Plaintiffs firm Arnold & Itkin has appealed a Harris County trial judge’s decision that allowed the law firm Ahmad Zavitsanos & Mensing to stay on as defense counsel to Transocean in multidistrict litigation stemming from offshore workers’ injuries, arguing the ruling was “in error” and “an abuse of discretion.”
In a 70-page petition for writ of mandamus filed with the First Court of Appeals on Thursday, plaintiffs’ attorneys — representing 23 workers who allege they were injured during Hurricane Zeta in October 2020 while aboard the Deepwater Asgard drilling rig in the Gulf of Mexico — argued a December ruling from Harris County District Judge Rabeea Collier must be vacated.
“Imagine that a lawyer learns confidential, potentially damaging information about a client,” the petition for writ of mandamus begins. “But after the client representation ends, the lawyer turns around and seeks to weaponize that information for the benefit of a new client at a new firm. How? By using that confidential information to impeach the credibility of that former client, who is now a critical adverse witness in the new litigation.”
“The Texas Disciplinary Rules of Professional Conduct rightly prohibit such a course of misconduct, which would wreak havoc upon the sanctity of the attorney-client relationship. So should this Court.”
At the core of Arnold & Itkin’s argument for AZA’s disqualification is its hiring of Karina Sanchez-Peralta, a former A&I clerk who now is an associate attorney at AZA. A&I argued that knowledge she gained as an A&I clerk about its client — a doctor who provided treatment to some of the plaintiffs in this litigation and will serve as an expert witness at trial — mandated AZA’s disqualification.
In separate orders issued in December, Judge Collier first denied the motion to disqualify AZA brought by 13 of the plaintiffs but did not explain the basis for her ruling in that order. In the subsequent order, Judge Collier declined the motion to disqualify AZA brought by the other 10 plaintiffs, writing in a two-page order that she disagreed with A&I that its prior employment of Sanchez-Peralta required the firm’s disqualification.
A&I argued in the petition for writ of mandamus that, under the Disciplinary Rules of Professional Conduct, a lawyer is barred from representing a new client against an old client if there’s a “reasonable probability” that the lawyer will use confidential information in a way that gives either side an advantage or disadvantage, or if the prior representation is “substantially related” to the second representation.
“Both apply here,” A&I told the justices. “Beyond a mere ‘threat,’ it is overwhelmingly ‘probable’ that Sanchez and AZA will use — indeed, they likely already have used — Dr. [Henry] Small’s confidential information to his and plaintiffs’ detriment, and to Transocean’s advantage. And the representations’ similarities — both centering on his reputation as a treating physician — readily meet the “substantial relation” test. Under Rule 1.09(b), Sanchez’s conflict is conclusively imputed to AZA, thus disqualifying AZA.”
At a hearing that lasted a couple of hours Friday morning, the law firms also hashed out a discovery dispute before Judge Collier. While denying some of its requests, the judge granted AZA’s request to access some information regarding the relationship between A&I and healthcare provider Advanced Diagnostic Healthcare System, and to take the deposition of one of its employees, who AZA alleges to be the liaison between doctors and lawyers.
AZA alleged in September filings that it had discovered an improper relationship between Advanced Diagnostics, A&I and its medical expert witnesses and a company allegedly providing some funding for the litigation. AZA accused A&I of orchestrating “at least two cleverly designed-for-litigation billing schemes” that were intended to inflate the plaintiffs’ medical costs and “obscure the providers’ interests and incentives by routing payments and stakes in the outcome of this litigation through middleman entities.”
After news outlets reported on those publicly filed documents, A&I sought sanctions against and the disqualification of AZA. A&I moved to disqualify AZA on different grounds, the employment of Sanchez-Peralta, in separate filings later in September.
AZA filed a response to the motions to disqualify in October, arguing they were without merit and lodged in an attempt to distract from allegations defense made about the billing relationship between the healthcare provider and A&I.
An emergency motion for a stay, filed by the plaintiffs, is currently pending before the First Court of Appeals, but the case remains scheduled for an April trial.
During Friday’s hearing, David Metzger of AZA argued why discovery into Advanced Diagnostics should be allowed. He explained that AZA’s theory about the arrangement between A&I and Advanced Diagnostics is that bills and proposed treatment plans flow from doctors to an “unknown person” at Advanced Diagnostics who acts as an “attorney liaison,” and who plays a role in allegedly inflating the cost of care. Once the lawsuit is over, Advanced Diagnostics and A&I work together to determine how much Advanced Diagnostics will get paid, Metzger said.
Judge Collier seemed displeased with the allegation, asking, “How is that different than any cases involving a personal injury in Harris County?”
“I see it over and over again,” she said. “A settlement amount is reached and afterward the lawyers negotiate a lower amount for medical bills. This is not something new or something that’s not being done. … Is this the billing scheme that you’re alleging? This is it?”
John Zavitsanos of AZA then addressed the court to argue that the defense theory differs from that common arrangement.
“Here’s the difference between what your honor just described and what’s going on here,” he said. “This is not going on after the fact for the benefit of the client to reduce the bill. … Rather, it is a scheme because the plaintiff lawyers, through this intermediary, are directly inflating these charges, not reducing them after the fact. The lawyers are participating in the amount being charged to extract a high recovery and then lower the amount paid later.”
“Well, that’s completely different,” Judge Collier said.
Roland Christiansen of A&I rebutted those allegations during Friday’s hearing, telling Judge Collier the defense attorneys in the case have a “fundamental misunderstanding” of the rules governing a Jones Act case like this one.
“In these cases, with that provider group, we have the agreement right here signed by Transocean that they paid all of it,” he said. “… They went and negotiated with them and paid them … How can there be a billing scheme if Transocean agreed contractually to pay this rate?”
Zavitsanos told The Lawbook in an interview Monday that he views the mandamus petition and request for an emergency stay as a way for A&I to hit pause on the proceedings.
“We believe that all of this is being done in order to avoid the discovery the judge ordered taken on Friday,” he said.
“We have a good faith basis to believe that there is possibly some funny business going on here, and it was only when we were on that scent that all this disqualification stuff happened.”
The attorneys representing the plaintiffs did not immediately respond to a message seeking comment Monday afternoon.
The plaintiffs are represented by Kurt B. Arnold, Andrew R. Gould, Roland T. Christensen, Brian M. Christensen and Parker J. Cragg of Arnold & Itkin and Misty A. Hataway-Coné of Coné PLLC.
The case number on appeal is 1-25-00075-CV. The Harris County case number is 2022-36264.