Date: July 28, 1994
Case No. 93-ERA-25
EDWARD P. HOLUB
Complainant
v.
H. NASH BABCOCK, BABCOCK & KING, INC.,
FIVE STAR PRODUCTS, INC., U.S. GROUT CORP.,
U.S. WATERPROOFING DIV., U.S. HIGHWAY PRODUCTS, INC.,
THE NOMIX CORP., THE NASH BABCOCK ENGINEERING COMPANY,
CONSTRUCTION PRODUCTS RESEARCH INC., INTERNATIONAL
CONSTRUCTION PRODUCTS RESEARCH, INC., FIVE STAR
CONSTRUCTION PRODUCTS CANADA, INC., THE BABCOCK
CORPORATION,
Respondents
ORDER TO SHOW CAUSE WHY ATTORNEY EUGENE R. FIDELL
SHOULD NOT BE DISQUALFIED
On June 10, 1994, an Order issued in the above-captioned case
concerning the appearance of Attorney Eugene R. Fidell as one of
Respondents' attorneys herein, and his ongoing representation of
the Chief Administrative Law Judge of the United States Department
of Labor.
On June 17, 1994, responding to that Order, Complainant filed
Motion to Disqualify Eugene R. Fidell. That motion seeks to
disqualify Attorney Fidell "from representing the Respondents in
this matter." Complainant's motion states in relevant part as
follows:
As the legal counsel for [the] Chief Judge
. . . of the Office of Administrative Law
Judges, Mr. Fidell is representing him in an
action brought by the Solicitor of Labor
seeking his removal as Chief Judge. In a
conversation between Mr. [George W.] Baker
[Complainant's counsel] and Mr. Fidell on June
13, 1994, Mr. Fidell stated that he had been
[PAGE 2]
representing the Chief Judge in this matter for approximately
two years.
While the Chief Judge does not exercise
decisional authority over the instant
case, he certainly exercises important
procedural authority.
(Emphasis in original). Asserting that, "[t]here are eleven
separate instances in which the Chief Judge plays a procedural role
in the instant case, . . ." Complainant referred to 29 C.F.R. Part
18. He characterized some of the rules as "ministerial,"
i.e., §§ 18.17 (receiving stipulations on
discovery), 18.31(a) (receiving notice of the disqualification of
an administrative law judge) and 18.59 (certification of official
record). Complainant referred to
"[o]ther[. . . rules . . .] where [the Chief Judge] exercises dual
authority with Judge Rosenzweig in discretionary matters,"
§§ 18.11 (consolidating hearings), 18.24 (issuing
subpoenas), 18.26(b) (changing the date, time or place of a
hearing), 18.34(g)(2) (permitting non-attorneys to appear) and
18.42(b) and (c) (expedited hearings). Complainant also noted
other regulation sections asserting that these provisions are
"where [the Chief Judge] either acts in an appellate capacity with
regard to Judge Rosenzweig's decision (18.36(b) - disciplining an
attorney) or where he acts when Judge Rosenzweig cannot act (18.25
- designation of presiding judge, 18.30 - designation of substitute
judge for hearing, 18.31(c) - designation of new administrative law
judge when the administrative law judge disqualifies herself)."
Complainant also refers to 29 C.F.R. Part 24, Procedures for Handling
Discrimination Complaints Under Federal Employee Protection Statutes, which, he
asserts, contain five references to actions by the Chief
Administrative Law Judge, including receiving the employer's
appeal. Complainant concludes as follows:
Given these continuing important procedural
powers that the Chief Judge can exercise in
the instant case, it would be unfair to the
Complainant to have as opposing counsel, Mr.
Fidell, who continues to represent the Chief
Judge in an important case regarding his
removal as Chief Judge.
For the foregoing reasons, the Complaint moves
that Attorney Eugene R. Fidell be disqualified
from representing the Respondents in this
[sic] instant case.
(Complainant's Motion to Disqualify).
[PAGE 3]
On June 20, 1994, Attorney Eugene R. Fidell filed
Respondents' Response to June 10, 1994 Order. The Response
states in relevant part as follows:
The facts set forth in the Order are, with one
exception,* correct. My firm and I have
represented [the] Chief Judge . . . since
1992. His case is now pending before the
Merit Systems Protection Board and has nothing
to do with this proceeding, the parties to it,
or the presiding Administrative Law Judge.
[The] Chief Judge . . . has no authority over
the instant case. The presiding
Administrative Law Judge is not subject to
performance rating, see 5 C.F.R. §
930.211 (1993), and enjoys statutorily
protected tenure of office. 5 U.S.C.
§§ 3105, 7521(a) (1988).
* The exception is that complainant has at
least two attorneys, although only one
-- George W. Baker -- has appeared in this
proceeding. A second attorney from Hawthorne,
Ackerly & Dorrance -- Timothy H. Throckmorton
-- participated in a meeting with me at Mr.
Pickerstein's office last month.
(Respondents' Response, June 20, 1994, at p. 1).
Concerning the disclosure issue, Attorney Fidell does state
that:
Before accepting this matter, I made an
informal inquiry of the Office of the
Solicitor of Labor concerning my intent to
appear for respondents. I was orally advised
that the Department is not a party to this
proceeding and has no objection to my
appearing for respondents. My firm was
retained on April 1, 1994.
I did not bring my representation of [the]
Chief Judge . . . to the attention of the
Administrative Law Judge or opposing counsel
because I was (and remain) aware of no reason,
either in substance or appearance, why that
[PAGE 4]
representation has any bearing on the propriety of my serving as
counsel for respondents. In addition, the very act of making my
representation of [the] Chief Judge . . . a matter of record in
this proceeding could have been perceived as an indirect effort to
derive some implicit advantage. Neither respondents nor I have any
desire to do so. The circumstances having now been laid on the
public record by the June 10 Order and this memorandum, the matter
should be considered closed.
(Id. at p. 2). With respect to the authority of the Chief
Judge, the Response makes the following assertion:
Complainant evidently objects to my
participation based on the theory that [the]
Chief Judge . . . might one day be called upon
to perform certain functions in connection
with the case. Passing over the fact that
function such as appointing a settlement
judge, see 29 C.F.R. § 18.9(e)(2),
58 Fed. Reg. 38500 (July 16, 1993), are
obviously ministerial, no such appointment has
been requested in this case, and if such a
request ever were made, the required action
could be taken by the Deputy Chief Judge if
need be.
The only specific situation cited by
complainant's counsel in attempting to
articulate why he believes I am disqualified
is that under 29 C.F.R. § 18.36 the Chief
Judge would have to rule on any appeal from
any order suspending or barring counsel. The
short answer to this is that there has been no
such order, there has been no such appeal, and
even if there were, the Deputy Chief Judge
could rule if, as would certainly happen,
[the] Chief Judge . . . were to recuse
himself. The same is equally true for any
other function that might normally fall to the
Chief Judge.
(Id. at pp. 2--3). Attorney Fidell concludes:
Finally the Order correctly notes that
respondents have other counsel. That is of no
moment for present purposes, although it is
testimony to the complex and multifaceted
nature of the congeries of proceedings in
[PAGE 5]
which respondents have been unfairly embroiled. The government has
fielded a battalion of lawyers from the Justice Department, the
United States Attorney's Office and the Nuclear Energy Commission
to face our squad in divers contexts. Complainant himself has two
lawyers, see note * supra, and if wanted to retain
others, that would be entirely his affair. So too, absent some
substantial basis to interfere with respondents' choice of counsel
-- both as to number and identity -- that choice must be respected.
(Id. at p. 3). On June 23, 1994, Respondents, through
Attorney Fidell, filed a further Respondents' Answer to Motion
to Disqualify[1] :
Complainant's motion to disqualify is
unfounded. [The] Chief Judge . . . obviously
has a variety of functions under the rules
governing these proceedings. A number -- as
complainant properly concedes -- are plainly
ministerial (as in the case of the powers to
certify the agency record, or receive the
notice of appeal, discovery stipulations or
notice of disqualification of a trial judge).
Others are water over the dam (as in the case
of the powers to receive the notice of appeal
or to designate a trial judge). Still others
are inapplicable on their face (as in the case
of the powers to consolidate hearings or allow
nonattorneys to appear). But none of these
powers has been brought into play since the
undersigned was retained or entered his
appearance in this proceeding. As we
explained in response to the June 10 Order, if
there were, in the future, any developments
that called for or permitted action by [the]
Chief Judge . . . it is perfectly obvious that
he would have to recuse himself. In the
circumstances, there is no basis for
disqualifying me. Complainant's motion should
therefore be denied (footnote omitted).
(Emphasis in original)(Respondents' Answer to Motion to
Disqualify, June 23, 1994, at pp. 1--2).
DISCUSSION
This motion, and the factual constellation giving rise
[PAGE 6]
thereto, present a number of difficult issues, both procedural and
substantive. Under the circumstances, it seems advisable -- and,
hopefully, helpful -- to proceed as if following an analytic road
map.
I. This Court's Authority to Rule on the Motion
The first issue to be addressed is whether this Court
possesses the authority to rule on a motion for disqualification.
The seminal case in this area is Goldsmith v. Bd. of Tax
Appeals, 270 U.S. 117 (1926), which involved the right of
the United States Board of Tax Appeals to prescribe rules for
admission of attorneys and certified public accountants to practice
before it under the Revenue Act of 1924. Although Congress did not
specifically include a provision in the enabling legislation
providing for such rules of admission, the Court held that, "so
necessary is the power and so usual is it that the general words by
which the Board is vested with the authority to prescribe the
procedure in accordance with which its business shall be conducted
include as part of the procedure rules of practice for the
admission of attorneys." Id. at 122.
The concept of agency regulation of those who practice before
it, within the context of a disqualification, was affirmed in
Herman v. Dulles, 205 F.2d 715 (D.C.Cir. 1953). That
case involved an attorney who practiced before the International
Claims Commission of the United States. After a hearing, the
Commission found that the attorney had violated certain canons of
ethics of the American Bar Association. Noting that the Commission
Rules of Practice and Procedure, § 300.6, prescribes grounds
on which an attorney's right to appear may be revoked, including a
Commission finding that an attorney has failed to conform to
recognized standards of professional conduct, the court found that
such finding supported the Commission's action against the
attorney.[2] See also Schwebel v. Orrick, 153
F.Supp. 701 (D.C.D.C. 1957), which involved a similar proceeding
before the Securities and Exchange Commission. See generally
Touche Ross & Co. v. Securities & Exch. Com'n., 609 F.2d
570 (2d Cir. 1979). But see Camp v. Herzog, 104
F.Supp. 134 (D.C.D.C. 1952), holding that the attorney in that case
was improperly disqualified. The Herman v. Dulles
court distinguished Camp v. Herzog, however, holding
it not to the contrary, and stating that, "[i]f the Board [National
Labor Relations Board] there involved had issued rules, there would
have been 'no question as to its power to discipline.' 104 F.Supp.
at page 138." Herman v. Dulles, 205 F.2d at 716--
17.[3]
[PAGE 7]
The next issue to be addressed, then, is whether the
Department of Labor possesses such statutory and, therefore,
derivative regulatory authority to oversee, and disqualify,
counsel. A recent decision of the Secretary of Labor, Rex v.
Ebasco Service, Inc., Case Nos. 87-ERA-6, 87-ERA-40 Sec'y.
Dec. and Order, March 4, 1994, clearly affirms this authority,
citing Goldsmith, supra, and Koden v. United
States Department of Justice, 564 F.2d 228, 232--33 (7th
Cir. 1977). See also Crosby v. Hughes Aircraft Co.,
Case No. 85-TSC-2, Sec'y. Dec. and Order, Aug. 17, 1993, appeal
docketed, Crosby v. Reich, No. 91-70834 (9th Cir. 1993);
Cable v. Arizona Public Serv. Co., Case No. 90-ERA-
15, Sec'y. Dec. and Order, Nov. 13, 1992; Stack v. Preston
Trucking Co., Case No. 89-STA-15, Sec'y. Dec. and Order of
Remand, April 18, 1990. See also 5 U.S.C. § 301.
II. Which Body of Law or Ethics Applies
Having determined that this Court possesses the authority to
rule on the petitioned-for disqualification, the next question to
be answered is, to which substantive body of law and ethics does
one turn under the circumstances of this case and, subsumed within
that issue, which jurisdictional venue controls.
It is noted that Rex, and the other decisions of
the Secretary cited therein, involved application of Fed.R.Civ.P. 11:
[T]he Secretary has held that § 18.36 of
the ALJ Rules of Practice provides a remedy
for conduct which is dilatory, unethical,
unreasonable, and in bad faith, so that Rule
11 of the Federal Rules of Civil Procedure is
not applicable because the situation is
"provided for or controlled" by Department of
Labor Regulations. [Citing Crosby,
supra; Cable, supra;, and
Stack, supra.] I agree . . .
that "vexatious pursuit of a groundless
action" would constitute dilatory, unethical,
unreasonable or bad faith conduct covered by
29 C.F.R. § 18.36(b).
Rex, id. at sl. op. 5-6.
Thus, in Rex, the administrative law judge
sought to impose respondent's attorney fees and costs on
complainant, a remedy which, he held, was not provided for by 29
C.F.R. Part 18. He therefore applied Fed.R.Civ.P. 11, reasoning
that, under §
[PAGE 8]
18.29(a)(8), he would be permitted to do so.[4] The Secretary,
however, looking to 29 C.F.R. § 18.34(g)(3), held that a
remedy already existed that would resolve the issue, i.e.,
disqualification.[5]
In the instant case, the remedy sought by Complainant is
disqualification, and there is no apparent contention that this
Court should look elsewhere for an end-game resolution of this
matter. To the extent that there might be a contention, however,
that Rex stands for the proposition that one must
never look beyond the four-corners of Part 18 to determine what
does constitute "dilatory, unethical, unreasonable or bad
faith conduct" within the meaning of Part 18, this Court finds that
it does not so restrict. Thus, a close reading of
Rex reveals that the conduct which was found to
constitute "vexatious pursuit of a groundless action," clearly fell
under the rubric of dilatory, unreasonable or bad faith conduct.[6]
Indeed, the Secretary adopted -- without discussion of the
implications of the conduct complained of -- the position of the
Wage and Hour Administrator that the actions of that complainant's
counsel are a form of "dilatory tactics" within the meaning of 29
C.F.R. § 18.36(b). This Court does not interpret this
straightforward and uncomplicated analysis of that straightforward
and uncomplicated factual predicate, as precluding a review of, and
reliance on, other legal precedent in cases which present more
thorny questions -- as does this matter.
There are several precedential sources from which to draw that
are arguably applicable herein: federal court precedent regarding
disqualification of attorneys and recusal of judges;[7] American
Bar Association Model Rules of Professional Conduct;[8] rulings derived
from such Model Code and Rules; and state bar association codes and
rulings.[9]
Regarding the appropriate venue, the Model Rules do provide
some guidance. Rule 8.5, "Disciplinary Authority; Choice of Law,"
states in relevant part as follows:
(a) Disciplinary Authority. A lawyer admitted
to practice in this jurisdiction is subject to
the disciplinary authority of this
jurisdiction, regardless of where the lawyer's
conduct occurs. A lawyer may be subject to
the disciplinary authority of both this
jurisdiction and another jurisdiction where
the lawyer is admitted for the same conduct.
(b) Choice of Law. In any exercise of the
[PAGE 9]
disciplinary authority of this jurisdiction, the rules of
professional conduct to be applied shall be as follows:
(1) for conduct in connection with
the proceeding in a court before
which a lawyer has been admitted to
practice (either generally or for
purposes of that proceeding), the
rules to be applied shall be the
rules of the jurisdiction in which
the court sits, unless the rules of
the court provide otherwise . . . .
The relevant portion of the "Comment" section states as follows:
Disciplinary Authority
Paragraph (a) restates longstanding law.
Choice of Law
A lawyer may be potentially subject to more
than one set of rules of professional conduct
which impose different obligations. The
lawyer may be licensed to practice in more
than one jurisdiction with differing rules, or
may be admitted to practice before a
particular court or agency with rules that
differ from those of the jurisdiction or
jurisdictions in which the lawyer is licensed
to practice. In the past, decisions have not
developed clear or consistent guidance as to
which rules apply in such circumstances.
Paragraph (b) seeks to resolve potential
conflicts. Its premise is that minimizing
conflicts between rules, as well as
uncertainty about which rules are applicable,
is in the best interest of both clients and
the profession (as well as the bodies having
authority to regulate the profession).
Accordingly, it takes the approach of (i)
providing that any particular conduct of an
attorney shall be subject to only one set of
rules of professional conduct, and (ii) making
the determination of which set of rules
applies to particular conduct as
[PAGE 10]
straightforward as possible, consistent with recognition of
appropriate regulatory interest of relevant jurisdictions.
Paragraph (b) provides that as to a lawyer's
conduct relating to a proceeding in a court or
agency before which the lawyer is admitted to
practice (either generally or pro hac
vice), the lawyer shall be subject only to
the rules of professional conduct of that
court or agency. . . .[[10] ]
See Model Rules of Professional Conduct, American Bar Association
(August 1993), as published in Martindale-Hubbell Law Digest
(A.B.A. Codes), 1994 Ed. at ABA-37. It is noted therein that there
was no counterpart to this Rule in the Model Code. Id. at
ABA-38.
The question which then arises is where this Court "sits" for
purposes of choice of law. Although the undersigned's
administrative location is Massachusetts, the above-captioned case
arises in Connecticut, and will be tried as near to the Stamford
location as can be accommodated. Further, any appeal of this case
after the Secretary's decision would be to the United States Court
of Appeals for the Second Circuit, the circuit within which the
alleged violation occurred. See 42 U.S.C. § 5851(c);
29 C.F.R. § 24.7. To the extent that the federal courts have
spoken as to the asserted conflict issue, it would appear that the
Second Circuit position in this matter would control.
