UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF INDIANA

FORT WAYNE DIVISION

USI INSURANCE SERVICES, LLC, )

)

Plaintiff, )

)

v. ) Case No. 1:14-cv-151

)

JOHN E. RYAN and WDCK, LLC, )

d/b/a The DeHayes Group, )

)

Defendants. )

OPINION AND ORDER

Plaintiff USI Insurance Services, LLC (“USI”), filed this action against Defendants John

Ryan and WDCK, LLC, d/b/a The DeHayes Group (“DeHayes”), seeking injunctive relief and

damages due to Ryan’s alleged breach of an Employment Agreement, trade secret violations, and

tortious interference with contract and business relationships. (Docket # 1.) USI contends that it

was assigned the Employment Agreement when it purchased a portion of the assets of Wells

Fargo Insurance Services USA, Inc. (“Wells Fargo”), Ryan’s former employer.

Now before the Court is a fully-briefed motion to disqualify Ryan’s counsel, Barrett &

McNagny, LLP (“B&M”), based upon a purported conflict of interest given that B&M wrote the

Employment Agreement in question and formerly represented Wells Fargo and its predecessors.

(Docket # 25, 26, 37, 49.) For the following reasons, USI’s motion to disqualify will be

GRANTED. 

A. Factual and Procedural Background

USI is engaged in the insurance business in Fort Wayne, Indiana. (Niezer Decl. ¶ 3.) It

acquired its Fort Wayne-based insurance operations, including all of its assets, information, and
goodwill (the “Fort Wayne Business”), from Wells Fargo in May 2014 in an asset purchase

transaction.1 (Niezer Decl. ¶ 7.) 

Before it was owned by Wells Fargo, the Fort Wayne Business was owned by Acordia,

Inc., and prior to that, O’Rourke, Andrews, & Maroney (“OAM”). (Niezer Decl. ¶ 9.) William

Niezer, who was President of OAM, has been in charge of the Fort Wayne Business at all relevant

times, regardless of whether it was owned by OAM, Acordia, Wells Fargo, or USI. (Niezer Decl.

¶ 12.) 

USI states that it now conducts the same type of insurance business in Fort Wayne that

Wells Fargo did before the May 2014 transaction. (Niezer Decl. ¶ 7.) It has the same

leader–Niezer; the same physical location; the same clients; and employs the same brokers,

except for Defendant Ryan. (Niezer Decl. ¶¶ 7, 8, 16.) Niezer hired Ryan in 1994 when OAM

owned the Fort Wayne Business, and Ryan continued his employment with the Fort Wayne

Business during the Acordia and Wells Fargo ownerships. (Niezer Decl. ¶¶ 13, 15.) Ryan,

however, refused USI’s offer of employment, and in May 2014 went to work for its direct

competitor, Defendant DeHayes. (Niezer Decl. ¶¶ 5-6.) USI alleges in this action that Ryan’s

work for DeHayes is in breach of the non-solicitation and non-disclosure covenants of the

Employment Agreement that he entered into with OAM in 1994, which purportedly was assigned

to Acordia, Wells Fargo, and then USI. (Niezer Decl. ¶ 13, Ex. A.) 

B&M, a Fort Wayne-based law firm, represented the Fort Wayne Business since its

inception in the 1920s and continued for almost a century, until some point in 2013. (Niezer Decl.

1 USI acquired forty-one other Wells Fargo insurance locations around the country in that same transaction. (Reply Ex.

3.) 

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¶ 11.) Thus, B&M has represented OAM, Acordia, and Wells Fargo. (Niezer Decl. ¶ 11.) The

representation included a variety of legal matters, including employment-related issues. (Niezer

Decl. ¶ 11.) 

As part of this representation, B&M wrote–at Niezer’s direction and in consultation with

him as the company representative–the Employment Agreement at issue here that Ryan signed in

1994. (Niezer Decl. ¶ 14.) Also, in 2009, B&M represented Wells Fargo in a case against

DeHayes and another departing employee, who, like Ryan, was alleged to have breached an

employment contract, misappropriated trade secrets, and engaged in tortious interference with

business and contractual relations. (Niezer Decl. ¶ 19 (citing Wells Fargo Ins. Servs. v. DeHayes

Grp. & Relue, No. 02C01-0704-PL-47 (Allen Cir. Ct. 2009)); Kimbrough Aff. ¶ 3, Ex. 1.) 

