Opposition Brief — Gottschall v. Jones & Laughlin Steel Corp.

Supreme Court, U.S,

FILED

- AUC 12 1985

No. 85-68 2 ) ROAR. SPANO, JR

an the

Supreme Court of the Wnited States

October Term, 1985

V. P. GOTTSCHALL and V. P. GOTTSCHALL

AS CUSTODIAN under the Uniform Gifts to Minors

Act for NICHOLAS P. GOTTSCHALL and TERESA

GOTTSCHALL, Minors, all in their own behalf, and for

all others similarly situated,

Petitioners,

VS.

JONES & LAUGHLIN STEEL CORPORATION,

Paul Thayer, Raymond A. Hay, Thomas C. Graham,

G. E. Smith, and D. T. Kalil,

Respondents.

On PETITION For A Writ OF CERTIORARI

To THE SUPREME CourRT OF

THE STATE OF PENNSYLVANIA

Brief In Opposition To

Petition For A Writ Of Certiorari

Counsel for Respondents:

DONALD C. WINSON*

; GEORGE M. MEDVED

ECKERT, SEAMANS, CHERIN

& MELLOTT

42nd Floor, 600 Grant Street

Pittsburgh, Pennsylvania 15219

(412) 566-6000

August 9, 1985 *(Counsel of Record)

i

COUNTERSTATEMENT OF

QUESTIONS PRESENTED FOR REVIEW

1. Whether this Court should issue a Writ of Certiorari

where there has been no final judgment or decree by any

Pennsylvania appellate court regarding the protective

orders, as required by 28 U.S.C. § 1257(3).

2. Whether this Court should issue a Writ of Certiorari

where the protective orders are interlocutory and not final.

3. Whether this Court should issue a Writ of Certiorari

where the protective orders conform with this Court’s

recent ruling in Seattle Times Co. v. Rhinehart, 104 S. Ct.

2199 (1984).

il

CORPORATE LISTING

In 1981, Jones & Laughlin Steel Corporation and

Youngstown Sheet and Tube Company merged into Jones

& Laughlin Steel, Incorporated (“J&L”). In December,

1984, J&L merged with Republic Steel Corporation, a New

Jersey corporation, which consolidated entity thereupon

changed its name to LTV Steel Company, Inc. L V Steel

Company, Inc. is a wholly-owned subsidiary of The LTV

Corporation. Listed in Appendix A to this brief is respon-

dent’s parent corporation, its subsidiary corporations and

all corporations with which it is affliated.

ay

ill

TABLE OF CONTENTS

Page

COUNTERSTATEMENT OF QUESTIONS

PRESENTED FOR REVIEW................... i

Gs ey Rs er il

pe a yy 6 lil

pp ee RS es gy: Sarr Vv

STATEMENT OF JURISDICTION .............. l

COUNTERSTATEMENT OF THE CASE......... 2

ee ee ee Wahab ak ses ken sewas 2

B. Procedural History Of The First

Ee re 3

C. Procedural History Of The Second

nk each powessescanss 4

D. Procedural History Of Appeals On The

Protective Orders After Consolidation. ..... 5

SUMMARY OF ARGUMENT .................. 6

ST Sg a 6

A. This Court Should Not Issue A Writ Of

Certiorari Because There Has Been No

Final Judgment Or Decree By Any

Pennsylvania Appellate Court, As Required

8 A Gy. | a 6

B. This Court Should Not Issue A Writ Of

Certiorari Because The Protective Orders

Are Interlocutory And Not Final.......... 9

\ 1. The Protective Orders Are

Not Appealable As Final Orders....... 9

iv

Page

2. The Protective Orders Are Not

Appealable Under The Collateral

Cy ee a, re web wink 10

C. This Court Should Not Issue A Writ Of

Certiorari Because The Protective Orders

Conform With This Court’s Recent Ruling

In Seattle Times Co. v. Rhinehart ......... 12

SE occ ot ees cecukarese pe aeeees eas 15

re skh cee ache ede aee peeaae rs A-1

dc ose ks. ae uw h ek Oe a B-1

APPR ©... 06a ss Akt wRtAh a) Ab weRee es C-1

Vv

TABLE OF AUTHORITIES

CASES

Page

Andrews v. United States, 373 U.S. 334 (1963) ........ 9

Catliv v. United States, 324 U.S. 229 (1945) .......... )

Clark v. Lomas & Nettleton Financial Corp.,

ee fF. le | Se 11

Cobbledick v. United States, 309 U.S. 323 (1940) ...... 4

Coopers & Lybrand v. Livesay,

Pe A I sb 6 8 cb ewes Vewvoues 9, 10

Cox Broadcasting Corp. v. Cohn,

ee Se MTOR 0 6 0S cccad cole keideces 6, 7, 8

Edward L. Forstall, et al. v. Jones & Laughlin Steel

Corporation, et al., Civil Action No. 80-1020

(United States District Court for the Western

Se er RD ccc cuca cu wa cnecueweas 2

Estelle v. Gamble, 429 U.S. 97 (1976) ............... )

Firestone Tire & Rubber Co. v. Risjord,

oe ere 10

Gillette Co. v. Minor, 459 U.S. 86 (1982) ..... eld cats 6

V. P. Gottschall, et al. v. Jones & Laughlin Steel

Corporation, et al., 482 A.2d 979

Ce og pula wk OS 5

Hamilton-Brown Shoe Co. v. Wolf Bros. Co.,

I aback se ok beh s ee vd eaws'e 9

International Products Corporation v. Koons,

Dae ee See Ge Ge. BOGS) oaks oes cc cece ecu 12

Radio Station WOW, Inc. v. Johnson,

I I oie ee ae 6,9

vi

Page

Republic Gas Co. v. Oklahoma,

er a

Richardson v. Hamilton International Corporation,

Ue Pe ys. rr 13

Richardson-Merrill, Inc. v. Koller, 53 U.S.L.W.

