Velazquez-Velez et al v. Molina-Rodriguez et al
Filing
70
OPINION AND ORDER. GRANTED 53 MOTION to Disqualify Counsel; DENIED 52 MOTION to Restrict. Plaintiffs have 45 days to procure new legal representation. Attorney Appearance due by 3/17/2017. Signed by Judge Salvador E. Casellas on 1/30/2016.(RJC)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
ALICIA VELAZQUEZ-VELEZ, et al.,
Plaintiffs,
v.
Civil No. 15-1126 (SEC)
CARLOS MOLINA-RODRIGUEZ, et al.,
Defendants.
OPINION & ORDER
In this political discrimination action, several transitory employees of the
Municipality of Arecibo (the Municipality) allege that their employment contracts
were not renewed due to their political affiliation with the Popular Democratic Party
(PDP). These Plaintiffs are currently represented by six attorneys from the law firm of
Aldarondo & López Bras (ALB).
Defendants move the Court to disqualify ALB and its attorneys from further
participation in this case.1 For the following reasons, Defendants’ motion is
GRANTED.
I.
Background
From 1998 to 2013, the Municipality regularly executed year-long contracts for
legal services with ALB. See Docket # 53-1. During these years, the Municipality’s
administration was spearheaded by the New Progressive Party (NPP). Between 2001
1
ALB does not challenge Defendants’ contention that the disqualification of any of these attorneys must be
imputed on the rest, such that the entire law firm would be disqualified. Accordingly, the Court shall use “ALB”
as a placeholder for both the individual attorneys and the law firm itself.
Civil No. 15-1126 (SEC)
Page 2
and 2005, however, no contracts were executed because the Municipality’s
administration at that time belonged to the PPD.
Over the years, ALB provided the Municipality with a wide gamut of legal
services, including representation before state and federal agencies and courts. See
Docket # 53-2. The record shows that ALB has defended the Municipality against
various employment discrimination and civil rights lawsuits filed in this district. See
Id. Indeed, three of the attorneys representing the Municipality in those cases also
appear as attorneys of record in this case.
The relationship between ALB and the Municipality soured, however, in 2013.
In the primaries, Carlos Molina defeated the incumbent NPP mayor Lemuel Soto for
the NPP’s nomination to the Municipality’s mayorship. Molina later won the general
election and became the Municipality’s new mayor. For reasons that are undisclosed
on the record, Molina quickly axed ALB as the Municipality’s legal representatives.
ALB stopped rendering legal services to the Municipality in early February 2013. The
next month, ALB filed a collection action against the Municipality related to legal
services rendered the preceding year. ALB won that case, and judgment was entered in
its favor on February 26, 2014.
Fast forwarding to the present day, the Municipality now moves to disqualify
ALB from this suit on grounds of conflict of interest. Specifically, the Municipality
contends that its lengthy history with ALB, coupled with its previous representation of
one of its officers named as a co-defendant in this case, placed ALB in a position to
gain confidential information relevant to this suit. ALB demurs.
II.
Discussion
The Court is mindful that “[d]isqualification during pending litigation is an
extreme measure.” In re Cendant Corp. Securities Litigation, 124 F. Supp. 2d 235, 249
(D.N.J. 2000). Accordingly, this type of request must be approached with “a keen
sense of practicality as well as a precise picture of the underlying facts.” Carlyle
Towers Condo. Ass'n, Inc. v. Crossland Sav., FSB, 944 F.Supp. 341, 345 (D.N.J.
Civil No. 15-1126 (SEC)
Page 3
1996). A dash of skepticism is helpful, too, since disqualification may sometimes be
sought as a tactical measure “designed to harass opposing counsel”. Fiandaca, 827
F.2d at 831.
a. Defendant’s motion is timely
From the outset, ALB argues that the motion to disqualify should be denied as
untimely. Courts in other circuits have held that delay is sufficient to deny a motion to
disqualify, see e.g. Redd v. Shell Oil Co., 518 F.2d 311, 315 (10th Cir. 1975).
However, the First Circuit has taken a more lenient tack, stressing that “the need for
upholding high ethical standards in the legal profession far outweighs the problems
caused by the delay in filing the disqualification motion.” Kevlik v. Goldstein, 724
F.2d 844, 848 (1st Cir. 1984); Fiandaca, 827 F.2d at 830. If “disqualification is in the
public interest, the court cannot act contrary to that interest by permitting a party's
delay in moving for disqualification to justify the continuance of [an ethical breach].”
