Jose Luis Pelaez, Inc. v. Mcgraw-Hill Global Educ. Holdings LLC
Jose Luis Pelaez, Inc. v. Mcgraw-Hill Global Educ. Holdings LLC
Opinion of the Court
In this action, Plaintiffs Jose Pelaez and Jose Luis Pelaez, Inc. (collectively, "Pelaez")
*569bring claims for copyright infringement against Defendants McGraw-Hill Global Education Holdings LLC and McGraw-Hill School Education Holdings LLC (collectively, "McGraw-Hill"). McGraw-Hill now moves to disqualify the law firm Harmon Seidman Bruss & Kerr, LLC ("HSBK") from representing Pelaez in this suit. McGraw-Hill's motion is based on a decision by Judge Michael Baylson of the Eastern District of Pennsylvania disqualifying HSBK from representing the plaintiff in Grant Heilman Photography, Inc. v. McGraw-Hill Glob. Educ. Holdings, LLC , No. CV-17-694 (MMB),
BACKGROUND
I. Judge Baylson's Findings
Because McGraw-Hill's motion relies principally on Judge Baylson's decision to disqualify HSBK from representing the plaintiff in Heilman II , the background to his ruling is summarized below. See Heilman II ,
A. HSBK's Disqualification in Heilman II
Grant Heilman Photography, Inc. ("Heilman") serves as an agent for photographers in connection with the licensing of their photographs for use in various publications. Id. at *1. McGraw-Hill is an educational publisher. Id.
Heilman has sued McGraw-Hill twice in copyright infringement actions before Judge Baylson. It was represented by HSBK in both suits, until HSBK's disqualification in 2018. The first suit, Grant Heilman Photography, Inc. v. McGraw-Hill Global Educ. Holdings, LLC, et al. , No. 12-CV-2061 (MMB) (E.D. Pa.) ("Heilman I "), began in 2012. The suit settled, but the settlement did not release McGraw-Hill from future claims based on the unauthorized printing or distribution of Heilman's photographs. Id. The second suit, Heilman II , began in 2017. In Heilman II , Heilman alleged that additional unauthorized use of its photographs occurred after the settlement of Heilman I . Id.
On August 31, 2017, while Heilman II was pending, McGraw-Hill became aware that HSBK had retained Mari Masalin-Cooper, a former McGraw-Hill employee, to consult on litigation against McGraw-Hill. Id. at *2.
On September 26, 2017, McGraw-Hill moved to disqualify HSBK from representing Heilman in Heilman II . Id. McGraw-Hill alleged that, although Masalin-Cooper is not a lawyer, she was a "pivotal litigation support employee" at McGraw-Hill and as a result was privy to McGraw-Hill's privileged and confidential information. Id. at *5. According to McGraw-Hill, because HSBK retained Masalin-Cooper as a consultant, a presumption arose that she had shared McGraw-Hill's confidences with the firm, and therefore HSBK had to be disqualified. Id.
On February 20, 2018, Judge Baylson held an evidentiary hearing (the "Hearing"). Id. at at *2. At the Hearing, Judge Baylson heard testimony from attorneys Michael Beylkin and Elizabeth Seidlin-Bernstein, who represented McGraw-Hill in Heilman I ; HSBK attorneys Amanda Bruss and Maurice Harmon; and the president and owner of Heilman, Sonia Wasco. (See Mem. Law Supp. Mot. Disqualify ("McGraw-Hill Mem."), Ex. B, ECF No. 163.)
B. Masalin-Cooper's Relationship with HSBK
The basic contours of Masalin-Cooper's relationship with HSBK are not disputed. From September 24, 2012, until her termination *570on May 10, 2016, Masalin-Cooper worked at McGraw-Hill, first as the Director of Creative Services and Content Licensing and later as the Director of Standards and Compliancy. See Heilman II ,
On August 18, 2016, after she was terminated by McGraw-Hill, Masalin-Cooper sent an unsolicited email to HSBK partner Christopher Seidin. Id. at *3. In the email, Masalin-Cooper stated that she had recently left her job with McGraw-Hill. She claimed to have a "deep and broad understanding of the business of permission/rights acquisition and the business contract and compliance of 3rd party content and media," and asked whether HSBK would be interested in "consulting on the best practices for content licensing and contract compliance as it pertains to copyright." Id. Twelve days later, Masalin-Cooper sent a substantively identical, also unsolicited, email to HSBK partner Maurice Harmon. Id. at *4.
The following month, Harmon and Masalin-Cooper communicated by telephone and email regarding her work experience. Id.
On December 6, 2016, HSBK and Masalin-Cooper entered into an agreement for Masalin-Cooper to provide consulting and/or expert witness services concerning "[l]itigation involving McGraw-Hill Global Education Holdings LLC and McGraw-Hill School Education Holdings LLC." Id.
