American Traffic Solutions, In v. Redflex Traffic Systems, Inc.

Filing 8

Submitted (ECF) Opening brief for review. Submitted by Appellant American Traffic Solutions, Inc. in 10-16419, Appellee American Traffic Solutions, Inc. in 11-15519. Date of service: 04/25/2011. [7729260] [10-16419, 11-15519] (LL)

UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT

AMERICAN TRAFFIC SOLUTIONS, INC.,
Plaintiff/Appellant/Cross-Appellee,

No. 10-16419, No. 11-15519
D.C. No. 2:08-cv-02051-FJM
District of Arizona, Phoenix

v.
REDFLEX TRAFFIC SYSTEMS, INC.,

APPELLANT’S OPENING BRIEF

Defendant/Appellee/Cross-Appellant.

Lynne Liberato
Mark Trachtenberg
Polly Graham
HAYNES AND BOONE, LLP
1221 McKinney Street, Suite 2100
Houston, Texas 77010-2007
Telephone: [phone]
Telecopier: [phone]

Michael D. Myers
Robert H. Espey II
Randy J. McClanahan
MCCLANAHAN MYERS ESPEY, L.L.P.
3355 West Alabama, Suite 210
Houston, Texas 77098
Telephone: [phone]
Telecopier: [phone]

Counsel for Plaintiff/Appellant/Cross-Appellee,
American Traffic Solutions, Inc.

CORPORATE DISCLOSURE STATEMENT
Appellant American Traffic Solutions, Inc. states that it is a Kansas
corporation and a wholly-owned subsidiary of ATS Consolidated Inc.

-i-

TABLE OF CONTENTS
CORPORATE DISCLOSURE STATEMENT ......................................................... i
TABLE OF CONTENTS.......................................................................................... ii
TABLE OF AUTHORITIES .................................................................................... v
STATEMENT OF JURISDICTION...................................................................... viii
INTRODUCTION ................................................................................................... ix
ISSUES PRESENTED FOR REVIEW ................................................................... xi
RULES ADDENDUM............................................................................................ xii
STATEMENT OF THE CASE................................................................................. 1
STATEMENT OF FACTS ....................................................................................... 2
A.

In 2003, Greenberg facilitated a strategic partnership between
ATS and Mulvihill that culminated in a corporate merger .................. 2

B.

After the merger, Greenberg was eager to expand its
relationship with ATS .......................................................................... 3

C.

Greenberg continued to provide legal services to ATS and
Mulvihill until early 2006 .................................................................... 5

D.

ATS’s former attorney is a shareholder at Greenberg ......................... 6

E.

In 2008, Greenberg switched sides and began representing
ATS’s principal competitor, Redflex ................................................... 6

F.

The district court erroneously denied ATS’s pretrial motion to
disqualify Greenberg ............................................................................ 7

G.

Contract procurement issues were hotly disputed at trial .................... 8

- ii -

H.

The record reveals multiple instances where confidential
information was potentially at issue..................................................... 9

STANDARD OF REVIEW .................................................................................... 11
SUMMARY OF THE ARGUMENT ..................................................................... 12
ARGUMENT AND AUTHORITIES..................................................................... 14
I.

Arizona law governs the disqualification inquiry ........................................ 14

II.

The district court abused its discretion in failing to disqualify
Greenberg because disqualification is mandatory when an attorney
acts adversely to a former client in a substantially related matter ............... 14
A.

The district court properly held that Greenberg had an attorneyclient relationship with ATS .............................................................. 15

B.

The district court abused its discretion in finding that
Greenberg’s past and present representations were not
“substantially related” ........................................................................ 17
1.

The district court failed to adequately analyze the
relationship between Greenberg’s past and present
representations ..........................................................................18

2.

Greenberg violated its duty of loyalty ......................................20
a.

Greenberg’s past and present representations
share a common factual background ..............................20

b.

Greenberg’s past and present representations
involve an identical issue................................................22

3.
4.
III.

Greenberg violated its duty of confidentiality ..........................23
Redflex’s counter-argument fails to withstand scrutiny...........25

The district court abused its discretion by disregarding relevant
evidence ........................................................................................................ 27
- iii -

A.

B.

ATS submitted proper rebuttal evidence.............................................29

C.

There is no ground in the record for refusing to consider
ATS’s evidence ...................................................................................30

D.

IV.

The district court based its decision on an erroneous legal
standard............................................................................................... 28

ATS suffered prejudice from the district court’s improper
exclusion of evidence ..........................................................................32

ATS is entitled to a new trial ........................................................................ 32

CONCLUSION AND PRAYER ............................................................................ 35
STATEMENT OF RELATED CASES .................................................................. 36
CERTIFICATE OF COMPLIANCE...................................................................... 37
CERTIFICATE OF SERVICE ............................................................................... 38

- iv -

TABLE OF AUTHORITIES
CASES
Ahanchian v. Xenon Pictures, Inc.,
624 F.3d 1253 (9th Cir. 2010) .................................................................................29
Analytica Inc. v. NPD Research, Inc.,
708 F.2d 1263 (7th Cir. 1983) .................................................................................25
Braggs v. Arpaio,
373 Fed. Appx. 680 (9th Cir. 2010).........................................................................28
Cal. Med. Ass’n v. Shalala,
207 F.3d 575 (9th Cir. 2000.....................................................................................31
Chugach Elec. Ass’n v. United States Dist. Ct.,
370 F.2d 441 (9th Cir. 1966) ........................................................................... passim
City of Whitewater v. Baker,
299 N.W.2d 584 (Wis. Ct. App. 1980) ....................................................................33
In re County of Los Angeles,
223 F.3d 990 (9th Cir. 2000) ...................................................................................14
Doe v. Reed,
586 F.3d 671 (9th Cir. 2009) ...................................................................................28
Emle Indus., Inc. v. Glen Raven Mills, Inc.,
478 F.2d 562 (2d Cir. 1973)........................................................................ 22, 23, 34
Foulke v. Knuck,
784 P.2d 723 (Ariz. Ct. App. 1989)................................................................. passim
Gadda v. State Bar of Cal.,
511 F.3d 933 (9th Cir. 2007) ...................................................................................28
Lane v. Dep’t of the Interior,
523 F.3d 1128 (9th Cir. 2008) .................................................................................30

-v-

Miller v. CMG Worldwide Inc.,
454 F.3d 975 (9th Cir. 2006) ...................................................................... 28, 29, 30
Miller v. Hambrick,
905 F.2d 259 (9th Cir. 1990) ...................................................................................30
Morford v. Morford,
619 N.E.2d 71 (Ohio Ct. App. 1993).......................................................................33
In re Murphy,
936 P.2d 1269 (Ariz. 1997)......................................................................................15
Norman v. Norman,
970 S.W.2d 270 (Ark. 1998)....................................................................................33
Obrey v. Johnson,
400 F.3d 691 (9th Cir. 2005) ...................................................................................32
Okeani v. Superior Court,
871 P.2d 727 (Ariz. Ct. App. 1993).........................................................................22
Otaka, Inc. v. Klein,
791 P.2d 713 (Haw. 1990) ...................................................................................... 24
Peters v. The Lincoln Elec. Co.,
285 F.3d 456 (6th Cir. 2002) ...................................................................... 28, 29, 30
In re Petrie,
742 P.2d 796 (Ariz. 1987)........................................................................................15
State v. Hursey,
861 P.2d 615 (Ariz. 1993)..................................................................... 18, 32, 33, 34
Thomas v. Municipal Court,
878 F.2d 285 (9th Cir. 1989) ............................................................................ 22, 23
Trone v. Smith,
621 F.2d 994 (9th Cir. 1980) ........................................................................... passim

