UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA ______________________________ ) JOSHUA M. AMBUSH ) ) Plaintiff, ) ) v. ) Civil Action No. 15-1237 (EGS) ) MICHAEL ENGELBERG, et al. ) ) Defendants. ) )
MEMORANDUM OPINION
Pending before the Court is plaintiff Joshua Ambush's
motion to disqualify Neal Sher and Charles Both as counsel for
defendants Eliezer Perr, Yedidiah Perr, American Center for
Civil Justice, Inc. ("ACCJ"), American Center for Civil Justice,
Religious Liberty and Tolerance, Inc., American Center for
Recovery, LLC, American Center for Freedom of Religion, and Neal
Sher (collectively, "Center Defendants"). Plaintiff asks the
Court to disqualify Mr. Sher and Mr. Both from representing the
Center Defendants because of purported conflicts between counsel
and their current and former clients in violation of D.C. Rules
of Professional Conduct ("D.C. Rules") 1.7 and 1.9. Plaintiff
also asserts that disqualification of Mr. Sher is necessary
under D.C. Rule 3.7, which prohibits a lawyer from acting as an
advocate at a trial in which the lawyer is likely to be a
necessary witness. Having carefully considered the parties' written submissions, including supplemental memoranda and
responses, plaintiff's motion is DENIED at this stage of the
proceedings, without prejudice to being refiled should the
circumstances warrant.
I. BACKGROUND
On May 30, 1972, three members of a Japanese terrorist
organization attacked passengers at the Lod Airport located near
Tel Aviv, Israel, killing and wounding dozens of individuals. In
2006, ACCJ, a non-profit organization that "advocate[s] for
individuals who have been victims of foreign terrorist attacks,"
and Mr. Ambush, an attorney, began working together to seek
compensation for various claimants injured as a result of the
Lod Airport massacre. Compl. ¶¶ 10, 33, 54-56. As part of his
work with ACCJ, Mr. Ambush filed a lawsuit – Franqui v. Syria,
No. 06-0734 (RBW) (D.D.C 2006) – on behalf of certain Puerto
Rican individuals and estates against those purportedly
responsible for the attack. Id. ¶¶ 54-55.
In the summer of 2008, the governments of Libya and the
United States negotiated a treaty pursuant to which Libya, one
of the defendants in the Franqui action, agreed to create a
settlement fund to compensate victims of state-sponsored
terrorism, including victims of the Lod Airport massacre. Id. ¶¶
61-62. Shortly thereafter, Mr. Ambush and the ACCJ became
"embroiled in a dispute as to the management and control of the
2 pending claims before the Department of State and Ambush's
compensation," and ACCJ sued Mr. Ambush in an action captioned
American Center for Civil Justice v. Ambush, No 09-233 (PLF)
(D.D.C. 2011) ("Attorneys' Fees Litigation"). Id. ¶¶ 69-70, 75.
Attorneys Mr. Sher and Mr. Both, among others, represented ACCJ
in that proceeding and were involved in negotiating the
settlement agreement that resolved that case in 2012. See Pl.'s
Mot. to Disqualify Counsel ("Mot."), ECF No. 11 at 1-2; Defs.'
Opp. to Pl.'s Mot. to Disqualify Counsel ("Opp."), ECF No. 14 at
2. Along with ACCJ, Michael Engelberg, who was then president of
ACCJ, and Eliezer Perr, a member of the board of directors of
ACCJ, were parties to the settlement agreement. Compl. Ex. 1.
The instant suit stems from a purported breach of that
settlement agreement. Plaintiff alleges that ACCJ, Dr.
Engelberg, Mr. Perr, Mr. Sher, and others interfered with his
efforts to seek compensation from his former clients and engaged
in other activity in violation of both the settlement agreement
and the Racketeering and Corrupt Organizations Act, 18 U.S.C. §
1962. See generally id. Attorney Efrem Schwalb is lead defense
counsel in this action and represents all of the Center
Defendants. Opp. at 2. On August 26, 2015, Mr. Sher and Mr. Both
entered an appearance on behalf of the Center Defendants by
signing a motion in which they requested additional time to
answer or otherwise respond to the complaint. See ECF No. 9; see
3 also D.C. Local Civil Rule 83.6(a) ("An attorney eligible to
appear may enter an appearance in a civil action by signing any
pleading described in Fed. R. Civ. P. 7(a)[.]"). In addition to
serving as counsel in this case and being a co-defendant, Mr.
