Hershewe v. Givens et al
Filing
152
OPINION AND ORDER that the 83 MOTION to Disqualify Defendant John Givens and The Cochran Law Firm is denied, as further set out in order. Signed by Honorable Judge Myron H. Thompson on 2/24/15. (Attachments: # 1 civil appeals checklist)(djy, )
IN THE DISTRICT COURT OF THE UNITED STATES FOR THE
MIDDLE DISTRICT OF ALABAMA, SOUTHERN DIVISION
)
)
)
)
)
)
)
)
)
EDWARD HERSHEWE,
Plaintiff,
v.
KEITH GIVENS, et al.,
Defendants.
CIVIL ACTION NO.
1:14cv655-MHT
(WO)
OPINION AND ORDER
Plaintiff
Edward
Hershewe
brings
this
action
against a number of defendants asserting fraud, breach
of
fiduciary
duty,
piercing
the
corporate
corporate
dissolution,
and
Influenced
and
Organizations
Corrupt
U.S.C. § 1961 et seq.
violation
of
Act
veil,
Racketeer
(RICO),
18
The defendants are Keith Givens
(K. Givens), John Givens (J. Givens), Chase Givens (C.
Givens),
U.S.
Legal
Forms,
Inc.,
Eagle
Investments,
LLP, Eagle Investments Group, LLP, USLegal Inc., VLO
Management, LLC, and Jacoby & Meyers, LLC.
The court
has
federal-question
jurisdiction
over
the
federal
claims pursuant to 28 U.S.C. § 1331 and supplemental
jurisdiction over the state-law claims pursuant to 28
U.S.C. § 1367.
The
motion
case
to
is
now
before
disqualify
the
court
defendant
J.
on
Givens
Hershewe’s
and
the
Cochran Law Firm as attorneys in this case based on
violations of Alabama Rules of Professional Conduct 1.7
and
3.7,
which
govern
conflicts
lawyers as witnesses, respectively.
of
interests
and
The motion will be
denied.
I.
BACKGROUND
This case arises out of a joint venture between
Hershewe,
a
lawyer
from
lawyer from Alabama.
Givens
and
investors,
J.
two
and
K.
Givens,
a
Along with K. Givens’s sons, C.
Givens,
these
Missouri,
as
well
lawyers
as
a
planned
several
to
other
start
a
national law office, called VLO Management, LLC, with a
2
few physical law offices and a strong online presence
across the country.
As alleged in the complaint, the agreement to start
VLO
was
an
exchange.
Hershewe
would
provide
the
capital for the business while K. Givens would provide
the intellectual property, copyright, and brand name
from
his
Hershewe
law
and
firm
K.
at
Givens
the
time,
would
be
Jacoby
&
Meyers.
co-managers
of
the
business, while C. Givens and J. Givens would play some
lesser role.
The deal, however, soured.
Hershewe claims that K.
Givens, C. Givens, and J. Givens took his investment
and a subsequent loan he made to VLO and used them for
their
own
purposes.
Relevant
to
this
motion,
he
alleges that at least some VLO assets were used to
purchase
furniture
Givens’s
investment
in
2012
company
(the Dothan building).
for
owns
a
building
in
Dothan,
that
the
Alabama
Hershewe also maintains that
VLO altered its tax records to cover up the fraud.
3
Hershewe sued, and various lawyers from branches of
the
Cochran
defendants.
Law
These
Firm
were
lawyers
hired
include
to
Angela
represent
J.
Mason,
Joseph D. Lane, and J. Farrest Taylor, who are lawyers
at the Cochran Firm-Dothan, which moved into the Dothan
building in 2013; Lance Swanner, who is the managing
partner of the Cochran Law Firm offices in Birmingham
and Mobile as well as a managing partner at Jacoby &
Meyers-Southeast, which moved into the Dothan building
in
2009;
and
defendant
J.
Givens,
also
of
the
Cochran-Firm Dothan, who was hired to represent VLO.
Hershewe now moves to disqualify all lawyers from
any branch of the Cochran Law Firm because they are
necessary witnesses.
He seeks to disqualify J. Givens
on the additional grounds that he has a conflict of
interest.
4
II. DISCUSSION
A. Standard of Review
It is “beyond dispute that lawyers are officers of
the
court
and
that
the
courts
have
the
inherent
authority to regulate their professional conduct.” In
re
Gopman,
531
F.2d
262,
266
(5th
Cir.
