Erie Molded Plastics, Inc. v. Nogah, LLC, 2013 U.S. App. LEXIS 5991 (3d Cir. March 26, 2013). In a commercial case, defendant advised its attorneys that it would no longer pay them and would soon file for bankruptcy. The attorneys sought to withdraw from the case. A district judge denied them permission to do that unless a substitution of attorney were filed (since the defendant, a business entity, could not represent itself) or defendant accepted an adverse judgment. The attorneys appealed, and the Third Circuit, speaking through Judge Ambro, reversed and permitted the lawyers to withdraw.
Ordinarily, no appeal could have been taken, since appeals as of right require a final judgment. The panel, however, invoked the collateral order doctrine. That doctrine, which originated in Cohen v. Beneficial Indus. Loan Corp., 337 U.S. 541 (1949), allows appeals as of right in a “small class” of cases where otherwise non-final rulings “(1) conclusively determine the disputed issue, (2) resolve important issues separate from the merits, and (3) are effectively unreviewable on appeal from the final judgment in the underlying action.” This appeal by the attorneys met those criteria and allowed the Third Circuit to take jurisdiction over the appeal.
Judge Ambro observed that denials of motions to withdraw as counsel are governed by the abuse of discretion standard. Citing an earlier Third Circuit case, the panel’s test was whether the law firm’s continued role in the case “serve[d] no meaningful purpose, particularly insofar as an opposing interest is concerned.” The court found no meaningful purpose. Plaintiff did not oppose the law firm’s withdrawal. And if the firm were allowed to withdraw, defendant would either have to find new counsel, in which instance the case would continue, with no prejudice to plaintiff, or defendant would have to accept an adverse judgment, which also would not prejudice plaintiff.
The collateral order doctrine is an important principle to keep in mind when seeking to appeal immediately federal district court orders (there is no New Jersey state court analog) that are not final. This case involves an unusual and seemingly almost trivial wrinkle, but one of great importance to lawyers who have learned that their clients will not pay them.