Friday, March 11, 2016
R. Allen Stanford after his 2012 conviction
Texas law grants immunity to a law firm, even for claims alleging that it aided and abetted fraud. In this case it is the massive Ponzi scheme of Allen Stanford. The all-Republican Texas Supreme Court, a graveyard for plaintiffs, affirmed that there is no fraud exception from Texas law granting immunity to lawyers for claims by non-clients. So regardless of the failures to two major law firms to recognize the mega-fraud being perpetrated on investors by Allen Stanford, they are immune from claims made by defrauded investors. The link below is to the full opinion. - gwc
Troice v. Proskauer Rose, LLP, Chadbourne Park, et al
U.S. Court of Appeals for the Fifth Circuit, March 10, 2016
This case represents more fallout from Allen Stanford’s massive Ponzi scheme. Plaintiffs filed this putative class action against one of Stanford’s lawyers, Thomas Sjoblom, and the law firms where he worked, arguing that they aided and abetted Stanford’s fraud and conspired to thwart the SEC’s investigation of Stanford’s scheme. After this case went to the Supreme Court and back on an issue not relevant here, defendants moved to dismiss plaintiffs’ complaint as barred by attorney immunity under Texas law. The district court denied that motion, holding that plaintiffs’ allegations met a “fraud exception” to attorney immunity, and defendants appealed.
We are now confronted with two issues. First, under Texas law, is attorney immunity a true immunity of suit, such that denial of a motion to dismiss based on attorney immunity is appealable under the collateral order doctrine?
Second, should we reverse the district court’s order denying defendants’ motions to dismiss based on attorney immunity now that the Texas Supreme Court has clarified that there is no “fraud exception” to attorney immunity? For the reasons below, we answer both questions in the affirmative.