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FREIVOGEL ON CONFLICTS WHAT'S NEW Home/Table of Contents 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 Conflict - Uncategorized (posted August 21, 2019) Rawa v. Monsanto Co., 2019 WL 3916537 (8th Cir. Aug. 20, 2019). This class action claims Monsanto mislabeled its herbicide, Roundup. A federal court in California transferred another similar action to this court. The trial court (E.D. Mo.) certified the class and approved a settlement. An objector claimed the class counsel had a conflict, but this opinion does not describe the nature of the alleged conflict. Class counsel had earlier obtained an expert opinion that the transfer and consolidation did not create a conflict for class counsel. The objector claimed that obtaining the opinion was an admission of guilt. In this opinion, affirming the trial court on all issues, the Eighth Circuit cited with approval the trial court's characterization of getting the opinion "as a sign of responsible behavior by class counsel," not an "admission that a conflict exists." Former Client (posted August 20, 2019) Chhabra v. Couture Interior Design Int'l Inc., No. 653644/2018 (N.Y Sup. Ct. Aug. 13, 2019). Law Firm represents Plaintiff against Defendants claiming that Plaintiff paid Defendants for home improvements, which Defendants failed to deliver. One defendant, Durite USA LLC, moved to disqualify Law Firm because Law Firm had earlier represented Durite in certain patent matters. This included obtaining a patent for the "Durazzo" process for design finishes. In this opinion the court denied the motion to disqualify. It simply could find not any relevant relationship between obtaining the patent for the Durazzo process and Defendants' failure to deliver home improvements. Zero Sum (posted August 19, 2019) Thornton v. Barrett, 2019 WL 3877368 (D. Idaho Aug. 16, 2019). Idaho has a statute that allows a prevailing party to seek lawyers' fees where the party's opponent pursued the case vexatiously. In this opinion the court determined the amount to be awarded. In passing it ruled, in effect, that the successful party's law firm may not seek fees if the amount of money available is not enough to cover both the party's recovery and the lawyers' fees. That would be a conflict of interest. Bankruptcy (posted August 16, 2019) In re Mack Indus., LTD, 2019 WL 3822315 (N.D. Ill. Aug. 14, 2019). The Chapter 7 trustee sued 440 parties alleging preferential or fraudulent transfers. Lawyer represents 52 of the defendants. The trustee moved to disqualify Lawyer because Lawyer had previously, and briefly, represented a debtor while under Chapter 11 and then represented two debtors when they became Chapter 7 debtors. To remove the suggestion of impropriety, Lawyer dropped the debtors as clients. In this opinion the bankruptcy judge denied the motion to disqualify. (Warning: We are keeping this brief - maybe too brief.) First the court ruled that Lawyer never represented the trustee or the estate; he represented only the debtors. Thus, Lawyer did not violate Rule 1.7 or Rule 1.9. Rule 1.7 did not apply simply because Lawyer owed no duty of loyalty to the trustee or the estate. The same analysis applied to Rule 1.9. Nevertheless, the court assumed, arguendo, that Rule 1.9 did apply. In a fact-intensive analysis the court concluded that these cases are not substantially related to Lawyer's work for the debtors, and there was no danger that Lawyer learned anything from the debtors that would give Lawyer a leg-up in these cases. [Our note: We have been doing this for nearly 20 years. This is the first case we have seen where a court - one way or the other - for conflicts purposes, distinguished representing a bankruptcy debtor versus the trustee or the estate. Brave bankruptcy judge.] Changing Firms; Screening (posted August 16, 2019) Nat'l Grange of the Order of Patrons v. Ellis Grp. LLP, 2019 WL 3800271 (Cal. App. Unpub. Aug. 13, 2019). Lawyer changed firms. In the face of a motion to disqualify the new firm, the new firm claimed it had erected a screen. The trial court disqualified the new firm. In this opinion the appellate court affirmed, in part because the screen was defective. Because the California Supreme Court adopted a screening rule after the events of this case, we will only briefly note that the court applied the analysis of Kirk v. First Am. Title Ins. Co., 183 Cal. App. 4th 776 (2010), and found the screen wanting. Class Action (posted August 14, 2019) AIIRAM LLC v. KB Home, 2019 WL 3779185 (N.D. Cal. Aug. 12, 2019). As part of a motion to strike in this putative class action the defendant claimed that the class representative and proposed class counsel were not adequate because they have conflicts of interest. The court rejected that claim because adequacy is determined at the class certification stage, not at the pleading stage. Corporation; LLC (posted August 14, 2019) Green v. Blake, 2019 WL 3776009 (D. Kan. Aug. 12, 2019). Green is suing Blake and Leonard for fraud and related causes of action. Green is claiming that Blake and Leonard made misrepresentations to Green to induce Green to invest in LLC. Blake and Leonard moved to disqualify Green's lawyer ("Lawyer") because Lawyer had represented them. In this opinion the court denied the motion. The court found that Lawyer had represented LLCs in which Blake and Leonard were members, but had never given individual advice to either Blake or Leonard. 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.] Nothing current. [Note: These, too, will appear at the This and That pages.] (posted August 21, 2019) Rawa v. Monsanto Co., 2019 WL 3916537
(8th Cir. Aug. 20, 2019). This class action claims Monsanto mislabeled
its herbicide, Roundup. A federal court in California transferred
another similar action to this court. The trial court (E.D. Mo.)
