author: HEANEY, Circuit Judge.

text:
    GRAVOIS BANK et al., Petitioners, v. BOARD OF GOVERNORS OF the FEDERAL RESERVE SYSTEM et al., Respondents, and Manchester Financial Corp. and the National Bank of Affton, Intervenors.
    No. 72-1423.
    United States Court of Appeals, Eighth Circuit.
    Submitted March 13, 1973.
    Decided April 27, 1973.

      Richard L. Hughes, St. Louis, Mo., for petitioners.
    David F. Ulmer, St. Louis, Mo., for intervenors.
    James C. Hair, Atty., Department of Justice, Washington, D. C., for respondents.
    Before VAN OOSTERHOUT, Senior Circuit Judge, MEHAFFY and HEA-NEY, Cii’cuit Judges.
   HEANEY, Circuit Judge.

The petitioners, three Missouri banks, ask us to review an order of the St. Louis Federal Reserve Bank granting the intervenor, Manchester Financial Corporation, permission to acquire The National Bank of Affton, a bank in organization.

Manchester Financial Corporation (MFC) is a bank holding company incorporated in 1968. In September of 1969, pursuant to a reorganization plan, the shareholders of the Manchester Bank of St. Louis, a state chartered bank, exchanged their Manchester Bank stock for shares in MFC. *As a result of the reorganization, the Manchester Bank became the principal subsidiary of MFC. The management of MFC and the Manchester Bank are substantially identical.

On March 29, 1972, MFC filed an application with the Board of Governors of the Federal Reserve System (Board) pursuant to § 3(a)(3) of the Bank Holding Company Act of 1956, 12 U.S.C. § 1842(a)(3), for prior approval by the Board of its proposed acquisition of one hundred percent (less director’s qualifying shares) of the voting shares of the proposed Affton Bank. Pursuant to its regulations, the Board delegated its authority for approval of the acquisition to the St. Louis Federal Reserve Bank (Reserve Bank). 12 C.F.R. § 265.2(f)(22).

The Reserve Bank, in turn, pursuant to 12 U.S.C. § 1842(b), notified the Comptroller that it had received MFC’s application. The Comptroller did not reply. However, on October 29, 1971, the Comptroller had granted his preliminary approval to the chartering of the Affton Bank, subject to the condition that MFC would be allowed to acquire the Affton Bank stock. In view of the fact that the Comptroller did not recommend disapproval of MFC’s application, it was not necessary for the Board to grant a hearing on the application. See, 12 U.S.C. § 1842(b). On May 3, 1972, petitioners’ attorney submitted written objections to the Board requesting that the Board deny MFC’s application. ****On June 12, 1972, the Reserve Bank issued an order approving MFC’s application. The petitioners filed a petition for review of the Reserve Bank’s order with this Court on July 11, 1972, but they did .not seek a stay of the order pending the outcome of the appeal. On August 12, 1972, MFC advised the Reserve Bank that it had completed the acquisition. Thereafter, the Affton Bank commenced operating.

The petitioners make four contentions on this appeal:

(1) That the Board has no jurisdiction to approve a bank holding company’s application to acquire a newly created bank.

(2) That the Comptroller of the Currency improperly delegated his authority by conditioning his grant of a charter to the Affton Bank upon subsequent approval by the Board of MFC’s request for permission to acquire the Affton Bank stock.

(3) That the Reserve Bank, in approving MFC’s acquisition of the Affton Bank stock, failed to make a factual determination as to whether or not the Affton Bank would be operated as a de facto branch of the Manchester Bank.

(4) That the Affton Bank will be operated as a de facto branch of the Manchester Bank, in violation of Missouri law and 12 U.S.C. § 36(c).

We review these contentions seriatim.

(1) The Bank Holding Company Act of 1956, as amended, 12 U.S.C. § 1841 et seq., inter alia, regulates the acquisition of assets by bank holding companies. Section 3(a)(3) of the Act requires that the bank holding companies obtain approval from the Board prior to obtaining ownership or control of stock in any “bank” if, as here, the acquisition will result in its owning in excess of five percent of that bank’s voting shares. 12 U.S.C. § 1842(a)(3). The petitioners argue that because the Bank Holding Company Act defines “bank” in terms of an existing operational institution, 12 U.S.C. § 1841(c), the Board was without jurisdiction to approve MFC’s acquisition of the proposed, but not yet operating, Affton Bank.

We reject this contention. In doing so, we note that the Supreme Court in Whitney Nat. Bank v. Bank of New Orleans & Trust Co., 116 U.S.App.D.C. 285, 323 F.2d 290 (1963), rev’d on other grounds, 379 U.S. 411, 417, 85 S.Ct. 551, 555, 13 L.Ed.2d 386 (1965), stated:

“The Bank Holding Company Act of 1956 prohibits a bank holding company from acquiring ownership or control of a national bank, new or existing, without the approval of the Federal Reserve Board. * * (Emphasis added.)

See also, First National Bank in Billings v. First Bank Stock Corp., 306 F.2d 937 (9th Cir. 1962).

Moreover, we note that the Board has historically construed the statute as allowing it to approve the acquisition of new banks by bank holding companies, and that it approved one hundred seven such acquisitions between 1960 and 1972. The construction is, in our view, reasonable and, accordingly, we give great weight to it. See, Investment Company Institute v. Camp, 401 U.S. 617, 626-627, 91 S.Ct. 1091, 28 L.Ed.2d 367 (1971).

(2) The petitioners’ contention that the Comptroller improperly delegated his chartering authority to the Board by conditioning the grant of the “certificate of authority to commence business” upon subsequent approval by the Board of MFC’s request for permission to obtain the Affton Bank stock is without merit. The applicable statute requires that the identity of the shareholders in a proposed bank be set out in the application for a charter. 12 U.S.C. § 22. Moreover, in granting the charter, the Comptroller is obligated to determine that the aforementioned condition, among others, is met. 12 U.S.C. § 26. Accordingly, where the prospective shareholder must also gain approval of the Board to acquire the stock, it is necessary for the Comptroller to condition the granting of the charter on subsequent approval of the acquisition by the Board. The Comptroller had independently made his determination as to the identity of the shareholders and, in our view, the “condition” does not represent an unlawful delegation of this duty. It merely insures that his determination will be carried out.

(3) The petitioners contend that the Reserve Bank, in considering MFC’s application for prior approval, did not examine the facts to determine whether or not the Affton Bank would be operated as a de facto branch of the Manchester Bank. They argue that historically the Board has maintained that such an examination is not required, and they emphasize that the record indicates that the Reserve Bank followed the Board’s traditional practice here. We agree.

The parties agree that Missouri is a unit bank state which, by law, prohibits branch banking. They also agree that in view of the Supreme Court’s decision in Whitney, the Board may not approve a bank holding company’s application to acquire stock of a bank in a unit bank state if the bank will, as a practical matter, be operated as a branch. See, Commercial Nat. Bank of Little Rock v. Board of Gov., 451 F.2d 86, 89 (8th Cir. 1971). The Board maintains that the Reserve Bank examined this issue in the instant case and found that the proposed acquisition represented a bona fide holding company operation and would not be operated as a branch.

Our review in this ease is largely governed by the Bank Holding Company Act. Section 9 of the Act provides that review may be obtained in this Court. 12 U.S.C. § 1848. The statute defines the extent of our jurisdiction and requires that “[t]he findings of the Board as to the facts, if supported by substantial evidence, shall be conclusive.” Implicit in this later command is a requirement that the Board make findings of fact to facilitate our review. They have done so here, and it is to those findings and the record which we must look to determine whether or not the Board has decided that the Affton Bank would not be operated as a branch of the Manchester Bank.

The Board points out that the Reserve Bank, acting under delegated authority, approved MFC’s application with the written objections of the petitioners before it. It emphasizes that the Reserve Bank specifically found that “consummation of the proposal would be in the public interest” and argues that this finding could not have been made if the Reserve Bank had found the Affton Bank to be a branch. While under some circumstances it might be proper for a reviewing court to assume that this finding indicates that the Board did examine the facts to determine if de facto branching would result, such an assumption would not be proper here. This is true because here the record indicates that an appropriate examination was not made.

We are driven to this conclusion by a letter of June 12, 1972, written by the Reserve Bank’s Vice President, Harold E. Uthoff, to the petitioners’ attorney. There, Mr. Uthoff made the following statement explaining the Reserve Bank’s disposition of the petitioners’ objection:

“Careful consideration was given to comments contained in your formal protest dated November 16, 1971 in which it was contended that the laws of Missouri clearly prohibit branch banking. On several occasions in the past the Board of Governors has considered the question of whether the existence of restrictive or prohibitive branching laws are a ban to approval of a proposed bank holding company acquisition and has rejected such contention for reasons cited in the matter of Application of First Arkansas Bankstock Corporation, Little Rock, Arkansas (1970 Federal Reserve Bulletin, page 779).” (Emphasis added:)

It is evident from this statement that the Reserve Bank was aware of the petitioners’ de facto branch argument. However, it chose to dispose of the contention by reference to a prior analogous ease decided by the Board. Thus, reference that that prior case is necessary to ascertain the extent to which the de fac-to branch issue was considered. The applicable portion of that decision reads as follows:

“ * * * The Protestants were reminded at the oral presentation that the Board has, on several occasions, taken the position that a State’s restrictive branch banking laws do not, in the light of the legislative history of the Act, provide guidance with respect to the Board’s responsibilities in considering an application to form or expand a bank holding company in such State. (See, Application of Tennessee Financial Corporation, 1969 Federal Reserve Bulletin, 160,161, and cases there cited.) The Board here reaffirms that position. * * * ” (Emphasis added.)

First Arkansas Bankstock Corporation, Little Rock, Arkansas, 1970 Federal Reserve Bulletin 778, 779.

