ML19329A791
| ML19329A791 | |
| Person / Time | |
|---|---|
| Site: | Perry, Davis Besse  |
| Issue date: | 02/01/1977 |
| From: | Douglas M CLEVELAND, OH |
| To: | |
| Shared Package | |
| ML19329A792 | List: |
| References | |
| NUDOCS 8001150692 | |
| Download: ML19329A791 (34) | |
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UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION 4
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Before The Atomic Safety and Licensing Appeal Board i
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In The Matter of I
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THE TOLEDO EDISON COMPANY AND Docket Nos 0-346A/
5 THE CLEVELAND ELECTRIC ILLUMINATING CO.
-500A (Davis-Beste Nuclear Power Station, 50-501A l
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Units 1, 2,~ and 3) j THE CLEVELAND ELECTRIC ILLUMINATING CO.
Docket Nos. 50-440A et al 50-441A i
'(Perry Nuclear Power Plant, Units 1 and 2) r h
BRIEF OF CITY OF CLEVELAND RE DISQUALIFICATION PROCEEDINGS l MALCOLM C. DOUGLAS MICHAEL R. GALLAGHER I
1 Acting Law Director Attorney for Squire, Sanders ROBERT D. HART
& Dempsey i: First Assistant, Director of Law 630 Bulkley Building 213 City. Hall Cleveland, Ohio 44115 Cleveland, Ohio 44114 li (216) 694-2737
. For the City of Cleveland.
3 i
) Chief Antitrust Counsel JOSEPH RUTBERG, Esq.
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BENJAMIN H..VOGLER, Esq.
. Assistant Chief Antitrust Counsel g
ROY P. LESSY, JR., Esq.
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Counsel f
'l For the NRC Staff.
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February 1,1977 1
8001250 72
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TABLE OF CONTENTS 1
TABLE OF CITATIONS iii i
STATEMENT OF THE FACTS 1
. AR GU M ENT......................................................
3 PROPOSITION I The Special Board Erred in Holding The Doctrine of Collateral Estoppel Was Appli-t cable To These Proceedings. Authority l
Holds That Collateral Estoppel Is Not To Be Applied To Disqualification Proceed-ings.
3 PROPOSITION II The Special Board Erred In Its Application of The Doctrine Of Collateral Estoppel.....
7 Even If Collateral Estoppel Was Proper Against The City, The Special Board Was Still Required To Make An Independent
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Examination and Determination of the Charges Against SS&D 7
PROPOSITION III The Special Board Erred In Finding That There Was An Identity Of Parties in the
.i Proceedings Before the United States District I
Court, Northern District of Ohio and The Parties to the Proceedings Before The Atomic Safety and Licensing Board 9
A.
THE NUCLEAR REGULATORY COMMISSION IS AS MUCH AN INTERESTED PARTY TO THESE PROCEEDINGS AS IS THE CITY.
10 B.-
THE NRC STAFF HAS BEEN INEXTRICABLY INVOLVED IN THE DISQUALIFICATION PROCEEDINGS SINCE INCEPTION 3
AND CANNOT BE FORECLOSED BY THE SPECIAL BOARD'S DETERMINATION AS TO LACK OF, INTEREST.
12 C.
THE JUSTICE DEPARTMENT IS ALSO AN INTERESTED 6
- PARTY IN THIS DISQUALIFICATION PROCEEDING.
13 PROPOSITION IV The Special Board Erred In Finding That There Was An Identity of Issues in The Proceedings Before the United States District Court, Northern District of Ohio and These Proceedings.
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In. Re Boone I
9 83 F. 9 44 (Cir. Ct. Cal. 1897)..............................
8 Kalb v. Fuerstein I
e 3 0 8 U. S. 4 3 3 ( 19 4 0 )..........................................
18 Laskey Bros. of West Virginia. Inc. v. Warner Bros. Pic+n es 130 F. Supp. 514 (S.D.N.Y.1955) aff'd 224 F. 2d 824 2nd Cir.
1955........................................................
3
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Laskey Bros. of West Virginia, Inc. v. Warner Bros. Pictures 1
13 0 F.S. 514, 517-518 (S.D.N. Y. 19 5 5).......................
4 il NCK Organ Ltd. v. Bergman i.
5 4 2 F 2 d 12 8, 13 3 ( 2nd Cir. 19 7 6)..............................
24 l
' N.L.R.D. v. Denver Building Construction Trades Council 18 6 F2 d 3 2 6 (C. A. D. C 19 5 0)..................................
18 f Porter v. Huber 6 8 F. S. 13 2 (W.D. Was h 19 4 6)................................
24 Spilker v. Hankin 1
18 8 F 2 d 3 5 (C. A.D. C. 19 51)...................................
18
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T.C. Theatres v. Warner Bros. Pictures. Inc.
113 F. S. 2 6 5, 2 6 8 (S.D. N. Y. 19 5 3 )...........................
23
} U.S. v. Mahaney 2 7 F. S. 46 9 (N. D. Cal. 193 9).................................
23 s
1" U.S. v. Standard Oil
]
136 F. S. 3 4 5 (S. D.N. Y. 19 5 5)................................
7 ij Vitaajlli v. Seaton j
3 5 9 U. S. 5 3 5 ( 19 5 8 )..........................................
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' STATEMENT OF THE FACTS i
This Appeal from the November 5,1976 decision of the Special
' Board established for a 10 C.F.R. Sec. 2.713 proceeding and the November 23, q 1976 order of the Atomic Safety and Licensing Board (hereinafter these appeals I
are considered as one entity) which dismissed and denied the disqualification l
motion filed by the City of Cleveland (" City") in November of 1975, requests this Atomic Safety and Licensing Appeal Board to review the actions cf these Boards in light of the order of this Atomic Safety and Licensing Appeal Board rendered U June 11,1976.
On June 11, 1976 this Appeal Board set forth a comprehensive opinion concerning disqualification proceedings. The Order created +he Special Board, empowered it alone to determine the merits of charges which might result in the 4
" disqualification on an attorney, ordered full discovery, and set forth specific l procedural safeguards in addition to a description of the hearing form.
