Steven Hunter (J. Albert Diaz)
The Florida Supreme Court asked the Florida Bar on Thursday to open an investigation into alleged ethics violations by two Miami plaintiffs attorneys.
In addition, the court quashed a Third District Court of Appeal ruling that allowed Steven Hunter of Hunter Williams & Lynch and Philip Gerson of Gerson & Schwartz to continue representing clients in a lawsuit against the Flight Attendant Medical Research Institute, or FAMRI.
The nonprofit institute funded by a $300 million settlement reached in 1997 with tobacco companies is tasked with promoting research into the effects of secondhand smoke. Nonsmoking attendants suffering illness due to secondhand smoke litigated against Big Tobacco.
Flight attendants exposed to in-flight smoke when smoking was allowed on airliners were allowed under the settlement to pursue individual claims against cigarette makers. Hunter and Gerson have been among a group of attorneys representing flight attendants on their individual claims.
In 2010, Hunter and Gerson sought a financial accounting of FAMRI, an injunction against further expenditures and a dispersing of fund directly to the clients, who received no money under the settlement.
Several clients objected to the new lawsuit and claimed it created a conflict of interest. Miami-Dade Circuit Judge Jerald Bagley agreed and disqualified Hunter and Gerson.
The Supreme Court said the Third District “lacked the constitutional authority to adopt a new test,” and should have interpreted the case by applying the Florida Rules of Professional Conduct, as did Miami-Dade Circuit Judge Jerald Bagley.
The Third District’s opinion in 2012 was an obvious challenge to the status quo. The panel said, “This case demonstrates why Florida’s Rules of Professional Conduct alone are inadequate to resolve conflict of interest problems typical to class action cases.”
The Third District adopted a federal approach balancing the right of a party to counsel against a client’s right to the counsel’s undivided loyalty. It then decided Bagley “departed from the essential requirements of law.”
The Supreme Court decision, written by Chief Justice Ricky Polston, was unanimous in its condemnation.
“This is not the proper test for motions to disqualify counsel as set forth by this court,” he wrote.
The Bar rules at issue say an attorney can’t withdraw from representation when a conflict arises “after representation has been undertaken,” but attorneys have a duty to decline representation if a conflict exists before representation is undertaken.
A conflict existed long before Hunter and Gerson sued the institute and should have been apparent to both, Polston said.
Hunter argued there was no conflict because he promptly withdrew as attorney of record when petitioners Alani Blissard and Olivia Chambers objected.
Gerson said he filed a lawsuit for petitioner Raiti Waerness at the request of the class action counsel but never met her.
Both attorneys insisted petitioners Patricia Young and Blissard, who are FAMRI board members, did not disclose information about themselves, the operations of FAMRI or their roles in FAMRI.
Their actions, however, fell short of what the rules require, Polston concluded.
“The record establishes that Hunter did not even seek out Blissard’s consent; rather, she independently learned of the plan to file a petition against FAMRI and contacted Hunter directly to express her objections,” Polston noted.
Likewise, “the impermissible conflict” between Gerson and clients Waerness and Peggy Spurgeon should have been apparent to him when he received their objections, the chief justice said.
The Third District concluded a conflict was minimal because the individual attendants’ cases and the institute lawsuit involved different issues.
The Supreme Court disagreed there as well. The settlement set limits on the use of FAMRI funds, and a distribution to “a handful of the former class members” would endanger the settlement.
By accusing FAMRI of not living up to the settlement and seeking a dispersal of funds, the court said, “We find that the individual litigation and the action against FAMRI are substantially related. … It is clear that the interests of the individuals participating in the action against FAMRI are materially adverse to the interests of Hunter and Gerson’s former clients.”
John S. Mills of the Mills Firm in Tallahassee represented the institute on appeal.
“I don’t think the Third District was expecting Supreme Court review,” he said.
The legal team opposing Hunter and Gerson was shocked when the Third District came up with a federal balancing test because the parties did not argue for such a test, Mills said.
The Third District was asked to rehear the case or certify a conflict but declined. However, the Supreme Court has discretion to take a case if a lower court decision conflicts with its own.
Aside from ignoring rules of conduct that the state Constitution empowers the high court to establish, the Third District ignored State Farm Mut. Auto. Ins. v. K.A.W., a 1991 decision that sets the standards for disqualifying counsel.
The latest decision disqualifies the last two of seven attorneys behind the lawsuit against the institute. Any flight attendants who want to pursue the same cause of action would have to find new counsel or proceed on their own.
Gerson said: “We stand by everything we said in the trial court, the Third District and in Supreme Court briefs and oral arguments,” but he also acknowledged the Supreme Court decision is final.
A similar lawsuit brought by another attorney was dismissed as legally insufficient, and that ruling was upheld by the Third District, Mills said.
“We’re confident the underlying petition will soon be dismissed on the merits and FAMRI can stop having to divert resources” to litigation, Mills said.