In the Matter of Richard A. Thalheim, Jr.

853 F.2d 383, 1988 U.S. App. LEXIS 11824, 1988 WL 83632

• Court: Court of Appeals for the Fifth Circuit
• Decided: August 30, 1988
• Docket: 87-3683
• Status: Published

Opinions

PER CURIAM:

Appellant, Richard A. Thalheim, Jr., appeals an order by the United States District Court for the Eastern District of Louisiana suspending him from practicing law before it for consecutive three-month and two-year periods. Appellee is the Disciplinary Committee for the United States District Court for the Eastern District of Louisiana.

I. Facts and Prior Proceedings

Pursuant to proceedings before its Committee on Professional Responsibility commenced in 1985, the Louisiana State Bar Association found appellant guilty of neglecting to deliver a client’s funds to him promptly, commingling and converting those funds, and charging a client an excessive attorney’s fee. Louisiana State Bar Association v. Thalheim, 504 So.2d 822, 827 (La.1987). Viewing the record and weighing both mitigating and aggravating circumstances, the Louisiana Supreme Court found Mr. Thalheim’s conduct negligent rather than intentional, and imposed a three-month suspension from the practice of law in the State of Louisiana. Id. at 827-28. This period of suspension was effective from June 18, 1987, to September 18, 1987.

Subsequently, certain judges of the United States District Court for the Eastern District of Louisiana complained that appellant had engaged in possible misconduct in proceedings before them. In accordance with Rule V of the Rules of Disciplinary Enforcement of the Eastern District of Louisiana, the court appointed a panel of three attorneys to investigate and recommend whether or not disciplinary proceedings should be instituted. Appellant avers that the panel recommended that disciplinary proceedings were not warranted.¹

Notwithstanding the panel’s recommendation or lack of recommendation, a judge was assigned to conduct a disciplinary proceeding against appellant.² A two-and-a-half-hour hearing was held, during which the court considered two questions. The first was whether the federal court should impose sanctions on the basis of the Louisiana determination. The second was the charge that had earlier been made to the disciplinary panel and had been considered by it. This charge was that appellant should also be disciplined for violating Local Rule 2.5³ by failing to disclose the existence of cases related to some of those he had tried before the court, for improperly splitting the causes of action in those cases, and for misrepresenting related matters to three of the district court’s judges.⁴

Subsequently, the hearing judge issued a memorandum dated August 12, 1987, to all members of the Eastern District bench stating that he had found the allegations of misconduct true. The memorandum recommended that appellant be suspended from practice before the Eastern District for three months on the basis of his Louisiana misconduct, this suspension to run concurrently with the Louisiana suspension, and that he be suspended from practice in the Eastern District for a consecutive one-year period on the basis of his misconduct in the federal court. On August 13, 1987, pursuant to action by a majority of its members, the court suspended appellant for three months on the basis of and concurrent with the Louisiana suspension, and increased the sanction for the federal infractions over the recommended one-year suspension to two years. The August 13th order did not include any factual findings or conclusions of law.

II. Issues on Appeal and Analysis

Appellant on oral argument expressly abandoned his appeal of his three-month suspension from practice before the district court that was based upon incidents giving rise to disciplinary action by the Louisiana Supreme Court. We summarily affirm the three-month suspension.

Appellant contests his two-year suspension from practice before the Eastern District which was based on his charged violations of the court’s local Rule 2.5 and, perhaps, related infractions. Although he raises several issues on this appeal, two of them are dispositive. We find it unnecessary to consider the substantive merits of the charges against appellant.

A. Proceeding despite absence of recommendation by attorney panel

First, appellant contends that the court violated procedural due process by failing to follow its own requirements concerning proper disciplinary procedure when it instituted proceedings with respect to the alleged federal infractions despite the attorney panel’s recommendation. We must agree. It is well-settled that federal district courts are bound by their own disciplinary rules when proceeding against attorneys for violation of ethical standards. See United States v. Stoneberger, 805 F.2d 1391, 1393 (9th Cir.1986); Matter of Abrams, 521 F.2d 1094, 1104-05 (3d Cir.), cert. denied, 423 U.S. 1038, 96 S.Ct. 574, 46 L.Ed.2d 413 (1975). Rule V of the Rules of Disciplinary Enforcement of the United States District Court for the Eastern District of Louisiana, reads, in relevant part:

(B) The Court shall appoint a standing committee of 42 members of the bar of this Court from which the Chief Judge of the Court shall designate a panel of at least three members thereof to investigate, in a given case, misconduct, or allegations thereof, to which Rules 1(F) and IV relate, coming to the attention of a judge of the Court by complaint or otherwise, which, if substantiated, would warrant discipline of an attorney admitted to practice before this Court....

