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KADISH v. COMMODITY FUTURES TRADING COM'N

December 7, 1982

LLOYD A. KADISH AND PETER BERMAN, PLAINTIFFS,
v.
COMMODITY FUTURES TRADING COMMISSION, DEFENDANT.



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

MEMORANDUM OPINION AND ORDER

Lloyd Kadish ("Kadish") and Peter Berman ("Berman") sue Commodity Futures Trading Commission ("CFTC") for a declaratory judgment authorizing the law firm of Silets & Martin, Ltd. ("Silets & Martin") to represent Kadish and Berman in a separate subpoena enforcement action (No. 82 C 3387) brought by CFTC against them. For the reasons and upon the conditions stated in this memorandum opinion and order, judgment is granted authorizing such representation.

This Court has issued three memorandum opinions and orders in this action:

    1. Opinion I (548 F. Supp. 1030 (Sept. 23,
  1982)) denied CFTC's summary judgment motion,
  holding the Silets & Martin firm was not
  disqualified as a matter of law.
    2. Opinion II (548 F. Supp. 1036 (Oct. 13,
  1982)) was issued sua sponte because of the
  intervening opinion by our Court of Appeals in
  Freeman v. Chicago Musical Instrument Co.,
  689 F.2d 715 (7th Cir. Sept. 27, 1982), addressing the issue
  of vicarious law firm disqualification.
    3. Opinion III (slip opinion, Nov. 15, 1982)
  dealt with the hearing procedure to be followed
  on the ultimate merits, at the same time again
  explicating the related substantive analysis.
  After some intermediate procedural skirmishes (dealt with in part by Opinion III) this Court scheduled a December 3 evidentiary hearing to permit a decision on the ultimate merits. However the parties filed a November 29 stipulation agreeing to waive the evidentiary hearing and asking this Court to rule instead on the basis of the evidence (affidavits and supporting documents) presented earlier on CFTC's summary judgment motion. Opinion III at 4 has already expressed the Court's willingness so to rule on a stipulated record.

In accordance with Fed.R.Civ.P. ("Rule") 52(a), this Court finds the following facts and states the following conclusions of law:

Findings of Fact ("Findings")*fn1

1.  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 asked
Dolkart to join him in his office to discuss something over
the telephone with other CFTC personnel in Washington. Dolkart
did so. Gekas explained Chicago Discount Commodity Brokers
("CDCB") was in financial difficulty and that he and the other
CFTC people had been talking about the situation for a
considerable amount of time before Dolkart was brought in to
join the telephone conversation. Gekas introduced Dolkart, via
speaker phone, to John Cotton and an unidentified staff
attorney at CFTC's Washington, D.C. Division of Enforcement.
2.  During the ensuing four-sided conversation Gekas 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. Dolkart had spent only a
few minutes in the telephone conversation, spending not over
ten minutes in Gekas' office overall. At no time during the
conversation while Dolkart was on the line did the
participants discuss CDCB's factual situation. Dolkart was not
told anything of the nature of the extended discussion that
had taken place before Gekas called him into the telephone
conversation.
3.  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).
4.  CFTC subsequently issued an order of investigation in
the CDCB matter. That order included Dolkart's name as one of
the three regional CFTC employees empowered to issue subpoenas
and take testimony in the CDCB investigation. However, Dolkart
(who was unaware of that designation) had no further
involvement in the CDCB investigation. Nor was Dolkart kept
abreast of substantive matters in the CDCB injunctive action
and ensuing investigation. Occasionally CFTC lawyers made
general remarks to Dolkart as to the status of the
proceedings, but the only information imparted in those
remarks was publicly available in any event.
5.  In April 1981 Dolkart was asked to and did provide
minimal assistance to CFTC staff attorney Adrianne Harvitt
("Harvitt") in CFTC's subpoena enforcement action against
CDCB's accountant David B. ...

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