Court Opinion

ID: 9472821
Source: CourtListenerOpinion
Date Created: 2023-08-05 04:11:51.855814+00
Date Added: 2024-06-11T17:43:10.101099
License: Public Domain

ADAMS, Circuit Judge,
concurring.
I
I agree with the result reached in this case, as well as with the majority’s exposition of the principles which generally govern conflicts of interest in the traditional *163lawyer-client setting. I write separately to caution that those general principles must be applied in a carefully considered fashion to contexts other than those in which they arose.
Perhaps no area of the law provokes as much litigation concerning ethical issues as class actions. See Waid, Ethical Problems of the Class Action Practitioner: Continued Neglect by the Drafters of the Proposed Model Rules of Professional Conduct, 27 Loy.L.Rev. 1047, 1047 (1981). Moreover, the Code of Professional Responsibility, Model Rules of Professional Conduct, as well as bar association opinions provide little guidance to the class action practitioner. See id. at 1048-49; Developments in the Law — Conflicts of Interest in the Legal Profession, 94 Harv.L.Rev. 1247, 1448 (1981). Courts confronting an ethical problem in the class action setting must focus on two points. First, courts cannot mechanically transpose to class actions the rules developed in the traditional lawyer-client setting context; and second, a resolution of such issues would appear to call for a balancing process that in most cases should be undertaken initially by the district court.
II
The general rules described by the majority regarding the duties of loyalty and confidentiality were developed for and arose out of the traditional lawyer-client ambience in which the roles of the attorney and the client are well defined. The Code of Professional Responsibility, for example, envisions the attorney primarily as an advocate of the interests of one client. In such a setting it is usually possible to foresee the exact nature of any conflict of interest problem that might arise out of multiple or successive representations. Generally, a lawyer can, with little adverse impact on a prospective client, guard against such situations by declining a representation.
Courts and commentators have noted that this traditional model cannot be carried over unmodified to the class action arena, since no clear allocation of decision-making responsibility has emerged between the attorney and class members. See Pettway v. American Cast Iron Pipe Co., 576 F.2d 1157, 1176 (5th Cir.1978), cert. denied, 439 U.S. 1115, 99 S.Ct. 1020, 59 L.Ed.2d 74 (1979); Developments in the Law — Class Actions, 89 Harv.L.Rev. 1318, at 1578 (1976). The obligation of counsel representing a class runs to the class as a whole, although as a general matter class counsel may have worked closely only with the named parties. See Greenfield v. Villager Industries, Inc., 483 F.2d 824, 832 (3d Cir.1973); Rhode, Class Conflicts in Class Actions, 34 Stan.L.Rev. 1183, 1203 (1981); Conflicts of Interest, 94 Harv.L.Rev. at 1451. Having all been affected similarly, class members generally know the initial objective of the class suit and accept the broad goals of the action. Despite the fact that class members are in some sense similarly situated, however, conflicting interests among the many individuals represented by a single attorney in a class action are frequently inevitable at some point during the litigation. Conflicts of Interest, 94 Harv.L.Rev. at 1447; Class Actions, 89 Harv.L.Rev. at 1594. “Representative suits carry with them an accepted structural risk that conflicts may arise between groups of class members.” Mendoza v. United States, 623 F.2d 1338, 1344 (9th Cir.1980), cert. denied sub nom., Sanchez v. Tuscon Unified School Dist. No. 1, 450 U.S. 912,101 S.Ct. 1351, 67 L.Ed.2d 336 (1981).