It was evident that this Appeal Board intended to protect the interests.
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of'all participants in these disqualification proceedings and etressed the importance of a full and complete hearing into the matter.
July of 1976, discovery commenced in the preliminary stages of the Spe.ial Board hearing on disqualification ordered by this Board. On August 26, l
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1976 Squire, Sanders & Dempsey ("SS&D") filed a Motion to Dismiss the Disquali-fication Proceedings on the basis of an August 3,1976 opinion and finding of the United States District Court for the Northern District of Ohio, Eastern Division, where in Docket No. CV-75-560, a private anti-trust action, a motion for disquali-l fication of SS&D had also bee filed. The basis for the Motion to Dismiss was essentially collateral estoppel.
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3 The City opposed the SS&D motion on the grounds that there was
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'! absolutely no authority or reason to apply any doctrine of collateral estoppel to disqualification proceedings and in addition that the granting of the SS&D motion g
would be a violation of the June 11,1976 Order of this Appeal Board.
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The City argued that it would be improper for the Special Board to accept tl. ba rs opinion of the United States District Court as conclusive upon an
.i issue if injustice would result from foreclosing further inquiry and alternatively, 1
l that in disqualification proceedings the application of collateral estoppel to a matter 4
of attorney conduct is inappropriate.
f The City urged the Special Board to deny the Motion to Dismiss aM to I
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' proceed with the required evidentiary hearing as ordered by this Appeal Board.
The City suggested that SS&D should more properly offer the opinion of the United i
States District Court as a defense at that hearing.
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The Special Board, one member dissenting, granted the SS&D Motion to 1 Dismiss and summarily dismissed the City's disqualification mcSoi'thus foreclosing the City from its right to be heard both initially or upon rebuttal to the findings of the United States District Court.
The Atomic Safety and Licensing Board, on November 24, 1976 performed
- what is described as "the ministerial duty" of pron ptly entering an order giving effect to the Special Board's November 5,1976 decision and finalized the dismissal
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R and denial of the City's Motion'.
The City filed its noL; :' :pp a1 from those orders and its exceptions
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i to those decisions.
Because many of the arguments advanced by the City are presented
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in its Brief of September " 1976, before the Special Board, and in the interest of l
~ [ economy of effort, that Brief is attached and incorporated herein.
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ARGUMENT f
PROPOSITION I The Special Board Erred In Holding The Doctrine Of Collateral B
Estoppel Was Applicable To These Proceedings. Authority Holds That Collateral EstoppelIs Not To Be Applied To Disqualificatio'n Proceedings.
3 The decision of the Special Board was contrary to < ase law as it held that the findings and conclusions of a United States District Court, in an Ohio disqualification Proceeding had any conclusive effect outside the jurisdiction I of that court.
Also contrary to authority was its acceptance of a disqualification I
decision without reviewing the entire record of the proceeding and its denial of 4
, hearings on subsequent disqualification motions.
Laskey Bros of West Virginia, Inc., v. Warner Bros. Pictures, 130 F. Supp. 514 (S.D.N.Y.1955) aff'd. 224 F. 2d 824 2d Cir.1955; Fisher Studio Inc. v. Lowe's Incorporated, 232 F. 2d 199 (2nd Cir.1956); and Harmar Drive-In Theatre, Inc.' v. Warner Bros Pictures Inc., 239 F. 2d 555 (2nd Cir.1956), are l
t the cases that reveal the lack of collateral effect given prior disqualification results.
These cases all concern the disqualifcations of attorney, Arnold G. Malkan.
Summarized, Malkan was disqualified in the United States District Court, of New York in 1954 (Fisher Case) from which order he appealed. He formed a new firm and filed different suits against the same defendants in the United States District Court of New York, for Laskey (a client of his prior firm) and for Aust'n (a new client). Defendants again moved for his disqualification.
i The United States District Court, Southern District of New York Court held hearings on the motion, took testimoney, examined the complete record of the prior United States District Court, Eastern District of New York disqualification proceeding and gave Malkan an opportunity to answer the defendant's charges.
f Malkan was disqualified as to client Laskey, but not disqualified as to client Austin's s
j case. The decision was later affirmed by the Second Circuit Court of Appeals.
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The Fisher disqualification finally reached the Second Circuit I
Court of Appeals in 1056 and the appeal resulted in Malkan not being disqualified, although his former partner Isacson and the firm Walkan & Isacson were disqualified.
Harmar Drive-Inn, reversed a lower court decision which had denied a motion to disqualify Malkan. The United States District Court, Southern District of New York, in Harmar, had conducted an inquiry into the motion and at which Malkan had offered evidence. The court denied the motion without opinion, The Second Circuit Court of Appeals ordered the disqualification of Malkan because his clients 1
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' in Harmar had been clients of the old Malkan & Isacson firm.
j Several principles are evident from these cases: The Fisher trial n
court stated that the disqualifi::ation order issued had no effect outside of its jurisdiction:
"With regard to other (antitrust) actions pending in other districts of a similar nature...I have no power to make an order which would be binding on these courts. Undoubtedly defendants have the legal right in these jurisdictions to urge the contents of the sti-pulation of February 3,1952 and the decisions hereto-fore rendered in the instant case." Laskey Bros, of W. Virginia, Inc. v. Warner Bros. Pictures. Inc.,
130 F.S. 514, 517-518, (S.D.N.Y.1955) (emphasis added).
All the trial courts in these held hearings, took testimony and, at least in I.askey, indicated that it had examined the entire record of the prior disqualifi-t t
' cation proceeding of the Fisher trial court. It does not appear that the mere fact of previous disqualification was conclusive and, indeed, Malkan was permitted k
to represent Fisher.
The most important principle, however, is that a denial of a dis-qualification motion does not foreclose any court from conducting subsequent disqualification proceedings against the same attorney.
