# FILED

December 10, 1997 Cecil Crowson, Jr . App ellate C ou rt Clerk IN THE COURT OF APPEALS OF TENNESSEE WESTERN SECTION AT KNOXVILLE

______________________________________________ TRACY WATSON and DEAN WATSON, Individually and

as Next F riends and Natural Guardians of TAYLOR WATSON, Plaintiff s-Appell ants, Bradley Circuit No. V-96-590 Vs. C.A. No. 03-A-01-9704-CV-00129 FAYE AMER

EDES, D.O.,

CHEROKEE WOMEN’S CENTER, P.C., TED AMEREDES, D.O., CLEVELAND ANESTHESIOLOGI STS, INC., a nd BRADLEY MEMORIAL HOSP ITAL, Defend ants-App ellees.

__________________________________ _________________________________________ _ FROM THE BRA

DLEY COU

NTY CIRCUI

T COURT THE HONORABLE JOHN B. HAGLER, JR., JUDGE

Glenna W. Overton, Donald E. Overton; Overton & Overton

of Knoxvi lle For Appellants Hugh J. Moore, Jr.; Philip B. Whitaker, Jr. Witt, Gaither & Whitaker, P.C. of Chattanooga For Appellee, Faye Ameredes

AFFIRMED AND R

EMANDED Opinion filed:

W. FRANK CRAWFORD,

PRESIDING J

UDGE, W.S.

CONCUR: ALAN E. HIGH

ERS, JUDGE WILLIAM H. W

ILLIAMS, SENIOR JUDGE This is a T.R.A. P. 9 interlocutory appeal from the order of the trial c ourt disqualifying some of plaintiffs’ lawyers from further repr esentation of plaintiffs in this case. Th e only i ssue for

review i s whethe

r the tria l court e rred in d isqualifying plainti ffs’2

counsel. The par

ties reli ed on aff

idavits to e stablish th

e facts in the trial court, and there is very little dispute. Lawyer, Roger Jenne, of Cleveland, Tennessee, w as retained by plaintiffs to handle a medical malpractice case against the defe ndants, Faye Amerede s, D .O., Cherokee Women’s Center, P.C., Ted Ameredes, D.O., Cleve l and Anesthesiologists, Inc., and Bradley Memorial Hospital. In February, 1996, Jenne associated the law firm of Montgomery and Thompson of Knoxville, Tenness ee to wor k with him o n the case. Montgomer y and Thom

pson is a partner ship of two lawyers; Dr. J. Tucker Montgomery and Debr a A. Thomp son, specializing in handling plaintiff medical malpractice cases. Dr. Montgomery ha s an M.D. degr ee, and Ms. Thompson is a graduate physical therapist. A complaint filed Jul y 2, 1996, alleges acts of malprac tice aga

inst the various defendants prior to, during, and after the delivery of the infant plaintiff, Taylor Watson, which resulted in personal injuries to the infant. I n July, 1996 , the law firm of Robinson, Smith & Wells was retaine d by Faye A merede s’s insura

nce car rier to represent her and Chero kee Women’s Center in the case. Def endants, Ted Ameredes and Cleveland Anesthesiologist, Inc., were represented by anothe r law firm and

Bradley Memorial Hospital by yet anoth

er law f irm. Robins on, Smith & W ells assigned the case to lawyers, James D. Robinson and Timothy M. Pierce. Mr. Pierce began work on the case on July 19, 1996. Earlier in July, 1996, Mr. Pierce began actively seeking employment outside the Chattanooga, Tennessee area, and on July 12, 1996, sent a resume to M ontgomery a nd Thompso n in Knoxville. Mr. Pierce met with Dr. Montgomery and Ms. Thompson on July 21, 1 996, to discuss employment possibilities, but on July 22, 1996, Mr. Pierce was informed by them that they did not wish to expand their practice. On July 23, 1996, Mr. Pierce contacted the Board of Professional Responsibility to inquire as to whether he should withdraw from the W atson ca se since he had been in contact with Montgomeryand Thompson concerning employment, and he

was advised t

hat until there was a formal offer of employment he could continue to work on the Watson case. On November 5, 1996, Dr. Montgomery, Ms. Thompson, and Mr. Pierce agreed to form a new partnership named Montgomery, Thompson & Pierce to begin practice on January 1, 1997. On November 6, 1996, Mr. Pierce notified his law firm, Robinson, Smith & Wells, of his resignation with the request that he be insulated from any case involving Montgomery and Thompson, including the Watson case. During the pe riod of time from July 19, 1996 to3

