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Tour Technology Software, Inc. v. RTV, Inc.

United States District Court, E.D. New York

August 2, 2018

TOUR TECHNOLOGY SOFTWARE, INC., Plaintiff,
v.
RTV, INC. et al., Defendants.

          MEMORANDUM AND ORDER

          Cheryl L. Pollak United States Magistrate Judge.

         On October 4, 2017, plaintiff Tour Technology Software, Inc. (“Tour”) brought this action against defendant RTV, Inc. (“defendant” or “RTV”) and a number of John and Jane Does, alleging that defendants had infringed plaintiff's United States Patent No. 6, 754, 400 (the “440 Patent”) entitled “System and Method for Creation, Processing and Visualization of OmniDirectional Images.” Currently pending before this Court is plaintiff's motion to disqualify defendant's counsel, Mitchel S. Feller, Esq., on the grounds that he represented a third party who was a defendant in another case involving the same 440 Patent. (See generally Pl.'s Mot. to Disqualify, Mar. 30, 2018, ECF No. 20).

         For the reasons set forth below, the Court denies the motion for disqualification.

         FACTUAL BACKGROUND

         Plaintiff Tour alleges that it is the owner of U.S. Patent No. 6, 754, 400 (the “400 Patent”), which enables the exploration of an indoor or outdoor location over the internet as if the person were actually at the location and looking at the scene through the selected or varying angular direction of the view. (Compl. ¶ 9, Oct. 4, 2017., ECF No. 1). Following the creation of the 400 Patent technology, the U.S. Patent Office issued the 400 Patent on June 22, 2004. (Id. ¶ 24, Ex. A). Through various assignments, the 400 Patent was assigned to Tour. (Id. ¶ 26).

         Defendant RTV is in the business of providing or presenting 360 degree virtual tour content for its clients, including individuals and businesses in the United States seeking to sell, rent, purchase, lease, and/or promote private residences, hotels, sporting and recreation facilities, schools, and golf courses, among others. (Id. ¶ 32). Plaintiff alleges that RTV is literally, or through the doctrine of equivalence, directly and indirectly infringing the 400 Patent. (Id.)

         Plaintiff seeks to disqualify defendants' counsel, Mr. Feller, from representing RTV in this action because Mr. Feller previously represented a different defendant in the case of Tour Technology v. Ice Portal, No. 11 CV 3912 (PKC) (E.D.N.Y. 2011), which allegedly involved the same patent and the same type of infringing activity at issue in this case. (Pl.'s Mem.[1] at 1). According to plaintiff, the prior lawsuit ended in a settlement memorialized in a confidential settlement agreement. (Id.) Plaintiff is concerned that because Mr. Feller was privy to the terms of that confidential settlement agreement, it “may be used by Defendant's counsel, Mr. Feller, to the detriment of Plaintiff Tour Technology, and give Defendant an unfair advantage in negotiation.” (Id. at 2).[2]

         DISCUSSION

         A. Legal Standard

         It is well-settled that the Court's authority to disqualify an attorney stems from its general supervisory power over the attorneys who appear before it. Gerffert Co. v. Dean, No. 09 CV 266, 2011 WL 683963, at *4 (E.D.N.Y. Feb. 16, 2011). “[I]n deciding questions of professional ethics [people] of good will often differ in their conclusions, ” Fund of Funds Ltd. v. Arthur Andersen & Co., 567 F.2d 225, 227 (2d Cir. 1977), and thus the Court has wide discretion in deciding whether to disqualify counsel. See Bobal v. Rensselaer Polytechnic Inst., 916 F.2d 759, 764 (2d Cir. 1990); Hull v. Celanese Corp., 513 F.2d 568, 571 (2d Cir. 1975); Gerffert Co. v. Dean, 2011 WL 683963, at *4. In exercising that discretion, the Court is mindful of its responsibility to “preserve a balance, delicate though it may be, between [the] right to . . . freely chosen counsel and the need to maintain the highest ethical standards of professional responsibility.” Ernie Indus., Inc. v. Patentex, Inc., 478 F.2d 562, 564-65 (2d Cir. 1973).

