# Petition for Writ of Certiorari — Harmar Drive-In Theatre, Inc. v. Warner Bros. Pictures, Inc. (No. 221) > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386418_1353%3A2 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Writ of Certiorari - **Published:** January 1, 1957 ## Text M a a et ~ Tay ae Supreme Court nf the United October Term, 1957 Docket ne ea 2: 7 /- ~ HARMAR DRIVE-IN THEATRE, INC., Plaintiff-A ppellant, against . WARNER BROS. PICTURES, INC. (In Dissolution), et al., Defendants, ; and PARAMOUNT FILM DISTRIBUTING CORP., et al., Defendants-A ppellees. ~ COLONLAL DRIVE-IN THEATRE, INC., P Plaintiff-A ppellant, against in aie WARNER BROS. PICTURES, INC. (In Dissolution), et al., or Defendants, and PARAMOUN ‘T FILM DISTRIBU TING CORP., et al., Defe witants-Appellees. PETITION FOR A WRIT OF CERTIORARI TO THE | UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT | ARNOLD MALKAN, Attorney for Petitioners, - 15 East 48th Street, - New York 17, N. Y. Waren A. SEAVEY. ~ ’ Harvard Law School, Cambridge, Mass., of Counsel. con | PAGE Opinions SD ods ae ear CSOT CET ee ee 2 Jurisdiction —.. ' ere ee ate ee es 2 Questions Presented 20.0... .. ae eon. ' 3 ee | oh ae 3 Statement “OS SS Sree es Seer aoe 3 Reasons for @ranting the Writ)..0............. . . 6 eee eee Saucer ears oa 13 APPENDIX: Opinion of United’ States Court of Appeals for the Second Cireuit, on Appeal ............-.. la Opinion of United States Court of Appeals for the Second Cirenit, on Petition for Rehearing ..... 1a Cases Cited Austin Theatre, Ine. v. Warner Bros. Pictures, 2 Cir., 994 F. 2d 824, cert. den. 350 U.S. 982 (1955) 22... 4,5, 9 Cammer’v.-United States, 350 U. S.399 (1956)... 7 Cohen v. Beneficial Loan Corp: 387 U.S. 541 (1949) 6 Consolidated Theatres, Ine. v. Warner Bros. Circuit Management Corp., 216 F. 2d 920.............. . 8 fischer Studio v. Loew's Inc., 2° Cir., 232 F. 2d 199, ee a Oe ae: eh. | rr 4, 5,.8 Jencks v. United States (June 3, 1957) ......... ree 4 in Re Levy, 348 ©. S. O78 (1905) :........ 2.2... ese. 7 Laskey Bros. of W. Va., Inc. v. Warner Bros. Pictures, 2 Cir, 224 F. 2d 824, cert. den. 350° UL S. 982 | AS ae ee eee eee eee ee ee ee Perper 4,8,9 Offut v. Cnited States, 348 ULS. 11 (1954) 02.2.6... a T. C. Theatre Corp. vi Warner Bros: Pictures, Ine. 113 F. Supp. 265 (S. DN. Y., 1953) ... 25... Skanes - il . PAGE Radovich v. National Football League, 352 U.S. 445 2 er ee | an Gan aga PETE OT OTT 7 United States v. Andolsheck, 2 Cir., 142 F.2d 508... + United States v. Standard Oil Co. (N. JL),-136_F. supp. 269 (5. D. N. ¥., 1966) ................... 1] Miscellaneous Citations “ . Rules of the United States District Courts for the Southern and Eastern Districts of New. York. 16° fo oe Se ARES ear ae on ary Oe 3 Canons of Ethies of the American Bar Association, 5 Es SE Pee yn eigenen Sala a \ . ( IN THE Supreme Court of the United States October Term, 1957 Docket No} ~ Harmar Drive-I PEATE, ic, -* Plaintiff-A ppellant, agaist ; ‘ WaRrNER Bros. Picrcres, Ixc, (In Dissolution), et al., Defendants, and Paramount Fito Disrriputine Corpv., et al., : . Defendants-Appellees. CovontaL Drive-Lx THE ATRE, INC., , ‘Plaintiff- Appellant, ugains? Warner Bros. Pictures, Inc. (In Dissolution), et al., Defendants, and PARAMOUNT Mine DISTRIBUTING Corp., et al., Do tondante- Appellees. ray Vv PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT To the Honorable, the Chief Justice and Associate Justices of the Supreme Court of the United States: Your petitioners, the plaintiffs Harmar Drive-In Bheatre, Inc. and Colonial Drive-In Theatre, Inc. and their counsel a - Arnold -Malkan, pray that a writ of: certiorari issue to the United States Court ef Appeals for the Second Cireuit for review of the judgment of that court filed December 28, _ 1996, and of the court's order filed March 27, 1957 denying petition for reargument. | | - Opiniogs Below The opinions of the court below and of the Chief Judge dissenting are published at 239 F. 24555. The majority , ‘and dissenting opinions on rehearing are not yet published. The district court decided in favor of plaintiffs-appellants without, opinion. All four of the opinions below are re- ' printed as Appendix, infra, for the Court’s convenience.! - Jurisdiction The jurisdiction of this Court is invoked under 28 U..S. C, Sec. 1254(1). The order of the Court’of Appeals deny- ing petition for rehearing was entered March 27, 1957. Questions Presented 1. Should an attorney’s disqualification, based solely on the fact of his former partnership with a former employee of counsel for defendants, be extended to new causes of action which he was retained to commence against the same defendants long after dissolution of the partnership— because the present plaintiffs had some officers and stock- holders in common with plaintifis in cases brought by the former partnership? eg : 2. May a party appeal denial of its preliminary motion to disqualify adverse counsel? ' All references to the opinions below are marked —a. Alk references to (App. —) are references to the Appendix to defendants-appellants’ brief in the court of appeals. ~~ VS i Ed 3 ? Statutes Involved Rules of the United States District Courts for,the South- -ern.and Eastern Districts of New York (Effective March 1, 1952, 16 F. R. 5. 906, YO8 ) . : ‘*RuLE 3: DiecrpLingE oF AYTORNEYS. ; ; * a ae (c} Professional misconduct shall include * * * a. failure to abide by the provisions of the Canons of Ethics.of the American Bar Association or of the New York State Bar Association.” > The Canons of Ethics of the American Bar Association: “Canon 6. ADVERSE INFLUENCES AND CONFLICTING INTERESTS. oe ag * * “The obligation to represent the client with un-- divided fidelity and not to divulge his secrets or con- fidences forbids also the subsequent accéptance of retainers or .employment from others’ in matters adversely ‘affecting any interest of the client with respect to which confideuce has been reposed.’’ Statement of the Case The District Court denied the motion of some of the defendants ‘herein that Malkan be disqualified as counsel for the plaintiffs. The Court of Appeals reversed and, on rehearing, adhered to its decision. From both decisions Chief Judge Clark dissented. The basis on which defendants moved to disqualify Malkan in the itstant cases and others is his partnership with one Isacson from July, 1952 to July, 1904. Mr. Isaeson had worked from Noveniber, i947 to March, 1951 for a firm that represented the eight major motion picture distribut- ing companies in some phases of their activities—mainly in 4 investigating and collecting fraudulent underpayments of film rentals. ye. Malkan & Isacson filed motion picture antitrust suits for | several different plaintiffs. In-one suit the defendants moved to have plaintiffs’ counsel disqualified. Kventually, Isacson was disqualified individually on the ground that the files of his former employers contained information relevant to the case. Fisher Studio v. Loew’s, Inc., 2 Cir., 232 F. 2d 199, cert, den. 352 U.S. 836 (1956). The defend. — ants withheld from inspection by Isacson’s counsel the documents assertedly containing such information and did not even specify the alleged information. The Court of Appeals criticized the trial judge but held that, in the course of the protracted proceedings, Isacson had waived his constitutional right to be eonfronted by the evidence. Cf. United States v. Andolsheck, 2 Cir., 142 F. 2d 503, recently cited by this. Court in Jencks v. United States (June 3, 1957). In 1954, while the Fisher disqualification motion was _ pending, Malkan and Isacson dissolved their firm. In two . cases‘ in ‘which Malkan thereafter appeared individually for the plaintiffs the defendants moved to disqualify him. In one case, with which Isacson had had no connection, -Malkan was held qualified. Austin Theatre, Inc. v. Warner Bros. Pictures (2 Cir.), 224 F. 2d 824, cert. den.'350 U. S. 932 (1955). The other case was, concededly the same as one in which Malkan & Isacsomhad filed a complaint before their dissolution: Laskey Bros. of W. Va., Inc. v. Warner Bros. Pictures, Ibid. Thus, Malkan had been a member of a partnership which had been disqualified in that very case. And, the court held, the subsequent dissolution of the part- nership could not ‘‘cure his ‘ineligibility to act as counsel in that case’’, 224 F. 2d at 826-7. At the same time, the court recognized explicitly that Malkan had shown that he -had not obtained confidential information from Isacson. Id., p. 827. And, to the same effect, see 9a. ( The two-instant cases were begun in June, 1955—a year after dissolution of Malkan’s partnership. In each case, the plaintiff .is a corporation which owns one theatre. These’ plaintiffs had never retained Malkan’s former part- nef or the former partnership. They first discussed their claims with, and retained Malkan, shortly before the suits were filed (App. 22, 30, 33). Some, though by no means all, of the officers and stock- holders of the instant plaintiffs were officers and stock- holders of the plaintiffs in three cases in which, for three other theatres, Malkan & Isacson had filed pro forma com- plaints pursuant to stipulation in the Fisher Studio dis- qualification proceeding, supra, then pending, merely to stop the running of the statute of limitations (App. 11). - From the decision of the majority disqualifying Malkan, the Chief Judge dissented on three grounds: (1) -That the’ District Court’s denial of asmotion to dis- qualify adverse counsel was not appealable. (2) That no basis had been shown to disqualify Date, that his disqualification was in conflict with all the prior authorities which had limited disqualification to the ‘‘same | case’? in which the attorney may have been directly or indirectly identified with an adverse party, and, particu- larly, in conflict with the same court’s decision in Atistin Theatre, Inc. v. Warner Bros. Pictures, 224 F. 2d 824, cert. _ den. 350 U. 8S. 932, as interpreted by both its author and the commentators as holding the vicariously disqualified part- ner free, after termination of the apiece ship, to peer in other cases, for: ‘«* * * the only similarity between the issues to be tried in the present two cases and the issues in the cases Isacson started while in partnership with Malkan is the Paramount decree, whicli is of course public property”’’ (11a). a and (3) That the decision constituted ‘‘a club to protect monopolists or harass cémplainers’’ (Sa).2 While explaining the uncertainty of the eee of disquali- fication in the second circuit, the. Chief J udge also pointed out that. the qualified active members of the court had divided evenly on whether or not to hold a rehearing im bane (lla). See pp. 7-8, infra. Reasons for Granting the Writ ‘The decisions here for review, reversing the district court by a uniquely divided court of appeals (infra, p. 7), ean have far-rtaching effects in three distinet fields of law: 1. The decisions below encroach upon the federal poliey against intermediate: appeals.’ Counsel cannot’ improve upon the procedural analysis © of Chief Judge Clark, one of the distinguished contribu-- tors.to modern federal procedure. His dissenting opinion, including his important footnotes 2 and 3 (6a-7a), empha- sizes that the instant decision accelerates a ‘‘trend to de- bilitate the recognized federal principle against piecemeal appeals’’ (7a). Judge Clark notes that the majority opin- ion apparently misreads and gives unwarranted extension to this Court’s decision in Cohen v. Beneficial Loan Corp., 337 U.S. 541, 546:(1949), and to a decision in u probate case unique in federal procedure, in disregard of the many federal cases holding interlocutory orders unappealable. The federal policy against intermediate appeals is curi- ously initertwined with the federal antitrust laws. This pro- cedural policy protects the small litigant who can ill afford ° / * All references to im are to the appendix hereto. ~] the experise and delay of multiple appeals. Nowhere is this philosophy more stubbornly resisted than in antitrust litigation, where some defendants seem to find large attor- neys’ fees a small price to pay for delay. Compare, for . example, the practice of attacking antitrust complaints by motions, recently disapproved by this Court in Radovich v. National Football . League, B02 U. S. 445 (1997). The mere appealability. of motions. to disqualify may make them effective. Few plaintiffs can stand by an attor- ney through a protracted-hearing and appeal before ope ration for trial can begin. ‘The decisions restrict the future of the increasing eee of salaried: attorneys by exposing them and any attorneys who may associate wth them to banishment from the fields in which they may have acquired skill and experi-' ence. Any such penalty has traditionally been scrutinized with the greatest care by this Court, which-is the protector not only of professional ‘standards, but of the rights of members of the profession. See, to choose some recent — examples, Offut v. United States, 348 U. S. 11 (1954); In re Levy, 348 U.S. 978 (1955) (summary reversal) ; and Cammer v. United States, 350 U. S. 399 (1956). Careful review is-also warranted in this case because of the Court’s special responsibility in supervising the administration of justice in the lower federal courts. _ Exercise of this Court's supervisory power is especially called for here because of the peculiar division of the court below. Not only did the Chief Judge dissent, but on peti- ‘tion for rehearing, two of the four active qualified members of the court of appeals evidently considered the question of such great importance that they voted to grant the peti- tion ahd hear the cases in banc. This was in spite of the traditionally strong policy of the second cireuit against granting either rehearings or hearings in banc. Indeed, to 3 our knowledge, that court has nevef granted a hearing in banc. The unfertunate fact that a majority vote was not obtainable on this question is due ta the untimely death of Judge Jerome Frank end the disqualification of another judge (lla). The fact that rehearing was denied only by an equally divided couyt is, undé, the circumstances, a rea- son for, rather than against, granting certiorari, Formerly, the remedy of disqualification was reserved tor the rare instances in which’ it seemed necessary to pro- tect a former client from the threat of misuse of confidential information acquired by his former attorney. However, a series of: disqualification motions made by the motion pic- ture companies have resulted in the following holdings. No showing of any specific confidential information is required to disqualify the former attorney-employee himself. . Con- solidated Theatres, Inc, v. Warner Bros. Circuit Manage- men! Corp., 2 Cir., 216 F. 2d 920 (1954). The attorney may be disqualified for having had mere access to informa- _ tion; .that is, merely by testimony that his former employ- er’s files contained relevant papers, without production or ° description of the papers. Fisher Studio, Inc. vy. Loew’s, Inc., et al., 2 Cir.-232 F. 2d 199, cert. den. 352 U. S. 836 (1956). Any attorney who might become his partner (and perhaps even his employer or employee) would forever be disquali- -fiable in any cases in which the disqualified attorney had appeared during the partnership, without being permitted to prove non-receipt of confidential information. Laskey Bros! of W. Va., Inc. v. Warner Bros. Piétures, et al., 2 | | b 5] Cir., 224 F. 2d 824, cert. den. 350 & S. 932. Such partner would also be forever disqualifiable even in cases which arise after dissolution of the partnership and which - inight have come to him in any event, if any relation what- ever can be worked out between the cases or the clients. Harmar Drive-In Theatre, Inc. v. Warner Bros. Pictures, . Inc., et al. and ‘Colonial Drive-In Theatre, Inc. v. Same (the instant cafes). In any event, the partner (and any - client) must be prepared in every new case to litigate the ? Q. a matter of disqualification through the court of appeals. Ibid. (Instant cases—appealability point.) * The future careers of thousands of employed lawyers and their potential partners, employers, and employees are now shrouded in uncertainty. The decisions below evi-. dently partly or wholly overrule the Laskey Bros. and Austin Theatre decision, 224 F. 2d 824, Supra, p. 9s which they profess to follow. The partner was vicariously disqualified in the Laskey case without opportunity to prove his non-receipt of confidential information since he had been a member ef a partnership;which had been disquali- fied in that particular case, and ” | * * * once a partner is thus vicariously disqualified for a particular case, the subsequent dissolution of the partnership cannot cure his ineligibility to act as counsel in that case.