United States District Court, D. Colorado
KENNETH P. O'HANLON, Plaintiff,
ACCESSU2 MOBILE SOLUTIONS, LLC, EBH, LLC, MICHAEL COHIG, PAUL ZORN, MICHAEL FOSSENIER, LAWRENCE E. CRANE, EBH, LLC, DAVID PALM, EDSON B. HUTCHINSON, and JOHN DOES 1-15, Defendants.
ORDER AND RECOMMENDATION OF UNITED STATES MAGISTRATE
Y. Wang United States Magistrate Judge.
matter comes before the court on several pending motions:
(1) Defendants AccessU2 Mobile Solutions, LLC
("AccessU2"), EBH, LLC, and David Palm's Motion
to Dismiss Amended Complaint, or in the Alternative, Motion
for Summary Judgment (the "AccessU2 Motion") [#49,
filed March 9, 2018];
(2) Plaintiff Kenneth P. O'Hanlon's ("Plaintiff
or "Mr. O'Hanlon") "Motion for
Disqualification of Attorneys for Defendants on the Grounds
of Conflict of Interest, Violation of DR-5 of the Rules of
Professional Conduct and Violation of Rules 1.7(a) and 1.9(a)
of the Model Code of Professional Conduct" (the
"Motion for Disqualification") [#64, filed April
(3) Plaintiffs Motion to Amend Complaint and Grant Leave for
the Amended Complaint (the "Motion to Amend") [#74,
filed May 4, 2018];
(4) Defendant Michael Cohig's Motion to Quash Service of
Process ("Motion to Quash") [#81, filed May 21,
(5) Defendant Paul Zorn's Motion to Dismiss Amended
Complaint, or in the Alternative, Motion for Summary Judgment
(the "Zorn Motion") [#82, filed May 21,
(6) Defendant Michael Fossenier's Motion to Quash Service
of Process ("Motion to Quash") [#86, filed May 24,
undersigned considers the Motions pursuant to 28 U.S.C.
§ 636(b), Rule 72 of the Federal Rules of Civil
Procedure, and the memoranda dated March 14, 2018 [#54],
April 18, 2018 [#66], May 7, 2018 [#78], May 22, 2018 [#83],
and May 24, 2018 [#87]. This court concludes that oral
argument will not materially assist in the resolution of this
matter. Therefore, having carefully reviewed the Motions and
associated briefing, the applicable case law, and the entire
docket, this court respectfully RECOMMENDS that the AccessU2
Motion and Zorn Motion be GRANTED and Plaintiffs Motion to
Amend be DENIED. Further, it is ORDERED that Plaintiffs
Motion for Disqualification is DENIED and Defendant
Cohig's Motion to Quash and Defendant Fossenier's
Motion to Quash are GRANTED.
court has discussed the background of this matter in several
prior Orders, see, e.g., [#6; #18; #26; #62], and
discusses it here only as it pertains to the instant Motions.
Mr. O'Hanlon initiated this action by filing hispro
se Complaint on January 24, 2018. [#1]. As Defendants in
this action Plaintiff names several limited liability
companies ("LLC") and several individuals allegedly
associated with those entities (collectively,
"Defendants"). [Id.]. Plaintiff alleges
that Defendants actively deceived and defrauded him to remove
him from AccessU2 without fair compensation and robbed him of
fair market value for his development of patented technology.
See generally [#1; #19]; see also [#56 at
8]. Following an Order to Show Cause why this matter should
not be dismissed for want of subject matter jurisdiction,
see [#6], and several Motions to Quash Service of
Process of the initial Complaint by individual Defendants,
see [#21; #33; #36], Plaintiff filed his First
Amended Complaint ("FAC") on February 13, 2018,
see [#19], the operative pleading in this matter.
asserts four claims against Defendants for (1) improperly
determining his distributive shares of AccessU2 in violation
of 26 U.S.C. § 704(b) and corresponding tax code
regulations ("Claim 1"); (2) failing to provide
accurate K-l tax filings and filing fraudulent K-l tax
filings with the Internal Revenue Service ("IRS")
in violation of federal tax law ("Claim 2"); (3)
improperly valuing Patent No. 7, 643, 821 B2 (the
"'821 Patent") as it relates to his
distributive shares of AccessU2 in violation of 26 U.S.C.
