Steve Herman's Blog

The Standing Committee of the ABA issued a formal Opinion regarding Government Lawyers’ Obligations When Knowing of a Public Official’s Intended or Ongoing Violation of the Law.  In sum:

“Model Rules of Professional Conduct 1.13(b) and (c) guide lawyers employed or retained by an organization when they know of intended or ongoing violations of law or other legal obligations by representatives of the organization that, depending on the circumstances, are likely or reasonably certain to result in “substantial injury to the organization.” With respect to Government lawyers, a violation of a legal obligation or of law by an officer or employee of a government organization will be “imputed” to the organization if the officer or employee is using or misusing authority that the officer or employee possesses by virtue of their employment with the government. For purposes of these provisions, any violation of a legal obligation to the government organization or violation of law that reasonably might be imputed to a government organization will cause “injury” to the organization within the meaning of the Model Rules – given the government’s obligation to support, defend, and promote the rule of law. The government lawyer should exercise reasonable judgment regarding whether that injury is “substantial” and whether that injury may therefore trigger the permissive or mandatory reporting provisions of Model Rules 1.13(b) and (c).”

More specifically:

“Two threshold questions raised by this scenario must be considered by a lawyer retained or employed by the government. First, there is the question whether the lawyer is employed in a representational capacity. As in private organizations, lawyers in government may serve in various roles, not all involving a lawyer-client relationship. A lawyer retained or employed by the government may hold a position that does not involve serving as a lawyer for the government organization as a client. To the extent the lawyer is not acting in a representative capacity, the rule governing a lawyer-client relationship, including Rule 1.6 and Rule 1.13, do not apply. Whether the lawyer serving in a nonrepresentational capacity may or must disclose information about government illegality to authorities in the government organization or to others may be dictated by internal regulations or other law, but it will not be dictated by Rules of Professional Conduct governing the lawyer-client relationship.

“The second threshold question will be: who is the client? Where the lawyer is serving in representative capacity as a lawyer for a government organization, then the lawyer is subject to the rules governing the lawyer-client relationship, including Rule 1.13. The client’s identity may not always be obvious and is an issue beyond the scope of the Model Rules. Government lawyers can represent a government entity as a whole (e.g., the United States of America, a particular state, or a particular town or county), or a branch of government (e.g., the executive branch, the legislature, or the judiciary), or one or more government agencies. The question is important in this context, in part, because Rule 1.6, the confidentiality rule, restricts a lawyer from disclosing information relating to the representation of a client to third parties without the client’s informed consent, but it does not restrict the disclosure of such information to the client. On the contrary, in many situations, the lawyer has an obligation to disclose information to the client. In the case of an organizational client, the lawyer’s disclosure of information relating to the representation to others within the organization does not necessarily implicate or run afoul of Rule 1.6. It is important therefore to identify the client in order to know whether another person is an officer or employee who can be considered a non-client constituent of the client organization.

“Under the Model Rules, a lawyer representing a government organization who learns of misconduct may always raise the issue within the organization, consistent with Rule 1.4 and Rule 2.1, which address the lawyer’s communications with, and advice to, the client. This is true even if the lawyer suspects but does not ‘know’ of wrongdoing that falls within Rule 1.13(b). A government lawyer may (and perhaps in some cases, must) go up-the-ladder (i.e., report to higherups within the organization), even when Rule 1.13(b) does not require it, because reporting up-the-ladder does not disclose protected information to a third party and therefore does not require the client’s informed consent or implied authorization….

“For a government organization, as with a private organization, ‘injury to the organization’ may include something other than direct financial injury. For example, a violation of a legal obligation or violation of law that subjects the organization to legal liability would likewise cause injury, and perhaps ‘substantial’ injury, even if financial damages will not ensue. Similarly, a constituent’s violation of a legal obligation to the organization may be considered to have resulted in substantial injury to the organization even if the direct financial damages are immaterial. Reputational harm may also constitute injury for any organization, and, if serious enough, may constitute ‘substantial’ injury.

“When assessing whether a violation may cause injury to the organization, government lawyers are differently situated from lawyers representing private organizations because of the unique interests and obligations of the government. In the case of a government organization, the term ‘injury’ should be construed broadly to include harms in addition to financial and other harms that are likely to be more relevant to private organizations. Unlike a private organization or entity, a government entity’s interests are not primarily financial ones. In particular, the lawful functioning of government should be at least as significant to the government organization and to the public officials who run it or oversee it as the government organization’s financial interests. Government organizations have a significant interest in the fair administration of justice and in protecting and preserving the rule of law. The government must set an example, itself complying with the legal obligations, even seemingly minor ones, that apply to it. As Justice Brandeis put it: ‘If the government becomes a lawbreaker, it breeds contempt for law; it invites every man to become a law unto himself; it invites anarchy.’ Thus, in the context of representing the government, the word ‘injury’ includes harm to the rule of law.

“The credibility of government depends on its own compliance with the law. And the rule of law presupposes that no one – and no organization – is above the law. For these reasons and more, a violation of law that is imputed to the government organization – in other words, government lawbreaking or lawlessness – causes injury not only to any third parties who are victims of the violation, but also to the public’s trust in government, and ultimately to the government

organization itself. Given the opportunity, public officials in authority should ordinarily be expected to address violations of legal obligations or of law that would be imputed to the government organization, even if the direct legal consequences to the organization would be insignificant. As a consequence, Rule 1.13 may impose more demanding disclosure obligations on government lawyers than on lawyers for private organizations.

