Archive for August, 2012

FORMER KBA PRESIDENT LOSES ATTORNEY FEE CLAIM IN CLASS ACTION AGAINST THE COVINGTON DIOCESE CASE. – KBA has requested records for a ethics investigation.

Thursday, August 23rd, 2012

FORMER KBA PRESIDENT LOSES ATTORNEY FEE CLAIM IN CLASS ACTION AGAINST THE COVINGTON DIOCESE CASE.

The Kentucky Supreme Court published a decision Aug. 23rd denying an attorney’s fee to past KBA President Barbara Bonar in the class action against the Covington Diocese case.

The Supreme Court Decision rules that Bonar voluntarily withdrew from a contingent fee case and therefore was not entitled to a legal fee.

The ruling also suggested that the trial judge had not committed error by referring in the trial to potential ethics prosecution of Bonar by the KBA.

The ruling in a footnote on page two said:

Footnote #1:
“In doing so, Bonar makes repeated reference to unrelated matters pending in
other tribunals in order to underscore allegations concerning Appellee Stanley M.
Chesley’s professional conduct in other cases. Appellees have moved to strike those
portions of Appellants’ brief and reply brief, including certain exhibits attached
thereto. We agree that these references and exhibits are entirely irrelevant to the
issues presented in this appeal. The motion is granted by separate order and the
irrelevant materials have not been considered by this Court
.”

At page 9, the ruling states:

“Mid-trial, the trial court noted that the Kentucky Bar Association had requested all records in the case once it was resolved. The trial court further commented that it would have referred the case to the KBA, regardless of the request, due to “numerous ethical problems” it perceived.”

LawReader Note: The name of the appellant in the Supreme Court system spells the name of Barbara Bonar as “Barbars Sonar”….the discussion in Justice Cunninghams decision uses the name of “Bonar”…this use of “Sonar” must be a clerical error.

Bonar was President of the Kentucky Bar Association in 2008. It is reported to LawReader that she obtained a stay in the KBA ethics investigation pending outcome of the civil case released today.

Stanley M. Chesley, a Cincinnati attorney, likewise asked for a stay in the pending KBA ethics prosecution pending outcome of the civil case which was the basis for the KBA investigation. The KBA apparently granted the stay request of Bonar but later refused to extend the same courtesy to Stanley M. Chesley. The footnote on Page 9 (cited above) mentions that the “records in the case were requested by the KBA “Once it was resolved”. That supports the conclusion that Bonar got a stay in her KBA ethics issues.
1. Barbara Bonar, the Kentucky Bar Association President Facing Ethics
advocatefornurses.typepad.com/…/kentucky-bar-association-presiden…Similar
Oct 22, 2008 – The president of the KBA, Barbara Bonar is facing an ethics probe and this case is receiving national and local press attention. We know, yes …
2. Chesley asks Ky. to hold off on discipline | NKY.com | cincinnati.com
nky.cincinnati.com/article/AB/…/Chesley-asks-Ky-hold-off-disciplineCached
May 9, 2011 – Lawyer Stan Chesley has asked the Kentucky Bar Association Board … bar association presidents, including Covington lawyer Barbara Bonar

Since the Bonar ethical issues arose at least in 2008, one must conclude that a Stay Order was granted to Bonar. A similar stay request was denied to Chesley. This suggests that Presidents of the KBA in at least some instances receive special handling not granted to attorneys.

The Supreme Court ruling released Aug. 23, 2012.

RENDERED: AUGUST 23, 2012 – ORDERED TO BE PUBLISHED

KENTUCKY SUPREME COURT

2010-SC-000087-DG
B. DAHLENBURG SONAR, P.S.C.; APPELLANTS
AND BARBARA D. SONAR
ON REVIEW FROM COURT OF APPEALS
V. CASE NO. 2007-CA-001374-MR
BOONE CIRCUIT COURT NO. 06-CI-02202
WAITE, SCHNEIDER, BAYLESS & APPELLEES
CHESLEY CO., L.P.A.; STANLEY M.
CHESLEY; AND ROBERT A. STEINBERG

OPINION OF THE COURT BY JUSTICE CUNNINGHAM
AFFIRMING
This matter involves a dispute over attorney’s fees. Appellants, Barbara
D. Bonar and her law firm, B. Dahlenburg Bonar, P.S.C. (collectively, “Sonar”),
claim entitlement to a portion of the attorney’s fees awarded in the class action
settlement of Doe v. Roman Catholic Diocese of Covington. Appellees are Waite,
Schneider, Bayless and Chesley Co., L.P.A.; Stanley M. Chesley; and Robert A.
Steinberg (collectively, “WSBC”). Bonar and WSBC initiated the Doe action as
co-counsel. • However, after the case was certified as a class action, but before
the settlement was negotiated, Bonar withdrew. She claims that she was
forced to do so by WSBC.

Following a bench trial, the Boone Circuit Court concluded that Bonar
was not entitled to any of the attorney’s fees because her withdrawal was
voluntary. Though that conclusion disposed of the matter, the court went on
to specifically reject the other theories of recovery presented by Bonar. The
court found that, even if Bonar had been forced to withdraw from the case
without cause, she would not be entitled to any fees measured by quantum
meruit. The fees she recovered through the settlement of individual claims of
prospective class members exceeded the amount recoverable by quantum
meruit. Additionally, the court found that Bonar committed “numerous ethical
violations” during her participation as class co-counsel, which would have
constituted grounds for removal and forfeiture of any fees due.

The Court of Appeals affirmed the judgment and we granted Bonar’s
motion for discretionary review. In her brief to this Court, Bonar focuses
nearly exclusively on the trial court’s finding that she could have been removed
from the Doe action for cause and vigorously disputes the conclusion that she
committed ethical violations.’

Further, both parties expend significant effort
disputing the factual circumstances surrounding this case, including how the
co-counsel relationship began and the fee-splitting agreement. This

Footnote #1:
1 In doing so, Bonar makes repeated reference to unrelated matters pending in
other tribunals in order to underscore allegations concerning Appellee Stanley M.
Chesley’s professional conduct in other cases. Appellees have moved to strike those
portions of Appellants’ brief and reply brief, including certain exhibits attached
thereto. We agree that these references and exhibits are entirely irrelevant to the
issues presented in this appeal. The motion is granted by separate order and the
irrelevant materials have not been considered by this Court.
2
information is largely irrelevant and we recount only those facts necessary to
our conclusions herein.

Factual Background
On June 21, 2002, Bonar filed suit against the Diocese of Covington in
an action styled John DiMuzio, et al v. Roman Catholic Diocese of Covington. In
addition to a host of employment-related claims, the complaint alleged longterm
concealment of sexual abuse by diocesan priests. Following the filing of
the complaint, several victims of sexual abuse began to contact Bonar seeking
representation. About the same time, Robert A. Steinberg, an attorney with
WSBC, was also investigating child sexual abuse claims and considering a
possible class action against the Diocese of Covington.

In December of 2002, Bonar and Steinberg discussed their similar claims
and, thereafter, Bonar agreed to join WSBC in a class action against the
Diocese. The Doe complaint was filed in Boone Circuit Court on February 4,
2003, with Bonar listed among class counsel and her clients listed as class
representatives. In a letter dated February 6, 2003, Steinberg wrote Bonar to
confirm her participation as co-counsel in the case and the fees she would
receive. The arrangement contemplated that Bonar would receive a certain
percentage of the overall fees awarded to class counsel. Bonar agreed by e-mail
dated February 10, 2003. No written agreement was ever formalized.
A petition for class certification was filed in July of 2003, and a
memorandum was filed a couple of months later in September. Both of these
pleadings listed Bonar as co-counsel. In this memorandum, the plaintiffs
3
alleged, for the first time, that the Diocese was continuing to place sexual
predators in positions involving contact with children. WSBC drafted the
memorandum and Bonar did not review it prior to its filing.

Evidently, Bonar was uncomfortable with the allegations contained in the
memorandum and was unaware that the class claim would implicate existing
programs in the Diocese. Immediately after it was filed, Bonar contacted
Steinberg to express her concerns. She requested that her name be removed
from the memorandum because it was “placing [her] in an extremely
uncomfortable position with many of [her] clients and peers.” She wrote to
Steinberg: “I am a supporter, volunteer, and member of many of these
programs, and my law practice involves clients, witnesses, and other persons
who are administrators, board members, ‘and personnel in many of the current
Diocese of Covington school programs.” In a subsequent letter, she explained
that the memorandum “indicates a position which could be interpreted as
contrary to some of my clients’ interests.”

Bonar also filed a “Notice to Clarify the Record” with the trial court, in
which she denied any participation in the drafting, review, or filing of the
memorandum. Thereafter, on October 1, 2003, Doe was certified as a class
action. On January 9, 2004, Bonar filed a motion to withdraw. Her
accompanying affidavit stated that “recent changes in the composition of the
class members have created a conflict of interest for Affiant, prohibiting Affiant
from continuing as class counsel.” She contemporaneously filed a notice of
attorney’s lien pursuant to KRS 376.460.
4
In May of 2005, a tentative settlement was reached in the Doe matter.
Following a fairness hearing on the proposed settlement, the Boone Circuit
Court addressed the issue of attorney’s fees. In subsequent pleadings
regarding that issue, Bonar alleged, for the first time, that WSBC had forced
her to withdraw. Over the next several months, the Doe settlement was
approved and an order setting attorney’s fees was issued. Attempts to mediate
the remaining dispute between Bonar and WSBC failed. Eventually, the parties
agreed to remove the attorney’s fees dispute from the class action and created
the present case style.

Bonar is not entitled to any fees
The trial court found that Bonar’s withdrawal from the class action was
voluntary. This factual finding will not be disturbed unless clearly erroneous.
CR 52.01. Upon review of the record, we agree with the Court of Appeals that
there is the requisite “substantial” evidence supporting the trial court’s finding.
Sonar’s letters to Steinberg following the filing of the September 2003
memorandum explain, in her own words, the reason for her withdrawal. She
plainly states that she perceived a conflict between the allegations contained in
that memorandum and her professional and personal ties to the Diocese. It is
clear that Bonar wished to distance herself from these allegations because it
jeopardized her relationship with her client base and her professional
colleagues.

The affidavit of Carrie Huff also supports this conclusion and provides
insight into why Bonar’s affidavit references only a client conflict. Huff is an
5
attorney who represented the Diocese in the Doe settlement and other sexual
abuse claims, and who worked closely with Bonar on these matters for several
years. Huff characterized the September 2003 memorandum as a
“reprehensible effort[] on the part of class counsel to deride and discredit the
Bishop’s efforts to address the sexual abuse crisis honestly and with pastoral
concern for the victims.” In subsequent conversations, Bonar expressed her
agreement with Huff’s position. When Huff read Bonar’s later motion to
withdraw, she asked Bonar “why she didn’t simply say honestly that she
disapproved of class counsel’s litigation and public relations strategies.”

According to Huff, Bonar responded that a “conflict arising out of her
relationship with a business client . . . was sufficient reason to justify the
withdrawal, and she did not want to attract attention to the withdrawal by
publicly criticizing her co-counsel’s tactics.” In short, Huff “saw no evidence
whatsoever that Ms. Bonar was being unwillingly excluded from representation
of the class. To the contrary, she appeared to be trying to curry favor with the
Diocese and with me by distancing herself from the class action.”

The weight of the evidence presented at trial supports the conclusion
that Bonar withdrew from the case voluntarily. She did so because she found
the class’s position towards the Diocese at odds with that of her clientele and
colleagues. Finding no reason to disturb the trial court’s factual finding, we
turn to its legal conclusion that Bonar was not entitled to any portion of the
attorney’s fees awarded to class counsel.
6
When an attorney voluntarily withdraws from a contingency fee case
without good cause, he or she forfeits any fee. Lofton v. Fairmont Specialty Ins.
Managers, Inc., 367 S.W.3d 593, 597 (Ky. 2012). See also 7A C.J.S. ATTORNEY
& CLIENT § 360 (2012) (“[A]n attorney who voluntarily withdraws from a case
without good cause forfeits recovery of compensation for services performed,
and he or she may not recover either on the contract or on quantum meruit.”).

Whether good cause exists must be determined on a case-by-case basis. Id.
Here, Bonar withdrew because she believed WSBC’s litigation tactics would
jeopardize her relationship with clients and professional peers. This does not
constitute “good cause,” which might entitle her to quantum meruit
compensation, particularly in light of the fact that Bonar’s ties to the Diocese of
Covington existed at the time she began representation of the class. The trial
court properly concluded that Bonar forfeited any claim to the attorney’s fees
awarded to class counsel.

Bonar also argues that the above-stated principles are inapplicable
because she had a separate fee-splitting agreement with WSBC, as opposed to
a contingency fee agreement with a client. She claims the agreement with
WSBC never contemplated her continued participation in the Doe action
beyond its filing, so that she is contractually owed her portion of the fees for
the work she performed before withdrawing. This assertion is not supported by
the record, nor would it alter our conclusion.

Because neither of the parties memorialized the fee-splitting agreement,
we look mainly to the series of correspondence between Bonar and Steinberg
7
that concerns fees. Bonar’s fees were set as a percentage of the “net fees
received in the case.” As with any contingency fee agreement, Bonar would
only earn fees if the class action was successful and only up to the amount
approved by the trial court. Implicit in this agreement is the assumption that
Bonar would remain as class co-counsel until the case was resolved, even
though she was not expected to litigate the matter. There is nothing in the
record to suggest otherwise. In fact, that Bonar provided explanations to
Steinberg, Huff and Chesley for her withdrawal is indication that her departure
was unexpected and premature.

