Iowa Supreme Court Attorney Disciplinary Board v. Dean A. Stowers , 823 N.W.2d 1 ( 2012 )

IN THE SUPREME COURT OF IOWA
No. 12–1025
Filed October 19, 2012
IOWA SUPREME COURT ATTORNEY DISCIPLINARY BOARD,
Complainant,
vs.
DEAN A. STOWERS,
Respondent.
On review of the report of the Grievance Commission of the
Supreme Court of Iowa.
Grievance commission reports respondent has committed ethical
infractions and recommends he receive a public reprimand. LICENSE
SUSPENDED.
Charles L. Harrington and David J. Grace, Des Moines, and
Margaret E. Johnson, Sidney, for complainant.
Brent B. Green of Duncan, Green, Brown & Langeness, P.C.,
Des Moines, for respondent.
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WATERMAN, Justice.
The Iowa Supreme Court Attorney Disciplinary Board brought a
complaint against Dean A. Stowers, alleging he violated four rules of
professional conduct by sending threatening emails to several individuals
after the multimillion dollar settlement of a lawsuit that his wife, Jan
Reis, filed against her former employer, Care Initiatives. In Reis v. Iowa
District Court, 787 N.W.2d 61, 69–70 (Iowa 2010), we affirmed the district
court’s ruling that Stowers’s emails constituted contempt of a protective
order in that action. A division of the Grievance Commission of the
Supreme Court of Iowa applied the doctrine of issue preclusion to
determine Stowers violated two of the four disciplinary violations charged
by the Board. The commission recommended we publicly reprimand
Stowers. On our de novo review, we find Stowers violated all four rules
and suspend his license to practice law for ninety days.
I. Scope of Review.
We review attorney disciplinary proceedings de novo. Iowa
Supreme Ct. Att’y Disciplinary Bd. v. Dunahoo, 799 N.W.2d 524, 528
(Iowa 2011). We give the commission’s findings respectful consideration,
but are not bound by them. Iowa Supreme Ct. Att’y Disciplinary Bd. v.
Schmidt, 796 N.W.2d 33, 36 (Iowa 2011). “The [B]oard must establish
attorney misconduct by a convincing preponderance of the evidence.”
Dunahoo, 799 N.W.2d at 528. When the Board establishes attorney
misconduct, we can impose a more or less severe sanction than that
recommended by the commission. Iowa Supreme Ct. Att’y Disciplinary
Bd. v. Wagner, 768 N.W.2d 279, 282 (Iowa 2009).
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II. Prior Proceedings and Factual Background.
The commission conducted a two-day evidentiary hearing on
January 24 and 25, 2012. The facts are consistent with the facts
detailed in our Reis opinion. See Reis, 787 N.W.2d at 64–65.
Stowers’s now former wife, Reis, had worked for Care Initiatives, a
nonprofit entity in West Des Moines, for just over ten years. She attained
the position of Chief Operating Officer (COO) and became a member of its
board of directors. On August 24, 2005, she made a formal internal
complaint alleging sexual harassment by the president of Care
Initiatives, H.W. She also filed a complaint on September 26 with the
Iowa Civil Rights Commission (ICRC). Care Initiatives placed her on
administrative leave on October 5. On November 15, Reis sued H.W., a
Texas resident, in federal court for assault and battery. The next day,
Care Initiatives terminated her employment and removed her from its
board. Reis filed additional charges with the ICRC in late 2005 and early
2006 alleging sexual harassment, retaliation, and wrongful termination.
She received an administrative release from ICRC and filed an action
against Care Initiatives and H.W. in the Iowa District Court for Polk
County on April 26, 2006. Her petition alleged she was terminated in
retaliation for standing up to sexual harassment and attempting to blow
the whistle on Care Initiatives’ failure to comply with tax requirements
for nonprofit executive compensation. She was represented in her
lawsuit by attorneys Paige Fiedler and Thomas Newkirk.
During this litigation, counsel for Reis and Care Initiatives agreed
to a protective order entered by the court. Reis and Stowers each signed
an “Undertaking To Be Bound By Protective Order,” which allowed them
access to documents Care Initiatives deemed confidential. The protective
order provided that all documents designated as confidential shall be
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used “only for the purposes of this litigation and for no other purpose,
except as otherwise provided in this Stipulation and Protective Order.”
The protective order further stated:
All persons who are afforded access to any documents or
information subject to this Stipulation and Protective Order
shall not use or disclose such documents or information for
purposes of business or competition, or for any purpose other
than the preparation for and the conducting of this proceeding,
or any appellate review thereof, and then solely as
contemplated herein, and shall keep the documents and
information secure and confidential in accordance with the
purposes and intent of this Stipulation and Protective Order.
(Emphasis added.)
Care Initiatives settled with Reis in November 2007. Care
Initiatives paid $4 million to Reis, which included her attorney fees. The
settlement agreement required Reis to return to Care Initiatives “any and
all documents in her . . . possession including copies in any form, that
pertain to Care, Reis’s employment at Care, or Reis’s lawsuit against
Care” except payroll records, her personnel file, and her medical and
mental health records.
After the settlement, Stowers, acting on behalf of Reis, instructed
Newkirk and Fiedler to deliver their case file and all documents to Reis,
including the confidential documents subject to the protective order and
settlement agreement. They complied. In January 2008, Newkirk wrote
counsel for Care Initiatives, stating:
[O]ur firm no longer represents Ms. Reis or Mr. Stowers.
Ms. Reis has taken possession of all documents related to
her case and she therefore has possession of any hard copies
to be returned pursuant to the agreement and any digital
files or documents on an external hard drive. Any future
communication regarding document exchange or agreed
destruction of digital files needs to be directed to her or to
Dean Stowers.
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Stowers, with the confidential documents now in his wife’s
possession, sent the emails at issue. He was prompted to do so by a
news media account of an investigation by Senator Charles Grassley into
excessive executive and director compensation at Care Initiatives.
