Articles Posted in Legal Ethics

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The Fifth Circuit reversed the district court's determination that plaintiffs were not prevailing parties and denial of recovery of attorneys' fees. Plaintiffs filed suit under 42 U.S.C. 1988, seeking both declaratory relief that defendant's actions violated their rights and injunctions staying defendant from terminating their Supplemental Nutritional Assistance Program (SNAP) benefits. The Fifth Circuit held that plaintiffs were the prevailing party before the district court because plaintiffs obtained judicially-sanctioned relief in the form of the Settlement Order, and the Settlement Order materially altered the legal relationship of the parties by making defendant subject to additional requirements not included under the SNAP program. The Fifth Circuit remanded to the district court to assess whether special circumstances apply and, if they do not, to determine the amount of reasonable and necessary attorneys' fees. View "Romain v. Walters" on Justia Law

Posted in: Legal Ethics

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The court-appointed receiver of the Stanford entities filed suit alleging that six transfers from SCB to Dillon Gage were fraudulent transfers under the Texas Uniform Fraudulent Transfer Act (TUFTA), Tex Bus. & Com. Code 24.005(a)(1), and should be returned to receivership. The jury found that the transfers were not fraudulent. The district court subsequently denied Dillon Gage attorney's fees. Both parties appealed. The Fifth Circuit concluded that the jury reasonably could have found that SCB could have raised sufficient capital to pay Dillon Gage to complete the Gallery Deal without using new customers' money; the jury was not required to find that SCB was insolvent at the time of the transfers; and, viewing both the direct and circumstantial evidence of fraud as a whole, a rational jury could have found that SCB did not act with fraudulent intent. The Fifth Circuit rejected the receiver's four challenges to the jury instructions and concluded that they were without merit, and held that the district court did not apply the wrong standard in assessing Dillon Gage's fee request. Accordingly, the Fifth Circuit affirmed the jury verdict and order denying attorney's fees. View "Janvey v. Dillon Gage Inc. of Dallas" on Justia Law

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The Fifth Circuit vacated the district court's grant of BDO's request for a protective order, holding that BDO did not prove its prima facie case of attorney-client privilege as to all of the log entries at issue, and that a protective order was unwarranted. The EEOC brought a subpoena enforcement action against BDO, seeking production of information relating to an employment discrimination investigation and asserting that BDO's privilege log failed to establish that the attorney-client privilege protected the company's withheld documents. The Fifth Circuit concluded that the log had three types of deficiencies that prevent the court from determining the applicability of the privilege: (a) entries that are vague and/or incomplete, (b) entries that fail to distinguish between legal advice and business advice, and (c) entries that fail to establish that the communications were made in confidence and that confidentiality was not breached. Because the magistrate judge's incorrect application of the legal standard may have affected both her analysis of the allegedly disclosed communications and the breadth of the protections she imposed in her order, the Fifth Circuit remanded so that BDO's request for protection may be considered under the proper legal standard for determining privilege. View "EEOC v. BDO USA" on Justia Law

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Wise Regional, a Texas municipal hospital authority, filed suit against Aetna, an insurance plan administrator, in state court over a dispute regarding medical insurance claims Wise Regional submitted on behalf of its patients. Aetna removed to federal court under 28 U.S.C. 1442, but the district court remanded to state court, awarding attorneys' fees. The court concluded that it had appellate jurisdiction over the remand order because Aetna relied upon the federal officer removal statute in its notice of removal; remand was proper because Aetna's notice of removal was untimely; and the district court did not abuse its discretion in awarding attorneys' fees where Aetna lacked an objectively reasonable basis for seeking removal of this action almost five months after expiration of the thirty-day deadline for removal. Accordingly, the court affirmed the judgment. View "Decatur Hospital Authority v. Aetna Health, Inc." on Justia Law

