rh answering brief in opposition to motion to disqualify

8/14/2019 RH Answering Brief in Opposition to Motion to Disqualify

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IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

x

ROHM AND HAAS COMPANY,

Plaintiff,

v.

THE DOW CHEMICAL COMPANY andRAMSES ACQUISITION CORP.,

Defendants.

:

:

:

:

:

:

x

C.A. No. 4309-CC

PLAINTIFFS ANSWERING BRIEF IN OPPOSITION TO DEFENDANTSMOTION TO DISQUALIFY WACHTELL, LIPTON, ROSEN & KATZ FROM

CONDUCTING DISCOVERY AGAINST DOW AND EXAMINING DOW WITNESSES

OF COUNSEL:

WACHTELL, LIPTON, ROSEN & KATZ51 West 52nd StreetNew York, New York 10019(212) 403-1000

ROHM AND HAAS COMPANYRobert A. Lonergan100 Independence Mall WestPhiladelphia, Pennsylvania 19106(215) 592-3000

Dated: February 9, 2009

CONNOLLY BOVE LODGE & HUTZ LLPCollins J. Seitz, Jr. (No. 2237)Henry E. Gallagher, Jr. (No. 495)David E. Ross (No. 5228)Bradley R. Aronstam (No. 5129)The Nemours Building1007 North Orange StreetP.O. Box 2207Wilmington, Delaware 19899(302) 658-9141

Attorneys for Plaintiff Rohm and HaasCompany


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1. Dow acquiesced in and consented to Wachtells representation of Rohm and Haas by failing to express an objection until afterlitigation began.......................................................................................... 23

2. Dow cannot excuse its failure to make a timely objection byclaiming that it was presented with a fait accompli .................................. 24

CONCLUSION............................................................................................................................. 25

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TABLE OF AUTHORITIES

Cases: Page

Audio Jam v. Fazelli ,

1995 WL 1791087 (Del. Ch. Aug. 17, 1995) ........................................................................... 10

Avacus Partners, L.P. v. Brian ,1990 WL 27538 (Del. Ch. Mar. 9, 1990).................................................................................. 21

Deemer Steel Casting Co. v. E. Coast Erectors , Inc. ,1990 WL 143840 (Del. Ch. Sept. 28, 1990) ............................................................................. 19

Del. Trust Co. v. Brady ,1988 WL 94741 (Del. Ch. Sept. 14, 1988)............................................................................... 11

Del-Chapel Assocs. v. Ruger ,2000 WL 488562 (Del. Ch. Apr. 17, 2000)................................................................................ 9

Deptula v. Steiner ,2003 WL 23274846 (Del. Super. Dec. 15, 2003) ................................................................. 9 n.6

Eli Lilly & Co. v. Genentech Inc. ,17 U.S.P.Q.2d 1531 (S.D. Ind. July 17, 1990) ................................................................... 23, 24

Elonex I.P. Holdings, Ltd. v. Apple Computer, Inc. ,142 F. Supp. 2d 579 (D. Del. 2001).................................................................. 9 n.6, 20, 21 n.13

Express Scripts, Inc. v. Crawford ,2007 WL 417193 (Del. Ch. Jan. 25, 2007)............................................................. 10, 20, 21, 22

Hendry v. Hendry ,2005 WL 3359078 (Del. Ch. Dec. 1, 2005)....................................................................... passim

IMC Global, Inc. v. Moffett ,1998 WL 842312 (Del. Ch. Nov. 12, 1998) ....................................................................... 10, 19

In re Appeal of Infotechnology, Inc. ,582 A.2d 215 (Del. 1990) ........................................................................................... 2, 9, 10, 24

In re Appeal of Dunlap ,2008 WL 2415043 (Del. May 6, 2008)................................................................................. 1, 10

J.E. Rhoads & Sons, Inc. v. Wooters ,1996 WL 41162 (Del. Ch. Jan. 26, 1996)........................................................................... 24, 25

Kanaga v. Gannett Co. ,1993 WL 485926 (Del. Super. Oct. 21, 1993).......................................................................... 10

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Kenton v. Bellevue Four, Inc. ,1999 WL 463684 (Del. Super. Apr. 26, 1999) ......................................................................... 23

Manchester v. Narrangansett Capital, Inc. ,1989 WL 125190 (Del. Ch. Oct. 19, 1989) .............................................................................. 16

McAllister v. Kallop ,1993 WL 205037 (Del. Ch. June 8, 1993)................................................................................ 20

Nemours Found. v. Gilbane ,632 F. Supp. 418 (D. Del. 1986)....................................................................................... 21 n.13

Postorivo v. AG Paintball Holdings, Inc. ,2008 Del. Ch. LEXIS 17 (Del. Ch. Feb. 7, 2008)..................................................................... 12

Sanchez-Caza v. Estate of Whetstone ,2004 WL 2087922 (Del. Super. Sept. 16, 2004) ............................................................... passim

Satellite Fin. Planning Corp. v. First Natl Bank of Wilmington ,652 F. Supp. 1281 (D. Del. 1987).......................................................................................16-17