** 224 F. 2d at 826-7. ; ro) . At the same time the Court held in the Austin Theatre ‘case that after dissolution the partner was free to handle any new cases against the defendants (since he had rebutted any inference that he might have received any confidential information). Now the majority below disqualifies the partner vieari- ously in two cases which came to him a year after the part- nership terminated and with which the personally disquali- ° fied attorney had no contract. Thus, the Laskey rationale for continuing vicarious disqualification is’ apparently abandoned, along with all or most of the Austin Thentre- decision that the partner is not disqualified in the entire field. The Laskey decision may well be justified. It merely excludes a partner from reviving an action in which the disqualified partner had participated. It is the extension of that rule to eases in whieh the disqualified partner had a 3 Other recent motions by the motion picture defendants to dis- qualify other attorneys include 7, C. Theatre Corp. v. Warner Bros. Pictures, Inc., 113 F. Supp. 265 (S..D. N. Y., 1953) and some unreported motiahs. 10 no participation which is bad. In the present cases his only connection is the fact that some of the officers’ and _ stockholders of the plaintiffs were formerly amoiy the offi- cers and stockholders of clients of his. In faet, the decisions below ean be rested only on the ‘ more than dubious grounds which the majority itself ap- pears to have disclaimed; that is, that the knowledge which had been available to the disqualified partner is imputed to all the other members of a partnership of which he was a member. On this point, it may be said first that such a rule would be out of line with all existing rules of trusts -and agency. ~ The majority’ opinion g@ompares the present situation with that of a self-dealing trustee. But the analogy is very remote, sine», by self-dealing, the trustec is doing a wrong- fulact. He deprives the beneficiary both of the opportunity of making a choice and of the full benefit of his trustee’s judgment. The self-dealing trustee would be like an at- torney who changed sides in the same case. This, of cour se, is absolutely prohibited because it creates a conflict of interests. The decisions below could logically be supported only on the ground that the knowledge.of his former partner is 1m- puted to Malkan as matter of law and despite a finding of fact to the contrary by the trial judge. ‘But that possible ground was rejected by the court below as the basis of decision. : It is true that the agency rules concerning the imputa- tion of the knowledge of an agent to his principal generally | apply to partnerships. But any doctrine of imputation of knowledge is always based on the wrongful conduct of the one to whom knowledge is imputed, that of an agent or partner while acting in the course of his work for the prin- - cipal. That is not true in the instant cases because it is ‘not claimed that with reference to these cases there has been any wrongful conduct. ll And the instant decisions are inconsistent with the rule where the ageut of two principals has aequired con- fidential information from one of them. Thus, where P, a client of an attorney, A, is purchasing Blackacre, P-is not charged with information which A had acquired from an- other client abous an equity in Blackacre, provided that .\ had acquired sueh information confidentially. ‘If an attorney’s partuers are to be forever bound by any knowledge to which he may uave had access, without any opportunity of proving that they have notereceived it, becoming an attorney's partner, or even his employee, will be a hazardous undertaking. Self-protection would require exhaustive crbss-examination of the prospective partner or employer concerning tormer clients. ven this would not furnish complete protection, which could be obtained only by a study of his files and those of his former partners or employers to determirte what clients they had represented and in what matters. Further, if the partner is assumed to have knowledge, his partner-in turn may be assumed to be coutaminated. Sinee the rule may logically include all those in the office of the contaminated attorney, the risks of employment by another will become incaleulabie. It is hoped that not all éf these consequences would follow, but the fear that they might would be a serious deterrent to the freedom of at- torneys in making associations. The issue is vital toygGovernment attorneys as atell as to those in -private practice. ~For the Government has shown that it may abandon reliance upon the reasonably limited and certain **conflict of mterests”” statutes in favor of asserting the broadest possibte disqualifieations under case law. United States v. Standard Oil Co. (N. J.), 186 _F. Supp. 345 (S. D. N. Y., 1956). f ~ Pergaps the strongest reason which can be urged for vranting this writ is the fact that in the present state of the decisions it 4s uneertain how far an attorney who en- 1Z ters a firm will be bound by any knowledge to which his partner may formerly have had access. To hold that he is bound. by all such, knowledge even after he has left the firm and that he must reject all cases which his former partner could not properly have taken is almost unthinkable. Nevertheiess, the present decision leaves the profession in doubt. , It seems vital that the Bar have an authoritative guide for the performance of its professional obligations. The uncertainty created below should not be permitted’ to stand in the way of time-honored associations among attorneys. Two of the four qualified judges of the Court of Appeals felt so strongly about this that they urged going against all precedent in the circuit by granting a hearing in banc. We urge that this doubt be resolved in the interest of the profession. 