*:7, 3
4 IN THE SUPERIOR COURT Of GUAM
ATTORNEY GENERAL OF GUAM, Civil Case No. CV0217-21 6 GOVERNMENT OF GUAM,
7 Plaintiff,
$ vs.
9 TELEGUAM HOLDINGS, iNC., dba GTA,
10 Defendant.
11 DECISION AND ORDER TELEGUAM HOLDINGS, LLC, dba GTA, 12 Counterclaim Plaintiff, 13 vs. 14 ATTORNEY GENERAL OF GUAM, 15 GOVERNMENT OF GUAM,
16 Counterclaim Defendant.
17 INTRODUCTION 18 This matter came before the Honorable Arthur R. Barcinas on September 2, 2021 for a 19 motion hearing on the Defendant/Counterclaim Plaintiffs Motion to Disqualify Assistant 20 Attorney General Benjamin Paholke. Plaintiff and Counterclaim Defendant Attorney General 21 of Guam and Government of Guam (“Government”) are represented by Assistant Attorney 22 General Joseph Perez, Benjamin Paholke, James Canto and Jordan Pauluhn. Defendant and 23 Counterclaim Plaintiff Teleguam Holdings LLC, dba GTA, named in the Complaint as 24
Page lof 12 1 Teleguam Holdings, Inc., dba GTA (hereinafter “GTA”) is represented by Attorneys Anita
2 Arriola and Nicole Cruz.
3 Having considered the arguments, pleadings and applicable law, the Court hereby
4 GRANTS the Motion to Disqualify Assistant Attorney General Benjamin Paholke from all
5 stages of the litigation.
6 BACKGROUND
7 This case arises out of the Complaint for Injunctive Relief, Restitution, Disgorgement
8 and Rescission of Contract filed by the Government on February 26, 2021, alleging that GTA
9 violated the Deceptive Trade Practices Act by passing on the Business Privilege Tax (“BPT”)
10 to customers as an illegal surcharge above the price of goods and services that it represented to
11 customers. On March 23, 2021, Defendant/Counterclaim Plaintiff GTA filed its Answer;
12 Affirmative Defenses and Counterclaim, alleging that the Complaint was groundless, brought
13 in bad faith, and brought for the purposes of harassment.
14 On May 24, 2021, the Government filed its Motion to Dismiss Defendant’s
15 Counterclaim and Strike Portions of Defendant’s Pleading’ (“Motion to Dismiss and Strike”).
16 GTA filed its Memorandum of Points and Authorities in Opposition to Plaintiffs Motion to
17 Dismiss and Motion to Strike on July 2, 2021. On July 16, 2021, the Government filed its
1$ Reply to Defendant’s Opposition. A hearing on the Motion to Dismiss and Strike was held on
19 July 22, 2021; however the motion was held in abeyance until resolution of the Motion to
20 Disqualify Assistant Attorney General Benjamin Paholke (“Motion to Disqualify”), which was
21 filed by GTA along with a supporting declaration on July 14, 2021.
22 Originally titled “Government’s Motion to Amend its Complaint, Strike Portions of Defendant’s Pleading, and 23 Dismiss Defendant’s Counterclaims.” The title of this pleading was changed on May 25, 2021 through the Government’s filing of the Errata to Correct the Caption and footers of the Government’s Motion to Dismiss. 24
Page 2of12 . 1 On August 12, 2021, the Government filed its Opposition to GTA’s Motion to 2 Disqualify. On August 25, 2021, GTA filed its Reply to the Government’s Opposition. A 3 hearing on the motion was held on September 2, 2021, at which point this Court took the 4 matter under advisement.