In Application of Tennessee Financial Corporation, 1969 Federal Reserve Bulletin 160, 161, the Board made a similar statement to that quoted from First Arkansas and gave the following citations in support of that statement:

(a) Application of Farmers and Mechanics Trust Company, Childress, Texas, 1960 Federal Reserve Bulletin 14, 16;

(b) Application of Denver U. S. Ban-corporation, Inc., Denver, Colorado, 1963 Federal Reserve Bulletin 1518,1527;

(c) Application of First Colorado Bankshares, Inc., Englewood, Colorado, 1963 Federal Reserve Bulletin 1646, 1651.

Keeping in mind the fact that the Reserve Bank rejected the petitioners’ contention by relying on the Board’s prior decision in First Arkansas, which in turn specifically relied on the reasoning given in the above cited Board decisions, we now review those decisions.

(a) Farmers and Mechanics Trust Company. There, the Board stated:

“ * * * Thus, notwithstanding proposals made on the floor of the Congress regarding the relation of State branch banking laws to holding company expansion, the existence in a particular State of a prohibition against branch banking cannot be weighed as an adverse consideration by the Board in exercising its judgment on a holding company’s application to acquire stock of a bank in that State.” (Emphasis added.)

1960 Federal Reserve Bulletin at 16.

(b) Denver U. S. Bancorporation. There, the Board reaffirmed and expanded the principle stated in Farmers and Mechanics Trust Company:

“The Board finds inapplicable to its statutory functions under Section 3 of the Bank Holding Company Act both the reasoning and holding in the Bank of New Orleans case. Accordingly, it believes its earlier position in the Farmers and Mechanics Trust Company matter to be consistent with controlling law and precedent for the Board’s present action in deciding the bank holding company application now before it.”

1963 Federal Reserve Bulletin at 1527.

(c) First Colorado Bankshares. There, the Board stated:

“* * * [T]he existence of a State statutory prohibition against branch banking, as in Colorado, cannot be weighed as an adverse consideration by the Board in its exercise of judgment on an application by a bank holding company to acquire stock of a bank in that State. The Board has considered the point * * * that the Board’s position should be reconsidered in the light of a recent decision by the United States Court of Appeals for the District of Columbia in Saxon, Comptroller of the Currency v. Bank of New Orleans and Trust Company et al., 116 U.S.App.D.C. 285, 323 F.2d 290, decided August 14, 1963. * * * The Court’s ultimate decision was premised upon a specific finding that, in its organization, financing, management, and operation, the new national bank was to all intents and purposes a branch of an existing national bank.
“The Board finds inapplicable to its statutory functions under Section 3 of the Bank Holding Company Act both the reasoning and holding in the Bank of New Orleans case. Accordingly, it believes its earlier position in the Farmers and Mechanics Trust Company matter to be consistent with controlling law, and precedent for the Board’s present action in deciding the bank holding company application now before it.”

1963 Federal Reserve Bulletin at 1651.

A close reading of these and other Board decisions reveal that the standards applied by it in reviewing branching challenges are vague and differ somewhat with each decision. Consequently, it is difficult to precisely determine the Board’s position on the issue before us. However, by specifically rejecting the reasoning and holding of the D.C. Circuit’s Whitney decision, the Board made it clear in Denver U. S. Bancorporation and First Colorado Bankshares that it was of the view that it need not examine the facts to determine if, as a practical matter, the acquisition of a bank by a bank holding company would result in the creation of a branch bank. That position, of course, is contrary to current law, and the Board has acknowledged that fact on this appeal. Yet, as was demonstrated above, the Reserve Bank’s rejection of the petitioners’ de facto branching argument in the instant case was ultimately based in part on these two Board decisions. Thus, contrary to the assertions made in the Board’s brief and oral argument, we are compelled to conclude that the Reserve Bank failed to examine the facts to determine if the Affton Bank would be a de facto branch of the Manchester Bank.

The Board argues that this conclusion is inconsistent with our affirmance of its First Arkansas decision in Commercial Nat. Bank of Little Rock v. Board of Gov., supra. We disagree. The principal issue in Little Rock was whether a holding company operation per se inevitably constituted branch banking. We held that it did not, but stated that de facto branch banking was prohibited in Arkansas even if done through a holding company structure. We went on to hold that the record did not reveal a violation of the branch banking laws of that State. We were not squarely faced there with the issue raised here — viz., whether the Board failed to consider if a de facto branch would be created. If we had been faced with the question, we would have answered it in the same way as we do here, assuming there was nothing further in that record on this issue.

(4) In view of our holding that the Reserve Bank failed to consider whether the Affton Bank would be a de facto branch of the Manchester Bank, we feel that it would be improper for us to go to the merits of the matter. The Board must make the initial determination of the issue on its merits. Accordingly, consistent with the dictates of 12 U.S.C. § 1848, we remand this case to the Board.

In reconsidering this case, the Board shall follow the guidelines laid down by this Court in Commercial Nat. Bank of Little Rock v. Board of Gov., supra, 451 F.2d at 89-90.

The petitioners did not initially ask for a stay of the Board’s approval of MFC’s acquisition of the Affton Bank stock, and we understand that the Aff-ton Bank is currently operating as a subsidiary of MFC. It can continue to do business pending review by the Board.

Remanded for further review consistent with this opinion.

      . The Manchester Bank has 220,000 shares outstanding. All but 1,280 of these shares are now owned by MFC. Eight hundred fifty of the shares not owned by MFC are held by the seventeen directors of the Manchester Bank as “director qualifying shares.” Four hundred thirty shares are owned by persons who did not exchange their Manchester Bank stock for stock in MFC.

      . The Affton Bank is located in Affton, Missouri, an unincorporated area of South St. Louis County.

      . The petitioners had initially informed the Board of their objections in a letter of November 16, 1971.

      . The propriety of this delegation of authority is not challenged here.

      . This finding was made in the Reserve Bank’s letter of June 12, 1972, to MFC granting approval to MFC’s proposed acquisition of the Affton Bank stock. The letter was written over the signature of Harold E. Uthoff, Vice President of the St. Louis Federal Reserve Bank. A similar finding was made by Carrold L. Jack, Investigating Assistant Examiner, in his staff report to Mr. Uthoff. Earlier in this same staff report, Mr. Jack indicated that the petitioners “believe this acquisition to be in violation of Missouri State branch banking laws, notwithstanding an Opinion by the Attorney General of the State to the contrary.” Mo.Atty. Gen.Opinion No. 375 (July 27, 1971). There, the Missouri Attorney General surmised that:
      “ * * * [t]he Missouri courts would follow the cases from other jurisdictions in holding that mere ownership by a holding company of controlling stock holdings in several banks or trust companies, does not constitute illegal branch banking. * * * ”
      However, the opinion does not discuss the de facto branch issue.

      . The Whitney decision is referred to by its companion’s case name, Saxon, Comptroller of the Currency v. Bank of New Orleans and Trust Company et al., in these decisions of the Board. We note that the Supreme Court reversed the Court of Appeals’ decision in Whitney on procedural grounds and did not reach the merits. However, the Supreme Court did recognize that it would be improper for the Board to approve a bank holding company’s acquisition if in fact a branch bank would result. Whitney Nat. Bank v. Bank of New Orleans & Trust Co., 116 U.S.App.D.C. 285, 323 F.2d 290 (1963), rev’d on other grounds, 379 U.S. 411, 418, 85 S.Ct. 551, 13 L.Ed.2d 386 (1965). See, Commercial Nat. Bank of Little Rock v. Board of Gov., 451 F.2d 86, 89 (8th Cir. 1971).


source: Caselaw Access Project

author: ALFRED T. GOODWIN, Circuit Judge:

license: Public Domain

text:
    Victoria Ann LIDIE et al., Appellants, v. STATE OF CALIFORNIA et al., Appellees.
    No. 26845.
    United States Court of Appeals, Ninth Circuit.
    April 10, 1973.

      Daniel S. Brunner (argued), Legal Aid Foundation of Long Beach, San Pedro, Cal., for appellants.
    Edward M. Belasco, Deputy Atty. Gen. (argued), Lee D. Barker, Deputy County Counsel (argued), Evelle J. Younger, Atty. Gen,, John D. Maharg, County Counsel, Los Angeles, Cal., for appellees.
    Before BROWNING and GOODWIN, Circuit Judges, and EAST, District Judge.

       The Honorable William G. East, United States District Judge for the District of Oregon, sitting by designation.

   ALFRED T. GOODWIN, Circuit Judge:

Plaintiffs, representing a class of applicants for food stamps, brought action against the State of California, the County of Los Angeles, and certain named officials, seeking declaratory and injunctive relief and damages.

The state participates in the Federal Food Stamp program. The food stamp legislation required state plans submitted to the Secretary of Agriculture to provide that “the State agency shall undertake the certification of applicant households in accordance with the general procedures and personnel standards used by them in the certification of applicants for benefits under the federally aided public assistance programs * * 7 U.S.C. § 2019(e)(2) (1970), subsequently amended, Act of October 30, 1972, Pub.L. No. 92-603, § 411(d), 86 Stat. 1491.

Department of Health, Education and Welfare regulations required benefits under the federally aided public assistance programs to be provided within 30 days of the application. H.E.W. Handbook of Public Assistance Administration, Part IV, 2300(b). • Plaintiffs assert that state and local officials had not followed this timetable in the administration of the food stamp program.

I. JURISDICTION

The first question is whether the district court, and therefore this court, has jurisdiction of the action. Plaintiffs relied for jurisdiction on 28 U.S.C. § 1343 and 42 U.S.C. § 1983. Because they did not allege the deprivation of any constitutional rights, their complaint raised in acute form the question left unanswered in King v. Smith, 392 U.S. 309, 312 n. 3, 88 S.Ct. 2128, 20 L.Ed.2d 1118 (1968): whether 28 U.S.C. § 1343 gives the federal courts jurisdiction to hear purely statutory claims.

In a supplementary brief, plaintiffs have requested leave to amend their complaint in this court so that it will assert the deprivation of a constitutional right. They also claim jurisdiction under 28 U.S.C. § 1337. Although amendment in the court of appeals is unusual, and not a practice to be encouraged, we believe that a substantial saving in judicial time and labor justifies the amendment in this case. 28 U.S.C. § 1653; Barrow Development Co. v. Fulton Insurance Co., 418 F.2d 316, 12 A.L.R.Fed. 420 (9th Cir. 1969). We grant leave to amend.

