Thursday, July 15, 2010

Lawyer Suspended In Medical Marijuana Clinic Dispute

An attorney who had advised his client to take over of a medical marijuana clinic where the client had been employed was suspended for 90 days by the Oregon Supreme Court. Some background on the matter, which involved a dispute between the attorney's client and her employer, a corporation that operated the Oregon clinic:

The accused met Leveque [the client] in 2004 when he became a patient at the clinic while Leveque was employed there.  In 2005, Leveque asked the accused for legal advice about difficulties that she was having with her employer and Paul Stanford, who ran the clinic and several similar clinics in other states.  The accused agreed to represent Leveque.  Although the parties disagree about Stanford's exact position with the corporation in 2005, it is undisputed that he was the sole incorporator of the corporation when it was established in 1999, that an October 2005 printout from the Secretary of State's online business names registry identified him as president, and that, at the time of the events at issue here, employees of the corporation (including Leveque) considered him to be in charge of the corporation's business.  

On October 7, 2005, as noted above, the clinic manager asked Leveque to go home.  She attempted to file an unemployment claim, although she told the accused that she was uncertain whether she had been fired.  Over the next month, Leveque did not return to work at the clinic; however, she was apparently attempting to get back (or retain) her job and still had a key to the clinic. 

Meanwhile, the accused contacted Ann Witte, the corporation's attorney, to attempt to resolve Leveque's employment dispute.  Leveque also had a number of concerns about the way the corporation was being run by Stanford -- including whether revenues were being appropriately accounted for, whether corporate assets were improperly being used to advocate for marijuana legalization, and other corporate governance issues -- and the accused advised Leveque in connection with those issues.  As part of his legal work for Leveque, the accused researched the corporation's status. 

The attorney conducted some research on the corporation. He received some inaccurate information about the corporation's legal status but failed to check information available on a state web page. He advised the client to either contact the Attorney General (which the client feared would shut down the clinic) or to take over the clinic premises. The client chose the latter course:

According to the Bar, the accused then advised Leveque that another option would be to go to the clinic, use her key to enter before business hours, and physically take over.  The accused claims, however, that Leveque decided on her own that she would use her key to open the office and attempt to take over management of the clinic.  He then advised her that she had "equal rights with Mr. Stanford" to run the clinic and that he could defend her from criminal or civil actions that might arise out of an attempted takeover. 

On November 14, 2005...Leveque and some other individuals (including a nurse, a doctor, a computer technician, and a locksmith) arrived at the clinic before it opened and before any employees were there.  Leveque used her key to let them in.  The locksmith began changing the locks, and others attempted to begin working on the clinic's computers.  The accused also came to the clinic that morning, although he states that he came separately from Leveque.  The first employee of the clinic to arrive was Kim Murphy, whose job was to open the clinic for business.  Murphy testified that Leveque, her associates, and the accused were inside the clinic when she arrived at about 7:45 a.m.  When Murphy asked Leveque what was going on, Leveque told her, "We're taking over the clinic."  Other clinic employees who arrived testified that Leveque made similar statements to them.  At one point, Leveque began taking patient schedules and placing them in her bag. 

At least two clinic employees, office manager Janus Brown and clinic administrator Scott Carr, told Leveque and the accused to leave.  They refused.  The accused maintains that he believed at that time that the lease was in the corporation's name and that, because he believed that Stanford had no legal authority to run the corporation, neither Stanford nor those working for him had any right to direct them to leave the premises.

At some point, a clinic employee called the police.  According to police records, the initial call came at 9:32 a.m., and the first police officers arrived at the scene at 9:37 a.m.  A clinic employee also phoned Stanford, who was in Hawaii; Stanford phoned Witte.  Witte arrived at the clinic at about the same time as the police.

According to the Bar, the accused told clinic employees and the police that he and Leveque had a court order or some written authorization from the Attorney General to be there.  According to the accused, he said only that he had a complaint letter that he had drafted to send to the Attorney General.  He claims that he showed the complaint letter to the police and Witte and told them that he was going to go to the Attorney General the following day if Leveque's issues could not be resolved.

 The police attempted to resolve the dispute.  Sergeant Kim Keist understood that Leveque believed that the clinic was not being properly operated and that there was a disagreement over who had the right to run the clinic.  It was her view at the time, which she explained to Leveque and the accused, that this was a civil dispute that would have to be resolved in court and that Leveque -- because she had "walked away from [the clinic]" -- was not authorized to enter the clinic and take it over.  In the meantime, someone had contacted the landlord, who faxed the lease agreement to the clinic.  The lease showed the corporation as the lessee and Stanford as the "guarantor."  After the accused saw the lease, he advised Leveque and her associates to leave, and they all left the premises.  The police left the scene at 10:27 a.m.

The court sustained a Rule 3.1 violation:

The accused claims that, to the extent that he is incorrect in his legal conclusions, he believed, when advising Leveque and acting on her behalf, that those conclusions were correct.  We find, however, that the accused knew that the positions he took in the course of representing Leveque were frivolous.  First, the accused's claim is undermined both by his advice to Leveque that her only redress for any concerns that she had about the corporation was to seek the assistance of the Attorney General and by his letter to Witte, in which he made a similar statement.  Second...on the morning of November 14, the accused lied to various individuals at the clinic, telling them that he had some written authorization permitting Leveque and her associates to take over the clinic.  That supports the Bar's position that the accused knew that, without some such authorization, he and Leveque had no legal right -- self-help or otherwise -- to take over the clinic.  Finally, the accused has practiced law in Oregon for more than 40 years, has substantial experience in securities and corporate litigation, and has some experience working with nonprofit corporations.  He is a sophisticated lawyer with extensive experience.  We find that the accused knew that his advice to his client -- that she had some legal basis for her attempt to take control of the clinic's operations -- was frivolous.

The matter was complicated by the death of the client and her consequent inability to testify in the bar proceeding. Nonetheless, the court accepted findings of fact favorable to the bar's contentions as set forth above.

The court found that a suspension was appropriate for misconduct that involved taking a frivolous legal position, false statements to third parties, dishonesty, and criminal trespass.

Here's a link to a December 2007 story about the clinic owner ("King Bong") from the Willamette Week. (Mike Frisch)

Bar Discipline & Process | Permalink

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