Rebecca McCarthy v. Care One Management, LLC ( 2024 )

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court ." Although it is posted on the
internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-3518-22
REBECCA MCCARTHY,
Plaintiff-Respondent,
v.
CARE ONE MANAGEMENT, LLC,
and ALISON FITZPATRICK-
DURSKI,
Defendants-Appellants.
______________________________
Argued December 5, 2023 – Decided January 16, 2024
Before Judges Whipple, Mayer and Paganelli.
On appeal from an interlocutory order of the Superior
Court of New Jersey, Law Division, Bergen County,
Docket No. L-8657-16.
Bruce H. Nagel argued the cause for appellant Care One
Management, LLC (Nagel Rice, LLP and O'Toole
Scrivo, LLC, attorneys; Bruce H. Nagel, Robert H.
Solomon, Thomas P. Scrivo, and Michael J. Dee, of
counsel and on the briefs).
Paul R. Castronovo argued the cause for respondent
(Castronovo & McKinney, LLC, attorneys; Thomas A.
McKinney, Paul R. Castronovo, and Edward W.
Schroll, on the brief).
PER CURIAM
By way of leave granted, defendant Care One Management, LLC (Care
One)1 appeals from a June 8, 2023 order denying its motion to disqualify the law
firm of Castronovo & McKinney, LLC, from further representation of plaintiff
Rebecca McCarthy. We affirm.
In our prior opinion, McCarthy v. Care One Management, LLC, No. A-
2542-19 (App. Div. July 12, 2021) (slip op. at 1), we affirmed the jury's award
of compensatory damages to plaintiff. We also determined "an award of
punitive damages against Care One was warranted." Id. at 12. However,
contrary to N.J.S.A. 2A:15-5.12(c), "the jury assessed punitive damages . . .
without the benefit of any evidence regarding Care One's financial condition."
Id. at 13. Thus, we concluded "[u]nder these circumstances, the award must be
vacated and a new trial as to punitive damages must be conducted after an
opportunity for discovery of relevant information." Id. at 14. We expressly
directed discovery of "evidence regarding Care One's financial condition . . . ,
1
Defendant's current corporate designation is ABC 1857, LLC f/k/a Care One
Management, LLC.
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including [] balance sheets and cash flow statements, as well [as] documents and
information regarding [Care One's parent]." Id. at 13.
Based on our remand instructions, plaintiff served Care One with requests
to produce documents. Plaintiff's document requests included not only Care
One's financial documents but financial documents from related corporate
entities. Plaintiff subsequently filed two separate motions seeking to compel
Care One to provide discovery related to its financial condition. On June 7,
2022, and again on January 13, 2023, the judge partially granted plaintiff's
motions and ordered Care One to produce its financial documents but not
documents concerning the financial condition of related corporate entities.
To comply with the first order compelling discovery, on June 10, 2022,
Care One's Executive Vice President and Chief Legal Officer, Ricardo Solano,
sent an email to Howard Tepper, Care One's Senior Vice President of Finance,
asking him to "designate somebody . . . to work with [Care One's outside
counsel] on identifying what potential records [Care One] ha[s] to produce to
satisfy [its] discovery obligation." Tepper designated Care One's Accounting
Manager, Harriet Sarna, to provide Care One's financial documents. On June
13, 14, and 15, 2022, Sarna provided Care One's counsel with payroll records,
general ledgers, and W-3 forms for 2016 through 2020.
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On June 16, 2022, Tepper and Sarna spoke with Care One's in-house and
outside counsel to discuss Care One's compliance with the court's June 7, 2022
order compelling discovery. According to Care One, during this conference
call:
[T]he participants, led by . . . Tepper, reviewed and
analyzed certain financial documents maintained by
Care One to determine whether they were encompassed
by . . . the [c]ourt's June 7, 2022 order. The call . . .
involved a detailed discussion . . . regarding the details
of Care One's financial records, including how those
records [were] generated and recorded . . . [,] [in order
to] produc[e] relevant and responsive records.
The next day, Care One produced approximately one thousand pages of financial
documents to plaintiff.
