Tuesday, June 2, 2015
Page 7
PERSPECTIVES (Column)
Merrill Lynch ‘Wealth Advisor’ Is Allowed to Litigate in Partial Secrecy
By ROGER M. GRACE
Sometimes lawyers don’t know when to leave well enough alone. Such lawyers include those representing Patrick J. Dwyer, of Miami, a financial advisor to the very wealthy who is a plaintiff in a Los Angeles Superior Court action.
Dwyer has an advantage, impermissibly accorded to him by Los Angeles Superior Court Judge Michael P. Linfield who has, so far, failed to adhere to dictates of a 1999 California Supreme Court opinion. The plaintiff’s attorneys put that advantage at risk by seeking, in the Court of Appeal, even more legally unauthorized special dispensation for Dwyer.
Their effort appears to be backfiring.
Dwyer heads Dwyer & Associates, a member of Merrill Lynch’s Private Banking and Investment Group. He’s identified on the Dwyer & Associates website as “Intl Private Wealth Advisor,” was named by Barrons this year as “#1 Advisor in Florida,” and is termed by his lawyers “one of the most successful financial advisors in the country.”
He is maintaining an action in which he is asking Linfield to order the Financial Industry Regulatory Authority, Inc. (“FINRA”), a private, industry-funded entity, to remove seven customer complaints about him, which he asserts are “meritless,” from its online database.
But he wants to litigate in a public court in absolute secrecy, hiding behind the pseudonym of “John Doe,” with references to his actual name barred.
FINRA, as well as the California Department of Business Oversight (which jointly owns the database, and intervened in the action), have used Dwyer’s actual name in court papers. The papers were initially filed under seal, with versions in the public file having Dwyer’s name blotted out wherever it appeared. Linfield, on April 29, decided that the plaintiff would continue to be listed as “John Doe” in the caption, but ordered that the unredacted versions of the documents be admitted to the public file.
By that order, Dwyer retains near anonymity. Anyone Googling Dwyer’s name would not come across the pleadings or motions. It’s true that scanned versions of most papers filed in the Los Angeles Superior Court can be accessed by going to the case summary on the court’s website, clicking on, “Click here to access document images for this case,” and paying a fee with a credit card. However—as it stood on April 29—no one searching for information on Dwyer would have been drawn to a case in which the plaintiff was said to be “John Doe” because no one unconnected with the case have would know that “Doe” is Dwyer.
Instead of being content with having a phony moniker listed as the name of the plaintiff, Dwyer’s lawyers asked for a stay to permit them an opportunity to challenge the unsealing order in this district’s Court of Appeal. With trial set for May 29, Linfield stayed his order until May 26.
According to the Court of Appeal’s online docket, on May 14, a notice of appeal of the unsealing order was received, and on May 18, a petition for writ of supersedeas was filed, along with exhibits.
In his “Introduction” to the petition, Jeffrey K. Riffer of the Century City law firm of Elkins Kalt Weintraub Reuben Gartside LLP, explains the need he perceived for issuance of an immediate stay of the trial court’s order, beyond May 26:
“The stay of the Trial Court order is necessary to preserve the status quo in the event the Court of Appeal reverses the Trial Court Order. Absent the stay, the information sought to be sealed will become public, and then any subsequent Court of Appeal opinion reversing the Unsealing Order will be moot; a stay is necessary to avoid irreparable harm to the Petitioner in having the information become public and to preserve this Court’s jurisdiction and the effectiveness of its ultimate decision on this appeal.”
He goes on to say:
“The Petitioner filed his complaint anonymously (as John Doe) because he is seeking expungement. If he is successful and the Trial Court orders expungement of the customer complaints in FINRA’s publicly available database that victory will be eviscerated if the identical customer complaints about him end up in a different public database—the court file.”
The argument is plainly specious; no one seeking information on Dwyer would have had reason to look in a case filed by “Doe.” That is, not until now…with this column and, I assume, other news sources, unmasking the clandestine litigant. Without the ill-advised activity in the appellate court, attention would not have been drawn to the trial court proceedings in Linfield’s Department 34 being conducted in the shadows.
