Patricia Young v. Norva L. Achenbauch , 136 So. 3d 575 ( 2014 )

Supreme Court of Florida
____________
No. SC12-988
____________
PATRICIA YOUNG, et al.,
Petitioners,
vs.
NORVA L. ACHENBAUCH, et al.,
Respondents.
[March 27, 2014]
POLSTON, C.J.
Petitioners, Patricia Young, Alani Blissard, and the Flight Attendant Medical
Research Institute (FAMRI), argue that the Third District Court of Appeal in Broin
v. Phillip Morris Cos., Inc., 84 So. 3d 1107 (Fla. 3d DCA 2012), erred in quashing
the trial court’s order disqualifying several attorneys, including Steven Hunter and
Philip Gerson, from representing a group of flight attendants in a suit against
FAMRI. Specifically, the petitioners claim that the Third District failed to apply
the Florida Rules of Professional Conduct in determining whether the trial court
abused its discretion by disqualifying the attorneys in the underlying case. 1 For the
reasons that follow, we quash the Third District’s decision in Broin and reinstate
the trial court’s disqualification order. 2 Additionally, with this opinion, we ask
The Florida Bar to investigate whether any Florida Rules of Professional Conduct
were violated during the underlying proceedings or during the presentation of this
case to this Court.
I. BACKGROUND
In 1991, flight attendants, who were suffering from diseases caused by
exposure to second-hand smoke in airline cabins, initiated a class action suit
against several tobacco companies. See Ramos v. Philip Morris Cos., Inc., 743 So.
2d 24 (Fla. 3d DCA 1999), rev. dismissed, 743 So. 2d 14 (Fla. 1999); Broin v.
Philip Morris Cos., Inc., 641 So. 2d 888 (Fla. 3d DCA 1994). The class action
resulted in a settlement agreement, whereby the class members agreed to waive
their intentional tort and punitive damages claims but retained the right to
individually pursue claims for compensatory damages against the tobacco
companies. See Ramos, 743 So. 2d at 27. In return, the tobacco companies agreed
1. We have jurisdiction based on express and direct conflict. See art. V, §
3(b)(3), Fla. Const.
2. The trial court’s order actually disqualified all seven attorneys for the
petitioners in the suit against FAMRI. However, only attorneys Hunter and Gerson
challenged their disqualification in the Third District. Therefore, this opinion will
only address the disqualification of Hunter and Gerson.
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to waive the statute of limitations defense and to establish a $300 million
settlement fund to be used solely to establish a foundation which would be charged
with sponsoring scientific research for the early detection and cure of diseases
associated with cigarette smoking. Id. at 27, 31-32. The settlement agreement
provided that if the settlement is modified in any way by the court “then this
[s]ettlement [a]greement shall be canceled and terminated, and shall become null
and void, and the parties shall be restored to their original positions.” The Third
District affirmed the trial court’s approval of the settlement without modification in
Ramos. See Philip Morris v. French, 897 So. 2d 480, 482-83 (Fla. 3d DCA 2004)
(explaining that the trial court approved the class action settlement agreement
“without modification” and that the Third District affirmed the trial court’s
decision in Ramos), rev. denied, 918 So. 2d 292 (Fla. 2005). Subsequently,
FAMRI was formed, and several of the flight attendants who were part of the
Broin class action became members of FAMRI’s board, including two of the
petitioners in this case, Young and Blissard. Additionally, pursuant to the
settlement agreement, the Broin class action was dismissed with prejudice in 1998.
Thereafter, many of the flight attendants who had been part of the class
action filed their individual suits as contemplated by the settlement agreement for
compensatory damages against the tobacco companies, including Young and
Blissard. Steven Hunter and Philip Gerson were among the group of attorneys
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who represented some of the flight attendants in their individual progeny suits.
According to Hunter and Gerson, while representing their flight attendant clients in
the individual suits, Hunter and Gerson became concerned that FAMRI’s activities
were not being supervised by the trial court and attempted to have FAMRI produce
an accounting, but FAMRI was allegedly unresponsive. And, in December 2010, a
group of attorneys, including Gerson and Hunter, filed a petition against FAMRI,
on behalf of a handful of the flight attendants who were part of the original Broin
class, seeking an accounting of FAMRI’s funds, an injunction against further
expenditures, and requesting that the settlement funds be dispersed directly to their
clients.