4773 (U.S. Sup. Ct. June 18, 1985).......... 10, 12

Seattle Times Co. v. Rhinehart,

SOOH. Cr. 2199 CIDRS) on. can sccacce 6, 8, 12, 13

Shaffer v. Heitner, 443 U.S. 186 (1977) .............0. 6

Simmons vy. United States, 390 U.S. 377 (1968) ...... 14

United States v. Hubbard, 650 F.2d 293

a RR ee er ee 13

Younger v. Harris, 401 U.S. 37 (1971)............65. 9

CONSTITUTION, STATUTES, AND RULES

on is a oe heehee hb Rae 4 7, 8, 12

28 U.S.C. § 1257(3) 0... cece ec ceeceeeeeees 1, 6, 7,8

No. 85-68

gn the

Supreme Court of the Vnited States

October Term, 1985

V. P. GOTTSCHALL, et al.,

Petitioners,

v.

JONES & LAUGHLIN STEEL CORPORATION, et al.,

Respondents.

ON PETITION For A Writ OF CERTIORARI

To THE SUPREME CouRT OF

THE STATE OF PENNSYLVANIA

Brief In Opposition To

Petition For A Writ Of Certiorari

STATEMENT OF JURISDICTION

This Court should refuse to exercise jurisdiction over

this matter because there has been no final judgment or

decree by any Pennsylvania appellate court, as required by

28 U.S.C. § 1257(3). In addition, this Court should refuse

to exercise jurisdiction over this matter because, as held by

2

the Superior Court of Pennsylvania, the two protective

orders are in rlocutory and not final.

COUNTERSTATEMENT OF THE CASE

Respondents have set forth a counterstaien.c.. of the

case because the statement of the case set forth by petition-

ers is inaccurate as well as incomplete.

A. Background

Petitioner V. P. Gottschall (“Mr. Gottschall”) was

admitted to practice before the Supreme Court of Pennsyl-

vania in 1966. Beginning in 1969 he was employed as an

attorney by Jones & Laughlin Steel Corporation (“J&L”)

and was responsible, inter alia, for securities matters until

the termination of his active employment in January 1979.

From 1976 to the end of his employment with J&L, Mr.

Gottschall was an Assistant General Counsel of J&L, and

from 1971 through 1979 he was an Assistant Secretary of

J&L. Since leaving J&L, Mr. Gottschall has filed a total of

six lawsuits against his former client, J&L, including the

two actions which underlie Mr. Gottschall’s petition.’

The nature and extent of Mr. Gottschall’s attorney-

client relationship with J&L which prompted the protec-

tive orders involved in Mr. Gottschall’s petition have

already been considered by a federal district court in

Edward L. Forstall, et al. v. Jones & Laughlin Steel Corpo-

ration, et al., Civil Action No. 80-1020 (United States Dis-

trict Court for the Western District of Pennsylvania). In

that securities class action involving many of the same

allegations involved in the present actions, Mr. Gottschall,

‘Summaries of the four other lawsuits which Mr. Gottschall has

filed against J&L and which do not underlie Mr. Gottschall’s petition

are contained in Appendix B to this brief.

3

an originally named individual plaintiff, was disqualified

from prosecuting the action pursuant to Canons 4 and 9 of

the Code of Professional Responsibility. The court ruled

that Mr. Gottschall’s prior representation of J&L as an

attorney had a substantial relationship to the matters

alleged in his complaint in that action.? Mr. Gottschall did

not appeal from his disqualification in that action.

B. Procedural History Of The First Protective Order

On October 29, 1980, Mr. Gottschall, as both named

class plaintiff and counsel of record, filed a class action

against J&L and five individuals who were officers of J&L

and/or its parent, The LTV Corporation, in the Court of

Common Pleas of Allegheny County, Pennsylvania at No.

GD 80-26963. In that action, Mr. Goitschal! requests, inter

alia, that a special investigator be appointed to conduct a

“thorough review of the situation” at J&L. On December

30, 1980, J&L filed a petition to disqualify Mr. Gettschall

as plaintiff and counsel of record pursuant to Canons 4 and

9 of the Code of Professional Responsibility.

In support of its petition, J&L filed affidavits of facts

and documents from its files to show the substantial rela-

tionship between Mr. Gottschall’s prior representation of

J&L and the allegations in his complaint. Judge Silvestri S.

Silvestri, the lower court judge, stayed the action pending

resolution of the petition to disqualify and entered a pro-

tective order sealing those portions of the record pertaining

to J&L’s petition and prohibiting disclosure of the contents

of the sealed portions by Mr. Gottschall to third parties.

7A copy of the order and accompanying opinion dated March 24,

1981 which disqualified Mr. Gottschall is attached hereto as Appendix

S

4

This order is the first of the two protective orders involved

in Mr. Gottschall’s petition.

On January 9, 1981, Mr. Gottschall filed an appeal

from this first protective order to the Superior Court of

Pennsylvania at No. 59 Pittsburgh 1981. Judge Silvestri

scheduled a hearing on the petition for disqualification for

April 14, 1981. On April 13, 1981, the day before the

disqualification hearing, Mr. Gottschall requested, and the

Superior Court granted, a stay of the hearing. On August 7,

1981, J&L moved to quash Mr. Gottschali’s appeal on the

ground that it was interlocutory. By order dated January

12, 1982, the Superior Court directed the parties to brief

and argue the jurisdictional propriety of the appeal with

the argument on the merits of the appeal.

C. Procedural History Of The Second Protective Order

On December 29, 1980, Mr. Gottschall, as both plain-

tiff and counsel of record, filed another lawsuit against J&L

at No. GD 80-32049 in the Court of Common Pleas of

Allegheny County, Pennsylvania. In that action, Mr. Gott-

schall requests the involuntary dissolution of /&L pursu-

ant to Section 1107 of the Pennsylvania Business Corpora-

tion Law. On January 29, 1981, J&L filed a petition to

disqualify Mr. Gottschall on the same basis as in GD 80-

26963 and also filed affidavits of facts and documents from

its files to show the substantial relationship between Mr.

