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FELIX v. BALKIN

May 7, 1999

PASCALE FELIX, PLAINTIFF,
v.
SHARON BALKIN, SAKS FIFTH AVENUE AND PARFUMS GIVENCHY, DEFENDANTS. IRIS NUNEZ, PLAINTIFF, V. SHARON BALKIN, SAKS FIFTH AVENUE, CLARINS U.S.A., INC. AND THIERRY MUGLER PARFUMS, DEFENDANTS. KETLY CALIXTE, PLAINTIFF, V. SHARON BALKIN, SAKS FIFTH AVENUE, THE DONNA KARAN COMPANY, DONNA KARAN NEW YORK AND THE DONNA KARAN BEAUTY COMPANY, DEFENDANTS. LOURDES MORALES, PLAINTIFF, V. SHARON BALKIN, SAKS FIFTH AVENUE, CLARINS U.S.A., INC. AND THIERRY MUGLER PARFUMS, DEFENDANTS. DENISE FELIX, PLAINTIFF, V. SHARON BALKIN, SAKS FIFTH AVENUE, THE DONNA KARAN COMPANY, DONNA KARAN NEW YORK AND THE DONNA KARAN BEAUTY COMPANY, DEFENDANTS. KRISTA LORN POWELL, PLAINTIFF, V. SHARON BALKIN, SAKS FIFTH AVENUE, CLARINS U.S.A., INC. AND THIERRY MUGLER PARFUMS, DEFENDANTS.



The opinion of the court was delivered by: Hellerstein, District Judge.

    MEMORANDUM AND ORDER

I resolve in this decision issues of disqualification of counsel, raised by plaintiff Lourdes Morales' motion to disqualify and by my own enlargement of the issues. I have jurisdiction to do so because of the court's responsibility concerning the obligations of professionalism in the matters coming before it. See Ceramco, Inc. v. Lee Pharmaceuticals, 510 F.2d 268, 271 (2d Cir. 1975) ("Courts have not only the supervisory power but also the duty and responsibility to disqualify counsel for unethical conduct prejudicial to his adversaries."); see also Hull v. Celanese Corp., 513 F.2d 568, 571 (2d Cir. 1975) ("The district court bears the responsibility for the supervision of the members of its bar."); Red Ball Interior Demolition Corp. v. Palmadessa, 908 F. Supp. 1226, 1245 (S.D.N.Y. 1995) ("A trial judge has the inherent authority to regulate lawyers' professional conduct.").

There are six lawsuits pending before me, consolidated for pre-trial purposes by a stipulation and order (the "Stipulation and Order") dated September 9, 1998. All of the matters allege a hostile work environment in the cosmetics and fragrance department of the Saks Fifth Avenue department store ("Saks") located in Manhattan, New York. Each of the plaintiffs allege inappropriate, unwanted touchings and comments by defendant Sharon Balkin, a Saks supervisory employee, and inadequate responses and retaliations by Saks and the perfume companies named as defendants.

Three of the six plaintiffs, Lourdes Morales, Iris Nunez and Krista Lorn Powell, were employees or subordinate supervisors who worked at the Thierry Mugler Parfums counter at Saks. The three sue Balkin, Saks, Thierry Mugler, and Thierry Mugler's parent company, Clarins U.S.A. Inc.*fn1, alleging violations of federal, state and New York City laws; see, e.g., 42 U.S.C. § 2000e, et seq.; N.Y.Exec.Law §§ 296.1, 296.6 and 296.7; N YComp. Codes R. & Regs. § 8-107. Plaintiff Pascale Felix's complaint against Balkin, Saks and Parfums Givenchy, and plaintiffs Ketly Calixte's and Denise Felix's complaints against Balkin, Saks, The Donna Karan Company, Donna Karan New York and The Donna Karan Beauty Company, make similar allegations.

Thornton & Tanenhaus and the Law Office of Michael S. Lamonsoff, Esq. ("Lamonsoff"), represent all six plaintiffs, and Epstein Becker & Green, P.C. represents Balkin and Saks in each of the six actions. Clarins is represented by Jones Hirsch Connors & Bull P.C. ("Jones Hirsch") in the Nunez and Powell actions, and by Wilson, Elser, Moskowitz, Edelman & Dicker, LLP ("Wilson Elser") in the Morales action. Other counsel represent the perfume companies sued in the other three actions.

The defendants have denied liability and alleged affirmative defenses. A joint motion to dismiss, a motion for summary judgment, and a motion for judgment on the pleadings are pending before me and are being resolved separately. Discovery has just begun, pursuant to the terms of the Stipulation and Order referred to above, only to be halted by the motion of plaintiff Lourdes Morales to disqualify Jones Hirsch from representing Clarins in the companion Nunez and Powell actions.

I. MORALES' DISQUALIFICATION MOTION

Plaintiff Morales contends that the Jones Hirsch law firm should be disqualified because its partner, Richard L. Steer, had represented her as well as Clarins in defense of a related sexual harassment and discrimination complaint brought by another employee who worked at the Thierry Mugler perfume counter, Michael A. Blake. Morales contends that Steer and Jones Hirsch gained "secrets and confidences" from her during the dual representation, and can use them against her interests. For the reasons discussed below, I find that Morales' argument lacks merit. However, there are additional grounds for disqualification that I must consider, of both Steer and, of counsel for Morales, Thornton & Tanenhaus and Lamonsoff. I hold, in the interests of justice and incident to the district court's supervisory responsibility with regard to maintaining proper professional standards in the matters before it, and for the reasons discussed below, that Steer and Jones Hirsch, and Thornton & Tanenhaus and Michael S. Lamonsoff, should be disqualified from representing, respectively, defendant Clarins, and plaintiffs Nunez, Powell and Morales, and I so order.

