# Petition — Person v. Association of the Bar of New York

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Petition
- **Published:** January 1, 1977
- **Citation:** 434 U.S. 924

## Text

Bago Coun. 8)

SEP 12 1977

WROWAEL RODAK, JR. CLERK

In The
SUPREME COURT OF THE UNITED STATES

ones Ta "Beg .

No.

CARL E. PERSON,
Petitioner,

Ve

THE ASSOCIATION OF THE BAR OF THE CITY ~
OF NEW YORK, SUPREME COURT, APPELLATE
DIVISION, FIRST DEPARIMENT, SUPREME COURT,
APPELLATE DIVISION, SECOND DEPARIMENT,
and ATTORNEY GENERAL OF NEW YORK STATE,

132 Nassau Street
New York, N.Y. 10038

(212) 349-4616
September 12, 1977

TABLE OF CONTENTS a ii
Ss Page
Page Protection clause of the
fourteenth amendment for
reasons outlined at pp.
34=36 -RRRRARESERSERE RESET SE SS 34

II, DR 7=109C, prohibiting the

Opinions BELOW cccccccccccccccceces 2
Jurisdiction cesccccccscccccccesese 3
Questions Presented ccccccccccccess 3

a contingent-fee basis,
Constitutional, Statutory and : impermissibly interferes
Rules Provisions Involved eecess 12 with substantial rights of
petitioner and his clients,
Statement of the CaSe seccccccceeee 23 and is a denial of equal
protection under the four~
1. Procedural Background .eceee 23 teenth amendment for reasons

2. Naboor Antitrust Action .... 24

3. Antitrust Law Enforcement of expert witnesses on a
Is Political Activity .ecee. 29 , 3 contingent-fee basis, is a
denial of procedural and
= 4. DR 7-109C Prevented + as applied, substantive ‘
Substantial Justice for . due process under the
the Naboor Plaintiffs ...... 31 fourteenth amendment for
reasons outlined at pp.
5. New York's Automatic - 41-43 eeeeeeeeooooaooe eee eee eoe 41

Adoption of DR 7=109C .seee. 32
IV. DR 7=-109C, prohibiting use

6. No Issues Of Fact cccccccces 33 of expert witnesses on a
fee basis, vio-
Reasons for Granting the Writ ..... 34 lates the first amendment,
’ through the fourteenth
The Court of Appeals has decided amendment, by the overbreadth
an important of federal doctrine and by unconstit:-
law which has not been, but tional application of the
should be, settled by this Court 34 . rule, because of its sub-
stantial and unjustified
I. DR 7-109C, prohibiting use of interference with first
expert witnesses on a contin- amendment freedoms, as
gent-fee basis, is irrational outlined at pp. 46-47 ..... 46

Conclusion Seeeeeeseeeeeeeeeeeeeeee

A - Memorandum and Order
dated March 24, 1976 by Judge
Dooling of the United States Dis-
trict Court the Eastern

Xi

for
District of New eeeeeceeaeaeee .

B = Memorandum and Order
dated June 25, 1976 by Judge
Dooling (RR RERRRERRRAR RE RE RRR EER SE SS

Appendix C = Memorandum and Order
Gated August 10, 1976 by Judge
Dooling (RE RRERERERERER ERE SR ESE ES SE SS

Appendix D - Judgment dated
and entered August 12, 1976 .eeee

Appendix E = Opinion of Circuit
Judge Smith of the United States
Court of Appeals for the Second
Circuit, dated April 29, 1977
reversing judgment of District

Court and dismissing action .....

Appendix F - Order of Court of
Appeals for the Second Circuit,
dated June 14, 1977, denying
Petitioner's petition for a
rehearing eeeeeceeaoeoeoaoeoeoeooeene eee eed

G =~ Order of Court of
Appeals for the Second Circuit,
dated June 14, 1977, denying
Petitioner's petition for a
rehearing en banc eeececece: *geee

49

la

21a

37a

40a

iv

TABLE OF CITATIONS

* Cases Cited:

* eeeeees ee eoeee eed 47

‘Bigelow v. Commonwealth of ‘Virginia,

421 U.S. BOT (1975) eeeeeeeeeeeeed 48

‘ ‘Boddie v, Connecticut, 401 U.S.

371 (197T) eeeeeeeeeeeeeeeeeeeeed 41

‘Dandridge v. Williams, 397 U.S.

‘71 (T5970) eeeeeeeeeeeeeeeeeeeeesd 49

A.D. ’ eiewve (ist
1961), aff'd, 11 N.Y.2d
679 (1962) eccccceccoocococccccce 37

Massachusetts Board of Retirement v.

’ eve eeece 36

‘NAACP v. ‘Button, 371 U.S. 415 (1963) 47-48

- National ‘Auto Brokers’ -
General Motors " 7 Civ.

‘ Ortwein v. Sciwab, 410 U.S. 656

Sisteiet vy. Reirigues 4 eSe
T (1973)

‘ United States v. Kras, 409 U.S. 434

‘ Winters v. Miller, 446 F.2d 65, 71
(ind Cir. 1977)

‘ United States Constitution:
Amendment 1, Peaceable Assemblage

clause eeeeeeeeeeeeeeeeeeeeeeeee

Amendment 1, Petition clause ..cece

Amendment 14, § 1, Due Process

clause Seeeeeee eee eeeeeeeeeeeee

Amendment 14, § 1, Equal
Protection clause

40

41

11-12, 39-40,
46-47, 49-49

11-12, 39-40,
46-47, 48-49

9, 11, 13,
41-42, 44,
46-47, 48-49

6, 8, 13,
34-36, 39-40

’ "Statutes Cited:

28 U.S.C. % 1254 (1) eeeeeeeeeeeeeee

‘28 U.S.C. 4 1343 (3) eeeeeeeoeeeeeee

28 U.S.C. § 2201 eeeeeee eee eeeee eee
42 U.S.C. § 1983 eeeeee ee eeeeeeeees

"s Consolidated Laws of New
York, Book 29, Judiciary Law,

§ 90 (2) SCeeeeeeeeSeeeeeeeeeeeeee

’ Rules Cited:

Rule 56 (f), F.R.Civ.P. eeeeeeeeeeee
Rule 704, Federal Rules of Evidence

Rule 7=109C of the
Code of Professional Responsibil-
ity adopted by the New York State
Bar Association,

published in

, Judiciary
Law, Appendix, at 351, 499 coceee

ABA Canon 39, adopted in 1928

4, 17, 21-22,

17-18, 23

9, 10-11, 18,
29, 40, 43

:
;
j

New York, § 603.2 cccccccccecececs 21-22, 32

Supreme
New York, § 691.2 ccccccccccccsee 22, 32 GUL E. ce,

Ve

‘Petitioner,

‘ Other Authorities Cited:

THE ASSOCIATION OF THE BAR OF THE CITY

Casencte, "Professicnal Respansi- OF NEW YORK, SUPREME COURT, APPELLATE
bility = A Constitutional DIVISION, FIRST DEPARIMENT, SUPREME COURT,
Challenge to Disciplinary Rule APPELLATE DIVISION, SECOND DEPARIMENT, and
7=109(C)", 55 N.C.L. Rev. ’ ATTORNEY GENERAL OF NEW YORK STATE,
709=21 (Apr. 1977) cccccccccceces Mm, 45 se
e ‘Respondents.

nesses - Is linary Rule
7109 (C) Dead?", 81 Dick. L. PETITION FOR A WRIT OF CERTIORARI TO THE UNITED
Rev. 655-661 (Spr. 1977) eesccee 45-46 STATES COURT OF APPEALS FOR THE SEQOND CIRCUIT
a. ‘Court ‘and

: The petitioner, Carl E. Person, respectfully
1154-1169 ones -nontvomentiecee 46 prays that a writ of certiorari issue to review
, ne an the judgment of the United States Court of
“DTS BT Warv.Le¥ev. T, 57-67 ... 40 Appeals for the Second Circuit, rendered in
this action on April 29, 1977.

