Evraz Oregon Steel Mills, Inc. v. Continental Insurance Company

Filing 304

OPINION and ORDER - For the reasons stated, the court finds that Stoel Rives is not disqualified from representing Evraz in the present action under Or. RPC 1.7, 1.9, or 3.7. Evraz's motion 278 to withdraw and substitute counsel is GRANTED. IT IS SO ORDERED. DATED this 21st day of November, 2013, by United States Magistrate Judge John V. Acosta. (peg)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON

EVRAZ INC., N.A., a Delaware
Corporation,

Civ. No. 3:08-cv-00447-AC
OPINION AND ORDER

Plaintiff,
v.
RIDDELL WILLIAMS P.S.
v.
THE CONTINENTAL INSURANCE
COMPANY, a Pennsylvania Corporation;
CENTRAL NATIONAL INSURANCE
COMPANY OF OMAHA, a Nebraska
Corporation; CENTURY INDEMNITY
COMPANY, a Pennsylvania Corporation;
GRANITE STATE INSURANCE
COMPANY, a Pennsylvania Corporation;
AMERICAN HOME ASSURANCE
COMPANY, a New York Corporation;
HARTFORD FIRE INSURANCE
COMPANY, a Connecticut corporation;
INSURANCE COMPANY OF THE
STATE OF PENNSYLVANIA, a
Pennsylvania corporation; NATIONAL
UNION FIRE INSURANCE COMPANY
OF PITTSBURGH PA, a Pennsylvania
company; RLI INSURANCE COMPANY,
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an Illinois corporation; STONEWALL
INSURANCE COMPANY, a Nebraska
corporation; WESTCHESTER FIRE
INSURANCE COMPANY, a New York
corporation; WESTPORT INSURANCE
CORPORATION, a Missouri corporation;
ZURICH-AMERICAN INSURANCE
COMPANY, a New York corporation;

Defendants,
THE CONTINENTAL INSURANCE
COMPANY, a Pennsylvania corporation,

Third-Party Plaintiff,
v.
INSURANCE COMPANY FOR THE
STATE OF PENNSYLVANIA, a
Pennsylvania corporation; and AMERICAN
HOME ASSURANCE COMPANY, a
foreign insurance company,
Third Party Defendants,
CONTINENTAL INSURANCE
COMPANY, a Pennsylvania corporation,
Counterclaimant,
v.
EVRAZ OREGON STEEL MILLS, INC., a
Delaware corporation
Counter Defendant,
INSURANCE COMPANY OF THE
STATE OF PENNSYLVANIA, a
Pennsylvania corporation; and AMERICAN
HOME ASSURANCE COMPANY, a
foreign insurance company,
Third-Party Plaintiffs,
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v.
TIG INSURANCE COMPANY;
Third-Party Defendant,
TIG INSURANCE COMPANY;
Counterclaimant,
v.
CONTINENTAL INSURANCE
COMPANY, a Pennsylvania corporation,
Counterdefendant.
___________________________________
ACOSTA, Magistrate Judge:
Introduction
This case arises from a contract dispute between plaintiff Evraz, Inc. (“Evraz”), and its
insurers over an alleged breach of the insurers’ contractual duty to provide for Evraz’s legal
defense in the Portland Harbor Superfund litigation. Evraz now moves for leave to substitute its
counsel in this case; specifically, Evraz seeks to substitute Stoel Rives LLP as counsel of record
in place of Gorden Tilden Thomas & Cordell LLP. Defendant Continental Insurance Company
(“Continental”) opposes Evraz’s motion on three grounds: first, Stoel Rives’ representation of
Evraz against Continental would create a current-client conflict of interest; second, an attorneyclient relationship existed between Continental and Stoel Rives in the underlying Portland
Harbor Superfund litigation; and third, Stoel Rives lawyers are fact witnesses Continental may
call to testify at trial. Defendants American Home Assurance Company, Granite State Insurance
Company, and National Union Fire Insurance Company join with Continental in opposing
Evraz’s motion to substitute counsel, although only on the ground that Stoel Rives attorneys are
fact witnesses who may be called to testify at trial.

