One Appeal Frivolous; Two Others Not

An Illinois Hearing Board found that an attorney had engaged in a single count violation of pressing a frivolous appeal. 

The board rejected allegations of frivolous appeals in two bankruptcy matters.

The attorney was admitted in 1976 and had previously been with Jenner & Block.

The underlying facts are complex (see this 1995 coverage from the Chicago Tribune) and started with a disagreement with co-counsel and an agreement with opposing counsel

In January 1993, Respondent had a disagreement with Rivkin & Radler on how to proceed in the litigation, and Warren Radler threatened to withdraw unless Respondent was removed from responsibility and decision-making. On January 21, 1993, [Client principal] Troy signed a letter which relieved Respondent of his responsibilities in the case, but reaffirmed his right to receive a 20% contingent fee. Respondent denied being discharged, and testified he did not withdraw his appearance because he did not think he was being asked to withdraw. 

In late January 1993 a settlement conference was held before Judge Zagel, without Respondent present, during which a suggestion was made that Respondent enter into a Legal Services and Consulting Agreement with two of the defendants, the effect of which would create an attorney/client relationship and prevent Respondent from representing anyone against them. Pursuant to the agreement Respondent was to receive a $200,000 fee spread out over a 30-month period. Respondent understood that the defendant companies were seeking assurances that he would not represent other plaintiffs against them or talk about them without their prior permission. Respondent was also aware of the defendants’ concern, which they shared with Judge Zagel, that he would join forces with another attorney who had already filed consumer class action lawsuits against juice manufacturers. 

Respondent objected to signing the consulting agreement because he wanted to continue working in the area of adulterated juice litigation and because he believed the agreement was an improper restriction on his right to practice in violation of Rule 5.6 of the Rules of Professional Conduct. Nevertheless, he signed the agreement on March 25, 1993, after Troy asked him to sign, Rivkin & Radler agreed to represent him if necessary, and Judge Zagel told him he could be subject to a malpractice claim if his failure to sign caused Troy to lose the settlement. Respondent testified the conversation with Judge Zagel occurred at a conference that was requested by defense counsel and which Respondent was instructed to attend. At that time Respondent thought he was being viewed as a Grove Fresh attorney, despite the January 21, 1993 letter from Troy. He noted he would not be subject to malpractice liability if he did not have an ongoing attorney/client relationship with Grove Fresh. 

In April 1993, Grove Fresh case No. 90 CV 5009 was settled and dismissed. Respondent received a $400,000 contingency fee from Grove Fresh, which was separate and apart from his fee under the consulting agreement, which he had agreed to and signed. 

In June 1993 a coalition of intervening journalists filed a motion to vacate the seal Judge Zagel had previously entered in the Grove Fresh litigation. After Judge Zagel denied the motion, the journalists filed an appeal in the Seventh Circuit Court of Appeals. On July 14, 1993, the Grove Fresh defendants filed their opposing brief which, despite their consulting agreement with Respondent, accused Respondent of misconduct by stating he had brought false allegations against the defendants in order to obtain a multi-million dollar settlement. 

On August 5, 1993 Respondent sent letters to the Grove Fresh defendants rescinding the consulting agreement, tendering the funds he had received, and advising them he could not have a viable relationship with clients who were accusing him of misconduct. Thereafter, the defendants filed a motion to enforce the settlement agreement and noticed it for hearing on October 21, 1993. Respondent received a copy of the notice shortly after it was filed. When Respondent did not appear on October 21, 1993, Judge Zagel issued a rule to show cause why he should not be held in contempt. 

On October 22, 1993, Respondent filed a motion with the Seventh Circuit requesting a hearing on the allegations made against him by the Grove Fresh defendants in the journalists’ appeal. He acknowledged that his motion recited confidential information, that is, the names of witnesses who had invoked their Fifth Amendment privilege against self-incrimination and the settlement amount, but noted those disclosures amounted to only seventeen words in a 16,000 word motion. Respondent believed the disciplinary rules allowed him to disclose confidential information in order to defend himself. 

