Case 2:19-cv-00209-JRG Document 119 Filed 02/14/20 Page 1 of 21 PageID #: 3270
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF TEXAS
`MARSHALL DIVISION
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`MEMORANDUM OPINION AND ORDER
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`CIVIL ACTION NO. 2:19-CV-00209-JRG
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`THE HILLMAN GROUP, INC.,
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`v.
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`KEYME, LLC,
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`Plaintiff,
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`Defendant.
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`Before the Court is Plaintiff The Hillman Group, Inc.’s (“Hillman”) Motion to Disqualify
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`Cooley LLP (the “Motion to Disqualify”). (Dkt. No. 32.) The Court heard oral arguments
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`regarding the Motion to Disqualify on January 21, 2020. Having considered the briefing and the
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`oral arguments, the Court is of the opinion that the Motion to Disqualify should be and hereby is
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`GRANTED.
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`I.
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`BACKGROUND
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`A. Cooley’s Relationship with Minute Key
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`Hillman’s relationship with Cooley LLP (“Cooley”) flows from its relationship with
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`Minute Key—a company involved in the self-service key duplication kiosk business and now
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`wholly owned by Hillman. (See Dkt. No. 32 at 7–9.) In June of 2018, Hillman announced that it
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`was acquiring Minute Key. (Dkt. No. 32 at 5.) In August of 2018, the acquisition was completed,
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`and Minute Key became a wholly owned subsidiary of Hillman. (Id.) Cooley, presently counsel
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`for Defendant KeyMe, LLC’s (“KeyMe”), represented Minute Key throughout its acquisition by
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`Hillman. (Id. at 5; Dkt. No. 57 at 2.) Post-acquisition, Minute Key continues to operate as it did
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`before, with the same employees, buildings, self-service key duplication kiosks, and intellectual
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`property. (Dkt. No. 32 at 5.) In December of 2018, Minute Key became fully merged into The
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`Hillman Group, Inc.1 (Id.) After this final merger, however, little, if anything, changed with Minute
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`Key’s business. (Id.)
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`Prior to the merger, Cooley represented Minute Key for over ten years. (Dkt. No. 57 at 2.)
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`While the full scope of Cooley’s representation of Minute Key is disputed between Hillman and
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`KeyMe (collectively, the “Parties”), it is undisputed that Cooley’s representation of Minute Key
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`began around 2008 with Minute Key’s retention of Noah Pittard—currently an equity partner at
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`Cooley—to help with corporate financing. (Id.; Dkt. No. 115 at 17:13–14.) Mr. Pittard handled
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`various and numerous matters for Minute Key in 2008 and thereafter. In 2012, Mr. Pittard began
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`to regularly attend Minute Key board meetings—often acting as the de facto secretary of the board.
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`(Dkt. No. 32 at 1, 12.) During this time, Minute Key never employed in-house counsel. According
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`to Randall Fagundo—the President and CEO of Minute Key during the relevant time—Minute
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`Key viewed Cooley, via Mr. Pittard, as their in-house counsel.2 (Id. at 1–2.) Cooley, however,
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`alleges that Mr. Pittard merely “advised Minute Key as outside counsel on corporate finance and
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`governance and attended board meetings.” (Dkt. No. 57 at 2.)
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`As a part of the many board meetings attended by Mr. Pittard, Hillman contends that he
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`was exposed to confidential and privileged information about Minute Key’s competitor strategies
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`(e.g., against KeyMe), product development, prosecution of two of the current patents-at-issue and
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`their patent families, and litigation involving one of these patents (i.e., U.S. Patent No. 8,979,446
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`(the “’446 Patent”)) as well as related patents. (Dkt. No. 32 at 2.) During the period that Mr. Pittard
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`1 Cooley claims that it was unaware of this final merger until August of 2019. (Id. at 3.)
