259 F. Supp. 3d 38
S.D.N.Y.2017Background
- FNBC sued Murex in a 13-count action alleging receivables fraud; Holland & Knight (H&K) represented FNBC in filing the suit.
- Earlier, Murex retained H&K (via senior policy analyst Michael McAdams) in Jan 2016 for a three‑month lobbying/consulting engagement regarding EPA RIN replacement rules; the engagement letter disclaimed creation of an attorney-client relationship.
- On Jan 29, 2016 the EPA sent Murex a 30‑day notice threatening enforcement re: possibly invalid RINs; thereafter McAdams drafted/edited Murex’s affirmative‑defense submissions to the EPA, reviewed confidential Murex materials, and advised on strategy.
- H&K’s Atlanta litigation team (including Maines) began representing FNBC against Murex in Dec 2015–Jan 2016; H&K asked Murex for a conflict waiver in March 2016, which Murex refused.
- Murex moved to disqualify H&K as FNBC’s counsel, arguing H&K concurrently provided legal services to Murex (not merely lobbying), gained confidential information, and thus an actual/apparent conflict and trial‑taint exist. The Court granted disqualification.
Issues
| Issue | Murex's Argument | H&K/FNBC's Argument | Held |
|---|---|---|---|
| Whether H&K formed an attorney-client relationship with Murex (vs. lobbying only) | McAdams provided legal advice: drafted/edited EPA submissions, applied regulatory law to facts, accessed confidential materials — thus attorney-client relationship formed | Engagement letter labeled work as lobbying/consulting, McAdams is not a licensed lawyer, parties never executed a legal engagement — no attorney-client relationship | Court: H&K did provide legal services to Murex after the EPA Notice; a reasonable Murex belief in attorney-client relationship existed, so an attorney-client relationship formed |
| Whether representations to Murex and to FNBC were concurrent | Representation of Murex (Jan–Mar 2016) overlapped with H&K’s representation of FNBC (Dec 2015 onward); H&K sought a waiver while both representations were ongoing | H&K argued matters were unrelated and later in time (FNBC suit filed after Murex work ended) | Court: Representations were concurrent when the conflict arose; concurrent‑representation standard applies |
| Whether disqualification is required given the concurrent representation | H&K gained Murex confidences and its complaint initially alleged Murex’s EPA/RIN exposure (creating appearance of disloyalty); risk of use of confidences at trial | H&K argued RIN/EPA materials are irrelevant to FNBC’s claims, erected an ethics screen after motion, and amended the complaint to remove RIN allegations | Court: Disqualification required — H&K failed to meet heavy burden to show absence of actual/apparent conflict; initial pleading and access to confidential EPA materials created unacceptable risk of trial taint |
| Whether an advance waiver in the engagement letter justified H&K’s adverse representation | H&K relied on lobbying agreement language and broad waiver permitting adverse representations in unrelated matters | Murex argued the agreement did not contemplate defense of an EPA enforcement action and did not give informed consent to this specific conflict | Court: Advance waiver insufficient because H&K’s work exceeded the written lobbying scope and waiver did not cover the precise conflict; informed consent was lacking |
Key Cases Cited
- Hempstead Video, Inc. v. Incorporated Village of Valley Stream, 409 F.3d 127 (2d Cir. 2005) (federal courts’ authority to disqualify counsel and balancing test)
- Nyquist v. Board of Education, 590 F.2d 1241 (2d Cir. 1979) (concurrent/successive representation and risk of trial taint standards)
- Evans v. Artek Systems Corp., 715 F.2d 788 (2d Cir. 1983) (standards and concerns when moving to disqualify counsel)
- Murray v. Metropolitan Life Ins. Co., 583 F.3d 173 (2d Cir. 2009) (disfavored nature of disqualification and high standard of proof)
- Hull v. Celanese Corp., 513 F.2d 568 (2d Cir. 1975) (doubt resolved in favor of disqualification)
- Purgess v. Sharrock, 33 F.3d 134 (2d Cir. 1994) (disqualification committed to district court’s discretion)
- GSI Commerce Solutions, Inc. v. BabyCenter, LLC, 618 F.3d 204 (2d Cir. 2010) (burden on lawyer in concurrent representation to show no actual or apparent conflict)
- Cinema 5, Ltd. v. Cinerama, Inc., 528 F.2d 1384 (2d Cir. 1976) (prima facie impropriety of representing a client and concurrently suing that client)
- Glueck v. Jonathan Logan, Inc., 653 F.2d 746 (2d Cir. 1981) (concurrent‑representation burden described as rarely met)
- Cheng v. GAF Corp., 681 F.2d 1052 (2d Cir. 1982) (risk of inadvertent influence from confidences warrants disqualification)
- Fund of Funds Ltd. v. Arthur Andersen & Co., 567 F.2d 225 (2d Cir. 1977) (presumption that confidences are shared within a firm and disqualification principles)