Petition — Sargent-Welch Scientific Co. v. Ventron Corp.

Supreme Court, U.S.

FILED

/ MAY 1 1978

IN THE .

Supreme Court of the Unit ODAK, JR., CLERK

THE AETNA CASUALTY AND SURETY COMPANY, AETNA

INSURANCE COMPANY, AMERICAN EMPIRE INSUR-

ANCE COMPANY, COMMERCIAL UNION INSURANCE

COMPANY, COMPAGNIES D’ASSURANCES DU GROUPE

CONCORDE, CONTINENTAL CASUALTY COMPANY,

EMPLOYERS MUTUAL LIABILITY INSURANCE COM-

PANY OF WISCONSIN, HARTFORD FIRE INSURANCE

COMPANY, INDUSTRIAL INDEMNITY COMPANY,

MARYLAND CASUALTY COMPANY, RELIANCE INSUR-

ANCE COMPANY, ROYAL INDEMNITY COMPANY,

ST. PAUL FIRE AND MARINE INSURANCE COMPANY,

SECURITY INSURANCE COMPANY OF HARTFORD,

THE TRAVELERS INDEMNITY COMPANIES, UNDER-

WRITERS AT LLOYDS AND ASSOCIATED BRITISH

INSURANCE COMPANIES, UNITED STATES FIDELITY

AND GUARANTY COMPANY, UNITED STATES FIRE

INSURANCE COMPANY AND ZURICH INSURANCE

COMPANY,

Petitioners,

v.

UNITED STATES OF AMERICA,

and

Respondent,

BERNARD C. GROSECLOSE, ALDEN E. HARE, WILLIAM

L. HOGAN AND DENNIS L. HUNTER,

Defendants.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR

THE FOURTH CIRCUIT

Water E. RuTHERFORD

One State Street Plaza

New York, New York 10004

Counsel for Petitioners

7" =). ",? ".

TABLE OF CONTENTS

Citations to Opinions Below ......................

I ERC SUENG 53 506.0905 04 bode Caccec heeds sas

SS Sere eee pre

IED Give depletes ba 6udaes <ddcbancaves

ED sn cicnncccesecnenessiees voce

Reasons for Granting the Writ ....................

1. Appeals should not be allowed by a disquali-

fied attorney or by a party who has not been

aggrieved by the order of disqualification

. The Circuit Court failed to adhere to accepted

standards in reviewing the disqualification

SE 6 A6 65 oR SRS NURS 6 ch cd aden neh’ Wekec ac

A. Failure to adhere to the abuse of dis-

cretion standard of review ..............

B. Failure to require a record of informed

GEE Ss ced ede vededidettecdevesecteces

C. An actual conflict does not have to exist in

order to warrant disqualification ........

I Wt Wind. i, ca cun bs kunsebecdbdaeetebes

SEE hack gdp vendadaneedesauess ens

Appendix B—Record of the proceedings before the

oo wo DW Ww

11

Al

district court and the Court of Appeals A10

‘i TABLE OF AUTHORITIES

* (CrraTions

Cases PAGE

Akerly v. Red Barn System, Inc., 551 F.2d 539 (3d

Che. IOUT) onc cc cccccccccccnscccecccccccsccrss 20

Allegaert v. Perot, 565 F. 2d 246 (2d Cir. 1977) .... 17

American Roller Co. v. Budinger, 513 F. 2d 982 (3d

| ) Pee 19

Armstrong v. New La Paz Gold Mining Co., 107 F. 2d

453 (9th Cir. 1939) ......---eeeerereererttes 12

Brown v. Grand Trunk Western R. Co., 124 F. 2d

1016 (6th Cir. 1941) ......---ee eee e eee ee rene 15

Brown & Williamson Tobacco Corp. Vv. Daniel Inter-

national Corp., 563 F. 2d 671 (5th Cir. 1977) .. 20

City of Inglewood v. Unnamed Citizens, Residents

& Owners of Propertu Within the City of Ingle-

wood, 508 F. 2d 1283 (9th Cir. 1974) ......---- 16

De Korwin v. First National Bank, 235 F. 2d 156 (7th

Cir. 1966) ..ccccccccccccccccccccnccccersseses 15

Estates Theatres, Inc. v. Columbia Pictures Indus-

tries, Inc., 345 F. Supp. 93 (S.D.N.Y. 1972) .... 30

Farmers’ Loan & Trust Co. v. Waterman, 106 U. S.

265, 1 S. Ct. 131, 27 L. Ed. 115 (1882) .......-- 13

First Iowa Hydro Electric Corp. v. lowa-Illinois Gas

& Electric Co., 245 F. 2d 630 (8th Cir.), rehearing

denied 355 U. S. 921, 78 S. Ct. 339, 2 L. Ed. 2d

QB (IDET)... wc wccccccccccccvcccccccescccres 15

Fox v. Allegheny Airlines, Inc. (S.D. Ind. 1972) .... 30

Fred Weber, Inc. v. Shell Ow Co., 566 F. 2d 602 (8th

oe) PPPrrrr rrr 16, 17

Fuller v. Branch County Road Commission, 520 F. 2d

307 (6th Cir. 1975) ....----eeeereeerrerrree ee 12

TABLE OF AUTHORITIES iii

a PAGE

mer v. Harper, 517 F. 2d 20 (10th Cir. 1975) ....24, 26

spl ny of Arizona v. Union Oil Company of Cali-

) oa 534 F. 2d 1322 (9th Cir.), cert. denied

S. 861, 97 S. Ct. 164, 50 L. Ed. 24 139

ig Sg EE SS Ted ee ae 17, 18, 31

Greene v. Singer, 461 F. 2d 242 (3d Cir.) cert. denied

409 U. S. 848, 93 § D

roo . Ct. 54, 34 L. Ed. 2d 89

a Trust Co. v. Cornucopia Mines Co., 22%

F. 404 (9th Cir. 1915), cert. denied, 239 U. $

, 36 S. Ct. 161, 60 L. Ed. 482 (1915) ........ 11,12

Hawley v. Hawley, 114 F. 24 505 (D. C. Cir. 1940) 12

Hendricks v. Leslie Fay. I

ia ee Cs , Inc., 273 N. C. 59, 159 S.E.

Hull v. Celanese Corp., 513 F. 2d 568 (2d Cir.1975).. 16

Ingram v. Garner, 16 N.C. App. 147, 191 S.E. 2d

& SET Sei ae 29

In . Air Crash Disaster at Charlotte, North ee

; na, 393 F. Supp. 1404 (J.P.M.D.L. 1975) ......21,2

n re Gopman, 531 F. 2d 262, reheari “~~

, 931 F. 2 aring en banc deni

542 F. 24 575 (5th Cir. 1976). 46.90, 30 31

In re Investigation Befor | ee

e April 1975 Grand J

531 F. 2d 600 (D.C. Cir. 1976) ........... 14.95

In re Investigation Before F

, ebruary 1977 Lynchbu

Grand Jury, 563 F. 2d 652 (4th Cir. 1977) .... "7, 18

In re Phoenix Dress Co., 131 F. 24 726 (7th Cir. 1942) 12

International Brotherhood of Teumsters, Local 523 v.

Keystone Frei

oa) reight Lines, 123 F. 2d 236 (10th Cir.

iv TABLE OF AUTHORITIES

PAGE

International Electronics Corp. V. Flanzer, 527 F. 2d ve

1288 (2d Cir. 1975) ....---eeeeeeee rere tet

Kreda v. Rush, 550 F. 2d 888 (3d Cir. 1977) ....16, 20, 25

Kroungold v. Triester, 521 F. 2d 763 (3d Cir. 1975) .- 19

Lewis v. United States, 216 U. S. 611, 30 S. Ct. 438, 54 "

L, Eid. 637 (1910) ...---.eeceeeeeeeee eter eeee

Meat Price Investigations Association vy. Spencer

Foods, Inc., No. 77-1605 (8th Cir. filed Mar. 3,

MOTB). ccuccccccvccecvicccestecctenesssseons 17

Mayer v. National Missile & Electronics, Inc., 326 =

F. 2d 401 (9th Cir. 1964) ....-----6 + cereeees

Melamed v. ITT Continental Baking Co., 534 F. 2d

82 (6th Cir. 1976) .....----e cere eereeererte es 25, 26

Mount Vernon Sav. Bank v. Wardmen, 173 F. 2d 648

(D.C. Cir. 1949) ......- cee eee eee reer ereceees 12

Redd v. Shell Oil Co., 518 F. 2d 311 (10th ee =

RUUD). .vccscntscnvecdecessnnbpeeeananeenaess i

Richardson v. Hamilton International Corp., 469 F. 2d

1382 (3d Cir. 1972), cert. denied, 411 U. S. 986,

98 S. Ct. 2271, 36 L. Ed. 2d 964 (1973) .....--- 17,19

Schloetter v. Railroc of Indiana, Inc., 546 F. 2d 706 _

(Tth Cir. 1976) ...-...ceeeeeeeee cere reeeeeres 16,

Steele v. Moore-Flesher Hauling Co., 260 N. C. 486, in

133 S.B. 2d 197 (1963) ......- eee eee eee rere

Tucker v. Shaw, 378 F. 2d 304 (2d Cir. a 31

United States v. Clarkson, 567 F. 94 270 (4th Cir. .

(IDET)... crccccccccvccsscescecsovenscsooeses 18,

United States v. Seigel, 168 F. 2d 143 (D.C. Cir. si

SGTD .vaucccvegenchvensunenabinasiurneceiie !

TABLE OF AUTHORITIFSs

Vv

| PAGE

United States vy. Trafficante, 328 F. 2d 117 (5th Cir.

MMENDRGistsetdecctces oocceces.. 18

Utility Contractors Association vy T

. Toops, |

83 (3d Cir. 1974) Maik 12

Woods v. Covington County Bank, 537 F. 24 804 (5th

PN PING USeNSexbbcscacce.... 19, 20

STaTUTES AND MISCELLANEOUS

ABA Code of Professional Responsibility :

he Gis soe tnaseksce.cc:.. 19

8 20

28 C.F.R. §§ 50.15-50.16 SE ee 9, 12, 24

H. Drinker, Legal Ethics ae 31

Federal Bar Association: Federal Ethical Consid-

erations 4-', 42, 5.1 (adopted November 17

SS a ie 30

DES en en 32

Judge Orrin G Judd, Conflicts of I

in G. nterest—A Trial

Judge’s Notes, 44 Fordham L. Rev. 1097 (1976) 34

Meyers, Ethical Considerations in the Representation

of Multiple Creditors Against a Single Debtor

51 Am. Bankr. L. J. 19 (1977) .

North Carolina Contribution Among Joint Tort-Feas-

ors Act, N. C. Gen. Stat. $$ 1B-1 to 1B-6

North Carolina State Bar Code of i

rolit Professional Re-

sponsibility, 44 N.C. Gen Stat

GOTT Gane) - Append. VII

vi TABLE OF AUTHORITIES

PAGE

Canon 1

BEL DU. wabéne (ogede cacccegveucéucnesetes 32, 33

BD cn cncccocdansenssencteccestunt 30, 32, 33

Te, BEAMS) cctvccccccdccscocsedeust 32

Canon 5:

EE GME cdvicceccvcveasecsasdncveesetaene 33

TE, BB ibs do sieddte ctcadds ceviécasndsene 27

RS epererrrrerrr Tier tr. 8, 27, 28

PG, BROS ccocccocccvcessccdecduduans 24

ED fo cc accsececcecséecsecendeunt 33, 39

BA, BED cc cccedbcncccibecccesce. sec 24

PE RD. ob seGidecuddse dbusescséet 5, 8, 27

DR, BEE oe cvcccccvesicciiess cdesees 10, 27

Canon 7:

Ey THEE cdodewes coesaceeesHensheosnences 33, 34

Poirier, The Federal Government Lawyer and Pro-

fessional Ethics, 60 A.B.A.J. 1541 (1974) ...... 30

Representation Committee of the General Litigation

Section, Civil Division, Report to the Assistant

Attorney General on Representation of Govern

ment Employees in Civil Litigation (March 21,

SEED ctasd cocccccdonedondéecde ccescddsdsccacs 21, 22

Schnapper, Legal Ethics and the Government Law-

yer, 32 The Record 649 (1977) ............++. 24

Thode, The Duty of Lawyers and Judges to Report

Other Lawyers’ Breaches of the Standards of

the Legal Profession, 1976 Utah L. Rev.95 .... 31

Se err 32

Van Graafeiland, Lawyer’s Conflict of Interest—A

Judge’s View, 50 N.Y.S.B.J. 101 (1978) ....... 10

IN THE

Supreme Court of the United States

OCTOBER TERM, 1977

>

THE AETNA CASUALTY AND SURETY COMPANY, AETWA

INSURANCE COMPANY, AMERICAN EMPIRE INSUR-

ANCE COMPANY, COMMERCIAL UNION INSURANCE

COMPANY, COMPAGNIES D’ASSURANCES DU GROUPE

CONCORDE, CONTINENTAL CASUALTY COMPANY,

EMPLOYERS MUTUAL LIABILITY INSURANCE COM.

PANY OF WISCONSIN, HARTFORD FIRE INSURANCE

COMPANY, INDUSTRIAL INDEMNITY COMPANY,

MARYLAND CASUALTY COMPANY, RELIANCE INSUR.

ANCE COMPANY, ROYAL INDEMNITY COMPANY,

ST. PAUL FIRE AND MARINE INSURANCE COMPANY,

SECURITY INSURANCE COMPANY OF HARTFORD,

THE TRAVELERS INDEMNITY COMPANIES, UNDER.

WRITERS AT LLOYDS AND ASSOCIATED BRITISH

INSURANCE COMPANIES, UNITED STATES FIDELITY

AND GUARANTY COMPANY, UNITED STATES FIRE

INSURANCE COMPANY AND ZURICH INSURANCE

COMPANY,

Petitioners,

v.

