In re Gatti

• Citation: 356 Or. 32,333 P.3d 994
• Decision Date: 21 August 2014
• Docket Number: (OSB No. 1060,SC S061105).
• Parties: In re Complaint as to the CONDUCT OF Daniel J. GATTI, Accused.
• Court: Supreme Court of Oregon

356 Or. 32

333 P.3d 994

In re Complaint as to the CONDUCT OF Daniel J. GATTI, Accused.

(OSB No. 1060; SC S061105).

Supreme Court of Oregon.

Argued and Submitted Nov. 8, 2013.

Decided Aug. 21, 2014.

On review of the decision of the trial panel of the Disciplinary Board.^*

Mark J. Fucile, Fucile & Reising LLP, Portland, argued the cause and filed the briefs for the accused.

Mary A. Cooper, Assistant Disciplinary Counsel, Tigard, argued the cause and filed the brief for the Oregon State Bar.

Peter R. Jarvis, Portland, filed a brief for amicus curiae Peter R. Jarvis.

Before BALMER, Chief Justice, and WALTERS, LANDAU, BREWER, and BALDWIN, Justices.^**

PER CURIAM.

In this lawyer disciplinary proceeding, the Oregon State Bar (Bar) charged Daniel J. Gatti (the accused) with violating the Rules of Professional Conduct (RPC). The Bar's charges were set out in five causes of complaint, all of which arose as a result of settlements that the accused had brokered for a group of clients—all sexual abuse victims—in civil actions brought against the Portland Archdiocese, the State of Oregon, and Father Michael Sprauer.

In January 2013, a disciplinary trial panel determined that the Bar had proved three of the five causes of complaint and that, in engaging in that conduct, the accused had violated four ethical rules—RPC 1.4(b) (failing to explain matters to the extent reasonablynecessary to allow clients to make informed decisions), RPC 1.7(a)(1) (failing to secure clients' informed consent before engaging in representation that constituted a current conflict of interest), RPC 1.8(g) (failing to secure clients' informed consent before participating in aggregate settlement of their claims), and RPC 8.4(a)(3) (engaging in conduct involving dishonesty, fraud, deceit, or misrepresentation that reflected adversely on fitness to practice law). The trial panel did not address the remaining two causes of complaint, but concluded that the accused should be suspended from the active practice of law for six months.

The accused now seeks review of that decision. We review the trial panel determinations de novo.ORS 9.536(2); BR 10.6. For the reasons that follow, we conclude that (1) the Bar met its burden of proof with respect to the three causes of complaint addressed by the trial panel and that the accused violated three of the four rules of professional conduct set out above—RPC 1.4(b), RPC 1.7(a)(1), and RPC 1.8(g); (2) the Bar did not prove that the accused violated RPC 8.4(a)(3); and (3) the accused should be suspended from the practice of law for 90 days.

FACTS

The following facts are undisputed. During the period roughly spanning 2001 through 2007, the accused represented 15 clients (the Sprauer plaintiffs) in joint actions brought against the Portland Archdiocese and the State of Oregon for the actions of Father Michael Sprauer.¹ All of the Sprauer plaintiffs—among them, Earl New, the complainant in this disciplinary matter—had several things in common: At various times, all had been incarcerated at the MacLaren Home for Boys, a facility for juvenile offenders, and all alleged that, while there, they had been sexually molested by Sprauer, the facility's chaplain.

At the outset of the Sprauer litigation, the accused sent each of the 15 plaintiffs a letter setting out the pros and cons of joint representation and advising them to obtain independent legal advice about whether to have the accused represent them jointly. The accused also provided the plaintiffs with a Joint Representation and Prosecution Agreement (JRA), which they all signed. Among other things, the agreement set out the terms under which the accused would pursue settlement of his clients' claims and addressed his clients' rights and responsibilities in the event that the opposing parties proposed an “aggregate or joint fund” settlement. Specifically, the agreement provided:

“5.2. Client and Attorneys agree that it is generally desirable to conduct settlement negotiations on an individual client basis and will endeavor to do so, with each client's case negotiated separately, based on its own strengths and weaknesses, and not linked to the settlement of any other client's case. No client may interfere with any other client's right to settle. However, client recognizes that it is possible that an aggregate settlement might be in plaintiff's interest, with a single lump sum fund to be shared by all clients, or a joint-fund settlement, with a lump sum to be shared by two or more clients. * * *

“5.3. In the event of an aggregate or joint-fund settlement, the participating clients may decide among themselves as to how the fund shall be allocated. An allocation may not be imposed on any client, except by Arbitration under Section 6 of this Agreement. Attorneys shall have no role whatsoever in the allocation decision, and shall not represent any client in that process. Client may, however, be represented by other counsel. If the participating clients cannot decide upon an allocation, the allocation decision shall be submitted to final and binding arbitration as provided in Section 6 of this Agreement.”

