Court Opinion

ID: 9478000
Source: CourtListenerOpinion
Date Created: 2023-08-05 06:36:41.820246+00
Date Added: 2024-06-11T17:46:09.795284
License: Public Domain

JERRY E. SMITH, Circuit Judge,
concurring in part and dissenting in part:
The panel majority, with the best of intentions, and with admirable attention to *391the requirements of due process and fairness in attorney disciplinary proceedings, has misread the local rules of the Eastern District of Louisiana. I concur in the conclusion that remand is needed for a hearing on Thalheim’s moral fitness to practice law. As to the two-year suspension, however, I would hold that the local rules do permit prosecution of disciplinary proceedings even after an investigating panel has recommended against imposition of discipline.
I.
The majority is certainly correct that federal courts must abide by their own disciplinary rules when charging attorneys with ethical or rules violations. My reading of the local rules at issue indicates that the judges who wrote those rules have indeed abided by them. Moreover, we must abide, on appeal, by a rule of our own — the maxim that “[cjourts have broad discretion in interpreting and applying their own local rules adopted to promote efficiency in the court.” Matter of Adams, 734 F.2d 1094, 1102 (5th Cir.1984) (citing Martinez v. Thrifty Drug & Discount Co., 593 F.2d 992 (10th Cir.1979)).
Although Matter of Adams addresses a bankruptcy rule, it is broadly applicable to all local court rules. Adams construes 28 U.S.C. § 2071, which authorizes courts to adopt local rules generally, not only bankruptcy rules. Citing Lance, Inc. v. Dewco Services, Inc., 422 F.2d 778, 783 (9th Cir.1970), we noted in Adams that “[wjhen the tribunal which has promulgated a rule has interpreted and applied the rule which it has written, it is hardly for an outside person to say that the author of the rule has misinterpreted it.... Accordingly, considerable deference is accorded to the district court’s interpretation and application of its own rule” (citing Smith v. Ford Motor Co., 626 F.2d 784, 796 (10th Cir.1980), cert. denied, 450 U.S. 918, 101 S.Ct. 1363, 67 L.Ed.2d 344 (1981)).
The panel majority, to the contrary, does not appear to acknowledge any rule of deference to the district judges who wrote the rule. In its discussion of the appropriate standard of review, the court rejects a clearly erroneous standard and, in stating that “[tjhe only matters before us are questions of law,” appears to adopt here a de novo standard. Adams, however, instructs us that “[w]e may reverse only where we are convinced that the district court has misconstrued its own rules.” 734 F.2d at 1102. Hence, the majority opinion appears to have overlooked the principle, consistent with Adams, that “we normally defer to a district court’s construction of its own rules.... ” John v. Louisiana Board of Trustees, 757 F.2d 698, 707 (5th Cir.1985).
II.
A fair reading of the local rules of the United States District Court for the Eastern District of Louisiana is that the district judges abided by the rules in suspending Mr. Thalheim, except for the failure to make a specific finding of moral unfitness to practice law. At the very least, even if an alternative reading is possible, we are bound by the Adams and John decisions to defer to the interpretation, by the district judges, of the rules which they wrote.
As the majority suggests, the validity of the district judges’ action hinges on the meaning and interpretation of Local Rule V(C)(3). Specifically, the question is whether that rule permits prosecution of a disciplinary action where the panel contemplated by Rule V(B) issues a Rule V(C)(1) report that does not recommend institution of disciplinary proceedings. My reading of the rules is that at the option of the district court, the disciplinary action, in such an instance, still may go forward.
The structure of the rules in this regard is logical and straightforward. Rule V is entitled "Disciplinary Proceedings.” Rule V(A) provides generally that disciplinary matters are under the control of the chief judge and subject to final action by a majority of the active judges. Rule Y(B) calls for the appointment of a standing committee of attorneys from which panels are chosen to investigate the violations described in Rules 1(F) and IV.
Rule V(C) then determines the procedure for utilizing the panels established by Rule *392V(B). In shorthand form, Rule V(C) establishes the following scenarios:
Rule V(C)(1): The panel investigates and makes its recommendation.
Rule V(C)(2): If the panel recommends the institution of formal disciplinary proceedings, the district court shall designate an attorney to initiate and prosecute disciplinary proceedings.
Rule V(C)(8): Even if Rule V(C)(2) does not require prosecution (i.e., because the panel did not recommend in favor of discipline), the court may still designate an attorney to prosecute.
