Free Response to Motion - District Court of Colorado - Colorado

Case 1:03-cv-02073-WDM-KLM

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I N THE U NITED STATES DISTRICT C OURT F OR THE DISTRICT OF C OLORADO Civil Action No. 03 -cv-02073-WDM-PAC ROBERTA PULSE, TONYA HOUSE, Plaintiffs, v. THE LARRY H. MILLER GROUP, Defendant. D EFENDANT 'S R ESPONSE TO PLAINTIFFS ' EXPEDITED M OTION TO DISQUALIFY H OLLAND & H ART

Defendant The Larry H. Miller Group (LHM), by Holland & Hart, LLP (H&H), respectfully submits this response to Plaintiffs' Expedited Motion to Disqualify Holland & Hart (the Motion). The Court should not decide the Motion because the issues i t raises are not yet ripe for decision. Moreover, once those issues do become ripe, they either will be mooted by the Court's resolution of the issue of judicial disqualification under 28 U.S.C. § 455(b) or, if Judge Miller is disqualified, will be presented to the judge to whom this case is reassigned. If the Court nevertheless considers the Motion on the merits at this time, it should deny the Motion because there is no evidence that either LHM or H&H attempted to "judge-shop" or otherwise acted in bad faith, H&H's involvement as counsel for LMH will not interfere with the administration of justice, and there is no basis for interfering with LHM's fundamental right to retain the counsel of its choice.

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P ROCEDURAL & F ACTUAL B ACKGROUND In early December 2005, LHM retained H&H to serve as its co-counsel in the two-week trial scheduled to begin on January 9, 2006. H&H attorneys Christopher M. Leh and Steven Gutierrez promptly entered their appearances on December 13. Later that day, counsel for all parties participated in a telephone hearing with the Court to discuss the possibility that Judge Miller might be disqualified from the case because his daughter-in-law, Kristine Miller, is a partner (currently on leave) at H&H. During that hearing, the Court questioned the parties as to the application of 28 U.S.C. § 455(b) to this case.1 The Court then directed the parties to submit statements concerning the question of whether Judge Miller was required to disqualify himself under Section 455(b)(5). Before eithe r of the parties filed their statements, and before the Court had an opportunity to rule on the Section 455(b) issue, Plaintiffs filed the Motion seeking disqualification of H&H due to the potential conflict created under Section 455(b) by its appearance i n this case. ANALYSIS A. Plaintiffs' Motion to Disqualify Counsel Is Premature.

The Court should not rule on the Motion because it is premature and may become moot once the Court resolves the judicial disqualification issue under Section 455(b)(5)(iii). The only ground that Plaintiffs have offered to justify

1

28 U.S.C. § 455(a) is not at issue in this case, because the parties agreed to waive that ground for disqualification pursuant to subsection (e) of the statute. 2

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disqualification of H&H is the potential conflict created by the Judge's familial relationship with Ms. Miller. Thus, the Motion depends entirely upon an assumed finding that there is a conflict under Section 455(b)(5)(iii). However, if the Court finds that there is no conflict, there is likewise no conceivable reason to disqualify Holland & Hart. Alternatively, if the Court determines that there is a conflict, it should allow the case to be reassigned to another judge to decide the attorney disqualification issue. See C. Wright, A. Miller & E. Cooper, Federal Practice and Procedure § 3548 at 795 -96 (1984) ("It has been held that a judge must recuse himself as soon as he becomes aware that his brother-in-law has been enrolled as counsel in the case. However, if the judge to whom the case is reassigned should find that the sole or primary motive for retaining the brotherin-law was to disqualify the original judge, the lawyer must be disqualified from further participation in the case.") (emphasis added). Here, if the Court finds that Ms. Miller has an interest that could be "substantially affected" by the outcome of this case, it would be just as inappropriate for the Court to decide this Motion as it would be for the Court to make any other substantive ruling in the case. Plaintiffs' cases confirm that the Court may not resolve the disqualification issue if it concludes that it must recuse under Section 455(b). See In re BellSouth Corp., 334 F.3d 941, 946 (11th Cir. 2003) (referring motion to disqualify counsel to another judge, presumably because the attorney disqualification issue could not be logically separated from the Section 455(b)

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issue); McCuin v. Texas Power & Light Co., 714 F.2d 1255, 1257 (5th Cir. 1983) (stating that district court judge was required to promptly recuse and allow the case to be transferred to another judge for consideration of motion to disqualify counsel); McGuire v. Sigma Coatings, Inc., 1994 WL 24240, at *2 (E.D. La. Jan. 19, 1994) (considering the motion to disqualify counsel only after the original judge recused herself) (copy attached); see also USX Corp. v. Tieco, Inc., 929 F. Supp. 1460, 1461 (N.D. Ala. 1996) (referring to another judge ruling on motion to disqua lify law firm). Because the Court has not yet ruled on the judicial disqualification issue on which it fully rests, the Motion is premature. See generally Goatcher v. Chater, 57 F.3d 980, 982 (10th Cir. 1995) (denying as premature motion for attorneys' fees and directing party seeking such fees to refile its motion "at the appropriate time"); Hickman v. Thomas C. Thompson Co., 644 F. Supp. 1531, 1535 (D. Colo. 1986) (denying as premature motion to strike an affirmative defense and directing plaintiff to "renew her motion" if defendants fail to present sufficient evidence on that defense at trial). B. There Appears to Be No Conflict Mandating Disqualification Under Section 455(b).

