Burford v. Cargill Inc
REPORT AND RECOMMENDATIONS re 147 MOTION to Disqualify Counsel filed by Cargill Inc; recommended that motion be denied. Objections to R&R due by 6/8/2009. Signed by Magistrate Judge Mark L Hornsby on May 19, 2009. (crt,Dunford, T)
UNITED STATES DISTRICT COURT W E S T E R N DISTRICT OF LOUISIANA S H R E V E P O R T DIVISION
J O H N BURFORD V ER SU S C A R G IL L , INC.
C IV IL ACTION NO. 05-cv-0283 J U D G E HICKS M A G I S T R A T E JUDGE HORNSBY
R E P O R T AND RECOMMENDATION I n t r o d u c tio n Jo h n Burford, later joined by other plaintiffs, filed this proposed class action suit a g a in s t Cargill, Inc. based on claims that Cargill supplied the dairy farmer plaintiffs with feed in f e rio r to what Cargill had represented it would deliver. Before the court is a Motion to D is q u a lif y Plaintiffs' Counsel (Doc. 147) based on counsel's concurrent representation of th e plaintiffs in this action and some former Cargill employees whom Cargill sued in C a lif o rn ia . The parties have filed several affidavits related to the disqualification issue, and th e court permitted a hearing at which several witnesses testified. After careful consideration o f the relevant evidence and the governing legal standards, the undersigned recommends that th e Motion to Disqualify be denied. R elev a n t Facts A . Background of the Burford Case D r . John Burford, a DeSoto Parish dairy farmer, filed this action in state court against C a rg ill. He alleged that Cargill had been supplying him with a pelletized dairy feed that was
in f e rio r to what Cargill representatives had told him he was getting. Burford alleged that he m a d e this discovery when a Cargill salesman gave him a copy of the actual feed formulation f ro m a mill. Cargill removed the case to this court in February 2005. T h e Acme Dairy had already filed a similar suit against Cargill in Idaho, and that case w e n t to trial in May 2005 and resulted in a jury verdict against Cargill for $7,600,000. The ca se settled after trial. Harry Dehaan, an Idaho attorney and dairy owner/operator,
re p re se n te d Acme Dairy in that case. C o u n se l for Plaintiffs in this Burford case published a notice to farmers that this B u rfo rd case may become a class action suit against Cargill. Also, word of the Acme Dairy v e r d i c t began to spread among dairymen. Attorney Dehaan and counsel in this case were s o o n contacted by dairy farmers from across the country, and they joined forces. In early 2 0 0 6 , Burford amended his complaint in this case to include class allegations on behalf of all dairy farmers in the United States who purchased from Cargill pelletized feed for dairy c o w s or heifers. Plaintiffs allege that Cargill would send nutritionists to a dairy to tailor the ingredients o f feed pellets to the needs of the dairy's herd. Cargill deemed the precise ingredients trade s e c re ts and did not reveal them to the farmer. After the initial sale, according to the a lle g a tio n s , Cargill would reformulate the pellet as often as weekly to substitute cheaper b yp ro d u c ts from Cargill's other operations. Those byproducts, the plaintiffs allege, were not
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n u tritio n a lly equivalent and damaged the dairy farmers by reducing milk production, im p a irin g reproduction, and increasing mortality and illness among the herd. B. Background of the California Case M a tth e w Budine worked for Cargill for more than 18 years and was serving as the g en era l manager of the Pacific Coast region when he resigned in January 2007. Four dairy n u tritio n is ts who worked under Budine also left Cargill at the same time. Budine and three o f the other former Cargill employees (Brian Sundberg, Luciana Jonkman, and Todd S ch w eg el) formed an independent dairy consulting business named Progressive Dairy S o lu tio n s , Inc. ("Progressive"). The other departing employee, Douglas DeGroff, formed or b e c a m e associated with Diversified Dairy Solutions, LLC. C a rg ill filed suit in a California federal court against Progressive, Diversified, and all f iv e former employees. It obtained a TRO and had U.S. Marshals seize computers,
d o c u m e n ts , and other items from the homes of the former employees. The suit alleged that the defendants had misappropriated trade secrets from Cargill, engaged in unfair competition, a n d the like. Cargill resolved its disputes with Douglas DeGroff, Diversified, and Todd S c h w e g e l and dismissed them from the case. Progressive, Budine, Jonkman, and Sundberg, h o w e v e r, defended the allegations and filed a counterclaim against Cargill. The Progressive parties, in their counterclaim, alleged that the Progressive business m o d e l did not involve the actual manufacturer of feed. Rather, Progressive would create a c u sto m feed formulation best suited for a particular herd and allow the farmer to bid out the
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f e ed formulation to feed manufacturers for production. The Progressive parties contrasted th e business model of Cargill, which also manufactures feed and seeks to profit through the sa le of the feed. Budine, Jonkman, and Sundberg alleged that they had learned that Cargill d id modify and alter formulas without the knowledge of customers (as the plaintiffs in B u rf o rd have alleged). The counterclaim set forth a description of this Burford suit and a summary of its a l le g a t io n s . Jonkman and Sundberg alleged that, while they worked at Cargill, several c u sto m e rs asked them whether feed formulas were changed. Jonkman and Sundberg allege th a t they relied on information provided by Cargill (later discovered to be false) and assured th e ir dairy farmer customers that Cargill had not changed any feed formulations. Budine a ll e g e d that when he asked about the issue on behalf of Jonkman, Sundberg, and other e m p lo ye e s, Cargill assured Budine that no unauthorized changes had been made, and Budine p a s s e d on those assurances to employees and customers. B u d in e , Jonkman, and Sundberg alleged that, in the months preceding their leaving th e company, they learned that Cargill had changed customer fee formulations without a u th o riz a tio n . They alleged that the changes were made at the corporate level, causing the c o u n te rc la im a n ts to believe it would be futile to bring the "unauthorized and illegal p r a c tic e s " to the attention of their superiors. They alleged that their discovery of these "false a n d deceptive business practices" was the reason they left Cargill. They alleged that Cargill, in an effort to destroy their reputations and credibility, embarked on a campaign to disparage
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t h e m and their new business. The counterclaim, based on these and similar allegations, a s s e rte d a number of causes of action against Cargill. Lead counsel for Plaintiffs in this Burford case are Roy S. Payne and Sam N. G r e g o r io , who practice in Shreveport, Louisiana, together with Harry Dehaan of Twin Falls, Id a h o . Payne, Gregorio, and Dehaan enrolled in the California case as counsel for the Progressive/B u d in e defendants/counterclaimants. The District Judge in the California federal c o u rt, based on affidavits and other paper submissions, granted Cargill's motion to disqualify th e attorneys because of what the court found was an appearance of impropriety. Cargill, Inc. v . Budine, 2007 WL 1813762 (E.D. Cal. 2007). C . Hearing Permitted C a r g ill filed a similar motion to disqualify in this case, and the parties submitted a n u m b e r of affidavits. Plaintiffs' counsel requested a hearing to fully explore the issues, insisting that a hearing would show that the representations in the written submissions were in c o rre c t and that there is no ground for disqualification. The court, despite reservations a b o u t the propriety of a hearing on the issue, elected to permit the hearing, which lasted s e v e ra l hours. D. Roy Payne's Testimony A tto rn e y Roy Payne was the first witness. He testified that his first contact with the f o rm e r Cargill employees was when Burford co-counsel Harry Dehaan called him and said h e had been contacted by a former Cargill employee, later learned to be Brian Sundberg, soon
