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.

Current Client; Appealability (posted September 28, 2023) In re Realtek Semiconductor Corp., No. 2023-147 (Fed. Cir. Sept. 25, 2023). Realtek filed this complaint before the International Trade Commission claiming the importation of AMD chips infringe on Realtek's patents. A hearing is pending before an ALJ. Realtek intends to call a lawyer ("Lawyer A") as a witness because Lawyer A had represented Realtek in negotiating a relevant license agreement. AMD moved to strike Lawyer A as a witness. The ALJ granted that motion and denied reconsideration. Realtek filed this petition for mandamus to disqualify the lawyer ("Lawyer B") who made the motion to strike Lawyer A as a witness, because Lawyer B represents Lawyer A "in other litigation." In this opinion the D.C. Circuit denied the petition for mandamus, in part because Lawyer B would not be cross-examining Lawyer A in this proceeding, thus not violating ABA Rule 1.7(a). The other ground for denying the petition is that the ALJ's decision should not be subject to an interlocutory appeal, citing Firestone Tire & Rubber Co. v. Risjord, 449 U.S. 368 (1981).

Derivative Action (posted September 28, 2023) In re Eastman Kodak Co. Derivative Litig., 2023 WL 6209592 (W.D.N.Y. Sept. 25, 2023). Kodak's board determined that "this action would not be in Kodak's best interest." In this opinion the court granted Kodak's motion for summary judgment. The court found that the board's determination was made "in good faith and after reasonable inquiry." Lots of players and lots of relationships involved. Key to us was the role of the law firm ("Firm A") charged by the board to make an investigation of Plaintiffs' complaints. In opposing summary judgment, Plaintiffs cited Firm A's relationships with some of the defendants and their other business activities. They are too complicated and varied to discuss here. Kodak did not believe that these relationships should not detract from Firm A's conclusions. The court was also impressed that another law firm ("Firm B") had examined Firm A's role and saw no conflicts.

Class Action; "Clear Sailing" (posted September 26, 2023) Rouse v. Language Line Servs., Inc., 2023 WL 6200072 (W.D. Mo. Sept. 22, 2023). Proposed settlement of class action. The court denied the first request to approve a settlement because the agreement contained a "combination of a claims made settlement with a reversion provision along with an overly-high award of attorneys' fees and a clear sailing provision." In this opinion the court disapproved a second request to approve the settlement because it still contains a reversion provision, a flat-fee lawyer award, and a clear sailing provision. These factors "suggest that Plaintiffs' counsel may have succumbed to a conflict of interest."

Bankruptcy (posted September 21, 2023) In re Fundamental Long Term Care, Inc., 2023 WL 6057245 (11th Cir. Sept. 18, 2023). The probate estates of six nursing home patients brought wrongful death cases against a nursing home operator ("Operator"), which is the debtor in this case Chapter 7 case. The probate estates are the only creditors in this case. When it appeared that certain third parties had looted Operator via fraudulent transfers and the like, the Chapter 7 trustee hired Law Firm as "special litigation counsel" to pursue claims against those parties. At some point Law Firm withdrew as litigation counsel, but continued to assist the trustee. The probate estates filed a motion to disqualify Law Firm and for disgorgement of some $5 million in fees. The motion was based on the fact that for many years Law Firm had represented the owner of the property upon which the offending nursing homes were located and did not disclose that relationship as required by Bankruptcy Rule 2014. The bankruptcy judge denied the motion. While the facts and relationships here are incredibly complex, the court's ruling was based essentially upon the fact that the property owner/client had nothing to do with operation of the nursing homes. Further, the court found that Law Firm's violation of Rule 2014 was not intentional. The district judge affirmed as to disqualification, but remanded the case to the bankruptcy judge to determine whether the Rule 2014 violation was "negligent," such that Law Firm should be sanctioned. Upon remand the bankruptcy judge found that sanctions were not warranted. The district court affirmed that finding. In this opinion the appellate court affirmed the district court.

Former Client (posted September 18, 2023) Rose v. Francis, No. 5:22-civ-00405 (S.D. W. Va. Sept. 15, 2023). Former inmates, represented by Law Firm, brought this class action against a state prison authority (“Agency”). While this case was pending, Law Firm hired Lawyer. Lawyer had previously represented Agency in one case involving an employment/discrimination claim and did only discovery work in that case. Nevertheless, Defendants moved to disqualify Law Firm in this case. In this opinion the court denied the motion, finding that the employment claim was not substantially related to this inmate class action. The court noted that Agency was a public body and anything Lawyer might have learned about Agency either was public, or would become public in the course of this case.

