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INORGANIC COATINGS, INC. v. FALBERG

October 3, 1995

INORGANIC COATINGS, INC., Plaintiff,
v.
GREGG FALBERG, THE INTERNATIONAL ZINC, COATINGS & CHEMICAL CORP., and POLYSET CHEMICAL CO., Defendants.



The opinion of the court was delivered by: KELLY

 R.F. KELLY, J.

 OCTOBER 3, 1995

 Before this Court is Defendants' Motion to Disqualify Plaintiff's Counsel from further participation in this action for violation of Rule 4.2 of the Pennsylvania Rules of Professional Conduct and for production of all notes and memoranda relating to the contact giving rise to the alleged violation. Defendants' motion arises from a telephone conversation between Defendant Gregg Falberg and Plaintiff's counsel prior to the filing of the Complaint. Plaintiff, Inorganic Coatings, Inc. ("ICI"), initially commenced this action to recover damages for trademark infringement and violation of its Disclosure Agreement regarding trade secret protection. For the reasons that follow, Defendants' motion will be granted.

 I. BACKGROUND

 On August 19, 1994, counsel for Plaintiff, Ethan Halberstadt, sent a letter to Gregg Falberg, stating that ICI would take appropriate legal action if Falberg and his company, International Zinc, Coatings and Chemical Corp. ("International Zinc"), did not cease certain conduct. On August 24, 1994, Halberstadt drafted the Complaint in this matter.

 On August 25, 1994, Halberstadt was contacted by attorney Leonard Togman on behalf of Gregg Falberg and International Zinc. In addition to discussing the subject matter of the impending litigation, Mr. Togman attempted to resolve matters before suit was instituted. Togman was not successful in obtaining a settlement.

 Later that same day, Halberstadt received a telephone call from Gregg Falberg. Falberg called Halberstadt to again try to settle things without litigation. Halberstadt advised Falberg that it would be best if Halberstadt communicated with Falberg's counsel, but continued speaking with Falberg anyway. The telephone call lasted approximately 90 minutes and consisted of matters relevant to the litigation, including Falberg's relationship with ICI, Falberg's dealings with Defendant Polyset, Falberg's customers, Polyset's manufacturing processes, potential witnesses, and Falberg's opinions of the patents at issue. D-6; D-7. During their conversation, Halberstadt took 24 pages of notes. In the period between Halberstadt's conversation with Falberg and the filing of the Complaint, Halberstadt revised his draft of the Complaint.

 On August 30, 1995, a status conference was held in an attempt to resolve a number of outstanding motions before this Court, including Defendants' Motion To Disqualify Plaintiff's Counsel. At the status conference, Plaintiff's counsel requested, and was granted, a hearing on the matter of disqualification. The hearing was held on September 8, 1995. Oral argument took place on September 15, 1995.

 II. STANDARD

 The Third Circuit has stated that a district court, in exercising its discretionary power,

 
should disqualify an attorney only when it determines, on the facts of the particular case, that disqualification is an appropriate means of enforcing the applicable disciplinary rule. It should consider the ends that the disciplinary rule is designed to serve and any countervailing policies, such as permitting a litigant to retain the counsel of his choice and enabling attorneys to practice without excessive restrictions.

 United States v. Miller, 624 F.2d 1198, 1201 (3d Cir. 1980). "The party seeking to disqualify opposing counsel bears the burden of clearly showing that continued representation would be impermissible." Cohen v. Oasin, 844 F. Supp. 1065, 1067 (E.D. Pa. 1994), citing Commercial Credit ...


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