Risk Update

Conflicts News — Heated Hot Potato Argument, Judicial Stock Conflict ($4k versus $2.7b), Entertainment Denied

Cisco wins reversal of $2.75 bln damages award because judge’s wife owned stock” —

  • “A U.S. appeals court on Thursday threw out a more than $2.75 billion award against Cisco Systems Inc , saying the trial judge should have disqualified himself after learning that his wife owned Cisco stock.”
  • “The trial judge, U.S. District Judge Henry Morgan in Norfolk, Virginia, found Cisco liable for patent infringement in October 2020, two months after learning that his wife owned 100 Cisco shares worth $4,688.”
  • “Morgan later put the shares in a blind trust, and told the parties that the shares ‘did not and could not have influenced’ his handling of the case.”
  • “But the Washington, D.C.-based appeals court said a blind trust was not the same as selling the shares, and it did not matter that San Jose, California-based Cisco had lost.”
  • “The court ordered the case reassigned to another judge, because letting Morgan stay on risked undermining public confidence in the judicial process.”
  • “Judicial independence attracted renewed attention last year after the Wall Street Journal said 131 federal judges violated federal law by hearing 685 lawsuits since 2010 involving companies where they or their families owned stock.”
  • “‘The judiciary takes this matter seriously,’ U.S. Supreme Court Chief Justice John Roberts wrote in his 2021 year-end report. ‘We expect judges to adhere to the highest standards, and those judges violated an ethics rule.'”

Fox Rothschild Calls Conflict Allegation A ‘Tall Tale‘” —

  • “Fox Rothschild lawyers representing aggrieved investors in a professional athlete startup asked a New York federal judge Tuesday to reject a ‘transparent’ attempt to manufacture a conflict and an appearance of impropriety.”
  • “Although one of the defendants in the case, GlassBridge Enterprises Inc., is a former Fox client, the firm’s work was focused on pension plan negotiations and had nothing to do with the current litigation, Cypress said. Moreover, that work was completed nearly two years before the current suit was filed. During that period, GlassBridge has also not claimed that the firm had confidential information related to GlassBridge’s investment in a startup known as SportBLX, which is the focus of the current case.”
  • “‘Critically, as Fox’s relationship with GlassBridge formally terminated in November 2021 — more than a year after Fox last performed work for GlassBridge — it is undisputed that Fox did not represent GlassBridge in connection with its securities manipulation, tortious interference with contract and unlawful conduct’ that is the subject of Cypress’ claims, the filing states.”
  • “New York-based SportBLX had sought to ‘tokenize’ and trade in professional athletes through a blockchain platform that the company would create.”
  • “In a May disqualification motion, Glassbridge said it had provided its Fox Rothschild lawyer, Pamela Thein, information about its valuation and assessments of the Sport-BLX investment so that the firm could advocate to include those assets in a proposed settlement agreement. In a second part of the representation, other Fox lawyers also assisted in negotiating lower insurance premiums.”
  • “But in mid-2019, GlassBridge received a demand letter from Fox Rothschild claiming that Cypress, another Fox client, ‘intended to sue Sport-BLX, which would have directly affected GlassBridge’s interests in Sport-BLX.’ Fox later assured the company that it would not be involved in the suit, but then ‘disengaged GlassBridge like a hot potato’ and sued anyway, the company said.”
  • “‘GlassBridge is being forced to defend itself in a lawsuit brought by its former law firm based on the very confidences that it provided Fox Rothschild during at least two prior representations,’ the company said.”

Hat tip to Nigel Riley, general manager of risk and compliance solutions at Intapp, for sending this interesting one my way: “Game over? Plaintiffs’ lawyers banned from Madison Square Garden by MSG” —

  • “The billionaire family that owns majority stakes in the New York Knicks, New York Rangers and the teams’ arena, Madison Square Garden, has never been shy about controlling access to the venues in its empire… But MSG has escalated its access game: It is now using bans from its venues as a litigation tactic.”
  • “At least two shareholder firms engaged in litigation over the 2021 merger of Madison Square Garden Entertainment Corp and MSG Networks Inc have received letters from an MSG lawyer advising that they are barred from entering Madison Square Garden, Radio City Music Hall, the Beacon Theatre and other MSG venues until the shareholder suits are resolved.”
  • “The justification? Professional conduct rules prohibiting contact between shareholder lawyers and MSG employees, the letter said. (Reuters obtained a copy.)”
  • “‘Because of the adversarial nature inherent in litigation proceedings, and because of the potential for contact with the company’s employees and disclosure outside proper litigation discovery channels that could result from the presence of any of your firm’s lawyers at the company’s venues, neither you, nor any other attorney employed at your firm, may enter the company’s venues,’ wrote Hal Weidenfeld, an in-house lawyer for MSG Entertainment, in a June 24 letter to shareholder lawyer Joel Fleming of Block & Leviton.”
  • “The suit contends that the Dolan family, which controls all of the various pieces of the MSG empire, forced through a deal that was detrimental to MSG Entertainment shareholders in order to enhance the family’s economic and voting stake in the combined entity.”
  • “The company said the new policy may be ‘disappointing’ to some of the now-banned plaintiffs’ lawyers, but that’s simply an unfortunate consequence of ‘our need to protect against improper disclosure and discovery.’ The lawyers will be welcomed back, the statement said, when their cases against MSG entities are resolved.”
  • “‘We’re a firm full of Celtics fans,’ Fleming said. ‘If we want to watch the Knicks lose, it’s a lot more fun to see it happen at TD Garden.'”

Curious, I had a look to see what other events the MSG ban blocks these lawyers from attending. Alas, they will be restricted from upcoming acts including: Billy Joel, Michael Buble, and Rage Against the Machine…

(Could one argue that it would be professionally prudent for these lawyers to keep their distances even after litigation is concluded? They may want to avoid even the appearance of impropriety… whispers that it was the lure of the upcoming Hanson concert, Tom Jones, or Doobie Brothers 50th Anniversary Tour that brought them to the negotiating table? I’ll let the ethics experts ponder that one…)