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CytImmune Sciences, Inc. v. Paciotti

United States District Court, D. Maryland, Southern Division

January 5, 2017

CYTIMMUNE SCIENCES, INC., Plaintiff,
v.
GIULIO PACIOTTI, Defendant.

          MEMORANDUM OPINION AND ORDER

          Paul W. Grimm United States District Judge

         Plaintiff CytImmune Sciences, Inc. (“CytImmune”) filed suit against Dr. Giulio Paciotti alleging that he breached an Assignment of Inventions, Non-Disclosure, Non-Solicitation and Non-Competition Agreement (“Agreement” or “NDA”) that he entered while working for the company. Verified Compl., ECF No. 2. CytImmune has moved to disqualify Dr. Paciotti's attorney, Jonathan Rose, and his current firm, Alston & Bird LLP (“Alston”). ECF No. 27. CytImmune contends that Rose and his former firm, Katten Muchin Rosenman LLP (“Katten”), served as CytImmune's outside counsel from 2004 through 2007, during which time Katten lawyers, including Rose, reviewed and commented on a non-compete agreement that was essentially identical to the one at issue in this case. Accordingly, CytImmune argues that Rose and his current firm have a conflict of interest in representing Dr. Paciotti that warrants disqualification and that Rose is a necessary witness in the case, an independent basis for disqualification. The Motion is fully briefed, Pl.'s Mem. Supp. Mot. Disqualify, ECF No. 27-1; Def.'s Opp'n Mot. Disqualify, ECF No. 66, [1] and no hearing is necessary, Loc. R. 105.6 (D. Md.). Because I find a significant risk that Mr. Rose's prior representation of CytImmune materially limits his representation of Dr. Paciotti, I will grant CytImmune's Motion.

         Background

         In 2003, Jonathan Rose began a four-year tenure as a partner at Katten focusing on labor-and employment-law matters. Rose Decl. ¶ 2, ECF No. 66-1; Schwinger Decl. ¶ 7, ECF No. 67-1; Tyler Decl. ¶ 5, ECF No. 65-1.[2] During Rose's tenure, Katten served as outside counsel for CytImmune. Marder Decl. ¶ 4, ECF No. 27-2. Mitchell Marder, who currently serves as CytImmune's Chief Legal Officer, also worked at Katten during the same time period, id. ¶¶ 2-3; Schwinger Decl. ¶ 6, and participated in the firm's representation of CytImmune, see Marder Decl. ¶¶ 6, 8 12. Robert Tyler, a Katten associate, also participated in the representation by offering legal advice on corporate-law matters. Tyler Decl. ¶¶ 3-5.

         In his declaration, Marder states that Katten attorneys reviewed and commented on a NDA template developed in 2005 that is identical to the Agreement signed by Dr. Paciotti that is central to the dispute in this case. Marder Decl. ¶ 5. He also specifically asserts that he asked Rose to review the NDA in January 2007 to determine its validity and enforceability under Maryland law and to remedy any legal defects in the document. Id. ¶ 12. According to Marder, Rose identified no deficiencies in the NDA. Id. ¶¶ 17, 22-23, 25, 30. Rose disputes Marder's account. Outside of “vague recollection[s]” based on documents discovered during the litigation, Rose has no “recollection whatsoever of ever working with [CytImmune] while at Katten” or any “recollection of being aware of the existence of a company called CytImmune.” Rose Decl. ¶ 3. Despite the fogginess of his memory on the topic, Rose incongruously states that he “had no involvement at all in the drafting of CytImmune's boilerplate non-compete agreement, and was never requested to provide a general (or specific) opinion on whether the non-compete agreement was enforceable as drafted.” Id. ¶ 7.