`2 Mr. Fagundo submitted a declaration in which he stated that he viewed Mr. Pittard as filling the in-house counsel
`role at Minute Key. (Dkt. No. 32-2 at 1.) In addition, in a deposition in 2014 Mr. Fagundo further reinforced this
`belief by describing Cooley’s role as that of “general counsel.” (Dkt. No. 32-22 at 233:6–8.)
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`2
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`regularly attended board meetings, Minute Key was involved in three separate patent cases:3
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`Minute Key Inc. v. KeyMe, 0:15-cv-1599 (D. Minn., 2015–2017); Hillman Group, Inc. v. Minute
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`Key, Inc., 1:13-cv-707 (S.D. Ohio, 2013–2014); Hillman Group, Inc. v. Minute Key, Inc.,
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`IPR2015-01154 (P.T.A.B., 2015–2016). (Id.) According to Hillman, through these board
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`meetings, Mr. Pittard was exposed to highly confidential material that would not be discoverable
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`in the present case, such as litigation strategies and attorney work product.4 (Id. at 2–5; Dkt. No.
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`115 at 11:14–13:23, 14:7–14:12, 15:7–19, 16:25–17:7.) Hillman further asserts that many of the
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`“same validity and strategy issues” will be at issue in the above-captioned case. (Dkt. No. 32 at 3.)
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`Finally, Hillman alleges that Cooley and Mr. Pittard assisted and advised Minute Key in its
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`litigation strategy for their patent matters. (Dkt. No. 32 at 2–4.)
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`In response, Cooley maintains that Mr. Pittard “frequently attends his clients’ board
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`meetings and, in most cases, acts as secretary.” (Dkt. No. 57 at 2.) Cooley also asserts that Mr.
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`Pittard is “not a litigator” and has “no expertise related to patents or patent litigation.” (Id.) In
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`addition, Cooley points out that it did not actually represent Minute Key in any patent matter as
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`all those cases where handled by other law firms.5 (Id.) Finally, Cooley alleges that any
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`information that Mr. Pittard may have received while at the Board meetings would be stale or
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`discoverable in this litigation and thus is not an adequate basis for disqualification. (Id. at 14.)
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`3 Each of these matters involved either the ’446 Patent—asserted here—or a child of the ’446 Patent. (Dkt. No. 32 at
`2.)
`4 This includes information such as “Minute Key’s product development, patent strategies, and competitive analysis.”
`(Id. at 4.) Further, Hillman alleges that Cooley provided advice to Minute Key regarding “its competition with
`KeyMe.” (Id.) In addition, Hillman alleges that through the board meetings Mr. Pittard was exposed to privileged
`information regarding “the origin of the invention described in [U.S. Patent No. 9,914,179], its scope, and
`information on related patents and applications.” (Id. at 5.) Apparently, these meetings were not purely high-level
`status updates. On at least one occasion, Mr. Pittard sat through a multi-hour presentation by Minute Key’s outside
`IP counsel on the status of Minute Key’s patent litigation. (Dkt. No. 115 at 25:5–8.)
`5 Nonetheless, it is worth noting that Mr. Pittard and a Patent Attorney from Cooley—Mr. Wayne Stacy—were listed
`on a contact list for the then pending Hillman litigation. (Id. at 4.) Cooley claims that Mr. Stacy’s work was minimal
`and only related to the settlement of that litigation. (Dkt. No. 57 at 8 n. 2.) While that may be true, the Court notes
`that the issue here is the risk that Cooley through its attorneys was exposed to confidential information, which this
`would reasonably suggest.
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`3
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`According to Cooley, the most recent work that Mr. Pittard performed for Minute Key was
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`in October of 2018 and related to the initial acquisition of Minute Key by Hillman. (Dkt. No. 57
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`at 2.) Cooley represents that the most recent work that it performed for Minute Key was in late
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`January of 2019 and was related to an unrelated tariff matter that predated the acquisition. (Dkt.
