in Re Datatreasury Corporation v. Daiflon, Inc., 449 U.S. 33, 35 1980 . In this case, that requires DataTreasury to…

NOTE: This order is nonprecedential.

# United States Court of Appeals for the Federal Circuit

IN RE DATATREASURY CORPORATION,
Petitioner.

2010-M928

On Petition for Writ of Mandamus to the United
States District Court for the Eastern District of Texas in
case no. 06-CV-0072, Judge David J. Folsom.

## ON PETITION FOR WRIT OF MANDAMUS

Before RADER, Chief Judge, BRYSON and MOORE, Circuit
Judges.

RADER, Chief Judge.

## ORDER

DataTreasury Corporation (DataTreasury) seeks a
writ of mandamus to direct the United States District
Court for the Eastern District of Texas to disqualify the
law firm of Fish & Richardson, P.C. from further
representation of defendant Bank of America in this case.
Bank of America opposes. DataTreasury replies.

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I.

In 1998, attorney Paul De Stefano was retained by
DataTreasury to provide legal counsel. De Stefano's
representation was brief, so brief in fact that he did not
bill the client for his time. The substance of the
representation involved the negotiation of a license
agreement pertaining to a patent related to check-image
capturing and storage.

De Stefano subsequently became a partner at the law
firm of Fish & Richardson. That firm currently
represents Bank of America in this suit brought by
DataTreasury. According to the allegations in
DataTreasury's complaint, Bank of America infringes the
same patent involved in De Stefano's prior
representation. De Stefano was with Fish & Richardson
at the time this suit was brought but has since left the
firm.

DataTreasury moved the district court to disqualify
De Stefano and the entire Fish & Richardson firm. After
careful review, the district court determined that despite
the lack of billable hours, De Stefano's prior
representation constituted an attorney-client relationship
and that the prior and current matters were substantially
related. The court therefore ruled that De Stefano was
disqualified under the "substantial relationship" test from
any representation in this matter.

The court, however, rejected Bank of America's
argument that Fish & Richardson's fate was completely
tied to De Stefano's. Rather, in the view of the court, a
"balancing approach" was needed. In reviewing the costs
and benefits of disqualifying the firm, the court explained
that Fish & Richardson had been one of the most active
firms in this now four year old litigation and had a
"singular familiarity with the issues in this case[.]" The

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court added that "the cost of retaining new counsel, in
terms of both money and time, would be substantial."
Based on the short duration of De Stefano's prior
engagement, the court concluded that "[o]n balance,
[DataTreasury]'s concerns do not outweigh each party's
right to choose its own counsel, as well as considerations
of efficient administration of justice." The court therefore
denied the motion to disqualify the Fish & Richardson
firm.

II.

Mandamus is an extraordinary remedy, available only
upon a demonstration by the petitioner of a "clear and
indisputable right" to the relief sought. Allied Chem.
Corp. v. Daiflon, Inc., 449 U.S. 33, 35 (1980). In this case,
that requires DataTreasury to demonstrate that the
court's denial of disqualification of the Fish & Richardson
firm was patently erroneous. Because this petition does
not raise issues unique to our jurisdiction, we apply the
law of the regional circuit in which the district court sits,
in this case the law of the Fifth Circuit.

For obvious reasons, an attorney is prohibited from
using confidential information he has obtained from a
client against that client on behalf of another. To provide
the public with additional trust in the attorney-client
relationship, a more restrictive rule on attorneys has also
developed prohibiting representation of an adversary of a
former client if the subject matter of the two
representations is "substantially related." In re Am.
Airlines, 972 F.2d 605, 609 (5th Cir. 1992); Rule 1.9(a) of
the Texas Disciplinary R. Profl Conduct. The test
requires only that the attorney could have received
confidential information during the first representation
that would be relevant in the second. It is irrelevant
whether confidential information is actually received.
Am. Airlines, 972 F.2d at 620.