- vi -

Tuscon Women’s Ctr. v. Ariz. Med. Bd.,
666 F. Supp. 2d 1091 (D. Ariz. 2009) .....................................................................30
United States v. Wheat,
813 F.2d 1399 (9th Cir. 1987) .................................................................................17
Westinghouse Elec. Corp. v. Gulf Oil Corp.,
588 F.2d 221 (7th Cir. 1978) ............................................................................ 11, 12
STATUTES AND RULES
15 U.S.C. § 1117......................................................................................................36
15 U.S.C. § 1121.................................................................................................... viii
15 U.S.C. § 1125(a) ............................................................................................... viii
28 U.S.C. § 1291.................................................................................................... viii
28 U.S.C. § 1331.................................................................................................... viii
28 U.S.C. § 1338.................................................................................................... viii
28 U.S.C. § 1367.................................................................................................... viii
FED. R. APP. P. 4(a)(1) ........................................................................................... viii
MODEL R. PROF’L CONDUCT 1.9(a)......................................................................... 14
ARIZ. R. PROF’L CONDUCT 1.9 .......................................................................... 17, 22
ARIZ. R. PROF’L CONDUCT 1.9(a)............................................................................ 14
ARIZ. R. PROF’L CONDUCT 1.10(a).......................................................................... 15
ARIZ. R. PROF’L CONDUCT 1.10(b) ......................................................................... 15
Local Rules of Practice, Arizona Dist. Ct. 83.2(e) ................................................ viii

- vii -

STATEMENT OF JURISDICTION
The district court had jurisdiction over this case pursuant to 15 U.S.C. §
1121 and 28 U.S.C. §§ 1331, 1367 and 1338 because the suit arises under the
Lanham Act, 15 U.S.C. § 1125(a). The district court entered a final judgment
disposing of all claims on May 28, 2010. (ER:2.) ATS filed a timely notice of
appeal on June 28, 2010, within thirty days after the entry of final judgment.
(ER:1); Fed. R. App. P. 4(a)(1). This Court has appellate jurisdiction under 28
U.S.C. § 1291.

- viii -

INTRODUCTION
This appeal is about a law firm that violated its duty of loyalty and
confidentiality to a former client by switching sides and representing its chief
competitor in a matter substantially related to its earlier representation. The parties
to the underlying lawsuit – Plaintiff American Traffic Solutions, Inc. (“ATS”) and
Defendant Redflex Traffic Systems, Inc. (“Redflex”) – are two leading providers
of traffic enforcement services. They provide red light and speed camera
enforcement programs in cities and towns throughout the United States and
frequently submit rival proposals for government contracts.
In this lawsuit, ATS alleged that Redflex improperly procured traffic
enforcement contracts by falsely advertising radars that were not certified by the
Federal Communications Commission (“FCC”). Redflex is represented by
Greenberg Traurig, LLP (“Greenberg”). However, before this lawsuit was filed,
Greenberg represented ATS and its wholly-owned subsidiary Mulvihill Intelligent
Control Systems, Inc. (“Mulvihill”) for over two years in contract procurement
matters.
The Honorable Frederick Martone denied ATS’s prompt motion to
disqualify its former counsel and Greenberg represented Redflex through a weeklong trial on the merits (“Redflex I”). Moreover, after months of discovery in this
case, Greenberg proceeded to represent Redflex in a separate mirror-image lawsuit

- ix -

against ATS until Greenberg was finally disqualified by the Honorable Susan
Bolton in that action (“Redflex II”). (ER:32.) This Court denied Greenberg’s
petition for writ of mandamus. (ER:33.) The district court’s erroneous failure to
disqualify Greenberg below requires remand and a new trial.

-x-

ISSUES PRESENTED FOR REVIEW
(1) Did the district court abuse its discretion by denying ATS’s motion to
disqualify Greenberg, considering that:
a.

both the court below and another district court have found that ATS
and Greenberg had a prior attorney-client relationship,

b.

undisputed evidence shows that Greenberg received confidential
information in connection with that relationship, and

c.

there is a significant factual overlap between Greenberg’s prior
attorney-client relationship with ATS and the issues in the underlying
lawsuit?

(2) Did the district court abuse its discretion by failing to consider relevant and
timely evidence attached to ATS’s reply memorandum in support of its motion
for disqualification?

- xi -

RULES ADDENDUM
Pursuant to Circuit Rule 28-2.7, Appellant ATS has included a rules
addendum at the end of this brief.

- xii -

STATEMENT OF THE CASE
Nature of the Case: This case arises from Redflex’s use of uncertified radars
in obtaining traffic enforcement contracts over ATS’s competition. ATS sued
Redflex for false advertising under the Lanham Act, tortious interference with
business expectancy, and unjust enrichment, alleging that it would have obtained
these traffic enforcement contracts but for Redflex’s false statements. (ER:5.)1
Course of Proceedings: In December 2008, ATS filed a motion to disqualify
Greenberg, arguing that Greenberg formerly represented ATS in substantially
related matters. (ER:6-9.) Redflex submitted a response, ATS filed a reply, and
Redflex filed a motion to strike the reply or, in the alternative, a sur-reply. (ER:1122.) On March 20, 2009, Judge Martone denied the motion to disqualify without
oral argument, disregarding ATS’s reply evidence. (ER:4.) The case proceeded to
trial and on May 27, 2010, the jury rendered a verdict for Redflex. (ER:3.) After
trial, Redflex filed a motion for attorneys’ fees and non-taxable costs. (R:322.)
Disposition of the Case: On May 28, 2010, the court entered a take nothing
judgment in favor of Redflex pursuant to the jury’s verdict. (ER:2.) On February
28, 2011, the court denied Redflex’s motion for attorneys’ fees. (R:354.) Both
parties appealed and the appeals were consolidated by this Court. (ER:1; R:356.)

1

Appellant’s Excerpts of Record are cited as: “ER:[tab] at [page/paragraph].” The Record on Appeal
is cited as: “R:[Docket Entry Number] at [page/paragraph].”

-1-

STATEMENT OF FACTS
The central question in this appeal is whether the district court should have
disqualified Greenberg from representing Redflex in the underlying false
advertising suit brought by ATS – Redflex’s chief competitor and Greenberg’s
former client.
A.

In 2003, Greenberg facilitated a strategic partnership between ATS
and Mulvihill that culminated in a corporate merger.
ATS’s relationship with Greenberg began in connection with ATS’s

strategic partnership with, and subsequent acquisition of, Mulvihill. Mulvihill is
also in the business of providing traffic enforcement services. (ER:7 ¶¶ 2-3.)
In late 2003, Mulvihill contracted with ATS to provide equipment and
services for a traffic enforcement contract with the New York Department of
Transportation. (ER:7 ¶ 2; 10 at 2.) As a result, Mulvihill’s former supplier
threatened to bring a lawsuit to block Mulvihill from using any ATS product in
connection with the New York contract. (ER:7 ¶ 2; 10 at 2.) Mulvihill retained
Greenberg to handle the dispute and facilitate a strategic partnership with ATS.
(ER:7 ¶ 2.) Greenberg attorney John Mascialino held multiple meetings with
officers from both ATS and Mulvihill to discuss, among other things, the
companies’ contract procurement efforts in the United States. (ER:10 at 2; 7 ¶ 6.)
The partnership continued throughout 2004. (ER:7 ¶ 3.) ATS provided
equipment and services that allowed Mulvihill to obtain public procurement

-2-

contracts in New York and Pennsylvania. (Id.) During this time, the companies
often worked together and shared confidential information with counsel in their
efforts to secure additional contracts. (Id.) In late 2004, they began negotiations for
a corporate merger. (Id.) Greenberg was fully aware of the pending acquisition
when it entered into an amended retainer letter with Mulvihill in February 2005 to
provide ongoing maintenance and services related to a traffic enforcement contract
in Philadelphia. (ER:7 ¶ 4; 9.)
One month later, ATS completed its acquisition of Mulvihill and the
companies’ operations were quickly integrated. (ER:7 ¶ 5; 18 ¶ 3.) Mulvihill is
now a wholly-owned subsidiary of ATS.
B.