Stowers first sent an email on February 12, 2008, to M.M., Senior Vice
President and Chief Financial Officer (CFO) of Care Initiatives, with the
subject line “Your Resignation.” The email, sent at 6:51 p.m., stated:
It looks as though your time has arrived.
Based upon information known and that disclosed
publicly, including apparent violations of Titles 18 and 26 of
the United States Code, you are being afforded the
opportunity to quietly tender your resignation from all
positions held with Care Initiatives and relinquish all rights
you may claim under any agreements that you have with
Care Initiatives by the close of business on February 13,
2008 by 4:00 p.m. cst.
If you avail yourself of this opportunity, you should
promptly vacate the premises and not return to them or
access any electronically-stored information and you should
further surrender all keys, documents, records and other
property of Care Initiatives in your possession by 4:00 p.m.
cst tomorrow.
You may tender your resignation and waiver of rights
to the Board of Directors in writing and kindly provide a copy
to me if you wish to take advantage of this limited
opportunity.
The next day, Stowers sent an email to R.T., a lawyer and member
of the board of directors of Care Initiatives, with the subject line “Your
Time Is Up.” The email stated:
Your options have narrowed substantially in the past
two months. You need to focus on just two things in my
estimation: 1) not getting yourself disbarred and indicted for
fraud, and 2) preserving what may be left of your assets and
already low reputation in the legal and lobbying community.
You should have taken my advice a long time ago.
Nobody wants to completely humiliate and embarrass you,
but you have a way of placing yourself in positions where
that can not be avoided . . . . Suffice it to say you are not
competent for the position at Care Initiatives, nor do you
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possess the requisite character and judgment required for
such a position. Your dilemma is grave indeed, even though
you may not fully realize it even to this day.
I want to give you the chance to resolve your dilemma
without as much trauma to you as would occur if you do not
accept the proposal I am about to make. So, here it is --
1. You will make a personal cash donation to a
charitable cause in the name of Jan Reis selected by Jan
Reis and myself in an amount equal to all payments that you
have received from Care Initiatives from August 2005 to the
present; and
2. You will immediately resign from the Board of Care
Initiatives and sever all ties to Care Initiatives. You are, of
course, free to date anyone you wish since this is a free
country, and you have my permission to do so.
Don’t doubt my resolve, ability to carry through, or
intent to seek complete vindication, [first name]. You have a
very narrow window of opportunity that you and any legal
counsel representing you personally should jump on without
delay before it closes. Don’t make this painful for yourself.
R.T. had received payments from Care Initiatives exceeding $100,000
since August 2005, the amount Stowers now effectively demanded R.T.
pay in Reis’s name to a charity to be selected by Reis and Stowers.
The following day, Care Initiatives’ counsel, Randy Armentrout,
sent a letter to Stowers referencing the protective order and settlement
agreement. Armentrout directed Stowers to return Care Initiatives’
documents. Stowers replied by an email on February 17 that disputed
his obligations under the protective order and noted he was not a party
to the settlement agreement signed by his wife. Stowers’s email
continued by noting “Care Initiatives is under one or more federal
investigations” and that an ethics complaint was pending against R.T.
and suggested the documents at issue related to those matters. Stowers
added, “Care Initiatives and it’s [sic] various counsel have shown a
practice of secreting and/or destroying evidence of wrongdoing.” The
next paragraph began, “From what I have seen there appears to be
sufficient basis for criminal prosecutions of [M.M.,] . . . [R.T.,] [and
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others].” Stowers’s email indicated he felt a need to retain the
documents to preserve evidence for federal investigations and until “Care
Initiatives had cleaned house.”
Armentrout and Stowers exchanged several more unproductive
communications. “Care Initiatives [then] filed an application for
contempt and to enforce the settlement agreement, asking the court to
order Reis [and] Stowers . . . to show cause why they should not be held
in contempt.” Reis, 787 N.W.2d at 65. The district court, following an
evidentiary hearing, concluded Stowers’s emails violated the protective
order and found both Reis and Stowers in contempt of court. Id. They
appealed. The court of appeals reversed. Id. On further review, this
court vacated the court of appeals decision and affirmed the district
court’s contempt order as to Stowers but reversed the contempt order as
to Reis. Id. at 75. We expressly rejected Stowers’s argument that
“threatening public humiliation, demanding resignations, and extracting
money payments to a charity in his wife’s name cannot support a finding
beyond a reasonable doubt that he ‘used’ the documents produced under
the protective order.” Id. at 69. We concluded that, by sending the
threatening emails predicated on knowledge gained from the confidential
documents, “Stowers was ‘using’ the documents to gain a tactical
advantage over Care Initiatives” and did so “in an attempt to exert
influence and pressure on a Care Initiatives’ CFO, board member, and
attorney.” Id. at 71.
This disciplinary proceeding followed.
III. Ethical Violations.
A. Violation of Protective Order. The Board alleged Stowers’s
emails violated the district court’s protective order and constituted a
violation of rule 32:3.4(c). That rule states “[a] lawyer shall not . . .
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knowingly disobey an obligation under the rules of a tribunal except for
an open refusal based on an assertion that no valid obligation exists.”
Iowa R. Prof’l Conduct 32:3.4(c).
In Reis, we affirmed the district court’s contempt order based on
evidence Stowers “used” the confidential documents by sending the
threatening emails in violation of the protective order. 787 N.W.2d at 70–
71. Contempt is
“ ‘conduct that is intentional and deliberate with a bad or
evil purpose, or wanton and in disregard of the rights of
others, or contrary to a known duty, . . . coupled with an
unconcern whether the contemner had the right or not.’ ”
Id. at 68 (quoting Amro v. Iowa Dist. Ct., 429 N.W.2d 135, 140 (Iowa
1988)). We reasoned:
When the emails to the CFO and board member are
considered in combination with the letter from Fiedler &
Newkirk, informing Care Initiatives that Reis or Stowers were
to be contacted about the documents, and Stowers’s email to
Armentrout, which essentially refuses to return the
documents, it is clear Stowers was “using” the documents to
gain a tactical advantage over Care Initiatives. Stowers[’s]
emails “used” the documents in an attempt to exert influence
and pressure on a Care Initiatives’ CFO, board member, and
attorney. The district court’s determination holding Stowers
in contempt of the protective order is affirmed.
