Jacob North Printing Co. v. Mosley

Jacob North P riNtiNg co., iNc., aPPellaNt,
v. barry Mosley, aPPellee .
779 N.W.2d 596
Filed March 19, 2010. 	No. S-09-774.
1. Jurisdiction: Appeal and Error. A jurisdictional question which does not
involve a factual dispute is determined by an appellate court as a matter of law,
which requires the appellate court to reach a conclusion independent of the lower
court’s decision.
2. Attorneys at Law: Appeal and Error. In an appeal from an order disqualify-
ing counsel, an appellate court reviews the trial court’s factual findings for clear
error and ultimately makes its disqualification decision independent of the trial
court’s ruling.
3. Jurisdiction: Appeal and Error. Before reaching the legal issues presented for
review, it is the duty of an appellate court to settle jurisdictional issues presented
by a case.
4. Attorneys at Law: Final Orders: Appeal and Error. An order disqualifying
counsel in a civil matter is not a final order. Such orders, however, are subject to
interlocutory review if the order of disqualification involves issues collateral to
the basic controversy and if an appeal from a judgment dispositive of the entire
case would not be likely to protect the client’s interests. This concept is referred
to as the “collateral order doctrine.”
5. Attorneys at Law: Conflict of Interest. In the context of an attorney disquali-
fication case, the issue collateral to the underlying action for purposes of the
collateral order doctrine is whether counsel should be disqualified on the basis of
the prior representation of an adverse party.
6. Attorneys at Law: Proof. The burden of showing that counsel should be dis-
qualified is on the party seeking disqualification.
7. Attorneys at Law: Appeal and Error. In a motion seeking disqualification of
counsel, it is error for a district court to consider whether disqualification is nec-
essary in order to avoid the appearance of impropriety.
8. Attorneys at Law: Conflict of Interest: Appeal and Error. An appellate court
should take into account the following considerations when making a determina-
tion about whether a prior matter was substantially related to a later one for the
purposes of a motion to disqualify counsel: whether the liability issues presented
are similar; whether any scientific issues presented are similar; whether the nature
of the evidence is similar; whether the lawyer had interviewed a witness who was
a key in both causes; the lawyer’s knowledge of the former client’s trial strate-
gies, negotiation strategies, legal theories, business practices, and trade secrets;
the lapse of time between causes; the duration and intimacy of the lawyer’s
relationship with the clients; the functions being performed by the lawyer; the
likelihood that actual conflict will arise; and the likely prejudice to the client if
conflict does arise.
jAcoB NorTh prINTINg co. v. MoSley 	585
cite as 279 Neb. 585
Nebraska Supreme Court Online Library
www.nebraska.gov/apps-courts-epub/
11/01/2026 04:48 AM CST

Appeal 	from 	the 	District 	court 	for 	lancaster 	county:
Jeffre cheuvroNt, judge. reversed and remanded for further
proceedings.
Mark A. Fahleson and Brian S. Kruse, of rembolt ludtke,
l.l.p., for appellant.
james c. Zalewski and Maria j. Thietje, of DeMars, gordon,
olson & Zalewski, for appellee.
heavicaN, 	c.J., 	Wright, 	coNNolly, 	gerrard, 	stePhaN,
MccorMack, and M iller-lerMaN, jj.
heavicaN, c.j.
INTroDUcTIoN
jacob North printing co., Inc. (jacob North), filed an action
against a former employee, Barry Mosley, alleging that Mosley
converted and misappropriated trade secrets and customer
information belonging to jacob North. Mosley filed a motion
to disqualify jacob North’s counsel. That motion was granted.
jacob North appeals. We reverse, and remand to the district
court for further proceedings.
FAcTUAl BAcKgroUND
jacob North provides printing and printing-related services
to clients throughout the United States. Mosley was hired by
jacob North on about May 12, 2003. Mosley had previously
been employed by omaha printing company.
In january 2004, Mosley was sued by omaha printing
company for violation of a covenant not to compete. jacob
North retained attorney Mark Fahleson and his law firm to
represent Mosley in that action. At that time, Fahleson and his
firm represented jacob North in a variety of other legal matters.
The litigation was eventually settled in March 2006.
Mosley’s employment with jacob North ceased on about
March 	12, 	2009. 	Mosley 	was 	subsequently 	employed 	by
Mccormick-Armstrong, Inc., a competitor to jacob North,
located in Wichita, Kansas. on March 27, jacob North filed
suit against Mosley alleging a breach of the duty of loyalty,
misappropriation of trade secrets, conversion, and a violation
586 	279 NeBrASKA reporTS