Gottschall’s prior representation of J&L and the allega-

tions in his petition for involuntary dissolution.

Judge Silvestri stayed the action pendi.ig resolution of

the petition to disqualify and entered a protective order

sealing those portions of the record pertaining to J&L’s

petition and prohibiting disclosure of the contents of the

sealed portions by Mr. Gottschall to third parties. This is

5

the second of the two protective orders involved in Mr.

Gottschall’s petition.

On February 24, 1981, Mr. Gottschall took an appeal

from this second protective order to the Superior Court at

No. 467 Pittsburgh 1981. On April 13, 1981, the Superior

Court granted Mr. Gottschall’s request for a stay, thus

preventing the lower court from conducting a hearing on

J&L’s petition to disqualify which had been scheduled for

April 14, 1981. On August 7, 1981, J&L moved to quash

this appeal on the ground that it was interlocutory. By

order dated November 18, 1982, the Superior Court

directed the parties to brief and argue the jurisdictional

propriety of the appeal with the argument on the merits of

the appeal. On July 14, 1983, the Superior Court ordered

the consolidation of the ar »eal at No. 467 Pittsburgh 1981

with the appeal at No. 59 Pittsburgh 1981.

D. Procedural History of Appeals On The Protective

Orders After Consolidation

In May, 1984, the Superior Court of Pennsylvania

heard argument on Mr. Gottschall’s appeals and on J&L’s

motion to quash the appeals as interlocutory. On Septem-

ber 7, 1984, the Superior Court quashed the appeals on the

ground that the protective orders were not final so that the

court lacked subject matter jurisdiction. V. P. Goittschall, et

al. v. Jones & Laughlin Steel Corporation, et al., 482 A.2d

979 (Pa. Super. 1984).

On September 21, 1984, Mr. Gottschall filed a petition

for reargument in the Superior Court which was denied,

per curiam, on November 9, 1984. On December 3, 1984,

Mr. Gottschall filed a petition for allowance of appeal with

the Supreme Court of Pennsylvania which was also denied.

per curiam, on April 16, 1985. On July 11, 1985, Mr.

6

Gottschall filed a Petition for a Writ of Certiorari which is

presently pending before this Court.

SUMMARY OF ARGUMENT

There are at least three reasons why this Court should

deny the pending Petition for a Writ of Certiorari: (i) there

has been no final judgment or decree by any Pennsylvania

appellate court, as required by 28 U.S.C. § 1257(3); (i1) the

protective orders are interlocutory and not final; and (iii)

the protective orders in question conform with this Court’s

recent ruling in Seattle Times Co. v. Rhinehart, 104 S. Ct.

2199 (1984).

ARGUMENT

A. This Court Should Not Issue A Writ Of Certiorari

Because There Has Been No Final Judgment Or

Decree By Any Pennsylvania Appellate Court, As

Required By 28 U.S.C. § 1257(3).

Under 28 U.S.C. § 1257(3), the Supreme Court of the

United States can review “... final judgments or decrees

rendered by the highest court of a State in which a decision

could be had...” Where the highest state court in which a

decision could be had has not rendered a final judgment or

decree, this Court has declined to exercise certiorari juris-

diction. See, e.g., Gillette Co. v. Minor, 459 U.S. 86 (1982);

Shaffer v. Heitner, 433 U.S. 186 (1977); Cox Broadcasting

Corp. v. Cohn, 420 U.S. 469 (1975); Radio Station WOW,

Inc. v. Johnson, 326 U.S. 120, 124 (1945).

In Cox Broadcasting Corp. v. Cohn, 420 U.S. 469

(1975) this Court reiterated this rule of finality but set forth

four distinct exceptions to it. Because the protective orders

j

in question are not within any of the four exceptions enun-

ciated in the Cox case, they fail to meet the jurisdictional

requirements of 28 U.S.C. § 1257(3).

The first exception in the Cox case is comprised of

cases in which the federal claim to be reviewed on interloc-

utory appeal is, as a practical matter, “conclusive over the

case” because the party asserting the claim has no other

grounds upon which to rest his case. 469 U.S. at 479. The

protective orders do not fall within this first exception

because Mr. Gottschall has other grounds upon which to

rest his case to obtain the unsealing of the record, i.e.

demonstrating that there is no substantial relationship

between the underlying actions and his prior representa-

tion of J&L.

The second exception in the Cox case is comprised of

those cases in which “the federal issue finally decided by

the highest court in the state will survive and require deci-

sion regardless of the outcome of future-state court pro-

ceedings.” 420 U.S. at 480. The protective orders do not

fall within this exception because the future state court

proceedings regarding Mr. Gottschall’s disqualification

may obviate the protective orders. If Mr. Gottschall is not

disqualified, the court presumably will unseal the affidavits

and supporting documents and the First Amendment issue

will be resolved in favor of Mr. Gottschall.

The third exception in the Cox case is comprised of

those cases in which subsequent review of a fully adjudi-

cated claim will be impossible regardiess of the ultimate

outcome of further proceedings on the merits still to be

conducted in the state courts. As Justice White explained,

“In these cases, if the party seeking interim review ulti-

mately prevails on the merits the federal issue will be

mooted; if he were to lose on the merits, however, the

8

governing state law would not permit him again to present

his federal claims for review.” 420 U.S. at 481. The protec-

tive orders do not fall within this third exception because if

Mr. Gottschall were disqualified, he could appeal to the

Pennsylvania Appellate Courts at the conclusion of the

action for review of all issues, including any First Amend-

ment issue, he may assert with respect to the protective

orders.

The fourth exception in the Cox case permits interloc-

utory review when: (i) “reversal of the state court on the

federal issue would be preclusive of any further litigation

in the relevant cause of action”; and (ii) failure to consider

the court decision immediately “might seriously erode fed-

eral policy.” 420 U.S. at 482-83. The protective orders do

not fall within this fourth exception because their dissolu-

tion would not preclude further litigation of either the

underlying cause of action or the motion to disqualify.

