Filed November 27, 2007
In re Thomas Frederick Sax
Commission No. 03 CH 99
Synopsis of Review Board Report and Recommendation
Thomas Frederick Sax was charged in a two-count complaint with misconduct related to his involvement in the development of a golf-themed restaurant, both as a lawyer and later, as a participant in the project. Count I of the complaint alleged that Respondent failed to disclose the implications, advantages and risks of common representation when representing multiple clients in a single matter, represented clients when his representation might have been materially limited by his responsibility to another client or a third person, or by his own interests, represented a client whose interests were directly adverse to other clients, when he knew or reasonably should have known that his clients had adverse interests, failed to explain a matter to the extent reasonably necessary to permit his client to make informed decisions regarding his representation by withholding certain information regarding the joint representation, entered into a business transaction with a client without full disclosure, when he knew or reasonably should have known that he and his client might have conflicting interests, engaged in overreaching the attorney-client relationship; exerted undue influence over a client; and engaged in conduct that tended to defeat the administration of justice or to bring the courts or legal profession into disrepute. Count II alleged that Respondent represented a client in the same or substantially related matter in which that client's interests were materially adverse to the interests of former clients, without obtaining his former clients' consent after disclosure and engaged in conduct that tended to bring the courts or legal profession into disrepute. Respondent admitted some of the factual allegations of the complaint and denied some of them. He denied the allegations of misconduct.
The Hearing Board found that all of the charges of Count I of the complaint, and none of the charges of Count II had been proved by clear and convincing evidence. It recommended that Respondent be suspended for a period of six months.
The case was before the Review Board on Respondent's exceptions. He challenged the Hearing Board's determination that he had an attorney-client relationship with his purported client and claimed that the Hearing Board misapplied applicable law, improperly excluded relevant evidence, improperly rejected certain testimony and found Respondent had committed misconduct on the basis of the acts and conduct of other attorneys. The Administrator argued that the Hearing Board majority's findings and its recommended sanction should be affirmed.
The Review Board affirmed the Hearing Board's findings of fact and findings of misconduct. It recommended that Respondent be suspended from the practice of law for a period of six months.
BEFORE THE REVIEW BOARD
ILLINOIS ATTORNEY REGISTRATION
|In the Matter of:
THOMAS FREDERICK SAX,
Commission No. 03 CH 99
REPORT AND RECOMMENDATION OF THE REVIEW BOARD
The Administrator-Appellee filed a two-count complaint against Respondent-Appellant Thomas Frederick Sax, charging him with misconduct related to his involvement in the development of a golf-themed restaurant, both as a lawyer and later, as a participant in the project. Count I of the complaint alleged that Respondent failed to disclose the implications, advantages and risks of common representation when representing multiple clients in a single matter, in violation of Rule 1.7(c) of the Illinois Rules of Professional Conduct; represented clients when his representation might have been materially limited by his responsibility to another client or a third person, or by his own interests, in violation of Rule 1.7(b); represented a client whose interests were directly adverse to other clients, when he knew or reasonably should have known that his clients had adverse interests, in violation of Rule 1.7(a); failed to explain a matter to the extent reasonably necessary to permit his client to make informed decisions regarding his representation, by withholding certain information regarding the joint representation, in violation of Rule 1.4(b); entered into a business transaction with a client without full disclosure, when he knew or reasonably should have known that he and his client might have conflicting interests, in violation of Rule 1.8(a); engaged in overreaching the attorney-client relationship; exerted undue influence over a client; and engaged in conduct that
tended to defeat the administration of justice or to bring the courts or legal profession into disrepute, in violation of Supreme Court Rule 771, which has since been renumbered as Supreme Court Rule 770. Count II alleged that Respondent represented a client in the same or substantially related matter in which that client's interests were materially adverse to the interests of former clients, without obtaining his former clients' consent after disclosure, in violation of Rule 1.9(a) (1), and engaged in conduct that tended to bring the courts or legal profession into disrepute, in violation of Supreme Court Rule 771, (now Rule 770).
Respondent admitted some of the factual allegations of the complaint and denied some of them. He denied the allegations of misconduct.
The Hearing Board found that all of the misconduct charged in Count I of the complaint, and none of the misconduct charged in Count II had been proved by clear and convincing evidence. It recommended that Respondent be suspended from the practice of law for six months.
