ML19329B746
| ML19329B746 | |
| Person / Time | |
|---|---|
| Site: | Perry, Davis Besse  |
| Issue date: | 08/06/1976 |
| From: | Gallagher M CLEVELAND ELECTRIC ILLUMINATING CO., SQUIRE, SANDERS & DEMPSEY |
| To: | Atomic Safety and Licensing Board Panel |
| References | |
| NUDOCS 8002060755 | |
| Download: ML19329B746 (50) | |
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UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION Before the Atomic Safety and Licensing Board In The Matter Of
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THE TOLEDO EDISON COMPANY and
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Docket Nos. 50-346A THE CLEVELAND ELECTRIC ILLUMINATING COMPANY
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50-500A (Davis-Eesse Nuclear Power Station,
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50-501A Units 1, 2 and 3)
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THE CLEVELAND ELECTRIC ILLUMINATING
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Docket Nos. 50-440A COMPANY, et al.
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50-441A (Perry Nuclear Power Plant, Units 1 and 2)
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MOTION OF SQUIRE, SANDERS AND DEMPSEY TO STAY TEMPORARILY FURTHER DISCOVERY Now comes Squire, Sanders and Dempsey, through its counsel, Michael R.
Gallagher, and respectfully moves the Special Board to stay further dis-covery in the disqualification proceedings until the.' acial Board has had an opportunity to consider and act upon a motion of Squire, Sanders and Dempsey to dismiss the disqualification proceedings which Squire, Sanders and Dempsey will file expeditiously.
i MICHAEL R. GALLAGHER Attorney for Squire, Sand s & Dempsey 630 Bulkley Building Cleveland, Ohio 44115 (216)241-5310 8002060 kf f
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,o MEMORANDUM On August 3, 1976 Judge Robert B. Krupansky entered an Order denying a motion of the City of Cleveland (City) to disqualify Squire, Sanders and Dempsey (SS&D) in case filed in the United States District Court for the Northern District of Ohio, Eastern Division, entitled City of Cleveland vs. The Cleveland Electric Illuminating Company, et al., Civil Action No.
C75-560.
The United States District Court case is one for treble damages brought by the City against the Cleveland Electric Illuminating Company (CEI) charg-ing violation of the antitrust laws.
It arises out of the same facts and presents essentially the same antitrust liability issues as the instant pro-ceeding before the NRC Antitrust Licensing Board.
A Motion to Disqualify SS&D as counsel was filed in it just as one was filed in the instant proceeding. The motion was identical to the one filed herein and the briefs, together with supporting exhibits, were sub-stantially identical.
The issues raised by the motions to disqualify are the same.
It is the position of SS&D that the principles of the doctrine of collateral estoppel require this Special Board to deny the City's Motion to Disqualify SS&D before the NRC. To this end, it contemplates filing and is commencing preparation of a Motion to Dismiss the disqualification proceedings.
SS&D's Motion to Dismiss will not be filed for the purpose of delaying these proceedings, but rather to avoid unnecessary expense and wasted effort.
l
, Such a goal is a desirable or.a, for there has already been a hearing be-fore the Licensing Board, one before the original Special Board, one be-fore the Appeal Board, and a prehearing conference before the reconstituted Special Board.
SS&D intends promptly to prepare and file its Motion to Dismiss these disqualification proceedings. The Motion will be premised on the argument that the City is collaterally estopped o raise an issue as to the facts upon which Judge Krupansky made specific findings; namely:*!
1.
The City is estopped from acserting alleged conflict of interest against SS&D.
2.
The City waived any right to assert alleged conflict of interest against SS&D.
3.
Brueckel's services for the City in preparing the 1972 Bond Ordinance were not adverse to Lansdale's repre-sentation of CEI in the antitrust proceeding.
4.
SS&D's role as special bond counsel is not a repre-sentation adverse to Lansdale's representation of CEI in the antitrust proceedings.
5.
Lansdale received no cont ential information con-cerning MELP from Brueckel actually or by operation of law.
i 6.
O'Loughlin's employment with SS&D presente no basis for disqualification.
7.
There exists no substantial relationship between the pending antitrust matter and SS&D's services as special bond counsel.
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- Attached hereto is a copy of Judge Krupansky's Order of August 3,1976.
Six of the foregoing findings appear on page 40 of the Order and the seventh may be found on pages 31, 32.
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In addition to the principles of coitateral estoppel, the binding character of Judge Krupansky's findings is confirmed by reference to the language of Rule 2.713(b) and 2.713(c). The Licensing Board's opinion and the Appeal Board's opinion both refer to these paragraphs as the basis for disqualification; that is, that the standard of conduct imposed on an at-torney practicing before the NRC is to " conform to the standards of con-duct required in the courts of the United States."
The United States District Court has now spoken directly to this point, holding that SS&D's conduct does conform to the required standards. Whether or not this Special Board agrees, the question has been put to rest by the NRC's own rules.
It is not the intention of this Motion to argue the merits of the Motion to Dismiss the disqualification proceedings.
SS&D only wishes to demonstrate preliminarily that there is sufficient merit to the position it argues to warrant the stay it requests.
SS&D assures the Special Board that it will move expeditiously in filing its Motion to Dismiss the disqualification proceedings.
l Respectfully submitted,
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MICHAEL R. GALLAGHER Attorney for Squire, Sanders' & Dempsey t
630 Bulkley Building Cleveland, Ohio 44115 (216)241-5310 1
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SERVICE Copies of the foregoing Motion and Memorandum have been mailed regular United States Mail, First Class, to Vincent C. Campanella, Director of Law, City of Cleveland, 213 City Hall, Cleveland, Ohio; Robert D. Hart, First Assistant, Director of Law, City of Cleveland, 213 City Hall, Cleveland, Ohio; James B. Davis, Esq., Special Counsel, Hahn, Loeser, Freedheim, Dean & Wellman, National City - East Sixth Building, Cleveland, Ohio 44114; in addition, the original and twenty (20) copies of the fore-going vere mailed to the Secretary, Nuclear Regulatory Commission, Washington, D.C. 20555, Atta: Chief, Docketing and Service Section; and one copy to each of the persons listed on the attached service list this 6th day of August 1976.
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MICHAEL R. GALLAGHER
SERVICE LIST i
Vincent C. Campanella, Esq.
Director of Law City of Cleveland 213 City Hall Cleveland, Ohio 44114 Robert D. Hart, Esq.
First Assistant Director of Law City of Cleveland 213 City Hall Cleveland, Ohio 44114 James B. Davis, Esq.
Special Counsel Hahn, Loesser, Freedheim, Dean & Wellman National City - E. 6th Building Cleveland, Ohio 44114 William J. Kerner, Esq.
Office of the General Attorney The Cleveland Electric Illuminating Co.
P. O. Box 5000 Cleveland, Ohio 44101 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
~
Gerald Charnoff, Esq.
Um. 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.
i Washington, ED.C.
20555
J 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.U.
Washington, D. C. 20036 Reuben Goldberg, Esqe David C. Epimfelt, Esq.
1700 Pennsylvania Avenue, N.W.
Suite 550 Uashington,~D. C. 20006 Alan S. Rosenthal, Chairman Atomic Safety and Licensing Appeals Board U.S. Nuclear Regulatory Cocaission Uashington, D. C. 20555 3
Dr. John H. Buck Dr. Lawrence K. Quarles Atomic Safety and Licensing Appeals Board U.S. Nuc1 car Regulatory Com:sission u = d-r a Washington, D. C. 20555 u i a
Howard K. Shapar, Esq.
Executive Legal Director U.S. Nucicar Regulatory Cocaission Washington, D. C. 20555 Mr. Frank W. Karas, Chief Public Proceedings Branch Office of the Secretary U.S. Nuclear Regulatory Cor=aission Unshington, D. C. 20555 Abraham Braitman, Esq.
Office of Antitrust & Indemnity U.S. Nuclear Regulatory Co= mission Uashington, D. C. 20555 Jerome E. Sharfman, Esq.
Atomic Safety & Licensing Appeals Board U.S. Nuclear Regulatory Commission Washington, D.C.
20555 s
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Frank R. C1okey, Esq.
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x Special Assistant Attorney Ceneral Towne House Apartments, Room 219 Harrisburg, Pennsylvania 17105 Edward A. Matto, Esq.
Assistant Attorney Ceneral Chief, Antitrust Section 30 East Broad Street, 15th Floor t6.
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Columbus, Ohio 43215 -
Richard S. Salzman, Chairman Atomic Safety and Licensing Appeals Board U.S. Nuclear Regulatory Coc: mission Uashington, D. C. 20555 LA
. ; ' ~ ' -T+.n Dr. W. Reed Johnson Atomic Safety and Licensing Appeals Board U.S. Nuclear Regulatory Commission Washington, D. C. 20555
-->~'m Andrew F. Popper, Esq.
Office of the Executive Legal Director U.S. Nucicar Regulatory Cocimission Washington, D. C. 20555 Benjamin H. W tier, Esq.
~
Joseph Rutberg, Esq.
Robert J. Verd2.sco, Esq.
Roy P. Lessy, Jr., Esq.
Office of the General Counsel Regulation U.S. Nuclear Regulatory Commission Washington, D. C. 20555 Melvin C. Berger, Esq..
Joseph J. Saunders, Esq.
Steven M. Charno, Esq.
David A. Leckie, Esq.
Janet R. Urban, Esq.,
Ruth Greenspan Bell, Esq.
Antitrust Division Department of Justice Post Officc Bo:: 7513 Washington, D. C. 20044
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-I Christophar R. Schraff, Esq.
