Fine Paper Antitrust Litigation, In re

• Decision Date: 21 February 1980
• Docket Number: No. 79-1929,79-1929
• Citation: 617 F.2d 22
• Parties: 1980-1 Trade Cases 63,211 In re FINE PAPER ANTITRUST LITIGATION, Kimberly-Clark Corporation, Appellant.
• Court: U.S. Court of Appeals — Third Circuit

Page 22

617 F.2d 22

1980-1 Trade Cases 63,211

In re FINE PAPER ANTITRUST LITIGATION, Kimberly-Clark Corporation, Appellant.

No. 79-1929.

United States Court of Appeals Third Circuit.

Argued Dec. 13, 1979.

Decided Feb. 21, 1980.

H. Blair White (argued), Nathan P. Eimer, David M. Schiffman, William O. Fifield, Sidley & Austin, Chicago, Ill., Thomas M. Stanton, David C. McKee, Neenah, Wis., for Kimberly-Clark Corp.

Harold E. Kohn (argued), Dianne M. Nast, Robert J. LaRocca, Kohn, Savett, Marion & Graf, Philadelphia, Pa., for Magazine Management Co., Inc.

Warren Rubin, Gross & Sklar, Philadelphia, Pa., for Pengad Co.

Arnold Levin, Adler, Barish, Daniels, Levin & Creskoff, Philadelphia, Pa., for Moses Jaroslawicz t/a J & B Toy and Stationery.

Jack L. Chestnut, Chestnut & Brooks, Minneapolis, Minn., for Artcraft Press, Inc., & Prompt Printing.

H. Laddie Montague, Jr., Berger & Montague, Philadelphia, Pa., for Archdiocese of Philadelphia.

Leonard Barrack, Barrack, Rodos & McMahon, Philadelphia, Pa., for William Fels t/a Fels Printing.

Granvil I. Specks, Specks & Goldberg, Chicago, Ill., for Herst Litho, Inc.

Dean A. Dickie, Lowell E. Sachnoff, Sarah R. Wolff, Schnoff, Schrager, Jones, Weaver & Rubenstein, Chicago, Ill., for Nationwide Direct Purchaser Class Certified by Pretrial Order No. 30.

Gary R. Reiss, O'Brien & Hallisey, San Francisco, Cal., for William Grader, et al., Guido Saveri, Saveri & Saveri.

Before ALDISERT, VAN DUSEN and HUNTER, Circuit Judges.

OPINION OF THE COURT

JAMES HUNTER, III, Circuit Judge.

Kimberly-Clark moved to disqualify Harold E. Kohn, H. Laddie Montague, Lowell E. Sachnoff, Guido Saveri and Granvil Specks, Esqs., and their firms from acting as counsel for the class in the Fine Paper Antitrust Litigation. The trial judge denied the motion to disqualify and Kimberly-Clark seeks immediate review of the order denying disqualification. Appellees have moved to dismiss the appeal for lack of appellate jurisdiction. Because this appeal does not satisfy the criteria for collateral appealability the motion to dismiss is granted.

I FACTS

The Fine Paper Antitrust Litigation was filed in July 1977. Eleven months later in May 1978, Kimberly-Clark was named a party defendant. After a vigorous contest, the plaintiffs' class was certified on February 16, 1979. Kimberly-Clark played an active role before the district court in opposing the class certification. Yet, at no time during the nearly year long proceeding did Kimberly-Clark challenge the class certification on the ground that class counsel was acting under a conflict of interest.

The facts upon which Kimberly-Clark predicated its disqualification motion were known by Kimberly-Clark throughout the period of contesting class certification. Immediately after losing the class certification issue, Kimberly-Clark presented the district court with a motion to disqualify class counsel from conducting the action, predicated on a conflict of interest or, at minimum, an appearance of impropriety. ¹

Messrs. Kohn, Montague, Sachnoff, Saveri, Specks and their firms represent the plaintiff-classes in the Folding Carton Antitrust Litigation and the Corrugated Container Antitrust Litigation. Kimberly-Clark is not a named party in either case but is one of the several hundred thousand absent class members in both actions. Thus, as an absent class member, Kimberly-Clark's interests are being advanced by Messrs. Kohn, Montague, Sachnoff, Saveri, Specks and their firms in those two cases. Both of those cases were filed prior to commencement of the Fine Paper action. The alleged conflict of interest arises from the fact that the counsel suing Kimberly-Clark as a named defendant in the Fine Paper action, also represent Kimberly-Clark's interest as absent class members in the two other cases. The three actions are, however, unrelated.

