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First NBC Bank v. Murex, LLC

United States District Court, S.D. New York

April 28, 2017

FIRST NBC BANK, Plaintiff,
v.
MUREX, LLC, f/k/a MUREX N.A. LTD., Defendant.

          OPINION & ORDER

          PAUL A. ENGELMAYER UNITED STATES DISTRICT JUDGE.

         This decision resolves a motion to disqualify counsel. Defendant Murex, LLC ("Murex") moves to disqualify the law firm Holland & Knight LLP ("H&K"), which, on behalf of plaintiff First NBC Bank ("FNBC") brought this 13-count lawsuit, claiming that Murex sold FNBC bogus receivables, and accusing Murex of, inter alia, breach of contract, breach of fiduciary duty, fraud, tortious interference with contract, and racketeering.

         Murex's motion to disqualify is based on the fact that Murex was an H&K client: At the time that H&K's litigators in Atlanta were readying to sue it, Murex alleges, its Washington, D.C., office was separately representing Murex in regulatory work. H&K's representation of Murex began as a lobbying representation, but, Murex contends, it grew to include legal services, triggering an attorney-client relationship and the canons of professional responsibility. Most notably, Murex contends, H&K helped Murex defend itself against an enforcement action that the Environmental Protection Agency ("EPA") had threatened. When eventually notified that H&K also represented FNBC and wished to sue Murex on FNBC's behalf, Murex refused to consent. Murex thus argues that H&K engaged in an unconsented-to concurrent representation of a client (Murex) and a party with interests adverse to it (FNBC), prima facie improper under professional canons. Murex argues that allowing H&K to represent FNBC in this lawsuit would give rise to an actual and apparent conflict of loyalties and taint this lawsuit. H&K, backed by FNBC, opposes the disqualification motion.

         For the reasons that follow, the Court grants the motion to disqualify.

         I. Background[1]

         Murex's motion to disqualify implicates two of H&K's client representations.

         The first, of Murex, extended from late January 2016 through April 2016. The Murex representation was originally contemplated to consist of lobbying services only and was subject to an engagement agreement that permitted H&K to represent clients adverse to Murex. Murex contends that, in fact, H&K's representation of it broadened beyond lobbying work, including helping Murex defend itself against a threatened EPA enforcement action, and briefly counseling Murex on a pending lawsuit in which Murex was represented by a different law firm.

         H&K's second representation, of FNBC, a Louisiana bank, extended from December 2015 to the present. It entailed readying-and, in September 2016, filing-this lawsuit, which accuses Murex of participating in a scheme to defraud FNBC by knowingly selling it receivables owed by Abengoa Bioenergy Company LLC (“ABC”) that allegedly were fraudulent, because they were based on sales of ethanol that FNBC claims never took place.

         Because the parties' arguments on the disqualification motion turn on the specifics of H&K's representations, the Court reviews them in detail.

         A. H&K's Representation of Murex

         1. Background to H&K's Engagement

         Murex markets and provides distribution services for ethanol and other gasoline blendstocks. Am. Compl. ¶ 13.

         Since approximately 2007, Murex has marketed and sold Renewable Identification Numbers (“RINs”). Bartel Decl. ¶ 3. RINs are 38-digit serial numbers assigned to a batch of renewable fuel, such as ethanol, for the purpose of tracking its production, use, and trading, as required by the EPA's Renewable Fuel Standards (“RFS”) program. RINs are generated by renewable fuel producers, not by traders in such fuels such as Murex. McAdams Decl. ¶¶ 11-12. Under federal regulations, obligated parties (e.g., refiners, importers, and certain blenders of gasoline) must hold enough RINs to meet regulatory “renewable volume” obligations; a market participant who does not hold a sufficient number of RINS must pay a civil penalty. Id. ¶ 12 (citations omitted). Companies such as Murex purchase, aggregate, and resell RINs for a profit. Id.

