# Petition — United States District Court for the District of New Jersey v. Arthur Lawrence Abrams > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385003_1118%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition - **Published:** January 1, 1975 - **Citation:** 423 U.S. 1038 ## Text od ana Supreme Court, U. & FilLED N ~ No O- 487 | sep /29. 1975 1 MICHSEL RPNIAK IR F2K s - ’ ; ‘ IN THE Supreme Court of the United States Ocroser TeRM, 1975 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY, Petitioner, Vv. ARTHUR LAWRENCE ABRAMS, Respondent. — PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT —— —_—_- -— ee — JonaTHan L. GOLDSTEIN, United States Attorney for the District of New Jersey, Joun J. Barry, Maryanne T. DesMOND, Assistant United States Attorneys, Federal Building, 970 Broad Street, Newark, New Jersey 07101 Attorneys for Petitioner. Adams Press Corp., 11 Commerce Street, Newark, N. J. 07102—(201) 623-8611 TABLE OF CONTENTS PAGE ES lll a aa 2 ET i ET ee eee, 2 QUESTION PRESENTED ..0.0...........-ccccocccccccccecees 2 ConstituTionaL Provision, Stature anp Rutes Iy- TE eeessseeesanmneainnieteinnetetccentetenitenniteintaesiementete en AT ROL RET REASONS FOR GRANTING THE WRIT 0on.e-ccceccececoccccocsecceeseeee 20 ConcLUsION 28 APPENDIX: A—Opinion of the United States Court of Ap- peals ° la B—Judgment of the United States Court of Appeals 36a C—Amended Judgment of the United States Court of Appeals 37a D—Opinion and Order of the United States District Court —_ E—Opinion of the Supreme Court of New Jer- sey a 53a Cases Cited Burr, Ex parte, 22 U.S. (9 Wheat.) 529 ooo 21 Colsey, In re, 63 N.J. 210, 306 A.2d 75 ............ 18 Disbarment of Buttles, In re, 419 U.S. 1101 ................ 24, 25 ii TABLE OF CONTENTS PAGE Disbarment of Mades, In re, 414 U.S. 1154 2000000... 25 Disbarment of Osborne, In re, 420 U.S. 918 .0000000..... 24 Disbarment of Pavsner, In re, 409 U.S. 1102 2000000020... 25 Garland, Ex parte, 71 U.S. (4 Wall.) 333 2000000... 21 I, TD OU ee Ge TID eecrnentiatttnsnnictvtaseanictinninens 22, 24 I, TR GR, GI Is ceeceenecneretnsiteneeeeresniecmmacentoion 22, 24 Richard G. Kleindienst, In the Matter of, No. 5-37-75, REN TT, ORRIN. LEAST TNO REE 21 Robinson, Ex parte, 86 U.S. (19 Wall.) 505.0000. 21 Ruffalo, In re, 300 US. GAG .on.n..n...ccccnicccscceccecceecseeees 21-23, 27 Sacher v. Association of the Bar, 347 U.S. 288 .0000....... 24 Sacher v. United States, 343 U.S. 1 oe. 24 Secombe, Ex parte, 60 U.S. (19 How.) 9 21 Selling v. Radford, 243 U.S. 46 oo. ececeeeeee 19, 22, 23 Theard v. United States, 354 U.S. 278 0. 19, 21-23 Pe ee A, Te Ts I eeecteetetecitenecttereceree 21 United States Constitution Cited Sire EE: SINS: Tb ‘sniessatiiesddbdiabdtesabadhdineellaebdiacheiiehindiiltaaciaicidicatiai 2,3 28 U.S.C.: I ic I a 2,3 TABLE OF CONTENTS iii Rules Cited weed 8 Ie etre ee 2,3 United States District Court, General Rules: R. 7 asian , 2,4,7 New Jersey Rules: R. 1:20-1 to R. 1:20-5 7 Other Authorities Cited Agata, Admissions and Discipline of Attorneys in Federal District Court: A Study and Proposed Rules, 3 Hofstra L. Rev. 249 et seq. (Spring 1975) 22 Cheatham, The Reach of Federal Action Over The Profession of Law, 18 Stan. L. Rev. 1288 (1966) .... 25 No. IN THE Supreme Court of the United States Ocroser Term, 1975 > UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY, Petitioner, v. ARTHUR LAWRENCE ABRAMS, Respondent. PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT The United States Attorney for the District of New Jersey, on behalf of the United States District Court for the District of New Jersey, petitions for a writ of cer- tiorari to review the judgment of the United States Court of Appeals for the Third Circuit in this case. Opinions Below The en banc opinion of the Court of Appeals (App. A, infra, pp. 1-35a) is not as yet officially reported. — en bane opinion and order of the district court gg , infra, pp. 39-52a) is reported at 385 F. Supp. 1210. _ The opinion of the New Jersey Supreme Court (App. E, on" pp. 53-6la) is reported at 65 N.J. 372 and at 320 A.2d 471. Jurisdiction The judgment of the Court of Appeals was entered on June 30, 1975 and was thereafter modified on July 14, 1975 (App. B & C, infra, pp. 36-38a). The jurisdiction of this Court is invoked under 28 U.S.C. §1254(1). The jurisdiction of the district court existed pursuant to Rule 7 of the General Rules of that court, which rule was duly enacted pursuant to Article IIT, Section 1 of the Constitution of the United States, 28 U.S.C. §2071 and Rule 83 F.R.C.P. Question Presented Where an attorney has been disciplined by a state court for professional misconduct on the basis of an evidentiary record not developed in that court and a United States District Court thereafter seeks to discipline that attorney on the basis of the identical record: (a) to what extent, if any, is the district court bound by the state court’s determination of the appropriate quantum of discipline to be imposed; and (b) to what extent, if any, is the district court bound by the state court’s analysis of the legal or factual issues involved? ol ee hee 3 Constitutional Provision, Statute and Rules Involved Article III, Section 1 of the Constitution of the United States, provides as follows: Articite III Section 1. The judicial Power of the United States, shall be vested in one supreme Court, and in such inferior Courts, as the Congress may from time to time ordain and establish. The Judges, both of the supreme and in- ferior Courts, shall hold their Offices during good Be- haviour, and shall, at stated Times, receive for their Serv- ices, a Compensation, which shall not be diminished during their Continuance in Office. Section 2071 of Title 28, United States Code, provides as follows: § 2071. Rule-making power generally The Supreme Court and all courts established by Act of Congress may from time to time prescribe rules for the conduct of their business. Such rules shall be consistent with Acts of Congress and rules of practice and procedure prescribed by the Su- preme Court. June 25, 1948, ¢. 646, 62 Stat. 961; May 24, 1949, c. 139, 4 102, 63 Stat. 104. Rule 83 of the Federal Rules of Civil Procedure pro- vides as follows: Rule 83. Rules by District Courts Each district court by action of a majority of the judges thereof may from time to time make and amend rules governing its practice not inconsistent with these rules. Copies of the rules and amend- 4 5 ments so made by any district court shall upon their promulgation be furnished to the Supreme Court of the United States. In all cases not pro- vided for by rule, the district courts may regulate their practice in any manner not inconsistent with these rules. : GENERAL RULEs (3) Proceedings within subdivisions (a), (b), and (c) of Paragraph 2 may be initiated by an order requiring the respondents to show cause within 30 deceit, malpractice, conduct prejudicial to the administration of justice or violation of the Code of Professional Responsibility of the American Bar Association. Rule 7 of the General Rules of the United States Dis- trict Court for the District of New Jersey, provides as follows: Rute 7 Discrecixne or ATTORNEYS (1) The chief judge shall have charge of all mat- ters relating to the discipline of members of the bar. (2) The court may make an order in a discipli- nary proceeding disbarring, suspending or censur- ing, or taking such other action as justice may re- quire, with respect to a member of the bar of this court: (a) Who has resigned from the bar of a court of any State, Territory, District, Commonwealth or Possession; (b) Who has been disbarred, suspended from practice or censured in any State, Territory, District, Commonwealth or Possession; (c) Who has been convicted of a crime involving moral turpitude in any State, Territory, Dis- trict, Commonwealth or Possession; or (d) Who is guilty of conduct unbecoming a mem- ber of the Bar of this court. Without limit- ing the generality of the foregoing, such misconduct shall be deemed to include fraud, OA Al Ree ew tee days after service thereof on him, personally or by mail, why he should not be disciplined. Upon the issuance of such order the chief judge may, for good cause, temporarily suspend the respondent pending the termination of the proceedings. Upon the return of said order, if the respondent fails to appear or, if he appears and does not contest, the court shall take such action as justice may require. If the respondent appears and contests, the chief judge shall prescribe procedures to formulate the issues and to provide for a hearing in a manner similar to that set forth in Paragraph 4 hereof. (4) Proceedings within subdivision (d) of Para- graph 2 shall be presented to the chief judge, and, if he deems the charges of professional miscon- duct of sufficient weight, he shall refer them for preliminary investigation and recommendation to a committee of members of the bar of the court designated by him or to the United States Attorney. The recommendation shall be presented to the chief judge. Thereupon, with the approval of the chief judge, the committee designated or the United States At- torney shall proceed against the defendant by a petition setting forth the charges against him and an 6 order requiring him to file an answer and show cause within 30 days after service on him, person- ally or by mail, of the petition and order why he should not be disciplined. Upon respondent’s an- swer to the petition, the chief judge may set the matter for prompt hearing before himself, or a court of one or more judges, or may appoint a mas- ter to hear and report his findings and recommen- dations. After such a hearing or report, or if no answer is made by the respondent, the court shall take such action as justice may require. (5) The court, with the consent of the respond- ent, may order a disciplinary hearing to be private and direct the papers to be sealed and impounded. (6) Whenever it appears that an attorney at law admitted to practice in this court is suspended, dis- barred, or disciplined in this court, the clerk shall transmit to the Supreme Court of New Jersey and the United States Court of Appeals for the Third Circuit a certified copy of the order of suspension, disbarment or discipline. (7) A visiting attorney permitted to argue or try a particular cause in accordance with Rule 4(c) who is found guilty of professional misconduct may be precluded from again appearing at the bar of this court. Upon the entry of an order of preclu- sion, the clerk shall transmit to the Supreme Court of New Jersey and the United States Court of Ap- peals for the Third Circuit a certified copy thereof, and of the court’s opinion. ES ee. eee ens 7 Statement Respondent, a New Jersey attorney,’ was disbarred un- til further order of the court by the United States District Court for the District of New Jersey of December 10, 1974 (App. D, pp. 39-50a). The proceeding was initiated by an order issued pursuant to Rule 7 of the General Rules of the court directing respondent to show cause before a three-judge panel why he should not be disci- plined. Prior to the issuance of that order, respondent had been suspended for one year from the practice of law by the New Jersey Supreme Court for having knowingly assisted his client in the making of a $20,000 illegal payment to a public official of Jersey City (App. E, pp. 53-6la). The discipline which had been imposed by the New J ersey Supreme Court was based on that court’s assessment of a record which had been developed by the Essex County Ethics Committee.* * Respondent is also a member of the bar of this court. * The State of New Jersey conducts attorney disciplinary pro- ceedings through county ethics committees. The ethics commit- tees are charged by law with conducting preliminary investigations and, where warranted, further formal proceedings. A formal pro- ceeding is commenced by the filing of charges. Thereafter, the attorney is required to file an answer. If necessary, a hearing is held at which testimony and other evidence is received. If un- professional conduct is found, a presentment containing a summary of the matter and the committee’s findings of fact is transmitted to the New Jersey Supreme Court for ultimate disposition. The Supreme Court conducts no further hearings and the ethics com- mittees do not make recommendations as to the nature or quan- tum of discipline to be imposed. New Jersey Court Rules, R1:- 20-1 to 1:20-5. That procedure was followed in this case and there is no claim that the state proceedings were defective in any respect. 4 8 That entire record, which consisted of certain testi- mony given under immunity by respondent and his elient before the New Jersey State Commission of Investiga- tion, formal charges filed by the Ethies Committee and respondent’s answer thereto, respondent’s testimony and that of two character witnesses before the committee, affidavits submitted by respondent and counsel to the committee and the committee’s presentment and supple- mental report, was before the district court (CA, pp. 412- l4a).* Respondent appeared personally with counsel before the three-judge panel on two occasions. On both occasions, the court questioned counsel as to matters appearing in the state record and offered respondent the opportunity to supplement the record in any respect. Respondent, though conceding that the district court was not bound hy the decision of the New Jersey Supreme Court as to the sanction which could be imposed, elected not to sup- plement the record (CA, pp. 375-76a, 378a, 412-14a, 405a). At the conclusion of the proceeding, respondent was ad- vised that the matter would be referred to the entire court for disposition (CA, p. 416a). Seven members of the court were of the view that, while a suspension, disbarment or censure of an attorney by the New Jersey Supreme Court would ordinarily re- sult in corresponding action in the district court, the dis- trict court had an independent obligation to make its own rational analysis and determination of the discipline to be imposed in each case and that the discharge of that obligation in respondent’s case required disbarment (App. $That record, minus copies of the exhibits appended to the Presentment of the Ethics Committee, is included in the appendix filed in the court of appeals. The designation “CA” as used in this petition refers to that appendix. 9 D, pp. 39-42a). Two members of the court, although agreeing that the court had the power to disbar respond- ent, dissented from the exercise of that power on the ground that policy considerations dictated that the dis- trict court impose a discipline identical to that imposed by the New Jersey Supreme Court unless there existed a grave reason for not doing so (App. D, pp. 43-50a). 