Young and Blissard, who both remain board members of FAMRI, as well as
FAMRI, moved to disqualify counsel for the petitioners in the action against
FAMRI on the ground of conflict of interest. In support of this motion, they
submitted several sworn affidavits setting forth their objections, which will be
discussed in turn below.
Specifically, Blissard averred in her affidavit that she was a former class
representative in the Broin class action and is a current member of FAMRI’s
board, and that Steven Hunter represented her in her individual progeny suit for ten
years. Blissard further explained that during that time she attended numerous
meetings with the various flight attendants’ counsel, including Hunter and Gerson,
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and that the flight attendants’ counsel worked as a team in the pursuit of the
individual flight attendants’ claims, and that she trusted the group of attorneys as
her legal team. Further, Blissard stated that during this time she shared many
confidences about herself and FAMRI and that Hunter “always stressed the united
team effort of his colleagues.” Additionally, Blissard stated that Hunter had asked
her to request funds from FAMRI’s board to help cover the litigation costs and
judgments in the individual flight attendant cases, but FAMRI denied the request
after consulting with its counsel because it could not legally authorize such
expenditures. Upon learning of the petition against FAMRI, Blissard explained
that she contacted Hunter and objected to the petition and that Hunter subsequently
withdrew as her counsel in her individual suit after representing her for a decade.
Similarly, Young submitted an affidavit in which she explained that she was
a former class representative in the Broin class action and is also a member of
FAMRI’s board. Like Blissard, Young averred that over the years she frequently
met with the group of attorneys representing the flight attendants in their individual
progeny suits, including Hunter and Gerson, and that she considered all of the
attorneys in the group to be her counsel, but admitted that neither Hunter nor
Gerson was her individual counsel of record. Young also stated that she shared
confidential information regarding FAMRI with Hunter and Gerson and that they
“asked [her] many questions about the criteria FAMRI used to fund research, the
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peer-review process, and whether their experts could bypass peer review.” In fact,
similar to Blissard, Young also stated that Gerson and Hunter asked her to request
funds from FAMRI to cover the litigation costs in the individual flight attendant
cases, a request which she conveyed to FAMRI’s board, but the board denied the
request because it could not legally authorize such an expenditure.
Additionally, two other affidavits were submitted from Hunter and Gerson’s
clients in support of disqualification. An affidavit from Olivia Chambers
explained that Hunter was her attorney in her individual progeny suit, and that in
February 2011 (after the petition against FAMRI had already been filed) she
received a letter from Hunter asking her to authorize him to proceed on her behalf
in the suit against FAMRI. Chambers stated that she objected to the action against
FAMRI and, as a result, Hunter withdrew as her counsel in her individual suit.
Likewise, an affidavit submitted by Raiti Waerness, one of Gerson’s clients,
explained that she learned of the petition against FAMRI and wrote Gerson
objecting to any action against FAMRI, and that Gerson subsequently withdrew as
her counsel in her individual suit in 2011. The petitioners also submitted an
exhibit in the form of an e-mail from Peggy Spurgeon in which she wrote to
Gerson in April 2010 stating that she also opposed his pursuit of the suit against
FAMRI.
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In addition to the affidavits from Hunter and Gerson’s clients in support of
disqualification, one of the attorneys who was a part of the group of attorneys
working on the flight attendants’ progeny cases submitted an affidavit stating that
all of the flight attendants’ counsel employed a team approach to the progeny
lawsuits—“work[ing] on the cases jointly, sharing information, discovery, and trial
strategy,” and freely exchanged information about each case among the group.
This attorney also averred that Young and Blissard met frequently with the group
and “freely provided information and confided in us about FARMI [sic] and their
work with FAMRI.” The attorney also stated that during this time he had
permitted one of the attorneys who joined with Gerson and Hunter in filing the
petition against FAMRI to review all of his flight attendant case files.