Although Kimberly-Clark enjoyed absent class member status in the Folding Carton and Corrugated Container actions before being named a party defendant in Fine Paper, it never communicated in any fashion with the class attorneys nor attempted to do so. No information, confidential or otherwise, was provided by Kimberly-Clark to the class attorneys whom it seeks here to disqualify. ²

The district court denied the motion to disqualify. In the words of the trial judge, Kimberly-Clark "stood by while plaintiffs' counsel participated most actively in every phase of the litigation from the inception of the cases prior to transfer date, including the MDL (multi-district litigation) proceedings; the extensive discovery proceeding; the long series of settlement negotiations; and trial preparation." The district court believed that to disqualify counsel at this stage of the proceedings "would seriously jeopardize the position of the plaintiff class; . . . and lead inevitably to an indefinite postponement of trial." The court thought that Kimberly-Clark's delay in moving to disqualify evinced a motive that is "less concerned about enforcing the Code of Professional Responsibility than it is in gaining a tactical advantage over its adversaries in these cases." Upon addressing the merits, the district court concluded that "mere membership of a defendant in a nationwide plaintiff's class represented by counsel in one proceeding" is not "sufficient grounds to disqualify that same counsel in an unrelated suit." The controlling reason to the district court was the total lack of any disclosures made in confidence by Kimberly-Clark to the attorneys it here seeks to disqualify.

Pertinent to this appeal are: Canon 4, "A lawyer should preserve the confidence and secrets of a client"; Canon 5, "A lawyer should exercise independent professional judgment on behalf of a client"; Canon 9, "A lawyer should avoid even the appearance of professional impropriety." ³

II THE COLLATERAL ORDER DOCTRINE

Our first task on review is to ascertain whether appellate jurisdiction exists. Title 28 U.S.C. § 1291 provides for appeals from "all final decisions of the district court", except where a direct appeal to the Supreme Court may be taken. The present appeal does not stem from a final decision pertinent to the merits of the action, but rather, it is predicated on the collateral order doctrine of appealability.

In Cohen v. Beneficial Loan Corp., 337 U.S. 541, 546, 69 S.Ct. 1221, 1225, 93 L.Ed. 1528 (1948), the Court first enunciated the requirements that a decision must meet to be capable of collateral review prior to the termination of the action. ⁴ These requirements have recently been restated in Coopers & Lybrand v. Livesay, 437 U.S. 463, 468, 98 S.Ct. 2454, 2458, 57 L.Ed.2d 351 (1977) to require that the decision "must conclusively determine the disputed question, resolve an important issue completely separate from the merits of the action, and be effectively unreviewable on appeal from a final judgment." Kimberly-Clark contends that the district court order denying disqualification of class counsel satisfies Cohen's requirements for immediate collateral review.

Although this court has "not been overly hospitable to requests" to extend the collateral order doctrine, Hackett v. General Host Corp., 455 F.2d 618, 621 (3d Cir. 1972), cert. denied, 407 U.S. 925, 92 S.Ct. 2460, 32 L.Ed.2d 812 (1971) we are mindful of and bound by the general rule of this circuit that disqualification orders are reviewable. See, e. g., International Business Machine Corp. v. Levin, 579 F.2d 271, 278 (3d Cir. 1978); Kroungold v. Triester, 521 F.2d 763, 765 (3d Cir. 1975). Greene v. Singer Company, 509 F.2d 750 (3d Cir. 1971) cert. denied, 409 U.S. 848, 93 S.Ct. 54, 34 L.Ed.2d 89 (1972). But see e. g., In Re Grand Jury Proceedings, 576 F.2d 1071 (3d Cir. 1978) (en banc), cert. denied, 439 U.S. 953, 99 S.Ct. 349, 58 L.Ed.2d 343 (1978); Levin v. Ripple Twist Mills, Inc., 549 F.2d 795 (3d Cir. 1977) (Appeal from denial of disqualification motion dismissed without published opinion). Nevertheless, not "every ruling relating to conflict of interest by an attorney should activate the Cohen rule" to permit immediate collateral review. Greene v. Singer Company, 509 F.2d 750, 751 (3d Cir. 1971) cert. denied, 409 U.S. 848, 93 S.Ct. 54, 34 L.Ed.2d 89 (1972). Each order denying disqualification must independently satisfy the criteria for collateral review or await post trial review. See In Re Grand Jury Investigation, 576 F.2d 1071 (3d Cir. 1978) (en banc), cert. denied, 439 U.S. 953, 99 S.Ct. 349, 58 L.Ed.2d 343 (1978).

The "appealability of any order entered in a class action is determined by the same standards that govern appealability in other types of litigation." Coopers & Lybrand v. Livesay, 437 U.S. at 470, 98 S.Ct. at 2459. Application of Cohen's criteria to the order denying disqualification of class counsel reveals that two of the three prerequisites to collateral review are not here satisfied. ⁵ Although this issue is separable from and collateral to the merits of the antitrust action, thereby satisfying one criterion of Cohen, the ruling denying disqualification does not meet the finality requirement for collateral review. Kimberly-Clark has also failed to demonstrate that any rights would be irretrievably lost by post trial review of this order. Thus, it has not been shown that the question is effectively unreviewable on appeal from a final judgment and fails to meet that requirement of the Cohen doctrine.

A. The Finality Requirement

Orders denying disqualification of class counsel on the basis of a conflict of interest have been found not to meet the finality requirement of collateral review. North American Acceptance v. Arnall, Golden & Gregory, 593 F.2d 642, 644 & n.3 (5th Cir. 1979); Zylstra v. Safeway Stores, Inc., 578 F.2d 102, 104 (5th Cir. 1978); Glenn v. Arkansas Best Corp., 525 F.2d 1216, 1217 (5th Cir. 1975). Finality has been found lacking because the disqualification issue is intertwined with the determination of adequacy of representation which is a...