Petition for Writ of Certiorari — Schlesinger v. Teitelbaum

statins |

t

° —

Supreme’ Cort urs

a FILED :

LIBRARY. *

SUPREME COURT, U- 3s. JuL 7 173

—_—_————_— —

MICHAEL RODAM, JR.,CLERK

IN THE

Supreme Court of the United States

uw €37- 115

0. . eeceeeseee

October Term, 1972

HYMEN SCHLESINGER and DAVID A. ITTENSLER,

Petitioners,

vs.

HON. HUBERT TEITELBAUM, UNITED STATES

DISTRICT JUDGE,

Respondent,

and

POINT TOWING COMPANY, INC., RIVER TRANS-

PORTATION, INC. and M. G. TRANSPORT

SERVICES, INC.,

Respondents.

PETITION FOR WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR THE

THIRD CIRCUIT

HYMEN SCHLESINGER, ESQUIRE,

ISADORE SCILESINGER, ESQUIRE,

LOUIS C. GLASSO, ESQUIRE,

716 Carlton Ilouse,

Pittsburgh, Pa. 15230,

Counsel for Petitioners.

BATAVIA TIMES, APPELLATE COURT PRINTERS

EDWARD W. SHANNON, REPRESENTATIVE

1701 PARKLINE DR., PITTSBURGH, PA. 15227

412-661-7463

&

INDEX.

PAGE

1. Reports of Opinions in the Courts Below ........ 1

2. Grounds on Which Jurisdiction is Invoked .... 2

3. Statutes Conferring Jurisdiction to Review Judg-

SE . & c55a4 kr ade teu e Gein es- (es ce dserenens 2

4. Questions Presented ........... ccc cece eee ences :2

5. Constitutiona! Provisions Involved in the Case .. 2

6. Statement of the Case ............ cee eee e eee 3

7, Reasons why the Writ should Issue ............ : oe

TABLE oF Cases.

American Trial Lawyers Association v. New Jersey

Supreme Court, 34 L. Ed. 2nd 651 ................ 8

Bolling v. Sharpe, 347 U.S. 497 ......... 0.0.0.0 00 8 5

Cammer v. U. 8., 350 U. S. 390 .... 1... cece ee eee &

Gair v. Peck, 160 N. BE. 2d 43 ....................

Moore v. C/S Fram, 226 F. Supp. 816 (D. C. Tex.),

affd. 338 F. 3d GES (5 Cir.) ....cccccccscccccens 6

‘Shannon v. Cross, 222 N. W. 168, 245 Mich. 220 ...... 5

In re Southern S. S. Co., 185 F. Supp. 358 (D.C. Del.) = 6

= v. Industrial Com., 207 F. 2d 178, 115 Utah

cheeses eCGRSGRCKS CAARIASECR OS OEERE RAS ER COCO 5

U.S. Bulk Carriers Inc. v. Arguelles, 400 U.S. 351... 6

Vaughan v. Atkinson, 369 U. S. 527 ................ 6

Washington-Southern Nav. Co. v. Balt. & Phila.

Steamboat Co., 236 U. S. 629 .................. 7

TI.

STATUTES.

PAGE

Federal Employers Liability Act, 45 U. S. C. A. 51

5 MPO PTT TT Te rT ereT TTT Tr eee TTT eer ee

SE Oe, Ge We Ws Ge Bis UD ok eevee ccsesececcersess 6

28 U. S. C. 1264(1) and 2101(c) ............. ce eee 2

CoNsTITUTION.

Constitution of the United States, Fifth Amendment 2

a a a Ev 1c avheteae cesabesvaeeenee 7

Local Rule 20 of the District Court .............. 4

IN THE

Supreme Court of the United States

October Term, 1972

HYMEN SCHLESINGER and DAVID A. HENSLER,

Petitioners,

Vs.

HON. HUBERT TEITELBAUM, UNITED STATES

DISTRICT JUDGE,

Respondent,

and

POINT TOWING COMPANY, INC., RIVER TRANS-

PORTATION, INC. and M. G. TRANSPORT

SERVICES, INC.,

Respondents.

