     Case 1:17-cv-01898-EGB Document 41 Filed 01/30/20 Page 1 of 2




      In the United States Court of Federal Claims
                     Nos. 20-120C & 20-150C (consolidated)
                              (Filed: May
                       Nos. 17-1898T,      8, 2020) 17-2023T
                                         17-2022T,
                            (Re-filed: May 26, 2020)1
                             (Filed:  January 30, 2020)
                                 UNDER SEAL

* * * * * ** ** ************* ** * * * ** ** *********** * *
      QUANTICO TACTICAL INC.,
                                                               Motion to Disqualify, Duty
DILLON TRUST COMPANY  LLC, et al.,
                 Plaintiff,
                                                               of Loyalty, Duty of
                                                               Confidentiality, ABA
                                                               Model Rule 1.9, ABA
      v.                 Plaintiffs,                           Model Rule 1.6
      THE UNITED STATES,
v.
                                Defendant,
THEand
    UNITED STATES,

                   Defendant.
      ATLANTIC DIVING SUPPLY, INC.

                                Intervenor-Defendant.
********************** **
      **************************
      UNIFIRE, INC.,   ORDER
                                Plaintiff,
       The parties filed a joint motion on January 29, 2020, to extend the
discovery
    v.    schedule. For good cause shown, the court grants the parties’ joint
motion and adopts the parties’ proposed amended schedule as follows:
      THE UNITED STATES,

           1.    The parties shall complete all fact discovery by February 14,
                             Defendant.
                 2020.

1 Pursuant
       2. to the
              TheProtective Orderexchange
                   parties shall   entered inthe
                                               thisidentity
                                                     case, this
                                                             of opinion
                                                                expertswas held
                                                                        under RCFC
open for fourteen days during which the parties could propose to chambers
              26(a)(2)(A) and written reports under RCFC 26(a)(2)(B) on or
any appropriate redactions. Plaintiff proposed certain redactions, in which
the governmentbefore  February 18,
                 and intervenor  did 2020.
                                     not join. Nevertheless, for good cause
shown, we adopt plaintiff’s proposed redactions. Those redactions are
indicated
       3. by closed brackets shall
              The parties    below.exchange rebuttal expert disclosures and
                 rebuttal expert reports on or before March 6, 2020.
                                             1

           4.    The parties shall complete all expert discovery on or before
   **************************

  David R. Hazelton, Washington, D.C., with whom was Kyle R. Jefcoat,
 Melissa Sherry, and Dean W. Baxtresser, for plaintiff.

   Doug Hoffman, United States Department of Justice, Commercial
 Litigation Branch, Civil Division, Washington, D.C., with whom was
 Martin F. Hockey, Jr., Deputy Director, Robert E. Kirschman, Jr., Director,
 and Joseph H. Hunt, Assistant Attorney General, for defendant.

   Paul F. Khoury, Washington, D.C., with whom was John R. Prairie,
 Kendra P. Norwood, and J. Ryan Frazee, for intervenor-defendant.

                                OPINION

BRUGGINK, Judge.

   This is a pre-award bid protest in which the protestor challenges its
exclusion from the competitive range in a solicitation by the Defense
Logistics Agency. Prior to briefing and resolution of the merits, intervenor
moved to disqualify as counsel the firm representing the protestor because it
had previously represented the intervenor. The motion is fully briefed, and
oral argument was held on April 29, 2020. We granted the motion by short
order on May 1, 2020. This opinion more fully explains the result.

                             BACKGROUND

    On November 16, 2018, the Defense Logistics Agency (“DLA”) issued
Solicitation No. SPE8EJ-18-R-0001 (“RFP”) for the Special Operations
Equipment (“SOE”) Tailored Logistics Support (“TLS”) Program with an
original proposal deadline of January 8, 2019, which was later extended to
January 18, 2019. Plaintiff Quantico Tactical, Inc. (“Quantico”) submitted a
proposal by January 17, 2019, and nine months later, on December 4, 2019,
DLA informed Quantico that it was being excluded from the competitive
range.

    On December 23, 2019, Quantico submitted a bid protest to the
Government Accountability Office (“GAO”). Unsatisfied with the agency’s
production of documents at GAO, Quantico withdrew its GAO protest and
filed the present action on February 3, 2020. On February 24, 2020, another
offeror excluded from the competitive range, Unifire, Inc. (“Unifire”), filed
a protest at the court, which was subsequently consolidated with this case as
the lead. On February 27, 2020, one of the offerors in the competitive range,


                                     2
Atlantic Diving Supply, Inc. (“ADS”), filed a motion to intervene, alleging
that Quantico’s protest implicated its own interests in remaining in the
competitive range. We granted intervention on March 3, 2020.

   On March 12, 2020, Quantico moved to supplement the administrative
record (“AR”), including seeking leave to take discovery from ADS. On
March 20, 2020, ADS moved for disqualification of Latham & Watkins
(“Latham”) as counsel for Quantico because the firm had previously
represented ADS in what it alleged was a related matter. On April 10, 2020,
Quantico moved to amend its complaint to clarify the relief it seeks regarding
ADS and DLA’s actions toward it. That motion and the motion to
supplement the record remain pending.

    During oral argument on the pending motion, plaintiff’s counsel made a
request to again amend the complaint and to produce affidavits in reply to
ADS’ arguments made in its April 27, 2020 response to the motion for a
status conference. The rationale offered was that Quantico could narrow its
allegations to assuage the court’s concerns expressed at oral argument
regarding the overlap in issues between Latham’s earlier representation of
ADS and its work for Quantico now. We denied both requests in our May 1,
2020 order.

