Westinghouse Electric Corp. v. Rio Algom Ltd.

MEMORANDUM OPINION

At issue in this complex antitrust litigation are a multitude of motions to disqualify counsel, on the grounds that the present litigation posture of two law firms creates a conflict of interest with their prior representation of several of the corporate defendants in earlier legal settings. The disqualification issues pose sensitive and difficult problems of legal ethics under the ABA’s Code of Professional Responsibility. They also raise the unsettled question of whether the mechanical disqualification of law firms for ethical transgressions is an appropriate judicial remedy in cases involving large multi-city corporate law firms, enormously complex multi-district litigation, and corporate litigants with nationwide and even multi-national connections.

With the modern-day proliferation of large law firms representing multi-billion dollar corporations in all segments of the economy and the governmental process, it is becoming increasingly difficult to insist upon absolute fidelity to rules prohibiting attorneys from representing overlapping le *1288 gal interests. While a recognition of these pragmatic realities may contribute to a broader perspective on current ethical problems, our paramount obligation is to balance an individual’s freedom to choose his own counsel with the need to preserve the highest ethical standards for professional conduct. In fulfilling this task, we are guided by the words of Judge Kaufman that the resolution of ethical problems rests on a “painstaking analysis of the facts and precise application of precedent.” United States v. Standard Oil Company, 136 F.Supp. 345, 367 (S.D.N.Y.1955).

The present action is one phase of a complex and continuing series of lawsuits involving the purchase and sale of uranium used in nuclear reactors. The triggering event occurred on September 8, 1975, when Westinghouse Electric Corporation (Westinghouse), a major manufacturer of nuclear reactors, notified a number of utility companies that performance of 17 of its long-term uranium supply contracts had become “commercially impracticable” under § 2-615 of the Uniform Commercial Code. In its notice, Westinghouse explained that unforeseen contingencies in the uranium market, including the 1973 Arab oil embargo, had caused extraordinary increases in uranium prices and a shortage of uranium supplies. Faced with a significant cost-price differential affecting the scheduled delivery of some 65 million pounds of uranium over the next 20 years, Westinghouse said that the unforeseen events excused full performance of its contractual obligations. In response, the affected utilities filed 13 federal actions, one state action, and three foreign actions against Westinghouse alleging breach of contract and challenging Westinghouse’s invocation of § 2-615. The federal actions have been consolidated for trial in the Eastern District of Virginia.

As an outgrowth of its defense of these contract actions, Westinghouse investigated the possibility that the uranium price increases were caused by conspiratorial activities of the uranium producers. On October 15, 1976, Westinghouse filed the present .antitrust action in this Court against 12 ¡foreign and 17 domestic corporations engaged in various aspects of the uranium industry. Westinghouse alleges that beginning in 1972, certain of the foreign defendants entered into a cartel agreement to rig bids, fix prices and contract terms, divide and allocate the world uranium market among the uranium producers, and require Westinghouse and other uranium resellers to pay discriminatorily high prices. The complaint also charges that the foreign defendants agreed to extend the effects of their cartel to the United States, in order to benefit their U. S. subsidiaries and to prevent price competition from other U. S. uranium producers and sellers. To cement this American connection, the foreign producers allegedly struck a bargain with U. S. producers, whereby the foreign producers promised not to underprice the U. S. producers and the domestic producers in return agreed to drop their opposition to the U. S. government’s phase-out of its embargo on the enrichment of foreign uranium. The domestic producers, with the advice and support of the foreign producers, allegedly adopted contracting and pricing policies designed to raise current uranium prices to levels fixed by the foreign, cartel. It is also charged that the U. S. producers agreed to withdraw uranium from the market, to boycott Westinghouse, to lobby foreign officials to refuse to sell uranium to Westinghouse, and to exchange market information in order to raise and stabilize prices. The effect of these actions, according to the complaint, has been to raise uranium prices to artificially high levels, fix the terms on which uranium is sold, curtail uranium supplies, divide the uranium market among the defendants, and deprive uranium purchasers of competition among producers, all to the injury of Westinghouse. For relief, Westinghouse seeks a declaration that defendants’ conduct violates Section 1 of the Sherman Act and Section 73 of the Wilson Tariff Act, treble damages, and injunctive relief.

Throughout the uranium litigation, Westinghouse has employed Kirkland & Ellis as its lead counsel. The Kirkland firm is a two-city operation, with offices in Chicago *1289 and Washington, D. C. Its Washington office uses the name Kirkland, Ellis & Rowe. We will refer to the combined firm as Kirkland. Kirkland’s Chicago lawyers number over 130, and its Washington branch contains about 40. Kirkland’s representation of Westinghouse extends back into the early 1960’s, and the uranium litigation alone has required the efforts of from 8 to 14 of its attorneys. In conducting the contract aspect of the litigation alone, Kirkland has reviewed large portions of the millions of documents produced, has conducted hundreds of depositions and interviews, and has generated some 2V2 million dollars in legal fees.

