Willie Luther DARDEN, Jr., Plaintiff-Appellant, v. ILLINOIS BELL TELEPHONE CO., Defendant-Appellee.
No. 83-3171
United States Court of Appeals, Seventh Circuit
July 30, 1986
797 F.2d 497
Argued Feb. 10, 1986.
Law firms and accountants may act or remain silent for good reasons as well as bad ones, and allowing scienter or conspiracy to defraud to be inferred from the silence of a professional firm may expand the scope of liability far beyond that authorized in Ernst & Ernst and Herman & MacLean. If the plaintiff does not have direct evidence of scienter, the court should ask whether the fraud (or cover-up) was in the interest of the defendants. Did they gain by bilking the buyers of the securities? Cf. Dirks, 463 U.S. at 662-64, 103 S.Ct. at 3265-66. In this case the Firms did not gain. They received none of the proceeds from the sales. They did not receive fees for rendering advice in connection with the sales tо the plaintiffs. Both Firms billed so little time to the Foundation between 1974 and 1976 (and none after October 1976) that it is inconceivable that they joined a venture to feather their nests by defrauding investors. They had nothing to gain and everything to lose. There is no sound basis, therefore, on which a jury could infer that the Firms joined common cause with other offenders or aided and abetted a scheme with the necessary state of mind.
The district court also held that the Firms had not committed any forbidden act, had not participated in a scheme to defraud by remaining silent when there was a duty to speak. This, too, is a correct conclusion. Neither lawyers nor accountants are required to tattle on their clients in the absence of some duty to disclose. ITT v. Cornfeld, 619 F.2d at 925; SEC v. Spectrum, Ltd., 489 F.2d 535 (2d Cir.1973). Cf. United States v. Matthews, 787 F.2d 38 (2d Cir.1986). To the contrary, attorneys have privileges not to disclose. See Upjohn Corp. v. United States, 449 U.S. 383, 101 S.Ct. 677, 66 L.Ed.2d 584 (1981).
The extent to which lawyers and accountants should reveal their clients’ wrongdoing—and to whom they should reveal—is a question of great moment. There are proposals to change the rules of legal ethics and the SEC‘s regulations governing accountants. The professions and the regulatory agencies will debate questions raised by cases such as this one for years to come. We express no opinion on whether the Firms did what they should, whether there was malpractice under state law, or whether the rules of ethics (or other fiduciary doctrines) ought to require lawyers and accountants to blow the whistle in equivalent circumstances. We are satisfied, however, that an award of damages under the securities laws is not the way to blaze the trail toward improved ethical standards in the legal and accounting professions. Liability depends on an existing duty to disclose. The securities law therefore must lag behind changes in ethical and fiduciary standards. The plaintiffs have not pointed to any rule imposing on either Firm a duty to blow the whistle.
AFFIRMED.
Roslyn C. Lieb, Chicago Lawyers Committee, for Civil Rights Under Law, Chicago, Ill., for plaintiff-appellant.
Marc I. Lipton, Schaumburg, Ill., for defendant-appellee.
Before BAUER, FLAUM and EASTERBROOK, Circuit Judges.
FLAUM, Circuit Judge.
Willie Luther Darden, Jr. filed a racial discrimination suit under
Illinois Bell hired Darden in October 1975, and his subsequent employment history was marred by numerous charges of tardiness and absenteeism. Illinois Bell discharged Darden for tardiness in 1976 but reinstated him in December 1977 to
After his termination, Darden amended the remaining EEOC charge to include a complaint based on retaliatory discharge. In November the EEOC issued its opinion finding “no reasonable cause” to believe that Illinois Bell had disciplined or discharged Darden either because of his race or in retaliation for his previous EEOC complaint. The EEOC then issued a right to sue letter and on January 17, 1980, Darden filed his pro se suit. Darden separately grieved the discharge through his union and submitted to arbitration. In February 1981, the arbitrator determined that Illinois Bell had “just cause” to discharge Darden and that Darden had failed to prove that Illinois Bell had fired him for discriminatory or retaliatory reasons. Subsequently, the trial court denied Darden‘s request for counsel and, relying in part on the arbitrator‘s decision, granted summary judgment to Illinois Bell on Darden‘s claim that Illinois Bell had no just cause to discharge him and had discriminated against him in violation of
II.
Darden‘s first issue on appеal concerns the district court‘s treatment of his requests for counsel. Darden apparently made two such requests: although the first does not appear on the district court‘s docket, the court on March 6, 1981, issued an order denying appointed counsel.2 Darden made a second request on May 22, 1981, to which the district court made no response. Darden‘s position is that both the district court‘s refusal to appoint counsel and its failure to respond to the second request constituted an abuse of discretion. See Jones v. WFYR Radio/RKO General, 626 F.2d 576, 578 (7th Cir.1980) (“denial of counsel will only be overturned for an abuse of discretion“), overruled on other grounds, Randle v. Victor Welding Supply Co., 664 F.2d 1064 (7th Cir.1981) (plaintiffs cannot take interlocutory appeals from denials of their counsel requests).