Id. at 71.
The Board contends this conclusion has preclusive effect and
establishes Stowers violated rule 32:3.4(c). Stowers argues the Board’s
offensive use 1 of issue preclusion is not appropriate in this case, and
alternatively, he did not violate the rule because he acted in good faith.
The commission gave preclusive effect to our 2010 ruling and, in the
1See Hunter v. City of Des Moines, 300 N.W.2d 121, 123–24 (Iowa 1981)
(discussing differences between defensive and offensive use of issue preclusion).
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alternative, concluded the convincing preponderance of evidence
established Stowers violated the protective order.
Iowa Court Rule 35.7(3) expressly permits the Board to invoke
issue preclusion in attorney disciplinary proceedings. Iowa Supreme Ct.
Bd. of Prof’l Ethics & Conduct v. D.J.I., 545 N.W.2d 866, 871 (Iowa 1996)
(observing under the former version of rule 35.7(3), rule 118.7, that issue
preclusion “may be used by either party in a lawyer discipline case”).
Under that rule, the Board must establish:
a. The issue has been resolved in a civil proceeding
that resulted in a final judgment, or in a criminal proceeding
that resulted in a finding of guilt, even if the Iowa Supreme
Court Attorney Disciplinary Board was not a party to the
prior proceeding.
b. The burden of proof in the prior proceeding was
greater than a mere preponderance of the evidence.
c. The party seeking preclusive effect has given written
notice to the opposing party, not less than ten days prior to
the hearing, of the party’s intention to invoke issue
preclusion.
Iowa Ct. R. 35.7(3).2 We have held offensive issue preclusion does not
violate due process. D.J.I., 545 N.W.2d at 874, 877 (holding our court
rule, then rule 118.7, applies retroactively); see also Iowa Supreme Ct.
Att’y Disciplinary Bd. v. Polsley, 796 N.W.2d 881, 884–85 (Iowa 2011)
(applying offensive issue preclusion); Iowa Supreme Ct. Att’y Disciplinary
Bd. v. Iversen, 723 N.W.2d 806, 809 (Iowa 2006) (same).
The three requirements of rule 35.7(3) are satisfied here. First,
Stowers’s contemptuous violation of the protective order was an issue
“resolved in a civil proceeding that resulted in a final judgment” for
purposes of rule 35.7(3)(a). We equate our prior decision affirming his
2All citations to the Iowa Court Rules are to the 2012 version, effective
February 20, 2012.
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contempt to “a final judgment” under rule 35.7(3)(a). Stowers contends
the contempt ruling in Reis was not final because on remand the district
court did not enter a contempt judgment, but a discovery sanction.
Stowers places undue emphasis on the specific entry of judgment on
remand. “Finality is a term of art for res judicata.” Emp’rs Mut. Cas. Co.
v. Van Haaften, 815 N.W.2d 17, 25 (Iowa 2012). “Finality for purposes of
res judicata requires [only] that a firm and considered decision has been
made by the court . . . .” Id. at 25, 26 (holding judicial acceptance of an
Alford plea of guilty to theft charge is final for issue preclusion purposes
in a subsequent civil collection action, even though the criminal record of
theft was expunged upon successful completion of the terms of a
deferred judgment).
The ultimate final judgment need not be on the specific issue to be
given preclusive effect. Id. (“[I]t is the court’s factual-basis determination
when accepting the plea that provides the plea’s preclusive effect, not the
subsequent sentence and deferred judgment.”). We affirmed the district
court’s determination that Stowers’s emails were in contempt of the
protective order. Reis, 787 N.W.2d at 71 (“The district court’s
determination holding Stowers in contempt of the protective order is
affirmed.”). The resolution of that issue is sufficiently “firm and
considered” to be final for issue preclusion purposes. The issue was
“resolved” in the contempt proceedings for purposes of rule 35.7(3)(a).
Second, the burden of proof in Stowers’s prior contempt
proceeding was greater than a preponderance of evidence for purposes of
rule 35.7(3)(b). Cf. Iowa Supreme Ct. Bd. of Prof’l Ethics & Conduct v.
Remer, 617 N.W.2d 269, 272 (Iowa 2000) (declining to apply issue
preclusion because the burden of proof in the prior proceeding was not
greater than a mere preponderance of the evidence). Contempt
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proceedings are quasi-criminal actions that must be established by proof
beyond a reasonable doubt. Ary v. Iowa Dist. Ct., 735 N.W.2d 621, 624
(Iowa 2007).
Third, the notice to Stowers required by rule 35.7(3)(c) was timely
provided. The Board stated in its complaint against Stowers that it
“intend[ed] to invoke issue preclusion in proving the allegations of this
complaint.” Cf. Iowa Supreme Ct. Att’y Disciplinary Bd. v. Weaver, 812
N.W.2d 4, 9 (Iowa 2012) (deeming use of issue preclusion improper
because the Board had failed to provide notice it intended to invoke the
doctrine).
Although the requirements stated in rule 35.7(3) are satisfied,
Stowers nevertheless argues offensive issue preclusion is inappropriate.
Our precedent recognizes two additional considerations when issue
preclusion is invoked offensively: (1) whether the opposing party in the
prior action had a full and fair opportunity to litigate the issue and (2)
whether any other circumstances justify permitting the party to relitigate
the issue. Van Haaften, 815 N.W.2d at 22. This precedent developed
through our common law, distinct from cases interpreting and applying
court rule 35.7(3). Assuming without deciding these requirements apply
under rule 35.7(3), we conclude issue preclusion should be applied.
