Taylor et al v. Hawley Troxell Ennis & Hawley LLP et al

Filing 358

MEMORANDUM DECISION AND ORDER - IT IS HEREBY ORDERED: 1. The Motion to Disqualify filed by the AIA Controlling Defendants and CropUSA (Dkt. 275 ) is DENIED. 2. The Motion to Disqualify filed by the Hawley Troxell Defendants (Dkt. 278 ) is DENIED. 3 . Roderick Bond may remain in this case as counsel for Dale Miesen. Roderick Bond may not represent Reed Taylor in this case. 4. The Motion to Take Judicial Notice filed by the Hawley Troxell Defendants (Dkt. 344 ) is GRANTED. Signed by Judge David C. Nye. (caused to be mailed to non Registered Participants at the addresses listed on the Notice of Electronic Filing (NEF) by (cjs)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF IDAHO
DALE L. MIESEN, an individual who is
a shareholder and who is also bringing
this action on behalf of and/or in the right
of AIA Services Corporation and its
wholly owned subsidiary AIA Insurance,
Inc.,
Plaintiff,
vs.
HAWLEY TROXELL ENNIS &
HAWLEY LLP, an Idaho limited
liability partnership; GARY D.
BABBITT, an individual; D. JOHN
ASHBY, an individual; RICHARD A.
RILEY, an individual; AIA SERVICES
CORPORATION, an Idaho corporation;
AIA INSURANCE, INC.; an Idaho
corporation; CROP USA INSURANCE
SERVICES, LLC; an Idaho limited
liability company; CROP USA
INSURANCE AGENCY, INC., an Idaho
corporation; CONNIE TAYLOR
HENDERSON, an individual; JOLEE K.
DUCLOS, an individual; MICHAEL W.
CASHMAN SR., an individual; JAMES
BECK, an individual; R. JOHN
TAYLOR, an individual; and GEMCAP
LENDING I, LLC, a Delaware limited
liability company,
Defendants,
and
CROP USA INSURANCE SERVICES,
LLC, an Idaho limited liability company;
CROP USA INSURANCE AGENCY,
INC., an Idaho corporation; CONNIE
MEMORANDUM DECISION AND ORDER – 1

Case No. 1:10-cv-00404-DCN

MEMORANDUM DECISION AND
ORDER

TAYLOR HENDERSON, an individual;
JOLEE K. DUCLOS, an individual; R.
JOHN TAYLOR, an individual;
MICHAEL CASHMAN SR., an
individual; JAMES BECK, an individual,
Defendants/Third-Party
Plaintiffs,
vs.
REED TAYLOR, an individual,
Third-Party Defendant.

I. OVERVIEW
This matter comes before the Court on two Motions to Disqualify Attorney
Roderick Bond. Dkts. 275, 278. At the time the Motions were filed, Bond represented
both Plaintiff Dale Miesen and Third-Party Defendant Reed Taylor. After these Motions
were filed, but before briefing was complete, Reed Taylor hired alternate counsel.
Because of this change in circumstances, the Court permitted the parties to file
supplemental briefs. After receiving these supplemental briefs, the Court held oral
argument and took the Motions under advisement. As explained below, the Court finds
good cause to DENY the Motions so long as Reed Taylor proceeds with alternate
counsel.
II. FACTUAL BACKGROUND
A. The Original Parties and Dispute
This is a shareholder’s derivative action, the Court’s jurisdiction over which is
based upon diversity of citizenship. Plaintiff Dale Miesen is a minority shareholder of the
MEMORANDUM DECISION AND ORDER – 2

Defendant AIA Services Corporation (“AIA”), the alleged wronged corporation. Donna
Taylor was originally named as a plaintiff in this action. However, the Court dismissed
her, in both her personal and representative capacities, because her presence destroyed
diversity. See Dkt. 178.
There were originally two groups of defendants in this action. The first group
consists of AIA Services Corporation, AIA Insurance, Inc. (collectively “AIA Entities”),
CropUSA Insurance Agency, CropUSA Insurance Services (collectively “CropUSA”),
and several controlling shareholders and officers of those entities, namely: R. John
Taylor, James Beck, Michael Cashman, Connie Taylor Henderson, and JoLee Duclos1
(individuals, collectively “AIA Controlling Defendants”). The second group consists of
the law firm Hawley Troxell Ennis & Hawley, LLP, and several of its attorneys who
represented the AIA Entities and CropUSA during the events that gave rise to this action,
namely: Gary Babbitt, Richard Riles, and John Ashby (collectively “Hawley Troxell
Defendants”). There is now one additional defendant, GemCap Lending I (“GemCap”).
GemCap first intervened in this action in July of 2016. Later, Miesen asserted claims
against GemCap in the Third Amended Complaint.
The operative complaint is the Third Amended Complaint. Dkt. 211. In it, Miesen
alleges, among other things, that the AIA Controlling Defendants engaged in fraud and
breached their fiduciary duties to the AIA minority shareholders. AIA was formed in
1983. It sold insurance products to members of farmers’ and growers’ associations and