The court‘s initial decision to deny Darden appointed counsel is to be analyzed, as Darden correctly points out, under the guidelines discussed in Jones, supra. See, e.g., McKnight v. United States Steel Corp., 726 F.2d 333, 337 (7th Cir.1984). Those guidelines “articulate[] three factors to be weighed by the district court: the merits of the plaintiff‘s claim, the plaintiff‘s diligence in attempting to obtain a lawyer, and the plaintiff‘s financial ability
It is apparent from the nature of the Jones factors that any one of them may be determinative in a particular case. That is, if a discrimination claim lacks merit, counsel will not be appointed regardless of the plaintiff‘s diligence in seeking representation or lack of financial means.3 Similarly, a plaintiff with a very strong case may be refused appointed counsel because he or she is able to pay for an attorney. A judge does not necessarily err, therefore, by basing the counsel decision on one factor alone. Nevertheless, the object of the undertaking is to ensure appropriate decisions at both the district court and appellate levels by gathering and preserving on the record as much information as is reasonably feasible at the mоst opportune stage in the proceedings. Thus, even if the district court is convinced that one factor is determinative, it should preserve on the record information relevant to the other two Jones factors, as detailed below at pages 502-503. Since it is the plaintiff who must provide the court with this information, the court should ensure an adequate record by providing “some guidance to the plaintiff regarding the factors that it may consider . . . and the showing that will be expected of plaintiff.” Poindexter v. FBI, 737 F.2d 1173, 1184 (D.C.Cir.1984). Although this record-creating process need not be elaborate, it will lessen the likelihood that the district court‘s decision will be attacked as baseless, as well as the necessity for remand should the district court‘s assessment of the determinative factor be overturned on appeal. We turn now to examine the Jones factors individually and the adequacy of the district court‘s inquiry in the present case.
With regard to the issue of merits, we noted in Jones that the trial court cannot rely solely on the EEOC‘s finding of “no reasonable cause” to justify a denial of counsel for lack of merit. “Rather, the district court should make some appraisal of the merits of plaintiff‘s claim.” Jones, 626 F.2d at 577. We explained that this appraisal need not be extensive, but we suggested that the court “conduct a brief oral examination of the plaintiff and review the EEOC record.” Id. We concluded in Jones that “if the court finds that the EEOC‘s determination is supported by substantial evidence and that the plaintiff‘s objections to the determination are insubstantial, it may accord the Commission‘s findings weight.” Id.
Here, the district judge indicated both in his order denying counsel and in a subsequent memorandum and order that he had requested and reviewed “the entire
If the court denies a counsel request on merit grounds without providing the plaintiff this opportunity, it risks a remand unless another ground for affirmance appears in the record. A rеmand is not necessary in this case, however, because when Darden filed his second request for counsel, he put in writing his objections to the EEOC‘s “no reasonable cause” determination. Our review of his statement reveals that his objections were insubstantial and on their face involved issues and claims that were put before the Commission. Thus, even had Darden communicated these objections to the district court before its ruling on the first motion, the outcome would not have been different. We caution, however, that a district court should not supplant this “merits dialogue” with a plaintiff by relying on the plaintiff to put his or her views of the merits into the record at a later date. Even if a plaintiff did so, in most cases we doubt whether the record would be sufficiently complete for us to determine, as we were able to do here, that the plaintiff‘s objections are immaterial.
The two other Jones factors similarly should not be overlooked. We noted above that the record should demonstrate that the district judge informed the plaintiff that he or she should submit evidence of attempts to retain counsel and financial status. This information can be made available to plaintiffs either verbally or in a printed page appended to the court‘s form Title VII complaint. The notification can be brief and simple; its object is not to create a procedural right in the pro se plaintiff, but to provide the court with a basis on which to make its determination. After all, a decision made in the absence of a basis is an abuse of discretion.
