Westinghouse Elec. Corp. v. Kerr-McGee Corp

Brief Fact Summary.

Following the suit filed by Westinghouse Electric Corp. (Westinghouse) (Plaintiff) against Kerr McGee (Defendant), Defendant moved to disqualify Kirkland and Ellis (Kirkland), counsel for Westinghouse (Plaintiff), because a report was issued at the same time, written by Kirkland on the oil companies, refuting any charge that the oil companies restricted uranium output

Synopsis of Rule of Law.

Even where no express attorney-client relationship exists, a fiduciary relationship may result due to the work performed and the circumstances under which confidential information is disclosed

Facts.

Kirkland and Ellis represented Westinghouse Elec. Corp (Westinghouse (Plaintiff) in an antitrust action, alleging restraint of trade in the uranium industry.  At the same time, Kirkland produced a report lobbying against the proposed breakup of the oil industry for API, of which Kerr-McGee (Defendant), Gulf (Defendant), and Getty (Defendant) were members.  The report was released the day this suit was filed, and refuted any charge that oil companies restricted uranium output.  Defendants Gulf, Kerr-McGee, and Getty, who had provided confidential information to Kirkland for the report, moved to disqualify Kirkland.  The district court used the rules of agency and determined that no attorney-client relationship existed between Kirkland and the oil companies and applied a different imputation of knowledge approach to Kirkland as a large law firm.  Defendants Gulf, Kerr-McGee, and Getty appealed

Issue.

Even where no express attorney-client relationship exists, may a fiduciary relationship result due to the work performed and the circumstances under which confidential information is disclosed?

Held.

(Sprecher, J.)  Yes.  Even where no express attorney-client relationship exists, a fiduciary relationship may result due to the work performed and the circumstances under which confidential information is disclosed.  In this case, Defendants Gulf, Kerr-McGee, and Getty, each had a reasonable belief that it was submitting confidential information about its involvement in the uranium industry to a law firm that was acting in their undivided interest.  These oil companies (Defendant) were unaware of the complaint that Kirkland was filing on behalf of Westinghouse (Plaintiff).  In addition, the screen Kirkland constructed between the attorneys who wrote the report on the oil companies and those representing Westinghouse (Plaintiff) was not effective, and that does not modify the presumption that actual knowledge of one or more lawyers in a firm is imputed to each member of that firm.  Therefore, the district court erred in its approach.

Discussion.

The court of appeals found that Kirkland’s considerably related contrary undertakings outbalanced the interest of the client to continue with its chosen attorney.  However, the court believed that Westinghouse (Plaintiff) should have the option of dismissing Defendants Gulf, Kerr-McGee, and Getty from the action or of discharging Kirkland.  The impact of the changeover had been lessened when substitute counsel had represented Plaintiff in the case since February 1978./br>