Conflicts & Commentary — “Slim Chickens” Calls Foul on Conflict Allegation, AI Assistance Drives Law Firm Disqualification, Judge Recused for Remarks

“Slim Chickens bid to disqualify attorneys lacks merit, plaintiff says” —

• “R Solution, a franchisee suing Slim Chickens, says the chicken chain’s attempt to disqualify R Solution’s attorney and Friday, Eldredge & Clark, LLP for conflict of interest lacks merit and should be denied.”
  “St. Louis-based R Solution includes three entities that share common ownership and management of a total of 10 Slim Chickens franchises operating in Illinois, Missouri and Kentucky. R Solution filed suit in Washington County Circuit Court in June claiming Slim Chickens painted a picture of a lucrative and scalable franchise opportunity while the reality was ‘starkly different.’”
  “Slim Chickens responded to the suit earlier this month, arguing the action should be dismissed, saying it is an attempt to shift blame for the franchisee’s poor performance and that agreements between the two entities invalidate the suit.”
  “In a separate filing, Slim Chickens asked the court to disqualify R Solution’s legal counsel because of a ‘clear’ conflict of interest. Slim Chickens noted it has been a long-time client of the Friday law firm, with the firm serving as counsel for Slim Chickens in transactions and litigation for more than 20 years.”
  “In its response filed recently, R Solution’s counsel contends the disqualifying attempt is invalid since Slim Chickens is not a current client of the Friday firm and that the cases where the firm did represent Slim Chickens are not substantially related to the current suit. R Solution argued Slim Chicken’s relationship with the Friday firm occurred in 2012 and revolved around matters of internal governance and fiduciary duty, while this case involves allegations of fraud and contract breeches.”
  “‘Yet Defendant now claims that information obtained over a decade ago — before it had even begun franchising — is so sensitive that it could unfairly prejudice them in this litigation,’ the response reads in part. ‘This inconsistency reveals the Motion for what it is: a litigation tactic intended to burden Plaintiffs and deprive them of their chosen counsel and not a genuine attempt to protect confidential information.’”
  “In its initial suit, R Solution said it invested more than $15 million developing the stores and $450,000 for development rights in Missouri and Illinois. It claims Slim Chickens also breached its franchise agreement in several aspects, including how Slim Chickens calculates royalties and its rejection of poultry product suppliers who were more cost-effective.”
  “In documents filed earlier this month, Slim Chickens said the suit by R Solution should be dismissed with prejudice since the plaintiff’s claims of fraud are actually disguised breach of contract arguments. It also notes the parties signed agreements that contained both general and specific releases of liability and a covenant not to sue.”
  “When a suit is dismissed with prejudice the plaintiff cannot refile the same claim against the same defendant going forward.”
  “Slim Chickens competes in the fast-casual segment, where restaurants provide a slightly more formal dining experience compared with fast-food operations. While fast-casual restaurants don’t have a wait staff, servers generally carry food to tables. The company has more than 300 locations, including overseas locations in the United Kingdom, Turkey and Germany.”
  “According to court documents, R Solution is involved in commercial development including retail, warehouses, offices and restaurants, and its leadership team had experience in franchise operations across multiple brands prior to its deal with Slim Chickens.”
  “R Solution acquired its first Chickens locations in Illinois in July 2019, between 2020 and 2022 it added six more, and in 2024 it acquired controlling interest in two locations in Kentucky.”

David Kluft notes: “Tidbit: If the judge says he doesn’t like me, can I move for his recusal?” —

• “In a dispute between a restaurant and a commercial landlord, an OH judge granted summary judgment for the landlord on the morning of trial. The restaurant won on appeal and the matter was remanded back to the judge.”
• “On the day of the new trial, the judge made off the record comments about the merits of the case and the restaurant asked him to recuse. The judge sanctioned the restaurant $40k in attorneys’ fees for a frivolous recusal motion. The attorneys’ fee order was reversed on appeal. On the day of the third attempt to conduct the trial, the judge turned to the restaurant’s counsel and said ‘I don’t like you… and you don’t like me.’”
• “The restaurant moved to recuse again and the court denied it. The judge then encouraged the landlord to move for a directed verdict, which he granted. The OH Supreme Court noted that adverse rulings are not normally sufficient grounds for recusal, except when the ruling ‘is accompanied by words or conduct that call into question the manner in which the proceedings are being conducted.’ The judge was disqualified.”
• Decision: here.

“Judge disqualifies three Butler Snow attorneys from case over AI citations” —

• “A federal judge in Alabama disqualified three lawyers from U.S. law firm Butler Snow from a case after they inadvertently included made-up citations generated by artificial intelligence in court filings.”
  U.S. District Judge Anna Manasco in a Wednesday order reprimanded the lawyers at the Mississippi-founded firm for making false statements in court and referred the issue to the Alabama State Bar, which handles attorney disciplinary matters. Manasco did not impose monetary sanctions, as some judges have done in other cases across the country involving AI use.”
  Fabricating legal authority ‘demands substantially greater accountability than the reprimands and modest fines that have become common as courts confront this form of AI misuse,’ Manasco said. ‘As a practical matter, time is telling us – quickly and loudly – that those sanctions are insufficient deterrents.’”
  The case is the latest example of a judge sanctioning or admonishing lawyers as AI-generated ‘hallucinations’ have continued to crop up in court filings ever since ChatGPT and other generative AI programs became widely available. Professional rules require lawyers to vet their work however it is produced.”
  The three Butler Snow lawyers were part of a team defending former Alabama Department of Corrections Commissioner Jeff Dunn in an inmate’s lawsuit alleging he was repeatedly attacked in prison. Dunn has denied wrongdoing.”
  The judge said the three lawyers’ conduct was ‘tantamount to bad faith.’ She sanctioned partner Matthew Reeves, who admitted to using AI to generate the citations and including them in the filings without verification. Reeves in a May filing apologized to the court and said he regretted his ‘lapse in diligence and judgment.’”
  She also disqualified partners William Cranford and William Lunsford, who each signed their names onto the filings. The lawyers said in May filings that they did not independently review the legal citations that were added.”
  Reeves, Cranford and Lunsford did not immediately respond to requests for comment on Thursday.”
  The judge declined to sanction Butler Snow, finding the firm ‘acted reasonably in its efforts to prevent this misconduct and doubled down on its precautionary and responsive measures when its nightmare scenario unfolded.’”
  The firm previously warned its attorneys about the risks of AI and escalated the issue after the court issued an order for the lawyers to explain what happened in the case. Butler Snow also mounted an internal investigation and retained another firm, Morgan, Lewis & Bockius, for an independent review to verify citations in 40 other cases, the judge said.”
  A Butler Snow spokesperson did not immediately respond to a request for comment. Nor did one of the lawyers representing plaintiff Frankie Johnson, or a lawyer from the Alabama attorney general’s office, which had appointed Lunsford to litigate on behalf of the state, according to the order.”
  The judge ordered the three lawyers to share a copy of the order with their clients, opposing lawyers and judges in other pending state or federal cases in which they are involved, and also to every lawyer at Butler Snow.”