Court Opinion

ID: 9810077
Source: CourtListenerOpinion
Date Created: 2023-08-31 21:38:56.485716+00
Date Added: 2024-06-11T13:39:21.356178
License: Public Domain

CHIEF JUSTICE RICE,
dissenting.
£40 In July 2012, Peters Mair Wilcox ("PMW"), a Colorado-based law firm, represented several parties in connection with a criminal investigation conducted by the Colorado Department of Revenue ("DOR"). PMW represented Conley Hoskins individually; additionally, it represented two medical marijuana dispensaries in which Hoskins had an ownership stake, All Care Wellness, LLC ("All Care"), and Jane Medicals, LLC ("Jane Medicals"), in their organizational capacities. PMW communicated extensively with the Senior Assistant Attorney General on behalf of these three clients during the course of its representation.1 PMW attorneys also arranged for and participated in the DOR's investigatory interviews of Jane Medicals *839and All Care's employees. During these interviews, the DOR asked employees questions about Jane Medicals' and All Care's business practices, and through its participation, PMW became privy to confidential and damaging information the employees disclosed to the DOR about both dispensaries.
141 Subsequently, the People indicted more than a dozen individuals or entities for violations of the Colorado Organized Crime Control Act ("COCCA"), among other crimes, including theft, tax evasion, securities fraud, and illegal distribution of marijuana. The indictment included 71 total counts. Specifically, it charged two of All Care's store managers, Nathan Newman and Ryan Tripp, as well as Hoskins, All Care, Jane Medicals, and others, with violations of COC-CA, including "racketeering-participation in an enterprise" and "conspiracy/endeavoring." After the indictment, Ralph Craveiro, the co-owner of All Care, challenged Hoskins's ownership interest in that business. Craveiro argued that Hoskins had forfeited his 50% share when he was charged with multiple felonies. All Care's ownership status remains in dispute and is the subject of a pending arbitration proceeding.
42 Thereafter, PMW entered an appearance only on behalf of Hoskins and Jane Medicals in the criminal case, despite having previously represented a co-defendant, All Care, in the very investigation that gave rise to the indictment. In response to PMW's entry of appearance, the People filed a motion to disqualify the firm, arguing that there was an impermissible conflict of interest between PMWs former client (All Care) and its current clients (Hoskins and Jane Medicals, hereinafter "Petitioners") and that All Care did not consent to PMW's representation of Petitioners.
143 The trial court held an evidentiary hearing that included testimony from an ethics expert (in opposition to the motion) and from Craveiro (in support of the motion). In later granting the People's motion, it concluded that All Care's and Petitioners' interests were "materially adverse" to one another in violation of Colo. RPC 1.9(a). Specifically, it reasoned that: (1) Hoskins had incentives to deny culpability and to shift the blame for his alleged criminal behavior as an All Care owner and manager to All Care's other employees; and (2) the prosecution planned to call at least one All Care employee to testify against Petitioners, such that PMW would be required not only to impermissibly cross-examine a former client, but would do so with the benefit of confidential information about that client. The court considered severing the trials, but decided against doing so because PMW's exposure to confidential information about All Care during the DOR's investigatory interviews meant that severance could not prevent PMW from using that information in its defense of Petitioners.
T44 Contrary to the majority, I would affirm the trial court and hold that Petitioners have materially adverse interests to those of All Care. Although the majority purports to apply the abuse of discretion standard in reversing the trial court, in actuality, it subjects the trial court's findings to a far more searching and demanding standard. Given that the record before us is more than suffi-client to justify the trial court's decision, I cannot agree with the majority's conclusion that the trial court abused its discretion when it disqualified PMW as counsel for Petitioners, and I respectfully dissent.
I. Analysis
'I 45 First, I examine the case law regarding the abuse of discretion standard in the context of motions to disqualify counsel specifically, including the sound reasons behind that very high standard. Next, I discuss how I would have applied that standard here, and explain why the majority-despite purportedly applying that standard-in actuality applies a far more stringent standard and accordingly errs in reversing the trial court.
A. Disqualification of Counsel and the Abuse of Discretion Standard
T 46 The Sixth Amendment right of criminal defendants to counsel of their choice is cireumseribed in several important respects and must give way under certain cireum-stances. See People v. Frisco, 119 P.3d 1093, 1095 (Colo. 2005) (citing Wheat v. United States, 486 U.S. 153, 159, 108 S.Ct. 1692, 100 *840L.Ed.2d 140 (1988)). Although a eriminal defendant's choice of a particular attorney is afforded great deference, People v. DeAtley, 2014 CO 45, ¶ 15, 333 P.3d 61, the "essential aim" of the Sixth Amendment "is to guarantee an effective advocate for each criminal defendant" within the adversarial process-not "to ensure that a defendant will inexorably be represented by the lawyer whom he prefers," Wheat, 486 U.S. at 159, 108 S.Ct. 1692.
