In re Complaint as to the Conduct of BARNES H. ELLIS, Accused. In re Complaint as to the Conduct of LOIS O. ROSENBAUM, Accused
Argued and Submitted, at Lewis and Clark Law School,
Portland, Oregon March 4, 2014.
On review of the decision of the trial panel of the Disciplinary Board OSB
No. 09-54, OSB No. 09-55. [*]
United States v. Stringer, 408 F.Supp.2d 1083, (D. Or., 2006)
W. Michael Gillette, Schwabe Williamson & Wyatt PC, Portland, argued the cause and filed the briefs for the Accuseds.
Mary A. Cooper, Assistant Disciplinary Counsel, Tigard, argued the cause and filed the brief for the Oregon State Bar.
Before Balmer, Chief Justice, and Walters, Linder, Landau, Brewer, and Baldwin, Justices.[**]
[356 Or. 693] PER CURIAM
This lawyer disciplinary proceeding involves several allegations under the former Code of Professional Responsibility. The accuseds (also individually referred to as Ellis or Rosenbaum in this opinion) represented a public company involved in various protracted proceedings over several years and also represented some company directors, officers, and managers during some of those same proceedings. The Bar charged the accuseds in separate complaints with multiple violations of several former Disciplinary Rules, including former DR 5-105(C) (waivable former-client conflicts with insufficient disclosure); former DR 5-105(E) (nonwaivable current-client conflicts and waivable current-client conflicts with insufficient disclosure); and former DR 1-102(A)(3) (misrepresentation by omission). A trial panel of the Disciplinary Board concluded that, although the Bar had not proved most of the charged violations, it did sufficiently prove that some client conflicts of interest had existed, that the accuseds had made insufficient disclosures as to those conflicts, and that the accuseds had made related misrepresentations by omission in a particular conflict disclosure letter. The panel determined that a public reprimand was the appropriate sanction. The accuseds sought review as to all allegations that the panel determined that the Bar had proved, and the Bar sought review as to some additional allegations that the panel determined had not been proved. For the reasons explained below, we dismiss the amended complaints.
We review the record de novo. Bar Rule of Procedure (BR) 10.6. The Bar must prove its allegations by clear and convincing evidence. B.R. 5.2. " Clear and convincing evidence" means that " the truth of the facts asserted is highly probable." In re Phinney, 354 Or. 329, 330, 311 P.3d 517 (2013) (internal quotation marks omitted). We set out a general factual summary below and discuss later in this opinion additional facts that relate to particular issues on review. We [356 Or. 694] draw all facts from the testimony and record before the trial panel, and from public court records in related proceedings.
A. Company Background, Accounting Issues, and Class Action Litigation
FLIR Systems, Inc. (FLIR) is a publicly traded Portland, Oregon, company that manufactures and sells thermal imaging equipment and broadcast camera systems, including to governmental entities. In early 2000, key FLIR directors, officers, and managers included Daltry (Board of Directors Chair), Wynne (board member), Stringer (President and Chief Executive Officer (CEO)), Samper (Chief Financial Officer (CFO)), Martin (Vice President of Sales (Worldwide)), Fitzhenry (General Counsel), and Eagleburger (Director of Sales Operations and Senior Vice President for Sales and Marketing). As CFO, Samper was responsible for FLIR's
accounting and preparation of its financial statements.
As the 1990s ended, FLIR's corporate accounting grew more complicated, in part due to recent mergers and acquisitions, and installation of a new enterprise reporting system. In 1999, FLIR had difficulty completing its financial statements on time. At a February 2000 Board of Directors meeting, Samper reported that FLIR's financial statements again would not be prepared on time. By that point, at least some board members began to doubt the competency of management, including Samper's ability to serve as CFO. Samper resigned shortly thereafter.
