60 F. Supp. 3d 751
W.D. Tex.2014Background
- NOV sued Omron for infringement of U.S. Patent No. 5,474,142 (the '142 Patent); case filed Aug. 23, 2012; trial set for April 2015 after extensive Markman and discovery activity.
- Omron later disclosed an Invalidity Opinion (prepared by Osha Liang lawyers in 2006 and updated in 2011) as part of an advice-of-counsel defense; that disclosure waived privilege as to communications about the opinion.
- Brian Wunder, formerly of Osha Liang, had been involved at varying levels with Omron matters: substantial work in a separate Canrig litigation and limited participation (mostly CC’ed emails and scheduling) in discussions about a potential NOV suit.
- Wunder joined plaintiff NOV’s counsel firm Raley & Bowick in Jan. 2013; the firm instituted a Chinese wall and Wunder performed no work on the NOV/Omron litigation; he left Raley & Bowick May 2014.
- Omron moved to disqualify Raley & Bowick, asserting Wunder acquired Omron confidences and that conflict should be imputed to the firm under Texas Rule 1.09 and Fifth Circuit precedent; NOV argued no prejudice, late tactical filing, and that Wunder never disclosed confidences to his new firm.
- The court found Wunder had an attorney‑client relationship with Omron and thus (under the substantial-relationship test) would be disqualified, but declined to impute that disqualification to Raley & Bowick after weighing the factual record (affidavits, Chinese wall, no disclosure) and equitable factors (lateness, prejudice to NOV, inability of Omron to identify specific harm).
Issues
| Issue | Plaintiff's Argument (NOV) | Defendant's Argument (Omron) | Held |
|---|---|---|---|
| Whether Wunder’s prior work for Omron creates a conflict disqualifying NOV’s counsel | Wunder did not do substantive work on the '142 patent at Osha Liang and did not disclose confidences to Raley & Bowick; firm screened him; disqualification would prejudice NOV | Wunder acquired Omron confidences while at Osha Liang and that conflict imputes to Raley & Bowick under Texas Rule 1.09 and Fifth Circuit precedent | Wunder personally conflicted, but court denied disqualification of Raley & Bowick after factual review and balancing; imputation not automatic |
| Whether the substantial-relationship test is met between Wunder’s prior work and the present case | NOV: prior matters were different and limited; not substantially related | Omron: prior advice re: potential NOV suit and Canrig litigation are substantially related to current litigation | Court: substantial-relationship test met for both the potential-NOV advice and Canrig work, so Wunder would be disqualified personally |
| Whether an irrebuttable presumption exists that Wunder shared confidences with his new firm (imputation) | NOV: any presumption is rebuttable here; firm provided affidavits and screening | Omron: presumption that migrating lawyer shares confidences with firm is controlling and irrebuttable under Texas law | Court: under Fifth Circuit law such presumption is not irrebuttable; allowed Raley & Bowick to rebut and found rebuttal sufficient |
| Whether disqualification is appropriate given timing and prejudice | NOV: motion is late and would cause severe prejudice and delay; counsel has long familiarity | Omron: timing does not excuse protecting client confidences; disqualification justified if confidences were shared | Court: late stage and heavy prejudice to NOV weigh against disqualification; Omron failed to show specific likely harm |
Key Cases Cited
- In re ProEducation Intern., Inc., 587 F.3d 296 (5th Cir. 2009) (presumption that confidences are shared by firm is not automatically irrebuttable; migrating attorney may rebut imputation under federal law)
- In re Dresser Indus., Inc., 972 F.2d 540 (5th Cir. 1992) (motions to disqualify are substantive and governed by federal standards informed by ethical rules)
- In re American Airlines, Inc., 972 F.2d 605 (5th Cir. 1992) (articulates substantial-relationship test and discusses presumptions about acquired confidences)
- Corrugated Container Antitrust Litig., 659 F.2d 1341 (5th Cir. 1981) (substantial-relationship test; presumption that confidences were disclosed to former counsel is irrebuttable; imputation may be applied depending on facts)
- U.S. Fire Ins. Co. v. United States, 50 F.3d 1304 (5th Cir. 1995) (disqualification not to be mechanically applied; must balance litigant’s right to counsel)
- Woods v. Covington Cnty. Bank, 537 F.2d 804 (5th Cir. 1976) (ethical canons are guides; courts must balance public interest and right to counsel)
- In re Columbia Valley Healthcare Sys., L.P., 320 S.W.3d 819 (Tex. 2010) (Texas Supreme Court: presumption that migrating lawyer shares confidences with new firm is irrebuttable under Texas law)