DCA Food Industries, Inc. v. Tasty Foods, Inc.

• Decision Date: 03 September 1985
• Docket Number: No. 85-C-364-C.,85-C-364-C.
• Citation: 626 F. Supp. 54
• Parties: DCA FOOD INDUSTRIES, INC., Plaintiff, v. TASTY FOODS, INC., Tapud Co. a/k/a Sha'ar Hanegev Ltd. and Jack Scanlon, Defendants.
• Court: U.S. District Court — Western District of Wisconsin

626 F. Supp. 54

DCA FOOD INDUSTRIES, INC., Plaintiff, v. TASTY FOODS, INC., Tapud Co. a/k/a Sha'ar Hanegev Ltd. and Jack Scanlon, Defendants.

No. 85-C-364-C.

United States District Court, W.D. Wisconsin.

September 3, 1985.

John W. Markson, Bell, Metzner & Gierhart, S.C., Madison, Wis. (Alfred B. Engelberg, New York City, of counsel), for plaintiff.

John C. Mitby, Madison, Wis. (Maurice B. Stiefel, Stiefel, Gross, Kurland & Pavane, P.C., New York City, of counsel), for defendants.

ORDER

CRABB, Chief Judge.

Plaintiff DCA has brought this action for patent infringement against the defendants. DCA alleges that it is the owner, as assignee of Yechiel Smadar, of United States Patent No. 3,650,766 (DCA '766 patent) covering an invention entitled "Extruded Food Products and Method of Producing Same"; that defendants Tasty Foods and Scanlon are infringing the DCA '766 patent by the sale and offering for sale of extruded onion rings; and that defendant Tapud is actively inducing and contributing to the infringement of the DCA '766 patent by defendants Tasty Foods and Scanlon by manufacturing the onion rings and delivering them to Tasty Foods and Scanlon. DCA further alleges that the process used by Tapud to produce extruded onion rings is described in United States Patent No. 4,436,759 (the '759 patent) issued in the names of David M. Trilling and Yechiel Smadar entitled "Production of Shaped Food Products," and that the extruded onion ring production process of the '759 patent infringes the claims of the DCA '766 patent. DCA seeks declaratory and injunctive relief and money damages for the alleged infringement. Jurisdiction is asserted under 28 U.S.C. § 1338(a).

The defendants are represented by Maurice B. Stiefel of the New York law firm of Stiefel, Gross, Kurland & Pavane, P.C., and by John C. Mitby of the Madison firm of Brynelson, Herrick, Gehl & Bucaida. DCA has moved to have Stiefel disqualified from representing the defendants in this case, asserting that because of Stiefel's prior relationship with DCA in connection with an earlier action involving the DCA '766 patent, he may not now represent the defendants. For the reasons discussed in this order, I will deny the motion to disqualify Stiefel.

From affidavits submitted by Alfred B. Engelberg, Maurice B. Stiefel and Yechiel Smadar, I find the following facts for the purposes of deciding this motion.

FACTS

Yechiel Smadar was employed by DCA from 1968 to 1971, during which time he invented the subject matter claimed in the DCA '766 patent. (Prior to working for DCA, Smader had worked for Nabisco.) Smadar assigned his interest in the patent to DCA. From 1973 through 1977 Smadar had a consulting agreement with DCA, under which he agreed to be available for consultation, to maintain in confidence any confidential information received from DCA, and not to engage in any competing business. Under the agreement, Smadar received $3,000.00 per year in 1973 and 1974, and $2,000.00 per year in 1975, 1976 and 1977. At the time of the meetings and deposition at issue in this motion, Smadar was not a DCA employee and had no contractual relationship with DCA. Shortly after the deposition, DCA paid Smadar $5000.00 for his cooperation in preparing for and giving deposition testimony.

In 1975, DCA became involved in litigation in which the validity, enforceability and infringement of the DCA '766 patent were at issue. Modern Maid et al. v. DCA Food Industries, Inc., No. 75 Civ. 1785 (E.D.N.Y.). In late 1977, in connection with this litigation, Smadar was subpoenaed by Modern Maid to appear at a deposition. After discussions among DCA's attorney (Alfred Engelberg), Smadar's personal attorney (David Drabkin) and Modern Maid's attorney, Smadar agreed to appear voluntarily at a deposition, at DCA's expense, in January of 1978. DCA, Smadar, and Drabkin also agreed that Smadar could retain additional patent counsel at DCA's expense. At Drabkin's recommendation, Smadar retained Maurice B. Stiefel. Neither DCA nor Engelberg was involved in Smadar's selection of Stiefel.

Engelberg, Stiefel, and Smadar agreed to meet prior to Smadar's deposition to prepare Smadar for the deposition. On December 20, 1977, Engelberg sent Stiefel a number of documents to review, all of which were matters of public record. The three met in Engelberg's office on January 23 and 24, 1978. Engelberg's recollection of what was discussed at that meeting seven years ago differs from Stiefel's and Smadar's recollections.

