Robbins Geller Rudman & Dowd has been at the center of what I've previously called the confidential witness conundrum: the pervasive phenomenon in which former employees cited in securities class action complaints refute their statements to plaintiffs' lawyers when they're contacted by defense lawyers. Securities class action lawyers, as you know, aren't permitted to serve discovery demands on defendants until they've gotten past dismissal motions, so their complaints rely heavily on allegations by confidential informants. But former employees are often subject to confidentiality provisions in severance agreements. Depending on which side you believe, plaintiffs' lawyers routinely misrepresent the information their investigators have received from confidential witnesses - or former employees get scared and recant when their identity is revealed and their severance is endangered.

Defense lawyers have claimed that just about every significant plaintiffs' firm has lied about information obtained from former employees, but Robbins Geller (which, after all, files more cases than anyone else in the securities class action bar) has been on the receiving end of more defense accusations than anyone else. That was a dangerous dynamic for the firm, since every new accusation refers back to the old ones.

But Robbins Geller just got good news in a hard-fought fight over confidential witnesses in a case in Georgia, continuing the firm's run of success in fending off allegations of misrepresentation. Last week, U.S. District Judge William Duffey of Atlanta decided to forgo any action against the plaintiffs' firm, even though Robbins Geller's own investigator in the case he was overseeing, a class action against SunTrust Banks, had contacted the court to contradict what the firm told the judge about its lawyers' contacts with a recanting informant. Duffey said Robbins Geller's behavior was not "in keeping with the conduct expected of attorneys practicing before this court," but concluded that the firm hadn't committed misconduct amounting to "an actionable violation of the Federal Rules of Civil Procedure."

Duffey's order ended a five-month headache for Robbins Geller that started last September, when Desiree Torres, an independent investigator working on the SunTrust case for the firm, contacted the judge's clerk to say that she was troubled by information Robbins Geller had presented to the court. (Duffey explained the backstory in an order in October.) Plaintiffs' lawyers had supposedly told the judge that they didn't know one of their witnesses had left the bank before events alleged in their pleadings. But Torres said that wasn't true. She told the court that Robbins Geller lawyers were present when she interviewed the former SunTrust employee. Not only did Robbins Geller know when he left the bank, she said, but also knew that he had disavowed knowledge of the bank's conduct after his departure.

Duffey ordered a hearing on the apparent discrepancy between the firm's assurances and Torres's account. (That order, in turn, prompted problems for defense counsel in another Robbins Geller case, an ongoing class action against Regions Financial in federal court in Birmingham, Alabama. A lawyer for individual defendants in the Regions case sent a letter to Duffey, claiming that there were similar allegations against Robbins Geller in the Alabama case and asking the judge to keep the SunTrust hearing open to the public. The letter sparked an angry response from the federal judge overseeing the Regions case, who had already certified a class despite defense arguments that five confidential informants had recanted their purported statements to the plaintiffs' firm.) At the Dec. 18 hearing before Duffey in the SunTrust case, Torres testified about "her concerns about the manner in which the information she collected from fact witnesses in this action was presented to the court," according to last week's order. Robbins Geller then offered its version of its litigation and case-management strategy, the judge said.

Duffey wasn't happy about what he heard. "The court remains troubled by the conduct of plaintiffs' counsel in failing to correct representations made in their pleadings," he wrote. "The decision not to correct the record after counsel became aware of the court's reliance on plaintiffs' representations is perplexing and disappointing." Nevertheless, he said, Robbins Geller hadn't committed an actionable violation, and since he had already dismissed the class action, he decided not to take further action. Torres has resigned as an investigator, Duffey noted in a footnote.

Duffey is the second federal judge to hold a hearing on confidential witnesses in a Robbins Geller securities class action. As we've reported, U.S. Senior District Judge Jed Rakoff ordered testimony last fall from recanting witnesses in a case against Lockheed. After a seven-hour session, Rakoff told both sides that he found the plaintiffs' investigator (not Torres, in this case) to be credible but was concerned about relying on double-hearsay evidence from the informants. The Lockheed case subsequently settled in December, though terms have not yet been disclosed.

Robbins Geller hasn't heard the last of the confidential witness issue. The 7th Circuit Court of Appeals is considering the firm's appeal of the dismissal of a class action against Boeing, which was tossed after a confidential witness recanted statements attributed to him. Both Robbins Geller and Boeing have already sent Judge Duffey's order to the appeals court.

Robbins partner Patrick Coughlin told me the firm is "satisfied" with Duffey's order. "We believe we reacted as quickly as we could under the circumstances to make the record clear," he said. SunTrust counsel Timothy Mast of Troutman Sanders declined to comment.

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