I. The Complaint and Subsequent Allegations

    Quantico’s complaint challenges its exclusion from the competitive range
for the SOE TLS Program, claiming, among other things, that the agency was
biased against it in favor of ADS and that the two companies had engaged
over several years in competition to supply special operations services to
DLA. The complaint also alleges that ADS committed fraud and other
criminal misconduct in relation to its incumbent SOE TLS Program contract
and fraudulently represented its small business status. The complaint and
plaintiff’s other papers make frequent mention of a Federal Civil False
Claims Act, 31 U.S.C. § 3729 (“FCA”) action brought on behalf of the
United States against ADS, dated July 2, 2015.

    In its motion to supplement the record, Quantico contends that the record
is missing entire categories of documents, including: “(1) key materials
referenced in the memorandum titled as the “Pre-Negotiation Briefing
Memorandum/Competitive Range Determination” for the SOE TLS
procurement (AR Tab 53 at 4320-496); (2) price analysis and evaluation
materials; and (3) documents evincing the government’s consideration of
ADS fraud that are at the heart of several critical issues raised by Quantico.”
Pl.’s Memo. in Support of Mot. to Suppl. (“Pl.’s Mem. in Support”) 3 (ECF


                                      3
No. 30-1). In that third category, Quantico seeks to supplement the AR with
documents that it alleges describe and relate to “procurement fraud by ADS
and multiple co-conspirators” resulting in six FCA settlements. Id. at 4.
Quantico then argues that DLA’s refusal to take any meaningful action “in
light of this major fraud” shows the agency’s bias and taints its evaluation of
Quantico. Id. Consideration of the motion to supplement has been suspended
pending resolution of the motion to disqualify. We will examine some of the
allegations more fully below, however, as they are relevant to the issue of
disqualification of counsel.

II. The Motion to Disqualify and Latham’s Prior Representation of ADS

    Shortly after Quantico filed its motion to supplement, ADS sought to
disqualify Latham as counsel for plaintiff, arguing that, “[b]ecause
Quantico’s allegations against ADS are substantially related to Latham’s
prior work for ADS and leverage confidential information that Latham
gained in its representation of ADS, Latham has breached the duties of
loyalty and confidentiality.”2 Reply in Supp. of Mot. to Disqualify (“ADS
Reply”) 1. Intervenor cites Rules 1.9(a) and 1.6 of the ABA Model Rules of
Professional Conduct as well as Rules 1.9 and 1.6 of the D.C. Rules of
Professional Conduct for a restatement of the duties owed by attorneys at
Latham to ADS as a former client. Attached in support of its motion, ADS
submitted the Declaration of Luke Hillier, who served as Chief Executive
Officer of ADS in 2010. See Declaration of Luke Hillier (“Hillier Decl.”)
(ECF No. 32-4).

     In his declaration, Mr. Hillier explains that ADS has served as one of
multiple incumbent contractors on the SOE TLS Program since 2009. He
provides that, in May 2010, ADS retained Latham “as legal counsel to
represent ADS in preparing for a potential initial public offering.3” Hillier
Decl. ¶ 3. Mr. Hillier further states that “Latham’s representation of ADS
involved performing legal due diligence of ADS’s business, which included
. . . reviewing ADS’s major contracts[.]” Id. ¶ 4. ADS avers that it “gave

2 Specifically, ADS alleges that Quantico’s motion to supplement and
complete the AR includes additional allegations that “draw an even closer
link to Latham’s prior work for ADS[,]” and that the companies identified in
the motion “are the very same companies Latham advised ADS to identify
as related parties in ADS’s Form S-1[,]” as discussed above. Mem. in Supp.
of Mot. to Disqualify (“ADS Mem.”) 17-18 (ECF No. 32-2).

3 This is evinced by an Engagement Letter sent to ADS by Latham, dated
May 7, 2010. Ex. 1, Engagement Letter (ECF No. 32-3).

                                      4
Latham full and open access to the company’s records through an electronic
data room[,]” which included “highly confidential information concerning
the company’s organizational structure, finances, legal matters, and
government contracts, including ADS’s contracts with DOD.” ADS Mem. in
Support of its Mot. to Disqualify 8 (ECF No. 32-2). Further, Mr. Hillier
declared that “a key component of Latham’s due diligence was reviewing all
aspects of ADS’s government contracts business – especially ADS’s largest
government contract at the time, the SOE TLS Program. Hillier Decl. ¶ 6.
“Latham had access to highly confidential and proprietary information
concerning all aspects of ADS’s performance of its SOE TLS Program,
including information related to its bidding and pricing strategy for task
orders competed among the other SOE TLS contract holders.” Id. ¶ 7. The
information provided to and reviewed by Latham, according to Mr. Hillier,
included information not disclosed in the publicly filed SEC Form S-1. Id. ¶
11.

    Latham billed over [               ] for legal services to ADS. Multiple
attorneys worked on the matter, including one of Quantico’s counsel in the
subject bid protest, [       ]. Ex. 3, Consolidated Invoices 4, 6, 9, 12, and
30 (ECF No. 32-5). The timekeeping entries made by Latham attorneys
include entries for “review[ing] Department of Defense backup,”
“review[i]ng updated diligence documents in dataroom,” “review[ing]
pending business report uploaded to dataroom[.]” Id. at 22, 23.