1. To illuminate the disagreement between the district court and the New Jersey Supreme Court and, thus, properly to frame the issues considered by the court of appeals, it is necessary briefly to summarize the facts un- derlying the finding of professional misconduct (see also App. A, pp. 3-10a; App. D, 39-40a; App. E, pp. 53-59a). In 1967, respondent became aware through Clinton B. Snyder, a local real estate broker, of the impending sale of Jersey City waterfront property. Respondent com- municated this information to his client, Ezra Sensibar, president of Construction Aggregates Corporation, a firm which specialized in the construction and operation of port facilities. Thereafter, respondent, Snyder and Sensibar formed the Port Jersey Corporation to bid on the waterfront property. The respective ownership inter- ests in Port Jersey were: Construction Aggregates Cor- poration 60%, Snyder 20% and respondent 20%. On August 1, 1967, the waterfront property was auctioned and Port Jersey was the successful bidder, having bid $2,040,000 (CA, pp. 53-35a). The waterfront property was essentially a swamp. In addition, it was isolated from city services, such as water and sewerage, and could not be easily reached due to the lack of access roads. In order to develop the prop- erty as a port facility, it was necessary in the judgment of the principals of Port Jersey to secure cooperation from the City of Jersey City in the form of construction 10 of access roads, laying of water and sewerage lines to the property and the providing of favorable tax treat- ment (CA, pp. 42-45a, 53-54a, 68-69a). At the time Port Jersey successfully bid on the property, the City of Jer- sey City had not announced that it was committing itself to furnish any such cooperation (CA, pp. 40a, 114a). Shortly after the successful bid, Sensibar arranged a meeting with John V. Kenny, who, though he held no office was regarded as tne de facto political leader in Jersey City. At that meeting Sensibar told Kenny that Port Jersey would need many forms of cooperation from the City of Jersey City in order to make the develop- ment of the port facility possible. Kenny agreed to fur- nish the cooperation requested and told Sensibar that if anybody asked for money, he, Sensibar, should come to him, Kenny, and he would take care of it. After being assured of cooperation, Sensibar asked Kenny whether there were any local people who should be taken into the venture. Kenny responded that he would appreciate Port Jersey’s employing Comparetto & Kenny as its architect. Respondent was out of town at the time of the meeting but was subsequently advised by Sensibar and Snyder as to what had transpired (CA, pp. 36-37a). Port Jersey thereafter decided to retain Comparetto & Kenny as its architects because of Kenny’s suggestion and because they were “well regarded, well connected locally”. Respondent negotiated the contractual terms and drafted the contract, which was entered into in De- eember 1967 (CA, pp. 39-40a, 114-16a). In March 1968, respondent and Sensibar met with Mayor Whelan and City Council President Flaherty at a party in New York City and respondent explained to those officials the various forms of cooperation which Port Jersey would require. No commitment was made by ee tn © ee ek es 0 at ome 11 officials. Thereafter, respondent negotiated a contract with the city of Jersey City in which the city agreed to construct the necessary access roads and to lay water and sewerage lines to the property (CA, pp. 41-44a). Title to the property passed in November 1968. Fol- lowing the closing of title, the city council adopted vari- ous resolutions providing for the access roads and water and sewerage lines. The city council also adopted a reso- lution authorizing the payment of a 5% brokerage com- mission to the C. B. Snyder Realty Company, a firm in which Snyder had a one-third interest. No provision had been made for the payment of the commission, which amounted to $102,000, either in the bid specifications, an- nounced when the property was auctioned, or in the clos- ing documents which were executed when title passed (CA, pp. 47a, 139a, 140-141a, 143a). Upon receipt of the $102,000 in January 1969, Snyder paid respondent half, pursuant to an oral arrangement. Respondent deposited the $51,000 he received in a special account, denominated the Arthur Lawrence Abrams Trust Account. This money was ultimately utilized to make an illegal $20,000 payment to the president of the Jersey City council, Flaherty (CA, pp. 47-51la). Later that month or in the early part of the following month, respondent attended a luncheon with Snyder and Bernard Kenny in Newark. At that time, Kenny stated that the “organization”, which respondent understood to mean the Hudson County Democratic Organization, wanted a percentage of the construction costs of the port facility in cash. Kenny did not threaten but did indicate that, in the absence of payment, Port Jersey would ex- perience difficulties. Respondent did not discuss the mat- ter further (CA, pp. 51-55a). 12 Respondent then informed Sensibar of what had hap- pened. Sensibar thereafter met with Flaherty to discuss complaints he had received from Port Jersey personnel about a lack of cooperation from the city. Sensibar men- tioned his original discussion with John V. Kenny. Flah- erty replied that he knew about that discussion and told Sensibar that the organization needed money. He sug- gested that Port Jersey contribute 3% of the cost of con- struction. Sensibar refused and the meeting ended (CA, pp. 117-18a). A couple of weeks later, Sensibar met with John V. Kenny. He told Kenny of Flaherty’s demand and re- minded him of their earlier discussion. Kenny responded by telling Sensibar that he remembered the discussion and would stand by it but that a campaign contribution would be appreciated because the organization had an expensive campaign. Sensibar did not respond and the meeting ended. Sensibar returned to Chicago “with the intention that we would not make any substantial contri- bution” (CA, pp. 119-20a). In early April, respondent, Snyder and Bernard Kenny told Sensibar they were stymied at city hall and sug- gested to him that he have another meeting with Flah- erty. A meeting was held in Flaherty’s office on April 19. At that meeting, Flaherty stated that he needed $140,000 to finance the balance of the campaign and that he had to go to a few large contributors to get the money. He also stated that the proposal he had made earlier was un- realistic and he was now willing to accept 1% of con- struction costs as a contribution. Sensibar offered a con- tribution of $10,000 and, after further discussion, agreed to the making of a $20,000 contribution (CA, pp. 120- 23a). 13 After the meeting, Sensibar consulted with respondent and Snyder who both told him “that it was unrealistic to exnect that we could do as much construction work, as much business as we were doing in Hudson County without acceding to a shakedown of some kind. They [respondent and Snyder] thought that $20,000 in the circumstances might be nominal and they urged that I should arrange for us to pay it” (CA, pp. 124a). Thereafter, respondent issued a $20,000 check on the Arthur Lawrence Abrams Trust Account at Sensibar’s request for the purpose of enabling Sensibar to obtain the $20,000 in cash he had agreed to pay to Flaherty (CA, pp. 58-59a, 161-63a). At Sensibar’s instruction, re- spondent falsely represented on the face of the check that it was issued in payment “For Engineering Serv- ices”, Thereafter, Sensibar sent respondent a false in- voice reflecting a $20,000 charge for engineering services (CA, pp. 311-13a). Sensibar cashed the check and de- livered the cash to Snyder, who in turn delivered it to Flaherty (CA, p. 125a). Afterwards, Port Jersey re- ceived cooperation from the City in regards to sewerage, water, access roads and favorable tax treatment (CA, pp. 125-26a). 2. On the foregoing facts, the district court differed with the New Jersey Supreme Court as to the quantum of discipline to be imposed because it disagreed that the facts presented mitigating circumstances. Both courts had previously disbarred an attorney, Colsey, who had assisted his client in making an extortionate payment to a public official and, in respondent’s case, disagreed as to whether there existed a sufficient distinction between the misconduct in the two cases. As the New Jersey Supreme Court viewed the matter: 14 In Colsey an attorney was disbarred for knowingly participating in a transaction which involved a cor- rupt payment to satisfy an illegal demand by a public official. However, unlike the situation here, the attorney was not in any sense a co-victim, played a very active part in the corrupt transac- tion itself and used the fact that he was a member of the bar as part of the mask for the crime by creating the appearance that a professional fee was involved. 63 N.J. at 215, 306 A.2d at 75. We agree with the position of respondent’s counsel that Colsey is distinguishable and that disbarment is not called for. (App. E, p. 60a). In disagreeing, the district court stated: We see no basis for distinguishing this case from In re Colsey, 63 N.J. 210 (1973). Professional mis- conduct, ‘ike fraud, takes many forms. Variations in detail are not significant when the underlying character is the same. A lawyer who countenances and assists client misconduct for the payment of an extortionate bribe countenances two offenses: one, the extortion and two, the bribe. His mini- mum duty in such circumstances is to advise the client against it in the strongest terms, and if the client persists, to disassociate himself from the matter promptly and completely. And, since a communication in the course of legal service sought in aid of the commission of a crime or fraud is not privileged, N.J. Ev. Rule 26 (2) (a), he may be under a further duty to report the matter to proper authorities. (App. D, p. 40a). As will be discussed in greater detail below, the four judges comprising the majority in the court of appeals 15 held that the district court was not permitted to dis- agree but was required to accept the distinctions made by the New Jersey Supreme Court. In addition to disagreeing that respondent’s variation of participation in the making of an illegal payment to a pubiic official was significant for disciplinary purposes, the district court made two observations concerning the record which reflected a somewhat different approach than that taken by the New Jersey Supreme Court. The first of these related to respondent’s 20% owner- ship interest in the Port Jersey Corporation, a fact which was undisputed from the outset of the state proceedings and which was at all times relied upon by respondent in attempting to justify his participation in the making of the illegal $20,000 payment. The district court was of the view that “[t]he acquisition of an interest in the client’s enterprise was obviously a factor that interfered with the exercise of free judgment on behalf of the client.” The New Jersey Supreme Court, in distinguish- ing respondent’s case from Colsey’s case, referred, as quoted above, to the fact that Colsey “was not in any sense a co-victim”, i.e., Colsey had no direct financial in- terest in his client’s enterprise (App. D, p. 40a). The second observation made by the district court re- flecting a different approach was with respect to the $102,000 commission and the subsequent use of respond- ent’s share to make the $20,000 illegal payment. The dis- trict court stated: Another factor is that Abrams accepted a share of a real estate commission paid by the City of Jersey City on the sale of property on public bid. He deposited that share in his trust aecount, ex- plaining that he considered it to belong to the 16 client, but no credible explanation was provided for the making of the payment in the first place. The commission aspect bears all the indications of a device to divert public funds into channels from which they could be repaid secretly to the public officials. Justification for its payment is not satis- factorily shown. (App. D, p. 40a) In the state proceeding, the commission was considered in two different contexts. In its initial statement of charges, the Ethics Committee had charged that respond- ent’s participation in sharing the commission and in re- bating $30,000 to Port Jersey violated a New Jersey stat- ute which had been repealed prior to the commencement of proceedings (CA, pp. 4-5a). That charge, in the view of the Supreme Court, was apparently abandoned be- eause the Ethics Committee made no reference to it in its supplemental report and, therefore, the court concluded that “the sharing of the brokerage commission” was not before it (App. E, pp. 57a, 58a). The other context in which the commission was con- sidered was its use to provide the funds from which the illegal $20,000 payment was made. The accusation had been made during the questioning of respondent by the State Commission of Investigation and the Ethies Com- mittee that the payment of the commission, which was a discretionary act by the city council of which Flaherty had been president, was part of a premeditated scheme to provide a fund from which illegal payments could be made (CA, pp. 79a, 201-02a, 226a).* In addressing itself to respondent’s use of his share to create the trust fund * Respondent’s counsel in respondent’s presence was additional- ly questioned on this point in the district court proceeding (CA, pp. 401-05a). 