ML19319B860

Brief of Squire,Sanders & Dempsey Re Special Section 2.713(c) Proceeding.Canons of Ethics Satisfied.No Transfer of Confidential Info Occured.Order of Special Board Should Be Affirmed.Certificate of Svc Encl

ML19319B860
Person / Time
Site:	Davis Besse, Perry
Issue date:	04/01/1976
From:	Gallagher M CLEVELAND, OH, SQUIRE, SANDERS & DEMPSEY
To:
References
NUDOCS 8001280700
Download: ML19319B860 (79)

Text

.,

., e P

UNITED STATES OF AMERICA -

/ 9 NUCLEAR REGULATORY COMMISSION Before the Atomic Safety and Licensing Appeal Board In The Matter Of THE TOLEDO EDISON COMPANY and )

G Docket Nos. 30-346A s THE CLEVELAND ELECTRIC ILLUMINATING COMPANY ) ~50-500A

(Davis-Besse Nuclear Power Station, )

50-501A Units 1, 2 and 3) )

)

THE CLEVELAND ELECTRIC ILLUMINATING COMPANY, ) Docket Nos. 50-440A et al. ) 50-441A (Perry Nuclear Power Plant, Units 1 and 2) )

BRIEF OF SQUIRE, SANDERS AND DEMPSEY RE SPECIAL SECTION 2.713(c) PROCEEDING Michael R. Gallagher Attorney for Squire, Sanders & Denpsey 630 Bulkley Building i Cleveland, Ohio 44115 (216)241-5310 James B. Davis, Esq.

Law Director City of Cleveland 213 City Hall-

. Cleveland, Ohio April 1, 1976 g o 01280 760 /p

. _ ~ _ _ - _ _ _ _ - _ _ _ _ _ _ _ _ _ .

TABLE OF CONTENTS TABLE OF CONTENTS i CITATIONS iii APPENDICES v I. PROCEDURAL BACKGROUNL 1 II. FACTUAL BACKGROUND 4 III. APPEAL BOARD's QUESTIONS 7 (1) The Evidence 8 A. Affidavits 8 B. Nuclear Regulatory Commission Filings 10 C. Transcripts of Hearings Before Licensing Board of December 31, 1975 and Special Board of February 3, 1976 11 D. Outside the Record: Where Is The Iceberg? 12 l

- (2) Significance Of The Evidence 14 (3) What Bearing Does The Fact That The City's Lawyers Retained SS&D Have On The Application of the Canon? 19 IV. LICENSING BOARD's QUESTIONS (1) Whether the jurisdiction of the NRC under Rule 2.713 extends to situations covering attorney conduct outside of the NRC forum l

which has an impact on representation within the forum. 22 l

(2) Whether the Special Board has the ultimate i authority to Put into effect or to vacate an i order of suspension under Rule 2.713. 23 k

_.j_ _ _ _ . _ _ - - - < ~

f (3) Whether a showing of either actual injury or specific exchange of inEormation of a confi-dential nature is required to enforce a find-ing of attorney misconduct based upon th- ex-change of some information supp]' . by one client of an attorney to another client of that attorney whose interests are adverse to the original client. 24 (4) Assuming the answer to question 2 is negative and 3 is affirmative, whether in the circum-stances now before us the order of disqualifi-cation may be upheld. 28 V. HAS SS&D BEEN DEPRIVED OF PROCEDURAL DUE PROCESS OF LAW BY THE LICENSING BOARD? 29 VI. CONCLUSION 33 SERVICE 36 I

O

CITATIONS CASES:

Accardi v. Shaughnessy, 347 U.S. 260 (1953). ........... 31 Acorn Printing Company v. Brown, 385 S.W.2d 813 (C.A. Mo. 1964) . .. . . . . ........... ..... 15, 16 Appalachian Power Company v. Environmental Pro.

Agcy., 47 F.2d 495 (1973) . . ................ 31 City of Cleveland v. CEI, Docket No. C75-560, (USDC N.D.0hio E.D.) . . . . . ...... ...... .... 13 City of Cleveland, Ohio v. Cleveland Electric Illuminating Company, Docket No. E7631, E7633, E7713, Federal Power Commission . ..... ..... 10 The City of Cleveland, Ohio v. Public Utilities Commission Of Ohio and Cleveland Electric Illuminating Company, No.75-447 (S.Ct.

October term,1975) . . . . . .. .... . ......... 10 a

Cleveland Electric Illuminating Company v. PUC, 42 Ohio St.2d, 403 (1975) . . ......... ....... 10 Go?aberg v. Kelly, 387 U.S. 254 (1969) .............. 30, 32 Gottwals v. Rencher, et al. , 98 P.2d 481 (S.Ct.

Nev. 1940). . . . ... . . . ............ .... 17, 25 North American Van Lines, Inc. v. I.C.C., 386 F.Supp. 665 (1974). .. . . . ... ......... .... 31 Northern California Power Agency v. Morton, 395 F.Supp. 1187 (1975) . . . ....... ..... .... 31 Porter Cty. Ch. of Izaak Walton L. v. Atomic E. Com'n., 315 F.2d 515 (1975). ........... .... 31, 32 Harry Rich Corporation v. Curtiss-Wright Corporation, 233 F.Supp. 252 (S.D.N.Y. 1964). .... .... 18 Rodale Press, Inc. v. F.T.C., 407 F.2d 1252 (C.A.D.C. 1968) . . .. . . . . . . . .'. . ......... 31

-iii-

Shelley v. The liaccabees,184 F.Supp. 797 (E.D.N.Y. 1960). . . . . . . . . . . . . . . . . . . . . . . 24, 25 Silver Chrysler Plymouth, Inc. v. Chrysler Motors Corporation, 518 F.2d 751 (C.A. 2 1975). . . . . .. . . . . . . . . . . . . . . . . . 24, 25 Universal Athletic Sales Co. v. American Cvm Recreational & Athletic Equipment Corporation, Inc., et al., 357 F.Supp. 905 (W.D.Pa. 1973) . . . . . . . . 16, 25 MISCELLANEOUS

>merican Bar Ascociation Committee on Ethics and Professional Responsibility - Informal Opinion 1323 (April 21, 1975) . . . . . . . . . . . . . . . 20 2 Am. Jur. 2d, Administrative Law, Section 415. . . . . . . . . . 29 Ethical Consideration 5-16. . . . . . . . . . . . . . . . . . . . 21 Ethical Consideration 5-17. . . . . . . . . . . . . . . . . . . . 21 44 Fordham Law Rev. 130 .

, . . . . . . . . . . . . . . . . . . . . 23 5 U.S.C., Section 556(d). . . . . . . . .'. . . . . . . . . . . . -29 5 U.S.C., Section 556(e). . . . . . . . . .f . . . . . . . . . . 29 I

l l

-iv-

O APPENDICES APPENDIX 1 Pages 4250-4151 and 4300-4304 of Transcript of Hearing Before Special Board On February 3,1976 Consisting of Partial Proffer of Testimony of Daniel J. O'Loughlin APPENDIX 2 Pages 1-4 and 39-44 of Deposition Trpnscript of Howard J. Holton Taken ,

In City of Cleveland v. CEI, No. C75-560 (USDC N.D. OHIO E.D.)

APPENDIX 3 Pages 1-4, 44-46 and 49 of Deposition Transcript of John Brueckel Taken In City of Cleveland v. CEI, No. C75-560 (USDC N.D. OHIO E.D.)

APPENDIX 4 Pages 11-18 of Trial Memorandum of SS&D Filed With Special Board

-v-

A e

UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION Before the Atomic Safety and Licensing Appeal Board 9

I The Matter Of THE TOLEDO EDISON COMPANY and ) Docket Nos. 50-346A IHE CLEVELAND ELECTRIC ILLUMINATING COMPANY ) 50-500A (Davis-Besse Nuclear Power Station, ) 50-501A Units 1, 2 and 3) )

y THE CLEVELAND ELECTRIC ILLUMINATING COMPANY, ) Docket Nos. 50-440A et al. .) 50-441A (Perry Nuclear Power Plant, Units 1 and 2) )

, BRIEF OF SQUIRE, SANDERS AND DEMPSEY RE SPECIAL SECTION 2.713(c) PROCEEDING I. PROCEDURAL BACKGROUND On November 20, 1975 the City of Cleveland (City) moved to disqualify the law firm of Squire, Sanders and Dempsey (SS&D) from participating as counsel for the Cleveland Electric Illuminating Company (CEI) in proceedings before the Atomic Safety and Licensing Board (Licensing Board).

Oral argument on whether charges should be preferred under 10 C.F.R. 6 Section 2.713(c) of the Commission's Rules of Practice was had on December 31, 1975.

On January 20, 1976 the Licensing Board issued a " Memorandum and Order of The Board Suspending Counsel From Further Participation as Attorney l t

e

• . in These Proceedings" in which order it preferred charges against SS&D, enumerated the grounds therefore and referred the charges to another Atomic Safety and Licensing Board (Special Board). In addition, however, it granted the City's Motion to Disqualify SS&D but stayed the order of suspension until after a hearing before the Special Board. The Licensing Board was split in its decision with Ivan W. Smith dissenting procedurally (Dissenting Memorandum, p. 1) and substantively (Ibid. , pp. 2-3) .

The Special Board scheduled a hearing for February 3,1976. SS&D, by letter, advised the Board and City's counsel of the witnesses it intended to call and secured the issuance of a subpoena for witness Howard J. Holton, who lived in the Washington area. The City requested and secured the issuance of subpoenas on the witnesses whom SS&D identified as individuals it would call to testify on its behalf.

At the hearing before the Special Board SS&D called as its first witness Daniel J. O'Loughlin who testified on direct and was partially cross-examined by City's counsel at which time the Special Board, reversing itself, -held that'it would accept no evidence from SS&D and would limit the hearing to oral argument, striking sua sponte the testimony of Mr. O'Loughlin and the exhibits which had been offered and ' admitted. SS&D proffered the stricken exhibits and testimony of Mr. O'Loughlin and by way of further proffer, recited in skeletal form the substance of the tdstimony intended to be adduced through witnesses Howard J. Holton, John Lansdale, Jr. and John B. Brueckel. .

On February 25, 1976 the Special Board issued a " Board Ruling in Special

Section 2.713 Proceeding" which consisted of a Majority Opinion and a Concurring Opinion. The Special Board found itself in agreement with the conclusion set forth in Mr. Smith's Dissenting Memorandum and, in addition, .found no evidence of unethical conduct by SS&D in the record and dismissed the charges preferred against SS6D by the Licensing Board .

and vacated the Licensing Board's Order of Suspension.

On Mart. 1,1976 the City moved the Licensing Board to make effec-tive its January 20, 1976 Order of Suspension which motion was opposed by SS&D, as well as by the NRC staff in " Staff's Answer to Motion of City of Cleveland For An Order of The Board Enforcing Its Order of Disqualification" dated March 15, 1976. (Staff's Answer) The staff contended that the ruling of the Special Board was controlling with respect to the disqualifi-cation proceeding and must be accorded finality. (Staff's Answer, pp. 2-3)

On March 19, 1976 the Licensing Board issued its " Order Certifying Ruling In Special Section 2.713 Proceeding" in which it held that the Special Board's ruling was advisory only and could be disregarded by the Licensing Board. It disagreed with the Special Board's finding that no evidence of unethical conduct appeared in the record, relying specifically on the June 21, 1974 Lansdale letter to Hauser and the accompanying memo-randum of Brueckel to Lansdale of May 21, 1974. The Licensing Board added gratuitously " finally, the memorandum [Brueckel's] may represent only the tip of the iceberg." (Order Certifying Ruling, p.14)

The Licensing Board's Order Certifying Ruling specified four questions 1

to be certified.

l i

Under date of March 19, 1976 the Atomic Safety and Licensing Appeal Board (Appeal Board) issued an order accepting the Licensing Board's certification and directed certification of three additional questions, while at the 'same time permitting the parties latitude to raise additional points not encompassed within the certified questions. ,

II. FACTUAL BACKGROUND The facts are essentially uncontroverted. Both the unoffered and unadmitted exhibits attached to the City's Motion, for Disqualification and the affidavits with attached exhibits filed by SS&D opposing the City's Motion establish the following:

SS&D is a firm of approaching 180 lawyers practicing princi. l 11y in the City of Cleveland, but with branches in Washington, D.C. and in Brussels, Belgium. It has a large public law department and handles much I i

of the bond work in Ohio for political subdivisions. It is a prestigiour, i well-respected law firm, of particular eminence as bond counsel.

l The Licensing Board made the following observation with respect to the firm's conduct before it:

"As we do so we note once again the high degree of professional skill which both CEI and the City impute to the Firm; the Board's lack of

--- criticism of any action undertaken by that Firm I

in the instant proceeding. . . ."

(Licensing Board's Majority Memorandum, p. 23)

SS&D has represented CEI as outside general counsel for approximately 65 years. It has held itself out to the public and to the-Bar as general counsel for CEI in the broadest sense of that term. Its general counsel l e

relationship with the CEI wcs known to the Law Directors of the City of Cleveland at all times pertinent to this inquiry and appreciated by other members of the City administration and by lawyers generally in the Cleveland area.

SS&D's representation of the City of Cleveland was on an.3d hoc basis.

For the most part, ind,1vidual pieces of law business consisted of bond matters. SS&D's sporadic, occasional ac[ hoc representation of the City of Cleveland extends over many decades.

As respects the municipal Electric Light and Power Plant (MELP), the primary financing instrument, the bond indenture of 1948, was prepared by the Cleveland Law firm of Jones, Day, Cockley and Reavis. Historically, the City used the services of the New York Law firm of Wood, Dawson, Love

, and Sabatine, although SS&D had handled the issuance of some parity bonds under the Jones, Day 1948 trust indenture, the last issue being in 1963.

Aware of SS&D's reluctance to handle any legal matters for MELP, including bond issues, the Law Director and Utilities Di ector of the City of Cleveland secured the services of the Wood, Dawson firm for a 1971 bond issue. The Wood, Dawson firm prepared the ordinance (No. 1187-71) and arranged for the issuance of an Anticipatory Note.

In 1972, with the 1971 Anticipatory Note about to become due, the City of Cleveland informally approached with respect to representation through the person of Howard J. Holton, Assistant Secretary of the Sinking Fund , and formally through the person of Richard R. Hollington, Jr. , Law Director of the City of Cleveland, who requested suggestions as to other Ohio bond counsel. The unusual request of asking one attorney to recommend

a competitor was made ~ because the Law Director and the Director of Utili-ties recognized SS&D's reluctance and were conscious of the controversies raging between MELP and CEI and mindful of SS&D's general counsel relation-ship with CEI. A Col'- 'a firm and a Cincinnati firm were recommended by SS&D to the Cleveland Law Director. Mr. Hollington approached the Columbus law firm but his request for its legal services was declined. Thereupon, Mr. Hollington returned to SS&D and importuned their representation. The City was in " desperate straits." Mr. Davis, present Law Director of the City of Cleveland, acknowledges both in his briefs and in his oral comments to the Licensing Board and the Special Board that NELP desperately needed SS&D's services. SS&D approached CEI and advised it of the City's dilemma.

CEI consented to SS&D's handling this specific matter.

The work done by SS&D in connection with the 1972 bond ordinance was limited to the preparation of the bond ordinance itself. SS&D had no hand !

l in the preparation of the prospectus nor in the issuance of the bonds. l It was unnecessary for it to receive, nor did it in fact receive, any confidential information or any information relating to the finances of MELP.

At the time of the City's entreaty in 1972, the City had already filed (in 1971) its Petition to Intervene before the Nuclear Regulatory Commission and a Complaint before the Federal Power Commission, both raising the antitrust questions presented to the Licensing Board.

Mr. Hollington, the Law Director of Cleveland at the time SSED was engaged for the 1972 bond ordinance, is a respected lawyer in the City

of Cleveland. He was graduated from Williams College with a B.A. degree in 1954 and from Harvard University with an L.L.B. in 1957. He was a member of the firm of Baker, Hostetter and Patterson, a firm of approximately 118 lawyers, at the time of his appointment as Law Director and returned to that firm as a partner upon leaving the Law Department. Mr. Hollington is regarded as exceptionally competent and is held in obvious esteem by his partners and associates.

The Law Department of the City of Cleveland at all times pertinent to the instant matter consisted of between 25 and 30 lawyers. It thus was larger than most law firms save relatively few in the City of Cleveland.

It acted as general counsel for the City handling a great variety of legal matters but on occasion referred out specialized questions.

