Justia Legal Ethics Opinion Summaries

This case concerns a business dispute between two individuals, Alan Weigel and Jason Albertson, regarding Veritas Crane LLC, a company providing crane and hoist services. Albertson founded Veritas in 2018, and Weigel joined the business in 2019, with both claiming at least 50% ownership. Their relationship deteriorated, leading Albertson to request the company’s bank to restrict access to its accounts due to allegations of fraudulent activity. In response, Weigel limited Albertson’s access to company facilities. Weigel then filed a complaint, naming himself and Veritas as plaintiffs, asserting both derivative claims on behalf of Veritas and direct claims against Albertson.The District Court of Cass County, East Central Judicial District, reviewed the matter after Albertson moved to disqualify Weigel’s attorney, Joel Fremstad. The court found that Fremstad had a lawyer-client relationship with both Weigel and Veritas, relying on evidence such as Fremstad’s signing of pleadings for both plaintiffs and communications indicating he advised Weigel in his role as CEO of Veritas. The court concluded that this concurrent representation violated North Dakota Rule of Professional Conduct 1.7(a), which prohibits representation of adverse clients, and ordered Fremstad’s disqualification.The Supreme Court of North Dakota addressed Weigel’s appeal and his petition for a supervisory writ. It determined the disqualification order was not immediately appealable under statutory law or the collateral order doctrine and dismissed the appeal for lack of jurisdiction. Exercising its supervisory authority, the Supreme Court reviewed the district court’s order for abuse of discretion and clear error. Although it noted a harmless legal error in the district court’s reasoning regarding derivative suits, the Supreme Court held that the underlying factual findings were supported by the record. The Court denied the petition for a supervisory writ, upholding the disqualification of Fremstad. View "Weigel v. Albertson" on Justia Law

MTG, Inc., a company specializing in tooling for the auto industry, filed for Chapter 11 bankruptcy in 1995, which was later converted to a Chapter 7 proceeding in 1996. Charles Taunt was appointed as the Chapter 7 trustee and, during his tenure, entered into a fee agreement with Comerica Bank, MTG's largest secured creditor. Taunt failed to disclose this agreement to the bankruptcy court, despite rules requiring disclosure of such connections. Several orders were issued during this time that benefited Comerica, including allowance of its claim, relief from stay, and settlement of pre-petition lender liability claims. After Taunt's undisclosed conflict of interest was revealed, litigation ensued over whether the resulting orders should be set aside and whether Taunt, his law firms, and Comerica were liable for fraud, conversion, and unauthorized transfers.Following discovery of Taunt's conflict, the United States Bankruptcy Court for the Eastern District of Michigan vacated the orders benefitting Comerica and found Taunt and his law firm had committed fraud on the court. Taunt was disqualified as trustee, his firm was denied fees, and Guy Vining was appointed as successor trustee. Vining initiated an adversary proceeding with multiple claims, primarily post-petition claims alleging fraud on the court, avoidable transfers, and conversion. The bankruptcy court granted summary judgment for defendants on most claims, awarding only limited attorney’s fees for exposing the fraud. The United States District Court for the Eastern District of Michigan affirmed these rulings.The United States Court of Appeals for the Sixth Circuit reviewed the case and affirmed the district court’s decision. The court held Comerica was not directly or vicariously liable for fraud on the court, as it was not an officer of the court and did not control Taunt. The court also ruled that the challenged post-petition transfers were authorized by valid court orders and thus not avoidable under bankruptcy law. Finally, the court found Taunt’s actions as trustee were authorized, rejecting the conversion claim. The limited attorney’s fees award and denial of punitive damages were upheld as within the bankruptcy court’s discretion. View "Vining v. Plunkett Cooney, P.C." on Justia Law

