No Disqualification Under Lawyer As Witness Rule

The Delaware Court of Chancery has denied a disqualification motion

Brex seeks to disqualify Su’s trial counsel under Rule 3.7(a) of the Delaware Lawyers’ Rules of Professional Conduct (the “DLRPC”). That rule states that “[a] lawyer shall not act as advocate at a trial in which the lawyer is likely to be a necessary witness unless . . . disqualification of the lawyer would work substantial hardship on the client.” Because Su’s lawyer is not likely to be a necessary witness, Rule 3.7(a) does not require disqualification.

Brex also seeks disqualification under DLRPC 1.9. Brex has waited too long and waived any conflict under that rule.

Facts

This action arises out of Brex’s acquisition of Pry Financials, Inc. (“Pry”), which Su founded. The parties dispute (1) whether Su disclosed to Brex that Pry was involved in litigation before the acquisition closed, and (2) whether Brex terminated Su for cause after the acquisition closed. The parties refer to the litigation at issue as the “Beowawie Litigation,” and I do the same. Gregory Patterson, Esquire, represented Pry and Su in the Beowawie Litigation. Patterson and Su each communicated with Brex about Su’s knowledge of the Beowawie Litigation. Part of this dispute is animated by purported differences in what they said. Su maintains that he had forgotten about the Beowawie Litigation during due diligence, and that he had had no contact with Patterson between October 2021 and March 2022. Brex’s counsel, Ryan Marsh, testified that on a May 9, 2022 call, Patterson “indicated” Patterson had spoken to Su in the two to three months prior. Marsh passed along his impressions of his call with Patterson to Brex’s board. Brex contends the board considered the contradictions between the accounts, and terminated Su for cause.

Patterson has represented Su in this litigation since it was filed in August 2022. He was admitted pro hac vice on September of 2022. On July 21, 2023, Brex raised its belief that Patterson was “a material witness in this case.” Patterson was undeterred, and continued to serve as Su’s lead counsel. Brex sought to depose Patterson, and Su resisted; addressing Brex’s motion to compel, the special discovery master in this case concluded Patterson’s knowledge about his communications with Su warranted a limited deposition.9 No party took exception. At his deposition, Patterson testified that he does not remember the May 2022 call with Marsh, and that if he did say he spoke to Su three to four months before the call, he “was wrong."

Rule 3.7

Su does not intend to call Patterson in his case-in-chief.23 Brex intends to call Patterson in its case-in-chief to bolster evidence that Patterson told Marsh that Patterson spoke with Su during the due diligence period, which Brex claims goes to whether Su was terminated for cause. Certainly, the reasons why Brex’s board terminated Su are central to this case. But Patterson’s testimony is cumulative of and peripheral to Marsh’s: Marsh shared his own impression with the board. Patterson’s testimony is further peripheral to the issue of what the board did with Marsh’s impression. And Patterson’s testimony that he does not remember the call, and if he said he spoke to Su during that period he was wrong, does nothing to bolster the conflict between Marsh’s and Su’s testimony.

Brex also intends to call Patterson to demonstrate that in this litigation, he contradicted his statement to Marsh. Patterson has not done that: he testified he does not remember the call, and that if he said he spoke to Su in that time period he was wrong. And the argument that someone is a necessary witness because they can be impeached presupposes that his testimony is necessary. As explained, it is not.

Brex also intends to call Patterson to demonstrate the board investigation Su is attacking as inadequate was deficient  because Patterson gave Marsh “wrong” information.26 This is a peripheral rebuttal argument, not a central case-in-chief argument.

I cannot conclude that Patterson is likely to be a necessary witness under DLRCP 3.7(a) at trial.

(Mike Frisch)