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IMAGE TECH. SERVS. v. EASTMAN KODAK CO.

May 17, 1993

IMAGE TECHNICAL SERVICES, INC., et al., Plaintiffs
v.
EASTMAN KODAK COMPANY, Defendant.



The opinion of the court was delivered by: BARBARA A. CAULFIELD

 Defendant Eastman Kodak Company ("Kodak") brings a motion to disqualify plaintiffs' counsel, the Coudert Brothers Law Firm ("Coudert"). Upon consideration of the briefs and arguments of the parties, and good cause appearing therefrom, Kodak's motion to disqualify the Coudert firm is GRANTED.

 FACTS AND BACKGROUND

 The Coudert firm has provided legal services to Eastman Chemical, one of Kodak's three major operating divisions, for the last six years. These services have covered a vast array of legal matters, including competition law questions, joint ventures, contract issues, tax issues, and questions concerning environmental law. Coudert preformed this work out of the Washington, D.C., New York, Paris, Brussels, Hong Kong and Singapore offices. For purposes of this motion, it is undisputed that the work performed by Coudert for Eastman Chemicals did not involve issues directly relevant to this litigation. *fn1"

 The facts and procedural background of this litigation have been amply recorded in the orders issued by this court, as well as the decisions of the Ninth Circuit Court of Appeals *fn2" and the United States Supreme Court. *fn3" For purposes of the present motion, it is sufficient to note that in 1991, Kodak appealed to the United States Supreme Court a judgment of the Ninth Circuit reversing and remanding the order of Judge William Schwarzer dismissing plaintiffs' federal antitrust claims. Coudert was asked by James Hennefer, counsel for the ISOs, to participate in the briefing before the Supreme Court. The ISOs primary contact with the Coudert firm was Douglas Rosenthal. A conflicts check performed by Coudert disclosed that the firm had an ongoing relationship with Eastman Chemical and Kodak Pathe. The work for Eastman Chemical was performed primarily by Coudert's Hong Kong office. Mr. Rosenthal asked Owen Nee, the managing partner of Coudert's Hong Kong Office, to disclose the conflict to the Eastman Chemical representatives, and obtain their consent to Coudert's representation of the ISOs.

 Mr. Nee planned to discuss the conflict during a separately arranged meeting on other business with Barry Falin, Director of Business Development for the Filter Products Organization of Eastman Chemicals, and Michael Chung, Manager of the Filter Products Organization. In preparation for that meeting, Mr. Nee discussed with Mr. Rosenthal what information was to be given to the Eastman Chemical business representatives. Mr. Rosenthal telefaxed Mr. Nee on July 13, 1991 as follows:

 
I have seen your fax of today and have spoken both to Ken Katz and Steve Hudspeth. I am authorized by both of them to affirm we trust your judgment about what to say, in passing, about our involvement in the Kodak Supreme Court case, when you meet with officials of Kodak Chemical dealing with China this Monday.
 
As a small modification to your proposed statement, might I suggest the following:
 
Our San Francisco office is going to participate in a brief contrary to the interests of the Kodak Corporation in the Supreme Court Appeal; and after review of the matter we have determined that the China representation is sufficiently distant that the actions of the San Francisco office do not constitute a conflict of interest. (emphasis added) *fn4"

 On September 20, 1991, Kodak was served with Respondent's Brief in the U.S. Supreme Court appeal. The brief identified Coudert as co-counsel for the ISOs. There is some dispute about when Coudert disclosed to Kodak that it would participate in the district court trial on remand. However, the parties agree that on July 30, 1992, Gordon Spivack of Coudert's New York office informed Gary Vangraafeiland, Senior Vice President and General Counsel of Eastman Kodak, that Coudert would participate in the preparation and trial of the ISO case in this court. Coudert filed a formal notice of appearance in this court on October 9, 1992.

 DISCUSSION

 A. Applicable Rules of Conduct

 Rule 110-3 of the Local Rules of Court for the Northern District of California provides that the conduct of counsel before this court is governed by "the standards of professional conduct required of members of the State Bar of California and contained in the State Bar Act, the Rules of Professional Conduct of the State Bar of California, and decisions of any court applicable thereto." *fn5" Under California law, the decision whether or not to disqualify counsel is ...


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