NonDoc Media and William W. Savage III submitted open records requests to the University of Oklahoma seeking two reports prepared by the law firm Jones Day. The reports resulted from investigations into allegations of misreporting alumni donor data and possible sexual misconduct involving high-ranking University officials. Jones Day was retained under an attorney-client relationship, and the reports included confidential interviews and legal analysis. Portions of the reports were provided to law enforcement under joint-interest agreements and excerpts of the sexual misconduct report were shared with the parties involved pursuant to Title IX protocols.The District Court of Cleveland County conducted an in camera review of both reports. It granted summary judgment in favor of the University, finding the documents protected by attorney-client privilege. The court also found that the reports were exempt under the Open Records Act’s personnel record exemption, and that the sexual misconduct report was further protected by work-product and informer privileges. The court did not find that the University had waived any of these protections, and rejected NonDoc’s arguments to the contrary. NonDoc appealed, and the Supreme Court of Oklahoma retained the case.The Supreme Court of the State of Oklahoma reviewed the summary judgment de novo and affirmed the district court’s decision. The Supreme Court held that the attorney-client privilege protects the reports from disclosure, and clarified that the privilege does not expire when the underlying investigation or action concludes. The court also found that the University did not waive the privilege by sharing the reports with law enforcement under joint-interest agreements or by limited disclosure required by law. Summary judgment for the University was affirmed. View "NONDOC MEDIA v. STATE Ex Rel. BOARD OF REGENTS of the UNIV. of OKLAHOMA" on Justia Law

Austin Knudsen, the Montana Attorney General, was charged with 41 counts of attorney misconduct by the Office of Disciplinary Counsel (ODC) for actions taken while representing the Montana State Legislature in litigation before the Montana Supreme Court and the United States Supreme Court. The underlying events involved Knudsen and his office’s response to subpoenas issued by the Legislature seeking judicial branch emails, and subsequent orders by the Montana Supreme Court to return those materials. During the litigation, Knudsen and his subordinates made critical statements about the Court and delayed compliance with a direct order to return subpoenaed documents.The Commission on Practice of the Supreme Court of the State of Montana held a contested hearing, ultimately finding that Knudsen violated five provisions of the Montana Rules of Professional Conduct and recommending a 90-day suspension from the practice of law. Knudsen objected, raising separation of powers arguments and claiming multiple due process violations during the disciplinary proceedings. The Commission’s findings of fact and conclusions of law were brief, lacking detailed explanation for each alleged rule violation.The Supreme Court of the State of Montana, exercising de novo review, found that Knudsen violated Rule 3.4(c) by knowingly failing to seek a stay or otherwise comply with the Court’s order to return subpoenaed materials, and Rule 5.1(c) by failing to ensure that his subordinates also complied. However, the Court determined that the Commission failed to prove violations of Rules 8.2(a), 8.4(d), and 8.4(a), finding that Knudsen’s critical statements about the Court were either opinions or facts not proven false, and that no prejudice to a specific proceeding was demonstrated. Due to significant due process violations in the Commission proceedings, the Supreme Court dismissed the case without imposing discipline. View "In re Knudsen" on Justia Law

HRT Enterprises pursued a takings claim against the City of Detroit after losing a jury verdict in state court in 2005. Subsequently, HRT filed suit in federal court in 2008, alleging a post-2005 violation under 42 U.S.C. § 1983. The United States District Court for the Eastern District of Michigan dismissed the federal action, citing the requirement from Williamson County Regional Planning Commission v. Hamilton Bank of Johnson City, 473 U.S. 172 (1985), to exhaust state remedies first. HRT then returned to state court, where its claim was dismissed on claim preclusion grounds, a decision affirmed by the Michigan Court of Appeals. After the state court denied compensation, HRT initiated a federal § 1983 action in 2012. The case was stayed when the City filed for bankruptcy, prompting HRT to participate in bankruptcy proceedings to protect its compensation rights. Ultimately, the bankruptcy court excepted HRT’s takings claim from discharge, allowing the federal case to proceed. After two jury trials, the district court entered judgment for HRT in September 2023.Following its success, HRT moved for attorney fees under 42 U.S.C. § 1988, presenting billing records that included work from related state and bankruptcy proceedings. The district court applied a 33% discount to the claimed hours due to commingled and poorly described entries, set an average hourly rate, and awarded $720,486.25, which included expert witness fees. Both parties appealed aspects of the fee award to the United States Court of Appeals for the Sixth Circuit.The Sixth Circuit held that the district court erred by concluding it had no discretion to award fees for work performed in the related state-court and bankruptcy proceedings, as such fees are recoverable when the work is necessary to advance the federal litigation. The court also found the district court erred in awarding expert witness fees under § 1988(c) in a § 1983 action, as the statute does not authorize such fees for § 1983 claims. The appellate court vacated the fee award and remanded for recalculation consistent with its opinion. View "HRT Enterprises v. City of Detroit" on Justia Law