Dwyer’s petition was not warmly received in the Court of Appeal. It was denied the same day it was filed.
An order by Presiding Justice Paul Turner of Div. Five says the “interested persons certificate, which claims there are no interested persons, is demonstrably untrue”; an adequate record was not provided; and rules pertaining to the filing of sealed records in the appellate court were not observed. Turner adds this writing-on-the-wall zinger:
“Finally, the petition to proceed anonymously is meritless as no overriding interest is present.”
He cites NBC Subsidiary (KNBC-TV), Inc. v. Superior Court (1999) 20 Cal.4th 1178, 1217-1218.
That was a case in which Los Angeles Superior Court Judge David M. Schacter (since deceased) barred the press and public from all portions of proceedings held outside the presence of the jury. The plaintiff was actress/singer Sondra Locke and the defendant was actor/director Clint Eastwood, with Schacter apparently supposing that the celebrity status of the litigants somehow justified to turning the court into a semi-private forum. The Court of Appeal (in an opinion by Turner) issued a writ ordering Schacter to vacate his order, and the Supreme Court affirmed.
The opinion, by then-Chief Justice Ronald M. George, says:
“[B]efore substantive courtroom proceedings are closed or transcripts are ordered sealed, a trial court must hold a hearing and expressly find that (i) there exists an overriding interest supporting closure and/or sealing; (ii) there is a substantial probability that the interest will be prejudiced absent closure and/or sealing; (iii) the proposed closure and/or sealing is narrowly tailored to serve the overriding interest; and (iv) there is no less restrictive means of achieving the overriding interest.”
The question remains: how can Linfield permit the case to continue being captioned Doe v. Financial Industry Regulatory Authority, Inc.?
Surely the standard set forth in NBC Subsidiary is not met. And this has been pointed out to him.
Ethan Dettmer of the San Francisco office of Gibson, Dunn & Crutcher, representing FINRA, and Adam J. Wright, attorney for the California Department of Business Oversight, in their “Joint Opposition to Plaintiff’s Motion to Proceed Anonymously and File Documents Under Seal,” cite NBC Subsidiary in pointing out:
“[T[he public has a First Amendment right of access to civil actions like this one, and thus civil actions and their records are presumptively open to the public.”
If someone were to set out to look into any litigation involving a particular person in a particular court and that person is identified in a case as “Doe” or “Roe,” the records are only ostensibly public; the public is deterred from looking at them in light of the court’s false representation as to who the parties are.
Again citing George’s opinion, the opposition reiterates:
“The California Supreme Court has held that civil actions are presumed to be open public proceedings, and that the public has a ‘right of access to ordinary civil trial and proceedings.’ ”
The lawyers go on to say:
“As the Supreme Court held in NBC Subsidiary, ‘the public has an interest, in all civil cases, in observing and assessing the performance of its public judicial system, and that interest strongly supports a general right of access in ordinary civil cases.’ ”
Dettmer and Wright advise that Dwyer, to sustain his burden, “must articulate and establish a specific overriding interest to support sealing, and demonstrate how this interest overcomes the public’s constitutional right of access.” They cite NBC Subsidiary and Rules of Court, rule 2.550(d) (which basically tracks the findings which George’s opinion requires be made before secrecy may be ordered).
The opposition continues:
“Instead of meeting this burden, Mr. Dwyer implicitly concedes that he cannot do so by claiming—erroneously—that he ‘does not have to make a strong showing of a need for anonymity.’…Indeed, Mr. Dwyer admits that he cannot make the necessary showing by conceding that his argument is based on nothing but speculation: ‘[t]here is no telling how many potential clients Mr. Dwyer may have lost….’… [emphasis supplied].)
“Mr. Dwyer’s private interest is not one of those interests that may be protected under NBC Subsidiary, where the California Supreme Court identified several ‘overriding interests’ that might justify sealing—the right to a fair trial, protection of minor victims, privacy interests of a prospective juror, protection of witness from embarrassment or intimidation so extreme it would traumatize them or render them unable to testify, protection of trade secrets, and safeguarding national security….None of these interests are applicable here.”