After the merger, Greenberg was eager to expand its relationship with
ATS.
Greenberg continued to represent both ATS and Mulvihill after the merger

and made no distinction between the companies when providing legal services.
(ER:18 ¶ 3; 7 ¶ 7.) By May 2005, ATS needed legal assessments concerning red
light and speed enforcement issues in a number of key states. (ER:9; 7 ¶ 7.) In this
regard, Greenberg attorneys John Mascialino and Sean Reilly traveled to ATS’s
offices in Scottsdale, Arizona, where ATS’s principal officers disclosed “highly
confidential and propriety matters” concerning ATS’s business goals, field
operations, financing, product pricing and other related topics. (ER:7 ¶ 7-8; 16 ¶ 7.)
Jim Tuton, ATS’s Chief Executive Officer, testified that he revealed confidential
-3-

information that “I would never want to be known to a competitor or a
competitor’s attorneys.” (ER:7 ¶ 8.)
Within a week after the meeting, Mascialino wrote to Tuton: “It was great
meeting the ATS team last week. Sean and I are excited about the growth potential
for our business and social relationships.” (ER:9.) Tuton responded with a list of
“action items” concerning legal work related to procuring traffic enforcement
contracts. (Id.) In connection with this list, Tuton promised to provide Greenberg
with, among other things: (1) a recent Florida red light camera legal opinion, (2) a
list of key states where ATS would require a legal opinion for red light camera and
speed camera enforcement, and (3) a list of key points that any legal opinion
should cover. (Id.) This information was sent to Sean Reilly, Tuton’s primary
contact at Greenberg. (ER:19 ¶ 3.)
Tuton testified that during these meetings it was his “expectation and
understanding” that Greenberg was acting as counsel to both ATS and Mulvihill.
(ER:7 ¶ 8.) Tuton also emphasized: “At no time did Greenberg indicate they were
only representing Mulvihill, even after we started discussing confidential ATS
matters, and they did not indicate to me that ATS should avoid disclosing
confidential information related to ATS.” (Id.)

-4-

C.

Greenberg continued to provide legal services to ATS and Mulvihill
until early 2006.
Greenberg’s relationship with ATS and Mulvihill continued into 2006.

(ER:7 ¶ 9.) During this time, Greenberg performed legal services related to public
procurement issues and disputes. (Id.) These services included: (1) ongoing
maintenance and contract-related assistance for Mulvihill’s Pennsylvania contract,
(2) lobbying efforts on behalf of both Mulvihill and ATS in Pennsylvania, and (3)
an opinion letter regarding expanding ATS’s traffic enforcement contract in New
York City. (ER:7 ¶ 9; 10 at 2.) In particular, Greenberg’s work in Pennsylvania
encompassed bidding and procurement issues that were similar to the issues
involved in the current dispute. (ER:7 ¶ 10.)
Greenberg obtained confidential information from ATS while rendering
these services. For example, Greenberg attorney Sean Reilly was involved in the
negotiation of a contract with the Philadelphia Parking Authority. (ER:18 ¶ 4.) The
negotiations necessitated numerous conference calls with executives from ATS and
Mulvihill. (Id. ¶ 5.) During these conference calls, ATS disclosed confidential
information concerning: (1) the technical operation of its cameras, (2) corporate
operations, and (3) strategies for using red light camera contracts to procure
contracts for speed cameras. (ER:18 ¶¶ 6-7; 19 ¶¶ 4-6.) Most importantly, ATS
specifically revealed its business strategies for procuring contracts over its
principal competitor – Redflex. (ER:18 ¶ 8; 19 ¶ 6.)
-5-

D.

ATS’s former attorney is a shareholder at Greenberg.
John Mascialino – who never disputed receiving confidential information

from ATS and Mulvihill – has been a shareholder in Greenberg since 2003,
including the period during which Greenberg represented Redflex in this lawsuit.
(ER:16; 6 at 3 n.3.) Sean Reilly was Of Counsel with Greenberg from 2002 until
2006, when he became President and Chief Executive Officer of a government
relations firm. (ER:18 ¶ 3.) He has continued to represent ATS since 2003. (Id.)
E.

In 2008, Greenberg switched sides and began representing ATS’s
principal competitor, Redflex.
Greenberg ended its representation of ATS and Mulvihill in March 2006.

(ER:7 ¶ 9.) Then, less than three years later, Greenberg switched sides and began
defending ATS’s principal competitor – Redflex – against a bid protest filed by
ATS. (ER:10.) The protest grew out of competition for a statewide speed
enforcement contract in Arizona – the first of its type in the country. (R:330 at 189;
ER:10.) Arizona rolled out its program in two stages: a pilot program and a
statewide contract. (R:330 at 189.) In both stages, ATS and Redflex were the only
qualified bidders to submit proposals and Redflex won both contracts. (R:330 at
194, 197, 200, 203.) ATS’s protest of these contract awards was the beginning of a
dispute that ultimately led to this lawsuit. (R:330 at 153-54.)
ATS promptly sent Greenberg a detailed letter asking it to withdraw from
representing Redflex in the bid protest. (ER:10.) Greenberg refused.

-6-

F.

The district court erroneously denied ATS’s pretrial motion to
disqualify Greenberg.
ATS moved to disqualify Greenberg within two months of bringing the

underlying lawsuit and before any other substantive motions were filed. (ER:5-6.)
Redflex opposed the motion but never denied that Greenberg received confidential
information relating to ATS’s procurement policies and business strategies.
(ER:11; 16.) Redflex simply pointed out that Greenberg’s past representation of
ATS was limited to red light camera contracts. (ER:11 at 6.) Redflex believed this
fact was significant because the present dispute involves a radar used only in speed
cameras; however, Redflex never explained why this distinction was meaningful
and never denied that ATS’s procurement policies and procedures were relevant to
this lawsuit. (ER:6 at 7; 11 at 3.)
The district court disregarded pertinent evidence attached to ATS’s reply
memorandum and – choosing not to rely on Redflex’s distinction between red light
and speed cameras – denied the motion to disqualify on a ground first raised in
Redflex’s sur-reply. (ER:20 at 5; 4 at 1, 3-4.) The court concluded, in a cursory
analysis, that this lawsuit dealt only with Redflex’s traffic equipment and,
therefore, was not related to the information that Greenberg obtained about ATS’s
equipment in its past representation:
Even if we assume that red light cameras and speed cameras are
related, plaintiff has failed to show that information obtained by
Greenberg would materially advance defendants’ position in this
-7-

action. The current litigation involves claims that Redflex made false
or misleading statements regarding the radars used in its speed
enforcement cameras. The focus of this action is on the equipment
manufactured by Redflex and is not “substantially related” to the work
that Greenberg provided for Mulvihill.
(ER:4 at 3-4.) However, the focus at trial was not exclusively on Redflex’s
equipment. Rather, ATS’s ability to procure traffic enforcement contracts was
vigorously disputed by the parties – just as ATS anticipated in its motion to
disqualify. (ER:6 at 7-8.)
G.

Contract procurement issues were hotly disputed at trial.
ATS brought suit against Redflex for false advertising under the Lanham

Act, tortious interference with business expectancy, and unjust enrichment. (ER:5.)
ATS alleged that Redflex improperly obtained traffic enforcement contracts in
eleven different jurisdictions by advertising radars that were not certified by the
FCC. (ER:5 ¶¶ 15-17; R:330 at 88-89.) ATS claimed that it would have procured
these coveted contracts in the absence of Redflex’s false advertising. (ER:5 ¶¶ 10,
11, 28, 30, 49; R:330 at 106.)
Contract procurement issues permeated the trial. The evidence suggested:
• Redflex had been trying to obtain FCC certification for its
radars for years. (R:331 at 333-46; 332 at 351-76.)
• Redflex illegally imported uncertified radars because it urgently
needed these radars to meet its deadlines in the Arizona
statewide project. (R:332 at 378-80, 383-86; R:334 at 633-34;
R:333 at 519, 527-28; PX174.)

