Corporate Families
Home/Table of ContentsA lawyer represents corporation A in a small matter. Corporation A is a wholly-owned subsidiary of Corporation AA. While that matter is pending, Corporation B comes to the lawyer and asks the lawyer to bring a multi-million dollar suit against Corporation AA. May the lawyer take the case? Are Corporations A and AA one for conflict of interest purposes? That will depend upon the tribunal or the facts or both. As shown below, some courts and writers have said that this is always a conflict of interest (the "bright line" rule). Others have said that the answer depends upon the facts (for lack of a better phrase, the "weighing" rule).
ABA Op. 95-390 (1995). Any careful study of this issue should begin with a reading of this opinion. The majority concluded that a parent-subsidiary relationship should not automatically disqualify a lawyer from a representation such as that described in the opening paragraph. Two members of the Committee wrote eloquent dissents. They took the bright line position that this would always be a conflict for which a consent would be required. A third member joined in those dissents. Thus, the Committee was deeply split. Nevertheless, the opinion is highly instructive.
Cmt. [34] to ABA Model Rule 1.7 was added by the House of Delegates in February 2002. It adopts the weighing test and provides as follows:
[34] A lawyer who represents a corporation or other organization does not, by virtue of that representation, necessarily represent any constituent or affiliated organization, such as a parent or subsidiary. See Rule 1.13(a). Thus, the lawyer for an organization is not barred from accepting representation adverse to an affiliate in an unrelated matter, unless the circumstances are such that the affiliate should also be considered a client of the lawyer, there is an understanding between the lawyer and the organizational client that the lawyer will avoid representation adverse to the client's affiliates, or the lawyer's obligations to either the organizational client or the new client are likely to limit materially the lawyer's representation of the other client.
A number of states have adopted, or are considering adoption of, the "Ethics 2000" changes. So, you should check the rules for the state in question.
The Cases. (
Caution: those cases that adopted the weighing approach do not necessarily consider the same factors in the same way. One factor that is important to some courts is whether the same in-house lawyer may be involved in both matters. Another is whether the lawyer may have obtained information about the client in one matter that would give the lawyer an advantage in the other. Some courts that reject the bright line test hold that the test should be an alter ego test. Other courts appear to be applying an alter ego analysis but do not say so. In short, there is no substitute for reading these cases before relying upon them.);
Trimble Inc. v. PerDiemCo LLC, Nos. 2019-2164, 2020-1157 (Fed. Cir. Jan. 28, 2020) (weighing; disqualified; same lawyers and integrated operations);
Dr. Falk Pharma GmbH and Valeant v. Mylan Pharm., Inc., 2019 WL 692670 (Fed. Cir. Feb. 20, 2019) (weighing; disqualified; same lawyers, etc.; OCG also involved);
GSI Commerce Solutions, Inc. v. BabyCenter, L.L.C., 2010 U.S. App. LEXIS 17182 (2d Cir. Aug. 18, 2010) (weighing; disqualified; same law department and other shared facilities and personnel);