{47 A trial court's inherent power to disqualify attorneys from conflicted representation derives from its duty to ensure the integrity and fairness of the proceedings before it. In re Estate of Myers, 130 P.3d 1023, 1025 (Colo.2006); see also Liebnow by & through Liebnow v. Boston Enters. Inc., 2013 CO 8, ¶ 13, 296 P.3d 108 (noting that it is within the "exelusive province" of the trial court to determine if disqualification is warranted). A trial court has "broad discretion" in deciding disqualification motions. People v. Harlan, 54 P.3d 871, 877 (Colo.2002). Indeed, a trial court stands in the best position to make the fact-specific determination as to whether a particular conflict would compromise the integrity of the proceeding. See Frisco, 119 P.3d at 1096 ("[Clourts clearly have the responsibility to ensure that a criminal defendant receives a fair trial (even where that requires disqualification of his counsel of choice), as well as the latitude to ensure the integrity, and appearance of integrity, of the process."); see also Wheat, 486 U.S. at 163, 108 S.Ct. 1692 (concluding that a trial court has "substantial latitude" in determining whether to disqualify an attorney in the face of actual or potential conflicts of interest). As such, we only overturn a trial court's decision on a disqualification motion if we find that the trial court abused its discretion. Liebnow, ¶ 14.
48 The abuse of discretion standard is-by design-deferential to the trial court. The standard is "very high" because "it ree-ognizes the trial court's unique role and perspective in evaluating the demeanor and body language of live witnesses, and it serves to discourage an appellate court from second-guessing those judgments based on a cold record." Carrillo v. People, 974 P.2d 478, 485-86 (Colo.1999) (describing the standard in the context of juror dismissal). To constitute an abuse of discretion, the trial court's decision must be "manifestly arbitrary, unreasonable, or unfair." Gen. Steel Domestic Sales, LLC v. Bacheller, 2012 CO 68, ¶ 42, 291 P.3d 1 (emphasis added). Significantly, in determining whether a trial court's decision is manifestly arbitrary, unreasonable, or unfair, we ask whether the trial court "exceed[ed] the bounds of the rationally available choices"-not whether we agree with that decision. Churchill v. Univ. of Colo., 2012 CO 54, ¶ 74, 285 P.3d 986 (internal quotation marks omitted) (quoting Hall v. Moreno, 2012 CO 14, ¶ 54, 270 P.3d 961).
' 49 We allow trial courts substantial latitude in determining whether disqualification is warranted for two reasons. First, conflicted representation undermines both the efficacy of an attorney's representation and the integrity of the legal system more generally. An attorney owes his or her client a duty of loyalty and a concomitant duty to avoid conflicts of interest; indeed, these are "perhaps the most basic of counsel's duties." Strickland v. Washington, 466 U.S. 668, 692, 104 S.Ct. 2052, 80 L.Ed.2d 674 (1984); see also Colo. RPC 1.7 emt. 1 (noting that loyalty is an essential element in the lawyer's relationship to a client). The importance of these duties is only heightened where counsel is representing, or has represented, criminal co-defendants. See Wheat, 486 U.S. at 159, 108 S.Ct. 1692 (noting the "special dangers" posed by conflicts involving multiple representation of criminal co-defendants).
¶50 Second, a trial court's decision about whether a conflict requires separate representation is made "not with the wisdom of hindsight after the trial has taken place, but in the murkier pre-trial context when relationships between parties are seen through a glass, darkly." Id. at 162, 108 S.Ct. 1692. In Wheat, a case disqualifying counsel from representing multiple co-defendants in a marijuana-distribution conspiracy, the United States Supreme Court explained the complexity of the decision trial courts face in determining disqualification motions:
The likelihood and dimensions of nascent conflicts of interest are notoriously hard to *841predict, even for those thoroughly familiar with criminal trials. It is a rare attorney who will be fortunate enough to learn the entire truth from his own client, much less be fully apprised before trial of what each of the Government's witnesses will say on the stand. A few bits of unforeseen testimony or a single previously unknown or unnoticed document may significantly shift the relationship between multiple defendants.
Id. at 162-63, 108 S.Ct. 1692. The broad discretion afforded to trial courts, then, is not only sensible, because trig) courts are far closer to the witnesses and the evidence than are appellate courts; it is also necessary given the unavoidably difficult nature of any pretrial disqualification decision.
{51 With the wide latitude afforded to trial courts in mind, I now turn to my angly-sis of the trial court's application of Rule 1.9(a) in this case.