The case now comes before the Review Board on the exceptions of the Respondent. He claims that there was not clear and convincing evidence of the existence of an attorney-client relationship, that the Hearing Board misapprehended the applicable law and that it improperly rejected, excluded or considered certain evidence. The Administrator urges us to affirm the Hearing Board's findings and its recommended sanction.
The facts necessary to our determinations are summarized below. Further details can be found in the Hearing Board's Report and Recommendation.
In the summer of 1995 Steve Ruttenberg, a resident of North Carolina, was the sole shareholder of NFC, Inc., which did business as National Franchise Consultants. The company assisted other companies with expansion through all types of vehicles, including
licensing, franchising and distributorships. According to some of its literature, NFC had represented hundreds of businesses in dozens of industries with their expansion and marketing projects, but at this point, Ruttenberg became interested in developing a theme restaurant franchise of his own. Theme restaurants, such as the Hard Rock Cafe, were very successful at that time.
Ruttenberg attended a seminar on the subject, studied the industry and visited various restaurants in cities that seemed conductive to the idea. Eventually he focused on the concept of a golf-themed restaurant. He believed this would attract a demographic older than the "hamburger/fry crowd," people who spent more money, liked to eat out and actually played golf. He envisioned national expansion, and perhaps international.
Ruttenberg's plan had six important elements. He wanted to get the PGA Tour (Tour) involved, as well as famous celebrity golfers. He needed to find the right location for the restaurant, an architect to design it, and a restaurant operator to run it. He also needed capital, as he estimated the restaurant's start-up costs at $4,500,000 to $7,000,000.
Ruttenberg took several steps toward accomplishing his plan. He contacted the Tour's vice president of licensing, Jeff Monday, and on January 11, 1996, NFC entered into an agreement with the Tour whereby it had the exclusive right during the following ninety days to provide the Tour with a detailed development plan. He obtained proposals from two architectural firms interested in designing the restaurant, and hired two commercial real estate companies to scout locations. He entered into an agreement on behalf of NFC with National Restaurant Search to assist him in finding a vice president of operations. Ruttenberg retained the services of Curry Walls, a celebrity broker, to assist NFC in securing celebrity involvement. The two men put together a list of professional golfers they felt would be worth pursuing. Ruttenberg
estimated that he spent one hundred hours pursuing contacts with golfers on behalf of his project. Several showed interest in becoming involved.
Regarding his sixth element, capital investment, Ruttenberg contacted Keith Rudman, a friend from Chicago who he knew had the financial wherewithal to invest. The two men had been involved in an earlier business venture. Ruttenberg did not ask Rudman to invest himself. According to their first agreement, dated February 28, 1996, NFC would provide Rudman with equity in exchange for being allowed to name him in the development plan as a potential investor in the restaurant project.
Ruttenberg completed the project's preliminary plan and forwarded it to Monday on April 10, 1996. He also attended a meeting at the Tour's offices early that month. Monday made several suggestions concerning the project and invited Ruttenberg to bring all of the parties involved and make another presentation to the Tour. In a letter dated June 3, 1996, Ruttenberg declined. Since the Tour had indicated it planned to look at other proposals, NFC did not wish to disclose the details of its project under those conditions. NFC officially withdrew its proposal.
In late June, Ruttenberg asked Rudman to become more involved in moving the project forward. He advised Rudman of the status of the project, and the two men verbally agreed to become partners. Again, according to Ruttenberg, he asked Rudman only to help him secure capital, not to personally invest.
In late June or early July, Rudman suggested to Ruttenberg that they should talk to a friend of his at the law firm of Pedersen and Houpt, which Rudman described as "a one-stop shop for projects like this." The Pedersen firm had been involved in taking entities such as Einstein Bagels and Boston Market public, and the firm held itself out as experienced in
representing people starting businesses such as the golf-themed restaurant. According to Ruttenberg, Rudman thought they should retain the firm to help with the project, and he agreed.
On July 3, 1996, Rudman and Ruttenberg participated in a conference call with Respondent. Rudman and Respondent had been friends since they were seven years old and according to Ruttenberg, Rudman introduced him to Respondent as a friend from North Carolina who created a golf-themed restaurant concept and invited Rudman to become his partner, to which Rudman had agreed. Ruttenberg remembered Respondent's response as being something like, "Great. Let's go. Tell me all you can."