Sher is ACCJ's General Counsel. Opp. at 2. Dr. Engelberg is
represented by separate counsel.
In this motion, plaintiff seeks to disqualify Mr. Sher and
Mr. Both from representing the Center Defendants. According to
plaintiff, Mr. Sher's role in this litigation as both counsel
and defendant violates D.C. Rule 1.7 because it presents
opportunities for "multiple conflicts of interest" to arise
between Mr. Sher's own personal interests and the interests of
the Center Defendants. Plaintiff also asserts that Mr. Sher and
Mr. Both cannot represent the Center Defendants in this
litigation because the interests of the Center Defendants are
materially adverse to the interests of Dr. Engelberg, who is a
former client of Mr. Sher and Mr. Both. Finally, because Mr.
Sher was allegedly "involved in the RICO conspiracy" and
negotiating the settlement agreement underlying this suit,
plaintiff insists that Mr. Sher will be a necessary witness,
thus requiring disqualification under D.C. Rule 3.7.
II. STANDARD OF REVIEW
A motion to disqualify counsel is committed to the sound
discretion of the district court. Palumbo v. Tele-Commc'ns,
4 Inc., 157 F.R.D. 129, 131 (D.D.C. 1994); see also Groper v.
Taff, 717 F.2d 1415, 1418 (D.C. Cir. 1983) ("the district court
bears responsibility for supervising the members of its bar and
its exercise of this supervisory duty is discretionary"). The
disqualification of a party's chosen counsel, however, is a
"drastic measure that is disfavored by the courts." Konarski v.
Donovan, 763 F. Supp. 2d 128, 135–36 (D.D.C. 2011) (citations
and internal quotation marks omitted). Accordingly,
"disqualification motions should be subject to particularly
strict judicial scrutiny." Id. Strict scrutiny is warranted
because disqualification "negates a client's right to freely
choose his counsel," Headfirst Baseball LLC v. Elwood, 999 F.
Supp. 2d 199, 204 (D.D.C. 2013) (internal quotation marks and
citation omitted), and because such motions may be "used as
'procedural weapons' to advance purely tactical purposes," In re
Rail Freight Fuel Surcharge Antitrust Litig., 965 F. Supp. 2d
104, 110 (D.D.C. 2013) (citation omitted).
The District of Columbia Rules of Professional Conduct
govern the practice of law – and the qualification of counsel –
in this District. See LCvR 83.15(a) (adopting the Rules of
Professional Conduct as adopted by the District of Columbia
Court of Appeals); D.C. Rules Prof. Conduct 8.5(b)(1) ("[f]or
conduct in connection with a matter pending before a tribunal,
the rules to be applied shall be the rules of the jurisdiction
5 in which the tribunal sits"); see also Paul v. Judicial Watch,
Inc., 571 F. Supp. 2d 17, 20 (D.D.C. 2008). In considering a
motion to disqualify counsel, the district court must conduct a
two-step inquiry: first, it must determine "whether a violation
of an applicable Rule of Professional Conduct has occurred or is
occurring," and second, "if so, whether such violation provides
sufficient grounds for disqualification." Headfirst Baseball,
999 F. Supp. 2d at 204-05 (citation and internal quotation marks
omitted). The D.C. Circuit has cautioned that, even where a
violation is found, disqualification is warranted only "rarely"
in cases where there is a "serious question as to counsel's
ability to act as a zealous and effective advocate for the
client" or the "substantial possibility of an unfair advantage
to the current client because of counsel's prior representation
of the opposing party[.]" Koller By & Through Koller v.
Richardson-Merrell Inc., 737 F.2d 1038, 1056 (D.C. Cir. 1984),
vacated on other grounds, 472 U.S. 424 (1985).
III. ANALYSIS
Plaintiff seeks to disqualify Mr. Sher and Mr. Both based
on two primary theories: (1) conflicts of interest under D.C.