The amended complaint states facts establishing jurisdiction under the “Act of Congress regulating commerce” provision of § 1337. The food stamp program has been held to be such an act. Moreno v. United States Department of Agriculture, 345 F.Supp. 310, 313 (D.D.C.1972), prob. juris, noted, 409 U.S. 1036, 93 S.Ct. 526, 34 L.Ed.2d 485 (1972); Murphy v. Colonial Federal Savings and Loan Ass’n, 388 F.2d 609 (2d Cir. 1967). We need not reach the claim that federal jurisdiction is based upon a denial of a constitutional right.

II. RIGHT TO RELIEF

The district court dismissed the action, holding that: (1) the defendants had violated no federal law in their processing of food stamp applications; (2) there was no actual controversy, because those plaintiffs entitled to receive food stamps had gotten them; (3) the plaintiffs had not established a class of persons entitled to relief, for they had not shown that the defendants had in any case wrongfully failed to provide food stamps within 30 days; and (4) the plaintiffs had failed to show that any of them came within the class which they sought to establish.

The district court’s dismissal was error. The action is not moot if either the class action for an injunction or the demand for damages survives. Powell v. McCormack, 395 U.S. 486, 89 S.Ct. 1944, 23 L.Ed.2d 491 (1969); Norman v. Connecticut Board of Parole, 458 F.2d 497 (2d Cir. 1972). There is a live issue regarding plaintiffs’ claim for damages.

At the time this action was brought, the 30-day rule was binding on the Secretary of Agriculture. The 30-day period ran from the date the agency received an' expression of the applicant’s desire to receive aid.

If the food stamp program were run by the Department of Health, Education and Welfare, the 30-day rule would be mandatory. Rodriguez v. Swank, 318 F.Supp. 289 (N.D.Ill., 1970), aff’d per curiam, 403 U.S. 901, 91 S.Ct. 2202, 29 L.Ed.2d 677 (1971); Like v. Carter, 448 F.2d 798 (8th Cir. 1971), cert. denied, 405 U.S. 1045, 92 S.Ct. 1309, 31 L.Ed.2d 588 (1972). The 30-day rule was one of the “Requirements for State Plans” in the H.E.W. Handbook, Part IV, § 2200(b)(3). The regulations which stated that the 30-day period terminated when “the applicants * * * receive their first assistance check * * * ” and which limited the circumstances under which the state agency could delay for more than 30 days were among the “Criteria for the Administration of the Plans,” H.E.W. Handbook, Part IV, § 2300. While no “assistance checks” are involved in the food stamp program, the equivalent would appear to be the “Authorization to Purchase” card given to recipients rather than the mere submission of recipients’ names to the “District Food Stamp Budget Unit.”

At the time the action was commenced, the Secretary of Agriculture did not purport to vary the H.E.W. standards or adjust them to the needs of his program, but, by a regulation repeating the statutory language referring to the H.E.W. standards, adopted those standards as his own. 7 C.F.R. § 1601.1(g) (1970). Under the regulation, we hold that an applicant eligible for stamps was entitled to receive them within 30 days of his application.

III. SCOPE OF REMEDY

But the abstract right to relief, upon a proper showing, does not end the matter. Plaintiffs are not entitled to the injunctive relief they seek, for two reasons: (1) at the time this action was brought the individual plaintiffs were not proper representatives of a class; and (2) changes in the relevant regulations since the action was filed have deprived the plaintiffs’ contentions of their original force.

The claims and defenses of these so-called representative parties are not typical of the claims and defenses of the alleged class within the meaning of Fed.R.Civ.P. 23(a)(3). Given the many disputed factual issues peculiar to individual plaintiffs, a class action is not warranted under Fed.R.Civ.P. 23(b)(3). The H.E.W. regulation relied on by the plaintiffs contemplates that the 30-day time limit will be exceeded “in unusual situations * * * in a small percentage of cases * * H.E.W. Handbook, Part IV, § 2300(b)(6). The situations of the original plaintiffs, Cooley, Lidie, and Jordan, appear to be unusual. Cooley was not eligible for food stamps at all, because he ate a majority of his meals in restaurants. Lidie and Jordan had been on the food stamp rolls, but were dropped for failure to use the stamps. The delay they complain of was in their attempt at recertification. There were also many disputed factual issues concerning each of their applications.

Nor could the plaintiffs’ “Motion to Amend” have cured their problem. The motion was actually a motion to intervene by several additional plaintiffs. Motions to intervene are liberally granted in mootness situations to avoid the problem of the granting of selective relief by defendants and the avoidance of the “dismissal or compromise” provisions of Fed.R.Civ.P. 23(e). But where the original plaintiffs were never qualified to represent the class, a motion to intervene represents a back-door attempt to begin the action anew, and need not be granted. Washington v. Wyman, 54 F.R.D. 266 (S.D.N.Y.1971).

The heart of the class action is the preponderance of questions of law and fact common to the plaintiffs seeking to assert the rights of the alleged class. The new parties sought to be interjected into the action could not enhance the common cause, and would add to the idiosyncratic problems presented by the original plaintiffs. The class action was correctly denied.

Even if there had been a proper basis for proceeding as a class action, there is a further reason for denying injunctive relief in this case.

During the pendency of this action, the Secretary of Agriculture, pursuant to his authority to issue regulations and to “formulate and administer” a food stamp program, 7 U.S.C. § 2013, published regulations which accepted in part and rejected in part suggested reforms similar to the claims of the plaintiffs in this case. 7 C.F.R. §§ 270, 271 (1972). Also during this litigation, the Food Stamp Act was amended to eliminate the requirement that the Secretary of Agriculture’s processing procedures be the same as those of the Department of Health, Education and Welfare. Act of October 30, 1972, Pub.L. No. 92-603, § 411(d), 86 Stat. 1491. The new regulations of the Secretary of Agriculture recognize the 30-day time limit, but require a more formal application than did the old H.E.W. regulations and require only notification, not assistance, to be given after 30 days. Because of the “necessarily forward looking nature of any injunctive relief,” DeBremaecker v. Short, 433 F.2d 733, 735 (5th Cir. 1970), plaintiffs would now have to show that these new rules are invalid in order to obtain an injunction requiring stamps to be given 30 days after application. Cf. Thorpe v. Housing Authority of Durham, 393 U.S. 268, 89 S.Ct. 518, 21 L.Ed.2d 474 (1969). Upon remand, the prayer for injunctive relief should be deleted, unless plaintiffs make such a showing.

IY. STATE LIABILITY

Defendants argue that because the Secretary had approved their plan an action will not lie against the state. The defendants also argue that because the food stamp program’s standards are derived from H.E.W. regulations this action is, essentially, a dispute between two federal agencies. However, federal approval of .the state statutory and regulatory scheme does not render the state’s administration of its program any less “state action” within the meaning of 42 U.S.C. § 1983. There was agency approval in Rosado v. Wyman, 397 U.S. 397, 90 S.Ct. 1207, 25 L.Ed.2d 442 (1970), and in King v. Smith, swpra,, but an action against a state official was still a proper way to test the legality of the state plan.

Plaintiffs’ claims for money damages for delay raise the Eleventh Amendment problem on which the circuits have disagreed. Jordan v. Weaver, 472 F.2d 985 (7th Cir., 1973); Rothstein v. Wyman, 467 F.2d 226 (2d Cir. 1972). However, defendants did not assert this defense in the district court. It is clear that the state’s sovereign immunity, if it exists, can be waived. By not raising the defense at an appropriate time, the state waived whatever protection, if any, the Eleventh Amendment might have provided in this case. We need not decide now whether the Second Circuit or the Seventh Circuit correctly resolved the Eleventh Amendment issue.

We remand the action to the district court for further proceedings to determine whether the alleged delay was justified by the special circumstances presented by each of the individual claims. If a particular delay was not justified, a successful plaintiff will be entitled to restitution measured by an issue of stamps or a payment of cash in the value of the stamps he would have received during the period of any wrongful delay.

Reversed and remanded.


author: KALODNER, Circuit Judge.

text:
    CAPITOL BUS COMPANY, t/a Trailways of Pennsylvania v. BLUE BIRD COACH LINES, INC., et al. Appeal of BLUE BIRD COACH LINES, INC. and Aetna Casualty and Surety Company, 71-2005. Appeal of AMERICAN FIDELITY FIRE INSURANCE COMPANY, 71-2006.
    Nos. 71-2005, 71-2006.
    United States Court of Appeals, Third Circuit.
    Argued Dec. 1, 1972.
    Decided May 14, 1973.

      James K. Thomas, Joseph P. Hafer, Metzger, Hafer, Keefer, Thomas & Wood, Harrisburg, Pa., for appellants in No. 71-2005 and cross-appellees in No. 71-2006.
    Frederick W. Andrews, Pannebaker, Andrews & Yost, Harrisburg, Pa., for cross-appellant in No. 71-2006 and as appellee in No. 71-2005.
    Clyde W. McIntyre, McNees, Wallace & Nuriek, Harrisburg, Pa., for appellee in both cases.
   OPINION OF THE COURT

Before KALODNER, ADAMS and HUNTER, Circuit Judges.

KALODNER, Circuit Judge.

In this diversity action, tried to the District Court upon stipulated facts, the appellant insurance companies were held liable to the appellee Capitol Bus Company, t/a Trailways of Pennsylvania (“Trailways”), for $13,700 damages to one of its buses on November 8, 1969, while it was being operated in the franchise area of the appellant Blue Bird Coach Lines. (“Blue Bird”), under an “Equipment Lease Agreement” (“Agreement”), designed to provide for the continuous carriage of passengers, without change of buses, over the franchise areas of the five bus lines party to the Agreement. The appellant American Fidelity Fire Insurance Company (“American”) was the property damage insurance carrier for Trailways and the appellant Aetna Casualty and Surety Company (“Aetna”) was Blue Bird’s property damage insurance carrier.