FLIR then discovered several accounting errors, including improperly claimed revenue in 1998 and 1999 for several transactions that appeared to be without sufficient foundation. As a result of that review, FLIR decided [356 Or. 695] to restate certain 1998 and 1999 financial statements previously filed with the Securities and Exchange Commission (SEC). In doing so, FLIR's independent auditor instructed FLIR to apply retroactively to the past 1998 and 1999 transactions a new SEC directive, which dictated a delay as to when certain revenue could be recognized in a company's financial statements. The underlying restatement calculations, combined with retroactive application of the new directive, ultimately caused a notable drop in FLIR's reported revenue for the identified time frame.
FLIR publicly announced its intent to restate. FLIR's stock price dropped, and, in early March 2000, several shareholders filed class action securities litigation against FLIR, Stringer, Samper, and eventually Daltry.
Later in March 2000, FLIR retained the accuseds, both partners at Stoel Rives LLP, in the class action litigation, and it informed Stringer and Samper that it would pay for their representation by the accuseds or other counsel. The accuseds sent engagement letters to FLIR, Stringer, and Samper, stating that a unified defense was advantageous and that they did not anticipate that any conflict would arise, but that each individual defendant might wish to consult with independent counsel for monitoring purposes; the letter also recommended consultation before consenting to the joint representation. Stringer declined and retained outside counsel. Samper already had retained outside counsel, Glade and Kaner, but decided in consulting with them to agree to have the accuseds serve as co-counsel. Glade accepted the joint representation on Samper's behalf, noting that--in the unlikely event that an actual conflict arose--Samper reserved his rights regarding his consent to the accuseds' continued representation of FLIR. After Daltry became a defendant in the class action, he also agreed to the joint representation, and he signed a similar consent letter. Fitzhenry consented on FLIR's behalf. When the accuseds began representing FLIR, Daltry, and Samper in the class action, they understood FLIR's accounting issues to be the result of possible management competency issues and an overworked and underesourced accounting staff, but not fraudulent actions by any FLIR officer or manager.
[356 Or. 696] FLIR ultimately filed three SEC restatements between April 2000 and March 2001. The class action litigation eventually settled in April 2001, before discovery, with payment by both FLIR's insurer and FLIR. No allegations in this proceeding concern the class action litigation.
At about the time that FLIR retained the accuseds, FLIR's board appointed a special committee, which included Wynne, to examine more closely the 1998 and 1999 financial misstatements and underlying accounting problems. In working with a prospective new independent auditor, the committee determined that it should assess the integrity of current management, which at that time included Daltry and Stringer (but not Samper, who had resigned, although the board had approved retaining him as an independent
consultant to assist with the restatements). The committee determined that Stringer had engaged in misrepresentations, and the board later decided that he should resign. Stringer was placed on administrative leave in May 2000 and later terminated; Daltry also resigned. By then, Wynne had come to question Stringer's integrity, but not Samper's; instead, he continued to view Samper as having competency issues only, and he did not think at this time that FLIR's management had engaged in any fraud.
B. SEC Investigation
Meanwhile, the SEC had begun investigating FLIR's accounting, arising from the same general facts and issues alleged in the class actions. The SEC began issuing subpoenas to FLIR officers, managers, and employees in late June 2000. At FLIR's request, the accuseds' joint representation--initially formed for the class action litigation--expanded to include any current or former FLIR officer, manager, or employee who received an SEC subpoena and who consented to be included in the joint representation. The accuseds continued their joint representation of FLIR, Daltry (for purposes of his SEC interview only), and Samper (who also continued to be separately represented by Glade and Kaner); they also began representing Wynne, Fitzhenry, and Eagleburger for purposes of the SEC investigation. The accuseds ultimately represented about 35 to 40 [356 Or. 697] individuals, slightly more than half the witnesses that the SEC examined.
Although the accuseds represented many individuals in the SEC investigation, they sent only eight engagement letters, directed to the individual clients who they thought had the greatest potential for future possible conflicts, including members of the board, Daltry, and Eagleburger. Those letters requested consent to the joint representation by using similar wording as the earlier class action letters; they did not include any new wording relating to the SEC investigation. The accuseds did not send a letter to Samper, because he only recently had signed a similar letter in the class action involving the same facts. For his part, Glade did not necessarily expect the accuseds to send a separate engagement letter to Samper, because he assumed that the SEC representation would proceed in the same fashion as the class action litigation--that is, he and Kaner would remain knowledgeable so as to provide independent advice to Samper and be available to take over responsibility for him as necessary. The accuseds agreed with each other to watch for emerging conflicts between their clients.