   The Form S-1 was filed by Latham on behalf of ADS with the SEC on
February 8, 2011. It discloses, “among other things, the various legal risks
associated with ADS’s U.S. government contracting business on which
Latham advised ADS during its representation,” including, Small Business
Act and U.S. Small Business Administration (“SBA”) size status regulations;
“the risk of not receiving a follow-on contract under the SOE TLS;” “the risk
of ADS not being able to participate in small business set-aside contracts
such as the SOE TLS;” the risks associated with “ADS’s acquisition of
MAR-VEL International, Inc.; and related party transactions with, among
other companies, MJL Enterprises, LLC, Mythics, Inc. and Tactical
Distributors, LLC.” Id. ¶ 10; Ex. 4, ADS’ Form S-1 9-18, 23, 45, 91, and 92
(ECF No. 32-6).

                              DISCUSSION

   Courts have the inherent power and duty to “supervise the conduct of the
members of [their] bar[s]” to ensure that attorneys’ moral and ethical
responsibilities are not breached. Richardson v. Hamilton Intern. Corp., 469
F.2d 1382, 1385 (3d Cir. 1972); see also Kenosha Auto Transp. Corp. v.


                                     5
United States, 206 Ct. Cl. 888, 891 (1975) (opining that “[t]he Canons of
Professional Responsibility are applicable to proceedings in this court, and
we have the inherent power to assist in their enforcement.”). While
disqualification of counsel has been viewed as an extreme measure, “courts
have broad discretion to order attorney disqualification[.]” City of Fresno v.
United States, 143 Fed. Cl. 226, 231 (2019) (citing Tannahill v. United
States, 25 Cl. Ct. 149, 164 (1992)).

    In assessing a disqualification motion, this Court “is guided by the Model
Rules of Professional Conduct of the American Bar Association, the Rules
of Professional Conduct of the Bar to which the attorney at issue is admitted
to practice, and relevant case law. Bayside Fed. Sav. & Loan Ass’n v. United
States, 57 Fed. Cl. 18, 20–21 (2003) (citation omitted). We start by looking
to the text of the model rules. City of Fresno, 143 Fed. Cl. at 233. The
moving party bears the burden of showing that disqualification is warranted.
See generally Commonwealth Sci. & Indus. Research Org. v. Toshiba Am.
Info. Sys., Inc., 297 F. App’x 970, 973-75 (Fed. Cir. 2008) (applying 5th
Circuit law).

    ADS urges that Latham must be disqualified from representing Quantico
in this matter because the firm has breached its duties of loyalty and
confidentiality to it as a former client. Although distinct, the two duties are
often considered together because the possibility that a lawyer might disclose
confidential information reads on the question of whether that attorney has
breached its duty of loyalty. See Dynamic 3D Geosolutions LLC v.
Schlumberger Ltd. (Schlumberger N.V.), 837 F.3d 1280, 1286 (Fed. Cir.
2016) (applying 5th Circuit law). But either alone may be disqualifying.

    In opposition, Quantico argues that “ADS has failed to prove that
Latham’s limited representation in 2010-2011” regarding the preparation of
the Form S-1 was a “substantially related” matter, that Latham never
received any privileged or confidential information about ADS’s government
contracts, and that third-party representatives were present in every
discussion that Latham had with ADS. Pl.’s Opp. to Mot. to Disqualify 7, 8
(“Pl.’s Opp’n”). Quantico also argues that Latham’s disqualification would
impose a substantial hardship on it. It supports its response with the affidavit
of [          ], an attorney with Latham & Watkins. We begin with the duty
of loyalty, as it is dispositive.

I. Latham’s Duty of Loyalty to ADS

    ADS relies primarily on ABA Model Rule 1.9(a), which provides, in
relevant part, that “[a] lawyer who has formerly represented a client in a


                                       6
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.” Model Rules of Prof’l Conduct 1.9
(a) (Am. Bar Ass’n 2018).4 Thus the rule applies to (1) a lawyer who
previously had an attorney-client relationship with a former client; (2) to
prohibit representation in the same or substantially related matter when; (3)
the interests of the former and current client are materially adverse; unless
(4) the former client “gives informed consent, confirmed in writing.” Id.

   It is undisputed that Latham represented ADS between 2010 and 2011
and advised ADS in preparing and filing the Form S-1 with the SEC.
Moreover, as Quantico’s complaint includes allegations that directly
challenge ADS’ eligibility to bid under the SOE TLS Program, the interests
of Latham’s former client, ADS, and its current client, Quantico, are
“materially adverse.” Nor is there any question whether Latham was given
“informed consent, confirmed in writing” by ADS prior to its representation
of Quantico in the subject bid-protest.5 Thus the only issue for decision is
whether the matters are “substantially related.”

    While we recognize the general right of a party to choose its counsel, “a
client’s entitlement to an attorney’s adherence to her duty of loyalty,
encompassing a duty of confidentiality” can override that right. Dynamic 3D
Geosolutions, 837 F.3d at 1286 (citing ABA Model Rules r. 1.9 cmts. 4, 7).
Comment 3 to Model Rule 1.9 explains that “[m]atters are ‘substantially
related’ . . . if they involve the same transaction or legal dispute or if there
otherwise is a substantial risk that confidential information as would
normally have been obtained in the prior representation would materially
advance the client’s position in the subsequent matter.” Model Rules of
Prof’l Conduct 1.9. cmt. 3. Thus “the obligation to protect a client’s
confidential information exists as part of the larger duty of loyalty owed to
clients to maintain the integrity of the attorney-client relationship.” Dynamic

4 Rule 1.9(a) of the D.C. Rules of Professional Conduct provides a similar
provision.

5 ADS represents that “Latham did not seek consent from ADS in filing
litigation substantially related to its prior representation of ADS,” in
conflict with the terms of its Engagement Letter, in which Latham
promised that “[w]ithout [ADS’s] consent, [Latham] will not represent
any other party in this matter, nor any other matter substantially related
to it[,]” Ex. 1, Engagement Letter (ECF No. 32-3); ADS Mem. 30 (ECF
No. 32).

