Opinion ID: 834852
Heading Depth: 2
Heading Rank: 1

Heading: Alleged Misrepresentations: RPC 8.4(a)(3) and Former DR 1-1 02(A)(3)

Text: We begin with the accused's appeal of the violations that the trial panel found. First, the trial panel found that the accused violated RPC 8.4(a)(3) and former DR 1-102(A)(3) by misrepresenting the terms of the settlement agreement when he asserted that the agreement was confidential. The trial panel found that the accused repeatedly asserted in court proceedings and to other parties that the confidentiality provision in the settlement agreement prohibited him from disclosing its terms. The trial panel determined, however, that [by] its express and unambiguous terms, the settlement agreement signed by the [a]ccused and the Chicago Title [d]efendants imposed upon the [a]ccused no obligation to maintain as secret the settlement amounts paid. In the trial panel's legal analysis, the confidentiality provision was not binding on the accused. It therefore concluded that the accused made knowing and material misrepresentations regarding the settlement agreement. RPC 8.4(a)(3) and former DR 1-102(A)(3) prohibit an attorney from making misrepresentations to the court or to other parties that are knowing, false, and material. See In re Eadie, 333 Or. 42, 53, 36 P.3d 468 (2001) (so stating for DR 1-102(A)(3)). To establish a violation of either rule, the Bar must prove, by clear and convincing evidence, that the accused's statements to the court and parties regarding confidentiality were false, that the accused knew those statements to be false, and that the statements were materialthat is, that they would or could significantly influence the hearer's decision-making process. Id.; see also In re Huffman, 331 Or. 209, 218, 13 P.3d 994 (2000) (material facts are those that, had they been known by the court or other decision-maker, would or could have influenced the decision-making process significantly (quoting In re Gustafson, 327 Or. 636, 648-49, 968 P.2d 367 (1998))). Accordingly, for the accused to be found to have violated the charged rules, the evidence must prove not only that the settlement agreement did not legally bind the accused to maintain the confidentiality of the agreement and its terms, but also that the accused could not reasonably have believed that the agreement imposed such a duty and that his statements would or could have affected the decisions of the parties or the court. The alleged misrepresentations include the accused's statements that neither side can divulge any information and that the agreement has a confidentiality provision in it that simply says it's not to be disclosed. As noted, the trial panel reached the legal conclusion that the settlement agreement did not prevent the accused from disclosing its terms. From that proposition, it concluded that the accused's statements were false and misleading. We disagree. We again quote paragraph 3.4 of the settlement agreement: Except as required to comply with applicable laws and regulations regarding public access and disclosure, [Chicago Title] Defendants will not affirmatively disseminate the terms of this Settlement Agreement including, but not limited to, the amount of the settlement, whether such settlement was favorable or unfavorable or any other communication about the settlement. In the event Defendants believe a law or regulation exists requiring public access or disclosure, Plaintiff [the accused] shall first be notified. If Plaintiff objects, the parties shall seek an in-camera adjudication of that issue. Paragraph 3.4 does not, by its terms, impose any obligation on the accused to keep the settlement agreement confidential; the explicit obligations run to the Chicago Title defendants. [9] Nevertheless, the accused asserts that he reasonably believed that he was bound to keep the agreement confidential in light of its text and context. For textual support, the accused points to the title of the settlementConfidential Settlement Agreement and Releasewhich, in his view, indicates that the entire agreement was confidential, even if paragraph 3.4 placed an explicit obligation only on the Chicago Title defendants. For support outside of the terms of the agreement, the accused points to communications between the parties early in the negotiations, in which both parties agreed that the agreement should be confidential. The accused also argues that Rudd, attorney for the Chicago Title defendants, made multiple assertions to the accused and to opposing parties that the terms of the agreement were confidential and that the confidentiality provision was binding on both parties. Indeed, Rudd repeatedly stated, in letters and court filings, that the settlement agreement includes a provision that the terms of the settlement agreement shall remain confidential. Finally, the accused relies on expert testimony from Eggum. Before the trial panel, Eggum opined that the agreement could be interpreted as binding both parties to silence based on the relationship between the parties and the accused's clear intent to keep the agreement secret, regardless of the fact that paragraph 3.4 allocated greater authority to the accused than to the Chicago Title defendants to control the release of information. Eggum testifiedand the Bar's expert, Hamlin, agreedthat confidentiality provisions in settlement agreements and other documents ordinarily bind both parties, even though one party may have a greater interest in preserving confidentiality than the other. Indeed, Hamlin could not recall a confidentiality provision in any settlement agreement that was not mutually binding. The Bar counters that the confidentiality provision was included at the accused's insistence and that the Chicago Title defendants' consent to include the provision in the settlement agreement does not prove that the agreement was binding on both parties. Similarly, the Bar argues that Rudd was correct in asserting to the court and other parties that the agreement was confidential as to her clients because, as indicated by paragraph 3.4, the Chicago Title defendants could not disclose the agreement or its terms without the accused's consent. In the Bar's view, then, Rudd's statements show only her understanding that her clientsand not necessarily the accusedwere bound to maintain the confidentiality of the terms of the settlement agreement. On de novo review, we conclude that the Bar did not prove by clear and convincing evidence that the accused made a knowing misrepresentation to the court or the opposing parties when he asserted that he could not disclose the terms of the settlement agreement because those terms were confidential. Viewing the accused's statements as factual representations regarding the settlement agreement, we find that the title and terms of the settlement agreement, the factual context of the negotiations that led to that agreement, Rudd's understanding of the mutuality of the confidentiality provision, and the expert testimony about confidentiality provisions in settlement agreements provide, at a minimum, some basis for the accused's factual assertion that the terms of the agreement were confidential. If we instead view the accused's statements as asserting a legal proposition that the settlement agreement imposed a duty of confidentiality on him, rather than as statements of fact, we reach the same conclusion. An attorney cannot be disciplined for making a misrepresentation in litigation if the relevant statement reflects a plausible legal theory. See In re Claussen, 331 Or. 252, 267-68, 14 P.3d 586 (2000) (attorney did not violate former DR 1-102(A)(3) when his legal research gave him some basis for making the representation). Because the accused's statements regarding the confidentiality of the agreement were plausible both legally and factually, the accused did not make a knowing misrepresentation in violation of RPC 8.4(a)(3) and former DR 1-102(A)(3). We need not decide whether the agreement, properly interpreted, actually required the accused to keep its terms confidential. It is sufficient that the accused presented a plausible legal argument in support of his position that the settlement agreement required him to keep the agreement confidential. The Bar's charge fails for an additional reason. Assuming, arguendo, that the accused's statements were knowingly false, there is no evidence in the record that those statements had or could have had any effect on any decision by the court or any party. The accused, while asserting to Judge Boutin that the confidentiality provision was binding on him, nevertheless proposed that Judge Boutin review the settlement agreement in camera. Judge Boutin declined to review the agreement, because he concluded that it was not relevant. In those circumstances, it is difficult to understand how the accused's alleged misrepresentations could have had any effect on Judge Boutin's decision making. Similarly, nothing in the record suggests that any of the attorneys to whom the accused made the statements was affected by them in any way. Rudd, of course, knew the actual terms of the settlement agreement. The other attorneys sought disclosure of the settlement agreement and related documents without regard to whether the accused's statements about the confidentiality provision were true or not. Nothing in the record indicates that the statements would or could have had any effect on any person's decision-making process. The statements were not material for the purposes of RPC 8.4(a)(3) and former DR 1-102(A)(3).