“As is the case for a lawyer representing a private organization, determining whether an injury is ‘substantial’ will require a government lawyer’s exercise of reasonable professional judgment based on all the relevant facts. For a government organization, as for a private organization, Rule 1.13(b) or (c) may be triggered if direct financial injury caused by a violation of law is ‘substantial.’  However, unlike in the private sector, in the context of representing the government, a relatively small financial loss may cause ‘substantial injury to the organization.’ ‘The public interest in the integrity of government may reasonably lead a lawyer to conclude, for example, that misappropriation of a small sum warrants remedial action for the government that might not be warranted for a nongovernmental client.’ The term should be interpreted and applied in light of Rule 1.13’s purpose, which is to require or authorize disclosures necessary to protect the organizational client from substantial injury.  ‘Government lawyers bear special obligations because of the responsibility to maintain public trust in government,’ so the focus should be on whether the injury is significant enough that a higher authority within the organization (in the case of Rule 1.13(b)), or an authority outside the organization (in the case of Rule 1.13(c)), should reasonably want to know the information and reasonably be expected to act on it to protect the organization from being injured by the wrongdoing.”

ABA Opinion No. 524  (July 22, 2026)

The post ABA Advises that Government Attorneys Have Broader Obligations than Private Counsel to Report Ongoing Misconduct by Public Officials or Employees appeared first on Gravier House.

Third-party payors who covered prescriptions for the diabetes medication Avandia brought a putative class action against the manufacturer, GlaxoSmithKline, for misrepresenting the drug’s cardiovascular risks and benefits. GSK’s misrepresentations, they claim, caused more health care providers to prescribe Avandia than cheaper alternatives. That, in turn, allegedly caused these TPPs to reimburse patients for Avandia that otherwise would not have been prescribed.

GSK challenged the District Court’s certification of the class, arguing that (i) it is not ascertainable, because there is not enough evidence to identify which TPPs reimbursed members for the drug, and (ii) that common issues do not predominate on causation because the plaintiffs lack class-wide evidence that GSK’s fraud caused them to cover more Avandia prescriptions than they would have otherwise.

The U.S. Third Circuit held that the proposed class was ascertainable, but parted with the District Court on the issue of whether common issues would predominate on causation.

Joining the First, Second, and Ninth Circuits, the Court concluded that plaintiffs in a pharmaceutical fraud RICO class action may use statistical evidence to prove the defendant was responsible for their injuries when the evidence can establish causation, not merely correlation. In this case, the plaintiffs’ statistical evidence did not satisfy this standard.

With respect to Ascertainability:

GSK advances two arguments that the Plans failed to prove there is a reliable and feasible mechanism for identifying class members: “First, it contends there are no records of which putative members reimbursed Avandia prescriptions in the class period. Second, it asserts that even if those records existed, they would not indicate whether a putative member was an end-payor (thus eligible for class membership) or was fully insured (hence ineligible for class membership). The District Court’s finding that there are objective records of the Plans’ reimbursements for Avandia prescriptions has no clear error. We note that two named plaintiffs dropped out of the case when they could not obtain purchase records from their pharmaceutical benefit managers. But, after receiving a subpoena, UBF’s PBM provided the data, showing it has (or at least had) the records after all. Even if PBMs could not provide the requisite data, the District Court’s finding that class members would be able to corroborate their claims was not clearly erroneous because a potential class member’s affidavit can be corroborated using multiple forms of documentation. The District Court’s finding the Plans will be able to distinguish end-payors from fully insured plans did not clearly err either. GSK claims that most TPPs will rely on PBM purchase records to establish their membership in the class. Generally, those documents do not identify whether a purchaser was an end-payor. The Plans, however, do not propose to rely on PBM data alone; the record contained ample evidence they would be able to use other resources to distinguish end-payors from fully insured TPPs. In a final bid to prevent class certification, GSK frames the Plans’ proposal as a dilemma. In its view, the proposal permits potential class members to identify themselves—violating our admonition that ascertainability cannot rest on mere say-so—or it depends on individualized evidence, risking the very mini-trials the ascertainability requirement exists to prevent. This dilemma is illusory. The Plans’ proposal for distinguishing end-payors from fully insured plans does not rely on mere say-so. Each potential class member’s payor status would be verified with documentation like receipts, claims data, plan documents, or public records. And using these records to confirm a TPP is an end-payor hardly constitutes a mini-trial. To the contrary, it is the straightforward yes-or-no review of existing records to identify class members we have held is administratively feasible even if it requires review of individual records with cross-referencing of voluminous data from multiple sources.”

With respect to Commonality, Predominance, and Causation:

“We do not presume in law that x caused y merely because x happened first. The connection might be causal. But it might be coincidental. Or some z might be responsible for x and y alike. As statisticians emphasize, correlation alone does not prove causation.

“One method experts have developed for distinguishing true causation from mere correlation is multiple regression analysis. It can define statistically the relationship between a dependent variable (e.g., salary) and one or more independent variables (e.g., education or work experience), enabling us to conclude with confidence that the latter is the reason for the former (or is at least one reason). It can also enable us to control for other independent variables so we can rule out competing explanations (or at least rule them unlikely). And it can quantify how much of a difference the cause makes to the effect. Thus, although it may be that the only empirical facts we can discover about the world are facts about correlation, regression analysis can justify the inference of causation by testing and attempted invalidation of other causal hypotheses.”