November

6, 1996, Dr. Ameredes met personally w ith Mr. P ierce on two occasions and had te leph one conversations with him on at least five occasions. During these meetings and telephone convers ations, she communicated information concerning the litigation. Mr. Pierce used the information acquire d from his c lient, Dr . Amered es, to pre pare the answer in defen se of the litigation. In addition to drafting the answer, Mr. Pierce had communications with other physicia ns, other counsel f or defe ndants and started

prepar ing discov ery matte

rs. Mr. Pierce’s discussions and negotiations with Montgomery and Thompson continued during the period he was representing Dr. Ameredes, but Montgomery and Thompson and Pierce maintain there wa s no disc ussion con cerning the case and that it was clearly unde rstood there would be no discussi on at any time concerning the case. They state fur ther that when they decided to formthe new firm, they agreed that there would be a separate checking account for the purposes of exp enses as s ociated with this case; that Montgomery and Thompson, a partnership, would remain an active partnership for the purpose of handling this case; that Pierce would have nothing at all to do with it; and that a “Chinese Wall” wo uld be mai ntained t

o isolate Mr. Pierce from any connection whatsoever with the W atson file. Opinions of Attorney William Hunt, III, disciplinary counsel for the Board of Professional Responsibility and Professor Carl Pierce from the U

niversity of Tenne ssee Colle ge of La w were f iled to the effect

that there were

no ethical violations by either Montgomer

y and Thom

pson or Mr . Pierce . Profess or Pierc e also opined that he had reviewed the screening mechanism instituted by Montgomery and Thompson and Mr. Pierce and that they were in compliance with Formal Ethics Opinion, 89-F-118. (March 10, 1989). Defendant

Ameredes’s motionto disqualify Montgomery and Thompson was argued on February 3, 1997. The trial court gra nted the motion and disqualified Montgomery and Thompso n wi th respect to defendant Faye Ameredes only. De fendant Ameredes filed a supplemental motion to disqualify Montgomery and Thompson from the case entirely, and that motion, along with a plaintiffs’ motion for reconside ration, was heard on March 3, 1997. Subsequently, the court entered its order disqualifying Montgomery and Thompson from further

r eprese ntati on of plaintiff in the case and certified an interlocutor y appeal which was then granted by this Cour

t. Plaintiffs first assert that the motion to disqualify was not timely filed and was made for4

the purposes of delay. However, it appears that the motion was filed January 17, 1997, and plaintiff s’ counsel was notified in the middle of December, 1996, that the motion would be filed to disqualif

y them fro m further

particip ation in

the case. We

do not see

any inord

inate delay in the record in this case. Plaintiffs next assert that the action by the court was the most drastic option the court had, and that t

he court properl y should ha

ve allowed the cont

inued re present a tion b y Montgomery and Thompson with the stringent conditions of isolation that had been instituted. Plaintiffs argue th at they sh ould be ab le to rely upon the advice they received from disciplinary boardattorneys. Moreover, they assert that their compliancewith Forma l Ethics Op inion 89-F118 eliminates any reason for disqualification. Rule 8 of the Supreme Court of Tennessee establishes a Code of Profe ssional Responsib ility consisting of three separate but inter elate d parts: Canon’s, Ethical Considera

tions, and Disciplinary Rules. The Code’s Preliminary Statement provides that the Canon’s, Ethical Considerations, andDisciplinary Rules “do define the type of ethical conduct tha tthe public

has a right to expe ct not only of lawye rs but also

of their non-prof

ess iona l employees andassociates in all matters pertaining to professional employment.” Furthermore, “[a]nenforcing agency, in applying the Disciplinary Rules, may find interpretative guidance in the basic principles embodied in the Canons and in the objectives reflected in the Ethica l Considerations.” Rule 9 of the Supreme Court of Tennessee pertains to discipline o f lawyer s and also provides for the establishment of three regional Ethics Committees authorized to issue “Formal Ethics Opinions.” Ethics Opinions “issue d and published by the Supreme Court Ethics Committee shall bind

