Commercial Litigation and Arbitration

Pro Hac Vice Status Denied on Advocate-Witness and Conflict of Interest Grounds Where One Former Class Counsel Seeks to Sue Others for Malpractice in Earlier Class Action

From Decker v. Nagel Rice LLC, 2010 U.S. Dist. LEXIS 26530 (S.D.N.Y. Mar. 22, 2010):

On November 2000, a ski train fire in Kaprun, Austria killed 155 individuals and left twelve survivors. In addition to a mediation that took place in Austria, American and foreign survivors and/or relatives of those who died in the fire brought multiple lawsuits in federal court against numerous defendants (the "In re Ski Train Litigation"). Plaintiffs in this action — who were the foreign plaintiffs in the In re Ski Train Litigation — now bring a legal malpractice action against certain counsel in that action. In addition to being represented by Joy Hochstadt, plaintiffs seek to have James Lowy represent them and move for his admission to this Court pro hac vice. For the reasons that follow, plaintiffs' motion is denied.


In January 2001, four of the six defendants to this action — Nagel Rice LLC ("Nagel"), Jay J. Rice, Kohn Swift & Graf LLC ("Kohn"), and Robert Swift — filed a class action in the In re Ski Train Litigation. The class action included American and foreign plaintiffs. In 2002, the Judicial Panel on Multidistrict Litigation assigned all related actions to this Court for coordinated or consolidated pretrial proceedings. In September 2002, the complaint that Nagel, Rice, Kohn, and Swift filed against one of the defendants — Siemens AG Osterrech ("Siemens AG") — was dismissed for lack of personal jurisdiction. In January 2003, Nagel, Rice, Kohn, and Swift moved for class certification and to be appointed class counsel. During the summer of 2003, the remaining two defendants to this action — Speiser Krause ("Speiser") and Ken Nolan — joined Nagel, Rice, Kohn, and Swift (collectively, "Defendants") as proposed class counsel. In October 2003, this Court certified an opt-in class and appointed Defendants as class counsel. In their capacity as class counsel, Defendants represented all plaintiffs — American and foreign.

Plaintiffs claim that between 2002 and 2006, Defendants made negligent mistakes and neglected the foreign plaintiffs' interests in favor of the American plaintiffs. ***

After the class was decertified, Defendants advised that they would no longer be representing the foreign plaintiffs in the In re Ski Train Litigation. On November 2, 2005, Edward Fagan was retained to represent the foreign plaintiffs. In December 2005, Lowy, along with Robert J. Hantman, joined Fagan as co-counsel. In May 2006, Lowy was admitted pro hac vice in this Court. Although it is disputed whether Defendants continued to represent the foreign plaintiffs after late 2005, Fagan, Lowy, and Hantman had primary responsibility for the foreign plaintiffs' claims beginning in late 2005. On June 19, 2007, the Court dismissed the foreign plaintiffs' claims on the basis of the doctrine of forum non conveniens and the dismissal was affirmed on appeal.

On August 16, 2007, this Court disqualified Fagan in the In re Ski Train Litigation due to ethical violations. Lowy continued to represent the foreign plaintiffs thereafter, including on appeal. On November 19, 2007, Fagan, as well as one of the plaintiffs in this action —Bernd Geier — filed an action for legal malpractice against Lowy and others. That action was voluntarily dismissed. As part of that action, Lowy submitted a declaration to the court disputing whether Geier was a plaintiff in the In re Ski Train.***


A. Disqualification

"The disqualification of an attorney in order to forestall violation of ethical principles is a matter committed to the sound discretion of the district court." This authority derives from a court's "inherent power to preserve the integrity of the adversary process." Disqualification is only warranted in the rare circumstance where an attorney's conduct "poses a significant risk of trial taint."

"Motions to disqualify opposing counsel are viewed with disfavor in this Circuit because they are often interposed for tactical reasons" and may have significant adverse consequences to the client. A court should review a request for disqualification with "fairly strict scrutiny." Although any doubts are to be resolved in favor of disqualification, the party seeking disqualification bears a heavy burden of demonstrating that disqualification is necessary.

B. Advocate-Witness Rule

Attorneys appearing before this Court must abide by the New York State Rules of Professional Conduct (the "Rules"). Rule 3.7(a) addresses the situation where an attorney may be a witness. Commonly referred to as the "advocate-witness" rule, Rule 3.7(a) states:

A lawyer shall not act as advocate before a tribunal in a matter in which the lawyer is likely to be a witness on a significant issue of fact unless: (1) the testimony relates solely to an uncontested issue; (2) the testimony relates solely to the nature and value of legal services rendered in the matter; (3) disqualification of the lawyer would work substantial hardship on the client; (4) the testimony will relate solely to a matter of formality, and there is no reason to believe that substantial evidence will be offered in opposition to the testimony; or (5) the testimony is authorized by the tribunal.

The advocate-witness rule is based upon concerns that:

(1) the lawyer might appear to vouch for his own credibility; (2) the lawyer's testimony might place opposing counsel in a difficult position when she has to cross-examine her lawyer-adversary and attempt to impeach his credibility; (3) some may fear that the testifying attorney is distorting the truth as a result of bias in favor of his client; and (4) when an individual assumes the role of advocate and witness both, the line between argument and evidence may be blurred, and the jury confused.