-8-

• Redflex falsely advertised that it was in compliance with
federal guidelines. (See, e.g., R:330 at 196-97, 204-05; PX81;
PX168.)
• Certain types of certification can be a “huge differentiator” in
customers’ purchasing decisions and can potentially cause one
bidder to win a contract over another. (R:330 at 190-91; 334 at
615-16; PX27.)
• Securing a traffic enforcement contract can result in decades of
benefits because there are high barriers to switching vendors.
(R:330 at 142-44, 173.)
Despite this evidence, the jury ultimately rendered a verdict for Redflex. (ER:3.)
However, Greenberg’s representation of Redflex prejudiced ATS’s case before the
jury even began its deliberations.
H.

The record reveals multiple instances where confidential information
was potentially at issue.
Redflex strongly disputed ATS’s allegations that it was harmed by Redflex’s

advertisement of uncertified radars. On cross-examination, Greenberg questioned,
among other things, the integrity of ATS’s advertisements, the credibility of ATS’s
witnesses, the margin of ATS’s profits, and the ability of ATS to implement
successful traffic enforcement programs. Specific examples are set forth below.
First, Redflex attacked the accuracy of ATS’s contract proposals,
specifically ATS’s representation that “the ATS system is a hundred percent
American made.” (ER:23.) During cross-examination, Greenberg questioned Tuton
regarding where the components in ATS’s radars were manufactured. (Id.) These
allegations – during this case – morphed into Redflex II, a full-blown countersuit
-9-

in which Judge Bolton finally disqualified Greenberg from litigating against ATS
and this Court denied Greenberg’s mandamus petition challenging the merits of
that decision. (ER:32-33.).
Second, Greenberg cross-examined ATS about the characteristics of its ZAX
photo enforcement radar. (ER:24.) ATS had been using the ZAX radar since at
least 1994, including the period during which Greenberg represented ATS. (Id.)
Greenberg insinuated on cross-examination that ATS falsely advertised the ZAX
radar. (Id.) Only several years before, ATS revealed confidential information to
Greenberg attorneys about the technical operation of its cameras and its contract
procurement efforts. (ER:18 ¶¶ 6-7; 19 ¶¶ 4-6; 7 ¶¶ 3, 6-8.)
Third, Greenberg attacked Tuton’s credibility, focusing particularly on the
extent of his personal experience in certifying radars. (ER:25.) Despite Tuton’s
twenty years experience in the industry, Greenberg suggested that he did not have
sufficient qualifications to testify on the topic of Redflex’s FCC certification
efforts. (Id.) Roughly five years before this thorough cross-examination, Tuton had
personally sat down with Greenberg lawyers and revealed highly confidential
information about ATS. (ER:7 ¶¶ 7-8; 16 ¶ 7.)
Fourth, Greenberg cross-examined ATS about its profit margin on photo
enforcement contracts. (ER:26-27.) Again, only several years earlier, ATS sat

- 10 -

down with Greenberg lawyers and revealed confidential information relevant to
profitability, including financing and product pricing. (ER:7 ¶¶ 7-8; 16 ¶ 7.)
Fifth, Greenberg questioned ATS’s ability to implement a successful and
profitable traffic enforcement program in Arizona. Redflex lost money on the
Arizona statewide contract. (R:330 at 205.) However, Tuton testified to steps and
advice that ATS would have given the Arizona Department of Public Safety
(“Arizona DPS”) to avoid the troubles that Redflex ultimately faced. (ER:28; see
also R:334 at 639-41.) Greenberg questioned ATS’s ability to implement these
policies given the Arizona DPS’s control over the project. (ER:29.) Additionally,
Tuton testified that, if Redflex were not a competitor, its standard pricing would
have been substantially higher – an assertion that Greenberg also questioned on
cross-examination. (ER:30-31.)
STANDARD OF REVIEW
An order denying disqualification is reviewed for an abuse of discretion.
Trone v. Smith, 621 F.2d 994, 999 (9th Cir. 1980); Foulke v. Knuck, 784 P.2d 723,
730 (Ariz. Ct. App. 1989). A district court abuses its discretion if it misperceives
the rule of law or fails “to give adequate consideration to the nature and scope of
[an attorney’s] prior representation.” Trone, 621 F.2d at 999. “Doubts as to the
existence of an asserted conflict of interest should be resolved in favor of
disqualification.” Westinghouse Elec. Corp. v. Gulf Oil Corp., 588 F.2d 221, 225

- 11 -

(7th Cir. 1978) (citing Chugach Elec. Ass’n v. United States Dist. Ct., 370 F.2d
441, 444 (9th Cir. 1966)).
SUMMARY OF THE ARGUMENT
The district court’s cursory analysis of the factual relationship between
Greenberg’s past representation of ATS and its current representation of Redflex
failed to take into account timely and relevant evidence and failed to appreciate or
protect the important ethical duties underlying the disqualification rules. In
committing these errors, the district court abused its discretion for four
independent reasons.
First, the district court failed to engage in any analysis of whether the type
of information Greenberg received during its past representation of ATS could
have been of some value in defending against ATS’s claims in this lawsuit. The
district court simply noted that this case involves Redflex’s equipment – as
opposed to ATS’s equipment – and thus could not be substantially related to
Greenberg’s past representation. This Court has repeatedly rejected this type of
superficial analysis.
Second, a proper inquiry establishes, as a matter of law, that the issues and
information pertinent to Greenberg’s two representations are closely related and, in
some instances, identical. Contract procurement issues, including ATS’s ability to
procure contract’s over Redflex’s competition, arose in both of Greenberg’s

- 12 -

representations. The duty of loyalty prevents lawyers from switching sides in
substantially related cases.
Third, the record reveals multiple instances where there is a reasonable
probability that Greenberg could have used confidential information obtained
during its past representation of ATS to advance Redflex’s defense. Redflex delved
into matters related to the accuracy of ATS’s contract proposals, the components of
its cameras, its profit margins and product pricing, and its ability to successfully
implement traffic enforcement programs.
Fourth, the district court applied an erroneous legal standard to disregard
ATS’s relevant and timely reply evidence. This evidence directly rebuts arguments
raised for the first time in Redflex’s response memorandum and underscores the
importance of contract procurement matters in both representations. There are no
grounds in the record upon which the district court could exclude this evidence and
this Court is free to consider it on appeal.
Where the district court abuses its discretion by failing to disqualify
opposing counsel, prejudice is presumed. Accordingly, for all of these reasons, this
Court should grant ATS its only viable remedy – a new trial.

- 13 -

ARGUMENT AND AUTHORITIES
I.

Arizona law governs the disqualification inquiry.
This Court applies state law in determining matters of disqualification. In re

County of Los Angeles, 223 F.3d 990, 995 (9th Cir. 2000); see also Local Rules of
Practice, Arizona Dist. Ct. 83.2 (e). Thus, the Court is bound to follow the views of
the Arizona Supreme Court on disqualification. In re County of Los Angeles, 223
F.3d at 995. However, Arizona, like many other jurisdictions, bases its
disqualification rules on the Model Rules of Professional Conduct. Compare ARIZ.
R. PROF’L CONDUCT 1.9(a) with MODEL RULE 1.9(a). Accordingly, courts from a
range of jurisdictions have interpreted the same disqualification standard and,
when harmonized with Arizona precedent, provide persuasive authority.
II.

The district court abused its discretion in failing to disqualify
Greenberg because disqualification is mandatory when an attorney acts
adversely to a former client in a substantially related matter.
The Arizona ethics rules are direct and unequivocal: “A lawyer who has

formerly represented a client in a matter shall not thereafter 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
gives informed consent, confirmed in writing.” ARIZ. R.

OF

PROF’L CONDUCT

1.9(a) (emphasis added); Trone v. Smith, 621 F.2d 994, 1001 (9th Cir. 1980)
(“disqualification is required when lawyers change sides in factually related
cases”); Foulke v. Knuck, 784 P.2d 723, 728-29 (Ariz. Ct. App. 1989). A conflict
- 14 -

on behalf of one lawyer is imputed to an entire firm. ARIZ. R. OF PROF’L CONDUCT
1.10(a); Trone, 621 F.2d at 999; In re Murphy, 936 P.2d 1269, 1273 (Ariz. 1997).
Moreover, even after an attorney leaves a firm, the firm is prohibited from
accepting adverse representation in a substantially related matter where any lawyer
remaining at the firm has relevant confidential information. ARIZ. R.

