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In re Tara Crosby LLC

United States District Court, E.D. Louisiana

November 18, 2019

IN THE MATTER OF TARA CROSBY, L.L.C. AND CROSBY TUGS, L.L.C., AS THE OWNERS AND OWNERS PRO HAC VICE OF THE M/V CROSBY COMMANDER AND HER CARGO, ENGINES, TACKLE, GEAR APPURTENANCES, ETC., IN REM, PETITIONING FOR THE EXONERATION FROM

         SECTION M (4)

          ORDER & REASONS

          BARRY W. ASHE UNITED STATES DISTRICT JUDGE

         Before the Court are (1) a motion to disqualify counsel for Tara Crosby, LLC and Crosby Tugs, LLC (collectively, “Crosby”) filed by claimants Robert Pitre and Joseph Hebert, [1] and (2) a motion to disqualify counsel for claimants filed by Tetra Technologies, Inc. (“Tetra”).[2] Crosby opposes claimants' motion, [3] and claimants oppose Tetra's motion.[4] On November 4, 2019, the Court held an evidentiary hearing on both motions.[5] Having considered the parties' memoranda, the testimony and other evidence elicited at the hearing, the record, and the applicable law, the Court issues this Order & Reasons concluding that neither counsel should be disqualified.

         I. BACKGROUND

         This cases arises out of the sinking on the morning of May 29, 2017, of the M/V Crosby Commander (“Commander”), owned and operated by Crosby, while towing the barge Marmac 25 on a hawser in the Gulf of Mexico, offshore Louisiana, during severe weather.[6] Claimants Pitre and Hebert were, respectively, the master and relief captain at the time the vessel sank.[7] At the time the vessel became imperiled, Hebert was at the wheel and Pitre was asleep in his bunk.[8]The captains and two deckhands evacuated as the vessel sank, though one deckhand drowned.[9]

         When claimants arrived on shore, they were met by Monty Wade Savoy, Jr., Crosby's corporate safety director.[10] Savoy accompanied them to Houma, Louisiana, where they were seen by a doctor. Savoy explained to them that they would be interviewed by the U.S. Coast Guard and would meet with Crosby's lawyers.[11] Crosby had asked counsel, Miles P. Clements and Joseph E. Lee, III, to investigate the sinking of the Commander.[12] On May 30, 2017, claimants were interviewed by the Coast Guard.[13] Before the interview, claimants spoke to counsel for Crosby and gave them and Savoy permission to attend the Coast Guard interviews.[14]The Coast Guard required that claimants provide signed written witness statements regarding the sinking of the Commander and complete work/rest worksheet forms for the day of the sinking, in addition to sitting for the interview. Hebert wrote and signed his own statement, but Pitre asked Clements to transcribe his statement for him.[15] Clements transcribed Pitre's statement during the interview, read the written statement to Pitre, and provided the statement to Pitre for his review.[16]Pitre then reviewed and signed the statement.[17] Hebert also gave a recorded statement to Lee.[18]

         Crosby initiated this lawsuit by filing a petition for exoneration or limitation of liability (the “Crosby petition”) on May 31, 2017.[19] Claimants, both represented by the same counsel, filed their answer and claim to the Crosby petition on September 11, 2017, and a third-party complaint against Tetra on October 27, 2017.[20] On June 11, 2018, the Court ordered claimants' counsel to provide a letter regarding potential conflicts posed by their representation of claimants.[21] Claimants provided an opinion letter written by Professor Dane S. Ciolino for in camera inspection on July 17, 2018, after which the Court ordered that the letter should be filed under seal and not disclosed to other parties, and the Court took no further action.[22]

         On September 25, 2019, the parties attended a settlement conference, during which possible conflicts of interest regarding Crosby's counsel, due to their interactions with claimants on May 30, 2017, were raised.[23] All conflict issues were discussed on October 9, 2019, at a scheduled pretrial conference, which the Court necessarily converted into a status conference when the parties indicated they would file cross-motions to disqualify.[24] The Court also continued the trial set for November 4, 2019, and instead scheduled an evidentiary hearing on said motions for that date.[25]

         At the November 4, 2019 hearing, the Court first heard Tetra's motion. Claimants presented the testimony of Professor Ciolino. The Court then heard claimants' motion. Claimants presented the testimony of both claimants, claimants' Coast Guard witness statements, an email from Savoy, and an email from Clements attaching claimants' and the other surviving crew member's witness statements and work/rest worksheet forms.[26] Crosby presented the testimony of Wade Savoy and Miles Clements, and both claimants' witness statements and work/rest worksheet forms.[27]

