Court Opinion

ID: 4232991
Source: CourtListenerOpinion
Date Created: 2017-12-28 15:00:28.212433+00
Date Added: 2024-06-11T14:43:16.505259
License: Public Domain

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
                             File Name: 17a0706n.06

                                     Nos. 17-3601/5605/5839
                                                                                    FILED
                           UNITED STATES COURT OF APPEALS                      Dec 28, 2017
                                FOR THE SIXTH CIRCUIT                      DEBORAH S. HUNT, Clerk

IN RE: CHRISTOPHER DAVID WIEST,                           )
                                                          )       ON APPEAL FROM THE
       Appellant.                                         )       UNITED STATES DISTRICT
                                                          )       COURTS FOR THE
                                                          )       SOUTHERN DISTRICT OF
                                                          )       OHIO, THE EASTERN
                                                          )       DISTRICT OF KENTUCKY,
                                                          )       AND THE WESTERN
                                                          )       DISTRICT OF KENTUCKY

BEFORE: CLAY, GIBBONS, and COOK, Circuit Judges.

       JULIA SMITH GIBBONS, Circuit Judge. Christopher David Wiest was suspended

from the practice of law for two years by the Ohio Supreme Court for dishonest or deceptive

conduct in violation of Ohio Rule of Professional Conduct 8.4(c). His charges arose from his use

of confidential client information to profit from stock he purchased in a company that his client

later acquired. Three district courts in this circuit—the Western District of Kentucky, the

Eastern District of Kentucky, and the Southern District of Ohio—imposed reciprocal discipline

based upon the Ohio Supreme Court’s findings. Wiest now appeals this imposition of reciprocal

discipline, alleging (1) he was denied due process because he was never put on notice of the

charges against him, (2) the Ohio Supreme Court’s reliance on his failure to disclose his

misconduct to his client was a violation of his Fifth Amendment right against self-incrimination,

and (3) the proof of his misconduct was otherwise infirm. For the reasons addressed below, we

affirm the orders of the district courts imposing reciprocal discipline.
No. 17-3601/5605/5839, In re Wiest

                                               I.

       Wiest is an attorney who has been admitted to practice law in Ohio since 2004 and in

Kentucky since 2005. Thompson Hine LLP, Wiest’s former employer, had a long-standing

retainer agreement with Stanley Black & Decker (“Stanley”) to provide legal services. Pursuant

to this agreement, Wiest provided due diligence services in October of 2010 relating to Stanley’s

potential acquisition of a company known as InfoLogix, Inc. (“InfoLogix”). Wiest had never

heard of InfoLogix prior to performing due diligence services on the company for Stanley.

       In connection with the potential acquisition of InfoLogix, Wiest received confidential

non-public information from Stanley on October 21, 2010, including that Stanley was proposing

to purchase InfoLogix stock at a price of $4.75 per share. Between October 28, 2010, and

November 16, 2010, Wiest purchased 35,000 shares of InfoLogix stock at prices ranging from

$2.84 to $1.95 per share. On November 18, 2010, Wiest sold 13,510 InfoLogix shares at a loss,

retaining 21,490 shares. Wiest never disclosed these trading activities to anyone at Stanley or

Thompson Hine.

       On December 15, 2010, Stanley announced that it was acquiring InfoLogix and would

pay $4.75 a share. The next day, Wiest retained an attorney with expertise in SEC matters, and,

on advice of counsel, he sold his remaining shares for a pretax profit of $56,291.97. The U.S.

Securities and Exchange Commission (the “SEC”) subsequently issued a subpoena compelling

Wiest to produce Stanley’s confidential information relating to his trading in InfoLogix stock.

Wiest complied with this subpoena, providing his client’s confidential information without

communicating with Stanley regarding the investigation or his disclosures to the SEC.