5 On September 3, 2021, without leave of Court, the Government filed a Notice of 6 Supplemental Authority regarding its Opposition to GTA’s Motion to Disqualify 7 (“Government’s Notice of Supplemental Authority”). On September 7, 2021, GTA filed its 8 Reply to the Government’s Notice of Supplemental Authority, requesting that the Court 9 disregard the Government’s Notice of Supplemental Authority and award GTA attorney’s fees 10 for its reply under CVR 7.1(k) and GR 2.1. GTA also filed Supplemental Documents in 11 Support of GTA’s Motion to Disqualify on October 14, 2021, to include Object ions and 12 Responses to GTA’s Second Set of Interrogatories and Second Request for Production of 13 Documents; and the Rule 33 Oath Signed by Assistant Attorney General Benjam in Paholke. 14 DISCUSSION
15 I. DISQUALIFICATION OF ASSISTANT ATTORNEY GENERAL PAHOLKE IS PROPER UNDER RULE 3.7 OF THE GUAM RULES OF PROFESSIONAL 16 CONDUCT.
17 The Guam Supreme Court has held that “disqualification is a drastic course of action
18 that should not be taken simply out of hypersensitivity to ethical nuances or the appearance of
19 impropriety.” Barrett-Anderson v. Camacho, 2018 Guam 20 ¶ 14 (quoting Roush v. Seagate 20 Tech., LLC, 58 Cal. Rptr. 3d 275, 281 (Ct. App. 2007)). However, an attorney may be
21 disqualified where the “continued representation of a party or participation in an action violates
22 or significantly risks violating the Guam Rules of Professional Conduct.” Id. ¶ 20. 23 Disqualification is not appropriate for potential conflicts, but rather for “inevit able and material
24 conflicts.” Id. ¶ 17. A trial court has substantial latitude in deciding the disqua lification of
Page3ofl2 1 counsel. See United States v. Zichettello, 20$ F.3d 72, 104 (2d Cir. 2000) (citing Wheat v.
2 United States, 486 U.s. 153, 163 (198$)); see also Whiting Corp. v. White Mach. Corp., 567
3 f.2d 713, 715 (7th Cir. 1977) (citing Schtoetter v. Railoc of Indiana, Inc., 546 F.2d 706 (7th
4 Cir. 1976)).
5 Disqualification may be an appropriate remedy under Guam Rule of Professional
6 Conduct 3.7(a), which states:
7 (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; 9 or (3) disqualification of the lawyer would work substantial hardship on the client. 10 Guam R. Prof 1 Conduct 3.7(a) (emphasis added). An attorney may be a necessary 11 witness when the attorney’s testimony is relevant and material, and he is the primary or only 12 source of testimony regarding a relevant fact. Guctrn Election Cornm’n v. Responsible Choices 13 for all Adults Coal., 2007 Guam 20, ¶ 89. Normally, “[a] tribunal should not permit a lawyer to 14 call opposing trial counsel as a witness unless there is a compelling need for the lawyer’s 15 testimony,’ in part because it may interfere with counsel’s function as an advocate.” Guam 16 Election Coinm’n v. Responsible Choices for alt Adults Coal., 2007 Guam 20, 17 ¶ 88 (citing Restatement (Third) of Law Governing Lawyers § 108(4) & cmt. b). A party seeking testimony 18 from an advocate-witness must show that the evidence is vital to the case and that such evidence 19 cannot be obtained from another source. Id. “A necessary witness is not the same thing as the 20 ‘best’ witness.” Harter v. Univ. of Indianapolis, 5 F.Supp.2d 657, 665 (S.D. md. 199$). “Where 21 counsel’s testimony would be merely cumulative of testimony provided by others, 22 disqualification is not appropriate.” Finkel v. frattarelli Bros., 740 F. Supp. 2d 368, 375 23 (E.D.N.Y. 2010). However, “[w]hether a defending or prosecuting attorney may testify in a case 24
Page 4 of 12 . 1 he is trying is within the discretion of the district court.” Guam Election Comm’n v. Responsible
2 Choices for alt Adults Coat., 2007 Guam 20, ¶ $8 (citing United States v. Watson, 952 F.2d 982,
3 986 (8th Cir.1991)). Further, an attorney who signs interrogatories may become a necessary
4 witness because interrogatory answers may be used at trial as permitted by the Rules of
