The opinion of the court was delivered by: WEXLER
This civil action was commenced in April 1983 pursuant to the Organized Crime Control Act of 1970, 18 U.S.C. Section 1961 et seq., commonly known as RICO. It stems from the earlier prosecution and conviction of Joseph Margiotta and others for a "kickback" scheme involving the award of Nassau County insurance policies.
Defendants Robert E. Dowler and Richard A. Williams, and Richard B. Williams & Sons, Inc., now move this Court
for an order disqualifying plaintiffs' counsel, the firm of Moore, Berson, Lifflander & Mewhinney of Garden City, New York (Moore Berson). Defendants Neil Cahn, Henry Wood, Jack Rose Insurance and Charles Langdon join in the motion to disqualify. Movants allege that counsel for plaintiffs have violated Canons 4, 5 and 9 of the ABA Code of Professional Responsibility in their representation of the plaintiffs. They assert two bases for disqualification. First, they contend that Moore Berson's representation of plaintiffs conflicts with earlier representation by one firm member of a defendant in this case. Second, defendants contend that the joint representation of two classes of plaintiffs is conflicting and thus violates the Code of Professional Responsibility.
At the center of the first controversy is attorney James A. Gallagher, Jr., now of the firm of Moore, Berson, Lifflander & Mewhinney. From May 15, 1979 to September 30, 1981 he was a member of Doran, Buckley, Kremer, O'Reilly & Pieper (Doran Buckley) located at 1505 Kellum Place, Mineola, New York. That firm is now defunct. The law firm was never a partnership, rather it was a "group of solo practitioners associated with each other for the purpose of sharing legal work and costs." (Affidavit of James Gallagher). Each so-called partner handled his caseload separately and independently and client files were not commingled. Nevertheless, it is undisputed that Doran Buckley had a firm letterhead, shared a secretarian-clerical staff, denominated members as either "partners" or "associates," shared the services of the associates among the partners, had a common but not integrated filing area, and generally held themselves out as a law firm to the public.
The Court will not quibble about the technical requirements of a law partnership. Doran Buckley held itself out as a law firm and centralized its office operations. How it held assets and distributed costs and income is of little importance to the public or Court in this instance. For the purposes of this controversy the Court deems Doran Buckley to have been a law firm.
It is undisputed that in 1976 Mr. Dowler was first represented in a business matter by the firm of Doran, Colleran, O'Hara, Pollio and Dunne. That firm was dissolved and Mr. Dowler retained one of its successors, namely Doran Buckley, to continue handling his affairs. In early 1980 Mr. Dowler consulted James Marsh, a member of Doran Buckley, several times concerning his appearance before the Grand Jury investigating Joseph Margiotta. Although Mr. Dowler retained another attorney to represent him for the Grand Jury proceedings, he imparted confidential information concerning that matter to James Marsh as his attorney. (Affidavit of Robert Dowler and Affidavit of James Marsh).
There is no assertion that Mr. Gallagher was a direct recipient of any confidences nor that there were any discussion of the Dowler-Margiotta matter to which Mr. Gallagher was party. It is contended that as a member of Doran Buckley he had free access to Mr. Dowler's client files and papers and could have received confidential information regarding Mr. Dowler. Mr. Gallagher affirms that in fact he did not read any of the Dowler files in the office or otherwise receive confidential information about any of Mr. Dowler's matters. Finally, he declares that Michael T. Sullivan is the partner representing plaintiffs in this case and while he has assisted Mr. Sullivan he will cease to do any work on the case should the Court so order. Defendants insist, however, that since the matters are identical, the opportunity for access to Dowler's attorney-client confidences so clear, and the appearance of impropriety so strong, the conflict in Mr. Gallagher's representation of the plaintiffs requires this Court to disqualify his new law firm.
As to the second grounds for disqualification, defendants contend that plaintiffs in this matter are two separate classes with distinct and conflicting interests in any funds awarded, should judgment be entered against defendants. Specifically, the firm of Moore Berson represents the class of Nassau county residents and taxpayers seeking damages, recission of insurance contracts, and recovery of premium and commission payments, and the class of local insurance brokers seeking damages arising from their exclusion from the county's insurance contract business. Both groups claim violation of 18 U.S.C. Section 1962 on the part of defendants and seek disgorgement of approximately $1,500,000.00 paid by the county in commissions and premiums as unlawful gain to the defendants and damages as to plaintiffs.
The Court turns first to the issue of James Gallagher's sequential conflicting representation of clients. According to the defendants, Mr. Gallagher, and therefore his present law firm, is in violation of Canons 4 and 9 of the Code of Professional Responsibility. Canon 4 provides that a "lawyer should preserve the confidences and secrets of a client." Canon 9 provides that a "lawyer should avoid even the appearance of professional impropriety."
It is axiomatic that the knowledge of one lawyer in a firm is attributable to every member of the firm. Therefore, if Mr. Gallagher is the recipient of Dowler's attorney-client confidences, the entire firm of Moore Berson are also recipients. The Second Circuit, however, has restricted the instances when, in situations like this, the knowledge of one or more members of a firm will be attributed to and deemed carried away with a former member of the firm.
In addressing the danger of misuse or violation of a first client's confidences in the representation of a second client the Court initially must find a substantial relation between the interests successively represented. Cheng v. GAF Corp., 631 F.2d 1052, 1056 (2d Cir.1980). In this case, there is obviously complete identity in the substance of the representation. This being established, there is an inference that the attorney has carried away knowledge of the first client's confidences. The Second Circuit, however, has held this to be a rebuttable inference. Cheng v. GAF Corp., 631 F.2d at 1056; Silver Chrysler Plymouth Inc. v. Chrysler Motors Corp., 518 F.2d 751, 754 (2d Cir.1975). Here, it is undisputed that Mr. Gallagher had mere opportunity for access to knowledge if he chose to rifle Mr. Marsh's segregated files. However, it has been established that there is no basis in fact for attributing knowledge of Dowler's confidences or affairs to Mr. Gallagher. Mere access to documents is not sufficient basis for inferring an attorney-client ...