Opinion
CIVIL ACTION NO. 02-8609
March 26, 2004
MEMORANDUM — ORDER
Defendant seeks to disqualify plaintiff's counsel from representing plaintiff in this action.
Plaintiff's counsel, Berger Montague, P.C., is also one of three co-lead counsel in the class action litigation known as In re High Fructose Corn Syrup Antitrust Litigation, MDL No. 1087, Master File No. 95-1477 (C.D. Ill.). Defendant is not a named plaintiff in that action, but is a member of the class of plaintiffs. Defendant contends that because plaintiff's counsel represents the class, the Berger firm is prohibited from representing the plaintiff in this action under Rule 1.7 of the Pennsylvania Rules of Professional Conduct. That rule states, in pertinent part, that "a lawyer shall not represent a client if the representation of that client will be directly adverse to another client, . . ."
Both parties agree that if Kraft were a named plaintiff in the class action there would clearly be a conflict and the Berger firm would be disqualified. The issue then becomes whether the fact that Kraft is an unnamed party, but a class member, in the Corn Syrup Litigation changes the analysis. The class consists of all direct purchasers of high fructose corn syrup during the period June, 1989 through June, 1995. The class exceeds 1,000 members. (Montague declaration ¶ 5-7). Plaintiff submits that during the class period Kraft purchased approximately 1% of the total purchases of the class from the defendants. Kraft responds that although this may be true, there are two grades of high fructose corn syrup involved in the litigation and that the sales volume for HFCS 42 by Kraft is considerably higher than 1%, as opposed to the sales volume for HFCS 55. The litigation has been ongoing since at least 1995. Settlements have been reached with three of the five defendants and a trial is scheduled for later this year with reference to the remaining defendants. The Berger firm has a very substantial involvement in the litigation, although very limited involvement with Kraft.
The only substantial involvement of the Berger firm with Kraft in the Corn Syrup Litigation occurred when it assisted in the deposition preparation of three Kraft employees who were subpoenaed by the defendants. Kenneth Adams, Esquire also appeared at each deposition as outside counsel for Kraft and its witnesses and participated in the depositions. The Berger firm submits that when the Kraft employees were interviewed to prepare for their depositions, they did not disclose any confidential information and that whatever information they disclosed was subsequently revealed during their depositions, where they were represented by separate outside counsel. Kraft concedes that the witnesses did not disclose any confidential information to the Berger firm which would be in any way relevant to this litigation.
In addition to the depositions, in 1996 representatives of the Berger firm spoke with Kraft associate general counsel to attempt to locate two of the former Kraft employees for purposes of testifying at trial. Since that time, on August 5, 2003, house counsel for Kraft advised one of Berger's co-lead counsel in the class action that Kraft did not intend to be involved in the class action and did not desire to even receive updates as to the status of the litigation. Thus, neither Kraft nor its counsel is playing any role at all, let alone a crucial role, in trial preparation or the trial of the Corn Syrup Litigation.
The Corn Syrup Litigation involves claims by the food and beverage manufacturers against the high fructose corn syrup producers relating to the manufacturing, sale and distribution of HFCS. The instant action, on the other hand, involves allegations of racial discrimination at a former Nabisco. plant in Philadelphia that was not integrated into Kraft until 2001 when Kraft purchased Nabisco. Thus, it is clear, that none of the information in either case, whether confidential or not, would be relevant to the other action. There is absolutely no factual or legal relationship between the present action and the Corn Syrup Litigation.
Kraft is entitled to the loyalty of the Berger firm in the class action litigation. However, it submits no basis on which the court can infer that it would not receive that loyalty even though the Berger firm represents plaintiff in this litigation. Kraft is a member of the class in the Corn Syrup Litigation and presumably all members of the class will be treated equally when the case is either settled or tried. Kraft is not a major player in the Corn Syrup Litigation and, indeed, has stated that it did not desire to actively participate in the litigation at all.
In Lazy Oil Co. v. Witco. 166 F.3d 581 (3d Cir. 1999) one of the cases addressing the most analogous situation, the Third Circuit adopted a balancing approach to motions to remove or disqualify class counsel on conflict of interest grounds once former class representatives became objectors and therefore adversaries to class counsel's remaining clients. The court noted approvingly the statement that "strict application of rules on attorney conduct that were designed with simpler litigation in mind might make the class action device unworkable in many cases. . . ." The court agreed with the concerns of Judge Adams in his concurrence in In re Corn Derivatives Antitrust Litigation, 784 F.2d 157 (3d Cir. 1984) that the rules for attorney disqualification could not be "mechanically transposed" to the class action context and that the more appropriate means of addressing such issues was through "a balancing process."
The Third Circuit then noted that in applying the balancing process the district court may consider factors discussed in In re "Agent Orange" Product Liability Litigation, 800 F.2d 14 (2nd Cir. 1986) and in both the majority and concurring opinions in Corn Derivatives. The Agent Orange court listed a number of relevant factors in this balancing inquiry including: the information in the attorney's possession, the availability of the information elsewhere, the importance of this information to the disputed issues, actual prejudice that would flow from the attorney's possession of the information, the cost to class members of obtaining new counsel and the ease with which they might do so, the complexity of the litigation and the time needed for new counsel to familiarize himself with the case.
In the Corn Derivatives litigation, Judge Adams, in his concurrence noted that "treating the relations between counsel and named and absent class members as identical to an attorney's relationship with individual clients outside the class action context would lead courts to find a conflict of interest in many class actions and to call for the typical remedial responses, such as disqualification." He stated that "relevant considerations include the amount and nature of the information that has been proffered to the attorney, its availability elsewhere, its importance to the question at issue, such as settlement, as well as actual prejudice that may flow from that information." . . . These factors should then be balanced against the cost to the opposing party, and the possibility of securing new counsel. . . ."
Applying these factors to the extent they apply to this action to the undisputed facts in this action as I have set them forth, I have little difficulty in denying the motion to disqualify. Kraft is a minor player in a class of more than 1,000 members in the Corn Syrup Litigation. The Berger firm has had extremely limited contact with Kraft during the course of that litigation and received no information, confidential or otherwise, from Kraft which would be in any way relevant to this litigation. Kraft has disclaimed any active role in the Corn Syrup Litigation and there is no factual or legal relationship between the present action and that litigation. Finally, Kraft has suggested no basis on which it will be prejudiced by the Berger firm's representation in this action.
An appropriate order follows.