IV. Candor in Ex Parte Proceedings

• Library: Professional Responsibility in Litigation (ABA) (2016 Ed.)

IV. Candor in Ex Parte Proceedings

The law permits ex parte proceedings in a variety of contexts—usually linked to a party's urgent need for judicial relief or intervention—as in requests for temporary restraining orders, or applications for temporary child custody, or orders of protection from abuse. The stakes in these proceedings are often substantial, yet there is no opponent to advocate conflicting positions or illuminate contrary facts, and the balance of interests normally found in litigation is therefore lost. At the same time, the court must strive for a just result and, accordingly, must consider the absent party's position to the extent reasonably possible. This leaves a judge hearing an ex parte proceeding wholly dependent on the lawyer who appears to furnish the facts on which any decision will be based. Model Rule 3.3(d) therefore establishes that in an ex parte proceeding, "a lawyer shall inform the tribunal of all material facts known to the lawyer that will enable the tribunal to make an informed decision, whether or not the facts are adverse."²⁵⁷

Model Rule 3.3(d) does not require guilty knowledge for a violation.²⁵⁸ Lawyers may violate Rule 3.3(d) through the inadvertent or negligent omission or misstatement of material facts, as well as through deceit or misrepresentation.²⁵⁹ For that matter, there is authority for the proposition that lawyers may violate the rule by failing to reasonably investigate the bases for assertions before making them.²⁶⁰ In other words, lawyers may violate Rule 3.3(d) by making statements that they do not know to be false because the test in ex parte proceedings is whether they reasonably believe statements to be true.²⁶¹ A lawyer should not simply accept a client's or co-counsel's factual representations as true if the lawyer has knowledge that calls those representations into doubt, or that suggests the need for independent investigation.²⁶²When acting upon the statements of others, prudent lawyers representing clients in ex parte proceedings will remember the maxim that once guided United States diplomats in arms control negotiations with representatives of the former Soviet Union—trust, but verify.

A. Illustrative Cases

Lawyers have unfortunately failed to honor their Rule 3.3(d) obligations in numerous cases.²⁶³ In In re Humphrey,²⁶⁴for example, lawyer Bobbie Humphrey obtained a temporary restraining order (TRO) on behalf of her sister based on materially false representations to the court concerning the parties' domicile. In obtaining the TRO, Humphrey knowingly misrepresented that her brother-in-law's office was the family home, thereby causing his eviction from his office and substantially disrupting his business.²⁶⁵ Had the judge known of the parties' actual residence, she never would have granted the TRO.²⁶⁶ The Louisiana Supreme Court found that Humphrey violated Rule 3.3(d) among others, and disbarred her for that and unrelated violations.

The lawyer in Goodsell v. Mississippi Bar,²⁶⁷ Jesse Goodsell, forged a client's signature on a motion for a temporary restraining order filed in chancery court. A disciplinary tribunal determined that the forgery was material despite the chancellor's testimony that had he known the circumstances surrounding the motion, the fact that Goodsell signed his client's name would have made no difference.²⁶⁸ The Mississippi Supreme Court agreed with the disciplinary panel, finding it material that (1) Goodsell forged his client's signature rather than informing the chancellor that he had signed for his client in a representative capacity, and (2) the client was not present when Goodsell signed the client's name to the motion.²⁶⁹ For this violation and others, the court suspended Goodsell for six months.

In Eagan v. Jackson,²⁷⁰ Sharon Eagan was catastrophically injured in a car accident in Guatemala in September 1990. Her brother, Eugene Keith, an experienced lawyer, brought her back to New Jersey, where they both resided. Keith arranged for her medical care and handled her affairs in consultation with their mother and brother. In late 1990, Keith met with long-time acquaintance Sheldon Bross, a member of the New Jersey personal injury law firm of Bross, Strickland, Cary & Grossman, P.A. (Bross Strickland). Keith retained Bross on a contingent-fee basis to prosecute a personal injury action on behalf of his sister. In January 1991, Bross sent Keith a letter thanking him for the referral of his sister's case and stating Bross's intention to pay Keith a one-third referral fee.²⁷¹ In October 1991, Bross filed a guardianship action in a New Jersey state court that culminated in Keith being appointed as Eagan's guardian. Neither Keith nor Bross revealed the existence of the referral fee agreement to Eagan's guardian ad litem in the guardianship proceeding or to the presiding judge.²⁷²

Bross filed suit on Eagan's behalf in a Pennsylvania federal court in January 1992, having been admitted to practice there pro hac vice. After nearly two years of litigation, a $1.2 million settlement was reached with the corporate defendant that was the principal target in the case, C.A.R.E. Bross filed an uncontested motion to approve the settlement and the proposed disbursement of the settlement proceeds. The district court heard the motion in late October 1993. C.A.R.E. received notice of the hearing but chose not to attend.²⁷³ Keith and Bross both attended the hearing, as did another Bross Strickland lawyer, Mark Mori. The district judge noticed some discrepancies between the fee requested by Bross Strickland to be paid out of the settlement funds and the percentages stated in the fee agreement between Keith and Bross. Bross and Mori promised to rectify the discrepancies in a post-hearing memorandum. During the hearing, the district court, which believed Keith's role in the litigation to be only that of Eagan's disinterested guardian, confirmed with Keith his belief that the proposed settlement was reasonable.²⁷⁴ At no point in the hearing did anyone disclose to the district court Keith's one-third interest in Bross Strickland's fee.²⁷⁵

Curiosity can sometimes be as perilous for lawyers as it is for cats, especially when it is a judge who is curious, and so it was here. After the hearing, the district judge, apparently spurred by the fee-related oddities in the settlement agreement, requested that Bross file a certificate with the court clerk reporting any referral fees to be paid from his firm's contingent fee.²⁷⁶ Bross and Keith filed responsive affidavits that revealed for the first time the one-third referral fee to be paid to Keith.²⁷⁷ Worried that the entire settlement process was tainted by Keith's undisclosed financial interest in the case, the district court issued a show cause order concerning various aspects of the lawyers' conduct. One of the issues raised was whether Bross had violated his duty of candor to the district court.

The court concluded that Bross breached his duty of candor when he stood silent as Keith told the court that the settlement was fair and endorsed the fee to be paid to Bross Strickland, given that Bross knew of Keith's "compromised position."²⁷⁸ The court evaluated Bross's duty of candor under Rule 3.3(d) on the basis that the settlement proceedings were ex parte, reasoning that while the defendants were still in...