       In December of 2014, the Cincinnati Bar Association filed a complaint with the Ohio

Board of Professional Conduct, alleging that Wiest violated the Rules of Professional Conduct

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No. 17-3601/5605/5839, In re Wiest

by using confidential information he obtained during the course and scope of representing

Stanley in his personal purchase of the 35,000 shares of InfoLogix stock. The specific charges in

the operative complaint were that Wiest’s “undisclosed use of confidential information of a

client for his own advantage breached the duties of loyalty and confidentiality which he owed to

his client . . . and violated the Ohio Rules of Professional Conduct,” including: Rule 1.6(a)

prohibiting a lawyer from revealing confidential client information without informed consent;

Rule 1.8(b) prohibiting a lawyer from using information relating to the representation of a client

to the client’s disadvantage without first obtaining the client’s informed consent; Rule 8.4(b)

prohibiting a lawyer from committing an illegal act that reflects adversely on the lawyer’s

honesty or trustworthiness; and Rule 8.4(c) prohibiting a lawyer from engaging in conduct

involving dishonesty, fraud, deceit, or misrepresentation. DE 4-5, Third Am. Compl., Page ID

73; Ohio Prof. Cond. Rule 1.6(a), 1.8(b), 8.4(b), 8.4(c).

       At the hearing before a panel of the board, however, the Cincinnati Bar Association

shifted the focus of its charges away from Wiest’s trading of InfoLogix stock based on

confidential information and to his alleged disclosure of confidential client information to the

SEC during its investigation of his trading activities. Following the hearing, the panel dismissed

the alleged violation of Rule 1.6(a) because the complaint had failed to provide Wiest notice that

it was his dealings with the SEC that were at issue rather than his purchase of InfoLogix stock.

The panel also dismissed the alleged violation of Rule 1.8(b), finding there was insufficient

evidence showing Wiest’s conduct disadvantaged his client. But the panel upheld the charges

for violations of Rule 8.4(b) and Rule 8.4(c) and recommended that Wiest be suspended from the

practice of law for two years, with the final 18 months stayed on the condition that he engage in

no further misconduct.

                                                 3
No. 17-3601/5605/5839, In re Wiest

       Wiest objected to the board’s findings of misconduct, arguing that the Rule 8.4(b)

violation related to the same conduct before the SEC for which he did not receive proper notice

and that, regarding the Rule 8.4(c) violation, his purchases of InfoLogix’s stock—as opposed to

his disclosures to the SEC in compliance with a subpoena—did not involve the disclosure of

confidential information he received from Stanley and were performed without the necessary

fraudulent intent. The Ohio Supreme Court agreed with Wiest’s first objection and dismissed his

charge for violating Rule 8.4(b) on the grounds that he had not received proper notice of the facts

underlying the charge. However, the court upheld the Rule 8.4(c) violation, finding that Wiest

had “engaged in dishonesty, fraud, deceit, or misrepresentation . . . [by] us[ing] confidential

information obtained in the course and scope of his representation of Stanley to trade in

InfoLogix stock and failed to consult with either his client or his employer before doing so.” DE

4-1, OH Sup. Ct. Slip Op., Page ID 46–50.

       The Ohio Supreme Court’s finding of a Rule 8.4(c) violation focused primarily on

Wiest’s “dishonesty and deceit” in failing “to disclose his actions to his client (or his firm) or to

seek his client’s informed consent to his actions.” Id. at 47. While noting that it “cannot

conceive of a situation in which an attorney could divorce a client’s confidential communication

that it was willing to pay more than 50 percent above a stock’s current trading price from his

desire to invest in that stock,” Id. at 49, the court ultimately relied on “Wiest’s repeated

concealment of information that he was duty-bound to communicate to his client” to “infer his

intent to engage in dishonesty, fraud, deceit, or misrepresentation.”        Id.   In detailing this

“repeated concealment,” the court discussed Wiest’s failure to disclose his trading of the stock

both at the time of the trades and when he first learned of Stanley’s intention to acquire

InfoLogix and also Wiest “remain[ing] silent when the SEC issued a subpoena compelling him

                                                 4
No. 17-3601/5605/5839, In re Wiest

to produce his client’s confidential information.” Id. The court subsequently suspended Wiest

from the practice of law for two years, with the second year stayed on the condition that he

engage in no further misconduct.

