A New Jersey appeals court ruled on April 24, 2008 that Gibbs & Bruns could continue its representation of both Plaintiffs and Third-Party Defendants in a multi-million dollar securities fraud lawsuit. Gibbs & Bruns brought the lawsuit on behalf of hedge fund Appaloosa Capital and certain mutual funds advised by Franklin and Franklin Mutual when those funds suffered investment losses as a result of the elaborate Bre-X Minerals Indonesian gold fraud. Defendants are investment banks J.P. Morgan Securities and Nesbitt Burns, now a subsidiary of the Bank of Montreal.
Having failed at their efforts to dismiss the case on the pleadings, the Defendant banks sued the Plaintiffs’ investment advisers for contribution as Third-Party Defendants. Following the advisers’ retention of Gibbs & Bruns, the banks moved to disqualify Gibbs & Bruns as counsel, arguing our joint representation of the Plaintiffs and their advisers was a conflict of interest. Superior Court Judge Stephen Smith, Jr. denied the motion, finding that the interests of the Plaintiffs and Third-Party Defendants were not adverse and no conflict existed. On April 24, 2008, the New Jersey Appellate Division agreed, settling the issue. Since then, Defendants’ summary judgment motions have been denied and the case is set for trial.