certified the class and approved a settlement. An objector claimed the
class counsel had a conflict, but this opinion does not describe the
nature of the alleged conflict. Class counsel had earlier obtained an
expert opinion that the transfer and consolidation did not create a
conflict for class counsel. The objector claimed that obtaining the
opinion was an admission of guilt. In this opinion, affirming the trial
court on all issues, the Eighth Circuit cited with approval the trial
court's characterization of getting the opinion "as a sign of
responsible behavior by class counsel," not an "admission that a
conflict exists." (posted August 8, 2019) Nasrabadi v. Kameli, 2019 WL 3573567 (N.D. Ill. Aug. 6, 2019). This is a suit brought by Plaintiff against Lawyer for malpractice and breach fiduciary duty. Lawyer moved to compel arbitration. In this opinion the court denied the motion. Plaintiff had hired Lawyer to help Plaintiff with the U.S. EB 5 visa program. Under that program foreigners could qualify for permanent U.S. residency by investing at least $500,000 in "qualified" enterprises. Lawyer had an interest in a property development project and suggested Plaintiff invest in that. Plaintiff did so. Lawyer's engagement letter contained a waiver of the conflict regarding Lawyer's interest in the project, but did not contain an arbitration clause. The operating agreement for the project did contain an arbitration clause, but Lawyer was not a party to that agreement. The court's ruling denying arbitration was based on the fact that the arbitration clause related to Plaintiff's investment, not to Lawyer's representation - the subject of this case. BANKRUPTCY (To read full article, click here) (posted August 16, 2019) In re Mack Indus., LTD, 2019 WL 3822315
(N.D. Ill. Aug. 14, 2019). The Chapter 7 trustee sued 440 parties
alleging preferential or fraudulent transfers. Lawyer represents 52 of
the defendants. The trustee moved to disqualify Lawyer because Lawyer
had previously, and briefly, represented a debtor while under Chapter 11
and then represented two debtors when they became Chapter 7 debtors. To
remove the suggestion of impropriety, Lawyer dropped the debtors as
clients. In this opinion the bankruptcy judge denied the motion to
disqualify. (Warning: We are keeping this brief - maybe too brief.)
First the court ruled that Lawyer never represented the trustee or the
estate; he represented only the debtors. Thus, Lawyer did not violate
Rule 1.7 or Rule 1.9. Rule 1.7 did not apply simply because Lawyer owed
no duty of loyalty to the trustee or the estate. The same analysis
applied to Rule 1.9. Nevertheless, the court assumed, arguendo, that
Rule 1.9 did apply. In a fact-intensive analysis the court concluded
that these cases are not substantially related to Lawyer's work for the
debtors, and there was no danger that Lawyer learned anything from the
debtors that would give Lawyer a leg-up in these cases. [Our note: We
have been doing this for nearly 20 years. This is the first case we
have seen where a court - one way or the other - for conflicts purposes,
distinguished representing a bankruptcy debtor versus the trustee or
the estate. Brave bankruptcy judge.] Nothing current. BOARD POSITIONS (To read full article, click here.) Nothing current. CHANGING FIRMS - SCREENING (To read full article, click here.) (posted August 16, 2019) Nat'l Grange of the Order of Patrons v. Ellis Grp. LLP,