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"While lawyers ought not to be subjected to recurrent harrassment by way of disqualification proceedings, the j
l power of the court to control its officers is continuous i
and the remedy of disqualification is an instrument to that end. Our holding is based on lack of evidence, not l
necessarily on the absence, of any case; if further facts justify disqualification appear, the district court is at liberty to take such actions as it deems appropriate."
Fisher Studios, Inc. v. Lowe's Incorporated, 232 F2nd 199, 204 (2nd Cir.1956).
Thus under the only reported case law, the United States District
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l Court, Northern District of Ohio determination as to the conduct of SS&D before that court, has no authority outside its jurisdiction. SS&D could have offered that -
opinion and the court records on the proceeding as evidence before the Special Board but the evidentiary value would have been weighed by the Special Board i
and subject to examination. Under the prior case law, the City should not have i
i l been denied a right to a hearing on the disqualification motion as a prior dismissal cicev.hcrc is not conclusive before the Special Board.
l The City submits that the Special Board acted contrary to authority in holding that the doctrine of collateral estoppel required the adoption of an Ohio
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I y. opinion as the determination of a disqualification before it. The Special Board i
1 should have required SS&D to defer its defense until the City had presented its c'ase.
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l It should have further required SS&D to have the entire United States District Court,.
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Northern District of Ohio disqualification proceeding records copied and submitted along with the bare opinion prior to permitting the firm 'to introduce it in defense.
The Special Board should have conducted full evidentiary hearings before deciding upon the merits of the case and allowed the City to present its case in chief and rebuttal.
The fact remaihs, however, that the Special Board incorrectly accepted a.; conclusive the findings and conclusions of the United States District Court, Northern District of Ohio based upon its mistake as to the application of the q
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J doctrine of collateral estoppel to the entire disqualification proceedings and as
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': such, erred.
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, PROPOSITION II The Special Board Erred In Its Application Of The j
Doctrine of Collateral Estoppel.
Even If Collateral Estoppel Was Proper Against The City, The Spccial Board Was Still Required To Make An Independent Examination and Determination of the Charges Against SS&D.
t By application of the doctrine of collateral estoppel to these disquali-fication proceeding,the Special Board believed it was incapable of further inquiry
. as it held that the City was prevented by the doctrine from further litigation on H
theissues and itself similarly foreclosed. The City submits that any foreclosure on the City did not affect the duty of the Special Board to proceed with the disquali-
- fication.
l While the City has argued, supra, that the doctrine of collateral estoppel does not apply in disqualification proceedings, assuming, arguendo, that it did apply to the Special Board, the Special Board was still required to continue with its hearings into the conduct of SS&D and erred in not so doing.
9 The Special Board, like any tribunal, was required to ascertain whether there was merit to the City's initial accusations against SS&D. Empire Linotype School v. United States,143 FS 627 (S.D.N.Y.1956), citing U.S.
' v. Standard Oil,136 F.S. 345 (S.D.N.Y.1955); Emile Industires. Inc., v.
. Patenex, Ind. 478 F2d 562 (2nd Cir.1973). The Special Board's duty was not lessened by any infirmity that the United States District Court, Northern District 3
o of Ohio decision might later impose upon the City and that duty required it to go forward with the proceeding. As stated in Empire, supra:
" Assuming, arguenda, that the Government had delayed -
in making it a motion to disqualify (and was estopped to j
do so), the Court would not be precluded from adjudication of the question now before it. The Court's power to regulate 1
the conduct of attorneys practicing before it cannot be defeated by the laches of a private party. Empire Linotype i
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School v. U.S.,143 F.S. 627, 631 (S.D.N.Y.1956).
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,; PROPOSITION III The Special Board Erred In Finding That There Was An l
Identity of Parties in the Proceedings Before The United States District Court, Northern District of Ohio and The
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Parties to the Proceedings Before The Atomic Safety and Licensing Board.
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.,l The Special Board held that the only real parties in interest with J
h.. respect to the disqualification proceeding in the United States District Court, fi I:, Northern District of Ohio were SS&D and the City, and upon determining that the
- ]I, only real p:.rties in interest in the disqualification proceeding before the Atomic I Safety and Licensing Board were SS&D and the City,it found identity of parties j as one of the elements necessary to apply the doctrino of collateral estoppel.
I l The City submits that the Special Board erred when it refused to recognize I, the Justice Department and the NRC Staff individually as additional parties l
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____...L A.
THE NUCLEAR REGULATORY COMMISSION IS AS MUCH AN INTERESTED PARTY TO THESE PROCEEDINGS AS IS THE CITY.
The Nuclear Regulatory Commission ("NRC") through its Boards, a
4 conducts adjudicative proceedings under powers granted it by Congress. The
.' NRC Boards are federal tribunals charged, like all tribunals, with the duty of I
maintaining the integrity of its proceedings and by controlling the conduct of g the attorneys who practice before it. Ceramco Inc. v. Lee Pharmacertical, 510 l
F2d 368 (1975); E. F. Hutton Co. v. Brown, 305 F.S. 371 (S.D. Tex 1971).
i h-In a disqualillcation proceeding, the tribunal examines the conduct of I
the attorney, indeed:
...the court on its own motion may disqualify an attorney ilfor violation of the Canons of Ethics". Empire Linotype Schools v.' United States, 143 F.S$ 627,631 (S.D.N.Y.1956). The tribunal, while not a proponent of disqua-lification, is required to become a so-called " party in interest" because of the nature 4
of its duty to make inquiry.
..(A) tribunal to whose attention an alleged violation (of professional conduct) is brought is similarly duty bound to determine if there
,is any merit to the charges." Estates Theatres, Inc. v. Columbia Pictures 2-i Industires. Inc., 345 F.S. 93, 98 (S.D.N.Y.1972) (citing many cases in support).