OF

PROF’L

CONDUCT 1.10(b).
Thus, disqualification under Rule 1.9(a) is mandatory if a movant: (1)
establishes the existence of an attorney-client relationship, and (2) demonstrates
that a former representation is “substantially related” to current litigation. See
Foulke, 784 P.2d at 726-27. ATS satisfied both parts of this test.
A.

The district court properly held that Greenberg had an attorneyclient relationship with ATS.

The court below – like Judge Bolton in Redflex II – properly held that
Greenberg had a past attorney-client relationship with ATS. (ER:4 at 3; 32.) An
attorney-client relationship is proven “by showing that the party sought and
received advice and assistance from the attorney in matters pertinent to the legal
profession.” In re Petrie, 742 P.2d 796, 800 (Ariz. 1987); see also Foulke, 784
P.2d at 726. The test is subjective, and requires consideration of the circumstances
under which confidences were divulged and whether the client believed an
attorney-client relationship existed. See In re Petrie, 742 P.2d at 801; Foulke, 784
P.2d at 726.
- 15 -

Considering these factors, the evidence of an attorney-client relationship is
overwhelming. It is undisputed that ATS revealed confidential information to
Greenberg in the course of seeking legal advice. (ER:7; 16.) It is also undisputed
that ATS subjectively believed it was represented by Greenberg. (ER:7 ¶ 8.) Jim
Tuton testified: “[I]t was my expectation and understanding that Greenberg was
acting as counsel to both ATS and Mulvihill, since we discussed confidential
information related to both parties.” (Id.) Furthermore, the evidence suggested that
Greenberg believed it was representing ATS. After traveling to ATS’s Arizona
offices, Greenberg attorney John Mascialino stated: “It was great meeting the ATS
team last week. Sean and I are excited about the growth potential for our business
and social relationships.” (ER:9.)
Even assuming that this evidence was not sufficient to support the district
court’s finding, ATS also submitted a rebuttal declaration from Greenberg attorney
Sean Reilly unequivocally stating: “[B]oth Mulvihill and ATS were my clients.”
(ER:18 ¶ 3.) As set forth in Part III below, the district court abused its discretion by
excluding this reply evidence and it is proper for this Court to consider it on
appeal. Accordingly, for the foregoing reasons, the district court correctly
concluded that ATS entered into an attorney-client relationship with Greenberg.

- 16 -

B.

The district court abused its discretion in finding that
Greenberg’s past and present representations were not
“substantially related.”

The district court erred in concluding that Greenberg’s past representation of
ATS was not substantially related to the underlying lawsuit. Matters are
“substantially related” if “they involve the same transaction or legal dispute or if
there otherwise is a substantial risk that confidential factual information as would
normally have been obtained in the prior representation would materially advance
the client’s position in the subsequent matter.” ARIZ. R.

OF

PROF’L CONDUCT 1.9

cmt. 3 (emphasis added). “The relationship is measured by the allegations in the
complaint and by the nature of the evidence that would be helpful in establishing
those allegations. Id. at 1000.
This Court has long interpreted the “substantial relationship” test to protect
two distinct duties to former clients: (1) the duty of loyalty, and (2) the duty of
confidentiality. Trone, 621 F.2d at 998-1001; see also United States v. Wheat, 813
F.2d 1399, 1403 n.1 (9th Cir. 1987); ARIZ. R. OF PROF’L CONDUCT 1.9. The duty of
loyalty prevents lawyers from switching sides in substantially related cases. Trone,
621 F.2d at 998-99; ARIZ. R. OF PROF’L CONDUCT 1.9. The duty of confidentiality
requires lawyers to preserve clients’ “secrets and confidences.” Trone, 621 F.2d at
998. Violation of either of these duties requires disqualification.

- 17 -

Thus, the “substantial relationship” test can be satisfied in two different
ways. First, to protect the duty of loyalty, the substantial relationship test is met if
the representations are “interlinked by reason of common factual background.” Id.
at 998, 1000; see also Foulke v. Knuck, 784 P.2d 723, 727 (Ariz. Ct. App. 1989).
Second, to enforce the duty of confidentiality, a substantial relationship is
presumed where there is a “reasonable probability that confidences were disclosed
which could be used against the client in later, adverse representation.” Trone, 621
F.2d at 998; see also State v. Hursey, 861 P.2d 615, 617 (Ariz. 1993).
Here, the district court abused its discretion by failing to adequately analyze
the relationship between Greenberg’s two representations under these tests. A
proper inquiry establishes, as a matter of law, that Greenberg violated both its duty
of loyalty and confidentiality by representing Redflex below.
1.

The district court failed to adequately analyze the
relationship between Greenberg’s past and present
representations.

The district court failed to engage in any meaningful analysis of the factual
relationship between Greenberg’s past representation of ATS and its current
representation of Redflex. The court’s analysis is encompassed in one sentence:
“The focus of this action is on the equipment manufactured by Redflex and is not
‘substantially related’ to the work that Greenberg provided for Mulvihill.” (ER:4 at
3-4.) This superficial analysis fails to even consider whether the type of

- 18 -

information – as opposed to the ownership of equipment – at issue in both
representations is substantially related.
In its leading case on attorney disqualification, this Court rejected this type
of cursory analysis, stating that it “missed the point” of the substantial relationship
test. Trone, 621 F.2d at 1001. In Trone, the plaintiff’s law firm formerly
represented the defendant in connection with a proposed stock offering. Id. at 996.
The representation lasted only one month and the law firm asserted that it received
no confidential information. Id. at 997. Roughly two-and-a-half years later, the
plaintiff brought a securities action against the defendant. Id. at 996-97. The
district court concluded that the matters were not substantially related because the
plaintiff’s complaint did not rely on the prior stock offering as a basis of liability.
Id. at 1000.
This Court held that the district court’s “inquiry was insufficient and missed
the point.” Id. It concluded that the district court should have carefully examined
the allegations in the complaint to determine whether the type of information
sought in the past representation could have been of some value in establishing the
truth of the plaintiff’s current allegations. Id; see also Chugach Elec. Ass’n v.
United States Dist. Ct., 370 F.2d 441, 443 (9th Cir. 1966) (noting that the district
court’s findings did not reach “the heart of the problem” because they failed to
account for the fact that the lawyer’s “knowledge of private matters gained in

- 19 -

confidence would provide him with greater insight and understanding of the
significance of subsequent events . . . and offer a promising source of discovery”).
Here, as in Trone, the district court abused its discretion by failing to analyze
the manner in which information obtained in Greenberg’s past representation could
be material to the present lawsuit. As set forth below, a careful analysis of
Greenberg’s two representations establishes that these matters are substantially
related and disqualification is mandatory. See Trone, 621 F.2d at 1000, 1002
(concluding that disqualification was required as a matter of law and remanding
with instructions to remove counsel); Chugach, 370 F.2d at 443-44 (same).
2.

Greenberg violated its duty of loyalty.

Greenberg’s past representation of ATS and its current representation of
Redflex share a common factual background. A proper inquiry establishes, as a
matter of law, that the issues and information pertinent to Greenberg’s two
representations are closely related and, in some instances, identical.
a.

Greenberg’s past and present representations share a
common factual background.