1

JoLee Duclos passed away late last year. See Dkt. 316.

MEMORANDUM DECISION AND ORDER – 3

worked with farmers and growers to form trusts and/or related cooperatives. In the late
1990s, the AIA Board of Directors, controlled by the AIA Controlling Defendants,
decided to begin selling crop insurance through a wholly-owned subsidiary called
CropUSA. Miesen alleges that the AIA Controlling Defendants unlawfully transferred
CropUSA from AIA to their own possession. The AIA Controlling Defendants then
proceeded to unlawfully fund, subsidize, and operate CropUSA using AIA’s assets.
Through their operation of CropUSA, the AIA Controlling Defendants defrauded AIA of
millions of dollars. Miesen also alleges that the AIA Controlling Defendants committed a
“laundry list” of other unlawful acts, self-dealing, malfeasance, and intentional torts.
Miesen has highlighted specific acts Defendant John Taylor allegedly committed. John
Taylor was President of both AIA Entities and CropUSA during all of these events.
Miesen alleges that John Taylor unlawfully transferred real property to AIA, required
AIA to pay the liabilities on the property, unlawfully amended AIA’s Bylaws, and issued
himself Series A Preferred Shares in AIA. Miesen claims that all of the above described
acts hurt AIA’s minority shareholders.
Hawley Troxell represented both AIA and CropUSA during the relevant
timeframe. Accordingly, Miesen claims the Hawley Troxell Defendants aided and abetted
the fraud the AIA Controlling Defendants perpetuated against AIA and its minority
shareholders and committed legal malpractice.
B. Third Party Complaint Against Reed Taylor
In May 2017, the AIA Controlling Defendants, along with CropUSA, filed a Third
Party Complaint against Reed Taylor. Dkt. 218. Except for short intervals, Reed Taylor
MEMORANDUM DECISION AND ORDER – 4

served as a director for AIA from its founding in 1983 until early 2001. He also served as
an officer of AIA at various times until he redeemed his shares in 1995. In addition, he
served on an advisory board for CropUSA from 1999 until 2007. Based on his
involvement with these entities, the AIA Controlling Defendants assert that if they are
found liable for their actions as officers/directors of AIA and for their actions as members
of the CropUSA advisory board, Reed Taylor should be found jointly liable. The AIA
Controlling Defendants also assert that Reed Taylor accepted millions of dollars in illegal
stock redemption payments from AIA and caused AIA to incur millions of dollars in
legal fees. Accordingly, the AIA Controlling Defendants and CropUSA have asserted
claims for contribution against Reed Taylor for the fiduciary-duty claims and the fraud
claims. Id.
Reed Taylor denies these allegations. He has also asserted his own counterclaims
against the AIA Controlling Defendants and CropUSA. Dkt. 276. Most of these claims
involve AIA’s 401(k) Profit Sharing Plan (“the Plan”). Specifically, Reed Taylor asserts
class action claims against the AIA Controlling Defendants for breach of fiduciary duties
owed to the Plan participants, in violation of the Employment Retirement Income
Security Act (“ERISA”). Reed Taylor also claims the AIA Controlling Defendants
engaged in transactions prohibited by ERISA.
C. Facts Relevant to the Motions to Disqualify
Attorney Lee Rousso filed the original complaint in this action, on behalf of
Miesen and Donna Taylor, on August 11, 2010. Dkt. 1. Attorney Bond first appeared on
March 18, 2012, on behalf of Donna Taylor. Dkt. 58. Bond then appeared as counsel for
MEMORANDUM DECISION AND ORDER – 5