4 If the NRC tribunals are de'
- bond to determine the merits of a h charge of misconduct by one of its attorney, the Special Bo rd cannot voluntarily relinquish that common law duty and duty required by the Order of this Appeal 3
3 Board, under a claim that the NRC is not a " party".
1 The Special Board was created for the purpose of fulfilling the duties
'!of the NRC in controlling attorhey conduct and maintaining the integrity of the NRC bar. The NRC has as much interest in the outcome of this disqualification lt l
8 i: proceeding against SS&D as the City has. The Special Board's decision to ignore
[ite responsibility and allow the opinion of the United States District Court, Northern ll j
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District Court of Ohio to substitute for its own determination af misconduct not ll only deprived the NRC of its primary interest but also emasculated the power of any hearing officers to maintain control over all parties and attorneys in various 1 adjudications. Clearly the NRC is a party in interest.
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The NRC Staff Has Been Inextricably Involved In the Disqualification Proceedings Since Inception and I
3 Cannot Be Foreclosed By The Special Board's Determination as to Lack of Interest.
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The NRC Staff became a party in interest to the disqualification i
proceeding almost from the beginning and had submitted briefs and engaged in oral argument concerning recommendations under the law and NRC Rules with respect to the alleged misconduct of SS&D before the Atomic Safety and Licensing p
Board. The participation of the NRC Staff has been continuous and clearly evident
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even before the Special Board.
1 At no time was the NRC Staff considered the voice of the Special Board or the Atomic Safety and Licensing Board. The Staff has always oeen considered g by the City as an independent entity with a vested interest in maintaining the I
8 integrity of the NRC bar and it was, therefore, entitled to be heard in the proceeding.
It is beyond refute that the NRC Staff is indeed a party in interest here.
The City submits that the doctrine of collateral estoppel was not applicable to the Special Board's disqualification proceeding: The Justice Depart-ment, The NRC Staff, no less than the NRC itself although parties in the Washington proceeding were not present or parties to the disqualification in the Ohio District Court.
Collateral estoppel will be applied only where the parties to two separate
, proceedings are identical. The Special Board erred when it found there to be but 3
i two parties to the NRC action and an identity of the parties. The Special Board
,. erred in finding a complete identity of parties in the pre ecdings before the District i
Court in Ohio and these proceedings.
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The Justice Department Is Also An Interested Party In l
This Disqualification Proceeding.
- l The Justice Department, no less than the City is also a party in I
s interest to these disqualification proceedings because the interests of the i
United States may have been adversely affected by the injury and prejudice the City alleged it had, and would suffer through the breaches of fiduciary obligations of its attorney SS&D.
j If SS&D's knowledge of the City and its Division of Light and Power l
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~ was utilized by SS&D in the main antitrust review, or enabled SS&D to foreclose a 4
j complete review, then the United States has a great interest in a determination over '
i whether SS&D should have been permitted to appear before the Atomic Safety h' and Licensing Board on behalf of CEI.
Moreover, the Justice Department, could have brought any alleged misconduct of SS&D to the attention of the Atomic Safety & Licensing Board and, but for the City's motion, would have Leen required to file its own motion for disqualification of that firm. Estates Theatres. Inc. v. Columbia Pictures Industries Inc., 345 F.S. 93 (S.D.N.Y.1972).
In Estates, suprg, a disqualification motion was filed against an attorney by the plaintiffs. The misconduct claimed was a conflict of interest
] between the attorney and a client who was not even a party to the case, but i
might be effected by its outcome. The court refused to dismiss the motion on
- lack of standing by stating
i "I do not agree. What is involved is a matter of public interest involving the integrity of the Bar l
(citing Consorted Theatres v. Warner Bros.
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l Cir. Man. Corp., 216 F. 2d 920 (C.A. 2,1954)),
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When the propriety of professional conduct is l
j questioned, any member of the Bar who is l
0 aware of the facts which give rise to the issue is duty bound to the Proper forum...The issue l
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having arisen here on plaintiff's motion, those attorneys representing other parties to the liti-gation were obligated to report the relevant in-f formation to the Court for its determination.
I Indeed, the court of Professional Responsibility mandates such acts: (Quoting DR l-102)
Estates, supra at 98. (Emphasis added).
In the Atomic Safety and Licensing Board disqualification proceeding,
. the City objected to SS&D's representation of CEI before that Board and claimed that such representation was adverse to the City interests. Under the Estates prin-
,, ciple, the Justice Department would have every right to speak for the City even if the City was not a party to the review. Clearly, its responsibility to the United States and the Atomic Safety and Licensing Board required the Justice Department to become a party in interest to the Special Board disqualification proceeding against SS&D,
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PROPOSITION IV The Special Board Erred In Finding That There Was An l
Identity of Issues In The Proceedings Before The United States District Court, Northern District of Ohio and These
' Proceedings.
The Special Board found that theissues before the United States District Court, Northern District of Ohio, concerning that court's disqualification y
of SS&D were identical in content and number with the issues involved in the i Special Board's disqualification of the firm. The Special Board misconstrued l
the similarity ofissues raised by the two disqualification proceedings for sameness I and thought them identical in thrust and number. As the issues may overlap, but are not identical, the Special Board was incorrect and held incorrectly.
The City submits that where the two disqualification proceedings share i
some common issues, specific issues were particular to each. How the particular conflict of interest was manifested and the effect of prior misconduct on the main
" action before the specific tribunalis the distinguishing factor. Some of the speci-l fic Special Board issues encompass:
1.
the propriety of SS&D's " secret representation" of CEI before the NRC from 1969 until 1974 and the effect of that representation tipon the antitrust review, l
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the propriety of the undisclosed and unpermitted represen-l..
tation of GI by SS&D fem 1974-1977 and the effect upon l
the City's right to a valid, complete, and unprejudiced antitrust review of CEI and CAPCO activity, 3.
the effect upon the City's interests before the NRC when SS&D attorneys had complete access to every City official j
, and City document and privy to complete City financial data from 1960-1976 and that same firm of attorneys was required to zealously represent the interests of CEI before the NRC, i
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any impropriety or appearance t r impropriety resulting i
l from the: lack of candor of certain SSAD attorneys who submitted affidavits to the Atomic Safety and Licensing
- Board,
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the issues by the Appeal Board on page 32 of its June lith Order.
d Regardless of common issues before the District Ccurt in Ohio, the above are singular only to the Special Board and were not at issue nor decided l' in Ohio.
j i-The City requested the Special Board to decide questions: Has the I
l conduct of SS&D during these proceedings complied with the standards of conduct required by the NRC bar? Is the standard of conduct of the N9C bar the standard of one particular District court or the standard of the majority of federal courts?
