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T. C. THEATRE CORP. v. WARNER BROS. PICTURES

May 25, 1953

T. C. THEATRE CORP.
v.
WARNER BROS. PICTURES, Inc. et al.



The opinion of the court was delivered by: WEINFELD

This is a motion by the defendant Universal Pictures Company, Inc. and Universal Film Exchanges, Inc. (both of which are hereafter referred to as Universal for an order (1) to disqualify Thomas Turner Cooke from acting as counsel for the plaintiff and from associating himself in any capacity with any attorney for the plaintiff in the pending action as long as Universal is a party defendant; (2) to disqualify Alexander Kahan from acting as counsel for plaintiff; and (3) to disqualify Gorfinkle & Adler, the attorneys of record for the plaintiff, from continuing to represent the plaintiff in this action.

Although Cooke is not the attorney of record for the plaintiff, it is not disputed that thus far he has been actively associated with, and has played an important role in, the litigation.

 The motions stem from the prior representation by Cooke of Universal in another matter.

 In July 1946, Cooke was retained to represent Universal's interests in the well-known Paramount case after the Statutory Court had filed its opinion. *fn1" The Court had directed the entry of a final decree, and its formulation and that of the proposed findings of fact and conclusions of law was a matter of considerable importance to all parties in the litigation, including, of course, the defendant universal, with whom we are presently concerned. Cooke as counsel for Universal prepared its proposed findings and decree; appeared at hearings before and the Statutory Court in support thereof and in opposition to those proposed by the government and some of the so-called 'Big Five' defendants. Following the settlement of the findings of fact, conclusions of law and the entry of the decree, his further activities included general representation of Universal in connection with its appeal to the Supreme Court; obtaining a stay of some of the provisions of the decree; preparation of brief and reply brief and argument before the Supreme Court of Universal's appeal.

 In May 1948, the Supreme Court rendered its opinion affirming in part and reversing in part the decree of the Statutory Court. Cooke then worked on a proposed petition for rehearing and on the order of mandate.

 Cooke's representation of Universal ended, according to the latter, on July 7, 1948; according to him, on or about February 14, 1951. Subsequently, on October 17, 1951, Cooke brought suit against Universal for a claimed balance due him on account of services rendered in the Paramount litigation. In that suit, which is still pending, he is represented by Mr. Kahan. The controversy as to dates is important here only to the extent that if we accept the date fixed by Cooke it narrows the gap between his former representation of Universal and his present representation of plaintiff against his former client Universal to less than a year. This gap is further narrowed when we consider that some of the complaints, admittedly prepared by Cooke, were in the process of preparation over an extended period of time.

 The cases out of which this motion grew were commenced between January 23, 1952 and May 15, 1952. The motion presently relates to but one pending case. *fn2" The complaint alleges that the defendants, including Universal, were engaged in a nation-wide conspiracy with each other and others unreasonably to restrain trade and that they combined with affiliated circuits, large unaffiliated circuits, and locally favored exhibitors to monopolize the motion picture exhibition industry in violation of Secs. 1 and 2 of the Sherman Act, 15 U.S.C.A. §§ 1 and 2. It is alleged that (1) they conspired with each other and with affiliated exhibitors to maintain a system of minimum motion picture prices; (2) they acted in concert in establishing a uniform and fixed system of runs and clearances against independent competitors of the theatre-operating defendants; (3) they entered into master agreements, or blanket deals and formula deals with circuits of theatres, and other non-competitive agreements; and (4) they discriminated, in a number of ways, against independent exhibitors.

 At this point it is noted that the conspiracy so charged is substantially the same nation-wide conspiracy which was found to exist on the part of the defendants in the Paramount case. All the eight distributor-defendants therein are named as distributor-defendants in this action.

 The plaintiff here alleges, more specifically, that from 1937 until the filing of the complaint, its Biltmore Theatre in Mt. Vernon, New York, was barred from receiving 'feature picture benefits', that the theatre would have been able substantially to increase its revenue had it been granted a prior run; that the unreasonable restraints of trade and the attempts to monopolize are with the purpose of driving the plaintiff out of business; that as a result the plaintiff has been damaged.

 Universal seeks to disqualify Cooke from now acting as attorney against it upon two separate grounds: (1) that the causes of action asserted by the plaintiff against Universal are based substantially on the identical charges made against it and the other distributor-defendants in the Paramount case, so that as present counsel for the plaintiff he will necessarily be called upon to prove against Universal, his former client, the very charges against which he had earlier defended it. Cooke's disqualification is urged irrespective of any showing that actual confidential information relating to the case had been received by him during the former representation; (2) that, in fact, matters of confidence were disclosed to Cooke while he acted as Universal's counsel in the Paramount litigation which are related to the issues at bar; and that his current representation of the plaintiff involves, or may involve, the disclosure or use of such confidences.

 Cooke disputes that the Paramount litigation and the present triple damage suit involve the same matters. As to Universal's second ground for his disqualification, he contends that he received no confidential communications from Universal, that there was no necessity therefor; that his services as appeal counsel in the Paramount case were based upon the 'cold record' and that prior to his entry into the case the government had fully exposed and made publicly available all the defendants' files and records, including, of course, Universal's. Finally, no attempt is made, he says, to relate any confidential communications allegedly received by him to any use which might be made of them in T. C.'s triple damage suit against Universal and others.

 A lawyer's duty of absolute loyalty to his client's interests does not end with his retainer. He is enjoined for all time, except as he may be released by law, from disclosing matters revealed to him by reason of the confidential relationship. Related to this principle is the rule that where any substantial relationship can be shown between the subject matter of a former representation and that of a subsequent adverse representation, the latter will be prohibited. *fn3"

 This salutory principle is summed up in Canon 6 of the Canons of Professional Ethics adopted by the American Bar Association, *fn4" which, in part, provides:

 'The obligation to represent the client with undivided fidelity and not to divulge his secrets or confidences forbids also the subsequent acceptance of retainers or employment from others in matters adversely affecting any interest of ...


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