The Hartford Steam Boiler Inspection & Ins. Co. v. Campbell, No. 4:20-cv-00117-SEB-DML (S.D. Ind. Dec. 16, 2020) (weighing);
SLF Holdings, LLC v. Uniti Fiber Holdings, Inc., 2019 WL 4143296 (S.D. Ala. Aug. 30, 2019) (parent-sub.; weighing; no disqualification);
Boynton Beach Firefighters' Pension Fund v. HCP, Inc., 2017 WL 5759361 (N.D. Ohio Nov. 28, 2017) (weighing; no disqualification);
Atlantic Specialty Ins. Co. v. Premera Blue Cross, 2016 WL 1615430 (W.D. Wash. April 22, 2016) ("brother-sister;" weighing; insurance claims handling; disqualified);
Lennar Mare, LLC v. Steadfast Ins. Co., 2015 WL 1540638 (E.D. Cal. April 7, 2015) (weighing - disqualified);
Standard Retirement Servs., Inc. v. Ky. Bancshares, Inc., 2014
U.S. Dist. LEXIS 136409 (E.D. Ky. Sept. 24, 2014) (weighing; no disqualification; emphasized information);
Heartland Mem'l Hosp., LLC v. McGuireWoods, LLP, 2012 U.S. Dist. LEXIS 129203 (N.D. Ind. Sept. 11, 2012) (subsidiary cannot sue lawyer for parent); FDIC v. Commonwealth Land Title Ins. Co., 2012 U.S. Dist. LEXIS 127247 (N.D. Ohio Sept. 7, 2012) (no disqualification; used different lawyers);
Title Ins. Co. v. St. Johns Bank & Trust Co., 2009 U.S. Dist. LEXIS 87151 (E.D. Mo. Sept. 22, 2009) (weighing; brother-sister context; firm disqualified);
Cliff Sales Co. v. Amer. Steamship Co., 2007 U.S. Dist. LEXIS 74342 (N.D. Ohio Oct. 4, 2007) (court applied weighing test, found close relationship, but denied disqualification because two month conflict did not harm client);
iSmart Int’l. Ltd. v. I-Docsecure, LLC, 2006 U.S. Dist. LEXIS 77323 (N.D. Cal. Oct. 12, 2006) (weighing; "close case," but no disqualification because no showing of use of confidences);
Jones v. Rabanco, Ltd., 2006 U.S. Dist. LEXIS 53766 (W.D. Wash. Aug. 3, 2006) (weighing test; companies shared employees and worked out of same location; "one" for conflicts purposes);
Snapping Shoals Electric Membership Corp. v. RLI Ins. Corp., 2006 U.S. Dist. LEXIS 45226 (N.D. Ga. July 5, 2006) ("reverse order" corporate family case; law firm disqualified in former client context);
Robinson v. Bodoff, 382 F. Supp. 2d 229 (D. Mass. 2005) (discussed no test; uncritical acceptance of different entities);
Eastman Kodak Co. v. Sony Corp., 2004 WL 2984297 (W.D.N.Y. Dec. 27, 2004) (weighing);
Certain Underwriters at Lloyd's v. Argonaut Ins. Co., 264 F. Supp. 2d 914 (N.D. Cal. 2003) (weighing);
Discotrade Ltd. v. Wyeth-Ayerst Int'l. Inc., 200 F. Supp. 2d 355 (S.D.N.Y. May 8, 2002) ("sister-sister;" weighing);
JPMorgan Chase Bank v. Liberty Mutual Ins. Co., 189 F. Supp. 2d 20 (S.D.N.Y. 2002) (weighing);
Colorpix Systems of America v. Broan Mfg. Co., 131 F. Supp. 2d 1499 (D. Conn. 2001) (weighing - court disqualified firm - impressed that same in-house lawyer involved for parent and subsidiary);
Gen-Cor, LLC v. Buckeye Corrugated, Inc., 111 F. Supp. 2d 1049 (S.D. Ind. 2000) (bright line);
Travelers Indem. Co. v. Gerling Global Reinsurance Corp., 2000 U.S. Dist. LEXIS 11639 (S.D.N.Y. 2000) (weighing - sister-sister corporations - note
Stratagem below);
Ramada Franchise Systems, Inc. v. Hotel of Gainsville Associates, 988 F. Supp. 1460 (N.D. Ga. 1997) (weighing);
Reuben H. Donnelley Corp. v. Sprint Publishing and Advertising, Inc., 1996 U.S. Dist. LEXIS 2363 (N.D. Ill. 1996) (weighing; court noted same in-house lawyer not involved in both matters);