Moreover, this Court’s refusal to consider them at this

time would not seriously erode any federal policy because,

as discussed below, they were entered in conformity with

this Court’s recent decision in Seattle Times Co. v.

Rhinehart, 104 S. Ct. 2199 (1984).

In addition to the absence of a “final order” under 28

U.S.C. § 1257(3), no Pennsylvania appellate court has

ruled on the merits of the protective orders, as required by

28 U.".C. § 1257(3). The Superior Court held that the

appeals were interlocutory and the Supreme Court of

Pennsylvania declined to review the decision of the Supe-

rior Court.

Since there is no final order and no determination on

the merits by the Pennsylvania courts, this Court should

not exericise its jurisdiction under 28 U.S.C. § 1257(3). By

refusing to exercise jurisdiction, this Court would not

9

undermine “harmonious state-federal relations’ and

would foster the long-recognized salutary principles of

comity and federalism. See Radio Station WOW, Inc. vy.

Johnson, 326 U.S. 120, 124 (1945); Republic Gas Co. v.

Oklahoma, 334 U.S. 62 (1948); Younger v. Harris, 401

U.S. 37 (1971).

B. This Court Should Not Issue A Writ of Certiorari

Because The Protective Orders Are Interlocutory And

Not Final.

This Court has recognized that the lack of finality of

an order “of itself alone” furnishes sufficient ground for

the denial of a writ of certiorari. Hamilton-Brown Shoe Co.

v. Wolf Bros. & Co., 240 U.S. 251, 258 (1916). See also,

Estelle v. Gamble, 429 U.S. 97, 114 (1976) (Mr. Justice

Stevens in dissent referred to “the Court’s normal practice

of denying interlocutory review.’’). Since the protective

orders are not final or appealable under the collateral order

doctrine, this Court should deny Mr. Gottschall’s petition.

1. The Protective Orders Are Not

Appealable As Final Orders.

Subject to certain exceptions not here relevant, appel-

late jurisdiction generally extends only to appeals from

“final decisions” of the lower courts. 28 U.S.C. § 1291; 42

Pa. C.S.A. § 722; see also, Andrews vy. United States, 373

U.S. 334 (1963); Cobbledick v. United States, 309 U.S. 323

(1940). A final decision is one which ends the litigation on

the merits and leaves nothing for the court to do but enter

the judgment. Coopers & Lybrand vy. Livesay, 437 U.S. 463,

467 (1978); Catliv v. United States, 324 U.S. 229 (1945).

The protective orders in question do not end the liti-

gation; they merely seal that part of the record which was

offered to establish J&L’s attorney-client privilege. The

10

protective orders only prevent Mr. Gottschall from

improperly disclosing the confidential information filed in

connection with J&L’s petitions to disqualify Mr. Gott-

schall, and they merely establish the threshold procedures

which the lower court correctly found to be necessary to

protect the asserted attorney-client privilege pending the

determination of J&L’s petitions to disqualify. Hence, to

allow Mr. Gottschall’s appeals to be considered on the

“merits” at this time would unquestionably frustrate the

policies underlying the finality requirement for the appeal-

ability of orders, i.e., to preclude piecemeal determinations

with the consequent protraction of litigation. See Firestone

Tire & Rubber Co. v. Risjord, 499 U.S. 368 (1981).

Unless the lower court may place under seal evidence

offered to support an asserted claim of attorney-client priv-

ilege or until the lower court determines the issues raised

by the asserted privilege, one would, in effect, be forced to

waive the atvorney-client privilege in the process of assert-

ing it. Thus, the interim relief of a protective order pending

determination of a petition to disqualify based on Canons

4 and 9 is proper and interlocutory.

2. The Protective Orders Are Not Appealable Under

The Collateral Order Doctrine.

Under the collateral order doctrine, as established by

this Court, an order is considered final and appealable only

if (i) it conclusively determines the disputed question; (ii)

it resolves an important issue completely separate from the

disputed question; and (iii) it cannot be effectively

reviewed on appeal from a final judgment. Richardson-

Merrill, Inc. v. Koller, 53 U.S.L.W. 4773 (June 18, 1985);

Firestone Tire & Rubber Co. v. Risjord, 449 U.S. 368

(1981); Coopers & Lybrand v. Livesay, 437 U.S. 463 (1978).

11

Here, the protective orders meet none of the three require-

ments of the collateral order doctrine.

First, the protective orders do not conclusively deter-

mine the disputed question. Rather, they are interim

orders entered by the lower court to protect confidentiality

pending a determination of J&L’s petition to disqualify

Mr. Gottschall. The conclusive determination of the pro-

priety of the protective orders would have occurred at the

hearing on the petition to disqualify which was aborted by

Mr. Gottschall’s request for a stay of the hearing.

Second, the protective orders do not resolve an impor-

tant issue completely separate from the disputed question.

Rather, the orders merely seal those portions of the record

relating to J&L’s petition to disqualify Mr. Gottschall and

prohibit disclosure of the sealed record. Because the com-

plaints filed by Mr. Gottschall in the underlying actions

concern matters upon which he worked while an attorney

for J&L, the protective orders directly relate to the main

cause of action.

Third, the protective orders can be effectively

reviewed on appeal from a final judgment. After final judg-

ments have been entered, Mr. Gottschall can appeal the

lower court’s protective orders and, if successful, unseal

the record and disclose to third parties the information he

obtained as an attorney for J&L. Deferring consideration

of the orders until such time would afford this Court as

well as the Pennsylvania appellate courts the opportunity

to consider these orders in light of a fully developed factual

record which would outline the confidences that J&L

- reposed in its former attorney, Mr. Gottschall.3

‘The protective orders are not appealable as injunctions. Clark vy.

