ZOEL HOLDING COMPANY, INC. v. VERDIN No. 1 CA-SA 13-0058.
ZOEL HOLDING COMPANY, INC.; MGA HEALTHCARE STAFFING, INC.; MGA HOME HEALTHCARE, L.L.C.; MGA HOME HEALTHCARE COLORADO, INC.; MGA EMPLOYEE SERVICES, INC., Petitioners, v. THE HONORABLE MARIA DEL MAR VERDIN, Judge of the SUPERIOR COURT OF THE STATE OF ARIZONA, in and for the County of MARICOPA, Respondent Judge, RICHARD EDEN and JANE DOE EDEN; KRISTIC KIDD and JOHN DOE KIDD; JESSICA SONCRAINTE and JOHN DOE SONCRAINTE; GARRETT BRILL and JANE DOE BRILL; JUSTIN PACK and JANE DOE PACK; MICHAEL LOVELL and JANE DOE LOVELL; HOME HEALTH AGENCY — ARIZONA, INC., d/b/a TEAM SELECT HOME CARE, Real Parties in Interest.
Court of Appeals of Arizona, Division One, Department E.
Filed March 28, 2013.
Maricopa County Superior Court No. CV 2013-001150
MARGARET H. DOWNIE, Presiding Judge.
Petitioners (referred to collectively as "Zoel") seek special action review of the superior court's order disqualifying their counsel. We accept jurisdiction because Zoel has no plain, speedy or adequate remedy by appeal. See Foulke v. Knuck, 162 Ariz. 517, 519, 784 P.2d 723, 725 (App. 1989) (accepting special action jurisdiction to consider denial of motion to disqualify counsel). However, we deny relief.
Team Select is a "direct competitor" of Zoel's, "engaging in the same business . . . by providing home healthcare services in Phoenix, Arizona and Colorado Springs, Colorado." In December 2009, Lewis & Roca ("L&R") began representing Team Select in a dispute with a different competitor involving a non-solicitation agreement and a former employee ("former matter"). L&R attorneys Wand and Samuels were primarily responsible for the former matter, which settled in February 2010.
In February 2013, L&R filed suit on behalf of Zoel against Team Select, its president, and certain employees who left Zoel to work for Team Select ("current matter"). Samuels is the lead L&R lawyer on the current matter. Zoel alleges Team Select hired its former employees, who took and used confidential and trade secret information in their new employment.
Team Select moved to disqualify L&R, claiming, inter alia, that a conflict of interest existed because the former and current matters are substantially related.
The superior court heard oral argument and took the motion to disqualify under advisement. The court thereafter granted the motion, and L&R promptly sought special action relief.
We review a ruling on a motion to disqualify counsel for an abuse of discretion. Amparano v. ASARCO, Inc., 208 Ariz. 370, 376, ¶ 19, 93 P.3d 1086, 1092 (App. 2004) (citation omitted). The burden is on the party moving to disqualify "to show `sufficient reason'" for the disqualification. Id. at 377, ¶ 24, 93 P.3d at 1093. "[I]n the absence of any express findings and conclusions by the trial court, we will imply the necessary findings and conclusions, if supported by the record, to affirm the order." Id.
ER 1.9(a) reads:
The comment to ER 1.9 states that matters are "substantially related"
ER 1.9, cmt. 3.
We cannot say the superior court "exceed[ed] the bounds of reason" in deeming the former and current matters substantially related, within the meaning of ER 1.9. See Associated Indem. Corp. v. Warner, 143 Ariz. 567, 571, 694 P.2d 1181, 1185 (1985) (in reviewing for abuse of discretion, "[t]he question is not whether the judges of this court would have made an original like ruling, but whether a judicial mind, in view of the law and circumstances, could have made the ruling without exceeding the bounds of reason").
In the former matter, a competitor accused Team Select of hiring an employee who was sharing information in violation of a non-compete agreement. In the current matter, Team Select is accused of similar conduct by a different competitor. Team Select has avowed that it disclosed to L&R "significant confidential information concerning Team Select's business structure, recruiting practices, hiring and firing practices, terms and conditions of employment of its employees, and other proprietary and confidential information regarding Team Select's operations that may be relevant to the claims [L&R] is now asserting against Team Select."
Given the substantial similarity between the two matters, the time that elapsed between them, the avowals by Team Select as to the information disclosed, and the fact that the same L&R attorneys handled both matters, the superior court could reasonably conclude there was a substantial risk that "confidential factual information as would normally have been obtained in the prior representation would materially advance" Zoel's position in the current matter.
MAURICE PORTLEY, PHILIP HALL, Judge, concurring.
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