The bus lines party to the Agreement participated in operating a scheduled run from Washington, D.C. to Erie, Pennsylvania through their franchise areas.

Trailways’ franchise area extends from Washington, D.C. to Elmira, New York. Blue Bird’s franchise area extends from Corning, New York to Jamestown, New York.

Two drivers, working in eight-hour shifts, were employed in the run; one from Washington, D.C. to Olean, New York, and the other from Olean to Erie, Pennsylvania, and return to Olean.

Trailways furnished the driver on the Washington to Olean shift. Blue Bird furnished the driver on the Olean to Erie, and return to Olean, shift.

Trailways paid its driver his mileage pay rate on his Washington to Olean shift. It also paid incidental Social Security taxes, federal and Pennsylvania unemployment and Workmen’s Compensation. Blue Bird reimbursed Trailways for use of Trailways’ driver on a nonprofit basis at the rate of 13 cents per mile from the driver’s entry into Blue Bird franchise area at Corning until the end of his shift at Olean.

Blue Bird received all the revenue benefits from the operation of the bus by the Trailways driver between Corning and Olean. It paid Trailways 18 cents per mile for use of the bus after it entered its franchise area at Corning, in consonance with Paragraph 11 of the Agreement which provided that “[e]ach operating carrier agrees to pay the owning carrier of buses leased hereunder a rental of eighteen cents (180) for each mile that such leased buses are operated by such operating carrier.” (emphasis supplied.)

The bus was damaged when it ran off the road while being driven by the Trailways driver at Andover, New York. Andover lies between Corning and Olean, Blue Bird franchise area.

The question here presented is whether American, Trailways’ property damage insurance carrier, or Aetna, Blue Bird’s property damage insurance carrier, is liable for payment of the damages sustained by the bus. American contends it is not liable since in its view Blue Bird was the “operating carrier” of the bus when it was damaged, and American’s policy provides that its coverage “shall cease while owned buses are being operated by other bus companies under . . . interchange agreements.” Aetna contends “Blue Bird, Aetna’s insured, was not an operating carrier within the meaning of the Equipment Lease Agreement,” and that the coverage of its policy specifically extends “only with respect to the terms and conditions of the equipment lease agreement.” Aetna further contends that “[t]he principles of agency and re-spondeat superior also indicate that the Trailways operator remained in the employ of its [sic] original master and Blue Bird is not responsible for the damage to the bus.”

As earlier stated, the District Court ruled that both American and Aetna were liable under their policies for payment of the damage to the bus. It based its ruling on its holding that the Trailways driver was the “servant” of both Trailways and Blue Bird when the bus was damaged and thus the two bus lines were “operating carriers” under the Agreement which made an “operating carrier” liable for damage to a bus.

The District Court resorted to general agency principles in ruling that the Trailways driver was the “servant” of the two bus lines, citing Dickerson v. American Sugar Refining Co., 211 F.2d 200 (3 Cir. 1954); Restatement (Second) Agency §§ 226, 227 (1957); Annot., 17 A.L.R.2d 1388 (1951).

The District Court erred when it resorted to general agency principles and it compounded its error when it premised its holding that both bus lines were “operating carriers” on its common servant finding.

We are here concerned solely with rights and liabilities of parties spelled out and fixed by the terms of a contract to which they are party.

Where a contract relating to leasing of equipment spells out and fixes the liabilities of the lessor and lessee with respect to damages sustained by the leased equipment the contract alone must be looked to, and general agency principles are inapplicable. The fact that general agency principles would be applicable in determining the liability of the lessor and lessee with respect to damages suffered by a third party in the use of the equipment is irrelevant to the determination of the rights and liabilities of the contracting parties inter se.

What has been said brings us to the Agreement which was executed May 15, 1969, some six months prior to the happening of the bus accident.

The Agreement provides in relevant part:

“1. PURPOSE
“The purpose of this agreement is to provide for the interchange of motor vehicle equipment between the parties hereto for operation in through service without change of buses, over the authorized operating routes of the respective parties.
“2. DEFINITIONS
“(a) ‘Owning Carrier’ as used herein means the status assumed by any party hereto when it permits any bus owned by it to be used and operated by any of the other parties hereto under and by virtue of this agreement.
“(b) ‘Operating Carrier’ as used herein means the status assumed by any party hereto when such party takes, uses and operates the bus of another party hereto under and by virtue of this agreement.
“(c) Operation of lease equipment shall be deemed to have begun when delivery of a bus leased hereunder is accepted by the driver, operator or other authorized representative of any operating carrier, and shall be deemed to continue until delivery of said leased bus is accepted by the driver, operator or other authorized representative of another party hereto.
“4. EQUIPMENT AND USE
“Each of said parties hereto shall furnish for use and operation by all of the parties hereto the number of buses of late model and of uniform make and design shown opposite its name in Schedule A attached. . . . Each of the said parties agrees to take, use and operate said equipment on its respective portion of said through routings in order to maintain the through schedule described in Schedule B attached. All expense for operating said buses shall be borne by the owning carrier, except for the compensation of operators or drivers; public liability insurance; highway, mileage, use and franchise taxes and highway, bridge, ferry, tunnel and terminal tolls and charges, which shall be borne by the operating carriers. .
“5. DRIVERS
“Each operating carrier shall furnish competent operators or drivers to operate buses leased by it hereunder.
“7. DAMAGES TO LEASED BUSES
“Whenever any leased bus is damaged by accident or collision, except loss or damage occasioned by fire, all costs of repairs shall be borne by the operating party in whose possession said bus was held or by whom such bus was being operated at the time of such damage. . . .
“9. PUBLIC LIABILITY INSURANCE
“Each operating carrier shall be solely and fully responsible for the op eration by it of leased buses and to that end agrees to indemnify and save harmless each of the other parties hereto from and against any and all claims, suits, or judgments for personal injuries, including death, and damage to or loss or destruction of property resulting from operation by such operating carrier. .
“11. RENTAL
“Each operating carrier agrees to pay to the owning carrier of buses leased hereunder a rental of eighteen cents (18^) for each mile that such leased buses are operated by such operating carrier. .
“12. RETENTION OF INDIVIDUAL RESPONSIBILITY AND RIGHTS
“Each operating carrier retains full responsibility and authority for the conduct of its common carrier service over its respective portion of the through routings. No party shall have any liability or expense due to the action of or operation by any other party except as specifically provided herein and in no way shall any party hereto be considered to have surrendered or transferred any of its rights to any other party.” (emphasis supplied).

In construing the Agreement we must give effect to these well-settled principles:

A contract is to be considered as a whole, and, if possible, all its provisions should be given effect; while a contract’s provisions must be interpreted with reference to the whole the specific controls the general; and a contract should be construed so as to give effect to its general purpose.

A contract must be interpreted in light of the meaning which the parties have accorded to it as evidenced by their conduct in its performance.

Applying the principles stated to the instant case, we are of the opinion that (1) standing alone, and independently so, the Agreement, by its terms, constituted Blue Bird the “operating carrier” of the bus when it was damaged while being operated in Blue Bird’s franchise area; and (2) Blue Bird’s course of conduct in the performance of the Agreement demonstrated that it interpreted the Agreement as constituting it the “operating carrier” of the bus when it was damaged. On the score of the latter holding we need only point out that it is undisputed that Blue Bird paid Trailways 18 cents per mile rental for the bus from its entry into Blue Bird’s franchise area in consonance with Paragraph 11 of the Agreement which provided “[e]ach operating carrier agrees to pay to the owning carrier of buses leased hereunder a rental of eighteen cents (180) for each mile that such leased buses are operated by such operating carrier,” and that Blue Bird also paid Trailways 13 cents per mile for the driver’s wages while the bus was being operated in Blue Bird’s franchise area in consonance with Paragraph 4 of the Agreement which requires the “operating carrier” to pay “the compensation of operators or drivers.”

Our view that the Agreement, standing alone, must be construed as constituting Blue Bird the “operating carrier” of the bus when it was damaged while being operated in Blue Bird’s franchise area is premised on these considerations :

The Agreement, considered as a whole, was designed, as earlier stated, to provide for the continuous carriage of passengers, without change of bus, over the franchise areas of the five signatory parties.

In implementation of its design, the Agreement defines an “operating carrier” as one which “takes, uses and operates the bus of another party” in its franchise area, and spells out the scope of authority and liabilities of the “operating carrier” with respect to use of the leased bus and the terms and conditions of the rental.

Critical to the issue whether Blue Bird was an “operating carrier” when the bus was damaged in its franchise area is the provision of the Agreement that “\_e\ach of the said parties agrees to take, use and operate said equipment on its respective portion of said through routings in order to maintain the through schedule. . . . (emphasis supplied).

The force of this provision is that the bus was delivered to, and accepted by, Blue Bird when it entered its franchise area.

Further critical to the issue of Blue Bird’s liability for payment of the damages to the bus in its franchise area are the provisions that (1) “[w]henever any leased bus is damaged by accident or collision . . .all cost of repairs shall be borne by the operating party in whose possession said bus was held or by whom such bus was being operated at the time of such damage. . . . ”; (2) “[e]ach operating carrier shall be solely and fully responsible for the operation by it of leased buses. . . . ”; (3) “[e]ach operating carrier retains full responsibility and authority for the conduct of its common carrier service over its respective portion of the through routings.” (emphasis supplied).

It may be noted that the District Court held that the Agreement, by its terms, constituted Blue Bird an “operating carrier” at the time the bus was damaged.

There is no basis in the Agreement for the District Court’s finding that Trailways was also an “operating carrier,” inasmuch as the bus was not operating in Trailways’ franchise area when it was damaged. It made that finding on its theory that the bus driver at the time of the accident was the “common servant” of both Trailways and Blue Bird under general agency principles, which as we earlier stated, was erroneous.

In accordance with what has been said the Order of the District Court will be vacated and the cause remanded with directions to proceed in accordance with this Opinion.

      . Cf., McGill v. Bison Fast Freight, Inc., 245 N.C. 469, 96 S.E.2d 438, 442 (1957).

