Articles Posted in Legal Ethics

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Watkins sued Trans Union for violating the Fair Credit Reporting Act. Trans Union asserted that attorney Cento should be disqualified from representing Watkins because, more than 10 years ago, Cento earned a living defending Trans Union in hundreds of lawsuits alleging Fair Credit Reporting Act violations. The district court found that Indiana Rule of Professional Conduct 1.9 (Duties to Former Clients) does not require Cento’s disqualification. On interlocutory appeal, the Seventh Circuit affirmed. The facts upon which Watkins’ case will turn—recurrent false collection listings on his credit report, despite multiple requests to remove them—are unique to his claim against Trans Union and are not interwoven with any individual case in which Cento represented Trans Union in the past. in cases involving an organizational client like Trans Union, “general knowledge of the client’s policies and practices ordinarily will not preclude a subsequent representation.” The general knowledge and experience Cento gained while defending Trans Union is not the type of confidential information with which Rule 1.9 is concerned. View "Watkins v. Trans Union, LLC" on Justia Law

Posted in: Legal Ethics

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In a class action against Sears concerning a defect in washing machines, the district court awarded class counsel $4.8 million, 1.75 times the fees counsel originally charged for their work on the case. The court reasoned that the case was unusually complex and had served the public interest and that the attorneys obtained an especially favorable settlement. The amount of damages that the class will receive has not yet been determined. The district court accepted Sears' estimate that the class members would receive no more than $900,000. The Seventh Circuit reversed, noting that the “case wasn’t very complex—it was just about whether or not Sears had sold defective washing machines.” A district court should compare attorney fees to what is actually recovered by the class and presume that fees that exceed the recovery to the class are unreasonable. The presumption is not irrebuttable, but in this case, class counsel failed to prove that a reasonable fee would exceed $2.7 million. View "Barnes v. Sears, Roebuck and Co." on Justia Law

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The U.S. Trustee alleged that Husain’s bankruptcy filings regularly failed to include debtors’ genuine signatures. Bankruptcy Judge Cox of the Northern District of Illinois made extensive findings, disbarred Husain, and ordered him to refund fees to 18 clients. When he did not do so, Judge Cox held him in contempt of court. The court’s Executive Committee affirmed the disbarment and dismissed the appeal from the order holding Husain in contempt but did not transfer the contempt appeal to a single judge, although 28 U.S.C. 158(a) entitles Husain to review by at least one district judge. The Seventh Circuit affirmed the disbarment and remanded the contempt appeal for decision by a single judge. The court noted extensive evidence that Husain submitted false signatures, documents that could not have been honest, and petitions on behalf of ineligible debtors; he omitted assets and lied on the stand during the hearing. The court noted that Husain’s appeal was handled under seal and stated that: There is no secrecy to maintain, no reason to depart from the strong norm that judicial proceedings are open to public view. View "In re: Husain" on Justia Law

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In 2012, Koehn filed a pro se complaint against his former employers. A magistrate held a settlement conference and appointed counsel for Koehn. The parties did not settle. Koehn obtained new counsel. The court held a telephonic status hearing and inquired about settlement negotiations. Defense counsel explained that he was new to the case and that, based on conversations with Defendants’ prior counsel, he believed that Defendants’ insurer had proposed a settlement of about $150,000. Koehn’s counsel stated that she had never heard that figure and that, given that information, a settlement conference might be productive. Defense counsel agreed and the court scheduled a conference. At that conference, Defendants offered less than $75,000, which Koehn had rejected in 2015. Koehn rejected the offer again. When the conference ended, the court stated: “At the conclusion of the jury trial, counsel for the Plaintiff may submit a request for attorney’s fees and costs associated with the unnecessary settlement conference held based upon defense counsel’s representations.” Koehn lost at trial but requested $3,744 in fees and $552.85 in costs associated with the 2016 conference. The district court granted Koehn’s motion; FRCP 16 allows the imposition of sanctions where a party’s failure to timely and candidly communicate a change in settlement posture results in an unnecessary settlement conference. The Seventh Circuit affirmed. Defendants did not participate in the settlement conference in good faith. View "Koehn v. Tobias" on Justia Law

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Murphy was an inmate in the Illinois Vandalia Correctional Center when correctional officers hit him, fracturing his eye socket, and left him in a cell without medical attention. Murphy sued under 42 U.S.C. 1983 and state-law theories. The court reduced a jury award of damages to $307,733.82 and awarded attorney fees under 42 U.S.C. 1988. The Seventh Circuit affirmed with respect to liability, rejecting an argument that state-law sovereign immunity bars the state-law claims. The Illinois doctrine of sovereign immunity does not apply to state-law claims against a state official or employee who has violated statutory or constitutional law. The court reversed and remanded the attorney fee award. Under 42 U.S.C. 1997e(d), the attorney fee award must first be satisfied from up to 25 percent of the damage award, and the district court does not have discretion to reduce that maximum percentage. Murphy then sought attorney fees for the appeal. The Seventh Circuit denied the petition. Murphy’s only success on appeal came on a purely state-law issue affecting damages awarded only under state law; a section 1988(b) award is not appropriate for that work. Plaintiff has already won—in the district court—both damages and a fee award for all of his attorney’s successful efforts thus far under federal law. View "Murphy v. Smith" on Justia Law