The antitrust defendants have filed a host of motions to disqualify Kirkland & Ellis as Westinghouse’s counsel in the antitrust phase of this massive litigation. Their motions can be divided into three categories.

First, three oil company defendants (Kerr-McGee, Getty and Gulf) charge that on the same day Kirkland’s Chicago office was filing a complaint attacking them for anticompetitive practices in the sale and pricing of uranium, Kirkland’s Washington office was presenting an extensive legislative report to the American Petroleum Institute (API), a trade association, which develops the completely opposite thesis. The report argues in part that petroleum company involvement in the uranium field has had the beneficial effect of promoting competition in America’s energy industries. The API commissioned the Kirkland study as part of an extensive lobbying effort directed at defeating proposed Congressional legislation which would have required oil and gas companies to relinquish their investments in alternative energy industries, including coal, uranium, geothermal and solar energy. All three oil companies are corporate members of the API. In the course of their participation in the study, they assert that they gave confidential industry and market data to Kirkland attorneys. Relying on Canons 4, 5 and 9 of the Code of Professional Responsibility the oil companies claim that Kirkland’s simultaneous representation of both Westinghouse and the API creates a substantial conflict of interest, a potential for disclosure of confidential information, and the appearance of impropriety. To extinguish these adverse and potentially harmful interests, they demand the disqualification of the entire Kirkland firm or, alternatively, the dismissal of the oil companies from the present action.

Second, twelve other corporate defendants presume the validity of the API motions and argue that if those companies are dismissed, equitable considerations compel the court to disqualify Kirkland from suing the remaining defendants. Without raising any additional charges of conflicting interests, they argue that if ethical policies force Kirkland to reduce the number of antitrust defendants, the remaining defendants will suffer several forms of prejudice. First, Kirkland’s inability to prosecute the oil companies would require it to shift the blame to the remaining defendants. As a result, the jury would be presented with a distorted and truncated picture of the alleged industry cartel. Second, Kirkland’s obligation to withhold confidential information gained during its API engagements would inhibit Kirkland’s questioning of the oil company defendants after their dismissal if they are deposed or called as witnesses by the remaining defendants. Finally, Kirkland’s role as an expert consultant to API on energy matters may make it necessary for Kirkland attorneys to be called as witnesses against Westinghouse and to explain why the API report appears to negate the claim of anti-competitive conduct in the uranium industry.

The third motion to disqualify is made by defendant Noranda Mines Limited, a Canadian corporation, and is completely independent of the other motions. Noranda asserts a direct conflict of interest resulting from Kirkland’s prior representation of Noranda. From 1965 until 1967, Kirkland represented Noranda in several matters, including negotiations for the purchase of 51% of the shares of Essex Wire Corporation. Noranda claims that during this time Kirkland acquired intimate knowledge of its corpo *1290 rate organization, officers, marketing methods, business philosophy, and its business contacts with the United States. Noranda argues that these matters, especially Noranda’s relationship with American-based or American-involved subsidiaries, provide the basis for Kirkland’s allegations against Noranda in the Westinghouse suit. Citing Canons 4 and 9, Noranda contends that Kirkland’s adversarial posture in the present litigation creates a conflict of interest, provides the potential for disclosure of confidential information, and gives rise to the appearance of impropriety.

The Kirkland firm has responded to these motions with a vigorous denial that any qf them contains an appropriate basis for its disqualification as Westinghouse’s counsel. Although Kirkland does not attempt to rebut the charge that the Westinghouse complaint and the API report take inconsistent legal positions, it argues forcefully that none of the oil companies has demonstrated an essential prerequisite to their disqualification motions, namely the existence of an attorney-client relationship between those companies and the Kirkland firm. Kirkland argues that its professional employment has extended only to Westinghouse and API, not to any of API’s member companies, and that its requests in the uranium contracts litigation, its contemporaneous written communications, and its course of dealings with the oil companies all negate the claim that Kirkland ever acted as their attorney. In addition, Kirkland contends that the API study did not produce any significant confidential information which has been or will be used against the oil companies in this case. Finally, Kirkland argues that any actual or apparent prejudice to the oil companies is strongly outweighed by the great hardship which would fall upon Westinghouse from Kirkland’s disqualification in such a complex and lengthy chain of lawsuits.

In response to the other sets of motions^ Kirkland contends that the arguments of the twelve other defendants are totally dependent on the merits of the oil company motions, and will be mooted by a denial of those motions. In any event, says Kirkland, those twelve companies lack standing to press their claims of prejudice since they admittedly were never clients of the Kirkland firm. Finally, in countering Noranda’s motion, Kirkland concedes that Noranda was a former client, but contends that there is no substantial relationship between Kirkland’s 1967 legal advice to Noranda on the proposed acquisition of a cable and wire company and its present prosecution of a uranium price-fixing conspiracy which is not alleged to have begun until 1972. Absent such a relationship between the past and present representations, says Kirkland, there is an insufficient adversity of legal positions to create a conflict of interest.