PETITION FOR WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR THE

THIRD CIRCUIT

1. Reports of Opinions in the Courts Below

The opinion of the Court of Appeals for the Third Cir-

cuit is reported in 475 F. 2d 137 and a copy is attached

hereto. No opinion was filed by the District Court.

SE RS TT ET TE

Pee wa re

2

2. Grounds on Which Jurisdiction is Invoked

The date of the judgment sought to be reviewed is March

9, 1973. Petition for Rehearing was timely filed and de-

nied by the Court of Appeals on April 13, 1973.

3. Statutes Conferring Jurisdiction to Review Judgment

Jurisdiction to review the judgment is contained in 28

U.S. C. 1254(1) and 2101 (¢e).

4. Questions Presented

a. Does the District Court have the power sua sponte

to set aside an agreement for counsel fees entered into

between a seaman and his attorney?

b. Does the District Court have the power to adopt

and apply as a guide in seamen’s cases a fixed schedule of

fees, and, if so, may it do so without notice to the bar and

a full evidentiary hearing and other safeguards of pro-

cedural due process?

e. Are the actions of Judge Teitelbaum in this case dis-

criminatory as applying only to seamen and violative of

due process under the Fifth Amendment of the Constitu-

tion?

5. Constitutional Provisions Involved in the Case

The Fifth Amendment to the Constitution of the United

States provides in part as follows:

“Article V. No person shall . . . be deprived of life,

liberty or property without due process of law, . . .”

- 6. Statement of the Case

1. David A. Hensler, petitioner and plaintiff below filed

an action as a seaman for personal injuries against Point °

Towing Company, Inc., River Transportation, Inc. and M.

G. Transport Services, Inc., respondents in this proceed-

ing (hereinafter referred to as defendants). The action

was filed in the Untied States District Court, Western Dis-

trict of Pennsylvania, at Civil Action No. 71-331. Hymen

Schlesinger, petitioner, has been the attorney for plaintiff

in said action,

2. In due course, the case came on for trial before Judge

Hubert Teitelbaum and in the course of trial a compromise

settlement in the amount of $17,500.00 was agreed upon by

the parties with the assistance of the trial judge. The

trial of the personal injury action was recessed and the

Court proceeded to hold a hearing to approve the settle-

ment.

3. At the said hearing the trial judge, stating that the

Court was the guardian of the seamen and had the power

to fix counsel fees, proceeded, over objection, to fix the fee

of plaintiff’s attorney, Hymen Schlesinger. The Court was

informed by plaintiff that counsel fees of one-third or

3314% of the settlement had been agreed upon by plaintiff

and his counsel, but nevertheless the Court stated that he

saw fit to follow as a guideline a schedule of fees fixed by

the members of the Court in seamen’s cases. The Court

stated further that he believed the fee he awarded to be

fair.

4. Despite the fact that neither plaintiff nor his counsel

requested any change in the fee contract, the Court sua

sponte stated that he had the power to change the contract

in a seaman’s case and, unless told by the “circuit” that he

has no such power, it is his intention to do so,

—_ os

ae

ROAST OM. pag

ee ee oe ed me

5. Local Rule 20 of the District Court prescribes the

procedure in the settlement of seamen’s cases and provides

in paragraph (d) thereof that the Court may fix counsel

fees.

6. Ata meeting of the Board of Judges of the District

Court held April 20, 1971, the Board adopted a motion to

amend the schedule of fees, namely, on the first $10,000.00—

334%; on the next $90,000—25% and on recovery in

excess of $100,000—15%. This schedule was to prevail

pending further study.

7. The schedule of fees was adopted without notice to

the bar, either before or after its adoption, without any

hearing whatsoever and without any statutory or other

authority.