. Assistant Attorneys General l
Environmental Law Section 361 East Broad Street, 8th Floor Columbus, Ohio 43215 Thomas 'J. Munsch, Jr., Esq.,
General Attorney Duquesne Light Company 435 Sixth Avenue Pittsburgh, Pennsylvania 15219 Joseph Rieser, Esq.
Reed, Smith, Shaw & McClay Suite 440 1155 Fifteenth Street, N. W.
Washington, D. C. 20005 Terrance H.- Benbow, Esq.
Winthrop, Stimson, Putnam & Roberts 40 Wall Street New York, Ucv York 10005 Hallace L. Duncan, Esq.
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Jon T. Brotm, Esq.
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Deucan, Broun, Usinberg & Palner 1700 Pennsylvania Avenue, U.W.
v Washington, D. C. 20006 Robert P. Mone, Esq.
George, Greek, King, McMahon & McConnaughey Columbus Center 100 East Broad Street Columbus, Chio 43215 David IIcnaill Olds, Esq.
John McN. Cra=cr, Esq.
Uilliam S. Lerach, Esq.
Reed, Smith, Shau & IIcClay Post Office Box 2009 Pittsburgh, Pennsylvania' 15230 D
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1 John C. Engle, President AMP-O Inc.
, Municipal Building 20 High Street Hamilton, Ohio 45012 h,
Victor Fe Greenslade, Jr., Esq.
Principal Staff Counsel The CJ.eypland Electric Illuminating Company Post Office Box 5000 Cleveland, Ohio 44101 Lee A. Rau, Esq.
Joseph A. Rieser, Jr., Esq.
. Reed, Smith, Shav & McClay Suite 404 Madison-Luilding Wachington, D. C. 20005' Leslie Henry, Esq.
Michael M. Driley, Esq.
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Roger P. Klee, Esq.
Fuller, Henry, Hodge & Snyder 300 Madison Avenue
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Toledo, Ohio 43604
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. Pennsylvania Power _ Company
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New Castle, Pennsylvania 15103 Eliz$1beth S. 'Bokers, Esq.
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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 Co::imissioh Washington, D.C.
20555 I
Thoman U. Reilly, Esq.,11 ember Atomic Safety & Licensing Board U.S. Nuc3 car Regulatory Commission 9
i Washington, D. C.
20555 f
Secretary U. S. Nuclear Regulatory Commission d
Washing; ton, D. C. 20555 Attn: Chief, Docketing and Service Section
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Robert M. Lazo, Esq.
Chairman Atomic Safety & Licensing Board U.S. Nuclent Regulatory Commission Washington, D.C.
20555 Andrew C. Goodhope, Esq.
Member Atomic Safety & Licensing Board 3320 Estelle Terrace Wheaton, Maryland 20906 Daniel M. Head, Esq.
Member Atomic Safety 7 (Licensing Board U.S. Nuclear Regulatory Commission Washington, D.C.
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EASTERN DIVISION E.it;. i' -
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CITY OF CLEVELAND,
) CIVIL ACTION NO. C75-560 i
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v.
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l THE CLEVELAND ELECTRIC
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ILLUMINATING COMPANY, et al.,
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Defendants
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ORDER KRUPANSKY, J.
This is an action instituted by the plaintiff City of Cleveland (City) against defendants Cleveland Electric Illuminating Company (CEI), Duquesne Light Company, Ohio l Edison Company, Pennsylvania Power Company, and Toledo i
Edison Company charging a conspiracy to violate Sections 1 and 2 of the Sherman Antitrust Act, 15 U.S.C.
$91 and 2.
i Jurisdiction is properly in'icked pursuant to Sections 4 and g 16 of the Clayton Act, as amended, 15 U.S.C. $$15 and 26.
l The Complaint, alleging certain acts of conspiracy 1
l to monopolize and restrain trade, was filed on July 1, 1975.
I Collateral to the substantive counts of the Complaint, the j-City, on December 15, 1975, filed its Motion to Disqualify ll the Cleveland law firm of Squire, Sanders and Dempsey
'lf (SS&D), legal ccunsel for defendant CEI.
This Motion, t
l charging a conflict 'of interest arising as a result of Y earlier legal retainers between SS&D and the City, seeks to g
- i il forecloco SS&D from further participation in these pro-I i ceedings.
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I The pending action before this District Court l
climaxes protracted litigation initiated.by the City against CEI and others as early as May 13, 1971, before the Federal I
l Power Commission (FPC) in a proceeding styled City of 5
Cleveland v. CEI, Docket No. E7631. Litigation was thereafter pursued by the City with its Petition to Intervene before the Nuclear Regulatory Commission (NRC) filed on July 6, 1971, wherein the City pressed its antitrust charges against CEI and others.1 By order dated July 12, 1972, the FPC concluded that the City's allegations of anti-competitive practices by CEI were unsupported by the facts. This conclusion was subsequently affirmed on January 9, 1976, by the United States Court of Appeals for the District of Columbia Circuit.
The proceeding before the NRC is still pending.
Issues of disqualification of counsel for conflicts arising as a result of former representation present the acutely sensitive dilemma of protecting the confidentiality I of the client-attorney relationship without needlessly interfering with a litigant's freedom to proceed with legal counsel of choice. See, Note, Attorney's Conflict of Interest:s:
Representation of Interest Adverse to That of Former Client, 55 B.U.
L. Rev. 61, 65 (1975). An equitable balance of these competing interests is.escential if the public's trust I
in the integrity of the Bar is to be preserved. Redd v. Shell i
011 Co., 518 F.
2d 311 (10th Cir. 1975). Assignment of this A
In the (4.ter of the Toledo Edison Cocoany and The Cleve-(,
land Electric Illuminating Company (Davis-3 esse Nuclear h
Power Station, Units 1, 2 and 3) Docket Hos. 50-346A, 50-il 500A and 50-501A; In the Matter of the Cleveland Electric d;
Illu=inating Company, et al.
(Perry Nuclear Power Plant,
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Units 1 and 2), Docket Nos. 50-440A and 50-441A.
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. 5 delicate factual and policy-making decicion is delegated i
with increasing exclusivity to the district court. As rr
- zed in Hull v. Celanese Corporation, 513 F. 2d 568, I
Sr- (2d Cir. 1975):
1 The district court bears the responsibility for the supervision of the members of its bar.
The dispatch.of this duty is discretionary in nature and a finding of the district court will be upset only upon a showing that an abuse of discretion has taken place.
See also, Richardson v. Hamilton International Corporation, 469 F. 2d 1382 (3d Cir. 1972), cert. denied, 411 U.S.
86, (1973); Green v. Singer, 461 F.
2d 242 (3d Cir.), cert.
denied, 409 U.S. 848 (1972).
In approaching the issues of disqualification, tue Court is mindful of its paramount obligation of " maintaining the highest standards of professional conduct and the scrupulcus administration of justice." Hull, supra at 569; Silver Chrysler Plymouth, Inc. v. Chrysler Motor Coro., 518 F. 2d 751, 757 (2d Cir. 1975). This obligation stands in contrast to the secondary consideration of ensuring the right of the public to legal counsel of its own choice.
Ethical problems, however, cannot be resolved in the abstract.
Rather the Court must rely upon a thorough consideration of the facts. "Nor can judges excl.de from their minds realities of which fair decision could call for judicial notice."
Silver Chrysler, 518 F. 2d at 753 Thus, when dealing with ethical principles it is apparent that a court, in the words of Judge Irving R.
Kaufman in United States v. Standard Oil Company, 136 F.
i l Supp. 345, 367 (S.D.N.Y. 1955),
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,i i cannot paint with broad strokes.
l The lines are fine and aust be so marked.
Guide-posts can be established when virgin ground is being explored, and the conclusion i
in a particular case can be reached only l
after paicstaking analysis of the facts and precise app.'ication of precedent.
Accordingly, the dynamics of time have resulted in evolving nodification of the practitioner's ethical, social and political roles in society.
Patterson and Cheatham, The Profession of Law 19-23, 65-67, (1973). Rules appropriate in guiding lawyers of several decades ago must be applied in light of current realities. As one commentator perceptively points out, the rigid rule of total disqualification is premised in the day when firms, when they existed, were very small -- also a day when attorneys most frequently could think of their activities in terms of discreet " matters." Increasingly, neither condition maintains.
Note, Unchanging Rules in Changing Times: The Canons of Ethics and Intra-firm Conflicts of Interest, 73 Yale L.J.
1050 (1964), quoced in Silver Chrysler Plymouth Inc. v. Chrysler Motors Corp.
370 F. Supp. 531, 589 (1973).
Since the largest legal firms represent the largest corporations within all sectors of the economy, it is practically impossible for a firm to ensure against some form of legal relationship between its clients at some time.
The pragmatics'or modern day legal practice assume greater significance and magnitude when a firm such as SS&D, a prominent authority in a highly specialized area of the law, is pursued to provide expert services for the economic benefit of the public interest.
THE PARTIES Since 1905, the City has owned and operated the Municipal Elec'"ic Light Plant (MELP) which has generated and distributed electric energy in keen competition with CEI i
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for residential, commercial and industrial consumers within I
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Cleveland, Ohio. MELP is a proprietary interest of City and is financed by tne issuance of revenue bonds payable from the revenues of the system. MELP, as all other city depart-ments, both governmental and proprietary, is represented i
i legally by the City's Law Department. The City Law Depart-ment is administered by the Law Director assisted by a Chief Counsel and. staffed by innumerable Assistant Law Directors.
John Lansdale, Jr. (Lansdale), against whom the Motion to Disqualify is primarily lodged, is a partner in the law firm of Squire, Sanders & Dempsey (SS&D) which practices in Washington, D. C. under the name of Cox, Lang-ford & Brown.
Martindale-Hubbell Law Directory (1975) identifies SS&D as having 79 partners and 80 associates.
