Harmar Drive-In Theatre v. Warner Bros. Pictures, No. 38

• Court: United States Courts of Appeals. United States Court of Appeals (2nd Circuit)
• Writing for the Court: CLARK, , and HAND and SWAN, Circuit
• Citation: 239 F.2d 555
• Parties: HARMAR DRIVE-IN THEATRE, Inc., Plaintiff-Appellee, v. WARNER BROS. PICTURES, Inc. (In Dissolution), et al., Defendants, and Paramount Film Distributing Corporation, Paramount Pictures, Inc. (In Dissolution), Paramount Pictures Corporation, American Broadcasting-Paramount Theatres, Inc., Loew's Incorporated, Twentieth Century-Fox Film Corporation (Delaware), RKO Radio Pictures, Inc., RKO Pictures Corporation, United Artists Corporation, Universal Pictures Company, Inc., and Universal Film Exchange, Inc., Defendants-Appellants. COLONIAL DRIVE-IN THEATRE, Inc., Plaintiff-Appellee, v. WARNER BROS. PICTURES, Inc. (In Dissolution), et al., Defendants, and Paramount Film Distributing Corporation, Paramount Pictures, Inc. (In Dissolution), Paramount Pictures Corporation, American Broadcasting-Paramount Theatres, Inc., Loew's Incorporated, Twentieth Century-Fox Film Corporation (Delaware), RKO Radio Pictures, Inc., RKO Pictures Corporation, United Artists Corporation, Universal Pictures Company, Inc., and Universal Film Exchange, Inc., Defendants-Appellants.
• Decision Date: 28 December 1956
• Docket Number: 24015.,Dockets 24014,39,No. 38

239 F.2d 555 (1956)

HARMAR DRIVE-IN THEATRE, Inc., Plaintiff-Appellee,
v.
WARNER BROS. PICTURES, Inc. (In Dissolution), et al., Defendants, and
Paramount Film Distributing Corporation, Paramount Pictures, Inc. (In Dissolution), Paramount Pictures Corporation, American Broadcasting-Paramount Theatres, Inc., Loew's Incorporated, Twentieth Century-Fox Film Corporation (Delaware), RKO Radio Pictures, Inc., RKO Pictures Corporation, United Artists Corporation, Universal Pictures Company, Inc., and Universal Film Exchange, Inc., Defendants-Appellants.
COLONIAL DRIVE-IN THEATRE, Inc., Plaintiff-Appellee,
v.
WARNER BROS. PICTURES, Inc. (In Dissolution), et al., Defendants, and
Paramount Film Distributing Corporation, Paramount Pictures, Inc. (In Dissolution), Paramount Pictures Corporation, American Broadcasting-Paramount Theatres, Inc., Loew's Incorporated, Twentieth Century-Fox Film Corporation (Delaware), RKO Radio Pictures, Inc., RKO Pictures Corporation, United Artists Corporation, Universal Pictures Company, Inc., and Universal Film Exchange, Inc., Defendants-Appellants.

Nos. 38, 39, Dockets 24014, 24015.

United States Court of Appeals Second Circuit.

Argued October 10, 1956.

Decided December 28, 1956.

Rehearing Denied March 27, 1957.

Bruce Bromley, New York City, for appellants; John Logan O'Donnell, Leo P. Arnaboldi, Jr., and John S. Luckstone, New York City, of counsel.

239 F.2d 556

Arnold Malkan, New York City, for appellees.

Before CLARK, Chief Judge, and HAND and SWAN, Circuit Judges.

Rehearing Denied March 27, 1957. See 241 F.2d 937.

SWAN, Circuit Judge.

These appeals bring up an order which denied, without opinion, a motion by defendants to disqualify the firm of Malkan & Ellner and the two lawyers constituting the firm, from appearing for or representing the plaintiffs in two actions each of which claimed treble damages for alleged violation of the anti-trust laws. In three prior appeals similar motions in other anti-trust suits have come before this court.¹

Before reaching the merits it is necessary to consider whether the order is appealable. This question was not raised in the original briefs of the parties, but at the request of the court supplemental briefs have been filed discussing it. In each of the four appeals mentioned in note 1, supra, the court assumed jurisdiction without discussion, other than the brief statement in the Fisher case, 232 F.2d 199, at page 204, that "these orders of disqualification are collateral to the main case." In three of the prior appeals the court affirmed orders which granted motions to disqualify; in the Austin case it affirmed an order which, as in the case now before us, denied the motion. A majority of the court are of opinion that with respect to appealability no distinction exists between orders granting disqualification and those refusing to do so. We think they fall within the class of orders described in Cohen v. Beneficial Indus. Loan Corp., 337 U.S. 541, 546, 69 S.Ct. 1221, 1225, 93 L.Ed. 1528, as "that small class which finally determine claims of right separable from, and collateral to, rights asserted in the action, too important to be denied review and too independent of the cause itself to require that appellate consideration be deferred until the whole case is adjudicated." Also closely analogous is Collins v. Miller, 91 U.S.App.D.C. 143, 198 F.2d 948, 37 A.L.R.2d 746, which held appealable an order denying a motion to remove an administrator because of dilatory and improper administration.

Having concluded that appellate jurisdiction exists, we pass to a consideration of the merits of the appeal. The question is whether the principle of the Laskey case, 224 F.2d 824 or that of the Austin case, decided in the same opinion, should be applied to the facts of the present case. In Laskey the plaintiff had employed the firm of Malkan & Isacson to bring an anti-trust action in the Western District of Pennsylvania. After the dissolution of that firm, Malkan joined with one Ellner to form the firm of Malkan & Ellner and this firm was employed by Laskey to bring a new anti-trust suit not differing in any material respect, in the Southern District of New York. It was held that because of Isacson's disqualification, his partner Malkan was vicariously disqualified for the particular case, and that the subsequent dissolution of the partnership did not cure his ineligibility to act in that case. In Austin it was held that the case came to the new firm of Malkan & Ellner "through channels having nothing whatsoever to do with Malkan's prior association with Isacson" and "in the absence of any showing that Malkan had received confidential information from Isacson." 224 F.2d 824, 827. Consequently Malkan & Ellner were not disqualified to represent Fisher.

In the case at bar it appears that prior to the dissolution of the firm of Malkan & Isacson that firm was engaged by members of the Stern family to bring antitrust suits in the Western District of Pennsylvania on behalf of three drive-in theatre corporations referred to as "South Park," "Community" and "Blue

239 F.2d 557

Dell." The Stern family owned all the stock of these three companies. This family also owned all the stock in "Colonial Drive-In Theatre" and 50 per cent. of the stock in "Harmar Drive-In Theatre," the other 50 per cent. being held by the Rodnok family. Mr. Ernest Stern was an officer of all five of these corporations, and all of them were included in the Associated Drive-In Theatre chain. Shortly after the dissolution of the firm of Malkan & Isacson in July 1954, Malkan & Ellner filed new complaints in the same court on behalf of "South Park," "Community" and "Blue Dell," adding new defendants and increasing the damage claims. Had these new actions been filed in the Southern District of New York it seems clear that the attorneys would be disqualified under the Laskey decision. In May or early June 1955, George and Ernest Stern engaged Malkan & Ellner to bring the instant actions on behalf of "Colonial" and "Harmar," respectively. The claims are substantially the same as those in the cases of the other three members of the chain of drive-in theatres. The instant actions were commenced June 30, 1955, and the defendants' motion to disqualify counsel was filed November 15th. It was denied without opinion on December 24, 1955

This court's decision in the Laskey appeal, as we understand it, rested upon the possibility that the partner (Isacson), who had formerly represented Warner...