The case centers on a dispute involving the Iowa Auditor of State’s authority to subpoena records from the City of Davenport, including documents claimed to be protected by the attorney–client privilege, in connection with a reaudit of city settlement payments. The city provided some documents but refused to produce others, asserting privilege. The Auditor sought enforcement of the subpoena, while the city moved to modify it. The controversy escalated due to public interest in the timing and propriety of the city’s settlements and the Auditor’s investigation into their legality.The Iowa District Court for Scott County ruled in favor of the Auditor, holding that Iowa law gave the Auditor broad access to city records, including attorney–client privileged materials, except for attorney work product, and ordered an in camera review of the contested documents. The city appealed, arguing the Auditor did not have authority to access attorney–client communications. During the appeal, the Auditor and the Iowa Attorney General disagreed fundamentally about the scope of the Auditor’s subpoena power and whether to defend the district court’s ruling. The Attorney General declined to make arguments supporting the Auditor’s position, citing broader state interests and a perceived conflict of interest.The Supreme Court of Iowa determined that, due to this conflict of interest, the Auditor may be represented by his own general counsel, rather than the Attorney General. The court reasoned that the Attorney General’s duties are materially limited by her responsibilities to other state agencies, constituting a conflict under Iowa’s professional conduct rules. The court further held that the Auditor does not need executive council approval to be represented by in-house counsel, as statutory provisions requiring such approval apply only to hiring outside counsel at state expense. The Attorney General was permitted to participate as amicus curiae. View "City of Davenport v. Office of the Auditor of the State of Iowa" on Justia Law

The case concerns a dispute that arose after a company, Motiva Performance Engineering, failed to deliver on an agreement to upgrade a vehicle for the plaintiff, resulting in a jury verdict against Motiva for breach of contract, fraudulent misrepresentation, and violation of the Unfair Practices Act. The company’s managing member, who was also its attorney, transferred Motiva’s Ferrari to another company he controlled shortly after the verdict and subsequently used the car as collateral for a loan without disclosing this to the court. Additional questionable conduct included failing to disclose or potentially backdating a promissory note and depositing insurance proceeds into his personal account. These acts occurred while the court was overseeing asset proceedings to satisfy the judgment against Motiva.Following these actions, the district court held a hearing and issued a sanctions order against the managing member and his associated entities for what it termed remedial contempt, requiring payment of the underlying judgment and a $50,000 donation to charity. The sanctions order also referenced Rule 1-011 NMRA (Rule 11) violations due to misstatements in court filings. The managing member moved for reconsideration, arguing the evidence did not support remedial contempt, but appealed the order before the motion was decided. The New Mexico Court of Appeals affirmed the sanctions on both inherent powers and Rule 11 grounds, though a dissent questioned the breadth of conduct relied upon under Rule 11.The Supreme Court of the State of New Mexico held that the district court erred by imposing punitive contempt sanctions without affording criminal-level due process protections and that such sanctions could not be justified under the court’s inherent powers without those protections. However, the court upheld the sanctions under Rule 11, as the due process requirements for Rule 11 are not equivalent to those for contempt. The holding was limited to willful misstatements made in documents filed with the court. The court affirmed the Court of Appeals in part, reversed in part, and remanded for further proceedings. View "Butler v. Motiva Performance Engineering, LLC" on Justia Law