The men spent the next one and one-half to two and one-half hours discussing the project. Ruttenberg believed that he and Rudman were hiring Respondent and his firm as their attorneys for the project, and he described in detail his ideas concerning the concept and everything he had done to further it. He withheld no information. Ruttenberg was still negotiating with the Tour and was being pressured to disclose his operator and financial backers. He asked if Respondent could be of help in obtaining them, and Respondent agreed to make some calls.
When the conference call ended, Respondent telephoned his uncle, George Sax, who was a successful businessman and knew restaurant operators and financial investors such as Ira Kaufman and Arnold Morton. Respondent spoke to Ruttenberg again on July 5, 1996.
The three men held a second conference call on July 11, 1996. The purpose of the call was to further discuss how to proceed with the project, in terms of finding financing and an operator. John Muehlstein, another lawyer from the Pedersen firm, also participated in the call. Respondent thought it would be helpful to involve Muehlstein, as he had contacts in the restaurant industry. Ruttenberg understood that Muehlstein also had expertise in raising large
amounts of capital. During the ninety minute conversation, Ruttenberg explained the project and Muehlstein offered his advice. Following the call, at Muehlstein's request, Ruttenberg forwarded him five copies of the preliminary development plan. Ruttenberg considered both Respondent and Muehlstein to be his and Rudman's lawyers, and felt that the project was moving forward.
Shortly before the July 11th conversation, Ruttenberg had contacted Rudman regarding the need for them to document their earlier partnership agreement. According to Ruttenberg, in exchange for Rudman's assistance in completing the project by helping him to secure the necessary capital, the involvement of the Tour and celebrity endorsers, as well as helping him to find adequate restaurant operators, suitable designers and a suitable location, the two men would "equally share all stock, profits, equity, etc." in the project. On July 12, 1996, Ruttenberg, on behalf of NFC and Rudman executed a partnership agreement which according to its terms, would continue indefinitely until it was dissolved by their mutual consent. The purpose of the partnership was to engage in the business of developing and marketing a golf-themed restaurant chain, and to raise capital to fund it. They would split all profits equally. The agreement was not drafted by the Pedersen firm.
Work continued on the project during the next six or eight weeks. On August 2, 1996, Respondent met with Rudman, George Sax, Kaufman and Morton to discuss the golf-themed restaurant idea. Respondent and Rudman had a two-hour conference call with Ruttenberg a few days later to advise him about the meeting. Morton had questions as to whether the golf theme was a viable concept but nevertheless, on August 9, 1996 Morton, Kaufman, Ruttenberg, Rudman and Respondent participated in a conference call with Monday. The Tour was still showing an interest in the project, and Monday had been pressuring
Ruttenberg to identify his financing and his operator. According to Respondent, Morton and Kaufman agreed to participate to bolster Ruttenberg's credibility with the Tour. After ending the call with Monday, the rest of the participants discussed whether it was really necessary to have the Tour involved, but the partnership kept working to accomplish that.
During July and August 1996, Ruttenberg had numerous conversations with Respondent concerning the project. Respondent had given Ruttenberg his home number also. They discussed the proposal that the Pedersen firm was preparing to give to the Tour. Ruttenberg also continued to work with Curry Walls on obtaining celebrity endorsements. On August 20, 1996, he sent a fax to George Sax, with a copy to Respondent. Ruttenberg knew that Sax was meeting with Morton and Kaufman the next day, and wanted him to know that Jack Nicklaus had agreed to be an endorser. What Nicklaus's company had actually agreed to was that Nicklaus would make appearances. Respondent reviewed the document and told Ruttenberg that in his opinion, Nicklaus's fee was prohibitively expensive. Ruttenberg considered Nicklaus's agreement to be a good start.
Shortly afterward, Respondent asked Timothy Lavender, another attorney from the Pedersen firm, to become involved in the project. Lavender also was experienced in restaurant deals, but testified that he took direction from Respondent concerning this one. Respondent introduced Lavender to Ruttenberg as the attorney who would negotiate the agreement with Nicklaus. Ruttenberg set up a conference call with Andy O'Brien, Nicklaus's representative, to introduce the two men. He introduced Lavender as counsel for the partnership.
