LOS ANGELES — A law firm that was representing Toys R Us in one case and fighting against the toy company in another will not be disqualified.

According to www.jdsupra.com, in Lanard Toys Limited v. Toys R Us Inc., Gordon and Rees Scully Mansukhani LLP began representation of Lanard Toys Limited in Florida against Toys R Us. Four months later, however, other lawyers from Gordon and Rees began their representation of Toys R Us in a case in California.

After the conflict of interest was discovered, Gordon and Rees withdrew from representing Toys R Us in the California matter; however, the law firm did not withdraw from the Florida case, resulting in Toys R Us filing a motion seeking disqualification.

According to Gordon and Rees, the dual representation came about because of an “inadvertent input error,” which occurred because of some of the names from the parties being accidentally omitted from the tracking software that prevents conflicts from taking place. The firm asserted it was not down to deliberately disregarding the duty of loyalty to a client.

Eric Caligiuri, an attorney with the California-based law firm Weintraub Tobin, told the Northern California Record that when it comes to filing a disqualification motion in an active litigation, conflict of interest cases don’t occur that often.

“However, a conflicts check should always be run before any client representation is undertaken,” he said. “If a proper and careful conflicts check is undertaken before agreeing to represent a client, then this should prevent conflict of interest issues from arising later during litigation.”

In this situation, Gordon and Rees said that the only activity it took part in involving the Toys R Us case was with “the finalization and filing of (Toys R Us') answer to the complaint at the direction of the Palter Firm,” which in this instance was Toys R Us' primary counsel, according to www.jdsupra.com.

According to Gordon and Rees, it never spoke to Toys R Us prior to the conflict issue being raised.

Furthermore, between the two parties, there was no agreement entered nor was any confidential information relating to Toys R Us' defense approach exchanged.

With the Florida case, though, Gordon and Rees was the primary counsel in the Lanard matter, had spent a considerable amount of time reviewing documents, and had represented Lanard in previous cases. Consequently, Lanard and Gordon and Rees said that to bring in new counsel up to speed on the Florida matter would take considerable time and effort.

Caligiuri, however, believes there is no reason to disbelieve what happened regarding the input error.

“The attorneys at the firm filed a declaration under penalty of perjury stating what happened,” he said. “And, more generally, attorneys have an ethical duty to be honest with the court.”

In analyzing the situation, the Florida court denied Toys R Us' disqualification motion. While the court found that Gordon and Rees had violated Florida’s conflict-of-interest laws, it found that this was down to an accidental input error, which caused the violation.

Yet, had there been more involvement in the other litigation between the attorneys and the opposing party, Caligiuri said that there would have been a stronger possibility of disqualification.

“This is because the likelihood that client confidential information was actually exchanged would have been much higher,” he said.

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Organizations in this Story

Toys R Us
101 Town Center Blvd.
Sanford, FL 32771

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