         II. PENDING MOTIONS

         A. Claimants' Motion

         Claimants move to disqualify Crosby's counsel based on the events that occurred on May 30, 2017, the day of the Coast Guard interview. First, claimants allege that they formed an attorney-client relationship with Crosby's counsel when, according to them: (1) Crosby's counsel told them that they were their lawyers and to relay that information to the Coast Guard in order to gain permission to attend the interviews; (2) Clements wrote the witness statement for Pitre, who “struggles with reading and reading comprehension”; and (3) Hebert gave counsel information in the “recorded statement that would otherwise have been shielded by attorney-client privilege.”[28] Claimants allege that “they [reasonably] believed these lawyers were [at the interviews] to represent their interests as their lawyers.”[29] Accordingly, Crosby's counsel, they argue, should be disqualified under Louisiana Rules of Professional Conduct 1.7 or 1.9, and 1.10, because the Crosby's and claimants' interests were and are adverse, the matter is the same, and the conflict is imputed to Crosby's counsel's law firm.[30] Second, claimants argue that even if the Court finds they did not form an attorney-client relationship with Crosby's counsel, said counsel should still be disqualified under Louisiana Rule of Professional Conduct 4.3.[31] Claimants allege that Crosby's counsel misled them, as unrepresented parties, by not clarifying their role as counsel only for Crosby and “induc[ing] [them] to create substantive evidence adverse to their own interests.”[32] Third, claimants argue that even if the Court does not disqualify counsel under the preceding rules, they should be disqualified under Louisiana Rule of Professional Conduct 3.7.[33] They assert that Clements and Lee may need to be called as necessary witnesses during trial because of their roles in the creation of the May 30, 2017 recorded and written statements.[34]Finally, claimants maintain that this conflict has not been waived. They argue that claimants' counsel only realized that Pitre “struggles with reading” at the September 25, 2019 settlement conference, [35] and that Crosby would not be prejudiced because the trial has been continued without date while claimants would be greatly prejudiced by a finding of waiver.[36]

         Crosby responds that claimants' motion is a meritless litigation tactic.[37] First, Crosby argues that neither Clements nor Lee ever created an attorney-client relationship with claimants: claimants did not manifest an intent of hiring the attorneys for legal advice, the attorneys never offered or agreed to provide legal advice, nor did the claimants receive legal advice from them.[38]Crosby emphasizes that Clements and Lee disclosed that they were Crosby's attorneys, that their presence at the interviews was not a formal appearance on behalf of claimants, and that they did not receive confidential information from claimants.[39] Even if Crosby's counsel did form an attorney-client relationship with claimants, Crosby maintains that they should not be disqualified under Rule 1.7 because their interests were not adverse on the morning of May 30, 2017, and that soon after, it would have been clear that Clements and Lee were solely Crosby's counsel because they extended claimants settlement offers on Crosby's behalf.[40] Crosby adds that neither should its counsel be disqualified under Rule 1.9 because the alleged representation (even if it existed for any length of time) was very brief and no confidential information was disclosed.[41] As there is no Rule 1.7 or 1.9 conflict, Crosby maintains, there is no Rule 1.10 imputation.[42] Second, Crosby asserts that its counsel should not be disqualified under Rule 4.3 because they never stated or implied to claimants that they were disinterested, they never gave claimants legal advice, and they did not mislead claimants, but rather “insisted that Claimants answer all questions truthfully” during the interview process.[43] Third, Crosby argues that its counsel should not be disqualified under Rule 3.7 because they are not likely to be necessary witnesses at trial.[44]It maintains that any information sought from Clements or Lee can be obtained from another source: the testimony of claimants themselves, the written and recorded oral statements, or Savoy's testimony.[45] Finally, Crosby argues that claimants have waived any issues regarding disqualification due to the long delay since claimants and their counsel knew of the alleged conflict, the tactical reason for bringing this motion (namely, that claimants want to exclude the written and recorded statements), and the extreme prejudice Crosby would suffer if its counsel were disqualified.[46]

         B. Tetra's Motion

         Tetra moves to disqualify claimants' counsel based on their representation of both Pitre and Hebert.[47] Tetra argues that Pitre and Hebert are directly adverse to each other and have asserted claims against each other. It notes that in their sixth defense to the Crosby petition, claimants argue that the events which led to their injuries were the result of the negligence of Crosby “and/or those whom [Crosby is] responsible” and in their tenth defense to the Crosby petition, claimants argue that the Commander was “operated in a willful, wanton and reckless manner.”[48] Tetra alleges that claimants, both employees of Crosby at the time of the sinking, significantly contributed to the cause of the sinking through Hebert's “negligent navigation” of the Commander and Pitre's decision to insert a “dog” into the towing winch, despite the incoming severe weather, “in direct contravention of the policy of Crosby.”[49] Tetra argues that because Crosby is vicariously liable for the captains' alleged negligence, claimants have accordingly asserted claims against each other.[50] Furthermore, under the applicable comparative negligence regime, in order to maximize their respective recoveries, claimants will need to establish the negligence of the other, making their interests directly adverse and the conflict nonwaivable.[51] Tetra likens representation of claimants to that of the simultaneous representation of a driver and passenger in relation to an automobile accident, a situation the Louisiana State Bar Association has opined attorneys should avoid entirely.[52]