       Following the Ohio Supreme Court’s imposition of sanctions against Wiest, the Kentucky

Bar Association filed a petition with the Kentucky Supreme Court to impose reciprocal

discipline, which it did on April 27, 2017. The federal district courts within Ohio and Kentucky

also considered imposing reciprocal discipline against Wiest, and, ultimately, the Southern

District of Ohio, the Eastern District of Kentucky, and the Western District of Kentucky imposed

reciprocal discipline. However, in a one-page order, the Northern District of Ohio declined to

impose reciprocal discipline “on the basis of due process.” DE 4-3, N.D. Ohio, Reciprocal

Discipline Order, Page ID 59.

       The orders from the three district courts imposing reciprocal discipline were subsequently

appealed and are now before this panel.

                                                II.

       “The Rooker–Feldman doctrine embodies the notion that appellate review of state court

decisions and the validity of state judicial proceedings is limited to the Supreme Court under

28 U.S.C. § 1257, and thus that federal district courts lack jurisdiction to review such matters.”

In re Cook, 551 F.3d 542, 548 (6th Cir. 2009) (footnote omitted); see also Exxon Mobil Corp. v.

Saudi Basic Indus. Corp., 544 U.S. 280, 291 (2005) (“[T]his Court’s appellate jurisdiction over

state-court judgments . . . precludes a United States district court from exercising subject-matter

jurisdiction . . . .”). However, because the district courts rely on the record developed by the

state courts in imposing reciprocal discipline, this Court must consider whether alleged defects in

those proceedings “so infected [the] federal proceeding that justice requires reversal of the

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No. 17-3601/5605/5839, In re Wiest

federal determination.” Cook, 551 F.3d at 548 (alteration in original) (quoting In re Ruffalo,

390 U.S. 544, 553 (1968) (White, J., concurring)).

       Federal courts are not “conclusively bound” by state disciplinary orders. Id. at 549; see

also Theard v. United States, 354 U.S. 278, 282 (1957) (“[D]isbarment by federal courts does not

automatically flow from disbarment by state courts.”). Nevertheless, a disciplinary order handed

down by a state court is entitled to “due respect.” In re Squire, 617 F.3d 461, 466 (6th Cir. 2010)

(quoting Cook, 551 F.3d at 549). “Federal courts also have noted that there are sound practical

reasons for deferring to state judgments in this context, explaining that ‘state bars are much

larger than federal bars, and with size has come the development of the means to investigate

charges of misconduct and resolve factual disputes.’” Cook, 551 F.3d at 549 (quoting In re

Cook, 49 F.3d 263, 265 (7th Cir. 1995)).

       Therefore, federal courts presumptively recognize the disciplinary condition created by

the judgment of the state court unless certain factors are present, including:

       1. That the state procedure from want of notice or opportunity to be heard was
       wanting in due process; 2, that there was such an infirmity of proof as to facts
       found to have established the want of fair private and professional character as to
       give rise to a clear conviction on our part that we could not consistently with our
       duty accept as final the conclusion on that subject; or 3, that some other grave
       reason existed which should convince us that to allow the natural consequences of
       the judgment to have their effect would conflict with the duty which rests upon us
       not to disbar except upon the conviction that, under the principles of right and
       justice, we were constrained so to do.

Id. at 549–50 (quoting Selling v. Radford, 243 U.S. 46, 51 (1917)); see also Squire, 617 F.3d at

466 (quoting the same factors).

                                                 6
No. 17-3601/5605/5839, In re Wiest

                                                III.

                                                 A.

       The first issue before us is whether the Ohio Supreme Court’s finding that Wiest violated

Rule 8.4(c) by failing to consult with Stanley before or after using confidential client information

in trading InfoLogix stock denied him due process. Wiest points to the court’s explanation that it

was Wiest’s “repeated concealment of information,” including when “the SEC issued a subpoena

compelling him to produce his client’s confidential information,” that allowed the court to “infer

his intent to engage in dishonesty.” CA6 R. 13, Appellant Br. at 21–22. This explanation, he

argues, shows that the 8.4(c) charge—like the 1.6(a) and 8.4(b) charges that had already been

dismissed—was premised on his conduct before the SEC, for which he had not received notice.