Miesen on March 23, 2016. Dkt. 122. At that time the Court removed attorney Lee
Rousso from the case. On July 28, 2017, after Reed Taylor was served with the Third
Party Complaint, Bond appeared on Reed Taylor’s behalf. Dkt. 246. A few months later,
on October 31, 2017, the Controlling AIA Defendants and CropUSA filed the first
Motion to Disqualify Bond. Dkt. 275. Four days later, the Hawley Troxell Defendants
followed suit with their own Motion to Disqualify. Dkt. 278.
On February 13, 2018, Reed Taylor filed a Notice of Substitution of Counsel,
notifying the Court that he was voluntarily dropping Bond as an attorney and replacing
him with Michael S. Bissell of Campbell & Bissell. The Movants2 objected to this
substitution. They argued the substitution does not cure the conflict in interest and the
Court still must disqualify Bond from representing any party in this case.
It is important to note that Bond has been representing Reed Taylor since as early
as 2007. Since then, Bond has represented Reed Taylor in a handful of disputes involving
AIA, primarily state court actions. For example, Bond has brought suit, on Reed Taylor’s
behalf, against AIA and its directors in a dispute over a stock redemption agreement.
Bond then sued, on Reed Taylor’s behalf, the lawyers involved in the stock redemption
agreement. Bond has also sued AIA, its officers, and other related entities on behalf of
Donna Taylor, Reed Taylor’s ex-wife and a former plaintiff in this lawsuit. The Movants
have described these various suits in their briefs in support of the Motions to Disqualify

2

For simplicity’s sake, the Court refers to all of the parties who have brought motions to
disqualify as “Movants.” Similarly, the Court refers to all those opposing the motions to
disqualify, including Miesen, Reed Taylor, and Bond himself, as “Opponents.”
MEMORANDUM DECISION AND ORDER – 6

in detail. See Dkt. 275, 278-1. A comprehensive accounting of these disputes and Bond’s
involvement is not necessary here. However, the Court does acknowledge Bond’s lengthy
and intimate representation of Reed Taylor over the last decade.
III. LEGAL STANDARD
State law governs motions to disqualify counsel. See In re Cnty. of L.A., 223 F.3d
990, 995 (9th Cir. 2000). In Idaho, courts also look to “the Idaho Rules of Professional
Conduct as adopted and interpreted by the Idaho Supreme Court” in determining whether
disqualification of an attorney is proper. Andersen v. Valley Cty., No. 1:16-CV-00554CWD, 2017 WL 2311668, at *3 (D. Idaho May 26, 2017); Parkland Corp. v. Maxximum
Co., 920 F. Supp. 1088, 1090 (D. Idaho 1996) (“[I]n deciding whether to disqualify
counsel, the Court looks to the local rules regulating the conduct of the members of its
bar.” (citation omitted)).
Disqualifying counsel is an exercise of the court’s inherent powers. Anderson v.
Valley Cty, No. 1:16-CV-00554-CWD, 2017 WL 2311668, *3 (D. Idaho May 26, 2017).
“The decision to grant or deny a motion to disqualify counsel is within the discretion of
the trial court.” Foster v. Traul, 175 P.3d 186, 194 (Idaho 2007) (citing Weaver v.
Millard, 819 P.2d 110, 114 (Idaho Ct. App. 1991)). Under Idaho law, “[t]he moving party
has the burden of establishing grounds for the disqualification.” Crown v. Hawkins Co.,
910 P.2d 786, 794 (Idaho Ct. App. 1996). However, “[t]he goal of the court should be to
shape a remedy which will assure fairness to the parties and the integrity of the judicial
process.” Weaver, 819 P.2d at 115. In addition, “[w]henever possible, courts should
endeavor to reach a solution that is least burdensome to the client.” Id. Finally, because
MEMORANDUM DECISION AND ORDER – 7

opposing counsel could potentially misuse a motion to disqualify for tactical purposes,
such motions are subjected to “particularly strict judicial scrutiny.” Optyl Eyewear
Fashion Int’l Corp. v. Style Co., 760 F.2d 1045, 1050 (9th Cir. 1985) (citation omitted).
IV. ANALYSIS
The Movants argue that disqualification is required by Rule 1.7 of the Idaho Rules
of Profession Conduct. In response, Opponents first argue that the movants do not have
standing to object to Reed Taylor’s choice of counsel as none of them are Bond’s current
or former clients. Second, Opponents argue Reed Taylor’s new counsel cures any conflict
that might require Bond’s disqualification. The Court addresses each of these arguments
in turn.
A. Rule 1.7
Idaho Rule of Professional Conduct 1.7 provides as follows:
(a) Except as provided in paragraph (b), a lawyer shall not represent a client
if the representation involves a concurrent conflict of interest. A concurrent
conflict of interest exists if:
(1) the representation of one client will be directly adverse to another
client; or
(2) there is a significant risk that the representation of one or more
clients will be materially limited by the lawyer’s responsibilities to
another client, a former client or a third person or by the personal
interests of the lawyer, including family and domestic relationships.
(b) Notwithstanding the existence of a concurrent conflict of interest under
paragraph (a), a lawyer may represent a client if:
(1) the lawyer reasonably believes that the lawyer will be able to
provide competent and diligent representation to each affected client;
(2) the representation is not prohibited by law;
MEMORANDUM DECISION AND ORDER – 8

