Westinghouse Elec. Corp. v. Rio Algom Ltd., 76 C 3830.
| Decision Date | 18 April 1978 |
| Docket Number | No. 76 C 3830.,76 C 3830. |
| Citation | 448 F. Supp. 1284 |
| Parties | WESTINGHOUSE ELECTRIC CORPORATION, Plaintiff, v. RIO ALGOM LIMITED, Rio Algom Corporation, Rio Tinto Zinc Corporation Limited, RTZ Services Limited, Rio Tinto Zinc Corporation, Conzinc Rio Tinto of Australia Limited, Mary Kathleen Uranium Limited, Pancontinental Mining Limited, Queensland Mines Limited, Nuclear Fuels Corporation, Anglo-American Corporation of South Africa, Limited, Engelhard Minerals and Chemicals Corporation, Denison Mines, Limited, Denison Mines (U. S.) Incorporated, Noranda Mines Limited, Gulf Oil Corporation, Gulf Minerals Canada Limited, Kerr-McGee Corporation, the Anaconda Company, Getty Oil Company, Utah International Inc., Phelps Dodge Corporation, Western Nuclear, Inc., Homestake Mining Company, Atlas Corporation, Reserve Oil and Minerals Corporation, United Nuclear Corporation, Federal Resources Corporation and Pioneer Nuclear, Inc., Defendants. |
| Court | U.S. District Court — Northern District of Illinois |
COPYRIGHT MATERIAL OMITTED
Fred H. Bartlit, Jr., Michael T. Hannafan, Kirkland & Ellis, Lee A. Freeman, Jr., Freeman, Rothe, Freeman & Salzman, Chicago, Ill., for plaintiff Westinghouse Electric Corp.
Rio Algom Ltd., in default.
Albert E. Jenner, Jr., Keith F. Bode, Jenner & Block, Chicago, Ill., for Rio Algom Corp.
Rio Tinto Zinc Corp. Ltd., in default.
RTZ Services Ltd., in default.
Paul G. Gebhard, Vedder, Price, Kaufman & Kammholz, Chicago, Ill., Richard E. Sherwood, Robert E. Willett, O'Melveny & Meyers, Los Angeles, Cal., for Rio Tinto Zinc Corp.
Conzinc Rio Tinto of Australia Ltd., in default.
Mary Kathleen Uranium Ltd., in default.
Pancontinental Mining Ltd., in default.
Queensland Mines Ltd., in default.
Nuclear Fuels Corp., in default.
Anglo-American Corporation of South Africa, Ltd., in default.
Lionel G. Gross, Kenneth Gaines, Susan A. Henderson, Altheimer & Gray, Chicago, Ill., Raymond L. Falls, Jr., Henry Bisgaier, Cahill, Gordon & Reindel, New York City, for Engelhard Minerals and Chemicals Corp.
Richard L. Blatt, Michael P. Tone, Peterson, Ross, Rall, Barber & Seidel, Chicago, Ill., Laurence V. Senn, Jr., Lance Gotthoffer, Mudge, Rose, Guthrie & Alexander, New York City, for Denison Mines, Ltd. and Denison Mines (U. S.) Inc.
Joseph S. Wright, Michael D. Freeborn, Eugene H. Ruark, R. Newton Rooks, Rooks, Pitts, Fullagar & Poust, Chicago, Ill., for Noranda Mines, Ltd.
Robert C. Keck, Thomas R. Shaver, Robert A. Creamer, Keck, Cushman, Mahin & Cate, Chicago, Ill., Edward F. Howrey, A. Duncan Whitaker, Howrey & Simon, Washington, D. C., Frank W. Morgan, Sr., Counsel, Gulf Companies, Pittsburgh, Pa., for Gulf Oil Corp. and Gulf Minerals Canada Ltd.
Glen W. McGee, Thomas W. Johnston, Brian J. Redding, Chadwell, Kayser, Ruggles, McGee & Hastings, Chicago, Ill., for Kerr-McGee Corp.
W. Donald McSweeney, Roger Pascal, Schiff, Hardin & Waite, Chicago, Ill., Melvin D. Goodman, Zachary Shimer, Chadbourne, Parke, Whiteside & Wolff, New York City, for the Anaconda Co.
Richard M. Calkins, James W. Hathaway, Burditt & Calkins, Chicago, Ill., Brenton F. Goodrich, Carl J. Schuck, Overton, Lyman & Prince, Los Angeles, Cal., for Getty Oil Co.
Watson B. Tucker, Theodore A. Livingston, Wm. Bruce Hoff, Jr., Mayer, Brown & Platt, Chicago, Ill., for Utah International Inc.
Andrew C. Hartzell, Jr., Debevoise, Plimpton, Lyons & Gates, New York City, for Phelps Dodge Corp. and Western Nuclear, Inc.
Theodore A. Groenke, J. Craig Busey, McDermott, Will & Emery, Chicago, Ill., David M. Balabanian, McCutcheon, Doyle, Brown & Enersen, San Francisco, Cal., for Homestake Mining Co.
Edward L. Foote, Winston & Strawn, Chicago, Ill., Michael V. Corrigan, Simpson, Thacher & Bartlett, New York City, for Atlas Corp.
Richard P. Campbell, McConnell & Campbell, Chicago, Ill., for Reserve Oil and Minerals Corp.
