S52422 Schnitzer Investment Corp. v. Certain Underwriters

SUPREME COURT CASES

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State: Oregon

Docket No: none

Case Date: 06/30/2006

FILED: June 30, 2006

IN THE SUPREME COURT OF THE STATE OF OREGON

SCHNITZER INVESTMENT CORP.,

Petitioner on Review,

CERTAIN UNDERWRITERS AT LLOYD'S OF LONDON
and CERTAIN LONDON MARKET INSURANCE COMPANIES,
THE INSURANCE COMPANY OF THE STATE OF PENNSYLVANIA,
TRANSPORTATION INSURANCE COMPANY;
CONTINENTAL CASUALTY COMPANY;
INSURANCE COMPANY OF NORTH AMERICA;
and PHOENIX INSURANCE COMPANY,

Respondents on Review.

(CC 9902-02004; CA A116662; SC S52422)

En Banc

On review from the Court of Appeals.*

Argued and submitted March 10, 2006.

Charles F. Hinkle, Stoel Rives, LLP, Portland, argued the cause and filed the brief for petitioner on review. With him on the brief was Joan P. Snyder.

I. Franklin Hunsaker, Portland, argued the cause and filed the briefs for respondent on review Certain Underwriters at Lloyd's of London and Certain London Market Insurance Company. With him on the briefs were Paul J. Killion and Bruce J. Rome, Duane Morris LLP, San Francisco.

Peter J. Mintzer, Cozen O'Connor, Seattle, filed the response and brief for respondent on review The Insurance Company of the State of Pennsylvania. With him on the brief were Thomas M. Jones and Helen A. Boyer.

David E. Prange, Abbott & Prange, PC, Portland, filed the response and brief for respondents on review Transportation Insurance Company and Continental Casualty Company. With him on the brief was Nicholas A. Nardi.

Peter R. Chamberlain, Bodyfelt, Mount, Stroup & Chamberlain, Portland, filed the response for respondent on review Insurance Company of North America. With him on the response was R. Lind Stapley, Soha & Lang, P.S., Seattle.

Timothy R. Volpert, Davis Wright Tremaine, LLP, Portland, filed the response for respondent on review The Phoenix Insurance Company. With him on the response was Everett W. Jack, Jr.

William H. Walters, Miller Nash, LLP, Portland, filed the brief for amici curiae Northwest Natural Gas Company, ZRZ Realty Company, Zidell Remediation Funding Trust, Zidell Marine Corporation, and Tube Forgings of America, Inc. With him on the brief was Gayle Patterson, attorney for Northwest Natural Gas Company.

KISTLER, J.

The decision of the Court of Appeals is affirmed.

* Appeal from Multnomah County Circuit Court, David Gernant, Judge. 197 Or App 147, 104 P3d 1162 (2005).

KISTLER, J.

Plaintiff owns property in Portland near the Willamette River. After the Oregon Department of Environmental Quality (DEQ) ordered plaintiff to clean up environmental contamination on its property, plaintiff brought this action seeking, among other things, indemnification from defendants for the costs that it had incurred in complying with DEQ's orders. The trial court granted defendants' summary judgment motion and entered judgment in their favor. Although the Court of Appeals disagreed with some aspects of the trial court's judgment, it upheld the trial court's ruling that defendants had no duty, under the terms of certain insurance policies that they had issued, to indemnify plaintiff. Schnitzer Investment Corp. v. Certain Underwriters, 197 Or App 147, 104 P3d 1162 (2005). We allowed plaintiff's petition for review to consider that issue and now affirm the Court of Appeals decision.

Plaintiff's property is environmentally contaminated as a result of industrial and chemical manufacturing. Most of the contaminants are in the soil, but the groundwater also contains some contamination above background levels. (1) Beginning in 1988, plaintiff and DEQ started investigating the extent of the contamination and the appropriate means to remedy it.

After notice, DEQ included plaintiff's property on a list of sites that needed further investigation or cleanup. DEQ divided the property into three parts, Units A, B, and C. In 1993 and 1995, DEQ issued Records of Decision directing plaintiff to remedy environmental contamination on Units A and C. DEQ determined that no remedial measures were necessary for Unit B.

Over the years, defendants have issued various comprehensive general liability policies to plaintiff. Some of those polices provided primary coverage; others were excess or umbrella policies. All the policies, however, contain essentially the same provision, which gives rise to this litigation. Defendants agreed to pay all sums "which the insured shall become legally obligated to pay as damages because of * * * property damage." The policies defined "property damage" as:

"(1) physical injury to or destruction of tangible property which occurs during the policy period including the loss of use thereof at any time resulting therefrom, or (2) loss of use of tangible property which has not been physically injured or destroyed provided such loss of use is caused by an occurrence during the policy period[.]" (2)

Finally, the policies contained a number of exclusions from coverage, including an exclusion for property damage to "property owned or occupied by or rented to the insured[.]"

