Court Opinion

ID: 9466150
Source: CourtListenerOpinion
Date Created: 2023-08-05 01:07:00.807986+00
Date Added: 2024-06-11T17:39:34.702872
License: Public Domain

ON PETITION FOR REHEARING EN BANC
OPINIONS FILED AUGUST 16, 1979
Before FAIRCHILD, Chief Judge, and SWYGERT, CUMMINGS, PELL, SPRECHER, TONE, BAUER, and WOOD, Circuit Judges.
FAIRCHILD, Chief Judge.
This appeal deals with one of the questions that may arise when a partner leaves a law firm taking a client of the firm with him, and then finds himself and his client in litigation against a party now represented by his former firm. On the facts of this case, we affirm the district court’s denial of a motion to disqualify the former firm.1
Prior to December, 1976 Granger Cook, Jr. was a member of the Chicago law firm of Hume, Clement, Brinks, Willian, Olds & Cook, Ltd. (the Hume firm). During that time Baxter Laboratories was a client of the firm with Mr. Cook in charge of the account. When Cook left the Hume firm December 31, 1976, he took the Baxter account with him and he now represents Baxter and the other defendants in this litigation.2
*195The controversy between the parties dates back to 1966-67 when both filed patent applications for a milk-coagulating enzyme. A patent interference was declared in 1971, which was finally resolved in favor of the plaintiff (Novo) in February, 1976. Although the Hume firm was outside patent counsel for Baxter during this time, the firm did not represent Baxter in the patent interference proceeding. During July of 1976, however, Cook, then a partner in the Hume firm, spent two and one-fourth hours reviewing legal authorities and conferring with Baxter attorneys in connection with a matter identified as “microbial rennet.” These conferences are the focus of defendants’ contentions that the Hume firm must be disqualified.
Granger Cook left the Hume firm in December, 1976. In February, 1977 the plaintiff filed this action in the United States District Court for the District of South Carolina, charging Baxter with patent infringement. In August, 1977, after the action had been transferred to the Northern District of Illinois, the Hume firm filed a motion to appear as counsel for Plaintiff Novo. The Baxter defendants opposed the appearance and filed a motion to disqualify the firm after the appearance was entered. The motion was denied in December, 1977 and this appeal followed.

THE SUBSTANTIAL RELATIONSHIP TEST

The district court correctly concluded that the starting point for the inquiry is whether the representation of Baxter by the Hume firm was substantially related to the present litigation. Schloetter v. Railoc of Indiana, Inc., 546 F.2d 706 (7th Cir. 1976); Westinghouse Electric Corp. v. Gulf Oil Corp. and United Nuclear Corp., 588 F.2d 221 (7th Cir. 1976). As we noted in Gulf Oil, supra:
The substantial relationship rule embodies the substance of Canons 4 and 9 of the A.B.A. Code of Professional Responsibility. Canon 4 provides that ‘a lawyer should preserve the confidences and secrets of a client,’ and Canon 9 provides that ‘a lawyer should avoid even the appearance of professional impropriety. As a result it is clear that the determination of whether there is a substantial relationship turns on the possibility, or appearance thereof, that confidential information might have been given to the attorney in relation to the subsequent matter in which disqualification is sought. 588 F.2d 224.
The district court concluded that there was no substantial relationship between the services rendered by the Hume firm to Baxter and the present litigation because the July, 1976 services that were arguably related were only two percent of the total representation provided Baxter by the Hume firm and were rendered under the direction of Granger Cook. The district court held, therefore, that the relationship, if any, was not “substantial.”
This quantitative analysis, however, involves misapprehension of the nature of the substantial relationship test. Even the briefest conversation between a lawyer and a client can result in the disclosure of confidences. It is the relationship between the prior representation and the present litigation that must be evaluated rather than simply the duration and extent of the past representation.
In this case we conclude that there was a substantial relationship between the July, 1976 representation and the present litigation. In Gulf Oil, supra, we suggested a three-part analysis, as follows:
Initially, the trial judge must make a factual reconstruction of the scope of the prior legal representation. Second, it must be determined whether it is reasonable to infer that the confidential information allegedly given would have been given to a lawyer representing a client in those matters. Finally, it must be determined whether that information is relevant to the issues raised in the litigation pending against the former client. 588 F.2d 225.
Applying this three-part test to the case at bar: (1) We find that the record adequately establishes a factual reconstruction *196of the scope of the prior representation. The two and one-fourth hours spent by Attorney Cook in July, 1976 on the “microbial rennet” matter is the key representation at issue. The September 16, 1977 affidavit of Attorney Cook states that the subject matter of the July, 1976 representation is “identical to the subject matter of the present litigation.”3 The actual connection between the two matters is the enzyme “microbial rennet,” in that Attorney Cook avers that this enzyme is identical to the enzyme accused of infringing the patents in the present litigation. (2) Applying the second prong of the test, we find that it is reasonable to infer that confidential information of the type allegedly given to Cook would have been given to a lawyer under the circumstances occurring in July, 1976. Cook’s September 16, 1977 affidavit states that confidential information was received, and it is not necessary that an attorney or party divulge any confidences in order to prove they were revealed. (3) Applying the third prong, we have little trouble concluding that information regarding the enzyme labeled “microbial rennet” is relevant to the present patent infringement action that alleges use of patented milk-coagulating enzymes. Certainly information regarding the enzymes used by Baxter is potentially useful evidence in establishing patent validity or infringement. “Relevance . must be measured against the potential avenues of proof and not against the expected.” Gulf Oil, supra, at 226.