Stowers primarily relies on alleged defects in the prior contempt
proceeding. Stowers contends the finding we affirmed on appeal, that his
emails were in contempt of the protective order, was not the basis for the
contempt originally pled by Care Initiatives. He also argues the district
court erred in finding contempt because it was unclear whether the
protective order continued after settlement and because the district court
made evidentiary errors. These arguments were considered and rejected
in our prior decision. Reis, 787 N.W.2d at 66–70. We held Stowers
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knowingly and willfully violated the protective order beyond a reasonable
doubt. Id. at 70. Stowers had a full and fair opportunity to litigate his
contempt in those proceedings, all the way through appeal to our court.
We find no special circumstances allowing Stowers to avoid issue
preclusion here.
Based on issue preclusion, we find Stowers, in contemptuously
violating the protective order, “knowingly disobey[ed] an obligation under
the rules of a tribunal.” Iowa R. Prof’l Conduct 32:3.4(c). Stowers next
argues that, even if the prior contempt finding is given preclusive effect,
he did not violate rule 32:3.4(c) because he made an “open refusal” to
obey the protective order based upon his good-faith belief he did not have
to comply. We stated in our prior decision:
Stowers suggests his emails cannot violate the
protective order because he was simply alerting Care
Initiatives that he might be required to report illegal behavior
discovered during the course of the lawsuit. The right or
duty of a litigant or lawyer to report illegal behavior to the
proper authorities if it is discovered during the course of a
civil proceeding is not before this court. Stowers was bound
by the protective order which prevented use or disclosure of
the documents. The protective order allowed modification,
and if Stowers was concerned about his ethical or legal
duties, he could have moved to modify the protective order to
allow disclosure of documents to the proper authorities.
Reis, 787 N.W.2d at 70. 3 We decline to allow Stowers to relitigate
whether his emails contemptuously violated the protective order, and we
reject his “open refusal” defense to rule 32:3.4(c). The commission found
that Stowers, by sending the threatening private emails, did not act
openly in court but rather “proceeded vigilante-style to use threats of
3We provide guidance for the modification of protective orders in Comes v.
Microsoft Corp., 775 N.W.2d 302, 309–10 (Iowa 2009).
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embarrassment, disbarment, and prosecution to extra-judicially seek
remedies.” We agree with the commission’s finding.
For these reasons, we find Stowers violated rule 32:3.4(c).
B. Communication with Persons Represented by Counsel. The
Board charged Stowers with violating rule 32:4.2(a), which states:
In representing a client, a lawyer shall not communicate
about the subject of the representation with a person the
lawyer knows to be represented by another lawyer in the
matter, unless the lawyer has the consent of the other lawyer
or is authorized to do so by law or a court order.
Iowa R. Prof’l Conduct 32:4.2(a). When the client is an organization, the
rule prohibits communication with certain constituents of the
organization. Iowa R. Prof’l Conduct 32:4.2 cmt. 7; see, e.g., Terra Int’l,
Inc. v. Miss. Chem. Corp., 913 F. Supp. 1306, 1321 (N.D. Iowa 1996)
(“The court concludes that ex parte contacts should not be permitted
with managerial level employees . . . .”). The first comment to this rule
identifies the primary purposes underlying the rule:
This rule contributes to the proper functioning of the legal
system by protecting a person who has chosen to be
represented by a lawyer in a matter against possible
overreaching by other lawyers who are participating in the
matter, interference by those lawyers with the client-lawyer
relationship, and the uncounseled disclosure of information
relating to the representation.
Iowa R. Prof’l Conduct 32:4.2 cmt. 1; see also Iowa Supreme Ct. Att’y
Disciplinary Bd. v. Olson, 807 N.W.2d 268, 277 (Iowa 2011) (“This rule is
designed to ‘protect[] the represented party from the imbalance of legal
skill and acumen between the lawyer and that party.’ ” (quoting Schmidt,
796 N.W.2d at 40)).
The Board argues M.M. and R.T. were “constituents” of Care
Initiatives, which Stowers knew was represented by counsel. Stowers
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denies M.M. and R.T. were “constituents” of Care Initiatives, and Stowers
claims the Board failed to establish his emails were done while
“representing a client” or related to any ongoing “matter” because his
wife’s lawsuit had been concluded.
The commission found Stowers did not violate this rule. It rejected
the Board’s contention that the “matter” at issue was the return of the
confidential documents and that Stowers had an attorney–client
relationship with his wife in that matter. The commission also found the
Board failed to establish M.M. and R.T. were constituents of Care
Initiatives because “[t]he evidence at [the] hearing was that Armentrout
only represented Care Initiatives and H.W., as its CEO, and that any
other constituents of Care Initiatives would require separate counsel.”
We disagree with the commission’s findings as to M.M.
First, we find Stowers was representing his wife and himself
through the email communications. In Reis, we concluded there was
“sufficient evidence supporting the district court’s finding that Stowers
acted as an attorney to Reis during the litigation.” 787 N.W.2d at 73.
Similarly, we find a convincing preponderance of the evidence establishes
Stowers’s emails to M.M. and R.T. were made pursuant to his attorney–
client relationship with Reis. State v. Parker, 747 N.W.2d 196, 203 (Iowa
2008) (stating an attorney–client relationship exists if (1) a person sought
advice from an attorney, (2) pertaining to matters within the attorney’s
professional competence, and (3) the attorney expressly or impliedly
agreed to give assistance). After the settlement, Reis, through Stowers,
terminated or restricted Fiedler and Newkirk’s representation, and
Stowers requested they send the confidential documents at issue to his
wife. Reis testified in her deposition that she relied on Stowers at times
for legal advice during her lawsuit against Care Initiatives.
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Second, Reis and Stowers had an ongoing dispute with Care
Initiatives over the return of the confidential documents pursuant to the
settlement agreement and protective order that remained in effect. This
was not an innocuous communication with a represented client over
housekeeping matters to implement an amicable settlement. Rather, this
was a contentious adversarial dispute over confidential documents
subject to a continuing protective order that escalated into contempt
proceedings. Stowers’s threatening emails were directly related to the
confidential documents at issue. Reis, 787 N.W.2d at 70–71.
