Attorneys at Akin Gump Strauss Hauer & Feld said last week that LBDS Holding Company admitted to fabricating evidence at the heart of a $25 million jury verdict. In its haste to flee the case, did Akin Gump reveal too much about its former client’s conduct?
In a pro se motion filed Tuesday, LBDS CEO Albert Davis wrote that he won’t oppose Akin Gump’s decision to withdraw from representing the company. But Davis wrote that he “does object to the inclusion of statements alleged to have been made by the company’s representatives in Akin Gump’s motion to withdraw, as the disclosure of those statements violates [LBDS'] attorney-client privilege.”
Davis indicated that LBDS would file a longer brief outlining its objections. He also asked U.S. District Judge Leonard Davis in Tyler, Texas, for an extension so that he could consult with a new legal team.
LBDS marketed software that it says improved the efficiency of magnetic resonance imaging (MRI) machines. The Dallas-based company alleged in a 2011 lawsuit that it entered into an agreement to sell its software to ISOL Technology Inc., a South Korean company that sells MRI machines. LBDS claimed that ISOL breached the distribution agreement and misappropriated trade secrets, causing LBDS to lose out on about $25 million in business from a third party called Cerner Corp. LBDS originally sought $68 million in damages.
In March, jurors awarded LBDS $24.4 million in lost profits and $760,000 in damages on the trade secrets misappropriation claim. LBDS was represented by Akin Gump partners Sanford Warren Jr. and Charles “Chad” Everingham IV, a former judge in the Eastern District of Texas. James Walker of Cole Schotz Meisel Forman & Leonard defended ISOL after taking over the case from Susman Godfrey a few months before trial.
According to a sanctions motion ISOL filed on May 21, Walker received an anonymous tip earlier this month that the U.S. Federal Bureau of Investigation was investigating whether Davis and his business partner Dave Hernon had faked a purported contract and emails with Cerner that formed the backbone of LBDS’s damages theory. After Walker handed Akin Gump a draft motion for sanctions, the firm says it confronted Davis and that he admitted the fraud accusations were “essentially correct.” Akin Gump described the purported confession in its motion to withdraw, which the judge has not yet formally granted.
We asked an Akin Gump spokesperson for a response to Tuesday’s filing, but didn’t hear back before our deadline. In its withdrawal motion, the firm said it was bound by ethical rules to “take remedial measures, including disclosing LBDS’ deception to the court.”