UNITED STATES DISTRICT COURT MIDDLE DISTRICT OF FLORIDA

TAMPA DIVISION LUIS A. GARCIA SAZ, and wife, MARIA DEL ROCIO BURGOS GARCIA, Plaintiffs, vs. CASE NO. 8:13-CV-220-T27 TBM CHURCH OF SCIENTOLOGY RELIGIOUS TRUST; et al Defendants. ________________________________________/

MOTION TO DISQUALIFY PLAINTIFFS’ COUNSEL AND CERTIFICATE OF COMPLIANCE WITH RULE 3.01(g)

Defendants, Church of Scientology Flag Service Organization, Inc. (Flag Church) and the

Church of Scientology Flag Ship Service Organization, Inc. (Ship Church), by their undersigned

counsel, move the Court for the entry of an order disqualifying plaintiffs’ counsel and

prohibiting them from acting as plaintiffs’ counsel herein based upon a conflict of interest, and as

grounds therefore submit the following memorandum.

MEMORANDUM

INTRODUCTION

This motion is not brought lightly. It is brought to protect the integrity and fairness of the

judicial process in this case. Irrefutable and compelling evidence demonstrates that plaintiffs’

counsel of record have associated and closely communicated with, as unnamed co-counsel, one

Robert Johnson, who for over a decade represented several of the defendants on numerous

matters, both transactional and litigation, that were substantially related – indeed, often virtually

identical – to the issues, strategy and facts that arise in this case. It would be inconceivable that

Johnson himself could, or would dare, act as counsel of record for plaintiffs, as plaintiffs’

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counsel all recognized when they did not list him as counsel of record in this case. But, under

well-established authority, Johnson’s lengthy experience and deep knowledge of defendants’

confidences, strategies, litigation and settlement policies and practices with respect to the very

issues raised in this case, must, under the circumstances, be attributed to counsel of record, lest

those very confidences be revealed to defendants’ irreparable prejudice.

But that is not all. Plaintiffs’ counsel have retained and/or consulted with two former

senior Church of Scientology officials – Michael Rinder and Marty Rathbun – who for many

years were intimately involved in -- in fact, in most respects in charge of – legal matters for the

defendants, including matters substantially related to this litigation. These former officials not

only engaged in ongoing extensive communications with the attorneys retained by defendants

and other senior Scientology churches, but they also received numerous communications from

such attorneys on such matters as how the churches should organize their affairs, implementation

of the church policy of refunds for certain kinds of donations under specific circumstances, the

legal strengths and weaknesses of church practices and positions, how to respond to intrusive

discovery, and other matters of legal strategy and tactics, all on matters substantially related or

identical to those that have been or will arise in this litigation.

In short, plaintiffs’ counsel have proceeded in a highly risky, heedless and dubious

manner with respect to the attorney-client privileged interests of the defendants, and have placed

themselves in the position where they simply may not be permitted to go forward as counsel in

this case.

STATEMENT OF THE CASE

A. The Claims and Issues in This Case

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Plaintiffs are former long-term parishioners of the Scientology religion. They have sued

to obtain refunds of donations they made to defendants. Specifically, plaintiffs seek return of

three kinds of donations.

First, plaintiffs seek to recover donations they made to defendant, CSRT, between 1998

and 2005 (Complaint ¶ 31), to support construction of the so-called “Super Power” building in

Clearwater, Florida. Plaintiffs allege that they were fraudulently induced to contribute to the

project by representations that CSRT needed the money to complete the project on an immediate

basis, that the building was not then and still has not been completed, and that the contributions

were diverted for other purposes. Id., ¶¶ 32-36, 86, and 93. Based on these allegations, plaintiffs

have alleged counts against CSRT and Flag Church (on a theory of joint enterprise) for fraud

(Counts I and III) and Unfair and Deceptive Trade Practices (Counts II and IV). These claims

necessarily would involve issues concerning the religious purpose of the building, the planning

and preparations for it, the process of obtaining the land, zoning and building approvals, fund

raising, architectural planning, reasons for changes or alterations in plans, if any, financing, and

necessity, scope and nature of discovery. Indeed, plaintiffs’ counsel publicly and inappropriately

threatened at a press conference to engage in highly intrusive discovery into defendants’

financial information and even to seek, as a litigation tactic, at the very outset of the case, a

deposition of the ecclesiastical leader of the Scientology religion, who holds no position with any

of the defendants.

Second, plaintiffs, alleging breach of contract, seek return of donations they made to Flag

Church and Ship Church at unspecified times in contemplation of participating in auditing or

training. See Complaint, ¶¶ 39-50, 104-109, and 110-115. The claims rest explicitly on what

plaintiffs allege is the policy of the defendants. See, e.g., Complaint, ¶¶42, 43 (resting claim on

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allegation that “Defendants maintain a policy of returning funds”); ¶42 (alleging Ship Church

induced donations “with the express understanding” that they would be returned upon demand);

¶45 (resting claims on alleged Scientology “principles of exchange”); ¶¶107 and 113 (resting

contract claims on alleged “represent[ations] in [their] policy and publications”). These claims

necessarily would involve issues concerning the origin and substance of Scientology religious

policy, including the specific Scientology Policy Directive of 1996 dealing with the issue, past

practice and policy with respect to refund claims, Internal Revenue Service recognition that such

donations qualify as tax deductible gifts under the IRC, Church practice and strategy with respect

to earlier claims and litigation regarding such claims, and development and application of

Scientology enrollment forms that set forth such policy and practice.

