Justia Legal Ethics Opinion Summaries

NOV purchased industrial-strength "desert-proof" air conditioners from Technicool for use on specialty oil-and-gas rigs, for more than $3 million. After multiple units failed, NOV, represented by SBPC, sued Technicool in Texas state court. Technicool filed for Chapter 7 bankruptcy. NOV sought relief from the automatic stay and was allowed to join Technicool’s owner, Furlough, to its state suit. NOV, again represented by SBPC, filed a claim in the bankruptcy case, representing 93 percent of the total claims. After learning that Furlough had formed other companies, the Trustee sought to consolidate the businesses and pierce the corporate veil and to employ SBPC as special counsel under 11 U.S.C. 327(a). Furlough objected, arguing that SBPC’s representation of NOV was a disqualifying “interest adverse to the estate.” In an engagement letter, signed by SBPC, NOV agreed to transfer to the bankruptcy estate funds it recovered from Furlough in state court. The bankruptcy court, district court, and Fifth Circuit held that Furlough lacked standing to object. Furlough cannot show that he was “directly and adversely affected pecuniarily by the order of the bankruptcy court.” SBPC’s appointment does not directly affect whether the bankruptcy court approves NOV’s claim. Under section 327(c), “a person is not disqualified for employment . . . solely because of such person’s employment by or representation of a creditor, unless there is objection by another creditor or the United States trustee, [and] an actual conflict of interest.” View "Furlough v. Cage" on Justia Law

In May 2014, Defendants distributed the film Walk of Shame. Weeks earlier, SOYP sent letters to Defendants alleging that the film included elements copied from a screenplay, "Darci’s Walk of Shame," written by SOYP’s president, Rosen; that Rosen’s screenplay was sent to Banks, the star of Walk of Shame, in 2007; that Rosen met with Banks to discuss the project; and that Rosen wanted Banks to star in his movie, but Banks never replied after the meeting. SOYP sued, alleging copyright infringement. Several discovery disputes arose; SOYP filed eight motions to compel production of documents. The Ninth Circuit affirmed the rejection of the suit on the pleadings, finding no substantial similarity between the works. Defendants then moved for attorney’s fees and costs. Judge Morrow, who had adjudicated the merits, held a hearing, Before the hearing, she issued an unsigned tentative order awarding Defendants $314,669.75 in fees and $3,825.15 in costs. After the hearing, she issued a minute order stating that Defendants’ motion was granted in part and denied in part and that a final order would issue. Judge Morrow retired without issuing a final order. Judge Phillips issued a final order, awarding Defendants the amount stated in the tentative order. The Ninth Circuit affirmed, noting the court’s discretion under 17 U.S.C. 505, that SOYP’s subjective beliefs regarding its outcome were irrelevant, and that other factors did not outweigh the objective unreasonableness of SOYP’s litigating position. View "Shame on You Productions, Inc. v. Banks" on Justia Law

The Oregon Supreme Court previously denied employer Shearer's Foods' petition for review in this workers’ compensation case, but addressed claimant William Hoffnagle's petition for an award of attorney fees for time that his counsel spent in response to employer’s unsuccessful petition for review. Employer objected that the Supreme Court lacked authority to award fees and also objects to the amount of requested fee. Although the Supreme Court often resolved attorney fee petitions by order rather than written opinion, employer’s objection to the Supreme Court's authority to award fees presented a legal issue that was appropriately resolved by opinion. Employer insisted the Oregon legislature had not authorized an award of fees for work that a claimant’s attorney performs in response to an unsuccessful petition for review; employer did not dispute that, after a series of amendments, ORS 656.386 specified a claimant who prevails against a denial was entitled to an award of attorney fees for work performed at every other stage of the case, including in the Supreme Court, if the Supreme Court addressed the merits of the case. "Employer offers no reason why the legislature would have intentionally created that one carve-out to what is otherwise a comprehensive authorization of fees when a claimant relies on counsel to finally prevail against the denial of a claim. Indeed, such a carve- out would be incompatible with what we have described as 'a broad statement of a legislative policy' reflected in ORS 656.386, 'that prevailing claimants’ attorneys shall receive reasonable compensation for their representation.'" The petition for attorney fees was allowed. Claimant was awarded $2,200 as attorney fees on review. View "Shearer's Foods v. Hoffnagle" on Justia Law