We find, however, that Wiest’s Rule 8.4(c) violation was premised on his misuse of confidential

client information and his failure to disclose this misconduct to Stanley rather than any conduct

before the SEC; therefore, he had prior notice of the facts underlying this violation and was not

denied due process.

       Due process is satisfied “where an appellant is given ‘an opportunity to respond to the

allegations set forth in the complaint, testify at length in her own defense, present other witnesses

and evidence to support her version of events . . . , [and is] able to make objections to the hearing

panel’s findings and recommendations.’”        Squire, 617 F.3d at 467 (alteration in original)

(quoting Cook, 551 F.3d at 550).

       Because Wiest’s conduct before the SEC, including any disclosure of confidential

information, was not charged in the complaint, the Ohio Supreme Court properly concluded the

charges for violating Rule 1.6(a) and Rule 8.4(b) should be dismissed, as those charges were

premised on allegations that Wiest “provid[ed] confidential client information to the SEC and . . .

                                                 7
No. 17-3601/5605/5839, In re Wiest

testif[ied] before the SEC without first seeking Stanley’s informed consent.” DE 4-1, OH Sup.

Ct. Slip Op., Page ID 43–46. Unlike these other charges, however, the Rule 8.4(c) violation

found by the court was premised on Wiest having used Stanley’s confidential information to

trade in InfoLogix stock without disclosing his actions to Stanley. Specifically, Wiest was

charged with misconduct in his “personal use of [confidential client] information, without

disclosure or permission, to buy and sell shares in InfoLogix[, which] constituted dishonest and

deceptive conduct.” DE 4-5, Third Am. Compl., Page ID 73, ¶ 10. Accordingly, the conduct

underlining his Rule 8.4(c) violation was explicitly charged in the complaint.

         In recounting the junctures at which Wiest could have, but failed to, inform Stanley of his

trading activity, the Ohio Supreme Court included “when the SEC issued a subpoena compelling

him to produce his client’s confidential information” as one of three moments1 when Wiest

should have disclosed his actions to his client. DE 4-1, OH Sup. Ct. Slip Op., Page ID 49. But

including the moment when Wiest received a subpoena from the SEC as one of the times when

Wiest should have disclosed his trading activity to Stanley did not transform his violation into

one based on his actions before the SEC. Wiest was put on notice of the facts underlying his

Rule 8.4(c) violation—his use of confidential client information without consent to trade in

InfoLogix stock—and was given an opportunity to defend against that charge in a hearing.

Accordingly, his due process rights were not violated by the district courts’ imposition of

reciprocal discipline based on his Rule 8.4(c) violation.

1
 The other two moments were the point at which Wiest engaged in his trading activities and the time he first learned
of Stanley’s intent to complete the acquisition of InfoLogix—activities that were explicitly charged in the complaint.

                                                          8
No. 17-3601/5605/5839, In re Wiest

                                               B.

          The second issue is whether punishing Wiest for his continued failure to disclose his

actions to his client, even if performed under the advice of counsel, deprived him of his Fifth

Amendment right against self-incrimination. We find that it did not.

          As an initial matter, Wiest did not obtain counsel until December 16, 2010, when he

learned Stanley had completed the acquisition of InfoLogix. Wiest asserts he invoked his Fifth

Amendment privilege upon advice of counsel, making December 16, 2010 the earliest point that

Wiest could have invoked the privilege. The conduct underlying his charge, however—both the

trading using confidential information and the failure to disclose that trading—occurred prior to

Wiest obtaining counsel and therefore prior to his purported invocation of his Fifth Amendment

rights.    Wiest’s duty to disclose his trading activities to his client arose prior to and

contemporaneously with his undertaking those actions, and his failure to do so at that time

constituted the misconduct underlying his violation.

