Court Opinion

ID: 63465
Source: CourtListenerOpinion
Date Created: 2010-04-26 04:57:25+00
Date Added: 2024-06-11T14:58:01.121900
License: Public Domain

IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT United States Court of Appeals
                                                   Fifth Circuit

                                                                            FILED
                                                                          August 6, 2008

                                       No. 07-51061                   Charles R. Fulbruge III
                                                                              Clerk

UNITED STATES OF AMERICA

                                                  Plaintiff-Appellee
v.

CHARLES ROARK; MILTON DUNTLEY; ERNIE LOPEZ

                                                  Appellants

                   Appeal from the United States District Court
                        for the Western District of Texas
                             USDC No. 3:07-CR-1761

Before PRADO, ELROD, and HAYNES, Circuit Judges.
PER CURIAM:*
       This is an appeal by Charles Roark, Milton “Mickey” Duntley, and Ernie
Lopez (collectively “Appellants”) from an order disqualifying their counsel, Mary
Stillinger, from representing multiple Appellants. The United States District
Court for the Western District of Texas held that: (1) Texas Disciplinary Rule of
Professional Conduct 1.06 gave the Government standing to challenge
Stillinger’s potential conflict of interest, and authorized the court to consider the
merits of that challenge; (2) it had “anomalous jurisdiction” to entertain the

       *
         Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR.
R. 47.5.4.
                                      No. 07-51061

merits of the Government’s Motion to Disqualify; and (3) at a minimum, a
serious potential for conflict existed, and therefore Stillinger was disqualified
from “simultaneously or serially” representing Appellants.
       On appeal, Appellants contend that the district court lacked jurisdiction
to consider the Government’s Motion to Disqualify. We agree with Appellants,1
and therefore VACATE the district court’s order disqualifying Stillinger.
                                  I. BACKGROUND
       For more than three years, the Federal Bureau of Investigation (“FBI”),
advised by the United States Attorney’s Office for the Western District of Texas,
has been investigating numerous individuals suspected of federal public
corruption, fraud, and money laundering. Judge Frank Montalvo of the Western
District of Texas authorized wiretaps and issued search warrants in connection
with the FBI’s investigation. None of the wiretaps or search warrants was
issued directly against Appellants; however, communications by Duntley and
Lopez (not to each other) were intercepted by the wiretaps. All proceedings
resulting from the FBI’s investigation were docketed under Cause No. EP-06-
CR-1369-FM (“Cause No. 1369”) and overseen by Judge Montalvo.
       The FBI named Duntley, Lopez, and Roark as targets in its public
corruption investigation. As a result of the FBI investigation, Appellants all
retained Mary Stillinger as their attorney. On June 4, 2007, the Government
moved to disqualify Stillinger from jointly representing Appellants in the
ongoing public corruption investigation.              The Government argued that
Stillinger’s joint representation presented an actual or serious potential conflict
of interest and therefore violated Texas Disciplinary Rule of Professional

       1
          As a result, we need not reach the question of whether the Government had standing
to raise Stillinger’s alleged conflict at this stage.

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                                        No. 07-51061

Conduct 1.06.2 The Government filed its motion under Cause No. 1369, which
the district court created for all criminal proceedings resulting from the FBI’s
investigation. As of the date of oral argument in this case, the Government has
not charged Appellants with any crimes. Further, the Government has not
initiated any judicial proceedings against them, served them with process,
brought them before a grand jury, or otherwise brought them before the court
in Cause No. 1369.
      Stillinger filed a Response to Motion to Disqualify, which opposed her
disqualification and moved to strike the Government’s Motion to Disqualify from
the record with leave to re-file under a separate, miscellaneous cause number.