Finally, plaintiffs seek return of donations they made to defendants IAS and USIMT from

1997-2007, to support humanitarian projects sponsored by those organizations (Complaint ¶¶ 53-

68). Plaintiffs allege that they made the donations based on representations that the money

would be used to further those projects, but that the money contributed was not used for that

purpose. Id., ¶ 69. These allegations form the basis for claims of fraud against defendants IAS

and USIMT (Count VI); claims of fraud against defendants Flag Church and Ship Church on a

theory of joint enterprise (Counts VIII and IX); and a claim for Unfair and Deceptive Trade

Practices against IAS and USIMT (Count VII). Such claims necessarily would involve issues of

attempts to engage in intrusive discovery of defendants’ humanitarian practices and financial

records and accountings.

Underlying all issues would be questions of the applicability of Scientology’s internal

justice procedures and arbitration, as discussed in the pending motion to compel arbitration, as

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well as fundamental constitutional questions arising under the religion clauses of the First

Amendment.

B. Johnson’s Attorney/Client Relationship with the Defendants. Bob Johnson first started representing various Church of Scientology entities in 1983,

and he represented them continuously through July, 1999. Johnson actively represented three of

the defendants in this action: Flag Church, Ship Church and CSRT. He also has represented

other Scientology churches. The attached declarations of Allan Cartwright (Exhibit A), Sarah

Heller (Exhibit B), Glen Stilo (Exhibit C), Judy Fontana (Exhibit D) and Peter Mansell (Exhibit

E) establish the relationship of Mr. Johnson with various Scientology entities, as well as the

relationships of Mark Rathbun and Michael Rinder with the various Scientology entities.

Johnson represented defendants with respect to every one of the issues and strategies

raised in the instant litigation. Attachment 4 to the Mansell Dec. (Exhibit E) is a schedule

entitled “Robert E. Johnson – Timeline of Involvement in Church Legal Matters,” which details

Johnson’s intimate involvement with various Church legal matters, including 12 refund suits and

22 refund claims. Over the course of the 16 years, the various Church entities paid to Mr.

Johnson in excess of $1,807,461.39 in fees and costs.

With respect to the plaintiffs’ claims for refunds for donations to CSRT to support the

construction of the Super Power and related buildings, the Stilo declaration demonstrates that

Johnson was from the beginning intimately involved in the legal representation with respect to

that project. He oversaw and participated in the purchase of the seventeen separate parcels of

land that CSRT assembled for the project, advised on legal issues, consulted with tax and

corporate attorneys, proposed the corporate set up for the acquisition, represented the Church at

hearings about the project before the Clearwater City Council, resolved disputes with the

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architects about delays in construction, re-drafted contracts, advised and wrote a 15 page memo

on litigation that arose over the acquisition and construction and mediated the case to resolution,

Johnson received extensive client briefings “concerning issues relating to the timing for opening

of the building, necessary ecclesiastical and staff precedents to any opening, and strategic issues

regarding the timing of the opening of the building coinciding with other events and activities.”

(Stilo, Dec., Exhibit C ¶20.

Moreover, Johnson represented CSRT in a dispute and threatened litigation involving a

former parishioner seeking return of his donations to CSRT for the building and the Super Power

project, for which he was “briefed on factual, legal and corporate issues respecting CSRT,

strategic considerations, and potential future policy issues respecting donations made to CSRT.”

Id., ¶21. Johnson was responsible for the settlement of that dispute, which raised factual disputes

virtually identical to those in the instant case. Id. 1

Among plaintiffs’ claims against CSRT for their donations to the Super Power project is

a claim under Count II arising under the Florida Unfair and Deceptive Trade Practices Act.

(Plaintiffs allege a similar claim in Count VII against defendants IAS and USIMT for their

donations to those defendants for humanitarian projects.) The purported application of the

Unfair and Deceptive Trade Practices Act to religious organizations presents unique factual and

legal issues, and Johnson was heavily involved in litigating those very issues in a case styled

Samuel Williams, et al. v. Church of Scientology Flag Service Organization, Inc., et al., filed in

1992 in the Circuit Court of the Fifth Judicial Circuit in Lake County, Florida, and he filed a 32-

page memorandum on the subject in that action. (Fontana Dec., Exhibit D, Attachment 1). The

declaration of Judy Fontana (Exhibit D, ¶6) explains Mr. Johnson’s role in the Williams case.

1In the current complaint, Garcia’s allegations about donations to CSRT for the Super Power project relate to matters that occurred during Johnson’s active representation. See Complaint, ¶ 31(a) and (b).

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Indeed, the Williams case involved claims virtually identical to the second kind of refund

claim plaintiffs make here, involving donations plaintiffs made in anticipation of participating in

Scientology religious services. As the Fontana declaration shows, the same issues, tactics and

strategies are involved in the present case. As FSO’s representative, Ms. Fontana “spent perhaps

hundreds of hours in oral and written communication with Mr. Johnson regarding this suit and

the issues raised therein.” Among those issues was a major dispute involving intrusive discovery

demands made upon the Church, particularly with respect to financial records and assets. Ms.

