Samuel Troice v. Proskauer Rose, L.L.P., et
2016 U.S. App. LEXIS 4480
| 5th Cir. | 2016Background
- Plaintiffs (buyers of Stanford Financial CDs) sued Thomas Sjoblom and his law firms for aiding and abetting fraud and conspiring to obstruct the SEC investigation into Allen Stanford’s Ponzi scheme.
- Plaintiffs’ allegations arise from Sjoblom’s representation of Stanford Financial during the SEC investigation: sending a jurisdictional letter, communicating with the SEC about documents and credibility, recommending deponents, and representing an executive at a deposition.
- Defendants moved to dismiss on multiple grounds, including SLUSA and Texas attorney-immunity; district court initially dismissed on SLUSA grounds but that was reversed and affirmed by the Supreme Court on appeal.
- On remand the district court denied defendants’ immunity-based motions to dismiss, concluding plaintiffs had pleaded a colorable fraud claim sufficient to invoke a putative “fraud exception” to attorney immunity.
- After defendants appealed, the Texas Supreme Court decided Cantey Hanger v. Byrd holding that “[f]raud is not an exception to attorney immunity,” clarifying immunity covers wrongful acts within the scope of representation.
- The Fifth Circuit held (1) Texas attorney immunity is a true immunity from suit (so the denial was immediately appealable under the collateral-order doctrine), and (2) under Cantey Hanger the alleged conduct fell within the scope of representation, so attorney immunity bars the suit; the court reversed and dismissed with prejudice.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is denial of a Texas attorney-immunity motion immediately appealable under the collateral-order doctrine? | Denial is not appealable because attorney immunity is merely an affirmative defense, not immunity from suit. | Attorney immunity is a true immunity from suit and denial is effectively unreviewable later. | Appealable: Texas attorney immunity is a true immunity from suit; collateral-order doctrine applies. |
| Does a fraud exception to attorney immunity permit plaintiffs’ claims? | Plaintiffs argued their pleaded fraud claims defeat immunity (colorable fraud claim suffices). | No fraud exception; Cantey Hanger forecloses treating fraud as an exception when conduct is within scope of representation. | No fraud exception: fraud allegations insufficient when conduct is within scope of representation. |
| Does attorney immunity protect attorneys from suits brought by non-clients/third parties? | Plaintiffs: immunity only protects against party-opponents, not third-party victims. | Defendants: immunity protects attorneys from liability to non-clients as well. | Immunity extends to non-clients; Texas law contemplates protection against liability to non-clients. |
| Were Sjoblom’s alleged actions within the scope of representation (thus immunized)? | Plaintiffs implicitly: some acts were fraudulent and outside protected scope. | Defendants: alleged communications and deposition representation are classic representation acts and immunized. | Held immunized: alleged acts (letters, communications, deposition representation) were within scope; dismissal warranted. |
Key Cases Cited
- Cantey Hanger, LLP v. Byrd, 467 S.W.3d 477 (Tex. 2015) (fraud is not an exception to attorney immunity; immunity does not extend to wrongful conduct outside scope of representation)
- Chadbourne & Parke LLP v. Troice, 134 S. Ct. 1058 (U.S. 2014) (SLUSA preclusion issue reversed and remanded)
- Digital Equipment Corp. v. Desktop Direct, Inc., 511 U.S. 863 (1994) (orders denying certain immunities are strong candidates for collateral-order appeals)
- Will v. Hallock, 546 U.S. 345 (2006) (immunity must protect against trial and burdens that would imperil substantial public interest)
- Shanks v. AlliedSignal, Inc., 169 F.3d 988 (5th Cir. 1999) (Texas litigation privilege characterized as true immunity; informing the collateral-order analysis)