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FREIVOGEL ON CONFLICTS WHAT'S NEW Items posted here during the past thirty days will also appear on this What's New page. Items posted within the past ten days will appear In Ten Day Bulletin immediately below. Items older than ten days but less than 30 days will be posted in the Thirty-Day Holding Area, which follows. Ten Day Bulletin Important Note on Web Security As of April 15, 2023, this Web site has been rendered "secure." This means we have obtained "SSL Certificates" for www.freivogel.com and www.freivogelonconflicts.com. If IT personnel in your organization have either cautioned you about use of this site, or restricted your access to it, you should call this change in status to their attention. Conflict Uncategorized (posted May 30, 2023) In re Guardianship J.W., No. 21-0348 (Ia. May 26, 2023). Lawyer filed a proceeding to make himself guardian of Minor over the objections of Minor's mother ("Mother"). Lawyer had previously represented Mother, including on custody matters. The trial court dismissed the proceeding because, in part, Lawyer had a conflict of interest. The appellate court reversed, saying that dismissal was not an appropriate remedy for an ethics violation. In this opinion the Iowa Supreme Court affirmed the trial court and ruled the action should be dismissed. First, the court ruled that dismissal could be a remedy. Second, the court ruled that Iowa Rule 1.9 would apply even though Lawyer was representing himself. Last, the court held that this proceeding was substantially related to Lawyer's earlier work for Mother. [Our note: This is a long opinion containing detailed reasoning. One interesting aspect is the court's analysis of decisions from other jurisdictions, the Restatement, and the ABA's Annotated Model Rules.] MISCELLANEOUS ETHICS AND LIABILITY NEWS [Note: Items that do not fit under the conflicts categories below, but which we believe will be of interest to this audience will appear here at This and That. Nothing current. [Note: These, too, will appear at the This and That pages.] (posted May 30, 2023) In re Guardianship J.W., No. 21-0348
(Ia. May 26, 2023). Lawyer filed a proceeding to make himself guardian
of Minor over the objections of Minor's mother ("Mother"). Lawyer had
previously represented Mother, including on custody matters. The trial
court dismissed the proceeding because, in part, Lawyer had a conflict
of interest. The appellate court reversed, saying that dismissal was not
an appropriate remedy for an ethics violation. In this opinion the Iowa
Supreme Court affirmed the trial court and ruled the action should be
dismissed. First, the court ruled that dismissal could be a remedy.
Second, the court ruled that Iowa Rule 1.9 would apply even though
Lawyer was representing himself. Last, the court held that this
proceeding was substantially related to Lawyer's earlier work for
Mother. [Our note: This is a long opinion containing detailed
reasoning. One interesting aspect is the court's analysis of decisions
from other jurisdictions, the Restatement, and the ABA's Annotated Model
Rules.] Rule 60(b)(6) (posted May 24, 2023) Martin v. SGT, Inc.,
2023 WL 3585326 (D. Utah May 22, 2023). This opinion deals largely with
Plaintiff's over-the-top serious discovery violations (forgeries, etc.)
and a resulting judgment against her. It also deals with Plaintiff's
claim that her prior law firm had a conflict of interest because of the
law firm's fee-shifting exposure to sanctions under Rule 37(b)(2)(C).
The court held that the conflict here does not rise to the level of
grounds for relief from the judgment against Plaintiff under Rule
60(b)(6). Malpractice Insurance (posted May 19, 2023) Brown Goldstein Levy LLP v. Federal Ins. Co.,
2023 WL 3513693 (4th Cir. May 18, 2023). The Government was
investigating Law Firm's client. The Government informed Law Firm that
because Law Firm was also a subject of investigation, Law Firm had a
conflict of interest. Two things followed: First the Government executed
a search warrant of Law Firm's offices. Second, the Government
requested that Law Firm obtain a formal conflict waiver from its client.
Law Firm incurred costs in responding to the search warrant and the
subsequent letter requesting a waiver. Law Firm demanded coverage and
reimbursement from Defendant, its malpractice carrier. Defendant
declined. Law Firm filed this case against Defendant seeking coverage.
The trial court, interpreting the malpractice policy and applying
Maryland law, denied the claim. In this opinion the appellate court
affirmed. The policy provided coverage for monetary or similar claims,
and the court found that the Government's actions were neither. APPEALABILITY (To read full article, click here.) Nothing current. ARBITRATION OF MALPRACTICE CLAIMS (To read the full article, click here. (posted May 18, 2023) Sun Knowledge, Inc. v. Osborne, No.
650648/2023 (N.Y. Sup. Ct. N.Y. County April 28, 2023). This is a suit
to vacate an arbitration award. One basis was that the arbitrator
allowed one lawyer to represent multiple respondents. The arbitrator
found no conflict. In this opinion the court rejected that ground.