the commit

tee, the person r equesti ng and the S upreme Court Board of Professional Responsibility, and shall constitute a body of principles and objectives upon which members of the bar

can rely for guidance in many specific situations.” Rule 9, Section 26.5 (a), Rules of th

e Supreme

Court. The controversy befo re us emanates from Canons 4 and 9. Canon 4 provides: “A lawyer should preserve the confidence s and secrets of a client.” Canon 9 provides: “A lawyer should avoid even the appearance of professiona l impropriety.” A lawyer cannot represe nt

someone a gainst a former client when there is a substantial relationship between the subject5

matter of the new action and the action in which the lawyer r epre s ented the

former c lient. Manning v. Fort Depos it Bank , 619 F. Supp. 132 7 (D. Ten n. 1985); Mills v. Crane , C.A. No. 66, 1987 WL 9165 (Tenn. App., E.S., April 10, 1987). Formal Ethics Opinion 81-F-5 (A pril 17, 1981) concerns the disqualifica tion of a law f

irm when o ne of the

firm’s la

wyers is disqualified, and the c ommittee o pined tha t “when a n attorne y is barred from representation on the grounds o f knowle dge actu ally or presumably acquired from a formal repr esentation, then his entire f

irm is simila

rly barred .” This rule was made applicable to paralegals in Formal Ethics Opinion 87-F-110. In Formal Ethics Opinion 89-F-118 issued March 10, 1989, the committee

was answering an inquiry “concerning clarific ation of Formal Ethics Opinions 81-F-5 and87-F110 and the application of screening procedure s as a v iable method to avoid the imputed disqualification provi s ion of DR 5-105(D) of the Code of Professional Responsibility.” The Opinion sta

tes: The board adopts the Seventh Circuit’s three-step an alysis , outlined in Schiessle v. Stephens , 717 F.2d at 420-421, concerning motions to disqualify counsel. That ana lysis requires a determination of 1. whethe

r a substa ntial rel ationship

exists between the subject matter of the forme

r and pre sent rep

resenta tions; 2. whethe

r the pre sumption of

shared c onfidenc es whic h arises from its de

termin ation that the representations are substantia lly related has been rebutted with respect to the former representation; 3. whether the presumption of shared confidence s has been rebutted with respect to the present representation.

* * * The comment to Rule 1.9 of the ABA Mo del Rules of Professi onal Condu ct sugges ts that the “underlying question [in determining whether

a substantial relationship exists] is whether the lawyer was so involved in the matter that the sub ject representationcan be justly regarded as a changing of sides in the matter in question.” Screening mechanisms should be ai med at confining disqualification to the per son who wa s involved in th e substantia lly related matter and therefore infected with or tainted by privileged information which is the source of the ethica l problem. Isolation of the infected person would allow the other lawyers and suppo

rt perso nnel in

the firm or office to assist in or conduct the questioned representation free from a n y taint of misuse of c lient con

fidence s. The board approves the use of scree ning procedu

res as a viable6 method to avoid the imputed o r vicarious disqualification provisions of DR 5-105 (D). The board has further de termined that the disqualificaiton rules and screening procedure s are applica ble to lawyer, law clerk, paralegal and legal se cretar

y. All questions as to the sufficiency of the screening process are factual issues to be resolved by “objective and verifiable e vidence present ed to the trial court” and determined “on a case -by-cas e basis.” Those factors which the board approves a s appropriate for consi de ration in determining whether “specific institutional s cree ning mechani sms” have been impl emented

“to eff ectively ins u lateagainst any flow of confidential information from the qu arantined

[person]” to other members of his or her new fir m include the following: 1. the structural organization of the law firm or o ffic e involved; 2. the likelihood of contact between the “infected” person and the specific

attorne ys and sup

port pe rsonnel involved in the present representation; 3. the existence of law firm or office rule s which prevent the “infected” person a. from access to relevant files or othe r inf ormation pertaining to the present litigation and b. from sharing in the fees derived from such litigation.