Even assuming arguendo that the series of correspondence between
Bonar and Steinberg regarding the fee-split constitutes a contract, she is not
entitled to any recovery. Whether the fee is established through a contingency
agreement with a client or through a fee-splitting agreement with co-counsel,
the underlying principle remains—an attorney who voluntarily leaves a case
absent good cause is not entitled to a portion of the fees earned. It would defy
common sense to allow an attorney to voluntarily withdraw from a case without
good cause, but nonetheless enforce a contract with co-counsel to split fees
ultimately awarded. See Hofreiter v. Leigh, 465 N.E.2d 110, 112 (Ill. App. Ct.
1984) (where rules concerning compensation of discharged attorney were
applied equally to contingency fee agreements and fee-splitting agreements
between co-counsel).

The trial court’s finding that Bonar voluntarily withdrew from the Doe
matter is based on substantial evidence. Good cause is not established where
8
an attorney withdraws because the clients’ position jeopardizes her personal
and professional relationships. This is particularly true when the attorney has
longstanding and deep personal and professional ties to the opposing party.
Accordingly, Bonar forfeited any fees she may have otherwise been entitled to.

Discovery Issues
Bonar argues that the trial court improperly limited discovery. It
appears she sought access to information pertaining to other class actions in
which WSBC was class counsel, WSBC’s prior fee-splitting agreements in other
cases, WSBC’s history of opting-out class members in other class action suits,
and WSBC’s fee-splitting agreements with other Doe co-counsel. Bonar fails to
provide a single legal citation to support her argument or the conclusion that
reversal is required.

A trial court’s orders with respect to discovery are reviewed for an abuse
of discretion. Goodyear Tire & Rubber Co. v. Thompson, 11 S.W.3d 575, 577
(Ky. 2000). It is apparent that the parties bitterly disputed nearly every factual
aspect of this case. The trial court properly limited discovery to evidence
necessary to consideration of the issues. The information which Bonar sought
was irrelevant to the simple issue of whether she was entitled to any of the
attorney’s fees awarded in the Doe action. We find no indication that the trial
court abused its discretion.

Fair Trial
Finally, Bonar argues that her right to a fair trial was violated by the trial
court’s statements regarding her conduct. Mid-trial, the trial court noted that
9
the Kentucky Bar Association had requested all records in the case once it was
resolved. The trial court further commented that it would have referred the
case to the KBA, regardless of the request, due to “numerous ethical problems”
it perceived.

We cannot agree that the trial court’s comments evince a prejudice
towards Bonar. When viewed in its totality, it is clear that Bonar received a fair
trial. Further, this argument is unpreserved. Had Bonar perceived a judicial
bias, the proper remedy is to immediately petition for recusal. Taylor v. Carter,
333 S.W.3d 437, 445-46 (Ky. App. 2010). Bonar failed to do so, instead raising
this particular argument for the first time on appeal.

Conclusion
Based upon all of the foregoing, the judgment of the Boone Circuit Court
is hereby affirmed.

Minton, C.J.; Abramson, Scott and Venters, JJ.; and Special Justices
Roger L. Crittenden and Robert M. Coots, concur. Noble and Schroder, JJ., not
sitting.

10

COUNSEL FOR APPELLANTS:
William C. Rambicure
Christopher B. Rambicure

RAMBICURE LAW GROUP, PSC
219 East High Street
P. 0. Box 34188
Lexington, KY 40588-4188
Stephen D.

NEW KBA PRESIDENT INCORRECTLY BLAMES THE SUPREME COURT FOR THE CONDUCT OF THE INQUIRY COMMISSION…President Myers has not revealed the cost to the KBA of their own attorneys in the Berry Federal Civil Rights action.

Thursday, August 23rd, 2012

August 23, 2012

By Stan Billingsley, Senior Editor, Kentucky Legal News, a division of www.lawreader.com.

Since April of 2011 LawReader has been trying to find out from the KBA how much of their budget was spent to employ outside counsel to assist the Bar Counsel’s office in the prosecution of attorneys ethics claims. In particular we have sought information about the attorney’s fees paid to Stites and Harbison for their defense of the KBA in the Berry case.

The past KBA President Maggie Keane, never responded to our request. Upon the swearing in of the new KBA President Doug Myers, we wrote him and asked for this same information.

President Myers was kind enough to have his office call us and they wrote a letter to us indicating that President Myers was currently ill, but as soon as he could, he would respond to our request. He did not indicate if he would provide any information, only that he would respond. We were of course agreeable to his request and have waited for several weeks without a follow up from President Myers.

This week we read stories on the web sites of the Herald-Leader and the Courier Journal in which President Myers responded to requests from both newspapers about the insurance coverage of the KBA. (He is well enough to speak to the Herald-Leader and Courier Journal, but still has not chosen to contact LawReader.)

The papers reported that the KBA has insurance coverage to pay the $191,500 the Federal Court awarded against the KBA for payment of attorney fees and court costs in favor of Attorney John M. Berry Jr.. Berry and the ACLU had filed a Federal Civil Rights Action in Federal Court against the KBA for interfering with Berry’s free speech rights.

The story indicated that President Myers believed that the insurance company would also be liable for the KBA’s attorney fees and costs paid to Stites and Harbison for their defense of the KBA.

We have made a guess that the fee earned by Stites and Harbison, for their excellent work, would at least equal the fees awarded to Berry and the ACLU for their attorney fees and costs. If that assumption is correct the total loss to the KBA would be close to $400,000.

We are still pursuing answers to our questions about the cost of this case to the dues paying members of the KBA.

One comment made by President Myers to the Herald-Leader was very troubling. He was quoted as saying the civil action was filed against the “Inquiry Commission, and they are appointed by the Supreme Court.” This was an obvious attempt by the President of the KBA to place the bad decision to limit an attorneys free speech rights upon the shoulders of the Kentucky Supreme Court.

We have trouble digesting that shifting of blame from the KBA to the Supreme Court.

I have written two books dealing with the operation of the KBA and their ethics discipline system. (Alice Vs. Wonderland published in 2011, and A Parliament of Owls which will be released in the next two weeks) . These books are works of fiction, but they correctly cite the law and procedures of the KBA attorney discipline system.

My research indicates that the Bar Counsel’s office exercises far more control over the Inquiry Commission than I think is appropriate. They write the docket for the Inquiry Commission, they select the cases to be heard by the Inquiry Commission, and the Supreme Court has no right to interfere with the Inquiry Commission or Bar Counsel operation. Like the legislature who writes the laws creating Grand Juries, the prosecutor deals with the Grand Jury not the legislature.

So saying the Supreme Court is responsible for the acts of the Inquiry Commission is totally incorrect.

The Supreme Court appoints the members of the Inquiry Commission but as an appellate body they do not interfere with the operation of the Inquiry Commission as cases they prosecute will end up for appellate review by the Supreme Court. Let us be clear about this…the Bar Counsel’s office interacts with the Inquiry Commission and the Supreme Court has no authority to intervene or control their actions.

A sworn deposition filed in the Berry case reveals the actual relationship of the Bar Counsel’s Office with the Inquiry Commission. That deposition is a public record and is quoted in A Parliament of Owls.

One may easily be tempted to assume, after reading the sworn deposition of the Inquiry Commission Panel Chairman, that the Bar Counsel’s Office even writes “proposed” findings for the Inquiry Commission.

We once again call on the President of the KBA to answer for LawReader and the 17,200 licensed attorneys who make up the Kentucky Bar Association, the following questions:

1. How much did the KBA pay Stites and Harbison (or any other law firms hired to defend the KBA in the Berry Civil Rights action)?
2. Which insurance company referred to by President Myers is the insurer for the KBA?
3. Will the insurance carrier for the KBA raise the premiums in future years due to the claim they are making for some $400,000 in losses resulting from the Berry case?
4. How much of the increase in future insurance premiums will come out of the KBA (and Judicial) budget and therefore out of the pockets of the 17,200 Kentucky lawyers.
5. We also have asked for financial numbers revealing how much the KBA and Bar Counsel’s Office has spent on outside counsel in other cases over the last two years. We can’t understand how the Bar Counsel’s Office has nine full time lawyers and still must hire outside counsel. Why don’t they hire attorneys skilled in this area of the law?

We would further ask President Myers to explain how he comes to the conclusion that the Kentucky Supreme is in anyway responsible for the conduct of the Bar Counsel’s Office and the Inquiry Commission. He clearly tried to blame the Supreme Court for the conduct of the Inquiry Commission. He entirely misses the point that the Bar Counsel’s Office is the only body that exerts influence over the Inquiry Commission.

It was the Bar Counsel’s Office that chose to present the case to the Inquiry Commission…and apparently said nothing when the Inquiry Commission dismissed the Berry case, but still issued a “warning letter”…which was the essence of the judgment against the KBA.

The Board of Governors has the power to hire and fire all employees of the Bar Counsel’s Office, and in fact they exercised that power by discharging Linda Gosnell last November. The Supreme Court can’t hire, fire or discipline any attorneys at the Bar Counsel’s Office.

The Supreme Court does provide the Clerk with a list of nominees to serve on the Inquiry Commission, but after that the only body that deals with the Inquiry Commission is the Bar Counsel’s Office. The prosecutors in the Bar Counsel’s Office decide which cases to present to the Inquiry Commission. The Bar Counsel’s Office took the Berry letter issue to the Inquiry Commission.

Our two years of research reveals not one fact which suggests that the Supreme Court in anyway influenced the Inquiry Commission or the Bar Counsel’s Office to seek sanctions against Berry for merely writing a letter critical of the Legislative Ethics Commission.

A Parliament of Owls, (due out in two weeks) makes some 43 suggestions for how the Supreme Court Rules may be changed to assure more accountability in the attorney discipline system.

Hopefully, President Myers will join in the effort to correct the problems with the Bar Counsel’s Office which resulted in the large financial award against the KBA.

We strongly urge President Myers to make it clear to the press that the Kentucky Supreme Court had nothing to do with the conduct of the Inquiry Commission with regard to the Berry case.

President Myers brought the Supreme Court into this debate, and we think unfairly so. If the Supreme Court were to sell tickets to next year’s budget hearing for consideration of the $5 million dollar+ KBA budget request, I would certainly buy such a ticket!

On August 23, 2012 reporter Andew Wolfson of the Courier-Journal quoted President Myers: “…the KBA Board of Governors has no control over whether the Inquiry Commission issues a warning letter letter or charges and that the commission’s members are appointed by the Supreme Court.” President Myers served on the Board of Governors for at least two years before becoming KBA President. The Board of Govenors has the power to hire and fire employees of the Bar Counsel’s Office.

THE DEBT COLLECTION PROCEDURES OF BANKS OFTEN VIOLATE COMMON LAW AS CREDIT CARD COMPANIES CAN’T PROVE THAT A PERSON OWES THE DEBT

Wednesday, August 22nd, 2012

FROM AN EDITORIAL IN THE NEW YORK TIMES

Robo Redux

Published: August 19, 2012 100 Comments
Each day in Civil Court in Brooklyn, Judge Noach Dear presides over as many as 100 credit card collection cases, a scene repeated day in and day out in courtrooms across the country.
The borrowers typically do not show up to defend themselves. Many do not know they are being sued, others are too poor or too intimidated to fight back. The result, in an estimated 95 percent of the cases, is a default judgment in favor of the bank or other debt collectors.
But as Jessica Silver-Greenberg reported recently in The Times, many of the suits rely on erroneous documents, faulty records and boilerplate testimony — a pattern that resembles in many respects the “robo signing” scandal of 2010, in which banks filed false court documents in foreclosure cases, depriving homeowners of due process that may have saved their homes.
Some credit card companies, including American Express and Citigroup, defend their procedures and insist that safeguards are in place to ensure that their court filings are accurate. But consumer advocates say that in many cases the suits involve debt that has already been discharged in separate bankruptcy proceedings or otherwise settled or collected. Where debts remain, the amounts are often inflated by excessive fees.
According to Judge Dear, in roughly 90 percent of credit card lawsuits the plaintiffs cannot even prove that a person owes the debt. Which is another way of saying that the courts are often being used as de facto debt-collection mills, allowing banks and others to seize money in violation of basic protections.
The outcomes can be devastating. Once a default judgment is entered, wages can be garnished, bank accounts frozen or liens filed to collect the debt — whether or not the amount was actually owed or the process was fair. Judgments — which are generally enforceable for 20 years — also appear on credit reports, preventing people from obtaining mortgages, credit or even jobs.
Big money is at stake. According to Equifax and Moody’s Analytics, borrowers are behind on nearly $21 billion in debt on some 10 million credits cards. In addition, debt collectors who buy bad debt for pennies on the dollar from creditors are trying to squeeze billions of dollars more from delinquent borrowers.
But as the foreclosure robo-signing experience showed, big money can mean big abuses that will not end without stronger enforcement of existing law by state attorneys general as well as new laws and regulation at the state and federal levels. The aim should be to prohibit banks from suing for old debts or from selling bad debt to third-party collectors without first notifying the debtor and providing detailed records of the amounts owed.
A bill in the New York Legislature, the Consumer Credit Fairness Act, would provide many of these protections, while a model law developed by the National Consumer Law Center would set standards for all states. New York’s Department of Financial Services and the federal Consumer Financial Protection Bureau should also exercise their powers to regulate debt collection.
In the meantime, going to court may be the consumer’s best defense. Judge Dear recently dismissed a suit brought by American Express against a woman who contested the amount being demanded. The Amex employee who testified, the judge noted, gave what he called “robo-testimony” — the same generic evidence given in other cases.
Amex defended its practices, but for that one woman, on that day, due process trumped robo-talk.

COAKY Distinguishes Wrongful Use of Civil Proceeding From Malicious Prosecution, Discusses Which Findings Are For Judge And Which Are For Jury

Tuesday, August 21st, 2012

By David Kramer | dkramer@dbllaw.com

In Bates v. Curtis, 2010-CA-990 (8/17/2012), the Kentucky Court of Appeals discussed the difference between a claim of wrongful use of civil proceedings and a claim of malicious prosecution. The former claim arises when there has been wrongful initiation of a civil action without probable cause and primarily for a purpose other than that of proper adjudication of the underlying claim. Malicious prosecution, on the other hand, arises when one has wrongfully instituted criminal proceedings against another. The Court of Appeals noted that malice is not an element of the civil cause of action, while it remains an element of malicious prosecution.
Moreover, advice of counsel is an absolute defense to such a claim, provided the client acted in good faith and disclosed all relevant facts to his or her attorney, who then advised the client to pursue the matter.