UNITED STATES OF AMERICA,

Respondent,

and

BERNARD C. GROSECLOSE, ALDEN E. HARE, WILLIAM

L. HOGAN AND DENNIS L. HUNTER,

Defendants.

-

—

PETITION FOR A WRIT OF CERTIORARI! TO THE

UNITED STATES COURT OF APPEALS FOR

THE FOURTH CIRCUIT

Petitioners The Aetna Casualty and Surety Company,

et al. respectfully pray that a writ of certiorari issue to

review the judgment and opinion of the United States

Court of Appeals for the Fourth Circuit entered on Jan-

uary 31, 1978.

Citations to Opinions Below

The opinion of the Court of Appeals for the Fourth

Circuit, printed in Appendix B hereto, fra, has not as

yet been reported. The opinion of the United States Dis-

trict Court for the Western District of North Carolina,

Charlotte Division, printed in Appendix B hereto, infra,

has been reported in 438 F. Supp. 886.

Jurisdiction

The judgment of the Court of Appeals for the Fourth

Circuit was entered on January 31, 1978. A timely peti-

tion for a rehearing en banc was denied on March 9, 1978,

and this petition for certiorari was filed within ninety

days of that date.

Questions Presented

1. Whether the defendant United States of America has

standing to appeal an order disqualifying the United

States Attorney and the Department of Justice from rep-

resenting co-defendants.

2. Whether the standard of review of a Court of Ap-

peals in reviewing an order issued by a district court dis-

qualifying counsel from representing multiple defendants

whose interests conflict is limited to determining whether

the district court abused its permissible discretion.

3. Whether a record of an evidentiary hearing is neces-

sary in order for the Court of Appeals to reverse an order

of disqualification on the basis that no conflict of interest

existed, and that even if a conflict of interest was found

to exist that there was informed consent.

4. Whether an attorney representing multiple defend-

ants may be disqualified for a potential as opposed to an

actual conflict of interest.

Statute Involved

The statutory provisions involved are Disciplinary Rule

5-105 of the Code of Professional Responsibility of the

North Carolina State Bar, adopted by the Council of the

North Carolina State Bar on January 12, 1973, amended

April 13, 1973, and approved by the Supreme Court of

North Carolina on April 30, 1973, effective January 1,

1974. 4A N.C. Gen. Stat. Append. VII (1977 Supp.) re-

printed infra in Appendix A.

Statement of the Case

The Petitioners herein are the liability and hull insur-

ers of Eastern Air Lines, Inc. On September 11, 1974,

Eastern Air Lines Flight No. 212 crashed while on ap-

proach to landing at Douglas Municipal Airport, Char-

lotte, North Carolina. As a result of said accident, nu-

merous claims and lawsuits were filed against Eastern

Air Lines. Eastern’s liability insurers settled these claims

and lawsuits for $21,786,457.72 and its hull insurers paid

$3,281,000.00 for the destruction of said aircraft. In the in-

stant action, said liability and hull insurers seek indem-

nity and/or contribution from the respondents and the

named defendants on the ground that their negligence

caused and/or contributed to the subject accident.

Eastern Air Lines Flight 212 was an instrument flight

rules (IFR) aircraft that was approaching Douglas Mu-

nicipal Airport for a landing on September 12, 1974. As

the aircraft approached the airport it came under the air

traffic control jurisdiction of defendant Dennis L. Hunter,

who was an air traffic controller at the Charlotte approach

control facility operated by the Federal Aviation Admin-

4

istration (FAA). Mr. Hunter proceeded to issue radar

vectors to Eastern Flight 212 which were designed to align

the aircraft for a VOR instrument approach to runway 36

at the Douglas Muncipal Airport. In providing this

navigational guidance Mr. Hunter was required to observe

and monitor the flight path of Eastern 212 as reflected on

his radarscope. Mr. Hunter had available to him one of

the most advanced types of radar (known as ARTS III)

utilized by the FAA’s air traffic control system. The

ARTS ITI radar not only provided Mr. Hunter with a tar-

get return for Eastern 212, but also contained alpha-

numeric capability which presented on the radarscope the

flight designator for the aircraft, its altitude and ground

speed. Thus, Mr. Hunter had available to him a continual

visual print-out of Eastern’s altitude.

For reasons never clearly established, the crew of East-

ern Flight 212 conducted their approach at an altitude

below the normally prescribed altitudes for a VOR instru-

ment approach to runway 36. This deviation from nor-

mally prescribed altitudes continued until the aircraft

struck the ground approximately three miles prior to the

threshold of runway 36.

During the period of time that Eastern Flight 212 was

flying below prescribed altitudes, Mr. Hunter never told

the crew of Eastern Flight 212 that their aircraft was fly-

ing low, even though this information was visually pre-

sented to him on his radarscope. Instead of alerting the

crew to this unsafe condition, Mr. Hunter routinely relin-

guished air traffic control jurisdiction over the flight to

the local controller in the Charlotte Tower without any

advice as to the aircraft’s low altitude. The Charlotte

Tower was responsible for clearing aircraft for landing,

and at the time of the accident herein was under the com-

mand of defendant Bernard C. Groseclose.

In the Charlotte Tower, the local control position was

being manned by defendant Alden E. Hare. However,

5

since Mr. Hare was in a training status, he could not

work the position alone. Defendant William L. Hogan

was assigned to supervise Mr. Hare and was responsible

for monitoring Mr. Hare’s activities. Messrs. Hare and

Hogan had available to them a repeater radarscope which

displayed the same information as the ARTS ITI radar-

scope, including the position and altitude of Eastern Flight

212.

As Eastern Flight 212 continued its descent toward the

airport, radar separation was being provided to the air-

craft. When a controller provides radar separation he

must look at his radarscope and monitor the progress of

the flight. In spite of this duty to monitor the progress

of Eastern Flight 212, Messrs. Hare, Hogan and Hunter

never told the crew of Eastern Flight 212 that the aircraft

was too low on its approach path even though they con-

stantly had displayed to them on their radarscopes the

altitude of said aircraft.

The instant lawsuit was commenced on February 9, 1977.

On or about March 21, the individual defendants appeared

through the United States Attorney and the Department

of Justice and moved for summary judgment on the ground

that they possessed official immunity from suit (A. 12).

The petitioners responded to said motion for summary

judgment on May 2, 1977 (A. 14), and at the same time

cross-moved to disqualify the United States Attorney and

the Department of Justice from representing the indi-

vidual defendants on the basis that representation of all

defendants would violate Disciplinary Rules (DR) 5-105(A)

and 5-105(B) of the North Carolina State Bar Code of

Professional Responsibility in that the individual defend-

ants were potentially, if not actually, adverse parties (A.

*“A” references are to the Appendix filed in the Court of Ap-

peals. Petitioners have been advised by the Clerk of the Court of

Appeals, that the record below should not be forwarded to this

Court unless requested.

20).2, The Department of Justice filed a memorandum of

law in response to the motion to disqualify in which it

presented arguments to support its position of multiple

representation.

A hearing was held on both motions on May 17, 1977

(A. 56). At said hearing Judge James B. McMillan de-

nied the individual defendants’ motion for summary judg-

ment and an order to this effect was entered on May 19,

1977 (A. 84).

With respect to the motion to disqualify, Judge Mc-

Millan expressed his opinion at the May 17th hearing

that an ethical conflict appeared to exist, and he sug-

gested to the Government attorney that the Departm wat

of Justice reconsider its position and advise the Court in

30 days (A. 80).

On June 29, 1977, the Department of Justice wrote to

the district court requesting a rehearing on petitioners’

motion to disqualify (A. 87). On July 5, 1977, petitioners’

attorney wrote to the Court opposing said request for a

rehearing, and specifically objected to the Department of

Justice ‘‘meeting at length’’ with the individual controllers

after the district court expressed its opinion at the May

17th hearing as to the impropriety of respondent’s rep-

resentation of the individual defendants (A. 89).

A rehearing on the motion to disqualify was held on

July 25, 1977, at which a new Department of Justice at-

torney basically repeated the arguments advanced by re-

spondent at the May 17th hearing as to why it was proper

to have multiple representation (A. 91). Again, the dis-

trict court expressed problems with the Department of

Justice’s position and gave respondent ten days to re-

consider the matter and advise the Court (A. 109).

?The Code of Professional Responsibility, adopted by the

North Carolina State Bar, effective January 1, 1974, 4A N.C.

Gen. Stat. Append. VII (1977 Supp.).

a a

7

On August 3, 1977, petitioners’ attorney wrote to Judge

McMillan pointing out the apparent mistakes of law and

erroneous advice that the Justice Department was giving

to the individual defendants (A. 115). On the same date,

the Department of Justice advised Judge McMillan that

it had concluded that it was in the best interest of all

defendants, jointly and severally, that the Department of

Justice continue to represent the individual defendants

as well as respondent (A. 122).

On August 4, 1977, the district court filed a Memoran-

dum to Counsel wherein the parties were given to August

15, 1977 to ‘‘file any further evidence or briefs directed

to the plaintiffs’ motion’’ (A. 131). No further briefs or

evidence were filed by any party. The respondent never

filed any affidavits or other evidence in support of its

contention that multiple representation had been agreed

to and given on the basis of informed consent.

On or about August 18, 1977, respondent finally filed its

answer to the complaint after a motion to compel had been

filed by the petitioners (A. 133). The individual defend-

ants have never answered the complaint, and currently

are in default.

On October 14, 1977, the district court filed its opinion

finding ‘‘that there is a conflict of interest between the in-

terests of the government and that of the controllers,’’ and

‘“‘that adequate representation of the individual control-

lers can not be provided by lawyers who also have the

obligation to defend the United States at large against the

charges being made in the pleadings.’’ On the basis of

these findings the district court ruled that government

counsel was disqualified from representing the individual

defendants.*

* The order actually stated that “the United States Attorney”

was disqualified. But since the district court repeatedly referred

(footnote continued on following page)

8

The crux of the conflict, according to the district court,

was that ‘‘{eJach controller has an interest in avoiding

personal responsibility upon any theory that the govern-

ment has a duty to tell approaching airplane pilots that

they are flying too close to the ground.’’ Specifically,

“fijf the plaintiffs prove their theory that the govern-

ment has or assumed such a duty, each individual con-

troller should be free to defend himself upon the basis, if

the evidence justifies it, that he personally assumed no

such duty and had had no such duty imposed upon him.

He should not be prejudiced by representation by a lawyer

who has to defend the government generally against that

charge.’’ (Appendix B, p. Al2). Furthermore, the district

court said that each of the individual defendants was en-

titled to the defense and contention that he performed his

job as required, and that if there was any fault, it did not

lie with him but with one of the others. Because of these

tactical considerations, which the district court said “com-

petent counsel should be free to take if the facts justify,”

the court determined that it was ‘‘fully obvious’’ that ‘‘a

conflict exists between the vigorous representation of the

interests of each individual defendant one the one hand and

a vigorous representation of the interests of the United

States at large on the other,” and that “it is apparent that

the interests of each individual defendant can not be ade-

quately served unless counsel for each defendant is entitled

to put the blame upon fellow controllers if the facts so jus-

tify.’’ The district court added that multiple representation

in this case would violate Ethical Consideration 5-15 and

Disciplinary Rule 5-105(B) of the Code of Professional

Responsibility, concerning the representation of clients

with conflicts of interests.

(footnote continued from preceding page)

to the “Department of Justice,” “[g]overnment counsel’, and

the “Government” in its discussion of the conflict, parties have as-

sumed that the order disqualifies all government attorneys from

meneene the individuals, and the appeal below proceeded on

that basis.

9

The district court rejected on several grounds the Gov-

ernment’s argument that even if the defendants were po-

tentially adverse parties, the Government could represent

them jointly after making full disclosure and obtaining

informed consent. First, the court held that ‘‘the consent

of an individual litigant can not be presumed to be fully

informed when it is procured without the advice of a law-

yer who has no conflict of interest.’’ Second, the court

held that full disclosure and informed consent did not help

here, because under Disciplinary Rule 5-105 multiple rep-

resentation after full disclosure and informed consent is

allowed only if it is ‘‘ ‘obvious that [the attorney] can

adequately represent the interest’ of each individual de-

fendant.’’ Third, the court concluded that ‘‘ {cjontrary to

the government’s view that there is only a remote possi-

bility of conflict among the defendants, this court is of the

opinion that an actual conflict exists.’’ The court also re-

jected the Government’s contention that there was no con-

flict because the United States alone would answer any

judgment, and found it ‘‘puzzling’’ that the Government

would give this case ‘‘so much attention’’ in light of the

general policy of the Department of Justice, (28 C.F.R.

§§ 50.15-50.16 (1977)), to ‘‘ ‘pay for representation by a

private attorney when several employees, otherwise en-

titled to representation by the Department, have suffi-

ciently conflicting interests which in the Department’s

view preclude representation of each of them by the

Department.’ ”’

On October 14, 1977, respondent filed a notice of appeal

to the United States Court of Appeals for the Fourth Cir-

cuit and oral argument was held before said Court on De-

cember 7, 1977.

On January 31, 1978, the United States Court of Appeals

rendered its opinion and judgment (Appendix B, p. A18.)

reversing the decision of the district court on the grounds

that nothing in the record disclosed that an actual conflict

of interest existed, that there was little or no possibility

10

that the individual defendants would incur any personal

liability as a result of the litigation, and that the district

court erred in its interpretation of DR 5-105(C) in hold-

ing that informed consent required the advice of an in-

dependent attorney. The Court of Appeals also held that

respondent United States of America had standing to

prosecute the appeal.

Petitioner’s timely request for a hearing en banc was

denied by the Court of Appeals on March 9, 1978. ( Appen-

dix B, p. A27.)