SBC Interactive, Inc. v. Corporate Media Partners ,1997 WL 770715 (Del. Ch. Dec. 9, 1997)............................................................................ 1, 11

Unanue v. Unanue ,2004 WL 602096 (Del. Ch. Mar. 25, 2004)....................................................................... passim

Zirn v. VLI Corp. ,1990 WL 119685 (Del. Ch. Aug. 13, 1990) ............................................................................. 12

Zirn v. VLI Corp. ,1989 WL 79963 (Del. Ch. July 17, 1989)................................................................................. 13

Rules:

Del. Lawyers R. Profl Conduct 1.7 & cmt. [7] ............................................................... 10-11, 12

Del. Lawyers R. Profl Conduct 1.9 & cmt. [3] .................................................................... 15, 16

Other Authorities:

7 Am. Jur. 2d A TTORNEYS AT LAW 137 (2008) ......................................................................... 11

Matthew F. Boyer, In the Wake of Infotechnology : Stricter Scrutiny of Attorney Disqualification Motions , 22-Winter D EL. LAW . 16 (2005) ...................................................... 9

Charles W. Wolfram, Former-Client Conflicts , 10 G EO. J. LEGAL ETHICS 677(1997) ....................................................................................................................................... 17

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Dows claim that Wachtell should be disqualified under the Rule of Professional

Conduct governing conflicts with former clients carries no more weight. Dows argument is that

its transformative strategy a strategy that Dow has touted publicly and prominently since at

least 2006 lies at the very heart of the instant litigation. Dow Br. 11-12. 1 That claim

strains credulity. This is a breach-of-contract case where the defendant admits that it has

breached the contract. The issue for trial is whether events that occurred after the contract was

signed allow Dow to avoid specific performance despite the fact that Dow agreed that Rohm and

Haas would be entitled to that remedy. Indeed, it is Dow that trumpets repeatedly that this case

is about what has happened in the last forty-five days . Direct quote: For Dow, Rohm and Haas, and the Merger, the world changed beginning December 28 . Answer, p. 13 (emphasis

added). Any secret strategic thinking two or three years ago that started Dow down the long pa

to buying Rohm and Haas is not relevant to th

th

is case.

Finally, the lack of persuasive merit of Dows motion, and its fundamentally tac-

tical nature, is demonstrated by Dows own conduct. Dow has of course known that Rohm and

Haas was represented by Wachtell from June 2008 onwards. Dows counsel sat opposite

Wachtell at the negotiating table. But never in the course of these inherently adversarial negotia-

tions, or in the months of interactions that followed, did Dow invoke the conflict it relies upon

now. Time and again, the courts of this State have rejected disqualification motions deployed as

procedural weapons for mere tactical gain. In re Appeal of Infotechnology, Inc. , 582 A.2d

215, 220-21 (Del. 1990). Dows motion is meritless, tactically motivated, and untimely. It

should be denied.

1 Memorandum Of Law In Support Of Dows Motion To Disqualify Wachtell, Lipton,Rosen & Katz From Conducting Discovery Against Dow And Examining Dow Witnesses, citedherein as Dow Br.

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STATEMENT OF FACTS

A. Wachtells prior representation of Dow

Wachtell was asked by Dow to provide advice with respect to its takeover de-

fenses in February 2007. At that time, Martin Lipton sent an internal e-mail to Wachtells New

Matter Committee that, as Dow points out, said Wachtells representation of Dow was continu-

ing. 2 Mr. Lipton proceeded to advise Dow on takeover defenses and certain other confidential

matters unrelated to the acquisition of Rohm and Haas. Mr. Lipton last recorded time spent on

Dow matters in September 2007. Lipton Aff. 2-3.

In April 2007, Wachtells representation of Dow expanded to include the contro-

versy surrounding two Dow executives, J. Pedro Reinhard and Romeo Kreinberg, whose em-

ployment was terminated after Dow learned that they were attempting to arrange an LBO of the

company without the authorization or knowledge of Dows board of directors. Lipton Aff. 2.

Jonathan Moses, a litigation partner at Wachtell, led a team that conducted an internal investiga-

tion into Reinhards and Kreinbergs activities, provided advice with respect to litigation be-

tween the executives and Dow (although Wachtell did not appear as counsel to Dow in that liti-

gation), and responded to inquiries from the SEC concerning the episode. Wachtells work on

these matters was substantially concluded by January 2008. Moses Aff. 2-3. 3

2 This e-mail describing the then-representation as continuing was not sent to Dow. Itwas produced by Wachtell in response to a third-party subpoena and provided to Dows counselin connection with the litigation in which the e-mail was produced. Moses Aff. 6.3 After January 2008, Wachtell performed only incidental work arising out of theKreinberg/Reinhard affair, mostly consisting of responding to a subpoena served on Wachtell byKreinberg. Moses Aff. 4. The litigation brought by Reinhard and Kreinberg was settled onJune 2, 2008. Moses Aff. Ex. A.