2019 WL 3800271 (Cal. App. Unpub. Aug. 13, 2019). Lawyer changed firms.
In the face of a motion to disqualify the new firm, the new firm
claimed it had erected a screen. The trial court disqualified the new
firm. In this opinion the appellate court affirmed, in part because the
screen was defective. Because the California Supreme Court adopted a
screening rule after the events of this case, we will only briefly note
that the court applied the analysis of Kirk v. First Am. Title Ins. Co., 183 Cal. App. 4th 776 (2010), and found the screen wanting. (posted July 31, 2019) PNC Bank, N.A. v. EP Curragh, LCC,
2019 IL App (1st) 181287-U (Ill. App. July 26, 2019). Lateral Lawyer
("LL") is in the law firm representing PNC ("Firm B"). LL had previously
worked at a law firm ("Firm A") then representing EP Curragh ("EP"). EP
moved to disqualify Firm B. The trial court granted the motion. In this
opinion the appellate court reversed. First, the court held that EP
failed procedurally to show that LL had worked on matters at Firm A that
were substantially related to this case. Second, the court held that,
in any event, Firm B had successfully screened LL from this matter. CLASS ACTIONS (To read full article, click here.) (posted August 14, 2019) AIIRAM LLC v. KB Home, 2019 WL 3779185
(N.D. Cal. Aug. 12, 2019). As part of a motion to strike in this
putative class action the defendant claimed that the class
representative and proposed class counsel were not adequate because they
have conflicts of interest. The court rejected that claim because
adequacy is determined at the class certification stage, not at the
pleading stage. (posted August 8, 2019) In re Google, Inc., 2019 WL 3559113 (3d
Cir. Aug. 6, 2019). This action is on behalf of millions of computer
users who fell victim to Google practices that affected the users'
privacy. Because of the difficulty of devising a scheme for compensating
all these users, the trial court approved a settlement whereby Google
would pay compensation only to several non-profit organizations devoted
to protecting user privacy -- cy pres recipients. One class
member objected and appealed. In this opinion the Third Circuit vacated
the settlement and remanded the case for "further proceedings." Because
no money would go to class members, the opinion refers to this as a "cy pres-only" settlement. The court said it was not condemning cy pres-only
settlements per se, but ruled that the trial court's proceedings were
not adequate to ensure fairness. Two factors were particularly
troubling. First, Google was already a financial supporter of the
intended recipients. Second, class counsel has an affiliation with one
of the recipients. (posted July 25, 2019) Gamble v. Kaiser Found. Health Plan, Inc.,
No 17-cv-06621-YGR (N.D. Cal. July 19, 2019). Class Representatives
filed an "unusual" motion under FRCP 16 that, among other things, sought
the court's "imprimatur" to Class Counsel's fee agreement with
Plaintiffs. In this order the court refused to approve the fee
agreement, finding that it would "create a conflict of interest between
counsel and plaintiffs, as well as the putative class." [Our note:
Our inexperience in negotiating or setting fees in class actions makes
us unable to grasp the significance of what Class Counsel was trying to
do here. Any class action lawyer thinking about drafting non-standard
fee agreements with plaintiffs should read the opinion.] (posted July 22, 2019) Mortimer v. Diplomat Pharm. Inc., 2019 WL
3252221 (N.D. Ill. July 19, 2019). Class Representative sought approval
to hire Law Firm as class counsel. Over objection, the court approved
Law Firm. The objection was that Law Firm was representing another class
against Diplomat in another case involving different conduct and time
frames. Not withstanding the differences, the objector claimed that this
is a limited funds ("zero sum") situation. The court said ordinarily a
law firm may represent different classes against the same defendant. The
court also said a limited funds scenario could be problematic for that
law firm. Here, the court concluded that Diplomat would almost certainly
be able to weather bad results in both matters, given its financial
condition and insurance coverage. [Our note: This opinion appears to
be a pretty good review of authorities on law firms' maintaining
multiple class actions against the same defendant.] Nothing current. CO-COUNSEL/COMMON INTEREST (To read full article, click here.) Co-Counsel (posted Aug. 2, 2019) Wayne County Empls. Ret. Sys.,
2019 WL 3494734 (D. Del. Aug. 1, 2019). In this putative class action,
System has sued defendants for securities fraud arising from inadequate
disclosures in merger documents. Lawyer, while at DLA Piper, represented
