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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 Delay as Waiver (posted June 26, 2019) City of Fresno v. United States, 2019 WL 2536106 (Fed. Ct. Cl. June 19, 2019). This is a suit by a group of water users ("Group 1") against the U.S. over Group 1's entitlement to water. Another group of users ("Group 2") moved to intervene to take positions adverse to Group 1. Law Firm represents Group 2. Group 1 moved to disqualify Law Firm because Law Firm currently represents a member of Group 1 on matters unrelated to this case, and because Law Firm formerly represented members of Group 1 on water allocation issues. In this opinion the court denied the motion because of Group 1's delay in making the motion. This suit started in October 2016. Law Firm filed Group 2's motion to intervene in May 2017. Group 1 began demanding that Law Firm withdraw in August 2018 and filed the motion to disqualify that month. Law Firm started appearing for Group 2 adverse to Group 1 on water allocation matters as early as 2014. Given all this, the court ruled that Group 1 simply waited too long to brings their motion. The court did discuss the current client and alleged former client conflicts, presumably to establish that no harm resulted from them. The court also discussed Law Firm's long-time (and expensive) representation of Group 2, including the expertise on water allocation matters Law Firm developed during that representation. Standing (posted June 26, 2019) State Farm Mut. Auto. Ins. Co. v. Elite Health Centers, Inc., 2019 WL 2576360 (E.D. Mich. June 24, 2019). State Farm has two law firms, Firm 1 and Firm 2, the latter being "local counsel." When State Farm first sought the deposition of Joshua Katke (a non-party), Katke complained that Firm 2, local counsel for State Farm, was his lawyer on other matters. State Farm later dropped the attempt to depose Katke. Nevertheless, the defendants moved to disqualify Firm 1 and Firm 2, because of possible misuse of Katke's confidences. In this opinion the court denied the motion because the moving parties could not show that they were ever clients of the firms. The court did discuss the unlikelihood that any harmful exchanges of confidences would occur. Conflict Uncategorized (posted June 24, 2019) In re Estate of Mueller, 2019 WL 2554344 (Kan. App. June 21, 2019). Lorine Mueller died in 2017. She left two children, Margo and Gary, and a widowed daughter-in-law, Cheryl. Lorine's 2007 will left most of her estate to Cheryl. Margo and Gary contested the will, claiming Cheryl exercised undue influence over Lorine. The trial judge admitted the will after a hotly contested hearing. Margo and Gary appealed. In this opinion, the appellate court affirmed. Cheryl's influence over Lorine was the key focus. A side issue - but an important one - involved the various roles of the Tessendorf law firm at various times during the last ten years of Lorine's life. The law firm players were Jacqueline Tessendorf ("Lawyer Jacqueline") and Ryan Tessendorf ("Lawyer Ryan"), spouses. Lawyer Jacqueline represented Lorine in a contested conservator proceeding brought by Margo and Gary, which they later dropped. Lawyer Ryan then prepared a new will for Lorine, the one in this case, leaving practically everything to Cheryl. Later, Lawyer Jacqueline did some odd tasks for Lorine. There is more, but you get the idea. Among other factors favoring the Tessendorf firm was that Lawyer Jacqueline and Lawyer Ryan were never involved with Lorine at the same time. Even more important, Margo and Gary were unable to show a breath of suspicious conduct by either Lawyer Jacqueline or Lawyer Ryan in any dealings with Lorine, Lorine's children, or Cheryl. Malpractice Liability; Commercial Negotiations (posted June 21, 