Former Client (posted March 29, 2023) Brown v. Rite Aid Corp., No. 1362 MDA 2021 (Pa. Super. Ct. March 27, 2023). Brown had been officer, director, and "chief counsel" for Rite Aid "for many years." In 1999 Shareholders brought a derivative action against Rite Aid and its officers and directors (including Brown) for misstating financial results. Law Firm defended all defendants. That case settled in 2000. In 2002 Rite Aid, represented by Law Firm, sued Brown for breach of fiduciary duty and other wrongs ("Underlying Case"). Brown succeeded in enjoining Rite Aid from maintaining Underlying Case because it violated the settlement and release terms of the derivative action. In 2018 Brown brought this case ("This Case") against Rite Aid and Law Firm for abuse of process and related causes of action. Brown moved to disqualify Law Firm from representing Rite Aid in This Case. The trial court in This Case denied the motion to disqualify. In this opinion the appellate court affirmed. The court noted that the derivative action ended twenty-one years ago and that Law Firm learned nothing from Brown in the derivative action that would be relevant in This Case. Further, the appellate court agreed that the representations were not substantially related. The court brushed aside Brown's Rule 1.7 argument, noting that Law Firm is not representing Brown.

Common Interest (Posted March 24, 2023) Mewawalla v. Middleman, No. 21-cv-09700-EMC (N.D. Cal. March 20, 2023). Two plaintiffs entered into a common interest agreement. Certain defendants sought discovery of the agreement. In this opinion the court ordered the plaintiffs to produce the agreement. The agreement only contained provisions as to how the agreement was to operate and contained no privileged information sought to be protected.

[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.)

Nothing current.

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

Nothing current.

BANKRUPTCY (To read full article, click here.)

(posted March 6, 2023) In re: Las Uvas Valley Dairies, No. 12-12356-t11 (D.N.M. March 3, 2023). Chapter 11. Under a plan all of Debtors assets were transferred to a liquidating trustee. The trustee moved to disqualify the law firm ("Law Firm") for a creditor ("County"). The bankruptcy judge denied the motion. The trustee moved for the bankruptcy judge to reconsider his ruling. In this opinion the bankruptcy judge denied the motion to reconsider. Law Firm had been Debtor's counsel when the Chapter 11 began. Law Firm ceased representing Debtor in December 2021. Law Firm "entered its appearance for County" in August 2022. The court ruled that Law Firm is not adverse to its former client, Debtor, because Debtor no longer has an interest in the case. Only the liquidating trustee has an interest, and Law Firm never represented the trustee. The court also observed that Law Firm, under New Mexico's version of Model Rule 1.9, cannot, and will not, reveal any information about its former client, Debtor. [Our note: Being the opinion of a bankruptcy judge, it may have little, if any, precedential value. Moreover, we are not certain of the court's reasoning regarding the use/misuse of Debtor's information. Our views may be of little value to this audience, so we will not discuss further.]

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

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

(posted March 17, 2023) Look v. McGowan, No. DA 11-0700 (Mont. Feb. 21, 2023) One of Look's lawyers withdrew and joined the law firm representing the McGowans ("Law Firm"). Law Firm conceded the need to withdraw because of the migratory lawyer. Law Firm contacted several law firms about substituting for the McGowans. Look moved to disqualify any law firm contacted by Law Firm. In this opinion the court denied that motion because of Look's "unsupportable accusations of ethical misconduct." Evidently, Look failed to show that Law Firm passed along any of the migratory lawyer's information gathered while representing Look. Kind of a food fight over who said what to whom, with the court participating.

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

Nothing current.

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

Common Interest (Posted March 24, 2023) Mewawalla v. Middleman, No. 21-cv-09700-EMC (N.D. Cal. March 20, 2023). Two plaintiffs entered into a common interest agreement. Certain defendants sought discovery of the agreement. In this opinion the court ordered the plaintiffs to produce the agreement. The agreement only contained provisions as to how the agreement was to operate and contained no privileged information sought to be protected.

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.)

Possessing Confidences of Non-Clients

(posted March 17, 2023) Ace Foods, LLC v. Slater's 50/50 Franchise, LLC, No. G061049 (Cal. App. 4th Dist. Unpub. March 14, 2023). Ace is represented by the Mirch law firm ("Mirch Firm"). Defendants moved to disqualify Mirch Firm. The trial court granted the motion. In this unpublished opinion the appellate court affirmed. Evidently, Mirch Firm had a relationship with a disbarred lawyer, Martin Reiner. However, Reiner, while disbarred, had had a prior relationship with Defendants in matters relating to this case. During that time, Defendants claim they believed Reiner was their lawyer. The issue in the disqualification motion was whether Reiner obtained Defendants' confidences in the earlier matter, and whether Reiner conveyed those confidences to Mirch Firm during preparation of this case. The trial court found that Reiner had relayed Defendants' confidences to Ace. The appellate court held that the trial court's findings were supported by "substantial evidence." [Our note: This is not the first time Mirch Firm has stubbed its toe over the disbarred Reiner. See, Mirch Law Firm, LLP v. Nakhleh, No. 20-56207 (9th Cir. May 12, 2022, reh. den. Sept. 19, 2022).]

