Greystone Staffing, Inc. v Vincenzi & Winston Resources
Annotate this CaseDecided on December 13, 2004
Supreme Court, Nassau County
GREYSTONE STAFFING, INC., Plaintiff,
against
VINCENZI AND WINSTON RESOURCES et al., Defendants.
4778-04
COUNSEL FOR PLAINTIFF
Littler, Mendelson, P.C.
885 Third Avenue
New York, New York 10022-4843
COUNSEL FOR DEFENDANT
(for Vincenzi)
Steven Cohn, P.C.
One Old Country Road
Carle Place, New York 11514
(for Winston)
Tannenbaum, Helpern, Syracuse & Hirschtritt, LLP
900 Third Avenue
New York, New York 10022-4775
Leonard B. Austin, J.
BACKGROUND
Plaintiff, Greystone Staffing, Inc. ("Greystone"), has moved to set aside the Stipulation of Settlement resolving this matter dated April 27, 2004.
Greystone is in the business of providing permanent and temporary staffing to its clients. Defendants, Winston Resources, LLC, Winston Staffing Services, LLC and Winston Support Services, LLC (collectively "Winston"), are in a similar competing business with Greystone.
Defendant, Jennifer Vincenzi ("Vincenzi"), was employed as a staffing recruiter by Greystone at its Massapequa office. In March 2004, Vincenzi terminated her employment with Greystone and went to work in a similar position for Winston at its Garden City office.
Vincenzi had a written employment agreement with Greystone that contained a restrictive covenant and a covenant not to compete. The restrictive covenant barred Vincenzi from working in a similar position for a competitor of Greystone within a fifty mile radius of Greystone's Massapequa office for a period of one year after she terminated her employment with Greystone. The covenant not to compete prevented her from contacting or soliciting business from any of Greystone's customers for a period of one year after she terminated her employment with Greystone.
Greystone commenced this action seeking to enjoin Vincenzi and Winston from violating the provisions of Vincenzi's employment agreement with Greystone and to
recover damages resulting from Vincenzi's alleged violation of that agreement.
At the very outset of this litigation, Greystone moved by order to show cause to obtain a preliminary injunction enjoining Vincenzi and Winston from violating the provisions of Vincenzi's employment agreement during the pendency of the action. In opposition to the motion, Vincenzi and Gregg Kaye, Winston's President, submitted affidavits denying any violations of Vincenzi's employment agreement. More specifically, they denied that they possessed or used any of Greystone's financial or customer records.
The action was settled by Stipulation dated April 27, 2004 in which Vincenzi represented that she did have in her possession any of Greystone's documents or records. Vincenzi further agreed that, for a period of one year commencing on March 8, 2004, she would not directly or indirectly or through a third party disclose any information relating to Greystone's billing rates. In addition, for that one year period commencing on March 8, 2004, she would not communicate directly or indirectly with any of Greystone's customer's other than those who had also been customers of [*2]Winston, those whose identity could be ascertained through public sources or those who she could recall through casual memory.
Greystone has now moved to vacate the Stipulation of Settlement alleging that the Stipulation was fraudulently induced. More specifically, Greystone alleges that
Vincenzi was in possession of, and used, the material she previously claimed not to have in her possession.
Tannenbaum, Helpern, Syracuse & Hirschtritt, LLP ("the Tannenbaum firm") represented both Winston and Vincenzi in opposing the order to show cause and in connection with the negotiation of the Stipulation of Settlement.
When Greystone moved to vacate the Stipulation of Settlement, the Tannenbaum firm indicated that could no longer represent both Vincenzi and Winston because of a potential conflict. The conflict arose because of allegations that Winston's President knew that Vincenzi was in possession of, and was using, Greystone's confidential information. These allegations are in direct conflict with the statements made in the affidavits submitted in opposition to the underlying motion for a preliminary injunction and the Stipulation of Settlement which resulted therefrom.
As a result of this conflict, Vincenzi has retained the offices of Steven Cohn, P.C. ("the Cohn firm") to represent her in this litigation. The Tannenbaum firm continues to represent Winston.
Greystone's present attorney, Littler Mendelson, asserts that the Tannenbaum firm's continued representation of Winston constitutes an unwaivable conflict and requests that the Court disqualify the Tannenbaum firm from representing Winston. For the reasons set forth herein, this Court agrees.
DISCUSSION
The Code of Professional Conduct provides a guide to attorneys regarding their professional conduct. However, when the Code of Professional Conduct is raised in litigation, it cannot be considered as statutory or decisional law. The Code of Professional Conduct provides guidance to the Court. S & S Hotel Ventures Ltd. Partnership v. 777 S.H. Corp., 69 NY2d 437 (1987).
The right of a party to be represented by the attorney of one's choosing is a valuable right. Cardinale v. Golinello, 43 NY2d 288 (1977). An attorney should not be disqualified unless there is a clear showing that disqualification is required. Id.; and S & S Hotel Ventures Ltd. Partnership v. 777 S. H. Corp., supra. See also, Eisenstadt v. Eisenstadt, 282 AD2d 570 (2nd Dept., 2001).