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In the course of the litigation teams work, Mr. Moses and one associate were

given password access to a database of confidential Dow documents, and Mr. Moses was given

access to Messrs. Reinhards and Kreinbergs e-mails. Moses Aff. 8. No Wachtell attorney

has accessed the database or the e-mails since 2007. Moses Aff. 8.

Wachtell has not performed any work for Dow since June 2008. The last bill to

Dow, sent on June 20, 2008, was [f]or services from November 1, 2007 to May 31, 2008 in

connection with Reinhard/Kreinberg litigation and totaled $65,000. Moses Aff. Ex. B. Of the

in excess of $2,000,000 that Dow says it paid Wachtell in 2007 and 2008 (Stuart Aff. 4),

$65,000 of that sum was billed in 2008. Moses Aff. 5.B. Wachtells representation of Rohm and Haas

Rohm and Haas retained Wachtell in October 2007 to provide advice in connec-

tion with Rohm and Haass consideration of its strategic alternatives. Neff Aff. 2; Lonergan

Aff. 2. In June 2008, Rohm and Haas decided to conduct an auction process. Wachtell repre-

sented Rohm and Haas throughout the auction process, including in the negotiation of the initial

confidentiality agreement with Dow, an agreement that included substantive terms restricting

Dows conduct and rights including in the event its bid did not succeed. Neff Aff. Ex. A.

Wachtell also represented Rohm and Haas in the negotiation of the Merger Agreement. Many

aspects of both the confidentiality agreement and the Merger Agreement were vigorously negoti-

ated; contrary to the suggestion in Dows brief (p. 14), price was not the only focus of the nego-

tiation. Lonergan Aff. 3; Neff Aff. 3. Throughout these negotiations, Wachtell regularly in-

teracted with Dow and its counsel and vigorously represented its client, Rohm and Haas. Dow

never suggested to either Wachtell or Rohm and Haas that there was any supposed conflict. Lon-

ergan Aff. 3; Neff Aff. 3.

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On two occasions during negotiations in late June and early July, Charles Kalil,

General Counsel of Dow, telephoned Mr. Lipton. On the first occasion, Mr. Kalil wanted to ad-

dress an issue that had arisen in the negotiation of the confidentiality agreement; on the second,

Mr. Kalil complained about the manner in which Wachtell was conducting the negotiations. Lip-

ton Aff. 5. Both times Mr. Lipton made clear to Mr. Kalil that Wachtell was representing

Rohm and Haas, that Mr. Lipton was not involved in the negotiations, and that Mr. Lipton would

not discuss the matter with him. Lipton Aff. 5. On neither occasion did Mr. Kalil object to

Wachtells representation of Rohm and Haas or suggest that there was a conflict. Lipton Aff.

5.In the months after the Merger Agreement was signed, Dow and its counsel con-

tinued to deal regularly with Wachtell on diligence, antitrust and other matters. Neff Aff. 4;

Lonergan Aff. 4. And again, throughout these pre-closing activities, Dow never raised any

concern about Wachtells representation of Rohm and Haas. Neff Aff. 4; Lonergan Aff. 4.

Beginning in November 2008, Dow began to make requests for further detailed

due diligence about a variety of topics. Dow indicated that the information it was seeking to

gather was not intended for integration planning purposes, but instead was part of Dows due

diligence against the representations and warranties of the Merger Agreement. Neff Aff. 5,

Ex. B. During a November 25, 2008 call among Dow, Dows counsel, Rohm and Haas, and

Wachtell, Dow again stated that this due diligence was not part of integration planning, but was

intended to assess the accuracy of Rohm and Haass representations and warranties review .

Since the closing of the Merger was conditioned upon the material accuracy of these representa-

tions and warranties (as provided in Section 6.3(a)(i) of the Merger Agreement), it was plain that

Dows interest in testing the accuracy of Rohm and Haass representations was adverse to the

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D. The nature and scope of the present litigation

The premise of Dows claim of a conflict is its contention that privileged informa-

tion about its transformative strategy constitutes the factual predicate of this case. Dow Br.

11-12. But the pleadings make clear that this case turns solely on Dows refusal to close the

Merger and whether Rohm and Haas is entitled to an order of specific performance to remedy

that breach. See Compl. 1-5, 41-50. Nothing in the Complaint puts Dows historical trans-

formative strategy at issue.

Dows Answer does not change this. To the contrary, each of Dows defenses re-

lies on what Dow characterizes as the sudden, historic, unforeseen and unforeseeable events of

the past 45 days. Answer at pp. 59-60; see also , e.g. , Answer 23 (pleading that a confluence

of dramatic and unforeseeable shocks that developed after December 28 cast a dark shadow of

uncertainty over the Merger); id. at 44 (Only when the Kuwaiti entities unexpectedly pur-

ported to reverse their approval of the K-Dow transaction in late December 2008 and failed to

close, in combination with the contemporaneous and subsequent severe deterioration of the

credit markets and industry-wide financial situation, was the viability of the Merger and Dows

ability to close threatened.).

Mr. Liveris, speaking on an earnings call on February 3, 2009, the same day that

Dow filed its Answer, pithily summed up Dows case: December changed everything.

