RELIGIOUS TECHNOLOGY CENTER, a California non-profit corporation, and Bridge
Publications, Inc., a California non-profit corporation, Plaintiffs,
v.
F.A.C.T.Net, INC., a Colorado corporation; Lawrence Wollersheim, an
individual; and Robert Penny, an individual, Defendants.
Civil Action No. 95-K-2143.
United States District Court,
D. Colorado.
Nov. 21, 1996.
Church's representative brought copyright infringement and trade secret
misappropriation action against corporation and individuals who allegedly had
posted church's materials on Internet without authorization. On defendants'
motions to admit attorneys to practice pro hac vice and for protective order
prohibiting deposition and document discovery of one attorney, the District
Court, Kane, Senior District Judge, held that: (1) attorney's alleged
knowledge of source of church's materials that were allegedly posted on
Internet without church's authorization did not make him material witness and
did not disqualify him from representing the corporation; (2) corporation was
entitled to protective order prohibiting deposition of its attorney; (3)
documents given by attorney to corporation and its directors in connection with
expert consulting performed for him in another case were protected from
discovery as work product; and (4) church's allegation that attorney assumed
custody of litigation files in prior action and was inextricably linked with
chain of custody of subject documents leading to copyright and trade secrets
violations did not disqualify attorney from representing individual defendant.
Motions granted.
[1] ATTORNEY AND CLIENT
Attorney's alleged knowledge of source of church's materials that were
allegedly posted on Internet without church's authorization did not
make him material witness in church's copyright infringement and trade secrets
misappropriation action against corporation that posted the documents and did
not disqualify him from representing the corporation; information in the
document was already widely known outside church through multiple sources,
attorney's testimony regarding document's source would have been duplicative,
and disqualifying attorney would work substantial hardship on corporation.
Colo.Rules of Prof.Conduct, Rule 3.7.
[2] ATTORNEY AND CLIENT
Moving parties have burden to establish grounds for disqualification of
opponent's attorney.
[3] ATTORNEY AND CLIENT
When ruling on motion for disqualification of counsel, one must make specific
findings and conclusions; however, use of these factual findings is restricted
to decision on motion to disqualify and parties are not bound by factual
findings for any other purpose in course of litigation.
[4] ATTORNEY AND CLIENT
Evidentiary hearing was not required on motion to disqualify counsel.
[5] ATTORNEY AND CLIENT
Representation of church's former counsel by attorney and law firm did not
disqualify attorney and firm from representing corporation that allegedly
posted church's materials on Internet in church's copyright infringement and
trade secret misappropriation actions.
[6] ATTORNEY AND CLIENT
Attorney's alleged representation of church in intellectual property matters
did not disqualify another attorney in his firm from representing corporation
that allegedly posted church's material on Internet without church's
authorization in resulting of copyright infringement and trade secret
misappropriation action; church failed to show that attorney was involved in
matters substantially related to suit while working for firm, and firm created
"confidentiality wall" before accepting case. Colo.Rules of Prof.Conduct,
Rule 1.9(b).
[7] FEDERAL CIVIL PROCEDURE
Corporation that allegedly posted church's materials on Internet without
church's authorization was entitled to protective order prohibiting deposition
of its attorney, where there were other sources for information sought.
[7] FEDERAL CIVIL PROCEDURE
Corporation that allegedly posted church's materials on Internet without
church's authorization was entitled to protective order prohibiting deposition
of its attorney, where there were other sources for information sought.
[8] FEDERAL CIVIL PROCEDURE
Deposition of opponent's attorney should only be allowed if requesting parties
have shown no other means exist to obtain information other than to depose
attorney; information is relevant and nonprivileged; and information is
crucial to presentation of case.
[9] FEDERAL CIVIL PROCEDURE
Documents given by attorney to corporation and its directors in connection with
expert consulting performed for him in another case were protected from
discovery as work product.
[10] FEDERAL CIVIL PROCEDURE
Information and documents corporation and its directors received in connection
with work performed by attorney in prior litigation as expert consultant was
privileged from disclosure in subsequent litigation pursuant to rule concerning
disclosure by nontestifying expert consultants. Fed.Rules Civ.Proc.Rule
26(b)(4)(B), 28 U.S.C.A.
[11] ATTORNEY AND CLIENT
Church's allegation that attorney assumed custody of litigation files in prior
action and was inextricably linked with chain of custody of subject documents
leading to copyright and trade secrets violations occurring when corporation
allegedly posted those documents on Internet did not disqualify attorney from
representing individual defendant.
*1471 Todd P. Blakely, John R. Posthumus, Robert R. Brunelli, Sheridan
Ross & McIntosh, P.C., Denver, CO, Earle C. Cooley, Cooley Manion Moore & Jones
P.C., Boston, MA, Helen K. Kobrin, North Hollywood, CA, Jeffrey A. Chase, Ann
B. Price, Jacobs Chase *1472 Frick, Kleinkopf & Kelley L.L.C., Denver, CO,
Elliot J. Abelson, Los Angeles, CA, for Plaintiffs.
Clifford L. Beem, Stuart D. Mann, Beem & Mann, P.C., Denver, CO, Bob Penny,
Longmont, CO, for Defendants.
MEMORANDUM OPINION AND ORDER ON PENDING MOTIONS
KANE, Senior District Judge.
Religious Technology Center ("RTC") and Bridge Publications, Inc. sue
Lawrence Wollersheim, Robert Penny and F.A.C.T.Net, Inc. for injunctive relief
and damages for copyright infringement (17 U.S.C. s 501) and trade secrets
misappropriation (Colo.Rev.Stat. s 7-74-102 (1986)).