The joint representation strategy in the SEC investigation was purposeful. According to the testimony of several witnesses before the trial panel, rules governing SEC investigations limit information available to subject companies and witnesses, while maximizing the SEC's ability to acquire information. A lawyer is permitted to attend a witness interview only if representing the witness, and the ability to examine transcripts and exhibits shown to witnesses during interviews is similarly limited. Joint representation therefore permits the company's attorneys to act as a central clearinghouse to obtain, consolidate, and disseminate material information--such as subpoenaed documents and the content of other witness interviews--to the joint clients, so as to maximize the amount of information flowing to all represented individuals. That global collection of information, in turn, helps the company and all involved individuals to [356 Or. 698] clarify the nature and focus of the investigation, and to provide useful information to the SEC. Also, unless the nature of the investigation lends itself to blame-shifting--such as cases involving insider trading, embezzlement, or obstruction of justice--the interests of the company and the various witnesses tend to be aligned during the investigation phase, because both the company and the witnesses seek to provide the SEC with truthful information so as to understand more fully the scope and direction of the investigation, and to ameliorate the need for any continued investigation. Joint representation therefore
is a common practice during the SEC investigation phase, when appropriate under the circumstances. As part of a joint representation, it also is common for some individual witnesses to have their own, independent lawyers, who monitor the proceedings to evaluate whether any conflict arises and who later may serve as lead counsel for their clients if needed.
During the SEC investigation, subpoenaed witnesses typically sent requested documents to Fitzhenry, and he sent them to the accuseds. The accuseds maintained all the documents in a room at Stoel Rives in part for SEC staff review; if SEC staff then marked a document for production, Stoel Rives would catalogue the document in a FLIR database and produce it to the SEC. Also as part of the joint representation, either Ellis or, more often, Rosenbaum attended all their clients' SEC interviews. Rosenbaum took extensive notes during the interviews that she attended, and she provided to individual witness clients or the lawyers of represented witness clients written summaries of all information that she learned during the interviews that was relevant to that client. The accuseds also provided several interview transcripts to their individual clients or their lawyers.
Part of the SEC's investigation explored Samper's involvement, as CFO, in FLIR's accounting problems that had prompted the restatements. Either Glade and Rosenbaum or Kaner and Rosenbaum attended all Samper's SEC interviews, and Rosenbaum provided to Glade and Kaner comprehensive written summaries of all other witness testimony and other documentation that, in her judgment, was [356 Or. 699] material to Samper's involvement. The accuseds, Glade, and Kaner continuously conferred through the course of the SEC investigation regarding the transactions at issue and the SEC's inquiries touching on Samper. For example, early in the investigation, a FLIR employee, Chambers, stated that Samper had directed the destruction of a document that she had created to track inventory. Rosenbaum, Glade, and Kaner thereafter provided information to the SEC, through Samper, showing that Chambers did not have a full understanding of the situation and that the destruction request had been appropriate. By the later part of 2001, Glade and Kaner continued to think that Samper did not have any conflicting interest with FLIR of which the accuseds would have been aware, and they continued to think that Samper's and FLIR's interests aligned.
The SEC focused on numerous specific transactions during its investigation, including a $4.6 million 1999 transaction--the " Swedish Drop Shipment" --that had prompted FLIR's second SEC restatement. Samper had mentioned that transaction to the SEC, and the SEC questioned both Samper and Stringer about its underlying entries. Samper told the SEC that Stringer had directed him to make certain entries and therefore he had done so, but FLIR later changed those entries in its second restatement.
