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Federal Trade Commission v. Adept Management, Inc.

United States District Court, D. Oregon, Medford Division

February 23, 2017

ADEPT MANAGEMENT, INC., et al., Defendants.


          MARK D. CLARKE United States Magistrate Judge.

         Plaintiff, the Federal Trade Commission ("FTC") brings claims against more than thirty defendants, alleging claims under section 5(a) and section 13(b) the Federal Trade Commission Act, 15 U.S.C. §§ 45(a), 53(b), to obtain preliminary and permanent injunctive relief, rescission or reformation of contracts, restitution, the refund of monies paid, disgorgement of ill-gotten monies and other equitable relief. The FTC claims that the defendants, who are a large number of corporate entities, groups, and individuals, engaged in a nationwide campaign using misrepresentations to solicit newspaper renewals and new subscriptions from consumers. The case comes before the Court on a motion to withdraw filed by an attorney for a group of the defendants (#112), and two motions to stay the case pending a grand jury investigation into one or more of the defendants (#111, #113). For the reasons below, the motion to withdraw is granted, subject to certain conditions. The motions to stay are denied. Additionally, the motion for disqualification of counsel (#96) is denied as moot.

         I. Attorney Lennon's Motion to Withdraw is Granted with Conditions.

         Under Oregon District Court Local Rule 83-11, an attorney may withdraw as counsel of record only with leave of the court. In considering a motion to withdraw from representation, courts consider a variety of factors, including: (1) the reasons why withdrawal is sought; (2) the prejudice withdrawal may cause to other litigants; (3) the harm withdrawal might cause to the administration of justice; and (4) the degree to which withdrawal will delay the resolution of the case. Sidbury v. Boeing, 2015 WL 11714358, at *2 (W.D. Wash. June 24, 2015) (citing Bohnert v. Burke, 2010 WL 5067695 (D. Ariz. 2010)).

         Application of this multi-factor test leads the Court to conclude that withdrawal should be allowed, with conditions. First, the reasons given for withdrawal are serious. Attorney David P. Lennon, counsel of record for seven individual defendants and over twenty corporate defendants, moves to withdraw based on potential or actual conflicts of interest arising from Mr. Lennon's connections and interactions with the defendants in this case - both his clients and other co-defendants. Co-defendants Dennis Simpson and Reality Kats, LLC, are former clients of Lennon, and they have filed a third-party complaint against Lennon in this action, as well as a motion to disqualify him as counsel. Additionally, Mr. Lennon submits that these defendants have filed a bar complaint in the State of Oregon, a lawsuit in a California court, and most recently a new action in the Jackson County Circuit Court.

         Second, the only prejudice to the other litigants will be mitigated by the conditions, as discussed below. Third, any harm to the administration of justice will also be remedied by the conditions. Fourth, the Court is hopeful that the conditions will prevent any substantial delay that would otherwise be caused by immediate withdrawal.

         As pointed out by Plaintiff FTC, Mr. Lennon has been the sole counsel for seven individual and twenty three corporate defendants for over nine months. He has worked with these parties for years, and he is familiar with the underlying conduct at issue, the structure of the corporate entities, the relationships among the defendants, and the location of key documents subject to discovery. The Court agrees that the conditions imposed on Attorney Lennon's withdrawal will help to minimize the inevitable delay that will be result as his clients seek representation, and the potential halting of the process altogether if the corporate defendants are unable to retain counsel. Mr. Lennon has already agreed to several of these conditions in his Reply brief, but the Court will include all of them here for purposes of clarity.

         Pre-conditions for Withdrawal:

         1. Mr. Lennon will continue to temporarily serve as counsel, and:

a. He will file amended affirmative responses on behalf of his clients, as ordered by the Court on December 21, 2016 (#94), which were due on January 27, 2017. This shall be filed no later than March 3, 2017.
b. He will respond to the requests for production of documents served on his clients, which are due March 17. As indicated in his Reply Brief, Mr. Lennon is aware of the existence and the location of the Company Group Defendants' documents and copies of hard drives. The Court sees no reason why he cannot make these available to the Plaintiff for copying and inspection before he withdraws.
c. If he has not already done so, Mr. Lennon will immediately provide the initial disclosures for his clients, which were due February 17.

         2. Mr. Lennon will submit an affidavit to the Court and provide satisfactory assurance that he has complied with the conditions above. If the Court approves his submission, he will be allowed to withdraw immediately.

         Post-conditions ...

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