A. The Employment Structure at Saks:

The perfume counters of the Saks department store in Manhattan are located on the first floor of the store. Perfume vendors, like Thierry Mugler, Donna Karan and Givenchy, occupy the counters and offer their products through beauty consultants and salespersons whom they employ or with whom they contract.*fn2 (Morales' Complaint, Ex. B to Affidavit of Fran L. Rudich, dated January 5, 1999 ("Rudich 1/5/99 Aff."), at ¶¶ 17-18). Plaintiffs Morales, Nunez and Powell were employees of Thierry Mugler. In addition, Morales was a supervisor and the Business Manager of the counter. (Id. at ¶ 16).

The employees of the various perfume vendors lacked authority to operate Saks' cash register and ring up sales of perfume. (Id. at ¶ 18). They were required to bring their sales to a Saks employee assigned as liaison to the perfume vendors. (Id.). Defendant Balkin was the Saks liaison to the Thierry Mugler, Givenchy and Donna Karan perfume counters. (Id. at ¶ 19).

B. The Blake Proceeding

In November 1996, Michael A. Blake, a sales assistant employed by Thierry Mugler at Saks, filed a charge of discrimination with the New York City Commission on Human Rights (the "Blake Proceeding"). (Affidavit of Richard L. Steer, dated January 18, 1999, at ¶ 4 ("Steer Aff., at ___")). Blake alleged that Balkin sexually harassed him, between July 17, 1996 and August 17, 1996, by unwanted and unwelcome touchings and suggestive comments, and that he was paid less than similarly situated Hispanic employees. (Blake v. Thierry Mugler, et al., NYCCHR Complaint No.: N-E-S-97-1003233E ("Blake Complaint") at ¶¶ 6, 7). Blake alleged that he reported the acts of harassment to Lourdes Morales, his Thierry Mugler supervisor, and to Saks; that no one remedied his complaint; and that, on or about August 23, 1996, Morales terminated Blake's employment. (Id. at ¶¶ 8, 9). Blake alleged that Thierry Mugler, Saks and Morales "discriminated against him by subjecting him to disparate treatment and sexually harassing him and terminating his employment . . . in violation of Section S-107.1(a) of the Administrative Code of the City of New York . . . [and in] violat[ion of] Title VII of the Civil Rights Act of 1964. . . ." (Id. at ¶¶ 10-11).

Clarins' insurer retained Richard L. Steer, a partner of Jones Hirsch and a specialist in the field, to represent it and Morales jointly, in November 1996. Steer, based on a "thumbnail" sketch of the issues by Clarins' Manager of Human Resources, Lily Babler, expressed the view that he could represent both Clarins and Morales jointly, without conflict. (Transcript of Argument, April 14, 1999 (hereafter, "Tr.Arg.")), pp. 27-28; (Letter from Richard L. Steer responding to Court Ordered Interrogatories, dated March 23, 1999, at ¶ 1(a-c) ("Jones Hirsch Response")). Steer, during an ensuing meeting with Babler and Morales in January 1997, told Morales that she "could get her own counsel if she wanted," but that he could represent her, except if there was a conflict, and "I didn't see any conflict." (Tr. Arg.p.28). Morales responded that "she didn't think there was a conflict either" (Tr. Arg. p. 28), and that "she had no objection to [Steer] representing her." (Jones Hirsch Response, at ¶ 1 (a-c)). Steer, however, did not speak to Morales individually. Nor did he question her to ascertain if, in fact, a conflict existed or might potentially arise, or explain the consequences of dual representation and potential conflicts, or come to his own reasoned opinion with regard to the issues of conflict and separate representation. (Tr. Arg. pp. 29-30). Steer also failed to enter into an engagement letter with either of his clients, or even prepare a memorandum for his files, covering the possibility of conflict and defining what might happen if a conflict between his two clients were to arise. After these meetings, Steer filed a joint verified answer denying Blake's allegations, verified by both Morales and Clarins on January 9, 1997, and, after meeting with Morales on May 8, 1997 to review discovery and production issues; filed a joint response to a document request on May 9, 1997. (Steer Aff., at ¶ 6).

Thornton & Tanenhaus and Lamonsoff argue that they did not learn about the Blake Complaint until April, May or June 1997. (Tr. Arg. p. 37; T & T Response, ¶ 3; Letter from Edward Tanenhaus supplementing T & T Response, dated March 29, 1999 ("Tanenhaus Supplemental Letter")). They were unable to say exactly when because, they assert, they had "nothing in the file." (Tr. Arg. p. 37). They acknowledge that they learned that Balkin was "harassing Blake and other people," but they claim not to have known until June 1997 that Morales had been sued by Blake, and was already represented by counsel. (Tr. Arg. pp. 37-38).

If Thornton & Tanenhaus and Lamonsoff did not know these essential facts about their client, and I find it hard to believe that they were as completely ignorant as they claim, they certainly should have found out, and they concede that "in hindsight, we should have [investigated]." (Tr. Arg. p. 38). Thornton & Tanenhaus and Lamonsoff made no effort to learn if Morales had counsel, or was implicated in some fashion in the Blake Proceeding. Had they inquired, they would undoubtedly have learned that Morales was already a respondent; that she was represented by counsel who also represented Clarins; that she had sworn to denials of sexual harassment which she was about to contradict; and ...


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