Jurisdiction is based on 28 U.S.C. ss 1331 and 1338(a) and (b) over the
copyright infringement claim and supplemental jurisdiction under 28 U.S.C. s
1367 over the trade secrets misappropriation claim, which Plaintiffs allege
arises out of the same transaction and occurrences.
Pending are Defendants' Motion to Admit Graham E. Berry to Practice Pro Hac
Vice, Motion for Protective Order Prohibiting Deposition and Document Discovery
of Graham E. Berry Esq. and Motion to Admit Daniel A. Leipold to Practice Pro
Hac Vice. I grant all three motions.
I. Procedural Status.
On August 22, 1996, I granted the motions for leave to withdraw as counsel of
record filed by Defendants' then counsel in this case, Faegre & Benson and
Reiman & Associates, P.C. I ordered that F.A.C.T.Net must have new counsel
enter an appearance by September 23, 1996, or be subject to being held in
default and having a default judgment enter. I gave all three Defendants until
January 6, 1997 to respond to the pending summary judgment motion filed by
Plaintiffs.
On September 23, 1996, Clifford L. Beem, of the law firm of Beem & Mann, P.C.
in Denver, Colorado, entered his appearance as co-counsel for the Defendants,
F.A.C.T.Net, Inc. and Lawrence Wollersheim in this matter. [FN1]
FN1. No appearance has been entered on behalf of Defendant Robert Penny.
I suggested in court on August 22, 1996 that because of Penny's serious
illness, multiple sclerosis, the parties should attempt to extricate him
from this suit and the related suit of F.A.C.T.Net, Inc. et al. v.
Coregis Insurance Co., 926 F.Supp. 1426 (D.Colo.1996).
On September 27, 1996, Beem filed a Motion to Admit Graham E. Berry to
Practice Pro Hac Vice for the purposes of representing the corporate Defendant
F.A.C.T.Net, Inc. in this case.
On September 27, 1996, Plaintiffs' Opposition to Pro Hac Vice Application of
Graham Berry and Musick, Peeler, & Garrett was filed. Defendants Wollersheim
and F.A.C.T.Net filed a response to the opposition. Thereafter, I permitted
both sides to file various supplemental documents relating to the issues of
Berry's admission pro hac vice.
On October 9, 1996, F.A.C.T.Net filed a Motion for Protective Order
Prohibiting Deposition and Document Discovery of Graham E. Berry, Esq. On
October 11, 1996, I granted this motion pro tempore until Berry's request to
practice pro hac vice is granted or denied. On October 18, 1996, Plaintiffs
filed an opposition to the motion for a protective order.
On October 10, 1996, Defendants F.A.C.T.Net and Wollersheim filed a Motion to
Admit Daniel A. Leipold to Practice Pro Hac Vice for the purposes of
representing Wollersheim in this case. On October 18, 1996, Plaintiffs'
Objections to Motion of Daniel A. Leipold to Appear Pro Hac Vice was filed.
F.A.C.T.Net and Wollersheim responded to the objections on November 8, 1996.
On November 18, 1996, Plaintiffs filed a reply.
II. Analysis of Pending Motions.
A. Motion to Admit Graham E. Berry to Practice Pro Hac Vice.
Plaintiffs, in their Opposition to Pro Hac Vice Application of Graham
Berry and Musick, Peeler, & Garrett, argue the Musick, Peeler firm and Berry
should be disqualified because (1) Berry was a central figure in the events
that lead to this suit, and is therefore *1473 a material witness as to
contested issues where his credibility will be a significant factor; (2) Berry
and the Musick, Peeler firm both previously represented a former counsel of RTC
in actions against RTC, during the course of which representation both Berry
and the Musick, Peeler firm necessarily were exposed to confidences RTC exposed
to its former counsel on matters substantially related to the instant lawsuit;
and (3) there is a conflict of interest created by the fact that another
Musick, Peeler partner was a member of a law firm where dozens of attorneys and
paralegals represented plaintiffs and other Church of Scientology entities in a
wide variety of matters, and participated in briefings on Plaintiffs' legal
affairs, including intellectual property matters.
Plaintiffs assert each of these grounds requires disqualification under the
Colorado Rules of Professional Conduct, which set the standard for attorneys
practicing before this court. See D.C.Colo.LR 83.6. Rule 3.7 of the
Colorado Rules of Professional Conduct provides:
(a) A lawyer shall not act as an advocate at a trial in which the lawyer is
likely to be a necessary witness except where:
(1) the testimony relates to an uncontested issue;
(2) the testimony relates to the nature and value of legal services rendered
in the case; or
(3) disqualification of the lawyer would work substantial hardship on the
client.
Colo.R.Prof.Conduct 3.7(a). Plaintiffs argue none of the exceptions applies
here.
In response, Defendants deny that Berry is a "necessary witness," asserting
any information he may have is privileged, irrelevant or obtainable elsewhere.
They maintain disqualification of Berry would cause F.A.C.T.Net substantial
hardship and that F.A.C.T.Net has waived any conflict of interest that may
arise from testimony by Berry. Defendants argue Berry's representation of
Plaintiffs' former counsel does not disqualify him from again opposing
Plaintiffs here. Finally, with regard to the Musick, Peeler partner, Willie
Barnes, Defendants state there is no substantial relationship between the
present matter and the work done by Barnes at his previous firm. They further
contend Barnes received no actual material confidential information and Musick,
Peeler has in place specific institutional measures to screen him from the
present litigation.