§ 704(b) and corresponding tax code regulations
("Claim 3"); and (4) civil theft of the '821
Patent, unjust enrichment, and violations of the federal
Uniform Trade Secrets Act, which this court construes as
violations of the Defend Trade Secrets Act
("DTSA"), 18 U.S.C. §§ 1832, 1836(b)
("Claim 4"). See [#19]. The undersigned
provided Plaintiff until March 9, 2018, to serve Defendants
properly with the FAC. See [#26]. Though Mr.
O'Hanlon purportedly served Defendants properly,
see [#40 through #48], several individual Defendants
again moved to quash service of process, prompting this court
to permit Mr. O'Hanlon to cure any deficiencies in
service by May 1, 2018, with the express warning that failure
to do so may result in a recommendation that improperly
served Defendants be dismissed without prejudice from this
action. See [#65]. Per Mr. O'Hanlon's
request, he received an additional two weeks to serve
Defendants Fossenier and Crane. See [#73].
Presently, Defendants Fossenier and Cohig have moved to quash
service of process. See [#81; #86].
March 9, 2018, Defendants AccessU2, E B H, LLC, and David
Palm moved to dismiss the FAC or for summary judgment in the
alternative, because Mr. O'Hanlon's claims are barred
by (1) accord, satisfaction, and release, (2) the statute of
limitations, and (3) claim preclusion. See generally
[#49]. The AccessU2 Motion asserts that the legal disputes
between Plaintiff and Defendants have been lingering for
several years, including prior litigation in the District
Court for the City and County of Denver ("Denver
District Court"). See generally [id.]; see also
[#19 at p. 12, ¶ 34]. And, as noted above, Defendant
Zorn filed a similar Motion on May 21, 2018. [#82].
then filed his Motion for Disqualification on April 17, 2018.
See [#64]. He contends that the court should
disqualify defense counsel Stuart Mann from representing all
Defendants, because a conflict of interest exists among the
Defendants given that Mr. O'Hanlon seeks to hold each
accountable to varying degrees, which may pit several
Defendants against one another. See generally [id.].
He also asserts that not all Defendants have consented to Mr.
Mann's representation such that Mr. Mann's
representation of all Defendants is materially limited
because he may abdicate his responsibilities to some
Defendants as opposed to others.
April 20, 2018, Plaintiff filed a proposed Second Amended
Complaint [#67], which the undersigned struck for failure to
comply with the Federal Rules of Civil Procedure as well as
this District's Local Rules of Civil Practice.
See [#68]. But given Mr. O'Hanlon's apparent
desire to file a Second Amended Complaint, this court set a
deadline of May 8, 2018 for the joinder of parties and
amendment of pleadings. See [id.]. Mr. O'Hanlon
filed the instant Motion to Amend on May 4, 2018 [#74].
Motions are now ripe for disposition and/or recommendation.
This court first considers Plaintiffs Motion for
Disqualification given the potential consequences on the
action in general should the court prohibit Mr. Mann from
continuing to represent Defendants. Next, I consider the
Motion to Amend, because a superseding complaint moots any
Motions to Dismiss aimed at an inoperative pleading. See
Gotfredson v. Larsen LP, 432 F.Supp.2d 1163, 1172 (D.
Colo. 2006). Given this court's conclusion on the Motion
to Amend, I then turn to the AccessU2 Motion and the Motions
to Quash. In considering each of these motions this court
affords a liberal construction to Mr. O'Hanlon's
papers because he proceeds pro se, Hall v. Bellmon,
935 F.2d 1106, 1110 (10th Cir. 1991), but it does not act as
his advocate and applies the same procedural rules and
substantive law to Mr. O'Hanlon as to a represented
party, Murray v. City o/Tahlequah, 312 F.3d 1196,
1199 n.2 (10th Cir. 2008).
