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Law360 (March 5, 2021, 4:49 PM EST) -- A federal judge said Friday he had no power to freeze Pollock Cohen LLP's assets for a lawsuit filed by a former attorney seeking a slice of settlements reached by the firm in his cases after he was let go.
U.S. District Judge Robert J. Colville said a 1999 U.S. Supreme Court ruling in Grupo Mexicano de Desarrollo SA v. Alliance Bond Fund Inc.
declared that federal courts can't freeze assets in lawsuits where no lien or equitable interest in the assets are claimed."In Grupo the court held that… the traditional rule remains that the federal courts have no equity power to restrain a defendant from controlling or alienating its assets pending a decision in an action for money damages and before any judgment is entered," Judge Colville wrote. "Because we have no authority to freeze defendants' funds to help ensure satisfaction of a judgment should plaintiff prevail on the underlying legal claim, the motion for preliminary injunction will be denied."
Judge Colville denied Pittsburgh attorney Darth Newman's request to make Pollock Cohen put the disputed funds in escrow pending resolution of his lawsuit seeking bonus pay.
Newman claimed that Pollock Cohen owes him between $50,000 and $60,000 in contingency fees from a multimillion-dollar suit the firm settled not long after he was fired. He initially sued the New York-based firm and three partners in the Allegheny County Court of Common Pleas in November, and the firm removed it to federal court in December.
Pollock Cohen hired Newman in April 2019 as a full-time special counsel in Pennsylvania for $10,000 a month and bonuses of 10% of the first $2 million in fees the firm accumulated per year. But the firm fired him in March 2020, citing financial stress related to the coronavirus pandemic.
In its motion to dismiss on March 3, the firm argued Newman was fundamentally misinterpreting the contract's definition of his bonuses, and he wasn't entitled to portions of settlements that were resolved after he was let go.
Newman had asked the court for a preliminary injunction to make Pollock Cohen put the disputed portions of the fees in escrow pending the resolution of his case.
The firm argued that a preliminary injunction was inappropriate for putting funds in escrow, and the court agreed, citing the Supreme Court's Grupo ruling.
"In short, where only damages are sought and no prior judgment has been entered, the court may not grant an asset freeze," Judge Colville wrote.
Newman had argued that there was a "public interest" exception to the Grupo ruling, and that there was a public interest in making sure attorneys didn't spend contested funds, but Judge Colville said Newman hadn't pointed to any cases applying that exception to circumstances like his.
"Absent from plaintiff's argument is citation to any legal authority that such an exception has ever been applied in the context of this case," the judge wrote. "In fact, in the most recent joint status report, plaintiff's counsel appears to have conceded the lack of such legal precedent."
Rachel McElroy, representing Newman, said her client was "disappointed in the ruling on this technicality but confident in the merits of the case."
Meanwhile, Adam Pollock of Pollock Cohen praised the ruling.
"As is well known among skilled practitioners, a court may not issue a preliminary injunction in a case alleging money damages," he told Law360 Friday. "We believe that the court reached the right, legally correct, just, and common sense conclusion."
Newman is represented by Rachel McElroy of McElroy Law Firm LLC.
Pollock Cohen and its partners are represented by Marla N. Presley and Joanna M. Rodriguez of Jackson Lewis PC.
The case is Newman v. Pollock Cohen LLP et al., case number 2:20-cv-01973, in the U.S. District Court for the Western District of Pennsylvania.
--Additional reporting by Grace Dixon. Editing by Ellen Johnson.
Update: This article has been updated to include comments from Pollock Cohen and Newman's counsel.
For a reprint of this article, please contact reprints@law360.com.
