___________ No. 95-2938

___________ Dennis W. Harker, Mary Harker, * * Appellants, * * Appeal from the v. * United States Tax Court. * Commissioner of Internal * Revenue, * * Appellee. *

___________ Submitted: February 12, 1996 Filed: May 3, 1996

___________ Before BOWMAN, BEAM, and LOKEN, Circuit Judges.

___________ BOWMAN, Circuit Judge.

Dennis an d Mary Harker appeal the decision of the Tax Court finding them liable for tax d eficiencies and fraud penalties. For reversal, they argue that the Tax Court abused its discretion w hen it denied their motion to disqualify Jeffrey A. Schlei, an attorney with the Office of District Counsel (ODC) for the Iowa District Office of th e Internal Revenue Service (IR S), and the entire legal staff of the ODC from representing th e Commissioner in the Tax Court proceedings. We affirm.

In Ju ly 1990, Dennis Harker pled guilty to tax evasion for th e tax able year 1987, and Mary Harker pled guilty to tax evasion for th e taxab le year 1985. The Harkers were represented in these criminal ta x proceedings by Mark G odwin of Isaacson & Clarke, a Des Moines law firm of four attorneys. Schlei was an associate with this law firm between 1987 and 1991. He left the law firm and joined the ODC in 1991. In April 1992 , following the resolution of

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their criminal cases, the Harkers received a not ice of deficiency from the Commissioner of the IRS. The Commissioner's notice stated that the Harker s
were liable for various tax deficiencies and civil fraud penalties fo r taxable years 1985, 1986, and 1987.

In July 1 992, the Harkers retained new counsel and filed a petition for a redetermination of deficiency in the Tax Court. In August 1993 , Schlei was assigned to assist IRS attorney Mary Ann Waters in representing the Commissioner in the Harkers' deficiency trial before the Tax Court

. In October 1993, just two weeks before trial, the Harkers, asserting they only recently had discovered that Schlei had been an associate with the la w firm that represented them during the now-resolved criminal ta x proceedings, filed a motion to disqualify Schlei and the ODC. The Harkers argued that Schlei's former association with the law firm disqualified him fro mnow representing the Commissioner against the Harkers in the civi l deficiency trial. The Harkers also argued that Schlei's former associatio n with the law firm required disqualification of the entire ODC.

The Tax C ourt denied the Harkers' motion on the basis of Model Rule of Professional Conduct 1.11(c)(1) (1992), which provides that a governmen t atto rney shall not participate in a matter in which the attorney ha d personal and substantial involvement while in pr ivate practice. The court found that Schlei had no personal or substantial involvement in th e Harkers' legal matters while at the law firm, had not seen or reviewe d their files, and was not privy to their verbal or written communications. Having determined there was no ground to disqual ify Schlei, the court also rejec ted the Harkers' request to disqualify the entire ODC. The cour t noted that motions to disqualify are subject to "strict judicial scrutiny" because of the cost and inconvenience they may impose on the judicia l system and the party whose attorney is disqualified. The court cited the fact that the Harkers filed their motion just two weeks before trial a s evidence that they had employed the

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motion primarily as a delay tactic. At the conclusion of the trial, the Tax Court sustained the Commissioner's determination of tax deficiencies and fraud penalties against the Harkers.

On appeal , the Harkers do not argue the merits of the Tax Court' s ruling against them on the question of their liability for tax deficiencie s and fraud penalties. Instead, they argue only that reversal is required becau se the Tax Court abused its discretion in denying their motion t o disqualify Schlei and the entire staff of the ODC. The Harkers also do no t argue that the Tax Court misapplied Model Rule of Professional Conduc t 1.11(c)(1) to the facts of their case, nor do they challenge the court's finding that Schlei was not personally and substantially involved in the Harkers' c riminal tax cases while at the law firm. We note that th e Harkers did not present the court with any evidence to counter Schlei' s aff idavit attesting to his lack of personal involvement in the Harkers ' criminal t ax cases. Rather, the Harkers contend their case should b e reversed and remanded because the Tax Court should have applied the Model Code o f Professional Responsibility and the decisions of this Cour t interpreting the Model Code. We reject these arguments.

The de cision to grant or deny a motion to disqualify an attorne y rests in the discretion of the trial court, and we will reverse thi s determina tion only upon a showing of abuse of that discretion. A.J. e x rel. L.B. v. Kierst , 56 F.3d 849, 859 (8th Cir. 1995). Because of th e potential for abuse b y opposing counsel, "disqualification motions should be subjected to "'par ticularly strict judicial scrutiny.'" Optyl Eyewear Fashion Int'l Corp. v. Style Cos. , 760 F.2d 1045, 1050 (9th Cir. 1985 ) (quoting Rice v. Baron , 456 F. Supp. 1361, 1370 (S.D.N.Y. 1978)). Whe n reviewing a decision of a district court on a motion for disqualification of an attorney, we apply the same rules governin g the professional conduct of attorneys that the district court has adopted. See Blair v. Armontrout , 916 F.2d 1310, 1333 (8th Cir.)