The Nabisco materials discussed at the January 23 and 24 meetings were confidential proprietary information of Nabisco, not DCA.¹

The prior art patents reviewed at these meetings involved public documents, not DCA's confidential proprietary material.²

Smadar was deposed on January 25 and 26, 1978. The deposition transcripts show appearances by Stiefel on behalf of the witness Smadar and Engelberg on behalf of DCA.

In 1981, Smadar and David Trilling retained Stiefel to prepare and prosecute a patent application on their invention involving extruded food products. In March, 1984, this application issued as the '759 patent, with Caribou Fisheries, Inc. of Boston as assignee. Defendants operate under the '759 patent and it is this patent that plaintiff alleges infringes the DCA '766 patent. Stiefel is being paid by Smadar to represent defendants in this action.³

DISPUTED FACTS

Because of the differing versions of the January 23 and 24 meetings set forth by Engelberg, Smader, and Stiefel in their affidavits, I can make no findings of fact on this subject except with respect to a few undisputed details set forth above. Set forth below is a summary of each person's recollection.

Engelberg states that he is unable to recall the details of his conversations with Stiefel and Smadar, but that his primary concern was to refresh Smadar's recollection fully about his role in the development of the invention leading to the DCA '766 patent, and he says that this required a "comprehensive review" of Smadar's participation. Whether that review included Smadar's DCA notebooks, which had remained in DCA's possession, and other DCA documents is disputed. Engelberg points to the following passage in Smadar's 1978 deposition to support his assertion that Smadar reviewed Smadar's DCA notebooks:

Q Can I draw your attention to page 18, Mr. Smadar, of that same notebook.

A Yes.

Q There is a note down at the bottom, near the bottom, it says, "a more detailed planning is in the onion ring folder."

Did you maintain a separate onion ring folder by that name?

A Yes, as a matter of fact, I thought about this folder.

I mentioned it to Mr. Engelberg the other day.

Both Smadar and Stiefel deny that there was a comprehensive review of Smadar's role in the invention. Like Engelberg, Stiefel says he has no specific recollection of the discussions. He does not remember seeing Smadar's DCA notebooks and states that he is confident that he would recall them if he had. Smadar states that they did not review his DCA notebooks, citing the following testimony from his deposition:

Q Are they in your notebook, that is what I am asking you.

MR. ENGELBERG: I object. I want to note for the record that the — counsel has had these notebooks for two years, and the witness has had them for two minutes, and there are four hundred pages here, and I don't see anyway this witness could be expected to know what is on every page of this notebook that he probably has not seen —

Q Did you reveiw sic these notebooks before this deposition?

A No

Engelberg asserts that in addition to reviewing the factual history of the invention, "it would have been crucially important for me to provide Mr. Smadar and Mr. Steifel sic with my detailed impressions and conclusions with respect to the major strengths and weaknesses of our litigation position and the types of `trap' questions that might be asked during a skillful cross-examination for the purpose of furthering Modern Maid's attack on the DCA '766 patent." However, Engelberg does not state that he actually recalls this discussion. Stiefel says that he has no recollection of such a discussion and that he strongly doubts this discussion took place.

OPINION

The precepts of the Code of Professional Responsibility as well as the prior case law determine the resolution of the ethical questions presented by the plaintiff's motion to disqualify Stiefel. The fundamental principle to be applied is the ethical obligation of the lawyer to maintain the confidentiality of information relating to the representation of his or her client (Canons 4 and 9).⁴See Freeman v. Chicago Musical Instrument Co., 689 F.2d 715, 721 (7th Cir.1982).

The law imposes on courts the duty to safeguard the confidentiality of the attorney-client relationship, and provides them the authority to disqualify counsel as one means of insuring that Canons 4 and 9 are not violated. Freeman, 689 F.2d at 721. At the same time, courts must bear in mind that "a party to litigation also has an important interest in enjoying the counsel of its choice, and the prophylactic rule of disqualification ought not be applied so indiscriminately as to undercut this interest without justification." Moritz v. Medical Protective Co., 428 F.Supp. 865, 874 (W.D. Wis.1977). Although disqualification of counsel protects one attorney-client relationship, it destroys another such relationship by depriving a party of its prerogative to proceed with counsel of its choice. For this reason, the Court of Appeals for the Seventh Circuit has described disqualification as "a drastic measure which courts should hesitate to impose except when absolutely necessary." Freeman, 689 F.2d at 721; see also Schiessle v. Stephens, 717 F.2d 417, 420 (7th Cir.1983).

I. Disqualification under Canon 4

The appropriate test for disqualification of an attorney under Canon 4 is well settled in this circuit. When a lawyer represents a party in a matter in which the adverse party is...