The district court here implied that its decision to deny appointed counsel was grounded in all three Jones factors, although the record fails to reflect that the court had any basis on which to evaluate Darden‘s efforts to obtain counsel and his lack of financial ability. Nevertheless, we affirm the district court‘s decision to deny Darden‘s request because of his claim‘s lack of substantive merit. We emphasize, however, that in order to avoid reversal for an incorrect assessment of one of the factors, a district court should not limit the record to its review of that one factor. Instead, a complete record would reveаl that the Title VII plaintiff was informed of the requirements for appointment of counsel and was given an opportunity to attempt to satisfy those requirements. As we noted above, this manner of handling requests for counsel is important to increase the chances of correct decisions—both at the trial and appellate levels—on requests for counsel and to avoid costly and time-consuming remands. The D.C. Circuit noted in Poindexter that “[t]he goal, of course, is to make a sound determination as to whether appointment is approрriate. Achievement of this goal is most likely if the relevant information is before the court.” 737 F.2d at 1184. We thus affirm the district court‘s March 6, 1981 denial of counsel, subject to the precautions outlined above.
Darden makes a final claim concerning appointment of counsel: his second request, filed on May 22, 1981, received no
To summarize, we affirm the district court‘s refusаl to appoint counsel, based on the fact that Darden‘s underlying claim was of insufficient merit. We suggest, however, that plaintiffs be informed at the outset of the factors on which their requests will be decided and be given some opportunity to object to the agency determination of their claim‘s merits. At a minimum, then, the pro se plaintiff should be informed: (1) that he or she has an opportunity to provide the court with an assessment of the merits, including the opportunity to enter objections to the EEOC‘s decision; (2) that diligence in attempting to procure counsel is relevant and that some showing of diligence should be made; and (3) that financial ability to pay for counsel is relevant and that he or she should provide the court with a statement of financial status. We further encourage district courts to facilitate periodic updating of counsel requests. These procedures will ensure that counsel requests contain sufficient facts for efficient, informed decision-making.
III.
We come now to Darden‘s contention that the district court erred in granting summary judgment to Illinois Bell. A review of the district court‘s decision reveals that it was based on sound reasoning and an appropriate use of the arbitrator‘s determination, and the decision therefore is affirmed.
Darden‘s suit, as it developed in the district court, contained three claims: (1) the claim that Illinois Bell discharged Darden without just cause; (2) the claim that the discharge was violative of
Turning to Darden‘s final assertion, that the district court gave too much weight to the arbitrator‘s determination when it granted summary judgment on the first two claims, we find no error. First, the district court properly construed Darden‘s “just cause” claim as a contractual one5 and therefore was correct in holding
The arbitrator‘s decision on the Title VII claim is not entitled to complete deference, however. Alexander v. Gardner-Denver Co., 415 U.S. 36, 94 S.Ct. 1011, 39 L.Ed.2d 147 (1974). The Supreme Court in Gardner-Denver refused to make a holding regarding the specific weight to be given to an arbitrator‘s decision, but stated that a court could accord “great weight” to a determination that gave full consideration to the Title VII claim. The Court cautioned, though, that Congress had entrusted the “ultimate resolution of discriminatory employment claims” to the judiciary. Id. at 1025 n. 21. The district court was well aware of this and accorded the arbitration decision “great weight,” while recognizing that “great weight” is not the same as “beyond dispute.” The “great weight” standard was appropriate here, since the arbitrator clearly construed the collective bargaining agreement in accord with Title VII to proscribe racially discriminatory and retaliatory discharges, and thus fully considered Darden‘s Title VII claim. Reviewing the arbitrator‘s finding that Illinois Bell had not discharged Darden for either of these illicit reasons, along with the totality of the evidence (which, as Darden himself acknowledges, was the same evidence that had been before the arbitrator), the district court did not err when it held that Darden had failed to create a genuine dispute as to the real reason for his discharge.
For these reasons, the judgment of the district court is AFFIRMED.
EASTERBROOK, Circuit Judge, concurring.
I join the opinion of the court. Although pro se litigants are not generally entitled to be told the law, see Jacobsen v. Filler, 790 F.2d 1362 (9th Cir.1986), for the judge is not an ombudsman, it is humane as well as prudent to help the pro se litigant learn the essential ingredients of a request for appointed counsel. Knowledge makes it easier for a person to vindicate his substantive rights and for the judge to pass on the litigant‘s claims. Simple notices of preliminary steps, especially how to apply for counsel, are wise judicial administration. The court makes it clear, however, that not all wise things create personal rights. I hope we shall not see complaints about the adequacy of the notice, as opposed to the substance of the judges’ decisions.
The court properly leaves open questions concerning the extent to which judges should appoint counsel under
One reason why judges do not review prosecutors’ decisions to pick some cases rather than others is that they cannot see the full menu of choicеs and therefore cannot make intelligent decisions about which cases are the best available. United States v. Schwartz, 787 F.2d 257, 266 (7th Cir.1986). There is a similar problem deciding which cases need the assistance of counsel. Some litigants will handle their own cases better than others; the assistance of counsel should be used only when
Congress did not doubt the value of voluntary transactions in allocating legal services. The statute authorizing the award of attorneys’ fees in civil rights cases,