         Claimants respond by referring to an opinion letter, filed under seal and not distributed, written by Professor Ciolino.[53] Claimants explain that there is no conflict in their dual representation because neither has an interest in alleging any fault against the other, and regardless, they have provided informed consent, waiving any such conflict.[54]

         III. LAW & ANALYSIS

         A. Legal Standard

         As succinctly explained by another section of this Court:

The Fifth Circuit has made clear that “[m]otions to disqualify are substantive motions affecting the rights of the parties and are determined by applying standards developed under federal law.” In re American Airlines, Inc., 972 F.2d 605, 610 (5th Cir.1992) (citing In re Dresser Indus., 972 F.2d 540, 543 (5th Cir. 1992)); see also Green v. Administrators of the Tulane Educational Fund, 1998 WL 24424 (E.D. La. 1998). Although federal courts may adopt state or ABA rules as their ethical standards, whether and how these rules apply are questions of federal law. See American Airlines, 972 F.2d at 610. The ethical canons that are relevant to this Court's opinion include (1) the local rules for the Eastern District of Louisiana, (2) the ABA's Model Rules of Professional Conduct, (3) the ABA's Model Code of Professional Responsibility, and (4) the Louisiana State rules of conduct. See Horaist v. Doctor's Hospital of Opelousas, 255 F.3d 261, 266 (5th Cir. 2001); FDIC v. United States Fire Ins. Co., 50 F.3d 1304, 1311-12 (5th Cir. 1995).

Zichichi v. Jefferson Ambulatory Surgery Center, LLC, 2008 WL 2859232, at *1 (E.D. La. July 22, 2008). This Court has adopted the Rules of Professional Conduct of the Louisiana State Bar Association as its rules of conduct. See LR 83.2.3. These rules are substantially the same as the ABA Model Rules. Lange v. Orleans Levee Dist., 1997 WL 668216, at *2 (E.D. La. Oct. 23, 1997). The following Louisiana Rules of Professional Conduct are relevant to the pending motions:

         Rule 1.7. Conflict of Interest: Current Clients

         (a) Except as provided in paragraph (b), a lawyer shall not represent a client if the representation involves a concurrent conflict of interest. A concurrent conflict of interest exists if:

(1) the representation of one client will be directly adverse to another client; or
(2) there is a significant risk that the representation of one or more clients will be materially limited by the lawyer's responsibilities to another client, a former client or a third person or by a personal interest of the lawyer.

         (b) Notwithstanding the existence of a concurrent conflict of interest under paragraph (a), a lawyer may represent a client if:

(1) the lawyer reasonably believes that the lawyer will be able to provide competent and diligent representation to each affected client;
(2) the representation is not prohibited by law;
(3) the representation does not involve the assertion of a claim by one client against another client represented by the lawyer in the same litigation or other proceeding before a tribunal; and
(4) each affected client gives informed consent, confirmed in writing.

         Rule 1.9. Conflict of Interest: Former Client

         (a) A lawyer who has formerly represented a client in a matter shall not thereafter represent another person in the same or a substantially related matter in which that person's interests are materially adverse to the interests of the former client unless the former client gives informed consent, confirmed in writing.

         (b) A lawyer shall not knowingly represent a person in the same or a substantially related matter in which a firm with which the lawyer formerly was associated had previously represented a client

         (1) whose interests are materially adverse to that person; and

         (2) about whom the lawyer had acquired information protected by Rules 1.6 and 1.9(c) that is material to the matter; unless the former client gives informed consent, confirmed in writing.

         (c) A lawyer who has formerly represented a client in a matter or whose present or former firm has formerly represented a client in a matter shall not thereafter:

         (1) use information relating to the representation to the disadvantage of the former client except as these Rules would permit or require with respect to a client, or when the information has become generally known; or

         (2) reveal information relating to the representation except as these Rules would permit or require with respect to a client.

         Rule 1.10. Imputation of Conflicts of Interest: General Rule

         (a) While lawyers are associated in a firm, none of them shall knowingly represent a client when any one of them practicing alone would be prohibited from doing so by Rules 1.7 or 1.9, unless the prohibition is based on a personal interest of the prohibited lawyer and does not present a significant risk of materially limiting the representation of the client by the remaining lawyers in the firm.

         (c) A disqualification prescribed by this rule may be waived by the affected client under the conditions stated in Rule 1.7.

         Rule 3.7. Lawyer as Witness

         (a) A lawyer shall not act as advocate at a trial in which the lawyer is likely to be a necessary witness unless:

         (1) the testimony relates to an uncontested issue;

         (2) the testimony relates to the nature and value of legal services rendered in the case; or

         (3) disqualification of the lawyer would work substantial hardship on the client.

         (b) A lawyer may act as advocate in a trial in which another lawyer in the lawyer's firm is likely to be called as a witness ...


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