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Hlp Properties, LLC v. Consolidated Editson Co. of New York, Inc.

United States District Court, S.D. New York

October 16, 2014

HLP PROPERTIES, LLC, et al., Plaintiffs,
v.
CONSOLIDATED EDITSON COMPANY OF NEW YORK, INC., Defendant.

OPINION AND ORDER

LORNA G. SCHOFIELD, District Judge.

Defendant Consolidated Edison Company of New York, Inc. ("CECONY") moves to disqualify Gibson, Dunn & Crutcher LLP ("Gibson Dunn") as counsel for Plaintiffs. For the following reasons, the motion is denied.

I. BACKGROUND

The facts are taken from the allegations in the Complaint and affidavits and exhibits submitted with the parties' briefing. These facts are assumed to be true for purposes of the present motion only.

A. Gibson Dunn's Representation of Plaintiffs

This is an action under the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. ยง 9601, et seq. ("CERCLA") and New York common law. Plaintiffs are the owners, past owners and developers of a parcel of land located in West Chelsea (the "Site"). Defendant CECONY is a previous owner of the Site. On March 3, 2014, Plaintiffs brought suit against CECONY, alleging that CECONY polluted the Site and seeking reimbursement for remediation costs.

Plaintiffs' litigation counsel is Gibson Dunn, by Randy Mastro, a litigation partner in the firm's New York office. Plaintiffs are also represented by Sive, Paget & Riesel, P.C., which primarily advises on environmental and technical aspects of the case. Gibson Dunn has represented Plaintiffs in connection with the Site since 1999.

From the time Gibson Dunn was initially retained until now, it has been in contact with CECONY representatives. In connection with the early stages of negotiations between Plaintiffs and CECONY, Gibson Dunn met with or corresponded with CECONY representatives on at least four occasions, including in June 1999, May 2000, June 2000 and July 2000. Gibson Dunn continued to have contact with CECONY representatives in later stages of the negotiations, including in 2011, when Gibson Dunn spoke directly with an executive of CECONY in connection with the negotiations; in December 2013, when Plaintiffs and CECONY entered into a six-month tolling agreement; and in January 2014, just before the Complaint in this action was filed, when Mastro sent CECONY a letter terminating the tolling agreement.

B. Gibson Dunn's Representation of CEI

In 2003, CECONY's parent company, Consolidated Edison, Inc. ("CEI"), retained Gibson Dunn by John Olson, a corporate partner in the firm's Washington, D.C. office. The engagement letter executed by Gibson Dunn and CEI identified CEI as the client, and stipulated that "[u]nless expressly agreed, [Gibson Dunn] [is] not undertaking the representation of any related or affiliated person or entity, nor any family member, parent corporation or entity, subsidiary, or affiliated corporation or entity, nor any of [CEI's] or their officers, directors, agents, partners or employees." (emphasis added). Gibson Dunn did not seek a conflicts waiver from CEI at the time.

Olson submitted a sworn affidavit in opposition to the disqualification motion, describing the scope of Gibson Dunn's engagement as "limited to advising the CEI board and one committee of CEI - the Corporate Governance and Nominating Committee... - solely with respect to corporate governance matters relating to public companies and NYSE-listed companies." Olson states that he did not attend any CECONY board meetings or perform any work for CECONY. Notwithstanding this statement, he notes that in two instances, work he performed for CEI may have benefitted CECONY. The first instance was in 2012, when Olson reviewed and commented on portions of CEI's proxy statements; according to Olson, some of his commentary may have been applicable to CECONY's annual information statement. The second instance was in 2009, when Olson provided advice to CEI regarding a third-party audit relating to governance issues at CEI and CECONY.

In his affidavit, Olson describes one additional matter in which Gibson Dunn represented CEI, which occurred in early - and lasted several weeks. The matter involved a state court action filed by shareholders against CEI and arose out of disclosures in a CEI proxy statement that were made on the advice of Olson and his corporate team. CECONY was not involved in the lawsuit. Olson affirms that he has never provided advice directly to CECONY or its Board, or represented CECONY in any way.

C. Gibson Dunn's Representation of Other Parties Adverse to CECONY

Between 2002 and 2008, Mastro represented three clients, in addition to Plaintiffs, that were adverse to CECONY and/or CEI. For two of the representations, involving Crow Holdings and Verizon New York Inc., respectively, which commenced after Gibson Dunn's concurrent representation of CEI, Gibson Dunn sought and obtained waivers to allow it to sue CEI. Mastro states that he sought a written waiver for the Crow Holdings matter because it was potentially adverse to both CEI and CECONY. Likewise, Mastro affirms that he sought ...


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