Alcan International Ltd. v. S.A. Day Mfg. Co., Inc., 176 F.R.D. 75 (W.D.N.Y. 1996) (court allowed a firm to be adverse to a company even though the firm was representing employees of that company's sister company);
Apex Oil Co. v. Wickland Oil Co., 1995 U.S. Dist. LEXIS 6398 (E.D. Cal. 1995) (weighing; alter ego);
Vanderveer Group, Inc. v. Petruny, 1993 U.S. Dist. LEXIS 13614 (E.D. Pa. 1993) (weighing);
Baxter Diagnostics, Inc. v. AVL Scientific Corp., 798 F. Supp. 612 (C.D. Cal. 1992) (seemed to apply a weighing test);
Teradyne, Inc. v. Hewlett-Packard Co., 1991 U.S Dist. LEXIS 8363 (N.D. Cal. 1991) (weighing);
Stratagem Dev. Corp. v. Heron Int’l. N.V., 756 F. Supp. 789 (S.D.N.Y. 1991) (bright line - parent-subsidiary);
Gould, Inc. v. Mitsui Mining & Smelting Co., 738 F. Supp. 1121 (N.D. Ohio 1990) (weighing);
Hartford Accident & Indem. Co. v. RJR Nabisco, Inc., 721 F. Supp. 534 (S.D.N.Y. 1989) (weighing);
Pennwalt Corp. v. Plough, Inc., 85 F.R.D. 264 (D. Del. 1980) (bright line);
URS Corp. v. Earth Tech., Inc., 2006 Cal. App. Unpub. LEXIS 11349 (Cal. App. Dec. 19, 2006) (weighing, but companies shared same law department, thus, disqualification);
Morrison Knudsen Corp. v. Hancock, Rothert & Bunshoft, 81 Cal. Rptr. 2d 425 (Cal. App. 1999) (weighing; court noted possible prejudice because of confidential information obtained in one matter that might be used in the other);
Brooklyn Navy Yard Cogeneration Partners L.P. v. Superior Court, 70 Cal Rptr. 2d 419 (Cal. App. 1997) (weighing; alter ego);
McKesson Information Solutions, Inc. v. Duane Morris LLP, No. 2006CV121110 (Super. Ct. Fulton Co. Ga. Nov. 8, 2006) (weighing);
McCourt Co. v. FPC Properties, Inc, 434 N.E.2d 1234 (Mass. 1982) (bright line);
Brooklyn Navy Yard Cogeneration Partners, L.P. v. PMNC, a Joint Venture, 679 N.Y.S.2d 312 (N.Y. App. Div. 1998) (weighing);
McKenna v. Gammon Gold Inc., 2009 CanLII 79 (Super. Ct. Ont. Jan. 6, 2009) (weighing; applied traditional alter ego test);
Savanna Energy Services Corp. v. CanElson Drilling Inc., 2010 ABQB 645 (Alb. Ct. Q.B. Oct. 8, 2010) (followed McKenna).
"No Harm, No Foul." HLP Props., LLC v. Con. Ed. Co. of N.Y., Inc., 2014 U.S. Dist.
LEXIS 147416 (S.D.N.Y. Oct. 16, 2014). Law Firm found itself
representing Parent Co. on corporate matters and against Subsidiary Co.
on a long-running environmental matter (this case). Sub Co. moved to
disqualify Law Firm in this case. In this opinion the court denied the
motion. First, the court found that Parent and Sub were one for
conflicts purposes, noting, among other factors, that they shared a law
department. In effect, the court applied a balancing/“no harm, no foul”
test. First, the court noted how prejudiced Sub’s client would be if it
lost Law Firm in this case. Second, the court noted that different
offices and different lawyers were involved at Law Firm and that there
was no sharing of Parent’s information. Though ruling for Law Firm, the
court said that Law Firm’s failure to obtain waivers from Sub and Parent
when it began representing Parent was “troubling.”
Another "No Harm, No Foul" Case. Gartner, Inc. v. HCC Specialty Underwriters, Inc., 2022 WL 131179
(S.D.N.Y. Jan. 14, 2022). Law Firm is a verein. Gartner is a corporate
family. One part of the verein represented a Gartner entity in
Australia. Another part of the verein represented several insurance
entities against another Gartner entity ("This Case"). In This Case
Gartner moved to disqualify the part of the Law Firm verein opposing it.