Cox, Langford & Brown is listed as having an additional seven partners and five associates. JS&D is the largest and one of the most prestigious law firms in Ohio.
SS&D is structured into five sections, i.e.,
Litigation, Public Law, Estate & Taxes, Labor and Corporate.
Incorporated into its Public Law Section fs SS&D's municipal bond department, perhaps the largest in the entire United States and nationally recognised as the most reputable and prestigious legal authority in this highly specialized area of consultation. Its unique expertise in municipal bond law is unquestioned in the bond market: the firm's imprimatur assures the bond market that a proposed issue has underlying legal validity, thereby affording it greater public accepta-bility and more favorable marketability.
In Ohio, SS&D performs virtually all state, county I
and municipal bond work. The firms of Peck,Shaffer & Wil-11ams (Peck) and Bricker, Evatt, Barton & Eckler (Bricker) of Cincinnati and Columbus, Ohio, respectively, also offer reputable bond consultation and services nationally on a lesser scale than SS&D.
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- h SS&D has represented CEI since the company's I
incorporation in 1890, and has openly, notoriously and i
without interruption, served CEI as outside general counsel for 65 years.
In accordance with the pronouncement of the Sixth Circuit Court of Appeals in Melamid v.
I.T.T.
Continental Baking Co., No. 75-1970 (6th Cir. April 27, 1976), an evidentiary hearing was accorded the parties to this pro-ceeding, in which the following facts were disclosed.
FACTS It is conceded that CEI is and has been one of j
SS&D's major corporate clients. The total commitment of SS&D to the legal and business affairs of CEI is further reflected by the service of Ralph M. Besso, a partner in SS&D who left the firm in 1948 to become Vice President and General Counsel and later President and Chief Executive of CEI; upon his retirement in 1970 he rejoined SS&D as a partner but continued as a Director of CEI.
Lansdale also has been a Director of CEI since 1964 and has, since at least 1948, been the partner of the firm who advised and counseled the Company in rate and service matters as its chief legal counsel, not only before l the Public Utilities Commission of Chio (PUCO), but in all I
other litigation save those proceedings before the FPC.
During the intervening 29 years between 1947 and the present, SS&D hhs, without exception, represented CEI in opposition to the City in each instance where the interest of CEI and the City were in conflict. Moreover, during this
! same period SS&D represented CEI in adversary proceedings
, against the City involving the Company's rate and service U
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,5 5 practices before the PUCO in 1947, 1961, 1964, 1965 and 1974 (Deft.'s Exh. 29).
For the City to now feign ignorance of I
the complete and intimate legal commitment of SS&D to CEI, i
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its client for 65 years, as against all adverse interests i
j including those of the City, and to disclaim knowledge of the scope and depth of the continuing legal relationship in total disregard of the innumerable direct adversary con-frontations experienced by the City during at least the 30 years reflected by the evidence herein (Deft.'s Exh. 29),
presents a naive absurdity.
MELP, CEI's chief competitor for the electric i
consumer market within Cleveland, is one of the utilities owned and operated by the City.
The other is the Water Division (Water). MELP and Water are self-supporting and financed by revenue bonds. These utilities theoretically generate funds from their own separate operations similar to profit-oriented, privately owned business ventures, in contrast to non-reimbursable governmental functions (police, fire, courts, etc.) and service functions (garbage col-lection, parks, building inspection, etc.) which are supported by general fund tax receipts.
In all general respects, MELP is considered to be similar to a privately owned and regulated electric utility, except that as a city owned enterprise, it pays no federal, state or local inccme, real estate or personal property
, taxes.2 It is structured as an independently operating, self-contained proprietary entity, and maintains an independent I
system of audits and accounts.
O I
l2 Cleveland Little Hoover Commission Project No. 12 -Division ll of Light and Power - The White - Becher - Pjevach Report on Light and Power City of Cleveland commission d by the Mayor 9 and President of Cleveland City Council to conduct an in-l L depth study of all City of Cleveland operations commenced in December 1965 and concluded on February 1, 1967.
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l Pursuant to the Charter of the City of Cleveland, Ch. 15, 583 et seq., MELP is legally represented i coun-1 i
I seled by the City's Law Department. Indeed, the Law Depart-i ment's representation of MELP is analogous to SS&D's repre-sentation of CEI.
A number of Cleveland's major law firms including SS&D have, during the last 30 years or more, served the City on an ad hoc basis as special counsel representing the City's legal interests in selected controversies.
The selective arrangement provides the City access, as its requirements demand, to the services of the area's, and in many instances the nation's, most respected and talented legal practitioners generally not available within the City's relatively limited salary-structuaed Law Depart-ment.
In most instances retainers are accepted as a public service, albeit upon a fee basis generally more moderate than the expertise commands in the private sector.
It is conceded that apart from the services per-formed by its bond department, SS&D's ad hoc legal repre-sentation of the City had no substantial relationship to the case at hand although the City urges that by some undefined process of legal osmosis, unsupported by evidence, SS&D acquired an insight into the City's affairs which is in j
itself an impermissible conflict, a charge of the type prompting Judge Moore ; comment in Silver Chrysler: suora at 754:
"The mere recital of such a proposition should be i
self-refuting."
,l MELP's limited relationship with SS&D since 1963 has been with John Brueckel (Brueckel), a partner assigned i
I to the bond department of the Public Law Section. It is noteworthy, however, that although SS&D accepted ad hoc I
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retainers from the City,it scrupulously avcided any relation-ship with MELP, apart from its bond consultations, except to openly oppose it as advocate for its client CEI in rate and i
service controversies and other adversary proceedings before f
the PUC0 and the courts.
t Accordingly, if the City is to prevail upon its Motion to Disqualify it must do so upon the relationship that existed between the parties as a result of SS&D's role as bond counsal for the City generally and, more particular-ly, in the financing of MELP.
It is in this context of dual representation that the alleged conflict must be considered. Absent evidence to the contrary, SS&D's capacity as bond counsel for City departments other than MELP, lacks, in the Court's view, the requisite adverse intecest implicit in controversies of this nature. Vague and general assertions by the City that SS&D's relationship with City departments in general is comparable to SS&D's general representation of CEI is clearly a distortion of its ad hoc relationship with the City as special counsel and ignores the diverse structure inherent in municipal government.
In this context an exploration of the function of bond counsel is helpful. The record, however, is limited in defining the work product' of this commission. The only evidence directed to the subject is the testimony of Brueckel who frequestly characterized his role in the following I
terms:
We address [ourselves to legality to make sure that the proceedings are legal so that people can have faith in their [the bond issue] legality.
So we are not in the advocacy position.
We arc not selling wares; we are selling
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legality.
I think that a bond attorney, j
l this is his or her lot.
I think you can destroy your credibility and the trust in you if you take an advocate's position l
and depart from the strict legal aspects.
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(Record at 305-307).
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In substance the primary responsibility of this l employment is to certify that the transcript of proceedings j
relating to any given bond offerir has been examined in o
conjunction with the law under authority of which said bonds are issued and executed and such examination supports a t
1egal opinion that the bonds constitute valid and legal obligations of the issuing governmental political subdivi-sion. (Pltf.'s Exh. AA at B-1).
As closely as the Court can determine from the fragmented testimony elicited at the hearing, the genesis of a bond issue is enabling legislation, in this case, an ordinance which fixes the amount and defines the purposes and the manner in which the issue is to be amortized. It is supported by a transcript or manuscript which emphasizes various factors and characteristics significant to the security; an analysis of the political subdivisions' debt structure; various financial factors; governmental opera-tions and economic characteristics of the issuing entity.
Included in the documentation of any bond issue is the Bond Certificate, Notice of Sale and Bid Forms.
From time to time bond counsel may be called upon' to draft, exclusive of financial statements, one or more of these documents, somewhat as a scrivener drafts instruments.
Initially the information is, in whole or in part, documented by the appropriate governmental agency and present-ed to bond counsel for examination and certification as to
! accuracy, authenticity and legality. Meticulous attention to detail, exactness and veracity coupled with sagacious pedantic legal acumen are the hallmark of successful bond counsel in an astutely discriminating financial community.
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i j Eminence is not achieved by accepting, at face value, the 1
! presentments of the subscriber, nor does perfunctory appro-bation effectuate and maintain probity.
I' Accordingly, primary and secondary source reference:
" bottomed on public knowledge and what is in the public donain" (Record at 310) are the tools of verification and the keystone of legal opinion attesting any offering.
Integral to such comparative analysis is examination of state and local law, both constitutional and legislative; the reports of the Ohio Municipal Advisory Council incGrpo-rating a compendium of indebtedness of every political subdivision in the state, debt payment record, operating expenses, tax collections, assessed valuations, millage limitations, and debt limitations, median family income, largest employers (Deft.'s Exhs. 23-27); primary records of-the state and county auditors; reports of various bond rating agencies such as Moody's and Standard & Poor, and other information bottomed in the public domain and utilized by the financial community in evaluating fiscal responsi-bility of a political subdivision.
(Record at 310 - 334).
Historically the competitive relationship between MELP and CEI is demarcated by two p'eriods, with 1971 being the watershed year. Prior to that time, the relationship, although competitive, was one in which the City sought, and
! CEI offered advice on the MELP operation.