      . J. E. Faltin Motor Transportation, Inc. v. Eazor Express, Inc., 273 F.2d 444, 445 (3 Cir. 1959) ; Empire Properties Corporation v. Manufacturers Trust Co., 288 N.Y. 242, 43 N.E.2d 25 (1942) ; Pritch-ard v. Wick, 406 Pa. 598, 178 A.2d 725 (1962) ; Restatement, Contracts §§ 235 (c), 236(b) and (c) (1932) ; Williston on Contracts, Third Edition §§ 618, 619 (1961).

      . Philips Electronics & Pharmaceutical Industries Corp. v. Leavens, 421 F.2d 39, 45 (3 Cir. 1970) ; American Cyanamid Company v. Ellis-Foster Company, 298 F.2d 244, 246 (3 Cir. 1962) ; Pittsburgh Railways Company v. Equitable Life Assurance Society of the United States, 288 F.2d 640, 642 (3 Cir. 1961) ; Maloney v. Glosser, 427 Pa. 548, 552, 235 A.2d 607, 609 (1967) ; Heilwood Fuel Co., Inc. v. Manor Real Estate Company, 405 Pa. 319, 328, 175 A.2d 880, 884 (1961) ; Restatement, Contracts § 235(e) (1932).
      “An important aid in the interpretation of contracts is the practical construction placed on the agreement by the parties themselves.” Williston on Contracts, supra note 2, § 623, at 789.

      . Paragraph 12 of the “Recommendations of Findings of Facts,” submitted to the District Court and signed by counsel for Blue Bird, Aetna and American, states:
      “At the time of this accident, Blue Bird paid Trailways at the rate of $.18 a mile for the bus under paragraph 11 of the Agreement attached hereto and $.13 a mile for the driver’s wages under a supplemental understanding while the bus was being operated under Blue Bird franchise. The wages of the driver were paid by Trailways.”

      . Agreement, Paragraph 1.

      . Id., Paragraph 2(b).

      . Id., Paragraph 4.

      . This cited provision is dispositive of Blue Bird’s contention that “Blue Bird had not accepted delivery of the bus” within Paragraph 2(c) of the Agreement which provides that “[o]peration of lease equipment shall be deemed to have begun when delivery of a bus leased hereunder is accepted by the driver, operator or other authorized representative of any operating carrier. . . . ” To hold otherwise would be in disregard of the settled rule that provisions of a contract must be construed in light of the totality of the contract’s provisions and stated purpose. Further, the fact that Blue Bird collected revenues derived from operation of the bus from the point it entered its franchise area and paid mileage rental to Trailways from that point and recompensed Trailways for the driver’s use establishes that Blue Bird considered it had accepted delivery of the bus.

      . Id., Paragrapli 7.

      . Id., Paragraph 9.

      . Id., Paragraph 12.


author: IRVING R. KAUFMAN, Circuit Judge:

text:
    EMLE INDUSTRIES, INC., et al., Plaintiff, and GLEN RAVEN MILLS, INC., et al., Plaintiffs in Separate Actions and Appellants, v. PATENTEX, INC., Defendant in All Actions and Appellee, and Burlington Industries, Inc., Former Defendant in Emle Action.
    Nos. 668-673, Dockets 72-2048 to 72-2053.
    United States Court of Appeals, Second Circuit.
    Argued April 3, 1973.
    Decided May 9, 1973.

      Frederic Houston, New York City, for appellant Glen Raven Mills, Inc.; John L. Ryan, New York City, for appellants Knit Products Corp., Bossong Hosiery Mills, Inc., Tower Hosiery Mills, Inc., and Holt Hosiery Mills Inc.; William T. Stephens, New York City, for appellant Alba-Waldensian, Inc. (Otterbourg, Steindler, Houston & Rosen, Pell & Le-Viness, Sullivan & Cromwell, New York City, Arthur O. Cooke, and Cooke & Cooke, Greensboro, N. C., on the brief).
    George T. Mobille, Washington, D. C. (Robert S. Newman, Whitman & Ransom, New York City, George M. Sirilla, Cushman, Darby & Cushman, Washington, D. C., on the brief), for appellee.
    Before KAUFMAN, ANDERSON and OAKES, Circuit Judges.

      . We have jurisdiction to review an order disqualifying an attorney under the doctrine of Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541, 69 S.Ct. 1221, 93 L.Ed. 1528 (1949). See Fleischer v. Phillips, 264 F.2d 515 (2d Cir.), cert. denied, 359 U.S. 1002, 79 S.Ct. 1139, 3 L.Ed.2d 1030 (1959) ; Marco v. Dulles, 268 F.2d 192 (2d Cir. 1969) ; 9 Moore, Federal Practice ¶ 110.13 [10].

   IRVING R. KAUFMAN, Circuit Judge:

We are called upon today to decide a question of acute sensitivity and importance, touching upon vital concerns of the legal profession and the. public’s interest in the scrupulous administration of justice. At issue is the disqualification of David Rabin, Esq., on the ground that his representation of the plaintiffs in the underlying actions below constituted a breach of Canon 4 of the Code of Professional Responsibility, which governs the conduct of lawyers.

The complaints in these actions sought declaratory judgments that patents held by Patentex, Inc., were invalid and unenforceable. The complaints alleged unlawful manipulation and control of Patentex by its part-owner, Burlington Industries, Inc., and charged Burlington with directing Patentex to improperly acquire and illegally use the patents in question to control prices in the yarn processing and knitting industry. Lead counsel for the plaintiffs, and self-acknowledged architect of all but one of the seven complaints in these actions, was David Rabin, a specialist in textile patent litigation. In the years between 1958 and 1962, however, Rabin had represented Burlington in another patent suit, referred to as the Supp-hose case, which also called into question the nature and scope of Burlington’s control over Patentex. Patentex, therefore, moved for Rabin’s disqualification, asserting that Rabin’s present adversarial posture might result in disclosure or conscious or unintentional use of confidential information acquired by him during the Supp-hose litigation. Judge Motley, in the district court, granted the motion, and this appeal followed.

We approach our task as a reviewing court in this case conscious of our responsibility to preserve a balance, delicate though it may be, between an individual’s right to his own freely chosen counsel and the need to maintain the highest ethical standards of professional responsibility. This balance is essential if the .public's trust in the integrity of the Bar is to be preserved. Moreover, we are mindful that ethical problems cannot be resolved in a vacuum. To affirm the order below will, to be sure, deprive plaintiffs of highly qualified counsel of their own choosing and may foreclose Rabin’s participation in future actions brought against Burlington and Patentex. There can be no doubt, however, that we may not allow Rabin to press these claims against Patentex if, in doing so, he might employ information disclosed to him in confidence during his prior defense of Burlington. Such a result would work a serious injustice upon Burlington and Patentex and would tend to undermine public confidence in the Bar. Thus, even an appearance of impropriety requires prompt remedial action by the court. After thorough consideration, we conclude that Rabin’s earlier defense of Burlington against charges that it controlled Paten-tex for illegal purposes precludes him from pressing similar claims in the instant suits. Accordingly, we affirm.

I.

At the outset, it is useful to identify the central characters in this litigation. Burlington Industries Inc., whose executive offices are located in Greensboro, North Carolina, is, we are told, the world’s largest textile company. As such, it is a major force in the yarn processing and knitting industry. Chad-bourn Gotham, Inc., headquartered in Charlotte, North Carolina, is also a primary competitor in this field. These two companies each own fifty percent of the voting stock of Patentex, Inc. According to a Dun & Bradstreet report, Burlington and Chadbourn created Pa-tentex in 1955 “to acquire title [from them] to patents and methods of manufacturing women’s stretch stockings and processing yarns used in their manufacture .... [Patentex] license[d] other hosiery manufacturers under their patents and in turn receive [d] royalties for their use.” Thus, in return for royalty payments, Burlington and Chad-bourn allowed their competitors to employ knitting technology which they had patented.

Lawrence Greenwald was president of Patentex at the time of the Supp-hose litigation, discussed in greater detail below, but is no longer employed by either Patentex or Burlington. Edward Kobos became Assistant to the President and Secretary of Patentex in 1957 and continues to hold these posts today. In 1957, Douglas Orr was assistant general counsel of Burlington and served as chief counsel to Patentex. From 1964 until his retirement in 1971, he was Burlington’s general counsel. Finally, David Rabin is a patent attorney who specializes in textile patents. In addition to both a bachelor’s and a master’s degree in law, his professional background includes a degree in mechanical engineering from Duke University and a period of employment in the United States Patent Office, where he specialized in yarn and knitting technology. His present office is in Greensboro, an area correctly categorized as “the heart of the textile industry.”

Since an understanding of Rabin’s prior involvement with Burlington in the Supp-hose case is essential to consideration of Patentex’s motion to disqualify him from serving as counsel in the pending actions, we now turn to a discussion of these two proceedings.

A. The Prior Action: The Supp-hose Case

The Rabin-Burlington-Patentex nexus was first formed in the Supp-hose case. The origins of that dispute date back to at least January, 1958, when Claussner Hosiery Co., a licensee of Patentex, inquired of Patentex President Greenwald whether it could manufacture hosiery with the same construction as a stretch support stocking then being marketed by Kayser-Roth, Inc. under the trade name “Supp-hose.” After several communications between Patentex and Claussner on this subject, Kobos, Greenwald’s assistant, informed Claussner and certain other Patentex licensees that they could continue to manufacture stretch support stockings under several Patentex patents without infringing Kayser-Roth’s patent. Patentex assured them that pursuant to its license agreement it would defend its licensees against any infringement actions brought against them by Kayser-Roth. Claussner’s primary concern, however, was that Kayser-Roth would commence infringement actions throughout the country against Clauss-ner’s large retail customers, who in turn would threaten to withhold future retail orders unless Claussner defended them. When Claussner sought assurance from Patentex that the latter would defend such “third-party” actions as well, Ko-bos replied, on October 30, 1958, that “we would not be willing to undertake to defend you in the event one of your retail customers were sued, even though you were later voluntarily or involuntarily involved in the suit.”

