'Dunn': Collateral Estoppel and Attorney Discipline
In his Attorney Discipline column, Hal R. Lieberman discusses 'Matter of Dunn,' in which the Court of Appeals found that an attorney had not been provided a full and fair opportunity to litigate before a magistrate judge the issue of whether she made false statements in a declaration, therefore the Appellate Division that censured her should not have given preclusive effect to the magistrate's sanctions order.
June 15, 2015 at 04:14 PM
10 minute read
When I first wrote about the use of collateral estoppel in attorney discipline proceedings 17 years ago,1 most disciplinary and grievance committees had not applied the doctrine except to establish liability in criminal conviction cases or to impose reciprocal discipline based upon discipline in a foreign jurisdiction. The idea of applying collateral estoppel to a broader array of civil judgments was largely rendered impractical by the burden of proof which, in a majority of U.S. jurisdictions, is proof “by clear and convincing evidence” in order to establish disciplinary liability, a higher burden than the ordinary civil “preponderance of the evidence” standard (except in fraud cases).
New York, however, is different. Here, based on longstanding New York Court of Appeals precedent, the burden of proof in disciplinary cases is the same as the civil “preponderance” standard.2 This allows New York's disciplinary and grievance committees to employ the doctrine of collateral estoppel, at least in theory, to preclude litigation of a broad array of civil judgments implicating an attorney in professional misconduct. Nonetheless, by 1998 only the Departmental Disciplinary Committee (First Department) and the Committee on Professional Standards (Third Department) had utilized the doctrine and obtained public discipline. Nor was any rule of disciplinary procedure concerning the use of collateral estoppel codified in the respective procedural rules of the four departments.
That may now change, for at least two reasons. First, the grievance committees and Appellate Divisions have begun to apply the doctrine with more regularity.3 Second, and of perhaps more importance, the New York Court of Appeals, for the first time, has addressed, and endorsed, collateral estoppel—if carefully applied—in the attorney discipline context, where there has been a prior civil adjudication implicating an attorney in professional misconduct. Which brings us to the subject of this article: Matter of Jill Dunn.4
The Dunn Case
The facts in Dunn, a Third Department case, are somewhat convoluted. An underlying federal action, commenced in the Northern District of New York, involved allegations that certain investment advisors had defrauded investors in violation of various federal securities laws.5 In connection with that action, the Securities and Exchange Commission (SEC) had obtained a temporary restraining order (TRO) freezing the assets of a trust that one of the defendants had allegedly established for the benefit of his children. Dunn, who represented the trust, obtained permission from the court to intervene in the SEC action and, shortly thereafter, convinced the court to vacate the TRO, arguing that the defendant did not have a beneficial interest in the trust.
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