The U.S. Court of Appeals for the Second Circuit yesterday rejected an attempt by three parties in the World Trade Center respiratory damage litigation to disqualify court-appointed amicus Cravath Swaine & Moore.

New York City, its contractors who worked at Ground Zero, and the insurance company set up to compensate first responders and cleanup workers, moved for Cravath’s disqualification because two of its associates who worked on the amicus had been law clerks for Judge Alvin Hellerstein (See Profile) and assisted him in the litigation.

But in a late-day order issued ahead of Thursday’s oral arguments challenging Hellerstein’s rulings on the 2010 settlement, the circuit turned aside the arguments for disqualification.

Judges Peter Hall (See Profile), Denny Chin (See Profile) and, sitting by designation, Judge Jane Restani of the U.S. Court of International Trade, denied the request of Margaret Warner of McDermott Will & Emery, the law firm representing the WTC Captive Insurance Company, and the lead lawyer for the city and its contractors, James Tyrrell of Patton Boggs.

Cravath, serving pro bono, had been appointed by the circuit to represent Hellerstein’s position on the rulings on appeal regarding the settlement.

The law firms representing most of the 10,000 plaintiffs—Warby Groner Edelman & Napoli Bern, and Sullivan Papain Block McGrath & Cannavo—had opposed disqualification.

The former clerks, Owen Roth and Michael Cabin, assisted Hellerstein in the litigation, and one of them worked on one of the orders at issue on appeal.

On April 3, Warner wrote to Cravath partners Evan Chesler and Antony Ryan, asking for assurance that the firm complied with Rule 1.12 of the New York Rules of Professional Responsibility on conflicts of interest by providing internal notice and "screening wall" requirements to insulate the former clerks from the amicus filing.

Cravath disclosed that same day that both Roth and Cabin "participated in the research and drafting of our amicus brief."

On April 6, Warner and Tyrrell submitted a motion and memorandum seeking Cravath’s disqualification.

The motion was made in dueling appeals challenging Hellerstein’s orders, including one requiring additional payments for people who suffered respiratory and other ailments in the aftermath of the Sept. 11, 2001, terror attacks and another denying attorney fees on those additional payments to lawyers representing some 10,000 plaintiffs.

The Warner memorandum came just five days before April 11 arguments in In re World Trade Center Disaster Site Litigation, 11-4021-cv, and it asked that the circuit either strike the amicus brief in its entirety or at least strike portions of the brief addressing two issues.

Warner will address the first issue on Thursday, arguing on behalf of the city, its contractors and WTC Captive that Hellerstein erred by going against the terms of the 2010 settlement agreement by requiring "bonus" and "contingent" settlement payments.

The second issue will be addressed by Denise Rubin of Warby Groner, who will argue on behalf of the plaintiffs’ firms that Hellerstein erred when ruling that plaintiffs’ lawyers could not collect fees on the bonus or contingent payments.

In her memorandum, Warner argued that Cravath "has taken sides beyond its appointment" on the higher payouts and supported the plaintiffs.

Cravath answered yesterday, before the circuit’s ruling, with a memorandum from Chesler, Ryan and Stuart Gold arguing that Rule 1.12 does not apply to its amicus representation.

"There was no ethical violation in having a judge’s former law clerks participating in preparing an amicus brief as court-appointed counsel to defend orders of the district court," they wrote.

They stated, "In fact, Rule 1.12(b)’s prohibition against a former law clerk ‘represent[ing] anyone in connection with a matter in which the [law clerk] participated substantially and personally’ does not apply in these circumstances since Cravath does not ‘represent anyone’ in this matter within the meaning of Rule 1.12(b)."

The Cravath team also worked to reassure the court that the rule doesn’t apply here because "the former law clerks did not seek out this engagement and no party is privy to confidential information from Judge Hellerstein’s chambers."

Opposing Disqualification

Attorneys representing most of about 10,000 plaintiffs filed their own papers arguing against disqualification—even though they agreed the firm should not have had Roth and Cabin as part of its team.

The reason, Paul Napoli of Napoli Bern said in an interview yesterday, is that disqualifying the firm would lead to a delay of some $50 million in payouts. Napoli said some $625 million has been distributed to plaintiffs in the case.

"We evaluated this very closely and our fear was that, while it was facially improper and we don’t condone what was done, we couldn’t support disqualification because it would probably end up with further delay in arguments and push the ultimate decision six months to a year down the road," Napoli said. "We don’t think that would be a good outcome for our clients."

He continued, "We respect counsel and we support some of the arguments they make that the city should pay contingency and bonus payments. We disagree with their arguments on fees. The assumptions they made on the fee issues were factually incorrect."

In a memorandum, Napoli, Rubin and Andrew Carboy and Brian Shoot of Sullivan Papain criticized their adversaries for seeking disqualification. "It is hypocritical in the extreme to criticize an amicus who essentially was appointed to represent and present the District Court’s position for communicating or working with the District Judge, his clerks or his former clerks," they wrote.

The city, its contractors and the WTC Captive yesterday said in a statement before the circuit ruling that the court appointed Cravath "specifically and only to fill the gap in the arguments on appeal by addressing the appropriateness of Judge Hellerstein’s orders precluding certain attorney fees."

"We were compelled to make this motion to disqualify Cravath, to strike its brief or for permission to reply because Cravath went beyond its judicial appointment," they said. "Cravath wrote to the court about issues that were already subject to opposing positions briefed by the parties."