Case 2:18-cv-02039-RDP Document 95 Filed 02/26/19 Page 1 of 42
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`FILED
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` 2019 Feb-26 AM 09:01
`U.S. DISTRICT COURT
`N.D. OF ALABAMA
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`UNITED STATES DISTRICT COURT
`FOR THE NORTHERN DISTRICT OF ALABAMA
`SOUTHERN DIVISION
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`SOUTHERN VISIONS, LLP,
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`Plaintiff,
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`v.
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`RED DIAMOND, INC.,
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`Defendant.
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`Case No.: 2:18-cv-02039-RDP
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`MEMORANDUM OPINION
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`The Wonder Years was an award-winning comedy-drama broadcast on ABC television
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`from 1988 to 1993. Set in a turbulent time in our nation’s history, the late 1960s and early 1970s,
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`the show portrays the life and perspectives of Kevin Arnold, a typical teenager raised by
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`stereotypical parents in Anytown, USA. In one particular episode, “Dance with Me,” Kevin’s
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`relationship with Lisa Berlini is blossoming (ever since their four-minute phone call). As they
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`joke around together in homeroom, the upcoming school dance is announced over the PA
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`system. Kevin decides it is time to take his burgeoning relationship with Lisa to the next level.
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`So, he asks her to the dance (in the most intimate form of communication known to twelve year
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`olds—by passing a note in class).
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`To his great glee, Lisa writes “OKAY!” (including a smiley face in the “o”). Kevin
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`cannot believe it. Lisa Berlini, who has “the best smelling head of hair in the seventh grade,” is
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`going to the dance with him; after all, he has it in writing. But soon after the bell rings, as Lisa
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`and Kevin are filing out of class, the taller, cooler Brad Gaines arrives on the scene. To Kevin’s
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`surprise, he asks Lisa to attend the dance with him. And to his dismay, mere minutes after saying
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`yes to Kevin, Lisa accepts Brad’s offer. After Brad smiles and walks off, Kevin, obviously
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`Case 2:18-cv-02039-RDP Document 95 Filed 02/26/19 Page 2 of 42
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`confused, confronts Lisa: “But you just said you’d go [to the dance] with me.” Lisa is
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`uncomfortable, but puts up a defense: “That was before Brad asked me. . . . I didn’t know he was
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`gonna ask me when I said ‘yes’ to you.”
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`Red Diamond, Inc., the defendant in this case, may have some sympathy for Kevin. Red
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`Diamond and the law firm Bradley Arant Boult Cummings (“Bradley”) have been to several
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`dances over the years. Over the better part of a decade, from 2009 to 2018, Bradley represented
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`Red Diamond in various small matters from time to time. But on December 23, 2018, Bradley
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`began representing Southern Visions, LLP in this significant patent infringement lawsuit against
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`Red Diamond. Bradley knew that its client Red Diamond objected strenuously to the
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`representation, but, much like Lisa Berlini, it was happy to accept what it doubtless viewed as a
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`substantial upgrade. Three days after saying “yes” to Southern Visions, on December 26, 2018,
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`Bradley withdrew from all matters in which it was representing Red Diamond.
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`Red Diamond has moved to disqualify Bradley from representing Southern Visions
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`against it in this lawsuit. (Doc. # 76). Among other things, Red Diamond claims Bradley violated
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`Alabama Rule of Professional Conduct 1.7(a), which generally forbids the simultaneous
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`representation of two directly adverse clients, when it began representing Southern Visions in
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`this lawsuit. The court held a hearing on the matter on February 11, 2019. After careful
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`consideration of the parties’ submissions and argument at the hearing, and for the reasons
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`explained below, the court agrees with Red Diamond. Bradley violated Rule 1.7(a) when it
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`began representing Southern Visions, and disqualification is an appropriate sanction for the
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`violation. Red Diamond’s motion to disqualify (Doc. # 76) is accordingly due to be granted.1
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`1 Because the court concludes Bradley should be disqualified for violating Rule 1.7(a), it does not address
`Red Diamond’s disqualification arguments based on Rules 1.9 and 1.10. Additionally, the court agrees with Bradley
`that the declaration of J. Douglas McElvy (Doc. # 76-5) is inadmissible under Federal Rule of Evidence 702 because
`it offers merely legal conclusions, which invade the province of the court and are not helpful to the trier of fact. See
`2
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`Case 2:18-cv-02039-RDP Document 95 Filed 02/26/19 Page 3 of 42
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`I.
