S51165 Kaib's Roving R.Ph. Agency v. Employment Dept.

SUPREME COURT CASES

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State: Oregon

Docket No: none

Case Date: 04/28/2005

FILED: April 28, 2005

IN THE SUPREME COURT OF THE STATE OF OREGON

KAIB'S ROVING R.PH. AGENCY, INC.,

EMPLOYMENT DEPARTMENT,

Respondent on Review/

Petitioner on Review.

(96-T-0123A; CA A110993; SC S51078, S51165)

On review from the Court of Appeals.*

Argued and submitted November 8, 2004.

James E. Mountain, Jr., of Harrang Long Gary Rudnick P.C., Portland, argued the cause and filed the brief for petitioner on review/respondent on review Kaib's Roving R.Ph. Agency, Inc. With him on the briefs on the merits were Craig A. Etter, pro hac vice, of Greenberg Traurig, LLP, McLean, Virginia, and Harvey J. Shulman, pro hac vice, Washington, D.C.

Denise G. Fjordbeck, Assistant Attorney General, Salem, argued the cause and filed the briefs for respondent on review/petitioner on review Employment Department. With her on the briefs were Hardy Myers, Attorney General, and Mary H. Williams, Solicitor General.

Joseph H. Hobson, Jr., Salem, filed briefs for amicus curiae Oregon Farm Bureau Federation.

Ross Day, Tigard, filed a brief for amicus curiae Oregonians in Action Legal Center.

Before Carson, Chief Justice, and Gillette, Durham, Riggs, De Muniz, and Balmer, Justices.**

GILLETTE, J.

The decision of the Court of Appeals is reversed, and the case is remanded to that court to award reasonable attorney fees and costs.

* 189 Or App 579, 77 P3d 327 (2003).

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

GILLETTE, J.

This is an attorney fee dispute arising out of a judicial review proceeding in which the Court of Appeals vacated and remanded for reconsideration an order of the Employment Department (department) that affirmed an unemployment tax assessment against petitioner. The party that obtained the remand, Kaib's Roving R.Ph. Agency, Inc. (petitioner), sought attorney fees and costs under either ORS 183.497(1)(a) or (b), set out post. A divided panel of the Court of Appeals denied that request. Kaib's Roving R.Ph. Agency v. Employment Dept., 189 Or App 579, 77 P3d 327 (2003) (Kaib's III). We allowed both petitioner's and the department's petitions for review. For the reasons that follow, we reverse the decision of the Court of Appeals.

The operative facts and procedural history of this proceeding are not in dispute. Petitioner provides relief pharmacists to various pharmacies in this state. Petitioner views those pharmacists as independent contractors. The department, however, views the pharmacists as petitioner's employees, for whom petitioner must pay unemployment tax. Accordingly, in 1996, the department sent petitioner an assessment for unemployment taxes and interest. Petitioner requested a hearing and an administrative law judge (ALJ) upheld the assessment. Petitioner then sought judicial review. The Court of Appeals reversed the department's order on the ground that the department had ignored an earlier ruling by the Department of Revenue (DOR), concluding that pharmacists were not employees, notwithstanding the fact that a statute, ORS 670.600, (1) directs both departments to use the same statutory criteria to determine independent contractor status. The Court of Appeals remanded the matter for further consideration. Kaib's Roving R.Ph. Agency v. Employment Dept., 161 Or App 290, 984 P2d 886 (1999) (Kaib's I).

Upon receipt of the notice of remand, the ALJ wrote a letter to petitioner acknowledging that the Court of Appeals had remanded the matter and informing petitioner that the hearings section did not intend to hold another hearing, in light of the fact that, in the ALJ's view, the hearings section had "the evidence we need to respond to the Court." The ALJ further informed petitioner that the hearings section would be issuing a proposed order, to which petitioner would be permitted to respond with exceptions, after which "the agency [would] issue a Final Order."

Thereafter, the ALJ issued a proposed order that once again affirmed the assessment. After petitioner received that proposed order, petitioner formed a belief that, in considering the case, the hearings section had had improper contact with various Employment Department officials outside that section including, specifically, the director of the department. Accordingly, petitioner requested records pertaining to contacts between anyone in the hearings section and anyone outside the hearings section concerning the substance of the case. The department complied with that request in April and May 2000. Petitioner also submitted multiple exceptions to the specific findings in the proposed order. The last objection alleged that the adjudicatory process used in the case violated petitioner's due process right to an impartial tribunal and violated applicable Oregon procedural statutes, because the hearings section decision-makers had had ex parte contacts concerning the merits of the issues before the hearings section. In June 2000, the department issued a final order in the proceeding that affirmed the assessment, denied that the hearings section had violated petitioner's due process rights or any Oregon procedural statutes, and denied that department officials had engaged in any improper contacts concerning the merits of the issues before the hearings section. The director of the department signed that order.