"In order to disqualify an attorney on the basis of the advocate-witness rule, a party must demonstrate that the testimony is both necessary and substantially likely to be prejudicial." "Prejudice in this context means testimony that is 'sufficiently adverse to the factual assertions or account of events offered on behalf of the client, such that the bar or the client might have an interest in the lawyer's independence in discrediting that testimony.'"

C. Conflict of Interest

Rule 1.7 and Canons 5 and 9 of the American Bar Association Code of Professional Responsibility prohibit conflicts of interest. Rule 1.7 provides:

[A] lawyer shall not represent a client if a reasonable lawyer would conclude that either: (1) the representation will involve the lawyer in representing differing interest; or (2) there is a significant risk that the lawyer's professional judgment on behalf of a client will be adversely affected by the lawyer's own financial, business, property or other personal interests.

Although not binding, "disqualification motions often benefit from guidance offered by the American Bar Association (ABA) [Code] . . . ." The Code consists of three separate but interrelated parts, including Canons, which are "statements of axiomatic norms." Within each Canon are corresponding Ethical Considerations and Disciplinary Rules. Disqualification can be ordered "where an attorney's conflict of interests in violation of Canons 5 and 9 ... undermines the court's confidence in the vigor of the attorney's representation of his client."

Similar to the prohibition found in Rule 1.7, Canon 5 of the Code suggests that a lawyer should exercise independent professional judgment on behalf of a client. Ethical Consideration 5-1 states that: "[t]he professional judgment of a lawyer should be exercised . . . solely for the benefit of the client and free of compromising influences and loyalties. . . . [T]he lawyer's personal interests . . . should [not] be permitted to dilute the lawyer's loyalty to the client." Disciplinary Rule 5-101 instructs that "a lawyer shall not accept employment if the exercise of his professional judgment on behalf of his client will be or reasonably may be affected by his own financial, business, property, or personal interests."

Canon 9 generally provides that a lawyer should avoid even the appearance of professional impropriety. Ethical Consideration 9-6 provides:

Every lawyer owes a solemn duty to uphold the integrity and honor of his profession; ... to observe the Code of Professional Responsibility; . . . and to strive to avoid not only professional impropriety but also the appearance of impropriety.


Defendants oppose the foreign plaintiffs' pro hac vice motion on the grounds that Lowy should be disqualified from representing plaintiffs. According to Defendants, Lowy (1) is a material fact witness; (2) will be named as a third-party defendant for contribution and/or indemnification; and (3) was sued by one of the plaintiffs in this action for legal malpractice in connection with the In re Ski Train Litigation and made sworn statements adverse to that plaintiff. For all three reasons, Lowy is disqualified.

First, Lowy is disqualified under the advocate-witness rule. The malpractice allegedly occurred when Defendants failed to move to certify the foreign plaintiffs as an opt-out class in either 2004, 2005, or 2006 or move this Court for relief from its judgment dismissing Siemens AG. As co-counsel to the foreign plaintiffs in 2005 and responsible for the foreign plaintiffs' unsuccessful appeal, Lowy had direct, personal, involvement in the alleged acts of malpractice. Even counsel for the foreign plaintiffs recognizes that Lowy had at least some involvement arguing only that "he was not involved in the case at all at the time when most of the acts of malpractice occurred." ***

In addition, the advocate-witness rule is intended to address four concerns. All are present here. Lowy declares that he will testify that Defendants engaged in malpractice while he and his co-counsel attempted to rectify those mistakes. Given Lowy's involvement with the underlying lawsuit and the prior malpractice action brought against him, this testimony may cause jurors and this Court to fear that he is distorting the truth as a result of bias in favor of plaintiffs or to protect his own interests. Defendants' counsel will vigorously cross-examine Lowy regarding the actions he took or failed to take as the foreign plaintiffs' counsel in the In re Ski Train Litigation. Defendants' counsel will seek to impeach Lowy's credibility with regard to whether it was Defendants or Lowy that caused the foreign plaintiffs' alleged harm. Such cross-examination places opposing counsel in a difficult situation and will require Lowy to vouch for his own credibility. Lowy's simultaneous representation of plaintiffs and his need to defend his own conduct will "'blur the line between argument and evidence [such] that the jury's ability to find facts [will be] undermined.'"

Furthermore, Lowy's testimony is both necessary and prejudicial. Lowy did not merely play a passive role in the In re Ski Train Litigation. Instead, Lowy was one of only three attorneys -- one of which was disqualified in 2007 -- that zealously represented the foreign plaintiffs during the precise time when the alleged malpractice was ongoing. Lowy will need to explain why he did not take steps to minimize plaintiffs' alleged harm, such as by seeking certification of the foreign plaintiffs as an opt-out class in the wake of the Second Circuit opinion or pursuing a judgment on appeal with regard to the dismissal of the claims against Siemens AG. Any such testimony will necessarily be adverse to plaintiffs' position and undermine their claim that Defendants' malpractice caused their harm. Because his testimony is both necessary and prejudicial, I find that Lowy must be disqualified under the advocate-witness rule. 44

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