Redd v. Shell Oil Co., 74-1801
| Citation | 518 F.2d 311 |
| Decision Date | 18 June 1975 |
| Docket Number | No. 74-1801,74-1801 |
| Parties | 1975-2 Trade Cases 60,382 Keith B. REDD, d/b/a Abajo Petroleum, Plaintiff-Appellee, v. SHELL OIL COMPANY, Defendant. In the Matter of Michael W. GRANEY, Attorney for Shell Oil Company, Appellant. |
| Court | United States Courts of Appeals. United States Court of Appeals (10th Circuit) |
Daniel L. Berman of Berman & Giauque, Salt Lake City, Utah, for plaintiff-appellee.
Robert H. Harry of Davis, Graham & Stubbs, Denver, Colo. (David M. Ebel, Donald E. Phillipson and Thomas A. Smart, Davis, Graham & Stubbs, Denver, Colo., on the brief), for appellant.
Before MURRAH, BARRETT and DOYLE, Circuit Judges.
This appeal is concerned with an attorney disciplinary proceeding which was ancillary or supplemental to an antitrust case in the United States District Court for the District of Utah, Keith B. Redd, d/b/a Abajo Petroleum v. Shell Oil Company. The lawyer who was subjected to the disciplinary sanction was Michael W. Graney of the District of Columbia, attorney for Shell Oil Company in the antitrust case. The trial court determined that Graney had sponsored what the court found and determined to be a meritless and untimely motion for disqualification of all of adversary's counsel, which motion had been made without adequate investigation. The court proceeded to apply the principle that the filing of a motion for disqualification drawing into question the ethical propriety of an adversary's conduct, and without adequate foundation, constitutes a violation of ethical standards. The reasoning was that the sponsorship of such a motion on the eve of trial based on circumstances which had been present long prior thereto constituted a sham and justified the imposition of sanctions. Thereupon, the court determined that Mr. Graney should be fined in the amount of $5,000.
The factual background which gave rise to this incident arose in connection with the antitrust case in which Redd, a dealer of petroleum products, sought to recover for violations of § 1 of the Sherman Antitrust Act, 15 U.S.C. § 1, conspiracy in restraint of trade. This cause was filed May 18, 1971. There followed considerable pretrial discovery and other pretrial activity. Finally, the cause was set for trial on July 15, 1974. However, on July 12, 1974, plaintiff Redd, through his attorney, filed a final pretrial order. Thereupon, allegedly because of the content of this pretrial order, Shell filed and served a motion to disqualify plaintiff's attorneys. The motion asserted that plaintiff's lawyers, all of them, were subject to disqualification under Canons 4 and 9 of the Code of Professional Responsibility. This motion was supported by affidavits and depositions of members of a law firm in Los Angeles, California, counsel for Shell Oil Company. The underlying factor in the filing of this disqualification motion was the employment by Mr. Daniel Berman, attorney for Redd, of one Richard D. Burbidge, a young lawyer who had previously worked for the law firm of McCutchen, Black, Verleger & Shea of Los Angeles, California, attorneys for Shell. The allegation was that Burbidge's employment in the McCutchen firm for 18 months after graduation disqualified him from participating on the side of Redd and becoming associated with Mr. Berman in Utah in the case (Burbidge was shown to have been a graduate of the University of Utah College of Law).
One of the bases for the action of the court in ruling that this motion to disqualify was a sham was its finding that the cases on which Burbidge worked were not related to the case of Redd v. Shell Oil Company. This appeal pertains only to the counter proceedings against attorney Graney. To determine whether the disqualification motion was filed in good faith, it is nevertheless necessary to consider, to some degree at least, what occurred in the pretrial preparations. These are somewhat complicated.
First, the court granted a partial summary judgment, finding that Shell had imposed unlawful territorial restrictions on the plaintiff. Notices were sent out by the clerk in May that the cause was to go to trial on July 15, 1974. The next step was on July 2, 1974, when counsel for the plaintiff submitted a proposed pretrial order to the trial court. This was largely a definition of issues since there had not been a pretrial conference. Defendant Shell opposed the entry of the pretrial order on the ground that it expanded the issues as well as the scope of the alleged conspiracy.
The original complaint had charged the defendant with conspiring to restrict the territory and the customers to whom the plaintiff could resell gasoline, diesel fuel and other petroleum products purchased from Shell and doing so with specific intent to suppress and eliminate competition and purchasers of the products. The provision of the pretrial order which sets forth the mentioned allegations reads as follows:
(1) The defendant Shell Oil Company has contracted, combined, and conspired with Shell jobbers including the plaintiff in violation of § 1 of the Sherman Act to restrict the territorial area in which such jobbers and the plaintiff may resell petroleum products including gasoline purchased from the defendant Shell and pursuant to such unlawful contract, combination, and conspiracy and as part thereof the defendant Shell has sold gasoline and diesel fuel to the plaintiff only at a price f. o. b. the plaintiff's bulk plants in Blanding, Utah, and Kayenta, Arizona, and required the delivery of such products to such bulk plants and terminated the plaintiff as a Shell jobber.
As we view it, the only addition to the original allegations is the last part which states that Shell had sold gasoline and diesel fuel to the plaintiff only at a price f. o. b. the plaintiff's bulk plants in Blanding, Utah and Kayenta, Arizona and required the delivery of such products to such bulk plants and terminated plaintiff as a Shell jobber. Paragraph (2) specifically refers to the tying and licensing of Shell's trademarks, brand names, and color schemes to the sale and distribution of gasoline to plaintiff. It is said that the pretrial order spelled out Shell's distribution system and showed conspiracies with its jobbers to prevent them from competing with each other and Shell by restricting territory in which they could resell. It is true that this paragraph is much more specific than the general paragraphs, 7(e) and (f) of the complaint. It is not so clear that it changes the basic theory of plaintiff's claims.
The trial court allowed the pretrial order to be filed on July 12, 1974, over the objection of the appellant Graney that it fundamentally changed the case because, so it was argued, the pretrial order modified the focus of the case from claiming horizontal conspiracy to a cause which attacked Shell's vertical marketing procedures. It was then that Graney proceeded to seek disqualification of the lawyers representing plaintiff Redd on the ground that Burbidge had become associated with the Berman law firm, which was the representative of the plaintiff, and had done so immediately after leaving the McCutchen firm in Los Angeles. The court deferred hearing the motion until the opening of the trial on the 15th of July.
The Graney motion recommended the disqualification of plaintiff's lawyers on the ground that Burbidge had spent 132 hours while he worked for the McCutchen firm on work of Shell Oil Company. By reason of this and the fact that he had been hired by the Berman firm soon after leaving McCutchen, it was contended that there had been a violation of Canons 4 and 9 of the Code of Professional Responsibility. This motion also brought out that a similar attack had been made in Arizona where two district judges had ruled that the Berman firm lawyers were disqualified. It was not contended that Burbidge had worked on the case of Redd v. Shell Oil Company. Rather, stress was placed on the fact that Burbidge had spent 132 hours working on other and different cases in which Shell was a party and allegedly had access to information affecting the main case. The matters in which Burbidge was engaged "included disputes of Shell Oil Company dealers and contractual responsibilities of Shell and its dealers as to each other." In addition, the motion said that Burbidge had frequent contacts with other members and associates of the firm who were engaged in representing Shell and its subsidiaries.
The day following the filing by Graney of the motion to disqualify...
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