Motion for Disqualification
motion to disqualify rests with the sound discretion of the
trial court." Quark, Inc. v. Power Up Software
Corp., 812 F.Supp. 178, 179 (D. Colo. 1992). As the
moving party, Mr. O'Hanlon has the burden of establishing
the grounds for disqualifying defense counsel. See
Religious Tech. Ctr. v. F.A.CT.Net, Inc., 945
F.Supp. 1470, 1473 (D. Colo. 1996). This is a significant
task, as "courts have historically been highly cynical
of motions to disqualify opposing counsel, noting that such
motions are often dilatory or tactical devices."
Miller v. Deustche BankNat'l Trust Co., No.
12-cv-03278-PAB, 2013 WL 4776054, at *5 (D. Colo. Sept. 4,
2013). Thus, to guard against the nefarious purpose of
securing a strategic advantage courts must make specific
findings of facts and conclusions of law when considering
whether the appropriateness of disqualification. See
World Youth Day, Inc. v. Famous Artists Merch. Exch.,
Inc., 866 F.Supp. 1297, 1299 (D. Colo. 1994). When, as
here, the record is sufficient for making such a
determination, no evidentiary hearing is required. See
Weeks v. Independent School Dist. No. 1-89, 230 F.3d
1201, 1212 (10th Cir. 2000) (specifying that no evidentiary
hearing is necessary where record contains sufficient
information to make specific findings of fact).
evaluating a motion to disqualify in a federal case the court
must decide the motion by "applying federal law."
Helmer v. Goodyear Tire & Rubber Co., No.
12-CV-00685-RBJ, 2013 WL 328951, at *3 (D. Colo. Jan. 29,
2013). That is, attorneys in federal cases are not only
"bound by the local rules of the court in which they
appear", but also by "the ethical rules announced
by the national profession and considered in light of the
public interest and the litigants' rights." Cole
v. Ruidoso Mun. Sck, 43 F.3d 1373, 1383 (10th Cir. 1994)
(explaining that motions to disqualify in federal court
affect substantive rights of the parties and are
"decided by applying standards developed under federal
law."). Mr. O'Hanlon's Motion for
Disqualification focuses on the American Bar
Association's Model Rules of Professional Conduct Rule
1.7 ("Model Rule 1.7"). [#64]. And although this
District has adopted the Colorado Rules of Professional
Conduct as its standards of professional responsibility,
see D.C.COLO.LAttyR 2(a), this distinction makes no
difference as Model Rule 1.7 and Rule 1.7 of the Colorado
Rules of Professional Conduct are identical, compare
Model Rules of Prof'l Conduct r. 1.7 with CO ST
RPC Rule 1.7. Under either rule, Mr. Mann cannot
represent a client if such representation involves a
concurrent conflict of interest. Thus, Mr. O'Hanlon must
(1) [Mr. Mann's] representation of one client will be
directly adverse to another client; or
(2) there is a significant risk that the representation of
one or more clients will be materially limited by [Mr.
Mann's] responsibilities to another client, a former
client or a third person or be a personal interest of the
Model Rules of Prof'l Conduct r. 1.7(a)(1), (2).
O'Hanlon submits two arguments as to why the court should
disqualify Mr. Mann from representing Defendants under Model
Rule 1.7. First, he asserts that because each Defendant is
potentially liability to him to varying extents, "the
representation of one client would be directly adverse to the
other clients." [#64 at 4]. He explains that
"Defendants may disagree on trial strategy, the
appropriateness of settlement, or may want to settle
independently of the other defendants." [#79 at 6].
According to Mr. O'Hanlon, the various interests at stake
for each Defendant will create direct adversity among the
group as a whole. Second, he contends that not all Defendants
have consented to Mr. Mann's representation of them in
this matter, and that this will materially limit Mr.
Mann's responsibilities to some as opposed to others. He
requests that, should it not disqualify Mr. Mann, the court
order all Defendants to file their consent to Mr. Mann's
representation on the docket.
AccessU2, E B H, LLC, and Palm counter that Plaintiff lacks
standing to assert claims on behalf of adverse parties and
that he fails to provide any "facts, law or cognizable
basis to support his motion for disqualification." [#69
at 2]. I respectfully agree.
It is axiomatic that a plaintiff must have standing to
proceed in federal court. See Susan B. Anthony List v.
Driehaus, 134 S.Ct. 2334, 2341 (2014) (standing requires
"(1) an 'injury in fact,' (2) sufficient
'casual connection between the injury and the conduct
complained of and (3) a 'likl[ihood]' that the injury
'will be redressed by a favorable decision.'"