Fontana briefed Johnson “in detail regarding the nature of Flag Church’s financial records

concerning parishioner donations, and the positions that the Flag Church wanted or needed to

take regarding discovery thereof.” The case led to an important decision of the Florida Fifth

District Court of Appeal imposing special limitations upon discovery of church financial

information. Church of Scientology v. Williams, 671 So.2d 840 (Fla. 5th DCA 1996).

The Williams case by no means was unique. As Ms. Fontana explains, Johnson

represented the Flag Church in at least nine other lawsuits seeking refunds and challenging the

Scientology religious policy and procedures with respect to that matter. Mr. Johnson’s services

included filing pleadings, discovery, negotiation of settlements, and preparation of releases. He

was extensively briefed on such subjects as settlement policy and strategy, arbitration policy,

church doctrine with respect to refunds and internal dispute resolution, relationship among

Scientology churches, entities, and ecclesiastical leadership, and discovery issues.

Johnson also was consulted and briefed on the church enrollment form that informs

parishioners of the refund policy and the exclusive procedure for requesting refunds, as well as

the arbitration procedures set forth in those forms. The nature, meaning, validity, purpose and

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origin of the forms is one of the central issues in this case, as shown by the pending motion to

compel arbitration. As Ms. Fontana states (Exhibit D, ¶19):

Another area in which Mr. Johnson was consulted by me and by other legal staff and executives of the Church which I observed, concerned the creation and application of a contractual form utilized by the Church for enrollment of Church parishioners in Church services. Over the years, legal issues have arisen respecting confidentiality of Scientology materials and counseling, and numerous other issues. Passages and elements in the enrollment forms were included with the intent to avoid future legal problems. The Church found it was important both for the Church’s protection and for the parishioner’s edification, to establish contractual understandings between parishioners and the Church. Thus, enrollment forms constituting parishioner acknowledgements, understandings, contracts, limitations, releases and other issues, evolved as situations occurred demonstrating the necessity of amending the enrollment forms. Mr. Johnson was carefully and fully briefed on such legal considerations respecting the issues in the enrollment forms. Why certain matters were included in the forms, what releases and acknowledgements were necessary and effective, and great detail concerning these forms was the subject of repeated consultation with Mr. Johnson.

The Enrollment Agreements and the Church’s policies regarding handling of refund claims are

essentially the same now as they were during the 16 years of Mr. Johnson’s representation.

Mr. Johnson was privy to all of the Church’s confidential information regarding its

approach to discovery, its approach to defending these claims, and its general approach to

litigation. The issues in this action are substantially related to all of the various refund matters

that Mr. Johnson handled in his 16 years representing various Church entities. (Fontana Dec,

Exhibit D, ¶¶14-18.)

C. Johnson is Co-Counsel in This Case

On January 25, 2013, plaintiffs filed their Rule 7.1 Disclosure indicating that the law firm

of GrayRobinson, P.A., of which Johnson is a member, might have an interest in the outcome of

the litigation. It is now undisputed that GrayRobinson’s “interest” arises because Johnson is

acting as co-counsel in the case, although without filing an appearance, that he has been

identified by plaintiffs as acting as a “contact person” for potential additional plaintiffs, and that

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he is “working with Ted Babbitt and he receives the public seeking the law firm [sic] services.”2

(Mansell Dec., Exhibit E, ¶¶3-4, Attachments 1 and 2; Exhibit F, Declaration of Brian Culkin.)

Johnson’s role is significant. As described by Brian Culkin, a former Scientologist who

was a putative plaintiff against Flag Church and other Scientology entities, he participated in a

conference call with ten former Scientologists, together with Mike Rinder, a former Scientology

official, and attorneys Tucker Byrd, Ted Babbitt and Robert Johnson, to discuss the proposed

litigation. In paragraphs 14 and 15 of the Culkin declaration, Mr. Culkin swears (Exhibit F):

Mike Rinder introduced Culkin to Robert Johnson to whom Culkin provided “a lot of

information” about his experiences in the Church and answered Mr. Johnson’s questions.

Mr. Johnson thought Culkin had a good case, and in late 2012, Johnson had his secretary

sent Culkin a retainer agreement. The retainer agreement was with three law firms: the

Babbitt firm, the Weil firm and GrayRobinson. Mr. Culkin did not execute this retainer

agreement or any other agreement with any of the law firms.

Beginning in October, 2012, Mr. Culkin spoke with Mr. Johnson about 30 times on the

telephone and received about 15 e-mails from him. Mr. Johnson became Culkin’s main

contact person on the litigation team. Mr. Culkin described Mr. Johnson as a “client

manager” and understood that the information given him would be shared with Messrs.

Babbitt and Weil.

Johnson had a good knowledge of the Church’s refund procedure and other internal

policies such as the Church’s religious doctrine called “Disconnection” from suppressive

persons.

2 At his press conference announcing this lawsuit, attorney Babbitt threatened to bring additional similar actions on behalf of other former Scientologists. (Exhibit E, Mansell Dec., ¶ 19.) Johnson acts as the “contact person” for such prospective additional plaintiffs, and Johnson and the putative plaintiffs apparently then participate in conference calls with Babbitt and other counsel of record to discuss facts and strategy.