This conflict most often, but not always, occurs over questions of relief. See J. Chambers, Class Action Litigation: Representing Divergent Interests of Class Members, 4 U. Dayton L.Rev. 353, 356 (1979). For example, the case at hand involves objections to a proposed settlement, a rather common occurrence in that class actions many times are settled prior to or shortly after class certification. See Class Actions, 89 Harv.L.Rev. at 1536. When absent class members disagree with named plaintiffs regarding the adequacy of a settlement, class counsel will more often than *164not side with the named parties. Id. at 1593. Absent class members who challenge a settlement thus may encounter as an adversary the class counsel, who represented them and arguably owes them a continuing duty of loyalty. Yet many commentators have noted that class counsel regularly defend the settlement against objectors, and even file appeals from district courts’ disapprovals of settlements. E.g., 2 H. Newberg, Newberg on Class Actions § 2710 (1977). Others have argued that the attorney “ought to have the opportunity to represent the position of that side of the split class which he or she supports.” Chambers, 4 U. of Dayton L.Rev. at 357.
Under a strict application of the ethical rules, however, whenever class members disagree about the propriety of a settlement, an attorney representing discordant class members would be required to withdraw completely from the litigation. In such a case, an attorney’s withdrawal would seemingly be automatic, regardless of which side the attorney agrees with. See also Waid, 27 Loy.L.Rev. at 1062; Class Actions, 89 Harv.L.Rev. at 1593 (both reading Code same way). Although this may promote the salutary ends of confidentiality and loyalty, it would have a serious adverse effect on class actions. Treating the relations between counsel and named and absent class members as identical to an attorney’s relationship with individual clients outside the class action context would cause courts to find a conflict of interest in many class actions and to call for the typical remedial responses, such as disqualification.
Class action litigation frequently promotes and protects the legal interests of those whose rights might not be protected at all without the class action device. Any approach resembling a per se disqualification of an attorney who represents multiple parties in a class, or the entire class, when any member disagrees, might well undermine the attractiveness and utility of the class action device by discouraging multiple representation.
If a class attorney is automatically prevented from continuing to represent the named parties or a majority of a class which supports a settlement, the minority dissenting class members might obtain considerable leverage in the litigation by being able to force the majority to seek new counsel. Similar problems arise if counsel is not permitted to side with the objectors. In many types of class actions, when notice of settlement is given to the class, no single individual may have a sufficient stake in the outcome of the litigation to warrant the expense of organizing opposition to the proposed settlement and obtaining separate representation. Rhode, 34 Stan.L.Rev. at 1215. In less celebrated cases and in those in which the availability of a statutory attorney’s fee is uncertain, it often will not be possible for dissenters to attract qualified counsel. See generally Handler, The Public Interest Activities of Private Practice Lawyers, 61 A.B.A.J. 1388 (1975). Thus, a rule requiring automatic disqualification may well penalize dissent, and thereby deprive the court of the important assistance which objecting class members render by challenging the fairness of a class action settlement. Class Actions, 89 Harv.L.Rev. at 1566-67.
Ill
As section C of the majority opinion suggests, the appropriate process would appear to be one of balancing. The costs to litigants and the class action device should be weighed carefully against the need to enforce the lawyer’s duties of loyalty and confidentiality. The duty of loyalty to a client has been embodied in the Code through a prohibition of any appearance of impropriety. “Public confidence in the integrity of legal institutions serves as an over-arching consideration beneath which attorneys practice their profession. The semblance of unethical behavior by practitioners may well be as damaging to the public image as improper conduct itself.” Silver Chrysler Plymouth, Inc. v. Chrysler Motor Corp., 518 F.2d 751, 759 (2d Cir.1975) (Adams, J., concurring).
Yet the duty owed in a class action is in some ways unique and cannot be equated with that in the traditional lawyer-client *165setting. The inherent risks in a class action are “accepted structural” facts, known to those who choose to participate in a class. Moreover, the legal system has responded to this risk with an array of carefully calibrated safeguards. See generally Fiss, The Forms of Justice, 93 Harv.L.Rev. 1 (1979) (distinguishing class action “structural reform” litigation from traditional “dispute resolution” model). Courts have affirmed the special responsibility placed upon the trial judge to protect the rights of class members. Mendoza, 623 F.2d at 1344; Grunin v. International House of Pancakes, 513 F.2d 114,123 (8th Cir.), cert. denied, 423 U.S. 864, 96 S.Ct. 124, 46 L.Ed.2d 93 (1975). In addition, the Federal Rules of Civil Procedure impose strict procedural requirements on the conduct of class actions. See Fed.R.Civ.P. 23. Of special significance is the trial court’s role in the supervision and approval of class settlements, based on the criterion of fairness. The attorney’s duty to the class requires him or her to make known to the court any conflicts in order that the court may take appropriate steps to protect the interests of all class members. Pettway, 576 F.2d at 1176.
