This is a must read for the legal ethics crowd with jaw dropping allegations. It was decided by the 2nd circuit on 9/26 (Winter, J.).
Leeds Morelli had more than 587 individual clients with employment discrimintion claims against Nextel. It settled the claims for all but 14 clients. Nextel promised to pay the firm various fees that could ultimately total $7.5 million; the schedule of payments was contingent on the firm getting the clients' to agree to waive various rights and claims and accept arbitration.
The class action complaint against the firm, 7 firm lawyers, and Nextel alleges that the firm breached its fiduciary duty to the plaintiffs, is guilty of fraud, is guilty of malpractice, and breached its contract. Allegations are made against Nextel for aiding the conduct.
The firm and the lawyer defendants argued that the clients gave informed consent to all of their conduct. The court holds that the firm's conflicts were unconsentable under the circumstances and upholds various claims in the complaint against a motion to dismiss.
The alleged conduct is beyond belief and if true would seem to justify serious discipline.
Almost as amazing as the alleged conduct is that the district judge dismissed the complaint, a decision the circuit reverses.
I don't know if either side put in an expert declaration. It would be hard to imagine one for the defendants based on the allegations in the complaint, which the court accepts as true for purposes of the motion. But I'll check when I next get on PACER.