Risk Update

Conflicts and DQ Developments — Late Disqualification Motion Denied, Ex-firm Employee Turned Opposing Counsel Called Out on Conflict and Confidentiality

Posted Dan Bressler

“Judge Rejects Company’s Attempt to Boot Former Lewis Rice Counsel From Representing Competitor” —

  • “A federal judge in Missouri this week declined to boot an NLJ 500 firm from defending an orthodontic appliance manufacturer in a trademark dispute, finding that the defense counsel’s former client, who is now the plaintiff, likely knew of the firm’s involvement well before the lawsuit was filed.”
  • “The plaintiff had claimed that Lewis Rice served as its ‘general counsel and only attorney for two decades.’ Its president also claimed he discussed issues regarding the present lawsuit with Lewis Rice partner Brian Pezza.”
  • “However, Pitlyk agreed that evidence showed the plaintiff likely had knowledge of the firm’s involvement with the competitor, leaving the plaintiff little room to attempt to explain a justified delay for its motion to disqualify.”
  • “‘Defendant had Lewis Rice as counsel for at least 11 months of back-and-forth between the parties to this litigation. At no point during those 11 months did plaintiff seek to disqualify Lewis Rice. Compelling defendant to find new counsel that far along in the litigation would be prejudicial,’ Pitlyk said in Monday’s order.”
  • “According to Pitlyk, Ordont did not raise the conflict of interest issue until after Lewis Rice filed a motion to dismiss the lawsuit in July 2023.”
  • “Lewis Rice further argued that its present representation of DynaFlex was well beyond any professional conduct violations. The firm claimed it never represented Ordont in trademark matters, and that Ordont used other law firms for such matters, as shown by public filings of the U.S. Patent and Trademark Office.”
  • “‘Under these circumstances, characterizing Lewis Rice as Ordont’s ‘general counsel’ is hyperbole and misleading,’ the defendant’s counsel said. ‘Lewis Rice properly declined to take on a new representation of its former client, Ordont, in December of 2021 when Ordont reached out asking that Lewis Rice represent it, for the first time, in a trademark matter.'”
  • “Ultimately Pitly rejected the plaintiff’s reasoning for the delayed disqualification request.”
  • “‘Plaintiff concedes in its reply that it ‘could have raised this motion before the TTAB, a tribunal,’ but contends that it was ‘required to raise the motion within a reasonable time of the commencement of this litigation,'” Pitlyk wrote. “Plaintiff’s suggestion that the delay should be measured from when this particular action commenced rather than when plaintiff learned of the potential conflict is in tension with the rationale for prohibiting untimely motions to disqualify—i.e., to prevent litigants from using such motions ‘later as a tool to deprive his opponent of counsel of his choice after substantial preparation of a case has been completed.””

“Arnold & Itkin DQ Bid Says Zeta Defense Atty Is Ex-Employee” —

  • “Arnold & Itkin has asked a Harris County judge to disqualify the law firm representing a drilling rig owner in litigation spurring from Hurricane Zeta, alleging a defense lawyer previously worked for Arnold & Itkin and improperly sent herself confidential information about the litigation before leaving the firm.”
  • “In a 25-page motion filed Tuesday, Arnold & Itkin LLP says that Karina Sanchez-Peralta of Ahmad Zavitsanos & Mensing PLLC, who represents Transocean Ltd., worked as a law clerk at Arnold & Itkin from Aug. 29, 2022, to Oct. 4, 2022. By that point, Arnold & Itkin had for two years been representing plaintiffs in the multidistrict litigation created to handle seamen’s claims surrounding Hurricane Zeta, the firm states. The crew members claim they were injured after Transocean forced their ship to remain in the path of the hurricane when it hit the Gulf of Mexico in October 2020.”
  • “Ahmad Zavitsanos ‘recruited’ Sanchez-Peralta before the end of her employment with Arnold & Itkin, the firm says, adding that she became an associate with Ahmad Zavitsanos in September 2023 and became attorney of record for Transocean in the Hurricane Zeta MDL in March 2024.”
  • “Sanchez-Peralta, has been chosen by her employer to serve as ‘lead attorney on all issues related to medical damages, witnesses, and records,’ took work product from Arnold & Itkin related to the Hurricane Zeta MDL “in the final minutes” of her employment, according to Arnold & Itkin.”
  • “‘Namely, Ms. Sanchez attached multiple confidential work-product documents to an email she sent to her own personal email literally in the last few moments before she walked out of the door,’ Arnold & Itkin asserts.’ Then, according to her own LinkedIn profile, she took a job at AZA. Plaintiffs just discovered these violations and the conflict of interest after feeling compelled to investigate other potential ethical and professional violations based on Transocean and its counsel’s recent conduct in the media.”
  • “In its motion Tuesday, Arnold & Itkin also accuses Sanchez-Peralta of saving trial strategy and a list of ‘hot docs,’ or documents considered to be the plaintiffs’ best evidence, for the Hurricane Zeta MDL litigation before leaving the firm.”
  • “‘Perhaps most damning is the fact that Ms. Sanchez also directly assisted in trial preparation and strategy related to Dr. Henry Small (‘Dr. Small’), an orthopedic surgeon who provided treatment for some of the plaintiffs in this case and a witness AZA intends to crossexamine at trial,’ Arnold & Itkin states. ‘Ms. Sanchez was intimately involved with [Arnold & Itkin attorney Roland Christensen] in researching and discussing information contained in a Texas Medical Board report — which is by Transocean’s own admission a critical component to Transocean’s defense in this case as evidenced during the days of pretrial hearings.'”