Optyl Eyewear Fashion Intern. Corp. v. Style Companies, Ltd.

• Decision Date: 20 May 1985
• Docket Number: No. 84-5695,84-5695
• Citation: 760 F.2d 1045
• Parties: OPTYL EYEWEAR FASHION INTERNATIONAL CORPORATION, a New York corporation, Plaintiff-Appellee, v. STYLE COMPANIES, LTD., a California corporation, Defendant, Lewis Anten, a professional corporation, Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1045

760 F.2d 1045

OPTYL EYEWEAR FASHION INTERNATIONAL CORPORATION, a New York corporation, Plaintiff-Appellee, v. STYLE COMPANIES, LTD., a California corporation, Defendant Lewis Anten, a professional corporation, Appellant.

No. 84-5695.

United States Court of Appeals Ninth Circuit.

Argued and Submitted Feb. 6, 1985.

Decided May 20, 1985.

Robert B. Jones, David A. Crossman, Fitch, Even, Tabin & Flannery, Chicago, Ill., Richard W. Dickerson, Lyon & Lyon, Los Angeles, Cal., for plaintiff-appellee.

Robert Ezra, Benbassat, Ezra, Arkin & Weissman, Los Angeles, Cal., for appellant.

Appeal from the United States District Court for the Central District of California.

Before SCHROEDER, FLETCHER, and FARRIS, Circuit Judges.

FLETCHER, Circuit Judge:

Lewis Anten, attorney for Style Companies, Ltd. ("Style") appeals the district court's imposition of sanctions against him for his conduct in seeking disqualification of opposing counsel. We affirm.

I. FACTS AND PROCEDURAL HISTORY

Appellee Optyl Eyewear Fashion International Corp. ("Optyl") brought suit against Style Companies, Ltd. ("Style") for trademark infringement and unfair competition. Optyl alleged that Style sold jackets bearing the trademark "Carrera," which is owned by Optyl.

In preparation for trial, Optyl sent letters to 1,100 of its customers in California, asking whether they had seen or purchased jackets bearing "Carrera" labels. The letters stated: "[o]ther companies are using the Carrera trademark and making millions of dollars at our expense." Optyl states that it sent out the letter to determine the level of actual confusion between its jackets and those sold by Style. Optyl contends the response to its mailing indicated an 85% degree of confusion.

After learning of the letter, Style filed an amended counterclaim for libel. Style then propounded interrogatories to Optyl, asking for the names of all persons who participated in preparing and sending the letters. Optyl responded that an executive vice-president of the company and Optyl's counsel had drafted the letter.

Style's counsel, Lewis Anten, then indicated by letter that he intended to call two of Optyl's attorneys, David Crossman and Robert Jones, as witnesses at trial. Anten requested that Optyl's lawyers voluntarily disqualify themselves and their firm from further representation of Optyl. When Optyl's attorneys refused, Anten filed a motion on behalf of Style to disqualify them.

Optyl answered Style's motion, and requested attorneys' fees and costs under 28 U.S.C. Sec. 1927 (1982), for defending against a frivolous and vexatious motion. The district court denied the motion for disqualification and granted the request for fees. The court ordered Anten personally to pay all costs, expenses, and attorneys' fees incurred by Optyl in opposing the motion for disqualification.

Optyl's attorneys claimed they had expended over $10,000 in opposing the motion to disqualify. The district court awarded them a total of $7,000 in fees and costs.

After the court denied Anten's motion for reconsideration, Anten timely appealed. ¹

II. DISCUSSION

A. Standard of Review

The primary responsibility for controlling the conduct of attorneys rests with the district court. Accordingly, we will not disturb an award of attorneys' fees absent an abuse of discretion. Sealy, Inc. v. Easy Living, Inc., 743 F.2d 1378, 1384 (9th Cir.1984); Lone Ranger Television, Inc. v. Program Radio Corp., 740 F.2d 718, 720 (9th Cir.1984); Foster v. Tourtellotte, 704 F.2d 1109, 1110 (9th Cir.1983).

B. Award of Attorneys' Fees and Costs Under Section 1927

The district court awarded fees and costs against Anten pursuant to 28 U.S.C. Sec. 1927, which provides that "[a]ny attorney ... who so multiplies the proceedings in any case unreasonably and vexatiously may be required by the court to satisfy personally the excess costs, expenses, and attorneys' fees reasonably incurred because of such conduct." This court has construed the phrase "unreasonably and vexatiously" to require a showing of intent, recklessness, or bad faith. Barnd v. City of Tacoma, 664 F.2d 1339, 1343 (9th Cir.1982); accord United States v. Austin, 749 F.2d 1407, 1408 (9th Cir.1984); United States v. Blodgett, 709 F.2d 608, 610 (9th Cir.1983). Based on the record before us, we are satisfied that Anten's disqualification motion was meritless, that it was brought solely for tactical reasons, and that it was brought in bad faith.