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a f te r the California suit was filed and the TRO issued. Payne downloaded pleadings from th e California case and sent them to Mr. Dehaan, who Payne understood was going to be ta lk in g to the former Cargill employees while he was in San Francisco that weekend. Payne a n d Dehaan discussed attorneys that they could recommend for the defendants in the C a lif o rn ia suit, but it never crossed Payne's mind to represent them himself. T h e former employees hired the Krieg, Keller firm in San Francisco to defend them i n the California case. The Burford attorneys soon got word that Krieg, Keller wanted to m e e t with them, so Shreveport attorneys Roy Payne and Sam Gregorio, along with Idaho a tto rn e y Harry Dehaan, traveled to San Francisco for a meeting at the Krieg, Keller office. P a yn e testified that he had been researching all along what restrictions there might be o n his contact with former Cargill employees. He was satisfied that the law in California p e rm itte d an attorney to contact the former employee of a corporate adversary. His intention in making the trip was to interview the former Cargill employees about their knowledge of C a rg ill' s dairy practices. Present at the meeting were the three Burford attorneys, Ken Keller and Chris Holland (o f Krieg, Keller), and former Cargill employees Budine, Jonkman, and Sundberg. Ken K e lle r described to the Burford counsel a counterclaim that had been drafted but not yet filed. H e stated that it was very expensive for Progressive Dairy and the former employees to pay fo r the cost of their defense and pursue the counterclaim on an hourly basis, so his firm re c o m m e n d e d that the California defendants get counsel to represent them on a contingency
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f e e basis. The Krieg, Keller firm had a policy not to undertake contingency representation. M r . Dehaan's name had come up as a possible attorney because of his well-known past litig a tio n against Cargill, as well as the pending Burford case. The Burford attorneys wanted time to consider the matter, and the meeting ended w ith o u t them having any substantive conversation with the former employees. The Krieg, K e lle r firm filed the counterclaim about a week after the meeting. Attorney Payne testified that the Burford attorneys had "no input" into the counterclaim, and the Krieg, Keller firm f i l e d the counterclaim after giving the Burford attorneys "just a short oral presentation." A tto rn e y Payne continued to research the legal claims and consider whether his group could lo g is ti c a l l y handle the California case. In his research, he came across a Minnesota case w h e re Cargill had succeeded in disqualifying class counsel in an employment case, so he was a w a re that was an issue he could expect to encounter. He researched other cases on the issue a n d determined that the key issue was for the former employee to avoid disclosing any a tto rn e y-c lie n t privileged information. Payne testified that Ken Keller reported at the meeting th a t he had spoken with his clients about that issue and was satisfied that they did not have a n y privileged information. A tto rn e y Kenneth Keller filed an affidavit in the California case, and Plaintiffs filed it as an exhibit at the hearing in this case. Keller testified that his clients, the former e m p lo ye e s of Cargill, left Cargill after they discovered the accuracy of the allegations made ag ains t Cargill in the Burford suit. Keller added that he understood his clients were aware
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o f attorneys Dehaan, Gregorio, and Payne because of their handling of the Burford case. " A c c o rd in g ly, [Keller] facilitated an initial meeting" between the former employees and the B u rf o rd attorneys. Keller testified that no confidential or privileged information was d is c u ss e d , and no documents were disclosed at the meeting. He adds that his firm later c o n su lte d with his clients to determine whether they had any privileged documents or in f o rm a tio n , and the firm determined that they did not. T w o letters are attached to Keller's affidavit. The first is from attorney Keller to the B u rf o rd attorneys. Keller writes that his clients have accepted his recommendation that they h ire the Burford attorneys to prosecute their counterclaim on a contingency fee basis. The se c o n d letter is from Budine, Jonkman and Sundberg to the Burford attorneys. They write th a t they have consulted with the Krieg, Keller firm about the nature of the attorney-client p riv ile g e and whether any information or documents obtained during their past employment b y Cargill could be protected by the privilege. The three former employees represent that th e y do not believe they have in their possession or control any privileged documents (other th a n some electronic documents that were returned to Cargill as part of the California litig a tio n ). They added that they would not reveal to the Burford attorneys any potentially p riv ile g e d communications, information, or documents. The Burford attorneys returned to California for a second meeting on May 4, where th e y were presented with the letters described above. Attorney Payne testified at the hearing th a t they had an "open session" about the issues to ensure that the former employees had in
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f a ct had a discussion about the issues addressed in the letters. Once the contingency a g re e m e n t and other documents were signed, the Burford attorneys, with Mr. Dehaan p a rtic ip a tin g at times by telephone, sat down with the former Cargill employees and started in t e rv i e w in g them about the facts of the California case. They discussed the employees' re sp o n s e to Cargill's allegations, what witnesses could testify on various points, and similar is s u e s. Payne testified that time pressures in the California litigation forced them to focus o n that case, and there was no discussion with the former employees about the Burford case. T h e Burford case was discussed only "in a general sense" in the context of why the e m p lo ye e s left Cargill and formed their own business. The former employees did not provide a n y documents to the Burford attorneys during the May 4 meeting. Payne testified that none o f the former employees told the Burford attorneys anything that Cargill's lawyers had ever s a id to them or that the former employees had said to Cargill lawyers. Payne testified that he and Gregorio came back to Shreveport after the May 4 meeting a n d began to "get on top of the pleadings" in the California case and prepare for a case m a n a g em e n t conference. At that conference, near the end of May 2007, Cargill advised the jud g e in the California case that Cargill would file a motion to disqualify the Burford atto rne ys. The motion was filed soon afterwards and briefed. The California federal court g ra n te d the motion on June 22, 2007. Payne testified that the Burford attorneys had no further d isc u ss io n s with the former Cargill employees after the ruling, except that Payne met with th e m in the Krieg, Keller offices to discuss the possibility of an appeal, which he ultimately
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d e ter m in e d was not procedurally available. The former employees soon retained California f irm s who took over the role of the disqualified attorneys. Payne testified that he did not see o r talk to the former Cargill employees after that meeting until the day of the hearing in this case. Payne testified that his initial purpose in traveling to California was to interview the f o rm e r Cargill employees about information relevant to the Burford case but, after his arrival, th e discussion turned to whether the Burford attorneys would sign on as counsel for the p ro p o s e d counterclaim. Payne said that when the Burford attorneys agreed to represent the f o rm e r Cargill employees in the California case, they did expect that the employees would e v e n tu a l ly offer helpful testimony in the Burford case, but that was an expectation he had re g a rd les s of whether he represented them. Payne testified that his firm has an exclusively c o n tin g e n t fee plaintiff's practice, which the California case fit within, and he believed the c o u n ter c laim had merit.1 E . Harry Dehaan's Testimony Attorney Harry Dehaan testified that his first contact with the former Cargill e m p lo ye e s was a telephone call from Brian Sundberg, who initially would not give his name. S u n d b e rg asked questions about the Acme Dairy case, and Dehaan explained the case to him.