Greenberg’s past representation of ATS is remarkably similar to its present
representation of Redflex. “The substantial relationship test does not require that
the issues in the two representations be identical.” Trone, 621 F.2d at 1000. It is
sufficient if they share a “close relationship.” Id.; see also Foulke, 784 P.2d at 727

- 20 -

(concluding that the “general subject matter” of a past representation was related to
issues in a current lawsuit).
ATS attached ample evidence to its disqualification motion establishing that
Greenberg’s past representation dealt with matters related to ATS’s procurement of
traffic enforcement contracts. (ER:7 ¶¶ 2-3, 6, 8-10; 8-10.) The face of the
complaint establishes that this case dealt with competition between ATS and
Redflex for traffic enforcement contracts. The complaint states:
• Redflex and ATS are direct competitors.
• [Redflex] solicits business from customers and potential
customers of ATS . . . .
• . . . but for Redflex’s misrepresentations and unfair competition,
both the pilot project and the statewide contract would have
been awarded to ATS.
• ATS’s proposal was responsive and responsible and but for
Redflex’s misrepresentation and illegal bid, ATS’s proposal
would have been awarded the contract.
• There existed valid business relationships and expectancies
between ATS and the governmental entities that contracted for
Redflex’s illegal radars.
(ER:5 ¶¶ 10, 11, 28, 30, 49; see also ER:7 at 7; 17 at 4-5.)
Furthermore, the trial transcript establishes that procurement matters were
hotly contested and placed Greenberg in the position of challenging the credibility
of ATS executives from whom Greenberg formerly obtained business confidences,
the ethics of ATS’s advertising policies, and the competency of its services. See

- 21 -

supra Statement of Facts Parts G, H; (ER:23-31.) This type of disloyalty endangers
both “the fact and the appearance of total professional commitment.” Trone, 621
F.2d at 998-99; see also Thomas v. Municipal Court, 878 F.2d 285, 289 (9th Cir.
1989) (noting that the facts of two representations were “inexorably linked”
because an attorney might have to cross-examine his former client about matters
related to a past representation); Okeani v. Superior Court, 871 P.2d 727, 728-29
(Ariz. Ct. App. 1993) (noting that impeachment of a witness on matters related to a
past representation creates a clear conflict of interest). Accordingly, the district
court abused its discretion in failing to disqualify Greenberg.
b.

Greenberg’s past and present representations involve
an identical issue.

Although ATS has no burden to meet such a stringent standard, Greenberg’s
continued representation of Redflex is particularly egregious because Greenberg’s
past and present representations encompass an identical issue. “[K]nowledge of
specific facts gained in a prior representation that is relevant to the matter in
question ordinarily will preclude such representation.” ARIZ. R.

OF

PROF’L

CONDUCT 1.9 cmt. 3; see also Emle Indus., Inc. v. Glen Raven Mills, Inc., 478 F.2d
562, 571-72 (2d Cir. 1973) (disqualifying counsel where past and present
representations addressed an identical issue); Thomas v. Municipal Court, 878 F.2d
285, 289 (9th Cir. 1989) (holding that disqualification was required where an issue
relevant to a past representation was raised defensively in a present lawsuit).
- 22 -

ATS submitted rebuttal evidence establishing that Greenberg obtained
information regarding ATS’s ability to procure traffic enforcement contracts over
Redflex’s competition. (ER:18 ¶ 8; 19 ¶ 6; see also 7 ¶¶ 6, 8-9.) As set forth in Part
III below, the district court abused its discretion in failing to consider this
significant rebuttal evidence. Greenberg never denied that it obtained this
information. (ER:16.) The core of this lawsuit dealt with competition between ATS
and Redflex for traffic enforcement contracts and events at trial confirmed the
importance of these issues. (ER:5 ¶¶ 10, 11, 28, 30; R:330 at 125-26; see also
Statement of Facts Parts G, H.)

Accordingly, because Greenberg’s past and

present representations concerned identical issues, the district court abused its
discretion in failing to disqualify Greenberg. See Emle Indus., Inc., 478 F.2d at
571-72; Thomas, 878 F.2d at 289.
3.

Greenberg violated its duty of confidentiality.

In addition to its duty of loyalty, Greenberg also violated its duty of
confidentiality. If there is a “reasonable probability that confidences were disclosed
which could be used against the client in later, adverse representation, a substantial
relationship between two cases is presumed.” Trone, 621 F.2d at 998. A former
client has no duty to reveal the precise secrets and confidences it disclosed.
Chugach Elec. Ass’n v. United States Dist. Ct., 370 F.2d 441, 444 (9th Cir. 1966);
Foulke, 784 P.2d at 728. Requiring disclosure “would place former clients in a

- 23 -

‘Catch-22,’ requiring that they divulge the very same confidences and secrets
which they seek to protect, disclosure of which is, in part, the reason for the
discomfort of having a prior attorney represent an adversary.” Foulke, 784 P.2d at
729; see also Chugach, 370 F.2d at 444.
In this case, Greenberg never has disputed that it received confidential
information from ATS. (ER:11; 16.) ATS presented evidence that Greenberg
obtained confidential information related to: (1) procurement efforts, (2) business
goals, (3) financing, (4) product pricing, and (5) field operations. (ER:7 ¶¶ 3, 6-9.)
ATS also presented rebuttal evidence establishing that Greenberg obtained
confidential information concerning: (1) corporate operations, (2) the technical
operation of its cameras, (3) strategies for using red light camera contracts to
procure speed camera contracts, and (4) business strategies for procuring contracts
over Redflex’s competition. (ER:18 ¶¶ 6-7; 19 ¶ 4-6; see infra Part III.)
These categories overlap with issues raised at trial. Redflex delved into
matters related to the accuracy of ATS’s proposals, the components of its cameras,
its profit margins and product pricing, and its ability to successfully implement
traffic enforcement programs. See supra Statement of Facts Part H; (ER:23-31.)
Accordingly, there is a reasonable probability that confidences could have been
used to materially advance Redflex’s defense. See Otaka, Inc. v. Klein, 791 P.2d
713, 719 (Haw. 1990) (holding that a lawyer’s “strategy sessions” with his former

- 24 -

client enabled him learn the former client’s management philosophy and to acquire
confidences relevant to a current dispute); Chugach Elec. Ass’n v. United States
Dist. Ct., 370 F.2d 441, 443 (9th Cir. 1966) (noting that a lawyer’s “knowledge of
private matters gained in confidence would provide him with greater insight and
understanding of the significance of subsequent events . . . and offer a promising
source of discovery”); Analytica Inc. v. NPD Research, Inc., 708 F.2d 1263, 1267
(7th Cir. 1983) (concluding that confidential information concerning a defendant’s
profitability, sales prospects, and general market strength was potentially germane
to the liability and damages issues of an anti-trust suit). For these reasons, the
district court abused its discretion in failing to disqualify Greenberg.
4.

Redflex’s counter-argument fails to withstand scrutiny.

Redflex failed to address the foregoing issues raised in ATS’s
disqualification motion. (ER:11.) Instead, Redflex attempted to sidestep these
issues by arguing that Greenberg’s past representation of ATS was limited to red
light camera contracts. (ER:11; 16 ¶ 12.) Redflex argued that this fact was
significant because the present dispute involves a radar used only in speed
cameras. (ER:11 at 3.) However, this distinction is irrelevant for purposes of
disqualification. Redflex’s argument completely ignores a crucial factor: the
relevance of contract procurement issues to both of Greenberg’s representations.
(ER:6 at 6-8.)

- 25 -

Furthermore, the distinction itself is faulty. ATS’s original evidence
established that Greenberg received information pertinent to speed cameras during
its past representation. (ER:9 (“My action items from the meeting on Friday were
to send the following documents to you: . . . A list of key States where we would
require Legal Opinions for . . . Speed Camera enforcement.”).) ATS and Redflex
are in the general photo enforcement business. (R:330 at 84, 173.) ATS established
that the majority of the contracts they compete for, including contracts at issue in
this case, involve both red light and speed functions. (ER:17; 18 ¶ 8; 19 ¶ 6; R:330
at 156-57; R333 at 464; PX20, 24, 33, 41 at 20, 49 at 60949, 47, 106, 115, 158 at
60934.)
In contrast, Redflex presented no evidence that there was a meaningful
distinction between Greenberg’s legal work on red light as opposed to speed
cameras. (ER:11, 16.) Nor did Redflex present any evidence that the information
Greenberg received – as opposed to the legal advice it gave or the governmental
relations activities it conducted – was limited to red light camera contracts. (Id.) In
fact, in light of the evidence attached to ATS’s disqualification motion, Redflex
could not have done so. (ER:9.)
Even assuming that this evidence were insufficient to rebut Redflex’s
artificial distinction, ATS submitted a reply affidavit from former Greenberg
attorney Sean Reilly establishing: “For the purposes of providing legal services, we

- 26 -

understood that there was no distinction between red light and speed camera
contracts and we observed no distinction between the two.” (ER:18 ¶ 6.) ATS also
presented unrefuted evidence that: (1) its cameras had the technical ability to
provide both red light and speed functions, and (2) in the course of Greenberg’s
work, ATS disclosed strategies for using red light contracts to obtain speed
contracts. (ER:18 ¶¶ 6-7; see also infra Part III.)
In sum, Redflex failed to set forth any meritorious ground for concluding
that Greenberg’s past and present representations are not substantially related and,
for all the foregoing reasons, Greenberg should be disqualified.
III.