B. Legal Framework

Indiana Rule of Professional Conduct 1.9(a) has been adopted by the Northern District of

Indiana in its Local Rules as the standard of professional conduct. See N.D. Ind. L. R. 83-5(e). 

Rule 1.9(a) provides: 

A lawyer who has f ormerly represented a client in a m atter shall not thereaf ter

represent another person in the same or a substantially related matter in which that

person’s interests are materially adverse to the interests of the former client unless the

former client gives informed consent, confirmed in writing.

In determining whether an attorney should be disqualified, the Seventh Circuit Court of

Appeals looks to “whether a substantial relationship exists between the subject matter of the prior

and present representations.” In re Neely, No. 2:11-CV-140, 2012 WL 1714415, at *4 (N.D. Ind.

May 14, 2012) (quoting Cromley v. Bd. of Educ. of Lockport Twp. High Sch. Dist. 205, 17 F.3d

1059, 1064 (7th Cir. 1994)); see also Schiessle v. Stephens, 717 F.2d 417, 420 (7th Cir. 1983);

LaSalle Nat’l Bank v. Lake Cnty., 703 F.2d 252, 255-56 (7th Cir. 1983). To determine whether a

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substantial relationship exists, the Court engages in a three step inquiry: 

First, the trial judge must make a factual reconstruction of the scope of the prior

legal representation. Second, it must be determined whether it is reasonable to

infer that the confidential information allegedly given would have been given to a

lawyer representing a client in those matters. Third, it must be determined whether

that information is relevant to the issues raised in the litigation pending against the

former client. 

Jones & Henry, Eng’rs, Ltd. v. Town of Orland, Ind., 942 F. Supp. 1202, 1206 (N.D. Ind. 1996)

(quoting LaSalle Nat’l Bank, 703 F.2d at 255-56). 

If the Court finds a substantial relationship exists, the non-movant has the opportunity, in

certain circumstances, to rebut the presumption it received confidential information during the

prior representation. Ramos v. Pabey, No. 2:05CV189, 2005 WL 2240036, at *4 (N.D. Ind. Sept.

13, 2005); Cromley, 205 F.3d at 1064. The presumption is rebuttable when “a member or

associate of a law firm changes jobs and later, he or his new firm is retained by an adversary of a

client of his former firm” and the lawyer shows “that effective measures were taken to prevent

confidences from being received by whichever lawyers in the new firm are handling the new

matter.” Leathermon v. Grandview Mem. Gardens, Inc., No. 4:07-cv-137, 2010 WL 1381893, at

*9 (S.D. Ind. Mar. 31, 2010). 

But the presumption that confidential information was received during the prior

representation is irrebuttable and an attorney cannot avoid disqualification where the court finds a

substantial relationship exists and the “individual attorney himself switches sides and represents a

new client against a former client.” Leathermon, 2010 WL 1381893, at *9 (citing Analytica, Inc.

v. NPD Research, Inc., 708 F.2d 1263, 1266-67 (7th Cir. 1983)). 

“The Seventh Circuit warns that disqualification ‘is a drastic measure which courts should

hesitate to impose except when absolutely necessary.’” Exterior Sys., Inc. v. Noble Composites,

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Inc., 210 F. Supp. 2d 1062, 1067 (N.D. Ind. 2002) (quoting Cromley, 17 F.3d at 1066). Yet, at

the same time, it instructs that “any doubts as to the existence of an asserted conflict must be

resolved in favor of disqualification.” United States v. Goot, 894 F.2d 231, 235 (7th Cir. 1990). 

“[C]ourts have a duty to safeguard the sacrosanct privacy of the attorney-client relationship so as

to maintain public confidence in the legal profession and to protect the integrity of the judicial

proceeding.” Chem. Waste Mgmt. v. Sims, 875 F. Supp. 501, 503 (N.D. Ill. 1994).