In this opinion the district judge denied the motion. First, Law Firm
did not raise the verein structure as a defense to the motion, and the
court treated Law Firm as one for purposes of the motion. Second, the
court found that the Gartner family had enough operational connections
that it should be treated as one for purposes of the motion. Thus, under
traditional analyses, the court might well have granted the motion to
disqualify. However, the court did a "no harm, no foul" (our term)
analysis and concluded that, on balance, it made sense for Law Firm to
stay in this case. Among factors weighing in favor of this result was
the screening by Law Firm of relevant information, the questionable
timing of Gartner's motion, and the prejudice to the insurance entities
that would result from disqualification.
Zappia v. Myovant Sciences Ltd., 2023 WL 8945267 (S.D.N.Y. Dec.
28, 2023). Class action based upon S.E.C. Rule 14a-9. Big Company had a
majority interest in Smaller Company and purchased the remainder of
Smaller Company's shares. Smaller Company created a special committee
"for the acquisition." Law Firm was hired to represent the special
committee. The proxy statement for the acquisition stated that Law Firm
had no conflicts and was "independent." The primary basis for this case
is that Law Firm had conflicts. Both companies were members of a large
and prominent Japanese keiretsu. Law Firm had, from time-to-time, represented other members of the keiretsu.
In this opinion the court granted Defendants' motion to dismiss. The
analysis was fact-intensive. Briefly, the court found that the
relationships of the various companies were attenuated, that all the
players were very sophisticated, and that information about the
relationships of Law Firm and members of the keiretsu was publicly available.
"Sister" Companies." Int'l Designs Corp., LLC v. Hair Air Int'l, Inc.,
No. CV 17-8411-GW (C.D. Cal. Feb. 28, 2019). [Note: The following is
based entirely on a Mondaq article, dated March 21, 2019. It is a rare
corporate family case involving two subsidiaries with a common parent.]
The plaintiff in this patent infringement case ("Sub 1") is a subsidiary
of Parent Corp. The law firm representing the defendant ("Law Firm")
represents a different subsidiary of Parent Corp., in another matter
(not this one). The plaintiff moved to disqualify Law Firm. In this
opinion the court denied the motion. We are waiting for the actual
opinion, to confirm the facts, and before commenting on the court's
reasons.
A Twist on Alter Ego. In re Consolidated Fen-Phen Cases, 2003 U.S. Dist. LEXIS 20231 (E.D.N.Y. Nov. 12, 2003). Personal injury plaintiffs “tried to pierce the corporate veil” by showing that the companies in question had earlier been held to be a single entity for conflict-of-interest purposes,
Discotrade Ltd. v. Wyeth Ayerst Int’l. Inc., 200 F. Supp. 2d 355 (S.D.N.Y. 2002). The court disagreed, quoting from Discotrade that a conflict of interest analysis is “not nearly as rigorous as an ‘alter ego’ or ‘piercing the corporate veil’ analysis.”
NetRatings, Inc. v. The NPD Group, Inc., 2003 U.S. Dist. LEXIS 23543 (D. Del. Dec. 11, 2003). NPD moved to disqualify NetRatings’ General Counsel, Alan Shapiro, because Shapiro had previously been General Counsel at JMM. The court characterizes JMM as a “subsidiary” of NPD; however, JMM is a public company with “many shareholders” other than NPD. NPD is not a public company. Tod Johnson was Chairman of both NPD and JMM. In support of the motion to disqualify, Johnson submitted an affidavit that said that when Shapiro was General Counsel of JMM, Shapiro discussed strategy with him about a related case between JMM and NetRatings. The court denied the motion, on the basis that Shapiro was never counsel for NPD. The court also took a stab at Johnson, saying that it would have been wrongful for him to use JMM's resources on behalf of NPD, to the detriment of JMM's other shareholders. Thus, he should have had no expectation that Shapiro was acting on behalf of NPD.
What about Mere "Controlling Interest"? Weil, Gotshal & Manges v. Fashion Boutique of Short Hills, Inc., 780 N.Y.S.2d 593 (N.Y. App. 2004). Law Firm was suing one company while representing another company, which had a "controlling interest" in the first company. Parties and court seemed to believe that was impermissible.
