Court Opinion

ID: 4210492
Source: CourtListenerOpinion
Date Created: 2017-10-10 21:01:17.178404+00
Date Added: 2024-06-11T14:40:38.432015
License: Public Domain

UNITED STATES DISTRICT COURT
                   FOR THE DISTRICT OF COLUMBIA
______________________________
                               )
JOSHUA M. AMBUSH               )
                               )
               Plaintiff,      )
                               )
          v.                   ) Civil Action No. 15-1237 (EGS)
                               )
MICHAEL ENGELBERG, et al.      )
                               )
               Defendants.     )
                               )

                       MEMORANDUM OPINION

     Pending before the Court is plaintiff Joshua Ambush's

motion to disqualify Neal Sher and Charles Both as counsel for

defendants Eliezer Perr, Yedidiah Perr, American Center for

Civil Justice, Inc. ("ACCJ"), American Center for Civil Justice,

Religious Liberty and Tolerance, Inc., American Center for

Recovery, LLC, American Center for Freedom of Religion, and Neal

Sher (collectively, "Center Defendants"). Plaintiff asks the

Court to disqualify Mr. Sher and Mr. Both from representing the

Center Defendants because of purported conflicts between counsel

and their current and former clients in violation of D.C. Rules

of Professional Conduct ("D.C. Rules") 1.7 and 1.9. Plaintiff

also asserts that disqualification of Mr. Sher is necessary

under D.C. Rule 3.7, which prohibits a lawyer from acting as an

advocate at a trial in which the lawyer is likely to be a

necessary witness. Having carefully considered the parties'
written submissions, including supplemental memoranda and

responses, plaintiff's motion is DENIED at this stage of the

proceedings, without prejudice to being refiled should the

circumstances warrant.

I.   BACKGROUND

     On May 30, 1972, three members of a Japanese terrorist

organization attacked passengers at the Lod Airport located near

Tel Aviv, Israel, killing and wounding dozens of individuals. In

2006, ACCJ, a non-profit organization that "advocate[s] for

individuals who have been victims of foreign terrorist attacks,"

and Mr. Ambush, an attorney, began working together to seek

compensation for various claimants injured as a result of the

Lod Airport massacre. Compl. ¶¶ 10, 33, 54-56. As part of his

work with ACCJ, Mr. Ambush filed a lawsuit – Franqui v. Syria,

No. 06-0734 (RBW) (D.D.C 2006) – on behalf of certain Puerto

Rican individuals and estates against those purportedly

responsible for the attack. Id. ¶¶ 54-55.

     In the summer of 2008, the governments of Libya and the

United States negotiated a treaty pursuant to which Libya, one

of the defendants in the Franqui action, agreed to create a

settlement fund to compensate victims of state-sponsored

terrorism, including victims of the Lod Airport massacre. Id. ¶¶

61-62. Shortly thereafter, Mr. Ambush and the ACCJ became

"embroiled in a dispute as to the management and control of the

                                2
pending claims before the Department of State and Ambush's

compensation," and ACCJ sued Mr. Ambush in an action captioned

American Center for Civil Justice v. Ambush, No 09-233 (PLF)

(D.D.C. 2011) ("Attorneys' Fees Litigation"). Id. ¶¶ 69-70, 75.

Attorneys Mr. Sher and Mr. Both, among others, represented ACCJ

in that proceeding and were involved in negotiating the

settlement agreement that resolved that case in 2012. See Pl.'s

Mot. to Disqualify Counsel ("Mot."), ECF No. 11 at 1-2; Defs.'

Opp. to Pl.'s Mot. to Disqualify Counsel ("Opp."), ECF No. 14 at

2. Along with ACCJ, Michael Engelberg, who was then president of

ACCJ, and Eliezer Perr, a member of the board of directors of

ACCJ, were parties to the settlement agreement. Compl. Ex. 1.

     The instant suit stems from a purported breach of that

settlement agreement. Plaintiff alleges that ACCJ, Dr.

