PROFESSIONALISM: CURBING OVERZEALOUS ADVOCACY
by: Rachael H. Lenoir, Law Clerk for Neil P. Olack United States Bankruptcy Judge for the Northern and Southern Districts of Mississippi
January 20, 2017
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Table of Contents
A. Lawyer’s Duty to the Client ...... 5
1. Criminal Activity of Clients ...... 5 2. Fee Disputes ...... 9 3. Technology in the Law Office ...... 11 4. Curtailing the Overzealous Client ...... 12 5. Overzealous Social Media ...... 13
B. Lawyer’s Duty to Opposing Counsel ...... 16
1. Discovery Abuses ...... 17 a. Inappropriate Questions ...... 17 b. Failing or Refusing to “Meet and Confer” ...... 18 2. Scheduling Conflicts ...... 20 3. Accusing Opposing Counsel of Unethical Behavior ...... 22
C. Lawyer’s Duty to the Court ...... 24
1. False Statements ...... 25 2. Candor Toward the Court ...... 26 3. Creative Claim or Vexatious Litigation? ...... 28 4. Forum Shopping ...... 33 5. Plagiarism ...... 36 6. Ghostwriting ...... 39 7. Filing Unauthorized Documents ...... 42 a. Petition for Relief ...... 42 b. Installment Application ...... 45 c. Petition and Certificate of Credit Counseling ...... 45
D. Conclusion ...... 47
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1 PROFESSIONALISM: CURBING OVERZEALOUS ADVOCACY
As advocate, a lawyer zealously asserts the client’s position under the rules of the
adversary system.2
A lawyer, as a member of the legal profession, is a representative of clients, an
officer of the legal system and a public citizen having special responsibilities for
the quality of justice.3
A lawyer shall act with reasonable diligence and promptness in representing a
client.4
As advocates for their clients, lawyers must be competent, honest, and loyal, but must they also be rude, contentious, and rancorous? What are the boundaries of appropriate zealous advocacy? The lines of civility are crossed by obstructive, abusive, and insulting behavior, but not all adversarial excess rises to the level of inappropriate behavior. This paper focuses on the blurry lines of zealous advocacy through a representative sampling of recent cases.
As a threshold matter, it should be noted that bankruptcy judges generally do not enforce attorney disciplinary rules (a task for the state bar), but they have the inherent power to regulate
1 These materials are designed to provide general educational information regarding the subject matters covered and do not reflect the personal views and opinions of the author or the presenter. Unless otherwise noted, all references to code sections are to the Bankruptcy Code found at title 11 of the U.S. Code, and all references to rules are to the Federal Rules of Bankruptcy Procedure. 2 MODEL RULES OF PROF’L CONDUCT Preamble at 2. 3 MODEL RULES OF PROF’L CONDUCT Preamble at 1. 4 MODEL RULES OF PROF’L CONDUCT R. 1.3. The ABA Model Rules adopted in 1983 removed the word “zeal” from the text of ABA Model Rule 1.3. The word “zeal,” however, remains in the comments. See MODEL RULES OF PROF’L CONDUCT R. 1.3 cmt. (“A lawyer must also act with commitment and dedication to the interests of the client with zeal in advocacy upon the client’s behalf.”).
Page 3 of 47 attorney conduct in the courtroom.5 One of the sources bankruptcy judges turn to when defining professional conduct standards is the Model Rules of Professional Conduct promulgated by the
American Bar Association (the “ABA Model Rules”) in 1983.6 Although each state has its own rules of professional responsibility that mandate the ethics with which each lawyer must comply, most of these state attorney-conduct rules are modified versions of the ABA Model Rules.
The consequences of unethical and unprofessional behavior can be serious in the bankruptcy arena: disqualification, denial of compensation, disgorgement of previously received compensation, revocation of pro hac vice admission, and monetary sanctions.7 In that regard, it is noteworthy that sanctioning an attorney is generally considered to be insufficient grounds for recusal.
In Sharifeh v. Fox (In re Sharif),8for example, the district court affirmed the denial of a motion to recuse brought under 28 U.S.C. § 455(a) where the alleged grounds for recusal were that the bankruptcy judge—in an unrelated bankruptcy case—held counsel in contempt of court and fined him $10,000.00 per day.9 In an appeal of that unrelated case, the district court reversed
5See Chambers v. NASCO, Inc., 501 U.S. 32, 50 (1991) (upholding court’s inherent powers to sanction bad-faith conduct in litigation); In re Snyder, 472 U.S. 634, 645 n.6 (1985); see also In re Hein, 341 B.R. 903, 905 (Bankr. N.D. Ind. 2006) (“Stupidity—acting without sufficient forethought—is a legitimate basis for imposing sanctions upon an attorney.”). 6States are the initial source of the right of a bankruptcy attorney to practice law. See United Mine Workers v. Ill. State Bar Ass’n, 389 U.S. 217, 222 (1967) (“That the States have broad power to regulate the practice of law is, of course, beyond question.”). 7See Middlesex Cty. Ethics Comm. v. Garden State Bar Ass’n, 457 U.S. 423, 434 (1982) (“The ultimate objective of [attorney disciplinary] control is the protection of the public, the purification of the bar and the prevention of a reoccurrence.”). 8No. 15-cv-10694, 2016 WL 5373199 (N.D. Ill. Sept. 26, 2016). This matter arises out of the same dispute that led to the U.S. Supreme Court’s decision in Wellness Int’l Network, Ltd. v. Sharif, 135 S. Ct. 1932 (2015). 9In re Morris Senior Living, LLC, No. 13 C 2064, 2013 WL 5753834, at *9 (N.D. Ill. Oct. 22,
Page 4 of 47 the sanctions and remanded the matter to the same bankruptcy judge for further proceedings. In the appeal of the recusal motion in In re Sharif, the district court ruled that no informed, thoughtful observer would believe that the contempt ruling posed a significant risk that the bankruptcy judge would decide the matter on some basis other than its merits, even assuming that the bankruptcy judge’s alleged bias against counsel could be imputed to his client.
In general, the duties of a lawyer can be divided into those obligations owed to: (1) the client, (2) opposing counsel, and (3) the court. The discussion below about overzealous advocacy follows these divisions.
A. Lawyer’s Duty to the Client
1. Criminal Activity of Clients
A lawyer shall not counsel a client to engage, or assist a client, in conduct that
the lawyer knows is criminal or fraudulent . . . .10
Rarely does a lawyer knowingly become involved in the criminal activity of a client.
Last fall, however, a lawyer in San Diego was sentenced to sixty (60) months in prison for knowingly assisting a client in illegally transferring money.11 The federal government alleged that the lawyer allowed nearly $12 million to be deposited into his trust accounts in order to move money overseas.
Recently, “Interest on Lawyer Trust Accounts,” referred to as IOLTA accounts, have come under scrutiny as a potential means for money laundering with or without the attorneys’
2013) (reversing sanctions on appeal). 10 MODEL RULES OF PROF’L CONDUCT R. 1.2(d). 11 Debra Cassens Weiss, Lawyer Gets Prison Time for Using Trust Accounts to Transfer Client Cash, A.B.A. Journal, Sept. 7, 2016.
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knowing involvement.12 IOLTA accounts are used by lawyers to handle client funds and the
interest earned on an IOLTA account funds legal services for the indigent in all fifty (50)
States.13 Unlike other bank accounts, however, IOLTA accounts are not subject to anti-money
laundering reporting obligations.14 For this reason, IOLTA accounts are attractive to money
launders.
After deliberating for less than a day, the jury in United States v. Knight convicted the
debtor’s attorney of conspiracy to commit bankruptcy fraud, aiding and abetting bankruptcy
fraud, aiding and abetting the making of a false statement in relation to a bankruptcy case, and
aiding and abetting money laundering.15 In a 102-page opinion, the district court granted the
attorney’s motion for acquittal on the false statement count and granted the attorney a new trial
on all other counts, and in a 34-page opinion, a majority of the Eighth Circuit affirmed the
district court.
In 2008, the debtor, a high profile real estate developer known for his lavish lifestyle,
initially retained the attorney to advise him on various options available to him to resolve his
financial problems, including bankruptcy. The debtor and/or entities he owned participated in
several real estate transactions that netted income or loan proceeds. The attorney’s involvement
was limited although some of the loan proceeds passed through the lawyer’s trust account. After
12 Money laundering is the transfer of illegally-obtained money into legitimate accounts so that its original source cannot be traced. BLACK’S LAW DICTIONARY 1159 (10th ed. 2014); see 18 U.S.C. § 1956. 13Brown v. Legal Found. of Wash., 538 U.S. 216 (2003) (upholding constitutionality of Washington State’s IOLTA program and the general concept of IOLTA programs in the nation). 14 Requiring lawyers to report financial transactions in IOLTA accounts, for example, could undermine the attorney/client privilege. 15800 F.3d 491 (8th Cir. 2015).
Page 6 of 47 the debtor’s real estate practice crumbled due to a weak real estate market and poor business decisions, the attorney filed a chapter 7 petition for relief on his behalf in 2009. The attorney had limited prior experience representing bankruptcy clients with such complex legal issues and financial dealings.
