Filed June 15, 2012
BEFORE THE HEARING BOARD
ILLINOIS ATTORNEY REGISTRATION
|In the Matter of:
Commission No. 2010PR00070
REPORT AND RECOMMENDATION OF THE HEARING BOARD
The hearing in this matter was held on July 19 and October 5, 2011 at the Chicago offices of the Attorney Registration and Disciplinary Commission ("ARDC"), before a Hearing Board Panel consisting of Stephen S. Mitchell, Chair, Larry R. Kane and Bonnie K. Curran. The Administrator was represented by Gina M. Abbatemarco. Respondent appeared in person and was represented by Erik D. Gruber.
On May 26, 2010, the Administrator filed a one-count complaint against Respondent pursuant to Supreme Court Rule 753(b). The Complaint alleges Respondent advanced a claim that the lawyer knows is unwarranted under existing law and brought a proceeding when there is no basis for doing so that is not frivolous. The Complaint also alleges Respondent solicited professional employment from a prospective client who is neither a relative, a close friend of the lawyer, or a person from whom the lawyer has had a prior relationship. And finally, the Complaint alleges that Respondent engaged in conduct that is prejudicial to the administration of justice. Respondent filed his answer on July 9, 2010. Respondent admitted some the factual
allegations and denied some of the factual allegations. Respondent denied all allegations of misconduct.
The Administrator presented the testimony of Colleen Boyle, Honorable Mark Vandewiele, Glenn F. Ruud, Catherine Zamora Cartee, Matthew Pappas, Ruth Bahe-Jachna and Respondent, as an adverse witness. The Administrator's Exhibits one through twenty five were admitted into evidence. Respondent presented the character witness testimony of Honorable Thomas J. Stanfa, Sharon L. Eiseman, Todd Smith, Kevin Conway and Jerome F. Crotty. Respondent testified on his own behalf. Respondent's exhibits one through sixteen were admitted into evidence.
In 2001, counsel for a group of current and former WalMart employees filed a class action lawsuit against WalMart based on claims that WalMart had not compensated its Illinois employees for all the time they had worked or paid them all of the benefits they had earned. The matter was docketed in the Circuit Court of the Fourteenth Judicial Circuit, Rock Island County, as Lisa Brown, et al. v. WalMart, case number 01 L 85 ("WalMart litigation"). (Resp. Ans.).
In July 2009, a proposed settlement agreement was reached in the WalMart litigation between the class representatives and WalMart, in which the parties agreed, inter alia, that the class would receive a minimum amount of $6 million and a maximum amount of $14 million. Regardless of the class payout amount, the attorneys for the class would be paid $8.25 million in fees and $507,000 in costs. (Resp. Ans.).
After the proposed settlement agreement was reached, class counsel mailed a notice regarding the proposed settlement to members of the class, which informed class members that
objections to the settlement had to be filed by September 28, 2009, and any objections were to include "the amount of money the objector claims is due to the objector and to the objector's attorney, if any; state the specific reason for each objection, including any legal support that the objector wishes to bring to the court's attention; include copies of any documentary evidence and a brief summary of testimonial evidence the objector wishes to introduce in support of the objection." The notice also provided that the court would conduct a fairness hearing to consider any objections on October 29, 2009, and class members had until December 15, 2009 to file a claim for their portion of the settlement. (Adm. Ex. 1; Resp. Ex. 2; Resp. Ans.).
On September 24, 2009, Respondent received a telephone call from Christopher Bandas ("Bandas"), who identified himself as an attorney licensed in Texas. Respondent did not know Bandas prior to that date. Respondent was aware that Bandas was not licensed to practice law in Illinois. Bandas requested that Respondent serve as local counsel for the filing of an objection to the proposed settlement that had been reached in the Illinois WalMart litigation. Further, Bandas asked Respondent to provide him with information about anyone Respondent knew of who worked at WalMart and would be eligible to file an objection to the settlement. Bandas told Respondent that when he had filed objections to class action settlements in other jurisdictions, he had been able to obtain a $100,000 settlement of his attorney's fees. (Tr. 273-74; Resp. Ans.).
Colleen Boyle was an administrative assistant at the Law Offices of Joel Rothman. Other small firms, including Respondent's, shared office space with Joel Rothman. Respondent has never provided legal services to Boyle. Boyle testified that in the Fall of 2009, Respondent informed the office staff about a pending class action suit, not her specifically. Respondent did not speak directly to anyone. The other administrative assistants overheard the entire conversation. Respondent told the office staff that there was a class action lawsuit with Walmart
and if they knew anyone who had worked for Walmart and they wanted information about the class action lawsuit, Respondent would be happy to talk to them about it and give them advice. Boyle told Respondent she had a friend that worked for Walmart, Jill Carlson ("Carlson"), and she would give her a call and ask Carlson if she wanted any information about the class action. Boyle took down Respondent's phone number. A few hours later, Boyle contacted Carlson and asked if she knew about the lawsuit. Carlson said that she received a piece of paper about it in the mail but she did not know any of the attorneys or what to do with it. Boyle has known Carlson since high school. Boyle gave Carlson Respondent's contact information. (Tr. 24-31).
Later that day, Carlson contacted Respondent and discussed with him the possibility of filing objections to the proposed settlement in the WalMart litigation. During that conversation and Carlson's subsequent discussion with Bandas the same day, Carlson, Bandas and Respondent discussed the filing of objections to the proposed settlement based on a claim that the settlement resulted in a larger award to class counsel than the class members. (Resp. Ans.).
Based on these conversations, Respondent and Bandas agreed to represent Carlson, and to file objections to the proposed settlement in the WalMart litigation under Carlson's name. Respondent and Bandas agreed that Respondent would serve as local counsel for the filing of Carlson's purported objections to the WalMart litigation, and Respondent would receive 15% of any fees that he and Bandas were able to recover as a result of filing Carlson's purported objections to the proposed settlement. (Resp. Ans.).