1976).1
Attorneys who practice before the Middle District of
Alabama must “adhere to ... th[e] Court's Local Rules,
the Alabama Rules of Professional Conduct, the Alabama
Standards for Imposing Lawyer Discipline, and, to the
extent
not
inconsistent
with
the
preceding,
the
American Bar Association Model Rules of Professional
Conduct.” M.D. Ala. L.R. 83.1(g). “These local rules
represent
controlling
obligations
on
attorneys
appearing in this court.” Green v. Montgomery County,
Ala., 784 F. Supp. 841, 842 (M.D. Ala. 1992) (Thompson,
C.J.).
However,
the
ethical
standards
that
govern
1.
In Bonner v. City of Prichard, 661 F.2d 1206
(11th Cir. 1981) (en banc), the Eleventh Circuit
adopted as binding precedent all of the decisions of
the former Fifth Circuit handed down prior to the close
of business on September 30, 1981.
5
attorneys
who
practice
before
a
federal
determined by federal and not state law.
472
U.S.
634,
645
n.6
(1985);
court
are
In re Snyder,
see
also
In
re
Finkelstein, 901 F.2d 1560, 1564 (11th Cir. 1990) (“The
state codes of professional responsibility do not by
their
own
courts
federal
terms
and
any
apply
to
sanctions
standards
law.”).
imposed
Therefore,
even
in
are
the
a
though
federal
matter
the
of
Middle
District has adopted the ethical rules promulgated by
the
Alabama
State
state-court
Nonetheless,
Bar,
the
court
interpretations
in
evaluating
of
the
is
not
bound
those
ethical
by
rules.
charges,
the
court must “hold attorneys to recognized standards of
professional conduct.”
Finkelstein, 901 F.2d at 1564.
This court has recognized a balancing test with
four guiding principles when evaluating a motion for
disqualification
Discrimination
of
Litig.
counsel.
Against
Ala.,
In
453
re
F.
Emp’t
Supp.
1323, 1331-32 (M.D. Ala. 2001) (Thompson, J.).
2d
First,
“disqualification is a drastic measure, which courts
6
should
hesitate
necessary.”
to
impose
except
when
absolutely
Id. at 1331; see also In re Bellsouth
Corp., 334 F.3d 941, 961 (11th Cir. 2003) (“Because a
party is presumptively entitled to the counsel of his
choice, that right may be overridden only if compelling
reasons
exist.”)
(internal
quotation
marks
omitted).
Second, “because of the impact a motion to disqualify
has on the party losing her counsel, the moving party
is held to a high standard of establishing the basis
for
the
motion,
and
the
need
for
disqualification.”
Id. at 1332.
Third, the court looks to whether “other
means
addressing
of
disqualification
are
a
violation
available
to
the
short
of
court--like
exclusion of ill-gotten evidence” to avoid the drastic
remedy
of
disqualification.
Id.
Last,
“because
a
motion for disqualification is such a potent weapon and
can be misused as a technique for harassment, the court
must exercise extreme caution in considering it to be
sure it is not being used to harass the attorney sought
to be disqualified, or the party he represents.”
7
Id.
(internal quotation marks omitted); see also Macheca
Transp. Co. v. Philadelphia Indem. Ins. Co., 463 F.3d
827, 833 (8th Cir. 2006) (“Because of the potential for
abuse
by
opposing
counsel,
disqualification
motions
should be subjected to particularly strict scrutiny.”)
(internal quotation marks omitted).
In sum, the moving
party has a high burden to prove that disqualification
is
absolutely
alternatives,
necessary,
and
that
that
the
there
motion
is
are
no
not
a
viable
cynical
attempt to harass the opposing party and gain an unfair
advantage in the litigation.
B. Alleged Violations of Ethical Rules
The
attorneys
attorney
court
will
Mason,
from
first
Lane,
the
examine
Taylor,
Cochran
Law
the
argument
Swanner,
Firm
and
should
that
any
be
disqualified under Alabama Rule of Professional Conduct
3.7 because they are necessary witnesses.
Then the
court will address whether J. Givens has a conflict of
8
interest
under
Alabama
Rule
of
Professional
Conduct
1.7.
i.
Rule 3.7
Rule 3.7(a) states that “a lawyer shall not act as
advocate at a trial in which the lawyer is likely to be
a necessary witness, except where: (1) [t]he testimony
relates to an uncontested issue; (2) [t]he testimony
relates
to
the
nature
and
value
of
legal
services
rendered in the case; or (3) [d]isqualification of the
lawyer would work substantial hardship on the client.”
