On May 30, 2014, the US Court of Appeals for the Eighth Circuit in Zerger & Mauer LLP v. City of Greenwood affirmed an order disqualifying plaintiffs' counsel despite having previously ruled that the district court lacked subject matter jurisdiction to hear the case on the merits (No. 12-2800, (May 30, 2014)).

Between 2006 and 2010, attorneys Heather Esau Zerger and Steven E. Mauer represented the city of Greenwood, Missouri in a public nuisance suit against Martin Marietta Materials concerning truck traffic traveling in interstate commerce through the city. The parties entered into a settlement in which Greenwood agreed to designate Second Avenue for the truck traffic.

In July 2011, Zerger and Mauer filed an action in Missouri state court against Martin on behalf of 18 individual plaintiffs who held property interests on Second Avenue. The plaintiffs sought damages for a private nuisance among other claims. Martin removed the case to federal court and in June 2012, the district court determined that it had subject matter jurisdiction over the case and enjoined the plaintiffs from pursuing their claims in any forum. The Eighth Circuit reversed, holding that the district court did not have jurisdiction (Baker v. Martin Marietta Materials, Inc., 745 F.3d 919 (8th Cir. 2014)).

Prior to the district court's ruling on the merits, Greenwood, a non-party in the private nuisance suit, moved to disqualify Zerger and Mauer from representing the individual plaintiffs, contending that the representation constituted a conflict of interest. The district court agreed with Greenwood and in April 2012 disqualified Zerger and Mauer from representing the individual plaintiffs. Zerger and Mauer appealed.

The Eighth Circuit affirmed the order and concluded that the district court's jurisdictional error did not void its disqualification order. The court drew strong parallels to a nearly identical procedural situation in the US Supreme Court opinion Willy v. Coastal Corp. (503 U.S. 131 (1992)). In that case, the Supreme Court upheld a district court's Rule 11 sanctions against a party and his attorney, even though the court of appeals later determined that the district court lacked subject matter jurisdiction.

The Eighth Circuit emphasized the importance of a district court's need to manage its bar and uphold the rules of professional conduct, and stated the resolution of Greenwood's motion to disqualify was separate from the merits case. The court ruled that the disqualification order should enjoy the same treatment as the Rule 11 sanctions order in Willy and affirmed the order.

Practitioners in the Eighth Circuit should be aware that an order disqualifying counsel from representation may stand even when a court later finds that jurisdiction was lacking.