Lorber v. Winston et al
Filing
144
MEMORANDUM OF DECISION AND ORDER - the Court denies Winstons request and permits Sorkin and his firm to (1) assist the Plaintiff in obtaining new counsel and (2) provide the Plaintiffs new counsel with all documents or exhibits, including their work product, related to the present case. However, in reaching this decision, the Court does not ignore Winstons concerns regarding the possibility of taint. As such, the Court prohibits Sorkin and his firm from: (1) providing the Plaintiffs new counsel with any documents or exhibits that have anything to do with Sorkins previous representation of Winston at the NASD proceedings or his prior consultation during Winstons criminal investigation; (2) discussing with the Plaintiffs new counsel anything having to do with Sorkins previous representation of Winston at the NASD proceedings or his prior consultation with Winston during Winstons criminal investigation; and (3) providing the Plaintiffs new counsel with any documents or exhibits that ha ve anything to do with the Probation Memo. (4) discussing with the Plaintiffs new counsel anything having to do with the Probation Memo. Lastly, with respect to the Courts November 26, 2012 Order, the Court grants Sorkin permission to file the corrected exhibits to the First Amended Complaint. Ordered by Judge Arthur D. Spatt on 11/29/2012. (Coleman, Laurie)
FILED
CLERK
11/29/2012 12:11 pm
U.S. DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
LONG ISLAND OFFICE
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
---------------------------------------------------------X
ANNETTE LORBER,
Plaintiff,
MEMORANDUM OF
DECISION AND ORDER
12-CV-3571 (ADS) (ETB)
-againstJONATHAN WINSTON, SHELDON M.
GANZ, SHELDON M. GANZ, CPA, P.C.,
EVA TEHRANI, HSBC BANK USA,
NATIONAL ASSOCIATION, HSBC
SECURITIES (USA) INC.,
Defendants.
---------------------------------------------------------X
APPEARANCES:
Lowenstein Sandler PC
Former attorneys for the plaintiff
1251 Avenue of the Americas
New York, NY 10020
By: Ira Lee Sorkin, Esq.
Savannah Stevenson, Esq.
Nicole Pappas DeBello, Esq., Of Counsel
Judd Burstein PC
Attorney for defendant Jonathan Winston
1790 Broadway
Suite 1501
New York, NY 10019
By: Judd Burstein, Esq., Of Counsel
Matalon Shweky Elman PLLC
Attorneys for the defendants Sheldon M. Ganz & Sheldon M. Ganz, CPA, PC
450 7th Avenue 33rd Floor
New York, NY 10123
By: Howard I. Elman, Esq., Of Counsel
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Law Offices of Eric Franz PLLC
Attorney for defendant Eva Tehrani
747 Third Avenue
20th Floor
New York, NY 10017
By: Eric P. Franz, Esq.
Andrew Leopoldo Mancilla, Esq., Of Counsel
Law Offices of Steven D. Isser
Attorney for defendant Eva Tehrani
1359 Broadway
Suite 2001
New York, NY 10018
By: Steven David Isser, Esq., Of Counsel
Sills Cummis & Gross P.C.
Attorneys for defendants HSBC Bank USA, National Association & HSBC Securities (USA) Inc.
30 Rockefeller Plaza
New York, NY 100112
By: Jonathan Young, Esq.
Andrew W. Schwartz, Esq., Of Counsel
NO APPEARANCE
513 Central Park LLC (Relief Defendant)
SPATT, District Judge.
On July 18, 2012, plaintiff Annette Lorber (“the Plaintiff”) commenced this action by
filing a Complaint against multiple defendants, which was thereafter reduced to the following:
Jonathan Winston (“Winston”); Sheldon M. Ganz (“Ganz”); Sheldon M. Ganz, CPA, P.C.; Eva
Tehrani (“Tehrani”); HSBC Bank USA, National Association; and HSBC Securities (USA) Inc.
(collectively, “the Defendants”). The Plaintiff subsequently filed a First Amended Complaint
on September 14, 2012.
On August 10, 2012, the defendant Winston moved to disqualify counsel for the Plaintiff,
Ira Lee Sorkin, Esq., based on the grounds that (1) Sorkin previously represented Winston in two
proceedings before the National Association of Securities Dealers (“the NASD”) and (2) the
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defendant Winston had consulted with Sorkin about Sorkin representing him when he was being
investigated for matters connected with his criminal indictment for securities fraud.