Id. (citing Emle Industries, Inc. v. Patentex, Inc., 478 F.2d 562 (2d Cir. 1978)). The
denial of disqualification on the basis of untimeliness is proper, however, if “it can be
shown that the movant strategically sought disqualification in an effort to advance
some improper purpose.” Fiandaca, 827 F.2d at 830–831.
The “great majority of cases where motions to disqualify were denied as
untimely involved motions filed on the eve of trial.” Records v. Geils Unlimited
Research, LLC, No. CIV.A. 12-11419-FDS, 2013 WL 3967970, at *3 (D. Mass. July
30, 2013). In comparison, the delay involved here is nowhere as egregious, as
Defendants filed their motion near the start of discovery. Moreover, there is simply no
concrete evidence showing that Defendants had any “improper motive” in seeking to
disqualify ALB. Southwire Co. v. Ramallo Bros. Printing, Civil No. 03-1100 (GAG),
2009 WL 4937726 at *6 (D.P.R. Dec. 15, 2009). Defendants apprised Plaintiffs that
conflicts of interest might become an issue later on in the case and made no effort to
conceal their hand. Finally, as discussed in further detail below, Defendants’ request is
meritorious. For these reasons, the Court finds that the motion is not untimely.
Civil No. 15-1126 (SEC)
Page 4
b. ALB has disqualifying conflicts of interest
In this district, the standard for attorney conduct is set by the Model Rules for
Professional Conduct issued by the American Bar Association (the Model Rules). See
Local Rule 83E(a). Model Rule 1.9(a), in particular, provides as follows:
A lawyer who has formerly 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 former client unless the former client gives informed
consent, confirmed in writing.
In conflict-of-interest scenarios, the relevant question is whether the attorneys
under examination could have “obtained confidential information in [a prior] suit that
would have been relevant to the [pending suit].” Borges v. Our Lady of the Sea Corp.,
935 F.2d 436, 439-40 (1st Cir. 1991) (citing Analytica, Inc. v. NPD Research, Inc., 708
F.2d 1263, 1266 (7th Cir. 1983)). The Court may also inquire whether the attorney
gained confidential knowledge concerning the previous client’s procedures and
policies. While this “playbook” information “is not in itself cause for disqualification,”
it may factor into the decision to the extent it is relevant and gives the non-moving
party an “unfair edge” in the litigation. See Charles W. Wolfram, Former Client
Conflicts, 10 Geo. J. Legal Ethics 677 (Summer 1997); see also Comment 3 to Model
Rule 1.9 (“[G]eneral knowledge of the client's policies and practices ordinarily will not
preclude a subsequent representation; on the other hand, knowledge of specific facts
gained in a prior representation that are relevant to the matter in question ordinarily
will preclude such a representation.”).
The burden of proof on a motion to disqualify belongs to the movant. For this
purpose, naked claims that the attorney received confidential information from his
prior (and now adverse) client do not suffice. Rather, “the moving party must allege
the type and nature of the confidences that were exchanged in the prior litigation that
should subsequently disqualify the attorney in the latter representation.” Starlight
Sugar Inc. v. Soto, 903 F. Supp. 261, 266 (D.P.R. 1995). This is a nuance that merits
Civil No. 15-1126 (SEC)
Page 5
some clarification, especially in light of ALB’s insistence that Defendants have not
met their burden of proof here. According to the commentary to Model Rule 1.9, a
“former client is not required to reveal the confidential information learned by the
lawyer in order to establish a substantial risk that the lawyer has confidential
information to use in the subsequent matter.” Model Rule 1.9, Cmt. 3. Indeed, such a
course “would result in the confidentiality of the information being lost in the very
process of attempting to protect it.” Starlight Sugar, 903 F. Supp. at 266 (D.P.R. 1995).
Instead, a “conclusion about the possession of such information may be based on the
nature of the services the lawyer provided the former client and information that would
in ordinary practice be learned by a lawyer providing such services.” Model Rule 1.9,
Cmt. 3.
Model Rule 1.9 “exists for the purpose of preventing ‘even the potential that a
former client's confidences and secrets may be used against him,’ to maintain ‘public
confidence in the integrity of the bar,’ and to fulfill a client's rightful expectation of
‘the loyalty of his attorney in the matter for which he is retained.’ ” See Madukwe v.
Delaware State Univ., 552 F. Supp. 2d 452, 458 (D. Del. 2008) (citing In re Corn
Derivatives Antitrust Litig., 748 F.2d 157, 162 (3d Cir. 1984)). Thus, “[w]hile the party
seeking disqualification bears the burden of establishing the existence of a ‘substantial
relationship,’ any doubts about whether disqualification is appropriate should be
resolved in favor of the moving party, in order to ensure protection of client
confidences.” Id. (citing INA Underwriters v. Nalibotsky, 594 F.Supp. 1199, 1207
(E.D.Pa. 1984)).
