Risk Update

Lawyer Disqualifications Denied — Bank Doc Dust Up, Shareholder Suit Meets Discovery “Banking Privilege” Debate

No Rule Violations: Judge Denies Motion to Disqualify Agency’s Attorney in Suit Against Shareholder, CFO” —

  • “A federal judge in Pennsylvania is allowing a Pittsburgh attorney representing On-Site Companionship Services Corp. to stay on a civil lawsuit filed against the agency’s sole shareholder and chief financial officer, denying the defendants’ claim that the lawyer violated rules of professional conduct by doing so.”
  • “In a June 16 opinion, U.S. District Judge Christy Criswell Wiegand of the Western District of Pennsylvania denied Steven Williams Jr. and Bernadette Ceravolo’s motion to disqualify opposing counseling representing the plaintiffs, On-Site Companionship Services, Steven Williams III, and Quinn Williams. The defendants argued that the attorney, Kenneth J. Hardin II, of Hardin Thompson, couldn’t represent the plaintiffs due to his involvement in the investigation involving Williams Jr. and Ceravolo and his prior dealings with the two defendants.”
  • “Williams and Ceravolo argued that such representation would violate Pennsylvania Rules of Professional Conduct 1.6 (confidentiality), 1.7 (conflicts of interest with current clients), 1.13 (organizational clients) and 3.7 (lawyers as witnesses).”
  • “The court disagreed, finding that the the defendants failed to clearly show a violation of the rules, or any attorney-client relationship between them. The defendants didn’t make any effort to show how that representation was ‘substantially related’ to the dispute regarding misappropriation, or that the firm would be able to use any confidential information from that representation in litigating the present matter, Wiegand held.”
  • “‘Consistent with Defendants’ representation that Mr. Williams Jr. worked with Mr. Hardin in his capacity as a constituent of the company, Mr. Hardin has submitted an affidavit unequivocally denying that he or his firm represented Defendants individually regarding the alleged misappropriation,’ Wiegand wrote. ‘From this record, the Court finds that any advice or assistance Defendants sought was for On-Site, not themselves individually, and that it would have been unreasonable for Defendants to believe that Hardin Thompson represented them individually in this matter (if they believed that Hardin Thompson represented them individually at all in this matter, which has not been established).'”

Leon Cosgrove Beats DQ Bid In Fla. Over Use Of Bank Docs” —

  • “A Florida federal judge has rejected a bid by former and current directors of a U.S. bank accused of operating under Venezuelan control to disqualify opposing counsel at Leon Cosgrove Jimenez LLC, finding that privileged documents the firm used are relevant to the allegations and that their content is unique.”
  • “U.S. Magistrate Judge Edwin G. Torres on Tuesday found that the banking directors’ request to disqualify the law firm for using documents from its regulator that they mistakenly disclosed during discovery was moot since the judge found that the banking examination privilege asserted by the regulator — the Office of the Comptroller of the Currency, an independent bureau of the U.S. Department of the Treasury — was not absolute. The OCC, which intervened in the case, is not a party to the suit.”
  • “‘The relevance of these documents to this case varies; however, the most obvious connection to [the banks’] claims is that the documents appear to evidence the OCC’s dissatisfaction with and criticism of the bank’s leadership during the relevant time period,’ Judge Torres said.”
  • “Judge Torres ruled that the information contained in the documents applies ‘sunlight’ to the bank’s allegations against its directors. ‘Moreover, on multiple occasions, the OCC expressed concern that the bank’s leader, defendant Gabina Rodriguez, was biased toward the Venezuelan government in a way that was contrary to the interests of the bank,’ Judge Torres said. We therefore find that the seriousness of this litigation calls for some sunlight into the way our federal government regulates our national banks.'”
  • “The judge rejected the OCC’s asserted banking examination privilege, finding that it is not steeped in statute or regulation and is not a doctrine recognized by the Eleventh Circuit or the U.S. Supreme Court. ‘It is a legal doctrine that has been created or adopted by courts whose cases do not bind our decision-making,’ the judge said.”
  • “Judge Torres said that in following the five-part framework created by a New York federal judge, the banking examination privilege may be overridden so the OCC documents can be used as evidence.”
  • “After rejecting the OCC’s argument that these documents are privileged, the judge said the bank directors’ bid to disqualify Leon Cosgrove for using the OCC documents is moot since their argument is based on the fact that the OCC documents are privileged.”