(C) 1. The panel shall complete its investigation with reasonable dispatch and shall make a report thereon in writing to the judge to whom the matter was allotted with a recommendation limited to whether or not a disciplinary proceeding should be instituted against the attorney who is the subject of the investigation ....

2. If the recommendation be for institution of formal disciplinary proceedings, the Court shall designate a member or members of the bar of this Court, who need not be members of the standing committee or of the investigatory panel, to initiate and prosecute proceedings as provided in Rule V(C).

3. In any case in which these rules do not require designation of counsel to initiate a disciplinary proceeding, or in which no such designation has been made, designation of counsel to prosecute such a proceeding shall be made by the Court as the necessity therefore appears.

Neither party refers us to prior decisions by this Court construing Rule V.⁵ In reviewing the interpretation and application of ethical rules or norms, we “apply the ‘clearly erroneous’ test to the findings of fact while carefully examining the District Court’s application of relevant ethical standards.” Cossette v. Country Style Donuts, Inc., 647 F.2d 526, 530 (5th Cir.1981); Brennan’s, Inc., v. Brennan’s Restaurants, Inc., 590 F.2d 168, 171 (5th Cir.1979); Woods v. Covington County Bank, 537 F.2d 804, 810 (5th Cir.1976). In the present case, there were no findings of fact, and the facts are not before us. The only matters before us are questions of law.

1. Possible authorization under Rule V(C)(3)

First, we consider whether the district court was justified in going forward with formal disciplinary proceedings, despite the lack of recommendation by the investigatory attorney panel, under authority alleged to be found in Rule V(C)(3). A thorough examination of this language in the context of the court’s Rules of Disciplinary Enforcement as a whole convinces us that Rule V(C)(3) does not provide such justification.

It is a basic principle of statutory construction that specific words within a statute may not be read in isolation from the remainder of the entire statutory scheme. Sutton v. United States, 819 F.2d 1289, 1293 (5th Cir.1987). Rule V(B) specifies the types of alleged misconduct that are to be referred to an investigative attorney panel for recommendation, namely, those described in Rules 1(F) and IV. Rule 1(F) provides for referral to an investigatory attorney panel where the court has received a certified copy of judgment of an attorney’s conviction “for a crime not constituting a ‘serious crime.’ ” Rule IV encompasses other specific types of misconduct for which attorneys may be disciplined, namely, for acts or omissions which violate: the laws of any states, territories of the United States, or the District of Columbia; the court’s rules relating to the professional conduct of lawyers; or the Code of Professional Responsibility adopted by the court.

The wording of the court’s regulatory scheme as it applies to this proceeding is in mandatory terms throughout. The word is “shall” not “may.” First, the Chief Judge is required to designate a panel of at least three attorneys from the standing committee of 42 bar members to investigate alleged misconduct of the types characterized in Rules 1(F) and IV. Rule V(B). T/'this panel recommends institution of formal disciplinary proceedings, the court must then designate counsel “to initiate and prosecute disciplinary proceedings as provided in Rule V(C).” Rule V(C)(2). Rule V(D) is crucial. It states that “[bjefore any final discipline is imposed for any misconduct to which the provisions of Rules 1(F) and IV relate, a disciplinary proceeding shall be instituted by counsel designated for such purpose ...” (Emphasis added.) Rule V(C)(3) provides that in cases where “these rules do not require designation of counsel to initiate a disciplinary proceeding ..., designation of counsel to prosecute such a proceeding shall be made by the Court as the necessity therefore [sic ] appears.” (Emphasis added.)