2019) Wagner v. Gould, 2019 WL 2524600 (Pa. App. June 19, 2019). Lawyer represented both Buyer and Seller in a sale of a "residential investment property." Because Lawyer caused Seller to lose security in the transaction, Seller sued Lawyer. In a bench trial the trial court found for Seller and entered judgment against Lawyer in the amount of security lost, $500,000. In this opinion the appellate court affirmed. The court really did not focus on Lawyer's conflict of interest, but rather on Lawyer's ineptitude in dealing with the security. Nevertheless, the case is an illustration of the hazards to a lawyer who attempts to represent both parties in a real estate sale of any complexity. Miscellaneous; 4.2 (posted June 19, 2019) Doe v. Superior Court, 2019 WL 2480029 (Cal. App. June 13, 2019). This is a suit for sexual harassment and sexual assault against College and several employees. One of Plaintiff's lawyers ("Lawyer") contacted a female employee (not a party) of College about her experience in an alleged similar matter. Defendants moved to disqualify Lawyer for violating California Rule 4.2. California has seemingly codified Comment [7] of ABA Rule 4.2 as California Rule 4.2(b)(2). The trial court granted the motion. In this opinion the appellate court reversed (granted mandamus). The court held that the interviewed employee was not in a position to bind College or impute liability to College as required by Rule 4.2(b)(2). Former Client (posted June 19, 2019) Annie Sloan Interiors, Ltd. v. Kappel, 2019 WL 2492303 (E.D. La. June 14, 2019). Defendant, a lawyer, formerly did trademark work for Plaintiff, Annie Sloan Interiors ("ASI"), including registering and defending the CHALK PAINT® trademark. After that representation terminated, Defendant began representing another client and attacked that same trademark. ASI brought this suit against Defendant for breach of fiduciary duty. Defendant moved to dismiss. In this opinion the court denied the motion, relying primarily on Louisiana Rule 1.9 (appears to be the same as MR 1.9). It remains to be seen, as the case plays out, the extent to which, if any, confidentiality plays a role in this case. Expert Witness (posted June 18, 2019) Jose Luis Pelaez, Inc. v. McGraw-Hill Global Educ. Holdings LLC, 366 F. Supp. 3d 567 (S.D.N.Y. March 13, 2019). Pelaez is suing McGraw-Hill ("M-H") for photo copyright infringement. Pelaez' expert ("Expert") worked for M-H for several years. Her duties included determining whether certain of M-H's activities infringed copyrights. After leaving M-H, Expert agreed to be an expert for Pelaez' law firm ("Law Firm"). In another similar case against M-H, hiring Expert got Law Firm disqualified, Grant Heilman Photography, Inc. v. McGraw-Hill Global Educ. Holdings, LLC, 2018 WL 2065060 (E.D. Pa. May 2, 2018). M-H moved to disqualify Law Firm in this case, relying heavily on the earlier case. In this opinion the court denied the motion, seeing differences between the two situations. Among other things, the court noted that Expert did not begin work at M-H until after the transactions in question occurred, and left M-H two months before this case was filed. The court also rejected M-H's "playbook" arguments. Finally, the court said that the motion to disqualify "carries the whiff of tactical maneuvering." [We were slow getting to this one. Sorry.] 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.] 4.2 (posted June 19, 2019) Doe v. Superior Court, 2019 WL
2480029 (Cal. App. June 13, 2019). This is a suit for sexual harassment
and sexual assault against College and several employees. One of
Plaintiff's lawyers ("Lawyer") contacted a female employee (not a party)
of College about her experience in an alleged similar matter.
Defendants moved to disqualify Lawyer for violating California Rule 4.2.
