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Santander Securities LLC v. Gamache

United States District Court, E.D. Pennsylvania

April 3, 2017

GARY GAMACHE, Defendant.


          PAUL S. DIAMOND, J.

         Plaintiffs Santander Securities LLC and Santander Bank, N.A. allege that former employee Gary Gamache misappropriated their confidential information and improperly solicited their customers after taking a position with non-party Citizens Securities, Inc. Acting at the direction of his new employer, Gamache moves to disqualify Belcher Fitzgerald LLP, Santander's counsel, alleging that the firm had previously represented Citizens against its former employees in similar restrictive covenant litigation. Even if Gamache has standing to seek disqualification, because Belcher Fitzgerald's prior representation of Citizens is not substantially related to the present dispute, I will deny the Motion.

         I. BACKGROUND

         From 2009 to November 2016, Santander (and its corporate predecessors) employed Gamache as a financial advisor. (Verified Compl., Doc. No. 1, ¶ 5.) As a condition of his employment, Gamache executed Santander's “Enterprise-Wide Code of Conduct and Ethics” and “Representative Employment Agreement.” (Verified Compl. ¶¶ 15, 23 & Exs. A, B.) Both documents required Gamache to keep Santander's corporate information confidential, prohibited the information's personal use, and obligated the return of confidential information upon Santander's request. (Id., Ex. A, §§ 8.2, 8.3; Ex. B, § 7.) The Representative Agreement also prohibited Gamache from soliciting former clients for twelve months after the termination of his Santander employment. (Id., Ex. B, § 8(b).)

         In November 2016, Gamache resigned from Santander and began work as a financial advisor at Citizens, Santander's direct competitor. (Verified Compl. ¶¶ 38-39.) Santander alleges that Gamache kept proprietary customer lists and other confidential information and improperly solicited his Santander clients once he began at Citizens. (See Verified Compl. ¶¶ 41-55). Accordingly, on January 23, 2017, Santander brought the instant five-count Complaint against Gamache, alleging breach of the Code of Conduct and the Representative Agreement, breach of fiduciary duty, trade secret misappropriation, unfair competition, and violation of the Defend Trade Secrets Act. (Verified Compl. ¶¶ 58-78); 18 U.S.C. § 1836; 12 Pa. C.S. § 5302. That day, Santander also initiated Financial Industry Regulatory Authority arbitration proceedings, bringing the same claims against Gamache as well as trade secret misappropriation, unfair competition, tortious interference, and unjust enrichment claims against Citizens. (See Belcher Aff., Doc. No. 18-1, Ex. 1.)

         Santander initially asked me to enjoin Gamache from using its confidential information and soliciting its clients pending the resolution of the FINRA arbitration. (Doc. No. 4.) On February 1, 2017, the Parties resolved the preliminary injunction request and agreed to stay this litigation and proceed with the FINRA arbitration after I determined whether Belcher Fitzgerald should be disqualified. (Doc. No. 17.)


         Although Citizens is not a party before me, it readily acknowledges its displeasure with Belcher Fitzgerald. According to Citizens' “Senior Employment Counsel, ” “[t]his is the first instance [the Belcher firm] has appeared in a matter in an adversarial position to [Citizens].” (Peterson Aff., Doc. No. 15-2, ¶¶ 1, 21.) Disavowing any “tactical” motivation, Citizens directed its counsel, Jackson Lewis-the same firm that represents Gamache-“to bring the instant motion [to disqualify].” (Id. ¶¶ 23, 25.) On February 1, 2017 (the same day the Parties resolved the injunction), Gamache moved to disqualify the Belcher firm. (Doc. No. 15.) The matter has been fully briefed. (Doc. Nos. 18, 19.)