of Nebraska’s consumer protection Act. Fahleson filed the
complaint on jacob North’s behalf.
Due to the 2004 representation, on April 6, 2009, Mosley
filed a motion to disqualify Fahleson. The district court granted
Mosley’s motion, reasoning that the “close similarities between
the two cases, the short period of time between the Douglas
county case and the present litigation, and the necessity of
avoiding the appearance of impropriety” supported disqualifi-
cation. jacob North appeals.
ASSIgNMeNT oF error
jacob North assigns that the district court erred in granting
the motion to disqualify its counsel.
STANDArD oF reVIeW
[1] A jurisdictional question which does not involve a fac-
tual dispute is determined by an appellate court as a matter of
law, which requires the appellate court to reach a conclusion
independent of the lower court’s decision.1
[2] In an appeal from an order disqualifying counsel, an
appellate court reviews the trial court’s factual findings for
clear error and ultimately makes its disqualification decision
independent of the trial court’s ruling.2
ANAlySIS
District Court’s Order Is Final.
As an initial matter, Mosley contends that the district
court’s order granting his motion for disqualification is not a
final order.
[3-5] Before reaching the legal issues presented for review,
it is the duty of an appellate court to settle jurisdictional issues
presented by a case.3 We have previously held that an order
disqualifying counsel in a civil matter is not a final order.4 We
have, however, allowed interlocutory review of such orders
1 Hallie Mgmt. Co. v. Perry, 272 Neb. 81, 718 N.W.2d 531 (2006).
2 Beller v. Crow, 274 Neb. 603, 742 N.W.2d 230 (2007).
3 See Hallie Mgmt. Co. v. Perry, supra note 1.
4 See Richardson v. Griffiths, 251 Neb. 825, 560 N.W.2d 430 (1997).
jAcoB NorTh prINTINg co. v. MoSley 	587
cite as 279 Neb. 585

disqualifying counsel if the order of disqualification involves
issues collateral to the basic controversy and if an appeal from
a judgment dispositive of the entire case would not be likely
to protect the client’s interests.5 This concept is referred to as
the “collateral order doctrine.”6 We have explained that in the
context of an attorney disqualification case, the issue “col-
lateral to the underlying action” is whether counsel should
be disqualified on the basis of the prior representation of an
adverse party.7
This case involves such a collateral issue, namely, whether
Fahleson should be disqualified from representing jacob North
because of Fahleson’s prior representation of Mosley. We
therefore have jurisdiction over this appeal under the collateral
order doctrine.
District Court Erred in Disqualifying Fahleson.
[6] having concluded that we have jurisdiction, we must
next determine whether the district court erred in granting
Mosley’s motion to disqualify Fahleson. The burden of show-
ing that counsel should be disqualified is on the party seeking
disqualification,8 in this case, Mosley.
Neb. r. of prof. cond. § 3-501.9(a) provides that
[a] lawyer who has formerly represented a client in a
matter shall not thereafter represent another person in
the same or a substantially related matter in which that
person’s interests are materially adverse to the interests of
the former client unless the former client gives informed
consent, confirmed in writing.
The parties do not dispute that Fahleson formerly represented
Mosley. Nor is this litigation the same litigation at issue in the
prior representation. The issue on appeal in this case instead is
whether the prior representation was “substantially related” to
the current matter.
5 See id.
6 See id.
7 Pennfield Oil Co. v. Winstrom, 267 Neb. 288, 673 N.W.2d 558 (2004).
8 See Beller v. Crow, supra note 2. See, also, Neb. ct. r. of prof. cond.
§ 3-501.9, comment 3.
588 	279 NeBrASKA reporTS

comment 3 to § 3-501.9 provides in part:
Matters are “substantially related” for purposes of this
rule if they involve the same transaction or legal dispute
or if there otherwise is a substantial risk that confidential
factual information as would normally have been obtained
in the prior representation would materially advance the
client’s position in the subsequent matter.
This court noted in State ex rel. Wal-Mart v. Kortum9 that
[i]n fashioning a “substantially related subject mat-
ter” test, a court must balance several competing con-
siderations, including the privacy of the attorney-client
relationship, the prerogative of a party to choose counsel,
and the hardships that disqualification imposes on parties
and the entire judicial process. . . . however, the pres-
ervation of client confidences is given greater weight in
that balancing. . . .
Mindful of these competing interests, we determine
that the subject matters of two causes are “substantially
related” if the similarity of the factual and legal issues
creates a genuine threat that the affected attorney may
have received confidential information in the first cause
that could be used against the former client in the pres-
ent cause.
Simply stated, if the court determines that the unique
factual and legal issues presented in both cases are so
similar that there exists a genuine threat that confidential
information may have been revealed in the previous case
that could be used against the former client in the instant
case, then disqualification must ensue.
[7] As an initial matter, we note that in reaching its decision,
the district court specifically stated in part that the “necessity
of avoiding the appearance of impropriety” compelled the deci-
sion to disqualify Fahleson. But in fact, this court, on several
occasions, has specifically held that this is not a consideration
in a disqualification analysis. “clearly, the ‘appearance of
impropriety’ . . . do[es] not address whether two causes are
9 State ex rel. Wal-Mart v. Kortum, 251 Neb. 805, 811, 559 N.W.2d 496, 501
(1997) (citations omitted).
jAcoB NorTh prINTINg co. v. MoSley 	589
cite as 279 Neb. 585

