Freivogel on Conflicts
FREIVOGEL ON CONFLICTS
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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

Joint Representation (posted December 8, 2017) Sabean v. Aikman, 2017 ONSC 7278 (CanLII) (Super. Ct. Ont. Dec. 5, 2017). Auto accident case. Father was driving his car, and Daughter was a passenger. They were rear-ended by Defendant, driving Employer's car. Father and Daughter hired Lawyer 1 to sue Defendants, which he did. Defendants turned the claim over to InsCo A. InsCo A hired Lawyer 2 to defend. Defendants filed an answer denying liability and counterclaiming against Father, claiming Father was wholly or partially responsible for the accident. Father turned the counterclaim over to InsCo B for a defense. InsCo B hired Lawyer 3 to defend the counterclaim. Father, as defendant to the counterclaim, moved to disqualify Lawyer 1 as lawyer for Daughter. The master denied the motion. In this opinion the judge affirmed. There were three issues in the appeal: (1) Did Lawyer 1 have a conflict representing both plaintiffs; (2) Did Father and Daughter effectively waive any conflict; and (3) could Father pass on information to Lawyer 1 about Daughter that would help Daughter in her case that would harm Father in the counterclaim. Both tribunals held that the potential for a conflict was remote, that the waivers of the potential conflict were effective, and there was no showing that the information contemplated in Issue 3 was actually transmitted. [Our comment: The reasoning of the tribunals was extensive, but given the odd juxtaposition of the parties, it is probably not of interest to the vast majority of this audience. If you wish to know more, read the opinion.]

Joint Representation (posted December 8, 2017) Burton v. Cleveland Heights Bd. of Educ., 2017 WL 6028211 (N.D. Ohio Dec. 4, 2017). Mother, on behalf of her disabled child, represented by Law Firm, sued School Board under federal IDEA. In a separate case, School Board sued Law Firm for misconduct in the prior administrative proceedings in Mother’s IDEA case. The court raised the possibility that Law Firm had a conflict of interest. In this opinion the court ruled it was not necessary to disqualify Law Firm “at this time” because the fee proceeding brought by School Board had been stayed, and because final rulings regarding discovery had not yet occurred.

Class Action
(posted December 6, 2017) Cunningham v. Suds Pizza, Inc., 2017 WL 6000616 (W.D.N.Y. Dec. 1, 2017). In this FLSA class action Plaintiffs sought approval of a settlement that contained a “clear sailing” provision regarding class counsels’ fees. The magistrate judge said that because of the conflict-of-interest concerns raised by such provisions, close judicial scrutiny of the fees is required. Because the settlement agreement provided that unclaimed funds would revert to Defendant, and because the claim response rate was predicted to be low, the court required the parties to amend the settlement agreement to provide for more reasonable class counsel fees. The ultimate resolution of the fee provisions are complex, and no purpose would be served by repeating them here.

Investing
(posted December 4, 2017) Power Play 1 LLC v. Norfolk Tide Baseball Club, LLC, 2017 WL 5312193 (S.D.N.Y. Nov. 13, 2017). Contract dispute. Law Firm represents Defendants. Plaintiffs moved to disqualify Law Firm in part because a member of Law Firm has an ownership interest in one of the defendants. In this opinion the court denied the motion, saying that an ownership interest without more is not disqualifying.

Joint Representation (posted December 4, 2017) Carrero v. Farrelly, 2017 WL 5970717 (D. Md. Dec. 1, 2017). Plaintiff sued a county police officer and the county for unlawful arrest. A county lawyer ("Lawyer") attempted to represent both defendants. In this opinion the court denied the defendants' motion to allow that joint representation. The court noted that each defendant had different defenses and that the possibility that Lawyer may be forced into taking inconsistent positions was almost inevitable. The case was complicated by the fact that the officer was, in part, detaining Plaintiff for ICE because of Plaintiff's federal immigration status.

Corporate Family
(posted December 1, 2017) Boynton Beach Firefighters' Pension Fund v. HCP, Inc., 2017 WL 5759361 (N.D. Ohio Nov. 28, 2017). Securities class action. In this opinion the court decided who should be lead plaintiffs and approved their retention of counsel. The lead plaintiffs approved are Companies 1 and 2. The law firms approved are Firms A and B ("Law Firms"). The hitch is that Law Firms have unrelated matters adverse to the ultimate parent ("UP") of Company 1. However, the court held that there was no violation of either Ohio Rule 1.7(a)(1) or (2). The only connection between Company 1 and UP worth mentioning is that Company 1's CEO is "employed by" UP. Otherwise, Company 1 and UP do not share directors, they share no executive officers, and there  is "complete separation of the companies' legal departments, finance operations, and proprietary trading operations." The court also noted that Company 1 was not the sole decision-maker for the class.