         Rose admits, however, that the contemporaneously created documentary evidence produced in support of CytImmune's Motion demonstrates his involvement in Katten's work for CytImmune during a one-week period in January 2007. Rose Decl. ¶ 4. That week, Marder, Tyler, Rose, and Katten associate Hana Brilliant all participated in drafting a termination letter and severance agreement for an outgoing employee. Marder Decl. ¶¶ 8, 11; Rose Decl. ¶ 6. In response to a chain of emails discussing the draft letter, CytImmune CEO Lawrence Tamarkin sent a copy of the company's NDA, which included a non-compete agreement, to Brilliant, Rose, Marder, and Tyler. Email from Lawrence Tamarkin, CEO, CytImmune Sciences, Inc., to Hana Brilliant, Jonathan Rose, Mitchell Marder, and Robert Tyler, Katten Muchin Rosenman, LLP (Jan. 23, 2007, 10:13 A.M.), Unredacted Marder Decl. Attach. 1, at 40-41, ECF No. 53.[3] In all relevant respects, the NDA Tamarkin provided to Katten is identical to the Agreement signed by Dr. Paciotti. Compare Redacted Marder Decl. Attach. 1, at 42-46, ECF No. 27-2, with Pl.'s Opp'n Summ. J. Ex. C, ECF No. 74-2. Shortly after receiving the copy of the NDA, Brilliant emailed Tamarkin, Rose, Marder, and Tyler to advise that she had prepared two alternative severance-agreement drafts in both of which she referenced the NDA. Email from Hana Brilliant, Associate, Katten Muchin Rosenman, LLP, to Lawrence Tamarkin, CEO, CytImmune Sciences, Inc., Jonathan Rose, Mitchell Marder, and Robert Tyler, Katten Muchin Rosenemann, LLP (Jan. 23, 2007, 11:38 A.M.), Unredacted Marder Decl. Attach. 1, at 51-52. During this same one-week period, Tyler emailed CytImmune employees to recommend that an unidentified “subcontractor . . . execute CytImmune's NDA, ” and expressed his opinion that requiring the subcontractor to sign the document might “appear a bit heavy handed, but . . . would protect CytImmune.” Email from Robert Tyler, Katten Muchin Rosenman, LLP, to CytImmune Sciences, Inc. (Jan. 22, 2007, 2:08 P.M.), Unredacted Marder Decl. Attach. 1, at 34.[4] The email's subject line indicates that he reached this conclusion at a time proximate to a phone conversation he had with Rose, though Tyler did not specify the subject their conversation. See Redacted Marder Decl. Attach 1, at 34 (“Subject: Re: Spoke with Jonathan, he should be giving you a call soon”).

         In March 2016, CytImmune filed its complaint against Dr. Paciotti in the Circuit Court for Montgomery County. Verified Compl., ECF No. 2. Dr. Paciotti's out-of-state attorney retained Rose as local counsel to handle the case. Pl.'s Mem. Supp. Mot. Disqualify 5. Shortly thereafter, CytImmune notified Rose of its belief that he had a conflict of interest in the case. Pl.'s Mem. Supp. Mot. Disqualify Ex. B, at 63-64, ECF No. 27-2.[5] Rose consulted his firm's general counsel, who concluded that no conflict existed. Id. at 63. Dr. Paciotti then removed the case to this Court, Notice of Removal, ECF No. 1, where CytImmune filed the instant Motion to Disqualify.

         Standard of Review

         As explained in Jarallah v. Thompson, 123 F.Supp.3d 719 (D. Md. 2015):

A motion to disqualify is a serious matter, which must be decided on a case-by-case basis. This is so because two significant interests are implicated by a disqualification motion: the client's free choice of counsel and the maintenance of the highest ethical and professional standards in the legal community. Nevertheless, the guiding principle in considering a motion to disqualify counsel is safeguarding the integrity of the court proceedings. Thus, this court must not weigh the competing issues with hair-splitting nicety but, in the proper exercise of its supervisory power over the members of the bar and with a view of preventing an appearance of impropriety, [this Court] is to resolve all doubts in favor of disqualification.

Id. at 731 (quoting Penn Mut. Life Ins. Co. v. Berck, No. DKC 09-0578, 2010 WL 3294309, at *3) (D. Md. Aug. 20, 2010) (alterations in original)). In light of this balance, the movant bears “a high standard of proof, ” Franklin v. Clark, 454 F.Supp.2d 356, 364 (D. Md. 2006), to demonstrate that the attorney has violated “a rule of professional conduct that requires disqualification, ” Jarallah, 123 F.Supp.3d at 732; see also Loc. R. 704 (making applicable the Maryland Lawyer's Rules of Professional Conduct (MLRPC) established by the Maryland Court of Appeals).

         Discussion

         CytImmune contends that Rose should be disqualified pursuant to MLRPC 1.9, which governs an attorney's obligation to a former client, MLRPC 1.7, which addresses conflicts of interest as they pertain to current clients, and MLRPC 3.7, which restricts a lawyer's ability to serve as a witness in his client's case. Pl.'s Mem. Supp. Mot. Disqualify 8. And as MLRPC 1.10 imputes attorneys' conflicts to their firms, CytImmune also asserts that Alston must be disqualified. Id. Finally, CytImmune contends that Rose should be disqualified pursuant to MLRPC 1.16, which requires a lawyer to decline or terminate representation that would violate the Rules. Id. 27. As violation of another Rule is a predicate for violation of MLRPC 1.16, I restrict my analysis to the aforementioned Rules.

         MLRPC ...


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