On November 22, 2022, plaintiff filed another motion to compel
discovery, "seeking records related to not only . . . Care One . . . but also various
related entities." In a January 13, 2023 order, the judge required Care One to
produce "detailed financial information, including tax records; income records;
profit and loss records and related information for Care Services . . . and Care
One."
On January 26, 2023, Tepper again spoke with Care One's in-house and
outside counsel to discuss Care One's compliance with the January 13 order. On
January 30, 2023, one of Care One's outside counsel circulated a draft cover
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letter to accompany the financial documents produced in response to the court's
January 13 order. Counsel asked Tepper to review the draft letter for accuracy.
Later that day, Care One asserted Tepper communicated with Care One's counsel
by email and telephone to discuss "information and figures contained [i]n the
financial records . . . to determine [the] relevance and responsiveness of the
documents proposed to be produced."
On February 5 and 22, 2023, Tepper forwarded confidential financial
documents regarding Care One to his personal email account. According to Care
One, Tepper's decision to forward these emails to his personal email account
violated the terms of his employment. Specifically, Care One claimed Tepper
was prohibited from using Care One's proprietary information and confidential
records "for [his] own purpose or for the benefit of any individual or entity other
than [Care One]."
On February 24, 2023, Care One fired Tepper. Tepper then retained
Castronovo & McKinney to represent him in negotiating a severance package.
Castronovo & McKinney sent a March 6, 2023 letter to Care One, alleging Care
One violated Tepper's rights by "firing him in retaliation for disclosing and
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refusing to participate in [Care One's] illegal conduct."2 The letter offered to
release Tepper's legal claims against Care One in exchange for "a fair severance
package."3
In response, Care One sent a March 31, 2023 letter to Castronovo &
McKinney, asserting the law firm's representation of Tepper would result in
disclosure of confidential and privileged information relevant to plaintiff's
punitive damages case. Care One claimed Tepper had no right to disclose
privileged information to Castronovo & McKinney.
A week after sending that letter, Care One filed a motion to disqualify
Castronovo & McKinney from further representing plaintiff in the punitive
damages retrial due to the law firm's violation of the Rules of Professional
Conduct (RPCs). In opposition to the disqualification motion, Tepper certified
his involvement with plaintiff's case was limited to "gather[ing] documents,
without any explanation or input." Tepper denied possessing "privileged
2
Tepper asserted a whistleblower claim against Care One under the
Conscientious Employee Protection Act, N.J.S.A. 34:19-1 to -14. Tepper
claimed he was fired by Care One for objecting to Care One's plan to pay State
penalties rather than properly staff its healthcare facilities and challenging the
company's characterization of certain business expenses.
3
According to information in the record, Tepper eventually retained a different
law firm to pursue legal action against Care One.
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information or documentation from Care One, including regarding [Care One's]
defense" in plaintiff's litigation.
In a May 8, 2023 order, the judge denied Care One's disqualification
motion without prejudice. In denying the motion, the judge explained he lacked
"specifics and details" of Tepper's alleged involvement in Care One's defense
beyond Care One's "conclusory statements." The judge stated Care One had to
provide "concrete information" that Tepper provided privileged and confidential
information to Castronovo & McKinney and was involved in strategic
discussions about plaintiff's punitive damages retrial to warrant disqualification.
Care One subsequently renewed its disqualification motion and submitted
additional certifications and exhibits. In opposing the renewed motion, Paul
Castronovo certified Tepper did not provide any privileged information or
materials related to plaintiff's retrial to him or to his law firm. Additionally,
Castronovo denied having any knowledge or possession of the redacted emails
Care One provided to the court for in camera review in deciding the
disqualification motion.
In a June 8, 2023 order, the judge again denied the disqualification motion.
In deciding the renewed disqualification motion, the judge conducted a
"detail[ed]" in camera review of "the exhibits[,] including emails and
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certifications submitted by [Care One's] counsel." After considering the legal
arguments and reviewing documents in camera, the judge found Care One
"failed to meet the heavy burden required for disqualification." The judge
rejected Care One's contention that Castronovo & McKinney violated the RPCs
and declined to disqualify the law firm from continuing to represent plaintiff.
