Opinion
00-CV-6161L(B).
December 11, 2000
DECISION AND ORDER
By an order dated June 9, 2000, Chief United States District Judge David G. Larimer referred the above-captioned matter to the undersigned for all pretrial matters, excluding dispositive motions, in accordance with 28 U.S.C. § 636 (b)(1)(A). (Docket #15).
Plaintiff filed this patent infringement action on April 11, 2000 against defendants G.D. Searle Co., Inc., Pfizer, Inc., Monsanto Co., and Pharmacia Corp. (Docket #1). Pharmacia moves to disqualify the law firm of Morrison Foerster from representing plaintiff in this action. (Docket #7). Oral argument of the motion to disqualify took place before the undersigned on August 30, 2000. For the following reasons, defendant's motion to disqualify is denied.
BACKGROUND
The University of Rochester brought this action pursuant to title 35 of the United States Code seeking injunctive relief and damages for alleged infringement of United States Letters Patent No. 6,048,850 (the `850 patent), issued April 11, 2000, for invention of a pharmaceutical method for selectively inhibiting COX-2 gene product activity (commonly referred to as "super aspirin"). The complaint was signed by Gerald P. Dodson, Esq., from the law firm of Morrison Foerster, LLP, located in Palo Alto, California. Attorneys from the law firm of Harter, Secrest Emery, LLP, located in Rochester, New York, are also listed as counsel of record for plaintiff.
On June 8, 2000, defendant Pharmacia answered the complaint and moved to disqualify the Morrison Foerster law firm from representing the University of Rochester in this case. Pharmacia claims that a disqualifying conflict of interest exists by virtue of Morrison Foerster's representation of Pharmacia in Dowhal v. SmithKline Beecham Consumer Healthcare, L.P., et al., No. 305893 (Cal.Super.Ct.), filed in California Superior Court on August 23, 1999.
As set forth in the extensive motion papers, the Dowhal case involves issues of compliance with California Proposition 65, which requires warning labels for products containing cancer-causing chemicals, such as nicotine. Pharmacia Upjohn manufactures the nicotine replacement therapy products Nicorette® gum and Nicotrol® patches, which are marketed by SmithKline Beecham and McNeil Consumer Products Co., respectively. Pharmacia Upjohn subsequently merged with Monsanto to form the Pharmacia Corporation, effective April 3, 2000. ( See Docket #12, Ex. 5; Docket #25, Ex. E). Pharmacia Upjohn, SmithKline Beecham, and McNeil were named as defendants in the Dowhal complaint, along with other manufacturers and retailers of nicotine replacement therapy products.
On August 15, 1999, prior to the filing of the Dowhal action, Michele Corash and Robert Falk (partners at Morrison Foerster) sent a memorandum to John Dittoe, an attorney at Crosby, Heafey, Roach May, P.C., in Oakland, California. The Crosby, Heafey firm, as counsel for Pharmacia Upjohn, was signatory to a joint defense agreement with Morrison Foerster (on behalf of SmithKline Beecham) and the Livingston Mattesich law firm of Sacramento, California (on behalf of McNeil). ( See Docket #33, Ex. 2). The joint defense agreement was entered in July 1998 after these companies received letters notifying them of alleged Proposition 65 violations. ( Id.). The August 15, 1999 memorandum advised Mr. Dittoe that SmithKline Beecham had agreed to indemnify and defend Pharmacia Upjohn in the Proposition 65 litigation, and had asked Morrison Foerster "to accept primary responsibility for [such] representation . . . ." (Docket #12, Ex.1).
On February 4, 2000, Mr. Dittoe wrote to Ms. Corash confirming SmithKline Beecham's agreement to fully defend and indemnify Pharmacia Upjohn in the Dowhal matter, and requesting written confirmation of the agreement, "[t]o eliminate any possible misunderstanding or confusion . . . ." (Docket #33, Ex. 10). On March 14, 2000, Ms. Corash sent an "Engagement to Perform Legal Services" letter to Harold J. Decker, Esq., Vice President of Litigation for Pharmacia Upjohn. (Docket #12, Ex. 6). The letter sets forth the basic terms of Morrison Foerster's representation of Pharmacia Upjohn in the Dowhal case, including the scope of engagement, billing policies and procedures, general responsibilities of attorney and client, and waiver of conflicts. Among other things, Ms. Corash advised Mr. Decker that Morrison Foerster was engaged by SmithKline Beecham to represent not only Pharmacia Upjohn in defense of the Proposition 65 litigation, but also several other defendants including Alza Corp., Lucky Stores, Inc., Rite Aid Corporation, Safeway, Inc., Walgreen Company, Costco Companies, Inc., and Aventis Pharmaceuticals, Inc. According to the engagement letter, Morrison Foerster's representation would cover discovery, motion practice, settlement, trial, and "any other appropriate litigation services relating to this matter . . .," for which SmithKline Beecham would be billed. ( Id., pp. 1-2).
