The Florida Bar v. Francisco Ramon Rodriguez, ___So.2d___, 2007 WL 1285820 (Fl. Sup. Ct. 2007)

Brief Summary
This opinion is the latest one of several disciplinary actions dealing with the various members of a firm that had represented multiple clients against the DuPont Corporation for crop damage caused by a fungicide. The lawyers were disciplined for violations of multiple rules ― including conflicts of interest, self-interest, and restrictions on representation ― because the firm was part of a secret side deal in which DuPont engaged the firm while the firm was still representing the plaintiffs. DuPont paid the firm more than $6 million at that time to prevent further litigation. The court rejected the referee’s recommended sanction of a public reprimand for the lead litigation attorney; suspended him for two years, and ordered disgorgement of his part of the fees received in the side agreement, plus interest.

Complete Summary
In 1996, Francisco Rodriguez was a member o the firm of Friedman, Rodriguez, Ferraro & St. Louis (collectively “the firm”). The firm represented 20 plaintiffs in a suit against the DuPont Corporation for severe crop damages caused by the fungicide Benlate, which was recalled from the market in 1991. Id. at *1. Roland St. Louis brought the clients to the firm and was the primary contact for communications with the clients. Mr. St. Louis played the primary role in the events discussed, and was subsequently disbarred. Florida Bar v. St. Louis, ___ So.2d ___, 2007 WL 1285836 (Fla. 2007). Mr. Rodriguez was the lead litigation attorney on the case.

During the pursuit of the case for Davis Tree Farm, the firm’s attorneys discovered that DuPont had concealed testing of Benlate in Costa Rica which revealed significant damage to plants that DuPont then ordered destroyed. Id. at *2. The trial court judge ruled that she would enter an order striking DuPont’s pleadings and entering a judgment in favor of Davis Tree Farm. Id. at *2. This motivated DuPont to attempt to settle all of the cases before the trial court’s order was entered.

In addition, DuPont wanted to avoid the use of any of the settlement attorney fees to fund future litigation against it by this firm. The firm researched the ethics of such an agreement, and found the law was unclear, but believed it was likely that the result could be achieved by DuPont engaging the firm after it finished representing all 20 of the Benlate clients. Id. at *2. Mr. St. Louis advised DuPont that in order to restrict the firm’s right to bring further actions against it, DuPont would have to pay the firm.

On Aug. 7, 1996, the trial judge’s order arrived. Negotiations continued that day, and Davis Tree Farm agreed to accept $30 million. Although Mr. Rodriguez thought the settlement negotiations were complete, DuPont made the settlement of the remaining 19 Benlate clients contingent on the firm signing an engagement letter that would preclude future cases by the firm against DuPont. Id. at *3. Although initially Mr. Rodriguez refused to enter the agreement until the representation of the clients was complete, the appointed mediator in the case (who had “substantial experience” in mass tort cases) informed the firm that DuPont would retract its settlement offer unless the firm agreed, and the mediator further advised Mr. Rodriguez that parties would sometimes make engagement agreements in these situations. Id..

After further negotiations concerning the amounts that DuPont would pay the remaining 19 clients (ultimately totaling $29 million), the firm negotiated hard for a separate payment of $6,445,000 to the firm in exchange for an agreement not to pursue future claims against DuPont and for the firm possibly to work for DuPont on an hourly basis in the future. The “engagement agreement” stated that it was contingent upon the effectiveness of the settlement agreement with the Benlate clients. Mr. Rodriguez did not draft that engagement agreement, but he was very involved in the negotiations for the $6,445,000. *Id. at *3.

The referee in this Bar disciplinary matter found that, at this point, Mr. Rodriquez became an agent of DuPont; that his dual allegiances created a conflict of interest; and that the firm had placed its interests above those of its clients.

On Aug. 8, 1996, the parties appeared before the trial judge and announced the settlement, requesting that the judge vacate and seal the order striking DuPont’s pleadings. The judge was not informed about the engagement agreement. DuPont further required that the clients only be told how much their settlement was, and that the amounts be confidential. To assure the confidentiality agreement, 10 percent of the clients’ settlement funds were to be held in escrow by the firm for two years. Only Davis Tree Farms was aware of the engagement agreement. The other clients were never told. Id. at *4. Moreover, in an attempt to secure the clients’ consent to the settlements, Mr. St. Louis had told clients if they rejected the offer, the firm would no longer represent them. Id. at *4.