The extent of Masalin-Cooper's "consulting" for HSBK was a one-hour telephone conversation with HSBK attorney Amanda Bruss on December 8, 2016, in which Bruss and Masalin-Cooper discussed McGraw-Hill's databases, permissions systems, and licensing procedures. Id. Masalin-Cooper was paid $ 600 for her services. Id. The only subsequent interactions between HSBK and Masalin-Cooper involved scheduling (and taking) her deposition, and an October 22, 2017 email from Bruss to Masalin-Cooper formally terminating Masalin-Cooper's consulting arrangement with HSBK. Id. at *5.
C. Judge Baylson's Decision
On May 2, 2018, Judge Baylson determined that HSBK attorneys had violated the Pennsylvania Rules of Professional Conduct by hiring Masalin-Cooper and disqualified HSBK from continuing to represent Heilman in Heilman II . Id. at *9-13. In his decision disqualifying HSBK, Judge Baylson made factual findings based on his review of, among other things, Masalin-Cooper's deposition, declarations submitted by the parties, and testimony received at the Hearing. Id. at *2.
Judge Baylson found that while employed by McGraw-Hill, Masalin-Cooper was "deeply involved in discovery management and other litigation support, including with respect to [Heilman I ]." Id. Specifically, Judge Baylson found that the team Masalin-Cooper managed at McGraw-Hill was tasked with suppressing the unauthorized images that were at issue in Heilman I . Id. Indeed, she had filed a declaration in that action, stating that she was "presently overseeing efforts to ensure that none of the photos that were at issue [in Heilman I ] is [sic] used in any future printing of Higher Education textbooks." Id. at *3.
The issues presented in Heilman II appeared to Judge Baylson to "arise directly out of" McGraw-Hill's failure to successfully suppress the content at issue in Heilman I . Id. He found that Masalin-Cooper "possessed privileged information (about material facts on substantially related cases) vis-à-vis both sides of the litigation ... much in the way of a 'double agent,' " id. at *13, and that Masalin-Cooper had, in fact, revealed confidential and/or privileged information concerning Heilman I to *571HSBK, id. at *12. Judge Baylson held that by retaining Masalin-Cooper, HSBK had incurred a duty to take preventive measures to stop Masalin-Cooper from sharing McGraw-Hill's confidences with HSBK. Id. at *10. By failing to do so, HSBK violated the Pennsylvania Rules of Professional Conduct. Id. at *13. According to Judge Baylson, "[t]he appearance of impropriety, and [HSBK's] lack of controls in ensuring compliance with the Rules" required its disqualification. Id.
On July 12, 2018, Heilman petitioned the U.S. Court of Appeals for the Third Circuit for mandamus, seeking to vacate Judge Baylson's disqualification order. The Third Circuit denied the petition on July 25, 2018. See in re: Grant Heilman Photography, Inc. , No. 18-2526 (3d Cir. July 17, 2018).
II. Procedural History
On May 24, 2018, McGraw-Hill moved to disqualify HSBK from representing Pelaez in this action. (See ECF No. 162.)
On June 7, 2018, Pelaez filed a memorandum in opposition to disqualification. (Pls.' Mem. Opp'n Mot. Disqualify ("Pelaez Opp'n"), ECF No. 164.)
On June 14, 2018, McGraw-Hill filed a reply. (See Reply Supp. Mot. Disqualify ("Reply"), ECF No. 170.)
LEGAL STANDARD
"The authority of federal courts to disqualify attorneys derives from their inherent power to preserve the integrity of the adversary process." United States v. Prevezon Holdings Ltd. ,
In this Circuit, "disqualification is called for only where 'an attorney's conduct tends to taint the underlying trial,' because federal and state disciplinary mechanisms suffice for other ethical violations." Prevezon Holdings ,
Whether to disqualify an attorney "in a particular case" can be determined "only after painstaking analysis of the facts and precise application of precedent." Olajide v. Palisades Collection, LLC , No. 15-CV-7673 (JMF),
DISCUSSION
The parties disagree on what disciplinary rule governs HSBK's relationship with Masalin-Cooper. McGraw-Hill argues that because HSBK contracted with Masalin-Cooper, she should be treated like a "side-switching consultant," relying on the line of Second Circuit decisions dealing with successive representation and on MMR/Wallace Power & Indus., Inc. v. Thames Assocs. ,
In Pelaez's view, the fact that HSBK paid Masalin-Cooper is irrelevant to the analysis of whether it breached an ethical duty. (See Pelaez Opp'n 10.) Pelaez contends that HSBK's contact with Masalin-Cooper should viewed in light of the general rule in this Circuit that "so long as measures are taken to steer clear of privileged or confidential information, adversary counsel may conduct ex parte interviews of an opposing party's former employee." Muriel Siebert & Co. v. Intuit Inc. ,
The Court need not resolve the above disagreement in order to rule on McGraw-Hill's motion. Regardless of how HSBK's conduct is framed, its disqualification is warranted only if McGraw-Hill has shown that HSBK likely obtained privileged or confidential information pertinent to this case, such that there is a risk the trial in this matter will be tainted. See Prevezon Holdings ,
As an initial matter, McGraw-Hill has not shown that Masalin-Cooper possessed privileged or confidential information specific to this case. Masalin-Cooper did not begin work at McGraw-Hill until late 2012, after the transactions at issue in this litigation were completed, and she was fired approximately two months before the complaint in this case was filed.