17 from which the illegal $20,000 payment was made, the New Jersey Supreme Court made two observations: (1) The purposes of surrounding the original creation of the trust fund is nowhere unequivocally ac- knowledged though the Committee in its present- ment concluded that the $51,000 retained in re- spondent’s possession in a trust account that con- tained only Port Jersey money was used by Port Jersey to make irregular payments which would not be reflected upon the corporate books of Port Jersey. (App. E, p. 58a) (2) Though the original creation of the trust fund it- self by the respondent was suspect, the record does not permit a finding that it was specifically de- signed for the illegal payment. (App. E, p. 60a) 3. On review, the court of appeals unanimously agreed that the district court’s order could not stand but could not agree either as to the reason why it could not stand or as to whether the district court was to be permitted to take any subsequent action in the matter. Four separate opinions were filed (App. A, pp. 1-35a). The majority, consisting of four judges, reversed stat- ing that the principles guiding its decision were three in number: (1) To recognize and reinforce an absolute and unfettered power of the district court to admit and to discipline members of its bar independently of and separately from admission and disciplinary procedures of (a) the state courts and (b) this court. (2) To recognize that the absolute and unfettered power of the district court to admit or reject appli- 18 cations for admissions will be circumscribed to the extent the district court depends upon the state court system for eligibility requirements. Thus, all other things being equal, if a district court by rule derivatively admits to its bar those admitted to the state bar, the district court may not arbi- trarily deny admission to one who is a member in good standing of the state bar. (3) To recognize that an absolute and unfettered power of the district court to discipline lawyers may be circumscribed to the extent the district court, in imposing its disciplinary sanctions, relies upon a state’s legal or factual determinations. Stated otherwise, the district court’s action may be circumscribed to the extent it depends in whole or in part on a state’s actions, either for the com- mencement of the disciplinary proceedings or for a stated basis in the determination of the sanction imposed. (App. A, pp. 15-16a) Applying those principles, the majority concluded that the district court’s action did not conform in two respects. First, it concluded that the district court had relied on the state court decision in Colsey, supra, for preceden- tial authority, and that, because it did so, it was re- quired to draw the identical distinctions between that case and the present case that were drawn by the New Jersey Supreme Court. As the majority put it: Having elected to bottom its own rational analysis on New Jersey law, the controlling case for the district court was In Re Abrams—not In Re Col- sey (App. A, 21a). oo: 19 Second, it concluded that the observations expressed by the district court with respect both to the commission and to respondent’s interest in his client’s enterprise were im- permissible because they were not consistent with the treatment of those matters by the New Jersey Supreme Court. As the majority analyzed the issue, the district court’s views constituted views on “charges” which either had never been made in the state proceedings (the ownership interest) or which had been abandoned therein (the com- mission). Reasoning from this premise, the: majority proceeded to analyze the district court disciplinary rule and concluded that the district court had violated its rule by not having provided respondent with formal notice of those “charges” prior to imposing discipline (App. A, pp. 22-26a). One judge who joined in that opinion filed a separate opinion expressing the view that the principles established by this Court in Selling v. Radford, 243 U.S. 46 and Theard v. United States, 354 U.S. 278 required the dis- trict court in respondent’s case to impose the identical discipline imposed by the New Jersey Supreme Court (App. A, pp. 26-29a). Three judges dissented from the reversal. They agreed with the majority that it was impermissible for the dis- trict court to have considered the commission and respond- ent’s ownership interest without having put respondent on notice prior to the commencement of the proceeding that it would do so. Their analysis differed from the majority’s in that they relied on due process notice grounds rather than upon an analysis of the district court rule to reach their result. Unlike the majority, however, 20 they deemed it appropriate to remand the case to allow the district court a further opportunity to reach its judg- ment regarding the extent of the discipline, based on the “issue” derived from the state proceeding, or else to seek to have additional charges filed in accorda. :e with Rule 7 (App. A, pp. 30-34a). One judge who joined in that opinion filed a separate opinion in which he expressed the view that he found this case to be “an exceedingly close case as to whether affirm- ance is required on this record” (App. A, pp. 34-35a). Reasons for Granting the Writ This case presents issues of first impression in this Court which are of fundamental importance to the pub- lic, the legal profession and the federal courts. At a time when the problems of attorney discipline are re- ceiving more widespread and searching attention by the profession and by the public, it is imperative that this court provide authoritative guidance as to how the fed- eral courts can best deal with those issues. In concluding en bane that it was impermissible for the district court to disagree with a state court determi- nation as to the discipline to be imposed upon an attor- ney who was clearly proven to have been guilty of serious misconduct, the court of appeals has forged a precedent inconsistent both with prior precedent in this court as to the extent of a federal court’s disciplinary powers and with the disciplinary practice followed in this court pur- suant to Rule 8. Moreover, by disagreeing not only as to the basis for its unprecedented action but also as to whether the district court may proceed further in this matter, the court of appeals has created great uncertainty 21 as to the action a federal court should take when a mem- ber of its bar has been disciplined by a state court.® 1. This court has consistently held that a federal court has the power both to prescribe requirements for admis- sion to practice before that court and to discipline attor- neys so admitted and this power has consistently been recognized by the court to be very broad. Ex parte Burr, 22 U.S. (9 Wheat.) 529; Ex parte Secombe, 60 U.S. (19 How.) 9, 13; Ex parte Garland, 71 U.S. (4 Wall.) 333, 378-79; Ex parte Robinson, 86 U.S. (19 Wall.) 505, 512; Theard v. United States, swpra at 281; In re Ruffalo, 390 U.S. 544, 547. This court has also consistently held that review of the exercise of this broad power is confined within the exceed- ingly narrow limits of clear abuse of discretion. Ex parte Burr, supra at 529; Ex parte Secombe, supra at 15; Ex parte Wall, 107 U.S. 265, 272; Theard v. United States, supra at 281. In the seminal case on the questions of a federal court’s power to discipline attorneys and a review- ing court’s power to interpose its judgment as to the ex- ercise of that power, Chief Justice Marshall explained that in disciplinary matters: [D]Jiseretion ought to be exercised with great mod- eration and judgment; but it must be exercised; * This case should be contrasted with the recent disciplinary ac- tion of the Court of Appeals for the District of Columbia circuit. That court suspended former Attorney General Kleindienst for one month after the Supreme Court of Arizona had chosen the lesser discipline of censure and after the District Court for the District of Columbia had concluded that no discipline at all was warranted. Jn the Matter of Richard G. Kleindienst, No. 5-37-75, filed August 11, 1975 (a copy of the as yet unpublished memoran- dum order is being served on counsel for respondent along with this petition). The charged misconduct in each instance was iden- tical. 22 and no other tribunal can decide, in a case of re- moval from the bar, with the same means of infor- mation as the court itself. If there be a revising tribunal, which possesses controlling authority, that tribunal will always feel the delicacy of interposing its authority, and would do so only in a plain case. Some doubts are felt in this court respecting the extent of its authority as to the conduct of the cir- cuit and district courts towards their officers; but without deciding on this question, the court is not inclined to interpose, unless it were in a case where the conduct of the Cireuit or District Court was irregular, or was flagrantly improper. Ez parte Burr, supra at 529. This court has never held that a federal court is bound by a state determination as to the discipline to be im- posed. Beginning with Selling v. Radford, supra, this court has been confronted on five occasions with the ques- tion of whether either this court or a lower federal court should disbar an attorney who had been disbarred by a state court. In re Isserman, 345 U.S. 286: In re Isser- man, 348 U.S. 1; Theard v. United Sates, supra; In re Ruffalo, swpra. * That the question has arisen in this form in probably due to the fact that traditionally federal courts have, with few excep- tions, tended to rely on the state courts to conduct disciplinary proceedings and to make disciplinary determinations. Once made by a state court, those determinations have been generally accepted without more by a federal court as a basis for imposing the iden- tical discipline in the federal court. See generally Agata, Admis- sions and Discipline of Attorneys in Federal District Court: A nome and Proposed Rules, 3 Hofstra L.Rev. 249 et seg. (Spring ). 23 In Selling, it was contended that simply because the state court had disbarred, this court was required to do so. This court’s response was it “should recognize the absence of fair private and professional character inher- ently arising as the result of [the state disbarment] so far as we are at liberty to do so consistently with the duty resting upon us to determine for ourselves the right to continue to be a member of this Bar”, 243 U.S. at 50. This court went on to state that it would disbar in such a case: unless, from an intrinsic consideration of the state record, one or all of the following conditions should appear: 1, that the state procedure, from want of notice or opportunity to be heard, was wanting in due process; 2, that there was such an infirmity of proof as to facts found to have established the want of fair private and professional character as to give rise to a clear conviction on our part that we could not, consistently with our duty, accept as final the conclusion on that subject; or 3, that some other grave reason existed which should con- vince us that to allow the natural consequences of the judgment to have their effect would conflict with the duty which rests upon us not to disbar except upon the conviction that, under the prin- ciples of right and justice, we were constrained so todo. Id. at 50-51. In applying that precedent to the disciplinary actions of lower federal courts, this court has twice reversed disbarment orders which were based on state judgments, holding on both occasions that the lower federal court could not, consistently with its independent obligation to determine for itself whether discipline should be imposed, accept the state judgment in the matter.. Theard v. United States, swpra; In re Ruffalo, supra. 24 In the Isserman eases, this court successively split four to four and three to three on the question of whether it should disbar an attorney who had been disbarred by a state court following the affirmance by this court of his conviction for contempt committed during a trial (Sacher v. United States, 343 U.S. 1). The disagreement in both eases centered primarily on the question of whether sim- ple contempt constituted an adequate basis for disbar- ment.’ From the foregoing discussion, it is, therefore, clear that unbroken precedent in this court required the district court to make its own independent determination of the appropriate discipline to be imposed on respondent and required the court of appeals not to interfere with that determination unless it found a clear abuse of discretion. 2. Reported precedent aside, the disciplinary practice of this court in recent years supports the district court’s action in this case. This court does not, in imposing dis- cipline on members of its bar, accept the proposition that it is required to impose the identical quantum of disci- pline which has been imposed by a state court. Attorneys who have been suspended for misconduct by state courts have regularly been disbarred by this court.’ See, e.g., In re Disbarment of Osborne, 420 U.S. 918 (three year suspension—New York); Jn re Disbarment of Buttles, TIn Sacher v. Association of the Bar, 347 U.S. 288, this court held that simple contempt involving no moral turpitude did not furnish an adequate basis for a lower federal court to disbar an attorney. 8 The court of appeals was fully aware of this court’s disciplin- ary practices but apparently concluded that those practices were not reievant to a consideration of the issues before it (App. A, p. lla). ‘i mee 25 419 U.S. 1101 (two year suspension—New York); In re Disbarment of Mades, 414 U.S. 1154 (two year suspen- sion—Massachusetts); In re Disbarment of Pavsner, 409 U.S. 1102 (three year suspension—New York). 3. The action of the court of appeals in this case raises substantial questions requiring this court’s review be- cause that action severely limits the exercise of independ- ent federal court determination in disciplinary matters in several critical respects. First, by holding that the district court was bound by state law and was, thus, required to accept the distinc tions which the state court had drawn between two cases, the court of appeals has established within its circuit a novel and significant principle which, if followed, would fundamentally alter the role of the federal courts in dis- ciplinary matters. Until the court of appeals’ decision in this case, no court or commentator had ever accepted the proposition that federal courts are bound in any way to state law in exercising their independent disciplinary powers. See, e.g., Cheatham, The Reach of Federal Action Over The Profession of Law, 18 Stan. L. Rev. 1288, 1291 (1966). None of the cases previously decided by this court sup- port that proposition and petitioner respectfully submits that the proposition is totally inconsistent with the con- cept of independent determination. Second, by holding that the district court violated its own disciplinary rule, the court of appeals has signifi- cantly enlarged the scope of review of disciplinary deter- minations and, thus, has correspondingly significantly di- minished the independence of federal courts within the circuit in disciplinary matters. If, as this court has repeatedly held, an exercise of disciplinary power by a federal court is reviewable only 26 within the exceedingly narrow limits of clear abuse of discretion, the question of whether a lower court correctly applied its rule should never arise because the ultimate. question for the reviewing court should be whether the discipline imposed was either clearly improper or was im- posed in violation of fundamental rights. To the extent, therefore, that the opinion of the court of appeals can be said to furnish precedent for an expanded scope of review in disciplinary matters, it would, if followed, signi- ficantly alter the relationship between district courts and reviewing courts in this highly sensitive area. Because the two novel holdings discussed above con- stituted the entire basis upon which the court of appeals reversed the district court’s disciplinary determination, the necessity for review by this court is clear. The alternative analysis employed in the concurring and dissenting opinion, in which three judges joined raises an equally substantial question requiring this court’s review because that analysis is also, in petitioner’s view, inconsistent with prior precedent of this court. The three judges who dissented from the reversal were in agreement with the majority that it was improper for the district court to treat two matters in the common evi- dentiary record differently than they had been treated by the New Jersey Supreme Court, but were not in agree- ment that the basis for this conclusion was either that the district court was required to follow state law or that it had violated its disciplinary rule.