The government alleged that the statement of financial affairs filed in the bankruptcy case contained blatantly false information designed to conceal the debtor’s assets from his creditors and the bankruptcy court. Although the debtor claimed that his income in 2008 was only about
$4,000.00, the government alleged that he actually earned more than $1 million from several real estate deals involving entities owned by the debtor and that the debtor passed roughly $1.2 million of this income through his attorney’s trust account. The jury convicted the attorney, but the district court concluded that the evidence presented “largely invited only speculation and conjecture.” The district court expressed grave concern that the jury convicted the attorney because he was the debtor’s attorney and not because the evidence showed that the attorney actually knew about or was involved in the debtor’s illegal conduct. (The debtor pled guilty to bankruptcy fraud before the attorney’s trial.)
Much of the evidence at the attorney’s trial in Knight focused on the propriety of the attorney’s use of his IOLTA account on the debtor’s behalf and the adequacy of the bankruptcy disclosures. (Did the attorney allow the debtor to use his IOLTA account fraudulently to conceal funds in contemplation of the bankruptcy filing?) Although the Eighth Circuit viewed the attorney’s use of the trust account “arguably unethical,” it found nothing illegal in the absence of evidence that the attorney knowingly helped the debtor hide money. Moreover, although there was evidence that the debtor omitted certain assets from his bankruptcy filings, the record
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strongly suggested that the debtor took affirmative steps to prevent his attorney from discovering
these omissions. Numerous witnesses made conclusive statements that the attorney was heavily
involved in some of the transactions in question, but no one had personal knowledge of his
involvement. In a partial dissent, one Eighth Circuit judge insisted that the case was not that
complex but simply presented a “close issue” concerning the question of the attorney’s guilt,
which the jury should have been allowed to decide.
Last summer, the U.S. Department of Justice filed an asset forfeiture case alleging that
more than a half billion dollars of funds taken from a Malaysian sovereign wealth fund passed
through the IOLTA accounts of two (2) major law firms as part of a money laundering scheme.16
The IOLTA accounts of one of the law firms allegedly received eleven (11) wire transfers
totaling $368 million from 2009 to 2010. The case has garnered media attention because some
of the funds that passed through these IOLTA accounts financed the film, The Wolf of Wall
Street. The Department of Justice has not accused the law firms of any wrongdoing.
The lesson for lawyers is do not become bankers. A lawyer’s unwitting involvement or
willful blindness to money laundering could suggest complicity with the crime. The ABA, in
collaboration with others, has published guidelines to help lawyers recognize money laundering
“red flags.”17
16 Debra Cassens Weiss, Big Law Firms Say Protocols Followed after US Claims Two Trust Accounts Held $586M in Stolen Money, ABA Journal, Aug. 10, 2016. 17 The guidelines may be found on the ABA’s website.
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2. Fee Disputes
Attorneys are entitled to reasonable compensation for the services they render.18
In Baker Botts L.L.P. v. ASARCO LLC,19 vigorous prosecution of an attorneys’ fees
dispute came before the U.S. Supreme Court. In 2005, ASARCO LLC (“ASARCO”), a copper
mining, smelting, and refining company, filed for chapter 11 bankruptcy. Pursuant to § 327,
ASARCO hired two law firms, Baker Botts L.L.P. and Jordan, Hyden, Womble, Culbreth &
Hozer, P.C., to represent it during the bankruptcy case. The firms led a successful reorganization
of the company, and as part of their services, obtained a judgment between $7 and $10 billion
against ASARCO’s parent company on claims of fraudulent transfer. ASARCO emerged from
the bankruptcy with $1.4 billion in cash and little debt.
The law firms sought compensation under §330(a)(1) and filed fee applications.
However, ASARCO, controlled once again by its parent company, disputed the fee applications.
ASARCO’s fee challenge included a discovery request covering every document Baker Botts
L.L.P. produced during the 52-month bankruptcy, resulting in the production of 2,350 boxes of
hard copy documents and 189 GB of electronic data.20 After a six (6)-day trial on fees, the court
rejected ASARCO’s objections and awarded the firms approximately $120 million for their work
on the bankruptcy proceeding, plus a $4.1 million enhancement for “exceptional performance.”
18 The reasonableness of compensation in the bankruptcy context is governed by 11 U.S.C. § 329. 19 135 S.Ct. 2158 (2015). 20See ASARCO, LLC v. Baker Botts, L.L.P.(In reASARCO, LLC), 751 F.3d 291, 293 (5th Cir. 2014).
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In addition, the court awarded the firms over $5 million for time spent defending their fee
applications.
ASARCO appealed to the district court, which affirmed the recovery of fees for
defending their fee applications, and to the U.S. Court of Appeals for the Fifth Circuit, which
reversed. The Fifth Circuit reasoned that the American Rule, which requires that each party pay
its own attorney’s fees, “applies absent explicit statutory…authority” to the contrary, and that
“the Code contains no statutory provision for the recovery of attorney fees for defending a fee
application.”21
The U.S. Supreme Court affirmed the Fifth Circuit, holding that the Bankruptcy Code
does not contain a sufficient exception to the American Rule that would permit bankruptcy
courts to award attorneys’ fees for work performed in defending fee applications. The American
Rule, according to the Supreme Court, requires that “[e]ach litigant pay his own attorneys’ fees,
win or lose, unless a statute or contract provides otherwise.”22
The dissent pointed out that a bankruptcy attorney who earns $50,000.00 but spends
$20,000.00 defending a fee application against a meritless objection, is effectively paid only
$30,000.00.23In footnote 4, the majority suggested Rule 9011 as an adequate remedy for
frivolous objections to fee applications.
A contract exception to the American Rule was rejected by the Delaware bankruptcy
21Id. (citing In re ASARCO, 751 F.3d at 301 (internal quotations omitted) (emphasis in original)). 22ASARCO, 135 S. Ct. at 2164 (emphasis added). 23Id. at 2170.
Page 10 of 47 court in In re Boomerang Tube, Inc.24 In Boomerang, the bankruptcy court rejected a retention agreement that included an indemnity provision for any successful defense of counsel’s fees.
The court ruled that the fee defense provision did not fit within the scope of “reasonable terms and conditions of employment” under § 328 and, moreover, would require the estate, a non-party to the contract, to pay defense costs even if the estate was not the party challenging the fees.
3. Technology in the Law Office
To maintain the requisite knowledge and skill, a lawyer should keep abreast of
changes in the law and its practice, including the benefits and risks associated
with technology . . . .25
A lawyer’s obligation to provide competent representation cannot be met without a basic knowledge of technology. The lawyer who demands the latest in technology has an obligation to understand how it changes the work environment and the accommodations that may be required to reduce or remove any potential problems of confidentiality. A good example is the
Amazon Echo, which integrates voice recognition software. The presence of Amazon Echo in the law office raises privacy issues because it records and stores the user’s voice, a function that may not be well known. Echo’s recordings, for example, have been requested by the Arkansas police in a homicide investigation.26 Access to the Amazon Echo or any other similar device in any law office should be limited to areas where privileged and confidential communications do
24 548 B.R. 69 (Bankr. D. Del. 2016); see also In re Huepenbecker, 546 B.R. 381, 385 (Bankr. W.D. Mich. 2015) (discussing impact of ASARCO and hardship to estate professionals whose fee applications draw objections). 25 MODEL RULES OF PROF’L CONDUCT R. 1.1 cmt. 8. 26Anna Massoglia, Amazon Echo Is Both Useful and Risky for Lawyers, Lawyerist.com, Jan. 3, 2017.
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not take place. Also, lawyers who use such devices should become familiar with the features that
deactivate and/or mute the microphone.
4. Curtailing the Overzealous Client
In Sigram Schindler Beteiligungsgesellschaft mbH v. Lee, a lawyer filed a petition for
writ of certiorari before the U.S. Supreme Court that was indecipherable.27 The “Statement of
the Case” began:
This petition is a refinement of SSBG’s preceding petition [121], asking this
Court to unmistakably clarify, to the whole patent community12), that its
Mayo/Biosig/Alice decisions (“3 decisions”) ended the claim construction
anomaly hampering especially ET Cls1)—but meet, by their “ET proof” refined
claim construction, all ET Cl’s needs.28
The last footnote stated, “Prof. Sigram Schindler, the primary inventor of the 453 patent, should
be recognized for significant contributions to this petition.”29 The U.S. Supreme Court issued a
show cause order to the lawyer who filed the petition.30 Ultimately, the Supreme Court did not
impose sanctions against the lawyer but reminded “All Members of the Bar” that “they are
responsible—as Officers of the Court—for compliance with the requirement . . . that petitions for
writs of certiorari be stated ‘in plain terms,’ and may not delegate that responsibility to the
27 No. 14-424, 2014 WL 5211966 (Oct. 6, 2014). 28Id. at *2 (footnotes omitted). The U.S. Supreme Court denied the petition for writ of certiorari. Sigram Schindler Beteiligungsgesellschaft mbH v. Lee, 135 S. Ct. 779 (2014). 29 Id. at *37 n.30. 30In re Shipley, 135 S. Ct. 779 (2014).