On September 25, 2009, Bandas prepared a fee agreement for Carlson to sign entitling Bandas and Respondent to apply to the court for a fee award in the WalMart litigation, and in which Carlson released her claims to any such award. The fee agreement further provided that Carlson could receive an incentive award from the court in the range of $1,500 to $5,000.
However, Carlson would only receive benefits that she would be entitled to receive as a class member, under the existing claims process. Carlson signed the agreement on September 26, 2009. (Adm. Ex. 2; Resp. Ex. 3; Resp. Ans.).
Between September 24, 2009 and September 28, 2009, Bandas prepared a motion setting forth Carlson's purported objections to the proposed settlement in the WalMart litigation. In the motion, Bandas generally claimed that the proposed settlement inequitably allocated greater portions of the settlement funds to class counsel and class representatives than it did to class members, and the period in which class members could file claims for a portion of the settlement was too brief. (Adm. Ex. 3; Resp. Ex. 4).
Between September 24, 2009 and September 28, 2009, Bandas sent Respondent the objections Bandas had drafted and a motion requesting that the court permit Bandas to appear pro hac vice in the WalMart litigation. Bandas requested that Respondent cause those materials to be filed in the WalMart litigation. (Resp. Ans.)
On September 28, 2009, Respondent signed and filed an appearance, Carlson's purported objections to the class settlement and request for attorneys' fees and expenses and a motion to intervene in the WalMart litigation. On that date, Respondent also filed Bandas's request for admission pro hac vice in the WalMart litigation. The court in case number 01 L 85 set Respondent's and Bandas's motions for a fairness hearing on October 29, 2009. (Resp. Ans.).
Sometime between September 28, 2009 and October 14, 2009, Respondent learned, by speaking to class counsel and reviewing court documents tendered at Carlson's October 14, 2009 deposition that Bandas had associated with local counsel in South Carolina, Iowa, Missouri, and Florida for purpose of filing objections to several class actions then pending against WalMart. Further, Respondent learned, in those cases, Bandas had raised similar claims to those he had
raised in case number 01 L 85. The objections that Bandas and his local counsel filed in those cases generally asserted that the proposed settlements inequitably allocated greater portions of the settlement funds to class counsel and class representatives than they did to class members, but did not contain specific allegations demonstrating the inequity of the settlements, or citations to legal authority in support of the purported objector's claim that the settlement should be rejected or adjusted in some manner. (Resp. Ans.).
Subsequent to October 14, 2009, neither Respondent nor Bandas withdrew the objections Respondent filed in the WalMart litigation. On October 29, 2009, neither Carlson, Respondent nor Bandas appeared for the fairness hearing in case number 01 L 85. On that date, the Honorable Mark A. Vandewiele denied the motion to intervene and object, as well as Bandas's motion for admission pro hac vice. In denying the motions, Judge Vandewiele found that:
[t]he Bandas Objection filed on behalf of Ms. Carlson is a generic boilerplate objection prepared and filed by attorneys working for their own personal benefit and not for the benefit of this Class or for those lawyers' client. The record before the Court demonstrates that Bandas is a professional objector who is improperly attempting to "hijack" the settlement of this case from deserving class members and dedicated, hardworking counsel, solely to coerce ill-gotten, inappropriate and unspecified "legal fees". Bandas has filed virtually identical, frivolous objections in South Carolina, Iowa, Missouri and Florida in settlements of similar wage and hour class actions against Walmart? The Court finds that a lack of involvement and participation by Ms. Carlson and her counsel, combined with their attempt to inject themselves at the last minute into this eight year litigation constitutes an effort to extort money from the Class and/or Class Counsel. Though filed by two lawyers, the Bandas Objection offers nothing in the way of specific criticisms of the proposed Settlement. The content of the Bandas Objection demonstrates that neither Ms. Carlson nor her counsel has ever visited the settlement website or read the Stipulation of Settlement in this case. The Bandas Objection ignores the terms of the proposed Settlement before the court. The Bandas Objection offers no legal or factual support for its assertion that the claims deadline is "brief" or that the claims process is difficult. The Class Settlement Amount and the Floor are clearly laid out in the Stipulation of Settlement and in the Class Notice?..It is short on specifics, is wholly devoid of evidence and controlling authority, and it fails to comply with the procedures ordered by the Court for properly objecting to the Settlement. Moreover, it is clear that neither the objector nor her counsel reviewed the Settlement Agreement
or any of the voluminous pleadings and appellate briefing that clearly reflect the complexities of this case, and the enormous efforts expended by Class Counsel on behalf of the Class over the last eight years.
Bandas contacted Respondent in September 2009. Respondent did not know Bandas prior to that phone contact. Bandas got Respondent's contact information from a mutual professional colleague. Bandas advised him of a class action involving WalMart in Illinois and asked him if he had any clients or knew of anyone who worked at WalMart. Respondent testified that Bandas gave him a summary of the settlement terms, which peaked his interest because Respondent thought they were unfair. Respondent thought the settlement terms reflected poorly on the legal profession. Respondent asked Bandas for more information before he agreed to work with him. During their phone conversation, Respondent agreed to see if there was anyone that fit the perimeters of who could file an objection. Respondent wanted to make sure that no promises were being made to clients about monetary awards. The first time Respondent spoke to Bandas, he did not agree to participate in filing an objection to the WalMart litigation. Respondent was aware that Bandas was not licensed to practice in Illinois. (Tr. 273-74, 308, 310-11, 315).
After speaking to Bandas, Respondent went down to the other end of the hall of the office space where the assistants sit. He announced to everyone present that he received a call about a class action pending for WalMart employees. He said that if anyone knows anyone, to let him know and he will turn them over to Bandas. Respondent stated that Colleen Boyle ("Boyle") told him that she had a girlfriend that was working or who worked at WalMart. Respondent told Boyle to give her his phone number if she wanted and she could call him. Jill Carlson ("Carlson") called Respondent either that night or the next day. (Tr. 316-17).