With respect to "Waiver of Conflict(s)," the engagement letter provided as follows:
This will also confirm that we have been retained only in connection with Proposition 65 litigation regarding nicotine replacement therapy products. Naturally, we would be interested in establishing a broader relationship with Pharmacia Upjohn, but we would appreciate confirmation that, in light of the limited representation involved, we are free to represent clients or take positions adverse to either Pharmacia Upjohn or an affiliate in matters which are not substantially related to matters for which you have retained us. We represent a variety of companies on biotechnology matters (including Chiron) which may, from time to time, be adverse to Pharmacia and Upjohn in such matters. The waiver specifically applies to such situations and applies as well to the merged entity once the merger of Pharmacia and Upjohn and Monsanto is concluded.
In addition, [Morrison Foerster] represents a variety of companies on biotechnology matters, including Chiron Corporation, which may from time to time be adverse to Pharmacia Upjohn. In light of our representation of Chiron Corporation, and in order to avoid any misunderstanding in the future, we ask that you confirm (through your countersignature below) that Pharmacia Upjohn agrees to waive any conflict of interest which may be deemed to arise as a result of our firm's representation of Chiron Corporation. Your waiver indicates that neither Pharmacia Upjohn nor any of its successors, subsidiaries and affiliates, including Monsanto, will seek to disqualify our firm from representing Chiron Corporation in matters substantially unrelated to our current representation of Pharmacia Upjohn.
( Id., p. 2). By his signature dated April 3, 2000 (the day the Monsanto/Pharmacia Upjohn merger became effective), Mr. Decker indicated he had read, understood and agreed on behalf of Pharmacia Upjohn to the terms of representation as set forth in the engagement letter. ( Id., p. 4). Mr. Decker transmitted the executed engagement letter under a cover letter printed on Pharmacia Corp. letterhead. ( Id.).
On May 1, 2000, Morrison Foerster associate Maria Chedid sent Mr. Dittoe a letter in further confirmation of the defense/indemnification agreement set forth in Ms. Corash's engagement letter. The confirmation contained the addendum that, "to the extent Crosby, Heaf[e]y, Roach May participates in the representation of Pharmacia Upjohn Co. in the [Proposition 65] matter, SmithKline will not pay the fees or costs incurred by the Crosby firm." (Docket #33, Ex. 11).
On May 12, 2000, Pharmacia's Senior Vice President and General Counsel Richard T. Collier wrote to Ms. Corash to advise that Pharmacia had been served with the complaint in this action (filed on April 11, 2000), and to request Morrison Foerster's withdrawal as counsel for the University of Rochester. ( Id., Ex. 12). On May 16, 2000, Morrison Foerster General Counsel Marshall L. Small responded to Mr. Collier's letter, voicing his "strenuous disagree[ment]" with Pharmacia's contentions that the waiver of future conflicts executed by Mr. Decker was ineffective, and that the only remedy was Morrison Foerster's withdrawal from its representation of the University of Rochester. ( Id., Ex. 13). According to Mr. Small, even if a conflict did exist, it was caused by the action of the client — i.e., the merger of Pharmacia Upjohn and Monsanto — and could be cured by Morrison Foerster's withdrawal from representation of Pharmacia Upjohn in the Proposition 65 litigation. ( Id.). On June 23, 2000, after the motion to disqualify was filed in this action, Pharmacia Upjohn executed a stipulation to substitute Mr. Dittoe and the Crosby firm as counsel of record in the Dowhal case in place of Morrison Foerster ( id., Ex. 18), over the objection of Mr. Collier on behalf of Pharmacia. ( Id., Ex. 17).
