ADLER, BARISH, DANIELS, LEVIN AND CRESKOFF, a partnership, Appellant, v. Alan B. EPSTEIN, Richard A. Weisbord, Arnold J. Wolf and Sanford I. Jablon.
Supreme Court of Pennsylvania.
Oct. 5, 1978.
Reargument Denied Nov. 6, 1978.
393 A.2d 1175
Argued April 20, 1978.
Alan M. Lerner, Philadelphia, for appellees.
Before EAGEN, C. J., and O‘BRIEN, ROBERTS, POMEROY, NIX, MANDERINO and LARSEN, JJ.
OPINION OF THE COURT
ROBERTS, Justice.
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,1 former associates of Adler Barish, from interfering with existing contractual relationships between Adler Barish and its clients. The court of common pleas entered a final decree granting the requested relief, but a divided Superior Court dissolved the injunction and dismissed Adler Barish‘s complaint. We granted allowance of appeal. We now reverse and direct reinstatement of the decree of the court of common pleas.2
From the formation of Adler Barish in February, 1976, through March of the next year, appellees were salaried associates of Adler Barish.3 Appellees were under the supervision of Adler Barish partners, who directed appellees’ work on cases which clients brought to the firm.4
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 appellees‘. Rather, each case was an Adler Barish case on which appellees were working.
Epstein‘s 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 client‘s new counsel and create a contingent fee agreement.6 Epstein also provided clients with a stamped envelope addressed to Epstein. Appellees Richard Weisbord, Arnold Wolf, and Sanford Jablon, who left Adler Barish on April 1, 1977, were aware of Epstein‘s efforts to procure this business on behalf of their new firm and did not attempt to curtail them. Indeed, Weisbord and Wolf, upon leaving Adler Barish, also immediately began to seek business, as did Epstein, for the new firm. They too informed clients of Adler Barish of their plans and that the clients were free to discharge Adler Barish and retain Weisbord and Wolf in its stead. Their efforts continued until Adler Barish filed its complaint.
Thus, clients of Adler Barish served a dual purpose in appellees’ effort to start their own law firm. First, while
On April 4, the court of common pleas granted Adler Barish preliminary relief, enjoining appellees’ campaign to obtain the business of Adler Barish clients.7 One month later, on May 5, the court entered its final decree, which provided:
“[T]he defendants, ALAN B. EPSTEIN, RICHARD A. WEISBORD, ARNOLD J. WOLF and SANFORD I. JABLON, 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:
- 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.
- Nothing in this Final Decree shall be 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.”
Appellees appealed to the Superior Court,8 which reversed. In addition to granting Adler Barish‘s petition for allowance of appeal, we granted a stay and expedited argument.
II. Appellees’ 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 appellees’ conduct constitutes an intentional interference with existing contractual relationships between Adler Barish and its clients. According to Adler Barish, appellees’ conduct is “deserving of censure, not encouragement.” Appellees’ on the other hand, contend that their conduct was “privileged,” 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.
“[S]peech which does ‘no more than propose a commercial transaction‘” 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 “free flow of commercial information” to the public is unimpaired. Moreover, the injunction expressly permitted appellees to announce “formation of their new professional relationship in accordance with the requirements of DR 2–102 of the Code of Professional Responsibility.” Appellees therefore were permitted to mail announcements to “lawyers, clients, former clients, personal friends, and relatives.” 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 “to those clients of the old firm for whom he had worked“).
What the injunction did proscribe was appellees’ “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.” Our task
The Code of Professional Responsibility, DR 2–103(A) (as adopted, 1974), provides:
“A 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.”
See also Code of Professional Responsibility, DR 2–104(A). Appellees clearly violated this “proscription against self-recommendation.” 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 appellees’ advice “regarding employment of a lawyer.”
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 “commercial speech.” In Ohralik, the state bar association suspended an attorney who “solicited” 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:
“In rejecting the notion that such speech ‘is wholly outside the protection of the First Amendment,’ Virginia Pharmacy, 425 U.S., at 761, 96 S.Ct. at 1825, we were careful not to hold ‘that it is wholly undifferentiable from other forms’ of speech. Id., at 771 n.24, 96 S.Ct. at 1830. We have not discarded the ‘commonsense’ distinction between speech proposing a commercial transaction, which occurs in an area traditionally subject to government
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 Amendment‘s 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.
