United States District Court, D. Montana
L. Christensen, Chief Judge
the Court is Defendant's Motion to Disqualify Counsel
(Doc. 142). For the reasons given below, the Court denies
George Leslie Manlove is the former CEO of Vann's, Inc.
("Vann's"), a Montana corporation that owned
and operated retail electronics and appliance stores
throughout the state before declaring bankruptcy in 2012. On
December 21, 2015, Manlove was indicted on two hundred
twenty-one felony criminal counts. The government alleges
that Manlove, along with CFO Paul Nisbet, conspired to
defraud their former employer.
Manlove's indictment, Vann's employees brought a
civil action against Manlove and Nisbet, alleging
responsibility for the corporation's bankruptcy. Three
members of the Vann's Board of Directors-William Honzel,
Cameron Lawrence, and Chris Abess-were deposed in the civil
matter as nonparties. The same three former Board members are
now expected to testify in the criminal proceeding on behalf
of the government.
bases his motion to disqualify on the fact that W. Adam
Duerk, one of the two Assistant United States Attorneys
prosecuting the case, formerly worked at the law firm that
represented Honzel, Lawrence, and Abess as non-party
witnesses in the civil matter. While the civil matter was
pending, Duerk was a shareholder at Milodragovich, Dale &
Steinbrenner, P.C. ("Milodragovich"). However,
Duerk was not personally involved in the representation of
Honzel, Lawrence, and Abess, and he did not work on the civil
matter. (Doc. 156-1 at 5-6; 156-4 at 2-3.) Nor has Duerk had
any contact with Honzel, Lawrence, and Abess on behalf of the
government; his co-counsel, Zeno Baucus, has handled
communications with the three former Board members and will
conduct their direct examination at trial. (Doc. 156-1 at 6.)
argues that Duerk's prosecution of this matter presents
an "ethical dilemma which cannot be resolved in a manner
to adequately assure the constitutional rights of Mr. Manlove
are protected." (Doc. 143 at 1-2.) He contends that
Milodragovich's representation of the former Board
members is imputed to Duerk, leading to violations of Montana
Rules of Professional Conduct 1.6, 1.7, 1.9, 1.10, and 1.11.
He has asked the Court to schedule a hearing before resolving
the issue. The government makes three responsive arguments:
(1) that Manlove lacks standing; (2) that the motion should
be denied as untimely; and (3) that there is no conflict with
the Rules. The Court determines that a hearing is
unnecessary, and it agrees with the government on all three
points, any one of which would be sufficient to deny
Court's determination of whether to disqualify an
attorney is reviewed for abuse of discretion. Paul E.
Iacono Structural Engr., Inc. v. Humphrey, 722 F.2d 435,
438 (9th Cir. 1983). The issue of standing raises a question
of this Court's authority under the United States
Constitution and is therefore governed by federal law. The
second and third issues raised by the government, which
concern whether disqualification is necessary and
appropriate, are governed by state law. In re County of
Los Angeles, 223 F.3d 990, 995 (9th Cir. 2000).
lacks standing to call for Duerk's disqualification.
Because neither Duerk nor his former law firm ever
represented Manlove, Duerk has no duty to Manlove under the
cited Montana Rules of Professional Conduct.
Court's powers are limited by the Constitution. It may
decide only "Cases" or "Controversies."
U.S. Const, art. Ill. § 2, cl. 1. It has no power to
adjudicate a dispute brought by one who lacks standing.
See Lujan v. Defs. of Wildlife, 504 U.S. 555, 560
(1992) ("[T]he core component of standing is an
essential and unchanging part of the case-or-controversy
requirement of Article III."). Standing may be found
only where where a party has "suffered an 'injury in
fact'-an invasion of a legally protected
interest...." Id. (citations omitted). Thus, a
litigant generally may not raise another person's legal
rights. Worth v. Seldin, 422 U.S. 490, 499 (1975).
Manlove has no "legally protected interest." In the
words of the Second Circuit, "[a]s a general rule,
courts do not disqualify an attorney on the grounds of
conflict of interest unless the former client moves for
disqualification." United States v. Rogers, 9
F.3d 1025, 1031 (2d Cir. 1993) (quoting In re Yarn
Processing Patent Validity Litig, 530 F.2d 53, 88 (5th
Cir. 1976)). As the annotation to Model Rule 1.9 states:
"The majority view is that only the former client has
standing to move for disqualification, unless an
'unethical change of sides [is] manifest and glaring'
or an ethical violation is open and obvious." Ellen J.
Bennett et al., Annotated Model Rules 173 (7th ed.
2011) (citing Yarn Processing, 530 F.2d at 83). The
Rules of Professional Conduct governing conflicts of interest
protect former and concurrent clients, not third parties such
as Manlove, and Manlove cannot enforce those clients'
rights. Nor can there be any violation so severe that it may
interfere with Manlove's constitutional rights. As a
partner at Milodragovich, Duerk received no confidential
client information; as a prosecutor, he has avoided contact
with the former clients. (Docs. 156-1 at 5-7, 156-2, 156-3,
156-4 at 2-3.)
the Court's resolution of the issue of standing is
dispositive of Defendant's motion, the Court nonetheless
addresses the remaining two issues raised by the parties in
Montana law, "a former client who is entitled to object
to an attorney representing an opposing party based on a
conflict of interest but who knowingly refrains from
asserting it promptly is deemed to have waived that
right." Schujf v. A.T. Klemens & Sons, 16
P.3d 1002, 1013 (Mont. 2000). "Alleged lawyer conflict
of interest problems should be brought up as early as
possible so that a determination may be made that does not
unduly prejudice any party." In re Guardianship of
Mowrer,979 P.2d 156, 160 (Mont. 1999). Even where a