SLF Holdings, LLC v. Uniti Fiber Holdings, Inc.

          ORDER

          KRISTI K. DuBOSE CHIEF UNITED STATES DISTRICT JUDGE.

         This matter came before the Court for a hearing on August 28, 2019 regarding Defendant Uniti Fiber Holdings, Inc.’s Motion to Disqualify Counsel (Doc. 13), Bradley Arant Boult Cummings, LLP (Bradley Arant)'s Response (Doc. 29), and Uniti Fiber Holdings, Inc.’s Reply and Notice (Docs. 31, 32).^[1] This motion is rooted in Uniti Fiber Holdings, Inc.'s position that it was, and is, a client of Bradley Arant. Bradley Arant contends that Uniti Fiber Holdings, Inc. has never been, and is not currently, a client of the law firm. For reasons explained herein, the motion to disqualify is DENIED.

         I. Entities

         Plaintiff SLF Holdings, LLC (SLF) is a privately held limited liability company in Alabama. Before July 3, 2017, SLF owned (and had as its affiliate) Southern Light, LLC (Southern Light). On July 3, 2017, Uniti Fiber Holdings, Inc. acquired Southern Light.

         Uniti Group, Inc. is a publicly-traded entity and the parent corporation of 76 separate corporate entities – one of which is Uniti Fiber Holdings, Inc.

         Defendant Uniti Fiber Holdings, Inc. is a holding company and a wholly-owned subsidiary of fellow Defendant Uniti Group, Inc.

         Uniti Fiber, LLC and Southern Light, LLC are subsidiaries or affiliates companies of Uniti Fiber Holdings, Inc., and Uniti Group, Inc. Uniti Fiber, LLC runs Southern Light LLC’s day-to-day operations.

         II. Relevant Law

         Motions to disqualify are governed by two sources: the local rules and federal common law. Herrmann v. GutterGuard, Inc., 199 Fed. Appx. 745, 752 (11^th Cir. 2006). Under this Court’s General Local Rules, attorneys are governed by the Alabama Rules of Professional Conduct and the Alabama Standards for Imposing Lawyer Discipline. S.D. ALA. L.R. 83.3(i). As set forth in Southern Visions, LLP v. Red Diamond, Inc., 370 F.Supp.3d 1314, 1323 (N.D. Ala. 2019) (footnotes omitted):

“The party moving to disqualify counsel bears the burden of proving the grounds for disqualification.” Id. “A disqualification order is a harsh sanction, often working substantial hardship on the client and should therefore be resorted to sparingly.” Herrmann, 199 F. App'x at 752 (quoting Norton v. Tallahassee Mem'l Hosp., 689 F.2d 938, 941 n. 4 (11th Cir. 1982) ) (internal quotation marks omitted).

Two sources of law govern motions to disqualify: the local rules of this court and federal common law. Herrmann, 199 F. App'x at 752….

*** Though state-court interpretations of the Alabama Rules of Professional Conduct are not binding on a federal court tasked with determining whether an attorney should be disqualified based on a violation of the Rules, they are persuasive authority concerning the Rules' meaning. See Clark v. Alfa Ins. Co., No. CIV.A. 00-AR-3296-S, 2001 WL 34394281, at *5 n.1 (N.D. Ala. Feb. 7, 2001) (Acker, J.).

In deciding whether to grant a motion to disqualify, a district court must first “identify a specific rule of professional conduct applicable to that court and determine whether the attorney violated that rule.” Herrmann, 199 F. App'x at 755; see also Schlumberger Techs., Inc. v. Wiley, 113 F.3d 1553, 1561 (11th Cir. 1997) (“[W]hile the district court's disqualification order is based on an allegation of ethical violation, ... [t]he court must clearly identify a specific Rule of Professional Conduct which is applicable to the relevant jurisdiction and must conclude that the attorney violated that rule.”). A district court “may not disqualify an attorney on the basis of some transcendental code of conduct that existed only in the subjective opinion of the court, of which the attorney had no notice.” Schlumberger, 113 F.3d at 1561 (cleaned up).

If a violation of an ethical rule is found, disqualification may be an appropriate sanction. See Herrmann, 199 F. App'x at 747 (affirming disqualification order where district court found violation of Georgia Rule of Professional Conduct). Upon finding a violation of an applicable ethical rule, a district court must then, “considering binding and persuasive federal case law, decide whether or not the ethical lapse warrants disqualification.” Clark, 2001 WL 34394281, at *3.

         This Court's Local Rule, General L.R. 83.3(i), governing "Admission to Practice," sets forth "Standards for Professional Conduct; Obligations[]" for attorneys admitted to practice before ...