         In or about 2010, it became clear that some biofuel producers had begun selling fraudulent RINs into the marketplace for RINs. Although FNBC initially implied otherwise in this lawsuit, see Compl. ¶ 62, the parties now agree that Murex was solely a victim of such fraud; it purchased fraudulently-created RINs from some producers, and resold these RINs in good faith to market participants. The producers from whom Murex bought fraudulent RINs include GRC Fuels, Inc. (“GRC”), Southern Resources and Commodities (“SRAC”), and Gen-X Energy Group (“Gen-X”). McAdams Decl. ¶ 13; Bartel Decl. ¶ 5; LeRow Decl. ¶ 6.

         In August 2015, Murex's chief financial officer, Rick Bartel, and director of compliance, Jennifer LeRow, sought to hire counsel to deliver a demand letter to GRC seeking compensation for damages suffered as a result of GRC's RIN fraud. Bartel Decl. ¶ 5. In connection with this proposed representation, LeRow sought a recommendation of counsel from Michael McAdams, a senior policy analyst in H&K's Washington, D.C. office. McAdams was known to Murex in his capacity as president of the Advanced Biofuels Association (“ABFA”), a trade association of approximately 30 advanced biofuels and feedstock companies, of which Murex, since 2011, has been a member. LeRow Decl. ¶ 4; McAdams Decl. ¶¶ 6, 8. Although a law school graduate, McAdams is not a licensed attorney. McAdams Decl. ¶ 3. McAdams referred Murex to H&K partner Bonni Kaufman and associate Andrew Emerson, both also based in Washington, D.C. After preliminary communications and/or emails among LeRow, McAdams, Kaufman, and Emerson, H&K determined that a business conflict prevented H&K from taking on the GRC representation.[2] Bartel Decl. ¶ 6; LeRow Decl. ¶ 7; McAdams Decl. ¶ 10; Emerson Decl. ¶¶ 3- 6; Kaufman Decl. ¶¶ 3-8 & Exs. 1-2. Murex later retained the firm of Kane Russell Coleman & Logan PC (“KRCL”) to represent it in connection with its claims against GRC relating to fraudulent RINs. Later in 2015, through KRCL, Murex sued GRC regarding its alleged creation and transfer of such RINs. That lawsuit is pending in United States District Court for the Northern District of Texas. Coleman Decl. ¶ 3.

         2. Murex's Retention of H&K for Lobbying

         On January 20, 2016, Murex retained H&K to provide, over the three-month period beginning February 1, 2016, lobbying services in connection with RINs. LeRow Decl. ¶ 8; McAdams Decl. ¶ 15 & Ex. 2. Of particular concern to Murex was securing a cap on the replacement obligations of entities like Murex who had purchased fraudulently-created RINs in good faith. For the years 2014 through 2016, the EPA had capped such parties' replacement obligations so as to require them to replace only 2% of the fraudulently created RINs that they resold. However, for 2013 and all preceding years, the EPA left the obligated party ostensibly required to replace 100% of the fraudulently-created RINs that it resold. Many RINs resold by Murex that had been deemed fraudulent had been generated before 2014. Murex notified McAdams of its concern that it might be obliged to make good on all pre-2014 fraudulent RINs, potentially costing Murex many millions of dollars. McAdams's lobbying effort was to focus on convincing the EPA to apply the 2% replacement cap to all fraudulently-created RINs that were resold, not just those created during 2014-2016. McAdams Decl. ¶ 14; see also LeRow Decl. ¶ 8 (H&K was retained “to advise Murex on EPA regulatory issues” and “to effect policy changes within the EPA beneficial not only to Murex but to other RIN buyers”); Tr. 27 (lobbying goal was to “move the two percent cap forward in time so it would cover years 2011 through 2013”).

         Before opening the Murex matter, McAdams ran a conflict check. It disclosed conflicts searches regarding Murex by two H&K lawyers, including Atlanta-based H&K partner J. Allen Maines. McAdams did not contact either partner about the “potential conflict, ” “based on my understanding that the nature of my work, nonlawyer lobbying, would not present an attorney-client conflict.” McAdams Decl. ¶ 16.