Reasons for Granting the Writ

The increased national and individual concern with the

competency and ethics of the Bar has resulted in a pro-

liferation of motions to disqualify counsel in civil cases.

Consequently, a new area of law has developed regarding

appellate review of orders of disqualification, much to the

concern of appellate judges.‘ Divergent and inconsistent

opinions by the Circuits with respect to who may appeal

and the standard of review with respect to said appeals

suggest that it is now time for the Supreme Court to es-

tablish appropriate guidelines for such appellate review.

The instant case provides a suitable vehicle for review

since the Court of Appeals for the Fourth Circuit has

adopted herein principles which are inconsistent and in

direct conflict with a majority of the Circuit Courts of

Appeal.

*Van Graafeiland, Lawyer’s Conflict of Interest—A Judge’s

View, 50 N.Y.S.B.J. 101 (1978).

ee oe

11

POINT I

Appeals should not be allowed by a disqualified

attorney or by a party who has not been aggrieved

by the order of disqualification.

The order of the district court entered herein on Octo-

ber 14, 1977, disqualified the United States Attorney and

the Department of Justice from representing the indi-

vidual defendants because of an irreconcilable conflict of

interest. The individual defendants did not appeal this

decision. The only party that objected to the decision

was defendant-respondent United States of America, who

filed a notice of appeal on the same day as the entry of

the order of disqualification. Petitioners contend that re-

spondent United States of America, as a party defendant

herein, was not aggrieved by the district court’s order

since its representation by the United States Attorney and

the Department of Justice was not affected by said order.

Petitioners further contend that the United States of

America lacks standing to prosecute an appeal as attorney

for the individual defendants.

The general rule relating to who may properly prose-

cute an appeal was succinctly and definitively set forth

in the case of Hamilton Trust Co. v. Cornucopia Mines Co.,

223 F. 494 (9th Cir. 1915), cert. denied, 239 U.S. 641,

36 S. Ct. 161, 60 L. Ed. 482 (1915):

‘It is a fundamental rule of appellate jurisdiction

that every person desiring to appeal from a decree

must be interested in the subject-matter of the litiga-

tion, and the interest must be immediate and pecuni-

ary and not a remote consequence of the judgment.

The interest must be substantial, and a merely nomi-

nal party to an action cannot appeal. The interest

must also be subsisting, for although a party may

have an appealable interest at the commencement of

the suit, if that interest has terminated before the

12

entry of the jndgment or decree sought to be ap-

pealed from, he cannot appeal. Again, the right or

title which the appellant seeks to establish must be his

own and not that of a third person.’’ 233 F. at 499

(emphasis added).

See also Fuller v. Branch County Road Commission, 520

F.2d 307, 309 (6th Cir. 1975), citing Lewis v. United States,

216 U.S. 611, 30 S. Ct. 488, 54 L. Ed. 637 (1910) (‘The

general rule is that only a party who is aggrieved by an

order can appeal from it.’’); Utility Contractors Associa-

tion v. Toops, 507 F.2d 83 (3d Cir. 1974); Mownt Vernon

Sav. Bank v. Wardman, 173 F.2d 648, 649 (D.C. Cir. i949)

(‘‘A party to an appeal must show that he is aggrieved

by the order appealed from.’’); In re Phoenix Dress Co.,

131 F.2d 726 (7th Cir. 1942) (individual possessing power

of attorney held not an aggrieved party); International

Brotherhood of Teamsters, Local 523 v. Keystone Freight

Lines, 123 F.2d 326, 330 (10th Cir. 1941) (‘*‘One may not

appeal from a judgment of a court in which he has no

interest.’’); Hawley v. Hawley, 114 F.2d 505, 507 (D.C.

Cir. 1940) (‘‘[A]n appeal can be taken only by one who

is directly aggrieved by the order appealed from.’’);

Armstrong v. New La Paz Gold Mining Co., 107 F.2d 453,

454 (9th Cir. 1939) (‘‘The appeal appears also to include

the dismissed defendant . . ., but as he is not a party

to the judgment appealed from such attempted appeal is

dismissed.’’).

As a co-defendant, the United States certainly has a

general interest ir who represents the individual defend-

ants herein, but as a party defendant it has no pecuniary

interest at jeopardy’ nor is it harmed by an order barring

* Although 28 C.F.R. §§ 50.15-50.16 (1977) (Appendix A,

p. A4), permit the Department of Justice to hire and pay for

outside counsel to defend Government employees in conflict-of-

interest situations, the Department of Justice did not choose to

exercise this option. The record does not reveal if the Department

of Justice offered this option to the individual defendants.

2 et ee Oe ae

13

its attorneys from also representing co-defendants.’ See

generally Mayer v. National Missile & Electronics, Inc.,

326 F.2d 401 (9th Cir. 1964) (party interested in subject

matter of litigation but not directly aggrieved *~ order

cannot appeal); United States v. Seigel, 168 F.2d 143

(D.C. Cir. 1948) (United States, not a party to the lower

court proceeding, held not entitled to bring an appeal as

the ‘‘real party in interest’’). Indeed, as this Court held

in Farmers’ Loan & Trust Co. v. Waterman, 106 U.S. 265,

1S. Ct. 131, 27 L.Ed. 115 (1882):

**Only parties to a decree can appeal. If a party to

the suit is in no manner affected by what is decreed,

he cannot be said to be a party to the decree.” 106

U.S. at 269.

When petitioners asked the Circuit Court to dismiss the

appeal by the United States since it was not an aggrieved

party, the Government argued in its reply brief that the

appeal should be allowed because:

“The district court’s order of disqualification was

directed to the Government, not to the individual con-

trollers, and it prevents the Government from under-

taking legal representation on behalf of the control-

lers.’’ (Reply Brief of the United States, p. 7.)

The Court of Appeals agreed with the United States’

position on the basis that:

“The United States Attorney and the I) partment

of Justice are the targets of the district court’s order

* At oral argument before the Court of Appeals, the Assistant

Attorney General for the Civil Division argued that the United

States was harmed because the district court order prevented the

defendants from presenting a united defense. The Government's

argument presupposes that independent counsel would not agree

to a united defense, which may be the exact reason why the De-

partment of Justice has disregarded its own regulations (fn. 5,

peat in not hiring independent counsel for the individual de-

endants.

14

and, in our opinion, it would be sophistic to say that

the Government is not adversely affected by their

disqualification. See In re Investigation before April

1975 Grand Jury, 531 F.2d 600, 606 (D.C. Cir. 1976).’”’

(Appendix B at p. A22.)

Petitioners would submit that it is obvious from the

foregoing that the United States prosecuted its appeal

herein, not in its capacity as an aggrieved party defend-

ant, but, rather, as an aggrieved lawyer who had been

. disqualified from representing a client,’ and the Court of

Appeals upheld its standing to proceed with the appeal

on that basis.*

In allowing an attorney to appeal in a civil action when

his client has not appealed, the Court of Appeals herein

has taken a position that is contrary to decisions rendered

by the Courts of Appeal for the Sixth, Seventh, Eighth

* Petitioners do not believe it proper to interpret a notice of

appeal filed by the United States of America to be an appeal by

the Government in its capacity as lawyer for the individual de-

fendants. If the Government wanted to appeal in its capacity as

lawyer, it would seem that the Attorney General of the United

States should have appealed in his individual capacity.

* Both the United States and the Court of Appeals cited as

authority for the Government's right to appeal Jn re Investigation

Before April 1975 Grand Jury, 531 F.2d 600, 606 (D.C. Cir.

1976), which allowed an attorney to ap when he was dis-

qualified from representing twenty-one witnesses before a grand

jury. Petitioners would submit that such precedent is not rele-

vant to the instant situation. In grand jury proceedings there

are no parties who ean prosecute an appeal, and in the case

cited the attorney would obviously lose a fee and therefore had a

pecuniary interest that was directly affected by the order of dis-

qualification—e.ements which are not present herein.

In addition, the Government and the Court of Appeals ap-

parently overlooked the fact that the Jn re Investigation Court

never considered the issue of whether, in the absence of the attor-

ney, the union, (similarly situated to the Government in the in-

stant case) which had procured the attorney for its members,

would have standing to appeal.

: <i. - py

ee ee Re ee

15

and Ninth Circuits. Thus, in De Korwin v. First National

Bank, 235 F.2d 156 (7th Cir. 1956), the Court dismissed

an appeal prosecuted solely by an attorney:

“In view of the fact that the only party to the suit in

a state court who has been restrained, Mrs. Tonella,

has not appealed, and Rinella claims only to have been

counsel for her, it follows that, to the extent his con-

nection with the partition case is concerned, that is,

his claimed representation of Mrs. Tonella, his serv-

ices are at an end. She has been restrained, and does

not object to the restraint. No party in interest

appeals.” 235 F.2d at 159.

Cf. Brown v. Grand Trunk Western R. Co., 124 F.2d 1016

(6th Cir. 1941) (“The genera: rule is thai an attorney can-

not, on his own motion, appeal from a judgment or decree

injuriously affecting the interest of his client without said

client’s consent.”).

Similarly, in First Iowa Hydro Electric Corp. v. lowa-

Illinois Gas € Electric Co., 245 F.2d 630 (8th Cir.), re-

hearing denied, 355 U.S. 921, 78 S. Ct. 339, 2 L. Ed. 2d 281,

(1957), the party appellants were joined in their appeal

by four attorneys who attempted to prosecute the appeal

on behalf of their clients and also on their own behalf,

based on their fee contract of employment and time ex-

pended on the action. In sustaining the motion to dismiss

the appeal, the Court remarked as follows:

“Under the Federal Rules of Civil Procedure, appeals

cannot be taken from final judgments of the District

Court otherwise than by parties to the judgments.

Rule 73 provides that ‘a party may appeal from a

judgment by filing with the district court a notice of

appeal.’ The four attorneys were not parties and

they neither asked nor obtained leave to become par-

ties. We know of no appeal by non-parties.” 245

F.2d at 631.

16

More recently, in City of Inglewood v. Unnamed Citr

zens, Residents € Owners of Property Within the City of

Inglewood, 508 F.2d 1283 (9th Cir. 1974), special counsel

purporting to represent certain unuamed citizens, whose

interests were alleged to have been jeopardized by a dis-

missal of the action, were held to have no standing to prose-

cute an appeal from the dismissal. Although the special

counsel was apparently retained by written contract with

the City of Inglewood to prosecute the actions, there was

no demonstration that the unnamed appellants had actu-

ally authorized special counsel to represent them either in

the original action or on appeal.

Based upon the foregoing case authority, it appears

that the Fourth Circuit stands alone in allowing appeals

in civil suits by an attorney from orders to which his client

has not appealed. Four different Cireuit Courts of Ap-

peal have case authority to the contrary and do not allow

the attorney (even though he has a pecuniary interest that

is affected) to appeal. This anomalous position by the

Fourth Circuit demands correction and warrants review

by this Court.

POINT Il

The Circuit Court failed to adhere to accepted

standards in reviewing the disqualification order.

A. Failure to Adhere to the Abuse of

Discretion Standard of Review.

It has been well established over the years that the

proper standard of review by an appellate court as to dis-

qualification orders is whether or not the district court

judge abused his discretion. Hull v. Celanese Corp., 513

F.2d 568, 571 (2d Cir. 1975); Kreda v. Rush, 550 F.2d 888,

889 (3d Cir. 1977); In re Gopman, 531 F.2d 262, 266, re-

hearing en banc denied, 542 F.2d 575 (5th Cir. 1976);

Schloeiter v. Railroc of Indiana, Inc., 546 F.2d 706, 710 (7th

Cir. 1976) ; Fred Weber, Inc. v. Shell Oil Co., 566 F.2d 602,

ete Li 6a ete ee an es sell

17

605 (8th Cir. 1977); Gas-A-Tron of Arizona v. Union Ou

Company of California, 534 F.2d 1322, 1325 (9th Cir.)

cert. denied, 429 US. 861, 97 S.Ct. 164, 50 L.Ed.2d 139

(1976) ; Redd v. Shell Oil Co., 518 F.2d 311 (10th Cir. 1975).

With the growing proliferation of motions to disqualify,

the abuse of discretion standard of review has been re-

cently reaffirmed with emphasis. Allegaert v. Perot, 565

F.2d 246, 251 (2d Cir. 1977); Meat Price Investigators

Association v. Spencer Foods, Inc., No. 77-1605 (8th Cir.

filed Mar. 3, 1978).

The Court of Appeals for the Third Circuit clearly and

concisely articulated the rule in the often-cited case of

Richardson v. Hamilton International Corp., 469 F.2d 1382

(3d Cir. 1972), cert. denied, 411 U.S. 986, 98 S. Ct. 2271,

36 L. Ed. 2d 964 (1973):

‘‘Whenever an allegation is made that an attorney

has violated his moral and ethical responsibilities, an

important question of professional ethics is raised.

It is the duty of the district court to examine the

charge, since it is that court which is authorized to

supervise the conduct of the members of its bar. The

courts, as well as the bar, have a responsibility to

maintain public confidence im the legal profession.

This means that a court may disqualify an attorney

for not only acting improperly but also for failing to

avoid the appearance of impropriety.

... [T]he regulation of attorneys appearing before

the district court in these matters will be disturbed

only when, on review of the record, we can say that

the district court abused its permissible discretion.

Greene v. Singer, 461 F.2d 242 (3d Cir. 1972); cert.

denied, 409 U.S. 848, 93 S. Ct. 54, 34 L. Ed. 2d 89 (Oct.

10, 1972).’’ 469 F.2d at 1385-86 (footnotes omitted,

emphasis added).

The abuse of discretion standard also appeared to be the

prevailing rule in the Fourth Circuit until publication of

the initial decision. Jn re Investigation Before February,

18

1977, Lynchburg Grand Jury, 563 F.2d 652, 657 (4th Cir.