In this case: “The District Court stated that the Plans introduced internal GSK studies showing a few of its marketing campaigns caused an increase in prescriptions.  On their own, they may not be evidence that GSK’s purportedly unlawful promotion caused an increase in prescriptions, because they did not isolate the cardiovascular messaging from other messaging about Avandia as the cause of increased prescriptions. The Court, while acknowledging GSK raised this concern, defended its determination that the internal marketing research could establish ‘class-wide reliance’ by citing cases holding that, in general, such an inference can be justified by statistical or aggregate evidence a RICO defendant’s fraud caused the plaintiffs’ injuries. That is true. But it does not resolve GSK’s concern. If the GSK studies showed its allegedly fraudulent claims about Avandia’s cardiac effects caused an uptick in prescriptions, then the cases the District Court cited would provide a legal foundation for putting them to work here. But as far as we can tell from the expert reports describing the studies, they did not identify the distinctive consequences of GSK’s allegedly fraudulent marketing as opposed to its marketing generally. Even if they could show physicians relied on what GSK said about Avandia, they may not be able to show doctors were swayed by its alleged misrepresentations about its cardiac effects in particular. Similarly, even if the problem is that all of GSK’s marketing omitted the truth about Avandia’s cardiac profile, the data in the record may not explain how much of its efficacy arose from that omission.

“If the District Court understood the actual scope of the studies but reasoned they sufficed to justify an inference of class-wide reliance, an error of law crept in: what the studies can prove is a legal matter, not a factual one. Even by the lights of the cases the District Court cited, only a report that attempts to isolate the effects of the alleged fraud could warrant that inference. And if the District Court incorrectly understood what the data concerned, its factual error was a clear one. Nothing in the record indicated the studies isolated the effects of GSK’s fraudulent marketing from the effects of its marketing in general. And the Plans disavow using these studies for that purpose. Further, because these studies do not seem to speak to the issue at hand, combining them with the common evidence of GSK’s alleged scheme does not yield an adequate basis for the District Court’s decision either….

“The Plans claim they can show reliance differently: by introducing statistical evidence of a correlation between the Nissen study’s exposure of the fraud and the subsequent decline in prescriptions, then using circumstantial evidence to show that the earlier exposure of the fraud would have led to the same decline — thus closing the gap between correlation and causation. In their view, if the public had learned the truth about Avandia’s cardiovascular profile at the start of the class period in 2005, prescriptions would have declined in the same way they did after the Nissen study exposed that information in 2007.

“We disagree. A few courts have permitted TPPs in similar RICO class actions to prove reliance with class-wide evidence when the evidence includes both statistical and circumstantial evidence of causation. But we are not aware that any court has permitted a putative class of TPPs to prove providers’ reliance by class-wide evidence without statistical evidence the defendant’s conduct caused the injuries. The Plans could have cleared the bar if they had introduced statistical evidence of causation, like a regression analysis. They tried. But the District Court struck that evidence after a Daubert hearing. Without it, the Plans have only statistical evidence of correlation and circumstantial evidence of causation. In this context, where their theory depends on establishing the fraud caused enough prescriptions to make it likely the fraud injured the entire class, that is not enough. TPP pharmaceutical fraud class action plaintiffs can prove causation by class-wide statistical evidence. But doing so takes more rigorous statistics than the Plans so far have presented. Every circuit to address this question has held or suggested that statistical evidence of causation may prove a drug manufacturer’s fraud injured a class of TPPs.”

In re Avandia, No.25-2278, 2026 WL 2093904 (3d Cir. July 21, 2026).

The post U.S. Third Circuit Affirms Third-Party Purchaser RICO Class on Ascertainability while Vacating and Reversing on a Lack of Predominance on Causation appeared first on Gravier House.

Wife filed for divorce. During the marriage, they were supported in part through family trusts funded by Wife’s parents. Hence, when Wife hired her divorce attorneys, she decided to involve her Mother. Wife signed a Consent to Communicate Without Waiver of Confidentiality which authorized her attorneys to “communicate in any manner necessary with Ursula Gebert, my mother, about any and all issues regarding my divorce action,” and to “release to Ursula Gebert any information and any documents and records of any nature related to the divorce action.” The consent form explicitly invoked the court of appeals’ decision in Accomazzo, stating Wife’s intention “to maintain confidentiality of all communications and all information shared with Ursula Gebert and to retain the attorney-client privilege relative to same.”  Mother signed her own acknowledgement, similarly citing Accomazzo and confirming her understanding that all communications and information shared with her would “remain privileged, confidential and will not be shared with any other individuals.”

During discovery, Husband served a request seeking three categories of documents: (1) written communications between Wife’s attorney and her parents’ estate planning counsel; (2) time entries for communications between Wife’s attorney and her parents’ counsel; and (3) written communications between Wife’s attorney and her parents. Wife objected based on privilege, confidentiality, and common interest. The Superior Court denied Husband’s motion as to the first two categories, but granted it in part as to the third. “Importantly” the Superior Court wrote, “there is a difference between Wife’s attorney including Wife’s mother on communications that he had with Wife — and Wife’s attorney communicating with Mrs. Gebert independently to strategize with Mrs. Gebert about the divorce proceedings” because “Accomazzo only protects the former because Mrs. Gebert is not represented by Wife’s divorce attorney in any capacity.” The Superios Court then ordered disclosure of communications between Wife’s counsel and Mother that were not designed to either merely inform Mother about the divorce proceedings or to memorialize the mental impressions of Wife’s counsel.

The Court of Appeals reversed, holding that Accomazzo created a presumption of privilege over communications between Wife’s attorney and Mother. Because the consent form reflected an agreement to maintain confidentiality, no evidence suggested disclosure to others, and Mother and Wife had no adverse interests, the court found Husband had failed to rebut the presumption.

The Supreme Court granted review and overruled Accomazzo.