The terms of defendants' policies frame the issue in this case. Under the terms of those policies, defendants had no duty to indemnify plaintiff for the costs that it incurred because of contamination to its own property. That much follows from the "owned property" exclusion. Groundwater, however, is the property of the state. See ORS 537.110 (recognizing state ownership of water). Defendants do have a duty to indemnify plaintiff for the costs that plaintiff became "legally obligated to pay because of property damage" to the groundwater.

It follows from the terms of defendants' policies that this case presents two issues. The first issue is whether there was "property damage" to the groundwater -- i.e., whether physical damage (environmental contamination) had occurred to the groundwater during the policy period. The second issue is whether plaintiff was legally obligated to incur clean-up costs because of existing contamination to the groundwater. If it were, then defendants' policies required them to indemnify plaintiff for those costs.

On the first issue, defendants do not dispute, for the purposes of summary judgment, that the environmental contaminants on plaintiff's property resulted in some contamination, above background levels, to the groundwater during the policy period; that is, defendants assume that some "property damage" occurred to the groundwater during the policy period. The issue that this case turns on is the second one -- whether plaintiff was "legally obligated" to incur certain costs because of property damage to the groundwater. On that issue, the 1993 and 1995 Records of Decision that DEQ issued define the scope of plaintiff's legal obligation.

Unless an ambiguity exists, we determine the meaning of those Records of Decisions as a matter of law, based on those decisions only and without reference to extrinsic evidence. See State v. Swain/Goldsmith, 267 Or 527, 530, 517 P2d 684 (1974) (signed order, rather than judge's statements, controls). If the decision is ambiguous, we may look to the record before DEQ to help determine the decision's meaning. See Bennett v. Bennett, 208 Or 524, 529, 302 P2d 1019 (1956) (stating proposition). We begin with the terms of the 1995 Record of Decision directing plaintiff to remedy the contamination to Unit A of its property. (3)

The 1995 Record of Decision sets out the following findings. Unit A is approximately 3.4 acres. Except for the northeast corner, Unit A lies approximately 200 feet from the Willamette River and is not subject to seasonal flooding. Previous owners of that part of the property had manufactured pesticides and agricultural chemicals on it. They also had used it for a plate and structural steel warehouse.

As a result of those activities, the soil in Unit A contained various metals, organic chemicals, and pesticides that exceeded background levels. The metals, semi-volatile organic chemicals, and pesticides were concentrated in specific locations or "hot spots" around the property (primarily around the former pesticide plant and what had been a surface impoundment pond). Concentrations of volatile organic chemicals were "relatively low" but were not restricted "to a particular subsurface unit or location within Unit A."

In assessing the degree to which those pollutants were subject to migration, DEQ found that the "organic contaminants present, particularly the chlorinated pesticides and [carcinogenic polycyclic aromatic hydrocarbon] compounds[,] generally have low solubilities in water and absorb to soil." Consistently with that finding, DEQ determined that "[l]eaching of contaminants from the soil into the dissolved phase via infiltrating precipitation is not a significant contaminant transport mechanism * * *."

DEQ also determined that "[r]elatively low metals concentrations (both total and dissolved) were found in groundwater samples." None of the dissolved metal concentrations exceeded current federal maximum contaminant levels for safe drinking water. The same conclusion was true for volatile organic compounds. DEQ found low concentrations of those compounds and one chlorinated herbicide, all of which were below the current maximum contaminant levels. Finally, DEQ noted that concentrations of hydrogen sulfide gas exceeding 10 parts per million were measured at two well heads but that the "concentrations of sulfur species in groundwater have not been quantified."

Based on those findings, DEQ found that "Unit A poses no significant risk of adverse impact on the environment" -- i.e., DEQ did not find a significant risk of adverse impact on the groundwater. Rather, DEQ found that the environmental contamination posed risks to human health; specifically, it found that the risk to human health derived from "long-term direct contact with near-surface soil" to which the contaminants had bound. DEQ observed that "[t]he routes of exposure included soil ingestion, dermal contact, and inhalation of particulates." Applying certain risk factors, DEQ concluded that "Unit A soils pose a potential chronic risk from surficial contamination for children under an uncontrolled residential site usage scenario because of possible ingestion, inhalation and dermal absorption of soil contaminants." (4) It also found that certain levels of carcinogenic risk may occur from "surficial exposure to pesticides and [carcinogenic polycyclic aromatic hydrocarbon compounds] * * * resulting from ingestion, dermal contact, and inhalation of soil."

