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Counsel Concerns
Disqualification Motion. The U.S. District Court for the Northern District of New York granted a defense motion to disqualify the plaintiffs' counsel in an investors' suit against a company that develops patented software for multimedia entertainment. Forbes v. NAMS International Inc., 3:07-CV-0039 (TJM/DEP). The investors claimed they had been defrauded by NAMS' statements regarding patent-pending technology to stop entertainment-industry losses from peer-to-peer file sharing.
Plaintiffs' attorney Ronald R. Benjamin of Binghamton, NY, had previously represented NAMS well into trade-secret litigation against Spectra.Net Communications. Non-consensual attorney-disqualification motions require a high burden of proof. When NAMs moved to have Benjamin disqualified from the investors' suit, the district court noted: 'The information currently available to the court suggests that despite the passage of over eight years since Attorney Benjamin withdrew from representation of NAMS, there is nonetheless a substantial interrelationship between the issues raised in the two cases [i.e., the current investors' suit and the Spectra.Net litigation] and a high probability that during the course of his earlier representation of the company he had access to confidential communications enshrouded by the attorney-client privilege. In its complaint in the Spectra.Net litigation, NAMS claimed to possess sensitive and trade secret information regarding the company's technology and business which was disclosed to and misappropriated by the defendant during the course of merger negotiations.'
The court continued: 'At the heart of the present controversy is a claim by the plaintiffs that in soliciting investment in the company the principals of NAMS, including through statements contained within the controversial [Confidential Private Placement Memorandum], overstated its capabilities and technology. The information which was imparted, or at a minimum readily available, to Attorney Benjamin ' during the course of his representation of that company in its litigation against Spectra.Net is directly linked and would undoubtedly provide useful, at least as a starting point, in discerning the capabilities of the company at the time of the offering at issue in this case.'
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