* * * Although the ethics opinions are not binding on the Court, State v. Jones , 726 S.W.2d 515, 519 (Tenn. 1987), they are important as repre senting the acknowledged standards of the profession. However, it is clear and the ethics committee recognizes that the determination of disqualif ication isto be made

by the tria

l court on a case b y case basis. We are mind

ful of the competin g public po licy inter ests of preserving client confidences on the one hand and on the other hand of permitting parties to have counse l of their choice. Plaintiffs correctly argue

that the presumption of shared confidences can be rebutted by insti tuting adequate screening procedure s commonly termed “a Chinese Wall.” In the ins tan t case, the trial court

found that the lawyers involved implemented a “Chinese Wall” but felt that because of the small s ize of the firm, it could not b e effe ctive to th e extent require d. We must bear in mind that the problem before us in this case was caused e ntirely by the attorneys that now seek to continue representing plaintiffs. Mr. Pierce, the lead attorne y for one defendant, prepared the original a

nswer to t

he compla

int, and w e mu st co nclude that he conformed to the7

require ments of Rule 11 of the Te nnessee Rules of Civ

il Proced ure and o btained a ll necessary informat i on c oncerning his client’s case. Thus, we have a law yer that knows more about the defendant’s case than anybody else, is privy to every bit of confide ntial informat

ion avail able from his client and then joins forces with the lawyers suing his c lient for twelve mi llion dolla

rs. These attorneys had to know when they made their arrange ments that the presumption of shared confidencewould exist and that this sharp scrutinty would come t o pass. This is somewhat different from the s ituation w

here a l awyer ison the periphery of a case as an assoc iate member of a firm. Mr. Pierce was the defend ant’s lawyer and is now a partner with the lawyer f or the plaintiff. Judge Koch’s concurring opinion in the unpublished case of King v. King states: However, except in the r arest of cases, the appearance of improprie ty alone is “simply too slender a reed o n which to

rest a disqualification order.” To warrant disqualificaiton, a lawyer’s conflict of intere st must tend

to taint the

trial’s f air nes ei ther by undermining the court’s co nfiden ce in the attorne y’s abilit y to vigorousl y represent the client or by creating a reas onable concernthat the attorney will give the present clien t an unfair advantage by u sing otherwise privileged information obtained while employed by the former client. Board of Edu cation v. Nyquist , 590 F.2d at 1246-47. King v. King , No. 89-46-11, 1989 WL 122981, at *13 (Tenn. App. M.S. Oct. 18, 1989). We do notdisagre e with Judg e Koch bu t perhap s this is “the rarest of cases.” We c an’t emphasize too strongly that we are dealing with the lawyer for the def endant, the one in the trenche s, the one that acquired all of the confidencesof the client in order to further the client’s interest. In our opinion, the appearance of impropriety in this case is not “too slender a reed.” In Cardona v. General Motors Corp. , 942 F.Supp. 968 (D.N.J. 1996), the Court was dealing witha motion to disqualify a law firm representing plaintiffs against Genera l Motors after the law firm hired General Motors’ former counse l in various lemon-law cases. The Court disqualified plaintiff’s law firm even in the face of sc reening mechanisms that had been instituted. The Court said:

Counsel fo

r Appella nts has advanced

the proposition that the “appearance

of impropriety doctrine” embodies “an arbitrary and vague standard.” Appellants’ Letter Brief, dated July 23, 1996, at 1. T his challenge to the doctrine has frequently been ma de. See, e.g., Cynthia M. Jacob, A Polemic Against R. P.C. 1.7(c)(2): The “Appearance of Impropriety” Rule, N.J. Lawyer Magazine, June 1996, at 23. This a rgument, however, underestimates the capacities of

the “ordinary knowledgeable citizen” who elects our8 feder al, state and local governments, sits on our juries, an d educates our children. What wou ld such a citizen think upon discoveryi ng tha t a lawyer, Mr. London, who had represented GM a t two se parate law firms, over a period of five years, and had become f

amiliar w ith its litigation and settlement strategi es, and had formed a close professional relationship with GM’s legal personne l, suddenly “switched sides” to join a law firm which regular ly sued GM and had , in fact, been on the other side of cases in which London had r

eprese nted GM. The answ er, I re spectfully sugges t, would be the same answer given by Magistra te Jud ge Kugler. At the heart of every “sideswitching attorney” case is the suspicion that by changing sides, the a ttorney h as brea

