ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA (D.C. Civil No. 74-1628.
Kalodner, Rosenn and Hunter, Circuit Judges.
The defendants moved below to disqualify the law firm representing the plaintiffs on the ground that its representation would offend the ethical standards set out in Canon 5 of the Code of Professional Responsibility and Disciplinary Rule 5-102, promulgated thereunder. The district court denied the motion and this appeal followed.
The background facts may be summarized as follows:
The plaintiffs filed an amended complaint on August 17, 1974 alleging that the defendants in their offering and sale to the plaintiffs of limited partnership interests in a real estate investment project violated the federal and Pennsylvania securities laws and further engaged in common law fraud and misrepresentation.
The defendants before making answer to the amended complaint filed their motion to disqualify plaintiffs' counsel. The motion asserted that "the defendants in this case never had any contact with the plaintiff, Leon Kroungold";*fn1 "all dealings relative to the limited partnership and the investment therein were made through Sheldon M. Bonovitz, Esquire," a partner in the law firm representing the plaintiffs; and "defendants intend to call Sheldon M. Bonovitz, Esquire, as a witness for the defendants and when Sheldon Bonovitz is so called, or deposes, he and his law firm will be in violation of Disciplinary Rule 5-102(B) . . . ."
The plaintiffs, in their "Memorandum Contra Defendants' Motion to Disqualify Counsel" below, stated in relevant part that they did not intend to call Bonovitz as a witness "since his very minor involvement on behalf of Mr. Kroungold has no relationship to the factual or legal issues in this litigation," and "if the Defendants choose to call Mr. Bonovitz as a witness, that fact does not require Duane, Morris & Heckscher to withdraw as counsel for Plaintiffs," under Disciplinary Rule 5-102(B), because "there is nothing known to Plaintiffs' counsel or in the record of this litigation which would in any way indicate that if Defendants choose to call Mr. Bonovitz as a witness, that his testimony is or may be prejudicial to the interests of Mr. Kroungold."
The district court in its "Memorandum and Order" stated in relevant part that "the Court concludes that no cogent reason exists to disqualify the law firm of Duane, Morris & Heckscher as counsel for the plaintiffs . . . under the facts of the instant case," and "accordingly, defendants' motion will be denied."
The issue presented is whether the district court abused its discretion in denying the defendants' motion to disqualify the plaintiffs' counsel. Autowest, Inc. v. Peugeot, Inc., 434 F.2d 556, 567 (2d Cir. 1970).*fn2
Our discussion must be prefaced by notation of the fact that an order denying a motion to disqualify counsel is appealable under 28 U.S.C. § 1291 (1970). American Roller Company v. Budinger, 513 F.2d 982, 983 (3d Cir. 1975); Richardson v. Hamilton International Corporation, 469 F.2d 1382, 1383 n.1 (3d Cir. 1972), cert. denied, 411 U.S. 986, 36 L. Ed. 2d 964, 93 S. Ct. 2271 (1973); Greene v. The Singer Company, 509 F.2d 750 (3d Cir. 1971). See, too, Silver Chrysler Plymouth, Inc. v. Chrysler Motors, Corp., 496 F.2d 800, 804-06 (2d Cir. 1974) (en banc); United States v. Hankish, 462 F.2d 316, 318 (4th Cir. 1972); Yablonski v. United Mine Workers of America, 147 U.S. App. D.C. 193, 454 F.2d 1036, 1038 (D.C. Cir. 1971), cert. denied, 406 U.S. 906, 31 L. Ed. 2d 816, 92 S. Ct. 1609 (1972); Uniweld Products, Inc. v. Union Carbide Corp., 385 F.2d 992, 994 (5th Cir. 1967), cert. denied, 390 U.S. 921, 19 L. Ed. 2d 980, 88 S. Ct. 853 (1968).
What has been said brings us to the question whether the district court abused its discretion in its disposition.
The parties agree that the defendants' motion to disqualify required the district court to test it by standards imposed by Canon 5.*fn3 They do not agree, however, as to the impact, if any, of the ...