Adler, Barish, Daniels, Levin & Creskoff v. Epstein
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Full Opinion
OPINION OF THE COURT
Appellant, the law firm of Adler, Barish, Daniels, Levin and Creskoff, filed a Complaint in Equity in the Court of Common Pleas of Philadelphia. It sought to enjoin appellees,
From the formation of Adler Barish in February, 1976, through March of the next year, appellees were salaried associates of Adler Barish.
While still working for Adler Barish, appellees decided to form their own law firm and took several steps toward achieving their goal. They retained counsel to advise them concerning their business venture, sought and found office space, and early in March, 1977, signed a lease.
Shortly before leaving Adler Barish, appellees procured a line of $150,000 from First Pennsylvania Bank. As security, appellees furnished bank officials with a list of eighty-eight cases and their anticipated legal fees, several of which were higher than $25,000, and together exceeded $500,000. No case on the list, however, was appelleesâ. Rather, each case was an Adler Barish case on which appellees were working.
Epsteinâs attempt to procure business on behalf of the firm did not stop with these contacts. He mailed to the clients form letters which could be used to discharge Adler Barish as counsel, name Epstein the clientâs new counsel and create a contingent fee agreement.
Thus, clients of Adler Barish served a dual purpose in appelleesâ effort to start their own law firm. First, while
On April 4, the court of common pleas granted Adler Barish preliminary relief, enjoining appelleesâ campaign to obtain the business of Adler Barish clients.
â[T]he defendants, ALAN B. EPSTEIN, RICHARD A. WEISBORD, ARNOLD J. WOLF and SANFORD I. JAB-LON, and all persons acting in concert with them or otherwise participating with them or acting in their aid or behalf, are permanently enjoined and restrained from contacting and/or communicating with those persons who up to and including April 1, 1977, had active legal matters pending with and were represented by the law firm of ADLER, BARISH, DANIELS, LEVIN and CRESKOFF, except that:
1. Nothing in this Final Decree shall be construed to preclude the defendants from announcing the formation of their new professional relationship in accordance with the requirements of DR 2-102 of the Code of Professional Responsibility.
2. Nothing in this Final Decree shall preclude those persons who, up to and including April 1, 1977, had active legal matters pending with and had been represented by the law firm of ADLER, BARISH, DANIELS, LEVIN and CRESKOFF from voluntarily discharging their present attorney and selecting any of the defendants, or any other attorney, to represent them.â
Appellees appealed to the Superior Court,
II. Appelleesâ Constitutional Claim
The facts found by the court of common pleas, which appellees do not dispute and the Superior Court did not disturb, demonstrate that, while leaving Adler Barish, appellees made numerous contacts with Adler Barish clients on whose active cases appellees were working before leaving Adler Barish. Adler Barish argues that appelleesâ conduct constitutes an intentional interference with existing contractual relationships between Adler Barish and its clients. According to Adler Barish, appelleesâ conduct is âdeserving of censure, not encouragement.â Appelleesâ on the other hand, contend that their conduct was âprivileged,â and that therefore no right of action for intentional interference lies. Moreover, they argue that their conduct is protected under the first and fourteenth amendments to the Constitution of the United States.
â[S]peech which does âno more than propose a commercial transactionâ â is no longer outside the protection of the first and fourteenth amendments to the Constitution of the United States. Virginia Pharmacy Board v. Virginia Consumer Council, 425 U.S. 748, 762, 96 S.Ct. 1817, 1825, 48
Nothing in the challenged decree prohibited appellees from engaging in the truthful advertising protected under Bates. Appellees could inform the general public, including clients of Adler Barish, of the availability of their legal services, and thus the âfree flow of commercial informationâ to the public is unimpaired. Moreover, the injunction expressly permitted appellees to announce âformation of their new professional relationship in accordance with the requirements of DR 2-102 of the Code of Professional Responsibility.â Appellees therefore were permitted to mail announcements to âlawyers, clients, former clients, personal friends, and relatives.â Code of Professional Responsibility, DR 2-102(A)(2). This would include the very clients of Adler Barish whose business appellees sought. See Committee on Professional Ethics of the American Bar Association, Informal Decision No. 681 (August 1,1963) (permitting departing attorney to send announcements âto those clients of the old firm for whom he had workedâ).