The California district court later issued a series of written rulings and held a jury a n d bench trial on various claims and counterclaims. The end result was a dismissal of all o f Cargill's claims and all of the former employees' counterclaims, with the imposition of c o s ts on Cargill. The case is on appeal to the Ninth Circuit Court of Appeals. Page 10 of 39
N ea r the end of the call, Sundberg gave Dehaan his name and phone number. Sundberg ca lled again the next day, after he had been sued, and Dehaan agreed to meet with Sundberg a n d Sundberg's partners in San Francisco the next day, as Dehaan was already making the trip to attend a seminar. D e h a a n said the former employees were terrified and worried about losing their h o m e s. He tried to reassure them and told them about the homestead exemption provisions o f the law. He gave them the names of attorneys who might represent them in the California c a se . There were no discussions at that time about Dehaan representing them. He testified th a t he later learned that the former employees had agreed to hire the Krieg, Keller firm, of w h ic h Dehaan was not familiar. Dehaan testified that he agreed with the earlier testimony that described the meetings in California. He denied that he received any information from the former employees that c o u ld possibly have been communicated from Cargill's lawyers to them during their e m p lo ym e n t. He conceded on cross-examination that the contingency fee agreement with th e former employees obligated him and his co-counsel to not only prosecute the c o u n te rc la im but also defend the employees against Cargill's claims. Dehaan said the employees had told him that they had factual information that would s u p p o rt some of the allegations in the Burford case, and they would testify if asked, but they w o u ld not talk to Dehaan about the details of what they knew until he made a decision about w h e th e r he would be their attorney. Dehaan attributed that reluctance to their fears stemming
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f ro m Cargill's suit against them for divulging trade secrets. Dehaan admitted that he a tte n d e d the meeting at Krieg, Keller with the intention of getting information from the f o rm e r employees that might be helpful in Burford, but the Keller firm was zealous in p ro tec tin g their clients and minimizing interaction with the Burford attorneys. He said he did n o t remember any former Cargill employee use the term "star witness" to describe a role he o r she could play in Burford. F . Matthew Budine's Testimony M a tth e w Budine testified at the hearing that he was the general manager of the Pacific C o ast business when he resigned from Cargill. He was also a member of the Cargill Dairy V isio n Team for the last couple of years of his employment. That group looks at strategic m a rk e tin g and business decisions for the dairy group. Budine said that he did not view litig a tio n as part of his responsibility. He was generally aware of the Burford case, and it was m e n tio n e d now and then at work, but he was not involved in any strategy or tactics planning f o r the litigation. Budine gave three weeks notice of his resignation, but Cargill asked him to leave i m m e d i a t e l y. Cargill soon sent him and the other departing employees a separation
a g re e m e n t. They also sent him a letter that generally advised him about confidential in f o rm a tio n , followed by a second letter that specifically referred to the Burford case and d ire c te d that information about Burford was to be held confidential.
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B u d in e consulted an employment lawyer about the separation agreement, and the a tto rn e y contacted Cargill to negotiate some of the issues when, without notice, Cargill filed th e California federal suit and served an order on Budine and the other former employees to s e iz e their computers and other information. The employment lawyer advised Budine that th e Cargill suit would crush the Progressive Dairy business because of the expense of d e f en s e , and the former employees were advised to find another line of work. B e f o re Cargill had filed its suit, rumors were going around at a dairy show that Cargill w o u ld sue the Progressive Dairy group. The former employees started asking for
rec o m m en d atio n s for counsel. Mr. Sundberg called Harry Dehaan, but other people were a ls o consulted. Budine, Sundberg and Jonkman met with Mr. Dehaan near the Oakland a irp o rt to discuss their situation, and Dehaan referred them to some lawyers in the bay area. T h e former employees interviewed three or four firms and settled on the Krieg, Keller firm, w h ic h Dehaan had not mentioned. Matt Swanson, whom Budine knew from the industry, h a d recommended the Krieg, Keller firm. Budine testified that attorney Keller's objective was to negotiate the TRO issues and th e n retain contingency attorneys. The former employees knew immediately that the defense f e es would soon put them out of business. Mr. Sundberg recommended Harry Dehaan as c o n tin g e n c y counsel, and the April 10 meeting was scheduled. B u d in e testified that the Krieg, Keller attorneys met with the former employees before th e meeting and set out the "ground rules" for them, including the need to keep the discussion
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f o c u se d on the California case and make sure that no privileged information was given to the B u rf o rd attorneys. Budine testified that the conversations in the meetings were about the C a lif o rn ia case, and he denied sharing with the Burford lawyers any information he got from law ye rs at Cargill or documents of any kind. Budine also agreed with Payne that the only to p ic at their final meeting was the disqualification issues and any appellate remedy. O n cross-examination, Mr. Budine said that he was familiar with the Acme Dairy v e rd ic t because he had read about it in a magazine. After Acme, Cargill was faced with the G ree n River Dairy case and the Baseline case. Mr. Budine admitted that he received expert re p o rts regarding records analysis and nutritional opinions in connection with those two c a s e s , and he was asked for his comments on the nutritional and dairy management aspects. A number of emails were introduced into evidence that showed Budine was among the re c ip ie n ts of correspondence, often with a Cargill attorney (Karin Nelsen) and a paralegal (K a re n Gooch), that related to opinions or reports offered by experts or consultants that C a r g ill had retained in connection with litigation similar to the Burford case. Budine was s o m e tim e s asked for and offered his comments on the nutritional and related issues. For e x a m p le , Attorney Karin Nelson asked Budine and others in Cargill to assist with the B ase lin e litigation in Idaho. Outside counsel had provided Budine and the others a summary o f the case as well as Baseline's expert information and drafts of Cargill's external expert re p o rts. Budine and the others were asked to review the information so that Cargill could " u tiliz e your expertise before our final expert reports are submitted and before the mediation
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th a t is scheduled for the Baseline case." Budine also received from Attorney Nelsen a copy o f Cargill's mediation statement that would be submitted in the Baseline case, but Budine d e n ie d having any input into the statement. Budine was also among the recipients of c o rre sp o n d e n c e regarding Mr. Dehaan's perceived litigation approach and discussions of h o w Cargill should respond to the approach. The correspondence also included a critique o f Cargill's expert testimony in prior cases and a discussion of how the testimony could be im p ro v e d in future litigation.2 S p e c if ic to the Burford case, Budine received email informing him and other m a n a g ers that a motion had been filed to certify Burford as a national class action. The n o tice generally stated that Cargill believed it had a good defense, that the managers should a n ticip a te promotions of the case via advertisement, and gave instructions on how to handle a n y media, customer, or employee inquiries about the case. Attorney Nelsen wrote Budine a n d other members of the Dairy Vision Team and asked them to be on the lookout for a d v e rtis e m e n ts about the Burford case in dairy publications. An agenda for a meeting a tten d e d by Budine included the item: "Class action suit - Karin wants to discuss for 1/2