Lomas & Nettleton Financial Corporation, 581 F.2d 516 (Sth Cir. 1978):

(Continued on next page)

12

Finally, this Court has recently held that “orders dis-

qualifying counsel in civil cases, like orders disqualifying

counsel in criminal cases, are not collateral orders subject

to appeal as ‘final judgments’ within the meaning of 28

U.S.C. § 1291.” Richardson-Merrill, Inc. v. Koller, 53

U.S.L.W. 4775 (June 18, 1985). Since an order disqualify-

ing Mr. Gottschail would not be collaterally appealable the

two protective orders which were merely interim orders

entered to protect confidentiality pending a disqualifica-

tion hearing, a fortiori, are not appealable under the collat-

_ eral order doctrine.

C. This Court Should Not Issue A Writ Of Certiorari

Because The Protective Orders Conform With This

Court’s Recent Ruling In Seattle Times Co. vy.

Rhinehart.

This Court should deny Mr. Gottschall’s petition not

only on the basis of the absence of a final decision by the

appellate courts of Pennsylvania and the interlocutory

nature of the protective orders, but also on the basis of

Seattle Times Co. v. Rhinehart, 104 S. Ct. 2199 (1984).

In the Seattle Times case, this Court noted that an

order prohibiting dissemination of discovered information

before trial is not the kind of classic prior restraint that

requires exacting First Amendment scrutiny. Moreover,

this Court recognized that because pretrial protective

orders do not compromise the First Amendment rights of

a restricted party as much as other restraints might, and

also because litigants and third parties who may have to

produce confidential information have protectable privacy

(Continued)

International Products Corporation vy. Koons, 325 F.2d 403 (2nd Cir.

1963).

13

interests, the trial court has “‘substantial latitude” to fash-

ion protective orders.

In the underlying actions, Judge Silvestri properly

entered the protective orders in order to preserve J&L’s

attorney-client privilege and to avoid contravention of the

policies underlying Canons 4 and 9 of the code of Profes-

sional Responsibility. In its petitions to disqualify Mr.

Gottschall, J&L set forth confidential information to show

that Mr. Gottschall’s prior representation of J&L was sub-

stantially related to Mr. Gottschall’s allegations in the

underlying actions.4 The protective orders were interim

only and entered pending a hearing which Judge Silvestri

promptly scheduled.‘ If Judge Silvestri had refused to enter

the protective orders, J&L would have been placed in the

anomalous position of being required to sacrifice confiden-

tiality in order to assert its right to confidentiality and of

being required to waive its attorney-client privilege in

order to preserve the privilege.

The refusal by courts to sanction such an anomaly was

recognized by the Court of Appeals for the District of

Columbia Circuit in United States v. Hubbard, 650 F.2d

293 (D.C. Cir. 1980). In the Hubbard case, the court

‘The showing of such a “substantial relationship” is the legal test

for disqualification. See Richardson v. Hamilton International Corpora-

tion, 469 F.2d 1382 (3rd Cir. 1972). The merits of J&L’s assertion of the

prior attorney-client relationship to disqualify Mr. Gottschall is demon-

strated by the fact that Mr. Gottschall was disqualified by a federal court

from prosecuting a similar suit against J&L. See Appendix C attached

hereto.

‘Like the Seattle Times case, which involved the issue of the possi-

ble dissemination of information involuntarily produced by plaintiffs

through discovery, the information covered by the protective orders

was also produced involuntarily by J&L as a result of lawsuits filed by

“Mir. Gottschall, an attorney, against his former client, J&L.

14

reversed the lower court’s unsealing of confidential docu-

ments where, as here, the documents were being used for

the sole purpose of demonstrating that their seizure was

unlawful and that their confidentiality should be main-

tained. In holding that it was improper to require sacrifice

of confidentiality in order to vindicate confidentiality, the

court declared:

It would be ironic indeed if one who contests the

lawfulness of a search and seizure were always to

acquiesce in a substantial invasion of these interests

simply to vindicate them.

650 F.2d at 321. Cf Simmons vy. United States, 390 U.S.

377 (1968).

Further, Mr. Gottschall can hardly complain of any

delay resulting from appeals or the fact that he did not

cross-examine anyone with respect to the underlying

actions. It was Mr. Gottschall, not J&L, who obtained the

stay from the Pennsylvania Superior Court one day before

the scheduled disqualification hearing, which prevented

the lower court from proceeding with a determination with

respect to the protective orders. By filing the motion to

stay, Mr. Gottschall precluded the lower court from estab-

lishing a record as to the relationship between Mr. Gott-

schall’s prior representation of J&L and the subject matter

of the underlying actions.

Finally, Mr. Gottschall’s claim that the protective

orders somehow inhibit his right to counsel is groundless.

First, the orders do not preclude Mr. Gottschall from dis-

cussing anything with anyone whom he might consult as

potential co-counsel. The protective order in GD No. 80-

32049 expressly states that Mr. Gottschall can consult with

potential co-counsel and the protective order in GD No.

15

80-26963 was stipulated to be the same in intent and effect.

Second, in both actions, Mr. Gottschali is counsel of

record and in Paragraph 12 of his class action complaint

against J&L in GD No. 80-26963 Mr. Gottschall repre-

sented that he is fully competent to represent the alleged

class.

CONCLUSION

In view of the foregoing, respondents respectfully

request that this Court deny the pending Petition for a

Writ of Certiorari.

Respectfully submitted,

Sete eBea ee ee Oe ane ee Oeeses ee Banas 26 6 8

SOOO eeeeaeseeeeaeseonsesds 60eaeestonnaene eee ess

GEORGE M. MEDVED

ECKERT, SEAMANS, CHERIN & MELLOTT

42nd Floor, 600 Grant Street

Pittsburgh, Pennsylvania 15219 |

Counsel for Respondents

APPENDIX A

A-|

CORPOR..-E LISTING

THE LTV CORPORATION

The LTV Corporation

Ashland Corporation

Continental Emsco Company

Corsair Insurance Company Limited

GK Steel corporation

Gulf States Steel Corporation

Investment Bankers, Inc.

Immobiliaria Nueva Icacos, S.A. de C.V.

J&L Empire, Inc.

