The Facebook, Inc. v. Connectu, Inc et al

Filing 692

MOTION for Leave to File Cameron Winklevoss, Tyler Winklevoss, and Divya Narendra's Civil L.R. 7-11 Supplemental Brief filed by Divya Narendra, Cameron Winklevoss, Tyler Winklevoss. (Attachments: # 1 Exhibit A)(Mosko, Scott) (Filed on 8/21/2009) Modified on 8/25/2009 (cv, COURT STAFF).

Exhibit A

1 Steven C. Holtzman (State Bar No. 144177) [e-mail] 2 BOIES SCHILLER & FLEXNER LLP 1999 Harrison Street, Suite 900 3 Oakland, California 94612 Telephone: [phone] Facsimile: [phone] 5 D. Michael Underhill (pro hac vice) BOIES SCHILLER & FLEXNER LLP 6 [e-mail] 5301 Wisconsin Avenue, N.W. 7 Washington, D.C. 20015 Telephone: [phone] Facsimile: [phone] 9 Scott R. Mosko (State Bar No. 106070) [e-mail] 10 FINNEGAN, HENDERSON, FARABOW, GARRETT & DUNNER, L.L.P. Stanford Research Park 11 3300 Hillview Avenue 12 Palo Alto, California 94304 Telephone: [phone] Facsimile: [phone] 14 Attorneys for CAMERON WINKLEVOSS, TYLER WINKLEVOSS, and DIVYA NARENDRA 15 16 17 18 19 20 21 22 23 24 25 26 27 28
EX. A TO MOT. TO FILE SUPPLEMENTAL BRIEFING: FOUNDERS' SUPPLEMENTAL BRIEF IN OPP'N TO MOT. TO DISQUALIFY COUNSEL - Case No. 5:07-CV-01389-JW

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN JOSE DIVISION THE FACEBOOK, INC. and MARK ZUCKERBERG, Plaintiffs, v. CONNECTU, INC. (formerly known as CONNECTU, LLC), PACIFIC NORTHWEST SOFTWARE, INC., WINSTON WILLIAMS, and WAYNE CHANG, Defendants. Case No. 5:07-CV-01389-JW EXHIBIT A TO FOUNDERS' MOTION TO FILE SUPPLEMENTAL BRIEFING: CAMERON WINKLEVOSS, TYLER WINKLEVOSS, AND DIVYA NARENDRA'S SUPPLEMENTAL BRIEF IN OPPOSITION TO CONNECTU, INC.'S MOTION TO DISQUALIFY COUNSEL

1

At the hearing held on August 17, 2009, the Court and counsel discussed the decisions by

2 the Ninth Circuit in Christiansen v. United States District Court, 844 F.2d 694 (9th Cir. 1988), and 3 the New York Court of Appeals in Tekni-Plex, Inc. v. Meyer and Landis, 674 N.E.2d 663 (N.Y. 4 1996). As detailed below, Christiansen strongly supports the Founders' position and Tekni-Plex 5 is distinguishable insofar as it ordered disqualification. 6 Christiansen addresses a number of issues raised by the Court at the August 17, 2009, oral

7 argument; specifically, (i) how joint representation affects alleged conflicts of interests, (ii) the role of 8 the substantial relationship test, and (iii) considerations of public perceptions regarding lawyer-client 9 relationships. Both the reasoning and the holding in Christiansen require denial of the motion to 10 disqualify. 11 First, Christiansen involved the requested disqualification of a law firm which had jointly

12 represented multiple clients -- a corporation and its old management. As with ConnectU, ownership 13 and control of the corporate entity (a bank) changed and new management sought to disqualify the 14 bank's former lawyers, who continued to represent prior management in defending against new 15 management's claims of misconduct. The Ninth Circuit granted mandamus and reversed the district 16 court's order disqualifying the law firm, even though counsel's previous work for the bank was 17 "substantially related" to the current suit. 18 Second, the Ninth Circuit held that the "substantial relationship" test does not apply where

19 "the former client [the bank] has no reason to believe that information given to counsel will not be 20 disclosed to the firm's current client [prior management]." Id. at 699. Any confidences that the law 21 firm could have learned from the bank were available to it from its current clients, just as is true here. 22 See, e.g., cmt 1. to ABA Model Rule of Professional Conduct 1.13 ("An organizational client is a 23 legal entity, but it cannot act except through its officers, directors, employees, shareholders and other 24 constituents."). Indeed, unlike the bank in Christiansen, ConnectU has had minimal operations and 25 revenues, such that any "confidences" it might have are certainly known to the Founders. 26 The Ninth Circuit's holding accords with the general rule that lawyers may be adverse to