5 Evidence. See Villareal v. El Chile, Inc., 266 F.R.D. 207, 211 (N.D. Ill. 2010), Saria v.
6 Massachttsetts Mitt. Life Ins. Co., 228 F.R.D. 536, 538—39 (S.D.W. Va. 2005); see dilso Guam
7 R. Civ. P. 33 (interrogatories are to be answered by the party served, or “if the party served is a $ public or private corporation or a partnership or association or governmental agency, by any
9 officer or agent, who shall furnish such information as is available to the party.”).
10 Guam Rule of Professional Conduct 3.7 was adopted from the 2002 ABA Model Rule,
11 Comment 2 of which states that the opposing party has a proper objection when an attorney’s
12 role as advocate-witness may prejudice the objecting party. See Model Rules of Prof’l
13 Conduct, R. 3.7, cmt. 2. This is because “[a] witness is required to testify on the basis of
14 personal knowledge, while an advocate is expected to explain and comment on evidence given
15 by others. It may not be clear whether a statement by an advocate-witness should be taken as
16 proof or as an analysis of the proof.” Id. In addition to potentially confusing the trier of fact, the 17 advocate-witness rule addresses the danger that a testifying attorney may not be a fully
18 objective witness. United States v. Jones, 600 F.3d $47, $62 (7th Cir. 2010)
19 (citing United States v. Morris, 714 F.2d 669, 671 (7th Cir.1983)); In re Leventhal, No. 10 B 20 12257, 2012 WL 1067568, at *2 (Bankr. N.D. ill. Mar. 22, 2012). Rule 3.7 also aims to prevent
21 substantial hardship to a client. Where a party has alternative representation in place, this fact 22 decreases the likelihood of substantial hardship arising from the disqualification of that party’s
23 attorney. Fognani v. Young, 115 P.3d 1268, 1276 (Cob. 2005).
Page 5 of 12 1 Here, Paholke’s testimony is relevant and material to GTA’s affirmative defenses and
2 counterclaims, to include failure to state a claim upon which relief may be granted, estopp el, 3 ladies, waiver, failure to exhaust administrative remedies, and its counterclaims that the
4 Complaint is groundless, made in bad faith, and brought for purposes of harassment. Paholk e 5 drafted and verified objections and responses to GTA’s interrogatories, authored and sent Civil 6 Investigative Demands to GTA, demanded documents from and investigated GTA’s actions
7 involving the BPT increase almost one year after GTA had provided information to the AG’s 8 office and was allegedly led to believe that the matter had been resolved. Furthermore, GTA 9 informed Paholke about the General Exchange Tarrif No. 1 and Public Utilities Order it
10 believed authorized GTA to charge its customers the BPT. Because Paholke is the only person 11 who signed and verified the interrogatory responses on behalf of the Government, he is the 12 only witness who can attest to his answers, whether he reviewed the responses for accura cy, 13 and what information was available to him. Although the Government argues that the answers 14 to interrogatories relate to uncontested issues and were the equivalent of authenticatin g 15 underlying documents, a review of the interrogatory answers suggests that some of the topics
16 are clearly contested by GTA and that the answers did not merely authenticate underl ying 17 documents. Further, Paholke communicated through phone calls and emails with James
18 Hoffman, Chief Legal Officer of Docomo Pacific Inc., who also filed a consumer compla int 19 against GTA. The other consumer complaint against GTA was filed by Frank Cruz, who 20 admitted that he did not complain to GTA before filing the complaint, despite his statem ents to 21 the contrary. GTA seeks to question Paholke about the nature of these communicatio ns and 22 what investigations were made. Because of Paholke’s central role and relation to GTA’s
23 defenses and counterclaims, GTA alleges that Paholke’s testimony is not only relevan t and 24 material, but unobtainable elsewhere.