, Invariably, in controversies between the City of Cleveland and CEl, SS&D represented CEI and the Law Department represented the City of Cleveland.

Fifty specific instances of such adverse representation appear in Appendix B attached to the affidavit of John Lansdale, Jr.

III. APPEAL BOARD'S QUESTIONS The Appeal Board itself has directed consideration of the following questions:

(1) When the City of Cleveland requested the firm of Squire, Sanders and Dempsey to represent it respecting the issu-ance of municipal bonds to finance construction of a new City power plant, what explanations were given to the

_ City by the firm about potential conflicts of interest which might arise because the firm also represented its competitor, the Cleveland Electric Illuminating Company?

(2) Precisely when, by whom, and to whom were those represen-tations made and what significance atteches to them?

(3) What (if any) bearing does the fact the City's lawyers retained the firm have on tu application of the Cenon to this case and, in particular, did it af-feet the firm's obligation to " explain fully to each client the implications of the. common representation and [to] accept or continue employment only if the clients consent?

Simply stated, the foregoing questions ask that the Appeal Board be advised of all evidence bearing on the City's knowledge of the potential conflict of interest, the significance of that evidence, and the effect of the fact that the City's lawyers retained SS&D.

(1) The Evidence A. Affidavits The City through the person of Howard J. Holton, Assistant Secretary of the Sinking Fund, knew of the conflicts and disputes in progress between the CEI and the City when he first approached John B. Brueckel about the 1972 ordinance in June 1972. (Brueckel Affidavit, p. 3) The request was made by the City with full kncwledge by the Law Director, responsible offi-cials of the City's Finance Department, and Mr. Kudukis, the Director of Utilities, of the controversies then current between the City and CEI and the fact that SS&D was and had been for many years the outside general counsel to CEI. (Ibid., p. 4)

Law Director Richard R. Hollington informed Daniel J. O'Loughlin of SS&D that, because of the current controversy between the City and CEI, l the City would prefer not to recai- SS&D for financing of the municipal

)

l

_9_

light plant. (O'Loughlin Affidavit , p.2) Mr. O'Loughlin recommended the

'Bricker firm in Columbus and the Peck firm in Cincinnati. The Bricker firm rejected the retainer and Mr. Hollington returned to Mr. O'Loughlin.

Because of the existing controversy, Mr. O'Loughlin asked that the request be in writing, approved by the Director of Utilities. This was done.

(Ibid., p. 2 and attached Exhibit A)

Even prior to the 1971 ordinance and bond issue, SS&D advised the City that, because CEI was in competition with the light plant, it was reluctant to handle financing relating to the light plant. Because of this the City went to the Wood, Dawson, Love and Sabatine firm in New York to handle the 1971 bond issue. (Holton Affidavit, p. 2)

In 1971 CEI and MELP we;e engaged in serious competition conflicts.

(Lansdale Affidavit, p. 7) The situation was well-known to administrative officials of the City, including Mr. Raymond Kudukis, Director of Utilities, and Mr. Richard R. Hollington, Jr., Director of law. It was widely known by the informed public. (Ibid. , p. 8 and attached Exhibit A) Equally well-known to the City was SS&D's representation of CEI for over 60 years.

(Id.) Mr. Hollington asked SS&D to act as bond counsel for MELP des-pite the then extant controversies between CEI and MELP. (Ibid., pp. 9-10)

From 1947 through 1974, SS&D handled approximately 50 lawsuits on behalf of the CEI in an adverse relationship with the City of Cleveland. In these cases the City and CEI were either in a plaintiff-defendant posture or in a co-defendant posture where there interests were, nevertheless, adverse. SS&D never represented the City in an adverse relationship with CEI. The City was represented in these lawsuits by its own Law Department.

(Lansdale Affidavit, pp. 12-13 and attached Exhibit B) In addition, SS&D has represented CEI before Ohio State Regulatory authorities in matters opposed by the City. (Ibid., p. 12) .In' October 1971, for ex-ample, the CEI filed an application for an increase of its electric rates. The City was granted leave to intervene and actively participated in the PUC proceeding opposing CEI. The City was represented by its Law Department in that matter and the CEI was represented by SS&D. The matter found its way through the Ohio courts [ Cleveland Electric Illuminating Company vs. PUC, 42 Ohio St.2d, 403 (1975)] (the Ohio Supreme Court affirm-ing in part and reversing in part the order of the Public Utilities Com-mission) and the City of Cleveland filed a Petition for a Writ of Certiorari with the U.S. Supreme Court which was denied.

The City of Cleveland, Ohio vs. Public Utilities Commission of Ohio and Cleveland Electric Illuminating Company, No.75-447 (October term, 1975).

B. Nuclear Regulatory Commission Filings Many of the same general questions raised in these licensing proceed-ings were raised in a complaint filed by the City of Cleveland against CEI before the Federal Power Commission on May 13, 1971. That case was entitled City of Cleveland, Ohio vs. Cleveland Electric Illuminating Company and bore Docket No. E7631. The complaint, in part, requested an order of the Federal Power Commissio directing a permanent interconnection between MELP and CEI and 1 'rther requested that the Federal Power Commission fix terms

and conditions of coordination of the power supply between the systems.1/

(City's Petition to Intervene [in the instant proceeding], p. 4, paragraph 6)

In the matter at bar before the Nuclear Regulatory Commission, the City of Cleveland filed its Petition to Intervene on July 6,1971. It filed an Amendment to the Petition to Intervene on July 27, 1971 and the CEI filed its Separate Answer to the Petition to Intervene on October 14, 1971. The Petition to Intervene was signed by Clarence L. James, Jr. , Law Director of the City at the time.

C. Transcripts of Hearings Before Licensing Board of December 31, 1975 and Special Board of February 3, 1976 Law Director, James B. Davis, acknowledged that he knew SS&D was gen-eral counsel for CEI, that his predecessors knew that Mr. Lansdale indi-vidually was chief counsel, that these facts were generally known by the Bar in Cleveland, and that if CEI would turn to anybody in a transition period (by changing to nuclear power) it would be John Lansdale and SS&D.

(Licensing Board Transcript, unrenumbered p. 32) 1/ Opinion. No. 644 of the Federal Power Commission issued on January 11, 1973 reads in part as follows: "According to the Initial Decision, the internal memorandum of CEI does not support a finding of anti-competitive practices or anti-trust violations. Nor does CEI's effort to collect the excise tax constitute an anti-competitive practice. The Administrative Law Judge found that the City's past inability to furnish reliable, de-pendable service on the MELP System has been due 'primarily to incompetent management and inef ficient operation." (City of Cleveland vs. Cleveland Electric Illuminating Company and City of Cleveland, Docket No. E7631 and E7633 and Docket No. E7713.

a

l Mr. Davis further acknowledged that he did not know himself whether there was a discussion between representatives of the City and SS&D with respect to any actual conflicts. (Ibid. , p. 38)

Moreover, Mr. Davis admitted that he does not place any reliance on a transfer of confidential information. (Ibid., p. 26) He assumes for purposes of his argument a violation of confidence occurred from the mere relationship of the parties. (Special Board Transcript, p. 4465)

D. Outside The Record: Where Is The Iceberg?

The Licensing Board in its Ordar Certifying Ruling stated in referring to the Brueckel memorandum "the memorandum may represent only the tip of the iceberg."

t There is no iceberg, L-SS&D had in the hearing room four witnesses ready to testify before the Special Board on behalf of SS&D. These witnesses included three SS&D lawyers and Mr. Holton, Assistant Secretary of the Sinki,g Fund of Cleveland at tua times pertinent to the Appeal Board's inquiry. These witnesses were available to be cross-examined by the City. They would have conclusively demonstrated that "no iceberg" in fact existed.

The Licensing Board conducted an in camera examination of the CEI's privileged documents and found nothing relevant, save allegedly the Brueckel memorandum which it describes as the "tip" of the iceberg. Indeed, the Licensing Board in-its. Order Certifying Ruling pins its whole case (acting now as an advocate on its own behalf) on this memorandum, not be-cause the memorandum establishes what the Licensing Board purports for it, I

Lat because it "may represent only the tip of the iceberg."

SS&D made a proffer of the evidence it would adduce before the Special Board. This evidence confirms what is already apparent from the affidavits, that there is no iceberg. It confirms that there was no con-fidential information transmitted by the Gity to SS&D. There was no trans- .

1 ference of confidential information from SS&D to CEI. Moreover, the prof-fered testimony of Daniel J. O'Loughlin confirms the awareness of Law j l

Director Hollingtoa and Utilities Director Raymond Kudukis of the conflict situation of SS&D in the representation of CEI and representation of the i i

City in the Municipal Light Plant bond proceedings. The Appeal Board's i

question of "when, by whom and to whom" is answered in the proffered testi-mony of Daniel J. O'Loughlin which is confirmatory of the representations i

appearing in his affidavit. (See Appendix 1, Special Board Transcript, pp. 4296-4304)

Again, with limited reference to the iceberg,the Appeal Board should be aware that the depocition of Howard J. Holton was taken by the City in the pending treble damage antitrust action entitled City of Cleveland vs.

'CEI, Docket No. C75-560 in the United States District Court for the Northern District of Ohio, Eastern Division. Mr. holton's testimony in that deposition confirms his affidavit and amply demonstrates that there is no iceberg. The pertinent pages of his deposition transcript (pp. 39-

44) are attached hereto and marked Appendix 2. This attachment is added to SS&D's Brief not as affirmative evidence in this matter but to demon-strate the grave error of the Licensing Board's improper inference that

an iceberg lurks beneath the surface. Pages 39-40 of the deposition trans-cript are germane also in that they addresu the question of the awareness of Mr. Holton and other members of the City administration of the conflict.

Specifically, when asked what he neant by his statement in the affidavit that SS&D " advised us thaf they were reluctant to handle financing related to the Light Plant," he responded that "I had known and to my knowledge, they had told the City they would not handle particular matters concerning the MUNI Light Plant." It was for this reason the City went to the Wood, Dawson, Love and Sabatine firm in New York in 1971.

Pages 41-42 and 44 reaffirm that he had no conf 1dential information to communicate to Mr. Brueckel and did not in fact cpmmunicate any such information to him.

With further reference to the iceberg, the Appeal Board should know that the deposition of John B. Brueckel was also taken in the Federal District Court proceeding. That deposition confirms that no confidential information was communicated to Mr. Brueckel, and that his limited function of preporing the 1972 bond ordinance required no financial information about MELP and none was in f act given to him. (See Appendix 3, pp. 44-SC and p. 49)

(2) The Significance Of The Evidence The foregoing evidence constitutes a sufficient disclosure under the applicable law. The critical question is whether the client knew of the potential conflict not whether the lawyer communicated it to the client in express language. The cases are quite clear on this point.

p

- w - y p -

r

In Acorn Printing Company v. Brown, 385 S.W.2d 812 (C.A.Mo. 1964), the court would not permit a client to assert that there was lack ot disclosure or consent to dual representation. Pertinent language ir the opinion reads:

"We consider what disclosure was required in these circumstances: The law does not require the doing of a useless thing. It was not necessary to tell McIntosh what he obviously already knew. We cannot consider him as an infant, a moron, a distraught wife in a divorce case, or an uneducated person.

He was a business . nan; the record indicates he was a man of affairs. If we consider his affidavit as evidence, we can accept the fact that Patten did not tell him that a judgment could be rendered against him, but we cannot swallow the implication that he did not know that such judgment could be rendered.

As to consent: It was the movant here (through McIntosh) who went to and employed plaintiff's

, counsel to (also) represent Joplin Investors after the notice conveyed by the third-party petition.

McIntosh does not contend that he did not know Patten then represented Acorn. We think it is a fair inference that he employed counsel for the plaintiff hoping thereby to secure an advantage by having plaintiff's attorney so ' trim his sails' in the conduct ?f his case in order to case liability upon the other defendants Brown and Whitaker. We believe that it was a mistake for Patten to attempt to represent both Acorn and Joplin Investors under the circumstances shown here. We think it was poor judgment on his part but, proper or improper, the law and the Canons which condemn the representation of adverse interests is for the protection of the lambs, not the wolves; and the fact that the wolf has-been caught in the lamb-fold is no reason why the lambs should he penalized.

We do not propose to allow our Canons of Ethics to be used as tools by those who seek to pervert their purpose. It is our conclusion that the movant is in no position to claim that there was either lack

of disclosure or consent and that the judgment of the Circuit Court should be affirmed. So ordered."

(385 S.W.2d at 819)

In Universal Athletic Sales Co. v. American Gym, Recreational &

Athletic Equipment Corporation, Inc., et al., 357 F.Supp. 905 (W.D.Pa. 1973),

the c0urt refused disqualification in the absence of a breach of confidence or trust. The court held that a lit'.gant is entitled to counsel of his own choice. Headnote 8 reads:

"It is not equitable to permit a situation to develop whereby a corporate officer who is also codefendant in a case with the corporation can either voluntarily or involuntarily terminate his relationship with the corporation and then turn around and cause the disqualification of corporate counsel."

(357 F.Supp. at 905)

In the opinion the following language appears:

"On the other hand, we have the competing public policy that the litigant is entitled to counsel of his own choice. In this case, we are asked by plaintiff to disqualify dafendant's counsel who have represented defendant throughout this litigation and for whose services defendant has paid."

(Ibid., at 906 .

"Upon consideration of all the testimony taken at this hearing, we find that the testimony of Attorney Murray is true and that defense counsel are not in possession of any confidential infor-mation which could-be used by them to the detri-ment of Salkeld. Since at the present time there appears to be no possibility of the use of confi-dential information supplied by a former client to the former client's detriment in this case, we will permit defense counsel to continue as attorneys for Super Athletics Corporation, Pinchock and Brodsky."

(Ibid., at 907) I l

l 1

In Gottwals v. Rencher, et al., 98 P.2d 481 (S.Ct.Nev. 1940), the Supreme Court of Nevada made the following pertinent comments:

"It is well settled that an attorney who is a recipient of the conficence of a client concerning a certain matter, is thereafter disqualified from acting for another party ad-versely interested in the same general matter."

(Citations omitted)

"Most of the authorities presented by plaintiff are in accord with this general rule. The facts of this case, however, take it out of its opera-tion. They show a waiver on the part of plaintiff of the privilege which, under the general rule, is secured to a client whose confidence has been given to an attorney. The privilege so secured may be waived." (Citations omitted)

"The waiver may be either express or implied. In Harvey v. Harvey, supra, it was deemed waived by conduct."

"Whether an attorney has violated his professional duty by changing sides in a particular case, which is the charge here, depends upon the facts of the particular case. Logan v. Logan, 97 Ind. App. 209, N.E. 32. Consequently, we have less hesitancy in holding a waiver in this case, because the likeli-hood that plaintiff sustained injury is extremely remote. He does not allege or show it, but stands on the bare legal proposition that he is entitled to a new trial because of Morse's former relations with him. There is nothing in any of the evidence adduced-on the hearing to indicate that he was prejudiced."

(98 P.2d at 487)

In a case closely in point on the matter before this Appeal Board the mere disclosure of a retainer appears to be sufficient. Upon this

showing, the complainant must prove a disclosure of confidential informa-tion. The doctrine of fairness is also emphasized in Harry Rich Corporation

v. Curtiss-Wright Corporation, 233 F.Supp. 252 (S.D.N.Y. 1964) in which Headnote 2 reads:

"Where lawyer with disclosed retainer from client A enters into attorney-client relationship with client B and then learns that position of client B is adverse to that of client A, there must be reasonable showing that disclosures by client B to lawyer were confidential to disqualify law-yer from representing client A in specific matter."

(233 F.Supp. at 252)

The court in referring to a hypothetical situation said:

"In the first situation, then, the client has been f airly warned, and if he nevertheless elects to proceed, he must accept the consequences, absent a showing of other considerations of equity and fair dealing."

(233 F.Supp. at 254)

Ignoring for the moment the intervention of the City's Law Director qua lawyer, it is clear that the Director of Utilities and the Law Director as responsible City officials were fully aware of the existing controver-sies between CEI and MELP, and of the potential conflict in SS&D's repre-sentation of CEI as general counsel while representing MELP ad hoc on the 1972 bond ordinance. This is clear from the fact that in 1971 the Utilities Director and Law Director went to the Wood, Dawson firm in New York to handle the 1971 bond issue. It is clear from the fact that they sought other Ohio counsel for the 1972 bond ordinance. It is clear also from the affidavit of Howard J. Holton and from the affidavits of John Lansdale, Jr. , Daniel J. O'Loughlin and John B. Brueckel. Regarded only as businessmen, or men of affairs, it is clear that they had sufficient knowledge upon which to make informed judgment. It is further clear that

• e they made the judgment beca'tse they wanted SS&D's services for the City's own ends.