2 3

OPINIONS BELOW JURISDICTION
The Memorandum and Order dated dated March | The decision of the Court of Appeals for
24, 1976 by the District Court for the Eastern the Second Circuit reversing the judgment of the
District of New York (Dooling, J.) is reported District Court and dismissing the action was made
at 414 F. Supp. 139 and is reproduced in Appendix and filed on April 29, 1977. See Appendix E, p.
A to this petition. The Memorandim and Order 40a, infra. Petitioner's petition for a rehearing
dated June 25, 1976 by Jutige Dooling is reported en banc was denied by two orders each dated
at 414 F. Supp. 144 and is reproduced in Appendix June 14, 1977. See Appendices F and G, pp.
B to this petition, The Memorandum and Order 64a and 66a, infra, The jurisdiction of this Court
Gated August 10, 1976 by Judge Dooling, not j in invoked uder 28 U.s.C. § 1254(1).
@ ss reported, is reproduced in Appendix C to this &
petition. The opinion of Circuit Judge Smith . QUESTIONS PRESENTED
of the United States Court of Appeals for the Disciplinary Rule DR 7-109C of the American
Second Circuit, decided April 29, 1977, is Bar Association ("ABA") Code of Professional
reported at 554 F.2d 534 and is reproduced in Responsibility, adopted in New York State and in
Appendix E to this petition. chusst G3 Chas ctaten » guiiiidte exh

attorney from using or acquiescing in the use of

bility - A Constitutional to
Disciplinary Rule 7-109(C)", 55 N.C.L.Rev.
709 (Apr. 1977).

4
an expert witness on a contingent-fee basis, no
matter how reasonable the contingent compensation
may be, and irrespective of the financial condi-
tion of the party, the type of lawsuit, or his
need to experts to prepare for testifying, and
to testify.

Violation of the rule by an attorney is
professional misconduct under § 90(2) of the
New York Judiciary Law, but the prohibition does
not apply to the experts themselves, the clients
of an attorney, or parties in litigation acting
on a pro se basis. Also, the rule does not
prohibit certain contingencies having far
greater prospective monetary value, such as a
substantial ongoing business relationship between
the expert witness and the attomey who retained
him or the attorney's client.

The rule was adopted by bar associations
controlled by attorneys for major corporations

5
which benefit from the rule (by reducing the

possibility that plaintiffs with meritorious
cases will succeed in litigation against the

corporation), and there was no independent

legislative or judicial review of the rule in
New York.

Because of the prohibition of DR 7-109C,
Petitioner, as attorney for 10 plaintiffs in a
major federal antitrust action (the "Naboor
action") against General Motors Corporation
("GM") and mmerous others, was not able to
employ the services of any expert witnesses to
prepare for and then testify at an evidentiary
hearing or at the trial.

This inability to employ expert witnesses
in opposition to the substantial amount of
expert preparation and testimony used by Gi
caused Petitioner's clients to lose, in 1973, a

6
critical motion for a preliminary injunction to
stop G4 from interfering with the clients’
sources of supply of new automobiles, on a
"fleet" basis, from willing Gi dealers.

The trial in the Naboor Action was held
during October, November and early December,
1976, and the action was dismissed, at the end
of the plaintiffs’ case, for alleged insufficiency
of evidence. The plaintiffs in the Nabcor
action had no expert witnesses to testify at the
trial for the above reasons. (An appeal is
pending in the Second Circuit under Docket No.
77-7037.)

The questicns presented are:

I. Whether DR 7-109C, prohibiting use of
expert witnesses on a contingent-fee basis, is
irrational and in violation of the Equal

Protection clause of the fourteenth amendment
because the rule:

(a)

(b)

(c)

(a)

7
makes directly conflicting assumptions
thinks atta 0 vennembiie fan fox
testifying could induce an expert
witness to commit perjury;
makes directly conflicting assumptions
about the need for contingent fees to
attorneys. and expert witnesses and
whether the use of either of such types
of contingent fees would induce the
attorney to suborn perjury;
prohibits all types of contingent fees
to expert witnesses, whether or not
the fees are small or reasonable;
does not regulate expert witnesses or
parties to litigation, only the attorney,
thereby permitting the attorney's client
or wnrepresented parties to use expert
witnesses on a contingent-fee basis,
reasonable or unreasonable (if the
attorney is not involved);

8 9
(e) does not prohibit an expert witness fron injunction to stop, and to recover for,

owning shares of stock in the client or | the illegal activities of major
from buying a percentage of the claim corporations which are destroying the
itself; | business and property of the clients;
(£) does not prohibit an attorney from using (b) does not permit petitioner or his clients
expert witnesses who have more substan- to make any showing of need to use
tial contingencies in the form of ongoing expert witnesses on a contingent-fee
business relationships and expectations; basis; and
and (c) prevents petitioner from introducing
: (g) does not prohibit a party or its ; opinion testimony on the ultimate
a employees and shareholders from cs facts in issue under Rule 704, Federal
testifying as an expert witness. Rules of Evidence, thereby giving
wealthy defendants a substantial,
II, Whether DR 7-109C, prohibiting the use unfair and unnecessary advantage.
of expert witnesses on a contingent-fee basis,
impermissibly interferes with substantial rights III, Whether DR 7-109C, prohibiting the use of
of petitioner and his clients, and is a denial expert witnesses on a contingent-fee basis, is a
of equal protection under the fourteenth denial of procedural and, as applied, substantive
amendment because the rule: due process under the fourteenth amendment
(a) prevents them from having the access because the rule:

to the courts they need to obtain an

10

(a) was adopted by persons having a substan-
tial interest in the prohibition without
independent review by the New York
legislature or judiciary;

(b) impermissibly interferes with the
fundamental property rights of
petitioner's clients to obtain a court
injunction against, and damages fron,
persons who, through violations of
federal antitrust laws, are destroying
business and property interests of
petitioner's clients;

(c) deprives petitioner and his clients
of the use of their own property (the
claim in litigation) to finance the
litigation without permitting them an
Opportumity to show need to hire
expert witnesses on a contingent-fee
basis; and

(d) deprives them of the substantial
advantages of Rule 704, Federal Rules

IV. Whether DR 7-109C, prohibiting the use of
expert witnesses on a contingent-fee basis,
violates the first amendment, through the
fourteenth amendment, by the overbreadth
doctrine and unconstitutional application of
the rule, because of its substantial and
unjustified interference with first amendment
freedoms:

(a) to petition the courts for a redress
of grievances as to antitrust claims
for injunctive and monetary relief; and

(b) to engage as a private attorney general

_ dn peaceable assembly and political

- . | 13
patina ia ices The Due Process clause in § 1 of the

nathihnnind tae the anna oe fourteenth amendment to the United States
Constitution provides:

"ee nor shall any State deprive any

without any opportumity to make a showing of
economic need to use expert witnesses on a

(reasonable) contingent=-fee basis. person of life, liberty, or property,
without due process of law...."

RULES PROVISIONS INVOLVED The Equal Protection clause in § 1 of the
The Peaceful Assemblage clause in the first fourteenth amendment to the United States
amendment to the United States Constitution Constitution provides:
e miscae? pace . ) "eee nor shall any State ... deny to
Congress : any person within its jurisdiction
eee abridging ... the right of the equal protection of the laws."

the people peaceably to assemble...."

The statute describing when cases in the

The Petition clause in the first amendment courts of appeals may be reviewed by the

to the United States Constitution provides: Supreme Court, 28 U.S.C. § 1254, reads in
"Congress shall make no law pertinent part as follows:
eee abridging ... the right of "Cases in the courts of appeals may
the people ... to pstitic the be reviewed by the Supreme Court by
Goverment for a redress of the following methods:

grievances."

15

"(1) By writ of certiorari granted Congress providing for equal
Upon the petition of any rights of citizens or of all
‘party to any civil or criminal persons within the jurisdic-
case, before or after rendition tion of the United States,"
of judgment or decree;"
The statute providing for declaratory
The statute providing jurisdiction to the judgments, 28 U.S.C. § 2201, reads in pertinent
District Court to hear civil actions, 28 U.S.C, part:
§ 1343, reads in pertinent part as follows: "Creation of remedy
“The district courts shall have original ; "In a case of actual controversy
jurisdiction of any civil action . 2 within its jurisdiction, ... any court
authorized by law to be commenced by of the United States, upon the filing
any person: of an appropriate pleading, may
allt Geclare the rights and other legal
"(3) To redress the deprivation, relations of any interested party
under color of any State law, seeking such declaration, whether or
statute, ordinance, regulation, not further relief is or could be
custom or usage, of any right, | sought. Any such declaration shall
privilege or immmity secured have the force and effect of a final
by the Constitution of the judgment or decree and shall be

United States or by any Act of

16
reviewable as such." Unchanged by
amendment effective Oct. 4, 1976.

The statute providing petitimer with the
right to sue for denial of his civil rights,
42 U.S.C. § 1983, provides in pertinent
part as follows:

"§1983. Civil Action for deprivation
of rights

"Every person who, under color of
e any statute, ordinance, regulation,
. custom, or usage, of any State
or Territory, subjects, or causes to
be subjected, any citizen of the
United States or other person within
the jurisdiction thereof to the
deprivation of any rights, privileges,
or immmities secured by the Costi-

tution and laws, shall be liable to
the party injured in an action at
law, suit in equity, or other proper

17
proceeding for redress."