Petitioner sought judicial review of that final order in the Court of Appeals. In its brief to that court, petitioner argued that the department erred in concluding that it had not violated petitioner's due process right to a fair hearing before an impartial adjudicator, that the department erred in concluding that it was entitled to ignore the earlier Department of Revenue ruling that petitioner's pharmacists were independent contractors, and that the department erred in concluding that the pharmacists were petitioner's employees and not independent contractors.

The Court of Appeals once again vacated the department's final order and remanded the case for reconsideration under the terms of its earlier decision in Kaib's I, this time directing the department to hold a new hearing before an ALJ who was not involved in the previous remand. Kaib's Roving R.Ph. Agency v. Employment Dept., 182 Or App 481, 487, 50 P3d 1193 (2002) (Kaib's II). In deciding the case in petitioner's favor, the Court of Appeals declined to address the constitutional arguments that petitioner raised; instead, the court resolved the issue on subconstitutional grounds.

The court observed that the chief of the department's hearings section, in collaboration with other department employees, had prepared the final order for the director's signature, which, as noted, the director then had signed. However, the court pointed out, two sections of the department's governing statute, ORS 657.683 and ORS 657.684, make it clear that the director is a party to proceedings before a hearing officer. Id. at 485-86. It followed, the court held, that the department must reconsider the case once again. Id.

The Court of Appeals further observed in Kaib's II that nothing in the department's governing statute changes the respective roles of the director and the ALJ after a remand. Id. at 486. Accordingly, the court reasoned, after it had held in Kaib's I that "the Employment Department must reconsider the evidence offered by [petitioner] regarding the Department of Revenue's prior determination," and remanded the proceeding for reconsideration, the case should have gone back to an ALJ. Kaib's II, 182 Or App at 486, quoting Kaib's I, 161 Or App at 298. The court noted that, although it had not expressly directed such a remand to an ALJ, that was the necessary consequence of its decision, because only an ALJ has authority to issue orders on behalf of the department in this kind of case. Id. at 486-87. The court once again vacated the department's order and remanded the matter for reconsideration. Id. at 487.

Having obtained what it considered to be a ruling in its favor in Kaib's II, petitioner then requested the Court of Appeals to award attorney fees and costs under ORS 183.497. As noted, a divided Court of Appeals denied that request, and we allowed both parties' petitions for review.

ORS 183.497 provides, in part:

"(1) In a judicial proceeding designated under subsection (2) of this section the court:

"(a) May, in its discretion, allow a petitioner reasonable attorney fees and costs if the court finds in favor of the petitioner.

"(b) Shall allow a petitioner reasonable attorney fees and costs if the court finds in favor of the petitioner and determines that the state agency acted without a reasonable basis in fact or in law; but the court may withhold all or part of the attorney fees from any allowance to a petitioner if the court finds that the state agency has proved that its action was substantially justified or that special circumstances exist that make the allowance of all or part of the attorney fees unjust.

"(2) The provisions of subsection (1) of this section apply to an administrative or judicial proceeding brought by a petitioner against a state agency, as defined in ORS 291.002, for:

"(a) Judicial review of a final order as provided in ORS 183.480 to 183.484."

The Court of Appeals held (and the parties do not dispute) that Kaib's II was a proceeding for judicial review of a final order of the Employment Department and, therefore, that it was a judicial proceeding to which ORS 183.497 applies. Kaib's III, 189 Or App at 584. We agree. In addition, the Court of Appeals held that it had found "in favor of" petitioner in Kaib's II, in light of the fact that, as a result of its decision, petitioner is entitled to a reassessment of the case by a new decision-maker. Id. at 585-86.

In explaining its decision in Kaib's III nonetheless to deny petitioner attorney fees and costs, the Court of Appeals began by reviewing the standard for such awards. The court acknowledged that ORS 183.497 seems to provide alternative standards for awarding attorney fees and costs--ORS 183.497(1)(a) making such awards discretionary in most circumstances, and ORS 183.497(1)(b) making them mandatory in cases in which the agency acted "without a reasonable basis in fact or in law." Kaib's III, 189 Or App at 585. However, it held that the two provisions were, under the circumstances of the case before it, legally indistinguishable. Id. at 587. The court reasoned that, in Van Gordon v. Ore. State Bd. of Dental Examiners, 63 Or App 561, 565-66, 666 P2d 276 (1983), it had adopted, with respect to discretionary awards, a "no reasonable basis in law or fact" standard. Kaib's III, 189 Or App 586. In addition, according to the court, ORS 20.075 provides criteria for discretionary decisions whether to award fees, and those criteria also capture the "no reasonable basis in law or fact" standard. (2) Kaib's III, 189 Or App at 586-87. For that reason, the court stated, it would not distinguish, for purposes of its analysis, between claims for fees asserted under ORS 183.497(1)(a) and (b). Id. at 587.