                                       7
3D Geosolutions, 837 F.3d at 1286. Although plainly germane to the
question of whether the duty of loyalty has been breached, we read the
inquiry as posed by Comment 3 as disjunctive, which is to say that the
similarity or overlap between legal and factual matters is sufficient by itself
to disqualify counsel. We find that under either approach, intervenor has
established a breach of the duty of loyalty.

    ADS cites the district court’s approach in Paul v. Judicial Watch, Inc.,
571 F. Supp. 2d 17 (D.D.C. 2008), as an appropriate way to view the issues
here. There, the court relied on an identical comment to D.C. Rule of
Professional Responsibility 1.9. The district court observed that, under D.C.
law, “when a party seeking disqualification carries its burden of persuading
the factfinder that two matters, handled by the same counsel, are substantially
related, there is an irrebuttable presumption that counsel received
information during the first representation that is relevant to the second.’”
Id. at 26 (quoting Derrickson v. Derrickson, 541 A.2d 149, 151-52 (D.C.
1988)).6 ADS also points to a D.C. Bar opinion that explains that “[t]wo
matters are ‘substantially related’ to one another if there is a substantial risk
that confidential factual information as would normally would have been
obtained in the prior representation is useful or relevant in advancing the
client’s position in the new matter.” D.C. Ethics Op. 343 (2008). It is thus
the risk of disclosure alone that is relevant and dispositive under D.C. law.
Unnecessary is a showing of actual disclosure of confidential information.

    ADS argues that a “substantial risk” has already been realized because
the information that Latham acquired about ADS and the SOE TLS program
during its representation in 2010 are “useful” and “relevant” to Quantico’s
position in the subject bid protest now. ADS Mem. 29. ADS urges that
there can be “no doubt that Latham is using its inside knowledge of ADS to
materially advance Quantico’s position in this protest” as Latham
represented ADS in preparing for an IPO, “which necessarily involved
reviewing ADS’s government contracts and performing related due diligence
since the overwhelming majority of ADS’s business is with the federal

6 The court in Derrickson opined that if the party seeking disqualification
shows that an “attorney-client relationship formerly existed” and that “the
current litigation is substantially related to the prior representation[,]” then
“the party seeking disqualification need not show that confidential
information was actually transmitted[.]” Derrickson, 541 A.2d at 152.
Moreover, “even if the attorney to be disqualified shows that he did not have
access to or does not recall confidential information, this will not defeat the
presumption which has been created.” Id.


                                       8
government.” Id. at 26. “[G]iven the nature of Quantico’s attacks against
ADS” in the present suit, there is no doubt in intervenor’s mind that Latham’s
2010-2011 representation of ADS is “substantially related” to the subject bid
protest. Id. at 24. Intervenor therefore argues that, under Paul, these matters
are “substantially related,” and “this Court should presume that Latham
received confidential information in representing ADS that is relevant to this
bid protest.” Id. at 23. ADS also argues, in the alternative, that “the
presumption is unnecessary in this case” as “Latham’s invoices[,] time
keeping entries,] and work product for ADS speak for themselves.” Id. at
27.

       A. The Matters Are Substantially Related

   We find that the legal and factual issues involved in Latham’s
representation of ADS and its representation of Quantico, although aimed at
very different ends, are substantially related. As detailed below, there is
significant overlap between the two. ADS prepared a chart comparing the
subject matter addressed in Latham’s prior work on behalf of ADS with some
of Latham’s current protest allegations against ADS. Excerpts are shown
below:

            Latham’s S-1                       Latham’s Allegations
 -Since 2006, we have been           -ADS claimed to be a small business
 providing proposal advice and       (fewer than 500 employees) even though
 other assistance to MJL.            it owned and/or controlled several other
                                     affiliated companies, including . . . MJL
 -MJL subcontracts certain products Enterprises[.]
 and services required under their
 contract to us.
                                     -ADS managed essentially all MJL’s
 -[O]ur staff assisted MJL with its  daily business operations. . . .
 accounting and bookkeeping for a    ADS prepared and submitted to the
 nominal service fee.                Government all the SDVOSB set-aside
                                     proposals for MJL. (quoting complaint)
 -In 2007, MJL was owned 49% by
 Tactical Holdings and 51% by an     -[A]n ADS holding company held 49
 unrelated party. In 2007, Tactical  percent ownership of MJL.
 Holdings was owned by Daniel
 Clarkson, Luke Hillier, Michael     -ADS claimed to be a small business
 Hillier, Jr. and R. Scott LaRose in (fewer than 500 employees) even though
 the amounts of 16.64%, 50.08%,      it owned and/or controlled several other
 16.64% and 16.64%,                  affiliated companies, including Mar-Vel
 respectively.                       International[.]


                                      9
 -In June 2008, we acquired the
 stock of MAR-VEL International,
 Inc., or “MAR-VEL.”

