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Pennwalt Corp. v. Plough, Inc. - 85 F.R.D. 264 (D. Del. 1980)

Rule:

The determination of whether there is a substantial relationship turns on the possibility, or appearance thereof, that confidential information might have been given to the attorney in relation to the matter in which disqualification is sought. The rule thus does not necessarily involve any inquiry into the imponderables involved in the degree of relationship between the two matters but instead involves a realistic appraisal of the possibility that confidences had been disclosed in the one matter which will be harmful to the client in the other. The effect of the Model Code of Prof'l Responsibility Canons is necessarily to restrict the inquiry to the possibility of disclosure; it is not appropriate for the court to inquire into whether actual confidences were disclosed.

Facts:

In 1977, plaintiff Pennwalt Corporation, which manufactured an athlete's foot remedy, became unhappy with the comparative advertising claims made by defendant Plough, Inc. ("Plough") with respect to its athlete's foot remedy. The parties, with in-house and outside legal counsel, including Pennwalt long-standing counsel ("Pennwalt's Counsel"), negotiated a stoppage of the offending advertisements. In 1978, Pennwalt's Counsel represented Scholl, Inc., a shoe manufacturer, in anti-trust litigation. In April 1979, Plough's parent corporation ("Parent") acquired Scholl as a wholly owned subsidiary, thus making Plough and Scholl sister corporations. In early May 1979, Pennwalt's Counsel filed a lawsuit against Plough in federal district court alleging, inter alia, violations of the Lanham Act with respect to its advertisements and comparative claims regarding its foot-care product. In late May 1979, Pennwalt's Counsel learned that the Parent had acquired Scholl. Ultimately, Pennwalt's Counsel withdrew from the Scholl anti-trust litigation, and Plough filed a motion to disqualify Pennwalt's Counsel from the Pennwalt's Lanham Act action against Plough.

Issue:

Did Pennwalt's Counsel violate Canons 4, 5, and 9 of the Model Code of Professional Responsibility?

Answer:

No.

Conclusion:

The court denied Plough's motion for disqualification. The court observed that Pennwalt's Counsel received no confidential information relevant to the instant litigation through its representation of Scholl, Plough's sister corporation, in unrelated anti-trust litigation in a different jurisdiction. Moreover, no conflict of interest had yet existed as of the date of Pennwalt's Counsel's withdraw from that anti-trust litigation. As such, there was no reasonable possibility of improper professional conduct, much less a showing of any specifically identifiable impropriety. Finally, the court ruled, there was nothing in the record to warrant any public suspicion.

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