Brokeback Lawfirm: A Substantive Report on the Hearing

Paul Hastings partner Zachary Fasman, counsel to Sullivan & Cromwell, leaving New York Supreme Court after yesterday’s hearing. As he passed us, he called out, “Go back to Washington!” It seemed half-playful, half-sincere.
As we mentioned yesterday, the Thursday morning hearing in Aaron Charney v. Sullivan & Cromwell was a bit of a snoozefest. Nothing particularly shocking or funny happened. The parties’ arguments hewed closely to their written submissions (as they should have). Justice Bernard Fried issued no significant rulings from the bench.
There were several MSM reporters at the hearing, but none of them has written anything on it — perhaps because it was a non-event. (Blogger Lavi Soloway did do a quick post on it.)
Even if it wasn’t a blockbuster hearing, some of you have requested a substantive report anyway. We’ve done a quick write-up, which appears after the jump.


We arrived at 60 Centre Street a little after the appointed hour of 9:30. We were cold, wet, and bedraggled. We didn’t even have time to put our necktie on; we were a mess.
Fortunately, Justice Bernard Fried didn’t get the proceedings started right at 9:30. This gave us time to fix our tie (while sitting in the back row, without a mirror).
In Attendance:
Parties: Aaron Charney was there! And from S&C, litigation partner Robert Giuffra. Has Giuffra replaced the controversial Gandolfo “Field Marshal” DiBlasi as the S&C partner riding herd on outside counsel?
Counsel to S&C: Zachary Fasman, of Paul Hastings; Charles Stillman; and a few associates.
Counsel to Aaron Charney: Daniel Alterman and Douglas James, of Alterman & Boop; Laura Schnell and Herb Eisenberg, of Eisenberg & Schnell; Michael Kennedy and David Holland (criminal defense lawyers).
(Yes, that’s right. It seemed that Charney had more lawyers present than S&C. Perhaps they are trying to downplay the case by devoting fewer resources to it.)
Counsel to Gera Grinberg: Gary Ireland.
Ex-counsel to Gera Grinberg: Edward Gallion (!!!), in funky tortoise-shell glasses. He was older than we expected, and he was accompanied by an unidentified lawyer lawyer of his own.
Journalists and bloggers: Vivia Chen, of the American Lawyer; Lindsay Fortado and Patricia Hurtado (that’s a mouthful), of Bloomberg News; Anthony Lin, of the New York Law Journal; blogger Lavi Soloway.
Public relations: Paul Caminiti of Sard Verbinnen, the PR guy hired by S&C to work specifically on L’Affaire Charney.
S&C’s Motion to Dismiss ABC’s Case
The court first heard argument on S&C’s motion to dismiss Aaron Charney’s case, based on the argument that ABC revealed client confidences, that the case can’t go forward without continuing to reveal such confidences, etc.
Zach Fasman argued for S&C. Justice Fried asked some skeptical questions, but it seemed like he was just trying to be an active and involved judge (i.e., they didn’t evince serious hostility towards S&C’s arguments). Justice Fried did zero in on the alternatives to outright dismissal offered by Fasman: striking the improper portions of Charney’s Complaint and/or granting leave to replead.
Laura Schnell argued for Charney. She was wearing the same black pantsuit she wore to the last hearing we attended (or maybe she just has ten of these in her closet, a la Hillary). We like her as an advocate.
Justice Fried questions her aggressively too. He again seems focused on the alternatives offered by Fasman. Our best guess as to what Fried will do: he will strike the improper portions of the Complaint (and/or dismiss without prejudice so Charney can replead, which he’d probably want to do anyway now that he’s no longer pro se).
ABC’s Motion to Dismiss S&C’s Counterclaim
The court then heard argument on Charney’s motion to dismiss S&C’s counterclaim for breach of fiduciary duty, breach of contract, replevin, conversion, and violation of attorney disciplinary rules.
Daniel Alterman argued for ABC. He argued that ABC didn’t owe a fiduciary duty to S&C, that replevin is moot because S&C has its documents back, that the elements for conversion aren’t satisfied, and that the firm can’t bring a cause of action re: the disciplinary rules.
Most interesting tidbit: ABC has returned all S&C materials to the firm EXCEPT TAPES, which are being transcribed right now. Who knows what these tapes will reveal?
Charles Stillman argued for S&C. He said that ABC may still have S&C documents, “in those computer places — whaddya call them? — like Yahoo.” (Stillman’s whole “unfrozen caveman lawyer” approach to cyberspace provoked tittering in the gallery.) He reiterated the arguments made in S&C’s moving papers about breach of duty of loyalty.
Interesting question from Justice Fried: “Isn’t this really a defamation cause masquerading as breach of fiduciary duty?”
Stillman’s response (paraphrased): “I haven’t thought about that adequately. Maybe there’s a defamation claim here. But that’s not the claim we’re asserting right now.”
As noted, no rulings from the bench. The hearing closed with some discussion of discovery housekeeping matters.
Justice Fried did express some irritation that the depositions of Charney and Grinberg, about the narrow issue of the destruction of Charney’s computer hard drive, went well beyond what he authorized (i.e., turned into fishing expeditions). (That’s how we learned about DiBlasi’s alleged “we’ve represented the Nazis” comment.)
Justice Fried admonished the parties to stick to what he ordered, and said that if they can’t adhere to his directives, then a special referee will have to supervise future depositions. Ouch!
Naughty lawyers! Not quite a benchslap; but maybe a playful spank. Not unlike what Sean Kalish administered to Adriana Dominguez.

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