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In paragraph 19, Mr. Culkin swears:

Robert Johnson and Mike Rinder both told me that if I filed a suit it was almost certain that my lawyers would be able to defeat a motion to dismiss based on First Amendment grounds that would be filed by the Church. It was my understanding that they were telling me this based on their experience having previously worked on Church legal matters including refunds. They told me that our side would get to take discovery which would include obtaining financial information from different Church entities (including ‘Super Power’ and IAS), and taking the deposition of David Miscavige [the ecclesiastical leader of the religion] as one of the first actions. This strategy that Rinder and Johnson discussed with me is basically the same one that Mr. Babbitt announced at his press conference the day he filed the Garcia suit.

D. Former Church Officials Rinder and Rathbun’s Role in this Case Mike Rinder and Marty Rathbun are former high Church officials who were removed

from any positions of responsibility, and subsequently left the Church in 2007 and 2004

respectively. They have both turned against their former religion and appear to be bent on

revenge against the Church and its current leadership. They have spread their hostility in various

media forms on the Internet and in court filings. They appear to be intent on visiting as much

harm as possible on the Church through whatever means. (Exhibit A, ¶21)

For more than 25 years, Mike Rinder was a senior official of the Church of Scientology

International (CSI), the senior management church of the Scientology religion. Rinder was a

member of the Board of Directors from 1987-2007, and for many years was an executive over

CSI’s Legal Bureau. He had full access to CSI’s corporate and litigation files. Between 1994

and 2001, he was the chief executive of the Office of Special Affairs, where he oversaw all legal

matters and had extensive contacts with Church attorneys. Rinder was involved in the hiring of

attorneys, including experts, in local and international religious affairs, corporations, taxation

and intellectual property for exhaustive review of the then-existing international and

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ecclesiastical and corporate structure of the Scientology religion. (Exhibit A, Cartwright Dec.,

¶7.)

Once having been removed from his positions at CSI and left the Church, Rinder

embarked on a campaign of organizing and encouraging numerous others to sue Scientology

churches for refunds. According to Culkin, Rinder was “actively organizing meetings of

potential plaintiffs, locating attorneys to represent them, connecting up the lawyers and the ex-

members, organizing conference calls with the lawyers, and acting as the overall coordinator of

what[Culkin]believed to be as many as 10 different lawsuits” against the Church. (Exhibit F,

Culkin Dec., ¶5.). Culkin alone had about 100 phone calls with and received 75 emails from

Rinder about potential litigation. Rinder participated in numerous conference calls with

prospective plaintiffs and lawyers, and represented “that he had experience in Scientology policy

matters, and. . . that he was providing this advice based on his past experience in Church of

Scientology legal affairs and having worked previously with attorneys representing the Church in

dealing with a variety of Church legal affairs including its refund procedures.” Id. It was Rinder

who located the lawyers who brought this lawsuit, interviewed potential plaintiffs, and

introduced them to the lawyers. It is more than a fair inference, which can be confirmed and

developed through discovery, that Rinder is responsible for inducing the plaintiffs to file this

lawsuit and for finding the attorneys to do so. A fair question, of course, will be what financial

benefits Rinder has received and hopes to reap from his efforts.

In January, 2012, Rinder filed a declaration in the prior, since-dismissed, state court

version of this case, stating that for the vast majority of the time between 1982 and 2007, he was

the most senior official responsible for “all litigation and contract matters.” He also swears that

the enrollment agreements with the Garcias were “the result of my work with in-house counsel

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for CSI, William T. Drescher, Esq.” Rinder swears that he “discussed the subject of the

‘arbitration clause’ with Mr. Drescher at length.” Rinder recites that Mr. Drescher (who is

deceased and cannot respond) believed the arbitration clause was unenforceable, and Mr. Rinder

then describes what he claims to be the Church’s “litigation strategy.” (Exhibit A, Cartwright

Dec. Attachment 1.) It thus is clear that Rinder has been actively collaborating with the plaintiffs

and their counsel in connection with the prosecution of their claim in state court and in this

Court.

For approximately 20 years, Marty Rathbun was a senior official involved with various

entities related to the Church of Scientology. Rathbun left Church staff in 2004. Exhibit A

outlines Mr. Rathbun’s relationship to the Church of Scientology.

Rathbun, according to his own affidavit filed in this matter, was “employed by the RTC

from March, 1987, until December, 2004,” served on the Board of Directors, including as

corporate President for many years,” and served as the Inspector General” of the “Religious

Technology Center (RTC) the senior-most body of the Church of Scientology’s corporate and

ecclesiastical hierarchy.” For most of his career, Rathbun was also responsible for handling

major legal actions. He worked with attorneys personally and worked on strategies, filings,

declarations, affidavits, and was a deponent on numerous occasions. Rathbun knew many of the

Church’s attorneys, the Church’s strengths and weaknesses, and knows virtually every major

legal situation the Church has had to resolve. In particular, Rathbun himself claims to have

played a central role in “the administration of policies concerning monetary refunds” and that he

worked “to formulate” the enrollment forms at issue in this case, including the arbitration

provisions. Rathbun Dec., ¶¶ 4, 6. Rathbun acknowledges that he consulted with counsel in

carrying out these duties (id., ¶ 7), but conspicuously avoids reference to any specific attorney

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communications he received; when read together with Rinder’s declaration on the same subject,

however, where Rinder also claims credit for creating the enrollment forms in the course of

which he engaged in extensive attorney-client communications, it is manifest that Rathbun and

Rinder received comprehensive attorney advice with respect to these and other matters, and that

they have now passed on the essence of those communications about strategy and related matters

to counsel in this and other cases.