Courts have recognized limited exceptions “where the third party is an agent of the party or necessary to effectuate the attorney-client communication. Such exceptions include: a parent’s presence in representation of a minor child, a translator where the client is not English-proficient, and communications where parties sharing a common interest in the litigation are present. Likewise, the privilege may be extended where technical expertise is necessary to facilitate communications between the client and attorney. Here, Wife invoked none of these exceptions (although she now argues Mother’s presence is necessary due to her PTSD) but simply attempted to unilaterally extend the attorney-client privilege to encompass Mother through an Accomazzo agreement.  We have also applied a ‘functional approach’ that examines ‘the nature, purpose, and context within which the communication occurs.’ For instance, in Clements, we recognized that, under applicable jail policies, communications between an inmate and his lawyer may remain confidential even if they are on a recorded line. But by definition, a third party typically is not a client; hence, it is generally inappropriate to extend the attorney-client privilege to a third party, because doing so detracts from the truth-seeking function of the legal process without advancing the privilege’s core purposes. The situation is even more attenuated when the communication is between the attorney and the third party without the client’s presence to receive legal advice. Consequently, the argument that parties’ subjective expectations can define the attorney-client privilege with regard to third parties in certain circumstances would create an exception that could swallow the rule, especially in cases with sophisticated parties who seek to expand the scope of confidentiality. We therefore hold that the scope of the privilege is generally an objective determination based on whether extending the privilege is necessary to effectuate the attorney-client communication. A corollary is that parties cannot create or expand the attorney-client privilege beyond those objective parameters….

“To summarize, in all instances, the burden is on the party seeking to establish attorney-client confidentiality to demonstrate the requirements are satisfied, including, as to third parties, that the presence of the third party is objectively necessary to effectuate the attorney-client communication. We overrule Accomazzo to the extent it conflicts with this opinion.

“In this case, Mother is the source of marital income. She knows facts that are relevant to the divorce, but Wife has not yet demonstrated that Mother is necessary to effectuate attorney-client communications. The agreement purporting to extend attorney-client confidentiality, and the subjective expectation of confidentiality it generated, are not sufficient. Although subjective beliefs and expectations are largely dispositive of whether an attorney-client relationship exists in the first place on the part of an actual client, and agreements that memorialize such expectations and terms are ethically required, the question of whether attorney-client confidentiality extends to communications involving third parties is an objective one that cannot be established on the subjective desires of the client even if set forth in the kind of agreement that was used here.”

Gelvin v. Parker, No.25-0116, 2026 WL 2075523 (Ariz. July 17, 2026).

The post Arizona Supreme Court Only Extends Attorney-Client Privilege to Family Members Where it is Shown that Involvement is Necessary to Effectuate Communication appeared first on Gravier House.

The Kentucky Supreme Court rejected a departing attorney’s argument that the 75/25 fee-split in his employment contract violated Rule 5.6, by effectively restricting his right to practice.

“The separation agreement here did not explicitly restrict Franklin’s ability to practice law. The parties agree that all clients were informed of their options to remain with Emery, continue with Franklin, or select new counsel. Nothing in the record indicates that the agreement operated to prevent Franklin from practicing law or accepting any representation he wished to undertake.

“The Court of Appeals reasoned that the fee allocation clause in the separation agreement created a financial disincentive for an attorney leaving a firm to retain clients, which unreasonably restricts the attorney’s practice. This is rebutted by the record. Franklin did, in fact, continue representing fourteen clients he was assigned while at Emery. Franklin failed to establish that enforcing the fee allocation provision would restrict his ability to practice law.”

The Court also rejected the argument that a quantum merit analysis was required:

“When a client discharges an attorney without cause before the case is resolved and hires new counsel who completes the representation, quantum meruit is the available method to measure appropriate compensation between prior and current counsel. Nothing in Baker suggests that a quantum meruit trial is required every time a lawyer leaves a firm. Rather, Baker applies only when there is no valid agreement governing fee allocation between successive, unaffiliated counsel. Where, as here, the fee allocation concerns clients whose matters originated within the firm and is addressed in a freely negotiated separation agreement, the analysis is governed by contract principles.”

Emery Law Office v. Franklin, No.2024-0306, 2026 WL 1839928 (Ky. June 25, 2026).

The post Kentucky Supreme Court Enforces 75/25 Fee-Split Against Departing Lawyer Where Employment Agreement Did Not Restrict Client Communication or Choice appeared first on Gravier House.

In an adversary proceeding involving the Bankruptcy of McClenny Moseley & Associates, a Houston-based law firm that entered contingent fee contracts with thousands of Louisiana residents in the wake of Hurricane Ida, the U.S. District Court in the Southern District of Texas certified a number of questions to the Louisiana Supreme Court.

Who Can Assert Absolute Nullity of a Contract?  Specifically: Can a successor law firm, in a lawsuit filed against it by a predecessor law firm seeking fees and costs, who either no longer could continue the representation and withdrew or was discharged by the client or the court, raise the defense that the predecessor law firm’s earlier misconduct renders the predecessor’s contingent fee contract an absolute nullity?

Yes. Under Louisiana Civil Code article 2030, an absolute nullity may be invoked by any person or may be declared by the court on its own initiative….

Does Attorney Misconduct Render Contract an Absolute Nullity? Specifically: If an attorney-client contingent fee contract was entered into as the result of either unethical or illegal means implemented by an attorney or someone acting on his or her behalf, or during the representation of the client the attorney practiced in an unethical or illegal manner, is that contingent fee contract a nullity?

A contingent fee contract entered as the result of unethical or illegal conduct is absolutely null.

If the misconduct occurs after the parties have entered into a valid contract, the agreement may terminate by dissolution, but is not absolutely null.