C. The Merits of the Disqualification Motion ²

The standards for disqualification of an attorney who may be a witness at trial derive from the applicable disciplinary rules, ³ and the principal considerations under those rules are (1) whether an attorney ought to be called to testify on behalf of his client, Model Code of Professional Responsibility DR 5-102(A), [hereinafter cited as "ABA Code"]; California Rules of Professional Conduct Rule 2-111(A)(4); [hereinafter cited as "Cal.Rules"]; see, e.g., Groper v. Taff, 717 F.2d 1415, 1418 (D.C.Cir.1983); General Mill Supply Co. v. SCA Services, Inc., 697 F.2d 704, 708 (6th Cir.1982); Universal Athletic Sales Co. v. American Gym, Recreational & Athletic Equipment Corp., 546 F.2d 530, 538 (3d Cir.1976), cert. denied, 430 U.S. 984, 97 S.Ct. 1681, 52 L.Ed.2d 378 (1977); J.P. Foley & Co. v. Vanderbilt, 523 F.2d 1357, 1359 (2d Cir.1975), or (2) whether the attorney may be called other than on behalf of his client and his testimony is or may be prejudicial to the client, ABA Code DR 5-102(B); Cal.Rule 2-111(A)(5); see, e.g., Kroungold v. Triester, 521 F.2d 763, 766 (3d Cir.1975); Teleprompter of Erie, Inc. v. City of Erie, 573 F.Supp. 963, 965 (W.D.Pa.1983); Davis v. Stamler, 494 F.Supp. 339, 342-43 (D.N.J.1980), aff'd, 650 F.2d 477 (3d Cir.1981); Smith v. New Orleans Federal Savings & Loan Association, 474 F.Supp. 742, 749-50 (E.D.La.1979); Freeman v. Kulicke & Soffa Industries, Inc., 449 F.Supp. 974, 978 (E.D.Pa.1978), aff'd mem., 591 F.2d 1334 (3d Cir.1979).

Optyl produced evidence in the district court showing that the extent of its counsel's participation in drafting the letter was limited to giving legal advice. Optyl claimed that any testimony its counsel might be asked to give would be protected by the attorney-client privilege. Optyl further asserted that it had no reason to call its counsel to testify and, even if they were called, their testimony would not be prejudicial to Optyl's case.

Style did not point to any evidence to refute Optyl's assertions. In fact, Style did not depose Optyl's counsel prior to moving for disqualification. Style relied entirely upon one interrogatory answer in which Optyl acknowledged that its counsel had participated in drafting the disputed letter. In short, Style offered absolutely no showing that Optyl "ought" to call its counsel to testify or that counsels' testimony might have been prejudicial if Anten had called Optyl's counsel to testify. See Rosen v. NLRB, 735 F.2d 564, 575 (D.C.Cir.1984) (mere allegations of impropriety are insufficient to compel withdrawal); cf. Rhinehart v. Stauffer, 638 F.2d 1169, 1171 (9th Cir.1979) (per curiam) (before filing an action, attorney has duty to investigate claims to see that they have merit).

On appeal, Anten implicitly admits that disqualification was not required under the disciplinary rules that deal specifically with lawyer disqualification, since his sole contention now is that disqualification was required by Canon 9 of the ABA Code, which proscribes "even the appearance of professional impropriety." See also Local Rule 2.5.2, Central District of California. ⁴ We find this argument meritless.

Although this court has held that Canon 9 alone can be a sufficient ground for disqualification, the circumstances are extreme, i.e., when the alleged impropriety is clear, affects the public view of the judicial system or the integrity of the court, and is serious enough to outweigh the parties' interests in counsel of their own choice. In re Coordinated Pretrial Proceedings in Petroleum Products Antitrust Litigation, 658 F.2d 1355, 1360 (9th Cir.1981), cert. denied, 455 U.S. 990, 102 S.Ct. 1615, 71 L.Ed.2d 850 (1982); accord Norton v. Tallahassee Memorial Hospital, 689 F.2d 938, 941 (11th Cir.1982).

Obviously, preservation of public trust in the legal system is an essential goal. At the same time, however, we must be cautious not to overuse Canon 9 as the basis for attorney disqualification. As the Second Circuit has noted: "Canon 9 ... should not be used promiscuously as a convenient tool for disqualification when the facts simply do not fit within the rubric of other specific ethical and disciplinary rules." International Electronics Corp. v. Flanzer, 527 F.2d 1288, 1295 (2d Cir.1975).

Anten does not allege any specific improprieties that would result if Optyl's counsel testified in this case. Instead, his theory is that his client, Style, would be prejudiced if Optyl's counsel testified, since Anten would then be handicapped in challenging the credibility of opposing counsel. We find several difficulties with this theory.

First, we cannot see why Optyl's counsel need be witnesses. Optyl asserts that it will not call its counsel to testify, and Anten has not offered any reason why Style would or should call them. In fact, he admits that counsels' testimony would be favorable to Optyl and unfavorable to Style. The only reason we can see for Anten's suggestion that he will call Optyl's counsel is to use it as a predicate for the disqualification motion.

Second, we find Anten's "prejudice" argument unpersuasive. It may be awkward to impeach a fellow attorney's credibility, International Electronics Corp. v. Flanzer, 527 F.2d at 1294, but the problem remains since counsel, disqualified or not, still can testify. See Comment, The Rule Prohibiting An Attorney From Testifying at Client's Trial: An Ethical Paradox, 45 U.Cin.L.Rev. 268, 271 (1976). Opposing counsel's duty to represent his client's...