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client.”31
5. Overzealous Social Media
Conversations that used to take place around the water cooler are now taking place on social networking sites like Facebook, Twitter, Snapchat, and Instagram. Social media serves as a breeding ground for impulsive, rude, and indiscrete comments by overzealous lawyers that would not have been made in person. Moreover, courts have found that the ethical and professional standards governing attorney advertising apply to social media.
A lawyer shall not make a false or misleading communication about the lawyer or
the lawyer’s services.32
For example, the Supreme Court of Indiana in In re Welkeimposed a 30-day suspension on a bankruptcy lawyer for false and misleading advertising on his website.33 Targeting debtors,
the website included the following statement:
Screwing Banks Since 1992
The advertisement was deemed misleading because the bankruptcy lawyer promised more than
he could possibly deliver. The bankruptcy lawyer agreed to remove the statement from his
website. (His current website shows a photograph of a lawyer with the cartoon head of a
snarling bulldog and the slogan, “AGGRESSIVE BANKRUPTCY AND FAMILY LAW FIRM
IN INDIANAPOLIS!”34) In a prior decision, the Indiana Supreme Court issued a private
reprimand against a bankruptcy attorney who placed the following advertisement in the
31In re Shipley, 135 S. Ct. 1589 (2015). 32 MODEL RULES OF PROF’L CONDUCT R.7.1. 33No. 49S00-15-5-DI-293 (Ind. Jan. 7, 2016). 34http://welkelawfirm.net (last visited Jan. 17, 2017).
Page 13 of 47 newspaper: Bankruptcy, but keep house & car.35
The Indiana Supreme Court found the advertisement misleading because it suggested that keeping a house and car through bankruptcy is guaranteed.
Because social media conduct falls outside the traditional mold, courts are sometimes hesitant to punish attorneys when the behavior does not disrupt the litigation process. The following matter, however, represents an extreme example of social media abuse that led to the disbarment of an attorney based on violations of the ABA Model Rules cited below:
A lawyer shall not (a) seek to influence a judge, juror, prospective juror or other
official by means prohibited by law [and] (b) communicate ex parte with such a
person during the proceeding unless authorized to do so by law or court order. 36
It is professional misconduct for a lawyer to:
(a) violate or attempt to violate the Rules of Professional Conduct, knowingly
assist or induce another to do so, or do so through the acts of another;
* * *
(c) engage in conduct involving dishonesty, fraud, deceit or
misrepresentation;
(d) engage in conduct that is prejudicial to the administration of justice . . . .37
In In re McCool,38 a Louisiana attorney was disbarred for posting a petition on the website www.change.org as well as posting other online statements about child custody cases
35In re Anonymous, 775 N.E.2d 1094 (Ind. 2002). 36 MODEL RULES OF PROF’L CONDUCT R. 3.5(a) and (b). 37 MODEL RULES OF PROF’L CONDUCT R. 8.4(a), (c), and (d). 38172 So. 3d 1058 (La. 2015).
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pending in both Louisiana and Mississippi. The attorney filed adoption proceedings in a
Louisiana state court on behalf of Raven Maurer’s new husband who sought to adopt Raven
Maurer’s two daughters. She also filed a motion for emergency custody based on Raven
Maurer’s allegations that her former husband abused their children. The Louisiana judge stayed
the adoption proceedings pending the outcome of a case previously initiated by Raven Maurer
against her former husband in Mississippi in which she sought to terminate his parental rights.
After losing an appeal of the stay order to the Louisiana Supreme Court, the attorney assumed all
legal options were exhausted.
The attorney and Raven Maurer then posted a petition titled “Justice for [H] and [Z]” on
www.change.org along with a photograph of the two girls. (Both courts had taken measures to
protect their identities.) The petition identified by name the judges in both matters and
provided contact information for the judges’ offices. The petition asked the Mississippi judge
to renounce jurisdiction to the Louisiana court and the Louisiana judge to withdraw “the
unlawful stay of the adoption proceedings.” The attorney signed her name to the petition and
reposted the online petition on her blog site. She encouraged others to contact the judges about
the cases. She also used her personal Twitter account to promote the online petition:
Make judges protect [H] and [Z] from abuse by their father!
As a result of the attorney’s social media blitz, hundreds of people allegedly wrote both
judges. Some unknown person faxed the petition to the Louisiana judge’s office. The
Louisiana judge had her administrative assistant return the petition to the attorney and cautioned
her against ex parte communication. Nevertheless, the attorney continued posting statements and articles about the manner in which the judges were handling the pending cases. For
Page 15 of 47 example, one of the articles, entitled “Make Louisiana and Mississippi Courts Protect HB and
ZB,” accused the Mississippi judge of refusing “to even look at the evidence.”
The Louisiana disciplinary board suspended the attorney from the practice of law for one year and one day. On appeal to the Louisiana Supreme Court, the attorney argued that her speech addressed matters of public concern and was protected by the First Amendment.
The Louisiana Supreme Court rejected the attorney’s constitutional defense and ruled that she engaged in improper ex parte communication with both judges by promoting an online petition that targeted them and the cases before them. The Supreme Court also concluded that the attorney disseminated false and misleading information and that her conduct was prejudicial to the administration of justice.
The appropriate method for challenging a judge’s decisions and evidentiary
rulings . . . is through the . . . appeal process, not by starting a social media blitz to
influence the judges’ . . . rulings in pending matters.39
Although the attorney had no prior disciplinary record, the Louisiana Supreme Court ordered disbarment as sanctions for her conduct.
B. Lawyer’s Duty to Opposing Counsel
A lawyer should use the law’s procedures only for legitimate purposes and not to harass or intimidate others.40
A lawyer shall make reasonable efforts to expedite litigation consistent with the interests of the client.41
39Id. at 1077. 40 MODEL RULES OF PROF’L CONDUCT Preamble.
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A lawyer shall not . . . unlawfully obstruct another party’s access to evidence ...42
A lawyer shall not . . . make a frivolous discovery request or fail to make
reasonably diligent effort to comply with a legally proper discovery request by an
opposing party.43
A lawyer is not bound . . . to press for every advantage that might be realized for
a client.44
In representing a client, a lawyer shall not use means that have no substantial
purpose other than to embarrass, delay, or burden a third person. . . .45
1. Discovery Abuses
Discovery abuses are common, perhaps because discovery takes place outside the
presence of the court.
a. Inappropriate Questions
The Minnesota Supreme Court in In re Petition for Disciplinary Action Against Kurzman, suspended a lawyer for 60 days after he asked questions during a deposition that inappropriately assumed the witness had been accused of sexual misconduct with minors.46 The deponent was
the court-appointed parenting consultant in a child visitation matter:
Q. When you were accused of inappropriate contact with some of your
clients, boys, at that time did you undergo a polygraph examination?
41 MODEL RULES OF PROF’L CONDUCT R. 3.2. 42 MODEL RULES OF PROF’L CONDUCT R. 3.4(a). 43 MODEL RULES OF PROF’L CONDUCT R. 3.4(d). 44 MODEL RULES OF PROF’L CONDUCT R. 1.3 cmt. 1. 45 MODEL RULES OF PROF’L CONDUCT R. 4.4(a). 46A14-1416 (Minn. Nov. 25, 2015).
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A. I’ve never been accused of inappropriate contact with—you mean
patients?
Q. Yeah.
A. I’ve never been accused of inappropriate contact with boys who’ve been
my patients.
***
Q. Have you ever been accused of inappropriate contact with any children?
A. No. Not that I’m aware of, no. Never any allegations. I would love to
see any documentation of that. It actually can’t exist.
After a disciplinary hearing, the Minnesota Supreme Court concluded that the attorney had no good faith basis for asking these questions.
b. Failing or Refusing to “Meet and Confer”
The bankruptcy court in New Prods. Corp. v. Tibble (In re Modern Plastics Corp.), issued sanctions of approximately $165,000.00 against the plaintiff and plaintiff’s counsel under
Rules 37(a)(5) and 45(d)(2) of the Federal Rules of Civil Procedure (applicable in adversary proceedings) for failing to “meet and confer” over subpoenas duces tecum after the nonparties subject to the subpoenas objected to the enormous breadth and scope of the subpoenas, the amount of work required to assess the demands, and the effort required to gather and produce responsive materials.47 Counsel for the non-parties asked the plaintiff’s attorney to meet in an attempt to resolve the objections and limit the burdens imposed by the subpoenas. Plaintiff’s counsel “went completely dark” and then issued additional subpoenas to entities also represented
47, No. 13-80252, slip op. at *28 (Bankr. W.D. Mich. July 23, 2015) (Dkt. 138).
