1. There are no restrictions as to the materials that may be brought
into the final examination.
2. Three hours will be allotted for the examination. Blue books will not
be passed out for the first 30 minutes. This time should be spent
reading and thinking about the question before you begin writing your
response. You may use scratch paper to begin outlining your answer
during this initial 30 minute period.
3. There will be one essay question on the final examination.
4. In answering the essay question, you should rely upon case law from
the textbook and handouts, our class discussions, and EITHER the ABA's
Model Rules OR the Model Code of Professional Responsibility. You will
not be expected to use both the Code and the Rules in your answer.
5. Students who wish to compare and contrast the Model Rules and the
Model Code in their answers may do so, and will receive additional
points for accurate & thoughtful analysis. However, you should try to
fully discuss all the issues raised by the question before attempting to
gain extra points by comparing the Model Code and the Model Rules.
6. DO NOT CITE A CASE WITHOUT FURTHER DISCUSSION! There is no
presumption that use of a case name results from knowledge of its
contents. Discuss and analyze any case law you plan to use in your
7. Write on only one side of each page in the blue books.
DO YOUR BEST TO WRITE LEGIBLY. FAILURE TO WRITE LEGIBLY WILL RESULT IN
AN IRATE GRADER READING YOUR EXAMINATION.
Kayla Carlyle joined the Wall Street firm of White & Bright in 1991, and
began to develop a specialty in corporate law. Kayla quickly developed a
good working relationship with George Thoroughgood, a partner in the
corporate department, and began to work on matters involving Occidental
Paint & Merchandising.
Occidental was a successful, publicly held company with over eighty
years of profitable business experience. Marvin Michelin, its CEO, was a
high profile maverick with a hands-on management style. Occidental
specialized in producing high quality, limited production paint for
specialized uses, such as airplanes and military equipment. Occidental's
newest premium paint was a product called "Cadmium Scarlett," a vivid,
indelible paint that could withstand jungle temperatures and humidity,
extreme wear and tear, and had a visibility range of over ten miles.
White & Bright handled all of Occidental's legal business, including
patent and intellectual property matters, environmental litigation and
general corporate planning.
1992 was not a good year for Occidental. Despite attempts to market
Cadmium Scarlett as a designer color, sales of the strikingly garish
paint plummeted, and other research and development projects yielded
poor results for greater than anticipated costs. In a secret corporate
meeting with Occidental's Board of Directors, Michelin decided to dump
their existing supply of Cadmium Scarlett at a waste site located next
to a deserted Occidental warehouse in West Orange, New Jersey, then sell
the warehouse and move on to other projects. Michelin used a trucking
company of which he was the sole owner to transport the paint to the
dump site. Over four thousand gallons of this extremely toxic paint was
dumped, dirt was loaded over the dump site, and the warehouse was sold
to a small trucking company called Burro's which needed a storage
facility in the area.
As it happened, Burro's used the same law firm as Occidental-- White &
Bright. Upon learning that the buyer and seller were both clients of the
firm, White & Bright advised the two companies to retain outside counsel
to handle the sales transaction. Both companies obtained independent
counsel, and a sales agreement was drawn up. During the negotiations,
Burro's insisted that an environmental audit of the property be done by
an independent engineering firm. Occidental contracted with Gorsuch
Engineering to perform the audit. Gorsuch was a sole proprietorship
owned by Andy Gorsuch, son-in-law of Marvin Michelin. Gorsuch's
environmental audit reported no toxic wastes on the site.
One year later, Edna Gardner, who lived just down the street from the
warehouse, turned on her tap water and screamed. The Cadmium Scarlett
had leached into the water table, and the water coming from the tap was
as red as Edna's hair, which closely resembled ruby nail varnish. In
short, that water was pretty darn red. Edna called the City Services
Department in West Orange, which quickly tracked down the problem. Two
days later, state and federal officials from the EPA showed up at
Burro's West Orange warehouse, with a warrant to search the premises.
Burro's turned the matter over to White & Bright, and sent over the
environmental audit statement that had been prepared by Gorsuch at the
time of the sale. The EPA investigators had many questions about
Occidental's use of the property. White & Bright told Occidental that it
would be best if Occidental turned over all its files relating to the
warehouse site so that the law firm could handle the government
inquiries of both companies as it thought best.
Upon reviewing the audit, Kayla became very concerned. It looked as
though Andy Gorsuch had never even visited the site. Descriptions of the
property were inaccurate and incomplete. Her quick check on Gorsuch
himself revealed that he was only two years out of engineering school,
self-employed, and living at Michelin's mansion. In addition, Kayla
remembered hearing that Occidental had an overstock of Cadmium Scarlett
in 1992 through her earlier work for the company.
Kayla went to George Thoroughgood and outlined the situation. George's
response was equivocal. "We may have a tricky situation here," he said
to Kayla. "Best thing is not to act precipitously. Besides, I'm not
worried about Gorsuch. I've referred some work to him -- Michelin told
me he needed help getting started. I've never had a complaint and he
sends me 5% of all his billings with a note saying he appreciates the
business. That young man has the right instincts."
