Bankruptcy (posted November 24, 2021) In re Boy Scouts of Am., 630 B.R. 122 (D. Del. May 6, 2021). BSA applied to retain Sidley Austin as "restructuring counsel" in this Chapter 11 case. Century Indem. Co., a unit of Chubb, was the only party objecting. Until recently Sidley represented Chubb and Century on various matters, including Century's disputes with its reinsurer over claims against BSA. In In re Boy Scouts of Am. & Del. BSA, LLC, No 20-10343(LSS) (D. Del. May 29, 2020), the bankruptcy judge overruled Century's objection and approved Sidley's retention. In January 2020 Sidley informed Chubb that it was withdrawing from all Chubb and Century matters. That process completed in February. As for §327(a), it is written in the present tense, so it does not prevent Sidley's retention. The bankruptcy court also looked to Rule 1.9. Based upon conflicting testimony, the court concluded that Sidley's earlier reinsurance work for Century "could be 'substantially related' to at least some aspects" of this case. However, the court was influenced by the fact that "conflicts counsel" would be handling BSA's insurance matters and that Sidley had erected a screen between its reinsurance group and the BSA restructuring team. Last, the court noted a number of cases that appear at our page, "Current Client, Part 1," under "No Harm, No Foul." In this opinion the district judge affirmed the bankruptcy judge's ruling following the above reasoning. The court concluded by saying it found "no abuse of discretion" by the bankruptcy judge.

Conflict Uncategorized. (Posted November 23, 2021) Weidel v. Weidel, 2021 WL 5365655 (N.J. App. Div. Nov. 18, 2021). Marital dispute, largely over ownership and control of business properties. At some point H presented W with an amendment to their pre-nuptial agreement. The amendment was drafted by Lawyer, who had represented W in estate planning and had represented H and W's business. Part of this lengthy and complex division of property exercise was a finding by the trial judge that the amendment was unenforceable because of Lawyer's conflict of interest. Thus, the trial court granted W summary judgment, finding the amendment unenforceable. In this opinion the appellate court affirmed, emphasizing that W did not have independent counsel regarding the amendment, and "there was no full financial disclosure." The amendment "bears the hallmarks of an unenforceable mid-marriage agreement."

Former Client (posted November 22, 2021) Manani Invs. v. 1936028 Ont. Inc., 2021 ONSC 7495 (CanLII) (Super. Ct. Ont. Nov. 12, 2021). Plaintiffs moved to disqualify Steven Gadbois, lawyer for Defendant. Plaintiff Damani claimed that Gadbois had earlier represented him in an action involving the same property. In the earlier action Damani's lawyer was William Hoskinson. In that action Hoskinson did ask Gadbois to file a pleading with Damani's name on it, but, in this opinion denying the motion, the court found that Damani had never met Gadbois nor gave Gadbois any information. The court further found that the motion was brought for "tactical reasons." Thus, "the bright line rule" enunciated in Canadian Nat'l Rys. Co. v. McKercher LLP, 2013 SCC 39, "does not apply."

[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.]

Rule 4.2

(posted November 20, 2021) Allstate Ins. Co. v. Inscribed PLLC, 2021 WL 5287283 (E.D. Mich. Nov. 15, 2021). In this opinion the magistrate judge found that (1) two of Allstate's lawyers violated Rule 4.2 by talking to an opposing party out of the presence of that party's lawyer, and (2) one of those lawyers lied about it under oath. The court disqualified the lawyers and their law firm. The court also referred the matter to disciplinary authorities. We cite the matter to show possible consequences of a Rule 4.2 violation.

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

(Posted November 23, 2021) Weidel v. Weidel, 2021 WL 5365655 (N.J. App. Div. Nov. 18, 2021). Marital dispute, largely over ownership and control of business properties. At some point H presented W with an amendment to their pre-nuptial agreement. The amendment was drafted by Lawyer, who had represented W in estate planning and had represented H and W's business. Part of this lengthy and complex division of property exercise was a finding by the trial judge that the amendment was unenforceable because of Lawyer's conflict of interest. Thus, the trial court granted W summary judgment, finding the amendment unenforceable. In this opinion the appellate court affirmed, emphasizing that W did not have independent counsel regarding the amendment, and "there was no full financial disclosure." The amendment "bears the hallmarks of an unenforceable mid-marriage agreement."

(posted November 18, 2021) Pace-O-Matic, Inc. v. Eckert Seamans Cherin & Mellott, LLC, No. 1:20-cv-00292 (M.D. Pa. Nov. 16, 2021). To read about the case, go to "Current Client," below.