Notwithstanding Morrison Foerster's withdrawal from its representation of Pharmacia Upjohn in the Proposition 65 matter, Pharmacia continues to seek to disqualify Morrison Foerster from representing the University of Rochester in this action. Pharmacia contends this adverse representation of existing clients is per se improper under the Lawyers' Code of Professional Responsibility, requiring disqualification in the absence of full disclosure and informed consent. In his declaration in support of the motion to disqualify, Mr. Decker states he was never informed by Ms. Corash or anyone at Morrison Foerster that, contemporaneous with the engagement for provision of legal services in the Proposition 65 litigation and the related waiver of conflicts on behalf of "the merged entity," Morrison Foerster was preparing to sue Pharmacia on behalf of the University of Rochester for infringement of the `850 patent. According to Mr. Decker, had he been so informed, he "would have objected to the law firm's conflicting representation, demanded that they withdraw from representing the University, and not signed the engagement letter." (Docket #12, ¶ 13). Mr. Decker also states that Pharmacia and its corporate predecessors have been Morrison Foerster clients since at least 1989, as evidenced by the performance of legal services involving several labor, tax, intellectual property and other matters (not related to the subject matter of this lawsuit) which resulted in billings totaling nearly $300,000.00. ( Id., ¶¶ 17-21; see also Docket #13 (Luckow Declaration re: Morrison Foerster's joint representation of Pharmacia and Chiron on unrelated intellectual property matter)).
In opposition to the motion to disqualify, the University of Rochester argues that when it retained Morrison Foerster in November 1999 to represent it in its efforts to protect its intellectual property related to the COX-2 inhibitor process, neither Pharmacia nor Pharmacia Upjohn was identified as an adverse party because, first, Pharmacia did not exist, and second, Pharmacia Upjohn had no apparent interest in Monsanto's COX-2 inhibitor drug Celebrex®. Accordingly, plaintiff argues the conflict arose only by virtue of the client's subsequent conduct — i.e., the merger — and that Morrison Foerster's withdrawal from its representation of Pharmacia Upjohn in the Proposition 65 litigation has cured the conflict. Plaintiff also contends the " per se" disqualification rule relied upon by Pharmacia does not apply here because Morrison Foerster's representation of Pharmacia was merely an "accommodation" pursuant to SmithKline Beecham's agreement to defend and indemnify Pharmacia Upjohn in the Proposition 65 litigation. According to plaintiff, this attenuated attorney-client relationship requires an inquiry into whether there was a substantial relationship between the subject matters of the California and New York cases, which there clearly is not. Finally, plaintiff argues the "Waiver of Conflict(s)" language in Ms. Corash's March 14, 2000 engagement letter should be given full effect.
These arguments are discussed in turn below.
On August 2, 2000, Pharmacia subpoenaed Morrison Foerster for a Rule 30(b)(6) deposition, scheduled for August 9, 2000 at MF's offices in Palo Alto, GA, and production of documents seeking further factual information in support of its disqualification motion. Plaintiff moved to quash the subpoena, and for an order of protection, objecting to the deposition and document production on the grounds of privilege, relevance and overbreadth. (Docket #36). On August 8, 2000, this court conducted a telephone conference with the parties at which it was agreed that Pharmacia would withdraw its subpoena and plaintiff would withdraw its motion to quash, without prejudice to renew as necessary to the court's consideration of the matters addressed in the parties' voluminous briefs, declarations and exhibits, and at oral argument.
DISCUSSION
1. The "Per Se" Rule.Pharmacia contends the circumstances of this case present a straightforward case of " per se" disqualification, as required under Canon 5 and Disciplinary Rule DR 5-105 of the Lawyer's Code of Professional Responsibility. Canon 5 provides: "A Lawyer Should Exercise Independent Professional Judgment on Behalf of a Client." DR 5-105 provide as follows:(A), (B) and (C) which state:
DR 5-105(A): A lawyer shall decline proffered employment if the exercise of his independent professional judgment in behalf of a client will be or is likely to be adversely affected by the acceptance of the proffered employment, or if it would be likely to involve him in representing differing interests, except to the extent permitted under DR 5-105(C).