The Court of Appeals next turned to consider petitioner's contention that the department had ignored two key provisions of its own unambiguous governing statute, ORS 657.683 and ORS 657.684, when it failed to recognize its party status and permitted the director rather than the ALJ to sign the final order, and that that fact inexorably leads to the conclusion that the department "acted without a reasonable basis in fact or in law." The court stated that there were two difficulties with petitioner's position. First, although it had cited them, petitioner had not relied on ORS 657.683 and ORS 657.684 when it argued to the Court of Appeals in Kaib's II that the department had acted improperly in rendering its decision in the proceeding. Rather, petitioner had confined its arguments to constitutional due process claims that the department had denied petitioner a right to a fair hearing before an impartial adjudicator. Kaib's III, 189 Or App at 588. Second, and more importantly, the Court of Appeals ruled that the department had not acted unreasonably when it failed to discern the applicability of ORS 657.683 and ORS 657.684 to petitioner's case. That is so, according to the court, because no appellate court previously had construed those sections and adjudged them to be applicable in circumstances like the present. Under those circumstances, the court held, an award of fees was not warranted. (3) Id. at 589-90.

In this court, petitioner argues that the Court of Appeals misconstrued ORS 183.497 by conflating the standards for discretionary and mandatory fee awards in paragraphs (a) and (b) of subsection (1) and that, based at least in part on that misconstruction, it erred in holding that an award of fees was not warranted. As will be shown below, we agree that the Court of Appeals misconstrued ORS 183.497(1). However, before examining the standards for awards of fees under the two paragraphs of that subsection, we take up a preliminary objection that the department has raised to any award of attorney fees to petitioner, viz., an argument that the Court of Appeals erred in concluding that its decision in Kaib's II was a finding "in favor of" petitioner. That is the appropriate approach because, if the department is correct that the Court of Appeals' vacation of the final order and remand in Kaib's II was not a finding "in favor of" petitioner, then no award of fees is appropriate under either paragraph of ORS 183.497(1).

ORS 183.497 provides for an award of attorney fees and costs "[i]n a judicial proceeding * * * if the court finds in favor of the petitioner." As noted, the Court of Appeals held that it had found in favor of petitioner in Kaib's II because petitioner gained a reassessment of the case by a new decision-maker. The department argues that that is not sufficient. According to the department, petitioner won only a de minimus victory, because petitioner has not advanced its position with respect to the substantive merits of its claim. And, the department reasons, because the Court of Appeals' decision in Kaib's II did not resolve the ultimate issues in the case in petitioner's favor, it was not a finding "in favor of" petitioner within the meaning of ORS 183.497.

To discern the meaning of the phrase "in favor of," we employ the now-familiar methodology for construing statutes that this court described in PGE v. Bureau of Labor and Industries, 317 Or 606, 859 P2d 1143 (1993). Under that methodology, we first examine the text of the statute, in context, in an effort to discern the intent of the legislature. Id. at 610. If the meaning of the statute is clear at that level of analysis, further inquiry is unnecessary. Id. at 611.

We begin with the observation that the department is not arguing that the Court of Appeals' decision in Kaib's II was not actually "in favor of" petitioner in the ordinary sense. Obviously, the outcome of Kaib's II was a significant success for petitioner, because the Court of Appeals vacated the department's order and remanded for a new hearing in accordance with procedures that the department had resisted. However, the department contends that petitioner had not won a victory justifying an award of attorney fees and costs. According to the department, a decision is only "in favor of" a particular party if it resolves the ultimate issues of the case; anything else is insufficient to trigger an entitlement to attorney fees under ORS 183.497(1).

The department points to no textual or contextual clues to support its proffered interpretation. (4) Rather, it jumps straight to consideration of legislative history. Text and context, however, support a contrary view. First, ORS 183.497(1) applies in proceedings for "judicial review of a final order." ORS 183.497(2)(a). Judicial review can and often does result in findings for or against parties without addressing the ultimate merits of a claim. No wording in ORS 183.497 suggests that the legislature intended to limit attorney fee awards to judicial review of the merits of a claim. Indeed, the fact that the statute deals with awards of fees in "judicial proceedings" indicates that it is not concerned with the overall administrative proceeding but, rather, with the specific result obtained on judicial review.

