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RehabCare Group East, Inc. v. Village Health Care Management, LLC

United States District Court, S.D. Illinois

April 16, 2018

REHABCARE GROUP EAST, INC., d/b/a RehabCare Group Therapy Services, Inc., Plaintiff,
v.
VILLAGE HEALTH CARE MANAGEMENT, LLC, d/b/a United Methodist Village North Campus, and UNITED METHODIST VILLAGE, INC., d/b/a United Methodist Village, Defendants.

          REPORT AND RECOMMENDATION

          STEPHEN C. WILLIAMS UNITED STATES MAGISTRATE JUDGE.

         I. Introductions

         Plaintiff RehabCare brought the present suit against Defendants alleging breach of contract, promissory estoppel, and unjust enrichment. Defendants now seek to have Plaintiff's counsel disqualified from representing Plaintiff in this suit. This matter is before the Court on Defendants' Motion to Disqualify. At the time suit was filed, and when the motion was filed, an attorney who formerly represented Defendant United Methodist Village was working in the same law firm as Plaintiff's counsel. On January 24, 2018, the Court held a hearing on the motion and ordered supplemental briefing. The ordered briefing, as well as additional briefing, is complete, and this matter is ripe for disposition. Since, under the Illinois Rules of Professional Conduct, United Methodist Village's former attorney's conflict is imputed to Plaintiff's current counsel, and since that imputation cannot be rebutted, the undersigned RECOMMENDS that the Motion to Disqualify be GRANTED.

         II. Background

         Plaintiff's counsel, Richard Saldinger, is a member of the law firm of Latimer LeVay and Fyock LLC. (LLF). He joined LLF on February 24, 2017. Prior to his joining the firm, another lawyer at LLF, Jeffrey Bunn, represented one of the Defendants, United Methodist Village, Inc. (UMV), in a contract dispute with a company called Aramark. The representation commenced in November of 2015. In representing UMV, Mr. Bunn dealt with its President and CEO, Paula McKnight. The contractual dispute with Aramark never reached the point of litigation, but concluded after negotiations with a settlement in March of 2016. The settlement called for the payments to Aramark by UMV continuing until March of 2017. Most of the communications between Mr. Bunn and Ms. McKnight occurred prior to the settlement in March of 2016, but there were sporadic communications regarding payment under the terms of the settlement during the payment period. In any event, all communications concerning the Aramark matter had concluded, and the representation of UMV in the Aramark matter, had effectively terminated, in January of 2017, prior to Mr. Saldinger joining LLF in February of 2017. It is undisputed that Mr. Saldinger never received any confidential information from Mr. Bunn concerning UMV and has no access to any confidential information in Mr. Bunn's possession or LLF's files.

         Prior to joining LLF, Mr. Saldinger had represented Plaintiff at his previous firm on a variety of matters and continues to do so today. Mr. Saldinger undertook his representation in the current matter in July of 2017.

         Additionally, prior to the hearing on this matter, UMV provided the Court with extensive email correspondence between Mr. McKnight and Mr. Bunn. The Court examined the correspondence in camera with the consent of both parties. Plaintiff's counsel did not seek to review the contents of the email correspondence in order to continue to maintain his lack of knowledge concerning any information exchanged between Ms. McKnight and Mr. Bunn. While the Defendant concedes that the correspondence itself does not reveal any confidential information, it is clear from the correspondence that there were additional oral communications between McKnight and Bunn, and that those conversations likely included discussions concerning negotiation strategy and Defendant's financial condition at the time of those communications.

         After the hearing on the Motion to Disqualify, on April 3, 2018, Plaintiff filed a Second Supplemental Response in Opposition, informing the Court that Mr. Bunn had retired from the practice of law. His last day at LLF was March 30, 2018.

         III. Analysis

         a. Applicable Rule

         Defendants' motion is governed by the Illinois Rules of Professional conduct, which have been adopted by the Southern District of Illinois. SDIL-LR 83.2(b). Since Mr. Bunn has left LLF in the middle of the disposition of the present motion, there are two potentially operative rules in play. The first is Illinois Rule of Professional Conduct 1.10(a) which provides in pertinent part that “[w]hile lawyers are associated in a firm, none of them shall knowingly represent a client when anyone of them would be prohibited from doing so by Rules 1.7 or 1.9.” The second is Rule 1.10(b), which states that

[w]hen a lawyer has terminated an association with a firm, the firm is not prohibited from thereafter representing a person with interests materially adverse to those of a client represented by the formerly associated lawyer and not currently represented by the firm, unless:
1) the matter is the same or substantially related to that in which the formerly associated lawyer represented the client; and
2) any lawyer remaining in the firm has information protected by Rules 1.6 and 1.9(c) that is ...

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