Third, we conclude M.M. is a constituent of Care Initiatives within
the meaning of rule 32:4.2(a). Although the rules do not contain a formal
definition of “constituent,” the rule of professional conduct that governs
attorneys’ conduct when representing an organizational client identifies
the organization’s directors, officers, employees, members, and
shareholders as constituents of the organization. See Iowa R. Prof’l
Conduct 32:1.13(f) (“In dealing with an organization’s directors, officers,
employees, members, shareholders, or other constituents, a lawyer shall
explain the identity of the client when the lawyer knows or reasonably
should know that the organization’s interests are adverse to those of the
constituents with whom the lawyer is dealing.” (Emphasis added.)); see
also Tiano v. Palmer, 621 N.W.2d 420, 423 (Iowa 2001) (“When the same
word or term is used in different statutory sections that are similar in
purpose, they will be given a consistent meaning.”). Under this
definition, M.M., an officer, and R.T., a member of the board of directors,
were both constituents of Care Initiatives.
However, rule 32:4.2(a) does not prohibit ex parte communication
with all constituents of the represented organization, but rather limits it
to the constituents “who supervise[], direct[], or regularly consult[] with
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the organization’s lawyer concerning the matter or ha[ve] authority to
obligate the organization with respect to the matter or whose act or
omission in connection with the matter may be imputed to the
organization for the purposes of civil or criminal liability.” Iowa R. Prof’l
Conduct 32:4.2 cmt. 7. The first category of constituents covered by rule
32:4.2(a) are those who “regularly consult[]” with the organization’s
lawyer concerning the matter. Iowa R. Prof’l Conduct 32:4.2, cmt. 7; see
also Terra, 913 F. Supp. at 1321. One purpose of applying this rule to
these particular constituents is to prevent “the uncounseled disclosure of
information relating to the representation.” Iowa R. Prof’l Conduct 32:4.2
cmt. 1.
In determining which categories of current corporate employees are
covered by this rule, the court in Terra concluded that counsel should
not be permitted to communicate ex parte with any “managerial level
employees.” Terra, 913 F. Supp. at 1321. The Terra court held that
Iowa’s former rule DR 7–104(A)(1) (now rule 32:4.2), did not permit
opposing counsel to engage in ex parte contacts with the corporation’s
shipping supervisor who oversaw no more than seven employees at a
time. Id. A senior vice president and CFO of an organization, such as
M.M., qualifies as a “managerial level employee[].” This conclusion is
buttressed by the fact that shortly after Stowers’s email to M.M., Care
Initiatives’ attorney, Armentrout, contacted Stowers to enforce the
protective order and settlement agreement. We find the evidence
establishes M.M. is a constituent of Care Initiatives whom Stowers could
not contact without the consent of Armentrout.
The second category of constituents covered by rule 32:4.2 are
those “who . . . ha[ve] authority to obligate the organization with respect
to the matter.” Iowa R. Prof’l Conduct 32:4.2 cmt. 7. Care Initiatives is a
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Texas nonprofit corporation. Under the laws of that state, the “ ‘[b]oard
of directors’ means the group of persons vested with the management of
the affairs of the corporation, regardless of the name used to designate
the group.” Tex. Bus. Orgs. Code Ann. § 22.001(1) (West, Westlaw
current through 2011 Reg. Sess. & 1st Called Sess. 82d Legis. Sess.).
While the board of directors as a whole possesses the power to manage
the corporation, a single director ordinarily does not have the authority
or power to bind the corporation. See Kiepfer v. Beller, 944 F.2d 1213,
1218 (5th Cir. 1991). “[T]he board ‘may exercise its powers only as a
body at a meeting duly assembled and conducted.’ ” Id. (quoting Curtis
v. Pipelife Corp., 370 S.W.2d 764, 767 (Tex. Civ. App. 1963)). The record
does not establish R.T. possessed individual authority to manage or bind
the corporation. Thus, the Board has failed to prove by a convincing
preponderance of the evidence that R.T. was a constituent of Care
Initiatives who rule 32:4.2(a) protected from ex parte contact by Stowers.
For these reasons, we find Stowers violated rule 32:4.2(a) as to
M.M. alone.
C. Extortion. The Board alleged Stowers’s email to R.T. was a
criminal extortion that violated rule 32:8.4(b). That rule provides that “it
is professional misconduct for a lawyer to . . . commit a criminal act that
reflects adversely on the lawyer’s honesty, trustworthiness, or fitness as
a lawyer in other respects.” Iowa R. Prof’l Conduct 32:8.4(b). A person
commits extortion by doing
any of the following with the purpose of obtaining for oneself
or another anything of value, tangible or intangible,
including labor or services:
1. Threatens to inflict physical injury on some person,
or to commit any public offense.
2. Threatens to accuse another of a public offense.
18
3. Threatens to expose any person to hatred, contempt,
or ridicule.
4. Threatens to harm the credit or business or
professional reputation of any person.
5. Threatens to take or withhold action as a public
officer or employee, or to cause some public official or
employee to take or withhold action.
6. Threatens to testify or provide information or to
withhold testimony or information with respect to another’s
legal claim or defense.
7. Threatens to wrongfully injure the property of
another.
Iowa Code § 711.4 (2007) (emphasis added). The person making the
threats has a defense to extortion if he “reasonably believed that [he] had
a right to make such threats in order to recover property, or to receive
compensation for property or services, or to recover a debt to which [he]
has a good faith claim.” Id. This statutory defense by its terms removes
typical settlement demands and litigation threats from the ambit of the
extortion statute.
The commission concluded Stowers did not violate the rule
because the evidence failed to establish R.T. credibly perceived a
legitimate threat of physical violence. Specifically, the commission
reasoned:
[D]espite the clearly threatening tone of the . . . email, this
count of the complaint was substantially undermined by the
testimony of [R.T.]. [R.T.] alleged that the primary threat he
perceived was one of physical harm directed toward himself
or his daughters. . . . [R.T.] specifically discounted the
conjecture that the e-mail was a threat to sue him. This is
consistent with [R.T.]’s failure to notify any authorities of a
perceived threat, the absence of any discussion of extortion
when the e-mail was brought to the attention of attorneys for
Care Initiatives, and the lack of any reference to extortion
when the ethics complaint was filed with the Board.