1977). In fact, only six weeks before the decision herein

the Fourth Circuit decided United States v. Clarkson, 567

F.2d 270 (4th Cir. 1977), wherein they held:

‘*Had the petitioner been dissatisfied with ..- order

of disqualification, he could, rather than acquiescing,

have appealed the order. . . . However, an order of

disqualification by the district court will only be re-

versed for clear abuse of discretion.’’ 567 F.2d at

272 n. 2 (citations omitted).

Indeed, the Fourth Circuit carefully cautioned its dis-

trict courts by setting forth the criterion upon which a

district court should consider a disqualification motion:

‘In determining whether to disqualify counsel for

conflict of interest the trial court is not to weigh the

circumstances ‘with hair-splitting nicety’ but, in the

proper exercise of its supervisory power over the

members of the bar and with a view of preventing

‘the appearance of impropriety’ it is to resolve all

doubts in favor of disqualification. Gas-A-Tron of

Arizona vy. Union Oil Co. of California (9th Cir. 1976)

534 F.2d 1322, 1324-25; United States v. Trafficante

(5th Cir. 1964) 328 F.2d 117, 120.’’ 567 F.2d at 273

n. 3.

In the instant case the Fourth Circuit attempted to

justify its departure from the ‘‘abuse of discretion stand-

ard of review’’ by stating that some recent decisions had

questioned the appropriateness of such a standard where

only a legal issue was involved.’ The divergence of the

* The Fourth Circuit hypothesized the issue as being only legal

even though it never stated what this legal issue was. Petitioners

objected to this premise since they had al-vays claimed that the

Government had not conceded the facts as alleged by the peti-

tioners (supra, pp. 4-5), and that there had not been informed

consent by the individual defendants ( Appellees’ Brief, pp. 14-15).

19

Fourth Circuit from the majority rule was based on its

interpretation of obiter dictum emanating from the Third

Circuit in American Roller Co. v. Budinger, 513 F.2d 982,

985 n. 3 (3d Cir. 1975),” and Krowngold v. Triester, 521 F.

2d 763, 765 n. 2 (3d Cir. 1975), both of which involved —

Canon 4 of the Code of Professional Responsibilities and

language from the Fifth Circuit in Woods v. Covington

“The failure to consider Counts I and II would require

reversal of the district court’s denial of Du Pont’s motion

even if an ‘abuse of discretion’ standard were applied. See

Richardson v. Ha:nilton Int'l Corp., supra, 469 F.2d at 1386;

Greene v. Singer Co., 461 F.2d 242 (3rd Cir.), cert. denied,

409 U.S. 848, 93 S. Ct. 54, 34 L. Ed. 2d 89 (1972). We have

serious reservations, however, whether our scope of review is

limited to finding an abuse of discretion in disqualifiation

eases such as this. It appears that in issue in these cases is

the purely legal question of whether two allegedly adverse

representations are so intertwined that it can be said that in

the former representation the attorney ‘might have acquired’

material ‘substantially related’ to the subject matter of the

second representation. Determination of that question leaves

little leeway for the exercise of discretion.”

“We applied the ‘abuse of discretion’ standard in re-

viewing district court dispositions of motions to disqualify

counsel grounded on Canon 4 of the Code of Professional

Responsibility which relates to the fiduciary relationship exist-

ing between lawyer and client, in Richardson v. Hamilton

International C ration, 469 F.2d 1382, 1386 (3rd Cir.

1972), cert. denied, 411 U.S. 986, 93 S. Ct. 2271, 36 L. Ed. 2d

964 (1973); Greene v. The Singer Company, 461 F.2d 242,

243 (3rd Cir.), cert. denied, 409 U. S. 848, 93 S. Ct. 54, 34

L. Ed. 2d 89 (1972).

We have, however, in a Canon 4 situation, recently ex-

pressed ‘serious reservations . . .’ whether our seope of review

is limited to finding an abuse of discretion in disqualification

eases such as this |where] it appears that in issue... is the

purely legal question whether two allegedly adverse repre-

sentations are so intertwined that it can be said that in the

former representation the attorney ‘might have acquired’ mate-

rial ‘substantially related’ to the subject matter of the second

representation’ and the ‘(djetermination of that questior

leaves little leeway for the exercise of discretion.’ American

118), Company v. Budinger, 513 F.2d 982, 985 n. 3 (3rd Cir.

County Bank, 537 F.2d 804 (5th Cir. 1976), which in-

volved Canon 9 of the Code of Professional Responsibility.

It is apparent from a reading of the Third Circuit de-

cisions, however, that they do not establish a different

staniard of review for disqualification cases. In fact, the

most recent decisions by the Third Circuit, which the

Fourth Circuit did not cite in its opinion, clearly hold that

the abuse of discretion standard is still the law. Kreda v.

Rush, 550 F.2d 888, 889 (3d Cir. 1977); Akerly v. Red

Barn System, Inc., 551 F.2d 539 (3d Cir. 1977).

Insofar as the Fifth Circuit’s opinion in Woods v. Cov-

imgton County Bank, 537 F.2d 804 (5th Cir. 1976), is con-

cerned, its validity has been cast in doubt by a later de-

cision by the Fifth Circuit, which again was not cited by

the Fourth Cireuit. The decision in Brown & Williamson

Tobacco Corp. v. Daniel International Corp., 563 F.2d 671

(5th Cir. 1977), clearly indicates that the Fifth Circuit has

not determined what standard of review it will apply:

‘*This circuit has not clearly chosen the standard

by which it reviews a trial judge’s decision to dis-

qualify, or not to disqualify, an attorney accused of

unethical conduct. One Panel has applied the abuse

of diseretion standard. See Jn re Gopmam, 531 F.2d

262, 266 (5th Cir.), rehearing en banc denied, 542 F.

2d 575 (5th Cir. 1976). Another has applied the

‘clearly erroneous’ test to fact issues while suggest-

ing careful review of a trial court’s rulings on ethical

violations. See Woods v. Covington County Bank,

537 F.2d 804, 810 (5th Cir. 1976). Both of these

standards yield the same result in this case.’’ 563 F.

2d at 673 n. 1.

Based upon the foregoing, petitioners would submit that

in failing to follow the abuse of discretion standard of re-

view, the Fourth Circuit has clearly departed from the

prevailing rule followed by the other Cireuit Courts of

Appeal.

21

B. Failure to Require a Record of Informed Consent.

The district court, based on the pleadings and its knowl-

edge of the facts surrounding the accident,” found a con-

flict of interest of sufficient magnitude and concern to re-

quire the disqualification of the United States Attorney

and the Department of Justice from representing the in-

dividual defendants. Nevertheless, the Court of Appeals

found the facts to be undisputed, and therefore concluded

that the district court had no advantage over an appellate

court in resolving the disqualification question. The

Fourth Circuit found ‘‘nothing in the record to support

the conclusion of the [district] court that ‘an actual con-

flict exists.’ ’’ (Appendix B, p. A23.)

However, the record of the proceedings before the dis-

trict court, composed solely of briefs submitted by the

parties and oral argument at two nonevidentiary hearings,

clearly fell short of the factual showing required to be con-

sidered by an appellate court for reversal of a lower court

order of disqualification. The Department of Justice

never submitted any affidavits or o‘her evidence to support

its contentions that it had fully informed the individual

defendants of their legal rights and that said defendants

consented to the continued representation by Government

attorneys.” The Government failed to make any eviden-

2 Judge McMillan had been assigned all cases arising out of

this incident by the Judicial Panel on Multi-District Litigation.

In re Air Crash Disaster at Charlotte, North Carolina, 393 F.

Supp. 1404 (J.P.M.D.L. 1975). In addition, he had presided at one

trial arising out of this accident at which the individual defendants

testified.

In advising the individual defendants of their rights, the

Department of Justice failed to follow its own internal procedures

with respect to conflict-of-interest and multiple-representation sit-

uations. The Report to the Assistant Attorney General on Repre-

sentation of Government Employees in Civil Litigation, dated

March 21, 1977, and prepared by the Representation Committee

of the General Litigation Section, Civil Division, states:

(footnote continued on following page)

22

tiary record of the alleged informed consent. The Gov-

ernment attempted to justify this lack of proof of informed

consent (Reply Brief of the United States, pp. 45) on the

basis that at the second hearing the district court stated

in colloquy between it and the Department of Justice

attorney:

“‘T’ll make the assumption that, as you reported

earlier, you’ve talked to each of your prospective or

present clients individually and that they’ve indicated

to you that ‘hey’re willing to be represented by gov-

ernment counsel. Now, I’m not inquiring into any-

thing about the fact that has taken place, if that’s

what you’re getting to, and that you have discussed it

at great length. What I want to know is from the

standpoint of a lawyer, how can you represent people

who have interests which conflict each with the

other?’’ (A. 95)

Clearly this assumption was only that the parties had

talked, and that the controllers had said they were willing

to be represented by Government counsel. There was no

assumption that there had in fact been ‘‘informed con-

(footnote continued from preceding page)

“V. With regard to ascertaining defendant conflicts at the

start of litigation, it is recommended that initial client inter-

views be conducted in those cases presenting potential for

conflicting interests through the use of one of the following

approaches:

(1) Intra or inter-divisional screening committees to

conduct initial interviews consisting of attorneys who would

not be assigned to any case on which they conducted initial

screening; or

_(2) Continuation of the present practice of hiring a

private attorney to conduct initial client interviews, at least

in those cases where there is some potential for a disclosure

of client confidences which would preclude representation

of any defendant.” pp. 26-27 (emphasis added).

Said report was not before the district court, but was presented

to the Court of Appeals in a motion to supplement the record

which was granted. (Appendix B, pp. A27-28.)

sent’’ in the full legal meaning of that term. Indeed, after

the second hearing wherein the above-cited colloquy oc-

curred, and after petitioners’ counsel wrote to the Court

pointing out wherein Government counsel had failed to

properly advise the individuals and therefore there could

not have been informed consent, the district court issued

an order inviting counsel to submit any further ‘‘evi-

dence’’ on the motion. The Government did not submit

anything.

When the district court discussed the issue of informed

consent in its decision, it postulated the issue as follows:

‘Government counsel say that each of the individ-

ual defendants has been fully informed and has con-

sented to the joint representation which is being af-

forded, and that this ought to solve the problem.

There are two difficulties with that point of view. In

the first place, the consent of an individual litigant

can not be presumed to be fully informed when it is

procured without the advice of a lawyer who has no

conflict of interest. In the second place, even though

consent has been given, DR 5-105 is not complied with

because it is not ‘obvious that (the attorney) can ade-

quately represent the interest’ of each individual de-

fendant.” (Appendix B, p. Al4.)

Based upon the foregoing, it appears clear that the dis-

trict court did not ‘‘accept’’ the representation of Gov-

ernment counsel that ‘‘there was no dispute among them

(the individual defendants) with respect to their duties

and responsibilities or the details of the plane crash’’

(Appendix B, pp. A23-24.), and it was wrong for the Court

of Appeals to make this factual assumption based upon the

above-cited record.*

Insofar as the Court of Appeals found informed consent

since “counsel for the air controllers’ union participated in the

(footnote continued on following page)

24

Since there was no record of informed consent, it was

clearly improper for the Court of Appeals to reverse the

district court on the basis that the record showed that the

individual defendants had been fully informed of the legal

issues and that they agreed to representation by the Gov-

ernment attorneys.”*

In reversing on the basis of an inadequate and factually

incomplete record, the Fourth Circuit again took a posi-

tion entirely different from every other Court of Appeals

that has been faced with a similar issue. In Fullmer v.

Harper, 517 F.2d 20 (10th Cir. 1975), the Court of Appeals

for the Tenth Circuit set forth the proper procedure to

ascertain the facts necessary to permit a meaningful re-

view by the Court of Appeals:

‘‘We now reverse on the grounds that the record

before us is inadequate to permit a review of the ac-

tion taken by thé trial court.

(footnote continued from preceding page)

discussions between the individual defendants and the Department

of Justice, and we think it reasonable to assume that he was aware

of any problems and properly advised the controllers with respect

to their best interests” (Appendix B, p. A25.), there is no record

te support this “assumption.” Indeed, we believe the Court of

Appeals was misled on this point because petitioners’ information

is that at least one, and possibly two, of the individual defendants

did not belong to the union. We request that the Solicitor General

verify the union status of the individuals and advise this Court

as to the true facts.

** The Court of Appeals gave no consideration to the fact that

an employer/employee relationship existed between the United

States and the individual defendants and that this relationship

per se had to exert pressure on the employees to go along with

their employer's desires. See Schnapper, Legal Ethics and the

Government Lawyer, 32 The Record 649, 656-57 (1977). The

economic pressures were obvious since the Government refused to

appoint independent counsel to assess the conflict (fn. 13, supra),

refused to hire independent counsel pursuant to 28 C.F.R.

§§ 50.15-50.16, and refused to prosecute an appeal on behalf of

the individuals. The financial interest of the Department of Jus-

tice herein would appear to be in violation of DR 5-101(A). (Ap-

pendix A, p. Al.)

4

%

-

o

:

3

g

;

wi aa As Seite os A. One

25

In our view the verified motion to disqualify raises

ethical questions that are conceivably of a serious na-

ture. In such circumstances a written response

should be required. The trial court should then hold

a full evidentiary hearing on the issues posed by the

motion to disqualify and the response thereto, which

hearing should include the taking of testimony. A

motion of this type should not be resolved on the basis

of mere colloquy between court and counsel. At the

conclusion of such hearing the trial court should then

make specific findings and conclusions, to the end that

this court will then have a record before it which will

permit a meaningful review, should review be sought.

Order reversed and cause remanded for further pro-

ceedings consonant with the views herein expressed.’’