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The court finds that no attorney-client relationship existed between Continental and Stoel
Rives under controlling Oregon Supreme Court precedent and, alternatively, under the Oregon
State Bar ethics opinions upon which Continental relies. The court also finds no representational
conflict would be created by allowing Stoel Rives to represent Evraz in its coverage litigation
against Continental. Accordingly, Evraz’s motion is granted.
Factual Background
I. Origins of the Present Dispute
Plaintiff Evraz, Inc., a Delaware corporation that operates steel mills, owns several
parcels of property in the Portland metropolitan area. (Decl. of Joan Snyder (“Snyder Decl.”) at
¶3.) In 1999 and 2000, the Oregon Department of Environmental Quality (“DEQ”) and the
United States Environmental Protection Agency (“EPA”) notified Evraz that it was potentially
liable for investigating and cleaning up environmental contamination at the Portland Harbor
Superfund Site. (Id.) Evraz has cooperated significantly with DEQ and the EPA, but has
nonetheless incurred significant legal defense costs since the case began. (Id. at ¶6.)
Evraz maintained insurance policies which covered liabilities due to environmental
damages caused by its operations, including a policy with Continental.1 (Id. at ¶8.) Evraz
eventually informed Continental and its other insurers that they each were responsible for
financing Evraz’s legal defense in the Portland Harbor Superfund litigation.

(Id. at ¶9.)

Continental shared the responsibility of financing the defense with Evraz’s other insurers, but
over time Evraz exhausted all of its policies except the Continental policy.

(Id. at ¶10.)

Continental eventually stopped payment as well, and Evraz now brings the present action against

1

Evraz was originally insured by The Fidelity and Casualty Company of New York. (Snyder Decl.
Ex. 1 at 2-3.) In 2006, Fidelity merged with Continental, with Continental as the surviving
company. Upon the merger of the two companies, Continental became Evraz’s primary insurer.
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Continental, claiming that Continental violated its statutory and contractual obligations to
finance its legal defense. (Id. at ¶18.)
II. The Parties’ Relationships with Stoel Rives
Stoel Rives has represented Evraz since the early 1990s and when the environmental
contamination claims arose in 1999 and 2000, Evraz asked Stoel Rives to represent it, with
Snyder serving as lead defense counsel. (Id. at ¶4.) Sometime between 2002 and November
2004, Evraz tendered defense of the claims to Continental. (Id. at ¶¶9-10.) In November 2004,
Continental agreed to participate in Evraz’s defense “pursuant to a reservation of all our rights
under the policies,” and to “share in the reimbursement of reasonable defense costs and at rates
typically paid . . . for similar defense work in the Oregon area.” (Id. at ¶11; Snyder Decl., Ex. 1,
at 1.) Continental did not specifically contact or hire Stoel Rives in connection with the defense.
(Snyder Decl. ¶11.) Evraz was responsible for paying Stoel Rives’s invoices, and Continental
reimbursed Evraz for its expenses in the beginning stages of the representation. (Id. at ¶19.) In
2008, Continental began sending some, but not all, reimbursement payments to Stoel Rives, who
either endorsed and forwarded the checks to Evraz, or deposited each check in its client trust
account for the benefit of Evraz.2 (Id. at ¶¶20, 22.) Also in 2008, Evraz filed this lawsuit against
Continental for failure to defend Evraz in the Portland Harbor Superfund litigation. (Compl.
(Dkt. No. 1).)
At several points during Stoel Rives’s representation of Evraz, it explained to Continental
that it was acting on Evraz’s behalf, and not on behalf of Continental. In a March 25, 2010,
letter, Snyder wrote to Continental, “[t]his is not a matter on which Stoel Rives was directly
retained by [Continental], so we are responding on behalf of your insured Evraz Inc. N.A.”
2

On two occasions, checks were accidentally deposited into Stoel Rives general account. As soon
as the error was discovered, the funds were immediately transferred to the client trust account. (Pl.’s
Mem. in Supp. at 9 n.4.)
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(Snyder Decl. Ex. 4 at 1.) Snyder subsequently used identical language in a letter to Continental
sent September 17, 2010, and again in a letter to Continental sent November 16, 2010. (Snyder
Decl., Exs. 5-6.)

