Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

DHR International, Inc. v. Winston

March 31, 2004

DHR INTERNATIONAL, INC., AND DAVID H. HOFFMAN, PLAINTIFFS-APPELLANTS,
v.
WINSTON AND STRAWN, DEFENDANT-APPELLEE, SPHERION ATLANTIC ENTERPRISES, LLC, SPHERION PACIFIC ENTERPRISES, LLC, AND AMERICAN ARBITRATION ASSOCIATION, DEFENDANTS.



Appeal From The Circuit Court of Cook County. No. 03 CH 3137. Honorable Bernetta D. Bush, Judge Presiding.

The opinion of the court was delivered by: Presiding Justice Campbell

Following an evidentiary hearing, the circuit court of Cook County entered an order denying a motion of plaintiffs DHR International, Inc. (DHR), and David H. Hoffman, chief executive officer and shareholder of DHR, for a preliminary injunction to stop defendant law firm Winston & Strawn (W&S) from representing defendants Spherion Atlantic Enterprises, LLC, and Spherion Pacific Enterprises, LLC (Spherion), in an arbitration proceeding Spherion brought against DHR in New York City before the defendant American Arbitration Association (AAA), based on an alleged conflict of interest. Plaintiffs now appeal.

The record on appeal discloses the following facts. On February 18, 2003, plaintiffs filed a three-count "Complaint for Declaratory Relief and Preliminary and Permanent Injunction" against defendants. Count I sought a declaration that a conflict of interest existed arising out of W&S's representation of Spherion in an arbitration proceeding Spherion brought against DHR before the AAA in a dispute arising from an asset purchase agreement. Plaintiffs alleged that William Doyle, an attorney who joined W&S after Spherion filed its claim with the AAA, also had represented plaintiffs and that W&S failed to timely erect an ethical screen to prevent disclosure of plaintiffs' confidences to other attorneys at W&S. Count II sought to preliminarily enjoin Spherion and the AAA from moving forward with the arbitration proceeding pending resolution of the conflict of interest issue. Count III sought to permanently enjoin: W&S from further representing Spherion in the arbitration; Spherion from continuing with the arbitration so long as W&S represented it in the arbitration; and the AAA from moving forward until the alleged conflict of interest was ended. Plaintiffs filed an emergency motion for a preliminary injunction. Although this motion is time-stamped as filed February 10, 2003, its reference to filing of the complaint and the certificate of service both suggest it was filed after the initial complaint.*fn1 This motion sought to preliminarily enjoin: W&S from further representing Spherion in the arbitration; Spherion from continuing with the arbitration so long as W&S represented it in the arbitration; and the AAA from moving forward until the alleged conflict of interest was ended.

On February 19, 2003, plaintiffs moved for a temporary restraining order (TRO). On February 21, 2003, the trial court found that it lacked jurisdiction over an arbitration that was to occur in New York and hence declined to order the AAA to stay the arbitration. The trial court also declined to order Spherion not to proceed. The trial court entered a TRO restraining W&S from representing Spherion in the arbitration, pending an expedited evidentiary hearing to begin on February 28, 2003.

On March 14, 2003, following a five-day hearing on the matter, the trial court issued a written order denying the motion for a preliminary injunction for the reasons set forth by the court in court on March 10, 2003 (the order stating that a true and correct copy of that decision is annexed as an "exhibit" to the order). The attached transcript shows that the trial court found that "there was no indication nor was there any evidence really ever present that Mr. Doyle ever represented DHR." The trial court found that plaintiffs failed to show that Doyle had any specific confidential information of DHR in the Spherion matter. The trial court noted that Hoffman did not initially raise a conflict issue, though he or his agents received the statement of claim showing that Spherion was being represented by W&S. The trial court found Hoffman's testimony that he did not initially pay attention to the matter to be not credible, as Hoffman appeared to be a successful and articulate businessman who knew everything that went on in his business. The trial court further found that W&S had represented DHR, but had not represented DHR after 1998.

On March 17, 2003, plaintiffs filed a motion to voluntarily dismiss Spherion and the AAA as defendants, which the trial court granted that same day. Plaintiffs also filed their notice of interlocutory appeal to this court on that date. On March 18, 2003, plaintiffs moved for a stay of the denial of the preliminary injunction. The parties agree that the trial court denied a stay of enforcement, but do not identify where an order denying the stay appears in the record. W&S filed a motion to amend the record to include a transcript of the hearing denying the stay. In response, plaintiffs filed a motion to strike portions of W&S's brief referring to said transcript. On November 19, 2003, this court entered an order denying without prejudice a motion by W&S to dismiss the appeal as moot.

I.