         The engagement letter between H&K and Murex, signed by McAdams and by Murex's president, Robert Wright, provides, in pertinent part:

Thank you for engaging Holland & Knight to provide EPA regulatory consulting services to Murex LLC. We look forward to serving your needs in this matter and developing a mutually satisfactory relationship.
Under the scope of this engagement H&K will provide Murex with the following: an overview of current EPA regulations and the impacts to Murex operations to date; secure meetings with key decision and policy makers at EPA regarding the implications of current regulations to your company and the RIN market in general; and H&K will seek support from the relevant congressional staff to reinforce your position with EPA if appropriate.
This agreement is effective as of February 1st for three months unless extended at the option of the client. As agreed, Holland & Knight LLP's fee in this matter will be $10, 000 [per month plus any reimbursable expenses. . . .
In addition, please be aware that the services for which you have engaged Holland & Knight are “law-related services” and not “legal services.” In other words, the firm will not be acting as your lawyers in this matter but rather in a lobbying capacity utilizing nonlawyer personnel. As such, the protections which accompany an attorney-client relationship do not apply. For example, while the firm will keep your information confidential, the specific rules governing lawyers and client confidential information do not apply. Further, the firm's lawyers would not be prohibited from providing legal services to clients in unrelated legal matters that are adverse to you. While conflicts of interest rules applicable to lawyers would not apply, we, of course, would not undertake lobbying services for another client adverse to the matter on which you have engaged our services.

McAdams Decl. ¶ 17 & Ex. 2. McAdams notified LeRow that H&K “could also provide other services to Murex, including legal services, ” but, McAdams attests, he did not commit H&K to undertaking such work. Id. ¶ 18.

         3. The EPA's Notice to Murex of Potential Enforcement Action

         On January 29, 2016, three days before H&K's lobbying engagement was to commence, Murex received a notice from the EPA. See Bartel Decl. ¶ 9 & Ex. B (“EPA Notice”). The EPA Notice was entitled: “ACTION REQUIRED-Affirmative Defense Notice for Potentially Invalid RINs.” It notified Murex that it “may own, have transferred, or used potentially invalid renewable identification numbers (RINs) to comply with your Renewable Fuel Standard (RFS) Renewable Volume Obligation (RVO) for one or more compliance years.” The EPA Notice stated that the majority of these RINs had been verified as “A-RINs”-a species of RIN-during the period between February 21, 2013 and December 31, 2014. It stated that the fraudulent RINs had been generated by Gen-X or SRC, and were believed invalid based on a federal court plea agreement in the case of United States v. Scott Carl Johnson, “and associated court filings.” Id.[3]

         The EPA Notice then recapped the law pertinent to such conduct. It notified Murex that under federal regulations, parties are generally prohibited from either transferring invalid RINs or using invalid RINs to meet their RVOs. Id. (citing 40 C.F.R. § 80.1460(b)(2) & (c)(1)). But, the EPA Notice stated, a company which had done so “may assert an affirmative defense to these actions.” Id. (citing 40 C.F.R. § 80.1473(a) & (c)). The EPA Notice then reviewed the criteria for this defense to the transfer or use of invalid RINs to apply. Id. If Murex could satisfy these criteria, the EPA Notice stated, “it will NOT have to replace these potentially invalid A-RINs, resubmit any prior compliance reports . . ., or be subject to any civil penalties for such conduct.” Id. The EPA Notice stated that it was being sent to parties whom the EPA had concluded “may own, have transferred, or used potentially invalid A-RINs as described above.” Id. It added that the EPA would separately contact parties whom it determined may have owned, transferred, or used Q-RINs (a different type of RIN). Id.

