DynTel Corp. v. Ebner

Susan Ebner (defendant) was an attorney employed by Cincinnati Bell. Cincinnati Bell owned a subsidiary named CBIS. Ebner’s office was near CBIS, and she sometimes helped CBIS with legal matters. However, Ebner was never employed or paid by CBIS. Cincinnati Bell sold CBIS to DynCorp (plaintiff), which renamed the entity DynTel Corporation (plaintiff). DynCorp told Ebner it would not offer her a job. Ebner notified DynTel that she would not be able to give it any further assistance and moved her office to make the separation clear. Ebner visited DynTel once and was required to get a visitor’s badge and be escorted. The government sued DynTel. DynCorp believed Cincinnati Bell was required to indemnify DynCorp for this lawsuit, but Cincinnati Bell disagreed. For six months, Ebner represented Cincinnati Bell in this disagreement, and DynCorp referred to Ebner as Cincinnati Bell’s attorney. The United States District Court for the District of Columbia (DC) ordered the parties to arbitrate the indemnification disagreement. For the first time, DynCorp claimed that Ebner owed DynTel an ethical duty of loyalty and that she needed to withdraw from representing Cincinnati Bell in the arbitration. When Ebner declined, DynCorp made a series of threats to Ebner, including threatening to report her to the DC bar. Ebner voluntarily submitted an ethical question to the bar’s legal-ethics committee about the situation, and the committee found that Ebner had no attorney-client relationship with DynTel and owed DynTel no duties. DynCorp continued threatening Ebner and insisting that she withdraw from representing Cincinnati Bell, so she offered to have the arbitrators decide the ethical question. DynCorp declined and instead sued Ebner in federal district court in Virginia, alleging that Ebner had violated a duty of loyalty to DynTel. DynCorp claimed that Ebner was DynTel’s attorney, which created a conflict of interest requiring her to withdraw from representing Cincinnati Bell. The district court dismissed the complaint for failure for being baseless and being filed in the wrong forum. DynCorp appealed. On appeal, Ebner sought sanctions against DynCorp, alleging DynCorp was suing Ebner for the improper purpose of harassing her and gaining a strategic advantage in the arbitration.