The New York statute making violation of
DR 7-109C an act of professional misconduct,
§ 90(2) of the New York Judiciary Law, published
in McKinney's Consolidated Laws of New York,
Book 29, reads in pertinent part:

“The supreme court shall have power
and control over attorneys ..., amd the
appellate division of the supreme court
in each department is authorized to censure,
suspend from practice or remove from office
any attorney ... who is quilty of
professional misconduct..., or amy conduct
prejudicial to the administration of
justice...."

Rule 56(f) of the Federal Rules of Civil

Procedure, providing for summary judgments,
reads in pertinent part:

18

"(a) For Claimant. A party seeking
to .e. Gbtain a declaratory judgment may,
at any time after the expiration of 20
days from the commencement of the action
or after service of a motion for summary
judgment by the adverse party, move with or
without supporting affidavits for a summary
judgment in his favor upon all or any part
thereof."

Rule 704 of the Federal Rules of Evidence,

permitting opinion testimony on ultimate issues,
reads: }

"Opinion on Ultimate Issue.
"Testimony in the form of an
opinion or inference otherwise admissible
is not objectionable because it embraces
an ultimate issue to be decided by the
trier of fact."

19
Disciplinary Rule DR 7-109C of the Code of

Professional Responsibility of the ABA adopted
by the New York State Bar Association ("DR

-J=109C") , published in McKinney's Consolidated

Laws of New York, Book 29, Judiciary Law,
Appendix at 351, 499, reads:

"A lawyer shall not pay, offer to pay,
or acquiesce in the payment of compensation
to a witness contingent upon the content of
his testimony or the outcome of the case.
But a lawyer may advance, guarantee, or
acquiesce in the payment of:

"1. Expenses reasonably incurred by a

witness in attending or testifying.

"2, Reasonable compensation to a

witness for his loss of time in
attending or testifying.

"3. A reasonable fee for the profes-

sional services of an expert
witness."

21
or deviate from the truth, or in any degree
to affect his free and wntramelled conduct
when appearing at the trial of in the
witness stand."

20
ABA Canon 39, originally adopted on July 26,
1928 and a predecessor to DR 7-109C, stated:
"Compensation demanded or received by
any witness in excess of statutory alla
ances should be disclosed to the court and
adverse counsel. If the ascertainment of
truth requires that a lawyer should seek
information from one connected with or
reputed to be biased in favor of an adverse
party, he is not thereby deterred fron
€ seeking to ascertain the truth from such
person in the interests of his client."

The court rule which makes a violation of
DR 7=109C professional misconduct, § 603.2 of
the Rules of the First Department of the
Appellate Division of the Supreme Court of the
State of New York, reads in relevant part:
: “Any attorney who ... violates ...
any Disciplinary Rule of the Code of
Professional Responsibility, as adopted by
the New York State Bar Association, effective

ABA Canon 39 was amended in 1937 to read:
"A lawyer may properly interview any
witness or prospective witness for the
opposing side in any civil or criminal
action without the consent of opposing
counsel or party. In doing so, however, he
should scrupulously avoid any suggestion
calculated to induce the witness to suppress

Jan. 1, 1970, as amended, or any Canon of the
Canons of Professional Ethics, as adopted by
such bar association and effective until Dec.
31, 1969 ... shall be deemed to be quilty of
professional misconduct within the meaning
"ef subdivision 2 of section 90 of the

22 23
Judiciary Law. ..." } STATEMENT OF FACTS
1, ‘Procedural Background
The court rule which makes a violation of The case originated upon the filing of a
DR 7-109C professional misconduct (in the complaint in the United States District Court for
Eastern District of New York), § 691.2 of the the Eastern District of New York to enjoin
Rules of the Second Department of the Appellate enforcement of DR 7=109C, which prohibits
Division of the Supreme Court of the State of attomeys fran using or acquiescing in the use of
New York, reads in relevant part: expert witnesses on a contingent-fee basis, how
"Professional Misconduct Defined ever reasonable. Petitioner alleged a violation
"Any attomey who ... violates ... of his civil rights under 42 U.S.C. § 1983
£ any disciplinary rule of the Code of @ —s_ ai alleged that the basis for jurisdiction
Professional Responsibility, as adopted by was 28 U.S.C. § 1343(3). After denial of
the New York State Bar Association, or any petitioner's motion for a preliminary injunction,
canon of the Canons of Professional petitioner moved to amend his complaint to allege
Ethics, as adopted by such bar association an action for declaratory judgment under 28
eee Shall be deemed to be guilty of U.S.C. § 2201, which motion was granted by
professional misconduct within the meaning Memorandum and Order dated June 25, 1976 (Appen-
of subdivision (2) of section 90 of the dix B hereto). Petitioner then moved for a
Judiciary Law." summary declaratory judgment under Rule 56(f),

F.R.Civ.P., to declare DR 7-109C unconstitutional,
and the motion was granted by Memorandum and

24

Order dated August 10, 1977 (Appendix C hereto),
and judgment was entered on August 12, 1976
(Appendix D hereto).

Respondents other than The Association of
the Bar of the City of New York appealed from the
judgment of the District Court, and the Second
Circuit reversed the judgment and dismissed the
action on April 29, 1977 (see Opinion of Second
Circuit at Appendix E hereto), and denied
petitioner's petition for a rehearing en banc at
the same time (see Appendices F and G hereto).

2. ‘Nabcor Antitrust Action
Petitioner, an antitrust attomey, repre-
sents 10 plaintiffs in a major antitrust action
against General Motors Corporation ("Gi"),
General Motors Acceptance Corporation, Ford Motor
Company, Chrysler Corporation, American Motors
Corporation and various other defendants. This
action, the "Nabcor action", was commenced in

25
the Southern District of New York during
December, 1970 under the name National Auto

‘Brokers Corp. v. General ‘Motors Corp., index

mmber 70 Civ. 5421, and was subsequently
severed into 4 separate actions. The plaintiffs
in the Nabcor action have charged Gi and the
other defendants with a conspiracy (i) to
boyoott Nabcor by cutting off Nabcor's sources
of supply of new cars and (ii) to fix retail
prices. The Naboor plaintiffs seek $100,000,000
in damages (before trebling) for themselves,
not as a class action, for the total destruction
of their unique new businesses of distributing
any make and model of new automobile through an
automobile “brokerage” system in competition
with the franchised distribution system of Gi and
the other auto manufacturers. Also, the Nabcor
plaintiffs seek a permanent injunction to stop
the illegal activities alleged.

26

It was essential for the Naboor plaintiffs
to retain expert witnesses to prepare to testify
and then to testify during a 1973 evidentiary
hearing on plaintiffs’ preliminary injunction
motion to enjoin Gi from interfering with
Naboor's purchasing of new cars from willing Gi
dealers on a "fleet" (i.e., lowcost) basis.
However, Nabcor and the other plaintiffs were
unable to afford needed expert witnesses, and
lost the critical motion, which caused Nabcor
and its 200 franchisees to go aut of business.
G4, on the other hand, submitted extensive
reports prepared by a major accomting firm
(Price, Waterhouse & Co.) retained by G's
attorneys, the New York firm of Paul, Weiss,
Rifkind, Wharton & Garrison. A partner of Price,
Waterhouse testified at the evidentiary hearing.
Also, the accounting firm or its partners
were retained to testify at trial as exert

witnesses on behalf of Gi and other defendants.
Price, Waterhouse & Co. had substantial business

27
selationshins of a contimzing nature with
GM, Gi's attomeys and other defendants which
made their compensation contingent to the

extent the firm risked the loss of further

business from such defendants and attorneys in
subsequent litigated or non-litigated matters,
including the 4 or more trials expected to be
held in the Naboor action, if the accounting
firm's “expert” testimony failed to meet the
requirements or satisfaction of Gi or Gi's
attorneys. During the evidentiary hearing, the
firm partner admitted that the firm's preparation
and his related testimony for Gi was done
contrary to generally accepted accounting
principles.