DR 5-105(B): A lawyer shall not continue multiple employment if the exercise of his independent professional judgment in behalf of a client will be or is likely to be adversely affected by his representation of another client, or if it would be likely to involve him in representing differing interests, except to the extent permitted under DR 5-105(C).
DR 5-105(C): In the situations covered by DR 5-105 (A) and (B), a lawyer may represent multiple clients if it is obvious that he can adequately represent the interest of each and if each consents to the representation after full disclosure of the possible effect of such representation on the exercise of his independent professional judgment on behalf of each.
N Y Judiciary Law App.; 22 N.Y.C.R.R. § 1200.24; see Pennwalt Corp. v. Plough, Inc., 85 F.R.D. 264, 271 (D.Del. 1980); see also Rule 83.3(c) of the Local Rules of Civil Procedure for the Western District of New York ("The Code of Professional Responsibility of the American Bar Association as adopted by the New York State Bar Association shall be enforced in this Court.").
As a general matter, motions to disqualify counsel are disfavored, and the movant bears the burden of demonstrating that disqualification is warranted by satisfying "a high standard of proof." Evans v. Artek Systems Corp., 715 F.2d 788, 791 (2d Cir. 1983); Sauer v. Xerox Corp., 85 F. Supp.2d 198, 199 (W.D.N.Y. 2000). This is primarily because "disqualification has an immediate adverse effect on the client by separating him from counsel of his choice, and [because] disqualification motions are often interposed for tactical reasons." Board of Educ. of City of New York v. Nyquist, 590 F.2d 1241, 1246 (2d Cir. 1979). However, while courts will not lightly grant a motion to disqualify, any doubts must be resolved in favor of disqualification. Hull v. Celanese Corp., 513 F.2d 568, 571 (2d Cir. 1975); Sauer, 85 F. Supp.2d at 199-200; Felix v. Balkin, 49 F. Supp.2d 260, 267 (S.D.N.Y. 1999). This approach strikes a balance between recognizing the client's right to counsel of choice, and protecting the "need to maintain the highest standards of the profession" and the "integrity of the adversary process." Sauer, 85 F. Supp.2d at 200 (quoting Evans, 715 F.2d at 792, and Government of India v. Cook Indus., Inc., 569 F.2d 737, 739 (2d Cir. 1978)).
In recognition of these concerns, the Second Circuit has established alternative guidelines for a district court to follow on a motion to disqualify an attorney for adverse representation, depending on the particular facts of the case. Glueck v. Jonathan Logan, Inc., 653 F.2d 746, 749 (2d Cir. 1981); Hartford Accident and Indemnity Co. v. RJR Nabisco, Inc., 721 F. Supp. 534, 538 (S.D.N.Y. 1989). The more stringent alternative, known somewhat misleadingly as the " per se" rule, pertains to situations where a law firm undertakes to represent two adverse parties, both of which are "clients in the traditional sense," and the relationship between the firm and the clients is continuing. Glueck, 653 F.2d at 749; Cinema 5, Ltd v. Cinerama, Inc., 528 F.2d 1384, 1387 (2d Cir. 1976). In such a case, the adverse representation is prima facie improper, and "the attorney must be prepared to show, at the very least, that there will be no actual or apparent conflict in loyalties or diminution in the vigor of his [or her] representation." Cinema 5, 528 F.2d at 1387; see also Ives v. Guilford Mills, Inc., 3 F. Supp.2d 191, 202 (N.D.N.Y. 1998).
The Second Circuit has established "a less stringent standard for cases of vicarious or attenuated representation, or where the potentially improper relationship is not a continuing one." Hartford Accident and Indemnity Co., 721 F. Supp. at 539. In this situation, "disqualification is warranted only where there is a substantial relationship between the subject matters of the representation." Id. (citing Glueck, 653 F.2d at 749); see also International Electronics Corp. v. Flanzer, 527 F.2d 1288 (2d Cir. 1975); Emle Industries, Inc. v. Patentex, Inc., 478 F.2d 562 (2d Cir. 1973). Under the "substantial relationship" test, disqualification should be granted "upon a showing that the relationship between the issues in the prior and present cases is `patently clear' [or] `essentially the same.'" Government of India v. Cook Industries, 569 F.2d at 739-40 (quoting Silver Chrysler Plymouth, Inc. v. Chrysler Motors Corp., 518 F.2d 751, 754-56 (2d Cir. 1975)); see also Ives v. Guilford Mills, 3 F. Supp.2d at 204.
