what i wanted to start with this morning is what's happened since briefing because a lot of time passes and the issues in this case which always get focused on are marijuana medical marijuana and now we have legal marijuana in the country in states and states versus federal law so what's happened is that there is at the time of the jury trial and even the time that all these things happened it was just a handful of states because california started in one thousand nine hundred six with the compassionate use since the trial that was in two thousand and four because this all began with the bar complaint two thousand and six since i jury trial we've gone from a handful of states to twenty three which shows that this federal state conflict is growing it's not receding and oddly in tone what last month didn't even look like there was a direction of possible resolution i i don't want to cut you short on this but we have to do you have to decide this case based upon the time framework that it exists right where we're not going to be able to take into apply anyway even as of the time so i'm not sure why you need to talk about other states and what's happened since well the reason i think it's relevant is that the whole idea of the temple amendment and states rights is that's the crucible were new things in equity because if these people have unclean hands because they hired a lawyer the fact that he cheated he led them astray he starts a corporation by forging their signatures and then you take their trust fund to be an unclean body to totality but where we don't get to present those things to court so it's really on i don't care he said i will not be bothered with the evidence that we have i think it's fairly clear that both parties have unclean hands in this case right a in this matter and the court weighed those facts on the one hand you've got a corporation and its principle earning five six million dollars a year passing on loads of cash to a lawyer was clearly corrupt and he was paid five thousand dollars a year and he took twenty five thousand dollars of the funds and he converted it so the court said well here your corporation you you are making millions off  of trafficking drugs illegal under federal law and then you've got a lawyer who's cropped up on the other hand so i think both of you have unclean hands and he weighed the various factors and weighed i is that what we're arguing is the standard and mr priest got five thousand dollars a month and he got those and checks thank you demand that the trust fund be twenty five thousand dollars cash those are very important fact to francis and as far as north bay wellness group revenue they may have generated five and a quarter million dollars in revenue because medical marijuana is almost four thousand dollars home they made no profits they actually filed nine twenty's that are in the record they actually lost money so they didn't make a why they were they were following california's rules regarding dispense freeze which the federal government just legalized last month saying that they will keep their hands off in the omnibus budget  thirteen so what's interesting is that the whole issue of marijuana has lost what the real point it was harry's involved in north in the business itself so yes so should the court has said both parties were involved in selling marijuana whether that's illegal or not understood under federal law it was illegal so they were both involved in illegally selling marijuana berries was also involved in stealing the stun is that what they're waiting should have been maybe accepting the premise that barry's wasn't involved in the drug part various put himself on the board after taking the case saying i can make you a five a one c three federal tax exempt corporation told them that they were kept records because  said the board chairman of the board keeps records he could him self on the board he told them that this was what was going on he actually didn't file anything was on retainer to the companies actually right he's on retainer and he put himself on the board to run it but the truth is he didn't follow any corporate papers till after they were open to the fords or signatures to file them he filed for profit corporation not the five a one c three he promised to but the real issue was he involved in running the company on the operation as a member of the board only as a matter of the board yes he was at but but realize he was hired the most important question that i think i missed in the briefing and we've all missed and you both hit on it is what's the threshold question what is the bad act that makes their hands unclean that they want to follow californias compassionate use act and they hired a lawyer and all this punishment is for harming the lawyer because the lawyer didn't say you can't do this i don't care what color seems like the bankruptcy court thought it was for violating federal law and but it but i guess what i'm struggling with is whether the court needed to balance the balance the unclean hands and whether barry's should have had more in the balance maybe than the court record just thought that is exactly what aside from these evidentiary rulings we have to give a lot of deference that evidentially really is but even in what you were able to put in there is evidence in the record that barry's was involved in the illegal drug trade part of this and in stealing the money right he definitely put himself in charge of day to day operations as far as a board member and directing them on every legal issue including how to set up the trust fund which was cash he did everything but what he didn't do was be a lawyer which was what they hired him they hired him  form a corporation if it was possible and to give them tax advice about whether it was task when the california state be a weak he lied about the corporation who formed their signatures and he got it wrong on the law it was a tax and that's why they had a judgment for the money that he owed because he didn't perform the service