1. Berry as a Material Witness.
[1] Plaintiffs' opposition to the motion to admit Berry to practice pro hac
vice amounts to a motion to disqualify Berry and the Musick, Peeler firm from
representing Plaintiff F.A.C.T.Net in this lawsuit. See Quark, Inc. v.
Power Up Software Corp., 812 F.Supp. 178, 179 (D.Colo.1992). "A motion to
disqualify rests within the sound discretion of the trial court." Id.
Plaintiffs first seek to disqualify Berry and his new firm on the basis
that Berry is a "necessary witness" under Rule 3.7 of the Colorado Rules of
Professional Conduct and therefore should not act as an advocate for Defendants
at trial.
[2][3][4] Plaintiffs have the burden to establish the grounds for
disqualification. See World Youth Day, Inc. v. Famous Artists Merchandising
Exchange, 866 F.Supp. 1297, 1299 (D.Colo.1994). When ruling on a motion for
disqualification of counsel, one must make specific findings and conclusions.
Id. However, the use of these factual findings is restricted to the
decision on this motion and the parties are not bound by the factual findings
for any other purpose in the course of this litigation. Id. [FN2]
FN2. Neither party has requested an evidentiary hearing concerning the
motion for admission pro hac vice. In Fullmer v. Harper, the Tenth
Circuit held where a
verified motion to disqualify raises ethical questions that are conceivably
of a serious nature.... the trial court should ... hold a full evidentiary
hearing on the issues posed by the motion to disqualify and the response
thereto, which hearing should include the taking of testimony. A motion of
this type should not be resolved on the basis of mere colloquy between
court and counsel. At the conclusion of such hearing the trial court
should then make specific findings and conclusions....
517 F.2d 20, 21 (10th Cir.1975).
Some district courts have followed this ruling as mandating an evidentiary
hearing. See, e.g., Geralnes B.V. v. City of Greenwood Village, 609
F.Supp. 191, 192 (D.Colo.1985) (Kane J.); Greenebaum-Mountain Mortgage
Co. v. Pioneer Nat. Title Ins. Co., 421 F.Supp. 1348, 1349 (D.Colo.1976).
Others have not. See, e.g., Beck v. Board of the Regents of Kansas, 568
F.Supp. 1107, 1113 (D.Kan.1983) (noting that Harper mandated the
district courts to make findings of fact and conclusion of law in ruling on
motions to disqualify opposing counsel, but declining to hear oral argument
and making no mention of the evidentiary hearing requirement). Notably in
the recent case of World Youth Day, Inc. v. Famous Artists Merchandising
Exchange, Inc., 866 F.Supp. 1297 (D.Colo.1994), extensively cited by both
sides, the court heard oral argument on the motion to disqualify, but made
no mention of an evidentiary hearing.
I find no authority mandating an evidentiary hearing concerning an opposed
motion for admission pro hac vice. Neither party has requested an
evidentiary hearing nor oral argument. Plaintiffs do not frame their
opposition as a "motion to disqualify," although their arguments amount to
such. Even if granting of the pro hac vice motion effectively amounts to
the denial of a motion to disqualify, such denial is not appealable as a
final order under 28 U.S.C. s 1291. See Firestone Tire & Rubber Co.
v. Risjord, 449 U.S. 368, 379, 101 S.Ct. 669, 676, 66 L.Ed.2d 571 (1981).
In Taylor v. Grogan, 900 P.2d 60, 64 (Colo.1995) (en banc), cert.
denied, --- U.S. ----, 116 S.Ct. 816, 133 L.Ed.2d 761 (1996), the court
found neither Rule 3.7 nor the accompanying committee comment mandate a
hearing where there is a possibility of conflict of interest on the part of
an attorney called as a witness.
In the circumstances, I find an evidentiary hearing is not required.
*1474 "The rules of professional conduct, as adopted by the Colorado
Supreme Court, are adopted as the standards of professional responsibility
applicable in this court." D.C.Colo.L.R. 83.6. Effective January 1, 1993,
the Colorado Supreme Court has adopted the Colorado Rules of Professional
Conduct.
Plaintiffs' opposition to the motion to admit Berry pro hac vice rests upon
Colorado Rule of Professional Conduct 3.7 which reads pertinently: "A
lawyer shall not act as an advocate at a trial in which the lawyer is likely to
be a necessary witness...." [FN3]
FN3. The Comment to Rule 3.7 states its rationale:
Combining the roles of advocate and witness can involve a conflict of
interest between the lawyer and client and can prejudice the opposing
party. If a lawyer is both counsel and witness, the lawyer becomes more
easily impeachable for interest and thus may be a less effective witness.
Conversely, the opposing counsel may be handicapped in challenging the
credibility of the lawyer when the lawyer also appears as an advocate in
the case. An advocate who becomes a witness is in the unseemly and
ineffective position of arguing his or her own credibility.
The opposing party has proper objection where the combination of roles may
prejudice that party's rights in the litigation. A witness is required to
testify on the basis of personal knowledge, while an advocate is expected
to explain and comment on evidence given by others. It may not be clear
whether a statement by an advocate-witness should be taken as proof or as
an analysis of the proof.
Colo.R.Prof. Conduct 3.7, Comment [1], [2].
A party seeking disqualification of an attorney as "likely to be a necessary
witness," must show that "the advocate's testimony [is] necessary, and not
merely cumulative ..." Colorado Bar Association Ethics Committee Opinion,
Formal Opinion No. 78: Disqualification of the Advocate/Witness, 23
Colorado Lawyer 2087, 2088-89 (Sept.1994). "The court may delay ruling on a
motion to disqualify until it can determine whether another witness can
testify." Id. "A lawyer is a 'necessary' witness if his or her testimony is
relevant, material and unobtainable elsewhere." World Youth Day, Inc., 866
F.Supp. at 1302.