The issues in the three sets of motions have been exhaustively briefed. The factual allegations are supported by a plethora of affidavits, counter-affidavits and documentary evidence. Since the bulk of the materials pertain to the oil company motions, we will review those facts first. In doing so, our attention will be focused on three main issues: 1) the existence of an attorney-client relationship between- the oil companies and Kirkland; 2) the quantitative and qualitative character of confidential information which the companies divulged to Kirkland; and 3) the contemporaneous knowledge and understanding'of-the companies and Kirkland in participating in the API study and the pending uranium contracts litigation.

The story begins with an analysis of Kirkland’s involvement with the American Petroleum Institute (API). The API is a national petroleum trade association with 350 company and 7,500 individual members. It performs a wide variety of cooperative efforts for the petroleum industry. It develops technical measurement standards for petroleum equipment, and functions as a clearinghouse and forum for informational exchange and technical research. In addition, it monitors the status of industry-related legislation and attempts to articulate and gain support for the industry position with Congress, the media and the publie at large. Kerr-McGee, Getty and Gulf are substantial dues-paying members of API. *1291 Getty and Kerr-McGee are represented on the API’s Board of Directors.

In October, 1975 Congress was presented with legislative proposals to break-up the oil companies both vertically, i. e. by separating their control over production, transportation, refining and marketing entities, and horizontally, i. e. by prohibiting cross-ownership of alternative energy resources in addition to oil and gas. To the surprise of many, the divestiture proposals drew the support of about forty U. S. senators. (Hefler Exh. 15, p. 3). The votes sent shock waves through the oil industry, since this proposed legislation threatened oil companies with a potential divestiture of millions of dollars of assets.

In November, 1975, the API launched a “Committee on Industrial Organization” to lobby against the proposals. According to one Committee member, the Committee was established “for the purpose of giving leadership to a major effort by the API to bring to the attention of the American public and Congress accurate, factual information . . .’’on the divestiture legislation. (Lea, ¶ 4). In a mailgram dated December 10, 1975, Frank Ikard, API’s president, asked “that each company designate one of its senior executives as coordinator or point of contact — an individual who will be familiar with the economic, legal, and public relations projects relating to divestiture/diversification being carried on by your company.” (Hefler Exh. 2). The company contacts were intended to facilitate coordination of the Committee’s activities with the individual companies. Ikard also stated that the Committee would be asking the oil companies for help and cooperation in providing additional manpower in the anti-divestiture campaign.

The Committee was organized into five task forces. An Economics and Analysis task force coordinated economic studies. A Public Affairs Task Force coordinated public relations. The External Constituencies Task Force sought support for the Committee’s goals from various groups both within and outside the oil industry. The Governmental Relations Task Force kept an eye on developments on Capitol Hill. Finally, the Legal Task Force, which is the task force with relevant connections to the present motions, “. . ha[d] the responsibility of conducting studies and legal research into the implications of divestiture and the adequacy of existing laws to keep the industry competitive.” Each task force was headed by a senior executive from one of API’s member oil companies. In the case of the Legal Task Force, the leadership spot was held by L. Bates Lea, General Counsel of Standard Oil Company of Indiana. Lea was assisted by Stark Ritchie, API’s General Counsel. (Hefler Exh. 4).

In a January, 1976 letter to the company contacts in which he described the task forces, the Committee’s Project Director noted that “you will, from time to time, be receiving requests from me or from each of the various task forces.” Recognizing the need for grass roots support from the API’s corporate members, he added that “this Committee is small and cannot possibly, without the help of the companies, hope to accomplish the prodigious task it faces.” (Hefler Exh. 4).

In his capacity as head of the Legal Task Force, Lea “concluded that it would be useful to have a law firm conduct an overall review of the whole subject of oil company energy diversification . . ” (Lea, ¶ 5). The review was to include an analysis of the structure of energy industries and of the economic and antitrust consequences of the proposed legislation. According to Lea, “the results were to be embodied in a final report which could serve as source material for those interested in the subject.” (Lea, 15).

Lea found that Frederick M. Rowe, an attorney in Kirkland’s Washington office, was willing to take the assignment. After consultation, Stark Ritchie concurred in Lea’s recommendation to retain Mr. Rowe (Lea, ¶ 6). On February 25, 1976, Ritchie wrote a letter on API stationery to Rowe confirming the retention of the Kirkland firm on this assignment. (Ritchie Exh. 1). On May 4, 1976, Ritchie specified in a letter to Rowe that Kirkland’s work should in- *1292 elude the preparation of possible Congressional testimony and an analysis of the legislation’s probable effect on oil companies which would have to divest assets. (Ritchie Exh. 2). To collect the data on those assets, Ritchie stated that API would arrange for interviews by Kirkland with a cross-section of industry personnel. He also added the following significant statement to the letter:

“Your firm will, of course, act as an independent expert counsel and hold any company information learned through these interviews in strict confidence, not to be disclosed to any other company, or even to API, except in aggregated or such other form as will preclude identify- ' ing the source company with its data.”

