Abdo v. Fitzsimmons

Background

Seyfarth Shaw LLP represented Ernest D. Del and other defendants in Abdo v. Fitzsimmons and a related action. The defendants were former officers or directors of Delivery Agent, Inc., in which the plaintiffs had invested. Del had retained Seyfarth under a 2017 representation agreement that recognized the firm’s joint representation of the other defendants and allowed the firm to withdraw if a conflict arose.

In January 2020, Seyfarth told the defendants that actual conflicts had arisen and that continuing joint representation might prevent the firm from asserting some positions or defenses for particular defendants. Several defendants obtained separate counsel. Del did not obtain new counsel, did not sign the revised retainer, and told Seyfarth that he would not waive the conflicts. Seyfarth moved to withdraw, also asserting that Del had generally failed to participate meaningfully in the defense. Del disputed that assertion and argued that the withdrawal was really related to the depletion of insurance coverage.

Motion to Seal

Seyfarth filed an administrative motion to seal exhibits to its reply. The court stated that sealing requires a showing that the material is privileged, protected as a trade secret, or otherwise legally protected, and that the request must be narrowly tailored. The court found that the three documents contained privileged attorney-client communications, that the request was narrowly tailored, and that it was unopposed. The court therefore granted the motion to seal.

Motion to Withdraw

The court applied the Northern District of California’s rules governing attorney withdrawal and the professional-conduct standards applicable to California lawyers. Those standards prohibit representation when a lawyer knows or reasonably should know that the representation would violate the rules, including when there is a significant risk that responsibilities to another client will materially limit the lawyer’s representation.

The court granted Seyfarth’s motion to withdraw. It reasoned that Seyfarth could not ethically continue representing Del and the other defendants without Del’s agreement to waive the existing conflicts and accept limits on certain arguments and defenses. The court also considered the timing of the withdrawal and the potential prejudice to Del. It found that Seyfarth had provided sufficient written notice, that Del had had enough time to seek separate counsel, and that sufficient time remained for new counsel to participate meaningfully because dispositive motions were not due for approximately 80 days and no trial was scheduled before the end of the year.

Because Del had not consented to the withdrawal and no substitution of counsel had been filed, the court imposed a condition: court papers and papers from other parties had to continue to be served on Seyfarth for forwarding until Del appeared through substitute counsel or as permitted by the local rules. Seyfarth also had to electronically file proof that papers had been served on Del. The court ordered Del to file a substitution of counsel by August 21, 2020. Judge Thomas S. Hixson vacated the scheduled hearing and decided the motions without oral argument.