It follows, then, that the only cases in which the rules require designation of counsel, are those arising under Rules 1(F) and IV, which also require referral to an investigative attorney panel for recommendation. The import of Rule V(C)(3) is that in cases where the rules do not require designation of counsel to initiate a disciplinary proceeding, namely, types of cases other than those enumerated under Rules 1(F) and IV,⁶ the court may designate counsel to prosecute the proceeding if it determines that such appointment is necessary. We conclude that Rule V(C)(3) does not authorize the court to designate counsel to prosecute cases arising under Rules 1(F) and IV if the investigative attorney panel has not recommended institution of formal disciplinary proceedings pursuant to rule V(C)(l)-(2).⁷

2. Possible authorization by implication

Attorney disbarment and suspension cases are quasi-criminal in character. In re Ruffalo, 390 U.S. 544, 551, 88 S.Ct. 1222, 1226, 20 L.Ed.2d 117 (1968); Charlton v. Federal Trade Commission, 543 F.2d 903, 906 (D.C.Cir.1976); Matter of Abrams, 521 F.2d at 1108 (Adams, J., dissenting). Accordingly, the court’s disciplinary rules are to be read strictly, resolving any ambiguity in favor of the person charged. Moreover, the same principle of construction follows from the fact that it was the court that drafted these rules. The court wrote its own rules; it must abide by them. The court’s disciplinary rules here at issue make no provision for the conduct of suspension proceedings absent recommendation by the investigative attorney panel provided for under the rules. To construe the rules’ silence on this crucial matter to mean that the court may institute proceedings notwithstanding the absence of recommendation by the investigative panel would be to make a nullity of those sections of the rules that require the designation of such a panel to investigate and recommend with respect to alleged misconduct arising under Rules 1(F) and IV. As a matter of interpretation, we cannot conclude that the court created these sections of its rules to be null or illusory.

3. Authority under the court’s inherent powers

At oral argument, appellee urged that the court’s disciplinary proceeding against appellant could be justified as an exercise of its inherent powers. Appellee did not advance that claim in its brief. See Federal Rules of Appellate Procedure, Rule 28(b), which states “The brief of the appellee shall conform to the requirements of [Rule 28] subdivision (a)(l)-(4), except that a statement of the issues or of the case [see (a)(2)-(3) ] need not be made unless the appellee is dissatisfied with the statement of the appellant.” See also Travelers Indemnity Co. v. Atlantic Express Line, 837 F.2d 187 (5th Cir.1988); Matter of Texas Mortgage Services Corp., 761 F.2d 1068, 1073-74 (5th Cir.1985). We need not decide here whether appellees’ inherent powers claim was waived or untimely. We point out, however, that a district court’s inherent power to discipline attorneys who practice before it does not absolve the court from the obligation to follow its own rules which it has created in order to implement its exercise of such power. Stoneberger, 805 F.2d at 1392-93; Abrams, 521 F.2d at 1103-05.

We find that Rule V clearly provides that formal disciplinary proceedings are to be instituted i/the attorney panel investigating the complaint so recommends. The clear implication under the requisite strict construction is that absent such recommendation, formal disciplinary proceedings are not to be pursued. There is no evidence in the record that the panel investigating appellant’s conduct recommended institution of disciplinary proceedings. Nevertheless, appellant was subjected to formal proceedings which culminated in the court’s order suspending him for a two-year period. We find as a matter of law that the court failed to follow its own rules.

B. Suspension despite absence of finding that appellant is morally unfit to practice law

Even if the district court had followed its own rules in instituting proceedings against appellant, we would be unable to affirm its order suspending him from practice for two years. Rule IV(B) of the Eastern District’s Disciplinary Rules provides explicitly: “[Discipline by way of suspension or disbarment shall not be imposed unless any such violation be of sufficient gravity as to evidence a lack of moral fitness for the practice of law.”