According to Ritchie, these instructions on confidentiality were intended to protect the companies’ proprietary information and to preclude the exchange of the information among the competitor members of API. (Ritchie, ¶ 5).

At Ritchie's request, the corporate interviews were mainly arranged by Gerald Thurmond, who was Washington counsel for Gulf and a member of API’s Antitrust Strategy Group. (Ritchie, ¶ 4). On May 11, 1976, Thurmond scheduled an interview with Gulf officials to be held in Denver on May 20. (Mingee, Exh. A). Thurmond also called P. J. Hefler, API’s company contact at Kerr-McGee, on May 24, 1976 to inform him of Kirkland’s interviewing plans. (Hefler Exh. 7). The next day, Hefler returned a call from Nolan Clark, an attorney in Kirkland’s Washington office, who asked to interview Kerr-McGee employees on a confidential basis. (Hefler, ¶ 9).

Nolan Clark had been assigned by Frederick Rowe to take primary responsibility for the data collection, analysis, and drafting of the API report. (Rowe, ¶ 3). During the period of May through December, 1976, Thurmond conversed with Rowe and Clark on several occasions to discuss strategies and industry impact in connection with the horizontal divestiture legislation. Thurmond states that he “was given to believe that the Kirkland firm was representing both API and Gulf Oil” on the divestiture work. (Thurmond, ¶¶ 6-8). In opposition to this statement, Clark asserts that he knows of no basis for the belief that Kirkland represented Gulf, that Thurmond never expressed or suggested that he held such a belief, and that Clark never made such a representation to any Gulf personnel. (Clark, ¶ 13).

Nolan Clark handled most of the interviews of industry personnel. (Rowe, ¶ 6). According to Clark, the interviews were designed to ascertain the probable effects of the divestiture legislation, to obtain information for API’s anti-divestiture arsenal, and to help identify publicly available materials which could be published in an API report. (Clark, ¶ 4). Clark was aware of the confidentiality restrictions imposed in Ritchie’s May 4 letter.

Clark ultimately interviewed representatives of eight oil companies between April 29 and June 15, 1976. The companies included Gulf and Kerr-McGee, but not Getty. (Clark ¶ 7). In preparation for the Gulf interviews, Clark submitted a ten-page list of proposed questions to Thurmond, Gulf’s Washington counsel, who forwarded them to Gulf personnel. (Thurmond, ¶ 7; Clark, ¶ 8). The questions were intended to elicit information on the economic consequences of the legislation, and to gather the most effective arguments against the proposed divestiture measures. (Clark, ¶ 6). The Gulf interviews were eventually held on May 28, 1976 and Kerr-McGee personnel were interviewed on June 9, 1976.

Before these interviews took place, Ritchie sent a May 25 cover letter and survey questionnaire to 59 API companies. (Ritchie, ¶ 6). In the introductory memorandum to the questionnaire, Ritchie made several representations which are important to the present questions. (Hefler, Exh. 9). First, he stated that Kirkland had been retained by the API “to assist in preparing positions, arguments and testimony in opposition to” the divestiture legislation. Second, he stated that Kirkland needed two types of publicly unavailable information in order to complete its objective study of the *1293 legislative impacts of the pending bills. That information consisted of the estimated value of assets invested in alternative energy fields that the companies would have to divest if the legislation were passed, and the past and projected outlays for research and development in these fields. Ritchie asked that the data be sent directly to Kirkland, not to the API. Finally and most importantly, Ritchie stated that:

Kirkland, Ellis & Rowe is acting as an independent special counsel for API, and will hold any company information in strict confidence, not to be disclosed to any other company, or even to API, except in aggregated or such other form as will preclude identifying the source company with its data, (emphasis in original).

This language paralleled similar instructions from Ritchie to the Kirkland firm on May 4. Consistent with this assurance, Ritchie advised the companies that they need not identify their companies by name when completing the questionnaires. According to Kerr-McGee, these communications were the beginning of an attorney-client relationship between Kerr-McGee and Kirkland. (Brief, p. 7).

R. J. Hefler, a Kerr-McGee Vice-President and API’s company contact on the divestiture legislation, received the Ritchie memorandum “shortly after May 26,” and apparently prior to his June 9 interview with Nolan Clark. (Hefler, ¶ 10). James Mingee, a Gulf Vice-President, received the memorandum on June 8, some ten days after his May 28 interview with Clark. (Mingee, ¶ 8). With both Kerr-McGee and Gulf, the memorandum had been addressed to the company’s general counsel and forwarded to the respective executives.

The May 28 interview with Gulf personnel was held in Denver. At the request of Gulf personnel, Dr. I. C. Bupp of the Harvard Business School also attended the sessions. (Clark, ¶ 9). Dr. Bupp was connected with Management Analysis Center, Inc. (MAC), a business consulting group employed by API to compile a publishable report on the desirability and economic impact of the horizontal divestiture legislation.