C. Discussion

USI asserts that B&M should be disqualified under Rule 1.9(a) from representing Ryan in

this matter because: (1) B&M wrote Ryan’s Employment Agreement for USI’s predecessor,

OAM, and (2) represented another predecessor, Wells Fargo, in a similar dispute against DeHayes

and another departing employee. In response, B&M argues that control of Wells Fargo–and thus,

the attorney-client privilege–did not pass to USI in the asset sale; therefore, USI is not a former

client, and Rule 1.9 does not apply. And even if control did pass, B&M urges that its long-ago

drafting of the Employment Agreement for OAM and its more recent representation of Wells

Fargo in the Relue case are not substantially related to the instant matter. 

1. The authority to assert the attorney-client privilege passed to USI in the asset sale.

“[T]he right to assert or waive a corporation’s attorney-client privilege is an incident of

control of the corporation.” Am. Int’l Specialty Lines Ins. Co. v. NWI-I, Inc., 240 F.R.D. 401, 407

(N.D. Ill. 2007); see John Crane Prod. Solutions, Inc., No. 3:11-cv-3237-D, 2012 WL 1694084,

at *1 (N.D. Tex. May 15, 2012) (“‘New managers installed as a result of a takeover, merger, loss

of confidence by shareholders, or simply normal succession’ control the attorney-client privilege

previously controlled by old management.” (quoting Commodity Futures Trading Comm’n v.

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Weintraub, 471 U.S. 343, 349 (1985))). “[A] transfer of assets, without more, is not sufficient to

effect a transfer of the privileges; control of the entity possessing the privileges must also pass for

the privileges to pass.” Am. Int’l Specialty, 240 F.R.D. at 407 (quotation omitted) (collecting

cases).

Some courts, however, have concluded that this “bright-line rule cannot capture ‘the

myriad ways control of a corporation or a portion of a corporation can change hands . . . .’” John

Crane Prod., 2012 WL 1694084, at *1 (quoting Soverain Software LLC v. Gap, 340 F. Supp. 2d

760, 763 (E.D. Tex. 2004)). “[S]o when determining whether the attorney-client privilege

transfers[,] courts should examine whether ‘the practical consequences of the transaction result in

the transfer of control of the business and the continuation of the business under new

management,’ and if they do, ‘the attorney-client privilege will follow as well.’” John Crane

Prod., 2012 WL 1694084, at *1 (quoting Soverain Software, 340 F. Supp. 2d at 763); accord

UTStarcom, Inc. v. Starent Networks, Corp., No. 07 C 2582, 2009 WL 4908579, at*3 (N.D. Ill.

Feb. 20, 2009); Parus Holdings, Inc. v. Banner & Witcoff, Ltd., 585 F. Supp. 2d 995, 1002 (N.D.

Ill. 2008) (articulating that the rule from Soverain is “the better reasoned rule, and the one that

appears to be followed by the majority of recent cases”); Am. Int’l Specialty, 240 F.R.D. at 407;

Coffin v. Bowater Inc., No. 13-227-P-C, 2005 WL 5885367, at *2 (D. Maine May 13, 2005).

“In determining whether the ‘practical consequences’ of a given transaction result in the

‘transfer of control,’ courts consider such factors as the extent of the assets acquired, including

whether stock was sold, whether the purchasing entity continues to sell the same product or

service, [and] whether the old customers and employees are retained . . . .” John Crane Prod.,

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2012 WL 1694084, at *1 (citing Soverain Software, 340 F. Supp. 2d at 763-64; M-I, LLC v.

Stelly, No. 4:09-cv-1552, 2010 WL 2196281, at *4-5 (S.D. Tex. May 26, 2010)). 

Applying this legal standard, the Court is not persuaded that Wells Fargo’s transfer of the

Fort Wayne Business (together with its forty-one other locations) to USI amounted to a mere

transfer of assets. As a result of the transfer, USI now conducts the same type of insurance

business, from the same location, led by the same leader–Niezer, employing most of the same

employees, and serving the same clients. 

Thus, USI not only acquired assets from Wells Fargo; it, in essence, continued to operate

the Fort Wayne Business with just a different name on the door. In fact, the client letter sent by

Wells Fargo and USI announcing the transaction assured clients that although they would notice

new signs, no changes would be made to their insurance coverage, payment schedules, or

procedures and, in most cases, clients would continue to work with the same team. (Reply Ex. 3.) 