This "restrained" or "more flexible" approach has developed in the Second Circuit based on the recognition that disqualification "should ordinarily be granted only when a violation of the canons of the Code . . . poses a significant risk of trial taint." Glueck, 653 F.2d at 748; see also Bottaro v. Hatton Associates, 680 F.2d 895, 896 (2d Cir. 1982); Universal City Studios, Inc. v. Reimerdes, 98 F. Supp.2d 449, 452 (S.D.N.Y. 2000). As Judge Feinberg explained in Board of Education v. Nyquist:
[D]isqualification has been ordered only in essentially two kinds of cases: (1) where an attorney's conflict of interests in violation of Canons 5 and 9 of the Code . . . undermines the court's confidence in the vigor of the attorney's representation of his client, . . . or more commonly (2) where the attorney is at least potentially in a position to use privileged information concerning the other side through prior representation . . . thus giving his present client an unfair advantage. . . . But in other kinds of cases, we have shown considerable reluctance to disqualify attorneys despite misgivings about the attorney's conduct. . . . This reluctance probably derives from the fact that disqualification has an immediate adverse effect on the client by separating him from counsel of his choice, and that disqualification motions are often interposed for tactical reasons. . . . [W]e believe that unless an attorney's conduct tends to "taint the underlying trial" . . . by disturbing the balance of the presentations in one of the two ways indicated above, courts should be quite hesitant to disqualify an attorney.Board of Education v. Nyquist, 590 F.2d at 1246 (citations and footnotes omitted).
Canon 9 provides: "A lawyer should avoid even the appearance of professional impropriety."
Thus, even where the so-called "per se" test is applied, disqualification does not necessarily follow. As recognized in Cinema 5 and subsequent cases, once it has been established that the law firm has a continuing relationship with two adverse parties who are "clients in the traditional sense," the burden shifts to the accused law firm to show that "there will be no actual or apparent conflict in loyalties or diminution in the vigor of his representation." Cinema 5, 528 F.2d at 1387; see also Commercial Union Insurance Company v. Marco International Corp., 75 F. Supp.2d 108, 111 n. 25 (S.D.N.Y. 1999). If this burden is met, the party seeking disqualification must then show that the challenged representation has tainted the trial by affecting counsel's presentation of the case, by placing counsel in a position to use privileged information, or by otherwise allowing counsel to gain an unfair advantage against the other side. Bottaro, 680 F.2d at 896; Glueck, 653 F.2d at 750; Nyquist, 590 F.2d at 1246.
Considering the circumstances presented on this motion in light of these guidelines, I find disqualification of the Morrison Foerster firm is not required under either the "substantial relationship" test or the " per se" test. First of all, Pharmacia has not established that it is a continuing client of the Morrison Foerster firm "in the traditional sense." Morrison Foerster was not Pharmacia Upjohn's "counsel of choice" for the defense of claims arising from alleged violations of Proposition 65 — the Crosby, Heafey firm was. Morrison Foerster's direct representation of Pharmacia Upjohn in the Dowhal case was clearly an accommodation to SmithKline Beecham, based on the agreement to defend and indemnify Pharmacia Upjohn and six other defendants. This representation lasted less than a year, and terminated in June 2000 with the stipulated substitution of the Crosby, Heafey firm as Pharmacia Upjohn's counsel of record in the Dowhal case. During that time, Crosby, Heafey was actively involved in Pharmacia Upjohn's defense, and remained primarily responsible for direct client contact. Because of this continued involvement, the Crosby, Heafey firm's legal bills have at all times been paid by Pharmacia Upjohn notwithstanding the defense and indemnity agreement, and there has been no showing that the substitution of counsel in the Dowhal action has caused (or will cause in the future) anything more than a minimal increase in Pharmacia Upjohn's litigation expenses. In addition, Morrison Foerster's prior representation of Pharmacia's corporate predecessors on several discrete tax, labor and unrelated intellectual property matters ended in 1998, and the record contains no facts to support Pharmacia's contention that it retained Morrison Foerster to provide joint representation on an intellectual property project with Chiron Corp. Finally, Pharmacia has not argued, and there is nothing contained in the extensive filings submitted by the parties to show or suggest, that the subject matter of the Proposition 65 litigation or any other prior representation by Morrison Foerster is in any way related to the patent infringement issues raised in this case.
