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2nd Cir. Unseals Atty Suit Records in Kickback Scandal

By Jonathan R. Tung, Esq. on March 03, 2016 | Last updated on March 21, 2019

The Second Circuit ruled recently that the law firm of Bernstein Litowitz Berger & Grossmann LLP can't hide up court records in a lawsuit in which a "disgruntled employee" was forced to resign after shining a light on potentially unethical conduct by lawyers at the firm.

Weighing the public interest versus potential harm to litigants and individual reputations, the circuit court found that the "the interests favoring secrecy ... are weak."

"Useless Memorandum"

In 2008, Bernstein became of counsel to the firm and helped put together a case against information and technology company Satyam Computer Services Ltd. The firm was hired by Mississippi Public Employees Retirement System, which was one of the lead plaintiffs in a massive class action suit.

Along the way, the firm hired Vaterra Martin, a solo in Jackson, Miss. She created a "useless memorandum" that the firm paid $112,500 for. He later also discovered that Martin was married to the lawyer in the Attorney General's Office, thereby causing potential conflicts.

Downhill From There

Bernstein's termination inevitably came down and the suit and settlement were permanently sealed. In the current suit, the circuit court agreed with the lower district court's "thoughtful and extended analysis" that public interest in access to the records actually outweighed any countervailing factors.

The factors that the firm sought to convince the circuit court of came in two flavors: one, an unsealing of Berntein's complaints against the firm would lend "truth to its allegations," essentially leading to an automatic win for Bernstein. Two, unsealing of the complaint would necessarily lead to the leaking of confidential client information.

The Second Circuit rejected both arguments. Following the logic of the defendants to its ultimate conclusion would logically mean that all suits in which the plaintiff lost would be sealed, a ridiculous conclusion.

As for the protection of client information, the circuit basically said, "worry about yourselves." The unsealing of the complaint and records might tend to be embarrassing for the firm, but it would not contain information that would damage their client.

The complaint has been forced open.

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