In 1997, the Bar began an investigation of the firm based on the complaint of one of the Benlate clients that the firm did not appropriately explain the terms of the settlement and there was a conflict of interest among the various Benlate clients. The client alleged the firm was forcing clients into accepting DuPont’s offers. During the Bar investigation, no questions were asked about the still-secret engagement agreement, nor did Mr. Rodriguez offer any information. This investigation led to a consent judgment in 1998. Id. at *4.

In 2003, however, the Bar filed this complaint against Mr. Rodriguez for failing to divulge information about the engagement agreement. The referee found it credible that Mr. Rodriguez and his attorney did not conspire to deceive the Bar but felt the investigation was focused on whether there was an improper aggregate settlement with the clients. Mr. Rodriguez, however, should have disclosed the engagement agreement voluntarily during the 1997 investigation and the referee recommended he be found guilty of violating multiple ethical rules in entering the engagement agreement and keeping the agreement secret from the clients, the court and the Bar in the 1997 investigation. The rules included: Rules Regulating the Florida Bar 4-1.4(a)(informing client of status of representation), 4-1.4(b) (duty to explain matters to client), 4-15.(a) (prohibited fees), 4-1.7(a) (representing a client whose interest are adverse to another client), 4-1.7(b) (duty to avoid limitation on independent professional judgment), 4-1.8(a), (business transaction with or acquiring interest adverse to client), 4-1.9(a) (conflict of interest as to former clients), 4-1.16(a)(1) (declining or terminating representation), 4-5.1(c) (responsibilities of a partner for rules violations), 4-5.6(b) (restriction on lawyers right to practice), and 4.8.4(a) (lawyer shall not violate or attempt to violate the Rules of Professional Conduct). Id. at *5. The referee recommended a public reprimand, four years of probation and 1,000 hours of pro bono legal work. Id. at *6. This appeal by Mr. Rodriguez and cross-petition by the Bar followed.

Although the court found that Mr. Rodriguez’s misconduct was not as egregious as that of Mr. St. Louis, who had been disbarred as a result of his role, it noted Mr. Rodriguez “still engaged in extremely serious misdeeds.” Id. at *8. The court held that Mr. Rodriguez violated conflict of interest rules and acted to protect his own interests ahead of those of his clients, resulting in actual and potential harm to the clients and the public. The court held that Mr. Rodriguez violated the Rules Regulating the Florida Bar 4-5.6(b), which expressly prohibits lawyers from making agreements restricting the lawyer’s right to practice as part of a settlement between private parties, and that violation of that rule ordinarily carries with it severe disciplinary consequences. Id. at *9. The court found that a two-year suspension rather than public reprimand was the appropriate sanction under Florida Standard of Imposing Lawyer Sanctions 4.32, which states “[s]uspension is appropriate when a lawyer knows of a conflict of interest and does not fully disclose to a client the possible effect of that conflict, and causes injury or potential injury to a client.” Id. at *8. Finally, the court ordered Mr. Rodriguez to disgorge his portion of the unlawful $6,445,000 fee to the Clients’ Security Fund, plus interest since August 1996.

Significance of Case
All of the partners of this firm, which no longer exists, were sanctioned to various degrees in separate disciplinary cases because of this secret side deal with DuPont. The court found that even if their only involvement was to receive a share of the DuPont engagement fees, they merited discipline. The case serves as an object lesson in how a firm can violate conflict of interest rules by entering into a deal with opposing parties while still representing their clients, as well as the dangers of trying to “force feed” all of the plaintiff-clients a settlement agreement where client interests vary and the lawyers’ own interests are implicated. Although the fees in such matters can seem alluring, disgorgement of the fees plus interest can be the final result, not to mention the financial burden of attorney fees and costs in a protracted Bar disciplinary proceeding. There is a certain inevitability to at least one client ultimately complaining in these cases, and although the wheels of justice may turn slowly (here, 11 years), they do grind exceedingly fine in the end.

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