(quoting Lujan v. Defenders of Wildlife, 504 U.S.
555, 560-61 (1992))). This remains true even when moving to
disqualify opposing counsel. See Shapiro v. Rynek,
No. 13-CV-3086-WJM-KMT, 2017 WL 121617, at *3 (D. Colo. Jan.
11, 2017) (concluding that the movant must have standing to
bring a motion to disqualify opposing counsel). For the
following reasons, this court concludes that Mr. O'Hanlon
irreducible minimum of standing requires the plaintiff to
prove an injury-in-fact, one that is not merely hypothetical
but is "concrete, particularized, and actual or
imminent." Colorado Outfitters Ass'n v.
Hickenlooper, 823 F.3d 537, 544 (10th Cir. 2016). As an
opposing party, who does not allege to be a former or current
client, Mr. O'Hanlon has a difficult task of establishing
that he suffered any cognizable injury from Mr. Mann's
representation of Defendants. See Gates Rubber Co. v.
Bando Chem. Indus., 855 F.Supp. 330, 334 (D. Colo. 1994)
("As a general rule, courts do not disqualify an
attorney on the grounds of conflict of interest unless the
former client moves for disqualification."). Mr.
O'Hanlon fails to demonstrate how Mr. Mann's
representation of Defendants has caused Plaintiff to
suffer any injury-in-fact. Indeed, it appears from Mr.
O'Hanlon's papers that he is asserting potential
injuries to Defendants, which is insufficient to establish an
injury-in-fact to Plaintiff. Cf Dawson v. City of
Bartlesville, Okla., 901 F.Supp. 314, 315 (N.D. Okla.
1995) (noting that "invocation of [Oklahoma] Rule
1.7," which is similar to Model Rule 1.7, "does not
alone provide standing for an antagonist to seek to
disqualify opposing counsel. There must be some other ground
for third-party standing.").
instances, however, an opposing party may have standing
"where the interests of the public are so greatly
implicated that an apparent conflict of interest may tend to
undermine the validity of the proceedings." Abbott
v. Kidder Peabody & Co., 42 F.Supp.2d 1046, 1050 (D.
Colo. 1999) (citing Beck v. Board of Regents, 568
F.Supp. 1107, 1110 (D. Kan. 1983) (proclaiming that where the
actions of a member of the bar "cast even the appearance
of an impropriety upon the legal profession" in the
public's view, review of that conduct may be warranted)).
But Mr. O'Hanlon fails to demonstrate that such
circumstances arise here. Cf Abbott, 42 F.Supp.2d at
1050-51 (finding the defendants had standing to move to
disqualify the plaintiffs' counsel where plaintiffs'
counsel represented 200 plaintiffs in a non-class action suit
and the retainer agreement deprived the plaintiffs the right
to control their own cases); Smith v TFI Family Servs.,
Inc., No. 17-02235-JTM-GEB, No. 17-02236-JTM-GEB, 2018
WL 2926474, at *3 (D. Kan. June 28, 2018) (finding
third-party standing where defense counsel represented
entities that performed services for children in state
custody, because such services sufficiently implicated the
public's interests). Thus, Mr. O'Hanlon lacks
standing to move to disqualify Mr. Mann under Model Rule 1.7.
Even if Plaintiff had standing to move to disqualify Mr.
Mann, his arguments fail on the merits as well. At bottom,
Plaintiff believes that each Defendant is culpable to an
unknown degree and may therefore try to implicate
co-Defendants to skirt liability. See [#79 at 5].
But Mr. O'Hanlon submits no evidence to corroborate his
assertions. And courts are wary of motions to disqualify
opposing counsel because they have the potential for misuse
to gain a tactical advantage or to harass opposing counsel;
thus, such motions must be supported by more than speculation
or conjecture. See Sequa Corp. v. Lititech, Inc.,807 F.Supp. 653, 659 (D. Colo. 1992). Further, direct
adversity between co-defendants does not exist even if one
may indirectly implicate the other, especially when all
Defendants deny liability in general. See, e.g.,
Shapiro, 2017 WL 121617, at *4-5 ...