Latham & Watkins can proceed as lead trial counsel for a defendant in a massive antitrust class action, a Washington federal district trial judge ruled on Tuesday, denying a motion to disqualify the firm.

Latham represents Union Pacific Railroad Co., one of four U.S. freight rail companies accused of conspiring to raise customer rates through fuel surcharges. After Latham entered the multidistrict litigation last fall, several now-ex-clients who were unnamed class members—petroleum byproducts distributor Oxbow Carbon LLC and its subsidiaries—moved to disqualify the firm, arguing it suffered a conflict of interest.

U.S. District Senior Judge Paul Friedman found that Latham’s participation didn’t create conflicts requiring the firm to step aside. As unnamed members of the potential class, the Oxbow companies weren’t considered “parties” for the purposes of conflicts checks, the judge wrote. The Oxbow entities are pursuing separate, related claims against Union Pacific, but Friedman said that didn’t create a conflict, either.

Lead counsel for Latham, San Francisco-based antitrust litigation partner Daniel Wall, could not immediately be reached for comment. Oxbow’s lead counsel, John Gerstein, a litigation partner at Troutman Sanders in Washington, said his client “felt strongly about the disqualification issue and disagrees with the court’s conclusion, but, nevertheless, respects the time and attention the court gave the matter.”

“Oxbow is vigorously moving forward with Oxbow’s case, regardless of who represents [Union Pacific] in the class action,” Gerstein said.

The Oxbow companies were among thousands of plaintiffs that shipped products through Union Pacific and the three other freight rail companies that were sued. The plaintiffs accused the companies of violating federal antitrust laws by working together to increase rates through “aggressive” fuel surcharges. The rail companies denied wrongdoing.

According to Oxbow, Latham represented its related companies beginning in 2004, earning more than $4.6 million in fees. Oxbow said the firm’s attorneys had access to “sensitive and confidential information.”

Latham began representing Union Pacific—another longtime client, according to briefs—in the litigation in October 2012, joining Covington & Burling and Jones Day as lead counsel. In February, Oxbow moved to disqualify Latham, arguing the firm’s representation of Union Pacific was “directly adverse” to Oxbow.

The disqualification dispute boiled down to two main issues: First, whether Oxbow’s claims against Union Pacific in its separate lawsuit should be considered the “same matter” as the multidistrict litigation, and second, whether Oxbow’s participation in the multidistrict litigation required disqualification.

Latham declined to represent Union Pacific in Oxbow’s separate case, in recognition of its relationship with Oxbow. Friedman said that under the D.C. Rules of Professional Responsibility, the presence of similar claims didn’t make the two cases the “same matter.” It was possible Latham might help Union Pacific develop defenses in the multidistrict litigation that would apply to the Oxbow case, the judge wrote, but that didn’t mean the firm was acting unethically.

Oxbow argued that although it was an unnamed member of the potential class in the multidistrict litigation, it was an “active” member, having filed a motion, and was also different from a typical unnamed class member because of the separate lawsuit.

Friedman said there could be circumstances under which the relationship between an unnamed class member and a law firm was “so substantial that it raises questions about the firm’s ability to zealously represent the defendant, or where there is a risk that the class member’s confidential information could be used by the firm in preparing the defendant’s legal strategy,” he said. “But such circumstances are not present here.”

“What sets Oxbow apart is that it has been unusually interested in pursuing its claims outside of this class action,” Friedman wrote. “Such activities cannot serve as the basis for deeming Oxbow equal, for conflicts purposes, to a named party within the class action” (emphasis in original.)

The decision represents the second victory in less than a month for the defendants. On August 9, the U.S. Court of Appeals for the D.C. Circuit voided Friedman’s decision last summer to certify a class, ordering the judge to take another look at the issue in light of new Supreme Court guidance.

Contact Zoe Tillman at ztillman@alm.com.