How Filing the Wrong Answer Cost a Law Firm Its Entire Case
In workers' compensation litigation, attorneys often move fast. Claims get filed, coverage is investigated, and answers get submitted before all the facts are in. But a new unpublished decision from the New Jersey Appellate Division delivers a stark reminder: moving fast does not excuse moving incorrectly — especially when an ethical duty to a client is on the line.
Background: A PEO Arrangement and a Disputed Claim
The case arose from a professional employer organization (PEO) arrangement. Prop N Spoon, a restaurant employer, contracted with Paychex — a national PEO — to administer its HR functions, including workers' compensation coverage. When employee Johann Mejia Arboleda filed a workers' compensation claim petition in October 2024, alleging a work-related injury, Prop N Spoon tendered the claim to Paychex. American Zurich Insurance, Paychex's insurer, assigned Goldberg Segalla LLP as defense counsel.
Here is where things went sideways.
The Four-Day Representation
On October 31, 2024, Goldberg Segalla filed a verified answer on behalf of Prop N Spoon. The answer was substantive: it disputed the nature, extent, and causation of Arboleda's claimed disability; requested his treatment records; reserved all defenses; and preserved the right to cross-examine witnesses and present expert testimony. Nothing in the filing reserved rights or flagged a future conflict. To the court and all others, Goldberg Segalla was Prop N Spoon's lawyer.
Four days later, on November 4, 2024, Goldberg Segalla filed an amended answer. This time, it entered a special appearance on behalf of Paychex, stated it did not represent Prop N Spoon, and denied coverage of the claim entirely. Shortly thereafter, it moved to dismiss the claim against Paychex, asserting that Prop N Spoon had concealed Arboleda's employment and thereby forfeited workers' compensation coverage.
In a span of four days, the firm had gone from defending Prop N Spoon to attacking it.
The Disqualification Motion
Prop N Spoon, now forced to hire its own attorney, moved to disqualify Goldberg Segalla under RPC 1.9(a)—New Jersey's former-client conflict-of-interest rule. That rule prohibits a lawyer who has represented a client from later representing another party in the same matter whose interests are materially adverse to the former client, absent written informed consent.
Goldberg Segalla opposed the motion with a creative argument: there was no attorney-client relationship with Prop N Spoon because the firm never intended to represent it, never provided legal advice, never exchanged confidential information, and — critically — the electronic court filing system left them no choice but to list Prop N Spoon as the client when submitting the initial answer. The firm characterized the filing as a "preliminary" step in the investigative process and emphasized that no substantive proceedings occurred during the four-day window.
The compensation judge was unpersuaded. On May 1, 2025, he disqualified the firm and ordered Zurich and Paychex to retain new counsel. After reconsideration was denied on July 7, 2025, Paychex appealed.
The Appellate Division's Rationale: Plain Language, No Exceptions
The Appellate Division affirmed, and its reasoning is worth understanding carefully.
The court applied de novo review to the legal question of disqualification under RPC 1.9(a) — meaning it gave no deference to the compensation judge's legal conclusions and reviewed the rule fresh. That standard actually cut against Goldberg Segalla; the court found the answer just as obvious as the judge did.
The court's analysis rested on the plain text of RPC 1.9(a). The rule does not ask whether confidential information was exchanged. It does not ask whether the prior representation caused harm. It does not carve out exceptions for brief or unintentional representations. It asks one question: Did the lawyer represent the client in the matter? If yes, and if the current client's interests are materially adverse to those of the former client, disqualification follows unless there is written, informed consent.
Filing a verified answer on Prop N Spoon's behalf — one that actively defended the company against Arboleda's claims — was, in the court's view, representation. Full stop. The firm undertook Prop N Spoon's defense. That it did so for only four days before pivoting did not change the analysis; it only underscored how egregious the conflict was.
The court also rejected the "no harm, no foul" framing directly and pointedly: "We decline to engraft a 'no harm-no foul' standard onto the Rules of Professional Conduct, particularly where, as here, a duty to a client is implicated." The Rules of Professional Conduct exist precisely to protect parties who may not even know they are being harmed — and the court refused to let efficiency or industry custom dilute that protection.
As for the defense of the electronic filing system, the court was dismissive. The judge below had already noted the firm could have filed the answer manually from the outset. The Appellate Division agreed: the technology argument did not excuse the ethical lapse. A systemic workaround was available, and the firm did not use it.
Workers' Compensation Context: Why This Matters in PEO Cases
PEO arrangements create a uniquely complex litigation environment. When a worker is injured, there may be genuine uncertainty about who the employer of record is, which entity carries coverage, and whether coverage defenses exist. Insurers and their assigned counsel often need time to investigate these questions before taking a formal position.
In that environment, the temptation to file a "placeholder" answer while the investigation proceeds is understandable. But this case establishes that doing so — by naming a party as your client — triggers the full protections of the attorney-client relationship and the full force of RPC 1.9(a). If that party later becomes adverse, the firm is disqualified from the case.
The practical lesson for workers' compensation defense practitioners in New Jersey is clear: if coverage is in dispute and the insurer needs time to investigate, do not file an answer on behalf of the employer while that investigation is ongoing unless you are prepared to represent that employer through the life of the case. Use manual filings if the electronic system creates incorrect party designations. Consider filing a notice of appearance or a special appearance from the outset, explicitly identifying the client and reserving all rights.
Procedural Note: No Hearing Required
One of Goldberg Segalla's arguments on appeal was procedural — the firm contended the compensation judge should not have ruled on the disqualification motion without holding a hearing. The Appellate Division dismissed this argument quickly, citing N.J.A.C. 12:235-3.5(c), which expressly authorizes a judge of compensation to decide all motions — other than motions to dismiss for lack of prosecution and motions to suppress defenses — on the papers alone, unless the judge decides to order oral argument or further proceedings. Disqualification motions fall within that catch-all category. No hearing was required.
This is a useful clarification for practitioners: disqualification motions before the New Jersey Division of Workers' Compensation can be decided on written submissions. While a judge may, in their discretion, schedule an argument, a party has no absolute right to a hearing on such a motion.
The Bottom Line
Mejia Arboleda v. Paychex is a cautionary tale about the collision of administrative convenience and professional responsibility. The court's message is unambiguous: the ethics rules are not suggestions, and representing a party — even briefly, even accidentally, even without exchanging a single word of legal advice — carries binding consequences. In workers' compensation PEO litigation, where the lines of coverage and representation can blur quickly, getting the client identification right from the very first filing is not a technicality. It is an ethical obligation with real teeth.
Mejia Arboleda v. Paychex & Prop N Spoon, A-0085-25 (N.J. App. Div. Feb. 25, 2026)
UNPUBLISHED OPINION. CHECK COURT RULES BEFORE CITING.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
This opinion shall not “constitute precedent or be binding upon any court.” Although it is posted on the internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3. Superior Court of New Jersey, Appellate Division.
*Jon L. Gelman of Wayne, NJ, is the author of NJ Workers' Compensation Law (West-Thomson-Reuters) and co-author of the national treatise Modern Workers' Compensation Law (West-Thomson-Reuters).
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