In considering a motion for disqualification of counsel,
a balancing is required between the interests of the client and those of the
opposing party. Whether the opposing party is likely to suffer prejudice
depends on the nature of the case, the importance and probable tenor of the
lawyer's testimony, and the probability that the lawyer's testimony will
conflict with that of other witnesses. Even if there is a risk of such
prejudice, in determining whether the lawyer should be disqualified due regard
must be given to the effect of disqualification on the lawyer's client. It is
relevant that one or both parties could reasonably foresee that the lawyer
would probably be a witness.
Colo.R.Prof.Conduct 3.7, Comment [4].
"The financial burden on the client of replacing the attorney, if combined
with other circumstances, may be sufficient to create an exception [to
disqualification.]" CBA Ethics Committee Opinion No. 78 at 2089-90.
*1475 For the reasons stated below, I find Plaintiffs have not met their
burden of proof to establish Berry is a "necessary witness." I also find
disqualification of Berry would work substantial hardship on F.A.C.T.Net.
Plaintiffs contend Berry was a central figure in the events that lead to
this suit, and is therefore a material witness as to contested issues where his
credibility will be a significant factor. They assert the posting to the
Internet of RTC's Advanced Technology materials which triggered this lawsuit
was made by F.A.C.T.Net director Arnaldo Lerma who was separately sued by RTC
in the Eastern District of Virginia. The posting was of certain "OT II" and
"OT III" works which were attached to a document referred to as the "Fishman
Declaration."
Plaintiffs assert Berry is inextricably linked with the events surrounding the
Fishman declaration which appeared as a filing in the lawsuit entitled Church
of Scientology International v. Fishman and Geertz in the Central District of
California. Geertz was represented by the law firm of Lewis, D'Amato,
Bribois & Bisgaard ("Lewis, D'Amato") and Berry was the partner in the firm who
handled the case. According to Plaintiffs, the Fishman Declaration, including
the OT II and OT III exhibits, was filed by Berry in support of a motion for
reconsideration of an order changing venue.
In this case, Plaintiffs assert, Defendants have argued Berry's placement of
the Fishman Declaration and attachments in the court file has justified their
posting of RTC's copyrighted and trade secret materials. Lerma testified he
obtained a copy of the documents from Wollersheim who has testified that he
received his copy from Berry's former law firm Lewis, D'Amato, while serving as
an expert witness for Berry. Plaintiffs state Wollersheim argues the passage
of the documents from Berry to him legitimizes Defendants' possession of them
although RTC claims the documents were stolen and misappropriated.
It is Plaintiffs' position that the Colorado Uniform Trade Secrets Act places
in issue the circumstances under which a defendant acquired the trade secret
materials and the knowledge of the person furnishing them. See
Colo.Rev.Stat. s 7-74-102 (1986). Plaintiffs state Berry is a material
witness regarding the chain of custody of the documents at issue. They state
he was identified as a material witness in this case in December 1995 in their
initial disclosures as someone "likely to have discoverable information
relevant to disputed facts alleged with particularity in the pleadings."
According to Plaintiffs, Berry's anticipated testimony relates to his personal
knowledge regarding the OT II and OT III materials, his filing of the Fishman
Declaration and attachments in the Fishman court file, his passage of the
declaration to Wollersheim, Wollersheim's participation with him in the Fishman
case, and any participation by Berry or Wollersheim in the execution of the
release.
Plaintiffs maintain because they are raising disqualification within hours of
the notice of pro hac vice application, when Berry and Musick, Peeler are
coming in as new counsel, there is no hardship on Defendants who have already
engaged other counsel to represent them and will not be left unrepresented.
In response, Defendants state Berry is not a "necessary witness" under
Rule 3.7(a) because his expected trial testimony is not "relevant, material
and unobtainable elsewhere." World Youth Day, Inc., 866 F.Supp. at 1302.
They address the areas in which Plaintiffs assert Berry will be a necessary
witness.
Defendants' position is Berry's personal knowledge of the OT II and OT III
works is irrelevant and immaterial to the present matter and Plaintiffs' desire
for information in this subject area falls short of making Berry a necessary
witness. They assert Berry is not on trial and has been specifically released
from all possible liability relating to the Fishman case by Paragraph 6 of the
"Agreement and Mutual General Release" entered into between the Church of
Scientology and Berry's former law firm, Lewis, D'Amato.
Defendants further respond Berry's knowledge of the filing of the Fishman
Declaration in the Fishman court file is also irrelevant. They state the
parties agree Defendants in the instant case received official court-stamped
copies of the declaration and attachments. *1476 Berry denies that he
personally filed the documents and thus, even if relevant, Berry's actual
knowledge of the filing is cumulative and hearsay. Any other information Berry
may have relating to the Fishman declaration, Defendants argue, is privileged
pursuant to the attorney client privilege, the attorney work-product doctrine
and/or the joint defense privilege.
Likewise, Defendants argue, any receipt by Berry of the OT II and OT III works
is irrelevant and immaterial to the present proceedings; any information
regarding the Lewis, D'Amato firm's receipt of such documents is similarly
privileged; and the information at issue is obtainable from other sources
including the Lewis, D'Amato's clerical staff and other attorneys who worked
more closely with the documents than did Berry.