         The material facts are undisputed. From 2009 to February 2015, the Belcher firm represented Citizens in “non-customer litigation matters (including all TRO and FINRA matters)” that were similar to the instant dispute. (Peterson Aff. ¶¶ 5, 8; Belcher Aff. ¶ 3.) Between 2013 and 2015, the Belcher firm represented Citizens in some ten FINRA noncompetition arbitrations. (Peterson Aff. ¶ 10.) The firm also authored numerous cease-and-desist letters that did not lead to litigation. (Id. ¶ 15.) Through their representation of Citizens in restrictive covenant litigation, the firm acquired “intimate knowledge of [Citizens'] processes and proprietary information, ” including information regarding its “trade secrets, ” “customer lists, ” “corporate recruitment, ” “counseling of new employees relative to their non-competition agreements, ” “financial reports, ” and related information. (Id.¶ 12.) The firm also learned Citizens' “methods of negotiating settlements, ” “litigation strategies, ” and its litigation “playbook.” (Id. ¶¶ 12, 26.) Citizens terminated the firm in mid-2015. (Id. ¶ 18.)

         Gamache does not contend that the Belcher firm ever represented him or obtained any confidential information from him. Nor does he contend that the firm had access to confidential communications between Gamache and Citizens or any confidential information concerning Citizens' decision to hire him. Gamache does not contend that during its representation of Citizens the firm acted adversely to Santander. On the contrary, the Belcher firm represented Santander in restrictive covenant matters at the same time it represented Citizens. (Belcher Aff. ¶ 4.)


         “Federal courts have inherent authority to supervise the conduct of attorneys appearing before them.” Jordan v. Phila. Hous. Auth., 337 F.Supp.2d 666, 671 (E.D. Pa. 2004). I will apply the Pennsylvania Rules of Professional Conduct, which this Court has adopted. Id. (quoting Henry v. Del. River Joint Toll Bridge Comm'n, No. 00-6415, 2001 WL 1003224, at *1 (E.D. Pa. Aug. 24, 2001)); Local R. Civ. P. 83.6(IV)(B).

         “Disqualification is a harsh measure and is generally disfavored by the court” because a party's “choice of counsel is entitled to substantial deference” and because motions to disqualify are often brought for tactical reasons. AgSaver LLC v. FMC Corp., No. 11-997, 2011 WL 2274178, at *3 (E.D. Pa. June 9, 2011); Com. Ins. Co. v. Graphix Hot Line, Inc., 808 F.Supp. 1200, 1203 (E.D. Pa. 1992). “[A] court should disqualify an attorney only when it determines, on the facts of the particular case, ” after “consider[ing] the ends that the disciplinary rule is designed to serve and any countervailing policies, ” that “disqualification is an appropriate means of enforcing the applicable disciplinary rule.” Graphix Hot Line, 808 F.Supp. at 1203 (quoting United States v. Miller, 624 F.2d 1198, 1201 (3d Cir. 1980)). “To disqualify opposing counsel, the moving party must clearly show that continued representation would be impermissible.” AgSaver LLC, 2011 WL 2274178, at *3 (quoting Reg'l Employers' Assur. Leagues Voluntary Employees' Beneficiary Ass'n ex rel. PennMont Ben. Servs., Inc. v. Castellano, No. 03-6903, 2005 WL 856928, at *2 (E.D. Pa. Apr. 12, 2005)). “Nonetheless, doubts regarding the existence of an ethical rule violation should be construed in favor of disqualification.” Id.

         Pennsylvania Professional Conduct Rule 1.9, which governs disqualification, provides as follows:

A lawyer who has formerly represented a client in a matter shall not thereafter represent another person in the same or a substantially related matter in which that person's interests are materially adverse to the interests of the former client unless the former client gives informed consent.

Pa. R.P.C. 1.9(a).

         To prevail here, Gamache must show: “(1) that a past attorney/client relationship existed which was adverse to a subsequent representation by the law firm of the other client; (2) that the subject matter of the relationship was substantially related; and (3) that a member of the law firm, as attorney for the adverse party, acquired knowledge of confidential information from or concerning the former client, actually or by operation of law.” Estate of Pew, 655 A.2d 521, 545-46 (Pa. Super. 1994); accord Jordan, 337 F.Supp.2d at 672 (party seeking disqualification must show: “(1) the former representation is the same or substantially related to the ...

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