 -We acquired MAR-VEL in order       Pl.’s Mem. in Support 8, 10 (ECF No.
 to gain access to its Prime Vendor 30-1)
 multiple- award IDIQ contract,
 which was the predecessor to our
 current Spec Ops TLS multiple-
 award IDIQ contract. The
 acquisition provided us with
 additional contract capacity to
 continue our sales growth until the
 award of our Spec Ops TLS
 contract was obtained. The
 aggregate purchase price for MAR-
 VEL was $5.5 million.

 S-1 at 45, 85 (ECF No. 32-6)



Those excerpts compare information presented in the S-1 that Latham
prepared for ADS with allegations in its briefing for supplementation of the
record. The issue of ADS’ affiliated entities is present in both, and more
critically, is very important, as will be elaborated below, to Quantico’s case
here.

    Further, there is no question that the current complaint relies on assertions
about Quantico’s conduct going back to the time when Latham represented
it. ADS’s comparison demonstrates that Latham’s work on the S-1 included
consideration of ADS’ connection with at least two affiliated companies,
MAR-VEL and MJL, a connection that resurfaces in Quantico’s allegations
in this protest regarding ADS’ eligibility to bid, bid rigging, and fraud on the
government.

   [

       ]. The complaint recites that ADS settled several FCA claims against
which involved “allegations that ADS and its owners and officers committed
fraud, rigged bids, and bribed DLA officials in order to gain favorable
treatment under the SOE TLS program.” Id. ¶¶ 6, 23. The next paragraph
alleges that DLA has failed to properly consider this information as it is
relevant to whether ADS is a responsible contractor eligible to do business
with the government. Id. ¶ 7. [


                                       10
       ].

    Paragraph 23 of the complaint alleges that DLA should have further
disqualified ADS from bidding as a small business because of its prior
allegedly false representations regarding its size status; paragraph 27
suggests that suspension or disbarment would have been appropriate
proceedings for DLA to have undertaken against ADS. Compl. ¶¶ 23, 27.
Although not explicitly mentioned in the Complaint, it is plain from
Quantico’s other papers, that the issue of ADS’ small business size status is
seen by Quantico as impacted by its affiliation with MAR-VEL and MJL,
among other entities.

    Attached to the complaint is the 2015 second amended False Claims Act
complaint, which specifically alleges fraud in ADS’ SBA size
representations and explicitly references work done on the Form S-1. Ex. 5,
FCA Complaint 139, 278, and 279 (ECF No. 1-5). Also attached is a
settlement agreement resolving that suit which, although including no
admission of guilt, recites the allegations made concerning Mar-Vel, MJL,
and another affiliated entity, SEK Solutions, LLC. Ex. 6, FCA Settlement
Agreement 2-4 (ECF No. 1-6).

    Although the complaint only references these entities by implication,
plaintiff’s motion to supplement the record makes crystal clear just how
central to Quantico’s theory of the case ADS’ history and corporate
relationship with these other companies is. The memorandum in support of
Quantico’s motion to supplement raises front and center whether ADS
previously falsely certified its small business status to DLA. It recites that
the FCA action alleged that ADS was ineligible due to its corporate parentage
or other common ownership of four related entities: Mar-Vel, MJL, SEK,
and Karda Systems. See Pl.’s Mem. in Support 7, 8 (ECF No. 30-1). It goes
on to state that ADS and these affiliates collude and rigged prices in order to
gain award and favorable pricing terms from DLA. Id. at 8-10. These issues
were left largely un-probed by DLA outside of a size determination that it
sought from the Small Business Administration, which, according to
Quantico, was based on incomplete information. Id. at 13. In Quantico’s
words:

        . . . ADS’s owner (Luke Hillier [part-owner of Mythics]) and
       ADS’s in- house counsel (Charles Salle) entered FCA
       settlements in August 2019. Notably, the settlement by ADS’s
       owner is believed to involve the second largest FCA amount


                                      11
ever for an individual (which helps to highlight the
egregiousness of the misconduct).

                            ....

The ADS affiliates covered by this FCA settlement [described
in the section titled “Overview of Procurement Fraud
Impacting the SOE TLS Program] include: . . . Mar-Vel
International, Inc.; Tactical Explores, Inc.; and Tactical
Distributors, LLC.
                            ....

. . . ADS claimed to be a small business (fewer than 500
employees) even though it owned and/or controlled several
other affiliated companies, including Mar-Vel International,
MJL Enterprises, SEK Solutions, and Karda Systems. Ex. 48
(ADS FCA Compl.) at 27–46, 75–76. Notably, “ADS Tactical
admitted that, if it had failed to qualify as a small business
under SBA set-aside contracts, it could become ‘ineligible to
compete for orders under our Spec Ops TLS contract, which
accounted for approximately 41 percent and 45 percent of our
total net sales[.]
                              ....

Although ADS and Mar-Vel International initially competed
against each other in the SOE TLS program, the two companies
later decided to collude to rig bids and help each other win
awards. Ex. 2 ¶¶ 331-34. The arrangement between these two
companies “provided that ADS and Mar-Vel would agree to
bid a certain way—e.g., bidding high, bidding low or not
bidding at all—on requests for proposals” under the SOE TLS
program. Id. ¶ 334. This arrangement “was designed to
guarantee that at least one of the two companies would
ultimately secure the bid.” Id. Later, ADS acquired Mar-Vel
for $5 million.
                            ....