Further, during a deposition taken in this case, Snyder testified, “I was

performing – my perspective is that we were hired by Evraz . . . and so I was performing under
my agreement with Evraz.” (Snyder Decl., Ex. 8 at 8.) Continental also served Snyder with a
subpoena duces tecum for production of documents in Stoel Rives’s possession. (Snyder Decl.
at ¶¶24-26.)
Legal Standard
The primary responsibility of regulating the conduct of lawyers in federal practice lies
with the district courts, governed by the rules of professional conduct of the state in which that
district lies. Gas-A-Tron of Az. v. Union Oil Co. of Cal., 534 F.2d 1322, 1325 (9th Cir. 1976).
The Ninth Circuit has held that when a party wishes to disqualify opposing counsel on the basis
of a conflict of interest or abuse of professional confidence, “the right of an attorney freely to
practice his profession must, in the public interest, give way in cases of doubt.” Chugach Elec.
Ass’n v. United States Dist. Court, 370 F.2d 441, 444 (1967). Because of the potential for
tactical use of disqualification, however, courts have established a “high standard of proof” for
the party moving to disqualify substitute counsel. Smith v. Cole, No. CV 05-372-AS, 2006 WL
1207966, at *2 (D. Or. Mar. 2, 2006), adopted by Smith v. Cole, No. CV 05-372-AS, 2006 WL
1280906, at *1 (D. Or. Apr. 28, 2006). To this end, the Ninth Circuit usually will grant
disqualifications due to prior representation conflicts only if a party may be prejudiced by the
subsequent representation. See Gas-A-Tron, 534 F.2d at 1325 n.2 (denying motion to disqualify
because there was no basis for an inference that the attorney gained sensitive information that
could prejudice the prior client).

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At the same time, the rules of professional ethics serve the important functions of
preserving the moral integrity of the legal system and preventing the appearance of impropriety.
Smith, 2006 WL 1207966, at *2. Courts, including courts in the District of Oregon have held
that in conflict cases, “any doubts must be resolved in favor of disqualification.” Id. (citing
Sauer v. Xerox Corp., 85 F. Supp. 2d 198, 199 (W.D.N.Y. 2000)). The competing interests
involved in conflicts of interest cases require the court to strike a delicate balance that prevents
unreasonable restrictions on an attorney’s ability to practice law while nonetheless upholding the
system’s integrity. See In re Huffman, 328 Or. 567, 589-90 (1999). Thus, it makes sense for the
court to operate under a legal standard which is closely tied to the rationales for rules of ethics,
particularly when guarding against tactical disqualifications. Cf. United States v. Leon, 468 U.S.
897, 918 (1984) (tying application of the exclusionary rule to the rationales and purposes of the
rule’s creation). If the party seeking disqualification cannot cite facts that invoke one of the
rationales for the conflict rule, a court should be skeptical of the party’s motives and should
apply a high standard.
Under the Oregon Rules of Professional Conduct (“RPC”) an attorney may not represent
a client if doing so would create a conflict of interest. RPC 1.7(a). A current conflict of interest
exists if: (1) representation of one client is directly adverse to another client; (2) there is a
significant risk that representing one client would materially limit the lawyer’s responsibility to
another client; or (3) the lawyer is related to another lawyer in the same matter. Id. An attorney
may represent a client despite a current conflict in limited circumstances, particularly when
“each affected client gives informed consent, confirmed in writing.” RPC 1.7(b).
Under RPC 1.9(a), lawyer may not represent a client against a former client “in the same
or substantially related matter” as the lawyer represented that former client unless the lawyer has

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the informed written consent of both clients.

