Justia Legal Ethics Opinion Summaries

MOVA technology can capture an actor’s facial performance for use in motion picture special effects and video games; it is secured by trademarks, copyrights, and patents, and is reflected in hardware, source code, and physical assets. VGHL claims that Perlman, the head of Rearden, declined to acquire the MOVA assets from OL2 and proposed OL2 sell to a Rearden employee, LaSalle. Perlman introduced LaSalle to Rearden’s corporate attorney who helped LaSalle establish his own company, MO2, and negotiated with OL2. Perlman later demanded that LaSalle convey the MOVA assets to Rearden and terminated LaSalle’s employment when LaSalle refused. MO2 sold the MOVA assets to SHST, which hired LaSalle, and began selling the technology. The Rearden parties claimed that SHST never obtained ownership and that LaSalle was simply hired to handle the acquisition on Rearden’s behalf. SHST sued, alleging that Rearden had made “false or misleading representations ... concerning the ownership of the MOVA Assets ... to mislead the public and actual and prospective users and licensees” and had falsely recorded assignments of the MOVA patents. During discovery, SHST moved to compel Rearden to produce documents exchanged between MO2 and Rearden’s corporate attorney. The district court granted the request, concluding that Rearden had not shown entitlement to assert attorney-client privilege on behalf of MO2 and that LaSalle waived privilege when he shared documents. The Federal Circuit denied a petition for mandamus. Rearden's arguments failed to carry the high burden required on mandamus to overturn the court’s discovery determination. View "In re: Rearden, LLC" on Justia Law

Defendants Eric Schrier, Frank Frederick, and Angela Martinez had been employed in various capacities by plaintiff SG Homecare, Inc. before abruptly leaving to start a competing firm, defendant Verio Healthcare, Inc. SG Homecare filed the underlying complaint, alleging the individual defendants breached their contractual and fiduciary duties, and misappropriated trade secrets. Schrier and his wife cross-complained against SG Homecare and its owner, Thomas Randall Rowley (together, the “SG parties”), alleging wrongful termination and intentional infliction of emotional distress. Defendant Verio Healthcare and the individual defendants were represented by Donald Wagner of the firm Buchalter Nemer, PLC. Shortly after the cross-complaint was filed, the SG Parties moved to disqualify Buchalter Nemer. The motion was based on an assertion that shortly before the individual defendants’ departure from SG Homecare, Buchalter Nemer executed a retainer agreement with SG Homecare and was either currently representing SG Homecare, or, alternatively, the present litigation was substantially related to Buchalter Nemer’s prior representation of SG Homecare (requiring disqualification in either event). Adding to mix: Wagner, as a member of the California State Assembly, relied on statutory entitlement to a continuance and extension of time of the entire litigation. The trial court denied the motion for a stay without explanation. Defendants petitioned the Court of Appeals court for a writ of mandate to order the trial court to grant the stay. The Appeals court summarily denied the petition, but the California Supreme Court granted review and remanded back to the Appeals court with instructions to issue an order to show cause. The Court of Appeals issued that order and denied the writ, namely because it found that the trial court acted within its discretion in its finding that the stay would "defeat or abridge the other party's" right to relief. View "Verio Healthcare v. Superior Court" on Justia Law

In 2012 Walgreens acquired a 45 percent equity stake in Alliance, plus an option to acquire the rest of Alliance’s equity for a mixture of cash and Walgreens stock. Walgreens later announced its intent to purchase the remainder of Alliance and engineer a reorganization whereby Walgreens would become a wholly-owned subsidiary of a new corporation, Walgreens Boots Alliance. Within two weeks after Walgreens filed a proxy statement seeking shareholder approval, a class action was filed; 18 days later, less than a week before the shareholder vote, the parties agreed to settle. The settlement required Walgreens to issue several requested disclosures and authorized class counsel to request $370,000 in attorneys’ fees, without opposition from Walgreens. The Seventh Circuit reversed approval of the settlement, calling the supplemental disclosures “a trivial addition to the extensive disclosures already made in the proxy statement.” “The oddity of this case is the absence of any indication that members of the class have an interest in challenging the reorganization.... The only concrete interest suggested … is an interest in attorneys’ fees.... Certainly class counsel, if one may judge from their performance in this litigation, can’t be trusted to represent the interests of the class.” View "Hays v. Berlau" on Justia Law

Attorney Donald Gilbert represented the Utah Down Syndrome Association and several of its founders in litigation between the Association and the Utah Down Syndrome Foundation, Inc. Gilbert filed this petition for extraordinary relief challenging (1) a 2008 district court judgment ordering Gilbert to disgorge $30,000 taken from Foundation bank accounts to pay his attorney fees, (2) an injunction that originally barred Gilbert’s clients from paying him with Foundation funds, (3) an order denying Gilbert’s motion to vacate the 2008 judgment, and (4) an order denying Gilbert’s motion for relief from the 2008 judgment. The Supreme Court denied Gilbert’s petition for extraordinary relief, holding (1) Gilbert unreasonably delayed seeking extraordinary relief from the injunction, the disgorgement order, and the denial of his motion to vacate; and (2) Gilbert failed to pursue the plain, speedy, and adequate remedy of direct appeal from the denial of his motion for relief from judgment. View "Gilbert v. Third Dist. Court Judges" on Justia Law