Moreover, through-out the 1960's the parties without success negotiated at I various levels the sale of MELP to CEI.
i In the pre-1971 era, the record discloses that l SS1D served as bond counsel for MELP-related bond issues on I
rive separate occasions: 1954, 1960, 1963, 1966 and 1968.
i l
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- l The latter two, in 1966 and 1968, were general obligation bonds for street lighting rather than EZLP mortgage revenue bonds. As such, their relationship to MELP is so attenuated i
as to render them irrelevant to this proceeding.
l As to the three earlier issuances, the record j
reveals little beyond their mere existence. It does appear, however, that the manuscript for the 1948 MELP issuance was prepared by the Cleveland law firm of Jones, Day, Cockley and Reavis (now Jones, Day, Reavis & Pogue) in conjunction with the New York firm of Wood, Dawson, Love & Sabatine (Wood, Dawson), and was the progenitor of the 1954, 1960 and 1963 parity issuances. The City Finance Department prepared the latter issuances, while SS&D merely certified the proceedings. The City has failed to present probative material evidence as to the role assumed by SS&D in these issuances, detailing neither the identity of the SS&D attorney serving as bond counsel, nor the nature or extent of information conveyed to the firm in the course of this ad hoc relationship. The paucity of evidence in this regard compels the Court to conclude that these issuances are simply too remote in point of time and relevance to be of any legal significance to the present inquiry.
The City's conclusory assertion of confidential disclosure arising from the Lansdale-Hauser memorandum dated October 26, 1966, (Pltr.'s Exh. E), is equally remote and,
! more importantly, unsupported by evidence and completely
! misconceived.3 h3nDecemberof19653 the Cleveland Little Hoover Commission I
was activated by the-Mayor and President of Cleveland City
!Councilbytheappointmentof24businessandcommunity
! leaders to conduct a 12-part, in depth study of all City l operations. The Commission was charged "to analyze the i
[j above operations, determine their adequacy, and make specific recommendations for improvements and/or financial savings."
i 4a). Project No. 12 of the study project bs(Deft.'sExh.
tyled Municipal Light - The White-Eecher-Pjevach Report -
P Financial Aspects of the Utilities - Division of Light and f Power was under the directorship of Carl White (White) of I
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Mounting equipment breakdowns resulting in wide-spread service failures and an increasing self-realization by MELP of its incapability to provide reliable service to its customers prompted the City to file a Complaint against CEI before the FPC on May 13, 1971. Pursuant to this action, and a Motion to Consolidate filed December 6, 1971, the City demanded of CEI a perma-nt synchronous interconnection between their respective transmission systems and an investi-gation of CEI's alleged anti-competitive practices. CEI was represented before the FPC by the law firm of Reid and Priest of New York.
Ernst & Ernst and G. George Becher (Becher). White was appointed by the Mayor and President of Council and, at all times in question, was acting in his representative capacity for the City. He voluntarily consulted CEI to discuss the legality of his memorandum styled " Thoughts on the Use of Electric Light and Power Plant Utility (MELP) Funds for Alleviation of Critical Situation in General Fund of the City of Cleveland" dated February 21, 1966, incorporating his thoughts on the use of MELP funds as they irpacted the City's general fund. Presumably, he was referre' to CEI's legal counsel Lanedale (Pltf. 's Exh. F).
Lansdale, pursuant to the instructions of his client CEI, agreed to meet with White on October 26, 1966. White appeared at the designated
- time with his associate Becher, also of Ernst & Ernst, and duly identified themselves to Lansdale and Brueckel, who was also present. The tabulations and calculations included in the White memorandum had been developed by White from sources known only to himself. During the course of the conference White also produced a legal opinion that Lansdale had prepared for CEI concerning the validity of relieving the City's general fund in which he recommended a reduction of charges by RELP for street lighting.
Although not j developed by the evidence it appears that Lansdale's legal i opinion to CEI predated the White memorandum. White's possession of Lansdale's CEI memorandum is unexplained, except to the extent that it had not been supplied by either Lansdale or Brueckel. All data and information, financial and otherwise, concerning MELP which was discussed during the course of the meeting was produced by White, as a representative of the City. It is quite clear that neither Lansdale, Brueckel nor any other member of SS&D produced any l evidence whatsoeverleoncerning MELP or CEI.
The subsequent letter and memorandum styled the Lansdale memorandum (Pltf;'s Exh. E), addressed to Donald Hauser (Hauser), house counsel for CEI, is a sequential report of the meeting with White and a reaffirmation of Lansdale's legal opinion to CEI.
Taken in proper context, it is obvious that there is no i; substance to the City's charge of confidential disclosure by h members of SS&D arising from this incident.
Disclosure, if I
1 any in fact occurred, was by the City through its representa-it l tive White.
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14 -
In the 1971 time frame, the City engaged Wood, Dawson, as bond counsel in con' unction with a $5 million second o
r.tortgage revenue bond issue for MSLP.
Wood, Dawson authored i
l l
,; Ordinance No. 1187,-71 (the 1971 ordinance), adopted by l
Cleveland City Council on June 28, 1971, which authorized 1
the city to issue and sell to its sinking fund $5 million in ant 2.ipatory notes to be liquidated from proceeds of future pub..c bond sales. On or about June 6, 1972, Howard Holton (Holton), Assistant Secretary of the City's Sinking Fund Commission and the public official primarily responsible for the City's bond work, approached Brueckel with a request to review and approve the issuance of $3 million available for sale pursuant to the 1971 ordinance. Brueckel, aware of the action before the FPC and the potential for the con-comitant charge of onflict cf interest arising as a result thereof, declined the offer pending a review of the request with his partners at SS&D. Thereafter, SS&D internally decided to forego the tendered retainer pending consultation and approval by its client, CEI, upon full disclocuri. of the possible consequences arising as a result of the under-taking. Carl Rudolph, President of CEI, subsequently authorized SS&D to act upon the City's request.
Concurrently, the incumbent Law Director for the City, Richard Hollington, Jr. (Hollington), was discussing with Daniel O'Laughlin (0'Laughlin), a partner of SS&D and former Chief Counsel for the City, the same potential for conflict arising from the FPC action.
ic should also be noted that, on July 6, 1971, the City moved to intervene in the NRC action to which CEI was already a party.
Before SS&D communicated to Holton the approval of i'
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CEI to SS&D's review of the City bond issue, Hollington telephonically advised O'Laughlin of the~ City's decision to seek other bond counsel for the pending proposed issue.
Hollington advised O'Laughlin that the decision was prompted by the intense competition between the City and SS&D's client, CEI, the adversary posture of the parties resulting therefrom, and opposition voiced by City Director of Utilitie Raymond Kudukis (Kudukis) in consultation with administrative and operational personnel of MELP.
Upon Hollington's direct request O'Laughlin suggested the names of two reputable Ohio law firms that offered bond services analogous to those performed by SS&D, i.e., William Chadeayne of the Bricker firm in Columbus, and the Peck firm in Cincinnati.
The City thereupon tendered its retainer to the Bricker firm. By.etter dated July 18, 1972, (Deft.'s Exh.
10), Chadeayne dec)
'd the proffered employment, noting certain complications and implying a questionable interpre-tation of Ohio law by Wood, Dawson as it applied to the initial bond proceedings. For reasons known only to itself and not disclosed by the evidence, the City, upon Bricker's refusal of its retainer, failed to approach the Peck firm of Cincinnati for employment on chis particular issue.
Citing the critical press of time, the City impor-tuned SS&D, literally as a public service, to undertake the 1
I assignment. However, before a reluctant acceptance of the retainer, SS&D insisted upon the written assent (in Holling-
^
ton's request to SS&D) of Kudukis. That concurrence was
- '. provided by the Hollington letter of July 24, 1972 (Deft.'s Exh. 11).
The Court is here constrained tc interject that, i
9 l
[ from the evidence taken in its entirety, reasonable minds I
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can arrive at but one conclusion: fro.d the open, notorious l; and continuous legal representation provided by SS&D as 1
l general outside legal counsel to CEI, adversary to the i
entire world including the City for 65 years, viz., that the City was fully cognizant of the scope and depth of any potential conflict of interest that could attach to SS&D's services to the City as a bond consultant.
The classic attorney-client relationship between laymen and lawyer is here significantly absent. Confronting the Court in the case at bar is a relationship between an attorney seeking consultation services for a client from another attorney. The Charter of the City of Cleveland, Ch.
15, 583, mandates that the Director of Law shall be the legal advisor of and attorney and counsel for the City, and for all officers and departments thereof, in matters relating to their official duties.
He shall.
. prepare all contracts, bonds, and other instruments in writing in which the City is concerned and endorse on each his ap-proval of the form and correctness thereof.
No such bond, contract or instrument shall become effective without such endorsement by the Director of Law thereon.
In accordance with the requirements of the foregoing concise language, the Law Director has historically, in his official capacity, either reviewed the legality of all proposed bond issues or, in the alternative, delegated the duties to j orivate lawyers or law firms as special counsel for the l; City.
Accordingly, in instances when the Law Director elected to delegate these duties, he has, within his dis-I cretion, assigned these duties to private bond counsel.
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!! Aware of the potential for conflict implicit in SS&D's jt simultaneous representation of CEI and the City and having l'
! openly discussed the subject with Kudukis and O'Laughlin it i
U f
is presumed that the decision of the Law Director to persist in his demands upon SSLD Jo act as bond couaael was, a
1 P04b8 rn ei-o e.rsaneo esas J
cr k
- r under the prevailing circumstances, knowledgeably rendered with a full understanding of the impact that such insistence could have upon the ethical issues evolving from the under-taking.
Brueckel's services, as they related to the 1972 MELP bond issue, aere limited to drafting Ordinance No.
2104-72, authorizing purchase of the issue by the City's sinking fund. Thereafter City Council enacted an amended version of the ordinance directing the issue to be sold publicly or, in the alternative, to be purchased by the sinking fund only upon enactment of an authorizing resolu-tion by City Council. SS&D did not prepare the amended form of the ordinance (Deft.'s Exh. Id).
