Behavioral Science and the Duty to Report Misconduct, Pt. 2

A previous post promised updates on an interesting case, Joffe v. King & Spalding LLP, No. 1:17-cv-03392-VEC, S.D.N.Y (2018), which addresses a common law breach of contract claim arising from the duty to report lawyer misconduct. Two weeks ago, Judge Caproni denied defendant King & Spalding’s motion for summary judgment in the case, finding that there are “questions of fact regarding whether [plaintiff] reported or attempted to report ethical concerns and whether King & Spalding retaliated against him for doing so”  (Slip Op. at 22) (the decision is available behind various paywalls; reporting is available here and here). As a result, the case now moves forward to a potential trial.

One of the most interesting aspects of Judge Caproni’s decision is the legal standard it adopts for common law breach of contract under the controlling New York case, Wieder v. Skala, 89 N.Y.2d 628 (1992).  King & Spalding had argued for an “extremely narrow” Wieder test that would permit claims “only to law firm associates who are faced with plainly unethical conduct and therefore face a ‘Hobson’s choice’ between complying with their own obligation to report unethical conduct . . . and their job” (Slip Op. at 13). In other words, proof of breach of contract would require proof of a mandatory duty to report based on a clear violation of the ethical rules. Rejecting this standard, and borrowing from frameworks in other forms of retaliatory discharge under federal law, the court concluded that “a plaintiff establishes a prima facie case under Wieder by demonstrating that he reported, attempted to report, or threatened to report suspected unethical behavior and that he suffered an adverse employment action under circumstances giving rise to an inference of retaliation.” (Slip Op. at 14). Notably, this standard does not require proof of actual misconduct; rather, the plaintiff need only possess a “sincerely held, good faith belief that there had been an ethical violation.” (Slip. Op. at 15, n.11). Once the plaintiff satisfies the prima facie test, the burden shifts to the defendant to show that either the plaintiff did not act in good faith or that the adverse employment decision “was not connected to the attempted, threatened or actual report” of misconduct. The plaintiff will then bear the burden to show that the “purported non-retaliatory reasons are pretextual.” (Slip Op. at 14-15).

Where the case goes from here remains to be seen — we will provide developments as they arise.

(7/16/18 update:  Curious development — Plaintiff Joffe’s lawyers (from Javerbaum Wurgaft Hicks Kahn Wikstrom & Sinins, P.C.) moved to withdraw as counsel.  Much of the basis for the motion is redacted (presumably to protect client confidences), but what is unredacted indicates a dispute over payment of attorney’s fees and aspects of litigation strategy.  What happens next, we will see).

(9/13/18 update: On Tuesday, Judge Caproni issued an order granting the request of Joffe’s lawyers to withdraw, finding that there were “satisfactory reasons” for the motion (the order is available here).  Expert discovery will be delayed until late November to allow Joffe to secure new counsel. Whether the case will move forward or settles remains to be seen).

(10/8/18 update: On October 2, Magistrate Judge Aaron granted a charging lien against Joffe, the amount to be determined at the end of the litigation.  Opinion here).

(10/23/18 update:  On October 16, plaintiff Joffe filed a motion to vacate the charging lien).