Former Client
(posted November 29, 2017) In re Catherine A., 2017 WL 5615874 (N.Y. App. Div. Nov. 22, 2017). In this case Mother seeks custody of her three children, currently with Grandmother. Mother prevailed in Family Court. Lawyer represents the children. Earlier, Lawyer had represented Mother in a criminal drug matter. In this opinion the court rejected Grandmother’s charge that Lawyer was violating Rule 1.9 (former client rule). The court held that the matters were unrelated, and Lawyer was not acting adversely to Mother.

                                                               Thirty Day Holding Area

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 and on the This and That pages.]

Other; New York's Unique Rule on Threatening Criminal Action

(posted November 14, 2017) Franco v. Ideal Mortgage Bankers, Ltd., 2017 WL 5195223 (E.D.N.Y. Nov. 9, 2017). This is a class action alleging Company's violation of FLSA. Plaintiffs joined Company and several officers allegedly in charge. One of the officers had pleaded guilty to a related criminal charge and was awaiting sentencing. The plaintiffs' lawyers emailed members of the class inviting them to comment to the Probation Office on their views on sentencing. The officer in question moved to disqualify the plaintiffs' lawyers, claiming they had violated N.Y. Rule 3.4(e). That rule prohibits a lawyer from threatening criminal charges to obtain an advantage in a civil case. (The ABA Model Rules have no such provision.) In this opinion the court denied the motion, noting that no prejudice to the defendants occurred in this case.

CONFLICTS - UNCATEGORIZED

[Note: These, too, will appear at the This and That pages.]

(posted November 14, 2017) In re Fagan, 2017 WL 5185449 (Ia. App. Nov. 8, 2017). The probate court appointed a guardian for Fagan.  Fagan appealed claiming that the guardianship should have been a limited one.  In this opinion the appellate court raised sua sponte that Fagan was denied representation in the trial court. The probate court had appointed Lawyer to represent Fagan. Instead of advocating for Fagan, Lawyer performed the role of guardian ad litem. The court held that Lawyer had a conflict of interest and remanded the case for appointment of counsel for Fagan and "further proceedings." One judge dissented on procedural grounds.

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

Nothing current.

BANKRUPTCY (To read full article, click here)

Nothing current.

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

Nothing current.

BOARD POSITIONS (To read full article, click here.)

(posted November 20, 2017) Freeman v. Beecher, 2017 WL 5329337 (N.Y. App. Div. Nov. 14, 2017). In this case Plaintiff sued for malpractice the lawyer who had negotiated a settlement for Plaintiff. The trial court granted a motion to dismiss. In this opinion the appellate court affirmed. One of the allegations of the complaint was that Plaintiff’s lawyer was serving on the board of a company in which Plaintiff was an investor. The court held that causation resulting from that position was “speculative.”

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

(posted November 22, 2017) Dollar Tree, Inc. v. Dollar Express LLC, No. 2017-0411-AGB (Del. Ch. Nov. 21, 2017). In this opinion the court found that the erection of a screen was, in part, grounds for denying disqualification in a case not involving a migratory lawyer. To read more about the case, go to "Former Client," below.

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

(posted December 6, 2017) Cunningham v. Suds Pizza, Inc., 2017 WL 6000616 (W.D.N.Y. Dec. 1, 2017). In this FLSA class action Plaintiffs sought approval of a settlement that contained a “clear sailing” provision regarding class counsels’ fees. The magistrate judge said that because of the conflict-of-interest concerns raised by such provisions, close judicial scrutiny of the fees is required. Because the settlement agreement provided that unclaimed funds would revert to Defendant, and because the claim response rate was predicted to be low, the court required the parties to amend the settlement agreement to provide for more reasonable class counsel fees. The ultimate resolution of the fee provisions are complex, and no purpose would be served by repeating them here.

(posted November 27, 2017) Brickman v. Fitbit, Inc., 2017 WL 5569827 (N.D. Cal. Nov. 20, 2017). In this opinion the court granted class certification. In Footnote No. 2 the court noted that Plaintiff’s law firm has a lawyer who is Plaintiff’s son. The son has not appeared in the case. The court found the relationship not “inherently suspect.”

CLIENT MERGERS/ASSET SALES (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 here.)

Nothing current.

CORPORATIONS (To read full article, click here.)

Nothing current.