Wolinsky Aff. Ex. I at 10.

(footnote continued)

information concerning Dow, and has at no time had any contact with Dow personnel inconnection with the Reinhard/Kreinberg or any other matter. Wolinsky Aff. Ex. B. Dow doesnot cite Mr. Rowes activity as a basis for its motion.

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ARGUMENT

DOWS MOTION TO DISQUALIFY ISBOTH UNFOUNDED AND UNTIMELY.

A. Dow bears a very heavy burden on this motion.

Disqualification motions are generally disfavored because they often are filed for

tactical reasons rather than bona fide concerns about client loyalty, Sanchez-Caza v. Estate of

Whetstone , 2004 WL 2087922, at *4 (Del. Super. Sept. 16, 2004), and because a litigant should,

as much as possible, be able to use the counsel of his choice. Unanue v. Unanue , 2004 WL

602096, at *2 (Del. Ch. Mar. 25, 2004). The Delaware Supreme Court has counseled the utmost

caution in granting a motion to disqualify, noting that the purpose of the Rules [of Professional

Conduct] can be subverted when they are invoked by opposing parties as procedural weapons.

Infotechnology , 582 A.2d at 220. 6

Dow claims that disqualification is favored in close cases, citing Del-Chapel

Assocs. v. Ruger , 2000 WL 488562, at *5 (Del. Ch. Apr. 17, 2000). With respect, Del-Chapel

misstated the law of disqualification in Delaware. Since the Delaware Supreme Courts decision

in Infotechnology , doubts are now resolved against, rather than in favor of disqualification.

Matthew F. Boyer, In the Wake of Infotechnology : Stricter Scrutiny of Attorney Disqualification

Motions , 22-Winter D EL. LAW . 16, 16 (2005).

6 See also , e.g. , Deptula v. Steiner , 2003 WL 23274846, at *1 (Del. Super. Dec. 13, 2003)(The Court must be wary so as to prevent motions to disqualify from being used as just anotherweapon in the litigation arsenal.); Elonex I.P. Holdings, Ltd. v. Apple Computer, Inc. , 142 F.Supp. 2d 579, 584 (D. Del. 2001) (It is well known to this court, and many others, that motionsfor disqualification are frequently filed as dilatory tactics intended to divert the litigation fromattention to the merits.).

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Moreover, a violation of the ethical rules by itself is not necessarily sufficient to

warrant the severe sanction of disqualification. Unanue , 2004 WL 602096, at *8; accord Ex-

press Scripts, Inc. v. Crawford , 2007 WL 417193, at *1 (Del. Ch. Jan. 25, 2007). The party

moving for disqualification bears the burden of proof to show both (1) a conflict of interest

under the Rules of Professional Conduct, and (2) [i]f a conflict is identified, that continued

representation by the conflicted attorney would undermine the integrity of the proceedings.

Hendry , 2005 WL 3359078, at *2 (citing Infotechnology , 582 A.2d at 216-17); see also , e.g. ,

IMC Global, Inc. v. Moffett , 1998 WL 842312, at *2 (Del. Ch. Nov. 12, 1998).

And a motion to disqualify must contain clear and convincing evidence estab-lishing a violation of the Delaware Rules of Professional Conduct so extreme that it calls into

question the fairness or the efficiency of the administration of justice. Dunlap , 2008 WL

2415043, at *1 (emphasis added). Vague and unsupported allegations are not sufficient to meet

this disqualification standard. Id. To the contrary, the movant must have evidence to buttress

his claim of conflict because a litigant should, as much as possible, be able to use the counsel of

his choice. Kanaga v. Gannett Co. , 1993 WL 485926, at *3 (Del. Super. Oct. 4, 1993). Factual

disagreements are resolved in favor of the non-moving party. Audio Jam v. Fazelli , 1995 WL

1791087, at *1 (Del. Ch. Aug. 17, 1995) .

Dow has not met this exacting burden. It has failed to show a conflict under the

ethical rules, much less one so extreme that the fairness of the proceedings would be under-

mined. Its failure of proof makes clear that it seeks precisely the sort of improper tactical advan-

tage that the caselaw forbids.

B. Dow is not a current Wachtell client.

Delaware Lawyers Rule of Professional Conduct 1.7 provides in relevant part

that a lawyer shall not represent a client if the representation involves a concurrent conflict of

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interest. A concurrent conflict of interest exists if: the representation of one client will be

directly adverse to another client . . . . To evaluate a claim of concurrent conflict of interest, the

Court must first determine to what extent the allegedly conflicted lawyer represents adverse par-

ties at the same time. Unanue , 2004 WL 602096, at *3. Dow contends that Wachtell has been

acting as Dows lawyers throughout the Firms representation of Rohm and Haas. Dow Br. 9.

This contention has no basis in law or fact.

The assertion that a lawyer-client relationship exists requires a realistic assess-

ment of all aspects of the relationship. Del. Trust Co. v. Brady , 1988 WL 94741, at *3 (Del.

