Waste Management of Louisiana, L.L.C. v. River Birch, Inc. et al

Filing 133

ORDER and REASONS denying 109 Defendant Frederick R. Heebe's Motion to Disqualify Counsel. IT IS FURTHER ORDERED, however, that on or before Monday, April 13, 2015, Plaintiff, through counsel, shall submit the following additional information as stated within document, for the Court's consideration. Signed by Judge Kurt D. Engelhardt on 3/27/2015. (cbs)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
WASTE MANAGEMENT OF LOUISIANA, LLC

CIVIL ACTION

VERSUS

NO. 11-2405

RIVER BIRCH, INC.,
HIGHWAY 90, LLC,
FREDERICK R. HEEBE, and
ALBERT WARD, JR.

SECTION "N" (4)

ORDER AND REASONS
Presently before the Court is Defendant Frederick R. Heebe’s motion (Rec. Doc. 109)
seeking to disqualify Phelps Dunbar, LLP ("Phelps") from its representation in this matter of
Plaintiff Waste Management of Louisiana, L.L.C. The Court rules on the motion as set forth herein.
BACKGROUND
As stated in Heebe's memorandum, Plaintiff's RICO claims regarding the 2006
closure of the Chef Menteur landfill, as pled in Plaintiff's original and first amended complaints, are
premised upon Defendants' alleged bribery of Henry Mouton, the former Commissioner of the
Louisiana Department of Wildlife and Fisheries.1 In granting Defendants' previously filed motion
to dismiss regarding those claims, the Court concluded Plaintiff’s allegations failed to satisfy its
pleading burden relative to causation, that is, that the alleged RICO predicate offense, bribery of

1

Plaintiff identified bribes paid to Henry Mouton as the predicate acts of his RICO
claims concerning the Chef Menteur landfill in both his original and first amended complaint and
RICO case statement. See Complaint (Rec. Doc. 1); Amended Complaint (Rec. Doc. 10), ¶ 91;
RICO Case Statement (Rec. Doc. 5), pp. 8-11.

Mouton, a public official, was a “but for” and the “proximate cause” of the alleged injury–loss of
the emergency authorization for the landfill.2 In other words, the Court found that Plaintiff had not
alleged sufficient facts to allow a reasonable inference, as opposed to mere speculation, that former
Mayor Ray Nagin’s July 2006 withdrawal of Chef Menteur’s authorization was because of actions
by Mouton, taken as a result of bribery allegedly attributable to Defendants, rather than a mere
coincidence.3
Following that ruling, Plaintiff filed its Second Amended Complaint.4 Although
maintaining Plaintiff's prior assertions regarding Mouton, the Second Amended Complaint
additionally alleges that Nagin's decision to withdraw Chef Menteur's emergency authorization
resulted from Defendants' payment of unlawful contributions to Nagin's 2006 re-election campaign
made with the specific intent to cause the former mayor to reverse course relative to the landfill.5
Pointing to July 2006 correspondence from the Louisiana Department of Environmental Quality to
Nagin outlining the negative consequences anticipated to result from Chef Menteur's closure,6
Plaintiff contends Nagin's decision cannot otherwise be explained by a change in circumstance
relative to the exigencies of New Orleans' hurricane clean-up operations.7 In apparent further

2

See Rec. Docs. 69 and 98.

3

See Rec. Doc. 98.

4

See Second Amended Complaint, Rec. Doc. 106.

5

Id. at ¶¶ 6, 11-14, and 54-71.

6

See Rec. Doc. 106, ¶¶ 16, and 64-69; see also Exhibit A to Rec. Doc. 106.