To the extent that a code of ethics of a state bar would
apply, one would look to the jurisdictions in which Attorney Fidell
is admitted, i.e., District of Columbia, Maryland, New York
and Massachusetts.[11] He is not admitted in Connecticut, and
based on the filings sent in support of Respondents' May 12, 1994,
motion to suspend these proceedings, he is not appearing pro hac
vice in the United States District Court for the District of
Connecticut.
Paul E. Iacono Structural Engineer, Inc. v.
Humphrey, 722 F.2d 435 (9th Cir. 1983), cert.
denied, 464 U.S. 851, addresses the issue of which code should
be applied and the nature of that application. In a conflict
situation somewhat analogous to that in Baroumes v. Eagle
Marine Services, id., the Ninth Circuit agreed with the
conclusion that to have force, the ABA Model Code must be
specifically adopted. The Iacono court stated as
follows:
The Model Code is itself not law but rather
merely a suggested body of ethical principles
and rules upon which reasonable lawyers,
[PAGE 11]
concerned about the proper role of the legal profession in American
society, have reached a consensus. Since "[a]dvance notice is
essential to the rule of law" and since "it is desirable that an
attorney or client be aware of what actions will not be
countenanced," In re Coordinated Pretrial Proceedings in
Petroleum Products Antitrust Litigation, 658 F.2d [at 1360]
. . . the provisions of the Model Code, standing alone, present no
just basis for disqualification of a lawyer. Until the Model Code
is adopted as law by the courts, the legislature, or the regulatory
authority charged with the discipline of lawyers in a particular
jurisdiction, the canons and disciplinary rules of the Model Code
are merely hortatory, not prescriptive. See id. at 1359 n.
5 (upholding disqualification based on violation of provisions of
Model Code where "the reference to the ABA Code in Local Rule
1.3(d) [of the United States District Court of the Central District
of California] sufficiently invokes Canon 9 as to make it a basis"
for disqualification.
Paul E. Iacono Structural Engineer, Inc. v.
Humphrey, id. at 438-39.
It thus appears that one ought look, in this case, to the
rules of the United States District Court for the District of
Connecticut to see which ethical rules are to be applied. See
also In re American Airlines, Inc., 972 F.2d 605, 609-10
(5th Cir. 1992). As noted above, however, Attorney Fidell is
neither licensed to practice law in Connecticut, nor is he
appearing pro hac vice in the ongoing District Court
proceedings involving Respondents herein. He is admitted to
practice in the District of Columbia, Maryland, New York and
Massachusetts. However, Baroumes, Iaconoand Petroleum Products, all emphasize the
desirability of an attorney or client being aware of what actions
will not be countenanced.
These jurisdictional facts present a problematic situation,
but not one incapable of resolution. Thus, the United States
District Court for the District of Connecticut Recognizes the Rules
of Professional Conduct as approved by the judges of the
Connecticut Superior Court as expressing the standards of
professional conduct expected of lawyers practicing in the District
of Connecticut. See U.S.Dist.Ct.Rules D.Conn., Civil Rule
3(a)(1).[12] See also Prisco v. Westgate Entertainment,
Inc., 799 F.Supp. 266, 268 (D.Conn. 1992). However, the
United States Court of Appeals for the Second Circuit applies the
American Bar Association Model Code of Professional
Responsibility,[13] and apparently, certain circuits, including
the Second Circuit, see no absolute disjunction between rules
relied on by a particular Federal district court and the
[PAGE 12]
Model Code of Professional Responsibility. See, for
example, International Electronics Corporation v.
Flanzer, 527 F.2d 1288 (2d Cir. 1975). See also
In re American Airlines, Inc., in which the Fifth
Circuit stated that:
The parties' extensive citation of this
court's precedents applying the ABA Model Code
suggests their recognition that the Texas
Rules, as adopted by the Southern District of
Texas, are not the "sole" authority governing
this case. Moreover, we do not believe that
our holding in Dresser [In
re Dresser Industries, 972 F.2d 540
(5th Cir. 1992)] has rendered the parties'
arguments grounded in the Texas Rules
irrelevant to our decision. The Texas Rules
were patterned after the ABA Model Rules of
Professional Conduct, which the
Dresser court cited along with
the Model Code as the national standards
utilized by this circuit in ruling on
disqualification motions. Since the
relevant ABA Rules do not differ materially
from the corresponding Texas Rules, the
parties' interpretations of the Texas Rules
are equally applicable in this case. Our
discussion will therefore center on the Texas
Rules.
(Emphasis added) Id. at 610. It is noted
that the District of Connecticut has, for example relied on an
interweaving of the Connecticut rules and the ABA Model Code.
See generally Trinity Amb. Serv. v. G & L Amb. Serv.,
578 F.Supp. 1280 (D.Conn. 1984). But see Prisco v. Westgate
Entertainment, Inc., 799 F.Supp. 266 (D.Conn. 1992),
wherein that court stated, "as with most Second Circuit case law
dealing with attorney disqualification, it is based on the ABA Code
of Professional Responsibility, while the instant case is governed
by the Model Rules of Professional Conduct. This distinction is
often without import, but where former clients are involved,
the [Connecticut] Model Rules and the ABA Code impose different
standards, and this affects the initial application of the
substantial relationship test." (Emphasis supplied),
id., at 271.
Accordingly, and based on all of the above, I find that there
is no compelling reason not to restrict the field of consideration
to the Connecticut Rules as well as to the Model Code of
Professional Responsibility as they both impact on the instant
case; and I further find that Attorney Fidell's not being licensed
[PAGE 13]
to practice law in the State of Connecticut does not remove his
actions -- or failure to act -- from scrutiny. Thus, as noted
above, the cases state that it is "desirable," not mandatory, that
an attorney who is the subject of a motion to disqualify be on
notice as to the rules to be applied. Indeed, in the context of
administrative proceedings, where there is no requirement that an
attorney be admitted to practice within the state or federal
circuit where a particular case arises, application of a
"mandatory" standard would have grave consequences. Thus, to apply
a mandatory standard in this regard, would often have the effect of
eviscerating the authority of the agency involved -- in proceedings
before an administrative law judge -- to police the ethical conduct
of those who appear before it. This was clearly not the intent of
Goldsmith v. Board of Tax Appeals, 270 U.S. 117
(1926), and all its progeny, and I so find.[14]
The next legal issue to be addressed prior to an analysis of
the facts presently before the Court is the effect to be given the
venue-applicable ethical standards. The Fifth Circuit cogently
addressed this point in In re American Airlines,
Inc., 972 F.2d at 610, stating that, "[a]s we confirmed in
Dresser, '[m]otions to disqualify are substantive
motions affecting the rights of parties and are determined by
applying standards developed under federal law.'
Dresser, at 543; see also In re Snyder,
472 U.S. 634, 105 S.Ct. 2874, 2881 n. 6, 86 L.Ed.2d 504 (1985);
In re Finkelstein, 901 F.2d 1560, 1564 (11th Cir.
1991); United States V. Miller, 624 F.2d 1198, 1200
(3d Cir. 1980); Cord v. Smith, 338 F.2d 516, 524 (9th
Cir. 1964)." The court continued:
Federal courts may adopt state or ABA rules as
their ethical standards, but whether and how
these rules are to be applied are questions of
federal law. . . .
Id. Indeed, one party in the American
Airlines case argued strenuously that the Texas rules of
conduct controlled the discretion of the federal district court,
and asserted that, "'a trial court is not forced by literalism or
mechanical standards to do injustice serving the mere litigation
tactics of a party. Rather a trial court, according to the
Rules, is to determine if there is actual prejudice or
threatened interference with the fair administration of
justice.'[Citation omitted] " (Emphasis in original)
Id. In drawing a comparison between itself and other
circuits with respect to how aggressively the appropriate standards
are to be applied, the Fifth Circuit highlighted, with more than a
hint of disapproval, the Second Circuit approach. The Fifth
Circuit continued:
[PAGE 14]
Some courts have taken the position . . . that
"[t]he business of the court is to dispose of
litigation and not to act as a general
overseer of the ethics of those who practice
here unless the questioned behavior taints the
trial of the cause before it." W.T.
Grant Co. v. Haines, 531 F.2d 671, 677
(2d Cir. 1976); Board of Educ. v.
Nyquist, 590 F.2d 1241, 1246 (2d Cir.
1979); Armstrong v. McAlpin, 625
F.2d 433, 445-46 (2d Cir. 1980). [Citation
omitted]. An attorney's ethical violation by
itself does not warrant disqualification under
this approach. Rather, disqualification is
proper only in cases where a court also finds
that the unethical conduct threatens to taint
the trial. This more limited test largely
rests upon a belief that disqualification
motions are often made for tactical reasons
such as delay or harassment. While the
"taint" standard "fails to correct all
possible ethical conflicts,"
Armstrong, 625 F.2d at 445, it
is argued that this limited disqualification
rule serves to deter many meritless, tactical
motions that would otherwise be filed.
Id.
It is emphasized that the undersigned does not accept, as the
definitive interpretation, the Fifth Circuit's view of the Second,
as to this issue. Indeed, in drawing comparisons, one is often
moved to place emphasis where it will be most apt to favor one's
own position; and, I might add, courts, including this one, are no
more immune to this tendency than the average mortal. Accordingly,
while the Fifth Circuit's analysis provides a convenient "jumping-
off" point, it is the Second Circuit's own view of this federal
question that will inform this Court and guide its analysis.[15]
III. Disqualification Motions and the Second Circuit
Just about all of the recent Second Circuit decisions dealing
with disqualification motions refer to Emle Industries, Inc.
v. Patentex, Inc., 478 F.2d 562 (2d Cir. 1973).
Emle involved an assertion that one David Rabin,
Esq., plaintiffs' attorney therein, breached Canon 4 of the ABA
Code, which Canon states that, "[a] lawyer should preserve the
confidences and secrets of a client." Id. at 564. As an
initial matter, the court stated as follows:
[PAGE 15]
We approach our task as a reviewing court in
this case conscious of our responsibility to
preserve a balance, delicate though it may be,
between an individual's right to his own
freely chosen counsel and the need to maintain
the highest ethical standards of professional
responsibility. This balance is essential if
the public's trust in the integrity of the Bar
is to be preserved. Moreover, we are mindful
that ethical problems cannot be resolved in a
vacuum. To affirm the [disqualification]
order . . . will, to be sure, deprive
plaintiffs of highly qualified counsel of
their own choosing and may foreclose Rabin's
participation in future actions brought
against Burlington and Patentex. There can be
no doubt, however, that we may not allow Rabin
to press these claims against Patentex if, in
doing so, he might employ information
disclosed to him in confidence during his
prior defense of Burlington. Such a result
would work a serious injustice upon Burlington
and Patentex and would tend to undermine
public confidence in the Bar. Thus, even an
appearance of impropriety requires prompt
remedial action by the court.
Id. at 564-65. In its discussion of the ethical standards
to be followed, the Second Circuit noted the "substantially
related" test articulated by Judge Weinfeld in T.C. Theatre
Corp. v. Warner Bros. Pictures, 113 F.Supp. 265 (S.D.N.Y.
1953), i.e., that matters encompassed by a pending suit,
wherein a party's former attorney appears on behalf of his
adversary are substantially related to the matters wherein that
attorney represented him, the former client. Judge Weinfeld went
on to state that, "[t]he court will assume that during the course
of the former representation confidences were disclosed to the
attorney bearing on the subject matter of the representation. It
will not inquire into their nature and extent. Only in this manner
can the lawyer's duty of absolute fidelity be enforced and the
spirit of the rule relating to privileged communications be
maintained." Emle, id. at 570. The
Emle court continued:
Canon 4 implicitly incorporates the admonition
. . . that [a lawyer is obliged to represent
the client with undivided fidelity and forbids
[PAGE 16]
disclosure of secrets or confidences and thus] forbids also the
subsequent acceptance of retainers or employment from others in
matters adversely affecting any interest of the client with respect
to which confidence has been reposed. . . . Without strict
enforcement of such high ethical standards, a client would hardly
be inclined to discuss his problems freely and in depth with his
lawyer, for he would justifiably fear that [the revealed]
information . . . may be used against him . . . . A lawyer's
good faith, although essential in all his professional activity,
is, nevertheless, an inadequate safeguard when standing alone.
Even the most rigorous self-discipline might not prevent a lawyer
from unconsciously using or manipulating a confidence acquired in
the earlier representation and transforming it into a telling
advantage in the subsequent litigation. Or, out of an excess of
good faith, a lawyer might bend too far in the opposite direction,
refraining from seizing a legitimate opportunity for fear that such
a tactic might give rise to an appearance of impropriety.[[16] ]
In neither event would the litigant's or the public's interest be
well served. The dynamics of litigation are far too subtle, the
attorney's role in that process far too critical, and the public's
interest in the outcome is far too great to leave room for even the
slightest doubt concerning the ethical propriety of a lawyer's
representation in a given case. These considerations require
application of a strict prophylactic rule to prevent any
possibility, however slight, that confidential information acquired
from a client during a previous relationship may subsequently be
used to the client's disadvantage.
Id. at 570-71. The court commented further on the
"appearance of impropriety:"
Nowhere is Shakespeare's observation that
"there is nothing either good or bad but
thinking makes it so," more apt than in the
realm of ethical considerations. It is for
this reason that Canon 9 . . . cautions that
"A lawyer should avoid even the appearance of
professional impropriety" and it has been said
that a "lawyer should avoid representation of
a party in a suit against a former client,
where there may be the appearance of a
possible violation of confidence, even though
this may not be true in fact." American Bar
Association, Standing Committee on
Professional Ethics, Informal Opinion No. 885
(Nov. 2, 1965).
[PAGE 17]
Id. In affirming the disqualification order,
Emle concludes as follows:
We have said that our duty in this case is
owed not only to the parties . . . but to the
public as well. These interests require this
court to exercise its leadership to insure
that nothing, not even the appearance of
impropriety, is permitted to tarnish our
judicial process. The stature of the
profession and the courts, and the esteem in
which they are held, are dependent upon the
complete absence of even a semblance of
improper conduct.
Id. at 575.[17]
General Motors Corporation v. City of New York,
501 F.2d 639 (2d Cir. 1974), involved litigation in which the City
asserted that GM had violated the antitrust law by monopolizing or
attempting to monopolize the nationwide market for municipal buses.
Within the context of the substantive issues, a motion for
disqualification of the City's privately retained counsel (George
D. Reycraft) was filed by GM, asserting a breach of the ethical
precepts embodied in Canon 9 and Disciplinary Rule (DR) 9-101(B) of
the Code of Professional Responsibility. Canon 9 states that, "[a]
lawyer should avoid even the appearance of professional
impropriety." "DR 9-101(B) prohibits '[a] lawyer . . . [from
accepting] private employment in a matter in which he had
substantial responsibility while he was a public employee."
General Motors Corporation, id. at 641 n. 1. The
facts reflect that Reycraft had been an attorney in the Antitrust
Division of the Department of Justice, who had been substantially
involved in an action brought under the Sherman Act by the United
States against GM. The action was based on GM's alleged
monopolization of a nation-wide market for the manufacture and sale
of city and intercity buses. The court referred to this case as
the "1956 Bus case." This 1956 case was, as the court put
it, "a matter which, at the very least, was similar to the dispute
for which his retention was sought . . . ." Id. at 642.
Reversing the District Court, which had denied the motion for
disqualification, the Second Circuit cited Emle, and
discussed Canon 9 of the Code:
Indeed, the "public's trust" is the raison
d'etre for Canon 9's "appearance of evil"
doctrine. Now explicitly incorporated in the
profession's ethical Code,[fn. omitted] this
[PAGE 18]
doctrine is directed at maintaining, in the public mind, a high
regard for the legal profession. The standard it sets --
i.e. what creates an appearance of evil -- is largely a
question of current ethical-legal mores. See Kaufman, the
Former Government Attorney and the Canons of Professional Ethics,
70 Har.L.Rev. 657, 660 (1957).
Nor can we overlook that the Code of
Professional Responsibility is not designed
for Holmes' proverbial "bad man" who wants to
know just how many corners he may cut, how
close to the line he may play, without running
into trouble with the law. Holmes, The Path
of the Law, in Collected Legal Papers 170
(1920). Rather, it is drawn for the "good
man," as a beacon to assist him in navigating
a ethical course through the sometimes murky
waters of professional conduct. Accordingly,
without in the least even intimating that
Reycraft himself was improperly influenced
while in Government service, or that he is
guilty of any actual impropriety in agreeing
to represent the City here, we must act with
scrupulous care to avoid any appearance
of impropriety lest it taint both the public
and private segments of the legal profession.
(Emphasis in original) Id. at 649. Citing
Emle's citation of Shakespeare, the court concluded
that, while the 1956 case and the one there under consideration
were not identical, "[b]oth . . . allege monopolization or
attempted monopolization of the same product line [fn.
omitted] -- city buses -- and, in the same geographic market
-- the United States. The subtleties of differential proof will
not obviate the "appearance of impropriety" to an unsophisticated
public." Id. at 651.
