By Mark Curriden
Senior Writer for The Texas Lawbook
(June 6) – Bickel & Brewer lost round three Wednesday in its high-stakes battle to be reinstated as lead lawyers in a large international business lawsuit in which it is accused of improperly hiring a former executive of the opposing corporation who had confidential insider legal information critical to the case.
The Fifth District Court of Appeals in Dallas rejected Bickel & Brewer’s petition for mandamus seeking to overturn a decision last December by state District Judge Carlos Cortez that disqualified the hard-charging Dallas lawyers from representing RSR Corporation, a Dallas-based lead smelter, which has sued a Chilean business partner alleging fraud, theft and breach of fiduciary duty and is seeking up to $60 million in damages.
James S. Renard, partner at Bickel & Brewer, said he and the lawyers at his firm “respectfully disagree with the decision and plan to seek review before the Supreme Court of Texas.”
In a unanimous opinion written by Justice Robert Fillmore, the three-judge panel found that the defendant, Inppamet, “demonstrated a genuine threat of disclosure of its confidential information” and that Judge Cortez did not abuse his discretion by disqualifying Bickel & Brewer from the case.
“I could not be prouder to be a lawyer than I am today when Judge Cortez and the Court of Appeals have now made it clear that ethics matters in Texas,” said Michael Lynn, a partner at Lynn Tillotson Pinker & Cox who is representing Inppamet. “We have been reminded once again that the unethical lawyer will be red carded and thrown out of the game.”
The case, which has been fiercely litigated for more than four years on three separate continents and features two of Dallas’ most prominent trial lawyers, has seen both sides make allegations of witness bribery, withholding evidence and fabrication of testimony.
The dispute arose last fall when Michael Lynn, who represents the defendant, Inppamet Ltda, filed a motion claiming that Bickel & Brewer and its Chilean co-counsel, Jorge Bofill, had hired Inppamet’s former chief financial officer as a consultant providing information on the case.
According to court records, the executive, Hernan Sobarzo, “secretly copied and retained approximately 2.3 gigabytes of company e-mails and files containing Inppamet’s confidential business and privileged information.” The emails included communications with the lawyers representing Inppamet in the case against RSR.
Sobarzo left Inppamet in 2010 and approached RSR officials about providing them insider information in return for compensation. He testified that in meetings with Bofill and Bickel & Brewer, he was promised $1 million in payments over three years. In return, Sobarzo agreed to provide documents he had taken from Inppamet and be a witness in the Dallas case.
Lawyers for Bickel & Brewer argued that they warned Sobarzo to not disclose any confidential information, that Texas Disciplinary Rule 4.02 allowed the firm to communicate ex parte with a former employee of the corporate defendant and that Judge Cortez misapplied the law in tossing the lawyers from the case.
Bickel & Brewer won round one in the dispute when former Texas Supreme Court Justice Deborah Hankinson, acting as special master in the case, reviewed the evidence and rejected Inppamet’s motion.
The firm lost round two when Judge Cortez reviewed the facts and arguments de novo and decided to disqualify Bickel & Brewer from the matter.
“It is not disputed that Sobarzo was a member of Inppamet’s litigation,” Justice Fillmore wrote in his 16-page opinion released late Wednesday. “Accordingly, there is an irrebuttable presumption that Sobarzo was in possession of Inppamet’s confidential information relating to this litigation.”
Justice Fillmore said that Bickel & Brewer’s admonition to Sobarzo to not disclose confidential information was “not enough to overcome the presumption.”
“Bickel & Brewer failed to either instruct Sobarzo not to work on the litigation or use formal, institutionalized screening measures to reduce the potential for misuse of confidences to an acceptable level,” Justice Fillmore said. “Rather, the sole purpose of meeting with Sobarzo was to discuss the pending litigation with Inppamet.”
Former Texas Supreme Court Justice Harriett O’Neill, who is representing Bickel & Brewer in the case, said she believes that the Texas Supreme Court will follow the guidance of the special master when reviewing the case.
“Bickel & Brewer’s contacts with Inppamet’s former employee, who blew the whistle on massive fraud within the company, were entirely ethical and permissible under Texas law,” said O’Neill. “The court of appeals based its decision not on misconduct, but on a legal standard that simply doesn’t fit the circumstances and will have a chilling effect on our legal system’s truth-finding function.”