Opinion ID: 385705
Heading Depth: 1
Heading Rank: 4

Heading: exclusion of in-house counsel

Text: 77 One final issue remains for our consideration. Exxon contends that the District Court abused its discretion in excluding Exxon's in-house litigation counsel from access to confidential competitively sensitive information of the Drives Group. 43 The June 25 Order granted such access only to outside counsel for Exxon. 44 On the basis of the facts of this case, we do not believe that this exclusion of in-house counsel for Exxon constituted an abuse of discretion by the District Court. 78 As developed fully in part II of this opinion, supra, it is essential in this case that a complete separation be maintained between Exxon and the Drives Group. For justifiable reason, the District Court was concerned that Exxon might let the Drives Group wither on the vine. 45 To protect the public interest in maintaining effective relief for a potential violation of the antitrust laws, the court fashioned a series of protective measures designed to preserve the competitive viability of the Drives Group. We have already concluded that it was proper for the District Court to include within those measures a provision prohibiting both in-house and retained counsel for Exxon from maintaining an attorney-client relationship with the Drives Group. 79 It cannot be disputed that the most critical of all protective measures is that which prevents the disclosure of competitively sensitive information of the Drives Group to other personnel of Exxon. Should such information be disclosed, all other protective measures would be virtually meaningless. If Exxon is able to secure competitively sensitive information of the Drives Group, either intentionally or inadvertently, the ability of the Drives Group to compete effectively with Exxon in the event of divestiture would be seriously impaired. 80 Exxon does not dispute that if the hold separate order is to have any effect, Drives Group information must remain confidential. In requesting greater access to necessary information, Exxon's proposed order included appropriate restrictions prohibiting disclosure of the acquired information to others. 46 Exxon simply contends here that those others need not include all in-house litigation counsel for Exxon. 81 It has been noted that in-house counsel stand in a unique relationship to the corporation in which they are employed. Although in-house counsel serve as legal advocates and advisors for their client, their continuing employment often intimately involves them in the management and operation of the corporation of which they are a part. In SCM v. Xerox Corp., Civil No. 15,807 (D.Conn. May 25, 1977) (Pre-Trial Ruling No. 44) (A. 996-1000), aff'd sub nom, In re Xerox Corp., 573 F.2d 1300 (2d Cir. 1977), then District Judge Newman denied in-house counsel access to the confidential information of a competitor. In so ruling, the court stated: 82 The Court does not in any way doubt the faithfulness of house counsel in endeavoring to abide by the terms of any protective order. The issue concerns not good faith but risk of inadvertent disclosure. House counsel are employed full-time to advance the interests of their employer. They regularly meet with personnel of the corporation on day-to-day matters, wholly apart from this litigation. 83 Id. at 3 (A. 998). Similarly, Judge Snyder stated in In re Westinghouse Electric Corp. Uranium Contracts Litigation, 76 F.R.D. 47, 57 n.6 (W.D.Pa.1977), (t)here is much to be said for the argument that in-house counsel, part of the ongoing business activity of a corporation, are never consulted in a non-business atmosphere. See also Chesa International, Ltd. v. Fashion Associates, Inc., 425 F.Supp. 234, 237 (S.D.N.Y.), aff'd mem., 573 F.2d 1288 (2d Cir. 1977); FTC v. United States Pipe and Foundry Co., 304 F.Supp. 1254, 1261 (D.D.C.1969) (in-house counsel not included among those with access to protected information). 84 This concern over the very close relationship between in-house and other personnel of the corporation is well-illustrated in this case. Exxon requested access for only two members of the Exxon legal department: Richard Keresey and Donald Farley. 47 As noted by the FTC, at the time Exxon made this request, Mr. Keresey sat on the board of directors of Exxon Enterprises, Inc., which then held Exxon's ACS operations. 48 The relationship of Mr. Farley to Exxon's drives operation has been disputed by the parties. 49 In any event, the District Court was faced with a possibility that both men had been closely involved with matters concerning Exxon's entrance as a competitor in the drives market, and could continue to be so involved in the future. 85 On the facts of this case, we are unable to find any abuse of discretion in the District Court's refusal to allow these two members of Exxon's in-house legal department access to competitively sensitive Drives Group information. As argued by the FTC, it is very difficult for the human mind to compartmentalize and selectively suppress information once learned, no matter how well-intentioned the effort may be to do so. Long after divestiture may have been ordered in this case, it is possible that these prominent members of Exxon's legal staff will help manage and advise Exxon's ACS effort. We find no abuse of discretion in the decision of the District Court that they should do so without ever having access to confidential information of the Drives Group, a possible major competitor. We believe that the limitation of access to outside counsel for Exxon is fully consistent with the public interest in safeguarding the Drives Group as a competitively viable entity. We thus affirm this aspect of the June 25 Order.