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FREIVOGEL ON CONFLICTS WHAT'S NEW 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 Important Note on Web Security As of April 15, 2023, this Web site has been rendered "secure." This means we have obtained "SSL Certificates" for www.freivogel.com and www.freivogelonconflicts.com. If IT personnel in your organization have either cautioned you about use of this site, or restricted your access to it, you should call this change in status to their attention. Current Client; Appealability (posted September 28, 2023) In re Realtek Semiconductor Corp., No. 2023-147 (Fed. Cir. Sept. 25, 2023). Realtek filed this complaint before the International Trade Commission claiming the importation of AMD chips infringe on Realtek's patents. A hearing is pending before an ALJ. Realtek intends to call a lawyer ("Lawyer A") as a witness because Lawyer A had represented Realtek in negotiating a relevant license agreement. AMD moved to strike Lawyer A as a witness. The ALJ granted that motion and denied reconsideration. Realtek filed this petition for mandamus to disqualify the lawyer ("Lawyer B") who made the motion to strike Lawyer A as a witness, because Lawyer B represents Lawyer A "in other litigation." In this opinion the D.C. Circuit denied the petition for mandamus, in part because Lawyer B would not be cross-examining Lawyer A in this proceeding, thus not violating ABA Rule 1.7(a). The other ground for denying the petition is that the ALJ's decision should not be subject to an interlocutory appeal, citing Firestone Tire & Rubber Co. v. Risjord, 449 U.S. 368 (1981). Derivative Action (posted September 28, 2023) In re Eastman Kodak Co. Derivative Litig., 2023 WL 6209592 (W.D.N.Y. Sept. 25, 2023). Kodak's board determined that "this action would not be in Kodak's best interest." In this opinion the court granted Kodak's motion for summary judgment. The court found that the board's determination was made "in good faith and after reasonable inquiry." Lots of players and lots of relationships involved. Key to us was the role of the law firm ("Firm A") charged by the board to make an investigation of Plaintiffs' complaints. In opposing summary judgment, Plaintiffs cited Firm A's relationships with some of the defendants and their other business activities. They are too complicated and varied to discuss here. Kodak did not believe that these relationships should not detract from Firm A's conclusions. The court was also impressed that another law firm ("Firm B") had examined Firm A's role and saw no conflicts. Class Action; "Clear Sailing" (posted September 26, 2023) Rouse v. Language Line Servs., Inc., 2023 WL 6200072 (W.D. Mo. Sept. 22, 2023). Proposed settlement of class action. The court denied the first request to approve a settlement because the agreement contained a "combination of a claims made settlement with a reversion provision along with an overly-high award of attorneys' fees and a clear sailing provision." In this opinion the court disapproved a second request to approve the settlement because it still contains a reversion provision, a flat-fee lawyer award, and a clear sailing provision. These factors "suggest that Plaintiffs' counsel may have succumbed to a conflict of interest." Bankruptcy (posted September 21, 2023) In re Fundamental Long Term Care, Inc., 2023 WL 6057245 (11th Cir. Sept. 18, 2023). The probate estates of six nursing home patients brought wrongful death cases against a nursing home operator ("Operator"), which is the debtor in this case Chapter 7 case. The probate estates are the only creditors in this case. When it appeared that certain third parties had looted Operator via fraudulent transfers and the like, the Chapter 7 trustee hired Law Firm as "special litigation counsel" to pursue claims against those parties. At some point Law Firm withdrew as litigation counsel, but continued to assist the trustee. The probate estates filed a motion to disqualify Law Firm and for disgorgement of some $5 million in fees. The motion was based on the fact that for many years Law Firm had represented the owner of the property upon which the offending nursing homes were located and did not disclose that relationship as required by Bankruptcy Rule 2014. The bankruptcy judge denied the motion. While the facts and relationships here are incredibly complex, the court's ruling was based essentially upon the fact that the property owner/client had nothing to do with operation of the nursing homes. Further, the court found that Law Firm's violation of Rule 2014 was not intentional. The district judge affirmed as to disqualification, but remanded the case to the bankruptcy judge to determine whether the Rule 2014 violation was "negligent," such that Law Firm should be sanctioned. Upon remand the bankruptcy judge found that sanctions were not warranted. The district court affirmed that finding. In this opinion the appellate court affirmed the district court. Former Client (posted September 18, 2023) Rose v. Francis, No. 5:22-civ-00405 (S.D. W. Va. Sept. 15, 2023). Former inmates, represented by Law Firm, brought this class action against a state prison authority (“Agency”). While this case was pending, Law Firm hired Lawyer. Lawyer had previously represented Agency in one case involving an employment/discrimination claim and did only discovery work in that case. Nevertheless, Defendants moved to disqualify Law Firm in this case. In this opinion the court denied the motion, finding that the employment claim was not substantially related to this inmate class action. The court noted that Agency was a public body and anything Lawyer might have learned about Agency either was public, or would become public in the course of this case. 