Page 18 of 47 by counsel for the non-parties that involved electronically stored information (“ESI”). The non-parties retained an ESI vendor to sift through the ESI, at considerable expense. In describing the burdens associated with responding to the discovery, the court noted:
Nevertheless, heedless of these obvious burdens, [plaintiff’s counsel] issued
subpoenas, as an officer of the court, that required a global banking giant and a
national law firm—neither a party to the litigation—to produce documents
involving their clients in thirty-six categories, covering a decade, within a
fortnight—spanning the Labor Day holiday.48
The bankruptcy court further commented:
Moreover, the court perceived not even a whiff of justification for the conduct of
[the plaintiff] or its counsel, in terms of avoiding undue burden resulting from the
subpoenas, let alone a “substantial” justification, during the two hearings the court
held in connection with the discovery dispute.49
In Physicians Choice of Arizona Inc. v. Miller,50 an Arizona state court judge was at a loss to find specific support for the Plaintiff’s Motion to Compel Acceptance of Lunch Invitation but granted the motion anyway. The genesis of the unusual motion was plaintiff’s counsel’s extension of a lunch invitation to defendant’s counsel to discuss discovery and other matters, which defendant’s counsel ignored. The reason he ignored the invitation was because he distrusted the plaintiff’s motives and was afraid that plaintiff’s counsel’s purpose was to persuade him of the lack of merit in the defense of the case. After the motion was filed,
48Id. at *13. 49Id. at *20. 50No. CV 2003-020242 (Ariz. Sup. Ct. July 19, 2006).
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however, defendant’s counsel made an illusory acceptance of the lunch invitation by selecting
Ruth’s Chris as the restaurant. The acceptance was illusory because “Ruth’s Chris, while open
for dinner, is not open for lunch.” The court granted the motion and listed numerous restaurants
from which counsel could choose to meet. The court also gave detailed instructions about how
the lunch would be paid, including the amount of the tip.
2. Scheduling Conflicts
A lawyer shall make reasonable efforts to expedite litigation consistent with the
interests of clients.51
Lawyers should accommodate the schedules of their adversaries when it is reasonable to
do so. As a practical matter, most lawyers realize that it is easier to ask for a favor from someone
whom you previously granted a favor. Also, it is a waste of judicial resources to bring trivial
disputes before the court when they should be resolved between lawyers.
In Arizonis v. Suffolk Bus Corp., counsel for both parties filed a motion asking the court
to resolve an impasse regarding the priority and scheduling of depositions.52 The issue was
whether the plaintiff or defendants’ witnesses would be deposed first. The district court
resolved the dispute by instructing the parties, in meticulous detail, how to flip a coin. In
reaching its decision, the court was inspired by the method used by another district court to
resolve a dispute regarding the situs of a deposition, a game of “rock-paper-scissors.”53
51 MODEL RULES OF PROF’L CONDUCT R. 3.2. 52No. 13-0964, 2014 WL 1379639 (E.D.N.Y. Jan. 8, 2014). 53Avista Mgmt., Inc. v. Wausau Underwriters Ins. Co., No. 6:05-CV1430ORL31JGG, 2006 WL 1562246 (M.D. Fla. June 6, 2006).
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In Menchaca v. Barrera (In re Barrera),54 the defendant in an adversary proceeding filed an emergency motion to extend the deadline to respond to a complaint. The defendant had retained counsel on May 13, 2016, and the response deadline was May 18, 2016. In email exchanges between them, plaintiff’s counsel refused to grant a 45-day continuance unless defendant agreed to produce certain documents but agreed not to take a default that week. The bankruptcy court was “somewhat chagrined by the inability of both counsel to work out a reasonable extension of time . . . and their lack of civility and professionalism as shown by their sharp and unbecoming litigation gamesmanship and posturing in their email correspondence.”
The bankruptcy court found fault with both counsel. The defendant’s counsel’s request for a
45-day extension was not reasonable because it was tied to the need to prepare a voluntary motion to dismiss the debtor’s bankruptcy case, as a tactic, rather than the need to prepare a response to the adversary complaint. The plaintiff’s counsel’s response to the request for a
45-day extension likewise was not reasonable “since [he] would not consider a first extension of
. . . [the] response deadline beyond a stingy two days unless [the defendant] complied with the extraneous condition of first providing discovery material.” The bankruptcy court granted the motion but extended the deadline by only 14 days.
In Hyperphrase Technologies, LLC v. Microsoft Corp., 55 nine (9) attorneys for
Hyperphrase Technologies, LLC (“Hyperphrase”) filed a motion to strike the summary judgment motion filed by Microsoft Corp. (“Microsoft”) for untimeliness. The deadline for filing summary judgment motions, according to the district court’s scheduling order, was June 25, 2003. For
54No. 2:16-ap-01885, 2016 WL 3004429 (Bankr. C.D. Cal. May 17, 2016). 55No. 02-C-647-C, 2003 WL 21920041 (W.D. Wis. July 1, 2003).
Page 21 of 47 any electronic document, this meant a deadline of midnight on the due date, but Microsoft did not e-file its summary judgment motion until 12:04:27 a.m. on June 26, 2003, with some supporting documents trickling in as late as 1:11:15 a.m. The district court denied the motion, despite “Microsoft’s four minute and twenty-seven second dereliction of duty,” but “to demonstrate the even-handedness of its magnanimity,” allowed Hyperphrase on some future occasion “to e-file a motion four minutes and thirty seconds late, with supporting documents to follow up to seventy-two minutes later.
3. Accusing Opposing Counsel of Unethical Behavior
A lawyer who knows that another lawyer has committed a violation of the Rules of
Professional Conduct that raises a substantial question as to that lawyer’s
honesty, trustworthiness or fitness as a lawyer in other respects, shall inform the
appropriate professional authority.56
Recently, the Iowa State Bar Association asked, “Is it unethical to call a fellow lawyer unethical?”57 In Iowa, a lawyer who knows another lawyer has violated ethics rules must report the violation to the state’s lawyer disciplinary board regardless of the nature or seriousness of the alleged violation. The Iowa State Bar clarified that a lawyer engages in unprofessional conduct when he warns opposing counsel of the “potential” for an ethics violation with the ulterior motive of obtaining some tactical advantage in the litigation. The Iowa State Bar Association relied on an opinion of the ABA Standing Committee on Ethics and Professional Responsibility, which addressed whether an attorney may threaten to file a disciplinary complaint against
56 MODEL RULES OF PROF’L CONDUCT R. 8.3(a). 57Iowa Ethics Op. 14-02 (Oct. 24, 2014).
Page 22 of 47 opposing counsel to force a settlement in a civil case. In ABA Formal Opinion 94-383: “Use of
Threatened Disciplinary Complaint Against Opposing Counsel,” the Standing Committee answered “no” to that question for the following reasons:
A lawyer’s use of the threat of filing a disciplinary complaint or report against
opposing counsel, to obtain an advantage in a civil case, is constrained by the
Model Rules, despite the absence of an express prohibition on the subject. Such
a threat may not be used as a bargaining point when the subject misconduct raises
a substantial question as to opposing counsel’s honesty, trustworthiness or fitness
as a lawyer, because in these circumstances, the lawyer is ethically required to
report such misconduct. Such a threat would also be improper if the professional
misconduct is unrelated to the civil claim, if the disciplinary charges are not
well-founded in fact or in law, or if the threat has no substantial purpose or effect
other than embarrassing, delaying or burdening the opposing counsel or his client,
or prejudicing the administration of justice.58
In a similar vein, the bankruptcy court in In re Gordon held that accusations of unethical conduct “have absolutely no place” in a pleading.59Counsel for a bank filed a motion to compel discovery from the chapter 7 trustee. In one of the pleadings submitted in support of the motion to compel, the bank’s counsel suggested that the trustee was filing baseless litigation and pursuing matters in order to collect fees for himself:
Only by sweeping these issues under the rug will the Trustee be able to play his
58 ABA Formal Opinion 94-383 (July 5, 1994). 59484 B.R. 825 (Bankr. N.D. Okla. 2013).
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end game strategy of asserting wild claims against Commerce Bank in hopes of
coercing Commerce Bank into a settlement (which the Trustee hopes will
generate a significant contingency fee for himself).60
The bankruptcy court denied the motion to compel and in the course of that ruling, noted that if the bank or its counsel had evidence of improper conduct by the trustee, they had a duty to report such conduct to the U.S. Trustee and possibly the State Bar. “Such personal and vitriolic accusations have no place as part of a litigation strategy, at least before this Judge.”61Counsel for the bank wrote a letter to the Assistant U.S. Trustee and others reiterating the allegations made against the chapter 7 trustee in the bank’s motion to compel. The bank’s efforts failed.
Feeling aggrieved, the trustee filed a motion for sanctions against the bank and its counsel on the ground that, inter alia, writing the letter was undertaken in bad faith and for an improper purpose.
The bankruptcy court declined to sanction the bank or its counsel. “Counsel who are aware of conduct that violates [the Model Rules of Professional Conduct] have an ethical duty to report it to the proper authorities . . . . The United States Bankruptcy Court . . . is not a substitute for these institutions.”62
C. Lawyer’s Duty to the Court
A lawyer should demonstrate respect for the legal system and for those who serve
it including judges, other lawyers and public officials.63
60Id. at 827-28. 61Id. at 828. 62Id. at 831. 63 MODEL RULES OF PROF’L CONDUCT Preamble.