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`Background
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`To provide relevant context, the court first summarizes Bradley’s prior representations of
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`Red Diamond and then reviews the circumstances that gave rise to Red Diamond’s
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`disqualification motion.
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`A.
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`Bradley’s Prior Representations of Red Diamond
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`Bradley began representing Red Diamond in January 2009. (Doc. # 76-1 at 1, ¶ 2). At
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`that time, Bradley attorney Ray Gibbons sent a letter to Red Diamond CEO William A. Bowron,
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`Jr. confirming “our engagement as legal counsel to provide general representation” to Red
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`Diamond. (Id. at 6). Since 2009, Bradley’s work for Red Diamond has been light and sporadic.
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`In 2011, pursuant to that “general representation” agreement, Red Diamond sought
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`Bradley’s assistance during the divorce of Tom Bowron. (Id. at 2, ¶ 3). Tom Bowron is the
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`brother of Red Diamond CEO William Bowron and a part owner of Red Diamond. (Id.). Because
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`Tom Bowron’s ownership interest in Red Diamond was at issue, Red Diamond’s financial
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`records were subpoenaed and several Red Diamond executives were deposed. (Id.). Bradley
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`attorney Stewart Cox was involved in objecting and responding to the financial subpoenas and
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`representing Red Diamond at the depositions of Red Diamond’s CEO William Bowron and its
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`CFO Sherman Pitts. (Docs. # 85-7 at ¶ 3; 76-1 at 2, ¶ 4).
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`Those sealed deposition transcripts, submitted by Red Diamond for the court’s in camera
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`review (Doc. # 86), show that Bradley received certain confidential, nonpublic information about
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`Red Diamond during the course of this representation. The information includes, broadly,
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`information about Red Diamond’s board of directors, director fees, distributions to owners,
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`ownership interests in the company, shareholder voting rights, audits, facilities, income, loans
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`Commodores Entm’t Corp. v. McClary, 879 F.3d 1114, 1128-29 (11th Cir.) (2018). Bradley’s motion to strike that
`declaration (Doc. # 84) is therefore due to be granted. The court has not considered the declaration in ruling on Red
`Diamond’s motion to disqualify.
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`3
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`Case 2:18-cv-02039-RDP Document 95 Filed 02/26/19 Page 4 of 42
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`and guarantees, family trusts, corporate structure, operating divisions, annual reports, customer
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`identities, company expenses, employee salaries, charitable giving, and other financial
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`information including debt, liabilities, total cost of goods sold, and total sales.
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`In March 2014, Red Diamond engaged Bradley to advise it on employee benefit matters,
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`including the company’s retirement and welfare benefit plans. (Docs. # 76-1 at 2, ¶ 6; 85-5 at
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`¶ 3). Bradley attorney David Joffe was principally responsible for handling these matters. (Doc.
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`# 85-5 at ¶ 3). Over the four years (2014-2018) that Joffe provided occasional advice to Red
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`Diamond about employee benefit matters, he billed only 26.5 hours for a total of $10,295. (Doc.
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`# 85-5 at 3, ¶ 6).
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`In December 2014, Red Diamond engaged Bradley to advise it on tax matters. (Doc.
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`# 76-1 at 2, ¶ 5). Bradley attorney Bruce Ely was principally responsible for this representation,
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`and he handled three tax matters for Red Diamond. In the first matter, Ely provided Red
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`Diamond advice about a pending tax audit by a private auditing company. (Doc. # 85-3 at ¶ 3).