On November 9, 1993, the Seventh Circuit struck Respondent’s request for a hearing and ordered him to show cause why he should not be sanctioned for filing a frivolous motion. The appellate court also opened a disciplinary file against him and referred the matter to the ARDC, which contacted Respondent and then closed its inquiry after receiving Respondent’s response. The rule to show cause was dismissed at a later date. 

Also on November 9, 1993, the Grove Fresh defendants petitioned the district court for a finding of contempt and sanctions against Respondent for disclosing in his appellate court motion information protected by the seal order. In October 1994 the Grove Fresh defendants filed a supplemental petition for contempt alleging that a letter sent by Respondent to an attorney assisting the journalists in their appeal also violated the seal order. 

On February 3, 1995 Judge Zagel held a hearing on the two contempt petitions filed by the Grove Fresh defendants. Respondent believed his status as a Grove Fresh attorney was the only predicate Judge Zagel had for exercising jurisdiction over him. 

On June 9, 1995 Judge Zagel issued a 60-page memorandum opinion and order holding Respondent in contempt of court and finding that he violated Rule 11. Judge Zagel found that Respondent willfully and knowingly violated protective orders, refused to appear in court as ordered, held himself out as counsel for Grove Fresh after he had been discharged, and filed a brief before the appellate court even though he was not a party to the action and did not represent a party to the action. Respondent was ordered to pay defendants’ fees and costs and to post a $50,000 bond to protect against the risk of future disclosures of confidential information. On February 7, 1997, almost two years later, Judge Zagel entered judgment against Respondent in the amount of $149,554.45. 

Respondent filed a notice of appeal of Judge Zagel’s ruling to the Seventh Circuit Court of Appeals and, in so doing, discovered that many documents from the district court case had not been entered on the docket. He testified that although Judge Zagel had unsealed a large portion of the record in December 1994, months later the clerk’s office still did not have the documents.

The resulting Seventh Circuit sanction order is linked here.

The board rejected the Administrator’s contention that two other appeals in bankruptcy matters were also frivolous. 

Much of the argument portion of Respondent’s brief, and nearly all of his recitation of facts, is directed to events in the Grove Fresh litigation that led up to the 1995 order and the appeal of that order. We do not regard Respondent’s arguments as legitimate advocacy, as he could not reasonably believe they would result in the Seventh Circuit vacating an order that it previously upheld. Therefore, we find that Respondent’s 2001 appeal was frivolous in nature and violated Rule 3.1.

We have a different view of Respondent’s bankruptcy appeals, which involved the question whether the contempt judgment of $149,554.45 could be discharged. The bankruptcy court, by Judge Squires, found that Respondent’s debt was not dischargeable under the Bankruptcy Code because Respondent caused a willful and malicious injury to the Grove Fresh defendants. In making his determination Judge Squires gave collateral estoppel effect to Judge Zagel’s 1995 contempt order which, as Judge Squires noted, found that Respondent “willfully and intentionally violated court orders without justification for the purpose of harming the Plaintiffs.” Believing that Respondent was asking him to overturn Judge Zagel’s 1995 contempt ruling, Judge Squires held that he had no appellate jurisdiction and could not, as a matter of law, effectively reverse or undo any final judgment entered by higher federal courts. Respondent denied that he was asking the Bankruptcy Court to overturn Judge Zagel’s findings; rather he was arguing that the contempt finding should not be given collateral effect for other reasons not previously addressed elsewhere.

Respondent appealed Judge Squires’ ruling, first to the United States District Court in 2009 and then to the Seventh Circuit Court of Appeals in 2010. In so doing, he followed the proper appellate route for appealing a ruling by the Bankruptcy Court.

Before the District Court Respondent argued, among other things, that his underlying actions which triggered the contempt proceedings were not malicious, and that the elements of collateral estoppel were not satisfied because Judge Zagel’s finding of willfulness was not fully litigated and he did not have full and proper representation in the contempt proceedings. He also argued that the prior judgment should not be given collateral estoppel effect because the procedures surrounding his 1995 hearing were unfair. Further, he noted that the Grove Fresh defendants did not respond to his Statement of Facts in his motion for summary judgment before Judge Squires and judgment should have been entered in his favor by the Bankruptcy Court.