THE DISQUALIFICATION OF COUNSEL

Having concluded that the July, 1976 services were substantially related to the case at bar, we must now consider to what extent that conclusion requires the disqualification of the Hume firm. Implicit in the substantial relationship test is a presumption that an attorney who worked on a substantially related matter received confidences in connection therewith. Gulf Oil, supra, at 225 — 26. In this case, Granger Cook has alleged that he did receive such confidences. If Cook were now seeking to represent the Plaintiff Novo, there is little doubt that a motion by Baxter to disqualify him would be granted. Schloetter v. Railoc, 546 F.2d 706, 710 (1976).
But of course in this case it is not Attorney Cook who is seeking to represent Novo. Cook, who is still counsel for Baxter, is seeking instead to disqualify his former firm from representing Novo. We must therefore consider to what extent the confidential information presumably received by Cook must be imputed to other members of the Hume firm.4
It is reasonable to presume that members of a law firm freely share their client’s confidences with one another. That presumption of shared confidences underlies, either implicitly or explicitly, many of the cases requiring the disqualification of counsel. Laskey Bros. v. Warner Bros. Pictures, Inc., 224 F.2d 824, 826 (2nd Cir.), cert. denied 350 U.S. 932, 76 S.Ct. 300, 100 L.Ed. 814 (1956); Schloetter v. Railoc of Indiana, Inc., 546 F.2d 706, 710 (7th Cir. 1976); Westinghouse Electric Corp. v. Kerr-McGee Corp., 580 F.2d 1311, 1321 (7th Cir. 1978). The application of the presumption recognizes not only the realities of law practice but also the ethical considerations of Canon 9: “A lawyer should avoid even the appear*197anee of impropriety.” We will at least begin by presuming that Granger Cook shared with his associates at the Hume firm whatever confidences he may have received from Baxter in connection with the July, 1976 “microbial rennet” work.
The more difficult question is whether it is appropriate for the court to inquire further, i. e., whether or not the presumption should be a rebuttable one. There are often good reasons for making a presumption of shared confidences irrebuttable. We generally do so at the first level (the presumption that confidences have been shared by a client in a substantially related matter) in order to avoid any unseemly inquiry into the actual details of conversations between client and counsel. Westinghouse Electric Corp. v. Gulf Oil Corp., 588 F.2d 221, 224, n.3 (7th Cir. 1978). Emle Industries, Inc. v. Patentex, Inc., 478 F.2d 562, 571 (2nd Cir. 1973). In that situation, and no doubt in others, an irrebuttable presumption may also be required by the spirit of Canon 9 — in order to avoid even the appearance of impropriety. On the other hand, a rote reliance on irrebuttable presumptions may deny the courts the flexibility needed to reach a just and sensible ruling on ethical matters. As the Second Circuit has noted:
When dealing with ethical principles, it is apparent that we cannot paint with broad strokes. The lines are fine and must be so marked. Guideposts can be established when virgin ground is being explored, and the conclusion in a particular case can be reached only after painstaking analysis of the facts and precise application of precedent.
Silver Chrysler Plymouth v. Chrysler Motors Corp., 518 F.2d 751, 753, n.3 (2d Cir. 1975), quoting United States v. Standard Oil Company, 136 F.Supp. 345, 367 (S.D.N.Y.1955).