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`That matter concluded in 2015. (Id.). In the second matter, which occurred in 2017, one of Red
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`Diamond’s tax officers was a witness in a proceeding before the Alabama Tax Tribunal relating
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`to a state audit of one of Red Diamond’s vendors. (Id. at ¶ 4). Bradley billed 13.25 hours to Red
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`Diamond on this matter. (Id.). Finally, Ely also billed fifteen minutes to Red Diamond in 2018
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`for his review of Red Diamond’s coffee-maker lease agreement for potential Alabama rental tax
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`issues. (Id. at ¶ 3).
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`Finally, in February 2016, Red Diamond engaged Bradley attorney Ethan Tidmore to
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`represent it in various debt collection matters. (Doc. # 76-1 at 3, ¶ 7). These matters involved
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`restaurants, food marts, or day cares that had purchased food supplies from Red Diamond on
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`credit and then defaulted on payment. (Doc. # 85-4 at ¶ 4). None of these debts exceeded
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`4
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`$25,000, and most were under $5,000. (Id. at ¶ 5). Some of these debt collection matters
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`remained pending when Red Diamond filed its motion to disqualify. (Doc. # 76-2 at 2, ¶ 4). As
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`recently as December 12, 2018, Tidmore met for lunch with Red Diamond’s Vice President of
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`Finance to discuss the status of these matters. (Id. at ¶ 5; Doc. # 85-4 at ¶ 14).
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`At the outset of most of the engagements described above, Red Diamond signed an
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`engagement letter purporting to provide Red Diamond’s prospective consent to Bradley
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`undertaking future representations of other clients “in any matter that is not substantially related”
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`to Bradley’s work for Red Diamond, “even if the interests of such clients in those other matters
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`are directly adverse” to Red Diamond, and “even if such representations would be
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`simultaneous.” (Doc. # 76-1 at 10, 15, 26). Bradley did not advise Red Diamond to seek
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`independent legal counsel about these advance conflict waivers, and Red Diamond did not seek
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`independent counsel about the waivers. (Doc. # 76-1 at 1-4).
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`The Current Dispute
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`B.
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`In September 2018, one of Red Diamond’s competitors, Southern Visions, filed a major
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`patent infringement action against it in the Northern District of Georgia. (Doc. # 1). Southern
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`Visions claims one of Red Diamond’s products -- a device for simultaneously brewing and
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`sweetening tea -- infringes several of Southern Visions’ patents. (Id. at 5-17). The action was
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`transferred to this court on December 11, 2018. (Doc. # 58).
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`On December 18, 2018, Bradley attorney Matthew Lembke received a call from one of
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`Southern Visions’ owners, Paul Stewart. (Doc. # 85-2 at ¶ 4). Stewart told Lembke that, in light
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`of the transfer to this court, Southern Visions planned to hire a lawyer in Birmingham to work on
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`this case and that Lembke was under consideration. (Id.). Lembke responded that he would need
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`to check for potential conflicts. (Id.).
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`5
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`After that call, Lembke asked his legal assistant, Amy Hersey, to run a conflicts check
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`with Southern Visions as the potential client and Red Diamond as the adverse party. (Id. at ¶ 6).
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`Before coming to Bradley, Hersey had worked as a legal assistant at the law firm Lightfoot,
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`Franklin & White (“Lightfoot”), which represents Red Diamond in this patent infringement suit.
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`(Id. at ¶ 3; Doc. # 76-3 at ¶ 2). When asked to run the conflicts check, Hersey immediately
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`informed Lembke that she had worked on the case while at Lightfoot. (Doc. # 85-2 at ¶ 6).
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`Lembke had another legal assistant run the conflicts check instead of Hersey, and she was
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`immediately screened from any involvement in the conflicts review process. (Id. at ¶¶ 6-7).
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`Hersey left the office for scheduled vacation from December 22-30, 2018 and was placed on paid
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`administrative leave (where she remains) on December 31, 2019. (Id. at ¶ 14; Doc. # 85-1 at
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`¶ 13).
