Utah: Attorney Breached Fiduciary Duties of Confidentiality and Loyalty

Link for opinion: http://www.utcourts.gov/opinions/supopin/USAPower051410.pdf


In USA Power, LLC v. PacifiCORP, 235 P.3d 749 (Utah 2010), the Utah Supreme Court reviewed a district court’s grant of summary judgment on three claims: misappropriation of trade secrets, breach of a confidentiality and nondisclosure agreement, and breach of an attorney's fiduciary duties of confidentiality and loyalty. The focus of this summary will be on the attorney’s breach of the fiduciary duties of confidentiality and loyalty.

The attorney was retained by USA Power in 2001 and later by PacifiCORP in 2003. USA Power argued that the attorney simultaneously represented them and defendant PacifiCORP, and disclosed confidential information to benefit PacifiCORP.

The Utah Supreme Court ruled that the district court erred when it granted summary judgment to an attorney and her law firm on USA Power’s breach of the fiduciary duty of confidentiality claim, and the lower court’s summary judgment was reversed and remanded because the district court “should have looked to whether USA Power presented evidence, either direct or circumstantial, that created a material issue” as to the attorney’s disclosure of confidential information.

The presentation of circumstantial evidence may create a real issue of material fact barring summary judgment. See Regan-Touhy v. Walgreen Co.,526 F.3d 641, 651 (10th Cir. 2008). The Utah Supreme Court held that genuine issues of material fact may be created by inferences drawn from circumstantial evidence because producing direct evidence that an attorney disclosed confidential information may be difficult for a plaintiff. Therefore, simultaneous adverse representation provides for an adequate inference of disclosure to create a genuine issue of material fact.

The Utah Supreme Court also ruled that the district court erred in granting summary judgment on the issue of the fiduciary duty of loyalty on the basis that a genuine issue of material fact caused harm to USA Power. Specifically, the attorney’s dual representation caused PacifiCORP to withdraw its interest in purchasing a power plant.

The court also concluded that PacifiCORP, a utility company, misappropriated trade secrets and breached a contract with USA Power, a power plant developer.

This case teaches the importance of the lawyer’s fiduciary duty. The elements of a claim against an attorney for breach of a fiduciary duty are " ‘(1) an attorney-client relationship; (2) breach of the attorney's fiduciary duty to the client; (3) causation, both actual and proximate; and (4) damages suffered by the client.'" Christensen & Jensen, P.C. v. Barrett & Daines, 2008 UT 64, ¶ 23, 194 P.3d 931 (quoting Kilpatrick v. Wiley, Rein & Fielding, 909 P.2d 1283, 1290 (Utah Ct.App.1996)).

Michigan: Attorney General Disqualified for Representing a Judge in a Conflict of Interest Case

Link for Opinion: http://scholar.google.com/scholar_case?case=3957021689359029401&q=rules+of+professional+conduct&hl=en&as_sdt=80000004&as_ylo=2010

In People v. Waterstone, 486 Mich. 942, 783 N.W.2d 314 (2010), the court of appeals directed the Attorney General to withdraw from prosecution of the case because of a conflict of interest under Michigan Rules of Professional Conduct 1.9 and 1.10. In this case, the Attorney General brought a felony complaint against Circuit Court Judge Waterstone, alleging that she knowingly permitted witnesses to commit perjury during a criminal trial. One of the two defendants from that criminal trial had earlier filed a federal civil rights suit against the judge and others. The Attorney General’s office assigned an assistant Attorney General from the Public Employment, Elections and Tort Division to defend the judge in the civil action, which was eventually dismissed. The Wayne County Prosecutor withdrew from prosecution of individuals allegedly involved in the perjury because of a conflict of interest, and eventually the Attorney General agreed to prosecute the cases.

The Court of Appeals held that because the prosecuting attorney learned confidential information during representation of the judge in the civil action and was then asked to investigate an alleged crime by that former client. In this case, the Attorney General’s office was a “firm” under Michigan Rules of Professional Conduct 1.10. This means that the Attorney General’s office should have conducted a conflict check before getting involved with the case. Even though the assistant Attorney General involved in the prosecution did not have actual knowledge of the Attorney General’s former representation of the judge, the court held that “prosecution of a judge is unusual, and knowledge of the potential federal case against the judge could be inferred under the circumstances.” Because a simple conflict check would have revealed the federal lawsuit, the Attorney General should have obtained the consent of the former client before taking the case. Further, the Attorney General’s failure to disclose the conflict prejudiced the judge, because it was reasonable for the judge to believe that the Attorney General was still representing her when an investigator from the Attorney General’s office interviewed her in connection with the perjury claims. Because of the conflict of interest, the court directed the Attorney General to withdraw from prosecuting the judge in the criminal matter.