[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.]

Nothing current.

APPEALABILITY (To read full article, click here.)

(posted September 28, 2023) In re Realtek Semiconductor Corp., No. 2023-147 (Fed. Cir. Sept. 25, 2023). To read about the case, go to "Current Client," below.

ARBITRATION OF MALPRACTICE CLAIMS (To read the full article, click here.

Nothing current.

BANKRUPTCY (To read full article, click .)

(posted September 21, 2023) In re Fundamental Long Term Care, Inc., 2023 WL 6057245 (11th Cir. Sept. 18, 2023). The probate estates of six nursing home patients brought wrongful death cases against a nursing home operator ("Operator"), which is the debtor in this case Chapter 7 case. The probate estates are the only creditors in this case. When it appeared that certain third parties had looted Operator via fraudulent transfers and the like, the Chapter 7 trustee hired Law Firm as "special litigation counsel" to pursue claims against those parties. At some point Law Firm withdrew as litigation counsel, but continued to assist the trustee. The probate estates filed a motion to disqualify Law Firm and for disgorgement of some $5 million in fees. The motion was based on the fact that for many years Law Firm had represented the owner of the property upon which the offending nursing homes were located and did not disclose that relationship as required by Bankruptcy Rule 2014. The bankruptcy judge denied the motion. While the facts and relationships here are incredibly complex, the court's ruling was based essentially upon the fact that the property owner/client had nothing to do with operation of the nursing homes. Further, the court found that Law Firm's violation of Rule 2014 was not intentional. The district judge affirmed as to disqualification, but remanded the case to the bankruptcy judge to determine whether the Rule 2014 violation was "negligent," such that Law Firm should be sanctioned. Upon remand the bankruptcy judge found that sanctions were not warranted. The district court affirmed that finding. In this opinion the appellate court affirmed the district court.

BANKS/TRUST DEPARTMENTS (To read full article, click here.)

CHANGING FIRMS - SCREENING (To read full article, click here.)

Nothing current.

CLASS ACTIONS (To read full article, click here.)

(posted September 26, 2023) Rouse v. Language Line Servs., Inc., 2023 WL 6200072 (W.D. Mo. Sept. 22, 2023). Proposed settlement of class action. The court denied the first request to approve a settlement because the agreement contained a "combination of a claims made settlement with a reversion provision along with an overly-high award of attorneys' fees and a clear sailing provision." In this opinion the court disapproved a second request to approve the settlement because it still contains a reversion provision, a flat-fee lawyer award, and a clear sailing provision. These factors "suggest that Plaintiffs' counsel may have succumbed to a conflict of interest."

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.)

Nothing current.

CORPORATE FAMILIES (To read full article, click here.) 

Nothing current.

CURRENT CLIENT (To read full article, click here.)

(posted September 28, 2023) In re Realtek Semiconductor Corp., No. 2023-147 (Fed. Cir. Sept. 25, 2023). Realtek filed this complaint before the International Trade Commission claiming the importation of AMD chips infringe on Realtek's patents. A hearing is pending before an ALJ. Realtek intends to call a lawyer ("Lawyer A") as a witness because Lawyer A had represented Realtek in negotiating a relevant license agreement. AMD moved to strike Lawyer A as a witness. The ALJ granted that motion and denied reconsideration. Realtek filed this petition for mandamus to disqualify the lawyer ("Lawyer B") who made the motion to strike Lawyer A as a witness, because Lawyer B represents Lawyer A "in other litigation." In this opinion the D.C. Circuit denied the petition for mandamus, in part because Lawyer B would not be cross-examining Lawyer A in this proceeding, thus not violating ABA Rule 1.7(a). The other ground for denying the petition is that the ALJ's decision should not be subject to an interlocutory appeal, citing Firestone Tire & Rubber Co. v. Risjord, 449 U.S. 368 (1981).

(posted September 11, 2023) Hamed v. Diaz, No. 514433/2019 (N.Y. Sup. Ct. Kings County Sept. 6, 2023). In this medical malpractice case, involving a State of N.Y. facility, the Attorney General's Office ("OAG") is defending a doctor. In another case, involving the same events, Plaintiff is suing the State of New York. OAG is defending that case, as well. Plaintiff moved to disqualify OAG in this case, claiming both representations are in conflict. In this opinion the court denied the motion, holding that the doctor's and State's interests are aligned. A complication is that the doctor is suing the State for wrongful termination. The OAG is not in that case, however. Plus, the grounds for termination did not involve the alleged malpractice in this case.

