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United States District Court, S.D. New York

December 16, 2004.


The opinion of the court was delivered by: GEORGE DANIELS, District Judge


Retired employees and their beneficiaries bring suit against their union under the Employee Retirement Income Security Act of 1974 ("ERISA") asserting claims for wrongful reduction of life insurance benefits, breach of fiduciary duty and failure to provide information summaries. Defendants move to disqualify plaintiffs' counsel based on certain plaintiffs' prior position with the defendants. For the reasons stated below, defendants' motion to disqualify plaintiff's counsel is denied.

I. Background

  Plaintiffs are the retirees or beneficiaries of retirees of the International Ladies' Garment Workers' Union ("ILGWU") and its alleged successor-in-interest, defendant Union of Needletrades, Industrial & Textile Employees ("UNITE") (collectively, the "Union").*fn1 Defendant UNITE seeks to disqualify plaintiffs' counsel based on plaintiffs' prior positions with the ILGWU and with UNITE. Specifically, defendant UNITE argues that plaintiffs Max Zimny, Theodore Bernstein and Irwin Solomon, prior to the initiation of the current lawsuit, were employed by the ILGWU and UNITE in positions where they were privy to and received confidential information subject to the attorney-client privilege.

  Defendant UNITE alleges that plaintiff Max Zimny, a practicing attorney, was the general counsel of the ILGWU and UNITE until his retirement in June 2001. In this position, plaintiff Zimny allegedly managed and participated in the drafting of, if not directly wrote, the 1995 Merger Agreement as well as the 1990 SPD, which defendants claim are central to their defense. Plaintiff Theodore Bernstein, also an attorney, was the Director of the Benefit Funds Department, a non-legal position, of ILGWU and UNITE until his retirement in July 2001. Defendants assert that plaintiff Bernstein "was responsible for the day-to-day administration of the benefits plans of the ILGWU and UNITE." Defendants' Brief at 7. Plaintiff Irwin Solomon was the General Secretary-Treasurer of the ILGWU until his retirement from the ILGWU on July 1, 1995. Although plaintiff Solomon is not a lawyer, defendants argue that he was nevertheless privy to confidential information. Based on the positions that these three plaintiffs possessed in ILGWU and UNITE, defendants argue that plaintiffs' counsel, Alfred H. Sigman, Janet E. Brown and E. Douglas Richards should be disqualified.*fn2

  II. Discussion

  The attorney-client privilege belongs to the client. Clients may invoke the privilege to prevent their lawyer from divulging communications made in confidence to their lawyer "while acting in the capacity of professional legal adviser for the purpose of obtaining legal advice." Doe v. A Corp., 709 F.2d 1043, 1046 (5th Cir. 1983). Lawyers, furthermore, may also receive information that is not protected by the privilege but is nevertheless considered confidential by the client. The Code of Professional Responsibility (the "Code") safeguards client's confidences, as well as the attorney-client privilege. Specifically, Canon 4 of the Code states that "[a] lawyer should preserve the confidences and secrets of a client." Canon 9, meanwhile, provides that "[a] lawyer should avoid even the appearance of professional impropriety." Defendant UNITE argues that plaintiffs' attorneys must be disqualified from further representation under the tenets of Canons 4 and 9.

  Disqualification motions are generally disfavored in this circuit and should be granted only where an attorney's representation of a client would tend to taint the trial. See Bd. of Educ. of City of New York v. Nyquist, 590 F.2d 1241, 1246 (2d Cir. 1979). A high standard of proof is required because such motions are "often interposed for tactical reasons . . . [a]nd even when made in the best of faith, such motions inevitably cause delay." Id. An attorney may be disqualified from representing a client if (1) the moving party is a former client of the adverse party's counsel; (2) there is a substantial relationship between the subject matter of the counsel's prior representation of the moving party and the issues in the present lawsuit; and (3) the attorney whose disqualification is sought had access to relevant privileged information in the course of the prior representation of his or her client. See Evans v. Artek Systems Corp., 715 F.2d 788, 791 (2d Cir. 1983) (citations omitted).

  The uniqueness of the situation presented is that defendant UNITE seeks to disqualify plaintiffs' counsel, but not because of counsel's prior representation of defendant. Rather, disqualification is based on the prior representation of defendant by a plaintiff. Defendant UNITE argues that plaintiff Max Zimny's prior position as general counsel, and plaintiff Theodore Bernstein's prior position as director of the Benefit Funds Department, made them privy to and indeed in actual receipt of, confidential information. Defendant UNITE argues that the appearance of impropriety, and plaintiffs' apparent future intent to uncover and use confidential information, mandates that their current attorneys be disqualified.

  Disqualification is not appropriate based upon the prior employment position of plaintiff Bernstein. Defendant UNITE cannot, and has not, proffered any evidence that plaintiff Bernstein was hired in a legal capacity, nor that part of his job was to perform the function of an attorney. See Transcript of Oral Argument dated October 22, 2003, p. 40. Moreover, the fact that he attended law school and subsequently became a member of the bar does not mean that conversations involving Mr. Bernstein are automatically protected by the attorney-client privilege. His mere knowledge of the law and his experience as a lawyer are insufficient to demonstrate the creation of an attorney-client relationship. Defendant UNITE has not presented any evidence to show that UNITE expected Bernstein to serve as their attorney or that, as their attorney, he received confidential information which defendant UNITE reasonably believed was protected by the attorney-client privilege. Defendant UNITE's motion cannot be based on an argument that plaintiff Bernstein was defendant UNITE's former attorney. There is therefore no basis to conclude that he could have transferred confidential information protected by the attorney-client privilege to plaintiffs' counsel, which would necessitate their disqualification.