The department asserts, based on its review of the legislative history, that a finding "in favor of" a party is equivalent to a finding that a party is a "prevailing party." It also cites several cases supporting the proposition that only a party who obtains substantive relief on the claims asserted is a "prevailing party" for purposes of an award of attorney fees and costs. That argument is misplaced. ORS 183.497 does not use the phrase "prevailing party," but another part of ORS chapter 183 does. ORS 183.485(1) requires a court having judicial review of contested cases to direct its decision, including its judgment, to the agency that issued the order being reviewed, and permits the court to "direct that its judgment be delivered to the circuit court for any county designated by the prevailing party for entry in the court's register." Clearly, the legislature knew how to refer to a "prevailing party" when that was what it intended. The fact that the legislature chose instead to refer in ORS 183.497(1) to a finding "in favor of" a party suggests that it intended something different.

Based on the foregoing, we conclude that the meaning of the phrase "in favor of" is clear at the first level of our analysis and further inquiry is unnecessary. (5) A decision of the court may be "in favor of" a party, even if it addresses only procedural matters. (6) In this case, the Court of Appeals' decision vacating the final order and remanding the proceeding for reassessment before a different decision-maker was a decision "in favor of" petitioner.

We turn now to petitioner's assertion that the Court of Appeals erred in denying it attorney fees and costs under ORS 183.497(1)(a) or (b). ORS 183.497(1)(a) provides that, in a judicial proceeding, the court "[m]ay, in its discretion, allow a petitioner reasonable attorney fees and costs if the court finds in favor of the petitioner." By the plain words of that subsection, that authority to award fees and costs is discretionary. McKean-Coffman v. Employment Div., 314 Or 645, 647, 842 P2d 380 (1992). By contrast, the plain words of ORS 183.497(1)(b) state that the court "[s]hall allow a petitioner reasonable attorney fees and costs" if the court finds that a state agency "acted without a reasonable basis in fact or in law." Thus, in contrast to ORS 183.497(1)(a), ORS 183.497(1)(b) imposes a mandatory obligation on the court in cases in which an agency has acted without such a reasonable basis. (7) McKean-Coffman, 314 Or at 647; see also 1000 Friends v. LCDC, 293 Or 440, 442, 649 P2d 592 (1982) (in construing earlier version of statute, court stated that, by using the word "shall," statute goes beyond merely allowing court discretion to award fees but, instead, requires court to award fees under circumstances described). The Court of Appeals' contrary construction, which treated the two subsections as setting indistinguishable standards, was error. (8)

As discussed above, petitioner's primary argument is that, in ignoring or being unaware of key provisions of its own unambiguous governing statutes, in failing to recognize its party status, and in permitting the director of the department rather than the ALJ to sign the final order, the agency "acted without a reasonable basis in * * * law." Therefore, petitioner contends, it is entitled to a mandatory award of attorney fees and costs under ORS 183.497(1)(b). In response, the department essentially adopts the reasoning of the Court of Appeals, asserting that an award of fees is not warranted because petitioner did not raise ORS 657.683 and ORS 657.684 as bases for its objections to the final order, and that the department did not act unreasonably in failing to understand that the director was a party to the proceeding and had no authority to sign the order.

The first of those two contentions is easily disposed of. With respect to mandatory awards, there is no room to consider whether the Court of Appeals decided the case on a ground asserted by the petitioner. That is, while the content and contours of a petitioner's argument to the Court of Appeals and its failure to urge a dispositive point of law in that court may be crucial in evaluating whether it is appropriate for the Court of Appeals to exercise its discretionary authority to award fees, such a consideration is irrelevant to the question of the reasonableness of a state agency's earlier conduct in issuing a final order. We must answer that question by reference to the agency's authority as delineated in its governing statutes.

The Court of Appeals held in Kaib's II, and we agree, that ORS 657.683 and ORS 657.684 clearly treat the director as a party to the proceeding and not as the ultimate decision-maker. ORS 657.683 sets out the procedure by which an employer who objects to the director's assessment of employment taxes under ORS 657.681 may seek a hearing before an ALJ. First, the employer files an application for a hearing. ORS 657.683(1). Then an ALJ sets the date and time for a hearing and "shall give notice of the time and place of the hearing to the director * * * and shall give notice to the [employer]." ORS 657.683(2). Thereafter, the ALJ holds a hearing and enters a decision either affirming, modifying, or setting aside the assessment, and promptly notifies both the employer and the director. ORS 657.683(4). The decision of the ALJ is final, ORS 657.683(5), except that either the employer or the director may seek judicial review of the decision by filing a petition for judicial review. ORS 657.684.

