Court Opinion

ID: 2691352
Source: CourtListenerOpinion
Date Created: 2014-08-01 21:03:00.797625+00
Date Added: 2024-06-11T13:15:39.123927
License: Public Domain

[Cite as Disciplinary Counsel v. Lapine, 128 Ohio St.3d 87, 2010-Ohio-6151.]

                         DISCIPLINARY COUNSEL v. LAPINE.
 [Cite as Disciplinary Counsel v. Lapine, 128 Ohio St.3d 87, 2010-Ohio-6151.]
Attorneys — Misconduct — Reciprocal discipline — Suspension order from U.S.
        Securities and Exchange Commission that prohibits respondent from
        practicing before it but that reflects no finding or admission of
        wrongdoing is not a “disciplinary order in another jurisdiction” within
        the meaning of Gov.Bar R. V(11)(F)(1) — Reciprocal discipline not
        appropriate — Cause dismissed.
           (No. 2010-1291 — Submitted November 16, 2010 — Decided
                                  December 21, 2010.)
        ON CERTIFIED ORDER of the United States Securities and Exchange
                               Commission, No. 3-13926.
                                 __________________
        O’DONNELL, J.
        {¶ 1} This case concerns whether a suspension order entered by the
United States Securities and Exchange Commission                  (“SEC”), in which an
attorney licensed in Ohio has voluntarily agreed not to practice before the SEC for
five years and which reflects neither an admission of wrongdoing by the attorney
nor an affirmative finding of professional misconduct by the SEC, is a
disciplinary order by another jurisdiction that requires this court to impose
reciprocal discipline pursuant to Gov.Bar R. V(11)(F).                 Upon review, we
conclude that the appropriate disposition is to dismiss this matter without
imposing reciprocal discipline.
        {¶ 2} Respondent, Jay Marc Lapine, Attorney Registration No. 0005051,
with a registration address in Duluth, Georgia, was admitted to the practice of law
in Ohio in 1979. On July 22, 2010, in accordance with Gov.Bar R. V(11)(F)(1),
                              SUPREME COURT OF OHIO

relator, Disciplinary Counsel, filed a certified copy of an order of the SEC
suspending respondent from appearing or practicing before it as an attorney for a
period of five years.
       {¶ 3} According to this suspension order, the SEC filed a complaint
against respondent in the United States District Court for the Northern District of
California in SEC v. Lapine, No. C-01-3650, alleging that respondent had
participated in a fraudulent scheme to inflate the revenue of a publicly traded
company in violation of generally accepted accounting principles by using
concealed side letters and back-dated contracts.         In particular, the complaint
alleged that respondent had falsified documents and circumvented internal
accounting controls and that he had aided and abetted his employers in the same
violations as well as in their failure to maintain accurate books and records and
their filing of materially false reports with the SEC.
       {¶ 4} The district court entered a final judgment by consent against
respondent (1) permanently enjoining him from violating or aiding and abetting
the violation of various sections of the Securities Exchange Act of 1934 and SEC
rules, (2) ordering him to pay a civil penalty of $60,000, and (3) prohibiting him
from acting as an officer or director of any entity issuing certain types of
securities or having a duty to file certain reports with the SEC for five years. The
court did not, however, obtain respondent’s admission to wrongdoing or make
any findings of misconduct.
       {¶ 5} Part 201, Title 17, C.F.R. contains the Rules of Practice of the
SEC. Section 201.102(e)(3)(i) provides:
       {¶ 6} “The Commission, with due regard to the public interest and
without preliminary hearing, may, by order, temporarily suspend from appearing
or practicing before it any attorney, accountant, engineer, or other professional or
expert who has been by name:

                                          2
                                January Term, 2010

       {¶ 7} “Permanently enjoined by any court of competent jurisdiction, by
reason of his or her misconduct in an action brought by the Commission, from
violating or aiding and abetting the violation of any provision of the Federal
securities laws or of the rules and regulations thereunder.”
       {¶ 8} In its order of suspension, the SEC noted that respondent, in
anticipation of additional proceedings against him pursuant to Section
201.102(e)(3)(i)(A), submitted an offer of settlement to the SEC.           The SEC
accepted the offer and entered an order suspending respondent from appearing or
practicing before it as an attorney for a period of five years. However, while
respondent consented to the entry of the SEC order, he did not admit that he had
engaged in misconduct, nor did the SEC make any affirmative findings of
misconduct.
       {¶ 9} Gov.Bar R. V(11)(F)(4) provides that the court shall impose
reciprocal discipline following the issuance of a disciplinary order in another
jurisdiction unless the attorney proves by clear and convincing evidence either (1)
that there was fraud or a lack of jurisdiction in the other jurisdiction’s disciplinary
process or (2) that the misconduct established warrants a substantially different
discipline in Ohio. Gov.Bar R. V(11)(F)(4)(i) and (ii). “In all other respects, a
final adjudication in another jurisdiction that an attorney has been subjected to
discipline shall establish conclusively the misconduct for purposes of a
disciplinary proceeding in Ohio.” Gov.Bar R. V(11)(F)(5).
       {¶ 10} Upon relator’s filing of the SEC suspension order, we ordered
respondent to show cause why we should not impose identical or comparable
discipline in Ohio. See Gov.Bar R. V(11)(F)(2)(b). After respondent filed a
response to the show-cause order and relator filed a reply, we directed the parties
to file briefs addressing three issues: (1) whether the Supreme Court Rules for the
Government of the Bar of Ohio require that “another jurisdiction” imposing
discipline upon an attorney make affirmative findings of misconduct, comparable

