Central Milk Producers Co-op. v. Sentry Food Stores, Inc.

• Decision Date: 30 March 1978
• Docket Number: No. 77-1633,77-1633
• Citation: 573 F.2d 988
• Parties: 1978-1 Trade Cases 61,953 CENTRAL MILK PRODUCERS COOPERATIVE, Central Milk Sales Agency, Associated Milk Producers, Inc., Appellants, v. SENTRY FOOD STORES, INC., Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 988

573 F.2d 988

1978-1 Trade Cases 61,953

CENTRAL MILK PRODUCERS COOPERATIVE, Central Milk Sales Agency, Associated Milk Producers, Inc., Appellants, v. SENTRY FOOD STORES, INC., Appellee.

No. 77-1633.

United States Court of Appeals Eighth Circuit.

Submitted Jan. 11, 1978.

Decided March 30, 1978.

Sydney Berde (argued), and Lawrence Sutin, St. Paul, Minn., on brief, for appellants.

Charles Pressman (argued), and Stephen Feinberg, Chicago, Ill., on brief, for appellee.

Before BRIGHT, STEPHENSON and HENLEY, Circuit Judges.

STEPHENSON, Circuit Judge.

The issue before the court on this appeal is whether the trial court ¹ abused its discretion in refusing to disqualify the law firm of Pressman and Hartunian from further representation of the plaintiff, Sentry Food Stores, Inc. (Sentry), in a civil antitrust action because two members of the law firm had previously worked for the government in a closely related case. We affirm.

On April 11, 1972, the law firm of Pressman and Hartunian filed suit on behalf of Sentry seeking treble damages and injunctive relief for alleged violations of antitrust laws by Associated Milk Producers, Inc. (AMPI), Central Milk Producers, Inc. (CMPC), Central Milk Sales Agency (CMSA), Associated Reserve Standby Pool Cooperative (ARSPC), Associated Milk Dealers, Inc. (AMDI), and certain of their officers and directors. Sentry Food Stores, Inc. v. AMPI, No. 72-C 888 (N.D.Ill., filed April 11, 1972). Sentry alleged that the defendants combined and conspired with other unnamed coconspirators to fix prices and monopolize milk marketing in the Chicago regional marketing area in violation of sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1, 2.

The United States Department of Justice had previously filed a civil antitrust suit against AMPI in the Western District of Texas on February 1, 1972. The suit instituted by the government was transferred to the Western District of Missouri pursuant to 28 U.S.C. § 1404(a). The instant case as well as numerous related actions were eventually transferred to the Western District of Missouri for coordinated or consolidated pretrial proceedings pursuant to 28 U.S.C. § 1407. See In re Midwest Milk Monopolization Litigation, 379 F.Supp. 989 (Jud.Pan.Mult.Lit.1974).

Attorneys Ronald L. Futterman and Rebecca J. Schneiderman, while employed by the Department of Justice, participated in the investigation, preparation and prosecution of the government's suit against AMPI. Both Futterman and Schneiderman represented the United States during coordinated discovery, and worked with private counsel, including the Pressman firm, in preparing the cases for trial.

In May of 1973 Futterman announced his intention to leave the Department of Justice to join the then two-man Pressman firm. The district court was advised during a pretrial conference of Futterman's intention to join Pressman and Hartunian. In July of 1973 Futterman commenced employment with the Pressman firm as an associate and continues to be employed by that firm.

On July 20, 1973, Sydney Berde, then attorney for CMPC and CMSA, wrote Charles Pressman of Pressman and Hartunian expressing his concern over Futterman's association with the firm and enclosed a draft memorandum in support of a motion to disqualify the Pressman firm. Berde indicated that he would file the motion unless he was satisfied that Pressman and Hartunian's continued involvement in the case was proper. After further communication between Pressman and Berde, Berde stated in a letter dated July 29, 1973, that the procedures to be used by Pressman and Hartunian in screening Futterman from any contact with the case were satisfactory and that he assumed that the matter was closed.

In July of 1975 Schneiderman announced that she intended to terminate her employment with the Department of Justice and that she planned to join the Pressman firm. By this time a consent decree had been filed with the district court terminating the government's litigation against AMPI. See United States v. AMPI, 394 F.Supp. 29 (W.D.Mo.1975), aff'd, 534 F.2d 113 (8th Cir. 1976). On September 5, 1975, Schneiderman joined the Pressman firm as a part-time associate. The office procedures designed to isolate Futterman from the case were applied to Schneiderman. On September 13, 1975, CMPC and CMSA filed a motion to disqualify the Pressman and Hartunian firm from further representation of Sentry in this antitrust action by reason of its employment of Futterman and Schneiderman. AMPI subsequently joined in the motion. The other defendants below specifically refused to join the motion. AMPI, CMPC, and CMSA, all presently clients of Sydney Berde, appeal from the oral ruling of the district court denying their motion to disqualify.