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`The day after running the conflicts check, on December 19, 2018, Lembke called
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`Lightfoot attorney Harlan Prater to determine whether Hersey had obtained confidential
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`information about this case. (Doc. # 85-2 at ¶¶ 8-9). If she had, Lembke wanted to know whether
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`Red Diamond would consent to an ethical screen around Hersey to cure any conflict created by
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`her employment with Bradley. (Id.). At the hearing on February 11, 2019, counsel for Red
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`Diamond represented that this was the first time Red Diamond learned Bradley was considering
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`representing Southern Visions in this lawsuit.
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`On the afternoon of December 21, 2018, after completing the conflicts check and
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`learning that Red Diamond was a current client of Bradley’s, Lembke met with Southern Visions
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`personnel. (Id. at ¶ 11). At the hearing, Lembke described the meeting as a “beauty contest.”
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`While in the meeting, Lembke learned that Red Diamond had earlier that day told Bradley it did
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`not consider itself to have consented to any conflict created by Bradley’s representation of
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`6
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`Southern Visions, and that in any event Red Diamond revoked any such consent, effective
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`immediately. (Id. at ¶ 12; Doc. # 76-1 at 33-34). At the end of that meeting, at about 4:00 pm,
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`Southern Visions decided it wanted Bradley to represent it as lead counsel in this case. (Docs.
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`# 85-2 at ¶ 11; 92-1 at ¶ 3).
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`Earlier in the day on December 21, at 12:53 pm, Red Diamond CEO William Bowron
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`had sent an email to Bradley attorney Stewart Cox expressing his dismay that Bradley was
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`considering representing Southern Visions in this case. (Doc. # 76-1 at 33-34). Though Bowron
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`is not a lawyer, the email contains classic legalese. In the email, Bowron explained that he was
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`“frankly shocked” Bradley believed the general advance conflicts waivers Red Diamond had
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`signed entitled Bradley to sue Red Diamond while it continued to represent Red Diamond in
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`other matters. (Id. at 33-34) (internal quotation marks omitted). In his view, Bowron explained,
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`the advance conflict waivers did not permit Bradley to sue Red Diamond while it simultaneously
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`represented Red Diamond in other matters. (Id. at 34). But, Bowron went on, “[t]o the degree
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`that [Bradley] or any other relevant party, board, agency, or court could conclude that Red
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`Diamond has consented to [Bradley] representing Southern Visions in the Patent Lawsuit, I want
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`to be clear that Red Diamond unequivocally revokes that consent.” (Id.). Bowron also expressed
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`his view that Bradley’s attempt to represent Southern Visions was nothing “less than a violation
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`of the trust I placed in your firm.” (Id.).
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`On the morning of December 23, 2018, Lembke asked Bradley’s general counsel, John
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`Watson, to have the firm’s business review committee determine whether to approve Bradley’s
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`representation of Southern Visions in this lawsuit. (Doc. # 92-1 at ¶ 4). A few hours later,
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`Watson notified Lembke that the Southern Visions representation had been approved. (Id.). In
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`Lembke’s view, “Bradley represented Southern Visions beginning on December 23, 2018,
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`7
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`following approval of the representation by the firm.” (Id. at ¶ 8). December 23 “was the first
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`day on which Bradley billed any time for work in connection with” this lawsuit. (Id.). A review
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`of Bradley’s invoice to Southern Visions, submitted for the court’s in camera review (Doc.
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`# 93), shows that Bradley lawyers performed about six hours of work on this case on December
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`23 and 24, the two days before Christmas.
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`Three days after Bradley lawyers began work on this case for Southern Visions, on
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`December 26, 2018 at 11:18 am, Bradley’s general counsel sent an email to Red Diamond
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`withdrawing from its current representations of Red Diamond, effective immediately. (Doc.
