12-4916-bk (L) In re Coudert Brothers

UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT SUMMARY ORDER RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.

At a stated Term of the United States Court of Appeals for the Second Circuit, held at the 1 Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York on the 2 2 ndday of September, two thousand fourteen. 3 4 Present: ROSEMARY S. POOLER, 5 REENA RAGGI, 6 Circuit Judges

. 1 7

_____________________________________________ 8

IN THE MATTER OF: COUDERT BROTHERS LLP 9 Debtor, 10

___________________________________________ 11 DEVELOPMENT SPECIALISTS, INC., 12 Plaintiff-Appellee-Cross-Appellant

, 13

------------------------------------------------------------------- 14 AKIN GUMP STRAUSS HAUER & FELD LLP, ARENT 15 FOX LLP, DLA PIPER (US) LLP, DECHERT LLP, 16 DORSEY & WHITNEY LLP, DUANE MORRIS, LLP, 17 JONES DAY, SHEPPARD MULLIN RICHTER & 18 HAMPTON, LLP, K&L GATES LLP, MORRISON & 19 FOERSTER LLP

, 20 Defendants-Appellants-Cross-Appellees

. 2 21 ORDER

Docket Nos. 12-4916 (L), 12-4925 (Con), 12-4926 (Con), 12-4928 (Con), 12-4931 (Con), 12-4933 (Con), 12-4935 (Con), 12-4938 (Con), 12-4939 Con), 12-4945 (Con), 12-4948 (Con), 12-4950 (Con), 12-4952 (Con), 12-4921 (XAP), 12-4927 (XAP), 12-4929 (XAP), 12-4932 (XAP), 12-4934 (XAP), 12-4936 (XAP), 12-4940 (XAP), 12-4942 (XAP), 12-4943 (XAP), 12-4946 (XAP), 12-4949 (XAP), 12-4951 (XAP), 12-4953 (XAP).

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1 Judge Richard C. Wesley, a member of the original panel, subsequently recused himself. Therefore, this case is decided by the two remaining members of the panel pursuant to Internal Operating Procedure E(b) of the Rules of the United States Court of Appeals for the Second Circuit.

2The Clerk of the Court is directed to amend the caption as above.

1Appearing for Defendant-Appellant-Cross-Appellee 1 Jones Day: Geoffrey S. Stewart, Jones Day, New York, 2 N.Y. (Jeffrey B. Ellman, Jones Day, Atlanta, 3 GA.; Shay Dvoretzky, Warren Postman, Jones 4 Day, Washington, D. C., on the brief ). 5 Appearing for Defendants-Appellants-Cross-Appellees 6 Dechert LLP, Morrison & Foerster LLP, 7 K&L Gates, LLP, Quinn Emanuel Urquhart & Sullivan LLP, 8 Duane Morris LLP, Dorsey & Whitney LLP, Arent Fox LLP, 9 DLA Piper LLP (US): Joel M. Miller, Miller & Wrubel, P.C. (Claire 10 L. Huene, S. Christopher Provenzano; Brett H. 11 Miller, Morrison & Foerster; Richard S. Miller, 12 K&L Gates, LLP; Susheel Kirpalani, Eric J. 13 Emanuel, Eric M. Kay, Quinn Emanuel 14 Urquhart & Sullivan LLP; Lawrence J. Kotler, 15 Duane Morris LLP; Patrick J. McLaughlin, 16 Dorsey & Whitney LLP; Allen G. Reiter, Arent 17 Fox, LLP; James P. Ulwick, Jean E. Lewis, 18 Kramon & Graham, P.A. Baltimore, MD; 19 Jeffrey Schreiber, Howard Davis, Meister 20 Seeling & Fein LLP; Daniel L. Brown, 21 Sheppard Mullin Richter & Hampton LLP, on 22 the brief ), New York, N.Y. 23 24 Appearing for Plaintiff-Appellee-Cross-Appellant 25 Development Specialists, Inc.: David J. Adler, McCarter & English, LLP 26 (Joseph R. Scholz, on the brief ), New York, 27 N.Y. 28 29 Appeal from the United States District Court fo r the Southern District of New York (McMahon, 30 J. ). 31 32 ON CONSIDERATION WHEREOF, IT IS HEREBY ORDERED, ADJUDGED, AND 33 DECREED that the decision and order of said distri ct court be and hereby is REVERSED IN PART 34 and VACATED and REMANDED in part. 35 36 Appellants-Cross-Appellees Akin Gump Strauss Hauer & Feld LLP, Arent Fox LLP, Dorsey 37 & Whitney LLP, Duane Morris LLP, Jones Day, K & L Gates LLP, Morrison & Foerster LLP, 38 Sheppard Mullin Richter & Hampton LLP, DLA Piper (US) LLP, and Dechert LLP (the “Law 39 Firms”) appeal from the July 18, 2012 amended decision and order of the United States District 40 Court for the Southern District of New York (McMahon, J. ), granting Appellee-Cross-Appellant 41 Development Specialist’s Inc.’s (“DSI”) motion for summary judgment. See Dev. Specialists, Inc. v. 42 Akin Gump Strauss Hauer & Feld LLP , 480 B.R. 145 (S.D.N.Y. 2012) (“DSI”) . DSI, in its capacity 43 as administrator for the bankruptcy estate of defunct law firm Coudert Brothers LLP, sought to 44 recover from the Law Firms profits earned by former Coudert partners, now working at the Law 45 Firms, on Coudert client matters that were uncompleted at the time of Coudert’s dissolution. We 46 assume the parties’ familiarity with the underlyi ng facts, procedural history, and specification of 47 issues for review. 48