27 former clients, except for those instances to which the substantial relationship test applies: A lawyer 28 is "bound to the [client] for a specific purpose only, not in perpetual servitude." Geoffrey C. Hazard, -1EX. A TO MOT. TO FILE SUPPLEMENTAL BRIEFING: FOUNDERS' SUPPLEMENTAL BRIEF IN OPP'N TO MOT. TO DISQUALIFY COUNSEL - Case No. 5:07-CV-01389-JW

1 W. William Hodes, Peter R. Jarvis, The Law of Lawyering, § 13.2 (3rd ed. 2009). Because the 2 "substantial relationship" test was "inapplicable," 844 F.2d at 699, the Ninth Circuit did not fashion 3 an alternative test, but applied this general rule and allowed the adverse representation. 4 Third, as to the issue of public perceptions, the Ninth Circuit reversed disqualification in

5 Christiansen even though it was sought by government regulators who had taken over the failed 6 bank and were alleging mismanagement by former officers to the public detriment. Thus, the Ninth 7 Circuit's public interest calculus necessarily included its assessment of public perceptions regarding 8 ethical lawyering as well as the strong public interest in ensuring the integrity and soundness of the 9 banking system -- yet it still barred disqualification. Here, additional facts suggest that public 10 perceptions do not require disqualification: (i) it is the Founders' consistent adversary Facebook 11 that controls ConnectU and is now dictating its conduct: (ii) the law firms that ConnectU seeks to 12 disqualify have brought no affirmative claims against ConnectU; and (iii) the Founders are only 13 seeking relief from Facebook, not ConnectU.1 Moreover, if disqualification were to occur here, the 14 Founders will be deprived of the services of their attorneys because they complied with a court order 15 to turn over their company to their adversary. 16 With respect to the Tekni-Plex case, we note that among the circumstances which led to

17 the Meyer firm's disqualification was that "the record fails to establish that [Meyer] also represented 18 Tang individually on these matters," and therefore "the exception to the privilege for co-clients who 19 subsequently become adversaries is inapplicable." Id. at 666. The facts in our case are in sharp 20 contrast; the record is undisputed that law firms jointly represented ConnectU and the Founders under 21 circumstances where ConnectU "ha[d] no reason to believe that information given [by ConnectU] to 22 counsel will not be disclosed to the firm's current client [the Founders]." Christiansen, 844 F.2d at 23 699. 24 25 To the extent that there is any concern about the law firms' bringing claims for debts owed to the Founders or Howard Winklevoss by ConnectU, that can be addressed by a prophylactic order limited 27 to such claims, rather than the drastic remedy being sought by ConnectU. See UMG Recordings v. MySpace, Inc., 526 F. Supp. 2d 1046 (C.D. Cal. 2007) (conditioning denial of motion to disqualify 28 on dropping affirmative defense which created conflict between law firm and former client). 26 -2EX. A TO MOT. TO FILE SUPPLEMENTAL BRIEFING: FOUNDERS' SUPPLEMENTAL BRIEF IN OPP'N TO MOT. TO DISQUALIFY COUNSEL - Case No. 5:07-CV-01389-JW
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1

In conclusion, courts must give disqualification motions "particularly strict judicial scrutiny"

2 and consider "[t]he cost and inconvenience to clients," Optyl Eyewear v. Style Cos. Ltd., 760 F.2d 3 1045, 1050 (9th Cir. 1985), especially where individuals with a substantial investment in the lawyer4 client relationship are involved. Disqualification in the matters pending in this Circuit would severely 5 prejudice the Founders. Currently pending before the Ninth Circuit are several complex and inter6 related appeals. Disqualification would deprive the Founders of their long-time counsel at a crucial 7 time, as well as the irreplaceable institutional knowledge of the long-running and complex underlying 8 cases.2 9 10 Dated: August 21, 2009 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 The law firms involved in this matter also represent the Founders and Howard Winklevoss in other proceedings outside of this Circuit: O'Shea in an arbitration proceeding in New York which is set for 26 a merits hearing in October; and Boies and Finnegan in Massachusetts court proceedings. This Court 27 can only address the on-going proceedings in this Circuit. ConnectU has filed a separate motion to disqualify in the Massachusetts action which remains pending. ConnectU has not sought disqualifi28 cation in the arbitral forum or from any court having jurisdiction over the arbitration. -3EX. A TO MOT. TO FILE SUPPLEMENTAL BRIEFING: FOUNDERS' SUPPLEMENTAL BRIEF IN OPP'N TO MOT. TO DISQUALIFY COUNSEL - Case No. 5:07-CV-01389-JW
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BOIES SCHILLER & FLEXNER LLP

/s/ D. Michael Underhill By: _______________________________________ D. Michael Underhill FINNEGAN, HENDERSON, FARABOW, GARRETT & DUNNER, L.L.P.

/s/ Scott R. Mosko By: _______________________________________ Scott R. Mosko Attorneys for CAMERON WINKLEVOSS, TYLER WINKLEVOSS, and DIVYA NARENDRA