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Law School Case Brief

W. Sugar Coop. v. Archer-Daniels-Midland Co. - 98 F. Supp. 3d 1074 (C.D. Cal. 2015)

Rule:

When evaluating whether a law firm may concurrently represent two clients, even on unrelated matters, it is presumed that the duty of loyalty has been breached and counsel is automatically disqualified, unless full reasonable disclosure is made and both clients knowingly agree in writing to waive the conflict. Because the waiver must be informed, a second waiver may be required if the original waiver insufficiently disclosed the nature of a subsequent conflict. But an advanced waiver of potential conflicts need not specify the exact nature of the future conflict. California law does not require that every possible consequence of a conflict be disclosed for consent to be valid; the inquiry is whether the waiver was fully informed. Whether full disclosure was made and the client made an informed waiver is a fact-specific inquiry that considers the following factors: (1) the breadth of the waiver; (2) the temporal scope of the waiver (whether it waived a current conflict or whether it was intended to waive all conflicts in the future); (3) the quality of the conflicts discussion between the attorney and the client; (4) the specificity of the waiver; (5) the nature of the actual conflict (whether the attorney sought to represent both sides in the same dispute or in unrelated disputes); (6) the sophistication of the client; and (7) the interests of justice.

Facts:

The underlying case arose from false advertising claims relating to the marketing of high-fructose corn syrup (HFCS) pitting the sugar industry against the corn-refining industry. Plaintiffs, Western Sugar Cooperative and others, were sugar industry manufacturers, trade groups, and associations while defendants, Archer-Daniels-Midland Co. (ADM) and others, were manufacturers and trade groups and associations active in the corn and HFCS industry. Plaintiffs, represented by the legacy law firm of Squire Sanders & Dempsey, LLP (Squire Sanders), filed the lawsuit, asserting one cause of action for false advertising under the Lanham Act, alleging that Defendants misled consumers by use of the term "corn sugar." Defendants ADM, Cargill, Ingredion, and Tate & Lyle each filed a counterclaim against Plaintiff the Sugar Association, asserting one cause of action for false advertising in violation of the Lanham Act, alleging that the Sugar Association misrepresented HFCS as unhealthy. After the filing of the suit, the law firms of Patton Boggs LLP (Patton Boggs) and Squire Sanders combined to form Squire Patton Boggs (SPB). SPB remained the Sugar Plaintiffs’ counsel of record. Ingredion and Tate & Lyle filed motions to disqualify SPB from representing the Sugar Plaintiffs SPB was now adverse to both Ingredion and Tate & Lyle—long-standing clients of the legacy firm Patton Boggs.

Issue:

Should SPB be disqualified as Plaintiffs’ counsel?

Answer:

Yes.

Conclusion:

The federal district court held that due to the fact that Tate & Lyle was a current client of SPB, and it simultaneously represented the adverse Sugar Plaintiffs, SPB breached its duty of undivided loyalty to Tate & Lyle. The Court noted that Tate & Lyle Did Not Make an Informed Waiver of SPB’s Concurrent Representation, as the prospective waiver in the Standard Engagement Terms purported to waive conflicts in any matter not substantially related indefinitely, and lacked specificity, i.e., it did not identify a potentially adverse client, the types of potential conflicts, or the nature of the representative matters. The Court averred that SPB’s subsequent termination of its relationship with Tate & Lyle did not cure the conflict because the termination happened after Tate & Lyle would not agree to waive the conflict. Moreover, the Court determined that SPB was subject to disqualification due to its prior representation of Ingredion in matters substantially related to the present action. Taking all of these into consideration, the Court granted the motion to disqualify SPB.

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