Personal solicitation of clients, particularly paid solicitation, is generally prohibited, and an attorney is barred from entering an agreement obtained as a result thereof. See Rules 7.2(c)(13), 7.4(a). Prohibited fee sharing and the unauthorized practice of law are also proscribed. See Rules 5.4(a), 5.5(a), 7.2(c)(13); see also La. R.S. 37:213A(1), (4). As an adjunct to the Rules of Professional Conduct, Louisiana Revised Statute 37:219A declares it to be unlawful for any attorney to pay money or give any other thing of value to any person for the purpose of obtaining representation of any client. These regulatory and statutory provisions embody the state’s strong public policy against paid, personal solicitations of clients….

If the Contingency Fee Contract is a Nullity, Can the Attorney Still Recover Fees and Costs?  Specifically: Can that attorney still seek attorneys’ fees and costs on any basis, including a non-contractual (be it quasi-contract or quantum meruit) basis? And/or: Assuming an attorney with a contingent fee contract was found to have participated in illegal conduct or conduct in violation of the Louisiana Rules of Professional Conduct, as opposed to mere neglect or negligence, can that attorney subsequently recover his or her fees and/or costs on any basis from the successor law firm who takes up the case and represents the client from the point of withdrawal to conclusion?

Attorneys who engage in improper solicitation cannot be permitted to reap the rewards by collecting their fees and costs on any basis.

If a valid contract is entered, but misconduct occurs thereafter, the attorney’s ability to recover fees is best handled through the framework established in Saucier and O’Rourke. The client owes only one contingency fee, (i.e. the highest ethical percentage to which the client contractually agreed), which is then allocated between the attorneys based on the Rule 1.5(a) factors. If the prior attorney was discharged for cause, his share of the contingency fee is reduced based on the nature and gravity of the cause contributing to his dismissal.

Recover against whom: Former Client, Successor Attorney, or Both?

Subject to certain requirements, the discharged attorney has a right of action to recover fees and costs against the former client and the successor law firm….

Recordation of the contract under La. R.S. 37:218 is necessary to impose an obligation on the defendant(s) to retain settlement funds until determination of the discharged attorney’s fee entitlement.

However, with respect to a claim against the client, the Court need not decide whether the contract must be recorded to assert a claim against a successor law firm in this case. “As Saucier made clear, a client is obligated to pay only one contingency fee. MMA seeks recovery only against successor attorneys, not former clients. Whether recordation of the contract is essential to maintain a claim against a former client is not determinative of the cause in this proceeding and thus inappropriate for certification.”

With respect to a claim against a successor attorney, both parties are asserting rights to the same corpus of money based on a privilege or security interest. “Under those circumstances, the recordation of the contract is not necessary to effectuate the privilege…. The defendant is the client’s obligor, not a competing claimant Once the settlement is paid, the privilege attaches and is effective against other claimants….  However, while recordation is not necessary, the discharged attorney must assert his claim by intervention or other legal proceedings prior to disbursement of the proceeds to a third party. In this context, the successor attorney is the third party, and the discharged attorney must provide him the required notice before the contingent fee is paid, meaning the funds have been received, are no longer held in trust for the client, and have become the property of the successor attorney. Once commingled with the successor attorney’s funds, the contingent fee — the thing subject to the privilege — has lost its identity, and, absent notice, the privilege is extinguished.”

Can Attorney Recover Fees and Costs if He Withdraws?  Specifically: Does the Saucier/O’Rourke framework apply to a case in which a law firm is not discharged but instead withdraws from representation because it was no longer able to represent the client, or would the withdrawal from such cases render the withdrawing firm ineligible for the collection of attorneys’ fees and costs? And/or: Assuming an attorney with a contingent fee contract withdraws from the representation of a client in an attempt to either avoid an adverse ruling by a court or to avoid sanctions or accusations due to some form of misconduct by the attorney or his or her employees or agents, can that attorney subsequently recover his or her fees and/or costs on any basis from the successor law firm who takes up the case and represents the client from the point of withdrawal to conclusion?

“Yes, in a case involving multiple contingent fee contracts, the Saucier/O’Rourke fee-allocation framework applies to any termination of an attorney’s representation, whether by discharge or withdrawal. The Rules of Professional Conduct contain both mandatory and permissive grounds for an attorney to withdraw from representing a client. Similar to when an attorney is discharged, a withdrawal can occur due to no fault of the attorney, such as an unexpected health issue, or, on the other extreme, may involve unethical or illegal conduct. Where the attorney bears some culpability, an O’Rourke reduction or denial based on the nature and gravity of the misconduct is appropriate, particularly where the withdrawal had a material adverse effect on the client’s interests.”

Does the Judge or Jury Make the O’Rourke Adjustment?

“Louisiana law does not determine whether the court or the jury should decide the O’Rourke adjustment. The U.S. Supreme Court has long held that the right to a jury trial in federal court, including diversity cases applying state substantive law, is to be determined as a matter of federal law…. Although the subject certified question focuses on one issue—the O’Rourke reduction — federal law still governs whether that issue will be submitted to the jury in a federal proceeding…. For this reason, we decline to answer this certified question.”

In re MMA Law Firm, No.2026-00161 (La. 6/29.2026), 2026 WL 1862008.

The post Louisiana Supreme Court Answers Certified Questions Affecting Claims for Attorneys’ Fees appeared first on Gravier House.