This case started out of a business dispute between respondent-cross-petitioner Just In Case Business Lighthouse, LLC (JIC) and petitioner-cross-respondent Patrick Murray. To prepare for the litigation, JIC hired Preston Sumner, a businessman with knowledge of business sales and valuation, as an advisor. Sumner agreed to help with the case in exchange for a ten-percent interest in the case's outcome. Murray objected to Sumner's involvement in the case, arguing: (1) Sumner's interest in the case outcome was an improper payment violating Colorado Rule of Professional Conduce (RPC) 3.4(b); (2) Sumner lacked the requisite personal knowledge of the case's underlying events as required by Colorado Rule of Evidence (CRE) 602; and (3) the summary charts Sumner prepared were inadmissible under CRE 1006. The trial court ruled that Sumner could testify as a summary witness, but not as an expert or fact witness. Sumner testified and laid foundation for two of the summary exhibits, which the trial court admitted into evidence. The jury returned a verdict in favor of JIC. Murray renewed his arguments on appeal, and the Court of Appeals rejected them in part, and remanded for the trial court to determine whether Sumner's testimony should have been excluded as a sanction for JIC's violation of RPC 3.4(b). After review, the Colorado Supreme Court held that violation of the ethical rule did not displace the rules of evidence, and that trial courts retained discretion under CRE 403 to exclude testimony of improperly compensated witnesses. The trial court here did not abuse its discretion in declining to exclude Sumner's testimony. Further, the Court held that trial courts could allow summary witness testimony if they determine that the evidence was sufficiently complex and voluminous that the witness would assist the trier of fact. The Court held that the trial court did not abuse its discretion with respect to the summaries. Finding no reversible errors with the trial court's judgment, the Supreme Court reversed the appellate court's judgment remanding the case for consideration of whether Sumner's testimony should have been excluded. View "Murray v. Just In Case Bus. Lighthouse, LLC" on Justia Law

Attorney Conour stole more than $4.5 million from clients’ trust funds, was convicted of fraud, and is serving 10 years in prison. Shortly before Conour’s crimes came to light, attorney Devereux left Conour Law Firm, taking clients with him to Ladendorf’s law firm. These clients ultimately produced attorneys’ fees aggregating some $2 million. The money was claimed by Devereux and the Ladendorf Firm (the Lawyers), several of Conour’s victims, and the lender on a loan to the Conour Firm to finance contingent-fee cases. The district court concluded that the Conour Firm was entitled to about $775,000 under principles of quantum meruit and that the lender had priority over the victims. The Seventh Circuit reversed, first holding that the Lawyers owe the Conour Firm less than the current value of the Conour Firm’s indebtedness to the lender and substantially less than what Conour owes to the victims. Conour converted the victims’ funds before taking the loan; victims of a lawyer’s breach of trust have a remedy notwithstanding the later grant of a security interest to a commercial lender, as reflected in Indiana Code 30-4-3-22(c)(2). That priority applies notwithstanding that Conour’s firm was an LLC, a separate entity. View "ACF 2006 Corp v. Devereux" on Justia Law

In this appeal, the issue this case presented for the Supreme Court's review centered on whether a law firm practicing as a limited liability partnership (LLP) failed to maintain professional malpractice insurance to cover claims against it, and, if so, whether that failure should cause the revocation of the firm's LLP status, rendering innocent partners personally liable. In July 2009, Mortgage Grader hired Olivo of Ward & Olivo (W&O) to pursue claims of patent infringement against other entities. Mortgage Grader entered into settlement agreements in those matters. In exchange for one-time settlement payments, Mortgage Grader granted those defendant-entities licenses under the patents, including perpetual rights to any patents Mortgage Grader received or obtained through assignment, regardless of their relationship to the patents at issue in the litigation. It is those provisions of the settlement agreement that allegedly gave rise to legal malpractice. In 2011, W&O dissolved and entered into its windup period. W&O continued to exist as a partnership for the sole purpose of collecting outstanding legal fees and paying taxes. The next day, Ward formed a new LLP and began to practice with a new partner. Mortgage Grader filed a complaint against W&O, Olivo, and Ward in October 2012, alleging legal malpractice by Olivo, and claiming that the settlement agreements resulting from Olivo's representation harmed Mortgage Grader's patent rights. The motion court denied Ward's motion to dismiss, first determining that Mortgage Grader had failed to comply with the statutory requirement to serve an affidavit of merit (AOM) on each defendant named in the complaint, and rejected its substantial compliance argument. However, the court also determined that W&O failed to maintain the requisite insurance, which caused its liability shield to lapse and relegated W&O to a GP. Thus, the motion court concluded that Ward could be held vicariously liable for Olivo's alleged legal malpractice. The Appellate Division reversed. The Supreme Court affirmed, finding that law firms organized as LLPs that malpractice insurance did not extend to the firm's windup period, and tail insurance coverage was not required. View "Mortgage Grader, Inc. v. Ward & Olivo, L.L.P." on Justia Law