(3) What Bearing Does The Fact That The City's Lawyers Retained SS&D Have On The Application Of The Canon?

I.

The Law Director of a municipality is its general counsel. As earlier indicated, in Cleveland there are 25 to 30 lawyers in the Law Department, a staf f larger than most firms in the City of Cleveland. The Law Director, as general counsel for the City, is bound by the same professional stan-dards of competence and by the same Code of Professional Responsibility as lawyers engaged in private practice. The current Law Director, Mr.

James B. Davis, cannot come before this Board as if sprung fresh-born upon the world at the date of his appointment one and a half years ago free of all knowledge of his predecessor general counsel and free of their moral and actual commitments.

Mr. Davis' predecessors in inverse chronological order were: Herbert Whiting, Esquire; Richard Hollington, Esquire and Clarence L. James, Esquire.

Mr. Hollington hired SS&D for the 1972 bond ordinance while his predecessor, Mr. James, had engaged the Wood, Dawson firm the previous year and had filed the Petition to Intervene in the instant proceedings in 1971 and the Com-plaint before the Federal Power Commission also in 1971.

In 1972, general counsel for CEI was der. ling with general counsel for the City. They were dealing at arms length and as knowledgeable attorneys in the City of Cleveland. The City's general counsel sought to engage CEI's general counsel for a specialized job. There is no evidence to

support the argument that the City's general counsel (Law Director Hollington) was either inept or naive at the time of SS&D's employment for the 1972 bond ordinance. It must be presumed that he had the average intelligence and general knowledge of competent lawyers of the Cleveland legal community representing large clients and/or municipalities. Mr.

Hollington was a member of one of the largest and most prestigious firms in the City of Cleveland when ap'*ointed p Law Director. He has since leaving the City returneu to that firm, clear evidence of the esteem of his peers and their estimate of his competence.

If there existed a potential for con't et at the time of SS&D's employ-ment in 1972, it was a conflict created by general counsel for the City when it filed proceedings before the Federal Power Commission and the Nuclear Regulatory Commission; any ef fectsuhich sprang from the conflict were effectsdirectly caused by general counsel for the City by insisting on the employment of SS&D under the circumstances.

In a recent opinion of the~ American Bar Associatior. Committee on Ethics and Professional Responsibility, the question of one lawyer engaging another was considered under facts not entirely dissimilar to the case at bar. In Informal Opinion 1323 (April 21,1975) the Committee stated on page 3:

"On the other_ hand, giving credence to the state-ment by Lawyer X that when he was engaged by coun-sel for Company B to represent the latter in its dispute with Company C ,he was advised by the lawyer for Company B that there would be no con-flict in his continued representation of Company A, then it.would be improper for counsel'for Com-

. pany B to urge disqualification of Lawyer X now that Company A and Company B have become embroiled in separate litigation."

^ '

Briefly stated, the relevancy of one lawyer hiring another lawyer to represent the first lawyer's client in a specialized legal matter lies in the fact that the lawyers are equally bound to recognize conflict situ-ations. While a layman may not comprehend a conflict or understand its consequences, his lawyer is not permitted that luxury. Applied to the case at bar, one finds the law imposing an equivalency of knowledge on the lawyer hiring and the lawyer being hired, in the absence of fraud.

There is both a de jure disclosure and, in this instance, a ciji facto dis-closure as well.

II.

Ethical Consideration 5-16 is inapplicable to the matter at bar for the following reasons: l

1. It relates to dual representation; that is, representation simultaneous in point of time. Not only is this apparent from the language of EC 5-16, but it is patent f rom the fact that EC 5-16 is an elucidation of Canon 5 which reads "A lawyer should exercise independent, professional judgment on behalf of a client." It is clear also from the disciplinary rules under Canon 5 which relate to the exercise of indepen-dent professional judgment on behalf of a client currently represented on a current matter. Finally, it is reinforced by the " typically recurring situations" referred to in EC 5-17. SS&D does not represent the City in the matter before the Nuclear Regulatory Commission.

2. It does not relate to a situation where a client engages special counsel through his own general counsel. Indeed, ethics precludes direct e

. communications with a client until after the attorney-client relationship

- is established where that client is already represented by counsel.

3. It does not relate to a situation vnere the client already had full knowledge of the circumstances which might' create a possible conflict.

It would be unnecessary to further communicate these to the client. The evidence, however, is clear that the client (who, for argument here we identify as Utilities Director Raymond Kudukis) already had full knowledge of the conflict and expressed.his position with respect to it both in 1971 and in 1972 and finally in 1972 expressly evidenced his desire to have SS&D represent MELP.on the 1972 bond ordinance.

4. It does not relate here, because the law does not require one do a vain or useless thing. Where the lawyer representing the City's inter-

, ests has knowledge of the potential forconflict, it is unnecessary for special counsel to communicate this to the client, the presumption being that the' client's own counsel will do so.

IV. LICENSING BOARD'S QUESTIONS J

(1). Whether the_ jurisdiction of the NRC under Rule 2.713 extends to situations covering attorney conouct out- ,

side of the NRC forum which has an impact on repre-

'sentation within the forum.

The question as'tramed demands a_ misleading answer. Of course there are: instances where the jurisdiction of the NRC under Rule 2.713 extends l

. to attorney conduct outside the NRC forum which has an impact on repre-  ;

. 1 sentation within that forum. The real question is whether the jurisdiction 1

l,

r is invoked in this case and that question turns upon whether there is a " substantial relationship" between prior attorney conduct and the NRC proceeding.

Initially, it should be observed that the courts have supervisory power over attorneys, not the NRC. Therefore, it must be understood as respects the NRC that the requirement of a " substantial relationship" is both a substantive requirement and a jurisdictional requirement.

There has been no dissent by any of the Board members or by counsel for the City to the legal proposition that " substantial relationship" is required in order to support disqua14.fication. One of the more recent cases reaffirming the substantially-related test in disqualification matters is Silver Chrysler Plymouth, Inc. vs. Chrysler Motors Corp. , 518 F.2d 751 P

(C. A.2d 1975); see also 44 Fordh'am Law Review 130.

Since no " substantial relationship" has been established in the record of this case, the Board is without jurisdiction to issue an order of sus-pension.

-(2) Whether the Special Board has the ultimate authority

-to put into effect or to vacate an order of suspen-sion under Rule 2.713.

SS&D takes the position, confirmed by the NRC staff, that the Special l

Board's ruling is. controlling and must be accorded finality. p Had the majority of the Licensing Boa;d interpreted Rule 2.713(c) in accordance with its unmistakable language, and as suggested by Ivan W.

Smith in his Dissenting Memorandum, the questions certified by the Licensing Board would never have arisen; for the Licensing Board would

4 have prefe; red charges, stated the grounds therefore and afforded SS&D an opportunity to be heard thereon before the Special Board. It would thereafter have accepted the Special Board's order or entered an order in accordance with the Special Board's findings. The error of the Licensing Board majority in issuing a premature order of suspension created the cur-rent confusion.

(3) Whether a showing of either actual injury or specific exchange of information of a confidential nature is required to enforce a finding of attorney misconduct based upon the exchange of some information supplied by one client of an attorney to another client of that attorney whose interests are adverse to the original client.

This question as framed is pernicious in that it limits the choice to two alternatives, actual injury and specific exchange, on ebe one hand, and any non-confidential public information, on the other hand. We are not limited to those alternatives in our analysis.

In Shelley v. The Maccabees, 184 F.Supp. 797 (E.D.N.Y. 1960), the court held that it was unnecessary for a litigant to show that his former attorney was in possession of specific secrets or confidences but required a showing that the former attorney had acquired or had access to confiden-tial information. Headnote 1 reads:

"In order for defendant to prevail on motion to disqualify law firm, its members, employees, and associates from representing plaintiff, defendant

. was required to show not less than that law firm, its members, employees and associates, as result of former representation of defendant, had ac-quired or had access to certain confidential in-formation which was substantially related to matters involved in instant action, the use 4 -

e.

whereof would constitute breach of professional ethics. Canons of Professional Ethics, American Bar ainociation, canons, 6, 37."

The court pointed out "Nowhere in any of the affidavits submitted in support of the application for the order of disqualification is there reference to agy con-fidential information allegedly obtained from "The Maccabees" by Manning, Hollinger and Shea, or its associates or employees, during their representation of it, let alone confidences which are substantially related to the issues involved in the instant action.

(184 F.Supp. at 800)

In Gottwals v. Rencher, et al., 98 P.2d 481, supra, the Nevada Supreme Court suggests the need to show actual injury or prejudice:

"Whether an attorney has violated his professional duty by changing sides in a particular case, which is the charge here, depends upon the facts of the particular case. Logan v. Logan, 97 Ind. App. 209, N.E. 32. Consequently, we have less hesitancy in holding a waiver in this case, because the likeli-hood that plaintiff sustained injury is extremely remote. He does not allege or show it, but stands on the bare legal proposition that he is entitled to a new trial because of Morse's former relations with him. There is nothing in any of the evidence adduced on the hearing to indicate that he was prejudiced."

(98 P.2d at 487)

In Universal Athletic Sales Co. v. American Gym, Recreational &

Athletic Equipment Corporation, Inc., et al., 357 F.Supp. 905, supra, the court also suggests the need to show possession of confidential information by the at-torney and detriment to the former client. We repeat its pertinent comment:

"Upon consideration of all the testimony taken at this hearing, we find that the testimony of Attorney Murray is true and that defense counsel are not in ,

possession of any confidential information which l l

l 1

I

could be used by them to the detriment of Salkeld.

Since at the present time there appears to be no possibility of the use of confidential information supplied by a former clf ent to the former client's detriment in this case, ve will permit defense counsel to continue as attorneys for Supre Athletics Corporation, Pinchock and brodsky."

(357 F.Supp. at 907) .

The uncontroverted evidence establishes that SSLD possesses no con-fidential information that can be used to the City's detriment on the issue before the Licensing Board. This is manifest from all of the evidence be-fore the Appeal Board and it is confirmed by the " iceberg" evidence. The case of Silver Chrysler Plymouth, Inc. v. Chrysler bbtor Corporation, 518 T.2d 351, supra, reaffirmed the "substantially-related test in disqualifi-cation matters. While not factual on all fours, the principles stated in that case have application here and bear upon the Licensing Board's third question.

Headnotes 2, 4 and 5 read:

2. Attorney and Client

" Ethical problems cannot be resolved in a vacuum and court cannot exclude realities of which fair decision would call for judicial notice."

4. Attorney and Client

" Inference that an attorney formerly associated with a firm himself receives confidential infor-mation transmitted by client to firm is re-buttable one."

5. _ Attorney and Client "For purposes of determining whether counsel should be disqualified for conflict based on former representation, there is no basis for distinguishing between partners and associates on basis of title alone since both are members of bar and bound by same Code of Professional Responsibility; but there is reason to differ-entiate between attorneys who become heavily

_4_ - a __ 7-

involved in facts of particular matter and those who enter briefly on periphery for limited and specific purpose relating solely to legal questions." '

(518 F.2d at 751)

The court took the view that given the fact of transmission of con-fidential information from the client to the law firm, the further infer-ence that it-was transmitted to a particular lawyer in th'e office is a re-buttable one. Applving this principle to the matter at bar, the City must prove (1) that confidential matter was communicated to Brueckel and (2)

.that Brueckel transmitted it to the CEI through Lansdale. The court further said "And a rational interpretation of the Code of pro-fessional Responsibility does not call for disquali- ,

fication on the basis of such an unrealistic precep-tion of the practice of law in large firms."

"Thus, while this Circuit has recognized that an inference may arise that an attorney formerly as-sociated with a firm himself received confidential information transmitted by a client to the firm, that inference is a rebuttable one. Laskey Bros.

of W. Va., Inc. v. Warner Bros. Pictures, 224 F.2d 82'. 827 (2d Cir. 1955), cert denied, 350 U.S. 932, 76 S.Ct. 300,100 L.Ed.2d 814. (1956);

United States v. Standard Oil Co. ,136 F.Supp.

245, 364 (S.D.N.Y. 1955). And in Laskey, the court cautioned that: 'It will not do to make the presumption of confidential information re-buttable and then to make the standard of proof for rebuttal unattainably high. This is particu-larly true where, as here, the attorney must prove a negative, which is always a difficult burden to meet.'" l (Ibid. at 754) i i

The court, in Silver Chrysler, acknowledged that the attorney there

.was involved in informal discussions on procedural matters and had engaged i

s I  !

L_ '

in research on specific points of law (Ibid. at 756). The court neverthe-less said :

"To apply the remedy when there is no realistic chance that confidences were disclosed would go far'beyond the purpose of those decisions."

"There may have been matters within the firm which, had Schreiber worked on them, would have compelled disqualification here. But Schreiber denied having been entrusted with any such con-fidences. He was supported in this respect by the affidavits of Furney and Baum. This was sufficient."

(Ibid. at 757)

Clearly, the Licensing Board was mistaken in its understanding of the law.

(4) Assuming the answer to question 2 is negative and 3 is af-firmative, whether in the circumstances now before us the order of disqualification may be upheld.

Since the Licensing Board is in error both on question 2 and on question 3, its order cannot be upheld. But there are additional reasons why it cannot be upheld.

First, there is no probative evidence of improper conduct on the part of SS&D. Each instance cited by the Licensing Board in its Majority Memorandum was dealt with meticulously in SS&D's Trial Memorandum filed with the Special Board. Pages 11 through 18 thereof are attached hereto and marked Appendix 4.

Second, the Motion to Disqualify should fail for reasons set forth in the Licensing Board's Dissenting Memorandum. CS&D respectfully refers

, the Appeal Board to the Dissenting }bmorandum and to the concurring opinions of the Special Board.

l

Third, SS&D has been deprived of procedural due process of law.

This ground will be considered in the following section of this Brief.

V. HAS SS&D BEEN -DEPRIVED OF PROCEDURAL DUE PROCESS OF LAW BY THE LICENSING BOARD?

Procedural due process embraces the requirements of notice and an opportunity to be heard and applies to and must be observed in adminis-trative proceedings.

The following observation is made in 2 Am.Jur.2d, Administrative Law, Section 415:

"A requirement of a hearing in the exercise of  !

quasi-judicial or adjudicatory power has obvious reference to the tradition of judicial proceed-ings with respect to those fundamental require-ments of fairness which are of the essence of due process in a proceeding of a judicial nature. This

, is generally regarded as requiring a ' trial-type hearing' or ' formal hearing' in such proceedings, with evidence, witnesses, and argument, considera-tion of the evidence and argument, and the decision on the record."

5 U.S.C. Section 556(d).and (e) of the Administrative Procedure Act  !

provide in pertinent part:

(d) ". . . A party is entitled to present his case or defense by oral or documentary evidence, to sub-mit rebuttal evidence, and to conduct such cross-examination as may be required for a full and true disclosure of the facts. . . . "

(e) ". . . When an agency decision rests on official ,

notice of a material fact not appearing in the evidence in the record, a party is entitled, on timely request, to an opportunity to show the contrary. . . ."'

+' -

t-me e-----tr-

'7 *-- F +>---mf

- '*Y v' -

-g

=

1

. 1 It should be noted parenthetically that the Licensing Board majority rested its initial order as'well as its subsequent order on documents which it examined in camera and as to which it gave SS&D no opportunity to appear before it to be heard.

In Coldberg v. Kelly, 387 U.S. 254 (1969) the Supreme Court required an evidentiary hearing before the State could terminate public assistance payments. It required that the recipient be afforded "an effective oppor-tunity to defend" in order to satisfy the requirements of procedural due process. In that case there was no statutory or regulatory requirement for a hearing of any kind. The court concluded that a hearing-provided subsequent to the termination of welfare benefits did not satisfy the con-stitutional requirement, even though the post-termination herring was a

" fair proceeding." the Court said:

"'The fundamental requisite of due process or law is the opportunity to be heard. ' Grannis v. Ordean, 234 U.S. 385, 394 (1914). The hearing must be 'at a meaningful time and in a meaningful manner.'

Armstrong v. Manzo, 380 U.S. 545, 552 (1965). In the present context these principles require that a ,

recipient have timely and adequate notice detailing I the reasons for a proposed termination, and an ef-fective opportunity to defend by confronting any adverse witnesses and by presenting his own argu-ments and ev'idence orally. These rights are impor-tant in cases such as those before us, where re-cipients have challenged proposed terminations as resting on incorrect or misleading f actual premises or on misapplication of rules or policies to the facts aof particular cases."