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

(posted December 1, 2017) Boynton Beach Firefighters' Pension Fund v. HCP, Inc., 2017 WL 5759361 (N.D. Ohio Nov. 28, 2017). Securities class action. In this opinion the court decided who should be lead plaintiffs and approved their retention of counsel. The lead plaintiffs approved are Companies 1 and 2. The law firms approved are Firms A and B ("Law Firms"). The hitch is that Law Firms have unrelated matters adverse to the ultimate parent ("UP") of Company 1. However, the court held that there was no violation of either Ohio Rule 1.7(a)(1) or (2). The only connection between Company 1 and UP worth mentioning is that Company 1's CEO is "employed by" UP. Otherwise, Company 1 and UP do not share directors, they share no executive officers, and there  is "complete separation of the companies' legal departments, finance operations, and proprietary trading operations." The court also noted that Company 1 was not the sole decision-maker for the class.

CRIMINAL PRACTICE (To read full article, click here.)

Nothing current.

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

(posted November 27, 2017) United States v. Emigration Improve. Dist., 2017 WL 5632398 (10th Cir. Nov. 22, 2017). Qui tam case. Plaintiff caused his law firm (“Law Firm”) to file a lis pendens against Defendants’ property. Defendants moved to have the lis pendens removed. The trial court granted the motion and awarded statutory costs and lawyers’ fees to Defendants. In one of its responses Law Firm made arguments to the effect that Law Firm should not have to pay, evidently “at the expense” of Plaintiff. The court found that Law Firm had a non-waivable conflict with Plaintiff and disqualified Law Firm. After Law Firm declared that it would pay all penalties, Plaintiff moved for reconsideration of the disqualification. The trial court denied reconsideration. In this opinion the Tenth Circuit reversed as to reconsideration and held that Law Firm could continue. The court noted that Plaintiff had tried, but failed, to find new counsel and said that no prejudice to the Plaintiff would result if Law Firm continued.

Lobbying

(posted November 17, 2017) United States v. HealthSouth, 2017 WL 5346385 (D. Nev. Nov. 10, 2017). Law Firm filed this qui tam case in 2013. In 2017 Defendant hired two Law Firm lawyers to do lobbying work in Georgia. As a result, Defendant moved to disqualify Law Firm in this case. The magistrate judge granted the motion. In this opinion the district judge affirmed. The court noted that while Georgia lawyers doing lobbying work in Georgia might not be subject to Georgia ethics rules, lawyers appearing in a Nevada case, are subject to Nevada rules. The court noted that Nev. Op. 52 holds that lobbying work is subject to Rule 1.7 (current client rule). Georgia’s version of Model Rule 5.7 appears to be contrary to the Nevada opinion.

(posted November 17, 2017) IPS Group, Inc. v. Duncan Solutions, Inc., 2017 WL 4654602 (S.D. Cal. Oct. 17, 2017). Patent infringement case. Law Firm has joined with other firms to defend it. Prior to this case Law Firm had done sporadic corporate work for Plaintiff. In this opinion the court denied Plaintiff's motion to disqualify Law Firm. In a fact-intensive analysis the court found that there was no current client relationship between Plaintiff and Law Firm.

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

Nothing current.

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

Nothing current.

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

(posted November 27, 2017) Rodriguez v. City of New Brunswick, 2017 WL 5598217 (D.N.J. Nov. 21, 2017). A City policeman shot Plaintiff. Doctor treated Plaintiff. Plaintiff sued City and at least one policeman. The lawyer for Defendants, without authorization, consulted with Doctor and hired Doctor as an expert witness. The magistrate judge granted a motion to disqualify Doctor and strike Doctor’s report. In this opinion the district judge affirmed.

(posted November 20, 2017) United States v. Lindemuth, 2017 WL 5517947 (D. Kan. Nov. 17, 2017). In this criminal case Defendant sought to add as an expert witness the bankruptcy lawyer who previously represented Defendant in a bankruptcy proceeding. The government objected. In this opinion the court overruled the government, saying that there was nothing about the expert’s previous conduct, or relationship with Defendant, that was disqualifying.

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

(posted November 29, 2017) In re Catherine A., 2017 WL 5615874 (N.Y. App. Div. Nov. 22, 2017). In this case Mother seeks custody of her three children, currently with Grandmother. Mother prevailed in Family Court. Lawyer represents the children. Earlier, Lawyer had represented Mother in a criminal drug matter. In this opinion the court rejected Grandmother’s charge that Lawyer was violating Rule 1.9 (former client rule). The court held that the matters were unrelated, and Lawyer was not acting adversely to Mother.