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`No. 57 at 3.) Although this final work was billed to “Minute Key,” it paid with a check drawn on
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`and signed by Hillman. (Dkt. No. 32 at 6.) Since the early 2019 work, Cooley has performed no
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`other work to Hillman or Minute Key. (Dkt. No. 57 at 3.) However, Hillman maintains that it still
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`believed Cooley represented it and maintained Cooley on its list of approved vendors for legal
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`services. (Dkt. No. 32 at 6; Dkt. No. 32-2 ¶6–7.) In fact, Hillman represents—and Cooley does not
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`refute6—that Cooley never sent Minute Key (nor Hillman) any sort of disengagement letter nor
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`returned Minute Key’s confidential files to them. (Dkt. No. 32 at 6; Dkt. No. 77 at 1.)
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`B. Procedural History of the Motion to Disqualify
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`Hillman filed the current suit against KeyMe on June 3, 2019, alleging that KeyMe’s self-
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`service key duplicating kiosks infringe the ’446 Patent and U.S. Patent No. 9,914,179 (the “’179
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`Patent”). (Dkt. No. 1.) On July 25, 2019, KeyMe filed a Motion to Dismiss for Improper Venue
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`under Rule 12(b)(3) (Dkt. No. 12) and a Motion to Change Venue (Dkt. No. 13). Also, on July 25,
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`2019, Michael G. Rhodes and Stephen R. Smith from Cooley filed notices of appearance in the
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`above-captioned case on KeyMe’s behalf.7 (Dkt. Nos. 9, 10.) Shortly thereafter, the “Parties”
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`requested, and the Court subsequently granted, limited venue discovery. (Dkt. No. 20; Dkt. No.
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`21.) Subsequently, Hillman filed an Amended Complaint on September 3, 2019, asserting the ’446
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`6 Cooley seems to rely on the fact that it only did two hours of work on Minute Key’s tariff matter after the merger to
`indicate that Cooley’s relationship with Minute Key had terminated. (Dkt. No. 57 at 6.) Cooley also points out that
`it declined a request for work from Hillman in August of 2019, “explaining that Hillman was not a client.” (Id.) The
`Court finds this misses the point since August would be after this potential conflict arose and had been discussed
`between Hillman and Cooley.
`7 These two notices were the first indication on the docket that Cooley was involved in this case.
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`4
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`Patent, the ’179 Patent, and one more additional patent—U.S. Patent. No. 10,400,474 (the “’474
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`Patent”). (Dkt. No. 30.) On September 4, 2019, Hillman filed the present Motion to Disqualify.
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`(Dkt. No. 32.)
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`Hillman says it first learned of Cooley’s involvement on July 24, 2019, when a Cooley
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`attorney contacted Hillman’s counsel seeking a Local Rule CV-7(h) meet and confer conference.
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`(Dkt. No. 32 at 6.) Hillman claims that it immediately began investigating the potential conflict,
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`because at the time Hillman believed that it was still a Cooley client . (Id.) After its preliminary
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`investigation, Hillman notified Cooley of the conflict of interest in a detailed letter dated August
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`7, 2019. (Id.)
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`On August 15, 2019, Cooley responded by letter claiming that Hillman was not a client
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`and contending it had no conflict. (Id.) Cooley also claimed that it had erected an ethical wall to
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`screen off any lawyers who worked on Minute Key matters. (Dkt. No. 32-32 at 2.) On August 19,
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`2019, Hillman responded requesting details on Cooley’s alleged ethical screen and reasserting that
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`Hillman was still a current client of Cooley’s. (Dkt. No. 32 at 6.) The Parties met and conferred
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`on August 26, 2019 but were unable to resolve the issue. (Id) According to Hillman, it never got
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`any details on the ethical screen or about the files of Minute Key that Cooley possessed. (Dkt. No.
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`115 at 15:24–16:11.)
