O Builders & Associates Inc. v. Yuna Corp.
19 A.3d 966
N.J.2011Background
- This dispute concerns the scope and application of RPC 1.18 for former prospective clients and attorney disqualification.
- In February 2008, Mrs. Kang consulted Attorney Lee about pending litigation and business matters at Baden Baden, with contested accounts of the substance of that consultation.
- Lee later filed suit for plaintiff O Builders against Yuna Corp. (defendant), prompting a motion to disqualify Lee as defense counsel due to the Kang consultation.
- Trial court denied disqualification; Appellate Division affirmed; this Court granted certification to review RPC 1.18's standards and procedures.
- The Court rejects an appearance-of-impropriety analysis, adopts a two-prong test (same/substantially related matter and significantly harmful information) for RPC 1.18, and sets burdens of production/persuasion.
- Justice Stern dissented, arguing that an evidentiary hearing was required given disputed facts about confidential disclosures.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether RPC 1.18 requires disqualification when two factors co-exist | Kang failed to show the matters are substantially related or the information is significantly harmful. | There was a real risk confidential information was shared that could harm Kang in the current matter. | Disqualification denied; two factors not proven to coalesce. |
| Who bears the burden of production and persuasion under RPC 1.18 | Moving party bears burden to show the two RPC 1.18 elements and burden does not shift prematurely. | The movant should show potential harm; the court should scrutinize alleged confidences. | Moving party bears burden; court decides on paper unless need for hearing. |
| Is the record sufficient to support disqualification under RPC 1.18 | Record shows no clearly disclosed confidential information relevant to the current matter. | Three-hour consultation could have involved confidential business information relevant to the case. | Record insufficient to disqualify; no substantial relation or significantly harmful information shown. |
Key Cases Cited
- City of Atlantic City v. Trupos, 201 N.J. 447 (2010) (adopts RPC 1.18 framework; burden-shifting in disqualification)
- Dewey v. R.J. Reynolds Tobacco Co., 109 N.J. 201 (1988) (decision on when to decide disqualification motions on papers vs. hearings)
- ALK Assocs., Inc. v. Multimodal Applied Sys., Inc., 276 N.J. Super. 310 (1994) (protective orders and confidentiality in disqualification contexts)