United States District Court, D. Vermont
Catamount Radiology, P.C., and Scott D. Smith, M.D., Plaintiffs,
Yvette Bailey, M.D., Defendant. Yvette Bailey, M.D., Counterclaim Plaintiff And Third Party Plaintiff
Scott D. Smith, M.D.; Catamount Radiology, P.C.; Joseph Woodin; Rebecca O'Berry; and Gifford Medical Center, Inc., Counterclaim Defendants And Third Party Defendants.
MEMORANDUM AND ORDER ON MOTION TO DISQUALIFY
J. GARVAN MURTHA, District Judge.
I. Introduction and Background
This case arises from a dispute between medical service professionals. The Court assumes familiarity with the facts and background of the lawsuit, which are summarized in Catamount Radiology, P.C. v. Bailey, No. 114-cv-213, 2015 WL 3795028 (D. Vt. June 18, 2015). In that Order, the Court granted in part and denied in part Plaintiff and Counterclaim Defendants' Motions for Judgment on the Pleadings. (Doc. 47.) The present Motion arises from recent developments in the discovery process.
On June 4, 2015, the parties convened in Burlington, Vermont for the deposition of Defendant/Counterclaim Plaintiff Dr. Yvette Bailey. Stephen Ellis - counsel for Catamount Radiology, P.C. ("Catamount") and Dr. Scott Smith - questioned Bailey from approximately 10 a.m. until all counsel agreed to suspend the deposition at 530 p.m. The next morning the parties assembled to resume. While attending to preliminaries, David Bond - Bailey's counsel - announced his concern that, after "reviewing the documents... with fresh eyes, " he believed Ellis was "a necessary witness... in the critical issue as to whether Dr. Bailey provided the supposedly required notice of her intent to purchase her stock certificates." (Doc. 43-1, at 4-5.) Bond expressed his intent to move the Court to disqualify Ellis, and in response Ellis concluded he did not "have any choice but to suspend the deposition and allow Mr. Bond to file the motion that he's threatened to file." (Id. at 7.) Counsel for Woodin, O'Berry, and Gifford agreed they could not continue either given the circumstances. (Id.) On June 8, 2015, Bailey moved to disqualify Ellis. (Doc. 40.) Catamount and Smith responded in opposition (Doc. 43) and Bailey replied (Doc. 50).
Bailey seeks to disqualify Ellis from representing Catamount and Smith under the advocate-witness rule, which holds "[a] lawyer shall not act as advocate at a trial in which the lawyer is likely to be a necessary witness" unless the testimony relates to an uncontested issue, the testimony relates to "the nature or value of legal services rendered in the case, " or disqualification would work a "substantial hardship" on the client. Vt. R. Prof. Conduct 3.7. Bailey takes the position Catamount and Smith are estopped from arguing Bailey's failure to purchase shares in Catamount precluded her from becoming a shareholder because they lulled her into believing she had already become a shareholder. She contends Ellis, now representing Catamount and Smith, made representations to Bailey through her attorney relevant to this estoppel defense in June 2014.
Smith hired Ellis to represent him sometime in June 2014 in response to Bailey's enlistment of attorney Kenneth Romer, her husband. Romer and Ellis exchanged several emails attempting to resolve the dispute between Bailey and Smith. In a June 12, 2014 email, Romer asserted Bailey was a "50% owner" of Catamount and expressed concern Smith disagreed with this contention. (Doc. 40-4, at 2, 4). On June 12, 2014, Ellis responded by asserting he "expressly and repeatedly declined to take any position on the nature of Dr. Bailey's relationship with [Catamount] or any other substantive issue." (Doc. 40-5, at 2.) Then, on June 18, 2014, Ellis submitted a position statement on behalf of Smith and Catamount asserting "Dr. Smith agrees that the Shareholders Agreement contemplates that he and Dr. Bailey will each purchase 10 shares of stock at $1600 per share, provide 50% coverage and receive equal compensation and benefits, and he is prepared to honor this agreement." (Doc. 40-6, at 9.) Ellis then warned that Bailey had "never notified Dr. Smith that she wishes to purchase Shares in the Company, pursuant to ¶ 4.2 of the Shareholders Agreement." (Id. at 10.) On June 30, 2014, Romer responded by asserting "accounting adjustments for the buy in', whether or not such stock is issued, can be made at any time during 2014. Certainly Dr. Bailey thinks that it is appropriate to issue said stock when it is practicable, and wishes to do so." (Doc. 40-7, at 2.) The briefing does not indicate Ellis further addressed Romer's response. The gravamen of Bailey's estoppel argument is that by his silence in response to this assertion, Ellis, acting on behalf of Smith, lulled Bailey into believing she had satisfied ¶ 4.2 of the Shareholders' Agreement. See Doc. 40, at 7 (Bailey argues "Attorney Ellis never said or did anything to disabuse Mr. Romer of the idea that Dr. Bailey was already an equal shareholder in Catamount") (emphasis in original).