At this juncture, Claussner turned to Rabin for professional advice. Rabin suggested that the wisest course for Claussner to follow would be to initiate litigation in a forum of its own choosing seeking a declaratory judgment that Kayser-Roth’s patent was invalid. At Claussner’s request, Rabin prepared an appropriate complaint for Claussner and its affiliate, McCallum Hosiery Co. Claussner subsequently consented to joining two other Rabin clients, Triumph Hosiery Mills and Hudson Hosiery Co., as plaintiffs in the action.

After his retention by these four hosiery mills, Rabin met with Orr, at that time Burlington’s assistant general counsel, to discuss Patentex’s attitude toward the impending litigation. Although Orr again rebuffed a request to defend any actions that Kayser-Roth might bring against retail customers of Patentex’s licensees, he indicated that Burlington would be interested in joining the contemplated declaratory judgment action against Kayser-Roth and, accordingly, requested Rabin to represent Burlington as well. According to Rabin, he responded by “explain [ing] to Mr. Orr that [he] was flattered with the invitation [to represent Burlington] but in view of the then pending actions against Burlington and [his] position of representing Claussner, McCallum, and Hudson, [he] would have to decline.” The currently pending actions to which Rabin referred were two infringement actions — both unrelated to the Kayser-Roth matter — which Rabin was prosecuting against Burlington on behalf of Floyd Shoaf, an inventor, and Tight Pat, Inc., owner of an allegedly infringed patent. The conflict concerning Clauss-ner, McCallum, and Hudson to which Rabin alluded was, of course, their potential claims against Patentex based on the indemnity clause in the license agreement. After discussing these matters with Orr, Rabin conferred with Shoaf and representatives of Claussner, McCallum, Hudson, and Tight Pat. Rabin then informed Orr that his clients had consented to his representation of Burlington and that Rabin would do so as long as he maintained “the right to protect and preserve any claims of my various clients with respect to Patentex, Inc.”

Following this ’ agreement, in December, 1958, Rabin filed a complaint against Kayser-Roth and its subsidiary, Alamance Industries, seeking a declaratory judgment that the Supp-hose patent was invalid. In February, 1959, Kay-ser-Roth served its answer, denying that its patent was invalid. In addition, Kayser-Roth asserted a counterclaim, alleging that

The Plaintiff, Burlington Industries, Inc., through its officers and agents, and through Patentex, Inc. . a company which the Plaintiff, Burlington Industries, Inc., actively controls, has individually and in Plaintiffs, actively induced infringement of the aforesaid patent-in-suit concert and cooperation with the other . by said Plaintiffs and others [the Patentex licensees] for the purpose of unlawfully exploiting and destroying Defendants’ property rights in said invention and destroying or adversely affecting Defendants’ United States and foreign business in said invention.

Thus, for the first time, Burlington’s alleged control of Patentex had become an issue in the Supp-hose case. Accordingly, Kayser-Roth took pre-trial depositions of Greenwald, Kobos, and Orr for the purpose of exploring the nature and degree of that control. The thrust of this inquiry is illustrated by the following testimony by Patentex President Greenwald:

Q. How does Patentex communicate with Burlington ?
A. Usually by word of mouth, I guess.
Q. Do you have any written memos or inter-office communications ?
A. I am not much of a writer. People are in the next office — I usually talk to them. I don’t write them notes. I won’t say I never have, but I don’t make a general practice of it.
Q. Do you have any records of communications between Patentex and Burlington relative to the subject matter of this litigation ?
A. Not that I know of.
•X* * * * * -X-
Q. How often does the board of directors of Patentex meet?
A. It’s required by its by-laws to meet once a year and it meets possibly once or twice a year in between.
Q. In connection with the day-today operations of Patentex, who is in charge of that ?
A. I am.
Q. With respect to the policy and decisions and judgments that are taken day-to-day, is that your responsibility?
A. Within limits. If they are policy matters, then I consult the directors.
* * * * * *
Q. Burlington is charged with the duty of managing Patentex, is it not?
A. I believe I elaborated on that once before. That is true but it’s a trust. When I say “it’s a trust”, I mean I am entrusted with the management of it and the decisions and policy are arrived at jointly with Chadbourn-Gotham and Burlington and that I have never taken anything upon myself that I thought could be questioned.

While it is unclear whether Rabin participated in preparatory conferences with anyone other than Greenwald, it is undisputed that Rabin was present as counsel for Burlington at each deposition at which Burlington’s relationship with Patentex was discussed.

Other events raised the issue of Burlington’s control of Patentex in yet another way. Upon receipt of the counterclaim, Rabin sent notice to Patentex, on behalf of his clients, indicating that its licensees had been charged with infringement. In response to Rabin’s letter, Greenwald, in correspondence dated August 18, 1959, called to Rabin’s attention paragraph eleven of the license agreement, which provides that “If, after notification to Licensor by Licensee of . the institution of suit for alleged infringement, Licensor, upon advice of its counsel, shall inform Licensee that the claim of infringement appears to be valid, Licensor may advise Licensee to modify its methods or processes of manufacture to avoid such infringement. . . .” Accordingly, Green-wald suggested that the licensees should alter their methods of manufacture “so as to avoid any infringement of [Kay-ser-Roth’s patent].” Kayser-Roth discovered this letter during a deposition and sought at trial to characterize its contents as an admission by Patentex of the validity of Kayser-Roth’s Supp-hose patent. Kayser-Roth argued, albeit unsuccessfully, that the admission could be imputed to Burlington because of its control of Patentex.

Thus, although the Supp-hose litigation ultimately concluded in 1962 with a declaration that Kayser-Roth’s patent was invalid, the nature and extent of Burlington’s control over Patentex was, beyond peradventure, a disputed matter in that case. That question was in sharp focus both because of Kayser-Roth’s direct charge that Burlington caused Patentex to induce its licensees to infringe the Supp-hose patent, and because of Kayser-Roth’s attempt to im-put to Burlington the alleged admission of validity in Greenwald’s August 18, 1959 letter.

With this background in mind, the question remains whether a substantially related issue is present in the instant actions, such as to require the disqualification of Mr. Rabin. To that question we now turn.

B. The Present Actions

Our discussion of the instant controversy is, perforce, a limited one, since other than the submission of affidavits and depositions pertaining to the motion for disqualification, and the filing of the parties’ complaints and answers, there has been little activity directed towards resolving the merits of the underlying dispute. Ernie and three affiliated companies, represented by Rabin, filed their complaint in May 1968, naming as defendants both Patentex and Burlington. Of particular interest is paragraph 12 of the complaint, prepared entirely by Mr. Rabin, which alleges that

Defendant Patentex, Inc. is a patent holding and licensing company controlled by defendant Burlington Industries, Inc. and holds numerous patents pooled together from various sources for the purpose of controlling the manufacture and sale of stretchable knitted fabrics, including hosiery, the method of manufacture thereof, and the processing of yarns to impart torque characteristics, among other products. Defendant Burlington Industries, Inc., through management of Patentex, Inc., has acquired competing patents through the resolution of interference proceedings in the United States Patent Office, and otherwise, and has endeavored to license the entire yarn processing industry and knitting industry, of which Burlington Industries, Inc. is a major entity, through preferential and discriminatory agreements, with the resolution of such proceedings occurring without regard to the first and true inventor of the alleged inventions, and have misused such patents, [emphasis supplied]

The complaint sought “an adjudication that defendants have misused their patents . . . and that such patents are unenforceable.” Patentex’s answer, apart from admitting that it was a company holding title to patents acquired from various sources, denied all other allegations in paragraph 12. As indicated by that portion of paragraph 12 that we have underscored for emphasis, the issue of Burlington’s control of Patentex was contested in the present action just as it was in the Supp-hose case.

Five additional complaints — those of Knit Products, Bossong Hosiery Mills, Alba-Waldensian, Tower Hosiery Mills, and Holt Hosiery Mills — which also are part of this consolidated action, though drafted by Rabin as well, were not filed until May, 1970. These suits by Paten-tex licensees, which did not name Burlington as a defendant, grew out of a demand made by Patentex that they sign a new license agreement more favorable to Patentex. According to Rabin,

I had been consulted by the various clients whom I had represented over a substantial number of years, conferred with them and the decision was made, in view of substantial unauthorized infringements by others, among other reasons, that these actions would be brought after the license agreements were repudiated, and it was not found necessary to bring Burlington into that lawsuit because there had been no threats made by Burlington, just solely against Patentex because Patentex was the licensor.

These complaints, however, differed from the Emle complaint only in the amount of specifies provided for the claim of misuse. After alleging that “Patentex is a patent holding and licensing company . . . owned by Burlington Industries, Inc. and Chadbourn, Inc. and . . . organized for the purpose, among others, of acquiring competing patents and patent applications in the yarn processing and knitting industry,” the complaints detailed eleven ways in which Patentex’s licensing program constitutes a misuse of its patents. In addition, the complaints specifically claimed that the licensing program violates the antitrust laws. The seventh complaint, filed by Glen Raven Mills in February, 1970, was not prepared by Rabin but Glen Raven’s attorney, Frederic Houston, conceded that he referred to Rabin’s Emle complaint while drafting it. Rabin undertook to represent Glen Raven in June, 1971.

Aside from a few requests for admissions and interrogatories served by Pat-entex and Burlington in the Emle action, these matters lay dormant until May, 1971. On May 25 of that year, however, Burlington moved to dismiss the Emle complaint under Rule 12(b)(6), F.R.Civ.P., for failure to allege the existence of an actual controversy between the Emle plaintiffs and Burlington. In order to prepare a defense to this motion, Rabin sought to depose Kobos, still Assistant to the President of Patentex and its Secretary. Rabin had only begun questioning Kobos on his duties at Patentex when counsel for Paten-tex instructed Kobos not to respond to any further questions. Subsequently, on September 27, 1971, Patentex filed a motion to disqualify Rabin from representing the plaintiff in each action on the ground that Rabin’s involvement constituted a breach of professional ethics. As we have noted, the actions were consolidated for the purposes of deciding this motion and came before Judge Motley. She concluded that “the issues of the control of Patentex by Burlington and the business relationships between Patentex and Burlington were present in the Swpp-Hose Case and are also present in the instant cases” and accordingly granted the motions to disqualify Rabin. This appeal followed.