This reading of the rules is logical, consistent, and complete: Under Rule V(C)(2), the court must proceed with disciplinary proceedings if the panel so recommends. Under Rule V(C)(3), even if the panel does not so recommend (or no panel has been appointed), the court still has the option to proceed.
The majority has proffered a completely contrary interpretation of the purpose of Rule V(C)(3): that it is triggered not when the attorney panel fails to recommend discipline for infractions encompassed by Rules 1(F) and IV, but only when discipline is needed for infractions other than those enunciated in Rules 1(F) and IV. Even if no deference were due the district judges in adopting one interpretation over another, the majority’s interpretation could not stand because it (inadvertently) confuses two distinct procedures: (i) appointing, according to the terms of Rule V(B), an investigatory panel; and (ii) designating, under Rule V(C), an attorney to “initiate and prosecute” disciplinary action once such investigation, if any, has been completed.
Properly read, Rule V(B) deals with investigation (not prosecution) and divides alleged ethical violations into two camps: (a) transgressions of Rules 1(F) and IV, and (b) all other unethical conduct. Under Rule V(B)’s terms, the district court will only rarely fail to appoint an investigative panel when it suspects an attorney has violated either Rule 1(F) or Rule IV.1 And since Rule V(B) silently fails to forbid the court from designating similar panels to investigate other attorney misconduct, it implicitly allows the court to follow such a procedure in regard to those violations, as well.
Rule V(C), on the other hand, describes procedures to prosecute, rather than investigate, alleged ethical transgressions. Parts (1) and (2) of Rule V(C) assume that a panel has been appointed to investigate the alleged misconduct, and Part (2) assumes that the panel has recommended prosecution. Together, these parts require the district court to designate an attorney to prosecute alleged disciplinary proceedings when an investigatory panel has so recommended. Part (3) covers “any case in which these rules do not require designation of counsel to initiate a disciplinary proceeding ...” (emphasis added).
Despite the evident distinction between the scopes and functions of Rules V(B) and V(C), the majority erroneously reads the language of V(B) into V(C):
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 [footnote omitted], the court may designate counsel to prosecute the proceeding if it determines that such appointment is necessary. [Majority’s emphasis.]
The majority’s error is in assuming that Rule V(C)(3) applies only when no panel exists because the infractions stem from rules other than Rule 1(F) or Rule IV. In reality, though, Rule V(C)(3) by its very terms applies when no panel exists or when *393an extant panel has recommended against prosecution. Again, the critical distinction (and confusion) is between (i) referral to a panel, which then investigates, and (ii) designation of an attorney to initiate and prosecute a disciplinary action once an investigation has been completed.2 The rules are designed to treat Rules 1(F) and IV differently from the other rules at the investigation stage; the majority, however, treats them differently at the prosecution stage, and does so by misusing Rule V(C)(3). This is the majority’s fundamental error.3
I return, then, to the pivotal question: What does Rule V(C)(3) mean when it refers to “any case in which these rules do not require designation of counsel to initiate a disciplinary proceeding”? As I have shown, that phrase cannot mean, as the majority concludes, types of cases other than those encompassed by Rules 1(F) and IV, since Rule V(B) — which is the rule cited by the majority as setting Rules 1(F) and IV apart for separate treatment — deals with designation of a panel to investigate and has absolutely nothing to do with Rule V(C)(3)’s scope, which is designation of counsel to initiate (i.e., prosecute) a disciplinary action.
So Rule V(C)(3) cannot have the meaning which the majority ascribes to it. Yet it must have some purpose and meaning. In construing the rule we are bound by the principle, which the majority acknowledges, “that a statute should be construed so that each of its provisions is given its full effect” and that “[ijnterpretations that render parts of a statute inoperative or superfluous are to be avoided.”
The interpretation of Rule V(C)(3) which I have set forth above, and which permits a disciplinary action to proceed even in the face of a contrary recommendation by the investigating panel, meets these standards and makes perfectly good sense. It is also the only interpretation that is consistent with the placement, or location, of Rule V(C)(3) within the local rules. If, arguen-do, Rule V(C)(3) were intended to refer to the distinction between Rule 1(F) and IV infractions, on the one hand, and other infractions, on the other hand, it logically would have been inserted immediately after, or would have been made a part of, Rule V(B); making it a subpart of Rule V(C) would have made absolutely no sense.
