Tapestry, Inc. v. Niche Corporation

Background

Tapestry brought a breach-of-contract action alleging that Niche Corporation and Jayesh Jesalpura failed to disclose conflicts of interest required by their contracts with Tapestry. According to the opinion, Jesalpura had previously worked for Tapestry as a systems analyst, and Jesalpura and family members allegedly owned interests in Niche, which provided information-technology consulting services to Tapestry.

Jesalpura moved to disqualify Tapestry’s attorney, Arthur D. Middlemiss, and Middlemiss’s firm, Lewis Baach Kaufmann Middlemiss PLLC. Disqualification would prevent the lawyer or firm from continuing to represent Tapestry in the case.

Advocate-Witness Argument

Jesalpura argued that Middlemiss violated the advocate-witness rule, which generally prevents a lawyer from acting as trial advocate in a matter where the lawyer is likely to be a necessary witness on a significant factual issue. The court explained that the person seeking disqualification must specifically show likely substantial prejudice and that the lawyer’s testimony is actually necessary for trial.

The court stated that Middlemiss appeared to have led Tapestry’s internal investigation, but it did not decide whether that fact concerned a significant issue in the case. Instead, it concluded that Middlemiss’s testimony was not necessary. Other people had been present during Middlemiss’s interviews with Jesalpura and other employees and could serve as fact witnesses. The court therefore rejected disqualification of Middlemiss. It also rejected disqualification of LBKM, because Jesalpura had not shown that Middlemiss was likely to testify at all.

Privilege-Waiver Argument

Jesalpura argued that Tapestry had placed attorney-client and work-product materials at issue by relying on Middlemiss’s investigation in terminating Jesalpura’s employment. An at-issue waiver occurs when a party asserts a claim or defense that it intends to prove by using otherwise protected legal communications or work product.

The court found no waiver supporting disqualification. It determined that resolving the dispute did not require examining Middlemiss’s privileged communications, work product, or state of mind. The court said the case’s merits turned on the underlying facts supporting Tapestry’s claims and Jesalpura’s defenses or counterclaims, not on what Middlemiss thought or advised. The court also noted that relevance alone does not eliminate attorney-client privilege.

Professional-Misconduct Argument

Jesalpura further argued that Middlemiss violated New York professional-conduct rules by acting in a way prejudicial to the administration of justice or reflecting adversely on his fitness as a lawyer. Jesalpura alleged that, during an interview about the alleged conflicts of interest, Middlemiss raised his voice and repeatedly banged the conference-room table in a threatening manner.

The court found that Jesalpura provided no support showing that this conduct amounted to professional misconduct warranting disqualification. It held that the alleged actions were insufficient to establish a violation and that Jesalpura had not met his burden for seeking the disfavored remedy of disqualifying counsel.

Disposition

The court denied Jesalpura’s motion to disqualify Middlemiss and LBKM. The court ordered Jesalpura to answer or otherwise respond to the complaint by June 4, 2020, and ordered the parties to submit a revised proposed case-management plan with updated discovery deadlines by May 18, 2020.