HIGH CREST FUNCTIONAL MEDICINE, LLC et al v. HORIZON BLUE CROSS BLUE SHIELD OF NEW JERSEY, INC. et al

Filing 166

LETTER OPINION/ORDER granting 158 Motion to Withdraw as Attorney. Attorney BRIAN C. BROOK terminated; that plaintiffs High Crest Functional Medicine, LLC,Immunogen Diagnostics, LLC, Michael Segal, and Neelendu Bose, shall appear by new counsel on or before October 27, 2017 or deem them pro se. Accordingly, the entity plaintiffs must appear by new counsel by October 27, 2017, or will be subject to default; etc. Signed by Magistrate Judge Leda D. Wettre on 10/3/17. (DD, )

UNITED STATES DISTRICT COURT
DISTRICT Of NEW JERSEY

Chambers of
Leda Dunn Wettre
United States Magistrate
Judge

Martin Luther King Federal
Building & U.S. Courthouse
50 Walnut Street
Newark, NJ 07101
[phone]

October 3, 2017
To:

All counsel of record
LETTER OPINION & ORDER
RE:

High Crest functional Medicine, LLC, et aL v. Horizon Blue
Cross Blue Shield ofNew Jersey, Inc., et aL
Civil Action No. 15-8876 (MCA) (LDW)

Dear Counsel:
Before the Court is the motion of Clinton Brook & Peed to withdraw as counsel for
plaintiffs. (ECF No. 158). The motion is GRANTED for the reasons set forth below.
Plaintiffs commenced this action in December 2015 and the defendants filed
Answers. (ECF Nos. 1, 10, 11, 17). The Court entered a discovery schedule in May
2016, selling a fact discovery deadline of January 31, 2017. (ECF No. 16). The
completion of discovery under the initial schedule was delayed, however, by the filing of
an Amended Complaint and subsequent motions to dismiss and for judgment on the
pleadings. (ECF Nos. 19, 57, 62, 91, 92, 93). Afier District Judge Madeline Cox Arleo
issued rulings on those motions (ECF Nos. 117, 132), this Court entered an Amended
Scheduling Order extending the fact discovery deadline to December 20, 2017, and the
expert discovery deadline to March 15, 2018. (ECF No. 137).
On September 6, 2017, plaintiffs counsel moved to withdraw pursuant to New
Jersey Disciplinary Rule of Professional Conduct (“RPC”) 1.16. (ECF No. 158). The
motion did not disclose the factual basis for the proposed withdrawal, contending that
doing so would reveal information protected by the attorney-client privilege. (Id.).
During a telephonic conference held before the undersigned on September 8, 2017, the
Court directed plaintiffs counsel to file further factual support for the motion in camera.
Plaintiffs counsel accordingly filed a supporting declaration in camera on September 11,
2017. They also filed a supplemental memorandum of law publicly, reiterating that

withdrawal was appropriate under RPC 1.16, but that counsel could not disclose the factual
basis for the motion. (ECF No. 160). Plaintiffs were served with the motion (ECF No.
163) and have not objected to their counsel’s withdrawal.
Defendant Horizon Blue Cross Blue Shield of New Jersey (“Horizon”) responded
to the motion on September 18, 2017, asserting that the Court should require plaintiffs
counsel to disclose to the parties the reasons for withdrawal provided in the in camera
declaration, to the extent that they are outside the scope of the attorney-client privilege, so
that Horizon may determine whether to oppose the motion. (ECF No. 161). Horizon
also requests that the Court not permit plaintiffs counsel to withdraw until plaintiffs
respond to long-outstanding discovery requests. (Id.).
I.

Propriety of the In Camera Declaration and Horizon’s Request for More
Information