Initially, there is the issue of this court's jurisdiction over the appeal. Plaintiffs assert that this court has jurisdiction over this appeal pursuant to Supreme Court Rule 307(a)(1), which permits appeals as of right from an interlocutory order "granting, modifying, refusing, dissolving, or refusing to dissolve or modify an injunction." 188 Ill. 2d R. 307(a)(1); see also Official Reports Advance Sheet No. 5 (March 5, 2003), R. 307, effective January 1, 2003. However, it is well-established that an order regarding disqualification of counsel is neither final and appealable, nor an interlocutory ruling for injunctive relief from which a party may take an immediate appeal under Rule 307(a)(1). In re Estate of French, 166 Ill. 2d 95, 98-101, 651 N.E.2d 1125, 1126-28 (1995), reaffirming Almon v. American Carloading Corp., 380 Ill. 524, 44 N.E.2d 592 (1942).*fn2

This court has reviewed the propriety of granting a disqualification order in appeals of contempt findings based on such orders. E.g., SK Handtool Corp. v. Dresser Industries, Inc., 246 Ill. App. 3d 979, 986, 619 N.E.2d 1282, 1286 (1993); Index Futures Group, Inc. v. Street, 163 Ill. App. 3d 654, 657, 516 N.E.2d 890, 892-93 (1987). In Hasco, Inc. v. Roche, 299 Ill. App. 3d 118, 123-124, 700 N.E.2d 768, 772 (1998), this court reviewed an order granting permanent injunctive relief that effectively disqualified opposing counsel in an arbitration proceeding, reasoning that the permanent injunction was a final appealable order. In Hannan v. Watt, 147 Ill. App. 3d 456, 458, 497 N.E.2d 1307, 1308 (1986), this court reviewed the denial of a preliminary injunction effectively seeking disqualification of opposing counsel in seniority list integration proceedings, but this court did not expressly address its jurisdiction therein and the order reviewed also dismissed the complaint.*fn3

In this case, plaintiffs seek review of an order denying a preliminary injunction that effectively sought disqualification of opposing counsel in an arbitration, but the complaint was not dismissed. Without considering whether Hasco or Hannan is consistent with Estate of French, this case does not fall within the scope of cases where this court has reviewed effective disqualification orders. Accordingly, following Estate of French, this court lacks jurisdiction to hear this appeal under Rule 307(a)(1).

We note that after its decision in Estate of French, the Illinois Supreme Court amended Supreme Court Rule 306 to allow for permissive appeals of orders granting motions to disqualify counsel. 166 Ill. 2d R. 306(a)(7) (amended effective March 26, 1996). Plaintiffs could have argued (though they did not) that even if the order at issue is non-final, this court should nevertheless consider whether to hear the case under Rule 306. Cf. In re Curtis B., 203 Ill. 2d 53, 63, 784 N.E.2d 219, 225 (2002) (non-final permanency order in child custody proceedings remanded to appellate court for consideration under Rule 306(a)(5)). However, Curtis B. involved Rule 306(a)(5), the broad language of which the supreme court noted plainly encompassed permanency orders. Curtis B., 203 Ill. 2d at 61, 784 N.E.2d at 224. In contrast, the plain language of Rule 306(a)(7) does not expressly refer to orders denying motions to disqualify counsel. Other provisions of Rule 306 demonstrate that the supreme court will specify that jurisdiction may extend to the denial of certain orders where the supreme court so intends. Official Reports Advance Sheet No. 5 (March 5, 2003), Rs. 306(a)(2) (allowing appeal from grant or denial of dismissal based on forum non conveniens), 306(a)(4) (allowing appeal from grant or denial of certain other motions for transfer of venue), effective January 1, 2003. Indeed, Rule 307(a)(1)--the very rule plaintiffs rely upon--expressly refers to orders granting or refusing injunctive relief. 188 Ill. 2d R. 307(a)(1); see also Official Reports Advance Sheet No. 5 (March 5, 2003), R. 307, effective January 1, 2003.

Moreover, in Curtis B., the case was remanded to this court for consideration under Rule 306(a)(5) because the statute purporting to make the permanency order final was not struck down as unconstitutional by this court prior to the appeal. Curtis B., 203 Ill. 2d at 63, 784 N.E.2d at 225. In contrast, Estate of French reaffirms a rule of jurisdiction set forth in 1942. The law did not change while this case was on appeal.*fn4

In short, this court does not have jurisdiction of this case under Rule 307(a)(1). Nor is this the only jurisdictional problem with this case. There is also the issue of mootness, which W&S first raised in its motion to dismiss. A case on appeal becomes moot where events occurring after the filing of the appeal render it impossible for the appellate court to grant the complaining party effectual relief. In re A Minor, 127 Ill. 2d 247, 255, 537 N.E.2d 292, 295 (1989). In this case, defendant's motion states that the underlying arbitration went forward beginning on July 7, 2003. Defendant's motion states that on October 21, 2003, the arbitration panel issued a partial final award, which included $982,516 to be paid to Spherion, as well as declaratory relief providing for future payments depending on DHR's financial performance.

The award states that it retains jurisdiction solely on the issue of attorney fees. Plaintiffs respond that the appeal is not moot because the arbitration panel has not entered a full final award, which has not been reduced to a judgment or collected. Plaintiffs state that DHR recently discovered correspondence from an associate at Doyle's former firm (attached as an exhibit to the response), asking DHR's chief financial officer for copies of the shareholder agreement, bylaws, the most recent annual minutes where directors and officers were elected, and the most recent balance sheet. Plaintiff argues in the alternative that even if the case is moot, it qualifies for review as involving a question of great public interest based on: (1) the ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.