Defendants make similar arguments of privilege, and additionally, the expert
consultant privilege contained in Federal Rule of Civil Procedure
26(b)(4)(B), concerning any knowledge Berry might have of the passage of the
Fishman Declaration to Wollersheim as a non-testifying expert consultant for
Lewis, D'Amato in the Fishman matter. [FN4] They maintain, since Wollersheim
has admitted he received the Fishman Declaration and attachments from Lewis,
D'Amato while serving as an expert consultant, a restatement of this
information by Berry would be merely cumulative.
FN4. A party may, through interrogatories or by deposition, discover
facts known or opinions held by an expert who has been retained or
specially employed by another party in anticipation of litigation or
preparation for trial and who is not expected to be called as a witness at
trial, only as provided in Rule 35(b) or upon a showing of exceptional
circumstances under which it is impracticable for the party seeking
discovery to obtain other facts or opinions on the same subject by other
means.
Fed.R.Civ.P. 26(b)(4)(B).
It is Defendants' position that the Church of Scientology did not depose
Wollersheim in connection with his expert declaration in the Fishman/Geertz
case as envisaged by the rule and thus, the communications, documents and
information that passed between Berry and Wollersheim remain privileged
under the rule, as well as under the attorney-client privilege and Berry's
attorney work-product privilege.
The same arguments are made concerning Wollersheim's participation with Berry
in the Fishman case. According to Defendants, the only relevant information
from Wollersheim's participation is that F.A.C.T.Net and Wollersheim received a
copy of the Fishman Declaration from Lewis D'Amato in connection with
Wollersheim's services as an expert consultant. As the parties agree
Wollersheim has already testified to that, Defendants maintain it is not
contested and Berry's knowledge of the subject is irrelevant.
With reference to Berry's being a material witness regarding "any
participation by Berry or Wollersheim in the execution of the [Lewis,
D'Amato/Church of Scientology,]" release, Defendants state Plaintiffs are aware
Berry was out of the country during the creation of the settlement agreement
and had no first hand knowledge of its negotiation or execution. Therefore,
they argue, the parties who were involved in creating this agreement could
testify on the subject with far more knowledge than Berry. Similarly, as
regards the funding and set-up of F.A.C.T.Net, Berry states he was not involved
and thus has no percipient knowledge.
In his second declaration attached to Defendants' response, Berry states it is
too early in this litigation to determine whether he could be a material
witness and, in the unlikely event that he were, he would step aside as trial
counsel, if indeed he acts as F.A.C.T.Net trial counsel, a matter not settled
at this time.
In addition Defendants argue disqualification of Berry would work substantial
hardship on F.A.C.T.Net as contemplated in the Colorado Rule 3.7(a)(3).
They assert Plaintiffs have a reputation for engaging in extreme litigation and
extra-litigation tactics which has resulted in less than a handful of attorneys
in the nation being willing to litigate against the Church of Scientology
organization, of whom Berry is one of the two most experienced and successful.
[FN5] The other *1477 attorney declines to be involved in the case unless
Berry is also counsel of record. According to Wollersheim's declaration, no
other qualified law firm has been willing to undertake to litigate against
Plaintiffs.
FN5. Defendants assert the Church of Scientology and its related entities
utilize their own language, dictionary, scriptures and policy statements
which take years of adversarial litigation to discover, interpret and
apply. With reference to Plaintiffs' litigation tactics, Defendants cite a
recent Ninth Circuit Court of Appeals ruling that the Church of Scientology
organization had been playing "fast and loose with the judicial system" and
levied $2.9 million in sanctions against it for "destruction and
concealment of documents, refusal to comply with many court orders,
needless delay, and multiplication of the proceedings by [the Church of
Scientology] and [its] filings of frivolous motions and of offensive and
unreasonable motions." Religious Technology Center v. Church of the New
Civilization, No. 94-55781, slip op. at 13, 1996 WL 171443 (9th Cir. April
11, 1996). Specifically, with regard to the church's tactics against
Defendant Wollersheim, the California Court of Appeal stated earlier this
year: "When one party to a lawsuit continuously and unsuccessfully uses
the litigation process to bludgeon the opponent into submission, those
actions must be closely scrutinized for constitutional implications."
Church of Scientology of California v. Wollersheim, 42 Cal.App. 4th 628,
649, 49 Cal.Rptr.2d 620 (Cal.App.1996).
Further, Wollersheim states F.A.C.T.Net has already spent a large amount of
money and a large portion of its remaining time bringing the Musick, Peeler
firm up to speed on the case for the January 6, 1997 court deadline for summary
judgment opposition, has shipped almost two hundred banker boxes of records to
the firm and has already spent approximately $1.4 million attempting to
litigate against Plaintiffs with a law firm which had not previously litigated
against them.
Defendants consider Berry to be the most willing and qualified attorney to
represent F.A.C.T.Net in this case and assert his loss would "work substantial
hardship" on F.A.C.T.Net under Rule 3.7 which was intended to be "less prone
to exploitation by opposing parties and more compatible with each party's
interest in retaining its counsel of choice." CBA Ethics Committee Opinion No.
78 at 2089 (citing Cannon Airways, Inc. v. Franklin Holdings Corp., 669
F.Supp. 96, 100 (D.Del.1987)).
Finally, Defendants assert F.A.C.T.Net has consented to representation by
Berry, an attorney who may be called as a witness and that in these
circumstances, waiver precludes disqualification as long as a "disinterested
lawyer" would conclude that the client should agree to the representation under
the circumstances. Id at 2088. Because, they argue, few attorneys would be
willing and able to stand up to the Church of Scientology's litigation tactics,
a "disinterested lawyer" would clearly have selected Berry as well.
In assessing whether Berry is a necessary witness, I consider the two
claims of Plaintiffs in this action, one for copyright infringement and the
other for misappropriation of trade secrets under Colorado Revised Statute s
7-74-102 (1986).