In response to the motion to disqualify, Hunter and Gerson submitted
affidavits in which they denied the existence of any conflict. Specifically, Hunter
admitted that he had been Blissard and Chamber’s counsel in their individual
progeny suits, but that there was no conflict in his representing the petitioners
against FAMRI because he had promptly withdrawn as Blissard and Chamber’s
counsel upon learning of their objections to the suit. Additionally, Hunter denied
ever representing Young or possessing any confidential information about Young
or Blissard’s dealings with FAMRI.
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Similarly, Gerson denied that an attorney-client relationship existed with
Blissard or Young, stating that they never disclosed any information about
themselves, their cases, the operations of FAMRI, or their roles in FAMRI to him.
He further denied ever asking Young about the possibility of FAMRI funding the
individual litigation cost, and stated that “there never was any information not
publicly available about FAMRI or its board members activities that was ever
provided to [him].” Finally, Gerson admitted that he had filed Raiti Waerness’
individual suit for her, but only at the request of the Broin class counsel because
the statute of limitations was due to expire, that he had never met her, and had not
heard from her until he received the letter in which she objected to any action
against FAMRI. And Gerson explained that upon learning of her objections, he
filed a motion to withdraw as her counsel and officially set the hearing on that
motion when he learned that she had filed an affidavit in support of his
disqualification. Gerson further averred that he “never received any information
about [Waerness] during the time [he] was attorney of record.” With regard to
Peggy Spurgeon, Gerson averred that, although he filed an action on her behalf, he
did so only as a courtesy to Broin class counsel. He explained that an attorney-
client relationship never existed, that he never met her, that he did not possess any
information about her, that she never completed the retainer agreement he sent her,
and that her case was dismissed for lack of prosecution in 2008.
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In June 2011, a hearing was held on the motion to disqualify, and the trial
court offered the parties the opportunity to proffer evidence and give testimony,
but neither party presented any witnesses. After reviewing all of the affidavits,
arguments, and exhibits, the trial court entered an order disqualifying all of the
attorneys for the petitioners in the action against FAMRI. The trial court found
that the attorneys had violated Florida’s Rule of Professional Conduct 4-1.7,
governing conflicts with current clients, and Rule of Professional Conduct 4-1.9,
governing conflicts with former clients. The trial court explained that withdrawing
from the representation of Young, Blissard, and Waerness appeared to be an
attempt to “drop one client ‘like a hot potato’ in order to treat it as though it were a
former client for the purpose of resolving a conflict of interest dispute.” (quoting
ValuePart, Inc. v. Clements, No. 06C2709, 2006 WL 2252541, at *2 (N.D. Ill.
Aug. 2, 2006)).
On certiorari review, the Third District quashed the trial court’s
disqualification order. Broin, 84 So. 3d at 1108. The Third District noted that “[a]
common dilemma arises when class counsel endeavor to reach a settlement which
is fair to all members, and some of the members object to the proposed
settlement.” Id. at 1111. Then, the Third District went on to state that “[t]his case
demonstrates why Florida’s Rules of Professional Conduct alone are inadequate to
resolve conflict of interest problems typical to class action cases[:]”
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Here, two class members, who object to a course of action approved
by a significant number of their co-class members, demand the
disqualification of counsel selected by the latter to represent them.
The sole basis for disqualification is the alleged team effort of all
plaintiffs’ counsel in the original action.
Id. at 1112.
The Third District ultimately concluded that the federal approach, which
“balances a party’s right to select his or her own counsel against a client’s right to
the undivided loyalty of his or her counsel,” “affords a better method for
determining when to disqualify an attorney for conflict of interest in the context of
a class action.” Id. Therefore, the Third District held that “before disqualifying a
class member’s attorney on the motion of another class member, the court should
balance the actual prejudice to the objector with his or her opponent’s interest in
continued representation by experienced counsel.” Id.Based on this balancing test, the Third District found that the other class
members’ right to be represented by Gerson and Hunter was outweighed by any
prejudice to the objectors. Id. The Third District explained that Gerson and
Hunter are familiar with the litigation history and, because they were not lead
counsel in the original class action, they would have had “little access to
confidential information.” Id. Furthermore, the Third District stated that,
“although arising from the prior litigation, the present action involves a different
issue.” Id. Accordingly, the Third District held that “the trial court departed from
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the essential requirements of law in disqualifying petitioners’ counsel” and
quashed the disqualification order and remanded for further proceedings. Id. at
1112-13.
