In Re Shared Memory Graphics LLC

659 F.3d 1336

Opinions

Opinion for the court filed by Circuit Judge DYK. Dissenting opinion filed by Circuit Judge NEWMAN.

ON PETITION

DYK, Circuit Judge.

ORDER

Shared Memory Graphics LLC (“SMG”) petitions for a writ of mandamus to direct the United States District Court for the Northern District of California to vacate its order granting Nintendo Co. of America’s (“Nintendo”) motion to disqualify the law firm of Floyd & Buss, LLP from further representation in this case based on the conflict-of-interest of Kent Cooper, one of the firm’s partners. See Shared Memory Graphics LLC v. Apple Inc., No. 10-CV-2475 (N.D.Cal. Dec. 17, 2010) (granting Nintendo’s motion to disqualify) [hereinafter Disqualification Order]; see also Shared Memory Graphics LLC v. Apple Inc., No. 10-CV-2475 (N.D.Cal. Mar. 4, 2011) (denying, inter alia, SMG’s motion to clarify the December 17, 2010, disqualification order) [hereinafter Clarification Order], Nintendo opposes. SMG replies. Because Nintendo clearly and indisputably waived the conflict-of-interest, we grant mandamus and direct the court to vacate its disqualification orders.

Background

This petition arises out of SMG’s patent infringement suit against Nintendo, Apple, Inc., Samsung Electronics Co., and Sony Corporation of America. SMG’s claims against Nintendo — the only party that sought disqualification here — involve the “Hollywood chip,” a complex memory chip composed of multiple components.

The Hollywood chip was previously the subject of a suit for patent infringement, which was brought by Lonestar Inventions, L.P. Advanced Micro Devices (“AMD”) and Nintendo were defendants in that suit, and they decided to exchange information concerning litigation tactics and settlement strategies, drafts of briefs, and other confidential information under a Joint Defense Agreement. Paragraph 6 of the Agreement provided as follows:

Nothing contained in this Agreement has the effect of transforming outside or inside counsel for either party into counsel for the other party, or of creating any fiduciary or other express or implied duties between a party or its respective counsel and the other party or its respective counsel, other than the obligation to comply with the express terms of this Agreement, or of interfering with each lawyer’s obligation to ethically and properly represent his or her own client. The parties expressly acknowledge and agree that nothing in this Agreement, nor compliance with the terms of this Agreement by either party, shall be used as a basis to seek to disqualify the respective counsel of such party in any future litigation.

P.A. 17.

Kent Cooper — the attorney at the center of this dispute — was working as the Director of Patents and Licensing for AMD at the time of the Lonestar litigation. He helped assess the infringement claim and the validity of the patent at issue in that ease. After the Lonestar litigation, Cooper left AMD to join the law firm of Floyd & Buss as a partner. Admittedly, the firm did not screen Cooper upon his entry.

Soon thereafter, Floyd & Buss filed this suit on behalf of SMG against Nintendo and the other defendants. Nearly ten months after the suit was filed, Nintendo moved to disqualify Floyd & Buss from continued representation in this case. Although the parties agreed that Cooper never represented Nintendo at any time, there was a dispute whether Cooper received confidential information from Nintendo during the Lonestar litigation. The district court granted the motion and disqualified the entire firm from continued representation.

In the district court’s view, the Joint Defense Agreement’s provision waiving any basis to seek disqualification of the “respective counsel of such party in any future litigation,” did not pertain to an attorney like Cooper who subsequently left AMD or Nintendo or its counsel and joined another company or firm. Disqualification Order at 6. Instead, the court held that the Agreement’s waiver provision only contemplated conflicts between AMD and Nintendo as “either party.” Id. The court stated that “[tjhere is no evidence to suggest that the waiver contemplated covering attorneys who left their respective companies for new clients.” Id. Therefore, in the view of the district court, “the Lonestar JDA does not foreclose Nintendo’s motion to disqualify Cooper for breach of confidentiality.” Id. Finding that the case at bar and the Lonestar litigation involved similar technology and similar legal issues pertaining to whether the Hollywood chip infringed the asserted claims, the district court applied a conclusive presumption that Cooper had accessed Nintendo’s confidential information and held that disqualification of the entire Floyd & Buss firm was therefore necessary. Id. at 7-9.

In a subsequent ruling, the district court clarified that Floyd & Buss was not only disqualified from representing SMG against Nintendo, but disqualified from representing SMG against all of the defendants in the action. See Clarification Order at 2.

SMG filed this petition, which seeks a writ of mandamus to vacate these rulings and for the district court to be directed to reinstate Floyd & Buss as counsel for SMG.