Brueckel did, however, at the insistence of the City, continue his consultations on a number of other bond issues, including the 1974 note to provide general obligation financing for street lighting improvener.ts.
During September of 1974, before the NRC, the City for the first time interjected the issue of conflict of interest arising as a result of dual representation. There-after, on July 1, 1975, the City initiated the instant antitrust action against CEI and others in this Court.
Commencing on August 5, 1975, the City, under the direction cf James B. Davis (Davis), incumbent Director of i Law, embarked upon an unusual, and perhaps questionable,
'l l campaign. On the one hand, the City was demanding that SS&D continue as bond counsel for the City under penalty of i
l violating DR 2-110, ' ode of Professional Responsibility, C
4 hE 4 DR 2-110 Withdrawal from Employment.
1 (A) In general, j
(1)
If permission for withdrawal from employment is required by the rules of a tribunal, a lawyer shall not withdraw from employment in a pro-cceding before that tribunal without its per-mission.
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while on the other hand demanding that SS&D withdraw as legal counsel for CEI both before the NRC and this Court, under penalty of violating Canons 4, 5, and 9 of the Code of i
Professional Responsibility. Notwithstanding its charges of l
conflict leveled sgainst SS&D, the City again retained SS&D as boad counsel in mid-November of 1975, at which time Davis assured Ralph Gibbon (Gibbon), the SS&D partner in charge of the Public Law Section, that the bond work currently under-taken would be considered as a matter separate and apart from the instant litigation. However, on December 5, 1975, mounting tension between the parties prompted Gibbon to notify Davis of SS&D's decision to withdraw as the City's bond counsel.
(Pltr.'s Exh. M). On December 15, 1975, the City filed the instant Motion to Disqualify.
As late as December 15, 1975, when its formal Motion to Disqualify and enjoin SS&D from further participation in the pending action before this Court was filed, the City, in its Brief support-ing said motion, continued to press SS&D to continue as bond counsel for the City:
SS&D is the largest law firm in the State of Ohio, with approximately 180 lawyers in 1975. It has one of the largest sections specializing in public law and public finance of any major law firm in the United States.
SS&D has a virtual monopoly on public finance law in Northern Ohio.
Only two other firms in Ohio, one in Columbus and one in Cincinnati, j
(2)
In any event, a lawyer shall not withdraw from employment until he has taken reasonable steps to avoid foreseeable pre'ndice to the rights of his client, including giving due notice to his client, allowing time for employment of other counsel, delivering to the client all papers and property to which the client is entitled, and complying with applicable laws and rules.
1 (3)
A lawyer who withdraws from employment l
shall refund promptly any part of a fee paid in advance that has not been earned.
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9 do any significant amount of public bond legal work.
Neither has ever worked for the City.
Cleveland has four other firms with in excess of 80 lawyers each and a number of other firms of
+
substantial size, but none has ever attempted any significant amount of bond work in the public sector. The opinion of SS&D is widely l
accepted by financial institutions in Ohio I
and elsewhere as authoritative for the sale of public notes and bonds.
The City of Cleveland, in order to conduct its business and survive financially, must each year issue millions of dollars of notes and bonds. Over the last several decades, virtually all of such notes and bonds have been prepared by SS&D and sold because cf its opinion letters. No other law firm in ]hio or elsewhere has the great and detailed fattillar-ity with the City's affairs, the legal skills in dealing with Ohio municipal law, and the staff necessary to prepare the City's bonds and notes and give the necessary opinions for their sale as does SS&D. For the City to arrange to transfer a part of its bond business to other firms would be very difficult and time consuming.
It is much more cumbersome and expensive to deal with law firms not located in Cleveland. The other large firms in Cleveland are reluctant, for a variety of reasons to even enter the field. Of the five large law firms in Cleveland, only Jones, Day, Reavis & Pogue has done any bond work for the City in recent. years, having prepared an issue of Sewee Bond Anticipation Notes in 1974 and again in 1975. This firm is not currently available as a source of bond work for the City because it now seeks to represent the Ohio Edison Company in this present case.
The City Law Department, with a constant problem of low pay and heavy turnover, has not managed to develop lawyers with the skills necessary to handle its own bond work.
It is totally incapable of doing such work at the present time.
The practical consequence of the virtual monopoly of skills possessed by SS&J in the field of public finance is that the City must and does totally l
rely upon it for the daily conduct of its financial t
affairs.
With the recent financial crisis in New York City, it is common knowledge that purchasers of municipal obligations across the country have become extremely
)
cautious. With regard to the purchase cf the current obligations of the City of Cleveland, it is now more necessary than ever to have authorita-tive opinion letters flom a law firm on its bonds and notes. At present, only SS&D is readily avail-h able to provide such opinions. (Pltr.'s Br. at 2-4).
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l ESTOPPEL The alleged conflict of interest, if any in fact exists, arises as a result of acti ns induced by the party 1
i seeking disqualification. SS&D's asserted defense of i
equitable estoppel is therefore appropriately urged.
In defining the doctrine of equitable estoppel in i
State v.
Dayton Power & Light Co.,
170 F. S"pp. 722, 725 (S.D. Ohio 1957), aff'd.263 F.2d 909 (6th Cir.), rev'd on other grounds, 359 U.S. 552 (1959), the court stated:
Equitable estoppel or estoppel in pais is the principal (sic] by which a party who knows or should know the tr'.ch is absolutely pre-cluded, both at law and in equity, from denying, or asserting the contrary of, any material fact which, by his words or con-duct, affirmative or negative, intentionally or throu6h culpable negligence, he has induced another, who was excusably ignorant of the true facts and who had a right to rely upon such words or conduct, to believe and act upon them thereby, as a consequence reason-ably to be anticipated, changing h'n position in such a way that he woald suffer injury if such denial or contrary assertion were allowed.
Generally speaking, however, equitable estoppel is a rule of justice which in its proper field prevails over all other rules.
u a
e The doctrine of estoppel in pais is founded upon principles of morality and fair dealing and is intended to subserve the ends of justice.
(Citations omitted).
While the doctrine is sparingly invoked against municipal corporations, there is no doubt that a municipality can be estopped to prevent a manifest injustice, where g
positive action or representation by the municipal corpo-ration, acting withi,n the scope of its authority, has induced j
another to act in good faith, and it would be inequitable to permit the retraction of such acts.
Haba v.
Cuff, 28 Ohio Op. 2d 266, 201 !I.E. 2d 343 (1963), appeal dismisced, 176 l
1 g
f 9
. Ohio St. 374, 199 N.E. 2d 736 (1964), cert. denied, 380 U.S.
98 4 (1965). The application of the estoppel doctrine to I
attorney disqualification proceedings was recognized in Con-l solidated Theatres, Inc. v. L'arner Bros. Circuit Mat. Corp.,
I 216 F. 2d 920 (2d Cir. 1954), as well as in Informal opinion 1323, (April 21, 1975), wherein the American Bar Association Committee on Ethics and Professional Responsibility stated:
[G]iving credence to the statement by Lawyer X that when he was engaged by counsel 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 conflict in his continued representation of Company A, then it would be improper for Company B to urge disqualification of Lawyer X now that Com-pany A and Company B have become embroiled in separate litigation.
Id,. at 3 The criteria for invoking the doctrine were suc-cinctly delineated in United States v. Georgia-Pacific Corp.,
421 F. 2d 92, 96 (9th Cir. 1970) wherein it was stated:
e Four elements must be present to establish the defense of estoppel: (1)
The party to be estopped must know the facts; (2) he must intend that his con-duct shall be acted on or must so act that the party asserting the estoppel has a right to believe it is so intended; (3) the latter must be ignorant of the true facts; and (4) he must rely on the former's conduct to his injury. (citation omitted).
From the evidence educed at the hearing, the City cannot, in good conscience, deny a full understanding of the scope and depth of SS&D's long standing general representa-tion of CEI, if only from a review of the 49 legal actions in which SS&D represented CEI as an adversary to the City's interests (Deft.'s Exh. 29); the Hollington-O'Laughlin tele-phone conversations on July 24, 1972; the Holt on-0'Laughlin discussions of 1972 and the open, notorious and continuous legal representation afforded CEI by SS&D for a period of C5 years.
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. The Hollington letter of July 24, 1972 (Deft.'s Exh. 11), communicating the Kudukis concurrence in the appointment of SS&D as special bond counsel for the 1972 MELP issue, with Hollington acting within the scope of his i
i authority as Law Director, certainly satisfies the second criteria. The Hollington-0'Laughlin discussion, coupled with the Hollington-Kudukis letter of July 24, 1972, convey-ed with explicit clarity the City's intention to waive any ethical objections that could arise as a result of SS&D's performance as bond counsel, and SS&D had every right to believe from the facts that the City so intended. Moreover, it is apparent from the facts that SS&D was, at that time, completely ignorant of any intention on the part of the City to press the ethical istles at a future date; and, in satisfaction of the fourth criteria set forth by United States v. Georgia-Pacific Corp., supra, SS&D, did in fact rely upon the City's conduct to its own detriment by reluctant ly undertaking the City's induced retainer.
Accordingly, the Court concludes that the facts herein catalogued warrant the imposition of the doctrine of equitable estoppel against the City, thereby foreclosing the City from prosecuting its Motion f>r Disqualification, and it is on this account denied.
The Court's inquiry does not, however, end here.
Further analysis of the disqualification issue is prompted by a ntnber of other asser;ed charges and defences.
WAIVER As a corollary to the doctrine of equitable estoppel, SS&D arguen that in the event of an affirmative I, finding by the Court of ethical conflict as alleged by the t
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y City, the City has knowingly and voluntarily consented to l
SS&D's role as bond counsel for the City, thereby waiving any right to pursue its Motion for Disqualification.