DERIVATIVE ACTIONS (To read full article, click here.)

(posted September 28, 2023) In re Eastman Kodak Co. Derivative Litig., 2023 WL 6209592 (W.D.N.Y. Sept. 25, 2023). Kodak's board determined that "this action would not be in Kodak's best interest." In this opinion the court granted Kodak's motion for summary judgment. The court found that the board's determination was made "in good faith and after reasonable inquiry." Lots of players and lots of relationships involved. Key to us was the role of the law firm ("Firm A") charged by the board to make an investigation of Plaintiffs' complaints. In opposing summary judgment, Plaintiffs cited Firm A's relationships with some of the defendants and their other business activities. They are too complicated and varied to discuss here. Kodak did not believe that these relationships should not detract from Firm A's conclusions. The court was also impressed that another law firm ("Firm B") had examined Firm A's role and saw no conflicts.

ENJOINING CONFLICTS (AND OTHER NON-TRADITIONAL REMEDIES) (To read full article, click here.)

Nothing current.

EXPERT WITNESSES (To read full article, click here.)

(posted September 7, 2023) G.W. Aru, LLC v. W.R. Grace & Co., No. JKB-22-2636 (D. Md. Aug. 22, 2023). Patent infringement case. Plaintiff Aru moved for a preliminary injunction and attached a lengthy declaration of Aru's owner, containing expert opinions. Grace moved to strike portions of the declaration because it contained "improper and inadmissible evidence." In this opinion the court denied the motion to strike. The supposed conflict of interest of the declarant was not an issue in the motion or the court's order. However, the court mentioned the conflict in a footnote (No. 1), citing two leading cases in which a party was an expert witness: Tagatz v. Marquette Univ., 861 F.2d 1040 (7th Cir. 1988) (despite "so obvious a conflict of interest"); and Patterson v. Santini, 2017 WL 11454838 (D. Colo. Mar. 20, 2017) (collecting cases).

FORMER CLIENT (To read full article, click here.)

(posted September 18, 2023) Rose v. Francis, No. 5:22-civ-00405 (S.D. W. Va. Sept. 15, 2023). Former inmates, represented by Law Firm, brought this class action against a state prison authority (“Agency”). While this case was pending, Law Firm hired Lawyer. Lawyer had previously represented Agency in one case involving an employment/discrimination claim and did only discovery work in that case. Nevertheless, Defendants moved to disqualify Law Firm in this case. In this opinion the court denied the motion, finding that the employment claim was not substantially related to this inmate class action. The court noted that Agency was a public body and anything Lawyer might have learned about Agency either was public, or would become public in the course of this case.

Playbook 

(posted September 15, 2023) Axle of Dearborn, Inc. v. Detroit IT, LLC, No. 21-cv-10163 (E.D. Mich. Sept. 13, 2023). Plaintiffs are suing Defendants for technology-related wrongs, including hacking and extortion. Law Firm represents several Defendants. Prior to 2023 Law Firm had represented Plaintiff Axle on various matters, none directly related to Defendants. Plaintiffs moved to disqualify Law Firm in this case. In this opinion the court granted the motion. The decision was so fact-intensive that a review of the various factual issues would not be productive. It is important to note that the court relied very heavily on playbook information, such as the habits and inclinations of Axle management. Anyone wishing to emphasize playbook information to establish a substantial relationship under Rule 1.9 would do well to start with this opinion.

(posted September 6, 2023) Nowarta Biopharma, Inc. v. Merchant Star Int'l Gen. Trading, LLC, 2023 WL 5659685 (Cal. App. 4th Dist. Unpub. Sept. 1, 2023). Nowarta is suing Merchant for breach of contract. Nowarta moved to disqualify Merchant's law firm ("Law Firm"). Three of Merchant's owners are lawyers in Law Firm. Law Firm had represented Nowarta in the past. One Law Firm lawyer was Nowarta's general counsel "for nearly three years," including when the "transactions at issue" in this case occurred. The trial court granted the motion to disqualify. In this unpublished opinion the appellate court affirmed. The matters were clearly substantially related. Law Firm claimed that if it were disqualified, a new law firm would have access to the information of the Law Firm lawyers who were owners of Merchant. "No," said the appellate court. Those lawyers are barred by Cal. Bus. & Prof. Code, § 6068 (e) and Cal.  Rule 1.6(a) from revealing anything they learned about the underlying transactions.

