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In re Doud

United States District Court, E.D. Michigan, Southern Division

June 23, 2017

IN RE RICHARD J. DOUD and ANDREW M. FERGUSON

          OPINION & ORDER

         Respondents Richard J. Doud and Andrew M. Ferguson, both principals at pertinent times with Davidson, Breen, Doud, Steele & Ferguson, P.C. (the “Firm”), were referred to the undersigned three-judge panel for disciplinary proceedings pursuant to E.D. Mich. LR 83.22. The referral resulted from the filing in this Court of numerous social security appeals under Doud's name, from 2012 to 2015, which were woefully deficient both as to the quality of the briefs and the management and monitoring of the appeal process on behalf of clients. The “one-size-fits-all” briefs often had very little to do with the facts of the particular case in which they were filed; and, except in one case, there was no lawyer review of opposing briefs and magistrate judge rulings in the cases. This repeated pattern of derelict performance led several magistrate judges and district judges to impose sanctions on Doud. In connection with the imposition of sanctions in one case, Doud and Ferguson misled the sanctioning judge regarding their compliance with his order by submitting a false affidavit.

         The questions raised by these revelations in 2015 prompted then-Chief Judge Gerald Rosen to convene the Panel to address misconduct that may have been committed by Doud and Ferguson. To initiate the proceeding, the Panel issued an order to show cause to both Respondents, who appeared by counsel and responded to the show cause order. The Chief Judge also appointed the Grievance Administrator of the Michigan Attorney Grievance Commission as Prosecuting Counsel under E.D. Mich. LR 83.22(e)(6)(a) to conduct the investigation and present evidence to the Panel. Prosecuting Counsel did so by conducting depositions of the Respondents and several lawyers and a legal secretary who worked at the Firm.[1] After receiving proposed findings from the Prosecuting Counsel and responses thereto, the Panel conducted a full hearing at which Doud and Ferguson testified; the parties later submitted supplemental proposed findings and a supplemental response.[2]

         After reviewing all of the evidence, the Panel concludes that both Doud and Ferguson engaged in serious violations of the Michigan Rules of Professional Conduct, with Doud's violations being more egregious.[3] These violations warrant suspending Doud from practicing before this Court for 90 days and publicly reprimanding Ferguson for his misconduct.

         I. FINDINGS OF FACT

         A. General Factual Background

         The Firm's practice consisted of workers' compensation, personal injury, and social security, with the Firm's bread and butter being workers' compensation. During the period in question, the Firm was managed by three shareholders, Ferguson, Michael Doud, [4] and Floyd Steele.[5] There were also two non-equity partners, James Smith and Philip Dellasantina, as well as associate attorneys.

         Doud was a shareholder of the Firm from 1977 until January 1, 2012, when a shareholder buyback agreement that he had executed on December 31, 2011 became effective. Doud's full level of involvement with the Firm following the execution of the agreement remains unclear. But what is clear is that Doud was permitted to manage various aspects of the Firm as he saw fit and to practice as much or as little as he wanted even after the agreement went into effect. See Ferguson Tr. at 103-104; Steele Tr. at 6, 39-40; McHugh Tr. at 13, 40; M. Doud Tr. at 7, 11, 13-14. Certain shareholders and other Firm employees were uncertain as to Doud's actual status vis-à-vis the Firm. See Ferguson Tr. at 130-131. In fact, Ferguson was unsure of Doud's status until March 2015, when Doud instructed Ferguson to inform the Court that Doud had retired as of December 2011. Id.; see also Letter of Referral at 3 (Dkt. 2) (noting that Ferguson, in a letter responding to sanctions imposed by Judge Gershwin Drain, informed the Court that Doud had retired as of 2011). Notwithstanding the uncertainty of Doud's exact status within the Firm, the Firm did not publicly announce any new status for Doud, because it and Doud sought to conceal from clients and adversaries any “reduced” role for him. See Doud Tr. at 30 (describing his appearance as a fully active member of the Firm as a “façade, ” which the Firm was able to “play” for a year or two).

         Much of the Firm's social security work was driven by its workers' compensation practice, because claimants often were contractually required to apply for disability benefits with the Social Security Administration (“SSA”). See Doud Tr. at 7. Doud hired Ruth Wood, a legal secretary, to assist with the social security practice and “trained [her] over the years with regard to handling Social Security files.” Doud Tr. at 12. It appears that once Doud was comfortable with Wood's competence, he allowed her to file initial applications for social security on her own. See Doud Tr. at 12-13. Doud began reducing his social security practice in the mid-1980s, and the responsibility for handling the administrative hearings shifted to younger, newer attorneys with the Firm. Doud Tr. at 14-16.

         Beginning in 2002 a new associate attorney, Mikel Lupisella, took over the social security practice within a month of starting his employment; he was the attorney primarily responsible for social security through the end of 2011. Doud Tr. at 23-24; Ferguson Tr. at 89, 134, 143; Lupisella Tr., at 10, 19-20.[6] Doud stated that when Lupisella took over the practice, Doud was not involved in the social security practice beyond “keeping [an] eye on [his] [w]orkers' [c]ompensation cases.” Doud. at 22-23. When the district court transitioned to electronic filing, Lupisella obtained his own electronic filing credentials (CM/ECF username and password); he did not use one associated with Doud. Lupisella Tr. at 14-15. Lupisella left the Firm in December 2011.