3. The Canons of Ethics are being abused as a weapon o ‘*protect monopolists’’ and ‘‘harass complainers”? (8a). Perhaps the greatest danger of the decision below is - that it can be used by powerful litigants in-terrorem. It confers upon defendants undeserved opportunities for collateral litigation. They are empowered to subject. to .the prolonged. scrutiny of the court the past associations of the opposing attorney in every case. It is characteristic of antitrust actions that defendants - are powerful organizations with unlimited resources. The rule announced by the Court gives them a powerful weapon. Plaintiffs, on the other hand, are generally small business- men who rely upon current receipts and have limited funds for litigation. They can be worn out if enough delay can be caused. There is no more effective defense in these cases. than delay. And there is no more effective means of delay 13 than the examination of the plaintiffs and their attorneys in disqualification proceedings. Until the attorney has been cleared, preparation for trial cannot begin. In one of these very cases the defendants have examined the plaintiff at length on conversations with its attorney, which should normally be privileged. See ¢.g., App. pp. 22-28. Thus, under the guise of proteefing their own attorney-client relations, these defendants are infringing upon the attorney-client relationships of their adversaries, _The spate of recent disqualification cases a that the danger is real and present. Until a few years ago this type of proceeding was seldony undertaken and then only in‘ serious cases. Since this weapon was discovered by -the motion picture industry; it has been used vigorously and remorselessly. It will be inereasingly difficult for persons having valid claims in this field tq sceure eom- petent attorneys bold enough to submit to searching personal attacks, many of which would interfere “with their confidential relations with clients. | CONCLUSION _ The decision is: of material importance to all attor- neys throughout the United States. They shauld know - with ‘some degree of definiteness the rules by which their conduct.-is to.be determined. The petition for certiorari should be granted. Respectfully submitted, -~ ARNOLD MALKaN, Attorney for Petitioners, 15 East 48th Street, New York 17, N. Y. WARREN A. SEAVEY, Harvard Law School, Cambridge, Mass., of Counsel. © la - APPENDIX (Opinion of United States Court of Appeals for the o. — ' “Second Circuit, on Appeal) -UNITED STATES COURT OF APPEALS For, rHE Seconp Circuir Nos. 38, 39—October Term, 1956 (Argued October 10, 1956 Decided December 28, 1956) Docket Nos. 24014, 24015 oe HarRMAR Drive-ly THEATRE, LNC.,. A | « Plaintiff-Appellee, , eS - against wi WaRNER Bros. Picrures, Lve. (In Dissolution), ef al., a, ee Defendants. CoLtoniaAL Drive-In Tueatre, INc., & Plaintiff-Appellee, against ) WaRNER Bros. Pictures, Inc. (In Dissolution), et al, Defendants. Before: Cuark, Chief Judge, . Hanp and Swan, Circuit Judges. Appeal from the United States District Court for the Southern District of New York, Sidney Sugarmant, Judge. Qa Defendants appeal from an order denying their motion to' disqualify plaintiff's attorney and his’ partner, bothe individually and as a law partnership, from representing - the plaintiff in each of the above entitled treble ‘damage anti-trust suits, Reversed with directions. Bruct Bromuty, Atlorney for Appellants; Joux Logan O'Donneci, Leo’ P. Arnasouor, Jr. and - JouHN S. Leckstone, 6f Counsel. ArNoLp MauKkan, Afforney for Appellees. a SWAN, Circuit Judge: These appeals bring up an order whieh denied, without opinion, a motion by defendants to disqualify the firm of Malkan & Ellnér and the two lawyers constituting the firm, from appearing for or representing the, plaintiffs in two actions ‘each of which claimed treble damages for alleged violation of the anti-trust laws. in three prior appeals similar motions in other anti-trust siits hae come before this court.’ ~ é Before reaching the merits it is necessary to consider whether the order is appealable. This question was not raised in the original ‘briefs, of the parties, but at the re- quest of the court supplemental briefs -have been filed dis- cussing it. In each of the four appeals mentioned in note 1, supra, the court’ assumed jurisdiction without discussion, other than the brief statement inthe Fisher case, 232 F. 2d 199, at 204, that ‘‘these orders of disqualification are collateral to the main case.’’ Tn three ef the prior. appeals e 1 Laskey Bros. of W..Va., Inc. v.. Warner Bros. Pictures and Austin Theatre, he v. Warner Bros. Pictures, 224°F. 2d 824, cert. denied 350 U. 932; Fisher Studio vy. Loew's Incorporated, 232 F. 2d: 199. 4 See aes Consolidated Theatres vV. Warner Bros. Circuit Management Corp., 2d Cir.. 216 F. 2d 920, which established the con- trolling principles. | 3a the court affirmed orders which granted motions to dis- qualify; in the Austiw case itvaffirmed an order which, as in the-case now before us, denied the motion. A majority: of the court. are of vpinion that with respect to appeal- ability: no’ distinction exists between orders granting dis- qualification and those refusing to do so. We think they - fall within the class of orders described in Cohen v. Bene- fi; ficial Loan Corp., 337 U.S. 541, 546 as ‘‘that simall class which finally determije claims of right separable from, and collateral to, rights asserted in the action, too im- portant to be denied review and too independent of the cause itself to require that appellate consideration be de- - ferred until the whole case is gree ** Also °closely -analogous is Collins v. Miller, C. A. D. C., 198 F. 2d 948, which held appealable eu sata denying a motion to re- move an administrator because of dilatory and improper administration. Having concluded that appellate jurisdiction exists, we pass to a consideration of the merits of the appeal. The’ question is whether the principle of the Laskey case, 224 F, 2d 824 or that of the Austin case, decided in the same -opinion, should be applied to the facts of the present case. In Laskey the plaintiff had employed the firm of Malkan & Isaeson to bring an anti-trust action in the Wester Dis- trict of Pennsylvania. After the dissolution of that firm, Malkan joined with one Ellner to form the firm of Malkan & Ellner and this firm was employed by Laskey to bring a new anti-trust suit not differing in any material respect, in the Southern District of New York. It was held that hecause of Isacson’s disqualification, his partner Malkan ‘ was vicariously disqualified for the particular case, and that the Subsequent dissolution of the partnership did not cure his ineligibility to act in that case. In Austin it was held that the case came to the new firm of Malkan & EFllner ‘through channels having nothing whatever to do with Malkan’s prior association with Tsacson”’ and ‘tin the ab- sence of any showing that Malkan had received confiden- yr 7 ta | “ ~ tial infermation from Isacson.’