As explained below, we quash the Third District’s decision because it failed
to apply the Florida Rules of Professional Conduct to determine whether
disqualification was warranted. We also reinstate the trial court’s disqualification
order. 3
II. ANALYSIS
We have previously explained that the Florida Rules of Professional
Conduct provide the standard for determining whether counsel should be
disqualified in a given case. State Farm Mut. Auto. Ins. Co. v. K.A.W., 575 So. 2d
630, 633 (Fla. 1991); see also Estright v. Bay Point Improvement Ass’n, Inc., 921
So. 2d 810, 811 (Fla. 1st DCA 2006) (“An order involving the disqualification of
counsel must be tested against the standards imposed by the [Florida] Rules of
Professional Conduct.”) (quoting Morse v. Clark, 890 So. 2d 496, 497 (Fla. 5th
DCA 2004)). In this case, the Third District’s review below should have been
limited to whether the trial court abused its discretion in granting the
disqualification motion. See Applied Digital Solutions, Inc. v. Vasa, 941 So. 2d
3. This case involves the interpretation and application of this Court’s Rules
of Professional Conduct, which is a pure legal issue subject to de novo review. See
State Farm Mut. Auto. Ins. Co. v. K.A.W., 575 So. 2d 630 (Fla. 1991).
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404, 408 (Fla. 4th DCA 2006) (“The standard of review for orders entered on
motions to disqualify counsel is that of an abuse of discretion. While the trial
court’s discretion is limited by the applicable legal principles, the appellate court
will not substitute its judgment for the trial court’s express or implied findings of
fact which are supported by competent substantial evidence.”) (citation omitted).
However, instead of just applying the Florida Rules of Professional Conduct to
determine whether the trial court abused its discretion in disqualifying the
attorneys, the Third District adopted a different test, namely a balancing test used
by the federal courts. Broin, 84 So. 3d at 1112. However, as explained above, this
is not the proper test for motions to disqualify counsel as set forth by this Court,
and the Third District lacked the constitutional authority to adopt a new test. Art.
V, § 15, Fla. Const.
Furthermore, we find that the trial court did not abuse its discretion when
ruling that counsel violated Florida Rules of Professional Conduct 4-1.7 and 4-1.9.
Rule 4-1.7 concerns conflicts of interests with current clients and provides that a
lawyer shall not represent a client if:
(1) the representation of 1 client will be directly adverse to
another client; or
(2) there is a substantial risk that the representation of 1 or more
clients will be materially limited by the lawyer’s responsibilities to
another client, a former client or a third person or by a personal
interest of the lawyer.
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R. Regulating Fla. Bar 4-1.7(a). However, notwithstanding a conflict under rule 4-
1.7(a), a lawyer might still be able to represent the clients provided that the
representation is not prohibited by law, the lawyer reasonably believes the
representation will not adversely affect his responsibilities to the other client, and
the other client consents after consultation. See generally id. 4-1.7(b).
The commentary to rule 4-1.7 further explains that
[a]n impermissible conflict of interest may exist before representation
is undertaken, in which event the representation should be declined.
If such a conflict arises after representation has been undertaken, the
lawyer should withdraw from the representation. Where more than 1
client is involved and the lawyer withdraws because a conflict arises
after representation, whether the lawyer may continue to represent any
of the clients is determined by rule 4-1.9.
Comment to R. Regulating Fla. Bar 4-1.7. “[L]oyalty to a client prohibits
undertaking representation directly adverse to that client’s or another client’s
interests without the affected client’s consent.” Id. And, “[o]rdinarily, a lawyer
may not act as advocate against a client the lawyer represents in some other matter,
even if the other matter is wholly unrelated.” Id.
Accordingly, the comment to rule 4-1.7 clearly explains that counsel may
withdraw from the representation when “a conflict arises after representation has
been undertaken[,]” but that counsel has the duty to decline representation if the
conflict “exist[s] before representation is undertaken.” Id. (Emphasis added.)