Secondly, even if Pharmacia could be considered a Morrison Foerster client with a continuing, "traditional" attorney-client relationship at the time this action was filed, I find that the University of Rochester has met its burden of demonstrating the absence of actual or apparent conflict in loyalties or diminution in the vigor of representation. When the University of Rochester engaged Morrison Foerster in November 1999 as counsel for enforcing its intellectual property rights with respect to COX-2 inhibitors, no information was available to Morrison Foerster to indicate (by way of an internal conflicts check) that Pharmacia Upjohn had, or was about to acquire, a potentially adverse interest. ( See Docket # 23, ¶ 2). The Pharmacia Corporation did not yet exist, and the announcement of the anticipated merger between Pharmacia Upjohn and Monsanto (whose subsidiary, Searle, manufactures Celebrex®) came in December 1999. The actual merger became effective on April 3, 2000. By then, Morrison Foerster had been engaged for several months in its representation of the University of Rochester, and substantial work had been performed directly on the University's behalf in anticipation of the filing of this infringement action on April 11, 2000 — the very day the `850 patent issued.
Moreover, as set forth in the declarations of attorneys Corash and Dodson, Morrison Foerster obtained no confidential information from Pharmacia Upjohn as a result of its involvement in the Proposition 65 litigation. Primarily because of the continuous involvement of the Crosby, Heafey firm — particularly, Mr. Dittoe, no Morrison Foerster attorney personally reviewed documents or information pertaining to discovery in the Dowhal matter, directly contacted or interviewed Pharmacia Upjohn employees in that regard, or ever spoke with anyone from Pharmacia Upjohn.
Accordingly, in order to justify the harsh remedy of disqualification, Pharmacia must come forward with facts tending to show that Morrison Foerster's representation of the University of Rochester has tainted the trial by affecting counsel's presentation of the case, by placing counsel in a position to use privileged information, or by otherwise allowing counsel to gain an unfair advantage against Pharmacia. The record before the court contains no such facts. Instead, Pharmacia contends simply that the trial has been tainted by Morrison Foerster's obvious breach of its duty of undivided loyalty to Pharmacia Upjohn.
Without minimizing the importance of "the duty of undivided loyalty which an attorney owes to each of his clients . . .," Cinema 5, 528 F.2d at 1386, this contention is not sufficient to sustain Pharmacia's burden as movant, in light of the facts and circumstances set forth above. There has been no showing, or even the suggestion, that Morrison Foerster attorneys have been placed in the position to use any privileged information or to otherwise gain an unfair advantage against Pharmacia in the pending action. Likewise, there has been no showing that counsel's representation in either the California or New York cases has been adversely affected, beyond the delay already suffered as a result of this motion. Finally, and significantly, Pharmacia Upjohn's defense in the Proposition 65 matter continues with its counsel of choice, whereas granting Pharmacia's motion to disqualify would have the result of depriving the University of Rochester of its co-equal right of choice. See, e.g., Gould, Inc. v. Mitsui Mining Smelting Co., 738 F. Supp. 1121, 1126 (N.D.Ohio 1990) (courts must exercise extreme caution not to act under misguided belief that attorney disqualification raises standard of legal ethics and public's respect; opposite effect is just as likely). In light of the complexity of the issues presented in this case, and the difficulty faced by plaintiff finding competent alternative, non-conflicted representation, disqualification of Morrison Foerster would likely cause prejudice to plaintiff and additional significant delay. ( See Ornt Decl., Docket #24).
Under the totality of the circumstances presented by way of the extensive motion papers and comprehensive oral argument, I find on balance that the need to maintain the highest standards of the profession and the integrity of the adversary process is outweighed in this case by the need to preserve plaintiff's choice of counsel. Accordingly, disqualification of Morrison Foerster is not warranted under either the "substantial relationship" or the "per se" approach.