We defer to the commission’s credibility finding that R.T.’s testimony
concerning his fear of physical violence was not believable. But, the
19
commission focused too narrowly on section 711.4(1) governing threats
of physical injury, to the exclusion of other grounds for extortion. We
find the record establishes that Stowers threatened to subject R.T. to
public ridicule and harm his professional reputation, and did so to
obtain something of value for another—a charity chosen by Reis and
Stowers—at a six-figure cost to R.T. Iowa Code § 711.4(3)–(4).
During the commission’s hearing, Stowers testified repeatedly that
he was acting as a husband and not as an attorney at the time he sent
the email to R.T. demanding a charitable donation in his wife’s name.
Whether he was acting as a husband or an attorney is immaterial to
determining whether his conduct violated rule 32:8.4(b) because lawyers
are required to obey the disciplinary rules when acting pro se or in a
personal capacity. Comm. on Prof’l Ethics & Conduct v. Hall, 463 N.W.2d
30, 35 (Iowa 1990) (“[L]awyers do not shed their professional
responsibility in their personal lives.”). It is also important to note that
rule 32:8.4(b) does not require a criminal conviction, but only that an
attorney committed a “criminal act.” Iowa Supreme Ct. Att’y Disciplinary
Bd. v. Lustgraaf, 792 N.W.2d 295, 299 (Iowa 2010) (holding respondent’s
failure to file tax returns in accordance with federal law was a violation of
rule 32:8.4(b), even though he was never criminally charged); see also
Hall, 463 N.W.2d at 33, 35 (holding respondent’s commission of theft
constituted violation of DR 1–102(A)(3), even though respondent was not
charged with or convicted of a crime).
Accordingly, the absence of criminal charges, or even acquittal of
criminal charges, is not a defense to this rule. 2 Geoffrey C. Hazard, Jr.,
et al., The Law of Lawyering § 65.4, at 65-10 (3d ed. Supp. 2009)
[hereinafter Hazard]. The Board simply must prove the attorney
committed the act by a convincing preponderance of the evidence.
20
Weaver, 812 N.W.2d at 9. “This burden is less than proof beyond a
reasonable doubt, but more than the preponderance standard required
in the usual civil case.” Iowa Supreme Ct. Bd. of Prof’l Ethics & Conduct
v. Lett, 674 N.W.2d 139, 142 (Iowa 2004). It is also a less stringent
burden than clear and convincing evidence, which is “the highest civil
law standard of proof.” Iowa Supreme Ct. Bd. of Prof’l Ethics & Conduct v.
Ronwin, 557 N.W.2d 515, 517 (Iowa 1996). Further, there must be a
“rational connection” between the criminal act and the lawyer’s fitness to
practice law. Weaver, 812 N.W.2d at 11.
The elements of extortion are (1) an improper threat (2) for the
purpose of obtaining for him or another (3) anything of value. See State
v. Crone, 545 N.W.2d 267, 271 (Iowa 1996). “Threats need not be
explicit; they may be made by innuendo or suggestion.” Id. Stowers’s
email to R.T. does not overtly threaten to disclose disparaging nonpublic
information, but the threat in context is at least implicit. Stowers tells
R.T. to “focus on just two things . . . . 1) not getting yourself disbarred
and indicted for fraud, and 2) preserving what may be left of your assets
and already low reputation in the legal and lobbying community.” The
email goes on to say, “I want to give you the chance to resolve your
dilemma without as much trauma to you as would occur if you do not
accept the proposal I am about to make.” This email conveys the
message that if R.T. fails to do what Stowers demands of him, Stowers
will take action to further harm R.T.’s reputation. The threat is
reinforced by the email’s final paragraph: “Don’t doubt my resolve, ability
to carry through, or intent to seek complete vindication.” We find
Stowers’s email improperly threatens to injure R.T.’s professional
reputation. See Iowa Code § 711.4(4).
21
The email also satisfies the second and third elements of extortion.
The email demands that R.T. “make a personal cash donation to a
charitable cause in the name of Jan Reis selected by Jan Reis and
[Stowers] in an amount equal to all payments that [R.T. had] received
from Care Initiatives from August 2005 to the present.” R.T. testified the
amount demanded exceeded $100,000. A $100,000 contribution
constitutes something of “value” to “another,” the charity, within the
meaning of section 711.4.
Stowers contends there is no extortion because he reasonably
believed he had the right to threaten R.T. in order to obtain a settlement
for his loss of consortium resulting from R.T.’s sexual harassment and
termination of Reis. See id. § 711.4 (“It is a defense to a charge of
extortion that the person making a threat . . . reasonably believed that
[he] had a right . . . to recover a debt to which the person has a good
faith claim.”). Stowers claims he was merely applying leverage to settle
his consortium claim. 4 He relies on Reis v. Walker, 491 F.3d 868, 870
(8th Cir. 2007), which acknowledges that we have “repeatedly held that,
because settlements are favored, commencing a lawsuit or adding a
claim to gain leverage for a settlement . . . is not an abuse of that
process.”
4On July 1, 2005, we replaced the Iowa Code of Professional Responsibility for
Lawyers with the Iowa Rules of Professional Conduct. Under the prior code, DR 7–105
stated “[a] lawyer shall not present, participate in presenting, or threaten to present
criminal charges solely to obtain an advantage in a civil matter.” Our new rules do not
contain a similar proscription. The American Bar Association’s Standing Committee on
Ethics and Professional Responsibility advised this change was deliberate. ABA Comm.
on Ethics & Prof’l Responsibility, Formal Op. 92-363 (1992). The model rules do not
prevent a lawyer from presenting or threatening criminal charges to settle a case
provided that the criminal charge is related to the civil matter, the lawyer has a
reasonable belief both the civil claim and criminal charges are justified, and such an
agreement itself is not a violation of the law. Id.
