Risk Update

Waiver & DQ News — Ex-client’s Conflicts Waiver Leads to Lawsuit, Update on Opioid Special Master “Reply All” Disqualification Motion

Posted Dan Bressler

“Ex-ArentFox client claims law firm secretly prepared to sue it on rival’s behalf” —

  • “A government contractor has sued its former counsel at U.S. law firm ArentFox Schiff, alleging the firm failed to disclose that it was preparing a lawsuit against it on behalf of one of the contractor’s business rivals.”
  • “Peraton, a contractor owned by private-equity firm Veritas Capital, alleged that ArentFox secretly fed information about it to CACI International, another ArentFox client. ArentFox used that information to help prepare a lawsuit against Peraton on behalf of CACI, Peraton alleged.”
  • “The law firm shot back against Peraton’s claims in a statement, saying the government contractor ‘knowingly consented to the firm pursuing litigation against it.'”
  • “It added, ‘Peraton is a sophisticated company whose own general counsel signed the consent on its behalf.'”
  • “ArentFox and Brand represented Peraton in licensing and sponsorship deals, netting the firm nearly $500,000 fees. Meanwhile, ArentFox was representing CACI in a trade secrets lawsuit in Virginia state court against two of CACI’s former employees, the Peraton lawsuit alleged.”
  • “Peraton alleged that ArentFox came to it with a conflict waiver under the pretense that the law firm was being served with a subpoena.”
  • “‘Had Peraton known that Arent Fox wanted permission to investigate legal claims against Peraton, sue Peraton, disclose its confidential information to CACI, or participate in a government inquiry against Peraton, then Peraton never would have consented to such a waiver,’ the lawsuit said.”
  • “Peraton signed off on the waiver in July 2022 and obtained a protective order that would limit the disclosure of its sensitive business information to ArentFox lawyers, not CACI. The lawsuit alleged that ArentFox had the order modified so that a pair of CACI executives could see the information from Peraton. ArentFox in its statement said it ‘certainly did not misuse any confidential Peraton information.'”

Follow up on this story: “Opioid Special Master Who Hit ‘Reply All’ Protected by Judicial Deliberative Privilege, Judge Rules” —

  • “A federal judge, invoking a judicial privilege to freely deliberate on matters, refused to disqualify the special master in the opioid multidistrict litigation.”
  • “In a Tuesday order, U.S. District Judge Dan Polster rejected a motion filed last month by two pharmacy benefit managers to disqualify David Cohen after the special master inadvertently sent an email to lawyers in the case. Cohen, who meant to send the email to himself, has been a special master in the opioid multidistrict litigation since 2018.”
  • “Polster sided with the plaintiffs’ executive committee in concluding that the email falls under the judicial deliberative privilege, which protects confidential communications among judges and their staff.”
  • “‘Special Master Cohen’s email, which consisted entirely of his own mental impressions, personal notes, and private musings about the submitted status reports, was unquestionably a privileged judicial deliberative memorandum to himself,’ Polster, who sits in the Northern District of Ohio, ruled.”
  • “He added, ‘For the judicial system to function, judges must view the arguments presented to them with an appropriate degree of skepticism. If judges were subject to accusations of bias and potential disqualification based solely on private, skeptical thought about a party’s position, there could be no judges.'”
  • “Polster questioned the motivations behind the disqualification motion, in which the pharmacy benefit managers ‘repeatedly and misleadingly attempt to convert the Special Master’s private thoughts into public comments.’ Such actions, he wrote, did not follow the standards of professional conduct outlined in his protective order.”
  • “In a footnote, he added: ‘The court also notes that, were the email from opposing counsel rather than the Special Master, and the PBMs responded that not only would they not allow counsel to claw back their inadvertent disclosure but intended to use it to attempt to gain some tactical advantage in litigation, such conduct could be the subject of a motion for sanctions.'”