The Court in Bates v. Curtis also discussed at length which findings are for the judge to make and which are reserved for the jury in such an action. Specifically, the judge determines whether: (a) a civil proceeding has been initiated; (b) the proceeding was terminated in favor of the plaintiff; (c) the defendant had probable cause for his action; and (d) the harm suffered by the plaintiff is a proper element for the jury to consider in assessing damages.

The jury determines the following: (a) the circumstances under which the proceedings were initiated to the extent necessary to enable the court to determine whether the defendant had probable cause for initiating the claim; (b) whether the defendant acted primarily for a purpose other than that of securing the proper adjudication of the underlying claim; (c) the circumstances under which the proceedings were terminated; (d) the amount that the plaintiff is entitled to recover as general and special damages; and (e) whether punitive damages are to be awarded, and if so, in what amount.
Wrongful use of civil proceedings should also be distinguished from a claim of abuse of process, a claim that arises when one uses a legal process, whether criminal or civil, against another primarily to accomplish a purpose for which that process is not designed. See, e.g., Sprint Communications Co., L.P. v. Leggett, 307 S.W.3d 109 (Ky. 2010).

Bates v. Curtis is not yet final, but was designated for publication in the South Western Reporter. Cases that are not final may not be cited as authority in Kentucky.
David Kramer is a Northern Kentucky attorney practicing at Dressman Benzinger LaVelle psc.
Subscribe to the DBL Civil Litigation blog.

U.S. DISTRICT JUDGE DANNY REEVES ORDERS KY. BAR ASSOCIATION TO PAY $191,588.64 ATTN. FEES AND COURT COSTS IN JOHN M. BERRY, JR. FREE SPEECH CASE – KBA Hasn’t Disclosed How Much They Have Paid Their Own Attorney* – Total costs to the KBA could exceed $400,000

Tuesday, August 21st, 2012

U.S. DISTRICT JUDGE DANNY REEVES ORDERS KY. BAR ASSOCIATION TO PAY $191,588.64 ATTN. FEES AND COURT COSTS IN JOHN M. BERRY, JR. FREE SPEECH CASE – KBA Hasn’t Disclosed How Much They Have Paid Their Own Attorney* – Total costs to the KBA could exceed $400,000

By LawReader Senior Editor Stan Billingsley – (502) 732-4617 e-mail: Firstjudge@aol.com
August 21, 2012
The prosecution of an attorney for making a truthful statement critical of a legislative body has raised the eyebrows of many Kentucky Attorneys. Now the attorneys who disapproved of the prosecution of Berry will have to consider the high cost of the attempt by the Kentucky Bar Association to enforce this law which was found unconstitutional as applied in the Berry case.

The Sixth Circuit ruling remanded the case to U.S. District Judge Danny Reeves to consider an award of attorney fees and costs to the successful party. Judge Reeves’s order awarded $191,588.64 in attorney fees and court costs to be paid by the Kentucky Bar Association.

$6,337.49 of that sum was for court costs, and the balance of $185,251.15 was a fee award to attorney David B. Tachau and the American Civil Liberties Union, who represented Berry in the federal civil rights action. None of this money will go to John Berry Jr.

KBA President Doug Myers (who took office on July 1, 2012) announced that the KBA would not seek an appeal of the ruling of the Sixth Circuit to the U.S. Supreme Court.
Louisville attorney David B. Tachau and his associate Katie McKune brought a high degree of legal skill to bear on their efforts to uphold constitutional rights of Kentucky lawyers. Bill Sharp an attorney for the American Civil Liberties Union was highly praised by those close to the case for his outstanding work in the Berry case. Berry and others have recognized Richard Beliles, a representative of Common Cause, for his efforts to monitor the activities of the Legislative Ethics Commission. Beliles has long been an advocate for open records and open meetings. Every attorney in the state should be aware that these four outstanding lawyers spoke up for them.

Our search of Google reveals that this case is a national issue, and is being discussed in the nation’s top law schools and largest cities. This ruling by the Sixth Circuit benefits all lawyers in the United States. We have not found one law review article or blog comment that supported the limitation on lawyers free speech rights.

In accordance with the Federal Civil Rights Act, the KBA was required to pay the attorney fees and court costs of the winning party. This large legal bill will have to come out of the pockets of Kentucky’s 17,200 lawyers, as the KBA is totally funded by the dues of Kentucky lawyers. It is possible that the KBA legal bill will be covered by some insurance policy. We would expect that if there is such insurance coverage for the KBA, that the insurance company may be reviewing the premium paid by the KBA in the light of the substantial financial consequences for violating constitutional rights of lawyers. Any premium paid for such coverage will come from the KBA dues paid by Kentucky lawyers.

The Sixth Circuit Court of appeals recently found that the Ky. Bar Association Inquiry Commission investigation had violated the constitutional rights of former State Senator John M. Berry Jr. by investigating him and issuing a warning letter regarding a letter he wrote to the Legislative Ethics Commission which was critical of their proceedings.
The Kentucky Bar Association hired Attorneys Mark R. Overstreet, Stites & Harbison, Pllc, Frankfort, Kentucky, and Bethany A. Breetz, Stites & Harbison, Louisville, to represent the Kentucky Bar Association in their attempt to limit the free speech rights of Kentucky lawyers.

I attended the oral arguments in Cincinnati in the Berry/ACLU case against the KBA Inquiry Commission. Mr. Overstreet lost this case, but as LawReader reported some months ago, Overstreet, in our opinion, did a very professional job. It was the law that was defeated not Mr. Overstreet and not Bethany Breetz. Their legal work in defending the KBA in our opinion justifies a fee award of at least as much as the court ordered to be paid to the Plaintiffs.

This area of practice is extremely technical. Our review of the briefs in this case demonstrated to us that attorneys on both sides of the case performed at a very high level.
It is possible that the total cost to the Kentucky Bar Association for trying to silence Berry will be close to $400,000 when Judge Reeves award is added to the fee the KBA must pay Stites and Harbison.

LawReader has been requesting a statement from the Kentucky Bar Association since last April regarding the amount of money they have paid to outside private counsel in this case and other cases. So far the KBA has not revealed how much they paid to defend their right to sanction lawyers for exercising their right to free speech. * (see footnote)
Once Berry objected to the Bar Associations efforts to limit his free speech rights, the KBA could have withdrawn their “warning letter” and issued a public apology, and could have requested that the Kentucky Supreme Court amend this rule. Other states have already amended this rule to deny the right of a Bar Association to sanction an attorney for making a truthful statement. If this had been done, the KBA would have saved most of the $400,000 in estimated total fees and court costs. Nevertheless the Kentucky Bar Association refused to withdrawn the “warning letter” against Berry and instead hired outside counsel to lead the lengthy legal battle in Federal Court and before the Sixth Circuit Court of Appeals.
Attorneys are telling LawReader that they can’t understand why the Board of Governors failed to exercise control over the Bar Counsel, Linda Gosnell, and allowed this wasteful expenditure of KBA resources to defend a rule that denies the constitutional rights of lawyers. One expert in federal litigation cases suggests that the total cost of this prosecution may have cost the KBA close to a million dollars when all the direct and indirect costs, travel expenses and costs of the KBA, and lost man hours are considered.

Kentucky lawyers will now have to pay for the privilege of having their free speech rights attacked. Their dues fund the KBA. It would be nice if the Legislature reimbursed the KBA for the cost of this expensive defense of the rule used to silence Berry. We are not holding our breathe.

One method of paying this bill would be to cut the number of full time lawyers in the Bar Counsel’s Office until the bill is offset. The Board discharged Linda Gosnell in November of 2011 and so far have not replaced her. The savings by leaving this office vacate will save the KBA about $100,000 a year.

The Board of Governors should also examine the use of outside counsel. At the very least the KBA should publically reveal the cost of hiring outside counsel in this and other cases. The KBA has authorized slots for nine full time attorneys, but have frequently farmed out legal work to private law firms.

Former Chase Law School Professor Martin Huelsmann commented to LawReader: “It is the practice of most law firms to do a cost-benefit analysis of every case they take. If a case is a financial loser, most law firms will decline the case. I see no similar cost-benefit analysis procedures being applied by the KBA. “

UK Law Professor Richard H. Underwood commented to LawReader:
“$190,000 would just about pay a year’s salary for two new Assistant Professors with top credentials and practice experience. I addressed this case in a letter to the editor in the Herald Leader, and discussed it in my class. It was obviously a loser for the Bar. I could have told you that for FREE. In fact, I did. What is going on?”

The Ethics Rule which was found unconstitutional, as applied against former Senator John M. Berry Jr., by the KBA states:
“ SCR 3.130(8.2) Judicial and legal officials
(a) A lawyer shall not make a statement that the lawyer knows to be false or with reckless disregard as to its truth or falsity concerning the qualifications or integrity of a judge, adjudicatory officer or public legal officer, or of a candidate for election or appointment to judicial or legal office.”
This rule is based on a recommended model rule of the American Bar Association. Several states in recent years have rewritten this rule to remove the provision which allows sanctions of attorneys for making “truthful but reckless” statements and to remove the term “public legal officer” from the protected class.
Until this rule is amended by the Kentucky Supreme Court, it is possible the Ky. Bar Association can once again try to limit the constitutional rights of attorneys. The Sixth Circuit clearly found problems with this rule, and all state bar associations are now on notice that attempts to limit the constitutional rights of attorneys can have costly consequences. The ABA model rules are clearly in need of review.

LawReader has made an inquiry to the ABA to see if the Sixth Circuit ruling will inspire them to consider changing the model rule used unsuccessfully against Berry by the KBA. KBA President Bill Robinson said he would look into the issue and respond.

The attack on Berry was thought by some to be an effort by the Bar Counsel’s Office of the KBA to curry favor with the Legislative Ethics Commission. The Legislative Ethics Commission considered a claim of a campaign finance complaint filed against Senate President David Williams. The LEC dismissed the charge against Senator Williams. Berry wrote and spoke on this subject and argued that the procedure of the LEC was in error when it allowed Senator Williams to remain inside the hearing room when the public was excluded from the hearing. Berry cited a rule which said such hearings were public meetings.

Officials at the LEC have informed LawReader that the complaint filed against Berry by LEC Board member Judge Paul Gudgel (Ret.) was not authorized by the LEC.

*The new President of the KBA, Doug Myers, took office in July of this year. His office recently contacted LawReader and said President Myers would soon have a response to LawReader’s request for financial information.

Docket Text from U.S. District Court Confirming Attorney Fee Award Against KBA:- Final order entered August 21, 2012
AGREED JUDGMENT: 1. The parties joint motion [Record No. 54] is GRANTED.

2. The Kentucky Bar Association Inquiry Commissions enforcement and interpretation of Kentucky Supreme Court Rule (SCR) 3.130-8.2(a), as-applied to Mr. Berrys intended speech, created a threat of professional discipline for engaging in speech which is fully protected by the First and Fourteenth Amendments to the United States Constitution.

3. The Kentucky Bar Association Inquiry Commissions enforcement and interpretation of SCR 3.130-8.2(a), as-applied to Mr. Berrys intended speech that is identical or substantially similar to that contained in his October 5, 2007 letter, has violated and would violate Mr. Berrys right to free speech secured by the First and Fourteenth Amendments to the United States Constitution.

4. The Kentucky Bar Association Inquiry Commission is permanently enjoined from initiating any future investigation, enforcement proceeding, or other disciplinary action against Mr. Berry pursuant to SCR 3.130-8.2(a) for engaging in speech (by whatever means) that is identical or substantially similar to that contained in Mr. Berrys October 5, 2007 letter.

5. By agreement of the parties, the Plaintiff is deemed to be a prevailing party in this litigation and is entitled to an award of reasonable attorneys fees, including those incurred on appeal. Although no information has been submitted for a judicial determination as to the reasonableness or amount of fees incurred, the parties agree that the Plaintiff is entitled to an award of reasonable attorneys fees in the amount of $185,251.15 and $6,337.49 in costs, for a total award of $191,588.64 under 42 U.S.C. § 1988.

6. By agreement of the parties, the Plaintiffs Second Cause of Action challenging SCR 3.130-8.2(a) on its face is DISMISSED, with prejudice.

7. This Agreed Judgment is final and binding on the parties to this action. The Court retains jurisdiction, to the extent necessary, to resolve any disputes arising under this Agreed Judgment and for issuing any further orders or directions as necessary and appropriate to construe, implement, or otherwise enforce this Agreed

8. All issues raised in this proceeding having been resolved by agreement of the parties, this action is STRICKEN from the Courts docket.

9. There being no just cause for delay this is a FINAL and APPEALABLE Judgment. Signed by Judge Danny C. Reeves on 08/21/2012.(LKM) cc: COR

Is it time for consideration of merit selection of judges?