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It is professional misconduct for a lawyer to . . . engage in conduct that is
prejudicial to the administration of justice.64
The administration of justice . . . is a truth-seeking process designed to resolve
human and societal problems in a rational peaceful and efficient manner.65
1. False Statements
The bankruptcy court in In re Howe sanctioned a debtor’s counsel for making a false
certification in the schedules indicating that the debtor had sought and obtained credit counseling
prior to the filing of her petition from an agency approved by the U.S. Trustee..66
The failure to examine the United States Trustee’s website to determine whether
the entity from which the debtor obtained counseling was a credit counseling
agency approved by the United States Trustee necessarily means that there was
not an inquiry that was reasonable under the circumstances regarding whether the
debtor had obtained counseling from an agency approved by the United States
Trustee.67
The clerk of court had issued a notice listing various deficiencies in the petition and directing the debtor to file an amended petition by a date certain. The clerk warned that the petition may be stricken if the debtor failed to comply. The debtor’s counsel took no steps to prevent the dismissal of the case or to address the notices issued by the clerk. The bankruptcy court ruled that the debtor’s counsel violated Rule 9011(b)(3), directed the debtor’s counsel to pay the
64 MODEL RULES OF PROF’L CONDUCT R. 8.4(d). 65 Standards for Prof’l Conduct Within the Seventh Fed. Judicial Circuit, Preamble. 66No. 15-00344, 2015 WL 4880862 (Bankr. D.C. Aug. 14, 2015). 67Id. at *1.
Page 25 of 47 balance of the filing fee, and ordered him to disgorge all fees paid by the debtor.
2. Candor Toward the Court
A lawyer shall not . . .knowingly make a false statement of fact or law to a
tribunal or fail to correct a false statement of material fact or law previously
made to the tribunal by the lawyer.68
When a lawyer is before the court, he must do more than merely tell the truth. A lawyer must be “candid.” A lawyer is subject to discipline if he knowingly makes a false representation about the law.
The district court in Hoover v. Harrington (In re Hoover), affirmed the bankruptcy court’s order finding that an attorney violated Rule 9011(b)(2) by: (1) misstating the prevailing legal standard for willful violations of the automatic stay in the debtor’s motion for sanctions and
(2) misquoting the statutory definition of “cash collateral” in the debtor’s objection to the U.S.
Trustee’s motion to convert or dismiss the case.69 Rule 9011(b)(2) provides:
By presenting to the court (whether by signing, filing, submitting, or later
advocating) a petition, pleading, written motion, or other paper, an attorney or
unrepresented party is certifying that to the best of the person’s knowledge,
information, and belief, formed after an inquiry reasonable under the
circumstances,—
(2) the claims, defenses, and other legal contentions therein are
warranted by existing law or by a nonfrivolous argument for the extension,
68 MODEL RULES OF PROF’L CONDUCT R. 3.3(a)(1). 69No. 14-40478, 2015 WL 5074480 (D. Mass. Aug. 27, 2015), appeal filed No. 15-2384 (1st Cir. Nov. 17, 2015).
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modification, or reversal of existing law or the establishment of new law.
FED. R. BANKR. P. 9011(b)(2). With regard to the first ground for sanctions, the attorney asserted that the continuation of a mortgage foreclosure sale post-petition constituted a willful violation of the automatic stay, and he cited three (3) Massachusetts bankruptcy cases that actually held the opposite view, that is, that a mortgagee has a limited right to continue a pending foreclosure sale without violating the automatic stay.70 The district court rejected the attorney’s description of the language in question as a nonfrivolous argument for a change in the law and concluded that the bankruptcy court did not clearly err in determining that the attorney made an unwarranted legal contention. With regard to the second ground for sanctions, the district court rejected the attorney’s argument that he merely paraphrased the statutory definition. The attorney wrote:
Under § 362(a), “cash collateral” means cash or other property “subject to a
security interest as provided in section 552(b) . . .” . In turn, § 552(b) defines the
relevant security interest as being based on a “security agreement” that the debtor
and the allegedly secured party “entered into . . . before the commencement of a
case. . . .” In other words, the lien at issue must be a consensual lien.71
The definition of “cash collateral” under § 363(a), however, defines the term more broadly to include cash and other specified assets “in which the estate and an entity other than the estate have an interest.” 11 U.S.C. § 363(a). Observing that the attorney had been sanctioned under
Rule 9011 previously for similar misconduct, the bankruptcy court ordered him to “enroll in and
70Lynn-Weaver v. ABN-AMRO Mortg. Grp., Inc. (In re Lynn-Weaver), 385 B.R. 7,11 (Bankr. Mass. 2008). 71Id. at *3.
Page 27 of 47 attend in person (not online) a one (1) semester, minimum three (3)-credit hour class on legal ethics or professional responsibility in an ABA accredited law school.”72 On appeal, the district court affirmed the sanctions.
3. Creative Claim or Vexatious Litigation?
A lawyer may not assert frivolous positions, claims, defenses, or motions.73 The mere fact that a legal position is “creative” or contrary to existing law does not make the litigation vexatious. When allegations are made without any reasonable basis and are designed merely to embarrass or to fulfill some other improper motive, however, they may render the lawyer subject to disciplinary action.
The debtor in re White-Robinson owned and operated a clothing store at a shopping center where she maintained inventory (mostly clothing and costume jewelry) and equipment
(shelving, mannequins, and some furniture).74 After the debtor became delinquent in her rent, her landlord locked the doors of the store and sued the debtor in state court for breach of the lease agreement. Three months later, the debtor filed a petition for relief under chapter 7. The debtor’s bankruptcy counsel immediately demanded that the landlord unlock the doors and allow the debtor to remove the inventory and equipment. The landlord promptly contacted the chapter
7 trustee. Based on the trustee’s instructions, the landlord refused to allow the debtor access to the store without coordination with the trustee. A few weeks later, the chapter 7 trustee visited the location and invited the debtor to retrieve any personal items. At that time, the chapter 7 trustee did not want the debtor to remove any business assets from the store in the event there
72Id. 73 MODEL RULES OF PROF’L CONDUCT R. 3.1. 74No. 11-32080-SGJ-7, 2011 WL 4807934 (Bankr. N.D. Tex. Oct. 11, 2011).
Page 28 of 47 was an objection to their exempt designation. The landlord did object, but was overruled by the bankruptcy court.
The debtor sought sanctions against the landlord for its alleged willful violation of the automatic stay by: (1) making “repeated” collection telephone calls to the debtor after receiving notice of the filing of the bankruptcy case; (2) using “aggressive collection efforts” by demanding payment in the form of “invoices”; (3) continuing to prosecute the state court lawsuit post-petition; (4) damaging some business assets and failing to return a shampoo bowl, ladder, and dressing-room curtains; and (5) filing a baseless objection to the debtor’s exemptions. The debtor accused the landlord of having an “intent to play games” and asserted that this had caused her to suffer “insomnia, marital difficulty, and emotional distress.”
After a two-day hearing, the bankruptcy court found that the debtor’s testimony, along with other evidence, established that the landlord: (1) placed one telephone call to the debtor and one to the debtor’s counsel on the same day the petition was filed before the landlord had been sent notice of the bankruptcy filing; (2) sent the debtor exactly one invoice mistakenly generated by a computer; (3) did nothing to further prosecute the state court lawsuit; and (4) never did anything to the business assets except in coordination with the chapter 7 trustee. The bankruptcy court also found that there was no evidence of any damages suffered by the debtor.
There was no evidence that the debtor was treated by a doctor or counselor or that she had taken any special medication during the pendency of the bankruptcy case. The bankruptcy court summarized the basis of the debtor’s contempt motion as follows: (1) one invoice erroneously sent by computer and (2) an allegedly missing shampoo bowl, ladder, and curtains. The bankruptcy court noted several procedural deficiencies in the filing of the motion, including (1)
Page 29 of 47 the failure of the debtor’s counsel to confer with the landlord’s counsel prior to filing the motion;
(2) the failure of the debtor to appear for her deposition; and (3) the failure of the debtor to file her witness and exhibit lists in a timely manner.
The bankruptcy court concluded that the conduct of debtor’s counsel in connection with the motion constituted a violation of Rule 9011(b), given that the factual allegations in the motion had no evidentiary support, that debtor’s counsel should have known the motion lacked evidentiary support, and that the motion was procedurally deficient. Based on its authority under
28 U.S.C. § 1927, the bankruptcy court ordered the debtor’s counsel to pay the landlord, through its counsel, $20,000.00, a portion of the attorney’s fees incurred by the landlord in defending the motion.