      2
        Rule 1.06 states:
      (a) A lawyer shall not represent opposing parties to the same litigation.
      (b) In other situations and except to the extent permitted by paragraph (c), a
      lawyer shall not represent a person if the representation of that person:
                (1) involves a substantially related matter in which that person’s
                interests are materially and directly adverse to the interests of another
                client of the lawyer or the lawyer[’]s firm; or
                (2) reasonably appears to be or become adversely limited by the
                lawyer[’]s or law firm’s responsibilities to another client or to a third
                person or by the lawyer[’]s or law firm’s own interests.
      (c) A lawyer may represent a client in the circumstances described in (b) if:
                (1) the lawyer reasonably believes the representation of each client will
                not be materially affected; and
                (2) each affected or potentially affected client consents to such
                representation after full disclosure of the existence, nature, implications,
                and possible adverse consequences of the common representation and the
                advantages involved, if any.
      (d) A lawyer who has represented multiple parties in a matter shall not
      thereafter represent any of such parties in a dispute among the parties arising
      out of the matter, unless prior consent is obtained from all such parties to the
      dispute.
      (e) If a lawyer has accepted representation in violation of this Rule, or if multiple
      representation properly accepted becomes improper under this Rule, the lawyer
      shall promptly withdraw from one or more representations to the extent
      necessary for any remaining representation not to be in violation of these Rules.
      (f) If a lawyer would be prohibited by this Rule from engaging in particular
      conduct, no other lawyer while a member or associated with that lawyer’s firm
      may engage in that conduct.

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                                       No. 07-51061

Stillinger contended that the disqualification motion was properly the subject of
a separate proceeding.
       The district court found that Comment 17 to Rule 1.06 “clearly [gave] the
Government standing to alert the Court to conflicts of interest and similarly
authorize[d] the Court to act to remedy any such situation.”3 The district court
also found it had “anomalous jurisdiction,” which gave it the “authority to
entertain the merits of matters arising from federal criminal investigations
under its supervision, regardless of whether the targets of such investigation
[were] actually under indictment.”4 The district court then considered the merits
of the alleged conflict and granted the Government’s Motion to Disqualify. It
also granted Stillinger’s motion to strike and directed the clerk to create a new,
miscellaneous cause number (EP-07-CR-1761-FM (“Cause No. 1761”)), transfer
the court’s disqualification order and all related pleadings to the new cause
number, and assign the new cause number to the district court.5 The order

       3
          The Western District of Texas has incorporated Rule 1.06 into its local rules.
Comment 17 to Rule 1.06 states:
        Raising questions of conflict of interest is primarily the responsibility of the
        lawyer undertaking the representation . . . . In a criminal case, inquiry by the
        court is generally required when a lawyer represents multiple defendants.
        Where the conflict is such as clearly to call in[to] question the fair or efficient
        administration of justice, opposing counsel may properly raise the question.
        Such an objection should be viewed with great caution, however, for it can be
        misused as a technique of harassment.
Tex. Disciplinary R. Prof’l Conduct 1.06, reprinted in TEX. GOV’T CODE ANN., tit. 2,
subtit. G app. A (Vernon 2005) (hereinafter “TDRPC”).
       4
          The district court cited Hunsucker v. Phinney, 497 F.2d 29, 32 (5th Cir. 1974) as
“recognizing a district court’s firmly established jurisdiction to order suppression of evidence
or return of property before indictment and noting that such exceptional jurisdiction to
adjudicate matters before an investigation has actually yielded an indictment derives from the
court’s inherent authority over those who are its officers.”
       5
         On July 27, 2007, Stillinger filed another motion asking the district court to clarify
several issues discussed in its order disqualifying her from representing Appellants. To clarify
its prior order, the district court advised Stillinger that she may meet with and counsel
Appellants regarding the content and consequences of the order disqualifying Stillinger, and
that she may represent one or more of Appellants on appeal. But if she did so, Appellants were

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                                       No. 07-51061

disqualifying Stillinger resolved all matters pending in Cause No. 1761, and this
appeal was taken from the order entered in Cause No. 1761.
                                    II. DISCUSSION
                              A. Appellate Jurisdiction
       The Government challenges the Court’s authority to grant relief to
Appellants on direct appeal, although it concedes that this Court has mandamus
jurisdiction.6     “This [C]ourt necessarily has the inherent jurisdiction to
determine its own jurisdiction.” Tex. Comptroller of Pub. Accounts v. Transtexas
Gas Corp., 303 F.3d 571, 576 (5th Cir. 2002) (internal quotation marks omitted).
Under 28 U.S.C. § 1291 (2006), the federal courts of appeals have jurisdiction
over “all final decisions of the district courts . . . except where a direct review
may be had in the Supreme Court.” Firestone Tire & Rubber Co. v. Risjord, 449
U.S. 368, 373 (1981) (quoting § 1291). A final judgment is one that “ends the
litigation on the merits and leaves nothing for the court to do but execute the
judgment.” Cunningham v. Hamilton County, 527 U.S. 198, 203 (1999) (quoting
Van Cauwenberghe v. Biard, 486 U.S. 517, 521-22 (1988); Catlin v. United
States, 324 U.S. 229, 233 (1945)).
       Stillinger’s disqualification was the only matter the district court
transferred from Cause No. 1369 to Cause No. 1761. When the district court
entered its order granting the Government’s Motion to Disqualify, there were no
remaining matters to decide under Cause No. 1761, leaving nothing more for the
district court to do other than execute the judgment. Ordinarily, a