The district court abused its discretion by disregarding relevant
evidence.
As noted previously, ATS submitted reply evidence that the district court

erroneously disregarded despite the fact that the district court ultimately denied the
motion to disqualify on grounds raised for the first time in Redflex’s sur-reply.
(ER:4; 20 at 5.) Although the evidence attached to ATS’s original disqualification
motion is sufficient standing alone to establish that the district court abused its
discretion in failing to disqualify Greenberg, ATS’s reply evidence removes any
remaining doubts. See supra Part II. In disregarding this evidence, the district court
applied an erroneous legal standard. Furthermore, under the proper standard, the
record reveals no grounds upon which the court could exclude it.

- 27 -

A.

The district court based its decision on an erroneous legal
standard.

The district court applied an improper legal standard in excluding evidence
attached to ATS’s reply memorandum. A reply memorandum may contain
additional evidence refuting arguments raised in the opposing party’s response. See
Miller v. CMG Worldwide Inc., 454 F.3d 975, 979 n.1 (9th Cir. 2006) (noting that
the district court properly admitted reply evidence that refuted arguments raised in
the nonmovant’s response); Braggs v. Arpaio, 373 Fed. Appx. 680, 681 (9th Cir.
2010) (same); see also Peters v. The Lincoln Elec. Co., 285 F.3d 456, 476-77 (6th
Cir. 2002).
The district court erroneously relied on a rule of appellate briefing that
prohibits an appellant from raising new issues for the first time in a reply brief.
(ER:4 at 1-2) (citing Gadda v. State Bar of Cal., 511 F.3d 933, 937 n.2 (9th Cir.
2007)). But the case law makes a distinction between trial court and appellate
briefing for good reason. Briefing before the trial court fleshes out unexplored
issues and evidence. In contrast, the factual record on appeal is fixed and all issues
already have been argued to a final decision.
At a minimum, this Court should remand for the district court to apply the
correct standard. Doe v. Reed, 586 F.3d 671, 676 (9th Cir. 2009) (“A district court
abuses its discretion if it bases its decision on an erroneous legal standard.”).
However, remand is unnecessary because, under the proper legal standard, the
- 28 -

district court had no discretion to disregard ATS’s evidence. See Ahanchian v.
Xenon Pictures, Inc., 624 F.3d 1253, 1261-62 (9th Cir. 2010).
B.

ATS submitted proper rebuttal evidence.

ATS’s reply evidence directly rebutted Redflex’s responsive arguments.
“[R]eply affidavits that respond only to the opposing party’s brief are properly
filed with the reply brief.” Peters, 285 F.3d at 476-77; Miller, 454 F.3d at 979 n.1.
In its response, Redflex made three misleading assertions. First, Redflex stressed
purported differences between red light and speed cameras. (ER:11 at 3-4; 16 at ¶
12.) Second, Redflex asserted that Greenberg partner John Mascialino never
received certain documents referenced in a June 2005 e-mail. (ER:11 at 3; 16 at ¶
8.) Third, Redflex implied that Greenberg did not believe it was representing ATS.
(ER:16.) ATS submitted two reply declarations that rebut these specific and
discrete points:
The Reilly Declaration: Sean Reilly, a former Greenberg attorney,
rebutted Greenberg’s artificial distinction between red light and speed
cameras. (ER:18 ¶¶ 6-8.) In doing so, Reilly reinforced a point
critical to the district court’s erroneous determination that this case
dealt only with Redflex’s equipment. Reilly stated: “ATS disclosed
strategies for using the red light contracts to procure additional
contracts for more services, including services related to speed
cameras. . . . ATS disclosed confidential information to me
concerning ATS’s business strategies for procuring the contracts over
Redflex’s competition.” (Id. ¶¶ 7-8.) Reilly also unequivocally stated:
“[B]oth Mulvihill and ATS were my clients.” (Id.¶ 3.)
The Tuton Declaration: Jim Tuton also rebutted Redflex’s artificial
distinction between red light and speed cameras and, in the process,

- 29 -

reinforced the relevance of ATS’s procurement policies in the present
case. Tuton stated: “I disclosed ATS’s strategies for using the red light
contracts to procure additional contracts for more services, including
services related to speed cameras. . . . I disclosed confidential
information to Greenberg Traurig lawyers concerning ATS’s business
strategies for procuring contracts over Redflex’s competition.” (ER:19
¶¶ 5-6.) Furthermore, Tuton rebutted Mascialino’s misleading
assertion by clarifying that he sent the referenced documents to Sean
Reilly, his primary contact at Greenberg. (ER:9; 19 ¶ 3; 16 ¶ 8.)
These documents addressed ATS’s need for legal opinions on red
light and speed camera contracts in key states, information that ATS
could use in its procurement efforts. (ER:9.)
Because ATS’s declarations rebut issues raised in Redflex’s response, the district
court abused its discretion in failing to consider ATS’s reply evidence. See Miller,
454 F.3d at 979 n.1; Peters, 285 F.3d at 476-77.
C.

There is no ground in the record for refusing to consider ATS’s
evidence.

Even assuming that ATS’s declarations exceed the scope of rebuttal
evidence, the district court nonetheless abused its discretion in failing to consider
them. A district court has discretion to allow a movant to present new issues and
evidence in a reply. See Lane v. Dep’t of the Interior, 523 F.3d 1128, 1140 (9th
Cir. 2008); Tuscon Women’s Ctr. v. Ariz. Med. Bd., 666 F.Supp.2d 1091, 1102 (D.
Ariz. 2009). The district court failed to exercise its discretion by erroneously
concluding that reply evidence is categorically prohibited. (ER:4 at 1-2); Miller v.
Hambrick, 905 F.2d 259, 262-63 (9th Cir. 1990) (“A district court’s failure to
exercise discretion constitutes an abuse of discretion.”).

- 30 -

Moreover, even if the district court were to exercise its discretion, “review
of the record discloses no ground on which the district court could deny [ATS]
relief.” Cal. Med. Ass’n v. Shalala, 207 F.3d 575, 579 (9th Cir. 2000). ATS filed
its motion to disqualify well over a year before this case went to trial. (ER:5-6;
R:330 at 1.) When the district court considered the motion, the parties had
completed all of their original and supplemental briefing and no requests for
additional time were pending. (ER:4 at 1.) Thus, consideration of ATS’s reply
evidence would have caused no delay in the resolution of the case, advanced the
development of important ethical issues, and prevented any possible misuse of
confidences in preparing Redflex’s defense of this case and Redflex’s complaint
against ATS in Redflex II (in which Judge Bolton properly disqualified
Greenberg).
Redflex failed to raise any meritorious ground for disregarding ATS’s reply
evidence. Redflex accused ATS of attempting to “sandbag” Greenberg with the
Reilly declaration. (ER:20 at 3.) However, Redflex failed to explain how it was
prejudiced. (Id.) Reilly was a former Greenberg attorney and his involvement was
raised in Redflex’s response memorandum. (ER:16 at ¶ 7.) Redflex did not seek an
extension of time to respond, to depose Reilly, or to submit a counter-declaration.
(ER:20.) Moreover, Redflex submitted a sur-reply asserting new grounds for
denying the motion for disqualification – grounds upon which the district court

- 31 -

ultimately relied despite its claim to the contrary. (ER:20 at 5; 4 at 3-4.)
Accordingly, there is no basis in the record for disregarding ATS’s reply evidence.
D.