Ch. Sept. 14, 1998) (emphasis added). Absent an express agreement between the lawyer and cli-ent, there would have to be, at the very least, a preexisting relationship that would create a rea-

sonable expectation on the clients part that the attorney was representing his interests, and re-

liance by the client upon that expectation. SBC Interactive , 1997 WL 770715, at *4 (emphasis

added); see also 7 Am. Jur. 2d A TTORNEYS AT LAW 137 (2008) (A plaintiffs subjective belief

that an attorney-client relationship exists, standing alone, cannot create such a relationship, or a

duty of care owed by the attorney to the plaintiff; instead, it is the intent and conduct of the par-

ties that controls the question as to whether an attorney-client relationship has been created.

(emphasis added)).

Simply put, any realistic assessment of the facts shows that Dow could not have

a reasonable belief that Wachtell is Dows lawyer. Quite the opposite: Dow was told that at

the outset that Wachtell was representing Rohm and Haas when Dow complained to Mr. Lipton

about the manner in which the responsible Wachtell lawyers were conducting the negotiations.

Lipton Aff. 5. And then, after the Merger Agreement was signed, when Dows litigators initi-

ated a round of post-signing due diligence to test the accuracy of Rohm and Haass representa-

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tions and warranties in the Merger Agreement, Wachtell openly assisted Rohm and Haas in de-

flecting Dows effort to find an out in the agreement.

Wachtell continued to act on behalf of Rohm and Haas and adverse to Dow after

K-Dow collapsed when Dow surreptitiously maneuvered a three-week delay in the closing date

by delaying the receipt of FTC clearance. Neff Aff. 7-9. And once again, during this period,

Mr. Lipton disabused Dow of any notion that Dow was a current Wachtell client. Indeed, Mr.

Liveris knew exactly what the score was, starting the conversation by acknowledging that he had

been told by Mr. Kalil that Mr. Lipton could not discuss the Rohm and Haas matter with him.

Lipton Aff. 7.Wachtells manifest adversity to Dow throughout this period makes Dows sup-

posed belief that Wachtell was still representing it completely un reasonable. The Rules of Pro-

fessional Conduct explicitly recognize that parties to business negotiations such as those that

preceded the execution of the Merger Agreement are adversaries for conflict purposes. See Del.

Lawyers R. Profl Conduct 1.7 cmt [7] (Directly adverse conflicts can also arise in transac-

tional matters and using sale of a business as example). And this Court has repeatedly charac-

terized the parties to corporate acquisition negotiations as adverse. See , e.g. , Postorivo v. AG

Paintball Holdings, Inc. , 2008 Del. Ch. LEXIS 17, at *20 (Del. Ch. Feb. 7, 2008) (holding that

parties were in an adversarial relationship when they negotiated an agreement for the sale of

substantially all of plaintiffs assets); Zirn v. VLI Corp. , 1990 WL 119685, at *8 (Del. Ch.

Aug. 13, 1990) (holding that parties to merger agreement clearly had adverse interests with re-

spect to the negotiation and documentation of their contract). The adversarial nature of the par-

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ties is all the more obvious where, as here, multiple companies make competing bids for a target

corporation. See Zirn v. VLI Corp. , 1989 WL 79963, at *8 (Del. Ch. July 17, 1989). 7

The evidence that Dow presents to support the notion that Dow had a realistic

expectation that Wachtell was acting as its counsel and was relying on that expectation after June

2008 is frivolous. The two WLRK Memos that Dow cites as evidence of an ongoing attorney-

client relationship were sent to over 4,200 people . Edelman Aff. 3-4. Recipients included doz-

ens of practitioners, academics, reporters at the Financial Times , Fortune Magazine , The New

York Times , The Wall Street Journal , and members of the judiciary. Edelman Aff. 2. The

Key Issues for Directors memo that Mr. Kalil transmitted to his Board as the work of Dowsattorneys can be found in its entirety on Harvard Law Schools website. 8 Mr. Stuart, in his turn,

points to a contact update form that a Wachtell paralegal sent to a 1,200 person mailing list a

mailing list that includes former clients, potential clients, and friends of the Firm in addition to

current clients. Edelman Aff. 5. None of this constitutes objective evidence of an existing

attorney-client relationship.

Dows other evidence of an ongoing relationship is also without substance.

Dow says that Wachtell has billed Dow over $2 million [i]n the last two years. Dow Br. 8.

What Dow fails to disclose is that all but $65,000 of that sum was billed in November 2007 or

7 As an empirical matter, recent high-profile cases make it apparent to any sophisticatedbusinessperson that the negotiation and execution of a corporate transaction carries with it aninherent risk of subsequent litigation between the parties. See, e.g. , Alliance Data Sys. Corp. v.

