Third Circuit Rejects Claims Over Claimed Former Client Conflict

In a rare foray into the thicket of former client conflicts, the Third Circuit affirmed a district court ruling in favor of a lawyer who represented a claimant adverse to a former client in an aviation products liability action.

In Avco v. Turner, a company that manufactures airplane engines sued their former defense attorney for breach of fiduciary duty and declaratory and injunctive relief, contending that she should be prohibited from representing a product liability plaintiff against Avco’s interests.  After Attorney Veronica Saltz Turner was hired by the Wolk Law Firm, she participated in the underlying case, Torres v. Honeywell Inc., where her work was limited to preparing and responding to Daubert motions of two non-Avco defendants and examining expert witnesses at a July 2020 Daubert hearing that did not involve Avco. After that hearing, Turner ceased work on the Torres case.

The evidence showed that over the course of 12 years, Turner had handled a number of products liability actions for Lycoming Engines, a division of Avco. Turner terminated her representation of Lycoming in November 2017 and ended her attorney-client relationship with Avco in June 2018. In March 2020, the Wolk firm, opposing counsel in several of Turner’s Lycoming products liability actions, retained Turner to assist in the Torres v. Honeywell case pending in Arizona.

District Judge Joshua D. Wolson granted summary judgment in Turner’s favor, concluding that Avco did not establish a factual dispute with respect to any actionable injury.  In bringing its claim, Avco bore the burden to produce evidence that the subject matter of the representation was “substantially related” to Turner’s previous representation of Avco.  See Pa. RPC 1.9(a)(former client conflicts). However, the court found that Avco did not meet that burden and granted summary judgment in Turner’s favor.

Avco appealed, and the Third Circuit vacated and remanded for consideration of whether there was a factual dispute as to the existence of a fiduciary relationship and Turner’s alleged breach, which might entitle Avco to fee disgorgement and injunctive relief.  2022 WL 2901015 (3d Cir. July 22, 2022).  The district court thereafter found that Avco failed to prove that Turner had breached a fiduciary duty of loyalty to Avco and again granted summary judgment. Avco Corp. v. Turner, 2022 WL 17251250 (E.D. Pa. Nov. 28, 2022).

Avco appealed once more, but the Third Circuit rejected Avco’s argument, concluding:

“Without evidentiary support of a relationship between confidential information Turner obtained from Avco and the substance of the work she did for Torres, Avco’s “appeal amounts to an argument that all [aircraft product liability] cases are the same.” [citation omitted]  Accepting this overly broad principle could handcuff attorneys to one side of the bar for their entire career. … Because Avco points to no evidence that Turner’s work in Torres called for or allowed the use of confidential information against Avco, it has not met its burden under the substantial relationship test. (Op. at 7-8.)(emphasis in original)”

The Third Circuit’s non-precedential opinion in Avco confirms that a lawyer’s intimate knowledge of a former client’s practices will not, standing alone, establish the necessary link from that confidential information to the subject matter of the later work adverse to the former client.  The challenge must be supported by an evaluation of the substance of the prior representation as compared to the current adverse representation.  Id. at 6, citing INA Underwriters Ins. Co. v. Nalibotsky, 594 F. Supp. 1199, 1206 (E.D. Pa. 1984). The Court observed that the Torres complaint alleged defects in a turbocharger caused the plane crash, but did not supply any documentation supporting its contention that Turner would have needed to draw upon Avco’s confidential information gleaned from any previous representation.

The Third Circuit’s ruling in Avco reaffirmed the principle that a challenge to a lawyer’s representation as a prohibited former client conflict is generally a fact specific inquiry, requiring the former client to produce evidence to support its contention that the lawyer’s current adverse representation is “substantially related” to the work performed for the former client, and that there is a tangible risk that the lawyer will thereby be positioned to take advantage of the former client’s confidential or privileged information. A client’s overly broad assumption that the lawyer must have obtained and will use the former client’s confidential information against in the future will also be insufficient to support a breach of fiduciary duty claim.

The Third Circuit’s observation that lawyers should not be “handcuffed” to a client or its legal position for the duration of their careers provides some comfort for lateral moving lawyers. However, before taking on a new matter that involves the interests of a former client, lawyers must be cognizant of the risks and evaluate the following:

In looking at the scope of the former representation, would the lawyer have received the type of information from the client that could be used to the advantage of the new client and disadvantage of the former client in the new matter;

Was the lawyer’s relationship with the former client so extensive that it obtained “intimate knowledge of the inner workings” of the former client (See, e.g., Darrow v. PPL Elec. Utilities Corp., 2021 WL 5895163 (Pa. Super. 2021); 

In the case of a lateral lawyer who formerly represented a client, can the firm establish an adequate and timely ethical screening protocol to isolate the lateral lawyer and effectively prohibit imputed disqualification under Pa. RPC 1.10. 

About The Author

Last modified: January 29, 2024

No comments yet.

Leave a Reply

Your email address will not be published. Required fields are marked *

× Close