Courts have used the following three-step test to determine whether the attorney
was indeed in a position to receive such disqualifying information:
First, the court reconstructs the scope of the facts involved in the former
representation and projects the scope of the facts that will be involved in
the second representation. Second, the court assumes that the lawyer
obtained confidential client information about all facts within the scope
of the former representation. Third, the court determines whether any
Civil No. 15-1126 (SEC)
Page 6
aspect of the former representation is so similar to any material matter in
the latter representation that a lawyer would consider it useful in
advancing the interests of the client in the latter representation.
Starlight Sugar Inc. v. Soto, 903 F. Supp. at 265–66 (citing Charles W. Wolfram,
Modern Legal Ethics § 7.4 at 370 (Practitioner's Ed. 1986)).
There is not much dispute concerning the scope of ALB’s prior representation
of the Municipality; in a nutshell, it was as broad as it gets. As ALB admits, it provided
a smorgasbord of legal services to the Municipality and its officers for a large part of
the past two decades. This included representation before federal and state courts,
administrative forums, and legislative processes. ALB also provided advice concerning
“any other matter delegated.” See Docket # 57-1.
Moving from the general to the specific, the record reflects that ALB defended
the Municipality against various lawsuits filed in this district. In support of their
motion, however, Defendants focus on just one of these cases: Oquendo-Maldonado v.
Municipality of Arecibo, Civil No. 07-1145 (DRD). The legal and factual issues in
Oquendo bear many similarities to this case. For instance, both cases involved nonpolicymaking public employees and PDP supporters claiming political discrimination
at the hands of an NPP administration. Also, they share a common plaintiff and
defendant. Specifically, Angel Oquendo-Maldonado (Oquendo) was the named
plaintiff in the case before Judge Dominguez, and was also a plaintiff here.2 Mr. Hiram
2
Co-plaintiff Oquendo recently moved to dismiss his claims against Defendants with prejudice, the timing of
which is somewhat suspicious given the close proximity to the motion for disqualification. Also curious is that,
at the summary judgment stage in Oquendo, ALB argued on behalf of the defendants that “Plaintiff Oquendo
routinely change[d] his political affiliation in order to assert claims of political discrimination against the party
currently in power in Arecibo.” Oquendo-Maldonado v. Municipality of Arecibo, Civil No. 07-1145 (DRD),
Docket # 137. This allegation stemmed from the fact that plaintiff Oquendo had participated in a political
discrimination case filed in 2001 where he claimed that members of a NPP administration in Arecibo had
discriminated against him because he was a member of the PDP. “Ultimately, Plaintiff Oquendo received a
settlement award in that case, which was disbursed during the administration of Defendant Mayor Soto, a
member of the NPP, between 2005 and 2006.” Id. In the case before Judge Dominguez, Oquendo made an aboutface, and claimed he was instead a NPP member subjected to discrimination by the PDP administration. Given
this history, the Court finds it eyebrow-raising that ALB would place its stamp of approval on Oquendo’s claims
here.
Civil No. 15-1126 (SEC)
Page 7
Cruz-Gonzalez (Cruz), on the other hand, was sued in his official and individual
capacity in both cases, where he was charged with being a major player in the
discrimination alleged. In Oquendo, Cruz is alleged to have participated in various
actions constituting political discrimination against the plaintiffs (including Oquendo)
– for instance: failure to assign work, the suspension of a co-plaintiff’s employment,
subjecting plaintiffs to inferior working conditions, and implementing “official
governmental policy” in a discriminatory manner. See Civil No. 07-1145 (DRD),
Docket # 1, pp. 2-4, 6, 8. Likewise, the Plaintiffs in this case also allege that Cruz
discriminated against them on account of their political affiliation. Specifically, they
claim that Cruz fudged the performance evaluations for some of the Plaintiffs so that
they reflected low scores and poor performance. These deficient evaluations were later
used to justify the non-renewal of their contracts. See Docket # 29 at pp. 3-4.
On the second and third prongs, the Court must assume that ALB obtained
confidential client information about all facts within the scope of the former
representation, and then assess whether any of those facts are sufficiently similar such
that “a lawyer would consider [them] useful in advancing the interests of the client” in
this litigation. Starlight Sugar, 903 F. Supp. at 266. As mentioned above, the scope of
the prior representation is set by the general “playbook” information that ALB gained
during its representation of the Municipality and its officers throughout the years,
including the Oquendo litigation.
As a preliminary matter, the Court finds that ALB’s limited representation of
the current municipal administration bears little, if any, relevance to this analysis.