(3) the representation does not involve the assertion of a claim by one
client against another client represented by the lawyer in the same
litigation or other proceeding before a tribunal; and
(4) each affected client gives informed consent, confirmed in writing.
Movants argue Bond must be disqualified because Miesen’s interests in this case are
“directly adverse to” Reed Taylor’s interests, in violation of Rule 1.7(a)(1) (“[A] lawyer
shall not represent a client if . . . the representation of one client will be directly adverse
to another client.”). Miesen’s claims in this derivative action seek to protect the interests
of AIA’s minority shareholders. Accordingly, Miesen brought suit against AIA’s
controlling officers and directors. Reed Taylor was at one point an officer and director of
AIA, and the AIA Controlling Defendants have brought a claim for contribution against
Reed Taylor. In essence, the AIA Controlling Defendants argue Miesen should have
named Reed Taylor as a defendant in this lawsuit and Bond’s lengthy client relationship
with Reed Taylor is the only reason he was not included as a defendant. Thus, with
regard to some claims, it appears that it is in Reed Taylor’s best interest for the AIA
Controlling Defendants to be found not liable.3 This interest is directly adverse to
Miesen’s interest.
Opponents of the Motions to Disqualify argue that there is no conflict of interest
because Miesen and Reed Taylor are “fully aligned.” The main thrust of the argument
seems to be that the third-party claims for contribution against Reed Taylor are baseless

3

The Court does not discount the fact that Reed Taylor has asserted his own claims against the
AIA Controlling Defendants and that, for those claims, the interests of Reed Taylor and the AIA
Controlling Defendants are in direct conflict.
MEMORANDUM DECISION AND ORDER – 9

because Reed Taylor was never involved in the malfeasance Miesen outlines in this Third
Amended Complaint. Opponents also explain that Reed Taylor previously discovered
some of this malfeasance, and that he included some of these acts of malfeasance in a
previous lawsuit and in his counterclaims against the AIA Controlling Defendants.
Opponents also point out that, prior to 2017, the AIA Controlling Defendants never
asserted any indemnification or contribution claims against Reed Taylor. Thus, they
argue, the contribution claims are manufactured and, in reality, an attempt to oust Bond
from this lawsuit.
Some of these arguments are compelling. However, it is too early for the Court to
determine whether the contribution claims the AIA Controlling Defendants have asserted
against Reed Taylor are meritorious. On the face of the pleadings, some of Miesen’s
claims appear to be plainly adverse to Reed Taylor’s interest. Thus, Bond’s
representation of both Miesen and Reed Taylor violates Rule 1.7.
Moreover, this dual representation appears, under the Rules, to be nonconsentable.
“Paragraph (b)(3) [of Idaho Rule of Processional Conduct] describes conflicts that are
nonconsentable because of the institutional interest in vigorous development of each
client’s position when the clients are aligned directly against each other in the same
litigation or other proceeding before a tribunal.” I.R.P.C. 1.7, Cmt. 17. Even though
Miesen has not asserted a claim directly against Reed Taylor, Bond’s representation of
Miesen in effect “involve[s] the assertion of a claim by one client”—the minority
shareholders—“against another client”—a corporate insider—“in the same litigation.”
I.R.P.C. 1.7(b)(3). By filing the Third-Party Complaint against Reed Taylor for
MEMORANDUM DECISION AND ORDER – 10

