Schlumberger Technologies, Inc. v. Wiley

113 F.3d 1553, 1997 U.S. App. LEXIS 13129, 1997 WL 265229
Procedural entryThis page is a short order in Schlumberger Technologies, Inc. v. Wiley. Read the opinion of the Court — 113 F.3d 1553
Court of Appeals for the Eleventh Circuit·Decided June 5, 1997·No. 95-6138·Published

Opinion

113 F.3d 1553

65 USLW 2818, 10 Fla. L. Weekly Fed. C 979

SCHLUMBERGER TECHNOLOGIES, INC., a Delaware corporation,
Plaintiff-Counterclaim-Defendant-Appellant,
v.
G. Dan WILEY; Robert A. Fergusson; Donald Bahouth,
Defendants-Counterclaim-Plaintiffs-Appellees.

No. 95-6138.

United States Court of Appeals,
Eleventh Circuit.

June 5, 1997.

Champ Lyons, Jr., Helmsing, Lyons, Sims & Leach, Mobile, AL, John H. Pickering, Alex E. Rogers and A. Stephen Hut, Jr., Washington, DC, for Appellants.

H. William Wadsden, Rachel Sanders-Cochran, Donald F. Pierce, Forrest S. Latta, Pierce, Ledyard, Latta & Wasden, P.C.; Orrin K. Ames, III, P. Russel Myles, Jerry A. McDowell, Hand, Arendall, L.L.C.; James E. Atchison, G. Dan Wiley, Hess & Atchison; William B. Jackson, II and Donald Bahouth, Mobile, AL, for Appellees.

Appeal from the United States District Court for the Southern District of Alabama.

Before BIRCH and CARNES, Circuit Judges, and MICHAEL*, Senior District Judge.

BIRCH, Circuit Judge:

The issue in this appeal is the standard that governs a district court's decision to deny a party's motion on behalf of a non-resident attorney for admission pro hac vice. The district court denied admission pro hac vice to plaintiff's counsel, even though it did not find that the attorney had violated any specific ethical rules. We hold that binding circuit precedent requires a showing of unethical conduct of such a nature as to justify disbarment of a lawyer admitted generally to the bar of the district court in order to justify the denial of an applicant's pro hac vice admission. Accordingly, we vacate the district court's order denying counsel's admission pro hac vice and remand for further proceedings.

I. BACKGROUND

This interlocutory appeal of the district court order denying admission pro hac vice to Roger M. Witten, counsel for Schlumberger Technologies, Inc. ("Schlumberger"), arises from a lawsuit filed by Schlumberger against former officers and directors of its wholly owned subsidiary, Global Tel*Link Corporation ("Global"). The defendants, G. Dan Wiley, Robert A. Fergusson, and Donald Bahouth, were the most senior officers of Global, and the first two were also directors of Global, until Schlumberger terminated their employment in February 1994 as a result of a legal audit of Global.

On April 1, 1993, Schlumberger acquired Global, which is headquartered in Mobile, Alabama, and whose principal line of business involved the manufacture and sale of communication services, predominantly automated pay telephones for prison systems. In the fall of 1993, Louisiana newspapers reported allegations that Global had overcharged customers in its contract with the Louisiana Department of Corrections, and the Louisiana Public Service Commission started an informal investigation into Global's operations in that state. In October 1993, Schlumberger retained the Washington, D.C. law firm of Wilmer, Cutler & Pickering ("WC & P") to provide advice on communications law issues. In December 1993, Schlumberger further retained WC & P to assist in a legal audit of Global and selected Witten, a WC & P partner, to lead the audit team. The audit team included other WC & P lawyers, lawyers from the Mobile, Alabama law firm of Helmsing, Lyons, Sims & Leach, and accountants from Price Waterhouse ("PW"). The legal audit began on January 10, 1994 and continued for approximately one month. At an initial informational meeting on the first day of the audit, Witten explained to Global middle and upper management personnel the process of the legal audit and told them that they would be interviewed by the audit team. Witten stated that the WC & P lawyers involved in the audit represented Schlumberger and were not lawyers for any of Global's employees or management. Dale Gaudier, in-house counsel for Schlumberger, distributed to Global employees a memorandum ("the Gaudier memo") dated January 10, 1994, stating in relevant part:

Schlumberger considers this review, and the information it and PW and WC & P gather during the review, to be confidential. You should not discuss or disclose to those outside Global the fact that a review is taking place or the nature of the review. You should also not discuss the substance of any conversations you may have with PW, WC & P or Schlumberger legal personnel with anyone inside or outside Global.

R3-Def. Exh. 1.

The audit team then secured Global's premises as well as its documents and computer files, and started interviewing Global employees. At the start of each interview, including those with Bahouth and Fergusson, Witten explained again that he represented Schlumberger, that he did not represent the interviewee personally, and that he could not guarantee that Schlumberger would not disclose any statements made by the interviewee.1 Witten and other members of the audit team interviewed Bahouth and Fergusson last, on January 17 to 18 and on January 18, respectively. As a result of the audit, Schlumberger concluded that Global had engaged in extensive consumer fraud and other unlawful practices while under defendants' management. Schlumberger voluntarily disclosed its findings to the appropriate state law enforcement and regulatory authorities and undertook to make restitution to the defrauded consumers. Schlumberger also fired the defendants for cause and commenced this suit in federal district court, alleging fraud under federal securities laws and Alabama law. Witten and local counsel signed the complaint.

Fergusson filed a motion, later joined by Wiley and Bahouth, to deny admission pro hac vice to Witten, alleging that Witten acted unethically during the interview with Fergusson.2 In an affidavit attached to his motion, Fergusson stated that, based on his observation of the audit team during the period preceding his interview and conversations with Global employees who had been interviewed, he had reason to suspect that he and others might be the targets of the investigation. Fergusson also claimed that he asked at the outset of the interview whether he should have a lawyer present and that Witten assured him that he need not. Bahouth later filed an affidavit making similar allegations.

In Schlumberger's opposition to Fergusson's motion to bar Witten's admission, Schlumberger denied that Fergusson asked whether he should have a lawyer at any time during his interview and asserted that none of the three members of the audit team who participated in the interview advised Fergusson in any way on whether he should have a personal lawyer. Schlumberger stated that, during the interview, Fergusson said that he might want to consult a lawyer in the future in his capacity as a shareholders' representative. According to Schlumberger, Witten did not give Fergusson any advice as to that matter and his only response was that Fergusson was being interviewed solely in his capacity as an officer and employee of Global.3

The district court held an evidentiary hearing on June 2, 1994.

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Schlumberger Technologies, Inc. v. Wiley, 113 F.3d 1553, 1997 U.S. App. LEXIS 13129, 1997 WL 265229 (11th Cir. 1997).

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