Firing Conflicted Hire Didn’t Cure Conflict in Tobacco Case

By Samson Habte

A law firm that hired an associate who spent 1,500 hours defending Philip Morris USA at his old job cannot represent plaintiffs suing the tobacco giant, even though the firm has fired the tainted lawyer, a Florida appeals court held Dec. 27.

The decision created new law in Florida on whether a firm that acquires a conflict of interest through a lateral hire can avoid imputed disqualification by terminating the conflicted attorney.

The three-judge panel said the answer is “no,” and it affirmed an order booting The Ferraro Law Firm as counsel for David and Corazon Canta, two smokers suing Philip Morris and R.J. Reynolds Tobacco Co. for injuries they allegedly suffered from using the companies’ products.

The disqualification was tied to the firm’s hiring of Paulo Lima, who represented Philip Morris while working at Hunton & Williams LLP from 2005 to 2010. During that time Lima billed more than 1,500 hours on Philip Morris matters.

In a deposition, Lima said Ferraro was aware of his prior work for Philip Morris when it hired him. The firm’s founder, James L. Ferraro, disputed that assertion. In an affidavit, he said “at no point during the interview process” did he learn that Lima “previously represented [Philip Morris] in any capacity or worked on any tobacco related cases.”

Ferraro did not dispute that it allowed Lima to continue working on the Cantas’ case after March 2016, when the defendants began seeking the firm’s disqualification in tobacco-related suits around the state.

Too Late

Ferraro terminated Lima in March 2017—nine months after a trial court disqualified the firm from a tobacco case, and four months after an appellate panel affirmed an order booting the firm from another one. Three days after terminating Lima, Ferraro filed a motion arguing that the firing mooted the disqualification motion in this case.Ferraro said the “plain language” of Florida Rule of Professional Conduct 1.10(c) compelled that conclusion. The rule says that if a firm terminates a lawyer, it “is not prohibited from thereafter representing” a person adverse to a client of the former lawyer, unless remaining attorneys acquired confidential information about the matter—which wasn’t the case here, the Ferraro firm said.

The appeals court wasn’t convinced. The panel acknowledged that Rule 1.10(c) does not “directly address” whether a firm that has gotten rid of a conflicted lawyer may continue representing a client that is adverse to a former client of the departed lawyer.

But the court said such a reading would conflict with “the policies underlying” the rule.

The rule imputes a lawyer’s conflict to his entire firm to encourage law firms to exercise responsibility when screening the conflicts of new hires in advance and take proactive steps to prevent such problems, Judge Vance E. Salter said.

''Unimputing’ a conflict seems as implausible as unringing a bell, unscrambling an omelette, or pushing toothpaste back into the tube,” Salter wrote.

Quoting the trial court, Salter added: “The circumstances here, including the fact that Lima continued to brief and argue appeals on [tobacco] cases for a full year after the motions were filed (and the Firm was put on notice of the potential for disqualification), tip the balance in favor of disqualification.”

Judges Kevin Emas and Thomas Logue joined the opinion.

The Ferraro Firm represented the plaintiffs. Arnold & Porter Kaye Scholer LLP represented Philip Morris. Jones Day and Carlton Fields Jorden Burt P.A. represented R.J. Reynolds.

The case is Canta v. Philip Morris USA, Inc. , 2017 BL 462444, Fla. Dist. Ct. App., 3d Dist., No. 3D17-1959, 12/27/17 .

To contact the reporter on this story: Samson Habte in Washington at shabte@bloomberglaw.com

To contact the editor responsible for this story: S. Ethan Bowers at sbowers@bloomberglaw.com

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