The opinion of the court was delivered by: CONNER
Plaintiff in this action alleges that he was wrongfully terminated from his executive position with defendant in contravention of his employment contract. Presently before the Court is defendant's motion to disqualify the law firm of Phillips, Nizer, Benjamin, Krim & Ballon ("Phillips Nizer") from representing plaintiff in this action. For the reasons which follow, the motion is granted.
Since 1936, Phillips Nizer (or its partners) has represented, and continues to represent, the Apparel Manufacturers Association, Inc. ("AMA") and, prior to 1976, AMA's predecessor, Popular Priced Dress Manufacturers Group, Inc. ("PPDM"). AMA is a New York not-for-profit corporate trade association having approximately 100 members. AMA members are corporations engaged in the manufacture and distribution of women's clothing. AMA's sole function is to negotiate and execute multi-employer collective bargaining agreements on behalf of its members with employees represented by the International Ladies Garment Workers' Union ("ILGWU") and ILGWU's local bargaining agent, the Dressmakers' Joint Council ("DJC").
Defendant is an integrated producer of apparel, principally for women. Since 1962, defendant has been a member of AMA (or of PPDM prior to 1976).
Defendant is one of the two or three largest members of AMA. Manny Eagle ("Eagle"), the President of the R & K Originals division of defendant, is also Executive Vice-President of AMA and one of six persons on AMA's committee responsible for collective bargaining with ILGWU and DJC.
Phillips Nizer's representation of AMA includes active involvement in collective bargaining negotiations and significant contact with the AMA negotiating committee regarding such negotiations and agreements. While Phillips Nizer has occasionally been independently retained by individual AMA members, Phillips Nizer has not represented defendant apart from its representation of AMA.
Plaintiff was employed by defendant in the executive position of "Fashion Director" at an annual salary of $ 165,000. That position is not covered by collective bargaining agreements negotiated by AMA on behalf of defendant.
Defendant contends that Phillip Nizer's simultaneous representation of plaintiff in this action, and of defendant (through AMA) in collective bargaining negotiations, violates Canons 4, 5 and 9 of the Code of Professional Responsibility ("Code"), as promulgated by the American Bar Association and adopted by the New York Bar Association.
However, defendant places greatest emphasis upon Canon 5, which provides:
"A lawyer should exercise independent professional judgment on behalf of a client."
In Cinema 5, Ltd. v. Cinerama, Inc., 528 F.2d 1384 (2d Cir. 1976), the Second Circuit considered the application of Canon 5 to an attorney seeking to represent a plaintiff prosecuting a suit against another current client of the attorney. The attorney argued that disqualification should not be required absent a "substantial relationship" between the subject matter of the action at bar and that of the attorney's representation of the defendant. The court rejected that contention as relying upon an inappropriate measure of compliance with Canon 5.
"The "substantial relationship' test is indeed the one that we have customarily applied in determining whether a lawyer may accept employment against a former client. International Electronics Corp. v. Flanzer, 527 F.2d 1288, 1291 (2d Cir. 1975); Silver Chrysler Plymouth, Inc. v. Chrysler Motors Corp., 518 F.2d 751 (2d Cir. 1975); Emle Industries, Inc. v. Patentex, Inc., 478 F.2d 562 (2d Cir. 1973). However, in this case, suit is not against a former client, but an existing one.
"The propriety of this conduct must be measured not so much against the similarities in litigation, as against the duty of undivided loyalty which an attorney owes to each of his clients.
"Ethical Considerations 5-1 and 5-14 of the American Bar Association's Code of Professional Responsibility provide that the professional judgment of a lawyer must be exercised solely for the benefit of his client, free of compromising influences and loyalties, and this precludes his acceptance ...