Mitchell A. KRAMER and David C. Harrison v. SCIENTIFIC CONTROL CORP. Et Al. Appeal of ARTHUR ANDERSEN & CO.

ROSENN, Circuit Judge

(concurring).

I join fully in the court’s opinion and disposition of the case. I write to make several additional points.

First, and most importantly, I understand the court to hold only that an attorney cannot act as counsel to a class when (a) the action might result in the creation of a fund from which an attorney’s fee may be awarded, and (b) the named class representative is also the class counsel or an attorney professionally associated with the attorney seeking to act as class counsel. I thus do not understand the court’s rule to bar an attorney from bringing a class action as plaintiff and acting as the named class representative so long as class counsel is an attorney not professionally associated with the plaintiff attorney. Furthermore, I do not understand the opinion to bar an attorney from acting as counsel to a class of which he might be a member, or to a class with claims similar or identical to claims in which the attorney has a beneficial interest.

Some examples may serve to clarify my point. If a client seeks the advice of an attorney with respect to possible fraudulent dealings in the shares of a corporation in which the attorney is also a shareholder and if an action to recover losses due to those fraudulent dealings would assert a claim the attorney could also assert as a shareholder, I see no reason to require the attorney to decline representing the class of persons with like claims, or to decline membership in the class for him or herself. Similarly, if the attorney’s spouse or the law firm in which the attorney is a partner owned the stock, I think the attorney need not decline the representation of the class. Also, if an attorney’s corporate client, in which the attorney owns stock, brought an antitrust class action on behalf of it and other corporations, I do not think the attorney need decline representing the class.

I think these situations are distinguishable from the facts of the instant case primarily because there is no appearance of financial conflict of interest and no appearance of improper solicitation — i. e., that the attorney-plaintiff and class counsel collusively use the class action mechanism to acquire clients. 1 Furthermore, to the extent the named class representative has substantive duties to perform — such as monitoring the performance of class counsel or agreeing to a settlement — the fact that the representative and counsel are somewhat independent insures that the repre *1094 sentative will exercise unconstrained judgment.

Secondly, it is inevitable that this decision will pose some problem for district courts that have already certified classes in which the named representative and class counsel are professionally affiliated. It is my view that in such already ongoing cases automatic disqualification of counsel on defendant’s motion is not mandated by this decision. Where it is possible for the class to obtain substitute counsel without substantially prejudicing the interests of the class or substantially delaying the action, the district court should disqualify counsel. There may be cases that have progressed so far and are so complex that requiring substitution of counsel would substantially delay the termination of the litigation and substantially harm the interests of the class members. In such instances, the district court may allow the litigation to proceed to termination without change in representative or counsel. The choice, in my view, lies in the informed discretion of the district court.

Finally, although I join the court’s judgment on the jurisdictional issues, I continue to adhere to the views I expressed in my dissent in Hackett v. General Host Corporation, 455 F.2d 618, 626 (3d Cir. 1972), cert. denied, 407 U.S. 925 , 92 S.Ct. 2460 , 32 L.Ed.2d 812 (1972). There I argued that denial of class certification is an appealable order because, first, it qualifies as a collateral order under the doctrine of Cohen v. Beneficial Finance Co., 337 U.S. 541 , 69 S.Ct. 1221 , 93 L.Ed. 1528 (1949), and second, it effectively terminates much class action litigation and thus is, in every meaningful sense, a final order. On the other hand, a class certification order does not terminate litigation, nor, in my view, does it ordinarily create the kind of prejudice necessary to invoke the collateral order doctrine. 2

. I do not mean to suggest, nor do I understand the panel’s opinion to suggest, that we are concerned only with the appearances, rather than the reality, of improper solicitation. I assume that if and when the latter does occur, it can be adequately dealt with through normal bar disciplinary procedures.

. The prejudice necessary to establish jurisdiction under the collateral order doctrine is that rights may be irreparably lost without review. Hackett, supra, 455 F.2d at 627 (Rosenn, J., dissenting); Samuel v. University of Pittsburgh, 506 F.2d 355, 359 (3d Cir. 1974). See, e. g., Eisen v. Carlisle and Jacquelin, 417 U.S. 156, 169-72 , 94 S.Ct. 2140, 2148-50 , 40 L.Ed.2d 732, 743-45 (1974), where the lack of appellate review of the district court’s order requiring defendants to pay 90% of the costs of notice to class members would have irreparably foreclosed defendants from contesting that order. The prejudice resulting from merely having to continue to defend the suit is, in my view, usually insufficient to invoke appellate jurisdiction. But see Herbst v. International Telephone and Telegraph Corp., 495 F.2d 1308 (2d Cir. 1974).