"Affiliates" or "Successors." Waid v. Eighth Judicial District Court, 119 P.3d 1219 (Nev. 2005).
University/Hospital Relationship. Hirsch v. Columbia University, 293 F. Supp. 2d 372 (S.D.N.Y. 2003).
Engagement Letter Important. Avocent Redmond Corp. v. Rose Electronics, 491 F. Supp. 2d 1000 (W.D. Wash. 2007). Law Firm represented the defendants in this case. Law Firm formerly represented a subsidiary of Plaintiff. For that reason Plaintiff moved to disqualify Law Firm. In this opinion the court granted the motion. The court resolved the corporate family issue by looking at the engagement letter between Law Firm and Plaintiff’s subsidiary, which said that Law Firm represented “[client/subsidiary], a wholly owned subsidiary of [Plaintiff], and its affiliates.”
Court Relied in Part on Corporate Family Authorities to Disqualify Law Firm. Eleventh St. Loftominium Ass’n v. Wabash Loftominium, L.L.C., 876 N.E.2d 65 (Ill. App. 2007).
Unintended Consequences of “Our Only Client” Language in Retention Agreement.
General Nutrition Corp. v. Gardere Wynne Sewell, LLP, 2008 U.S. Dist. LEXIS 66703 (W.D. Pa. Aug. 12, 2008).
Skycasters LLC v. J.W. Didado Electric, Inc., 2008 Ohio App. LEXIS 4062 (Ohio App. Sept. 24, 2008). Law Firm represented the defendant in this breach of contract case. Law Firm had earlier represented a company not a party to this case in obtaining a zoning change to the plaintiff's property. The non-party company had even earlier been under common ownership with the plaintiff, but was no longer at the time of the zoning change. The plaintiff moved to disqualify Law Firm. The trial court denied the motion, and, in this opinion, the appellate court affirmed.
e2Interactive, Inc. v. Blackhawk Network, Inc., 2010 U.S. Dist. LEXIS 48333 (W.D. Wis. May 17, 2010). Law Firm, one of the firms for plaintiffs in this patent infringement case represented corporate affiliates ("Affiliates") of the defendant in unrelated litigation in Georgia. In undertaking the Georgia litigation in 2007 Law Firm provided a retainer agreement that included an advance conflict waiver and and agreement that the Georgia client would not deem its affiliates as clients of law firm ("Corporate Family Provision"). In-house counsel for Affiliates struck both provisions. In 2009 Law Firm proposed a fee change in the Georgia litigation and forwarded to Affiliates another retainer agreement containing both of the foregoing provisions. For some reason in-house counsel for Affiliates struck the advance waiver but not the Corporate Family Provision. In any event, the defendant in this case moved to disqualify Law Firm in this case. In this case the magistrate judge denied the motion. The magistrate judge held, in effect, that the failure to strike the Corporate Family Provision from the 2009 retainer meant that Law Firm could be adverse to Affiliates' affiliates (i.e., the defendant in this case).
Law Firm's Engagement Agreement Excluding "Affiliates" Worked. Franklin Capital Funding v. AKF, Inc., No. 19-cv-13562 (E.D.
Mich. July 2, 2020). In this opinion the court denied plaintiff Franklin
Capital Funding's motion to disqualify defendant's law firm, Varnum.
Plaintiff Franklin Capital Funding is "closely related" to Franklin
Capital Management. (The opinion does not reflect the exact nature of
the relationship.) Avrohom Baum worked for the Franklin Capital entities
and had a meeting with Varnum about representation. Baum provided the
name "Franklin Capital Management," so Varnum could do a conflicts
check. They signed a "master" engagement agreement in Which Franklin
Capital Management was the designated client. The agreement provided
that Varnum would not be representing any of the client's "affiliates."
Later, Varnum showed up as defendants' lawyers in this case. Thus, the
motion to disqualify. Baum claimed that he always assumed that Varnum
was agreeing to represent all the related entities. Basically, the court
put the onus on Baum to question the provision about no representation
of "affiliates" in the engagement agreement, which Baum did not do.
