Monday, May 2, 2011

Another Brick in the Ethical Wall -- California Federal Court Upholds Ethical Screen

As noted by Hinshaw & Culbertson, The U.S. District Court for the Northern District of California just upheld an ethical screen in the case of a conflict stemming from a lawyer's lateral move. [See details re: Openwave Systems, Inc. v. Myriad France S.A.S., Slip Copy, 2011 WL 1225978 (N.D. Cal. 2011)]

The court noted that there was no reason to believe any confidential information had been shared, and that the firm had put an effective ethical wall in place. It: "(1) distributed a screening memorandum expressly prohibiting discussion of confidential matters to all involved personnel; (2) secured all papers and files; (3) labeled all paper documents with a statement regarding the ethical wall; and (4) limited access to electronic files to only the 'core group of professionals and support staff'"

In its own commentary, Hinshaw notes that this case adds momentum to the pro-screening attitudes which made news last year in Kirk v. The First American Title Insurance Company:
  • "Until 2010 it was not clear when, if ever, a conflicted lawyer could be screened in California for purposes of avoiding disqualification... The present opinion marks perhaps the first extensive foray into the issue of screening by a California federal court since Kirk. Although federal courts are not technically bound to apply state law on the issue of disqualification, the Northern District chose to apply Kirk. The opinion is also notable because it, unlike Kirk, involved a more standard former-client conflict that arose from a lawyer switching firms."
In his denial of this recent motion, the district judge essentially called "shenanigans" against counsel arguing for disqualification, writing:
  • "Too much money is being wasted these days on tactical motions to disqualify."
  • Myriad's motion—given the minute likelihood of an actual breach of confidentiality, its strategic timing, and the delay in its filing—appears to be motivated by a desire to derail an upcoming summary judgment motion. In fact, despite having knowledge of the conflict for months, Myriad filed the instant motion just two days after Openwave sought leave to file for summary judgment.

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