Respondent testified that Boyle worked for Joel Rothman, who shared office space with him. Respondent is not related to Boyle. Respondent is not related to Carlson and did not perform any legal work for her on any other matter. (Tr. 277, 283-84).
When Carlson called Respondent, he asked her about how long she has worked at WalMart. Respondent told Carlson that he did not know much about the WalMart class action but if she wanted further information, she could follow up with Bandas. Carlson must have called Bandas because Bandas called Respondent shortly thereafter letting Respondent know Carlson called him. Carlson told Bandas she wanted to get involved in the WalMart class action suit. Respondent discussed with Bandas what would happen next. Bandas told Respondent procedurally what would happen: an objection would be prepared, Respondent would review it, Respondent would serve as local counsel and Carlson would sign off on it. Bandas told Respondent that Carlson would have to sign an attorney agreement that Bandas prepared. Respondent told Bandas that his main concern was ensuring that no promises of anything were made to the client. (Tr. 320-22).
Respondent agreed to act as local counsel the next day. Bandas prepared the objections, which Respondent reviewed. Respondent discussed the objections with Bandas before he filed them. Bandas prepared the engagement letter, which Respondent also reviewed. There were no promises that Carlson would receive money in the engagement letter. According to the fee agreement, if Respondent was able to resolve the objections with the class attorneys, Respondent would be paid 15% of what Bandas was paid, regardless of whether there was an appeal. The fee agreement between Respondent and Bandas would not affect what Carlson would receive if there was a settlement. Carlson was not responsible for any attorney's fees or case costs. (Tr. 322-24; Resp. Exs. 3, 4).
Prior to filing objections to the WalMart settlement, Respondent did not review the WalMart court file or talk to any plaintiffs or defense counsel. The only information Respondent received was from Bandas. Respondent did not perform any research on the reasonableness of fees for this specific case prior to filing the objections. Respondent did not review cases that Bandas had filed objections to in other jurisdictions. Respondent was aware that there was a settlement that was going to award counsel for the plaintiffs approximately 60% and that the class members would get approximately 40% of the settlement award. Respondent was aware of the value of the injunctive relief in other jurisdictions but not the Illinois case. (Tr. 275-77).
Prior to the filing of the objections and the motion for Bandas to be admitted pro hac vice, Respondent did not do anything to verify if Bandas had been disciplined in any other jurisdiction because he was not given any reason that verification was necessary. Respondent signed and filed the objections as Illinois local counsel. Respondent did not request that Bandas make any changes to the objections or the fee agreement because Respondent was satisfied with them. Bandas reviewed the objections and the fee agreement with Carlson. Respondent was supposed to get 15% of any fee that was received by Bandas as a result of the objections. Bandas told Respondent that he had received $100,000 in fees from other class action settlement cases. (Tr. 278-81).
The objections Respondent filed do not address all of the aspects of the settlement. The primary objections were to the fee arrangement and the claims process. Bandas informed him about the claims process and how the notices were to be sent out to claimants. Prior to filing the objections, Respondent did not ask Bandas for any supporting documentation about the claims process prior to filing the objections. (Tr. 286-88; Adm. Ex. 3).
Between filing the objections and Carlson's deposition, Respondent had a conversation with one of the plaintiff's counsel, Rodney Bridgers, regarding scheduling. Respondent described Bridgers' tone as hostile and somewhat threatening. Bridgers told Respondent about Bandas' issues in other jurisdictions. Respondent received court rulings addressing Bandas' conduct in other jurisdictions at Carlson's deposition. Respondent discussed the conversation he had with Bridgers with Bandas. Respondent and Bandas also discussed the Florida case where a judge had made some negative comments about Bandas. Bandas told Respondent that he was not in the Florida court to defend himself. Respondent asked Bandas if he had been disciplined and Bandas said that he had not been disciplined. After Carlson's deposition, Respondent decided to proceed with the objections. (Tr. 281-83, 326-28).
After Bandas prepared the objections, Respondent reviewed them and asked Bandas many questions. Respondent's main reason for objecting was the fee structure of the settlement. Respondent was concerned that the attorneys were being paid a percentage based on the payout maximum and thought it was highly unlikely for the claims to reach the maximum, therefore, the attorneys would get more money than the claimants. Based on the information that Respondent received from Bandas, Respondent did not think it was necessary to review the court file. Bandas represented to Respondent that he was well versed in class action suits and Respondent had no reason to disbelieve him. Respondent did not believe it was necessary for him to consult with class counsel over the settlement class in order to prepare the objections. Respondent did review the notice to the class. Respondent testified that the claim form says that objections needed to be filed on or before September 29, 2009, but there was no requirement to appear in court. Respondent elected not to attend. Respondent stated that in hindsight, he would have attended the hearing. (Tr. 328-39; Resp. Ex. 2).
Respondent did not think it was necessary to review what Bandas had filed in other jurisdictions. Based on the information Respondent received from Bandas, the review of the objections and the notice requirements, Respondent believed he was doing everything in good faith. The objections made reference to specific elements of the settlement terms. Regarding the injunctive relief term of the settlement, Respondent understood that injunctive relief was present in many of the other WalMart cases. Respondent strongly disagreed with the amount of money the class attorneys were set to receive. (Tr. 340-44).
Respondent reviewed the notice of appeal and pleading in the WalMart litigation before signing them. Respondent reviewed the brief regarding the appeal from the denial of the objections before he signed it. (Tr. 349-50; Resp. Exs. 9, 13).
