Florida Supreme Court Affirms Disqualification of Counsel for Class Action of Toxic Tort Plaintiffs

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The Florida Supreme Court clarified that its rules of professional responsibility govern whether counsel for class action plaintiffs should be disqualified based on alleged conflicts of interests that arise after a class action settlement has been entered, and affirmed the disqualification of counsel for plaintiffs who sought to modify the terms of a class action settlement. Young v. Achenbauch, No. SC12-988, 2014 WL 1239965 (Fla. Mar. 27, 2014).

Flight attendants initiated a class action suit based on exposure to secondhand smoke in airline cabins against several tobacco companies.  The case resulted in a class action settlement that provided $300 million to sponsor scientific research for the early detection and cure of diseases associated with cigarette smoking by creating the Flight Attendant Medical Research Institute (FAMRI).  The class action plaintiffs agreed to waive their intentional tort and punitive damage claims against the defendants, but retained the right to pursue individual claims for compensatory damages.  The settlement provided that if the settlement were modified in any way, then it would be cancelled and become null and void.  Several of the class action plaintiffs became board members of FAMRI.

Many of the flight attendants who had been part of the class action retained counsel and filed individual suits seeking compensatory damages, including two of FAMRI’s board members.  Counsel for the flight attendants became concerned that FAMRI’s activities were not being supervised by the trial court and eventually filed a petition against FAMRI, on behalf of several flight attendants, seeking an accounting of FAMRI’s funds and an injunction against further expenditures, and requesting that the underlying settlement money be dispersed directly to their clients.  Board members of FAMRI moved to disqualify the attorneys.

The trial court found that the attorneys violated Florida’s Rule of Professional Conduct 4-1.7, governing conflicts with current clients, and Rule of Professional Conduct 4-1.9, concerning conflicts with former clients.  An intermediate appellate court applied a test developed in federal courts that balances a party’s right to select his or her own counsel against a client’s right to the undivided loyalty of his or her counsel for determining when to disqualify an attorney based on a potential conflict of interest in the context of a class action proceedings, rather than applying Florida’s Rules of Professional Conduct, and reversed the disqualification order.  The Florida Supreme Court reversed the intermediate court and reinstated the disqualification order.

The Supreme Court ruled that Florida’s Rules of Professional Conduct control whether counsel should be disqualified, and rebuked the intermediate court for applying the federal court balancing test.  The Supreme Court determined that the trial court did not abuse its discretion in disqualifying the attorneys because the action against FAMRI was directly adverse to the interests of the Board members, and thus violated rule 4.1-7, and that the petition against FAMRI, the individual progeny suits, and the original class action were all substantially related because they involved the same transaction or legal dispute, and thus the attorneys also violated rule 4.1-9.

This decision underscores the importance of scrutinizing whether a conflict of interest may have arisen subsequent to the entry of a class action settlement based on the evolving positions and interests of former class members.

Topics:  Class Action, Corporate Counsel, Disqualification, Professional Liability, Settlement

Published In: Civil Procedure Updates, Civil Remedies Updates, Labor & Employment Updates, Toxic Torts Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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