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`On January 21, 2020, this Court held a hearing on the Motion to Disqualify. Following the
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`hearing, the Court ordered the Parties to meet and confer regarding how the ethical screen is
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`structured and how it operates. (Id. at 36:16–22.) The Court further ordered Mr. Rhodes from
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`Cooley to file a supplemental declaration within 72 hours of that conversation detailing the
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`substance of that meet and confer and describing the real-world functionality of the ethical screen
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`in place. (Id. at 36:25–37:5.) The Court received Mr. Rhodes’ declaration on January 23, 2020.
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`5
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`(Dkt. No. 108.) Ryan O’Quinn—counsel for Hillman—then filed a supplemental declaration
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`regarding Mr. Rhodes’ declaration on January 28, 2020.8 (Dkt. No. 110.)
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`II.
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`LEGAL STANDARD
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`Under Fifth Circuit law, a motion to disqualify is a substantive motion “affecting the rights
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`of the parties” and is thus “determined by applying standards developed under federal law.” In re
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`Am. Airlines, Inc., 972 F.2d 605, 610 (5th Cir. 1992) (quoting In re Dresser Industries, 972 F.2d
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`540, 543 (5th Cir.1992)). While the Fifth Circuit is “sensitive to preventing conflicts of interest,”
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`the Fifth Circuit has warned that disqualification should not be applied “mechanically” or
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`“cavalierly.” In re ProEducation Int’l, Inc., 587 F.3d 296, 299-300 (5th Cir. 2009) (citing In re
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`Am. Airlines, 972 F.2d at 610; FDIC v. U.S. Fire Ins. Co., 50 F.3d 1304, 1312 (5th Cir.1995)).
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`Rather, the Fifth Circuit has directed courts to carefully “consider ‘[a]ll the facts particular to [the]
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`case . . . in the context of the relevant ethical criteria and with meticulous deference to the litigant’s
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`rights.’” Id. at 300 (quoting U.S. Fire Ins., 50 F.3d at 1314.); Woods v. Covington Cty. Bank, 537
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`F.2d 804, 810 (5th Cir. 1976) (“A court should be conscious of its responsibility to preserve a
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`reasonable balance between the need to ensure ethical conduct on the part of lawyers appearing
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`before it and other social interests, which include the litigant’s right to freely chosen counsel.”) To
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`that end, courts are to consider a motion to disqualify “in light of the litigant’s rights and the public
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`interest, considering ‘whether a conflict has (1) the appearance of impropriety in general, or (2) a
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`possibility that a specific impropriety will occur, and (3) the likelihood of public suspicion from
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`the impropriety outweighs any social interests which will be served by the lawyer’s continued
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`participation in the case.’” Horaist v. Doctor's Hosp. of Opelousas, 255 F.3d 261, 266 (5th Cir.
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`2001) (citing In re Dresser Indus., 972 F.2d at 543).
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`8 From reviewing the declarations, it is clear that there is still a dispute regarding the efficacy of the ethical wall in
`question.
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`6
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`When deciding a motion to disqualify, a court first looks at that court’s specific local rules.
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`U.S. Fire Ins. Co., 50 F.3d at 1312. In the Eastern District of Texas, “[t]he standards of professional
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`conduct adopted as part of the Rules Governing the State Bar of Texas shall serve as a guide
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`governing the obligations and responsibilities of all attorneys appearing in this court.” LOCAL
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`RULE AT-2(a). District courts, however, are not limited to their local rules in deciding a motion to
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`disqualify. In re Am. Airlines, 972 F.2d at 610. In fact, in reviewing motions to disqualify, courts
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`are to also “consider the ethical rules announced by the national profession in light of the public
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`interest and the litigants’ rights.” Id. To this aim, the Fifth Circuit has acknowledged that the ABA
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`Model Rules of Professional Conduct (the “Model Rules”) are the “national standards to consider
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`in reviewing motions to disqualify.” In re ProEducation Int’l, 587 F.3d at 299.
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`In the current Motion to Disqualify, Hillman alleges two separate grounds why Cooley
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`should be disqualified: (1) that Cooley should be disqualified because Hillman is a current client
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`of Cooley, and, alternatively, (2) that Cooley should be disqualified because Hillman is a former
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`client and Cooley’s representation of KeyMe in this case is substantially related to Cooley’s past
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`representation of Minute Key and the confidential information it received. (Dkt. No. 32 at 9–15.)
