Risk Update

Risk News — Conflicts Fight Over Duty of Loyalty in Dual Representation, Opioid Special Master Facing Disqualification, Law Firm Data Breach Notification Delay

Lawyers for ‘orgasmic meditation’ company founder refute prosecutors’ ethics concerns” —

  • “Attorneys at law firm Steptoe & Johnson on Wednesday defended their work for the indicted founder of the sexuality-focused wellness company OneTaste, as they asked a judge to reject U.S. prosecutors’ concerns about a potential conflict of interest.”
  • “In a filing, defense lawyers for OneTaste founder Nicole Daedone responded to a request from the U.S. Attorney’s Office in Brooklyn for a hearing to explore what the government called the possibility for divided loyalties among defense lawyers.”
  • “Steptoe represents both Daedone and Institute of OM, which the government said is a OneTaste-affiliated entity. Institute of OM is not a defendant. Cherwitz is represented by law firm Alston & Bird.”
  • “Prosecutors said they were concerned about two things: Daedone’s legal strategy — for instance, if she were to plead guilty — could ‘tarnish the OneTaste brand’ and be ‘adverse’ to Institute of OM, prosecutors said.”
  • “In addition, they said OneTaste’s payment of fees to Cherwitz’s lawyers could affect what legal advice they provide to her in any scenario in which she takes a stance adverse to OneTaste.”
  • “Steptoe ‘owes a duty of loyalty’ to the Institute of OM and could be limited in sharing information with Daedone, prosecutors told U.S. District Judge Diane Gujarati.”
  • “In their court filing, Daedone’s attorneys called the government’s concerns ‘speculative’ and ‘implausible.'”
    “‘The dual representations have not, and have no potential of, creating a conflict of interest for Steptoe,’ Steptoe’s Reid Weingarten and Julia Gatto said.”
  • “Cherwitz’s attorneys denied there was any conflict in her fee arrangement, saying ‘companies routinely agree to advance the legal fees of current and former employees.’ They said there was not ‘a single shred of evidence that Ms. Cherwitz engaged in a forced-labor conspiracy.'”

Opioid Special Master Facing Disqualification Motion After Hitting ‘Reply All’ on Email” —

  • “The special master in the opioid multidistrict litigation is under pressure to disqualify himself after he hit ‘reply all’ on an email that was meant for himself but, instead, went to lawyers in dozens of cases.”
  • “David Cohen, who has served as special master since 2018, intended to forward an Aug. 28 email with notes to himself on the bellwether trial process in the opioid cases against pharmacy benefit managers. But, according to an affidavit, he accidentally replied to all the lawyers in the cases.”
  • “Now, lawyers at Alston & Bird and Quinn Emanuel Urquhart & Sullivan, representing two pharmacy benefit managers, have moved to disqualify Cohen on the basis of the email, which ‘would lead any reasonable observer to question his impartiality.’
    Cohen, a prominent special master in mass torts, immediately emailed lawyers to apologize, asking them to disregard his earlier email, which was ‘meant to be to my own files.’ But on Sept. 1, lawyers for the pharmacy benefit managers requested in an email that he disqualify himself.”
  • “In a Sept. 7 email responding to them, Cohen said he found no reason to recuse himself. ‘To this day,’ he wrote in an attached affidavit, ‘I have never had any disqualifying personal bias or prejudice concerning any party, nor any disqualifying personal knowledge of disputed evidentiary facts concerning any proceeding, in any case where I served as special master.'”
  • “Cohen sent his email two days before an Aug. 30 hearing. In his email, he wrote: ‘PBMs’ goal is to complicate and delay (including a request to do nothing and set a status 4 weeks hence). I say Ps add claims against PBMs as mail-order pharmacies. Two reasons: (1) Ps are the master of their own complaint, and (2) claims against PBMs as mail-order pharmacies will show how much PBMs knew (and they knew a lot). And then let PBMs respond as they wish. If that complicates the case, so be it. We are used to that.'”
  • “The disqualification motion cites that portion of the email, and Cohen’s decision to allow each side to pick four bellwether cases, not two, because ‘it is too easy for Ds to buy off 2 Ps, avoiding any global resolution.'”
  • “‘Special Master Cohen’s email shows that he has prejudged merits issues before any evidence has come in and before OptumRx or Express Scripts have had any opportunity to brief and be heard on the question of their purported knowledge,’ the motion says. ‘That alone requires disqualification.'”
  • “At the Aug. 30 hearing, U.S. District Judge Dan Polster, who is overseeing the opioid multidistrict litigation in the Northern District of Ohio, was quick to shut down any possibility that he would disqualify Cohen.”
  • “‘Well, that isn’t going to happen,’ he told Boone, according to a transcript. ‘You know, he sent something that – it showed – may have shown his thought at the moment, doesn’t in any way, shape, or form indicate that he’s biased or prejudged anything. All right? No one has a clue what the evidence is. All right? I don’t.'”

Law Firm Accused of Waiting More Than a Year to Inform Affected Parties About Data Breach” —

  • “Los Angeles-based law firm Hill, Farrer & Burrill was slapped with a data breach class action over allegations it detected a data breach in March 2022 but waited over a year to inform affected individuals their personal information had been leaked.”
    “Booker alleges that the data breach was a result of Hill Farrer’s inadequately protected computer network, and that it was completely preventable.”
  • “According to the complaint, Hill Farrer determined that cybercriminals gained unauthorized access to its systems between March 14 and March 18, 2022. The hackers are alleged to have accessed and stole sensitive personal information, including names, dates of birth, Social Security numbers, and medical treatment information of Booker and other victims.”
  • “Booker claims she was notified of the breach on Sept. 5, 2023, over a year after it was discovered that an unauthorized user had gained access to the firm’s electronic systems. The letter informed her that her name, date of birth, Social Security number, and medical treatment information was stored in a system that had been accessed by hackers.”
  • “According to the complaint, the Los Angeles firm’s lack of urgency to inform victims that their information had been leaked allowed cyber criminals ‘free reign to surveil and defraud their unsuspecting victims.'”