Empire Iron Mining Partnership

Jones & Laughlin Steel Incorporated

Kentron Saudi Arabia, Inc.

Kingsley International Insurance Ltd.

LTV Aerospace and Defense Company

LTV Education Systems, Inc.

LTV/EGL Holding Company

L-S Electro-Galvanizing Company

LTV Electro-Galvanizing, Inc.

LTV Energy Products Company

LTV Holdings, Inc.

LTV International, N.V.

LTV International Sales Company

LTV Leasing, Inc.

LTV Properties, Inc.

LTV Sales Finance Company

LTV Steel Specialty Products Company

LTV Steel Company, Inc.

LTV Steel Tubular Products Company

Georgia Tubing Corporation

LTVUS, Corp.

THE LTV Corporation (Wyoming)

A-2

Lykes Financial Corporation

Lykes Financial Corporation

Lykes Leasing Corporation

Ore Finance Company

RepSteel Overseas Finance N.V.

Republic International Corporation

Sierra Research Corporation

Western Reserve Capital Management, Inc.

LTV AEROSPACE AND DEFENSE COMPANY

SUBSIDIARIES

Am General Corporation

LTA International, N.V.

MLRS International Corporation

Sierra Industries, Inc.

Sierra Information Systems Corporation

National Telephone Systems, Inc.

Natel Communication Services, Inc.

Universal Time/Frequency, Inc.

Sierra Research International Corporation

Vought Industries, Inc.

Vought International, Inc.

Vought Overseas, Ltd.

Vought Arabia

Vought Properties, Inc.

LTV ENERGY PRODUCTS COMPANY

SUBSIDIARIES

Conensco Limited

Conensco Marine Systems S.A.

Continental Emsco Company C.A.

Petroequip

Continental Emsco Company de Mexico, S.A. de C.V.

Halcorp, Inc.

Elastomeric Actuators, Inc.

| A-3

| Fibercast Company

Juddcorp, Inc.

| J. K. Industries, Inc.

LTV Energy Products Company Limited

Nippon Conensco Co., Ltd.

| Oil States Offshore Marine, Inc.

Oil States Rubber Co.

| Oil States Rubber Co. (U.K.) Limited

Oil States Rubber DISC, INC.

Technical Plastics, Inc.

LTV HOLDINGS, INC. SUBSIDIARIES

NRE Corporation

North River Energy Company

Reomar, Inc.

Chateaugay Corporation

Pineocean Limited

Republic Builders Products Corporation

Republic Buildings Corporation

Republic Container Company

Republic Drainage Products Company

Republic Steel Services Group, Inc.

Hogg Robinson Group, p.l.c.

Republic Steel Services Group, Ltd.

Cedar Hill Management Ltd.

Republic Hogg Robinson IIS (Bermuda) Ltd.

Kepublic Storage Systems Company

LTV STEEL COMPANY, INC. SUBSIDIARIES

Agiomet, Inc.

Aliquippa and Southern Railroad Company

Apieco Assurance Ltd.

BCNR Mining Corporation

Beatrice Pocahontas Company

Beckley Coal Mining Company

A-4

Bristol Quebec Mining Co., Limited

Buffalo River Improvement Corporation

Carryore, Limited

Chicago Short Line Railway suasens

Crystalane, Inc.

Bardale Coal Company

Crystalee

Cuyahoga Valley Railway Company, The

Mahoning Valley Railway Company, The

Dearborn Leasing Company

Donner-Hanna Coke Joint Venture

Economy Fuel and Supply Company

Qundr Corporation

Iron Ore Company of Canada

Jay & Sea Corporation

Jalcite I, Inc.

Jalcite II, Inc.

Black River Line Company

Jalore Mining Company, Ltd.

Jones & Laughlin Environmental Properties, Inc.

Jones & Laughlin Mining Company

Jones & Laughlin Ore Mining Company

J&L Clilffs Ore Partnership

Tilden Mine Joint Venture

Knoll Lake Minerals Limited

Lorain Pellet Terminal Co.

Monongahela Connecting Railroad Company, Inc.

Midland Terminal Company, The

Mesaba-Cliffs Mining Company, The

Negaunee Mine Partnership

Nemacolin Mines Corporation

Northern Land Company

Olga Coal Company

Pioneer Pellet Plant

A-5

Presque Isle Corporation

R-N Corporation

Republic Hibbing Corporation

Hibbing Development Company

Hibbing Taconite Company

Republic-Reserve, Inc.

Reserve Mining Co.

Reserve Mining Co.

Republic Technology Corporation

Reserve Mining Company

Reserve Mining Company

Ress Realty Company

The Terminal Garage Company

Sandy Ridge Energy Corporation

Knox Creek Coal Corporation

Lassie Coal Corporation

Sandy Ridge Carbon Corporation

The Prospect Corporation

Sao Carlos Minerios S.A.

Sao Thomas Minerios S.A.

Minerios Minerva S.A.

The River Terminal Railway Company

Tuscaloosa Energy Corporation

Union Drawn Steel Company, Limited

Wabush Iron Co. Limited

Arnaud Railway Company

Wabush Lake Railway Company, Limited

Youngstown Erie Corporation

Erie Development Company

Erie Mining Partnership

Erie Mining Company

YST Erie Corporation

APPENDIX B

B-1

OTHER LITIGATION BETWEEN

MR. GOTTSCHALL AND J&L

1. On September 5, 1980 Mr. Gottschall filed a class

action complaint against J&L in V. P. Gottschall, et al. v. |

Jones and Laughlin Steel Corporation, et al., No. GD 80-

12?*8 (Court of Common Pleas of Allegheny County, Penn-

sylvania) which requested dissemination of certain finan-

cial information for 1978 and 1979. That action was dis-

continued on September 24, 1980 based on a stipulation of

counsel and without prejudice to J&L’s position as to any

liability for dissemination of financial information.

