United States District Court, D. Nevada
UNITED STATES OF AMERICA ex rel. JOSHUA LUKE, Plaintiff,
HEALTHSOUTH CORPORATION, et al., Defendants.
ORDER (1) OVERRULING OBJECTIONS AND (2) DENYING
MOTIONTOSTAY (ECF NOS. 87, 88)
P. GORDON, UNITED STATES DISTRICT JUDGE
Judge Ferenbach granted the defendants' motion to
disqualify the law firm Troutman Sanders LLP from
representing relator Joshua Luke in this action. ECF No. 86.
Luke objects. Luke also requests I stay the disqualification
order until the issue is resolved on appeal. I overrule the
objections and deny the motion to stay. The Troutman firm is
disqualified from representing Luke in this action.
filed this qui tam action in July 2013. ECF No. 1. The case
was sealed while the United States considered whether it was
going to intervene. In May 2017, the United States opted not
to intervene. ECF No. 34. The complaint was served on the
defendants in June 2017. ECF No. 42 at 2.
was represented in this action by attorneys from the Troutman
firm. The Troutman lawyers appeared pro hac vice, except
attorney Kevin Kieffer, who is a Nevada licensed attorney.
ECF Nos. 38-40; 87 at 2 n.2.
August 2017, the defendants moved to disqualify the Troutman
firm from representing Luke because in early 2017, defendant
Healthsouth Corporation hired two Troutman attorneys, Peter
Robinson and Robb Willis, to provide lobbying services for
Healthsouth in Georgia. ECF No. 66-2 at 3. As part of that
arrangement, Healthsouth provided confidential information to
Robinson and Willis. Id. According to Healthsouth
Executive Vice President John Patrick Darby, Healthsouth
would not have entered into the lobbying agreement had it
known that Troutman had already filed suit against
Healthsouth on Luke's behalf in Nevada. Id.
lobbying agreement is between Healthsouth and Troutman
Sanders Strategies, a limited liability company wholly owned
by the Troutman law firm. ECF No. 66-3 at 3. The agreement
identifies those who will lobby on Healthsouth's behalf,
including attorneys Robinson and Willis. Id. at 3.
The agreement states that Strategies may receive support from
attorneys at the Troutman law firm with Healthsouth's
approval and, if that occurs, Healthsouth would have to enter
into a separate agreement for services with the Troutman
firm. Id. The agreement states that Strategies would
not be providing legal services to Healthsouth and
“[a]ccordingly, [Healthsouth] will not have an
attorney-client relationship with [Strategies] and its
employees with regards to the services that [Strategies] will
provide related to the agreement.” Id. at 4.
The agreement has a “conflict of interest”
section which states that Strategies will not lobby positions
that would be in conflict with Strategies' obligations
under the agreement. Id. It also states Strategies
“is not providing legal services as part of this
agreement.” Id. However, it does not state
that the Troutman law firm may represent someone suing
the agreement was with Strategies, Strategies' invoice
directed that payment be remitted to the Troutman law firm.
ECF No. 66-4. Additionally, Robinson and Willis used their
Troutman law firm email addresses and phone numbers to
communicate with Healthsouth about their lobbying services.
ECF No. 66-2 at 3.
Judge Ferenbach held a hearing and granted the motion to
disqualify Troutman from representing Luke in this case. ECF
Nos. 86, 92. Judge Ferenbach applied the Nevada Rules of
Professional Conduct and concluded that under Nevada law, a
lawyer providing a law-related service such as lobbying is
still subject to Nevada's Rules regarding client
conflicts. ECF No. 92 at 24. Judge Ferenbach thus ruled there
was a concurrent conflict because Robinson and Willis both
represented Healthsouth and were associated in the same firm
with the attorneys representing Luke in this lawsuit against
Healthsouth, and Healthsouth did not give informed consent to
this conflict. Id. at 25-26.
OBJECTIONS (ECF No. 87)
objects to Judge Ferenbach's disqualification decision.
In his initial objection, Luke argues that Judge Ferenbach
erred by applying the Nevada Rules of Professional Conduct to
the two lawyers who provided lobbying services in Georgia.
ECF No. 87. Instead, Luke argues, the court should have
applied a choice-of-law analysis and selected Georgia as the
state with the most significant relationship with the Georgia
lobbyists' conduct and therefore Georgia's Rules of
Professional Conduct should have applied. Luke contends that
under Georgia law, a lawyer providing lobbying services is
not subject to the Rules of Professional Conduct so long as
the lobbying client knows legal services are not being
provided and no attorney-client relationship is being
created. See Georgia Bar Rule 4-102 & cmt. 9
(RPC 5.7). Luke asserts the lobbying agreement made clear to
Healthsouth that no legal services were being provided and no
attorney-client relationship was formed. Healthsouth responds
that the Nevada Rules of Professional Conduct apply because
the parties agreed that was the law that applied, the Local
Rules of this District require it, and applicable authority
supports that decision.
moved for leave to file a reply, which I granted. In his
reply, Luke argues he has not waived the argument about the
applicability of Georgia law because that argument was
presented at the hearing in front of Judge Ferenbach. Luke
also argues that even if the Nevada Rules control, Rule
1.0A(b) of those Rules directs the court to look to
substantive law outside the Rules to determine if an
attorney-client relationship exists. Luke contends the
substantive law that should apply to make that determination
is Georgia law because that is the law governing the
relationship between Healthsouth and Strategies.
responds that Luke waived the argument about Rule 1.0A(b)
because he did not raise it before the Magistrate Judge or in
the objections. Healthsouth also argues on the merits that
Judge Ferenbach properly applied the Nevada Rules when
deciding whether the Troutman attorneys are disqualified in
this case. Healthsouth contends Robinson and Willis would be
precluded from representing Healthsouth in this case, and
thus the Troutman attorneys appearing in this case with whom
Robinson and Willis are associated are likewise disqualified.
contends that once Troutman ran a conflicts check, it should
have either declined the lobbying engagement or attempted to
obtain Healthsouth's informed consent. Having done
neither, Healthsouth ...