Taken together these realities of class action practice suggest that the mere appearance of impropriety when a lawyer attacks or defends a class settlement against the interest of a formerly represented class member may well be insufficient in itself to be the basis for an automatic disqualification.1
Similarly, although the importance of maintaining client confidences cannot be minimized, a rigid “prophylactic rule” in the area of client confidentiality in class actions would appear to be inappropriate. Cf. Note, The Attorney-Client Privilege in Class Actions: Fashioning an Exception to Promote Adequacy of Representation, 97 Harv.L.Rev. 947 (1984) (confidentiality should give way when it impedes basic representational aspects of a class action). Instead in a class action context in which disqualification potentially threatens the viability of the representational suit, the court should require some showing by the party urging disqualification. Relevant considerations include the amount and nature of the information that has been proffered to the attorney, its availability elsewhere, its importance to the question at issue, such as settlement, as well as actual prejudice that may flow from that information. Cf. Silver Chrysler, 518 F.2d at 759 (Adams, J., concurring) (suggesting, because of countervailing factors, a showing of knowledge of confidential and pertinent information).2 In camera review of the information might be in order in some cases to safeguard the class members from the harm caused by disclosure in open court. See Note, 97 Harv.L.Rev. at 960. These factors should then be balanced against the costs to the opposing party, and the possibility of securing new counsel. Such costs will likely be affected by the point in the litigation at which the conflict develops; the burden is perhaps less at earlier stages.
IV
The disqualification motion at issue in the present appeal was first raised before *166this Court. As the majority notes, this motion is properly before us; a federal court has inherent powers over the discipline of attorneys practicing before it. In an appropriate ease, of course, the appellate court may resolve such an issue in the first instance. In some proceedings, the foregoing analysis would suggest a remand to the district court, which is in a more advantageous position to balance the factors involved than is an appellate court lacking factfinding resources. Alternatively, the appellate court might appoint a special master.
Nevertheless, I cannot say that the motion to disqualify the firm of Cochrane and Bresnahan has been improvidently granted. Sufficient evidence is extant in the present record to permit a proper balancing process as outlined above. Some of the important factors weighing towards disqualification are that the firm represented only three class members, not the entire class or a large portion of it; that a large amount is at stake for each litigant; and that the party potentially forced to proceed without chosen counsel is a large corporation with ample resources to enable it to secure new counsel.

. Moreover, although considerable knowledge and experience might have been gained by the attorney in the early stages of a case, such information need not in and of itself jeopardize or unfairly unbalance the case of the class members the attorney does not side with. The opposing clients as members of the original suit might enjoy the advantage of having gained important information with which to wage their opposition. Chambers, 4 U. of Dayton L.Rev. at 357.

. In the criminal context society arguably has a greater interest in preventing conflicts of interest; furthermore, the right to effective assistance of counsel is guaranteed by the Sixth Amendment. The Supreme Court has held that a defendant who objects before trial to multiple representation by counsel must show that the potential conflicts impermissibly imperil his right to a fair trial. Cuyler v. Sullivan, 446 U.S. 335, 348, 100 S.Ct. 1708, 1718, 64 L.Ed.2d 333 (1980). A defendant who raises no objection at trial must demonstrate that a conflict of interest actually affected the adequacy of representation, although the Court does not require of "nice calculations as to the amount of prejudice" attributable to the conflict. Id. at 349, 100 S.Ct. at 1719; Glosser v. United States, 315 U.S. 60, 76, 62 S.Ct. 457, 467, 86 L.Ed. 680 (1942).