However, unlike current client conflicts,

subsequent client conflicts are not imputed to the disqualified attorney’s entire firm. Id. An
attorney associated with the disqualified attorney’s firm may represent a client in the same or
substantially similar matter so long as: (1) the current client’s interests are not materially
adverse to the prior client; and (2) the lawyer did not acquire confidential information that is
material to the matter. RPC 1.9.
Under THE RESTATEMENT (THIRD) OF LAW GOVERNING LAWYERS §132 n.b (2000)3 the
four main rationales for the prior client conflict rule are: (1) to prevent the lawyer from
compromising his or her duties to the former client by using confidential information learned in
the prior representation; (2) to prevent the lawyer from compromising duties to the present
client;4 (3) to prevent the proliferation of lawyers laying a basis for subsequent representation
against current clients; and (4) to nonetheless prevent a regime in which each engagement with
an attorney turns into a lifetime commitment – thus disincentivizing lawyers from taking on new
business.
Under the “advocate-witness” rule of Oregon Rule of Civil Procedure 3.7 (“Rule 3.7”),
an attorney who is a necessary witness at trial may not represent a party to that trial. When a
lawyer will be a necessary witness at trial, members of that lawyer’s firm may nonetheless
represent a party to the action so long as the witness’s testimony is not prejudicial to the firm’s

3

While the Third Restatement of Law Governing Lawyers is not controlling authority in Oregon,
the Oregon Supreme Court has repeatedly used it to guide the court’s interpretation and application
of the Oregon Rules of Professional Conduct. See, e.g., In re Hostetter, 348 Or. 574, 591 (2010)
(citing § 132 (1)); In re Newell, 348 Or. 396, 410 (2010) (citing § 99, cmt. g); Reynolds v. Schrock,
341 Or. 338, 350 (2006) (citing § 121, cmt. b).

4

For example, by moderating the zealousness of representation to avoid revealing confidential
information of the previous client.
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client. Id. Given the conflict of interest problems inherent in trial counsel testifying against his
or her client, tactical disqualification issues are not part of the Rule 3.7 analysis.
Discussion
I. Attorney-Client Relationship
Whether an attorney-client relationship ever existed between Stoel Rives and Continental
is the determinative issue Evraz’s motion and Continental’s opposition raise. Continental claims
there is a default rule in Oregon that governs insurance duty-to-defend cases, and under this rule
an attorney-client relationship automatically arose between Continental and Stoel Rives when
Continental began “funding” Evraz’s defense.

Evraz responds that under the prevailing

standards of Oregon law an attorney-client privilege did not arise, thus precluding a conflict of
interest.
The court finds that an attorney-client relationship did not exist between Continental and
Stoel Rives. Resolution of this issue begins with Continental’s assumption that legal ethics
opinions are controlling of this court’s determination. They are not. Several Oregon State Bar
ethics opinions suggest that in some circumstances, an insurer retaining counsel pursuant to a
duty to defend an insured gives rise to a tri-partite attorney-client relationship between the
attorney and both the insurer and insured. See OSB Formal Op. Nos. 2005-121, 2005-77, 2005157, 2005-30. Continental overlooks well-established Oregon law that legal ethics opinions are
advisory only. See, e.g., Application of Kraus, 295 Or. 743, 751 (1983) (Oregon legal ethics
opinions “are only advisory in nature”); In re Conduct of Lathen, 294 Or. 157, 164 (1982)
(Oregon legal ethics opinions “of course . . . are not binding authority”); Brown v. Oregon State
Bar, 293 Or. 446, 451 (1982) (“The recommendations and the ethics opinions which [the Oregon
State Bar] publish are advisory and are not binding on this court.”). See also Couey v. Brown,

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257 Or. App. 434, 441 (2013) (recognizing ethics opinions as “advisory”). None of the ethics
opinions Continental cites have been interpreted or adopted by the Oregon Supreme Court.
The Oregon Supreme Court determines the standards that govern attorneys and its
standard controls this court’s determination here. Brown, 293 Or. at 451 (“The disciplinary rules
are standards adopted by this court to govern the supervision and discipline of attorneys. The
professional discipline of attorneys is within the exclusive jurisdiction of this court.”). The
supreme court established the Oregon standard for determining the point at which the attorneyclient relationship arises in In re Weidner, 310 Or. 757, 768 (1990). There, the supreme court
held that the attorney-client relationship need not be explicit but may be implied when each of
two elements is present: (1) the putative client subjectively believes the relationship exists; and
(2) based on the evidence, the putative client’s belief is objectively reasonable. Id. at 770. In
determining whether the attorney-client relationship exists, the court considers all available
evidence of reasonableness, but is particularly attentive to whether the putative client intended
the relationship to arise and “whether the services performed were of the kind traditionally done
professionally by lawyers.” Id. at 768.
In Oregon, an implied attorney-client relationship is established where “the
putative client [holds] a subjective belief that the relationships exists, coupled
with an objectively reasonable basis for the belief.” The lawyer’s subjective
understanding is irrelevant and the objectively reasonable basis is evaluated in
light of the attorney’s conduct. “The evidence must show that the lawyer
understood or should have understood that the relationship existed, or acted as
though the lawyer was providing professional assistance or advice on behalf of
the putative client.” In sum, having established a subjective belief, the putative
client must also show through objective evidence that the lawyer gave him or her
a reasonable basis upon which to base this subjective belief.
Tinn v. EMM Labs, Inc., 556 F. Supp. 2d 1191, 1192-93 (D. Or. 2008) (internal citations
omitted).

