Wyeth v. Abbott Laboratories, Civil Action No. 08-230 (JAP).

• Citation: 692 F. Supp.2d 453
• Decision Date: 08 February 2010
• Docket Number: Civil Action No. 08-230 (JAP).
• Parties: WYETH, et al., Plaintiffs, v. ABBOTT LABORATORIES, et al., Defendants.
• Court: U.S. District Court — District of New Jersey

692 F. Supp.2d 453

WYETH, et al., Plaintiffs, v. ABBOTT LABORATORIES, et al., Defendants.

Civil Action No. 08-230 (JAP).

United States District Court, D. New Jersey.

February 8, 2010.

Donald A. Robinson, Keith J. Miller, Robinson, Wettre & Miller LLC, Newark, NJ, for Plaintiffs.

Thomas R. Curtin, George C. Jones, Graham Curtin, PA, Morristown, NJ, Arnold B. Calmann, Jakob Benjamin Halpern, Saiber LLC, Newark, NJ, Jeffrey S. Ginsberg, Kenyon & Kenyon, LLP, New York, NY, for Defendants.

OPINION

PISANO, District Judge.

Defendants Boston Scientific Corporation and Boston Scientific Scimed, Inc. (together "BSC") appeal pursuant to Federal Rule of Civil Procedure 72(a) and Local Civil Rule 72.1(c)(1) from the December 1, 2009 Letter Order of the Magistrate Judge disqualifying Howrey LLP ("Howrey") as counsel for BSC in this matter.¹ The Court heard oral argument on December 29, 2009. For the reasons below, the decision of the Magistrate Judge is reversed, and Howrey shall be permitted to continue as counsel for BSC.

I. Background

This is a patent infringement action brought by plaintiffs Wyeth and Cordis Corporation against defendants BSC and Abbott Laboratories. BSC is presently represented in this action by the law firm Howrey LLP ("Howrey"), which entered the case on behalf of BSC in or about April 2009, when it was substituted for Kenyon & Kenyon LLP, the law firm that had initially appeared on behalf of BSC in this case.

Shortly after Howrey's lawyers were admitted pro hac vice in this matter, Wyeth sought leave from Magistrate Judge Bongiovanni to file a motion to disqualify Howrey. Wyeth alleged that Howrey's representation of BSC constituted a violation of Rule of Professional Conduct ("RPC") 1.7, which prohibits a lawyer from representing a client, where, among other things, "the representation of that client will be directly adverse to another client." RPC 1.7(a)(1). According to Wyeth, Howrey is representing Wyeth in an ongoing patent matter in Europe (the "Lonza matter"),² and because Wyeth and BSC are adverse in the instant case, Howrey should be disqualified from representing BSC in this action.

About the same the time Howrey entered the present case on behalf of BSC, Howrey also entered its appearance for BSC in a similar case that was pending before District Judge Robinson in the District of Delaware. In that case—a declaratory judgment patent action related to the instant case that has since concluded³ —BSC was the plaintiff and Wyeth a defendant. Howrey attorneys were granted pro hac vice admission on behalf of BSC in that case, and immediately thereafter, on April 30, 2009, Wyeth filed a motion before Judge Robinson to disqualify Howrey from representing BSC based upon the alleged violation of RPC 1.7.⁴

In light of the pending motion in the District of Delaware, by Order dated May 12, 2009, Judge Bongiovanni deferred addressing the disqualification issue in the present case until after the Delaware motion was decided. See Order at Docket Entry # 54. Judge Bongiovanni's May 12th Order instructed the parties, upon receipt of a ruling on the Delaware motion, to submit a letter to this Court seeking relief if either party believed that the ruling from Delaware did not resolve the disqualification issue in the instant case. Id.

Judge Robinson held a full evidentiary hearing on the disqualification motion.⁵ On August 25, 2009, Judge Robinson issued a memorandum opinion in which she found that although Howrey's representation of BSC violated RPC 1.7, disqualification "was not the appropriate remedy under the circumstances" based upon Delaware law. See Boston Scientific Corp. v. Johnson & Johnson Inc., 647 F.Supp.2d 369, 374 (D.Del.2009). Finding that the two matters at issue—i.e., the Lonza matter in Europe and the patent action in Delaware—were unrelated, were being handled out of offices in different countries, and were separated within the Howrey firm by an ethical wall, Judge Robinson determined that it was not necessary to disqualify Howrey from representing BSC in the Delaware action. Id. Furthermore, Judge Robinson found that Howrey's violation of RPC 1.7 was in large part due to Wyeth's conduct, which the court found created "significant confusion for Howrey" as to which Wyeth entity or entities Howrey was actually representing in the Lonza matter. Id. In denying Wyeth's motion, the court noted that "Wyeth should not now benefit from such obfuscatory conduct." Id.

