Eckert Seamans Cherin & Mellott said it should not be disqualified from representing a “kids-for-cash” scandal defendant in a civil suit when the firm sued that defendant in a civil rights suit on behalf of one of the kids because both parties signed conflict waivers.
The law firm responded last week to a motion to disqualify it from representing Robert J. Powell, his wife and a company they own in a suit against them by Powell’s former partner, Gregory R. Zappala, and a number of companies Zappala owns or co-owned with Powell.
Two of those co-owned companies, Western PA Child Care and PA Child Care, were the juvenile detention facilities that two former Luzerne County judges sent juveniles to in exchange for kickbacks from Powell, according to court documents and previous reporting by The Legal. Powell has said Zappala was not involved in the scheme, which resulted in prison sentences for Powell and the two judges. Now Zappala is suing Powell and others under Racketeer Influenced and Corrupt Organizations Act claims in the Western District of Pennsylvania in Western PA Child Care v. Powell.
When lawyers at Eckert Seamans signed on to represent Powell, Zappala moved to disqualify the firm.
Eckert Seamans attorney Bridget Montgomery represented Raul Clark and his parents against Powell and one of his entities as part of a class action brought against a number of players in the kids-for-cash scandal. That class action, Wallace v. Powell, received final settlement approval in July. Eckert Seamans lawyers John R. McGinley, Daniel B. McLane and Thomas Sanchez entered their appearance in Western PA Child Care on behalf of Powell, his wife, and a company, Vision Holdings LLC.
The plaintiffs argued that no rational attorney could reasonably believe he or she could provide competent representation to both the Clarks and the Powells.
But Eckert Seamans said Aug. 27 that the plaintiffs couldn’t cite to any authority supporting the motion to disqualify. The firm said it received waivers from both parties, each of whom were represented by independent counsel when deciding to waive the conflict. Eckert Seamans also noted the civil rights case involved different issues than the RICO case.
Eckert Seamans admits in its filing that the two cases constitute a concurrent conflict of interest between firm clients under Rule of Professional Conduct 1.7(b), but disagreed with Zappala that the conflict was not waivable. The law firm said such a conflict can be waived if it meets four conditions, one of which is the informed consent of the parties.
Eckert Seamans further noted it created an ethical wall in its firm between the two cases and said the attorneys work in different offices, leaving little chance information would inadvertently be shared.
The only concurrent conflict that is not waivable under Rule 1.7(b), Eckert Seamans said, is one where the two representations “‘involve the assertion of a claim by one client against another client in the same litigation or other proceeding before a tribunal.’”
Eckert Seamans said that isn’t the case in these matters because the Powells are not asserting claims against the Clarks and the Clarks are not asserting claims in the Western PA Child Care case against the Powells. The firm said the interests of the Clarks and the Powells are not aligned against one another in the instant case.
“This proceeding involves contentious disputes between two former business partners who owned and operated a private detention facility business,” Eckert Seamans said. “The legal claims here are premised on the federal RICO statute and claims of unjust enrichment under Pennsylvania law. Conversely, the Middle District litigation is principally a federal civil rights action that bears little similarity to the instant proceeding.”
Zappala and the other plaintiffs, through their attorney, Bernard Schneider of Brucker Schneider & Porter, argued in the disqualification motion that the Powells engaged Eckert Seamans to induce the disqualification motion and delay a hearing on the plaintiffs’ motion for preliminary injunction, The preliminary injunction motion seeks to stop Powell from spending between $150 million and $200 million in attorney fees his former law firm is allegedly set to earn.
The plaintiffs argued Eckert Seamans should know that any promises Powell made to pay the Clarks “are worthless.” The plaintiffs also claimed in the motion that if the attorney fees are released to Powell, he will “hide or dissipate them and the Clarks will have no remedy against Powell.”
As to the argument that the hiring of Eckert Seamans was part of the Powells’ efforts to delay the case, Eckert Seamans said it was to the contrary. The firm said it is the filing of the motion to disqualify that could delay the case and put the burden on the court and Eckert Seamans to address the motion in the midst of preparing for an expedited hearing on the preliminary injunction matter.
“Moreover, it should be remembered that all of [Eckert Seamans'] affected clients, the Powells, Vision and the Clarks, have no problem with [Eckert Seamans] being involved in the two separate and different litigations,” the firm said. “Instead, the purported conflict alleged to mandate disqualification is being raised by counsel for the plaintiffs, the adversaries of the Powells and Vision in the instant litigation.”
A call to Schneider was not returned. McClane of Eckert Seamans declined to comment beyond his firm’s filing. Eckert Seamans is co-counsel for the Powells along with New York-based attorneys at Kramer Levin Naftalis & Frankel.