The PGA Tour had requested that the partnership provide it with a proposal by the end of August. According to the billing records, between August 26th and 31st, Lavender spent 11.5 hours doing work related to the PGA Tour and Nicklaus agreements. Respondent also
provided some input concerning the letter of intent to the Tour. Lavender spent an additional five hours on the restaurant project on August 28th, which included a meeting with Rudman, Rudman's assistant, another attorney from the Pedersen firm, Mike Black, and an accountant who worked with Pedersen & Houpt concerning restaurant acquisitions. The purpose of the meeting was to explain different ways to structure restaurant investment to Rudman.
On August 23, 1996, Rudman had confessed to Respondent that he felt embarrassed that he had vouched for Ruttenberg, who he believed had misrepresented the status of the restaurant project at the time that Rudman agreed to become involved. Rudman was considering several options, one being to cut all ties with Ruttenberg and have nothing further to do with the project. Alternatively, he considered being involved on different terms. Sometime around this time, Rudman decided that he would make an offer to pay Ruttenberg for his idea and for whatever agreements he actually had reached with Nicklaus and the Tour.
On September 3, 1996, at Rudman's request, Ruttenberg attended a meeting at the Pedersen firm. Ruttenberg believed that the purpose of the meeting was to have his attorneys explain how equity interests in deals such as the restaurant project were normally divided. Respondent, Rudman, Muehlstein, Lavender and Black were all present at the beginning of the meeting. Respondent introduced himself, as the two men had never met in person, and left the room after ten or fifteen minutes. Rudman also left at the beginning of the meeting as he explained that he did not wish to influence the advice that Ruttenberg would be given. According to Ruttenberg, this was the only time that he felt that the Pedersen firm was representing him personally, rather than the partnership, as he believed the lawyers were going to give him personal advice.
Muehlstein was the first to speak. He explained why the Pedersen firm had experience in matters such as these, and then left the room. According to Lavender, he was very uncomfortable at this point as he felt that he was left with "clearly an unrepresented individual." As Lavender remembered it, he explained to Ruttenberg that the firm represented Rudman and did not represent him, and Ruttenberg indicated that he understood. However, Lavender's notes from the meeting did not contain any mention of his admonition. He did not send any follow-up letter on this point. Black remembered Lavender's warning, but not any response by Ruttenberg.
Lavender then explained the proposed division of equity in the project, which gave Ruttenberg three percent. Ruttenberg did not agree to those terms. On September 6, 1996, he telephoned Respondent, concerned because Rudman had threatened to kill the deal. Respondent suggested that he work things out with Rudman. After their conversation, Ruttenberg faxed Respondent a copy of the July 12th partnership agreement. This was the first time that Respondent knew of its existence.
According to Ruttenberg, when he spoke to Respondent later that day, Respondent stated that Rudman would not go forward without control of the project. As Rudman had made a lot of money, Respondent recommended that Ruttenberg take a smaller percentage, sit back and get rich. Respondent explained that he was working in the best interests of both men.
Negotiations concerning Ruttenberg's share of the deal continued during September and October. Ruttenberg understood that Respondent, Lavender and Black represented Rudman concerning the equity matter, but believed that they still represented him on all other issues.
While theoretically attempting to resolve the conflict with Ruttenberg, Rudman, with the assistance of the Pedersen firm, also appeared to be moving ahead without him. On August 29th, Respondent's secretary prepared a new matter data sheet to open a file for Keith Rudman concerning restaurant development. Respondent was listed as the billing and supervising attorney. Rudman was listed as an individual client, with no partners, affiliated businesses or stockholders. Partners who needed to be checked for purposes of firm conflicts included the PGA Tour, Nicklaus, Morton, Kaufman and golf course architect Tom FazioŚnot Ruttenberg.
Respondent denied directing his secretary to set up the file. He merely found the documents on his desk on September 3rd and signed them. According to Respondent, Ruttenberg's name was not included for the conflicts check as Rudman intended to buy him out and they would go their separate ways.