7

Id. at ¶¶ 13 and 64.
2

support for its position,8 Plaintiff's Second Amendment also twice references Nagin's 2014
conviction of "twenty counts of bribery, conspiracy, and wire fraud," arising from receipt of
financial benefits from city contractors, including those associated with Hurricane Katrina clean-up
and rebuilding efforts, both before and after Hurricane Katrina.9
Plaintiff's allegations regarding the intended and resulting consequences of
Defendants' unlawful contribution to Nagin's campaign are the focus of the motion to disqualify now
before the Court. Specifically, Heebe contends these new allegations have created an impermissible
conflict of interest for Plaintiff's counsel, Phelps, "because Phelps represented Mr. Nagin for several
years in connection with a federal criminal investigation and a state ethics probe."10 Although
Plaintiff maintains that no Phelps attorney served as counsel of record for Nagin's federal criminal
proceeding,11 it is undisputed that attorney Harry Rosenberg, a Phelps partner, served as legal
counsel for Nagin in two state ethics proceedings concerning conduct that also provided the factual
bases for certain of the aforementioned multiple counts of which Nagin was criminally convicted
in 2014.12 Phelps partner, Patrick A. Talley , Jr., along with co-counsel, James G. Kress, of Baker
Botts, LLP, represent Plaintiff herein.

8

If not intended to provide support for Plaintiff's allegations regarding the purpose and
effect of Defendants' contributions to Nagin's decision regarding the Chef Menteur landfill, the
statements seemingly are superfluous and not appropriately included in the pleading.
9

See Rec. Doc. 106, ¶¶ 15 and 70.

10

See Rec. Doc. 109-1, p. 2.

11

See United States v. Nagin, Criminal Action No. 13-11 (E.D. La.).

12

See Ethics Matter Nos. 2009-442 and 2009-436 (Rec. Docs. 109-2 and 109-3); see
also United States v. Nagin, Criminal Action No. 13-11 (Indictment, Rec. Doc. 1)(Judgment, Rec.
Doc. 173)(E.D. La.).
3

The declaration by Talley accompanying Plaintiff's memorandum states that Talley
and Kress were first retained relative to the instant lawsuit, in September 2011, when Talley was a
partner at Frilot, LLC.13 Prior to that time, however, Talley had represented Plaintiff in connection
with the related lawsuit relative to Plaintiff's waste disposal contract (discussed in the Second
Amended Complaint) that Jefferson Parish brought against Plaintiff in 2009.14 In July 2012, Talley
left Frilot and joined Phelps. Talley's declaration also advises that he was unaware of Rosenberg's
representation of Nagin until defense counsel raised the issue in connection with the filing of
Plaintiff's Second Amended complaint.15 He further avers that he has never consulted with
Rosenberg about Nagin or "shared any information with []Rosenberg regarding the allegations
referring to Nagin" in this lawsuit.16
In opposing Heebe's motion, Plaintiff contends that Rosenberg’s work for Nagin,
regarding prior dealings with City of New Orleans contractors Home Depot and Mark St. Pierre, and
his company NetMethods, is unrelated to Plaintiff's allegations herein against Defendants involving
illegal campaign contributions. Plaintiff's submission also asserts that Rosenberg is the only Phelps
Dunbar partner who has met with Nagin or performed any work on his behalf and that, in addition
to Rosenberg, only his secretary and filing clerk have had access to the Nagin matter.17 Plaintiff

13

See Rec. Doc. 113-1, ¶ 3.

14

See Rec. Doc. 113, p. 3 (referencing Consolidated Garbage District No. 1 of the
Parish of Jefferson and the Parish of Jefferson Through the Jefferson Parish Council v. Waste
Management of Louisiana, L.L.C., et al., Civil Action No. 09-06270 (E.D. La).
15

See Rec. Doc. 113-1, ¶5.

16

Id. at ¶ 8.

