Kaselaan & D'Angelo Associates, Inc. v. D'Angelo
1992 U.S. Dist. LEXIS 16292, 144 F.R.D. 235, 1992 WL 302238 (1992)
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Rule of Law:
Under New Jersey Rule of Professional Conduct 1.9(a)(1), an attorney must be disqualified from representing a client against a former client if the current matter is 'substantially related' to the prior representation. A matter is 'substantially related' where the adversity between the clients creates a climate for the disclosure of relevant confidential information or where the issues in the former and present suits are practically the same.
Facts:
- Attorney John J. Rosenberg began representing Kaselaan & D’Angelo Associates, Inc. (K & D) in various employment matters around January 1986.
- On December 24, 1988, Hill International, Inc.'s predecessor acquired K & D from William 'Chip' D'Angelo and his partner.
- As part of the acquisition, D'Angelo entered into a six-year employment agreement with K & D on January 1, 1989, which contained restrictive covenants regarding soliciting clients, interfering with employees, and misappropriating confidential information.
- Rosenberg continued to represent K & D on employment matters until at least March 1990, including while D'Angelo served as K & D's president.
- During his representation, Rosenberg advised K & D on claims against other former employees for unfair competition and breach of loyalty, and assisted in drafting a termination agreement for an employee named Paul Manna that contained restrictive covenants similar to those in D'Angelo's contract.
- After D'Angelo's employment ended, K & D and Hill International alleged he violated his restrictive covenants and other duties of loyalty.
- D'Angelo retained Rosenberg and his law firm to represent him in the ensuing legal dispute with K & D and Hill International.
Procedural Posture:
- Kaselaan & D’Angelo Associates, Inc. and Hill International, Inc. filed a lawsuit against William “Chip” D’Angelo in the U.S. District Court for the District of New Jersey.
- D'Angelo retained John J. Rosenberg and the law firm of Varet, Marcus & Fink, P.C. as his legal counsel.
- Plaintiffs filed a motion in the district court to disqualify Rosenberg and his firm from representing D'Angelo.
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Issue:
Does an attorney's prior representation of a company in employment matters, including disputes over restrictive covenants and trade secrets, create a disqualifying conflict of interest under the 'substantially related' test when the attorney subsequently represents a former executive being sued by that same company for alleged breaches of similar restrictive covenants?
Opinions:
Majority - Simandle, District Judge
Yes, the attorney's prior representation creates a disqualifying conflict of interest. An attorney must be disqualified under New Jersey Rule of Professional Conduct (RPC) 1.9(a)(1) when their current representation is in a 'substantially related' matter that is materially adverse to a former client. The court found that New Jersey law construes 'substantially related' broadly, mandating disqualification where the issues are 'practically the same' or where the adversity creates a 'climate for the disclosure of relevant confidential information.' Here, Rosenberg's prior work for K & D involved defending against the same types of claims now being asserted against D'Angelo—unfair competition, breach of loyalty, and misappropriation. This prior work, particularly on the Paul Manna matter, gave Rosenberg knowledge of K & D's confidential information, policies, and litigation strategies concerning departing employees, creating a substantial relationship between the matters. The court also found disqualification warranted under RPC 1.9(a)(2) because Rosenberg could use information from his prior representation to K & D's disadvantage. The disqualification was imputed to Rosenberg's entire firm under RPC 1.10(a).
Analysis:
This decision emphasizes New Jersey's broad interpretation of the 'substantially related' test for attorney disqualification, contrasting it with more restrictive federal interpretations that may require factual identity between cases. The court prioritizes the protection of client confidences and loyalty over a party's choice of counsel, establishing that similarity in legal issues and strategic approaches is sufficient to create a conflict. This ruling serves as a precedent for disqualification motions in federal courts applying New Jersey's ethics rules, signaling that an attorney cannot 'switch sides' in cases involving similar subject matter, even if the specific underlying facts differ. It reinforces that knowledge of a former client’s litigation 'playbook' in a particular area of law can create a disqualifying advantage.
