Lucent Technologies, Inc. v. Gateway, Inc. et al., 2007 WL 1461406 (S.D. Cal 2007)
Brief Summary
The court granted a motion to disqualify and refused to allow the disqualified firm to rebut the presumption of shared confidences when an attorney who worked extensively on one side of a case switched firms and went to work for the firm representing the other side.
Complete Summary
Lucent began this litigation in 2002 against Dell and Gateway as defendants. Microsoft intervened as a defendant in February 2003. Lucent was represented by Kirkland & Ellis, LLP and Microsoft was represented by Fish & Richardson, P.C. The firm of Gibson Dunn associated with Fish & Richardson to represent Microsoft on post-trial and appeal issues after a trial on the first set of patents.
On February 12, 2007, Dr. Koehl, an attorney previously employed by Kirkland & Ellis, was hired by Gibson Dunn and moved to its New York office. Dr. Koehl had billed about 2,300 hours between 2004 and 2007 on behalf of Lucent in this litigation. Although Dr. Koehl listed Lucent as a firm client and the current litigation in his conflicts check materials, Gibson Dunn did not recognize the conflict until Lucent brought the matter to its attention on March 15, 2007. Id. at *1.
When Lucent raised the issue, Gibson Dunn implemented a screening wall and directed that 1) Dr. Koehl could not discuss his work for Lucent nor disclose any confidential information in the presence of any Gibson Dunn attorney or personnel; 2) the Gibson Dunn team could not discuss the case with Dr. Koehl or in his presence and 3) Dr. Koehl was absolutely prohibited from any access to any documents associated with the litigation. Dr. Koehl disclosed that he had not discussed the case with anyone at Gibson Dunn, but prior to the screen, he was asked by a few attorneys about his involvement at which time he would change the topic and did not disclose any confidential information. Dr. Koehl stated that he had never communicated with the Gibson Dunn attorneys working on the case. Id. at *1. Gibson Dunn refused to voluntarily withdraw from representing Microsoft, and this motion for disqualification followed. Id. at *1.
The court noted that California Rule of Professional Conduct 3-310(E) states “[A] member shall not, without the informed consent of the client or former client, accept employment adverse to the client or former client where, by reason of the representation of the client or former client, the member has obtained confidential information material to the employment.” Id. at *2.
The court also noted that “When a conflict of interest requires an attorney’s disqualification from a matter, the disqualification normally extends vicariously to the attorney’s entire law firm.” Id. at *2, quoting People ex rel. Dept. of Corporations v. SpeeDee Oil Change Systems, Inc. 20 Cal.4th 1135, 1139 (Cal. 1999). In addition, the court asserted that California courts have not generally allowed vicarious disqualification to be avoided by use of a screening procedure. See Henriksen v Great American Savings & Loan, 11 Cal. App. 4th 109 (Cal.App. 1992). The court, however, noted that the Ninth Circuit had indicated that it might be more flexible regarding screening procedures and had stated that “an ethical wall, when implemented in a timely and effective way, can rebut the presumption that a lawyer has contaminated the entire firm.” In re County of Los Angeles, 223 F.3d 990, 996 (9th Cir. 2000)
The court then found the circumstances of this case were not sufficiently similar to those in In re County of Los Angeles to merit a rebuttable presumption of vicarious disqualification despite “shifting winds” in the Ninth Circuit on the issue. 2007 WL 1461406. at *3. That case involved a retired U.S. magistrate judge working on “discrete, successive conflicting representations in substantially related matters” as opposed to prior representation of an adverse party in the same litigation. Id. at *3. The court found the In re County of Los Angeles decision to be limited, and noted that subsequent California case law chose not to allow an ethical wall to rebut the presumption. See City and County of San Francisco v. Cobra Solutions, Inc. 43 Cal.Rptr.3d 771 (Cal. 2006).
Special emphasis was also placed on the fact the conflict in this case occurred in the context of a single litigation. 2007 WL 1461406 at *4. The court found precedent that the allowance of a rebuttable presumption did not apply to conflicts within the context of a single litigation and California state court decisions mandated automatic disqualification of the entire firm. I-Enterprise Co. LLC v. Draper Fisher Jurvetson Management Co. V, LLC, 2005 WL 757389 at *5-7 (N.D.Cal. 2005).
Finally, the court found that several additional factors weighted strongly for applying the vicarious disqualification. Dr. Koehl had spent a significant amount of time involved with confidential information in a high profile case, and lawyers in the New York office of Gibson Dunn had asked him about the case before an ethical wall was in place. In addition, the screening procedure was not implemented until after Lucent’s attorneys advised Gibson Dunn of the conflict. The court also found that the Gibson Dunn attorneys who were working on the case were in Washington, D.C., while Dr. Koehl was in New York was insignificant in light of electronic and phone communication.
Significance of Case
Although the “winds of change” may be blowing regarding vicarious disqualification in the Ninth Circuit, and although some read Cobra Solutions as intimating that screens will be allowed as long as the person to be screened is not a managing partner or equivalent, this court chose not to allow the use of a screen.
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