8. Subsequent to the hearing held by Judge Teitelbaum

in this case, plaintiff’s counsel filed a petition requesting

approval of the compromise settlement as required by local

Rule 20 upon which the Court entered an order on De-

cember 11 approving the settlement and directing that

there be escrowed with the Clerk the amount of $625.00

representing the difference between the fee agreed upon

between plaintiff and his attorney, $5833.33, and the fee

fixed by the Court, $5208.33, pending resolution of the

controversy.

9. Petitioners filed a petition for writ of mandamus and

prohibition in the Court of Appeals which was denied on

March 9, 1973. A petition for rehearing was also denied.

' §

7. Reasons why the Writ should Issue

a. In the absence of specific statutory authority, the

district court is without power to adopt by rule, resolution

or motion in personal injury cases of seamen, a schedule

of attorneys’ fees. Shannon v. Cross, 222 N. W. 168, 245

Mich., 220; Thatcher v. Industrial Com., 207 F. 24 178, 115

Utah 568. This amounts to creating a standard by which

fees are to be gauged.and creates a presumption that fees

higher than the schedule are excessive or exorbitant.

b. Assuming arguendo but not conceding the proposi-

tion that courts have the power to regulate fees, this is

an adjudicatory power which comes into fruition when ad-

versary interests are involved and an issue is created re-

quiring production of evidence and other safeguards of

procedural due process. Such power may also exist based

upon the power of discipline over attorneys for charging

unconscionable fees. Such power operates retrospectively

and must he distinguished from the prospective operation

of a rule or resolution adopted by the Board of Judges

which amounts to judicial legislation, as well as prejudg-

ing a case.

¢. The action of the Distriet Court is discriminatory in-

asmuch as it applies only in seamen’s cases. Unlawful

discrimination amounts to a denial of due process under

the 5th Amendment of the Constitution. Bolling v. Sharpe,

347 U.S. 497. -

d. The actions of the Board of Judges in adopting a

fixed schedule of fees and the conduct of J udge Teitelbaum

in applying it as a guide in this case constitutes an inter-

ference with the right of contract between attorney and

client and, since it diminishes the fee of counsel, it amounts

to deprivation of property without due process in contra-

vention of the 5th Amendment.

6

e. Congress in adopting the Jones Act, 46 U. S. C. A.

688 and the Federal Employers Liability Act, 45 U. S. C. A.

51 et seq., saw fit not to regulate fees of attorneys nor to

confer any power on the courts to do so.

f. Attorneys’ fees of 44 of compromise settlements over

$10,000.00 have been found to be reasonable in Jones Act

eases involving the death of seamen where fiduciaries

brought the action and minor children were involved and

where the District Judge properly had the power to fix

fees. Moore v. C/S Fram, 226 F. Supp. 816 (D. C. Tex.),

affd. 328 F. 2d 868 (5 Cir.); In re Southern S. S. Co., 135

F. Supp. 358 (D.C. Del.). It should be noted that in Penn-

sylvania, courts are empowered by statute to fix fees in

death actions, and as to minors, the latter are deemed in-

capable of entering into contracts for attorneys fees in

actions pending before a court.

g. The theory of guardianship upon which the lower

court predicated its actions confers no such power. The

latest pronouncement that the court is the guardian of the

seamen is U7. S. Bulk Carriers Inc. v. Arguelles, 400 U. 8S.

351. Neither that case nor any reported case on the guard-

ianship theory contains any authority for adoption by court

rule of a fixed schedule of fees. See e.g. Vaughan v. Atkin-

son, 369 U. S. 527, where the Court refused to pass on the

reasonableness of a 50% attorney’s fee since the matter

had not been considered by the lower courts.

h. Approval by the Court of Appeals of the fixed fee

schedule and its application by Judge Teitelbaum sets a

dangerous precedent throughout the nation. In this con-

nection, the declaration at the hearing by Judge Teitel-

baum: “T haven’t the slightest doubt the court can con-

trol fees of anybody if they wanted to . . .” is an eloquent

7:

claim of power to regulate attorneys’ fees generally de-

pending: only on the. mere: exercise. by the: Court of volition.