“Numerous 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 833 (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 employers’ 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.”
Id., 436 U.S. at 455–456, 98 S.Ct. at 1918–19 (footnote omitted). In rejecting the attorney‘s constitutional claim, the Court determined that the state‘s interests were important enough to support regulation of the attorney‘s conduct:
“As applied in this case, the disciplinary rules are said to have limited the communication of two kinds of information. First, appellant‘s 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 ‘the fitting remedy for evil counsels is good ones’ 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 ‘availability, nature, and prices’ 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 ‘informed and reliable decisionmaking.’ Ibid.”
Id., 436 U.S. at 457, 98 S.Ct. at 1919 (footnotes omitted).
Just as in Ohralik, appellees’ conduct frustrates, rather than advances, Adler Barish clients’ “informed and reliable decisionmaking.” After making Adler Barish clients expressly aware that appellees’ 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. Epstein‘s aim was to encourage speedy, simple action by the client. All the client needed to do was to “sign on the dotted line” 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. Appellees’ concern for their line of credit and the success of their new law firm gave them an immediate, personally created financial interest in the clients’ decisions. In this atmosphere, appellees’ 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 “facilitate informed selection of lawyers by potential consumers of legal services“). “[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 lawyer‘s exercise of judgment on behalf of the client will be clouded by his own pecuniary self-interest,” Ohralik v. Ohio State Bar Association, 436 U.S. at 461, 98 S.Ct. at 1921, we must reject appellees’ argument and conclude that, just as in Ohralik, the Constitution permits regulation of their conduct.11
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.12 There, we stated:
“At 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: ‘There are frequent expressions in judicial
opinions that “malice” 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.’ Our cases are in accord: Klauder v. Cregar, [supra;] Dora v. Dora, [supra.]
“The 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, ‘. . . 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 thereby‘. 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.”
402 Pa. at 300–301, 167 A.2d at 474 (footnotes omitted).13
In its continuing effort to provide the judicial system orderly and accurate restatements of the common law, the
“Intentional 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 person‘s failure to perform the contract.”
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).14 Accordingly, we believe it appropriate to analyze this case in light of the approach fashioned by Restatement (Second). Accord, Augustine v. Anti-Defamation League, 75 Wis.2d 207, 249 N.W.2d 547 (1977).
An examination of this case in light of Restatement (Second) of Torts, § 766, reveals that the sole dispute is whether appellees’ conduct is “improper.” There is no doubt
In assessing whether appellees’ conduct is “improper,” 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 “privileges” in conjunction with the closely related right of action for intentional interference with prospective contract relations:
“The 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: ‘. . . 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.’ What is or is not privileged conduct in a given situation is not susceptible of
precise definition. Harper & James refer in general to interferences which ‘are sanctioned by the “rules of the game” which society has adopted‘, and to ‘the area of socially acceptable conduct which the law regards as privileged,’ id. at 510, 511, and treat the subject in detail in §§ 6.12 and 6.13.”
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 “improper:”
“In determining whether an actor‘s 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 actor‘s conduct,
(b) The actor‘s motive,
(c) The interests of the other with which the actor‘s conduct interferes,
(d) The interests sought to be advanced by the actor,
(e) The proximity or remoteness of the actor‘s conduct to the interference and
(f) The relations between the parties.”17
Appellees’ 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 Barish‘s fee agreements with clients were a source of anticipated revenue protected from outside interference.20
Appellees’ contacts were possible because Adler Barish partners trusted appellees with the high responsibility of developing its clients’ cases. From this position of trust and
the jury‘s award of compensatory damages for plaintiff, this Court concluded:
“The jury was warranted in finding from the evidence presented that the named defendants coordinated, through wile, stratagem and deception to separate an attorney from his client. It could not be said, as a matter of the law, that the jury went astray when they concluded, as they must have, that [the employee] did not voluntarily write a letter revoking his power of attorney to [plaintiff]. Logic, sequence of events, and palpable circumstances justify their conclusion that the railroad company representatives prepared a letter of revocation, that they employed a maneuver to have [the employee] copy that letter outside the railroad company office, thinking that this would wipe away their participation in the affair; that they supplied [the employee] with the paper on which he was to copy the letter of revocation; that [a union official], working with the railroad, supervised the copying, and supplied the envelope, in which he placed the letter, which he consigned to the United States mails. The jury were warranted in concluding that all the named defendants were a part of this plan and participated fully in the enterprise which finally resulted in depriving a member of the Philadelphia bar from legal business properly his.”
