CHRISPENS v. COASTAL REFINING
& MARKETING, INC.
257
DAVIS, Justice
This appeal involves a motion to disqualify
counsel under Model Rules of Professional Conduct (MRPC) 1.9(a) (1994 Kan.Ct.R.Annot. 320) . . . .
Christopher Christian was a member
of the firm of Turner and Boisseau, Chartered, from
1991 to 1993. During this time, he,
along with Eldon Boisseau, represented Coastal
Refining and Marketing, Inc., in several cases involving pipeline leakage or
spills. In September 1993, Christian
left Turner and Boisseau and began working for the
firm of Michaud, Hutton, Fisher & Andersen (Michaud firm). In November 1993, the Michaud firm, with
Christian signing the petition on behalf of plaintiffs Eldon Chrispens, et al, (Chrispens),
filed an action against Coastal Refining and Marketing, Inc., (Coastal)
alleging that its clients were injured by substances that leaked from a
pipeline owned by Coastal.
Before any discovery, Coastal filed
a motion to disqualify Christian pursuant to MRPC 1.9(a), and to disqualify the
Michaud firm pursuant to MRPC 1.10(b). After an evidentiary hearing with
testimony from Eldon Boisseau and Debra Broussard, Coastal's in‑house counsel, the trial court
determined that the Coastal cases upon which Christian worked when a member of
the firm of Turner and Boisseau were not
substantially related to the case in which Christian, as a member of the
Michaud firm, now brought suit against Coastal.
The court held that in the absence of a substantial relationship between
the cases, MRPC 1.9(a) did not prevent Christian from suing his former client,
Coastal. Based on its decision of no
personal conflict, the question of imputed disqualification of the Michaud firm
was resolved against Coastal. . . .
Our discussion centers upon [MRPC
1.9] . . . . The applicable provisions
of MRPC 1.9(a) provide:
A lawyer who has formerly
represented a client in a matter shall not thereafter: (a) represent another
person in the same or a substantially related matter in which that person's
interests are materially adverse to the interests of the former client unless
the former client consents after consultation." (1994 Kan.Ct.R.Annot.
320.) (Emphasis added.)
The trial court determined that
there was not a substantial relationship between the previous cases Christian
worked on while at Turner and Boisseau and the new
case filed by Christian against his former client while working at the Michaud
firm. This conclusion resulted in the
court's denial of the motion for disqualification based upon a conflict of
interest. Our first inquiry, and to a
large extent, the resolution of this appeal, involves a determination of what
is meant by the phrase "substantially related matter" expressed in
MRPC 1.9(a) . . . .
SUBSTANTIALLY
RELATED MATTER
One noted authority has commented
that gallons of ink have been consumed by those who have tried to determine or
explain the test for deciding whether a substantial relationship exists between
representations. ABA/BNA Lawyers' Manual
on Professional Conduct, 51:215. There
is widespread agreement that conflict questions involving former clients should
be resolved through application of the substantial relationship test. However, there is no standard definition of
what the test should compare in determining whether there is a close connection
between the conflicting representations.
ABA/BNA Lawyer's Manual on Professional Conduct, 51:225. The Model Rules do not provide a definition,
nor do the comments to the rules attempt to define the phrase
"substantially related." There
is no
The ABA/BNA Lawyer's Manual on
Professional Conduct, 51:225 notes:
Perhaps the most widely followed
formulation of the substantial relationship test is that it compares the
'matter' or 'subject matter' of the former representation to that of the
current representation. 'Matter' is the
word used in Model Rule 1.9(a), and this word, or the term 'subject matter,' is
a popular means of applying the substantial relationship test.