  Plaintiff Max Zimny, however, presents a different set of issues. It is undisputed that he served in a legal capacity as the general counsel of the ILGWU. After the merger agreement was consummated, he also served as the general counsel of UNITE.*fn3 Despite plaintiffs' insistence that he served in this capacity under UNITE in name only, and indeed did not deal with any matters substantially related to the current litigation, it is beyond dispute that, as general counsel, in name or otherwise, plaintiff Zimny owes to his former client the ethical obligations commensurate with his position as a member of the bar. Whether he was privy to, or in fact received, confidential information that is substantially related to the present case is not dispositive of defendants' motion. Canon 9 also protects against the mere appearance of impropriety. As general counsel, there is a strong presumption that plaintiff Zimny had access to confidential information and that this confidence might be breached. See Hull, 513 F.2d at 571-72 (finding that the court need not inquire whether the lawyer did, in fact, receive confidential information as the breach of confidence "is presumed in order to preserve the spirit of the Code") (citations omitted). Whether in fact he saw drafted certain documents, or whether he ever intended to, or did breach those confidences does not absolve him of the mandates of Canon 9. The mere possibility that these confidences could be breached "is sufficient to make disqualification a necessary and desirable remedy to enforce the lawyer's duty of absolute fidelity and to guard against the danger of inadvertent use of the confidential information." NCK Org., 542 F.2d at 134 (quoting Ceramco, Inc. v. Lee Pharmaceuticals 510 F.2d 268, 271 (2d Cir. 1975).

  If plaintiff Zimny were the attorney in this case, the answer, based on the above, would be simple: he must be disqualified. Despite both his attestations that he was not personally involved in any employee benefit issues, as well as competing factual claims by the parties regarding his involvement, it is clear that his position as general counsel would warrant his disqualification. Any doubt or ambiguity regarding disqualification is to be resolved in favor of disqualification. See Hull, 513 F.2d at 571 (citations omitted). The issues presented here, however, necessitate further analysis. First, should the presumption of possession and breach of confidences be extended to his attorneys, thereby warranting their disqualification? Second, if the presumption does extend to his attorneys, how can plaintiff ever pursue his personal claim with any attorney, if his attorneys are always to be disqualified?

  The closest factually-analogous case in this circuit is Hull v. Celanese Corp., 513 F.2d 568 (2d Cir. 1975). In that case, an attorney who previously represented the defendant on an employment discrimination case subsequently ended her representation, and then sought to intervene as a plaintiff in that very same civil rights action. Defendants' motion to disqualify was based "apparently on the theory that it could be presumed that, as a client, the lawyer-client would impart to her counsel information received in confidence from her former client." NCK Org., 542 F.2d at 136 (Mansfield, J., concurring). The Second Circuit found that the situation is "one of those cases in which disqualification is a necessary and desirable remedy to enforce the lawyer's duty of absolute fidelity and to guard against the danger of inadvertent use of confidential information." Id. at 571 (internal quotations and citations omitted). The court, however, limited the scope of its opinion, finding that "the novel factual situation presented here dictates a narrow reading of this opinion. . . . The scope of this opinion must, of necessity, be confined to the facts presented and not read as a broad-brush approach to disqualification." Hull, 513 F.2d at 572.

  In the present case, as defendants have not alleged that any specific information has been passed from Zimny to plaintiffs' counsel and because discovery on this case had been stayed, plaintiffs motion to disqualify present counsel is denied. Plaintiffs have a right to freely select the counsel of their choice. This right is balanced with competing interests, mainly, defendant UNITE's and the ILGWU's interest to be free from the risk of even inadvertent disclosures of confidential information as well as the public' interest in the scrupulous administration of justice. See Hull, 513 F.2d at 570. As there has been no evidence of information actually being passed, the case remains untainted and the defendants have not been prejudiced. This determination is guided by Judge Mansfield's concurring opinion in NCK Org. where she held I would not subscribe to an iron-clad rule automatically presuming that a disqualified lawyer has disclosed confidences to a firm which was not in an attorney-client relationship with the other side. While an automatic taint may be a salutary method of enforcing ethical principles against an attorney who personally acted in a fiduciary capacity for an adversary, it smacks of an overkill to extend such a taint to a new counsel brought in by him to represent someone else. Whether the disqualification is to be extended to the new firm should turn on the circumstances surrounding his consultation of that firm and particularly the nature and extent of the communications between the disqualified lawyer and the new firm.

 Where, as here, there is no allegation of confidences being shared, the current lawyers need not be disqualified. The presumption remains with the former attorney-plaintiff, and is not extended to other counsel.*fn4

  III. Conclusion

  For the reasons stated above, defendants' motion to disqualify plaintiffs' counsel is denied.

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