410 Pa. at 13–14, 187 A.2d at 914–15. First Pennsylvania Bank‘s willingness to extend appellees credit on the basis of expected fees from cases confirms the financial significance of Adler Barish‘s fee agreements.
IV. Conclusion
In Ohralik, Mr. Justice Powell emphasized:
“[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). ‘The 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 “officers of the courts.“‘”
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 ‘self-employed businessmen,’ they also act ‘as trusted agents of their clients, and as assistants to the court in search of a just solution to disputes.’ Cohen v. Hurley, 366 U.S. 117, 124, 81 S.Ct. 954, 958, 6 L.Ed.2d 156 (1961).”
Ohralik v. Ohio State Bar Association, 436 U.S. at 460, 98 S.Ct. at 1920–21. Our “special responsibility” 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.
MANDERINO, J., filed a dissenting opinion.
APPENDIX
Epstein sent the following cover letter:
404 South Camac Street
Philadelphia, Pennsylvania 19147
March 25, 1977Dear
Re:
In confirmation of our recent conversation, I have terminated my association with the offices of Adler, Barish,
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 19106Re:
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
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 attorney‘s wishes or directions in connection with this matter.
Very truly yours,
The following fee agreement was also sent to Adler Barish clients:
CONTINGENT FEE AGREEMENT
Date ________
I (we) hereby constitute and appoint ALAN EPSTEIN as my (our) attorney to prosecute a claim for me (us) for ________ against all responsible parties, including, but not limited to ________ The claimant (deceased) is ________, and the cause of action arose on ________.I (we) hereby agree that the compensation of my (our) attorney for services shall be determined as follows:
________________________________________________________________
________________________________________________________________
________________________________________________________________I (we) hereby acknowledge receipt of a duplicate copy of this Contingent Fee Agreement.
Name ________________ Name ________________
Address ________________ Address ________________
I dissent. The opinions of Judge Hoffman and Judge Spaeth in the Superior Court leave no doubt that injunctive relief in this case is completely unwarranted. Adler, Barish, et al. v. Epstein, etc. Superior Court, 382 A.2d 1286 (1977). Since their opinions were filed, Ohralik v. Ohio State Bar Association, 436 U.S. 447, 98 S.Ct. 1912, 56 L.Ed.2d 444 (1978) has been decided by the United States Supreme Court. That decision relied on by the majority does not support the majority‘s reinstatement of an injunction in violation of appellees’ free speech rights. Ohralik condemned in-person solicitation which deprives citizens of an opportunity for reflection before signing quickly on the dotted line. Id. at 1917. It does not, as the majority asserts, condemn regulation of the type of speech or conduct engaged in by the appellees which did not include any coercive in-person solicitation. The majority‘s reliance on Ohralik is completely unwarranted.
Specifically, the majority relying on Ohralik concludes that appellees, former associates of the law firm, Adler, Barish, engaged in illegal solicitation when they mailed to the clients of Adler, Barish form letters which could be executed to discharge Adler, Barish as counsel, name appellees as client‘s new counsel and then create a contingent fee agreement.
Contrary to the majority‘s analysis, however, the United States Supreme Court‘s decision in Ohralik does not prohibit the type of direct solicitation which is before this Court today.
When the majority says that “just as in Ohralik, the [Federal] Constitution permits regulation of their [appellees‘] conduct,” it widely misses the mark. See at 1181.
One need not be a legal scholar to see the distinction for First Amendment purposes between the ambulance-chasing tactics used by the lawyer in Ohralik and the written communications which appellees mailed to the clients of Adler, Barish. The letters sent to prospective clients which would
This Court today misuses its injunctive powers to prohibit not only what is a protected form of direct solicitation under the First Amendment but to prohibit an attorney from truthfully informing a client about the client‘s legal rights. The Order of the Superior Court should therefore be affirmed.
MANDERINO, J.