Attorneys – Duty to disclose – Rule 1.13(b)

Where a plaintiff limited liability company has alleged that a defendant attorney was negligent in not disclosing to the plaintiff’s board of directors certain information that the company’s chief executive officer shared with the attorney regarding a federal investigation, the attorney is entitled to summary judgment because he did not have and did not breach any duty to disclose directly to the board the information that was already known to its CEO.

“Massachusetts Premier Soccer LLC ran a for-profit youth soccer business under the name Global Premier Soccer. The parties refer to the plaintiff as ‘GPS.’ Many of GPS’s coaches were foreign nationals who were present in the United States under temporary, non-immigrant visas. During 2018, federal agents began to investigate GPS’s use of these visas for its coaches. Attorney Perry Henderson and his law firm Burns & Levinson were doing a broad array of corporate legal work for GPS, but not representing or counselling GPS with respect to its visa program. GPS’s chief executive officer, Joseph Bradley, knew about the apparent federal investigation and shared some of that information with Henderson. In October 2019, federal agents executed a search warrant at GPS’s headquarters. GPS contends that its reputation and business were severely harmed by this surprise raid, and that it could have avoided this harm if Henderson had told other board members about the investigation.

“GPS has three remaining claims against Burns & Levinson and Henderson. First, it alleges that Henderson was negligent in not disclosing to GPS’s board of directors the information shared by CEO Bradley about the apparent federal visa investigation, that if the Board had been aware of what was going on it could have managed the situation and avoided the surprise execution of a search warrant, and that Henderson’s alleged breach of a duty of disclosure to the Board substantially harmed GPS. Second, GPS claims that Burns & Levinson had a conflict of interest because it was representing Bradley and GPS at the same time. Third, it also claims that Burns & Levinson improperly billed GPS for worked done solely for Bradley.

“The Court will allow the motion by Burns & Levinson and Henderson on these claims. As for the first claim, the summary judgment record establishes that these defendants did not have and did not breach any duty to disclose directly to GPS’s board the information that was already known to its CEO. GPS did not articulate any substantive opposition to the summary judgment motion with respect to the other two claims. …

“Though GPS has sued Burns & Levinson and Attorney Henderson for legal malpractice, it does not contend that these defendants were negligent in providing legal services or advice. Instead, GPS asserts in count I of its complaint that these Defendants were negligent because they allegedly had and breached an affirmative obligation under Mass. R. Prof. Conduct 1.13(b) to notify other board members that federal officials seemed to be looking into the GPS visa program. The Court will allow Defendants’ request for summary judgment on this claim because the summary judgment record establishes that Burns & Levinson and Henderson did not have and did not breach any such duty under the circumstances of this case. …

“GPS contends that Burns & Levinson and Henderson had a duty under Mass. R. Civ. P. 1.13(b) ‘to disclose to the non-conflicted members of the GPS board of managers the existence of the criminal investigation as a corporate crisis involving ongoing business practices at the core of the business.’ The Court is not persuaded. It concludes that, as a matter of law, Defendants did not have and did not breach any such duty. …

“The summary judgment record establishes that Defendants had no duty under Rule 1.13(b) to inform other board members about the apparent federal investigation for several, independent reasons.

“First, the limited information shared with Attorney Henderson did not give him ‘actual knowledge’ that Bradley or anyone else at GPS had done or was doing anything that was ‘a violation of a legal obligation to the organization, or a violation of law that reasonably might be imputed to the organization.’ All that Henderson knew was that federal agents were conducting some kind of investigation into GPS’s visa program. Rule 1.13(b) does not impose a duty on outside corporate counsel to directly inform the board of directors any time they learn that the CEO is aware of an apparent federal investigation concerning some aspect of the company’s operations.

“Second, Henderson had no actual knowledge — or, for that matter, any reason to believe — that the federal investigation into GPS’s visa program concerned ‘a matter related to the representation’ of GPS by Burns & Levinson. As discussed above, Burns & Levinson was not involved in designing the visa program and did not submit any petitions seeking visas. Nothing in the limited information shared with Henderson by Bradley suggested that the apparent federal investigation was related in any way to matters or issues as to which Burns & Levinson had done legal work for or provided legal advice to GPS.

“Third, the limited information shared with Henderson about the nascent federal investigation was provided to him by the CEO of GPS. During oral argument, GPS conceded that no one knew Bradley was a target of the investigation before the October 2019 execution of the search warrant. Since Henderson had no actual knowledge that Bradley had done anything wrong, or even that federal agents might suspect Bradley had engaged in wrongdoing, Henderson and Burns & Levinson had no legal duty to bypass the company’s CEO and directly inform other board members that there seemed to be some sort of federal investigation under way. That was the CEO’s responsibility.”

Massachusetts Premier Soccer LLC v. Burns & Levinson LLP, et al. (Lawyers Weekly No. 09-091-25) (7 pages) (Salinger, J.) (Suffolk Superior Court) (Docket No. 2084CV00398-BLS2) (June 6, 2025).

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