On September 16, 1996, a certificate incorporating Golf Restaurants International, Inc. was issued by the State of Delaware. A certificate of amendment signed by Rudman as President and Lavender as Assistant Secretary was filed on October 22, 1996, changing the name of the corporation to Clubhouse International, Inc. The documents were prepared by a Peterson & Houpt paralegal, under Lavender's supervision.
Ruttenberg had very little contact with Respondent after October 1996. In or about November 1996, Ruttenberg and Rudman made another presentation to Nicklaus's attorney and representatives of the Tour. The presentation concerned a revised business plan prepared by Respondent, who was supposed to be there as well but his plane was grounded. As of November 14, 1996, Ruttenberg's name was no longer included on the letterhead in correspondence with the Tour.
Ruttenberg spoke to Rudman during the winter months and believed that the restaurant project was moving forward. On March 28, 1997, Rudman appeared at Ruttenberg's North Carolina home unannounced. After showing Ruttenberg slides that he had prepared concerning the project, Rudman made his final offer to settle the equity issue. Ruttenberg could take two percent, or sue him. While Ruttenberg had heard before this that Respondent was going to be involved in some way, it was at this meeting that he learned Respondent was now a partner in the project. On April 4, 1997, Rudman sent Ruttenberg a follow-up letter, declaring that any partnership that might exist between the two men was dissolved, and wishing Ruttenberg well.
By May 1997, Respondent was general counsel for the new restaurant project. Rudman was president, and the Pedersen firm was outside counsel.
December 12, 1997 was the grand opening of the first Clubhouse International restaurant in Oakbrook, Illinois. Celebrity guests included Nicklaus and Fred Couples. According to Rudman, Clubhouse was not the same as Ruttenberg's golf-themed restaurant concept as it was a "lifestyle" restaurant, focused not only on golf, but also on sailing and ballooning.
On June 25, 1998, in recognition of the services he had provided to the restaurant, Respondent received $100,000 in Clubhouse stock. On November 18, 1998, in recognition of his contributions to the founding of Clubhouse International, LLC during the previous 26 months, Respondent received two and one-half percent of the company's common stock and reimbursement of his expenses.
At some point, Ruttenberg filed suit against Rudman, Respondent and Pedersen & Houpt. Rudman settled prior to trial for $1,550,000. The case went to trial against the remaining
defendants, and the jury awarded Ruttenberg $8,200,000. A settlement was reached by the parties while the appeal was pending.
Rather than contest the Hearing Board's specific findings of misconduct, Respondent argues that the evidence was not sufficient to show that an attorney-client relationship existed between him and Ruttenberg, noting that without such a relationship, there can be no findings of misconduct. That an attorney-client relationship existed between them was a factual finding. In re Imming, 131 Ill.2d 239, 254, 545 N.E.2d 715, 137 Ill. Dec. 62 (1989).
Respondent first objects to the Hearing Board's finding that the conference call on July 3, 1996 involving him, Ruttenberg and Rudman, and if not, then the call on July 11, 1996 involving Ruttenberg, Rudman, Respondent and Muehlstein created such a relationship. Respondent makes a lengthy argument, based on his interpretation of the evidence. E.g., that as Respondent had access through his uncle to restaurant investors and operators, he was contacted for that purpose and not for his legal expertise, that even if Ruttenberg believed Respondent and his firm were acting as his attorneys, his belief was never communicated to Respondent, and that according to Respondent, his co-respondent and two other Pedersen and Houpt attorneys originally named in the complaint, Ruttenberg was always "one hundred percent aware" that the Pedersen firm represented Rudman only. Our task, upon review, is not to determine whether there is an alternative interpretation of the events that took place, but to determine whether Hearing Board's factual findings are against the manifest weight of the evidence. In re Witt, 145 Ill.2d 380, 390, 583 N.E.2d 526, 164 Ill. Dec. 610 (1991). This occurs when an opposite conclusion is apparent or the facts found appear unreasonable, arbitrary, or not based on the evidence. Leonardi v. Loyola University, 168 Ill. 2d 83, 106, 658 N.E.2d 450, 212 Ill. Dec. 968
(1995). If this is not the case, then we must affirm those findings. In re Witt, supra, 145 Ill.2d at 390, 583 N.E.2d 526, 164 Ill. Dec. 610.