Because of the public outcry over the colorful and toxic drinking water,
the EPA placed the West Orange site on its Superfund priority list. The
agency cleaned the site up at a cost of fifteen million dollars and
filed suit against Burro's and Occidental for compensation. Under
federal law, present owners of the property, transporters and generators
of the toxic waste are potentially responsible for compensating the
government for clean up costs. Criminal penalties are available for
company executives and officers who knowingly engage in illegal dumping.
In its deposition of Michelin, attorneys for the EPA pushed hard to
determine whether the company had ever had an overstock of Cadmium
Scarlett, and if so, what arrangements were made for its disposal.
Michelin testified that the company did have an overstock in 1992, but
that he had contracted with Burro's to dispose of the waste at an out-
of-state site. Michelin insisted that he had paid Burro's $20,000 to
cover the out-of-state dumping costs at a North Carolina dump that had
special facilities to handle toxic liquids.
Kayla listened to this testimony with a mounting sense of horror and
disbelief. She remembered talking to Burro's CEO -- Stan Schwartz -- at
the time the warehouse was sold, and he had told her that the company
knew nothing about Occidental, had never had any dealings with them, and
wanted to know anything the law firm could tell them about the company.
At the first recess in the deposition, Kayla pulled George aside and
told him she thought Michelin was lying to try and save himself from
George sternly reminded Kayla that an attorney's primary duty is to
protect and vigorously represent their clients, not to turn them in for
suspected misconduct. Kayla asked if they should question Michelin to
determine whether he was telling the truth. George took the position
that this would be insulting to the client, would undermine the
relationship of trust and confidence and would be "bad form." Kayla
Two weeks later, the CEO of Burro's dropped by the law firm. George was
out golfing, so the receptionist took him to Kayla's office. Stan told
Kayla that EPA officials were interrogating him, wanting to know why he
hadn't taken the Cadmium Scarlett to North Carolina, as required by his
contract with Michelin. Stan was confused and frightened. He wanted to
know if White & Bright had reached some agreement with the EPA and
Occidental to treat Burro's as "the fall guy."
Kayla told Stan that White & Bright would never "cut a deal" with the
fed's to protect one client at another's expense. She also said that
Michelin's testimony at the deposition had come as a surprise to the
firm, that she personally thought he had been untruthful and she
suspected his lies would "catch up with him." She then assured Stan that
White & Bright would do everything possible to minimize the liability of
both clients for the cleanup costs.
One month later, the EPA filed a motion to disqualify White & Bright
from representing either Occidental or Burro's in any suit to recover
federal funds spent cleaning up the West Orange dump site. George
Thoroughgood promptly held a press conference, in which he compared the
EPA attorneys to a "lawless pack of jackals, mindlessly bent on
recovering money." He stated that neither Occidental nor Burro's had
ever done anything "that could possibly be described as violating the
environmental laws," and that both companies were fine, All-American
examples of entrepreneurship that were determined to keep the
environment safe for children everywhere. Thoroughgood also said that
EPA "scalawags" were too lazy and incompetent to track down the real
source of the contamination, which he himself strongly suspected to be
traceable to an old project done by the Army Corps of Engineers.
The district court denied the EPA's motion to disqualify White & Bright,
holding that separate trials for each defendant would be sufficient to
resolve the conflict. The court then began to select jurors for the
trials. No juror was asked whether or not they remembered hearing
Thoroughgood's statement, or whether they had read anything at all about
the case. Three separate trials were held: one for Occidental, one for
Burro's, and one to determine the criminal liability of Marvin Michelin.
George Thoroughgood handled Occidental's and Michelin's trial, and Kayla
handled the trial of Burro's.
Occidental and Michelin both argued at trial that the site had been
clean when sold, that there had been an agreement with Burro's to
properly dispose of the Cadmium Scarlett and that any toxic waste on the
property must have been dumped by Burro's. Burro's argued that there had
been no such contract, and that it had bought the warehouse site in
reliance on the Gorsuch audit. Michelin testified at his own trial and
at Occidental's. His testimony in both actions was consistent with his
deposition testimony. When asked why there was no written contract with
Burro's, Michelin replied that he had relied on their good reputation in
the community and done a "handshake deal." Michelin was acquitted of
criminal charges. Both companies were convicted of violating federal
environmental laws. Kayla resigned from White & Bright to start a solo
Once these proceedings had terminated, Occidental brought a breach of
contract action against Burro's for failure to comply with an oral
agreement to deliver the Cadmium Scarlett to a proper dumpsite.
Occidental retained Melvin Belli, a solo practitioner, to bring this
action. Stan tracked down Kayla, who agreed to represent Burro's. She
filed an answer denying the existence of any contract, offered to
testify in support of her client and requested Rule 11 sanctions against
opposing counsel. She also counterclaimed for fraudulent
misrepresentation connected with the sale of the West Orange warehouse.
Identify and discuss all ethical issues.
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