several of the defendants in "prior related actions." Lawyer joined
Labaton just before Labaton filed this action for System. On February 8,
2019, Labaton withdrew from this case, and Rosenthal, Monhait filed its
appearance. System moved to have Rosenthal, Monhait approved as class
counsel. The defendants objected because of Lawyer's work for the
defendants at DLA Piper. In this opinion the magistrate judge approved
retention of Rosenthal, Monhait primarily because the defendants could
make no showing that any of their confidential information made its way
from Lawyer to Rosenthal, Monhait. [Our note: We had difficulty
following the judge's reasoning. However, the judge pretty clearly
observed the majority rule that the disqualification of one co-counsel
is not "imputed" to the other co-counsel unless a party can show that
the other co-counsel actually received relevant confidential information.] COMMERCIAL NEGOTIATIONS (To read full article, click here.) Nothing current. CORPORATIONS (To read full article, click here.) LLC (posted August 14, 2019) Green v. Blake, 2019 WL
3776009 (D. Kan. Aug. 12, 2019). Green is suing Blake and Leonard for
fraud and related causes of action. Green is claiming that Blake and
Leonard made misrepresentations to Green to induce Green to invest in
LLC. Blake and Leonard moved to disqualify Green's lawyer ("Lawyer")
because Lawyer had represented them. In this opinion the court denied
the motion. The court found that Lawyer had represented LLCs in which
Blake and Leonard were members, but had never given individual advice to
either Blake or Leonard. CORPORATE FAMILIES (To read full article, click here.) CRIMINAL PRACTICE (To read full article, click here.) Nothing current. CURRENT CLIENT (To read full article, click here.) (posted August 5, 2019) Quinn v. City of Vancouver (Wash.), 2019
WL 3530914 (W.D. Wash. Aug. 2, 2019). Quinn has been an Assistant City
Attorney for Vancouver since 1993. In 2016 she filed a complaint with
the EEOC. In 2017 she filed an "internal whistleblowing complaint with
the City." She then filed this case alleging numerous state and federal
discrimination claims against Vancouver and others. Vancouver moved to
disqualify Quinn's lawyer in this case. In this brief opinion the court
denied the motion. The court found that Vancouver's motion was based on
conjecture and not fact. The court rejected the notion that a lawyer
could never sue her employer for discrimination while representing that
employer on non-employment matters. (posted July 24, 2019) Edwards v. Vemma Nutrition, 2019 WL
3302825 (D. Ariz. July 23, 2019). Plaintiff's lawyer ("Lawyer") moved
to withdraw, claiming he had a conflict. The defendants are seeking
lawyers' fees under 18 U.S.C. §1927 and FRCP 11. Lawyer claims that
these claims put him at odds with the plaintiff. In this opinion the
court denied the motion. The court said that there is no authority for
the proposition that a motion for sanctions against both a lawyer and
the lawyer's client is, without more, a conflict. The court had invited
Lawyer to file an affidavit describing the nature of the conflict, but
Lawyer failed to do so. The court said that failure "speaks volumes." [Our comment: We are unable to tell from the opinion who wrote it or what kind of case this is.] 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.) Nothing current. FORMER CLIENT (To read full article, click here.) (posted August 20, 2019) Chhabra v. Couture Interior Design Int'l Inc.,
No. 653644/2018 (N.Y Sup. Ct. Aug. 13, 2019). Law Firm represents
Plaintiff against Defendants claiming that Plaintiff paid Defendants for
home improvements, which Defendants failed to deliver. One defendant,
Durite USA LLC, moved to disqualify Law Firm because Law Firm had
earlier represented Durite in certain patent matters. This included
obtaining a patent for the "Durazzo" process for design finishes. In
this opinion the court denied the motion to disqualify. It simply could
find not any relevant relationship between obtaining the patent for the
Durazzo process and Defendants' failure to deliver home improvements. (posted August 5, 2019) Van Hoek v. McKesson Corp., 2019 WL
3536705 (M.D. Fla. Aug. 2, 2019). This is an "employment action" by Van
Hoek against McKesson and others. At the outset of this case the firm
Sizemore, Gonzalez represented the defendants. In April 2019 Sizemore,
Gonzales merged into the firm GrayRobinson. The problem is that Sandra
Sheets is a lawyer at GrayRobinson. About ten years ago Sheets did
estate planning work for Van Hoek. In January 2010 Sheets wrote Van Hoek
something resembling a termination letter and has done no work for her
since. Nevertheless, Van Hoek moved to disqualify GrayRobinson as the
defendants' law firm. In this opinion the court denied the motion.