Engelberg, Mr. Perr, Mr. Sher, and others interfered with his

efforts to seek compensation from his former clients and engaged

in other activity in violation of both the settlement agreement

and the Racketeering and Corrupt Organizations Act, 18 U.S.C. §

1962. See generally id. Attorney Efrem Schwalb is lead defense

counsel in this action and represents all of the Center

Defendants. Opp. at 2. On August 26, 2015, Mr. Sher and Mr. Both

entered an appearance on behalf of the Center Defendants by

signing a motion in which they requested additional time to

answer or otherwise respond to the complaint. See ECF No. 9; see

                                3
also D.C. Local Civil Rule 83.6(a) ("An attorney eligible to

appear may enter an appearance in a civil action by signing any

pleading described in Fed. R. Civ. P. 7(a)[.]"). In addition to

serving as counsel in this case and being a co-defendant, Mr.

Sher is ACCJ's General Counsel. Opp. at 2. Dr. Engelberg is

represented by separate counsel.

      In this motion, plaintiff seeks to disqualify Mr. Sher and

Mr. Both from representing the Center Defendants. According to

plaintiff, Mr. Sher's role in this litigation as both counsel

and defendant violates D.C. Rule 1.7 because it presents

opportunities for "multiple conflicts of interest" to arise

between Mr. Sher's own personal interests and the interests of

the Center Defendants. Plaintiff also asserts that Mr. Sher and

Mr. Both cannot represent the Center Defendants in this

litigation because the interests of the Center Defendants are

materially adverse to the interests of Dr. Engelberg, who is a

former client of Mr. Sher and Mr. Both. Finally, because Mr.

Sher was allegedly "involved in the RICO conspiracy" and

negotiating the settlement agreement underlying this suit,

plaintiff insists that Mr. Sher will be a necessary witness,

thus requiring disqualification under D.C. Rule 3.7.

II.   STANDARD OF REVIEW

      A motion to disqualify counsel is committed to the sound

discretion of the district court. Palumbo v. Tele-Commc'ns,

                                   4
Inc., 157 F.R.D. 129, 131 (D.D.C. 1994); see also Groper v.

Taff, 717 F.2d 1415, 1418 (D.C. Cir. 1983) ("the district court

bears responsibility for supervising the members of its bar and

its exercise of this supervisory duty is discretionary"). The

disqualification of a party's chosen counsel, however, is a

"drastic measure that is disfavored by the courts." Konarski v.

Donovan, 763 F. Supp. 2d 128, 135–36 (D.D.C. 2011) (citations

and internal quotation marks omitted). Accordingly,

"disqualification motions should be subject to particularly

strict judicial scrutiny." Id. Strict scrutiny is warranted

because disqualification "negates a client's right to freely

choose his counsel," Headfirst Baseball LLC v. Elwood, 999 F.

Supp. 2d 199, 204 (D.D.C. 2013) (internal quotation marks and

citation omitted), and because such motions may be "used as

'procedural weapons' to advance purely tactical purposes," In re

Rail Freight Fuel Surcharge Antitrust Litig., 965 F. Supp. 2d
104, 110 (D.D.C. 2013) (citation omitted).

     The District of Columbia Rules of Professional Conduct

govern the practice of law – and the qualification of counsel –

in this District. See LCvR 83.15(a) (adopting the Rules of

Professional Conduct as adopted by the District of Columbia

Court of Appeals); D.C. Rules Prof. Conduct 8.5(b)(1) ("[f]or

conduct in connection with a matter pending before a tribunal,

the rules to be applied shall be the rules of the jurisdiction

                                5
 in which the tribunal sits"); see also Paul v. Judicial Watch,

 Inc., 571 F. Supp. 2d 17, 20 (D.D.C. 2008). In considering a

 motion to disqualify counsel, the district court must conduct a

 two-step inquiry: first, it must determine "whether a violation

 of an applicable Rule of Professional Conduct has occurred or is

 occurring," and second, "if so, whether such violation provides

 sufficient grounds for disqualification."   Headfirst Baseball,
999 F. Supp. 2d at 204-05 (citation and internal quotation marks

 omitted). The D.C. Circuit has cautioned that, even where a

 violation is found, disqualification is warranted only "rarely"

 in cases where there is a "serious question as to counsel's

 ability to act as a zealous and effective advocate for the

 client" or the "substantial possibility of an unfair advantage

 to the current client because of counsel's prior representation

 of the opposing party[.]" Koller By & Through Koller v.

 Richardson-Merrell Inc., 737 F.2d 1038, 1056 (D.C. Cir. 1984),

 vacated on other grounds, 472 U.S. 424 (1985).

III.   ANALYSIS

       Plaintiff seeks to disqualify Mr. Sher and Mr. Both based

 on two primary theories: (1) conflicts of interest under D.C.