         After Lupisella's departure, Doud was concerned about the future and stability of the social security practice and attempted to recruit one of the partners to take over the practice. Doud Tr. at 31; Ferguson Tr. at 22-23. Ferguson agreed to step into the social security practice at the administrative level of the social security proceedings, even though he had no prior experience in that area. Ferguson Tr. at 23, 24 While Doud insists that he told Ferguson to take over the entire social security practice, the Panel credits Ferguson's testimony that Doud asked him to handle only the administrative stage, not court appeals.[7] Because Ferguson was never told by Doud to supervise the Firm's social security appeals, he assumed that those cases were being handled by a process put into place by Doud and Wood. Ferguson Tr. at 24, 52-53, 108 (“I didn't know that I had to ask [questions about the brief-writing process for appeals in district court] because I assumed that [Doud] had set up a good system.”).

         For all intents and purposes, it was legal secretary Wood who ran the Firm's social security practice after Lupisella's departure. If the initial application for benefits was denied, Wood would meet with the clients and prepare the necessary documents for the hearing before an administrative law judge. Wood Tr. at 9-10. If the administrative law judge denied the claim, Wood would automatically file an appeal of the decision to the SSA Appeals Council. Id. at 16, 19-20; see also Ferguson Tr. at 46 (stating that once the administrative hearing was completed, the case was essentially done from his perspective); Id. (stating that if a client wanted to pursue an unfavorable decision he would direct the client to speak to Wood). If the Appeals Council denied an appeal, the client could further appeal the administrative decision in federal court by speaking with Wood or the assigned attorney. Wood Tr. at 20-21.

         If the client wanted to proceed to federal court, Wood would instruct either Aaron Lemmens or Paul McHugh, two associate attorneys who joined the Firm after Lupisella left, to begin writing briefs. Lemmens Tr. at 32-33; McHugh Tr. at 8-9, 10. McHugh testified that he was given no training prior to writing the briefs. Id. at 8. Lemmens indicated his “training” was limited to sitting in on administrative hearings and speaking with Wood - a non-lawyer - and Ferguson, who lacked any experience in the subject area. Lemmens Tr. at 9. Lemmens also testified he did not discuss the merits of cases with Ferguson, and that Ferguson never reviewed his social security work product or gave any type of formal evaluation. Id. at 30, 55. Nor did Ferguson or other senior lawyers give any substantive advice in terms of pointing out appropriate case law or statutory authority to assist McHugh or Lemmens. McHugh Tr. at 17.

         When it came to filing cases in district court, Lupisella, while at the Firm, filed both complaints and briefs under his name using a CM/ECF username specific to him. Lupisella Tr. at 14-15, 16. According to Wood, this was not the appropriate procedure, as the filings should have been done under Doud's name; consequently, when Lupisella departed, Wood was instructed by Doud to return everything to Doud's name.[8] Wood Tr. at 22-23. Craig Zanot, then a shareholder of the Firm, and Wood together obtained a CM/ECF username for Doud in December 2011. See Emails at 5-6 (cm/ecf page) (Dkt. 35-2).[9] The purported purpose of placing everything into Doud's name was to prevent departing lawyers from stealing Firm clients; there never was an expectation by anyone at the Firm that Doud would be working on the case. Wood Tr. at 46-47. Going forward, associates were instructed by Wood to file all briefs in Doud's name, using Doud's newly obtained CM/ECF username. McHugh Tr. at 11-12; Lemmens Tr. at 33, 34-36, 39-40, 56; Wood Tr. at 23.[10]

         Following the filing of a brief, no further work would be done on a social security appeal. Lemmens Tr. at 39; McHugh Tr. at 15-16. Attorneys did not see the opposing party's brief, did not submit any type of response, and never saw a report and recommendation (“R&R”) or a final decision; nor did they ask to see any of those items. Lemmens Tr. at 38-39; McHugh Tr. at 15-17. Lemmens and McHugh saw their jobs as completed once they filed a brief. Lemmens Tr. at 39; McHugh Tr. at 15. Wood was responsible for monitoring all electronic filings in the district court, but she neither reviewed the filings nor did she inform any of the attorneys that something had been filed. Wood Tr. at 26-28. Wood testified that no one reviewed R&Rs to determine whether objections should be filed. Id. at 49.[11] Wood merely printed off the final judgment and placed it in the case file, then sent a letter to the client informing the client of the decision. Id. at 28, 49.