Page 6 of 12 1 In its Amended Initial Disclosures, GTA listed Paholke as a person with discoverable
2 information. See Deci. of Anita P. Arriola (Jul. 14, 2021), Ex. R. GTA has already deposed
3 Paholke once and seeks to depose him a second time. GTA has also indicated its intent to call
4 Paholke as a witness at trial. Because GTA claims that the Complaint was groundless, brought
5 in bad faith and for purposes of harassment, Paholke is unlikely to be an objective witness
6 because his testimony will concern the manner in which he investigated GTA, the reasons for
7 his actions, and will put his conduct as a professional at issue. Thus, he will have reason to cast
$ his conduct in light favorable to himself. GTA also claims that Paholke’s representation of the
9 Government severely prejudices GTA because his statements may create confusion as to
10 whether he is acting as advocate or witness, and may also be confusing or misleading to the
11 Court. Based on these arguments, the Court finds that Paholke’s testimony is not only relevant
12 and material, but that he is the only source of certain information sought by GTA. The court
13 further finds that these circumstances create a conflict of interest warranting disqualification.
14 Additionally, there is no risk of “substantial hardship” to the Government if Paholke is
15 disqualified as counsel because there are other Assistant Attorney Generals participating in this
16 matter and as such, there is substitute counsel available. Therefore, this consideration weighs in
17 favor of disqualification. For the reasons stated above, the Court disqualifies Assistant
1$ Attorney General Paholke from representing the Government as counsel in this matter.
19 II. DISQUALIFICATION IS PROPER UNDER RULE 1.7 BECAUSE PAHOLKE’S DUAL ROLE AS ADVOCATE-WITNESS PRESENTS A CONFLICT OF 20 INTEREST.
21 Paholke’s dual role of advocate and witness also presents a conflict of interest under
22 Guam Rule of Professional Conduct 1.7. Pursuant to Rule 1 .7(a)(2), a lawyer shall not
23 represent a client where there is a significant risk that the representation of one or more clients
24 will be materially limited by “a personal interest of the lawyer.” The standard for attorney
Page7ofl2 1 disqualification due to a conflict of interest is “whether an attorney’s continued representation
2 of a party or participation in an action violates or significantly risks violating the Guam Rules
3 of Professional Conduct.” Barrett-Anderson, 201$ Guam 20 ¶ 20. When an attorney becomes a
4 witness, his loyalties may be divided between his personal interests in protecting his reputation
5 and his client’s right to effective representation. United States u. Smith, No. 17-CR-00020,
6 2017 WL 4225630, at *6 (D. Guam 2017); see also Jamieson v. Slater, No. CV 06-1524-PHX-
7 SMM, 2006 WL 3421788, at *6 (D. Ariz. 2006).
8 Here, GTA has placed Paholke’s actions and conduct in question through its defenses
9 and counterclaims. The probity of Paholke’s conduct is at issue in relation to GTA’s
10 allegations that Paholke communicated with Docomo representatives and pursued this action
11 despite GTA’s contention that the Complaint is groundless, brought in bad faith and for the
12 puxposes of harassment. Thus, he may be unable to provide detached legal advice and
13 zealously represent the Government, while also defending his credibility and actions. Because
14 Paholke has a personal interest in protecting his actions and reputation, the Court finds there is
15 a significant risk that his continued representation of the Government in this matter would
16 violate Rule 1.7 of the Guam Rules of Professional Conduct. Furthermore, it is possible that his
17 testimony could be adverse to the Government. This circumstance presents a conflict of interest
18 under Rule 1.7, which this court finds warrants disqualification at trial and in pre-trial matters.
19 III. GOVERNMENT ATTORNEYS ARE SUBJECT TO THE GUAM RULES OF PROFESSIONAL CONDUCT AND THIS ACTION IS NOT BROUGHT 20 PROSE.