Tuesday, August 21st, 2012

JUDICIAL ELECTIONS AND THE BOTTOM LINE

August 19, 2012 Excerpt from an EDITORIAL BY THE NEW YORK TIMES
This year, 32 states will be holding contested elections or retention votes for judges on their highest courts. An ideological battle in Florida, an expensive and partisan one in North Carolina and others are providing uncomfortable lessons about why judges on the highest courts should be appointed rather than elected. Elections turn judges into politicians, and the need to raise money to finance ever more expensive campaigns makes the judiciary more vulnerable to improper influence by donors.
In six states where spending has been especially heavy — Alabama, Illinois, Michigan, Ohio, Pennsylvania and Texas — the harm to justice is well documented. A new report by the Center for American Progress has shown that in those states, impartiality appears diminished. It noted, “The high courts that have seen the most campaign spending are much more likely to rule in favor of big businesses and against individuals who have been injured, scammed, or subjected to discrimination.”
The center found that in 403 cases between 2000 and 2010, the courts in those states ruled in favor of corporations 71 percent of the time, notably more often than the odds would predict.
…political donors have an interest in electing judges who support their point of view. Businesses and their surrogates have deep pockets to contribute to campaigns, giving them tremendous sway in the elections.
With almost 40 percent of the spending in elections for top state courts in 2009-10 coming from lawyers, lobbyists and business interests, according to the Brennan Center for Justice, it is not surprising that candidates who favor business are getting elected as top-court judges or that they are taking legal positions that businesses favor.
State courts decide 95 percent of the country’s legal cases…The evidence mounts that top state judges should be picked and appointed through merit selection, not elected.

Legislature Adopts New Sentencing Policy for Kentucky – July 1, 2013

Sunday, August 19th, 2012

This new statute will impose a duty on the courts to evaluate the sentences they impose with consideration to imporve outcomes for defendants to help prevent future recidivism.
KRS 532.007 Commonwealth’s sentencing policy.

It is the sentencing policy of the Commonwealth of Kentucky that:
(1) The primary objective of sentencing shall be to maintain public safety and hold offenders accountable while reducing recidivism and criminal behavior and improving outcomes for those offenders who are sentenced;
(2) Reduction of recidivism and criminal behavior is a key measure of the performance of the criminal justice system;
(3) Sentencing judges shall consider:
(a) Beginning July 1, 2013, the results of a defendant’s risk and needs assessment included in the presentence investigation; and
(b) The likely impact of a potential sentence on the reduction of the defendant’s potential future criminal behavior;
(4) All supervision and treatment programs provided for defendants shall utilize evidence-based practices to reduce the likelihood of future criminal behavior; and
(5) All supervision and treatment programs shall be evaluated at regular intervals to measure and ensure reduction of criminal behavior by defendants in the criminal justice system.
Effective: June 8, 2011
History: Created 2011 Ky. Acts ch. 2, sec. 1, effective June 8, 2011

GOP Consultant Claims Koch Brothers Bought Ryan’s Nomination With $100 Million Promise

Saturday, August 18th, 2012

Note: Kentucky Legal News is non-partisan. We print this story only because it alleges a violation of Federal law and is made by a Republican about other Republicans. This may be nothing more than one wing of the Republican party fighting another wing of the party.

August 18th, 2012 1:10 am Joe Conason

Veteran Republican political consultant, unrepentant dirty trickster, and recently reborn libertarian Roger Stone yesterday published a startling accusation against Paul Ryan and Mitt Romney on his personal website, The Stone Zone. According to Stone, the billionaire Koch brothers purchased the Republican vice presidential nomination for Ryan from Romney in late July by promising to fork over an additional $100 million toward “independent expenditure” campaigning for the GOP ticket.
Any such transaction would represent a serious violation of federal election laws and perhaps other statutes, aside from the ethical and character implications for all concerned. Although Stone is not the most reputable figure, to put it mildly, he has been a Republican insider, with access to the party’s top figures, over four decades. His credentials date back to Nixon’s Committee to Reelect The President and continue through the Reagan White House, the hard-fought Bush campaigns, and the Florida fiasco in 2000, when he masterminded the “Brooks Brothers riot” that shut down the Bush-Gore recount in Miami-Dade. Peruse his site and you’ll see his greatest hits and the attention he has drawn from major publications.
I’ve known Roger personally for years and always considered him intelligent and amusing; also extremely dangerous and even erratic. Sometimes I’ve been surprised by how much he knows about the inner-most workings of his party – even when he is clearly persona non grata among the current power elite.
Here is how Stone led his latest post, headlined “The Paul Ryan Selection, “which also delivers an amusing swipe at a certain Fox News analyst:
I’ve waited a few days to lay out my analysis of the selection of Paul Ryan for the VP slot on the Romney ticket. Unlike politicos like Dick Morris who badmouths the selection privately and shills for it publicly, I’ll tell you what I really think. My sources tell me David Koch played a key role in Ryan’s selection and that Koch’s wife Julia had been quietly lobbying for Ryan. The selection was cemented at the July 22nd fundraiser Koch held for Romney at the former’s sumptuous Hamptons estate. Koch pledged $100 million more to C-4 and Super PAC efforts for Romney [in exchange] for Ryan’s selection.
When he mentions “C-4,” of course, Stone is referring to the tax-exempt non-profit groups recognized by the IRS under section 501-C-4 of federal tax law – such as Americans For Prosperity, a group largely backed by the Koch brothers that has so far spent nearly $20 million on this year’s campaign. The C-4 groups, including another known as Crossroads GPS run by Karl Rove, need not disclose their rich donors, while Super PACs do. This year, the right-wing C-4s are outspending all the SuperPACS combined, as Pro Publica reported recently.
As a declared supporter of Libertarian Party presidential candidate Gary Johnson, the former governor of New Mexico, Stone is grinding a sizeable ax, as always. He goes on to denigrate the idea that Ryan is a libertarian, despite his declared idolatry of the late Ayn Rand. Not much more can be said about Stone’s stark allegations, unless more evidence emerges to confirm them. But there is nevertheless a ring of candor in Stone’s story, tying the plutocratic Kochs to the plutocratic ticket of Romney-Ryan.
What he has written amounts to a gleeful felony indictment of everyone involved. Will any of them demand a retraction or even issue a denial?

BERRY FREE SPEECH RULING BECOMES A NATIONAL ISSUE: KBA’S ENFORCEMENT OF UNCONSTITUTIONAL RULE PANNED

Friday, August 17th, 2012

ETHICS BLOGS MAKE BERRY FREE SPEECH RULING A NATIONAL ISSUE. THE KBA FINDS LITTLE SUPPORT FOR THEIR EFFORTS TO SILENCE ATTORNEY’S SPEECH.

PROFESSIONAL RESPONSIBILITY BLOG
http://bernabepr.blogspot.com/2012_07_01_archive.html See discussion of ABA rules.

Monday, July 30, 2012
Court finds state violated attorney’s constitutional rights
In an important opinion on first amendment rights of lawyers, the United States Court of Appeals for the Sixth Circuit has ruled that the Kentucky State Bar violated and attorney’s rights when it sent the attorney a warning letter after he criticized the state Legislative Ethics Commission. The case is called Berry v. Schmitt and it is available here.

The case is important because it discusses the fine line between the authority of the state to regulate attorney speech and the individual attorney’s right to express his opinion about judges and the court system. For a number of reasons, attorneys have less freedom of speech than other professionals – there are rules that limit what can be said about on going cases for example – but just as there is a limit to what attorney’s can say, there has to be a limit to the power of the state to regulate speech.

For a good discussion of the ruling in Berry go here, here and here.

NATIONAL LAW JOURNAL COMMENTS ON BERRY FREE SPEECH FOR LAWYERS CASE
Court finds ethics warning trampled lawyer’s speech rights
By Leigh JonesContactAll Articles
The National Law Journal
July 30, 2012

A federal appeals court has ruled that the Kentucky Bar Association violated a lawyer’s First Amendment rights when it warned him against criticizing the handling of an investigation of a state senator.

In reversing a lower court, the U.S. Court of Appeals for the Sixth Circuit on July 27 found that the Kentucky attorney ethics board’s written warning to attorney John Berry amounted to an unconstitutional restriction of his free speech rights. The letter asserted that he had violated a rule prohibiting lawyers from making false statements and warned him against doing so again.

The American Civil Liberties Union of Kentucky brought the action on Berry’s behalf.

According to the Sixth Circuit’s ruling, the dispute stemmed from Berry’s criticism of the manner in which the Kentucky Legislative Ethics Commission in 2007 handled complaints about Kentucky Senate President David Williams’ fundraising activities.

Berry, a former state senator, attended a hearing into the allegations against Williams. During the hearing, the legislative commission called an executive session during which it excluded the news media, Berry and other members of the public. The panel did allow Williams to attend the executive session.

Following the hearing, Berry wrote a letter to the legislative commission criticizing the proceeding, stating that it was “enough to arouse suspicion” and “gave cause for some to speculate that the deck was stacked and the senator would be exonerated.”

Berry sent copies of the letter to the legislative commission, the news reporters and the public. A month later, the Kentucky Bar Association Inquiry Commission, which investigates wrongdoing by attorneys, began investigating Berry. It ultimately sent him a written warning, according to Sixth Circuit’s ruling. The warning said that Berry had violated a rule that forbids lawyers from making knowingly false statements or speaking with reckless disregard for their truth, when he publicly implied that the commission had not conducted its review appropriately. The letter noted that the warning did not constitute formal discipline, but advised Berry to conform to attorney ethics rules in the future.

Berry filed a federal action challenging the ethics action, arguing that he wanted to engage in future criticism of the Williams investigation but feared incurring professional discipline. Berry asked the court to declare the attorney ethics rules at issue unconstitutional.

The appeals court, noting that the statements Berry made were neither false or made with reckless disregard for truth, found that the rule, as applied in his situation, violated his future right to free speech.

“The warning letter implied a threat of future enforcement that elevated the injury from subjective chill to actual injury,” Judge John Rogers wrote, joined by Judge Martha Craig Daughtrey.

U.S District Judge Jack Zouhary, sitting by assignment on the appellate panel, concurred but added that the case seemed motivated by a personal spat, not constitutional issues. “Simply put, this case is more about stubborn Berry having the last word in his dispute with the [state bar] than about the First Amendment,” he wrote.

William Sharp, staff attorney at the ACLU of Kentucky, said that the important point was that Zouhary concurred. “Whatever thoughts he had about the case, he agreed that the Kentucky Bar Association violated Mr. Berry’s free speech rights,” Sharp said.

Representing the state bar was Mark Overstreet of Stites & Harbison in Frankfort, Ky. He did not respond to messages seeking comment. Michael Schmitt, named as a defendant in the case as the chairman of the bar’s ethics panel, did not return a telephone call seeking comment.

Contact Leigh Jones at ljones@alm.com.
Shop Act Survive Taylor v. King? »
July 30, 2012
Lawyers & Freedom of Speech: Sixth Circuit Rules That KBA Went Too Far
Lawyers do not have complete, unfettered freedom of speech. Part of the price of a law license is giving up some First Amendment rights to bar association regulation. This creates a tension and sometimes “the state applies its rules in a way that impinges upon the free interchange of ideas that is vital to self-government” as the Sixth Circuit explained recently in Berry v. Schmitt, Nos 11-5456/5515 (6th Cir, July 27, 2012).
John Berry, a lawyer, attended a public session of the Kentucky Legislative Ethics Commission (KLEC) regarding alleged fund-raising violations by Senate President David Williams. Barry became dissatisfied with the way the hearing was conducted and wrote a letter to the commission, which was also passed out to the public and media, criticizing as follows:
The inquiry was conducted entirely behind closed doors with the exception of Sen. Williams who was allowed to be present throughout the preliminary inquiry. The exclusion of the public and the media was enough to arouse suspicion, but the exclusion of the complainant (except for brief appearance as a witness) coupled with the inclusion of the alleged violator throughout the proceeding gave calls for some to speculate that the deck was stacked and the Senator would be exonerated. I was not, and am not, willing to go that far, but I believe that your Order … that exonerated him, was contrary to the undisputed evidence that was presented.
The Inquiry Commission of the Kentucky Bar Association later started an investigation regarding whether Berry’s letter violated Rule of Professional Conduct 8.2.(a), which provides that “a lawyer shall not make a statement that the lawyer knows to be false or with reckless disregard as to its truth or falsity concerning the qualifications or integrity of a judge, adjudicatory officer or public legal officer.” The rule was violated, the Inquiry Commission concluded, because Berry’s letter “publicly impli[ied] that the Legislative Ethics Commission did not conduct its review appropriately.” Berry filed suit claiming that the KBA had violated his First Amendment rights to freedom of speech.
The Sixth Circuit, in an opinion written by Judge John Rogers, a law professor at the University of Kentucky School of Law prior to joining the court, ruled that the KBA had violated Berry’s First Amendment rights. The Sixth Circuit’s ruling rested on three grounds. First, that “truth is a defense” and that the KBA did not contest the truth of the factual allegations in Berry’s letter. Second, statements of opinion are protected by the First Amendment unless they ‘imply a false assertion of fact.’” Third, the Court concluded with some pointed observations that Berry’s opinion was not based on implied facts:
Berry’s opinion was not based on implied facts. The KBA contends that Berry’s letter implied that the Commission illegally excluded the public from hearing. Of course, contentions that adjudicatory bodies acted illegally are the staple of appellate briefs, and cannot without more constitute ethical violations. Berry’s statements, in any event, did not necessarily imply that the Commission broke the law. Berry may well have known that the Commission was following its regulations, but believe that the regulations themselves were slanted in favor of accused legislators. Certainly, Berry could not be punished for advocating a change in the law. Even assuming that Berry believes that the commission had broken the law, he provided the public with the facts upon which his opinion relied. The public is free to investigate the Commission’s procedures and draw its own conclusions. The speaker is not required to provide a comprehensive legal analysis to support his every utterance.
Robert L. Abell
www.RobertAbellLaw.com
SW VIRGINIA LAW BLOG
Tuesday, July 31, 2012
The free speech rights of lawyers to criticize quasi-judicial tribunals
Earlier this week in Berry v. Schmitt, the Sixth Circuit in an opinion by Judge Rogers, joined by Judge Daughtrey, held that the Kentucky Bar Association violated the First Amendment rights of a Kentucky lawyer by imposing a reprimand on him for his comments that were critical of the failure of Kentucky’s legislative ethics commission to act against a well-known state legislator. The Bar did not claim that the lawyer made any false statements. The Court observed that “[e]ven assuming that Berry believed that the Commission had broken the law, he provided the public with the facts upon which his opinion relied. The majority distinguished this case from lawyers speaking in the courtroom, or lawyers speaking outside the courtroom in ways that involve the “unmitigated expression of disrespect for the law.” The third judge on the panel concurred in the opinion but wrote separately to express his view that the lawyer’s case was mostly an exaggeration borne of his “long-running feud” with the Kentucky Bar Association.