° ®No view was expressed in this opinion as to the majority’s conclusion that the district court was bound by state law. As to the conclusion that the district court violated its rule, however, the view taken was that it was an inappropriate basis for decision because (1) the district court’s actions suggested that it believed its rules had been implemented by the procedures followed, (2) the interpretation of local rules is primarily committed to the courts which promulgated them, and (3) the meaning of the rule in the procedural context that developed was uncertain (App. A, p. 32a). 27 They based their conclusion on the due process ground of lack of adequate notice of the charges upon which dis- cipline was imposed. This court has held in Jn re Ruffalo, supra, that, where a federal court disbars an attorney on the basis of a state record, the federal disbarment suf- fers from any due process infirmity in the state proceed- ing. The infirmity found in Ruffalo was that an entirely new charge was formally lodged against an attorney after he had both filed his answer to the original charges and had testified and provided other evidence. The new charge ultimately furnished the entire basis for the fed- eral disbarment. Ruffalo is clearly distinguishable from the case at bar for four reasons. First, no due process infirmity was either claimed or found to have existed in the state pro- ceeding. Second, no new charge was ever filed against respondent. Third, the two matters treated differently by the district court were matters which were not only considered relevant to an original charge by the Ethics Committee, by the New Jersey Supreme Court, and by the district court but were matters as to which respond- ent had been questioned by the State Commission of In- vestigation, the Ethics Committee, and the district court (See pp. 15-17, supra). Fourth, a reviewing court could hardly conclude that the additional matters considered by the district court constituted the entire or, indeed, any substantial basis for the discipline imposed. By construing Ruffalo, therefore, to require remand in this case, the concurring and dissenting judges have created a precedent which, if followed, would require a federal court either to accept a state court’s factual ana- lysis or run the risk of having a reviewing court conclude that its disagreement with that analysis constituted, for due process purposes, the filing of new charges. Such a s. 28 result is not consistent with the principle that a federal court must make its own independent determination of the disciplinary action to be taken. CONCLUSION For the foregoing reasons, it is respectfully sub- mitted that the petition for a writ of certiorari should be granted. JONATHAN L. GoLpsTEIN, United States Attorney for the District of New Jersey, Joun J. Barry, Maryanne T. Desmonn, Assistant United States Attorneys, Federal Building, 970 Broad Street, Newark, New Jersey 07101 Attorneys for Petitioner. SepreMBER 1975 APPENDIX A Opinion of the United States Court of Appeals UNITED STATES COURT OF APPEALS For tHe Turrp Circuit No. 75-1029 I~ THE MATYER OF: ArtHurR LawrRENCE ABRAMS, An attorney-at-law Arthur Lawrence Abrams, Appellant AppEAL From THE Uwirep States Districr Court For THE District or New JERSEY. (D.C. Mise. No. 74-53) Argued May 8, 1975 Before: Serrz, Chief Judge, Van Dusen, Aupisert, ADAMS, Rosenn, Hunter and Wels, Circwt Judges. OPINION OF THE CoURT (Filed—June 30, 1975) {la} 2a Appendiz A Sills, Beck, Cummis, Radin & Tischman Clive S. Cummis, Esq., Of Counsel Jerald D. Baranoff, On the Brief 33 Washington Street Newark. New Jersey 07102 Counsel for Appellant Clyde A. Szuch, Esq. Pitney, Hardin & Kipp 570 Broad Street Newark, New Jersey 07102 Counsel for New Jersey State Bar Association, Amicus Curiae Jonathan L. Goldstein, U. S. Attorney John J. Barry, Assistant U. S. Attorney Maryanne T. Desmond, Assistant U. S. Attorney, On the Brief Federal Building Newark, New Jersey 07101 Cownsel for Appellee William J. Brennan, II Co-Chairman, Ethics Committee 1 Palmer Square Princeton, New Jersey 08540 Thomas F. Campion Co-Chairman, Ethics Committee 570 Broad Street Newark, New Jersey 07102 Counsel for amicus curiae, Federal Bar Association (Newark Chapter) ALpIsert, Circuit Judge. Arthur Lawrence Abrams appeals from an order of the United States District Court for the District of New 3a Appendi«c A Jersey disbarring him from the practice of law in that court. The circumstances giving rise to this litigation re- late to Abrams’ issuance of a check, drawn on a trust ac- count and ultimately used to satisfy the extortion of Jer- sey City officials. The Supreme Court of New Jersey or- dered his suspension from the practice of law for one year. In re Abrams, 65 N.J. 172, 320 A.2d 471 (1974). Acting on the same evidentiary material, and without con- ducting a separate evidentiary hearing, the district court entered its order. The question presented for review is the propriety of the district court’s action. L Although the facts relevant to the charge against Abrams are not in dispute, we will accept the statement of facts presented in the United States Attorney’s brief de- fending the action of the district court: The order appealed from had its genesis in an in- vestigation conducted by the New Jersey State Com- mission of Investigation (“SCI”). In August 1971, ORDER For the reasons stated, it is hereby ordered that the name of Arthur Lawrence Abrams be, and the same hereby is, stricken from the roll of attorneys permitted to practice before this Court, and until the further order of the Court. In re Abrams, 385 F. Supp. 1210, 1212 (D.N.J. 1974). Al- though the last clause renders the order susceptible to the in- terpretation that the court ordered something less than a final disbarment, the parties have treated this case as one of disbar- ment. Accordingly, we also will treat the order as a disbar- ment. 4a Appendix A appellant, Arthur Lawrence Abrams, and his client Ezra Sensibar refused, on the basis of the Fifth Amendment, to answer certain quesiions pro- pounded by the SCI. Thereafter, formal immunity was conferred upon them and their subsequent pub- lic testimony in October 1971 formed the predicate for the filing of formal charges against Abrams by the Essex County Ethic: Committee. At Abrams’ specific request, his testimony and that of Sensibar was made part of the record of the ensuing disci- plinary proceeding. Although several charges were initially filed against Abrams, only one charge is now relevant. That charge was as follows: On April 22, 1969, by check bearing that date drawn on his trust account in the National New- ark and Essex Bank, in Newark, respondent did pay to Construction Aggregates Corporation the sum of $20,000 allegedly for engineering services which sum respondent well knew would be used by said corporation, or an officer thereof, for an illegal and improper purpose contrary to and in violation of N.J.S. 2A :93-6 as a bribe to and to satisfy the extortionate demands of certain pub- lie officials of the City of Jersey City. The facts relevant to that charge are set forth below. In 1967, appellant became aware through Clinton B. Snyder, a Jersey City real estate broker, of the impending sale of Jersey City waterfront property. Appellant communicated this information to Ezra Sensibar, president of Construction Aggregates Corporation, a firm which specialized in the con- struction and operation of port facilities. There- after, appellant. Snyder and Sensibar formed the 5a Appendia A E.S.C.A. Corporation (later renamed the Port Jer- sey Corporation and hereinafter referred to as “Port Jersey”) to bid on the Jersey City water- front property. The respective ownership interests in Port Jersey were: Construction Aggregates Cor- poration 60%, Snyder 20% and appellant 20%. On August 1, 1967, the waterfront property was auc- tioned and Port Jersey was the successful bidder, having bid $2,040,000. The waterfront property was essentially a swamp. In addition, it was isolated from city services, such as water and sewersge, and could not be easily reached due to the .ack of access roads. In order to develop the property as a port facility, it was necessary in the judgment of the principals of Port Jersey to secure cooperation from the City of Jer- sey City in the form of construction of access roads and water and sewerage lines to the property and the providing of favorable tax treatment. At the time Port Jersey successfully bid on the property, the City of Jersey City had not announced that it was committing itself to furnish the various forms of cooperation Abrams and his co-venturers deemed essential. Shortly after the auction, a meeting was arranged by Sensibar to obtain the necessary cooperation. The meeting was held at the offices of Comparetto and Kenny, a local architectural and engineering firm, and was attended by John V. Kenny [de facto political leader of Hudson County], Sensibar and Snyder. At the meeting, Sensibar told John V. Kenny that Port Jersey would need many forms of cooperation from the City of Jersey City in order to make the development of the port facility 6a Appendix A possible. Kenny agreed to furnish the cooperation requested and told Sensibar that, if anybody asked him for money, he, Sensibar, should come to him, Kenny, and he would take care of it. After being assured of cooperation, Sensibar asked Kenny whether there were any local people who should be taken into the venture. Kenny responded that he would appreciate Port Jersey’s employing Com- paretto and Kenny as its architect. Abrams was out of town at the time of the meeting but was subsequently advised by Sensibar and Snyder as to what had transpired at the meeting. Port Jersey thereafter decided to retain Com- paretto and Kenny as its architects because of John V. Kenny’s suggestion and because they were “well regarded, well connected locally.” Abrams negotiated the contractual terms and drafted the contract, which was entered into in December 1967. In March of 1968, Abrams and Sensibar met with Mayor Whelan and City Council President Flaherty at a party at the New York Athletic Club and Abrams explained to these ofiicials the various forms of cooperation which Port Jersey would re- quire. No commitment was made at that time to furnish the cooperation requested. Thereafter, Abrams negotiated a contract with the City of Jer- sey City in which the City agreed to construct the necessary access roads and to lay water and sewer- age lines to the property. Title to the property did not pass until November 21, 1968. During the period intervening between the successful bid and the closing on the property, appellant, in addition to the negotiations described 7a Appendia A above had negotiated certain purchases of adjoin- ing properties in order to resolve potential title problems and had also negotiated a $6,000,000 de- velopment loan. Following the closing of title, the city council of Jersey City adopted various resolutions providing for the furnishing of the access roads, water and sewerage lines. In addition, the city council adopted a resolution authorizing the payment of a 5% brokerage commission to the C.B. Snyder Realty Company, a firm in which Snyder had a one-third interest. No provision had been made for the pay- ment of the commission, which amounted to $102,- 000, either in the bid specifications, announced when the property was auctioned, or in the closing docu- ments which were executed when title passed. Upon receipt of the $102,000 in January 1969, Snyder paid Abrams half, pursuant to an oral ar- rangement entered into between them at some ear- lier date. Abrams deposited the $51,000 he re- ceived in a special account, denominated the Arthur Lawrence Abrams Trust Account. This money re- mained in the trust account for more than two years and was ultimately utilized in part to make a $20,000 payment to the president of the Jersey City coun- cil.” 2Of this transaction, the state court noted: The respondent testified that although the $51,000 was his to do with as he pleased, he considered that he should ethically turn it over to ESCA [Port Jersey]. He did that by placing it in an “Arthur Lawrence Abrams Trust Ac- count” in the National Newark and Essex Bank; at one point he described the $51,UJ0 in the trust account as “an emergency fund.” 65 N.J. at 173, 320 A.2d at 472. 