Much of the correspondence that Cargill introduced as evidence was redacted so that the Burford attorneys would not be privy to its contents. Cargill filed in the record b o th a redacted set of exhibits and (under seal) an un-redacted set. The court has a tte m p te d to fairly summarize some of the redacted material in a fashion that will convey its relevance to the issues at hand, but without revealing any specific Cargill strategies, ta c tic s, or confidential information. Page 15 of 39
h o u r," but Budine testified that Nelsen showed up only at lunch and did not discuss the B u rf o rd case. Budine also received correspondence directing his attendance at a conference call for g e n e ra l managers to discuss procedures that the law department would be implementing re g a rd in g document retention and to discuss document requests that could be expected. B u d ine received an email from paralegal Gooch regarding an approaching visit by members o f the dairy legal team to meet with people in Budine's region who would have the most k n o w l e d g e on the subjects of the litigation. Budine was included among the people who w o u ld be interviewed, and paralegal Gooch advised that the team would copy certain d o c u m e n ts from Budine's computer and paper records. Another email from Gooch to B u d in e and others further discussed the document collection process that would be used in c o n n e ctio n with the class-action litigation. Budine also offered testimony in camera, which w ill be reviewed below. G. Brian Sundberg's Testimony Brian Sundberg testified that he worked for Cargill for about eight years as a dairy n u tritio n is t. He had the title of dairy management consultant at the time he left the company. S u n d b e rg said that after he left Cargill he heard rumors that the company would sue the f o rm e r employees who formed Progressive Dairy. He had never been sued before and did n o t know any attorneys, but he did know Harry Dehaan's name, and he called him for advice sh o rtly before he was served with the California suit.
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S u n d b e rg offered testimony similar to Budine about the meeting near the Oakland a irp o rt and the attorney selection process. He said it was the idea of the Krieg, Keller law ye rs that the former employees consider hiring Dehaan as their contingency fee counsel. S u n d b erg also described the meetings with the Burford attorneys similarly to Budine's d e sc rip tio n . Sundberg denied that he played any role in developing legal strategy at Cargill, th a t he ever talked to Cargill attorneys, or that he had any substantive discussions with the B u rf o rd attorneys about the Burford case. M a rk Carpenter is a Minneapolis attorney. His Faegre & Benson firm represents C a rg ill in the Burford case. By agreement of the parties, attorney Carpenter offered t e s t i m o n y in camera, with only the court, court staff, and the court reporter present. C a rp e n te r testified in two such sessions, the first following the courtroom testimony of Brian S u n d b e rg . Attorney Carpenter testified that he had a conversation with Sundberg in December 2 0 0 6 . Sundberg told him that he had been in the office of a dairy client when the owner, Mr. H e id a , received a phone call from someone associated with the Burford plaintiffs. Mr. Heida re la te d to Mr. Sundberg that he had called a toll free number that he had seen in a publication a n d left a voice mail. Sundberg, according to Carpenter, said that Mr. Heida told the person o n the phone that Cargill had done a fine job for him. (Heida's dairy later joined as a p lain tiff in this case to sue Cargill.)
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H e id a eventually received, as a result of his call, a questionnaire, a retention a g re e m e n t, and a letter from Mr. Dehaan. Mr. Sundberg obtained a copy of the documents s e n t to Mr. Heida, and they found their way into the hands of Cargill counsel. Attorney C a rp e n te r testified that he talked to Mr. Sundberg about possibly executing an affidavit about th e events, which Carpenter believed might support a discovery motion related to the q u e stio n n a ire s completed by various dairies. Mr. Sundberg said that he would prefer not to s u b je c t his customer, Mr. Heida, to the litigation process. Mr. Carpenter called Mr. Budine, w h o was Sundberg's superior, and Budine agreed with Sundberg. Mr. Sundberg was questioned in camera about his visit with Mr. Heida and the related e v e n ts . He did not remember many of the details, but he did not have any significant d is a g re e m e n ts with Mr. Carpenter's recollections (despite Sundberg's earlier testimony that h e never talked to a Cargill lawyer). Sundberg also offered that he and his co-defendants w e re being represented in the California case by two law firms, one in Los Angeles and the o th e r serving as local counsel near the Fresno court where the case was pending. Both firms a g r e e d to take the case on a 100% contingency fee basis. H . Luciana Jonkman's Testimony L u c ian a Jonkman did not testify at the hearing, but Plaintiffs offered her affidavit f ro m the California case. Jonkman testified by affidavit that she did not recall discussing the s tra te g y, arguments, or other substantive aspects of the Burford case with anyone, including C a rg ill's lawyers. She did learn that one of her dairy customers had joined the Burford case,
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a n d she asked Cargill for assurance that the company would indemnify her and pay her legal c o sts if she were to become involved in the case, and she received that assurance. Jonkman ac k n o w led g e s that other former employees recall providing documents to Cargill lawyers s o m e tim e in 2006 (as part of the company's document collection procedure), but she has no re c o lle c tio n that she provided any material to Cargill lawyers. She adds that she has been in s t ru c t e d by her counsel not to discuss with anyone other than her Krieg, Keller counsel a n yth in g that Cargill's lawyers may have said to her or in her presence. I. Todd Schwegel's Testimony T o d d Schwegel testified at the hearing that he did not participate in the meeting with H a rry Dehaan near the Oakland airport. He did accompany the other former employees when th e y interviewed potential attorneys, including the Krieg, Keller firm. He elected, after the in itia l consultation with counsel, to pursue a resolution of Cargill's suit against him by re tu rn in g all Cargill property of any kind, leaving his job at Progressive Dairy, and starting a business from scratch under a "clean room" procedure. Mr. Schwegel testified about a conversation he had with Mr. Sundberg. Schwegel d e sc rib e d it as follows: "What he told me was, specifically, was that Harry Dehaan had said that he thought he (Dehaan) could help him (Sundberg) out in his case; in exchange, if Mr. S u n d b e rg had some plane tickets show up on his doorstep, would he be willing to come to L o u is ia n a ." Schwegel added that Sundberg told him that Sundberg "thought he (Sundberg) c o u ld be a star witness in this in exchange for the information he knew." Schwegel added
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th a t Sundberg said he could be a "star witness in exchange for (which) they wouldn't have to pay these large legal fees." O n cross-examination, Mr. Schwegel appeared less than certain about whether it was S u n d b e rg or perhaps one of the other former employees) who said their information could b e exchanged, and he was not sure if the said exchange would be for free representation or m e re ly help in finding representation. With regard to plane tickets, Schwegel admitted that C a r g ill had provided him plane tickets to travel to Louisiana for the hearing. It was also d ra w n out that Mr. Schwegel's settlement with Cargill obligated him to pay $1,000,000, of w h ic h he had paid $12,000 and expected to make another payment of $6,000, with the re m a in in g $982,000 to possibly be waived by Cargill if Schwegel remained in compliance w ith the agreement. One aspect of the agreement is a non-disparagement clause, which S c h w e g e l said allowed him to tell the truth under oath, and he insisted that he was telling the tru th at the hearing and that Cargill had not suggested to him what he should say. A tto rn e y Harry Dehaan returned to the stand to respond to Mr. Schwegel's testimony. H e was asked if he ever told Sundberg, Jonkman, or Budine that he would compensate them in return for testimony. He answered: "I never offered money or free legal help or pro bono h e lp in return for false testimony, and I highly resent the inference and the allegation." He d e n ie d that there was any mention of airline tickets or pro bono work.