What the injunction did proscribe was appelleesâ âcontacting and/or communicating with those persons who up to and including April 1, 1977, had active legal matters pending with and were represented by the law firm of ADLER, BARISH, DANIELS, LEVIN and CRESKOFF.â Our task
The Code of Professional Responsibility, DR 2-103(A) (as adopted, 1974), provides:
âA lawyer shall not recommend employment, as a private practitioner, of himself, his partner, or associate to a non-lawyer who has not sought his advice regarding employment of a lawyer.â
See also Code of Professional Responsibility, DR 2-104(A). Appellees clearly violated this âproscription against self-recommendation.â Berlant Appeal, 458 Pa. 439, 443, 328 A.2d 471, 474 (1974), cert. denied, 421 U.S. 964, 95 S.Ct. 1953, 44 L.Ed.2d 451 (1975). They recommended their own employment, even though clients of Adler Barish did not seek appelleesâ advice âregarding employment of a lawyer.â
Ohralik v. Ohio State Bar Association, 436 U.S. 447, 98 S.Ct. 1912, 56 L.Ed.2d 444 (1978), makes plain that, after Bates, states may constitutionally impose sanctions upon attorneys engaging in conduct which violates these disciplinary rules, even though the conduct involves âcommercial speech.â In Ohralik, the state bar association suspended an attorney who âsolicitedâ persons injured in an automobile accident by making visits to the hospital room where the persons were recovering. Mr. Justice Powell, speaking for the Court, emphasized that commercial speech does not enjoy the same constitutional protections traditionally afforded other forms of speech:
âIn rejecting the notion that such speech âis wholly outside the protection of the First Amendment,â Virginia Pharmacy, 425 U.S., at 761, 96 S.Ct. at 1825, we were careful not to hold âthat it is wholly undifferentiable from other formsâ of speech. Id., at 771 n.24, 96 S.Ct. at 1830. We have not discarded the âcommonsenseâ distinction between speech proposing a commercial transaction, which occurs in an area traditionally subject to government*426 regulation, and other varieties of speech. Ibid. To require a parity of constitutional protection for commercial and noncommercial speech alike could invite dilution, simply by a leveling process, of the force of the Amendmentâs guarantee with respect to the latter kind of speech. Rather than subject the First Amendment to such a devitalization, we instead have afforded commercial speech a limited measure of protection, commensurate with its subordinate position in the scale of First Amendment values, while allowing modes of regulation that might be impermissible in the realm of noncommercial expression.