The question of whether Respondent had acted maliciously in violating the protective and seal orders, which would preclude the $149,000 judgment from being discharged, had not been raised in either of the earlier appeals to the Seventh Circuit. Similarly, the question of whether the 1995 order should be given collateral estoppel on that issue had not been previously addressed. We find the foregoing arguments were properly asserted in a proceeding where the ultimate issue of dischargeability depended on a finding that Respondent had acted maliciously. Further, because the doctrine of collateral estoppel applies only to issues that have been actually and fairly litigated by represented parties, Respondent by necessity had to revisit the 1995 contempt order, including whether procedural safeguards were followed, to mount his arguments.

Judge Gettleman recognized that several of Respondent’s arguments involved non-dischargeability or collateral estoppel, but he ultimately rejected those arguments as being unpersuasive. As we previously stated, the success or failure of an argument does not determine whether it is frivolous.

While Respondent would have been wise to focus more heavily on case law relating to dischargeability, we cannot say that his appeal of rulings relating to his bankruptcy was frivolous or that his arguments were asserted in bad faith. As we have noted, in addressing the issue of collateral estoppel, the prior judgment or order must be addressed in some detail and doing so could well cause a court which had heard previous appeals in 1998 and 2001 to believe it was hearing arguments and issues which had already been presented to it and that it had decided. We are not clearly convinced that was the case with the bankruptcy appeal. Much of the background information with which Respondent chose to burden his briefs included facts that the court had heard before, but we do not believe that the inclusion of such information – even if not necessary to a full airing of the issues before the court – caused the appeal to be “frivolous.” We conclude therefore that the Administrator did not prove by clear and convincing evidence that Respondent’s 2009 appeal of Judge Squires’ ruling to Judge Gettleman violated Rule 3.1.

For the same reasons relating to Respondent’s appeal to the district court, we find the Administrator did not prove by clear and convincing evidence that Respondent’s appeal of Judge Gettleman’s decision to the Seventh Circuit in 2010, which further related to the dischargeability of his debt to the Grove Fresh defendants, violated Rule 3.1. We note that in making our findings with respect to the bankruptcy appeals, we gave consideration to the nature and purpose of Respondent’s assertions. The fact that an argument was previously raised in a different context or that some particular contention was baseless (for example, Respondent’s assertions with respect to Judge Zagel’s fictional writings) does not, in our minds, rise to the level of a Rule 3.1 violation when the overall appeal was legitimately brought. See e.g. City of Chicago v. Am. Nat’l Bk & Trust Co., 233 Ill. App. 3d, 1031, 1039-40, 399 N.E.2d 1126 (1^st Dist. 1992) (court may ignore material that is irrelevant or extraneous to proceedings). We also note that Judge Gettleman recognized in his opinion that a “direct appeal” was an appropriate method for Respondent to further pursue his arguments.

Although we have found misconduct only as to Respondent’s 2001 appeal, we wish to express our concern with the content of all his briefs insofar as he was not able to succinctly describe the factual basis for his arguments. We understand that Respondent was dealing with events that spanned a period of almost twenty years and therefore he may have felt compelled to provide extensive background and details. In our opinion, however, his lengthy explanations were unduly burdensome and consumed valuable space that could have been devoted to a more thorough examination of the law. We sympathize with any court having to encounter such writings on a repeated basis, as the appellate panel of judges in the Grove Fresh litigation did.

The board proposes a 60-day suspension with automatic reinstatement.

we suspect Respondent’s personal need for vindication interfered with his judgment and prevented him from recognizing the error of his ways. We note that prior to becoming involved in the Grove Fresh dispute, Respondent practiced successfully for a number of years, both on his own and with two firms, with no client complaint.

 (Mike Frisch)