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Keywords

attorneysubpoenafiduciarycorporationfiduciary dutygrand jurypiracy

attorneysubpoenagrand jury

Related Cases

Dean Foods Co. v. Pappathanasi, Not Reported in N.E.2d, 18 Mass.L.Rptr. 598, 2004 WL 3019442

Facts

West Lynn Creamery, a long-time client of the law firm Rubin and Rudman, received a federal grand jury subpoena in October 1997 related to payments made to the Gavriels, who operated Dunkin' Donuts franchises. Rubin and Rudman was retained to represent West Lynn in connection with the subpoena, but during the subsequent stock sale to Suiza Foods Corporation in June 1998, the existence of the subpoena was not disclosed in the stock purchase agreement. This omission led to legal issues for West Lynn Creamery when it was later implicated in a conspiracy to defraud the IRS.

Issue

Did Rubin and Rudman LLP breach their duty to West Lynn Creamery by failing to disclose the federal grand jury subpoena during the stock sale?

Rule

An attorney has a duty to disclose material information that could affect a client's interests, particularly in transactions such as stock sales where undisclosed liabilities may impact the value of the transaction.

Analysis

The court analyzed the actions of Rubin and Rudman in the context of their duty to West Lynn Creamery. It found that the firm was aware of the grand jury subpoena and the potential implications it had for the company. Despite this knowledge, the firm did not include the subpoena in the disclosures made during the stock sale, which constituted a breach of their fiduciary duty to the client.

Conclusion

The court concluded that Rubin and Rudman LLP breached their duty to West Lynn Creamery by failing to disclose the grand jury subpoena, which resulted in significant legal and financial consequences for the company.

Who won?

West Lynn Creamery prevailed in the case because the court found that Rubin and Rudman had a clear duty to disclose the subpoena, which they failed to do, leading to the adverse consequences faced by West Lynn.

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Keywords

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