Wednesday, May 23, 2018
S.C. Need Not Grant Hearings in Disciplinary Cases
Marilyn Scheer Continues Her Assault on Order Suspending Her From Practice
By a MetNews Staff Writer
A suspended Van Nuys attorney yesterday suffered a rejection by the Ninth U.S. Court of Appeals of her assault—one in a series—on California’s attorney disciplinary system.
Marilyn S. Scheer, who was suspended from practice by the California Supreme Court on July 16, 2014, until she pays approximately $120,000 in restitution to numerous clients in various states, was rebuffed in her contention that the California Supreme Court acts unconstitutionally in rubber-stamping disciplinary recommendations by the State Bar Court, rather than hearing both sides. In particular, she attacks California Rules of Court, rule 9.16(b) which provides:
“Denial of review of a decision of the State Bar Court is a final judicial determination on the merits and the recommendation of the State Bar Court will be filed as an order of the Supreme Court.”
Scheer’s challenge to that rule was rejected, in an unrelated case, by the state Court of Appeal on March 29.
The Ninth Circuit, in yesterday’s memorandum opinion, declared, simply:
“The district court properly dismissed Scheer’s constitutional challenge to Cal. Rules of Court 9.16(b) because Scheer failed to state a plausible claim for relief.”
It then cited the Ninth Circuit’s 2016 opinion in Scheer v. Kelly for the proposition that “California attorney disciplinary proceedings do not violate an attorney’s First Amendment, due process, or equal protection rights.”
The decision in that case stemmed from a 2013 order placing Scheer on inactive status until she paid a $5,775 arbitration award to a former client. The state Supreme Court denied review.
Sheer then brought suit in the U.S. District Court for the Central District of California against Patrick Kelly, in his then-role as State Bar president, and others, arguing that there is no meaningful oversight of State Bar actions. On motion of the State Bar, the action was dismissed by District Judge Josephine L. Staton.
Writing for the Ninth Circuit in affirming, Circuit Judge Marsha S. Berzon said:
“Scheer’s First Amendment claims are unsupported. The First Amendment does protect the right to access courts in a variety of contexts in which filing fees or other barriers might prevent some would-be litigants from bringing cases under existing law….But we are aware of no case holding that the First Amendment provides a freestanding right for an individual to have a state court hear her dispute in the absence of some asserted state or federal cause of action, statutory or judge-made.
“Scheer’s Fourteenth Amendment Due Process and Equal Protection claims also fail.”
District Court Decision
Scheer’s present action is against David Pasternack, who was State Bar president when the District Court action was filed, and others. Judge Manuel L. Real of the Central District dismissed the action on April 28.
Real rejected Scheer’s argument that Scheer I was not binding because it arose in the context of an administrative action, not a disciplinary one.
“In Scheer I, Plaintiff challenged California’s attorney-discipline system on essentially the same grounds as in this action…,” he observed. “Under settled principles of law, Scheer I is binding Ninth Circuit authority.”
Real agreed with the report and recommendations of a magistrate judge that Sheer’s arguments that Rule 916(b) is on its face unconstitutional “failed on the merits.”
Civil Code Section
The 2014 State Bar discipline arose from loan modification services Scheer performed. It was found that she practiced law unlawfully by performing those services in 11 states where Scheer was not licensed, and also that she violated Civil Code §2944.7(a)(1) by requiring that fees be paid upfront.
In contesting the constitutional validity of that section in the district court, Scheer argued that the State Bar Court is merely an administrative agency so that its determination as to the constitutionality of a law has no preclusive effect.
Real said the report and recommendation “found that the California Supreme Court’s decision, not the State Bar Court’s decision, was entitled to preclusive effect.” That court, he pointed out, said in its 2000 decision in In re Rose that its summary denial of review in an attorney discipline case is a final “judicial” determination.
“Plaintiff may not agree with Rose, as witnessed by her repeated citations to the dissents in that case…,” Real said, “but that does not mean it is not the law.”
The Ninth Circuit declared yesterday:
“The district court properly dismissed Scheer’s constitutional challenge to Cal. Civil Code § 2944.7 as barred by issue preclusion because the claim was predicated on issues that were resolved against Scheer in a prior state court action.”
The case is Sheer v. Pasternak, 17-55765.
Scheer Wins One
On April 14, 2016, the Ninth Circuit found in favor of Scheer in In re Scheer. Circuit Judge John B. Owens wrote an opinion declaring that Scheer’s $5,775 debt to a former client, arising from an arbitration award, is dischargeable in bankruptcy.
Scheer sought a return of her law license based on 11 U.S.C. § 525(a), which prohibits revoking a license “solely because” there has been nonpayment of a debt that is dischargeable in bankruptcy.
The Bankruptcy Court had found the debt nondischargeable based on §523(a)(7) which applies where a “debt is for a fine, penalty, or forfeiture payable to and for the benefit of a governmental unit, and is not compensation for actual pecuniary loss.” Owens wrote:
“[T]he debt at issue was effectively the amount that Scheer improperly received from a client, but did not pay back. At its core, the $5775 is not a fine or penalty, but compensation for actual loss. Try as we might, we cannot stretch the language of section 523(a)(7) to cover the fee dispute at issue here, even though we may disapprove of Scheer’s conduct.”
“Scheer’s performance as an attorney leaves much to be desired, and it is unsettling that she can use bankruptcy to avoid refunding her client’s improperly collected fees. But our moral take on Scheer’s conduct does not control—the statutory language and policies underlying section 523(a)(7) do. And under the current state of the law, the debt to her client does not fall within the section 523(a)(7) nondischargeability exception.”
That decision did not affect Scheer’s bar status because by that time, she was under suspension in connection with the 2014 disciplinary order (which has been followed by two others).
State Court Decision
On March 29, Div. One of this district’s Court of Appeal affirmed the denial of Scheer’s petition for a writ of administrative mandamus challenging an order by the State Bar Client Security Fund to reimburse it for funds it paid to 30 of her former clients. The appeal was predicated on the asserted invalidity of the Supreme Court’s 2014 order adopting the State Bar’s recommendation for discipline, and the purported infirmity of Rule 9.16(b).
Presiding Justice Frances Rothschild said that her court cannot overrule the California Supreme Court and that, in any event, the rule is valid.
That case is Scheer v. California Client Security Fund, B281926.
Scheer commented to the MetNews at the time:
“Attorneys are the only licensed professionals in the state who can have their licenses suspended by agency action alone, without access to an independent true court. The California Supreme Court is the only true court available to attorneys in this state and the California Supreme Court has not accepted an attorney’s petition for review of State Bar court (agency) action in more than 18 years. But I will continue to challenge Cal. R. Ct. 9.16 in any forum available to me; I am sure most attorneys are not aware of this process—it allows the State Bar and State Bar court almost unlimited power without regard to due process. The Constitution as the supreme law of the land has been ignored.”
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