ML19326B007

Reply Memorandum of Squire,Sanders & Dempsey at Evidentiary Hearing Before Special Board on Disqualification.No Evidence Exists to Support Accusations in City of Cleveland,Oh 760211 Hearing Memorandum.Certificate of Svc Encl

ML19326B007
Person / Time
Site:	Davis Besse, Perry
Issue date:	02/14/1976
From:	Gallagher M GALLAGHER, SHARP, FULTON, NORMAN & MOLLISON, SQUIRE, SANDERS & DEMPSEY
To:	Atomic Safety and Licensing Board Panel
References
NUDOCS 8003050996
Download: ML19326B007 (15)

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UNITED STATES OF AMERICA NUCLEAR REGULATORY COFD!ISSION Before the Atomic Safety and Licensing Board IN THE MATTER OF -

/m THE TOLEDO EDISON COMPANY and ') Docket Nos. A 346A IllE CLEVELAND ELECTRIC ILLUMINATING COMPANY ) 50-500A (Davis-Besse Nuclear Power Station, -

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

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

REPLY MEMORANDUM OF SOUIRE, SANDERS AND DEMPSEY AT EVIDENTIARY HEARING BEFORE SPECIAL BOARD ON DISQUALIFICATION e- .

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MICHAEL R. GALLAGHER 630 Bulkley Building 0F COUNSEL: Cleveland, Ohio 44115 (216/241-5310)

CALIACHER, SHARP, FULTON NORMAN & MOLLISON . Attorney for Squire, Sanders

& Dempsey' February 14, 1976 -

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UNITED STATES OF AMERICA NUCLEAR REGULATORY CO}DilSSION Before the Atomic Safety and Licensing Board IN THE MATTER OF THE TOLEDO EDISON COMPANY AND ) Docket Nos. 50-346A THE CLEVELAND ELECTRIC ILLUMINATING COMPANY ) 50-500A (Davis-Besse Nuclear Power Station, ) 50-501A Units 1, 2 and 3) )

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

REPLY MEMORANDUM OF SQUIRE, SANDERS AND DEMPSEY AT EVIDENTIARY HEARING BEFORE SPECIAL BOARD ON DISQUALIFICATION 1:.

THERE IS NO EVIDENCE IN THE RECORD TO SUPPORT THE ACCUSATIONS OF THE CITY'S LAW DIRECTOR The City substitutes rhetoric for evidence, speculation for reasoned inference and loaded words such as " betrayal" and " sabotage" for logic. Of even greater concern, however, are the misstatements of fact contained in the City's Hearing Memorandum.1/

For example: It is stated on page 6 of City's Hearing Memor-andum that ". . . Lansdale was helping advise the Little Hooter 1 Hearing Memorandum in Opposition to Trial Memorandum of Squire, Sanders and Dempsey at Evidentiary Hearing before Special Board on Visqualification, dated February 11, 1976 l

Commission how to increase MELP rates to private residential customers under the guise of relieving the street lighting burden on the City's General Fund. Such a scheme was particularly damaging to the City be-cause CEI could thus be foisted upon the City and by an apparently neutral and outside body, the Little Hoover Commission." ". . . in their trial brief, Squire, Sanders and Dempsey attempt an explanation of this meeting. Unfortunately, there is no evidence before this panel to back up their claims . . ." The City Law Director well knows that the Little Hoover Commission was an arm of the City acting for and on its behalf. Yet, he revels in the order of this board striking evidence establishing this fact at the hearing of February 3,1976. He then insinuates that the Little Hoover Commission is really allied with CEI by describing it as "an apparently neutral and outside body."

It is clear that the City is twisting the known evidence and is endeavoring to take advantage of the board's ruling excluding evi-dence of the true nature of the Little Hoover Commission. The City's conduct under the circumstances is unprofessional and should not be countenanced.

Similarly, the City endeavors to mislead the Special Board by its references to the bcnd issues of 19662/ and 1968. (See Items 3 and 4,. Hearing Memorandum, page 7.) These bond issues were multi-purpose general obligation issues. The full faith and credit of the 2/There was no 1966 bond issue. There were two bond issues in 1968.

