S054681 Wolf v. Oregon Lottery Commission

SUPREME COURT CASES

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State: Oregon

Docket No: (CAA125420;SCS054681)

Case Date: 03/27/2008

FILED: March 27, 2008

IN THE SUPREME COURT OF THE STATE OF OREGON

LARRY WOLF,
an Oregon elector
and president of the Oregon Education Association,
VARNER SEAMAN, >MAUREEN CRAWFORD
and NICHOLAS BLOSSER,

Respondents on Review,

OREGON LOTTERY COMMISSION
and COMMISSIONERS KERRY TYMCHUK,
BRUCE ANDREWS, STAN ROBSON, and RICHARD SOLOMON,
in their official capacities,

Petitioners on Review.

(CA A125420; SC S054681)

On review from the Court of Appeals.*

Argued and submitted November 5, 2007.

Denise G. Fjordbeck, Senior Assistant Attorney General, Salem, argued the cause and filed the brief for Petitioners on Review. With her on the brief were Hardy Myers, Attorney General, and Mary H. Williams, Solicitor General.

Margaret S. Olney, of Smith, Diamond & Olney, Portland, argued the cause and filed the brief for Respondents on Review.

Before De Muniz, Chief Justice, and Gillette, Durham, Balmer, Kistler, and Walters, Justices.**

GILLETTE, J.

The decision of the Court of Appeals is reversed. The rule is held valid.

*Judicial Review of permanent rule adopted by the Oregon Lottery Commission. 209 Or App 670, 149 P3d 303 (2006).

**Linder, J., did not participate in the consideration or decision of this case.

GILLETTE, J.

Under Oregon law, any person dissatisfied with an administrative rule promulgated by an Oregon administrative agency may challenge the validity of that rule in an original proceeding filed in the Court of Appeals. ORS 183.400. (1) This is such a case. The Oregon Lottery Commission (the Lottery), after notice and a series of hearings, promulgated a rule, former OAR 177-040-0026 (2004), dealing with the payments that the Lottery would make to businesses (called "retailers") that make video lottery games available to the public. (2) Among other things, the rule provided that "[t]he compensation amount the Lottery shall pay to a retailer for the sale of video lottery game shares is calculated on a percentage of net receipts during a business year." The rule established two options for payment, with retailers empowered to select which option they wished to use. Petitioners challenged the rule on the ground, among others, that the Lottery did not have statutory authority to promulgate the rule. A panel of the Court of Appeals agreed, and invalidated the rule. Wolf v. Oregon Lottery Commission, 209 Or App 670, 149 P3d 303 (2006). We allowed the Lottery's petition for review and now reverse the decision of the Court of Appeals.

The statute that controls the outcome of this case is ORS 183.400, which sets out the procedure for mounting a facial challenge to administrative rules and describes the scope of judicial review. That statute provides:

"(1) The validity of any rule may be determined upon a petition by any person to the Court of Appeals in the manner provided for review of orders in contested cases. The court shall have jurisdiction to review the validity of the rule whether or not the petitioner has first requested the agency to pass upon the validity of the rule in question, but not when the petitioner is a party to an order or a contested case in which the validity of the rule may be determined by a court.

"(2) The validity of any applicable rule may also be determined by a court, upon review of an order in any manner provided by law or pursuant to ORS 183.480 or upon enforcement of such rule or order in the manner provided by law.

"(3) Judicial review of a rule shall be limited to an examination of:

"(a) The rule under review;

"(b) The statutory provisions authorizing the rule; and

"(c) Copies of all documents necessary to demonstrate compliance with applicable rulemaking procedures.

"(4) The court shall declare the rule invalid only if it finds that the rule:

"(a) Violates constitutional provisions;

"(b) Exceeds the statutory authority of the agency; or

"(c) Was adopted without compliance with applicable rulemaking procedures.

"(5) In the case of disputed allegations of irregularities in procedure which, if proved, would warrant reversal or remand, the Court of Appeals may refer the allegations to a master appointed by the court to take evidence and make findings of fact. The court's review of the master's findings of fact shall be de novo on the evidence.

"(6) The court shall not declare a rule invalid solely because it was adopted without compliance with applicable rulemaking procedures after a period of two years after the date the rule was filed in the office of the Secretary of State, if the agency attempted to comply with those procedures and its failure to do so did not substantially prejudice the interests of the parties."