It is axiomatic that the client's right to object to an attorney's allegedly adverse representation may be waived.
E.g.,
Marketti v. Fitzsimmons, 373 F. Supp. 637 (W.D.Wisc. 1974);
Note, Attorney's Conflict of Interests, supra at 81.
See also In re Yarn Processing Patent Validity Litigation, 530 P. 2d 83, 89 (5th Cir. 1976). The defense of consent and waiver is predicated, in large part, upon the same evidence supporting the Court's invocation of the doctrine of estoppel. As noted in Matsuo Yashida v.
Liberty Mutual Insurance Co., 240 F. 2d 824, 829 (9th Cir. 1957):
Waiver and estoppel are legal terms which are frequently used interchangeably.
Al-though the legal consequences of each are often the same, the requisite elements are different. Waiver refers to the voluntary or intentional relinquishment of a known right.
It emphasizes the mental attitude of the actor. On the other hand, estoppel is any conduct, express or implied, which reasonably misleado another to his prejudice so that a repudiation of such conduct would be unj uc t in the eyes of the law.
It is grounded not on subjective intent but rather on the objective impression creat-ed by the actor's conduct.
It is in the area of implied waiver that the two doc-trines are closely akin. (footnotes omitted).
The Court, accordingly, focuses upon those facts evidencing the City's subjective intent manifested by the events sur-rounding the 1972 bond ordinance representation.
Again the Hollington-Kudukis letter of July 24, 1972, when taken in context with the Hollir.gton-0'Laughlin telephone conversations that preceded it, leaves no room for doubt that the City did indeed waive any and all c5fection to SS&D's continued representation of CEI:
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I would greatly appreciate SS&D assist-ing the City as bond counsel in connection i
with this matter. I have discussed this a
with Ray Kudukis who concurs with my refer-ral of this matter to your firm.
Accordingly, on this account the City's Motion to Disqualify is dismissed.
SUBSTANTIAL RELATIONSHIP TEST Analogous to the City's broad brush treatment of the facts is the cavalier manner of its treatment of the law governing the issue of disqualification. Interchangeably, and with3ut recognition of the distinct and definitive nature of each of the relevant Canons, the City charges SS&D with violating Canons 4, 5 and 9 of the Code of Professional Responsibility. Although case authority does recognize a certain interrelationship between Canons 4 and 5, recent legal precedent distinguishes Canon 9 from the others and proscribes its indiscriminate application to issues of disqualification. Silver Chrsyler Plymouth Inc., 518 F. 2d at 757. See generally, Note, The Second Circuit and Dis-qualification - Silver Chrysler Steers in a New Direction, 44 Fordham L. Rev. 130 (1975). That the " appearance of impropriety" doctrine of Canon 9 should not be given an overbroad application was recently reaffirmed in International Electronics Corp. v. Flanger, 527 F. 2d 1288, 1295 (2d Cir.
1975) wherein the court stated:
We caution, as the Connecticut Bar Asso-clation urges us to do, that Canon 9, though there are occasions when it should be applied, should not be used promiscuously as a convenient tool for disqualification i
when the facts simply do not fit within the I
rubric of other specific ethical and disci-l plinary rules. 5
> Canon 9 as applied to Daniel O'Laughlin's former employ-
!! ment as Chief Counsel for the City Law Department will be discussed more fully hereinafter.
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b.
Judicial notice is taken of the standards of l'
professional conduct proclaimed in the Code of Professional Responsibility. Canon 4, "A Lawyer Should Preserve the fConfidencesandSecretsofaClient,n6 promotes the sound I
policy of confidentiality of communication inherent in the j
attorney-client relationship by insuring, in the first
,f i
instanco, fundamental fairness in the judicial process by 6 DR4-101 Preservation of Confidences and Secrets of a Client.
(A)
" Confidence" refers to information protected by the attorney-client privilege under applicable law, and " secret" refers to other information gained in the professional relationship that the client has requested be held inviolate or the dis-closure of which would be embarrassing or would be likely to be detrimental to the client.
(B)
Except when permitted under DR4-101 (C), a lawyer shall not knowingly:
(1) Reveal a confidence or secret of his client.
e (2) Use a confidence or secret of his client to the disadvantage of the client.
I,3 ) Use a confidence or secret of his ellent for the advantage of himself or of a third person, unless the client consents after full dis-closure.
(C)
A lawyer may reveal:
(1) Confidences or secrets with the consent of the client or clients affected, but only after a full disclosure to them.
(2) Confidences or secrets when permitted under Disciplinary Rules or required by law or court order.
(3) The intention of his client to cqmmit a crime and the information necessary to prevent the
- crime, (4) Confidences or secrets necessary to establish o
or collect his fee or to defend himself Dr his employees or associates against an accu-sation of wrongful conduct.
l (D)
A lawyer shall exercise reasonable care to prevent his employees, associates, and others whose services are utilized by him from disclosing or using 4
l confidences or secrets of a client, except that a j
lawyer may reveal the information allowed by DR4-f 101 (C) throitch an employee.
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. shielding the client from his attorney's use of confidential information against him. Secondly, it encourages full
, disclosure by a client, thereby enabling the attorney to l
l
\\ function more effectively on the client's behalf.
- Note, i
Attorney's Conflict of Interests, supra at 64.
Canon 5.
"A Lawyer Should Exercise Independent Professional Judgment on Behalf of a Client," also provides guidance for attorneys in conflict situations arising from multiple client representa tion.7 In determining the existence of a conflict of interest herein, the Court's attention is directed to the test first advanced in T. C. Theatres Corp. v. Warner Bros. Pictures, Inc., 113 F. Supp. 265, 268 (S.D.N.Y. 1953),
IDRS-105 (A) - (D) Refusing to Accept or Continue Employment if the Interests of Another Client May Impair the Independent Professional Judg-ment of the Lawyer.
(A)
A lawyer shall decline proffered employment, except to the extent permitted under DRS-105 (C).
(B)
A lawyer shall not continue multiple employment if the exercise of his independent professional judg-ment in behalf of a client will be or is likely to be adversely affected by his representation of another client, except to the extent permitted under DRS-105(C).
(C)
In the situations covered by DR5-105 (A) and (B),
a lawyer may represent multiple clients if it is obvious that he can adequately represent the interest of each and if each consents to the l
representation after full disclosure of the j
possible effect of such representation on the j
exercise of his independent professional judgment h
on behalf of each.
5 (D)
If 1.awyer is required to decline employment or I
to withdraw from employment under DRS-105, no f
partner or associate of his or his firm may accept
(
such employment.
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subsequentl-J adopted by the Second Circuit Court of Appeals, in Congol' ted Theatres, Inc.
v.
Warner Bros. Circuit Managene Corp., supra, and now generally applied in
}
I nearly all circuits, to wit: the " substantial relationship" te' Redd v.
Shell Oil Co., supra; Richsrdson v. Hamiltor Internat'l Corp., supra; Uniweld Products, Inc. v. Union Carbide Corp., 385 F. 2d 992 (5th Cir. 1967), cert. denied, 390 U.S.
921 (1968); Chugach Elec. Ass'n. v. United States District Court, 370 F. 2d 441 (9th Cir. 1966), cert, denied, 389 U.S. 820 (1967); Cannon v. U.S.
Acoustics, 398 F. Supp. 209 (N.D.Ill. 1975); Marketti v. Fitzsimmons, supra. As Judge Weinfeld initially formulated the test in T.C. Theatres Corp., sypra at 268, disqualification should be ordered where any substantial relationship can be shown between the subject matter of a former representation and that of a subsequent adverse representation.
Since the party moving for an ordt of disquali-fication of an opponent's counsel charging alleged conflict of interest must overcome the burden imposed by several interrelated evidentiary hurdles, the City is thus required to prove that:
1.
A past attorney-client relationship existed between the City and Brueckel which was adverse to Lansdale's concurrent and subsequent representa-tion of CEI; I,
OThe City asserts th'at the " substantial relationship" test
! is not applicable herein, relying on the recent case of 1 Cinema 5, Ltd. v. Cinerama, Inc., 528 F. 2d 1384, 1387 (2d
- Cir. 1970), wherein the Second Circuit held that said test
! "did not set a sufficiently high standard" for disqualifi-j
- cation where the " relationship is a continuing, adverse i
'i representation." The Court concludes that the instant case
}
L is distinguishable therefrom, as detailed infra.
Unlike l
[ Cinema _5, Brueckel's ad hoc relationships with the City had fixed parameters, were non-litigious and inherently non-adverse, and, with the exception of the 1972 ordinance, were i
unrelated to MELP matters.
4 I
r-i
. 2.
The subject matter er those relationships was/is substantiai related; and t
i 3.
Lansdale, as 'torney for CEI, acquired knowledge I
of confidential information from or concerning the City, actually or by operation of law.
Initially, within the context of the Code of Pro-fessional Responsibility, the existence of any attorney-client relationship, arising as a result of SS&D's pole as bond consultant for the City, is questionable. The role of bond counsel is not that of an " advocate." Bond counsel merely examines and attests to the legal validity of pro-posed bond issues. Indeed, Brueckel's services in 1972 in drafting an ordinance for the $9.8 million bond issue are analogous to that of a scrivener, a role that does not create the relationship. W. McCormick, Law of Evidence $88 at 180 (2d ed. 1972). However, viewing the relationship in a light most favorable to the City, the Court concludes that an attorney-client relationship did exist between the City and SS&D as its bond counsel. The existence of an attorney-client relationship between CEI and Lansdale is conceded.
Having acknowledged the existence of an attorney-client relationship, the Court must also affirmatively find it to have been an adversary relationship.