          More fundamentally, however, Wiest’s argument must fail because the Fifth

Amendment’s protections do not relieve an attorney of his ethical duty to communicate with his

client. “The Fifth Amendment, made applicable to the States by the Fourteenth Amendment,

requires that ‘[n]o person . . . shall be compelled in any criminal case to be a witness against

himself.’” Chavez v. Martinez, 538 U.S. 760, 766 (2003) (quoting U.S. Const. amend. V)

(citation omitted). The Supreme Court has held that the Fifth Amendment “not only protects the

individual against being involuntarily called as a witness against himself in a criminal

prosecution but also privileges him not to answer official questions put to him in any other

proceeding, civil or criminal, formal or informal, where the answers might incriminate him in

future criminal proceedings.” Lefkowitz v. Turley, 414 U.S. 70, 77 (1973) (emphasis added).

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No. 17-3601/5605/5839, In re Wiest

Accordingly, under the Fifth Amendment, an individual cannot be compelled by a governmental

authority to answer questions or otherwise produce evidence during a proceeding, including an

attorney disciplinary proceeding, which may later be used against him in a criminal proceeding.

See Spevack v. Klein, 385 U.S. 511, 514–16 (1967) (Fifth Amendment applies to attorney

disciplinary proceedings).

       Here, however, Wiest is not attempting to invoke his Fifth Amendment rights to protect

himself from being compelled by the government to testify about his potentially illegal insider

trading during his disciplinary proceeding. Rather, he is arguing that his Fifth Amendment right

against self-incrimination relieves him of his duty to disclose his misuse of confidential client

information to that client, and therefore, that it was improper for the Ohio Supreme Court to infer

deceitful intent from his failure to make such disclosures. The Fifth Amendment simply does not

apply in this way. Wiest’s duty to inform his client of his actions arose from his ethical

obligations as an attorney—not because of any compulsion by a governmental authority.

Moreover, his disclosure would not have occurred during the course of any proceedings. The

fact that a court later inferred deceitful intent from Wiest’s failure to communicate with a client

as required by his ethical obligations does not make the Fifth Amendment applicable to this

situation. Accordingly, the imposition of discipline based in part on the failure to disclose his

misconduct to his client did not deprive Wiest of his Fifth Amendment right against self-

incrimination.

                                                10
No. 17-3601/5605/5839, In re Wiest

                                               C.

       The final issue is whether some other “grave reasons” exist, which “under principles of

right and justice,” should prevent discipline from being imposed in this case. We fail to find any

such reasons.

       Other than the two grounds rejected above, the only reason articulated by Wiest for

declining to impose reciprocal discipline is an infirmity of proof showing he acted with the

requisite intent. This case, however, does not possess “such an infirmity of proof establishing

the misconduct as to give rise to the clear conviction that this Court could not consistently with

its duty, accept as final the conclusion on that subject . . . .” Squire, 617 F.3d at 470 (citing

Cook, 551 F.3d at 549–50). Wiest purchased stock in a company he had never heard of upon

learning that his client was willing to pay more than 50 percent above the stock’s current trading

price. And rather than disclose this purchase to his client—when the appearance alone that he

was using confidential client information for his personal gain triggered his duty to

communicate—Wiest chose to conceal his purchase from the client, to continue to remain silent

when he learned his client was moving forward with the acquisition, and to once again remain

silent when he profited from the acquisition and was investigated by the SEC for insider trading.

Wiest does not dispute his trading activities or that he remained silent in the face of numerous

events alerting him to his need to disclose his actions. Therefore, we do not find that the

evidence in the record demonstrating Wiest’s deceit was so infirm or undermined by other

exculpatory evidence as to compel this panel to reject the discipline imposed. Accordingly,

Wiest has failed to present any “grave reasons” making it inappropriate for the district courts to

impose reciprocal discipline.

                                               11
No. 17-3601/5605/5839, In re Wiest

                                            IV.

       For the above reasons, we affirm the orders of the district courts imposing reciprocal

discipline.

                                             12