The Tenth Circuit published its opinion in United States v. Flood on Thursday, May 9, 2013.
In January 2003, the Securities and Exchange Commission (SEC) filed a civil suit against ClearOne Communications (ClearOne), as well as the company’s CEO, Frances Flood, and CFO, Susie Strohm. The SEC alleged that Ms. Flood and her codefendants had employed a scheme to defraud, falsely filed with the SEC, committed securities fraud, kept false records, and aided and abetted false bookkeeping. The law firm of Snow Christensen & Martineau (SCM) was retained to represent Ms. Flood. The parties were at all times represented by separate counsel. During the SEC proceedings, Ms. Flood, Ms. Strohm, and ClearOne entered into a Joint Defense Privilege and Confidentiality Agreement (Joint Defense Agreement), which enabled them to share documents, litigation strategies, and other information without waiving attorney-client privilege. Ultimately, Ms. Flood settled with the SEC.
Around the same time, Ms. Flood executed an Employment Separation and Indemnification Agreement (Separation Agreement) with ClearOne. Under the Separation Agreement, Ms. Flood agreed to resign as CEO and surrender her stock options in exchange for $350,000 and ClearOne’s promise to indemnify her “for any liability and all reasonable attorneys’ fees and costs incurred by her in connection with the SEC Action or any Related Proceedings.”
Subsequently, the government brought criminal charges against Ms. Flood and Ms. Strohm. SCM continued to represent Ms. Flood, sending invoices for its attorney’s fees to ClearOne. Initially, ClearOne paid SCM’s invoices as they became due. However, in October 2007, ClearOne requested detailed information pertaining to Ms. Flood’s representation. SCM had learned that ClearOne was sharing materials prepared under the Joint Defense Agreement with the government. Accordingly, SCM refused ClearOne’s request, explaining that it would not “disclose work product and attorney-client information.”
In April 2008, ClearOne ceased paying Ms. Flood’s attorney’s fees. Ms. Flood, represented by SCM, brought suit against ClearOne to compel payment. SCM continued to represent Ms. Flood in the criminal proceedings.
In January 2009, the court granted a preliminary injunction against ClearOne, ordering ClearOne to pay Ms. Flood’s attorney’s fees. ClearOne initially complied, but stopped making payments. SCM filed a motion to compel payment. Shortly before the criminal trial concluded, ClearOne made another payment. The jury found Ms. Flood guilty on all counts.
Ms. Flood then filed her § 2255 motion, arguing that she received ineffective assistance of counsel because her attorneys labored under a conflict of interest. The district court denied her motion. Ms. Flood appealed to the Tenth Circuit, arguing that: 1) conflicts of interest adversely affected her trial counsel’s performance; 2) the district court abused its discretion by denying her motions for an evidentiary hearing, discovery, and judicial notice; and 3) she was denied effective assistance of counsel under Strickland.
The Tenth Circuit granted a Certificate of Appealability limited to issues one and two.
The Sixth Amendment guarantees the “right to representation that is free from conflicts of interest.” Wood v. Georgia, 450 U.S. 261, 271 (1981). To prevail on an ineffective assistance claim the defendant must show that her counsel’s performance was deficient and that prejudice resulted. Strickland v. Washington, 466 U.S. 668, 692 (1984). However, “[p]rejudice is presumed only if the defendant demonstrates that counsel ‘actively represented conflicting interests’ and that ‘an actual conflict of interest adversely affected [her] lawyer’s performance.’” Strickland, 466 U.S. at 692.
After a thorough review of the record, the Tenth Circuit found that Ms. Flood offered no evidence that would suggest SCM served ClearOne’s interests instead of hers. The Court simply could not find a conflict of interest based on the facts.
Further, having carefully reviewed the entire record, including the trial transcript, the Tenth Circuit found no abuse of discretion by the district court in denying an evidentiary hearing. Nor did the Court find any abuse of discretion in the district court’s denial of Ms. Flood’s motions for discovery and judicial notice.