Risk Update

Conflicts, Conflicts, Conflicts — Freivogel Findings, Ferocious FIFA Fight

Posted Dan Bressler

It was time to remember to never forget to check in on Bill Freivogel’s latest findings:

In re Bear Communications, LLC, 2021 WL 4256161 (D. Kan. Sept. 17, 2021). Chapter 11.

  • “The unsecured creditors’ committee applied to retain Law Firm as counsel to the committee. Various parties objected. One objection is that Law Firm represents an ‘affiliate’ of a major creditor in this case, in lobbying matters. The major creditor is Verizon Sourcing, LLC. The affiliate/client is Verizon Communications.”
  • “In this opinion, applying 11 U.S.C. § 1103, the bankruptcy judge approved the retention. The court noted that under 11 U.S.C. § 328(c) the court can deny compensation to a professional who turns out to be not disinterested. Thus, Law Firm will have to employ ‘constant vigilance’ to avoid conflicts because its ‘compensation will be in jeopardy.'”
  • “A number of things are not clear from the opinion: (1) the structure of Verizon’s corporate family; (2) the relevance, if any, of Law Firm’s status as a Swiss Verein; and (3) whether Law Firm will be representing Verizon Sourcing in this case. It appears that Verizon Sourcing is asserting a claim against Debtor of some $44 million and that Debtor is claiming that Verizon Sourcing owes Debtor some $12 million.”

Mauck v. Cherry Oil Co., Inc., 21 CVS 343 (N.C. Super. Ct. Sept. 20, 2021).

  • “In this derivative action Law Firm appeared for the individual defendants and for the corporation in question. Plaintiffs moved to disqualify Law Firm. In this opinion the trial court denied the motion. North Carolina courts had not addressed the circumstances under which the same law firm could represent the alleged wrong-doers and the entity in question.”
  • “The opinion contains a wide-ranging discussion of cases around the U.S. The analysis boiled down to whether the claim against the individual defendants ‘involves serious charges of wrongdoing.’ This is language appearing in Comment 14 to N.C. Rule 1.13 (apparently the same as Model Rule 1.13 and its Comment 14). The court said, in effect, ‘nothing serious here.’ The claim was essentially “a bitter family dispute” about the way the corporation should be run and Plaintiffs’ roles in the corporation.”

Madden v. Elara Caring, LLC, No. CIV-19-1178-G (W.D. Okla. Sept. 21, 2021)

  • “Lawyer represents Plaintiff in this employment-related case. Lawyer had, for several years, served as an executive in several corporate predecessors of Defendant. At one point she had the title of ‘general counsel.’ Defendant moved to disqualify Lawyer.”
    “In this opinion the court denied the motion. While Lawyer did sign Plaintiff’s employment agreement for the company, she had not drafted it. In a routine former-client analysis the court found Lawyer’s involvement with the companies would not ‘materially advance’ Plaintiff’s position in this case.”

And, following Freivogel, because I’m a sucker for alliteration (and don’t know anything about soccer, though I’m sure there’s a clever word for a “second attempted shot on goal” that would do nicely here too): “Saxena White Can’t Lead FIFA Suit After Robbins Geller DQ” —

  • “U.S. District Judge Louis L. Stanton tossed Robbins Geller off the case in May, finding the firm committed fraud by failing to disclose short positions held by an investor leading a certified class action over bribes Mexican media company Grupo Televisa SAB allegedly paid to soccer’s international governing body.”
  • “Saxena White asked on Sept. 16 to take the reins, as the firm’s litigation director Steven B. Singer sought permission to work with Robbins Geller to get up to speed on the 3-year-old case. But the request appeared to perturb Judge Stanton, who cited Saxena White’s reliance on Robbins Geller as basis for denying the firm’s lead counsel bid Thursday.”
  • “The Robbins Geller disqualification order ‘was a dishonorable discharge for lack of candor amounting to fraud upon this court,’ Judge Stanton wrote. ‘[Singer’s] presumption that the court would allow the easing of his firm’s burden by recourse to Robbins Geller and the reliance of Saxena White on continued work by Robbins Geller all weigh heavily against the approval of Saxena White as class counsel.'”
  • “The case dates back to 2018, when Robbins Geller filed suit on behalf of a group of Grupo Televisa investors who say they were harmed by a drop in stock prices following trial testimony that the company had contributed to a $15 million bribe to secure rights to FIFA broadcasts. Judge Stanton certified the suit as a class action in June 2020. But the judge disqualified Robbins Geller a year later for failing to disclose that its original candidate for lead plaintiff, which claimed to have lost $986,000 in Grupo Televisa’s stock drop, in fact gained $11 million from shares it held in a Canadian hedge fund that had shorted the stock.”