2. The "Merger" Exception.
Plaintiff also argues that, since the adverse representation at issue was caused by Pharmacia Upjohn's merger with Monsanto, Morrison Foerster's withdrawal from representation in the Dowhal matter has cured the conflict. "It is . . . established law that an attorney cannot avoid disqualification under the Cinema 5 rule merely by `firing' the disfavored client, dropping the client like a hot potato, and transforming a continuing relationship to a former relationship by way of client abandonment." Burda Media, Inc. v. Blumenberg, 1999 WL 1021104, at *3 n. 1 (S.D.N.Y. November 8, 1999), quoted in Universal City Studios v. Reimerdes, 98 F. Supp.2d at 453. However, courts and commentators have relied on the Restatement of the Law Governing Lawyers § 213, Comment j, set forth in the declaration of plaintiff's expert Professor Susan Koniak as follows:
Cure of conflict created by transactions of client. A lawyer may withdraw in order to continue an adverse representation against a theretofore existing client when the matter giving rise to the conflict and requiring withdrawal comes about through initiative of the client. An example is a client's acquisition of an interest in an enterprise against which the lawyer is proceeding on behalf of another client. However, if the client's acquisition of the other enterprise was reasonably foreseeable by the lawyer when the lawyer undertook representation of the client, withdrawal will not cure the conflict. In any event, continuing the representation must be otherwise consistent with former-client conflict rules.
(Docket #19, ¶ 29); see, e.g., Carlyle Towers Condominium Association, Inc. v. Crossland Savings, FSB, 944 F. Supp. 341, 348-50 (D.N.J. 1996) (discussing holding in Gould v. Mitsui Mining); see also Pennwalt v. Plough, 85 F.R.D. at 272 (under specific facts and circumstances presented, disqualification not ordered where conflict arose after merger and counsel withdrew from adverse representation).
As stated in the Gould case:
The explosion of merger activity by corporations during the past fifteen years, and the corresponding increase in the possibility that attorney conflicts of interest may arise unexpectedly, make it appropriate for a court to adopt a perspective about the disqualification of counsel in ongoing litigation that conforms to the problem. This means taking a less mechanical approach to the problem, balancing the various interests. The result is that the courts are less likely to order disqualification and more likely to use other, more tailored measures to protect the interests of the public and the parties.Gould v. Mitsui Mining, 738 F. Supp. 1126. To determine whether disqualification was required, the court considered the following factors: prejudice to the moving party; receipt of confidential information as a result of prior representation; the cost of retaining new counsel, in terms of both time and money; the delay to the litigation caused by requiring plaintiff to obtain new counsel; the complexity of the issues in the case and the time it would take new counsel to acquaint themselves with the facts and issues; and the fact that the conflict was created by merger after the case was commenced, not by any affirmative act of counsel. Id. at 1126-27.
Thus, the courts have adopted the Restatement approach not so much as a "cure" for conflicts arising by merger activity after commencement of the suit, but as a factor to be considered in balancing the competing considerations the party's prerogative to proceed with counsel of its choice and the need to uphold ethical conduct. Id. (citing Panduit Corp. v. All States Plastic Manufacturing Corp., Inc., 744 F.2d 1564, 1577 (Fed. Cir. 1984); Schiessle v. Stephens, 717 F.2d 417, 420 (7th Cir. 1983)). As discussed above, considering the lack of prejudice to Pharmacia Upjohn in defense of the Dowhal Proposition 65 claims, the absence of any showing that Morrison Foerster attorneys obtained confidential information from Pharmacia Upjohn, and the likelihood that disqualification would cause prejudice to plaintiff and further substantial delay, the balance is already struck in favor of allowing plaintiff to proceed with its counsel of choice. The fact the conflict in representations arose only by virtue of Pharmacia Upjohn's acquisition of an interest in COX-2 inhibitors as a result of its merger with Monsanto subsequent to Morrison Foerster's engagement by plaintiff, coupled with Morrison Foerster's relatively prompt withdrawal from its representation in the Dowhal matter, tips the balance further against disqualification.
3. Waiver.
Plaintiff also contends the waiver of future conflicts set forth in Ms. Corash's March 14, 2000 letter, executed by Mr. Decker, should be given effect. Plaintiff does not cite any case law in support of this argument. Rather, plaintiff relies on an advisory opinion of the New York County Lawyers' Association Committee on Professional Ethics entitled, "Advance Waivers of Conflicts of Interest," which provides:
A lawyer can seek and a client or prospective client can give an advance waiver with respect to conflicts of interest that may arise in the future. The lawyer must first evaluate whether the future representation is likely to give rise to a non-consentable conflict. If the lawyer determines that the prospective conflict is consentable, he or she can proceed to make full disclosure to the client or prospective client and obtain that person or entity's consent. The validity of the waiver will depend on the adequacy of disclosure given to the client or prospective client under the circumstances, taking into account the sophistication and capacity of the person or entity giving consent.