Subsequently, on October 17, 2012, Winston filed a second motion to dismiss or, in the
alternative, to disqualify counsel for the Plaintiff, Ira Lee Sorkin, Esq., based on Sorkin’s alleged
used of privileged material related to the defendant Winston’s abovementioned criminal case.
On November 24, 2012, the Court issued an Order granting Winston’s motion to
disqualify Sorkin. The Court held that there was a possibility of trial taint due to Sorkin’s
previous representation of Winston at the NASD proceedings and his prior consultation with
Winston concerning Winston’s criminal investigation. The Court also found that Sorkin’s use of
a “Memorandum of Law in Support of Defendant’s Motion for Termination of Probation
Pursuant to 18 U.S.C. § 3564(c) and Fed. R. Crim. P. Rule 32.1 and Discharge from
Supervision” (“the Probation Memo”) was an additional ground for disqualifying Sorkin,
because the Probation Memo was protected by the work product privilege. However, the Court
“decline[d] to dismiss the Plaintiff’s First Amended Complaint.” (Dkt. No. 136, pg. 26.)
In light of the Court’s November 24, 2012 Order, Winston now requests, by letter dated
November 27, 2012, that (1) “the docket in this case, other than Orders issued by the Court, be
sealed, so that new counsel will not be tainted by [] Sorkin’s . . . use of the Probation Memo or
by information gleaned from [] Sorkin’s prior representation of [] Winston” and (2) “[] Sorkin . .
. be barred from directly or indirectly communicating with prospective or retained new counsel,
or advising Plaintiff with respect to potential new counsel.” (Dkt. No. 139.) Rather, Winston
argues that “Sorkin should be limited to providing documents (other than copies of the two
Complaints in this case) to prospective or retained new counsel” and that “[h]e should not be
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permitted to discuss his views of the case or provide any of his or his firm’s work product.”
(Dkt. No. 139.)
In response, Sorkin asserts, on behalf of himself and his law firm, that it “would be in
violation of our duties as Plaintiff’s counsel, as well as the applicable Rules of Professional
Conduct, if we did not assist in: (1) helping Plaintiff find new counsel pursuant to the Order; and
(2) helping Plaintiff’s new counsel transition into the case by providing relevant documents,
facts, strategy, procedural history, and other relevant information.” (Dkt. No. 141.) Further,
Sorkin contends that if he did not provide the Plaintiff with the abovementioned assistance, the
Plaintiff would be “severely prejudice[d] . . . due to no fault of her own.” (Dkt. No. 141.)
As an initial matter, the Court notes that its November 24, 2012 Order did not dismiss the
First Amended Complaint. Instead, as quoted above, the Court in its Order explicitly “decline[d]
to dismiss the Plaintiff’s First Amended Complaint.” (Dkt. No. 136, pg. 26.) Accordingly, the
First Amended Complaint remains the operative pleading in this case. Thus, to the extent that
Winston requests that the Plaintiff’s new counsel be denied access to the First Amended
Complaint, the Court denies the application.
Winston’s request raises issues concerning the transition between disqualified counsel and
new counsel, which is separate and distinct from the attorney disqualification issues that were
central to the November 24, 2012 Order. See Chronicle Publishing Co. v. Hantzis, 732 F. Supp.
270, 273 (D. Mass. 1990), stay den. by, writ of mandamus den. by, appeal dismissed by
Chronicle Pub. Co. v. Hantzis, 902 F.2d 1028 (1st Cir. Mass. 1990) (“The questions of (1)
attorney disqualification and (2) the subsequent work product turnover to substitute counsel are
separate and distinct.”); Behunin v. Dow Chemical Co., 642 F. Supp. 870, 872 (D. Colo. 1986)
(“[T]he propriety of work product turnover should be considered apart from the underlying
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determination of whether withdrawal or disqualification is called for.”). It appears to the Court
that these issues may have yet to be addressed by the Second Circuit. Nonetheless, courts sitting
in other circuits have addressed similar issues and have “rejected a per se rule that the work
product of a disqualified law firm is automatically ‘tainted’ and, therefore, inaccessible to
substitute counsel.” Id. (citing First Wisconsin Mortg. Trust v. First Wisconsin Corp., 584 F.2d
201, 204-05 (7th Cir. 1978) (en banc) (“[S]uch an automatic or per se equation of denial of the
work product to the disqualification of representation is not good law and the application of such
a rule without more requires reversal. . . . We see no reason for an irrebuttable presumption
merely from dual representation in the conflict context to the effect that whenever cause of
disqualification exists any lawyer work thereafter is lost work irrespective of its nature or any
other pertinent factors.”); see also International Business Machines Corp. v. Levin, 579 F.2d 271,
283 (3d Cir. 1978) (disagreeing with “a legal tenant . . . against permitting the turnover of a
disqualified attorney’s work product”); Arnold v. Cargill Inc., Civil No. 01-2086 (DWF/AJB),
2004 U.S. Dist. LEXIS 26793, at *10 (D. Minn. Nov. 23, 2004) (“[T]he weight of authority leads
the Court to conclude that the specified court filings and orders at issue here are not per se
tainted simply because [the Plaintiffs’ counsel]was disqualified.”); Behunin, 642 F. Supp. at 872.