Appellant emphasizes that there was no proof that he was not morally fit to continue to practice law, that the court made no finding on this point, and that, accordingly, there was “no basis under the local rules to impose a suspension.” We note that appellee’s brief does not respond to this contention. Appellee addressed it at oral argument only in replying to questioning by the Court. The Eastern District’s disciplinary rules do not explicitly require a stated finding that the charged attorney’s misconduct evidenced “a lack of moral fitness for the practice of law.” ⁸ But under the proper requirement of strict construction and the obviously extremely serious nature of such a finding, articulation of the requisite finding cannot be casually ignored by the district court. Further, such a finding is required in order to create an adequate record for appellate review. It is impossible to review the action of the district court without such a finding and clear convincing evidence in the record to support it.⁹

The privilege of practicing law 'is not “a matter of grace and favor” ’ [Willner v. Committee on Character and Fitness, 373 U.S. 96, 102; 83 S.Ct. 1175, 1179-80, 10 L.Ed.2d 224 (1963)]; on the contrary ... ‘an attorney’s license to practice [is] a “right” which cannot lightly or capriciously be taken from him.’ ... [T]he power to withdraw that right ‘ought always to be exercised with great caution; and ought never to be exercised except in clear cases of misconduct, which affect the standing and character of the party as an attorney.’ [Ex parte Wall, 107 U.S. 265, 288, 2 S.Ct. 569, 589, 27 L.Ed. 552 (1883).] ...

Not surprisingly, then, it has become well settled that the charging party has the burden of proving that the charged attorney is no longer worthy of his office.

Charlton v. Federal Trade Commission, 543 F.2d at 906.

Apart from the fact that the court’s own rules require that it find a “lack of moral fitness for the practice of law” before imposition of suspension, the United States Supreme Court has held that a specific finding that an attorney’s conduct constituted bad faith must precede any sanction imposed under a district court’s inherent powers. Roadway Express, Inc. v. Piper, 447 U.S. 752, 100 S.Ct. 2455, 2465, 65 L.Ed. 2d 488 (1980). See also Stoneberger, 805 F.2d at 1393. There was no such finding here. At a minimum, we would have to remand to the district court for appropriate findings before we could consider affirming the two-year suspension.

Our review of the cases where courts have held that an attorney was not morally fit to practice law appears to show a requirement of more egregious misconduct on the part of the attorneys in question than is found in the scanty record here.¹⁰

Courts have found that attorneys or bar applicants were not morally fit to practice law if such persons: used force or violence in attempting to overthrow the state or national government, or advocated such action, Schware v. Board of Bar Examiners of the State of New Mexico, 353 U.S. 232, 242, 245-46, 77 S.Ct. 752, 758, 760, 1 L.Ed. 2d 796 (1957); engaged in forgery and practiced law without a license, or submitted false affidavits to a bar admissions committee, Konigsberg v. State Bar of California, 353 U.S. 252, 263, 77 S.Ct. 722, 728, 1 L.Ed.2d 810, (1957); “authored pleadings stating contentions which are outrageous, untrue, and unfounded, the effect of which can only erode the confidence of the public and the parties in the judicial system,” engaged in a trial method that “invariably involves an attack upon the prosecution and the court rather than a sincere representation of his client,” and “repeatedly and purposefully failed to follow instructions given from the bench which relate to the proper conduct of a trial during the evidence and argument phases,” United States v. Gorman, 661 F.Supp. 1087, 1088 (D.Minn.1987); attempted to induce a witness to testify falsely under oath in a judicial proceeding, United States v. Friedland, 502 F.Supp. 611, 619 (D.N.J.1980) aff'd 672 F.2d 905 (3d Cir.1981); or obtained money under false pretenses and solicited another to commit the crime of bribery, Matter of Caruso, 414 F.Supp. 43, 44 (D.N.J.1976).

Because we reverse the district court’s imposition of a two-year suspension on other grounds, we need not finally determine whether the court could have made a finding, on this record, that appellant’s misconduct reached such a level as to evidence lack of moral fitness for the practice of law. We do hold that Rule IV(B) requires that such a specific finding be made on the record before discipline by way of suspension or disbarment can be imposed. It was not made here.

III. Conclusions

When a court undertakes to sanction an attorney for violating court rules, it is incumbent upon the sanctioning court to observe scrupulously its own rules of disciplinary procedure. If the rules are inadequate, the court can proceed to amend them. But unless and until such amendment occurs, attorneys have the right to rely upon the rules. A court cannot ignore and circumvent its rules at will to the detriment of those covered by them. We make no finding as to the merits of the district court’s order. We find the two-year suspension proeedurally invalid on either of the two grounds stated in part II of this opinion.

We affirm the district court’s order imposing upon appellant a three-month suspension from practicing law before it between June 18, 1987 and September 18, 1987. We reverse the district court’s order imposing an additional two-year suspension.