Rathbun was uniquely in possession of vast amounts of information protected by the

attorney/client privilege. He was the principal or one of the principal liaisons between CSI, Flag

Church and other Scientology churches, on the one hand, and attorneys representing such

churches in both litigation and non-litigation matters, on the other. Because of that unique role,

Rathbun had primary responsibility to find and to recover all relevant information and data that

might be necessary, useful or appropriate for the attorneys to do their jobs effectively. Rathbun

became an arm or agent of the attorneys in the same manner as would a paralegal, investigator or

secretary.

ARGUMENT

The trial court has broad discretion in deciding motions for disqualification. Rentclub,

Inc. v. Transamerica Rental Finance Corp., 811 F.Supp. 651, 654 (M.D. Fla. 1992), aff’d, 43

F.3d 1439 (11th Cir. 1995). Any doubt must be resolved in favor of disqualification. Id.

Plaintiffs’ counsel must be disqualified from representing plaintiffs because their co-counsel,

Robert Johnson, was defendants’ former attorney, and because of plaintiffs’ counsels’ current

relationship with defendants’ former senior officials, Rinder and Rathbun. Mr. Johnson’s

conflict-of-interest in representing plaintiffs against his former clients is imputed to his co-

counsel and is sufficient to require their disqualification. Plaintiffs’ counsel should also be

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disqualified based upon the appearance of impropriety because they have access to defendants’

privileged and confidential information from defendants’ former attorney and senior officials.

I. Plaintiffs’ Counsel Must be Disqualified Based Upon a Conflict-of-Interest

Florida law applies a two-part test to determine whether an attorney should be

disqualified because of a conflict-of-interest. State Farm Mut. Auto. Ins. Co. v. K.A.W., 575 So.

2d 630, 633 (Fla. 1991);Bochese v. Town of Ponce Inlet, 267 F.Supp.2d 1240, 1244 (M.D. Fla.

2003); Cox v. Am. Cast Iron Pipe Co., 847 F.2d 725 (11th Cir. 1988). The party seeking to

disqualify opposing counsel must show: (1) an attorney-client relationship existed, thereby

giving rise to an irrefutable presumption that confidences were disclosed during the relationship;

and (2) the matter in which the law firm subsequently represented the interest adverse to the

former client was the “same or substantially related” to the matter in which it represented the

former client. State Farm Mut. Auto. Ins. Co., 575 So. 2d at 633.

To determine whether an attorney-client relationship exists, the focus is the subjective

intent of the person seeking out the lawyer. Estate of Jones v. Beverly Health and Rehabilitation

Serv., Inc., 68 F.Supp.2d 1304, 1309 (N.D. Fla. 1999). To determine whether a matter is the

“same or substantially related,” the moving party must demonstrate “the relationship between the

subject matters, issues and causes of action of both the present and previous representations.” Id.

at 1310. The matters “need only be akin to the present action in a way reasonable persons would

understand as important to the issues involved.” Id.

In Estate of Jones, supra, the defendant, a nursing home, moved, pursuant to Florida Bar

Rule 4-1.9, to disqualify the personal representative’s counsel because of a conflict-of-interest.

Id. at 1308. The former client of the personal representative’s counsel was a subsidiary of the

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defendant. Id. at 1307. He represented the defendant’s subsidiary with respect to nursing home

claims similar to the one at issue in the personal representative’s complaint. Id. Upon leaving

his prior firm, he joined a new firm where the personal representative was a current client. Id. at

1308. The court ordered disqualification finding an attorney-client relationship between the

defendant and the personal representative’s counsel. Id. at 1312. The court held that the matters

were substantially related because the former counsel had knowledge of the defendant’s internal

operating issues, corporate policies, defense posture and litigation tactics. Id. at 1310.

An attorney’s representation of a client can be so broad in scope that it, ipso facto, makes

matters “substantially related.” See e.g., Madukwe v. Delaware State University, 552 F.Supp.2d

452, 458-463 (D. Del. 2008) (holding disqualified counsel’s representation of university was so

broad in scope that counsel was disqualified from representing the plaintiff in a discrimination

action against the university. Also holding, “knowledge of this type of ‘playbook information’ –

for example, “’what lines of attack to abandon and what lines to pursue, what settlements to

accept and what offers to reject…is a basis for disqualification.’” (citations omitted));

Onebeacon Am. Ins. Co. v. Safeco Ins. Co., 2008 WL 4059836 (S.D. Ohio 2008) (holding

counsel’s intimate familiarity with client’s approach to litigation is basis to disqualify counsel);

Colorpix Sys. Of Am. v. Broan Mfg. Co., Inc., 131 F.Supp.2d 331 (D. Conn. 2001) (holding

disqualification is granted where attorney developed litigation strategy in prior similar lawsuits);

Superguide Corp. v. Directv Enterprises, Inc., 141 F.Supp.2d 616 (W.D. NC 2001) (holding

attorney’s crucial knowledge of corporate client’s course of conduct under licensing agreement

basis for disqualification for conflict-of-interest); Cardona v. General Motors Corp., 942 F.Supp.