Courts when applying the “practical consequences” rule under similar circumstances have

concluded that the attorney-client privilege transferred with the assets. See, e.g., UTStarcom,

2009 WL 4908579, at *5 (concluding that attorney-client privilege transferred with plaintiff’s

purchase of a business unit, where plaintiff continued to offer the same products to existing

customers at the same locations and employed many of the same employees); Soverain Software,

340 F. Supp. 2d at 763 (finding that the practical consequences of the assets transfer made

Soverain a successor to the commercial embodiment of the patents at issue, and therefore, it could

assert the attorney-client privilege); Parus Holdings, 585 F. Supp. 2d at 1001 (finding that the

transaction was not a mere assignment of patent rights, but a continuation of that portion of the

predecessor’s business responsible for the development and marketing of a product line); Graco

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Children’s Prods. Inc. v. Regalo Int’l LLC, No. Civ. A. 97-6885, 1999 WL 553478, at *4 (E.D.

Pa. 1999) (concluding that where plaintiff purchased the assets and liabilities of several product

lines, and the agreement included certain operations, working capital, and brand names, the

attorney-client privilege concerning the validity of the patent for one of the product lines also

transferred). 

B&M, however, attempts to distinguish the instant circumstances from such cases,

emphasizing that Wells Fargo sold just a small portion of its assets and continues to exist as an

ongoing, independent entity–even in Indiana. In support, B&M cites Card v. CSC Credit

Services, Inc., No. 1:13-cv-1150, 2014 WL 590368, at *1 (S.D. Ind. Feb. 13, 2014), in which

Defendant CSC Credit sought to disqualify plaintiff’s counsel, who had formerly represented

Equifax, on the basis that Equifax acquired CSC’s consumer-reporting assets and assumed

liability for claims predating the acquisition. The CSC Court denied the motion to disqualify,

determining that the asset transaction did not transfer control of Equifax to CSC. Id. at 2. As

B&M sees it, here too control of the corporation–and the attorney-client privilege–remains with

Wells Fargo, and thus, Rule 1.9 concerning former clients does not apply to USI. (Def.’s Resp.

11.) 

Contrary to B&M’s assertion, the present circumstances are distinguishable from Card, as

the record here reveals more “practical consequences” of the transaction. See Soverain Software,

340 F. Supp. 2d at 763 (“[W]hether the attorney-client relationship transfers . . . to the new

owners turns on the practical consequences rather than the formalities of the particular

transaction.”). To reiterate, Niezer, who served as the OAM’s President and company

representative when B&M wrote Ryan’s Employment Agreement, continues to lead the Fort

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Wayne Business for USI. The same type of insurance business is conducted from the same

geographic location, servings the same clients, and employing most of the same employees. In

short, the practical consequences of the transaction is that the Fort Wayne Business has simply

continued under new management. As stated earlier, courts have held under similar

circumstances that the attorney-client privilege passed even though only a portion of the

company’s assets were transferred. See, e.g., UTStarcom, Inc., 2009 WL 4908579, at *5; Parus

Holdings, 585 F. Supp. 2d at 1001-003; Soverain Software, 340 F. Supp. 2d at 763; Graco

Children’s Prods., 1999 WL 553478, at *4. 

 For these reasons, the Court concludes that USI is Wells Fargo’s successor to the Fort

Wayne Business for purposes of the attorney-client privilege. Accordingly, USI should be

considered a former client of B&M under Rule 1.9. 

2. A “substantial relationship” exists between this matter and B&M’s prior

representation.

Having found that USI should be considered a former client under Rule 1.9, the Court

must next determine whether B&M’s drafting of the Employment Agreement for OAM and its

representation of Wells Fargo in the Relue case are substantially related to the instant matter. The

Court easily concludes that the matters are substantially related. 

a. Ryan’s Employment Agreement

B&M does not dispute that it wrote Ryan’s Employment Agreement for OAM at Niezer’s

direction in 1994.2

 (Def.’s Resp. 4-5.) It contends, however, that the anticipated issues in this

litigation are whether the Agreement was assignable to USI, not OAM’s rights with respect to

2 Rule 1.10(a) imputes all conflicts of interest to all lawyers in the firm while they are associated with the firm. 

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Ryan. B&M further asserts that “[w]hatever information that [B&M] supposedly received in

conjunction with drafting the Agreement on behalf of OAM is irrelevant to whether the

Agreement may be enforced by USI against Ryan twenty years and several corporate entities

later.” (Def.’s Resp. 5.) 