To prevail in a copyright infringement action, a plaintiff must prove (1)
ownership of a valid copyright and (2) defendant copied "protected components
of the copyrighted material." Gates Rubber Co. v. Bando Chemical Indus.,
Ltd., 9 F.3d 823, 831 (10th Cir.1993). Plaintiffs have not established the
relevance of Berry's testimony to this claim, nor to the issue of Defendants'
"fair use" defense.
With regard to the trade secrets claim, the issue is whether Defendants
misappropriated Plaintiffs' alleged trade secrets by using portions of the OT
II and OT III works without authorization. In ruling on Plaintiffs' motion for
a preliminary injunction, I found the evidence showed the works to be widely
known outside the Church of Scientology through multiple sources. See
Religious Technology v. F.A.C.T.Net, Inc., 901 F.Supp. 1519, 1527
(D.Colo.1995). The court in Religious Technology Center v. Lerma, E.D.Va. 95-
1107-A dismissed the trade secret count as to all defendants in that case in
which Lerma was sued arising out of the same posting to the Internet of the
Works which triggered this lawsuit. This diminishes the likelihood that any
testimony about the source of the Fishman Declaration is relevant and material.
Wollersheim has already testified he received a copy of the Fishman
Declaration from Lewis, D'Amato in his capacity as nontestifying consultant in
the Fishman case. Berry's testimony in this regard would be duplicative. The
issues raised by the trade secrets claim concern whether Defendants, rather
than Berry, misappropriated the alleged *1478 trade secrets. Moreover,
Berry has been released from all liability relating to the Fishman case by the
"Agreement and Mutual Consent General Release" entered into between the Church
of Scientology and Lewis, D'Amato.
Plaintiffs have not established that Berry is a necessary witness, as
contemplated by Colorado Rule of Professional Conduct 3.7 with regard to
either of Defendants' claims. Compelling Berry to testify with regard to the
various topics on which Plaintiffs claim his testimony is necessary would also
invoke issues of the attorney client privilege, attorney work-product doctrine,
the joint defense privilege and the expert consultant privilege.
Moreover, in considering Plaintiffs' opposition to Berry's representation, I
must guard against the possibility that Plaintiffs may seek to disqualify Berry
in order to "secure a tactical advantage in the proceedings." See Bartech
Ind., Inc. v. Int'l Baking Co., Inc., 910 F.Supp. 388, 392 (E.D.Tenn.1996).
The parties' litigation history and Berry's detailed declaration with regard to
the animosity of the Church of Scientology organization toward him are germane
in this regard.
I am also persuaded that in light of all the relevant circumstances,
denying Berry's motion for admission pro hac vice, alternatively disqualifying
him from acting as counsel for F.A.C.T.Net, would work substantial hardship on
F.A.C.T.Net for the reasons Defendants have argued.
2. Berry and the Musick, Peeler Firm's Previous Representation of a Former
Counsel of RTC.
[5] Plaintiffs assert Berry and the Musick, Peeler firm both previously
represented a former counsel of RTC in actions against RTC, during the course
of which representation both Berry and the Musick, Peeler firm necessarily were
exposed to confidences RTC shared with its former counsel on matters
substantially related to the instant lawsuit.
Here, Plaintiffs refer to Berry and Musick, Peeler's representation of Joseph
A. Yanny, a former attorney for RTC, in a suit in which RTC sued Yanny for
numerous causes of action, including breach of fiduciary duty, breach of
contract, tortious breach of the covenant of good faith and fair dealing,
constructive fraud, fraud, intentional interference with contract, civil
conspiracy and conversion.
Plaintiffs rely on Hull v. Celanese Corp., 513 F.2d 568 (2d Cir.1975). In
Hull, the issue was "whether a law firm can take on, as a client, a lawyer
for the opposing party in the very litigation against the opposing party."
Id. at 569. The Hull court stated: "the novel factual situation here
dictates a narrow reading of this opinion." Id. at 572. It distinguished
its holding from the result reached in Meyerhofer v. Empire Fire & Marine
Insurance Co., 497 F.2d 1190 (2d Cir.), cert. denied, 419 U.S. 998, 95 S.Ct.
314, 42 L.Ed.2d 272 (1974), where the court held disqualification was
unnecessary as the lawyer had acted properly in defending himself against an
accusation of wrongful conduct.
The facts here are more analogous to those in Meyerhofer. There, an
attorney, Goldberg, left his law firm after he had objected to its handling of
a client's securities offering. Goldberg gave an affidavit to the Securities
Exchange Commission and three months later, upon being informed that he was to
be included as a defendant in an action against his former firm and client,
gave a copy of the affidavit to plaintiffs' counsel, the Bernson firm, showing
lack of complicity with the alleged wrongdoing. Upon plaintiffs' motion to the
court, Goldberg was dropped as a defendant.
Defendants moved to disqualify the Bernson firm on the grounds that they had
received confidential information from defendants' former lawyer. The appeals
court held a "lawyer may reveal confidences or secrets necessary to defend
himself against 'an accusation of wrongful conduct.' " Id. at 1194. It
affirmed the district court's order prohibiting Goldberg from representing the
interests of plaintiffs against his former client but found no basis to
disqualify the Bernson firm from representing plaintiffs "in either this or
similar actions." Id. at 1196.
Likewise here, Yanny would be prohibited from representing the interests
of any party against his former client, the Church of Scientology
organization. However, I see no *1479 basis for precluding Berry or the
Musick, Peeler firm from representing F.A.C.T.Net based on the fact that they
formerly represented Yanny in defending him against charges made by the Church
of Scientology.