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`A. Conflicts of Interests with Current Clients
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`Rule 1.06(b)(1) of the Texas Disciplinary Rules of Professional Conduct (“Texas Rules”)
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`and Rule 1.7 of the Model Rules govern conflicts of interests involving representation of
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`concurrent clients. While normally the Texas Rules and Model Rules are the same, in this situation
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`the Court faces a disparity between these rules. See Gen. Elec. Co. v. Mitsubishi Heavy Indus.,
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`Ltd., No. 3:10-CV-276-F, 2011 WL 13201855, at *4 (N.D. Tex. Sept. 12, 2011). Under the Texas
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`Rules, a lawyer is only prevented from concurrently representing two adverse clients if the matters
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`are “substantially related.” Texas Rules Rule 1.06(b)(1) (“involves a substantially related matter
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`7
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`in which that person’s interests are materially and directly adverse to the interests of another client
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`of the lawyer or the lawyer’s firm.”) (emphasis added). Under the Model Rules, however, a lawyer
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`cannot represent a client if “the representation of one client will be directly adverse to another
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`client.” Model Rules Rule 1.7(a)(1); see also Model Rules 1.7 Comment 6 (“Thus, absent consent,
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`a lawyer may not act as an advocate in one matter against a person the lawyer represents in some
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`other matter, even when the matters are wholly unrelated.”).
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`Faced with this conflict, the Court must decide in this case which rule should apply.
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`Considering the guidance of existing Fifth Circuit precedent, this Court concurs with the Northern
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`District of Texas that “the narrower national standards apply.” Gen. Elec. Co., 2011 WL 13201855
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`at *4. As mentioned above, motions to disqualify are substantive motions and “are determined by
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`applying the standards developed under federal law.” In re Dresser Industries, 972 F.2d at 543.
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`Further, the Fifth Circuit has made clear that “[o]ur source for the standards of the profession has
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`been the canons of ethics developed by the American Bar Association.” Id. The Fifth Circuit has
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`further stated that “[u]nquestionably, the national standards of attorney conduct forbid a lawyer
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`from bringing a suit against a current client without the consent of both clients.” Id. at 545.
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`Considering this guidance, the Court is of the opinion that the more stringent standard from the
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`Model Rules should apply to conflicts of interest with concurrent clients. Having reached this
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`conclusion, the Court need not determine if Cooley’s past representation of Hillman by way of Mr.
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`Pittard’s participation in board meetings where long range strategic planning occurred is
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`substantially related to the current issues in this case. That said, the Court notes that Hillman’s
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`arguments to that effect are compelling, on their face.
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`8
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`B. Conflicts of Interests with Former Clients
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`Rule 1.09(a) of the Texas Rules and Rule 1.9 of the Model Rules govern conflict of interests
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`with former clients. Unlike the rules with concurrent clients, the Texas Rules and the Models Rules
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`are identical “in all important aspects.” In re Am. Airlines, 972 F.2d at 615 n.2. Given their
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`similarity, the Court will focus its analysis using the Model Rules Rule 1.9, which states:
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`[a] lawyer who has formerly represented a client in a matter shall not thereafter
`represent another person in the same or a substantially related matter in which that
`person’s interests are materially adverse to the interests of the former client unless
`the former client gives informed consent, confirmed in writing.”
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`(emphasis added). While not explicitly defined in the Model Rules, Comment 3 to Rule 1.9 of the
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`Model Rules provides that:
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`[m]atters are “substantially related” for purposes of this Rule if they involve the
`same transaction or legal dispute or if there otherwise is a substantial risk that
`confidential factual information as would normally have been obtained in the prior
`representation would materially advance the client’s position in the subsequent
`matter.
