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

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Petition
- **Published:** January 1, 1978
- **Citation:** 439 U.S. 822

## Text

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

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

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385005_0963%3A1. Public record. Not legal advice.