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attorneylawyerinjunctionmotionfiduciarywill
plaintiffattorneylawyerinjunctiontrust

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Mylan, Inc. v. Kirkland & Ellis LLP, Not Reported in Fed. Supp., 2015 WL 12733414

Facts

Mylan, Inc. and its affiliates filed a complaint against Kirkland & Ellis LLP, alleging that K&E violated its fiduciary duties by representing Teva in a hostile takeover attempt of Mylan's parent company, Mylan N.V. Mylan claimed that K&E had received confidential information during its representation of Mylan and that this representation of Teva was directly adverse to Mylan's interests. The court reviewed extensive documentation and evidence submitted by both parties, including declarations and expert reports, to assess the situation.

The Court finds the following facts: Plaintiff Mylan Inc., a wholly owned indirect subsidiary of Mylan N.V., is a leading global pharmaceutical company, whose affiliates and subsidiaries develop, license, manufacture, market and distribute generic, branded generic and specialty pharmaceuticals.

Issue

Whether Kirkland & Ellis LLP's representation of Teva Pharmaceutical Industries in its hostile takeover attempt of Mylan N.V. constitutes a violation of its fiduciary duties to Mylan and the Pennsylvania Rules of Professional Conduct.

The Court observes, in reaching its recommendation, that several considerations raised (expressly or implicitly) by the parties are not within the scope of the present determination.

Rule

Under Pennsylvania's Rules of Professional Conduct, a lawyer shall not represent a client if the representation involves a concurrent conflict of interest, which exists if the representation of one client will be directly adverse to another client.

Pennsylvania's Rules of Professional Conduct provide, in relevant part: 1.7 Conflict of Interest: Current Clients (a) Except as provided in paragraph (b), a lawyer shall not represent a client if the representation involves a concurrent conflict of interest.

Analysis

The court analyzed whether K&E's representation of Teva was permissible under the ethical rules and the terms of the Engagement Letter with Mylan. It found that K&E's representation was likely impermissible as it was directly adverse to Mylan, which had provided K&E with confidential information. The court emphasized the importance of the attorney's duty of undivided loyalty to the client and the potential for irreparable harm to Mylan if the injunction were not granted.

Where, as here, the Court concludes it is substantially likely that the representation is impermissible, i.e., in violation of the governing ethical rules and not permitted by the terms of the Engagement Letter, and that Plaintiffs are substantially likely to succeed on the merits of their underlying action for a permanent injunction.

Conclusion

The court recommended granting Mylan's motion for a preliminary injunction, concluding that K&E's representation of Teva was likely in violation of ethical rules and that Mylan was likely to succeed on the merits of its underlying action for a permanent injunction.

The Court concurs with the Pennsylvania Supreme Court's emphasis on the critical importance of every attorney's duty of 'undivided loyalty' and its indication that deferential regard for, and diligent protection of, this duty is essential to the public trust.

Who won?

Mylan prevailed in the case as the court found that K&E's representation of Teva was likely impermissible under the ethical rules, thus supporting Mylan's claim of a conflict of interest.

The Court finds that there is no basis for this argument. See, e.g., Painter Report at ¶ 29 ('There are substantial grounds to challenge the proposition that Teva is acting adversely to Mylan N.V. when it is offering to pay … 48% more than the trading price….')

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