California has seemingly codified Comment [7] of ABA Rule 4.2 as
California Rule 4.2(b)(2). The trial court granted the motion. In this
opinion the appellate court reversed (granted mandamus). The court held
that the interviewed employee was not in a position to bind College or
impute liability to College as required by Rule 4.2(b)(2). CONFLICTS - UNCATEGORIZED [Note: These, too, will appear at the This and That pages.] Nothing current. BANKRUPTCY (To read full article, click here) Nothing current. Nothing current. BOARD POSITIONS (To read full article, click here.) Nothing current. CHANGING FIRMS - SCREENING (To read full article, click here.) Screening Judge's Law Clerk (posted June 13, 2019) In re Fundamental Long Term Care, Inc.,
2019 WL 1443404 (M.D. Fla. June 7, 2019). This opinion denies motions
to recuse the bankruptcy judge and his law clerk. The problem was that
the law clerk had previously practiced in the law firm for certain
creditors and may have learned things that might taint his behavior as
the judge's clerk. As to that claim, in this opinion, the bankruptcy
judge said that the remedy in such a situation is for the judge to
screen the clerk from this case. The judge had done so. CLASS ACTIONS (To read full article, click here.) (posted June 11, 2019) In re Hyundai & Kia Fuel Econ. Litig.,
2019 WL 2376831 (9th Cir. June 6, 2019). This class action claims that
auto makers misrepresented fuel efficiency of their vehicles. The
district court certified a class and approved the settlement. In this
appeal the defendants claimed, among other things, that class counsel
had a conflict of interest. Class counsel were co-counsel in another
case with the law firm representing defendants in this case. In the
other case they are representing plaintiffs against Volkswagen involving
VW diesel emissions. The defendants cited no authority for that being a
conflict, so the court rejected that claim. Nothing current. CO-COUNSEL/COMMON INTEREST (To read full article, click here.) Nothing current. COMMERCIAL NEGOTIATIONS (To read full article, click here.) (posted June 21, 2019) Wagner v. Gould, 2019 WL 2524600 (Pa. App.
June 19, 2019). To read about the case, go to Malpractice Liability, below. (posted June 4, 2019) Marques v. Nat'l Bank of Canada, 2019 PECA 8 (CanLII) (P.E.I. Ct. App. May 5, 2019). Plaintiff obtained a mortgage loan from Bank in order to build a house. Because of alleged construction defects in the house, Plaintiff sued Bank for failure to inspect the house. The trial court granted Bank a summary judgment. In this opinion the appellate court affirmed. One claim was that one lawyer represented both Bank and Plaintiff in the loan transaction. In this opinion the court said this was "usual practice" in P.E.I. If a conflict does develop between the parties, the lawyer should refer them both to separate counsel. There was no conflict here. CORPORATIONS (To read full article, click here.) 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 June 13, 2019) City & County Paving Corp. v. Titan Concrete, Inc.,
2019 WL 2454819 (N.Y. App. Div. June 13, 2019). Defendant moved to
disqualify plaintiff's lawyer because that lawyer had earlier
represented Defendant on a matter unrelated to this one. The trial court
denied the motion. In this opinion the appellate court reversed. The
court noted that the earlier representation was still extant when
Plaintiff brought this matter. Citing N.Y. Rule 1.7(a)(1), the court
said the conflict "must be assessed as of that time." (posted June 6, 2019) Sacher v. Sacher, 2019 WL 2337393 (Cal.
App. Unpub. June 3, 2019). The Kenneth faction of the Sacher family
("Kenneth") is fighting with the Fred faction of the family ("Fred").
Kenneth is represented by Lewis Brisbois. Fred is represented by James
Bohm and the Bohm Wildish law firm. In these three related cases Kenneth
and Lewis Brisbois are claiming that James Bohm exercised undue
influence over Fred, and committed other ethical violations, in family
trust matters. The problem is that Lewis Brisbois is representing the
Bohm Wildish firm in an unrelated matter. Thus, Fred and James Bohm
moved to disqualify Lewis Brisbois in these cases. The trial court
granted the motion. In this opinion the appellate court affirmed. Using
an analysis that we do not understand, the court held Fred and Bohm had
standing to bring the motion. However, in an analysis we do understand,
the court added that it could allow the motion based on "the court's
authority to remedy an attorney's breach in the case before it." Then,
the court agreed with the trial court that Lewis Brisbois had a conflict
and should be disqualified. (posted June 6, 2019) In re Thetford, 2019 WL 2237994 (Tex. May 24, 2019). Niece sought the appointment of a guardian for Aunt. Lawyer, who had represented Aunt, represented Niece in the proceeding. Aunt moved to disqualify Lawyer. The trial court denied the motion. The appellate court affirmed. In this 5-4 opinion the Texas Supreme Court denied mandamus (affirmed). The basic issue is whether a person's lawyer can represent someone seeking the appointment of a guardian for that person. The majority ruled that the rule should be flexible. The minority said the rule against such a representation should be "hard-and-fast." The minority pointed out that ABA Op. 96-404 (1996) and eleven states have such a rule. The case is complicated by the fact that Niece was Lawyer's sometime legal assistant and Niece was in default on a $350,000 note held by Aunt. The note had been paid off by the time the guardianship proceeding began. Both the majority and minority opinions were very thoughtful expositions on the rapidly increasing population of older people needing care and the legal framework for providing that care. Both opinions discussed, and compared Model Rule 1.14 and Texas Rule 1.02(g), which are "comparable." DERIVATIVE ACTIONS (To read full article, click here. (posted June 4, 2019) Kleeberg v. Uber, 2019 WL 2284724 (S.D.N.Y.