“[A]
necessary
witness
is
one
who
has
crucial
information in his possession which must be divulged”
and
whose
testimony
unobtainable elsewhere.”
is
“relevant,
material,
and
Lane v. State, 80 So. 3d 280,
299 (Ala. Crim. App. 2010) (internal quotation marks
omitted); see also Pigott v. Sanibel Dev., LLC, 2007 WL
2713188, at *2 (S.D. Ala. 2007) (Steele, J.) (holding
that
Rule
3.7
“requir[es]
the
party
seeking
disqualification to establish that relevant, material
9
evidence could not be obtained other than by calling
the attorney as a witness.”).
Hershewe
first
insists
that
Mason,
Lane,
and
Taylor, all with the Cochran Law Firm-Dothan, must be
disqualified because they are necessary witnesses to
testify
about
the
furniture
in
the
Dothan
building,
specifically when it arrived, who brought it to the
building,
where
it
is
argument is meritless.
located,
and
its
value.
This
Mason, Lane, and Taylor did not
have offices in the Dothan building until well after
the furniture allegedly purchased with VLO assets was
placed in the building, and they could not answer how
the
furniture
building.
arrived
or
who
brought
it
into
the
Even if they had been in the building, it is
highly likely that another person who worked in the
building
testify.
or
at
the
Cochran
Firm
could
be
found
to
Moreover, in open court on October 28, 2014,
Hershewe admitted that he had not tried to get the
information from another party.
take
the
drastic
measure
10
of
The court refuses to
disqualification
when
Hershewe has not even taken the preliminary step of
attempting to identify other witnesses.
Hershewe
attorneys
as
next
well
argues
as
that
Swanner
all
of
should
be
the
above
disqualified
because they are necessary witnesses to testify about
this court’s previous order not to destroy evidence.
Specifically,
he
argues
that
every
attorney
at
the
Cochran Law Firm-Dothan as well as Swanner will have to
testify
about
documents
evidence.
the
after
alleged
the
changes
court’s
order
in
not
VLO’s
to
tax
destroy
Hershewe fails to explain why he could not
get the information on the tax documents from VLO’s
accountant, either through testimony or affidavit.
differently,
this
evidence
is
not
Put
“unobtainable
elsewhere.”
Hershewe last, and most implausibly, states that
all
lawyers
from
the
Cochran
Law
Firm
should
be
disqualified because K. Givens used letterhead with the
Cochran
Law
Firm’s
name
when
allegedly
engaging
in
fraud and because an administration coordinator for the
11
firm helped set up VLO’s bank account.
It is unclear
why K. Givens’s use of the Cochran Law Firm letterhead
is relevant to whether members of the firm will be
necessary witnesses or what material information these
witnesses
would
provide.
Furthermore,
as
to
the
administration coordinator, Hershewe does not meet his
high burden to describe what material information he
would receive regarding VLO’s bank account and why that
could not come from another source besides counsel.
ii. Rule 1.7
Hershewe
next
alleges
that
J.
Givens
should
be
disqualified because of his conflict of interest as the
attorney for the company from which he is accused of
taking money for personal gain.
the
standard
under
Rule
1.7,
The court will address
Hershewe’s
standing
to
bring this claim, and the claim’s merits.
Rule 1.7(b) governs conflicts between a lawyer’s
interests and the client’s.
It states, “A lawyer shall
not represent a client if the representation of that
12
client may be materially limited ... by the lawyer’s
own
interests,
believes
the
affected;
unless:
(1)
the
representation
and
consultation.”
(2)
Id.
the
lawyer
will
not
client
reasonably
be
adversely
consents
after
The comments elaborate that, “If
the probity of a lawyer’s own conduct in a transaction
is
in
serious
question,
it
may
be
difficult
or
impossible for the lawyer to give a client detached
advice.”
Id. (Comment).
The first issue is whether Hershewe, as an opposing
party,
can
bring
this
motion
to
disqualify.
The
comment to the rule leaves the option open but notes
that courts should be cautious: “Where the conflict is
such
as
clearly
to
call
into
question
the
fair
or
efficient administration of justice, opposing counsel
may properly raise the question.
Such an objection
should be viewed with caution, however, for it can be
misused as a technique of harassment.”
Alabama case law is less clear.
Id. (Comment).
In Ex Parte Tiffin,
879 So. 2d 1160, 1165 (Ala. 2003), the Alabama Supreme
13
Court
states
that,
“At
a
minimum,
a
party
seeking
disqualification for the conflict addressed in Rule 1.7
must demonstrate ... that it is a current client of the
lawyer whose representation is challenged,” but later
notes
that
“ordinarily”
and
“as
a
general
rule,”
parties outside the attorney-client relationship cannot
bring
claims
original).
under
Rule
1.7.