                                          3
                             SUPREME COURT OF OHIO

to those required by Gov.Bar R. V(6)(J) and V(11)(A)(3)(c), before reciprocal
discipline may be imposed pursuant to Gov.Bar R. V(11)(F), (2) whether the SEC
is a “jurisdiction” within the meaning of Gov.Bar R. V(11)(F) for purposes of
imposing reciprocal discipline, and (3) whether the respondent has been
disciplined by the SEC as a reciprocal authority such that this court should impose
reciprocal discipline pursuant to Gov.Bar R. V(11)(F). See Disciplinary Counsel
v. Lapine, 126 Ohio St.3d 1588, 2010-Ohio-4639, 934 N.E.2d 358.
       {¶ 11} The parties dispute whether the SEC is a “jurisdiction” for
purposes of Gov.Bar R. V(11)(F), and we have not before specifically addressed
this question with respect to the SEC. However, we have previously recognized
that a federal agency may be considered a jurisdiction for purposes of this rule.
       {¶ 12} In Disciplinary Counsel v. Rayve, 121 Ohio St.3d 1212, 2009-
Ohio-844, 901 N.E.2d 1292, Disciplinary Counsel v. Knuth, 119 Ohio St.3d 1201,
2008-Ohio-3810, 891 N.E.2d 343, and Disciplinary Counsel v. Colitz, 99 Ohio
St.3d 1216, 2003-Ohio-3308, 790 N.E.2d 788, we imposed reciprocal discipline
on attorneys suspended from practice before the United States Patent and
Trademark Office (“USPTO”).
       {¶ 13} While we did not provide our reasoning for recognizing that the
USPTO is a jurisdiction for purposes of Gov.Bar R. V(11)(F), it is notable that
only those practitioners who are registered with the USPTO Office of Enrollment
and Discipline or who are given limited recognition pursuant to agency
regulations may represent others before the USPTO. Section 11.10(a), Title 37,
C.F.R. Applicants for admission to practice before the USPTO are required to
pass a registration exam administered by the Office of Enrollment and Discipline,
except in limited circumstances when a waiver applies. Section 11.7(b)(1)(ii),
Title 37, C.F.R. Further, Section 11.19(a), Title 37, C.F.R. provides that all
practitioners are subject to the disciplinary jurisdiction of the USPTO, and Section
11.19(b)(1)(iv) states that practitioners may be disciplined for violations of the

                                         4
                                January Term, 2010

Mandatory Disciplinary Rules of the USPTO identified in Section 10.20, Title 37,
C.F.R. The Office of Enrollment and Discipline has authority to investigate
misconduct, Section 11.22(a), and may initiate disciplinary proceedings against a
practitioner, Section 11.32, in which any violation of the disciplinary rules must
be proven by clear and convincing evidence. Section 11.49.
       {¶ 14} By comparison, the SEC regulations do not limit appearance and
practice before the SEC in a representational capacity to registered practitioners.
Not only do the rules of practice allow a person to be represented by any attorney
admitted to practice before the Supreme Court of the United States or the highest
court of a state, but they also allow a partner to represent a partnership, an officer
to represent a corporation, trust, or association, and an officer or employee to
represent a state commission, department, or political subdivision.           Section
201.102(b), Title 17, C.F.R.
       {¶ 15} Thus, rather than imposing admission requirements, the SEC
affords the privilege of appearing in a representative capacity to broad categories
of individuals, with that privilege subject to subsequent suspension on the SEC’s
finding of a lack of qualification to represent others, a lack of character or
integrity, unprofessional conduct, or a violation of federal securities law. Section
201.102(e)(1)(ii) through (iii). Notably, the SEC Rules of Practice do not set
forth or incorporate by reference any rules of professional conduct or provide for
disciplinary hearings in which misconduct must be proven by clear and
convincing evidence.
       {¶ 16} Moreover, the definition of “practice” provided in the SEC Rules
of Practice encompasses more than the practice of law and includes:
       {¶ 17} “(1) Transacting any business with the [SEC]; and
       {¶ 18} “(2) The preparation of any statement, opinion or other paper by
any attorney, accountant, engineer or other professional or expert, filed with the
[SEC] in any registration statement, notification, application, report or other

