Risk Update

Conflicts Contentions — Law Clerk Conflict Concern Causes College Case Transfer, Privacy Ombudsman Denies Conflict Alleged Against 23andMe Counsel

Posted Dan Bressler

“23andMe Privacy Reviewer Defends WilmerHale as Choice of Counsel” —

  • “The consumer privacy ombudsman in 23andMe’s sale of customers’ genetic data is defending his choice of counsel against objections from the Justice Department’s bankruptcy watchdog. Neil Richards, a Washington University School of Law professor appointed by the court to make privacy recommendations in 23andMe’s asset sale, denies that WilmerHale has disqualifying conflicts of interest in the case.”
  • “The US Trustee in June objected to Richards’ choice of counsel, citing a possible conflict of interest due to the firm’s work for Regeneron Pharmaceuticals Inc. on unrelated matters. Regeneron was named a backup bidder in the asset sale.”
  • “‘To disqualify WilmerHale now, based on a remote and hypothetical possibility of a conflict that never presented itself, would be to create an unworkable rule,’ the filing said.”
  • “The filing argues that WilmerHale’s work for Regeneron in matters unrelated to the Chapter 11 case doesn’t create an actual conflict and that the US Trustee is holding WilmerHale to a higher standard than prescribed by bankruptcy law. “Because Regeneron was not one of the original parties in the interest list, WilmerHale had no prior knowledge of the company’s involvement before it submitted a bid, over which the law firm ‘had no control,’ the filing says.”
  • “This scenario doesn’t even require disqualification and would ‘upend the orderly operation of large chapter 11 cases,’ it said.”
  • “The fees WilmerHale collected from Regeneron in 2024 accounted for less than 0.04% of the firm’s revenue, no other party objected to the firm’s retention, and Richards’ work has concluded, the response said.”
  • “‘The CPO’s role, and WilmerHale’s representation of the CPO, has concluded,’ the response says. ‘Denying the CPO’s retention of WilmerHale would not change the Report, the selection of TTAM as the successful bidder, the CPO’s testimony at the sale hearing, or the Court’s approval of the sale to TTAM.'”

“Conflict Forces Transfer Of Seton Hall Whistleblower Case” —

  • “Seton Hall University’s former president’s whistleblower suit against the school will be heard in a New Jersey state court in Hudson County after an Essex County judge confirmed her decision to move the case due to a potential conflict of interest involving the daughter of one of the defendants.”
  • “Judge Venable moved the case originally when a law clerk in the Essex County civil division reported a potential conflict because her father, Michael Lucciola, is a member of Seton Hall’s Board of Regents and a defendant in the case.”
  • “Seton Hall fought that move on the grounds that Lucciola’s daughter was not clerking for the judge handling the litigation brought by the university’s former president, Joseph Nyre, and that nothing in the Code of Judicial Conduct or the Code of Conduct for Judicial Employees requires transferring a case in such a situation.”
  • “The school also pointed out that it filed its motion to dismiss in March 2024 and that the parties had already had a hearing on it in September 2024. Moving the case would require duplicating a significant amount of effort, Seton Hall argued.”
  • “In Wednesday’s opinion Judge Venable wrote that the court properly considered all evidence presented in various lengthy filings in deciding to move the case.”
  • “She wrote that Canon 2.1 of the Code of Judicial Conduct, which directs judges to avoid the appearance of impropriety, is the best guide for handling the situation. She clarified that the court relied on that canon not because it fits the exact facts of the situation, but for guidance about appearances of impropriety.”
  • “‘It was not a misunderstanding of the court that Canon 2.1 applied to law clerks, but rather the misunderstanding of the court’s reasoning by moving defendants,’ Judge Venable wrote.”
  • “‘Moreover, the absence of a specific canon addressing law clerk conduct does not preclude the possibility that a law clerk’s actions or relationships could create an appearance of impropriety; however, citing the lack of a rule as justification essentially invites the court to conclude that such situations can never arise, which is not the case,’ she went on.”