I Would the integrity of the Commission itself and the NRC bar suffer or be lessened
' if the actions of SS&D were common to attorneys in the NRC bar?
l The City suggests that the Special Board could not possibly understand.
nor assess the extent of the issues raised by the City in the Obia di qualificaticn by merely reading r. thirty-two page court opinion. Further how it could anticipate the extent of the issues to be raised by the City in the Atomic Safety and 'icensing l Board proceeding and then actually find them totally identical with the issues as i
i shown through the holdings of the Ohio District Court, is a factor in determining-8 error in its November 5th decision.
i The Special Board has no basis upon which to conclude that the issues involved in both the District Court and the Atomic Safety aad Licensing Board disqualification proceedings were identical and thus erred in applying collateral estoppel to an inquiry of different issues.
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i PROPOSITION V The Special Board Erred In Falling To Conduct Evidentiary I'
j Hearings as Required By The Mandate of the Atomic Safety And
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Licensing Appeal Board in its Decision of Ju.s 11, 1976.
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The Special Board Denied The C.ty Due Process When It 4
Refused To Conduct Full Evidentiary Hearings Prior To Its
-Determination of the Merits of the City's Accusations.
This Appeal Board has wrestled with the problem of deprivation of due process when arriving at its decision.of June 11,1976 and the City had been l led to believe that it would be afforded the same due process safeguards before the Special Board as SS&D would receive. The City was assured of the rfght to discovery, a right to present its case in chief and conduct cross-examination at a full evidentiary hearing, and most importantly, a right to rebutt the evidence testimony SS&D might offer in defense. The City was also assured that, following that full evidentiary hearing, the Special Board would determine, in its entirety,
.. the merits of the disqualification of SS&D.
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The Special Board arrived at a determint. tion of the charges against
' SS&D but that determination was neither a determination of the merits, nor a ii
] deternination following a full evidentiary hearing. Althoug evented by the j ' law and the superadded mandate of this Appeal Board, from such capricious l
actions, the November 5th decision appears to be exactly that capricious and devoid -
I of due process protection. Goldberg v. Kelly, 397 U.S. 254 (1970), Goldsmith
- v. U.S. Board of_ Tax Appeals, 270 U.S.117 (1925). Equally prohibited by law and mandate from' imposing limitation upon the City's right to be heard or to offer.
evidence in rebuttal, the Special Board decision eifectively imposed such a limitadon.
SS&D's Motion to Dismiss was an attempt to foreclose the City from
~ he same rights that SS&D h*ad argued for so strenously in May of 1976. Further, t
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the motion contained a document that is proported to be a complete defense b
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h ethicalinquiry by the hRC and which was accepted by the Special Board outside of the hearing procedures established on June 11, 1976.
The full evidentiary hearings required by the Appeal Board were l not held and the City was denied its right to present its case or even rebutt the presumptions and inaccuricies contained in a thirty-two page document from an Ohio Die'.cict Court.
I The Special Board determined that the charges against SS&D should I
be dismissed because the Ohio District Court disqualification proceeding precluded inquiry into any similar accusations. (See argument 2, supra). The City was denied any right to present the underlying record in that proceeding, an explanation of the partiality of the proceeding, effect of the denial of any discovery '
I save deposition to the proceeding, or to show that the evidence presented had no
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, rational basis to the conclusions drawn.
The City challenges the ability of the Special Board to so summarily deprive the City of its due process rights and guarantees in this proceeding. The
> Special Board need never have followed the equitable doctrine of collateral estoppel i
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l to the proceedings if injustice would result. Spilker v. Hankin_,188 F2d 35 i
g (C.A.D.C 1951)* N.L.R.D. v. Denver Building Construction Trades Council, 186 F2d 326 (C.A.D.C.1950); see also Kalb v. Fuerstein, 308 U.S. 433 (1940).
The Special Board chose, without any authority on the subject, to apply the doctrine and through that application commit a greater injustice by deprivation.
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, of due process.
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Even If The Doctrine of Collateral Estoppel Could Have l
Caused The Dismissal of the City's Motion Prior to the Hearing, the Special Board was Still Required, Under Due Process Requirements to Conduct the Full Evidentiary i
Hearings That Had Been Promised By The June 11, 1976 Order of This Appeal Board.
- l Even if the doctrine of collateral estoppel could have provided the Special Board with the power to summarily dismiss the City's motion, the Appeal
- i I
Board had specifically granted the City greater procedural protections which could '
not be ignored by the Special Bcard. Vitarelli v. Seaton, 359 U.S. 540 (1958).
In Vitarelli, the plaintiff employee was led to believe that he was to receive certain procedural steps which might lead to his dismissal from the Interior Department for security reasons. Following a hearing at which no evidence was entered against him, the employee was discharged. The Interior Department defended its actions by stating that it did not deny Vitarelli due process because
' it could have discharged him without ever stating any cause and without providing l him with a hearing.
l The Supreme Court held that what the Interior Department could have done was immaterial. As the Department had guaranteed Vitarelli greater procedur-l al protections in its examination that it had been required to do, it could not rescind, h
the additional guarantees on the excuse that it could have ruled on his situation with-out need for a hearing.
j
...(H)aving chosen to proceed against petitioner on security grounds, the secretary here...was bound by the
' regulations which he himself had promulgated for dealing with such cases, even though without such regulations he could have discharged petitioner summarily. Vitarelli, i
supra, at 539-540.
l The Court further held. that a revised procedural order would not moot Vitarelli's i
I suit as one could not expunge specifically granted under that examirstion.
