United States District Court, E.D. Louisiana
ORDER AND REASONS
SUSIE MORGAN, District Judge.
This is a civil action originally filed in state court by Robert Gibbens against Quality Rental Tools, Inc. ("QRT"). QRT removed the case and asserted a counterclaim against Gibbens, Basin Holdings US, LLC ("Basin"), and Black Diamond Oilfield Rentals, LLC ("Black Diamond").
Gibbens has moved to disqualify lead counsel for QRT, Gerald deLaunay ("deLaunay"). Basin and Black Diamond have filed a similar motion. QRT opposes the motions and has separately moved to strike Exhibits 1 and 5-attached to Gibbens's motion-on the basis of attorney-client privilege. With respect to the motions to disqualify, the questions presented are whether deLaunay is a necessary witness at trial, and, if so, whether he should be disqualified from trial and pre-trial proceedings. With respect to the motion to strike, the issue is whether QRT has waived any assertion of attorney-client privilege. For the following reasons, the Motions to Disqualify are DENIED WITHOUT PREJUDICE and may be re-urged at a later date closer to trial. The Motion to Strike is GRANTED IN PART, and Exhibit 1 to Gibbens's Motion is STRICKEN from the record.
Gibbens signed an employment contract with QRT in 2005, which guaranteed a severance payment tied to the value of QRT at the time of separation (the "Severance Agreement"). In February 2012, QRT and Basin entered into negotiations for the sale of QRT. Those negotiations were governed by a confidentiality agreement (the "Confidentiality Agreement.").
On April 29, 2012, Basin offered to purchase QRT for $13, 750, 000 (the "Basin Offer"). QRT submitted a counteroffer. Negotiations eventually fell through.
On July 16, 2012, Gibbens terminated his employment with QRT. QRT C.E.O. Frank Clements, Sr. ("Clements") subsequently engaged Majorie Corcoran, CVA ("Corcoran") to determine the value of QRT. Corcoran issued a report valuing QRT at $8, 040, 000.
Gibbens alleges this valuation is based on an erroneous assumption that QRT will lose revenues currently derived from NAMCO Pipe & Supply, L.L.C. ("NAMCO"), a company in which QRT owns a 43% interest. Gibbens alleges Clements intentionally misled Corcoran in order to reduce the amounts owed under the Severance Agreement. Gibbens subsequently filed suit against QRT and Clements.
QRT removed the case, answered, and asserted a counterclaim. QRT alleges Gibbens misused confidential information to form a new business venture with Basin, eventually called "Black Diamond." QRT further alleges Basin violated the Confidentiality Agreement.
Gibbens, Basin, and Black Diamond have moved to disqualify deLaunay. QRT has separately moved to strike two exhibits attached to Gibbens's motion. The Court addresses each motion in turn.
I. Motions to Disqualify
Motions to disqualify in the Fifth Circuit are governed by state and national ethical standards. At least four ethical canons are relevant: (1) the Local Rules for the Eastern District of Louisiana; (2) the American Bar Association's Model Rules of Professional Conduct ("Model Rules"); (3) the ABA's Model Code of Professional Conduct ("Model Code"); and (4) the Louisiana Rules of Professional Conduct ("Louisiana Rules"). The local rules "are the most immediate source of guidance for a district court."
Gibbens, Basin, and Black Diamond contend deLaunay will be a necessary witness at trial. They claim deLaunay was a "key player" in (1) the valuation of QRT leading up to Gibbens's departure, and (2) the decision-making process concerning the future of NAMCO. ...