Tt cam: be easily seen that: the action of the Distriets Court

and Judge Teitelbaum is an opening wedge toward reguia-

tion of contingent fees in all tort litigation.

i. The Court of Appeals concludes that the Distriet

Court had the power to adopt the rule of April, 1971 (Op.,

p. 9). Such conelusion js premised im part on this Rule

83 of the F.R. C. P. There are several things wrong with

this holding.

First, Rule 83 requires that local rules “shall upon their

promulgation he furnished to the Supreme Court.” The

prescribed fee schedule was secretly adopted “pending fur-

ther study of the problem”. Tt was never published nor

was any notice ever given to the bar before or after its

adoption.

The rule is invalid since it affects substantive rights of

counsel] and client. Local rules govern procedure only and

may not affect substantive rights, Washington-Southern

Nav. Co. v. Balt. & Phila. Steamboat Co., 236 U. S. 629, 635.

It may be theoretically argued that the rule prescribing

a schedule of fees is merely procedural, but actually and

realistically it is substantive and has criminal sanctions

built into it. The rule in question establishes a schedule

of fees. The Court of Appeals in construing the rule stated

in its Opinion, p. 2, that it provides that such fees as guide-

lines shall be considered fair and reasonable and fees in

excess of the schedule “shall constitute unreasonable com-

pensation in violation of the Code of Professional Re-

sponsibility of the American Bar Association”,

tA Raver nin Shee Beattie

j. The Court of Appeals erroneously equates the power

of the District Court to adjudicate a specific controversy

over counsel fees with the legislative power to fix a stand-

ard of fees.

k. The case of Gair v. Peck, 160 N. E. 2d 43, does not

support the conclusion of the Court of Appeals. Strong

reliance is placed upon Gair in support of its conclusion

that the district court has the power to adopt a rule fixing

a schedule of fees.

However, Gair is a slender reed for a number of reasons,

the chief one being that the Court of Appeals of New York

validated the rule as being within the statutory power.

160 N. E. 2nd at p. 53.

The Opinion in our case, p. 7, appears to base its deci-

sion in part on the Court’s “supervisory power over the

members of its bar . . .” This probably refers to the con-

cept that attorneys are officers of the court. This doctrine

has strict limitations. Cammer v. U. S., 350 U. S. 399, 405.

In view of the limitations on the doctrine in Cammer,

the basis of the Court’s Opinion here is illogical, creating

as it does a presumption of unprofessional conduct sub-

jecting the attorney to penalties for charging fees in ex-

cess of the schedule. Truly, the contested rule has criminal

aspects.

]. The issues involve questions of exceptional import-

ance as well as serious constitutional questions of due pro-

cess, unlawful discrimination, impairment of contract, ret-

roactive application of the rule, and potential criminal

sanctions. In this connection we respectfully direct the

court’s attention to American Trial Lawyers Association

v. New Jersey Supreme Court, 34 L. Ed. 2nd 651. In that

BENGE TM PG OAR) alt PERE

9

case the Court unanimously reversed a dismissal of an

action involving several Similar issues, Although the de-

cision was based on the abstention doctrine and the Court F

did not rule on the merits, nevertheless we believe that the f

Court recognized by implication the substantiality of the

issues. That case involved issues of violation of federal

constitutional rights by the State Supreme Court in adopt-

ing a rule fixing the schedule of fees in tort cases,

m. This petition presents the issue of the district court’s

power to legislate judicially in the matter. Unless your

Honorable Court grants review of the actions of the lower

courts, there is likelihood that the actions of the courts

below will serve as a precedent for similar actions in other

circuits.

Wherefore, petitioners respectfully pray your Honorable

Court to grant a writ of certiorari directed to the Court

of Appeals for the Third Ci reuit and to the District Court

for the Western District of Pennsylvania commanding

them to certify the record in this cause so that the matter

may be reviewed by this Court.

HYMEN SCHLESINGER,

ISADORE SCHLESINGER.,

LOUTS C. GLASSO,

Attorneys for Petitioners.