It’s been a while. I know. But I saw a blurb about a story that caught my attention in the before-times and then a second story about the same case more recently that hooked me enough to write about.
Primarily, it hooked me because it provides a compelling opportunity to discuss two important points about legal ethics at the same time. First, the ethical obligations lawyers owe to former clients go beyond simply restricting certain future representations and include restrictions on using the client’s information. Second, even a clear violation of the ethics rules does not automatically translate to a viable cause of action against an attorney.
As we’ll see at the end, it is a story that because it happened in New York might just be a bad look for the lawyer involved when it would be a lot more damning if it had happened here in Tennessee.
The initial story that caught my eye was this one in Law360 where the proprietors of a panzerotti restaurant in Brooklyn sued an attorney saying he had stolen their idea for such a restaurant and the logo they used. The more recent story that lured me, also from Law360, is that the lawyer has now filed a motion to dismiss that suit, in part, arguing that the USPTO had rejected the restaurant’s trademark claims.
You can go read the amended complaint in the lawsuit in question for yourself:
But from the “former client” side of the story, this is how they tell it. Its principals retained the lawyer, Cea, to help with documents to be filed in connection with the seeking on E-2 visa application and that, as part of that process, they had to turn over their confidential business plan for the proposed restaurant. After they did that, they say they also retained Cea to represent the business regarding lease negotiations and obtaining a liquor license for their restaurant.
The lawsuit then claims that after their restaurant opened, Cea and a partner opened a competing restaurant, but in Manhattan, using the improperly obtained confidential business plan information of the former client. The lawsuit also claims that the competing restaurant’s logo infringes upon their logo in violation of The Lanham Act.
Now, I’m no trademark lawyer but my unsophisticated eyeball comparison of the two logos doesn’t impress me at all. The rest of the complaint, though, when it focuses upon the strong similarities on how the insides of the restaurants are laid out, and the kinds of equipment used, and even approaches to menu items is a bit more compelling. The complaint also alleges that the lawyer even hired the same architect that the former client used for its restaurant for the competing restaurant. Notably, the complaint also alleges that when first contacted after the opening of the competing restaurant, the lawyer claimed that his only involvement was in helping the second restaurant with its lease.
When first digging into this story, I was overwhelmed by the audacity of any lawyer thinking they could ever do something like this without running afoul of RPC 1.9(c)’s restrictions on adversely using information related to the representation of a former client.
In Tennessee, that rule reads as follows:
A lawyer who has formerly represented a client in a matter … shall not thereafter reveal information relating to the representation or use such information to the disadvantage of the former client unless (1) the former client gives consent, confirmed in writing, or (2) these Rules would permit or require the lawyer to do so with respect to a client; or (3) the information has become generally known.
While proving a successful cause of action would be a different kettle of fish for reasons discussed below, because Tennessee (like most jurisdictions) treats all information related to the representation as confidential, under Tennessee’s rules, someone doing what Cea was alleged to have done would have real problems defending a disciplinary complaint. Perhaps, as to some of the allegations, Cea could engineer a defense based on all of the public facing aspects of the former client’s restaurant became “generally known” once they opened for business.
Even in Tennessee though, violations of RPC 1.9(c) wouldn’t automatically translate to a viable civil cause of action. (The actual lawsuit asserts a breach of fiduciary duty claim and that would likely be what someone would hazard as a claim in Tennessee.) That is because we, like most states, clarify in the Scope section of our rules that while ethics rules exist as a framework for imposing discipline, they are not intended or designed to provide a basis for an independent cause of action.
[21] Violation of a Rule should not itself give rise to a cause of action against a lawyer nor should it create any presumption in such a case that a legal duty has been breached. In addition, violation of a Rule does not necessarily warrant any other nondisciplinary remedy, such as disqualification of a lawyer in pending litigation. The Rules are designed to provide guidance to lawyers and to provide a structure for regulating conduct through disciplinary agencies. They are not designed to be a basis for civil liability….
We also have a final sentence in that part of the Scope that tries to clarify that there are some situations in which the violation of a rule can be relevant to determining whether a breach of the standard of care also occurred but since New York doesn’t I’ll leave that for another day.
New York’s approach to client confidentiality though is different and, as a result, even though its RPC 1.9(c) reads largely similar to Tennessee’s on adverse use of information its reduced scope of confidentiality under RPC 1.6 really changes the landscape.
New York’s RPC 1.6 limits confidential treatment to “information gained during or relating to the representation of a client, whatever its source, that is (a) protected by the attorney-client privilege, (b) likely to be embarrassing or detrimental to the client if disclosed, or (c) information that the client has requested be kept confidential.”
That distinction and what it means for a lawyer appears to be salient to Cea’s situation. Cea’s motion to dismiss, while primarily focused on an attempt to enforce an alleged settlement agreement as well as other procedural arguments, does poke at the margins of whether he was ever asked to treat any of the information he learned from any client as confidential. He also appears to take issue even with the idea that he ever had any fiduciary relationship with anyone who is a party to this litigation. You can look at the memorandum of law supporting that motion to dismiss if you are so inclined.