Six months after the Second Circuit decided General
Motors, it addressed a disqualification motion in
Ceramco, Inc. v. Lee Pharmaceuticals, 510 F.2d 268
(2d Cir. 1975). This case involved a trademark infringement suit
involving denture adhesive being sold under the name "Genie" by Lee
Pharmaceuticals. In order to establish whether suit could be
brought in the Eastern District of New York, Towell, one of
Ceramco's attorneys, telephoned Lee's order department, and without
identifying himself or his position as one of Ceramco's lawyers,
requested the names of dental supply houses in the Eastern District
which were distributing "Genie." Asserting that Towell had
violated Canon 7 ("zealous representation"), Canon 5 (that the
telephone calls made Towell a
[PAGE 19]
"witness for his client") and Canon 9 ("appearance of
impropriety"), Lee moved for disqualification. Denying the motion,
the Second Circuit offered its opinion that, "[t]his is the kind of
misconduct, if it is misconduct, which is technical in character,
does no violence to any of the fundamental values which the canons
were written to protect and certainly falls far short of justifying
a grant of the relief requested." Id. at 271. The court
then made a comparison:
The typical situation in which
disqualification has been found to be an
appropriate remedy has involved a conflict of
interest such that continued representation by
chosen counsel clearly prejudiced the rights
of the opposing party and, by creating the
appearance of impropriety, posed a substantial
threat to the integrity of the judicial
process. . . . In sum, Ceramco's counsel's
actions, while demonstrating an unfortunate
insensitivity to the etiquette of the bar, had
no possibility of so prejudicing the opponent
that the firm should be barred from the case
entirely or the client punished by precluding
reliance on counsel's work product.
Accordingly, if any corrective action is to be
taken, it should be accomplished under the
auspices of the appropriate bar association
and should in no way be permitted to affect
the decision on the merits of the case.
Id.
The next case in the evolution of the Second Circuit's view of
attorney disqualification is Hull v. Celanese
Corporation, 513 F.2d 568 (2d Cir. 1975). It is with this
case that the court begins to articulate a balancing test between
a party's right to its counsel of choice as against maintaining the
highest standards of conduct. The Second Circuit articulated the
issue as follows:
[W]hether a law firm can take on, as a client,
a lawyer for the opposing party in the very
litigation against the opposing party.
Factually,the case is novel and we approach it
mindful of the important competing interests
present. It is incumbent upon us to preserve,
to the greatest extent possible, both the
individual's right to be represented by
[PAGE 20]
counsel of his or her choice and the public's interest in
maintaining the highest standards of professional conduct and the
scrupulous administration of justice.
Id. at 569. The facts were as follows: Hull had been
employed by Celanese since 1963 and, in September of 1972,
initiated a sex-based discrimination suit against that corporation.
Attorney Delulio began work at Celanese in July 1972, and was
assigned to work on the defense of the Hull case in February of
1973, and her work on that case continued until September of 1973.
During this latter month, Hull and Delulio met socially, and two
months thereafter, Delulio approached Hull for the name of the law
firm representing Hull. Delulio thereupon contacted the Rabinowitz
firm on November 9, 1973, and six days thereafter, the Rabinowitz
firm filed sex discrimination charges on behalf of Delulio with the
EEOC. The court noted that, "Delulio thereafter consulted with the
[New York Bar] regarding, inter alia, the propriety of her
intervention in the Hull action. [The New York Bar
advised] . . . against intervention. [Fn. omitted]. Subsequently,
the motion herein seeking intervention on behalf of Delulio and
four other women was filed. Two weeks later Celanese cross-moved
to deny intervention and to disqualify the Rabinowitz firm."
Id. at 570. Noting that, "in the disqualification
situation, any doubt is to be resolved in favor of
disqualification[,] Fleischer v. A.A.P., Inc. 163
F.Supp. 548, 553 (S.D.N.Y. 1958), appeal dismissed, 264 F.2d
515 (2d Cir.), cert. denied, 359 U.S. 1002, 79 S.Ct. 1139,
3 L.Ed.2d 1030 (1959)[,]" the court observed that while the facts
of Hull were distinguishable from those in
Emle, "the conclusions reached in that case apply
with equal validity here." Id. at 571. The court also noted
that in Emle, "[it was] felt that the invocation of
Canon 9 . . . was particularly appropriate.[Fn. omitted]."
Id. Thus, in Emle, the lawyer switched sides
to represent an adverse interest in a subsequent, but substantially
related, case; whereas in Hull, the inhouse lawyer
for Celanese switched sides to become a plaintiff in the same
action. The court continued:
Thus, while the cases are factually
distinguishable, the admonition of Canon 9 is
equally appropriate here. This is, in short,
one of those cases in which disqualification
is "a necessary and desirable remedy . . . to
enforce the lawyer's duty of absolute fidelity
and to guard against the danger of inadvertent
use of confidential information . . . ."
See Ceramco, Inc. v. Lee
Pharmaceuticals, 510 F.2d 268, 271 (2d
Cir. 1975).
[PAGE 21]
Id. The Rabinowitz firm argued strenuously that they
had never worked for Celanese and that they had "carefully
cautioned" Delulio not to reveal any information or confidences she
had received in her capacity as a lawyer for Celanese, but to
confine herself to the facts of her own case. They contended that
because they never received any confidential information either
directly or indirectly, they could not use it either consciously or
unconsciously. The court responded:
This argument, somewhat technical in nature,
seems to overlook the spirit of Canon 9 as
interpreted by this Court in
Emle. We credit the efforts of
the Rabinowitz firm to avoid the receipt of
any confidence. Nonetheless,
Emle makes it clear that the
court need not "inquire whether the lawyer
did, in fact, receive confidential
information. . . ." Emle
Industries[, id. at 571].
Rather, "where 'it can reasonably be said that
in the course of the former representation the
attorney might have acquired
information related to the subject matter of
his subsequent representation,' T.C.
Theatre Corp., supra [113 F.Supp.], at
269 (emphasis supplied), it is the court's
duty to order the attorney disqualified."
Id. at 571. The breach of confidence
would not have to be proved; it is presumed in
order to preserve the spirit of the Code.
Id. at 572.
Not long after Hull, the Second Circuit issued
its opinion on the merits of the disqualification motion in
Silver Chrysler Plymouth, Inc. v. Chrysler Motors
Corporation, 518 F.2d 751 (2d Cir. 1975). The substance of
the underlying case involved a breach of contract issue with
respect to a lease agreement, as well as a cause of action arising
under the so-called Dealers' Day in Court Act, 15 U.S.C. §
1221 et seq. This portion of the claim alleged threats
amounting to coercion or intimidation forcing Silver Chrysler,
under threat of eviction, to sign a new agreement at a higher
rental. Chrysler was represented by the law firm of Kelley Drye.
Silver Chrysler was represented by the law firm of Hammond &
Schreiber. Dale Schreiber of that firm had been employed as an
associate by Kelley Drye, and while there, had worked on certain
Chrysler matters. Based on this scenario, Kelley Drye brought the
motion for disqualification.
[PAGE 22]
District Judge Jack B. Weinstein considered the motion below,
and the Second Circuit noted that, "[i]n support of, and in
opposition to, the motion respectively, the parties submitted
voluminous affidavits, copies of pleadings in cases in which
Schreiber had allegedly worked, and extensive memoranda of law.
With this material before him and after oral argument, the judge
proceeded to analyze the motion on the theory that "'[d]ecision
turns on whether, in the course of the former 'representation,' the
associate acquired information reasonably related to the particular
subject matter of the subsequent representation.'" Id. at
753. Judge Weinstein held the disqualification of Schreiber not
warranted.[18]
The Second Circuit began its analysis by citing Canons 4 and
9, as well as Emle and its progeny. The court then
stated as follows:
Thorough consideration of the facts, as more
elaborately set forth in the opinion below, is
required.3 Nor can judges exclude from
their minds realities of which fair decision
would call for judicial notice.
3 As a district judge, now Chief Judge Kaufman,
the author of the Emle opinion,
said in United States v. Standard Oil
Company, 136 F.Supp. 345, 367
(S.D.N.Y. 1955), while refusing to disqualify
an attorney:
When dealing with ethical
principles, it is apparent that we
cannot paint with broad strokes.
The lines are find and must be so
marked. Guide-posts can be
established when virgin ground is
being explored, and the conclusion
in a particular case can be reached
only after painstaking analysis of
the facts and precise application of
precedent.
(Emphasis supplied). Id. at 753. The court, noting
that Schreiber began work at Kelley Drye after graduation
from law school, and that he worked there for approximately two and
one-half years, seemed to take judicial notice of the attenuated
relationship between summer law students and the firms which
employ them,
[PAGE 23]
although it does not appear that Schreiber was ever employed as a
summer associate. The court continued on its apparent path of
judicial notice:
Even after an initial association with a firm
upon graduation, it is not uncommon for young
lawyers to change their affiliation once or
even several times. It is equally well known
that the larger firms in the metropolitan
areas have hundreds (collectively thousands)
of clients. It is unquestionably true that in
the course of their work at large law firms,
associates are entrusted with the confidence
of some of their clients. But it would be
absurd to conclude that immediately upon their
entry on duty they become the recipients of
knowledge as to the names of all the firm's
clients, the contents of all files relating to
such clients, and all confidential disclosures
by client officers or employees to any lawyer
in the firm. Obviously such legal osmosis
does not occur. The mere recital of such a
proposition should be self-refuting. And a
rational interpretation of the Code of
Professional Responsibility does not call for
disqualification on the basis of such an
unrealistic perception of the practice of law
in large firms.
Id. 753-54. The court noted that, while the Second Circuit
does recognize that an inference may arise that an attorney
formerly associated with a firm himself received confidential
information transmitted by a client to the firm, such inference is
rebuttable, and quoted from Laskey Bros. of W. Va., Inc. v.
Warner Bros. Pictures, 224 F.2d 824 (2d Cir. 1955):
"It will not do to make the
presumption of confidential
information rebuttable and then to
make the standard of proof for
rebuttal unattainably high. This is
particularly true where, as here,
the attorney must prove a negative,
which is always a difficult burden
to meet."
224 F.2d at 827. The importance of not
[PAGE 24]
unnecessarily constricting the careers of lawyers who started their
practice of law at large firms simply on the basis of their former
association underscores the significance of this language.
[Citation omitted].
Id. at 754. Noting that the Second Circuit has also adhered to
the "substantial relationship" test, i.e., that, "'the
former client need show no more than that the matters embraced
within the pending suit wherein his former attorney appears on
behalf of his adversary are substantially related to the matter or
cause of action wherein the attorney previously represented him,
the former client." T.C. Theatre Corp. v. Warner Bros.
Pictures, Inc., 113 F.Supp. 265, 268 S.D.N.Y. 1953).'"
Id., the court also cited United States v. Standard
Oil Company, 136 F.Supp. 345, 355 (S.D.N.Y. 1955), for the
proposition that, "'[u]nfortunately, the cases furnish no
applicable guide as to what creates a "substantial" relationship.'
The cases available at that time were cases in which the
relationship was 'patently clear.'" Id. at 754.[19] The
court characterized the Hull, General Motorsand Emle cases, inter alia, as
reflecting a patently clear substantial relationship. Relying on
affidavits submitted to Judge Weinstein, the Second Circuit
contrasted the Silver Chrysler Plymouth situation
with the "patently clear" cases cited above, stating that,
"Schreiber was not counsel for Chrysler in the sense that the
disqualified attorneys were in those cases. Although Kelley Drye
had pervasive contacts with Chrysler, Schreiber's relationship
cannot be considered co-extensive with that of his firm."
Id. at 756. While conceding that the evidence before Judge
Weinstein was "admittedly somewhat conflicting," the Second Circuit
reviewed, and, in essence, affirmed, Judge Weinstein's credibility
resolutions with respect to Schreiber's purported involvement.
The Second Circuit then did an interesting thing. Noting that
there is no basis to formulate a per se rule based on title
alone, i.e., "partner" versus "associate," when trying to
ascertain the extent of involvement in particular cases, the court
stated as follows:
But there is reason to differentiate for
disqualification purposes between lawyers who
become heavily involved in the facts of a
particular matter and those who enter briefly
on the periphery for a limited and specific
purpose relating solely to legal questions.
In large firms at least, the former are
normally the more seasoned lawyers and the
latter the more junior. This is not to say
[PAGE 25]
that young attorneys in large firms never become important figures
in certain matters but merely to recognize that some of their work
is often of a far more limited variety. Under the latter
circumstances the attorney's role cannot be considered
"representation" within the meaning of T.C. Theatre
Corp. and Emle so as to require
disqualification. Those cases and the Canons on which they are
based are intended to protect the confidences of former clients
when an attorney has been in a position to learn them. To apply
the remedy when there is no realistic chance that confidences were
disclosed would go far beyond the purpose of those decisions.
Id. at 756-57.[20] Once again referring to the
factual affidavits before Judge Weinstein, the Second Circuit noted
that, "Chrysler was in a position here conclusively to refute Schreiber's
position that his role in these cases had been non-existent or
fleeting. Through affidavits of those who supervised Schreiber on
particular matters or perhaps through time records, the issue was
capable of proof. Chrysler instead chose to approach the matter in
largely conclusory terms.8 [8 Example from a Kelley Drye (Chrysler)
affidavit: '[Schreiber] obtained unmeasurable confidential
information regarding the practices, procedures, methods of
operation, activities, contemplated conduct, legal problems, and
litigations of [Chrysler]., J.A. 29(a).] We cannot realistically
subscribe to the contention that proof submitted for this limited
purpose, by time records or otherwise, would have necessitated
disclosure of any confidences entrusted to Kelley Drye." Id.
at 757.
With respect to Canon 9, the court stated as follows:
Finally, in view of the conclusion that
Schreiber's work at Kelley Drye does not
necessitate disqualification, we agree with
the district court that refusal to disqualify
Schreiber and his firm will not create an
appearance of impropriety. Neither Chrysler
nor any other client of a law firm can
reasonably expect to foreclose either all
lawyers formerly at the firm or even those who
have represented it on unrelated matters from
subsequently representing an opposing
party. Although Canon 9 dictates that doubts
should be resolved in favor of
disqualification, Hull v. Celanese
Corp., supra, 513 F.2d at 571, it is
not intended completely to override the
delicate balance created by Canon 4 and the
[PAGE 26]
decisions thereunder.
(Emphasis added). Id. Finally, the court concluded:
A decision to sustain Judge Weinstein's denial
of the motion does not diminish the force of
our decisions which hold that the right of the
public to counsel of its choice or the
possibility of a reduction of "both the
economic mobility of employees and their
personal freedom to follow their own
interests" . . . must be secondary
considerations to the paramount importance of
"maintaining the highest standards of
professional conduct and the scrupulous
administration of justice." Hull v.
Celanese Corp., supra, 513 F.2d
569.[Footnote omitted].
Id.[21]
The claim of disqualification in Lefrak v. Arabian Am.
Oil Co., 527 F.2d 1136 (2d Cir. 1975), involved, in the
context of antitrust litigation, an assertion of improper
solicitation of clients directly or indirectly through laymen, and
accepting employment as a result of that solicitation. The court
emphasized that, ". . . there is no evidence and no claim made that
the plaintiffs in the three separate pending antitrust actions were
in fact solicited by their counsel or anyone else. Rather, the
charge is that counsel solicited other prospective
plaintiffs, none of whom have surfaced as intervenors or as
plaintiffs in comparable actions against the defendants-appellants.
In sum, there is no taint attached to counsel's representation of
the clients who are plaintiffs in the pending law suits."
Id. at 1139. The court continued:
The misconduct complained of does not infect
either the merits, the competence or the
ethics of the representation in the pending
actions. . . . There has been no taint
established and no possible prejudice to the
defendant in permitting these actions to
proceed to trial and judgment.
Id.International Electronics Corp. v. Flanzer, 527
F.2d 1288 (2d Cir. 1975), involved an appeal by the law firm for
the defendants from the granting of a motion to disqualify them
from representing
[PAGE 27]
a former partner and former clients in a litigation. Noting that,
"[s]uch moves and countermoves by adversaries appear to have become
common tools of the litigation process[,]" the court requested
amici briefs from four bar associations, including the
Connecticut Bar Association. The disqualification motion involved
Julius Apter, a former partner in the firm of Apter, Nahum & Lenge,
who, at the time of the Second Circuit decision, was fully retired
from the practice of law by virtue of illness and age. The
plaintiffs had filed a motion in the District of Connecticut to
disqualify the firm from representing any of the defendants,
asserting that Julius Apter was a partner in the firm when the
litigation was instituted, had played the principal role in the
negotiation of the sale and merger, and would be a material witness
as to those substantive issues. By way of response, Julius Apter
filed an affidavit in which he swore that he had not practiced law
since January of 1974, and that he had retired from the Apter firm.
Noting that the District Court had made no mention of Canon 4,
the Second Circuit agreed that Canon 4 was not applicable, and
noted that the briefs of both the Connecticut and New York Bar
Associations recommended that conclusion. The Second Circuit also
found that the strict Connecticut rules, which differed in some
respect from the ABA Code, would also not act to disqualify the
Apter firm. Holding that it found no ethical justification for
disqualification of the law firm from representing at trial its
former partner Julius Apter as a party defendant, the court also
addressed Canon 9, and stated as follows:
From what we have said, it must be clear that
we do not think the question of "appearances"
under Canon 9 is particularly acute in this
case. We caution, as the Connecticut Bar
Association urges us to do, that Canon 9,
though there are occasions when it should be
applied, should not be used promiscuously as a
convenient tool for disqualification when the
facts simply do not fit within the rubric of
other specific ethical and disciplinary rules.
Id. at 1295.
The next case of import in the Second Circuit is W.T.
Grant Co. v. Haines, 531 F.2d 671 (2d Cir. 1976), which, in
the context of an antitrust action brought by the corporation
against certain parties, including a former employee, involved a
motion for disqualification of the corporation's law firm for
asserted improper communication with the employee while he was
unrepresented
[PAGE 28]
by counsel. Reviewing the facts of the case in the context of
Canon 7, and Disciplinary Rule 7-104, "Communicating with One of
Adverse Interest," the court emphasized the facts of the case:
Haines was hardly a stranger to Grant. He was
its representative as Regional Director of its
real estate department, he had been employed
by it for about ten years, and he had received
some $200,000 of its money as salary or bonus
over that period. He was presumably a
sophisticated businessman who was questioned
on matters within his competence, which
related to his stewardship, and which
unquestionably involved his honesty and
fiduciary obligations to his employer. He was
neither a callow youth nor a befuddled widow.