In furtherance of this broad procurement fraud, ADS conspired
with other offerors in the SOE TLS Program including MJL,
SEK and Karda. Ex. 49 § C(i)-(iv). According to DOJ, ADS
controlled these companies but hid that fact from DLA. Id.
ADS’s relationship with MJL—another bidder in the present
RFP—is exemplary of ADS’s control over its affiliated

                             12
       defendants. MJL, which claimed status as a Service-Disabled
       Veteran Owned Small Business (“SDVOSB”), was founded by
       former ADS employee Martin Hierholzer, had the same
       address as an ADS facility, and an ADS holding company held
       49 percent ownership of MJL.

Pl.’s Mem. in Support 6, 6 n.3, 8-10 (ECF No. 30-1).

    It is plain that the relationship between ADS and the affiliated companies
Mar-Vel, MLJ, and others, is a common issue in both of counsels’
engagements. Latham, in preparing the S-1 Form, reviewed ADS’
affiliations with those entities. It further advised ADS on the risks, as listed
in the S-1, that ADS could lose it size status and thus its ability to bid on set-
aside defense contracts. And its representation here in this bid protest, as we
have seen above, plainly aims to pursue ADS’ connection to these
companies.

    Quantico’s only answer to this problem is that Latham’s work on the S-1
for ADS did not, in fact, result in the disclosure of any confidential
information, which would cut against a finding of risk to ADS from its
appearance for Quantico now. Although we disagree with the premise, as
discussed in detail below, we hold that, when the legal issues are so plainly
overlapping and very material to the issues that the subsequent client has put
before the court, a finding of actual disclosure of confidential information is
unnecessary. As the court in Paul held, the risk of an unfair advantage for
the new client against the old is simply too great for the representation to
continue. 571 F. Supp. at 26 (“This conclusive presumption is more than
adequate to demonstrate precisely the ‘substantial possibility of an unfair
advantage to the current client’”) (quoting Koller v. Richardson-Merrell Inc.,
737 F.2d 1038, 1056 (D.C. Cir. 1984)).

    We find that the matters involved in both representations by Latham are
plainly substantially related without regard to whether actual disclosure of
confidential information was made. The legal issues that Latham was hired
to advise ADS on in 2010 included a general review of ADS’ business with
the federal government, most of which concerned the SOE TLS program, the
subject of this bid protest. The representation also included a review of ADS’
risks of losing those contracts if its status as a small business concern were
compromised, necessarily calling for an evaluation of its relationship with
affiliated entities. Those relationships are the subject of allegations in the
complaint and are part of Quantico’s motion to supplement the record.
Plaintiff names those entities in its papers and cites to their affiliation with
ADS as evidence of DLA’s irrationality in concluding that ADS was a


                                       13
responsible bidder and otherwise qualified as a small business to bid on the
subject procurement. Indeed, Quantico seeks discovery of ADS on these
very issues. The overlap is clear.7

       B. There Is a Substantial Risk that ADS’ Confidential Information
          Would Materially Advance Quantico’s Position

    ADS also avers that confidential information was disclosed to attorneys
at Latham as part of their work preparing the S-1 and advising on a potential
public offering. Intervenor cites to the affidavit of its president, Mr. Hillier,
as proof. Because that confidential information is relevant to the issues in
the present suit, disqualification is warranted, argues ADS.

    Quantico responds that the corporate filing of an S-1 would not result in
the review of information that would “materially advance” Quantico in the
subject bid protest, Pl.’s Opp’n 21, and further that such representation
“would not likely result in a law firm obtaining information that the company
would reasonably expect to remain confidential[.]”8 Id. at 23 (ECF No. 39).
Quantico also argues that because the “S-1 and the amendments are public
documents,” and because all of the information that Latham attorney’s
reviewed “was accessed through an on-line data room to which underwriters,
underwriters’ counsel, and independent accountants had access [to,]” ADS
has failed to specify any confidential information that was provided to
Latham. Id. at 29-31. The confidentiality vel non of the information reviewed
by Latham is thus central to Quantico’s defense of Latham’s representation
of it.

    Relying on comment 3 to ABA Model Rule 1.9, which provides:
“Information that has been disclosed to the public or to other parties adverse
to the former client ordinarily will not be disqualifying[,]” Quantico argues
that Latham should not be disqualified because every allegation in the
complaint comes from either publicly available sources or Quantico’s own
documents and that ADS’ discussions with counsel in 2010-11 regarding the
S-1 Form were attended by multiple parties. The import of the latter

7 Although counsel for Quantico has suggested in its papers and during oral
argument that drafting an S-1 and the background review and preparation
that goes into it is not as substantive as the court might believe, surely more
than [           ] dollars in billings belies that inference.

8 Quantico also notes that “if Latham discovered any indicia of ADS’s
fraudulent misconduct,” securities laws would have required their disclosure
in the S-1 filing. Id.

                                       14
observation is that any privilege would be waived. Plaintiff further cites to
Comment 8 of ABA Model Rule 1.9, which provides: “[T]he fact that a
lawyer has once served a client does not preclude the lawyer from using
generally known information about that client when later representing
another client.” Because the information regarding ADS cited in the
complaint is in the public domain, no conflict with Latham’s duty of loyalty
arises, goes the argument.

    ADS replies that the “public nature of some of these documents [i.e. SEC
Form S-1, Latham’s invoices to ADS, and the complaint] does not change
the fact that Latham had access to highly confidential information, not all of
which has been publicly disclosed[.]” ADS Reply 11 (ECF No. 41). Because
that confidential information is highly relevant to the issues that Quantico
has put at bar, the matters are substantially related, argues intervenor.