Id.
(emphasis
in
This limiting language leaves open the door
for infrequent exceptions where an opposing party could
bring a claim under Rule 1.7.
Parte
Tiffin’s
standard
Later cases have used Ex
against
opposing
parties
bringing a Rule 1.7 claim but have not included the
“ordinarily”
indicating
requirement
issue.
(Ala.
or
a
“as
a
possible
against
general
shift
opposing
to
rule”
a
more
parties’
language,
stringent
raising
the
See, e.g., Ex Parte Wheeler, 978 So. 2d 1, 5
2007);
see
also
Cochran
v.
Five
Points
Temporaries, LLC, 2012 WL 4726285, at *3 (N.D. Ala.
2012)
(Blackburn,
C.J.)
(citing
14
Ex
Parte
Tiffin
to
dismiss a disqualification claim where the movant was
not a client).
Because the court finds below that Hershewe does
not meet the substantive requirement of Rule 1.7, it
need not decide this standing issue.
The stringent
standing requirement adopted in Wheeler and Cochran,
though, is concerning.
While, as the comment to Rule
1.7 suggests, courts should treat reporting by opposing
counsel with extreme caution, an opposing party still
has an ethical obligation to report misconduct “to a
tribunal or other authority empowered to investigate or
act upon such violation.”
Ala. R. Prof. Conduct 8.3;
cf. In re Emp’t Discrimination, 453 F. Supp. 2d at 1332
(dismissing standing challenge regarding Alabama Rules
of Professional Conduct 4.2 and 1.6 because question
was properly before the court under Alabama Rule of
Professional
Conduct
8.3).
A
strict
requirement
against reporting a rule violation by an opposing party
raises the possibility that a court would be barred
from considering a potential conflict of interest even
15
if another attorney fulfilled her ethical obligation
and
reported
the
information
under
Alabama
Rule
of
Professional Conduct 8.3.
As to the substantive requirements, Rule 1.7 allows
for a lawyer with a potential conflict to represent a
client if: (1) the lawyer believes the representation
will
not
be
consents.
adversely
affected;
and
(2)
the
client
The first prong, in particular, is troubling
in this case.
J. Givens is currently representing VLO,
a company that he allegedly defrauded.
The rules are
clear that, in situations such as these, “it may be
difficult or impossible for the lawyer to give a client
detached
advice.”
(comments).
Ala.
R.
Prof.
Conduct
8.3
Even though J. Givens has stated that he
will file a motion to withdraw when VLO retains trial
counsel or when the Board of Directors of VLO asks him
to
withdraw,
it
is
easy
to
see
how
VLO’s
and
his
interests could conflict should the evidence indicate
that he was committing fraud or a breach of fiduciary
duty against VLO.
However, considering the high burden
16
on Hershewe and the caution about disqualification as a
trial tactic by opposing counsel, the court finds that,
while it may be difficult for J. Givens to represent
VLO, disqualification under Rule 1.7 is not required at
this point.
Hershewe also does not meet his high burden on the
second prong.
His main contention is that J. Givens
did not have client consent because he filed a motion
to
dismiss
rather
than
an
answer,
instructions of the board of directors.
against
the
While he does
present one email to this effect, it relies on hearsay
of a conversation between a third-party and J. Givens
and does not indicate whether the position of the board
changed.
evidence
The
to
one
meet
email
does
the
high
not
provide
burden
to
enough
prove
disqualification.2
2. Hershewe also argues that J. Givens should be
disqualified because he will be a necessary witness at
trial. The court need not reach this issue because J.
Givens has stated his intention to withdraw as counsel
should the case go to trial.
17
The court thus denies the motion to disqualify J.
Givens.
However, the court still notes its concern
that J. Givens continues to represent a company from
which he is accused of stealing money.
PRC,
5
F.
(Thompson,
noting
the
Supp.
J.)
2d
1299,
(finding
court’s
1305
against
concern
Cf. Nuri v.
(M.D.
Ala.
1998)
disqualification
about
the
appearance
but
of
impropriety).
***
Accordingly,
it
is
ORDERED
that
the
motion
to
disqualify defendant John Givens and the Cochran Law
Firm (doc. no. 83) is denied.
DONE, this the 24th day of February, 2015.
/s/ Myron H. Thompson___
UNITED STATES DISTRICT JUDGE
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