"In almost every setting where important decisions turn on questions of fact, due process requires an i

s ,

opportunity to confront and cross-e:: amine adverse witnesses. E.g., ICC v. Louisville & N.R. Co.

277 U.S. 88, 93-94 (1913); Willner v. Committee on Character 6. Fitness, 373 U.S. 96,103-104 (1963) .

What we said in Greene v. McElroy, 360 U.S. 474, 496-497 (1959), is particularly pertinent here:

"Certain principles have remained relatively im-

, mutable in our jurisprudence. One of these is that where governmental action seriously injures an individual, and the reasonableness of the ac-

tion depends on fact findings, the evidence used to prove the Government's case must be disclosed to the individual so that he has an opportunity to show that it is untrue."

(387 U.S. at 269-270)

See Also: Appalachian Power Co. v. Environmental Pro. Agcy., 47 F.2d 495 (1973); Rodale Press, Inc. v. F.T.C., 407 F.2d 1252 (C.A.D.C. 1968);

Northern California Power Agency v. Morton, 395 F.Supp. 1187 (1975); North American Van Lines, Inc. v. I.C.C., 386 F.Supp. 665 (1974).

l The cases are quite clear that the failure of an administrative agency to follow its own administrative regulations is a denial of procedural due process. Accardi v. Shaughnessy, 347 U.S. 260 (1953). In Smith v. Resor, 406 F.2d 141 (1969), the court said:

4 "Although the courts have declined to review the merits of decisions made within the area of dis-cretion delegated to administrative agencies they have insisted that where the agencies have laid down tht.r own procedures and regulations, those procedures and regulations cannot be ignored by the agencies them-selves even where discretionery decisions are involved."

(406 F.2d at 145)

. The rule that an agency must comply with its own regulations has J

been applied to the Atemic Energy Commission. In Porter Cty. Ch. of Izaak Walton L. v. Atomic E. Com'n., 515 F.2d 515 (1975) the Court stated:

9 e - -

w -

y- -

-mr e --u -- w +---*-------n -w-

- y.

"We are compelict to conclude that since the AEC did not comply with its own applicable regula-tions (Part III, supra' which are binding on it, and since there are any persuasive reasons for requiring it to comply with those regulations in this case (Part IV, supra), the AEC's decision of August 29, 1974 is unlawful and is hereby set aside."

(515 F.2d at 530)

In the instant case not only has SS&D been deprived of an opportunity to make a full evidentiary showing, but it has been misled by the comments of.the Licensing Board at the hearing of December 31, 1975. (See Licensing Board Transcript, p. 82, lines 20-22; p. 88, linea 8-14; p. 89, lines 17-22;

p. 94, lines 9-18.

Quite clearly, counsel for SS&D believed that an evidentiary hearing would be held before the Special Board and acted accordingly. It submitted comprehensive affidavits before the Licensing Board in an effort to avoid the preferring of charges, relying on the language of Rule 2.713(c) for the right to adduce live witnesses and evidence before the Special Board on the hearing of the preferred charge and the ', rounds therefor.

The Licensing Board further deprived SS&D of procedural due process by, entering its finding and order prior to the required hearing. Cf. Goldberg v.

Kelly, 387 U.S. 254, supra.

1!oreover, the Licensing Board deprived SS&D of due process by going outside of the record before it to consider privileged documents in camera upon which to base its finding without affording SS&D a hearing thereon.

Finally, SS&D has been deprived of due process of law because the Licensing Board in entering its order of suspension of March 19, 1976, did not act as an impartial board, but rather acted as an advocate urging the propriety of its earlf ur ill-conceived and unwarranted finding.

VI. CONCLUSION The preparation of the 1972 bond ordinance was the only employment undertaken by SS&D for the City subseqt' ant to January 1, 1965 (the remote-ness date established by the Licensing Board) which has any possible nexus to the matter pending before the Licensing Board. With respect to such employment, the evidence is uncontradicted.

The employment was solicited by the Law Director of the City. The employment was importuned with knowledge by him and Director of Public Utilities that pending controversies existed between the City and CEI.

Two such controversies, the City's Complaint before the Federal Power Com-mission and its Motion to Intervene in the instant proceedings, had been initiated by the Law Director and the Utilities Director of the City dur-

. ing the preceding year. The services of SS&D were engaged by the City's Law Director with full knowledge of SS&D's general representation of CEI.

SS&D acceded to the request for- representation by the Cit' only af ter being assured in writing by the Law Director that he had consulted with the City's l Utility Director and that the Utility Director agreed to SS&D's employment by the City.

Under the facts of this case, we submit that the Canons of Ethics pertaining to disclosure, if they' apply at all, have been completely sat-isfied.

With the background of actual knowledge established by the Record

': ht this case, there can be no valid claim for disqualification.

With respect to the claim of transfer of confidential information among lawyers of SS&D,.the Licensing Board relies on a single document, 9

+>wy -

q-p9 e pw----w+ w w

the 1974 Lansdale letter to Hauser which had attached the Brueckel memor-andum to Lansdale. However, as indicated by Special Board member Edward Luton in his concurring opinion:

" Counsel for the Firm argues that, 'The memorandum is proper because it relates to municipal law gen-erally.' I agree. The problem with which the mem-orandum concerns itself appears to be nothing other than the strictly legal one of determining whether the Municipal Light and Power Plant is a legal en-tity capable of entering a binding contract."

(Special Board Concurring Opinion, p. 15)

There is no confidential information obtained from the City disclosed in the Brueckel memorandum. Thus, this claim of the Licensing Board is simply not supported by the evidence.

Finally, the Record discloses that the action of the Licensing Board

=

failed to satisfy the most elementary standards of due process. The Firm was convicted on charges which it was not granted the opportunity to refute before the Licensing Board.

The Special Board reviewed the evidence upon which the Licensing Board predicated its charge. It then gave the Firm the opportunity to respond to these charges by way of briefs and oral argument. After considering the record as a whole, the Special Board determined that the majority of the Licensing Board was in error both procedurally and substantively. In con-curring opinions, the Special Board unanimously vacated the. order of dis-qualification rendered against Squire, Sanders & Dempsey by the majority of the-Licensing Board and in so doing supported the conclusions of the dissenting member of the Licensing Board.

L'e submit to this Appeal Board that time order of the Special Board should be affirmed.

Respectfully submitted, f

YOMWs O W ilff{

Michael R. Gallagher /

Attorney for Squire, Sanderdp& Dempsey 630 Bulkley Building Cleveland, Ohio 44115 (216)241-5310 r

CERTIFICATE OF SERVICE I hereby certify that copies of the Brief of Squire, Sanders and Dempsey Re Special Sgetion 2.713(c) Proceeding were served by deliver-ing on April 2, 1976 to James B. Davis, Esq., Robert D. Hart, Esq.,

Counsel for the City of Cleveland, Alan S. Rosenthal, Esq. , Michael C.

Farrar, Esq., Richard S. Salzman, Esq., Chairman and Members respectively

.of the Appeal Board, Benjamin H. Vogler, Esq. , Office of General Counsel at the addresses appearing on the Service List attached hereto; by mailing the original and 20 copies to the Secretary, United States Nuclear Regulatory Commission, Washington, D.C. 20555, Attention Chief, Docketing and Service Section; and by mailing one copy to each of the other persons listed on the attached Service List, Regular United States Mail, First Class, Postage Prepaid, on the 1st day of April, 1976.

/

,)? 5'

/

lhS$ '4 /

Fuchael R. Gallagher

/

l

SERVICE LIST James B. Davis, Esq.

Director of Law 213 City Hall Department of Law Cleveland, Ohio 44114 9

Robert D. Hart, Esq.

First Assistant, Director of Law 213 City Hall Cleveland, Ohio 44114 Douglas V. Rigler, Esq.

Chairman Atomic Safety & Licensing Board Panel Foley, Lardner, Hollabaugh & Jacobs 815 Connecticut Avenue, N.W.

Washington. D. C.

Ivan W. Smith, Esq.

Atomic Safety & Licensing Board Panel U.S. Nuclear Regulatory Commission Washington, P. C. .20555 John M. Frysiak,,Esq.

Atomic Safety & Licensing Board Panel U.S. Nuclear Regulatory Commission Washington, D. C. 20555 Gerald Charnof f , Esq.

Ua. Bradford Reynolds, Esq.

Shaw, Pittman, Potts & Trowbridge 1800 M. Street, N.W. - ;

Washington, D. C. 20036 Mr. Chase R. Stephens Docketing & Service Section U.S. Nuclear Regulatory Commission 1717 H Street, N.W.

Washington, D.C. 20555 d+- " '"7- '

D + N

t

• Donald 11. Hauser, Esq.

Corporate Solicitor The Cleveland Elcetric Illuminating Company Post Office Box 5000 Cleveland, Ohio 44101 John Lansdale, Jr., Esq.

Cox, Langford & Drotm 21 Dupont Circic, it U. ,

Washington, D. C. 20036 Reuben Coldberg, Esq.

David C. Hjelmfelt, Esq.

1700 Pennsylvania Avenue, H.U.

Suite 550 Washington, D. C. 20006 Alan S. Rosenthal, Chairman Atomic Safety and Licensing Appeals Board '

U.S. Nucicar Regulatory Commission washington, D. C. 20555

Dr.-John H. Buck Dr. Lattrence K. Quarles

', Atomic Safety and Licensing Appeals Board U.S. Nucicar Regulatory Commission n -

n .

-> Uashington, D. C. 20555 Howard K. Shapar, Esq.

Executive Legal Director U.S. Nucicar Regulatory Comission Washington, D. C. 20555 Mr. Frank U. Karas, Chief Public Proceedings Branch Office of the Secretary U.S. Hucicar Regulatory Co:=tission Unshington, D. C. 20555 Abraham Braitman, Esq.

Office of Antitrust & Indemnity U.S. Uucicar Regulatory Commission Uashington, D. C. 20555 r.

4 e

e

d Frank R. Clokey, Esq. ..

Special Assistant Attorney General

• Towna House Apartments, Room 219 Harrisburg, Pennsylvania 17105 .

Edward A. Matto, Esq.

Assistant Attorney General Chief, Antitrust Section 30 East Broad Street,15th Floor .

Columbus, Ohio 43215 Richard S. Salzman, Chairman Atomic Safety and Licensing Appeals Board U.S. Nuc1 car Regulatory Connission Uashington, D. C. 20555 - .

Michael C. Farrar Dr. W. Reed Johnson Atomic Safety and Licensing Appeals Board U.S. Uucicar Regulatory Commission Washington, D. C. 20555 - r "- - -

Andrew F. Popper, Esq.

Office of the Executive Legal Director

', U.S. Nuclear Regulatory Commission

Uachington, D. C. 20555 Benjamin H. Vogler, Esq.

• Joseph Rutberg, Esq.

Robert J. Verdisco, Esq.

Roy P. Lessy, Jr., Esq.

Office of the General Counsel Regulation -

U.S. Nuclear Regulator Commission

• Uashington, D. C. 20555 Melvin C. Berger, Esq.

Joseph J. Saunders, Esq.

Stevera M. Charno, Esq. ,

David A. Lechic, Esq.

Janet R. Urban, Esq. ,

Ruth Greenspan Ec11, Esq.

Antitrust Division Department of Justice

. . Post Office Bo:: 7513 ~

Uashington, D. C. 20044 J

Christophe,r R. Schraff, Esq.

Assistant Attorneys Cencral Envi on=cntal Law Section 361 East Broad Street, 8th Floor Columbus, Ohio 43215 Thomas J. !!unsch, Jr. , Esq.

General Attorney Duquesnc Light Company 435 Sixth Avenue '

Pittsburgh, Pennsylvania 15219 Joseph Riccer, Esq.

Reed, Smith, Shaw & McClay '

Suite 440 1155 rifteenth Street, n. W.

Washington, D. C. 20005 Terrance H. Denbou, Esq.

Uinthrop, stimson, Putna & Roberts 40 vall Street IIcu York, lieu York 10005 Ua11 ace L. Duncan, Esq.

? Jon T. Brown, Esq.

Duncan, Broun, Ucinberg & Palear

.' 1700 Pennsylvania Avenue, U.U.

Washingten, D. C. 20006 Robert P. Monc, Esq.

George, Grock, King, licMahon & licConnaughey Coluabus Center 100 East Broad Street Columbus, Ohio 43215 David IIencill Olds, Esq. .

John Mci!. Cramer, Esq. '

Uill.ica S. Lerach, Esq.

Reed, Smith, Shau & McClay Post Office Box 2009 Pittsburgh, Pennsylvanin' 15230 O=

e

8 John C. Engle, President

/JIP-O Inc.

1+ nicipal Building ,

20 }iigh Street Itamilton, Ohio 45012  %.

Victor F. Creensir.de, Jr., Esq.

Principal Staff Counsel j

Yne CJcveland Electric Illuminating Company . .

Post Office Box S000 ._

Cleveland, Ohio 44101 .

Lee A. Rau, Esq.

Joseph A. Rieser, Jr., Esq.

Reed, S:alth, Shaw & McClay . . . . . . . . . .

4 Suite 404 .

Madison Building --

Washington, D. C. 20005 '

Leslic IIenry, Esq. '

IIichael H. Eriley, Esq. . . . . . . . .,, . , . .

s, Roger P. Klee, Esq. , ,,.s i m u , . . . . ,,... .. , , ,

Fuller, Henry, Hodge & Snyder 3J'O Undison Avenue -

Toledo, Ohio 43604 Cm,,-

Pennsylvania Power Company . . . . ..u.. .. . ., ... ,c...u,...m.,,,. ,,,m., ...,.

One East Washington" Street -

Ucw Castic, Pennsylvania 15103 Eliza'beth S. Bokers, Esq.

~

Chairman -

Atomic Safety & Licensing Board ..

U.S. Nuclear Regulatory, Commission

• Washington, D. C. 20555 Eduard Luton, Esq., Member .

~

Atomic Safety & Licensing Board . -

U.S. Nuclear Regulatory Commission ,

L'ashington , D. C. 20555 ~ ~

l ,

Thoman L'. Reilly, Esq., Member Atomic Safety & Licensing Board U.S. Nuc. lear Regulatory Commission -

Unshington, D. C. 20555 Secretarv ~

3 U. S. Nuclear Regulatory Commission Uashington, D. C. 20555 i Attn: Chief, Docketing and Service Section I j

APPENDIX 1 Pages 4250-4251 and 4300-4304 of Transcript of IIcaring Before Special Board On February 3, 1976 consisting of Partial Proffer of Testimony of Daniel J. O'Loughlin

E f t 4p*i M.st' 0 l A* 8').*!"t 9' .

j,i -

• 6 Q1 D'n

.. , i I O II r

, gla t=

i

v. s }  ;. . .. > .* .. , ,3 .v . _ .

r .

. t

$I =i i l.

l i '" i i

D b w.a ., c t: . .._. ..

h Ll 1 l

• [ bl

'. e r 46

, ,h . . - . . . . . . - - . . . . . . . . . . . . . . . . . . . . . .

f h

/

8l _

9

• 5 4 f

f'I-l l *a se L.

.Lg,, . ..

, L. s.. . . . . t,. .

t.%)r?.. .

i .- .) <- . . , . ..

g'

. .... ~.:u., . ,. 9 m,.p.

~ . .v. . a . .- . a, s

<..,.,,ar.w < q,u..y ..

a a..,-

y e e.*....s.

.. ....s..* j.' e., .. .

s* s*s 's ae .. w'

. . . . '.~. -} c l',*....'I..^.

<- . . . t

. l r

t(I.n..ai. '.c c.. .'ly .'J.  ;......4 .'5

. + ), ,

t i

}

i. .

.e g

l .

s.,- i. .M - 8 t ,

{%

,f I 1 5

+v p..y. e.t,e\ . ."s.. 4 .sl N.e} Lg .f4mAJ s 3. .L'sar.,3 -+'. y,. ......r..,.,;.* . . -- .r,.

L...s. .L . - I o ' "a. .t'. u 4.,r .4  ; ..'.,""..'st .

<4 . w *c 1. e ,

p .s 8-

. .C.,.J.'.'... .. ,

r

]* .

te s-

\sw . .s y.. 1?.. 6. '. s d. ,.l. .. ... .P.,m,........ . . . .

.r . ', s , (.