517 F.2d at 21-22 (emphasis added).

See Melamed v. ITT Continental Baking Co., 534 F.2d 82,

84-85 (6th Cir. 1976); Zn re Investigation Before April

1975 Grand Jury, 531 F.2d 600, 608-09 (D.C. Cir. 1976);

Redd vy. Shell Ow Co., 518 F.2d 311, 316 n. 3 (10th Cir.

1975) ; Kreda v. Rush, 550 F.2d 888, 890 (3d Cir. 1977).

The Court in Melamed v. ITT Continental Baking Co.,

534 F.2d 82, 84-85 (6th Cir. 1976) considered a district

court’s record composed similarly to that herein. The

Melamed Court agreed with the observation made by the

Tenth Circuit in Fullmer, and unlike the Court of Appeals

herein, the Melamed Court openly conceded the inadequacy

of the record and remanded the matter to the district

court for further proceedings:

‘* Although we find that the district court’s order is

appealable, examination of the record discloses that

the remaining issues on appeal cannot adequately be

determined or disposed of until the district court has

held a full evidentiary hearing on the issues posed by

the motion to disqualify and the response thereto.

The district court reached the conclusion that the mo-

ee me ld te in tle et A AR eng Sa EE =

tion to disqualify was not well taken, but apparently

this conclusion was based upon briefs of cownsel with

one supporting affidavit filed with the movant’s brief.

It may be that the court also relied to some extent

upon colloquies between the court and cownsel. There

ts nothing im the record to indicate that an evidentiary

hearing was held or a factual inquiry made to deter-

mine the basis or lack of basis for Continental’s

standing to maintain the motion to disqualify, or to

determine the operative and controlling facts on which

a decision could appropriately be made whether or not

the motion to disqualify should be sustained. Under

the circumstances, we are in agreement with the ob-

servations made by the Court of Appeals for the

Tenth Circuit in Fullmer v. Harper... .’’ 534 F.2d

at 84-85 (emphasis added).

Clearly, if the Court of Appeals herein disagreed with

the findings of the district court, rather than reverse on

an inadequate record, it should have remanded the action

to the district court for an evidentiary hearing. Such a

procedure would have been in accord with the prevailing

approach taken by the Circuit Courts and certainly such

an important issue as ‘‘informed consent’’ should not be

resolved on the basis of assumption.”*

1® As one commentator recently observed :

“There are substantial difficulties present in the obtaining

of the client’s consent to the continuation of multiple repre-

sentation in the hope of either avoiding or spotting conflicts

and dealing with them at a later time. As one lawyer told

me ‘a lawyer can obtain permission from his client to continue

with multiple representation, even in clear conflict situations,

depending upon how the problem is explained to the client.’

This is likewise the view of Professor Katz of Yale. Katz

likens the problem of a lawyer explaining a conflict to a

client to that of a doctor explaining various medical alterna-

tives to a patient. It isn’t only the mere words used in the

(footnote continued on following page)

© oe 2 ee

-

'

27

C. An Actual Conflict Does Not Have to Exist

in Order to Warrant Disqualification.

Insofar as the Court of Appeals herein reversed the dis-

trict court on the basis that the record did not disclose an

actual conflict, it completely misinterpreted the Code of

Professional Responsibility and emasculated the intent of

the Ethical Considerations behind the Disciplinary Rules.

Disciplinary Rule (DR) 5-105, as adopted by the North

Carolina State Bar, provides in part:

**(A) A lawyer shall decline proffered employment if

the exercise of his independent professional judg-

ment in behalf of a client will be or is likely to be

adversely affected by the acceptance of the prof-

fered employment, except to the extent permitted

under DR 5-105(C).

A lawyer shall not continue multiple employment

if the exercise of his independent professional

judgment in behalf of a client will be or is likely

to be adversely affected by his representation of

another client, except to the extent permitted under

DR 5-105(C).”’

(B)

The ethical considerations underlying these Disciplinary

Rules are contained in EC 5-14 and 5-15, which provide:

“EC 5-14 Maintaining the independence of pro-

fessional judgment required of a lawyer precludes his

acceptance or continuation of employment that will

(footnote continued from preceding page)

explanation that the client considers in making up his mind.

The degree of faith and confidence in the professional as well

as the complexity of the subject matter bear greatly on the

decision made by the client or patient. Where the confidence

is and the subject matter difficult, the ‘consent’ given

may be less than knowing and legitimate.” Meyers, Ethical

Considerations in the Representation of Multiple Creditors

Against a Single Debtor, 51 Am. Bankr. L.J. 19, 24 (1977).

A ee re ne

adversely affect his judgment on behalf of or dilute

his loyalty to a client. This problem arises whenever

a lawyer is asked to repvesent two or more clients who

may have conflicting interests.

EC 5-15 If a lawyer is requested to undertake or

to continue representation of multiple clients having

potentially differing interests, he must weigh care-

fully the possibility that his judgment may be im-

paired or his loyalty divided if he accepts or continues

the employment. He should resolve all doubts against

the propriety of the representation. A lawyer should

never represent in litigation multiple clients with

conflicting interests and there are few situations im

which he would be justified in representing in litiga-

tion multir’e clients with potentially conflicting inter-

ests. If a lawyer accepted such employment and the

interests did become actually conflicting, he would have

to withdraw from employment with likelihood of re-

sulting hardship on the clients; and for this reason,

it is preferable that he refuse the employment initially.

On the other hand, there are many instances in which

a lawyer may properly serve multiple clients having

potentially differing interests in matters not involved

in litigation. If the interests vary only slightly, it

is generally likely that the lawyer will not be subjected

to an adverse influence and that he can retain his

independent judgment on behalf of each client; and

if the interests become conflicting, withdrawal! is less

likely to have a disruptive effect upon the causes of

his clients.’’ (Emphasis added.)

In applying these Disciplinary Rules and Ethical Con-

siderations, the district court had a great familiarity with

the facts surrounding this accident since it had been as-

signed all cases arising out of this tragedy by the Ju-

dicial Pane: on Multi-District Litigation. Jn re Air Crash

Disaster at Charlotte, North Carolina, 393 F. Supp. 1404

(J.P.M.D.L. 1975). Based upon its knowledge of the fac-

29

tual situation that would develop, it was obvious to the

district court that each individual defendant had a right

to defend himself hy blaming one of the other defendants

and/or other personnel of the United States of America

as sole cause of the instant accident.” (Appendix B, pp.

A12-13.)

Thus, the petitioners charged that defendant Groseclose

was negligent in failing to properly supervise and train

defendants Hare, Hogan and Hunter. If this allegation

is proved, any attorney representing Messrs. Hare, Hogan

and Hunter should logically cross-claim against Mr. Grose-

close. If the allegation cannot be proved, and if in fact

proper training was given, then Mr. Groseclose should

cross-claim against Messrs. Hare, Hogan and Hunter be-

cause they failed to follow the training that was given to

them. Likewise, Mr. Hogan was supervising Mr. Hare,

who was in a trainee status as local controller. If a

mistake was made at this position, Mr. Hare should

_ logically blame Mr. Hogan for improper supervision and

_ training.

In addition, Mr. Hare and Mr. Hogan might claim that

it was Mr. Hunter’s responsibility to issue a safety ad-

visory to Eastern Flight 212, and that the aircraft should

_ not have been turned over to them by Mr. Hunter without

the advice that the aircraft was at an improperly low alti-

tude. #Likewise, Mr. Hunter might claim that the responsi-

bility to issue a safety advisory to the aircraft rested

_ with Messrs. Hare and Hogan since they were in radio

' contact with the flight.

BRM a oath ck ie wr

3

;

&

-

$

4

Whatever the ultimate cross-claim situation is, it would

appear clear that an attorney representing each defendant

** North Carolina recognizes contribution and indemnity. North

Carolina Contribution Among Joint Tort-Feasors Act, N.C. Gen.

Stat. §§ 1B-1 to 1B-6; Steele v. Moore-Flesher Hauling Co., 260

N.C. 486, 133 S.E.2d 197 (1963); Hendricks v. Leslie Fay, Inc.,

273 N.C. 59, 159 S.E. 2d 362 (1968); Ingram v. Garner, 16

N.C. App. 147, 191 S.E. 2d 390 (1972).

would be compelled to inquire and expose all the training

and supervision that existed at the Charlotte Tower and

the responsibilities of each one of the controllers with

respect to the issuance of safety advisories. This would

appear to be a formidable task for a Department of Jus-

tice attorney whose main loyalty would be in defending

the agency involved. See Poirier, The Federal Government

Lawyer and Professional Ethics, 60 A.B.A.J. 1541 (1974) ;

Federal Ethical Consideration 5-1, 4-1 and 4-2. (Appendix

A, pp. A3-4.)

With this state of facts, there is no doubt that Judge

MeMillan had a sound basis in concluding:

‘“*T find that there is such a conflict and that ade-

quate representation of the individual controllers

cannot be provided by lawyers who also have the obli-

gation to defend the United States at large against

the charges being made in the pleadings.’’

We would submit that the conflict found by the district

court, whether it be actual or potential, warranted the

immediate disqualification of Government counsel and

%* The Court of Appeals suggested that the motives of the

moving party should be taken into account in considering motions

to disqualify, and that in the present case petitioners’ counsel may

have been motivated by tactical reasons. Of course, the district

court made no such finding, and the Court of Appeals ignored

the duty of counsel to bring such conflicts of interest to the atten-

tion of the trial judge (In re Gopman, 531 F.2d 262, 265-66 (5th

Cir. 1976) ; Estates Theatres, Inc. v. Columbia Pictures Industries,

Inc., 345 F. Supp. 93, 98 (S.D.N.Y. 1972); Code of Professional

Responsibility EC 1-4, 4A N.C. Gen. Stat. Append. VII (1977

Supp.)) and also ignored the decision in For v. Allegheny Air-

lines, Inc. (S.D. Ind. 1972) (A. 41-53), wherein Government

counsel withdrew on the eve of trial from representing a defend-

ant air traffic controller on the ground of a conflict of interest.

Petitioners’ interest in the conflict is not irrelevant because they

are the ones who will be prejudiced by additional expenses if Gov-

ernment counsel waits until the eve of trial to recognize their

ethical conflict.

31

was in accord with the prevailing approach by the Circuit

Courts of Appeal. As the Court of Appeals for the Fifth

Cireuit stated in In re Gopman, 531 F.2d 262 (5th Cir.

1976) :

‘*We also must remember that the [district] potential

conflict permits it ‘to nip any potential conflict of

interest in the bud,’ Tucker v. Shaw, 378 F.2d 304,

307 (2d Cir. 1967). On the record before this Cor rt,

it is clear that the possibility of a conflict had become

great enough for the trial court to exercise its dis-

eretion.’’ 531 F.2d at 266.

See United States v. Clarkson, 567 F.2d 270, 273 n. 3 (4th

Cir. 1977) ; Schloetter v. Railroc of Indiana, Inc., 546 F.2d

706 (7th Cir. 1976); Gas-A-Tron of Arizona v. Union Oil

Co. of California, 534 F.2d 1322, 1324-25 (9th Cir. 1976);

International Electronics Corp. v. Flanzer, 527 F.2d 1288,

a Cir. 1975); H. Drinker, Legal Ethics 104-05

(1 .

In the instant case, the actual or potential conflict was

not resolved in favor of disqualification, even though the

Cireuit Court itself had mandated such an approach.

United States v. Clarkson, 567 F.2d 270, 273 n. 3 (4th

Cir. 1977). Instead, the conflict was resolved in favor

of multiple representation by asserting that ‘‘there is little

or no possibility that the four controllers will incur any

personal liability as a result of this litigation.’’ (Appendix

B, p. A24.) This reasoning is unique to the Fourth Circuit,

and it is indeed difficult to see its relevancy to the district

court’s responsibility to supervise the Bar and to ensure

that all attorneys practicing before it adhere to the Code

of Professional Responsibility. See Thode, The Duty of

Lawyers and Judges to Report Other Lawyers’ Breaches

of the Standards of the Legal Profession, 1976 Utah L.

Rev. 9%. The Disciplinary Rules cannot be violated just

because a Iawycr’s client may not have to pay a judg-

ment. As the Preliminary Statement to the Code of

Professional Responsibility states:

“The Disciplinary Rules, unlike the Ethical Con-

siderations, are mandatory in character. The Dis-

ciplinary Rules state the minimum level of conduct

below which no lawyer can fall without being subject

to disciplinary action.” 4A N.C. Gen. Stat. Append.

VII (1977 Supp.).

Disciplinary Rule 1-102(A)(‘) provides:

“(A) A lawyer shall not:

(a) Violate a Disviplinary Rule.”

The Ethical Considerations in support of this Rule pro-

vide:

“EC 1-1 A basic tenet of the professional respon-

sibility of lawyers is that every person in our society

should have ready access to the independent profes-

sional services of a lawyer of integrity and compe-

tence. Maintaining the integrity and improving the

competence of the bar to meet the highest standards

is the ethical responsibility of every lawyer.”

“EC 1-4 The integrity of the profession can be

maintained only if conduct of lawyers in violation of

The Court’s premise that the individuals assume no risk of

paying any judgment is erroneous. Pursuant to 28 U.S.C. § 2676

(Appendix A, p. A9.), judgment entered against the United States

would constitute a bar to any action against the employee. How-

ever, 28 U.S.C. § 2676, by its very wording. only becomes appli-

cable once a judgment is entered against the Government. If this

ease is tried, a jury will return a verdict against the individuals

while the Court will have to enter findings against the United

States. Under Rule 58, Fed. R. Civ. P., a judgment may be en-

tered immediately upon a general verdict by a jury. It is there-

fore possible that a judgment may be entered against the in-

dividuals long before the Court enters its findings with respect to

the United States. Also, the rule as to pre-judgment and post-

judgment interest may vary between the Government and the in-

dividuals. All of these factors make it far from infallible that

the controllers will not have to pay a judgment.

the Disciplinary Rules is brought to the attention of

the proper officials. A lawyer should reveal volun-

tarily to those officials all unprivileged knowledge of

conduct of lawyers which he believes clearly to be in

violation of the Disciplinary Rules. A lawyer should

upon request serve on and assist committees and

boards having responsibility for the administration

of the Disciplinary Rules.”