? 224 F. 2d 824, 827. Con- sequently Malkan & Ellner were. not disqualified to represent Fisher. — | In the case at bar it appears that prigr to the dissoln- tion of the firm of Malkan & [sacson that firm was engaged by members of the Stern family to bring anti-trust suits in the Western District of Pennsylvania on behalf of three drive-in theatre corporations referred to as ‘South Park,’’ ‘Community’? and ‘Blue Dell.’’) The Stern family owned all the stock of these three companies. This family also owned all the stock in ** Colonial Drive-In Theatre’? and 50 per cent. of the stock in ‘*Harmar Drive-In Theatre,’’ the other 50 per cent. being held by the Roduok family. Mr. Ernest Ster. was an officer of all five of these corporations, and all of them were included in the Assoeiated Drive-In Theatre chain. Shortly after the dissolution of the firm of Malkan & Tsaeson in July 1954, Malkan & Ellner filed’ new complaints in the same court on behalf of ‘South Park,’’ ‘‘Community’’ and ‘‘Blue Dell,’’ adding new de- fendants and increasing the damage claims. Had these new actions been filed in the Southern District of New York it seems clear that the attorneys would be disqualified under the Laskey decision. In May or early June 1955, George and Ernest Stern engaged Malkan & Ellner to bring ssi instant actions on behalf of ‘* Colonial’’ and ‘‘ Harmar,” re- spectively. The claims are substantially the same as ioe in the cases of the other three members of the chain of drive-in theatres. The instant, actions were commenced June 30, 1955, and the defendants’ motion to disqualify counsel was filed November 15th. It was denied without ‘opinion on December 24, 1955. This court’s decision in the Laskey appeal, as we under- stand it, rested upon the possibility that the partner (Tsae- son), Whe had formerly represented Warner Bros. Pictures. had passed on to his partner (Malkan) confidential infor mation that he got from the defendant while representing it. True, the court spoke of an ‘‘irrebuttable inference’’ but we take it that what was meant was that a court should not pass upon that issue, just as it will not pass upon the questign whether an express trustee who buys the -trust ‘res for himself Kas in fact gotten any advantage in the sale from being a trustee. Thus we think it clear that Malkan was disqualified as an attorney for ‘‘South Park,’’ ‘*Com- munity ’’ and ‘‘ Blue Dell*’ because he was lsacson’s partner, and that fact prevented Malkan from showing that he had learned -nothing from Isacson. Moreover, if the two plain- ‘tiffs at bar were identical in interest with the three just mentioned, we cannot believe that it makes any difference - that they ar¢ separate corporations. Lf the beneficial owner- ship of all the corporations is the same, and the disqualift- cation, imputed to the innocent partner, lasts after the dissolution of his partnership with Isacsou, there is just as much reason to suppose that the defendants: at bar will suffer in tke defense of the instant actions as in the de- fense of the other three actions.. ‘Therefor e, as to ‘*Co- lonial,’’ which is completely controlled by the Sterns, Mal- kan is disqualified. *As to ‘‘Harmar,”’ the situation is not quite so clear. The Sterns owned only half the stock but it was they who engaged Malkan. Under these circumstances we think that the situation cajled on him to show that the Ster ns did not control ‘* Harmar,’’ and this he did not ‘do. We hold him disqualified also in the ‘Harmar’? action. It is stated in the appellees’ brief, without contradiction by the appellants, that the firm of Malkan & Ellner has heen dissolved and stipulations have been filed in each of the instant cases substituting Arnold Malkan individually as attorney for the plaintiff. Consequently the defendants’ appeals are moot as to the firm. The order is reversed and the cause remanded with di- ‘rections to grant the motion in so far as it seeks the dis- qualification 6f Arnoid Malkan. 6a Cuark, Chief Judge (dissenting) : In form Judge Sugarman’s order was quite interlocu- tory; he merely declined, without stating reasons, to grant defendants’ motion for Malkan’s summary disqualification.’ Obviously he was not persuaded by defendants’ showing; but there was nothing in his action to prevent him from acting otherwise at any time on a more convincing showing. - So we have no more reason to interfere now than we would have as to, e.g., an order refusing to halt discovery before trial. This appeal should therefore be dismissed for want of an appealable order. If, however, we reach the merits, we should affirm, since we, like Judge Sugarman, as yet at least can find no persuasive grounds for the present dis- qualification. oo _ On the issue of appealability it should be noted that, save for a single somewhat equivocal precedent discussed ‘here- inafter, there is no case actually supporting appealability under really comparable conditions. The cases ordering disqualification have that very element of finality lacking here. And if analogy be sought under the ‘‘correlative order’’ or ‘‘offshoot’’ rule, we must note that these ‘are cases where the courts have found and have emphasized such an element of finality whose clear absence here makes them rather persuasive precedents against our jurisdiction. 