Saturday, April 13, 2013

Armstrong v. McAlpin case brief

Armstrong v. McAlpin case brief summary
625 F.2d 433 (2d Cir. 1980)

Defendants sought review of an order entered in the United States District Court for the Southern District of New York, which denied defendants' motion to disqualify the counsel for plaintiffs. Defendants sought to have counsel disqualified because an attorney in the firm had worked for the Securities and Exchange Commission during its investigation of defendants.

OVERVIEW: The Securities and Exchange Commission (SEC) obtained a default judgment against defendants. Plaintiffs were acting to recover money and property misappropriated by defendants, after plaintiffs had been appointed a receivership following the default judgment. Seven months after plaintiffs obtained a firm to act as counsel in some of its litigation, a former SEC attorney went to work for the firm.

The court affirmed the lower court's denial of defendants' motion to disqualify the firm, and found that plaintiffs' counsel had taken steps to isolate the former SEC attorney from the case, that he could not provide the firm with any inside information as they already had the SEC files, and that automatically disqualifying the firm would not only have serious consequences for the litigation at hand but potentially could affect the willingness of attorneys to work for the government.

Although the court reached the merits of this case, it went on to overrule its holding in an earlier case and ruled that orders denying motions to disqualify counsel would no longer be immediately appealable.

OUTCOME: The court affirmed the lower court's denial of defendants' motion to disqualify counsel for plaintiffs. The court found that any appearance of impropriety caused by a former Securities and Exchange Commission attorney joining the firm representing plaintiffs was not a strong enough basis to disqualify the whole firm because the attorney was not participating in the case.

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