Rules 1.7 and 1.9; and (2) D.C. Rule 3.7's prohibition against a
6 lawyer acting as an advocate when the lawyer is also a necessary
witness. The Court addresses each argument in turn. 1
A. Conflict of Interest
In his motion, plaintiff describes two sources of potential
conflicts of interests.
First, plaintiff points to Mr. Sher's role in this matter
as both a co-defendant and an attorney representing the Center
Defendants. Plaintiff contends that Mr. Sher's dual role
violates D.C. Rule 1.7(b)(4), which requires disqualification
where a "lawyer's professional judgment on behalf of the client
will be or reasonably may be adversely affected by . . . the
lawyer's own financial, business, property, or personal
interests." See Mot. at 9-10.
Second, plaintiff argues that Mr. Sher and Mr. Both's prior
representation of Dr. Engelberg in the Attorneys' Fees
Litigation forecloses their role as counsel for the Center
Defendants in this case under D.C. Rule 1.9. See Mot. at 10-12.
According to plaintiff, this suit is substantially related to
the Attorneys' Fee Litigation and the interests of Dr. Engelberg
1 Plaintiff also suggests that Mr. Sher should be disqualified from this case because he was previously disbarred from the District of Columbia bar. See Mot. at 9. But Mr. Sher is currently admitted to practice before this Court, see Opp. Ex. A, and it is the Court's understanding that Mr. Sher properly disclosed his prior disbarment on his application. As such, the Court declines to disqualify Mr. Sher on that basis alone. 7 are now materially adverse to the interests of the Center
Defendants. Id. As evidence of this adversity, plaintiff points
to the derivative suit filed in 2014 by Dr. Engelberg against
ACCJ, Mr. Perr, and others ("New York state action") in which
Dr. Engelberg alleges that Mr. Perr and his son "used their
respective positions of authority . . . to siphon off, both
directly and indirectly, over $20 million dollars of charitable
funds to other shell . . . entities, owned and controlled by
them." Mot. Ex. 1 at 2-3.
Center Defendants assert that neither of these scenarios
creates a disqualifying conflict of interest and further add
that plaintiff lacks standing to raise these concerns. Because
the Court agrees with Center Defendants on the threshold issue
of standing, plaintiff's motion to disqualify counsel based on
conflict-of-interest grounds is denied.
Before a federal court can exercise its jurisdiction, a
movant must establish, as an "irreducible constitutional
minimum," that he has suffered "an injury in fact" that is
caused by the challenged conduct and likely redressable through
relief from the court. Lujan v. Defs. of Wildlife, 504 U.S. 555,
560-61 (1992). Even in instances where a movant has alleged some
injury, absent exceptional circumstances, he must generally
"assert his own legal rights and interests, and cannot rest his
claim to relief on the legal rights or interests of third
8 parties." Warth v. Seldin, 422 U.S. 490, 499 (1975); cf.
Kowalski v. Tesmer, 543 U.S. 125, 130 (2004) (a third party may
be permitted to litigate the rights of another where, inter
alia, there is a hindrance in the ability of the person
possessing the right to protect his own interests). A party
seeking disqualification of counsel is not excepted from this
requirement – i.e., he, too, must establish standing to pursue
his disqualification claim. See, e.g., Pigford v. Veneman, 355
F. Supp. 2d 148, 156–57 (D.D.C. 2005) (movants "must demonstrate
separate standing – personal and individual injury to them as a
result of class counsel's conduct – in order to pursue" their
claim to disqualify class counsel).
The D.C. Circuit has "not yet spoken" as to whether a non-
client has standing to disqualify opposing counsel. Cauderlier &
Assocs., Inc. v. Zambrana, No. CIVA 05-1653 ESHJMF, 2006 WL
3445493, at *3 (D.D.C. Oct. 6, 2006). Other courts are split:
some have found that non-clients have standing to seek opposing
counsel's disqualification based on an attorney's duty to report
any ethical violations to the court, while others have refused
to confer standing on "unauthorized surrogates" who cannot
demonstrate that they are personally harmed by purported
conflicts of interests between counsel and counsel's clients.
Compare Kevlik v. Goldstein, 724 F.2d 844, 847–48 (1st Cir.