8a Appendix A In late January or early February 1969, Abrams attended a luncheon with Snyder and Bernard Kenny at the Downtown Club in Newark. At that time, Kenny stated that the “organization”, which appellant took to mean the Hudson County Demo- cratic Organization, wanted a percentage of the con- struction costs of the port facility in cash. At that time, the estimated cost of construction of the projected port facility was somewhere between fifty and one hundred million dollars. When this de- mand was made, Abrams didn’t think it was neces- sary to ask Kenny any details nor did Kenny think it was necessary to tell appellant any details. Kenny did not threaten but did indicate that, in the absence of payment, Port Jersey would experi- ence difficulties. Abrams did not argue with Kenny or discuss the matter further with him. Following the meeting, Abrams telephoned Sensi- bar in Chicago and was told by Sensibar that he, Sensibar, would take care of it. Thereafter, Sensi- bar met with Flaherty in New York. He told Flah- erty that he was getting complaints about a lack of cooperation and reminded Flaherty of his, Sensi- bar’s, original discussion with John V. Kenny and the promise of cooperation. Flaherty said that he knew about that discussion but that the organiza- tion needed money. He suggested to Sensibar that Port Jersey contribute 3% of the cost of construc- tion. Sensibar refused and the meeting ended. A couple of weeks later, Sensibar arranged a meeting with John V. Kenny. He told Kenny of Flaherty’s demand and reminded him of their earl- ier discussion. Kenny responded by telling Sensi- 9a Appendix A bar that he remembered the discussion and would stand by it but that a campaign contribution would be appreciated because the organization had an ex- pensive campaign. Sensibar did not respond and the meeting ended. Sensibar returned to Chicago “with the intention that we would not make any substantial contribution”. In early April, Abrams, Snyder and Bernard Kenny told Sensibar they were stymied at city hall and suggested that he, Sensibar, have another meet- ing with Flaherty. A meeting was held in Flaherty’s office on April 19 between Sensibar and Flaherty. At that meeting, Flaherty told Sensibar that he, Flaherty, needed $140,000 to finance the balance of the campaign and that he had to go to a few large contributors to get the money. He also told Sensi- bar that the proposal he, Flaherty, had made be- fore was unrealistic and he was now willing to come down to 1% of construction costs as a contribu- tion. Sensibar offered a contribution of $10,000, and, after discussion, Sensibar and Flaherty agreed to the making of a $20,000 contribution. After this meeting with Flaherty, Sensibar con- sulted with Abrams and Snyder, who both told him “that it was unrealistic to expect that we could do as much construction work, as much business as we were doing in Hudson County without acceding to a shakedown of some kind. They [Abrams and Snyder] thought that $20,000 in the circumstances might be nominal and they urged that I should ar- range for us to pay it”. Thereafter, Abrams issued a $20,000 check on the Arthur Lawrence Abrams Trust Account at Sensi- 10a Appendix A bar’s request for the purpose of enabling Sensibar to obtain the $20,000 in cash he had agreed to pay to Flaherty. At Sensibar’s instruction, Abrams falsely represented on the face of the check that it was issued in payment “For Engineering Serv- ices”. Thereafter, Sensibar sent Abrams a false in- voice reflecting a $20,000 charge for engineering services. Sensibar cashed the check and delivered the cash to Snyder, who in turn delivered it to Flaherty. Afterwards, Port Jersey received coop- eration from the City in regards to sewerage, water, access roads and favorable tax treatment. U.S. Attorney’s Brief at 4.9 (footnotes and appendix ref- erences omitted). In 1973, the Essex County Ethics Committee charged Abrams with various ethical violations stemming from his activities for Port Jersey. In reviewing those charges, however, the New Jersey Supreme Court concerned itself only with Abrams’ “knowing participation in the $20,000 payment to the Jersey City officials.” In re Abrams, supra, 69 N.J. at 177, 320 A.2d at 474. After detailing the factual circumstances which spawned the allegations of impropriety, the state court stated: We are concerned with the respondent, a member of the bar who, apart from his financial interest in the venture, was acting as legal counsel and was bound by the high ethical principles of his profession. Those principles clearly dictated that he play no part whatever in the corrupt $20,000 payment to the public officials of Jersey City. We are entirely satisfied that respondent’s participation in the cor- rupt payment ... was unethical and calls for some measure of discipline. lla Appendix A . . . We agree with the position of respondent’s counsel that . . . disbarment is not called for. But we disagree that “discipline which exceeds repri- mand” would be excessive. ... The determination as to the measure of discipline is difficult and, as we have repeatedly pointed out, “each case must rest largely upon its own particular circumstances.” . . . We have concluded that the respondent’s professional dereliction warrants sus- pension from the practice of law for a period of one year and until further order; judgment to that effect will be entered. Ibid. at 178-79, 320 A.2d at 474-75. Il. Preliminarily we emphasize that which is before us and that which is not. We are not to decide Abrams’ right to practice in this court. We are not in the position of the United States Supreme Court reviewing a disciplinary ac- tion imposed by a state court or determining one’s right to continue to practice in that Court. We are to decide if reversible error was committed when the district court, under the circumstances of this case, barred Abrams from practicing in that court after the state court had imposed only a one-year suspension. We agree totally with the United States Attorney that the starting point for analysis is the unquestioned princi- ple that the District Court of New Jersey, like all federal courts, has the power both to prescribe requirements for admission to practice before that court and to discipline attorneys who have been admitted to practice before that 12a Appendix A court. Ez parte Robinson, 86 U.S. (19 Wall.) 505, 512 (1873); Ex parte Garland, 71 U.S. (4 Wall.) 333, 378-79 (1866); Ex parte Secombe, 60 US. (19 How.) 9, 13 (1859); Rodgers v. United States Steel Corp., 508 F.2d 152, 163 (3d Cir. 1975); see U.S. Const. art. III, §1; 28 U.S.C. §2071; Rule 83, F.R. Civ. P. From the earliest days of this nation, the power has been recognized as broad. See In re Ruffalo, 390 US. 544, 047 (1968); Theard v. United States, 354 U.S. 278, 281 (1957) ; Ex parte Secombe, supra, 60 U.S. at 13; Ex parte Burr, 22 U.S. 529 (1824). However, its exercise is not without limits. As Chief Justice Marshall wrote, a balance must be struck: On one hand, the profession of an attorney is of great unportance to an individual, and the pros- perity of his whole life may depend on its exercise. The right to exercise it ought not to be lightly or capriciously taken from him. On the other, it is ex- tremely desirable that the respectability of the bar should be maintained, and that its harmony with the bench should be preserved. For these objects, some controlling power, some discretion, ought to reside in the court. This discretion ought to be ex- ercised with great moderation and judgment; but it must be exercised; and no other tribunal can decide, in a case of removal from the bar, with the same means of information as the court itself. Ex parte Burr, supra, 22 U.S. at 529-30. Although a disbarment proceeding is not criminal in nature, it has consequences which remove it from the ordi- nary run of civil case. Konigsberg v. State Bar, 353 U.S. 252, 257 (1957); see Anonymous v. Association of the Bar, — F. 2d —, 17 Crim. L. Rptr. 2083 (2d Cir., Apr. 3, 1975). 13a Appendix A “Disbarment, designed to protect the public, is a punish- ment or penalty imposed on the lawyer. Ex parte Gar- land, 4 Wall. 333, 380; Spevack v. Klein, 385 U.S. 511, 515.” In re Ruffalo, supra, 390 U.S. at 550. In striking the appropriate balance, the district courts must not operate in a vacuum. If the disciplinary proceed- ings derive from state court action, federal courts are not totally free to ignore the original state proceedings: If the accusation rests on disbarment by a state court, such determination of course brirgs title deeds of high respect. But it is not conclusively binding on the federal courts. The recognition that must be accorded such a state judgment and the extent of the responsibility that remains in the fed- eral judiciary were authoritatively expounded in Selling v. Radford, 243 U.S. 46. The short of it is that disbarment by federal courts does not auto- matically flow from disbarment by state courts. Of the conditions that qualify such a state court judg- ment, the one here relevant is that some “grave reason existed which should convince us that to al- low the natural consequences of the judgment to have their effect would conflict with the duty which rests upon us not to disbar except upon the convic- tion that, under the principles of right and justice, we were constrained so to do.” Jd., at 51. Theard v. United States, supra, 354 U.S. at 282. Til. Our task is one which is “always painful”, involving as it does a “proceeding for disbarment of a lawyer.” * 8 Theard v. United States, supra, 354 U. S. at 279 (Frank- furter, J.). l4a Appendiz A But it is also more, for the district court’s permanent ter- mination of Abrams’ right to practice his profession in the New Jersey district court constitutes a substantially more drastic penalty than that first imposed by the state court. Thus, sensitive personal, institutional and societal interests quickly surface and compete with one another. These separate interests clamor for vindication, and they do so in a jural environment that is fraught with ten- sion and devoid of decisional and precedential guideposts. The United States Attorney suggests that In re Fleck, 419 F.2d 1040 (6th Cir. 1969), cert. denied, 397 U.S. 1074 (1970), comes close. We disagree and find little guidance from Fleck. There the state court suspended the lawyers indefinitely ; thereafter the district court disbarred them. We are not at all certain that a substantial difference exists between indefinite suspension and disbarment of a lawyer.* Thus, in Roscoe Pound’s phrase, the “body of *This is made abundantly clear in Jn re Fleck, 419 F.2d at 1041, in the appendix setting forth the district court’s opinion: This matter is before the Court pursuyant to an order that respondents show cause why they should not be dis- barred from the practice of law in this Court. The re- spondents were indefinitely suspended from the practice of law in Ohio on December 6, 1961. (Cleveland Bar Asso- ciation v. Fleck et al., 172 Ohio St. 467, 178 N-E.2d 782.) On June 15, 1962 respondents were suspended forthwith from the practice of law in this Court, and pursuant to Rule 1(E) of the Rules of this Court respondents were ordered to show cause why they should not also be disbarred from practice in this court. Rule 1(E) provides in part: “Disbarment an. Discipline. Any member of the bar of this court may for good cause shown and after an opportunity has been given him to be heard, be dis- (Footnote continued on following page) 15a Appendiz A authoritative materials” relevant to our inquiry gives gen- eral, but not specific, guidance. The» are no “precepts attaching a definite detailed legal consequence to a defi- nite, detailed state of facts”; at best, we have only some “authoritative starting points for legal reasoning.” ® Supplied only with “authoritative starting points of legal reasoning” distilled from the Supreme Court teach- ings, we perceive our role in reviewing the district court’s action to be extremely limited: (1) To recognize and reinforce an absolute and un- fettered power of the district court to admit and to dis- cipline members of its bar independently of and sepa- rately from admission and disciplinary procedures of (a) the state courts and (b) this court. (2) To recognize that the absolute and unfettered power of the district court to admit or reject applications for admissions will be circumscribed to the extent the dis- trict court depends upon the state court system for eligi- bility requirements. Thus, all other things being equal, if (Footnote continued from preceding page) barred, suspended from practice for a definite time, repri- manded, or subjected to such other discipline as the court may deem proper.” (Emphasis supplied) It appears that the district court rule contemplated suspension “for a definite time.” Because the Ohio state court had “indefini- tely suspended” the attorneys, the district court ordered them to show cause “why they should not also be disbarred from practice in this court.” 5 Pound, Hierarchy of Sources and Forms in Different Systems of Law, 7 Tut. L. Rev. 475, 476, 482, 483 (1933). l6a Appendix A a district court by rule derivatively admits to its bar those admitted to the state bar, the district court may nt arbitrarily deny admission to one who is a member in good standing of the state bar. (3) To recognize that an absolute and unfettered power of the district court to discipline lawyers may be circum- seribed to the extent the district court, in imposing its disciplinary sanctions, relies upon a state’s legal or factual determinations. Stated otherwise, the district court’s action may be circumscribed to the extent it depends in whole or in part on a state’s actions, either for the com- mencement of the disciplinary proceedings or for a stated basis in the determination of the sanction imposed. IV. We now turn to the application of these guidelines to the case at hand. Initially, we observe the district court’s basis for ad- mitting Abrams to its bar: “Abrams is a member of the bar of this Court by derivative admission on motion, by virtue of his status as an attorney licensed to practice by the Supreme Court of New Jersey. Local Rule 4.” 385 F. Supp. at 1212. Thus, the district court has sacrificed some of its total independence of the state court system with respect to its admission procedures.* * Rule 4 of the United States District Court for the District of New Jersey provides in part: A. The bar of this court shall consist of those persons heretofore admitted to practice in this court and those who may hereafter be admitted in accordance with these rules. (Footnote continued on following page) 17a Appendiz A The majority opinion for the divided district court de- scribed the disciplinary proceedings under Local Rule 7.” (Footnote continued from preceding page) B. Any attorney licensed to practice by the Supreme Court of New Jersey may be admitted as an attorney at law on motion of a member of the bar of this court, made in open court, and upon taking the prescribed oath and sign- ing the roll. C. Any member in good standing of the bar of any court of the United States or of the highest court of any state, who is not eligible for admission to the bar of this court under sul livision B of this rule, may in the dis- cretion of the court, on motion, be permitted to appear and participate in a particular case; provided, however, that such appearances and participation in civil actions, indivi- dually or by a law firm of which said attorney is a member or associate, shall be limited to not more than three actions in any calendar year... . 