Good Morning All! A long one today, so make some coffee or print it out for reading at your leisure.
I decided to use this post to tell my side of the story on the issue of the ethical matters that are currently pending before the Kansas Bar Association.
As Noah predicted, one of the defendants in the case I now call 'Trademark II' basically ignored everything that happened the day before in 'Trademark I' (see post #36) to fixate and gleefully comment on a companion opinion filed on the same day by Judge Waxse.
In this opinion, the judge declined to disqualify me from motions practice (filing legal papers in the case) on the grounds of American's claim of professional misconduct. However, in his duty as a judge, he did forward a copy of his opinion and the related pleadings to the ethics committee.
To summarize the ruling. On other grounds I was disqualified from conducting the trial because I would also be a witness. I had volunteered for this disqualification
and the ruling was almost word for word my profferred order. However, I am still allowed to pursue post-judgment motions.
On the claim of professional misconduct, I was not disqualified, but was admonished from using any information I received during my direct and ex parte communications with American Plastic, should the case go to trial. Half an hour later, the judge published a ruling in favor of the Ranch and closed the case (except for post-judgment motions). The claim of misconduct was also rightfully forwarded to the appropriate professionals for further review. All in all, fair and reasonable under the facts and the law. Again, I stand in awe of this judge, one of the most respected in the Kansas legal system.
Now, because defendant Koehler had gleefully filed a multi-count ethics complaint against me last year, and included a cryptic reference to this matter, which did not concern her in the least, I took the opportunity to explain myself to the investigator about the ex parte communication. The investigator has already filed his report with the head of the ethics committee, so the judge's referral is not new news. I await the committee's ruling on the complaint and will act appropriately. In the meantime, my ability to practice law is not, in any way, impaired or diminished.
In 'Trademark I', I declined, in my response, for several reasons, to elaborate on the whole affair, stating only the defense of consent. I requested a full evidentiary hearing, and the judge declined.
Again, I was not found guilty of anything by Judge Waxse. I was not disqualified based on my actions. I was properly, and gently, admonished and the matter was sent on to the ethics committee for further review.
That being said, to anyone who is interested, here is my side of the story:
In Spring of 2008, I was approached by American's lawyer about a possible settlement of Trademark I. That settlement offer included an invitation to purchase certain assets owned by American Plastic Equipment. During the back-and-forth, the offer included an invitation to physically inspect the assets.
I asked for a list of those assets and was not satisfied with the result. I told the lawyer that we would not agree to anything without better lists and an opportunity to physically inspect the assets.
I knew I was going to be in West Virginia in June 2008 for JohnnyCon. I informed the lawyer I would like to physically inspect the assets on my way back home to Kansas. I received a one-line email from the lawyer saying he had informed his client of my intent to visit the American Plastic Equipment, Inc. facility in Sebring, Ohio. I thought the matter was settled.
On the drive home from West Virginia to Kansas, I detoured north into Ohio and presented myself at the Sebring facility on Monday morning. Nothing was ready, no one was prepared, one secretary said something like, 'oh yeah, I remember hearing something about that, but didn't know what was going on . . . '
I was not amused. I had taken an extra day of traveling to make this journey. However, by stroke of luck, Jay Horowitz was in residence that day and deigned to meet with me.
Now is where it started getting and feeling weird . . .
The crux of this entire issue is that once a person or company is represented by counsel, the opposing attorney is not to have contact with the person or company so represented. The one defense is consent.
I was operating under the assumption that I had consent.
Back to our story. I met with Jay Horowitz. I absolutely told him he had the right to have his attorney present and asked him if he wanted to contact his attorney. He declined. He said some other things as well, that I will not disclose.
We discussed the assets. The conversation remained polite, but did become curt after a while. Again, all I will say. I agreed with Mr. Horowitz to keep the specifics of the negotiations confidential. That is the reason I did not post a defense in my brief. However, today, I am including some generalities.
We agreed that American would, by email, send us a detailed list of assets in possession of American and other parties. Upon an agreement on the asset list, we would offer a price.
So now, I am on the road again and back home.
I exchanged several emails and telephone calls with Mr. Horowitz. For the most part the communications were highly technical, dealing primarily with the list and condition of the assets. However, the tension escalated with each phone call.