2The district court found the uncompleted client matters were assets of Coudert, and as such 1 recoverable by the bankruptcy estate. Id. at 154. However, another court in the same district 2 reached the opposite conclusion, refusing to recognize a property right in unfinished hourly fee 3
matters. Geron v. Robinson & Cole LLP , 476 B.R. 732, 740 (S.D.N.Y. 2012) (“In re Thelen I ”). 4 Both cases were appealed to this Court, and a separate panel of this Court heard argument in In re 5 Thelen on October 7, 2013. In an opinion dated November 15, 2013, the Court in Thelencertified 6 the following questions to the New York Court of Appeals pursuant to Second Circuit Local Rule 7 27.2 and New York Compilation of Codes, Rules, and Regulations, title 22, section 500.27(a): 8 9 Under New York law, is a client matter that is billed on an hourly basis the 10 property of a law firm, such that, upon dissolution and in related bankruptcy 11 proceedings, the law firm is entitled to the profit earned on such matters as 12 the “unfinished business” of the firm? 13 14 If so, how does New York law define a “client matter” for purposes of the 15 unfinished business doctrine and what proportion of the profit derived from 16 an ongoing hourly matter may the new law firm retain? 17 18 In re Thelen , 736 F.3d 213, 225 (2d Cir. 2013) (“ In re Thelen II” ). On December 2, 2013, we 19 certified the same two questions to the New York Court of Appeals with respect to the instant 20 appeal. In re Coudert Bros. LLP , 2013 WL 9363394 (2d Cir. Dec. 2, 2013). 21 22 The New York Court of Appeals issued an opinion on July 1, 2014, answering the first 23 certified question in the negative. See In re Thelen LLP , 2014 WL 2931526, at *5 (N.Y. July 1, 24 2014)(“In re Thelen III ”). The Court found it unnecessary to answer the second question. Id. at *9. 25 Given the holding in In re Thelen III, we must reverse the district court’s grant of summary 26 judgment in DSI’s favor. On remand, the district court is directed to enter summary judgment in 27 favor of the Law Firms and to dismiss the claims that the client matters at issue were Coudert’s 28 property, as well as the related claims seeking an accounting for those fees. 29 30 In briefing to this Court following the New York Court of Appeals decision, DSI argued 31 that it believed its remaining claims—dismissed by the district court as “duplicative and 32 unnecessary” in light of the accounting proceeding—should be revived. DSI also argues that it 33 should be permitted to proceed with an accounting as to unpaid accounts receivables and work-in34 progress that DSI alleges are unaffected by the New York Court of Appeals decision. We thus 35 vacate the district court’s grant of summary judgment to the Law Firms dismissing the remaining 36 claims, vacate the grant of an accounting and remand to the district court to consider, in the first 37 instance, whether DSI may proceed on any of the dismissed claims and whether any part of its claim 38 for an accounting survives In re Thelen

. 39 40 Accordingly, the decision and order of the district court hereby is REVERSED in part and 41 VACATED and REMANDED in part. The cross-appeal brought by DSI is DISMISSED as moot. 42 Each side to bear its own costs. 43 44 FOR THE COURT: 45 Catherine O’Hagan Wolfe, Clerk 46 47 48

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