First, the Court is not convinced by B&M’s attempt to narrowly interpret USI’s claims

against Ryan and B&M’s anticipated defense of such claims. It is early in this litigation, and

Ryan reserved the right in his amended answer to name additional affirmative defenses. (Docket #

41 at 34.) 

 Second, it is eminently reasonable to infer that Niezer provided B&M with confidential

information when it prepared the Employment Agreement on AOM’s behalf. “Good attorneys . .

. learn as much as they can about their client’s motives, concerns, and interest before drafting

documents that will legally bind the client.” Exterior Sys., 175 F. Supp. 2d at 1116. Indeed,

“attorneys are generally prohibited from attacking the work they have done for a former client.”

In re S. Kitchens, Inc., 216 B.R. 819, 831 (Bankr. D. Minn. 1998). In fact, Comment 1 to Rule

1.9 specifically states that “a lawyer could not properly seek to rescind on behalf of a new client a

contract drafted on behalf of the former client.” See Exterior Sys., 175 F. Supp. 2d at 1117 (“In

simple terms, Attorney Gillard’s current client is suing the successor to her former client on a

contract she created on behalf of her former client. This conflict, separate from any other

potential conflict, is sufficient to warrant disqualification of Gillard.”); In re S. Kitchens, 216 B.R.

at 831 (collecting cases). 

Finally, the passage of time is only one factor to consider in deciding a motion to

disqualify counsel. See Ind. R. Prof. Cond. 1.9, cmt. 3. Although twenty years have passed since

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B&M drafted the Employment Agreement, it continued to represent OAM, Acordia, and Wells

Fargo during the years Ryan was employed at the Fort Wayne Business, undercutting B&M’s

assertion that any confidential information became obsolete by the passage of time. And in this

instance, the subject matters of B&M’s prior representation and the current litigation–a former or

present employee purportedly engaging in competitive activities–are “not only similar, they are in

important respects identical.” Healthnet, Inc. v. Health Net, Inc., 289 F. Supp. 2d 755, 760 (S.D.

W. Va. 2003) (finding that seventeen years did not negate relevance of current case and prior

representation); see Childress v. Trans Union, LLC, No. 1:12-cv-184, 2013 WL 1828050, at *5

(S.D. Ind. Apr. 30, 2013) (finding seven years insufficient passage of time to overcome other

factors in favor of finding a substantial relationship exists). 

Accordingly, B&M’s former representation of OAM in writing Ryan’s Employment

Agreement is substantially related to the present litigation challenging that very Agreement. 

b. The Relue litigation

In addition, USI asserts that the 2009 Relue case–in which B&M represented Wells Fargo

(or a related entity) against DeHayes and a departing employee– is substantially related to the

current litigation. But B&M argues that the “differences between the present case and the [p]rior

[l]awsuit are legion.” (Def.’s Resp. 5.) It contends that Relue involved a different employment

agreement; a current, rather than former, employee; and a breach of duty of loyalty claim not at

issue here. (Def.’s Resp. 5-6.) It also emphasizes that the trade secrets claim was voluntarily

dismissed early in the Relue litigation. (Def.’s Resp. 5-6.)

Where an attorney has repeatedly represented a former client, courts look to the similarity

between the past and present claims to determine whether the substantive subject matters of both

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representations overlap and whether the attorney would have been privy to a “substantial amount

of discussion and strategic thinking” in its prior representation.3 See LaSalle Nat’l Bank, 703 F.2d

at 256 (finding that even though the attorney had not been involved in the sewage agreement

underlying the current litigation, the scope of prior legal representation extended to similar

sewage agreements because attorney “was clearly privy to a substantial amount of discussion and

strategic thinking about the various sewage agreements”); Westinghouse Elec. Corp. v. Gulf Oil

Corp., 588 F.2d 221, 225 (7th Cir. 1978) (finding scope of prior legal representation encompassed

current litigation on uranium supply contracts because attorney had previously handled numerous

mining patents and real estate transactions regarding movant’s uranium properties); Safe-TProds., Inc. v. Learning Res., Inc., No. 01 C 9498, 2002 WL 31386473, at *4 (N.D. Ill. Oct. 23,

2002) (concluding that scope of prior representation extended to prior litigation addressing claims

similar to the underlying litigation because the prior case exposed attorney to former client’s

confidential business planning and strategy).