17

See Rec. Doc. 113, p. 2.
4

additionally represents that Rosenberg implemented security measures to restrict computer access
to electronically generated and stored documents relating to Nagin’s file.18
Plaintiff contends that replacing Talley at this stage would impose a substantial
hardship on it given that Talley "has immersed in the issues relating to this case for five years."19
Plaintiff also argues that any potential conflict can be adequately addressed by the Court "permitting
Waste Management to allocate exclusive responsibility to its independent co-counsel, Baker Botts,
for the discrete portion of the case relating to Mr. Nagin, including discovery and cross examination,
and allowing Phelps Dunbar to withdraw as counsel from participation in those aspects."20 Plaintiff's
submission further represents that it "agrees to Phelps Dunbar’s decision to restrict its
representation in this matter so as to exclude any participation in potential discovery from or
examination of Mr. Nagin."21
LAW AND ANALYSIS
In connection with the instant motion, the parties discuss Rules 1.7, 1.9. and 1.10(a)
of the Louisiana Rules of Professional Conduct.22 Those rules provide, in pertinent part:

18

Id.

19

See Rec. Doc. 113, p. 3.

20

Id. at p.16.

21

Id. at p. 3; see also Rec. Doc. 113-3, ¶9.

22

The Rules for Lawyer Disciplinary Enforcement of the Eastern District of Louisiana
specifically adopt the Rules of Professional Conduct of the Supreme Court of Louisiana. See Local
Rule 83.2.3 of the Local Rules for the United States District Court for the Eastern District of
Louisiana.
5

RULE 1.7 CONFLICT OF INTEREST: CURRENT CLIENTS
(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 a personal
interest of the lawyer.
(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;
(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.
RULE 1.9 DUTIES TO FORMER CLIENTS
(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.
(b) A lawyer shall not knowingly represent a person in the same or a
substantially related matter in which a firm with which the lawyer
formerly was associated had previously represented a client
(1) whose interests are materially adverse to that person; and
(2) about whom the lawyer had acquired information
protected by Rules 1.6 and 1.9(c) that is material to the matter; unless
the former client gives informed consent, confirmed in writing.
(c) A lawyer who has formerly represented a client in a matter or
6

whose present or former firm has formerly represented a client in a
matter shall not thereafter:
(1) use information relating to the representation to the
disadvantage of the former client except as these Rules would permit
or require with respect to a client, or when the information has
become generally known; or
(2) reveal information relating to the representation except as
these Rules would permit or require with respect to a client.
RULE 1.10(a) IMPUTATION OF CONFLICTS OF INTEREST:
GENERAL RULE
(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 Rules 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.
"It is generally proper for an opposing party to bring conflict of interest matters to
the attention of the court." Federal Deposit Insurance Corp. v. United States Fire Insurance Co.,
50 F.3d 1304, 1315 (emphasis added)(citing In re American Airlines, 972 F.2d 605, 611 (5th Cir.
1992)). "'Such an objection should be viewed with caution, however, for it can be misused as a
technique of harassment.'" Id. (quoting ABA Model Rule 1.7 cmt. (1992)). Furthermore, "[a]s a
general rule, courts do not disqualify an attorney on the grounds of conflict of interest unless the
former client moves for disqualification." In re Yarn Processing Patent Validity Litig., 530 F.2d 83,
88 (5th Cir. 1976) (emphasis added). In any event, the party seeking disqualification bears the
burden of proof. See In re American Airlines, 972 F.2d at 614; United States v. DeCay, 406 F.
Supp. 2d 679, 683 (E.D. La. 2005).
In Federal Deposit Insurance Corp., 50 F.3d at 1314, 1316, the Fifth Circuit offered
the following guidance relative to a court's consideration of a motion seeking disqualification of
counsel:
7