Petitioners would submit that a lawyer’s ethics are not

dependent upon the ultimate liability of his client. The

end does not justify the means. In glossing over the Jus-

tice Department’s conflict of interest herein, the Fourth

Circuit has sanctioned procedures that are ethically wrong.

The danger herein is that if multiple representation con-

tinues, our judicial system is deprived of its basic predi-

cate—zealous advocacy based upon unimpaired independ-

ent professional judgment. If this occurs, the judicial

system has failed in its duty to litigants.

The basic predicate in an adversary system is succinctly

stated in EC 5-1 and EC 7-19:

‘“‘EC 5-1 The professional judgment of a lawyer

should be exercised, within the bounds of the law,

solely for the benefit of his client and free of com-

promising influences and loyalties. Neither his per-

sonal interests, the interests of other clients, nor the

desires of third persons should be permitted to dilute

his loyalty to his client.”

“EC 7-19 Our legal system provides for the adjudi-

cation of disputes governed by the rules of substan-

tive, evidentiary, and procedural law. An adversary

presentation counters the natural human tendency to

judge too swiftly in terms of the familiar that which

is not yet fully known; the advocate, by his zealous

preparation and presentation of facts and law, enables

the tribunal to come to the hearing with an open and

neutral mind and to render impartial judgments. The

34

duty of a lawyer to his client and his duty to the legal

system are the same: to represent his client zealously

within the bounds of the law.”

The danger, thus, is not just the appearance if impro-

priety, but the clear and present danger to the client and

to the judicial system that the presentation of the case by

an attorney representing multiple defendants inevitably

will be less than it ought to be, thus depriving the court of

its ability to sift and weigh all the evidence as it is re-

quired to do in meeting its obligation to find the truth and

render justice to all.”

CONCLUSION

For these reasons, a writ of certiorari should issue

to review the judgment and opinion of the Fourth

Circuit.

Respectfully submitted,

Watrter E. RutHerrorp

One State Street Plaza

New York, N. Y. 10004

Counsel for Petitioners

On the Brief:

Peter HoenicG

Auan D. Reirzrevp

“(To the degree that substantial justice requires, a judge

must exercise his power to enforce ethical standards through dis-

qualification of attorneys. No judge properly can disregard this

responsibility to enforce respect for the judicial process where the

very integrity of that process is threatened by an attorney’s con-

flict of interest.” Judge Orrin G. Judd, Conflicts of Interest—A

Trial Judge’s Notes, 44 Fordham L. Rev. 1097, 1111-12 (1976).

Al

APPENDIX A

Statutes.

North Carolina State Bar Code of Professional Responsi-

bility, 4A N.C. Gen. Stat. Append. VII (1977 Supp.).

CANON 1

A Lawyer Should Assist in Maintaining the Integrity

and Competence of the Legal Profession

ETHICAL CONSIDERATIONS

EC1-4 The integrity of the profession can be maintained

only if conduct of lawyers in violation of the Disciplinary

Rules is brought to the attention of the proper officials. A

lawyer should reveal voluntarily to those officials all un-

privileged knowledge of conduct of lawyers which he be-

lieves clearly to be in violation of the Disciplinary Rules. A

lawyer should, upon request serve on and assist committees

and boards having responsibility for the administration of

the Disciplinary Rules.

CANON 5

A Lawyer Should Exercise Independent Professional

Judgment on Behalf of a Client

DISCIPLINARY RULES

DR5-101 Refusing Employment When the Interests of the

Lawyer May Impair His Independent Profes-

sional Judgment.

(A) Except with the consent of his client after full dis-

closure, a lawyer shall not accept employment if the

exercise of his professional judgment on behalf of his

client will be or reasonably may be affected by his

own financial, business, property, or personal inter-

ests.

A2

Statutes.

(B) A lawyer shall not accept employment in contem-

plated or pending litigation if he knows or it is obvi-

ous that he or a lawyer in his firm ought to be called

as a witness, except that he may undertake the em-

ployment and he or a lawyer in his firm may testify:

(1) If the testimony will relate solely to an uncon-

tested matter.

(2) If the testimony will relate solely to a matter of

formality and there is no reason to believe that

substantial evidence will be offered in opposition

to the testimony.

(3) If the testimony will relate solely to the nature

and value of legal services rendered in the case

by the lawyer or his firm to the client.

(4) As to any matter, if refusal would work a sub-

stantial hardship on the client because of the dis-

tinctive value of the !awyer or his firm as counsel

in the particular case.

DR5-105 Refusing to Accept or Continue Employment if

the Interests of Another Client May Impair

the Independent Professional Judgment of

the Lawyer.

(A) A lawyer should decline proffered employment if the

exercise of his independent professional judgment in

behalf of a client will be or is likely to be adversely af-

fected by the acceptance of the proffered employment,

except to the extent permitted under DR5-105 (C).

(B) A lawyer shall not continue multiple employment if

the exercise of independent professional judgment in

behalf of a client will be or is likely to be adversely

affected by his representation of another client, except

to the extent permitted under DR5-105 (C).

A3

Statutes.

(C) In the situations covered by DR5-105 (A) and (B), a

lawyer may represent multiple clients if it is obvious

that he can adequately represent the interest of each

and if each consents to the representation after full

disclosure of the possible effect of such representation

on the exercise of his independent professional judg-

ment on behalf of each.

(D) If a lawyer is required to decline employment or to

withdraw from employment under DR5-105, no partner

or associate of his or his firm may accept or continue

such employment.

FEDERAL BAR ASSOCIATION: FEDERAL ETHICAL

CONSIDERATIONS (Adopted November 17, 1973)

Canon 4. A Lawyer Should Preserve the Confidences and

Secrets of a Client.

F.E.C.-4-1. If, in the conduct of official business of his

department or agency, it appears that a fellow employee

of the department or agency is revealing or about to re-

veal information concerning his own illegal or unethical

conduct to a federal lawyer acting in his official capacity

the lawyer should inform the employee that a federal law-

yer is responsible to the department or agency concerned

and not the individual employee and, therefore, the infor-

mation being discussed is not privileged.

F.E.C.-42. If a fellow employee volunteers information

concerning himself which appears to invoive illegal cr ua-

ethical conduct or is violative of department or agency

rules and regulations which would be pertinent to that de-

partment’s or agency’s consideration of disciplinary ac-

A4

Statutes.

tion, the federal lawyer should inform the individual that

the lawyer is responsible to the department or agency con-

cerned and not the individual employee.

Canon 5. A Lawyer Should Exercise Independent Pro-

fessional Judgment on Behalf of a Client.

F.E.C.-5-1. The immediate professional responsibility

of the federal lawyer is to the department or agency in

which he is employed, to be performed in light of the par-

ticular public interest function of the department or

agency. He is required to exercise independent profes-

sional judgment which transcends his personal interests,

giving consideration, however, to the reasoned views of

others engaged with him in the conduct of the business of

the government.

28 C.F.R. §$§ 50.15-50.16 (1977).

PART 50—STATEMENTS OF POLICY

§ 50.15 Representation of Federal employees by Depart-

ment of Justice Attorneys or by private counsel fur-

nished by the Department in state criminal proceed-

ings and in civil proceedings and Congressional

proceedings in which Federal employees are sued or

subpoenaed in their individual capacities.

(a) Under the procedures set forth below, a federal em-

ployee (herein defined to include former employees) may

be represented by Justice Department attorneys in state

criminal proceedings and in civil and Congressional pro-

ceedings in which he is sued or subpoenaed in his individ-

ual capacities, not covered by $15.1 of this chapter.

A5

Statutes.

(1) When an employee believes he is entitled to repre-

sentation by the Department of Justice in a proceeding,

he must submit a request for that representation, together

with all process and pleadings served upon him, to his im-

mediate supervisor or whomever is designated by the head

of his department or agency, forthwith. The employee’s

employing federal agency shall submit to the Civil Divi-

sion in a timely manner a statement, with all supporting

data, as to whether the employee was acting within the

scope of his employment, together with its recommenda-

tion as to whether representation should be provided. The

communication between the employee and any individual

acting as an attorney at his employing agency, with regard

to the request for representation, shall be treated as sub-

ject to the attorney-client privilege. In emergency situa-

tions the Civil Division may initiate conditional represen-

tation after communication by telephone with the

employing agency. In such cases, appropriate written

data must be subsequently provided.

(2) Upon receipt of the agency’s notification of request

for counsel, the Civil Division will determine whether the

employee’s actions reasonably appear to have been per-

formed within the scope of his employment, and whether

providing representation is in the interest of the United

States. If a negative determination is made, Civil Divi-

sion will inform the agency and/or the employee that no

representation will be provided.

(3) Where there appears to exist the possibility of a

federal criminal investigation or indictment relating to the

same subject matter Jor which representation is sought,

the Civil Division will contact a designated official in the

Criminal Division for a determination whether the em-

ployee is either a target of a federal criminal investiga-

tion or a defendant in a federal criminal case. An em-

ployee is the target of an investigation if, in addition to

A6

Statutes.

being circumstantially implicated by having the appropri-

ate responsibilities at the appropriate time, there is some

evidence of his specific participation in a crime. In ap-

propriate instances, Civil Rights and Tax Divisions and

any other prosecutive authority within the Department

should be contacted for a similar determination.

(4) If the Criminal, Civil Rights or Tax Division or

other prosecutive authority within the Department (here-

inafter ‘‘prosecuting division’’) indicates that the em-

ployee is not the target of a criminal investigation con-

cerning the act or acts for which he seeks representation,

then representation may be provided. Similarly, if the

prosecuting division indicates that there is an ongoing in-

vestigation, but into a matter other than that for which

representation has been requested, then representation

may be provided.

(5) If the prosecuting division indicates that the em-

ployee is the target of a criminal investigation concerning

the act or acts for which he seeks representation, Civil

Division will inform the employee that no representation

by Justice Department attorneys will be provided. If the

prosecuting division indicates that the employee is a tar-

get of an investigation concerning the act or acts for which

he seeks representation, but no decision to seek an indict-

ment or issue an information has been made, a private

attorney may be provided to the employee at federal ex-

pense under the procedures of § 50.16.

(6) If conflicts exist between the legal or factual posi-

tions of various employees in the same case which make it

inappropriate f» @ single attorney to represent them all,

the employees may ve separated into as many groups as is

necessary to resolve the conflict problem and each group

may be provided with separate representation. Some sit-

uations may make it advisable that private representation

be provided to all conflicting groups and that Justice De-

A7

Staiutes.

partment attorneys be withheld so as not to prejudice par-

ticular defendants. In such situations, the procedures of

§ 50.16 will apply.

(7) Once undertaken, representation under this subsec-

tion will continue until either all appropriate proceedings,

including applicable appellate procedures, have ended, or

until any of the foregoing bases for declining or with-

drawing from representation is found to exist, including

without limitation the basis that representation is not in

the interest of the United States. In any of the latter

events, the representing Department attorney on the case

will seek to withdraw but will ensure to the maximum ex-

tent possible that the employee is not prejudiced thereby.

(8) Justice Department attorneys who represent em-

ployees under this section undertake a full and traditional

attorney-client relationship with the employees with re-

spect to the attorney-client privilege. If representation is

discontinued for any reason, any incriminating informa-

tion gained by the attorney in the course of representing

the employee continues to be subject to the attorney-client

privilege. All legal arguments appropriate to the em-

ployee’s case will be made unless they conflict with gov-

ernmental positions. Where adequate representation re-

quires the making of a legal argument which conflicts with

a governmental position, the Department attorney shall

so advise the employee.

(b) Representation by Department of Justice attorneys

is not available to a federal employee whenever:

(1) The representation requested is in connection with

a federal criminal proceeding in which the employee is a

defendant;

(2) The employee is a target of a federal criminal in-

vestigation on the same subject matter;

A8

Statutes.

(3) The act or acts with regard to which the employee

desires representation do not reasonably appear to have

been performed within the scope of his employment with

the federal government; or

(4) It is otherwise determined by the Department that

it is not in the interest of the United States to represent

the employee.

[Order No. 683-77, 42 FR 5695, Jan. 31, 1977]

§ 50.16 Representation of Federal employees by private

counsel at Federal expense.

(a) Representation by private counsel at federal ex-

pense may be provided to a federal employee only in the

instances described in § 50.15 (a)‘5) and (a) (6).

(b) Where private counsel is provided, the following

procedures will apply:

(1) The Department of Justice must approve in ad-

vance any private counsel to be retained under this sec-

tion. Where national security interests may be involved,

the Department of Justice will consult with the employ-

ing agency.

(2) Federal payments to private counsel for an em-

ployee will cease if the Department of Justice (i) decides

to seek an indictment of or to issue an information against

that employee on a federal criminal charge relating to the

act or acts concerning which representation was under-

taken; (ii) determines that the employee’s actions do not

reasonably appear to have been performed within the

scope of his employment; (iii) resolves the conflict de-

scribed in § 50.15(a)(6) and tenders representation by De-

partment of Justice attorneys; (iv) determines that rep-

resentation is not in the interest of the United States;

(v) terminates the retainer with the concurrence of the

employee-client, for any reason.

AQ

Statutes.

(c) In any case in which the employee is not repre-

sented by a Department of Justice attorney, the Depart-

ment of Justice may seek leave to intervene or appear as

amicus curiae on behalf of the United States to assure

adequate consideration of issues of governmental concern.

[Order No. 683-77, 42 FR 5696, Jan. 31, 1977]

28 U.S.C. § 2676

§ 2676. Judgment as bar

The judgment in an action under section 1346(b) of this

title shall constitute a complete bar to any action by the

claimant, by reason of the same subject matter, against

the employee of the government whose act or omission

gave rise to the claim.