. s .. g f ps .; . ,. *

. . e Il a r.nd 2)  :

? .e,s . ll * -

. . - - . . . . - . . - . . . . . . . . . . . . . . . . . . . }

• • t

. (' "! .e,

• '. .gc,. . . . ' ' . .. , .. .. . . ,. . . ,

( **l.1 . . s . A. .. . .

t .s

• ,1 l

• f, -) t- * . . . . . ,

I .a :/ . ' s. .- ... p.6

, , . 1 1'e 4 . ...d *. a. ,t.

• f

) e L

v ./. ." . .g .- ,3. ... r.

.f .4..os . ' . .,g ,  :

. ..,4., . . ,.,.~s

. i s

w f e.. y. . . . . **... . , 9, ..

9 s. . *s..,..

s .

I fl '

• • • 6, iV t l .

f i, gs ("g . *, .../. .j ..

g L.y.- . .~i; ,* *.s.. . ,. . $ . a e7 rg .

6 4. 8 .. ").

. . .. = . l h.. 3 A. . jv. ... ww .,.. e.s.. . .* . .I .w .  %.

tt. '.

( * -

.p G, *. : c.A. p ...y,.

y c.1.a. i%. . g e. n . u .. .

s.- 3..,....,..

v .. :. n.

4.

3- ,,

{- . . . . . . c. .r . < s...a.<

t

.i.4 g.

lI ..'T*.1.".*.*,%*e, ..<w s ..

.~

gl i

. t.

g

'. t c.

i~ .*

g E l I p . g'*L.e mv L. y .y).o. ;~.v ,+.o .'. i v.

av 9 ,s , y.s  ?,1 . o . ; ,. . . .

t ,

2.. . .,e , , tas i s .t.  : b.t

{

t

.,' g , a. 4. ,.

.?.a..... - n.'.t...,3e.

C 4

.p,

.,.,..s.*..

. .','..".p....;s."....

n.

.s

,s . ,. ",

': ;t et ,

joi vp .*

. L' L'J s s. f.,.:t. .. .u.r.. o.*. w;".,."...)*.*

.? .

..* ,. ,' o a

.s. ;

e .t*

a

. .n J"JJb,

q. cn. .~ .. . ;. ,,,.,., . s '

t .I . e 1. .t 14 s..' .g . ..e 4

.:. (

4 ,.

t' ,e O.

i ** * ~-'

. . .F* L' h' ** 4 ?'M, a td .', e .*.'.'s'~r s

v p' 1 i,

g s'. .L '..d, , :a e i.. . : % a s sp.... <

.4 *;,: .; . a : '. t . :.:t. .'.

L'.'.',.'

. . . I.

1.1.*, --

.. I

'~. ? .: s . '.~1,.' ,

av.

-.a,.,.,

o A., . ..- y f't -., t 1. .* ,. . . -.s4 ., .?. ;.)-

,1

..>.. . gg. . . , , , .

• r 1.

g. r'...

s. .s g ,. ..s. .'!. .. . - .tj . .* ? .i., . ,

r.. . .

n ,.M ,. ,*

% .p.

s n.. . a.;, sy .

, s .

4

e a

. , 5  %'. J U .s ,

8

. ,le ,

p* , ,,. . - ..  : ,s .

.r,.

~ *

c. ,

s 1

l -

, , s  ;

9 ho I

I . * .) ; " *

", ' s ". n,., , , s ll . .t .. .is. . ., ; . . . .. t 2 ;;,. ,; ;-

c .

,t ! Cu .'. > . .

.+ . . .

s l' 5 1: .

f., ' l' s . .,. .

M .g -:!. f4 t): .

i'U '. i., ' #

j . , ...'

i

.g. I, b ., . . .:: . .;. .. s .- .

• ..x s e)-. , , . r.s. . .s , , . . . .

n.

e. tt+ 4' '+ ,- 4.st*.- .. .. .

..) -..

3

. ... - r -

., i,l

-0i p.,  ;

. .7 g ... . s ..., .. , ,

.e , . .,.,s. . . . .

,' . ...s

. .: .v. -

. . .o . . . , -

, , s : ,

, .. . .> . . .w.

i 7. , . ., n i. r. .; . . . . . , v. ,.1 . . . - . -

. r. . .. . .

, .> . . e, .:

0 ,,

.,..f..*..,.e,.>', , ,

... ,. T . gri . ,

4. 'v. ' 1.

a. r. . . f.

.e.-  ;

I CO

• s 0 0 l  ;

.c i i QQ >

.e .

i j 0 '9~

v I_ - J  !

• i t 13 O

.9 4

n.  ;  ;

1 s.r'  !,

I. i

.*F*

f a18 i.

4 Ie,/ .

5 eq a%

t.

g t;

t I i

s. I s l

1 .

...n.

o

• il 7

n t'l a-.-

g l'

e it 3 4l 3

et *. 3 9'

'4) i a

a e.

6 4 2.5 th  !

• 18  ; i i .

, :r. 4q. t k I L

el  !

I

\

i' 1

[ E9 E l

4 f q

.t I 4

, }

p  !

+. 3  :*

i .

.e e

.e ..e.

. t

,,! a,

.'e  ;,

s. ! .

i . - . . . . . , . . . . . .- .

N.

f

• i s .-

../...

' s J * ~A :> ..

. s .

$1 I

OQ D

(. .' I:f D 1

e OO ~

l

~ , _, C it V "'

f(

'i f .*

I:

el. s.

q.,.......,...' . . .

I, *. .1. . . ., .*. $ ..<. . . ..... ___ ,

.. _ . . . .. . . . .., . f

• , .l

%N G I .. . .

l 'I.; 411 d ).L L ,,, ..r* O .. .' E ..

a

\

• c.

s. ~ ; oer.L i,,... se V- .: ~. .p .

.x*.

• a'

b. ae t. . . .'

4 1

I

.s , .. ,..

• t. , .%.: .. 1:p ...

u. .,.-

t

.r i I .

t.

.t'.. . ., a ..

' *)... . .. - ,

~ .

! i 3

t. ..

• lb , : ' J .'. t

• • • * ,1. .~ *

.. 5 .. .

1 .c . .a .... ##.. . . - . s ll 1 s

. .,..g.; ,; .

q , p e

.3. . ) .

/c...,

i c ]

,'t /C8 . . .>.J . .: . ., .. ,. ,., ..s-I

[ .l

. i, ST. ) . /. r*.*

. 1 I. 6 . . .v.?. .

i < ,

I)

.rittla .En

~

l 10. - '

? .7 - . s. t

• j 1

<... g s Le  : j

.,I I'IO , 0 9 4'.3."  %* t . ;C. , e

, i , j v 1.

.....13

s. s. . . T.',-

.. . > ~'t . .i , ,

, ,i i -._.3..,..,.t..

.1 s . ,,, . 25 . 7. . . .. .. ...:., ..

m. i.- ,

t. ..-.: ~ -

c6.s m.:.s.Aq .;.; . > > . , 9  : -

s . ' .r. n. , y< ., ; ,.-n . s t

} ,

)

$. ( ,

, Crm e.RGUIEicT OF 170 . .. , t . .

J.r. i

<.y) [ c

.n

~..-,n vu w ,.s, n ,, n. . . . . ..

..: ., :.n . . . .. s,.. m.

4 i

i >

4

• }

,..s.-

g .L .* b i:

t*

l a L r*e *

• e.p

• a: \h', . I.f '3s.. yg' s'i .' ;. ' ' s '.'"*%*'**

t

.* ..,..v..._-a p , , na '. rf.r (. , , '- s -- .s .') ;i

(

rw

. . ,t. .. .- ..

..6f,;

i

=

k 4

c.- .,. lt lt li $

ts

'l  :

't 9

1. . . $ 1-

. , - }

II 1

6.

• i' t t*

.s e

d i **

,. g a? %. .f,

.  ; i

{

?

i- * .. w.- , g ,. . g f.

OQi

• i, .. . , .

e. + .g

.w.

g ,e s

VO - -

.,, ...,,y, .

,, .;.. i .s..,

. . . . m. .. 7 . .

8 1

n

' ' I J.........<s.

s-.. L, . . . . . c, ..

., )- ,.

. w .s .y< .. ..s..-.. ...

lyL w -l t, ..

}

o 4

• l . ..,. L. *..* ' .. ' , . .

.4.< .*. . s . g t..  ! . . g e .T.

. . .g-

, , . .n ,

f.

, i . . s. ., g-

.i

. I.

. I

• h

,; 1 -

.,v

... . . , s . < . .: -,., ,.

. . . . _. s.. s . ..2 .<. ? n. i .: ,

. L+-e.. .r. . . . ... .

,, 3 1;

1.

y

. \, .; .n. . v<v. . 3

1. - . ;-- ? ., . ,

t t.. s

... hy y.t.- i . . n. . ; ., .rc..:; ys. t.. . ,'.  :

e. ... . n . _. .. e...

....,..s .

f . ... . . . ., . s ,. r4 **

}

t i

D l 31 C.!'t . .

i .

I

' y. ,, . .s ,. .-.'.

o .... .,. .'.r. L ..a .s.. . *.. . s

%. e . .t r. d. .

. p/.

g.

p, .f. s ~3 , s .. .....:>.. .e.'s.", . .'f t . C. } *.s . ='

l

' t.

a..h ,s.

. ). u. . . .~ .. .. ..u . t

. - , . . ,..r..c,.~...

.,.a...w . . .  : . . . .

( A. . . . .. . . -.>e 3

1 1

y e +

p.. c.......:,....i.,'

,, q. ., . a 3... . . .

. .y.. e.c. p. .. -o, p#.:-

. .:<. . . . .. . ...a g . .- .

8 t

3

, lg:

, , , .i

. '. .p .

3

t. t4 , . .t.J ,.

.n, ,

oa

s. ,

.. +m . .e

.v..

. . .a

,? ,v - . L. n,r.. ....

- u' . . . ..g.<.

. . . . s .. . ,.

s.

e, y

. j

..-5..-, .. <. , ..:. e s=. ..1 ' . i.c P.o ii t . .- .i. a '. . 4. . 4 . .. ' . . . ".

, i .I. . m .4.r. .,2...(.. . t ,

v.

i j f, IdJ:YO hu U.*d Nt.'I "* WO U. ' D.' d ". YC: ,". U.$.12 . .W1 J.'3 .~ . '.'

i

, 9, 1

o* .. c.,m e. o c.,. c, .

t s. a. . c . 4 . 1.. . y . , c.....y..~..-.. . . . . . ..

. r.- p. . , , ,

,:.a ., ,= 3 . . . '. ..w :.... . . . . . .. . .. .. .. .:.. .. .......

. . l t

p' # **

I. .y.. },

. , . _ c't ,.. g . ..... .g. ?. . t ,.se5 L. r.*n.

b *..* ,3 *

.......^ u'- .t ..'.4.._'.r-

..' '. . . ?! * * .

i

,4 ' ,

e r i.

. . . p -

L.c ..  :. ,

. o

" .i ; .i 6 i a p. . t. g. .. . :....

..,.,,.: . . ..:. ., ... , .o ., .

,, . n. ~.. - s .. ..

i

. a v, . '

n t . .i y r c.r. our r.;prcs.xmtz.or. or .; . . c.n m T....:r. c. ~

c. v n a I c,.a..-.  ;

..n !,

• . I ii . y.

s. *

, 1 q..-,1 3

'.t w e . .e i. c 3

. s. . .e e.<. ,... , e, f.,'.s. . .r. a. , . . .s. .? .pr

. 4. ( g. g. r ,. ., . . . is . .

. s,.

, , t f D I

.f **

. 1 a qu r c. s h... g Q.b a.

=

j . a.

• +. A. ) p. .,,;r */,, ..

+ /. .r.g . .! . r. >- .*-

.i s

c. . r u; ;3._e

.. , ... .. . ,v. p.. . ., - .-; I.. , q .s..

.i ('

t.

.e c..y .e.s. f.* .1 c .1

. a 6. h..s.

. *4 T. v' ..*t . . . #.*.b'..ut. *.C. . .g'. *. i . 3 *'. ' v. %.# t. '. " f.*. .I .s*e . (.

• C...'.' ' ' . I. . 3- # '. I

.s . . - .

g

(

e. ....s. : .c . , . e..

g,.

Li r.,

. o-t.. 3.. .. .,. e.

,e.

. 1 .

.y.

j .v. i c m..o  ;

t7,.gs.::. 4, . ,. ..as . . .... .

. - ,..,.....r .o ,. ts... .. . ,

t

t. .!

t.

• p .. . . . -. . . . . I *5

• * #* *.?. . .

( *.*? .i. ; l

,q 'p ( $..

o....- . . . . .

...f. s s ,.f. . . .,i, . . .

., t... .3, . . , , . ; .7 L'  !

f .

k

e s-I

+

- 1 1.

. j.- S u.. , I e ,t l *i :. .

l a ,

b

?, , . . . ,

. . ~

).

3.,....

.~ . *...we

...,. . y. ,

g S*

I 1

r i ,s. .. .. , .. I t,. , .n .. . . . .

t

l. j .

). . . . .i f e. '.i. . ,

.n. . , e..e,: . .,.s..

1

,' p. \ \ , *

< , ,. ,9.~ , ... ..... g o

1 . n, . : .s. .s. . g.-

- , r.

to n g T A 1 a. . .

1.if j

.,.A,.,*.*..r .._.......;. * *s. * *

%,...- . . . .. _ . . I g u ..; .. .e,. '. . v. m. . .. ,. ?. . ,

v, . .

v, ... . . m ,

i 9

'.ss. . ', 'a. 4. 4.; rw r.

4. .,. ,...e, I v . , . .. . .

. 4. "! .4 .. .;;

. . . .. .. . .1 ,

4 .. t.

s i. .?

t... -

s...,- .

1 t

8' 6 v i

\

t.

i

.. ..".,.'v..

*.N*

u 4. v. .. .

s I

e r. -

L. 4 se.e. w . . ;. .... . . n. ,.4.... /.2. ., t .4 :.- , . . ... ...,...,i.>;. .

t.: 4 a

.. . e t + .?. - .. .

. . .d s.. s.~. .

t I. % 1 c, h .

y. 9 s. ..... .s,

. .1. .,..n r 1 q, g,:m.

s . . ;. .. s.

.. .?.a...-

.n .. . .6

.s..' .-V..

..r .r-..., .,g..._..r.

m 1 A.

p . . _. .

., I t* *

!! +-

e.

f.J ;i "t ( .- l ' .<. i. s. . .s, . ,

I e 1 1 I @

• [ **

I

y. *t. .

, ' ' *. , g

.. . .. .g.i.

. * .*....s*. g ,.1 .*c y.

g. ,,.T,

. . , ,, ..3 g ?.  ;..,

Is .y = . l g ,9, ,

.t. .*? r' **.t ,. s!

r. . ;*e ,. ,. ... . r. s. . .-*.,t.v.. . = * - <i s g

l .

I f

?

,,,., {l

()

w: . y- . . . .s. y .s.. .... . *  ! *.

... . . .. .[. e

. 't

.; g. .3 s,..m.

e...g.

, s *

~

[

. 4* .

e*

r. ..

• . A.. s4.t.., u . ,..w.

. a .. . . 1w., ..

...; .. t.

if I

• / .

11 * '

T f*., . . , .*

,T. L ,e . . .

s e. t .

r. . . . , . * . g. N, ,,,(, ., ......,,.. ,*s ,*.T . y , ;. .. i

• j ,, /* +.. -

, . . .' . '. . .} ., .. c. . . 1... , , , .J s_ ,.w ,

i 7

O W.;. 4. a. .s. .~ r

.p., s

( v. . . ., . /. -

s.. , . .%. . s .z . . . p. A . ,;. ..:. . <-,.,t . - . .. .. ..;.e .

.. .v...,

, .  ; a.n. ,. (. .v .r .  :

. ~ ..~ ,'..,a ,

.- m,. . .....s.. y . ,

i. .

)* i s

,'; :..w. ..J.'p y . , r. .G._,._......s a ...s

..,,j o *w .j. ,1. ..4.-

. . . . 4 ,

.. . . 4 ..u .i , . 's.n.. .yr.,.g . .,.

..y....... . m. u ..4 n. rr,

+

e y i f

h .!..} i g4e. t . e ..j. . ,..? .,

< /i , w s.

L . .. .t. .c

.. .s.1.

t. ...

. . . . ... .< -. . . .. < . ,i

~ ,

4 1.

.r.

.m. t ..

a. ...: .v .- a. .,.. t, , .s

,1... .t .eu*

-. .. . r ...a..

. , . :, r..,., .

• -4.

.t t

.s t.

' s

.s .

. . . . .. ... -t. t3.....jj ..3-

.a.,.q. .. .... '. n .. :

.. ...... i. 7. .;. n.e. p. , . ..w...