(posted November 22, 2017) Dollar Tree, Inc. v. Dollar Express LLC, No. 2017-0411-AGB (Del. Ch. Nov. 21, 2017). The Dollar Express Group bought 330 stores from the Dollar Tree Group. In June 2017 the Dollar Tree Group, represented by Law Firm, filed this action, claiming the Dollar Express Group failed to pay millions of dollars required by the purchase agreement. The complaint also contained allegations of fraudulent transfer and illegal distribution under Delaware law. In early 2016 Dollar Express hired Consultant to provide an opinion on solvency related to a dividend Dollar Express contemplated. Consultant retained Law Firm to advise on Consultant's work for Dollar Express. In this work Law Firm was exposed to confidential Dollar Express information. Consultant moved to intervene in this case solely to seek, along with Dollar Express, Law Firm's disqualification. In this opinion the court denied the motion. First, the court held that Dollar Express could not reasonably have believed that Law Firm represented Dollar Express in Law Firm's work for Consultant. The court further held that Law Firm's learning of Dollar Express' confidences in the solvency work did not make Dollar Express a client. The court also noted that Law Firm promptly set up a screen upon learning of the conflict claim, and that the Law Firm lawyers working for Consultant had not shared information with lawyers working on this case. Finally, on balance, the court held that Law Firm's presence in this case "does not prejudice the fairness of the proceedings."

GOVERNMENT ENTITIES - SUING ONE PART/REPRESENTING ANOTHER PART (To read full article, click here.)

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.)

(posted November 17, 2017) Mount Vernon Fire Ins. Co. v. VisionAid, Inc., 2017 WL 5476323 (1st Cir. Nov. 15, 2017). Employer fired Employee. Employee sued Employer for unlawful termination. Employer turned the case over to its employment practices carrier, InsCo, which appointed Law Firm to defend. Employer wanted Law Firm to assert a counterclaim against Employee for “misappropriation of funds.” The Massachusetts Supreme Judicial Court had answered a certified question to the effect that InsCo had no duty to prosecute the counterclaim. Thus, Employer had to hire its own lawyer to do it. The issue remained whether InsCo’s retained lawyer would have a conflict. If so,  Employer could hire its own defense counsel at InsCo's expense. In this opinion the court found no conflict. Thus, InsCo’s retained counsel could continue to defend the employment claim, while Employer could continue asserting the counterclaim against Employee.

(posted November 15, 2017) Tex. Op. 668 (Nov. 2017). InsCo assigns a staff lawyer ("Lawyer") to defend an insured in a personal injury case. The plaintiff also happens to be insured by InsCo. Unbeknownst to Lawyer, InsCo's adjuster takes a statement from the plaintiff. Lawyer obtains the statement in discovery. The statement is favorable to the defendant. InsCo may have been been guilty of bad faith in not informing the plaintiff that the statement may be used against the plaintiff. This opinion discusses whether Lawyer may continue in the case. The opinion appears to be very Texas-centric, so we will not discuss it further other than flagging it for Texas insurance defense lawyers.

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

(posted December 4, 2017) Power Play 1 LLC v. Norfolk Tide Baseball Club, LLC, 2017 WL 5312193 (S.D.N.Y. Nov. 13, 2017). Contract dispute. Law Firm represents Defendants. Plaintiffs moved to disqualify Law Firm in part because a member of Law Firm has an ownership interest in one of the defendants. In this opinion the court denied the motion, saying that an ownership interest without more is not disqualifying.

ISSUE OR POSITIONAL CONFLICTS (To read full article, click here.)

Nothing current.

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

(posted December 4, 2017) Carrero v. Farrelly, 2017 WL 5970717 (D. Md. Dec. 1, 2017). Plaintiff sued a county police officer and the county for unlawful arrest. A county lawyer ("Lawyer") attempted to represent both defendants. In this opinion the court denied the defendants' motion to allow that joint representation. The court noted that each defendant had different defenses and that the possibility that Lawyer may be forced into taking inconsistent positions was almost inevitable. The case was complicated by the fact that the officer was, in part, detaining Plaintiff for ICE because of Plaintiff's federal immigration status.

LAWYER AS EXPERT WITNESS OR CONSULTANT (To read full article, click here.)

Nothing current.

LAWYERS REPRESENTING LAWYERS (To read full article, click here.)

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.

TRADE (AND OTHER) ASSOCIATIONS (To read full article, click here.)

Nothing current.

UNDERLYING WORK PROBLEM (To read full article, click here.)

Nothing current.

WAIVERS/CONSENTS (To read full article, click here.)

Nothing current.

WITNESS - ADVERSE - CURRENT/FORMER CLIENT (To read full article, click here.)

Former Client; Substitute Counsel

(posted November 29, 2017) United States v. Kight, 2017 WL 5664590 (N.D. Ga. Nov. 27, 2017). In this opinion the court denied rehearing on its earlier ruling disqualifying Defendant’s lawyer. The problem was he would have to cross-examine a former client. The court reiterated that in this particular case bringing in substitute counsel to cross-examine the former client would not work.

ZERO SUM GAMES (To read full article, click here.

Nothing current.

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