Three separate approaches regarding
the substantial relationship test have been used throughout the country. The first approach indicates that the
comparison of the former and current representations should center on the facts
of each case. The second approach,
advanced by the Second Circuit, insists that the inquiry should focus on legal
issues and requires the issues involved in the former representation to be
"identical" to or "essentially the same" as those presented
in the current representation. The
relationship under the second approach must be "patently clear." This approach has not been a view widely
adopted. See Nelson, Conflicts in
Representation: Subsequent Representations in a World of Mega Law Firms, 6 Geo.J. Legal Ethics 1023, 1031 (1993). The third approach is set forth in the case
of Westinghouse Elec. Corp. v. Gulf Oil Corp. The Seventh Circuit blends fact and issue
comparisons into a three‑step substantial relationship test:
[D]isqualification
questions require three levels of inquiry.
Initially, the trial judge must make a factual reconstruction of the
scope of the prior legal representation.
Second, it must be determined whether it is reasonable to infer that the
confidential information allegedly given would have been given to a lawyer
representing a client in those matters.
Finally, it must be determined whether that information is relevant to
the issues raised in the litigation pending against the former client.
The substantial relationship test
developed so that a determination of a conflict of interest could be made
without requiring the former client to reveal what confidential information
passed from client to lawyer. The
following quote from T.C. & Theatre Corp. v. Warner Bros. Pictures,
which did not invent the substantial relationship test but is perhaps the case
responsible for popularizing it, highlights the objective of the test: "
'In cases of this sort the Court must ask whether it can reasonably be said
that in the course of the former representation the attorney might have
acquired information related to the subject of his subsequent representation.
If so, then the relationship between the two matters is sufficiently close to
bring the latter representation within the prohibition of Canon 6,' the former‑
client conflicts rule in the ABA Canons of Professional Ethics. Whether using the Model Code or the Model
Rules as their guide, courts follow the same path today." ABA/BNA Lawyer's Manual on Professional
Conduct, 51:226‑27.
Several federal cases interpreting
In Graham v. Wyeth Laboratories,
the Tenth Circuit found that cases were substantially related when the actual
context of the two representations were similar or related. In Koch v. Koch Industries, the United
States District Court defined the term "substantially related" to
mean that the cases "involve the same client and the matters or
transactions in question are relevantly interconnected or reveal the client's
pattern of conduct." . . . In Trone, the
court states: "[T]he underlying concern is the possibility, or appearance
of the possibility, that the attorney may have received confidential
information during the prior representation that would be relevant to the
subsequent matter in which disqualification is sought. The test [under MRPC 1.9(a)
] does not require the former client to show that actual confidences
were disclosed. That inquiry would be
improper as requiring the very disclosure the [MRPC 1.9(a) ]
is intended to protect."
Each case under
both MRPC 1.9(a) . . . must be decided on its unique facts and an
application of the rule to those facts.
This perhaps is another way of saying that the determination of conflict
under MRPC 1.9(a) . . . must be made on a case‑by‑case basis with
the decision to be based on the unique facts and application of the rule to
facts of that case. Factors which courts
have considered in making a determination under MRPC 1.9(a) . . . include: (1) The case involved the same client and the
matters or transactions in question are relevantly interconnected or reveal the
client's pattern of conduct; (2) the
lawyer had interviewed a witness who was key in both cases; (3) the lawyer's knowledge of a former
client's negotiation strategies was relevant;
(4) the commonality of witnesses, legal theories, business practices of
the client, and location of the client were significant; (5) a common subject matter, issues and
causes of action existed; and (6) information existed on the former client's
ability to satisfy debts and its possible defense and negotiation strategies. This is by no means an exhaustive list but
merely reflects that the determination is oftentimes an evaluative
determination by the trial court based upon the unique facts of the case. In some cases, one factor, if significant
enough, may establish that the subsequent case is substantially similar. For example, if the former representation
involved defending the client on a criminal charge and the attorney is
thereafter elected as a prosecutor and then seeks to prosecute the same client
upon a charge connected with the prior defense, the former representation alone
makes the disqualification an easy question.