Cascades Branding Innov., LLC v. Walgreen Co.,
2012 U.S. Dist LEXIS 61750 (N.D. Ill. May 3, 2012). Law Firm
represented Co. No. 1, owned by Owner, in litigation. Later Owner,
after selling Co. 1, owned another company (Co. 2), which is the
plaintiff in this suit. Law Firm appeared as counsel for a defendant in
this suit. The plaintiff moved to disqualify Law Firm in this suit.
First, the court held that a lawyer can represent one company and then
oppose another company where they were owned by the same owner but at
different times. But, the court granted disqualification on another
ground, which was a Rule 1.18 matter. A member of Co. 2's current
corporate family had communications with Law Firm about a representation
that related to this case, but was not precisely this case. Law Firm
did not take that case, but wound up representing a defendant in this
case. The court said that the relationship analysis for Rule 1.18
should be "viewed through the prism of Rule 1.9." The analysis about
what was disclosed to Law Firm in these communications was very
fact-intensive. Robt. Bosch Healthcare Sys., Inc. v. Cardiocom, LLC, 2014 U.S. Dist. LEXIS 81296 (N.D. Cal. June 13, 2014). Plaintiff is part of a
family of companies holding medical-related patents (“Bosch Cos.”). For
some years up until March 2014 Law Firm did patent prosecution work for
several Bosch Cos. In 2012 one of the Bosch Cos. sued Cardiocom for
patent infringement. Law Firm appeared for Cardiocom. The Bosch Co. did
not object. In 2013 a Bosch Co. filed this action against Cardiocom for
patent infringement, and Law Firm appeared for Cardiocom. The Bosch Co.
filed a motion to disqualify Law Firm in this case in April 2014. In
this opinion the district judge denied the motion. First, the court held
that the Bosch Co. waited too long to file the motion in this case and
noted that the Bosch Co. never moved in the earlier case. The Bosch Co.
made a lame “our-right-hand-did-not-know-what-our-left-hand-was-doing”
argument, which the court rejected. Second, the court held that the
relationship between the Bosch Cos. Law Firm represented in patent
prosecution work, with the Bosch Co. in this case, was too attenuated to
treat them as one for conflicts purposes. Trip Mate, Inc. v. Stonebridge Cas. Ins. Co.,
2012 U.S. Dist. LEXIS 136340 (W.D. Mo. Sept. 24, 2012). Law Firm does
work for members of a "family" of insurance companies. The court does
not describe the precise nature of the "family." In this case Law Firm
has appeared for a client against members of the "family" that Law Firm
does not currently represent. In this opinion the court denied a motion
to disqualify Law Firm.
Skanska USA Bldg. Inc. v. Atlantic Yards B2 Owner, LLC, 2016 WL
6106652 (N.Y. App. Div. Oct. 20, 2016). Plaintiff, an “international
construction conglomerate,” sued defendants for breaches of a $100
million plus construction contract. Law Firm, which represents
Defendants in this case, represented “two of Plaintiff’s affiliates in
matters in Maryland and Florida.” Plaintiff moved to disqualify Law
Firm. The trial court denied the motion. In this opinion the Appellate
Division affirmed. The court said that the Maryland and Florida matters
were not related to this case, that none of Law Firm’s lawyers on this
case has Plaintiff’s confidential information, and that Plaintiff failed
to show that Law Firm’s screen was “inadequate.”
Freedom Financial Group, Inc. v. Woolley, 2010 Neb. LEXIS 134 (Neb. Nov. 12, 2010). Affiliates of a client do not normally have a cause of action for malpractice for work for the client.
Engagement Letter Key. Keefe Commissary Network, LLC. v. Beazley Ins. Co., Inc., No.
4:20-cv-00176-SNLJ (E.D. Mo. Aug. 12, 2020). Law Firm represents Beazley
in this case. For one week earlier this year, Law Firm represented
members of a corporate family, which family included Plaintiff, Keefe
Commissary. Plaintiff moved to disqualify Law Firm. In this opinion the
court denied the motion. Plaintiff might have had a "hot potato"
argument, but the court passed over that to examine the parties'
engagement letter. It arguably included Plaintiff's corporate parent,
but "nowhere is Keefe Commissary . . . expressly mentioned or tacitly
embraced." Thus, "the representational disclaimer" in the engagement
letter excludes Plaintiff.