An attorney-client relationship is a consensual one, which therefore arises only when both parties have consented to its formation. Torres v. Divis, 144 Ill. App. 3d 958, 964, 494 N.E.2d 1227, 98 Ill. Dec. 900 (2nd Dist. 1986). The client must indicate his intent to have the attorney act on his behalf, while the attorney must indicate his acceptance of the power to do so. Id. Their consent can be express or by implication. In re Sanders, 96 CH 633 (Review Board, December 30, 1998).
The evidence in this case shows that prior to July 3, 1996, Ruttenberg and Rudman had agreed to become partners in the golf-themed restaurant project. His purpose in partnering with Rudman, according to Ruttenberg, was to move the project forward. In furtherance of that, Rudman suggested that the two men use the Pedersen law firm, which he described as "a one-stop shop" for such projects. The firm could provide the necessary legal expertise as well as help in raising capital and finding an operator.
At the beginning of their July 3rd conference call, which lasted one and one-half to two and one-half hours, Rudman explained to Respondent that the restaurant concept was Ruttenberg's idea but that he had invited Rudman to participate. Respondent then asked Ruttenberg to tell him everything he could, and Ruttenberg did so. He described his idea and all the work he had done on the project up to that point. He answered Respondent's questions. Ruttenberg held no information back, as he believed he was speaking to his attorney. Ruttenberg clearly intended to have Sax and his firm represent him concerning the restaurant project, and reasonably believed by the end of the call that they were going to do so
Contrary to Respondent's argument, "the weight of the authority indicates that a client's reasonable belief is a significant, if not the controlling factor, in deciding whether an attorney-client relationship existed." In re Snowden, 04 CH 108 (Review Board, December 14, 2006), approved and confirmed, No. M.R. 21673 (September 18, 2007). See also In re Demuth, 126 Ill. 2d 1, 533 N.E.2d 867, 127 Ill. Dec. 785 (1988) and In re Imming, supra, 131 Ill.2d 239, 545 N.E.2d 715, 137 Ill. Dec. 62. However, the evidence also shows Respondent's acceptance of the power to act on behalf of the project.
According to Ruttenberg, who the Hearing Board found to be a credible witness, at the end of the call Respondent stated that this was a great idea and one that he and the Pedersen firm could help to take the next step. Respondent suggested things he could do to move the project forward, and did them within the next several days. He spoke to his uncle. He arranged the July 11th conference call involving Muehlstein, who had knowledge concerning the contractual aspects of such a project as well as the ability to help raise large amounts of capital. Respondent indicated his willingness to provide the services to the project that Rudman told Ruttenberg they needed lawyers to provide.
After examining the facts, as found by the Hearing Board, we conclude that the Hearing Board's finding that an attorney-client relationship existed between Respondent and Ruttenberg no later than the July 11th telephone conference call was not against the manifest weight of the evidence.
Respondent also claims that there was not sufficient evidence that he committed the misconduct found by the Hearing Board in that it relied on a theory of vicarious liability in order to make those findings. Respondent's argument is based on the Hearing Board's statement that while Respondent contended that the complaint's allegation that "as of no later than July 11,
1996, an attorney-client relationship existed between Pedersen & Houpt and Rudman and Ruttenberg as promoters of the Enterprise" required proof that the Pedersen firm represented Ruttenberg personally, the Hearing Board did not share that interpretation. According to Respondent, the Hearing Board instead assumed that proof that Respondent personally represented Ruttenberg was not necessary to find that he engaged in a conflict of interest. Instead, Respondent argues that the Hearing Board considered work performed by other Pedersen & Houpt attorneys in finding misconduct, rather than considering only the acts of Respondent himself.
In taking this sentence from the Hearing Board's Report and Recommendation out of context, Respondent misinterprets its meaning. The Hearing Board actually stated that while Respondent argued that the allegations of the complaint required proof that the Pedersen firm represented Respondent personally, it
[did] not share Respondent's interpretation. First, the Administrator also alleged that Respondent represented Ruttenberg and NFC, Ruttenberg's corporation. Specifically, the complaint alleged that Respondent engaged in misconduct by "representing clients (Ruttenberg and NFC) if the representation of those clients may be materially limited by the lawyer's responsibilities to another client (Rudman) . . ." The complaint further states: "subsequent to September 6, 1996, representing a client (Rudman) if the representation of that client will be directly adverse to other clients (Ruttenberg and NFC) . . ." Accordingly, the complaint identifies Ruttenberg, NFC, and Rudman as the clients.
