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Ethics/Professional Responsibility,
California Courts of Appeal

Nov. 8, 2019

Candor to the tribunal is now mandatory in California

A new day has dawned with the California Supreme Court’s approval of new Rule 3.3, Candor Toward the Tribunal, last November. It would be wise to understand the new rules given that “business as usual” can lead to many very bad results, including a referral to the State Bar and a client claiming a reduction in fees based on a breach of ethics.

Knapton gerald web

Gerald G. Knapton

Senior Partner, Ropers Majeski Kohn & Bentley APC

Email: gerald.knapton@rmkb.com

For many years California courts have complained about hide-the-ball tactics employed by many lawyers. Until recently, the courts did not have the tools to penalize those tactics beyond "interpretations" of the California Rules of Professional Conduct and some of the American Bar Association's Model Rules -- which were not then adopted in California, but were supposed to apply where the coverage of the California rules was unclear or inadequate.

A new day has dawned with the California Supreme Court's approval of new Rule 3.3, Candor Toward the Tribunal, last November. It would be wise to understand the new rules given that "business as usual" can lead to many very bad results, including a referral to the State Bar and a client claiming a reduction in fees based on a breach of ethics.

New Rule 3.3 reads:

"(a) A lawyer shall not:

"(1) knowingly make a false statement of fact or law to a tribunal or fail to correct a false statement of material fact or law previously made to the tribunal by the lawyer;

"(2) fail to disclose to the tribunal legal authority in the controlling jurisdiction known to the lawyer to be directly adverse to the position of the client and not disclosed by opposing counsel, or knowingly misquote to a tribunal the language of a book, statute, decision or other authority; or

"(3) offer evidence that the lawyer knows to be false. If a lawyer, the lawyer's client, or a witness called by the lawyer, has offered material evidence, and the lawyer comes to know of its falsity, the lawyer shall take reasonable remedial measures, including, if necessary, disclosure to the tribunal, unless disclosure is prohibited by Business and Professions Code section 6068, subdivision (e) and rule 1.6. A lawyer may refuse to offer evidence, other than the testimony of a defendant in a criminal matter, that the lawyer reasonably believes is false.

"(b) A lawyer who represents a client in a proceeding before a tribunal and who knows that a person intends to engage, is engaging or has engaged in criminal or fraudulent conduct related to the proceeding shall take reasonable remedial measures to the extent permitted by Business and Professions Code section 6068, subdivision (e) and rule 1.6.

"(c) The duties stated in paragraphs (a) and (b) continue to the conclusion of the proceeding.

"(d) In an ex parte proceeding where notice to the opposing party in the proceeding is not required or given and the opposing party is not present, a lawyer shall inform the tribunal of all material facts known to the lawyer that will enable the tribunal to make an informed decision, whether or not the facts are adverse to the position of the client."

A recent published opinion is the first to cite new Rule 3.3. In Davis v. TWC Dealer Group, Inc., 2019 DJDAR 10187 (Cal. App. 1st Dist., Oct. 30, 2019), the defendant's motion to compel arbitrations against three former employees of an automotive dealership was denied. The appellants' opening brief characterized the many (nine) arbitration agreements as reading: "I and the Company both agree that any claim, dispute, and/or controversy that either party may have against one another ... which would otherwise require or allow resort to any court or other governmental dispute resolution forum between myself and the Company (or its owners, directors, officers, managers, employees, agents, and parties affiliated with its employee benefit and health plans) arising from, related to, or having any relationship or connection whatsoever with my seeking employment with, employment by, or other association with the Company, whether based on tort, contract statutor [sic] or euitable [sic] law or otherwise ... shall be submitted to and determined exclusively by binding arbitration... I agree that the arbitration and this Agreement shall be controlled by the Federal Arbitration Act, in conformity with the procedures of the California Arbitration Act ..."

The opinion affirmed the denial of the petition to compel arbitration, writing: "We cannot help but observe the four ellipses in TWC's quotation -- and observe further TWC's lack of candor, given how much the quotation misrepresents the Agreements here. Using Agreement No. 3 for comparison, the first and second ellipses each omit three lines, the third ellipsis seven lines, and the last ellipsis 24 lines -- 38 lines. Thirty-eight lines omitted from a 49-line paragraph, a paragraph that, as will be discussed in detail below, our Supreme Court has recently described as a 'paragon of prolixity,' whose substance is 'opaque,' and which has sentences that are 'complex, filled with statutory references, and legal jargon.' (OTO, L.L.C. v. Kho (2019) 8 Cal.5th 111, 128 (Kho).) That is what the ellipses leave out. TWC's conduct is not to be condoned.'"

Later the court wrote: "In 2018, our Supreme Court approved a comprehensive revision of the California Rules of Professional Conduct, effective November 1, 2018. The new rules replace the former rules, and implement a decimal numbering and organizational system based on the A.B.A. Model Rules of Professional Conduct. As pertinent here, this revision includes new rule 3.3, 'Candor Toward the Tribunal,' which provides in pertinent part as follows: '"A lawyer shall not [¶] ... [¶] (2) fail to disclose to the tribunal legal authority in the controlling jurisdiction known to the lawyer to be directly adverse to the position of the client and not disclosed by opposing counsel or knowingly misquote to a tribunal the language of a book, statute, decision or other authority...."'

"It is hard to imagine legal authority more 'directly adverse to the position of" TWC than Kho -- hard to imagine a more obvious violation of Rule 3.3."

But in addition to undermining credibility and losing a case or appeal, a lawyer can also be referred to the State Bar based on that conduct under California Business and Professions Code Section 6086.7:

"(a) A court shall notify the State Bar of any of the following:

"(1) A final order of contempt imposed against an attorney that may involve grounds warranting discipline under this chapter. The court entering the final order shall transmit to the State Bar a copy of the relevant minutes, final order, and transcript, if one exists.

"(2) Whenever a modification or reversal of a judgment in a judicial proceeding is based in whole or in part on the misconduct, incompetent representation, or willful misrepresentation of an attorney."

"A court 'shall notify the State Bar' whenever, inter alia, 'a modification or reversal of a judgment in a judicial proceeding is based in whole or in part on the misconduct, incompetent representation, or willful misrepresentation of an attorney.' (Bus. & Prof. Code, § 6086.7, subd. (a)(2).) We believe that the misconduct at issue here is sufficiently serious that the State Bar should be made aware of it. (See In re Aguilar (2004) 34 Cal.4th 386, 389-394 [18 Cal.Rptr.3d 874, 97 P.3d 815] [referring attorneys held in contempt for failing, without adequate justification, to appear for oral argument before California Supreme Court, and for lying to court].)" Magana v. Superior Court, 22 Cal. App. 5th 840, 864 (2018).

One more indignity is that a lawyer's fee might be reduced or eliminated by such conduct: "La Chapelle is correct in suggesting that an attorney's breach of a Rule of Professional Conduct may negate an attorney's claim for fees." Pringle v. La Chapelle, 73 Cal. App. 4th 1000, 1005 (1999).

Courts are overburdened and have always been irritated by gamesmanship and blatant misstatements that makes them incur extra work to reach the merits of a matter. Now that they have a tool to address those ploys it might be best for counsel to reconsider what and how they advocate. 

#355113

Ben Armistead

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