Still with me? I was attempting to negotiate a settlement with Mr. Horowitz to end Trademark I through a purchase of assets. In this stead I was acting more as a company owner than a lawyer.
However, one of the problems was American's absolute refusal to admit or believe that we had won a judgment in our favor on all trademark related counts back in August 2007. All settlement offers included a demand that we 'buy the rights' from American. I felt like I was talking to a brick wall.
In the meantime,
1. I have American's lawyer battering me with discovery requests and demands for depositions. Those discovery requests included demands for information relating to at least one trademark count that had already been dismissed. I finally applied for, and received, a protective order stopping all discovery. I should have done it weeks earlier and saved myself a lot of tension.
2. I have the 'so-called licensees' gleefully ignoring said court decisions and aggressively marketing goods under trademarks that had been stripped from American (to this day not one defendant will admit that the court decision has any validity)
3. I have the pressure of trying to put together the asset list and a settlement offer and carry my day-to-day responsibilities.
Boys and Girls, I cracked under the strain and I lost my temper. I took the bait that was being dangled in front of me and waded right on in.
I unloaded, via more than one email, on Mr. Horowitz my overall opinion of the negotiations, his attorney, the case in general, and the licensees. Those emails were immediately forwarded by Jay to his attorney and almost instantaneously the motion to DQ me for 'ethical violations' was filed.
Those last few days of the settlement negotiations are where I made my error.
When I saw that there was no middle ground for settlement, in that American would never admit the validity of the court ruling, I should have broken off the emails and blocked any further phone calls from Jay Horowitz. That's what a cold, cool, uber-attorney would have done.
I didn't. I let my temper get the best of me.
That is my ethical violation. I exceeded the bounds of the consent to inspect the assets and had an improper ex parte communication with Jay Horowitz regarding the case and those involved in it. That was the basis for American's demand that I be completely disqualified from acting as attorney for the case.
This rule is sound. It is intended to prevent attorneys from going around a client's protective legal shield to coerce and intimidate vulnerable parties.
However, I doubt Mr. Horowitz felt either coerced or intimidated. He gave as good as he got during the technical discussions.
The microsecond that American's attorney filed his motion to DQ me, I informed Mr. Horowitz that our discussions were finished and I would not make any additional contact, nor would I could accept any contact from him. I turned the whole thing over to Noah to continue the discussions. The entire tentative deal almost immediately fell apart and all chances of settlement disappeared - if they had ever existed in the first place. So, nine months later, because of that DQ complaint, instead of a settlement, American lost the case and has had judgment entered against it on all counts.
However, I did step over the line. I fully admit it, and it will certainly not happen again. It is not the serious, egregious, horrific ethical violation that the defendants in Trademark II would like everyone to believe. If I am to be penalized in any way, I will deal with it as it comes. My business is now between myself and the bar association and no business of the defendants in Trademark II.
Rules exist for a reason and this acts as a reminder to me. That's what the canon of ethics is for. Geneations of attorneys making errors and a series of rules resulted from those errors. Don't you just hate it when authority figures are proved right again and again? Again, rules exist for a reason. No, you shouldn't run with scissors, and, no, even when it might result in a settlement beneficial to all parties, a lawyer/owner shouldn't negotiate directly with the other party. It is asking for trouble.
As for the other complaint filed by a Trademark II defendant. I thought about publishing it here on the blog. I have an absolute right to anonimity. However, the Trademark II defendant decided to reference her complaint in pleadings she has made. That gave me an absolute right to mount a public defense.
However, her complaint includes a lot of personal information about a lot of people that she took upon herself to include in the complaint. If the complaint is ever formally adjudicated in court, a LOT of very personal dirty laundry is going to be thoroughly washed and aired in public. Therefore, I will withold any statements on that case until such time as it is adjudicated.
So, in closing, I will say, there is no 'new' or additional referral to the ethics committee in the judge's opinion. It is the same issue being submitted through a different channel. Judge Waxse had an absolute duty to make the referral and I neither suprised, offended, or worried. It is all being dealt with. Meanwhile Trademark II clunks along at a micro-snail pace (more posts to come on THAT issue).
Thanks again everyone - Terri