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United States v. Discala

United States District Court, E.D. New York

December 24, 2017



          ERIC N. VITALIANO United States District Judge

         Prompted by a late and unusual confluence of events, the government seeks a hearing pursuant to United States v. Curcio, 680 F.2d 881 (2d Cir. 1982), regarding perceived potential conflicts in the continued representation of defendant Morris by his attorney of record while defendant Josephberg moves to disqualify that same attorney of record for defendant Morris. For the reasons that follow, defendant Josephberg's motion to disqualify the attorney of record for defendant Morris is granted, and the government's request for a Curcio hearing is denied as academic.


          Michael Morris and Craig "Jobo" Josephberg were charged with a number of securities- related crimes in a superseding indictment filed on November 2, 2015.[1] See ECF Dkt. No. 166 (Superseding Indictment). As relevant to this memorandum and order, Morris was a managing director of Halcyon Cabot Partners, Ltd., and Josephberg was previously employed at Halcyon. Attorney Amy Lynn Walsh has represented Josephberg since July 29, 2014, see ECF Dkt. No. 32 (appearance entered by Amy Lynn Walsh), and Attorney Maranda Fritz has represented Morris since November 4, 2015, see ECF Dkt. No. 176 (appearance entered by Maranda E. Fritz). On December 1, 2017, two years and 26 days after Attorney Fritz first appeared, the government filed a letter motion notifying the Court and all defense counsel of a potential attorney conflict of interest - Attorney Fritz had, apparently, previously represented Josephberg in connection with his work at Halcyon, and apparently represented government Witness A as well. See ECF Dkt. No. 385 (Dec. 1, 2017 government letter motion). The government requested that the Court schedule a Curcio hearing to deal with any real or potential conflicts.[2]

         On December 7, 2017, Attorney Walsh filed a letter that the Court construed as a motion to disqualify Attorney Fritz, on the grounds that she owes Josephberg a continuing duty of loyalty - one that Josephberg was not willing to waive. See ECF Dkt. No. 397 (Dec. 7, 2017 Josephberg letter motion). The next day, at a scheduled status conference and oral argument on previously filed and briefed motions, the Court ordered briefing on the issue of Attorney Fritz's alleged conflict of interest. That briefing is now complete.

         Relevant Principles of Law

         Under the Sixth Amendment, a defendant in a criminal case is entitled to the assistance of competent counsel, see Wheat v. United States, 486 U.S. 153, 158, 108 S.Ct. 1692, 1697, 100 L.Ed.2d 140 (1988), and there is a "presumption in favor of counsel of choice." United States v. Jones, 381 F.3d 114, 119 (2d Cir. 2004). At the same time, federal courts have an independent interest "in ensuring that criminal trials are conducted within the ethical standards of the profession and that legal proceedings appear fair to all who observe them." Wheat, 486 U.S. at 160, 108 S.Ct. at 1698. Interwoven in these understandings is the tenet that attorneys owe ethical duties to current and former clients. See, e.g., United States v. Perrone, 2007 WL 1575248, at *8 (S.D.N.Y. May 29, 2007).

         In practical terms, when a court is made aware that an attorney may have a conflict of interest, it must follow the two-step analytical framework described in United States v. Levy, 25 F.3d 146, 153 (2d Cir. 1994). First, there is an obligation to inquire and "investigate the fact and details of the attorney's interests to determine whether the attorney in fact suffers from an actual conflict, potential conflict, or no genuine conflict at all." Id. An actual conflict "exists when the attorney's and the defendant's interests 'diverge with respect to a material factual or legal issue or to a course of action, ' or when the attorney's representation of the defendant is impaired by loyalty owed to a prior client." Jones, 381 F.3d at 119 (citation omitted).

         If a court determines that there is an actual or potential conflict, it moves to the second step, which requires consideration of whether the conflict is automatically disqualifying or waivable. Levy, 25 F.3d at 153. The Second Circuit has clarified that there is a "very narrow category of cases in which we have held attorney conflicts to be unwaivable." United States v. Perez, 325 F.3d 115, 126 (2d Cir. 2003), which are not at issue here. As this Court noted recently, Perez did not exhaust the field, and "[b]eyond the 'always' category, there is a 'sometimes' category" of unwaivable conflicts. United States v. Vertuccio, 2017 WL 6513676, at *3 (E.D.N.Y.Dec. 19, 2017). Other kinds of conflicts are generally waivable, provided that there is a knowing and intelligent waiver by a defendant. Curcio, 680 F.2d at 888-890.