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Continental cannot satisfy the Weidner test on the record before this court. First, the
evidence is insufficient to support the conclusion that Continental subjectively believed an
attorney-client relationship arose between it and Stoel Rives when Evraz “tendered the defense”
to Continental. It relies on the insurance defense “dual representation” analysis articulated in the
Oregon ethics opinions, but the first of these ethics opinions issued in 2005, one year after Evraz
tendered its defense to Continental in 2004. Thus, Continental could not possibly have relied on
the ethics opinions’ “dual representation” discussion to conclude that Stoel Rives represented it
in 2004.
Furthermore, after 2005 Stoel Rives put Continental on notice it was not representing
Continental. Stoel Rives sent three letters to continental between March and November of 2010
which contained the phrase, “[t]his is not a matter on which Stoel Rives was directly retained by
[Continental], so we are responding on behalf of your insured Evraz Inc. N.A.” (Snyder Decl.
Exs. 4-6.) Continental did not respond to or object to these statements, never stated its belief
that Stoel Rives represented it in the Portland Harbor Superfund litigation, and took no other
contemporaneous action that would indicate Continental believed Stoel Rives represented it.
Additionally, virtually all communication from Stoel Rives went directly to Evraz, not
Continental. Stoel Rives sent all invoices directly to Evraz, which paid them and forwarded
them to Continental for reimbursement. When Continental sought to dispute the rates Stoel
Rives charged, it contacted Evraz, not Stoel Rives, to obtain an itemized list of charges. Further,
Stoel Rives did not send and Continental did not request update letters or other correspondence
about the case, communications typically and regularly provided by lawyers retained by an
insurance company in the insurance-defense context. Stated simply, at the times in question
Continental never acted as an insurer would act toward insurance defense counsel.

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Finally, Continental’s subsequent conduct related to this case further suggests it never
sincerely believed it was represented by Stoel Rives. Continental has never challenged with
contrary testimony or evidence Snyder’s assertion at deposition that she believed she was
representing only Evraz in the Portland Harbor Superfund litigation. Continental served Snyder
with a subpoena duces tecum to obtain documents in Stoel Rives’ possession; had Continental
believed Stoel Rives to be its lawyers, Continental instead would have asserted its right as a
client to receive upon request copies of the documents. In sum, the record does not support the
conclusion that Continental subjectively believed Stoel Rives represented it in the Portland
Harbor Superfund litigation.
Nor does Continental satisfy the Weidner test’s objective prong, because it has not shown
“through objective evidence that the lawyer gave [it] a reasonable basis upon which to base this
subjective belief.” Tinn, 556 F. Supp. 2d at 1193. Continental’s first argument to support the
objective prong is “‘the objective facts on which a reasonable person would rely’ are the OSB
Formal Opinions that clearly establish that an attorney engaged in insurance defense has two
clients: the insurer and the insured.” (Continental’s Op. to Mot. for Leave to Withdraw (“Opp.
Mem.”) at 13-14 (emphasis in original).) This position is objectively unreasonable for two
reasons. First, Continental could not have relied on these Oregon ethics opinions or expected
Stoel Rives was acting consistent with them because they did not exist in 2004, when
Continental accepted Evraz’s tender of defense. No party can reasonably rely on legal authority
that did not exist at the time the reliance on it purportedly occurred. Second, Continental could
not form a reasonably objective basis that is contrary to the clear and controlling law of the
forum jurisdiction. Since at least 1982 the Oregon Supreme Court has clearly stated that Oregon
State Bar ethics opinions are advisory only, and the Weidner test for determining the existence of

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an attorney-client relationship had existed in Oregon fourteen years before Evraz tendered its
defense to Continental in 2004.