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The district court granted summary judgment to Darwin, concluding that plaintiff was judicially estopped from claiming defense costs in excess of $668,068.38. The district court further found that Darwin was entitled to recover "overpayments" on an equitable "money had and received" theory. Both parties appealed. The court concluded, after thorough review, that plaintiff never took the position that her defense costs in the underlying suit were limited to $668,068.31 and that the prior court never accepted such a position. Therefore, the district court's contrary determination represented an abuse of discretion and the application of judicial estoppel was inappropriate. The court further concluded that summary judgment should not have been granted against plaintiff on the breach of contract claim where the district court relied in part on the judicial estoppel ruling; the proper measure of covered defense costs remains an unsettled question of fact and plaintiff was not entitled to a declaratory judgment; and the court rejected plaintiff's remaining claims. In light of the court's judicial estoppel ruling, the court concluded that the district court's grant of summary judgment on Darwin's claim for money had and received cannot stand. Finally, the court rejected Darwin's breach of contract claim. Accordingly, the court reversed and remanded for further proceedings. View "Aldous v. Darwin National Assurance Co." on Justia Law

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After the district court awarded BancorpSouth nearly $1 million in attorneys’ fees under state law, or, in the alternative, under the Copyright Act, 17 U.S.C. 101 et seq., Spear Marketing appealed. Spear Marketing argued that the district court erred in awarding attorneys’ fees under state law because its state law claim was preempted and erred in alternatively awarding attorneys’ fees under the Copyright Act because it never pleaded or litigated a copyright claim. The court concluded that the district court did not err in awarding attorneys' fees under the state law because no court has ever held the state law claim to be preempted. View "Spear Marketing v. BancorpSouth Bank" on Justia Law

Posted in: Legal Ethics

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Appellants-attorneys Shawn Fitzpatrick and Timothy Flocos were sanctioned by the district court for certifying that their clients’ initial disclosures under Federal Rule of Civil Procedure 26(a)(1) were complete and correct even though the disclosures failed to mention evidence that Appellants later used during a deposition. Appellants appealed, asking the Fifth Circuit to reverse the district court’s decision and remit to them the monetary sanctions collected by the district court. Appellants argued that they used two recordings solely to impeach a witness' credibility; therefore, they were not required to disclose the recordings under Rule 26(a)(1). Appellants also argued that the district court failed to properly consider whether their decision to withhold the evidence at issue from the initial disclosures was substantially justified. Finding no reversible error in the district court's decision to sanction appellants, the Fifth Circuit affirmed. View "Olivarez v. GEO Group, Inc., et al" on Justia Law

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Plaintiff, an evangelical Christian, filed suit against the City, alleging that he was denied his First Amendment right to hand out religious literature at a public festival. The parties entered into a consent decree where the City agreed to pay plaintiff a dollar in nominal damages and where, among other provisions, the City was prohibited from interfering with plaintiff's free speech rights or other individuals at future public events in downtown Ft. Worth. At issue are the attorney's fees. Because a plaintiff is a prevailing party when nominal damages are awarded, and this case does not present the special circumstances in which a prevailing civil rights plaintiff may be denied fees altogether, the court vacated the order denying fees and remanded for an assessment of the reasonableness of the fee request. View "Grisham v. City of Fort Worth" on Justia Law

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This attorneys’ fees dispute arises out of an underlying lease dispute between HDRE and RARE. HDRE appealed the district court's award of attorneys’ fees for RARE under an attorneys’ fees provision in a lease agreement between the parties that was subsequently novated by another agreement. The court held that the novation of the Lease extinguished the parties’ rights under that agreement to prevailing-party attorneys’ fees and that the district court consequently abused its discretion in awarding fees to RARE. The court disagreed with the district court’s conclusion that several provisions of the Lease evince the parties’ intent for the attorneys’ fees provision to survive a future novation. Accordingly, the court reversed the district court's judgment. View "HDRE Bus. Partners Ltd. Grp. v. RARE Hosp. Int'l" on Justia Law

Posted in: Contracts, Legal Ethics

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Plaintiff filed suit against the city, alleging claims for hostile work environment, quid pro quo, and retaliation under Title VII of the Civil Rights Act, 42 U.S.C. 2000e et seq. On appeal, plaintiff challenged the district court's reduction of her attorney fee award. The district court concluded that the ratio between attorney’s fees and damages was excessively disproportionate. The court vacated the fee award and remanded for determination of a new fee award, concluding that there is no requirement of strict proportionality between attorney’s fees and damages. View "Combs v. City of Huntington" on Justia Law

Posted in: Legal Ethics