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The district court held De Stefano to a presumption
that he received confidences from DataTreasury despite
the short duration of his counsel and that DataTreasury
had waived the subject matter of the privileged material.
Yet, the court refused to conclusively presume he shared
those attributed confidences with other members of Fish
& Richardson. DataTreasury contends that this is error
under the Fifth Circuit's Am. Airlines decision, but cites
in support only dicta. See Am. Airlines, 972 F.2d at 614,
n.1 ("A second irrebuttable presumption is that
confidences obtained by an individual lawyer will be
shared with other members of his firm. . . This
presumption is not at issue in this case."); see also
ProEducation Int'l, Inc. v. Mindpoint, 587 F.3d 296, 303
(5th Cir. 2009) ("[T]he Am. Airlines case did not actually
involve or apply this presumption, so any statement
regarding the presumption are dicta."). DataTreasury
also urges that the court's analysis outside of the reach of
the two-prong substantial relationship test was
erroneous, citing the panel's description of the test in Am.
Airlines as "categorical in requiring disqualification upon
establishment of a substantial relationship." 972 F.2d at
614.

It is true that this statement in Am. Airlines lends
support for DataTreasury's position, but not enough to
meet its burden for this extraordinary remedy. See In re
Volkswagen of Am., Inc., 545 F.3d 304, 317, n.7 (5th Cir.
2008) (en banc) (A petition for a writ of mandamus should
be denied if the "facts and circumstances are rationally
capable of providing reasons for what the district court
has done."); In re Cordis Corp., 769 F.2d 733, 737 (Fed.
Cir. 1985) (noting that "if a rational and substantial legal
argument can be made in support of the rule in question,
the case is not appropriate for mandamus).

The Fifth Circuit has on multiple occasions conducted
a similar balancing analysis after reaching the conclusion

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that the substantial relationship test had been met. See,
e.g., Corrugated, 659 F.2d at 1348; United States v.
Kitchin, 592 F.2d 900 (5th Cir. 1979). In Corrugated, for
example, the court noted after reaching its conclusion that
the two-prong test had been satisfied by the movant that
"[t]hough the protection of the right of a civil litigant to
counsel of his choice is important, that social goal is
outweighed here by the likelihood that the image of the
legal profession would be tarnished by the continuance of
his relationship." 659 F.2d at 1348. While Corrugated is
pre-Am. Airlines and based on the now defunct
"appearance of impropriety" ethics canon, Am. Airlines
itself supports its reasoning's viability. See Am. Airlines,
972 F.2d at 618 ("We believe the replacement of the
'appearance of impropriety' with [duty of] loyalty provides
no basis for altering the substantial relationship test
found in our precedents.").

We cannot conclude that DataTreasury established a
clear and indisputable right to disqualify Fish and
Richardson. As the court noted, the case has now been
pending for more than four years and DataTreasury is
seeking to disqualify one of the most actively involved law
firms. In addition, the court found plausible Bank of
America's contention that Fish & Richardson has
"singular familiarity with the issues in this case and that
the cost of retaining new counsel, in terms of both money
and time, would be substantial given that Fish &
Richardson lawyers and staff have invested tens of
thousands of hours . .. at a cost of millions of dollars."
The district court concluded that these concerns
outweighed the representation provided by De Stefano
that involved no billable hours and entailed no receipt of
information that will be considered privileged at trial.
Under these circumstances, we cannot say that
DataTreasury has met its burden of establishing a clear
and indisputable right to mandamus relief.

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IN RE DATATREASURY
Accordingly,
IT IS ORDERED THAT:
The petition for a writ of mandamus is denied.

FOR THE COURT

AUG 5 2010

/s/ Jan Horbaly

Date

Jan Horbaly Clerk

cc: Rod Phelan, Esq.
Nelson J. Roach, Esq.
William H. Boice, Esq.
Gerald C. Conley, Esq.
Robert M. Parker, Esq.
William Ellsworth Davis III, Esq.
Thomas M. Melsheimer, Esq.
Layn R. Phillips, Esq.
Samuel F. Baxter, Esq.
Guillermo E. Baeza, Esq.
John J. Feldhaus, Esq.
John R. Emerson, Esq.
Howard N. Wisnia, Esq.
Clerk, United States District Court for the Eastern
District of Texas, Marshall Division.

FILED
U.S. COURT OF APPEALS FOR
THE FEDERAL CIRCUIT
AUG 05 2010

JAN HORBALY
CLERK

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