The opinion of the court was delivered by: GREENE
This is a motion to disqualify defendants' attorneys, the law firm of Covington & Burling (C & B), on the ground that they had previously served plaintiff, the National Civil War Wax Museum, Inc. (Gettysburg),
on the same subject matter that is involved in the pending suit.
This antitrust action was brought by a wax museum franchisee located in Gettsyburg, Pennsylvania, against Historic Figures, Inc. (HF) (which operates a like museum in Washington, D.C.) and several others.
Gettysburg challenges its franchise agreement with HF's subsidiary, National Historical Museum, Inc. (NHM), asserting violations of the Sherman and Clayton Acts.
Defendants moved for summary judgment on September 28, 1979; plaintiff thereafter obtained one extension of time in which to file its opposition; it was denied a second extension; and it filed the instant motion to disqualify defendants' counsel shortly before its opposition to the motion was finally due (and more than two years after the commencement of this action). The parties have filed numerous memoranda, many lengthy affidavits, and hundreds of pages of exhibits concerning the motion presently before the Court.
The factual setting from which the motion to disqualify arises occurred approximately twenty years ago. Frank Dennis, who was president and chief operating officer of defendants HF and NHM until his retirement in 1977, and who is an attorney by training, established a wax museum in Washington, D.C., in 1958, with the assistance of Dorfman, who manufactured the display figures and became the museum's manager. As a result of numerous inquiries concerning the purchase of figures and the establishment of other wax museums, Dennis and Dorfman decided to embark on a franchising enterprise, using NHM as the corporate vehicle. Chaim Uberman, the owner and manager of the gift shop at the Washington museum, and his partner, Arnold Wesson, were among those who sought the assistance of Dennis and Dorfman to establish another museum, and the plaintiff corporation was formed for that purpose and became the first franchisee. The founders of Gettysburg were Uberman, Wesson, Dennis, and Dorfman, and they were joined by Richard Riddell, another officer and director of HF.
Primarily at issue here is Canon 4 of the Code of Professional Responsibility which provides that an attorney "should preserve the confidences and secrets of his clients."
More specifically, C & B is being charged in the motion with what is generally termed a successive conflict of interest, that is, the representation by an attorney of the current adversary of a former client. The test that has most frequently been applied to determine whether an attorney should be disqualified in such a situation is whether the matter on which he represents a client now is "substantially related" to that on which he advised his former client on a previous occasion. If there is such a relationship, the attorney must be disqualified, the theory being that only by such a disqualification can the possibility be avoided that confidential information provided by the former client to the attorney might be used to that client's detriment. T. C. Theatre Corp. v. Warner Bros. Pictures, Inc., 113 F. Supp. 265 (S.D.N.Y.1953). Plaintiff argues that such a relationship exists here and that C & B therefore should be disqualified from further representing defendants in this litigation. The Court has concluded that, for several independent reasons, disqualification is not appropriate.
The issue of whether there is a substantial relationship between the present litigation and the matters on which C & B previously provided advice to Gettysburg is of course essentially a factual one. If such a relationship exists in this case, the common hub would necessarily have to be the franchise agreement between Gettysburg and HF, for it is that agreement which forms the basis for the present antitrust lawsuit. On that issue, plaintiff claims that C & B advised, or must have advised, Gettysburg with respect to the agreement in 1959, when it was entered into; defendants contend that C & B did not do so. After considering the voluminous record submitted to it, the Court finds that plaintiff has failed to demonstrate
that C & B provided advice to Gettysburg concerning the franchise matter.
Before describing the evidence concerning the former relationship between C & B and Gettysburg, it is appropriate to delineate in general terms what, as a matter of law, is regarded as a "substantial relationship" within the meaning of Canon 4. Because it has adverse consequences on the judicial process
and, perhaps more importantly, because it has a substantial impact in time and money on a client who would have to hire new lawyers after others may already have done a significant amount of work, disqualification is not mandated when the grounds are vague or tenuous. Indeed, as the Court of Appeals for the Second Circuit
has held, disqualification is granted "only upon a showing that the relationship between issues in the prior and present cases is "patently clear' ... (and) when the issues involved have been "identical' or "essentially the same.' " Government of India v. Cook Industries, Inc., 569 F.2d 737, 739-40 (2d Cir. 1978).
C & B's involvement with the parties to this action began some time in August or September, 1959, when Dennis retained the law firm to represent HF and NHM with respect to certain corporate, tax, and real estate matters which he felt to be beyond his legal expertise. Until that time, Dennis had handled all legal matters for HF and NHM with the assistance of Henry Trepagnier, a member of HF's staff and also a lawyer by training. It was also during that same general period that discussions commenced among the founders of Gettysburg regarding the proposed new museum, and Dennis suggested to the others that C & B be asked to assist in handling the initial organizational matters for Gettysburg as well as certain real estate problems relating to the site of the proposed museum. Throughout the period
during which C & B provided these services to Gettysburg,
Dennis served as the principal contact between it and C & B.
The franchise agreement between NHM, as franchisor, and Gettysburg, as franchisee, appears to have been signed on September 22, 1960. The dispute between the parties on this aspect of the motion revolves around the question whether C & B's work for Gettysburg, rather than being limited to matters of organization, incorporation, and land acquisition, also included that agreement.
Defendants turned over to plaintiff over five hundred pages of documents; plaintiff had of course access to its own books and records; it also had all the files of C & B relating to Gettysburg, including billing memoranda and time sheets;
and it has had access to the relevant books and records of HF and NHM. Except for the matters noted below, there is not the slightest evidence or even suggestion in all of these materials that C & B advised Gettysburg with respect to the franchise agreement.
In addition, Dennis stated under oath that he drew up the franchise agreement himself, together with Henry Trepagnier, without any assistance or participation from C & B.
Finally, the document embodying the Gettysburg franchise agreement appears to have been typed on a typewriter similar to that used to produce letters from Dennis and Trepagnier-a machine that is totally unlike the typewriters employed to produce the C & B documents submitted to the Court by plaintiff, again suggesting that C & B did not draft or otherwise originate the agreement.
Plaintiff's evidence in opposition to these by and large objective facts is conjectural at best. It relies on four documents which can be read to refer to a relationship between C & B and the franchise matter only by a considerable stretch of the imagination.
As for the Dennis and Koch affidavits, plaintiff has simply sought-unsuccessfully in the Court's view-to discredit the credibility of these individuals. Finally,
plaintiff has erected an elaborate argument of a necessary involvement of C & B in the franchise matter based on juxtapositions of dates and documents. The Court finds that argument unconvincing in the ...