A reading of the transcript reveals his
willingness to discuss freely the use of
automobiles, entertainment opportunities and
loans from those dealing with Grant. We do
not characterize the admission or the
discussion generally as necessarily
inculpatory--the point is that Grant had the
right to inquire into this matter even absent
Haines' representation by counsel. Although
fully aware of the serious nature of the
charges, Haines chose to speak for the record
without benefit of counsel.
Id. at 674-75. With respect to certain authorizations which
Haines was asked to sign by Grant's attorney, the court noted that
whether the request constituted "advice" within the Code and
"whether Haines acted on that advice or because of his own sense of
obligation to Grant is a close question. [Footnote omitted]. We
cannot escape the fact, however, that outside counsel knew that
Haines was about to be served [with a lawsuit] and knew that he
could not clear his name or prevent his discharge. This was found
below and the conduct of counsel was properly characterized there
as 'somewhat overbearing' and 'lack[ing] the sensitivity which
members of the bar should show in dealing with laymen.' We agree
that the procedures adopted here were at least inappropriate and
certainly not to be encouraged." Id. at 676.
Having endorsed the District Court's characterization of the
attorney's conduct, the Second Circuit then stated that,
"[h]owever, the fact of professional misconduct is not necessarily
determinative of the issue before us. The question is whether or
[PAGE 29]
not that conduct should merit the sanction sought, . . .
disqualification of counsel from continuing representation of
Grant." Id.[22] In this regard, the court noted that,
while the district court was critical of counsel's conduct, it
nonetheless refused to impose the sanction, and that, "[w]e have
consistently held that the remedy of disqualification rests in the
discretion of the district court and its determination will only be
upset upon a showing of abuse. [Citations omitted]." Id.
Recapping the facts and emphasizing that the actions of counsel
violated no canon or disciplinary rule by its interrogation of
Haines without the presence of his attorney; and noting that,
"[w]hile Haines did sign authorizations which would presumably
facilitate further leads or uncover assets which could be attached
or levied upon in the event a judgment against him was obtained,
the injury he might suffer is speculative at best at this point.
The issue then is whether under these circumstances a court should
disqualify counsel." Id. at 677. In making that
determination, the court proceeded to balance the nature of the
conduct against Grant's right to counsel of its choice. In this
regard, the court looked at the following factors:
As Judge Clark suggested in
Fisher and as we have recently
noted in Lefrak, we cannot
lightly separate Grant from the counsel of its
choice. Counsel here has been engaged for
well over a year in the investigation and
preparation of this lawsuit. Disqualification
of present counsel and the substitution of a
new attorney unfamiliar with the facts and the
law will inevitably result in further harmful
delay and expense to Grant. The transcript of
the Haines interview is a public record. . . .
While disqualification is clearly punitive
insofar as Grant and its outside counsel are
concerned, its benefit to Haines is indeed
questionable. The business of the court is to
dispose of litigation and not to act as a
general overseer of the ethics of those who
practice here unless the questioned behavior
taints the trial of the cause before it.
Lefrak v. Arabian American Oil Co.,
supra, 527 F.2d at 1141. Plaintiff has
failed to establish that taint here in our
judgment. If the Liebman firm is guilty of
professional misconduct, as to which we
express no view, the appropriate form is the
Grievance Committee of the bar association.
Whatever sanction if any that is imposed there
will not
[PAGE 30]
affect the rights of a plaintiff long since embarked upon serious
litigation.
Id.
The next case of import is Bd. of Ed. of N.Y. City v.
Nyquist, 590 F.2d 1241 (2d Cir. 1979). The underlying
litigation giving rise to the disqualification motion involved a
merging of separate male and female physical education teachers'
seniority lists for purposes of layoff. The male teachers alleged
that maintaining separate lists was illegal; the female teachers
asserted that their seniority status would perpetuate plaintiff's
past discriminatory practices, and that if the merged list were to
be used for layoff purposes, six times as many female teachers
would be laid off. As the court noted, "The stakes in the lawsuit
are obviously high." Id. at 1243.
The male teachers were represented by an attorney who was also
general counsel to the state teachers' union. Under the union's
legal services program, its members could apply for free legal
representation, and the case would be taken on when in the judgment
of the legal staff, the case was both job-related and meritorious.
It was through this procedure that the male teachers retained
Attorney James R. Sandner, the General Counsel, as their attorney.
The union itself, however, took no position on the merits, or on
any other issue in the litigation. The female teachers moved to
disqualify Sandner, or in the alternative, to require the union to
furnish counsel for the female teachers. The Second Circuit noted
that District Judge Lasker "concluded that 'the female teachers are
paying, in part, for their opponents' legal expenses.' This
violated 'at least the spirit, if not the letter, of Canon 9 of the
Code of Professional Responsibility that "A lawyer should avoid
even the appearance of impropriety."' Accordingly, the judge
granted the motion and this appeal by the male [teachers]
followed." Id. at 1244.
Rejecting certain arguments relating to fair representation in
the context of a union's duty to its membership, as well as certain
First Amendment contentions, the court addressed its power to
disqualify attorneys. The court noted that, historically,
"attention has focused on identifying the circumstances in which
exercise of the power is appropriate. Our reading of the cases in
this circuit suggests that we have utilized the power of trial
judges to disqualify counsel where necessary to preserve the
integrity of the adversary process in actions before them." The
court continued:
[PAGE 31]
In other words, with rare exceptions
disqualification has been ordered only in
essentially two kinds of cases: (1) where an
attorney's conflict of interests in violation
of Canons 5 and 9 . . . undermines the court's
confidence in the vigor of the attorney's
representation of his client, see, e.g.,
Fund of Funds, Ltd. v. Arthur Andersen &
Co., 567 F.2d 225 (2d Cir. 1977);
Cinema 5, Ltd. v. Cinerama,
Inc., 528 F.2d 1384 (2d Cir. 1976), or
more commonly (2) where the attorney is at
least potentially in a position to use
privileged information concerning the other
side through prior representation, for example
in violation of Canons 4 and 9,[footnote
omitted] thus giving his present client an
unfair advantage, see, e.g., Fund of
Funds, Ltd. v. Arthur Andersen & Co.,
supra; Emle Industries, Inc. v.
Patentex, Inc., 478 F.2d 562 (2d Cir.
1973).
Id. at 1246. Noting that, "in other kinds of cases, we have
shown considerable reluctance to disqualify attorneys despite
misgivings about the attorney's conduct, [citing W.T.
Grant, supra, and Ceramco, Inc.]" the court
offered as its rationale for that reluctance its view that,
"disqualification has an immediate adverse effect on the client by
separating him from counsel of his choice, and that
disqualification motions are often interposed for tactical reasons.
See Allegaert v. Perot, 565 F.2d 246, 251 (2d Cir.
1977); J.P. Foley & Co., Inc. f. Vanderbilt, 523 F.2d
1357, 1360 (2d Cir. 1975)(Gurfein, J., concurring). And even when
made in the best of faith, such motions inevitably cause delay. .
. ." The court concluded setting forth its legal position by
stating as follows:
Weighing the needs of efficient judicial
administration against the potential advantage
of immediate preventive measures, we believe
that unless an attorney's conduct tends to
"taint the underlying trial," see W.T.
Grant Co., supra, 531 F.2d at 678, by
disturbing the balance of the presentations in
one of the two ways indicated above, courts
should be quite hesitant to disqualify an
attorney.
Id.[23] Applying this legal framework to the facts, and
noting that Sandner was disqualified by the district court because
a layman
[PAGE 32]
would be "severely troubled" by the fact that the female teachers
are paying, in part, for their opponents legal expenses, the Second
Circuit rejected that reasoning, and offered the following
analysis:
There is no claim . . . that Mr. Sandner feels
any sense of loyalty to the women that would
undermine his representation of the men. Nor
is there evidence that his representation of
the men is anything less than vigorous. There
is also no claim that the men have gained an
unfair advantage through any access to
privileged information about the women. Were
there any such problem, the women would not be
asking, and the district judge would not have
ordered, as an alternative to disqualification
of Mr. Sandner, that [the Union] pay their
attorney's fees. Thus, in no real sense can
Mr. Sandner's representation of the men be
said to taint the trial.
Id. at 1247. With respect to the Canon 9 issue, the court
stated that, "there is at least some possibility that Mr. Sandner's
representation of the men has the appearance of impropriety,
because of the large number of union members involved and the
public importance of the civil rights issue at the heart of the
dispute." The court concluded:
But in any event, we think that
disqualification was inappropriate. We
believe that when there is no claim that the
trial will be tainted, appearance of
impropriety is simply too slender a reed on
which to rest a disqualification order except
in the rarest cases. This is particularly
true where, as in this case, the appearance of
impropriety is not very clear.
Id.[24]
In 1980, the Second Circuit decided Armstrong v.
McAlpin, 625 F.2d 433 (2d Cir. 1980)(en banc),
vacated on other grounds and remanded, 449 U.S. 1106, 101
S.Ct. 911, 66 L.Ed.2d 835 (1981), remand decision, 699 F.2d
79, 94 (2d Cir. 1983), and is of interest because it overruled the
first Silver Chrysler Plymouth, Inc. v. Chrysler Motors
Corp., supra, 496 F.2d 800, the
Armstrong court holding that orders denying
motions to disqualify are not
[PAGE 33]
immediately appealable.[25]
With respect to the substantive aspects of the motion to
disqualify, the court declined to disqualify a former government
attorney who was subsequently employed by a law firm representing
the receiver in the underlying SEC litigation because (a) the
attorney was carefully screened from the litigation by his law
firm, (b) the appearance of impropriety was insufficient to warrant
disqualification as such appearance was not sufficiently manifest,
and (c) the adverse consequences of separating the law firm from
its client. Quoting extensively from its Board of Education
v. Nyquist decision, the court stated that, "the current
uncertainty over what is 'ethical' underscores for us the wisdom,
when considering such issues, of adopting a restrained approach
that focuses primarily on preserving the integrity of the trial
process." Armstrong v. McAlpin, 625 F.2d at 444.
Holding that the district court justifiably held that the firm
which employed the former SEC attorney, and which also represented
the receiver, posed no threat to the integrity of the trial process
in light of the screening put in place by that firm, the court
stated that, "disqualification of the firm can only be based on the
possible appearance of impropriety stemming from Altman's [former
SEC attorney] association with the firm. However, as previously
noted, reasonable minds may and do differ on the ethical propriety
of screening in this context. But that can be no doubt that
disqualification of [the firm] will have serious consequences for
this litigation; separating the receiver from his counsel at this
late date will seriously delay and impede, and perhaps altogether
thwart, his attempt to obtain redress for defendants' alleged
frauds. Under the circumstances, the possible 'appearance of
impropriety is simply too slender a reed on which to rest a
disqualification order . . . particularly . . . where . . . the
appearance of impropriety is not very clear.' Nyquist,
supra, 590 F.2d at 1247." Id. at 445. The court
concluded as follows:
However, absent a threat of taint to the
trial, we continue to believe that possible
ethical conflicts surfacing during a
litigation are generally better addressed by
the "comprehensive disciplinary machinery" of
the state and federal bar . . . . Nor do we
believe . . . that a failure to disqualify
[here] . . . based on the possible appearance
of impropriety will contribute to the "public
skepticism about lawyers." While sensitive to
the integrity of the bar, the public is also
[PAGE 34]
rightly concerned about the fairness and efficiency of the judicial
process. We believe those concerns would be disserved by an order
of disqualification in a case such as this, where no threat of
taint exists and where appellants' motion to disqualify . . . has
successfully crippled the efforts of a receiver, appointed at the
request of a public agency, to obtain redress for alleged serious
frauds on the investing public. Thus, rather than heightening
public skepticism, we believe that the restrained approach this
court had adopted towards attempts to disqualify opposing counsel
on ethical grounds avoids unnecessary and unseemly delay and
reinforces public confidence in the fairness of the judicial
process.
Id. at 446.[26]
The above review of Second Circuit case law[27] reflects that
disqualification motions are not easily susceptible to the usual
calculus of legal analysis. To carry the analogy a bit further, it
is as if the Second Circuit has attempted to set forth the legal
equivalent of a mathematical formula or theory, only to encounter
new and unpredicted factual aspects on application which must be
taken into consideration and made to square with that theory's
underlying precepts. Thus, a review of the Second Circuit case law
as to disqualification motions reveals that while the court has set
certain guideposts, the analysis of each case is plainly fact-
driven, with great emphasis placed on the practicalities of each
situation. See, e.g., Armstrong v. McAlpin,
discussed above, and footnote 26, supra. Indeed,
questions involving, for example, the extent to which the
underlying substantive case has been litigated at the time the
motion is made, the difficulty the party involved may have in
finding new representation,[28] and whether there are remedies
other than disqualification that would cure the problem raised by
the motion. These are some of the questions asked by the court in
various cases.
Insofar as the Second Circuit's guideposts are concerned, the
cases reflect that the court is reluctant -- even loathe -- to
disqualify an attorney based on the appearance of impropriety alone
(Canon 9), i.e., without a factual predicate leading to a
finding that one of the other Canons has also been violated
(usually Canons 4 or 5, and, on occasion, Canon 7). Further, in
the Second Circuit it is not sufficient that an attorney merely
violate a Canon; rather, the conduct giving rise to the violation
must constitute a threat of taint to the trial of the substantive
cause of action being litigated.
The Second Circuit, however, has far from abdicated its role
in "exercis[ing] its leadership to insure that nothing, not even
the appearance of impropriety, is permitted to tarnish our judicial
[PAGE 35]
process. The stature of the profession and the courts, and the
esteem in which they are held, are dependent upon the complete
absence of even a semblance of improper conduct." Emle,
id. at 575. Indeed, there is scarcely a Second Circuit case
involving attorney disqualification which fails to invoke the high
standard set by Emle. It is within this context that
a few additional Second Circuit cases will be reviewed in aid of
the disposition of the instant motion.
The first such case is Cinema 5, Ltd. v. Cinerama,
Inc., 528 F.2d 1384 (2d Cir. 1976), which, as the Second
Circuit noted, presented "a somewhat unusual set of facts." In
that case, counsel had been disqualified by the district court from
further representation of Cinema 5 because Manly Fleischmann, a
partner in a New York City firm was also a partner in a Buffalo
firm which concurrently represented Cinerama in other litigation
"of a somewhat similar nature." Id. at 1385. Thus, in
January of 1972, the Buffalo firm was retained to represent
Cinerama and several other defendants in an anti-trust law suit
having its genesis in the Rochester area, brought in the Western
District of New York, and which concerned allegations of
discriminatory and monopolistic licensing and distribution of
motion pictures. A similar action was also brought in the Western
District in March of 1974, but occurring in the Buffalo area. The
action in the Southern District (which gave rise to the
disqualification motion), was brought in August of 1974, and
involved allegations of conspiracy among the defendants, including
Cinerama, to acquire control of Cinema 5 though stock acquisitions,
with the intention of creating a monopoly and restraining
competition in New York City's first-run motion picture theater
market. Relying on General Motors Corp. v. City of New
York, 501 F.2d 639 (2d Cir. 1974), the district court found
"sufficient relationship between the two law firms and the two
controversies to inhibit future confidential communications between
Cinerama and its attorneys and that disqualification was required
to avoid even the appearance of professional impropriety . . . ."
Id. Cinema 5 strongly argued, however, that its counsel
should not be disqualified unless the relationship between the
controversies is substantial, and asserted that there was "nothing
substantial in the relationship between an upstate New York
conspiracy to deprive local theater operators of access to films
and an attempted corporate take-over in New York City." Id.
Noting that the "substantial relationship" test had been
customarily applied in determining whether a lawyer may accept
employment against a former client, the Second Circuit stated as
follows:
[PAGE 36]
However, in this case, suit is not against a
former client, but an existing one. One firm
in which attorney Fleischmann is a partner is
suing an actively represented client of
another firm in which attorney Fleischmann is
a partner. The propriety of this conduct
must be measured not so much against the
similarities in litigation, as against the
duty of undivided loyalty which an attorney
owes to each of his clients.
(Emphasis supplied). Id. at 1386. The court pointed out in
this regard, that a lawyer's duty to his or her client is as a
fiduciary or trustee, and that when Cinerama retained Fleischmann
in the Western District case, "it was entitled to feel that at
least until that litigation was at an end, it has his undivided
loyalty as its advocate and champion, Grievance Committee v.
Rottner, 152 Conn. 59, 65, 203 A.2d 82 (1964), and could
rely upon his 'undivided allegiance and faithful, devoted service.'
Von Moltke v. Gillies, 332 U.S. 708, 725, 68 S.Ct.
316, 324, 92 L.Ed. 309 (1948)." Id. Citing the New
Testament, inter alia, for the proposition that "no man can
serve two masters," the court stated that Cinerama, in the Western
District litigation, "had the right to expect also that
[Fleischmann] would 'accept no retainer to do anything that might
be adverse to his client's interests.' Loew v.
Gillespie, 90 Misc. 616, 619, 153 N.Y.S. 830, 832 (1915),
aff'd, 173 App.Div. 889, 157 N.Y.S. 1133 (1st Dep't 1916).
Needless to say, when Mr. Fleischmann and his New York City
partners undertook to represent Cinema 5, Ltd., they owed it the
same fiduciary duty of undivided loyalty and allegiance."
Id.