B. The Trial Court's Findings of Material Adversity Are Sufficiently Supported by the Record
{52 I agree with the majority that, for purposes of Colo. RPC 1.9(a), the current criminal matter involving PMW as Petitioners' counsel constitutes "the same or a substantially related matter" as the underlying DOR investigation. Additionally, it is undisputed that Al Care, as a former client of PMW's in that investigation, has not consented to PMW's representation of Petitioners. Therefore, the outcome of this case turns on whether the trial court's conclusion-that All Care's interests are "materially adverse" to Petitioners' interests-was so manifestly arbitrary, unreasonable, or unfair so as to constitute an abuse of discretion. Contrary to the majority, I would hold that the People met their burden to show that All Care's interests were materially adverse to Petitioners'. Accordingly, the trial court did not exceed the bounds of rationally available choices in finding there was "an inkerent and substantial risk" of PMW violating its duty of loyalty to All Care in violation of Colo. RPC 1.9. See Frisco, 119 P.3d at 1096.
153 The majority concludes that it is "mere speculation" that Hoskins will seek to shift blame to other All Care employees be-ecause Hoskins was All Care's only "high managerial agent" who was specifically named in the indictment. Maj. op. 11 33-34. In other words, it concludes that there are no other individuals to whom Hoskins can shift the blame for All Care's alleged eriminal malfeasance and, thus, that there is no conflict of interest because Hoskins's interests are aligned with All Care's. See id.
1 54 The record, however, does not support this conclusion; rather, it shows there is a significant risk that Hoskins will attempt to exculpate himself at the expense of All Care's employees. For example, both Nathan Newman and Ryan Tripp, two All Care managers, were indicted along with Hoskins. Specifically, the indictment alleges that Newman, Tripp, and Hoskins, along with other All Care employees, engaged in a complex erimi-nal conspiracy which involved receiving, buying, selling, cultivating, and/or distributing marijuana. It was not manifestly arbitrary, unreasonable, or unfair for the trial court to conclude that one of Hoskins's best defense strategies would be to shift blame away from himself and onto Newman and Tripp (or, for that matter, onto other indicted or unindicted All Care employees) by claiming that they acted at their own behest in committing any alleged crimes rather than at his direction.
T55 The majority also relies on section 18-1-606(1)(b), C.R.S. (2013), which provides that a business entity is guilty of an offense when that offense was "engaged in, authorized, solicited, requested, commanded, or knowingly tolerated by ... a high managerial agent acting within the seope of his or her employment or in behalf of the business entity." It notes that there were no "high managerial agents" for All Care named in the indictment besides Hoskins. Maj. op. 11 81-32. However, the majority fails to acknowledge that there was specific evidence presented at the disqualification hearing indicating that Newman and Tripp might well qualify as "high managerial agents" for All Care, even if they were not also specifically designated "high managerial agents" in the indictment. Section 18-1-606(2)(a) defines a "high managerial agent," in relevant part, as "an officer of a business entity or any other *842agent in a position of comparable authority with respect to ... the supervision in a managerial capacity of subordinate employees." Craveiro, who was a witness for the People at the disqualification hearing, testified that Newman and Tripp were traditional store managers for All Care and that they had unfettered access to the marijuana and the money in All Care's store. The prosecution need not have identified these individuals as "high managerial agents" in the indictment in order for All Care to be held criminally responsible for their conduct, making them an obvious target for Hoskins's blame shifting.
T56 Moreover, the record also establishes-as the trial court correctly noted-that Hoskins had already begun to point fingers and did so well in advance of trial. Specifically, during the DOR's pre-indictment investigation, PMW attorney Stephen Peters sent a letter to a Senior Assistant Attorney General entitled "Investigation of Conley Hoskins." In that letter, Peters explained that he initially began representing Hoskins "in response to tax and employment issues arising from the malfeasance of key managerial employees." Peters also offered, in the very same paragraph, to show the DOR copies of tax- and withholding-related paperwork prepared by an accountant in response to this "malfeasance" "[because the taxes are one stated theory of your proposed securities prosecution." Although the majority acknowledges the existence of this letter, it completely disregards it for purposes of the material adversity analysis, apparently because the letter did not specifically mention All Care. See maj. op. 17. However, given that the letter was sent in the context of the pre-indictment investigation of Hoskins's businesses, including All Care, it was not manifestly arbitrary, unreasonable, or unfair for the trial court to rely on the letter as a piece of evidence in support of the People's motion to disqualify. Indeed, the letter concretely demonstrates that, at least when it comes to the indiectment's charges of securities fraud and tax evasion, Hoskins was already directing blame away from his own malfeasance, if any, to the "malfeasance of key managerial employees."