. . ..s. .r m' . , - c, /.

.. w. .; . .

1, 3

- p ..

i

f, .; .t. .3. .. . , . ,, *, * .r.- .q.s. ./ -. _

. u.. .i g.

o,.7,,......,

.. s .

,s.

. . . . ..o .i.

i i

t / , "v'

'. y, ~~ , * .. .. . , ., , -i , , s, .s.a ...

. . ,: .,) ; . . , - - -- 0.e. . i. /.e.g . . .. ... .

~.

..r.s -

. . '. 3 r. -

.: .T. i e1t $,

,,. . i }. .. s ., . .. . ..%, e. . ; /; u. h .. <

ps ....

. i, , ' . ' , A.,,

- .t. . .

,. . . .. . %. . s. ; 7 - . .. ,. .4. . '... . .; ,,. - * .. . .

..f...,.

6 4

f*, ...

..- * '.1, 4l v.

,...m+.. ,-.* *... ,.s .-.a . .

... tli c.

-. 4 1

• c 4. . .... d

~

1, .. +

%. . <.t...'L .c

t. 3 I

,9.. ).

g

( ,

,. *.e.s j , g' *

.n.

.I (.,. . ' gi .N . . ; - '

n e .

w.

. . +

tl

.i t

[

If f'

li i-e 'j I

. .. U 4...J ,.' I t

. e

' .. ,; I

.i

. s

.ee . , . .. e g . s , e. *.

• eg .- .. ., t e'

. c. .e. . . .  ;

1. - I t.* , , .

• i

,s .,.s.

.  !. . , t.

. t.

r

• s

..L.-

.s

..../

i

5. . :. _- .

a e.

., t

- *; r. - ,

t, . ..

-?

3 t

i L'O q.7. . ,, *

- :- ^ , -

.O, - --

L -' - - -

D .

• 1 6

l , .

, '.:. .Q  :

.V. d r. e. .

. .4., .. .

.n. m 4 f D .9 .~  !

y. -

a .,. ,

}.. . 't < .  ; f 4 . -) . . . . . . .

t,

i.  ! s..

s.e.,.s...,..../..,

t.

w(.) ..',

s.

.. L ., .

g.*. .c.t- ..e..s.

,.i gr -

e F

e. O .w ). ,.). .., .1 .,...s . . /..p 4.;. ..A ., s

,- . ,.t. s , .: -

.i. .. 6. ' .t e . . .

...s-...m. ..._

e6 t .. . .

..., .a. .

li.

{1 * *

,s 2, 4

/1- .

n.

s, w'.c). . .

ei d baf. , 0

. . .5.

f a. .

s s ., 4 >.

v

. g i%. s. ;. t

. .*.... . 6 a e i

• t m l. c. .

...,t ,. t.-w , , e > y,*-.. . 4 i.y .:, . .'. , .s.

., .. s c.~

o y.,1,..*.._.

.+ . -. .,.

.....o..p t. . . , n, ,.... .3. y _ . .g. .n.,,

e 1 i i

}

• -*n thO -arimiU." ? j.9 ic :.c.n ,

r. * *

'. *l . . /. .' . s,..N.,..

.s j ;'

f: . , . .* , , , , .., e

,. , y [. t. . .- g, 1. - .. . . . .4.. . .. .. . . . .. .w-

l. ,.:

• ..I s pt.. e .t. s .. ,

.c,-.

- c .a. . .. e.n.,;,*

.. v s u r . g.

.t. ..-.s  ; , . . ....

s.....<..

.v.  ;

5 1

I r

., y . i; .v.

- ~ . . , . . . < .v, . , . .,. ;.- - r.u...

...-.J t

m .

r,: . ..s... . $w.u,. *. ..j.r.. q ta. . w. .. .. . ,. .v.,w. .f .

J u,.

.v .,.,,.c...

t

b. . I.

t l I, y . n. , ..i . s.- ..: :. . ,, a c  ;

g, i,;. .. j. , ..

......../,,s,,..,,,.

i.,- .p.:... .,.. . . . ,.. . ,

, i

,, "1 j,

u. c. )*' . .;. }*.. . . .. .q. .-,+,. . , g , n . r.s

. ; n'- '

,i. ., . . ' - .

.s

.s. ..1 1.~ 1. . .Y... .

'...1.. n. ..*  !

i ~

f I' .* in.*g*. p I *. /.'.*g c*.*. % * #9n ..

u (* * * ( 4. .*.*  % .4., J. $

• ?**. . u. ** t. F..*. t 8

. g..' r,9.4 ....u #. ... .. , .,. . 1,7 (S. C. , , " , - . f. *.:.. ) .* . t ., ( 4. ,

$,. o, , ,

e .i

..j {,#

(> .

rus& .. 1 e .% . g a. ,.. ..x. y /.

.. l . . . .. *L. h. e'1.

. a. .- . . . . . .r..-*....- u s.. .S5 . - . .. I 8

'j*4, I j. q. .y .l.w q a* .g, se*

f Qp . . . g .. . p...g ... rre $..*A . .)

i.-- s'i .*.td . . u- ,.a . . 'm.. .i. 'e i

} f p.s ..; ,. .

L..4. . f. .... .. ../. . r. .. .3.. :. .,. .. , , . . , .,. ..

,r. 4

. L.. t . , - ..

3.

.w . t ., ...

... e i.v. ,.

• t i t i

I r..s. a.:..c .,. . .

f ! u. .J. .-..

..v.

. , < . 1 %., .u. .:.1.. . C..p 7:

t... . . ..- r. ; .., .. . , . . . .,'s.'- ,...qp .v......*

1. s .-s .% ~. a. * . . J.. '.s.- n j

s.  !

.6 4

,.: .)*.

I . .

s. t. b:, L.7 .;. . s.. .. ,, . .. < ....s . .

6 6

l'

.) ,9-8 k.3 .D.4. rvl.a.E.-+

1,e P-a a s.9 )V?.s..t+.', *

-w ..r d.. ..,,_ . - . . , .

• g **J.

1 6

f l - * ,6 a

---e'..

., i F.

.1,.,..

a v.o . J ,

J"w . 4..,s t. ,w...*. . 4.,1.,' . . ....;

s, . . . *,,..g. . . . ' .. u

.? *  %.,,*.. . j a y a

v. .

4'

1. 4 i

$t *

}l P 4 e .? .'.* .; U .D.  :

, . . [

8 e

. , .a.

)l r

- t)-  ;-

t , e,

,8  :

.s s ..' .

• { a s e

1.

~

'g* e-. .$. . s.e,. (.

. .4 . 6 3.

. .l.

.+,..s. e 4 i

.s

(*, , .

e.

• I

.. O 9 g

.. . t1 .. . s. ' .'.

. . 4 -

8. : . . . .

+

..n..

1 D #'

4 f

'. i . ! ,. *... .es. ' cr% . , *.

V. .  ! .L .. .g t,. t.. s.

1 n '9 ~ ~ ~

f 0 l 4

} #.- .. .,. ., . . d. wt . . .; ,., . *

. . .,. /.

• 7.

s. . .ci. g I g .,

y 1, > ,

e... *1 -

p. ..". .'. .

. . . , ...e g; p. ..

. e" . , .

.j . . ',.-?.., .. *

, s. g.) .

3 s

,. i

/

t'.....

J

. . g. . .".,,y g . , .; ..., .. ,. s. .o. . ..!.,

2,,,

} s

..'?..f.,. .

......5.,,.

.. . . s.

~.,f ..

tb

'l t

b '8.*.. U.*M G $ .~2." " '. ..T.-+. .,

l.s , ' T ** . . . . 1'.

. ,,- ; i.... . :. .'a g 7 ,., . , , ,.p

. - .. .a..,. .,. . t.; .

p .; . , , , ,. . .

p.,.,g,...,. ,

t a

1

..t

.14. e.. .r * ; w. .:

,.....)a....., .#.. 6 . .; s{ .. , . . .,-.. ..

s,,...

.s. ...

{ . ,

3, o

i s e, c g's ,'./.a .! , . * . . ' . . . * , . . , ' s. ; y, .

'.g*'., (* .* - (...#-..:*

. ... . .e 5 3 6,- .

.. w .

.. . . L.. s . s Q,,,.

I.

.. .s i.

.]  ! a. w. ., .t..-<<*=. v.. g s . .., . n. ,y. '. $=

. . .s. . 6 6 . ,t

.1

. s. : .

=. .. .? J .. . . . .. ' . ' .** . . . .t '1r '...'.s't.

. 0..<

a f' ,t

}.

.-

• t

.. s. . _.. . ... 1. e..

s. ,

,..e s. Ts .. .

.s

... L.y. .

6 i, e

,4 I 1, '. +

4

.3 c

.. . .- e. . g .

-(,, ,

, , t *.. .t ;...l,.

- - .s 3.,. . m. .: ,. .g:.y..,

.. . ...u ..

, , .n. g m. . l ...,4*.

'l .

i ha t h .. . - . *

-; . .i. ,dj . n. ...s. ..-..rn...-

., .3. . .. .. ,. , . .

(. ... . /. ... ... , , . , , ..)..,

i. *

. . . s; . .<. . . . .Y. ... . u .. i. f,..

. I

• *4 y..; a *. fg .? . .-. . y r. ..s.* .* * #* 5

., .s, .,e..

• 5,...- ..t *

• t.

6.'.

i p

.r. a. .'l. . f. [. ,.

• w.1

.} h. .f. , a*k

s. ,' 3.. .,g - p 6. ,, /.,.$ / .v. t * .,.5. .. ,"..y! . ,

o t'

f.

.t

'3 i

.(

.t. ,.f.i.c:. . .... J .,  ?

.s... : ,

.....:.r.,

t g

1

.l .; } . ,. .~ G.s \ a ;; . ..

1.. .e, .. .;,.. . . 1 , . . ... . ' . . . m, .%.

s

..t. -

'l (.; .a .wr"., -6. . . '. . c s+.

+ - > '

• e t}

I

e. t

.?. j ,y-. . .. r.

, e. ... . -. .':

s...

p. .,. .. ... ' t'.. .', *.T. .r, r'. I.'..>.:.

4 I.'.".J.','* . t.-.> ('.'. ; '~.'-1-.".*'..'I.

.- .'t,.,-b,.

• 4'..

e, 4 '

i.

I. . .,

'I.

s.

, , u .. .. .. . .,. . g .e. t>. . .t . . .l--

. ...,.g.. ., ....u..a ,

..s.-.,r...

- .. ..% c v...,..

,y- . .

,1,.-.., . .

- . ... g . .

.6 It e-Q i.*

q

. . .. ., v<.v.., . v .u.g . , . . <. , .9,<... . . . , v ; . i .,., .t.

s+.. . s : . .,

,. . .'u.,,.

,.-.. ,,,... . . . . ......c ,

..p

.. w ~ s. . .

1&

i

. + , . . . .,a. .

' :i: '. r..s .....s

• .h.-.

b. *:- . .

. - . . . . . ' , .w.: - , -3.: G. *. .'..,, -

6. t u t. .

4. i . . . . . . -.

. . .. w : - . . . }

4 t

.". 3 q

c. .- ...e.., 'J.u r

.~ ,

'. e.. . . .3 s..

.. , q .

. . , .'.?.m o,,

.r'.-. . ~ . . . . .. ... ...

.f.+.

. . . j

.t V

. d

.I p.

. L..... .: s. . . ..

g,i 10 r..t . . . . . . ... ..j,. . ' , . . . ... - . . . . .., . , '

e .y.., s. .r.,.... .

p e

....-.4 h

i }

.c  :. ,3.5. *.:. (. . ,3.~. g, g. n. .. *. ..1 ,. t.. . w....., .ce. .

. . .e ,

s.. . . . t. ,

. .-  ;. y. .

. . .. . . q. . .

.,. . . . .. ,, g a

t'

!i o

,sd ' .t

i, .

+su a h g

+

4 e

I.

4 t

. .s - . i e,. s . . .

... . s. . .s. .. J.

f

. . e

}

..f .2 4,. e,

.., . . a.

. . , .s

.. . .s . ,

• 4 ,.

t b

p. Q. i .

.r.. . . . ,

,- - ,,*.s"> s er.

.,i~ .... .

. - - ' ~' - - ' ' - - '

0 - - -

Q . D *,6 -

- .. ~

m -

93 .(  :

a 3

.s

• . . .. = ,

,.,4.f.........t , . 7

- s. e WL U u ,

. . ' .*.. .s",,,

1

• f .*. t t t

.T. . .

. , .. s .. .... . , . . .m..

e.

.D . ' . . ? ' 1. , .. ..

?

l 5

, s ..

.,t. -

, .. . g . - . ,.. ... ....

.- . s.

... n. .

... .. s.. n. ,. <.r tq.... ...:

f f s. ,-

e L..

.a

.i. s .,.. .; , t ...,. .. .. . .: :..,.,.

.=. . ..L s . .

9

o. ...

.. .r.

... s.

,i l

. .... . . . , ..n. _...

.s.. . . .- a.. .. . . .

t........v.= ..~ r. .;. t. . . .. l 1' .

. l.

. n. .ir.: ;. e~

.. .s . .~. s1..

. . . . ,. ; u -

. ..,t

.g .

a,.,,.,., u 4

1, . .'? ,' E :n. r a 6 J .?.o c,' n, c; ,, . u l

L"c ', q . 1.;c,s ceig.f. c :%;,,g o g ,,9m  !

l.

c .4  : p. . - ,. ..> . ,_..  !

. -. s. 3. . . .. . . . . s ,j  :. . . . . - ...

-. m., , .. .s.

u . . . . e. . vs u.

s .._ . , , i i

1 1 , . , . ~ , . ... <.i . ; . .., . . . m.

u, . . . , , . .../. . .

.u.. . :. .. . . . . .. . 1. v.. .

i

,-S.e .

.4, .

e l.

+

t . . , .

._ ... ..;. .... . . .p ,, , , L e... - ..,..- . . . , . . . i

(- . . (. ; . ris t . . . . + . .- .- d.' .....4 g

. ,. . -* .,.,%.N..

, . . ,..,<.g.

} ,....,3, ..

.f-..

5 . 5. ..

s..... 1 s... .. , . . s. . a 1. .*.

. a,

.,,. .p . sL... 's. .

j, .. 4.1 . , .. . .; y .

.+,),. * <t.

ss .. . .. . . ~ .  % .,."

a. . .c.! 'j*.a..(,1

.r. : g

.= A- .. y;.-.1. - .:G.. ., , ,

..,..i2.

4 . - ....&qs., L

e. ,..s g *' , ., . ..s

.] . . .-?] g

. . - . j, . . ,

. 9..,

t, J,,.,...

s e.. t..

45. . . i. .. .,

t l

r

.- i 9, ,. .. ,.

s s

. r. . .

'.1.,,.,. . _ s. y aJ..,f ,.

&. ,J4 v

, . . .y . , . . ..a.}..>

.,y. . . , b . w. ., ....,,;

w em . ..

O

. h. e.

, 6 g

APPENDIX 2

, Pages 1-4 and 39-44 of Deposition Trans-cript of Howard J. Holton Taken In City Of C3cycInnd v. CEI, No. C75-560 (US11C ,

N.D. OH10 E.D.)

i i

'I i

l 1

-)

I

~

_ _ - _ . _ _ _ ..T . _ . . _ _ _

e I:

j 1 l

l 1'

IN TlIE UNITED STATES DISTRICT COURT t)

FOR Tile NORTilERN DISTRICT OF 011I0

~

EASTERN DIVISION 3

---

X CITY OF CLEVELAND, ,

r Complainant,  :

G versus,  : CIVIL ACTION No.75-56C TliE CLEVELAND ILLUMINATING  :

COMPANY, et al, Defendants.  :

9

---

X 10 Alexandria, Virginia 31 Friday, February 27, 1976 i 12 Deposition of 13 IIOWARD J. IiOLTON , 4 14 '

1 a witness, called for examination by counsel for the 35 complainant, pursuant to notice, in the offices of Mr.

3G llolton , at City 11all, 125 North Royal Street, Alexandria, 17 Virginia, begi ning at 11 o' clock a.m., before Anita D.