The court then addressed Canon 5 and the ethical
considerations flowing therefrom:
Ethical Considerations 5-1 and 5-14 of the
American Bar Association's Code of
Professional Responsibility provide that the
professional judgment of a lawyer must be
exercised solely for the benefit of his
client, free of compromising influences and
loyalties, and this precludes his acceptance
of employment that will adversely affect his
judgment or dilute his loyalty.
Id. The court expressed its opinion that, the lawyer who
would sue his own client, citing as justification that the two
causes of action lack a substantial relationship, "is leaning on a
slender
[PAGE 37]
reed indeed." Id. The court continued:
Putting it as mildly as we can, we think it
would be questionable conduct for an attorney
to participate in any lawsuit against his own
client without the knowledge and consent of
all concerned. This appears to be the opinion
of the foremost writers in the field, see
Wise,[Legal Ethics 256,] 272 [(2d ed.)];
Drinker, Legal Ethics 112, 116, and it is the
holding of the New York courts. In
Matter of Kelly, 23 N.Y.2d 368,
376, 296 N.Y.S.2d 937, 244 N.E.2d 456 (1968),
New York's highest court said that "with rare
and conditional exceptions, the lawyer may not
place himself in a position where a
conflicting interest may, even inadvertently,
affect, or give the appearance of affecting,
the obligations of the professional
relationship." Nor is New York alone in this
view. In Grievance Committee v.
Rottner, supra, 152 Conn. at
65, 203 A.2d 82, Connecticut's highest court
held that the maintenance of public
confidence in the bar requires an attorney to
decline employment adverse to his client even
though the nature of such employment is wholly
unrelated to that of his existing
representation.
(Emphasis supplied). Id. at 1386-387. The court left aside
the question of whether such adverse representation, without more,
requires disqualification in every case. What the court did hold,
however, was that, in cases involving concurrent representation,
the "substantial relationship" test, "does not set a sufficiently
high standard by which the necessity for disqualification should be
determined. That test may properly be applied only where the
representation of a former client has been terminated and the
parameters of such relationship have been fixed." Id. Thus,
the court set forth the following standard:
Where the relationship is a continuing one,
adverse representation is prima facie
improper, Matter of Kelly,
supra, 23 N.Y.2d at 376, and the attorney
must be prepared to show, at the very least,
that there will be no actual or
apparent conflict in loyalties or
diminution in the vigor of his representation.
[PAGE 38]
We think that appellants have failed to meet this heavy burden . .
. .
Because he is a partner in the [Buffalo] firm,
Mr. Fleischmann owes the duty of undivided
loyalty to that firm's client, Cinerama.
Because he is a partner in the [New York City]
firm, he owes the same duty to Cinema 5, Ltd.
It can hardly be disputed that there is at
least the appearance of impropriety where half
his time is spent with partners who are
defending Cinerama in a multi-million dollar
litigation, while the other half is spent with
partners who are suing Cinerama in a lawsuit
of equal substance.1 [1 Mr. Fleischmann's
personal participation in the Buffalo
litigation was minimal, and we are confident
that he would make every effort to
disassociate himself from both lawsuits and
would not divulge any information that came to
him concerning either. However, we cannot
impart this same confidence to the public by
court order. (Emphasis supplied).].
Because "an attorney must avoid not only the
fact, but even the appearance, of representing
conflicting interests," Edelman v.
Levy, 42 App.Div.2d 758, 346 N.Y.S.2d
347 (2d Dept.1973)(mem.), this requires his
disqualification. Hull v. Celanese
Corp., supra, 513 F.2d at 571;
General Motors v. City of New York,
supra, 501 F.2d at 649; W.E. Bassett
Co. v. H.C. Cook Co., 201 F.Supp 821,
825 (D.Conn.), aff'd, 302 F.2d 268 (2d
Cir. 1962)(per curiam). . . .
Id.See generally Fund of Funds, Ltd. v. Arthur
Andersen & Co., 567 F.2d 225 (2d Cir. 1977), citing
Cinema 5, Ltd. v. Cinerama, Inc., supra, with
approval.
The final case to be discussed is one arising in the District
of Connecticut, MMR/Wallace Power & Indus. v. Thames
Associates, 764 F.Supp. 712 (D.Conn. 1991), an interesting
case which involved an allegation of ex parte contact by an
attorney, Michael Forstadt of Schatz & Schatz, Ribicoff & Kotkin
("Schatz firm") with Richard Willett, a confidential former
employee of MMR.
[PAGE 39]
Briefly, MMR entered into a construction contract with Thames
for a project in Uncasville. Willett was employed by MMR at the
project site and served as MMR's office manager for approximately
14 months. His position gave Willett firsthand information
regarding the day-to-day project operations. In February 1989,
Thames terminated MMR's contract, giving rise to the underlying
substantive litigation. MMR thereafter established an office in
Norwich for the purpose of closing out the project activities and
to prepare for litigation. Willett was assigned to the Norwich
office, where he assisted MMR's attorneys to prepare for the
contract litigation by setting up the document control system for
use during discovery. Thus, Willett was responsible for reviewing,
indexing and digesting all of the various discovery materials. He
also prepared reports concerning issues involved in the litigation,
and on at least one occasion, met with attorneys from the Schatz
firm. Further, he attended confidential litigation strategy
meetings, assisted in answering interrogatories and consulted with
counsel regarding the individuals to be deposed. Although Willett
was reassigned to a project in North Carolina in December of 1989,
he maintained weekly contact with MMR's attorneys until June of
1990. In March of 1990, Willett began discussions with
MMR's attorneys concerning the possibility of his serving as a
consultant in the litigation after MMR declared bankruptcy.
Thereafter, Aetna Insurance Company made such an offer to Willett,
to which he made a counteroffer which was neither accepted nor
rejected by Aetna. Assuming that Aetna's silence was a rejection,
and upset about a pay dispute, "Willett asked a friend to
anonymously contact defendant's attorney, Matthew Forstadt and,
without identifying Willett, see if Forstadt would be interested in
speaking with him about the possibility of his becoming a trial
consultant for Thames." Id. at 715.
Forstadt met with Willett, and asked Willett "if he was under
contract to MMR, or whether he had an existing or previous
employment agreement with MMR, to which Willett responded that he
did not. . . . Forstadt also instructed Willett that, if he was
privy to privileged communications with plaintiff's counsel,
Forstadt did not want to know what was discussed, [Footnote
omitted] nor was he interested in any proprietary or trade secret
information belonging to MMR. Forstadt further instructed Willett
to make duplicate copies of certain computer discs containing
various reports, analyses and correspondence regarding the
Uncasville site, and return the original discs to [MMR's
attorneys]." Id.
On June 26, 1990, Forstadt extended an offer to Willett to
hire him as an exclusive trial consultant for Thames. By chance,
[PAGE 40]
and prior to signing the agreement, Willett was contacted by MMR's
attorneys to ask if Willett had reached an agreement with Aetna to
assist with MMR's trial preparation. Willett responded that, "he
had 'cut a deal' to serve as a consultant for Thames, and that
under instructions he had received from Forstadt, he would no
longer be communicating with [MMR's] attorneys." Id. at 716.
MMR's attorneys thereupon informed Willett that his Thames
agreement was improper and urged him not to sign it. Willett
consulted with Forstadt about the situation, "who informed Willett
that he had nothing to worry about, and that he should sign the
agreement. . . ." Id. Willett executed the agreement. MMR
filed the motion for disqualification on October 12, 1990.
Setting forth Second Circuit law, generally, including the
maxim that the attorney's conduct must threaten to taint the
pending litigation and that caution is dictated notwithstanding the
court's misgivings because of the immediate effect of separating a
client from his counsel of choice and because such motions are
often interposed for tactical reasons. The court continued:
Nevertheless, if the court concludes that the
asserted course of conduct by counsel
threatens to affect the integrity of the
adversarial process, it should take
appropriate measures, including
disqualification, to eliminate such taint.
Papanicolaou v. Chase Manhattan Bank,
N.A., 720 F.Supp. 1080, 1083 (S.D.N.Y.
1989).
Id. at 718. Citing Emle for the proposition
that, "[e]ven an appearance of impropriety may, under the
appropriate circumstances, require prompt remedial action by the
court[,]9" id., the court stated at footnote nine as
follows:
That a lawyer is ethically obligated to avoid
"even the appearance of impropriety" is
embodied in Canon 9 of the Code of
Professional Responsibility ("Code").
Although the Code has not been formally
adopted in Connecticut, "its salutary
provisions have consistently been relied upon
by the courts in [the Second Circuit] in
evaluating the ethical conduct of attorneys."
Hull, supra, 513 F.2d at 571, n.
12, albeit only in the "rarest cases."
Nyquist, supra, 590 F.2d at
1247. The court notes that, prior to its
adoption of the [Connecticut] Rules,
[PAGE 41]
this court recognized the Code of Professional Responsibility of
the American Bar Association as expressing the standards of
professional conduct expected of lawyers. . . .
Id. at 718, n. 9. Setting forth its analytical framework,
the court posed the following questions, stating that each must be
answered in the affirmative if the motion is to be granted. The
questions were as follows:
Did Willett have confidential or privileged
information pertaining to MMR's trial
preparation and strategy?
Assuming that Willett had such information,
did he disclose it to attorney Forstadt?
If such information was disclosed to Forstadt,
does his continued representation of Thames
threaten to "taint" all further proceedings in
this case?
Id. at 724. The court found that Willett possessed
confidential and privileged information about the case, and then
addressed the second question, i.e., whether he disclosed
such information to Thames' counsel. Citing Hull,
supra, 513 F.2d at 572, for the proposition that a presumption
arises that confidences were, in fact, shared by Willett with
attorney Forstadt, the court held that Thames failed to sustain its
burden to rebut that inference.[29] With respect to the third
question, the court held that Forstadt's representation of Thames
threatened to taint the integrity of the case, "because the
confidential information he presumably received from Willett
creates at least an appearance that defendant has obtained an
unfair advantage at trial." (Emphasis supplied).
Id. at 727. Emphasizing the fact that Forstadt not only
interviewed Willett, a member of his adversary's litigation team,
but sought to hire him for the defendant's exclusive use, thereby
giving Thames unrestricted access to MMR's trial strategies and
thereby having a "devastating effect on the outcome of the
litigation[;]" the court also stated that:
Even if, as defendant maintains, no
confidential information was actually
disclosed, Forstadt's alliance with
Willett creates a "nagging suspicion" that
Thames' preparation and presentation has
already been unfairly benefitted. . . .
[PAGE 42]
(Emphasis supplied). Id. The court pointed out that
"[t]here is little reason to believe Forstadt had any reason in
hiring Willett other than obtaining information to which he was not
entitled . . . ." Id. Further, the court noted that,
"rather than simply reject Willett's overture, and remind him of
his legal responsibilities, Forstadt instead offered him a
contract. . . ." Id. The court continued:
Conduct of this sort can hardly be said to
demonstrate "a cautious regard for the
disciplinary rules," [citation
omitted], for, at the very least, a prudent
attorney would have inquired of plaintiff's
counsel regarding their relationship with
Willett prior to offering him a consulting
contract. . . .
Id. Forstadt and his firm were accordingly disqualified.
IV. Analysis
I shall begin the analysis herein mindful of Chief Judge
Irving R. Kaufman's introductory words in Fund of Funds, Ltd.
v. Arthur Andersen & Co., 567 F.2d 225 (2d Cir. 1977):
We hasten to add that the lawyers involved in
this dispute are individuals who enjoy the
high regard of the profession. Compliance or
noncompliance with Canons of Ethics frequently
do not involve morality or venality, but
differences of opinions among honest men [and
women] over the ethical propriety of conduct.
* * *
It is a longstanding rule that, "When dealing
with ethical principles, . . . we cannot paint
with broad strokes. The lines are fine and
must be so marked. Guideposts can be
established when virgin ground is being
explored, and the conclusion in a particular
case can be reached only after painstaking
analysis of the facts and precise application
of precedent.4 [4 United States v.
Standard Oil Co., 136 F.Supp. 345, 367
(S.D.N.Y. 1955), recently quoted and applied
in Silver Chrysler Plymouth, Inc. v.
Chrysler Motors Corp., 518
[PAGE 43]
F.2d 751, 753 (2d Cir. 1975).]" We approach our task in this
factually complex case conscious of this oft-repeated admonition
and with the recognition that in deciding questions of professional
ethics men [and women] of good will often differ in their
conclusions.
Id. at 226-27.
The operative facts, insofar as they are known, are these.
Attorney Eugene Fidell has been representing the Chief Judge for
approximately two years in a personnel action brought by the
Department of Labor which seeks his removal as chief judge.
Attorney Fidell was retained by Respondents on April 1, 1994, and
in May, approximately one month thereafter, he filed an appearance
as one of Respondents' attorneys in the above-captioned case.
Attorney Fidell asserts in his June 16, 1994, response, that,
"[b]efore accepting this matter, I made an informal inquiry of the
Office of the Solicitor of Labor concerning my intent to appear for
respondents. I was orally advised that the Department is not a
party to this proceeding and has no objection to my appearing for
respondents. . . ." Attorney Fidell further asserts as follows:
I did not bring my representation of [the]
Chief Judge . . . to the attention of the
Administrative Law Judge or opposing counsel
because I was (and remain) aware of no reason,
either in substance or appearance, why that
representation has any bearing on the
propriety of my serving as counsel for
respondents. In addition, the very act of
making my representation of [the] Chief Judge
. . . a matter of record in this proceeding
could have been perceived as an indirect
effort to derive some implicit advantage.
Neither respondents nor I have any desire to
do so. The circumstances having now been laid
on the public record by the June 10 Order and
this memorandum, the matter should be
considered closed.
Regarding Respondents' choice of lawyers, Attorney Fidell
states as follows:
[T]he Order correctly notes that respondents
have other counsel. That is of no moment for
present purposes, although it is testimony to
the complex and multifaceted nature of the
congeries of proceedings in which respondents
[PAGE 44]
have been unfairly embroiled. The government has fielded a
battalion of lawyers from the Justice Department, the United States
Attorney's Office and the Nuclear Regulatory Commission to face our
squad in divers contexts. Complainant himself has two lawyers . .
. and if he wanted to retain others, that would be entirely his
affair. So too, absent some substantial basis to interfere with
respondents' choice of counsel -- both as to number and identity --
that choice must be respected.
In a subsequent "Answer to Motion to Disqualify," dated June
21, 1994, Attorney Fidell notes that some of the Chief Judge's
functions are ministerial, and that, "[o]thers are water over the
dam (as in the case of the powers to receive the notice of appeal
or to designate a trial judge). Still others are inapplicable on
their face (as in the case of the powers to consolidate hearings or
allow nonattorneys to appear). But none of these powers has
been brought into play since the undersigned was retained or
entered his appearance in this proceeding." (Emphasis in
original). Attorney Fidell concludes as follows:
As we explained in response to the June 10
Order, if there were, in the future, any
developments that called for or permitted
action by [the] Chief Judge, it is perfectly
obvious that he would have to recuse himself.
In the circumstances, there is no basis for
disqualifying me. Complainant's motion should
therefore be denied. [Footnote omitted].
It is noted, and conceded, by Attoney Fidell that any appeal of
this disqualification motion is to the Chief Judge. His suggested
remedy is the Chief Judge's recusal.
Like many of the cases discussed in this Order to Show Cause,
the factual predicate herein breaks new ground. Further, and
contrary to Attorney Fidell's understandable desire to invoke the
easily accomplished option of the Chief Judge's recusal should he
be asked to rule on this motion or act in some other authorized
capacity with respect to this case, the ethical considerations
underlying this situation are neither as straightforward, nor the
remedy as facile, as Mr. Fidell would appear to suggest.
The review of Second Circuit cases reflects that the Canons of
Ethics most frequently encountered by that court are Canons 4, 5,
7 and 9. As has already been pointed out, the Second Circuit will
only rarely disqualify counsel based on a violation of Canon 9,
alone.
[PAGE 45]
Canon 4, which states that, "[a] lawyer should preserve the
confidences and secrets of a client," does not have immediate
applicability. Thus, this canon usually comes into play where, for
example, an attorney represents client "A" in a particular lawsuit
against client "B", and then in a subsequent lawsuit, represents
client "B," although not against client "A," but where matters
arise which adversely affect client "A." Thus, as
Emle noted:
Canon 4 implicitly incorporates the
admonition, embodied in old Canon 6, that
"[t]he [lawyer's] obligation to represent the
client with undivided fidelity and not to
divulge his secrets or confidences forbids
also the subsequent acceptance of retainers or
employment from others in matters adversely
affecting any interest of the client with
respect to which confidence has been reposed."
Without strict enforcement of such high
ethical standards, a client would hardly be
inclined to discuss his problems freely and in
depth with his lawyer, for he would
justifiably fear that information he reveals
to his lawyer on one day may be used against
him on the next.
Emle Industries, Inc. v. Patentex, Inc., 478 F.2d at
570. In order to deal with these issues, the Second Circuit relied
on the so-called "substantially related" test, i.e., that
the "'former client need show no more than that the matters
embraced within the pending suit wherein his former attorney
appears on behalf of his adversary are substantially related
to the matters or cause of action wherein the attorney previously
represented him, the former client.'" Emle, id., citing
T.C. Theatre Corp. v. Warner Bros. Pictures, 113 F.Supp.
265 (S.D.N.Y. 1953).