The matter before the Court brings into focus three competing Disciplinary Rules, 22 NYCRR 1200.19 [DR 4-101], the obligation to preserve client confidences and secrets; 22 NYCRR 1200.24 [DR 5-101], prohibiting an attorney from representing clients with potentially conflicting interests; and 22 NYCRR 1200.32 [DR 7-101], obligating an attorney to zealously represent a client within the bounds of the law. [*3]
The Tannenbaum firm may not use anything it was told by Vincenzi while it represented her in its current representation of Winston. Doing so would be a violation of its obligation to maintain its client's confidences. Yet, failing to use this information, if
it were beneficial to Winston but harmful to Vincenzi, would be a violation of the Tannenbaum firm's obligation to zealously represent it is client.
Vincenzi and Winston have clearly divergent and conflicting interests. The basis of Greystone's action is that Vincenzi took confidential and proprietary information that she obtained as Greystone's employee and used it to compete with Greystone. The action was settled based upon representations made by Vincenzi and Winston that Vincenzi did not have any such information and, if she did, she was not making use of same. The basis for setting aside the settlement is that such representations were fraudulent. Greystone asserts that Vincenzi had, and was making use of, Greystone's confidential and proprietary information and that Winston knew and consented to Vincenzi using such information.
While it is unclear whether the information in question was confidential and/or proprietary, Winston could defend such a claim by establishing that it did not know of, and did not consent to, Vincenzi using Greystone's proprietary and confidential information. Therefore, the extent to which Vincenzi revealed to the Tannenbaum firm the information she possessed, the advise she was provided and the extent to which Winston was aware of and consented to Vincenzi using this information is directly in issue.
22 NYCRR 1200.24(c) [DR 5-105(c)] provides that an attorney may represent clients with potentially adverse interests if "...a disinterested lawyer would believe that the lawyer can competently represent the interest of each and if each consent to the representation after full disclosure of the implications of the simultaneous representation and the advantages and risks involved." The Cohn firm asserts that Vincenzi has been advised of the risks involved in having the Tannenbaum firm continue to represent Winston and that Vincenzi consents to such representation.
However, this does not resolve the issue. First, 22 NYCRR 1200.24(c) involves the circumstance where one attorney or one firm is representing multiple clients with potential conflicting interests. That is not the case here. The Tannenbaum firm presently represents a client, Winston, whose interest may be adverse to the interests of a former client, Vincenzi.
Secondly, the Disciplinary Rules permit such representation even if the client or the former client consent only if a disinterested attorney would believe that such representation does not create a conflict of interest. Here, Vincenzi's consent, even after consulting her new attorney, cannot be permitted to avoid the clear conflict in her position and that of here new employer, Winston. What she told the Tannenbaum firm [*4]in the course of her defense in the underlying settlement, which is now under attack, logically conflicts with the position of Winston in seeking to sustain the Stipulation of Settlement.
This Court is not unmindful of party's right to be represented by the attorney of his or her choice. Cardinale v. Golinello, supra. However, that right is not absolute. It must give way to a rule of reason. Under the circumstances presented, Winston's continuation of the Tannenbaum firm cannot be permitted.
Where a current client and a former client have potentially conflicting interests, an attorney should be disqualified. William Kaufman Organization, Ltd. v. Graham & James, L.L.P., 263 AD2d 440 (1st Dept., 1999), app. dism., 94 NY2d 876 (2000). An attorney must avoid not only representing clients who have actual conflicts but also must avoid representing client whose interests appear conflicting. Cardinale v. Golinello, supra. See also, Kassis v. Teacher's Ins. & Annuity Assn., 93 NY2d 611 (1999).
Once an actual conflict exists, the attorney is prohibited from representing any
party in that action. Sidor v. Zuhoski, 261 AD2d 529 (2nd Dept., 1999); and Shaikh v. Waiters, 185 Misc 2d 52 (Sup.Ct. Nassau Co., 2000). In this action, the fact that Vincenzi hired separate counsel indicates the existence of an actual conflict between Vincenzi and Winston.
The Tannenbaum firm's continued representation of Winston in this action would
involve its representing parties with potentially conflicting interests. It also involves the potential compromise of client confidences which if kept would hurt Winston and if not,
would hurt Vincenzi. The Tannenbaum firm has not placed before the Court any evidence that the information it obtained from Vincenzi while representing her is unlikely to be significant or material to the litigation. Kassis v. Teacher's Ins. & Annuity Assn., supra.
Under such circumstances, The Tannenbaum firm's continued representation of Winston in this litigation would be inappropriate and disqualification is required.
Accordingly, it is
ORDERED, that Plaintiff's motion to disqualify Tannenbaum, Helpern, Syracuse & Hirschtritt, LLP from representing the Winston Defendants is granted; and it is further,
ORDERED, that Tannenbaum, Helpern, Syracuse & Hirschtritt, LLP is directed to serve a copy of this order upon Winston pursuant to CPLR 311-a; and it is further,
ORDERED, that all proceedings in this action are stayed for a period of 30 days from the date hereof to permit Winston to retain new counsel: and it is further,
ORDERED, that counsel for the parties and incoming counsel for Winston are directed to appear for a conference on January 26, 2005 at 9:30 a.m.
This constitutes the decision and Order of the Court.
[*5]
Dated: Mineola, NY _____________________________
December 13, 2004 Hon. LEONARD B. AUSTIN, J.S.C.
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