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So too the City, on June 11,1976, was granted greater procedural l protections in presenting its charges of misconduct before the Se
- al Board. It il is undenied that the preliminary stages of the hearing had begun and discovery was commencing. On November 5,1976, the Special Board arbitrarily stripped away d
l the normal due process requirements and refused to honor the promise of the
^
' greater procedural protections granted by this Appeal Board.-
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Assuming, arguendo, that the Ohio determination on the basis of
' evidence therein contained was correct, and assuming that the Special Board after viewing the record considered that SS&D had put forth an adequate defense, the Special Board would still have been required to offer the City an opportunity to I'
. rebutt that defense as the right of rebuttal had been specifically granted to the l City by this Appeal Board.
The failure of the Special Board to hold the required evidentiarv s
hearing and its determination as to the merits of the charges without affording 3 the City notice and its opportunity for a hearing, deprived the City of its regular
! and additional due process protections guaranteed by the Constitution and the very '
orders of this Appeal Board. By failing to conduct the full evidentiary hearings.
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- into the charges, the Special Board erred.
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PROPOSITION VI The Special Board Erred in Granting the Motion to Dismiss Filed by Squire, Sanders & Dempsey and in Dismissing Cleveland's Motion to Disqualify the Law Firm of Squire, Sanders & Dempsey and its Washington, D.C. Affiliate, Co'x, Langford and Brown.
Where Disqualification Proceedings Are Concerned, District Court Conclusions That Have No Decisional Precedents or Ethical Precepts are Invalid and Not Binding.
The findings of fact of a District Court disqualification decision will 4
be overturned by a reviewing court if a higher court finds an abuse of discretion by that lower court. Further, a reviewing court, or any other court, is not bound by any conclusions drawn from facts found by the District Court unless those con-1 clusions are supported by decisional precedent or ethical precepts irrespective of the discretion of the trial judge.
"Having accepted the District Judge's findings of fact, we must reject his conclusions. Neither decisional precedents nor ethical precepts support his rational
...(W)hether the order disqualifying (the firm) from representing American Can in this action was proper involves ethical, not legal considerations. " American Can Co. v. Citrus Feed Co., 43 6 F2d 1125,1127 (5th Cir. 1971).
It follows, therefore, that in disqualification proceedings, conclusions, quite apart from the findings of fact, have no validity whatever unless collaterally i
supported by either prior case law or traditional precepts. When the Special i
Board dovetailed the United States District Court, Northern District of Ohio's findings of fact into the conclusions that that Court drew from those facts and then
. held the entire matter binding upon the parties,it was a clearly erroneous decision.
The City submits, that, regardless of the validity of the United States
. District Court, Northern District of Ohio's findings of fact in the Ohio disqualifi-cation, as to the presence of estoppel / waiver or substantial relationship the con-l
.f
clusions drawn from those facts by the District court were spurious and j
3 invalid for lack of precedent and are, indeed, contrary to traditional legal N ethics.
While the Special Board may have considered itself bound by findings of fact (the existence of an implied waiver in 1972), it erred in con-sidering, as equally binding, a District court conclusion which was unsupported U.
I by decisional precedent or ethical precept (an implied 1972 waiver to adverse
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i; representation perpetually estopping a client from 1) objecting to a conflict i
of interest in 1976 and/or 2) actual misconduct and breach of duty by attorneys from 1972-1974.
The City submits that the conclusions drawn by the Ohio District h Court have no support whatever.
1)
There ic no e.uthcritf or estopping a client from objecting to f
his attorney's breach of fiduciary obligations.
The court In Re Boone, 83 F 944 (Cir. Ct. Cal.1897) held that only the law could release an attorney from the fiduciary obligations he owes to his clients. It held that no client could ever agree, even by written release, to an attorney's breach of duty with respect to the attorney-client relationship because the law itself, and not the client, had created the duty and only the ir law could release him.
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A client could agree to his attorney accepting adverse employment
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i but could never prospectively consent to release the attorney from his duty of i
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confidentiality. A written statement purporting to release the attorney from I
l J his obligations was held void:by the court.
If no prospective agreement could subvert the obligations owed to a
!I l clientino client could be~ estopped from objecting to a conflict of interest or s.-
24
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a misconduct resulting from breach of duty. See also T.C. Theatres v. Warner Bros. 3ctures, Inc.,113 F.S. 265, 268 (S.D.N.Y.1953) 2)
There is no authority for estopping a governmental unit or entity embodied with the public interest fromobjecting to an attorney's con-flict of interest or miscondut.
The limited authority involving a public entity moving for disqua-b lification contains dictum indicating that no public entity or semi public
, group would ever have the power to consent to adverse representation because the public interest of the represented group requires added protection. U.S.
- v. Stand _ard Oil,136 F.S.'345, 351 (S.D.N.Y.1955): U.S. v. Mahang, 27 F.S. 469 (N.D. Cal.1939), A.B.A. informal Opinion 1233 (1972), with respect N to an Indian Tribe; see also Handelman v. Weps, 368 F.S. 258 (S.D.N.Y.1973).
3)
There is no authority under which an implied or uninformed waiver to adverse representation ever foreclosed subsequent objections and a court inquiry into an attorney's conflict of interest or attorney misconduct.
The subject ofwaiver and effects of any waiver upon the client's right to raise ethical objections have been extensively briefed by all parties in the prior stages of these proceedings and the City will not repeat its arguments except to point out that a client waiver of any type has not stopped subsequent court inquiry into the conduct of an att'orney.
As a court has a continuing duty to supervise the conduct of its bar, it must, in the public interest, adjudicate any question of attorney miscon-duct brought to its attention. If an attorney had breached his duty that breach of duty would not be condoned'or ignored by the laches or waiver of a client.
Emile Ind_ustrics Inc. v. Patentes. Inc., 478 F2d 562, 574 (2nd Cir.1973),
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U.S. v. Standard Oil, 354 F.S. 351 (n6) (S.D.N.Y.1955).