8 4 ' "M City.was pledged to support them. They did not, as asserted by the City, require "all relevant information from MELP." They required no financial information from MELP, either as respects its finances gener-ally or as respects its revenue. They were not revenue bond issues.

The financial condition of MELP and the state of its revenue were im-material and totally irrelevant. The statement by the City to the con-trary is a deliberate falsehood. For the City to permit or encourage an inference that the financial condition of MELP or its revenues were needed or required as part of the referred-to bond issues is highly improper.

Again, the City, with total indifference to the facts and without the slightest support in the evidence, charges sabotage with respect to the 1972 Bond Ordinance. There was no evidence to support or even suggest such a charge in the City's Principal Brief. Not only is the record beref t of evidence but there is positive evidence in the detailed affidavit of John B. Brueckel refuting the unsupported accu-sation in City's Principal Brief. There are many other instances, but we believe our point is made.

In arguing one's case, it is entirely proper to urge the Board to draw certain inferences from the facts before it. However, the facts from which ~ the inferences are to be drawn must be established by evidence. The City fails to observe this fundamental principle.

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II.

SQUIRE, SANDERS AND DEMPSEY HAD AN ETHICAL DUTY TO AID THE CITY IN 1972 WHEN THE CITY COULD NOT OTHERWISE OBTAIN BOND COUNSEL The facts are simple: SS&D, CEI's general counsel, was ap-proached by the City, for whom it did bond work on an ad hoc basis over a number of years, to handle the 1972 bond issue for MELP. The City was in desperate straits.1/ Although initially turned away, the City importuned SS&D through the Law Director, its general counsel. SS&D

' agreed after first securing the consent of CEI and the express written request of the City's Law Director and Utilities Director. The Law Director, having induced _ the representation for the limited purpose of a bond issue, now seeks to disqualify.SS&D from representing CEI in these i

proceedings.-

The positive ethical obligation of Squire, Sanders and Dempsey under the circumstances has been overlooked. Ethical Consider-ation'l-1 provides:

"A basic tenet of the professional respon-sibility of lawyers is that every person in our society should have ready access to the independent professional services of a lawyer of integrity and competence. Maintaining the

-integrity and: improving the competence of the bar to meet the highest standards is the f ethica1' responsibility of every lawyer."

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. 2/". . . the City in desperation,- af ter trying to obtain other bond counsel,. turned once again to Squire, Sanders and Dempsey in 1972 .'. . ." Hearing Memorandum, page 12- ,

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Ethical Consideration 2-26 provides:

"A lawyer is under no obligation to act as adviser or advocate for every person who may wish to become his client, but in further-ance of the objective of the bar to make legal services available, a lawyer should not lightly decline proffered employment.

The fulfillment of this objective requires acceptance by a lawyer of his share of ten-dered employment which may be unattractive both to him and the bar generally."

Under the facts of the case at bar, Squire, Sanders and Dempsey was under a positive ethical obligation to aid the City. It dealt with the City's knowledgeable general counsel, its Law Director and it secured consent from the CEI. It required a written request for its services which was provided. A rejection of the City's entreaty under the circumstances would have raised a serious question of ethics in the minds of reasonable persons.

III.

d THE ATOMIC SAFETY AND LICENSING BOARD IS WITHOUT AUTHORITY TO SUSPEND AN ATTORNEY IN C00D STANDING ADMITTED TO PRACTICE BEFORE ANY COURT OF THE UNITED STATES SAVE FOR MISCONDUCI 0F THE ATTORNEY MANIEEST IN HIS APPEARANCE BEFORE THE BOARD

. The courts have supervisory power over mes.bers of the bar.

It is through this inherent power they enforce the Code of Professional Responsibility. Estate Theaters, Inc. v. Columbia Pictures Industries, Inc. 345 F.Supp. 93 (S.D.N.Y. 1972)

An administrative board has no inherent supervisory power over members of the bar. What authority the Atomic Safety and Licensing Board has with respect to counsel is derived from 10 CFR 2.713 (Part 2,

-9 Subpart g., Rules of General Applicability).

Bo'th the Antitrust Board and the Special Board have agreed in comments: during the hearings of December 31,~1975 and February 3, 1976, that Rule 2.713 was not designed to cover conduct our of its presence. Both conceived the Rule to apply to contumacious conduct before the Board 'or in connection with proceedings before the Board.