required to retain separate counsel for the FBI’s ongoing criminal investigation. Finally, the
district court denied Stillinger’s request that the Government and its agents be prohibited from
attempting to communicate with Appellants while they retained new counsel.
       6
         The Government contends, however, that mandamus relief is inappropriate even if the
district court acted without any jurisdiction to deprive Appellants of their chosen counsel.
Because of our conclusion that we have jurisdiction on direct appeal, we need not reach this
issue.

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                                     No. 07-51061

disqualification motion is not a final order because it is entered in an ongoing
case with other matters yet to be resolved. Because of the relatively unique
circumstances of this case, nothing further remained pending in Cause No. 1761
(or even Cause No. 1369) with respect to these defendants or their counsel.
Accordingly, under the particular situation presented here, we hold that the
district court’s disqualification order is final for purposes of § 1291. Because this
is an appeal from a final decision, and direct review by the Supreme Court is not
available, we have appellate jurisdiction under § 1291.
                    B. The District Court’s Jurisdiction
      The district court asserted two bases for its jurisdiction over the Motion
to Disqualify: (1) inherent authority to regulate attorneys’ conflicts of interest,
and (2) anomalous jurisdiction. We will address in turn each purported basis for
the district court’s jurisdiction.
                             1. Inherent Authority
      The Government argues that the district court had “inherent jurisdiction”
to entertain its Motion to Disqualify. The Government relies heavily on Woods
v. Covington County Bank, 537 F.2d 804 (5th Cir. 1976), where we stated that
“a [d]istrict [c]ourt is obliged to take measures against unethical conduct
occurring in connection with any proceeding before it.” Id. at 810 (emphasis
added). Stillinger’s potential conflict of interest arguably arose out of a pending
criminal investigation furthered by court-ordered warrants and wiretaps.
Because of the district court’s “supervisory role” in the investigation, the
Government contends that the district court had jurisdiction to exercise its
inherent authority over Stillinger’s alleged conflict of interest.
      Appellants argue that inherent authority does not give a court jurisdiction
over individuals not otherwise before it. In other words, a district court’s
inherent authority is properly exercised only when the court is acting in a
proceeding already pending before it.

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                                  No. 07-51061

      The United States Supreme Court has explained inherent judicial power
as follows:
      It has long been understood that “[c]ertain implied powers must
      necessarily result to our Courts of justice from the nature of their
      institution”. . . . For this reason, “Courts of justice are universally
      acknowledged to be vested, by their very creation, with power to
      impose silence, respect, and decorum, in their presence, and
      submission to their lawful mandates.” These powers are “governed
      . . . by the control necessarily vested in courts to manage their own
      affairs so as to achieve the orderly and expeditious disposition of
      cases.”
Chambers v. NASCO, Inc., 501 U.S. 32, 43 (1991) (citations omitted). “Because
of their very potency, inherent powers must be exercised with restraint and
discretion.” Id. at 44.
      Within the scope of inherent power is a federal court’s authority “to
determine who may practice before [it] and to regulate the conduct of those who
do.” United States v. Dinitz, 538 F.2d 1214, 1219 (5th Cir. 1976). “Since
attorneys are officers of the courts before which they appear, such courts are
necessarily vested with the authority, within certain limits, to control attorneys’
conduct.” Id. at 1219 (emphasis added); see also United States v. Gopman, 531
F.2d 262, 266 (5th Cir. 1976).
      We have recognized a district court’s inherent authority to take measures
against conflicts of interest when they arise “in connection with any proceeding
before it.” Woods, 537 F.2d at 810. For example, in In re American Airlines, 972
F.2d 605 (5th Cir. 1992), the district court refused to disqualify American
Airlines’ former counsel from representing its competitor in antitrust litigation
against it. 972 F.2d at 608. On appeal, this court recognized that if American
Airlines’ former counsel committed an ethical violation by representing its
adversary in the underlying antitrust litigation, then the district court was
obligated to take measures against that conduct. Id. at 611. In Gopman, we

