Agent Orange Product Liability Litigation, In re
| Citation | 800 F.2d 14 |
| Decision Date | 21 August 1986 |
| Docket Number | 85-6269 and 85-6275,84-6245,84-6241,84-6237,85-6257,84-6247,85-6101,85-6161,Nos. 84-6231,85-6205,84-6321,84-6233,84-6235,85-6103,84-6443,s. 84-6231 |
| Parties | In re "AGENT ORANGE" PRODUCT LIABILITY LITIGATION. |
| Court | U.S. Court of Appeals — Second Circuit |
Stephen J. Schlegel, Chicago, Ill., for plaintiffs' Management committee.
Robert A. Taylor, Jr., Washington, D.C. (Wayne M. Mansulla, Ashcraft & Gerel, Washington, D.C., of counsel), for Ashcraft & Gerel.
Benton Musslewhite, Houston, Tex., for Law Offices of Benton Musslewhite, Inc.
Before NEWMAN, KEARSE, and MINER, Circuit Judges.
Stephen J. Schlegel, Esq., a member of the Plaintiffs' Management Committee ("PMC") in the "Agent Orange" product liability litigation, moved in this Court for an order disqualifying the law firm of Ashcraft & Gerel ("Ashcraft") and the Law Offices of Benton Musslewhite ("Musslewhite"), Inc., from representing in the captioned appeals certain class members and other plaintiffs who challenge the settlement of the litigation approved by the district court. Schlegel contends principally that Ashcraft and Musslewhite, as a result of their prior representation of parties supporting the settlement, have conflicts of interest requiring their disqualification as appellate counsel. In an order filed on April 3, 1986, we denied the motion, indicating that this opinion would follow.
The Agent Orange lawsuits began in late 1978 and early 1979 when several individual veterans of the Vietnam War and their families brought suit in the Northern District of Illinois and the Southern and Eastern Districts of New York. Named as defendants were several chemical companies that had manufactured Agent Orange and other herbicides for use by the military as defoliants in the Vietnam War. The plaintiffs alleged that they had sustained various physical injuries by reason of the veterans' exposure to Agent Orange. By order of the Judicial Panel on Multidistrict Litigation, these actions were transferred to the Eastern District of New York for consolidation of pretrial proceedings pursuant to 28 U.S.C. Sec. 1407 (1982). Later-filed actions were also transferred to the Eastern District.
Pursuant to Fed.R.Civ.P. 23(b)(3), the district court certified a plaintiff class consisting of members of the armed forces of United States, New Zealand, and Australia who were injured while in or near Vietnam by exposure to Agent Orange or similar herbicides, and their spouses, parents or children who were directly or derivatively injured as a result of the exposure. Notice of the class certification was given, and potential class members were allowed to opt out. See In re "Agent Orange" Product Liability Litigation, 611 F.Supp. 1223, 1229 (E.D.N.Y.1985).
For purposes of this motion, most of the pertinent facts relating to the representation of individual plaintiffs and the plaintiff class have been stipulated or are not disputed.
Schlegel became counsel to various plaintiffs in the litigation as early as November 1978. He has been designated as one of plaintiffs' counsel of record throughout the Agent Orange litigation. Musslewhite became involved as plaintiffs' counsel in Agent Orange litigation as early as January 1979. He represents some 1,500 Vietnam veterans as individual clients. Ashcraft has represented plaintiffs in Agent Orange litigation on an active basis since early 1980. It represents more than 2,000 plaintiff class members, as well as 386 individuals who originally opted out of the class; 60 of those opt-outs later rejoined the class.
In 1980, after tentatively granting the class certification, the district court appointed Yannacone & Associates ("Yannacone"), a consortium of New York-area lawyers, as lead counsel to the class. Thereafter, Ashcraft acted as class action counsel under an agreement with Yannacone. At the request of or by agreement with Yannacone in early 1983, Schlegel, Musslewhite, and Ashcraft became members of the PMC. All functioned for a time thereafter as class counsel. In addition, Schlegel and Musslewhite were designated by the court as lead counsel.
Ashcraft was never appointed lead counsel, but as a member of the PMC and as class action counsel, it undertook a number of tasks on behalf of the class, including attending depositions, reviewing documents obtained through discovery, and writing, filing, and opposing motions in the district court. During Musslewhite's tenure as a member of the PMC, he was listed as counsel of record in numerous filings with the district court and joined in motions concerning class certification, proposed forms of notice to class members, and other substantive issues in the litigation.