The B&M attorney who represents Ryan here and who represented Wells Fargo in Relue

attests that he does not believe he received any confidential information in the Relue litigation

that would bear upon the present matter. (Kimbrough Aff. ¶ 10.) But that assertion

misapprehends the inquiry at this stage; the proper inquiry is whether “it is reasonable to infer

that confidential information allegedly given would have been given to a lawyer representing a

3 Put another way, where an attorney has repeatedly represented a former client, courts have not engaged in a “one-toone approach” comparing the facts underlying the current representation with the facts underlying every previous case.

Childress, 2013 WL 1828050, at *4-5 (recognizing that the “factually distinct” language of Rule 1.9 Comment 2 allows an

attorney to represent a client against a former client in other types of lawsuits, but not where the claims are being brought under

the same statutory provisions he used to advocate for the former client); cf. Misiak v. Morris Material Handling, Inc., No. 07 CV

6330, 2008 WL 4874178, at *2 (N.D. Ill. July 10, 2008) (finding scope of prior legal representation was limited to claims for

workers’ compensation and did not extend to all previous legal representation).

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client in those matters.” LaSalle Nat’l Bank, 703 F.2d at 255-56. “[I]t is not appropriate for the

court to inquire into whether actual confidences were disclosed.” Westinghouse Elec. Corp., 588

F.2d at 224. 

Contrary to B&M’s characterization, the substantive subject matters of B&M’s past and

prior representations overlap, and it can be reasonably inferred that B&M was exposed to a

“substantial amount of discussion and strategic thinking”–presumably from Niezer, at least in

part–on matters involving an employee’s competitive activities. LaSalle Nat’l Bank, 703 F.2d at

256; see Ramos, 2005 WL 2240036, at *2-3. This confidential information that B&M was privy

to is relevant to the issues raised in this litigation, which again will presumably encompass

Niezer’s strategic thinking about the Fort Wayne Business and an employee’s (albeit, former

employee) competitive activities. See LaSalle Nat’l Bank, 703 F.2d at 256; see, e.g., Emmis

Operating Co. v. CBS Radio, Inc., 480 F. Supp. 2d 1111, 1119 (S.D. Ind. 2007) (finding

substantial relationship test satisfied in intentional interference with employment contract case

where employee of defendant would potentially be cross-examined by counsel from the same firm

that negotiated his employment contract with plaintiff); Safe-T-Prods., 2002 WL 31386473, at *5

(finding relevancy prong satisfied where the court “presume[d] that [the attorney] has extensive

knowledge about the business planning and strategy of the [d]efendants” and “was presumably

privy to a substantial amount of strategic thinking and discussion”). 

On this basis, a substantial relationship exists between B&M’s former representation of

Wells Fargo in the Relue litigation and B&M’s current representation of Ryan. Accordingly,

USI’s motion to disqualify B&M as Ryan’s counsel in the present litigation under Rule 1.9(a)

will be granted.

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D. Conclusion

For the foregoing reasons, the Plaintiff’s Verified Motion to Disqualify Counsel for

Defendant John E. Ryan (Docket # 25) is GRANTED. Defendant John Ryan’s Motion to Stay

the Proceedings Pending the Court’s Ruling on Plaintiff’s Motion to Disqualify Counsel (Docket

# 31) is DENIED AS MOOT.

The Court on its own motion sets a telephonic preliminary pretrial conference for July 23,

2014, at 10:00 a.m. Accordingly, Defendant WDCK, LLC’s Motion for Rule 16 Conference

(Docket # 45) is deemed MOOT. Plaintiff USI’s Motion for Extension of Deposition Deadline

(Docket # 40) will be addressed at the preliminary pretrial conference. Counsel are to conduct a

Rule 26(f) conference as soon as practicable and should be prepared to report orally, Fed. R. Civ.

P. 26(f)(4), at the July 23, 2014, conference concerning a discovery plan at least through the

preliminary injunction proceedings. 

 SO ORDERED. 

Dated this 7th day of July, 2014.

S/ Roger B. Cosbey 

Roger B. Cosbey,

United States Magistrate Judge

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