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September 23, 1982


The opinion of the court was delivered by: Shadur, District Judge.


Lloyd Kadish ("Kadish") and Peter Berman ("Berman") sue Commodity Futures Trading Commission ("CFTC") for a declaratory judgment authorizing Silets & Martin, Ltd. ("Silets & Martin") to represent Kadish and Berman in a separate subpoena enforcement action CFTC has brought against them.*fn1 CFTC has moved for summary judgment, seeking disqualification of Silets & Martin as a matter of law. For the reasons contained in this memorandum opinion and order, CFTC's motion is denied.


On Sunday, October 26, 1980 John Dolkart ("Dolkart"), a senior trial attorney with CFTC, was working in its Chicago offices, preparing for a business trip the following day. CFTC Regional Counsel Constantine Gekas ("Gekas") came in and told Dolkart Chicago Discount Commodity Brokers ("CDCB") was in financial difficulty. Gekas then invited Dolkart into his office and introduced Dolkart, via speaker phone, to John Cotton and an unidentified staff attorney at CFTC's Washington, D.C. Division of Enforcement.

During the ensuing four-sided conversation Gekas said Kadish was counsel for CDCB and asked what Dolkart knew about Kadish. Dolkart responded Kadish was "sharp" and CFTC would need to proceed cautiously with Kadish representing CDCB. All four then engaged in a discussion in principle as to the advisability of moving against CDCB by federal court injunctive action rather than through administrative proceedings. Dolkart opined that from the public's perception neither posed any particular advantage when a registrant like CDCB becomes insolvent. Then Dolkart excused himself from the discussion.

Later the same day Gekas again visited Dolkart's office, this time to ask that Dolkart prepare an injunctive complaint for use by CFTC against CDCB. Dolkart prepared a "boilerplate" complaint by "cutting and pasting" portions of pleadings in prior CFTC cases. Although his draft Complaint contained no factual information as to CDCB, Dolkart told Gekas the relevant facts could be gleaned from public filings in CFTC's office and then aided Gekas in obtaining those files (though Dolkart did not review them before giving them to Gekas). CFTC's subsequent order of investigation in the CDCB matter, a private document not available to the public, named Dolkart as one of three regional employees designated to conduct an investigation of CDCB's activities.

After that initial activity, Dolkart was not in any way involved in the later CDCB investigation. However, in April 1981 Dolkart assisted another CFTC staff attorney, Adrianne Harvitt ("Harvitt"), in CFTC's subpoena enforcement action against CDCB's accountant David B. Dahl. Dolkart's activity took two forms:

    1. Dolkart briefly discussed with Harvitt the
  federally recognized accountant-client privilege,
  though not in relation to specific facts
  regarding Dahl and CDCB.
    2. Dolkart accompanied Harvitt to court for her
  April 29, 1981 argument of a motion in the CDCB
  matter. Dolkart did not participate in Harvitt's
  preparation or argument. Instead he was with
  Harvitt solely to "hold her hand," because she
  was both new to the Division of Enforcement and
  generally inexperienced.

Dolkart left CFTC June 12, 1981 and began work as an associate with Silets & Martin three days later. In December 1981 Kadish and Berman, who had received CFTC administrative subpoena duces tecum in its CDCB investigation, retained Silets & Martin to represent them.

Before meeting with Kadish and Berman, Royal Martin, Jr. ("Martin") asked Dolkart to work on the matter. Dolkart described his earlier "peripheral exposure" to Martin. Martin then decided Silets & Martin could represent Kadish and Berman but "pursuant to our general firm policy, Dolkart should not be involved in the matter." Martin invited another associate, Shelly Kulwin ("Kulwin"), into his office (with Dolkart still present) and said (1) Martin and Kulwin would work on the Kadish and Berman matter and (2) Dolkart "was to be completely excluded from participation in the case." Martin, Dolkart and other firm members and associates have filed affidavits attesting to their adherence to that exclusion. Of course Dolkart, as an associate, does not share in the firm's fees from representing Kadish and Berman.

Standards Governing Disqualification

In the decision of any disqualification motion, this Court's first line of inquiry is addressed to the American Bar Association ("ABA") Code of Professional Responsibility (the "Code"). This District Court has adopted the Code as an appropriate guideline for the conduct of attorneys admitted to practice before it (General Rules 6(a)(i)), and our Court of Appeals has regularly relied upon it in the disqualification area. See, e.g., Novo Terapeutisk Laboratorium A/S v. Baxter Travenol Labs, Inc., 607 F.2d 186, 189 (7th Cir. 1979); Westinghouse Electric Corp. v. Gulf Oil Corp., 588 F.2d 221, 224, 228 (7th Cir. 1978).

Under the circumstances of this case a two-level analysis is called for. First this Court must determine whether Dolkart could represent Kadish and Berman. If not — and this opinion concludes that he cannot — it must be separately decided whether Dolkart's disqualification extends vicariously to Silets & Martin.

Dolkart's Individual Disqualification

Little difficulty is posed by the first issue of Dolkart's personal disqualification. Code Disciplinary ...

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