The record shows that instead Continental assumed facts

without confirming the legal basis for its assumption, and its unsupported assumption cannot
support an objectively reasonable basis under the Weidner test.
Furthermore, the record lacks objective evidence of an attorney-client relationship
between Stoel Rives and Continental. Continental produced no letter, memo, email, or other
contemporaneous document from Stoel Rives that supports an objectively reasonable basis to
conclude that Stoel Rives represented Continental. It produced no document from it to Stoel
Rives claiming, expressly or implicitly, to be Stoel Rives’s client, which Stoel Rives then should
have corrected or refuted. Continental has produced no evidence of requests or demands to Stoel
Rives’ insisting on compliance with traditional insurance-defense relationship hallmarks such as
creating litigation budgets, providing direct, regular status updates, setting maximize amounts
for hourly rates, or requiring authorization from Continental before engaging in various litigation
tasks.

And, at the time Evraz tendered its defense to Continental, Stoel Rives had been

representing Evraz in the Portland Harbor Superfund litigation for five years and Evraz generally
since the early 1990s, an attorney-client relationship created without any involvement by or
connection with Continental. Continental has pointed to no act or representation by Stoel Rives
that would give Continental a reasonable basis to think Stoel Rives also became its lawyer in the
Portland Harbor Superfund litigation after Continental accepted Evraz’s tender of defense.
Continental offers the declaration of Thomas Bariball to support its position, but it
contains only four general and conclusory paragraphs (see Decl. of Thomas Bariball (“Bariball
Decl.”) ¶¶ 1-4), none of which set forth specific facts that support an objectively reasonable
basis to conclude under Weidner that an attorney-client relationship existed between Stoel Rives

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and Continental. Notably, Bariball represents he is the Continental employee knowledgeable
about Evraz’s tender and the Portland Harbor Superfund litigation (Bariball Decl.¶ 1) and
Continental’s position necessarily assumes an attorney-client relationship existed with Stoel
Rives between 2004, when Evraz tendered its defense to Continental, and 2008, when Evraz
filed suit against Continental over coverage issues. Yet Baribell’s declaration contains no
reference to and is not supported by any correspondence or emails which contemporaneously
documented the common interactions that necessarily would have occurred between lawyer and
client during the four years of the purported relationship.

Bariball’s declaration provides

insufficient evidence to support finding an objectively reasonable basis that an attorney-client
relationship existed between Stoel Rives and Continental.
Even if, as Continental urges, the court were to apply the default rule, the court still
would find no attorney-client relationship existed.

The foundation of the default rule’s

applicability is that the dual-client relationship arises in a traditional insurance-defense context,
but that context does not exist here. On that point, Continental overlooks the absence of two
crucial facts: it did not hire and did not pay Stoel Rives.
Evraz, not Continental, hired Stoel Rives to represent it in the Portland Harbor Superfund
litigation. Evraz hired Stoel Rives five years before Continental accepted Evraz’s tender of
defense under a reservation of rights in November 2004. At the time Continental accepted
Evraz’s tender of defense, Stoel Rives had served as Evraz’s legal counsel since the early 1990s.
Continental does not dispute any of these facts which chronicle Stoel Rives’ hiring as Evraz’s
counsel, and it points to no preexisting insurance-defense relationship or attorney-client
relationship with Stoel Rives which might explain how a conclusion that it had hired Stoel Rives
to represent Evraz.

