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Jose Manuel Perez v. Petsmart

September 12, 2010

JOSE MANUEL PEREZ, PLAINTIFF,
v.
PETSMART, INC., DEFENDANT.



The opinion of the court was delivered by: E. Thomas Boyle United States Magistrate Judge

MEMORANDUM OPINION AND ORDER

Before the Court is plaintiff's Second Motion to Disqualify defendant's counsel ("Motion") on the grounds of unwaivable conflicts of interest and violation of the duty of truthfulness in statements to others. For the reasons that follow, the Motion is DENIED.

BACKGROUND

In this action, which was removed to federal court on the basis of diversity, Plaintiff alleges that defendant wrongfully terminated him as a result of defamatory statements made by four PetSmart employees--Jenny Lopez, Jaclyn Irma Yeh, Yicinniya Williams, and Victoria Rahn (the "Employees"). (See Declaration of Leonard Zack ("Zack Decl.") at 2; Memorandum of Law in Support of Motion to Disqualify ("Plaintiff's Memo") at 1; Complaint at 7-9). The Complaint further alleges causes of action for negligent hiring, negligent supervision and retention, and breach of contract. (Complaint at 6-7). None of the Employees is a party here. However, the Employees are defendants in a state court action filed by plaintiff which arises from the same set of facts. (See Zack Decl. at 2). Although the Suffolk County Supreme Court dismissed that action, the dismissal is subject to plaintiff's pending motion for reconsideration. (See id. at 1-2).

Defendant's attorneys, Littler Mendelson, represent PetSmart in this action and the four Employees in the state court action. Each of the four Employees has consented to the joint representation. (See Declaration of David S. Warner in Opposition to Plaintiff's (Second) Motion for Disqualification ("Warner Decl."), at 1). Notwithstanding the consent, Plaintiff asserts that there is a conflict of interest which requires Littler Mendelson to be disqualified from representing PetSmart. (See Plaintiff's Memo at 4-7). Specifically, plaintiff contends that there is the potential for Littler Mendelson to argue that the Employees were acting outside the scope of their employment when they made the allegedly defamatory remarks, which would benefit PetSmart's defense but harm the defense of the Employees. (See id.). Plaintiff also argues that a scheme by which PetSmart pays for the defense of the Employees is unethical. (See id. at 11-12). Plaintiff further asserts that he formed an implied attorney-client relationship with Littler Mendelson when he was interviewed regarding two unrelated wrongful termination cases against PetSmart--one involving former PetSmart employee Raheem Smalls (the "Smalls Litigation") and one involving former PetSmart employee Raymond Lothian (the "Lothian Litigation"). (See Affidavit of Jose Manuel Perez ("Perez Aff.") at 1-3). Plaintiff states that he provided confidential information to Littler Mendelson during the course of this implied professional relationship. (See id. at 2-3; Plaintiff's Memo at 3-4). He argues that Littler Mendelson must be disqualified in order to prevent PetSmart from "using such personal information to [plaintiff's] detriment." (Plaintiff's Memo at 4). Finally, plaintiff asserts that Littler Mendelson should be disqualified because one or more attorneys at the firm knowingly misrepresented to plaintiff and the Court that surveillance video from the date relevant to plaintiff's claims here has been overwritten. (See Plaintiff's Memo at 12-13).

Defendants counter that there is no actual conflict of interest because PetSmart's interests are not adverse to the Employees' interests, and PetSmart's assumption of Employees' defense costs does not violate any ethical rules. (See Memorandum of Law in Opposition to Motion to Disqualify ("Opposition" or "Opp.") at 7-10, 15-16). Additionally, they argue that Littler Mendelson never formed an attorney-client relationship with Perez, nor did Perez ever impart confidential information to attorneys from Littler Mendelson. (Id. at 11-14). Lastly, they assert that they have not misled plaintiff or the Court regarding the videotape; rather, the tape has indeed been overwritten, and plaintiff's accusation is baseless. (Id. at 16-17). Defendants ask the Court to sanction plaintiff for bringing this Motion in bad faith. (Id. at 17-18). For the reasons that follow, plaintiff's scattershot Motion to Disqualify is denied.