The Court of Appeals began its analysis by observing that, in this case, in challenging the Lottery's rule, petitioners do not contend that the Lottery violated rulemaking procedures; they confine themselves to arguing that the rule exceeded the Lottery's statutory authority, and that it violated the provision of Article XV, section 4(3), of the Oregon Constitution that dictates how the Lottery must spend its proceeds. Wolf, 209 Or App at 672. The court then briefly examined the terms of the challenged rule, which included a tiered compensation scheme that bases compensation on a percentage of net revenues. Id. at 673-74.

Turning first to the subconstitutional question, see Planned Parenthood Assn. v. Dept. of Human Res., 297 Or 562, 564-65, 687 P2d 785 (1984) (describing proper sequence for analyzing challenges to administrative rules), the Court of Appeals focused its analysis on ORS 461.445, the statute that authorizes the Lottery to enact rules like the one in question. That statute provides:

"In establishing its schedule of payments to contractors, the Oregon State Lottery Commission shall undertake to develop a system that maximizes the net revenue to the state for the public purpose consistent with providing a reasonable rate of return for contractors."

(Emphasis added.) The pivotal phrase, the court noted, was the direction to "undertake to develop" the system contemplated by the statute. Wolf, 209 Or App at 674. The Lottery had argued that the word "undertake," which is central to that phrase, means "attempt," so that the statutory directive to the Lottery is to attempt to create a schedule of payments to contractors that "maximizes the net revenue to the state," while providing a "reasonable rate of return" to contractors.

The Court of Appeals rejected the Lottery's view because, it said, to accept that view would render the statute "hortatory." Id. at 674. Noting that the word "undertake" has a vast array of other meanings beyond "attempt" (such as "guarantee," "promise," "contract," and "covenant"), the Court of Appeals concluded that the word must have a substantive connotation and that the dictionary did not provide an answer. Instead, the court stated,

"[a] more meaningful method of interpreting the term is to ask whether the legislature would enact operative legislation (as opposed to a general, introductory policy statement preceded by a 'whereas' clause or its functional equivalent) containing explicit, substantive standards (such as 'maximize[] the net revenue' and 'reasonable rate of return'), couched in mandatory terms ('shall undertake'), if the legislature's intention was merely to give advice. We conclude that, in context, the term 'undertake' imposes a genuine mandate. The Lottery is charged with the duty to develop a system, and to do so subject to an express constraint: to maximize state revenue consistent with providing retailers a reasonable rate of return."

Id. at 675 (emphasis in original). For that reason, the Court of Appeals rejected the Lottery's argument -- that ORS 461.445 merely directs the Lottery to make an effort to devise a system that would maximize net revenues, while providing a reasonable rate of return to retailers.

We do not agree with the Court of Appeals' analysis. It is true, of course, that the legislature, in enacting ORS 461.445, intended to require that the Lottery "establish a compensation system" by rule. But when one views the statute in its entirety, it becomes clear that the word "undertake," as used in the statute, must mean "attempt."

Under ORS 461.445, the Lottery is to "undertake to develop a system" that has two goals, viz., "maximiz[ing] the net revenue to the state" and "providing a reasonable rate of return" to retailers. In that context, the outcome -- a "system" -- is to be the result of a process -- "develop[ment]"-- by the Lottery that harmonizes two competing goals. Moreover, interplay of those two goals will differ to some degree for each of the hundreds of retailers with whom the Lottery deals. (Each has different costs in rent, taxes, personnel, and physical facilities, to name only the most obvious examples. Moreover, each of those factors may vary to some degree for each retailer from year to year.) Yet the Lottery's "system" is to be imposed by a set of rules, which are quasi-legislative policy choices of general applicability. See ORS 183.310(9) (defining "rule"). Such rules will, of necessity, affect some retailers differently than others. No system is possible that precisely strikes the statutory balance as to every retailer. Therefore, the statute cannot mean that the Lottery "guarantees," "promises," "contracts," or "covenants" to produce such a system. (3) The Lottery must seek to achieve the goals listed in ORS 461.445, but the validity of any "system" the Lottery creates through rules is not contingent upon its meeting the two competing goals vis-à-vis each and every retailer. It follows, we believe, that the word "undertake," as used in ORS 461.445, can only mean "attempt," because the best that can be hoped for in a rule (or a series of rules) is a rough approximation of the specified goals. That is, it is the attempt, not the wholly accurate outcome, that the legislature has directed the Lottery to make.

The Court of Appeals, however, appears to have read that word as imposing a more demanding standard, and that, in our view, led to the Court of Appeals' misunderstanding of the scrutiny that it could apply to the system that the Lottery created.

