CAFC addresses attorney disqualification in Valeant v. Watson

The order in Valeant v. Watson gives insight in attorney disqualification issues based on later representation adverse to a former client. The concept of "generally known" information was argued.

The issue arose because Watson proposed to use Winston and Strawn in an appeal of a decision in a patent case, and a lawyer (Braden) at Winston and Strawn had once represented Valeant:

On appeal, Kasowitz [attorneys for Watson at trial] informed Valeant of Watson's intention to retain Winston & Strawn for this appeal. Valeant declined to consent to Winston & Strawn's representation of Watson and timely informed Watson of its opposition.

Valeant argues that two legal professionals now at Winston & Strawn had formerly represented Valeant in the Valeant Matters while at Howrey LLP and obtained relevant knowledge about the matters. Valeant identifies these individuals as attorney Georgianna Braden and paralegal Alissa Hodges. Applying Florida's Rules of Professional Conduct, Valeant argues that, because Ms. Braden acquired Valeant's protected information during her time at Howrey, her new firm, Winston & Strawn must now be disqualified from representing Watson in this appeal.

Watson argues that this court should not apply Florida's Rules of Professional Conduct, but instead only the ethical code of the United States Court of Appeals for the Eleventh Circuit.

Of the "which rules apply" matter, the CAFC noted:

The parties dispute whether the regional circuit law in this case also includes ethical rules applicable to the underlying district court. In previous unpublished rul- ings, this court has applied a district court's ethical rules to determine whether counsel should be disqualified on appeal. See Touchcom, Inc. v. Bereskin & Parr, 299 Fed. Appx. 953, 954 (Fed. Cir. 2008); Outside the Box Innova- tions, LLC v. Travel Candy, Inc., No. 2009-1171, 2010 WL 2160753 (Fed. Cir. May 26, 2010). In any event, there could be inconsistencies if we did not apply the district court's ethical rules, for example, if this court's decision requires a remand to the district court. We determine that it is appropriate to apply the Florida Bar Rules in this instance.

Of the Florida rules:

Rule 4.1-10 of the Florida Bar Rules of Professional Conduct states that "[w]hen a lawyer becomes associated with a firm, the firm may not knowingly represent a person in the same or substantially related matter in which that lawyer, or a firm with which the lawyer was associated, had previously represented a client whose interests are materially adverse to that person and about whom the lawyer had acquired information protected by rules 4-1.6 and 4-1.9(b) and (c) that is material to the matter."

The issue of "generally known":

Rather, Watson contests whether the material that Ms. Braden acquired while at Howrey would have been protected by the Florida Bar Rules. Watson argues that any information about Valeant that Ms. Braden acquired while at Howrey is "generally known" as defined by Florida Bar Rule 4-1.9(b) and therefore not disqualifying.


As to published pleadings, the issue arose in Cohen v. Wolgin:

Cohen v. Wolgin, 1993 U.S. Dist. LEXIS 9040 , stating “since the pleadings are accessible to the public upon demand, it is concluded that any information that is contained in the pleadings filed in prior state or federal litigation regarding Hotel Rittenhouse Association ("HRA") is "generally known".”

Watson's position:

Watson relies on comments to the rules, which state that "[i]nformation that has been widely disseminated by the media to the public, or that typically would be ob- tained by any reasonably prudent lawyer who had never represented the former client, should be considered generally known and ordinarily will not be disqualifying." Watson argues that any information Ms. Braden acquired should be considered generally known, largely due to the fact that the material has been publicly litigated in the Valeant Matters.

There was no doubt that Braden had access to confidential materials:

Declarations submitted by both Valeant and Watson indicate that Ms. Braden had knowledge about confidential information material to this case. She worked on validity issues for several asserted patents and reviewed confidential documents, such as laboratory notebooks.

The CAFC rejected the "generally known" argument and disqualified Winston & Strawn:

Watson argues that this information would be consid- ered "generally known" because some Valeant matters have been litigated publicly and some information would be gleaned through typical discovery procedures. The comments to the Florida Bar Rules, however, indicate that while "information acquired in a prior representation may have been rendered obsolete by the passage of time," "knowledge of specific facts gained in a prior representation that are relevant to the matter in question ordinarily will preclude such a representation." Florida Bar Rule 1- 9, cmt. Watson has not convinced us that confidential matters became publicly known, nor have the declarations submitted by Watson overcome the prima facie showing that Ms. Braden had knowledge of at least some confidential information material to this case. Because Ms. Braden is otherwise prohibited from representing Watson, her new firm is likewise prohibited. See Edward J. DeBartolo Corp. v. Petrin, 516 So. 2d 6, 6-7 (Fla. 5th Dist. Ct. App. 1987).

The Cohen v. Wolgin case was briefed in Vares-Ebert v. Kelberg (NJ Appellate A–4581–10T2), wherein Kelberg tried to suppress "generally known" information from court documents, with the Appellate Division observing:


The confidentiality provisions of the settlement agreement are inconsistent with N.J.S.A. 45:9–22.21 to –22.25, specifically, N.J.S.A. 45:9–22.23a(10) and Rule 1:38, which permit free access by the public to the information sought to be concealed.

Of separate interest is the footnote of the NJ Appellate decision, as initially published:

A subsequent order dated May 14, 2010, enforced the settlement between plaintiff and defendant Kelberg and ordered plaintiff to sign the Stipulation of Dismissal with prejudice, the Release, and the Certification of Medicare eligibility within fifteen days.   Plaintiff has not designated this order in the notice of appeal or amended notice of appeal.   Therefore, none of the terms of this order are subject to review.   Rule 2:5–1(f)3A;  see W.H. Indus., Inc. v. Fundicao Balancins, Ltda, 397 N.J.Super. 455, 458 (App.Div.2008).

The footnote was later modified in what IPBiz terms a "Sikahema event."


UPDATE. 13 Sept 2015

See
http://docketreport.blogspot.com/2015/09/no-disqualification-of-counsel-for.html