2. On May 27, 1981 Mr. Gottschall filed another class

action complaint in V. P. Gottschall, et al. v. Jones and

Laughlin Steel Corporation, et al., GD 81-14167 (Court of

Common Pleas of Allegheny County, Pennsylvania) which

requested dissemination of certain financial information

for 1980. That action was subsequently discontinued by

Mr. Gottschall because the requested information had

already been sent to J&L preferred shareholders before Mr.

Gottschall’s complaint had been served upon J&L.

3. On June 19, 1981 Mr. Gottschall, as a named class

plaintiff, with the law firm of Strassburger, McKenna, Mes-

ser, Shilobod and Gutnick as counsel, filed a class action

complaint against J&L in-Forstall, et al. v. Jones & Laugh-

lin Steel Corporation, et al., Civil Class Action No. 81-

1020 (United States District Court for the Western District

of Pennsylvania). On March 24, 1982 Judge Bloch granted

J&L’s motion to disqualify Mr. Gottschall and the Strass-

burger firm to prevent violations of Canon 4 of the Code

regarding the potential disclosure of confidences gained by

Mr. Gottschall during his employment as counsel for J&L.

No appeal was taken. On October 26, 1982 Judge Mencer

denied the motion of the remaining named plaintiffs to

saa

B-2.

certify the action as a class action on the ground that they

had not satisfied the requirements of Rule 23 of the Fed-

eral Rules of Civil Procedure. On February 7, 1983, the

court granted J&L’s motion for summary judgment dis-

missing the claims of the remaining individual plaintiffs

for failure to state a claim under the federal securities laws.

This order was affirmed by the U.S. Court of Appeals for

the Third Circuit in a judgment order dated September 15,

1983. No petition for a writ of certiorari was filed.

4. On May 14, 1985 Mr. Gottschall filed an action

against J&L in V. P. Gottschall v. Jones & Laughlin Steel,

Inc., formerly Jones & Laughlin Steel Corporation, a/k/a

LTV Steel Corporation, No. GD85-8594 (Court of Com-

mon Pleas of Allegheny County, Pennsylvania). This

action is an attempt by Mr. Gottschall to recover attor-

neys’ fees he incurreca in his defense of a replevin action by

J&L against Mr. Gottschall to obtain the return of J&L

documents that Mr. Gottschall had in his possession. The

replevin action was filed on March 9, 1981 and was discon-

tinued by praecipe on May 16, 1983 pursuant to a joint

stipulat’on.

APPENDIX C

C-]

IN THE UNITED STATES DISTRICT COURT FOR

THE WESTERN DISTRICT OF PENNSYLVANIA

EDWARD L. FORSTALL, et al.

Plaintiffs, Civil Action

VS. No. 81-1020

JONES & LAUGHLIN STEEL

CORPORATION, et al.,

Defendants.

MEMORANDUM OPINION

BLOCH, District J.

This action is brought pursuant to the Securities

Exchange Act of 1934 charging that defendants made false

and misleading public statements regarding the stock of

Jones & Laughlin Steel Corporaticn (hereinafter referred

to as “J & L”) for the purpose of defrauding its sharehold-

ers. Plaintiffs allege that such statements and omissions

were designed to diminish the value of the stock so that

LTV Corporation could purchase the J & L stock of public

shareholders at a substantially depressed price.

Defendants (Jones & Laughlin Steel Corporation,

LTV Corporation, Jones & Laughlin Industries, Inc., Paul

Thayer, Raymond Hay, and Thomas C. Graham) have

moved to disqualify and dismiss the complaint of V. P.

Gottschall (hereinafter referred to as “Gottschall’’) who

served as counsel for J & I for ten years. Defendants allege

that there is a substantial relationship between the subject

matter of this litigation and matters handled by Gottschall

as counsel for J & L in 1978. Defendants contend that this

relationship creates an irrebuttable presumption of confi-

dentiality which prohibits Gottschall from initiating or

C-2

participating in litigation against J & L by virtue of case

law interpreting Canons 4 and 9 of the Code of Profes-

sional Responsibility. Plaintiff Gottschall responds that

whether there is a substantial relationship between the sub-

ject matter of this suit and his previous work as an attor-

ney for J & L is immaterial because he is not charged with

confidences when the client seeks to perpetrate a fraud or

criminal scheme.

Defendants also seek disqualification of Gottschall

counsel, E. J. Strassburger, Howard F. Messer, and H. Yale

Gutnick (hereinafter the “Strassburger firm’), on the

ground that counsel has obtained knowledge about the

case through the disclosure of confidentia’ information by

Gottschall. For the same reason, defendant. seek dismissal

of the two plaintiffs remaining as class representatives,

Edward L. Forstall and William L. Livitski.

The Third Circuit Court of Appeals reviewed a similar

case in 1972 involving an attorney who owned stock in a

corporation which he had previously represented and who

initiated a shareholders’ derivative suit against the corpo-

ration for allegedly issuing a false and misleadiing proxy

statement in connection with a merger. See, Richardson v.

Hamilton International Corp., 469 F.2d 1382 (1972). The

Court upheld an order disqualifying the attorney as plain-

tiff in the class action and shareholders’ derivative suit on

the ground that Canon 4 of the Code of Professional

Responsibility, which concerns client confidentiality,

might be breached.

The Court reviewed the rationale underlying Canon 4

and found that “the free flow of information from client to

attorney, so vital to our system of justice [would] be irrepa-

rably damaged” if an attorney were permitted to reveal

confidences. Richardson, supra, at 1384, citing United

C-3

States v. Standard Oil Company, 136 F. Supp. 345, 355

(S.D. N.Y. 1955); ABA, Informal Opinion No. 287 (1953).

The test for determining whether confidences would be

breached is whether the second suit is “so closely con-

nected with the subject matter of the earlier representation

that confidences might be involved.” ABA, Informal Opin-

ion No. 1233 (August 24, 1972). As the Seventh Circuit

Court of Appeals recently noted, a finding that the subject

matter is related amounts to an irrebuttable presumption

that confidentiality existed in order to avoid “compelling

the former client to prove the very things that he seeks to

keep confidential.” Jn re Corrugated Container Antitrust

Litigation, 659 F.2d 1341 (1981).

