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An attorney who serves as both co-counsel for a corporate defendant and as a member of the entity’s board of directors must be restricted in his access to plaintiff’s documents, a Northern District of New York federal judge has found. Senior U.S. District Judge Howard G. Munson said the “serious risk of inadvertent disclosure of confidential documents and information” is too great to allow Joseph J. Heath of Syracuse, N.Y., to examine some records in ongoing business litigation. Norbrook Laboratories Limited v. G.C. Hanford Manufacturing Co., 5:03-CV-165, arises from a dispute involving two firms that produce veterinary pharmaceuticals. Norbrook, established in 1969, is based in Ireland. Hanford, established in 1846, is based in Syracuse. The dispute in federal court centers on Norbrook’s allegation that Hanford misappropriated trade secrets and confidential information — specifically the so-called “Norbrook Process” of manufacturing penicillin G procaine — to obtain a competitive edge. The discovery issue before Judge Munson was whether Hanford’s co-counsel, who also serves as corporate counsel and a member of the board of directors, should have access to materials that Norbrook’s counsel has labeled as: “Confidential/Attorney’s Eyes Only.” Joseph Heath, the attorney in question, fills a number of roles, but in-house counsel is not one of them. Rather, he was retained separately, and in addition to his duties as secretary and board member, to work on this case. Despite Heath’s arm’s-length ties, Norbrook argued that he cannot be considered anything other than an “insider,” and must not be privy to the plaintiff’s trade secrets. Judge Munson turned to the seminal case on protective orders, U.S. Steel Corp. v. U.S., 730 F.2d 1465, a 1984 ruling from the U.S. Court of Appeals for the Federal Circuit. That case admonished courts to avoid drawing an arbitrary distinction regarding the type of counsel employed and to focus instead on the risk of even inadvertent disclosure of trade secrets. Here, Munson said it makes no difference whether or not Heath is actually in-house counsel or whether he is directly involved in competitive decision-making, research or sales strategy. What is key, according to Munson, is the fact that “he sits in the same room as those who are involved in competitive decision-making,” a situation that presents an “unacceptable opportunity” for inappropriate, if inadvertent, disclosure of trade secrets. “While the court does not doubt Mr. Heath’s assurances that he will abide by the protective order, it cannot endorse a situation that places Mr. Heath’s ethical obligations as an attorney in direct competition with his fiduciary duty to Hanford,” Judge Munson wrote. Appearing for Norbrook were Lyndon M. Tretter of Hogan & Hartson in Manhattan and Mitchell L. Katz of Menter, Rudin & Trivelpiece in Syracuse. Appearing for the defendants were Thomas D. Keleher and Louis Orbach of Bond, Schoeneck & King in Syracuse, and Heath.

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