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A federal judge has found that Frankfurt Garbus Klein & Selz committed a breach of ethics by representing a client against Time Warner Entertainment Company when the firm already represented the company in another action. But New York’s Southern District Judge Lewis A. Kaplan, while saying that the firm’s “breach of ethics cannot be minimized,” nonetheless ruled that name partner Martin Garbus can continue to represent defendant Eric Corley against Time Warner’s claim under the Digital Millennium Copyright Act (DMCA). The ruling came in Universal City Studios Inc. v. Reimerdes, 00 Civ. 0277. Universal City, Time Warner and other motion picture studios sued Shawn Reimerdes, Corley and others to enjoin them from posting on the Internet the computer program DeCSS, which the studios argue allows people to defeat the encryption system that prevents the copying of Digital Video Disks (DVDs). Garbus came into the case to represent Corley in March. In April, Time Warner moved to disqualify the Frankfurt firm because the firm represented Time Warner in an unrelated matter involving the “Harry Potter” books, Scholastic Inc. v. Stouffer, 99 Civ. 11480. Frankfurt Garbus was retained in September 1999 by Time Warner, Harry Potter author J.K. Rowling and Scholastic after Nancy Stouffer claimed that she owned the copyright and trademark in the term “Muggles,” the name of the aunt, uncle and cousin of the Harry Potter character. Time Warner, Rowling and Scholastic later agreed that Frankfurt Garbus would also represent them in a declaratory judgment action against Stouffer, with Scholastic responsible for paying attorneys fees. Kaplan said a Time Warner in-house attorney called Frankfurt partner Edward Rosenthal, who is responsible for the Stouffer lawsuit, to express concern about a potential conflict because of the firm’s role in the DVD litigation. He said Rosenthal told Time Warner there was no conflict, that the issues in the two cases were distinct, and that Time Warner had the option of retaining separate counsel for the Stouffer case. The issue for Kaplan was Canon 5 of the Code of Professional Responsibility, mandating that a lawyer “exercise independent professional judgment on behalf of a client,” and Disciplinary Rule DR 5-105, which he said bars a lawyer from “representing a client if that representation is of interests differing from or adverse to those of another existing client.” “When the Frankfurt firm agreed to represent Time Warner along with Scholastic and Ms. Rowling, it surrendered the right to represent another client in litigation against any of them,” he said. Frankfurt Garbus had submitted a declaration defending its position by Professor Emeritus Charles W. Wolfram of Cornell Law School. Professor Wolfram, chief reporter for the American Law Institute’s Restatement of the Law Governing Lawyers, and author of the treatise “Modern Legal Ethics,” said that the firm “proceeded appropriately.” Wolfram argued that Time Warner was a “non-primary” or “accommodation” client, and that only “primary” clients may seek disqualification of conflicted counsel. He also said that Frankfurt Garbus had the option of removing itself from the Stouffer case. Kaplan, however, said Wolfram did not argue that Frankfurt Garbus acted “properly in taking on defendants in a case brought against them by Time Warner, among others, while simultaneously representing Time Warner.” He said that Time Warner had a real economic stake in the Stouffer litigation, and he rejected the contention that Frankfurt was entitled to drop Time Warner “simply because it found a case more to its liking.” TACTICAL MOTIVES? But Kaplan also found that “there is substantial reason to believe that the motion to disqualify the Frankfurt firm is motivated at least partly by tactical considerations.” He said that Time Warner waited almost a month to raise the conflict issue with Rosenthal. He also said that the company has made “no effort” to show how it would be hurt by the conflict, and that Time Warner also stands to gain “by forcing defendants to find and educate new counsel.” And although he declined to disqualify Frankfurt Garbus out of concern that Corley might be prejudiced, he had strong words for the firm. “Even acknowledging that the Frankfurt firm, in consequence of sloppy conflict checking procedures, appears to have agreed to take on this case without realizing that doing so would be improper, its insistence on proceeding once it learned of the conflict was improper,” Kaplan said. “The proper place for this controversy is in the appropriate professional disciplinary body.” Garbus said he is convinced that Frankfurt acted properly — a belief he said was supported by Wolfram’s declaration. “One of the most respected ethicists said that what we did was exactly appropriate,” Garbus said, adding that he was “pleased” to still be in the case. Leon P. Gold, William M. Hart and Jon A. Baumgarten of Proskauer Rose represented Universal Studios Inc. and other plaintiffs. Hal R. Lieberman, Ronald C. Minkoff and J. Richard Supple, of Beldock Levine & Hoffman, represented Frankfurt Garbus.

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