contribution, the AIA Controlling Defendants have, in effect, brought Reed Taylor in as
another defendant/joint tortfeasor. Therefore, this is a nonconsentable conflict in
substance, if not in name.
Finally, the Court notes that Bond’s representation of both Miesen and Reed
Taylor is in conflict with Bond’s duty to maintain the confidences of his clients. See
I.R.P.C. 1.6. It seems highly unlikely that Bond can maintain the confidences of both
clients while also serving as a zealous advocate for both clients. See I.R.P.C. 1.7 Cmt. 30
(“A particularly important factor in determining the appropriateness of common
representation is the effect on client-lawyer confidentiality and the attorney-client
privilege.”).
In sum, the Court finds, under Rule 1.7, that Bond cannot represent both Miesen
and Reed Taylor. However, this is not the end of the inquiry.
B. Standing to Object to Counsel
Opponents argue that the Court should deny the Motions to Disqualify because
Movants do not have standing to challenge Bond’s dual representation of Miesen and
Reed Taylor. The Idaho Rules of Professional Conduct themselves warn that “the Rules
can be subverted when they are invoked by” parties without standing “as procedural
weapons.” I.R.P.C. Scope. The Rules explain that “[t]he fact that a Rule is a just basis for
a lawyer’s self-assessment, or for sanctioning a lawyer under the administration of a
disciplinary authority, does not imply that an antagonist in a collateral proceeding or
transaction has standing to seek enforcement of the Rule.” Id. However, the Rules do not
foreclose the possibility that an “antagonist” could have standing to enforce the Rule. At
MEMORANDUM DECISION AND ORDER – 11

the same time, the Rules also do not prescribe the circumstances under which an
“antagonist” would have standing to enforce the Rules. Thus, the Court must turn to case
law for guidance.
The Idaho Court of Appeals faced a similar situation, and a motion to disqualify,
in Weaver v. Millard. The Weaver court first found that the district court properly viewed
the motion “with caution,” as it came, “not from a client or former client of the attorney,
but from an opposing party.” 819 P.2d at 115. The Weaver court then found the district
court did not abuse its discretion in denying the motion to disqualify after applying the
following four-part test:
(1) Whether the motion is being made for the purposes of harassing the
defendant, (2) whether the party bringing the motion will be damaged in
some way if the motion is not granted, (3) whether there are any alternative
solutions, or is the proposed solution the least damaging possible under the
circumstances, and (4) whether the possibility of public suspicion will
outweigh any benefits that might accrue to continued representation.
Id. at 116. Opponents argue Movants must pass this four-part test in order to having
standing to even bring their Motions to Disqualify.
It is true that none of the Movants are Bond’s current or former clients and that
they seek to enforce the Rules in the face of “an appearance of impropriety” rather than
direct harm. Accordingly, the Court must view the Motions to Disqualify “with caution,”
but its not clear whether the Court must apply the four-part Weaver test.
Movants argue the four-part Weaver test is discretionary and not required to
establish standing as the Idaho Supreme Court has not mandated this test. It is accurate to
say that the Idaho Supreme Court has yet to require satisfaction of the Weaver test as a
MEMORANDUM DECISION AND ORDER – 12

threshold for standing. For example, in Foster v. Traul, the Idaho Supreme Court
concluded that a district court simply “did not abuse its discretion” in applying the
Weaver test in a similar scenario. 175 P.3d 186, 195 (2007).
This Court is bound by the decisions of the Idaho Supreme Court, but the high
court has yet to speak directly to this issue. Nevertheless, “[w]hen the state’s highest
court has not squarely addressed an issue, [federal courts] must predict how the highest
state court would decide the issue using intermediate appellate court decisions, decisions
from other jurisdictions, statutes, treatises and restatements for guidance.” All. for Prop.
Rights & Fiscal Responsibility v. City of Idaho Falls, 742 F.3d 1100, 1102 (9th Cir.
2013). In light of Weaver and Foster—and the absence of any alternative tests—this
Court is persuade that the Idaho Supreme Court would apply the four-part Weaver test in
determining whether an opposing party, who is not a current or former client of the
attorney in question, has standing to bring a motion to disqualify counsel. Accordingly,
the Court turns now to an application of that test.
(1) Harassment
Opponents argue Movants brought the two Motions to Disqualify only to harass
Reed Taylor. As evidence of this harassment, Opponents point to the coordinating timing
of the Motions, the failure to propose alternatives to disqualification, and the fact that the
Hawley Troxell Defendants have not even asserted a claim against Reed Taylor—i.e.
“they have no dog in the fight.” Movants deny this accusation wholeheartedly. Instead,
they insist Bond’s dual representation is a clear violation of the Rules of Professional