Rule V(C)(3) does make sense only if given the meaning which I have explained above and only if placed (as indeed the district judges placed it) as a subpart of *394Rule V(C). The trilogy of Rule V(C), then, is logical, consistent, and clear. Part 1: The court-appointed panel investigates and recommends.4 Part 2: If the panel recommends discipline, the court must appoint a prosecuting attorney. Part 3: If the panel does not recommend discipline (or does not exist), so that the court is not required to appoint a prosecuting attorney, it may do so anyway, if it wishes. This interpretation, moreover, is not only logically consistent and is compelled by the plain wording of the rule, but is also supportive of the proposition that the courts retain, in the end, the inherent power to control and direct discipline against attorneys practicing before them.
III.
I have acknowledged the principle that courts must follow their own disciplinary rules. I have indicated, infra, that the judges of the Eastern District of Louisiana did so in regard to Mr. Thalheim — that the rules permitted them to pursue discipline against Thalheim despite the apparent absence of a recommendation for discipline from the investigating panel. But it might nevertheless be argued that even if such a reading of Rule V(C)(3) is technically correct, it is unfair to apply it to Mr. Thalheim because the rule is not absolutely clear and does not state as directly as it might that if the panel recommends against discipline, the court shall still have the option to pursue discipline.
The suggestion might be, in other words, that since disciplinary rules are in the nature of penalties, they should be strictly construed, in order that attorneys subjected to those rules should be unequivocally on notice as to what the rules are before being penalized pursuant to them. But the fact is that Rule V(C)(3) is not one of the rules that tells Mr. Thalheim and other attorneys in the Eastern District which actions on their part can subject them to disciplinary action. Rule V(C)(3) is a procedural rule that is implemented only after a disciplinary infraction has occurred. Thus, Mr. Thalheim can claim no prejudice from a reading of the rule that permits the disciplinary process to go forward; he can assert no detrimental reliance on the rule at issue in this case.
IV.
Finally, although I agree with the majority that Local Rule IV(B) requires a specific finding of moral unfitness to practice law, and that the requisite finding has not been made, I disagree with the majority’s suggestion, or at least implication, that from the facts of this case the judges of the Eastern District of Louisiana could not reasonably have found Mr. Thalheim morally unfit to practice law.
In summary, Richard Thalheim, Jr., is a bad actor in the state and federal courts of Louisiana. Here, he was charged with, among other things, misrepresenting facts to three different federal district judges and with repeatedly failing to disclose matters which the local rules require him to disclose. It is clear from the record that Thalheim used and abused disclosure and selective non-disclosure as a tactic to promote his and his clients’ interests in litigation. It is difficult to understand why the majority apparently does not believe that on the basis of those facts the local district judges could reasonably conclude that Thal-heim has demonstrated moral unfitness.
At oral argument, Thalheim’s attorney abandoned his client’s appeal of his three-month Eastern District suspension that was based upon the disciplinary proceedings before the Louisiana Supreme Court. That abandonment is welcome, for the facts of the state supreme court action easily would support a finding of moral unfitness.5
As to the two-year suspension, I am hard-pressed to accept the proposition that *395the federal judges in the district could not decide, on the basis of the facts underlying that suspension, that Mr. Thalheim is morally unfit to practice law. At the very least, the district judges should be given the opportunity to make that determination, following a hearing on remand, and subject of course to our further review. Since we do not know what evidence would be adduced at such hearing on the issue of moral unfitness, we should not guess at this point that the evidence would be “scanty” or insufficient.
The majority opinion here suggests that it would require “more egregious misconduct” than Thalheim’s to establish moral unfitness.6 This dictum will be an unwelcome signal indeed to the district judges throughout the three states in this circuit who now may feel that they cannot suspend attorneys unless their conduct is even more serious than the violations of the local rules with which attorney Thalheim has been charged.7 Indeed, the majority opinion offers little in the way of support or encouragement to our Article III colleagues who are responsible for maintaining efficient management and ethical standards in our federal district courts. I respectfully dissent.