Firefighters alleged that they suffered hearing losses caused by the loud noise emitted by a manufacturer’s fire sirens. A perfunctory investigation conducted by the manufacturer during discovery revealed the firefighters’ lawsuit to be clearly time-barred, and also revealed that one firefighter had not even suffered hearing loss attributable to noise exposure. Eventually, Plaintiffs requested the district court to dismiss the case with prejudice (Federal Rule of Civil Procedure 41(a)(2)). In doing so, the court awarded attorneys’ fees and costs in favor of the manufacturer, making an explicit reference to plaintiffs’ counsel’s practice of repeatedly suing the fire siren manufacturer in jurisdictions throughout the country in a virtually identical fashion. The Third Circuit affirmed. Although attorneys’ fees and costs are typically not awarded when a matter is voluntarily dismissed with prejudice, such an award is appropriate when exceptional circumstances exist. Exceptional circumstances include a litigant’s failure to perform a meaningful pre-suit investigation, as well as a repeated practice of bringing meritless claims and then dismissing them with prejudice after both the opposing party and the judicial system have incurred substantial costs. Such exceptional circumstances are present in this case. View "Carroll v. E One Inc." on Justia Law

Kennedy had decades of experience working for Schneider Electric and taught classes, part-time, in electrical and industrial safety at Prairie State community college. Schneider requires its employees to obtain advance approval before they teach classes or submit articles for publication. Without obtaining permission, Kennedy published articles about power-distribution equipment, identifying himself as a Prairie State instructor. When Schneider learned of these articles a manager contacted Prairie State to ask about Kennedy’s course materials, which she worried might contain proprietary information. Weeks later, while reviewing instructors' credentials, Prairie State realized that Kennedy did not possess the qualifications to teach and did not rehire Kennedy as an adjunct instructor. A year later, Kennedy sued Schneider, alleging defamation and malicious interference with an advantageous relationship. The court granted Schneider summary judgment, finding that Prairie State acted solely because Kennedy did not meet its credentialing requirements and not because of Schneider’s telephone call. More than a year later, Kennedy moved to set aside the judgment (Federal Rule of Civil Procedure 60(d)(3)), asserting that Schneider’s lawyers knowingly submitted perjured evidence. The court denied the motion, stating that the cited evidentiary discrepancies were known at the time of summary judgment, and granted Rule 11 sanctions against Kennedy’s lawyer for having to defend against the motion ($10,627.16). The Seventh Circuit affirmed. Kennedy could have challenged the same evidence on summary judgment. If the court made a mistake, Kennedy could have asked for reconsideration or appealed. View "Kennedy v. Schneider Electric" on Justia Law

The DC Circuit affirmed the district court's judgment that certain documents subpoenaed by the FTC were covered by the attorney-client privilege. The court held that obtaining or providing legal advice was one of the significant purposes of the communications at issue. In this case, the relevant communications consisted primarily of the transmission of factual information from Boehringer's employees to the general counsel, at the general counsel's request, for the purpose of assisting the general counsel in formulating her legal advice regarding a possible settlement. Other communications were between the general counsel and the corporation's executives regarding the settlement. Therefore, all of the communications were protected by the attorney-client privilege. View "FTC v. Boehringer Ingelheim Pharmaceuticals, Inc." on Justia Law

The Supreme Court ordered that the Honorable Frank M. Calvert be suspended from the office of circuit court commissioner without compensation and prohibited from exercising any of the powers or duties of a circuit court commission in Wisconsin for a period of fifteen days due to Commissioner Calvert’s judicial misconduct.The Wisconsin Judicial Commission filed a complaint against Commissioner Calvert alleged that he had engaged in judicial misconduct in presiding over an action seeking a harassment injunction. The Judicial Conduct Panel made conclusions of law and recommended that the Supreme Court suspend Commissioner Calvert for no more than fifteen days. The Supreme Court adopted the panel’s undisputed findings and conclusions of law and agreed that a fifteen-day suspension was in order. View "Wisconsin Judicial Commission v. Honorable Frank M. Calvert" on Justia Law

Cathedral Buffet, an Ohio for-profit corporation, does not generate a profit. Its sole shareholder is Grace Cathedral, a 501(c)(3) non-profit religious organization, which subsidizes the restaurant. The restaurant separated its workers into “employees” and “volunteers.” Volunteers performed many of the same tasks as employees, who received an hourly wage. Reverend Angley recruited volunteers from the pulpit on Sundays, suggesting that members who repeatedly refused to volunteer were at risk an unforgivable sin. The Department of Labor (DOL) filed suit; the district court held that Buffet’s religious affiliation did not exempt it from Fair Labor Standards Act. The Sixth Circuit reversed. To be considered an employee under the FLSA, a worker must first expect to receive compensation; Buffet volunteers had no such expectation. Buffet then sought “prevailing party” costs and attorney’s fees under the Equal Access to Justice Act (EAJA), 28 U.S.C. 2412, arguing that the DOL’s position throughout the litigation was not substantially justified. The Sixth Circuit declined to address the issue: “in the usual case in which fees are sought for the entire litigation, the determination of whether the government was ‘substantially justified’ . . . is for the district court” because that court “may have insights not conveyed by the record.” Buffet did not wish to argue before the district court, which adopted the DOL’s position, but that is not a legitimate reason to forgo judicial economy. The district court is better-equipped to determine the fees, if any, that should be awarded for work at that level. View "Acosta v. Cathedral Buffet, Inc." on Justia Law

