Timetable for modular lawsuits gets stretched out; battle over disqualifying law firm

According to documents filed with the state Supreme Court, the various parties in the dispute over the stalled modular factory run by affiliates of Forest City Ratner and Skanska have agreed to an extended timetable regarding their three lawsuits.

In the case related to the shutdown of the modular factory, and whether Forest City can unilaterally reopen it, the parties have until 12/22/14 to file papers. In the cases related to the responsibility for the cost overruns, the parties have until 12/9/14 to respond to each other's legal filings.

Battle over disqualification

Meanwhile, today the case is scheduled to go before a judge on a related matter: the attempt by Skanska to disqualify the firm Troutman Sanders from representing Forest City in the modular dispute, as Troutman represents another part of Skanska's family of businesses.

Skanska earlier denied Troutman a requested waiver to proceed. (Here's a summary from Law 360 based on a preliminary set of legal papers.) The hearing is scheduled for 9:30 am (or after) at state Supreme Court, 60 Centre Street in Manhattan, Motion Submission Part Room 130.

Troutman's argument

According to a memo from Troutman:

Skanska Building does not assert any risk that Troutman could use confidential information obtained from its representation of the Skanska Southeast-managed joint ventures [part of Skanska Civil] to the disadvantage of Skanska Building in the instant litigation. Nor does Skanska Building articulate any way in which Troutman’s representation of FCRC in this litigation impairs Troutman’s ability to represent the Skanska Southeast-managed joint ventures in an objective and appropriately zealous manner. Rather, Skanska Building’s motion boils down to a basic proposition that Troutman should be disqualified because anyone who is adverse to one member of the Skanska family must be deemed adverse to every other member of the family.

Troutman says that the Skanska parties adverse to Forest City are not Troutman’s “client” for the purpose of analyzing conflicts of interest, so it would be unfair to Troutman "but more importantly" to Forest City--which has a longstanding relationship with an attorney who joined Troutman in August--if Troutman had to leave the case.

Skanska's argument

Skanska alleges sneaky behavior and suggests that Troutman is trying to improperly separate the three cases:

Before Mr. [Aaron] Abraham ever joined Troutman, the firm knew of the conflict issue and they said nothing. After Mr. Abraham joined the firm, Troutman said nothing until the Friday before Labor Day, because Forest City, with Mr. Abraham, was busy advising and/or drafting a complaint which Forest City planned to file on the first business day after Labor Day. Indeed, even as Skanska specifically advised Forest City that no conflict waiver had been granted, Troutman participated in a "Skanska Litigation" conference call, subsequent to which a Forest City affiliate sued Richard Kennedy, a Skanska Civil Director, asserting ad hominen allegations and making certain to serve him with process, in the dark of night, in front of his wife and young children. Troutman then continued to participate as co-counsel, over Skanska's objection, and did not file an appearance in any action until Skanska Building's Counsel wrote to the Court requesting a Commercial Division Rule 24 pre-motion conference. Thereafter, appearances were filed in all but the Kennedy Action. As to this, Troutman's attempt to segregate the Kennedy Action from the others by claiming that the actions and issues are distinct, is not an argument which can be advanced in good faith. A simple reading of the complaints and the RJIs demonstrate the intertwined nature of all three proceedings. There is also a motion to dismiss filed by Forest City in this action, in which it relies upon terms of the Limited Liability Agreement, under which Forest City commenced the Kennedy Action. Indeed, if the "distinctness" of the two proceedings is the benchmark of disqualification, then disqualification is a certainty.

Skanska also argues that Skanska Building and Skanska Civil are closely related affiliates and notes that, Troutman, in communications with Skanska Civil, identified this situation as a "conflict" but now calls it a "business risk."

Given rules requiring loyalty to a client, in this case, Skansa argues that "Skanska Civil, Skanska Building, and Richard Kennedy share a unity of interest and as a result, Troutman cannot enter into an adverse representation to Mr. Kennedy and Skanska Civil's related sister company."

Beyond the "abhorrent" service of Kennedy at home, rather than in his office,"the nature of Forest City's litigation strategy has attempted to undermine the Skanska brand," Skanska argues, sugesting that the public would likely "be unable to determine a meaningful distinction between Skanksa Civil and Skanska Building, but would rather see the entities jointly as corporate parts of the 'Skanska' brand."