In re Sax, 03 CH 99 (Hearing Board, July 12, 2006) at 37. Thus, it is clear that the Hearing Board rejected Respondent's claim that proof was required that Ruttenberg was personally represented, not that Respondent personally represented him and his project. Like the Hearing Board, we conclude that for our purposes, Ruttenberg, his interests in the project and NFC are indistinguishable. The Hearing Board's Report and Recommendation makes numerous factual
findings that support its determination that Respondent represented those interests, based on his actions alone.
Respondent was the Pedersen & Houpt partner that Rudman and Ruttenberg first contacted regarding the project. He invited Ruttenberg to tell him everything about his idea, and indicated to Ruttenberg that he and his firm would act as attorneys for the project. He acted in a way that it was reasonable to expect an attorney from a "one stop shop" for such a project to act on behalf of his clients, e.g., Respondent contacted his connection to financial backing and an operator. He brought in other members from the Pedersen firm with expertise that would be of help to the project. He participated in numerous telephone calls with Rudman and Ruttenberg, and with Ruttenberg alone. He gave Ruttenberg advice concerning potential restaurant-related deals, such as the contract for Nicklaus's services. He revised the business plan. He gave Ruttenberg advice after it was evident that Ruttenberg's interests and Rudman's had diverged.
The Hearing Board's findings that Respondent had committed misconduct were clearly based upon the actions of Respondent himself. Those findings were not against the manifest weight of the evidence. We note also that the Hearing Board's determination that the charges of Count II had not been sufficiently proved resulted from its refusal to admit into evidence, or find misconduct based upon, a document that could not be specifically linked to Respondent.
Next, Respondent maintains that the Hearing Board made a mistake of law in finding that Ruttenberg's opinion that Respondent and the Pedersen firm only represented him personally for one day was inadmissible on the basis that it was a layman's opinion. As noted above, whether or not Respondent represented Ruttenberg personally is not germane to our
determination, but we point out that this was not the holding of the Hearing Board. The Report and Recommendation actually stated that
Respondent argues that he never represented Ruttenberg personally, and because the Administrator alleges only that he represented Ruttenberg personally, no misconduct can be found. Respondent relies on Ruttenberg's testimony in which he admits that the Pedersen firm represented him personally only on September 3, 1996. Respondent's argument is based on an overly restrictive view of the complaint and the evidence, and we reject it. Although Ruttenberg testified that he was personally represented by the Pedersen firm only on September 3, 1996, his layman's opinion regarding a conclusion of law is not determinative of the issue. Instead, it is our responsibility to examine all of the evidence and draw the proper legal conclusion.
In re Sax, supra, 03 CH 99 (Hearing Board, July 12, 2006) at 36.
The Hearing Board did not find Ruttenberg's opinion inadmissible. It merely did not consider his opinion to be determinative of the issue. It is the Hearing Board's responsibility to weigh all of the evidence and resolve conflicts in the evidence. In re Jakubowski, 93 CH 455 (Review Board, May 10, 1996), approved and confirmed, No. M.R. 12728 (September 24, 1996). The fact that it determined that other evidence disproved Ruttenberg's belief does not lead to the conclusion that it failed to carry out its responsibilities.
Ruttenberg's beliefs were not the "linchpin of the case" that Respondent claims. As previously noted, there was more than enough objective evidence upon which to base the findings of misconduct made here. The Hearing Board's findings were not against the manifest weight of the evidence.
Respondent's last objection is to the Hearing Board's refusal to admit certain documents into evidence because it found that they were more prejudicial than probative and that they addressed one of the ultimate issues in the case. Respondent believes that this evidence was relevant to the determination of whether there was an attorney-client relationship between
Respondent and Ruttenberg, in that he finds that it tends to make the existence of facts that are of consequence to the Hearing Board's determination more or less probative than they would be without the evidence. He argues that the exhibits should have been admitted on this basis. The Hearing Board's evidentiary rulings are reviewed for an abuse of discretion. In re Joyce, 133 Ill.2d 16, 29, 549 N.E.2d 232, 139 Ill. Dec. 720 (1989).
