On The Case

Fired King & Spalding associate can move ahead with ethics retaliation claims

(Reuters) - David Joffe was fired from his job as a senior associate in King & Spalding’s New York office in December 2016. He claims he got the sack because he refused to abandon what he asserted to be an ethical obligation to report K&S’s supposed misconduct in a contract suit he was involved in. The firm says there was no misconduct and Joffe was fired because, among other things, partners gave his work mixed reviews.

These irreconcilable accounts will now be put to the test. On Friday, U.S. District Judge Valerie Caproni of Manhattan issued a scheduling order that allows fact and expert discovery to move ahead over the next several months, with a final deadline in December.

The case, at least as Joffe told his story in a complaint filed last May in Manhattan federal court, raises an interesting question about lawyers’ ethical duty to report misconduct they believe they have witnessed within their own firms – and the firms’ obligations to whistleblowers within their ranks.

According to Joffe’s complaint, filed by Andrew Moskowitz of Javerbaum Wurgaft Hicks Kahn Wikstrom & Sinins, he worked with two K&S partners in 2014 in defending the Chinese telecom ZTE Corp in a Manhattan federal-court suit by the patent prosecutor Vringo Inc. Vringo accused ZTE of improperly disclosing confidential information. K&S asserted ZTE’s use of the Vringo information was permissible.

K&S’s litigation tactics undoubtedly provoked both Vringo, which moved to sanction the firm, and U.S. District Judge Lewis Kaplan of Manhattan, who criticized K&S in various hearings and orders for supposedly obstructive maneuvers. In 2015, Judge Kaplan went so far as to issue a show-cause order asking the K&S partners and ZTE to explain why they shouldn’t be sanctioned for attempting to avert the deposition of a ZTE official.

K&S brought in outside counsel from Patterson Belknap Webb & Tyler to defend the show-cause order (and ultimately moved to withdraw from the case). The underlying litigation between Vringo and ZTE settled with no final sanctions ruling from Judge Kaplan.

Joffe, however, was convinced that K&S partners had misrepresented ZTE’s conduct to Judge Kaplan. He also believed, according to his complaint, that he was ethically bound to report the partners to the New York bar. Joffe recounted his concerns to both K&S’s outside counsel from Patterson and to the firm’s in-house general counsel.

A few months later, at his performance review, Joffe was informed that he’d been removed from the partnership track and that his pay would be frozen. Joffe claimed in his complaint that the firm attributed his punishment to his late filing of time sheets and failure to submit a personal business development plan. In its answer to Joffe’s complaint, K&S said Joffe’s career was foundering for many reasons, including “lack of engagement, lack of a meaningful chance of being promoted and complaints about poor quality work product.” (K&S, which is represented by Proskauer, did not file a motion to dismiss the Joffe complaint.)

Joffe came to believe he was being punished for raising questions about supposed ethical breaches in the ZTE case. He insisted that the firm owed him the bonus he’d been denied for his work in 2015 and even broached the controversy with K&S’s in-house general counsel. After a lackluster performance review in October 2016, at which Joffe was informed his career had “stagnated,” he was fired in December.

He claimed K&S illegally retaliated against him, despite the protection New York’s Court of Appeals gave to law firm associates in Wieder v. Skala. In the Wieder case, the state high court ruled that a law firm associate who alleged he was fired after reporting a fellow associate’s misconduct to the bar’s disciplinary committee did not have a cause of action for abusive discharge because he was an at-will employee. But the Court of Appeals said he could sue for breach of contract. “We agree with plaintiff that in any hiring of an attorney as an associate to practice law with a firm there is implied an understanding so fundamental to the relationship and essential to its purpose as to require no expression: that both the associate and the firm in conducting the practice will do so in accordance with the ethical standards of the profession,” the Wieder opinion said.

Essentially, Joffe claims K&S punished him for upholding those ethical standards. K&S counters in both its answer and in a press statement on the Joffe suit that his firing simply had nothing to do with his assertions of ethical obligations.

“He was terminated because he repeatedly refused to comply with directives and expectations that apply to all firm associates,” the firm’s statement said. “We also deny that our lawyers knowingly made any false statements to the court. Mr. Joffe was involved in all aspects of the ZTE case and was present in the courtroom on July 7, 2014, when our partner made statements based on information provided by our client that we later learned were inaccurate.… If Mr. Joffe had any reason to believe that those statements were not true at the time they were made, he had an obligation to immediately so advise the partner or the court. He did neither.”

Joffe’s lawyer told Judge Caproni at a hearing Friday that a settlement seems unlikely in the near future, so it looks like we’ll find out more about which side is telling the truth before this case is over. Associates across New York should be paying attention.