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`(emphasis added). Thus, in a motion to disqualify on the grounds of a former client relationship,
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`the movant must show: “1) an actual attorney-client relationship between the moving party and
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`the attorney he seeks to disqualify and 2) a substantial relationship between the subject matter of
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`the former and present representations” or a risk of the improper use of confidential information.
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`In re Am. Airlines, 972 F.2d at 614–15. Finally, conflicts of interest either for former clients or for
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`concurrent clients are imputed to an attorney’s entire firm. Model Rules Rule 1.10; Texas Rules
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`Rule 1.06(f).
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`III. ANALYSIS
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`In light of the facts of this case and Fifth Circuit law, the Court finds that Cooley’s attorney-
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`client relationship with Minute Key never terminated. Further, the Court finds that such
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`relationship was succeeded to by Hillman as part and parcel of the Minute Key acquisition. As
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`9
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`such, the Court finds that Hillman is a current client of Cooley and, thus, that Cooley has a
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`concurrent conflict of interest under Rule 1.7 of the Model Rules. The Court further finds that,
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`even if this were not the case, there is a real risk of confidential information from Minute Key
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`being used against Hillman in this lawsuit. The Court finds that Cooley’s prior representation of
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`Minute Key is substantially related to the present action. This results compels the Court to hold
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`that disqualification of Cooley is warranted in this case.
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`A. Minute Key/Hillman is a Current Client of Cooley
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`i.
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`Minute Key’s Attorney-Client Relationship Transferred to Hillman.
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`As an initial matter the Court must decide whether Minute Key’s attorney-client
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`relationship transferred to Hillman when Hillman acquired Minute Key. The Court finds that it
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`did. The Parties agree that the “practical consequences” of the acquisition and merger control the
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`answer to this question. (Dkt. No. 77 at 1 (citing John Crane Prod. Sols., Inc. v. R2R & D, LLC,
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`No. 3:11-CV-3237-D, 2012 WL 3453696, at *3 (N.D. Tex. Aug. 14, 2012)); Dkt. No. 84 at 5.)
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`Under this analysis, “[i]f the practical consequences of the transaction result in the transfer of
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`control of the business and the continuation of the business under new management,” the attorney-
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`client relationship will follow as well. John Crane Prod. Sols., Inc., 2012 WL 3453696, at *3
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`(citing Soverain Software LLC v. Gap, Inc., 340 F. Supp. 2d 760, 763 (E.D. Tex. 2004) (citing
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`Commodity Futures Trading Commn. v. Weintraub, 471 U.S. 343, 349 (1985) (“[W]hen control
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`of a corporation passes to new management, the authority to assert and waive the corporation’s
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`attorney-client privilege passes as well.”))). In looking at the “practical consequences” of a
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`transaction, some courts have looked specifically at factors such “as the extent of the assets
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`acquired, including whether stock was sold, whether the purchasing entity continues to sell the
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`same product or service, whether the old customers and employees are retained, and whether the
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`same patents and trademarks are used.” John Crane Prod. Sols., Inc., 2012 WL 3453696, at *3.
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`10
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`Considering the “practical consequences” of this merger, the Court finds that in acquiring
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`and merging with Minute Key there was a “transfer of control of the business and the continuation
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`of the business under new management” to Hillman. See Soverain Software, 340 F. Supp. 2d at
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`763. Prior to Hillman’s acquisition of Minute Key, Minute Key had one singular business—self-
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`service key duplication kiosks—with its main office in Boulder, Colorado. It held and owned
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`intellectual property in the name “Minute Key” and relating to the technology involved in their
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`kiosks. (Dkt. No. 32 at 1, 5.) After the merger, Minute Key maintained their home office in
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`Boulder, Colorado. (Id. at 5.) Minute Key also maintained most of the same employees. (Id.) Most
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`importantly, Minute Key continued its one sole business—self-service key duplication kiosks—
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`under its same name and implementing its same intellectual property. (Id.) The only real change
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`after the merger in June 2018 was that Hillman internally integrated Minute Key into its corporate
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`structure and combined their executive management teams. (Id.) Then in December 2018, on this
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`same basis, Minute Key completed its full merger into Hillman. (Id.)