right so there's eight hundred thousand dollars tax bill for the state and what we're saying is ok if you want to say it's unthinking and they don't get to have this money from discharge my clients have never argued that what they say is a lawyer under the sixth amendment still has a duty to loyalty honesty and competency and he was none and to up hold the legal system we have to have a basis where the lawyers are held to at least a slight standard higher than the client who's following their advice i can only actually find one case and it's on appeal so i can use it for any well i mean sure some touches me agree with you some judges may not in balancing the facts in this particular case that's that's why the standard review matter so much some some judges may very well look at it and say look you've got a a lawyer who's held to a high standard who essentially ripping off his client in the in the twenty five thousand dollars and didn't do all of these other things that you'd expected to do and then on the other hand you've got somebody who set up  drug sale organization that's the at legal under state law isn't under federal law so i think the lawyers conduct is much worse so i'm not going to apply unclean hands doctrine in that instance that's your argument and i i think some judges might weigh it that way this particular judge didn't and so that the question is is is this judge's exercise of discretion so beyond the pale of reasonable justification i have a hard time with that conscience the judges reaction early in the cases i will not hear about his dishonesty i will not hear that he's still involved in other medical marijuana operations i will not hear that he hides six different corporations on assets from his position committed perjury it doesn't matter to me how much perjury he commits i'm mad at them because they hired him to work through the state's medical marijuana law i believe the real threshold issue is that the right of counsel is absolute and that no client who hires a counsel and follows their advice under the state can be held to a tougher standard than a lawyer especially when the federal government has another remedy they exercise all the time which of the court could have said he's wrong clients is wrong but this charge shouldn't be granted we only let honest doctors use bankruptcy not just on a screw up lawyers who make all motors look horrible and the system what corrupt but we're not letting the medical marijuana people have this either because under from from his clients this could never happen in reverse six can only happen from lawyers because these people to know what they were doing here is a five in one this is all california's regular law if a client goes to read this to hire a lawyer so they can ask questions they will never learn about the doctrine of unclean hands they will never even cation that's a tough one for you know you have to be in federal court for that so they trusted him absolutely that they trust him blindly actually they eventually fired him and it took them seven months to get their records back and they were incomplete and they discovered forgery and they had shut down by then because it was so bad but the real question is the integrity of the courts and the integrity of the sixth amendment is making an immunity for lawyers and fair hunting against want you know but in this soulless case that they did they just did which is so important aug eleventh of two thousand and fourteen it was a labor case where they discovered after the employer didn't pay their workers whole lot of money because they were latino but later ron there was an error in school security number and so the employer once said unclean hands i would have fired them for this there in california court says no we're not going to create a class of worker that employers have inherent advantage over because it'll never happen the other way around and what we're making here is an immunity for corrupt lawyers that harms our judicial system it harms the six the member right to counsel the absolute it we war hunting for clients that have conflicts between fed straight and that's a lot of people that's undocumented workers that's people who might be trying to get out of prostitution that's people with california driver's licenses that aren't recognized may please the court john chandler santa rosa california on behalf of  bankruptcy it's pretty unusual was someone with that degree of responsibility would be able to get a discharge on something that he stole why it why should i'm clean hands have anything to do with this there are protections within the bankruptcy code in all chapters chapter seven chapter eleven twelve thirteen except with bad faith filings the issue before  really what else are we talking about this courting recruit us say spoke about unclean hands and then i don't think i heard your answer isn't that what we're talking about what we're talking about i understand what you're getting after is the balance balance of equities right it's a balance of equity which deals with the individual conduct involved here so if you're going to balance the equities and your client has a fiduciary duty to the client and steal some money i don't the other side been charged with stealing money they've been you know they were running what at that time was an illegal operation for because of fairly federal law but your friend was doing money how discharge they got the start they got the judgment saying that the lawyer actually owed this money there was no yes you may think there was any crime but those courts didn't think that and so then now you're saying they didn't have standing to object to the bankruptcy to do is do a balancing even if we then call it a standing question i agree so we have to do a balancing of the parties conduct and as i agree as the court noted  when opposing counsel made her arguments the trial court did balance exactly and the standard before the court is abuse of discretion there is ample evidence within the record to justify how