### The Model Rules of Professional Conduct (1992), promulgate d 1 

### by the American Bar Association in August 1983, have been adopted by the United States Tax Court, as well as approximately thi rty-six states and the District of Col umbia. 2 G. Hazard, Jr. & W. Hodes, The Law of Lawyering, A Handbook on The Model Rules of Profe ssional Conduct § AP4:101 (2d ed. 1992 & Supp. 1994). A minority of states have adopted the older Model Code of Professional Responsibility. Both of the cases relied upon by the Harkers were overruled 2 

### in part by In re Multi-Piece Rim Products Liability Litigati on , 612 F.2d 377 (8th Cir. 1980) (en banc) (overruling portion of case s that dealt with appealability of disqualification orders). Th e overruled portions of those decisions, however, are not rele vant to this appeal.
-4- (reviewing lower court's decision granting motion to disqualify, this Cour t applied Model Rules instead of Model Code because Western District o f Mi ssouri, where underlying habeas corpus proceeding was brought, ha d adopte d Missouri Rules that were consistent with Model Rules), cert
. denied , 502 U.S. 825 (1990). We do not discern any reason for no t extending the same approach to our review of rulings by the Tax Court on motion s to disqualify. The Tax Court has adopted the Model Rules o f Professional Conduct to govern the conduct of attorneys who practice befor e it. Tax Court Rule 201(a), reprinted in 26 U.S.C.A. foll. § 7453 (Wes t 1 1986); see also Duffey v. Commissioner , 91 T.C. 81, 82 (1988).

In suppor t of their argument for disqualification, the Harkers rely
on Arkansas v. Dean Foods Products. Co. , 605 F.2 d 380 (8th Cir. 1979), and Fred Web er, Inc. v. Shell Oil Co. , 566 F.2d 602 (8th Cir. 1977), cert
. de nied , 436 U.S. 905 (1978). Those cases arose in the United State s 2 District Court for th e Eastern District of Arkansas and the United States District Court for the Eastern District of Missouri, respectively, and bot h distr ict courts applied the Model Code. The Harkers' reliance on Dea n Foods and Fred Weber therefore is misplaced because those cases interpret the Model Code, which, as we already have pointed out, does not apply in the Tax Court, for th at court has adopted the Model Rules. In Dean Foods and Fred Weber , we concluded that, in order to prevent

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the "appearance of impropriety," a lawyer is pre sumed under the Model Code to have knowledge of all confidential information relating to clients of the lawyer's firm and thus is disqualified from taking a position adverse to the former client in a substantially related matter. Dean Foods , 605 F.2d at 385-86; Fred Weber , 566 F.2d at 608-09. Because the Tax Court has adopted the Model Rules, which do not incorporate the Model Code' s appearance-of-impropriety standard, those cases interpreting the Model Cod e do not govern our review of the Tax Court's decision.
Additionally, the Harkers argue that the ethics rules adopted by the United States Distric t Court for the Southern District of Iowa, i.e. , the Model Code, are relevant here because that federal district court is a n alternative forum in which the Harkers could have paid their deficiency an d sued fo r a refund. The Harkers further argue that, because Schlei is a member of the Iowa bar, his conduct should be governed by Iowa ethics rule s in ma tters before the Tax Court. These arguments are entirely withou t merit. The fact that Schlei is a member of the Iowa bar and that th e Harkers could have litigated this case in another forum does not provide any basis for requiring the Tax Court to apply rules of professiona l conduct o ther than those that the Tax Court has chosen to adopt. Th e Har kers selected the Tax Court as the forum in which to litigate thi s matter and therefore necessarily assented to be governed by the rules of that forum.
We conclude the Tax Court did not abuse its discretion in denyi ng the Harker s' motion to disqualify Schlei. Given that conclusion, i t necessarily follows that the Harkers' argument that Schlei' s disqualification should be imputed to the entire legal

### Our decision does not mean that we believe the governmen t 3 

### used its b est judgment in assigning Schlei to this case. Th e gove rnment knew, prior to assigning Schlei to represent th e Commissioner in the Harkers' t ax-deficiency trial, that Schlei had worked as an associate in a four-person law firm that previousl y had represented the Harkers in criminal tax proceedings. Eve n though Schlei had no personal or substantial involvement in th e Harker s' criminal cases while at the law firm, surely th e govern ment had other attorneys from whom to choose in assignin g counsel to the Harkers' civil case. Had Schlei not been assigned to the deficiency trial, this wholly unnecessary controversy about disqualification would have been avoided.
-6- staff of t he ODC also fails. The judgment of the Tax Court is affirmed. 3

A true copy.

Attest:

CLERK, U. S. COURT OF APPEALS, EIGHTH CIRCUIT.