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`In light of this history, it is clear to the Court that Minute Key’s attorney-client relationship
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`with Cooley transferred to and was succeeded to by Hillman. Hillman is the complete successor,
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`in law and fact, to Minute Key. Hillman continued Minute Key’s existing business unchanged.
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`The same employees (and presumptively customers) were retained. The same patents and
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`trademarks were used. Thus, the Court finds that Hillman continues to run Minute Key’s business
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`as before but simply “under new management” and, as a result the attorney-client relationship
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`transferred as well from Minute Key to Hillman.9 See Soverain Software, 340 F. Supp. 2d at 763
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`(citing Commodity Futures Trading Commn., 471 U.S. at 349).
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`9 The Court further points out that Cooley seemingly conceded that Minute Key’s attorney-client relationship with
`Cooley passed to Hillman at oral argument. (Dkt. No. 115 at 29:22–30:13 (acknowledging in response to questioning
`from the Court that “we have to look at the substantial relationship test” for determining a conflict of interest).)
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`11
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`ii.
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`Cooley’s Representation of Minute Key was Broad and Indefinite.
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`The next matter that the Court must decide is the scope of Cooley’s representation of
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`Minute Key. In determining the scope of an attorney-client relationship, courts look “to the actions
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`of the parties.” See Gen. Elec. Co., 2011 WL 13201855 at *7. This is often revealed by both “the
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`implicit and explicit actions of the parties.” Id. at *6. Considering the facts of this case, the Court
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`finds that Cooley’s prior representation of Minute Key was broad, unrestricted, and highly akin to
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`the role of in-house general counsel.
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`The Court finds the relationship presented in General Electric to be both similar and
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`informative in this case. In General Electric, the attorneys at issue had a “decades-long
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`relationship” with the opposing party. Id at *7. Over the course of this relationship, the attorneys
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`helped the opposing party with “various, intermittent disputes relating to contracts concerning its
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`[business] as they arose.” Id. Faced with these facts, the Northern District of Texas found that
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`“[t]he attorney-client relationship . . . was ongoing and open-ended.” Id.
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`Similarly, Minute Key had a long-term relationship with Cooley for roughly ten years prior
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`to the merger of Minute Key and Hillman. (Dkt. No. 57 at 2.) Mr. Pittard and Cooley represented
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`Minute Key on a variety of matters, even providing advice as to matters where they did not directly
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`represent Minute Key. (Dkt. No. 32 at 1, 4, 12; Dkt. No. 32-22 at 233:6–8 (Mr. Fagundo stating in
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`deposition testimony in 2014 that Minute Key switched counsel in one of their patent cases based
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`on advice by “Cooley, who’s [Minute Key’s] general counsel.”); Dkt. No. 57 at 2, 8.) In addition,
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`during the period of 2012–2018, Mr. Pittard attended almost every Minute Key board meeting and
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`often acted as the Secretary at those meetings. (Dkt. No. 32 at 1, 12.) The Court further notes that
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`during this time Minute Key had no general counsel, and that the then-serving President and CEO
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`of Minute Key considered Mr. Pittard (and through him Cooley) as Minute Key’s general in-house
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`12
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`

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`Case 2:19-cv-00209-JRG Document 119 Filed 02/14/20 Page 13 of 21 PageID #: 3282
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`counsel. (Id. at 1–2.) At oral argument counsel for Cooley acknowledged that Cooley and Minute
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`Key had an “outside corporate securities general counsel-type relationship.” (Dkt. No. 115 at
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`23:21–25.)
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`In light of this evidence, it is clear that Cooley’s representation was “ongoing and open-
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`ended” and more akin to that of an in-house general counsel than anything else. See Gen. Elec.