It is apparent that the situation herein is not a Canon 4
case. Thus, this is not a situation where the attorney in question
represents one client, and then after that first case has been
resolved, subsequently represents another client in a matter that
might adversely affect the first. Indeed, it can be said that
there is no substantive matter under consideration in the second
case, i.e., the instant case, that would adversely affect
the Chief Judge in his case, i.e., the case in which Fidell
first appeared. In this regard, it might be said that, the only
party whose interests might be adversely affected herein, the
Complainant, who is also the moving party with respect to the
disqualification
[PAGE 46]
issue, has no connection to Attorney Fidell at all. Finally, and
insofar as Canon 4 is concerned, there is no substantial
relationship -- or any relationship -- between the subject matter
of the Chief Judge's case and the case herein. I accordingly find
that Canon 4 has no relevance to the disqualification motion under
consideration. See generally International Electronics Corp.
v. Flanzer, 527 F.2d at 1291-292. But see Silver
Chrysler Plymouth, Inc. v. Chrysler Mo. Corp., 518 F.2d at
757 where the court, while noting the "substantially related" test,
held that where an attorney's contact with the subject matter in
question is attenuated, that attorney's role cannot be considered
"representation" within the meaning of T.C. Theatre
Corp. and Emle, and that the attorney in
question had rebutted any inference that he possessed confidences
that could be used against the former client.
It would further appear that Canon 7 does not apply. Canon 7
states that, "[a] lawyer should represent a client zealously within
the bounds of the law." Thus, unlike the situations in
Ceramco, Inc. v. Lee Pharmaceuticals, 510 F.2d 268
(2d Cir. 1975), W.T. Grant Co. v. Haines, 531 F.2d
671 (2d Cir. 1976) or Papanicolaou v. Chase Manhattan Bank,
N.A., 720 F.Supp. 1080 (S.D.N.Y. 1989), there has never
been an assertion herein that Attorney Fidell somehow had
unauthorized contact with the Complainant. Thus, the conduct
complained of is his concurrent connection to both the Chief Judge
and to Respondents. This does not fall within the bounds of Canon
7, and I so find.
Canon 5, however, presents a somewhat different issue. That
Canon states that, "[a] lawyer should exercise independent
professional judgment on behalf of a client," and there are two
"Ethical Considerations" which may apply. EC 5-1 states as
follows:
The professional judgment of a lawyer should
be exercised, within the bounds of the law,
solely for the benefit of his client and free
of compromising influences and loyalties.
[Footnote omitted]. Neither his personal
interests, the interests of other clients, nor
the desires of third persons should be
permitted to dilute his loyalty to his client.
EC 5-14 states as follows:
Maintaining the independence of professional
judgment required of a lawyer precludes his
acceptance or continuation of employment that
[PAGE 47]
will adversely affect his judgment on behalf of or dilute his
loyalty to a client.17 This problem arises whenever a lawyer is
asked to represent two or more clients who may have differing
interests, whether such interests be conflicting, inconsistent,
diverse, or otherwise discordant.18
17 See ABA Canon 6 [1908 enactment] . .
. .
18 The ABA Canons speak of "conflicting
interests" rather than "differing interests"
but make no attempt to define such other than
the statement in Canon 6 [1908 enactment]:
Within the meaning of this canon, a lawyer
represents conflicting interests when, in
behalf of one client, it is his duty to
contend for that which duty to another client
requires him to oppose."
Cinema 5, Ltd. v. Cinerama, Inc., 528 F.2d 1384
(2d Cir. 1976), which addresses the Canon 5 issue, is set forth in
detail, above. Similar to Manly Fleischmann and his two law firms
in Cinema 5, Mr. Fidell has a concurrent relationship
with two clients in two separate proceedings. Unlike Cinema
5, however, there is no one party herein which appears in
both the proceeding involving the Chief Judge and the instant case.
Thus, in the Cinema 5 scenario, one of Fleischmann's
firms represented Cinerama in one case, and in the other case, in
which Cinerama was also a party, Fleischmann's other firm
represented Cinema 5, Ltd. against Cinerama. Cinerama, represented
in the Cinema 5 proceeding by Louis Nizer's firm,
brought the motion for disqualification. As set forth in detail
above, Fleischmann's New York City firm took the position that
where there is no substantial relationship between the
controversies, there is no basis for disqualification. The Second
Circuit held, however, that where the same party appears in two
lawsuits, and an attorney is retained by the party in one case, but
is appearing against that client in another case, the issue is not
so much the similarity of the two causes of action, but rather the
duty of undivided loyalty that an attorney owes to each of his or
her clients.
Clearly, the Chief Judge does not stand in Cinerama's shoes,
and as Mr. Fidell has pointed out, the Solicitor, who has
apparently brought the action on behalf of the Department of Labor
in the Chief Judge's case, is not a party to this proceeding.
These factors, however, do not end the inquiry because, as the
Second Circuit points out in Cinema 5:
[PAGE 48]
Ethical Considerations 5-1 and 5-14 . . .
provide that the professional judgment of a
lawyer must be exercised solely for the
benefit of his client, free of compromisng
influences and loyalties, and this precludes
his acceptance of employment that will
adversely affect his judgment or dilute his
loyalty. . . .
Cinema 5, Ltd. v. Cinerama, Inc. 528 F.2d at 1386.
It is this requirement that brings us to the nub of the issue
herein: Can Mr. Fidell represent the Chief Judge and also
represent Respondents free from concern that a position, action or
failure to act in one case will have ramifications for the other.
In Cinema 5, the crux of the disqualification was the
presence of Cinerama as a party in both lawsuits. In the instant
case, the problem that arises is that the existence of Mr. Fidell's
attorney-client relationship with the Chief Judge raises the
potential for ex parte contact -- indeed, it raises the
question of whether Mr. Fidell's relationship with the Chief Judge,
in the context of his concurrent relationship with Respondents
herein, is ex parte per se.
In this regard, as has been noted at footnote 16 (see
page 21, supra), Attorney Fidell has already been required
to make a choice involving his attorney-client relationship with
the Chief Judge, which has had ramifications herein. That choice
was whether or not Mr. Fidell should disclose his representation of
the Chief Judge to his opposing counsel, as well as to this Court.
Mr. Fidell chose not to do so, at least in part, because "the very
act of making my representation of [the] Chief Judge a matter of
record in this proceeding could have been perceived as an indirect
effort to derive some implicit advantage." On the other hand, and
the Court emphasizes that there is no evidence to support this
proposition, it might also be argued that the failure to disclose
might be similarly indicative of an indirect effort to derive some
implicit advantage. It is this kind of concern which lies at the
very heart of what defines ex parte within the context of
Canon 5, i.e., action taken, or not taken, for the benefit
of one side only. Thus, while Attorney Fidell does not represent
two adverse interests within the meaning of Cinema 5,
it might be said, as does Ethical Consideration 5-14, that dilution
of one's loyalty to one's clients arises when these clients "may
have differing interests, whether such interests be conflicting,
inconsistent, diverse, or otherwise discordant." It would appear
that while the interests of
[PAGE 49]
Attorney Fidell's two clients are not adverse, they might well be
characterized as "discordant," and would thereby have the potential
to taint the substantive proceeding herein.[30] Thus, as noted
above, Attorney Fidell's representation of Respondents has already
been compromised by his having to take his representation of the
Chief Judge into account when deciding whether or not to disclose
that attorney-client relationship.
Finally, Canon 9 must be addressed. Canon 9 states that, "[a]
lawyer should avoid even the appearance of impropriety." As fully
set forth above, the Second Circuit, and the federal district
courts therein, do not often disqualify a lawyer based on Canon 9
alone, see, for example Bd. of Ed. of N.Y. City v.
Nyquist, 590 F.2d 1241 (2d Cir. 1979), and Armstrong
v. McAlpin, id., 625 F.2d 433 (2d Cir. 1980); but it has
been done, see Hull v. Celanese Corporation, 513 F.2d
568 (2d Cir. 1975)[31] , and MMR/Wallace Power & Indus. v.
Thames Associates, 764 F.Supp. 712 (D.Conn. 1991).
Hull, like MMR, involved a type of
ex parte situation in that, in the context of a sex
discrimination lawsuit, Celanese's in-house counsel (Delulio) asked
to intervene as a plaintiff in Hull's case. Applying Canon 9, and
citing Ceramco, Inc. v. Lee Pharmaceuticals, 510 F.2d
268, 271 (2d Cir. 1975), the court emphasized the need "to guard
against against the danger of inadvertent use of confidential
information . . . ." Thus, Celanese sought disqualification
of the Rabinowitz firm based on the risk that confidential
information received by Delulio as Celanese's attorney might be
used by the Rabinowitz firm against Celanese in the prosecution of
the joint Hull-Delulio claims. The Rabinowitz firm contended that
they had never worked for Celanese and therefore never had direct
access to confidences of Celanese. The court set forth
Rabinowitz's intentions with respect to the sharing of any such
confidences:
[The Rabinowitz firm] maintain[s] that they
carefully cautioned Delulio not to reveal any
information received in confidence as an
attorney for Celanese, but rather to confine
her revelations to them to the facts of her
own case. This, they contend would avoid even
an indirect transferral of confidential
information. They conclude that since they
never got any information either directly or
indirectly, they could not use the information
either consciously or unconsciously.
Hull, id. at 571. The court responded that the argument was
"somewhat technical in nature," and that it "seems to overlook the
[PAGE 50]
spirit of Canon 9 as interpreted by this Court in
Emle." The court continued:
We credit the efforts of the Rabinowitz firm
to avoid the receipt of any confidence.
Nonetheless, Emle makes it clear
that the court need not "inquire whether the
lawyer did, in fact, receive
confidential information. . . ." Emle
Industries, Inc. v. Patentix, Inc., supra,
478 F.2d at 571. Rather, "where 'it can
reasonably be said that in the course of the
former representation the attorney
might have acquired information related
to the subject matter of his subsequent
representation,' T.C. Theatre Corp.,
supra [113 F.Supp.] at 269 (emphasis
supplied), it is the court's duty to order the
attorney disqualified." Id. at 571.
The breach of confidence would not have to
be proved; it is presumed in order to preserve
the spirit of the Code.
(Emphasis supplied). Id. at 572.
Unlike Hull, there is no attorney in this case
"switching sides." Also unlike Hull, there are two
legal actions herein, not one, and I have already found that they
are unrelated. What we do have, however, is an individual, Mr.
Fidell, who maintains a concurrent attorney-client relationship
with both the Chief Judge and with Respondents herein. In this
regard, Attorney Fidell argues that the Chief Judge has no
authority over the instant case, and in those areas where he might
be required to exercise his authority, he would recuse himself.
Like the Hull court's characterization of the
arguments made by the Rabinowitz firm, this argument, too, seems
somewhat technical in nature, and overlooks not the relationship of
the Chief Judge to the instant case, but the relationship of the
Chief Judge to the other administrative law judges over whom he
exercises administrative authority. Thus, the fact that, as
Attorney Fidell properly points out, the undersigned enjoys
statutorily protected tenure of office and freedom from performance
ratings, is not the point. Simply put, reprisal against the
presiding judge is not the issue here. Rather, it is the
potential for shared confidences, either consciously or
unconsciously that is the feared-for transcursion, or overstepping,
herein; and as the Second Circuit has pointedly noted in
Hull, the breach of confidence would not
[PAGE 51]
have to be proved, it is presumed in order the preserve the
spirit of the Code.
In the context of the potential for shared confidences, the
contemplated recusal of the Chief Judge is irrelevant. Indeed, it
would only serve to beg the question: recusal from what? Thus, the
Chief Judge does not preside in this case. As for the presiding
judge, and under the circumstances of this case, there is no
recusal possible for the undersigned, for if I cannot hear this
case, no Department of Labor judge may hear it either.[32]
Finally, and of equal importance, is that the potential for
shared confidences in this situation creates an appearance of
impropriety sufficient to taint the instant proceedings. Thus, the
potential for shared confidences would go to the very heart of the
litigation process itself. As the Second Circuit has noted, "[t]he
dynamics of litigation are far too subtle, the attorney's role in
that process is far too critical, and the public's interest in the
outcome is far too great to leave room for even the slightest doubt
concerning the ethical propriety of a lawyer's representation in a
given case." Emle Industries, supra, at 571. This
Court can conceive of no rationale that would render this set of
circumstances ethically acceptable to the bar, the courts or the
public's interest in the integrity of the judicial process itself.
Indeed, the Second Circuit has repeatedly held that any doubt is to
be resolved in favor of disqualification. See, for example
Hull v. Celanese Corporation, 513 F.2d at 571. Finally,
as then-Circuit Judge Kaufman stated in Emle:
We have said that our duty in this case is
owed not only to the parties . . . but to the
public as well. These interests require this
court to exercise its leadership to insure
that nothing, not even the appearance of
impropriety, is permitted to tarnish our
judicial process. The stature of the
profession and the courts, and the esteem in
which they are held, are dependent upon the
complete absence of even a semblance of
improper conduct.
Id. at 575.[33] [34]
The next issue to be addressed is the balancing of a party's
right to be represented by an attorney of its own choice as against
the threat of taint to the proceeding if the attorney remains.
See Hull v. Celanese Corporation, id.; W.T. Grant v.
Haines, 531 F.2d
[PAGE 52]
671 (2d Cir. 1976), which discusses this balancing and which is set
forth above at pages 33-5; and Armstrong v. McAlpin,
625 F.2d 433 (2d Cir. 1980), discussed above at pages 38-9, and
footnote 26. As is apparent from a review of the cases, the court
looks to certain factors when it balances the needs of the party to
chose his or her own lawyer, as against the threat of taint to the
proceeding. Some of these factors are: the length of time the
attorney has been representing the party, the availablity of other
counsel, and whether there is another remedy that would have the
same effect as disqualification and thereby cure any potential for
taint.
In the case herein, Mr. Fidell undertook to represent
Respondents on April 1, 1994 and made a formal appearance in this
case in May of 1994, or a period of four months, up to the present.
While he has filed several motions and responses, the greatest
portion of these relate to the disqualification issue itself.
Under these circumstances, I find that the length of Mr. Fidell's
tenure as one of Respondents' attorneys, as well as the degree of
his involvement in this case, is not so great as to prejudice
Respondents in their defense of this matter.
Further, Respondents have other, able, counsel in this case
who have been representing them since the inception of this matter
more than one year ago. Mr. Fidell notes in his June 16, 1994
response, that the presence of other counsel representing
Respondents, "is of no moment for present purposes . . . . [and
that] Complainant himself has two lawyers . . . and if he wanted to
retain others, that would be entirely his affair. So too, absent
some substantial basis to interfere with respondents' choice of
counsel -- both as to number and identity -- that choice must be
respected." Mr. Fidell correctly points out that the number of
attorneys that one retains is irrelevant. Indeed, it might be said
that a party can never have too many lawyers, if numbers are the
only issue at hand. That is not the case herein, however.
Thus, the question here is whether Respondents will be able to
retain other, competent, counsel who will be able to meet their
needs should Mr. Fidell be disqualified. In this case, Respondents
already have competent counsel, even absent Mr. Fidell. See,
for example the discussion at footnote 26, above, which
presents the situation where there were no other available
competent counsel. I accordingly find that Respondents will not be
prejudiced if Attorney Fidell is disqualified.
The final question in this regard is whether there is a remedy
other than disqualification which would have the effect of removing
the potential for taint. Some of the cases note that
disqualification issues can often be handled by bar association
grievance committees. This is not such a case, however. Thus, the
[PAGE 53]
threat of taint here is grounded in Mr. Fidell's relationship to
the Chief Judge and his concurrent relationship to Respondents in
this case. This situation will not be remedied by a bar
association ruling. In addition, there is the very real question
of which bar association would have jurisdiction herein. As has
already been discussed, this case arises in Connecticut, and Mr.
Fidell is not licensed to practice in that jurisdiction. Referral
to a bar association would thus raise more questions than it would
solve. In addition, I have already rejected recusal as being
irrelevant to the circumstances of this case.
There is one other possibility that merits mention, and that
is the construction of the so-called "Chinese Wall," or
"screening." Screening involves setting up a procedure whereby an
attorney whose presence in a case would otherwise cause a conflict,
is screened from any contact with the ongoing litigation so that
his or her firm might therefore continue to participate. See
generally Papanicolaou v. Chase Manhattan Bank, N.A.,
720 F.Supp. 1080 (S.D.N.Y. 1989), and cases cited therein. It
would not seem to apply herein, for several reasons. Firstly, it
is not Attorney Fidell who would need to be screened. Thus, he
does not need screening from his law firm; neither can he be
screened from the Chief Judge who is, after all, his client.
Secondly, screening the Chief Judge is tantamount to recusal, and
I have already held that recusal will not cure either the
appearance of impropriety or the threat of taint. Finally,
screening would not aid Attorney Fidell in curing the problems
raised by Canon 5, i.e., the duty of undivided loyalty that
an attorney owes to each of his or her clients. I accordingly find
that screening is not an appropriate mechanism to cure the threat
of taint.
There is one more aspect to "screening" that should be noted
herein, and that goes to Attorney Fidell's failure to disclose to
opposing counsel or to this Court, his attorney-client relationship
with the Chief Judge. If screening were to be an alternative
"cure" herein, and I have found that under the circumstances of
this case that it is not, Attorney Fidell would be required to show
that he "implemented effective prophylactic measures to insulate an
infected attorney." Id. at 1086. In this regard, the court
noted its "doubts [as to] whether any Chinese walls, which are
meant to be preemptive, can ever function effectively when
erected in response to a motion [to disqualify], and not prior to
the arising of the conflict. [Citation omitted]." Id. at
1087. Thus, without timely disclosure, there can be no screening;
and even though the motion was filed in response to the Court's
disclosure, Attorney Fidell's duty of undivided loyalty to
Respondents had already been compromised.[35]
[PAGE 54]
Accordingly, and based on the current state of the record, I find
that, as between Respondents right to counsel of their own choice
and removing the threat of taint by disqualifying Attorney Fidell,
the balance must fall on the side of disqualification.