A medical device company that manufactures spinal devices was indicted, along with its CEO and CFO, for allegedly paying bribes to surgeons through a sham consulting program in violation of the Anti-Kickback Statute. The indictment claimed the surgeons did not provide bona fide consulting services, but were paid to use and order the company’s devices in surgeries covered by federal health care programs. The company’s CFO, who is not a shareholder but is one of only two officers, allegedly calculated these payments based on the volume and value of surgeries performed with the company’s devices. During the development of the consulting program, the company retained outside counsel to provide legal opinions on the agreements’ compliance with health care law, and those opinions were distributed to the surgeons.After the grand jury returned the indictment, the United States District Court for the District of Massachusetts addressed whether the CFO’s plan to argue at trial that the involvement of outside counsel negated his criminal intent would effect an implied waiver of the company’s attorney-client privilege. The district court initially found that if the CFO or CEO invoked an “involvement-of-counsel” defense, it would waive the corporation’s privilege over communications with counsel. Following dismissal of charges against the company, the district court focused on whether the officers collectively could waive the privilege, concluded they could, and ruled that the CFO’s planned defense would constitute an implied waiver, allowing disclosure of certain privileged communications to the government. The district court stayed its order pending appeal.The United States Court of Appeals for the First Circuit vacated the district court’s waiver order and remanded. The Court of Appeals held that (1) the record was insufficient to determine whether the CFO alone had authority to waive the company’s privilege, and (2) not every involvement-of-counsel defense necessitates a waiver. The appellate court directed the district court to reassess the issue in light of changed circumstances and to consider less intrusive remedies before finding an implied waiver. View "United States v. SpineFrontier, Inc." on Justia Law

Donald J. Trump filed a lawsuit in the United States District Court for the Southern District of Florida against dozens of defendants, including Hillary Clinton, the Democratic National Committee, several law firms, and individuals, alleging that they conspired to spread false claims of his collusion with Russia during the 2016 presidential campaign. Trump asserted multiple claims, including two under the Racketeer Influenced and Corrupt Organizations Act (RICO) and three under Florida law, such as injurious falsehood and conspiracy to commit malicious prosecution. He alleged that these actions caused him substantial financial harm and loss of business opportunities.After extensive pleadings, the district court dismissed Trump’s amended complaint with prejudice, holding that his federal racketeering claims were untimely and legally insufficient, and that his state law claims either failed to state a claim or were also untimely. The court found the complaint to be a “shotgun pleading” and cited numerous factual inaccuracies and implausible legal theories. The court also dismissed claims against certain defendants for lack of personal jurisdiction, but did so with prejudice. Subsequently, the district court imposed sanctions on Trump and his attorneys for filing frivolous claims and pleadings, based both on its inherent authority and Rule 11, and denied Trump’s motions for reconsideration and to disqualify the judge.Upon appeal, the United States Court of Appeals for the Eleventh Circuit affirmed most of the district court’s orders. The appellate court held that Trump’s racketeering claims were untimely and meritless, and that his state law claims failed for both procedural and substantive reasons. However, the Eleventh Circuit found that the district court lacked personal jurisdiction over one defendant, Orbis, and therefore vacated the dismissal with prejudice as to Orbis, remanding with instructions to dismiss those claims without prejudice. The sanctions orders and other rulings were affirmed, and requests for appellate sanctions were denied. View "Trump v. Clinton" on Justia Law

In this matter, an attorney representing the appellant in a civil case filed a petition for writ of supersedeas and an opening appellate brief that included citations to several cases that do not exist. The cited case names, reporter volumes, and page numbers either led to unrelated cases or to no cases at all, and the legal propositions attributed to these citations were unsupported by any actual authority. The attorney later provided copies of real cases with similar names but different citations, which also failed to support the propositions for which the fabricated citations were used. The attorney claimed these errors were clerical and not the result of intentional fabrication or reliance on artificial intelligence (AI), although he admitted to using AI in preparing at least one of the briefs.The Fourth District Court of Appeal, Division Two, issued an order to show cause regarding the fabricated citations and held a hearing. The attorney responded in writing and at the hearing, accepting responsibility for the citation errors but maintaining they were not willful and resulted from a breakdown in his citation-verification process. He asserted that the errors were clerical and not the product of AI hallucinations, although he acknowledged using AI in preparing the appellate brief and possibly the writ. The court found his explanations lacking in credibility, noting that the errors were not consistent with mere clerical mistakes and that the attorney’s claims about his verification process were contradicted by his own admissions.The California Court of Appeal, Fourth District, Division Two, held that the attorney unreasonably violated California Rules of Court, rule 8.204(a)(1)(B), by failing to support each point in his briefs with citations to real legal authority. The court imposed a sanction of $1,750, to be paid to the court, and directed the clerk to notify the State Bar of California of the sanction. View "Schlichter v. Kennedy" on Justia Law