That misunderstanding is reflected in its treatment of the concept of "rate of return" -- a concept that had dominated petitioners' arguments. After consulting various texts and other sources, the court concluded that

"the phrase 'rate of return' in the video lottery context means the profits received by a retailer from the proceeds of video lottery games -- that is, the revenue minus the operating cost of providing those games (for example, labor) -- expressed as a percentage of the total capital investment (for example, furniture or remodeling, or the opportunity cost of using space for lottery games instead of other revenue-generating uses). It follows that ORS 461.445 requires that the Lottery, in developing a compensation system for retailers, obtain and consider data not only on retailers' revenue, but also on their operating costs and capital investments."

Wolf, 209 Or App at 678.

The court also relied on another provision of the enactment that authorized the Lottery to permit video poker, but which had been included in the Oregon Revised Statutes as a note, rather than being codified: Oregon Laws 1991, chapter 62, section 13. Section 13(1) contemplated that the Commission would contract for an "outside review" of the cost of operating video lottery games and the manner in which revenue from the operation of those games was shared between retailers and the Lottery, with the review culminating with a report to the Lottery. Or Laws 1991, ch 962, § 13(1), compiled as a note after ORS 461.544 (1991) (so providing). The Court of Appeals took special notice of section 13(2), which provided, "After considering the findings and recommendations of this report, the lottery commission shall modify its provisions for the payments to contractors." The court announced that the text of section 13, read in context, "required the Lottery to measure retailers' compensation for providing video lottery games in terms of revenue, operating costs, and capital expenditures ('space * * * for the operation' of machines)." Wolf, 209 Or App at 678-79 (emphasis in original). Finally, after going beyond the words of the legislation itself and reviewing the legislative history, the Court of Appeals also stated that,

"in using the term 'rate of return,' the legislature intended to assign to the Lottery the task of formulating a compensation system for retailers taking into account their revenues, operating costs, and total capital investment, in such a way as to provide a 'reasonable rate of return.' Our remaining inquiry is whether the Lottery did so."

Id. at 681 (emphasis added).

That last, emphasized statement illustrates the error in the Court of Appeals' analysis: As we have explained, the law required only that the Lottery try to achieve the statutory goals. By inquiring into whether the Lottery "did so," the Court of Appeals was asserting that the statute meant not that the Lottery was to try, but that it had to succeed at providing a reasonable rate of return. As we have explained, review by that standard asked more of the Lottery than the statute did. Having mistaken its role in scrutinizing the Lottery's rule, the Court of Appeals then turned to consider "the role that the rulemaking record can play in our inquiry." Id. (emphasis added). As we shall explain, the resulting inquiry also was erroneous.

The Court of Appeals acknowledged the limitations on judicial review set out in the text of ORS 183.400, the part of the Administrative Procedures Act that grants it the authority to consider facial challenges to agency rules. Id. at 682. As noted earlier, that statute provides, in part:

"(3) Judicial review of a rule shall be limited to an examination of:

"(a) The rule under review;

"(b) The statutory provisions authorizing the rule; and

"(c) Copies of all documents necessary to demonstrate compliance with applicable rulemaking procedures."

ORS 183.400(3) (emphasis added). The court also acknowledged this court's opinion in AFSCME Local 2623 v. Dept. of Corrections, 315 Or 74, 79, 843 P2d 409 (1992), where this court stated:

"Aside from questions that might arise concerning the facts surrounding the process of adopting a rule -- questions not raised in this case -- judicial review under ORS 183.400 is limited to the face of the rule and the law pertinent to it. Numerous individual fact situations can arise under any rule, but judicial review of the rule as applied to each of those situations is reserved to other forums."[ (4)]

(Emphasis added.)

Nonetheless, the court rejected the Lottery's argument that, under those standards, the rulemaking record made before the Lottery commission in its deliberations over the appropriate content of former OAR 177-040-0026 (2004) was irrelevant to the court's judicial review function. The court stated, "Neither the statutes nor the cases construing them support the Lottery's position." Wolf, 209 Or App at 682. The court then undertook an extensive examination of both the evidence presented to the Lottery during the rulemaking process and the statements made by various Lottery commissioners at that time to determine whether the Lottery had created a system that met the statutory goals. And, based on that examination, the court concluded that former OAR 177-040-0026 (2004) bore "no discernable relationship" that that court could identify to the rate of return described in the governing statute. Therefore, the court held that the rule was invalid. Wolf, 209 Or App 691-92.