First, the court found that Van Hoek was not a current client of
GrayRobinson. Last, the court found that the earlier estate planning was
not substantially related to this employment action. (The opinion does
not state the nature of the employment action.) Playbook (posted July 31, 2019) Plein v. USAA Cas. Ins. Co.,
2019 WL 3407107 (Wash. App. July 29, 2019). The Pleins' home suffered
fire damage. The Pleins' insurer, USAA, recommended a company to remedy
the damage. The smoke aroma persisted after that work. The Pleins
determined that much of the damage had not been remedied, but merely
covered up. USAA balked at providing coverage for additional work, and
the Pleins sued USAA for bad faith. Law Firm joined in the
representation of the Pleins. The problem was that Law Firm had just
recently terminated its representation of USAA. That representation
spanned some ten years and involved "at least 165 cases," some of which
involved bad faith claims by homeowners. One case involved a bad faith
claim arising out of defective remediation of smoke damage. USAA moved
to disqualify Law Firm in this case. The trial court denied the motion.
In this opinion the appellate court reversed. The court pretty clearly
adopted the playbook approach to the substantial relationship test under
Rule 1.9. The court noted the "legal strategies and defenses developed
between USAA" and Law Firm. The court concluded that Law Firm's
knowledge goes beyond the "general knowledge of the client's policies
and practices" as discussed in Comment 3 to Rule 1.9. 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.) Reservation of Rights (posted July 26, 2019) Flexi-Van Leasing, Inc. v. The Travelers Indem. Co.,
2019 WL 3343970 (D.S.C. July 25, 2019). Vititoe was injured when a
truck trailer rim assembly he was working on exploded. In an underlying
case he sued, among others, the owner of the trailer ("Flexi"). A number
of other companies were involved including the company that was using
the trailer when Vititoe was injured, not Flexi. In this case Flexi sued
Travelers to establish insurance coverage for Vititoe's injuries.
Travelers moved for summary judgment. In this opinion the court granted
Travelers a summary judgment. There is too much going on here, such as
contractual relationships among the various companies involved, to
justify a complete description. Travelers had served a reservation of
rights. Two things of interest to this audience are worth mentioning.
First, the court said that the mere possibility that a conflict could
arise among several of the parties was not justification for Flexi to
hire its own counsel at Travelers' expense. There must be an "actual"
conflict. Second, the obligation of Travelers to defend Flexi did not
include an obligation of Travelers' retained counsel to bring a
third-party action on behalf of Flexi against another player [Our note: The author of this site has tried truck rim "separation" cases.] INVESTING IN CLIENTS/STOCK FOR FEES (To read full article, click here.) Nothing current. JOINT/MULTIPLE REPRESENTATION (To read full article, click here.) (posted July 26, 2019) Anzora v. Lezama, 2019 WL 3334685 (D. Col.
July 24, 2019). Two trucks collided. Plaintiff was driving one of them.
Evidently, the other truck crossed the center line. Its mirror
penetrated Plaintiff's side of the cab, injuring her. IMS, a finance
company, funded Plaintiff's surgery to the tune of some $75,000. Law
Firm represents both Plaintiff and IMS. Defendants moved to disqualify
Law Firm. In this opinion the court denied the motion. The court said
the interests of Plaintiff and IMS were "aligned." The only way a
conflict could arise is if Plaintiff loses this case or Plaintiff fails
to reimburse IMS. Moreover, because Plaintiff is contractually bound to
pay IMS - win or lose - IMS right to recovery is not "contingent." So
IMS personnel may testify as an expert on Plaintiff's behalf. 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.) Nothing current. WAIVERS/CONSENTS (To read full article, click here.) Nothing current. WITNESS - ADVERSE - CURRENT/FORMER CLIENT (To read full article, click here.) ZERO SUM GAMES (To read full article, click here.) (posted August 19, 2019) Thornton v. Barrett, 2019 WL 3877368 (D.
Idaho Aug. 16, 2019). Idaho has a statute that allows a prevailing
party to seek lawyers' fees where the party's opponent pursued the case
vexatiously. In this opinion the court determined the amount to be
awarded. In passing it ruled, in effect, that the successful party's law
firm may not seek fees if the amount of money available is not enough
to cover both the party's recovery and the lawyers' fees. That would be a
conflict of interest. (posted July 22, 2019) Mortimer v. Diplomat Pharm. Inc., 2019 WL 3252221 (N.D. Ill. July 19, 2019). Analysis of when limited funds could be problematic for lawyer handling multiple class actions against the same defendant. To read more, go to "Class Action," above. Home/Table of Contents Website powered by Network Solutions® |