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

(posted March 15, 2023) Atanasio v. O'Neill, No. 502769/2016 (N.Y. Sup. Ct. Kings County March 8, 2023). Plaintiff, a member (we think) of LLC has sued Defendant, also a member of LLC, derivatively for diverting LLC funds to himself. Law Firm has appeared for Defendant. Law Firm had represented LLC during the time of Defendant's misconduct. Plaintiff moved to disqualify Law Firm. In this opinion the court denied the motion. The court found that Law Firm is not violating New York's version of M.R. 1.9, because nothing Law Firm did for LLC was "related to this case at all." [Our note: We are not capable of making sense of the court's description of who did what to whom, and whether there was a relationship. Nor, do we know of precedent for when a lawyer can oppose a former entity client in a derivative action. It seems that an easier solution here would have been to recognize that the confidentiality aspect of Rule 1.9 would not play a role because Defendant would already know everything about LLC, and his own conduct, relevant to the case.]

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

Nothing current.

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

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

(posted March 29, 2023) Brown v. Rite Aid Corp., No. 1362 MDA 2021 (Pa. Super. Ct. March 27, 2023). Brown had been officer, director, and "chief counsel" for Rite Aid "for many years." In 1999 Shareholders brought a derivative action against Rite Aid and its officers and directors (including Brown) for misstating financial results. Law Firm defended all defendants. That case settled in 2000. In 2002 Rite Aid, represented by Law Firm, sued Brown for breach of fiduciary duty and other wrongs ("Underlying Case"). Brown succeeded in enjoining Rite Aid from maintaining Underlying Case because it violated the settlement and release terms of the derivative action. In 2018 Brown brought this case ("This Case") against Rite Aid and Law Firm for abuse of process and related causes of action. Brown moved to disqualify Law Firm from representing Rite Aid in This Case. The trial court in This Case denied the motion to disqualify. In this opinion the appellate court affirmed. The court noted that the derivative action ended twenty-one years ago and that Law Firm learned nothing from Brown in the derivative action that would be relevant in This Case. Further, the appellate court agreed that the representations were not substantially related. The court brushed aside Brown's Rule 1.7 argument, noting that Law Firm is not representing Brown.

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

Nothing current.

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

(posted March 17, 2023) Markel Am. Ins. Co. v. Allison, No. 5:22-cv-01494-JLS-PVC (C.D. Cal. March 15, 2023). Employee sued Employer for wrongful termination and related wrongs ("Underlying Case"). Employer had insurance coverage from InsCo. Employer hired Law Firm to defend the employment claim. The case went badly and was settled for more than InsCo thought it was worth. Thus, InsCo sued Law Firm for malpractice ("This Case"). Law Firm moved to dismiss. In this opinion the court denied the motion. The court noted that ordinarily, in California, where the carrier hires defense counsel and directs the defense, the lawyer has two clients. In this instance Employer hired Law Firm, but that retention was "acknowledged" by InsCo. The court said that at this early stage InsCo had pleaded enough involvement in the defense to make "an attorney-client relationship" "plausible."

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.)

Fee Forfeiture

(posted March 16, 2023) CFFC2, Inc. v. Bergstrom, 2023 WL 2494454 (Cal. App. 4th Dist. Unpub. March 14, 2023). Lawyer did work for Client. Client paid Lawyer some fees. When Lawyer sent a final bill for $144,000, Client paid some of it. Lawyer assigned his claim for the balance to Assignee. Assignee brought this suit against Client for the balance. Following trial the trial court ruled against Assignee on amounts claimed but not already paid. The court held that much of the work not yet paid for was done for a relative of Client. This work was not in Client's interest, but in the interests of the relative and Lawyer. Lawyer had a conflict and must forfeit those amounts. In this unpublished opinion the appellate court affirmed. [Our note: Although unpublished and clearly consistent with precedent, we cite the case to reaffirm that lawyers who are insensitive to conflicts face fee forfeitures. It is also clear that an assignee of a claim for legal fees take subject to that defense.]

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.

(posted March 7, 2023) Org. of Chinese Americans, Inc. v. Damron, 2023 WL 2301977 (D.D.C. March 1, 2023). We have always felt lawyer malpractice cases rarely add to conflict-of-interest literature. In our view, this is one of the exceptions. According to Judge Beryl Howell, the case "arises from a botched real estate transaction." We will limit our discussion to one of several claims by sellers against their Law Firm. Law Firm handled the transaction for the sellers. When the purchaser sued the sellers for specific performance, Law Firm defended the sellers. Law Firm lost the litigation. In this malpractice case the sellers claimed Law Firm had a conflict in the litigation because it had handled the sale and was trying to cover up its malpractice in the transaction. In this opinion Judge Howell denied Law Firm's motion to dismiss that claim. The court said that Law Firm's failure to advise of its conflict might not have caused the litigation loss. However, if the sellers had appreciated the conflict, they might have avoided the litigation or settled it for "a lower overall payment."

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.