Fred Weber, Inc. v. Shell Oil Co.

• Decision Date: 28 December 1977
• Docket Number: 77-1599 and 77-1616,Nos. 77-1571,s. 77-1571
• Citation: 566 F.2d 602
• Parties: , 1977-2 Trade Cases 61,754 FRED WEBER, INC., Appellee, v. SHELL OIL COMPANY, Shell Pipe Line Corporation, Amoco Oil Company and Standard Oil Company (Indiana), Appellants.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 602

566 F.2d 602

44 A.L.R.Fed. 697, 1977-2 Trade Cases 61,754

FRED WEBER, INC., Appellee, v. SHELL OIL COMPANY, Shell Pipe Line Corporation, Amoco Oil

Company and Standard Oil Company (Indiana), Appellants.

Nos. 77-1571, 77-1599 and 77-1616.

United States Court of Appeals,

Eighth Circuit.

Submitted Sept. 14, 1977.

Decided Nov. 30, 1977.

Rehearing and Rehearing En Banc Denied Dec. 28, 1977.

William Simon of Howrey & Simon, Washington, D. C. (argued), for appellant, Shell Oil Co.; Alan M. Wiseman, Robert J. Brookhiser, Jr., Washington, D. C., and William G. Guerri, St. Louis, Mo., on brief for Shell Oil Co. and Shell Pipeline Corp.

John C. Shepherd, of Coburn, Croft, Shepherd, Herzog & Putzell, St. Louis, Mo. (argued), for appellant, Standard Oil Co. (Indiana); Richmond C. Coburn, Joseph A. Kral, III, Adrian L. Steel, Jr., St. Louis, Mo., and Maurice R. Glover, Chicago, Ill., on brief for Standard Oil Co. (Indiana) and Amoco Oil Co. (Indiana).

Norman C. Parker of Flynn & Parker, St Louis, Mo. (argued), for appellee; Mary Ann Weems of Flynn & Parker, Edward D. Weakley, and William I. Rutherford, St. Louis, Mo., on brief.

Before STEPHENSON and VAN OOSTERHOUT, Circuit Judges, and MARKEY, ^* Chief Judge.

MARKEY, Chief Judge.

Appeal from an order of the United States District Court for the Eastern District

of Missouri, 432 F.Supp. 694 (E.D.Mo.1977), denying defendants' motion to disqualify plaintiff's counsel. We affirm.

Background

Among the defendants in the present civil antitrust suit are Shell Oil Company (Shell) and American Oil Company (Amoco), which seek the disqualification of Lashly, Caruthers, Thies, Rava & Hamel (the Lashly firm) as counsel for plaintiff Fred Weber, Inc. (Weber).

The Lashly firm was counsel for some of Shell and Amoco's codefendants in a prior criminal antitrust suit, United States v. American Oil Co., 65 C.R. 150(3), brought in 1965. Shell and Amoco are represented here by the attorneys who represented them in the prior suit. That suit terminated in November 1965 when Judge Regan accepted pleas of nolo contendere from all defendants.

Judge Regan, the judge in American Oil, recused himself from the present suit on his own motion, in accord with the ABA Code of Judicial Conduct, Canon 3C(1) ¹ and 28 U.S.C. § 455. ² Order of December 10, 1976. One month later, and eight months after being sued for conspiracy to violate the antitrust laws in the present suit, Shell and Amoco filed their motion to disqualify the Lashly firm in view of Canons 4, 5, and 9 of the ABA Code of Professional Responsibility. ³

Shell and Amoco allege that members of the Lashly firm, by reason of their representation in American Oil, had access to confidential information (debriefing memoranda of grand jury testimony) in the files of Amoco's counsel, and were present at meetings of counsel for all defendants at which defense strategy was discussed. The Lashly firm contends that it never represented Shell or Amoco in the criminal suit; that it never received confidential information; that, absent proof of receipt of confidential information, disqualification is not warranted; that there is no appearance of impropriety; and that the motion is one of a series of delaying tactics.

Judge Nangle, to whom the case was reassigned, ordered Shell and Amoco to file in camera "any and all material in their possession which support(s) the allegations made in their motion to disqualify plaintiff's attorney . . . (and) written affidavits setting out all confidences which were exchanged during the pendency of United States v. American Oil Company . . . " Order of April 20, 1977.

After a hearing, Judge Nangle held that the evidence, including the in camera submissions, testimony, affidavits of counsel, and other submissions, established that counsel for the criminal defendants did agree to work together in their defense of the indictment, but that no member of the Lashly firm had represented Shell or Amoco or had received any confidential information. 432 F.Supp. at 696. The motion to disqualify was therefore denied.

Scope of Review

We apply the scope of review in disqualification cases described in Hull v. Celanese Corp., 513 F.2d 568 (2d Cir. 1975): "The district court bears the responsibility for the supervision of the members of its bar. (Citing authorities.) The dispatch of this duty is discretionary in nature and the finding of the district court will be upset only upon a showing that an abuse of discretion has taken place. (Citing authorities.)" 513 F.2d at 571.