May 29, 2019). This derivative action involves two closely-held
entities, No. 1 and No. 2. Law Firm appeared for the individual
defendants and for No. 1 and No. 2. The plaintiffs moved to disqualify
Law Firm from representing No. 1 and No. 2. In this opinion the
magistrate judge denied the motion. The court stated, as a general
matter, the Second Circuit and New York courts "reject the routine
disqualification" of lawyers representing both companies and their
officers in derivative actions. This is particularly true where the
entities are closely-held and remain "passive litigants," the case here.
[Our note: The facts are too complex to rehearse here. But, the
opinion is an extensive review of Second Circuit and New York authority
on lawyer conflicts in derivative actions.] ENJOINING CONFLICTS (AND OTHER NON-TRADITIONAL REMEDIES) (To read full article, click here.) Nothing current. EXPERT WITNESSES (To read full article, click here.) (posted June 19, 2019) Annie Sloan Interiors, Ltd. v. Kappel,
2019 WL 2492303 (E.D. La. June 14, 2019). Defendant, a lawyer, formerly
did trademark work for Plaintiff, Annie Sloan Interiors ("ASI"),
including registering and defending the CHALK PAINT® trademark. After
that representation terminated, Defendant began representing another
client and attacked that same trademark. ASI brought this suit against
Defendant for breach of fiduciary duty. Defendant moved to dismiss. In
this opinion the court denied the motion, relying primarily on Louisiana
Rule 1.9 (appears to be the same as MR 1.9). It remains to be seen, as
the case plays out, the extent to which, if any, confidentiality plays a
role in this case. (posted June 18, 2019) Jose Luis Pelaez, Inc. v. McGraw-Hill Global Educ. Holdings LLC,
366 F. Supp. 3d 567 (S.D.N.Y. March 13, 2019). Pelaez is suing McGraw-Hill ("M-H") for
photo copyright infringement. Pelaez' expert ("Expert") worked for M-H for several years. Her duties included determining whether certain
of M-H's activities infringed copyrights. After leaving M-H, Expert
agreed to be an expert for Pelaez' law firm ("Law Firm"). In another
similar case against M-H, hiring Expert got Law Firm disqualified, Grant Heilman Photography, Inc. v. McGraw-Hill Global Educ. Holdings, LLC,
2018 WL 2065060 (E.D. Pa. May 2, 2018). M-H moved to disqualify Law
Firm in this case, relying heavily on the earlier case. In this opinion
the court denied the motion, seeing differences between the two
situations. Among other things, the court noted that Expert did not
begin work at M-H until after the transactions in question occurred, and
left M-H two months before this case was filed. The court also rejected
M-H's "playbook" arguments. Finally, the court said that the motion to
disqualify "carries the whiff of tactical maneuvering." [We were slow getting to this one. Sorry.] (posted June 13, 2019) VNO 1105 State Hwy. 36, LLC v. Twp. of Hazlet,
2019 WL 2443430 (Tax Ct. N.J. June 10, 2019). In this opinion the Tax
Court judge denied a motion for rehearing the judge's earlier decision
disqualifying Plaintiff's expert. In this case Plaintiff challenges the
assessed valuation of its property. The Plaintiff's expert is the
assessor in a different municipality. According to the court, allowing
his testimony would create "an appearance of impropriety and impair the
integrity of his public office as assessor." FORMER CLIENT (To read full article, click here.) (posted June 4, 2019) Wiederman v. Halpert, 2019 WL 2274485 (N.Y.
