Antitrust Law Daily Wrap Up, ANTITRUST—E.D.N.Y.: Law firm disqualification denied in Air Cargo Shipping case, (Feb 24, 2016)

By Edward L. Puzzo, J.D.

Neither class counsel's law firm nor one of their attorneys could be disqualified from representing plaintiffs in an airfreight shipping services price fixing action on the basis that the individual attorney was previously counsel for one of the former defendants in the case, the federal district court in Brooklyn, New York has ruled (In re Air Cargo Shipping Services Antitrust Litigation, February 23, 2016, Pohorelsky, V.).

In this multidistrict class action, charging Air China Cargo and others with conspiring to unlawfully fix prices of airfreight shipping services worldwide in violation of Section 1 of the Sherman Act, the court on February 19, 2016 granted preliminary approval to a $50 million settlement. The settlement class consisted of all persons or entities that purchased airfreight shipping services for shipments to or from the United States directly from any of the defendants or affiliates, at any time during the period from January, 2000 through September, 2006.

In 2006, Robert Kaplan of the law firm of Kaplan Fox & Kilsheimer was appointed as co-counsel for the putative class. George F. Hritz, a member of the law firm of Hogan & Hartson from 2006 to 2010, was lead counsel for Air Canada, one of the defendants in this matter. Hritz signed a joint defense agreement (JDA) with the other defendants during that time.

In 2014, Hritz joined Kaplan Fox & Kilsheimer, class counsel in this matter. His association with Kaplan Fox became known by counsel for defendants, who raised the concern that Kaplan Fox may have improperly received confidential information concerning defendants from Hritz. Subsequently, defendants moved to disqualify both Hritz and Kaplan Fox. They argued that, by virtue of his involvement in joint defense efforts pursuant to the JDA, Hritz obtained confidential information belonging to the defendants which created a conflict of interest that should prevent him from serving as plaintiffs' counsel. They further argued that Hritz’ conflict of interest must be imputed to Kaplan Fox, thus preventing that firm from serving as counsel for the plaintiffs.

Attorney conflict. The court noted that the JDA, upon which the conflict-of-interest argument was made, specified that nothing in it was “deemed to create an attorney-client relationship between any counsel and anyone other than the client of that counsel.” Thus, Hritz had an attorney-client relationship with only one of the original defendants, Air Canada. That defendant was dismissed from this case in 2012, well before Hritz began his association with Kaplan Fox.

In addition, the court continued, the movants were unable to provide proof that Hritz did in fact obtain confidential information from any of the other defendants, even though he had the right to such information under the JDA. Instead, they relied on a presumption that client confidences were shared with him. But such a presumption was inapplicable in the absence of an attorney-client relationship, the court stated.

Firm conflict. Even if, for the sake of argument, movants had been able to establish that Hritz had obtained confidential information concerning the defendants, that would only create a rebuttable resumption that his conflict of interest should be imputed to his new firm. The court noted that there had been a three and one-half year gap between when Hritz last may have obtained confidential information about defendants and the time he joined plaintiff counsel Kaplan Fox. Further, Hritz attested that he could not recall obtaining any confidential information from any of the current defendants. Kaplan Fox also put screening mechanisms in place, barring any internal discussion of this case with Hritz. Thus, the court was satisfied that his current association with Kaplan Fox carried no risk of trial taint, and denied defendants' disqualification motion.

The case is Civil Action No. 1:06-md-01775-BMC-VVP.

Attorneys: Rebecca R. Anzidei (Stein Mitchell Muse Cipollone & Beato LLP) for Yamaha Motor Co., Ltd. and Yamaha Motor Corp. U.S.A., Sunward International Inc. and I-Pulse Co., Ltd. Christopher William Carrion (Wilmer Cutler Pickering Hale & Dorr LLP) for Deutsche Lufthansa AG and Lufthansa Cargo AG. Andrew H. Marks (Crowell & Moring) for Swiss International Air Lines Ltd. Brenda D. Diluigi (Linklaters LLP) for Air France.

Companies: Yamaha Motor Co., Ltd; Yamaha Motor Corp. U.S.A.; Sunward International Inc.; I-Pulse Co., Ltd; Deutsche Lufthansa AG; Lufthansa Cargo AG; Swiss International Air Lines Ltd.; Air France

Cases: Antitrust NewYorkNews