Bailey believes Ellis must be disqualified under the advocate-witness rule because he is a "necessary witness" at trial on the estoppel issue. First, Bailey argues Ellis's testimony as to contents of phone calls between himself and Romer is necessary for trial. Second, Bailey argues if Ellis is trial counsel, his cross-examination of Romer on these communications would create a risk the jury would treat his questioning and argument as unsworn fact. See, e.g., Murray v. Metro. Life Ins. Co., 583 F.3d 173, 178 (2d Cir. 2009).
"Motions to disqualify opposing counsel are viewed with disfavor because they impinge on a party's right to employ the counsel of its choice." Shader v. Brattleboro Sav. & Loan Ass'n, No. 514-cv-152, 2014 WL 7140612, at *10 (D. Vt. Dec. 12, 2014) (quoting Scantek Med., Inc. v. Sabella, 693 F.Supp.2d 235, 238 (S.D.N.Y. 2008)). The right to choose counsel must be balanced against the risk of "harm to the integrity of the judicial system" challenged counsel's participation poses. Murray, 583 F.3d at 178. "Because courts must guard against the tactical use of motions to disqualify counsel, they are subject to fairly strict scrutiny, particularly motions under the witness-advocate rule." Id. (quotations omitted). The advocate-witness rule seeks to alleviate four risks which might taint the underlying trial
(1) [T]he 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.
Id. (citing Ramey v. Dist. 141, Int'l Ass'n of Machinists & Aerospace Workers, 378 F.3d 269, 282-83 (2d Cir. 2004)). Guidance on Vermont's witness-advocate rule calls for consideration of the "nature of the case, the importance and probable tenor of the lawyer's testimony, and the probability the lawyer's testimony will conflict with that of other witnesses." Vt. Prof'l Conduct Rule 3.7 - Comment .
First, Ellis is not a necessary witness. It appears the only admissible evidence Ellis could provide relevant to estoppel - and to this case - relates to the contents of one or two phone conversations between himself and Romer. Given that Ellis's communications on behalf of Catamount and Smith are largely memorialized in emails, which at points summarize the content of telephone calls,  Ellis's testimony is unlikely to add any crucial information and unlikely to contradict written evidence. Bailey has no need to call Ellis as a witness, because Romer can testify to any communications between the two. See, e.g., Finkel v. Frattarelli Bros., 740 F.Supp.2d 368, 375 (E.D.N.Y. 2010) ("Where counsel's testimony would be merely cumulative of testimony provided by others, disqualification is not appropriate."); Solow v. Conseco, Inc., No. 06-cv-5988, 2007 WL 1599151, at *4 (S.D.N.Y. June 4, 2007) ("The rule requires that a lawyer's testimony be necessary, not simply that it be the best evidence, and to that end, courts deem a lawyer's testimony necessary one if there [are] no other witnesses to the circumstances at issue) (quotations omitted) (alteration in original); J.G. Ries & Sons, Inc. v. Spectraserv, Inc., 384 N.J.Super. 216, 229-31, 894 A.2d 681, 689 (App. Div. 2006) (holding a letter written by a party's attorney could be admitted through another witness, the recipient, and therefore the attorney was not a necessary witness).
Second, Ellis's participation would not taint the trial. The only valid reason the Court might consider disqualifying Ellis is if his cross-examination of Romer at trial would blur "the line between argument and evidence." Murray, 583 F.3d at 178. If Ellis questioned Romer on the contents of their phone conversations at trial, there would be a risk the jury would construe Ellis's questions as evidence given his firsthand knowledge of those conversations. See id. In ruling on a motion to disqualify, however, a circumscribed remedy is preferred. See United States v. Quest Diagnostics Inc., 734 F.3d 154, 166 (2d Cir. 2013) ("[C]ourts must balance... competing concerns by limiting remedies for ethical violations to those necessary to avoid tainting the underlying trial.") (quotations and alterations omitted). Catamount and Smith chose Ellis as their counsel and he has become intimately familiar with this case over the past year of litigation at their expense. Therefore, the Court will not disqualify Ellis from representing Catamount and Smith in this matter. Instead, the Court makes the limited ruling that, at trial, Ellis may not examine Romer concerning any communications between the two of them. Cf. Air Italy S.p.A. v. Aviation Techs., No. 10-cv-20, 2011 WL 96682, at *5 (E.D.N.Y. Jan. 11, 2011) (allowing challenged counsel to continue representation, but disqualifying him from acting as trial counsel because he was his client's sole representative in negotiating the documents at the heart of the trial). Ellis was not involved in drafting the agreements underlying this case. He only became involved in the matter when litigation began. Barring Ellis from examining Romer on the substance of their communications in June 2014 respects Catamount and Smith's right to select their counsel while ensuring the "line between argument and evidence" is ...