Fisher Studio v. Loew's Incorporated, 233

• Court: United States Courts of Appeals. United States Court of Appeals (2nd Circuit)
• Writing for the Court: CLARK, , and FRANK and HINCKS, Circuit
• Citation: 232 F.2d 199
• Parties: FISHER STUDIO, Inc. and Robert V. Fisher, Plaintiffs-Appellants, and David H. Isacson and Malkan & Isacson, Appellants, v. LOEW'S INCORPORATED et al., Defendants-Appellees.
• Docket Number: No. 233,Docket 23908.,233
• Decision Date: 02 April 1956

232 F.2d 199 (1956)

FISHER STUDIO, Inc. and Robert V. Fisher, Plaintiffs-Appellants, and
David H. Isacson and Malkan & Isacson, Appellants,
v.
LOEW'S INCORPORATED et al., Defendants-Appellees.

No. 233, Docket 23908.

United States Court of Appeals Second Circuit.

Argued February 15, 1956.

Decided April 2, 1956.

232 F.2d 200

Bruno Schachner, New York City (David H. Isacson and Arnold G. Malkan, New York City, on the brief), for plaintiffs-appellants.

Bruce Bromley, New York City (Louis Phillips, John Logan O'Donnell, and Leo P. Arnaboldi, Jr., New York City, on the brief), for defendants-appellees.

Before CLARK, Chief Judge, and FRANK and HINCKS, Circuit Judges.

CLARK, Chief Judge.

This is another of the several appeals before us recently involving the issue of attorneys' disqualification for previous representation of the defendants in antitrust cases. The background of this case is set forth in Laskey Bros. of West Virginia v. Warner Bros. Pictures, 2 Cir., 224 F.2d 824, certiorari denied 350 U.S. 932, 76 S.Ct. 300, which actually concerns a later disqualification of attorneys dependent on the facts here brought out below. See also Consolidated Theatres v. Warner Bros. Circuit Management Corp., 2 Cir., 216 F.2d 920, establishing the controlling principles of law.

This particular appeal comes from orders made in an antitrust action brought by certain exhibitors of 16 mm. motion

232 F.2d 201

picture films against fifteen film producers and distributors alleging arbitrary restriction upon the distribution and exhibition of 16 mm. films and the establishment and maintenance of a price-fixing system against the plaintiffs. Plaintiffs, their attorney David H. Isacson, and the dissolved law firm of Malkan & Isacson are appealing from an order of the district court disqualifying Isacson and his firm from representing the plaintiffs. Upon defendants' original motion for disqualification the court referred the matter to Special Master Harold F. McNiece, who filed a report of over 200 pages concluding that both Isacson and the firm were disqualified. Judge Abruzzo adopted and confirmed the report and ordered the recommended disqualification. Subsequently he denied a motion for new trial on the issue of disqualification. The appeal is from both these orders. Later the judge entered a third order interpreting a prior stipulation of the parties, by which interpretation the disqualification was made applicable to all 35 mm. and 16 mm. antitrust cases and underreporting cases to which defendants were party. This, too, is the subject of appeal, with a request for consolidation of the appeals

The facts upon which the disqualification was based were exhaustively developed in the procedings before the Special Master and are set forth in convincing detail in his thorough report. We shall make only a summary reference to them here.

Isacson was employed by the law firm of Sargoy & Stein between November, 1946, and March, 1951. Sargoy & Stein was organized in 1946, and during the period of Isacson's employment was the legal representative of eight of the present defendants or their corporate predecessors, if any, in matters closely related to this suit. It also rendered services to and received compensation from a ninth defendant in respect to treble-damage antitrust claims. Sargoy & Stein rendered services to four other defendants, which were either subsidiaries or film distributors of its clients, but received no compensation from them. As to the other two defendants, which also acted as film distributors for certain of Sargoy & Stein's clients, the evidence is unclear, but the law firm "may" have dealt with matters involving these defendants.

Sargoy & Stein first employed Isacson as an auditing clerk, but from the early part of 1947 he assumed the duties of a lawyer and his name appeared on the firm's letterhead. As a member of the firm's staff, he was in a position to acquire knowledge of the manner in which the companies did business in the 16 mm., as well as the 35 mm., field. This included knowledge as to which companies produced 16 mm. prints; the use to which they put them; the manner of licensing of 16 mm. pictures for exhibition; the limitations, if any, that were imposed on the distribution; the contractual provisions between the companies and their licensees, limiting the use of the pictures; and the terms of the licenses. All this information was accessible to him from the files of Sargoy & Stein.

During Isacson's employment, the firm brought or participated in 464 suits on behalf of distributors against exhibitors for percentage frauds or underreporting or other actions for recovery of rentals. Of these, at least 233 involved antitrust defenses, counterclaims, or countersuits by exhibitors. Of these 233 cases, Isacson, then on behalf of distributors, initialed or marked memoranda or correspondence in every one, wrote letters or memoranda in 170 of the cases, and participated in taking depositions in 72. There was convincing evidence that Isacson worked on and was well acquainted with the antitrust aspects of a number of cases and his evasive testimony at the Master's hearing did not serve to rebut this conclusion. Although his work primarily involved 35 mm. matters, he had access to the 16 mm. files and 16 mm. matters were on occasion discussed with him. In any event, 35 mm. and 16 mm. antitrust problems are so related

232 F.2d 202

that confidential information gained in one area would be of value in the other

Fisher, one of the plaintiffs in this action, first came into contact with Sargoy & Stein in 1946 when he visited their office. Isacson met Fisher through a mutual acquaintance in that office. Isacson left Sargoy & Stein in March, 1951; and the complaint in this action was filed in September, 1952. There was testimony that in August, 1952, Isacson telephoned an attorney employed by Sargoy & Stein to inquire if he knew the names of persons in the 16 mm. film filed who might have justifiable complaints and asked specifically about Fisher. And there were other circumstances from which solicitation of this suit by Isacson might have been strongly inferred.

On the basis of all the evidence both the Special Master and Judge Abruzzo found that Isacson had violated Canons 6 and 37 of the Canons of Professional Ethics of the American Bar Association¹ by...