N YCty.Law.Assn.Comm.Prof.Eth. Op. 724, reprinted at 1998 WL 39561 (January 26, 1998).
Plaintiff has not convincingly argued for enforceability of the waiver, especially since its own expert, Professional Ethician Susan P. Koniak, stated in her declaration that she disagreed with plaintiff's position in this regard. ( See Docket # 19, ¶ 27). In any event, as defendant points out, courts take a fairly critical view of "blanket" future conflicts waivers. As stated in Worldspan, L.P. v. The Sabre Group Holdings, Inc., 5 F. Supp.2d 1356 (N.D.Ga. 1998):
[F]uture directly adverse litigation against one's present client is a matter of such an entirely different quality and exponentially greater magnitude, and so unusual given the position of trust existing between lawyer and client, that any document intended to grant standing consent for the lawyer to litigate against his own client must identify that possibility, if not in plain language, at least by irresistible inference including reference to specific parties, the circumstances under which such adverse representation would be undertaken, and all relevant like information.Id. at 1360 (citing Cinema 5, 528 F.2d at 1386; Florida Ins. Guaranty Assn., Inc. v. Carey Canada, 749 F. Supp. 255, 260 (S.D.Fla. 1990)); see also Westinghouse Elec. Corp. v. Gulf Oil Corp., 588 F.2d 221, 227-29 (7th Cir. 1978) (client's consent to lawyer's representation of adverse party in first suit does not bar later motion to disqualify in second suit involving different parties, much more substantial claims, and more reason for concern that firm would misuse confidential information from prior representation); Restatement (Third) of Law Governing Lawyers § 202, Comment d (1990) ("Courts have refused to infer from a general, prior consent that a client reasonably was consenting to a later, sharply-conflicted representation.").
Due to the "entirely different quality" of this litigation compared to the Dowhal case, its "exponentially greater magnitude," the absence of any disclosure pertaining to the impending suit against Pharmacia, Pharmacia's prompt withdrawal of consent upon discovering the conflict, and the position taken by plaintiffs own expert, I refuse to give full effect to the waiver of future conflicts relied upon by plaintiff in opposition to this motion.
4. Pharmacia Is Not a Client.
Finally, plaintiff argues that disqualification is unwarranted because Morrison Foerster has never represented Pharmacia. This argument must also be rejected. As Pharmacia points out, there is ample case law which supports the proposition that, for conflict purposes, representation of a subsidiary corporation is equivalent to representation of the parent, and vice-versa. See Carlyle Towers v. Crossland Savings, 944 F. Supp. at 346 (conflict arose when law firm's representation of plaintiff became adverse to interests of parent corporation of subsidiary that firm represented in transactional matter, due to merger of parent with defendant); Teradyne, Inc. v. Hewlett-Packard Co., 1991 WL 239940, at *6-7 (N.D.Cal. June 6, 1991) (for conflict purposes, parent company was also client of law firms which had represented wholly-owned subsidiary); Stratagem Dev. Corp. v. Heron Int'l N.V., 756 F. Supp. 789, 793 (S.D.N.Y. 1991) (finding conflict where law firm represented subsidiary in one instance, and filed suit against parent company in another); Hartford Accident and Indemnity v. Nabisco, 721 F. Supp. at 540 (finding that parent company, through its subsidiary, was client of firm for conflict purposes, but denying motion to disqualify on fact-specific grounds).
Based on this precedent, and in the absence of any countervailing precedent cited by plaintiff, I decline to hold that Pharmacia has never been a client of the Morrison Foerster firm for conflict purposes.
CONCLUSION
For the foregoing reasons, defendant Pharmacia's motion ( Docket #7) to disqualify the law firm of Morrison Foerster from representing the University of Rochester in this action is denied. In addition, the University of Rochester's motion ( Docket #36) to quash Pharmacia's deposition subpoena and for an order of protection is denied as moot. ( See note 1, infra).
IT IS SO ORDERED.