         Another consideration is a trial court's independent responsibility "in ensuring that criminal trials are conducted within the ethical standards of the profession and that legal proceedings appear fair to all who observe them." Wheat, 486 U.S. at 160, 108 S.Ct. at 1698. Wheat makes clear that trial courts retain discretion to disqualify counsel even where the law does not absolutely require it - discretion to entertain those situations that fall into the "sometimes" category.

         Additionally, disqualification need not be on the basis of a conflict with the interests of her client, but because of the duty of loyalty owed to a former client, which is fundamental to the attorney-client relationship. This duty of loyalty is at the heart of the law, and it is not extinguished by the end of representation - it is important enough a former client may make a motion to disqualify an attorney representing a co-defendant, and upon a sufficient showing, have that attorney disqualified. However, the Second Circuit has made clear that the moving party must meet a high burden. This is because courts "must be solicitous of a client's right freely to choose his counsel [, because such] motions are often interposed for tactical reasons, and ... inevitably cause delay." Evans v. Artek Systems Corp., 715 F.2d 788, 791-92 (2d Cir. 1983) (internal quotations and citations omitted).

         Given the substantial rights involved and the high burden they precipitate, a party moving to disqualify counsel for another party must show that, first, he was previously represented by the subject attorney; second, that there is a "substantial relationship between the subject matter" of the attorney's prior representation of him and the issues in the current litigation; and third, that the attorney he seeks to disqualify either had access to or was likely to have access to "relevant privileged information" while representing him. See United States v. Prevezon Holdings Ltd., 839 F.3d 227, 239 (2d Cir. 2016). A matter is substantially related to an earlier representation if, first, "the current matter involves the work the lawyer performed for the former client; or, [second], there is substantial risk that representation of the present client will involve the use of information acquired in the course of representing the former client, unless that information has become generally known." United States v. Pizzonia, 415 F.Supp.2d 168, 178 (E.D.N.Y.2006). As noted in Pizzonia, the question of how broad a client's interests are have to be determined by the scope of the work that the attorney did in the former representation. Id. This consideration interlocks with the New York Rules of Professional Conduct, in particular Rule 1.9, which governs a lawyer's responsibilities to former clients. Finally, once a substantial relationship is established between the two cases, and the same lawyer is involved in both, the moving party "is not required to make a specific showing that confidences were passed to counsel. Instead, the [moving party] is entitled to the benefit of an irrebuttable presumption that confidences were shared." Prevezon Holdings Ltd, 839 F.3d at 240 (quoting DeFazio v. Wallis, 459 F.Supp.2d 159, 164-65 (E.D.N.Y.2006)).


         As a preface, based on the dialogue with counsel at the December 8th status conference, it is presumed that, following appropriate and independent counsel's advice to him, but without a formal Curcio allocution, Morris would exercise his Sixth Amendment right to have Attorney Fritz continue as his attorney of record, notwithstanding any past representation she afforded to Josephberg. Here, though, that is only half the equation. Succinctly, if Attorney Fritz did represent Josephberg, then Josephberg would need to waive any actual or potential conflicts as well. See Pizzonia, 415 F.Supp.2d at 179. Josephberg's motion to disqualify Attorney Fritz loudly speaks that he believes that there is an actual conflict and that, even if he could waive it, he would not. See ECF Dkt. No. 397 at 2.

         Plainly, the first relevant factor as to disqualification, and, indeed, the most critical challenge on this motion, is whether or not Attorney Fritz actually represented Josephberg. Attorney Fritz argues that she represented Josephberg only as corporate counsel; both Josephberg and the government disagree with that representation. Attorney Fritz states, in both her memorandum of law and her affirmation, that "[a]t no point leading up to the interviews did Ms. Fritz tell Mr. Josephberg that she represented him personally. Rather, she made clear to him that she represented Halcyon and Mr. Morris - a fact that, at that point, was well known to everyone at Halcyon, including Mr. Josephberg." Dkt. No. 405 at 2; see also Dkt. No. 405-1 ...

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