App. Div. May 29, 2019). In this case Plaintiff seeks to collect a
$600,000 judgment entered in a Connecticut court. Defendants moved to
disqualify Plaintiff's lawyer ("Lawyer") because Lawyer had earlier
represented Defendants in various matters. In one matter Lawyer
represented Defendants in claiming identity theft. In another matter
Lawyer represented Defendants' children for an alleged bank fraud. The
trial court granted the motion to disqualify. In this opinion the
appellate court affirmed. The opinion does not mention any ethics rule.
It says only that Defendants' confidential disclosures to Lawyer in the
earlier matters "resulted in a substantial risk of prejudice" and caused
"the very appearance of a conflict of interest." (posted June 4, 2019) Dorsey v. Sokoloff, 2019 WL 2192432 (D. Md. May 21, 2019). Decedent died nine months after receiving stun gun shocks from a deputy sheriff. His family, represented by Law Firm, has sued several members of the sheriff's department and state and county officials. A former sheriff/defendant (Berry) moved to disqualify Law Firm because Law Firm had represented him in 2012. In the earlier case Berry sued another former sheriff for obstructing investigations, retaliation, and related claims. In this opinion the court denied the motion, finding the matters were not substantially related. (posted June 4, 2019) Alderwood Estate & Ret. Centre Ltd. v. Regular, 2019 NLSC 87 (CanLII) (S. Ct. Newf. & Lab. April 23, 2019). This is a misrepresentation claim by Plaintiff against several defendants involving the sale of a retirement home. One of the defendants (Kirby) moved to disqualify the law firm for Plaintiff ("Law Firm") because, as recently as five years ago, Law Firm had represented Kirby in five matters. In a very fact-intensive analysis, in this opinion, the court denied the motion. The court found that the earlier matters were not sufficiently related to this case, that it was not all likely that Law Firm had learned anything from Kirby relevant to this case, and that Law Firm was not, in any way, attacking the work that it had done for Kirby. The earlier matters basically involved the purchase and sale of other retirement homes. 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 June 4, 2019) Microsoft Corp. v. World Tech Invs., LLC,
2019 WL 2314482 (N.D. Ohio May 31, 2019). Microsoft sued World Tech for
violating Microsoft's intellectual property rights. World Tech's
insurer, State Farm, is defending under a reservation of rights. State
Farm moved to intervene in this case to obtain a declaration that its
policy does not cover this matter. In this opinion the court denied the
motion. Among other things, allowing intervention would put State Farm's
retained counsel for World Tech in an impossible position (conflict of
interest). INVESTING IN CLIENTS/STOCK FOR FEES (To read full article, click here.) Nothing current. JOINT/MULTIPLE REPRESENTATION (To read full article, click here.) (posted June 13, 2019) Plouffe v, Cevallos, 2019 WL 2451063 (3d
Cir. June 12, 2019). Employment related case by former assistant
professor against a state university and related persons and entities.