N 4)
There is no authority which permits an attorney employed p by a public entity be bound by less stringent fiduciary obligations with respect to the public employer then he would be bound toward a private client.
" Officers of the government, employing attorneys are entitled to the same protection against unprofes-sional conduct on their part as are private persons, and attorneys so employed owe the same fidelity to such employers as to other clients." Brown v. Miller, j
286 F. 994 (C.A.D.C.1923); see also Porter v.
Huber, 68 F.S.132 (W.D. Wash.1946).
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5)
There is not authority which would hold " Bond Counselling" to be a service that did not involve the creation of an attorney-client relation-ship and attendant fiduciary obligations.
g "Itdoes not make any difference that the particular j
transaction is one which could have been handled on the client's behalf by a layman... lawyers customarily render bulh legal and non-legal services without distinction...(c)lients are entitled to expect that their lawyers will act as they are supposed to act without quibble as to what particular services 'may have been technically legal services." NCK Organ Ltd. v.
Bergman,, 542 F2d 128,133 (2nd Cir.1976) quoting Cord v. Smith, 338 F2d 516, 534 (9th Cir.1964).
6)
There is no authority for concluding that continual or continuouus "ad hoc" representation by an attorney fails to create an attorney-client rela-tionship and attendant fiduciary obligations.
l "The bills of the attorney found in the record show the duration of the connection and the extent and l
va:ciety of the items charged and paid for. They indicate a continuous undersianding and consequent employement. Undoubtedly either a party had the right to terminate the connection at any time; and if it were done the other would have had no right to complaint. But, until tl is occurred, the confidence manifested'by the client gave him the right to expect a corresponding return of zeal, diligence and good faith on the part of the attorney.
/
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- f The employment to draw the contract was sufficient alone to put the parties in this relation to each other.
(Citation omitted). Baker 3 Humphrey,101 U.S.
2 494, 500 (1879).
7)
There is no authority which would permit an attorney to represent another client in a suit against a present client where consent of both parties has not been obtained.
"Under the Code, the lawyer who would sue his own client asserting in justification the lack of " substantial relationship" between the litigation and the work he has undertaken to perform for that chent is leaning on a slender reed indeed. Putting it as mildly as we can, we think it would be questionable conduct for an
]
^p attorney to particiipate in any lawsuit against his own client without the knowledge and consent of all concerned".
We do holet, however, that the ' substantial relationship'
~... H test does not set c sufficiently high standard by which the necessity for disqualification should be determined.
That test may be properly applied only where the represen-tation of a former client has been terminated and the parameters of such relationship have been fixed. Where the relationship is a continuing one, adverse representation is prima facie improper, and the attorney must be prepared to show, at the very least, that there will be no actual or apparent conflict in loyalties or d1 munition in the vigor of his representation. Cinema 5 Ltd. v. Cinerama. Inc.
528 F2d 1384,1386-7 (2nd Cir.1976).
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8)
The " substantial relationship test" of T.C. Theatres v.
Warner Bros. Pictures, Inc.,113 F.S. 265 (S.D.N.Y.) is merely a rule of ja evidence where adverse representation against a former client is the basis for a conflict of interest charge.
l' Judge Weinfield in the T.C. Theatre case created a " test" which i
would enable the court to infer from a private relationship that confidences and information were disclosed to.the challenged attorney which might be of use to
' that attorney in the present adverse representation.
P, Consolidated Theatres, Inc. v. Warner Bros. Cir. hianagement Corp.
25 2
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f.
216 F2d 920, 924 (2nd Cir.1954) clarified that the substantial relationship test by stating that:
"..'.was not a rule of substantive law purporting to define the professional obligation. It went no further than to measure the quantum of evidence required for proof of the obligation".
The so-called " test" was further referred in Fleischer v. A. A.P. Inc.'.163 F.S.
548, 552 (S.D.N.Y.1958):
"The courts have generally treated this so-called rule of evidence as creating an ' irrebuttable infer-ence' that confidentail information, material and
[
relevant to the instant case, was given to the I
attorney if the issues and subject matter of the former case are substantially related to the issues and subject matter of the present litigation."
9)
The substantial relationship test is an examination of the issues 4
in the case before the disqualification tribunal anct the issues or subject matter of the prior presentation. Once a common issue is evident, the test is met.
The City st.bmits that a review of the authorities and ethical precepts cast grave doubts upon the validity of an reasoning behind the conclusion made by the Ohio Distret Court disqualification proceeding.
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26
}
h CONCLUSION.
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4 The City requests the Appeal Board to reverse the November 5 decision of the Special Board and the November 23,1976 Order of the Licensing Board and remand the disqualification matter back to the Special Board with instructions to comply with this Appeal Board's order of June 11, 1976.
I j!
The City submits that this Board may find an adequate basis for
, the reversal with any of the above enumerated exceptions.
P A failure to correct the two Boards would subject the basic l-y authority of Commission tribunals to outside interference. Only through reversal will this Appeal Board control the conduct of the attorneys of the NRC bar.
Respectfully submitted, l
MALCOT.M C. DOITGT.AS Acting Director of Law
/
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a ROBERT D. HART First Assistant, Director of Law 213 City Hall f
Cleveland, Ohio 44114 216-694-2737 Attorneys for City of Cleveland.
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6
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CERTIFICATE OF SERVICE A copy of t'he foregoing Document was mailed this
/ day of 3 !'M e I
,197} to the following:
h l
John Lansdale, Jr., Esquire Cox, Langford & Brown 21 Dupont Circle, N.W.
Washington, D. C.
20036 Donald H. Hauser, Esquire Corporate Solicitor j;
The Cleveland Electric Illuminating Company l
Post Office Box 5000 Cleveland, Ohio 44101
'j i
Gerald Charnoff, Esquire Wm. Bradford Reynolds, Esquire k'j Shaw, Pittman, Potts & Trowbridge l
910 Seventeenth Street, N.W.
Washington, D.C.