The Lexington paper, the Louisville paper, and the Associated Press had articles about the case.

It is impossible to read such a story without recalling the unfortunate Richmond lawyer, who at the time was only a few years younger than I am now, who received a show cause from the Virginia Supreme Court for words he delivered to Justice John Charles Thomas of the Virginia Supreme Court in at a Christmas party in 1987, along with the two other cases described in this VLW article.
Posted by Steve at 1:00 PM

FINDLAW
Attorney Calls Shenanigans on Ethics Commission, Wins Appeal
By Robyn Hagan Cain on August 1, 2012 3:09 PM|
Kentucky Attorney John Berry was irked when the Kentucky Legislative Commission excluded the public from a hearing about allegations against Senate President David Williams, but allowed Williams to stay. The Commission later dismissed the complaint against Williams.
Berry complained in a letter to the Commission that the whole situation was shady. The Commission whined to the Kentucky Bar Association, which then warned Berry that his conduct violated the Kentucky Rules of Professional Conduct. Last week, the Sixth Circuit Court of Appeals clarified for the Kentucky Bar that lawyers, much like regular people, have free speech rights and can write letters.
But the case must be more complicated than that, right?
Not really.
In 2007, the Kentucky Legislative Ethics Commission received a complaint regarding Williams’ fundraising. At the hearing on the matter, the Commission called an executive session and excluded the media, Berry, and other members of the public, but allowed Williams to be present.
After the complaint against Williams was dismissed, Berry wrote a letter to the Commission, (which he also distributed to the public and the media), criticizing the disposition of the matter:
The inquiry was conducted entirely behind closed doors with the exception of Senator Williams who was allowed to be present throughout the preliminary inquiry. The exclusion of the pub[l]ic and the media was enough to arouse suspicion, but the exclusion of the complainant (except for a brief appearance as a witness) coupled with the inclusion of the alleged violator throughout the proceeding gave cause for some to speculate that the deck was stacked and the Senator would be exonerated. I was not, and am not, willing to go that far, but I do believe that your Order … that exonerated him, was contrary to the undisputed evidence that was presented.
(Gave cause for some to speculate that the deck was stacked? Berry doesn’t hold back.)
The Commission complained to the Kentucky Bar Association (KBA) Inquiry Commission, which investigated the matter and informed Berry that his letter violated Kentucky Rule of Professional Conduct 8.2(a). The rule states:
A lawyer shall not make a statement that the lawyer knows to be false or with reckless disregard as to its truth or falsity concerning the qualifications or integrity of a judge, adjudicatory officer or public legal officer.
There was no formal discipline; just a warning that Berry should avoid making similar statements in the future.
Berry, however, refused to back down. He challenged the warning, and the Sixth Circuit Court of Appeals ultimately sided with him.
Circuit Judges John Rogers and Martha Craig agreed that “The warning letter implied a threat of future enforcement that elevated the injury from subjective chill to actual injury.” The third judge, U.S District Judge Jack Zouhary, thought that the letter violated Berry’s free speech rights, but that the appeal was “more about stubborn Berry having the last word in his dispute with the KBA than about the First Amendment.”
Either way, Berry and free speech win. Go America.

SIXTH CIRCUIT LAW BLOG
Curb Free Speech
By Trevor Covey on August 1st, 2012Posted in News and Analysis, Recent Cases
In Berry v Schmitt, the Sixth Circuit held that the Kentucky Bar Association (“KBA”) could not use Kentucky Rule of Professional Conduct 8.2(a) to bar an attorney, John Berry, from commenting on the Kentucky Legislative Ethics Commission investigation of Senate President David Williams. Senator Williams was investigated for alleged fund-raising violations. Berry attended the public session of the investigation, but was closed out—along with the rest of the public attendees. Only Senator Williams himself was allowed to stay. Troubled by the Commission’s decision to block out the public at the public session while permitting Senator Williams to remain, Berry wrote a letter to the Commission and disseminated it to the public and the media. In the letter, Berry wrote, “The exclusion of the pub[l]ic and the media was enough to arouse suspicion, but the exclusion of the complainant (except for a brief appearance as a witness) coupled with the inclusion of the alleged violator throughout the proceeding gave cause for some to speculate that the deck was stacked and the Senator would be exonerated.”
The KBA sent a warning letter to Berry under Rule 8.2(a). Rule 8.2(a) provides that “[a] lawyer shall not make a statement that the lawyer knows to be false or with reckless disregard as to its truth or falsity concerning the qualifications or integrity of a judge, adjudicatory officer or public legal officer.” The letter stated that it was issued to “advise you in the future to conform your conduct to the requirements of the Rules of Professional Conduct.” Berry filed for an injunction and declaratory judgment that he intended to further criticize the Commission’s investigation and KBA’s invocation of Rule 8.2(a) unconstitutionally restricted that speech.
The Sixth Circuit agreed. Finding that Berry had standing and his suit was ripe, the Court turned to KBA’s argument that the Rooker-Feldman Doctrine barred Berry’s claim. The Rooker-Feldman doctrine “bars lower federal courts from conducting appellate review of final state-court judgments because 28 U.S.C. § 1257 vests sole jurisdiction to review such claims in the Supreme Court.” The Sixth Circuit rejected the application of Rooker-Feldman, holding that even though the warning letter is in fact a state court judgment, the letter is not the source of Berry’s injury. The doctrine only applies where the injury alleged was caused by the state court judgment and seeks review of the judgment itself. Here, “Berry seeks declaratory and injunctive relief to prevent future enforcement by the KBA, the threat of which currently chilling his speech.” Berry did not seek to expunge the letter, nor would the order he does seek have that effect.
The Sixth Circuit did, however, hold that ethics rules can permissibly reach speech that defamation suits cannot. Therefore, the Court reasoned, the more appropriate test might be broader than the seminal New York Times standard. The Court noted that this standard would likely follow the one articulated by the Ninth Circuit: “what the reasonable attorney, considered in light of all of his professional functions, would do in the same or similar circumstances. The inquiry focuses on whether the attorney had a reasonable factual basis for making the statements, considering their nature and the context in which they were made.” Berry disclosed the facts supporting his opinion, all of which were true and non-defamatory, and thus not sanctionable under the Ninth Circuit test or the narrower New York Times standard. Therefore, the Sixth Circuit—while declining to adopt a test for future cases—held KBA unconstitutionally applied 8.2(a) to restrict Berry’s free speech.

CHANNEL 18 LEXINGTON KENTUCKY
COVERING KENTUCKY
Lawyer’s Reprimand Rejected On Free Speech Grounds
Posted: Jul 28, 2012 3:17 PM

Louisville , Ky. (AP) – After he criticized Kentucky’s Legislative Ethic Commission, a Louisville attorney was warned in a letter not to publicly make such comments again.

However, the letter to John M. Berry Jr. and the Kentucky Bar Association rule used to justify it amounted to an unconstitutional attempt at suppressing Berry’s free speech rights, the U.S. 6th Circuit Court of Appeals ruled Friday.

Judge John M. Rogers concluded that, because the letter implied that Berry would face disciplinary action in the future for similar comments, the letter had the effect of stopping further criticisms, even though his comments were fact-based.

Rogers wrote that there’s no point in waiting for the Kentucky Bar Association to punish Berry for similar conduct because there’s little indication the bar will alter its regulations.

“By contrast, Berry is faced with a present quandary – speak now and risk punishment or forever hold his peace,” Rogers wrote.

The decision limits the Kentucky Bar Association’s regulation barring attorneys from knowingly making false statements concerning the qualifications or integrity of a judge, adjudicatory officer or public legal officer.

Judge Jack Zouhary filed a concurring opinion wondering why anyone made a fuss over the case.

“Really? This matter is old news and will not likely be pursued by Berry, or anyone else,” Zouhary wrote. “While the law might be on Berry’s side, his long-running feud with the KBA is exaggerated.”

The Kentucky Bar Association issued a written warning to Berry after he knocked the commission over its handling of allegations concerning state Senate President David Williams’ fundraising practices in October 2007. Berry circulated a letter saying the “deck was stacked” in the commission hearing and they improperly excluded the public from the hearing, but allowed Williams in.

The letter said some people could conclude that Williams would be exonerated regardless of the evidence.

“I was not, and am not, willing to go that far, but I do believe that your Order … that exonerated him, was contrary to the undisputed evidence that was presented,” Berry wrote to the commission.

Berry then publicized the letter to the commission, the public and the media.

The bar association began investigating in November 2007 and, after a lengthy probe, it issued a letter to Berry telling him to “conform your conduct” to the association’s rules in the future.

“Although Berry was not disciplined for his circulation of the October 5 letter, the warning letter implied a threat of future enforcement that elevated the injury from subjective chill to actual injury,” Rogers wrote.

Berry sued the bar association in 2009, saying he wanted to continue to criticize the commission’s investigation of Williams. But, Berry said, he couldn’t because of the threat of being disciplined.

Rogers found that Berry’s criticisms were a mixture of fact and expressions of opinion and not punishable without violating his free speech rights.

“Had the KBA proven that any of those facts was untrue, Berry’s assertions could have formed the basis for discipline,” Rogers wrote.

Rogers wrote that the court didn’t take a position on the constitutionality of punishing a lawyer who uses profanity or directs threats against the courts or other “unmitigated expression of disrespect for the law.”

“Nothing like that was going on in this case,” Rogers wrote.

Kentucky Bar Association President Doug Myers told The Associated Press that the case marks the first time the rule has had judicial review and the court’s decision will provide guidance in the future about how to impose it.

“We’re prepared to follow their guidance,” Myers said. “We know what we’re supposed to do now.”

In a written statement, Berry, who was represented by the American Civil Liberties Union, praised the court’s ruling.

“The right of every citizen, including attorneys, to publicly express opinions about the performance of public agencies and officials is a constitutional right that is vital to the success of our democracy,” Berry said.

______

Follow Associated Press reporter Brett Barrouquere on Twitter:

OHIO LAW BLOG
Landmark Sixth Circuit Decision Upholds Lawyer’s Free Speech
Posted by Zukerman on Friday, August 3, 2012
It’s a cruel irony that lawyers, perhaps the most verbose citizens in the U.S., have more restrictions placed on their speech than any other citizen. State disciplinary rules and codes of professional responsibility govern what lawyers can and cannot say, how they may say it, and how they can advertise their services. And until this week, Ohio attorneys had no clear federal court decision affirming their First Amendment rights.
All of that changed when the Sixth District Court of Appeals ruled in favor of John Berry, a Kentucky lawyer who had criticized the state’s Legislative Ethics Commission (“LEC”) investigation into alleged fundraising violations by a state senator. Berry attended an LEC meeting that went into an executive session, leaving Berry and reporters in the dark. In a letter he distributed to members of the LEC as well as the public, Berry wrote that the secretive move could cause the public to think that the “deck was stacked” in the senator’s favor. The LEC reported Berry’s remarks to the Kentucky Bar Association (“KBA”), which informed Berry that “by publicly implying that the [LEC] did not conduct its review appropriately,” he violated Kentucky Rule of Professional Conduct 8.2(a), which states:
A lawyer shall not make a statement that the lawyer knows to be false or with reckless disregard as to its truth or falsity concerning the qualifications or integrity of a judge, adjudicatory officer or public legal officer, or of a candidate for election or appointment to judicial or legal office.[1]
The KBA further advised Berry that he would be wise to refrain from making similar critiques in the future. The LBA never officially sanctioned Berry, but Berry viewed the warning letter as a restriction on his future speech. Berry’s challenge of the KBA’s warning eventually landed before the Sixth Circuit.
The Sixth Circuit held that the “chilling effect” of the KBA’s warning violated Berry’s freedom of speech. In reaching it’s decision, the court rejected KBA’s argument that that Berry’s statement was defamatory simply because it implied that the LEC illegally excluded the public from the executive session. Berry did not explicitly state that the action was illegal. But even if he had said that it was unlawful, the court ruled that his speech still would have been protected, as “contentions that adjudicatory bodies acted illegally are the staple of appellate briefs, and cannot without more constitute ethical violations.”
With this in mind, the court found that Berry’s comments on the LEC’s investigation – which consisted of a mixture of fact and opinion – was protected speech under the First Amendment. Because the KBA did not dispute that the factual assertions made by Berry (the meeting was held behind closed doors) were true, that left only his opinion that the public might conclude that the “deck was stacked” in the senator’s favor. The court found that “[a]n opinion can ‘be the basis for sanctions only if it could reasonably be understood as declaring or implying actual facts capable of being proved true or false.’” Because Berry’s opinion was based on revealed facts, the court ruled that the public was free to accept or reject the opinion.
However, the court did not accept Berry’s argument that he could only be punished by the KBA if his statements were “knowingly false or made with reckless disregard of their falsity,” the same standard applied to private defamation claims. The court said that because the rules of professional conduct were meant to “preserve public confidence in the fairness and impartiality of our system of justice” rather than merely shield public officials from criticism, the ethics rules could restrict speech that defamation suits cannot. Instead of the defamation standard, the court applied a test articulated by the Ninth Circuit in U.S. v. Sandlin, 12 F.3d 861, 867 (9th Cir.1993):
A court should “determine what the reasonable attorney, considered in light of all his professional functions, would do in the same or similar circumstances.” * * * The inquiry focuses on whether the attorney had a reasonable factual basis for making the statements, considering their nature and the context in which they were made.”
After dismissing the somewhat flimsy arguments advanced by the KBA, the court concluded that the ethics rule as applied to Berry violated his First Amendment right:
Even assuming that Berry believed that the Commission had broken the law, he provided the public with the facts upon which his opinion relied. The public was free to investigate the Commission’s procedures and draw its own conclusions. The speaker is not required to provide a comprehensive legal analysis to support his every utterance. For these reasons, Rule 8.2(a) was applied unconstitutionally
It would be difficult to overstate the importance of the court’s ruling in Berry. Attorneys across Ohio are now armed with an appellate federal decision affirming that the First Amendment’s vital protections extend not only to citizens who haven’t graduated from law school, but also to those who have.
It’s worth noting that Ohio Rule of Professional Conduct 8.2(a) is identical to the Kentucky rule. The Ohio Supreme Court – while (perhaps reluctantly) conceding that the First Amendment does indeed protect the speech of attorneys – has nonetheless held that “attorneys may not invoke the federal constitutional right of free speech to immunize themselves from even-handed discipline for proven unethical conduct.” Disciplinary Counsel v. Gardner, 793 N.E.2d 425, 99 Ohio St.3d 416, 2003-Ohio-4048. Federal courts are now at odds with the Ohio Supreme Court when it comes to this issue.
It’s unclear at this point whether the Kentucky Bar Association intends to appeal to the Supreme Court, and if so, whether or not the Court would grant certiorari. In the meantime, lawyers everywhere can celebrate the Berry opinion and the freedoms it extols.
________________________________________
[1] This language is identical to Ohio Rule 8.2(a).