On appeal to the district court, the debtor’s counsel argued that “the bankruptcy court may not expect an attorney to have 20/20 hindsight where no evidence was presented or suggested that [she] knew her client’s arguments would fail at the time of filing.”75 The district court rejected her argument and affirmed the sanctions order, noting that the debtor was the attorney’s sole source of information and the debtor’s testimony was inconsistent with the allegations in the motion. The Fifth Circuit affirmed the sanctions order in a two (2)-paragraph order.76
In the interim, during the pendency of the appeal of the sanctions order, the debtor’s counsel did not pay the court-ordered sanctions. At another show-cause hearing, the
75 White-Robinson v. Coventry II DDR/Trademark Montgomery Farm, L.P. (In re White-Robinson), No. 3:2-CV-259-P (N.D. Tex. Nov. 13, 2012). 76 White-Robinson v. Coventry II DDR/Trademark Montgomery Farm L.P. (In re White-Robinson), 551 F. App’x 121 (5th Cir. 2014).
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bankruptcy court ordered the debtor’s counsel(and her law firm) to pay an additional $6,454.50,
the expenses the landlord incurred in attempting to enforce the sanctions order. Additionally,
the bankruptcy court ordered her to pay $100.00 every day that she did not pay the sanctions.
The debtor’s counsel appealed the contempt order, which the district court affirmed. On appeal
to the Fifth Circuit, the debtor’s counsel argued, inter alia, that the sanctions order violated 28
U.S.C. § 2007, the federal prohibition on imprisonment for a debt, because imprisonment is a
possible remedy for civil contempt.77The debtor’s counsel also asked the Fifth Circuit to vacate
the contempt order and remand for consideration of her financial ability to pay. (By then, she
owed well over $100,000.00 because of the amount of time that had elapsed.) The Fifth Circuit
held that a civil contempt order that does not impose imprisonment cannot violate 28 U.S.C. §
2007. The Fifth Circuit declined to remand the contempt order. Given that the debtor’s counsel
did not obtain or pursue a stay of the sanctions order, she had only herself to blame for the
accrued balance.
In In re Freeman, a chapter 13 case commenced on December 5, 2014, the debtor sought sanctions against a claimant under Rule 9011 for filing a “stale” proof of claim (“POC”).78 The
POC was supported by a copy of a bill dated April 28, 2004. The debtor asserted that the
applicable statute of limitations had expired and, therefore, the claim “is completely without the
claimed value, uncollectable [sic] at law, and without reasonable basis in law or fact.”79 The
bankruptcy court noted that there was conflicting authority on whether Rule 9011(b)(2) imposed
77Garrett v. Coventry II DDR/Trademark Montgomery Farm L.P. (In re White-Robinson), 777 F.3d 792 (5th Cir. 2015). 78 540 B.R 129 (Bankr. E.D. Pa. 2015). 79Id. at 133.
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a duty on a claimant to investigate and develop plausible responses to obvious affirmative
defenses before filing a proof of claim, and that sanctions were not appropriate “unless and until
the Supreme Court resolves the issue.”80
In In re Falbo,81the debtor’s father died while owning a home secured by a mortgage held
by Wilmington Savings Funds Society (“Wilmington”). The debtor did not own or inherit the
home and was not an obligor on the mortgage. Therefore, when the debtor commenced a chapter
13 bankruptcy case three (3) years after her father’s death, she did not list her father’s home or
the mortgage in her bankruptcy schedules. Even so, Wilmington’s counsel filed a proof of
claim in the amount of $116,892.84. The debtor contacted Wilmington’s counsel to explain
that her father left the home to his grandchildren, not to her, pursuant to his will that was in
probate, and she had no interest in the property. According to the debtor, Wilmington’s counsel
called her a liar.
The debtor filed an objection to Wilmington’s claim to which she attached a copy of the
will and the state court order admitting the will to probate. Wilmington’s counsel filed a
motion to lift the stay in which Wilmington asked the Court to limit communications regarding
the mortgage to the debtor (to the detriment of the grandchildren). At a hearing, the court
granted Wilmington’s motion to lift the stay but without the additional language requested by
Wilmington and also disallowed Wilmington’s claim. Debtor’s counsel requested attorney’s
fees of $700.00 for having to file the claims objection. The bankruptcy court instructed
80Id. at 144. The U.S. Supreme Court heard arguments on January 17, 2017, in the appeal of Johnson v. Midland Funding, LLC, 823 F.3d 1334 (11th Cir. 2016), where the Eleventh Circuit held that filing proofs of claim for debts that are time-barred did not prelude liability under the Fair Debt Collection Practices Act. 81560 B.R. 203 (Bankr. W.D.N.Y. 2016).
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Wilmington’s counsel to contact debtor’s counsel to settle the amount of attorney’s fees.
Wilmington’s counsel did not call debtor’s counsel but instead filed a motion to reconsider that
included 102 pages of exhibits. At the hearing on the reconsideration motion, the court
awarded debtor’s counsel $1,200.00 in attorney’s fees and ordered Wilmington’s counsel to
write a letter of apology to the debtor. The bankruptcy court found that Wilmington’s counsel
engaged in “vexatious litigation conduct” by filing 102 pages in exhibits seeking reconsideration
of a ruling in favor of his client.
The actions of Wilmington’s counsel were disproportionate to the relief sought.
Proportionality is already a factor in determining the permissible scope of discovery under Rule
26(b)(2) of the Federal Rules of Civil Procedure (made applicable in adversary proceedings by
Rule 7026). The decision in Falbo supports the view that proportionality is also an important
factor in determining when litigation is vexatious.82
4. Forum Shopping
In Adams v. United Services Automobile Association, the plaintiffs in a class action suit
alleged that United Services Automobile Association and others underpaid class members for
actual cash value claims made under property insurance policies.83 The defendants had removed
the case from the Circuit Court of Polk County, Arkansas, to federal court where it stayed on the
docket for seventeen (17) months before it was voluntarily dismissed. During much of that time
82 Country Credit, LLC v. Martin (In re Martin), Adv. Proc. 13-00090-NPO, slip op. at 27 (Bankr. S.D. Miss. 2016) (noting that creditor’s actions in bringing adversary proceeding to dispute the dischargeability of a debt of approximately $1,200.00 were disproportionate to amount at stake, given that the debtor proposed to pay the creditor in full through his chapter 13 plan). 83 No. 2:14-CV-02013-PKH (W.D. Ark. Dec. 21, 2015) (Dkt. 37).
Page 33 of 47 period, the district court granted the parties’ request to stay the case on the ground they were actively engaged in settlement negotiations. The day after the plaintiffs voluntarily dismissed the federal case, they refiled in state court with a proposed class action settlement that required the insurer to set aside $3.4 million for class members and pay plaintiffs’ lawyers up to $1.85 million in fees and expenses. On the same day the state court approved the settlement, the district court scheduled a show cause hearing to determine whether the lawyers used the federal court “as a bargaining chip in the negotiation of an ultimately questionable settlement” and then opted for state court “to evade the federally mandated review of the class and the settlement by this Court in particular.”
After the show cause hearing, the federal court concluded that the attorneys violated Rule
11 (b)(1) of the Federal Rules of Civil Procedure by filing the stipulation of dismissal, finding that “[r]efiling in a more favorable forum and avoiding an adverse decision are improper purposes for dismissal.”84 After another hearing to determine whether and what sanctions should be issued, the federal court issued a reprimand against five (5) of the attorneys, who recently appealed the decision.
In In re Currency Management Co., Ltd.,85 a chapter 7 case, creditor Matt’s Landscaping
Contractors, Ltd. (“Matt’s”) moved for sanctions against the attorney (“Thompson-Burks”) for the debtor, Currency Management Co., Ltd. (“Currency”), pursuant to Rule 9011. The court permitted limited discovery and an evidentiary hearing. After considering the evidence, the court concluded that sanctions were appropriate for the counsel’s attempt to relitigate a state court
84Id. (Dkt. 61). 85No. 09 B 03825, 2010 WL 3523086 (Bankr. N.D. Ill. Sept. 3, 2010).
Page 34 of 47 dispute in the bankruptcy case.
In December 2006, Matt’s sued Currency in the Circuit Court of Cook County, Illinois, for Currency’s alleged breach of a snow removal contract. Thompson-Burks represented
Currency in the state court action. Because Currency failed to comply with state discovery rules, the circuit court barred Currency from presenting any witnesses or evidence at trial. On February
6, 2009—three (3) days before the state court trial was set to begin—Thompson-Burks filed a chapter 7 bankruptcy petition on behalf of Currency. Subsequently, Thompson-Burks twice challenged the bar orders in state court, but her attempts were unsuccessful. Thompson-Burks then attempted to present the evidence she could not offer in state court in the bankruptcy court.
On July 22, 2010, Thompson-Burks appeared before the bankruptcy court, which inquired as to the status of the state court action and whether Thompson-Burks would again try to challenge the bar orders in state court. She responded that she “would, having tried it before
[the bankruptcy court] and not prevailing.” The bankruptcy court noted that “this frank acknowledgment, coupled with the timing of the bankruptcy filing on the eve of trial, points to only one conclusion: the bankruptcy was filed to avoid the adverse state court proceedings.”