Date of Formation of Family Member Was Key. Sempiturno in Motion, LLC v. Cajun 417, LLC, No. 20-681 (E.D. La.
Aug. 25, 2020). The Bader family owns a number of bars and restaurants
in New Orleans. In March 2019 the Baders formed the defendant Cajun.
Cajun operates under the name "House of the Rising Sun." In this suit
Plaintiff claims that "House of the Rising Sun" infringes Plaintiff's
trademarks. Cajun moved to disqualify Plaintiff's law firm ("Law Firm")
because a member of Law Firm earlier had represented the Bader family
and their companies on trademark matters. That representation ended in
2014. In this opinion the court denied the motion. The court held that
Lawyer never represented defendant Cajun because Cajun did not exist
until 2019. Thus, Rule 1.9 did not apply, and the court did not need to
get to the substantial relationship analysis. The court's analysis of
the corporate family issue suggests that had Cajun existed while Lawyer
represented the Bader family, and given the tight-knit nature of the
Bader organization, the court might have disqualified Law Firm.
Jefferson St. Holdings, LLC v. Otter Prods., LLC, 2023 WL 7551560
(D. Col. Nov. 14, 2023). Patent infringement case. Plaintiff moved to
disqualify Defendant's law firm ("Law Firm") under Rule 1.9. In this
18-page opinion the magistrate judge denied the motion. The factual
background is byzantine. The number of cases and authorities cited is
enormous. We have no sense whether this ruling could withstand review. A
couple of highlights: Plaintiff may or may not own the patents
involved. Law Firm had previously represented, not Plaintiff, but a
99%-owned subsidiary of Plaintiff. The engagement letter with the
subsidiary Law Firm said it was representing only the subsidiary and no
other entity. And, so on.
State and Local Ethics Opinions. (See the parenthetical note at The Cases, above. Much the same can be said for the following opinions.) Ala. Op. 1992-20 (1992) (weighing); Cal. State Bar Op. 1989-113 (1990) (weighing; alter ego test); Ill. Op. 95-15 (1996) (weighing); Md. State Bar Op. 87-19 (weighing); Mass. Bar Op. 3 (1992) (weighing, but leaning toward bright line [see McCourt, above]); N.Y. City Op. 2007-03 (Sept. 2007) & 2003-03 (Oct. 2003) (weighing); N.Y. County Bar Op. 684 (1991) (weighing; stresses possibility of misuse of confidences). Pa. Op. 2001-03 (2001) would allow a law firm that represents one subsidiary to be adverse to a another subsidiary of the same parent. N.Y. City Op. 2008-2 (Sept. 2008) discusses the extent to which an in-house lawyer may represent other members of a corporate family.
Rule 4-1.13 of the Florida Rules of Professional Conduct. The Florida Supreme Court amended the Comment to its version of Model Rule 1.13 to adopt the alter ego test. See Comment [12]. See also Comment [13] to D.C. Rule1.7.
Restatement. See § 121, cmt. d.
Treatises. Hazard, Hodes, & Jarvis § 17.9; Rotunda & Dzienkowski § 1.13-7.
Law Reviews. John Steele,
Corporate Affiliate Conflicts: a Reasonable Expectation Test, 29 W. State U. L. Rev. 283 (2002) ; Wolfram,
Corporate Family Conflicts, 2 J. Inst. Study Legal Ethics 296 (1999); Rotunda,
Sister Act: Conflicts of Interest with Sister Corporations, in, Legal Ethics: The Core Issues, 1 J. Inst. Study Legal Ethics 215 (1996); Steele,
Corporate Affiliate Conflicts: A Reasonable Expectations Test, 29 Western St. U.L. Rev. 283 (2002); Kehr,
Who’s the Client, 23 L.A. Law 33 (June 2000).
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