Appellee contends in its brief that an order denying a motion to disqualify is not separately appealable under 28 U.S.C. § 1291. However, in the recent case of Fred Weber, Inc. v. Shell Oil Co., 566 F.2d 602, 606-07 (8th Cir. 1977), this court held that an order denying disqualification is immediately appealable under the "collateral order" exception to the "finality" requirement of section 1291. Consequently, we will consider the merits of appellants' claim.

The essence of appellants' argument is that, because of their involvement in the government suit against AMPI, Futterman and Schneiderman are disqualified from representing Sentry in the present action by Disciplinary Rule 9-101(B) of the American Bar Association Code of Professional Responsibility. This Disciplinary Rule provides: "A lawyer shall not accept private employment in a matter in which he had substantial responsibility while he was a public employee." It is further claimed that the disqualification of Futterman and Schneiderman is extended to the entire firm by Disciplinary Rule 5-105(D), which provides: "If a lawyer is required to decline employment or to withdraw from employment under a Disciplinary Rule, no partner, or associate, or any other lawyer affiliated with him or his firm, may accept or continue such employment." See American Can Co. v. Citrus Feed Co., 436 F.2d 1125, 1128-29 (5th Cir. 1971); Laskey Bros. v. Warner Bros. Pictures, Inc., 224 F.2d 824, 826 (2d Cir. 1955); Handelman v. Weiss, 368 F.Supp. 258 (S.D.N.Y.1973). These disciplinary rules are based upon sound policy considerations including discouraging government lawyers from handling particular assignments in such a way as to enhance their own future employment and the professional benefit derived from avoiding the appearance of evil.

Appellee acknowledges that neither Futterman nor Schneiderman could represent Sentry in the present action because of the activities in which they engaged while employed by the government. However, appellee argues that the disqualification of Futterman and Schneiderman should not be extended to the entire Pressman firm because appellants stipulated that Futterman and Schneiderman "rendered the government an uncompromised standard of service, conscientiousness and integrity" and because the screening procedures adopted Appellee further urges that a rule requiring automatic disqualification of an entire firm would unduly restrict a government lawyer's future employment and would result in the government being unable to recruit competent lawyers as well as unnecessarily limiting the availability for litigants of skilled lawyers, particularly in specialized areas. See ABA Comm. of Professional Ethics, Opinions, No. 342 (1975); N.Y. City Bar Ass'n Comm. on Professional and Judicial Ethics, Opinions, No. 889 (1976), as reported in 45 U.S.L.W. 2292 (Dec. 14, 1976). See also Kaufman, The Former Government Attorney and the Canons of Professional Ethics, 70 Harv.L.Rev. 657 (1957).

by the firm isolating Futterman and Schneiderman from any contact with the case avoid even the appearance of impropriety.

It is clear that under a literal reading of DR-9-101(B) in conjunction with DR-5-105(D) the Pressman firm has committed a violation of the Code of Professional Responsibility by continuing to represent Sentry after hiring Futterman and Schneiderman. However, proof of a Code violation does not necessarily resolve the issue before us. Although the Code of Professional Responsibility establishes proper guidelines for the professional conduct of attorneys, a violation does not automatically result in disqualification of counsel. See Meat Price Investigators Ass'n v. Spencer Foods, Inc., 572 F.2d 163 (1978); W. T. Grant Co. v. Haines, 531 F.2d 671, 676-77 (2d Cir. 1976); Fisher Studio, Inc. v. Loew's, Inc., 232 F.2d 199 (2d Cir.), cert. denied, 352 U.S. 836, 77 S.Ct. 56, 1 L.Ed.2d 55 (1956). The sanction of disqualification rests in the discretion of the trial court and its determination will only be overturned upon a showing of abuse of such discretion. Fred Weber, Inc. v. Shell Oil Co., supra; W. T. Grant Co. v. Haines, supra; Lefrak v. Arabian American Oil Co., 527 F.2d 1136 (2d Cir. 1975); Waters v. Western Co., 436 F.2d 1072 (10th Cir. 1971).

In resolving the issue before us we follow the guidelines enunciated by Judge, now Chief Judge, Kaufman in Emle Industries, Inc. v. Patentex, Inc., 478 F.2d 562, 564-65 (2d Cir. 1973):

We approach our task as a reviewing court in this case conscious of our responsibility to preserve a balance, delicate though it may be, between an individual's right to his own freely chosen counsel and the need to maintain the highest ethical standards of professional responsibility. This balance is essential if the public's trust in the integrity of the Bar is to be preserved. Moreover, we are mindful that ethical problems cannot be resolved in a vacuum.

In the present case, after...