Proskauer Rose and Chadbourne & Parke scored big on Thursday when a federal appellate court threw out a long-running lawsuit that claimed both law firms had helped conceal R. Allen Stanford’s $7.2 billion Ponzi scheme.
The decision came from the 5th U.S. Circuit Court of Appeals in New Orleans, which reversed a 2014 Texas Supreme Court ruling that denied the firms motion to dismiss.
“The district court erred in denying their motions to dismiss based on attorney immunity,” said the 3-0 decision .
The appellate court held the law firms were indeed immune from liability. It said Thomas Sjoblom, the lawyer who had represented Stanford and worked at both Proskauer and Chadbourne, was performing his role as an attorney. Sjoblom’s actions in representing Stanford, including sending a letter to the SEC arguing it had no jurisdiction to investigate, “are classic examples of an attorney’s conduct in representing his client,” the panel wrote.
“That some of it was allegedly wrongful, or that he allegedly carried out some of his responsibilities in a fraudulent manner, is no matter,” the ruling said. It later added that, “simply claiming that an attorney’s conduct was fraudulent does not allow plaintiffs to circumvent attorney immunity.”
The judges on the panel included Circuit Judges Rhesa Hawkins Barksdale, Edith Brown Clement and Catharina Haynes.
The ruling was based on Texas law that protects attorneys who have been lied to or misled by their clients, Joshua Hochberg, Sjoblom’s attorney told The American Lawyer .
Sjoblom, Proskauer and Chadbourne were sued for their roles as Stanford’s legal advisor in a class action brought by 18,000 investors claiming they were partially responsible for their losses from the Ponzi scheme.
Stanford is serving jail time — a 110-year sentence — after his conviction in 2012 of defrauding investors.
Sjoblom has started his own law firm, Thomas V. Sjoblom, according to his LinkedIn profile . He did not respond to a request for comment.
A Proskauer spokeswoman said in a statement that the firm was pleased with the 5th Circuit’s decision. “The decision, which was based on arguments that Proskauer has made since the outset of the litigation, brings this purported class action to an end.”
A spokesperson for Chadbourne did not respond to a request for comment, as well as other lawyers involved in the case.