Zeggert v. Summit Stainless Steel, LLC
OPINION & ORDER: Plaintiff's Motion to disqualify pro hac vice counsel 13 is Denied. Such denial is without prejudice to Zeggert's right to file a similar motion at a later stage of these proceedings should he obtain new, substantial evidence of a conflict of interest that would merit disqualification under the legal framework discussed (within this opinion). Signed on 6/24/13 by Magistrate Judge Paul Papak. (gm)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON
SUMMIT STAINLESS STEEL, LLC,
PAP AK, Magistrate Judge:
Plaintiff Christopher Zeggert filed this action against defendant Summit Stainless Steel,
LLC ("Summit"), on January 3, 2013. Zeggert alleges Summit's liability for workers'
compensation discrimination pursuant to Or. Rev. Stat. §§ 659A.040 and 659A.885(3) and for
intentional int1iction of emotional distress under Oregon common law. This court has
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jurisdiction over Zeggert's action pursuant to 28 U.S. C.§ 1332, based on the diversity of the
parties and the amount in controversy.
Now before the court is Zeggert's motion(# 13) for disqualification of Summit's pro hac
vice counsel, Joseph P. Paranac and the other attorneys of the LeC1airRyan lawfirm. Zeggert
argues that Paranac and his firm are barred from representing Summit in these proceedings due to
Paranac's purported previous representation of Zeggert in a different but purportedly related
matter, and on the purported ground that Paranac may be called as a witness in this action. For
the reasons set forth below, Zeggert's motion is denied.
"Attorneys admitted pro hac vice are held to the same professional responsibilities and
ethical standards as regular counsel. Once admitted, pro hac vice counsel cannot be disqualified
under standards and procedures any different or more stringent than those imposed upon regular
members of the district comi bar." Cole v. United States Dist. Court for the Dist. of Idaho, 366
F.3d 813, 822 (9th Cir. 2004), quoting United States v. Collins, 920 F.2d 619, 626 (lOth Cir.
1990). The federal courts apply state law in determining matters of attorney disqualification.
See, e.g., In re County ofLos Angeles, 223 F.3d 990, 995 (9th Cir. 2000) (citations omitted).
A motion to disqualify opposing counsel is subject to "particularly strict judicial
scrutiny," due to the significant potential for misuse of state ethical rules for improper tactical
purposes. Optyl Eyewear Fashion International Cmp. v. Style Cos., 760 F.2d 1045, 1050 (9th
Cir. 1985), quoting Rice v. Baron, 456 F. Supp. 1361, 1370 (S.D.N.Y. 1978). The decision
whether or not to grant a motion for disqualification of counsel is within the discretion of the
district court. See, e.g., Gas-A-Tron ofArizona v. Union Oil Co., 534 F.2d 1322, 1325 (9th Cir.
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Summit employed Zeggert as a warehouse manager from August 14, 2006, through
Janumy 4, 2012. In June 2008, Summit employees over whom Zeggert had supervisory authority
overheard Zeggert using the racial slur "nigger." One of those employees subsequently advised
Surmnit employee and Zeggert supervisee Eric Hadnot, an African-American, that Zeggert had
used that slur in the workplace.
Hadnot complained about the incident to Surmnit human resources, which conducted an
investigation. Zeggert admitted to his use of the racial slur, and Summit issued a warning that
such conduct would not be tolerated, and required him to apologize to Hadnot. In addition,
Surmnit issued a company-wide reminder to its employees that the use of such language was
contrmy to company policy.
In August 2009, Hadnot filed a Bureau of Labor and Industries ("BOLI") complaint
against Summit, alleging that Zegge1t had harassed and discriminated against him, not just by
isolated use of a racial slur but also by intimidating him, expressing racial animus by reference to
a noose, and by "countless" uses of the slur "nigger." Zeggert was the only Summit employee
regarding whom such accusations were made, and Surmnit was the sole respondent in the BOLI
proceedings. Surmnit retained attorney Paranac and his lawfirm, LeClairRyan, to represent it in
com1ection with Hadnot's complaint. Paranac prepared Summit's position statement, by and
through which he indicated that Zeggert had not intended his use of the slur "nigger" in a
Except where otherwise indicated, the facts recited below are undisputed for purposes
of the motion now before the court.
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"pejorative or derogatory" sense, but rather "as it is used in English vernacular and urban
colloquialism." Paranac further indicated that Zeggert's use of the slur was m?re isolated than
Hadnot alleged. In addition, Paranac advised BOLl that Summit had warned Zeggert, required
him to apologize, and affirmed its policy against the use of such language in the workplace.
Notwithstanding Summit's representations to BOLl, in August 2010 BOLl issued a Notice of
Substantial Evidence Determination concluding that Zeggett had engaged in "a pattern of racial
· harassment towards his subordinates" beginning before the date Hadnot was first hired.