22
But, we are not persuaded Stowers sent his threatening email to
R.T. to obtain a settlement of his consortium claim. Stowers never
mentioned any consortium claim in his email to R.T. or other
contemporaneous communications. It is difficult to believe an attorney
attempting to settle a consortium claim would fail to even mention the
claim when making demands. Indeed, Stowers lived through his wife’s
litigation and the settlement of her case without filing his own
consortium claim against Care Initiatives or R.T. Interestingly, according
to Stowers’s own testimony, he drafted, but never filed, a petition setting
forth his consortium claim on November 16, 2007, exactly two years to
the day Care Initiatives terminated his wife. 5 As an experienced
attorney, Stowers knew or reasonably should have known his consortium
claim is subject to the two-year statute of limitations in Iowa Code
section 614.1(2).
Thus, by the time Stowers sent the threatening emails in February
2008, any consortium claim he may have had arising from acts occurring
up to his wife’s termination was barred by the statute of limitations. See
Riniker v. Wilson, 623 N.W.2d 220, 228 (Iowa Ct. App. 2000) (applying
two-year statute of limitations to loss-of-consortium claim arising from
sexual harassment and assault by former employer). For these reasons,
on our de novo review, we find Stowers did not email R.T. to pursue
settlement of a consortium claim. Accordingly, he is not protected by the
defense to extortion in section 711.4.
Finally, we find a rational connection between Stowers’s extortion
and his fitness to practice law. Weaver, 812 N.W.2d at 11–12 (setting
5Whenever feasible, claims for loss of consortium should be joined with the
injured spouse’s claim. See In re Estate of Sylvester, 559 N.W.2d 285, 288 (Iowa 1997).
23
forth nexus factors); Iowa Supreme Ct. Att’y Disciplinary Bd. v. Templeton,
784 N.W.2d 761, 767 (Iowa 2010) (same). The conduct was intentional
and sought to vindicate a personal grudge. See 2 Hazard § 65.4, at 65-9
to 65-10 (stating a nexus often exists when the lawyer is “nursing a
grudge”). Stowers’s extortion threats used confidential information in
contemptuous violation of a protective order. Reis, 787 N.W.2d at 70–71;
see also Iowa Supreme Ct. Bd. of Prof’l Ethics & Conduct v. Miller, 568
N.W.2d 665, 667 (Iowa 1997) (attorney’s threats against her former
employer using confidential information “bordered on extortion” and
violated ethics rules).
For these reasons, we find Stowers violated rule 32:8.4(b).
D. Actions Prejudicial to the Administration of Justice. The
Board alleged Stowers’s conduct violated rule 32:8.4(d). Rule 32:8.4(d)
states “[i]t is professional misconduct for a lawyer to . . . engage in
conduct that is prejudicial to the administration of justice.” Conduct is
prejudicial to the administration of justice when it impedes “ ‘the efficient
and proper operation of the courts or of ancillary systems upon which
the courts rely.’ ” Templeton, 784 N.W.2d at 768 (quoting Iowa Supreme
Ct. Att’y Disciplinary Bd. v. Howe, 706 N.W.2d 360, 373 (Iowa 2005)).
“The mere commission of a criminal act will not constitute a violation of
rule 32:8.4(d) unless that conduct somehow impedes the operation of the
justice system.” Lustgraaf, 792 N.W.2d at 300.
The commission concluded the emails were prejudicial to the
administration of justice because Stowers’s “threat of public legal
persecution in order to obtain a private benefit is clearly an abuse
prejudicial to the administration of justice.” We agree that Stowers’s
emails were prejudicial to the administration of justice.
24
Stowers’s emails violated the protective order and triggered a series
of unnecessary court proceedings, including rulings by the district court,
court of appeals, and this court. See Reis, 787 N.W.2d at 64–65. This
constituted conduct prejudicial to the administration of justice. See
Iowa Supreme Ct. Att’y Disciplinary Bd. v. Schall, 814 N.W.2d 210, 214
(Iowa 2012) (holding attorney violated rule 32:8.4(d) because the
misconduct caused unnecessary motions and court hearings); Iowa
Supreme Ct. Att’y Disciplinary Bd. v. Van Ginkel, 809 N.W.2d 96, 103
(Iowa 2012) (holding attorney’s neglect of an estate was prejudicial to the
administration of justice because it caused the district court to file seven
delinquency notices). Accordingly, we find Stowers violated rule
32:8.4(d).
IV. Sanction.
We determine appropriate sanctions in light of each case’s
particular circumstances, although prior cases are instructive. Iowa
Supreme Ct. Att’y Disciplinary Bd. v. Kallsen, 814 N.W.2d 233, 239 (Iowa
2012). In crafting a sanction,
“we consider the nature of the violations, the attorney’s
fitness to continue in the practice of law, the protection of
society from those unfit to practice law, the need to uphold
public confidence in the justice system, deterrence,
maintenance of the reputation of the bar as a whole, and any
aggravating or mitigating circumstances.”
Id. (quoting Iowa Supreme Ct. Att’y Disciplinary Bd. v. Boles, 808 N.W.2d
431, 441 (Iowa 2012)).
Stowers’s emails contemptuously violated a protective order by
misusing confidential documents. He made an unauthorized ex parte
contact with a constituent of an entity he knew was represented by
counsel. He attempted to extort a $100,000 donation to a charity in his
25
wife’s name. His actions that required contempt proceedings were
prejudicial to the administration of justice.
We previously addressed the appropriate sanction for analogous
misconduct when the attorney made improper demands on her former
employer in response to an alleged wrongful discharge for whistle-
blowing and sexual harassment. Miller, 568 N.W.2d at 667. Miller was
employed as an attorney at Gekko when she discovered a fraud that
potentially implicated company principles. Id. at 666. She came forward
with the information over an officer’s objection and was promptly
terminated. Id. Miller, using confidential information she gained
representing Gekko, demanded Gekko repurchase her 60,000 units in
the company (the equivalent of corporate shares in a limited liability
company) and 15,000 to 20,000 units owned by her friend at a price
considerably higher than market value. Id. She also demanded Gekko
dismiss its disciplinary charges against her. Id. She threatened to file a
complaint with the Securities and Exchange Commission and pursue
actions for sexual harassment and trade libel unless her demands were
met. Id. Although Miller had a right under federal law to demand Gekko
repurchase her units at her purchase price, she had no right to exact a
price in excess of market value or force a repurchase for her friend. Id.
at 667. We acknowledged Miller’s conduct “bordered on extortion.” Id.