7. Rule 7 of the United States District Court for the District of New Jersey provides, in part: (1) The chief judge shall have charge of all matters re- lating to the discipline of members of the bar. (2) The court may make an order in a disciplinary pro- ceeding disbarring, suspending or censuring, or taking such other action as justice may require, with respect to a mem- ber of the bar of this court: i f a court of any (a) Who has resigned from the bar o State, Territory, District, Commonwealth or Possession. (b) Who has been disbarred, suspended from practice or censured in any State, Territory, District, Common- wealth or Possession ; (Footnote continued on following page) 18a Appendix A (Footnote continued from preceding page) (c) Who has been convicted of a crime involving mor- al turpitude in any State, Territory, District, Common- wealth or Possession; or (d) Who is guilty of conduct unbecoming a member of the bar of this court. Without limiting the generality of the foregoing, such misconduct shall be deemed to in- clude fraud, deceit, malpractice, conduct prejudicial to the administration of justice, or violation of the Canons of Professional Ethics of the American Bar Association. (3) Proceedings within subdivisions (a), (b), and (c) of Paragraph 2 may be initiated by an order requiring the re- spondent to show cause within 30 days after service thereof on him, personally or by mail, why he should not be disci- plined. Upon the issuance of such order the chief judge may, for good cause, temporarily suspend the respondent pending the termination of the proceedings. Upon the re- turn of said order, if the respondent fails to appear or, if he appears and does not contest, the court shall take such action as justice may require. If the respondent appears and contests, the chief judge shall prescribe procedures to formulate the issues and to provide for a hearing in a man- ner similar to that set forth in Paragraph 4 hereof. (4) Proceedings within subdivision (d) of Paragraph 2 shall be presented to the chief judge, and, if he deems the charges of professional misconduct of sufficient weight, he shall refer them for preliminary investigation and recom- mendation to a committee of members of the bar of the court designated by him or to the United States Attorney. The recommendation shall be presented to the chief judge. Thereupon, with the approval of the chief judge, the com- mittee designated or the United States Attorney shall pro- ceed against the defendant by a petition setting forth the charges against him and an order requiring him to file an answer and show cause within 30 days after service on (Footnote continued on following page) 19a Appendix A In its statement of reasons, the district court acknowl- edged a responsibility to the New Jersey state court sys- tem, implicitly incorporating the statement of “facts and circumstances” set forth in the opinion of the New Jersey Supreme Court. See 385 F. Supp. at 1211. Thus, the district court found no adjudicative facts on its own; in- stead it relied exclusively on those found by the state court. The district court then conceded: Ordinarily, a suspension, disbarment or censure by the Supreme Court of New Jersey will result in corresponding action here. Local Rule 7. But this accommodation does not necessarily suffice to dis- charge the independent obligation of this Court to take appropriate action on its own rational analy- sis and determination, although in doing so it will hold the greatest respect for, and give due weight and consideration to, the views of the Supreme Court. In re Ruffalo, 390 U.S. 544, 88 S. Ct. 1222, 20 L. Ed. 2d 117 (1968); In re Wilkes, 494 F.2d 472, at 474-75 (C.A. 5, 1974). Ibid. at 1212. (Footnote continued from preceding page) him, personally or by mail, of the petition and order why he should not be disciplined. Upon respondent’s answer to the petition, the chief judge may set the matter for prompt hearing before himself, or a court of one or more judges, or may appoint a master to hear and report his findings and recommendations. After such a hearing or report, or if no answer is made by the respondent, the court shall take such action as justice may require... . 20a Appendiz A A. We acknowledge the right of the district court “to dis- charge [an] independent obligation” and to “take appro- priate action on its own rational analysis and determina- tion.” We further acknowledge that the “appropriate action” may be at variance with that taken by the state court system. We also acknowledge that the district court may draw inferences from “facts and circumstances” which differ from those drawn by the state. Especially do we believe that the district court may emphasize counter- vailing federal considerations. Cf., e.g., Byrd v. Blue Ridge Rural Elec. Cooperative, Inc., 356 U.S. 525, 537 (1958). But “appropriate action” must always embody a proper application of governing legal precepts. We conclude that the district court’s action was deficient in this respect. For “its own rational analysis and determination” the district court relied in part on a New Jersey Supreme Court decision for precedential authority for its action. We see no basis for distinguishing this case from In re Colsey, 63 N.J. 210, 306 A.2d (1973). Pro- fessional misconduct, like fraud, takes many forms. Variations in detail are not significant when the underlying character is the same. A lawyer who countenances and assists client misconduct for the payment of an extortionate bribe countenances two offenses: one, the extortion and two, the bribe. His minimum duty in such circumstances is to advise the client against it in the strongest terms, and if the client persists, to disassociate himself from the matter promptly and completely. And, since a communication in the course of legal service sought in aid of the commission of a crime or fraud is not 2la Appendix A privileged, N.J. Ev. Rule 26(2)(a), he may be under a further duty to report the matter to proper au- thorities. 385 F. Supp. at 1211-12. In the context of its announced objective to “hold the greatest respect for, and give due weight and considera- tion to, the views of the [New Jersey] Supreme Court,” the district court was not free to rely upon Colsey for New Jersey precedential guidance. Having elected to bot- tom its own rational analysis on New Jersey law, the con- trolling case for the district court was In re Abrams— not In re Colsey. And, in Abrams, the New Jersey Su- preme Court explicitly concluded that Colsey was dis- tinguishable: In Colsey (63 N.J. 210, 306 A.2d 72) an attorney was disbarred for knowingly participating in a transaction which involved a corrupt payment to satisfy an illegal demand by a public official. How- ever, unlike the situation here, the attorney was not in any sense a covictim, played a very active part in the corrupt transaction itself and “used the fact that he was a member of the bar as part of the mask for the crime by creating the appearance that a professional fee was involved.” 63 N.J. at 215, 306 A.2d at 75. We agree with the position of re- spondent’s counsel that Colsey is distinguishable and that disbarment is not called for. 65 N.J. at 178, 320 A.2d at 475. Whatever freedom the district court possessed inde- pendently to draw inferences from the facts and circum- stances, the court could not, with fealty to consistency, disregard the interpretation of New Jersey state law by that state’s highest court and at the same time profess 22a Appendix A to “hold the greatest respect for, and give due weight and consideration to, the views of the [New Jersey] Supreme Court.” B. Locel Rule 7 provides for disciplinary proceedings of one who has been disbarred or suspended from practice in any state, Rule 7(2)(b), and one who is “guilty of con- duct unbecoming a member of the bar of this court”, Rule 7(2)(d). The rule to show cause entered against Abrams clearly was limited to Rule 7(2)(d) and 7(2)(b): It appearing that Arthur Lawrence Abrams may have been guilty of conduct unbecoming a member of the Bar of this court; and It further appearing that the said Arthur Law- rence Abrams was suspended from the practice of law by order of the Supreme Court of New Jersey dated June 3, 1974.... The second paragraph of the rule relates to the state proceedings in which the only charge considered was the issuance by Abrams of a check for $20,000. We agree with the United States Attorney’s assertion that “[a]]l- though several charges were initially filed against Ab- rams, only one charge [the $20,000 payment from the trust fund] is now relevant.” U.S. Attorney’s Brief at 4. Unfortunately, the district court did not limit its con- sideration to that matter. Instead, it also considered the $102,000 real estate commission shared by Abrams: Another factor is that Abrams accepted a share of a real estate commission paid by the City of Jersey City on the sale of property on public bid. He deposited that share in his trust account, ex- 23a Appendix A plaining that he considered it to belong to the client, but no credible explanation was provided for the making of the payment in the first place. The commission aspect bears all the indications of a device to divert public funds into channels from which they could be repaid secretly to the public officials. Justification for its payment is not satis- factorily shown. 385 F. Supp. at 1211. Consideration by the district court of the “commission aspect” was impermissible for two reasons. First, although the presentment of the county Ethics Committee contained a finding that the sharing of the brokerage commission violated New Jersey law, this charge was later “withdrawn by the Committee”, In re Abrams, supra, 65 N.J. at 176, 320 A.2d at 473, and not considered by the New Jersey Supreme Court. Ibid. at 177, 320 A.2d at 474. Therefore, insofar as the district court disciplinary proceeding derived from New Jersey’s suspension of Abrams, see Local Rule 7(2)(b), page 21 n.7 supra, the district court could not, with propriety, rely on the “commission aspect” of the original present- ment. Second, insofar as the district court disciplinary pro- ceeding derived from “conduct unbecoming a member of the bar” separate and apart from that considered in the New Jersey state court proceedings, the lower court was obliged to follow its own procedural rules. This it failed to do. Local Rule 7(4), page 22 n.7 supra, provides that proceedings relating to “conduct unbecoming a member of the bar of this court” “shall be presented to the chief judge, and, if he deems the charges of professional mis- conduct of sufficient weight, he shall refer them for pre- 24a Appendix A liminary investigation and recommendation to a committee of members of the bar of the court designated by him or to the United States Attorney.” The reference pro- cedure was not followed; nor were the procedures gov- erning reception of any recommendation of the committee designated or the United States Attorney followed. It is argued that the failure of the district court to follow the provisions of Local Rule 7(4) can be justified because “[t]hese things had been done in the state pro- ceeding which [Abrams] states were not ‘wanting in due process in any respect’. He specifically asked the District Court to decide the matter on the basis of the entire state record. He did not ask for further investigations which might have led to the filing of yet additional charges. He was content to avoid further proceedings then. He cannot be heard to complain now that their lack prejudiced him in any way. He was found on the basis of the record which he declined to supplement to have been guilty of the precise misconduct originally charged and that record overwhelmingly supports that charge and amply justifies his disbarment.” U.S. Attorney’s Brief at 34-35 (our em- phasis) (appendix reference omitted). The deficiency in this argument is that that part of the “precise misconduct originally charged” by the Ethics Committee relating to the $102,000 commission was with- drawn by that committee and not considered by the state court. When Abrams “specifically asked the District Court to decide the matter on the basis of the entire state record”, he had the right to assume that the federal court was only going to consider the $20,000 payment. He had the right to assume that in the absence of a Local Rule 7(4) procedure, the only matter relevant in the district court was the charge considered by the state court. 25a Appendix A As we have previously observed, the United States Attomiey in his brief agrees that “[a]lthough several charges were initially filed against Abrams, only one charge is now relevant.” If only one charge is relevant before this court, only one charge should have been rele- vant before the district court. If the district court chose, as was its right under 7(2)(d), w go beyond the state court proceeding and examine other aspects of Abrams’ “conduct unbecoming a member of the bar of this court,” it was obliged to follow its own rules. The United States Attorney cannot now, with consistency, argue that Abrams waived® his right to Local Rule 7(4) procedures to defend against charges not processed in the state court, and at the same time agree that only one charge is rele- vant to these proceedings—that concerning the $20,000 payment. Accordingly, we hold that the district court erred in considering the “commission aspect” of Abrams’ conduct. Finally, the district court considered its “view” that “Tt]he acquisition of an interest in the client’s enterprise was obviously a factor that interfered with the exercise of free judgment on behalf of the client.” 385 F. Supp. 8 The United States Attorney also appears to argue that the burden of initiating the independent investigation under Local Rule 7(4) was on Abrams. “[Abrams] did not ask for further investi- gations which might have led to the filing of yet additional char- ges. He was content to avoid further proceedings then. He can- not be heard to complain now that their lack prejudiced him in any way.” U.S. Attorney’s Brief at 35. We disagree. The clear meaning of Local Rule 7(4) is that the Chief Judge initiates the reference procedure and that the procedure is mandatory. “(The Chief Judge] shall refer [the charges of professional misconduct] for preliminary investigation and recommendation... .” See page 15 n.7 supra (emphasis added). 26a Appendix A at 1211. For the same reasons that it was impermissible under these circumstances for the district court to con- sider the “commission aspect”, so also was the district court precluded from relying on this perceived impro- priety in assessing a greater sanction than the state court. Indeed, if anything, the case against the district court’s considering this aspect of Abrams’ activities is even stronger, for it was not the subject of any charge contained in the Ethics Committee presentment. The district court’s judgment of disbarment will be reversed. Rosenn, Circuit Judge, concurring. I join in the majority opinion. I write to emphasize what I believe should be the proper standard for federal disciplinary action based upon a record compiled in state proceedings. Each federal court has a broad independent power to discipline members of its bar, initiate and conduct disci- plinary proceedings, and impose sanctions predicated upon the record it has compiled. See Theard v. United States, 354 U.S. 278, 281 (1957). The independence of a district court acting in such fashion circumscribes our authority to review its disciplinary actions. See Ex Parte Burr, 22 U.S. (9 Wheat.) 