 Rules 1.7 and 1.9; and (2) D.C. Rule 3.7's prohibition against a

                                  6
lawyer acting as an advocate when the lawyer is also a necessary

witness.   The Court addresses each argument in turn. 1

             A. Conflict of Interest

     In his motion, plaintiff describes two sources of potential

conflicts of interests.

     First, plaintiff points to Mr. Sher's role in this matter

as both a co-defendant and an attorney representing the Center

Defendants. Plaintiff contends that Mr. Sher's dual role

violates D.C. Rule 1.7(b)(4), which requires disqualification

where a "lawyer's professional judgment on behalf of the client

will be or reasonably may be adversely affected by . . . the

lawyer's own financial, business, property, or personal

interests." See Mot. at 9-10.

     Second, plaintiff argues that Mr. Sher and Mr. Both's prior

representation of Dr. Engelberg in the Attorneys' Fees

Litigation forecloses their role as counsel for the Center

Defendants in this case under D.C. Rule 1.9. See Mot. at 10-12.

According to plaintiff, this suit is substantially related to

the Attorneys' Fee Litigation and the interests of Dr. Engelberg

1    Plaintiff also suggests that Mr. Sher should be
disqualified from this case because he was previously disbarred
from the District of Columbia bar. See Mot. at 9. But Mr. Sher
is currently admitted to practice before this Court, see Opp.
Ex. A, and it is the Court's understanding that Mr. Sher
properly disclosed his prior disbarment on his application. As
such, the Court declines to disqualify Mr. Sher on that basis
alone.
                                 7
are now materially adverse to the interests of the Center

Defendants. Id. As evidence of this adversity, plaintiff points

to the derivative suit filed in 2014 by Dr. Engelberg against

ACCJ, Mr. Perr, and others ("New York state action") in which

Dr. Engelberg alleges that Mr. Perr and his son "used their

respective positions of authority . . . to siphon off, both

directly and indirectly, over $20 million dollars of charitable

funds to other shell . . . entities, owned and controlled by

them." Mot. Ex. 1 at 2-3.

     Center Defendants assert that neither of these scenarios

creates a disqualifying conflict of interest and further add

that plaintiff lacks standing to raise these concerns. Because

the Court agrees with Center Defendants on the threshold issue

of standing, plaintiff's motion to disqualify counsel based on

conflict-of-interest grounds is denied.

     Before a federal court can exercise its jurisdiction, a

movant must establish, as an "irreducible constitutional

minimum," that he has suffered "an injury in fact" that is

caused by the challenged conduct and likely redressable through

relief from the court. Lujan v. Defs. of Wildlife, 504 U.S. 555,

560-61 (1992). Even in instances where a movant has alleged some

injury, absent exceptional circumstances, he must generally

"assert his own legal rights and interests, and cannot rest his

claim to relief on the legal rights or interests of third

                                8
parties." Warth v. Seldin, 422 U.S. 490, 499 (1975); cf.

Kowalski v. Tesmer, 543 U.S. 125, 130 (2004) (a third party may

be permitted to litigate the rights of another where, inter

alia, there is a hindrance in the ability of the person

possessing the right to protect his own interests). A party

seeking disqualification of counsel is not excepted from this

requirement – i.e., he, too, must establish standing to pursue

his disqualification claim. See, e.g., Pigford v. Veneman, 355
F. Supp. 2d 148, 156–57 (D.D.C. 2005) (movants "must demonstrate

separate standing – personal and individual injury to them as a

result of class counsel's conduct – in order to pursue" their

claim to disqualify class counsel).

     The D.C. Circuit has "not yet spoken" as to whether a non-

client has standing to disqualify opposing counsel. Cauderlier &

Assocs., Inc. v. Zambrana, No. CIVA 05-1653 ESHJMF, 2006 WL
3445493, at *3 (D.D.C. Oct. 6, 2006). Other courts are split:

some have found that non-clients have standing to seek opposing

counsel's disqualification based on an attorney's duty to report

any ethical violations to the court, while others have refused

to confer standing on "unauthorized surrogates" who cannot

demonstrate that they are personally harmed by purported

conflicts of interests between counsel and counsel's clients.

Compare Kevlik v. Goldstein, 724 F.2d 844, 847–48 (1st Cir.