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The Blatt firm filed a collection lawsuit against Oliva in the first municipal district of the Circuit Court of Cook County. Oliva resided in Cook County. Under the Seventh Circuit’s 1996 “Newsom” decision, interpreting the Fair Debt Collection Practices Act (FDCPA) venue provision, debt collectors were allowed to file suit in any of Cook County’s municipal districts if the debtor resided in Cook County or signed the underlying contract there. While the Oliva suit was pending, the Seventh Circuit overruled Newsom, with retroactive effect (Suesz, 2014). Blatt voluntarily dismissed the suit. Oliva sued Blatt for violating the FDCPA as newly interpreted by Suesz. The district court granted Blatt summary judgment, finding that it relied on Newsom in good faith and was immune from liability under the FDCPA’s bona fide error defense, 15 U.S.C. 1692k(c). The Seventh Circuit initially affirmed. On rehearing, en banc, the Seventh Circuit vacated. The holding in Suesz was required by the 2010 Supreme Court decision in Jerman v. Carlisle, that the FDCPA’s statutory safe harbor for bona fide mistakes does not apply to mistakes of law. Under Suesz and Jerman, the defendant cannot avoid liability for a violation based on its reliance on circuit precedent or any other bona fide mistake of law. View "Oliva v. Blatt, Hasenmiller, Leibsker & Moore, LLC" on Justia Law

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Seventh Circuit Rules 3(c)(1) and 28(a) require the same jurisdictional information for docketing and briefing. With an exception for pro se submissions, the court screens all filed briefs to ensure that they include all required information about the jurisdiction of both the district court (or agency) and the court of appeals. FRAP 28(b) allows the appellee to omit the jurisdictional statement “unless the appellee is dissatisfied with the appellant’s statement.” In consolidated appeals, the Seventh Circuit found the jurisdictional statements inadequate and stated that the appellee cannot simply assume that the appellant has provided a jurisdictional statement that complies with the rules. The appellee must review the appellant’s jurisdictional statement to see if it is both complete and correct. If the appellant’s statement is not complete, or not correct, the appellee must file a “complete jurisdictional summary.” It is not enough simply to correct the misstatement or omission and “accept” the balance of the appellant’s statement. In one case, the Attorney General stated: “Mr. Baez‐Sanchez’s jurisdictional statement is correct,” saying nothing about completeness, so the brief must be returned to the Department of Justice. The other jurisdictional statement states “Appellants’ jurisdictional statement provides a complete jurisdictional summary.” The court stated: Fine, but what about correctness? View "Bishop v. Air Line Pilots Association, International" on Justia Law

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Hunt worked as a truck driver. In 2010, he signed an Independent Contractor Operating Agreement with Moore Brothers, a small Norfolk, Nebraska company. Three years later, Hunt and Moore renewed the Agreement. Before the second term expired, however, relations between the parties soured. Hunt hired Attorney Rine. Rine filed suit in federal court, although the Agreements contained arbitration clauses. Rine resisted arbitration, arguing that the clause was unenforceable as a matter of Nebraska law. Tired of what it regarded as a flood of frivolous arguments and motions, the district court granted Moore’s motion for sanctions under 28 U.S.C. 1927 and ordered Rine to pay Moore about $7,500. The court later dismissed the action without prejudice. The Seventh Circuit affirmed. It was within the district court’s broad discretion, in light of all the circumstances, to impose a calibrated sanction on Rine for her conduct of the litigation, culminating in the objectively baseless motion she filed in opposition to arbitration. View "James Hunt v. Moore Brothers, Inc." on Justia Law

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General Motors (GM), represented by the Mayer Brown law firm, entered into secured transactions in which JP Morgan acted as agent for two different groups of lenders. The first loan (structured as a secured lease) was made in 2001 and the second in 2006. In 2008, the 2001 secured lease was paid off, which required the lenders to release their security interests in the collateral securing the transaction. The closing papers for that payoff accidentally also terminated the lenders’ security interests in the collateral securing the 2006 loan. No one noticed—not Mayer Brown and not JP Morgan’s counsel. When GM filed for bankruptcy protection in 2009, GM and JP Morgan noticed the error. Plaintiffs, members of the consortium of lenders on the 2006 loan, were not informed until years later. Plaintiffs sued GM’s law firm, Mayer Brown. The Seventh Circuit affirmed dismissal, holding that Mayer Brown did not owe plaintiffs a duty. The court rejected arguments that JP Morgan was a client of Mayer Brown in unrelated matters and thus not a third‐party non‐client; even if JP Morgan was a third‐party non‐client, Mayer Brown assumed a duty to JP Morgan by drafting the closing documents; and the primary purpose of the GM‐Mayer Brown relationship was to influence JP Morgan. View "Oakland Police & Fire Retirement System v. Mayer Brown, LLP" on Justia Law

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Leonard was appointed to defend Ogoke, who was charged with wire fraud. Ogoke’s codefendant, Okusanya entered into a cooperation plea agreement. Based on the government's motion in limine, Judge Guzmán entered an order that “unless there is a showing that the missing witness is peculiarly within the government’s control, either physically or in a pragmatic sense, Defendant is precluded from commenting on the government’s failure to call any witness.” It was the government’s theory that Ogoke and Okusanya were coconspirators in the fraud. Okusanya appeared on the government’s witness list, but the government did not call him during trial. During his closing argument, Leonard made several references to Okusanya’s failure to testify. Judge Guzmán sustained an objection and struck that portion of the argument. Before the jury returned a verdict, Judge Guzmán issued an order to show cause as to why Leonard should not be held in contempt. The jury found Ogoke not guilty. The government declined to participate in the contempt proceeding, Leonard was represented by counsel, but no prosecutor was appointed. Leonard stated that he had not realized he violated the ruling, but later acknowledged his “huge mistake.” Judge Guzmán issued an order holding Leonard in contempt, 18 U.S.C. 401, and ordering him to pay a fine, finding Leonard’s explanation “incredible” given his extensive experience as a defense attorney. The Seventh Circuit affirmed the conviction as supported by sufficient evidence, rejecting procedural and due process arguments. View "United States v. Ogoke" on Justia Law