(posted August 31, 2023) LCC Enters. LLC v. Cresto, 2023 WL 5519336 (S.D. Cal. Aug. 24, 2023). Plaintiff purchased Company from Defendants ("The Sale"). Plaintiff is suing Defendants for fraud and related wrongs because Defendants did not disclose Company's problems prior to The Sale. Plaintiff moved to disqualify Defendants' law firm in this case ("Law Firm") because Law Firm had represented Company before The Sale. In this opinion the court granted the motion to disqualify. Before The Sale, Law Firm had assisted Company in responding to claims by third parties. These claims appear to have been matters Plaintiff is claiming were not disclosed by Defendants prior to The Sale. Thus, the matters are substantially related. [Our note: We are not certain that the opinion holds together. For example, the court responded to Defendant's standing argument, by holding simply that in the Ninth Circuit standing is not a requirement for a motion to disqualify. As to the main issue, we will leave it to our California friends to determine whether the court's analysis of California's substantial-relationship jurisprudence is sound.]

(posted August 28, 2023) BeSang, Inc. v. Intel Corp., 2023 WL 5499982 (D. Ore. Aug. 25, 2023). To read about the case, go to "Initial Interview . . . " below.

INITIAL INTERVIEW - HEARING TOO MUCH (To read full article, click here.)

(posted August 28, 2023) BeSang, Inc. v. Intel Corp., 2023 WL 5499982 (D. Ore. Aug. 25, 2023). Patent infringement case. Plaintiff moved to disqualify the law firm for Defendant ("Law Firm"). In this opinion the court denied the motion. The opinion is highly fact-specific and a routine analysis. But, it illustrates a workman-like approach by the court to Rules 1.9 and 1.18--in a technology setting. Law Firm had three earlier contacts with Plaintiff. The first resulted in a brief representation, which the court found to have no relevance to the patent issues in this case, and thus no substantial relationship under Rule 1.9. The other contacts did not result in representation, but were in the "prospective client" category, resulting in an analysis under Rule 1.18. In both cases the court found that the information Plaintiff shared with Law Firm would not be "significantly harmful" to Plaintiff in this case.

INSURANCE DEFENSE (To read full article, click here.)

Reservation of Rights 

(posted September 1, 2023) Mid-Continent Cas. Co. v. Harris County Mun. Util. Dist., 2023 WL 5621664 (Tex. App. Aug. 31, 2023). Plaintiff sued Dist. and two directors claiming Plaintiff lost his election to the board due to Defendant misconduct. Defendants turned the case over to the district's D&O insurance company ("InsCo"). InsCo agreed to defend under a reservation of rights, mentioning a possible policy exclusion. Because District's lawyer perceived that there were "potential" conflicts among the Defendants, Defendants rejected InsCo's offer to provide one lawyer for all Defendants. Each Defendant hired separate counsel to defend them. After Plaintiff dismissed the case, InsCo refused to pay for the separate lawyers. So, Defendants brought this case to recover those defense costs. The trial court found against InsCo. In this opinion the appellate court reversed, finding that Defendants failed to show an "actual" conflict among them, thus failing to justify hiring separate counsel. The court discussed the kinds of conflict that would have justified hiring separate counsel, the principal one being when the case being tried could have decided application of the policy exclusion. Those kinds of conflicts were not in this case.

INVESTING IN CLIENTS/STOCK FOR FEES (To read full article, click here.)

Nothing current.

JOINT/MULTIPLE REPRESENTATION (To read full article, click here.)

Nothing current.

Nothing current.

MALPRACTICE LIABILITY/FEE FORFEITURES (To read full article, click here.)

(posted September 13, 2023) 810 Woodward Ave., LLC v. Bolton, 2023 WL 5926945 (Super. Ct. Conn. New Haven Sept. 7, 2023). Landlord sued Tennant for overdue rent. They settled. Tennant gave check to Tennant's lawyer to hold in trust account for Landlord. Before Tennant's lawyer could give the funds to Landlord, Tennant had a change of heart and ordered Tennant's lawyer to return the funds to Tennant, which he did. Landlord brought this case against Tennant's lawyer for breach of fiduciary duty, conversion and theft. After a bench trial the court found for Tennant's lawyer, as set forth in this opinion. The essence of the ruling is that Tennant's lawyer's duty was to follow his client's directions and return the money to his client. To find a duty to the opposition party in this circumstance "would create a conflict of interest. The law ought not proceed in this direction."

OF COUNSEL (To read full article, click here.)

OPPOSING LAWYERS NEGOTIATING A LAW PRACTICE MERGER (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.

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.