It was error for the court to consider the record in the way that it did, and further error to utilize that record as a justification for striking down the Lottery's rule. The governing statute, ORS 183.400(3), could not be phrased more plainly. The record on review (aside from information concerning whether the statutory procedures for rulemaking were followed, an issue not presented by this case) consists of two things only: the wording of the rule itself (read in context) and the statutory provisions authorizing the rule. ORS 183.400 (3)(a), (b). See Planned Parenthood Assn., 297 Or at 572-74 (illustrating process). See also ORS 183.400(4)(a), (b) (court may declare rule invalid "only if" the rule violates a constitutional provision or "exceeds the statutory authority of the agency") (emphasis added).

This court's statement in AFSCME Local 2623, that judicial review is limited under ORS 183.400 to the face of the rule and the law pertinent to it, is precisely on point. Nothing in that decision invites a reviewing court to consider, in addition to the relevant statutes and the wording of the rule (read in context), particular evidence that was offered in the course of the rulemaking proceeding or the comments of individual rulemakers concerning that evidence and their thoughts about their rulemaking task. Indeed, an inquiry into the thinking processes of administrators and agency heads who were performing their quasi-legislative function as rulemakers is impermissible, given the limited scope of the issues under ORS 183.400(3).

It follows from the foregoing that the Court of Appeals should have limited its inquiry to the wording of the rule, read in context, and the applicable statute, ORS 461.445. When that is done, it becomes apparent that the rule passes the statutory test: The legislature directed the Lottery to attempt to establish a payment scheme that would maximize state revenues while providing contractors with a reasonable rate of return. Former OAR 177-040-0026 (2004) fulfilled the legislative directive. It is true that the rule did not speak either in terms of "maximizing revenue" or of "reasonable rate of return," but the absence of those phrases does not show that the Lottery was not following the statute. By regulating a contractor's net receipts from lottery games shares, the rule necessarily established what revenues the Lottery would receive and, derivatively, what each retailer's particular rate of return would be. The rule was not facially invalid on the statutory ground urged by petitioners. The Court of Appeals' contrary conclusion was error.

The question arises concerning what disposition to make of this case. As noted, petitioners challenged the rule in question on both statutory and constitutional grounds. Because of its view of the case, the Court of Appeals did not need to address petitioners' constitutional challenge to the rule. Ordinarily, we now would remand the case to the Court of Appeals to address petitioners' constitutional arguments. However, both parties ask us to dispose of the remaining issue in this opinion. We believe that it is desirable to do so in this case.

We have considered petitioners' constitutional arguments. Petitioners assert that former OAR 174-040-0026 (2004) is invalid, because the rates set by the Lottery in that rule exceed permissible "costs of administration" of the Lottery, contrary to that requirement in Article XV, section 4(3), of the Oregon Constitution. (5) Petitioner's argument in this respect is doubly mistaken. First, the argument shares a flaw with petitioners' statutory arguments, i.e., it assumes that the reviewing court can look behind the wording of the rule, read in context. That is not correct, as we already have explained. Second, the "costs of administration" mentioned in section 4(3), and on which petitioners rely, are the Lottery's administrative costs. See Ecumenical Ministries v. Oregon State Lottery Comm., 318 Or 551, 567, 871 P2d 106 (1994) (so explaining). Therefore, they are not the costs of retailers that the Lottery's rule makes allowance for. Petitioners' constitutional arguments are not well taken in the context of a proceeding under ORS 183.400.

The decision of the Court of Appeals is reversed. The rule is held valid. (6)

1. ORS 183.400 is set out in the text at ___ Or at ___ (slip op at 3-4).

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2. The rule provided:

"(1) The compensation amount the Lottery shall pay a retailer for the sale of video lottery game shares is calculated on a percentage of net receipts during a business year. 'Net receipts' means the amount of money that is received at a retailer's premises from the sale of video lottery game shares after the payment of prizes. At the time a retailer signs a Retailer Contract, the retailer must choose in writing to receive compensation in accordance with either subsection (a) or subsection (b) of this section. If the retailer fails to choose as required, the Lottery shall compensate the retailer pursuant to subsection (a) of this section for the first business year the contract is in effect. For each subsequent business year the contract is in effect, no less than 60 days before the beginning of the upcoming business year, the retailer may submit a written notice to the Lottery that the retailer chooses to be compensated under the alternative compensation method for the upcoming business year. If the retailer does not submit or fails to timely submit a written notice, the Lottery shall compensate the retailer using the retailer's current compensation method for the next business year.

"(a) 3-Tier Option:

"Net Receipts per Year -- Compensation -- Percent of Net Receipts

"up to $175,000 -- 32.5%

"$175,000 to $475,000 -- 26%

"$475,000 and up -- 17%

"For example, if a retailer's annual net receipts are $600,000, the retailer would receive over the course of the business year: 32.5% of the first $175,000 ($56,875), and 26% of the next $300,000 ($78,000), and 17% of the remaining $125,000 ($21,250), for a total of $156,125.