Respondent filed an appeal of Judge Vandewiele's order denying the objections. Respondent testified that the agreement he had with Carlson states he would file an appeal if they did not succeed at the objection stage. There was an appointment scheduled to discuss the appeal with Carlson but she canceled the appointment and never rescheduled. Respondent and Bandas did not seek admission for Bandas in the Appellate Court. Bandas contacted John Pentz ("Pentz") to work on the appeal. Pentz has filed objections in various class action lawsuits. Pentz was granted pro hac vice by the Appellate Court and he filed the reply brief for the appeal. Class counsel objected to Pentz being allowed admission. Respondent consulted with Pentz regarding appellate drafts. The oral argument with regard to the appeal of the denial of the objections occurred in October 2010. As of the date of this Hearing, the Appellate Court has not ruled on that appeal. (Tr. 284-87, 350; Resp. Exs. 9, 10, 13).
Respondent stated that Mr. Azar (a member of plaintiffs' counsel) contacted Bandas in an effort to try to settle Carlson's objections. Settlement documents were drafted but certain class
counsel would not sign off. Because of the result of other WalMart litigations, Respondent wanted to dismiss the appeal. Respondent contacted Bandas and expressed his concerns about the ramifications of the objections being allowed. Respondent attempted to contact Carlson to no avail. Respondent has never been engaged in any other class action with Bandas. (Tr. 356-66).
Honorable Mark Vandewiele
Judge Vandewiele is assigned to hear cases in Rock Island County, 14th District. Judge Vandewiele worked in private practice from 1984 through 2000. In 2000, he was elected Circuit Court Judge assigned to the Civil Division. Judge Vandewiele was assigned to the WalMart litigation in late 2001. At that time, the case had just been filed. Judge Vandewiele testified that the parties were doing extensive discovery. Judge Vandewiele signed an order that only Rudd (plaintiff side) and Pappas (defense side) could file pleadings in the case. A day-long hearing was held on class certification. Judge Vandewiele denied class certification. That decision went up on appeal. The Third District refused to take the appeal. There was an appeal to the Illinois Supreme Court. The Illinois Supreme Court exercised its supervisory authority and ordered the Appellate Court to take the case. At that point, the Appellate case was put on hold because the case settled and returned to Judge Vandewiele for review and certification of the settlement. (Tr. 38-48).
Judge Vandewiele testified that the WalMart litigation was contentious. In 2009, the parties requested the preliminary approval of the settlement, which he granted. The preliminary order provided for certain notices to be published in the newspaper. Judge Vandewiele received a handful of objections to the proposed settlement. Both parties filed responses to the objections.
Judge Vandewiele reviewed the objections sent by Respondent. Judge Vandewiele also reviewed Carlson's deposition transcript. (Tr. 48-52; Adm. Ex. 1).
Judge Vandewiele stated that after reading the Carlson deposition, he had concerns. He thought there might be some ethical issues based on her testimony. Judge Vandewiele dealt with the issue in his judicial capacity and also reported the conduct to the ARDC. Judge Vandewiele also had concerns about Respondent's objections pleading. He thought that the pleading was "light" on specifics. (Tr. 52-55).
Even though he initially denied the class certification, Judge Vandewiele was pleased that the parties were able to settle the case. However, for settlement purposes, he had to certify the class. After weighing all the issues, $25 million seemed like a reasonable settlement for this particular case at this particular time. (Tr. 54-58).
On October 29, 2009, a fairness hearing was held in the WalMart litigation. Respondent and Bandas did not appear, as they noted in their pleading. At the fairness hearing, an expert witness affidavit was submitted regarding the reasonableness of attorney's fees. The attorneys were to receive one-third of $25 million. Judge Vandewiele thought that the amount was fair because of the injunctive relief element of the settlement. (Tr. 58-61; Adm. Ex. 24).
Judge Vandewiele decided to deny the objections filed by Respondent. He also denied Bandas' motion to appear pro hac vice. Case counsel made Judge Vandewiele aware of the other issues in other states where Bandas had been disciplined or his actions had been called into question. Since Respondent and Bandas did not appear at the fairness hearing, they were not able to explain the discipline issues to him. Judge Vandewiele approved the settlement. He found the attorney's fees were fair and reasonable. He also found the notice to the potential
claimants was appropriate and adequate. Judge Vandewiele did not think that Respondent's objections complied with the notice. (Tr. 62-65; Adm. Exs. 1, 7, 9).
Judge Vandewiele agreed that the guaranteed cash floor payment was $14.5 million and class counsel would be paid $8.25 million from that amount. He also stated that the value of the injunctive relief was assessed in that amount. Judge Vandewiele accepted class counsel's assessment of the injunctive relief at $60 million, though he thought it was a bit high. He said it was probably worth about $25 million. (Tr. 67-69).
Judge Vandewiele did review some of the other WalMart cases in other jurisdictions. According to the settlement structure, money not passed out to claimants would be returned to WalMart less the minimum $14.5 million cash floor. Judge Vandewiele stated that whether money was returned to WalMart was irrelevant to him. Judge Vandewiele approved the one-third attorney fee based on the $25 million. (Tr. 69-74, 76-78)
Judge Vandewiele wished Respondent would have attended the fairness hearing so Respondent could have explained to him what was going on. Judge Vandewiele agreed that Respondent was not required to attend the fairness hearing. Judge Vandewiele stated that one of the bases for denying the objections was because Carlson never visited the settlement website or read the stipulations of the settlement in the case. Also, Judge Vandewiele believed that Respondent never visited the settlement website or read the stipulations of settlement in the case. The order denying the objections and motion for pro hac vice was written by plaintiffs' counsel. Judge Vandewiele agreed that the time limit to file a claim was two and a half months. However, after the preliminary approval of the settlement, claims notices went out to claimants on August 3, 2009. (Tr. 83-88, 108-109; Resp. Exs. 2, 4, 6).