1“December 24, 1955 This motion is in all respects denied. It is so ordered. Sidney Sugarman U.S.D.J.” As endorsed on the back of the show cause order. so , ? The very quotation set forth in the opinion from Cohen v. Bene- ficial Indus. Loan Corp., 337 U. S. 541, 546, directly points the moral; Judge Sugarman’s refusal! to disqualify Malkan summarily is anything but one of “that small class which finally determine claims of right separable from, and collateral to, rights asserted in the action, too important to be denied review and too independent of the cause itself to require that appellate consideration be deferred ‘until the _whole case is adjudicated.” She I do not see’ the analogy here ofa case in the (federally) unique . probate proceedings of the District of Columbia, Collins v. Miller. D. CU. Cir., 198 F. 2d 948, and think the contrary cases cited in the opinion involving receivers and the like are more in point. See also Youpe v. Moses, D. C. Cir., 213 F. 2d 613, 616, 617. I do not think it necessary to cite some of the many cases, such as United States Plywood Corp. v. Hudson Lumber Co., 2 Cir., 210 F, 2d 462, holding interlocutory trial orders unappealable. (a Even the offshoot rule, in view of its obvious trend to debilitate the recognized federal principle against piece- meal appeals, may require that re-examination which it has not yet received in the light of the amendment to F. R. 54(b), providing a meaus of appeal in multiclaim cases, and the generous scope given that amendment in Sears, Roebuck & Co, v. Mackey, 351 U.S. 427, and Cold Metal Pracess Co. v. United Engineering d& Foundry Co., 351 U. S. 445. In fact I have suggested the need for such re- examination in, e.g., Republic of Italy v. DeAngelis, 2 Cir., 206 F. 2d 121, 132; and I regret that I have not succeeded in persuading my brothers to consider the impact of the amendment here. For it might well suggest a desirable disposition of the problem we face. But in any event, the present order seems to me to lack finality under any view.* The one analogous case looking the other way is that branch of ‘the consolidated decision reported as Laskey Bros. of W. Va., Inc. v. Warner Bros. Pictures, 2 Cir., 224 F. 2d 824, certiorari denied 350 U. S. 932, which affected the action brought by the Austin Thea- tre. The opinion therein does not mention appealability (nor was it discussed by counsel), but does affirm district - court orders disqualifying ‘Malkau in the Laskey case .and _refusing to do so in the Austin case. 1] was the author of the opinion there and must take whatever blame there is ‘ for not using the word ‘‘Dismissed,’’ rather than ‘* Af- firmed’’. (the results as to the parties being the same in any event), as to one-half the result reached. But I do not feel too penitent, since experience has taught me that only 3] am glad that my brothers do not rest upon the point argued that by this order affecting trial maneuvers, the judge has somehow declined to grant an injunction against himself; the Supreme Court has how vastly reduced the potency of that form of .mythology. Baltimore Contractors v. Bodinger, 348 U. S. 176; City of Morgan- town, W.Va. v. Royal Ins. Co., 337 U.S. 254; and see Wilson Bros v. Textile Workers Union of America, C1O, 2 Cir., 224 F. 2d 176, certiorari denied 350 U. S. 834. Practically there is no ‘sense in the thought that Malkan must be stopped immediately from disclosing confidential information to the plaintiffs; if anything real is here involved (as to which see discussion below in the text), the informa- tion was available and used long ago. Sa ‘rarely and perhaps fortuitously may an opinion be ex- pected to rise above its sources in the presentations of. counsel. Moreover, there were practical grounds for mini’ mizing, if not overlooking: the point; a preliminary order of this court nad consolidated the two eases throughout, even to the briefs of counsel, and discussion of the two con- trasting situations, suggesting distinctions the court found decisive, was quite necessary if the rationale was to be at alk complete. ‘That, I submit, is too precarious a footing upon which to crystallize error. j But: passing to the merits [| will accept the statement of the issue that our question here is as to which branch of the Laskey opinion goverus, the Laskey rule or the Austin rule. Nor will I object to the formulation of the Laskey principle of disqualification perhaps beyond that of merely providing against the probable misuse of confidential in- formation by attorneys. In a case where one counsel has represented one side, it is appropriate that his former partners should be disqualified from going over to repre- sent the other side (without consent of course); both dig- nity. of the profession and the need of publice vindication of the confidential relationship involved and hence publie con- fidence in its reality so require without more. But such vicarious disqualification of partners. should be rather strictly limited to the ‘‘same case’’; there is no justification for more as cither punishment or public vindication of the protected relation; and the dangers of using legal ethies as a club to protect monopolists or harass complainers (as is indeed directly suggested by the long battles: on these preliminary issues so assiduously staged by these defend- ants) suggest care and concern lest we go too far. I think we are doing