As an initial matter, the Court finds that plaintiffs counsel’s submission of a
declaration supporting the motion to withdraw in camera, as the Court directed, was
proper. Whether to employ in camera procedures in “circumstances involving sensitive
information” is within the district court’s discretion. Am. Civil Liberties Union ofN.J v.
F.B.I., 733 F.3d 526, 534 (3d Cir. 2013). Courts in this District have allowed an attorney
moving to withdraw to submit documents providing the reasons for withdrawal in camera
if those reasons concern information protected by attorney-client privilege. See, e.g.,
Rusinow v. Kamara, 920 F. Supp. 69, 72 (D.N.J. 1996).
Horizon is correct that under certain circumstances courts have disclosed portions
of in camera declarations not protected by the attorney-client privilege. See George v.
Siemens Indus. Automation, Inc., 182 F.R.D. 134 (D.N.J. 1998). For instance, the court
in George concluded that it had an obligation to disclose one paragraph of plaintiffs
counsel’s in camera affidavit to opposing counsel because it contained material that was
relevant, not privileged, and “essential to preparation of the opposing party’s case.” Id. at
142. The George court further concluded that even assuming the material was covered by
the work product doctrine, the “[dJefendants undoubtedly need [the materialJ to prepare an
adequate defense” and any action by the Court short of disclosing the information would
“result in the Court being a party to the perpetration of a fraud.” Id. at 142-43. Under
less extreme circumstances, however, other courts have refused to disclose information
submitted in support of a motion to withdraw that the opposing side has “no legitimate
interest” in reviewing. Team Obsolete Ltd. v. A.H.R.M.A. Ltd., 464 F. Supp. 2d 164, 165
(E.D.N.Y. 2006).
Here, the Court has reviewed plaintiffs counsel’s in camera declaration carefully
and concludes that it contains information protected by the attorney-client privilege and
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there is nothing to indicate that the information falls under the crime-fraud exception. The
information in section A of the declaration, which forms the primary basis for the Court’s
decision to grant the motion, includes confidential client communications. Section B
provides an alternate basis for withdrawal: plaintiffs’ failure to pay attorney’s fees. This
section necessarily includes discussions of plaintiffs counsel’s fee arrangements with
plaintiffs. To the extent it does not discuss the nature of services rendered, that
information is not privileged. See Id. (court determined it had obligation to inform
plaintiffs that a failure to pay legal fees was the basis for withdrawal); see also Montgomery
Cy. v. Micro Vote Corp., 175 f.3d 296, 304 (3d Cir. 1999) (“The attorney-client privilege
does not shield fee arrangements.”); In re Grand Jury Investigation, 631 F.2d 17, 19 (3d
Cir. 1980) (explaining “general rule” that attorney-client privilege does not protect fee
information absent strong probability that disclosure would implicate client in criminal
activity for which client sought legal advice); Stanziale v. Vanguard Info-Solutions Corp.,
Civ. A. No. 06-2208 (MBK), 2008 WL 1808318, at *2 (Bankr. D.N.J. Apr. 21, 2008)
(“[Flees paid for legal work and the general nature of legal work performed do not
constitute a confidential communication, but
specific descriptions of services
necessarily intrude upon the area of confidential communications.”). But nor are the
details of the fee arrangement between plaintiffs and their counsel relevant to Horizon’s
counterclaims or defenses. Therefore, Horizon has no legitimate interest in such
information and the Court will not order its disclosure. See Team Obsolete Ltd., 464 F.
Supp. 2d at 165, 166 (denying request to unseal affidavit submitted in support of defense
counsel’s motion to withdraw because although the court had an obligation to inform
plaintiffs that a fee dispute was the basis for withdrawal, plaintiffs had “no legitimate
interest in learning the specifics of this dispute”); Patterson v. CBS Inc., Civ. A. No. 942562, 1996 WL 724697, at *1 (S.D.N.Y. Dec. 16, 1996) (sealing ex parte information
submitted in support of plaintiffs motion to withdraw because defendants had “no
legitimate reason to learn the particulars of the dispute” between plaintiff and his attorney).
.

II.

.

.