LOUISVILLE COURIER-JOURNAL

Kentucky lawyer’s threatened sanction rejected on free-speech grounds
Court: Ky. Bar Association violated free speech right
LOUISVILLE — In a nationally watched case on lawyers’ free-speech rights, a federal appeals court has ruled that the Kentucky Bar Association violated the First Amendment when it threatened to sanction an attorney for criticizing the state Legislative Ethics Commission.
The 6th U.S. Circuit Court of Appeals held Friday that the bar association chilled the free-speech rights of Henry County lawyer John M. Berry Jr. when it warned him he could be punished for challenging the integrity of a ruling dismissing an ethics complaint against Senate President David Williams.
The appeals court said a rule barring lawyers from making reckless or false statements regarding the integrity of judges or legal officers was unconstitutionally applied against Berry because everything he had said about the Ethics Commission was true or protected opinion.
In a statement issued by the American Civil Liberties Union of Kentucky, which represented him, Berry said, “The right of every citizen, including attorneys, to publicly express opinions about the performance of public agencies and officials is a constitutional right that is vital to the success of our democracy.”
Berry added in an interview that “the bar association probably shouldn’t have gotten involved with this in the first place” and that the ruling clarifies the rights of lawyers to get involved in public matters.
Kentucky Bar Association President W. Douglas Myers said his organization would accept the ruling. “The court has spoken and given us guidance on how this rule should be applied,” he said.
Retired state judge Stan Billingsley, the publisher of the blog LawReader, called the ruling “a major victory for Kentucky attorneys.”
In a brief supporting Berry, the Thomas Jefferson Center for the Protection of Free Expression, based in Charlottesville, Va., had said the “government has no more compelling reason to restrict the speech of John Berry than it does that of Joe the Plumber.”
The appellate panel said it is “especially problematic” when the state impinges on free-speech rights of attorneys because they are “often the citizens best situated to criticize government abuse.”
Berry, a retired state senator who practices in New Castle, wrote a letter to the Ethics Commission in 2007 saying that its findings exonerating Williams were “contrary to the undisputed evidence that was presented.”
Berry also complained that the inquiry was conducted “entirely behind closed doors” after the public and press — but not Williams — were excluded, which he said “gave cause for some to speculate the deck was stacked.”
Common Cause, following up on a story published in The Courier-Journal, had alleged that Williams had violated legislative ethics rules by asking 40 lobbyists to raise money for Republican candidates at a luncheon at the Muhammad Ali Center.
Unhappy with Berry’s comments, ethics commission member Paul Gudgel, a retired Court of Appeals judge, brought them to the attention of the bar association, which filed a disciplinary complaint against Berry.
The bar association’s inquiry commission notified Berry he was under investigation for violating a rule of professional conduct that says “a lawyer shall not make a statement that the lawyer knows to be false or with reckless disregard as to its truth or falsity concerning the qualifications or integrity of a judge, adjudicatory officer or public legal officer.”
The inquiry commission dismissed the complaint without charging or admonishing Berry but said he violated the rule “by publicly implying that the Legislative Ethics Commission did not conduct its review appropriately” and advised him “in the future to conform your conduct to the requirement of the rules of professional conduct.”
Berry sued in federal court, alleging that the warning curtailed his right to engage in future criticism of the legislative panel.
U.S. District Judge Danny Reeves dismissed the suit, but the appellate panel reversed him.
“The balance between an attorney’s right to free political speech and a state’s right to regulate attorney conduct is delicate,” that court said. “Sometimes, however, the balance is upset and the state applies its rules in a way that impinges upon the free interchange of ideas that is vital to self-government.”

The court said that Berry’s assertions about the exclusion of the public from the hearing were “objectively verifiable” and that his statement that the public might believe the “deck was stacked” was an opinion protected by the First Amendment.
The three-judge ruling was unanimous, although one judge, Jack Zouhary, said that while the law was on Berry’s side, “his long-running feud with the KBA is exaggerated.”
Berry was represented by ACLU staff attorney William Sharp and cooperating lawyers David Tachau and Kate McKune. The bar association was represented by Mark Overstreet and Bethany Breetz.
In clearing Williams, the Legislative Ethics Commission noted that he had called the commission in advance and was told that nothing prohibited the fundraising event. It also noted that there was no evidence that he solicited a lobbyist at the luncheon.
Gudgel, who is still on the Ethics Commission, declined to comment on the appeals court ruling, saying he hadn’t read it.
Tony Wilhoit, the commission’s executive director, also declined to comment.

NATIONAL LAW JOURNAL COMMENTS ON JOHN M. BERRY JR. FREE SPEECH FOR LAWYERS CASE

Friday, August 17th, 2012

Court finds ethics warning trampled lawyer’s speech rights
By Leigh JonesContactAll Articles
The National Law Journal
July 30, 2012

A federal appeals court has ruled that the Kentucky Bar Association violated a lawyer’s First Amendment rights when it warned him against criticizing the handling of an investigation of a state senator.

In reversing a lower court, the U.S. Court of Appeals for the Sixth Circuit on July 27 found that the Kentucky attorney ethics board’s written warning to attorney John Berry amounted to an unconstitutional restriction of his free speech rights. The letter asserted that he had violated a rule prohibiting lawyers from making false statements and warned him against doing so again.

The American Civil Liberties Union of Kentucky brought the action on Berry’s behalf.

According to the Sixth Circuit’s ruling, the dispute stemmed from Berry’s criticism of the manner in which the Kentucky Legislative Ethics Commission in 2007 handled complaints about Kentucky Senate President David Williams’ fundraising activities.

Berry, a former state senator, attended a hearing into the allegations against Williams. During the hearing, the legislative commission called an executive session during which it excluded the news media, Berry and other members of the public. The panel did allow Williams to attend the executive session.

Following the hearing, Berry wrote a letter to the legislative commission criticizing the proceeding, stating that it was “enough to arouse suspicion” and “gave cause for some to speculate that the deck was stacked and the senator would be exonerated.”

Berry sent copies of the letter to the legislative commission, the news reporters and the public. A month later, the Kentucky Bar Association Inquiry Commission, which investigates wrongdoing by attorneys, began investigating Berry. It ultimately sent him a written warning, according to Sixth Circuit’s ruling. The warning said that Berry had violated a rule that forbids lawyers from making knowingly false statements or speaking with reckless disregard for their truth, when he publicly implied that the commission had not conducted its review appropriately. The letter noted that the warning did not constitute formal discipline, but advised Berry to conform to attorney ethics rules in the future.

Berry filed a federal action challenging the ethics action, arguing that he wanted to engage in future criticism of the Williams investigation but feared incurring professional discipline. Berry asked the court to declare the attorney ethics rules at issue unconstitutional.

The appeals court, noting that the statements Berry made were neither false or made with reckless disregard for truth, found that the rule, as applied in his situation, violated his future right to free speech.

“The warning letter implied a threat of future enforcement that elevated the injury from subjective chill to actual injury,” Judge John Rogers wrote, joined by Judge Martha Craig Daughtrey.

U.S District Judge Jack Zouhary, sitting by assignment on the appellate panel, concurred but added that the case seemed motivated by a personal spat, not constitutional issues. “Simply put, this case is more about stubborn Berry having the last word in his dispute with the [state bar] than about the First Amendment,” he wrote.

William Sharp, staff attorney at the ACLU of Kentucky, said that the important point was that Zouhary concurred. “Whatever thoughts he had about the case, he agreed that the Kentucky Bar Association violated Mr. Berry’s free speech rights,” Sharp said.

Representing the state bar was Mark Overstreet of Stites & Harbison in Frankfort, Ky. He did not respond to messages seeking comment. Michael Schmitt, named as a defendant in the case as the chairman of the bar’s ethics panel, did not return a telephone call seeking comment.

Contact Leigh Jones at ljones@alm.com.

DISPUTING AN ERROR IN A CREDIT REPORT UNDER THE FEDERAL FAIR CREDIT REPORTING ACT

Thursday, August 16th, 2012

By Christopher Markus | cmarkus@dbllaw.com August 16, 2012

Congress enacted the Fair Credit Reporting Act (FCRA) in 1970 to require consumer reporting agencies to accurately report consumer credit information. The FCRA gives consumers rights to dispute errors in credit reports. Consumers must follow a specific procedure to properly dispute an error in a credit report. Likewise, reporters of information concerning a consumer’s credit must follow specific investigatory procedures upon receipt of notice of disputed information.
First, the consumer must notify the agency reporting the inaccurate information of the error. The three major credit reporting agencies are Experian, Equifax and TransUnion. Each of these companies maintain websites that allow consumers to dispute information in a credit report on-line.
In most cases, a consumer credit reporting agency must conduct an investigation within 30 days of receiving notification of a dispute from a consumer to determine whether the disputed information is inaccurate. This investigation must be conducted by the agency at no charge to the consumer. In the event the agency’s investigation reveals erroneous information, the agency must cease reporting the incorrect information and take steps to prevent the erroneous information from reappearing in the consumer’s credit report. Within five days after completing its investigation, the agency must provide the consumer, in writing, with the results of its investigation.
When a consumer reporting agency receives notice of disputed information, it must provide notice of the dispute to the party responsible for furnishing the erroneous information within 5 days (e.g., a credit card company that incorrectly reported payments on a credit card account as delinquent). Once the party furnishing the information receives notification of a dispute from a consumer reporting agency, it must:
• conduct an investigation with respect to the disputed information;
• review the information provided to it by the consumer reporting agency concerning the dispute;
• report the results of its investigation to the consumer reporting agency regarding the dispute;
• if the investigation finds that the disputed information is incomplete or inaccurate, the party furnishing the information must report this fact to all other consumer reporting agencies that received the erroneous information; and
• discontinue any future reporting of the erroneous information.
The party furnishing the information must complete these steps before the 30-day deadline by which the credit reporting agency must complete its investigation of the disputed information expires.
Christopher Markus is a Northern Kentucky attorney practicing at Dressman Benzinger LaVelle psc

WENDELL BERRY DONATES HIS PAPERS TO KENTUCKY HISTORICAL SOCIETY

Thursday, August 16th, 2012

Wendell E. Berry Collection Now at KHS

Press Release Date:

Wednesday, August 15, 2012

Contact Information:

Chelsea Compton
502-564-1792, ext. 4504
chelsea.compton@ky.gov

FRANKFORT, Ky. (Aug. 15, 2012) — Widely acclaimed Kentucky author Wendell E. Berry, who has been called a “prophet of rural America” in The New York Times, has donated his writings, research materials and incoming correspondence to the Kentucky Historical Society (KHS). These materials are being processed and will be made available to researchers by Nov. 1.

A native of Henry County, Berry is a prolific author of fiction, nonfiction and poetry. He has been the recipient of numerous awards and is well known for his commitment to protecting the environment. He has taught at numerous universities, including the University of Kentucky, Stanford University, Georgetown College, the University of Cincinnati, New York University and Bucknell University.

Berry donated approximately 75 boxes of materials to KHS. These materials include his writings, both those that resulted in publications and those that did not; as well as his research materials and incoming correspondence. The documents cover literary and cause-oriented topics.

In explaining his choice of a repository, Berry cited the late Kentucky historian Dr. Thomas D. Clark, for whom the Center for Kentucky History is named.

“I wanted to keep the papers in Kentucky because I am a Kentuckian, and I selected KHS for two reasons: First, it is handy to me, and second, because I know that the historical society was a favorite project of Dr. Clark, who was my teacher and my friend,” said Berry. “I wanted to honor him and his contribution.”

As part of the deed of gift to KHS, Berry restricted access to his personal writings during his lifetime. Researchers seeking access to Berry’s writings must request approval from the author. All other materials, including incoming correspondence and research materials, will be accessible to the public once they have been cataloged by KHS archivists.

“KHS is honored to have been approached by Mr. Berry to serve as the official repository for his documents,” said Kent Whitworth, KHS executive director. “It is a privilege that KHS takes seriously. We will conserve these materials for future generations and make them available for researchers as quickly as possible.”

-30-

An agency of the Kentucky Tourism, Arts and Heritage Cabinet, the Kentucky Historical Society is committed to helping people understand, cherish and share Kentucky’s history. The KHS history campus includes The Thomas D. Clark Center for Kentucky History, Old State Capitol and Kentucky Military History Museum at the State Arsenal. For more information about the Kentucky Historical Society and its programs, visit the website at www.history.ky.gov.

