The Appellate Division recently reminded all lawyers of the importance of complying with protective orders. In Rotondi v. Dibre Auto Group, LLC, the Appellate Division affirmed a trial court's decision to disqualify plaintiff's counsel from continuing to represent plaintiff because she violated such an order.
In Rotondi, plaintiff purchased a new car from defendant car dealership. One year later, she attempted to refinance the car with the dealer, but ended up filing a class action lawsuit against the dealer and various other entities involved in the refinancing for alleged improprieties in the refinancing process. She alleged violations of the New Jersey Consumer Fraud Act and various other statutory and common law causes of action. Although filed as a putative class action, plaintiff's attempt to certify the class were eventually denied and the case, in the words of the trial court, "ultimately became simply a claim by [plaintiff] against the dealer."
As part of that lawsuit, the trial court entered a protective order that allowed the parties to designate materials as "Confidential" or "Attorneys' Eyes Only." Under the order, documents designated as "Confidential" could only be used by the "receiving party for purposes of the prosecution or defense of [the] action," and could not be used "by the receiving party for any business, commercial, competitive, or other purpose." Documents designated as "Attorneys' Eyes Only" could only be "disclosed [ ] to outside counsel for the receiving party and to such other persons as counsel for the producing party agrees in advance or as ordered by the court."
Notwithstanding these provisions, plaintiff's counsel used documents designated as "Attorneys' Eyes Only" to initiate a separate class action against defendant in a different county. Defendant filed a motion seeking to consolidate the new matter with the Rotondi lawsuit. The trial court denied the motion to consolidate, but "relieved [counsel] from serving as plaintiff's counsel in the Rotondi matter [ ] due to her 'confidentiality order violation.'" The trial court held that this sanction was appropriate because counsel had violated several Rules of Professional Conduct, including RPC 3.4(c), which forbids a lawyer from "knowingly disobey[ing] an obligation under the rules of a tribunal," and RPC 8.4(c), which prohibits a lawyer from engaging in "conduct involving dishonesty, fraud, deceit, or misrepresentation" or "engag[ing] in conduct that is prejudicial to the administration of justice." The trial court also referred the matter to the Office of Attorney Ethics.
Plaintiff appealed, but the Appellate Division affirmed the trial court's decision. It "commenc[ed] [its opinion] by stating [its] concurrence with the judge's ruling that [counsel] violated the terms of the [protective order]." The Appellate Division then turned to whether disqualification was the appropriate remedy for this violation. In doing so, it applied a balancing test to determine whether the trial court abused its discretion in disqualifying counsel. This test required the Appellate Division to balance the "need to maintain the highest standards of the profession against a client's right freely to choose [ ] counsel." In applying this test, however, the The Appellate Division further noted that "a person's right to retain counsel of his or her choice is limited in that there is no right to demand to be represented by an attorney disqualified because of an ethical requirement."
Applying this test to the facts before it, the Appellate Division held that the trial court did not abuse its discretion in disqualifying counsel, ruling as follows:
Despite our recognition of plaintiff's right to be represented by counsel of her choosing, we view a remedy other than disqualification here would tend to assuage the severity of [counsel's] unethical conduct. As such, we find [that the trial judge] did not abuse his discretion in balancing the relevant factors and disqualifying counsel.
While the Appellate Division noted that it was not establishing a "bright-line rule for disqualification of counsel for discovery violations such as what occurred in this matter" it nonetheless warned that "an attorney's failure to conform to his or her ethical obligations may imperil their client's right to counsel of their choice."