GSI Commerce Solutions, Inc. v. BabyCenter, LLC

GSI Commerce Solutions, Inc. (GSI) (plaintiff) sued BabyCenter, LLC (defendant) regarding an e-commerce services agreement (the agreement) that the parties entered. As a wholly owned subsidiary of Johnson & Johnson (J&J), BabyCenter used J&J’s in-house legal department. J&J’s legal department created the agreement and was involved in the dispute between GSI and BabyCenter. BabyCenter also substantially relied on J&J for financial resources, human resources, information technology, and other support. GSI’s counsel, Blank Rome, LLP, had represented J&J in other matters. Pursuant to the engagement agreement that Blank Rome and J&J entered in 2004, Blank Rome agreed to represent J&J in compliance matters involving J&J and J&J affiliates, and J&J specifically waived a conflict of interest regarding Blank Rome’s representation of another company’s patent matters. Blank Rome also attached a standard addendum to the engagement agreement, which included a general statement that Blank Rome would represent only the client named in the engagement letter and not its affiliates or subsidiaries, unless Blank Rome stated otherwise in writing. In 2006, Blank Rome represented BabyCenter in a privacy matter. However, Blank Rome did not advise J&J or BabyCenter regarding the specific agreement that GSI and BabyCenter disputed, and Blank Rome did not receive confidential information relevant to that agreement. The district court granted BabyCenter’s motion to disqualify Blank Rome as GSI’s counsel, finding that Blank Rome’s representation of both GSI and J&J was a conflict of interest. GSI appealed.