âNumerous examples could be cited of communications that are regulated without offending the First Amendment, such as the exchange of information about securities, SEC v. Texas Gulf Sulphur Co., 401 F.2d 883 (CA2 1968), cert. denied, 394 U.S. 976, 89 S.Ct. 1454, 22 L.Ed.2d 756 (1969), corporate proxy statements, Mills v. Electric Auto-Lite Co., 396 U.S. 375, 90 S.Ct. 616, 24 L.Ed.2d 593 (1970), the exchange of price and production information among competitors, American Column & Lumber Co. v. United States, 257 U.S. 377, 42 S.Ct. 114, 66 L.Ed. 284 (1921), and employersâ threats of retaliation for the labor activities of employees, NLRB v. Gissel Packing Co., 395 U.S. 575, 618, 89 S.Ct. 1918, 1942, 23 L.Ed.2d 547 (1969). See Paris Adult Theatre I v. Slaton, 413 U.S. 49, 61-62, 93 S.Ct. 2628, 2637, 37 L.Ed.2d 446 (1973). Each of these examples illustrates that the State does not lose its power to regulate commercial activity deemed harmful to the public whenever speech is a component of that activity. Neither Virginia Pharmacy nor Bates purported to cast doubt on the permissibility of these kinds of commercial regulation.â
Id., 436 U.S. at 455-456, 98 S.Ct. at 1918-19 (footnote omitted). In rejecting the attorneyâs constitutional claim, the Court determined that the stateâs interests were important enough to support regulation of the attorneyâs conduct:
*427 âAs applied in this case, the disciplinary rules are said to have limited the communication of two kinds of information. First, appellantâs solicitation imparted to Carol McClintock and Wanda Lou Holbert certain information about his availability and the terms of his proposed legal services. In this respect, in-person solicitation serves much the same function as the advertisement at issue in Bates. But there are significant differences as well. Unlike a public advertisement, which simply provides information and leaves the recipient free to act upon it or not, in-person solicitation may exert pressure and often demands an immediate response, without providing an opportunity for comparison or reflection. The aim and effect of in-person solicitation may be to provide a one-sided presentation and to encourage speedy and perhaps uninformed decisionmaking; there is no opportunity for intervention or counter-education by agencies of the Bar, supervisory authorities, or persons close to the solicited individual. The admonition that âthe fitting remedy for evil counsels is good onesâ is of little value when the circumstances provide no opportunity for any remedy at all. In-person solicitation is as likely as not to discourage persons needing counsel from engaging in a critical comparison of the âavailability, nature, and pricesâ of legal services, cf. Bates, supra, 433 U.S. at 364, 97 S.Ct. at 2699, it actually may disserve the individual and societal interest, identified in Bates, in facilitating âinformed and reliable decisionmaking.â Ibid.â
Id., 436 U.S. at 457, 98 S.Ct. at 1919 (footnotes omitted).
Just as in Ohralik, appelleesâ conduct frustrates, rather than advances, Adler Barish clientsâ âinformed and reliable decisionmaking.â After making Adler Barish clients expressly aware that appelleesâ new firm was interested in procuring their active cases, Epstein provided the clients the forms that would sever one attorney-client relationship and create another. Epsteinâs aim was to encourage speedy, simple action by the client. All the client needed to do was to âsign on the dotted lineâ and mail the forms in the
Thus, appellees were actively attempting to induce the clients to change law firms in the middle of their active cases. Appelleesâ concern for their line of credit and the success of their new law firm gave them an immediate, personally created financial interest in the clientsâ decisions. In this atmosphere, appelleesâ contacts posed too great a risk that clients would not have the opportunity to make a careful, informed decision. Compare Code of Professional Responsibility, EC 2-10 (directing that standards for attorney advertising âfacilitate informed selection of lawyers by potential consumers of legal servicesâ). â[T]o reduce the likelihood of overreaching and the exertion of undue influence on lay persons; to protect the privacy of individuals; and to avoid situations where the lawyerâs exercise of judgment on behalf of the client will be clouded by his own pecuniary self-interest,â Ohralik v. Ohio State Bar Association, 436 U.S. at 461, 98 S.Ct. at 1921, we must reject appelleesâ argument and conclude that, just as in Ohralik, the Constitution permits regulation of their conduct.
Thus, we turn to whether the court of common pleas properly concluded that Adler Barish is entitled to relief. In Birl v. Philadelphia Electric Co., 402 Pa. 297, 167 A.2d 472 (1961), this Court adopted Section 766 of Restatement of Torts and its definition of the right of action for intentional interference with existing contractual relations.
âAt least since Lumley v. Gye (1853), 2 Ell. & Bl. 216, 1 Eng.Rul.Cas. 706, the common law has recognized an action in tort for an intentional, unprivileged interference with contractual relations. It is generally recognized that one has the right to pursue his business relations or employment free from interference on the part of other persons except where such interference is justified or constitutes an exercise of an absolute right: Restatement, Torts, § 766. The Special Note to comment m. in § 766 points out: âThere are frequent expressions in judicial*430 opinions that âmaliceâ is requisite for liability in the cases treated in this Section. But the context and course of decision make it clear that what is meant is not malice in the sense of ill will but merely purposeful interference without justification.â Our cases are in accord: Klauder v. Cregar, [supra;] Dora v. Dora, [supra.]