FEDERAL SIXTH CIRCUIT RULES COPS CAN TRACK SUSPECTS VIA CELLPHONE WITHOUT WARRANT

Wednesday, August 15th, 2012

Geo-data received based on “reasonable grounds” phone was connected to a crime.
by Cyrus Farivar- Aug 14 2012 ArsTechnia
In a 2-1 ruling, the U.S. Circuit Court of Appeals for the Sixth Circuit has ruled (PDF) that law enforcement has the right to warrantlessly obtain location data from a cellphone in order to track a suspect. The case involves a man named Melvin Skinner, a newly-convicted drug trafficker, who was part of a cross-country, large-scale drug operation organized by another man, James Michael West.
Skinner had appealed his many convictions: conspiracy to distribute and possess with intent to distribute over 1,000 kilograms of marijuana, conspiracy to commit money laundering, aiding and abetting the attempt to distribute in excess of 100 kilograms of marijuana. His attorneys argued that the government’s use of his GPS location information from his phone, which led to his arrest, constituted a warrantless search in violation of the Fourth Amendment.
“There is no Fourth Amendment violation because Skinner did not have a reasonable expectation of privacy in the data given off by his voluntarily procured pay-as-you-go cell phone,” wrote Judge John Rogers, in the majority opinion. “If a tool used to transport contraband gives off a signal that can be tracked for location, certainly the police can track the signal.”
The Stored Communications Act strikes again
In January 2006, Christopher S. Shearer, another participant in the West marijuana operation, was stopped with $362,000 in cash. Shearer was on his way to deliver money on behalf of West, to his marijuana supplier, Philip Apodaca, in Tucson, Arizona. Under questioning, DEA agents learned from Shearer how the West group conducted the drug trafficking operation. The agents found out that Apodaca would purchase prepaid cellphones under fictitious names and used pre-programmed contact information to orchestrate drug trafficking. Those phones were then discarded after a period of time.
However, by May and June 2006, law enforcement agents received authorization to intercept the communications of two phones established in West’s name. In an order written by a Tennessee federal magistrate judge, the prosecuting United States attorney received authorization to install a pen register, a trap and trace device, and to receive location data from the call’s origination and termination points, in addition to GPS and ping data from those phones.
Among other rationales, the judge cited the Stored Communications Act (also known as a 2703(d) order) as grounds to provide this order. Under that federal statute, authorities can’t receive the contents of electronic communication (what was said), but can find out where and to whom it was said. In contemporary cases within the last decade, law enforcement and judges have increasingly used this reasoning to obtain extensive location data that can effectively turn the phone into a tracking device. Such information previously would have required a much higher legal threshold—a probable cause-driven warrant.
Thanks to the intercepted calls between Shearer and West, law enforcement learned of the existence of a truck driver courier, known by the codename “Big Foot,” who turned out to be Melvin Skinner. Based on the location data acquired from both phones, law enforcement agents were able to learn of Skinner’s location en route during his drug delivery from Arizona to Tennessee. Not surprisingly, he was promptly arrested at a rest stop near Abilene, Texas while driving a “motorhome filled with over 1,100 pounds of marijuana.”
Different than Jones
In the court’s majority opinion, Judge Rogers specifically referred to the Jones case, which was decided by the United States Supreme Court in January 2012. In that unanimous decision, the Supreme Court found that law enforcement does not have the authority to warrantlessly place a GPS tracking device on a suspect’s vehicle.
However, in this case, the Sixth Circuit Court of Appeals found that “no such physical intrusion occurred.”
“Here, the monitoring of the location of the contraband-carrying vehicle as it crossed the country is no more of a comprehensively invasive search than if instead the car was identified in Arizona and then tracked visually and the search handed off from one local authority to another as the vehicles progressed,” Judge Rogers added in the decision.
“That the officers were able to use less expensive and more efficient means to track the vehicles is only to their credit.”
In the wake of the Skinner decision, some privacy law experts disputed the court’s reasoning.
“In fact, the government’s use of a pen register and a trap trace device (called a “hybrid order) to obtain the info is something that has been extensively litigated and disputed,” wrote Hanni Fakhoury, a staff attorney with the Electronic Frontier Foundation, in an e-mail sent to Ars.
“This ‘hybrid’ theory has been challenged both as a matter of statutory interpretation (i.e., the government’s statutory analysis is wrong; you can’t use the statutes in that way) and as a matter of constitutional law (i.e., even if you could use a d-order to get this info, 2703(d) is unconstitutional because this information requires a search warrant). The fact the Sixth Circuit didn’t mention that or go through any of the legal analysis or even note that this is a hotly contested legal issue is simply (to borrow a term I saw on Twitter) ‘lazy.’”

FEDERAL JUDGE THROWS OUT KY. DISTILLED LIQUOR AND WINE SALES RESTRICTION ON GROCERY STORES

Tuesday, August 14th, 2012

Jack Brammer — jbrammer@herald-leader.com
FRANKFORT – A federal judge ruled Tuesday that the state law that prohibits grocery and convenience stores from selling wine and distilled spirits is unconstitutional.
U.S. District Judge John G. Heyburn II of Louisville ruled that the state law violates the U.S. Constitution’s Equal Protection Clause in that it prohibits certain grocery stores, gas stations and others from obtaining a license to sell package liquor and wine.
The judge also said his order would be put on hold until the court could hold a conference with the parties involved to discuss various issues.
The ruling came in the civil case of Maxwell’s Pic-Pac, Inc., and others versus state Alcoholic Beverage Control Commissioner Tony Dehner, who enforces state alcoholic beverage laws.
Dick Brown, a spokesman for the state ABC, said “We are studying the ruling to determine its impact.”
The state has required grocery stores to have a separate entrance and shop to sell alcoholic beverages. Such requirements do not apply to drug stores.

Read more here: http://www.kentucky.com/2012/08/14/2298869/judge-overturns-kentuckys-ban.html#emlnl=Breaking_news#storylink=cpy

SCOTUSblog Challenges Ruling That Lets Prosecutors Vindictively File Charges As Long As They Have Proof

Tuesday, August 14th, 2012

SCOTUSblog Challenges Ruling That Lets Prosecutors Vindictively File Charges As Long As They Have Proof
Abby Rogers|Aug. 13, 2012,

Tom Goldstein, SCOTUSblog

The U.S. Court of Appeals for the Eleventh Circuit ruled last year prosecutors can’t get in trouble for “subjective ill-will,” meaning prosecutors have the right to file charges against you out of spite as long as they have the evidence to back it up.
And now, a group of former judges and prosecutors, headed up by SCOTUSblog’s Tom Goldstein, are asking the Supreme Court to reverse the appeals court’s decision, The Wall Street Journal’s Law Blog reported Friday.
In its brief, filed Thursday with the high court, the group argues prosecutors’ motives when filing charges are an important part of the judicial process.
“An indictment (or superseding indictment) filed in bad faith is no less dangerous to the integrity of the criminal justice system than a vexatious or frivolous one, and deserves no less sanction,” according to the brief, posted by Law Blog.
The Eleventh Circuit’s controversial ruling overturned a Florida court’s decision that ordered prosecutors to pay legal fees for a doctor after finding prosecutors were prejudiced against Ali Shaygan, a doctor accused of illegally prescribing pain medications.
That doctor came under government scrutiny after one of his patients died while taking methadone.
Shaygan’s doctor moved to suppress the doctor’s statements to investigators, and the government threatened doing so could be very bad for Shaygan, Reuters’ Alison Frankel previously reported.
A 141-count indictment against Shaygan ensued.
Former Sixth Circuit appeals court judge Nathaniel Jones and former Tenth Circuit judge Michael McConnell, among others, joined Goldstein in his brief.

Read more: http://www.businessinsider.com/scotusblog-challeneges-ruling-that-lets-prosecutors-vindictively-file-charges-as-long-as-they-have-proof-2012-8#ixzz23WhjIaNE

DOZENS OF PRISONERS COULD BE FREED -JUSTICE DEPT. CONCEDES THEY ARE LEGALLY INNOCENT

Tuesday, August 14th, 2012

By Brad Heath, USA TODAY

Dozens of federal prisoners who are locked up even though prosecutors concede they are “legally innocent” could soon be released under new orders from the U.S. Justice Department.

The department confirmed Monday that it had instructed its lawyers to abandon legal objections that could have blocked — or at least delayed — the inmates from being set free. In a court filing , the department said it had “reconsidered its position,” and that it would drop its legal arguments “in the interests of justice.”
The shift follows a USA TODAY investigation in June that identified more than 60 people who were imprisoned for something an appeals court later determined was not a federal crime. The investigation found that the Justice Department had done almost nothing to identify those prisoners — many of whom did not know they were innocent — and had argued in court that the men were innocent but should remain imprisoned anyway.

Neither Justice Department lawyers nor defense attorneys would speculate Monday how many innocent prisoners eventually might be released. Some who were convicted of other crimes might receive shorter sentences; others might be tried for different offenses.
Chris Brook, the legal director of the ACLU of North Carolina, called the move “an encouraging first step,” but said “much more has to be done for these wrongly incarcerated individuals.” He said the department still had not offered to identify prisoners who were sent to prison for something that turned out not to be a federal crime.

Federal law bans people from having a gun if they have previously been convicted of a crime that could have put them in prison for more than a year. In North Carolina, however, state law set the maximum punishment for a crime based in part on the criminal record of whoever committed it, meaning some people who committed crimes such as possessing cocaine faced sentences of more than a year, while those with shorter records face only a few months.

For years, federal courts there said that didn’t matter. If someone with a long record could have gone to prison for more than a year, then all who had committed that crime are felons and cannot legally have a gun, the courts maintained. But last year, the 4th Circuit Court of Appeals said judges had been getting the law wrong: Only people who could have faced more than a year in prison for their crimes qualify as felons. Its decision meant thousands of low-level offenders are not committing a federal crime by having a gun.
In many cases, prosecutors did not dispute that prisoners convicted of gun possession before that decision were innocent, but argued that they should remain locked up because of strict laws that limit when and how inmates can challenge their convictions. The department’s new instructions directed prosecutors to drop those arguments.
Justice spokeswoman Adora Andy said the department had “decided to take a litigating position designed to accelerate relief for defendants in these cases who, by virtue of a subsequent court decision, are no longer guilty of a federal crime.” She declined to elaborate on the details of the department’s instruction. In at least one case on Monday, the government asked a court to set aside a defendant’s gun possession conviction.

The shift was met with cautious praise Monday from defense lawyers scrambling to file challenges based on the court’s ruling. Eric Placke, an assistant federal public defender in Greensboro, N.C., said it was “an appropriate response, a fair response, by allowing things to be handled on the merits rather than based just on procedural defenses.”
One of those prisoners, Travis Bowman, said in an e-mail that he was hoping for “another chance at life” if his gun possession conviction is overturned. Bowman was sentenced to 10 years in federal prison for being a felon in possession of a firearm; he was arrested after a high-speed police chase through rural Murphy, N.C. Under the appeals court’s ruling, his prior convictions weren’t serious enough to make having a gun a crime.
Bowman said he didn’t know he was innocent until USA TODAY contacted him earlier this year. He later asked a federal judge in North Carolina to release him. “If that happens, I got so much stuff I wanna do with my life,” he said.

Many of the practical effects of the Justice Department’s new instructions remained unclear on Monday.

The legal issue underlying the gun possession cases could also have implications for many other federal inmates. That’s because a person’s felony record plays a key role in deciding how long a prison sentence he will receive when he’s convicted of a federal crime. Hundreds of inmates have already gone to court arguing their prison sentences are too long because at least one of their prior convictions no longer qualifies as a felony under the appeals court’s decision.

The ACLU, which last week asked Justice officials to do more to help the inmates, estimated last week that as many as 3,000 people could be eligible to either be released or have their sentences reduced. because of the 4th Circuit’s decision. The department did not say on Monday whether it would also drop its legal objections in those cases.

NATIONAL MOTORISTS ASSOCIATION OPPOSES NEW FEDERAL LEGISLATION WHICH ENCOURAGE IGNITION INTERLOCK DEVICES

Monday, August 13th, 2012

NATIONAL MOTORISTS ASSOCIATION OPPOSES NEW FEDERAL LEGISLATION WHICH ENCOURAGE IGNITION INTERLOCK DEVICES
Aug. 13, 2012
Buried within the approximately 600 pages of legislation enacted in the recent federal transportation law are two provisions to encourage the installation of ignition interlock devices (IIDs) into more vehicles. (Current interlocks are in-vehicle breathalyzers that prevent the vehicle from starting if the driver tests positive for alcohol. Learn more about the problems with interlocks here.)

The first offers grants to states that implement mandatory interlock requirements for all DUI offenders. The second provides continued funding for the Driver Alcohol Detection System and Safety (DADSS) program.

DADSS is a partnership between NHTSA and the automobile industry to develop “non-invasive in-vehicle alcohol detection technologies that can very quickly and accurately measure a driver’s blood alcohol concentration (BAC).”

The effort centers on two possible technologies—one that reads BAC through the driver’s skin and another that uses cabin sensors to measure alcohol concentrations in the driver’s exhaled breath. Note that neither technology operates like current interlock devices, which have been deemed as unreliable, too intrusive and “not acceptable for widespread use among the driving public…”

It’s no secret that the true aim of DADSS is to install interlock devices in all new vehicles. Under this regime, all drivers—not just those with DUI convictions—would have to pass a BAC test every time they wanted to start their car.

Interlock proponents, such as MADD and certain policymakers, downplay their support for mandatory, universal interlock use because of the public backlash it would cause. So, they work toward incremental gains, such as passing more interlock legislation at the state level and funding initiatives like DADSS, which are couched as “research” programs.

But the efforts of advocates and policymakers may not be enough. According to this recent article, the key to universal acceptance (read mandatory in all new vehicles) of interlock devices may lie elsewhere:

While some believe that the universal implementation of alcohol interlocks should be mandated by government, there is an argument that suggests that the paradigm shift towards universal acceptance will be driven by private industry.