"(b) 2-Tier Option:

"Net Receipts per Year -- Compensation -- Percent of Net Receipts

"up to $650,000 -- 26%

"$650,000 and up -- 19%

"For example, if a retailer's annual net receipts are $1,000,000, the retailer would receive over the course of the business year: 26% of the first $650,000 ($169,000), and 19% of the remaining $350,000 ($66,500), for a total of $235,500.

"(2) The compensation rates for the sale of video lottery game shares set forth in this rule are limited to compensation for the sale of shares for video poker games as described in OAR 177-200-0070."

The foregoing rule has since been renumbered as OAR 177-040-0027, and its scope now is limited to video poker retailers, rather than to the broader spectrum of retailers who offered various Lottery games to the public at the time that the former rule was adopted. However, with respect to video poker retailers, the issues the Court of Appeals addressed in this case remain viable.

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3. The Court of Appeals implicitly recognized that point when it rejected petitioners' argument that the statute did not permit the Lottery to balance the competing interests of retailers against revenues to the state but, rather, required it to maximize revenue by selecting the lowest rate of return for retailers that would keep them operating the games. The Court of Appeals ultimately solved the problem this way:

"We * * * conclude that ORS 461.445 requires the Lottery to establish a retailer compensation system that balances two competing objectives: maximizing state revenue and providing retailers with a reasonable rate of return. In doing so, [however,] the Lottery is not obligated to establish a rate of return that is the lowest one that the market will sustain[, i.e., one in which the retailers receive only so much as will cause them to continue to participate in the program]."

Wolf, 209 Or App at 676.

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4. We note in passing that the phrase, "the face of the rule," means the wording of the rule when read in the context of the other rules of which it is a part. We did not mean to suggest by the use of that phrase in AFSCME Local 2623 that the rule was to be read in isolation.

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5. Article XV, section 4(3), of the Oregon Constitution provides:

"There is hereby created the State Lottery Commission which shall establish and operate a State Lottery. All proceeds from the State Lottery, including interest, but excluding costs of administration and payment of prizes, shall be used for any of the following purposes: creating jobs, furthering economic development, financing public education in Oregon or restoring and protecting Oregon's parks, beaches, watersheds and critical fish and wildlife habitats."

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6. Our holding in this case arises out of the limited scope of review allowed under ORS 183.400. We do not by our holding suggest that petitioners could not in the future seek relief under another procedure, such as a contested case, or through a declaratory judgment. See, e.g., ORS 183.410 (declaratory judgment proceeding before agency).

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Filed: June 30, 2011 IN THE SUPREME COURT OF THE STATE OF OREGON In Re: Complaint as to the Conduct of J. MARK LAWRENCE, Accused. (OSB 08-115; SC S058778) En Banc On review of the decision of a trial panel of the Disciplinary Board. Argued and submitted May 2, 2011. Paula Lawrence, McMinnville, argued and cause and filed the briefs for accused. Stacy Hankin, Assistant Disciplinary Counsel, Tigard, argued the cause and filed the brief for the Oregon State Bar. PER CURIAM The complaint is dismissed. PER CURIAM The issue in this lawyer disciplinary proceeding is whether the accused, by releasing a partial transcript of a juvenile hearing to the press, violated Rule of Professional Conduct (RPC) 8.4(a)(4), which prohibits a lawyer from engaging in conduct that is prejudicial to the administration of justice. A trial panel found the accused guilty of violating RPC 8.4(a)(4) and suspended him for 60 days. We review the decision of the trial panel de novo. ORS 9.536(2); BR 10.6. Because we conclude that

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the Bar failed to prove by clear and convincing evidence that the accused's conduct caused prejudice to the administration of justice, we dismiss the complaint. The facts are straightforward and largely undisputed. In 2007, the accused represented a juvenile male who, along with another male friend, allegedly had touched or swatted several female classmates on the buttocks and had danced in front of the females in a lascivious manner. The incident occurred at the students' middle school. After being informed of the youths' behavior, the vice principal and a police officer interviewed the victims. Based on those interviews, the accused's client and his friend were arrested by a McMinnville Police Officer on February 22, 2007. On February 23, the Yamhill County Juvenile Department filed a delinquency petition alleging that the accused's client had committed acts that, if done by an adult, would have constituted five counts of first-degree sexual abuse and five counts of third-degree sexual abuse. At an initial detention hearing that same day, the court ordered the youths to remain in custody. The events giving rise to this disciplinary action arose out of a second detention hearing held on February 27, 2007, before Judge John Collins. The accused called two of the victims to testify on behalf of his client. The female victims testified that the youths were their friends and that they did not find the youths to be threatening in any way. Regarding the alleged sexual abuse, the female victims testified that the touching or swatting was not sexual in nature but rather was mere horseplay. The victims also testified that they felt pressured by the vice principal and the police officer to make the touching sound hurtful and uncomfortable when it was not. By the second detention hearing, the case was receiving substantial media 2