Because of the prohibition of DR 7-109C,
petitioney was wnable to retain any expert
witnesses to perform preparation work prior to
trial, in the areas of accomting, econanics,
marketing, franchising and automobile distribu-

28 29

tion, and therefore had no expert witnesses The use of expert witnesses in both of
prepared to testify at trial, ‘The needed expert such areas could have prevented the court's
witnesses requested non-contingent compensation determination of insufficiency. See Rule
of about $100,000 or more, which petitioner's 704 of the Federal Rules of Evidence which
clients could not afford. This financial permits opinion testimony on the ultimate
inability was allegedly caused by the violations issue to be decided by the trier of fact.
of federal antitrust law alleged in their

antitrust complaint. 3. Antitrust Law Enforcement

Petitioner has proven that enforcement of
the antitrust laws by the Department of Justice

; The first of the 4 severed Naboor actions d
@ —s_ the @& action) was dismissed after the plaintiffs’ CJ
case by the District Court in December, 1976,

after 6 weeks of trial, the judge determining

that the plaintiffs had insufficient evidence

to submit to the jury as to liability or damages.

An appeal is pending in the Court of Appeals for action against Gi or any of the other defendants
the Second Circuit under Docket No. 77-7037. tn On tehene eatin en ated © @ @
National ‘Auto Brokers ‘Corp. v. General Motors the Nabcor plaintiffs and petitioner. Because of
Corp., 70 Civ. 5421A (USDC SDNY), appeal
pending in 2nd Cir. under Docket No. 77-7037.

and New York Attorney General is done on a
discretionary basis, with major reliance upon
private actions to enforce the federal and
state antitrust lays. The Justice Department
and New York Attormmey General refused to take

this refusal to assist, petitimer and his Nabcor
Clients are performing a political activity of

30
government, enfcxcing the entitrust las, and axe
recognized as “private attorneys general" under
decisions of this Court.

In his complaint, petitioner alleged that
he and his Nabcor clients have assembled in the
Naboor action as a political association to
enforce the antitrust laws against G4 and the
other defendants.

Petitioner has proven that the concentration
of wealth in this country is at a dangerously
high level, and our form of govermment depends
on how effective the nation's antitrust laws are
enforced. Enforcement of the antitrust laws has
substantial political ramification in this

country.

Petitioner has proven that antitrust
litigation is very costly in most cases, with
the plaintiffs in an antitrust action often

31
having insufficient funds available to adequately
present their case in court, even if they
are able to retain an attorney cm a contingent-
fee basis, unless the plaintiffs can use a
portion of their claim to finance the suit.
Also, existence of the rule inhibits attempts to
find counsel willing to take the action on a
contingent-fee basis for himself,

4. DR 7-109C Prevented Substantial
‘Justice for the Nabcor Plaintiffs

Because of the high cost of retaining needed
expert witnesses in the Nabcor acti, and the
existence of DR 7-109C (prohibiting attomeys
from using expert witnesses on any kind of
contingent-fee basis, however reasonable),
petitioner and his 10 Naboor clients were
unable, in petitioner's professional opinion as
an attorney, to obtain substantial justice in
the Naboor private antitrust action, which denial
continues to this day.

32
5. New York's Automatic
Adoption of DR _7-109C

DR 7-109C was promilgated by the ABA during
1969, Its inmediate predecessor, Canon 39 (1937
version) did not prohibit the use of expert
witnesses on a contingent-fee basis; nor did the
prior version of Canon 39, adopted in 1908.

DR 7-109C of the ABA was adopted in 1970 by
the New York State Bar Association, violation
of which Rule is professional misconduct under
§ 90(2) of the New York Judiciary Law and
Rules § 603.2 and § 691.2 of the First and
Second Departments of Appellate Division of the
New York Supreme Court.

New York's adoption of the ABA Code,
including DR 7-109C, occurred automatically and
without any prior legislative or judicial
review and without any attempt to balance
the interests at stake. The ABA, New
York State Bar Association and defendant,

The Association of the Bar of the City of New

33
York are dominated or controlled by partners in
law firms representing major business interests
which benefit from the adoption and enforcement

of DR 7-109C. The rule inhibits persons such

as petitioner and his antitrust clients from
proving meritorious claims against these

same major companies. Furthermore, these
business interests have combined on a political-
action basis to prevent effective antitrust law
enforcement (through The Business Roundtable,
consisting of the chief executive of the top 158
corporations, including G1, Ford and Chrysler,
and was founded by a top partner in the law
firm representing The Association of the Bar

of the City of New York). The Business Roundtable

is even financing the defense of liticatim for
companies not members of The Business Roundtable.

6. No Issues of Fact
Petitioer's facts are wmrefuted. Respon-
dents filed no affidavits in opposition to the

34
petitioner's affidavits (other than attorneys"
affidavits), and respondents did not seek any
discovery. The judgment of the District Court
“was based exclusively on the affidavits of

plaintiff and the pleadings".

REASONS FOR GRANTING THE WRIT
Petitioner submits that this Court should
grant this petition for the following reasons:
The Court of Appeals has decided an important
question of federal law which has not been,
but should be, settled by this Court.

I.

DR 7=109C, prohibiting the use of expert
witnesses on a contingent-fee basis, is
irrational and in violation of the Equal
Protection clause of the fourteenth amendment
because the rule:

(a) makes directly conflicting assumptions
about whether~ a reasonable fee for

b)

(c)

(d)

(e)

35

‘testifying could induce an expert

witness to commit perjury;

makes directly conflicting assumptions
about the need for contingent fees to
attorneys and expert witnesses and
whether the use of either of such types
of contingent fees would induce the
attomey to suborn perjury;

prohibits all types of contingent fees
to expert witnesses, whether or not
the fees are small or reascnable;

does not regulate expert witnesses or
parties to litigation, only the attorney,
thereby permitting the attorney's client
or unrepresented parties to use expert
witnesses on a contingent-fee basis,
reasonable or ureasonable (if the
attorney is not involved);

does not prohibit an expert witness from
owning shares of stock in the client or
from buying a percentage of the claim

. 36 | 37

itself; to existing case law in New York permitting pay-
(£) does not prohibit an attorney from using ment of contingent fees to certain types of

expert witnesses who have nore substan- expert witnesses. See Marine Midland ‘Trust Co.

tial contingencies in the form of ongoing ' Of ‘New York v. Forty Wall Street Corp., 13 A.D.2d

business relationships and expectations; 118, 213 N.¥.S.2d 689 (1st Dept. 1961), aff'd,

and ; 11 N.Y¥.2d 679 (1962).

(g) does not prohibit a party or its

employees and shareholders from Paragraph "(a)" of the above-listed
testifying as an expert witness. irrationalities is discussed by Judge Dooling
at 29a-32a. The rule is irrational as well
co Irrationality is one basis for declaring a * because of the other 6 reasons (b-g). The rule
rule unconstitutional, .. a denial of equal j would be rational, possibly, only if “contingency”
protection under the fourteenth amendment. referred to a percentage of the recovery, rather
‘Massachusetts Board of ‘Retirement v. Murgia, than to include a reasonable fee paid only in
427 U.S. 307, 312 (1976) ard ‘San ‘Antonio the event of success of the litigation.
‘ Independent ‘School District v. Rodriguez, 411
U.S. 1, 44-53 (1973). _ Also, the rule prevents an attorney from
advising his client on how to proceed himself
DR 7=109C, as adopted by the New York State to use an expert witness on a contingent~fee

Bar Association effective in 1970, was contrary basis. This would seem to be a basis itself for

38
declaration of unconstitutionality, through
its denial of counsel to a client, particularly
because it would be professional misconduct to
inform the client what the attorney is not

permitted to participate in.

Judige Dooling held that New York did not
prevent all types of transfers of interests in
lawsuits, and that petitioner should request a
ruling from the ethics conmittee of the defendant
bar association on the ethical propriety (as
distinguished from the legality) of selling
shares in lawsuits. Thereafter, during Jime,
1976, the Securities and Exchange Conmission
permitted a client of petitioner to make a
public offering of shares in a lawsuit under
Regulation A. New York law does not prohibit
an expert witness from owing shares in the
leeematt tn vidch be is to testify os a epent.
In fact, under New York law, petitioner's clients
could have sold shares in the lawsuit to

39
expert witnesses, then return the cash to then as
a “non-contingent” fee permissible under DR 7-109C,
umier the decision of the Second Circuit, because
only literal contingent fees (and not variations
thereon) are prohibited by the rule. See 58a.

II.

DR 7-109C, prohibiting the use of expert
witnesses on a contingent-fee basis, impermis-
sibly interferes with substantial rights of
petitioner and his clients, and is a denial
of equal protection under the fourteenth
amendment because the rule:

(a) prevents them fron having the access
to the courts they need to obtain an
injunction to stop, and to recover for,
the illegal activities of major
corporations which are destroying the
business and property of the clients;

(b) does not permit petitioner or his clients
to make any showing of need to use

40

unt Geum @ s cite

basis; and
(c) prevents petitioner fron introducing
Opinion testimony on the ultimate
facts in issue under Rule 704, Federal
Rules of Evidence, thereby giving
wealthy defendants a substantial,
unfair and unnecessary advantage.