Discussion

The remedy of mandamus is available in extraordinary situations to correct a clear abuse of discretion or usurpation of judicial power. In re Calmar, Inc., 854 F.2d 461, 464 (Fed.Cir.1988). This court has thus held that a party seeking a writ bears the burden of proving that it has no other means of obtaining the relief desired, Mallard v. U.S. Dist. Court, 490 U.S. 296, 309, 109 S.Ct. 1814, 104 L.Ed.2d 318 (1989), and that the right to issuance of the writ is “clear and indisputable,” Allied Chem. Corp. v. Daiflon, Inc., 449 U.S. 33, 35, 101 S.Ct. 188, 66 L.Ed.2d 193 (1980).

Citing Richardson-Merrell, Inc. v. Roller, 472 U.S. 424, 105 S.Ct. 2757, 86 L.Ed.2d 340 (1985), Nintendo contends that mandamus authority cannot be exercised under the circumstances of this case. Nintendo’s reliance on Richardson-Merrell for this proposition, however, is misplaced. The question at issue there was whether an order disqualifying counsel could be appealed under the collateral-order doctrine, which furnishes “an exception to the final judgment rule for a ‘small class’ of prejudgment orders.” Id. at 430, 105 S.Ct. 2757.

Far from stating that an order disqualifying counsel may not be remedied through a writ of mandamus, the Court specifically noted that “a rule precluding appeal [under the collateral-order doctrine] would not necessarily leave the client or the disqualified attorney without a remedy” because “a party may seek ... a writ of mandamus from the court of appeals.” Id. at 435, 105 S.Ct. 2757.

Nintendo also cannot seriously contest that SMG could meaningfully obtain this relief other than by seeking a writ of mandamus. By the time an appeal here could be taken, the trial would be over, and SMG would have gone through the litigation without the counsel of its choice.¹ Mandamus thus acts as a safety valve to prevent such irreparable harm if appropriate circumstances are presented. See Mohawk Indus., Inc. v. Carpenter, — U.S. -, 130 S.Ct. 599, 608, 175 L.Ed.2d 458 (2009).

We therefore turn to the merits. A request for mandamus relief is determined under Federal Circuit law, except to the extent that underlying procedural issues may be governed by the law of the regional circuit, which in this case is the law of the Ninth Circuit. In re Pioneer Hi-Bred Int’l, Inc., 238 F.3d 1370, 1374 (Fed.Cir.2001). Motions to disqualify under the law of that circuit in turn are decided under state law, in this case California law, where this case is pending. See In re Cnty. of Los Angeles, 223 F.3d 990, 995 (9th Cir.2000).

SMG argues that the district court erred by granting Nintendo’s motion for disqualification. SMG contends that the motion was precluded by the waiver-of-conflict provision in the Lonestar Joint Defense Agreement. According to SMG, the Agreement clearly intended to bar Nintendo from seeking to disqualify “respective counsel” like Cooper who subsequently left one of the parties or its counsel to join another company or law firm. That waiver provision, set forth in Paragraph 6 of the Joint Defense Agreement, provides:

The parties expressly acknowledge and agree that nothing in this Agreement, nor compliance with the terms of this Agreement by either party, shall be used as a basis to seek to disqualify the respective counsel of such party in any future litigation.

P.A. 17.

We agree with SMG’s interpretation. As an initial matter, while challenging SMG’s reading of the Joint Defense Agreement, Nintendo cannot dispute that these types of waiver provisions are enforceable where, as here, there is a non- attorney-client relationship (Cooper did not represent Nintendo in the Lonestar litigation) involving sophisticated parties. See generally Model Rules of Profl Conduct 1.7 cmt. 22 (noting “if the client is an experienced user of the legal services involved and is reasonably informed regarding the risk that a conflict may arise, such consent is more likely to be effective”).

Even in attorney-client situations, general rules of professional legal conduct recognize that in certain circumstances it is not only proper but beneficial for parties to contractually consent to a waiver of future conflicts of interest. See Restatement (Third) of the Law Governing Lawyers, § 122 cmt. D (2000) (“[T]he gains to both lawyer and client from a system of advance consent to defined future conflicts might be substantial.”); see generally Model Rules of Profl Conduct 1.7 cmt. 22 (recognizing the appropriateness of contracting advanced waivers of conflicts of interest). Moreover, courts applying California law, which governs motions to disqualify counsel, In re Cnty. of Los Angeles, 223 F.3d at 995, have generally recognized the enforceability of advanced waiver of potential future conflicts, even if the waiver does not specifically state the exact nature of the future conflict, see Visa U.S.A., Inc. v. First Data Corp., 241 F.Supp.2d 1100, 1105 (N.D.Cal.2003).