968 (D. NJ 1996) (holding disqualification is granted based on knowledge of former client’s

litigation strategy in Lemon Law case); R&D Muller, Ltd. v. Fontaine’s Auction Gallery, LLC,

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906 N.E.2d 356 (Mass. App. Ct. 2009) (holding “even though considerable time had passed”

since attorney last represented former client, “the attorneys had been exposed to confidential

information that could be used to the [former client’s] disadvantage in the present case.”);

Franzoni v. Hart Schaffner & Marx, 726 N.E.2d 719 (Ill. App. 2000) (holding disqualified

counsel’s “intimate” involvement with employment matters while in-house counsel for

corporation was sufficient basis for disqualification); City Nat. Bank v. Adams, 96 Cal.App.4th

315 (Cal. App. 2d 2002) (holding long-standing relationship between attorney and client

sufficient for disqualification); Webb v. E.I. Du Pont De Nemours & Co., Inc., 811 F.Supp. 158

(D. Del. 1992) (granting motion to disqualify where former attorney prepared ERISA report at

issue in lawsuit against former client); and Kenn Air Corp. v. Gainesville-Alachua Co. Regional

Airport Authority, 593 So.2d 1219 (Fla. 1st DCA 1992) (holding long-standing relationship

sufficient to establish counsel had “switched sides”).

There is no dispute that Mr. Johnson had an attorney-client relationship with Church

entities for a period of 16 years that gives rise to an irrefutable inference that confidences were

exchanged. His representation of the Church entities was broad in scope and allowed him access

to the Church’s litigation strategy “playbook.” There is also no dispute that Mr. Johnson

represented Church entities with respect to matters that are substantially related to this action.

He acted as the Church’s counsel for a total of 32 refund matters. Much like the cases cited

herein, Mr. Johnson was privy to Church confidential information regarding refund practices and

procedures as well as litigation strategy. Moreover, he was still actively representing the Church

entities when some of the alleged events giving rise to plaintiffs’ lawsuit occurred.

Mr. Johnson’s confidential knowledge regarding the various Church entities, under the

facts and circumstances present here, should be imputed to plaintiff’s counsel of record and be

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the basis for their disqualification. Disqualification based on the imputation of a co-counsel’s

conflict of interest to an attorney is required when the attorney, through his or her relationship

with co-counsel, was in a position to receive relevant confidences regarding the party seeking

disqualification. See Fund of Funds, LTD. v. Arthur Andersen, Co., 567 F.2d 225, 235 (2d Cir.

1977). See Zarco Supply Co. v. Bonnell, 658 So. 2d 151, 154 (Fla. 1st DCA 1995) (holding that

“for purposes of analysis under rule 4-1.10(b), the two firms may be viewed as ‘one firm.’” Rule

4-1.10(b) governs imputed disqualifications). Once a party seeking disqualification shows either

direct evidence of disclosure, which of course as a practical matter often is difficult or impossible

to do, or, more commonly, that the former counsel has made substantial communications to his

co-counsel or assisted closely in preparing the litigation, “a rebuttable presumption arises” that

confidential information was shared. Polish Roman Catholic St. Stanislaus Parish v.

Hettenbach, 303 S.W.2d 591, 604 (Mo. App. 2010); In re American Home Products, Corp., 985

S.W.2d 68, 81 (Tex. 1998). See Paul R. Trasker & Alan H. Casper, Vicarious Disqualification of

Co-Counsel Because of “Taint,” 1 Geo. J. Legal Ethics 155, 189 (Summer 1987). While the

presumption theoretically may be overcome by proving the negative, that in fact no confidences

were disclosed, Polish Roman Catholic St. Stanislaus Parish, 303 S.W.2d at 604, ultimately, as

formulated by this court, while a conflict is not automatically imputed to co-counsel from a

different law firm, a court will do so “where there is more than a small actual risk of confidential

information spreading from the primarily-conflicted attorney to the associating firm.” Baybrook

Homes, Inc. v. Banyan Const. & Dev., Inc., 991 F.Supp. 1440, 1445 (M.D. Fla. 1997) (emphasis

added).

It is clear from the facts that not only is there a rebuttable presumption that Johnson has

transmitted confidential information to counsel of record, but that there is in fact far more than a

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“small actual of risk” that that is exactly what has happened. The facts show that Mr. Johnson is

working intimately with plaintiffs’ counsel to prosecute this case and to solicit new clients. In

fact, as stated on page 3, supra, Mr. Culkin, a putative plaintiff with a prospective refund claim

against defendants was tendered a retainer agreement with plaintiffs’ counsel of record and Mr.