1984) (because an attorney with unprivileged knowledge of a

                                9
violation of an ethical rule has an obligation to "report such

knowledge to a tribunal or other authority," "disqualification

may rightly be sought by opposing counsel even though he/she is

not representing the aggrieved client"), with In re Yarn

Processing Patent Validity Litig., 530 F.2d 83, 88 (5th Cir.

1976) ("To allow an unauthorized surrogate to champion the

rights of the former client would allow that surrogate to use

the conflict rules for his own purposes where a genuine conflict

might not really exist."); see also, e.g., Colyer v. Smith, 50
F. Supp. 2d 966, 969-72 (C.D. Cal. 1999) (collecting cases and

noting that courts allowing a non-client to challenge the

qualification of counsel on conflict grounds have required that

the non-client "establish a personal stake in the motion to

disqualify to satisfy the 'irreducible constitutional minimum'

of Article III"); Santander Sec. LLC v. Gamache, No. CV 17-317,

2017 WL 1208066, at *3-4 (E.D. Pa. Apr. 3, 2017) (collecting

cases). Notably, even courts generally reluctant to confer

standing on non-clients have recognized that standing may exist

where "the ethical breach so infects the litigation in which

disqualification is sought that it impacts the moving party's

interest in a just and lawful determination of [his] claims."

Colyer, 50 F. Supp. 2d at 971.

     Here, plaintiff is not and never has been a client of Mr.

Sher or Mr. Both. Rather, plaintiff seeks disqualification of

                                 10
Mr. Sher and Mr. Both based on alleged conflicts of interest

between (1) Mr. Sher and his co-defendants and (2) Mr. Sher and

Mr. Both's previous and current clients – i.e., Dr. Engelberg

and the Center Defendants, respectively. Plaintiff claims he has

standing to do so because Mr. Sher and Mr. Both's continued

representation of the Center Defendants in this case would so

infect the litigation as to impact his interest in the just

adjudication of his claims. See Mot. at 7-8. In other words,

according to plaintiff, disqualification of opposing counsel is

"absolutely necessary to preserve the integrity of the adversary

process" and preserve the "fairness of the proceedings." Id. at

7, 13. Plaintiff cites to a number of cases, each of which

confirm the principle that counsel must be disqualified where

their ethical breaches infect the litigation – but none of which

give plaintiff his desired result. See id. at 7 (citing Pigford,
355 F. Supp. 2d at 157 (denying motion to disqualify for lack of

standing); Koller, 737 F.2d at 1064 (reversing district court's

revocation of counsel's pro hac vice appearances and

disqualification of law firm); Cauderlier, 2006 WL 3445493, at

*3 (finding defendant lacked standing because "[h]e [could] not

possibly claim that his right to a fair resolution of his claims

w[ould] be affected by what law firm represent[ed] his

opponents")). To the contrary, as these cases make clear, courts

are reluctant to disqualify counsel on fairness grounds unless

                               11
the movant clears a high bar by, for example, showing that the

conflict is so glaring that it "undermines the Court's

confidence in the vigor of the attorney's representation of his

or her client," Pigford, 355 F. Supp. 2d at 166-167, or

"threatens the non-client with immediate and actual harm by

creating the substantial risk to her right to a fair and just

determination of her claims," Cauderlier, 2006 WL 3445493, at

*3.

      Plaintiff has failed to clear that high bar here. With

respect to plaintiff's concern that Mr. Sher's personal interest

as a co-defendant will cloud his judgment as an advocate for the

Center Defendants, the Court finds compelling that, in their

opposition brief, (1) the Center Defendants assert that they

have provided consent – after being advised by another attorney

– as to Mr. Sher's continued representation; and (2) Mr. Sher

maintains that he reasonably believes that he will be able to

provide competent and diligent representation to his co-

defendants. See Opp. at 8-9; D.C. Rule 1.7(c) (a lawyer may

represent a client despite a conflict if "[e]ach potentially

affected client provides informed consent" and "[t]he lawyer

reasonably believes that the lawyer will be able to provide

competent and diligent representation to each affected client").

Likewise, with respect to the allegations of adversity between

the Center Defendants and Dr. Engelberg, Dr. Engelberg himself –

                                12
the client whose interests are alleged to be harmed – has stated

through his counsel that he does not object to Mr. Sher and Mr.

