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California Association of Realtors, Inc. v. PDFfiller, Inc.

United States District Court, D. Massachusetts

March 13, 2017

CALIFORNIA ASSOCIATION OF REALTORS, INC., Plaintiff,
v.
PDFFILLER, INC., VADIM YASINOVSKY, and BORIS SHAKHNOVICH, Defendants. PDFFILLER, INC., Counterclaim Plaintiff,
v.
CALIFORNIA ASSOCIATION OF REALTORS, INC., REAL ESTATE BUSINESS SERVICES, INC. and RE FORMSNET LLC d/b/a ZIPLOGIX, LLC Counterclaim Defendants.

          MEMORANDUM & ORDER

          Indira Talwani United States District Judge

         Plaintiff and Counterclaim Defendant California Association of Realtors, Inc. (“CAR”) has moved to disqualify attorneys from the law firm DLA Piper, LLP, from representing Defendants Vadim Yasinovsky and Boris Shakhnovich and Defendant and Counterclaim Plaintiff PDFfiller, Inc. in this matter based on CAR's attorney-client relationship with Jeffrey Shohet. For the following reasons, Plaintiff's Motion to Disqualify DLA Piper LLP Based upon Conflict of Interest [#55] is DENIED.

         I. Background

         Shohet is a California-licensed attorney based in San Diego. He began his practice with a firm known as Gray Cary Ames and Frye, which through a series of combinations has been known since 2005 as DLA Piper, LLP (“DLA Piper” or “the Firm”). Shohet remained an attorney in the Firm's San Diego office until his recent retirement.

         California Association of Realtors, Inc. (“CAR”) is a California-based trade association representing 170, 000 real estate professionals in California. Beginning in 1999, the Firm represented CAR and its individual directors in several lawsuits alleging violations of the Sherman Act and California Cartwright Act. Shohet served as lead counsel in one of the lawsuits in 2003. The Firm's retainer agreement relating to this litigation states that the engagement was “expressly limited” to the 2003 action, which concluded in 2005. The record is silent as to when the other cases ended, but there is no dispute that they had concluded by 2010.

         In December 2003, the Firm opened a general advice account for CAR with the scope of legal services “to provide general advice from time to time as requested by [CAR].” Shohet was listed as “the Firm attorney assigned primary responsibility.” The retainer letter described CAR as “an ongoing client of the Firm.” The letter also described how the file would be disposed of “[a]t the conclusion of this matter.” Beginning in 2007, DLA Piper also represented CAR in a class action alleging violation of state unfair competition laws and a malicious prosecution action. Shohet consulted on the latter but did not provide representation, because he anticipated being called as a witness. He did not work on the class action. The record is ambiguous if additional retainer agreements were entered into for the 2007 litigation, but, in any event, there is no dispute that all litigation had concluded by 2010.

         After 2010, Shohet continued to advise CAR under the general advice account. From 2010 to 2015, Shohet billed a decreasing number of hours to the account. Between 2013 and 2015, Shohet billed only approximately five hours to the account, and Amanda Fitzsimmons, an associate based in the San Diego office, billed under two hours in 2015. Attorney Fitzsimmons' work was limited to discrete legal research not related to the facts and legal issues presented in this case. No DLA Piper attorney has performed legal work for CAR since 2015. At no time was CAR advised that the attorney-client relationship had been terminated, however, and CAR continued to regard Shohet as its counsel.

         On June 2, 2016, CAR filed this trademark and copyright infringement action against PDFfiller; its CEO and secretary, Vadim Yasinovsky; and its president, treasurer, and director, Boris Shakhnovich. Shakhnovich contacted attorney Michael Strapp about the matter on June 8. Strapp, who has a longstanding personal relationship with Shakhnovich, had joined DLA Piper's Boston office five days earlier, on June 3.

         A conflict search in the DLA Piper database reflected CAR's general advice account as an open matter. The director of DLA Piper's Intellectual Property Group emailed Shohet, asking him if he could close the general advice account because it had not reflected activity in the past ten months. Shohet agreed that it could be closed. The firm, treating CAR as a former client, concluded that representation of PDFfiller in this matter would not pose a conflict of interest.

         Strapp and another DLA Piper attorney filed notices of appearance on Defendants' behalf on June 22, 2016. On July 26, with the agreement of the parties, this court referred the case to a federal magistrate judge for alternate dispute resolution (“ADR”). The court stayed discovery pending a report from the magistrate judge.

         On August 4, CAR's counsel sent a letter to Strapp, asserting that DLA Piper's representation in this matter posed a conflict of interest. That day, DLA Piper erected an ethical screen in which the attorneys representing PDFfiller were foreclosed from accessing information related to the firm's prior representation of CAR. To date, no attorney representing PDFfiller has accessed such a file, before or after the erection of the ethical screen. Nor have the PDFfiller attorneys communicated with Shohet or Fitzsimmons about this matter. DLA Piper further has constructed an ethical screen so that only attorneys in the Office of General Counsel have access to files related to the representation of CAR.

         On August 22, 2016, PDFfiller filed antitrust counterclaims against CAR and third-party Defendants Real Estate Business Services, Inc. and RE FormsNet LLC d/b/a zipLogix, LLC. CAR.

         CAR filed the instant motion on October 3, 2016, but did not move to stay proceedings or oppose PDFFiller's request for additional time to file its opposition to the disqualification motion. With the court's permission, PDFfiller responded on November 16.

         The following day, November 17, the parties appeared before the magistrate judge for ADR proceedings. The case did not settle, but progress was made. On November 23, the parties filed a Joint Motion to Stay All Deadlines for Sixty Days [#88] pending ADR, in which they sought, inter alia, a stay of deadlines regarding additional briefing for CAR's motion to disqualify. The court allowed the motion and entered a stay until January 23, 2017. On January 1, 2017, while the case was stayed, Shohet retired from DLA Piper. Thereafter, on January 17, the federal magistrate judge ...


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