Robert T. Johnson, Jr., John T. Loughlin, Bell, Boyd, Lloyd, Haddad & Burns, Chicago, Ill., Harry L. Bigbee, W. Perry Pearce, Bigbee, Stephenson, Carpenter & Crout, Santa Fe, N. M., W. Latham Leeds, Johnson, Bromberg, Leeds & Riggs, Dallas, Tex., for United Nuclear Corp.
Richard K. Decker, Joseph E. Coughlin, Lord, Bissell & Brook, Chicago, Ill., Leonard J. Lewis, Gerald Miller, Van Cott, Bagley, Cornwall & McCarthy, Salt Lake City, Utah, for Federal Resources Corp.
Thomas D. Allen, Edward T. Butt, Jr., Wildman, Harrold, Allen & Dixon, Chicago, Ill., for Pioneer Nuclear, Inc.
At issue in this complex antitrust litigation are a multitude of motions to disqualify counsel, on the grounds that the present litigation posture of two law firms creates a conflict of interest with their prior representation of several of the corporate defendants in earlier legal settings. The disqualification issues pose sensitive and difficult problems of legal ethics under the ABA's Code of Professional Responsibility. They also raise the unsettled question of whether the mechanical disqualification of law firms for ethical transgressions is an appropriate judicial remedy in cases involving large multi-city corporate law firms, enormously complex multi-district litigation, and corporate litigants with nationwide and even multi-national connections.
With the modern-day proliferation of large law firms representing multi-billion dollar corporations in all segments of the economy and the governmental process, it is becoming increasingly difficult to insist upon absolute fidelity to rules prohibiting attorneys from representing overlapping legal interests. While a recognition of these pragmatic realities may contribute to a broader perspective on current ethical problems, our paramount obligation is to balance an individual's freedom to choose his own counsel with the need to preserve the highest ethical standards for professional conduct. In fulfilling this task, we are guided by the words of Judge Kaufman that the resolution of ethical problems rests on a "painstaking analysis of the facts and precise application of precedent." United States v. Standard Oil Company, 136 F.Supp. 345, 367 (S.D.N.Y.1955).
The present action is one phase of a complex and continuing series of lawsuits involving the purchase and sale of uranium used in nuclear reactors. The triggering event occurred on September 8, 1975, when Westinghouse Electric Corporation (Westinghouse), a major manufacturer of nuclear reactors, notified a number of utility companies that performance of 17 of its long-term uranium supply contracts had become "commercially impracticable" under § 2-615 of the Uniform Commercial Code. In its notice, Westinghouse explained that unforeseen contingencies in the uranium market, including the 1973 Arab oil embargo, had caused extraordinary increases in uranium prices and a shortage of uranium supplies. Faced with a significant cost-price differential affecting the scheduled delivery of some 65 million pounds of uranium over the next 20 years, Westinghouse said that the unforeseen events excused full performance of its contractual obligations. In response, the affected utilities filed 13 federal actions, one state action, and three foreign actions against Westinghouse alleging breach of contract and challenging Westinghouse's invocation of § 2-615. The federal actions have been consolidated for trial in the Eastern District of Virginia.
As an outgrowth of its defense of these contract actions, Westinghouse investigated the possibility that the uranium price increases were caused by conspiratorial activities of the uranium producers. On October 15, 1976, Westinghouse filed the present antitrust action in this Court against 12 foreign and 17 domestic corporations engaged in various aspects of the uranium industry. Westinghouse alleges that beginning in 1972, certain of the foreign defendants entered into a cartel agreement to rig bids, fix prices and contract terms, divide and allocate the world uranium market among the uranium producers, and require Westinghouse and other uranium resellers to pay discriminatorily high prices. The complaint also charges that the foreign defendants agreed to extend the effects of their cartel to the United States, in order to benefit their U. S. subsidiaries and to prevent price competition from other U. S. uranium producers and sellers. To cement this American connection, the foreign producers allegedly struck a bargain with U. S. producers, whereby the foreign producers promised not to underprice the U. S. producers and the domestic producers in return agreed to drop their opposition to the U. S. government's phase-out of its embargo on the enrichment of foreign uranium. The domestic producers, with the advice and support of the foreign producers, allegedly adopted contracting and pricing policies designed to raise current uranium prices to levels fixed by the foreign cartel. It is also charged that the U. S. producers agreed to withdraw uranium from the market, to boycott Westinghouse, to lobby foreign officials to refuse to sell uranium to Westinghouse, and to exchange market information in order to raise and stabilize prices. The effect of these actions, according to the complaint, has been to raise uranium prices to artificially high levels, fix the terms on which uranium is sold, curtail uranium supplies, divide the uranium market among the defendants, and deprive uranium purchasers of competition among producers, all to the injury of Westinghouse. For relief, Westinghouse seeks a declaration that defendants' conduct violates Section 1 of the Sherman Act and Section 73 of the Wilson Tariff Act, treble damages, and injunctive relief.
Throughout the uranium litigation, Westinghouse has employed Kirkland & Ellis as its lead counsel. The Kirkland firm is a two-city operation, with offices in Chicago and Washington, D. C. Its Washington office uses the name Kirkland, Ellis & Rowe. We will refer to the combined firm as Kirkland. Kirkland's Chicago lawyers number over 130, and its...
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