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attention. Judge Collins allowed the press to attend the detention hearing, but prohibited the press from recording the proceedings. The parties dispute whether the judge prohibited only video recordings or also prohibited audio recordings.1 A number of newspaper and television stories reported the events and testimony at the hearing. After the hearing, the accused obtained a copy of the official audio recording of the hearing and had a partial transcript prepared that contained the victims' testimony. In March 2007, a reporter contacted the accused about the February 27 hearing. The reporter, who was not present at the hearing, expressed disbelief that the female victims had felt pressured by the vice principal and the police officer to make the youths' actions seem sexual. The accused offered to give the reporter a copy of the partial transcript when it was available. The accused believed that it would have been improper to give the reporter the official audio recording of the hearing but thought that the transcript could be released. The accused contacted Deborah Markham, the deputy district attorney handling the case, to see if she objected to releasing the transcript. Markham told the accused that she believed that the court would have to consent. The accused then released the transcript to the reporter without obtaining permission from Judge Collins. Deputy District Attorney Deborah Markham testified that Judge Collins prohibited video recording. Judge Collins testified that he might have prohibited the press from recording the detention hearing, but that he did not remember whether he did so or not. He did remember allowing video recording at a later hearing in the proceeding. The accused testified that Judge Collins prohibited video recording but that he could not remember if the judge prohibited audio recording.
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When Judge Collins learned that the transcript had been released -following news reports that cited the transcript -- he called a meeting with Markham and the accused and told them to release no other transcripts. The testimony from the accused, Markham, and Judge Collins differs regarding that meeting. The accused described the meeting as relaxed and said that Judge Collins had stated that the release of the transcript was permissible. Markham testified that Judge Collins was "very concerned" about the release of the transcript and that Judge Collins said that the accused's disclosure violated the law. Judge Collins testified that the accused did not get his consent to release the transcript, but that he was not sure if the accused needed to do so under the circumstances of the case, particularly given the presence of the press at the hearing. In Judge Collins's description, the meeting was not contentious; although he requested that the parties refrain from releasing any additional transcripts, he did not "feel like [he] needed to be firm" and so did not issue an order barring further releases. In April 2008, several months after the juvenile case was resolved, Tim Loewen, director of the Yamhill County Juvenile Department, reported the accused's action of releasing the transcript to the Bar. After investigating the matter, the Bar charged the accused with violating RPC 8.4(a)(4)2 by releasing to the press "information
2

RPC 8.4(a) provides, in relevant part: "It is professional misconduct for a lawyer to: "* * * * * "(4) engage in conduct that is prejudicial to the administration of

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appearing in the record" of a juvenile case without court consent, in violation of ORS 419A.255(1) and (3).3 The Bar alleged that the accused had "usurped" Judge Collins's authority to control the proceeding by not seeking the court's consent before releasing the transcript, and thereby had caused prejudice to the administration of justice. In the proceeding before the trial panel, the accused argued that his release of the transcript did not violate ORS 419A.255 for each of three independent reasons: (1) the transcript that he had prepared was not a part of the record of the case and so was not subject to ORS 419A.255; (2) Judge Collins had consented to the release of the information contained in the transcript when he allowed the press to attend and report on

justice[.]"
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ORS 419A.255 provides, in relevant part:

"(1) The clerk of the court shall keep a record of each case, including therein the summons and other process, the petition and all other papers in the nature of pleadings, motions, orders of the court and other papers filed with the court, but excluding reports and other material relating to the child, ward, youth or youth offender's history and prognosis. The record of the case shall be withheld from public inspection but is open to inspection by the child, ward, youth, youth offender, parent, guardian, court appointed special advocate, surrogate or a person allowed to intervene in a proceeding involving the child, ward, youth or youth offender, and their attorneys. The attorneys are entitled to copies of the record of the case. "* * * * * "(3) Except as otherwise provided in subsection (7) of this section, no information appearing in the record of the case or in reports or other material relating to the child, ward, youth or youth offender's history or prognosis may be disclosed to any person not described in subsection (2) of this section without the consent of the court * * * ."

