[textbook]Traversing the Ethical Minefield Problems, Law, and Professional Responsibility by Susan R. Martyn (z-lib.org)(1) (1)

Jonathan W. FELDMAN, United States Magistrate Judge.
Sometimes a case will present an issue that requires a court to choose between the lesser
of two unfair results. This is one of those cases. . . .
Founded in Rochester, Eastman Kodak Company (hereinafter Kodak) is the area’s
largest private employer. Kodak’s important and widespread presence in our community
inevitably results in the company becoming involved in a myriad of court proceedings in
both state and federal courts. These lawsuits run the gamut, from intellectual property
cases, to contract actions, to employment discrimination claims. Woods Oviatt Gilman,
LLP (hereinafter Woods Oviatt) is one of Rochester’s oldest law firms and has an active
litigation practice in both state and federal courts. Woods Oviatt’s business model
intentionally seeks to avoid having Kodak as a client. This business decision has obvious
benefits to Woods Oviatt, as it allows the firm to attract and represent clients who may
have interests adverse to Kodak, without offending conflict of interest rules associated with
the practice of law. The instant dispute pays tribute to the difficult conflict problem created
when an otherwise legitimate corporate acquisition by Kodak results in Kodak becoming an
uninvited client of Woods Oviatt.
For several years, Woods Oviatt has represented Heidelberg Digital LLC (hereinafter
Heidelberg). 1 Indeed, Heidelberg chose Woods Oviatt as their counsel because, among
other things, the law firm could represent Heidelberg in its business dealings with Kodak.
Among the many matters Woods Oviatt handled for Heidelberg were two employment
discrimination lawsuits, one pending in this Court (Jackson v. Heidelberg) and the other
pending in New York State Supreme Court (McEwen v. Heidelberg). . . .
In May 1, 2004 Kodak acquired Heidelberg. There is no dispute that Woods Oviatt
was aware of the Kodak-Heidelberg transaction before it occurred. . . Following Kodak’s
acquisition of Heidelberg, Woods Oviatt continued to act as defense counsel in the Jackson
and McEwen cases and continued to bill for legal services rendered in those cases. 3
In July 2004, William G. Bauer, a partner at Woods Oviatt, entered an appearance as
local counsel in two separate cases currently pending in this Court. In both cases Kodak is
the opposing litigant. One of the cases (Kodak v. Sony Corporation) is a patent
infringement suit. The other (Employees Committed for Justice (“ECJ”) v. Kodak) is a
class action complaint alleging, inter alia, that “Kodak has engaged in an ongoing pattern
and practice of discrimination against its African-American employees.” According to
Kodak, Ms. McEwen is a putative member of the potential class in the ECJ v. Kodak case.
After the May acquisition of Heidelberg, Kodak’s legal department assumed
responsibility for all litigation matters involving Heidelberg. . . .
A week later, on August 9, 2004, Gary Van Graafeiland, General Counsel and Senior
Vice President of Kodak, wrote to James P. McElheny, the Managing Partner of Woods
Oviatt, stating that Kodak had “recently learned” that Bauer was “representing clients with
interests adverse to those of Kodak” in the ECJ v. Kodak and Sony v. Kodak cases. Because
Kodak had acquired Heidelberg, and Woods Oviatt continued to represent Heidelberg in
litigation, Van Graafeiland requested that “your firm [Woods Oviatt] remove this conflict
of interest by withdrawing from the representation of the plaintiffs in the ECJ action and
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