         The EPA Notice concluded by giving Murex 30 days to provide the EPA a written report asserting the elements of an affirmative defense. The EPA Notice recapped these as including that (1) the RINs in question had been “verified through a quality assurance audit” consistent with 40 C.F.R. § 80.1472; (2) Murex “did not know of have reason to know that the RINs were invalidly generated prior to being verified” by an independent third-party auditor; the notice directed Murex to have its “Responsible Corporate Officer” provide a signed statement confirming this; (3) Murex “did not cause the invalidity”; (4) Murex “did not have a financial interest in the company that generated the invalid RINs”; and (5) “[a]ll other supporting documentation” for an affirmative defense were provided. Id. (“[a]ny supporting information or documentation must be specific enough to allow the EPA to evaluate that each of the above criteria have been met”). If Murex did not submit a timely written report, or if the EPA found the elements of an affirmative defense not satisfied, the EPA Notice stated, “the EPA may require your company to replace potentially invalid A-RINs, resubmit any compliance reports involving use of potentially invalid A-RINs, and pay a civil penalty.” Id.

         4. H&K's Interactions With Murex Involving the EPA After Receiving the EPA Notice

         The relevant personnel at Murex and H&K have submitted declarations chronicling the- or significant aspects of the-interactions between Murex, H&K, and the EPA that followed the EPA Notice. As discussed more fully below, H&K contends that its ensuing services to and communications with Murex consisted exclusively of lobbying, within the scope of the parties' January 20, 2016 engagement letter. See, e.g., McAdams Decl. ¶ 20 (his work for Murex “was directed to the EPA in its agency or administrative capacity” and was “within the scope of what is commonly done by nonlawyer lobbyists”). Murex contends that, although the parties never modified their engagement letter, H&K's work regarding the EPA expanded beyond the bounds set by the letter, including guiding Murex in the defense of the enforcement action threatened by the EPA Notice. See, e.g., LeRow Decl. ¶ 9 (“During the course of H&K's engagement, McAdams routinely provided detailed legal analysis and opinions regarding the application of various regulations and statutes to Murex's business operations.”) The Court reviews the communications among Murex and H&K in detail, to elucidate H&K's work for Murex.[4]

         Murex received the EPA Notice on at 2:56 p.m. on Friday, January 29, 2016. At 3:10 p.m., Murex's LeRow forwarded the notice by email, with a summary, to McAdams, copying Murex's president, Wright, and its CFO, Bartel. Bartel attests that he directed LeRow to contact McAdams because Bartel “had significant concerns about the financial ramifications of an EPA enforcement action against Murex, ” in that, “[if] Murex failed to prove its affirmative defenses, the EPA may have required Murex to: (1) replace potentially invalid RINs, causing Murex damages; (2) submit to the EPA certain compliance reports detailing the use of potentially invalid RINs; and (3) pay a potentially sizable civil penalty.” Bartel Decl. ¶ 11. Mindful that Murex had “just 30 days to prepare affirmative defenses to the EPA's allegations that Murex may have unknowingly transferred fraudulent Gen-X and SRAC RINs, ” Bartel asked LeRow “to contact McAdams to request his participation in preparing the response and corresponding with the EPA.” Id. ¶¶ 11-12.

         Over the ensuing weeks, McAdams exchanged numerous emails with Murex executives regarding its response to the EPA Notice. Murex's Wright, Bartel and LeRow, and a fourth Murex official, Luke Parkhurst, its director of ethanol and RIN trading, were parties to these emails. LeRow's emails to McAdams attached voluminous materials. Bartel explains that he asked LeRow “to provide McAdams with a tremendous amount of information about Murex's RIN diligence policies, transactions, disputes, EPA interaction, and claims and causes of actions against other parties for RIN fraud and related issues, so that McAdams would be adequately informed when advising Murex on how to respond to the EPA.” Id. ¶ 13 (stating that “[t]he vast majority of that information is highly confidential”). Bartel summarizes McAdams's ensuing work vis-à-vis the EPA Notice as follows:

McAdams, armed with Murex's confidential information, helped Murex craft its response to the EPA Notice and a later assertion of additional affirmative defenses. He provided advice on formatting, legal substance, how to address certain regulatory compliance concerns, and how to avoid potentially adverse legal issues associated with Murex's RIN diligence explanations and the EPA in general.