Judge Vandewiele is not aware of any discipline against Bandas' law license in any state. Judge Vandewiele could not recall if Bandas was required to post a bond for appeals in other WalMart litigation. If the objection to the settlement is granted, then the Illinois WalMart case will go back to the beginning of litigation. (Tr. 89-91).
After reading Carlson's evidence deposition, Judge Vandewiele felt that Respondent violated the rules of ethics and he had a duty to report Respondent's conduct. Carlson's report of what Colleen Boyle told her led him to believe that Respondent solicited Carlson to be his client. (Tr. 98-101; Resp. Ex. 5).
Glenn F. Ruud
Glenn Ruud ("Ruud") is an attorney, practicing law in Illinois since 1975. Ruud is also admitted in Iowa. Ruud has been in private practice since 1976. Ruud's practice concentrates in contract law, environmental law and civil litigation. Ruud became involved in the WalMart litigation in the Spring of 2001. Ruud represents the plaintiffs in the class action. Judge Vandewiele appointed Ruud's firm as the Illinois lead counsel to act with several other firms that were not from Illinois. Ruud's firm was responsible for signature and filing of any of the documents that had to be filed in court on behalf of the plaintiff class. (Tr. 127-31).
A significant amount of the drafting and other preparation was done by some of the other law firms with whom he was associated, including Rodney Bridgers and Judy Spanier. Ruud stated that there was a significant amount of discovery, part of which was discovery related to the other cases in other jurisdictions. Ruud received a large amount of written discovery from WalMart. During the discovery phase, an unbelievable amount of computer records and other materials were reviewed by experts. There were confidentiality issues interposed by WalMart
with the production of records. Plaintiffs' counsel was ultimately allowed to share information on a national level. (Tr. 131-38).
Ruud received a copy of the objections filed by Respondent on behalf of Carlson. Ruud's only contact with Respondent was related to scheduling the deposition of Carlson. Respondent never requested any pleadings in the case or a copy of the settlement agreement from him. Ruud has never personally spoken to Bandas or had any correspondence with him. After Ruud received the objections and motion for admission, he contacted Spanier and Bridgers. They told Ruud that Bandas was somebody who had a reputation for being a "professional objector." Ruud researched Bandas as well as "professional objectors" on-line. After reviewing the objections, Ruud did not believe the objections appeared to be factually appropriate in relation to the agreement reached with the WalMart litigation in Illinois. Ruud was involved in the settlement negotiations for the Illinois case. The settlement involved an initial application process and also a second tier of payments against the potential floor amount so that WalMart was going to have to pay the minimum amount no matter how many claims were filed. (Tr. 142-51).
Ruud outlined the specific terms of the settlement agreement including the claims process, the publications, the duties of a claims administrator and the injunctive relief. The second tier settlement aspect was unique to the Illinois and Iowa litigation. (Tr. 151-56).
Ruud is aware of the objections that Bandas has filed in other WalMart cases in other jurisdictions, including the Iowa case and the South Carolina case. However, Ruud is not aware of Bandas getting disciplined in any jurisdiction. Ruud is not aware of any Appellate Court that has required Bandas to post a bond in order to appeal a denial of any objections to a WalMart settlement. (Tr. 160-63; Resp. Ex. 14).
Catherine Zamora Cartee
Catherine Zamora Cartee ("Cartee") is an attorney admitted to practice law in Iowa since 1988. Cartee worked as a prosecutor in the Clinton County Attorney's Office. She worked for a private firm for thirteen years and became a sole practitioner in 2005. Cartee's practice concentrates on family law, employment law and personal injury. In 2000, Cartee became involved in the Iowa WalMart litigation. Cartee testified that Lisa Brown, the Illinois class representative, was the daughter-in-law of a secretary in Cartee's office. Cartee brought Glenn Ruud into the litigation because she was not licensed in Illinois. Cartee was admitted pro hac vice by Judge Vandewiele. Cartee did not do a lot of the drafting of pleadings for the Illinois case. The Illinois case was very contentious. (Tr. 172-78).
In late November 2008, Cartee learned that WalMart was interested in settling the Iowa and Illinois cases. Initially, Cartee was not willing to settle given the terms that WalMart offered. Cartee described the injunctive relief that was negotiated. Cartee stated that cases that were certified got twice as much money as the cases that were not certified. Cartee decided to settle because Illinois had been denied class certification and she wanted to get the class members something verses nothing. (Tr. 179-84).
Plaintiff's counsel hired an expert to determine the amount of fees they should receive. Cartee also stated that the value placed on the injunctive relief was $60 million. Cartee described the efforts that were to be put in place to find claimants to receive their award. (Tr. 185-88).
Prior to the objections being filed in Illinois by Respondent, Cartee did not have any contact with Respondent or Bandas. Cartee did not receive any requests for more information from Respondent or Bandas about the settlement. Respondent has not approached her attempting
to settle the appeal of the objections. Cartee stated that the plaintiffs' counsel fees have been earned. Cartee is not aware of any plaintiffs' counsel trying to settle the appeal of the objections. Cartee would never settle the appeal of the objections. None of the class counsel has been paid because of the pending appeal of the objections in the Illinois case. (Tr. 191-93, 195, 197, 206).
Matthew Pappas ("Pappas") is an attorney practicing law in Illinois since 1988. He is also admitted in Iowa and the federal courts of both Illinois and Iowa. Pappas worked for private firms and then opened his own practice in 1996. Pappas concentrates on management, labor and employment related matters. Pappas became involved in the WalMart litigation in 2001. Pappas is local counsel for WalMart. Pappas argued the class certification petition on behalf of WalMart and did much of the discovery. The amount of discovery performed by WalMart was huge. (Tr. 210-13).