The writer explains that as interlocks have become widespread in commercial and fleet vehicles, especially overseas, the companies that have adopted them are perceived by the public as more safety conscious and better corporate citizens. The logic goes that if a taxi passenger in Belgium observes the driver using an interlock before starting the cab, the passenger will feel more secure and have a more positive view of interlocks.

The writer concludes that the private sector, not government, can do a better job of changing public perception of interlocks, especially in North America. If consumers become more aware of alcohol testing in commercial driving settings, and the assumed accompanying safety benefits, they will more accepting of interlocks in their personal vehicles and may actually want them.

It’s an interesting point. Private sector companies are masterful at influencing public opinion. It’s called marketing, and the techniques to do it effectively have been honed over 150 years. But even if UPS or Walmart did require interlocks in its fleet vehicles, would the company really want to call attention to that fact? Likely not, for fear of even suggesting that its drivers might drive while impaired.

So, even if the private sector begins to adopt interlock technology on a large scale, the spillover effect on consumers will likely be subtle and incremental (like slowly turning up the heat on a frog in a pot of water). Given the modus operandi of the interlock proponents, they will probably be very content with that.

Ignition interlocks represent a flawed solution to the drunk-driving problem. Nonetheless, their supporters will continue to push for universal acceptance through obvious, and not so obvious, means. Their success is not guaranteed. We encourage you to ask your policymakers to consider alternative, thoughtful approaches to this serious public safety issue. ♦

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Problems Riddle Moves to Collect Credit Card Debt – Several Large Banks Falsify Credit Card Records

Monday, August 13th, 2012

August 12, 2012, 9:09 pm — NEW YORK TIMES

Problems Riddle Moves to Collect Credit Card Debt

By JESSICA SILVER-GREENBERG

The same problems that plagued the foreclosure process – and prompted a multibillion-dollar settlement with big banks – are now emerging in the debt collection practices of credit card companies.

As they work through a glut of bad loans, companies like American Express, Citigroup and Discover Financial are going to court to recoup their money. But many of the lawsuits rely on erroneous documents, incomplete records and generic testimony from witnesses, according to judges who oversee the cases.

Lenders, the judges said, are churning out lawsuits without regard for accuracy, and improperly collecting debts from consumers. The concerns echo a recent abuse in the foreclosure system, a practice known as robo-signing in which banks produced similar documents for different homeowners and did not review them.

“I would say that roughly 90 percent of the credit card lawsuits are flawed and can’t prove the person owes the debt,” said Noach Dear, a civil court judge in Brooklyn, who said he presided over as many as 100 such cases a day.

Last year, American Express sued Felicia Tancreto, claiming that she had stopped making payments and owed more than $16,000 on her credit card.

While Ms. Tancreto was behind on her payments, she contested owing the full amount, according to court records. In April, Judge Dear dismissed the lawsuit, citing a lack of evidence. The American Express employee who testified, the judge noted, provided generic testimony about the way the company maintained its records. The same witness gave similar evidence in other cases, which the judge said amounted to “robo-testimony.”

American Express and other credit card companies defended their practices. Sonya Conway, a spokeswoman for American Express, said, “we strongly disagree with Judge Dear’s comments and believe that we have a strong process in place to ensure accuracy of testimony and affidavits provided to courts.”

Interviews with dozens of state judges, regulators and lawyers, however, indicated that such flaws are increasingly common in credit card suits. In certain instances, lenders are trying to collect money from consumers who have already paid their bills or increasing the size of the debts by adding erroneous fees and interest costs.

The scope of the lawsuits is vast. Some consumers dispute that they owe money at all. More commonly, borrowers are behind on their payments but contest the size of their debts.

The problem, according to judges, is that credit card companies are not always following the proper legal procedures, even when they have the right to collect money. Certain cases hinge on mass-produced documents because the lenders do not provide proof of the outstanding debts, like the original contract or payment history.

At times, lawsuits include falsified credit card statements, produced years after borrowers supposedly fell behind on their bills, according to the judges and others in the industry.

“This is robo-signing redux,” Peter Holland, a lawyer who runs the Consumer Protection Clinic at the University of Maryland Francis King Carey School of Law.

Lawsuits against credit card borrowers are flooding the courts, according to the judges. While the amount of bad debt has fallen since the financial crisis, lenders are trying to work through the soured loans and clean up their books. In all, borrowers are behind on $18.7 billion of credit card debt, or roughly 3 percent of the total, according to Equifax and Moody’s Analytics.

Amid the surge in lawsuits, credit card companies are facing scrutiny. The Office of the Comptroller of the Currency is investigating JPMorgan Chase after a former employee said that nearly 23,000 delinquent accounts had incorrect balances, according to people with knowledge of the investigation.

Linda Almonte, a former assistant vice president at JPMorgan, claimed in a whistle-blower complaint that she had been fired after alerting her managers to flaws in the bank’s records.

The currency office, which oversees the nation’s largest banks, is also broadly looking into the industry’s debt collection efforts, focusing in part on the documents included with lawsuits. A spokeswoman for JPMorgan declined to comment.

The Federal Trade Commission is working with courts across the country to improve the process for pursuing borrowers who are behind on their credit card payments, mortgages and other bills. In a recent review of the consumer litigation system, the commission found that credit card issuers and other companies were basing some lawsuits on incomplete or false paperwork.

“Our concerns center on the fact that debt collection lawsuits are a pure volume business,” said Tom Pahl, assistant director for the F.T.C.’s division of financial practices. “The documentation is very bare bones.”

The lenders disputed the suggestion that they file lawsuits that include flawed or inaccurate documentation.

“We look at account records in our system to individually verify the accuracy of information before affidavits are filed and testimony is given,” said Ms. Conway, the American Express spokeswoman, who declined to comment on specific borrowers.

The industry has faced similar criticism over practices stemming from the housing crisis. Amid a surge in foreclosures, state attorneys general accused the banks of using faulty documents without reviewing them and improperly seizing homes. In February, five big banks agreed to pay $26 billion to settle the matter.

The errors in credit card suits often go undetected, according to the judges. Unlike in foreclosures, the borrowers typically do not show up in court to defend themselves. As a result, an estimated 95 percent of lawsuits result in default judgments in favor of lenders. With a default judgment, credit card companies can garnish a consumer’s wages or freeze bank accounts to get their money back.

In 2010, Discover sued Taryn Gregory for more than $7,000 in credit card debt. Ms. Gregory, of Commerce, Ga., had fallen behind on her bills, but said she had accumulated only $4,000 in debt.

After the suit was filed, Ms. Gregory, a 41-year-old child care assistant, asked Discover for proof of the balance. The resulting documents, which were reviewed by The New York Times, have inconsistencies. One statement, for example, says it was produced in 2004, but advertisements on the bottom of the document bear a 2010 date.

The lawsuit against Ms. Gregory is still pending. Discover declined to comment. Judges have also raised concerns about witnesses and affidavits.

In May, Michael A. Ciaffa, a district court judge in Nassau County, N.Y., challenged the paperwork signed by a Citigroup employee in Kansas City, Mo. He found that one document “has the look and feel of a robo-signed affidavit, prepared in advance,” according to court records. The case is still pending.

Emily Collins, a spokeswoman for Citigroup, said: “We continually review the effectiveness of our controls and policies for credit card collections, and ensure that affidavits are validated for accuracy and signed by Citi employees with knowledge of the client’s account. Citi Cards has a range of programs to support our clients who may be facing financial difficulty, and we make every effort to work with our clients to prevent delinquency.”

A review of dozens of court records showed that the same employee signed documents in cases filed against borrowers in three other states. In one lawsuit in Seattle, the employee attested in an affidavit in May that a customer, Vickie Sawadee, owed $14,000 on her Citigroup credit card. Although Ms. Sawadee was behind on her payments, she said she does not owe the full amount. She hired a lawyer to defend her case.

Many judges said that their hands are tied. Unless a consumer shows up to contest a lawsuit, the judges cannot question the banks or comb through the lawsuits to root out suspicious documents. Instead, they are generally required to issue a summary judgment, in essence an automatic win for the bank.

“I do suspect flaws,” said Harry Walsh, a superior court judge in Ventura, Calif. “But there is little I can do.”

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UK LAW PROFESSOR UNDERWOOD PUBLISHES NEW EVIDENCE MANUAL FOR COURTROOM USE

Sunday, August 12th, 2012

UK Law professor Richard H. Underwood and Dean of DePaul University College of Law Glen Weissenberger, have published a book on Kentucky Evidence Law. This book is part of the Kentucky Practice Manual Series.
The747 page book is full of indexes, and tabs which speed your search . The title of the book, published by Lexis-Nexis is: KENTUCKY EVIDENCE COURTROOM MANUAL – 2012-2013.
More information about the book can be found at http://www.lexisnexis.co,/custserv/
The book is available in print or as an E-book (ISBN 978-5791-1906
LawReader review of this book was most enlightening. Every lawyer should have this book in their library.

ISSUES RAISED IN GROWING FIELD OF SPACE LAW

Sunday, August 12th, 2012

ISSUES RAISED IN GROWING FIELD OF SPACE LAW
Space Law: Is Asteroid Mining Legal?
Wired Science
Can a private company claim ownership of an asteroid based on sending a probe out to it? Can it at least get exclusive mining rights? Would it own the gold, platinum or other materials mined from the asteroid?
Last week, a new private company, Planetary Resources announced an ambitious plan to prospect for and eventually mine near-Earth asteroids. Backed in part by Google execs Larry Page and Eric Schmidt, this venture has stirred the pot once again on the question of outer space property rights.
Understanding the legality of asteroid mining starts with the 1967 Outer Space Treaty. Some might argue the treaty bans all space property rights, citing Article II:
Outer space, including the moon and other celestial bodies, is not subject to national appropriation by claim of sovereignty, by means of use or occupation, or by any other means.
Others have argued that because Article II only applies to nations, individuals are free to claim chunks of the solar system. But as we’ve noted before, the treaty also requires nations to ensure their citizens comply with the other provisions of the Outer Space Treaty — including a prohibition against sovereign claims of property rights. So neither nations nor individuals can appropriate territory in space. But what about asteroid mining?
While Article II clearly bans “appropriation,” other provisions actually support property rights. The treaty makes clear that both the exploration and use of outer space shall be free of restraint and discrimination, and that there will be free access to all parts of space. It also states that the use of equipment and facilities necessary for peaceful activities is fine. And anything launched into (or built in) space remains the private property of its owner.
To make sense of the Treaty, we must turn to customary international law — how nations have interpreted what these treaty provisions mean in their dealings, both internally, and with other nations. These other sources of international law are critical because the Outer Space Treaty itself is at best confusing and, at worst, internally inconsistent on space property rights.
Blanket claims to celestial bodies have been attempted for millennia, yet none has been recognized by customary law. The only court case we have in this respect arose when Greg Nemitz, a space activist, filed a claim for the asteroid Eros with an online database known as the Archimedes Institute, and then sent NASA a bill for parking fees when NASA landed the NEAR-Shoemaker probe on Eros in 2001. The U.S. 9th Circuit Court of Appeals dismissed the suit because Nemitz was unable to prove actual ownership rights for Eros.
While Nemitz failed, customary international law has essentially recognized property rights based on possession — which, as the old saying goes, is nine-tenths of the law. Satellite orbits, for instance, are allocated by the International Telecommunications Union. Strictly speaking, they are not “owned” by the assignee, but can be renewed on a regular basis, and can be leased to other parties. This and Outer Space Treaty’s recognition of property rights for satellites are the basis for the more than $300-billion-per-year private satellite industry.
Similarly, asteroid mining will depend on customary international law established by the 1960s moon race between the U.S. and USSR. The six Apollo landings brought back 842 pounds of lunar material. NASA has strictly controlled use of the material, and less than 10 percent has ever been experimented on.
NASA itself claims) that the lunar samples are “a limited national resource, a future heritage, and [requires] that samples be released only for approved applications in research, education, and public display.” The United States government has vigorously prosecuted anyone thought to have improperly obtained any such samples. Yet NASA exchanged some of these samples with the Soviet Union, which drew from the approximately 300 grams of lunar material brought back by three Soviet Luna robotic sample return missions.
Under any definition of ownership, the United States clearly owns the Apollo lunar samples. Any entity that can claim something as an exclusive resource, control its transport and distribution, and can exchange it for something else of value (in this case, other lunar samples), clearly owns that object. Russian lunar samples have been re-sold by private individuals, establishing that portions of a celestial body can be subject to ownership if they are removed from that celestial body — whether by governments or private parties — even if the celestial bodies themselves are not subject to appropriation.
This is the single most important legal precedent for property rights in space, and should provide great comfort to those who wish to exploit the resources of outer space. It is also consistent with many commentators, who allege that the Outer Space Treaty’s prohibition on “appropriation” relates only to entire celestial bodies as they exist “in nature,” and that both individuals and nations can claim ownership of resources extracted from celestial bodies. The only real question, then, is the extent of this ownership: Can an entire asteroid be claimed if it is being mined?
Under the Outer Space Treaty, if a company is mining an asteroid, no other entity could come along and start mining on the other side if doing so could interfere with the first set of miners. If the asteroid were large enough to accommodate two independent mining operations, both could likely proceed, each gaining ownership of whatever material they extract. Thus, customary international law already gives would-be asteroid miners a sound basis for their business model.
But what if a mining company captured an asteroid, changing its orbit to bring it closer to Earth and thus make return of extracted materials easier? Would the entire asteroid belong to the mining company because the asteroid, as a whole, was “extracted” from its “natural” orbit — becoming more like a single rock or an artificial satellite than a moon or a planet?
This question is too far in the future to answer. But the day that question arrives, we can all pop the champagne corks to celebrate: Mankind will have become a truly spacefaring species. We will have taken the first steps toward bringing the nearly limitless resources of space into the economic sphere of humanity

Also see ABA site on space law: http://www.americanbar.org/groups/air_space.html