Id. ¶ 14.

         The emails exchanged between McAdams and Murex personnel during this period reflect, in order, the following communications.

         On Saturday, January 30, 2016, McAdams emailed LeRow: “I see you called. Looking over this letter it certainly looks helpful in many respects. Clearly they are comfortable with 13 [2013] and beyond as far as affirmative defense.” Bartel Decl., Ex. C.

         On Sunday, January 31, 2016, Wright emailed McAdams:

Mike, I would like to know your opinion of what this communication from the EPA might mean to Murex. Is it likely we have an off ramp for all RINS generated by Gen-x and Srac? Do you think this might apply to other invalid RIN generators? How about historical D5 invalid RINS that we have previously settled with customers. . . . any potential help in your opinion. Please call me this weekend or Monday if you have a moment. Thanks for your help!
Bob

Id.

         On Tuesday, February 2, 2016, Bartel emailed McAdams attaching Murex's “draft Affirmative Defense Letter for Gen-X and SRAC.” He added: “We would do a related letter for all other advanced biofuel RINS purchased and sold by Murex. Please give me your comments and suggestions.” The attached draft letter took the form of a certification by Bartel. It addressed each element of an affirmative defense as identified by the EPA. Id.

         Later that day, McAdams responded. After thanking Bartel for the draft, McAdams added that he would include a “fo[u]rth bullet” point in Murex's letter to the EPA, the text of which McAdams then proposed. That bullet point addressed, inter alia, the means by which the RINs in question had been verified, citing the pertinent CFR subsection. McAdams reminded Bartel that “[o]f course we need to get this out the door in 30 days. We should make sure we beat that date and that the document is sent by a document dated carrier.” Id.

         On Wednesday, February 3, 2016, Bartel sent an email entitled, “Assertion of Affirmative Defense” to McAdams and the other Murex officials. The body of Bartel's email contained the revised text of the draft affirmative defense letter. That letter was addressed to an EPA official. It contained, as its first substantive point, the language that McAdams had proposed to Bartel, verbatim. Attached to Bartel's email were schedules of A-RINs, generated by Gen-X or SRC, and various documents and reports, that Bartel proposed be sent to the EPA with the letter. The email identified materials that Bartel proposed not to include in Murex's EPA submission. The email explained that certain contracts and other documents contained particular notations regarding RINs whereas others did not. Id.

         Later the same day, McAdams replied to Bartel:

“Rick: Excellent, you gave it back to him in exactly the form he asked for it. As I like to say[, ] idiot proof, if you know what I mean. All the best, ”

Id.

         On February 5, 2016, Murex submitted its initial EPA Notice response letter to the EPA. Bartel Decl. ¶ 16; see also LeRow Decl. ¶ 10 (“I provided McAdams a final draft of the Affirmative Defense Letter and all supporting documents, asked for his final review, and obtained his approval before submitting it to the EPA”). The letter and its many attachments were contained in a series of 16 emails that LeRow sent the EPA, each entitled “Assertion of Affirmative Defense-MUREX.” Murex's letter tracked Bartel's prior draft. LeRow's emails to the EPA cce'd-in addition to her Murex colleagues-McAdams, who was identified at his H&K email address at “hklaw.com.” LeRow Decl., Ex. A; id. ¶ 11 (“I provided H&K with . . . attachments detailing, among other things: (1) Murex's correspondence and agreements with Gen-X and SRAC; (ii) Gen-X and SRAC engineering reviews; (iii) Gen-X and SRAC attestation reports; (iv) Murex's due diligence on Gex-X and SRAC RINs; (v) Gen-X and SRAC RIN reports; (vi) master service agreements with third-party due diligence providers, also known as EPA approved Quality Assurance Plan providers (“QAP Providers”); and (vii) numerous QAP certificates validating RINs purchased by Murex from Gen-X and SRAC”).