ATS suffered prejudice from the district court’s improper
exclusion of evidence.

ATS’s rebuttal declarations bear directly on the district court’s erroneous
decision to deny the disqualification motion. When reviewing the effect of
erroneous evidentiary rulings, this Court begins “with a presumption of prejudice.”
Obrey v. Johnson, 400 F.3d 691, 701 (9th Cir. 2005). Here, Redflex cannot rebut
that presumption. As set forth above, the reply declarations correct misleading
assertions in Redflex’s response and reinforce key points – particularly,
Greenberg’s acquisition of information relevant to ATS’s contract procurement
efforts. (ER:18 ¶¶ 6-9; 19 ¶¶ 3-6; see also ER:7 ¶¶ 3, 6-10.) In light of the
substantial overlap between procurement issues in Greenberg’s past representation
of ATS and procurement issues in the present lawsuit, the district court’s failure to
consider the evidence attached to the reply memorandum cannot be considered
harmless.
IV.

ATS is entitled to a new trial.
When a law firm represents a client in a substantially related matter, “a new

trial is the only plausible remedy.” State v. Hursey, 861 P.2d 615, 619 (Ariz. 1993).
As the Arizona Supreme Court has emphasized, “[t]he mere fact of confidential
communications in the prior relationship is enough to presume prejudice to the

- 32 -

defendant, because justice and the law must rest upon the complete confidence of
the public and to do so they must avoid even the appearance of impropriety.” Id.
(internal quotations omitted); see also Norman v. Norman, 970 S.W.2d 270, 27475 (Ark. 1998) (remanding for a new trial where the district court abused its
discretion in failing to disqualify the plaintiff’s counsel and noting “the rules do
not require a finding of prejudice”); City of Whitewater v. Baker, 299 N.W.2d 584,
588-89 (Wis. Ct. App. 1980) (concluding that a new trial was the “only viable
remedy” for the trial court’s failure to disqualify opposing counsel despite the fact
that review of trial transcript “reveal[ed] no particularly damaging information
about [the movant] which an attorney would not otherwise discover”); Morford v.
Morford, 619 N.E.2d 71, 76 (Ohio Ct. App. 1993) (“Professionalism does not
contemplate a ‘no harm, no foul’ standard of practice.”).
The rule of presumed prejudice is based on sound policy. First, a movant
“should not be forced to attempt to prove that there was an actual indiscretion or
impropriety. Evidence of such conduct, being under the control of [opposing
counsel], would be well-nigh impossible for a [movant] to bring forth.” Hursey,
861 P.2d at 619. As the Second Circuit has observed, the subtly of possible uses
can be difficult, if not impossible, to identify:
Even the most rigorous self-discipline might not prevent a lawyer
from unconsciously using or manipulating a confidence acquired in
the earlier representation and transforming it into a telling advantage
in the subsequent litigation. . . . The dynamics of litigation are far too
- 33 -

subtle, the attorney’s role in that process is far too critical, and the
public’s interest in the outcome is far too great to leave room for even
the slightest doubt concerning the ethical propriety of a lawyer’s
representation in a given case. These considerations require
application of a strict prophylactic rule to prevent any possibility,
however slight, that confidential information acquired from a client
during a previous relationship may subsequently be used to the
client’s disadvantage.
Emle Indus., Inc., 478 F.2d at 571-72.
Second, if a movant “were required to show prejudice he might, in some
cases, be forced to disclose a confidential communication he made to his former
lawyer.” Hursey, 861 P.2d at 619; cf. Foulke v. Knuck, 784 P.2d 723, 729 (Ariz.
Ct. App. 1989) (“we do not believe specific harm must be established to justify
disqualification where there has been a violation of [Rule] 1.9(a)”). ATS should
not be put to this choice. However, ATS has identified specific places in the trial
transcript where Greenberg conducted examinations on topics with respect to
which Greenberg received confidential information. See, supra, Statement of Facts
Part H; (ER:23-31.) This evidence reinforces the presumption of prejudice and
demonstrates that ATS is entitled to a new trial.
The application of the ethics rules is admittedly harsh. However, neither
Redflex nor Greenberg is free of responsibility for the result. As one Arizona court
of appeals has noted: “[The attorney] continued to render legal services after she
and her client were fully aware that the appropriateness of the representation was
being contested. Both counsel and client proceeded at their own risk.” Foulke, 784
- 34 -

P.2d at 729-30. Accordingly, this Court should disqualify Greenberg and remand
for a new trial in this case.
CONCLUSION AND PRAYER
For the foregoing reasons, ATS respectfully requests that the Court reverse
the final judgment rendered against ATS, order that Greenberg be disqualified
from representing Redflex in any further proceedings, and remand this case for a
new trial.
Respectfully submitted,
HAYNES AND BOONE, LLP
/s/ Lynne Liberato
Lynne Liberato
Mark Trachtenberg
Polly Graham
1221 McKinney, Suite 2100
Houston, Texas 77010-2007
Telephone: [phone]
Telecopier: [phone]
- and Michael D. Myers
Randy J. McClanahan
Robert H. Espey, II
MCCLANAHAN MYERS ESPEY, L.L.P.
3355 West Alabama, Suite 210
Houston, Texas 77098
Telephone: [phone]
Telecopier: [phone]
Attorneys for Appellant,
American Traffic Solutions, Inc.
- 35 -

STATEMENT OF RELATED CASES
Pursuant to Circuit Rule 28-2.6, ATS states that this appeal is related to
consolidated appeal No. 11-15519 styled Redflex Traffic Systems, Inc. v. American
Traffic Solutions, Inc, in which Redflex challenges the trial court’s denial of its
application for attorneys’ fees and non-taxable costs pursuant to § 35(a) of the
Lanham Act, 15 U.S.C. § 1117.

- 36 -

CERTIFICATE OF COMPLIANCE
[FED. R. APP. P. 32(a)]
1.
This brief complies with the type-volume limitation of Fed. R. App. P.
32(a)(7)(B) because this brief contains 8,335 words, excluding the parts of the
brief exempted by Fed. R. App. P. 32(a)(7)(B)(iii).

2.
This brief complies with the typeface requirements of Fed. R. App. P.
32(a)(5) and the type style requirements of Fed. R. App. P. 32(a)(6) because this
brief has been prepared in a proportionally spaced typeface using Microsoft Word
2000 in 14 point Times New Roman font.

/s/ Mark Trachtenberg
Mark Trachtenberg
Attorney for Appellant
American Traffic Solutions, Inc.

Dated: April 25, 2011.

- 37 -

CERTIFICATE OF SERVICE
I hereby certify that I electronically filed Appellant’s Opening Brief with the
Clerk of the Court for the United States Court of Appeals for the Ninth Circuit by
using the appellate CM/ECF system on April 25, 2011.
Participants in the case who are registered CM/ECF users will be served by
the appellate CM/ECF system.

/s/ Mark Trachtenberg
Mark Trachtenberg

- 38 -

RULES ADDENDUM
Arizona Rules of Professional Conduct:
Rule 1.9 (a): “A lawyer who has formerly represented a client in a matter
shall not thereafter 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 gives informed consent,
confirmed in writing.”
Rule 1.10 (a): “While lawyers are associated in a firm, none of them shall
knowingly represent a client when any one of them practicing alone would
be prohibited from doing so by ERs 1.7 or 1.9, unless the prohibition is
based on a personal interest of the prohibited lawyer and does not present a
significant risk of materially limiting the representation of the client by the
remaining lawyers in the firm.”

Local Rules of Practice, Arizona Dist. Ct., Rule 83.2: “The ‘Rules of
Professional Conduct,’ in the Rules of the Supreme Court of the State of Arizona,
shall apply to attorneys admitted or otherwise authorized to practice before the
United States District Court for the District of Arizona.