Also during the SEC interviews, several of the accuseds' individual clients offered statements that arguably could be construed as unfavorable to other clients, particularly Samper. The accuseds continued to evaluate whether any conflict among various clients had arisen, but they determined that their clients' interests remained [356 Or. 700] aligned and therefore made no additional disclosures during the investigation phase.
As the SEC investigation progressed, Wynne worked with a new FLIR controller, Muessle, who had reviewed multiple earlier recorded transactions and determined that many should not have been entered due to insufficient supporting documentation. By spring 2001, Wynne concluded that FLIR's former management had engaged in securities fraud. As to Samper specifically, Wynne concluded that Samper had made entries and submitted financial statements that contained figures manipulated as a result of fraud, which, in Wynne's view, satisfied the definition of securities fraud, even if Samper himself had not manipulated any figures. The accuseds were unaware until several years later that Wynne had reached that general conclusion about Samper.
Meanwhile, in July 2001, Stringer sued FLIR for wrongful termination, and the accuseds' firm, Stoel Rives, represented FLIR in that action. The complaint eventually was dismissed with prejudice in 2003.
The SEC investigation effectively concluded near the end of 2001. Typically, at the close of an SEC investigation phase, the SEC decides whether to send a " Wells Notice" to the company or other individuals. A Wells Notice is an official notification that outlines the SEC's potential case against the recipient, laying the groundwork for a possible civil enforcement action. During the " Wells phase," each Wells Notice recipient typically meets separately with the SEC to discuss the SEC's theory of its case against that recipient. A Wells Notice recipient then may file a " Wells Submission" that offers a specific response to the Wells Notice. Often, the Wells process frames ensuing settlement negotiations between the SEC and a Wells Notice recipient.
[356 Or. 701] In February 2002, the SEC issued Wells Notices to FLIR and Samper, indicating its intention to recommend separate civil enforcement actions against them. The SEC also issued similar Wells Notices to Fitzhenry and Eagleburger, which the accuseds had not anticipated, and to others who were not the accuseds' clients, including Stringer; Martin (FLIR's former Vice President of Sales (Worldwide), who effectively had been terminated in spring 2000); and FLIR's previous auditor. Ellis immediately advised Fitzhenry and Eagleburger to obtain independent counsel, and they both did so. Wilson began representing Fitzhenry, and Neil began representing Eagleburger; as to both clients, the accuseds remained available as supporting co-counsel. As to Samper, Glade and Kaner took the lead in his representation during the Wells phase, with the accuseds moving to a supporting co-counsel role as needed. The accuseds continued to represent FLIR.
In early March 2002, FLIR had its Wells meeting with the SEC, which included Wynne, the accuseds, and FLIR's then-current CEO, Lewis. At that meeting, FLIR emphasized its remediation efforts. Also at the meeting, SEC staff questioned both Samper's and Fitzhenry's truthfulness, based on their investigation. After the meeting, Rosenbaum reported the general discussion to Glade and Kaner, and also to Neil, once he began representing Eagleburger. Among other things, Rosenbaum told Kaner that the SEC thought that Samper had not been forthcoming.
Samper's Wells meeting was scheduled for the following week. Before that meeting, Ellis left a long voicemail message for Glade that emphasized the SEC's strident tone in FLIR's Wells meeting; emphasized the SEC's certitude that wrongdoing had occurred, including by Samper; and recommended possible approaches for Samper. Glade and Kaner--but not the accuseds--attended Samper's Wells meeting. Even with Ellis's forewarning, they were shocked by the SEC's tone and negative view of
Samper. In the course of discussing its case against Samper, the SEC told Glade and Kaner that Rosenbaum had represented most of [356 Or. 702] the witnesses who purportedly had implicated Samper in problematic transactions.
Rosenbaum was out of the country during Samper's Wells meeting, but she e-mailed Glade afterwards to ask how it had gone. Glade responded that it was " what you would expect" and had involved familiar transactions, that the SEC was relying on FLIR employees who did not have firsthand knowledge of key events, and that the SEC thought that Samper had been disingenuous at best. Rosenbaum and Glade then exchanged thoughts about Samper preparing a Wells Submission; Glade's side of the communication acknowledged that Rosenbaum had been supplying him with her witness notes all along, suggesting that he already had been privy to statements about Samper from Stoel Rives-represented witnesses on which the SEC had relied in Samper's Wells meeting.