         The same day, McAdams responded, stating, with respect to the attachments, that he would “print them all and review over the weekend.” Id. ¶ 12 & Ex. B. LeRow responded:

:)
It's SOOO much information amassed over the years. You probably won't be able to go through it all. I was just trying to give them a good picture of just how much effort went into vetting these guys. I hope it works well for them to be able to make the right decision. Do you think this might encourage them to get back in touch about the meeting? I am truly hoping it will.

Id.

         In the period after the EPA letter was submitted, Bartel attests:

“EPA representatives engaged in direct correspondence with Murex regarding its affirmative defenses. McAdams was heavily involved at all times during these exchanges, and advised Murex how to respond in each interaction. McAdams counseled Murex on how to address each of the EPA's regulatory compliance concerns, and how to assert Murex's affirmative defenses to liability.”

Bartel Decl. ¶ 16.

         The emails exchanged between McAdams and Murex personnel during the period after Murex's first EPA submission reflect, in order, the following communications.

         On Tuesday, February 9, 2016, Bartel emailed McAdams and the other Murex officials. He attached a new draft letter that he proposed Murex send to the EPA “covering the remainder of Gex-X and SRAC RINs.” Bartel's draft letter noted that Murex had already responded to the EPA Notice “regarding potentially invalid Gen-X and SRAC RINs” for 2013 and 2014. The new letter addressed treatment of such RINs for the periods before 2013 and after 2014. Bartel's draft letter explained why each element of an affirmative defense applied to those RINs. Bartel Decl., Ex. E.

         To the draft letter, Bartel attached a document, “Schedule A, ” which Bartel proposed as an exhibit to the second letter to the EPA. Schedule A consisted of an extended narrative regarding Murex. It contained: (1) four paragraphs recounting the evolution of Murex's quality assurance program (QAP), including how Murex became exposed to fraudulent RINs, the steps Murex took to vet the issues and its sources of supply, how Murex modified its anti-fraud due diligence practices, and the third-party auditors and consultants Murex utilized for these purposes; (2) a discussion of Murex's marketing agreements; (3) a discussion of the timetable for implementing Murex's QAP programs; and (4) a statement about Murex's future. Schedule A also described Murex's QAP program in detail and explained why, in Murex's view, it satisfied the EPA's standards. Bartel also attached a proposed Schedule B, which reproduced the due diligence provisions of Murex's purchase and sale agreements regarding RINS. Id., Ex. E. Bartel's email asked McAdams for his “comments and changes.” Bartel's email also raised strategy questions about Murex's approach to the EPA, including whether yet a third letter was warranted “for the remaining RINs, including GRC?” Id.

         On Thursday, February 11, 2016, LeRow reminded McAdams that Murex was awaiting his comments before sending a new letter to the EPA. Id.

         On February 12, 2016, Murex received an email from the EPA. Murex Mem., Ex. D.

         McAdams advised LeRow, Bartel and Wright that he had “asked two of my compliance folks to check the paperwork.” Id., Ex. E. Later that day, McAdams wrote LeRow:

Also, I know you and Rick have cleaned up the slide show. I want to sit with my white Collar crime guy and run him through the slides. Could you send me the latest document.

Id.[5]

         Later that day, after LeRow sent him the slides (“Latest copy attached, Mike! Thanks!”), id., McAdams wrote a long email-consisting of five single-spaced paragraphs-to LeRow, Wright, and Bartel, entitled “draft response the EPA email.” Id., Decl. D. At the top, McAdams wrote: “Take a look at this and tell me what you think. I believe we need to put something in front of them.” Id. The balance of the email consisted of the text of an extended memo that McAdams proposed that Murex send to five EPA officials regarding the agency's potential enforcement action. McAdams's proposed communiqué from Murex to the EPA began:

“Thank you for your email this morning. We certainly appreciate the gravity and sensitivity of the matter which you are currently managing. Murex has a couple of basic points we wanted to communicate to the agency during your deliberations on a path forward concerning the notified RIN noncompliance issue which we recently received from EPA.”