21 The Government contends in its Opposition to GTA’s Motion to Disqualify that this
22 action involves one plaintiff, namely the Attorney General of Guam in the name of the
23 Government of Guam. Opp’n (Aug. 12, 2021) at 3. The Court recognizes that the Attorney
24 General of Guam is the Chief Legal Officer of the Government of Guam, and may conduct
Page 8of12 1 civil actions on behalf of the Government of Guam. GL4A v. Movian, 2005 Guam 5 ¶ 19; 5 2 GCA § 30109(c) (2003); 48 U.S.C.A. § 1421g (West). Here, the Complaint states that this “is
3 an action brought by the Attorney General of Guam in the name of the Government of Guam
4 under 5 GCA § 32116.” Compl. ¶ 3.
5 Although the OAG admits that this suit is brought on behaf of the Government of
6 Guam, it cites to Barrett-Anderson to support its argument that this action is being brought pro
7 se by the Government, and as such, certain rules of the Guam Rules of Professional Conduct
8 do not apply to Assistant Attorney General Paholke. The Court is unconvinced by this
9 argument. In Barrett-Anderson, the Attorney General herself brought a suit against the
10 Governor and Department of Revenue and Taxation (DRT) on behalf of herself and her office.
11 The Supreme Court found that because Attorney General Elizabeth Barrett-Anderson was
12 “bringing the suit on her own behalf,” Rule 1.7 was not implicated. Barrett-Anderson, 2018
13 Guam 20 ¶ 26. This is distinguished from the current matter, where the Complaint is brought
14 by the Attorney General’s Office on behalf of the Government of Guam. Thus, the
15 Government’s reliance on Barrett-Anderson is misplaced. In fact, the Supreme Court in
16 Barrett-Anderson rejected the Attorney General’s request for flexibility under the Guam Rules
17 of Professional Conduct based on her position as the Chief Legal Officer for the government of
18 Guam, noting that the rules allow courts to “protect the public and maintain public confidence
19 in the legal profession.” Id. at ¶ 24 (citing Iowa Sup. Ct. Att’y Disciplinary Bd. ij’. Deremiah,
20 875 N.W.2d 728, 737 (Iowa 2016).
21 Although the OAG cites to numerous cases to support its argument that certain Rules of
22 Professional Conduct do not apply in this case because the Attorney General’s Office is a
23 lawyer-litigant bringing this action pro se, none of these cases are factually or legally similar to
Page 9 of 12 1 the case at bar. The Court finds that the action is not brought pro se; and that the Guam Rules
2 of Professional Conduct apply to Assistant Attorney General Paholke.
3 IV. PAHOLKE’S CONFLICT OF INTEREST WARRANTS DISQUALIFICATION FROM ALL STAGES OF THE LITIGATION. 4 Rule 3.7 provides that a lawyer-witness may be disqualified from acting as an advocate 5 at trial, while Rule 1.7 bars representation when a concurrent conflict of interest exists. Courts 6 have also found that in certain circumstances, an attorney-witness may be disqualified from 7 representation in pre-trial matters. See Lange v. Orleans Levee Dist., No. 97-987, 1997 WL 8 668216, at *3 (E.D. La. Oct. 23, 1997) (finding that an attorney may be disqualified from 9 representation at any stage of the proceedings “where the lawyer-witness’ testimony is likely to 10 be prejudicial to his client.”); see also Guar. Corp. v. Nat? Union fire Ins. Co. qf Pittsburgh, 11 PA., No. 90-2695, 1993 WL 165690, at *8 (E.D. La. May 10, 1993) (disqualifying attorneys 12 for all purposes in the litigation where the Court determined that they were likely to be called 13 as witnesses and their actions were at issue). In making these determinations, a critical inquiry 14 is whether the litigation can be conducted in fairness to all parties. See World Youth Day, Inc. 15 v. Famous Artists Merch. Exch., Inc., 866 F. Supp. 1297, 1303 (D. Cob. 1994) (where district 16 court disqualified attorney-witness from certain pre-trial and trial matters); Lafond Family Tr. 17 v. Allstate Prop. & Cas. Ins. Co., Civil Action No. l9-CV-00767-KLM, 2019 WL 3734459 at 18 *6 (D. Cob. Aug. 8, 2019) (wherein district court disqualified attorney-witness from taking or 19 defending depositions where he could challenge responses based on his recollection, thereby 20 prejudicing the opposing party). 