Last week, the United States Court of Appeals for the Federal Circuit issued an opinion deciding motions to disqualify counsel for Mylan Pharmaceuticals Inc. (“Mylan”) in three appeals pending before the Court: Dr. Falk Pharma GMBH v. Generico, LLC, 2017-2312; Salix Pharma., Inc. v. Mylan Pharma. Inc., 2017-2636, 2018-1320; and Valeant Pharma. Int’l, Inc. v. Mylan Pharma. Inc., 2018-2097 (February 20, 2019). Because counsel for Mylan previously represented and continued to represent an affiliate of parties adverse to Mylan in the appeals, the Court found the firm had a concurrent conflict of interest and granted the motions to disqualify.
Katten Muchin Rosenman LLP (“Katten”) began representing Bausch & Lomb Inc.—a corporate affiliate of parties adverse to Mylan in the appeals—on trademark matters in 2001, and currently represents Bausch & Lomb in a trademark lawsuit. The engagement letter Katten signed in connection with this representation incorporated by reference Bausch & Lomb’s parent company’s Outside Counsel Guidelines. The Guidelines state they govern the relationship between the firm and the parent company, as well as its subsidiaries and affiliates. The Guidelines also instructed the firm to run a conflict check covering the parent company’s subsidiaries and affiliates, and stated that any conflicts that arise can only be waived or approved by written agreement of the parent company. Among the subsidiaries and affiliates referenced in the Guidelines are two parties adverse to Mylan in the appeals—Valeant and Salix. In 2018, two attorneys representing Mylan joined Katten and brought the Mylan matters adverse to Valeant and Salix over with them to Katten from their prior firm.
In granting the disqualification motions, the Federal Circuit looked first at the terms of the client engagement agreement. The Court held the express terms of the Outside Counsel Guidelines created an ongoing attorney-client relationship between Katten and the subsidiaries and affiliates of Bausch & Lomb. As such, Katten’s concurrent representation of Mylan in proceedings adverse to Valeant and Salix violated Rule 1.7 of the Model Rules of Professional Conduct. The interrelatedness of Valeant, Salix, and Bausch & Lomb provided additional grounds for the Court’s finding. The Court found these entities all share a high degree of operational commonality and are financially interdependent. The Court concluded that, regardless of whether disqualification is always mandatory for a Rule 1.7 violation, the circumstances of this case warranted disqualification and ordered Katten be disqualified from the appeals.