Finally, DEQ noted that it had not considered whether hydrogen sulfide was migrating to the surface by way of the groundwater. It found that "[g]roundwater monitoring will be conducted as part of the selected remedy to evaluate the potential presence of hydrogen sulfide or other sulfur species."

In directing plaintiff to remedy the environmental contamination on Unit A, DEQ sought to determine the most cost-effective remedy in light of the magnitude of the risks that the contaminants on Unit A posed. After considering several possible remedies, DEQ directed plaintiff (1) to excavate the top four feet of any soil that contains specified levels of six chemical compounds; (2) to remove certain sludge, crushed drums, and an underground storage tank; (3) to use a soil cap (5) to prevent direct exposure to any residually contaminated soil and to prevent erosion and runoff of contaminated soil; and (4) to monitor hydrogen sulfide gas to ensure that "the objectives of long term [hydrogen sulfide] gas management are maintained." Finally, DEQ required plaintiff to monitor the groundwater for at least five years. DEQ suggested that, "[i]f groundwater quality has not been degraded [during that period]," no additional monitoring would be necessary.

In explaining why the remedial measures that it selected would protect human health and the environment, DEQ reasoned that excavation and removal of the soil "will significantly reduce the threat of exposure from ingestion, dermal contact, and inhalation of contaminants adhered to soil particulates." It also explained that

"[c]apping will significantly reduce the potential for reasonable exposures to contaminated soil by eliminating direct exposure pathways, preventing erosion and runoff, and limiting infiltrations of water, thereby reducing the potential of contaminants to leach to groundwater." Having considered the terms of the 1995 Record of Decision, we agree with both the trial court and the Court of Appeals that DEQ's decision did not require plaintiff to clean up existing contamination in the groundwater; DEQ found that the contamination on plaintiff's property did not pose a significant adverse risk to the environment. Rather, the decision required plaintiff to remove and cap the soil to prevent the health risks resulting from contact with environmental contamination in the soil -- ingestion, inhalation, and dermal contact with the soil. That conclusion follows both from the specific risks that DEQ identified and from the measures that it required plaintiff to take to remedy those risks.

Plaintiff argues, however, that removing and capping the soil will benefit the groundwater. It points to DEQ's statement that capping the soil will "reduc[e] the potential of contaminants to leach [into the] groundwater" and also DEQ's requirement to monitor the groundwater to ensure that the groundwater quality does not worsen. The difficulty with plaintiff's argument is that, at most, those remarks reflect a concern about future harm to groundwater. As the Court of Appeals correctly recognized, however, the terms of defendants' policies require defendants to indemnify plaintiff only if DEQ's Records of Decision legally obligated plaintiff to remedy "property damage" to the groundwater, and defendants' policies define "property damage" as an injury that occurs during the policy period, not an injury that may occur in the future. Under the terms of the policies, defendants had no obligation to indemnify plaintiff for the costs that it incurred in complying with DEQ's orders.

On review, plaintiff advances essentially three contrary arguments. The first two are factual. Plaintiff notes that, when DEQ initially proposed listing plaintiff's property, and also at other points during the investigative stage, it directed plaintiff to determine whether it was necessary to clean up existing contamination to the groundwater. Plaintiff reasons from that premise that DEQ's final order required it to clean up existing contamination to the groundwater. In investigating that issue, however, plaintiff's consultant, CH2M Hill, found that the groundwater contained low levels of volatile organic compounds, no semi-volatile compounds, and a trace amount of a herbicide. A later investigation revealed that none of those contaminants exceeded maximum contaminant levels. The fact that DEQ required plaintiff to investigate whether plaintiff needed to remedy existing groundwater contamination does not mean that DEQ later directed plaintiff to do so.

Plaintiff's other factual argument is based on an affidavit that the DEQ project manager, Gilles, provided plaintiff as part of this litigation. In that affidavit, Gilles explained that DEQ had ordered plaintiff to remove and cap the soil to prevent environmental contaminants from leaching into the groundwater. Not only does the affidavit focus on future harm to the groundwater, but plaintiff's reliance on Gilles's affidavit suffers from a more fundamental problem. The relevant document to determine whether DEQ required plaintiff to clean up the contamination on its property because of existing contamination to the groundwater is the DEQ decision and, if that decision is ambiguous, the record leading up to it. See Swain/Goldsmith, 267 Or at 530; Bennett, 208 Or at 529 (stating those propositions). Gilles's post-hoc explanation of what DEQ's decision meant is no more relevant to that determination than a legislator's subsequent statement concerning the meaning of a law. Cf. DeFazio v. WPPSS, 296 Or 550, 561, 679 P2d 1316 (1984) (later legislature's understanding not relevant to meaning of earlier enacted law).

Indeed, Gilles executed an earlier affidavit for one of defendants that is at odds with the affidavit that he executed for plaintiff. (6) The conflict between those two after-the-fact explanations illustrates why neither affidavit provides a reliable basis for understanding what DEQ required in its 1993 and 1995 Records of Decision. Rather, the terms of those decisions control.