The accuseds, Wynne, and Fitzhenry drafted FLIR's Wells Submission, filed in March 2002. FLIR's Wells Submission purposefully focused on current management's remediation efforts since discovery of the 1998 and 1999 accounting issues. FLIR emphasized a near-complete turnover of management and auditors, and its expansion and strengthening of its accounting personnel and controls, including removal of senior management responsible for FLIR's troubles. FLIR described the earlier accounting issues as " errors" or " problems," not " fraud." FLIR also stated that, to the extent that any wrongdoing might have occurred, FLIR understood that the SEC was " pursuing fraud claims against one or more individuals who may have been responsible." In crafting its Wells Submission, FLIR intended to refer to only Stringer and Martin as the senior management who had been " removed" and against whom the SEC was " pursuing" further action. FLIR's Wells Submission did not expressly take any position or make any characterization about Samper, Daltry, or Eagleburger, although it did comment favorably on Samper's cooperation with the SEC; it also included an expressly favorable statement about Fitzhenry, who was the only member of the current senior management team who had worked at FLIR in 1998 and 1999, and so the drafters thought it important to offer a positive comment about his ongoing employment. [356 Or. 703] At the time that FLIR prepared its Wells Submission, the accuseds had concluded that Stringer and Martin--but not Samper or any of their other clients--had acted fraudulently in relation to FLIR's 1998 and 1999 accounting errors.
Upon receipt of FLIR's Wells Submission, Glade reviewed it and construed it as inferentially referring to Samper as a bad actor. Ellis, however, assured Glade that FLIR had not intended to identify Samper as a culpable actor; instead, FLIR's Wells Submission focused on forward-looking remediation only. Glade and Kaner continued to represent Samper through the Wells phase, with the accuseds continuing as supporting co-counsel, communicating almost daily with Glade and Kaner. Samper ultimately did not file a Wells Submission.
Fitzhenry and Eagleburger also each had Wells meetings with the SEC, attended by their respective independent counsel and Ellis. Ellis worked on a draft Wells Submission for Eagleburger at Neil's request.
Individual negotiations with the SEC commenced thereafter, resulting in separate settlement orders, finalized in judgment form by October 2, 2002, between the SEC and FLIR, Samper, and Eagleburger; an order as to Fitzhenry issued later, in November 2002.  The accuseds represented [356 Or. 704] FLIR in its negotiations, but did not participate in negotiations involving the three individual clients, who instead continued to be represented by their respective independent counsel. Following finalization of the SEC settlements, the accuseds considered their representation of Samper, Fitzhenry, and Eagleburger--and of Daltry, who had not received a Wells Notice--to be at an end. Stringer did not settle with the SEC, and the SEC later filed a complaint against him.
In the same general timeframe as the SEC Wells process and settlements, FLIR continued to defend against Stringer's wrongful termination action. Wynne, who by now had replaced Fitzhenry as FLIR's General Counsel, determined that the SEC's open Stringer investigation might be helpful to FLIR in defending against his wrongful termination action. After the SEC settlements against FLIR and Samper had been finalized, Wynne reviewed the SEC's complaint against Stringer and was surprised that it did not include any allegation about the Swedish Drop Shipment entry, which Wynne thought was the most egregious example of financial irregularity tied directly to Stringer. Wynne also thought that that entry--which never had identified either an underlying transaction or product--was critical to FLIR's defense against Stringer's pending wrongful termination action because it tended to justify Stringer's termination. Wynne therefore asked Rosenbaum, in her capacity as FLIR's counsel, to contact the SEC and inquire about the absence of that entry from the SEC's complaint against Stringer. At that time, Rosenbaum considered her representation of all the joint representation clients other than FLIR to be over; also, both she and Ellis thought that the Swedish Drop Shipment entry implicated Stringer, but not Samper, who no longer had a pending action before the SEC. Rosenbaum called the SEC on October 3, 2002, conveying Wynne's offer that FLIR would assist the SEC in its case against Stringer and noting Wynne's surprise that the SEC's complaint against Stringer did not mention the Swedish Drop Shipment.