Attorneys may not avoid this rule by taking on representation in which a conflict of
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interest already exists and then convert a current client into a former client by
withdrawing from the client’s case. See Clements, 2006 WL 2252541, at *2
(explaining that a lawyer or law firm “may not simply [choose] to drop one client
‘like a hot potato’ in order to treat it as though it were a former client for the
purpose of resolving a conflict of interest dispute”); Unified Sewerage Agency v.
Jelco, Inc., 646 F.2d 1339, 1345 n.4 (9th Cir. 1981) (noting that, if the duty of
loyalty did not prevent this practice, “the challenged attorney could always convert
a present client into a ‘former client’ by choosing when to cease to represent the
disfavored client”). In fact, we have previously held that “[a]n attorney engages in
unethical conduct when he undertakes a representation when he either knows or
should know of a conflict of interest prohibiting the representation.” The Fla. Bar
v. Scott, 39 So. 3d 309, 316 (Fla. 2010).
The conflict of interest in this case existed long before Gerson and Hunter
undertook the litigation against FAMRI and should have been apparent to both
Gerson and Hunter. Specifically, with regard to Hunter, the conflict should have
been evident the moment the idea of suing FAMRI was first raised, because he had
represented Blissard, who is a member of FAMRI’s board, for ten years, and the
petition against FAMRI accuses the board (including Blissard) of misusing funds.
Simply put, the action against FAMRI’s board is “directly adverse” to the interests
of Blissard, and the commentary to rule 4-1.7 clearly explains that “loyalty to a
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client prohibits undertaking representation directly adverse to that client’s or
another client’s interests without the affected client’s consent.” Comment to R.
Regulating Fla. Bar 4-1.7. In fact, the record establishes that Hunter did not even
seek out Blissard’s consent; rather, she independently learned of the plan to file a
petition against FAMRI and contacted Hunter directly to express her objections.
Therefore, because the conflict of interest existed before the litigation against
FAMRI was undertaken, Hunter had a duty under rule 4-1.7 to decline to pursue
the petition against FAMRI, and his withdrawal as Blissard’s counsel after the fact
did not resolve this conflict or preclude the application of rule 4-1.7 to determine
whether he should have been disqualified as counsel in the action against FAMRI.
Likewise, with regard to Gerson, the impermissible conflict of interest
should have been apparent to him when he received notification from his clients,
Raiti Waerness and Peggy Spurgeon, that they objected to the action against
FAMRI. And, like Hunter, his subsequent withdrawal as Waerness’ counsel did
not resolve the conflict of interest or evade the applicability of rule 4-1.7.
Additionally, even though Gerson may not have been direct counsel to
Young or Blissard, and Hunter may not have been direct counsel to Young, given
the team approach to representation by the flight attendants’ counsel in the progeny
litigation and the sharing of information and confidences that occurred, the conflict
of interest in pursuing the action against FAMRI should have been evident. See
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Visual Scene, Inc. v. Pilkington Bros., PLC., 508 So. 2d 437, 440 n.3 (Fla. 3d
DCA 1987) (explaining that where groups of attorneys and clients work together
and pool or share litigation information, “for the limited purpose of the ‘pooled
information’ situation, the attorney for one becomes the attorney for the other”);
see also Mansur v. Podhurst Orseck, P.A., 994 So. 2d 435, 438 (Fla. 3d DCA
2008) (explaining that the test for whether there is an attorney-client relationship is
whether the client has a “reasonable” belief that she or he is represented by the
attorney) (quoting The Fla. Bar v. Beach, 675 So. 2d 106, 109 (Fla. 1996)).
Additionally, we conclude that disqualification was also warranted under
rule 4-1.9. Rule 4-1.9 concerns conflicts of interest with former clients and
provides the following:
A lawyer who has formerly represented a client in a matter shall
not thereafter:
(a) 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;
(b) use information relating to the representation to the
disadvantage of the former client except as these rules would permit
or require with respect to a client or when the information has become
generally known; or
(c) reveal information relating to the representation except as
these rules would permit or require with respect to a client.