A court must take into account not only the various ethical
precepts adopted by the profession but also the social interests at
stake." Among the factors that we have considered in the past are
“whether a conflict has (1) the appearance of impropriety in general,
or (2) a possibility that a specific impropriety will occur, and (3) the
likelihood of public suspicion from the impropriety outweighs any
social interests which will be served by the lawyer's continued
participation in the case.” [In re Dresser Industries, Inc., 972 F.2d
540, 544 (5th Cir. 1992)]. As we have noted in another action to
disqualify counsel, “The rule of disqualification is not mechanically
applied in this Circuit.” Church of Scientology of California v.
McLean, 615 F.2d 691, 693 (5th Cir.1980). All of the facts particular
to a case must be considered, in the context of the relevant ethical
criteria and with meticulous deference to the litigant's rights.
***
We have held that application of the disqualification rule
requires a balancing of the likelihood of public suspicion against a
party's right to counsel of choice. Cossette v. Country Style Donuts,
Inc., 647 F.2d 526, 530 (5th Cir. 1981). However, rather than
indiscriminately gutting the right to counsel of one's choice, we have
held that disqualification is unjustified without at least a reasonable
possibility that some identifiable impropriety actually occurred.
Woods, 537 F.2d at 813. A disqualification inquiry, particularly
when instigated by an opponent, presents a palpable risk of unfairly
denying a party the counsel of his choosing. Therefore,
notwithstanding the fundamental importance of safeguarding popular
confidence in the integrity of the legal system, attorney
disqualification, particularly the disqualification of an entire firm, is
a sanction that must not be imposed cavalierly.
In view of the particular facts of this case, we find that the
FDIC's right to the counsel of its choice outweighs the harm of
possible public suspicion. We do recognize that preservation of a
popular faith in the judicial system is a primary consideration, and
that lawyers generally should avoid even the appearance of
impropriety. “It does not follow, however, that an attorney's conduct
must be governed by standards which can be imputed only to the
most cynical members of the public.” [Woods v.Covington Cty. Bank,
537 F.2d 804, 813 (5th Cir. 1976)]. As noted in the comments to both
the Model Rules and the Texas Rules, an opponent may be tempted
to invoke the disqualification rule for purposes of harassment.
Unhappily, as often as the rule is misused, the profession is disserved.
8

When, for purely strategic purposes, opposing counsel raises the
question of disqualification, and subsequently prevails, public
confidence in the integrity of the legal system is proportionately
diminished. “Indeed, the more frequently a litigant is delayed or
otherwise disadvantaged by the unnecessary disqualification of his
lawyer under the appearance of impropriety doctrine, the greater the
likelihood of public suspicion of both the bar and the judiciary.”
Woods, 537 F.2d at 813.
Having considered the parties's submissions, in light of the foregoing legal
authorities, the Court, on the showing made, presently declines to disqualify Phelps from all aspects
of its representation of Plaintiff in this matter at this time. Thus, to that extent, IT IS ORDERED
that Heebe's motion is DENIED. IT IS FURTHER ORDERED, however, that on or before
Monday, April 13, 2015, Plaintiff, through counsel, shall submit the additional information outlined
below for the Court's consideration. Following that submission, if Heebe concludes further motion
practice regarding the issue of disqualification is warranted, he may proceed accordingly.
In reaching this determination, the Court notes, as urged by Plaintiff, the significant
fact that neither movant Heebe, nor any of the other defendants to this proceeding, contend that any
of them has ever been a Phelps client. Furthermore, Heebe has not identified any particular way in
which his rights are prejudiced by Plaintiff's counsel's firm's relationship with Nagin. On the other
hand, Plaintiff's allegations regarding Nagin and the Chef Menteur landfill accuse both Defendants
and Nagin, not just Defendants, of serious wrongdoing. This is true notwithstanding that Nagin is
not a defendant or specifically named co-conspirator.23 Nor do Plaintiff's allegations regarding
Nagin concern a minor issue in the case. To the contrary, as reflected in the other of the Court's
rulings, proving causation regarding the reason for the withdrawal of the Chef Menteur's emergency
authorization is an essential element of Plaintiff's RICO claims regarding that landfill. Further, it