21 Here, there is a conflict of interest between Paholke as necessary witness, wherein he 22 has a personal interest in defending his conduct and reputation, and Paholke as attorney, where 23 he has a duty to zealously represent the interests of the Government. The conflict of interest 24
Page 10 of 12 1 exists because Paholke’s testimony may be adverse to the Government, and his own actions are
2 at issue as they relate to GTA’s defenses of failure to state a claim, estoppel, waiver, laches,
3 and GTA’s counterclaims. For example, if Paholke’s actions are found to be in bad faith,
4 groundless or harassing, his actions could harm the Government and lead to liability. Due to
5 the seriousness of this conflict of interest, the Court finds that allowing Paholke to continue to
6 act as counsel in this matter would taint this case, and that Paholke should be disqualified from
7 all stages of this litigation.
8 V. THE GOVERNMENT HAS NOT SHOWN THAT THIS MOTION WAS BROUGHT FOR TACTICAL ADVANTAGE. 9 Disqualification should not be sought for tactical advantage. Barrett-Anderson, 2018 10 Guam 20 91 20. Although throughout the Government’s Opposition it makes conclusory 11 arguments that the attempt to disqualify Paholke is brought for tactical advantage, the court is 12 not persuaded. The Government argues that “[gliven the lack of merit in GTA’s legal position 13 and its unwillingness to accommodate opposing counsel’s scheduling requests at almost every 14 turn, one can reasonably conclude that tactical advantage is the only true motive of GTA’s 15 present motion.” Opp’n at 15. However, as discussed above, the Court does not find that 16 GTA’s legal position lacks merit. The Court also does not find that failing to accommodate 17 scheduling requests necessarily leads to an inference that this motion is brought for tactical 18 gain. Without more, the Court cannot conclude that this motion is brought for tactical 19 advantage. 20 VI. THE COURT DISREGARDS SUPPLEMENTAL AUTHORITY FILED BY THE 21 GOVERNMENT BUT DECLINES TO IMPOSE SANCTIONS.
In GTA’ s Reply to the Government’s Notice of Supplemental Authority, it requested 22 that the Court disregard the Government’s Notice of Supplemental Authority and award GTA 23 attorney’s fees for its reply under CVR 7.1(k) (providing that the Court “need not consider 24
Page 11 of 12 1 motions, oppositions to motions or briefs or memoranda that do not comply with this Rule”)
2 and GR 2.1 (providing that failure to conform to rules “shall subject the offending party or
3 counsel to such penalties, including monetary sanctions andlor the imposition of costs and
4 attorney’s fees to opposing counsel.”). Here, the Government did not request leave of Court to
5 file supplemental authority after this court took the matter under advisement. Consequently, the
6 Court will disregard the Government’s supplemental authority filed on September 3, 2021 and
7 warns the Government that failure to follow the rules could lead to imposition of sanctions or
8 attorney’s costs.
9 CONCLUSION
10 For the reasons stated above, the Court GRANTS the Motion to Disqualify Assistant
11 Attorney General Benjamin Paholke from representing the Government at all stages of this
12 litigation.
13 MflV ? 14 IT IS SO ORDERED
16 HONORABLE ARTHUR R. BARCINAS Judge, Superior Court of Guam 17
19 SERVICE VIA I acknowledge That an electron coie original was e-maile to
23 Deputy Clerk, Superior Court of Guam
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