Johnson. The facts show that Mr. Johnson was acting as “case manager.” He conveyed to

putative clients his knowledge of litigation strategies and procedures against defendants. He

implied that the information would be communicated to counsel of record. Indeed, he

participated in conference calls with counsel of record in which the facts and strategy of the

prospective case were discussed. His interest in this case was disclosed in plaintiffs’ Certificate

of Interested Parties. Because it appears that Mr. Johnson and plaintiffs’ counsel of record

worked closely together to bring this lawsuit, it is illogical to assume that they have not

exchanged confidential information. Zarco Supply Co., 658 So. 2d at 155 n. 2. As such,

plaintiffs’ counsel must be disqualified in this case.

Moreover, if the Court retains any questions about the extent of Johnson’s

communications and participation with counsel of record in matters relating to this lawsuit, the

court should order limited discovery to proceed on that question only, followed by an evidentiary

hearing. School Board of Broward County v. Polera Building Corp., 722 So.2d 971, 974 (4th

DCA 1999) (Evidentiary hearing required before denial of motion to disqualify counsel where

issue of fact exists; discovery should be considered “in light of the requirement that an

evidentiary hearing must be held”).

II. Plaintiffs’ Counsel Must be Disqualified Based Upon the Appearance of Impropriety

While plaintiffs’ counsel must be disqualified because of an actual, imputed conflict-of-

interest in representing the plaintiffs in a matter adverse to defendants, the appearance of

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impropriety arising from their association with defendants’ former co-counsel and former senior

officials also mandates disqualification. Norton v. Tallahassee Memorial Hospital, 689 F.2d 938

(11th Cir. 1982).3 The party seeking to disqualify opposing counsel based upon the appearance

of impropriety must show: (1) although proof of actual wrongdoing is not required, there must

exist a reasonable possibility that some specifically identifiable impropriety did in fact occur, and

that (2) the likelihood of public suspicion or obloquy must outweigh the social interests that will

be served by the attorney’s continued participation in the case. Norton, 689 F.2d at 941; see also

Rentclub, Inc., 811 F.Supp. at 654 (M.D. Fla. 1992).

Plaintiffs’ counsels’ affiliation with Mr. Johnson, defendants’ former attorney, and with

Messrs. Rinder and Rathbun, defendants’ former senior officials, gives counsel an appearance of

impropriety that merits disqualification. In Rentclub, Inc., the counter-plaintiff moved to

disqualify the counter-defendant’s counsel, because of counsel’s appearance of impropriety. Id.

at 653-4. Counter-defendant hired a paid “trial expert” to assist in litigation. Id. at 653. The

“trial expert” was a former officer of counter-plaintiff. Id. He was privy to confidential and

proprietary information and documents belonging to the counter-plaintiff. Id. In addition, he

was involved in communications regarding the counter-plaintiff and litigation substantially

related to the lawsuit. Id. The court also held that the trial expert’s assertion that he was privy to

management discussions regarding the counter-defendant and the events giving rise to the

lawsuit was outcome determinative. Id. at 655. The court held that the law firm was disqualified

3 Canon 9 of Florida’s former Model Code stated that “a lawyer should avoid even the appearance of professional impropriety.” Florida has since adopted the Model Rules that remove Canon 9 and the “appearance of professional impropriety” rule. While there has been a suggestion that the appearance of impropriety standard is “outdated,” Herrmann v. Gutterguard, Inc., 199 Fed.Appx. 745, 755 (11th Cir. 2006) (applying Georgia law), the Florida Supreme Court has held that “we do not believe that a different standard applies because the specific admonition to avoid the appearance of impropriety does not appear in the Rules of Professional Conduct.” State Farm Mut. Auto. Ins. Co. v. K.A.W., 575 So. 2d 630, 633 (Fla. 1991). This district continues to apply the Norton test. See e.g. Rentclub, Inc. v. Transamerica Rental Finance Corp., 811 F.Supp. 651, 654 (M.D. Fla. 1992), aff’d, 43 F.3d 1439 (11th Cir. 1995).

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because of the appearance of impropriety as a result of the firm’s association with the “trial

expert.” Id. at 656-7.

Much like Rentclub, Rinder and Rathbun were privy to privileged and confidential

information and documents regarding defendants. Both were upper-level officials. Both were

involved with all major litigation activity of the Church entities. Both worked, in conjunction

with church attorneys, extensively on the formulation and development of refund policies,

enrollment forms, and Scientology arbitration procedures, receiving attorney advice on such

subjects. Both worked with Johnson when he represented various churches. It is undisputed that

each of these former Church officials possessed highly confidential and privileged information

belonging to the Church. It is clear that they are working intimately with plaintiffs’ counsel in

the prosecution of this case such that there is the appearance of impropriety. Plaintiffs’ counsel

in this action are receiving an unfair advantage against defendants and their disqualification is

warranted.

III. The Cases Upon Which Plaintiffs’ Counsel Purports to Rely are Inapposite Before filing this motion with the Court, the undersigned attorneys notified plaintiffs’

counsel of record and Robert Johnson of the present conflict issue. Plaintiffs’ counsel and Mr.

Johnson cited four cases to defendants’ counsel. The cases are easily distinguished.

