Update: This article has been corrected to reflect that the dispute is before U.S. District Senior Judge Paul Friedman.
Latham & Watkins is fighting an attempt to disqualify the firm as lead trial counsel for Union Pacific Railroad, a defendant in multidistrict litigation over freight rail fuel surcharges.
The dispute pitted the firm against former clients who are plaintiffs in the fuel surcharge class action. The clients, resources producer Oxbow Carbon LLC and its subsidiaries, argued that Latham violated its duty of care by agreeing to represent Union Pacific. Oxbow is an unnamed class member in the multi-district litigation and is pursuing a separate, but related, lawsuit against Union Pacific.
Latham, in a brief filed May 17 in Washington federal district court, said Oxbow had dropped many of its arguments for disqualification after facing pushback from the firm. "Moving to disqualify a law firm is a serious matter, and it is unacceptable that Oxbow did so with a set of arguments so weak that substantially all of them had to be abandoned after Latham’s opposition," the firm argued.
An Oxbow spokesman declined to comment. Oxbow’s lead attorney, John Gerstein of Troutman Sanders, could not be reached. Lead counsel for Latham, firm partner Daniel Wall in San Francisco, who practices in antitrust, declined to comment.
The Oxbow companies were among thousands of plaintiffs that shipped products through the four largest freight rail companies in the United States, a group that included Union Pacific. The plaintiffs accused the rail companies of violating federal antitrust laws by working together to increase rates through "aggressive" fuel surcharges. The rail companies denied wrongdoing.
In a separate lawsuit Oxbow filed against Union Pacific and BSNF Railway Co.also a defendant in the multidistrict litigationOxbow claimed its related business paid more than $30 million in allegedly unlawful fuel surcharges.
According to Oxbow, Latham represented its related companies beginning in 2004, earning more than $4.6 million in fees. Oxbow said firm attorneys had access to "sensitive and confidential information."
Latham began representing Union Pacificanother longtime client, according to briefsin the multidistrict 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.
Oxbow cited sections of the D.C. Rules of Professional Conduct barring lawyers from taking on certain new clients if it would be "adverse" to another client or significantly affect its interests, without consent from the affected clients.
Latham argued the firm had to withdraw only if there were a conflict with a named plaintiff, a group that didn’t include Oxbow; the firm declined to represent Union Pacific against Oxbow’s separate lawsuit because of the conflict. It would be "practically impossible" for law firms to defend antitrust class actions if they had to check for conflicts with all class members, the firm said.
Latham also disputed that firm attorneys had access to confidential information that would be relevant to Union Pacific’s defense and accused Oxbow of failing to offer specific examples, except for future projections about shipping activity.
"This motion is just a parting shot to punish Latham for perceived disloyalty to Oxbow’s business interests," the firm argued. Latham added that it is Union Pacific’s lead trial counsel, and that it would be unfair to force the rail company to hire a replacement at this point.
Oxbow countered that it wasn’t "some nameless, faceless, passive class member." The company agreed it would be "virtually impossible" for law firms to check for conflicts with all unnamed class members. However, Oxbow said, its position was different because of its separate lawsuit against Union Pacific and participation in the class action. Latham knew what Oxbow was doing, Oxbow said, and nonetheless agreed to help Union Pacific develop a defense strategy.
"Here, before Latham entered its appearance in this Court, it knew about Oxbow’s claims against [Union Pacific], and it knew that Oxbow was a client," the company argued.
In its latest filing, Latham accused Oxbow of making up rules, saying it was "settled law" that a firm could represent a class action defendant when another client was an unnamed plaintiff, barring other ethical concerns. Under the case law, the firm said, it didn’t matter if Latham knew Oxbow was an unnamed class member. The firm also argued Oxbow’s separate lawsuit against Union Pacific couldn’t create a conflict because it differed in meaningful ways from the class action.
Latham claimed Oxbow conceded several points, including that Latham didn’t have access to relevant confidential information; Oxbow said in its reply that because Latham’s role as Union Pacific’s counsel was adverse to Oxbow, the court didn’t need to address the confidential information issue.
The dispute is before U.S. District Senior Judge Paul Friedman.
Zoe Tillman can be contacted at [email protected].