Plaintiff's third argument is a legal one. Plaintiff relies on dictum in Wyoming Sawmills v. Transportation Ins. Co., 282 Or 401, 407, 578 P2d 1253 (1978), to argue that defendants' policies provide coverage. The dictum in that case assumed that the insured was legally obligated to incur costs because of property damage to a third person's property. Id. Given that assumption, this court suggested (but did not hold) that the insurer would have a duty to indemnify the insured both for the cost of repairing the damage to the third person's property and also for the cost of replacing the insured's property, which the policy otherwise would not have covered. Id. The assumption that underlies the dictum in Wyoming Sawmills is absent here. As we have explained, DEQ's records of decision did not "legally obligat[e]" plaintiff to clean up property damage to the groundwater. Accordingly, this case does not require us to decide whether we would follow the dictum in Wyoming Sawmills.

Plaintiff also cites cases from other jurisdictions in which an insured was legally obligated, as a result of pollution emanating from the insured's property, to remedy environmental contamination to a third person's property. See, e.g., Bankers Trust Co. v. Hartford Acc. & Indem., 518 F Supp 371, vacated on other grounds, 621 F Supp 685 (SDNY 1981). In those cases, the courts required the insurer, despite the owned-property exclusion, to pay both for the cost of cleaning up the third person's property and for at least some part of the cost of cleaning up the source of the pollution on the insured's property. Id. Plaintiff's reliance on those cases suffers from the same problem that its reliance on Wyoming Sawmills does. The premise underlying all those cases -- that the insured was legally obligated to clean up existing contamination to a third person's property -- is absent here. (7) We agree with both the trial court and the Court of Appeals that defendants had no obligation under the terms of their policies to indemnify plaintiff for the costs of complying with DEQ's 1993 and 1995 Records of Decision.

Plaintiff advances a second, separate argument. It contends that, because the Court of Appeals held that defendants have a duty to pay plaintiff's defense costs, the Court of Appeals should have addressed an issue concerning certain "lost policies" -- policies that plaintiff claims existed but that neither plaintiff nor defendants can find. Defendants respond that the question of which defendant pays plaintiff's defense costs presents only a question of contribution among defendants and is of no concern to plaintiff. Without some showing that the existing policies are insufficient to cover plaintiff's defense costs, a showing that plaintiff has not made, we agree with defendants that the issue is one for only them to raise. Because they did not do so, there was no need for the Court of Appeals to address that issue. The Court of Appeals correctly resolved the two issues that plaintiff pursues on review.

The decision of the Court of Appeals is affirmed.

1. Because the chemical components of soil and groundwater vary, DEQ first determines the level of chemicals that occur naturally in the soil or groundwater (the background levels) and then measures whether chemicals or other contaminants exceed those background levels.

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2. The policies define "occurrence" as "an accident, including continuous or repeated exposure to conditions, which results in * * * property damage neither expected nor intended from the standpoint of the insured."

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3. That decision is more favorable to plaintiff than the 1993 Record of Decision regarding Unit C. If, as the Court of Appeals held, the 1995 Record of Decision does not require defendants to indemnify plaintiff, then neither does the 1993 Record of Decision.

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4. When DEQ issued its 1995 Record of Decision, plaintiff's property was unoccupied. Plaintiff, however, intended to develop it, and DEQ determined the risk of contamination to both persons and the environment based on plaintiff's intended use of the property.

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5. DEQ recognized that plaintiff proposed to develop the property. The proposed structures and parking lots would result in an "asphalt cap" over some residually contaminated soil.

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6. In the affidavit that he filed for one of defendants, Gilles averred: "As project manager, I did not consider groundwater to be contaminated by hazardous substances at levels posing significant risk to human health or the environment. The risk assessments completed for Units A and C eliminated the groundwater pathway as one of potential concern. If the DEQ ever had significant concern for groundwater, we would have required cleanup alternatives for groundwater to be developed in the Feasibility Study. The removal of soil contamination at Units A and C, site grading, placement of a soil cap on the Site, and installation of a diversion and collection system were designed to clean up soil contamination and to minimize direct exposure of contaminants to humans."

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7. Plaintiff also cites a few cases that have required insurers, on the basis of public policy rather than the terms of the insurance policy, to pay the cost of cleaning up environmental contamination on the insured's property to prevent the imminent contamination of neighboring properties. That is so even though no contamination of the neighboring properties had occurred. To the extent that plaintiff relies on those cases, they are inconsistent with the definition of "property damage" in defendants' policies. That definition requires, at a minimum, existing damage to a third person's property and defines the obligation that defendants owe plaintiff.

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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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