The bankruptcy court concluded that Thompson-Burks had misused the bankruptcy process to relitigate Matt’s breach of contract claim in the bankruptcy court, as opposed to the state court where she was barred from introducing evidence or witnesses after Currency violated state discovery rules. The court held that Thompson-Burks’ attempt at forum-shopping was “not a proper use of [the bankruptcy] court,” because it is “bad faith” to “use a bankruptcy filing solely as a tactic designed to gain a litigation advantage over a creditor.”
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5. Plagiarism
It is professional misconduct for a lawyer to . . . engage in conduct involving
dishonesty, fraud, deceit or misrepresentation.86
A lawyer shall not make an agreement for, charge, or collect an unreasonable
fee. . . .87
As defined in Black’s Law Dictionary, plagiarism is “[t]he deliberate and knowing presentation of another person’s original ideas or creative expressions as one’s own.”88 The
ABA Model Rules do not directly address plagiarism. Nevertheless, some courts have ruled
that plagiarism is a form of dishonesty and misrepresentation that warrants sanctions. But
lawyers routinely use legal forms and borrow ideas and boilerplate language without citing the
original source. When does the use of outside sources without attribution become plagiarism?
Another related issue is how much may an attorney charge a client for work that is unoriginal?
In Shodeen v. Petit (In re Burghoff),89 the defendant in an adversary proceeding sought
to remove counsel for the chapter 7 trustee based on an alleged potential conflict of interest. To
that end, counsel for the defendant submitted an eighteen (18)-page brief and a nine (9)-page
post-hearing brief. After reading both briefs and concluding that they each contained an
“extraordinary amount of research,” the bankruptcy court directed counsel for the defendant to
certify the author or authors of the briefs. Counsel for the defendant certified that he had
prepared both briefs but noted that he had “relied heavily” on an article written by others. He
86MODEL RULES OF PROF’L CONDUCT R. 8.4(c). 87MODEL RULES OF PROF’L CONDUCT R. 1.5(a). 88BLACK’S LAW DICTIONARY 1335 (10th ed. 2014). 89374 B.R. 681 (Bankr. N.D. Iowa 2007).
Page 36 of 47 did not cite the article. The bankruptcy court on its own located the article, published on the internet by two attorneys of a New York law firm. A comparison revealed that the first seventeen (17) pages of the initial brief consisted verbatim of excerpts from the article. The post-hearing brief reproduced string citations from the article but its text contained mostly original material. Counsel for the defendant charged his client $5,737.50 for 25.5 hours of work preparing both briefs.
At a sanctions hearing set on the bankruptcy court’s own motion, counsel for the defendant explained that he used the article as the framework for the initial brief but admitted that he had “stepped over the line” by not making greater changes to the original text. He denied that the post-hearing brief violated any ethical rule because he did not believe that the act of copying string citations constituted plagiarism.
The court found that counsel for the defendant had plagiarized both briefs by passing off the ideas in the article, including the citations, as his own. The court also found that counsel for the defendant had charged his client an unreasonable amount given the actual labor and time he expended in preparing the briefs. As sanctions, the court ordered counsel for the defendant to complete a law school class on professional responsibility and to disgorge any fees charged his client for preparing the briefs.
In McCullough v. World Wrestling Entertainment, Inc., 90 fifty-three (53) retired professional wrestlers alleged in a complaint (the “WWE Complaint”) that they sustained traumatic brain injuries during their employment with World Wrestling Entertainment, Inc.
(“WWE”), an entertainment company that produced televised wrestling programming. The
90Case No. 3:15-cv-01074-VLB (D. Conn. Oct. 17, 2016).
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WWE filed a motion seeking sanctions against the wrestlers and their counsel because the WWE
Complaint “blatantly and shamelessly plagiarizes extensive allegations from the concussion lawsuit filed against the NFL.”91 Among the numerous examples of plagiarism listed by the
WEE in its fifty-six (56)-page sanction motion, were the following:
1. The wrestlers copied the allegation in the complaint filed in the NFL
lawsuit (the “NFL Complaint”) concerning a statement made by NFL
Commissioner Roger Goodell in 2007 but changed the allegation to attribute the
statement to the WWE.
2. The wrestlers copied the allegation in the NFL Complaint that the
American Football Coaches Association had published a warning in 1983 that
players who suffer a concussion should be removed from sports but changed it to
claim that the report was about wrestlers instead of football players.
3. The wrestlers copied the allegation in the NFL Complaint that football
player Mike Webster sustained repeated and disabling head impacts while playing
for the Steelers but changed the allegation to claim that Mike Webster was a
wrestler.
As sanctions, the WWE asked the District Court to dismiss the WWE Complaint with prejudice and order the wrestlers to pay its attorney’s fees and costs. The District Court has not yet ruled on the sanction motion.
Allegations of plagiarism are not limited to attorneys. An often-quoted passage from a
Mississippi Supreme Court case on closing arguments to the jury, according to legal lore, was
91Id. slip op. at 10.
Page 38 of 47 plagiarized from the brief of the poet William Alexander Percy, an excerpt of which follows:
Counsel may draw upon literature, history, science, religion, and philosophy for
material for his argument. He may navigate all rivers of modern literature or sail
the seas of ancient learning; he may explore all the shores of thought and
experience; he may, if he will, take the wings of the morning and fly not only to
the uttermost parts of the sea but to the uttermost limits of space in search of
illustrations, similes and metaphors to adorn his argument. . . . He cannot,
however, state facts which are not in evidence, and which the court does not
judicially know in aid of his evidence. Neither can he appeal to the prejudices of
men by injecting prejudices not contained in some source of the evidence.92
6. Ghostwriting
Every petition, pleading, written motion, and other paper, except a list, schedule,
or statement, or amendments thereto, shall be signed by at least one attorney of
record in the attorney’s individual name. A party who is not represented by an
attorney shall sign all papers.93
A lawyer shall not . . .knowingly make a false statement of fact or law to a
tribunal or fail to correct a false statement of material fact or law previously
made to the tribunal by the lawyer.94
“Ghostwriting” occurs when an attorney provides legal services to a litigant who is
92Nelms & Blum Co. v. Fink, 131 So. 817, 820-21 (Miss. 1930); Williams v. Miss., 595 So. 2d 1299, 1309 n.12. (Miss. 1992). 93 FED. R. BANKR. P. 9011(a). 94 MODEL RULES OF PROF’L CONDUCT R. 3.3(a)(1).
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purportedly acting pro se. The ethical issues raised by “ghostwriting "have been considered
under Rule 9011(a), which sets forth the signing requirements for documents submitted to
federal courts, and ABA Model Rule 3.3, which addresses a lawyer’s duty of candor to the court.
Numerous federal courts have found that attorneys who “ghostwrite” briefs or other pleadings
for ostensibly pro se litigants engaged in misconduct.95 In 2007, however, the ABA’s Standing
Committee on Ethics and Professional Responsibility issued an opinion adopting a more relaxed
stance on “ghostwriting,” concluding that “[a] lawyer may provide legal assistance to litigants
appearing before tribunals ‘pro se’ and help them prepare written submissions without disclosing
or ensuring the disclosure of the nature or extent of such assistance.”96 The ABA committee
based its opinion on ABA Model Rule 1.2(c), which provides that “[a] lawyer may limit the
scope of the representation if the limitation is reasonable under the circumstances and the client
gives informed consent.”97 Whether it is ethically permissible for an attorney to prepare
pleadings without disclosing the attorney’s participation varies among jurisdictions.
In In re Dreamplay, Inc., the corporate debtor filed a chapter 11 petition for relief.98
One of the debtor’s most valuable assets was its liquor license. A professional accountant and
creditor of the estate (the “Accountant”) decided that the liquor license was not property of the
debtor’s estate because it was issued in the name of two individuals. The Accountant obtained
a default judgment against one of the named individual licensees and caused the issuance of a
95See, e.g., Duran v. Carris, 238 F.3d 1268, 1271-73 (10th Cir. 2001). But see In re Fengling Liu, 664 F.3d 367 (2d Cir. 2011) (holding that ghostwriting did not violate lawyer’s duty of candor). 96ABA Standing Comm. on Ethics & Prof’l Resp., Formal Op. 07-446, Undisclosed Legal Assistance to Pro Se Litigants (2007). 97 MODEL RULES OF PROF’L CONDUCT R.1.2(c). 98In re Dreamplay, Inc., 534 B.R. 106 (Bankr. D. Md. 2015).
Page 40 of 47 writ of execution for the removal of the liquor license from the debtor’s business premises. The debtor filed a motion for sanctions, seeking damages against the Accountant for violation of the automatic stay. In response, the Accountant submitted an affidavit stating that he had consulted with “separate counsel with bankruptcy experience” with regard to the writ of execution.
Because state law clearly held that liquor licenses issued to individuals for use by a corporation are owned by the corporation, the bankruptcy court granted the debtor’s motion for sanctions against the Accountant.