Trauernicht and Wright, two former employees of Genworth Financial, sued Genworth on their own behalf and on behalf of a class of all others similarly situated, alleging that the company, as the sponsor of their defined contribution retirement plan, breached its fiduciary duties in selecting and retaining certain investment opportunities for the plan — namely, the BlackRock LifePath Index Funds — because those funds, as a whole, were imprudent investments. The action was brought under ERISA §§ 502(a)(2) and 409(a), seeking primarily the recovery of monetary losses.  The district court entered an order certifying the class under Rule 23(b)(1), but the U.S. Fourth Circuit Court of Appeal reversed.

In sum, the Court concluded that the plaintiffs’ ERISA § 502(a)(2) claims brought in the context of a defined contribution plan are individualized monetary claims, which cannot be joined in a mandatory class certified under Rule 23(b)(1). Moreover, because the plaintiffs’ and purported class members’ individual circumstances differed dramatically and all did not suffer the same injury, the Court found that their claims did not satisfy commonality. The Court noted, in this regard, that many persons included in the class suffered no injury, as they fared better for having made their investments in the BlackRock LifePath Index Funds than they would have had they invested in an appropriate substitute fund.  More particularly:

“ERISA § 502(a)(2) provides that a plan participant, beneficiary or fiduciary may bring a civil action for appropriate relief under ERISA § 409, and ERISA § 409, in turn, provides that any person who is a fiduciary with respect to a plan who breaches a fiduciary duty imposed by the statute shall be personally liable to make good to such plan any losses to the plan resulting from each such breach. Thus, under this portion of ERISA § 409(a), an ERISA fiduciary who breaches its duties is personally liable to the plan for damages.  And when ERISA § 409(a) is combined with the cause of action for appropriate relief created by ERISA § 502(a)(2), the two sections allow for a derivative action to be brought by a retirement plan participant on behalf of the plan to obtain recovery for losses sustained by the plan because of breaches of fiduciary duties. These provisions authorize such ‘derivative’ claims with respect to both defined contribution plans and defined benefit plans….  In the context of a defined benefit plan, where the plan assets are undifferentiated and held collectively in trust for the payment of defined and fixed retirement benefits, a plan participant injured by a fiduciary’s breach must, by necessity, seek losses on behalf of the plan as a whole — there is no other way to make good to such plan the losses to the plan resulting from the fiduciary breach.”

However:

“The structural features shaping the contours of relief for a defined benefit plan are not the same with respect to a defined contribution plan, where the plan assets are allocated to individual accounts, and a participant’s benefits are based solely upon the amount held in his individual account. In that distinct context, a plan participant can bring an ERISA § 502(a)(2) claim to seek monetary relief, again on behalf of the plan, for the losses sustained with respect to the plan assets in his individual account. And such recovery would be paid not to the plan generally, nor to the participant directly, but rather to the participant’s individual retirement account based on the losses that particular account sustained as a result of the fiduciary breach…. Consequently, when ERISA § 502(a)(2) claims are brought in the context of a defined contribution plan, they are indeed ‘individualized monetary claims’ and therefore cannot be joined in a mandatory class certified under Rule 23(b)(1)….  The Supreme Court has instructed that individualized monetary claims belong in Rule 23(b)(3).  This is because there are greater procedural protections attending Rule 23(b)(3) classes, which are considered unnecessary for proper Rule 23(b)(1) and Rule 23(b)(2) classes, but which are necessary when each class member has an individualized claim for money….”

With respect to commonality: “the plaintiffs alleged injury by comparing the performance of the BlackRock LifePath Index Funds to four comparator funds — two that invest in actively managed funds and two that invest in passively managed funds. Genworth Financial argued, however, that because the BlackRock LifePath Index Funds were passive funds, they must be compared only to the two passive comparators that the plaintiffs identified in their complaint as appropriate substitutes. And Genworth Financial pointed out that when such comparison is made, the record shows that there were many members of the class who suffered no injury as the result of Genworth Financial’s alleged fiduciary breach. Indeed, the two passive comparator funds underperformed the BlackRock LifePath Index Funds during the class period for three separate vintages — the 2050 Fund, the 2060 Fund, and the Retirement Fund — which accounted for as much as 42% of the Plan assets invested in the BlackRock LifePath Index Funds. Thus, Genworth Financial concluded that, because many purported class members suffered no injury, they did not suffer the same injury, as necessary for commonality…. When the district court confronted this evidence and the parties’ dispute, it postponed the necessary rigorous analysis of commonality, concluding that it did not need to resolve the parties’ dispute regarding appropriate comparators at this juncture. The district court, instead, relied on what it described as the ‘inherent’ commonality of § 502(a)(2) claims. This approach was error….  A rigorous analysis of commonality would also have required the court to address whether class members suffered different injuries resulting from their different circumstances arising in the context of a defined contribution plan. The record shows that each plaintiff, as well as each class member, participated in the plan in a materially different way. Each participant made his or her own investment decisions with respect to his or her individual account, and the participant could change that decision on any given day. Moreover, the participants selected different vintages of the BlackRock LifePath Index Funds at different times during different market conditions. And the different BlackRock TDF vintages carried different risks, depending on the retirement date selected. Finally, each participant withdrew assets from the Plan at different times. And during these times, the market performed uniquely each day. The district court thus failed to address commonality with any particularity — relying instead on a perceived ‘inherent’ commonality that Genworth Financial’s fiduciary breach was with respect to the Plan. This overgeneralized approach failed to recognize that a given statute can be violated in many ways, and, quite obviously, the mere claim by the plaintiffs that they purportedly suffered similar injuries gives no cause to believe that all their claims can productively be litigated at once.”