The judge stated:
When considering a motion to disqualify . . . , [the]
movant bears the burden of proving the disqualification
is appropriate due to . . . an RPC violation. RPC 1.13
controls here.
It has to be established that . . . Tepper was responsible
for or significantly involved in the organization's legal
position of the matter and did not merely provide
information or data. . . . Motions to disqualify are
viewed with disfavor[,] and disqualification [is]
considered a drastic measure which courts should
hesitate to impose[] except when absolutely necessary.
. . . It's this [c]ourt's view that [Care One] [did not] meet
[its] burden of showing that . . . Tepper was
significantly involved in litigation control. Instead[,]
what is revealed through the e-mails is that . . . Tepper
was involved with production of documents and data.
....
There's a lot of . . . inference and innuendo, but there's
nothing here that tells me specifically . . . an attorney
. . . involved in that litigation strategy . . . met
with . . . Tepper and had discussions as to legal
strategy . . . .
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It sounds to me that . . . Tepper responded to their
inquiries for documents. If they had a question about
the document . . . , he would respond to that. But
he . . . didn't determine how [Care One] . . .
implement[ed] its legal strategy.
On July 20, 2023, we granted Care One's motion for leave to appeal the
order denying disqualification of Castronovo & McKinney from further
representation of plaintiff.
On appeal, Care One contends the judge erred by failing to disqualify
Castronovo & McKinney under RPC 4.4. Care One argues Castronovo &
McKinney, during its representation of Tepper, obtained confidential and
privileged information relevant to plaintiff's case and must be disqualified
because it obtained evidence in violation of Care One's rights. We reject these
arguments.
We review a trial court's determination on a motion to disqualify counsel
de novo. City of Atlantic City v. Trupos, 201 N.J. 447, 463 (2010); see also
Greebel v. Lensak, 467 N.J. Super. 251, 257 (App. Div. 2021). In reviewing a
motion for the disqualification of counsel for an adversary based on the RPCs,
we are required to "balance competing interests, weighing the need to maintain
the highest standards of the profession against a client's right freely to choose
his counsel." Twenty-First Century Rail Corp. v. N.J. Transit Corp., 210 N.J.
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264, 273-74 (2012) (quoting Dewey v. R.J. Reynolds Tobacco Co., 109 N.J.
201, 218 (1988)). "[T]o strike that balance fairly, courts are required to
recognize and to consider that 'a person's right to retain counsel of his or her
choice is limited in that there is no right to demand to be represented by an
attorney disqualified because of an ethical requirement.'" Id. at 274 (citations
omitted).
"Disqualification of counsel is a harsh discretionary remedy which must
be used sparingly." Dental Health Assocs. S. Jersey, P.A. v. RRI Gibbsboro,
LLC, 471 N.J. Super. 184, 192 (App. Div. 2022). Additionally, disqualification
motions are "viewed skeptically in light of their potential abuse to secure tactical
advantage." Escobar v. Mazie, 460 N.J. Super. 520, 526 (App. Div. 2019)
(citing Dewey, 109 N.J. at 218).
Care One argues Castronovo & McKinney violated RPC 4.4(a) by
obtaining information regarding Care One's privileged litigation strategy related
to plaintiff's punitive damages retrial and Care One's confidential financial
documents. Care One asserts Tepper improperly emailed confidential financial
documents to his personal email and shared those documents with Castronovo
& McKinney.
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RPC 4.4 addresses "[r]espect for [r]ights of [t]hird [p]ersons." Under RPC
4.4(a), "[i]n representing a client, a lawyer shall not use . . . methods of obtaining
evidence that violate the legal rights of such a person." Care One argues Tepper
possessed protected and privileged information regarding Care's One litigation
strategy in producing financial documents responsive to the June 7, 2022 and
January 13, 2023 court orders.
Care One contends Tepper communicated with its in-house and outside
counsel regarding corporate financial documents to be produced to plaintiff and
provided legal advice regarding those documents such that the communications
were protected by the attorney-client privilege. Care One portrays Tepper's
involvement in the production of financial information responsive to the court's
orders as "assist[ing] Care One's attorneys in providing legal advice concerning
[plaintiff's] litigation." However, based on Tepper's certification in opposition
to Care One's first motion to disqualify Castronovo & McKinney, Care One
mischaracterizes and overstates Tepper's function.
