In In re Straight Path Communications Shareholder Litigation, C.A. No. 2017-0486-SG the Delaware Court of Chancery considered plaintiffs’ motion to compel and motion to supplement case schedule to impose an election deadline regarding defendants’ counsel’s role at trial as lead counsel and as a witness for the defense.  The Court found the motion to be premature and made no determination as to whether an ethical violation occurred.

Attorney Jason Cyrulnik is the lead counsel for IDT Corp. and its related defendants (the “IDT Defendants”).  But that role was complicated by the fact that Jason Cyrulink was also a fact witness to the transaction at issue in the suit by sitting for a deposition, and the fact that IDT Defendants indicated they may call him to testify at trial.

In light of these dual roles as both lawyer and fact witness, in May 2021, Plaintiffs filed a Motion to Supplement the Case Schedule to Impose Election Deadline Regarding Jason Cyrulnik, Esq.’s Role at Trial (the “Motion”).  The Motion asks the Court to require the IDT Defendants to choose which function Cyrulnik will perform at trial:  lead advocate, or witness.  Importantly, Plaintiffs do not seek to disqualify Cyrulnik as counsel for the IDT Defendants, or to bar him from testifying.  Rather, Plaintiffs simply sought to prevent Attorney Cyrulnik from performing both advocate and witness functions, which they contend is prohibited by Rule 3.7(a) of the Delaware Lawyers’ Rules of Professional Conduct.  Rule 3.7(a) provides that a lawyer shall not act as advocate at a trial in which the lawyer is likely to be a necessary witness unless:

(1) the testimony relates to an uncontested issue;

(2) the testimony relates to the nature and value of legal services rendered in the case; or

(3) disqualification of the lawyer would work substantial hardship on the client.

In opposing the Motion, the IDT Defendants argue that Rule 3.7(a) only bars testimony from a trial advocate where that testimony is “necessary,” whereas Attorney Cyrulnik’s anticipated testimony is, by their own admission, merely “helpful.”  Defendants further argue that Plaintiffs waived their right to challenge Attorney Cyrulnik’s dual roles by waiting several years, until just before trial, to make the Motion, despite knowing throughout the case that Cyrulnik was both lead counsel and a fact witness with potentially relevant testimony.

On July 7, 2021, Vice Chancellor Glasscock heard oral argument on the Motion and followed with a Letter Opinion and Order on July 12, 2021 (the “Letter Opinion”).  Although he noted that the Motion was premature, he nevertheless provided guidance to the parties as they conferred to resolve this issue.  In relatively clear terms, the Vice Chancellor explained that the Delaware ethical rules and relevant case law preclude a lawyer from both advocating and testifying as a witness at the same trial, except in narrow circumstances that he stated were not applicable here.  Vice Chancellor Glasscock characterized the IDT Defendants’ interpretation of Rule 3.7(a) – that Cyrulnik could both serve as lead counsel and testify because his testimony was merely “helpful” and not “necessary” – as “inapt,” “a funhouse-mirror reading of the rule,” and “an absurdity,” before reiterating that “it is a well established ethical principle that, in general a lawyer who represents a client in a litigated matter may not also appear therein as a witness,” citing Matter of Est. of Waters 647 A.2d 1091, 1096 (Del. 1994).

The Letter Opinion explains that, because Plaintiffs are not using Rule 3.7(a) offensively to disqualify the IDT Defendants’ counsel, the “clear and convincing” standard applicable to offensive disqualification motions is “inapt—even nonsensical—here.”  Vice Chancellor Glasscock so held because the party seeking to call Attorney Cyrulink as a witness is the same party that he represents, not an opponent.  The Vice Chancellor further highlighted that Plaintiffs are not improperly exploiting Attorney Cyrulnik’s dual roles to achieve a tactical advantage, as “they have no preference as to whether Lead Counsel testifies or advocates,” but are simply maintaining, in accordance with the ethical rules, that a lawyer representing a client in litigation may not also testify as a witness.

The IDT Defendants’ argument that Plaintiffs waived their right to challenge Attorney Cyrulnik’s dual roles was rejected in the Letter Opinion as well, as Vice Chancellor Glasscock noted that the IDT Defendants knew from the start of this action that their counsel was a potential witness, and “[i]t is the responsibility of every Delaware attorney—and not her opponent—to ensure her own compliance with ethical responsibilities.” Vice Chancellor Glasscock concluded by instructing the parties to meet and confer on the issue and further instructed the IDT Defendants to file a proffer of Attorney Cyrulnik’s expected testimony along with a statement of why his non-essential testimony is required in the interests of justice.  Following a 20-day meet-and-confer period, the IDT Defendants confirmed in a letter to the Court on July 30, 2021 that they do not intend to call Attorney Cyrulnik as an affirmative witness for their case in chief, but reserve the right to call him as a witness “in rebuttal.”  In an August 6, 2021 response, Plaintiffs pointed out that the IDT Defendants did not submit the proffer or statement sought by the Vice Chancellor, and requested entry of an order ruling that Attorney Cyrulnik’s intended role as trial counsel prevents him from testifying in any capacity at trial.  As of October 14, 2021, no such order has been entered.

In re Straight Path Commc’ns Inc. Stockholder Litig., C.A. No: 2017-0486-SG (Del. Ch. Jul. 12, 2021)