In this context it should be noted that Canon 5, construed in conjunction with ethical consideration EC 5-15 and 5-19, approves cer-tain limited multiple-client representations.
l EC 5-15:
A lawyer should never represent in litigation multiple cliente with differing interests; and there are few situations in which he would be justified in representing in litigation multiple clients with potential-ly differing interests.
If a lawyer accepted such er.ployment and the interests uid become e-on =
il 4
i h
actually differing, he would have to with-j; draw from ceployment uith likelihood of g
resulting hardship on the clients; and for l
ll this reason it is preferable that he refuse C.
....x..g..c.;
c.R.411y.
Or cha other hand, t
}
there are many instances in which a lawyer may erocerly serte r.ultiple clients having gotentially differing interests in matters noc involvir.c litigation. If the interests I
vary only s115ntly, it is generally likely that the lawyer will not be subjected to an adverso influence and that he can retain his independent judgment on behalf of each client; and if the interests become differing, with-drawal is less likely to have a disruptive effect upon the causes of his clients.
(emphasis added).
EC 5-19:
A lawyer may represent several clients whose interests are not actually or potential-ly differing. Nevertheless, he should explain any circumstances that might cause a client to question his undivided loyalty. Regardless l
of the belief of a lawyer that he may properly
-l represent multiple clients, he must defer to a client who holds the contrary belief and l
withdraw from representation of that client.
l (emphasis added).
Representations are sufficiently adverse to warrant a disqualification when, in behalf of one client, it is
[the attorney's] duty to contend for that which duty to another client requires him to oppose. Canon 6, ABA Canons of Ethics (now Canon 5, CPR).
i j
e Notwithstanding the intense competition existing I
between CEI and MELP, the ;ourt, in vicuing the nature of the legal representation afforded each of the parties hereto t
j by SS&D, finds that in this posture SSED's role as the
'l j City's special bond counsel in each ad hoc instance reflected IIl by the record herein, and more particularly for the 1972 I
l $9.8 million MELP issus, did not give rise to potentially differing interests between the City and CEI.
SS&D's repre-centation of the City'as bond counsel was not litigious.
i i! SS&D's representution of the City in bond natters was not
[
I l
i a
I!
u....
l 1
r
l i as advocate. Each retainer was arranged by the City's legal counsel, namely the Law Director, acting with full realiza-i tien of SSLD's relationship as advocate for CEI in its a
capacity of general counsel, all in keeping with the objec-tives of EC 5-15 and 5-19 In view of the foregoing, the Court is unable to find the required adversity of representation necessary to support disqualification.
In the event that the City had carried its burden of proof by initially demonstrating the requisite adversity between these two representations, it would have been confronted next with the burden of affirmatively showing, as the second element of the test, that the former attorney-client relationship involved matters substantially related
~
to the latter. Absent such affirmative showing, it is axiomatic that no ethical problem results.
Cannon v. U.S.
Acoustics, supra at 222.
In confronting the conflicts issue, this element is "not one whose dimensions are delineated with mathemati-cal precision," Silver Chrysler, 518 F. 2d at 758 (Adams, J.
concurring), and "[u]nfortunately, the cases furnish no I
i I
applicable guide as to what creates a ' substantial' relation-I ship." United States v.
Standard Oil Co., 136 F. Supp. 345, l
355 (S.D.N.Y. 1955). A survey of cases cited in Silver Chrysler disclosed that disqualification was ordered only i
l under circumstances where the relationship between subse-fquentandformerrepresentationswas"patentlyclear." 518 F. 2d at 754.
The gravamen of the City's antitrust action
! reflected by the pleadings is that of anti-competitive hg practices, engaged in by the parties in the generation, trancnission and sale of electric enercy in the Clevelar.d, I
- l
I Chio area, as demonstrated by the City's charges th t the defendants combined and conspired: to refuse to wheel or to I
i allow the t$ansmission of electric power and energy to KELP i
from other power and energy suppliers, or from HELP to any l other electric utility system which is an actual or potential i
l competitor of any of the defendants, over trans' mission lines I
owned or controlled by the defendants or any of them; to boycott and refuse te deal with plaintiff and others in the power exchange market, except on terma that would maintain domination and exclusive control by the defendants over electric bulk power supply in the area served by each, and upon conditions that would be harmful to the interest of the plaintiff and other actual and potential competitors at wholesale or retail; to refuse to admit plaintiff to member-ship in the Central Area Power Coordinating Group (CAPCO) or to otherwise permit plaintiff to have access to the benefits of coordinated operations and development or any other benefit of power pooling or power exchange services; and to engage in other activities for the purpose and with the effect of restraining and eliminating competitfon in the sale of electric power and energy.
The Court concludes that there exists no substan-tial relationship between the pending antitrust action and SS&D's services to the City.on an ad hoc basis as special bond counsel attesting the veracity of proposed bond offer-ings.
No " patent'ly clear" relationship exists between Brueckel's bond representation in 1972 and Lansdale's representation of CEI in this pending antitrust action. The Court is unable to discern any commonality of issues, see i
l I
I I
P**"
m..-...,.........
e
e.
Fleischer v.
A.A.P., Inc., 163 F. Supp. 548 (S.D.N.Y.
i
! 1958), acceal disnissed, 264 F. 2d 515 (2d Cir.) cert.
~
t
] denied, 359 U.S. 1002 (1959), particularly in view of the i
i
}
non-litigious nature of Brueckel's bond consultations. Thus, the instant case is distinguishable from precedent such as Emle Industries, Inc. v. Patenter, 478 F. 2d 562 (2d Cir.
1973), where the matters in controversy were identical, and Motor Mart, Inc. v. Saab Motors, 359 F. Supp. 156, 157 (S.D.
N.Y. 1973), where the suit wa's " essentially the same type of suit."
Moreover, the Court finds the City's reference to Chugach Elec. Ass'n. v. United States District Court, supra, does not support its contention of substantial relationship. In Chugach, substantial relationship was patently clear and the disqualification was predicated upon the challenged attorney's former position, for 14 years, as General Counsel for the movant. That the City would compare Brueckel's limited, ad hoc representation to that of a general counsel relationship reflects the City's failure to perceive the subtleties, or the " fine lines" to which Judge Kaufman referred in United States v. Standard Oil Co., supra at 367, that must be carefully considered in applying e,thi-cal principles.
Furthermere, it is inconceivable that Brueckel's authorship of Ordinance No. 2104-72 would provide him with confidential knowledge disclosing the City's antitrust strate 6 es or motives such as those available to the dis-i O
qualified attorney in Chugach.
l l
The Court necessarily concludes that the City has
,, failed to meet its burden of proving a substantial relation-l i ship between the instant representations.
f t
^
~m a
. The general rule 11 disqualification cases has been that, upon proof of a former attorney-client relation-ship concerning substantially related matters, disclosure of confidences is presumed.
T.C. Theatres Corp., supra at 268.
l This Court concludes that equity demands, and the pragmatics of emerging specialization inherent in contem-porary legal practice dictates, that this presumption be rebuttable. Thus, upon proof of the attorney-client relation-ship arising from Brueckel's employment as special bond counsel, and of an adverse and substantial relationship between that employment and SS&D's representation of CEI (which the City failed to pravide), the disclosure of confidential information would have been initially presumed in favor of the City.
However, the record in the instant case reflects that SS&D successfully and conclusively produced substantial probative, material evidence affirmatively showing that no confidential disclosure in fact occurred and that the very melhanical procedure integrant to the services of bond counsel for the City foreclosed such manifestation. In the first instance, the document composite of any proposed City bond issue is, by law, a matter of public record. Secondly, preliminary to any attestation of legality by City's bond counsel, verification of such documentation is premised upon public record, and information within the public domain, e.g.,
legislative en,actments of state and local political subdivisions, record's of the State and County Auditors, and Municipal fiscal officers, Ohio Municipal Advisory Council Reports, Moo'y's Reports, Standard &-Poor.
d In instances where courts have found disclosure of f
information by the client to one member of a law firm, such i
van-a m.,-,. n,, e... s.,
~
knowledge has traditionally been imputed to all members of his firm. Consolidated Theatres, Inc. v. Warner Bros.
l Circuit Management Corp., supra at 928. The Court, having l
l found no disclosure of confidential information in the proceeding at bar, is not confronted with resolving this issue.
It should, however, be noted that recent prevailing legal precedent has rejected the harsh, hard-line approach of irrebuttably imputing confidential disclosures, actual or presumed, received by one member of a law firm to all members of that law firm in favor of the more realistically equitable logic, attuned to contemporary legal practices common to emerging law firms of substantial size. This more l
intellectually sound treatment is demonstrated in Silver Chrysler:
Only where an attorney himself represented a client in matters substantially related to those embraced by a subsequent case he wishes to bring against the former client, is he irrebuttably presumed to have benefitted from confidential information relevant to the current case.
In such limited situations there is no necessity to demonstrate actual exposure to specific confidences which would benefit the present client.
But, as Judge Herlands noted in Fleischer [ supra at 552),
in a case "where the attorney may be ' vicariously disqualified' (as by virtue of his former membership in a law partnership), the inference is treated as rebuttable." 370 F. Supp. at 587. (citations omitted).
In affirming the lower court's departure from precedent, the Second Circuit, citing Laskey Bros. of U. Va.,
Inc. v. Warner i
Bros. Pictures, 224 F. 2d 824, 827 (2d Cir. 1955), cert.
l; denied, 350 U.S. 932 (1956), has cautioned:
lI l
It will not do to make the presumption l
of confidential information rebuttable and then to make the standard of proof for rebuttal unattainably high.
This is particularly true where, as here, the I
attorney must prove a negative, which is y'
always a difficult burden to meet.
I Silver Chrysler, 518 F. 2d at 754.