    Quantico relies heavily on Soverain Software LLC v. CDW Corp., 2010
WL 1038731, at *4 (E.D. Tex. Mar. 18, 2010), where the district court in
Texas denied a somewhat similar disqualification request in a patent
infringement suit. In Soverain, Newegg retained Latham as counsel to assist
in preparing for a future IPO. Id. at *1. Between September 2009 and
December 2009, Mark Finkelstein, while working for Latham, assisted with
the Newegg IPO and was tasked with “performing certain due diligence
regarding Newegg’s general IP matters and pending lawsuits in order to
recommend to Latham’s corporate attorney what disclosures were necessary
during the IPO.” Id. Finkelstein participated in due diligence phone calls in
which he “generally discussed the Soverain litigation and the risks and
exposures related to the litigation[,]” billing approximately ten hours relating
to the Newegg IPO matter. Id. Finkelstein later left Latham and joined the
firm, Jones Day, which had represented Soverain throughout the litigation,
billing over 24,000 hours related to the litigation. Id. Shortly afterwards,
Newegg filed an emergency action to disqualify Jones Day from further
representing Soverain based on Finkelstein’s involvement. Id.

    The court in Soverain determined that, “[f]or conflicts involving former
representations, the movant must prove either [(1)] that the present and
former matters are substantially related or [(2)] that the former attorney
actually possesses relevant confidential information. Id. at *2. (citations
omitted) (emphasis added). The district court found neither. In denying the
motion to disqualify, the court held that “the record revealed no appearance
of impropriety on the part of Finkelstein or Jones Day[,]” stating that “Jones
Day ha[d] become extensively familiar with the case and expended millions
of dollars in preparation, and removing Jones Day now would severely



                                      15
prejudice Soverain.9” Id. at *4. Because of Mr. Finkelstein’s limited
involvement in the IPO, the court stated that “it is hard to believe” that the
party requesting disqualification discussed “confidential information” such
as “litigation and settlement strategy on due diligence phone calls where
underwriters’ counsel assisting in the IPO were present.’” Id.

     Soverain is distinguishable on the facts. Finkelstein billed around ten
hours to the Newegg IPO matter while working for Latham. The court there
dealt only with a single attorney switching firms. Here, the entire firm billed
hundreds of hours and switched clients. Finkelstein’s involvement in the
litigation between the two clients while at Latham was simply too little to
draw a substantial link between the two representations. That is not the case
here.

    On the second prong, the Soverain court also noted that “the evidence
show[ed] that Finkelstein did not have access to any confidential documents”
relating to the patent litigation. Id. at *3. Here, the invoices confirm that
Latham attorneys devoted hundreds of hours in preparing the S-1 Form for
ADS, which included reviewing ADS’ contracts and transactions while
assessing the specific risks it recommended disclosing. As part of its due
diligence, Latham reviewed risks associated with ADS’ affiliated entities as
they related to its compliance with SBA size status regulations, the same risks
that are directly raised in the allegations of Quantico’s complaint and its
arguments in the motion to supplement.

    Comment 3 to Model Rule 1.9 provides that, “[i]n the case of an
organizational client, general knowledge of the client’s policies and practices
ordinarily will not preclude a subsequent representation; on the other hand,
knowledge of specific facts gained in a prior representation that are relevant
to the matter in question ordinarily will preclude such a representation.”
Model Rules of Prof’l Conduct r. 1.9, cmt. 3 (emphasis added). Here, it
would have been impossible for Latham to have met its obligation to provide
relevant and accurate legal advice regarding necessary disclosures to be
made in the S-1 without an in-depth review of ADS’ military contracts.
Latham had to inform itself with more than “general knowledge” regarding
ADS’ business. We are entitled to infer that, in Latham’s preparation of the
S-1, confidential information was made available and that Latham had to
exercise its judgment in what to disclose publicly. We accept at face value

9 In reaching this decision, the court noted that “[w]hile Newegg is not
required to produce the actual confidential information, it has the burden to
delineate with specificity what confidential information was shared[,]” a
burden Newegg failed to meet. Id. at *4.

                                      16
Mr. Hillier’s representations in that regard. The fact that other parties had
access to some or all of that same confidential information does not change
the fact that the information was not public.10 We note that no court has
found it necessary that a legal privilege cover the information asserted to be
at risk of disclosure by former counsel.

    Moreover, we find this disqualification request more akin to that made in
H20 Plus, LLC v. Arch Personal Care Products, L.P., No. CIV.A. 10-3089,
2010 WL 4869096 (D.N.J. Nov. 23, 2010) (Magistrate’s decision), aff’d, No.
CIV. 10-3089, 2011 WL 1078584 (D.N.J. Mar. 21, 2011) (district court
decision). In H20 Plus, the magistrate judge disqualified the law firm of
Kelley Drye & Warren (“KDW”) as counsel for Defendants, Arch Personal
Care Products, L.P and Arch Chemicals, Inc. (collectively, “Arch”) in a
breach of contract action, based on the finding that KDW’s previous
representation of H20 was substantially related to its current representation
of Arch. Id. at *1, *6. As the parties agreed that KDW had a previous
attorney-client relationship with H20 and that their interests were materially
adverse, the court’s analysis focused on whether the information that KDW
had accessed in H20’s electronic data room in the prior representation
included confidential information that could be used against H20 in the
current litigation. Id. at *6.