The rule prevents petitioner and his
clients from protecting their property and
from recovering damages for injury already
suffered, ‘United States v. Kras, 409 U.S.

434 (1973) is clearly inapplicable. ‘See

Judge Dooling's opinion at 26a and ‘The Suprem=
‘Court, 1972 Term, 1973, 87 Harv.L.Rev. 1, 57-67.
Kras had other alternatives and he was looking
to obtain a benefit granted by statute.
Petitioner and his clients are seeking to
obtain an injunction, wiich only the courts can

41
grant, and they are looking to protect property
from being destroyed by illegal activity, which
the federal and state regulatory authorities have
refused to stop themselves. Accordingly, the
courts are the only effective remedy, and the
case falls squarely within Boddie v. Connecticut,

401 U.S. 371 (1971) and Winters v. ‘Miller,
446 F.2d 65, 71 (2nd Cir. 1971); ‘cert, ‘denied,
404 U.S. 985 (1971). Ortwein v. ‘Sctuab,

410 U.S. 656, 658-59 (1973) is not applicable

because of the availability of another remedy

amd interests of less constitutional significance,
involving reduced welfare payments. ‘The interest
of the Nabcor plaintiffs was their om business

and property, protected by the fourteenth
amendment.

Ir.

DR 7-109C, prohibiting the use of expert
witnesses cn a contingent-fee basis, is a denial

42
of quntend exh, @ ented, substantive
@ue process under the fourteenth amendment
because the rule:

(a) was adopted by persons having a substan-
tial interest in the prohibition without
independent review by the New York
legislature or judiciary;

(>) impermissibly interferes with the
fundamental property rights of
petitioner's clients to obtain a court
injunction against, and damages from,
persons who, through violations of
federal antitrust laws, are destroying
business and property interests of
petitioner's clients;

(c) deprives petitioner and his clients
of the use of their am property (the
Claim in litigation) to finance the
litigation without permitting them an
Opportumity to show need to hire

expert witnesses cn a contingent-fee

The substantial financial interest of
the persons controlling the various bar associa~
tions which adopted DR 7-109C and their major
corporate clients should disqualify these
bar associations from adopting DR 7-109C on
the grounds of self interest, which is a denial
of procedural due process. ‘Hortonville Joint

“School Dist. No. 1 v. Hortomville Ed. Ass'n,

96 S.Ct. 2308 (1976).

a4
The rule is absolute even thowh the need
for expert witnesses in litigation is increasing,

because of the increased complexity of our society,

and the need for experts ranges widely, depending
on the type of case, the type of eqert testimony
needed, the anount of money involved, and other
factors too complex to sweep away with a total
prohibition.

The rule does not permit any opportunity
needy parties or their attorneys to show to the
court their particularized need to use expert
witnesses on a reasonable contingent-fee basis.

Thus, persons are deprived, without due
process, of the use of their own property
(the litigated claim) to finance pursuit of
the claim.

Justice is slowed down by the need in
such instances for m inpecumecus plaintiff to

45
prove his case using a more tedicus route,
contributing to courtroom congestion, assuming
in som instances there may be this alternative.
The rule itself prevents persons from ascertaining
whether an expert could develop information based
on which he could give his opinion testimony on
the ultimate or other facts in issue. By
permitting plaintiffs to use expert testimony
(and most plaintiffs cannot now afford to),
mach of the work would be done before trial,
not involving the courts, by the respective
experts, which would tend to identify and
simplify the issues more quickly, and result in
shorter trials and possibly more out of court
settlements of meritorious clains.

For a discussion of Judge Dooling's decision
in this action see Casenote, “Professional
Responsibility - A Constitutional Challenge to
Disciplinary Rule 7-109(C)", 55 N.C.L.Rev.

709-21 (Apr. 1977); and Casenote, “Legal Ethics -

46
Contingent Fees to Expert Witnesses - Is
Disciplinary Rule 7-109(C) Dead?", 81 Dick. L.
Rev. 655-661 (Spr. 1977). Also, see Michelman,
“The ‘Supreme Court ‘and Litigation Access ‘Fees: ‘The
“Right to Protect One's Rights (pt. 1), 1973 Duke
LJ. 1153, 1154-1169,

IV.

DR 7-109C, prohibiting the use of expert
witnesses on a contingent-fee basis, violates
the first amendment, through the fourteenth
amendment, by the overbreadth doctrine and
by unconstitutional application of the rule,
because of its substantial and unjustified
interference with first amendment freedoms:

(a) to petition the courts for a redress
of grievances as to antitrust claims
for injunctive and monetary relief; and

(b) to engage as a private attomey general
in peaceable assembly and political

47
“(antitrust) litigation in association
between petit-ioner and his clients
without any opportmity to make a showing
of economic need to use expert witnesses om
a (reasonable) contingent-fee basis.

Private enforcement activities in connection
with the antitrust lavs make the enforcers
“private attorneys general" under decisions
of this Court. Alyeska Pipeline Service Co.

v. Wilderness Society, 95 S.Ct. 1612, 1624
(1975). Also, some litigation is political,
protected by the Ist Amendment. ‘NAACP v. Button,

371 U.S. 415 (1963).

Because the Justice Department and New York
Attorney General enforce the federal and New
York State antitrust laws on a discretionary
basis, their decision to enforce or not is
political; and the enforcement of such laws

a private basis by private attorneys general

-
—— —

48 . 49
such as petitioner and his clients is also doctrine. Dandridge v. Williams, 397 U.S. 471,
associational political activity of the 484 (1970).

‘ NAACP v. Button type.

CONCLUSION
Petitioner argues that DR 7-109C interferes For the foregoing reasons, this petition
impermissibly with his associational (political) for a writ of certiorari should be granted.

freedom under the first amendment to engage
in political litigation enforcing the nation's ’
ence of DR 7-109C. Carl > Se 7 aaa ——
e e 132 Haseena Street
. New York, N.Y. 10038
The State has performed no balancing of
September 12, 1977

interests under Bigelow v. Commonwealth of
‘Virginia, 421 U.S. 809 (1975).

Also, because of the involvement of
petitioer's first amendment rights to petitim
and to peaceably assemble for political purposes,
DR 7=-109C is unconstitutional as applied, or
it is unconstitutional under the overbreadth

la
APPENDIX A — MEMORANDUM AND ORDER DATED MARCH 24,

1976 OF THE UNITED STATES DISTRICT COURT FOR
THE EASTERN DISTRICT OF NEW YORK

CARL E. PERSON,

Plaintiff, :
: 75 C 1473
THE ASSOCIATION OF THE BAR MEMORANDUM
OF THE CITY OF NEW YORK, $ and
SUPREME COURT, APPELLATE ORDER

eeaeanwanweweveaeaeaenecaeracaeee @ X

Appearances :
CARL E. PERSON, Esde, plaintiff ‘pro se

HALIBURTON FALES, 2d Esq. (Messrs. WHITE &
CASE and ROBERT H. HAILE, Esq. of Counsel)
for The Association

“ Se tye Pe gy
e, Attomey
Gelahdants other than the Bar Association,
and for the Attorney General under
Executive Law, § 71

DOCGLING, D.J.
Plaintiff has applied for the convening of a

2a
APPENDIX A - MEMORANDUM AND ORDER DATED MARCH 24,
1976 OF THE UNITED ST?iE5 DISTRICT COURT FOR
THE FASTERN DISTRICT OF NEW YORK
three judge court (28 U.S.C. § 2281) on the basis
that the second count of the complaint challenges
on constitutional grounds the validity of
certain sections of the Judiciary Law of New
York as implemented through the rules of the
Appellate Divisions and the Lawyer's Code of
Professional Responsibility. Broadly, plaintiff,
a lawyer, contends that, as implemented and
threatened to be applied, the statutes, rules
and code stifle the prosecutim and fair trial
of litigation (such as antitrust triple damage
cases) by making impossible the financing of
such costly litigatio. Plaintiff particularly
points to the canons of professional conduct
that, in substance, forbid the transfer for value
of shares in the rights of action, and forbid
(he mutsntien of eyess Waseem tame exeer
ectden wuld he cantiugent on en cussess of Un
suit and would be measured upon the amount of