On the other hand, in cases less
clear, the trial court must balance the previous client's right of
confidentiality, the right of having a reasonable choice of legal counsel, and
the right of lawyers to form new associations and take on new clients when
leaving a previous association. Given
the mobile society we live in and the very real need to preserve professional
integrity as well as the real needs of those citizens who rely upon attorneys
for assistance, the balancing of the competing interests becomes very difficult
at times. Both the wording of the rules
involved and the somewhat elusive test of "substantially related"
provide the court with an opportunity to make a circumspect decision concerning
conflict of interest. We reject the
narrow Second Circuit view, which requires that a substantial relationship must
be patently clear and disqualification is required only when the issues involved
are identical or essentially the same.
We adopt a rule which requires the trial court to make a determination
after considering the facts surrounding the two representations. . . .
BURDEN OF PROOF
. . . MRPC 1.9 deals with the disqualification
of an individual attorney. There is no requirement under this rule as there is
under MRPC 1.10(b) to establish that the attorney gained material and
confidential information during the course of his or her previous employment. As stated in Koch v. Koch Industries,
disqualification under MRPC 1.9(a) is dependent upon the party moving for
disqualification to establish that (1) the attorney whose disqualification is
sought formerly represented them in a matter, (2) the matter is substantially
related to a matter in which the attorney now seeks to represent a new client,
and (3) the new client's interest is substantially adverse to the interest of
the party seeking disqualification. We
hold that the burden of proof under MRPC 1.9(a) is upon the party alleging
conflict and moving for disqualification.
PRESUMPTIONS
The question under MRPC 1.9(a)
regarding presumptions is: Once a matter
has been found to be substantially related under MRPC 1.9(a) and all other
requirements of the rule have been satisfied, does this result in automatic
disqualification of the subject attorney? . . .
The answer to the question posed in
the last paragraph is twofold. First, if
the disqualification motion is advanced solely under MRPC 1.9(a), an irrebuttable presumption arises that in cases
"substantially related," the former client revealed confidential
information requiring the attorney's disqualification. . . .
A. Proceeding Under
MRPC 1.9(a)
Once it has been established that an
attorney has formerly represented a client in a matter and seeks to represent
another client in the same or a substantially related matter in which that
client's interests are materially adverse to the interests of the former
client, an irrebuttable presumption arises that the
attorney acquired confidential information in the former representation and is
disqualified from representing the latter client. MRPC 1.9(a), by its express
terms, provides that an attorney who has represented a client in a matter
"shall not" represent an adverse party in the same or a substantially
related matter. This is consistent with
the substantial relationship test as used in the majority of
jurisdictions. In Koch, the
federal district court stated:
If a substantial relationship is found,
an irrebuttable presumption arises that the former
client revealed facts requiring the attorney's disqualification. The court need not inquire into whether the
confidential information was actually revealed or whether the attorney would be
likely to use the information to the disadvantage of the former client. . . .
To conduct such an inquiry would frustrate the former client's interest in the
confidential information.
We believe the reasoning of Koch
is sound. The reason for this irrebuttable presumption, as noted in Koch, is
rooted in the idea of attorney loyalty:
[MRPC 1.9(a) ]
is a prophylactic rule to prevent even the potential that a former client's
confidences and secrets may be used against him. Without such a rule, clients may be reluctant
to confide completely in their attorneys. Second, the rule is important for the
maintenance of public confidence in the integrity of the bar. [Citation omitted.] Finally, and importantly, a client has a
right to expect the loyalty of his attorney in the matter for which he is
retained.
Where a lawyer has been directly
involved in a specific transaction, subsequent representation of clients with
materially adverse interests in a matter substantially related to the specific
transaction is prohibited. The burden
upon a motion for disqualification under this rule is upon the moving party
asserting the conflict. See MRPC 1.9,
Comment (1994 Kan.Ct.R.Annot. 320‑ 21). . . .
[The court engaged in a lengthy
analysis of the facts involving Christian’s prior representation of Chrispens and the current case]
. CONCLUSION
Coastal's burden under MRPC 1.9(a) was to
show that (1) Christian formerly represented it in a matter, (2) that the
matter is substantially related to the matter in which Christian now seeks to
represent a new client, and (3) that the new client's interests are
substantially adverse to the interests of Coastal.
The essential facts are not in
dispute. As we have stated above, the
trial court's conclusion that the matters were not substantially related is a
question of law subject to de novo review.