Although it is undisputed that Masalin-Cooper provided Bruss with some information relevant to this case, McGraw-Hill has not shown that information to be confidential, let alone privileged. The parties agree that during Bruss's conversation with Masalin-Cooper, Bruss sought and received *573information concerning whether McGraw-Hill had internal systems and databases designed to track the use of photographs in its publications. (See Pelaez Opp'n 19; Reply 4.) McGraw-Hill characterizes this information as "confidential," and argues that HSBK has "exploited" the information to its advantage in this suit. (See McGraw-Hill Mem. 3-5; Reply 3-4.) Yet McGraw-Hill fails to counter Bruss's sworn statements that (1) this information was subsequently obtained directly from McGraw-Hill and its employees through formal discovery, in depositions that McGraw-Hill did not designate as confidential; and (2) HSBK was aware of the general nature of the database issue prior to Bruss's interview of Masalin-Cooper. (See Decl. Amanda Bruss ¶¶ 11-13, 26, ECF No. 165.) These statements, which are left unaddressed by McGraw-Hill, refute McGraw-Hill's contention that the information Bruss received concerning photograph usage tracking was confidential. Moreover, McGraw-Hill does not identify any unfair advantage Pelaez will obtain in this litigation as a result of any of this information having initially been acquired from Masalin-Cooper. See Matthews v. LeBoeuf, Lamb, Greene & MacRae ,
Absent evidence that Masalin-Cooper possessed privileged or confidential information concerning the transactions at issue in this litigation, McGraw-Hill must show that there is a "substantial relationship" between this litigation and the matter on which Masalin-Cooper worked, namely, Heilman I . See, e.g., Olajide ,
McGraw-Hill falls short of the necessary showing. Aside from referring to Heilman II as a "parallel case," (McGraw-Hill Mem. 1), McGraw-Hill provides no argument on this point. Moreover, in a submission made in opposition to Pelaez's pending motion for partial summary judgment, McGraw-Hill itself argues that the resolution of Heilman I is "not relevant" to this proceeding. (Defs.' Resp. Pls.' Am. Statement Undisputed Material Facts (ECF No. 132), ¶¶ 43, 44). As McGraw-Hill points out, this case arises out of conduct that occurred in connection with agreements between McGraw-Hill and a third-party, Corbis, that was not involved in Heilman I . (See
To the extent McGraw-Hill asserts that Masalin-Cooper had knowledge of McGraw-Hill's general litigation strategies and defenses, (see McGraw-Hill Mem. 3, 9), that type of knowledge is not sufficient to establish a risk of taint in this matter. See Olajide ,
*574Vestron, Inc. v. Nat'l Geographic Soc. ,
McGraw-Hill complains that HSBK failed to give notice of its intent to consult with Masalin-Cooper, depriving it of the "opportunity ... to control the dissemination of [its] privileged and confidential information." (Reply 7.) McGraw-Hill need not have depended on HSBK for that opportunity. It is well-established in this Circuit that a party who fears its former employee will reveal privileged or confidential information in the course of an ex parte interview by opposing counsel may apply to the Court for a protective order which includes prophylactic measures designed to avoid such disclosure. See, e.g., Arista Records ,
For the reasons above, disqualification of HSBK is not warranted. Because McGraw-Hill has not requested any relief aside from disqualification, the Court need not reach the question of whether, even in the absence of a risk of taint, HSBK's contact with Masalin-Cooper violated any state disciplinary rules.
CONCLUSION
McGraw-Hill's motion to disqualify Pelaez's counsel, HSBK, is DENIED. The Clerk of Court is directed to close Docket No. 162.
SO ORDERED.
In addition to seeking HSBK's disqualification in this action, McGraw-Hill filed substantially similar motions in four other cases. At least two of those motions have been denied. See Kashi v. McGraw-Hill Glob. Educ. Holdings , No. CV-17-1818,
Reference
- Full Case Name
- JOSE LUIS PELAEZ, INC. and Jose Pelaez v. MCGRAW-HILL GLOBAL EDUCATION HOLDINGS LLC and McGraw-Hill School Education Holdings LLC
- Cited By
- 8 cases
- Status
- Published