While Defendants contend that ALB provided a broad spectrum of services to the
current NPP administration such that the latter would be in a position to gain
disqualifying information from the current administration, this argument is
unpersuasive. Defendants claim that ALB filed motions on behalf of the Municipality
on various “active cases,” had “telephone conversations with municipal employees,”
and “drafted letters and emails to opposing parties as well as to municipal employees
Civil No. 15-1126 (SEC)
Page 8
of the current administration.” See Docket # 64. But all these activities took place
during the administrative transition stemming from the Mayor’s decision to terminate
ALB as legal counsel. And, in any event, the representation in question lasted only for
about a month. Given this context, any inference that these activities involved the
transmission of confidential information that would give ALB an unfair advantage in
this litigation withers substantially.
Defendants also argue, however, that ALB gained disqualifying information
during the course of its lengthy representation of the previous administration. ALB
parries this contention with Ramos Laboy v. Trujillo Panisse, 213 F. Supp. 2d 54, 57
(D.P.R. 2002), which stands for the sound proposition that in political discrimination
cases, the core of the allegations “always center around the conduct of the people who
run the Municipality, in other words, the municipal officers,” rather than the abstract
municipal entity itself. Cf. Valdez v. Pabey, No. 2:05-CV-255, 2005 WL 3556428, at
*7 (N.D. Ind. Dec. 27, 2005) (observing that “[w]hile a city is a distinct legal entity
apart from its governing administration, the fact that a city's strategies, agendas,
policies and politics are tied to the governing administration cannot be ignored.”).
Once the municipal administration switched hands, ALB argues, the slate was wiped
clean and any confidential information ALB had was gone with it. The problem,
though, is that this case is distinguishable from Ramos and Valdez on two critical
issues.
The first is that, since the administrations in Ramos belonged to different
political parties, the court “[could] only conclude that they must also differ in their
public policy.” Id. Also, the discrimination in Ramos arose because the incoming
mayor was specifically “attempting to correct the previous administration's illegal
hiring practices.” Ramos Laboy, 213 F. Supp. 2d at 58. Given the diametrically
opposed political ideologies and the hostility displayed by the incoming mayor to the
previous one’s hiring practices, the Ramos court held that the previous administration’s
Civil No. 15-1126 (SEC)
Page 9
policy had no relevance to the one employed by the current administration. But neither
factor is present here.
From the perspective of the Plaintiffs in this case – some of which worked for
the previous administration – the political hierarchy stayed constant through the
transition. See Docket # 1, ¶ 3. It is certainly possible that the incoming and outgoing
administrations may have had their differences. But for a case grounded on political
discrimination, what truly matters is the political alignment of the players involved.
Moreover, nothing on the record suggests that the current Mayor disagreed with the
outgoing one concerning the latter’s hiring practices, or, more generally, on the role
political affiliation plays in these decisions. In a case like this, it is plausible to believe
that at least some relevant municipal policies and procedures (including confidential
documents and memoranda containing such details) survived the transition process.
The second distinguishing element lies in a similar vein. In the aforementioned
cases, the people who occupied executive positions in the government – that is, those
that “breathe life into the governmental unit” – were all replaced by the incoming
administration. Valdez, 2005 WL 3556428 at *5. Here, however, at least one of the
directors of the previous administration survived the transition: co-defendant Hiram
Cruz. This is acutely problematic.
Recall that a conclusion about the possession of disqualifying information “may
be based on the nature of the services the lawyer provided the former client and
information that would in ordinary practice be learned by a lawyer providing such
services.” Model Rule 1.9, Cmt. 3. ALB does not dispute that, for many years, it
provided a broad range of legal services to the Municipality. At the very least, the
Court must assume that ALB was in a position to gain sensitive information from a
high-level municipality official such as Cruz on matters relating to the Municipality’s
hiring practices and the potential existence of confidential information (including
communications and memoranda) concerning the political affiliation of the
Civil No. 15-1126 (SEC)
Page 10
Municipality’s employees.3 Compounding this problem is that the previous
administration’s policies and procedures cannot be brushed away as irrelevant. Again,
contrary to Ramos, it is not unreasonable to believe that some of these policies and
procedures may have survived the transition. Finally, it is also possible that Cruz had
previously shared confidences with ALB regarding the Plaintiffs in this case, since like
Cruz, they also survived the transition (at least until their contracts expired).