         B. Events Leading to the Referral

         The systemic and structural deficiencies in the Firm's social security practice resulted in numerous filings, in the name of Doud, that suffered from myriad significant defects. Several members of this Court have taken note of the Firm's repeated deficient performance. See, e.g., Fielder, No. 13-10325, 2014 WL 1207865 at *1 n. 1 (E.D. Mich. Mar. 24, 2014) (discussing magistrate judges who have critiqued Doud and warning that failure to advance properly supported arguments could lead to sanctions and disciplinary action); Swadling v. Comm'r of Soc. Sec., No. 14-10251, 2015 WL 1511048, at *2 (E.D. Mich. Mar. 24, 2015) (fining Doud $7, 500 and referring him for disciplinary action); Leveque v. Comm'r of Soc. Sec., No. 13-10685, 2014 WL 172297, at *1 (E.D. Mich. Jan. 15, 2014) (adopting R&R that critiqued Doud for failure to substantiate arguments); Servantes v. Comm'r of Soc. Sec., No. 14-10250, 2015 WL 870255, at *17 (E.D.Mich. Feb. 27, 2015) (fining Doud $2, 500).

         In one instance, Doud was ordered to take specific remedial action; Doud's and Ferguson's responses to this order gave rise to additional allegations of misconduct. On March 6, 2015, District Judge Robert Cleland issued an Order in Radford v. Comm'r of Soc. Sec., No. 14-10831, 2015 WL 998332 (E.D. Mich. Mar. 6, 2015) (“the Radford Order”), adopting an R&R issued in that social security case. In the R&R, the Magistrate Judge observed that the filing bearing Doud's name was “yet another one-size-fits-all brief, containing virtually the same conclusory allegations and absence of developed argument that other courts had found insufficient.” Radford v. Comm'r, No. 14-10831, 2015 WL 998338, at *6 (E.D. Mich. December 1, 2014). The Magistrate Judge found it significant that the brief had been filed despite prior significant criticism of the briefing style leveled by another district judge. Id. In adopting the R&R, Judge Cleland made additional findings, concluding that Doud had effectively abandoned his client, and submitted work product to the Court that was not only careless, but professionally incompetent. Radford, 2015 WL 998332 at *1. Consequently, Judge Cleland ordered the following:

Plaintiff's attorney, Richard J. Doud, must file a statement by March 20, 2015, made under oath, that he has personally delivered to Plaintiff Kimberly Radford (1) a printed copy of the Magistrate Judge's report and recommendation, (2) a printed copy of this order, and (3) a written cover letter or memorandum to Ms. Radford that contains the following statement printed in at least 13-point font:
“Your case has been dismissed. I have been ordered by the court to deliver the court orders to you. The court also ordered me to tell you that you should carefully read 1) the Magistrate Judge's report and recommendation and 2) the order of the District Court accepting the recommendation and commenting on the case that I presented to the court on your behalf.”

         A copy of the cover letter or memorandum must be attached to the statement he files.

Id. (emphasis added).

         Judge Cleland's Order, issued on March 6, was ignored by the Firm until March 16, 2015, just four days before the statement was due. Smith Tr. at 31-32. James Smith was the first to take some action relative the Radford Order; he faxed a copy to Wood's attention. Smith Tr. at 32.[12]Wood conveyed the Radford Order to Ferguson, who wanted nothing to do with it, and Ferguson instructed Wood to call Doud, give Doud the information, and tell Doud the court was directing Doud to respond to the order. Ferguson Tr. at 25-26. Wood emailed Doud a document on March 16, requesting Doud sign and return it as soon as possible. See 3/16/2015 Email at 2 (cm/ecf page) (Dkt. 35-4). In response, Doud requested the actual Order, indicating he would write a response. Id. Wood sent the Radford Order to Doud on March 18, explaining, “the judge does not want our response just the statement signed.” 3/18/2015 Email at 3 (cm/ecf page) (Dkt. 35-4). Doud then instructed Wood to “[p]lease have Andrew [Ferguson] draft whatever is necessary. Sign my name to it.” Id.

         At some point between learning about the Radford Order and March 18, Wood made an appointment for Ms. Radford to come into the office and meet with Ferguson. Ferguson Tr. at 26. Wood provided Ferguson with a number of materials and explained that Doud wanted Ferguson to handle it, and that the Court needed a response by March 20. Id. Ferguson reviewed the materials Wood had sent him, noticing that information needed to be delivered to the client and then returned to the Court. Id. at 27. The specific materials included an affidavit, the statement to the client, and the court's decision. Id. at 28. According to Ferguson, because Wood told Ferguson he had the authority to sign for Doud, Ferguson thought it was okay. Id. at 27. Ferguson told Ms. Radford that he was “stepping in for Richard Doud in this case, ” and that he was “going to sign for Richard.” Id. at 28. At that time, Ferguson had not personally communicated with Doud. Id. at 31.[13]

         The affidavit in question avers that “Richard Doud” was “duly sworn, deposes and states, that pursuant to the [Radford Order], that he has personally delivered to Plaintiff” the required materials. See Radford Aff. at 5-6 (cm/ecf pages) (Dkt. 35-4). The signature on the affidavit purports to be Doud's and was notarized. Id. at 6 (cm/ecf page). The statement ordered to be provided to Ms. Radford also bears a signature purporting to be Doud's. See Radford Statement at 4 (cm/ecf page) (Dkt. 35-4). There is nothing on either of those two documents to indicate that they were signed by someone other than Doud or signed with Doud's permission. Doud confirmed that he had nothing to do with drafting the affidavit, that the ...


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