LHM submits to the Court concurrently with this response its Supplemental Submission in Response to Court's Request Regarding Mandatory Disqualification, which responds to the Court's request for information concerning Ms. Miller's potential financial and other interests in the outcome of this proceeding. Based on the information p rovided and for the reasons stated 4

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in that submission, if the Court elects to apply a functional analysis to the potential conflict due to Ms. Miller's relationship with H&H, it appears that Section 455(b)(5)(iii) would not require the Court's disqualifica tion. Therefore, the sole basis assumed in the Motion for disqualifying H&H does not, in fact, exist. C. The Circumstances in this Case Do Not Warrant the Drastic Remedy of Disqualifying Defendant's Counsel of Choice. 1. No Bad Faith or Improper In tent. In contrast to the cases that Plaintiffs cite in support of their Motion, here there is no evidence of any improper motive on the part of either LHM or H&H. Plaintiffs rely solely on the fact that H&H entered its appearance one month before trial wi th the knowledge that this might result in disqualification of Judge Miller.2 This fact, alone, however, does not allow an inference of improper intent, particularly in light of LHM's waiver of judicial disqualification under Canon 3D of the Code of Conduct for United States Judges and Section 455(a), and its neutral position on whether Section 455(b) requires recusal. Given the

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Plaintiffs seem to imply that LHM's retention of H&H two to three months after some adverse rulings further implies that bad intent may be involved in this case. Motion at 3, 5. They ignore the fact that Judge Miller also has rendered important rulings favorable to LHM. For example, on September 30, 2005, he overrode the Magistrate Judge's recommendation to deny in its entirety LHM's Motion to Dismiss or for Summary Judgment, concluding (unlike the Magistrate Judge) that Plaintiffs' failure to have served the Amended Complaint on Larry H. Miller Corporation required dismissal of the claim against that defendant. At the same time, Judge Miller affirmed substantive rulings of the Magistrate Judge that were contrary to Plaintiffs' interests. 5

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dearth of evidence, it is not surprising that Plaintiffs do not argue directly that LHM retained H&H in order to disqualify Judge Miller. Rather, they rely ­ improperly ­ on speculative insinuation. Because there was no improper conduct here, most of Plaintiffs' cases, which concern impropriety on the part of the attorney or the client in creating the conflict, are inapplicable. For example, in In re BellSouth Corp., 334 F.3d at 941, the district court found that the client had selected its attorney specifically "to cause the recusal of the assigned judge." Id. at 947.3 The Eleventh Circuit concluded that in those limited circum stances, the lawyer may be disqualified. Id. at 958. See also McCuin, 714 F.2d at 1257 (directing that the lawyer should be disqualified if the district court on remand were to find that the sole or primary motive for retaining the lawyer was to disquali fy the judge); McGuire, 1994 WL 24240, at *4 -5 (finding client's explanation for its retention of a particular law firm to be "a sham" and, accordingly, granting motion to disqualify that firm).

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Although Plaintiffs state that H&H, like the attorney involved in In re BellSouth , was retained well into the litigation, the district court in In re BellSouth found that several other factors surrounding the company's retention of new counsel warranted a finding of bad faith. These included, inter ali a, (1) testimony indicating that BellSouth was interested in retaining that attorney only if a case were brought in that particular district, (2) the fact that BellSouth had been represented for 14 months by "competent and well-respected attorneys" in another law firm in related litigation in another district, and (3) statistics showing that BellSouth retained that attorney in only four out of 204 cases in which the company was sued in that district in the last eleven years, and that in three of those four cases the same judge had been forced to recuse himself. Id. at 947. 6

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2.

LHM's Right to Counsel of Its Choice.

Apparently concedi ng that there is no bad faith involved in this case, Plaintiffs insist that H&H should be disqualified "[e]ven absent improper motive or questionable tactics." Motion at 1. Yet Plaintiffs have provided no authority for the sweeping proposition that a law firm can be disqualified from a case ­ absent any evidence of impropriety or other special circumstances ­ simply to prevent a potential conflict with the presiding judge. If that were so, law firms, rather than judges, would be disqualified in the many cases of potential conflict that arise every year; and there would be a myriad of cases supporting Plaintiffs' proposition. But this is not the law; and there are no such cases. As Plaintiffs' own authorities recognize, parties have a due process right to the counsel of their choice. See, e.g., In re BellSouth , 334 F.3d at 955; McCuin , 714 F.2d at 1262. Therefore, disqualification of a party's chosen counsel is a drastic measure that should not be taken lightly ­ and should not be required merely becaus e the presence of counsel might require reassignment of a case to another judge. See S.J. Groves & Sons Co. v. Intern. Broth. of Teamsters, Chauffeurs, Warehousemen & Helpers of America, Local 627 , 581 F.2d 1241, 1248-49 (7th Cir. 1978) ("[w]e do not inte nd to encourage a lawyer's withdrawal as a substitute for the judge's disqualification"); see also McCuin , 714 F.2d at 1262-63 ("disqualification of counsel is an extreme remedy that will not be imposed lightly") (citation and quotation marks omitted); Uni ted States v. Sablan, 176 F. Supp.2d 1086, 1090 (D. Colo. 2001) ("disqualification is a drastic