[356 Or. 705] C. Fitzhenry's Bar Matter
Also in October 2002, Fitzhenry asked Ellis to self-report to the Bar on Fitzhenry's behalf, regarding an acknowledgment in Fitzhenry's Wells Submission and SEC settlement order that he had signed an inaccurate management representation letter in 1999, in reliance on prior signatures from Stringer, Samper, and others. Ellis notified the Bar and sent a confirming letter in November 2002, explaining that Fitzhenry by his signature had intended to verify only the legal--not accounting--representations made in the management representation letter and that he otherwise had relied on FLIR's CEO (Stringer), CFO (Samper), and outside auditors for verification that a particular sale referred to in the letter could be recorded and that the accounting representations were therefore accurate. The next month, Ellis sent the Bar additional materials and a longer letter that, among other things, reiterated that Samper, as CFO and also a signatory on the letter, was a person directly responsible for accounting issues at FLIR and that Samper had assured Fitzhenry that the representations in the letter were accurate. The Bar filed a complaint against Fitzhenry in November 2003, and Ellis thereafter represented
him in his Bar matter. This court ultimately suspended Fitzhenry for 120 days, for violating former DR 1-102(A)(3) (conduct involving misrepresentation). In re Fitzhenry, 343 Or. 86, 162 P.3d 260 (2007).
D. Department of Justice Investigation
In January 2003, an Assistant United States Attorney, Garten, told Ellis that the Department of Justice (DOJ) was opening a criminal investigation into FLIR's accounting. None of the involved lawyers who testified at the trial panel hearing--including the accuseds--had anticipated a criminal investigation, and they all were surprised to learn about it. Over the next several weeks, Garten and [356 Or. 706] the accuseds either met or communicated several times, and the accuseds produced FLIR documents to the DOJ or the FBI at Garten's request. As discussed below and later in this opinion, the nature of the conversations and extent of the document production underlie some of the Bar's conflict of interest and misrepresentation allegations.
Garten initially told the accuseds that he did not intend to target FLIR, but he pressed for both FLIR and the accuseds personally to cooperate with the DOJ in building a case against all potential defendants. In a subsequent meeting that Ellis attended, Lewis assured Garten that FLIR would cooperate, but the accuseds did not think that they ethically could assist in a case against their former clients.
Garten later wrote to the accuseds and reiterated his request that they cooperate; his letter also suggested that FLIR had requested immunity. Garten eventually withdrew his request for the accuseds' personal cooperation, although he continued to request assistance with document production and witness scheduling. Garten also told the accuseds in his last meeting with them that, as to Daltry and Fitzhenry but not Samper, he might not pursue individual criminal cases if they cooperated. Garten later sent a confirming e-mail that continued to request the accuseds' assistance in witness scheduling and reiterated an earlier document request. Thereafter, the accuseds had no direct contact with Garten other than document production--which by this time was ongoing--and witness scheduling.
On the same day as the accuseds' last meeting with Garten, Rosenbaum told Glade--and later confirmed in writing--that FLIR was not a DOJ target and that Samper [356 Or. 707] and others, including Daltry, Fitzhenry, and Eagleburger, might need lawyers in connection with the DOJ investigation. Her confirming letter to Glade also stated that the accuseds expected to continue to assist FLIR with document production and witness scheduling. Rosenbaum sent a similar letter to Eagleburger's independent counsel, Neil. Rosenbaum also eventually reached Daltry; on her recommendation, Daltry immediately retained criminal defense counsel, Myers. Rosenbaum told Myers about Garten's document requests, that FLIR was not a DOJ target, and that Garten was inclined to give Daltry immunity if he cooperated; Ellis reiterated several of those points to Myers the next day. By about this time, Stoel Rives had sent numerous FLIR documents to either the DOJ or the FBI--many were part of the public record, and many, but not all, had been produced to the SEC previously.