‘substantially related’ and, thus, [is] not [a] factor[] that may
be considered in determining whether or not to disqualify an
attorney or firm.”10 We therefore conclude that the district court
erred insofar as it considered the appearance of impropriety
in its decision to grant the motion to disqualify. Because we
review the district court’s factual findings for clear error but
its conclusion of law de novo, and because we do not consider
the appearance of impropriety in our analysis, we conclude the
district court’s error was harmless.
We now turn to jacob North’s argument on appeal. jacob
North argues that disqualification is unnecessary because the
two matters at issue are not substantially related.
[T]he legal theories and liability issues are completely dif-
ferent in the two cases. The Douglas county Action was
a breach of contract case involving Mosley and omaha
printing company, and based on a written non-compete
agreement. There is no contract or non-compete agree-
ment at issue in this case. jacob North alleges Mosley
wrongfully converted company property and misappropri-
ated trade secrets and customer information. The scientific
issues and evidence [are] different in that the Douglas
county case did not involve transmission of trade secrets
via e-mail. The witnesses are different, with the exception
of Mosley himself. The prior action involved a suit by a
completely different company.11
Mosley contends differently, noting that
the most obvious concerns are Fahleson’s intimate rela-
tionship with both cases, the very likely potential for con-
flict, and the likelihood of prejudice to Mosley. . . .
. . . .
In the case at bar, the allegations in jacob North’s
Complaint and Praecipe are based on, generally, the
allegation that Mosley converted client lists. Although
jacob North asserts that the cases are not similar due
to the omaha litigation being based on a “non-compete
10 Id. at 812, 559 N.W.2d at 501. See, also, Richardson v. Griffiths, supra
note 4.
11 Brief for appellant at 8.
590 	279 NeBrASKA reporTS

agreement”, as opposed to trade secrets and customer
information, . . . it is clear that both cases are premised on
the allegations of unfair competition.12
[8] We agree with jacob North and conclude that these two
matters are not substantially related. In Kortum,13 we listed
considerations in making a determination about whether a
prior matter was substantially related to a later one: whether
the liability issues presented are similar; whether any scientific
issues presented are similar; whether the nature of the evidence
is similar; whether the lawyer had interviewed a witness who
was a key in both causes; the lawyer’s knowledge of the former
client’s trial strategies, negotiation strategies, legal theories,
business practices, and trade secrets; the lapse of time between
causes; the duration and intimacy of the lawyer’s relationship
with the clients; the functions being performed by the lawyer;
the likelihood that actual conflict will arise; and the likely
prejudice to the client if conflict does arise.
We have examined the record and analyzed it in conjunc-
tion with the factors set forth in Kortum, and we conclude
that the record does not establish a substantial relationship
sufficient to require Fahleson’s disqualification. While both
cases do involve unfair competition, the prior case dealt with
Mosley’s alleged breach of a noncompete agreement, while
the current case contends that Mosley engaged in the conver-
sion of jacob North’s client lists. Such a similarity is insuf-
ficient to show a substantial relationship. We further conclude
that the two cases do not present the same liability or scien-
tific issues. Nor do these two matters involve the same type
of evidence. The only witness in common would appear to be
Mosley himself.
In addition to the above, Mosley has presented no evidence
whatsoever that Fahleson now has, or ever had, any knowl-
edge regarding Mosley’s trial and negotiation strategies, legal
theories, business practices, or trade secrets, nor has Mosley
presented any evidence that Fahleson has any knowledge about
the client lists at issue in this litigation. And to the extent that
12 Brief for appellee at 7-8.
13 State ex rel. Wal-Mart v. Kortum, supra note 9.
jAcoB NorTh prINTINg co. v. MoSley 	591
cite as 279 Neb. 585

Mosley might have met his burden simply by his largely con-
clusory statements that the matters were related, we find that
Fahleson adequately rebutted those allegations when, in an
affidavit, he expressly denied that he was “aware of any trade
secrets, trial strategies, negotiation strategies, legal theories or
business practices of [Mosley].”
We also note that the length of time between the end of
Fahleson’s representation of Mosley and the commencement
of the litigation in this case was 3 years—2 years in excess of
the 1 year separating representations in Kortum. According to
Fahleson’s affidavit, during those 3 years, neither Fahleson nor
his firm represented Mosley in any other action or capacity.
And prior to the earlier litigation, Mosley was informed as to
the ongoing nature of Fahleson’s relationship with jacob North
and therefore would have been aware that even as Fahleson
was representing Mosley, he was continuing to represent jacob
North. Such would militate against a finding of an intimate
relationship between Mosley and Fahleson.
We agree with jacob North that the district court erred in
disqualifying Fahleson as counsel and therefore reverse the
order of the district court and remand this cause to the district
court for further proceedings.
coNclUSIoN
The district court erred in disqualifying Fahleson because
its current representation of jacob North against Mosley was
not substantially related to Fahleson’s earlier representation
of Mosley against omaha printing company. The decision of
the district court is reversed, and this cause is remanded to the
district court for further proceedings.
reversed aNd reMaNded for
further ProceediNgs.
592 	279 NeBrASKA reporTS