1996-03

QUESTION:
This letter constitutes a request for an expedited opinion
with respect to the question of whether or not I and other
lawyers have a conflict of interest arising out of our
participation in two separate lawsuits. In the Circuit
Court
of Any County, Alabama, in a case styled Doe v. Roe, et
al.,
civil action number CV-1212, we represent a class of
pharmacy owners in a lawsuit filed pursuant to Alabama’s
antitrust statute, §6-5-60 Alabama Code 1975, against
numerous pharmaceutical manufacturers. In Doe we allege
that
the pharmaceutical manufacturers have conspired in a price
discrimination scheme to charge favored purchasers of
pharmaceuticals lower than market rates while the same
defendants charge the owners of independent pharmacies
artificially and agreed upon high rates.

Other lawyers and I have also recently filed a petition to
intervene and a complaint in intervention in Smith v.
Acme Laboratories, et al., civil action number CV-3434
pending in the Circuit Court of Some County, Alabama.

In the Smith case a class of indirect purchasers or
consumers has been certified as a class composed of Alabama
residents as well as residents of the District of Columbia
and the States of Kansas, Maine, Michigan, Minnesota,
Mississippi, New Mexico and Wisconsin. In Doe no class
certification has yet been entered.

In the Smith case the lawyers for the original plaintiff
and plaintiff class oppose our intervention on the grounds
that we have a conflict of interest. We believe that no
conflict exists for the following reasons:
1. The defendants are the largest pharmaceutical
manufacturers in the world. Between them they have more
assets and a greater wealth than most of the countries of
Europe combined. This is not a situation where there is a
limited fund for recovery. The two classes may be competing
for the same funds but the funds are unlimited. As you can
see from the attached complaint and motion for class
certification and order in the Smith case, individual
claims of $50,000 or more are excluded by definition from
the class. There is simply no possibility that these two
classes, that is the class in Doe and Smith, will ever
be competing for a limited pool of money.
2. Under Alabama’s antitrust statutory scheme the damages
sought in both cases are statutory and therefore are
defined
or fixed by statute. It is not a situation where unlimited
damages would be sought by competing classes.
3. The wrongful conduct complained of in both actions is
the concerted effort by the defendants to fix the prices of
drugs charged to retail pharmacies and to the customers of
those pharmacies. There is no allegation in either case
that
the retail pharmacies have violated Alabama law. The
wrongful conduct complained of in both cases is that of the
defendants. This wrongful conduct has affected both classes
of plaintiffs. The fact that the pharmacies may in some
instances have passed on the artificially inflated prices
to
the indirect purchasers or the consumers is not a violation
of Alabama law and is not the subject of either complaint.
With respect to the liability of the defendants, then, the
necessary proof is identical in these cases. Accordingly we
could have no conflict if that is the complaint of the
plaintiffs’ lawyers in Smith.

Any claim by the plaintiffs’ lawyers in the Smith case
that we have a conflict of interest due to our
representation of the plaintiffs’ class in Doe could
only be raised after there had been a certification of the
plaintiffs’ class in Doe. No certification has been made
by Judge Goodnite. Even if we admitted the possibility of
such a conflict, it could not conceivably arise until there
was a certification in Doe.
* * *
We do not believe that we have a conflict of interest
between these two plaintiff classes. Judge Jones, the judge
in the Smith case, will be deciding sometime in the near
future whether we have a conflict or not. We would like as
prompt a ruling as we possibly can get from your office as
to whether or not any conflict exists.”

* * *

ANSWER:
You do not presently have a conflict of interest under the
circumstances described in your letter.

DISCUSSION:
This situation is covered by Rule 1.7{b) , which states:

“Rule 1.7 Conflict of Interest: General Rule

* * *

(b) A lawyer shall not represent a client if the
representation of that client may be materially limited by
the lawyer’s responsibilities to another client or to a
third person, or by the lawyer’s own interests, unless:

(1) The lawyer reasonably believes the representation
will not be adversely affected; and

(2) The client consents after consultation. When
representation of multiple clients in a single
matter is undertaken, the consultation shall
include explanation of the implications of the
common representation and the advantages and risks
involved.”

Ordinarily a lawyer may not represent two plaintiffs in
separate actions against the same defendant if the lawyer
knows or has reason to believe there will be insufficient
insurance or assets to satisfy both potential claims.
However, if both plaintiffs consent to the representation
after full disclosure then the conflict is obviated.

In the circumstances you have described, there do not
appear
to be any issue conflicts between the two plaintiff classes
you seek to represent. In Doe, you represent Alabama
pharmacy owners and in Smith, you will be representing
consumers who have purchased drugs in the past. Both groups
contend that the defendant took illegal steps and measures
to inflate the prices of their products to those in the
distribution and end-user positions. As for whether both
plaintiff classes will be competing for the same assets to
satisfy their claims, there is no indication, at this
point,
that the defendants’ resources are so limited as to
generate
that type of conflict for you. If future discovery reveals
that situation, then the conflict issue would have to be
addressed again. Rule 1.7(b), of course, gives you the
option of seeking consent from your class clients. In that
case the risk of any adverse effect created by the multiple
representation is eliminated.

Download PDF