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remedy"); Procter & Gamble Co. v. Haugen, 183 F.R.D. 571, 574 (D. Utah 1998) ("disqualification of counsel is a `drastic' measure and a court should hesitate to impose it except when `necessary'") (citation omitted). In those limited instances where courts have disqualified parties' chosen attorneys despite the absence of findings of impropriety, there have been special circumstances ­ namely, a greater potential than normal for abuse by litigants ­ that warranted the extreme step of disqualifying counsel. For example, in In re FCC, 208 F.3d 137 (2d Cir. 2000), the Second Circuit disqualified a law firm where the firm was not retained until after the panel had issued its decision, the firm soon thereafter filed a petition for rehearing, and the firm's involvement would have necessitated the disqualification of one of the panel judges. Id. at 139-40. See also Shomron v. Fuks, 286 A.D.2d 587, 590 (N.Y. App. Div. 2001) (holding that attorney should be disqualified where he had a conflict with the arbitrator, was the fourth attorney retained by the client, and was brought into the arbitration after nearly three years of proceedings, seven preliminary hearings, 18 da ys of evidentiary hearings and 30 rulings). Similarly, in United States v. Jones , 102 F. Supp.2d 1083 (E.D. Ark. 2000), the court disqualified an attorney under circumstances suggesting abuse of the system, although the court stopped short of finding that there was bad faith involved. Id. at 1086. In Jones, the attorney in question not only filed an entry of appearance just days after the court filed an order of recusal in any matter in which that attorney was involved, but also (1) requested that the court

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reassign the case to another judge, without bringing the recusal issue directly to the judge, and (2) sought a continuance of the trial, despite the court's earlier refusal to delay the trial any further on those same grounds. Id. Additionally, in contrast to the instant case, the attorney at issue was brought into the lawsuit only to serve as associate counsel in the event the defendant's primary counsel was physically unable to proceed with the trial. Id. at 1089. The potential for abuse in tho se cases was far more evident than it is here ­ where H&H's involvement arguably does not require Judge Miller's recusal at all. There are no indicia of possible bad faith that might justify the relief that Plaintiffs seek. In addition, United States v. Cooley, 1 F.3d 985 (10th Cir. 1993) (cited in Motion at 4), is inapposite. The Cooley court found that the district court judge improperly denied a motion to recuse under Section 455(a), based on statements he made on television regarding the subject matter of the litigation. Id. at 995. Although the court indicated that Section 455 did not "give litigants a veto power over sitting judges," id. at 993, it did not address the consequences of an entry of appearance filed by a litigant's chosen counsel where that appearance might result in recusal. Finally, Plaintiffs have cited absolutely no authority for the proposition that the "orderly administration of justice" may require attorney disqualification, even absent evidence of bad faith. Their citation to Fed. R. Civ. P. 1, which simply provides that the Federal Rules of Civil Procedure are to be applied so as to

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"secure the just, speedy, and inexpensive determination of every action," has no bearing on the application of Section 455(b). More fundamenta lly, Plaintiffs can point to no authority indicating that a mere concern for expeditious resolution of a case, without more, can override a party's interest in employing the counsel of its choice. C ONCLUSION Plaintiffs' Motion, filed before the Court's res olution of the Section 455(b) issue and premised entirely on the assumption of a disqualifying judicial conflict under Section 455(b), is premature. Therefore, the Court should deny the Motion for lack of ripeness. Additionally, it appears that the Court need not recuse itself under Section 455(b)(5)(iii) and, therefore, the sole basis for the Motion is absent. Moreover, there is no evidence of ill-motive in connection with H&H's entry of appearance in this case that might justify disqualification, and Plaintiffs' cited authorities do not support disqualification in the absence of egregious circumstances that are not present here. Accordingly, if the Court considers the Motion on the merits, it should deny the Motion and decline to disqualify H&H. DATED: December 28, 2005.

/s/ Steven Gutierrez______

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Christopher M. Leh HOLLAND & H ART LLP 1800 Broadway, Suite 300 Boulder, CO 80302 Telephone: 303-473-2700 Fax: 303-473-2720 E-mail: [email protected] Steven M. Gutierrez, HOLLAND & H ART LLP 555 Sevente enth St., Suite 3200 Denver, CO 80202 Telephone: 303-295-8000 Fax: 303-295-8261 E-mail: [email protected] ATTORNEYS FOR DEFENDANT

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CERTIFICATE OF SERVICE

I hereby certify that on December 28, 2005, I electronically filed the foregoing with the Clerk of Court using the CM/ECF system that will send notification of such filing to the following e -mail addresses: Kimberlie K. Ryan, [email protected] Whitney Traylor, [email protected] Judy Holmes, [email protected]

/s/ Steven Gutierrez

3494705_1.DOC

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