In September 1983, Yannacone moved for and was granted permission to withdraw as lead counsel and a member of the PMC. Ashcraft also withdrew from the PMC in September 1983. The order of the district court approving the withdrawal of Yannacone provided that the PMC would function as lead counsel. The PMC then consisted of Schlegel, Musslewhite, and the law firm of Baskin & Sears.
Prior to May 7, 1984, with the class actions scheduled to go to trial on May 7, the parties negotiated a settlement of the class actions. The agreement called for the defendant chemical companies to pay a total of $180 million in settlement to the members of the plaintiff classes.
As a member of the PMC, Musslewhite had participated in the negotiations that led to the settlement agreement; he voted in favor of that agreement and spoke in support of it in the fairness hearings conducted by the district court in August 1984. Thereafter, however, Musslewhite became disenchanted with the proposed settlement agreement, and in January 1985, he withdrew from the PMC.
In January, 1985, the district court found the settlement to be fair, reasonable, and adequate under the circumstances, In re "Agent Orange" Product Liability Litigation, 611 F.Supp. 1296 (E.D.N.Y.1985), and in May 1985, it approved a distribution plan for the settlement fund, In re "Agent Orange" Product Liability Litigation, 611 F.Supp. 1396 (E.D.N.Y.1985).
Following the entry of final judgments approving the settlement, Ashcraft and Musslewhite, on behalf of the thousands of plaintiffs they represent, filed appeals contending that the settlement should be set aside. Ashcraft, on behalf of its clients and on behalf of 21 law firms around the country claiming to represent some 3,000 additional class members, filed a brief challenging the fairness, reasonableness, and adequacy of the settlement and contending, in addition, that the district court lacked subject matter jurisdiction of the litigation and had denied individual claimants due process in certifying the class.
Musslewhite filed a brief adopting the arguments made in Ashcraft's brief and making additional challenges to the sufficiency of the notice given to class members and the adequacy of the approved settlement. In responding to the present motion, Musslewhite stated that his view of the adequacy of the settlement, which he initially had favored, was changed by information that came to light only after the agreement was negotiated, as to the number of class members who did not receive notice of the class action and the number of class members who have claims to be satisfied from the settlement fund. He stated that whereas prior to the negotiations it was believed that there were some 20,000 claims to be asserted, only 4,000 of which were serious, it now appears that there are some 243,000 claims to be asserted, more than 128,000 of which are serious. These revelations caused Musslewhite to change his view that the settlement was adequate, to urge the other members of the PMC to reject the settlement, and to challenge the settlement on appeal.
Schlegel, on behalf of the PMC as it is presently constituted, moved to disqualify Ashcraft and Musslewhite from representing parties on the pending appeals, principally on the grounds that the combination of (1) Ashcraft's representation of both class members and individuals who chose to opt out of the class, (2) Musslewhite's participation in the negotiation of the proposed settlement on behalf of the class, and (3) the prior roles of Ashcraft and Musslewhite as members of the PMC and class counsel, have given them "such a direct conflict of interest as to create a clear impropriety in violation of controlling standards of professional conduct." For the reasons below, we have concluded that the motion should be denied.
As a matter of professional responsibility, an attorney owes a duty of loyalty to his client. This duty encompasses an obligation to defer to the client's wishes on major litigation decisions, not to divulge confidential communications from the client, and not to accept representation of a person whose interests are opposed to those of the client. E.g., A.B.A. Code of Professional Responsibility EC 7-1, 4-1, and 5-2.
These obligations do not necessarily end when the attorney-client relationship ends. E.g., Cinema 5, Ltd. v. Cinerama, Inc., 528 F.2d 1384 (2d Cir.1976); Emle Industries, Inc. v. Patentex, Inc., 478 F.2d 562, 570-71 (2d Cir.1973). Thus, we have ordered disqualification of a party's attorney where, as a result of his prior representation of another client, "the attorney is at least potentially in a position to use privileged information concerning the other side ... thus giving his present client an unfair advantage." Board of Education v. Nyquist, 590 F.2d 1241, 1246 (2d Cir.1979); see, e.g., Fund of Funds, Ltd. v. Arthur Andersen & Co., 567 F.2d 225 (2d Cir.1977); Cinema 5, Ltd. v. Cinerama, Inc., 528 F.2d 1384; In re Corn Derivatives Antitrust Litigation, ...
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