At least seven Gulf executives, and Gulf’s regional attorney, attended the May 28, 1976 meeting. Mr. Mingee, who arranged the meeting and attended as a Gulf Vice-President, provided his contemporaneous understanding of the expected tenor and scope of the interviews in a May 27 intraoffice memo to the other participants. In the memo he noted that Kirkland “has been hired by API to prepare material for congressional hearings on horizontal divestiture” and that “Dr. I. C. Bupp is working with API on the same subject.” (Mingee Exh. B). Mingee expressed his hope that their questions could be satisfactorily answered “through an informal discussion,” since the preparation of written answers “may complicate the subject severely because undoubtedly it would require time consuming approvals at higher levels, perhaps even Pittsburgh.” (Id. Exh. B).

For the description of the topics discussed on May 28, we refer to the uncontradicted affidavit of Nolan Clark. (See Clark Aff., ¶ 12). Clark confirmed his recollection of the meeting with Dr. Bupp. At the beginning of the discussion, Clark was introduced as an attorney for API. Mr. Allen, Gulf’s regional counsel, suggested that discussion focus first on legal consequences of divestiture, such as bank approval of the sale of assets, performance guarantees, and the handling of retirement liabilities. After Mr. Allen left, Dr. Bupp asked questions on uranium pricing and marketing, including how Gulf set uranium prices. Gulf personnel responded that they relied on published data for uranium prices. According to Clark, this was the substance of the uranium pricing discussion, and all questions on that subject were posed by Dr. Bupp. Clark has submitted his notes of the meeting to the court for in camera inspection in order to protect any proprietary information, and although they are in a cryptic and abbreviated form, they suggest that the discussion included consideration of capital investments, production costs, and exploration expenditures in Gulf’s uranium, coal, *1294 oil, oil shale and gas industries. The entire meeting lasted more than two hours.

Nolan Clark’s interview with Kerr-McGee officials took place in Oklahoma City on June 9, 1976. Those officials were R. J. Hefler, Kerr-McGee’s Vice-President for Public Services, and George Cobb, Executive Vice-President. Mr. Cobb was chosen because of his long experience with the company and his extensive knowledge of uranium and coal. (Hefler, ¶ 11). Clark, Cobb and Hefler were the only persons present during the interview. No Kerr-McGee lawyers attended. At the outset of the meeting, in response to a question about Clark’s affiliation and the purpose of the meeting, Clark told Cobb and Hefler that pursuant to Kirkland’s retention by the API on the horizontal divestiture legislation he was interviewing industry personnel to analyze the probable consequences of the legislation. (Clark, ¶ 14; Hefler, ¶ 12). Hefler understood Clark to explain that Kirkland was working on behalf of API and also its members such as Kerr-McGee. (Hefler, ¶ 12). Clark denies he made any statement that Kirkland was working on behalf of any of the API’s member companies and knows of no basis for Hefler’s belief that Kirkland was representing Kerr-McGee. Neither Cobb nor Hefler expressed that belief during the meeting, according to Clark’s recollection. (Clark, ¶¶ 14, 16). Both Clark and Hefler agree that Clark made assurances that the information disclosed during the interview would be held in confidence, but Hefler asserts that that assurance extended to all information, while Clark claims it extended only to proprietary information, which could be disclosed in aggregate form, in conformity with earlier written communications from Stark Ritchie.

Both Clark and Hefler agree that the conversation focused on the legislation’s impact on Kerr-McGee uranium and coal assets, which it would be forced to divest. (Hefler, ¶ 13; Clark, ¶ 15). Clark was given considerable background information on Kerr-McGee’s uranium industry, including mining locations, uranium conversion process, and pellet fabrication. Clark states that virtually all the information provided was publicly available. (Clark, ¶ 15). On the subject of uranium marketing and pricing, Cobb described the escalating prices and tightening supplies in the current market, and the reasons behind the trends. (Hefler, ¶ 13). The session lasted about three hours.

As noted earlier, Kirkland did not interview any Getty personnel. However, Getty received the confidential API questionnaire which requested Getty to estimate the value of its assets subject to proposed divestiture and its research and development outlays in alternative energy fields. Getty completed the questionnaire and mailed its data sheets to Nolan Clark on June 4, 1976, with the understanding that the data would be held in confidence. (Copley aff., ¶ 3). Getty’s Vice President states that in submitting the data, he “acted upon the belief and expectation that such submission was made in order to enable [Kirkland] to render legal service to Getty in furtherance of Getty’s interests.” (Copley, ¶ 7). In opposition to this statement, Clark asserts that he knows of no basis for Copley’s belief and expectation, that he never even suggested that the data was to be used except for Kirkland’s report for API, and that Copley’s belief was never expressed to him during the course of the study. (Clark, ¶ 23).