Aladdin Solutions, Inc. , C.A. No. 3796-VCS (Del. Ch. 2009); Hexion Specialty Chems., Inc. v. Huntsman Corp. , C.A. No. 3841-VCL (Del. Ch. 2008); Clear Channel Broad., Inc. v. Newport Television LLC , C.A. No. 3550-VCS (Del. Ch. 2008); SLM Corp. v. J.C. Flowers II L.P. , C.A.No. 3279-VCS (Del. Ch. 2007); The Finish Line, Inc. v. UBS Secs. LLC , No. 07-2137-II (III)(Tenn. Ch. 2007); United Rentals, Inc. v. RAM Holdings, Inc. , C.A. No. 3360-CC (Del. Ch.2007)..8 See http://blogs.law.harvard.edu/corpgov/2008/12/20/key-issues-for-directors/ (EdelmanAff. Ex. A).

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earlier, with the remaining $65,000 billed in June 2008. 9 Moses Aff. 5. The billing evidence

only confirms that Wachtells representation of Dow was substantially over by the end of 2007.

Dows litany of interviews and meetings with high-level Dow executives and employees, Dow

Br. 3, also confirms that Dow is not a current Wachtell client. With the exception of conversa-

tions between Messrs. Liveris and Kalil and Mr. Lipton in 2008 which, as shown, do not in

any way evidence an ongoing client relationship 10 everything that Dow lists occurred in

April or May of 2007. Dow Br. 3.

Finally, Dow cites an internal Wachtell e-mail from February 2007 referencing a

then-continuing representation of Dow. Dow Br. 6 & Ex. 5. In light of Wachtells seven-month long adverse representation of Rohm and Haas, that two-year-old e-mail cannot support

the weight that Dow would have it carry. 11 There is no current representation, and no conflict on

that basis.

9 Similarly, while Mr. Stuart claims to have 1,300 e-mails exchanged with Wachtellduring 2007 and 2008 (Stuart Aff. 3), he is noticeably silent on what proportion of those e-mails were exchanged in the latter half of 2008.10 While Mr. Kalils affidavit references discussions that he and Mr. Liveris had with Mr.Lipton in 2008, it is noticeably silent on the subject of those discussions and makes no claim thatMr. Lipton provided Dow with legal advice in 2008. See Kalil Aff. 9, 12.11

No one from Dow was copied on this internal Wachtell e-mail. See Dow Br. Ex. 5.Thus, while Dow argues that Wachtell never disavowed its supposed continuingrepresentation (Dow Br. 6), the simple fact is that there was nothing to disavow: no one fromWachtell ever represented to Dow that the representation was continuing. To the contrary, inJune 2008, Mr. Lipton told Mr. Kalil that Wachtell was representing Rohm and Haas, somethingthat Mr. Kalil already knew because Wachtell lawyers were negotiating against Dow on behalf of Rohm and Haas. Lipton Aff. 5.

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C. Wachtells representation of Rohm and Haas does not violate Rule 1.9.

Dow also has not met, and cannot meet, its burden on this motion to show by

clear and convincing evidence that Wachtells representation of Rohm and Haas violates Dela-

wares former client rule. Rule of Professional Conduct 1.9 states in pertinent part:

A lawyer who has formerly represented a client in a matter shallnot thereafter represent another person in the same or a substan-tially related matter in which that persons interests are materiallyadverse to the interests of the former client unless the former clientgives informed consent, confirmed in writing. (Emphasis added.)

Because it is undisputed that this matter is not the same as any matter in which

Wachtell represented Dow, the question is whether the current matter is substantially related to

Wachtells prior representation of Dow. Comment 3 to Rule 1.9 explains that, for such a rela-

tionship to exist, there must be a substantial risk that confidential information learned from one

client in an earlier matter would materially advance another clients position in a later matter.

In determining whether the test is met, courts consider three factors: (1) the na-

ture and scope of the prior representation; (2) the nature of the present litigation; and (3) whether

in the course of prior representation, the former client might have disclosed confidences that

could be detrimental to it in the present litigation. Unanue , 2004 WL 602096, at *6; see also

Hendry , 2005 WL 3359078, at *4 (applying test to determine that lawyer was not likely to have

obtained confidential information from former client that materially could advance new cli-

ents position in current litigation); Sanchez-Caza , 2004 WL 2087922, at *3 (similar). None of

these factors shows a substantial relationship between the present matter and Wachtells prior

work for Dow.

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Dow suggests that Wachtell somehow had access to documents about this transac-

tion. Dow Br. 1. For that to be true, Wachtell would have needed a crystal ball. Wachtell was

given access to a database of Dow documents in May 2007 , over one year before negotiation of

the Merger Agreement began. Moses Aff. 8. Only two Wachtell attorneys (neither of whom

has worked on the Rohm and Haas representation) had access to that database, and neither of

them has accessed it since the Fall of 2007. Id. Wachtell could not have seen any documents

about the actual deal negotiated in July 2008.

Dows own conduct gives lie to the assertion that Wachtells representation of

Rohm and Haas is materially advanced by supposed confidential information concerning Dowsevaluation of Rohm and Haas. If that were true, that information would have most advantaged

Wachtell and Rohm and Haas at the time of the negotiation of the Merger Agreement . Thus,

Dows claim that it had no compelling reason to address the supposed conflict at the time of

the negotiation has it exactly wrong; if information about Dows strategic vision had any value, it

was precisely during the period in which Wachtell was advising Rohm and Haas on how to struc-

ture and conduct a bidding process designed to get the best terms from Dow.

