869 F.3d 514
7th Cir.2017Background
- Plaintiff Richard Watkins sued Trans Union under the Fair Credit Reporting Act alleging Trans Union maintained inaccurate/mixed credit-file information and failed to correct it (claims under 15 U.S.C. §§ 1681e, 1681g, 1681i).
- Watkins retained attorney John Cento; Cento had previously (2001–2005) defended Trans Union in ~250 FCRA cases and billed ~4,000 hours, working closely with Trans Union personnel and in-house counsel.
- Cento later formed a plaintiff-side FCRA practice and was disqualified in prior suits against Trans Union under earlier federal precedents.
- Trans Union moved to disqualify Cento in Watkins by seeking a show-cause order; the district court permitted limited discovery, then rejected disqualification under Indiana Rule of Professional Conduct 1.9.
- The district court concluded the present suit is not the same transaction as Cento’s prior Trans Union representations, and any confidential information he obtained was either general/obsolete or not likely to materially advance Watkins’s case after more than a decade.
- Trans Union appealed interlocutorily under 28 U.S.C. § 1292(b), arguing the district court applied the wrong standard and misapplied the law; the Seventh Circuit affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Cento must be disqualified under Indiana Rule of Professional Conduct 1.9 for representing Watkins against his former client Trans Union | Cento/Watkins: Rule 1.9 allows representation because Watkins’s case is factually distinct; Cento’s prior knowledge is general or obsolete and discoverable | Trans Union: Cento’s prior extensive, exclusive FCRA work for Trans Union created a substantial risk he possesses confidential information that would materially advance Watkins’s claims; earlier federal "substantial relationship" precedent requires disqualification | Court held: Apply Indiana Rule 1.9; no disqualification — matters not the same transaction and no substantial risk that confidential information would materially advance Watkins’s claim (passage of time and generality of knowledge dispositive) |
| Applicable standard: federal common law substantial-relationship test vs. state Rule 1.9 | Watkins/Cento: Indiana Rule 1.9 and its commentary govern and narrow the pre-Rule broad federal test | Trans Union: Pre-Rule Seventh Circuit cases (LaSalle, Analytica) embody proper standard and support disqualification | Held: Indiana Rule 1.9 (with its commentary) governs in Southern District of Indiana; district court did not err in using Rule 1.9 rather than pre-Model-Rule federal common law |
| Effect of passage of time on presumed confidential information | Watkins/Cento: Over a decade has passed; technology and case law developments have rendered any previously confidential information obsolete | Trans Union: Some internal, privileged, or non-disclosed factual/strategic information persists and remains useful; prior disqualifications show risk | Held: Court accepted district court’s factual finding that passage of time, technological change, and intervening litigation reduced any substantial risk — not an abuse of discretion |
| Role of "general knowledge" vs. "specific confidential facts" in disqualification | Watkins/Cento: General knowledge of client policies/practices is not disqualifying; Rule 1.9 commentary permits use of experience | Trans Union: Cento’s role gave him access to nonpublic operational, strategic, and litigation information that is relevant and thus disqualifying | Held: Court distinguished general knowledge (permitted) from specific confidential facts (disqualifying); found Cento’s knowledge primarily general/obsolete and therefore not disqualifying |
Key Cases Cited
- LaSalle Nat’l Bank v. Lake County, 703 F.2d 252 (7th Cir. 1983) (articulated the pre-Model-Rule broad federal "substantial relationship" test for disqualification)
- Analytica, Inc. v. NPD Research, Inc., 708 F.2d 1263 (7th Cir. 1983) (applied the pre-Model-Rule substantial-relationship rule; relevance to disqualification irrespective of actual receipt of confidences)
- Freeman v. Chicago Musical Instrument Co., 689 F.2d 715 (7th Cir. 1982) (disqualification is a severe, disruptive remedy and should be imposed cautiously)
- Owen v. Wangerin, 985 F.2d 312 (7th Cir. 1993) (district court disqualification decisions reviewed for abuse of discretion)