A Texas appellate court has ruled that the Provost Umphrey Law Firm and one of its attorneys did not take confidential information from a possible client and then use it in another case.
On Jan. 14, the Court of Appeals for the Fifth District of Texas at Dallas affirmed a motion for summary judgment in favor of Provost Umphrey Law Firm LLP and attorney Joe Kendall who worked in the firm's Dallas office from 2002 to 2008.
Summary judgment had been granted to Provost Umphrey and Kendall, who had been sued for breach of fiduciary duty by plaintiffs/appellants Davis Gillis, Dave Richardson and Barry Clauss.
The suit alleged that confidential information was provided by Gillis to Kendall to obtain legal advice for a possible lawsuit under the qui tam provisions of the federal False Claims Act. The information related to the procurement of technology-related products and services by the Dallas Independent School District and the Houston Independent School District.
The plaintiffs claim the confidential information was used by Provost Umphrey and Kendall to prepare and file a qui tam lawsuit on behalf of other clients, which resulted in a settlement of more than $16 million.
Gillis, Richardson and Clauss were barred from sharing in the settlement because they were not the first to file a claim, which is a requirement in a qui tam suit.
Kendall argued that he did not disclose confidential information, that he owed no duty of loyalty or fiduciary duty and that the plaintiffs suffered no damages. The trial court granted summary judgment “without specifying” the basis for its ruling, and entered final judgment.
The appellants argue the trial court erred in granting summary judgment, but justices affirmed the trial court decision.
Dave Richardson hired private investigator Dave Gillis and his company Dave Gillis & Associates, to investigate possible corruption and unlawful practices regarding technology-related products by DISD and HISD. Barry Clauss was a Dallas ISD employee who was significantly involved in technology issues and served as a confidential source to Gillis.
Gillis & Associates had previously done investigative work for Kendall and Provost Umphrey.
Gillis allegedly discovered that third parties had colluded to violate competitive bidding requirements and to restrict competition for the school districts, and had offered DISD employees unlawful consideration in exchange for technology contracts.
However, Kendall did not filed a False Claims Act suit on behalf of Richardson, Gillis and Clauss.
“Unbeknownst to appellants, Provost, Kendall and co-counsel filed an FCA lawsuit in 2005 on behalf of Dan Cain and Pamela Tingley (U.S. ex rel. Cain v Micro Systems Enterprises et al, Case No. 3-05CV-1843-P).
Pennsylvania attorney Brian P. Kenney retained Provost Umphrey and Kendall to serve as co-counsel on the Cain suit.
In the meantime, appellants retained counsel and filed their own qui tam lawsuit (U.S. ex rel. Richardson v Analytical Comp. Services et al, No. H-05-3836) in the Southern District of Texas on Nov. 14, 2005.
Court documents say that the Cain lawsuit contained the same material subject matter that Gillis had discussed with Kendall.
After they learned Provost Umphrey was involved in the Cain case, the plaintiffs notified the law firm by letter on May 12, 2006, alleging conflict of interest, breach of fiduciary duty and breach of the duty of loyalty.
The firm allegedly refused to take any action to remedy the breach of duties, they claim.
The Cain and Richardson settlements garnered a $16.25 million settlement from Hewlett-Packard Co. to the federal government.
Appellants argued that Kendall and Gillis had a limited attorney-client relationship, and that Kendall had a duty to maintain the confidentiality of the information Gillis provided.
But Kendall said he only had a 10 or 15 minute meeting with Gillis and “never thought” the purpose of the meeting was to get personal legal advice for Gillis to hire the law firm. There were no notes taken, no follow up calls, no documents were reviewed and Kendall never met with Gillis again, court papers say.
The case was heard by Justices Robert Fillmore, Craig Stoddart and Bill Whitehill. Justice Fillmore authored the opinion.
Joe Kendall now has his own Dallas firm, Kendall Law Group LLP. He has also served as federal court judge and a Texas district court judge.
Appeals Case No. 05-13-00892-CV
Dallas County 160th District Court Case No. DC-10-15198