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the hearing; and (3) the information in the transcript could be released under ORS 419A.255(5)(b) and (d), which list certain exceptions to the confidentiality of juvenile records. Even assuming that he did violate ORS 419A.255, the accused asserted, he did not violate RPC 8.4(a)(4), because his conduct was not prejudicial to the administration of justice. That was so, according to the accused, because the defendant and the victims supported releasing the transcript and because the information contained in the transcript had already been made public as a result of the press attending and reporting on the hearing. Thus, in the accused's view, no harm -- actual or potential -- resulted from his conduct. The trial panel found by clear and convincing evidence that the accused had violated RPC 8.4(a)(4) and suspended the accused from the practice of law for 60 days. The trial panel first determined that ORS 419A.255(3) prohibited the accused from releasing the partial transcript to the press without the consent of the trial court and that the accused had violated the statute in doing so. With little discussion, the trial panel then found that the evidence that the accused had violated the statute also was sufficient to show prejudice to the administration of justice and thus that the accused had violated RPC 8.4(a)(4). The accused sought review in this court. To prove a violation of RPC 8.4(a)(4), the Bar must prove (1) that the accused lawyer's action or inaction was improper; (2) that the accused lawyer's conduct occurred during the course of a judicial proceeding; and (3) that the accused lawyer's conduct had or could have had a prejudicial effect upon the administration of justice. See In re Kluge, 335 Or 326, 345, 66 P3d 492 (2003) (citing In re Haws, 310 Or 741, 746-48, 6

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801 P2d 818 (1990)) (so stating for identically worded former DR 1-102(A)(4)). Because we find the issue to be dispositive, we begin by examining the third element -- whether the accused's conduct had or could have had a prejudicial effect on the administration of justice -- and assume, without deciding, that the accused's conduct violated ORS 419A.255(3) and otherwise satisfied the test set out in Kluge and Haws. Prejudice to the administration of justice "may arise from several acts that cause some harm or a single act that causes substantial harm to the administration of justice." Kluge, 335 Or at 345. This court has identified two components to the "administration" of justice: "1) The procedural functioning of the proceeding; and 2) the substantive interest of a party in the proceeding." Haws, 310 Or at 747. "A lawyer's conduct could have a prejudicial effect on either component or both." Id. The Bar argues that the accused's conduct, a single act, resulted in prejudice to the administration of justice because it had the potential to cause substantial harm to the procedural functioning of the court. The Bar asserts, "Substantial potential harm to the administration of justice occurs whenever a lawyer interferes in or usurps the court's ability to do its job in a proceeding pending before it." The Bar states that the accused "usurped" the court's authority by not seeking Judge Collins's consent prior to releasing the transcript. The Bar cites three disciplinary cases to support its position that the accused's conduct resulted in substantial potential harm to the administration of justice. First, in In re Eadie, 333 Or 42, 36 P3d 468 (2001), this court found a violation of former DR 1-102(A)(4) where the accused lawyer submitted a proposed order containing a 7

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misrepresentation that was intended to influence the judge in changing the trial date. Id. at 58. That conduct substantially harmed the procedural functioning of the court because it resulted in the judge acquiescing to a trial date preferred by the accused and made it necessary for the judge to resolve a dispute resulting from the accused's misrepresentation and to redraft an order. Id. Second, in In re Morris, 326 Or 493, 953 P2d 387 (1998), this court concluded that the accused lawyer had engaged in a single act of conduct that had the potential to cause substantial harm, either to the procedural functioning of the court or to the substantive interests of the parties, when she knowingly filed a notarized document that she had altered. Id. at 502-03. Third, in In re Thompson, 325 Or 467, 940 P2d 512 (1997), this court found a violation of former DR 1-102(A)(4) where the accused lawyer physically confronted a judge after receiving an adverse decision. That conduct caused substantial harm to the administration of justice because the accused's ex parte communication with the judge "unfairly attack[ed] the independence, integrity, and respect due a member of the judiciary." Id. at 475. The conduct also had the potential to cause substantial harm, because it could have influenced the judge to change her decision or to recuse herself from the case. Id. In each of the preceding cases, the accused lawyer engaged in conduct that had the potential to disrupt or to improperly influence the court's decision-making process, Thompson, 325 Or at 475; that created unnecessary work for the court, Eadie, 333 Or at 58; or that had the potential to mislead the court, Morris, 326 Or at 503. Moreover, in Eadie and Morris, the accused lawyers made knowing misrepresentations to the court. Similarly, in Kluge, the accused lawyer's conduct in knowingly filing an 8