"Petitioners' disagreement with that decision is just that--a
disagreement." BANKRUPTCY (To read full article, click here.) (posted May 15, 2023) In re HRB Sundown, Inc., 2023 WL 3294623
(D. Del. May 5, 2023). Chapter 11. Pre-petition, Law Firm had
represented Debtor, and, post-petition, Law Firm was retained as
"special corporate counsel under § 327(e)" of the Bankruptcy Act. The
plan provided for appointment of a trustee of a liquidating trust to
"prosecute certain retained" cases, and the appointment of a plan
administrator to manage everything else. The liquidating trustee brought
this action against another company related to Debtor. Law Firm
appeared for the defendant. The liquidating trustee moved to disqualify
Law Firm, claiming, in effect, that the trustee "stepped into the shoes"
of Debtor, and thus, the trustee was a former client of Law Firm. In
this opinion the bankruptcy judge denied the motion to disqualify
because, the way the plan was structured, the liquidating trustee's
duties were limited, and most duties were in the hands of the plan
administrator. The court admitted that case law on this issue is
"scant." BANKS/TRUST DEPARTMENTS (To read full article, click here.) Nothing current. BOARD POSITIONS (To read full article, click here Nothing current. CHANGING FIRMS - SCREENING (To read full article, click here.) Screening (posted May 26, 2023) Octaform Sys., Inc. v. Johnston,
2023 WL 3645965 (D. Nev. May 25, 2023). Trade secret case. Firm P
represents Plaintiffs; Firm D represents Defendants. Lawyer was an
associate at Firm D from 2015 to 2018. Lawyer left Firm D in 2018 to
join Firm C (C not in this case). Lawyer left Firm C to join Firm P in
2022. Because Lawyer had worked on this case at Firm D, Firm P screened
Lawyer from this case. Nevertheless, Defendants moved to disqualify Firm
P. In this opinion the magistrate judge denied the motion to
disqualify. Because Lawyer did a lot of work on this case at Firm D, the
judge found that Lawyer's role was "substantial." (The Nevada screening
rule normally invalidates a screen when the lateral's work was
"substantial.") However, given the totality of all the circumstances,
the court felt "disqualification would be an extreme and unnecessary
sanction here." The court relied heavily on Nevada Yellow Cab Corp. v. 8th Judicial Dist. Ct., 152 P.3d 737 (Nev. 2007) (not a screening case). [Our
note: There were lots of circumstances that we will not discuss here.
If you wish to defeat disqualification in the face of a "substantial"
finding, reading the opinion would be a good start.] CLASS ACTIONS (To read full article, click here.) Nothing current. CO-COUNSEL/COMMON INTEREST (To read full article, click here.) Nothing current. COMMERCIAL NEGOTIATIONS (To read full article, click .) Nothing current. CORPORATIONS (To read full article, click here.) (posted May 19, 2023) Kaikov v. Yadgarov, No. 2021-04780, Index
No. 600362/16 (N.Y. App. Div. 2d Dept. May 17, 2023). Plaintiff is
Managing Partner of LLC. Somehow, members having a minority interest in
LLC, caused LLC's property to be sold to Buyer. Plaintiff, represented
by Law Firm, is suing the minority members and Buyer for breach of
fiduciary duty. Defendants moved to disqualify Law Firm because Law Firm
had earlier represented LLC, Plaintiff and the minority members in a
related transaction. The trial court granted the motion. In this opinion
the court affirmed, citing, primarily, Deerin v. Ocean Rich Foods, LLC, 71 N.Y.S.3d 123 (2d Dept. 2018). The court also sustained disqualification on Rule 3.7 grounds. CORPORATE FAMILIES (To read full article, click here.) Nothing current. CRIMINAL PRACTICE (To read full article, click here.) Nothing current. CURRENT CLIENT (To read full article, click here.) (posted May 24, 2023) Foley v. Drexel Univ., Civ. No. 22-1777
(E.D. Pa. May 23, 2023). Plaintiff is suing Drexel for various
employment-related violations. Plaintiff's husband ("Husband") is
representing her. Drexel moved to disqualify Husband under Rule 3.7 and
under Rule 1.7. The court denied the Rule 3.7 ground, finding that
Drexel had not shown that Husband was a necessary witness, or that
pre-trial was the stage to enforce the rule. Drexel also claimed a
conflict because Husband is on Plaintiff's health insurance at Drexel,
and because Husband's financial interests are otherwise intertwined with
Plaintiff's. The court felt that it was not her, or defendant's, place
to judge whether Plaintiff's choice of counsel was "a good, bad, or
awkward one." (posted May 13, 2023) In re Jackson, 2023 WL 3394129 (D. Conn.