This point is made, citing NBC Subsidiary and rule 2.550(d):
“Finally, the fact of the matter is that many—perhaps most—litigants would prefer not to have their names in the public record in connection with ongoing litigation. Doctors, lawyers, and other professionals are regularly sued in malpractice actions, and people in all walks of life are sued for fraud, negligence, sexual harassment and other embarrassing charges. There is no doubt that all, or some very high percentage, of those people would rather not have their names associated with those embarrassing charges. Notwithstanding this personal preference, the First Amendment, the California Rules of Court, and the California Supreme Court, all require that court records and court proceedings be open to the public in all but the most extreme circumstances.”
Linfield’s order allowing the caption to be unaltered, thus hiding Dwyer’s identity, plainly contravenes NBC Subsidiary.
The opposition, aptly, observes:
California courts…strongly protect the public’s right of access to court proceedings. Courts only abrogate the public’s right of access in extraordinary circumstances when highly sensitive and private information would otherwise be disclosed….
Understanding that he cannot meet the well-established standard, Mr. Dwyer invents a new standard: that a plaintiff can sue anonymously any time reputational harm is at issue. Under Mr. Dwyer’s invented test, any defamation suit is automatically a “John Doe” case. Or, a step removed from defamation, any time a restaurant gets a negative review on Yelp, the restaurant can sue Google anonymously to remove any reference that a negative review was even made. Essentially, any time a professional or a business has a complaint made against them, they can anonymously sue anyone who even references that complaint. That is not the law, and it stands in opposition to the long-standing rule that the public should have open access to the courts.
Dwyer is registered with FINRA and 17 additional self-regulatory organizations in 29 states, Puerto Rico, and the District of Columbia.
“He has been in the securities industry for over twenty years,” Riffer says in his petition in the Court of Appeal. “He has worked for the same firm (Merrill Lynch) the entire time. No disciplinary action or regulatory action has ever been brought against him.”
It might well be that none of the seven complaints has merit. The complaints are:
•2001: Clients wanted the funding of an account delayed; they claim that they lost $111,000 as a result of non-compliance with their wishes. Wrongdoing is denied. The response is that there a “misunderstanding” between the clients and Dwyer. The matter is “settled to avoid the expense and uncertainty of litigation,” it is recited, with an agreement that moneys would be refunded if it turned out that the clients gained a benefit from the transaction. (Dwyer’s “Complaint for Expungement” alleges that Merrill Lynch erred in reporting this matter because it does not relate to a reportable “sales practice violation.”)
•2001: A customer alleges receiving bad advice, causing a $255,000 loss. An arbitration is set; Dwyer is not named as a party and the matter, as to him, is closed.
•2005: A client asserts that Dwyer made an unwise investment, with damages set at $128,524.00; Merrill Lynch denies the assertions.
•2006: Unsuitable investment recommendations are alleged but no loss is claimed. A letter is sent denying the allegations and the matter is closed.
•2008: A loss of $6.8 million is asserted based on infirm recommendations. The matter is closed with no action taken.
•2009: A client alleges unwise investment recommendations but declares no loss. As Merrill Lynch tells it, the client was overpaid when the account was closed; an action was brought to collect the mistakenly paid funds; the client then filed the accusation; in the end, a payment was made to Merrill Lynch.
•2009: Shoddy investment recommendations are alleged, as well as misrepresentations by Dwyer as to the risk and liquidity of hedge funds. No loss is stated.
None of this is particularly damning. What does put Dwyer in bad light—and should not be concealed—is that he is seeking to hide these allegations from potential customers, and to utilize the public courts of this state in secrecy.
His name is Dwyer, not Doe. Linfield should not permit the falsification of identity to continue.
A trial before him is now set for Thursday.
There will be more comments on this case tomorrow.
Copyright 2015, Metropolitan News Company