In support of their motion, defendants state that Gott-

schall was employed from February of 1969 through Janu-

ary 15, 1979, as an attorney with general responsibility for

J & L’s compliance with securities law. In 1976, he was

promoted to the position of Assistant General Counsel

with securities matters assigned to his supervision. On this

point, Gottschall admits in his answer that he participated

on behalf of J & L in discussions and reviews of drafts of a

proxy statement relating to the merger of LTV and Lykes,

which is described in Paragraph 36 of the Complaint. Also,

defendants claim that Gottschall’s counsel for this action,

the Strassburger law firm, has examined documents of

J & L which relate to this litigation and were taken by

Gottschall during or after his employment as an attorney

for J & L. On this point, Gottschall admits removal of

documents which relate to J & L, but he denies that the

documents were the property of J & L. Further, he admits

that some of the documents relate to the merger of LTV

and Lykes and that the Strassburger firm has examined

those documents. This Court finds that Gottschall’s

C-4

involvement in any discussions regarding the merger of

LTV and Lykes as counsel for J & L is past representation

which bears on the present action. As the Seventh Circuit

Court of Appeals noted in a recent opinion, “[w]here parts

of the present action and the past representation concern

the very same subject matter, reasonable minds must agree

they are substantially related.” Jn re Corrugated Container

Antitrust Litigation, 659 F.2d 1341, 1346 (1981).

Gottschall contends that whether or not there exists a

substantial relationship between these matters, J & L can-

not assert the privilege of confidentiality because there is

no such privilege where a client seeks the attorney’s advice

in furtherance of the commission of a fraud: “He must let

the truth be told.” Clark v. United States, 289 U.S. I, 53

S.Ct. 465, 77 L.Ed. 993 (1933) (Cardoza, J.). Defendants

respond that letting the truth be told is a far cry from

initiating a suit for personal monetary gain. The same

point was raised and succinctly answered by the Southern

District Court of New York in 1971 in an opinion which

was upheld by the Second Circuit Court of Appeals: “If an

attorney believes that executives of a corporate client are

engaging in wrongful conduct, he may disclose this to the

corporation’s board of directors; but he infringes Canon 4

if he himself institutes suit. ABA Opinion 202 (1940).”

Doe v. A. Corp., 330 F. Supp. 1352 (1971), affirmed, 453

F.2d 1375 (2d Cir. 1972).

Finally, Gottschall argues that he should be permitted

to maintain his suit against the remaining defendants,

LTV Corporation and Jones & Laughlin Industries, Inc.

(hereinafter referred to as “JLI’’), if his suit against J & L is

dismissed. The complaint alleges that J & L and JLI were

subsidiaries of LTV. For purposes of ethical considera-

tions, the ABA Committee on Ethics and Professional

C-5

Responsibility has opined that “‘as a matter of reality and

practicality,” the separate legal entities of the corporations

should be ignored. ABA Informal Opinion 973.

This Court, therefore, finds that Gottschall’s com-

plaint should be dismissed. In responding to the motion,

Gottschall admitted that his own disqualification would

require disqualification of the Strassburger firm. Indeed,

for the disqualification to serve its intended purpose of

prohibiting the disclosure of client confidences, this Court

will also enjoin Gottschall and the Strassburger firm from

disclosing confidential information to anyone.

In addition to disqualification of the Strassburger

firm, defendants seek dismissal of the suit brought by

plaintiffs Edward L. Forstall and William J. Livitski on the

ground that they may be privy to confidential information

disclosed by Gottschall. Affidavits submitted by the named

plaintiffs indicate no exchange of confidential information

has taken place. Since both parties have urged this Court to

decide defendants’ motion based on the facts set forth in

pleadings and affidavits of record, this Court finds no evi-

dence which would support dismissal of the complaint

brought by plaintiffs Forstall and Livitski. Dismissal of

Gottschall’s complaint does not interfere with the right of

other class members to maintain this action.

An appropriate Order will be issued.

ie > | dial SS Avan N, BLOCH |.

United States District Judge

C-6

ORDER

AND Now, this 24th day of March, 1982, upon consid-

eration of the Motion to Disqualify the Named Plaintiffs

and the Attorneys for the Plaintiff Class and to Dismiss

this Action filed by Defendants, Jones & Laughlin Steel

Corporation, LTV Corporation, Jones & Laughlin Indus-

tries, Inc., Paul Thayer, Raymond Hay, and Thomas C.

Graham, in the above captioned matter on October 1,

1981,

It Is HEREBY ORDERED that said Motion is GRANTED in

part as follows:

1. V. P. Gottschall is disqualified as a named plaintiff

and as a class representative;

2. V. P. Gottschall is prohibited from communicating

to other class members any information concerning

J & L that he acquired in connection with his

employment as an attorney for J & L;

3. H. Yale Gutnick, Howard F. Messer, E. J. Strass-

burger and the firm of Strassburger, McKenna,

Messer, Shilobod & Gutnick are disqualified from

representing any members of the class in this or

any similar action; and

4. H. Yale Gutnick, Howard F. Messer, E. J. Strass-

burger and the firm of Strassburger, McKenna,

Messer, Shilobod & Gutnick are prohibited from

communicating to class members any information

they received from V. P. Gottschall that he

acquired in connection with his employment as an

attorney for J & L. |

C-7

It Is FURTHER ORDERED that said Motion is DENIED,

insofar as Defendants seek to disqualify E. L. Forstall and

W. J. Livitski.

ALAN N. BLOCH

Reawekw ate ewe witi he ew wea ae ee

United States District Judge

cc: E. J. Strassburger, Esquire

3101 Grant Building, Pittsburgh, PA 15219.

Donald C. Winson and

Richard W. Gladstone, II, Esquires

42nd Floor, U.S. Steel Building,

Pittsburgh, PA 15219.

David A. Brownlee, Esquire

1500 Oliver Building, Pittsburgh, PA 15222.