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`# 85-1 at 7-8). The email stated that Bradley believed it could represent Southern Visions in this
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`case because of Red Diamond’s advance conflict waivers. (Id. at 7). Bradley explained that it
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`routinely requires large companies like Red Diamond to agree to such waivers in advance when
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`it handles relatively small matters for them, so that Bradley is not precluded from undertaking
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`more substantial representations on behalf of other clients in the future. (Id.). Bradley stated it
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`would not have agreed to represent Red Diamond in the few, small matters that it did without the
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`advance conflict waivers, and that the waivers were an express condition of Bradley’s
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`representation of Red Diamond. (Id.). The email closed by listing three pending debt collection
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`matters Bradley was handling for Red Diamond, noting that those matters had no pending
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`deadlines, and explaining that Red Diamond would need to obtain other legal counsel if it wished
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`for any further action to be taken in those matters. (Id. at 8).
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`Forty-three minutes after Bradley withdrew from representing Red Diamond, Bradley
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`attorney Matthew Lembke entered an appearance on behalf of Southern Visions in this case. But,
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`to be clear, it is undisputed that Bradley’s representation of Southern Visions began on
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`December 23, not December 26.
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`8
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`Case 2:18-cv-02039-RDP Document 95 Filed 02/26/19 Page 9 of 42
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`II.
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`Legal Standard
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`“Because a party is presumptively entitled to the counsel of his choice, that right may be
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`overridden only if ‘compelling reasons’ exist.” In re BellSouth Corp., 334 F.3d 941, 961 (11th
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`Cir. 2003). One compelling reason to deny a client counsel of its choice is counsel’s violation of
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`an applicable rule of professional conduct. See Banque de Rive, S.A. v. Highland Beach Dev.
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`Corp., 758 F.2d 559, 561 (11th Cir. 1985); Miccosukee Tribe of Indians of Fla. v. Cypress, 686
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`F. App’x 823, 825-26 (11th Cir. 2017); McGriff v. Christie, 477 F. App’x 673, 677-79 (11th Cir.
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`2012); Herrmann v. GutterGuard, Inc., 199 F. App’x 745, 747, 755-57 (11th Cir. 2006).
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`“The party moving to disqualify counsel bears the burden of proving the grounds for
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`disqualification.” Id. “A disqualification order is a harsh sanction, often working substantial
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`hardship on the client and should therefore be resorted to sparingly.” Herrmann, 199 F. App’x at
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`752 (quoting Norton v. Tallahassee Mem’l Hosp., 689 F.2d 938, 941 n. 4 (11th Cir.1982))
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`(internal quotation marks omitted).
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`Two sources of law govern motions to disqualify: the local rules of this court and federal
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`common law. Herrmann, 199 F. App’x at 752.
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`Local Rule 83.1(f) provides that attorneys appearing before this court are governed by:
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`(1) this court’s local rules; (2) the Alabama Rules of Professional Conduct (to the extent they are
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`not inconsistent with the court’s local rules); and (3) the American Bar Association Model Rules
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`of Professional Conduct (to the extent they are not inconsistent with either the court’s local or
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`Alabama rules). N.D. Ala. L.R. 83.1(f). The local rules also provide that violations of those
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`standards may result in a variety of sanctions, including “removal from a particular case.” Id.
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`Though state-court interpretations of the Alabama Rules of Professional Conduct are not
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`binding on a federal court tasked with determining whether an attorney should be disqualified
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`based on a violation of the Rules, they are persuasive authority concerning the Rules’ meaning.
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`See Clark v. Alfa Ins. Co., No. CIV.A. 00-AR-3296-S, 2001 WL 34394281, at *5 n.1 (N.D. Ala.
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`Feb. 7, 2001) (Acker, J.).
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`In deciding whether to grant a motion to disqualify, a district court must first “identify a
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`specific rule of professional conduct applicable to that court and determine whether the attorney
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`violated that rule.” Herrmann, 199 F. App’x at 755; see also Schlumberger Techs., Inc. v. Wiley,
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`113 F.3d 1553, 1561 (11th Cir. 1997) (“[W]here the district court’s disqualification order is
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`based on an allegation of ethical violation, . . . [t]he court must clearly identify a specific Rule of
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`Professional Conduct which is applicable to the relevant jurisdiction and must conclude that the
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`attorney violated that rule.”). A district court “may not disqualify an attorney on the basis of
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`some transcendental code of conduct that existed only in the subjective opinion of the court, of
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`which the attorney had no notice.” Schlumberger, 113 F.3d at 1561 (cleaned up).
