Appeal from an order entered in the United States District Court for the Southern District of New York, Richard Owen, Judge, denying plaintiff's motion to disqualify defendant's law firm. Reversed and remanded.
Before Oakes and Meskill, Circuit Judges, and Bonsal, District Judge.*fn*
James K. J. Cheng appeals from an order entered in the United States District Court for the Southern District of New York (Owen, J.) denying his motion to disqualify the law firm representing his opponent, GAF Corporation. Cheng argued below that because one of the attorneys employed by the law firm representing GAF previously had been employed by the legal services office representing Cheng, disqualification was necessary to avoid violations of various Canons of the American Bar Association Code of Professional Responsibility ("ABA Code"). The district court, concluding that disqualification was not warranted, denied Cheng's motion. For the reasons set forth below, we reverse the district court's decision and remand for entry of an order of disqualification.
In 1977, Cheng, represented by Legal Services for the Elderly Poor ("LSEP"), instituted an employment discrimination action against GAF. From the start, GAF has been represented in this litigation by the law firm of Epstein, Becker, Borsody & Green ("Epstein firm"). In October, 1979, while the Cheng case was still in the discovery phase, the Epstein firm hired Philip Gassel as an associate in its health law department. From 1974 until his association with the Epstein firm, Gassel had been employed as a senior attorney at LSEP. Although Cheng concedes that while Gassel was employed at LSEP he did not represent Cheng in any litigation, Cheng claims that Gassel did participate in discussions with other members of the staff about the GAF case.
After learning of Gassel's new association, Cheng filed a motion to disqualify the Epstein firm from representing GAF in the instant case. Cheng alleged that the "continued participation of the Epstein firm . . . seriously jeopardizes the integrity of confidences and secrets of (Cheng) which were imparted to Mr. Gassel under the cloak of attorney-client relationship." Weiss Affidavit at 5. Citing the small size of the LSEP legal staff, which consisted of four to six attorneys working with several part-time students, and noting the frequency of cooperation and consultation among the LSEP attorneys, Cheng claimed that Gassel had actual knowledge of Cheng's confidences and secrets when he joined the Epstein firm. Cheng argued, therefore, that under Canons Four, Five and Nine of the ABA Code,*fn1 the Epstein firm should be disqualified.
Opposing the disqualification motion, the Epstein firm averred in its affidavits that Gassel had been hired as a health law attorney and had functioned only in that capacity, aside from handling some commercial litigation and miscellaneous matters. The Epstein firm emphasized that Gassel had not worked on the Cheng case, had not divulged any confidential information and would not be required to do so in the future. Gassel submitted an affidavit disclaiming any present involvement in the Cheng case and urging acceptance of the technique of insulation practiced by the Epstein firm.
In his opinion denying the disqualification motion, Judge Owen discussed Gassel's involvement in the Cheng case, and expressed the belief that Gassel possessed minimal confidential information, that he had not disclosed the information yet and that the Epstein firm had effectively screened him from the attorneys handling GAF's defense. Stating that the prejudice that would result from requiring GAF to change law firms after extensive discovery and trial preparation would be substantial, Judge Owen concluded that "to order disqualification under these circumstances would not serve any interest which the law recognizes." Because we disagree with Judge Owen's view of the effectiveness of the screening procedures employed by the Epstein firm, we reverse.*fn2
It is well settled in this Circuit that a motion to disqualify an attorney is addressed to the discretion of the district court, and a ruling thereon will not be overturned absent a determination of abuse of discretion. Hull v. Celanese Corp., 513 F.2d 568, 571 (2d Cir.1975). See also Fund of Funds, Ltd. v. Arthur Andersen & Co., 567 F.2d 225 (2d Cir.1977); Allegaert v. Perot, 565 F.2d 246 (2d Cir.1977); W. T. Grant Co. v. Haines, 531 F.2d 671 (2d Cir.1976). The question raised in this appeal is whether Judge Owen's refusal to disqualify the Epstein firm was such an abuse.
I. Disqualification Under Canon 4
The American Bar Association Code of Professional Responsibility has been recognized in this Circuit as providing appropriate guidelines for proper professional behavior. Fund of Funds, Ltd. v. Arthur Andersen & Co., supra, 567 F.2d at 227 n.2; NCK Organization Ltd. v. Bregman, 542 F.2d 128, 129 n.2 (2d Cir.1976); Cinema 5, Ltd. v. Cinerama, Inc., 528 F.2d 1384, 1386 (2d Cir.1976); Hull v. Celanese Corp., supra, 513 F.2d at 571 n.12. Cf. Armstrong v. McAlpin, 625 F.2d 433, 446 n.26 (2d Cir.1980) (although ABA committee that drafted Code has indicated rules were intended for use in disciplinary proceedings rather than in disqualification proceedings, Court refers to Code for guidance).
Canon 4 and its Ethical Considerations and Disciplinary Rules provide standards to guide an attorney in preserving the confidences and secrets of a client.*fn3 Cheng argues vigorously that under these standards Gassel should be disqualified from representing GAF in the present action. Although Gassel is not actively involved in GAF's defense, his disqualification under Canon 4 would implicate the sweeping prohibition of representation by a tainted attorney's co-workers contained in Canon 5. Disciplinary Rule 5-105(D) provides: "If a lawyer is required to decline employment or to withdraw from employment under a Disciplinary Rule, no partner, or associate, or any other lawyer affiliated with him or his firm, may accept or continue such employment." Although the district court below did not decide whether Gassel himself had to be disqualified under Canon 4, we must address this question briefly as it bears upon our analysis of Disciplinary Rule 5-105(D).
Determination of a violation of Canon 4 sufficient to disqualify an attorney traditionally has been based on a finding of concurrent or successive representation in ...