After Rudman's visit to North Carolina, Ruttenberg retained the law firm of Jenner & Block to represent him in resolving the equity issue. The excluded documents include the response from Jenner & Block attorney Anton Valukas to a letter from counsel for the ARDC asking whether Valukas believed Ruttenberg had an attorney-client relationship with Pedersen & Houpt at any time. The exhibits also included a memorandum prepared by another Jenner & Block attorney, Robert Stauffer, on which Valukas's response was based. While Jenner & Block claimed that Stauffer's memorandum was privileged material, it had inadvertently been sent to the ARDC.
Whether such a relationship existed was clearly a key component of the ultimate issue before the Hearing Board and therefore, Valukas's opinion was not appropriate evidence. In re Masters, 91 Ill.2d 413, 425, 438 N.E.2d 187, 63 Ill. Dec. 449 (1982). Additionally, evidence can be excluded when it is not sufficiently reliable. Decker v. Libell, 193 Ill.2d 250, 254, 737 N.E.2d 623, 250 Ill. Dec. 1 (2000). As his letter itself makes clear, Valukas's opinion was not reliable evidence. Jenner & Block did not represent Ruttenberg until such time as his and Rudman's interests were clearly adverse. Valukas warned that he was "not fully aware of the circumstances" that preceded the firm's involvement, and their representation did not involve any analysis of the nature of their earlier relationship. While the firm's files contained no clear evidence of an attorney-client relationship, it was Valukas's understanding that the Pedersen firm
had prepared documents that might indicate that the firm viewed itself as Ruttenberg's attorneys. Stauffer's memorandum concluded that by September 1996, Ruttenberg knew that Pedersen & Houpt did not represent him, but Stauffer did not draw any conclusion as to what Ruttenberg believed their relationship to be before that time.
Valukas did not possess information sufficient to offer a reliable opinion as to the ultimate issue presented here. The excluded exhibits did not prove what Respondent intended them to prove and therefore, the prejudicial impact of the evidence, based on insufficient information, outweighs its probative value. The Hearing Board's decision to exclude these documents was not an abuse of discretion.
The final issue is the appropriate sanction. The Hearing Board recommended that Respondent be suspended from the practice of law for a period of six months, but its recommendation is advisory only. In re Chandler, 161 Ill.2d 459, 473, 641 N.E.2d 473, 204 Ill. Dec. 249 (1994). The Administrator urges us to affirm the Hearing Board's recommendation. Respondent continues to take the position that he has done nothing wrong and therefore, he does not suggest an alternative.
In making our recommendation, we consider the case based on its own particular facts and circumstances, while keeping in mind that the purpose of discipline is not to punish the individual respondent, but to protect the public, to maintain the integrity of the profession and to protect the administration of justice from reproach. In re Timpone, 157 Ill.2d 178, 197, 623 N.E.2d 300, 191 Ill. Dec. 55 (1993). Aggravating and mitigating factors are relevant. In re Witt, supra, 145 Ill.2d at 398, 583 N.E.2d 526, 164 Ill. Dec. 610.
We note, as did the Hearing Board, that Respondent's actions are mitigated by his lack of prior discipline in over twenty years of practice and by evidence of his good character.
However, we are also troubled by his refusal to recognize that he has committed such obvious misconduct. We have considered In re Twohey, 191 Ill.2d 75, 727 N.E.2d 1028, 245 Ill. Dec. 294 (2000) and In re O'Shea, 02 SH 64 (Review Board, July 16, 2004), petitions for leave to file exceptions allowed, No. M.R. 19680 (November 17, 2004), cited by the Hearing Board, and agree that they provide guidance to our recommendation.
In view of all the circumstances, we conclude that a suspension of six months will best serve the underlying purposes of our disciplinary process, namely to safeguard the public, maintain the integrity of the legal profession and protect the administration of justice from reproach. In re Discipio, 163 Ill.2d 515, 528, 645 N.E.2d 906, 206 Ill. Dec. 654 (1994). We affirm the Hearing Board's findings of fact and findings of misconduct, and recommend that Respondent-Appellant Thomas Frederick Sax be suspended from the practice of law for a period of six months.
Date Entered: 27 November 2007
Bruce R. Meachum