The Accountant, while purportedly acting pro se, filed a motion for reconsideration and motion for stay of the sanctions order. Because there appeared to be an “uptick in[the] quality” of the papers previously filed by the Accountant, the bankruptcy court included a footnote in the order denying the motion for reconsideration disclosing its suspicion that ghostwriting had occurred. After the identity of the “separate counsel with bankruptcy experience” was revealed, the bankruptcy court issued a show cause order to that attorney. After a hearing, the bankruptcy court found that it was inappropriate for the attorney to practice law on behalf of the Accountant without either a state license or approved pro hac vice status and it was also inappropriate for the
Accountant to represent in papers that he was proceeding “pro se.” An attorney who actively represents a client is bound to do so in an open manner. “It cannot be done from the Twilight
Zone of shadowy, deflected responsibility where a lawyer is able to point the finger of blame at his client or otherwise duck and dodge when called to account for either advice or statements.”99
The bankruptcy court ruled that the attorney violated Rule 9011 and engaged in the unauthorized practice of law. The bankruptcy court reprimanded the attorney, barred him from ever
99Id. at 120.
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practicing law in that court again, ordered him to submit the opinion to the state disciplinary
counsel for whatever action it deemed appropriate, and ordered stricken from the record all
papers filed by him on the Accountant’s behalf.
7. Filing Unauthorized Documents
The advocate has a duty to use legal procedure for the fullest benefit of the
client’s cause, but also a duty not to abuse legal procedure.100
A lawyer shall not knowingly…make a false statement of fact or law to a tribunal
or fail to correct a false statement of material fact or law previously made to the
tribunal by the lawyer.101
The implementation of electronic case filing in 1999 eliminated the filing and storage of
mounds of paper. To preserve the integrity of the judicial process, most courts have adopted
local rules and procedures for filing, signing, maintaining, and verifying pleadings and
documents filed by electronic means.102 When an attorney files a document electronically that
purportedly contains the debtor’s signature, that attorney is representing to the court that he has
secured the original document with the debtor’s “wet” signature. The following cases involve
attorneys who falsely represented a document had been signed by the debtor.
a. Petition for Relief
The bankruptcy court in In re T.H. found that an attorney violated Rule 9011 and multiple state rules of professional conduct by electronically filing a petition for relief without
100 MODEL RULE OF PROF’L CONDUCT 3.1 cmt. 1. 101 MODEL RULE OF PROF’L CONDUCT 3.3(a)(1). 102 FED. R. BANKR. P. 5005.
Page 42 of 47 first obtaining the client’s authorization to do so.103 Counsel was unable to produce a copy of the petition with a “wet” signature and this resulted in a conclusive presumption that no signature existed. Moreover, according to the court, the alleged “exigent circumstances” for the filing—which were disputed by the client—did not justify the attorney’s disregard of his duties of care and due diligence in failing to make a reasonable inquiry into the client’s personal and financial circumstances before filing the petition. In addressing the firm’s practices, the court stated:
In addition to the troubling policies and practices, the [law firm]’s treatment of
T.H. post-filing and the reaction to her visit in March 2014 [are] unacceptable to
this Court. The [law firm] failed to properly follow-up with T.H. following the
filing of the Petition. The Court is not satisfied that [the attorney and the law
firm] put forth a sufficient good faith effort to contact T.H. to complete any of the
required actions in her case following her initial visit to the office. Moreover,
the [law firm]’s reaction and reception towards T.H. when she visited their office
upon discovering the filing that she did not authorize was obstinate and wholly
unprofessional. The Court accepts T.H.’s testimony that the reception was a
hostile one. The accusatory tone of [the attorney’s] letter to the U.S. Trustee
supports this conclusion. . . . It is unacceptable to this Court for the [law firm] to
treat T.H. in such a disrespectful manner when she was seeking assistance in
removing the unwanted bankruptcy ruling from her record.104
103529 B.R. 112 (Bankr. E.D. Va. 2015). 104Id. at 145-46.
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The bankruptcy court issued sanctions that included: (1) suspending the attorney from the practice of law for sixty (60) days; and (2) holding the attorney and the law firm jointly and severally liable to the alleged client for $1,000.00, which represented the disgorgement of the fee paid for the filing of the petition.
In In re Husain,105 a disciplinary proceeding was brought against an attorney, Al-Haroon
Husain (“Husain”), for filing bankruptcy petitions and other documents that did not bear his clients’ contemporaneous “wet” signatures, and that clients had not reviewed. The court held that permanent suspension from the practice of law before the bankruptcy court was appropriate discipline for the attorney.
In “filing documents with the Court that purported to bear his bankruptcy clients’ signatures as required by Rule 1008 and 28 U.S.C. § 1746, Husain represented to the Court that the documents had been properly executed in accordance with those requirements.” However, the “evidence show[ed] that on numerous occasions…Husain and [an employee] signed documents for clients, had clients sign incomplete documents and altered dates and reused clients’ signatures.” Moreover, Husain’s “contention that he had ‘authorization’ from each client with respect to each improperly executed document, even if true, in no way change[d] the patent falsity of Husain’s representations to the Court.” Thus, Husain violated Model Rule 3.3(a)(1).
The court also noted that, with the “scourge of identity theft,” it is not advisable for an attorney to file a bankruptcy case on behalf of a debtor he or she has not met with personally, or to get documents or information from a third party, because the “potential for fraud is too great.”
105533 B.R. 658 (Bankr. N.D. Ill. 2015).
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b. Installment Application
The debtor in In re Howard paid $1,500.00 to his attorney for bankruptcy legal fees and filing costs.106 Using the electronic filing system, the attorney filed on behalf of the debtor both a petition for relief and an application to pay the filing fee in installments (the “Installment
Application”) which bore the electronic signature of the debtor. The Installment Application falsely represented that the debtor did not have the ability to pay the filing fee in full. In fact, the debtor had already paid his attorney all of the legal fees and bankruptcy filing costs.
Although the Installment Application bore the electronic signature of the debtor, it was unsigned by the debtor and filed without the debtor’s knowledge or authority. The attorney entered into a consent order in which he agreed that his conduct violated several state rules of professional conduct, including: competence (Rule 1.1); scope of representation (Rule 1.2); communications
(Rule 1.4); candor toward the court (Rule 3.3); and misconduct (Rule 8.4). The bankruptcy court imposed disciplinary sanctions against the attorney that included: (1) revocation of the attorney’s electronic filing privileges for two (2) years; (2) return of all fees paid by the debtor to the attorney; (3) suspension from the practice of law before the district and bankruptcy courts for two years; and (4) a fine of $10,000.00 payable to the U.S. Trustee.
c. Petition and Certificate of Credit Counseling
In In re Dobbs, a voluntary chapter 13 petition for relief (the “Petition”) and certificate of credit counseling (the “First Certificate”) were filed by an attorney on behalf of the debtor.107The
Petition contained the debtor’s electronic signature. Later, a second certificate of credit
106No. 14-11041, 2015 WL 1969776 (Bankr. D.R.I. May 1, 2015). 107535 B.R. 675 (Bankr. N.D. Miss. 2015).
Page 45 of 47 counseling was filed on the debtor’s behalf by a different attorney. The court set a show cause hearing to determine why the debtor had filed two certificates of credit counseling. At that hearing, the debtor testified that he never attended the credit counseling as alleged in the First
Certificate. More important, he testified that he had never signed the Petition and was unaware for several weeks that the Petition had been filed. The court issued an order to the debtor’s first attorney requiring him to appear and show cause why sanctions and/or other disciplinary action should not be taken against him.
In response to the show cause order, the attorney mailed the court a letter explaining that the debtor’s ex-wife had consented to the filing of the Petition, and the ex-wife had completed the mandatory credit counseling. The attorney included in his letter an affidavit from the debtor’s ex-wife consistent with his story. The attorney’s recitation of events at the show cause hearing was consistent with the letter and the ex-wife’s affidavit—that the attorney had placed the debtor in bankruptcy without the debtor’s authorization, forged the debtor’s signature, and arranged for the debtor’s estranged wife to take the credit counseling that produced the First
Certificate. The court considered the attorney’s misconduct not only in the case before it but also in previous cases. The court noted that the attorney had been subject to numerous private and public reprimands by the Mississippi Bar as well as a suspension from the practice of law. With all previous efforts to deter misconduct having been exhausted, the bankruptcy court permanently disbarred the attorney from practicing law in the bankruptcy court pursuant to §
105, § 526(a)(5), Rule 9011(c), local rules, and the inherent power of the court. The debtor’s bankruptcy case was dismissed and closed. The attorney then filed a motion to reopen the closed bankruptcy case based allegedly on “newly discovered evidence.” At the hearing on the motion
Page 46 of 47 to reopen, both the attorney and the ex-wife changed their story and testified that the debtor was aware of the bankruptcy filing. The court did not find the ex-wife credible and for that reason and others denied the motion to reopen.
D. Conclusion
Maintaining ethical responsibility and professionalism is not only good business (because what goes around comes around) but also is necessary to avoid serious adverse consequences.
This is evidenced by the sanctions and other relief imposed against overzealous lawyers who ignore or subvert the ethical standards for professional conduct.
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