Forest Oil Corp v. Union Oil Corportion of California
Filing
64
Order
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF ALASKA
FOREST OIL CORPORATION,
Case No. A05-0078 CV (RRB)
Plaintiff,
vs.
*** AMENDED ***
ORDER GRANTING MOTION
TO DISQUALIFY COUNSEL
UNION OIL COMPANY OF
CALIFORNIA, d/b/a UNOCAL
ALASKA,
Defendant.
I.
INTRODUCTION
Defendant Union Oil Company of California (“Unocal”)
moves to disqualify Plaintiff Forest Oil Corporation’s (“Forest”)
counsel, Patton Boggs LLP (“Patton Boggs”).
Unocal argues that
Patton Boggs is both representing Unocal in a separate lawsuit and
suing
Unocal
Professional
in
this
Conduct
lawsuit,
1.7.1
a
Forest
breach
of
opposes
Alaska
and
Rule
argues
of
that
disqualification is not necessary because the other lawsuit is
1
Clerk’s Docket No. 21 at 1-2.
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A05-0078 CV (RRB)
unrelated to the present case and such a response would not be just
or fair.2
Because the Court concludes that Patton Boggs is in
violation of Rule 1.7 of the Alaska Rules of Professional Conduct,
Unocal’s Motion is GRANTED.
II.
FACTS
The attorneys of record for Forest are Kyle W. Parker and
David J. Mayberry, both of Patton Boggs. These same attorneys from
Patton Boggs are also the attorneys of record for the defendants,
including Unocal, in Trading Bay Energy Corp. v. Marathon Oil
Company and Union Oil Company of California (“Trading Bay”).3
Trading Bay is currently pending on appeal to the Ninth Circuit.4
III. DISCUSSION
“Of the many ethical requirements placed upon lawyers,
one of the most significant is loyalty to the client.”5
the
division
of
an
attorney’s
loyalty,
the
Alaska
To prevent
Rules
of
Foundation
of
Professional Conduct 1.7 states:
2
Clerk’s Docket No. 26 at 27.
3
Clerk’s Docket No. 21 at Ex. A at 7.
4
Case Nos. 04-36001 and 04-36086 (consolidated).
5
Washington Legal Foundation
Washington, 271 F.3d 835, 842 (2001).
v.
Legal
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(a) A lawyer shall not represent a client if
the representation of that client will be
directly adverse to another client, unless:
(1) the lawyer reasonably believes the
representation will not adversely affect the
relationship with the other client; and
(2) each client consents after consultation.
Explaining this Rule, the Comments state that “a lawyer ordinarily
may not act as an advocate against a person the lawyer represents
in some other matter, even if it is wholly unrelated.”
There
are
no
relevant
decisions
interpreting
this
provision in the civil context in Alaska or in the Ninth Circuit.
As a result, Forest argues that the standard developed in the
Second
Circuit
should
be
applied
here.
The
Second
Circuit
distinguishes between a “traditional client” and a “vicarious
client.”6
For traditional clients, the per se rule applies whereby
“adverse representation is prima facie improper” and to continue
the representation, the attorney must show “that there will be no
actual or apparent conflict in loyalties or diminution in the vigor
of his representation.”7
For vicarious clients, the substantial
relationship rule applies and “the former client [must] show no
more than that the matters embraced within the pending suit wherein
his former attorney appears . . . are substantially related to the
6
Glueck v. Jonathan Logan, Inc., 653 F.2d 746, 749 (2d Cir.
1981).
7
Cinema 5, Ltd. v. Cinerama, Inc., 528 F.2d 1384, 1386-87 (2d
Cir. 1976).
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A05-0078 CV (RRB)
matters
or
cause
of
action
wherein
the
attorney
previously
represented him, the former client.”8
The Second Circuit developed this rule in a case where
the issue was “whether . . . a law firm that represents an
incorporated trade association may represent an individual client
in a suit against a corporation one division of which is a member
of
the
association.”9
The
Court
held
that
the
substantial
relationship test “should be applied to suits brought by an
association’s law firm against an association member.”10
However,
as far as the Court is aware, this judicially-created exception has
not been expanded to encompass other circumstances.11
The Court is
not persuaded that it should expand the exception in a circumstance
8
T.C. Theatre Corp. v. Warner Bros. Pictures, 113 F. Supp.
265, 268-69 (S.D.N.Y. 1953). See also Glueck, 653 F.2d at 749-50
(adopting the substantial relationship test for vicarious clients).
9
10
Glueck, 653 F.2d at 747.
Id. at 749-50.
11
See Discotrade, Ltd. v. Wyeth-Ayerst Intern., Inc., 200 F.
Supp. 2d 355 (S.D.N.Y. 2002)(holding that the exception did not
apply to corporate subsidiaries of a single corporate parent); City
of Kalamazoo v. Michigan Disposal Service, 151 F. Supp. 2d 913
(W.D. Mich. 2001)(agreeing with the Magistrate Judge that it is
illogical to conclude that the law firm only represented the Joint
Defense Group, and not the constituent defendants in the group);
British Airways, PLC. v. Port Authority of New York and New Jersey,
862 F. Supp. 889 (E.D.N.Y 1994)(holding that the exception did not
apply when the law firm for Plaintiff British Airways is also the
counsel in personal injury suits for Defendant Port Authority
pursuant to a lease agreement with British Airways to represent and
indemnify the Port Authority when a person is injured within the
airline’s leasehold).