This case arose from a series of transactions in which petitioners Rocky Mountain Exploration, Inc. and RMEI Bakken Joint Venture Group (collectively, “RMEI”) sold oil and gas assets to Lario Oil and Gas Company (“Lario”). In the transaction, Lario was acting as an agent for Tracker Resource Exploration ND, LLC and its affiliated entities (collectively, “Tracker”), which were represented by respondents Davis Graham & Stubbs LLP and Gregory Danielson (collectively, “DG&S”). Prior to RMEI’s sale to Lario, RMEI and Tracker had a business relationship related to the oil and gas assets that were ultimately the subject of the RMEI-Lario transaction. The RMEI-Tracker relationship ultimately soured; Tracker and Lario reached an understanding by which Lario would seek to purchase RMEI’s interests and then assign a majority of those interests to Tracker. Recognizing the history between Tracker and RMEI, however, Tracker and Lario agreed not to disclose Tracker’s involvement in the deal. DG&S represented Tracker throughout RMEI’s sale to Lario. In that capacity, DG&S drafted the final agreement between RMEI and Lario, worked with the escrow agent, and hosted the closing at its offices. No party disclosed to RMEI, however, that DG&S was representing Tracker, not Lario. After the sale from RMEI to Lario was finalized, Lario assigned a portion of the assets acquired to Tracker, and Tracker subsequently re-sold its purchased interests for a substantial profit. RMEI then learned of Tracker’s involvement in its sale to Lario and sued Tracker, Lario, and DG&S for breach of fiduciary duty, fraud, and civil conspiracy, among other claims. As pertinent here, the fiduciary breach claims were based on RMEI’s prior relationship with Tracker. The remaining claims were based on allegations that Tracker, Lario, and DG&S misrepresented Tracker’s involvement in the Lario deal, knowing that RMEI would not have dealt with Tracker because of the parties’ strained relationship. Based on these claims, RMEI sought to avoid its contract with Lario. Lario and Tracker eventually settled their claims with RMEI, and DG&S moved for summary judgment as to all of RMEI’s claims against it. The district court granted DG&S’s motion. The Colorado Supreme Court granted certiorari to consider whether: (1) Lario and DG&S created the false impression that Lario was not acting for an undisclosed principal (i.e., Tracker) with whom Lario and DG&S knew RMEI would not deal; (2) an assignment clause in the RMEI-Lario transaction agreements sufficiently notified RMEI that Lario acted on behalf of an undisclosed principal; (3) prior agreements between RMEI and Tracker negated all previous joint ventures and any fiduciary obligations between them; (4) RMEI stated a viable claim against DG&S for fraud; and (5) RMEI could avoid the Lario sale based on statements allegedly made after RMEI and Lario signed the sales agreement but prior to closing. The Supreme Court found no reversible error and affirmed. View "Rocky Mountain Exploration, Inc. and RMEI Bakken Joint Venture" on Justia Law

Stone sued Cook in the Eastern District of Texas, alleging infringement of the 327 patent, which relates to a basket-type medical device used to remove stones from biological systems. Venue was transferred to the Southern District of Indiana. Cook deposed the patent’s inventor, who stated, regarding the addition of the “sheath movement element” in claim 1 to overcome an examiner’s rejection, “I realize there is nothing novel about it.” Cook then petitioned the Patent and Trademark Office for inter partes review of all claims. Following the institution of IPR, one of Stone’s managing members offered to license the 327 patent to Cook for $150,000.00 but negotiations broke down. The Patent Board canceled all of the patent’s claims. Following a dismissal with prejudice, the court denied Cook’s motion for attorney fees, 35 U.S.C. 285. The Federal Circuit affirmed, agreeing the case was not “exceptional” and that Stone lacked any type of “clear notice” of the 327 patent’s invalidity by service of Cook’s invalidity contentions. While one might view Stone’s litigating position as weak given the inventor’s deposition testimony regarding the novelty and origin of claim 1’s sheath handle element, exceptionality is not assessed by a strong or even correct litigating position. View "Stone Basket Innovations, LLC v. Cook Medical LLC" on Justia Law