The language of Rule 2.713 when read in pari materia compels this conclusion.

The absence of an evidentiary hearing compels this conclu-sion. An evidentiary hearing is unnecessary when dealing with an ac-tion undertaken in proceedings before the Board; it is essential if the Board's inquiry must go beyond conduct immediately before it, as in the instant case,. where the alleged misconduct is not manifest in the proceedings.

The Antitrust Board has made a positive finding on the pro-priety of SS&D's conduct before it. We cite the Majority Memorandum at page 23.

"As we do so we note once again the high

, degree of professional skill which both CEI and the City imputeto the Firm; the Board's lack of criticism of any action undertaken by that Firm in the instant proceeding . . . ."

Since the Antitrust Board has already made a specific finding that there is no' criticism of any action undertaken by SSED in the in-stant proceeding and since Rule-2.713, properly construed, does not authorize suspension of an attorney by the Board as respects actions

~7-not manifest in its proceedings, this Board is without authority to suspend Squire, Sanders and Dempsey herein.

Respectfully submitted,

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, Michael R. Gallyf,her l 630 Bulkley Building 3

Cleveland, Ohio 44115 (216/241-5310) <

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CERTIFICATE OF SERVICE I hereby certify that copies of the Reply Memorandum of Squire, Sanders and Dempsey at Evidentiary Hearing Before Special Board on Dis-qualification has been served by mailing the original and 20 copies to the Secretary, U. S. Nuclear Regulatory Commission, Washington, D.C.

20545, Attention: Chief, Docketing and Service Section, and by mailing one copy to each of the persons listed on the attached Service List, d Regular United States Mail, First Class, postage prepaid, on the /Y" day of February 1976.

& J Mba Michael R. Galla er 630 Bulkley Builcing Cleveland, Ohio 44115 (216/241-5310) e i

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SERVICE LIST James B. Davis, Esq.

Director of law 213 City Hall Department of Law Cleveland, Ohio 44114 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, D. C. 20555 John M. Frysiak,,Esq.

Atomic Safety & Licensing Board Panel U.S. Nuclear Regulatory Commission Washington, D. C. 20555 Cerald Charnoff, Esq.

Wm. 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 Sr.reet, N.W.

Washington, D.C. 20555 l

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i Donald H. Hauser, Esq.

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

Cox, Langford & Brown 21 Dupont Circle, N.W.

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

David C. Hjelmfelt, Esq.

1700 Pennsylvania Avenue, N.W.

Suite 550 , ,

Washington, D. C. 20006 Alan S. Rosenthal, Chairman .

Atomic Safety and Licensing Appeals Board U.S. Nuclear Regulatory Comission Washington, D. C. 20555 g Dr. John H. Buck

' Dr. Lawrence K. Quarles

, Atomic Safety and Licensing Appeals Board U.S. Nuclear Regulatory Comission e-e Washington, D. C. 20555 -

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Howard K. Shapar, Esq.

E::ecutive Legal Director U.S. Nuclear Regulatory Comission Washington, D. C. 20555 Mr. Frank W. Karas, Chief Public Proceedings Branch Office of the Secretary U.S. Nuclear Regulatory Comission Washington, D. C. 20555 Abraham Braitman, Esq.

Office of Antitrust & Indemnity U.S. Nuclear Regulatory Comission Washington, D. C. 20555 e

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' ' Frank R. Clokey, Esq.

Special Assistant Attorney General

Towne House Apartments, Room 219 Harrisburg, Pennsylvania 17105 .

Edward A. Matto, Esq.

Assistant Attorney General Chief, Antitrust Section u ,

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30 East Broad Street,15th Floor Columbus, Ohio 43215 -

Richard S. Salzman, Chairman Atomic Safety and Licensing Appeals Board U.S. Nuclear Regulatory Commission i >>

Washington, D. C. 20555 Michael C. Farrar t

Dr. W. Reed Johnson i Atomic Safety and Licensing Appeals Board i*

U.S. Nuclear Regulatory Commission '

Washington, D. C. 20555

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• Andrew F. Popper, Esq.

, Office of the Executive Legal Director U.S. Nuclear Regulatory Commission Washington, D. C. 20555 Benjamin H. Vogler, Esq. '

Joseph Rutberg, Esq.