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 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.) (posted September 28, 2023) In re Realtek Semiconductor Corp., No. 2023-147 (Fed. Cir. Sept. 25, 2023). To read about the case, go to "Current Client," below. ARBITRATION OF MALPRACTICE CLAIMS (To read the full article, click here. Nothing current. BANKRUPTCY (To read full article, click .) (posted September 21, 2023) In re Fundamental Long Term Care, Inc.,
2023 WL 6057245 (11th Cir. Sept. 18, 2023). The probate estates of six
nursing home patients brought wrongful death cases against a nursing
home operator ("Operator"), which is the debtor in this case Chapter 7
case. The probate estates are the only creditors in this case. When it
appeared that certain third parties had looted Operator via fraudulent
transfers and the like, the Chapter 7 trustee hired Law Firm as "special
litigation counsel" to pursue claims against those parties. At some
point Law Firm withdrew as litigation counsel, but continued to assist
the trustee. The probate estates filed a motion to disqualify Law Firm
and for disgorgement of some $5 million in fees. The motion was based on
the fact that for many years Law Firm had represented the owner of the
property upon which the offending nursing homes were located and did not
disclose that relationship as required by Bankruptcy Rule 2014. The
bankruptcy judge denied the motion. While the facts and relationships
here are incredibly complex, the court's ruling was based essentially
upon the fact that the property owner/client had nothing to do with
operation of the nursing homes. Further, the court found that Law Firm's
violation of Rule 2014 was not intentional. The district judge affirmed
as to disqualification, but remanded the case to the bankruptcy judge
to determine whether the Rule 2014 violation was "negligent," such that
Law Firm should be sanctioned. Upon remand the bankruptcy judge found
that sanctions were not warranted. The district court affirmed that
finding. In this opinion the appellate court affirmed the district
court. BANKS/TRUST DEPARTMENTS (To read full article, click here.) Nothing current. BOARD POSITIONS (To read full article, click here Nothing current. CHANGING FIRMS - SCREENING (To read full article, click here.) Nothing current. CLASS ACTIONS (To read full article, click here.) "Clear Sailing" (posted September 26, 2023) Rouse v. Language Line Servs., Inc.,
2023 WL 6200072 (W.D. Mo. Sept. 22, 2023). Proposed settlement of class
action. The court denied the first request to approve a settlement
because the agreement contained a "combination of a claims made
settlement with a reversion provision along with an overly-high award of
attorneys' fees and a clear sailing provision." In this opinion the
court disapproved a second request to approve the settlement because it
still contains a reversion provision, a flat-fee lawyer award, and a
clear sailing provision. These factors "suggest that Plaintiffs' counsel
may have succumbed to a conflict of interest." Nothing current. CO-COUNSEL/COMMON INTEREST (To read full article, click here.) Nothing current. 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. CRIMINAL PRACTICE (To read full article, click here.) Nothing current. CURRENT CLIENT (To read full article, click here.) (posted September 28, 2023) In re Realtek Semiconductor Corp.,
No. 2023-147 (Fed. Cir. Sept. 25, 2023). Realtek filed this complaint
before the International Trade Commission claiming the importation of
AMD chips infringe on Realtek's patents. A hearing is pending before an
ALJ. Realtek intends to call a lawyer ("Lawyer A") as a witness because
Lawyer A had represented Realtek in negotiating a relevant license
agreement. AMD moved to strike Lawyer A as a witness. The ALJ granted
that motion and denied reconsideration. Realtek filed this petition for
mandamus to disqualify the lawyer ("Lawyer B") who made the motion to
strike Lawyer A as a witness, because Lawyer B represents Lawyer A "in
other litigation." In this opinion the D.C. Circuit denied the petition
for mandamus, in part because Lawyer B would not be cross-examining
Lawyer A in this proceeding, thus not violating ABA Rule 1.7(a). The
other ground for denying the petition is that the ALJ's decision should
not be subject to an interlocutory appeal, citing Firestone Tire & Rubber Co. v. Risjord, 449 U.S. 368 (1981). (posted September 11, 2023) Hamed v. Diaz, No. 514433/2019 (N.Y.
Sup. Ct. Kings County Sept. 6, 2023). In this medical malpractice case,
involving a State of N.Y. facility, the Attorney General's Office
("OAG") is defending a doctor. In another case, involving the same
events, Plaintiff is suing the State of New York. OAG is defending that
case, as well. Plaintiff moved to disqualify OAG in this case, claiming
both representations are in conflict. In this opinion the court denied
the motion, holding that the doctor's and State's interests are aligned.