It has taken five to six years to deal with the issue of class certification. Pappas received the objections filed by Respondent. Pappas testified that because he knew that a Circuit Court judge was filing a complaint to the ARDC, he thought his duties under Himmel required him to parrot the complaint. Pappas did not make an independent decision as to whether or not a violation occurred. (Tr. 214-15).
Prior to the objections being filed, Pappas did not receive any type of contact about the litigation from Respondent or Bandas. Pappas researched Bandas and did not come across any reference to Bandas being disciplined. (Tr. 216-18).
Ruth Bahe-Jachna ("Bahe-Jachna") is an attorney admitted to practice law in Illinois in 1989. Bahe-Jachna has worked for various private firms in Chicago. Currently, she works at
Greenberg Traurig concentrating her practice in litigation. Bahe-Jachna became involved in the Illinois WalMart litigation in the summer of 2005 as defense counsel. Bahe-Jachna was responsible for overseeing the Illinois case and working with the national coordinating counsel that WalMart had in all the wage and hour cases. Bahe-Jachna has always played some role in the drafting and/or reviewing of pleadings. The discovery process was very contentious between the parties. Bahe-Jachna was aware of the objections filed by Respondent. Bahe-Jachna was not contacted by Respondent or Bandas prior to the filing of those objections. None of the objections struck her as having any merit. Bahe-Jachna was aware that Bandas had filed objections in other WalMart cases. (Tr. 241-49).
Bahe-Jachna stated that WalMart did not take a position on the issue of Carlson's objections specifically. However, WalMart did file a brief addressing mischaracterizations addressed in the objections. (Tr. 250-51).
Evidence Offered in Mitigation
Respondent was admitted to practice law in Illinois in 1980. Respondent's practice concentrates in civil litigation. Respondent is also licensed to practice in federal court and Ohio. Respondent is married and has two sons. Respondent has worked with various firms and partners throughout his legal career. Since 2001, Respondent operated his own firm, the Law Offices of Alan Barinholtz, P. C. Respondent did some class action work in the 1990's involving drug manufacturers. (Tr. 272-73, 295, 301, 303-04).
Respondent has done work for the Chicago Volunteer Legal Services for 15 years. Respondent has acted as an arbitrator for over 20 years. In 2010, Respondent performed about 40 hours of pro bono work. Respondent is a member of the Chicago Bar Association, Illinois
State Bar Association and Illinois Trial Lawyers Association. Respondent is also a member of the Decalogue Society, specifically the co-chair of the Social Action Committee. Respondent has worked with the National Railroad Counsel and the National Association of Railroad Trial Counsel. Respondent is a member of the Anshe Emet synagogue. Respondent has been active in the synagogue as well as the school associated with the synagogue. Currently, Respondent is a board member for the Chicago Improv Foundation. Respondent is active in the theatre community. Respondent has made financial contributions to various charities. (Tr. 367-79).
Judge Thomas J. Stanfa
Judge Stanfa is an associate judge in the Sixteenth Circuit of Illinois. Judge Stanfa has known Respondent since 1977. Judge Stanfa and Respondent attended law school together. Judge Stanfa and Respondent have a social relationship. Judge Stanfa testified that Respondent is honest and has a high moral character with the highest integrity. Judge Stanfa is aware of the allegations charged against Respondent. (Tr. 120-25.)
Sharon Lynn Eiseman
Ms. Eiseman is an attorney employed at the Office of the Attorney General. Currently, Ms. Eiseman is the Bureau Chief of Land Acquisition. Ms. Eiseman has known Respondent for 25 years. Ms. Eiseman and Respondent have a professional relationship. They are also members of the same synagogue. Ms. Eiseman stated that Respondent does both charitable work and pro bono work in the community. Ms. Eiseman stated that Respondent has a good reputation for honesty and integrity. Ms. Eiseman reviewed the complaint in this matter and her opinion of Respondent has not changed. Ms. Eiseman has not discussed the allegations of the complaint with other people in the community. (Tr. 224-31).
Mr. Smith is a trial lawyer. Mr. Smith was president of the Illinois State Bar Association in 1997-1998. Mr. Smith has known Respondent for 30 years. Mr. Smith and Respondent have a social and professional relationship. Mr. Smith stated that Respondent has a reputation of high honesty and high integrity in the legal community. Mr. Smith has seen the complaint in this matter against Respondent and his opinion of Respondent has not changed. (Tr. 233-39).
Mr. Conway is an attorney at the firm of Cooney & Conway. Mr. Conway has been a partner at the firm for 20 years, concentrating on litigation. Mr. Conway is a past president of the Illinois Trial Lawyers Association. He was also Chairman of the Tort Litigation Committee for the Chicago Bar Association. Mr. Conway has known Respondent for over 25 years. Mr. Conway and Respondent have a professional relationship. Mr. Conway stated that Respondent has a good reputation for honesty and integrity in the community. Mr. Conway does not believe that this matter has changed Respondent's reputation. (Tr. 257-63).
Jerome F. Crotty
Mr. Crotty is an attorney. He is a named partner at the firm of Rieck & Crotty, P.C. Mr. Crotty has known Respondent for eleven years. Mr. Crotty and Respondent have a social relationship. Mr. Crotty stated that Respondent has a good reputation for honesty and integrity in the legal community. Mr. Crotty has seen the complaint in this matter. The allegations of the complaint do not change his opinion of Respondent's reputation. (Tr. 265-70).
Respondent has not been previously disciplined.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
In attorney disciplinary proceedings, the Administrator must prove the alleged misconduct by clear and convincing evidence. Supreme Court Rule 753(c)(6); In re Ingersoll, 186 Ill. 2d 163, 168, 710 N.E.2d 390 (1999). It is the responsibility of the Hearing Panel to determine the credibility of the witnesses, weigh conflicting testimony, draw reasonable inferences, and make factual findings based upon all the evidence. In re Timpone, 157 Ill. 2d 178, 196, 623 N.E.2d 300, 308 (1993). With the above principles in mind and after careful consideration of the testimony, exhibits and Respondent's admissions, we make the following findings.