Al0

APPENDIX B

Opinion of the District Court.

United States District Court,

W. D. North Carolina,

Charlotte Division.

Oct. 14, 1977.

The Arrna Casuauty anp Surety Company, Aetna Insur-

ance Company, American Empire Insurance Company,

Commercial Union Insurance Company, Compagnies

D’Assurances Du Groupe Concorde, Continental Cas-

ualty Company, Employers Mutual Liability Insurance

Company of Wisconsin, Hartford Fire Insurance Com-

pany, Industrial Indemnity Company, Maryland Cas-

ualty Company, Reliance Insurance Company, Royal

Indemnity Company, St. Paul Fire and Marine Insurance

Company, Security Insurance Company of Hartford, the

Travelers Indemnity Company, Underwriters at Lloyd’s

and Associated British Insurance Companies, United

States Fidelity and Guaranty Company, United States

Fire Insurance Company and Zurich Insurance Company,

Plaintiffs,

v.

Unrrep States of America, Bernard C. Groseclose, Alden

E. Hare, William L. Hogan and Dennis L. Hunter, De-

fendants.

No. C-C-77-41.

ORDER

McMn ay, District Judge.

Plaintiffs brought this suit against the United States to

recover as subrogees their losses allegedly exceeding

All

Opinion of the District Court.

$20,000,000.00 resulting from the crash of Eastern Air

Lines’ Flight 212 near Charlotte, North Carolina, on the

llth day of September, 1974.

The United States, through the Department of Justice,

is providing a defense on behalf of the United States itself

and on behalf of Bernard C. Groseclose, chief of the air

traffic controllers at the Charlotte airport, and the three

air traffic controllers who had duties with respect to the

approach of the aircraft. These controllers are the de-

fendants Dennis L. Hunter, the approach controller; Alden

E. Hare, the local controller; and Wiiliam L. Hogan, who

was then and there supervising the work of Hare, a trainee

in the job.

The defendant Groseclose was in overall charge of the

operation of the tower and the training of air traffic

controllers.

The defendant Hunter, the ‘‘approach controller,’”’ was

an experienced controller whose duties included making

radio contact with approaching aircraft while they were

a considerable distance away from the airport and issuing

instructions as needed to enable the aircraft to line up with

the runway and begin to make its landing approach.

The defendant Hare, a trainee in the ‘‘local controller’’

position, had the duty of assuming tower communications

with the aircraft when it was ‘‘handed off’’ by Mr. Hunter,

and of giving any instructions necessary to get the aircraft

lined up and keep it lined up so that it would be approach-

ing the end of the runway going in the right direction.

The defendant Hogan was supervising the work of the

trainee defendant, Hare.

None of the air traffic controllers as far as is now known

had ever been given the affirmative duty to read or esti-

mate from their radar scopes how high approaching air-

craft were above the ground and to warn aircraft pilots

when they were dangerously close to the ground.

A12

Opinion of the District Court.

The crash of the plane resulted when the pilots flew it

into the ground several miles short of the runway and a

considerable distance below the level of the runway.

[1] Counsel for the plaintiffs have filed a motion to

disqualify the Department of Justice from representing

both the government and the controllers upon the theory

that there is a conflict of interest between the interests

of the government and that of the controllers.

I find that there is such a conflict and that adequate

representation of the individual controllers can not be

provided by lawyers who also have the obligation to de-

fend the United States at large against the charges being

made in the pleadings.

Each controller has an interest in avoiding personal

responsibility upon any theory that the government has a

duty to tell approaching airplane pilots that they are flying

too close to the ground. If the plaintiffs prove their theory

that the government has or assumed such a duty, each in-

dividual controller should be free to defend himself upon

the basis, if the evidence justifies it, that he personally

had assumed no such duty and had no such duty imposed

upon him. He should not be prejudiced by representation

by a lawyer who has to defend the government generally

against that charge.

The individual defendant Groseclose is entitled to the

defense and contention that he loyally passed on to the

individual controller all instructions and training required

of him and that regardless of what duty might be imposed

upon the governmnet, he had not been directed by the

government, and had not undertaken to carry out, the duty

of telling air line pilots that they were flying too close

to the ground.

The “approach controller’? Hunter is entitiled to be

represented by counsel free to admit or contend that he

had neither assumed nor been subjected to the duty of giv-

A13

Opimion of the District Court.

ing warnings to aircraft flying too close to the ground.

He is also entitled to the contention that when he handed

the plane over to the local controller, everything was A-OK

and that the responsibility, if any, lay with the local con-

troller.

The ‘‘local controller’? Hare is entitled to contend that

if there was fault on the part of the government it lay

with his supervisor, Mr. Hogan, or with others up the line,

and with the approach controller, and that the critical

course of the plane had been set by others before his con-

tact with the plane ever began.

The defendant Hogan is entitled to the contention that

his supervision over the defendant Hare was flawless and

that if Hare was in any way responsible, his fault was

some last moment oversight rather than something which

could have been prevented by training and supervision.

From the above general summaries of attitudes, among

others, which competent counsel should be free to take if

the facts justify, it is fully obvious that a conflict exists

between the vigorous representation of the interests of

each individual defendant on the one hand and a vigorous

representation of the interests of the United States at large

on the other.

Moreover, it is apparent that the interests of each in-

dividual defendant can not be adequately served unless

counsel for each defendant is entitled to put the blame

upon fellow controllers if the facts so justify.

To require one lawyer or team of lawyers to represent

both the individual defendants and the government forces

those attorneys into a violation of Ethical Consideration

5-15 and Disciplinary Rule 5-105(B) of the American Bar

Association Code of Professional Responsibility. Ethical

Consideration 5-15 provides:

“If a lawyer is requested to [represent] multiple

clients having potentially different interests, he must

Al4

Opimion of the District Court.

weigh carefully the possibility that his judgment may

be impaired or his loyalty divided . . . He should

resolve all doubts against the propriety of representa-

tion. A LAWYER SHOULD NEVER REPRESENT

IN LITIGATION MULTIPLE PARTIES WITH

CONFLICTING INTERESTS, AND THERE ARE

FEW SITUATIONS IN WHICH HE WOULD BE

JUSTIFIED IN REPRESENTING IN LITIGATION

MULTIPLE CLIENTS WITH POTENTIALLY

CONFLICTING INTERESTS . . . If the interests

vary only slightly, it is generally likely that the

lawyer . . . can retain his independent judgment.”

(Emphasis added.)

DR 5-105 goes on to provide that an attorney can not

represent multiple interests in litigation unless ‘‘it is ob-

vious that [the attorney] can adequately represent the in-

terest of each and if each consents to the representation.”’

[2, 3] Government counsel say that each of the in-

dividual defendants has been fully informed and has con-

sented to the joint representation which is being afforded,

and that this ought to solve the problem. There are two

difficuities with that point of view. In the first place, the

consent of an individual litigant can not be presumed to

be fully informed when it is procured without the advice

of a lawyer who has no conflict of interest. In the second

place, even though consent has been given, DR 5-105 is not

complied with because it is not “obvious that [the attor-

ney] can adequately represent the interest” of each in-

dividual defendant.

Contrary to the government’s view that there is only a

remote possibility of conflict among the defendants, this

court is of the opinion that an actual conflict exists.

Some suggestion was made that counsel could withdraw

if an actual conflict developed in the course of the trial.

Al5

Opinion of the District Court.

Since the actual conflict is already upon us, I am not per-

suaded that this would be wise; moreover, this case is too

bulky and involves too many people for the court to run

the risk of withdrawal of counsel in mid-tria]l and the en-

suing mistrial which would have to be allowed.

The government has made several other contentions:

(a) That the United States will pay any judgment

awarded against the individuals. Unfortunately, no

statute is cited and no bond has been posted to cover

that contingency.

(b) That the FAA Facility Manual, page 37. re-

quires the United States to foot the bill. The court

is not satisfied that this manual binds the Treasury.

Moreover, the manual itself is something less than a

guaranty. It says that “even if a money judgment

were obtained against an employee individually the

FAA would im a proper case institute action seeking

passage . . . by the Congress . . . for the relief of

the employee.” “Proper case” is not defined.

(c) That judgment against the employees is barred

by 28 U.S.C. § 2676, which provides:

“The judgment in an action under section 1346(b)

of this title shall constitute a complete bar to any

action by the claimant, by reason of the same subject

matter, against the employee of the government whose

act or omission gave rise to the claim.” This statute

does not help the individual defendants unless and

until a judgment has been rendered against the gov-

ernment.

The trouble with all these contentions about the govern-

ment’s obligation or willingness to stand good for any loss

is that the rule against representing conflicting interests is

a matter of principle having to do with the integrity and

Al6

Opinion of the District Court.

effectiveness of lawyers and of the trial process; and it is

not to be swept under the rug simply because the govern-

ment may have a deep pocket and has attorneys who are

sure that that government will “do right” if things go

wrong. The conflict remains regardless of whoever pays;

moreover, the taxpayers are entitled to representation by

a district attorney or attorney general whose loyalty is

not clouded by possible conflicting claims or rights of the

controllers themselves.

It is somewhat puzzling that the question should be

receiving so much attention in view of the Department of

Justice’s “STATEMENT OF POLICY” in the form of

Order No. 683 77 dated January 19, 1977, which in para-

graph 3 reads as follows:

“The Department will likewise pay for representation

by a private attorney when several employees, other-

wise entitled to representation by the Department,

have sufficiently conflicting interests which in the De-

partment’s view preclude representation of each of

them by the Department.”

Private counsel are expensive and getting more so; but

the unimpeachable conduct of a case of this possible mag-

nitude would seem to be more important both to the tax-

payers and the individuals involved than the attorneys’

fees which might be involved.

IT IS THEREFORE ORDERED:

1. That in the opinion of this court, the United States

Attorney is, because of irreconcilable conflicts of interest,

disqualified from representing the individual defendants.

2. That if this decision is not appealable as of right the

court nevertheless certifies under 28 U.S.C. § 1292(b) that

Al7

Opinion of the District Court.

it involves a controlling question of law and practice as

to which there may be ground for difference of opinion

and that an immediate appeal from this order may mate-

rially advance the ultimate termination of the litigation.

(At the hearing i indicated an unwillingness to certify

this question, but since as announced at the hearing I do

not believe there should be more than one more trial on

any of the issues of liability arising out of the crash of

Eastern Flight 212, and since all the cases now pending

were filed quite late in the game, I am not opposed to

letting all plaintiffs wait for trial until this question is

decided. )

3. That since the only thing involved in this appeal is

the propriety of conflicting representation, no appeal from

this order shall work any postponement of pleadings or

discovery or otherwise prevent orderly progress without

interruption toward complete readiness for trial.

Al8

Opinion of the Court of Appeals.

No. 77-2303

UNITED STATES COURT OF APPEALS

For THE Fourtrns Circuit

Appeal from the United States District Court for the

Western District of North Carolina, at Charlotte.

James B. McMillan, District Judge.

Tue Agtna CasuaLty AND Surety Company, Aetna Insur-

ance Company, AMERICAN Emprre Insurance Company,

CommerciaL Union Insurance Company, COMPAGNIES

D’Assurances Du Groupe ConcorpE, CoNTINENTAL Cas-

vaLty Company, EmpLoyers Mutua Liasmity Insur-

ANCE Company or Wisconsin, Hartrorp Fire Lysurance

Company, InpustriaL INDEMNITY Company, MaryLaNnp

Casuatty Company, Reviance Insurance Company,

Royat [xpemnity Company, St. Pavt Fire anp Marine

Insurance Company, Security Insurance CoMPANY OF

Harrrorp, THe TraveLers [NpeEMNITY Company, UNDER-

WRITERS AT Luioyp’s AND AssociATED BritisnH INSURANCE

Companies, Unirep States Fiperiry anp Guaranty Com-

PANY, Unirep States Fire Insurance Company and

Zuricu Insurance ComMPany,

Appellees,

v.

Unitrep States or AMERICA,

Appellant,

and

Brernarp C. Grosectose, ALDEN E. Hare,

WituiaM L. Hoean and Dennis L. Hunrer,

Defendants.

Argued December 7,1977 Decided January 31, 1978

Before Haynsworrn, Chief Judge; Burzner, Circuit Judge,

and Fievp, Senior Circuit Judge.

Al9

Opinion of the Court of Appeals.

Frevp, Senior Circuit Judge:

The United States has appealed from an order of the

district judge disqualifying the Department of Justice and

the United States Attorney from representing four of its

individual codefendants in this case. The district court

concluded that such representation would violate Discip-

linary Rules 5-105(A) and 5-105(B) of the Code of Pro-

fessional Responsibility adopted by the North Carolina

State Bar effective January 1, 1974. 4A Gen. Stat. Append.

VII 240 (Supp. 1975).’

The substantive litigation arises out of the crash of

Eastern Airlines Flight 212 as it approached the airport

at Charlotte, North Carolina, on the morning of Septem-

ber 11, 1974. At the time of the crash the individual de-

fendants, Bernard C. Groseclose, Alden E. Hare, William

L. Hogan and Dennis L. Hunter, were on duty at the air-

? DR5-105 Refusing to Accept or Continue Employment if the

Interests of Another Client May Impair the Independent Pro-

fessional Judgment of the Lawyer.

(A) A lawyer should decline proffered employment if the

exercise of his independent professional judgment in

behalf of a client will be or is likely to be adversely

affected by the acceptance of the proffered employment,

except to the extent permitted under DR5-105 (C).

(B) A lawyer shall not continue multiple employment if the

exercise of independent professional judgment in behalf

of a client will be or is likely to be adversely affected

by his representation of another client, except to the ex-

tent permitted under DR5-105 (C).