MEMORANDUM DECISION AND ORDER – 13

Conduct that could potentially harm them and that needed to be brought to the Court’s
attention.
The Court sees little evidence of harassment in the record. Rather, as discussed
above, Bond’s dual representation is a violation of the Idaho Rules of Professional
Conduct and does raise serious concerns regarding Bond’s ability to adequately and fairly
represent both Miesen and Reed Taylor. Thus, the Court cannot conclude that Movants
brought these Motions in bad faith.
(2) Damage to Movants
Opponents argue that Movants will suffer no harm if Bond is permitted to
continue his dual representation. In contrast, Opponents point out the severe harm both
Miesen and Reed Taylor will suffer if they are not permitted to proceed with their
counsel of choice, particularly considering the lengthy history and complex nature of this
case. Movants respond by arguing they will be damaged because Miesen and Reed
Taylor will collude through Bond and, in the process, subvert the third-party claims
against Reed Taylor.
The Court sees both alleged harms as potentially causing real damage to one or
more parties in this case. However, for the purpose of establishing standing, only the
harm to the Movants is relevant. Considering Bond’s lengthy professional relationship
with Reed Taylor, the Court finds there is a potential for coordination between Miesen
and Reed Taylor that would ultimately harm, or at least disadvantage, Movants during the
course of this litigation.

MEMORANDUM DECISION AND ORDER – 14

(3) Alternative Solutions
Opponents propose severing the claims brought by and against Reed Taylor as a
means of solving Bond’s conflict of interest. Opponents also criticize Movants for failing
to propose any alternatives besides completely barring Bond from this case. The Court
agrees with Movants that severing the claims brought by and against Reed Taylor is not a
just solution. To accurately determine Reed Taylor’s contribution, if any, to the fiduciary
duty claims and the fraud claims, he must be a party to this case. In addition, a second
suit would waste the resources of both the Court and the parties and risk inconsistent
judgments. The Court also understands Movants arguments as to why permitting Bond to
proceed only as Miesen’s counsel is an unworkable alternative. However, as discussed in
the final section of this Decision, the Court is not persuaded by these arguments.
Nevertheless, the Court finds Movants arguments sufficient to satisfy this prong of the
standing test.
(4) Public Suspicion vs. Benefits of Continued Representation
Finally, Opponents argue the public would be suspicious if Bond, who has
participated in this case for years, was suddenly kicked off, particularly if Hawley
Troxell—a party with no dog in the fight—was the impetus for Bond’s disqualification.
Moreover, Opponents assert Miesen would be greatly harmed if he did not have the
benefit of Bond’s knowledge of this complex case. In response, Movants argue the clear
appearance of impropriety far outweighs any inconvenience Miesen would experience if
forced to find new counsel. Movants reiterate that Bond is attempting to, in essence,
represent both a plaintiff and a defendant in this case, which creates a potential for
MEMORANDUM DECISION AND ORDER – 15

collusion between the two parties, and will pose problems down the road during the
discovery process as the two parties’ positions diverge. The Court cannot say that the
potential for public suspicion clearly outweighs the benefits of permitting Bond to
continue his dual representation of Miesen and Reed Taylor. The Court acknowledges it
will be burdensome for Miesen to find alternate counsel and for that counsel to
familiarize himself or herself with this case. However, as the Court previously explained,
the dual representation is a clear, nonconsentable violation of Rule 1.7, and to allow
Bond to continue his representation in the face of this violation would certainly raise
public suspicion and rouse distrust in the judicial system. Thus, the Court finds the
potential public suspicion is sufficient to satisfy this last prong of the Weaver test.
Movants have sufficiently met the four parts of the Weaver test. Accordingly, the
Court finds they have standing to bring their Motions to Disqualify and seek enforcement
of the Rules in this case. However, again, the Court’s inquiry does not end here. Despite a
finding that the dual representation violates Rule 1.7, and despite a finding that Movants
have standing to protest this violation, the Court must determine whether the recent
change in circumstances moots the Motions.
C. Whether Replacement Cures the Conflict
Regardless of everything discussed above, Opponents argue the Court
should not disqualify Bond because Reed Taylor has fired Bond and hired Bissell