3a

APPENDIX A - MEMORANDUM AND ORDER DATED MARCH 24,
1976 OF THE UNITED STATES DISTRICT COURT FOR
THE EASTERN DISTRICT OF NEW YORK

Clients of such members as coconspirators to the

extent that they have joined in adopting or
enforcing laws and rules

"ee Which prohibit clients pursuing
antitrust claims and/or their attorneys
working on a contingent-fee basis from
obtaining the momey to pay the liti-
ee eee
their respective interests in the

*
without prejudice pursuant to F.R.C.P. 41 (a) (2)
and directing the Clerk to enter judgment that

1) Disciplinary Rule 7-109C of the Lawyers'
Code of Professional Responsibility, as adopted

38a

APPENDIX D = JUDGMENT DATED AND ENTERED
AUGUST 12, 1976

by the New York State Bar Association, and that
rule as incorporated in Rule 603.2 of the Rules
of the Appellate Division, First Department, and
Rule 691.2 of the Rules of the Appellate Division,
Second Department, so far as the rule proscribes
the payment of reasonable fees for the profes-
sional services of expert witnesses if payment
of the fees is contingent upon the outcome of
the case, is unconstitutional; and that

2) plaintiff take nothing on counts ome and
two, and that those counts are dismissed against
all defendants, with costs as taxed by the Clerk,
it is

ORDERED and ADJUDGED that

1) Disciplinary Rule 7-109C of the Lawyers
Code of Professional Responsibility, as adopted
by the New York State Bar Association, and that
sulle as inncepcented in Rule 603.2 cf the Rules
of the Appellate Division, First Department, and

39a

APPENDIX D = JUDGMENT DATED AND ENTERED
AUGUST 12, 1976

Rule 691.2 of the Rules of the Appellate
Division, Second Department, so far as the rule
proscribes the payment of reasonable fees for the
professional services of expert witnesses if
payment of the fees is contingent upon the out-
come of the case, is unconstitutional; and that
2) plaintiff take nothing on counts one and
two, and that those comts are dismissed against
all defendants with costs as taxed by the Clerk.

Dated: Brooklyn, New York
August 12, 1976

‘LEWIS ‘ORGEL
fs/

By? is/ ‘THOMAS ‘BLASTELLO

Approved: August 12, 1976

_/8/ JOHN F, -DOOLING, JR.
ae

40a

APPENDIX E = OPINION OF CIRCUIT JUDGE SMITH OF
THE SECOND CIRCUIT, DATED APRIL 29, 1977

UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT

No. 590 = September Term, 1976
(Argued March 8, 1977 Decided April 29, 1977.)
Docket No. 76-7457

CARL E, PERSON
Plaintiff-Appellee,

Ve

THE ASSOCIATION OF THE BAR OF THE CITY

Appeal from a summary declaratory judgment
in the United States District Court for the
Eastern District of New York, John F. Dooling,
Jr., Judge, declaring unconstitutional
Disciplinary Rule 7-109C of the Lawyers’ Code of

4la

APPENDIX E = OPINION OF CIRCUIT JUDGE SMITH OF
THE SECOND CIRCUIT, DATED APRIL 29, 1977

Professional Responsibility as incorporated in
the Rules of the Appellate Division of the First
Department and the Second Department of the
Supreme Court of New York, Reversed,

CARL E. PERSON, New York, N.Y.,

Appellee Pro Se.
SMITH, Circuit Judge:

The Supreme Court, Appellate Division, First
Department, Supreme Court, Appellate Division,
Second Department, and the Attorney General of
the State of New York, defendants below, appeal
from a summary declaratory judgment in the United
States District Court for the Eastern District of
New York, John F. Dooling, Jr.; Judge, which
declared unconstitutional Disciplinary Rule
7-109C of the Lawyers’ Code of Professional

42a

APPENDIX E = OPINION OF CIRQUIT JUDGE SMITH OF
THE SECOND CIRCUIT, DATED APRIL 29, 1977

Responsibility ("DR 7-109C"). ‘This rule has been
adopted by the New York State Bar Association and
incorporated in Rule 603.2 of the Rules of the
Appellate Division, First Department, and Rule
691.2 of the Rules of the Appellate Division,
Second Department The rule was declared
unconstitutional insofar as it proscribes the
payment by attorneys of reasonable fees for the
professional services of expert witnesses if

payment of the fees is contingent upon the
quteane of the conn.” We reverse.

The sole issue on appeal is the constitution-
ality of DR 7-109C, Person having abandoned all
Claims except those specifically ruled upon by
the court below.”

New York Judiciary Law § 90(2) vests the
state supreme court with “power and control” over
lawyers and the practice of the law and authorizes
the appellate divisions to censure, suspend from

43a

APPENDIX E = OPINION OF CIRCUIT JUDGE SMITH OF
THE SECOND CIRCUIT, DATED APRIL 29, 1977

practice, or to disbar lawyers who are guilty of
professional misconduct or conduct prejudicial to
the administration of justice. Such misconduct
is defined by § 603.2 of the Rules of the First
Department and § 691.2 of the Rules of the
Second Department to include violations of any
disciplinary rule of the Code of Professional
Responsibility as adopted by the State Bar
Association, including DR 7-109C,

Plaintiff-appellee, Carl E. Person, is the
attorney for ten plaintiffs in an antitrust
action in the Southern District of New York,
‘National Auto Brokers Corp, v. General Motors
‘Corp, (70 Civ, 5421), the "Nabcor action," in
which plaintiffs are seeking $300,000,000 in
denages.” vececn alleges; inter ‘alia, that he is
unable to prosecute the Naboor action because
neither National Auto Brokers Corp. nor any of
the other plaintiffs in the suit, can afford

44a

APPENDIX E =~ OPINICN OF CIRCUIT JUDGE SMITH OF
THE SECOND CIRCUIT, DATED APRIL 29, 1977

adequate expert testimony in the fields of
accounting, franchising, financing and economics,
unless he is permitted to retain experts on a
contingent fee basis, a practice not permitted
under DR 7-109C, His specific allegations have
been set out by the court below, Person ‘v.
Association of the Bar of the City of New York,
414 F. Supp. 139, 140 (E.D.N.Y. 1976).

The district court granted summary judgment
because it found that DR 7-109C foreclosed a
lawyer's effort to cbtain expert testimony. The
court agreed that in the Nabcor action, Person
had demonstrated that he was unable to obtain
needed accounting and economic testimony because
of his clients’ lack of funds and the inhibition
of the disciplinary rule, and that he was
therefore rendered less effective than, in his
judgment, he would have been if he were able to

seek out expert testimony on a contingent fee

45a

APPENDIX E = OPINION OF CIRCUIT JUDGE SMITH OF
THE SECOND CIRCUIT, DATED APRIL 29, 1977

basis. In addition to a litigant's interest in
having genuine access to the court, the attorney,
the court held, had an interest in being able
freely to seek out and contract on a contingent
fee basis with qualified experts where that is
the only or most appropriate way in which a client
can afford to retain expert services, It found
that no basis in reason exists for rejecting a
reasonable fee arrangement simply because the
fee will not be paid if the client does not
prevail in the case. Person 'v, ‘Association of
the Bar, 414 F, Supp. 144 (E.D.N.Y, 1976). ‘The

46a

APPENDIX E = OPINION OF CIRCUIT JUDGE SMITH OF
THE SECOND CIRCUIT, DATED APRIL 29, 1977

case, be disproportionate to the merely
conjectured probability of occurrence of
the wrong aimed at. (414 F. Supp. at 146).

The court cited Boddie v. Connecticut, 401 U.S.

371, 377, 379-380 (1971), and Winters v, Miller,
446 F.2d 65, 71 (24 Cir.), cart. denied, 404
U.S. 985 (1971), in support of its holding, and

entered summary judgment declaring
Rule 7-109C ctieestiiabtens

I.

Jurisdiction below is based on 28 U.S.C. §
1342(3), 42 U.S.C. § 1983, and on 28 U.S.C. §
2201. Before proceeding to the merits, we first
address" Eppellants' claims that the court lacks
subject matter jurisdiction because no case or
controversy exists, and that the Appellate
Division defendants are not “persons” within the

meaning of the Civil Rights Act.
The disciplinary rule at issue has been

47a

APPENDIX E =~ OPINION OF CIRCUIT JUDGE SMITH OF
THE SECOND CIRCUIT, DATED APRIL 29, 1977

incorporated into the laws of the State of New
York. Payment by an attorney of contingent fees
for expert testimony, offers to pay, or
acquiescence in the payment of contingent fees,
are all forbidden under DR 7-109C, The district
court concluded that "(t)he Rule, unless ignored,
must of itself foreclose a lawyer's effort to
obtain expert testimony and go far to deny to
the lawyer the opportunity to demonstrate the
availability of such testimony. ..." 414

F. Supp. at 145, The underlying action is still
permding and the present claim may well determine
the plaintiff's ability to pursue it. Since
there is no reason to assume that the rule will
not be enforced, we find a substantial contro-
versy of sufficient immediacy to warrant the
lasuance of a declaratory judgment. ° golden
‘‘v, Dwickler, 394 U.S. 103, 108 (1969).

