U.S. v. Miller

• Decision Date: 26 June 1980
• Docket Number: No. 79-2445,79-2445
• Citation: 624 F.2d 1198
• Parties: 80-2 USTC P 9559 UNITED STATES of America v. MILLER, William G., Appellant.
• Court: U.S. Court of Appeals — Third Circuit

Page 1198

624 F.2d 1198

80-2 USTC P 9559

UNITED STATES of America v. MILLER, William G., Appellant.

No. 79-2445.

United States Court of Appeals Third Circuit.

Argued March 20, 1980.

Decided June 26, 1980.

Herbert L. Zuckerman (argued), Zuckerman, Aronson, & Horn, Newark, N. J., for appellant.

Robert J. Del Tufo, U. S. Atty., Samuel A. Alito, Jr., Asst. U. S. Atty. (argued), Newark, N. J., for the U. S.

Before SEITZ, Chief Judge, and WEIS and HIGGINBOTHAM, Circuit Judges.

OPINION OF THE COURT

SEITZ, Chief Judge.

The defendant in this criminal prosecution for violations of the Internal Revenue Code appeals from a pretrial order disqualifying the law firm that had been representing him. The district court disqualified the firm because one of its partners had been an assistant United States attorney, with general responsibilities for tax matters, while the case was under investigation in the U. S. Attorney's office. This court has jurisdiction under 28 U.S.C. § 1291 (1976), because the district court's disqualification order is a final decision on a collateral issue. IBM v. Levin, 579 F.2d 271, 278 (3d Cir. 1978).

I.

The appellant, William G. Miller, is charged with four counts of attempted income tax evasion, 26 U.S.C. § 7201 (1976), and seven counts of making and signing false income tax returns, 26 U.S.C. § 7206(1) (1976). For his legal counsel, Miller hired the Newark, New Jersey, law firm of Zuckerman, Aronson, & Horn. One of the firm's partners, Lawrence S. Horn, had been an assistant U. S. attorney in the District of New Jersey for several years prior to joining the firm.

The government moved to disqualify the Zuckerman firm on the ground, inter alia, that Horn had participated in the government's preparations of its case against Miller while an assistant U. S. attorney. It relied on DR 9-101(B) of the ABA's Code of Professional Responsibility: "A lawyer shall not accept private employment in a matter in which he had substantial responsibility while he was a public employee."

The record then before the district court showed that much of the government's preparation occurred while Horn was with the U. S. Attorney. The case was prepared within the U. S. Attorney's office by a unit of the Department of Justice known as the Organized Crime and Racketeering Section, Newark Strike Force. Horn was not a member of the Strike Force. However, the Strike Force attorney who was assigned to the Miller case, Michael B. Himmel, submitted an affidavit in which he recalled discussing with Horn a legal question relevant to the case. The issue was "the difference between specific item and net worth theories of income tax prosecution." Himmel could not recall whether he had discussed any of the specific facts of the Miller case with Horn. Horn stated in response that he could not recall this discussion but that he was sure that he had never discussed the facts of the Miller case with anyone in the U. S. Attorney's office.

The district court initially denied the motion. Relying on an advisory opinion issued by the Supreme Court of New Jersey, In re Advisory Opinion on Professional Ethics no. 361, 77 N.J. 199, 390 A.2d 118 (1978), which applied DR 9-101(B) to the situation of a former prosecutor, the district court ruled that a prosecutor could be disqualified under DR 9-101(B) only if as a prosecutor he obtained actual knowledge of the case or held responsibility over the subject matter. Horn's conversation with Himmel, according to the district court, showed neither fact.

The government moved for reconsideration, directing its arguments this time to New Jersey's interpretation of the disciplinary rule. The government submitted evidence to show that the Miller case fit within the subject matter of Horn's former responsibilities. An affidavit by the U. S. Attorney, Robert J. Del Tufo, described these responsibilities. Horn was the resident expert on tax law. He handled most of the criminal tax prosecutions in the office and advised other prosecutors on tax issues. The U. S. Attorney expected his assistants to consult with Horn on any tax questions. The affidavit also stated that when Horn joined the Zuckerman firm, the firm announced that he had been "Chief of the Criminal Tax Fraud Unit within the United States Attorney's Office."

The U. S. Attorney's affidavit also discounted the significance of the distinction between cases assigned to Strike Force attorneys and cases assigned to regular assistant U. S. attorneys. The U. S. Attorney has ultimate responsibility for cases in both categories. Attorneys in the office freely exchange information and assume responsibilities without regard to this distinction. On tax cases assigned to Strike Force attorneys, Horn often provided the U. S. Attorney with evaluations and assisted the Strike Force attorneys with their preparations.