the court determined those equitable your client stole according to the lower court's findings sold twenty five thousand dollars in a question it's oh the question is whether there should be discharge ability in bankruptcy right i understand the point your honor what is the answer the answer is there is remedies within the code that if this were by resist seeking bankruptcy protection for the sole purpose of this criminal and his i guess role as a counsel for the corporation was his only activity with the company but i may be mistaken but that's my understanding he was on retainer for five thousand a year right you just that i think there you know they didn't make large sums of money in two thousand five hundred six there were some tax issues associated with that but the end of the day those sales were conducted by the establishes the this sequence of payments all that was established on the record is that it was cash payments sporadic payments and i think the jury jury obviously came to the conclusion that a total of twenty five not right the only issue before i was discharged that's correct under five twenty three and if we if we agree with you here then if there's someone in caged in insider trading who makes a lot of money from insider trading hires a lawyer with the money from insider trading and the lawyer takes a million dollars runs off with it that person through the layers of the thing gets a judgment are you saying that that person can try to stop the lawyer from getting it discharged in bankruptcy you know they want this applied to every kind of potentially illegal activity where someone hires a lawyer and don't we have to be concerned about that rule as a principle i understand your point your honor of the slippery slope potential however as i stated earlier when i came up to the podium was that there are protections within the bankruptcy bad face  each and every chapter if that were the case and the opposing party had proof of that intense there was a court found that he stole this money right i mean that's the judgment from the  thousand dollars there's no dispute about that the question is is that dischargeable in bankruptcy you keep talking about that the code is peppered with this is a nice phrase but what does it mean the code does not say if you're a dog you can get a discharged in bankruptcy you don't say that and so we're talking now is whether there is some special aspect of the bankruptcy code that going to permit your client because at doesn't make any sense at all the state bar comes down on people all the time the steel clients money i know of no case that is allowed an attorney who steals money from his client to have a  just charge and bankruptcy i mean if you got any cases that suggest that someone who steals that much money from a client can get a destructive yes i think what ultimately the court is focusing on is the balance of  plaintiffs does not deserve the equitable balancing that the opposing counsel was encouraging the court to do the again there is a nice circuit case recruit saying that if somebody runs a nail salon and they don't have a city permit and the lawyer comes in and steals all their money that lawyer can get destroyed bankruptcy because salon didn't have a cited doesn't help you with this light it's just general language but doesn't that involve these facts does it or anything like it i don't i don't believe that they're exactly in line most cases doesn't involve  hearings initiated that might impact mr barrie's license to practice law i would hope so however that is not the issue before the court today the issue before the court is five twenty three and the discharge ability of the conversion judgment from the state court young clean hands doctrine it is a football given the fact that they're involved in a schedule one with a schedule one drug under the controlled substances ac supremacy clause dictates the federal law says for bring court of the land and yeah a lot of tap i don't think anybody's arguing that that time they were violating federal law so we're well past that the question is given that that as true right while both sides both sides we respect the jury's findings however the bankruptcy code is very clear that state court judgments are just chargeable under five twenty three or i would like to agree with counsel on something when you look at the case law that the bankruptcy judge put in his memorandum they all talk about standing that there is no standing to come to the court the court did not want to look at the equities of which wrong with greater or when someone comes to the coordinates on something wrong they know to serve a remedy my argument here is that there's no way that the client exceeded the wrongs of perrie's he should have told him not to do it that would have been good counsel if he really felt these ways that he later uses for i characterized as earlier as you got that time the law said to go marijuana was illegal will put your client hard on the part of the lawyer the distinction is that the lawyer sold twenty five thousand dollars and that's what we balance is that correct i want to go back further in the big picture the distinction is not hired as counterpoint and chose to get involved in the business they had no idea that counsel shouldn't be sitting on a board without a conflicts waiver and a proper we really need to get into that but the it is the issue that they hired a lawyer and they trusted him and everything is neverless just changing all the time you don't hear all the new stuff but it it's now even legal in federal aid so i want to do a lottery pick before but i'm sure but let's talk about his duties for a moment because you did touch on that during his office this almost out of time right now please look at his answer from state court each six twenty he claims to be their partner he claims those are profits from his work he doesn't just claim to be their lawyer amazing affirmative defense is also federal unclean hands with their thank you thank you both for argument