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STATE OF ILL. v. BROG

December 6, 1982

STATE OF ILLINOIS, ET AL., PLAINTIFFS,
v.
BORG, INC., ET AL., DEFENDANTS.



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

MEMORANDUM OPINION AND ORDER

This is one of three class actions*fn1 charging 22 piping construction companies and 36 individuals with bid-rigging, price fixing and job allocation in the Chicago area from 1956 to 1977 in violation of the Sherman Act. As a result of information learned during the course of the litigation, the State of Illinois ("Illinois") has moved to disqualify attorney Edwin C. Thomas ("Thomas") and his law firm Bell, Boyd & Lloyd ("Bell Boyd") from further participation in Illinois' action.*fn2 For the reasons stated in this memorandum opinion and order Illinois' motion is granted.

Background

One of the many previous motions in these actions was defendants' seeking summary judgment because limitations allegedly barred all pre-January 31, 1975 claims by Illinois. See 94 F.R.D. 300 (N.D.Ill. 1982). Illinois responded the statute of limitations had been tolled until Illinois actually discovered defendants' alleged wrongs. But defendants contended Illinois had actual or constructive knowledge before January 31, 1975 of facts suggesting the existence of its claims. Such knowledge, if established as a matter of law, would have defeated Illinois' effort to reach back of the limitations period. This Court found defendants had not established Illinois' knowledge beyond factual dispute (94 F.R.D. at 302-03, emphasis in original, footnote and citations omitted):

  What defendants have rather done is to offer bits
  and pieces of evidence purportedly showing
  Illinois had "direct knowledge of facts
  supporting its claim long before the January 31,
  1975 limitation date." . . . But those bits and
  pieces do not prove as a matter of law even
  "constructive" knowledge on Illinois' part — they
  were not enough as a matter of law to "have aroused
  suspicion or curiosity on the part of plaintiff" as
  to the wrongs asserted in the Complaint. That is so
  because almost without exception the evidence
  adduced by defendants really involves bid-rigging
  conspiracies by mechanical contractors in downstate
  Illinois, not in the Chicago area with which
  Illinois' Complaint is exclusively concerned. . . .
  . . . No demonstration that Illinois knew about
  bid-rigging among principally downstate
  contractors and on downstate projects can
  establish the necessary "suggestion" as to the
  present defendants and their Chicago projects as
  a matter of law. Nor can one-sentence references
  to one Chicago project or to rumors of statewide
  illegality bear the weight defendants seek to
  place on them. It must be remembered that on the
  present motion all reasonable factual inferences
  are drawn in favor of Illinois and not
  defendants.

For purposes of their summary judgment motion defendants sought to assimilate downstate bid-rigging to Chicago bid-rigging. Illinois urged the two matters were entirely separate, so its extensive earlier investigation of the downstate conspiracy would not imply pre-1975 knowledge of any Chicago conspiracies. On the present motion, the parties have virtually traded positions.*fn3

Illinois is spurred to that exchange by the fact Thomas directed the downstate investigation and related antitrust litigation as an Assistant Illinois Attorney General from 1970 to 1977 or 1978.*fn4 More precisely, Illinois' present motion was triggered by defendants' use of Thomas' former position and activities as an important part of defendants' "bits and pieces" to evidence Illinois' pre-1975 knowledge of facts suggesting Chicago area bid-rigging.*fn5 Defendants' summary judgment motion argument on Thomas' implicit role as a conduit of knowledge has come home to roost as Illinois' argument for Thomas' disqualification.

In particular, on the summary judgment motion defendants argued (Mem. 6; R. Mem. 20-22) the downstate investigation conducted by Thomas provided Illinois with knowledge of Chicago-area bid-rigging before January 1975. What is more important,*fn6 Thomas' own deposition testimony admitted he learned of possible (or even probable) Chicago bid-rigging during his downstate investigation in the early 1970's (Dep. 51, 55, 58, 74-77, 82-84, 88-90, 98-99, 210-12, 215-16), and he explained Illinois' failure to act then on that knowledge as the result of a conscious policy of inaction (Dep. 67-68, 70, 104, 113-14, 179, 182-83). That explanation of inaction was sought to be used to turn Illinois' ostensible ignorance of specific Chicago-area conspiracies into collateral "proof" of Illinois' knowledge of the general existence of such conspiracies. In any case, Thomas himself connected his prior public duties to the Chicago-area bid-rigging that is the subject of these consolidated actions.

Disqualification: Legal Principles

Our Court of Appeals has adopted the "clearly settled" legal test in disqualification matters:

  [W]here an attorney represents a party in a
  matter in which the adverse party is that
  attorney's former client, the attorney will be
  disqualified if the subject matter of the two
  representations are "substantially related."

Westinghouse Electric Corp. v. Gulf Oil Corp., 588 F.2d 221, 223 (7th Cir. 1978) ("Westinghouse II"). See also Westinghouse Electric Corp. v. Kerr-McGee Corp., 580 F.2d 1311, 1322 (7th Cir.), cert. denied, 439 U.S. 955, 99 S.Ct. 353, 58 L.Ed.2d 346 (1978) ("Westinghouse I"). That test embodies the substance of Canons 4 and 9 of the (1978) ABA Code of Professional Responsibility (the "Code").*fn7 Contrary to Economy's assertion (Ans. Mem. 8), the concerns of Canon 4 are necessarily implicated when a party seeks disqualification under Canon 9, as Illinois does here. See Westinghouse II, 588 F.2d at 224.

Illinois urges Thomas should now be disqualified because his continued participation in this action ...


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