R. Regulating Fla. Bar 4-1.9(a)-(c). “Matters are ‘substantially related’ for
purposes of this rule if they involve the same transaction or legal dispute, or if the
current matter would involve the lawyer attacking work that the lawyer performed
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for the former client.” Comment to R. Regulating Fla. Bar 4-1.9. A party seeking
disqualification under rule 4-1.9 does not have to demonstrate actual prejudice to
the former client as a result of the subsequent representation because the existence
of an attorney-client relationship “giv[es] rise to an irrefutable presumption that
confidences were disclosed.” K.A.W., 575 So. 2d at 633-34.
In this case, as the trial court found, the petition against FAMRI, the
individual progeny suits, and the original class action are substantially related
because they involve the same transaction or legal dispute. Specifically, the
original class action resulted in the underlying settlement agreement that
established FAMRI, set limitations on the use of FAMRI’s funds (which the
current petition seeks to distribute), and contemplated the individual progeny suits
by the flight attendants against the tobacco companies. Gerson and Hunter
represented many of the flight attendants in their individual suits. Now, Gerson
and Hunter have accused FAMRI of not living up to the settlement’s mandate,
assert that FAMRI’s alleged lack of research is “a substantial reason for the
disappointing outcomes of [the] individual lawsuits,” and seek to have the funds
given to FAMRI as part of the settlement agreement dispersed to only a handful of
the former class members. Consequently, we find that the individual litigation and
the action against FAMRI are substantially related as that term is defined in rule 4-
1.9. And, it is clear that the interests of the individuals participating in the action
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against FAMRI are materially adverse to the interests of Hunter and Gerson’s
former clients who objected to the petition against FAMRI and did not give their
informed consent. Therefore, we agree with the trial court’s determination that
rule 4-1.9(a) was violated.
Accordingly, we find that disqualification was warranted in this case.
III. CONCLUSION
For the reasons explained above, we quash the Third District’s decision
below and reinstate the trial court’s disqualification order.
It is so ordered.
PARIENTE, QUINCE, CANADY, LABARGA, and PERRY, JJ., concur.
LEWIS, J., concurs in result.
NOT FINAL UNTIL TIME EXPIRES TO FILE REHEARING MOTION, AND
IF FILED, DETERMINED.
Application for Review of the Decision of the District Court of Appeal – Direct
Conflict of Decisions
Third District - Case No. 3D11-2129
(Miami-Dade County)
Christian Dietrich Searcy of Searcy Denney Scarola Barnhart & Shipley, P.A.,
West Palm Beach, Florida; David Joseph Sales, Jupiter, Florida; John Wesley
Kozyak, Thomas A. Tucker Ronzetti, Rachel Sullivan, and Jessica E. Elliott of
Kozyak Tropin & Throckmorton, P.A., Coral Gables, Florida; John Stewart Mills,
Andrew Manko, and Courtney Rebecca Brewer of The Mills Firm, P.A.,
Tallahassee, Florida; Miles Ambrose McGrane, III of The McGrane Law Firm,
Miami, Florida; and Roderick Norman Petrey, Coral Gables, Florida,
for Petitioners
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Steven Kent Hunter and Christopher J. Lynch of Hunter, Williams & Lynch, P.A.,
Miami, Florida; Philip Maurice Gerson and Edward Steven Schwartz of Gerson &
Schwartz, P.A., Miami, Florida; Stanley M. Rosenblatt and Susan Rosenblatt of
Stanley M. Rosenblatt, P.A., Miami, Florida; Marvin Weinstein of Grover &
Weinstein P.A., Miami Beach, Florida; Mark Jurgen Heise and Antonio C. Castro
of Boies, Schiller & Flexner, Miami, Florida; Kelly Anne Luther of Kasowitz
Benson, Miami, Florida; Edward A. Moss and Kenneth James Reilly of Shook
Hardy & Bacon, LLP, Miami, Florida; David Ross of Green Traurig, LLP, Miami,
Florida; Douglas Chumbley and Benjamin Reid of Carlton Fields, Miami, Florida;
and Stephanie Ethel Parker, John F. Yarber, and John M. Walker of Jones Day,
Atlanta, Georgia,
for Respondents
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