The circumstances of this case demonstrate that the presumption that Cook shared confidences with his associates at the Hume firm need not be irrebuttable. Cook and his client, Baxter, are not in an adversary relationship here. There is no reason to expect that Cook is not acting completely in his clients’ interest. Additionally, since it was Cook who presumably received Baxter’s confidences, he is in a position to know exactly what confidences he may have shared with others in his firm. His failure to allege, even in general terms, that he shared confidences received in connection with the “microbial rennet” matter with other members of the Hume firm is therefore very significant. Although the client, Baxter, would be entitled to the benefit of the presumption that Cook did so, and to the resolution of any doubts in Baxter’s favor (Gulf Oil, supra, at 225), we do not find it necessary to exclude from consideration evidence clearly showing otherwise.
In this case the evidence is not in conflict. Cook does not allege that he shared any of Baxter’s confidences in connection with the “microbial rennet” matter with others in the Hume firm. All of the remaining members of the Hume firm have submitted affidavits stating that they did not receive any such information from Cook. The presumption has been clearly and effectively rebutted. Because the facts are clear, we need not, in this case, decide whether some special quality or quantity of proof is required to rebut the presumption. Canon 9 does not require the courts to deny Novo the counsel of its choice. The order of the district court is therefore AFFIRMED.
SWYGERT, CUMMINGS, and SPRECHER, Circuit Judges, dissent for the reasons given by the majority in the panel opinion, 607 F.2d 186.

. This appeal was originally decided by a three-judge panel, ante, page 186. Rehearing en banc was granted on April 13, 1979.

. The corporations listed as defendants-appellants have the following relationship: The original corporation involved was Baxter Laboratories (Baxter). Baxter Travenol Laboratories is its successor in interest and Travenol Laboratories is a wholly-owned subsidiary. Baxter Travenol Laboratories had an operation called the Wallerstein Division. On July 11, 1977, Gist-Brocades Fermentation Industries, Inc., and Gist-Brocades, N. V., acquired Wallerstein from Baxter and agreed to indemnify Baxter with respect to this patent litigation, because it was allegedly the Wallerstein Division that was infringing the patent owned by plaintiff-appellee (Novo).

. Defendants suggest that the purpose of this representation was to consider the possibility of initiating a declaratory judgment action (rather than wait for plaintiff to bring the present infringement action) regarding the identical patents at issue in the case at bar.

. Because the conclusions we reach in this case may not have a factual basis in every other case, it is important to note the following: (1) While Cook’s affidavit states that he conferred generally with other members of the Hume firm about the Baxter account, and that other members of the firm received confidential information about Baxter, there is no allegation that the July, 1976 representations (which are discussed separately in the affidavit) were ever discussed with anyone else in the firm. Cook, of course, is in a position to know whether confidences were shared since it was he who presumably received those confidences and who would have shared them if they had been shared. (2) There are affidavits in the record from all of the remaining members of the Hume firm stating that none of them had any knowledge of the July, 1976 representations.