APPEALABILITY (To read full article, click here.)

Nothing current.

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

Nothing current.

BANKRUPTCY (To read full article, click here.)

(posted November 24, 2021) In re Boy Scouts of Am., 630 B.R. 122 (D. Del. May 6, 2021). BSA applied to retain Sidley Austin as "restructuring counsel" in this Chapter 11 case. Century Indem. Co., a unit of Chubb, was the only party objecting. Until recently Sidley represented Chubb and Century on various matters, including Century's disputes with its reinsurer over claims against BSA. In In re Boy Scouts of Am. & Del. BSA, LLC, No 20-10343(LSS) (D. Del. May 29, 2020), the bankruptcy judge overruled Century's objection and approved Sidley's retention. In January 2020 Sidley informed Chubb that it was withdrawing from all Chubb and Century matters. That process completed in February. As for §327(a), it is written in the present tense, so it does not prevent Sidley's retention. The bankruptcy court also looked to Rule 1.9. Based upon conflicting testimony, the court concluded that Sidley's earlier reinsurance work for Century "could be 'substantially related' to at least some aspects" of this case. However, the court was influenced by the fact that "conflicts counsel" would be handling BSA's insurance matters and that Sidley had erected a screen between its reinsurance group and the BSA restructuring team. Last, the court noted a number of cases that appear at our page, "Current Client, Part 1," under "No Harm, No Foul." In this opinion the district judge affirmed the bankruptcy judge's ruling following the above reasoning. The court concluded by saying it found "no abuse of discretion" by the bankruptcy judge.

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

Nothing current.

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

Nothing current.

CO-COUNSEL/COMMON INTEREST (To read full article, click here.)

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.) 

Nothing current.

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

(posted November 18, 2021) Pace-O-Matic, Inc. v. Eckert Seamans Cherin & Mellott, LLC, No. 1:20-cv-00292 (M.D. Pa. Nov. 16, 2021). Pace-O-Matic ("POM") is suing Eckert for breach of fiduciary duty, including for compensatory and punitive damages. Eckert was representing POM in Virginia litigation. At the same time POM was in Pennsylvania litigation, evidently represented by a firm other than Eckert. In the Pennsylvania litigation POM was seeking an injunction preventing the Pennsylvania State Police from enforcing certain laws against POM. Another company, Parx, was resisting POM's efforts in Pennsylvania, first as an amicus, and ultimately as an intervening party. Eckert was assisting the other law firm representing Parx. When POM discovered that Eckert was assisting Parx, adverse to POM in Pennsylvania, POM asked Eckert to stop assisting Parx. Eckert's response was to drop POM as a client in the Virginia matter! In this case POM, in discovery, is seeking all communications between Eckert and Parx (including Parx' other counsel). Eckert is resisting production of these communications, on attorney-client privilege and work product grounds. In this opinion the magistrate judge, after an in-camera inspection of the communications, ruled that they must be produced. The basis was that Eckert is judicially estopped from claiming privilege and work product protection, because it is claiming, for conflict-of-interest purposes, that it was not representing Parx in the Pennsylvania litigation. From the in-camera inspection the court concluded that Eckert's assistance to Parx, and Parx' other counsel, in the Pennsylvania litigation was too substantial for Eckert to claim it was not representing Parx against POM. The court even said Eckert was doing this "clandestinely." Thus, in the judge's words, Eckert was playing "fast and loose with the courts," requiring judicial estoppel. [Note: This is our first experience with "judicial estoppel" -- ever. In this site's 21 years of existence the term has never appeared. Thus, we have no idea if it was correctly applied against Eckert in this case.]

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

(posted November 15, 2021) In re Facebook, Inc. Derivative Litig., No. 2018-0307-JRS (Ct. Ch. Del. Nov. 2, 2021). In October 2021 the court appointed certain plaintiffs as co-lead plaintiffs and two law firms as co-lead counsel. Other parties, disagreeing with the appointments, filed an application for certification of an interlocutory appeal. Evidently, the primary objection was based upon the fact that certain of the appointed lawyers were maintaining other direct actions against the corporation in question. In this opinion the vice chancellor denied certification (denied appeal). The court discussed holdings from around the country finding no per se rule against such representations. Rather, each such relationship should be subject to a fact-intensive analysis. In this case the vice chancellor, after such an analysis, found that lawyer appointments were in the best interests of the corporation and its shareholders.