First, with respect to the issue of Johnson’s improper actions, Johnson refers to Morgan

Stanley & Co., Inc. v. Solomon, 2009 WL 413519 (S.D. Fla. 2009), and Hernandez v. Royal

Caribbean Cruises Ltd., 2010 WL 3522210 (S.D. Fla. 2010). The cases are similar to each other

and different from this case, and neither saves Johnson or his co-counsel from the consequences

of their actions. Both turned on the utter lack of similarity of the facts and circumstances of the

prior litigation to the case in which disqualification was sought. Thus, in Solomon the court

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found that mere similarity in legal theories was not enough to justify disqualification, and that

“there is no evidence demonstrating that Mr. Solomon would be attacking his own legal work.”

Solomon, 2009 WL 413519 at *4; likewise in Hernandez the court found that the defendant

failed to offer any proof that plaintiff’s counsel represented defendant in a case involving similar

facts. Hernandez, 2010 WL 3522210 at *4. Here, in contrast, defendants have submitted much

more than general affidavits regarding Mr. Johnson’s former representation, and defendants

specifically identify the ways in which the current lawsuit is substantially related as a matter of

facts and circumstances to the former representation. Indeed, defendants have shown that

Johnson was involved in numerous cases raising the same factual scenarios, the same strategic

considerations, and the same confidences.

Second, plaintiffs’ counsel of record assert that counsel is not prohibited from speaking

with or contacting former employees regardless of whether such employees may have at one

time had access to privileged attorney-client communications, citing H.B.A. Management, Inc. v.

Estate of Schwartz, 693 So. 2d 541, 544 (Fla. 1997) and Natl. Assoc. for the Advancement of

Colored People et al (NAACP) v. State of Fla., Dept. of Corrections, 122 F.Supp.2d 1335 (M.D.

Fla. 2000). These cases are inapposite. The precise questions before each court were not

disqualification because of violation of privilege, but the extent to which discovery from prior

employees could be used to bind a party opponent. H.B.A. Management, Inc. 693 So. 2d at 544

(holding that the Florida Bar Rule regarding contacting parties that are represented by counsel is

designed to “preclude interviewing of employees who have authority to bind the corporation;”

the concern over binding the corporation does not exist with former employees “who can no

longer speak for or bind the corporation.”); NAACP, 122 F.Supp. 2d at 1342 (holding statements

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of former employees of the Department “may not later be used by the Plaintiffs against the

Department as a binding admission”).

The two courts addressed the attorney-client privilege issue in dicta, but, contrary to the

suggestion of plaintiffs’ counsel, did so in terms that clearly disapprove of the very conduct that

counsel engaged in with Rinder and Rathbun. Thus, H.B.A. Management emphasized “the

caveats contained at the end of the [ABA and Florida Bar Ethics Opinions]”4 and warned

“counsel that no inquiry can be made into any matters that are the subject of the attorney-client

privilege.” Id. Likewise, in NAACP, the court, in holding that plaintiff’s counsel could conduct

ex parte interviews with former “rank and file” employees of the Department of Correction,

explained that “there is no suggestion that former high ranking Department employees with

privileged information are the target of the interviews but rather the target of the interviews is the

rank and file correctional officers who may have seen or heard the conduct alleged in the

complaint.” Id. at 1340. In response to this concern, the court further held that “Plaintiffs'

counsel shall advise the former employee to avoid disclosure of privileged material. In the course

of the interview, Plaintiffs' counsel shall not attempt to solicit privileged information and shall

terminate the interview should it appear that the former employee may reveal privileged matters”

[(in addition to other safeguards outlined in the decision)]. Id. at 1341.

The cautions and warnings expressed by the courts in the H.B.A. Management, Inc. and

NAACP cases sadly are of little use in this case. The present case is before the Court on a motion

to disqualify plaintiffs’ counsel based on confidential information already obtained. While the

courts in H.B.A. and NAACP recognized the need to avoid inquiry into the corporate entities’

4Specifically, the ABA Opinion states that counsel “must be careful not to seek to induce” a former employee to violate the corporation’s attorney-client privilege. The Florida Bar Ethics opinion states “the attorney should not inquire into matters that are within the corporation’s attorney-client privilege (e.g., asking a former manager to relate what he had told the corporation’s attorney concerning the subject matter of the representation).”

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privileged and confidential matters, here, plaintiffs’ counsel have already conferred with former

Church officials and counsel. The cat is already out of the bag.

CONCLUSION

For the foregoing reasons, plaintiffs’ motion to disqualify should be granted.

Compliance with Local Rule 3.01(g)

The undersigned certifies that he has conferred with plaintiffs’ counsel in a good-faith

effort to resolve the issues raised by this motion and counsel for the parties have not been able to

agree on the resolution of this motion.

I HEREBY CERTIFY that on May 10, 2013, I electronically filed the foregoing with the Clerk of the Court by using the CM/ECF system which will send a notice of electronic filing to the following: RONALD P. WEIL, ESQ., rpw@weillaw.net, and THEODORE BABBITT, ESQ., tedbabbitt@babbitt-johnson.com, attorney for plaintiffs.

/s/ F. Wallace Pope, Jr. F. Wallace Pope, Jr. Florida Bar No. 0124449 E-mail: wallyp@jpfirm.com Johnson, Pope, Bokor, Ruppel & Burns, LLP 911 Chestnut Street Clearwater, Florida 33757 Telephone: (727) 461-1818 Facsimile: (727) 462-0365 Counsel for FLAG CHURCH & SHIP CHURCH

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