                                          5
                             SUPREME COURT OF OHIO

document with the consent of such attorney, accountant, engineer or other
professional or expert.” (Emphasis added.) Section 201.102(f), Title 17, C.F.R.
       {¶ 19} Notably, the Supreme Court of Florida, the only court to consider
whether the SEC is a jurisdiction for purposes of imposing reciprocal discipline,
held that an SEC suspension order is not a final adjudication in a disciplinary
proceeding by a court or other authorized disciplinary agency of another
jurisdiction within the meaning of Florida’s reciprocal-discipline provisions.
Florida Bar v. Tepps (Fla.1992), 601 So.2d 1174. While the court noted that the
SEC has authority to temporarily or permanently deny any person the privilege of
appearing or practicing before it, the primary purpose of this authority “is not to
ensure the qualification, supervision or regulation of lawyers.” Id. at 1175. Cf.
Stanley v. Ligon (2008), 374 Ark. 6, 11, 285 S.W.3d 649, fn. 4 (“While the
[Social Security Administration] and [the Department of Veteran’s Affairs] are
administrative agencies with authority to regulate who represents claimants before
them, they are not regulating the practice of law when so doing. * * * Thus,
when the SSA suspended Stanley from representing claimants for five years, that
did not amount to a suspension from the practice of law [for purposes of
reciprocal discipline]”).
       {¶ 20} Because the SEC does not admit or supervise attorneys or
specifically regulate the practice of law, it should not be considered a jurisdiction
for purposes of imposing reciprocal discipline on an attorney admitted to practice
in Ohio.
       {¶ 21} Even if we were to consider the SEC a jurisdiction for purposes of
reciprocal discipline, this matter should nonetheless be dismissed because as
relator concedes, the SEC suspension order is not the result of a disciplinary
proceeding and is therefore not a “disciplinary order” within the meaning of
Gov.Bar R. V(11)(F)(1).

                                         6
                                January Term, 2010

       {¶ 22} The Supreme Court Rules for the Government of the Bar generally
contemplate that an attorney will either admit a disciplinary violation or be found
by clear and convincing evidence to be guilty of professional misconduct before
discipline is imposed. See Gov.Bar R. V(11)(A)(3)(c) and V(6)(J). This policy
accords with the principle that an attorney’s license to practice law may not be
arbitrarily revoked and that an attorney is entitled to procedural due process in a
disciplinary proceeding. See, e.g., In re Ruffalo (1968), 390 U.S. 544, 550-551,
88 S.Ct. 1222, 20 L.Ed.2d 117; Konigsberg v. State Bar of California (1957), 353
U.S. 252, 262, 77 S.Ct. 722, 1 L.Ed.2d 810.
       {¶ 23} However, for purposes of imposing reciprocal discipline, a final
adjudication in another jurisdiction that an attorney has been subjected to
discipline conclusively establishes the misconduct for purposes of a disciplinary
proceeding in Ohio, Gov.Bar. R. V(11)(F)(5), unless the attorney demonstrates
fraud or a lack of jurisdiction in the other jurisdiction’s disciplinary process,
Gov.Bar R. V(11)(F)(4)(a)(i).
       {¶ 24} The purpose of reciprocal discipline is to prevent relitigation of
misconduct that has already been established in another jurisdiction and to protect
the public from lawyers who commit such misconduct. Official Comment 1,
Prof.Cond.R. 8.5; see also People v. Bode (Colo.O.P.D.J.2005), 119 P.3d 1098,
1100 (the purpose of reciprocal discipline is “to enhance public confidence in the
profession by preventing lawyers admitted to practice in more than one
jurisdiction from avoiding the effect of discipline by simply practicing in another
jurisdiction”). That purpose is not served, however, if the other jurisdiction has
not actually established the underlying misconduct.
       {¶ 25} Here, respondent entered into a settlement agreement with the
SEC, but he did not admit violating any law or committing any professional
misconduct, and the SEC did not make an affirmative finding of misconduct
based on clear and convincing evidence. Respondent therefore has not been

                                        7
                             SUPREME COURT OF OHIO

disciplined by the SEC for professional misconduct as an attorney, but rather has
voluntarily agreed not to practice before the SEC in order to settle a dispute with
that agency. The suspension order thus cannot serve as a basis for imposing
reciprocal discipline.
       {¶ 26} For these reasons, the SEC is not a “jurisdiction” for purposes of
reciprocal discipline, it did not issue a disciplinary order within the meaning of
Gov.Bar R. V(11)(F), and reciprocal discipline is not available in this case.
Accordingly, the appropriate disposition is to dismiss this matter without
imposing reciprocal discipline.
                                                              Judgment accordingly.
       BROWN,      C.J.,   and    PFEIFER,       LUNDBERG   STRATTON,   O’CONNOR,
LANZINGER, and CUPP, JJ., concur.
                                 __________________
       Jonathan E. Coughlan, Disciplinary Counsel, and Stacy Solochek
Beckman, Assistant Disciplinary Counsel, for relator.
       Carpenter, Lipps & Leland, L.L.P., Jeffery A. Lipps, and David J. Leland,
for respondent.
                            ______________________

                                             8