By Joan C. Rogers
The U.S. District Court for the Eastern District of Pennsylvania Dec. 22 granted a law firm's motion for a preliminary injunction against a lawyer who tried to recruit many of the law firm's clients after she was fired (Feldman & Pinto PC v. Seithel, E.D. Pa., No. 11-5400, 12/22/11).
Judge Petrese B. Tucker found that the firm was likely to prevail on its claim that the lawyer tortiously interfered with the firm's contractual relations with its clients. The lawyer's misleading letter to the firm's clients after she left the firm violated professional conduct rules and the basic duties that a lawyer owes to her former firm, Tucker said.
In February 2010, South Carolina attorney Martha L. Seithel became an employee of Feldman & Pinto PC (Feldman), a Pennsylvania personal injury law firm. She previously practiced for more than eight years at the Motley Rice law firm, where she focused on pharmaceutical litigation.
In April or May 2011, Feldman told Seithel that her employment was not working out as the firm had hoped, but that she could keep working there long enough to make plans for her future. Seithel began making plans to establish her own practice.
On June 13, 2011, the firm found that it was unable to access client files located on its “Dropbox,” an online repository of electronic files in which Seithel had been storing client information. Believing that Seithel had locked it out of the Dropbox, the firm terminated her employment immediately.
On July 7, 9, and 12, Seithel sent letters to approximately 450 of Feldman's clients. The letters stated that Seithel “recently left” Feldman and Pinto and now practices as Seithel Law LLC, which has an experienced team “with over twenty years of combined experience” in pharmaceutical litigation. The letters averred that Seithel had “primary responsibility” for the client's claims and had been involved in the client's litigation “in a leadership position” since the beginning of the lawsuits.
The letters, written on letterhead of Seithel Law LLC, indicated that the clients' decision about who they wanted to perform legal services was entirely theirs to make, and that Seithel desired to continue representing them. The letter instructed the clients to indicate on an enclosed “Consent to Representation” form if the clients wished for Seithel “to continue the work” in their case, if the clients wished to have Feldman & Pinto “maintain responsibility” for their file, or if they wished to have their file transferred to some other attorney. At least 140 clients elected to have Seithel represent them.
When Feldman learned about the letters, it sued Seithel and her firm for breach of contract, unjust enrichment, and several torts. The court entered a temporary restraining order in August.
In its opinion on the firm's motion for a preliminary injunction, the district court said it would only address the claim that the parties had briefed in full—that is, intentional interference with contractual relations.
It was apparent, the court found, that the clients whom Seithel contacted had existing contractual relationships with Feldman, and that Seithel intended to interfere with those contracts. The key question was whether her conduct was proper, Tucker said.
Citing Pennsylvania case law and the Restatement (Second) of Torts §772 (1979), Tucker observed that one who merely gives truthful information to another has no liability for interference with a contract. If this truthfulness defense is proved, then it becomes unnecessary to determine if the defendant's conduct was proper, she explained.
Tucker found that the letter Seithel sent to Feldman clients was untruthful or misleading in several respects. Although Seithel may have had primary responsibility or a leadership role for the cases of some of the clients who received the letter, she “greatly exaggerated her role” with regard to some other clients receiving the letter, the court said.
Moreover, Tucker found that “Seithel was not open and honest about many other representations in her letter,” including the nature of her departure from Feldman, the state in which she was licensed, the “combined experience” of her team at Seithel Law LLC, the actual existence of Seithel Law LLC (which was not officially organized at the time when she sent the letters), and the need for clients to make an election.
“Such exaggerations and omissions were as misleading as any outright falsehood, and therefore, the truth defense to Plaintiff's claim for intentional interference with contractual relations does not apply,” Tucker wrote.
On the question whether Seithel's conduct was proper, Tucker found guidance in Adler, Barish, Daniels, Levin & Creskoff v. Epstein, 393 A.2d 1175 (Pa. 1978), and Joseph D. Shein PC v. Myers, 576 A.2d 985 (Pa. Super. Ct. 1990), as well as Pennsylvania and Philadelphia Joint Ethics Op. 2007-300, 23 Law. Man. Prof. Conduct 384 (2007).
The court concluded that “Seithel's conduct was improper because it violated the Rules of Professional Conduct, and the basic duties that a lawyer owes to her old firm.”
Tucker found that Seithel's letter violated her ethical duty to communicate truthfully to clients, as prescribed by Rule 7.1, which prohibits a lawyer from making a false or misleading communication about the lawyer or the lawyer's services, and Rule 1.4, which requires sufficient explanation to permit clients to make informed decisions.
Seithel also acted improperly, Tucker found, by depriving Feldman of access to client files, and by using confidential client information gained through her relationship with the firm in a way that could have unduly suggested a course of action for the clients, and unfairly prejudiced Feldman. “[S]he sent election forms in which clients had to do no more than sign on the dotted line without making a careful, informed decision,” Tucker observed.
Feldman carried its burden of demonstrating a substantial likelihood that Seithel's conduct was improper, and therefore proved a substantial likelihood that it would succeed on the merits of its claim for intentional interference with contractual relations, the court ruled.
The court also found that Feldman will be irreparably harmed if it cannot access its own files and reestablish contact with its clients, and that Seithel will not be harmed if Feldman's clients are given the opportunity to make an informed decision about their choice of representation. No public interest would be served by permitting Seithel to benefit from the clients' immediate and perhaps ill-considered response to her misleading letter, the court added.
Moreover, Tucker found that certain steps Feldman took in reaction to Seithel's letters to its clients—such as telling clients that she had been fired—did not amount to “unclean hands” so as to prevent the firm from seeking the court's aid. In communicating with clients that elected Seithel, Feldman was merely attempting to remedy the clients' confusion by explaining the events that had transpired, the court said.
The preliminary injunction bars Seithel and her firm from contacting any Feldman clients except for those who elected to be represented by her before the temporary restraining order was entered in August. It also enjoins Seithel and her firm from communicating with any referring attorneys or co-counsel about the representation of any Feldman client whose case is pending or filed in a Philadelphia court.
The order indicates that the court is going to mail a “corrective letter” to clients who returned election forms in which they chose Seithel as their counsel, other than certain specific clients who have already clarified that they want her firm to represent them. Once that letter is mailed, the forms in which clients elected Seithel's new law firm as counsel will no longer be treated as presumptively valid, the order says.
Seithel filed a notice of appeal on Dec. 30.
Feldman & Pinto was represented by Marc J. Zucker and Jennifer Hiller-Nimeroff of Weir & Partners in Philadelphia. Seithel and her firm were represented by Jennifer L. Myers and Alan B. Epstein of Spector, Gadon & Rosen, Philadelphia.
Full text of the court's opinion is at http://op.bna.com/mopc.nsf/r?Open=jros-8pyszj .
The order setting out terms of the preliminary injunction can be viewed at http://op.bna.com/mopc.nsf/r?Open=jros-8q3rvv .
Copyright 2012, the American Bar Association and The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)