Moreover, in suing Yanny as it did, Plaintiffs waived any privilege with
respect to any information relevant to the issues raised by their claims and
released Yanny from his obligation of secrecy with respect to that
information. See Carlson, Collins, Gordon & Bold v. Banducci, 257
Cal.App.2d 212, 228, 64 Cal.Rptr. 915 (Cal.App.1967) (holding "an attorney is
released from those obligations of secrecy which the law places upon him
whenever the disclosure of a communication, otherwise privileged, becomes
necessary to the protection of the attorney's own rights.") That principle of
California professional responsibility law is also applicable here to Berry and
Musick, Peeler's representation of Yanny.
The Tenth Circuit has set out requirements which a party seeking to disqualify
opposing counsel on the ground of a former representation must establish:
(1) an actual attorney-client relationship existed between the moving party
and the opposing counsel;
(2) the present litigation involves a matter that is "substantially related"
to the subject of the movant's prior representation; and
(3) the interests of the opposing counsel's present client are materially
adverse to the movant.
Cole v. Ruidoso Mun. Sch., 43 F.3d 1373, 1384 (10th Cir.1994). Here, there
is no showing that the Plaintiffs were ever represented by Berry or Musick,
Peeler, thus one does not reach the issue of whether the present litigation
involves a matter "substantially related" to that in a prior lawsuit.
I therefore find no basis for denying Berry's motion for admission pro hac
vice or disqualifying him or Musick, Peeler on the grounds of their former
representation of Yanny.
3. Musick, Peeler's Conflict of Interest
[6] Plaintiffs argue there is a conflict of interest created by the fact
that another Musick, Peeler partner, Willie Barnes, was a member of a law firm,
Wyman, Bautzer, Kuchel & Silbert which represented Church of Scientology
entities in a wide variety of matters, including intellectual property matters.
"A lawyer shall not knowingly represent a person in the same or a
substantially related matter in which a firm with which the lawyer formerly was
associated had previously represented a client...." Colo.R.Prof.Conduct
1.9(b). This paragraph "operates to disqualify the lawyer only when the lawyer
involved has actual knowledge of information protected by Rules 1.6 and
1.9(b)." Comment to Rule 1.9. " 'Substantiality is present if the
factual contexts of the two representations are similar or related.' "
Quark, Inc., 812 F.Supp. at 179 (quoting Smith v. Whatcott, 757 F.2d
1098, 1100 (10th Cir.1985)). In seeking to disqualify an attorney, "[s]pecific
facts must be alleged and 'counsel cannot be disqualified on the basis of
speculation or conjecture....' " Id. (quoting FDIC v. Sierra Resources,
Inc., 682 F.Supp. 1167, 1170 (D.Colo.1987)).
Plaintiffs do not allege nor establish that the factual context of any
matter on which Barnes worked while at the Wyman firm was similar to that
underlying the alleged copyright and trade secret violations at the heart of
this case. Nor do they allege actual knowledge of Barnes of any confidential
factual information of relevance to the subject case.
Barnes has stated the only connection he had with Plaintiffs was his
involvement in "one minor consultation with another Wyman attorney that
generally related to the franchise investment law of the State of
California." (Resp. Pls.' Opp. Pro Hac Vice App., Barnes Decl. P 4.) He
denies receiving any knowledge of any confidential information that could be
material to the present case. (Id. PP 4-7.)
Plaintiffs have failed to make the basic showing that Barnes was involved in
matters substantially related to this suit while at the *1480 Wyman firm.
Therefore, the presumption does not arise that Barnes was privy to confidential
information relevant to this case, nor that he shared such information with
other members of Musick, Peeler, thus disqualifying the entire firm. See
Quark, Inc., 812 F.Supp. at 179-80.
Moreover, the Tenth Circuit, rather that adopt a per se rule of imputed
knowledge that would require automatic disqualification of the firm, has
recognized an exception for those firms which have adopted "pre-existing
institutional mechanisms that effectively screened the attorney from the
current case." Hunter Douglas, Inc. v. Home Fashions, Inc., 811 F.Supp.
566, 570 (D.Colo.1992) (citing Smith, 757 F.2d at 1100); see also Quark,
Inc., 812 F.Supp. at 180.
I am satisfied that such measures were in place at Musick, Peeler before it
accepted the present case and that the firm's "confidentiality wall" satisfies
the factors for effectively screening Barnes from financial interest and
participation in the instant case. See Smith, 757 F.2d at 1101; Quark,
Inc., 812 F.Supp. at 180.
For all the aforesaid reasons, I grant the motion to admit Berry to practice
pro hac vice.
B. Motion for Protective Order Prohibiting Deposition and Document Discovery of
Graham E. Berry Esq.
[7] On October 11, 1996, I granted F.A.C.T.Net's Motion for Protective Order
Prohibiting Deposition and Document Discovery of Graham E. Berry, Esq. pro
tempore until Berry's request to practice pro hac vice was granted or denied.
On October 18, 1996, Plaintiffs filed an opposition to the motion for a
protective order.
[8] I have granted Berry's request to practice pro hac vice. As counsel for
Defendant F.A.C.T.Net, Berry's deposition should only be allowed if Plaintiffs
have shown (1) no other means exist to obtain the information other than to
depose him; (2) the information is relevant and non-privileged; and (3) the
information is crucial to the preparation of the case. See Shelton v.
American Motors Corp., 805 F.2d 1323, 1327 (8th Cir.1986). For the reasons
stated above in relation to the motion for admission of Berry pro hac vice, I
find Plaintiffs have not made the necessary showing to allow the taking of
Berry's deposition.