MEMORANDUM DECISION AND ORDER – 16

as his replacement. Movants primarily argue that Bond’s disqualification is still
required under the “hot potato rule.”4
“The so-called ‘hot potato rule’ provides that without a proper waiver, ‘a
law firm that knowingly undertakes adverse concurrent representation may not
avoid disqualification by withdrawing from the representation of the less favored
client before hearing.” State Comp. Ins. Fund v. Drobot, 192 F. Supp. 3d 1080,
1114 (C.D. Cal. 2016). This rule aims to protect and reinforce the duty of loyalty
an attorney has to an existing client, which is “so sacred, so inviolate that not even
by withdrawing from the relationship can an attorney evade it.” Id. (internal
quotation marks and citation omitted). The parties have not cited an Idaho case
that discusses or applies the “hot potato rule.” However, it appears logical, applied
throughout other jurisdictions, and consistent with secondary sources. See
Restatement of the Law Governing Lawyers § 132 Cmt. c; see also § 121 Cmt.
e(i). Nevertheless, the hot potato rule does not apply here to force Bond out of this
case.
The Court finds it significant that Bond did not drop Reed Taylor like a
“hot potato.” Rather, Reed Taylor dropped Bond. Reed Taylor then hired his own

4

Movants also argue that Bissell is not exactly independent counsel. Bond and Bissell were
members of the same law firm that represented Reed Taylor in a suit against AIA (Taylor v. AJA
Services Corp., et al., Case No. CV-07-00208) in the District Court of the Second Judicial
District of the State of Idaho, in and for Nez Perce County, and also represented Reed Taylor in a
suit against Riley and Hawley Troxell (Taylor v. Riley, et al., Case No. CV OC 0918868) in the
District Court of the Second Judicial District of the State of Idaho. Dkt. 343 at 3. However,
Movants have not explained why this prior work precludes Bond or Bissell from proceeding on
this case.
MEMORANDUM DECISION AND ORDER – 17

counsel and has made it widely known that he does not object to Bond remaining
as Miesen’s counsel. In doing so, Reed Taylor has consented to Bond’s
participation in this case and waived any further challenge. The cases applying the
hot potato rule have carved out an exception for when “a proper waiver” has been
obtained. See Drobot, 192 F. Supp. 3d at 1114 (explaining that, “without a proper
waiver” a lawyer cannot drop a client like a hot potato); see also W. Sugar Coop.
v. Archer-Daniels-Midland Co., 98 F. Supp. 3d 1074, 1084 (C.D. Cal. 2015)
(noting client did not consent to concurrent representation and finding attorney
could not avoid automatic disqualification “by unilaterally converting a present
client into a former client” (emphasis added)). Unlike a conflict under Rule
1.7(b)(3), it appears this is a scenario in which a client’s informed consent can
cure a conflict of interest. Indeed, nothing in the Rules or case law indicates a
client cannot consent to being dropped like a “hot potato.” In addition, there is no
need to protect the sacred duty of loyalty if the client fires the attorney or
otherwise consents to the attorney terminating his or her representation of the
client.
Other relevant factors that the Court must consider also favor allowing
Bond to continue in the case, as Miesen’s counsel alone. The Court finds this
remedy is the “least burdensome to” both Miesen and Reed Taylor and “will
assure fairness to the parties and the integrity of the judicial process.” Weaver, 819
P.2d at 115. As noted previously, Miesen would be severely prejudiced if Bond
were disqualified from this highly complex case. It would take any replacement
MEMORANDUM DECISION AND ORDER – 18

counsel a great deal of time and resources to familiarize himself or herself with
this case enough to be a zealous advocate for Miesen. Additionally, having Miesen
and Reed Taylor proceed with separate counsel averts the appearance of
impropriety and the chance of collusion. Accordingly, under both the Rules and
the relevant discretionary factors, the Court finds good cause to DENY the
Motions to Disqualify.
IV. ORDER
IT IS HEREBY ORDERED:
1. The Motion to Disqualify filed by the AIA Controlling Defendants and
CropUSA (Dkt. 275) is DENIED.
2. The Motion to Disqualify filed by the Hawley Troxell Defendants (Dkt.
278) is DENIED.
3. Roderick Bond may remain in this case as counsel for Dale Miesen.
Roderick Bond may not represent Reed Taylor in this case.
4. The Motion to Take Judicial Notice filed by the Hawley Troxell
Defendants (Dkt. 344) is GRANTED.5

DATED: March 16, 2018

_________________________
David C. Nye
U.S. District Court Judge

5

Judicial notice is proper because the documents attached to the Motion are not subject to
reasonable dispute. See Fed. R. Evid. 201.
MEMORANDUM DECISION AND ORDER – 19