âThe elements of this tort of inducing breach of contract or refusal to deal, which must be averred in the complaint, are set forth in the Restatement, Torts, § 766, which says, â. . one who, without a privilege to do so, induces or otherwise purposely causes a third person not to (a) perform a contract with another, or (b) enter into or continue a business relation with another is liable to the other for the harm caused therebyâ. In other words, the actor must act (1) for the purpose of causing this specific type of harm to the plaintiff, (2) such act must be unprivileged, and (3) the harm must actually result.â
402 Pa. at 300-301, 167 A.2d at 474 (footnotes omitted).
In its continuing effort to provide the judicial system orderly and accurate restatements of the common law, the
âIntentional Interference with Performance of Contract by Third Person
One who intentionally and improperly interferes with the performance of a contract (except a contract to marry) between another and a third person by inducing or otherwise causing the third person not to perform the contract, is subject to liability to the other for the pecuniary loss resulting to the other from the third personâs failure to perform the contract.â
This Court constantly seeks to harmonize common law rules, principles, and doctrines with modern perceptions of societal needs and responsibilities. See e. g., Glenn v. Point Park College, 441 Pa. 474, 481, 272 A.2d 895, 899 (1971) (relying upon Tentative Draft of § 766A, Restatement (Second) of Torts (Tent. Draft No. 14, 1969), in upholding right of action for interference with prospective contract relations).
An examination of this case in light of Restatement (Second) of Torts, § 766, reveals that the sole dispute is whether appelleesâ conduct is âimproper.â There is no doubt
In assessing whether appelleesâ conduct is âimproper,â we bear in mind what this Court stated in Glenn v. Point Park College, supra, 441 Pa. at 482, 272 A.2d at 899, where we analyzed âprivilegesâ in conjunction with the closely related right of action for intentional interference with prospective contract relations:
âThe absence of privilege or justification in the tort under discussion is closely related to the element of intent. As stated by Harper & James, The Law of Torts, § 6.11, at 513-14: â. . . where, as in most cases, the defendant acts at least in part for the purpose of protecting some legitimate interest which conflicts with that of the plaintiff, a line must be drawn and the interests evaluated. This process results in according or denying a privilege which, in turn, determines liability.â What is or is not privileged conduct in a given situation is not susceptible of*433 precise definition. Harper & Hames refer in general to interferences which âare sanctioned by the ârules of the gameâ which society has adoptedâ, and to âthe area of socially acceptable conduct which the law regards as privileged,â id. at 510, 511, and treat the subject in detail in §§ 6.12 and 6.13.â
We are guided, too, by Section 767 of Restatement (Second) of Torts, which focuses on what factors should be considered in determining whether conduct is âimproper:â
âIn determining whether an actorâs conduct in intentionally interfering with an existing contract or a prospective contractual relation of another is improper or not, consideration is given to the following factors:
(a) The nature of the actorâs conduct,
(b) The actorâs motive,
(c) The interests of the other with which the actorâs
conduct interferes,
(d) The interests sought to be advanced by the actor,
(e) The proximity or remoteness of the actorâs conduct to the interference and
(f) The relations between the parties.â17
Appelleesâ conduct adversely affected more than the informed and reliable decisionmaking of Adler Barish clients with active cases. Their conduct also had an immediate impact upon Adler Barish. Adler Barish was prepared to continue to perform services for its clients and therefore could anticipate receiving compensation for the value of its efforts. Moreover, as we concluded in Richette.v. Pennsylvania Railroad, 410 Pa. 6,187 A.2d 910 (1963), Adler Barishâs fee agreements with clients were a source of anticipated revenue protected from outside interference.