(C) In the situations covered by DR5-105(A) and (B), a

lawyer may represent multiple clients if it is obvious

that he can adequately represent the interest of each

and if each consents to the representation after full

disclosure of the possible effect of such representation

on the exercise of his independent professional judg-

ment on behalf of each.

A20

Opinion of the Court of Appeals.

port as air traffic controllers employed by the Federal

Aviation Administration.’

The plaintiff insurance companies have paid approxi-

mately twenty-five million dollars in settlement of wrong-

ful death, personal injury, and property damage claims

arising from the plane crash, and they filed this action on

February 9, 1977, against the United States and the four

federal air traffic controllers mentioned above. Charging

that the negligence of the defendants was the proximate

cause of the crash, the plaintiffs seek indemnification and

contribution from the defendants for the amounts paid in

settlement of the various insurance claims. Jurisdiction

for the action against the United States is alleged under

the Federal Tort Claims Act, £8 U.S.C. § 1346(b) and for

the claims against the individual defendants under 28

U.S.C. § 1332. The plaintiffs have charged, and the Gov-

ernment admits, that at the time of the crash the four

individual defendants were acting within the course and

scope of their employment.

On March 23, 1977, the four individual defendants, who

at the time were represented by the Department of Jus-

tice, filed a motion for summary judgment or, in the al-

ternative, to dismiss the complaint. On May 2, 1977, the

plaintiff insurance companies filed a memorandum and af-

fidavit in opposition to the motion, and on the same day

filed the motion to disqualify government counsel from

representing the four air traffic controllers. The district

judge conducted a non-evidentiary hearing on the motions

on May 17, 1977, and, while indicating that he perceived

a conflict of interest on the part of the Government coun-

sel, deferred ruling on the disqualification motion for a

2 Groseclose was Chief of the Air Traffic Controllers at the

Charlotte airport. At the time of the crash, Hunter was the ap-

proach controller; Hare, a trainee, was the local controller and

was being supervised by Hogan.

a — ce ee ee ee ee -

A21

Opinion of the Court of Appeals.

period of thirty days in the hope that the matter might be

resolved without further action by the court. By order

entered on May 19, 1977, the motions of the individual de-

fendants for dismissal or summary judgment were denied.

On June 29, 1977, the Deputy Assistant Attorney Gen-

eral for the Civil Defense Division of the Department of

Justice wrote to the district court and requested an oppor-

tunity to present additional evidence and argument bear-

ing upon the existence of any potentia)] conflict of interest

between the United States and the individual defendants.

He further advised the court that the question had been

carefully reviewed in the Department of Justice and that

the Department could discern “no conflict at the present

time”, and that the possibility of any conflict developing

in the future appeared “extremely remote”. He stated

that the matter had been discussed at length with the in-

dividual defendants and that they had “knowingly and

intelligently asserted their desire to be represented jointly

by the Department of Justice”.

The district court convened a second hearing on July

25, 1977, at which time the Deputy Assistant Attorney

General was present, together with the four defendant air

traffic controllers and counsel for their union. The court

was advised that the question of conflict had been dis-

cussed with the air controllers in the presence of counsel

for their union and that they, with the concurrence of

the union counsel, consented to, and indeed demanded,

joint representation by the Government. Counsel for the

Department of Justice suggested that the court examine

the individual defendants im camera, or otherwise hear

their testimony with respect to the issue of full disclosure

and informed consent to joint representation. The district

judge, however, declined these suggestions and advised the

parties that he would defer action for another ten days,

indicating that if the Government failed to change its posi-

tion he would enter adverse findings on the conflict ques-

A22

Opinion of the Court of Appeals.

tion. By letter of August 3, 1977, the Department of Jus-

tice advised the court that the Government adhered to its

position, and on October 14, 1977, the district court en-

tered the order of disqualification from which the Govern-

ment has appealed.

As a prefatory matter, we note that it is now well estab-

lished that the order of a district court granting or

denying a motion to disqualify an attorney is a final order

appealable pursuant to 28 U.S.C. § 1291, MacKethan v.

Peat, Marwick, Mitchell @ Co., 557 F.2d 395, 396 (4 Cir.

1977); Silver Chrysler Plymouth, Inc. v. Chrysler Motors

Corp., 496 F.2d 800 (2 Cir. 1974), and we reject the argu-

ment of the plaintiffs that the United States is not an ag-

grieved party and therefore lacks standing to prosecute

this appeal. The United States Attorney and the Depart-

ment of Justice are the targets of the district court’s order

and, in our opinion, it would be sophistic to say that the

Government is not adversely affected by their disqualifica-

tion. See In Re Investigation before April 1975 Grand

Jury, 531 F.2d 600, 606 (D.C. Cir. 1976).’

Turning to the merits of the appeal, the plaintiffs con-

tend that the scope of our review is limited to a determina-

tion of whether the district court abused its permissible

discretion. While some of the cases support the position

of the plaintiffs on this point, more recently the courts

have expressed serious reservations about whether the

limited abuse of discretion standard is appropriate in dis-

* Counse] for the plaintiffs also suggests that we should dismiss

this appeal as a sanction against the Government for its violation

of the statutory provisions ing the use of reports of the Na-

tional Transportation Safety Board. We agree with the Govern-

ment that the reference to the report in its brief relative to the

present appeal does not contravene the statutes in question, 49

U.S.C. § 1903(¢) and 49 U.S.C. § 1441(e), which provide that no

such reports “shall be admitted as evidence or used in any suit

or action for damages growing out of any matter mentioned in

such report or reports.”

ene a a ee

A23 |

Opinion of the Court of Appeals. }

qualification cases where only a purely legal question is at

issue. Woods v. Covington Cty. Bank, 537 F.2d 804 (5

Cir. 1976); Kroungold v. Triester, 521 F.2d 763, 765, n.2

(3 Cir. 1975); American Roller Company v. Budinger, 513

F.2d 982, 985, n.3 (3 Cir. 1975). We are inclined to agree

with the Fifth Circuit that ‘‘[i]n disqualification cases

such as this, where the facts are not in dispute, District

Courts enjoy no particular functional advantage over ap-

pellate courts in their formulation and application of eth-

ical norms,’ and that it is appropriate for us ‘‘to deter-

mine whether the District Court’s disqualification order

was predicated upon a proper understanding of applicable

ethical principles.’”

It is our opinion that in disqualifying the Department

of Justice in this case the district court erred in two re-

spects. First of all, we find nothing in the record to sup-

port the conclusion of the court that ‘‘an actual conflict

exists.’ We agree with counsel for the Government that

in reaching this conclusion the court appears to have taken

the position that the mere existence of multiple defend-

ants in a case such as this inevitably creates a conflict of

interest on the part of the lawyer undertaking to repre-

sent them. At the hearings and in its order the district

court pointed out possible contentions which might be

made by each of the four controllers which would excul-

pate him from liability, but cast the blame upon one or

more of his codefendants, including the Government.

These hypotheses, however, were based solely upon con-

jecture and ignored the representation of Government

counsel, which was accepted by the court, that in the con-

ference between the representatives of the Department of

* Woods v. Covington Cty. Bank, 537 F.2d 804, 810 (5 Cir.

1976).

5 Id.

* App. 143.

A24

Opinion of the Court of Appeals.

Justice and the controllers, there was no dispute among

them either with respect to their duties and responsibili-

ties or the details of the plane crash.’

Bearing further on the question is the fact that there is

little or no possibility that the four controllers will incur

any personal liability as a result of this litigation. As

heretofore noted, the plaintiffs allege, and the Govern-

ment admits, that the controllers were acting within the

course and scope of their employment at the time of the

erash, and under such circumstances any finding of negli-

gence against them would be imputed to the Government

* This lack of any dispute among the defendants apparently

disturbs counsel for the plaintiffs. At the initial hearing on the

motion the following colloquy took place:

Court: Does it hurt the plaintiffs? Does it harm your

clients if the defendants happen to have lawyers who can’t

represent either client adequately?

Mr. Rutherford: I think it does because I think and ex-

perience has shown that when the government attorney rep-

resents everybody in a piece of litigation that the position

taken by everybody is uniform, then in effect there is almost

a conspiracy of silence as to what truly happened with respect

to the air traffic controller management of this particular

flight. (App. 61).

From this it appears to us that in filing the motion for dis-

qualification, counsel for the plaintiffs seems to have been moti-

vated more by a desire to fragmentize the defense than by any

sensitivity to the ethical considerations involved. While it is

true that when such motions are based on Canon 4 of the Code of

Professional Responsibility the court must consider the rights of

both adversaries in the litigation, Canon 5 is addressed solely

to the relationship between the attorney and his immediate clients.

With respect to multiple representation, Disciplinary Rule 5-105

is designed to protect the interests of those clients, and their

interests alone, and the impact of such multiple representation

upon the plaintiffs is irrelevant. We further note that cases in-

volving the multiple representation of criminal defendants are

largely inapposite since in such eases the court is required to

consider the multiple representation in the light of the constitu-

tional right to effective assistance of counsel under the Sixth

Amendment.

A25

Opinion of the Court of Appeals.

and place liability upon it under the Tort Claims Act.

Additionally, we note that if the Government and the con-

trollers should be held to be jointly liable, the individual

defendants would not be required to pay the damages,

since a judgment against the United States would auto-

matically bar the entry of any contemporaneous or subse-

quent judgment against them. 28 U.S.C. § 2676; see Gil-

man v. United States, 206 F.2d 846, 848 (9 Cir. 1953), aff’d

347 U.S. 507. These, we think, are practical considera-

tions which appropriately should have entered into the

disposition of the motion.

Even, however, assuming the existence of a conflict, we

think the district court erred in its reading of Disciplinary

Rule 5-105(C) which permits an attorney to represent

multiple parties who are in a position of potential conflict

‘if it is obvious that he can adequately represent the in-

terest of each and if each consents to the representation

after full disclosure of the possible effect of such repre-

sentation on the exercise of his independent professional

judgment on behalf of each.’’ The court accepted the

representations of the Department of Justice relative to

such disclosure and consent, but, nevertheless, discounted

them entirely upon the basis that such consent ‘‘can not

be presumed to be fully informed when it is procured with-

out the advice of a lawyer who has no conflict of inter-

est.’"* We find no authority or reason to support the

theory that the consent to multiple representation under

the Rule can be effective only upon the advice of an inde-

pendent attorney, but, in any event, as we have noted,

counsel for the air controllers’ union participated in the

discussions between the individual defendants and the De-

partment of Justice, and we think it reasonable to assume

that he was aware of any problems and properly advised

the controllers with respect to their best interests.

5 App. 142-143.

A26

Opinion of the Court of Appeals.

The district court, however, further took the position

that even if there were full disclosure and ‘‘fully informed

consent’’, the Government was barred from representa-

tion because it was not ‘‘obvious’’ that it could adequately

represent the interest of each defendant. In the light of

what we have said in this opinion we think it is ‘‘obvious’’

that the Government can adequately represent the inter-

ests of the air controllers. Indeed, it appears to us that

such representation is highly desirable since these de-

fendants will have the benefit not only of Government

counsel but also the reservoir of the Government’s exper-

tise in this highly involved and technical litigation, and

will be spared the burden upon their time and resources

incident to the employment of independent counsel.

Noting that motions to disqualify lawyer-opponents

upon alleged ethical grounds have become increasingly

common in the litigation process, in /nternational Elec-

tronics Corp. v. Planzer, 527 F.2d 1288 (1975), the Second

Circuit requested four bar associations to file briefs on the

subject as amici curiae. In its brief the Connecticut Bar

Association made the following comments:

It behooves this court, therefore, while mindful of the

existing Code, to examine afresh the problems

sought to be met by that Code, to weigh for itself wha.

those problems are, how real in the practical world

they are in fact, and whether a mechanical and didac-

tic application of the Code to all situations automat-

ically might not be productive of more harm than

good, by requiring the client and the judicial system

to sacrifice more than the value of the presumed

benefits.

527 F.2d at 1293. Viewed in the light of these observa-

tions, with which we are in full accord, the plaintiffs’ mo-

tion should have been denied. Accordingly, we reverse

the order of the district court.

REVERSED.

A27

Order Denying Petition for Rehearing and

for Rehearing En Banc.

UNITED STATES COURT OF APPEALS

For THE Fourtrs Circuit

No. 77-2303

ss

-

The Aetna Casualty and Surety Company; Aetna Insur-

ance Company; American Empire Insurance Company ;

Commercial Union Insurance Company; Compagnies

D’Assurances Du Groupe Concorde; Continental Cas-

ualty Company; Employers Mutual Liability Insurance

! Company of Wisconsin; Hartford Fire Insurance Com-

| pany; Industrial Indemnity Company; Maryland Cas-

ualty Company; Reliance Insurance Company; Royal

Indemnity Company; St. Paul Fire and Marine Insur-

ance Company; Security Insurance Company of Hart-

ford; The Travelers Indemnity Company; Underwriters

at Lloyd’s and Associated British Insurance Companies ;

United States Fidelity and Guaranty Company; United

| States Fire Insurance Company; and Zurich Insurance

| Company,

Appellees,

versus

United States of America and Bernard C. Croseclose,

Alden E. Hare, William L. Hogan and Dennis L.

Hunter

Appellants.

a

+

ORDER

Upon consideration of the appellee’s petition for re-

hearing and suggestion for rehearing en banc, and no

A28

Order Denying Petition for Rehearing and

for Rehearing En Banc.

judge having requested a poll on the suggestion for re-

hearing en banc,

It is ApsupGep and Orxperep that the petition for rehear-

ing is denied.

It is FurrHer Orperep that the appellee’s motion to sup-

plement the record is granted.

Entered at the direction of Judge Field for a panel con-

sisting of Chief Judge Haynsworth, Judge Butzner, and

Judge Field.

For the Court,

/s/ Wruwuam K. Srare, II

CLERK

ee ee RT BER cere