Conflict-of-Interest Suit at CIT an 'Abuse of Litigation Process,' Georgetown Professor Says

Antidumping duty petitioners submitted various supplemental authorities in Amsted Rail Co.'s case over its former counsel's purported "betrayal" in using a former client's information against it in a later injury proceeding at the International Trade Commission. The petitioners, collectively referred to as the Coalition of Freight Coupler Producers, included a declaration from Georgetown University Law Center ethics professor Michael Frisch discussing whether ARC's former counsel, Daniel Pickard, now-partner at Buchanan Ingersoll, committed an ethics violation. Frisch said that the D.C. Bar Rule 1.9 concerning conflicts of interest does not apply to ARC since the only party affected by the injury proceeding is ASF-K de Mexico, a Mexican maquiladora factory affiliated with ARC that did not formerly employ Pickard, and that ARC's lawsuit is an "abuse of the litigation process" (Amsted Rail Co. v. United States International Trade Commission, CIT #22-00307).

The case concerns a past ITC injury investigation on freight rail couplers and parts thereof from China and a present injury investigation on the same goods from China and Mexico. ARC is a U.S. producer and importer of freight rail couplers, and originally employed Wiley Rein, including Pickard at the time, to represent it. Pickard filed an antidumping and countervailing duty petition on behalf of ARC and McConway & Torley (M&T) to start the prior injury investigation. ARC then withdrew from the petition, leaving Pickard to continue the case with M&T and a labor union that replaced ARC. The ITC issued an administrative protective order (APO).

In that investigation, the ITC unanimously voted that the U.S. industry was not materially harmed. During the inquiry, Pickard moved from Wiley to Buchanan. The injury determination was issued in June, when the APO covered only Pickard and two non-attorneys at Wiley. After the determination, in July, Buchanan filed an amendment to the APO adding seven attorneys and two non-attorney personnel from Buchanan.

Days later, Buchanan filed a petition to start another injury investigation on the freight rail couplers, this time including Mexican imports as well as Chinese ones, with M&T and the union standing as the two petitioners. Pickard, who represented ARC, included Mexican imports in the petition, knowing that the only Mexican imports came from ARC's affiliate ASF-K. Describing this as a "betrayal," ARC originally took to the ITC to argue that Pickard and Buchanan should be disqualified from the proceeding and dismissed from the APO (see 2210120062). The company filed suit against CIT to argue that the ITC's decision to give BPI access to Buchanan violated the Administrative Procedure Act and its 5th Amendment rights (see 2210170084).

Pickard, now solely representing the petitioners, moved to add various supplemental authorities to the case, given that the case "has proceeded on a very brief timeline" and that the plaintiffs "have levied serious allegations of professional misconduct." The first outside source concerns Frisch's declaration. The law professor said that the D.C. Bar ethics rule cited by the plaintiffs does not apply to the present case. This rule, Rule 1.9, says that a lawyer who formerly represented a client shall not represent another person in the same or substantially related matter where that person's interests "are materially adverse to the interests of the former client" lest the former client give consent.

Frisch said that this rule is inapplicable since ARC will not be a mandatory respondent in the Commerce Department's investigation and, as such, the "real party which is adverse to the Defendant-Intervenor is ASF-K." Given this, since ASF-K has never been Pickard's client, this rule "is inapplicable," the professor said. Frisch also cited the Restatement (Third) of The Law Governing Lawyers, Section 75, to posit that a co-client may not invoke attorney-client privilege against another co-client over communications involving either party during the co-client relationship. This rule is rooted in the assumption that all information is to be shared between all of them.

The professor further argued that ARC's and ASF-K's lawsuit "is itself an abuse of the litigation process," since the Mexican factory, "a non-client," is looking to disqualify Pickard despite there being no basis in the law for a non-client to do so. "[T]he non-client seeks to disqualify Mr. Pickard, notwithstanding a knowing waiver by Amsted, an actual client, that complied with all governing ethical requirements, ... and the retainer agreement specifically included a waiver in precisely the circumstances presented here," Frisch said. "[T]he waiver was the product of negotiations, in which Amsted, the waiving client, had the full and complete assistance of independent counsel." The Model Rules of Professional Conduct have also shown that the violation of a rule should not lead to litigation, nor does it warrant "any nondisciplinary remedy," including disqualification," he said.

The petitioners also included in their supplemental authorities the Preamble to the American Bar Association Model Rules, the D.C. Bar Ethics Opinion 317 concerning waivers of conflicts of interest and an excerpt from the Restatement (Third) of The Law Governing Lawyers, Section 75.