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Evraz, not Continental, paid Stoel Rives. Continental disputes this by stating it “funded”
Evraz’s defense pursuant to the insurance contract, but undisputed is that Continental never paid
Stoel Rives, a critical distinction here because of Continental’s rigid reliance on the contextspecific default rule. Here, Continental reimbursed Evraz who then paid Stoel Rives, which
Evraz had directly retained and paid to represent it long before Continental accepted Evraz’s
tender of defense. The payment relationship between Evraz and Stoel Rives never changed after
Continental appeared. Continental provides neither analysis nor authority to support its assertion
that it should be found to have paid Stoel Rives as the default rule contemplates and, thus, trigger
its application to the specific facts present here.
Finally, the court’s determination of the attorney-client relationship issue is made against
the higher burden of proof imposed on Continental under the tactical disqualification principle.
Continental identified no confidential information Stoel Rives acquired during the purported
attorney-client relationship that it could use to Continental’s detriment. It offered no evidence or
argument on this key element to demonstrate how and why it would be prejudiced by Stoel Rives
representing Evraz.
In short, Continental has provided no substantive reason to support its position that Stoel
Rives should be disqualified from representing Evraz in this case. Lacking this showing, the
record that suggests Continental seeks Stoel Rives’ disqualification for tactical purposes. Under
the “high standard of proof” applicable in such circumstances, Continental is far from meeting
its burden here for the reasons discussed above. For those same reasons, however, the court’s
decision would be the same even if it did not consider the tactical disqualification standard.
In sum, for the reasons stated above the court finds that no attorney client relationship
arose between Stoel Rives and Continental. Because Continental was never a Stoel Rives client,

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the court will not disqualify Stoel Rives from this case on the basis of a successive
representation conflict.
II. Conflict arising from the advocate-witness rule of Or. RPC 3.7
Continental and the other insurer defendants argue that Stoel Rives’s lawyers, including
Snyder, are necessary witnesses at trial because they have intimate knowledge of Stoel Rives’s
representation of Evraz in the Portland Harbor Superfund litigation. Continental contends it will
solicit testimony from Snyder about “the defense counsel payment arrangement, including any
alleged agreement concerning payment and the reasonableness of rates paid.” (Opp. Mem. at
24.) Continental claims Stoel Rives therefore should be disqualified under Rule 3.7.
Under Oregon Rule of Professional Conduct 3.7 (“Rule 3.7”):
(a) A lawyer shall not act as an advocate at a trial in which the lawyer is likely to
be a witness on behalf of the lawyer’s client unless:
(1) The testimony relates to an uncontested issue;
(2) The testimony relates to the nature and value of legal services
rendered in the case;
(1) The lawyer is appearing pro se.
(b) A lawyer may act as an advocate in a trial in which another lawyer in the
lawyer’s firm is likely to be called as a witness on behalf of the lawyer’s client.
(c) If, after undertaking employment in contemplated or pending litigation, a
lawyer learns or it is obvious that the lawyer or a member of the lawyer’s firm
may be called as a witness other than on behalf of the lawyer’s client, the lawyer
may continue the representation until it is apparent that the lawyer’s or firm
member’s testimony is or may be prejudicial to the lawyer’s client.
Although Snyder will be a necessary witness at trial and, according to Rule 3.7, may not
represent Evraz herself, a member of Snyder’s firm may serve as Evraz’s trial counsel so long as
Snyder’s trial testimony will not prejudice Evraz. Continental claims Snyder’s disqualification
should impute to all Stoel Rives attorneys because it has previously used Snyder’s testimony
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against Evraz in opposition to a now-withdrawn motion for summary judgment. However,
Continental fails to articulate the contents of that testimony or explain why it suggests Snyder’s
trial testimony would be prejudicial to Evraz. Beyond that, Continental fails to cite specific
deposition testimony or other evidence on the record to support its argument that Snyder’s
disqualification should be imputed to the rest of Stoel Rives. Therefore, based on the current
record, the court cannot conclude that all Stoel Rives attorneys are disqualified from
representing Evraz at trial under Or. RPC 3.7.5
Conclusion
For the reasons stated above, the court finds that Stoel Rives is not disqualified from
representing Evraz in the present action under Or. RPC 1.7, 1.9, or 3.7. Evraz’s motion to
withdraw and substitute counsel (Dkt # 278) is GRANTED.
IT IS SO ORDERED
DATED this 21st day of November, 2013.

/s/ John V. Acosta
JOHN V. ACOSTA
United States Magistrate Judge

5

The court reaches this decision without prejudice to the Defendants’ ability to raise this argument
again as the record becomes more developed.
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