Tepper aided in gathering documents on Care One's behalf related to the
disclosure of the company's financial condition relevant to plaintiff's punitive
damages retrial. In his certification, Tepper asserted he engaged in the following
activities: (1) instructed Sarna to provide financial records to be produced in
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response to the judge's orders; (2) determined the documents constituting Care
One's "financial records"; (3) reviewed for accuracy a draft cover letter to
Castronovo & McKinney enclosing the responsive discovery documents; and (4)
provided information regarding Care One's financial records, including how
those records were generated and recorded.
Based on the information contained in the motion record, Tepper's
involvement was correctly characterized by the judge as "the supplying of
factual information or data respecting the matter." Tepper participated in culling
financial documents relevant to Care One's financial condition as ordered by the
judge. Care One's certifications in support of its disqualification motion simply
explained Tepper's role in the selection of its financial documents produced to
Castronovo & McKinney.
Accepting as true that Tepper explained certain financial documents to
Care One's counsel, such discussions did not constitute legal strategy. Care
One's counsel had to decide which financial documents were responsive to the
court's orders. Ultimately, Care One's counsel was responsible for producing all
documents relevant to Care One's financial condition and certifying Care One's
compliance with the judge's orders.
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Care One does not claim the documents it produced to Castronovo &
McKinney are privileged. Because Care One presumably produced all
documents in its possession responsive to the judge's orders, the means and
manner related to the production of the documents lacks any relevance related
to plaintiff's punitive damages retrial. Thus, any discussion Tepper may have
had with Care One's counsel regarding the production of the company's financial
documents would not be evidence at the retrial.
Consistent with our prior opinion, documents produced by Care One
evidencing its financial condition must be presented to the jury during the
punitive damages retrial under N.J.S.A. 2A:15-5.12(c)(4). To the extent
Castronovo & McKinney might consider using documents related to Care One's
financial condition which were not produced by Care One's counsel, unless the
documents were otherwise publicly available, the potential consequences to the
law firm could be far more severe than disqualification.
However, on this record, we are satisfied Care One failed to meet its heavy
burden of demonstrating Castronovo & McKinney violated RPC 4.4(a) to
warrant disqualification of the law firm from continued representation of
plaintiff. Care One proffered "inference and innuendo" that Castronovo &
McKinney obtained, reviewed, and intended to use Care One's confidential
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financial documents in connection with plaintiff's punitive damages retrial. We
are confident the trial judge will be able to address a disqualification motion
during the retrial if Castronovo & McKinney attempt to produce as evidence of
Care One's financial condition any documents not previously produced by Care
One in response to the court's orders or documents not otherwise available to
the general public.
At this juncture, Care One failed to demonstrate Tepper disclosed to
Castronovo & McKinney any confidential and privileged information or
material to be used during plaintiff's punitive damages retrial. To prevail on its
disqualification motion, Care One had to demonstrate Castronovo & McKinney
violated the RPCs. Care One has failed to do so on the present record.
Because we are satisfied Castronovo & McKinney did not violate any
ethical rules on the record before us, we need not address the federal cases from
other jurisdictions and unpublished cases relied upon by Care One in support of
its arguments on appeal. First, those cases are not binding on this court. In
addition, the cases are premised upon judicial determinations that the actions of
the adverse law firms constituted ethical violations.
During the punitive damages retrial, if Castronovo & McKinney were to
use unlawfully obtained confidential or privileged information, then RPC 4.4(a)
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may be triggered. We take no position whether a situation may arise during the
course of the punitive damages retrial warranting renewal of Care One's motion
to disqualify Castronovo & McKinney. Nor do we offer any opinion as to the
propriety of the law firm's conduct under these unique circumstances.
To the extent we have not addressed any of Care One's remaining
arguments, those arguments are without sufficient merit to warrant discussion
in a written opinion. R. 2:11-3(e)(1)(E).
Affirmed.
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