ched a d uty of fid

elity and loyalty to a former client, a client who had freely shar ed with the attorney secret s and confidences with the expectation that they would be disclosed to no one e

lse. It is for this reason that the “appearance of impropriety doctrine” w as adop ted to protect the public, our profession, and those i t serve s. In short, this much maligned doctrine exists to engender, protect and preserve the tr ust and confidence of clients. Id. at 974-75. Can on 9 was accorded great weight in Penn Mutual Li fe Insuranc e Co. v. Cle veland Mall Associates , 841 F. Supp. 815 (E.D. Tenn. 1993), where the Court had for consideration a motion to disqualify plaintiff’s counsel after the merger of the law fi rm representing plaintiff withthe law firm

repres enting the defendant. In reaching the decision that plaintiff’s c ounsel should be disqualified, the Court said:

While it has been said that Canon 9's admonition that lawyers should avoid even the apperance of improprie ty is “too slender a reed on which t

o rest a d

isqualifi c ation o rder,” Freeman v. Chicago Musical Instrument Co. , 68 9 F.2d 715, 725 (7th Cir. 1982), there is n

everthe less a le gitima te concern about the appearance

of impropriety here which l en ds weight to the proposition that the merged Heiskell firm should be disqualified. The defendants were closely advised by l awyers of the firm of Heiskell , Donelson , Bearma n, Adams, Williams & Kirsch. After the defendants were sued, a law firm dominate d by that sa me firm, and bearing

virtually the same name -- Heiskell , Donelson, Bearman, Adams, Williams & Caldwell -- showed up on the other side of the dispute. For

all practical purposes, the lawyers have switched sides. Clie nts must

feel free to share c onfidenc es with th eir lawyers. This will not occur if we permit lawyers to b e today’s confidants and tomorrow’s adversaries

. See Analytica, Incorporated

v. NPD R esearch, 708 F.2d 1263, 1269 (7th Cir. 1983). Penn. Mut. Li

fe Ins. Co ., 841 F. Supp. at 818. (emphasis added). We recogni ze, as a

rgued by plaintiff s, that ther

e are di verse op inions on the weight t o be given to Canon 9 in disqua lificatio n cases. Disqualif ication isa drastic

measure , and it is n ot to9

be taken lightly. However, weare not unmindful of what has become in some instances rather poor public perception of lawyers. This could be attributed in pa

rt, at lea st, to the profession’s relaxation of

many of its rules of condu ct that his toricall y separa ted the pr ofession from othe

rs.

In the case before us, the lawyers c arefu lly planned their joinder -- a calculated and delib erate ac t with full k

nowledge that Pierc e possess ed the mos t intimate c onfidenc e of his client concerning the case. They argue that the screening procedur es rebut the presumption of Pierce sharing t

hese con fidence s. The new firm is small, a nd we hope the firm has the collegia lity that typifies the brotherhood of the profession. In such an atmosphere, it

is certa inly conceiv able

that at best inadvertent references to the c ase could crop up from time to time. Who knows what effects such refere nces might

have on plaintiffs’ lawyers in perha ps followi ng some leadthat was innocently, perhaps, fostered by some comment made without any improper motive. Leaving

aside the

possibil ity of

divulged confidences, we are still faced with the appearanc e of impropriety. As in the Penn Mutual case, the lawyers in the case befor e us “switched sides.” We, like the Court in Cardona , believe that Canon

9 is essen tial to engender, protect, and preservethe trust and confidence of the client

. In the ca se befor e us with th

ese peculiar fa

cts,

w e cannot sa

y that the

trial cou rt erre d in disqua

lifying pla

intiffs’ lawyersfrom furthe r particip ation in the

case. T he profe ssion dema

nds, and th

e public d eserve s, no less. Accordingly, the orde

r of the tr ial cour t is afff irmed, a nd the ca se is remanded for such further procee dings as a

re nece ssary. Co sts of the a ppeal ar e assess ed again st the app ellants.

_________________________________ W. FRANK CRAWFORD, PRESIDING J

UDGE, W.S. CONCUR:

____________________________________ ALAN E. HIGH

ERS, JUDGE

____________________________________ WILLIAM H. W

ILLIAMS, SENIOR JUD GE