Contrary to the trial court's conclusion, we conclude as a matter of law
that the matter between the two representations were
substantially related. We base this
conclusion on the facts that all cases involved the same client; that the matters or transactions in question
are relevantly interconnected and reveal Coastal's
pattern of conduct; that Christian had
interviewed and acquired valuable knowledge of the weaknesses and strengths of
key witnesses who will be key witnesses in the Chrispens
case; that Christian obtained
confidential financial information in representing Coastal concerning the
settlement of a punitive damage claim in the Jerke/Ebenkamp
cases, which information is material and relevant in the Chrispens
case; that Christian gained material,
confidential information of Coastal's negotiations
strategies which may become valuable in the Chrispens
case; that all cases involve the common
subject of pipeline leaks or spills from Coastal's
Wichita refinery; and that the previous
representation by Christian of Coastal terminated less than three months from
the time Christian initiated the Chrispens action
against Coastal.
Reversed and remanded with
directions to grant the motion for disqualification.
««««««««««
1.
Chrispens identifies various approaches to determining whether
a substantial relationship exists. Which
approach (issue or fact-based) seems more appropriate? It appears that the majority is leaning
toward a fact-based approach, which may be more sound since, as the court noted
in Carlson v. Langdon, 751 P.2d 344, 349 (Wyo. 1988), issues frequently
do not develop until long after litigation has been instituted. An approach that considers the factual
context of the matters to determine if they have common facts is more
consistent with the underlying concern that the attorney may have been in a
position to receive confidential information which could possibly be used to
the detriment of the former client in the later proceeding.
2.
Should the test for “substantial relationship” be a strict one, or
should it be fairly liberal? Which
approach does the Chrispens court
take? As noted, some courts require that
the relationship be “patently clear,’ while other courts appear to require
merely that there be an opportunity for “greater
insight” into the affairs of the client.
The courts using a strict approach are usually concerned primarily, if
not exclusively, with protecting confidential information. Those courts using broader tests are
frequently also concerned about appearance of impropriety. How would it look to the public to
allow the attorney to sue his or her former client in this situation? Is this an appropriate consideration? Canon 9 of the Code of Professional
Responsibility provided that a lawyer should avoid the appearance of
impropriety. The Model Rules contain no
such provision. Is appearance of
impropriety an appropriate basis for disqualification where there is little or
no real risk to confidential information?
Courts today are split on this issue. Compare Harker v.
Commissioner of Internal Revenue, 82 F.3d 806.
808-809 (8th Cir. 1996)(not appropriate); President Lincoln Hotel Venture v.
Bank One, 271 Ill. App. 3d 1048, 649 N.E.2d 432, 441 (1994)(appearance of
impropriety “too slender a reed” on which to base disqualification even under
the Code) with First American Carriers, Inc. V. Kroger, 302 Ark. 86, 787
S.W.2d 696 (1990) (test still appropriate); Heringer
v. Haskell, 536 N.W.2d 362, 366-67 (N.D. 1995)(appearance of impropriety
standard “has not been wholly abandoned in spirit.”). At least one court has equated the
appearance of impropriety considerations that appeared in the old Code with
loyalty considerations recognized by the Commentary to the Model Rules. See In re American Airlines, Inc. AMR,
972 F.2d 605, 607-20 (5th Cir. 1992).
3.
As noted, where a court finds a substantial relationship, it will
presume that the attorney has access to confidential information that would be
helpful in the current litigation. Most
courts hold this presumption to be irrebuttable and
require disqualification. See. e.q. Herbes
v. Graham, 180
4. Where an attorney has been
disqualified, most courts will permit that attorney to turn over work product
to new counsel unless actual confidential information is included or other
improper advantage is likely. See, e.g., First Wisconsin
Mortgage Trust v. First Wisconsin Corp., 584 F.2d 201 (7th Cir. 1978) and Canadian
Gulf Lines, Inc. v. Triton International Carriers, Ltd., 434 F. Supp. 691 (D.