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J . Robert Sheffer's Testimony R o b ert Sheffer was the general manager in the Northeast division at the same time Mr. B u d in e was the general manager in the Pacific division. The two men were college c las sm a tes and fraternity brothers, and they held similar positions at Cargill throughout their c a re e rs with the company. They also served together on the Dairy Vision Team, which is m a d e up of eight to ten persons who set the vision for Cargill's future direction. S h e f f er testified that he recalled, when he was chair of the Dairy Vision Team, that th e Cargill legal team asked the group to help prepare a sort of Frequently Asked Questions d o c u m e n t about the Burford case. He said the group provided feedback to the members of th e legal team (Nelsen, Carpenter and Gooch), who generated a document that was sent to a ll general managers. Sheffer said he considered the feedback discussions between the legal tea m and the Dairy Vision Team to be privileged and confidential. S h e f f er described a conference call he had, in his capacity as a manager, with the C a rg ill legal team. Neither Mr. Budine nor other former employees were parties to the call, b u t Cargill offered Sheffer's description at the hearing in an effort to demonstrate the sort o f communication that might occur between the legal team and a manager. Sheffer said the c o n f e r e n c e was geared toward scheduling the gathering of some information, but they also h a d "a good dialogue about ideas, thoughts, practices that we thought would be coming up in the case and any question that I asked was answered." He remembered discussions about th e "ideas or thoughts or tactics that would be used" in the case.
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K . The Sunnyside Dairy Communications Attorney Mark Carpenter, outside counsel for Cargill in this Burford case, testified b y affidavit, in open court, and in camera. Carpenter testified that Budine emailed Carpenter to ask him for advice on how to proceed regarding Cargill's previously rejected offer to S u n n ysid e Dairy that Cargill write off a large feed bill in exchange for a release of liability o n any performance issues with the Sunnyside herd. (Such offers later became a subject in this litigation and prompted a request to Judge Hicks to enjoin the settlement strategy.) Attorney Carpenter replied to Budine with his advice and also offered his thoughts on h o w the issue might factor into class certification issues in the Burford case. Carpenter a d d e d that he would need Budine to keep his memory sharp on the issues so that he could p ro v id e an affidavit that Carpenter could use when he briefed the certification issue. Budine d id provide an affidavit to Carpenter about the Sunnyside Dairy issues after the Burford p la in tiffs sought injunctive relief. There was an exchange of emails among Budine, paralegal G o o c h , and attorney Carpenter about the contents of the affidavit and possible revisions. C arp en ter, in camera, discussed the un-redacted email regarding the Sunnyside Dairy a c c o u n t. The emails show that Budine provided Carpenter information, and Carpenter re sp o n d e d with a legal opinion on the status of the outstanding account, as well as a brief m e n tio n of how the facts might impact class certification issues. Carpenter testified that the s e ttle m e n t strategy employed on the Sunnyside account had originally been proposed by B u d in e , and the two of them had conversations about it during the litigation of the injunction.
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B u d in e , in camera, generally remembered the attempt to settle with Sunnyside Dairy and later c o n v e rs a tio n s with attorney Carpenter about how that situation related to the request for in ju n c tiv e relief in this case. L . Other Testimony About Budine's Role A tto rn e y Carpenter testified by affidavit and in court that he had participated in ap p rox im at ely six privileged (in his opinion) discussions with Budine related to the Burford c a se . He conceded on cross-examination that managers such as Budine are not decision m a k e rs with regard to litigation. Rather, Carpenter and other outside counsel looked to the C a rg ill in-house legal team, which received direction from executives in the home office. A c c o rd in g ly, Carpenter did not present any litigation strategy to Budine in an effort to get h im to approve it, though he said he was open to Budine's suggestions for any modification. C a rp e n te r did not consider Budine to be someone who was managing the litigation. And he c o n c ed e d that he had no evidence that any of the former employees had provided any p r iv i le g e d documents or communications to the Burford attorneys. A tto rn e y Carpenter testified in camera that the Cargill legal team selected Budine and th re e other employees to serve as an internal expert team related to the Baseline case. Budine w a s the only general manager to serve on the team, which was formed in late 2005 and c o n tin u e d through the end of the litigation, which was a couple of months after that. The c o u rt asked Carpenter if he could point to any documents that specifically stated that Budine w a s a member of an internal expert team. Carpenter did not identify any direct
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c o m m u n ic a tio n that announced the team had been formed or identified it by name as the " in t e rn a l expert team", but Carpenter did point to emails from attorney Karin Nelsen to B u d in e and the other team members that supported his testimony. (The court has noted an em ail from paralegal Gooch to Budine and another person in which she refers to them as part o f the "internal consulting team.") T h o se emails, some of which were discussed above during the summary of Budine's tes tim o n y, arranged a meeting to discuss the Baseline case. The recipients were told that it w a s important for them to review the Baseline expert information, drafts of Cargill's external e x p e rt reports, and a summary of the case that was drafted by outside counsel. Budine and the other three were told to do this so that the legal team could "utilize your expertise" before C a rg ill submitted its final expert reports and before an approaching mediation. The counselp re p a re d summary referred to by Nelsen was marked "Privileged and Confidential AttorneyC lie n t Communication" and was an executive summary of the Baseline case. The meeting to o k place on January 25, 2006, and the participants included Budine, the other members of the internal team, attorney Carpenter, paralegal Gooch, and a non-testifying consulting expert w h o was working with Cargill. The testifying experts later joined the conference call for the s e c o n d half. Carpenter testified in camera that the discussions included how to most effectively re b u t the Baseline allegations through expert reports and what additional work or analysis b y the experts would do that. Carpenter's notes included references to input by Mr. Budine
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d u rin g the discussions. The court has reviewed Carpenter's handwritten notes, and they do in c lu d e references to Mr. Budine suggesting responses to certain positions taken by the B a se lin e experts. Notes also indicate that Budine suggested a way to portray the plaintiff d a i ry and its operations to explain changes in the herd. According to Carpenter's notes, B u d in e also explained during the call that a rule employed by one Baseline expert was not a p p lica b le in the geographical area of the Baseline dairy. Budine also offered comments a b o u t the damages calculation. A tto rn e y Carpenter also testified about communications in early 2006, soon after the B u rf o rd plaintiffs indicated they would pursue class allegations. Carpenter spoke to Andrew L o d e r (of Cargill) about what resources could be drawn upon to defend Cargill better than w a s done in the Acme case. Loder suggested that Carpenter talk to Mike Watson, a Cargill b u s i n e s s development manager who was familiar with the events leading up to the Acme c a se . That led to Mike Watson sending an email to attorney Carpenter, with a copy to Budine a n d Loder. The email offered Watson's recommendations on what issues should be
e m p h a s iz e d or avoided to better defend against the claims in Burford. He also offered s p e c if ic recommendations on how to respond to part of Mr. Dehaan's successful approach in the earlier case. Christian Walker is an attorney with Faegre & Benson, the same firm in which a tto rn e y Mark Carpenter works. Walker testified that he works in the De Moines, Iowa o f f ic e . As a second-year associate, his role in the Burford case was focused on discovery.