V. ProcedureA. Further Proceedings on the Disqualification Motion
The first issue to be addressed is the nature and type of
proceeding involving disqualification motions. The parties are
entitled to a hearing with respect to these motions. See
generally Schwebel v. Orrick, 153 F.Supp. 701 (D.C.D.C.
1957); Koden v. United States Department of Justice,
564 F.2d 228 (7th Cir. 1977); Rex v. Ebasco Service,
Inc., Case Nos. 87-ERA-6, 87-ERA-40, Sec'y. Dec. and Order,
March 4, 1994. See also Touche Ross & Co. v. Securities &
Exch. Com'n., 609 F2d 570 (2d Cir. 1979), which primarily
concerned the "exhaustion doctrine" in the context of an
administrative proceeding to determine whether certain accountants
had engaged in unethical conduct.
However, while an on-the-record hearing on the
disqualification motion is available, not every party in every case
avails themselves of it. For example, some cases are submitted on
affidavits, depositions, briefs or oral argument. See, for
example E.F. Hutton & Company v. Brown, 305 F.Supp. 371
(S.D.Tex. 1969), wherein the court noted the following:
Both Hutton and Brown have stated in their
briefs that they consider this record
complete, and neither has asked to offer any
live testimony or requested an evidentiary
hearing. Although each originally requested
oral argument, both later waived oral argument
and agreed to submit the motion on the lengthy
briefs already filed.
Id. at 376. Papanicolaou v. Chase Manhattan Bank,
N.A., 720 F.Supp. 1080 (S.D.N.Y. 1989), involved contact
and discussion of the case between defendant's attorney and the
plaintiff in the absence of plaintiff's attorney. With respect to
the procedural issue of whether a hearing was warranted, the court
noted as follows:
The Court offered to hold a hearing to
ascertain exactly what was said during the
[PAGE 55]
meeting but counsel for both parties expressed the opinion that the
court should decide the matter without a hearing. The affidavits
of the plaintiff and the Milbank partner conflict with respect to
the content and import of their conversation;[footnote omitted] but
it is not disputed that the two argued the merits of the case at
length . . . .
Id. at 1082. By contrast, in Fund of Funds, Ltd. v.
Arthur Andersen & Co., 567 F.2d 225 (2d Cir. 1977), which
involved disputed facts, the district court judge "[took] extensive
testimony . . . ." Id. at 232. In General Motors
Corporation v. City of New York, 501 F.2d 639 (2d Cir.
1974), the court noted that, "[t]he facts necessary to an
understanding of our disposition of these appeals have been
gleaned, in the main, from the complaint and from the affidavits
filed by the parties in support of and in opposition to the
respective motions at issue. They are, thankfully, rather
straightforward and, in all material respects, undisputed."
Id. at 641. Cf. Silver Chrysler Plymouth, Inc. v.
Chrysler Mot. Corp., in which the parties submitted
"voluminous affidavits, copies of pleadings in cases in which [the
attorney in question] had allegedly worked, and extensive memoranda
of law. . . . and . . . oral argument . . . ." Id. at 752.
Interestingly, the court also noted, "[t]horough consideration of
the facts, as more elaborately set forth in the opinion below, is
required. [footnote omitted]. Nor can judges exclude from their
minds realities of which fair decision would call for judicial
notice." Id. at 753. Hull v. Celanese
Corporation, 513, F.2d 568, 570 (2d Cir. 1975), also
appeared to rely on affidavits and other documentary evidence in
reaching the decision to disqualify. MMR/Wallace Power &
Industrial, Inc. v. Thames Associates, 764 F.Supp. 712
(D.Conn. 1991), appeared to rely on deposition testimony,
affidavits and documentary evidence. Lefrak v. Arabian Am.
Oil Co., 527 F.2d 1136 (2d Cir. 1975), is comprehensive as
to this issue. Citing Hull, the court stated as
follows:
Certainly the method of conducting the inquiry
is within the discretion of the judge charged
with the responsibility of supervision. This
court has not mandated any procedure. The
trial judge may be able to make the
determination of impropriety vel non on
the basis of oral arguments and affidavits,
General Motors Corp. v. City of New
York, 501 F.2d 639 (2d Cir. 1974), he
may appoint a special master to ascertain the
facts, Fisher Studio, Inc. v. Loew's
Inc, supra, or he may conduct the
evidentiary hearing which was
[PAGE 56]
provided here. In addition to the affidavits submitted, Judge
Costantino did examine the list of proposed questions submitted by
appellants' counsel and he did permit counsel to interrupt the
proceeding to suggest further questioning. Whether discovery is
permissible is clearly within his discretion in any event,
Lehigh Valley Industries, Inc. v. Birenbaum, 527 F.2d
87 (2d Cir., Nov. 28, 1975); H.L. Moore Drug Exchange, Inc.
v. Smith, Kline & French Laboratories, 384 F.2d 97 (2d Cir.
1967), and that discretion should be rarely disturbed in non-
adversary proceeding involving attorney disqualification.
Id. at 1140.[36]
Based on all of the above, if any party herein intends to
submit evidence in addition to whatever documents are already
before the Court, I find that any of the above enumerated methods
are acceptable and would satisfy due process concerns in this
regard.
B. The Nature and Effect of This Order to Show Cause
On considering how this motion would be handled procedurally,
and after extensive research, it was concluded that an order to
show cause would be appropriate herein. As an initial matter, and
considering the numerous issues raised by the motion to disqualify,
it was thought that the parties should have the opportunity to view
the thinking of the Court and the way in which the Court has
thus far analyzed the complex issues presented.
Far more important from Respondents' point of view, is the
procedural effect of couching this Order as one to show cause and
whether it thereby acts to deny Respondents due process by, in
effect, prejudging the motion. For the following reasons, I find
that a show cause order herein is appropriate. Firstly, an order
to show cause is not a final order. Thus, it allows a party to
rebut whatever findings or analysis have been made in support of
the order's conclusion. Generally speaking, the moving party,
here, the Complainant, would have the burden of making out a
prima facie case, which, if successfully done, would place
upon Respondents the burden of production to show that
disqualification is not warranted. The burden of persuasion,
however, would remain with the Complainant. See generally,
Mitchell v. Flynn, 478 A.2d 1133 (Me. 1984). While
Complainant herein was the moving party, and did offer argument in
support of the motion, there was no evidence, as such, presented.
Nonetheless, in the context of a disqualification motion, which
raises questions involving ethical conduct, the Court may both
raise issues and analyze them, sua sponte. See Empire
Linotype School v. United States, 143 F.Supp.
[PAGE 57]
627 (S.D.N.Y. 1956), cited above at footnote 30. Further, the
Court may rely on Respondents' concessions (see, for
example, Attorney Fidell's explanation as to the reason
underlying his failure to disclose); and certainly, the Court has
relied on facts which are undisputed (for example, Attorney
Fidell's attorney-client relationship with both the Chief Judge and
with Respondents herein); all of which findings are, in the Court's
view, supported by the extensive Second Circuit case law on issues
involving disqualification. This is not to say that Attorney
Fidell and Respondents may not adduce further evidence in the
manner of their own choosing and thus provide the basis for an
ultimate finding that disqualification herein is not warranted;
and, indeed, they are invited to submit such evidence. However,
based on all of the above, and on Randall v. Brigham,
74 U.S. (7 Wall.) 523, 540, 19 L.Ed. 285 (1869), I find that under
the circumstances of this case, an Order to Show Cause is an
appropriate procedural vehicle.
C. Some Thoughts Regarding Appeal of This Matter
The regulations provide that any appeal of this
disqualification matter, regardless of which party prevails, would
be to the Chief Judge. See 29 C.F.R. § 18.36(b). It
is assumed that the Chief Judge would recuse himself from this
matter. The question arises, however, where any subsequent appeal
would lie. In this regard, I would ask the parties to consider the
effect of Armstrong v. McAlpin, id. at 625
F.2d 433, on any appeal resulting from the disqualification
proceedings herein, including the issue of whether, if
disqualification is ordered, the Secretary rules on the
disqualification, or whether it is considered wholly collateral
within the meaning of Armstrong, and
therefore not subject to a final decision by the Secretary absent
a recommended decision and order on the merits. Id. at
438.[37]
Finally, I would ask the parties to consider the following
language found in 29 C.F.R. § 18.36(b), that, "[a]ny attorney
or other representative so suspended or barred may appeal to the
Chief Judge but no proceeding shall be delayed or suspended pending
disposition of the appeal; provided, however, that the
administrative law judge shall suspend the proceeding for a
reasonable time to obtain another attorney or representative," and
whether it is consistent or inconsistent with the following
language found in Armstrong:
We do not reach the same conclusion, however,
with respect to orders granting
disqualification motions. In such cases, the
losing party is immediately separated from
[PAGE 58]
counsel of his choice. If the order is erroneous, correcting it by
an appeal at the end of the case might well require a party to show
that he lost the case because he was improperly forced to change
counsel. This would appear to be an almost insurmountable burden.
In addition, permitting an immediate appeal from the grant of a
disqualification motion does not disrupt the litigation, since the
trial must be stayed in any case while new counsel is obtained.
Id. at 440-41.
ORDER
1. Respondents are hereby ORDERED to show cause why
Attorney Eugene R. Fidell should not be disqualified from
participating in this proceeding as Respondents' counsel.
2. The parties are further ORDERED to inform the Court
by close of business, Friday, August 19, 1994, as to whether they
wish to present further evidence in this matter, and the form that
such evidence will take.
JOAN HUDDY ROSENZWEIG
District Chief Administrative
Law Judge
[ENDNOTES]
[1] This filing also included, Status Report on Related
Proceedings.
[2] The court also considered the provision of the
Administrative Procedure Act dealing with "Ancillary matters,"
including paragraph (a) "Appearance," then § 6, 60 Stat.
240, 5 U.S.C.A. § 1005. Noting that that section provides
that persons compelled to appear before an agency may be
accompanied and represented by "counsel," the court also pointed
out that:
It does not regulate the qualifications of
counsel or provide how agencies may regulate
them. During debate on the bill Senator
McCarran read with approval the Attorney
General's statement that § 6(a) "does
not deal with, or in any way qualify, the
present power of an agency to regulate
practice at its bar." Administrative
Procedure Act, Legislative History, 79th
Cong. 2d Sess., Sen.Doc. 248, p. 317. Bills
to regulate admissions and disciplinary
proceedings in administrative agencies have
been introduced but not passed. These
include H.R. 8201, 81st Cong., 2d Sess., and
H.R. 3097, 82d Cong., 1st Sess. "It is clear
* * * that the existing powers of the
agencies to control practice before them are
not changed by the Administrative Procedure
Act. Attorney General's Manual on the Administrative
Procedure Act, 1947, p.66.
Herman v. Dulles, id. at 717.
[3] But cf. Great Lakes Screw Corporation v. NLRB,
409 F.2d 375 (7th Cir. 1969), involving a hearing before a then-
trial examiner which the Seventh Circuit characterized as being
"scarred with antagonism, enmity and histrionic pettiness" and
that, "[t]he hearing generated more heat than light." Id.
at 378. On the 13th day of the hearing, the trial examiner
excluded the company's chief counsel from the hearing. That
ruling was immediately appealed to the Board. The Board upheld
the ruling, holding that the trial examiner did not abuse his
discretion and was acting within the scope of his authority under
the Boards rules. The Board's ruling, however, was made without
a hearing, and did not set forth the conduct on which it based
its affirmation of the exclusion until it decided the case on the
merits in a decision issued two years later. While reaffirming
the right to exclude, the court nonetheless held that, "[b]y
excluding counsel without setting forth with sufficient
particularity the basis for such action, the Board has
substantially and prejudicially violated the Administrative
Procedure Act. By denying petitioner his statutorily afforded
right [to counsel], administrative due process is violated."
Id. at 380.
[4] 29 C.F.R. § 18.29(a)(8), "Authority of
administrative law judge," states as follows:
(a) General powers. In any proceeding
under this part, the administrative law judge
shall have all powers necessary to the
conduct of fair and impartial hearings,
including, but not limited to, the following:
* * *
(8) Where applicable, take any
appropriate action authorized by
the Rules of Civil Procedure for
the United States District Courts,
issued pursuant to 28 U.S.C. 2072
. . . .
[5] Rex, id. at sl. op. 5-6, 7. I note that the
slip opinion cites at page 7, 29 C.F.R. § 18.4(g)(3). No
such section exists. The citation was apparently meant to read
§ 18.34(g)(3), which is entitled, "Denial of authority to
appear."
[6] The conduct complained of involved that complainant's
attorney going forward with the case but failing to carry out the
responsibilities that such prosecution entails, only to have her
reveal at the hearing that neither witnesses nor other evidence
would be produced, as well as a concession that a violation of
the employee protection provisions of the Energy Reorganization
Act could not be proved.
[7] Although Complainant's motion is aimed at disqualification,
Respondents argue that the proper remedy is recusal of [the]
Chief Judge . . . should he be asked to somehow act in this case.
In truth, the scenario in this case seems to be somewhat of a
hybrid, and so both areas of inquiry shall be pursued.
[8] As noted in Toledo Edison Co. (Davis-Besse Nuclear
Power Station, Units 1, 2, & 3) , et al., 39 Pike and
Fischer Administrative Law (2d) 769, 777 n.8 (Nuc Reg Comm ALAB,
1976), "The [then-]Code of Professional Responsibility consists
of Canons, Ethical Considerations and Disciplinary Rules. 'The
Canons are statements of axiomatic norms, expressing in general
terms the standards of professional conduct expected of lawyers.
. . .' Preliminary Statement to Code. Each Canon is
interpreted by Ethical Considerations which 'are aspirational in
character' and Disciplinary Rules which are mandatory.
Ibid. . . ."
The Code now appears to co-exist with the ABA Model Rules of
Professional Conduct. The "Rules" were promulgated in 1983, and
various amendments thereto have been added since then. The 1993
Rules of Procedure for the Model Rules provide, in part,
as follows:
1. The Committee may express its opinion on
questions of proper professional and judicial
conduct. The Model Rules of Professional
Conduct and the Code of Judicial Conduct, as
they may be amended or superseded, contain
the standards to be applied. For as long
as a significant number of jurisdictions
continue to base their professional standards
on then predecessor Model Code of
Professional Responsibility, the Committee
will continue to refer also to the Model Code
in its opinions.
* * *
12. Opinions of the Committee issued before
the effective dates of the Model Rules of
Professional Conduct, the predecessor Model
Code of Professional Responsibility and the
Code of Judicial Conduct continue in effect
to the extent not inconsistent with those
standards and not overruled or limited by
later opinions.
(Emphasis added).
[9] Precedent derived from this source raises the venue issue.
[10] Although this comment to Paragraph (b) would, on its face,
appear to resolve the issue, i.e., one applies agency
rules; in fact, it only begs the question. Thus, because Part 18
does not address any substantive issues involving ethical conduct
that might lead to disqualification, one would expect that the
rules of conduct where the court "sits" would apply. See
discussion of Rex v. Ebasco Service, Inc.,
id., at pp. 8-9, supra, and this Court's conclusion
that reliance on case precedent and other legal materials for a
determination of whether the conduct complained of constitutes
"unethical" conduct leading to disqualification within the
meaning of 29 C.F.R. § 18.36, is permissible.
[11] The issue of which code of conduct should be applied in a
disqualification situation was considered by the Benefits Review
Board in Baroumes v. Eagle Marine Services, 23 BRBS
80 (1989), which arose under the Longshore and Harborworkers'
Compensation Act, as amended, 33 U.S.C. §§ 901 et
seq. In that case, the employer had been represented by an
attorney named Doyle in a case involving the claimant, who was
awarded benefits. Thereafter, the claimant was again injured,
and retained the services of an attorney named Stafne. Not long
thereafter, Mr. Doyle, having assertedly taken steps to avoid
future conflicts of interest between his former clients and Mr.
Stafne's law firm's existing clients, joined Mr. Stafne's law
firm. The employer (whom Mr. Doyle had previously represented)
requested disqualification of Mr. Stafne and his firm. Stafne
declined, and the issue came before the administrative law judge.
The Board recapped the judge's Order Regarding
Representation:
[A]fter finding that Mr. Doyle is not
directly involved in the current
representation of claimant and that no
evidence exists that Mr. Doyle has shared any
of the employer's confidences with Mr.
Stafne's firm, [the judge] concluded that
both Mr. Doyle and his firm were prohibited,
pursuant to Rules 1.9 and 1.10 of the
Washington [state] Rules of Professional
Conduct, from representing claimant in his
present action. . . .
Id. at 81. After considering certain other procedural
matters not of immediate moment to the instant case, the Benefits
Review Board addressed the issue of whether the administrative
law judge properly applied the Washington rules. The Board
stated as follows:
After initially finding that . . . 29 C.F.R.
§ 18.36 gave him the authority to
preclude a person from representing a
claimant where that representation would
contravene reasonable standards, the
administrative law judge adopted, as a
reasonable standard, the standard contained
in Rule 1.10(b) of the Washington [rules] to
disqualify Mr. Stafne from representing
claimant herein. Specifically, [he]
concluded that since Mr. Doyle, who had
previously represented employer in a claim
filed against it by claimant, was
disqualified from representing claimant in
his present claim, pursuant to Rule 1.9, . .
. Mr. Doyle's new firm was also disqualified,
pursuant to Rule 1.10(b) . . . from
representing claimant.
Id. at 82-3. Holding that 29 C.F.R. § 18.36 grants
an administrative law judge the authority to exclude a
representative from appearing in a proceeding before him or her,
the Board next addressed which standard is to be applied in
making this determination. The Board continued:
Additionally, as the Rules of Practice and
Procedure before the Office of Administrative
Law Judges do not delineate what constitutes
ethical conduct, we hold that the
administrative law judge rationally relied
upon the Washington [rules] to establish the
ethical standard to be applied to the case
before him. Advance notice is essential to
the rule of law: thus, it is desirable that
an attorney be aware of what actions will not
be countenanced. See Paul E. Iacono
Structural Engineer, Inc. v.