In November 2010, Hadnot filed an additional BOLl charge and initiated a discrimination
and retaliation action against Summit in this District. Paranac and the LeClairRyan firm again
represented Summit for purposes of Hadnot's claims against it. Hadnot noticed the depositions
of three of Summit's employees, including Zeggett. Zeggert and the other Summit employees
were advised that Paranac would represent them for putJlOSes of the depositions.
According to Zeggett's sworn declaration testimony, Paranac subsequently called him
fi·om his New Jersey offices to tell him that he "would be advising [Zeggett) and representing
[Zeggert] at a series of depositions to be conducted at the offices of Mr. Hadnot's attomey in
Portland." According to Zeggert's declaration testimony, "[i]n that telephone conversation,
[Paranac] advised [Zeggert] of the procedures and purposes of depositions, including [Zeggeti's]
right to recess the deposition at any time to confer with [Paranac) as [Zeggert's] counsel."
Zeggert fmiher declares that he and Paranac "candidly and honestly discussed [Zeggert's] own
conduct and ... concerns about potential liability." Summit offers no evidence to dispute
Zeggert's declaration testimony regarding that telephone conversation, although Summit does
offer Paranac's clarifYing declaration that Paranac "never advised or suggested to [Zeggett] that
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[Paranac] was representing him other than for purposes of his deposition in his representative
capacity as a supervisory employee of [Summit]."
Paranac later traveled to Oregon to prepare Summit's employees for their depositions.
According to Paranac's swom declaration testimony, "[a]t the outset of meeting with each
employee, [he] clearly advised that [he] was counsel for (Summit] in the lawsuit filed by Mr.
Hadnot against [Summit]." Paranac fmiher declares that "[a]t no time ... did [he] advise or even
suggest that (he] was acting as personal counsel on behalf of any of [Summit]'s employees,
including [Zeggert]." Paranac declares that he "expressly advised [Zeggert] that anything he
communicated to [Paranac] may be shared with (Summit]." Paranac declm·es that "[Zeggert] did
not indicate in any way that he did not understand these statements." Zeggert offers no evidence
to dispute Paranac's declaration testimony to that effect.
Zeggert declares that he ultimately "spent two days with lVIr. Paranac, and revealed all
[his] knowledge about the case, [his] own conduct, and the conduct of upper management at
Summit to [Paranac]." Paranac does not dispute that testimony, but declares that "[a]t no time
during [his] meeting with [Zeggeti] did [Zeggert] disclose any fact ... that was not previously
disclosed either during (Summit]'s internal investigation or the BOLI proceedings."
Zeggeti fmihcr declares that "t]In·oughout th[e] period [during which Paranac was
preparing him for deposition], [he] believed that Mr. Paranac was acting as [his] attorney and that
[his] conversations with [Paranac] were protected by attorney-client privilege." Zeggeti declares
that "[h]ad [he] believed otherwise, [he] would have obtained counsel for [him]self," apparently
notwithstanding the fact that no claims for liability were leveled against him in either the BOLI
proceedings or the district comi action against Summit. Indeed, Zegge1'1 declares that he "was
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not even aware that [he] had not been named as a defendant in [Hadnot's district court action]
until ... Februmy 29, 2012." Zeggert declares that during the time when Paranac was in Oregon
to prepare Summit's employees for deposition he "was repeatedly admonished by [Summit]
upper management that [he] was not to discuss anything about Mr. Hadnot's claims and
[Zeggert's] communications with Mr. Paranac with anyone." Summit offers no evidence to
dispute Zeggett's testimony that he subjectively believed that Summit had retained Paranac to
represent him individually.
The parties ultimately settled Hadnot's claims against Summit without a trial. Zeggert
had not been deposed by the time the patties reached their settlement agreement.
Zeggert filed this action against Summit on Janumy 3, 2013. Zeggert alleges Summit's
liability for workers' compensation discrimination and for intentional infliction of emotional
distress. Summit asserts various affirmative defenses, none of which implicates matters raised in
connection with Hadnot's claims of racial harassment and discrimination.
Zeggeti argues that Paranac and the LeClairRyan firm should be disqualified from
representing Summit in this matter for two reasons: first, because Paranac purpmiedly
represented Zegge1i in connection with Hadnot's claims against Summit (and, impliedly, because
Hadnot's action against Summit was substantially related to Zeggeti's claims against Summit),
and second, because Paranac purpotiedly may be called as a witness in this action. As noted
above, Zegget"t's motion is governed by Oregon law.
Purported Conflict of Interest Premised on Purported Prior Representation
Oregon Professional Conduct Rule 1.9 provides that "[a] lawyer who has formerly
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represented a client in a matter shall not thereafter represent another person in the same or a
substantially related matter in which that person's interests are materially adverse to the interests
of the fo1mer client unless each affected client gives info1med consent, confirmed in writing."