Dow also claims that Wachtells purported knowledge of Dows planned and po-

tential acquisitions and divestitures is relevant because Rohm and Haas will take the position

that Dow can address its financial problems by selling assets. Dow Br. 12. Of course, this is

not only Rohm and Haass position, it is Dows position: Dow told its shareholders on February

3 that it was exploring the sale of twelve of its assets in order to facilitate the financing of the

Merger. Wolinsky Aff. Ex. I at 12. And once again, any information that Wachtell may have

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seen about Dows divestiture strategies is more than a year old and not relevant in a world in

which, as Dow would have it, everything has changed. 12

Finally, the claim that confidential information could be used to Dows detriment

is further refuted by the affidavits of Mr. Lipton and Mr. Moses, the Wachtell partners who led

the Dow representation, stating that they have not shared Dows client confidences with the

Wachtell lawyers working on the Dow matter. Lipton Aff. 10; Moses Aff. 11. Mr.

Wolinsky, the lead Wachtell litigation partner on this matter, has likewise submitted an affidavit

stating that as he told Dows counsel prior to the filing of this motion the Wachtell lawyers

who worked on the Dow matter have not had substantive communications with the Rohm andHaas team at Wachtell about this litigation. Wolinsky Aff. 2. Cf. IMC Global , 1998 WL

842312, at *3 (in Rule of Professional Conduct 1.10 case, court has discretion to rely on attorney

representations as to the full extent of information flow between them); Deemer Steel Casting

Co. v. E. Coast Erectors , Inc. , 1990 WL 143840, at *4 (Del. Ch. Sept. 28, 1990) (presumption of

shared confidences under Rule 1.10 rebuttable by credible evidence demonstrating that the at-

torney received no disqualifying confidential information)

D. Wachtells continuing representation of Rohm and Haas will not underminethe fairness and integrity of the proceedings, but hamstringing Rohm andHaass ability to use its chosen counsel will.

Even if Dow could possibly establish a violation of the ethical rules (which, as set

forth above, it cannot), that violation alone is not sufficient to justify the extraordinary remedy of

12 Recognizing that information of that vintage has no bearing on the issues in the case,neither party has sought discovery of documents or information related to strategic planning in2007. Dows discovery requests call for documents and information from April 1, 2008, whileall but one of Rohm and Haass requests seek documents and information from June 1, 2008forward. The only exception is Rohm and Haass request for discrete financial statements forDows major joint ventures for the past three years. Wolinsky Aff. Exs. C-H.

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disqualification. See Hendry , 2005 WL 3359078, at *4; Sanchez-Caza , 2004 WL 2087922, at

*4; Elonex I.P. Holdings, Ltd. v. Apple Computer, Inc. , 142 F. Supp. 2d 579, 583 (D. Del. 2001).

[D]isqualification does not always serve as an appropriate remedy for violations of Rule 1.9.

Express Scripts , 2007 WL 417193, at *1. The Courts inquiry focuses on whether [the law-

yers] continued representation of [the current client] will so undermine the integrity and fairness

of the proceedings that [the current client] should be deprived of the counsel of his choosing.

Unanue , 2004 WL 602096, at *2; accord McAllister v. Kallop , 1993 WL 205037, at *1-*2 (Del.

Ch. June 8, 1993).

Thus, to determine whether disqualification is an appropriate remedy for an ethi-cal violation, this Court measures the interests of the former client in protecting confidences

revealed during representation with the prejudice that would be suffered by the current client

were the attorney or firm to be disqualified. Express Scripts , 2007 WL 417193, at *1; see also

Sanchez-Caza , 2004 WL 2087922, at *4 (court must weigh the current clients choice of coun-

sel with a former clients right to protect confidences revealed in a prior representation (cita-

tion omitted)).

Courts routinely deny disqualification when the risk that there were relevant client

confidences disclosed in the prior representation is slight, but the current client would be preju-

diced. See id. at *5 (denying motion where it would undoubtedly prejudice the Plaintiff by de-

nying him his choice of counsel and by delaying the adjudication of the merits. . . . The likely

prejudice that would result from disqualification is not warranted given the limited, unrelated

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justifiable delay in raising any objection to Wachtells representation of Rohm and Haas itself

defeats disqualification.

1. Dow acquiesced in and consented to Wachtells

representation of Rohm and Haas by failing toexpress an objection until after litigation began.

If Dows claim that Wachtells representation of Rohm and Haas constitutes a

conflict of interest is to be credited, Dow cannot escape the conclusion that the conflict would

have been patently obvious more than seven months ago at the outset of the negotiations between

the parties. And if any credence is to be given Dows claim that confidences about its strategy

were significant, those confidences would have been far more useful to conducting the auction

for Rohm and Haas than in an after-the-fact litigation about a breach. Yet Dow claims that it

was silent during the auction and merger negotiations because there was no compelling reason

to object. Dow Br. 14.

This is simply not an excuse for Dows conduct. If Dow were truly concerned

about the use of its confidential information against its own interests, it was incumbent upon

Dow to object to Wachtells representation of Rohm and Haas in June 2008. See Kenton v.