May 10, 2023) This opinion is by a Connecticut bankruptcy judge largely
construing New York ethics rules. One's first reaction might be that it
is, therefore, of limited precedential value. But, the opinion is long
(37 pages, 280 footnotes) and very thoughtful. It also features noted
New York ethics experts on both sides whose opinions appear to be
reasonable. Their approaches to the evidence appear to be a primer on
how expert witnesses should deal with conflicting evidence, and how a
thoughtful judge should balance their opposing views. The opinion
decides whether the former law firm ("Law Firm") for Debtor (a rap music
artist) should recover pre-petition fees. One issue is whether an
engagement agreement between Debtor and Law Firm complied with New York
Rules 5.1 and 5.2. In this opinion the bankruptcy judge ruled the letter
was sufficient. The other issue involved whether Law Firm had a
conflict that disqualified it from recovering the fees. The conflict
involved Law Firm's relationship with co-counsel. Co-counsel, in
addition to representing Debtor, represented another rap music artist,
arguably Debtor's competitor. A sub issue was whether Law Firm should
have called this other artist as an adverse witness, thereby creating a
conflict for Law Firm. The experts took opposing (and reasonable) views
of the evidence on this. The court found that there was no disqualifying
conflict, and concluded that Law Firm should recover its fees. DERIVATIVE ACTIONS (To read full article, click here.) Nothing current. ENJOINING CONFLICTS (AND OTHER NON-TRADITIONAL REMEDIES) (To read full article, click here.) (posted May 18, 2023) Asurion, LLC v. Bryan Cave Leighton Paisner LLP,
2023 WL 3484201 (M.D. Tenn. Nashville Div. May 16, 2023). Asurion
purchased another company ("Acquired Co") from Acquired Co's owners
("Owners"). Asurion and Owners dispute certain of Asurion's
post-purchase conduct and are in arbitration. Law Firm represents Owners
in the arbitration. Asurion brought this action to enjoin Law Firm from
representing Owners in the arbitration, claiming Law Firm has a
conflict. Prior to the purchase a lawyer in Law Firm ("Lawyer") had
arguably represented Asurion in matters arguably related to the
arbitration. In this opinion the court granted Asurion a preliminary
injunction. The court found that Lawyer had represented Asurion and that
the representation was substantially related to the arbitration. Those
findings are very fact-specific. The finding as to substantial
relationship involved "playbook" factors (e.g. "internal thinking and
sense of urgency"). The court noted that Tennessee's screening provision
applies to laterals, not the case here. The court ordered Asurion to
post security in the amount of $100,000. A very key point is that no one
seems to have questioned the propriety of an injunction proceeding. EXPERT WITNESSES (To read full article, click here.) (posted May 22, 2023) Agri-Systems v. Structural Techs., LLC,
2023 WL 3481397 (D. Col. May 16, 2023). This is a dispute among
contractors about what went wrong with the construction of a concrete
silo. Party 1 objected to the listing of two construction expert
witnesses by Party 2. In addition to their technical qualifications,
Party 1 said the experts were biased because they were employed by Party
2. The court rejected the bias arguments, saying the experts' alleged
bias goes to the weight of their testimony, not admissibility. The court
also noted that prejudice would be less likely because the case would
not be tried to a jury. FORMER CLIENT (To read full article, click here.) Playbook (posted May 18, 2023) Reid v. Costco Wholesale Corp.,
No. 8:23-cv-00255-FWS-JDE (C.D. Cal. April 20, 2023). Plaintiff fell in
Costco's store and sues for injuries. Costco moved to disqualify
Plaintiff's law firm ("Law Firm") because Law Firm employees Lawyer, who
had at another firm represented Costco in 21 injury cases (not this
matter), including "slip-and-fall" cases. In this opinion the court
granted the motion. The court discussed "playbook" at some length and
concluded that some playbook information is more important than other.
There was just too much of it here. The court also found that Law Firm's
attempt to screen Lawyer was inadequate. (posted May 15, 2023) Doe v. JPMorgan Chase Bank, N.A., 2023 WL
3383724 (S.D.N.Y. May 11, 2023). In this class action Plaintiffs are
accusing Bank of looking the other way from Jeffrey Epstein's sex
trafficking while doing business with Epstein ("supporting" his
"venture"). Several plaintiffs moved to disqualify Law Firm from
representing Bank in this case. Law Firm had represented an
anti-sex-trafficking organization in filing an amicus brief in support
of a claim by a woman who was trying to circumvent Epstein's 2008
Florida non-prosecution agreement. In this opinion the court denied the
motion to disqualify, finding the two matters not substantially related.