II.

As previously indicated, Canon 4 of the Code of Professional Responsibility provides that “A lawyer should preserve the confidences and secrets of a client.” We take as our guidepost in applying the language of Canon 4 to this case the standard articulated by Judge Weinfeld in T.C. Theatre Corp. v. Warner Bros. Pictures, 113 F.Supp. 265 (S.D.N.Y. 1953). There, the court said:

I hold that the former client need show no more than that the matters embraced within the pending suit wherein his former attorney appears on behalf of his adversary are substantially related to the matters or cause of action wherein the attorney previously represented him, the former client. The Court will assume that during the course of the former representation confidences were disclosed to the attorney bearing on the subject matter of the representation. It will not inquire into their nature and extent. Only in this manner can the lawyer’s duty of absolute fidelity be enforced and the spirit of the rule relating to privileged communications be maintained.

113 F.Supp. at 268-269 (emphasis supplied). The “substantially related” test has been approved and followed by subsequent decisions, see, e.g., Consolidated Theatres v. Warner Bros., 216 F.2d 920 (2d Cir. 1954); Doe v. A. Corp., 330 F.Supp. 1352 (S.D.N.Y.1971), aff’d, 453 F.2d 1375 (2d Cir. 1972) (per curiam); Empire Linotype School v. United States 143 F.Supp. 627 (S.D.N.Y.1956); United States v. Standard Oil Company, 136 F.Supp. 345 (S.D.N.Y.1955), and has been embraced by both sides in this proceeding.

Canon 4 implicitly incorporates the admonition, embodied in old Canon 6, that “The [lawyer’s] obligation to represent the client with undivided fidelity and not to divulge his secrets or confidences forbids also the subsequent acceptance of retainers or employment from others in matters adversely affecting any interest of the client with respect to which confidence has been reposed.” Without strict enforcement of such high ethical standards, a client would hardly be inclined to discuss his problems freely and in depth with his lawyer, for he would justifiably fear that information he reveals to his lawyer on one day may be used against him on the next. A lawyer’s good faith, although essential in all his professional activity, is, nevertheless, an inadequate safeguard when standing alone. Even the most rigorous self-discipline might not prevent a lawyer from unconsciously using or manipulating a confidence acquired in the earlier representation and transforming it into a telling advantage in the subsequent litigation. Or, out of an excess of good faith, a lawyer might bend too far in the opposite direction, refraining from seizing a legitimate opportunity for fear that such a tactic might give rise to an appearance of impropriety. In neither event would the litigant’s or the public’s interest be well served. The dynamics of litigation are far too subtle, the attorney’s role in that process is far too critical, and the public’s interest in the outcome is far too great to leave room for even the slightest doubt concerning the ethical propriety of a lawyer’s representation in a given case. These considerations require application of a strict prophylactic rule to prevent any possibility, however slight, that confidential information acquired from a client during a previous relationship may subsequently be used to the client’s disadvantage.

Moreover, the court need not, indeed cannot, inquire whether the lawyer did, in fact, receive confidential information during his previous employment which might be used to the client’s disadvantage. Such an inquiry would prove destructive of the weighty policy considerations that serve as the pillars of Canon 4 of the Code, for the client’s ultimate and compelled response to an attorney’s claim of non-access would necessarily be to describe in detail the confidential information previously disclosed and now sought to be preserved. Thus, where “it can reasonably be said that in the course of the former representation the attorney might have acquired information related to the subject matter of his subsequent representation,” T.C. Theatre Corp., supra, at 269, (emphasis supplied), it is the court’s duty to order the attorney disqualified. Nowhere is Shakespeare’s observation that “there is nothing either good or bad but thinking makes it so,” more apt than in the realm of ethical considerations. It is for this reason that Canon 9 of the Code of Professional Responsibility cautions that “A lawyer should avoid even the appearance of professional impropriety” and it has been said that a “lawyer should avoid representation of a party in a suit against a former client, where there may be the appearance of a possible violation of confidence, even though this may not be true in fact.” American Bar Association, Standing Committee on Professional Ethics, Informal Opinion No. 885 (Nov. 2, 1965).

Examination of the issues in the Supp-hose case and in the present actions, in light of the “substantial relationship” test, leads inexorably to the conclusion that Rabin properly was disqualified from representing the plaintiffs in the present actions. Each proceeding involves a claim that Burlington controls Patentex and uses this control for an illegal purpose. In the Supp-hose case, Kayser-Roth argued that Burlington’s control was used to destroy the Supp-hose patent and, also, that this control justified imputing to Burlington an admission made by Patentex. In the present suits, plaintiffs alleged that such control permitted Burlington, through Patentex, to fix prices within an industry in which Burlington is the dominant factor.

Rabin himself recognized the identity of issues between the two cases in his deposition on the motion to disqualify:

Q. My question, however, was very simply this: Did the defendants in the Supp-hose case go into the relationship of Burlington and Patentex, during the depositions of Kobos, Orr, Greenwald ... at which depositions you were in attendance, being Burlington’s counsel?
A. [Mr. Rabin]: That is correct.
Q. They did ?
A. Yes. They went into the relationship between, to the best of my knowledge, of who owned or controlled Patentex.
Q. Right. Whether Burlington owns and/or controls Patentex.
A. That’s right.
•X- * -X- * *X- -X-
Q. And I believe it is correct, is it not, that Burlington Industries was named as a codefendant in the Complaint you prepared and filed in the behalf of Emle?
A. That is correct.
■X- * X- X- X- X-
Q. You agree, do you not, that one of the issues raised by paragraph twelve [of the Emle complaint] is the extent, if any, of Burlington’s control over Patentex?
A. I think I indicated to you before, Mr. Mobile, this was the position that I had, that I — yes.
Q. The answer is yes?
A. Yes, the answer is yes.
* * * * * *
Q. Well, it is a fact, is it not, that, in every one of the 1970 actions . . the issue of Burlington’s control over Patentex was raised in the Complaints you filed as it was in the Complaint in the Emle case ?
A. Yes.
Q. That is a fact, isn’t it ?
A. Right.

Rabin’s testimony underscores the inference of substantial relationship of issues, easily drawn from an examination of the pleadings alone in each proceeding. It is clear, therefore, that there are matters in controversy in each case —both the nature and scope of control, if any, exercised by Burlington over Pat-entex — that are not merely “substantially related,” but are in fact identical.

It is strenuously argued, however, that control of Patentex by Burlington was conceded in a stipulation by Burlington in the Supp-hose case and, therefore, is not at issue here. Plaintiffs contend, instead, that the disputed matter in each case is the use to which Burlington put its control over Patentex and that this use differs in each action. The simple answer to this argument, however subtly advanced, is that it is factually incorrect. The stipulation in the Supp-hose case merely recited that “Burlington and Chadbourn each own 50% of the voting stock of Patentex, and Burlington owns 45% and Chad-bourn owns 55% of the non-voting stock, and the majority of the Patentex Board of Directors are Burlington men and the minority are Chadbourn men.” It stated further that “Burlington pays the salaries of Patentex employees and certain other expenses of Patentex, and the amount attributable to Patentex is charged back against Patentex’s account.” We are unable to agree that a concession that Burlington owned fifty percent — less than a majority — of Pat-entex’s voting shares is tantamount to an admission by Burlington that it exercised day-to-day or week-to-week control over Patentex and that it caused Patentex to engage in illegal activity. Moreover, Greenwald’s deposition in the Supp-hose case, with its emphasis on his relationship with Burlington executives and its concern with Greenwald’s degree of decision-making freedom, demonstrates that the question of control was an important issue in that case, one not resolved by stipulation. Thus, although in both the prior and the present case the parties sought to prove that Burlington had achieved an illegal end through Patentex, in each case they first faced the burden of proving that Burlington did, in fact, control Patentex in such a manner that the alleged illegal ends could be achieved.

It is urged that the fact of Burlington’s control of Patentex was widely known throughout the industry and that such notoriety removes that issue from the case. We do not understand what this “notoriety” argument proves. Henry Drinker, a leading authority in the field of legal ethics, notes that the client’s privilege in confidential information disclosed to his attorney “is not nullified by the fact that the circumstances to be disclosed are part of a public record, or that there are other available sources for such information, or by the fact that the lawyer received the same information from other sources.” H. Drinker, Legal Ethics 135 (1953). Here, even assuming arguendo that Burlington’s control of Patentex was “notorious” within the industry, it can hardly be contended that “trade gossip” is sufficiently reliable such as to constitute the basis of formal proof. The issue of control — its nature and scope — remained to be developed at trial, and Rabin, were he permitted to represent the plaintiffs in any further proceedings, might make use of confidential information establishing Burlington’s alleged control over Patentex. Thus, industry “notoriety” of Burlington’s control does not bear even one iota upon the ethical considerations here involved.

Two final questions remain. The plaintiffs contend that at the time Rabin undertook to represent Burlington in the Supp-hose case, it was agreed that Burlington would not move to disqualify Rabin in any future matter in which he opposed Burlington. This claim, however, fails to withstand scrutiny. An examination of Rabin’s own recollection of the agreement leads to a conclusion that the Burlington-Rabin agreement dealt only with Rabin’s ability to continue prosecution of the unrelated Shoaf and Tight Pat actions, referred to earlier, and his freedom to press, if necessary, the potential indemnity claims of Claussner, MeCallum, and Hudson under the Patentex license agreement. According to Rabin, he “was flattered with the invitation [to represent Burlington] but in view of the then pending actions against Burlington and [Ms] position representing Claussner, MeCallum, and Hudson, [he] would have to decline.” (emphasis supplied) It was only in response to these specific concerns that Orr stated, again according to Rabin, “that no conflict would arise in the future.” This limited view of the agreement also is supported by Orr’s recollection of the understanding:

Q. Well, to refresh your recollection, do you recall Mr. Rabin indicating to you that he had a conflict with existing litigation?
A. [Mr. Orr] : With respect to the Claussner case, I remember he did.
Q. The Supp-Hose case ?
A. The Claussner claim for indemnity, yes.
Q. And that if he undertook to represent Burlington that he would be in a position of conflict or could be in a position of conflict by reason of his representation of Shoaf and Tight Pat?
A. No.
Q. What was the conflict ?
A. Well, the possible conflict that he would want to reserve any rights that Claussner and his other clients who were licensees of Patentex might have to bring suit against Patentex on the indemnity agreement.
Q. Did he make it clear to you that he reserved these rights if he should represent Burlington ?
A. Yes.

