Westinghouse, 580 F.2d at 1319. The court added that a "fiduciary relationship may result because of the nature of the work performed and the circumstances under which confidential information is divulged." Id. at 1320.
Although the co-defendant disqualification example in Westinghouse would have fallen under Canon 9 of the ABA Model Code of Professional Responsibility because it creates the "appearance of impropriety," the example applies with equal force under Rule 1.9 of both the N.D. Ill. R.P.C. and the ABA Model Rules. While Rule 1.9 generally rejected the "appearance of impropriety" standard of Canon 9 in favor of a fact-based test, it did not reject the "appearance of impropriety" standard in so far as that standard embodies the substantial relationship test. Patrick E. Donovan, Comment, Serving Multiple Masters: Confronting The Conflicting Interests That Arise In Superfund Disputes, 17 B.C. Envtl. Aff. L. Rev. 371, 378-79 (1990). The court's reading of International Paper Co. v. Lloyd Mfg. Co., 555 F. Supp. 125 (N.D. Ill. 1982) comports with this view. In International Paper Co., Judge Hart applied the "substantially similar Gulf Oil test" to a co-defendant situation. Id. at 134. When applied under Canon 9 of the ABA Model Code of Professional Responsibility, that test required an additional showing that the attorney in question "actually received confidential information" and that the information could be used against the co-defendant. Id. Thus, the difference between a disqualification under Canon 4 and Canon 9 in applying the substantial relationship test is that under Canon 9, no presumption exists that the attorney was privy to confidential information. Accordingly, the court finds that the substantial relationship test, as it has been applied under Canon 9, applies with equal efficacy under Rule 1.9, and where there is no direct or express attorney-client relationship, it requires a showing that the attorney in question was privy to confidential information. See Rio Hondo Implement Co. v. Euresti, 903 S.W.2d 128, 132 (Tex. Ct. App. 1995) (applying the test under Rule 1.9).
By definition, therefore, there must actually have been an exchange of confidential information. Thus, GTE's assertion that there is a presumption that confidential information was exchanged is in error, as the presumption exists only where there is an express attorney-client relationship and the matters are substantially related. See Wilson P. Abraham Const. Corp., 559 F.2d 250, 253 (5th Cir. 1977) (holding that there is no presumption absent a direct attorney-client relationship). Accordingly, the court must inquire whether confidential information was exchanged between GTE and Chrysler and their respective counsel, as well as consider the circumstances under which such exchanges occurred, in order to determine whether a fiduciary relationship existed.
Ordinarily, the proper method for a district court to make such a determination would be to either conduct an evidentiary hearing or review evidence submitted in the form of affidavits. See Cromley v. Board of Educ. of Lockport Township High Sch. Dist. 205, 17 F.3d 1059, 1064 (7th Cir.), cert. denied, 130 L. Ed. 2d 28, 115 S. Ct. 74 (1994). While neither side has submitted affidavits or requested an evidentiary hearing, they have not contested each other's statement of facts.
Accordingly, the court shall determine whether GTE has carried its burden to show an exchange of confidential information based on the undisputed facts contained in the parties' memorandums.
The sole purpose of the Cost Recovery Committee was to jointly investigate and pursue any additional PRPs that may exist. The mere fact that GTE and Chrysler executed confidentiality agreements, by itself, does not mean that their respective attorneys exchanged confidential information. It is not disputed, however, that pursuant to their agreement, Hinshaw & Culbertson disseminated the investigation results to each member's respective counsel, including Faletto. In addition, it is undisputed that counsel for each member, including Faletto, jointly discussed the investigation results, strategy, and legal merit of proceeding against additional PRPs, including Dean Foods. These undisputed facts alone support a finding that confidential information was exchanged between the co-plaintiffs and their respective counsel. The fact that no officer, shareholder, or employee of GTE (excluding its counsel) ever consulted with Faletto with the expectation that Faletto or any Howard & Howard attorney would provide legal representation to GTE does not change this conclusion. Were this a requirement in every situation, no co-defendant (or in this case, co-plaintiff) who retained its own counsel would be able to demonstrate the existence of a fiduciary relationship. Rather, it is sufficient that the information collected by GTE and its counsel from the investigation was jointly shared, discussed, and disseminated between each respective Cost Recovery Committee member's attorney for the purpose of a joint civil prosecution.
Similarly, the circumstances under which this confidential information was disclosed lead the court to conclude that a fiduciary relationship arose between GTE and Faletto for purposes of disqualification under Rule 1.9. The confidentiality provisions contained in both the Appleton Agreement and the Investigation Agreement clearly establish an intent that the shared information would remain confidential and would remain protected under the attorney-client privilege. The disclosures by GTE via its counsel to Faletto, Chrysler's counsel, were made with the expectation that they would not be disclosed to the targets of the investigation. Faletto's receipt of such disclosures and participation in meetings obligated him to refrain from reappearing on the opposite side of the same litigation to which such information would be highly pertinent. See Analytica, Inc. v. NPD Research, Inc., 708 F.2d 1263, 1269 (7th Cir. 1983). Accordingly, Faletto's appearance on behalf of Dean Foods is a violation of Rule 1.9, and Faletto is disqualified from representing Dean Foods in this matter.
Next, the court must determine whether the entire firm of Howard & Howard is disqualified under Rule 1.10. Rule 1.10(a) provides:
No lawyer associated with a firm shall represent a client when the lawyer knows or reasonably should know that another lawyer associated with that firm would be prohibited from doing so by Rules 1.7, 1.8(c), or 1.9, except as permitted by Rules 1.10(b), (c), or (d), or by Rule 1.11 or Rule 1.12.