Justia Professional Malpractice & Ethics Opinion Summaries

Klayman founded Judicial Watch in 1994 and was its general counsel until 2003. Following a 2013 complaint to the D.C. Bar, a Hearing Committee concluded that Klayman violated Professional Conduct Rules 8.4(d) and 1.9. One client, a former Judicial Watch employee, had alleged a hostile work environment. Klayman had advised Judicial Watch about her complaints. After Klayman left Judicial Watch and without seeking its consent, he entered an appearance on her behalf. Another client was a Judicial Watch donor, seeking the return of her donation, represented by Klayman without consent. The third client, a former Judicial Watch client, sued Judicial Watch; Klayman entered an appearance without seeking consent.The Hearing Committee found that Klayman violated Rule 1.9 or its Florida equivalent in all three representations, Klayman’s representation of the third client violated Rule 8.4(d), by “[e]ngag[ing] in conduct that seriously interferes with the administration of justice,” and that Klayman gave false testimony before the Committee. The Committee recommended a 90-day suspension, with reinstatement contingent upon a showing of his fitness to practice law. The Board on Professional Responsibility agreed with respect to Rule 1.9 but disagreed concerning Rule 8.4(d) and false testimony. It rejected the reinstatement condition. Suspended for 90 days by the D.C. Court of Appeals, Klayman did not challenge the Rule 1.9 finding but sought to avoid reciprocal discipline. The D.C. Circuit imposed a reciprocal 90-day suspension and referred the matter to the Committee on Admissions and Grievances for recommendations on whether further discipline is warranted. View "In re: Klayman" on Justia Law

This appeal arose from petitioner's mismanagement of two related businesses, Commonwealth Capital and Commonwealth Securities. After FINRA determined that petitioner misused investor funds and tried to cover it up, FINRA barred petitioner from the securities industry, fined her, and ordered her to disgorge certain misused expenses. The SEC affirmed the industry bar and disgorgement order.The DC Circuit affirmed, concluding that petitioner's ambitious constitutional arguments are futile for a simple reason: Congress has prohibited the court from considering issues not raised before the SEC. Furthermore, petitioner has not provided any reasonable grounds that would excuse her failure to exhaust her constitutional claims before the Commission. Nor has there been an intervening change in law that might have excused her failure to press these contentions below. The court also concluded that Saad v. SEC, 980 F.3d 103 (D.C. Cir. 2020), foreclosed petitioner's argument that her lifetime bar is impermissibly punitive. In this case, the SEC's remedial justification finds adequate support in the record. The court rejected petitioner's assertion that continuing education expenses misallocated to the funds—rather than to her companies—were not "net profit," and thus not appropriate for remedial disgorgement after Liu v. SEC, 140 S. Ct. 1936 (2020). Rather, by paying for continuing education expenses out of the funds, instead of her wholly-owned business, the court concluded that petitioner enriched herself by the amount of the savings. View "Springsteen-Abbott v. Securities and Exchange Commission" on Justia Law

Petitioner, a broker-dealer, twice misappropriated his employer's funds and then unsuccessfully tried to cover his tracks by falsifying documents. FINRA permanently barred him from membership and from associating with any FINRA member firm.The DC Circuit held that the Supreme Court's recent decision in Kokesh v. SEC, 137 S. Ct. 1635 (2017), which held that SEC disgorgement constitutes a penalty within the meaning of 28 U.S.C. 2462, does not have any bearing in petitioner's case. The court explained that binding circuit precedent establishes that the Commission may approve expulsion not as a penalty but as a means of protecting investors. In this case, the Commission did precisely that. Because this court has already held that the Commission appropriately concluded that petitioner's bar was not excessive or oppressive in any other respect, that ends the court's inquiry. View "Saad v. Securities and Exchange Commission" on Justia Law

Plaintiffs filed a legal malpractice case arising out of the failure of two sets of lawyers associated with two different law firms, Westerman, Hattori, Daniels & Adrian, LLP (Westerman) and Kratz, Quintos & Hanson, LLP (Kratz), to file necessary documents in plaintiffs' patent case, allegedly resulting in plaintiffs' loss of that case. The complaint alleged four counts against defendants: Count I against both defendants for the original malpractice, Count II alleging that Westerman negligently gave legal advice after the original decision in the patent case issued and Counts III and IV alleging that advice Kratz gave regarding the malpractice case against Westerman led to the loss of the Count I claim against both defendants through the operation of the statute of limitations.The DC Circuit affirmed the district court's dismissal of Count II of the Second Amended Complaint where the district court did not abuse its discretion by finding that plaintiffs waived any claim for damages arising from the Count II allegations. The court also affirmed the district court's grant of summary judgment on Counts III and IV of the Second Amended complaint where plaintiffs failed to establish that Armstrong's advice was the proximate cause of its injuries. View "Seed Company Limited v. Westerman, Hattori, Daniels & Adrian, LLP" on Justia Law

The DC Circuit denied a petition for review of the FAA's decision to revoke petitioner's pilot certification for knowingly operating an aircraft with narcotics on board. After petitioner's plane crash-landed due to an engine malfunction, a trooper doing a routine inventory of the aircraft's contents discovered three chocolate bars infused with tetrahydrocannabinol (THC, the psychoactive agent in marijuana) in petitioner's briefcase.The court held that the sanction of revocation of petitioner's pilot certificate was not imposed arbitrarily, capriciously, nor in conflict with the law. The court held that the Board explicitly considered petitioner's mitigating factors and simply determined that they did not warrant a lighter sanction. The Board reasoned that knowingly transporting illegal narcotics on an aircraft, regardless of quantity or purpose, fell within the scope of 14 C.F.R. 91.19 and was grounds for a certificate revocation. Likewise, the fact that the marijuana was purchased in Colorado did not change the fact that marijuana was illegal under federal law and in federal airspace. Finally, the passage of 49 U.S.C. 44710 did not limit the FAA's authority to revoke certificates under 49 U.S.C. 44709. View "Siegel v. Administrator of the FAA" on Justia Law