The opinion of the court was delivered by: FRANK MAAS, Magistrate Judge
MEMORANDUM DECISION AND ORDER
This lawsuit involves two competing medical schools in the
Carribean: Ross University School of Medicine ("RU"), located on
the island of Dominica, and the American University of Antigua
College of Medicine ("AUA"), on the island of Antigua. The suit
was commenced by Dominica Management, Inc. ("DMI"), which
previously had a management contract to provide services to, and
now is also an indirect owner of, RU. The matter comes before the
Court on DMI's motion to disqualify Leonard A. Sclafani, Esq.,
and his firm, Polatsek & Sclafani ("P&S"), from any further
representation of one of the defendants in this case. For the
reasons set forth below, that motion is denied. I. Background
RU has been in operation for 27 years. (Aff. of John T. St.
James, sworn to Feb. __, 2005 ("SJ-I"), ¶ 5).*fn1 AUA was
formed in 2001, held its first classes in 2004, and can fairly be
described as an unwelcome competitor of RU. (See id. ¶ 9).
The complaint names three defendants: AUA; Neal S. Simon
("Simon"), the President of AUA, who previously served as
President and General Counsel of RU and as an employee of DMI;
and Sol Weltman ("Weltman"), whom the complaint describes as a
former computer programmer in the information technology
department of DMI. (Compl. ¶¶ 5, 24-28, 38-40).
The complaint alleges, inter alia, that AUA and Simon (a)
wilfully infringed RU's 2002 Student Handbook, which was
copyrighted by DMI; (b) misappropriated a proprietary DMI
computer system developed by Weltman and other DMI trade secrets;
(c) aided and abetted breaches of the duty of loyalty owed to DMI
by its employees; and (d) engaged in unfair competition. (Id.
¶¶ 47-85). Because the parties agreed to engage in limited
document and deposition discovery so that DMI could determine
whether there was a basis to seek a preliminary injunction, the
defendants have not answered and their counsel have yet to enter
formal notices of appearance in this case. The first witness deposed by AUA was Weltman. At the outset of
that deposition, Mr. Sclafani stated for the record that the full
scope of his engagement had yet to be determined, but that he was
representing Simon "[f]or the purposes of this deposition"
because there appeared to be a conflict between Simon and AUA.
(SJ-I, Ex. B at 9-10). The other attorneys attending the
deposition including AUA's counsel appear not to have voiced
any objection to this arrangement. (See id.). Thereafter,
however, DMI's counsel wrote to Mr. Sclafani to ask that he and
P&S withdraw from the case because they previously had
represented both RU and DMI. (Id. Ex. C). The letter from DMI's
attorney noted that Simon himself also had been "of counsel" to
P&S. (Id.). After Mr. Sclafani declined the request, (id. Ex.
D), DMI filed this motion to disqualify him and his firm from
further representation of Simon.
The motion is now fully submitted. (See Docket Nos. 11-17).
Because the parties agree as to the applicable legal principles,
Simon has not submitted a memorandum of law as part of his
Mr. Sclafani began to represent RU in the mid-1980s, at first
individually, and soon thereafter through P&S, his newly-formed
firm. (Affirm. of Leonard A. Sclafani, Esq., dated Mar. 4, 2005
(Sclafani Affirm."), ¶ 21). At the outset, the firm's work for RU
consisted of bringing collection actions, dealing with
landlord-tenant matters, and the prosecution and defense of suits
involving suppliers. (Id. ¶ 22). Over time, the firm added to its repertoire the defense of civil
rights actions brought by students, tax advice, and corporate
work. (Id. ¶ 23). This representation continued until the
spring of 2000. (Id. ¶ 24).
In 1997, P&S incorporated DMI in New York State at the request
of Dr. Robert Ross, the President of RU. (See id. ¶¶ 27-28;
SJ-I ¶¶ 24, 28 & Ex. E). Dr. Ross was also the sole shareholder
of DMI. (SJ-II at ¶ 6).
In 2000, Dr. Ross sold his controlling interest in both RU and
DMI to The Leeds Group ("Leeds"), an investment banking firm.
(Sclafani Affirm. ¶ 34; SJ-II ¶ 6). Some time prior to the sale,
Dr. Ross entered into a retainer agreement ("Retainer Agreement")
with P&S on behalf of RU.*fn2 (SJ-I Ex. G). The Retainer
Agreement provided for P&S to act as RU's "general outside
counsel and legal representative." (Id.). The Agreement further
provided for RU to pay P&S $10,000 per month over a five-year
period for legal services, and stated that it could be terminated
only for "cause," which was defined as "malpractice, fraud,
deceit or dishonesty," or the death or disability of Mr.
Sclafani. (Id.). The Agreement was prepared on P&S letterhead,
which discloses that, in addition to his other roles, Simon was
"of counsel" to P&S. (Id.).
Although Mr. Sclafani alleges that the sale of RU was expressly
made subject to the Retainer Agreement, The Leeds Group declined
to continue the retainer arrangement following its acquisition of RU. (Sclafani Affirm. ¶¶
43, 49). As a consequence, by early summer 2000, P&S had ceased
all representation of RU and DMI. (Sclafani Affirm. ¶ 52).
Indeed, the only potential legal matter that tied them together
was a dispute as to P&S's entitlement to recover the legal fees
that it contends remain unpaid pursuant to the Retainer
In 2003, Leeds sold RU and DMI to DeVry, Inc. (Id. ¶ 53;
SJ-II ¶ 10). It appears that Simon left RU after this second sale
occurred and began the steps necessary to form AUA. (Sclafani
Affirm. ¶¶ 55-56). Ross remained and was a DMI employee until
October 6, 2000, when he was terminated. (SJ-II at 17 & Ex. C).
The termination letter states that Ross was fired because of his
"dishonesty in submitting a fraudulent [Retainer A]greement to
[DMI] and asking [DMI] to honor that [A]greement." (Id. Ex. C).
As the Second Circuit has noted, disqualification motions
interfere with the ability of parties to choose their own
counsel, often are employed for tactical reasons, and, even in
the best of circumstances, cause delay. Bd. of Educ. v.
Nyquist, 590 F.2d 1241, 1246 (2d Cir. 1979); Gov't of India v.
Cook Indus., Inc., 569 F.2d 737, 739 (2d Cir. 1978).
Accordingly, a party moving for disqualification carries a "heavy
burden," Evans v. Artek Sys. Corp., 715 F.2d 788, 794 (2d Cir.
1983), and must satisfy a "high standard of proof." Gov't of India, 569 F.2d at 739. Although the
conclusion in any particular case "can be reached only after
painstaking analysis of the facts and precise application of
precedent," United States v. Standard Oil Co.,
136 F. Supp. 345, 367 (S.D.N.Y. 1955), the question ultimately is one of
preserving the public's trust in the ...