Humphrey, 722 F.2d 435 (9th Cir.
1983), cert. denied, 464 U.S. 851;
In re Coordinated Pretrial Proceedings
in Petroleum Products Antitrust
Litigation, 658 F.2d 1355 (9th Cir.
1981), cert. denied, 455 U.S. 990
(1982). Accordingly, as claimant's counsel
practices law within the State of Washington,
he should be aware of the state rules of
professional conduct and the administrative
law judge committed no error in utilizing the
Washington [rules] as the standard for
ethical behavior in the case before him.
Id. at 83-4. It is noted that the Benefits Review Board
nonetheless held that the administrative law judge abused his
discretion in ordering disqualification by failing to consider,
inter alia, evidence of record evidence -- uncontradicted
affidavits submitted by Stafne's firm -- that mechanisms had been
put into place at the firm which insured that no conflict of
interest occurred between Mr. Doyle's former clients and the
firm's present clients.
[12] It is noted that the interpretation of said Rules of
Professional Responsibility by any authority other than the
United States Supreme Court, the United States Court of Appeals
for the Second Circuit and the United States District Court for
the District of Connecticut are not binding on disciplinary
proceedings initiated in the United States District Court for the
District of Connecticut.
[13] See 2d Cir.R. § 46(h)(2).
[14] Cf. E.F. Hutton & Company v. Brown, 305
F.Supp. 371 (S.D.Tex. 1969), which also involved a
disqualification motion. One of the "subissues," as that court
termed it, was the jurisdictional issue of whether the court had
sufficient authority to even consider a request for injunctive
relief, in the context of the disqualification motion, against a
New York law firm who were not resident and had not been admitted
to practice generally in the Southern District of Texas. The
court further noted that the New York firm had neither moved for,
nor been granted, leave to appear as counsel in "this particular
cause, and have not affixed their names to any pleading or brief
filed on behalf of Hutton." Id. at 379. The court's
analysis of its authority in this regard is only analogous, but
nonetheless instructive, as regards the application of
Connecticut state rules of ethics by an attorney who has not, to
this Court's knowledge, even appeared pro hac vice in the
District of Connecticut. Id. at 379-80 et seq. It
is noted, however, that because the instant case may never be
considered in federal district court, and if appealed, go
directly to the Second Circuit, it may well be that only the
American Bar Association Code of Professional Responsibility, as
construed by the Second Circuit, applies. See Section V,
"Procedure," infra, at page 61.
[15] It is noted that most of the Second Circuit cases will
involve discussions of Canons 4, 5 or 7, of the Code, as well as
Canon 9. While the facts of these cases shall be discussed, this
Court notes that the facts of the instant case are not identical
to those discussed. However, they are presented to provide an
indication of how the Second Circuit analyzes issues involving
disqualification; and, as a corollary thereof, how aggressively
that court applies and enforces the Canons, i.e., the
"federal question," herein.
[16] Indeed, I note that even Attorney Fidell admits to this
possibility when he notes in his June 16, 1994, response, that,
"[i]n addition, the very act of making my representation of Chief
Judge Litt a matter of record in this proceeding could have been
perceived as an indirect effort to derive some implicit
advantage."
[17] In terms of chronology, the next case that would be
considered would be Silver Chrysler Plymouth, Inc.v.
Chrysler Motors Corp., 496 F.2d 800 (2d Cir. 1974)(en
banc). However, that case was primarily concerned with the
appealability of a motion to disqualify; and while that issue is
of import herein, Silver Chrysler Plymouth was
subsequently overruled in Armstrong v. McAlpin, 625
F.2d 433 (2d Cir. 1980)(en banc), vacated on other
grounds and remanded, 449 U.S. 1106, 101 S.Ct. 911, 66
L.Ed.2d 835 (1981), decision on remand, 699 F.2d 79, 94
(2d Cir. 1983), discussed infra.
[18] It is once again noted that the facts of the instant case
are not on all fours with the facts of the Second Circuit cases
under discussion. What is important, however, is to understand
the principles relied on by that court, how the facts before it
are analyzed -- a particularly interesting aspect of Silver
Chrysler -- and, indeed, the procedures utilized by the
courts below in arriving at factual findings -- although this
latter issue shall be discussed in more detail, infra.
[19] The court noted at footnote 4 that, in Standard
Oil, "'No such glaringly obvious relationship exists in
this case' and, applying a substantial relationship test, refused
to disqualify counsel. 136 F.Supp. at 355-59." Id. at
754.
[20] The court makes an interesting analytical leap here. Thus,
while all the previous decisions it cites as reflecting a
patently clear substantial relationship relate that relationship
solely to the causes of action at issue; the Silver
Chrysler Plymouth court also injects the relationship of
the lawyer in question to the cause of action, as well as the
relationship of the lawyer in question to his previous firm.
Indeed, it is to this last aspect that much of its "judicial
notice" regarding law firm etiquette is based.
[21] It is apparent that the Second Circuit was not entirely
secure in its decision. Thus, the final paragraph of the opinion
states as follows:
If during such further preparation, or even
during the trial itself, there should appear
indications that confidential information not
apparent from the proof submitted thus far is
being used, the trial judge will be available
for such action as may be appropriate.
[Footnote omitted].
Id. at 758.
[22] It is noted that Haines also sought dismissal of the
complaint based on counsel's conduct. The court declined to so
order.
[23] In this regard, the court noted the availability of federal
and state comprehensive disciplinary machinery.
[24] It is important to note, however, that the court pointed to
the possibility of other available remedies in the event the
union took a position with respect to the merits of the
litigation, then bringing the case within the ambit of the "fair
representation" cases, as well as the possibility for grievance
proceedings. Finally, the court pointed out that, "it may be
that judicial construction of the plan, in an appropriate
lawsuit, could provide some relief for the women." Id.
[25] This procedural issue and its relevance herein will be
discussed, infra.
[26] It should be noted, as the court took great pains to point
out in the factual portion of its opinion, this case involved
securities fraud assertedly perpetrated by Clovis McAlpin and
Robert Vesco, who thereafter fled to Costa Rica. When they, and
other defendants, failed to appear, the SEC obtained a default
judgment, and Michael Armstrong was appointed the receiver,
having the responsibility for recovering all monies and property
misappropriated by defendants. To this end, Armstrong was
authorized to initiate litigation in this country and abroad.
The law firm of Barrett Smith Schapiro & Simon was appointed as
Armstrong's counsel, and the firm expended an enormous amount of
time and resources preparing for the litigation. More than one
year later, the receiver and Barrett Smith became aware of a
potential conflict of interest involving an institutional client
of Barrett Smith that might become a defendant in the SEC
litigation. Thus, the receiver concluded that it was necessary
to substitute litigation counsel. The problem that arose,
however, was that it was necessary to find a firm that could not
only take on the complex litigation in the United States and in
Costa Rica, but which would agree to see the litigation through
to the end and would do so knowing that it would receive little
or no interim compensation. Further, most of the large law firms
which could have handled the case were already representing the
institutional defendants and were therefore not available. The
court noted that, after failed negotiations with two firms and
more than six months after Barrett Smith withdrew, the Gordon
firm was chosen because one partner was already performing legal
work in Costa Rica, and another partner had specialized
experience in prosecuting complex fraud cases.
With respect to Altman, the former SEC attorney, the court
noted that he became associated with the Gordon firm
approximately seven months before that firm was retained by the
receiver. At the time Altman joined the firm, the receiver had
no reason to know that Altman had left the SEC to join Gordon.
During the initial meetings with the Gordon firm, Armstrong
(receiver) first learned that Altman had recently become
associated with the firm. As a result, both Barrett Smith and
the Gordon firm researched the issue of the ethical effect of
Altman's prior SEC affiliation and his supervisory role while at
the SEC with respect to the lawsuit. The two firms concluded
that Altman should not participate in the case, but that the firm
should not be disqualified if Altman were properly screened from
the litigation. The matter was brought to the attention of
Judge Stewart, who was the presiding district court judge,
and he permitted participation by the Gordon firm. The court
noted that the disqualification motion was not brought until June
of 1978, almost two years after the commencement of the action,
and more than two years after the Gordon firm had been retained.
[27] There will be some additional Second Circuit cases cited
herein more appropriately addressed, infra.
[28] This practical question is separate and distinct from the
principle involving a party's right to counsel of its own
choosing, a principle which the Second Circuit balances against
the requirement that the highest standards of conduct be
maintained.
[29] It is noted that the district court cited, inter
alia, Goldenberg v. Corporate Air, Inc., 189
Conn. 504, 457 A.2d 296 (1983), rev'd on other grounds
Burger and Burger, Inc. v. Murren, 202 Conn. 660, 522
A.2d 812 (1987), which, the MMR court stated, has
adopted an irrebuttable presumption. However, inasmuch as the
instant case will not be considered either with respect to the
disqualification motion or on the merits in the District of
Connecticut, Goldenberg does not control. The
MMR court did state, however, that, "[a]s indicated
above, the courts which have considered this question are split.
Although the opinions in both Hull and
Williams [a 1984 Western District of Missouri case,
588 F.Supp. 1037, which does not control herein] arguably suggest
that the presumption is to be considered irrebuttable, such
conclusions must be considered as dicta in light of factual
evidence . . . that confidential information was actually
disclosed by the individual switching sides to opposing counsel."
Id. at 726.
Leaving Williams aside, this Court would
respectfully suggest that the MMR court's reading
of Hull in this regard is not supportable. Thus,
while the Second Circuit did set forth District Judge Owen's
findings that, "'The foregoing contents of affidavits prepared by
Delulio and the Rabinowitz office are some evidence, in my
opinion, of the possibility that Delulio, unquestionably
possessed of information within the attorney-client privilege,
did in fact transmit some of it to the Rabinowitz firm,
consciously or unconsciously.'7 [7 73 Civ. 3725 (S.D.N.Y., July
12, 1974), at 5.]" Hull at 570; the Second Circuit
then proceeded to set forth "[t]he unusual factual situation
presented here [which] bears repetition in some detail[,]"
id., and did not mention, or even hint, in its own
recitation of the facts that any information was transmitted.
Neither was this mentioned even as a "moreover" argument.
Further, the fact that the Hull court relied on
Emle for the proposition that the court "'need not
inquire whether the lawyer did, in fact, receive
confidential information . . . .' Emle, id. 478
F.2d at 571," Hull, at 572, suggests, rather, that
its holding that, "[t]he breach of confidence would not have to
be proved; it is presumed in order to preserve the spirit of the
Code[,]" id., is more than
just "dicta." Further, with respect to the Second Circuit's
recitation of Judge Owen's finding, the court stated the
following at footnote 8, "Judge Owen initally considered holding
a hearing to determine whether there had been actual disclosures,
but decided in the negative. He concluded that 'a hearing would
be self-defeating since it would be necessary to reveal to the
Rabinowitz firm in some specificity the extent of Celanese's
disclosures to Miss Delulio in the course of ascertaining to what
extent, if any, that information reached them.'[Citation
omitted]." Id. at 570. This footnote would suggest that
no factual finding in this regard was contemplated by Judge Owen,
and would further suggest that the Second Circuit considered as
dicta Judge Owen's statement, set forth above, concerning the
contents of the affidavits and whether or not any information was
transmitted. Supportive of this view is the Second Circuit's
characterization of the Emle presumption as
"irrebutable." See Meyerhofer v. Empire Fire and Marine
Insurance Co., 497 F.2d 1190, 1195 (2d Cir.), cert.
denied, 419 U.S. 998, 95 S.Ct. 314, 42 L.Ed.2d 272 (1974),
cited in Hull, id. at 572, and distinguished on
other grounds. Finally, and because it would appear that neither
this motion nor the substantive case will be within the
jurisdiction of the District of Connecticut, it is doubtful
whether MMR's analysis in this regard would
control.
[30] It is noted that while neither of Attorney Fidell's clients
has raised the disqualification issue, it is well settled that a
court has the authority to raise such questions sua sponte.
See generally Empire Linotype School v. United States,
143 F.Supp. 627 (S.D.N.Y. 1956), stating:
Assuming arguendo that the Government
had delayed making the motion to disqualify,
the Court would not be precluded or estopped
from adjudicating the question now before it.
The Court's duty and power to regulate the
conduct of attorneys practicing before it, in
accordance with the Canons, cannot be
defeated by the laches of a private party or
complainant. Thus, the Court, on its own
motion, may disqualify an attorney for
violation of the Canons of Ethics.
Porter v. Huber,
D.C.W.D.Wash.1946, 68 F.Supp. 132. And, by a
parity of reason, it is the responsibility of
the Court to ascertain whether there is any
merit to the accusation when once an alleged
violation of the Canons has been called to
the Court's attention. United States
v. Standard Oil Co.,
D.C.S.D.N.Y.1955, 136 F.Supp. 345, 351, note
6.
Id. at 631. See also footnote 33, infra.
[31] Emle Industries, Inc. v. Patentex, Inc., 478
F.2d 562 (2d Cir. 1973), is not quite a pure Canon 9 case in that
it does touch on Canon 4, id. at 570. The
Hull court noted, however, that in
Emle, the Second Circuit felt that, "the invocation
of Canon 9 was particularly appropriate [footnote omitted]."
Hull v. Celanese, 513 F.2d at 571.
[32] Compare Potashnick v. Port City Construction
Co., 609 F.2d 1101 (5th Cir. 1980), which concerned the
failure of a judge to disqualify himself based on his involvement
in business dealings with the plaintiff's attorney. Thus, in
that case, it was the presiding judge who suffered the conflict.
In the case herein, the conflict lies with the attorney.
[33] See also MMR/Wallace Power & Indus. v. Thames
Associates, 764 F.Supp. 712 (D.Conn. 1991) which has
already been set forth above at length. The Court wishes to
emphasize that it does not in any fashion equate the conduct of
Attorney Forstadt with the situation herein. However, the
district court does address the issue of Forstadt's relationship
with Willett, the individual who had been allied with MMR and was
now allied with Thames, stating that, "[e]ven if, as [Thames]
maintains, no confidential information was actually disclosed,
Forstadt's alliance with Willett creates a 'nagging suspicion'
that Thames' preparation and presentation has already been
unfairly benefitted." Id. at 727. There is one additional
point to be made regarding MMR, and that is the
fact that when Forstadt was approached by Willett offering his
services, Forstadt failed to contact MMR's attorneys. As the
court put it, "at the very least, a prudent attorney would have
inquired of plaintiff's counsel regarding their relationship with
Willett . . . ." Id. Again, and emphasizing that
Forstadt's conduct is not to be equated with the situation
herein, it might be said that when Attorney Fidell undertook to
represent Respondents in this case, prudence would have suggested
that both Complainant's counsel and this Court be informed as to
his attorney-client relationship with the Chief Judge and as to
his intentions to represent Respondents herein. Mr. Fidell's
inquiry to the Solicitor reflects that he did have some concern.
However, when the Solicitor's office informed him that it is not
a party to this proceeding and had no objection to his appearing
on behalf of the Respondents, Attorney Fidell would have been
better served had he then made such inquiry to someone who was a
party to this proceeding, or to the Court. Indeed, this Court
learned of the situation purely by happenstance. See
footnote 31, supra.
[34] There is one additional point to be raised, and that is the
question of whether Attorney Fidell's representation of the Chief
Judge, in an action where the U.S. Department of Labor, and
presumably, the Secretary, is the opposing party, may also
threaten to taint this proceeding in that any decision by the
undersigned on the merits of this case is "recommended." It is
the Secretary who issues the final decision and order.
[35] See generally Armstrong v. McAlpin, 625 F.2d
433, 436 (2d Cir. 1980)(en banc), vacated on other
grounds and remanded, 449 U.S. 1106, 101 S.Ct. 911, 66
L.Ed.2d 835 (1981), for a discussion of the steps taken by the
parties when they learned of the possible conflict. See also
in this regard, footnote 26, above.
[36] Thus, the Second Circuit provided some instructive
background. The court noted that, "appellants here do not seek a
reversal of the order of the court below and a disqualification
of counsel. Rather, they ask us to vacate that order and remand
to the district court for further hearings 'with instructions for
a full and vigorous investigation of the underlying facts.' The
remand sought is based on the premise that the disqulaification
proceeding is not properly termed a 'judicial proceeding' but in
fact is adversary in nature, entitling the defendants' counsel to
employ the traditional litigation techniques of discovery as well
as direct and cross-examination. We think that this argument is
based upon a misconception of the [district court] proceeding
below and is in fact unsupported by authority. On the contrary,
more than a century ago Mr. Justice Field in Randall v.
Brigham, 74 U.S. (7 Wall.) 523, 540, 19 L.Ed. 285 (1869)
made the following pertinent comments:
'It is not necessary that proceeding against
attorneys for malpractice, or an
unprofessional conduct, should be founded
upon formal allegations against them. Such
proceedings are often instituted upon
information developed in the progress of a
cause; or from what the court learns of the
conduct of the attorney from its own
observation. Ssometimes they are moved by
third parties upon affidavit; and sometimes
they are taken by the court upon its own
motion. All that is requisite to their
validity is that, when not taken for matters
occurring in open court, in the presence of
the judges, notice should be given to the
attorney of the charges made and opportunity
afforded him for explanation and defence.
The manner in which the proceeding shall be
conducted, so that it be without oppression
or unfairnes, is a matter of judicial
regulation.'"
Id. at 1140.
[37] Cf. Rex v. Ebasco Services, Inc., id. where
the Secretary ruled as to the ordered sanction, and rejected it,
but made the ruling in the context of the entire case which was
before him on the merits.