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untimely motion to disqualify the trial judge and then failing to serve the motion on opposing counsel caused prejudice to "the procedural functioning of the judicial system by imposing a substantial burden upon both opposing counsel and [the trial judge] to undo the accused's actions." 335 Or at 346. In this case, the Bar has made no showing, as required by Kluge and Haws, that the accused's conduct harmed the procedural functioning of the judicial system, either by disrupting or improperly influencing the court's decision-making process or by creating unnecessary work or imposing a substantial burden on the court or the opposing party. Nor has the Bar shown that his conduct had the potential to result in any of the above. Certainly, Judge Collins did not testify that the accused's actions interfered with Judge Collins's conduct of the juvenile proceeding. Although the Bar correctly asserts that ORS 419A.255 gives the trial court control over the release of protected information in a juvenile record -- and, as noted, we assume without deciding that the accused acted improperly in not seeking the trial court's consent -- the Bar's theory fails to take into account the fact that the information contained in the partial transcript that the accused released was presented in open court and had already been reported by the press.4 It is difficult to see how the accused's release of the same information, in the context of this case, had the potential to cause any harm to the proceeding, much less substantial harm.

Article I, section 10, of the Oregon Constitution grants members of the public, including the press, the right to attend juvenile hearings. State ex rel Oregonian Pub. Co. v. Deiz, 289 Or 277, 284-85, 613 P2d 23 (1980).

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See Kluge, 335 Or at 345 (prejudice to the administration of justice may arise from "several acts that cause some harm or a single act that causes substantial harm"). Indeed, the Bar makes no effort to show that the accused's conduct could have resulted in new information being made public or that the release of the partial transcript itself had any potential impact on the proceeding. In fact, after the press attended the hearing and the accused released the transcript, Judge Collins allowed members of the press to listen to the official audio recording of the hearing. Nevertheless, the Bar asserts that Judge Collins was sufficiently "concerned" about the release of the information to call the accused and Markham to his chambers to discuss the incident. The fact that Judge Collins was "concerned" and met with the accused and Markham does not, by itself, demonstrate the potential for substantial harm to the procedural functioning of the court. Judge Collins himself stated that, although "in a perfect world," he probably would not have wanted the transcript released, in the context of this case and the open court provision of Article I, section 10, of the Oregon Constitution, the release of the partial transcript was likely permissible without his consent because "if [the press is] * * * going to know the information and report the information, at least get it right." Judge Collins's testimony, then, does not demonstrate that the accused's conduct impacted the procedural functioning of the court, even if the accused's conduct was cause for "concern." Nor does the Bar offer any evidence to prove that the release of the partial transcript harmed the substantive interests of the accused's client, the victims, or the state. The accused released the transcript, with the support of his client, in response to an 10

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inquiry from the media and in order to respond to inaccuracies appearing in some media reports. The accused maintained the confidentiality of the victims' names in the transcript, referring to them by their initials, consistent with an earlier order by Judge Collins. In this proceeding, the accused also submitted letters from the two victims who testified (and their parents) that stated their support for the release of the partial transcript. Finally, there was no testimony from the Yamhill County Juvenile Department that the release of the partial transcript had any effect on its substantive interests or its ability to prosecute the case. The Bar appears, instead, to take the position that virtually any violation of a statute, rule, or court order that occurs during the course of a court proceeding and relates to the conduct or any procedural aspect of that proceeding necessarily is prejudicial to the administration of justice. The Bar asserts, in effect, that "substantial potential" harm is implicit in the accused's conduct. Our cases, however, require proof by clear and convincing evidence that an accused's conduct in a specific judicial proceeding caused actual or potential harm to the administration of justice and, when only one wrongful act is charged, that actual or potential harm must be "substantial." Kluge, 335 Or at 345; Haws, 310 Or at 748. Here, the Bar's evidence did not prove that substantial harm resulted or could have resulted from the accused's conduct. We conclude that the Bar has not proved by clear and convincing evidence that the accused violated RPC 8.4(a)(4). The accused's conduct did not result in such prejudice, because there is no evidence that the release of the partial transcript, which contained solely information already presented in open court and reported by the press, 11

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harmed the procedural functioning of the judicial system. Nor is there any evidence that the substantive rights of the accused's client, the other juvenile defendant, the victims, or the state were harmed. "Prejudice to the administration of justice" requires such a showing. Haws, 310 Or at 747-48. The complaint is dismissed.

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