Rather, Courts “have adopted a flexible case-by-case approach to determine whether to
allow access to disqualified counsels’ work product.” Arnold, 2004 U.S. Dist. LEXIS at *10-11.
See First Wisconsin, 584 F. 2d at 202 (“The answer to this issue . . . is not a per se preclusion but
must be a flexible one based upon an examination of the particular facts of the case under
consideration.”); Behunin, 642 F. Supp. at 872 (“Whether disqualification, or in this case
withdrawal, eliminates the harm which led to withdrawal should be determined on a case by case
basis.”). Moreover, “the court should employ a balancing approach” to determine whether “the
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possibility that confidences or secrets will be used against the disqualifying party outweighs the
deleterious effect of unavailability [of the work product] on the abandoned client should the
court deny the work product request.” Behunin, 642 F. Supp. at 873, n. 3. In this regard, courts
have emphasized that courts can “lessen[] the hardship” caused to a party by disqualification of
her counsel “by allowing [the disqualified counsel] to provide [the] substitute counsel with all
[relevant] work product.” EEOC v. Orson H. Gygi Co., 749 F.2d 620, 622 (10th Cir. 1984). See
also First Wisconsin, 584 F.2d at 205 (“This is not a matter of penalty against the lawyer. The
lawyer's penalty is the disqualification. The penalty from not having the work product made
available to substitute counsel is against the client.”).
With this in mind, the Court, exercising its discretion, finds that the burden to the
Plaintiff if Winston’s request is granted outweighs the possibility of taint if the request is not
granted. Specifically, if Winston’s request was granted, the Plaintiff would be forced to start this
litigation over, as her new counsel would have to re-gather all the relevant facts and caselaw
pertaining to this case. Further, she would be denied the benefit of her former counsel’s
investigation and review of hundreds of documents, as well as the report of a handwriting expert.
See Arnold, 2004 U.S. Dist. LEXIS at *14-15 (“Denying potential successor counsel access to
the specified materials at issue here would greatly harm Plaintiffs. Not only would it jeopardize
their chances of obtaining replacement counsel, it would destroy the work already performed and
require successor counsel to effectively start over.”). Accordingly, the Court denies Winston’s
request and permits Sorkin and his firm to (1) assist the Plaintiff in obtaining new counsel and
(2) provide the Plaintiff’s new counsel with all documents or exhibits, including their work
product, related to the present case.
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However, in reaching this decision, the Court does not ignore Winston’s concerns
regarding the possibility of taint. As such, the Court prohibits Sorkin and his firm from:
(1) providing the Plaintiff’s new counsel with any documents or exhibits that have
anything to do with Sorkin’s previous representation of Winston at the NASD
proceedings or his prior consultation during Winston’s criminal investigation;
(2) discussing with the Plaintiff’s new counsel anything having to do with Sorkin’s
previous representation of Winston at the NASD proceedings or his prior
consultation with Winston during Winston’s criminal investigation; and
(3) providing the Plaintiff’s new counsel with any documents or exhibits that have
anything to do with the Probation Memo.
(4) discussing with the Plaintiff’s new counsel anything having to do with the Probation
Memo.
Lastly, with respect to the Court’s November 26, 2012 Order, the Court grants Sorkin permission
to file the corrected exhibits to the First Amended Complaint.
SO ORDERED.
Dated: Central Islip, New York
November 29, 2012
____/s/ Arthur D. Spatt____
ARTHUR D. SPATT
United States District Judge
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