The case was resolved below against Plaintiff. Plaintiff claimed that
the law firm representing jointly the university and the individual
plaintiffs should have been disqualified. In this opinion affirming the
rulings below, the court summarily dismissed that objection saying, "it
is a regular practice for an Attorney General's office to represent
state agencies and state employees concurrently in civil litigation." (posted June 11, 2019) Maiden Lane Hosp. Grp. LLC, v. Beck,
2019 WL 2417253 (S.D.N.Y. June 10, 2019). Beck worked for Maiden Lane.
He induced another plaintiff, Potentis, to invest in Maiden Lane. In
this suit, brought by Maiden Lane and Potentis, Maiden Lane claims Beck
misused Maiden Lane funds, thus breaching his fiduciary duty to Maiden
Lane. Potentis claims that Beck misrepresented the investment in Maiden
Lane, thus committing fraud. Law Firm represents both Maiden Lane and
Potentis. Beck moved to disqualify Law Firm. In this opinion the court
denied the motion. Space does not justify detailing the court's
reasoning. The court simply did not see how Maiden Lane's interests
conflict with Potentis' interests given the nature of the parties'
various relationships. LAWYER AS EXPERT WITNESS OR CONSULTANT (To read full article, click here.) Nothing current. Nothing current. MALPRACTICE LIABILITY/FEE FORFEITURES (To read full article, click here.) (posted June 21, 2019) Wagner v. Gould, 2019 WL 2524600 (Pa. App.
June 19, 2019). Lawyer represented both Buyer and Seller in a sale of a
"residential investment property." Because Lawyer caused Seller to lose
security in the transaction, Seller sued Lawyer. In a bench trial the
trial court found for Seller and entered judgment against Lawyer in the
amount of security lost, $500,000. In this opinion the appellate court
affirmed. The court really did not focus on Lawyer's conflict of
interest, but rather on Lawyer's ineptitude in dealing with the
security. Nevertheless, the case is an illustration of the hazards to a
lawyer who attempts to represent both parties in a real estate sale of
any complexity. 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.) (posted June 26, 2019) State Farm Mut. Auto. Ins. Co. v. Elite Health Centers, Inc.,
2019 WL 2576360 (E.D. Mich. June 24, 2019). State Farm has two law
firms, Firm 1 and Firm 2, the latter being "local counsel." When State
Farm first sought the deposition of Joshua Katke (a non-party), Katke
complained that Firm 2, local counsel for State Farm, was his lawyer on
other matters. State Farm later dropped the attempt to depose Katke.
Nevertheless, the defendants moved to disqualify Firm 1 and Firm 2,
because of possible misuse of Katke's confidences. In this opinion the
court denied the motion because the moving parties could not show that
they were ever clients of the firms. The court did discuss the
unlikelihood that any harmful exchanges of confidences would occur. Nothing current. UNDERLYING WORK PROBLEM (To read full article, click here.) Nothing current. WAIVERS/CONSENTS (To read full article, click here.) Passage of Time as Waiver (posted June 26, 2019) City of Fresno v. United States,
2019 WL 2536106 (Fed. Ct. Cl. June 19, 2019). This is a suit by a group
of water users ("Group 1") against the U.S. over Group 1's entitlement
to water. Another group of users ("Group 2") moved to intervene to take
positions adverse to Group 1. Law Firm represents Group 2. Group 1 moved
to disqualify Law Firm because Law Firm currently represents a member
of Group 1 on matters unrelated to this case, and because Law Firm
formerly represented members of Group 1 on water allocation issues. In
this opinion the court denied the motion because of Group 1's delay in
making the motion. This suit started in October 2016. Law Firm filed
Group 2's motion to intervene in May 2017. Group 1 began demanding that
Law Firm withdraw in August 2018 and filed the motion to disqualify that
month. Law Firm started appearing for Group 2 adverse to Group 1 on
water allocation matters as early as 2014. Given all this, the court
ruled that Group 1 simply waited too long to brings their motion. The
court did discuss the current client and alleged former client
conflicts, presumably to establish that no harm resulted from them. The
court also discussed Law Firm's long-time (and expensive) representation
of Group 2, including the expertise on water allocation matters Law
Firm developed during that representation. WITNESS - ADVERSE - CURRENT/FORMER CLIENT (To read full article, click here.) Nothing current. Home/Table of Contents Website powered by Network Solutions® |