Trauernicht v. Genworth Financial, 169 F.4th 459 (4th Cir. 2026)

The post U.S. Fourth Circuit Finds that ERISA 502(a)(2) Claims Brought in the Context of Defined Contribution Plans are “Individual Monetary Claims” which Cannot be Certified under Rule 23(b)(1) appeared first on Gravier House.

“An employer that stops participating in an underfunded Multiemployer Pension Plan must pay the plan ‘withdrawal liability’ — i.e., its share of the plan’s unfunded vested benefits. Calculating the unfunded vested benefits is a complicated endeavor because the plan’s actuary must predict the value of the plan’s future assets and obligations. To do so, the actuary makes certain assumptions about, for example, retirees’ life expectancies and the anticipated growth rate of the plan’s investments. By statute, an employer’s withdrawal liability is based on the value of the plan’s unfunded vested benefits ‘as of’ the last day of the plan year preceding the employer’s withdrawal, also known as the measurement date. The question presented in this case is whether the ‘as of’ language sets the measurement date as the deadline by which actuaries must select the assumptions that underlie the withdrawal-liability calculation. The Court of Appeals for the D. C. Circuit held that it does not, concluding that actuaries may select their assumptions after the measurement date. We agree. The statute governing the selection and use of actuarial assumptions in the withdrawal-liability context contains no requirement that actuaries use assumptions adopted prior to the measurement date.”

M&K Employee Solutions v. Trustees of IAM National Pension Fund, 146 S.Ct. 1224 (2026).

The post U.S. Supreme Court Holds that Actuaries May Select Their Assumptions After the Measurement Date for Withdrawing Employers from a Multi-Employer Plan appeared first on Gravier House.

Defendants sell baked goods to retailers through delivery drivers, or distributors, like plaintiffs. Plaintiffs sued Bimbo for alleged violations of the Fair Labor Standards Act on behalf of themselves and others similarly situated. The district court authorized plaintiffs to send notices to the latter group, including distributors based outside Vermont, the state where plaintiffs reside and the District Court is located. Bimbo sought an interlocutory appeal challenging the court’s authority to do so, arguing that it lacked personal jurisdiction over the claims of out-of-state distributors, and the U.S. Second Circuit Court of Appeals agreed.

The Supreme Court, in Brystol-Myers Squibb, held that the California court lacked personal jurisdiction over the nonresident plaintiffs’ claims. “Because the nonresident plaintiffs did not allege that they obtained Plavix, or suffered or received treatment for the injuries it caused, in the state of California, their claims did not arise out of or relate to Bristol-Myers’s contacts with California. Bristol-Myers’s relationship with third parties – the resident plaintiffs who obtained or ingested Plavix in California – was an insufficient basis for jurisdiction over the nonresident plaintiffs’ claims, even though the claims alleged similar injuries.

“Nothing in the record suggests that Bimbo’s Connecticut or New York distributors suffered FLSA violations arising from Bimbo’s contacts with Vermont. Plaintiffs argued below, but do not press on appeal, that Bimbo’s use of the same distribution protocol across the three states supplied a nexus between the in-state and out-of-state distributors. But the uniformity of the corporate practice has no more jurisdictional significance than the chemical consistency of Plavix’s ingredients. It may give rise to similar theories or claims but cannot transform out-of-state dealings into in-state contacts.”

“Rule 4(k) of the Federal Rules of Civil Procedure lists the bases available in federal courts on which the effective service of process establishes personal jurisdiction. Those bases include, in relevant part, a defendant’s amenability to the jurisdiction of a court of general jurisdiction in the state where the district court is located, or a federal statute that specifically authorizes service of process. The FLSA contains no such authorization. Unlike some of its contemporary statutes, the original FLSA, enacted in 1938, did not provide for nationwide service of process. To this day, the FLSA requires plaintiffs to bring their case in any Federal or State court of competent jurisdiction.”

The Court, at the same time, was careful to distinguish the collective action from a formally certified class action under Rule 23: “There is a sufficient contrast between the unity created by a Rule 23(b)(3) class action and the loose form of an FLSA collective action. Once a putative class is certified, the class acquires a legal status separate from the interest asserted by the named plaintiff or by the absent class members as individuals. The class asserts only common questions of law or fact that predominate over individual discrepancies. A judgment resolving those questions binds all class members who have not affirmatively opted out. The unitary class claims thus might be understood to draw the spotlight of jurisdictional analysis away from any class member’s personal circumstances. A class claim, for example, remains justiciable even after the class representative’s claim becomes moot. We need not decide here whether personal jurisdiction over a class claim would be defeated by a gap in a court’s jurisdiction over an out-of-state class member’s claims; the nature of a class claim is sufficiently distinguishable from an FLSA collective action that the answer to that question does not control the outcome in this case.”

Provencher v. Bimbo Foods, No.24-3112, 2026 WL 1206215 (2nd Cir. May 4, 2026).

The post U.S. Second Circuit Extends Bristol-Myers Squibb to FLSA Collective Actions appeared first on Gravier House.

Nine applicants for residential mortgage products sued Navy Federal Credit Union, individually and on behalf of a putative class, alleging systematic discrimination against racial minorities. As described by the Court of Appeal: “The facts of each applicant’s case vary. Relevant to this appeal: (1) the applicants live in different States; (2) eight applicants are Black and one is Latino; (3) six applicants applied for a first mortgage, one applied for a first mortgage and a cash–out refinance, one applied for a Veterans Affairs (VA) first mortgage, and one applied for a VA cash-out refinance; and (4) the applicants’ debt, income, and credit scores vary.”

Defendant moved to dismiss the complaint, and, in the alternative, to strike the class allegations under Rules 12(f) and 23(d)(1)(D). The District Court granted the motion to dismiss in part and denied in part, and struck the class allegations, from which the U.S. Fourth Circuit granted interlocutory review.

