State ex rel. Swanson v. 3M Co., 845 N.W.2d 808

Background

3M retained Covington & Burling LLP (Covington) in the 1990s–2006 to advise on fluorochemical (FC) regulatory and legal matters; Covington obtained confidential information about health/environmental effects of FCs.
Covington represented Minnesota (the State) on an NRD (natural resource damages) lawsuit against 3M beginning January 2011 on a contingency-fee basis; substantial litigation work and discovery followed.
3M learned of Covington’s prior FC work and moved to disqualify Covington under Minn. R. Prof. Conduct 1.9(a) (former-client conflict) in April 2012; 3M also sued Covington separately for breach of fiduciary duty/contract.
The district court granted disqualification in October 2012, finding the matters substantially related and that Rule 1.9(a) mandated disqualification; the court also held implied waiver unavailable.
The court of appeals affirmed disqualification and dismissed Covington’s appeal for lack of standing; the Minnesota Supreme Court granted review and addressed standing, the substantial-relationship standard, waiver, and whether equities could avoid disqualification.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Standing of disqualified attorney to appeal	3M: only the client has the right; attorney lacks a legally protected interest to appeal disqualification	Covington/State: disqualification is an adverse professional finding injuring attorney’s reputation, so attorney may appeal	Attorney has standing to appeal when court finds a Rule of Professional Conduct violation and disqualifies the attorney (attorney’s reputational interest suffices)
Standard for Rule 1.9(a): "substantially related" test	3M: NRD case is substantially related to Covington’s prior FC work because both involve health/environmental effects of FCs	Covington/State: factual differences, public/regulatory disclosures, and passage of time may dissipate confidentiality; district court must assess these factors	Adopted substantial-relationship test from Rule 1.9 cmt.3; district court must analyze factual/legal overlap, whether confidential info remains, and whether disclosure/age obviates confidentiality; remanded because district court failed to consider all factors and make adequate findings
Waiver of right to seek disqualification	State: 3M delayed and therefore waived right to seek disqualification	3M: disputed timing/knowledge; delay was not attributable to corporate knowledge or counsel	Waiver of disqualification is possible; requires proof of knowledge and intent to waive (may be inferred from conduct); remanded for fact-intensive waiver inquiry (district court must determine when 3M (as corporation) knew)
Whether equities can prevent disqualification once Rule 1.9(a) violation found	State: even if violation exists, equities (substantial work, right to counsel of choice) justify denying disqualification	3M: Rule 1.9(a) is mandatory; violation requires disqualification unless waiver/standing bars relief	Rule 1.9(a) is mandatory; if court finds a violation under the proper standard, disqualification follows (equitable balancing does not override the rule); remanded for proper application

Key Cases Cited

Adams v. Ford Motor Co., 653 F.3d 299 (3d Cir. 2011) (finding of attorney misconduct is appealable absent monetary penalty)
Reach v. County of Schenectady, 593 F.3d 218 (2d Cir. 2010) (attorney may appeal adverse misconduct finding)
Walker v. City of Mesquite, 129 F.3d 831 (5th Cir. 1997) (reputational injury justifies appeal of misconduct finding)
Kevlik v. Goldstein, 724 F.2d 844 (1st Cir. 1984) (public policy favors disqualification despite delay in many cases)
Lennartson v. Anoka-Hennepin Indep. Sch. Dist. No. 11, 662 N.W.2d 125 (Minn. 2003) (mandatory-language conflict rule construed to preclude equitable imputation inquiry)
Patterson, State v., 812 N.W.2d 106 (Minn. 2012) (recent Minnesota use of Rule 1.9 comment 3 for substantial-relationship analysis)