Tuesday, April 5, 2016
Panel Rejects Challenge to State Bar Discipline Rules
By KENNETH OFGANG, Staff Writer
State Bar disciplinary procedures, including the adjudicatory role of the State Bar’s administrative review tribunal and the lack of mandatory review in the state Supreme Court, do not violate the U.S. Constitution, the Ninth U.S. Circuit Court of Appeals ruled yesterday.
The panel turned aside the arguments of suspended Woodland Hills attorney Marilyn Scheer. Scheer filed suit in 2013, after she was ordered placed on involuntary inactive status for failing to pay a $5,775 arbitration award in favor of a former client.
Scheer, who was subsequently suspended for a minimum of two years in connection with a number of loan modification matters she handled for clients in California and 12 other states, had previously raised similar arguments before the state Supreme Court.
She is a 1979 graduate of Drake University Law School in Iowa, and was admitted to practice in that state that year. She was admitted in California in 1987.
She practiced bankruptcy law at one time, later shifting to real estate and lending law at a large firm where she was laid off in 2009, the State Bar Court explained in its opinion suspending her two years ago. Scheer started her own practice, Marilyn Scheer Law Group PC, in August 2009.
Involuntary Inactive Status
In placing her on involuntary inactive status, the Review Department said she failed to pay the award, present a reasonable payment plan, or show that she could not afford to pay. In the suspension case, it said she had engaged in unauthorized practice in several states, violated a statute prohibiting lawyers handling loan modifications from collecting fees prior to completing work, and unethically telling clients that she would stop work on their matters if they didn’t pay fees that were owed.
She remains ineligible to practice in the state, and the Review Department has recommended discipline in two other cases, according to the State Bar website.
U.S. District Judge Josephine L. Staton granted the State Bar’s motion to dismiss the action. She concluded that Scheer’s challenges to the State Bar rules as applied to her were barred by the Rooker-Feldman doctrine, and that her facial challenges failed on the merits.
Rooker-Feldman generally bars federal courts, other than the Supreme Court, from reviewing the merits of final state court orders.
In opposition to Scheer’s appeal, the State Bar argued, as it had in the district court, that the action was time-barred, saying it should have been brought within two years of the new rules being enacted, which occurred in 1991.
But Judge Marsha Berzon, writing for the Court of Appeals, rejected the State Bar’s reading of Action Apartment Ass’n, Inc. v. Santa Monica Rent Control Board (9th Cir. 2007) 509 F.3d 1020. The court held there that the time to bring a facial challenge to a rent control ordinance began to run when the ordinance was enacted.
“The State Bar vastly overreads Action Apartment,” Berzon said.
“It asserts that Action Apartment’s holding applies to all facial challenges to statutes and ordinances, not just those premised on injuries to property rights,” she explained. “But Action Apartment and the cases it cites are grounded in an analysis that applies only in the context of injury to property.”
Unlike the landlords who challenged the Santa Monica ordinance, who suffered whatever harms the ordinance may have causes as soon it became law, Scheer was not injured by the State Bar rules until the state high court rejected her challenge to them. Otherwise, she explained, lawyers would be barred from challenging the disciplinary system even if they “had not been lawyers — or had been small children — in 1993,” when the two-year period would have expired under the State Bar’s argument.
This would be “an absurd result,” the judge said.
But the district judge was correct on the merits, Berzon said.
While some cases have held that denial of access to courts violates the First Amendment, the reasoning of those decisions cannot be applied to a detailed, state-created process like the State Bar disciplinary system. Nor can Scheer claim she was denied due process, when she was “afforded notice, a hearing, a written decision, and an opportunity for judicial review,” the appellate jurist said.
Equal Protection Claim
As for Scheer’s equal protection claim, Berzon acknowledged that attorneys may have fewer rights in disciplinary proceedings than members of other regulated professions.
“The regulatory scheme survives [rational basis] review because the historically unique role of lawyers allows states to treat legal practice differently from other profession,” Berzon wrote. Because lawyers play an essential role in the justice system, and are officers of the courts, “California’s decision to regulate lawyers principally via a judicially supervised administrative body attached to the State Bar of California, the organization of all state-licensed lawyers, is rational and so constitutional.”
Berzon was joined by Judge John B. Owens and Judge Algenon L. Marbley, visiting from the U.S. District Court for the Southern District of Ohio.
The case is Scheer v. Kelly, 14-55243.
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