Id.

         McAdams's draft message to the EPA went on to amplify, in some detail, on aspects of Murex's affirmative defenses. Id. It concluded by noting that Murex was sending with it “a slide presentation we developed in the event we were able to meet with you directly, ” and offering to answer the agency's questions. Id.

         The EPA did not, however, ultimately meet with Murex. McAdams Decl. ¶ 19.

         On March 2, 2016, LeRow sought feedback again from McAdams on whether “to move forward with a proactive submission [to the EPA] on an affirmative defense on the remainder of the volume.” She attached Bartel's earlier draft letters and Schedules A and B. Id.

         Although the materials submitted on this motion do not reflect the EPA's decision, at argument, counsel represented that, at an unspecified later date, the EPA decided not to take enforcement action against Murex, provided that Murex, as it had proposed when proffering its affirmative defenses, made a limited repurchase of certain sham RINs. See, e.g., Tr. 12, 34.[6]

         5. Murex's Consultation of H&K Regarding the GRC Lawsuit

         In addition to McAdams's work for Murex in connection with the EPA, Murex directed KRCL, its outside counsel in the GRC litigation, to contact McAdams “to obtain advice on RIN fraud litigation matters.” Bartel Decl. ¶ 17. On February 12, 2016, McAdams and two KRCL's lawyers (Joseph Coleman and Robert N. LeMay) spoke about such matters. Id. The purpose of the call, which Coleman described as “rather extensive, ” was “to consult with Mr. McAdams on RIN-related matters affecting the GRC [l]itigation on behalf of Murex.” Coleman Decl. ¶ 5. McAdams, whom Coleman understood was a lawyer in H&K's Washington, D.C., office, stated that he was representing Murex in matters involving RINs and the EPA. Id. ¶¶ 4-5.

         During the call, the KRCL lawyers and McAdams discussed “litigation and settlement strategy relating to RINs and other issues affecting the GRC litigation.” Id. ¶ 6. Coleman attests that:

“[C]ase strategy was developed during the telephone conference. Mr. McAdams provided in depth factual information and strategy insight with respect to RIN matters in general, including RIN-related information affecting the GRC [l]itigation. Mr. McAdams also discussed the strategy he was utilizing on Murex's behalf before the EPA related to RINs purchased by Murex. During our conversation, Mr. McAdams offered legal opinions on matters related to the GRC [l]itigation.”

Id. ¶ 6. McAdams acknowledges sharing information on the call “about RIN transactions and the fraud perpetrated on Murex and others by parties that may have included GRC.” McAdams Decl. ¶ 34. But, he attests, “I shared this information in the manner that any willing fact witness would share information with counsel for a party” and “never stated or implied to these lawyers that I was a lawyer for Murex” or “that I was licensed to practice law anywhere.” Id.

         6. Murex's Proposal to Expand H&K's Engagement, and H&K's Request That Murex Sign a Conflict Waiver

         In mid-March 2016, Murex, “generally satisfied” with H&K's work, sought to expand H&K's engagement “beyond what H&K could reasonably provide given the $10, 000 monthly fee cap.” Bartel Decl. ¶ 18. Murex asked McAdams and H&K partner Kaufman to prepare a legal work budget for research, analysis, and work related to the EPA's renewable fuel standard (the “RFS legal work”). Kaufman and Emerson prepared such a budget. Id. In connection with the potential representation, on or about March 14, 2016, H&K's McAdams, Kaufman, and Emerson spoke with a Murex representative for approximately 30 minutes “about the possibility of bringing an action against the EPA under the Administrative Procedures Act or other action.” Kaufman Decl. ¶ 9; McAdams Decl. ¶¶ ...


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