   The court relied on an opinion by the New Jersey Supreme Court
regarding New Jersey’s own Rule 1.9(a):

          (1) the lawyer for whom disqualification is sought received
          confidential information from the former client that can be
          used against that client in the subsequent representation of
          parties adverse to the former client or (2) facts relevant to
          the prior representation are both relevant and material to
          the subsequent representation

Id. (quoting City of Atl. City v. Trupos, 201 N. J. 447, 452 (2010))
(emphasis added). The district court judge, on appeal, also relied on the

10 ABA Formal Opinion 479 lends further support, stating that information
is generally known “if it is widely recognized by members of the public in
the relevant geographic area or it is widely recognized in the former client’s
industry, profession or trade.” ABA Formal Opinion 479 (Dec. 15, 2017).
The opinion further explains that “the fact that the information may have
been discussed in open court, or may be available in court records, in public
libraries, or in other public repositories does not, standing alone, mean that
the information is generally known[.]” Id.

                                     17
decision in Trupos. 2011 WL 1078584 at *4.

    In applying New Jersey’s equivalent to ABA Model Rule 1.9, the court
concluded that H20 had established “beyond all doubt that KDW should be
disqualified[]” as KDW previously represented H20 in the sale of its business
and received and accessed confidential information during the course of the
prior representation. 2010 WL 4869096 at *13. That broad knowledge of
H20’s business, including confidential information, was more than enough
to disqualify the firm from representing another party in a contract action
against its former client.

    We find the present predicament to be like that in H20 Plus. Latham’s
review of ADS’ business generally, especially its government contracts, and
its access to ADS’ data room, is more than enough to support a finding that
the firm had access to “both relevant and material” information to their
subsequent representation of Quantico in the subject bid protest.

       C. Latham Must Be Disqualified

    In sum, we find that the issues brought to bear by the current protest
implicate those that Latham was retained to advise ADS on earlier, which
means that there is a “substantial risk” that the information learned by
Latham in its preparation of the Form S-1 for ADS would materially advance
Quantico’s position in the subject bid protest. We also find that Latham had
access to confidential information that is relevant to the present matter.
Although Quantico urges that it will be prejudiced by having to switch horses
mid-race, that harm is far outweighed by the potential of harm to ADS were
the representation to continue. The same attorneys who once had unfettered
access to ADS’ proprietary information should not be sitting across the table
at deposition inquiring into the same issues. Just as important is the public’s
interest in the fair and impartial administration of justice and the court’s
interest in preventing even the appearance of impropriety in the practice of
law. The only conclusion is thus that Latham may not now represent an
adverse party in matters that directly relate to its prior representation.

     We note that the concerns embodied in Rule 1.9 are the same reason we
cannot, as an alternative, accept the offer to limit Quantico’s discovery
request and to file a second amended complaint. The amended complaint
and the motion to supplement constitute Quantico’s current position in this
litigation, and while reducing the claims asserted or restricting the scope of
discovery requested might minimize the potential conflict, it might also
affect Quantico’s interests. The current representation is untenable.



                                      18
II. ADS’ Duty of Confidentiality to ADS

   ADS also argues that “[t]he restrictions imposed by ABA Model Rule
1.9(a) and the corresponding D.C. Rule 1.9 are grounded in the obligations
imposed by ABA Model Rule 1.6 and D.C. Rule 1.6 to protect client
confidences and secrets.” ADS Mem. 24, 25 (citing Model Rules of Prof’l
Conduct r. 1.6 (a)-(b) (Am. Bar Ass’n 2018) and D.C. R Prof. Conduct 1.6).11
ABA Model Rule 1.6 provides in relevant part:

        (a) A lawyer shall not reveal information relating to the
        representation of a client unless the client gives informed
        consent, the disclosure is impliedly authorized in order to
        carry out the representation or the disclosure is permitted by
        paragraph (b).

        (b) A lawyer may reveal information relating to the
        representation of a client to the extent the lawyer reasonably
        believes necessary[.]

Model Rules of Prof’l Conduct r. 1.6 (a)-(b) (Am. Bar Ass’n 2018). It argues
that the court can ground disqualification independently under Rule 1.6.




11 D.C. Rule 1.6 similarly provides as follows:

        (a) Except when permitted under paragraph (c), (d), or
        (e), a lawyer shall not knowingly:
               (1) reveal a confidence or secret of the lawyer’s client;
               (2) use a confidence or secret of the lawyer’s client
               to the disadvantage of the client;
               (3) use a confidence or secret of the lawyer’s client
               for the advantage of the lawyer or of a third person.
        (b) “Confidence” refers to information protected by the
        attorney-client privilege under applicable law, and “secret”
        refers to other information gained in the professional
        relationship that the client has requested be held inviolate,
        or the disclosure of which would be embarrassing, or would
        be likely to be detrimental, to the client.

D.C. R Prof. Conduct 1.6.

                                      19
    We find that ABA Model Rule 1.6 is unnecessary to our ruling, although
we note that, based on the Hillier Declaration, the allegations made in
Quantico’s complaint, and the subjects discussed in the S-1, we are satisfied
that Latham was privy to confidential information related to the subject bid
protest.

                               CONCLUSION

   For the above stated reasons, ADS’ motion to disqualify Latham as
counsel for Quantico is granted. Quantico shall have replacement counsel
move to substitute counsel on or before June 12, 2020. All other deadlines
remain stayed.


                                                 s/Eric G. Bruggink
                                                 Eric G. Bruggink
                                                 Senior Judge




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