Respondent is charged with:
advancing a claim or defense the lawyer knows is unwarranted under existing law, in violation of Rule 1.2(f)(2) of the 1990 Illinois Rules of Professional Conduct;
bringing or defending a proceeding, or asserting or controverting an issue therein, when there is no basis for doing so that is not frivolous, in violation of Rule 3.1 of the 1990 Illinois Rules of Professional Conduct;
using means in representing a client that have no substantial purpose other than to embarrass, delay or burden a third person in violation of Rule 4.4 of the 1990 Illinois Rules of Professional Conduct;
through a representative, soliciting professional employment from a prospective client who is neither a relative, close friend of the lawyer, or a person with whom the lawyer or the lawyer's firm has had a prior relationship, in violation of Rule 7.3 of the 1990 Illinois Rules of Professional Conduct; and
engaging in conduct that is prejudicial to the administration of justice, in violation of Rule 8.4(a)(5) of the 1990 Illinois Rules of Professional Conduct.
The panel finds that the Administrator failed to prove by clear and convincing evidence that Respondent advanced a claim that Respondent knew was unwarranted under existing law. The evidence shows Respondent was contacted by Bandas and informed of the pending
settlement for the Illinois WalMart litigation. Respondent testified that Bandas explained the terms of the settlement and raised several concerns. At the time Respondent learned of the pending settlement, he believed there was no reason to doubt the information he received from Bandas. Respondent discussed the case with Bandas and reviewed the objections that Bandas had drafted. The panel finds Respondent's testimony credible in that he believed the objections were warranted. Best practices suggest that Respondent should have investigated the case file and settlement terms independently however, these practices are not required. Therefore, the panel recommends that the allegation that Respondent violated Rule 1.2(f)(2) of the Illinois Rules of Professional Conduct be dismissed.
Next, the panel finds the Administrator failed to prove by clear and convincing evidence that Respondent asserted an issue therein, when there is no basis for doing so that is not frivolous. The panel finds there is some merit to the objections that Respondent brought to the WalMart litigation settlement. Even if the objections end up being denied, that does not make them frivolous. It is not for the panel to judge whether the settlement terms for the plaintiffs' attorneys' fees are reasonable or not. However, the panel finds Respondent had a reasonable basis for filing objections to the proposed settlement. Therefore, the panel recommends that the allegation that Respondent violated Rule 3.1 of the Illinois Rules of Professional Conduct be dismissed.
The panel finds the Administrator failed to prove by clear and convincing evidence that Respondent used means in representing Carlson that had no substantial purpose other than to embarrass, delay or burden a third person. The evidence shows Bandas contacted Respondent to discuss the WalMart litigation and settlement. After discussing the settlement terms, Respondent, in good faith, had concerns about the amount the plaintiffs' counsel could
potentially receive verses the amount the claimants could potentially receive. Respondent received the objections and reviewed them. The evidence shows Respondent did not contact any of the parties counsel to discuss the case or the settlement terms. While this panel finds Respondent did not exercise best practices, the panel does not find that Respondent's lack of diligence rises to the level of violating Rule 4.4. Therefore, the panel recommends the allegation that Respondent violated Rule 4.4 of the Illinois Rules of Professional Conduct be dismissed.
The panel finds the Administrator failed to meet the burden of proof by clear and convincing evidence Respondent solicited professional employment, through a representative, from a prospective client who is neither a relative, close friend of the layer, or a person with whom the lawyer has had a prior relationship. The panel finds the testimony of Colleen Boyle to be the most credible description of how Respondent came into contact with Jill Carlson. Boyle stated in Fall 2009, Respondent informed the office staff about a pending class action suit, not her specifically. Boyle testified that the other administrative assistants overheard the entire conversation. Respondent let the office staff know that there was a class action lawsuit with WalMart and that if they knew anyone who had worked for WalMart and they wanted information about the class action lawsuit, Respondent would be happy to talk to them about it and give them advice. Boyle told Respondent she had a friend that worked for WalMart, Jill Carlson, and she would give her a call and ask Carlson if she wanted any information about it. Respondent's recollection of events was identical to Boyle's description. The panel finds this series of events does not rise to the level of solicitation. Therefore, the panel recommends the allegation that Respondent violated Rule 7.3 of the Illinois Rules of Professional Conduct be dismissed.
The panel finds the Administrator proved by clear and convincing evidence that Respondent engaged in conduct that is prejudicial to the administration of justice. The panel finds the lack of investigation into the WalMart case, specifically the settlement terms, created potential risk for the class members as well as the attorneys representing both parties. The panel finds Respondent should have contacted the attorneys involved in the case to learn the specifics of the settlement and the work that went into the Illinois case. Respondent should have investigated similar WalMart class action suits in other jurisdictions for knowledge about other settlement awards, jury awards and class certification. The panel acknowledges Respondent was not required to attend the fairness hearing but it would have been prudent to have attended the hearing and have the opportunity to express his concerns about the disparity of the settlement fund distributions between class counsel and class claimants. The panel finds Respondent's decision not to appear as well as his lack of research into the settlement proposal prior to filing his objections is prejudicial to the administration and therefore, the panel finds Respondent violated Rule 8.4(a)(5) of the Illinois Rules of Professional Conduct.
The Administrator also charged Respondent with engaging in "conduct which tends to defeat the administration of justice or to bring the courts or the legal profession into disrepute in violation of Illinois Supreme Court Rule 770." With respect to the charge that Respondent engaged in "conduct which tends to defeat the administration of justice or to bring the courts or legal profession into disrepute in violation of Supreme Court Rule 770," the Illinois Supreme Court recently stated "Rule 770 is not itself a Rule of Professional Conduct" and "one does not 'violate' Rule 770. Rather, one becomes subject to discipline pursuant to Rule 770 upon proof of certain misconduct." In re Thomas, 2012 IL 113035, par. 92. Accordingly, based on the wording of the allegation in the Complaint before us, the panel finds no violation of Rule 770.