A complication is that the doctor is suing the State for wrongful
termination. The OAG is not in that case, however. Plus, the grounds for
termination did not involve the alleged malpractice in this case. DERIVATIVE ACTIONS (To read full article, click here.) (posted September 28, 2023) In re Eastman Kodak Co. Derivative Litig.,
2023 WL 6209592 (W.D.N.Y. Sept. 25, 2023). Kodak's board determined
that "this action would not be in Kodak's best interest." In this
opinion the court granted Kodak's motion for summary judgment. The court
found that the board's determination was made "in good faith and after
reasonable inquiry." Lots of players and lots of relationships involved.
Key to us was the role of the law firm ("Firm A") charged by the board
to make an investigation of Plaintiffs' complaints. In opposing summary
judgment, Plaintiffs cited Firm A's relationships with some of the
defendants and their other business activities. They are too complicated
and varied to discuss here. Kodak did not believe that these
relationships should not detract from Firm A's conclusions. The court
was also impressed that another law firm ("Firm B") had examined Firm
A's role and saw no conflicts. ENJOINING CONFLICTS (AND OTHER NON-TRADITIONAL REMEDIES) (To read full article, click here.) Nothing current. EXPERT WITNESSES (To read full article, click here.) Party as Expert (posted September 7, 2023) G.W. Aru, LLC v. W.R. Grace & Co.,
No. JKB-22-2636 (D. Md. Aug. 22, 2023). Patent infringement case.
Plaintiff Aru moved for a preliminary injunction and attached a lengthy
declaration of Aru's owner, containing expert opinions. Grace moved to
strike portions of the declaration because it contained "improper and
inadmissible evidence." In this opinion the court denied the motion to
strike. The supposed conflict of interest of the declarant was not an
issue in the motion or the court's order. However, the court mentioned
the conflict in a footnote (No. 1), citing two leading cases in which a
party was an expert witness: Tagatz v. Marquette Univ., 861 F.2d 1040
(7th Cir. 1988) (despite "so obvious a conflict of interest"); and
Patterson v. Santini, 2017 WL 11454838 (D. Colo. Mar. 20, 2017)
(collecting cases). FORMER CLIENT (To read full article, click here.) (posted September 18, 2023) Rose v. Francis, No. 5:22-civ-00405
(S.D. W. Va. Sept. 15, 2023). Former inmates, represented by Law Firm,
brought this class action against a state prison authority (“Agency”).
While this case was pending, Law Firm hired Lawyer. Lawyer had
previously represented Agency in one case involving an
employment/discrimination claim and did only discovery work in that
case. Nevertheless, Defendants moved to disqualify Law Firm in this
case. In this opinion the court denied the motion, finding that the
employment claim was not substantially related to this inmate class
action. The court noted that Agency was a public body and anything
Lawyer might have learned about Agency either was public, or would
become public in the course of this case. Playbook (posted September 15, 2023) Axle of Dearborn, Inc. v. Detroit IT, LLC,
No. 21-cv-10163 (E.D. Mich. Sept. 13, 2023). Plaintiffs are suing
Defendants for technology-related wrongs, including hacking and
extortion. Law Firm represents several Defendants. Prior to 2023 Law
Firm had represented Plaintiff Axle on various matters, none directly
related to Defendants. Plaintiffs moved to disqualify Law Firm in this
case. In this opinion the court granted the motion. The decision was so
fact-intensive that a review of the various factual issues would not be
productive. It is important to note that the court relied very heavily
on playbook information, such as the habits and inclinations of Axle
management. Anyone wishing to emphasize playbook information to
establish a substantial relationship under Rule 1.9 would do well to
start with this opinion. (posted September 6, 2023) Nowarta Biopharma, Inc. v. Merchant Star Int'l Gen. Trading, LLC,
2023 WL 5659685 (Cal. App. 4th Dist. Unpub. Sept. 1, 2023). Nowarta is
suing Merchant for breach of contract. Nowarta moved to disqualify
Merchant's law firm ("Law Firm"). Three of Merchant's owners are lawyers
in Law Firm. Law Firm had represented Nowarta in the past. One Law Firm
lawyer was Nowarta's general counsel "for nearly three years,"
including when the "transactions at issue" in this case occurred. The
trial court granted the motion to disqualify. In this unpublished
opinion the appellate court affirmed. The matters were clearly
substantially related. Law Firm claimed that if it were disqualified, a
new law firm would have access to the information of the Law Firm
lawyers who were owners of Merchant. "No," said the appellate court.