State disciplinary and disbarment pro-

48a

APPENDIX E = OPINION OF CIRCUIT JUDGE SMITH OF
THE SECOND CIRCUIT, DATED APRIL 29, 1977

ceedings have been held comparable to criminal
proceedings. In re Ruffalo, 390 U.S. 544, 551
(1968). Because the threat of disciplinary
action is real but state proceedings have not
yet been instituted which would prevent federal
review under Younger v. Harris, 401 U.S. 37

(1971), and Anonymous ‘v. Association of the Bar
of the City of New York, 515 F.2d 427, 430 (2d

Cir.), cert. denied, 423 U.S. 863 (1975), this
is an appropriate time for a declaratory
judgment. Doran 'v. Salem Im, Inc., 422 U.S.
922, 930-31 (1975).

We hold further that this suit for declara-
tory relief is maintainable against defendants-
appellants under 42 U.S.C. § 1983, Although a
judge exercising his judicial function is not
liable for damages under 42 U.S.C. § 1983,

Pierson v. Ray, 386 U.S, 547, 553-55 (1967), the

immmity of judges has been held in a mmber of

49a

APPENDIX E = OPINION OF CIRCUIT JUDGE SMITH OF
THE SECOND CIRCUIT, DATED APRIL 29, 1977

cases not to extend to actions for injunctive
relief. - Littleton v. Berbling, 468 F.2d 389,
406-07 (7th Cir. 1972), rev'd ‘on ‘other grounds

- ‘gub ‘nom, ‘O'Shea ‘v. ‘Littleton, 414 U.S. 488
(1974); Exdmann‘v. Stevens, 458 F.2d 1205, 1210
(2a Cir.) ; ‘cert. ‘denied, 409 U.S. 889 (1972);
Law Students Civil Rights Research ‘Council; ‘Inc.
ye Wadmond, 299 F. Supp. 117, 123 (S.D.N.¥. 1969)
(three-judge court), aff'd on other ‘grounds,

401 U.S. 154 (1971)

It.

The district court held that an attorney has
a right to retain experts on a contingent fee
basis whenever this is appropriate for the most
effective prosecution of a civil action. It.
held further that an attormey's clients have a
fundamental right of access to the courts, citing
‘ Boddie and Winters, and found that appellee's

$i..£.

50a

APPENDIX E = OPINION OF CIRCUIT JUDGE SMITH OF
THE S_OOND CIRCUIT, DATED APRIL 29, 1977

clients were deprived of this right of access
through the operation of DR 7-109C, ‘The rule,
the court held, had no rational justification and
was therefore unconstitutional under the
fourteenth amendment.

We find the court's reliance on Roddie and

Winters misplaced. The fundamental nature of

the marriage relationship and the exclusiveness
of the courts as a means for dissolving that
relationship were central to the Court's
decision in Boddie. Justice Harlan, writing for
the Court, painted out that the Court went “no
further than necessary to dispose of the case
before us" and did not decide that access for
all individuals to the courts is a right that is,
in all circumstances, guaranteed by the due
process Clause of the fourteenth amendment,

401 U.S. at 382-83, The Supreme Court has
Upheld a filing fee for indigents seeking a

5ia

APPENDIX E - OPINION OF CIRCUIT JUDGE SMITH OF
THE SECOND CIRCUIT, DATED APRIL 29, 1977

discharge in bankruptcy. * ‘United ‘States ‘v. ‘Kras,
409 U.S. 434 (1973). It held that since
bankruptcy was a legislatively created benefit,
no constitutional right of access to bankruptcy
proceedings existed. In contrast to the fimda-
mental rights at stake in Boddie, bankruptcy
involves economic rights which the court held
were not fundamental. The Court also based its
decision in Kras on the availability of alter-

nate means for the adjustment of legal relations
with creditors. Since it found no fundamental
interest at stake in bankruptcy, it held that
the proper standard for reviewing applicable
legislation was the existence of a “ratimal
justification." 401 U.S. 444-47.

’ Winters v. Miller, ‘supra, was decided two
years before Kras. Winters upheld the right of
access to a court by a plaintiff seeking damages
for the infringement of rights guaranteed under

52a

APPENDIX E — OPINION OF CIRCUIT JUDGE SMITH OF
THE SECOND CIRCUIT, DATED APRIL 29, 1977

the first amendment.
Here we have no denial of access—plaintiffs
are in court and have already engaged in exten-
sive litigation. Seite Willin in hak ee when
place an insuperable obstacle in the way of
successful presentation of their position on
trial. It may be conceded that litigatio of
difficult and complex matters by persons with
small individual stakes in the outcome may be
aided and encouraged by elimination of the
prohibition against the hiring of experts whose
fees may be contingent upon the results. We are
not convinced, however, that there is no
danger of the inducement of false expert
testimony by such contingency arrangements.
The legislature has made a judgment that
the need for discouragement of contingent fee
arrangements outweighs the obstacle to financing
litigation which a ban on contingent fees may

53a 54a

APPENDIX E = OPINION OF CIRCUIT JUDGE SMITH OF | APPENDIX E = OPINION OF CIRCUIT JUDGE SMITH OF
THE SECOND CIRCQUIT, DATED APRIL 29, 1977 | THE SECOND CIRCUIT, DATED APRIL 29, 1977
create. We cannot say that this legislative pee legal business which the Supreme Court struck
judgment is irrational. The extent of the | down in NAACP v. Button, 371 U.S. 415 (1963),
“obstacle and the weight to be given its existence cited by appellee. In contrast to the Virginia
when balanced against the likelihood of false statute invalidated in NAACP v. ‘Button, the New
testimony and unfair results from permitting the York disciplinary rule is specific, not subject
procurement of expert testimony by the offer of to selective enforcement because of vagueness,
a stake in the outcome are matters of judgment and its effect on first amendment rights, if
best conficed to legislative and juiicial any, is remote, DR 7=-109C does not deny
bodies of the state. | attorneys or their clients access to the courts
©e We think that the interest in treble damage e — it merely forces attorneys and litigants to
antitrust claims of persons with little at stake finance the payment of experts in a manne: not
individually is more closely akin to the related to the outcome of the litigation. Courts
legislatively created interest in the shedding | have for centuries possessed disciplinary powers
of debt obligations through bankruptcy of Kras | incident to the administration of justice.
than to the fundamental interest of an individual | ‘NAACP v. Button, supra, 371 U.S. at 456 (Justice
in the marriage relationship which was before | Harlan dissenting). DR 7-109C is a proper
the Court in Boddie. ¢ exercise of such a power.
The New York rule is not analogous to a We also reject appellee's argument that the

Virginia statute regulating the solicitation of incidental economic burden placed on same

55a

APPENDIX E = OPINIOGN OF CIRCUIT JUDGE SMITH OF
THE SECOND CIRCUIT, DATED APRIL 29, 1977

litigants by DR 7-109C constitutes a violation
of the equal protection clause of the fourteenth
anendment. Strict scrutiny of a legislative
Classification is required for equal protection
determination only when the classification
impermissibly interferes with the exercise of a
fundamental right or operates to the peculiar
disadvantage of a suspect class, Massachusetts
Board of Retirement v. Mirgia, 427 U.S. 307
(1976); San Antonio School ‘District ‘v. ‘Rodriquez,
411 U.S. 1, 17 (1973). Classifications in the
area of economics and social welfare have been
held not to constitute such suspect classifica-
tions. Ortwein'v. Schwab, 410 U.S. 656, 659
(1973); Dandridge v. Williams, 397 U.S. 471,
485-86 (1970). In the absence of interference
with a fundamental right of access or a suspect
classification, the relevant standard of review
is the rationality of the New York rule,

56a

APPENDIX E = OPINION OF CIRCUIT JUDGE SMITH OF
THE SEOOND CIRCUIT, DATED APRIL 29, 1977

Massachusetts Board of Retirement ‘v. ‘Murgia,

‘supra, 427 U.S. at 312; McGowan v, Maryland, 366

U.S. 420, 425 (1961).