Appelleesâ contacts were possible because Adler Barish partners trusted appellees with the high responsibility of developing its clientsâ cases. From this position of trust and
IV. Conclusion
In Ohralik, Mr. Justice Powell emphasized:
â[T]he state bears a special responsibility for maintaining standards among members of the licensed professions. See Williamson v. Lee Optical Co., 348 U.S. 483, 75 S.Ct. 461, 99 L.Ed. 563 (1955); Semler v. Oregon State Bd. of Dental Examiners, 294 U.S. 608, 55 S.Ct. 570, 79 L.Ed. 1086 (1935). âThe interest of the States in regulating lawyers is especially great since lawyers are essential to the primary governmental function of administering justice, and have historically been âofficers of the courts.â â*437 Goldfarb v. Virginia State Bar, 421 U.S. 773, 792, 95 S.Ct. 2004, 2016, 44 L.Ed.2d 572 (1975). While lawyers act in part as âself-employed businessmen,â they also act âas trusted agents of their clients, and as assistants to the court in search of a just solution to disputes.â Cohen v. Hurley, 366 U.S. 117, 124, 81 S.Ct. 954, 958, 6 L.Ed.2d 156 (1961).â
Ohralik v. Ohio State Bar Association, 436 U.S. at 460, 98 S.Ct. at 1920-21. Our âspecial responsibilityâ includes the obligation to assure that persons seeking professional legal assistance receive the quality advocacy and fair treatment they justifiably expect. Our responsibility also includes the duty to provide an atmosphere conducive to proper attorney-client relationships, including those situations where, as here, associates assist other members of a firm in rendering legal services. Consistent with these jurisprudential concerns, our supervisory authority over practitioners in our courts, prior decisions, the Code of Professional Responsibility, and Restatement (Second) of Torts, it must be concluded that the court of common pleas correctly determined that Adler Barish is entitled to relief.
Order of the Superior Court reversed and court of common pleas directed to reinstate its final decree. Each party pay own costs.
APPENDIX
Epstein sent the following cover letter:
404 South Camac Street Philadelphia, Pennsylvania 19147 March 25, 1977
Dear In confirmation of our recent conversation, I have terminated my association with the offices of Adler, Barish,
*438 Daniels, Levin and Creskoff and will be continuing in the practice of law in center city Philadelphia. As I explained, you have the right to determine who shall represent your interests and handle the above-captioned matter in the future. You may elect to be represented by my former office, me or any other attorney permitted to practice in this jurisdiction.
During our conversation, you expressed a desire to have me continue as your legal representative, and in recognition of your choice in this regard, I have enclosed two documents which must be signed and returned to me in the enclosed stamped, addressed envelope to effect this end. Copies of these documents are also enclosed for your records.
If you have any questions regarding these materials or any other matter, feel free to call me at KI 6-5223.
Sincerely,
Alan B. Epstein
ABE/ete
Enclosure
The Form discharging Adler Barish provides:
Messrs. Adler, Barish, Daniels,
Levin & Creskoff
2nd Floor, Rohm & Haas Building Sixth & Market Streets Philadelphia, PA 19106
Re:
Gentlemen:
I have been advised that Alan B. Epstein, Esquire has terminated his association with your firm of attorneys and it has been carefully explained to me that I have the right to determine who shall represent me and handle the above-captioned matter.
This correspondence is to serve notice I hereby discharge the office of Adler, Barish, Daniels, Levin & Creskoff from*439 any further representation of me whatsoever and request that the members of your firm and/or your employees or agents refrain from acting against my wishes in this regard or my interests in any way whatsoever.
This letter is to also serve as my notice and request that I want Alan B. Epstein to be my attorney in this matter, to keep or secure my file and all allied papers, and to handle this matter and represent me.
I further direct you to deliver immediately to my attorney, Alan B. Epstein, my entire file and all allied papers and to refrain further from any actions contrary to my attorneyâs wishes or directions in connection with this matter.
Very truly yours,
The following fee agreement was also sent to Adler Barish clients:
Additional Information