529, 530 (1824). When, how- ever, the disciplinary action is dependent on a record developed in state proceedings, I believe the district court should, absent exceptional circumstances, impose the same sanctions prescribed by the state. This standard is founded upon the vital principle of comity, which represents a “belief that the National Gov- 27a Appendiz A ernment will fare best if the States and tieir institu- tions are left free to perform their separate functions in their separate ways.” Younger v. Harris, 401 U.S. 37, 44 (1971). Comity recognizes that the founding fathers created a system “in which the National Government, anxious though it may be to vindicate and protect federal rights and federal interests, always endeavors to do so in ways that will not unduly interfere with the legitimate activities of the States.” Id. In the United States, admission to the bar and disci- pline of attorneys is peculiarly within the province of the states. See In re Dreier, 238 F.2d 68 (3d Cir. 1958). This is the practice in this circuit. New Jersey, for example, has a comprehensive and thoughtful system dealing with every aspect of admission to the bar and any subsequent discipline. Admission to the bar of the District Court of New Jersey is derivative, dependent upon admission to the bar of the Supreme Court of New Jersey. Absent misconduct in the district court, disciplinary actions also are derivative in a sense, since they generally are based, as in the instant matter, on the previously compiled state record; they occur after the completion by the state of its proceedings. The imposition of disbarment by the federal court when the state has imposed only suspension implicitly at- tacks the regularity and judgmental values of the state proceedings, implying that the sanction chosen by the state courts is inappropriate. This result is bound to create tensions between the state and federal judiciaries. A second important policy behind the need to avoid disparate sanctions by the federal and state courts is the maintenance of public confidence in our legal system and in the bar. Disbarment is designed to protect the public. In re Ruffalo, 390 U.S. 544, 550 (1968). The district 28a Appendix A court’s action permits Abrams to practice in the state, but not the federal, system. Such an anomaly can only lead to confusion in the minds of the public, which justi- fiably may speculate why an attorney not qualified to prac- tice in a federal court has sufficient moral character to practice in the state court. Unless an exceptional reason of record justifies such disparate treatment, its effect will, in my opinion, render a grave disservice to the pub- lic. The Supreme Court has recognized the vitality of these interests in Selling v. Radford, 243 U.S. 46 (1917). The Court declared that it would afford the utmost respect in sanctioning members of its bar to the judgment of state proceedings unless there was a failure of due proc- ess, an infirmity of proof or some other “grave reason” not to give effect to the “natural consequences of the judgment... .” Jd. at 51. Forty years later, in Theard v. United States, supra, the Court, while reaffirming the independence of the federal courts in disciplinary mat- ters, directed a district court imposing sanctions based upon state proceedings to be guided by the standards of Selling. We also have noted the importance of following the judgment of the state courts in these matters. In re Dreier, 258 F.2d 68 (3d Cir. 1958). The District Court for the Middle District of Pennsylvania had denied Dreier’s application for admission to its bar on the ground that Dreier lacked good moral character due to events for which he had been suspended from the bar of the Luzerne County Court of Common Pleas. Prior to his application for admission to the federal bar, the county bar had restored Dreier to membership in good standing. This court held that the federal district court could not entei an order amounting to permanent disbarment based a 29a Appendiaz A upon events for which Dreier had paid the penalty im- posed by, and had been restored to membership in good standing of, the bar which knew him best. Finally, the teachings of Selling and Theard have not been lost upon the district courts throughout the country. Sixty-nine district courts responded to a survey asking whether they ever had deviated from disciplinary actions taken by the courts of their states. One district court, the Southern District of New York, responded that they had a rule permitting disparate discipline for the reasons announced in Selling or if “the misconduct established has been held by this Court to warrant substantially dif- ferent discipline.” Rule 5(d). Only three other district courts cited instances of deviating from the action of their state courts. One such instance was Jn re Dreier, just discussed. In another, the disbarment by the district court was reversed for lack of due process. In re Jones, 506 F.2d 527 (8th Cir. 1974). In the third instance, the district court had appointed a special master who had conducted a three-day hearing and received much evidence not heard by the Alaskan Supreme Court. Jn re Mackay, 298 F. Supp. 170 (D. Alaska 1969). In sum, I believe the district court should have followed the standards of Selling and Theard, which impliedly were recognized by this court in Dreier, and which are acknowledged in practice at least by the overwhelming majority of the district courts throughout the country. There is no contention that the state proceedings lacked due process, and the parties stipulated to the relevant facts. The district court did not adequately explicate, and I do not perceive, any grave reasons for choosing more severe punishment than imposed by the Supreme Court of New Jersey. Since the majority opinion, as I read it, does not pre- clude the district court from imposing the sanctions de- creed by the state court, I join in the reversal. 30a Appendix A Apams, Circuit Judge, Concurring and Dissenting Since no particularized supplemental allegations were prepared for the district court, the basis for the charge in that court reasonably appeared to be that Arthur L. Abrams had issued a check for $20,000, to be used to bribe a municipal official. It was on this specific charge that the New Jersey Supreme Court had entered its judgment to suspend Abrams from the practice of law for one year.’ And this charge necessarily must have been the one that Abrams and his counsel had in mind when they elected to rest on the record that had been before the New Jersey state court. However, the district court did not confine itself to the bribery charge. Rather, “view[ing] the matter some- what differently” from the New Jersey Supreme Court, the district court proceeded to consider two additional issues: Abrams’ interest in his client’s enterprise, and his acceptance of a real estate commission. Concerning these, the district court said: The acquisition [by Abrams] of an interest in the client’s enterprise was obviously a factor that inter- fered with the exercise of free judgment on behalf of the client. Another factor is that Abrams accepted a share of a real estate commission paid by the City of Jersey City on the sale of property on public bid. He deposited that share in his trust account, explaining that he considered it to belong to the client, but no credible explanation was provided for the making of the payment in the first place. The commission 1In re Abrams, 65 N.J. 172, 320 A.2d 471 (1974). 3la Appendix A aspect bears all the indications of a device to divert public funds into channels from which they could be repaid secretly to the public officials. Justifica- tion for its payment is not satisfactorily shown.? The state court had taken a substantially diverse attitude toward these two items. As to the propriety of Abrams’ association with the business venture of his client, the New Jersey Supreme Court was silent. Respecting the real estate commission, later deposited in the trust fund, the state court, on the same record had acknowledged that: Though the original creation of the trust fund itself by the respondent was suspect, the record does not permit a finding that it was specifically designed for the illegal payment.* If the district court determined to go beyond the scope of the charges resolved against Abrams in the state pro- ceeding, namely, the illegal $20,000 payment, and to con- sider other aspects of Abrams’ conduct, it should have so advised Abrams and given him and his counsel the oppor- tunity to introduce evidence relating to such conduct. Due process would seem to require as much.* No justification ?In re Abrams, 385 F. Supp. 1210, 1211 (D. N.J. 1974) (cita- tion omitted). $320 A.2d at 475. *The parties have not disputed that a disbarment proceeding must satisfy procedural due process requirements. Thus, the only issue confronting the Court in this regard is the nature of the procedure that must be employed. Cf., Goss v. Lopez, 95 S. Ct. 729 (1975). See Note, Specifying the Procedures Required by Due Process: Toward Limits on the Use of Interest Balancing, 88 Harv. L. Rev. 1510 (1975). 32a Appendiz A has been forthcoming that would excuse the failure to supply Abrams a full description of the charges to be considered.® In a case presenting a situation similar to the one here, In re Ruffalo, the Supreme Court made it clear that in a disbarment case the charge against the attorney must be set forth at the outset. It said: “[disbarment] pro- ceedings [are] of a quasi-criminal nature. The charge must be known before the proceedings commence.”* 5 It is observed that local rule 7(4) for the United States Dis- trict Court for the District of New Jersey seems to provide for a disciplinary procedure which—at least when it extends beyond the grounds relied upon in a state disciplinary process—calls for notice of the sort that is lacking here. See majority opinion note 7. But apparently the district court which promulgated the rule did not so interpret it, at least in the procedural context that de- veloped here. Rather, the district court’s actions suggest that it believed its rules were implemented by the procedures followed in this case. Because the interpretation of local rules is primarily committed to the district court that promulgates them, and because their meaning in the present context appears somewhat uncertain, I am constrained to reach the question whether constitutional due process has been satisfied. *In re Ruffalo, 390 U.S. 544, 551 (1968) (citation omitted). Randall v. Brigham, 74 U.S. (7 Wall.) 523 (1868). In three cases subsequent to the Ruffalo decision, the Supreme Court has reaffirmed that, before proceedings to withdraw a state-controlled benefit are undertaken, a respondent must be given both notice of the reasons urged in support of the contemplated action and an opportunity to respond. Perry v. Sinderman, 408 U.S. 593 (1972) (employment termination) ; Morrissey v. Brewer, 408 U.S. 471 (1972) (parole revocation) ; Goldberg v. Kelly, 397 U.S. 254 (1970) (welfare benefit termination). 33a Appendix A Nor is it valid to contend that Abrams waived his right to know the charges on which the sanction was to be based, or his right to an opportunity to offer a defense against any and all such charges. There is nothing in the district court record which adequately demonstrates that Abrams was aware that charges respecting his relation- ship with his client and the $102,000 trust fund were under consideration.’ Where the duty to apprise Abrams of the full reach of a disciplinary inquiry was not dis- charged, it would not seem reasonable to conclude that Abrams waived his right to present evidence on the two matters that supported, at least in part, the district court’s judgment, independent of the state court conclu- sion.® I therefore agree with the majority that the judgment of the district court cannot stand. There is no way to determine from the record what disciplinary sanction the district court might have imposed had it confined itself— as its rule’ seems to indicate and due process requires * Some intimation of the breadth of the district court inquiry was discussed at the hearing on June 24, 1974. Transcript 6-10. *’ The Supreme Court has indicated forcefully that even in a civil case involving a sophisticated corporate party, the rudiments of cue process—notice of charges and a fair opportunity to be heard —are not lightly presumed waived. In Ohio Bell Tel. Co. v. Public Utility Commission, 301 U.S. 292 (1937), the Supreme Court held, “We do not presume acquiescence in the loss of funda- mental rights.” Jd. at 307, quoted in D. H. Overmyer Co. v. Frick Co., 405 U.S. 174, 186 (1972). The standard for finding waiver in the case at hand, a “quasi-criminal” proceeding, should be no less. ® Note 5, supra. 34a Appendix A —to the charge adjudicated in the state proceeding and the record that the parties specifically stipulated. However, unlike the majority, I do not believe that an outright reversal is warranted. Rather, I would vacate the judgment that was entered and remand the case. This would allow the district court a further opportunity to reach its judgment regarding the extent of the discipline, based on the issue derived from the state proceeding, or else to seek to have additional charges filed as rule 7 seems to authorize, plus the opportunity afforded Abrams to meet such additional charges.’® Chief Judge Seitz and Judge Van Dusen join in this opinion. Van Dusen, Circwit Judge, concurring and dissenting: While joining in the separate opinion of Judge Adams for reversal and remand due to Local Rules 7(2)(d) and 7(4), I find this an exceedingly close case as to whether affirmance is required on this record, as contended in the United States Attorney’s brief, and respectfully state these views not stated in Judge Adams’ opinion. I em- phasize the majority’s language that “the starting point 10 Whether it is wise or unwise for a federal district court in a situation like the present one to impose disbarment when the highest state court has imposed a temporary suspension is, of course, not before this Court. However, it should be noted that in this regard the Supreme Court has advised the federal courts respecting the considerations that govern a federal disciplinary proceeding that follows a state investigation. heard v. United States, 354 U.S. 278, 282 (1957); Selling v. Radford, 243 U.S. 46, 51 (1917). 35a Appendix A for analysis is the unquestioned principle that the Dis- trict Court of New Jersey, like all federal courts, has the power both to prescribe requirements for admission to practice before that court and to ‘liscipline attorneys who have been admitted to practice before that court” (p. 10) and that its discipline “may be at variance with that taken by the state court system” (p. 16).' See Jn re Fleck, 419 F.2d 1040 (6th Cir. 1969). The district court is entitled to regulate its bar, inter alia, in order to assure proper advocacy to assist it in the conduct of its judicial functions. In Selling v. Radford, 243 U.S. 46, 50 (1917), the Court emphasized “the condi- tion of fair private and professional character, without the possession of which there could be no possible right to continue to be a member of this Bar.” A True Copy: Teste: Clerk of the United States Court of Appeals for the Third Circuit. 