1984) (because an attorney with unprivileged knowledge of a
9 violation of an ethical rule has an obligation to "report such
knowledge to a tribunal or other authority," "disqualification
may rightly be sought by opposing counsel even though he/she is
not representing the aggrieved client"), with In re Yarn
Processing Patent Validity Litig., 530 F.2d 83, 88 (5th Cir.
1976) ("To allow an unauthorized surrogate to champion the
rights of the former client would allow that surrogate to use
the conflict rules for his own purposes where a genuine conflict
might not really exist."); see also, e.g., Colyer v. Smith, 50
F. Supp. 2d 966, 969-72 (C.D. Cal. 1999) (collecting cases and
noting that courts allowing a non-client to challenge the
qualification of counsel on conflict grounds have required that
the non-client "establish a personal stake in the motion to
disqualify to satisfy the 'irreducible constitutional minimum'
of Article III"); Santander Sec. LLC v. Gamache, No. CV 17-317,
2017 WL 1208066, at *3-4 (E.D. Pa. Apr. 3, 2017) (collecting
cases). Notably, even courts generally reluctant to confer
standing on non-clients have recognized that standing may exist
where "the ethical breach so infects the litigation in which
disqualification is sought that it impacts the moving party's
interest in a just and lawful determination of [his] claims."
Colyer, 50 F. Supp. 2d at 971.
Here, plaintiff is not and never has been a client of Mr.
Sher or Mr. Both. Rather, plaintiff seeks disqualification of
10 Mr. Sher and Mr. Both based on alleged conflicts of interest
between (1) Mr. Sher and his co-defendants and (2) Mr. Sher and
Mr. Both's previous and current clients – i.e., Dr. Engelberg
and the Center Defendants, respectively. Plaintiff claims he has
standing to do so because Mr. Sher and Mr. Both's continued
representation of the Center Defendants in this case would so
infect the litigation as to impact his interest in the just
adjudication of his claims. See Mot. at 7-8. In other words,
according to plaintiff, disqualification of opposing counsel is
"absolutely necessary to preserve the integrity of the adversary
process" and preserve the "fairness of the proceedings." Id. at
7, 13. Plaintiff cites to a number of cases, each of which
confirm the principle that counsel must be disqualified where
their ethical breaches infect the litigation – but none of which
give plaintiff his desired result. See id. at 7 (citing Pigford,
355 F. Supp. 2d at 157 (denying motion to disqualify for lack of
standing); Koller, 737 F.2d at 1064 (reversing district court's
revocation of counsel's pro hac vice appearances and
disqualification of law firm); Cauderlier, 2006 WL 3445493, at
*3 (finding defendant lacked standing because "[h]e [could] not
possibly claim that his right to a fair resolution of his claims
w[ould] be affected by what law firm represent[ed] his
opponents")). To the contrary, as these cases make clear, courts
are reluctant to disqualify counsel on fairness grounds unless
11 the movant clears a high bar by, for example, showing that the
conflict is so glaring that it "undermines the Court's
confidence in the vigor of the attorney's representation of his
or her client," Pigford, 355 F. Supp. 2d at 166-167, or
"threatens the non-client with immediate and actual harm by
creating the substantial risk to her right to a fair and just
determination of her claims," Cauderlier, 2006 WL 3445493, at
*3.
Plaintiff has failed to clear that high bar here. With
respect to plaintiff's concern that Mr. Sher's personal interest
as a co-defendant will cloud his judgment as an advocate for the
Center Defendants, the Court finds compelling that, in their
opposition brief, (1) the Center Defendants assert that they
have provided consent – after being advised by another attorney
– as to Mr. Sher's continued representation; and (2) Mr. Sher
maintains that he reasonably believes that he will be able to
provide competent and diligent representation to his co-
defendants. See Opp. at 8-9; D.C. Rule 1.7(c) (a lawyer may
represent a client despite a conflict if "[e]ach potentially
affected client provides informed consent" and "[t]he lawyer
reasonably believes that the lawyer will be able to provide
competent and diligent representation to each affected client").
Likewise, with respect to the allegations of adversity between
the Center Defendants and Dr. Engelberg, Dr. Engelberg himself –
12 the client whose interests are alleged to be harmed – has stated
through his counsel that he does not object to Mr. Sher and Mr.