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`If a violation of an ethical rule is found, disqualification may be an appropriate sanction.
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`See Herrmann, 199 F. App’x at 747 (affirming disqualification order where district court found
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`violation of Georgia Rule of Professional Conduct). Upon finding a violation of an applicable
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`ethical rule, a district court must then, “considering binding and persuasive federal case law,
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`decide whether or not the ethical lapse warrants disqualification.” Clark, 2001 WL 34394281, at
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`*3.
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`III.
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`Analysis
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`Red Diamond’s motion to disqualify requires the court to resolve two distinct issues.
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`First, the court must determine whether Bradley violated a rule of professional conduct
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`applicable in this court by undertaking representation of Southern Visions in this lawsuit.
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`Second, if such a rule violation occurred, the court must decide whether disqualification is an
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`appropriate sanction.
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`The local rules of this court are silent on attorney conflicts of interest, but they do
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`incorporate by reference the Alabama Rules of Professional Conduct and require attorneys
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`practicing in this court to abide by those rules. See N.D. Ala. L.R. 83.1(f). As explained below,
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`the court concludes (1) that Bradley violated Alabama Rule of Professional Conduct 1.7(a) and
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`(2) that disqualification is warranted.
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`A.
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`Bradley Violated Rule 1.7(a)
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`Red Diamond’s motion to disqualify calls for a straight-forward application of Alabama
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`Rule of Professional Conduct 1.7(a). The plain text of Rule 1.7(a) and other provisions of the
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`Rules of Professional Conduct all compel the conclusion that Bradley violated the rule when it
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`began representing Southern Visions on December 23, 2018. Bradley’s arguments to the contrary
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`are unpersuasive.
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`1.
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`The Rule 1.7(a) Violation
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`Rule 1.7(a) forbids a lawyer from simultaneously representing two clients who are
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`directly adverse to one another unless certain express conditions are met. The Rule provides:
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`A lawyer shall not represent a client if the representation of that client will be
`directly adverse to another client, unless:
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`(1) The lawyer reasonably believes the representation will not adversely affect
`the relationship with the other client; and
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`(2) Each client consents after consultation.
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`Ala. R. Prof. Conduct 1.7(a). Importantly, the restrictions Rule 1.7(a) imposes on individual
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`lawyers apply with equal force to law firms because, under Rule 1.10(a), one lawyer at a firm
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`may not “knowingly represent a client” when any other lawyer at the firm “would be prohibited
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`Case 2:18-cv-02039-RDP Document 95 Filed 02/26/19 Page 12 of 42
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`from doing so” by Rule 1.7 if practicing alone. Ala. R. Prof. Conduct 1.10(a); see also Ex parte
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`Osbon, 888 So. 2d 1236, 1238 (Ala. 2004) (“Rule 1.10(a) requires a law firm to be treated as a
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`single attorney.”).
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`Thus, by its plain terms, Rule 1.7(a) imposes two requirements before a law firm may
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`accept a representation that pits a new client against one of the firm’s existing clients. First, the
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`law firm must reasonably believe the new representation will not adversely affect its relationship
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`with its existing client. Second, both the new client and the existing client must consent “after
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`consultation.”
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`The facts show Bradley violated the plain language of Rule 1.7(a). It is undisputed that
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`Bradley began representing Southern Visions in this matter on December 23, 2018—the day its
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`business review committee approved the representation and Bradley lawyers began billing time
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`on the matter. (Doc. # 92-1 at ¶ 8). At that time, Bradley still represented Red Diamond in at
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`least three pending debt collection matters. In fact, Bradley did not withdraw from representing
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`Red Diamond in those matters until December 26, 2018—three days after it began working on
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`this lawsuit for Southern Visions and less than one hour before one of its lawyers appeared in
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`this case. (Doc. # 85-1 at 7-8). Thus, Bradley was representing two clients directly opposed to
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`one another in pending litigation for three days.