1In the case of Ex parte Burr, 22 U.S. (9 Wheat.) 529, 530 (1824), from which the majority quotes at pages 10 and 11 of its opinion, the Court stated at page 530: “If there be a revising tribunal, which possesses controlling authority, that tribunal will always feel the delicacy of inter- _ posing its authority, and would do so only in a plain case. Some doubts are felt in this court respecting the extent of its authority as to the conduct of the circuit and district courts towards their officers; but without deciding on this question, the court is not inclined to interpose, unless it were in a case where the conduct of the circuit or district court was irregular, or was flagrantly improper.” 36a APPENDIX B 7 Judgment of the United States Court of Appeals UNITED STATES COURT OF APPEALS For tHE Txirp Circuit No. 75-1029 —>— In the Matter of ArtHur LAwrENCE ABRAMS, an Attorney-at-Law, Artuur LAWRENCE ABRAMS, Appellant (D.C. Mise. No. 74-53) — On APPEAL FROM THE Unirep States District Court FORK THE District or NEw JERSEY Present: Serrz, Chief Judge and Van Dusen, ALDISERT, Apams, Rosenn, Hunter and Wes, Circuit Judges JUDGMENT This cause came on to be heard on the record from the United States District Court for the District of New Jersey and was argued by counsel. On consideration whereof, it is now here ordered and adjudged by this Court that the judgment of the said District Court, entered December 12, 1974, be, and the same is hereby reversed. Costs taxed against appellee. ATTEST: Tuomas F. Quinn Clerk June 30, 1975 37a APPENDIX C Amended Judgment of the United States Court of Appeals UNITED STATES COURT OF APPEALS For tHe Txurirp Circuir No. 75-1029 ~~ In the Matter of ArtHur Lawrence ABRAMS an Attorney-at-Law, ArTHuR Lawrence ABRAMS, Appellant (D.C. Mise. No. 74-53) —e On APPEAL FROM THE Unitep Srates District Court FoR THE District or NEw JERSEY Present: Serrz, Chief Judge and Van Dusen, ALDISERT, ApaMs, Rosenn, Hunter, and Weis, Circuit Judges AMENDED JUDGMENT This cause came on to be heard on the record from the United States District Court for the District of New Jersey and was argued by counsel. 38a Appendia C On consideration whereof, it is now here ordered and adjudged by this Court that the judgment of the said District Court, entered December 12, 1974, be, and the same is hereby reversed. Each party to bear its own costs. ATTEST: Tomas F.. Quinn Clerk July 14, 1975 39a APPENDIX D Opinion and Order of the United States District Court UNITED STATES DISTRICT COURT District oF New JERSEY Mise. No. 74-53 —> In the matter of ArTHUR LAawRENCE ABRAMS, an Attorney at Law ——~@- OPINION AND ORDER ‘Filed—December 10, 1974) By orders dated June 3 and June 19, 1974, the Snu- preme Court of New Jersey suspended Abrams from the practice of law for 1 year, effective July 1, 1974, and until the further order of the Court. These disciplinary proceedings on order to show cause under Local Rule 7 followed. The facts and circumstances are adequately detailed in the opinion of the Supreme Court, 65 N.J. 172 (1974) and need not be repeated here. It was recognized there that Abrams’ participation in activities leading to the payment of a bribe to a public official was improper. It was also indicated that his interest in salvaging his in- vestment share of the client’s enterprise, to protect which the bribe was paid, and the existence of extortionate ele- 40a Appendia D ments in the demands of the public officials, were mitigat- ing factors to be given effect in selecting the degree of disciplinary action to be taken. We view the matter somewhat differently. The acqui- sition of an interest in the client’s enterprise was obvi- ously a factor that interfered with the exercise of free judgment on behalf of the client. Code of Professtonal Responsibility, Canon 5, EC 5-1, 5-2 and 5-3; DR 5-103 and 5-104. Another factor is that Abrams accepted a share of a real estate commission paid by the City of Jersey City on the sale of property on public bid. He deposited that share in his trust account, explaining that he considered it to belong to the client, but no credible explanation was provided for the making of the payment in the first place. The commission aspect bears all the indications of a de- vice to divert public funds into channels from which they could be repaid secretly to the public officials. Justifica- tion for its payment is not satisfactorily shown. We see no basis for distinguishing this case from In re Colsey, 63 N.J. 210 (1973). Professional misconduct, like fraud, takes many forms. Variations in detail are not significant when the underlying character is the same. A lawyer who countenances and assists client misconduct for the payment of an extortionate bribe countenances two offenses: one, the extortion and two, the bribe. His minimum duty in such circumstances is to advise the client against it in the strongest terms, and if the client persists, to disassociate himself from the matter promptly and completely. And, since a communication in the course of legal service sought in aid of the commission of a crime or fraud is not privileged, N.J. Ev. Rule 26 (2) (a), he may be under a further duty to report the mat- ter to proper authorities. 4la Appendiz D Abrams is a member of the bar of this Court by deriva- tive admission on motion, by virtue of his status as an attorney licensed to practice by the Supreme Court of New Jersey. Local Rule 4. Ordinarily, a suspension, dis- barment or censure by the Supreme Court of New Jer- sey will result in corresponding action here. Local Rule 7. But this accommodation does not necessarily suffice to discharge the independent obligation of this Court to take appropriate action on its own rational analysis and determination, although in doing so it will hold the great- est respect for, and give due weight and consideration to the views of the Supreme Court. Jn re Ruffalo, 390 U.S. — In re Wilkes, 494 F.2d 472, at 474-5 (C.A. 5, Then, too, there will be cases in which this Court will act first. If an attorney be convicted of a crime in this Court, or commits an act of professional misconduct in connection with a matter before this Court, a disciplin- ary proceeding may begin here and be concluded here, or may take the form of a temporary suspension here pend- ing disciplinary proceedings here or before the Supreme Court. In either case, this Court would duly inform the Supreme Court of the pendency of the matter, and of the outcome, so that it might proceed to carry out its func- tions under N.J. Const. 1947, Art. 6, §2, par. 3. The same would be true in the case of attorneys disciplined here who are admitted to the practice of law in other jurisdictions. Differences in disciplinary action as between this Court and the Supreme Court could give rise to practical diffi- culties for the disciplined lawyer. If the Supreme Court’s discipline be more severe than ours, it will likely control the practical impact because the ability to practice before this court would have little meaning without the ability 42a Appendix D to practice law in New Jersey. If this Court’s discipline be more severe, the practical impact will be lessened con- siderably by the lawyer’s ability to practice law in New Jersey although not in this Court. Since the instances in which the two Courts will have different views are not likely to be frequent, and since the practical impact of the Supreme Court’s view will necessarily predominate, we do not think the risks are sufficiently great to permit the withholding of different views when they are held by this Court. OrDER For the reasons stated, it is hereby Orperep that the name of Arthur Lawrence Abrams be, and the same here- by is, stricken from the roll of attorneys permitted to practice before this Court, and until the further order of the Court. Datep: 12-10-74 : s/ Lawrence A. Wurtz, Chief Judge s/ James A. Cootanan, Senior Judge s/ Georce H. Bartow, U.S.D.J. s/ Freperick B. Lacey, U.S.D.J. s/ Vrxcent P. Bronno, U.S.D.J. s/ Henrpert J. Srern, U.S.D.J. s/ H. Curtis Meanor, U.S.D.J. Original to Clerk 43a Appendia D Conen, Senior Judge, with whom Judge Fisuer joins, dissenting: It is well settled that the federal judiciary may review the results of a state court proceeding involving the dis- cipline of an attorney. Both the scope of such a review, and the weight to be accorded a state court’s disposition are set forth in Selling v. Radford, 243 U.S. 46 (1917). A case of more recent vintage which addressed similar questions, and affirmed the vitility of Selling was Theard v. Umited States, 354 U.S. 278 (1955). While I do not question the power of this court to impose a sanction dif- ferent from that imposed by the Supreme Court of New Jersey, I question the advisability of such a course of action. Furthermore, although this court may act inde- pendently of the state court determination, such inde- pendence is narrowly confined by the language of Selling itself. The Supreme Court took pains to mark the limited scope of federal review: “. .. [W]e should recognize the condition created by the judgment of the state court unless, from an intrinsic consideration of the state record, one or all of the following conditions should appear: 1. That the state procedure from want of notice or opportunity to be heard was wanting in due proc- ess; 2, that there was such an infirmity of proof as to facts found to have established the want of fair private and professional character as to give rise to a clear conviction on our part that we could not consistently with our duty accept as final the conclusion on that subject; or 3, that some other grave reason existed which should convince us that to allow the natural consequences of the judgment to have their effect would conflict with the duty which rests upon us not to disbar except 44a Appendiz D upon the conviction that, under the principles of right and justice, we were constrained so to do.” 243 U.S. at 51. (emphasis supplied) No question is presented here as to whether the hear- ing accorded the attorney by the state court was consis- tent with due process, nor is there any dispute regarding the facts. What, then, is the “grave reason” for this court to pronounce a harsher judgment than that imposed by the state judiciary? I must confess that I cannot dis- cern in the majority opinion the answer to this crucial question. The majority cites In re Ruffalo, 390 U.S. 544 (1968) and In re Wilkes, 494 F.2d 472 (5th Cir. 1974) in support of its position that the federal judiciary must independently act in disciplinary matters. These cases, however, simply affirm the principles of due process which must be followed in the conduct of such disciplinary pro- ceedings. Neither these cases, nor the instant case, deal with a “grave reason,” which would justify a different disposition by this court. Notwithstanding the absence of a response to the cru- cial question of “grave reason,” I dissent as a matter of policy. Assuming that the purpose of the harsh sanction advocated by the majority is to deter future wrongdoers, deterrence is certainly not advanced by the possibility that Abrams may, at some future time, be permitted to practice in the state courts. While there may be cases which might justify disparate treatment, I am not con- vinced that this is such a case. The majority takes issue with the Supreme Court of New Jersey for distinguishing this case from Jn re Colsey, 63 N.J. 210, A.2d (1973), where the attorney was disbarred. Placing aside for the moment the ques- tion of whether this court should engage in a contest 45a Appendia D with the State Supreme Court over the merits of the dis- tinction, this case is distinguishable from Colsey in at least three ways: (1) in this case, the disciplined attorney himself, as a part owner of the business, was a victim of the extortion; (2) here, the disciplined attorney did not retain part of the “pay-off” as a “fee”; and finally, (3) unlike Colsey there was no deliberate attempt in this case to perpetrate a tax fraud. I do not find the state court’s distinction to be without basis. The majority’s position, simply stated, is: “Professional misconduct, like fraud, takes many forms. Variations in detail are not significant when the underlying character is the same.” Ante at 2. This is an oversimplification of the facts, and of the state court opinion. I do not quarrel with the sentiments expressed by the Court with regard to unethical conduct; in fact, I whole- heartedly endorse such a standard for all attorneys in all states. In my opinion, however, such sentiments are largely irrelevant to the true import and impact of the majority opinion. It is quite understandable that the Court should be reasonably exercised and concerned with the improprieties of members of the Bar, especially in light of the increased awareness of the public to such activities. In this Water- gate area of “dirty tricks, laundered money,” perjury, ob- struction of justice, corruption and related matters, one must not lose sight of the more mundane aspects of the legal and judicial process, as it pertains to the interrela- tionship of the federal and state judiciary. In its effort to weed out unethical practices, wherever and whenever 46a Appendiz D they oceur, the Court may have lost sight of the past practice in this, and other districts, regarding disciplinary proceedings. For the first time in the history of the District of New Jersey, or for that matter in the history of any district within the Third Circuit, our Court has refused to be bound by a state court determination in a disciplinary matter. No explanation is given for this sharp divergence from past practice other than the independence of the federal judiciary. Certainly the independence of the fed- eral judiciary cannot be the “grave reason” required by Selling. Although the majority opinion recognizes the derivative nature of admission to the federal bar, it glosses over the remainder of the State machinery with regard to bar admission and attorney discipline. Some elucidation would be appropriate in these circumstances. Fully forty-five of the New Jersey Court rules, with myriad subdivisions, deal with nearly every imaginable aspect of qualifications for admission to the bar, actual admission, and any subsequent discipline of one who is admitted. There is in existence in New Jersey a compre- hensive and thoughtful scheme for dealing with the cum- bersome and ofttimes complex questions of who should and who should not be authorized to engage in the prac- tice of law. Admission to practice in our courts is derivative. It is the state who conducts bar examinations. It is the state who maintains committees on character and fitness and ethics. The federal courts have no such machinery and rely exclusively on the state system in det [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385003_1118%3A1. Public record. Not legal advice.