Gulf submitted financial information and its completed questionnaire to Kirkland on August 10,11 and 13, 1976. (Mingee, ¶¶ 10, 11, 12). In each instance, Mr. Mingee stated in his cover letter that Gulf supplied the information on a confidential basis with the understanding that it would be aggregated in the industry and that it would not be reported separately without Gulf’s prior written consent. (Mingee Exh. E, F,. and G).

Kerr-McGee sent its completed questionnaire to Nolan Clark on August 25, 1976. (Hefler, ¶ 16).

In his affidavit, Nolan Clark explains that the questionnaires were sent directly to him in order to protect any data which the oil companies classified as proprietary information. (Clark, ¶ 17). This procedure *1295 eliminated the possibility that industry competitors could obtain the data through API. Clark states that none of the submitted data was used in the API report except in aggregate form. (Clark, ¶ 20). Clark asserts that except for the aggregated data on oil company assets and research and development expenses in alternative energy fields, all quantitative data used in the API report was derived from publicly available sources. (Clark, ¶ 28). He also reveals that some oil companies, such as Gulf, were receiving requests for data on their research and development outlays from the MAC group as well as API. (Clark, ¶¶ 21-22). The MAC survey form asked for some of the same data as was requested in the API questionnaire, although it is somewhat less comprehensive. (Clark, Exh. A, Attachment B). In addition, Clark sent to Gulf a request from First Boston Corporation for financial information on the coal interests of oil companies, a subject which was also partially included in the API survey. (Clark, ¶ 24). Gulf eventually supplied some or all of the requested data, and First Boston summarized its findings at a public symposium.

The final disposition of the oil company data sheets was settled in October, 1976. During their work on the API report, Rowe and Clark became concerned that legislative committees might subpoena the data sheets and that Kirkland might not be able to resist disclosure to Congress. (Clark, ¶ 25). Therefore, they decided to return the API questionnaires to the companies when the report was completed. This decision was conveyed to Stark Ritchie on October 15, the same day the final report was submitted to the API. The Ritchie letter does not contain Clark’s currently proffered rationale for the return of the data. (Clark, Exh. E). The questionnaires were ultimately returned to Gulf, Getty and Kerr-McGee on October 29, 1976.

Before its October 15, 1976 release date, the API report went through several drafts, which were sent to some API members for review and comments (Clark, ¶ 26). Both Hefler (Kerr-McGee) and Thurmond (Gulf) received copies of the drafts. (Hefler ¶¶ 15, 18; Thurmond, ¶ 9). For our purposes, we find it unnecessary to discuss the content of the preliminary versions of the API report.

The final API report is a voluminous document, containing some 230 pages of text and supported by 82 pages of exhibits. A major section of the report is devoted to a description of oil company participation in various energy fields, including coal, uranium, geothermal energy, oil shale, tar sands, synthetic fuels from coal, and solar energy. Other sections analyze United States energy requirements, examine and criticize the arguments put forward in support of the horizontal divestiture bill, describe the legislation’s negative impact on the economy and on energy production, and evaluate the legislation’s lack of harmony with antitrust principles, historical lessons and public policy. Uranium is the primary subject of about 25 pages of text and 11 pages of exhibits. References to uranium appear throughout the report.

On the same day that the final API report produced by Kirkland’s Washington office was published, Kirkland’s Chicago office filed the present complaint on behalf of Westinghouse against 29 uranium producers, including Kerr-McGee, Getty and Gulf. A comparison of the two documents reveals a rather basic conflict in their contentions and underlying theories. Because a major argument behind the divestiture legislation was that oil company participation in alternative energy fields creates anti-competitive pressures on the economy, the report marshalls a large number of facts and arguments to show that oil company diversification does not threaten overall energy competition. In particular, the report asserts that the relatively high concentration ratios in the uranium industry can be expected to decline (III 20-21), that current increases in uranium prices are a result of increasing demand (III 22-23), that oil company entry into uranium production has stimulated competition (V 10, 29) and diminished concentration (V 12, VI 13), that oil companies have no incentive to act in concert to restrict coal or uranium production (VI 18-19), and that the historical record refutes *1296 any charge that oil companies have restricted uranium output. (VI 24). The report concludes that “the energy industries, both individually and collectively, are competitive today and are likely to remain so.” (VI 34). In contrast, the major theory of the Westinghouse complaint is that uranium producers such as Gulf, Getty and Kerr-McGee have conspired to destroy competition in uranium marketing and pricing. To that end, they have allegedly coordinated production, withheld uranium from the market, fixed prices at artificially high levels, and generally suppressed competition in uranium marketing. Perhaps in recognition of the diametrically opposing theories of the API report and the Westinghouse complaint, Kirkland does not attempt to rebut the oil companies’ charges that it has simultaneously taken inconsistent positions on competition in the uranium industry.