O.R.P.C. l.9(a). I therefore agree with Zeggert that, ifParanac in fact represented him in
connection with Hadnot's claims against Summit and if Zeggert's action against Summit is in fact
substantially related to Hadnot's prior action against Summit, it would be appropriate to
disqualify Paranac from representing Summit in this matter. However, as the following
discussion reflects, the record now before the comi does not suggest that either of those requisite
propositions can be established here.
The existence of an attorney-client relationship, where (as here) no formal or express
retention agreement exists, "can be inferred tl·om the conduct of the pmiies." In re Complaint as
to Conductoj);Jettler, 305 Or. 12,18 (1988), citing In re Robertson, 290 Or. 639,648 (1981).
Here, Zeggler takes the position that he reasonably believed that an attomey-client relationship
was established when Paranac unde1iook to represent him for purposes of his deposition by
counsel for Hadnot. The Oregon Supreme Comi has held that:
[T]o establish that the lawyer-client relationship exists based on reasonable
expectation, a putative client's subjective, uncommunicated intention or
expectation must be accompanied by evidence of objective facts on which a
reasonable person would rely as supporting existence of that intent; by evidence
placing the lawyer on notice that the putative client had that intent; by evidence
that the lawyer shared the client's subjective intention to form the relationship; or
by evidence that the lawyer acted in a way that would induce a reasonable person
in the client's position to rely on the lawyer's professional advice. 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 re Complaint of Weidner, 310 Or. 757, 770 (1990) (footnote omitted). Paranac's undisputed
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testimony that "[a]t the outset of meeting with each employee, [he] clearly advised that [he] was
counsel for [Summit] in the lawsuit filed by Mr. Hadnot against [Sunm1it]," that "[a]t no time ...
did [he] advise or even suggest that [he] was acting as personal counsel on behalf of any of
[Summit]'s employees, including [Zeggert]," and that he "expressly advised [Zeggert] that
anything he communicated to [Paranac] may be shared with [Summit]" is sufficient to establish
the absence of any of the factors set fmih in Weidner as requisite to establishing the existence of
an attomey-client relationship on the basis of the putative client's reasonable expectations.
Because no attorney-client relationship was created, Paranac did not represent Zegge1i in the
Hadnot matter, and no conflict of interest has been established.
Moreover, on the arguendo assumption that such a relationship had been created, nothing
in the record before the court suggests that Hadnot's prior action and Zeggmi's current action
were substantially related. For purposes of Rule 1.9:
matters are "substantially related" if ( 1) the lawyer's representation of the cunent
client will injure or damage the fmmer client in connection with the same
transaction or legal dispute in which the lawyer previously represented the former
client; or (2) there is a substantial risk that confidential factual infmmation as
would normally have been obtained in the prior representation of the former client
would materially advance the current client's position in the subsequent matter.
O.R.P.C. 1.9(d). There is no indication that Paranac's representation of Summit in the matter
now before the court could hmm Zegge1i in connection with the Hadnot matter, which has been
finally settled, that Zeggert ever provided Paranac with confidential information not already
known to Summit, or that any information obtained by Paranac in connection with Hadnot's
claims would in any sense advance Summit's position in connection with Zegge1i's ctment
claims. Indeed, there appears to be little substantial overlap in the legal or factual issues raised
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by Hadnot's claims with those raised by Zeggeti's claims.
Because the record does not support Zeggert's theory that Paranac previously represented
him (and because the record likewise does not supp011 Zeggert's implied theory that his claims
against Summit are substantially related to Hadnot's prior claims), Zeggert's motion is denied to
the extent premised on a theory of prior representation.
Purported Conflict of Interest Premised on Purported Possibility that Paranac will
be Called as a Witness in these Proceedings
The situation in which a party's counsel may be called as a witness on that pmiy's behalf
is governed by Oregon Professional Conduct Rule 3. 7. Rule 3. 7 provides as follows:
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:
the testimony relates to an uncontested issue;
the testimony relates to the nature and value of legal services
rendered in the case;
disqualification of the lawyer would work a substantial hardship on
the client; or
the lawyer is appearing pro se.
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
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
finn 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
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As discussed above, the record before the court does not suggest any substantial overlap
in the legal or factual issues raised by Hadnot's claims with those raised by Zeggert's claims.
Neither Zeggert's claims against Summit nor Summit's asserted affirmative defenses suggest that
any question as to which Paranac could be called as a fact witness will arise in this action. In
consequence, there does not appear to be any substantial likelihood that Paranac would be called
to testify in these proceedings. Zeggert's motion is therefore denied to the extent premised on the
purported possibility that Paranac will be called as a witness in these proceedings.
For the reasons set forth above, Plaintiff's motion (#13) to disqualify pro hac vice counsel
is denied. Such denial is without prejudice to Zeggert's right to file a similar motion at a later
stage of these proceedings should he obtain new, substantial evidence of a conflict of interest that
· would merit disqualification under the legal framework discussed above.
Dated thi¢st day of June, 2013,
norable Paul Papak
United States Magistrate Judge
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