As here, the commission recommended a public reprimand for Miller. Id.
at 666. But, we found “the seriousness of the violations require[d] a
sanction greater than a public reprimand” and suspended Miller from the
practice of law for sixty days. Id. at 667.
We next consider Stowers’s other violations. Unauthorized
communication with a represented party typically warrants a public
reprimand. Iowa Supreme Ct. Att’y Disciplinary Bd. v. Box, 715 N.W.2d
26758, 765 (Iowa 2006) (imposing public reprimand on attorney without
prior disciplinary history because prohibited communication resulted in
substantial harm and rejecting request to privately admonish
respondent); Iowa Supreme Ct. Bd. of Prof’l Ethics & Conduct v. Sullins,
556 N.W.2d 456, 457 (Iowa 1996) (imposing public reprimand on
attorney for contacting child witness in child abuse proceedings when
attorney knew child would soon be appointed representation); Comm. on
Prof’l Ethics & Conduct v. Zimmermann, 522 N.W.2d 619, 621 (Iowa 1994)
(issuing admonition when attorney improperly interviewed child under a
good-faith misinterpretation of a court order). But see Schmidt, 796
N.W.2d at 44–45 (imposing thirty-day suspension when attorney’s
unauthorized communication was combined with serious domestic
abuse).
Sanctions for an attorney’s violation of a court order vary in light of
the accompanying misconduct. See, e.g., Dunahoo, 799 N.W.2d at 530–
35 (imposing one-year suspension when attorney violated a bankruptcy
court order, committed trust account violations, and neglected several
clients); Iowa Supreme Ct. Bd. of Prof’l Ethics & Conduct v. Hughes, 557
N.W.2d 890, 895 (Iowa 1996) (imposing public reprimand when attorney
advised client to ignore court order to obtain a substance abuse
evaluation and declining to impose suspension because of the attorney’s
unblemished record and respectful and candid manner in dealing with
the court); Comm. on Prof’l Ethics & Conduct v. McCullough, 465 N.W.2d
878, 886–87 (Iowa 1991) (suspending attorney’s license for one year
when counsel egregiously and flagrantly counseled client to violate court
order).
Stowers points to several mitigating factors. He has performed
significant court-appointed criminal defense work at reduced fees and
27
has served the state and federal courts through several criminal law
committees and panels. See Boles, 808 N.W.2d at 442 (recognizing
volunteer service to the community and legal profession is a mitigating
factor). Stowers’s character witnesses testified that his emails were an
aberration from his normally professional conduct. Cf. Iowa Supreme Ct.
Att’y Disciplinary Bd. v. Parrish, 801 N.W.2d 580, 589 (Iowa 2011)
(stating a pattern of misconduct is an aggravating factor). Neither
Stowers nor his wife profited from his ethical violations. See Iowa
Supreme Ct. Bd. of Prof’l Ethics & Conduct v. Stein, 603 N.W.2d 574, 576
(Iowa 1999) (noting lack of personal gain may be a mitigating factor).
We recognize Stowers’s wife’s contentious lawsuit involved deeply
personal issues that took a heavy psychic toll on each of them and their
marriage, which ended in divorce. See Van Ginkel, 809 N.W.2d at 110
(“[W]hile personal issues may be a factor in determining the appropriate
sanction, they do not excuse ethical violations.”). Yet, a lawyer in such
circumstances should recognize the need to obtain and follow
dispassionate, objective advice of counsel and “to be sensitive to
circumstances which might impair his judgment.” Comm. on Prof’l Ethics
& Conduct v. Hoffman, 402 N.W.2d 449, 451 (Iowa 1987). Stowers had
ample time to do so.
Minimizing or failing to take responsibility for one’s misconduct is
an aggravating factor. Iowa Supreme Ct. Bd. of Prof’l Ethics & Conduct v.
Tofflemire, 689 N.W.2d 83, 93 (Iowa 2004) (“[T]he attorney’s failure to
appreciate the wrongfulness of his or her actions is an aggravating
circumstance.”); Iowa Supreme Ct. Bd. of Prof’l Ethics & Conduct v.
Mulford, 625 N.W.2d 672, 686 (Iowa 2001) (noting the attorney “has
continued to minimize his misconduct”). The commission observed
Stowers was unable to “bring himself to admit that he had done anything
28
more than acted unprofessionally and did not sincerely concede anything
was actually wrong beyond tenor and tone of the challenged e-mails.”
On our review of the hearing transcript, we agree with the commission.
Stowers was defiant when asked if his conduct was inappropriate. The
commission noted Stowers’s “comportment” during the disciplinary
hearing to be “unduly dismissive, disdainful, and derisive of all
participants . . . displayed in the form of eye-rolling, sneers, and other
non-verbal communication.”
After careful consideration of the record, mitigating and
aggravating factors, and precedent, we conclude a ninety-day suspension
is appropriate.
V. Conclusion.
We suspend Stowers’s license to practice law in this state
indefinitely with no possibility of reinstatement for ninety days. This
suspension applies to all facets of the practice of law, as provided in Iowa
Court Rule 35.13(3), and requires notification to clients, as outlined in
rule 35.23. Upon application for reinstatement, Stowers must
demonstrate that he has not practiced law during the period of his
suspension and that he has complied with all of the requirements for
reinstatement provided in rule 35.14. The costs of this proceeding are
assessed against Stowers pursuant to rule 35.27(1).
LICENSE SUSPENDED.
All justices concur except Mansfield, J., who takes no part.