Plaintiff, the minority shareholder of Omega, filed suit against majority shareholder Kent Constable, his wife Karen, and Omega, alleging direct and derivative claims arising from a dispute over management of Omega and its assets. Counsel represented all defendants in the litigation. The trial court granted plaintiff's motion to disqualify Counsel from representing any of the defendants. The court concluded that the trial court did not err by disqualifying Counsel as to Omega because Counsel concurrently represented defendants in the same action where an actual conflict existed between them, and Kent alone did not have authority to consent to the conflicting representation on Omega's behalf. The court concluded that the trial court erred by disqualifying Counsel as to the Constables where Counsel's continued representation of the Constables poses no threat to Counsel's continuing duty of confidentiality to Omega. Finally, the trial court did not err by concluding defendants did not meet their burden of showing plaintiff waived his right to seek to disqualify Counsel where plaintiff's 16-month delay was not unreasonable because prejudice to defendants was not extreme. Accordingly, the court affirmed in part and reversed in part. View "Ontiveros v. Constable" on Justia Law

This appeal stemmed from a dispute regarding a contract the parties entered into, which gave Lewmar the exclusive right to manufacture and sell Steinerʹs patented sailboat winch handle, a device used to control the lines and sails of a sailboat. The parties resolved the dispute when Lewmar made, and Steiner accepted, an offer of judgment under Rule 68 of the Federal Rules of Civil Procedure. After judgment was entered, Steiner moved for attorneysʹ fees of $383,804 and costs of $41,470. The district court denied attorneysʹ fees but awarded costs of $2,926. The court concluded that Steiner was precluded from seeking fees pursuant to the Agreement in addition to the $175,000 settlement amount because claims under the Agreement were unambiguously included in the Offer; Steiner was not precluded from seeking attorneysʹ fees under the Connecticut Unfair Trade Practices Act (CUTPA), Conn. Gen. Stat. 42‐110g(d), because the Offer did not unambiguously encompass claims for attorneysʹ fees under CUTPA; and the court remanded for the district court to clarify whether it considered the claim for attorneys' fees under CUTPA on the merits and if not, to do so. Finally, the court concluded that the district court correctly added costs under the ʺcosts then accruedʺ provision of Rule 68. View "Steiner v. Lewmar, Inc." on Justia Law

Plaintiff Bruce Kaye, the controlling principal of three entities that sold and managed timeshare interests in resort properties in Atlantic County, hired defendant Alan Rosefielde, an attorney admitted to practice law in New York but not in New Jersey, initially as outside counsel, and then as an employee. After defendant had worked closely with plaintiff for approximately four months, the parties entered an agreement providing that, as compensation for his services, defendant would earn an annual salary of $500,000. For approximately two years, defendant served as Chief Operating Officer for several of the timeshare entities, and effectively functioned as their general counsel. In that capacity, defendant committed serious misconduct by acting on his own behalf instead of for his employers benefit, and exposing his employers to potential liability. Based on this misconduct, and dissatisfaction with defendant’s performance, plaintiff terminated defendant’s employment. Kaye, in his individual capacity and as trustee of two trusts, Kaye’s son Jason Kaye, and the business entities that Kaye owned, sued Rosefielde and several other entities. Plaintiffs asserted claims based on Rosefielde’s breach of fiduciary duty, fraud, legal malpractice, unlicensed practice of law, and breach of the duty of loyalty. Following a lengthy bench trial, the trial court found that Rosefielde engaged in egregious conduct constituting a breach of his duty of loyalty, breach of his fiduciary duty, legal malpractice, and civil fraud. The trial court rescinded Rosefielde’s interest in several entities, awarded compensatory damages, punitive damages, and legal fees, and dismissed Rosefielde’s counterclaims. It declined, however, to order the equitable disgorgement of Rosefielde’s salary as a remedy for his breach of the duty of loyalty, on the ground that his breach did not result in damage or loss to the entities that employed him. The Appellate Division affirmed that determination, and the New Jersey Supreme Court granted certification on the issue of equitable disgorgement. “In imposing the remedy of disgorgement, depending on the circumstances, a trial court should apportion the employee’s compensation, rather than ordering a wholesale disgorgement that may be disproportionate to the misconduct at issue. . . . If an agent is paid a salary apportioned to periods of time, or compensation apportioned to the completion of specified items of work, he is entitled to receive the stipulated compensation for periods or items properly completed before his renunciation or discharge. This is true even if, because of unfaithfulness or insubordination, the agent forfeits his compensation for subsequent periods or items.” The judgment of the Appellate Division was reversed with respect to the remedy of equitable disgorgement, and the matter was remanded to the trial court to decide whether plaintiffs were entitled to disgorgement. If so, the trial court should apportion Rosefielde’s compensation, ordering disgorgement only for monthly pay periods in which he committed acts of disloyalty. View "Kaye v. Rosefielde" on Justia Law