Robert J. Verdisco, Esq.

l Roy P. Lessy, Jr., Esq.

Office of the General Counsel l Regulation l

U.S. Nuclear Regulatory Commission l Washington, D. C. 20555 Melvin C. Berger, Esq.

I Joseph J. Saunders, Esq.

Steven H. Charno, Esq. "

David A. Leckie, Esq.

Janet R. Urban, Esq. 3 Ruth Creenspan Bell, Esq.

Antitrust Division Department of Justice Post Office Box 7513 -

Washington, D. C. 20044

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.- / . Christopher R. Schraff, Esq.

Assistant ' Attorneys General Environmental Law Section 361 East Broad Street, 8th Floor Columbus, Ohio 43215 Thomas J. Munsch, Jr., Esq.

General Attorney Duquesne LiS he Company 435 Sixth Avenue Pittsburgh, Pennsylvania 15219 Joseph Rieser, Esq.

Reed, Smith, Shaw & McClay '

Suite 440 1155 Fifteenth Street, II. U.

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

Winthrop, Stimson, Putnam & Roberts 40 Wall Street New York,Itew York 10005 Wallace L. Duncan, Esq. .

h Jon T. Brown, Esq.

Duncan, Brown, Weinberg & Palmer l

. 1700 Pennsylvania Avenue, N.W.

Washington, D. C. 20006 Robert P. Mone, Esq.

George, Greek, King, McMahon & McConnaughey Columbus Center 100 East Broad Street Columbus, Ohio 43215 David McNeill Olds, Esq. .

John McN. Cramer, Esq. .

Uilliam S. Lerach, Esq.

Reed, Smith, Shaw & McClay Post Office Box 2009 Pittsburgh, Pennsylvanin'15230 e

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- John C. Engle,, President AMP-O Inc.

Municipal Building 20 High Street Hamilton,' chio 45012 Victor F. Greenslade, Jr., Esq.

Principal Staff Counsel The Cleveland Electric Illuminating Company Post Office Box 5000 Cleveland, Ohio 44101 Lee A. Rau, Esq.

Joseph A. Rieser, Jr., Esq.

. - . Reed, Smith, Shaw & McClay . .

Suite 404

- Madison Building Washington, D. C. 20005 Leslie Henry, Esq.

Michael M. Briley, Esq. . , . .

Roger P. Klee, Esq.

e, Fuller, Henry, Hodge & Snyder 300 Madison Avenue i, Toledo, Ohio 43604 E.. Pennsylvania Power Company ..a... . . . . . . . . te.,.

One East Washington Street New Castle, Pennsylm nia 15103 l

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.. John C. Engle, President .

AMP-O Inc.

,Hunicipal Building , ,

20 High Street .

Hamilton, Ohio 45012 -

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Victor F. Greenslade, Jr., Esq.

Principal St,aff Counsel The Cleveland Electric Illuminating Company . .. ._ _

Post Ot. ice Box 5000 Cleveland, Ohio 44101 Lee A. Rau, Esq.

Joseph A. Rieser, Jr., Esq.

. . Reed, Smith, Shaw & McClay , . . - . .- ..

Suite 404 Madison Building --

Washington, D. C. 20005 Leslie Henry, Esq. '

... . . Michael M. Briley, Esq. ._..x. . . . s. . 4 muos. ... .... .. . . ,

. ,, Roger P. Klee, Esq. '

Fuller, Henry, Hodge & Snyder

• 1. 300'Hadison Avenue Toledo, Ohio 43604

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Pennsylvania Power. Con:pany ,_ . . . .4.. - . . .. ,un..,...u...,. . . . . . . .

One East Washington-Street -

New Castle, Pennsylvanin 15103 Eliza'beth S. Bokers, Esq.

Chairman Atomic Safety & Licensing Board U.S. Nuclear Regulatory, Commission Washington, D. C. 20555

. Edward Luton, Esq., Member .

Atomic Safety & Licensing Board .

U.S. Nuclear Regulatory Commissio'n

• Washington, D.C. 20555 I

Thomas W. Peilly, Esq., Member Atomic Safety & Licensing Board U.S. Nuclear Regulatory Commission Washington, D. C. 20555

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