The court also questioned the plaintiffs' standing (not being former
clients of Law Firm), and the slowness with which the plaintiffs in this
case raised the conflict matter. (posted May 13, 2023) In re Gutierrez & NRG Energy, Inc.,
2023 WL 3356701 (Tex. App. 1st Dist. May 11, 2023). In this Texas
proceeding, parties in a Louisiana case seek, through a letter rogatory,
the deposition of a Texas resident, Mauricio Gutierrez. The Texas trial
court ordered the deposition to proceed. In this opinion the Texas
appellate court affirmed. Much of the opinion deals with application of
Texas' "apex deposition" rule. The parts relevant to this audience deal
with whether the law firm for the party seeking the deposition had a
former client relationship with Gutierrez and his related organizations
and whether an earlier proceeding was substantially related to this one.
The relationships are exceedingly complex, fact-specific, and of
doubtful precedential value (Texas appellate court citing Texas cases
exclusively). We will leave it at that. If the above concepts interest
you, read the opinion. Nothing current. HOT POTATO DOCTRINE (To read full article, click here.) Nothing current. INITIAL INTERVIEW - HEARING TOO MUCH (To read full article, click here.) Nothing current. INSURANCE DEFENSE (To read full article, click here.) Nothing current. INVESTING IN CLIENTS/STOCK FOR FEES (To read full article, click here.) Nothing current. Nothing current. JOINT/MULTIPLE REPRESENTATION (To read full article, click here.) (posted May 17, 2023) Federal Ins. Co. v. Mintz, 2023 WL 3450502
(2d Cir. May 15, 2023). Federal brought this interpleader action against
a number of parties, including PixarbioBio Corp. and several of its law
firms. Federal is requesting the court to determine where the proceeds
of a Federal's "securities liabilities" policy should be paid. One of
the parties was a law firm (The Mintz Fraade Law Firm P.C.). Other
parties in the case claimed Mintz Fraade should not receive any of the
funds because it had a conflict of interest. This whole set of
circumstances began when the SEC commenced an investigation of Pixarbio
and several of its principals. The SEC told Mintz Fraade that it, too,
was a party of interest in the investigation. Nevertheless, Mintz Fraade
represented Pixarbio and two officers in the investigation. The trial
court ruled that the conflict was unwaivable and that Mintz Fraade
should receive no share of the Federal payment, Federal Ins. Co. v. Pixarbio Corp., 2022 WL 623735 (S.D.N.Y. March 3, 2022). In Federal Ins. Co. v. Pixarbio Corp.,
2022 WL 1689636 (S.D.N.Y. May 26, 2022), the court denied Mintz
Fraade's motion for reconsideration. In this opinion the Second Circuit
affirmed the trial court's decisions. (posted May 10, 2023) Hawk Tech. Sys., LLC v. Castle Retail, LLC,
2023 WL 3312637 (W.D. Tenn. May 8, 2023). Patent infringement case. Law
Firm for Plaintiff moved to withdraw after the court dismissed the case
and Defendant moved for attorneys fees jointly between Plaintiff and
Law Firm. In this opinion the court denied the motion to withdraw "at
this juncture." The court noted that Law Firm likely has a conflict, but
that, here, the conflict is cured by Plaintiff's retention of
alternative counsel. Thus, Plaintiff can "adequately defend it own
interest." [Our note: We have no experience in how awards of
attorneys fees in patent cases are resolved. It would appear that the
court ordered Law Firm to remain in the case to facilitate the possible
award of fees against Law Firm.] Nothing current. Nothing current. MALPRACTICE LIABILITY/FEE FORFEITURES (To read full article, click here.) Nothing current. OF COUNSEL (To read full article, click here.) Nothing current. OPPOSING LAWYERS NEGOTIATING A LAW PRACTICE MERGER (To read full article, click here.) Nothing current. PARTNERSHIPS (INCLUDING LIMITED PARTNERSHIPS) (To read full article, click here.) Nothing current. SETTLEMENT AGREEMENTS (To read full article, click here.) Nothing current. STANDING (To read full article, click here.) Nothing current. Nothing current. UNDERLYING WORK PROBLEM (To read full article, click here.) (posted May 17, 2023) Federal Ins. Co. v. Mintz, 2023 WL 3450502
(2d Cir. May 15, 2023). To read about the case, go to "Joint . . ." above. WAIVERS/CONSENTS (To read full article, click here.) Nothing current. WITNESS - ADVERSE - CURRENT/FORMER CLIENT (To read full article, click here.) Nothing current. ZERO SUM GAMES (To read full article, click here.) Nothing current. Home/Table of Contents Website powered by Network Solutions® |
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