States have a compelling interest in
regulating the conduct of professionals who
practice within their borders, The interest in
regulating lawyers is especially great because
lawyers are essential for the functioning of the
administration of justice. Goldfarb v. Virginia

‘State Bar, 421 U.S. 773, 792 (1975). In New

York the legislature has expressly provided that
the judiciary has the power to regulate attorneys,

People ex rel, Karlin v, Culkin, 248 N.Y. 465,

472-77 (1928); Judiciary Law § 90(2). Disciplin-
ary Rule 7-109C was promilgated to insure that
judicial proceedings in New York were free of
false testimony which might result if expert
witnesses were paid on a contingent fee basis.
Expert testimony, by its very nature, concerns

57a

APPENDIX E = OPINIOCN OF CIRCUIT JUDGE SMITH CF
THE SECOND CIRCUIT, DATED APRIL 29, 1977

areas of knowledge with which the ordinary juror
and the court are unfamiliar, and perjured expert
testimony is particularly difficult for a juror
to detect. New York has adopted DR 7=109C to
lessen the likelihood of false expert testimony.
The rule is not invalid because it cannct pre-
vent all perjured expert testimony. New York
may tackle a problem one step at a time.

‘ Williamson v. Lee Optical Co., 348 U.S. 483,
489 (1955). "(A court’s) procedure does not nm
afoul of the Fourteenth Amendment because
another method may seem to our thinking to be
fairer or wiser. . . ."' Snyder 'v, Massachusetts,
291 U.S. 97, 105 (1934).

Person has advanced arguments why it might
be desirable to alter the present rule in order
to facilitate litigation by less affluent
litigants. He points out that cross-examination
would reveal whatever financial stake a witness

58a

APPENDIX E = OPINION OF CIRCUIT JUDGE SMITH OF
THE SECOND CIRQUIT, DATED APRIL 29, 1977

has in the outcome of litigation. He notes that
experts often have ongoing business relationships
with the parties who retain them and therefore,
in an indirect sense, frequently have a stake in
the outcome of litigation although their fee is
not contingent and thus not covered by DR 7-109,
Other experts, although retained on a "fixed fee"
basis, often do not expect to receive payment
unless the party for whom they testify is success-
ful. ‘These are factors which may indicate the
Gesirability of legislative change, but they do
not constitute sufficient grounds for invalidat-
tog the curzent canon ox mule.”

New York Disciplinary Rule 7-109C does not
affect a fundamental right nor create a suspect
Classification. We hold that it has a sufficient
rational basis to withstand a constitutional
challenge under the equal protection and due
process clauses of the fourteenth amendment.2/

59a ! 60a
APPENDIX E = OPINION OF CIRCUIT JUDGE SMITH OF APPENDIX E = OPINION OF CIRCUIT JUDGE SMITH OF
THE SECOND CIRCUIT, DATED APRIL 29, 1977 THE SECOND CIRCUIT, DATED APRIL 29, 1977
The judgment is reversed and the complaint ‘2/ The Code of Professional Responsibility
dismissed, was adopted by the American Bar Association on
August 12, 1969 and became effective January 1,
‘Footnotes 1970, McKinney's Consol. Laws of N.Y., Book
‘1/ Disciplinary Rule 7-109C states: 29, Judiciary Law, Appendix at 351, 499. The
A lawyer shall not pay, offer to pay, or Association of the Bar of the City of New York,
acquiesce in the payment of campensation a defendant below, has not taken a separate
to a witness contingent upon the content appeal, It views itself as an investigative
of his testimony or the outcome of the . and prosecutorial agency of the First

case, But a lawyer may advance, guarantee, ; Department, (First Department Rules, § 603.4).
or acquiesce in the payment of: Appellants’ Brief at 2.
1, Expenses reasonably incurred by a
witness in attending or testifying. ‘3 Person moved to convene a three-judge
2. Reasonable compensaticn to a witness district court below to declare unconstit.-
for his loss of time in attending or tional those sections of the New York
testifying. Judiciary Law which forbid the transfer for
3. A reasonable fee for the professional - value of shares in rights in action and the
services of an expert witness. retention of expert witnesses whose fee is

contingent on the outcome of the suit. This

61a

APPENDIX E = OPINION OF CIRCUIT JUDGE SMITH OF
THE SECOND CIRCUIT, DATED APRIL 29, 1977

motion was denied below, Person ‘vy. ‘Associa-
' tion ‘of ‘the Bar of ‘the City of New York, 414
F, Supp. 139 (£.D.N.Y. 1976). Person then

moved for a summary declaratory judgment
solely on the issue of the validity of

DR 7-109C,
‘ 4/ See published opinions in Nabcor action:
332 F. Supp. 280 (S.D.N.Y. 1971); 60 F.R.D.
© 476 (1973); 376 F. Supp. 620 (S.D.N.Y. 1974).
' 5/ Person has moved pursuant to Fed, R,

Civ. P. 41(a) (2) to dismiss all claims not
adjudicated by grant of the summary judgment.
The court granted his motion and entered
summary judsment declaring DR 7=109C
unconstitutional on August 12, 1976 in
accord with its Memorandum and Order of June
25, 1976, Joint Appendix 177-79.

62a

APPENDIX E = OPINION OF CIRCUIT JUDGE SMITH OF
THE SECOND CIRCUIT, DATED APRIL 29, 1977

' 6/ Appellants argue that "DR 7-109C does

not and did not prevent plaintiff from
arranging with an expert to testify am a
contingent fee basis provided DR 7-109C was
declared unconstitutional." Appellants'
Brief at 8. This argument is circular and
without merit. It is the costitutionality
of the rule which is at issue in this case.

a In Wadmond, the Supreme Court of New

York and two of its Appellate Divisions were
named as defendants and were held to be
suable for injunctive relief. (Opinion by
Judge Friendly.)

* 8/ See Recent Developments ‘in Attorneys'

* Fees, 29 Vand. L.R. 685, 710-16 (1976); F.
Michelman, Litigation ‘Access ‘Fees, 1973
Duke L.J. 1153, 1160.

63a

APPENDIX E = OPINION OF CIRCUIT JUDGE SMITH OF
THE SEOOND CIRCUIT, DATED APRIL 29, 1977

' 9/ We do not reach any questicn which
might be raised were the state rules

arguably in conflict with the federal rules.

64a

APPENDIX F = ORDER OF SECOND CIRCUIT DATED JUNE
14, 1977, DENYING PETITION FOR REHEARING

UNITED STATES COURT OF APPEALS

“ene or eae

At a Stated Term of the United States Court
of Appeals, in and for the Second Circuit, held
at the United States Court House, in the City of

HON, J. JOSEPH SMITH,
HON, WILLIAM H. MILLIGAN,
| Circuit Judges.

Carl E. Person,
Plaintiff-Appellee,
Ve

The Association of the Bar of the City of
sion, First Department, Supreme Court, 76=7457

Appellate Division, Second Department,
and Attorney General of New York State,

Defendants-Appellants.

65a 66a
APPENDIX F - ORDER OF SECOND CIRCUIT DATED JUNE APPENDIX G = ORDER OF SECOND CIRCUIT DATED JUNE
14, 1977, DENYING PETITION FOR REHEARING 14, 1977, DENYING PETITION FOR REHEARING EN BANC
A petition for a rehearing having been filed UNITED STATES COURT OF APPEALS
herein by counsel for the appellee, SECOND CIRCUIT

Upon consideration thereof, it is

Ordered that said petition be and it hereby At a stated term of the United States Court

Of Appeals, in and for the Second Circuit, held

Vv.
The Association of the Bar of the City of

is DENIED.
at the United States Court House, in the City of
/s/ A DANIEL FUSARO New York, on the fourteenth day of June, one
A. DANIEL FUSARO thousand nine hundred and seventy-seven.
Clerk -
Carl E, Person,
©@ e Plaintiff-Appellee,

Division, Second Department, 76-7457
and Attorney General of New York State,

Defendants~Appellants.

-_
A petition for rehearing containing a
suggestion that the action be reheard en banc
having been filed herein by counsel for the

appellee, and no active judge or judge who was

67a

APPENDIX G = ORDER OF SECOND CIRCUIT DATED JUNE
14, 1977, DENYING PETITION FOR REHEARING EN BANC

a member of the panel having requested that a
vote be taken on said suggestion,
Upon consideration thereof, it is
Ordered that said petition be and it
hereby is DENIED.

_.Jg/ IRVING -R. -KAUFMAN
IRVING R, KAUFMAN, Chief Judge

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385004_2520%3A1. Public record. Not legal advice.