         A motion to disqualify an attorney is governed by federal law. Acme Am. Repairs, Inc. v. Katzenberg, No. 03 CV 4740, 2007 WL 952064, at *4 (E.D.N.Y. Mar. 29, 2007) (citing Arifi v. De Transp. Du Cocher, Inc., 290 F.Supp.2d 344, 348 (E.D.N.Y. 2003)). The applicable ethical rules are those provided in the New York Rules of Professional Conduct, as interpreted by the United States Supreme Court, the Second Circuit, and this Court. Id. (citing L. Civ. R. 1.5(b)(5)).

         “[A]s a matter of professional responsibility, an attorney owes a duty of loyalty to his client . . . not to divulge confidential communications . . . and not to accept representation of a person whose interests are opposed to the client.” Anderson v. Nassau Cty. Dep't of Corr., 376 F.Supp.2d 294, 297 (E.D.N.Y. 2005) (quoting Ehrich v. Binghamton City Sch. Dist., 210 F.R.D. 17, 23 (N.D.N.Y. 2002)). However, given that disqualification imposes “immediate adverse effect[s] on the client by separating him from counsel of his choice, and that disqualification motions are often interposed for tactical reasons, and inevitably cause delay, ” courts “must demonstrate reluctance” before granting motions for disqualification. Id. (citing Board of Ed. of City of N.Y. v. Nyquist, 590 F.2d 1241, 1246 (2d Cir. 1979)). Disqualification of counsel is “viewed with disfavor in this Circuit . . . because it impinges on parties' rights to employ the counsel of their choice.” Intellipayment, LLC v. Trimarco, No. 15 CV 1566, 2016 WL 1239261, at *4 (E.D.N.Y. Mar. 29, 2016) (citing Stratevest Ltd. v. Rogers, 903 F.Supp. 663, 666 (S.D.N.Y. 1995); Bennett Silvershein Assocs. v. Furman, 776 F.Supp. 800, 802 (S.D.N.Y. 1991)). A “high standard of proof” is thus required to succeed on a motion to disqualify counsel. Id. (quoting Evans v. Artek Sys. Corp., 715 F.2d 788, 791-92 (2d Cir. 1983)); see also Muniz v. Re Spec Corp., 230 F.Supp.3d 147, 152 (S.D.N.Y. 2017) (explaining that motions to disqualify counsel are subject to “strict scrutiny” because of their “potential for abuse as a tactical device”) (quoting Scantek Med., Inc. v. Sabella, 693 F.Supp.2d 235, 238 (S.D.N.Y. 2008)). Moreover, courts have noted that even when made in good faith, motions to disqualify counsel “inevitably cause delay.” Intellipayment, LLC v. Trimarco, 2016 WL 1239261, at *4 (quoting Evans v. Artek Sys. Corp., 715 F.2d at 791-92).

         Thus, “mere speculation” regarding the reasons supporting disqualification are insufficient, and a motion for disqualification should only be granted “if the facts present a real risk that the trial will be tainted.” Muniz v. Re Spec Corp., 230 F.Supp.3d at 152 (quoting Revise Clothing, Inc. v. Joe's Jeans Subsidiary, Inc., 687 F.Supp.2d 381, 388 (S.D.N.Y. 2010); accord Intellipayment, LLC v. Trimarco, 2016 WL 1239261, at *4. Whether to disqualify counsel “is a matter committed to the sound discretion of the district court.” Intellipayment, LLC v. Trimarco, 2016 WL 1239261, at *4 (citing Cresswell v. Sullivan & Cromwell, 922 F.2d 60, 72 (2d Cir. 1990)).

         The standard for disqualification depends on whether the representation is concurrent- meaning the lawyer represents two or more current clients at the same time-or successive- meaning the attorney represents a current client against, or whose interests are adverse to those of, a former client. Hempstead Video, Inc. v. Incorporated Vill. of Valley Stream, 409 F.3d 127, 133 (2d Cir. 2005); see Ehrich v. Binghamton City Sch. Dist., 210 F.R.D. 17, 24 (N.D.N.Y. 2002) (explaining that “[t]he conflict analysis differs depending on whether an attorney is representing interests adverse to a current or former client”). The status of the representation- and thus the test applied by the Court-is determined as of the time the conflict arises, and not at the time the motion for disqualification is filed. Anderson v. Nassau Cty. Dep't of Corr., 376 F.Supp.2d at 298. Concurrent representation, in which an attorney simultaneously represents a client and another party with interests directly adverse to that client, is considered per se improper, and the attorney must be disqualified unless he or she demonstrates “at the very least, that there will be no actual or apparent conflict in loyalties or ...


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