It is impossible to know, for sure, whether any relevant confidential information
survived the change in administration. Nevertheless, Defendants have proffered
enough to raise serious doubts on this matter, which the Court must resolve in their
favor. Madukwe, 552 F. Supp. 2d at 458. Furthermore, any lawyer worth his salt would
consider this sort of “playbook” information useful to this case, even if it only serves
to assist in targeting discovery. Thus, the Court finds that ALB’s extensive
representation of the previous administration, at the very least, placed it in a position to
gain sensitive information that could be useful in litigating this case. Whether or not
ALB actually gained such information is beside the point.
ALB’s representation of the Municipality and its officers in the Oquendo case
provides an even stronger basis for disqualification. Defendants stress that Oquendo
was litigated on the merits; the parties conducted discovery and the district court
issued an opinion granting Defendants’ motion for summary judgment. This means, of
course, that ALB was actually in a position to gain confidential information from the
Municipality and its officers on all material issues surrounding that suit. The question
is whether that information is substantially related to this case. The Court finds it is.
In a political discrimination case, the plaintiff must “produce sufficient direct or
circumstantial evidence from which a jury” may reasonably infer that political
discrimination “was a substantial or motivating factor behind [the] dismissal.”
Peguero–Moronta v. Gabriel Santiago, 464 F.3d 29, 45 (1st Cir. 2006). Thus, the Court
3
The Court is loath to speculate. Nevertheless, this is a case in which the Mayor is accused with having
performed a witch-hunt to extricate PDP supporters from the Municipality.
Civil No. 15-1126 (SEC)
Page 11
must assume that, both in this case and in Oquendo, the Municipality and its officers
shared confidences with ALB concerning their knowledge of the plaintiffs’ political
affiliation and of the “motivating factors” behind the challenged employment
decisions. Id. at 48.
The Court has already discussed how the presence of Cruz as an executive in
both administrations weighs in favor of disqualification given that he may have shared
confidential information regarding general municipal policies and procedures. But
Cruz was ALB’s client as well, and like in Oquendo, he is sued in both his personal
and official capacities. Consequently, the Court must assume that Cruz shared
confidential information with ALB that could relate to his defense in this case. During
the course of the representation, Cruz could have revealed information concerning
whether he actually or apparently harbored discriminatory animus against any of the
Plaintiffs in this case (or the plaintiffs in Oquendo, or PDP supporters in general); his
knowledge of Plaintiffs’ political affiliation (and any methods used to identify them);
and any policies and procedures he had implemented and maintained through the
transition. Without question, this information is substantially related to this case.
Further, for any litigator, this is potentially a treasure trove of information that could
be used to tailor Plaintiffs’ case.
Therefore, the Court holds that ALB’s prior representation of the Municipality
and its officers placed it in a position to gain confidential information that could be
unfairly leveraged against the Defendants in this case.
Still, the analysis does not end with this determination, as the decision to
disqualify lies within the discretion of the Court. Borges, 935 F.2d at 439 (“The
standard of review of a district court's disqualification of counsel decision is abuse of
discretion.”). In deciding whether disqualification is the proper remedy, the Court must
balance the “hardships to the client whose lawyer is sought to be disqualified against
potential harm to the adversary should the attorney be permitted to proceed.” Cendant
Corp., 124 F.Supp.2d at 249. In a criminal case, this factor carries much weight since it
Civil No. 15-1126 (SEC)
Page 12
affects the defendant’s Sixth Amendment’s right to counsel. But when “choice of
counsel and the protection of a privileged communication” square off in a civil case,
the First Circuit has indicated that it leans “toward the protection of the
communication.” Kevlik, 724 F.2d at 848.
In this case, the equities clearly favor disqualification. Aside from the First
Circuit’s preference toward disqualification when confidential information is
potentially involved, this case is still in its nascent stages. Discovery is stayed, and the
Plaintiffs shall be provided time to find new counsel.4
III.
Conclusion
ALB is henceforth disqualified from representing Plaintiffs in this case.
Plaintiffs are hereby granted 45 days for their new legal representation to file their
notice of appearance.
IT IS SO ORDERED.
In San Juan, Puerto Rico, this 30th day of January, 2017.
s/ Salvador E. Casellas
SALVADOR E. CASELLAS
U.S. Senior District Judge
4
As a final hail-Mary, ALB argues that disqualification in this case would also have the effect of unduly limiting
the ability of ALB’s attorneys to exercise their profession merely because they had provided services to the
opposing parties in the past. The Court agrees with ALB that it is not “per se improper for a law firm to represent
a party who is now adverse to a former client without a showing by the former client that the matters in the
pending suit are ‘substantially related’ to the matters in which the attorney previously represented the party.” See
Docket # 57-1, p. 16 (citations and quotations omitted). But that is precisely what Defendants showed here. It is
the particular facts of this situation, rather than any per se rule, that militates in favor of dismissal.
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