N o
i
. o u.s nn.-..4.........
l T
^
4.
As Judge Weinstein had noted in the lower court decision in Silver Chrysler, 370 P. Supp. at 588:
i l
Since the larger firms represent the a
largest corporations with interests in all sectors of the economy, it is almost impossible to have an important client or its subsidiary avoid some kind of legal relationship with another client at some time. Cf. E. O. Smigel, The Wall Street Lawyer 734 (1964).
"Where a firm re-presents concurrently conflicting inter-ents, the practice is sometimes followed of ' splitting up' the firm into separate teams of lawyers, each of which repre-sents one of the antagonistic clients."
Note, Unchanging Rules in Changing Times:
The Canons of Ethics and Intra-firm Con-flicts of Interest, 73 Yale L.J. 1058, 1071 (1964). Cf. J.C. Goulden, The Super-lawyers 53 (1972) (Covington and Burling
^
"isn't really a law firm.
- Actually, it's a conglomeration of fifty law practices.").
{
The fact that attorneys within the firm are effectively insulated from exposure to the confidences of other clients where necessary demonstrates t.ie inappropriate-ness of an invariable mechanical imputa-tion of knowledge.
Nor does this departure from traditional inter-pre ation of Canons 4 and 5 diminish the force of existing decisions which hold that the right of the public to counsel of its choice or the l
possibility of a reduction of "both the j
economic mcbility of employees and their
'l personal freedom to follow their own interests" must be secondary considerations j
to the paramount importance of " maintaining
{
the highest standards of professional conduct and the scrupulous administration of justice."
i d
Silver Chrysler, 518 F. 2d at 757. (citations omitted).
I Thus, it is appropriate to reject a mechanistic l
! approach herein. Alternatively, the doctrine of vertical h responsibility, classically invoked for disqualifying former government attorneys upon termination of government service was, and is, limited in application to imputing confidential li h
.: disclosures, presumed or actual, of subordinates serving t
j I
l !
.n.,_..............
P' I
within the same subdivision or section of service of the d former government attorney.
- See, United States v. Standard l
l Oil, sunra at 362.
l This doctrine of vertical responsibility is rele-vant to the private sector of legal practice in view of the increasing numbers of law firms that equal the size of many legal subdivisions of government. Imputing to an attorney in the private practice all confidential information obtained, or presumed to have been obtained, by other members of his law firm may severely limit the scope of the private attor-ney's future career and the effective operation of his firm, as well as the individual's right to legal counsel of choice. The analogous rule in the private practice of law should therefore limit the imputation of confidential dis-closures, actual or presumed, to only those lawyers practic-ing in the attorney's area of concentration. Absent direct proef to the contrary, the attorney would not be deemed to have shared confidential information relating to matters and services exclusively within the sphere of representation of another department or section of his firm. This vertical responsibility rule is more acutely dramatized in the large, I
l departmentalized law firms characteristically more prevalent I
in an eca of evolving legal specialization. See also Kaufman, The Former Government Attorney and the Canons of Professional Ethics, 70 Harv. L. Rev. 657, 666-67 (1957);
I l Note, Attorney's Conflict of Interests, sunra at 77-78.
Without question SS&D is the largest law firm in Ohio and perhaps one of the larger law firms in the nation, with approximately 180 partners and associates.
It is s
, departmentalized into five sections as hereinbefore described.
3 L
l !
h t
Brueckel is, and has been during his legal career with SS&D, assigned to the highly specialized bond division of the I Public Law Section of that firm; Lansdale is, and has been l
8 i
' during his le;al career with SSLD, assigned to the Litiga-tion Section of the firm. Each is a separate and distinct section of the firm pursuing specialized areas of endeavor.
The Litigation Section has, without exception, pursued in adversary proceedings the interests of CEI.
In no instance has it represented MELP, and under circumstances of cross-interest between the parties the litigation section has been the advocate for CEI.
The record is barren of evidence of actual confi-l dential disclosure between Brueckel of the Public Law Section and Lansdale of the Litigation Section. The Lansdale-Hauser memorandum resulting from the White-Litcle Hoover Commission meeting attended by Lansdale ana Brueckel does ot support a conclusion of actual disclosure for the reasons haretofora discussed in the statement of the facts herein.
Apart from the doctrine of vertical responsibility, l the City was equally uns'tecessful in supporting imputed dis-I closure of confidential ictrormation by Brueckel to Lansdale in light of affirmative evidence rebutting such presumption.
See, Standard Oil Co.,
supra at 304.
The City having failed to ca y its burden of I
i proof as to the three elements of the " substantial relation-
! ship" test, it is manifest that disqualification of SS&D is lJl not warranted under this traditi onal analysis.
h, Lastly, the Court directs its attention to the 3 alleged conflict of interest arising from O'Laughlin's service with the City Law Department betueen 1952 and 1968 i
f when he became associated with SS&D.
l!
l "4
I i
7 l
l.:
'i
.s bl.
t
',l During his tenure with the City Lau Department, 0'Laughlin served as Chief Counsel for the City under Law Director Brentic Klementouics (Klementowics) between 1964 e
I 1^<-
'" 'h's cat 7eity he had ovarall responsibility l for the City's civil litiCation, monitoring in varying I,
decrees legal services required by all City departments.
The evidence demonstrates that MELP affairs during this period were directly under the supervision of Klementowicz, d? acting on behalf of the incumbent Mayor Ralph J. Locher.
6 0'Laughlin was, however, as Secretary to the Mayor's Board E
of Control privy to various discussions concerning MELP bj expansion. Since affiliating with SS&D, 0'Laughlin has been assigned to the Public Law Section, where he has served in a cor.sulting capacity with various political subdivisions of j
governm(nt, school boards and state universities.
t The City's charge of conflict arising from O'Laughlin's employment by SS&D is founded upon Canon 9, "A Lawyer Should Avoid Even the Appearance of Professional Impropriety."
DR 9-101 (B) states:
I A lawyer shall not accept private employment in a matter in which he had substantial responsibility while he was a public employce.
As noted in ABA Committee en Professional Ethics Formal Opinion !!o. 37 (May 4, 1931), the rule evolved to protect against the manifest possibility that his action as a publ c legal official nicht be influenced for open to the charge that it had been influenced) by the hope of being employed privately either to up-hold or upact what he had done.
.}
I Considering the issue presented, the Court is
- ulded by Judge Kauftr.an's admonition articulated in his sc
- r.inal article, The Portwr Govern nent Attornov and the C
- 'nons of Professionni Ethics,_ 70 liarv.
L. Rev. 657, 663 (1957),.:herein he stated:
,,..-...,..u.....
.m o,
If the Government service will tend to sterilize an attorney in too large an area of law for too long a time, or will prevent him from engaging in the practice e
of a technical specialty which he had devoted years in acquiring, and if that sterilization will spread to the firm with which he becomes associated, the sacrifice of entering government service will be too great for most men to make.
Obvious are the distinctions between legal precedent and the present case under which Canon 9 sanctions are sought. In those instances wherein disqualification was ordered pursuant to Canon 9, the challenged attorney had performed extensive services in specific matters, or litigation in the same proceeding from which he was subsequently being disqualified.
E.g., General Motors Corp. v. City of New York, 501 F. 2d 639 (2d Cir. 1974); Allied Realty of St. Paul, Inc.
- v. Exchange Nat'l Bank of Chicago, 408 F. 2d 1099 (8th Cir.), cert, denied, 396 U.S. 823 (1969); Hilo Metal Company, Ltd. v. Learner Co., 258 P. Supp. 23 (D. Haw.
1966).
Manifes t from the record is the City's failure to factually interconnect O'Laughlin's present employment with his previous public employment. Indeed, the record is con-spicuously silent as to any specific claims or matters i
involving O'Laughlin's participation in MELP affairs, either substantial.y or remotely related to the antitrust action
[l presently before this Court. Accordingly, in the words of i
Judge Kaufman in United States v.
Standard Oil Co., supra at I
j 365 (S.D.H.Y. 1955), the failure of proof is fatal:
h
[I]t is hapdly reasonable to hold that l
an appearance of evil can be found in i
[an attorney's] undertaking a case against the government where there is not some closer factual relationship between his j
former job and the case at hand other than that the same vast agency is involved.
I l
i i
j l !
! l l'
i l
~...
t i
c.
Absent the vital links required to support a Canon 9 violation, the City's Motion for Disqualification is overruled on this account.
SUMMARY
OF CONCLUSIONS For the reasons hereinbefore set forth, the Court concludes:
1.
The City is estopped from asserting alleged conflict of interest against SS&D; 2.
The City, with full knowledge of SS&D's legal representation of CEI over the years, waived any rights to assert alleged conflict of interest against SS&D; 3
Brueckel's services for the City in preparation of the 1972 $9.8 million MELP related bond ordinance' were not adverse to Lansdale's adversary represen-tation of CEI in this antitrust action; 4.
SS&D's role as special bond counsel for the City on an ad hoc basis throughout the years does not constitute an adverse representation to Lansdale's representation of CEI in the instant antitrust action within the intent and meaning or the Canons.
5 Lan'sdale received no confidential information concerning MELP as a result of Brueckel's services as special bond counsel to the City either actual-ly or by operation of law; 6.
O'Laughlin's present employment with SS&D presents no bcsis for disqualification of SS&D as counsel for CEI in the pending antitrust action.
t 1
f,
! ?
t
a 41 -
Accordingly, the City's Motion to Disqualify the law firm of SS&D from continued representation of defenda.it lCEIinthisantitrustactionisherebydenied.
/
5 d,.& "
l 2 #)4 2
Un " Sta 5 It @ ct Judge' e
1 e
s 4
i i
i p.oa a e il
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_ _ _ _ _ - _ _ _