20006
)
Mr. Chase R. Stephens l
1 Docketing and Service Section U.S. Nuclear Regulatory Commission 1717 H Street, N.W.
Washington, D. C.
20555 d
Douglas V. Rigler, Esquire Chairman Atomic Safety & Licensing Board Panel Foley, Lardner, Hollabaugh & Jacobs 815 Connecticut Avenue, N.W.
Washington, D.C.
20555 Michael R. Gallagher Attorney at Law 630 Bulkley Building Cleveland, Ohio 44115 Ivan W. Smith, Esquire John M. Frysiak, Esquire 3
Atomic Safety & Licensing Board Panel U.S. Nuclear Regulatory Commission Washington, D. C.
20555 u
r l
i i 28 7
j* Alan S. Rosenthal, Chairman l
Atomic Safety and Licensing Appeals Board U. S. Nucelar Regulatory Commission il Washington, D. C.
20555
!l Dr. John H. Buck Dr. Lawrence K. Quarles Atomic Safety & Licensing Appeals Board U.S. Nuclear Regulatory Commission Washington, D. C.
20555 i Howard K. Shapar, Esquire I
' Executive Legal Director U.S. Nuclear Regulatory Commission 4 Washington, D. C.
20555 l
Mr. Frank W. Karas, Chief j Public Proceedings Branch l
9 Office of the Secretary U.S. Nuclear Regulatory Commission Washington, D.C.
20555 i
,' Abraham Braitman, Esquire Office of Antitrust & Idemnity 3
U.S. Nuclear Regulatory Commission Washington, D.C.
20555
' Frank R. Clokey, Esquire Special Assistant Attorney General Towne House Apartments, Room 219 Harrisburg, Pannsylvania 17105
- Edward A. Matto,' Esquire
' Assistant Attorney General
- Chief, Antitrust Section
/ 30 East Broad Street,15th Floor Columbus, Ohio 43215 I
Richard S. Salzman, Chairman
, Atomic Safety & Licensing Appeals Board
, U. S. Nuclear Regulhtory Commission t Washington, D. C.
20555 i
Michael C. Farrar Dr. W. Reed Johnson j Atomic Safety & Licensing App,eals Board U.S. Nuclear Regulatory Coniraission Washington, D. C.
20555 k
29
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y
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Andrew F. Popper, Esquire Office of the Executive Legal Director U.S. Nuclear Regulatory Commission l
Washington, D. C.
20555 3 Benjamin H. Vog%r, Esquire Joseph Rutberg, Esquire Robert J. Verdisco, Esquire Roy P. Lessy, Jr., Esquire Office of the General Counsel Regulation U.S. Nuclear Regulatory Commission Washington, D.C.
20555 p Melvin C. Berger, Esquire i'
Joseph J. Saunders, Esquire Steven M. Charno, Esquire i David A. Leckie, Esquire
'j Janet R. Urban, Esquire -
Ruth Greenspan Bell, Esquire g Antitrust Division Department of Justice Post Office Box 7513 Washington, D.C.
20044 d'
Karen H. Adkins, Esquire Richard M. Firestone, Esquire Assistant Attorney Generals Antitrust Section 30 East Broad Street,15th Floor I, Columbus, Ohio 43215 i
Christopher R. Schraff, Esquire Assistant Attorneys General Environmental Law Section 361 East Broad Street, 8th Floor Columbus, Ohio 43215 Thomas J. Munsch, Jr., Esquire General Attorney
.) Duquense Light Company 435 Sixth Avenue Pittsburgh, Pennsylvania 15219
. Joseph Rieser, Esquire r
" Reed, Smith, Shaw & McClay Suite 440 1155 Fifteenth Street, N.W.
Washington, D. C.
20005 6
l 6
30
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I Terrence H. Benbow, Esquire Winthrop, Stimson, Putnam & Roberts
Wallace L. Duncan, Esquire Jon T. Brown, Esquire Duncan, Brown, Weinberg & Palmer 1700 Pennsylvania Avenue, N.W.
- Washington, D.C.
20006 Robert P. Mone, Esquire
', George, Greek, King, McMahon &
l McConnaughey
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Columbus Center a 100 East Broad Street I
Columbus, Ohio 43215 il Reuben Goldberg, Esquire
!! Arnold Fieldman, Esquire David C. Hjelmfelt, Esquire Goldberg, Fieldman & Hjelmfelt Attorneys at Law e
0 1700 Pennsylvania Avenue, N.W.
Suite 550 Washing ton, D. C.
20006
. David McNeill Olds, Esquire John McN. Cramer, Esquire j
i William S. Lerach, Esquire Reed, Smith, Shaw & McClay P. O. Box 2009 Pittsburgh, Pennsylvania 15230 John C. Engle, President AMP-O, Inc.
Municipal Building i
20 High Street
. Hamilton, Ohio 45012 i
5 l
l Jon T. Brown, Esquire' Duncan, Brown, Weinberg & Palmer Suite 777 I
'i 1700 Pennsylvania Avenue, N.W.
f Washington, D.C.
20006 Victor F. Greenslade, Jr., Esquire Principal Staff Counsel The Cleveland Electric Illuminating Company j{i
! P.O. Box 5000 Cleveland, Ohio 44101 31;
" c:
- h, 4-: Lee A. Rau, Esquire l
Joseph A. Rieser, Jr., Esquire Reed, Smith, Shaw & McClay 4
Suite 404 Madison Building Washington, D.C.
20005 i
Leslie Henry, Esquire Michael M. Briley, Esquire Roger P. Klee, Esquire Fuller, Henry, Hodge & Snyder 1
300 Madison Avenue Toledo, Ohio 43604 h
Pennsylvania Power Company 1 East Washington Street
. - New Castle, Pennsylvania 15103 h
by Regular U. S. Mail.
Respectfully submitted, if
- .,e -
' ROBERT D. HART First Assistant, Director of Law r
e J
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