With regard to the document request, Plaintiffs request Berry to
produce:
1. All documents which you gave to Lawrence Wollersheim, Robert Penny,
Arnaldo Lerma, or F.A.C.T.Net, Inc. in connection with work performed for you
in Church of Scientology International v. Fishman, Case No. 91-6426 HLH
(Tx).
2. All documents concerning the Advanced Technology.
(Mot. Protective Order, Ex. B, Subpoena in Civil Case, Ex. A at 3.)
As noted in Shelton:
The work-product doctrine not only protects from discovery materials obtained
or prepared in anticipation of litigation, but also the attorney's mental
impressions, including thought processes, opinions, conclusions and legal
theories.
....
[W]here, as here, the deponent is opposing counsel and opposing counsel has
engaged in a process of selecting and compiling documents in preparation for
litigation, the mere acknowledgment of the existence of those documents would
reveal counsel's mental impressions, which are protected as work product.
Shelton, 805 F.2d at 1328-29.
[9] With regard to the first request for documents given by Berry to
F.A.C.T.Net and its directors in connection with the expert consulting
performed for him in the Fishman case, production of the documents would reveal
more than their mere existence. They would be reflective of Berry's "mental
selective process." See id. at 1329. As such, the documents are protected
as work product.
[10] Moreover, the information and documents F.A.C.T.Net and its directors
received "in connection with work performed" in the Fishman matter are
privileged pursuant to Rule 26(b)(4)(B) concerning disclosure by non-
testifying expert consultants.
*1481 In addition, Berry's statement that these documents have not been
returned to him by Defendants is uncontradicted. The documents are therefore
obtainable by means other than subpoenaing Berry. Finally, Berry states he has
no percipient knowledge of the actual delivery of the documents to Defendants
and names several persons who would be more appropriate sources of information
in this regard.
With regard to the second request for all documents concerning the "Advanced
Technology," since the Church of Scientology produced these documents and has
the original or copies, it is not essential to Plaintiffs case that Berry
produce them.
Accordingly, I grant the Motion for Protective Order Prohibiting Deposition
and Document Discovery of Graham E. Berry, Esq. F.A.C.T.Net requests me to
sanction Plaintiffs and award Berry his expenses and fees incurred in the
preparation of this motion for a protective order because the deposition
subpoena was intended to harass him and is unduly burdensome. I deny this
request.
C. Motion to Admit Daniel A. Leipold to Practice Pro Hac Vice.
[11] Plaintiffs object to the motion of Daniel Leipold to appear pro hac
vice for the purpose of representing Defendant Lawrence Wollersheim. They
contend he assumed custody of the litigation files from Church of Scientology
v. Fishman containing the Fishman Declaration on July 11, 1996 and that twenty
days later Lerma made his allegedly unlawful posting of the declaration and its
attachments leading to this action. Plaintiffs contend Leipold like Berry is
inextricably linked with the chain of custody of the subject documents leading
to the copyright and trade secrets violations at issue.
It is Plaintiffs' position that Leipold is therefore a "necessary
witness" whose testimony is "relevant, material and unobtainable elsewhere."
See World Youth Day, Inc., 866 F.Supp. at 1302. Accordingly, Plaintiffs
maintain Leipold's disqualification should be granted and his pro hac vice
application be denied under Colorado Rules of Professional Conduct, Rule 3.7
which prohibits an attorney from being an advocate for a trial in which he is
likely to be a necessary witness.
Defendants respond that Plaintiffs' contention that Leipold cannot serve as
counsel is meritless because Defendants in this action have testified that they
possessed the relevant documents months before Leipold's brief possession of
the documents.
Having reviewed the affidavits of Leipold and Wollersheim and the deposition
of Lerma, I find no merit in Plaintiffs' contention that Leipold is linked with
the chain of custody of the documents at issue which lead to the alleged
copyright and trade secrets violations. Plaintiffs have not shown that Leipold
is a necessary witness in this regard. Accordingly I grant the Motion to Admit
Daniel A. Leipold to Practice Pro Hac Vice.
III. Conclusion.
I grant the Motion to Admit Graham E. Berry to Practice Pro Hac Vice, Motion
for Protective Order Prohibiting Deposition and Document Discovery of Graham E.
Berry, Esq. and Motion to Admit Daniel A. Leipold to Practice Pro Hac Vice.
On August 22, 1996, I granted Defendants Wollersheim, F.A.C.T.Net and Penny
until January 6, 1997 to respond to Plaintiffs' pending motion for summary
judgment and set a hearing on the motion for February 7, 1997 at 8:00 a.m.
The opposition to the admission of Berry and Leipold as counsel for Defendants
F.A.C.T.Net and Wollersheim has resulted in nearly a two month delay in
Defendants' retention of their desired counsel. I allow Defendants until
February 6, 1997 to respond to the summary judgment motion and continue the
hearing on the motion to March 17, 1997 at 9:00 a.m. Accordingly,
IT IS ORDERED THAT the Motion to Admit Graham E. Berry to Practice Pro Hac
Vice is GRANTED;
IT IS FURTHER ORDERED THAT the Motion for Protective Order Prohibiting
Deposition and Document Discovery of Graham E. Berry, Esq. is GRANTED;
IT IS FURTHER ORDERED THAT the Motion to Admit Daniel A. Leipold to Practice
Pro Hac Vice is GRANTED;
*1482 IT IS FURTHER ORDERED THAT Defendants have up to and including
February 6, 1997 to respond to the pending summary judgment motion and the
hearing on the motion is continued to March 17, 1997 at 9:00 a.m.