Those lawyers are barred by Cal. Bus. & Prof. Code, § 6068 (e) and
Cal. Rule 1.6(a) from revealing anything they learned about the
underlying transactions. (posted August 31, 2023) LCC Enters. LLC v. Cresto, 2023 WL
5519336 (S.D. Cal. Aug. 24, 2023). Plaintiff purchased Company from
Defendants ("The Sale"). Plaintiff is suing Defendants for fraud and
related wrongs because Defendants did not disclose Company's problems
prior to The Sale. Plaintiff moved to disqualify Defendants' law firm in
this case ("Law Firm") because Law Firm had represented Company before
The Sale. In this opinion the court granted the motion to disqualify.
Before The Sale, Law Firm had assisted Company in responding to claims
by third parties. These claims appear to have been matters Plaintiff is
claiming were not disclosed by Defendants prior to The Sale. Thus, the
matters are substantially related. [Our note: We are not certain that
the opinion holds together. For example, the court responded to
Defendant's standing argument, by holding simply that in the Ninth
Circuit standing is not a requirement for a motion to disqualify. As to
the main issue, we will leave it to our California friends to determine
whether the court's analysis of California's substantial-relationship
jurisprudence is sound.] (posted August 28, 2023) BeSang, Inc. v. Intel Corp., 2023 WL
5499982 (D. Ore. Aug. 25, 2023). To read about the case, go to "Initial Interview . . . " below. Nothing current. HOT POTATO DOCTRINE (To read full article, click here.) Nothing current. INITIAL INTERVIEW - HEARING TOO MUCH (To read full article, click here.) (posted August 28, 2023) BeSang, Inc. v. Intel Corp., 2023 WL
5499982 (D. Ore. Aug. 25, 2023). Patent infringement case. Plaintiff
moved to disqualify the law firm for Defendant ("Law Firm"). In this
opinion the court denied the motion. The opinion is highly fact-specific
and a routine analysis. But, it illustrates a workman-like approach by
the court to Rules 1.9 and 1.18--in a technology setting. Law Firm had
three earlier contacts with Plaintiff. The first resulted in a brief
representation, which the court found to have no relevance to the patent
issues in this case, and thus no substantial relationship under Rule
1.9. The other contacts did not result in representation, but were in
the "prospective client" category, resulting in an analysis under Rule
1.18. In both cases the court found that the information Plaintiff
shared with Law Firm would not be "significantly harmful" to Plaintiff
in this case. INSURANCE DEFENSE (To read full article, click here.) Reservation of Rights (posted September 1, 2023) Mid-Continent Cas. Co. v. Harris County Mun. Util. Dist.,
2023 WL 5621664 (Tex. App. Aug. 31, 2023). Plaintiff sued Dist. and two
directors claiming Plaintiff lost his election to the board due to
Defendant misconduct. Defendants turned the case over to the district's
D&O insurance company ("InsCo"). InsCo agreed to defend under a
reservation of rights, mentioning a possible policy exclusion. Because
District's lawyer perceived that there were "potential" conflicts among
the Defendants, Defendants rejected InsCo's offer to provide one lawyer
for all Defendants. Each Defendant hired separate counsel to defend
them. After Plaintiff dismissed the case, InsCo refused to pay for the
separate lawyers. So, Defendants brought this case to recover those
defense costs. The trial court found against InsCo. In this opinion the
appellate court reversed, finding that Defendants failed to show an
"actual" conflict among them, thus failing to justify hiring separate
counsel. The court discussed the kinds of conflict that would have
justified hiring separate counsel, the principal one being when the case
being tried could have decided application of the policy exclusion.
Those kinds of conflicts were not in this case. INVESTING IN CLIENTS/STOCK FOR FEES (To read full article, click here.) Nothing current. Nothing current. JOINT/MULTIPLE REPRESENTATION (To read full article, click here.) Nothing current. Nothing current. Nothing current. MALPRACTICE LIABILITY/FEE FORFEITURES (To read full article, click here.) (posted September 13, 2023) 810 Woodward Ave., LLC v. Bolton,
2023 WL 5926945 (Super. Ct. Conn. New Haven Sept. 7, 2023). Landlord
sued Tennant for overdue rent. They settled. Tennant gave check to
Tennant's lawyer to hold in trust account for Landlord. Before Tennant's
lawyer could give the funds to Landlord, Tennant had a change of heart
and ordered Tennant's lawyer to return the funds to Tennant, which he
did. Landlord brought this case against Tennant's lawyer for breach of
fiduciary duty, conversion and theft. After a bench trial the court
found for Tennant's lawyer, as set forth in this opinion. The essence of
the ruling is that Tennant's lawyer's duty was to follow his client's
directions and return the money to his client. To find a duty to the
opposition party in this circumstance "would create a conflict of
interest. The law ought not proceed in this direction." 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.) Nothing current. ZERO SUM GAMES (To read full article, click here.) Nothing current. Home/Table of Contents Website powered by Network Solutions® |
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