to sell the settlement proposal which his attorney had failed to do earlier that same day. Halberstadt did advise Falberg that it would be best if Halberstadt spoke to his attorney, but, nevertheless, continued the conversation with Falberg, despite the ethical ramifications. This ex parte communication lasted for over 90 minutes and related to numerous matters pertinent to 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. Thus, there is sufficient evidence to conclude that Halberstadt's hour and a half telephone conversation discussing the merits of the impending lawsuit with the opposing party, without the presence of his counsel, would severely prejudice the Defendants, and disqualification is required. See Papanicolaou v. Chase Manhattan Bank, N.A., 720 F. Supp. 1080 (S.D.N.Y. 1989) (district court held that conduct of attorney in discussing merits of case with opposing party for one and one-half hours outside presence of counsel warranted disqualification).
Plaintiff has argued that "the record is silent with respect to any actual prejudice which would be suffered by the defendants as a result of continued representation." Plaintiff's Supplemental Memorandum, p.7. However, Defendants have pointed to several examples of interpretation, analysis, and strategy that Falberg discussed with Halberstadt during the August 25th telephone conversation. Defendants' Reply Memorandum, p. 15; D-6; D-7. Plaintiff responds that there was nothing learned from the subject conversation which has or could influence this litigation and which was not already known to Mr. Halberstadt or since made available to him. Thus, Plaintiff concludes that Falberg did not suffer the prejudice that might support disqualification.
In Papanicolaou v. Chase Manhattan Bank, 720 F. Supp. 1080 (S.D.N.Y. 1989), similar arguments were made regarding the prejudice necessary to support disqualification. Id. at 1085. The Court cited Zeller v. Bogue Electric Manufacturing Corp., 71 Civ. 5502 (S.D.N.Y. Mar. 11, 1975), for the proposition that disqualification is required where the substance of the ex parte discussion "went to the nub of the lawsuit . . . [in order] 'to protect [the adverse party] from any unfair advantage [the attorney] might have achieved by the improper [contact].'" Papanicolaou, 720 F. Supp. at 1085. In addition, the court stated that the rule of professional conduct "quite clearly puts the responsibility on the attorney to avoid such [communications]." Zeller, supra, slip op. at 6. Furthermore, the court found little to distinguish the attorney's violation of Rule 4.2 from violations of Canons 4 and 5, which require disqualification. Papanicolaou, 720 F. Supp. at 1085. The same is true for the case at hand.
Plaintiff also argues "that ICI would clearly be separated from its counsel of choice and prejudiced if the disqualification was ordered." Plaintiff's Supplemental Memorandum, p. 7. While this court recognizes the importance of ICI's right to counsel of its choice and that Halberstadt and his law firm have been engaged for over a year in the investigation and preparation of this lawsuit, "these considerations must yield, however, to considerations of ethics which run to the very integrity of our judicial process." Hull v. Celanese Corp., 513 F.2d 568, 572 (2d Cir. 1975); see also Commonwealth Ins. Co. v. Graphix Hot Line, Inc., 808 F. Supp. 1200, 1203 (E.D. Pa. 1992). Moreover, Defendants point out that disqualification of Plaintiff's counsel will not adversely affect ICI because ICI has recently retained Duane, Morris & Heckscher as its counsel in a second suit against Defendants before this Court, alleging patent infringement, based on the same facts in this case. Defendants Reply Brief, p.4. Thus, while "the United States District Court of the Eastern District of Pennsylvania has recognized that a party's 'choice of counsel is entitled to substantial deference,'"
such a factor is of limited concern under the particular facts of this case.
Lastly, Defendants request production of all notes and memoranda relating to Halberstadt's ex parte contact giving rise to the Rule 4.2 violation.
"This type of equitable relief has been ordered where, as here, a party circumvents discovery procedures in order to gain an unfair advantage in litigation.
A court has authority to prohibit or remedy litigation practices which raise ethical concerns or may constitute ethical violations." Kligman, 737 F. Supp. at 329 (citations omitted). Such a remedial measure is appropriate in this case.
Based on the above, Defendants' Motion to Disqualify Plaintiff's Counsel (Halberstadt and his law firm) from further participation in this action for violation of Rule 4.2 of the Pennsylvania Rules of Professional Conduct is granted. Plaintiff and its counsel will also be required to produce all notes and memoranda related to the ex parte contact with Defendant Gregg Falberg. In addition, this Court will allow ICI ten days to obtain new counsel, which counsel will certify that it does not have access to the information obtained pursuant to the unethical communication. Finally, this court will seal all of the records containing reference to the unethical communication.
An appropriate order will be entered.
AND NOW, this 3rd day of October, 1995, upon consideration of Defendants' Motion to Disqualify Plaintiff's Counsel 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 violation, and Plaintiff's response thereto, and following a hearing and argument thereon, it is hereby ORDERED:
1. Defendants' Motion to Disqualify Plaintiff's Counsel, Ethan Halberstadt, Esquire, and the law firm of Powell, Trachtman, Logan, Carrle & Bowman, P.C., is GRANTED. Within ten (10) days of the date this Order is filed Plaintiff's counsel will withdraw from this case and new counsel for Plaintiff Inorganic Coatings, Inc. ("ICI"), shall enter its appearance and certify that it does not have access to the information obtained pursuant to the unethical communication at issue;
2. Defendants' Motion to Compel the production of all evidence obtained through Mr. Halberstadt's ex parte communication with Defendant Gregg Falberg is GRANTED. Within ten (10) days of the date this Order is filed, Plaintiff and its counsel shall produce all notes and memoranda relating to such ex parte communication and all of the records containing reference to the unethical contact shall be sealed; and
3. Plaintiff's counsel shall have an additional ten (10) days to turn over Plaintiff ICI's file to its new counsel.
BY THE COURT:
ROBERT F. KELLY, J.