. The majority is incorrect in stating that all infractions listed in Rules 1(F) and IV "require referral to an attorney panel for recommendation.” The second sentence of Rule IV(B), which is omitted in the majority opinion, reads: “However, should a majority of the judges of the Court determine, upon their investigation of any complaint or allegations of misconduct, other than conviction of crime, that such conduct even if substantiated would not warrant disciplining the attorney who is the subject of the complaint, such complaint or allegations of misconduct shall not be referred to an investigatory panel and shall be disposed by the Court [sic] in such manner and with such formality as it deems appropriate.” This flaw is of critical significance, since it is a misinterpretation that underlies the majority’s entire analysis.

. It is possible that the majority’s misreading of Rule V(C)(3) stems from a misapprehension of the word "initiate" as used in the Eastern District rules. In those rules, "initiate" is synonymous with "prosecute.” (See, e.g., Rule V(C)(2), "initiate and prosecute.") Thus, "initiate" does not refer to the incipiency of a disciplinary matter, whose earliest stage normally consists of investigation. The majority’s misreading of Rule V(C)(3) can be explained if one assumes that it read "initiate” to mean "investigate” rather than "prosecute.”

. Despite the error, the majority attempts to buttress its analysis by emphasizing Rule V(D), which it describes as "crucial.” But the majority's reading of Rule V(D) would make the first portion of that rule superfluous, for Rule V(C)(2) already requires the court to designate counsel to prosecute a disciplinary proceeding. The only purpose of Rule V(D) is to establish a procedure for that prosecution and not per se to state when a prosecutor is required to be appointed. The critical language does not appear in the majority opinion; the rule reads in its entirety:
Before any final discipline is imposed for any misconduct to which the provisions of Rule 1(F) and IV relate, a disciplinary proceeding shall be instituted by counsel designated for such purpose in which the respondent-attorney shall be ordered by the Court to answer and show cause, in writing, within 30 days after service of such order upon the respondent, personally or by mail, why final discipline, required by these rules and the findings of the Court, consisting of disbarment or other lesser sanctions, should not be imposed.
Thus, the meaning and purpose of Rule V(D) is that no attorney can be disciplined for a Rule 1(F) or Rule IV violation except by prosecution by court-appointed attorney and in accordance with the procedures set forth in the rule. (These show-cause procedures apparently were followed in the case of Mr. Thalheim.) Under Rule V(C)(3), the court has the option of imposing discipline even in the absence of a panel recommendation. The import of Rule V(D) is that the court cannot impose any such discipline for violations of Rule 1(F) or IV without finally appointing a prosecutor and requiring the giving of notice.

. The use of the word "recommendation" in Rules V(C)(1) and V(C)(2) is instructive. It tells us that the panel’s action is not in the nature of a prerequisite to prosecution (such as an indictment) but is only, plain and simply, an advisory “recommendation.”

. The facts of Thalheim’s conversion of client funds are as follows: On or about February 1, 1985, Thalheim received a settlement check for $49,493.60, payable to himself and his client, which he deposited into his office operating account. The client was promised that it would *395take ten days for the check to clear. Instead, between February 15 and March 15, 1985, the client placed 23 long-distance telephone calls to Thalheim’s office, trying unsuccessfully to get his money.
The client complained to the Louisiana Bar Association. Thalheim received notice of the complaint on March 25, 1985, and on April 1, 1985, borrowed $35,100.00 from his mother and, on the same day, disbursed $24,238.43 to the client. At that time, Thalheim’s office operating accounts showed a blance of only $7,566.79. Moreover, Thalheim charged that same client $1,000.00 more than the allowed statutory fee; he refunded it only after being contacted by a bar association committee.

. In fairness to the majority, I should note that this assertion refers only to Thalheim’s federal-court transgressions and not to his misdeeds in state court regarding misuse of a client's money.

. Although it does not, and should not, have any impact upon the instant appeal, I note that the Louisiana Supreme Court and Eastern District of Louisiana disciplinary proceedings are not the only times Mr. Thalheim has run afoul of court rules. As recently as May 1988, as counsel of record in Fournier v. Petroleum Helicopters, Inc., 845 F.2d 1020 (5th Cir.1988) (mem.), aff’g 665 F.Supp. 483 (E.D.La.1987), Thalheim violated Fed.R.App.P. 35(a), Fifth Cir. Loc. Rules 35.2.2 and 35.2.4, and the statement in the Internal Operating Procedure note under Local Rule 35. Thalheim was ordered to show cause why sanctions should not be imposed upon him for the violations. His primary excuse was that his office copy of the local rules was out-of-date; the panel determined that no sanctions should be assessed. While the Fournier incident does not reflect moral unfitness, it underscores the fact that recently in three different courts — the Louisiana Supreme Court, the Eastern District of Louisiana, and this circuit — Mr. Thalheim has shown either an unwillingness or an inability to abide by the rules which other attorneys are expected to follow. Although he is entitled to due process and to having the courts abide by their own rules, he is hardly entitled to sympathy.