Koehring Co. v. Manitowoc Co., Inc., Civ. A. No. 74-C-564.

Decision Date22 September 1976
Docket NumberCiv. A. No. 74-C-564.
Citation418 F. Supp. 1133
PartiesKOEHRING COMPANY, Plaintiff, v. The MANITOWOC COMPANY, INC., Defendant.
CourtU.S. District Court — Eastern District of Wisconsin

Edward M. O'Toole, Chicago, Ill., Andrew J. Beck, Milwaukee, Wis., for plaintiff.

Phillip H. Mayer, Chicago, Ill., Walter S. Davis, Milwaukee, Wis., for defendant.

DECISION and ORDER

REYNOLDS, Chief Judge.

In this patent infringement action, plaintiff Koehring Company has moved to disqualify Phillip H. Mayer and his law firm, Wolfe, Hubbard, Leydig, Voit & Osann, Ltd.1 (hereafter "Wolfe-Hubbard") from representing the defendant Manitowoc Company upon the ground that Wolfe-Hubbard's representation is a breach of Canon 4 of the Code of Professional Responsibility.2 In support of the motion, plaintiff has submitted the affidavits of Andrew J. Beck and Atty. Edward M. O'Toole and accompanying exhibits. Defendants have submitted affidavits of Phillip H. Mayer and John D. West and the transcribed deposition of Andrew J. Beck. Oral argument was heard on the motion on September 10, 1976. For the reasons stated below, the motion is granted.

The pertinent facts are as follows. By letter dated September 26, 1972 to John D. West, President of Manitowoc, Andrew J. Beck, house patent counsel for Koehring, charged Manitowoc with infringement of two of its patents, U.S. 3,083,837 ('837 patent) and U.S. 3,134,488 ('488 patent) relating to Thew Shovels. West of Manitowoc then asked Atty. Mayer to review the claim. By letter dated September 28, 1972, Atty. Mayer wrote Beck of Koehring and indicated that his firm had done some consulting work over the years for Manitowoc "in product areas having no known relation to Koehring's business." He also indicated that Manitowoc was aware of Wolfe-Hubbard's pending representation of Koehring in other litigation, and then stated "To my knowledge we have had no prior contacts, and know of no potential contacts, with Thew Shovel or that aspect of the present Koehring business, and therefore, we see no conflict problem — particularly viewed from a practical standpoint."

By letter dated February 12, 1973, Atty. Mayer wrote Beck of Koehring on the subject of Wolfe-Hubbard's prior representation of Koehring:

"In view of the telephone conversation, I have gone back into our files to see what Ross Clark may have done for Koehring on the Thew Shovel patents now asserted against Manitowoc . . . I am enclosing a copy (to you, not Manitowoc) of Ross' June 4, 1964 opinion to Bill Denny on the . . . '837 patent. Aside from copies of 1964 correspondence between Koehring and Harnischfeger's lawyers, this is all that file contains. In 1969, Harnischfeger sued Koehring and by the end of the year there were several counterclaims . . . involving three Koehring patents including the jib crane '837 and '488 patents. These suits were initially handled by Bill Denny but, in October, 1969, Chuck Walton asked Ross to take over. Some discovery was taken and the cases settled in May of 1970. . . . Interrogatories and their answers in these cases identify and discuss the prior art considered by Ross in 1964 and state that this was the reason for disclaiming in the '837 patent. This is only now coming to light since Ross left our firm about a year ago, you joined Koehring after the May, 1970 settlement, and I had nothing to do with this background. I don't believe this background should preclude our continuing to help resolve the present Koehring-Manitowoc dispute, but we do want the facts to be known to all . . ."

A letter dated October 16, 1973, from West of Manitowoc to Beck of Koehring indicates that West had received a long opinion from Attorney Mayer on the '837 and '488 patents. In that letter, West stated that he was enclosing copies of the opinions. At page 55 of his opinion to Manitowoc, Attorney Mayer stated:

"The June 4, 1964 Legal Opinion
As we noted earlier, on June 4, 1964 our firm rendered a legal opinion to Koehring on the validity and infringement of the Jones et al. patent. Without revealing the contents of the opinion, two points, we think, should be emphasized.
First, to the extent the opinion was favorable to the validity of the patent, this would mitigate against the award of attorney fees against Koehring in the event Koehring were to bring suit and the court were to disagree with our previous opinion. On the other hand, to the extent the opinion is unfavorable with respect to validity, should a court agree with our previous views then Koehring, if it brought suit nonetheless, could well be held to have done so in bad faith; a court, in that case, would very likely award attorneys fees. Otherwise stated, a positive opinion of counsel can be helpful; a negative opinion can end up being very expensive if it is ignored."

On November 27, 1974, Koehring filed its complaint in the present action charging Manitowoc with infringement of the two patents. By letter dated February 4, 1975 from Edward M. O'Toole, counsel for Koehring, to Mayer, O'Toole objected to Mayer's continued representation of Manitowoc now that settlement of the matter had broken down and referred to his view of their agreement that "I would not object to your participation in a settlement conference provided that you would not use that fact against our position." On February 12, 1975, Phillip Mayer, on behalf of Manitowoc filed answer to the complaint. Plaintiff's motion to disqualify was filed March 4, 1975.

Plaintiff Koehring argues that the subject matter in the opinion and prior litigation is the same as that in the present litigation — the validity of patents '837 and '488 — and therefore Canon 4 of the Code of Professional Responsibility, which reads "A lawyer should preserve the confidences and secrets of his client," as elaborated upon by the case law, requires disqualification of defendant's counsel.

Defendant Manitowoc has made several arguments. First defendant has argued that the subject matter of the prior and present legal activity are not substantially related and relate to claims in the patents that are not in dispute. Secondly, the defendant argues that it is material that it was Mr. Ross Clark, a former member of the Wolfe-Hubbard firm and now deceased, who worked on the Koehring matter in the 1960's and gave the 1964 legal opinion, and therefore, any confidences which may have been traded are irretrievably gone. Thirdly, defendant contends that plaintiff "sat on its rights," that it was not until December of 1974 that newly retained counsel for Koehring raised the question of Wolfe-Hubbard's representation of defendant Manitowoc, and therefore plaintiff is barred from now asserting its objection by the doctrine of equitable laches. And, lastly, defendant argues that plaintiff has waived its objection to Wolfe-Hubbard's representation of defendant by consenting to that representation.

In Marketti v. Fitzsimmons, 373 F.Supp. 637 (W.D.Wis.1974), the court considered a motion for disqualification of counsel and held that members of a local teamsters union who brought suit to dissolve a trusteeship imposed by the international union were entitled to disqualify the law firm which had represented the local from representing the international union. At page 639, the court noted:

"Absent a clear waiver of objection to potential conflicts, the undivided fidelity owed a former client requires disqualification in the subsequent situation whenever the following criteria are satisfied:
. . . (1) The former representation,
(2) a substantial relation between the subject matter of the former representation and the issues in the latter lawsuit, and
(3) the later adverse representation." (cites omitted)

The court is satisfied that the three criteria have been met here. Wolfe-Hubbard formerly represented Koehring in the Harnischfeger litigation in matters relating to the validity of the '837 and '488 patents, the same ones involved here. In this action, Wolfe-Hubbard represents Manitowoc and in so doing is now in the position of asserting the invalidity of those same patents against its former client. Thus, the court finds the subject matter of the prior and present litigation, the validity of the '837 and '488 patents to be "substantially related." This court rejects the argument that the decision on this motion should be...

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