Williams v. La Perla North America, Inc.

Background

Hughes Hubbard & Reed LLP (HHR) moved for permission to withdraw as counsel for La Perla North America, Inc. HHR stated that La Perla was no longer a functioning entity with which counsel could meaningfully discuss legal strategy and that La Perla had failed to pay legal fees and costs for several months. Williams opposed the motion.

The opinion states that La Perla had closed all of its stores in the United States, closed its New York headquarters, and had no remaining U.S. employees. HHR’s only contact, Matt McEvoy, was described as an outside restructuring consultant rather than an officer, director, or employee of La Perla. HHR stated that it had not maintained contact with him and had no authority to act for La Perla.

Court’s analysis

The court explained that counsel in the district may withdraw only after receiving a court order and providing advance written notice to the client and other parties who have appeared. The court also considered the reasons for withdrawal, potential prejudice to other litigants, effects on the administration of justice, and possible delay.

The court found good cause for withdrawal. La Perla had not paid HHR’s legal fees or costs since April 2023, despite efforts to collect $614,542 in fees and $29,682 in expenses. The court also found that La Perla’s lack of communication made it impossible for HHR to meaningfully defend the case. HHR had provided notice of the motion to Williams and to La Perla through its New York office, its registered service agent in California, and email to McEvoy.

Williams argued that HHR should not be allowed to withdraw after litigating the case for about a year. He contended that HHR had caused him to incur significant costs defending against counterclaims and preparing for a deposition that did not occur. The court noted that it had granted Williams’s two motions to dismiss La Perla’s counterclaims, but had not found those counterclaims frivolous. The court also found that HHR responded the same day Williams’s counsel asked whether La Perla would produce a deposition witness, and that HHR had previously provided information about La Perla’s financial problems.

The court concluded that allowing withdrawal would not impede the administration of justice or cause additional delay beyond the existing delay. It reasoned that HHR could not litigate without a client directing the litigation and that withdrawal would allow the case to move forward.

Ruling and consequences

Judge Jacquelyn Corley granted HHR’s motion to withdraw as counsel for La Perla. Because no replacement lawyer appeared at the same time, HHR must continue receiving papers for forwarding to La Perla until La Perla appears through new counsel. La Perla must obtain new counsel within 30 days of the order. HHR must notify La Perla of the order and its continuing obligation to accept service and must file proof of that notice within three days.

The court set a further case-management conference for March 28, 2024. If new counsel appeared, a joint conference statement was due one week before the conference; if no counsel appeared by March 25, 2024, no further statement was due.