Bellevue Four, Inc. , 1999 WL 463684, at *1 (Del. Super. Apr. 26, 1999) (failure to make timely

objection upon learning the facts supporting a disqualification motion results in waiver of the

right to seek disqualification).

Dow is thus in the same position as the unsuccessful movant in Eli Lilly & Co. v.

Genentech, Inc. , 17 U.S.P.Q.2d 1531 (S.D. Ind. 1990). There, Lilly moved to disqualify its for-

mer in-house counsel, Dr. Buting. Dr. Buting, on behalf of Lilly, had negotiated the licensing

agreement with Genentech that was the subject of the litigation, but subsequently became in-

house counsel to Genentech, where his responsibilities included administering that same licens-

ing agreement. Id. at 1532-33. Lilly communicated with Dr. Buting in his new role and raised

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no objection until litigation began. Id. The court concluded that Lilly, by its conduct, had con-

sented to and acquiesced in its former lawyers potentially adverse role ever since Dr. Buting

switched companies. Id. at 1535. Lilly therefore waived its right to raise disqualification be-

cause it knowingly failed to make a prompt objection. Id. at 1536.

The same is true here. Dow never objected until it became clear that Rohm and

Haas would litigate Dows breaches of the Merger Agreement. Dows seven-month-long acqui-

escence in Wachtells role as counsel to Rohm and Haas demonstrates that the present motion is

nothing more than the procedural weapon that the Supreme Court has warned against. Info-

technology , 582 A.2d at 220.2. Dow cannot excuse its failure to make a timely objection

by claiming that it was presented with a fait accompli .

Finally, it is no answer for Dow to claim that its failure to object in June 2008

when the conflict was, on Dows theory, most acute can be excused because Dow was presented

by Rohm and Haas with its retention of Wachtell as a fait accompli . If there was an issue, it was

incumbent upon Dow to raise it at that time. At a minimum, Dow could have expressed its ob-

jection and taken the position that while it was consenting to Wachtells representation of Rohm

and Haas in the merger negotiation, it would object if Wachtell sought to litigate against Dow in

some future dispute.

Dows reliance on J.E. Rhoads & Sons, Inc. v. Wooters , 1996 WL 41162, at *5

(Del. Ch. Jan. 26, 1996), for the proposition that a party to a transaction may acquiesce in its for-

mer law firms transactional representation of a counterparty, yet still make a timely objection

when litigation later develops is thus completely misplaced. J.E. Rhoads involved the sale of a

business in which all parties to the transaction buyer, seller, and employees agreed to be

represented by the same law firm. Id. at *1. When litigation later arose between the employees

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and the buyer, the court held that the litigation was substantially related to matters in which [the

law firm] previously . . . acted as an intermediary for all parties . Id. at *4 (emphasis added).

Not even Dow claims that Wachtell represented both parties here in negotiating the Merger

Agreement.

CONCLUSION

Courts understandably are wary of disqualification motions because of their po-

tential for abuse. This motion brought seven months after Dow was faced with its supposed

counsel sitting across the bargaining table is a perfect example of why that is so. Dows mo-

tion is without merit and untimely. It should be denied.

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OF COUNSEL:

Paul K. RoweMarc WolinskyElaine P. GolinGarrett B. MoritzJoshua A. NaftalisWACHTELL, LIPTON, ROSEN & KATZ51 West 52nd StreetNew York, New York 10019Telephone: (212) 403-1000Facsimile: (212) 403-2000

Robert A. LonerganROHM AND HAAS COMPANY100 Independence Mall WestPhiladelphia, Pennsylvania 19106Telephone: (215) 592-3000Facsimile: (215) 592-3377

Dated: February 9, 2009

Respectfully submitted,

CONNOLLY BOVE LODGE & HUTZ LLP

/s/ Collins J. Seitz, Jr.Collins J. Seitz, Jr. (No. 2237)Henry E. Gallagher, Jr. (No. 495)David E. Ross (No. 5228)Bradley R. Aronstam (No. 5129)The Nemours Building1007 North Orange StreetP.O. Box 2207Wilmington, Delaware 19899Telephone: (302) 658-9141Facsimile: (302) 658-5614

Attorneys for Plaintiff Rohm and HaasCompany

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CERTIFICATE OF SERVICE

I, Collins J. Seitz, Jr., Esquire, hereby certify that on February 9, 2009, a copy of the

foregoing Memorandum of Law In Opposition To Defendants Motion To Disqualify Wachtell,

Lipton, Rosen & Katz From Conducting Discovery Against Dow And Examining Dow Wit-

nesses to be served by LexisNexis File & Serve to counsel of record as follows:

Martin P. Tully, EsquireKenneth J. Nachbar, EsquireMorris, Nichols, Arsht & Tunnell1201 N. Market StreetWilmington, DE 19899

/s/ Collins J. Seitz, Jr.Collins J. Seitz, Jr. (Bar No. 2237)

rh answering brief in opposition to motion to disqualify

Documents