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where there is no entity, such as an association, standing between
Unocal and Patton Boggs.
A joint defense agreement should not be
considered such an entity.
The
reasons.
Court
reaches
this
conclusion
for
a
number
of
First, the Court agrees with the Court in City of
Kalamazoo that it is illogical to conclude that Patton Boggs
represented only the joint defense group and not the constituent
defendants of the group.
The joint defense group existed solely
within the confines of the Trading Bay matter and has no purpose
separate from that litigation.
This distinguishes the group from
associations, where the association is a separate entity from its
individual members.
Second, there was no third-party standing
between the law firm and Unocal.
This relates to the previous
argument; a joint defense group is not a separate entity apart from
its constituents.
Therefore, even though Unocal’s relationship
with
may
Patton
Boggs
be
more
attenuated
than
that
of
its
relationship with its attorney in this case, that attenuation is
not as sharp as when there is a separate entity between the law
firm and the client.
Turning to Rule 1.7, the Rule States that, “A lawyer
shall not represent a client if the representation of that client
will be directly adverse to another client. . . .”
Thus, if Unocal
is a client of Patton Boggs in the Trading Bay matter, then Patton
Boggs may not bring an adverse action against Unocal in a separate
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A05-0078 CV (RRB)
action.
Here, Unocal, as a member of the joint defense group, is
such a client.
First, while Unocal may not have directed such
litigation, Unocal participated in meetings, paid fees for the
representation, and relied on the advocacy skills of Patton Boggs.
Second, Patton Boggs appeared as the attorney of record for Unocal
in Trading Bay.
Third, Unocal is a current client of Patton Boggs
because Trading Bay is currently pending before the Ninth Circuit.
Finally, there is no exception under Rule 1.7(a)(2) because Unocal
has not consented to Patton Boggs representing a client directly
adverse to it.
The Court agrees with Forest that disqualification is not
automatic upon finding that an ethical rule has been violated.12
The Court is especially wary of such a sanction in this case
because: (1) the attorneys have a long-standing relationship with
Forest; (2) there is a reduced risk of divided loyalties given that
Unocal’s interests in Trading Bay are directly aligned with the
other members of the joint defense group; and (3) the potential of
using attorney disqualification as a litigation tactic.
However,
this case differs significantly from all other decisions relied on
by Forest.
Namely, it is not merely the same firm involved in both
disputes, it is actually the same two attorneys.
12
This is a
See Concat LP v. Unilever, PLC, 350 F. Supp.2d 796, 814-15
(N.D. Cal. 2004); United States v. Miller, 624 F.2d 1198, 1201 (3d
Cir. 1980); Cinema 5 Ltd. v. Cinerama, Inc., 528 F.2d 1384, 1387
(2d Cir. 1976).
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conflict that cannot be cured by an ethical wall, nor by any other
means.
Further, even if the Court accepts Forest’s argument that
there will be no actual conflict in loyalties, “the appearance of
impropriety” cannot be avoided.13
The
Court
does
not
make
this
decision
lightly
and
recognizes the great prejudice to Forest by being prevented the
counsel of its choice and the attendant ramifications.
The Court
also recognizes plaintiff’s counsel’s good faith on this issue and
is not casting aspersions with regard to them.
However, the duty
of loyalty is a fundamental rule and necessary to maintain the
integrity
of
the
legal
profession.14
Finally,
the
Court
is
unpersuaded by Forest’s argument that because Unocal failed to
object to prior breaches of Patton Boggs’ duty of loyalty, it is
precluded from doing so now.
The Court does not know the details
of these other instances, and regardless, such inaction does not
qualify as a waiver under Rule 1.7.
Thus, while the Court
13
Cinema 5, LTD, 528 F.2d at 1387 (“the attorney must be
prepared to show, at the very least, that there will be no actual
or apparent conflict in loyalties.”); International Business
Machines Corp. v. Levin, 579 F.2d 271, 283 (3d Cir. 1978) (“we have
held that a court may disqualify an attorney for failing to avoid
even the appearance of impropriety.”).
14
See International Business Machines Corp., 579 F.2d at 283
(“An attorney who fails to observe his obligation of undivided
loyalty to his client injures his profession and demeans it in the
eyes of the public. The maintenance of the integrity of the legal
profession and its high standing in the community are important
additional factors to be considered in determining the appropriate
sanction for a Code violation.”).
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recognizes the severe hardship disqualification places on Forest,
it finds that such action is required.
For the foregoing reasons, Defendant’s motion is GRANTED.
Because there are also multiple motions for summary judgment before
the Court, the Court will stay addressing these motions until
February 1, 2006, to allow Forest to decide how to proceed.
ENTERED this 9th day of January, 2006.
/s/ RALPH R. BEISTLINE
UNITED STATES DISTRICT JUDGE
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A05-0078 CV (RRB)
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