Though California law governs motions to disqualify counsel, Paragraph 13 of the Joint Defense Agreement provides that the agreement is to be “governed by and construed in accordance with the laws of the State of Washington.” Our task is to give effect to the plain language of the parties’ agreement. In doing so, we look to the document as a whole, being careful to avoid an interpretation that would render any part of the Agreement superfluous. See Wagner v. Wagner, 95 Wash.2d 94, 101, 621 P.2d 1279 (1980); see also Restatement (Second) of Contracts § 203(a) & cmt. b (1981) (“Since an agreement is interpreted as a whole, it is assumed in the first instance that no part of it is superfluous.”).

In view of these principles, the Agreement’s terms clearly point away from the district court’s conclusion that Cooper was not covered by the waiver provision. Nintendo agreed not to seek disqualification of then “respective counsel of such party [i.e., AMD] in any future litigation.” Cooper was indisputably a “respective counsel” of AMD, and, contrary to Nintendo’s objections, the breadth and temporal scope of the waiver are broad enough to include “any future litigation” between Nintendo and a party employing, or represented by, Cooper.

This interpretation is bolstered by the fact that “respective counsel” was a term used consistently throughout Paragraph 6 of the Joint Defense Agreement. Just before the waiver provision, the paragraph provides: “Nothing contained in this Agreement has the effect of ... creating any ... duties between a party or its respective counsel and the other party or its respective counsel, other than the obligation to comply with the express terms of this Agreement[.]” (emphasis added).

To limit the definition of “respective counsel” in this provision to current counsel of AMD and Nintendo (namely, counsel for AMD and Nintendo in 2010 and 2011, or at the time of the SMG litigation), however, would produce an illogical result: former counsel such as Cooper would have no ongoing obligation of confidentiality. In addition, such a reading of the Joint Defense Agreement would violate the fundamental principle that a contract should be interpreted so as to give meaning to each of its provisions. See Brinderson-Newberg Joint Venture v. Pac. Erectors, Inc., 971 F.2d 272, 278-79 (9th Cir.1992); Wagner, 95 Wash.2d at 101, 621 P.2d 1279; see also Restatement (Second) of Contracts § 203(a) & cmt. b (“Since an agreement is interpreted as a whole, it is assumed in the first instance that no part of it is superfluous.”). The parties clearly expressed their intention for Cooper and other “respective counsel” to comply with the terms of confidentiality. Pursuant to the district court’s interpretation, however, limiting “respective counsel” to current counsel for AMD or Nintendo would mean that the Joint Defense Agreement imposes no ongoing obligation of confidentiality with respect to former counsel. Such a reading of the agreement is plainly illogical and contrary to the intent of the parties. This would contradict the very reason why any joint defense agreement is in effect in the first place.

Because the only construction that honors the parties’ intent to protect their confidential information while keeping the paragraph internally consistent is to include Cooper as a “respective counsel,” we agree with SMG that the district court’s determination was incorrect as a matter of law.² Furthermore, we believe that SMG will be adversely affected if it is required to wait until after a final adverse judgment to have this issue addressed because it will have been required to proceed through the litigation without counsel of its choice. We therefore hold that SMG has demonstrated that its right to issuance of the writ is “clear and indisputable,” and that the writ of mandamus should be granted. Although SMG raises other assertions of error, because we agree Nintendo waived this potential conflict, we do not address these issues.

Accordingly,

It Is Ordered That:

The petition is granted. The district court is directed to vacate its order disqualifying Cooper and the Floyd & Buss law firm from further representation in this case.

Footnotes

1

. The Supreme Court has described the circumstances in which an order disqualifying counsel could be reviewed on direct appeal, stating that, "should the Court of Appeals conclude after the trial has ended that permitting continuing representation was prejudicial error, it would retain its usual authority to vacate the judgment appealed from and order a new trial.” Firestone Tire & Rubber Co. v. Risjord, 449 U.S. 368, 378, 101 S.Ct. 669, 66 L.Ed.2d 571 (1981). In other words, it appears as though a showing of prejudice would be required. Practically speaking, it would be very difficult to demonstrate prejudice absent some sort of misconduct on the part of counsel.

2

. In holding that waiver provision applicable to counsel who have left the employment of one of the parties to the agreement, we in no way suggest that counsel subject to the agreement could not be disqualified for failure to comply with the agreement itself.