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`Co., 2011 WL 13201855 at *7 (“[T]he Court looks to the actions of the parties as a manifestation
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`of their intent concerning the purpose of their attorney-client relationship. . . . [T]he evidence
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`indicates that the two entities contemplated an ongoing relationship that had the purpose of
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`allowing [the client] to bring matters to [the attorneys] for legal advice and consultations as
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`needed.”) As in General Electric, Cooley and Minute Key had a long history and neither party had
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`any intention of ending their relationship.10
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`iii. Minute Key/Hillman is a Current Client of Hillman.
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`Having determined the scope of Cooley’s representation of Minute Key and that Minute
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`Key’s attorney-client relationship was succeeded to by Hillman, the Court must now determine
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`whether Hillman is a current or a former client. In light of Cooley’s broad and ongoing “on-call”
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`representation of Minute Key and the facts of this case, the Court finds that Hillman is a current
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`client of Cooley.
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`Generally, an attorney-client relationship ends “once the purpose of the employment is
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`completed, absent a contrary agreement.” Simpson v. James, 903 F.2d 372, 376 (5th Cir. 1990), as
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`amended on denial of reh'g (July 6, 1990). However, courts also recognize that when the purpose
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`10 Cooley dismisses General Electric on the grounds that the relationship involved “was significantly narrower than
`the purported unlimited ‘general counsel’ role that Minute Key alleges Cooley occupied.” (Dkt. No. 57 at 6.) Cooley
`further argues that the case “is inapposite” because it did not involve a transfer of that relationship. (Id.) In response,
`the Court notes that the broader relationship between Minute Key and Cooley more strongly supports the position
`that their relationship was “ongoing and open-ended.” Here the Court is simply analyzing the relationship between
`Minute Key and Cooley. Whether that relationship continued after the merger is a separate question discussed in
`Section III(A)(iii).
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`13
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`Case 2:19-cv-00209-JRG Document 119 Filed 02/14/20 Page 14 of 21 PageID #: 3283
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`of a representation is for the attorney to be “on standby” that the attorney-client relationship is
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`“ongoing and open-ended.” Gen. Elec. Co., 2011 WL 13201855 at *7. The attorney-client
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`relationship can persist even when there are no pending projects. Id. (“An [ongoing, needs-based]
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`attorney-client relationship . . . does not lapse as soon as the attorney finishes his work on a
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`particular project; it carries on as new projects arise.”) Id.
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`The Court now addresses whether the attorney-client relationship was terminated prior to
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`Cooley’s representation of KeyMe in this case. The relevant timeframe in making this
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`determination is “during the pendency of th[e] case.” Rembrandt Techs., LP v. Comcast Corp.,
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`No. CIV.A. 2:05CV443, 2007 WL 470631, at *3 (E.D. Tex. Feb. 8, 2007). There is no doubt that
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`presently Cooley has made representations that its relationship with Minute Key, and by extension
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`Hillman, is over. However, that is not the question. The question is whether the relationship was
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`terminated as of the filing of this case.11
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`Hillman argues that Minute Key’s relationship with Cooley was not terminated by the
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`merger of Minute Key into Hillman. (Dkt. No. 32 at 9.) Hillman further argues that, given the type
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`of relationship between Cooley and Minute Key, their relationship continued until at least the filing
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`of this case and Cooley’s appearance. (Id.) Hillman argues that if Cooley wanted to end the
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`relationship then it should have given notice to Hillman and returned Minute Key’s client files to
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`it. (Id. at 9–10.); see Texas Rules Rule 1.15(d) (“Upon termination of representation, a lawyer shall
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`. . . giv[e] reasonable notice to the client, allow[] time for employment of other counsel, surrender[]
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`papers and property to which the client is entitled and refund[] any advance payments of fee that
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`11 The critical date in this case would be on or near July 24, 2019, when Cooley, on behalf of KeyMe, first participated
`in a meet and confer with Hillman attorneys. (Dkt. No. 32 at 6.) Cooley claims that their representation of KeyMe
`“began in August 2019,” (Dkt. No. 57 at 7), but this is