so here. It is not fortuitous that in every ease so far we have affirmed the action of the trial judge: of Judge Goddard in Consolidated Theatres v. Warner Bros. Circuit Management Corp.. 2 Cir. 216 F. 2d 920, which originally established the principles; Judge Dawson in a Srey and Austin; and Judge Abruzzo in Fisher Studio Loew’s Incorporated, 2 Cir., 232 F. 2d 199, certiorari. denied 77S. Ct. 56. This means that we have found the 9a ‘*same case’’ rarely, and elsewhere have accepted the’ find. ings of the trial judge either for or against disqualification. It is evident that my brothers are finding the same case involved where I would not. Actually all these Stern family cases necessarily concern separate claims involving different theatres, different areas of competition, different periods of time. The only definite sameness | find is that all start with the famous Paramount decree. But so does all litigation ii this area at the present time. In short what this-decision really means is that Malkan is barred from this profitable atea of anti-trust litigation for the foreseeable future. This is much, much further than we have gone; in general we have looked for actually the same ease; in Laskey, for example, it was the same action started in-a new district. Defense counsel very shrewdly suggested that here all we had to do to find identity was to look through the corporate control to the real ownership. If. that were all, I.should of course agree., But it seems to me that even had a-single person owned all the theatres here involved, the cases would still not be identical and auto- matic or vicarious or wholesale disqualification ought not to follow. | : Hence I think Malkan, whatever presumption of fact.we may apply against him, should be ‘permitted te show he received no confidences of his client’s adversary which could be used against the confidant in the pending ease. Indeed he convineed Judge Sugarman through affidavit -and deposition. While I think the judge quite justified in his conclusion, | would see no objection to asking him to re-examine the facts and give us a detailed finding. But actually | find the situation differing in no matter of sub- stance from that before Judge Dawson in the Austin ease. If we should reverse here we surely should have reversed there.. I find the result here quite unfair to young lawyers attempting tg,break into substantial practice and undesir- able in poliey as helping to safeguard monopoly. T think Judge Sugarman’s decision should’ stand until real evi dence to the contrary appears. ? 1] oe 1VUa (Opinion of! United States Court of Appeals for the Second. Circuit, on Petition for Rehearing) UNITED STATES COURT OF APPEALS ‘For THE SECOND CiRcUIT Nos. 38, 39—October Term, 1956 (Petition filed January 12, 1957 Deeided Marelh 27, 1957) Docket” Nos. Wv14, 24015 "er : [Same Tire] * — Before: . Chark, Chief Judge, and Hann, and Sway, Circuit Judges. = On Petition for Rehearing Warren A. Skavey, Cambridge, Mass., for plain- tiffs-appellees, petitioners. | Bruce Bromuey, New York City. (Joux Logan | O’DoxxeLt and Leo P. Arnasorpi, Jr., New York City, of counsel), for defendunts-appel Se lants. Per CURIAM: Petition for rehearing denied. Chief Judge CLakk dissents in separate opinion. ’ (Lark, Chief Judge: (dissenting) : In view of the consideration which has been given to the suggestion for a hearing in banc, T deem a short note as to - the present state of ‘*second cirenit law’? hereon desirable. notwithstanding the extensive statements. in our former optnions now published as 2 Cir., 239 F. 2d 535. iia: Since one judge has died and another is disqualified, only four judges. were available to vote on a hearing in -. banc; as the votes were equally divided, the majority. re- quired by 28 U.S. C. ° 46(¢) for such hearing is lacking: While decision is thus afforded for the present case, it is obvious that precedents for the future must remain un- eertain. The majority herein cite and parport to follow the Laskey-Austin decision, 2 Cir., 224 F. 2d 824, certiorari denied 350 U. S. 932; and-hence it is to be taken as law, even though I feel convinced that iny brothers have quite departed from its wording and purpose. And the difficulty is not lessened because, as seems clear to ie, .careful scholars and judges have interpreted the former decision (for whose apparent ambiguities I have to accept, respon- sibility) as do I. See Cuited States v. Standard Ou Co. (N.-J.), D. C. S. D.-N. Y., 1386 F. Supp. 345, 363, 364; Note, 69 Harv. L: Rey. 1339, 13841: Note, 3 U. C.-L. A. L. Rev. 105; Kaufman, The Former Government Attorney and the Canons of Professional Ethics, 70 Harv. L., Rev. 657. This tangled situation must therefore await future development. os I do deem it proper to puint out that can ae brief on the petition for rehearing affords convincing support for my conclusion that fhe only «similarity between the issues to be tried in'the present two cases and the issues in the eases Isacson started while in partnership with Malkan is the Paramount decree, which is of course public prop- erty. The real issues at trial—conipetitive conditions in the neighborhood of the present theatres, linking the neigh- borhood with the national conspiracy, proof of damages— are entirely different in the different cases. Appellees un- derline this by seeking support for the disqgalification by reason of Malkan’s unethical solicitation’ of clients. But only recently we explained with some precision why that should nof be a means by which one party can deprive an opponent of his counsel. Fisher Studio v. Loew's Incor- porated, 2 Cir. 232 F. 2d 199, 204, certiorari denied 352 U.S. 836. --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386418_1353%3A2. Public record. Not legal advice.