38 Glover, a Certified Verbatim Reporter and a Notary Public in and for the State of Virginia at large, when there were 20 present or, behalf of the resI)cctive parti es :

21 22 2:5 AUDRCY J RUDIG E R c.t nisair ti vi + 9 Aw.i ut r> cutt R

95'S** C D64 8** IW PG1 liUAU p Asset , a voer.sv a PO*3D

?.4 ) ,% 1 *4

, e 2 3

For the Complainant:

JAMES B. DAVIS, ESQUIRE Director of I.aw, City of Cleveland For Squire, Sanders and Dc;npsey:

GALLAGHER, SHARP, FDLTON, NOPJ4AK & MOLLISON By: MICllAEL R. GAT LAGliER, ESQUIRE G

7

-CO- .N .T .E .N

- - T..S-  :

8 W3..TNE SS DIRECT CROSS REDIRECT RECROSS 9

IlONARD J. IlOLTON 4 34 42 --

10 11 E X 11 I B ITS :

- ~- ~~ '"~ - '"' '-' --

12 EXIIIBITS PAGE 13 1101 ton Deposition Exhibit A 35 14 15 3G 17 JS 19 20 21 22 23 i

AllDHE Y .l. RLIDIGl_ R c t +.ta'e D vt pu Aviv r., e c Nir.fe 3 95'a Ote AiN te8tird.s H"J ATT F 6 p se t A g, Vig f,ih , A ; ;'@ 10

%. u

. . ~ . . . _ . . - . . . . . . ~ . . . - . . _ . . . . - - - . . . . . - - - . - . - . ..

. I I

- 6 i

3  !

3 PROCEEDI NGS :

MR. GALLAG!1ER: P.efore proceeding, may we have

, certain cli pul ations.

.I'

'l Pirst of all, the stipulation as to waiver r'

with respect to formalities of service and notice in the 6

event there may be some defect as respects that.

MR. DAVIS: That is agreeabic.

8 MR. GALLAGIIER : And as I have inquired at the 9

other depositions, may we stipulate that it is unnecessary 30 to file the deposition in order to use it as affirmative 33 evidence in the litigation?

) 32 MR. DAVIS: All right.

33 MR. GALLAGIIER : Should we also stipulate that J4 the witness need not sign the deposition?

35 MR. DAVIS: Well, I think 1. hat is a stipu3 atior 36 that should come from him under the Federal rules.

37 MR. GALLAGilER : Prom us and from him both, but 36 we need it first from you.

39 MR. DAVIS: It is agreeable to me. i 20 MR. IIOLTON : I would prefer not to sign the 21 deposition.

1 22 MR. GALLAGIIER : Then you waive the requirement N that you sign it?

i AUDREY J. RUDrGCH c r nynan s r use.v w i crete re 3 pys (.st At*4 H t t .."'O f. W e A!t

% V'34 G lfs 4 .' .'O

• O

$ A46(f- A D L 'J 1 31 4

l

~ ~

4 MR. HOLTON: Yes.

~

MR .- GALLACHER: So then all formalities are

'j waived with respect to the deposition, e.nd it can be used 4

- as af firmative evidence in the case withou t being filed.

5 All right.

G hihereupon, ,

HOWARD J. HOLTON, 8

a witness, was called for examination by counsel for the 8

complainant, and, after having been first duly sworn by 10 the Notary Public, was examined and testified as follows:

31 DIRECT EXAMINATION 12 I. ,

BY MR. DAVIS:

• 3 Mr. Holton, your name, please?

0 14 A. Howard J. Holton.

35 O. And your present residence?

18 A. 308 Virginia Avenue, Alexandria, Virginia.

3I MR. GALLAGHER: Now, I am going to have 38 difficulty, because there is a truck right outside of the 38

-window,.and I would appreciate it if both of you would 20

-keep your voices up. I will try to do the same when it is al -

my-turn.

22 BY MR. DAVIS:

2A And your present occupation?

-0 -

AUDREY J. HUDIGER

. (.E f D* r[D % E NM A7tV n y ppat*rse 39 % C M 4*N l*8ti:37.3 H!- A*.7 F A.P8 A.. V1840s'N.4 27233 '

- - - - P S t .'a i M

39 3

%q 0--- ~ Wha t -ye a rs--wou 3 d -- !.ha t -1 e , -a 9--be*&t Sj.on--ec- m----

ry

\

~

ucall?

U: A. '67 through '71.

\s

p. Apprm:imately a four-year period?

N A. 'g Appro>:ima tely , yes.

\

A d I did not hold that position all of those 7

years. It would 'probab]y have been three years of that.

b 0 Now, you have stated earlier that you were l 9

also Acting Director of budget and Management?

30 A. Yes.

'N II 0 When was that?

I 12 -

A. That would have been also during Mr. Stokes' N

10 administration, probably in the '68-!G9 s years.

N 34 0 What were your dutics?

II' A. Those are estimatcd years now.

N 16 0 I understand.

II N What were your duties as Acting Direct,or of 3S Budget and Management?

39 \

A. Preparation of the Mayor's Estimato and ove'r-20 \

ee in g . of-the-Dat a -P r oc e s s i n g-Dep a-r tmen te. -- 1 23 0 Now, you have before you your affidavit 22 c>:ecuted on December 9, 1975.

w; In 3t, on the second page, you said: One matte l i

AUDREY J. HUDtGE R c, ,4 , , m m .. .. . , m. ,. . . _ ,.

l m, cui: . a .ncc nw

, A 4 3f p A h , V. 8 e 6 4 P.'C 30 M*

)

l

.- e l

40 '

1 3

of financing with which I had to concern myself from ,

l n

time to time was the Cleveland Municipal Electric Light l

., \

Plant. 3 l 4

It then continues: Because Squire, Sanders 5

and Dempsey represented the Cleveland Electric T

6 Illuminating Company generally, which company was in I

competition with the City Light Plant, Squire, Sanders and 8 Dempsey had advised us that they were reluctant to handle 9 financing related to the Light Plant, al though they harl K) done so on occasion. Now, what did you mean by that 11 sentence?

k 12 Tu That I had known, and to my knowledge they 13 had told the City, that they would not handle particular 14 matters concerning the MUNI Light Plant.

In Q. And was it because of that then that in 1971 16 the City went to the h'ood, King, Dawson, Love and Sabatine 17 firm in New York?

38 A. That is my understanding.

19 I And did that New York firm in fact prepa're G

20 the 1971 ordinance for the MELP bond issue?

21 A. Yes, they did.

22 0 As respects the 1972 bond ordinance, had there "3 beery any question but that it would be a revenue issue?

AUDDEY J. RUDIG ER ctnsu.1 a 61 pt. Am wt a : nir n M *a ( % Athe t+ kiDC.> PD A D F A . :e 6 A m . Vih t,eN= 4 .' 2 31 r*

_. n . %p

n.. . - - . - - _ . . . . . - . . . . - . . . . . . _ _- .-. .-- ..

43

.1. An iar._an._LJ:.nc.c ,._f.ho.m a:.:._:,% pwm4c. _ _.

\ .

3 Q. ln other words, it was intended from the out-

\

sef 1. hat it be a revenue issue by the City?

"l' .

\/

s As far es I know, yes.

\

. s Q. ' ,, Was 1.here any question but that it was

\

r intended t.))at it be a second mortgage N

issue?

\

6 3, ,jhere was no question in my mind. 12 0 .

I 0 Why-do you say that, Mr. Ilolton?

s 8

A. Because the earnings were not sufficient

\

9 to issue a supplemental indenture.

10 0 And this caUnings test is a test found in the x

N 33 1948 1. rust indenture; i s tItat correct?

\

( .

32 A. That is correct.'. '

13 0 And that trust indenpure was prepared by

\

'N 34 the Cleveland law firm of Jones, D' avis, Cockley and

\

35

\

Reavis? \,

\

10 A. I could not answer that. I\ don't know.

37 0 And is it a fact that when thes1972 bond 18 ordinance matter was first sent to Squire, Sanders and 30 Dempsey it was intended by the City that t.he purchase

\

20 would be by the Sinking Fund and/or the Treasury 16 vestment s

21 Account?

22 - A. -- -Th a t- wa s- my- u nder s ta ndi.ng .. ._.- .-

23 0 Do I understand also that at no time in AUDREY J itUDiGER t.r.nm ar u s s e,9 A w ra . o eve n y e t. e c oe .s t *. F.se,D C. f ren at s f Asses A%. 5 !! * . 8. ; N 1.'s

42 I

connection with the 1972 bond ordinance matter that you ever communicated to I'.r. Brucchel any confidential

'1

! infor:na tion of the Citv? -

4 A. I did not have any confidential information

. 5 myself, so I could not communicate it to him.

T 6

0 Now, some accusations have been made with respect t@

7 Mr. Bruechel's conduct with respect to the 1972 bond 8

ordinance.

9 In your dealings with Mr. Bruechel, did you 10 arrive at an estimate im to his loyalty and his competence 33 as counsel for the City in the limited matters tha t he l 12 handled?

13 MR. DAVIS: I will object.

34 TIIE WITNESS : As far as I am concerned, I had 15 only the highest regard for Mr. Brueckel.

36 BY MR. G ALLAGilER :

17 Is it your judgment that he had been loyal Q.

38 to the City in all of the charges and responsibilitics 39 which the City imposed upon him?

29 MR. DAVIS: I will object to that.

21 TilP WITNESS: My personal opinion, yes, i 22 MR. C ALLAGliCR : No further questions at this )

23 ti me .

AUUHF Y J RtfDIC. fin t t ri.6 '**% e A'ev ." ev stic h

)*%* Cb4A?*dIl'..'Ot 8 b#DAL

$ A ?:4 0 A % . % s 8t '. 0 % &

• M' 4 Cs

i l i

l 43 I

REDllECT EXAMII1AT10N o"

BY MR. DAVIS:

3 i s.

. _ .4._ . 4:r . - 1:o'! ton , con,ing . ).ac h t o . thi .2 -sues aent ++ 't

. 'N pears in the affidavit prepared by I4r. Lansdale:

hp'N Squh Sanders and Dampsey had advised un that they were 0

relucta?i' to handle financing relating to the Light 7

Plant.

b \ if I recall your prior testimony here Now.,N D

this morning, you cannot recall anybody every having said N'

10 that to you personallp,from Squire, Sanders and Dempsey?

11 That is why in the A. I do not rem iter.

( 12 affidavit it reads us.

g N

13 Q. So you have no persbnal direct knowledge of V

34 whether they vere reluctant or not to, handle the financing; N,

33 isn't that correct? \

s 16 A. I don't remember.

37 So that the statenent that appears'4a here, 0

s 38 N

had advised us,that the word us meant the City, anh,did not 39 mean you? >

20 A. I-b-e. n t-t-he-C-i-t-y r--r-5Sh t-21 p. And you did not have any direct knowledge, or 22 you do not have any recollection of whether they ever N were reluctant or not; i s uhat you are telling us now? .

AUDRCY J. RUDIGER cintan e vs.va atv sc>entra 3 P S 4 C.4 4 '*w i. a p *, g so a p FA:serAs va. - .a;, pie

Ih lk 1 A. No.

2 1 am saying that I did have the know1cdge 0, that they uere reluctant, but I do not recall whether it i

4 was told to me directly, or whether it was told to someone 5 clse and relayed to me.

G 0 You cannot recall any direct discussio s with 7 S, S and D lawyers and yourself, in which they e>: pressed 8 reluctance to you?

9 MR. GALLAGHER: Objection. He has already e 30 stated his answer to that.

31 Tile WITNESS: Not that I could swear to or 12 say under oath, no.

33 BY MR. DAVIS:

14 0 Now, you say that you had no confidential 35 information to give to them with regard to that '72 note issue; 10 is that correct?

17 A That is correct.

18 0 However, it is possible that other persons 19 might have had -- ,

20 MR. GALLAGHER: I am going to object.

21 THE WITNESS: I couldn't answer that. I 22 don't know.

23 MR. DAVIS: All right.

AUDitEY J. RUDIGER c { p t is ti n \ f s ;e ATw f.*' PC.tt i t re 3 P L t. (..e A". Si R'D 0 f A D & D

$ A e r:8A4,%p*5F 4l.*30

e , , ,

3 I 4 ,

I f-4 k

i j .*

i l

f i .

1-

+

i i

1' i

i  :

i 1

APPENDIX 3 I.

{. ,. Pages 1-4, 44-46 and 49 of. Deposition ,

j Transcript Of John Brueckel Taken In

City Of Cleveland v. CEI, No. C75-560 I

- (USDC N.D. Ohio E.D.)

f i

i 4

i i

}

4 0

i.

I d

i i

R i

l' i.. . . - . _ . - . ~ . , _ . . _ - - -._._.-;.-.... .._. _ ._--_ _ _ -_-_.._..--.... _ _ _ _ _ .. . - -

.IN THE UNITED STATI;S DISTRICT COURT POR TH1; NORTHEFJi DISTRICT OF OHIO EASTERN DIVISION City of Cleveland, )

)

Plaintiff, )

)

vs. ) Civil Action

) No. C75-560 The Cleveland Electric ')

Illuminating Connany et al., )

)

Defendants. )

Deposition of JOHN BRUECKEL, a witness called for adverse witness examination by the plaintiff pursuant to the Federal Rules of Civil Procedure, taken before-George J. Staiduhar, Notary Public in and for the State of Ohio, by c greement of counsel, on Saturday, the 28th day of February, 1976, commencing at 11:00 a. m., at the office of the Law Director of the City of Cleveland, Room 213 City Hall, Cleveland, Ohio 44114.

i FIN CUN COURT R E P O RTE R S Captures the spoken word and reduces it to TYPEWRITING 1568 Union Comnierce Building - (216) 696-2272 - Cleveland, Ohio 44115

_= . _ __

2 1

APPERR7d1CES :

2 On behalf of the Plaintiff:

3 James B. Davis, Law Director and 4

Robert D. Hart, Assistant Law Director Room 213 City Hall 5

Cleveland, Ohio 44114 6

On behalf of the Defendants:

7 Gallagher, Sharp, Fulton, Norman & Mollison:

By Michael Gallagher 8 630 Bulkley Building Cleveland, Ohio 44115 9

10 ALSO PRESENT:

11 Ann Kilbane 12 13 14 15 36 17 18 19 20 21 22 23 l

I 24 l l

2.3 i -4 f

3 1

On-lpz JOUN BRUECRCL 2

of lawful age, a witness called by the plaintiff pursuant 3

to the Federal Rules of Civil Procedure, was by me first 4

duly sworn, as hereinafter certified, was deposed and 5

testified as follows:

6 DIRECT EXAMINATION 7 By Mr. Davis:

8 0 Would you please state your full name and address?

9 A. John Brueckel.

10 Do you want my office address or home address?

11 O Both.

12 A 1800 Union Commerce Building, Cleveland, Ohio 13 is the office.

14 My home address is 22400 McCauley Roadr Shaker 15 Heights.

16 MR. GALLAGHER: The same stipula-17 tions, by the way, with respect to this deposi '

18 tion?

19 MR. DAVIS: Well, the stipula-20 tions are,'as I understand them, to be that we 21 are taking this deposition this morning by 22 agreement of counsel with the formalities as to 23 the time of taking and place being waived.

24 What else?

l 3 MR. GALLAGIIER: Yes, and the i

f

. 1 4 I

agreement as to filing?

o 11R. DAVIS: Ho agreement as 3

to filing.

4 0 Mr. Drueckel, your prcfessional affiliation at 5

this time is where?

6 A I am a partner in the law firm of Squire, Sanders I

& Dempsey.

8 MR. GALLAGHER: Let me interrupt 9

for a moment then and I would ask that the 10 deposition be transcribed; that the original 11 of it be filed in Federal District Court in 12 this case.

13 0 How long have you been connected with Squire, 14 Sanders & Dempsey, Mr. Brueckel?

15 A I have been an associate since starting in 1946, 16 and I became a partner in 1957.  !

17  ;;1,mm m ala yvu yv Lv lo, ,d,vul; 18 A Yale University.

19 O And k re did you do your undergraduate work?

20 A Yale Univer v.

I 21 G Do you belong to an professional organizations?

22 A Thc American Bar and the veland Bar and the 23 State Bar.

24 ,

G Do you belong to any organizations dealin with I

p,nis c<n.,nnn ne finnnnn nonnen11y?

33 !I i

i

4

<j 1]

t _'. : ene; , ; ,-

2 0 right. Did you talk to a lir. Cnruso in 3

the Utilities Dapart:.. ' at any time?

4 MR. GALLAGHER: With respect 5

to the 1972 bond issue?

6 rz. 1".'IF - he eir 7

These questions are all directed to the 1972 8

bond issue.

n

~

MR. GALLAGHER: So you understand.

10 A I can't recall talking to him in connection with II the 1972 bond issue.

12 Do you recall who was the then Commissioner O

13 of Fiscal Control in the Utilities Department?

