Mitchell A. KRAMER and David C. Harrison v. SCIENTIFIC CONTROL CORP. Et Al. Appeal of ARTHUR ANDERSEN & CO.

534 F.2d 1085, 21 Fed. R. Serv. 2d 1223
CourtCourt of Appeals for the Third Circuit
DecidedApril 20, 1976
Docket75-1673, 75-1849
StatusPublished
Cited by141 cases

This text of 534 F.2d 1085 (Mitchell A. KRAMER and David C. Harrison v. SCIENTIFIC CONTROL CORP. Et Al. Appeal of ARTHUR ANDERSEN & CO.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Third Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Mitchell A. KRAMER and David C. Harrison v. SCIENTIFIC CONTROL CORP. Et Al. Appeal of ARTHUR ANDERSEN & CO., 534 F.2d 1085, 21 Fed. R. Serv. 2d 1223 (3d Cir. 1976).

Opinions

OPINION OF THE COURT

ALDISERT, Circuit Judge.

May a member of the bar who is a plaintiff class representative in a class action proceeding under Rule 23(b)(3) of the Federal Rules of Civil Procedure designate as his counsel a member or employee of his law firm? This is the question presented in the appeal at No. 75-1849 from an order denying appellant’s motion to disqualify plaintiffs’ counsel. Also raised, at No. 75-1673, is the issue whether the district court erred in certifying the class. F.R.Civ.P. [1087]*108723(a), (c). We answer the first question in the negative; we do not reach the second, for want of an appealable order.

Mitchell A. Kramer and David C. Harrison, then law partners, purchased as joint tenants 50 shares of Scientific Control Corp. stock on January 6, 1969. They sold the stock one month later at a net loss of $438.13. During the summer of 1971, after Kramer and Harrison had dissolved their partnership, Kramer received a four-page questionnaire from the Securities and Exchange Commission requesting information on the transaction in Scientific Control stock. Kramer did not answer the SEC inquiry. Instead, after communicating with Harrison and receiving his permission, Kramer filed suit,1 naming himself and Harrison as plaintiffs. The complaint named as defendants Scientific Control Corp. and certain officers and directors; H. L. Federman & Co., an underwriting firm; and Arthur Andersen & Co., the certified public accounting firm and appellant herein. Robert M. Britton, then an associate in Kramer’s office, signed the complaint. Britton later moved to dismiss as to several named defendants, to add several defendants, and to amend the complaint; still later, he moved for a class action determination. Shortly before Britton left the employ of Kramer in July 1972, he withdrew as counsel and Steven Kapustin, then replacing Britton as an associate but now a partner of Kramer, entered his appearance.

On October 1, 1974, the district court granted plaintiffs’ deferred motion for a determination that the action proceed as a Rule 23(b)(3) class action. 64 F.R.D. 558 (E.D.Pa.1974). On April 17, 1975, the district court denied a motion for reconsideration of its class action certification or, in the alternative, for a certification pursuant to 28 U.S.C. § 1292(b). 67 F.R.D. 98 (E.D.Pa. 1975). The appeal at No. 75-1673 followed; appellees have moved to dismiss this appeal for want of jurisdiction.

Two months later, on June 20, 1975, appellant moved the district court, inter alia, to disqualify plaintiffs’ counsel because “[tjhere exists an irreconcilable conflict of interest between the representation by Kramer & Salus [the firm in which Kapustin is now a partner] of the named plaintiffs and the members of the class purported to be represented by the named plaintiffs; 2. The Code of Professional Responsibility bars such representation . .” Appendix at 272a. The district court, treating the motion as one for reargument or reconsideration of its April 17th order and, as such, untimely, denied the motion. Ibid. at 277a. Appellant then noticed the appeal at No. 75-1849.

I.

As we recently stated: “[T]his court has taken a strong position that a class certification decision, per se, is not an appealable final order under 28 U.S.C. § 1291. Hackett v. General Host Corp., 455 F.2d 618 (3d Cir.), cert. denied, 407 U.S. 925, 92 S.Ct. 2460, 32 L.Ed.2d 812 (1972). To qualify for interlocutory review in this circuit a class certification decision must be attended by special factors which take it outside the ambit of the general rule. Katz v. Carte Blanche Corp., 496 F.2d 747, 756 (3d Cir.) (in banc), cert. denied, 419 U.S. 885, 95 S.Ct. 152, 42 L.Ed.2d 125 (1974).” Ungar v. Dunkin’ Donuts of America, Inc., 531 F.2d 1211, 1213 (3d Cir. 1976). We will review class action certification decisions if the parties satisfy two conditions precedent, neither of which may be expected absent special circumstances — an order by the district court judge and permission from this court. 28 U.S.C. § 1292(b). See generally Note, Interlocutory Appeals in the Federal Courts Under 28 U.S.C. § 1292(b), 88 Harv. L.Rev. 607 (1975). Here, appellant met neither of the conditions. Accordingly, we will grant appellees’ motion to dismiss the appeal at No. 75-1673.

[1088]*1088 The appeal at No. 75-1849 stands on a different footing. Where a serious question of impropriety arises in the context of a motion to disqualify an attorney from proceeding to trial, this court has invoked the collateral rule of Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541, 69 S.Ct. 1221, 93 L.Ed. 1528 (1949). Accordingly, we have held that district court orders denying such motions may be appealable under 28 U.S.C. § 1291. Kroungold v. Triester, 521 F.2d 763, 765 (3d Cir. 1975); American Roller Co. v. Budinger, 513 F.2d 982, 983 (3d Cir. 1975); Greene v. Singer Co., 509 F.2d 750 (3d Cir. 1971) (sur. motion to dismiss appeal).2 We believe that the questions presented in the appeal at No. 75-1849 are “ ‘too important to be denied review and too independent of the cause itself to require that appellate consideration be deferred’”. Ibid, at 751. We hold, therefore, that the order denying the motion to disqualify plaintiffs’ counsel qualifies for immediate review.

II.

Having established our appellate jurisdiction to review the denial of the motion to disqualify, we now properly turn to the question of the scope of our appellate review. It has been said that a district court’s decision to grant or deny such a motion may be reversed only for an abuse of discretion. See Kroungold v. Triester, supra, 521 F.2d at 765 & n.2. Recently, however, we observed that in many contexts disqualification motions present purely legal issues, subject to full appellate review. American Roller Co. v. Budinger, supra, 513 F.2d at 985 n.3. Once again, this possible discrepancy need not detain us here. As previously rehearsed, page 1087 supra, in this case the district court treated the motion to disqualify counsel as a motion to reconsider the class action certification decision.

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Bluebook (online)
534 F.2d 1085, 21 Fed. R. Serv. 2d 1223, Counsel Stack Legal Research, https://law.counselstack.com/opinion/mitchell-a-kramer-and-david-c-harrison-v-scientific-control-corp-et-al-ca3-1976.