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H e testified (in open court) that he had conference calls with general managers, including B u d in e , to outline the litigation, some of Cargill's defenses to the class action assertions, and a tte m p t to identify key personnel and documents relevant to the claims. Walker did not tra v e l to the Pacific Coast region to collect documents or ever personally meet with Budine. A tto rn e y Carpenter testified in camera about a conference call with Budine in July 2 0 0 6 . Carpenter said the meetings were arranged with each general manager to learn more a b o u t the policies in each of Cargill's regions, which might bear upon class certification i s s u e s in this Burford case. Carpenter said he led off the call by summarizing the claims, d e sc rib in g the time frame at issue, talking about the policies he believed were most relevant, a n d discussing the strategy for defense of class certification. Carpenter testified that Budine p o in te d out some facts about the forms of Cargill feed, which Carpenter said was exactly the typ e of information he was looking for regarding the class issues. Budine also offered during the discussion his view that two of the allegations pursued in an earlier case were n u tritio n a lly inconsistent. C a rg ill paralegal Karen Gooch testified in camera. She offered testimony similar to a tto rn e y Carpenter that Budine was on the internal expert team for the Baseline case. She s a id that Budine was a key member of the team and not just a document locator. The rest of h e r testimony largely related to correspondence and meetings that were addressed by other w itn e s s e s .
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B u d in e also testified in camera on these subjects. He said he did not remember re a d in g the Baseline executive summary that was emailed to him and others. The court noted th a t though Cargill is a large company, Budine's name kept coming up on correspondence f ro m lawyers who were communicating about or looking for information about litigation. B u d in e was asked if he was part of an internal expert team or the like. He responded: "I was a go-to person in Cargill for any dairy nutrition problem across the country." He said he had tra v e le d to Maine, Hawaii, and other areas where there had been problems arise because he h a d been "the type of person to go in and help fix the problem." Budine said the Baseline c a se was "out of my area," and he got involved because of Michael Watson (whom he p e rc e iv e d to be part of the problem) and was sent to California to work under him. Budine a d d e d that he believed that "from a nutritional troubleshooting standpoint I think I was their n u m b e r one guy in the company." B u d in e testified that he could not recall the specific conference call that Mr. Carpenter d e sc rib e d . The court asked Budine about several points or suggestions that Carpenter's notes in d ic a te d Budine offered about the litigation that was discussed during the call. Budine e x p re ss e d little memory of the matters, and said he would have offered his nutritional opinion o n the issues. Budine otherwise generally downplayed his role in connection with litigation to that of a logistics coordinator, arranging for the collection of documents by the legal team o r providing the names of persons who could best demonstrate a Cargill dairy system called M A X . Budine closed by saying that he understood Cargill now wanted to portray him as
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" th e most important person in the world" but, from his perspective, he was trying to run a b u s in e s s and the lawyers were "basically asking me to go fetch things." D is q u a lific a tio n of Counsel: Basic Legal Standards M o tio n s to disqualify counsel are decided based on state and national ethical sta n d a rd s. In this case, the relevant ethical rules and standards include the local rules of this c o u rt, the American Bar Association's Model Rules and Code, and the Louisiana Rules of P rof essio n al Conduct. Horaist v. Doctor's Hosp. of Opelousas, 255 F.3d 261, 266 (5th Cir. 2 0 0 1 ). Local Rule 83.2.4W adopts the Rules of Professional Conduct of the Supreme Court o f Louisiana, and those rules are based in turn on the ABA's Model Rules of Professional C o n d u c t. Id. In considering a motion to disqualify, the court views the rules in light of the party's rig h ts and the public interest. In addition to the specific rules that apply, the court considers w h e th e r 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 im p ro p rie ty outweighs any social interests which will be served by the lawyer's continued p articipa tio n in the case. In re Dresser Industries, 972 F.2d 540, 543-44 (5th Cir. 1992). T h e parties have briefed at length a number of cases, including Williams v. T ra n sw o rl d Airlines, Inc., 588 F.Supp. 1037 (W.D. Mo. 1984) and others cited in the C a lif o rn ia decision, Cargill, Inc. v. Budine, 2007 WL 1813762 (E.D. Cal. 2007), all of which a d d re ss e d motions to disqualify counsel in similar but distinct settings. Those several
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d e c is io n s , most from other district courts, contain useful discussions of the law, but none of th e m are controlling, and each stands on its unique facts. R u le 3.4(b) L o u is ia n a Rule of Professional Conduct 3.4(b) provides that a lawyer shall not "offer a n inducement to a witness that is prohibited by law." Cargill, pointing primarily to the te stim o n y of Todd Schwegel, argues that the "understanding" of the former employees " a p p ea rs to be" that their cooperation by testifying in the Burford case was being exchanged f o r Burford counsel's help in the California case, "potentially implicating" the rule. See C a rg ill's post-hearing memorandum at Doc. 201, p. 1. Cargill urges that the evidence s h o w e d that former employees had an understanding, whether nurtured intentionally by a tto rn e y Dehaan or not, that Burford counsel would help the employees fight Cargill in the C a lif o rn ia case in exchange for their being "star witnesses" in this case. T h e evidence did not establish a violation of Rule 3.4(b). Todd Schwegel, Cargill's p r in c i p a l witness on the issue, could offer only that one of his fellow departing employees, a n d he was not sure which one, said that their information about Cargill could be exchanged, b u t Schwegel was not sure if the exchange would be for free representation or mere help in f in d in g representation. Even if Mr. Sundberg or other of the departing employees considered h im s e lf a potential "star witness" in this Burford case - and that may yet turn out to be true th a t does not mean he came to that understanding because any of the Burford attorneys o f f ere d him an inducement prohibited by law. Cargill's case on this point is built on the