34 A I can't recall at the moment.

15 Would you have dealt with that official, whatever G

16 hic name is?

17 t. I can't recall that I'd have any need for doing 18 no in connection with the 1972 bond issue.

19 g Did you obtain financial information about 20 MELP at that time from anybody at MELP?

21 A We never cot to the point of approving the bonds.

22 After the bond ordinance was passed, we never 23 got to the point of assembling a formal transcript 24 where we might have gotten earnings figures.

I 2.i We Inver approved of this richt, so we never got .

hl j

1

T, 45

.. 1 to the point of exploring if the C : ty -- I don 't even know that the City wanted our opinion because they may 3

have purchased it themselves without our opinion.

4 All my express instructions were were to fix 5

up the ordinance.

6 O All right. Coming to this point, lir. Brucchal, it was well understood the City planned to purchase the

~

8 obligation out of its sinking fund or treasury investment 9

account?

10 A True.

II T9CSpz G Let's come to that point. It was well understood 12 That that the City planned to purchase the obligation?

13 was well understood from the beginning?

^

14 A Right.

15 0 And the need for that was that the revenues for 16 these obligations were then considered insufficient so II that the temporary bonds could be sold outside of the 18 City; isn't that also correct?

19 MR. GALLAGHER: If you know.

20 A What's the question?

21 (Question read.)

22 A Could you rephrase that? It is a little tough 23 for me to handle that.

24 , G You understood at the time you were involved in 25 ,

preparing these temporary bonds, did you not --

i

4G 3

MR. G7.LLliGHER: Do you mean preparing 2

the ordinance?

3 HR. DAVIS: Preparing any 4

of the documents concerned.

5 MR. GALLAGHER: He said he was 6

instructed to prepare the ordinance, and that was his function. That's what he did.

8 I think it is best if you can stick 9

within the framework of the facts.

10 g What did you in fact manage to prepare with II reference to that 1972 issue of temporary bonds for P.ELP?

12 A The basic document, the bond ordinance.

13 G Anything else?

I4 A There was a notice to state funds.

15 G Anything else?

30 A No. )

17 As it turned out, you did draft the language of G

IS the bonds themselves? l 1

19 L No.

20 In connection with the preparation of the ordinance 3D 21 for those 1972 temporary bonds, you then understood that 22 it would not be possible in the estimation of City offi-23 cials to sell those obligations on the open market?

24 A I think that is correct if you make certain 25 ! ascumptions.

L I l l

_, w -_, ,

l

• 49 1

What am I to say t( your question? You say 2

that the revenues are insufficient.

3 They could be sufficient to pay the interest.

4 There were ra principal payments during the five years.

5 That's what they wanted.

6 G Did you make an inspection then of the revenues 7

available?

8 A No.

9 0 None at all?

10 A No. I 11 '

O At any time?

10 A No, because my total job, as I understood it, was 13 to draw the ordinance. We never got to the question of 14 payabili' y.

15 m , ___t1- . . - - , , - - -

1. ...uwm. . . - . u . w. v , w v vauiu . u w ai n u.i 36 a p ,ceeding before the United States Nuclear Regulatory l

II Commissio you prepared a 12-page affidavit, did you not? '

18 A Yes.

1 19 0 It was prepai d with considerable care, was it 90 not? 4 ol L -es.

1 22 You swore to everything in it u being true, l

I 0

i 23 did you not?

24 A Yes.

^

. s C1.^ j . iC C. C '. I t .C(( L{sg , i ;^ . N. [ [ O 11 [,' , . e { I

, d i M h

APPENDIX 4 Pages 11-18 of Trial Memorandum of SS&D Filed With Special Board O

e l

UNITED STATES OF A> ERICA NUCLEAR REGULATORY CO)DiISSION Before the Atomic Safety and Licensing Board In the Matter of THE TOLEDO EDISON COMPANY and ) Dock't Nos. 50-346A THE CLEVELAND ELECTRIC ILLUMINATING COMPANY ) 50-500A (Davis-Besse Nuclear Power Station, ) 50-501A Units 1, 2 and 3) )

)

THE CLEVELAND ELECTRIC ILLUMINATING COMPANY, ) Docket Nos. 50-440A ET AL. ) 50-441A (Perry Nuclear Power Plant, Units 1 and 2) )

TRIAL MEMOPJLNDUM OF SQUIRE, SANDERS AND DEMPSEY AT EVIDENTIARY HEARING BEF0PI SPECIAL BOARD ON DISQUALIFICATION e

I.

.__m.._

The he ng before the Special Board is a trial de novo for the purpose of hearing evidence on ix grounds stated in the Majority Memorandum N

as the basis for preferring char . (Majority Memorandum, pp. 24-26)

A presumption of propriety attends e conduct of Squire, Sanders & '

Denpsey (SS&D herein). The Majority Memorandum ma he following observation of the firm's conduct:

"As we do so we note once again the high degree of professional skill which both "I md t!n City irr;t 1. th; "im , i.L m

SS;S Jmmmm tL th r; ':._ b c; cr_cc fertilir ti-- it%#- tk- " - -

of co idential information supplied by the City in connection with finance or Bond nsel activities.

SSLD es not deny that there is cross-fertilization within the firm in the sense of exchange between lawyers and between departments of general' matters of w and legal concepts. Thus, a lawyer in the corporate department may call upo a lawyer in the municipal law department for clarification of municipal

• aw principles relating to a matter before him.

So, too, lawyers in the litiga on department may call upon lawyers in the

\

probate department, the corporate epartmant, or the municipal law department for law generally as it relates to ma ters before the litigating lawyer.

This kind of cross-fertilization is the rength of a law firm. However, cross-fertilization of law and legal concept is an entirely different matter from cross-fertilization of confidential 'nformation supplied by clients. The intercommunication of confidential nformation of clients does not occur within SS&D and did not occur as respects the City and CEI ia any matters having any relationship with t Nuclear Regula-tory Commission's proceedings.

To assure this Special Board that there was no exchange of "information supplied by the City to the Firm in connection uith finance and Bond ounsel acticities" we respectfully refer to the specific instances cited by the "ug ri t; 'in rc r ?.u: tr uppert-it crrencouc renclucir .

A. 1963 Bond Issue This was held by all members of the Board to be too remote to be meaningful. (tbjority Memorandum, p.11; Dissenting Memorandum, p. 6)

+

o A fortiori, this view should obtain as to pre-1963 contacts and probably should obtain as to all pre-1965 matters generally, the Board having established a post-1965 boundary date for discovery in the absence of a showing of good cause. (Majority Memorandum, p. 11)

B. Exhibit E: Mr. Lansdale's Letter of October 27, 1966 And Memorandum of October 26, 1966 Relating to a Meeting Between Carl White and George Eecher of the Cleveland Little Hoover Commission and John Lansdale and John Brueckel of Squire, Sanders and Dempsey The evidence will disclose that the Little Hoover Commission was acti-vated as a City of Cleveland project by Mayor Locher and President of Council Stanton late in 1965. It was composed of 24 persons commissioned by the Mayor and Council President to undertake in December 1965 a " crash" study of the City's finances and an "in-depth" study of all City operations,

, including the Municipal Light Plant.

Mayor Locher instructed all department heads to cooperate with the Cleveland Little Hoover Commission to assist him in solving the "short and long range problems of city government and of the city itself." The instruc ,

tion was directed to every member of the City administration, including the Director of Law and members of the Law Department.

Outsiders dealing with the Little Hoover Commission were dealing with the City in cooperating with the Little Hoover Commission.

Twenty in-depth study projects were completed. Project #12 was described

" Project #12 - Municipal Light - The White-Dechert-Pjevach Report - Financial Aspects of the Utilities - Division of Light and Power". Carl White and G. George Becher were two of the analysts charged with the responsibility L

,. ..- ~

fe r the preparation of Project #12, The MELP Report.

An examination of the memorandum of October 26, 1966 (City's Exhibit E), which refers to the meeting of Mr. Bruechel and Mr. Lansdale with Mr. White and Mr. Becher, when taken in' context refutes the charges made against SSLD in the Majority Memorandum.

The Majority Memorandum cites the conference with the Cleveland Little

• Ecocar Commission ae an instance of Mr. Lansdale directly consulting with l Mr. Brueckel relating to General Fund assessments for street lights and the payment terns under the 1948 trust indenture. It finds this to be an instance "where there was specific cross-fertilization within the Firm with respect to matters jointly affecting CEI and the City in which the interests _of the parties were or could have been adverse."

We find that both the Majority Memorandum and the Dissenting Memorandum nisunderstood the nature of the meeting and attributed to it misconduct which, when placed in its proper context, simply did not exist. The Board may have been misled by City counsel's lack of candor in dealing with this subject.

A careful reading of City's Exhibit E discloses that Mr. Carl White headed up the Little Hoover Commission Report on the Municipal Elcetric Light Plant.

He was appointed by the Mayor and the President of Council for this purpose.

He was acting on behalf of the City. He orally identified himself to Lansdale and produced credentials to document his authority. He had been instructed to consult with Mr. Lansdale concerning the validity of any suggestion that the General Fund be relieved further by reduction in charges by the electric department to the General Fund for street lighting. Mr. White had with him a i 1

cop -of opinions which Mr. Lansdale had previously furnished The Illuminating Cor.p any.

l l

[ l

'I

_14_

Mr. k7 tite produced.also a memorandum White had prepared dated February 21, 1966 which contained his thoughts on.the use of MELP funds for alleviating the critical situation of the General Fund of the City. The memorandum

-contained tabulations based upon studies of the cost of service for the year 1964. All of the data in those studies was produced by Mr. White for the City of Cleveland and 1.ot data produced by Mr. Bruechel, Mr. Lans' dale or any member of SS&D.

Fully understood, it should be perfectly clear that Mr. Brueckel was not " participating with his Firm in acting for CEI against the com-petitive interest of City's electric system" nor was this a specific in-stance of cross-fertilization within the Firn respecting a ratter where

" parties were or could have been adverse." Rather, Mr. Brueckel was acting in the best interests of the City by cooperating with its Little Hoover There was no communication of confidential

~

.. Co=nission at the City's request.

information in the course of that conference.

C. Board's Exhibit A and B: Lansdale's l Letter Dated June 17, 1974 and Brueckel's  ;

Memorandum Dated May 21, 1974 Re: Con- j tracting with City and Highlighting MELP 4 The Majority Memorandum describes these as " crucial documcats" which

" demonstrate abuse of the Firm's client relationship with the City and'they contradict the implications if not the direct language of the Lansdale and Brueckel Affidavits." (Majority Memorandum, p.16)

The foregoing documents constitute the basis for the FOURTil GROUND appearing in the' Majo: !.ty Memorandum charging that there was an actual transmittal of material.

1

Even the Dissenting Memorandum was uncharitable to Mr. Brueckel

". . . Mr. Brueckel's affidavit appears to be wanting in candor . . .

deceptively narrow . . .

These are painfully unfair accusations to Mr. Brueckel. One need only read his memorandum with care to assure himself that that accusation is unwarranted.

John Brueckel is a municipal law expert. He is a generalist in the public law department of Squire, Sanders & Dempsey. He is constantly asked questions relating to municipal law by lawyers in the corporate, probate, litigation and other departments of the firm. He and his public law departcent represent a majority of the cities, counties, villages, boards of education, hospital districts, regional se"er districts, state universities, community colleges, and ,o on, in the State of Ohio.

Mr. Brueckel's memorandum in question is an excellent illustration of the distinction between cross-fertilization within a firm with respect to law and ideas and cross-fertilization as that term may be usad to suggest the transmittal of confidential information supplied by a client.

Paragraph 1 of the Brueckel memorandum (Board's Exhibit B) refers to the Cleveland Charter and identifies charter requirements. Paragraph 2 states "You may have to give attention t, prior practice that has been followed in preparing contratts". But continues, "I am not familiar with the forms of these contracts." Mr. Brueckel then calls attention to the ordinances granting contracting authority to the director of the department and says: "This [the ordinances) forms the basis for the suggestions contained in the latter portion of this namorandum." Paragraph 3 states that there is

- I I

sema historical evidence that the City Council wanted MELP to stand on its  :

m.n two feet. This historical. evidence is apparent from early newspaper articles extending back into the 1960's, from the Little Hoover Commission report and from general knowledge about the community. Indeed, it was loudly proclaimed by Council members. The memorandum concludes: "On the basis of all of the foregoing, 1 would suggest . . . ." The memorandum thus by its very terms is delimiting. It states precisely the basis upon which it reaches its conclusion.

The Dissenting Memorandum says that "Mr. Bruechel appears to be offering a solution in the interest of resolving a mutual problem. His purpose was probably benign." (Dissenting Memorandum, p. 14) While this is true, it is not the reason the memorandum is a proper one. The memorandum is proper because it relates to municipal law generally. It looks at the Charter of the City of Cleveland and the ordinances of the City of Cleveland. It says nothing more than any lawyer would say who practices in the City of Cleveland; and lawyer consulted on the same question with respect to Cleveland or any other city in Ohio, would approach the question identically. Nothing confidential is referred to in the memorandum nor is it inferrable that reference was made to any information obtained from the City. Certainly, there is no " nexus" or " substantial relationship" with any matter before the

uclear Regulatory Commission.

D. Exhibit G: Lansdale's Letter dated February 18, 1965 and Gibbon's Undated Memorandum Prepared in 1962 Re: Municipal Law Questions The Gibbon memorandum was prepared in 1962, and accordingly, is " remote" under the stated remoteness rule of the majority and dissent.

B

e It was prepared in legal support of a proposal made by CEI to the City in a letter of CEI's President, Mr. Lindseth, to Mayor Locher dated September 17, 1962.

The auestion put was whether the City could legally agree to increase its rates to its customers so as to pro tanto reduce payments for its own needs and thus improve the cash position of its General Fund.

Fk. Gibbon is and was at the time of preparation of the subject memorandum an expert in municipal law. He concluded that he could not-see "any legal objection to the company's proposal." In coming to this con-clusion, he reviewed "[1] the outline of procedure for accorpliahing such interconnection attached to Mr. Lindseth's letter, [2] the Charters of the City of Cleveland, [3] the indentures securing outstanding bonds issued by both The Illuminating Company and the City to construct their respective

,. systems [4] the general law on the subj ect." (Gibbon Memorandum, p. 1)

Mr. Gibbon then raised a caveat as respects the joint ownership of property or joint operation of a business enterprise by the City as being 1cgally improper (Ibid, pp. 2-3), a caveat about the bargaining away of a municipality's right to set rates (Ibid, p. 4) and made the observation that while there is no legal inhibition against *a municipality furnishing its service free of charge, the trust indenture of 1948 contained language which r'equired some payment. (Ibid, p. 5) ,

Mr. Lansdale's covering letter of Tebruary 18, 1965 refers to a letter of August 12, 1963 which he wrote to Lee Howley, then Vice-president of CEI's Legal Department. This is the letter to which Carl White referred in the 4

-, . ...nr, .-- . - - - , --. ,, - g - , - - - ,, a . . , ,.

a e

_1g_ J l

Cleveland Littic Hoover Commission Report. The substance of the Gibbon ecnorandum thus had been fully disclosed shortly after August 12, 1963 as reflected in Lansdale's letter of February 18, 1965.

Accordingly, we find that there was a disclosure to the City of the contents of the memorandum, and moreover that the memorandum related to municipal law generally and not to client-related information. We find further that it bears no relationship to the financial condition of HELP as such. It involved no confidential material at all, and certainly none having any " nexus" or " substantial relationship" to the Nuclear Regulatory Commission proceeding. In any event the substance of the memorandum was disclosed to the City during the " remote" period (August 12, 1963 letter) and uas, at all times pertinent hereto, in the possession of the City and its General Counsel, the Law Department.

E r O_~a TJ. "(2) L held thui ihu rii u t v. cuuidiv.6 gave rise to potential conflict in the event information relating to bond counsel advice be-came relevant to some later contest between the City and CEI. We hold that thic potential for' onflict should have been and was known to the F1 at the time it agreed to represent the City. We - d that the Firm should have recognized that absent c ess waiver by the City, the Firm mightbeprec\x luded* rom representing CEI inanyproceedingi(nch(chinformation supplied in the courts of% e bond counseling could become relevant."

(Majority Memorandum, pp. 24-25 The foregoing ground is premised upon several er s of fact and reason.

First, it assumes confidential information passed from the Cit o SS&D at the time of the 1972-73 bond ordinance. Second, it refers to a "later ntest b:t;.:ca the City cnd C I" and to thc "parmutial for menfl ct."

9 m