AFFIRMED IN PART and REVERSED IN PART.

1 . Appellant states that he has not seen the panel’s report but was advised of its contents by panel members. Appellee states that "[t]he panel's findings and recommendations are not of record.”

2 . At the hearing, in response to appellant’s objection to the proceeding going forward absent the panel’s recommending disciplinary action, the hearing judge stated ”[T]he judges who seek this hearing have the right to have it proceed notwithstanding any specific recommendation by others." For purposes of this appeal, it is unnecessary to determine whether the panel recommended against disciplinary action or submitted no recommendation.

3 . The applicable rule, Rule 2.5, was then captioned, “Collateral Proceedings and Refiled Cases.” Its first sentence read:

“Whenever a civil matter commenced in or removed to the Court involves a cause of action or happening that either comprises all or a material part of the subject matter of another action (whether civil or criminal) then pending before this or another court or an administrative agency, or previously dismissed by this Court, or that is closely related to another such action either pending or previously dismissed, counsel shall append on a separate sheet of paper, to the front of the complaint, a list and description of all such actions then known to counsel and a brief resume of the relationship.

Rule 2.5 was amended, effective July 1, 1987 and recaptioned, “Related Proceedings and Refiled Cases.” The amended version added a statement of legislative intent. The first sentence was amended as follows:

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We do not address appellant’s due process vagueness allegation, but we observe that both the title and the substantive language of the 1987 revision provide clearer notice of the rule’s purpose and requirements than did the version under which appellant was charged.

4 . Neither party refers to any rules or decisional law specifying that splitting causes of action or misrepresenting related matters constitutes misconduct. It is unclear whether the court deemed these alleged actions further violations of Local Rule 2.5 or separate offenses grounded in other, unspecified, rules or standards.

5 . Our own research has located only one case involving Rule V, Dison v. Morrison, No. 87-1127, (E.D. La., Mar. 23, 1988) [available on WESTLAW, 1988 WL 28302] (referring a case of possible misconduct to an attorney panel for investigation pursuant to Rule V).

6 . The other cases referred to in Rule V(C)(3) encompass instances where an attorney admitted to practice before the Eastern District has been subjected to discipline by some other court (Rule II), or has been disbarred on consent or resignation from the bar of another court (Rule III).

7 . It is well established that a statute should be construed so that each of its provisions is given its full effect. Interpretations that render parts of a statute inoperative or superfluous are to be avoided. Quarles v. St. Clair, 711 F.2d 691, 701 n. 32 (5th Cir.1983).

8 . At oral argument, in response to questioning, appellee advanced the contention that such a finding is implicit in the court’s ruling, i.e., in the fact that it imposed sanctions. The critical question, however, is whether the court made the requisite finding. We are not prepared simply to assume that it did so.

9 . In attorney suspension and disbarment cases, the charges must be sustained by clear and convincing proof. In re Fisher, 179 F.2d 361, 369 (7th Cir.), cert. denied sub nom. Kerner v. Fisher, 340 U.S. 825, 71 S.Ct. 59, 95 L.Ed. 606 (1950); In re Ryder, 263 F.Supp. 360, 361 (E.D. Va.), aff'd 381 F.2d 713 (4th Cir.1967) (adopting the district court’s opinion).

10 . The brief on behalf of the district court makes no attempt to rely upon the evidence involved in the state disciplinary proceeding to justify the federal two-year sanctions.

Neither party refers us to any cases in which an attorney has been disciplined for failure to observe the requirements of the Eastern District’s local rule 2.5. Our own research has turned up just one case involving this rule, Oliney v. Gardiner, 771 F.2d 856 (5th Cir.1985). Here appellant “kept the filing of the second suit hidden from the court and opposing counsel,” and "deliberately attempted to circumvent” Rule 2.5 "by filing, and failing to inform the court or opposing counsel of a second identical suit while the first suit was still pending.” Id. at 859. In Oliney, the district court dismissed the second suit, and we affirmed the dismissal. There are no reported cases in which an attorney has been suspended or otherwise disciplined for violation of Rule 2.5. Local Rule 2.5 itself provides only that if counsel fails to make the called-for certification, the cases in question are to be consolidated by transfer, if the judges involved so determine.