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un certa in hearsay testimony of a witness who has a $1,000,000 credibility issue, coupled with a request that the court draw from the circumstances an inference of highly unprofessional conduct when other reasonable inferences are permitted. The court has weighed the evidence, in c lu d in g the credibility of the witnesses, and finds that the evidence does not establish a v io la tio n of Rule 3.4(b). Sharing of Privileged Information L o u is ia n a Rule of Professional Conduct 4.2(b) provides that a lawyer shall not c o m m u n ic a te about a case with a person the lawyer knows is "presently" an employee of a re p re se n te d organization.3 T h is court has interpreted the rule and its predecessor versions to p e rm it counsel to conduct ex parte interviews of former employees of a corporate or other o rg a n iza tio n a l adversary, provided counsel does not attempt to discuss matters subject to atto rne y-clien t privilege. The approach is reflected in cases such as Jenkins v. Wal-Mart S tores, Inc., 956 F.Supp. 695 (W.D. La. 1997). See also Dane S. Ciolino, Lawyer Ethics
R u le 4.2 currently provides: In representing a client, a lawyer shall not c o m m u n ic a te about the subject of the representation with: ( a ) a person the lawyer knows to be represented by another lawyer in the matter, unless the lawyer has the consent of the other lawyer or is authorized to do so by law or a court o rde r. (b) a person the lawyer knows is presently a director, officer, employee, member, s h a re h o ld e r or other constituent of a represented organization and (1 ) who supervises, directs or regularly consults with the organization's lawyer co n ce rnin g the matter; (2 ) who has the authority to obligate the organization with respect to the matter; or (3 ) whose act or omission in connection with the matter may be imputed to the o rg a n iz a tio n for purposes of civil or criminal liability. Page 30 of 39
R e f o rm in Perspective: A Look at the Louisiana Rules of Professional Conduct Before and a f te r Ethics 2000, 65 La. L. Rev. 535, 581 (2005) ("As to contacting constituents of a re p re s e n t e d organization, a lawyer is free to communicate with any former employee who is not independently represented."). Cargill argues that its former employees shared p riv ile g e d information with Burford counsel or, in the alternative, the court should presume s u c h information was shared. The court finds that Budine's role in the earlier and similar dairy litigation was greater th a n his recollection suggested. The court is persuaded by testimony, notes from meetings, a n d emails that demonstrate Budine was both a high-ranking manager and a member of a s e le c t group of persons who served as an internal expert or consulting team. As a member o f that group of experts, as well as in his capacity as a manager, Budine was privy to c o m m u n ic a tio n s to and from the legal team that discussed legal strategy and ideas concerning e x p e rt testimony relevant to dairy litigation. The evidence shows that Budine was not merely re c e iv in g copies of correspondence because he was a manager, but because he was actively p a rtic ip a tin g in such discussions. Attorney Carpenter's notes from one meeting show that Budine had a number of c o m m e n ts to offer regarding responses to experts in the Baseline case. Mr. Budine attempted to downplay his role by saying that he gave only his "nutritional" opinion, but it was not n e c e ss a ry for Mr. Budine to direct or approve legal strategy before his conversations with c o u n se l for Cargill would be privileged. There was a meeting of internal experts (later joined
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b y external experts) with counsel to discuss various aspects of the expert testimony and to h e lp counsel prepare for a mediation. It may be that the resulting reports were disclosed to th e opposing party and that the principal facts that were discussed could be discovered in litig a tio n , but the communications during that meeting were nonetheless privileged. The evidence also showed that Budine had privileged communications with attorney C a rp e n te r related to the Sunnyside Dairy issues and related litigation for injunctive relief. A tto rn e y Carpenter disclosed, during those communications, some of his thoughts on how t h e Sunnyside matter could relate to a class certification issue. The evidence also showed that Brian Sundberg had communications with attorney Carpenter about his visit with Mr. H e id a and a potential discovery motion related to the questionnaires that Burford counsel s e n t to potential plaintiff dairies. Accordingly, the former employees did possess knowledge o f privileged communications between themselves and Cargill counsel. T h e court finds that Burford counsel have demonstrated to the satisfaction of the u n d e rs ig n e d that the former Cargill employees did not disclose to them privileged in f o rm a tio n during Burford counsel's brief representation of the former employees. The B u rf o rd attorneys and the former Cargill employees did enter into an attorney-client r e la ti o n s h ip , which is of a nature that confidences are exchanged freely, but the evidence sh o w s that this was a unique attorney-client relationship. Before the attorneys ever spoke to th e clients directly, the clients were counseled by the Krieg, Keller firm about the privilege is s u e s, and all persons concerned put into writing their understanding that the former
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em p loyee s might possess privileged information but that it was not to be shared with Burford c o u n se l. Attorney Payne was persuasive in his testimony about the great care that was taken ab o u t this issue so as to avoid any impropriety. The Jenkins decision recognized that there " a lw a ys exists a concern that former employees may disclose privileged communications," a n d there is risk in letting the former employees decide what is and is not privileged, but the c o n c ern "can be mitigated with an appropriately tailored order proscribing any p riv ileg e-se n sitiv e inquiries by opposing counsel." Jenkins, 956 F. Supp at 696 n.2. There w a s no tailored order in this case, but there was great care taken by a group of lawyers who re se a rc h e d the issues and set forth the ground rules in writing before there was any su b sta n tiv e communication between the former employees and Burford counsel. T o the extent that there is a legal presumption that privileged information is shared d u rin g such an attorney-client relationship and Cargill has not cited any controlling au tho rity that mandates such a disqualifying presumption in these circumstances the court f in d s that it was rebutted by the evidence at the hearing. This court, unlike some courts that h a v e employed such a presumption, conducted a hearing, fully explored the relevant facts, an d assessed the credibility and weight of the testimony. After that full exploration, the court f in d s that the former Cargill employees did not improperly disclose any privileged in f o rm a tio n to the Burford attorneys. No witness pointed to a single disclosure.