Having concluded Respondent engaged in misconduct, we must determine the appropriate discipline. In so doing, we keep in mind that the purpose of these proceedings is not to punish, but rather to safeguard the public, maintain the integrity of the profession and protect the administration of justice from reproach. In re Timpone, 157 Ill. 2d 178, 197, 623 N.E.2d 300 (1993). Attorney discipline also has a deterrent value in that it impresses upon others the repercussions of errors such as those committed by Respondent in the present case. In re Discipio, 163 Ill. 2d 515, 528, 645 N.E.2d 906 (1994).
The Administrator recommends that Respondent be suspended from the practice of law for 6 months and attend the ARDC seminar on professionalism. However, this recommendation assumes all allegations of misconduct were proved by clear and convincing evidence. Therefore, the panel finds that a less severe sanction is appropriate.1 In arriving at the appropriate discipline, we consider those circumstances which may mitigate and/or aggravate the misconduct. In re Witt, 145 Ill. 2d 380, 398, 583 N.E.2d 526 (1991). In mitigation, Respondent cooperated in these proceedings, has been licensed since 1980 with no prior discipline, expressed remorse for his misconduct, and presented five witnesses who attested to his good character and to the fact he has provided legal services on a pro bono basis. See In re Clayter, 78 Ill. 2d 276, 399 N.E.2d 1318 (1980).
In aggravation, we may consider any harm or risk of harm that was caused by Respondent's conduct. See In re Saladino, 71 Ill. 2d 263, 276, 375 N.E.2d 102 (1978) (discipline should be "closely linked to the harm caused or the unreasonable risk created by the [attorney's] lack of care"). We consider the risk of harm to the claimants and the class counsel by Respondent's lack of diligence in researching the settlement terms and court file. We find
Respondent did make his objections in good faith based on the information he knew at the time he filed his motion. However, Respondent could have reduced the risk of harm by seeking more information and attending the fairness hearing.
While every case is unique, we find the following cases to be instructive: In In re Grigsby, 00 SH 58, recommendation adopted, as modified, No. M.R. 18695 (May 22, 2003), the attorney was reprimanded for failing to provide competent representation in a post-conviction petition and appeal and for failing to keep his client reasonably informed as to the status of the case. He had not previously been disciplined, and presented character evidence from other attorneys.
In In re Steinberg, 89 CH 283 (July 2, 1990), the Hearing Board reprimanded an attorney for neglecting a client's work related claim. The attorney delegated the client's matter to another attorney. Thereafter, the client's matter was dismissed for want of prosecution. Although two motions to vacate the dismissal were filed, no counsel ever appeared to argue the motions. The attorney also failed to advise the client about the status of her claim. At the time of the reprimand, the attorney had made a good faith effort to compensate the client and recognized his ultimate responsibility in the client's matter.
In the present case, Respondent received a call from an out of state attorney regarding a class action suit which was settling in Illinois. Respondent discussed the suit with the attorney, reviewed the proposed objections, agreed to act as local counsel and filed the objections. Respondent, while acting in good faith, did not independently research the class action suit, contact class counsel to discuss the terms of settlement or specifically, discuss the process that class counsel used to determine the appropriate amount of fees. Further, while not required, Respondent chose not to attend the fairness hearing, where he would have had the opportunity to
explain his position to Judge Vandewiele. However, Respondent's misconduct was limited to one case, he did not engage in any intentionally deceptive misconduct, he has not been previously disciplined and we do not believe he poses a threat to his future clients. We conclude that a reprimand will satisfy the purposes of the disciplinary process in that it will protect the public and remind attorneys of their obligation to perform their legal services diligently.
Accordingly, and for the reasons stated, we conclude Respondent Alan Barinholtz should be reprimanded for his misconduct. A proposed reprimand is attached hereto.
Date Entered: June 15, 2012
|Stephen S. Mitchell, Chair, Larry R. Kane and Bonnie K. Curran, Hearing Panel Members.|
1 The fact we did not find a violation of Supreme Court Rule 770 does not affect our recommendation as to sanction. In re Gerard, 132 Ill. 2d 507, 548 N.E.2d 1051 (1989).
BEFORE THE HEARING BOARD
ILLINOIS ATTORNEY REGISTRATION
|In the Matter of:
Commission No. 2010PR00070
To Alan Barinholtz:
You are being reprimanded by the Hearing Board of the Attorney Registration and Disciplinary Commission as follows:
As detailed in the Hearing Board Report and Recommendation, you engaged in conduct that is prejudicial to the administration of justice.
Your conduct violated Rule 8.4(a)(5) of the 1990 Illinois Rules of Professional Conduct.
You have not been previously disciplined, you did not engage in any dishonest act, you cooperated fully in these proceedings, and we do not believe you will repeat your mistakes.
Your conduct, however, was improper and cannot be condoned. The Hearing Board has authority pursuant to Supreme Court Rule 753(c) and Commission Rule 282 to administer a reprimand to an attorney in lieu of recommending disciplinary action by the Court and the Board has determined such action is appropriate in this case.
Therefore, you are hereby reprimanded and admonished not to repeat the misconduct outlined in the Report and Recommendation.
You are further advised while this reprimand is not formally presented to the Supreme Court, it is not to be taken lightly. This reprimand is a matter of public record, is on file with the Attorney Registration and Disciplinary Commission and may be admitted into evidence in subsequent disciplinary proceedings against you.
Date Entered: June 15, 2012
|Stephen S. Mitchell, Chair, Larry R. Kane and Bonnie K. Curran, Hearing Panel Members.|