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`Under Rule 1.7(a), Bradley was permitted to undertake the Southern Visions
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`representation only if two conditions were met. Taking those conditions in reverse order, Bradley
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`was first required to obtain each client’s consent “after consultation.” Ala. R. Prof. Conduct
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`1.7(a)(2). Second, even assuming client consent, Bradley could not represent Southern Visions
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`unless it “reasonably believe[d] the representation [would] not adversely affect” its relationship
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`with Red Diamond. Ala. R. Prof. Conduct 1.7(a)(1). As explained below, the court concludes
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`Case 2:18-cv-02039-RDP Document 95 Filed 02/26/19 Page 13 of 42
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`that Red Diamond did not consent to Bradley’s representation of Southern Visions “after
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`consultation.” And, in any event, whether or not Red Diamond consented to the representation,
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`Bradley certainly could not have reasonably believed that suing Red Diamond for a substantial
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`sum of money on behalf of Southern Visions would not adversely affect its relationship with Red
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`Diamond. Bradley therefore failed to comply with both conditions of Rule 1.7(a) in accepting the
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`Southern Visions representation.
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`a.
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`Bradley Did Not Obtain Red Diamond’s Consent After Consultation
`to Represent Southern Visions
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`Bradley claims it complied with Rule 1.7(a)’s requirement of consent after consultation
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`by having Red Diamond sign engagement letters at the outset of its prior representations of Red
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`Diamond that contained advance conflict waivers. The advance waivers state that Red Diamond
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`agreed that Bradley could undertake future representations of other clients “in any matter that is
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`not substantially related” to Bradley’s work for Red Diamond, “even if the interests of such
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`clients in those other matters are directly adverse” to Red Diamond, and “even if such
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`representations would be simultaneous.” (Doc. # 76-1 at 10, 15, 26). Notwithstanding their broad
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`language, the court does not believe these advance waivers permitted Bradley to undertake the
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`Southern Visions representation, for two reasons: (1) Red Diamond never gave its consent “after
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`consultation” to the Southern Visions representation, through the advance waivers or otherwise;
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`and (2) even if Red Diamond had consented to Bradley’s representation of Southern Visions, it
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`unequivocally revoked that consent before Bradley began representing Southern Visions.
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`First, Rule 1.7(a) forbids concurrent conflicting representations unless each client
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`consents “after consultation.” The terms “consult” or “consultation” are defined in the Alabama
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`Rules of Professional Conduct as denoting “communication of information reasonably sufficient
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`to permit the client to appreciate the significance of the matter in question.” Ala. R. Prof.
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`Case 2:18-cv-02039-RDP Document 95 Filed 02/26/19 Page 14 of 42
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`Conduct, Terminology. And, by using the term “after,” Rule 1.7(a) requires client consent to
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`occur subsequent to such a communication. This directive recognizes the reality that it is highly
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`likely a client will not foresee and appreciate some future conflicts when asked to sign a generic
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`advance waiver. In other words, Rule 1.7(a) requires lawyers to obtain informed consent from
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`their clients before undertaking directly adverse representations. That did not happen here.
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`Neither the advance waivers Red Diamond signed nor any communications Bradley had with
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`Red Diamond after Southern Visions approached it about this case sufficed to provide the
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`consent after consultation Rule 1.7(a) requires.
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`Turning first to the advance waivers, a number of courts have held that broad, open-
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`ended advance conflict waivers like those Red Diamond signed are ineffective to provide
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`consent to future conflicts. See, e.g., Lennar Mare Island, LLC v. Steadfast Ins. Co., 105 F. Supp.