The department either ignored the foregoing statutory provisions in the present case or it was unaware of them. It attempts to excuse its failure to act in accordance with those unambiguous provisions by asserting that no court had interpreted them and that the Court of Appeals' remand order was vague in stating that "the Employment Department" must reconsider the matter. The department, however, is obligated to understand the clear provisions of its governing statute without a court's published opinion interpreting it. As Judge Wollheim stated in his dissenting opinion below,

"State agencies are expected to know the law, just like citizens. Ignorance of the law is no excuse. This is especially the situation with state agencies, which are assumed to have subject-matter expertise. * * * It is simply not acceptable for a state agency to defend its failure to comply with state law by arguing that it was unaware of [that law]."

This court has explained that an agency's erroneous interpretation of its statutes will not, in every case, support a claim for attorney fees under ORS 183.497(1)(b). McKean-Coffman, 314 Or at 649. An agency's interpretation of a statute may be legally incorrect but not unreasonable. In such a case, a mandatory award of fees is not appropriate. Id. This, however, is not such a case. The department has not proffered an "interpretation" of ORS 657.683 and ORS 657.684, or any other section of its governing statute, that would have permitted the director to sign the final order in this case.

As is evident from the foregoing, we conclude that the department acted without a reasonable basis in law when it failed to recognize that the director was a party to the proceeding and permitted the director, rather than the ALJ, to sign the final order. Because this case fits the other criteria in ORS 183.497(1)(b) for an award of fees, granting petitioner's request for an award of attorney fees was mandatory. The Court of Appeals' contrary ruling denying fees and costs was error. (9)

The decision of the Court of Appeals is reversed, and the case is remanded to that court to award reasonable attorney fees and costs.

1. ORS 670.600 provides:

"As used in various provisions of ORS chapters 316, 448, 656, 657, 671 and 701, an individual or business entity that performs labor or services for remuneration shall be considered to perform the labor or services as an 'independent contractor' if the standards of this section are met[.]"

In S-W Floor Cover Shop v. Natl. Council on Comp. Ins., 318 Or 614, 628, 872 P2d 1 (1994), this court concluded that the legislative intent behind that wording was to achieve uniformity as to who qualifies as an independent contractor for purposes of, among other things, the revenue code and the unemployment laws.

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2. ORS 20.075 provides, in part:

"(1) A court shall consider the following factors in determining whether to award attorney fees in any case in which an award of attorney fees is authorized by statute and in which the court has discretion to decide whether to award attorney fees:

"* * * * *

"(b) The objective reasonableness of the claims and defenses asserted by the parties."

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3. Judge Wollheim filed a dissenting opinion in which he contended that petitioner was entitled either to a mandatory or a discretionary award of fees under ORS 183.497. Id., 189 Or App at 590-94.

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4. The department claims that the "plain meaning" of the words "in favor of" is "unequivocal and explicit: the challenged order must be invalidated or altered in a way that is of present benefit to the petitioning party." (Emphasis omitted.) According to the department, that proposition means one thing, viz., that the challenged order must have been invalidated on the merits of the substantive claim. That conclusion does not follow from its premise, however. It unquestionably is of present benefit to petitioner to be granted reassessment of its case before a different decision-maker.

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5. Given our view of the clarity of the text and context on this point, it is unnecessary to describe the legislative history in any detail. It is sufficient here to note that our review of the legislative history to which the department has referred us does not change our view of the intended meaning of the phrase "in favor of," based on text and context alone.

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6. We say "may be," rather than "is," only because there could be circumstances in which a party's "win" truly was minimal, even pyrrhic. But that is not the case here.

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7. The mandatory obligation to award fees in ORS 183.497(1)(b) is subject to an exception allowing the court to "withhold all or part of the attorney fees from any allowance to a petitioner if the court finds that the state agency has proved that its action was substantially justified or that special circumstances exist that make the allowance of all or part of the attorney fees unjust." The department did not rely on that exception in its objections to petitioner's attorney fee request in the Court of Appeals, and the Court of Appeals did not address its meaning or application in this case. The department has made an argument to this court that the exception applied, but that argument is unpreserved, and we therefore do not consider it.

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8. That error appears to have been due, at least in part, to an inappropriately narrow reading of that court's Van Gordon decision. In any event, this court's later decision in McKean-Coffman makes it absolutely clear that the authority conferred by each subsection of ORS 183.497(1) differs. 314 Or at 647.

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9. In light of our ruling under ORS 183.497(1)(b), it is not necessary to consider petitioner's arguments concerning its entitlement to fees under the court's discretionary authority in ORS 183.497(1)(a).

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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
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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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