23

See Rec. Doc. 106, ¶¶ 23-33.
9

appears that Plaintiff intends to attempt to offer the fact (at a minimum) of Nagin's 2014 conviction
as evidence to support its claims.24
It also is unclear, on the record presently before the Court, whether the ethics
proceedings in which Rosenberg has served as counsel for Nagin have entirely terminated or
whether some aspect of either remains ongoing. In other words, is Rosenberg presently representing
Nagin relative to that or any other matter or is Nagin instead a former Phelps client? Plaintiff's
submissions likewise do not indicate whether any Phelps attorney has informed Nagin of the
allegations that Plaintiff has directed against him in the Second Amended Complaint and/or inquired
whether he has any objection to Phelps' representation of Plaintiff in this matter, or instead consents
to it and waives any such objection. Although the record in this matter does not reflect that Nagin
has registered any objection, or filed a motion, relative to Phelps' representation and its allegations
involving Nagin, it is not entirely inconceivable that he might choose to do so at some point in this
proceeding, especially if discovery and testimony are sought from him.
Finally, it presently appears to the Court that one workable solution of this issue, not
requiring Plaintiff to obtain new counsel, would be to have Phelps counsel's representation of
Plaintiff, in this matter, limited to only the claims asserted concerning Jefferson Parish, with cocounsel, Baker Botts, hereinafter handling all aspects of this litigation relative to Plaintiff's claims
involving the Chef Menteur landfill. While one part of Plaintiff's submission arguably suggests that
Plaintiff has suggested this very division of labor amongst its counsel, others parts appear to suggest
that Phelps would refrain only from discovery directed to Nagin personally and any examination at

24

See note 8, supra.
10

trial.25 To the extent that the latter arrangement is what actually is being proposed, it appears to the
Court that the more prudent approach would be to have Phelps counsel removed from any aspect
of this proceeding in which Plaintiff's interests would be adverse to Nagin's, including discovery
(whether directed to Nagin or someone else), other pre-trial motion practice, and the presentation
of evidence and argument at trial. Given the relative recency of the addition of Plaintiff's allegations
that unlawful campaign contributions to Nagin were at least partially responsible for his decision
to withdraw the Chef Menteur emergency authorization, it is not apparent to the Court that such an
arrangement would impose substantial hardship on Plaintiff.
In any event, as stated, the specifics of the separate roles of Plaintiff's counsel being
proposed in response to Heebe's motion are not made sufficiently clear in the submissions before
the Court. Nor, importantly, has the Court been provided with written evidence of Plaintiff's consent
to any proposed severance of the roles and responsibilities of its counsel for the duration of this
proceeding.
Accordingly, as indicated above, IT IS ORDERED that, on or before Monday, April
13, 2015, Plaintiff's counsel shall submit the following: (1) a report of current representation of
Nagin by any member of the Phelps firm or, if all such representation has terminated, a statement
confirming that status and that Nagin has been so informed of the termination of that representation;
(2) a declaration from counsel (a) confirming that Phelps has provided Nagin with written notice of
the substance of the allegations in the Second Amended Complaint concerning him, and the 2006
withdrawal of the Chef Menteur landfill emergency authorization, as well as a copy of the pleading
itself, and (b) stating the date of such notice; (3) a copy of the written consent/waiver, or objection,

25

See Rec. Doc. 113, p. 16; Rec. Doc. 113, pp. 2-3 and 17-18; Rec. Doc. 113-1, ¶9.
11

if any, that Nagin provides or has provided to Plaintiff's counsel regarding Phelps' continued
representation of Plaintiff in this proceeding; (4) a written proposal of the specific division of labor
amongst Plaintiff's co-counsel that either already has been implemented and/or is proposed going
forward; and (5) written consent by an authorized representative of Plaintiff (as well as any
necessary written resolutions or other directives that Plaintiff's governing documents require from
Plaintiff's managing members) regarding any limitation of the scope of Plaintiff's counsel's
representation of Plaintiff in this matter, and/or permanent division of labor amongst Plaintiff's
counsel, that would operate to prevent one or more attorneys from serving as legal counsel to
Plaintiff with respect to any particular aspect(s) of this litigation.
New Orleans, Louisiana, this 27th day of March 2015.

_________________________________
KURT D. ENGELHARDT
United States District Judge

12