Initially, the Court of Appeals noted that: “It is common ground that district courts may sometimes make class certification decisions based solely on the pleadings and before any discovery has occurred. Although Navy Federal and the district court cited Federal Rules of Civil Procedure 12(f) and 23(d)(1)(D), we conclude that Rule 23(c)(1)(A) is the source of authority to make such determinations. By directing district courts to make class certification decisions at ‘an early practicable time,’ Rule 23(c)(1)(A) grants district courts considerable discretion about the timing of their class certification decision, including whether to entertain requests to make such decisions at the pleading stage. But … a district court may deny class certification before discovery only if the complaint’s class action allegations fail to satisfy the relevant legal standards as a matter of law.”

In this particular case, the Court concluded that “this is the unusual case in which the district court could determine — based solely on the face of the complaint — that any request to certify a (b)(3) class fails as a matter of law. The nine named plaintiffs alone are residents of five different States who applied for at least four different products and had different outcomes with Navy Federal. The complaint identifies an open-ended class period ‘from 2018 to the present,’ while seeking restitutionary relief, as well as compensatory, statutory, and punitive damages on behalf of each Class member. Although a district court usually should consider more information than the bare allegations of the complaint in making such a determination, this is the rare circumstance where a failure of predominance and/or superiority is readily apparent from a reading of the plaintiffs’ complaint.”

However, with respect to certification under (b)(2), the Court of Appeal reversed: “The district court never used the word ‘commonality,’ referenced the provision that imposes that requirement (Rule 23(a)(2)), or cited the Supreme Court decision (Wal–Mart) that forms nearly the entire basis of Navy Federal’s commonality argument. And, as just explained, the district court’s stated reasons sound more in predominance and superiority than in commonality. Second, we cannot say that the complaint fails to make a prima facie commonality showing as a matter of law. The complaint alleges that Navy Federal requires every applicant to fill out a single form that collects various categories of information that can be proxies for race. The complaint further alleges that Navy Federal runs the data from the application through its proprietary underwriting algorithm – singular – to determine a person’s creditworthiness and decide whether to lend to a particular borrower and on what terms. Finally, the complaint alleges that this at-least semi-automated underwriting process — again, singular — generates a uniquely discriminatory result. These allegations suggest several common questions of law or fact that are capable of class-wide resolution and whose answers will resolve an issue that is central to the validity of each one of the claims in one stroke. For example, does Navy Federal use a single algorithm as part of its process for evaluating every loan applicant regardless of the underlying product? …. If so, does that algorithm — as opposed to some other variable(s) — produce the disparate impacts based on race that are alleged in the complaint? …. If so, is Navy Federal’s use of that algorithm justified by some interest that would defeat all the applicants’ claims? Depending on their resolution, these common questions could produce a common answer to the crucial question why was each class member disfavored.”

Oliver v. Navy Federal Credit Union, 167 F.4th 106 (4th Cir. 2026).

The post U.S. Fourth Circuit Affirms Striking of (b)(3) Class, But Not (b)(2) Class, at Pleading Stage appeared first on Gravier House.

The Faulks brought a class action in State Court under State Law.  While one of the defendants is incorporated in Alaska, where the plaintiffs reside, Jeld-Wen is a Delaware corporation, and the case was therefore removed under CAFA. The Faulks sought to file a second amended complaint to remove the class action allegations and to have the case remanded back to State Court. The U.S. District Court believed that the Faulks’ procedural move “reeked of forum manipulation” and applied the long-standing Ninth Circuit rule that jurisdiction is determined at the time of removal.

While the Faulk’s appeal was pending, however, the U.S. Supreme Court decided Royal Canin v. Wullschleger, 604 U.S. 22 (2025), in which a plaintiff who initially brought state and federal claims in state court amended her complaint to remove all federal claims. The Court held that “when an amendment excises the federal-law claims that enabled removal, the federal court loses its supplemental jurisdiction over the related state-law claims.”

The Court of Appeals therefore reversed:

“Earlier this year, the Supreme Court decided Royal Canin. The Court recognized that a plaintiff is master of the complaint, and therefore controls much about her suit, … extending beyond the time her first complaint is filed. When a plaintiff removes the basis for federal jurisdiction from her complaint, that plaintiff alters a federal court’s authority. So when any federal anchor supporting jurisdiction is gone, jurisdiction over the residual state claims disappears as well. We have since held that Royal Canin abrogated our precedent holding that the availability of supplemental jurisdiction depended on the allegations in the complaint at the time of removal, and that subsequent amendments did not eliminate the district court’s ability to exercise supplemental jurisdiction….

“Under Royal Canin, there is no subject matter jurisdiction over the Faulks’ SAC. With the Faulks’ excision of their class action allegations, we can no longer rely on minimal diversity under CAFA. Because the Faulks, an Alaska couple, also sued Spenard, an Alaska corporation, complete diversity is lacking. With no diversity or federal question jurisdiction, no original jurisdiction remains. Without another basis for federal jurisdiction, the case must therefore return to state court.

“Put another way, the Faulks are masters of their complaint. They sacrificed a litigation advantage by excising their class action allegations. With that currency, they appear to have purchased a remand to state court. Royal Canin requires that we accept the exchange.”

Faulk v. Jeld-Wen, 159 F.4th 618 (9th Cir. 2025).

The post U.S. Ninth Circuit Applies Royal Canin to CAFA, Divesting Jurisdiction Based on Post-Removal Amendments to Complaint appeared first on Gravier House.