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`3d 1100, 1118 (E.D. Cal. 2015) (finding generic advance waiver signed by a sophisticated client
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`“too broad and too stale to cover the current conflict”); W. Sugar Coop. v. Archer-Daniels-
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`Midland Co., 98 F. Supp. 3d 1074, 1083-84 (C.D. Cal. 2015) (holding ineffective an “open-
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`ended” conflict waiver signed by a sophisticated client that (1) purported to indefinitely waive
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`conflicts in any matter not substantially related and (2) did not identify a potentially adverse
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`client, the types of potential conflicts, or the nature of the potential future representations);
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`Celgene Corp. v. KV Pharm. Co., No. 07-4819SDW, 2008 WL 2937415, at *8-10 (D.N.J. July
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`29, 2008) (same). Open-ended advance conflict waivers are especially suspect where a lawyer
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`seeks to rely on them to provide effective consent to directly adverse litigation between current
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`clients. As one court in this Circuit put it:
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`[F]uture directly adverse litigation against one’s present client is a matter of such
`an entirely different quality and exponentially greater magnitude, and so unusual
`given the position of trust existing between lawyer and client, that any document
`intended to grant standing consent for the lawyer to litigate against his own client
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`Case 2:18-cv-02039-RDP Document 95 Filed 02/26/19 Page 15 of 42
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`must identify that possibility, if not in plain language, at least by irresistible
`inference including reference to specific parties, the circumstances under which
`such adverse representation would be undertaken, and all relevant like
`information.
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`Worldspan, L.P. v. Sabre Grp. Holdings, Inc., 5 F. Supp. 2d 1356, 1360 (N.D. Ga. 1998).
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`Another way of stating this principle is to say that a court will not lightly conclude that a
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`client’s advance conflict waiver was truly intended to permit the law firm to later sue that current
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`client on behalf of another—not without clear evidence of such intent. The rationale behind this
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`clear-statement rule is the idea that some conflicts -- like suing a current client -- so break the
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`bonds of trust between client and lawyer that it is highly unlikely a client would knowingly and
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`voluntarily consent in advance to such a conflict. Indeed, the RESTATEMENT (THIRD) OF THE LAW
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`GOVERNING LAWYERS (which the court recognizes is only persuasive authority) endorses this
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`idea by prohibiting lawyers from suing a current client even with the client’s informed consent.
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`See § 122(2) (“Notwithstanding the informed consent of each affected client or former client, a
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`lawyer may not represent a client if . . . one client will assert a claim against the other in the
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`same litigation.”) (emphasis added). While that guidance is in no way binding, it is informative.
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`Bradley responds that Red Diamond’s advance waivers were effective because Red
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`Diamond is a sophisticated consumer of legal services and should have understood that signing
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`the waivers would permit Bradley to later sue it on behalf of another client. In support of this
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`argument, Bradley cites a comment in the RESTATEMENT (THIRD) OF THE LAW GOVERNING
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`LAWYERS which provides, “A client’s open-ended agreement to consent to all conflicts normally
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`should be ineffective unless the client possesses sophistication in the matter in question and has
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`had the opportunity to receive independent legal advice about the consent.” § 122, cmt. d
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`(emphasis added). But Bradley fails to note that the same section of the RESTATEMENT it cites—
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`the text, not the comment—expressly forbids the very representation Bradley undertook, even
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`Case 2:18-cv-02039-RDP Document 95 Filed 02/26/19 Page 16 of 42
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`when a client gives informed consent. See § 122(2) (“Notwithstanding the informed consent of
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`each affected client or former client, a lawyer may not represent a client if . . . one client will
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`assert a claim against the other in the same litigation.”) (emphasis added). Thus, at least in the
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`view of the commentators, whatever else sophisticated parties may provide advance consent to
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`under § 122, they cannot consent in advance—or ever—to their own lawyers suing them on
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`behalf of another client.
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`In light of these authorities, the court concludes that Red Diamond did not effectively
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`consent after consultation to Bradley representing Southern Visions in this lawsuit through the
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`advance waivers it signed. To be clear, the court sto