It would be unreasonable to read Orr’s recognition and acceptance of these potential conflicts as a blanket waiver by Burlington covering all possible future claims in which Rabin might be involved in a posture adverse to Burlington. Rabin himself conceded that he “was not that clairvoyant to ask something of that sort.” In light of the strict prophylactic purposes of Canon 4’s injunction to preserve a client’s confidences, we do not find an all-inclusive waiver in this case.

Lastly, it is urged that Burlington’s motion to disqualify Rabin is barred by the doctrine of laches. This claim too must fail. Since, as we have noted, disqualification is in the public interest, the court cannot act contrary to that interest by permitting a party’s delay in moving for disqualification to justify the continuance of a breach of the Code of Professional Responsibility. See United States v. Standard Oil Co., supra, 136 F.Supp. at 351 n. 6. Accordingly, “the Court’s duty and power to regulate the conduct of attorneys practicing before it, in accordance with the Canons, cannot be defeated by the laches of a private party or complainant.” Empire Linotype School, supra, 143 F.Supp. at 631. Although in an extreme case a party’s delay in making a motion for disqualification may be given some weight, see Marco v. Dulles, 169 F.Supp. 622, 632 (S.D.N.Y.1959) (nineteen year delay), such extenuating circumstances are not present here. The three-year gap between filing of the Ernie action in 1968 and Patentex’s motion to disqualify Rabin in 1971 is not extraordinary. Moreover, plaintiffs themselves allowed the actions to remain virtually dormant and they have not demonstrated that Patentex’s delay has caused them any prejudice. Indeed, whatever delay may have accompanied Patentex’s motion to disqualify Mr. Rabin has, if anything, worked to its disadvantage and not to that of the plaintiffs. Appellants themselves suggest that the delay has rendered Patentex’s claim of prejudice under Canon 4 moot because Mr. Rabin has been associated with this matter for over five years. If that is true, it can hardly be argued that appellants would have been better situated if Patentex had moved for disqualification at an earlier time, for had they done so appellants would have been deprived of Rabin’s services altogether. Laches is an equitable remedy and the court will not bar a claim on that ground where no prejudice has resulted from the delay.

IV.

In light of all we have said, we conclude that the issue of Burlington’s control over Patentex was a disputed matter in the Supp-hose case and is a core subject of the controversy in the present actions. Since Rabin defended Burlington against such a claim in the Supp-hose case he must be barred from asserting a “substantially related” claim against Burlington on behalf of the present plaintiffs. For the reasons set forth above, we need not inquire whether Rabin in fact had access to confidential information when he represented Burlington in the Supp-hose case. We realize, of course, that Rabin’s disqualification may inconvenience plaintiffs, who undoubtedly chose Rabin in the belief that he was the best attorney to prosecute their claims. Moreover, without impugning its motives, we are not so naive as to believe that Patentex will be displeased to see Rabin, effective advocate that he is, removed from these proceedings. But the possibility that Patentex may benefit from Rabin’s disqualification cannot alter our conclusion that his continued participation in these proceedings would constitute a serious breach of professional ethics. Furthermore, we are certain that despite his considerable talents, Rabin is not the only member of the patent bar qualified to capably represent these plaintiffs.

It is argued that to disqualify Rabin from these actions in an excess of ethical zeal will permit the defendant to monopolize patent counsel. We can only note, however, that it is hardly appropriate to east aside ethical responsibilities out of an excess of antimonopolistic fervor. Reduced to basics, this argument would permit Rabin to represent plaintiffs only by carving out a special exception to the strictures of Canon 4 for situations in which a motion for disqualification has been made by a large corporate litigant against an attorney who has crossed sides to represent smaller interests. Nothing in the Code of Professional Responsibility or in the teaching of prior cases warrants such ethical relativity, for the Code, like its predecessor the Canons of Professional Ethics, “set[s] up a high moral standard, akin to that applicable to a fiduciary. . . . Without firm judicial support, the Canons of Ethics would be only reverberating generalities." Empire Linotype School v. United States, 143 F.Supp. 627, 633 (S.D.N.Y.1956). We have said that our duty in this case is owed not only to the parties — who by chance consist of a group of smaller competitors arrayed against the industry giant — but to the public as well. These interests require this court to exercise its leadership to insure that nothing, not even the appearance of impropriety, is permitted to tarnish our judicial process. The stature of the profession and the courts, and the esteem in which they are held, are dependent upon the complete absence of even a semblance of improper conduct. We conclude, therefore, that the substantial relationship between matters contested in the Supp-hose litigation and issues raised in the present actions requires that Rabin be barred from further participation in these proceedings.

Accordingly, the order of the district court is affirmed.

      . Canon 4 of the Code of Professional Responsibility provides that “A lawyer should preserve the confidences and secrets of a client.”

      . Separate but similar complaints were filed by Ernie Industries, Inc., Glen Raven Mills, Inc., Knit Products Corp., Bossong Hosiery Mills, Inc., Alba-Waldensian, Inc., Tower Hosiery Mills, Inc., and Holt Hosiery Mills, Inc. The actions were consolidated in the district court for purposes of deciding the motion to disqualify and were similarly consolidated on appeal to this court. Ernie Industries was adjudicated bankrupt on December 27, 1971, and has not participated in this appeal.

      . Triumph Hosiery Mills, Inc. v. Alamance Industries, Inc., 191 F.Supp. 652 (M.D.N.C.1961), aff’d, 299 F.2d 793 (4th Cir.), cert. denied 370 U.S. 924, 82 S.Ct. 1566, 8 L.Ed.2d 504 (1962).

      . Upon information and belief, the activities and conduct of Patentex in its patent licensing programs in the yarn throwing industry and the knitting industry constitute a misuse of the Patentex patents among other reasons:
      (a) conducting a package licensing program of numerous patents and obligating licensees to pay royalties irrespective of the use of said entire package and without setting a royalty for unrelated patents in the package;
      (b) illegally tying a group of competing patents in a single package;
      (c) granting preferential licenses at discriminatory royalty rates under the same patent;
      (d) unlawfully demanding and collecting royalties on unpatented devices and products beyond the expiration date of one or more of the license patents without reducing or modifying the royalty rate;
      (e) requiring licensees to grant back to Patentex improvements made in yarn throwing and knitting resulting in restraining improvements and developments in yarn throwing and knitting and perpetuating a patent pool of indeterminate duration and beyond the terms of the licensed patents ;
      (f) discriminatorily waiving or knowingly refusing to collect royalties uniformly from (1) yarn throwsters and (2) knitters;
      (g) extracting as a condition for becoming a patent licensee under the Pat-entex patents that the validity of the Patentex patents would not be contested at any time by the licensee irrespective of termination of the license agreement or a determination of invalidity of one or more Patentex patents by a court of competent jurisdiction;
      (h) entering into discriminatory licensing arrangements in its licensing programs by nonuniform licensing provi-visions among different licensees including but not limited to exempting some licensees from payment of royalties while demanding that other licensees pay royalties upon goods of the same quality, description and characteristics;
      (i) refusing to honor its expressed commitment and obligation to most favorable royalty treatment of licensees and not to others;
      (j) acquiring patents through misrepresentations and fraud upon the United States Patent Office; and
      (k) illegally cross-licensing and pooling of patents.

      . At the time of Judge Weinfield’s decision, preservation of a client’s confidences was governed by Canons 6 and 37 of the Canons of Professional Ethics, whereas the motion to disqualify in the instant case was made under Canon 4 of the Code of Professional Responsibility, which superseded the Canons on January 1,1970. The difference is immaterial, however, since “Canon 4 and its subjoined rules make no changes in settled principles of ethics involving the preservation of confidential cliental information. These precepts have been traditional in the relationship of client and lawyer in the art of legal ethics, preserved by old Canons 6, 11, and 37 . ” R. Wise, Legal Ethics 65 (1970).

      . There can be no doubt that Judge Motley applied this standard. She specifically stated that
      Applying the test enunciated by Judge Weinfeld of this Court in T.C. Theatre Corp. v. Warner Bros. Pictures, 113 F.Supp. 265 (1953), the court finds and concludes the motion to disqualify Mr. Rabin on the ground of conflict of interest must be granted.
      [T]he issues of the control of Paten-tex by Burlington and the business relationships between Patentex and Burlington were present in the Supp-Hose case and are also present in the instant cases.

      . This reasoning also explains why Rabin is barred from these actions despite his claim that he became aware of Burlington’s control of Patentex during a previous defense of Bossong Hosiery Mills in a patent infringement action brought against it by Patentex. Rabin asserts that he became familiar with Burlington’s relationship with Patentex in order to prosecute Bossong’s counterclaim that Patentex misused its patents “in the exercise of a concerted effort to monopolize illegally the field of stretch yarn production . . . . ” This representation cannot destroy the inference that during his subsequent attorney-client relationship with Burlington, Rabin became privy to confidential information not disclosed during the Bossong action.

      . In connection with their claim of non-access, plaintiffs argue that the district court should have held an evidentiary hearing on this point. In addition to the compelling policy reasons against such a procedure, we note that Judge Motley considered extensive affidavits and depositions submitted by the parties and reviewed them at length during an oral hearing on the motion. Such procedures have proven adequate in other cases presenting complicated facts. See, e. g., United States v. Standard Oil Co. (N.J.), 136 F.Supp. 345 (S.D.N.Y.1955). Moreover, no request for an evidentiary hearing was made in the district court.