DISCUSSION

I. Legal Standard for Attorney Disqualification "[T]he disqualification of an attorney upon the motion of an adversary is a serious sanction that ought not to be imposed lightly. Indeed, it is well-established that [m]otions to disqualify opposing counsel are viewed with disfavor in this Circuit because they are often interposed for tactical reasons and result in unnecessary delay." Gabayzadeh v. Taylor, 639 F. Supp. 2d 298, 300 (E.D.N.Y. 2009) (internal citations and quotation marks omitted). Because of "the serious impact of attorney disqualification on the client's right to select counsel of his choice, . . . such relief should only be granted when a violation of the [ethical rules] poses a significant risk of trial taint." Glueck v. Jonathan Logan, Inc., 653 F.2d 746, 748 (2d Cir. 1981). The party urging disqualification of opposing counsel "bears a 'heavy burden' of demonstrating that disqualification is warranted." Gabayzadeh, 639 F. Supp. 2d at 300 (quoting Evans v. Artek Sys. Corp., 715 F.2d 788, 794 (2d Cir. 1983)).

II. Littler Mendelson Does Not Suffer from an Actual Conflict of Interest Based on the Joint Representation of PetSmart and Its Employees New York Rule of Professional Conduct 1.7(a) states, "a lawyer shall not represent a client if a reasonable lawyer would conclude that . . . the representation will involve the lawyer in representing differing interests." N.Y Comp. Codes R. & Regs. tit. 22, § 1200.0, Rule 1.7(a). Plaintiff contends that Littler Mendelson suffers from a conflict of interest because it represents PetSmart in this litigation and the four Employees in the state court litigation. He asserts:

In their Motion to Dismiss the Complaint [in the state court action], defendants Lopez, Yeh, Williams and Rahn have already argued that their allegedly defamatory statements were made within the scope of their employment and thus subject to a qualified privilege . . . . [T]he Defendants['] argument evidences that it is their intent to assert the defensive position that any alleged defamatory statements were made in the context of their employment and, thus, they can not [sic] be personally liable for their actions and statements.

However, this defensive posture is entirely adverse to the interests of their employer, defendant PetSmart, who, should the court find that the statements of defendants Lopez, Yeh, Williams and Rahn were in fact defamatory, will argue that defendants Lopez, Yeh, Williams and Rahn were acting outside the scope of their official duties, thereby partially or completely avoiding liability based on respondeat superior. Thus, to continue their joint representation, defendants Lopez, Yeh, Williams and Rahn would be forced to align their interests with those of their Employer, while foregoing a position which would better suit their interests.

(Zack Decl. at 5-6 (paragraph numbering omitted); see also Plaintiff's Memo at 10-11)). Plaintiff is incorrect for two reasons.

First, plaintiff's argument that Littler Mendelson has an incentive to argue that the Employees were acting outside the scope of their employment does not make sense in this context. The Employees and PetSmart are participating in two separate litigations. In the state court action, there is no possibility that PetSmart will be held liable, no matter whether the court finds that the Employees were acting within or outside of the scope of their employment, because Petsmart is not a party to that action. Therefore, Littler Mendelson has no incentive to argue, in the state court case, that the Employees were acting outside of the scope of their employment.

The Court cannot conceive of a reason that PetSmart would have an incentive to contend, in this case, that the (non-party) Employees were acting outside the scope of their employment. Plaintiff's complaint alleges that PetSmart (1) hired and retained one of the Employees although it knew or should have known that she had made false reports of sexual harassment against co-workers (the negligent hiring and negligent retention and supervision causes of action); (2) breached an implied contract with plaintiff created by PetSmart's employee handbook and company manuals by firing him without engaging in the proper procedures (the breach of contract cause of action); and (3) discriminated against plaintiff when they fired him based on false accusations of sexual harassment which the Employees made because they dislike heterosexual men (the discrimination cause of action). (See Complaint at 6-8). To the extent that the scope-of-employment question is relevant to these causes of action, surely it would be to PetSmart's benefit to argue that it relied on ...


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