157 The majority's conclusion that Hos-kins has no motive to blame All Care's employees or managers is also premised on its problematic assumption that Hoskins is motivated solely by his narrow financial interests in preserving All Care as a viable future entity. See maj. op. 184. Significantly, the majority makes this assumption without pointing to a single piece of evidence in the record. See id. However, it was not manifestly arbitrary, unreasonable, or unfair for the trial court to conclude that Hoskins was likely to employ a blame-shifting defense, even at the expense of losing future financial benefits from All Care, because doing so might allow him to avoid jail time or other forms of criminal sanction. If Hoskins were to successfully demonstrate that All Care's employees were serving their own prerogatives by engaging in unlawful activity-and not because Hoskins "authorized, solicited, requested, commanded, or knowingly tolerated" such activity-he could escape personal culpability, even at the risk of losing his investment in All Care.
[ 58 Moreover, at the disqualification hearing, the trial court correctly noted that if Hoskins loses his ownership stake in All Care in the pending arbitration proceeding, he would also lose his financial interest in ensuring that All Care escapes criminal sance-tions. In this respect, the majority's holding that there was no material adversity is contingent on a future third-party arbitrator's decision to preserve Hoskins's ownership share. In contrast, the trial court's decision to grant the People's motion to disqualify ensures that even if Hoskins loses his ownership share, this loss will not affect All Care's ability to defend itself.
1 59 The trial court's decision was justified not only because it reasonably concluded that Hoskins had obvious incentives to shift the blame onto All Care; it also was justified because the record establishes that PMW obtained confidential information 2 about All *843Care in the course of the pre-indictment investigation, and this information would compromise All Care's ability to defend itself and could force PMW into a position of divided loyalties. As PMWs correspondence with the Senior Assistant Attorney General makes clear, PMW took a very active approach in managing the DOR's pre-indictment interviews with All Care's employees. The trial court rationally presumed that PMW became privy to confidential information about All Care's business dealings when it (1) prepared employees for the DOR's interviews, as it was presumed to do in competently representing All Care as an entity, and (2) attended the interviews. Additionally, the prosecution indicated that it will call an All Care employee to testify against Hoskins3 Accordingly, in the event the trials were not severed, PMW would immediately be placed in an untenable position. On the one hand, it would have a duty to cross-examine any All Care employee effectively in representing Hoskins, and doing so could redound to the benefit of Hoskins personally. On the other hand, it could not use any confidential information learned during the course of the investigatory interviews without violating continuing duties to All Care as a former client. See Colo. RPC 1.9(c) (stating that a lawyer who has formerly represented a client in a matter cannot "use information relating to the representation to the disadvantage of the former client" and also cannot "reveal information relating to the representation"); see also Dunlap v. People, 173 P.3d 1054, 1070 (Colo. 2007) ("An attorney has a continuing duty to keep confidential any information learned during the prior representation of the witness. This duty creates the possibility that the attorney will be hindered in cross-examining the witness, which thus impedes the attorney's ability to zealously represent the current client." (internal citation omitted)).
T60 The trial court also fully considered whether a remedy short of disqualification would be effective. It noted that severing the trials would not necessarily eliminate the conflict of interest implicated here because PMW was already exposed to confidential information about All Care and there was nothing the trial court could do to ensure that PMW did not use that information in defending Petitioners. Such a conclusion was justified given its finding that Hoskins would have an incentive to blame other All Care employees in his own defense.
II. Conclusion
T61 Contrary to the majority, I1 believe that the record presented here was more than sufficient for the trial court to find that Petitioners' interests were "materially adverse" to All Care's interests. Although it purports to apply an abuse of discretion standard in reviewing the trial court's decision, the majority actually applies a far more stringent standard and fails to recognize the substantial latitude and broad discretion afforded trial courts in making the difficult decision to disqualify counsel. Accordingly, I respectfully dissent.

. The trial court's order granting the People's motion to dismiss attached excerpts of these communications. The excerpts included over a dozen emails exchanged between PMW and the Senior Assistant Attorney General, as well as two letters sent from PMW to the Senior Assistant Attorney General.

. Petitioners' expert opined that this information was not truly "confidential," insofar as any successor law firm hired by Hoskins would have access to the information in PMW's possession because Hoskins would simply provide this information to his new counsel. Although Hoskins *843might well know a significant amount about the inner workings of All Care and the activities of its employees, it is undisputed that Hoskins did not attend every single investigatory interview with All Care's employees. Accordingly, Hoskins would not be able to provide replacement counsel with precisely the same kind of confidential, and damning, information about All Care as that which was provided to PMW during the pre-indictment interview process of All Care's employees.

. The majority asserts that the People did not meet their burden to show material adversity in part because they did not identify precisely by name which witness they intended to call to testify against Petitioners and did not explain precisely why that witness's testimony would be adverse. See maj. op. 129. It cites, however, no authority requiring such precision in identification. Additionally, it is a perfectly logical assumption that the testimony offered by any such employee would be adverse to Hoskins personally because the prosecution would be introducing it in support of their case against him. In any case, it was not manifestly arbitrary, unreasonable, or unfair for the trial court to rely on the People's representations about its trial plans.