By letter dated September 2, 2009, Wyeth wrote to Judge Bongiovanni asking that the Court decline to follow Judge Robinson's decision and instead disqualify Howrey as a result of the violation of RPC 1.7. In the December 1 Letter Order, Magistrate Judge Bongiovanni adopted the factual findings of Judge Robinson and concurred with the Delaware court's conclusion that Howrey's representation of BSC in this case constituted a violation of RPC 1.7. However, Judge Bongiovanni granted Wyeth's motion and disqualified Howrey, interpreting applicable case law as requiring mandatory disqualification for a violation of RPC 1.7. This appeal followed.

II. Analysis

A. Standard of Review

Pursuant to Local Civil Rule 72.1(c), a decision of a magistrate judge with respect to a non-dispositive matter may be set aside when the ruling is "found to be clearly erroneous or contrary to law." R. 72.1(c)(1)(A). "A finding is clearly erroneous when although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed." Marks v. Struble, 347 F.Supp.2d 136, 149 (D.N.J.2004) (quoting Dome Petroleum Ltd. v. Employers Mut. Liab. Ins. Co., 131 F.R.D. 63, 65 (D.N.J. 1990)). A ruling is contrary to law if the magistrate judge has misinterpreted or misapplied applicable law. Singer Management Consultants, Inc. v. Milgram, 608 F.Supp.2d 607, 611-12 (D.N.J.2009).

B. Whether the Magistrate Judge's Decision was Clearly Erroneous or Contrary to Law

In this District, questions of attorney ethics are governed by Local Civil Rule 103.1(a), which provides that the conduct of attorneys admitted before this Court shall be governed by the Rules of Professional Conduct of the American Bar Association as modified by the New Jersey Supreme Court. FMC Corp. v. Guthery, 2009 WL 485280, 2009 U.S. Dist. LEXIS 14609, 2009 WL 485280 (D.N.J. February 24, 2009); see also Carlyle Towers Condo. Ass'n v. Crossland Sav., 944 F.Supp. 341, 345 (D.N.J.1996). Typically, when interpreting the Rule of Professional Conduct, courts "look to New Jersey's state courts' interpretations of them as primary authority and modifies that interpretation when required or permitted by federal law." Guthery, 2009 WL 485280, at *3, 2009 U.S. Dist. LEXIS 14609 at *5.

As noted earlier, the instant dispute arises under Rule of Professional Conduct 1.7. That rule provides as follows:

(a) Except as provided in paragraph (b), a lawyer shall not represent a client if the representation involves a concurrent conflict of interest.

A concurrent conflict of interest exists if:

(1) the representation of one client will be directly adverse to another client; or

(2) there is a significant risk that the representation of one or more clients will be materially limited by the lawyer's responsibilities to another client, a former client or a third person or by a personal interest of the lawyer.

(b) Notwithstanding the existence of a concurrent conflict of interest under paragraph (a), a lawyer may represent a client if:

(1) the lawyer reasonably believes that the lawyer will be able to provide competent and diligent representation to each affected client;

(2) the representation is not prohibited by law;

(3) the representation does not involve the assertion of a claim by one client against another client represented by the lawyer in the same litigation or other proceeding before a tribunal; and

(4) each affected client gives informed consent, confirmed in writing.

RPC 1.7.

There is no dispute that BSC, a defendant in this case, and Wyeth, a plaintiff, are adverse in this matter. Thus, the threshold issue for the Magistrate Judge with respect to whether there was a violation of RPC 1.7 was whether Wyeth was, as it claimed, a current client of Howrey. In addressing this question in the District of Delaware, Judge Robinson noted that Wyeth is a global pharmaceutical company with multiple divisions and subsidiaries, a "family of companies" for whom Howrey has handled several matters. Delaware Opinion at 2-3. Although Judge Robinson found that several factors—including Wyeth's naming conventions, its use of the same in-house attorneys on matter involving different subsidiaries, and the willingness of it and its subsidiaries to receive billing invoices on matters on which they were not directly engaged with Howrey— caused confusion at Howrey as to exactly which Wyeth entity Howrey was representing in the Lonza matter, Judge Robinson ultimately concluded that a current attorney-client relationship exists between Wyeth and Howrey with respect to the Lonza matter. Id. at 8. As such, Judge Robinson found that Howrey's representation of BSC adverse to Wyeth in the Delaware case was a violation of RPC 1.7. Id.

Judge Bongiovanni concurred with and adopted the finding of Judge Robinson that a current attorney-client relationship exists between Howrey and Wyeth, as well as the conclusion that Howrey's representation in the instant action constitutes a violation of RPC 1.7. Letter Order at 2. These findings are not challenged on this appeal. However, Judge Bongiovanni, citing In re Cendant Corp. Securities Litigation, 124 F. Supp 2d 235 (D.N.J.2000) and Celgene Corp. v. KV Pharmaceutical Corp., 2008 WL 2937415 (D.N.J. July 29, 2008), applied what appeared to her to be a mandatory disqualification rule, and granted Wyeth's motion to disqualify the Howrey firm, finding that "given the violation of Rule 1.7, . . . disqualification is...