The prominence of this conflict is more easily discerned from the documents themselves than from the contemporaneous activities of the Kirkland firm. Not only did completely different Kirkland attorneys work on the two matters, but the attorneys were segregated between the Washington and Chicago firms. In addition, Kirkland’s investigation of antitrust violations by uranium producers was treated as a highly confidential matter, which was not disclosed even within the firm to anyone not directly involved in the Westinghouse matter. Securities law dictated that public disclosure of the possible antitrust lawsuit be prevented. (Jentes, ¶ 15). Consequently, although the Washington office did know of Kirkland’s representation of Westinghouse on the utility contracts litigation, none of the Washington attorneys working on the API divestiture assignment knew of the separate Westinghouse antitrust complaint until it was filed in court on October 15, after the stock exchanges closed on that day. (Rowe, ¶¶ 8-9; Clark, ¶ 29). The Chicago attorneys also had little awareness, if any, of the API work by the Washington office. Although the attorneys working on the Westinghouse complaint do not profess complete ignorance of the API representation by their brothers in Washington, they state that they did not communicate with the Washington attorneys about the API work prior to October 15 and had no knowledge of the data collected for the API report. (Jentes, ¶ 17; Locke, ¶3; Newton, ¶ 17; Sonda, ¶ 14; Wilson, ¶ 3; Bartlit, ¶ 10; Goold, ¶ 5; Haubold, ¶ 4). Nolan Clark and Frederick Rowe confirm that they never disclosed any information from the API questionnaires or interviews to any lawyer in the Chicago office. (Clark, ¶ 30; Rowe, ¶ 25).

There is one partial overlap between Chicago and Washington attorneys in connection with the API anti-divestiture efforts. The overlap involves the work of William Jentes, who was one of Kirkland’s lead attorneys working on the Westinghouse antitrust complaint. In August, 1976, L. Bates Lea, as head of API’s Legal Task Force on the divestiture legislation, arranged for Jentes to prepare a legal memorandum analyzing arguments which had been advanced to broaden the scope of existing antitrust laws to outlaw interlocking directorates. (Jentes, ¶ 16; Lea, ¶ 8). The issue had been raised by proponents of the divestiture legislation as an example of the collusive behavior of large corporations. Since Lea’s own legal staff at Standard Oil was fully committed on other matters, Lea farmed out the task to Kirkland. (Lea, ¶ 8). Lea forwarded the Kirkland memo to the API, which mailed it to its company contacts on September 23, 1976. Kirkland’s fees were paid by Standard, and no Kirkland attorney working on the memo had any contact with any API representative except Lea. (Jentes, ¶ 16). The memorandum addresses the antitrust issues from a predominantly theoretical perspective, and does not contain one word on uranium. (Hefler, Exh. 13).

In view of this rather rigid separation between Kirkland attorneys working on the Westinghouse antitrust complaint and the API report, it is understandable that officials of Getty, Gulf and Kerr-McGee state that they were never told by Clark or Rowe that Kirkland was considering an antitrust action against those companies, and were *1297 never told of any possible conflict between Kirkland’s dual engagements. (Thurmond, ¶ 8; Cody, Rebuttal Aff., ¶ 4; Copley, ¶ 5; Heimann, ¶ 5; Hefler, ¶ 14). A Gulf official maintains that if he had been aware of such facts, he would not have released the data in the API questionnaire to Kirkland. (Copley, ¶ 5).

Following the filing of the Westinghouse complaint and the publication of the API report, Kirkland and API personnel made a number of efforts apparently intended to minimize the possibility of a conflict of interest. On October 20 Stark Ritchie, API’s General Counsel, telephoned William Heimann, General Counsel of Kerr-McGee, to report that he had been assured by Fred Rowe that no Kerr-McGee data obtained for the API report had been or would be made available to Kirkland attorneys working on the Westinghouse case. (Heimann, Exh. A). Rowe confirms this conversation with Ritchie. (Rowe, ¶ 12). In mid-November, 1976, L. Bates Lea, head of the API Legal Task Force, called Ralph Copley, Getty’s Chief Counsel, to state his belief that no conflict existed since the Westinghouse complaint made specific § 1 Sherman Act charges while the API work was a defense of the industry’s structural posture. (Copley Rebuttal Aff.). In a December 7, 1976 letter to Ritchie, Rowe concurred with Lea’s belief that no conflict existed, explaining that the API and Westinghouse matters dealt with completely different legal approaches to the application of antitrust principles, namely across-the-board legislative restructuring as opposed to case-by-case judicial enforcement. He added, however, that “to avoid any appearances of a possible future conflict,” Kirkland should not advise API on uranium marketing and pricing matters during the pendency of the Westinghouse lawsuit without prior consent by both clients. (Rowe, Exh. C). Westinghouse has concluded that no conflict exists. (Pugliese, ¶ 5). And on December 1, 1976, the API’s General Committee on Law discussed the conflict problem and reached a consensus that Kirkland’s Washington office should continue' to advise the API on the divestiture legislation. (Thurmond Rebuttal Aff., ¶ 3). There is a sharp dispute between two members present at the meeting whether the Committee concluded that no conflict existed. Chairman Lea says yes (Lea, ¶ 9) and member Thurmond says no (Thurmond, ¶ 3). Kerr-McGee denies that the API committee has any power to issue a binding decision on this issue. (Cody Rebuttal Aff., ¶ 7).

