Posted by: Patricia Salkin | August 16, 2014

8th Circuit Court of Appeals Finds District Court’s Mistaken Assumption of Subject Matter Jurisdiction Over Incorrectly Removed Action Did Not Affect Validity of Its Order Disqualifying Counsel

The City of Greenwood engaged in a dispute with Martin Marietta Materials (“Martin”) arising out of a rock quarry located south of Greenwood. The parties entered into a settlement in which Martin paid Greenwood $7,000,000, and Greenwood agreed to designate Second Avenue for the truck traffic. In the settlement, Greenwood declared that the truck traffic was reasonable and did not constitute a nuisance. Zerger and Mauer served as Greenwood’s counsel throughout the litigation and settlement, receiving over $4,000,000 in fees. On July 29, 2011, eighteen individual plaintiffs who held property interests on Second Avenue commenced action in Missouri state court against Martin and other entities (collectively, “Martin”) involved in transporting materials from the quarry, seeking damages for a private nuisance, among other claims. Zerger and Mauer served as counsel for these plaintiffs. prior to the district court’s resolution of the merits case, on February 21, 2012, Greenwood—a non-party—moved to disqualify Zerger and Mauer from representing the individual plaintiffs, contending that Zerger and Mauer’s current representation constituted a conflict of interest. The district court agreed with Greenwood and, on April 26, 2012, the district court disqualified Zerger and Mauer, who then appealed.

The court reasoned that the district court’s inherent need to manage its bar and uphold the rules of professional conduct are no less significant for the “maintenance of orderly procedure” than the Rule 11 sanctions Willy declined to overturn. For the purposes of evaluating the propriety of the district court’s order absent jurisdiction, the resolution of Greenwood’s motion to disqualify is separate from the merits case; therefore, the district court’s disqualification order should enjoy the same treatment as a Rule 11 sanction order, and the court concluded the jurisdictional infirmity did nothing to disturb the district court’s order.

Pursuant to Missouri Rule of Professional Conduct 4–1.9(a) outlines the duties an attorney owes former clients: “A lawyer who has formerly represented a client in a matter shall not thereafter represent another person in the same or a substantially related matter in which that person’s interests are materially adverse to the interests of the former client unless the former client gives informed consent, confirmed in writing.” As such, the Eighth Circuit upheld the district court’s disqualification order. This order only governs Zerger and Mauer’s representation in the federal proceedings, however, and will likely become an issue when the matter moves to state court.

Zerger & Mauer LLP v. City of Greenwood, 751 F.3d 928 (8th Cir. 2014)

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