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                                  No. 07-51061

recognized a district court’s inherent authority to regulate conflicts of interest
beyond the trial setting, holding that “as an incident of [its] supervisory power,
a [district] court has jurisdiction to discipline an attorney whose unethical
conduct relates to a grand jury proceeding within that court’s control.” In re
Gopman, 531 F.2d at 266.
      We have never held that a district court may exercise its inherent
authority to regulate conflicts of interests arising in the isolated context of an
ongoing criminal investigation where the only relationship to the court is its
issuance of warrants and wiretap authorizations related to targets not
represented by the counsel in question. We decline to so hold in this case. The
proper exercise of inherent authority presumes an underlying proceeding within
the court’s control, a reason separate from the alleged conflict of interest.
      In the present case, no such underlying proceeding exists.           Neither
Stillinger nor Appellants have ever appeared, nor have they been asked to
appear, before the district court in any criminal proceeding affiliated or allegedly
arising from Cause No. 1369. Stillinger’s appearance was sought in Cause No.
1369, which was severed into Cause No. 1761, only in connection with the
Government’s Motion to Disqualify, no other matter. Appellants have not been
charged with a crime, nor have grand jury proceedings been initiated against
them, nor have they been called to appear as grand-jury witnesses. Stillinger’s
alleged potential conflict of interest existed only in the context of an ongoing
criminal investigation monitored and supervised by the FBI, which is
independent and separate from any proceeding occurring before the district
court. Accordingly, the district court’s inherent authority was an improper basis
to assert jurisdiction over the Government’s Motion to Disqualify.
      We understand the district judge’s laudable concern about potential
conflicts of interest in an ongoing criminal investigation. However, this holding
does not leave the district court or the Government’s attorneys completely

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                                   No. 07-51061

powerless to act. Lawyers have an obligation to report violations of “applicable
rules of professional conduct that raise[] a substantial question as to that
lawyer’s honesty, trustworthiness or fitness as a lawyer” to the appropriate
disciplinary authority. TDRPC 8.03(a). Both the State Bar of Texas and the
Western District of Texas have grievance procedures whereby an attorney can
be charged with unethical conduct and appropriate proceedings under the
applicable rules can transpire. Tex. Rs. Disciplinary P. 1.02, 2.10-3.16, reprinted
in TEX. GOV’T CODE ANN., tit. 2, subtit. G app. A-1 (Vernon Supp. 1997); W.D.
Tex. R. AT-7.
                         2. Anomalous Jurisdiction
      Appellants contend that anomalous jurisdiction does not exist to disqualify
counsel and has only been invoked in cases involving the seizure of property by
federal agents. Even if anomalous jurisdiction could be invoked, Appellants
argue that the prerequisite factors for anomalous jurisdiction could not be
satisfied by the facts surrounding this case. The Government concedes that
anomalous jurisdiction does not apply to the present case, and argues that the
district court merely “intended to invoke the inherent authority from which
anomalous jurisdiction springs.”
      Anomalous jurisdiction is one basis for a court’s inherent authority to act.
In re Grand Jury Proceedings, 115 F.3d 1240, 1246 (5th Cir. 1997). It is defined
as a district court’s “power to order the suppression or return of unlawfully
seized property even though no indictment has been returned and thus no
criminal prosecution is yet in existence.” Id. (quoting Hunsucker v. Phinney, 497
F.2d 29, 32 (5th Cir. 1974)). The present case does not involve unlawfully seized
property.   Considering both the facts of this case and the Government’s
concession on this issue, we hold that the district court did not have anomalous
jurisdiction to entertain the Government’s Motion to Disqualify.
                              III. CONCLUSION

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                                 No. 07-51061

      We hold that neither the district court’s inherent authority nor anomalous
jurisdiction were appropriate jurisdictional bases for the district court to
entertain the Government’s Motion to Disqualify. No other basis for the district
court’s jurisdiction has been raised. We VACATE the district court’s order
disqualifying Stillinger and REMAND with instructions to dismiss the case for
lack of jurisdiction.

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