There is one additional chronological strand of facts which runs alongside the history of Kirkland’s API representation and which Kirkland deems significant to the oil companies’ present charges of conflicting interests. Kirkland traces its representation of Westinghouse on the utility contracts litigation back to January, 1976 and describes its discovery requests in that case which were directed against the oil company movants. Kirkland asserts that during these contacts Kirkland attorneys consistently identified their Westinghouse affiliations and made numerous inquiries which put the companies on notice as to their investigation of a possible antitrust conspiracy in uranium pricing. Kirkland points to these encounters as evidence of its adversary stance with the oil companies and as evidence that no attorney-client relationship existed between Kirkland and the companies.

As noted earlier, Westinghouse is defending the utility contract action in the Eastern District of Virginia on the theory that unforeseen intervening circumstances regarding the price and supply of uranium rendered performance of its uranium supply contracts “commercially impracticable” under Section 2-615 of the Uniform Commercial Code. One of the intervening circumstances that Westinghouse has alleged in its answers to the complaints is an illegal agreement among uranium producers to manipulate the price and availability of uranium. In Re Westinghouse Electric Corporation Uranium Contract Litigation, 436 F.Supp. 990, 995 (Jud.Pan.Mult.Lit. 1977). The Judicial Panel recognized “that the allegations of a uranium price-fixing and market manipulation conspiracy in [the present case] and the actions in [Virginia] *1298 involve common questions of fact . . ” Id.

In developing evidence for its defenses in the contract actions, Kirkland’s Chicago attorneys working on the Westinghouse case embarked on a program to meet with uranium producers and others to gain knowledge of the uranium market. (Jentes, ¶ 10; Newton, ¶ 3; Sonda, ¶ 2). As part of this evidence-gathering effort, these Kirkland attorneys, mainly George Newton and James Sonda, contacted, deposed or sought discovery from agents of each of the three oil companies which have moved for Kirkland’s disqualification. (Newton, ¶ 4).

On January 16, 1976, Sonda and Newton met for three hours with Mr. Peterson of the Getty legal staff and two Getty employees at company headquarters in Los Angeles. One of the employees was Dr. Siegfried Muessig, whom Kirkland believed had knowledge of the uranium market. At the outset of the meeting, Sonda and Newton identified themselves as Kirkland attorneys representing Westinghouse. According to their recollection, the discussion touched upon the March, 1973 meeting of uranium producers at Oak Brook, Illinois, which is identified in Westinghouse’s present antitrust complaint as one phase of the uranium producers’ conspiracy to demand and quote higher uranium prices. The participants also discussed statements by producers, including Getty, that uranium price increases were needed and probed the reasons behind the statements. (Newton, ¶ 5; Sonda, ¶ 3). Mr. Peterson, Getty’s attorney, has a somewhat different recollection of the meeting. He understood that Kirkland’s theory for its defense of commercial impracticability rested on a number of economic factors which contributed to uranium price increases, including the Arab oil embargo, Atomic Energy Commission policies, and governmental action of foreign uranium producing countries. He was told that Kirkland only wanted to discuss past and current projections of uranium supplies and prices, and heard no intimations that Kirkland saw conspiratorial conduct of uranium producers as a factor in the price increase. (Peterson Aff.).

On July 13,1976, Kirkland served a deposition subpoena on Dale Cooper, a Getty employee who presented a paper at Oak Brook on the need for increased uranium prices. (Newton, ¶ 12). The subpoena requested Cooper to produce documents reflecting communication with other uranium producers on “ . . . uranium prices or market conditions or the ability or inability of any producer to supply uranium to any customer.” (Id.) At the deposition, during which Getty counsel were present, Sonda questioned Cooper at length about his participation in the Oak Brook meeting. (Sonda, ¶ 4). Cooper was directed not to answer any questions relating to the market analysis and price predictions made within his department since the late 1960’s. (Newton Exh. 6). Although the parties had earlier agreed to limit the scope of the documents under subpoena, the documents eventually produced were unsatisfactory to Kirkland attorneys. (Newton, ¶ 13).

On August 30, 1976, Kirkland served a subpoena duces tecum on Dr. Muessig of Getty, again seeking to discover documents relating to price communication with other producers and to the Oak Brook meeting. (Newton, ¶ 14; Sonda, ¶ 5). Getty again objected to the subpoena. Discussions ensued between Getty and Kirkland attorneys. Sonda explained that efforts by the uranium producers to raise prices and restrict supply were highly relevant to Westinghouse’s defense to the uranium contracts. (Sonda, ¶ 6). Getty attorneys speculated that Kirkland would use the information to prepare an antitrust suit against Getty, and they told Getty on September 19 that they would not comply unless they kn