Issues

The dispositive issues on appeal are: (1) whether the order denying the motion is

separately appealable, and (2) whether the district court abused its discretion in refusing the disqualification of the Lashly firm in view of Canon 4, 5, or 9 of the Code of Professional Responsibility. ⁴

OPINION

The question before us is one of first recorded impression: Does a lawyer's representation of A, codefendant with B in a prior suit, disqualify the lawyer as representative of C against B in a subsequent, related suit?

(1) The order denying the motion to disqualify is immediately appealable.

Appeals in federal cases being governed by 28 U.S.C. § 1291 (1958) and 28 U.S.C. § 1292 (1958), ⁵ appeals prior to final judgment below are commonly sought through the "collateral order" exception to the § 1291 "finality" requirement, created by the Supreme Court in Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541, 69 S.Ct. 1221, 93 L.Ed. 1528 (1949). ⁶ An order is appealable under Cohen when: (1) it is a "final determination of a claim of right 'separable from, and collateral to,' the rights asserted in the main action;" (2) it presents " 'a serious and unsettled question,' rendering it 'too important to be denied review' "; and (3) an immediate appeal is "necessary to preserve rights that would otherwise be lost on review from final judgment." Community Broadcasting of Boston, Inc. v. Federal Communications Commission, 178 U.S.App.D.C. 256, at 259, 546 F.2d 1022 at 1025 (1976).

Courts have distinguished between the granting and denying of motions to disqualify counsel. Orders granting such motions have long been considered immediately appealable under Cohen. Schloetter v. Railoc of Indiana, Inc., 546 F.2d 706 (7th Cir. 1976). The circuits disagree on appealability of orders denying motions. The Second, Third, Fifth, Sixth, Seventh and Tenth Circuits have held that orders denying motions to disqualify meet the requirements of Cohen. Silver Chrysler I, supra note 6 (overruling prior contrary decisions); Greene v. Singer Co., 509 F.2d 750 (3rd Cir. 1971); Tomlinson v. Florida Iron & Metal, Inc., 291 F.2d 333 (5th Cir. 1961); Melamed v. ITT Continental Baking Co., 534 F.2d 82 (6th Cir. 1976); Schloetter, supra; Fullmer v. Harper, 517 F.2d 20 (10th Cir. 1975). The D.C. Circuit has held the contrary. Community Broadcasting, supra. The Ninth Circuit, with no mention of Cohen, has held denial of the motion reviewable by writ of mandamus, but not appealable. Cord, supra.

The disagreement is over the adequacy of review after final judgment, Community Broadcasting, supra, and Silver Chrysler I, supra note 6, are representative. In Community Broadcasting, the court said: "Although 'collateral' to the main proceeding, an order denying a motion to disqualify does not, in most cases, implicate any claim of right that will be irreparably lost on appeal from final judgment." 178 U.S.App.D.C. at 262, 546 F.2d at 1028. The D.C. Circuit also expressed the view that "(a) rule allowing interlocutory appeals here would provide litigants with yet another device by which to delay final determination on the merits, and would lead the court to divert its attention from the central issues in the case." 178 U.S.App.D.C. at 261, 546 F.2d at 1027 (footnote omitted). The court in Silver Chrysler I adopted the language and decision of the Supreme Court in Cohen : " 'We hold this order appealable because it is a final disposition of a claimed right which is not an ingredient of the cause of action and does not require consideration with it.' 337 U.S. at 547, 69 S.Ct. 1221." 496 F.2d at 805-06. The Second Circuit was influenced by its feeling that "(t)here is no sufficient basis for distinguishing between . . . (orders granting and denying disqualification). In both situations the order is collateral to the main proceeding yet has grave consequences to the losing party, and it is fatuous to suppose that review of the final judgment will provide adequate relief." 496 F.2d at 805.

We hold that the order denying disqualification is final under Cohen and therefore appealable. The question involved is separable from and collateral to the main action; it is serious, and too important to await review in conjunction with the appeal from a final judgment. We recognize the obvious risk that an immediate appeal may be used for delay and diversion. On balance, however, we consider the risk insufficient to warrant an insistence that trials be conducted under a cloud of potential disqualification. Moreover, disciplinary powers of courts are available to deal with unfounded motions to disqualify and frivolous appeals from their denial.

(2) Disqualification is not required by Canons 4, 5 or 9.

Canon 4

Though Canon 4 is an exemplary rule dealing with a particular relationship, the lawyer's personal relationships to others are incapable of comprehensive codification. The broad commitment of the lawyer to respect confidences reposed in him is his talisman. Touching the very soul of lawyering, it rests upon a "privilege" which is that of the client, not that of the lawyer. Inaccurately-described as the "lawyer's privilege against testifying," the privilege of clients to bind their lawyers to secrecy is universally honored and enforced as productive of social values more important than the search for truth. Canon 4 is designed to preserve the trust of the client in his lawyer, without which the...