Corporate Law

Federal Judge Steps Aside, Allows Del. Court to Decide Claimed Cravath Conflict Issue

A federal judge in Philadelphia has stepped aside from a lawsuit seeking to disqualify Cravath Swaine & Moore from serving as counsel to a company seeking to take over a former client of the law firm.

Because Delaware Chancery Court is to address the same conflict issue on an expedited basis in earlier-filed litigation in a court battle over the $5.1 billion takeover bid, there is no prejudice to Airgas Inc. in awaiting that ruling, held U.S. District Judge Eduardo Robreno in a decision yesterday.

And at the same time, Robreno found, policy concerns including comity and the fact that would-be acquirer Air Products & Chemicals isn’t a party to the federal action supported a compelling argument for the temporary stay sought by Air Products, reports the Legal Intelligencer.

“It would constitute an unprecedented intrusion of federal power upon a local court for this court to dictate to the Delaware Chancery Court that a law firm (Cravath) was disqualified from representing a litigant (Air Products) in a proceeding before it,” says Robreno in his written opinion (PDF), granting the temporary stay sought by Air Products.

The parties hotly contest, the judge notes, “the nature of Cravath’s representation” of Airgas, during a nine-year period, and Air Products, over more than four decades, as well as “the scope of the representation and when Cravath’s representation of Airgas came to an end. Also in dispute is the nature of the information Cravath learned while representing Airgas.”

Additional coverage: “Ex-Client Loses TRO Bid to Ban Cravath in $5.1B Deal, But Could Win Next Round Next Week” “Cravath Fires Back in Conflict Case, Says Ex-Client is Doing Battle in Wrong Court”

Philadelphia Inquirer: “Airgas board rejects offer by Air Products”

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