Analysis of Motion to Withdraw

Local Civil Rule 102.1 provides that “[uJnless other counsel is substituted, no
attorney may withdraw an appearance except by leave of Court.” Pursuant to Local Civil
Rule 103.1, the New Jersey Rules of Professional Conduct govern attorneys practicing in
the District of New Jersey. L. Civ. R. 103.1. RPC 1.16 lists the circumstances under
which an attorney may withdraw from representation of a client. Whether to grant a
motion to withdraw is within the Court’s discretion. Cuadra v. Univision Commc ‘ns, Inc.,
Civ. A. No. 09-4946 (JLL), 2012 WL 1150833, at *5 (D.N.J. Apr. 4, 2012). The general
criteria by which the Court typically considers such an application are “(1) the reasons why
withdrawal is sought, (2) the prejudice withdrawal may cause to litigants, (3) the harm
withdrawal might cause to the administration of justice and (4) the degree to which
withdrawal will delay resolution of the case.” Haines v. Liggett Grp., Inc., 814 F. Supp.
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414, 423 (D.N.J. 1993); see also TBI Unlimited, LLC v. Clear Cut Lawn Decisions, LLC,
Civ. A. No. 12-3355 (RBK)(JS), 2014 WL 12616940, at *1 (D.N.J. Nov. 6, 2014).
Nevertheless, and as the Third Circuit has explained, there is no required list of factors that
a district court must consider in deciding a motion to withdraw, which is necessarily factspecific. See Ohntrup v. Makina Ve Kimya Enthtstrisi Kurumu, 760 F.3d 290, 295 (3d
Cir. 2014) (“[Tjhere is no multi-factor test that a district court must apply to decide a
motion for attorney withdrawal. Rules regarding attorney withdrawal are necessarily
general because of the context-laden nature of such determinations. The interests to be
considered will vary widely from case to case.”).
The Court, in the exercise of its discretion, grants plaintiffs counsel’s motion to
withdraw. Upon review of the in camera declaration and the motion papers filed
electronically, the Court is satisfied that the counsel’s withdrawal is warranted under RPC
1.16. Moreover, plaintiffs have not opposed the motion and Horizon has not provided a
basis to deny the motion. Although granting the motion will require the entity plaintiffs
to appear by new counsel and may slightly delay discovery, the reasons for withdrawal
outweigh any potential prejudice to the litigants or delay in resolving the case. This case
is not yet through discovery or scheduled for trial. Consequently, should new counsel
appear for plaintiffs, there will be time for new counsel to complete discovery.
Accordingly, the circumstances of this case favor withdrawal.
The Court denies Horizon’s request for an order preventing plaintiffs counsel from
withdrawing until plaintiffs respond to outstanding discovery requests. As discussed
previously, the persuasive reasons for withdrawal provided in plaintiffs counsel’s
declaration outweigh the potential prejudice to Horizon caused by a delay in discovery.
Given the nature of the withdrawal, preventing plaintiffs counsel from withdrawing until
they prepare responses to outstanding discovery requests would be inappropriate. I
Accordingly, the Court will not delay in granting the motion to withdraw.
Therefore, for the foregoing reasons, the motion to withdraw is GRANTED and it
hereby ORDERED that Plaintiffs counsel shall serve a copy of this Order upon its
is
Counsel’s
clients by overnight and regular mail within three (3) business days.
The other cases Horizon cites to show prejudice are distinguishable. For instance,
Clinton Brook & Peed’s motion and declaration do not suggest thatplaintiffs are attempting
to delay proceedings by inciting their counsel’s withdrawal, and nonpayment of fees is not
the only basis for withdrawal. See Rophaiet v. Alken Murray Corp., Civ. A. No. 94-9064,
1996 WL 306457, at *2 (S.D.N.Y. June 7, 1996). Nor are the parties finished with
discovery and ready for thai; under those circumstances, the impact to the administration
of justice would certainly be more severe. See In re Lands End Leasing, 220 B.R. 226,
235 (D.N.J. 1998).
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withdrawal is not effective until they have provided contact information (address,
telephone number, and email address) for each of their clients and proof of service of this
Order upon their clients is filed on the Court’s docket.
It is further ORDERED that plaintiffs High Crest Functional Medicine, LLC,
Immunogen Diagnostics, LLC, Michael Segal, and Neelendu Bose, shall appear by new
counsel on or before October 27, 2017. Should Michael Segal and Neelendu Bose (the
individual plaintiffs) fail to appear by new counsel on or before October 27, 2017, the Court
will deem them pro Se. The Court further advises plaintiffs that limited liability
companies may not proceedpro se in federal court. Cf Opta Sys., LLC v. Daewoo Elecs.
Am., 483 F. Supp. 2d 400, 406 (D.N.J. 2007); see also In re 69 N. Franklin Tpk., LLC, No.
16-1383, 2017 WL 3263525, at *2 (3d Cir. Aug. 1, 2017). Accordingly, the entity
plaintiffs must appear by new counsel by October 27, 2017, or will be subject to default.
The Clerk’s Office is directed to terminate ECF No. 158.

.

Leda Dunn Wettre
United States Magistrate Judge

cc:

Hon. Madeline Cox Arleo, U.S.D.J.

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