In late February 2003, after meeting with Garten to reiterate FLIR's intent to cooperate, Wynne proposed to the accuseds that FLIR retain separate counsel as to the DOJ
investigation but that the accuseds continue to produce FLIR documents as needed and to schedule witness interviews. The accuseds tentatively agreed and determined that they were not obligated to make any disclosure about the arrangement to Daltry, Samper, or Eagleburger. They nonetheless decided, in the exercise of caution, to send a disclosure letter and obtain consent.
On March 3, 2003, Rosenbaum sent a disclosure letter to FLIR and also, in care of their individual counsel, to Daltry, Samper, and Eagleburger. The letter explained that FLIR was cooperating with the DOJ and did not expect to be a defendant; that Stoel Rives had been asked to advise FLIR and assist in producing documents and scheduling witness interviews; that the investigation related to the accuseds' earlier representations of Daltry, Samper, and Eagleburger, and had potentially adverse consequences to them; and that Stoel Rives would not voluntarily disclose either client confidences or information or materials arguably subject [356 Or. 708] to confidentiality claims. The former clients all consented. In the meantime, the accuseds scheduled further witness interviews and had produced more documents to the DOJ. For its part, FLIR retained other counsel to represent it in other aspects of the DOJ investigation.
In September 2003, Stringer, Martin, and Samper were indicted in United States District Court for criminal securities violations. They moved to dismiss, asserting violations of due process and self-incrimination protections stemming from surreptitious cooperation between the SEC and the DOJ. Samper further argued that the government had taken unfair advantage of the accuseds' purported conflict of interest. The District Court agreed with the defendants' arguments and dismissed the indictments in 2006, but the Ninth Circuit vacated the dismissals in 2008. United States v. Stringer, 535 F.3d 929, 942 (9th Cir 2008). The Ninth Circuit decision brought the case to the Bar's attention. None of the clients or lawyers involved complained to the Bar about the accuseds' conduct.
E. Bar Complaints and Trial Panel Hearing and Decision
The Bar filed amended complaints against the accuseds in February 2012, alleging violations of former DR 1-102(A)(3) (misrepresentations by omission) (one cause and one alternative cause as to each); former DR 5-105(C) (former-client conflict) (one alternative cause as to each, and one additional cause as to Ellis); and former DR 5-105(E) (current-client conflict) (nine causes as to Rosenbaum, and 10 as to Ellis). The amended complaints were identical, except that the complaint against Ellis contained two additional allegations concerning his representation of Fitzhenry in the latter's Bar matter.
The trial panel conducted a hearing in 2012 and concluded in 2013 that the Bar had not proved most of the alleged violations, but had proved some violations, and further determined that the appropriate sanction was a public reprimand. The accuseds requested review of all the panel's conclusions that violations had occurred, and the Bar raised [356 Or. 709] additional challenges to several panel conclusions that no violation had occurred. We summarize the panel's decisions at issue on review in our discussion below.
II. DISCIPLINARY RULES
As noted, the Bar's complaints alleged misconduct under the former Code of Professional Responsibility. Former DR 5-105 set out the client-conflict rules and provided, in part:
" (A) Conflict of Interest. A conflict of interest may be actual or likely.
" (1) An 'actual conflict of interest' exists when the lawyer has a duty to contend for something on behalf of one client that the lawyer has a duty to oppose on behalf of another client.
" (2) A 'likely conflict of interest' exists in all other situations in which the objective personal, business or property interests of the client are adverse. A 'likely conflict of interest' does not include situations in which the only conflict is of a general economic or business nature.
" * * * *
" (B) Knowledge of Conflict of Interest. For purposes of determining a lawyer's knowledge of the existence of a conflict of interest, all facts which the lawyer knew, or by the exercise of reasonable care ...