Kramer v. American Bank & Trust Co.

989 F. Supp. 2d 709, 2013 WL 5925377, 2013 U.S. Dist. LEXIS 158157
CourtDistrict Court, N.D. Illinois
DecidedNovember 5, 2013
DocketCase No. 11 C 8758
StatusPublished
Cited by1 cases

This text of 989 F. Supp. 2d 709 (Kramer v. American Bank & Trust Co.) is published on Counsel Stack Legal Research, covering District Court, N.D. Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Kramer v. American Bank & Trust Co., 989 F. Supp. 2d 709, 2013 WL 5925377, 2013 U.S. Dist. LEXIS 158157 (N.D. Ill. 2013).

Opinion

MEMORANDUM OPINION AND ORDER

Jeffrey Cole, UNITED STATES MAGISTRATE JUDGE

I.

INTRODUCTION

The American Bank and Trust Company, N.A. (the Bank) has moved to disqualify plaintiffs’ counsel, Ari Karen. [# 141]. Judge Lee has referred the motion here for resolution. [# 147]. 28 U.S.C. § 636(b)(1)(A); Rule 72(a), Federal Rules of Civil Procedure.

Regrettably, disqualification motions have become common tools in litigation, often being used for purely strategic purposes and to harass. See Richardson-Merrell, Inc. v. Roller, 472 U.S. 424, 436, 105 S.Ct. 2757, 86 L.Ed.2d 340 (1985); In re BellSouth Corp., 334 F.3d 941, 961 (11th Cir.2003); Freeman v. Chi. Musical Instrument Co., 689 F.2d 715, 722 (7th Cir.[711]*7111982); Allegaert v. Perot, 565 F.2d 246, 251 (2d Cir.1977). Thus, motions for disqualification are not favored and should not be casually granted. Melamed v. ITT Conti Baking Co., 592 F.2d 290, 295 (6th Cir.1979); Fred, Weber, Inc. v. Shell Oil Co., 566 F.2d 602, 609 (8th Cir.1977), cert. denied, 436 U.S. 905, 98 S.Ct. 2235, 56 L.Ed.2d 403 (1978); Panduit Corp. v. All States Plastic MFG. Co., 744 F.2d 1564, 1576-77 (Fed.Cir.1984). As I noted at the evidentiary hearing, I do not think the motion was made in bad faith or to gain a tactical advantage. (R. 249).

The Bank’s motion stems from an encounter one of the Bank’s managing consultants — Sharon Wheeler- — had with Mr. Karen at a seminar he was giving on loan officer compensation in Chicago in September 2010 — -a year before the present litigation. According to the Bank, just before Mr. Karen was to speak, Ms. Wheeler, in the public atrium outside the auditorium where he was to speak, shared confidential information of the Bank with him, regarding wage and hour issues, and. he provided legal advice to her. It is the Bank’s contention that as a consequence, an implied lawyer/client relationship came into being, and since this case is a wage and hour case, a conflict of interest exists requiring the disqualification of Mr. Karen, his law firm, his co-counsel, and his co-counsel’s firm. Plaintiffs, of course, see it very differently.

As it was Ms. Wheeler’s word against Mr. Karen’s, an evidentiary hearing was required so- that the credibility of the two witnesses could be properly assessed. See, e.g., Tellabs Operations, Inc. v. Fujitsu Ltd., 882 F.Supp.2d 1053, 1056 (N.D.Ill.2012).1 That assessment turns on the plausibility of the testimony, the shifting and vacillating explanations for conduct, uncertain, inconsistent, and clashing memories, the inconsistencies between testimony and objective evidence, the internal inconsistencies within testimony, and the extent to which documents or objective evidence may contradict or support the witness’s story. See Anderson v. Bessemer City, 470 U.S. 564, 574-75, 105 S.Ct. 1504, 84 L.Ed.2d 518 (1985); Mitondo v. Mukasey, 523 F.3d 784, 788 (7th Cir.2008); United States v. Bradford, 499 F.3d 910, 920-21 (8th Cir.2007); Kadia v. Gonzales, 501 F.3d 817, 820 (7th Cir.2007); Pinpoint, Inc. v. Amazon.Com, Inc., 347 F.Supp.2d 579, 583 (N.D.Ill.2004) (Posner, J.)(sitting by designation).

In addition, demeanor and inflection can be critical components of the decision whether to believe a witness. Anderson, 470 U.S. at 575, 105 S.Ct. 1504; United States v. Schiro, 679 F.3d 521, 532 (7th Cir.2012); United States v. Smith, 668 F.3d 427, 430 (7th Cir.2012). Indeed, “the demeanor of a witness ... may satisfy the tribunal not only that the witness’ testimony is not true but that the truth is the opposite of his story; for the denial of one, who has a motive to deny, may be uttered with such hesitation, discomfort, arrogance or defiance, as to give assurance that he is' fabricating, and that, if he is, there is no alternative but to assume the truth of what he denies.” NLRB v. Walton Mfg. Co., 369 U.S. 404, 408, 82 S.Ct. 853, 7 L.Ed.2d 829 (1962).2

[712]*712Since “[t]he first step in the resolution of any legal problem is ascertaining the factual background and sifting through the facts with an eye to the legally relevant,” Upjohn Co. v. United States, 449 U.S. 383, 390-91, 101 S.Ct. 677, 66 L.Ed.2d 584 (1981); see also Sandra T.E. v. South Berwyn School Dist., 100 600 F.3d 612, 619 (7th Cir.2010), we begin with the evidence adduced at the evidentiary hearing.

II.

FACTUAL BACKGROUND

A.

Mr. Karen’s Version Of His Encounter With Ms. Wheeler

At the hearing, Mr. Karen explained that he was a frequent presenter at seminars like the one for the Illinois Mortgage Bankers Association in September, 2010 in Chicago. (R. 34). When he began giving the presentations, the intended audience was mortgage banks or bank representatives, but this grew to include loan officers. Indeed, the representation of loan officers in the audiences prompted Mr. Karen to tweak the presentation a bit. (R. 34). The presentation in question was focused on amendments to the Truth in Lending Act’s regulation covering payment to loan officers: they could no longer be paid on the “percentage of the revenue derived in loans that they closed.” (R. 34 — 35).3

One of Mr. Karen’s aims in conducting these talks was to generate business — to get mortgage lenders to hire him to advise them about compensation plans. (R. 37). He didn’t get paid to speak, but he hoped that he would raise his profile and marketability in the industry, a not uncommon goal of speakers at CLE-type seminars. (R. 37). He would meet people at the presentations, and if they contacted him, he’d follow up with them. (R. 43). He said that he didn’t necessarily make himself available to people before his presentations, but that day someone did come up to him while he was sitting and preparing his speech. (R. 38). He didn’t find out until this litigation was well under way who she was — Ms. Wheeler. (R. 38).

Ms. Wheeler had never met or spoken with Mr. Karen before that day. When she saw him, he was sitting at a table in the atrium outside the auditorium in which he was to speak. That area was open to the public and was filled with tables and chairs. Ms. Wheeler pulled up a chair at the table at which Mr. Karen was preparing his presentation and sat down and began talking to him. {See Plaintiffs Exs. 2s-2c, which are color pictures of the area).

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Bluebook (online)
989 F. Supp. 2d 709, 2013 WL 5925377, 2013 U.S. Dist. LEXIS 158157, Counsel Stack Legal Research, https://law.counselstack.com/opinion/kramer-v-american-bank-trust-co-ilnd-2013.