Both's role in this case at this stage in the proceedings. See

Opp. Ex. C. See also D.C. Rule 1.9 (permitting a lawyer who

formerly represented a client to represent another person in a

substantially related matter in which that person's interests

are materially adverse to the interests of the former client if

the former client gives informed consent).

     In short, notwithstanding plaintiff's claims to the

contrary, the Court finds that any alleged conflicts here simply

do not rise to the level where they affect the integrity of the

proceedings or threaten plaintiff's right to a just

determination of his claims. Accordingly, plaintiff lacks

standing to seek disqualification of Mr. Sher and Mr. Both on

conflict-of-interest grounds.

            B. Lawyer as Necessary Witness

     Plaintiff also asserts that Mr. Sher should be disqualified

under D.C. Rule 3.7, which prohibits a lawyer from acting as an

advocate and a witness in the same matter.

     As a threshold matter, the Court finds that plaintiff does

have standing to seek disqualification on this ground. As the

comments to D.C. Rule 3.7 make clear, "[c]ombining the roles of

advocate and witness can prejudice" the opposing party's rights

in litigation by, for example, limiting an opposing party's

                                13
access to evidence or affecting the orderly conduct of the

trial. See also, e.g., Colyer, 50 F. Supp. 2d at 974 (finding

that non-client plaintiff did have standing to seek

disqualification of opposing counsel who might be needed as a

fact witness, "as it directly affect[ed] [plaintiff's] access to

evidence and the orderly conduct of the trial"); Xcentric

Ventures, LLC v. Stanley, No. CV-07-00954-PHX-NVW, 2007 WL
2177323, at *2 (D. Ariz. July 27, 2007) (finding that

"Defendants have standing to move for disqualification on the

ground of [opposing counsel's] simultaneous service as counsel

and witness in the case").

      Plaintiff claims that there is "no question" that Mr. Sher

will be a necessary witness in this case given his alleged

involvement in the RICO conspiracy that forms the basis of this

suit. While that may be so, on its face, Rule 3.7 only applies

to trial counsel. See D.C. Rule 3.7 ("A lawyer shall not act as

advocate at a trial in which the lawyer is likely to be a

necessary witness[.]") (emphasis added). As such, even a lawyer

who is likely to be a necessary witness at trial is not

disqualified from representing his client during pretrial

proceedings. See D.C. Ethics Opinion 228 ("Given the Rule's

express limitation and the trial-stage purposes it is intended

to serve, we conclude that a lawyer who is likely to be a

necessary witness at trial may represent a client in most pre-

                               14
trial matters. This includes, but is not limited to, taking

witness depositions, pre-trial discovery and argument of most

pre-trial motions, and also assisting in trial preparation.");

see also Canfield v. Stone, No. CIV. A. 93-1022(NHJ), 1993 WL
468451, at *1–2 (D.D.C. Oct. 25, 1993) (concluding that any

different result "would deprive the defendant of his chosen

representative before it is clear that trial will be

necessary").

      Accordingly, plaintiff's objections to Mr. Sher's role are

premature at this stage in the proceedings. Should plaintiff's

complaint survive any dispositive motions and proceed toward

trial, plaintiff may renew this motion to disqualify Mr. Sher as

trial counsel. 2

IV.   Conclusion

      For the reasons set forth above, it is ORDERED that

plaintiff Joshua Ambush's motion to disqualify Mr. Sher and Mr.

2    Plaintiff also suggests that, given the eventual
possibility of disqualification later in the proceedings, the
Court should disqualify Mr. Sher now to avoid "delaying the
resolution of the case and causing additional expenses to all
the parties." Mot. at 8. Given that the Center Defendants
already have retained Mr. Schwalb as lead counsel, and given
that plaintiff does not allege any disqualifying conflicts as to
Mr. Schwalb, it is not clear to the Court that disqualifying Mr.
Sher and/or Mr. Both at a later stage would cause significant
delay or create additional expenses. In any event, because Rule
3.7 expressly limits itself to advocacy at trial, the Court is
reluctant to disqualify defendants' chosen counsel at this
juncture.
                                15
Both as counsel for Center Defendants is DENIED. To the extent

that it becomes apparent that Mr. Sher will be a necessary

witness at trial, plaintiff may re-raise his arguments for

disqualification at that time. A separate Order accompanies this

Memorandum Opinion.

     SO ORDERED.

Signed:   Emmet G. Sullivan
          United States District Judge
          October 10, 2017

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