Maritrans Gp Inc. v. Pepper, Hamilton & Scheetz

602 A.2d 1277 (1992)

Purchase the Printed Copy at bsmsphd.com

Nature of the Case

To access this section all you need to do is click here and register.

Facts

P is a Philadelphia-based public company in the business of transporting petroleum products. P competes in the marine transportation business with other tug and/or barge companies. Pepper and Messina (Ds) represented Maritrans or its predecessor companies in the broadest range of labor relations matters for well over a decade. Pepper (D) represented Maritrans in a complex public offering of securities, a private offering of $115 million in debt, a conveyance of all assets, and a negotiation and implementation of a working capital line of credit. Pepper (D) was paid approximately $1 million for its labor representation and in the last year of the representation, approximately $1 million for its corporate and securities representation. Ds gained detailed financial and business information, including P's financial goals and projections, labor cost/savings, crew costs, and operating costs. D's knew the complete inner-workings of P. P even analyzed each of its competitors with Ds. These analyses included an evaluation of each competitor's strengths and weaknesses, and of how P deals with its competitors. Ds subsequently undertook to represent several of P's New York-based competitors. The New York companies sought wage and benefit reductions in order to compete more effectively with, i.e., to win business away from, P. P objected to these representations, and voiced those objections to Ds. Ds took the position that this was a 'business conflict,' not a 'legal conflict,' and that they had no fiduciary or ethical duty to P that would prohibit these representations. P and Ds agreed that Ds would continue as P's counsel but would not represent any more than the four New York companies it was then already representing. Messina (D) was to act not as counsel for P but, rather, as counsel for the New York companies, while two other D labor attorneys would act as counsel for P. It was agreed that the attorneys on one side of this 'Chinese Wall' would not discuss their respective representations with the attorneys on the other side. P agreed because it was the best way to stop Ds rom representing yet more of its competitors, especially Bouchard. Messina (D) then 'parked' Bouchard and another of the competitors, Eklof, with Mr. Vincent Pentima, a labor attorney then at another law firm. Of course, Ds were negotiating with Pentima for Pentima's admission into the partnership at D, notwithstanding D's specific agreement not to represent these other companies. P executives discussed with Ds plans and strategies of an aggressive nature in the event of a strike against the New York companies. Less than one month later, D terminated its representation of P. D then undertook the representation of the New York companies. Pentima also joined D as a partner and brought with him, as clients, Bouchard and Eklof. P filed a complaint against Ds. The court imposed a preliminary injunction, and Ds appealed getting it overturned. The Superior Court found that the trial court's use of Pennsylvania Rules of Professional Conduct 1.7 and 1.9 as points of reference for its breach of fiduciary duty analysis improperly augmented the substantive law of our Commonwealth. The Superior Court did not analyze whether the common law principles of fiduciary duty, embodied in those rules, nonetheless apply to this case. P appealed.