By Mike Scarcella

WASHINGTON, July 14 (Reuters) - U.S. law firm Quinn Emanuel cannot represent data provider Commercial Real Estate Exchange (CREXi) in its antitrust case against larger rival CoStar Group, a federal judge ruled, finding the firm's representation of both companies created a conflict of interest.

U.S. District Judge Consuelo Marshall in Los Angeles on Monday granted a request from CoStar to disqualify Quinn Emanuel from representing CREXi in the long-running litigation.

The judge agreed with CoStar's arguments that Quinn Emanuel owed it a duty of loyalty because the firm had appeared for CoStar in a separate lawsuit in the federal court in San Jose last year.

Quinn Emanuel declined to comment. CREXi in a statement said "CoStar’s litigation tactics are meant to distract from its mounting antitrust exposure as its business and stock struggle."

CoStar general counsel Gene Boxer in a statement said the disqualification order “confirms a basic principle that every client is entitled to expect from its lawyers: loyalty.” Boxer said "CREXi’s strategy is now apparent: when caught stealing CoStar Group’s content, it tried to steal CoStar Group’s lawyers too."

California-based CREXi, which was represented by Quinn Emanuel since last year, lodged antitrust counterclaims against CoStar in 2021 in a copyright lawsuit ​that CoStar filed against ⁠CREXi the previous year.

The original lawsuit alleged CREXi deliberately copied tens ​of thousands of CoStar photos of real ​estate ⁠properties in what the company has called a mass copyright infringement scheme. CREXi in its counterclaims alleged CoStar locked real estate brokers into using its ​data platforms and blocked rivals from accessing ​key web tools.

In court filings, CoStar said Quinn Emanuel did not obtain approval from the company or a waiver before taking on the work for CREXi.

“Despite representing CoStar in active litigation, Quinn made the self-interested decision to represent one of CoStar’s key competitors adverse to its client,” CoStar told Marshall in January.

CREXi countered that disqualification was not justified because there was no overlap between the lawyers working on the two cases and because they involved different facts and witnesses. A judge in February dismissed the lawsuit in San Jose, an employment dispute against CoStar.

CREXi said in a court filing that CoStar's bid to disqualify Quinn Emanuel was “litigation gamesmanship” and that barring the representation would “strip CREXi of its carefully chosen counsel and severely prejudice its ability to litigate this case.”

Marshall said that because CoStar had not consented to Quinn Emanuel’s work for CREXi “the duty of loyalty has been breached.”

The case is CoStar Group v. Commercial Real Estate Exchange, U.S. District Court, Central District of California, No. 2:20-cv-08819-CBM-AS.

For plaintiff: Nicholas Boyle and Elyse Greenwald of Latham & Watkins

For defendant: Alex Spiro and Michael Lifrak of Quinn Emanuel

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