In July 2004, the Sprauer plaintiffs' litigation was halted while the Archdiocese filed for bankruptcy protection. In 2005, at the bankruptcy court's direction, the Sprauer plaintiffs and the Archdiocese began a series of mediation meetings. In anticipation of those meetings, the accused sent his clients a letter addressing the conflict that would arise if the Archdiocese assets were less than the total value of the Sprauer plaintiffs' claims:

“The Oregon attorney ethics rules are clear that when the defendant's assets exceed the total value of all claims, there is no conflict of interest. The rules are also clear that when the defendant's assets are known to be less than the total value of all claims, there is a conflict of interest. This conflict allows a lawyer or firm to represent multiple clients on common issues but prevents the lawyer or firm from representing individual clients [ vis-à-vis ] each other in deciding the relative allocation of dollars to be received by each client.”

The accused also sent the plaintiffs a second letter setting out the advantages and disadvantages of joint representation and a second JRA containing provisions similar to the first. The second JRA again provided that “an aggregate settlement might be in plaintiff's interest, with a single lump sum to be shared by all clients,” and that the accused would “have no role whatsoever in the allocation decision.” The Sprauer plaintiffs also signed the second JRA.

The parties' first mediation meeting took place in September 2005, at which time the Archdiocese offered each of the Sprauer plaintiffs $7,500 to settle their claims. Plaintiff New was willing to accept that offer. Then, as now, New was serving a 27–year sentence based on his 1994 convictions for burglary, kidnapping, sodomy, and menacing. Acknowledging in a letter to the accused that “I'm your hardest case because a jury would not be sympathetic to me because of my charges,” New indicated that he “would like to accept the offer of $7,500 and let you take the winning cases to trial.” Initially, the accused did not act as New had requested and refused to settle any of the plaintiffs' claims for the sum offered. Later, however, the accused attempted to accept the Archdiocese's $7,500 offer on New's behalf; the Archdiocese rejected that attempt as untimely.

A second mediation meeting was scheduled for the fall of 2006. In preparation for that meeting, the accused obtained individual minimum settlement offers from each of his clients. The total of those individual minimum settlement offers was $284,500.

At the mediation, the accused told the two judges who served as mediators that the plaintiffs would settle their cases for $284,500. Instead of relaying that offer to the Archdiocese, however, mediator Judge Hogan told the Archdiocese that it must pay $600,000 to settle the plaintiffs' claims. The Archdiocese agreed and Judge Hogan so informed the accused. Neither the Archdiocese nor its attorney had any role in allocating the $600,000 between the plaintiffs. After the mediation concluded, the attorney for the Archdiocese sent the accused a letter in which she listed the plaintiffs and their respective claim numbers and confirmed “that you have settled all of the above-referenced cases with the Archdiocese for the total sum of $600,000.” The accused's office then informed the attorney for the Archdiocese of “plaintiffs' understanding” concerning the “settlement breakdowns” and supplied her with a list of the sums that each plaintiff should receive in settlement of his claims. In accordance with those “settlement breakdowns,” the Archdiocese sent the accused individual settlement agreements and checks. Each plaintiff signed his own settlement agreement and each settlement was separately approved by the bankruptcy court. The individual settlement agreements did not make the agreement of any one plaintiff contingent on the agreement of any other plaintiff.

When later questioned by the Bar about how he had determined the “settlement breakdowns,” the accused explained that, in addition to obtaining minimum settlement authority from each of his clients, he also had obtained their advance consent to disburse any sum that exceeded the total of their minimum settlement offers proportionately. The accused explained that the plaintiffs had agreed that a plaintiff whose minimum settlement offer represented, for example, five percent of the total of the individual minimum settlement offers would receive five percent of any offer exceeding that total.

However, the accused explained, his agreement with New was different. According to the accused, New had agreed to settle his claim for a maximum of $7,500—an amount that would remain unchanged, even if the Archdiocese offered to settle for more than the total of the plaintiffs' minimum settlement...