(posted November 8, 2021) Avalyn Pharma, Inc. v. Vincent, 2021 WL 5140190 (S.D. Cal. Nov. 4, 2021). Co. A is suing Co. B for a declaratory judgment, and Co. B is counterclaiming for declaratory judgment and breach of contract. Co. A moved to disqualify the law firm for Co. B ("Law Firm"). In this opinion the court denied the motion. For much of what occurred underlying this case, Cos. A & B were under common ownership and management. Vincent was a founder and principal of both companies. He is now affiliated with Co. B and is a defendant along with Co. B. Vincent no longer has a relationship with Co. A. Prior to this case Law Firm had done patent prosecution work for Co. A. Law Firm did learn confidential information regarding Co. A's technology. The court looked at two issues: (1) whether Law Firm's prior work for Co. A is substantially related to the contract issues in this case, and (2) whether Law Firm had a duty of loyalty to Co. A, apart from its duty of confidentiality. As to (1), the court compared this case to shareholder derivative actions, where courts allow a law firm to represent the insider defendants even though the law firm represented the corporation on other matters. The theory there is that the insiders already know the corporation's secrets. That would be the case here. As to (2), the court noted that Law Firm was doing nothing in this contract case to jeopardize the patent prosecution work it had done for Co. A. Stated in our terms, Law Firm was not attacking its earlier work for Co. A.

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

Nothing current.

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

(posted November 22, 2021) Manani Invs. v. 1936028 Ont. Inc., 2021 ONSC 7495 (CanLII) (Super. Ct. Ont. Nov. 12, 2021). Plaintiffs moved to disqualify Steven Gadbois, lawyer for Defendant. Plaintiff Damani claimed that Gadbois had earlier represented him in an action involving the same property. In the earlier action Damani's lawyer was William Hoskinson. In that action Hoskinson did ask Gadbois to file a pleading with Damani's name on it, but, in this opinion denying the motion, the court found that Damani had never met Gadbois nor gave Gadbois any information. The court further found that the motion was brought for "tactical reasons." Thus, "the bright line rule" enunciated in Canadian Nat'l Rys. Co. v. McKercher LLP, 2013 SCC 39, "does not apply."

(posted November 8, 2021) First Fid. Trust Servs., Inc. v. Shelter Cove Condo. Ass'n, Inc., No. 1D20-1423, et al. (Fla. App. 1st Dist. Nov. 3, 2021). Petro obtained a judgment against Ass'n. Ass'n failed to pay. The trial court appointed Receiver No. 1 to govern the Ass'n and assume powers necessary to satisfy the judgment. Receiver No. 1 hired Law Firm No. 1 to assist. Several years later Receiver No. 2 replaced Receiver No. 1, discharged Law Firm No. 1, and hired Law Firm No. 2. Law Firm No. 1 re-appeared in the Petro case on behalf of Mortgage Co., which had a lien on one of the Ass'n units. This required Law Firm No. 1 to take positions adverse to Receiver No. 2. Ass'n moved to disqualify Law Firm No. 1. The trial court granted the motion. In this opinion the appellate court affirmed the disqualification, finding that Law Firm No. 1 violated Florida Rule 1.9 (former client; substantial relationship). Among other things, Mortgage Co., assisted by Law Firm No. 1, is challenging a special assessment in favor of Petro. That assessment had been imposed by Receiver No. 1 while represented by Law Firm No. 1.

(posted November 8, 2021) Avalyn Pharma, Inc. v. Vincent, 2021 WL 5140190 (S.D. Cal. Nov. 4, 2021). To read about the case, go to "Derivative Action," above.

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.

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

(posted November 20, 2021) Heagy v. Burlington Stores, Inc., 2021 WL 5399910 (E.D. Pa. Nov. 17, 2021). Plaintiff fell down in Defendant's store. She is suing Defendant for negligence and damages. This opinion involves discovery issues. One issue is whether Defendant's lawyers can represent Defendant's former employees at their depositions. The court ruled that they could, provided the lawyers comply with Pennsylvania ethics rules. However, the court said that Plaintiff's lawyers could question the former clients about whether they had given informed consent to the representation.

Nothing current.

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

Nothing current.

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.)

Advance Waivers

(posted November 6, 2021) Nev. Op. 58 (Aug. 27, 2021). This opinion holds that advance waivers can be enforceable in Nevada. It further holds that "truly informed consent" will vary given the sophistication of the client giving consent and the nature of the matters involved. The opinion contains a nice history of advance consents in the U.S. and weaves together the Nevada Rules with the ABA Model Rules, including Comment [22] to ABA Rule 1.7, and with Restatement § 122, comment d. It also discusses and compares leading cases from other jurisdictions.

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

Nothing current.

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

Nothing current.