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A p p ea ra n ce of Impropriety C o u rts have also disqualified counsel based on an appearance of impropriety. The d o c trin e finds its roots in former ABA Canon 9 and the common law developed by the c o u rts . The Fifth Circuit discussed the doctrine in Woods v. Covington County Bank, 537 F .2 d 804, 812-13 (5th Cir. 1976). The Court observed: "The requirement that a lawyer avoid e v e n the appearance of impropriety reflects the bar's concern that some conduct which is in f a ct ethical may appear to the layman as unethical and thereby erode public confidence in the ju d ic ia l system or the legal profession." Id at 813. Thus, courts have disqualified attorneys u n d e r the appearance of impropriety doctrine even though there was no evidence of actual w ro n g d o in g . The Fifth Circuit recognized, however, that motions to disqualify can be used f o r strategic purposes, and the disqualification of a lawyer based on an overly broad a p p lica tio n of the doctrine would delay or disadvantage the affected party and give rise to its o w n likelihood of public suspicion of the bar and judiciary. Consequently, the Court stated th a t there need be no proof of actual wrongdoing, but "there must be at least a reasonable p o s s ib i lity that some specifically identifiable impropriety did in fact occur." Id. See also F D IC v. U.S. Fire Ins. Co., 50 F.3d 1304, 1316 (5th Cir. 1995) ("rather than indiscriminately g u ttin g the right to counsel of one's choice, we have held that disqualification is unjustified w ith o u t at least a reasonable possibility that some identifiable impropriety actually o c c u r r e d ." ) .
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T h e court found above that the evidence does not establish to the satisfaction of the u n d e rs ig n e d that there has been an actual violation of the Rules of Professional Conduct or th e improper disclosure of privileged communications. There are, however, facts that leave a t least a reasonable possibility that former Cargill employees disclosed, even inadvertently, p riv ile g e d communications to Burford counsel. The California federal court issued a c o m p e llin g opinion, albeit without a hearing, that expressed great concern that non-lawyer e x e cu tiv e s such as Mr. Budine could effectively communicate with his counsel about the C a lif o rn ia litigation without some disclosure. The undersigned has found, based on a p re p o n d e ra n c e of the evidence standard, that there were no disclosures, but that does not p re c lu d e a reasonable possibility that there was disclosure. Budine was a member of a team o f internal experts and communicated with Cargill counsel about expert opinions, approaches to litigation and expert positions in a similar case, and he received a number of email and tele p h o n e communications from the Cargill legal team about this and similar litigation, all o f which related to his reason for leaving the company and entering the California suit. Thus, o b je c tiv e grounds exist for an appearance of impropriety. An attorney need not be disqualified even if there is an appearance of impropriety. T h e court must also find that the "likelihood of public suspicion or obloquy outweighs the s o c ia l interests which will be served by a lawyer's continued participation in a particular c a se ." Woods, 537 F.2d at 813 n.12. This requirement was also observed in Horaist, 255 F .3 d at 266, when the Court stated that disqualification is proper only when the first factors
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a re present and "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." The court m u s t keep in mind the fundamental importance of safeguarding popular confidence in the in t e g rity of the legal system, but it also must be mindful that attorney disqualification is a s a n c tio n "that must not be imposed cavalierly." FDIC v. U.S. Fire, 50 F.3d at 316. A n y public concern about impropriety in this case was alleviated to a large extent by th e quite brief time which Burford counsel had any communications with the former Cargill e m p lo ye e s and the advance ground rules that were established. The evidence showed that th e Burford attorneys never spoke directly to the former Cargill employees until May 4, 2007, a n d then under constant awareness of the privilege issues, and the California court ended the re p re se n ta tio n on June 22, 2007. Since that date, the evidence shows, there has been no c o m m u n ic a tio n between Burford counsel and the former employees except for a meeting a b o u t a possible appeal of the disqualification order. The brief duration of representation d o e s not defeat the possibility of impropriety, but it should lessen any public concern that the B u rf o rd attorneys gained an unfair advantage in this litigation through their association with th e former Cargill employees. Another factor is the value or danger, depending on one's perspective, of what p riv ile g e d communications the Burford attorneys might have learned from the former e m p lo ye e s. The court listened to a full day of testimony from the former Cargill employees a n d Cargill counsel about the communications at issue. The communications have been
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d esc rib ed in only a general sense in this Report and Recommendation, but the court heard a ll of the details and does not believe that the Burford attorneys would benefit to any m ea n ing fu l extent if the court were to turn over to them the transcript of the in camera te s tim o n y and the unredacted documents. This weighs against disqualification. There is an interest in a client maintaining the attorney of his choice. That factor is o rdin arily important, but it is more important in this case. This is not a car accident or a m e d ic a l malpractice case, for which there are many skilled attorneys available to take a m e rito rio u s case. Rather, this case regards complex issues of dairy nutrition and production, a field in which not many attorneys operate routinely. Harry Dehaan, however, has a unique b ac k g rou n d as a dairyman and a successful attorney for dairy owners in similar cases. It w o u ld likely be quite difficult for the Burford plaintiffs to replace Dehaan with an attorney o f equal knowledge in the relevant area and the experience of litigating similar cases against C a rg ill. There is also the danger that, if current counsel are disqualified, the special c h a ra c te ris tic s of the case might leave the farmer-plaintiffs unable to locate suitable counsel w h o are competent to handle the potential class action suit. It would not serve the interest of s o c ie ty to have several dairy farmers' claims of this importance and magnitude not be p re se n te d to the courts by, and receive the attention and efforts of, the farmers' considered c h o ice of competent and experienced counsel.
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C o n c lu s io n In conclusion, the court finds, under a preponderance of the evidence standard, that th e re were no violations of the Rules of Professional Conduct or disclosures of privileged in f o rm a tio n , but there is at least a reasonable possibility of a disclosure of privileged c o m m u n ic a tio n . That possibility gives rise to a potential appearance of impropriety. After c o n sid e rin g the relevant factors, the undersigned concludes that the best interests of the p u b lic are served by permitting Burford counsel to continue their participation in this case. T h e court appreciates that Cargill holds the strong view that its position is correct, and the c o u rt respects the contrary decision of the California federal court, but, after careful re f le c tio n and consideration of the relevant law and evidence, the court finds that d is q u a lif ic a tio n of plaintiffs' counsel is not appropriate in this case. Accordingly; I T IS RECOMMENDED that the Motion to Disqualify Plaintiffs' Counsel (Doc. 1 4 7 ) be denied. O b je c tio n s U n d e r the provisions of 28 U.S.C. § 636(b)(1)(C) and Fed. R. Civ. P. 72(b), parties a g g rie v e d by this recommendation have ten (10) business days from service of this report and re c o m m e n d a tio n to file specific, written objections with the Clerk of Court, unless an e x te n sio n of time is granted under Fed. R. Civ. P. 6(b). A party may respond to another p arty's obje
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