Horn testified that his responsibilities in tax cases were informal, nothing more than a specialization and a pattern of assignments and consultations. He stressed that he had no general responsibility for supervising tax cases. He repeated that he had no direct involvement in the preparation of the case against Miller.

After considering this additional evidence, the district court granted the government's motion. The court again relied on the interpretation of DR 9-101(B) in the advisory opinion of the Supreme Court of New Jersey. That interpretation holds that a prosecutor's "responsibility, whether exercised or not, over the subject matter" of a case pending in his office precludes him from a subsequent appearance as a private defense attorney in the case. In re Advisory Opinion, supra, 390 A.2d at 120. The district court held that the present case fell within the dictates of this rule because Horn had "some advisory responsibility" over criminal tax matters. Consequently, the court disqualified the entire Zuckerman firm.

II.

Supervision of the professional conduct of attorneys practicing in a federal court is a matter of federal law. IBM v. Levin, 579 F.2d 271, 279 n. 2 (3d Cir. 1978). We face an initial issue, therefore, of the correctness of the district court's reliance on an opinion of a state supreme court.

The basis for the district court's reliance on In re Advisory Opinion was its Local Rule 6:

The Disciplinary Rules of the Code of Professional Responsibility of the American Bar Association as amended by the Supreme Court of New Jersey . . . shall govern the conduct of . . . the members of the Bar admitted to practice in this Court.

D.N.J.Gen.R. 6 (emphasis added). The Supreme Court of New Jersey has not amended DR 9-101(B), the disciplinary rule applied in this case. See Rules Governing the Courts of the State of New Jersey 142 (West 1979). However, In re Advisory Opinion, supra, interpreted DR 9-101(B) to impose significantly greater restrictions on former prosecutors than would be required under the ABA's interpretation of the rule. See ABA Comm. on Ethics and Professional Responsibility, Formal Opinion 342, at 9 (1975). See also United States v. Standard Oil Co., 136 F.Supp. 345 (S.D.N.Y.1955). By relying on In re Advisory Opinion, the district court read its Local Rule 6 to incorporate not only New Jersey's published set of disciplinary rules but also New Jersey law on the interpretation of these rules. ¹

We find no error in the district court's reading of Local Rule 6. A court of appeals will grant substantial deference to a district court in the interpretation and application of local district court rules. See Hawes v. Club Ecuestre El Commandante, 535 F.2d 140, 143-44 (1st Cir. 1976); Lance, Inc. v. Dewco Services, Inc., 422 F.2d 778, 783-84 (9th Cir. 1970). Incorporation of the body of New Jersey law on professional ethics, including interpretations of disciplinary rules, serves at least two legitimate purposes: It allows the district court to use the possibly greater facilities of the state to investigate the ethical standards and problems of local practitioners. It also avoids the detriment to the public's confidence in the integrity of the bar that might result from courts in the same state enforcing different ethical norms. See In re Abrams, 521 F.2d 1094, 1106 (3d Cir.) (Rosenn, J., concurring), cert. denied, 423 U.S. 1038, 96 S.Ct. 574, 46 L.Ed.2d 413 (1975).

III.

Before considering the merits of this appeal, we must review the principles governing our scope of review. The district court's power to disqualify an attorney derives from its inherent authority to supervise the professional conduct of attorneys appearing before it. Richardson v. Hamilton International Corp., 469 F.2d 1382, 1385-86 (3d Cir. 1972), cert. denied, 411 U.S. 986, 93 S.Ct. 2271, 36 L.Ed.2d 964 (1973); E.F. Hutton & Co. v. Brown, 305 F.Supp. 371, 376-77 (S.D.Tex.1969). As a general rule, the exercise of this authority is committed to the sound discretion of the district court and will be overturned on appeal only for an abuse of this discretion. Greene v. Singer Co., 461 F.2d 242 (3d Cir.), cert. denied, 409 U.S. 848, 93 S.Ct. 54, 34 L.Ed.2d 89 (1972).

This general rule is subject to one major exception. We have not confined our review to the abuse of discretion standard on issues of whether an ABA disciplinary rule prohibits certain professional conduct. Such issues "leave little leeway for the exercise of discretion." American Roller Co. v. Budinger, 513 F.2d 982, 985 n. 3 (3d Cir. 1975). We have approached these issues as questions of law subject to plenary review. IBM v. Levin, 579 F.2d 271, 279 (3d Cir. 1978).

In this case, the district court interpreted DR 9-101(B) to prohibit certain professional conduct. Its interpretation was not an exercise of discretion. However, in this case plenary review on appeal assumes a particular form. Because the district court relied on New Jersey law for its interpretation, it was bound by a controlling case of the Supreme Court of New Jersey. See In re Abrams, 521 F.2d 1094, 1102-03 (3d Cir.) ...