Both's role in this case at this stage in the proceedings. See
Opp. Ex. C. See also D.C. Rule 1.9 (permitting a lawyer who
formerly represented a client to represent another person in a
substantially related matter in which that person's interests
are materially adverse to the interests of the former client if
the former client gives informed consent).
In short, notwithstanding plaintiff's claims to the
contrary, the Court finds that any alleged conflicts here simply
do not rise to the level where they affect the integrity of the
proceedings or threaten plaintiff's right to a just
determination of his claims. Accordingly, plaintiff lacks
standing to seek disqualification of Mr. Sher and Mr. Both on
conflict-of-interest grounds.
B. Lawyer as Necessary Witness
Plaintiff also asserts that Mr. Sher should be disqualified
under D.C. Rule 3.7, which prohibits a lawyer from acting as an
advocate and a witness in the same matter.
As a threshold matter, the Court finds that plaintiff does
have standing to seek disqualification on this ground. As the
comments to D.C. Rule 3.7 make clear, "[c]ombining the roles of
advocate and witness can prejudice" the opposing party's rights
in litigation by, for example, limiting an opposing party's
13 access to evidence or affecting the orderly conduct of the
trial. See also, e.g., Colyer, 50 F. Supp. 2d at 974 (finding
that non-client plaintiff did have standing to seek
disqualification of opposing counsel who might be needed as a
fact witness, "as it directly affect[ed] [plaintiff's] access to
evidence and the orderly conduct of the trial"); Xcentric
Ventures, LLC v. Stanley, No. CV-07-00954-PHX-NVW, 2007 WL
2177323, at *2 (D. Ariz. July 27, 2007) (finding that
"Defendants have standing to move for disqualification on the
ground of [opposing counsel's] simultaneous service as counsel
and witness in the case").
Plaintiff claims that there is "no question" that Mr. Sher
will be a necessary witness in this case given his alleged
involvement in the RICO conspiracy that forms the basis of this
suit. While that may be so, on its face, Rule 3.7 only applies
to trial counsel. See D.C. Rule 3.7 ("A lawyer shall not act as
necessary witness[.]") (emphasis added). As such, even a lawyer
who is likely to be a necessary witness at trial is not
disqualified from representing his client during pretrial
proceedings. See D.C. Ethics Opinion 228 ("Given the Rule's
express limitation and the trial-stage purposes it is intended
to serve, we conclude that a lawyer who is likely to be a
necessary witness at trial may represent a client in most pre-
14 trial matters. This includes, but is not limited to, taking
witness depositions, pre-trial discovery and argument of most
pre-trial motions, and also assisting in trial preparation.");
see also Canfield v. Stone, No. CIV. A. 93-1022(NHJ), 1993 WL
468451, at *1–2 (D.D.C. Oct. 25, 1993) (concluding that any
different result "would deprive the defendant of his chosen
representative before it is clear that trial will be
necessary").
Accordingly, plaintiff's objections to Mr. Sher's role are
premature at this stage in the proceedings. Should plaintiff's
complaint survive any dispositive motions and proceed toward
trial, plaintiff may renew this motion to disqualify Mr. Sher as
trial counsel. 2
IV. Conclusion
For the reasons set forth above, it is ORDERED that
plaintiff Joshua Ambush's motion to disqualify Mr. Sher and Mr.
2 Plaintiff also suggests that, given the eventual possibility of disqualification later in the proceedings, the Court should disqualify Mr. Sher now to avoid "delaying the resolution of the case and causing additional expenses to all the parties." Mot. at 8. Given that the Center Defendants already have retained Mr. Schwalb as lead counsel, and given that plaintiff does not allege any disqualifying conflicts as to Mr. Schwalb, it is not clear to the Court that disqualifying Mr. Sher and/or Mr. Both at a later stage would cause significant delay or create additional expenses. In any event, because Rule 3.7 expressly limits itself to advocacy at trial, the Court is reluctant to disqualify defendants' chosen counsel at this juncture. 15 Both as counsel for Center Defendants is DENIED. To the extent
that it becomes apparent that Mr. Sher will be a necessary
witness at trial, plaintiff may re-raise his arguments for
disqualification at that time. A separate Order accompanies this
Memorandum Opinion.
SO ORDERED.
Signed: Emmet G. Sullivan United States District Judge October 10, 2017