Risk Update

Conflicts Called — Conflict Called on Concurrent Competitor IP Representation, AI Company’s Conflict Allegation Affirmed

Posted Dan Bressler

“Quinn, Alex Spiro Disqualified From IP Lawsuit Over Conflict” —

  • “CoStar Group Inc. convinced a federal judge that conflict-of-interest concerns justify disqualifying Quinn Emanuel from defending a rival company in a copyright lawsuit nearing trial.”
  • “Quinn breached its duty to CoStar, which the firm represented in a different lawsuit, because CoStar didn’t consent to Quinn’s concurrent representation of competitor Commercial Real Estate Exchange Inc., known as CREXi, according to an order published Monday in the US District Court for the Central District of California.”
  • “‘The court’s decision reinforces a fundamental principle of the legal profession: a law firm cannot represent a client while simultaneously taking a position adverse to that same client without informed consent,’ said Andy Florance, CoStar’s founder and chief executive officer, in an emailed statement.”
  • “Judge Consuelo B. Marshall’s decision is the latest development in the companies’ years-long feud trading allegations that CREXi misappropriated online data and CoStar violated antitrust law. CoStar sued CREXi in 2020, accusing the company of stealing the real estate information business’ broker directories, property listing data, new listing alerts, and more than 50,000 copyrighted photographs.”
  • “Quinn used to represent CoStar in an unrelated employment discrimination lawsuit in the Northern District of California, and requested to replace Keker, Van Nest & Peters LLP as CREXi’s counsel in December. Quinn’s team included famed litigator Alex Spiro, whose clients include Tom Brady and Elon Musk.”
  • “CoStar said Quinn didn’t mention the adverse representation before making the move and subsequently said it would drop CoStar as a client unless it agreed to waive the conflict.”
  • “When CoStar declined, Quinn moved to withdraw its representation of CoStar in the discrimination suit, with a hearing set in March. The court granted its motion in February.”

“Summary Judgement Awarded: AI Company Talkdesk Calls Conflict on Former Lawyer” —

  • “The Ninth Circuit affirmed the district court’s rulings in favor of Talkdesk, Inc.. The court upheld the granting of summary judgment against its former attorney, Andrew Pham, for breach of fiduciary duty and breach of contract. It also upheld the denial of Pham’s request to amend his answer and the subsequent entry of a default judgment against him.”
  • “The court found that Pham clearly ‘switched sides’ after his termination from Talkdesk. Despite his prior attorney-client relationship with Talkdesk—where he had negotiated a Master Services Agreement (MSA) with a vendor named Engineer.ai Corporation—Pham went on to assist Engineer in its dispute against Talkdesk, eventually becoming Engineer’s general counsel to supervise litigation regarding that exact MSA. He also advised a Talkdesk employee on how to avoid being fired.”
  • “Pham breached his Proprietary Information and Inventions Agreement (PIIA) in two ways: He improperly retained internal company communications and a notebook containing Talkdesk’s legal strategies and agreement terms after his termination. He supplied Engineer with facts regarding Talkdesk’s internal billing practices, contractor discounts, and employment matters for use in the MSA dispute.”
  • “The court ruled that the district court did not abuse its discretion by denying Pham’s motion to amend his answer, noting the motion was untimely and Pham failed to demonstrate ‘good cause’ or ‘excusable neglect.'”
  • “The court affirmed the entry of a default judgment, noting that Pham essentially ‘authored his own default’ by voluntarily withdrawing his original answer rather than facing a Rule 11 challenge from Talkdesk.”