Editor's Note:
State Bar Ethics Opinions cite the applicable California Rules of Professional Conduct in effect at the time of the writing of the opinion. Please refer to the California Rules of Professional Conduct Cross Reference Chart for a table indicating the corresponding current operative rule. There, you can also link to the text of the current rule.
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Does an attorney violate rule 7-104 by filing, or threatening to file, administrative charges against an employer for employment discrimination pursuant to Title VII of the Civil Rights Act of 1964 where the filing of such charges is a prerequisite to the filing of a civil lawsuit?
Rule 7-104 does not prohibit an attorney from filing or threatening to file a complaint with EEOC. Because a party is required to exhaust administrative remedies by filing a claim with the EEOC, such attempts are intrinsically related to the objects of the civil litigation and thus are not collateral The public policy underlying employment discrimination laws encourages private settlement as a means of deterring illegal conduct.
Rules 7-104 and 1-100 of the Rules of Professional Conduct of the State Bar of California.
Rule 7-104 provides:
"A member of the State Bar shall not threaten to present criminal, administrative or disciplinary charges to obtain an advantage in a civil action, nor shall he present or participate in presenting criminal, administrative or disciplinary charges solely to obtain an advantage in a civil matter."
The rule has unique application where, as here, the statutory scheme not only welcomes, but in fact requires, the filing of administrative charges as a means of settling any future civil actions that may be filed by the employee against the employer. It is the Committee's opinion that rule 7-104 does not apply to instances where the filing of an administrative complaint is a prerequisite to filing a civil complaint, under the doctrine of exhaustion of administrative remedies.
The Civil Rights Act of 1964 requires the exhaustion of administrative remedies prior to seeking judicial relief. The Civil Rights Act of 1964 requires the filing of a claim with the Equal Employment Opportunity Commission (EEOC), prior to commencement of a civil action. (Love v. Pullman Co. (1972) 404 U.S. 522 [92 S.Ct. 616; 30 L.Ed. 2d 679].) The EEOC is entrusted with the responsibility of attempting to settle employment discrimination claims by "informal methods of conference, conciliation and persuasion." (42 U.S.C. 2000e-5(b).) Before an employee may seek redress in Federal Court under Title VII, the employee must also exhaust all state administrative civil rights remedies. (London v. Coopers & Lybrand (9th Cir. 1981) 622 F.2d 811; 42 U.S.C. 2000e-5.)
Rule 7-104 contains two essential components. First, the rule prohibits threatening to file criminal, administrative or disciplinary charges to obtain an advantage in a civil action. Second, the rule also prohibits an attorney from presenting criminal, administrative or disciplinary charges solely to obtain an advantage in a civil matter.
California rule 7-104 differs from former American Bar Association Code of Professional Responsibility Disciplinary Rule 7-105(a)1 in that the latter did not prohibit the use of "administrative" and "disciplinary" charges to obtain a civil advantage but is simply limited to "criminal" charges.
Rule 7-104 seeks to discourage the collateral use, or threat of use, of criminal, administrative or disciplinary proceedings to exert improper leverage in settlement of civil disputes. Rule 7-104 is similar to former ABA Code DR 7-105 and EC 7-21. EC 7-21 provided:
"The civil adjudicative process is primarily designed for the settlement of civil disputes between parties, while the criminal process is designed for the protection of society as a whole. Threatening to use, or using the criminal process to coerce adjustment of private civil claims or controversies is a subversion of that process; further, the person against whom the criminal process is so misused may be deterred from asserting his legal rights and thus the usefulness of the civil process in settling private disputes is impaired. As in all cases of abuse of judicial process, the improper use of criminal process tends to diminish public confidence in our legal system."
Thus, rule 7-104 was intended to prevent the misuse of the filing of criminal, administrative and disciplinary claims to extort civil settlements where the filing of such charges would provide no personal benefit to the complaining party other than to extort favorable settlement. The rule is analogous to the tort of abuse of process, which prohibits the use of judicial process for an improper collateral purpose. (Christensen v. Younger (1975) 47 Cal.App.3d 613; Seidner v. 1551 Greenfield Owners' Association (1980) 108 Cal.App.3d 895.)
While in some instances attorneys will be guided by altruism in seeking to protect the public by filing criminal or administrative charges, in many cases the filing of administrative or criminal charges is aimed at obtaining settlement advantage in civil actions. In the classic application of the rule, for example, an attorney representing a creditor may seek to file theft charges against a debtor in order to coerce payment of the debt. The filing of criminal charges, although potentially benefitting society as a whole, does not provide a direct benefit to the complaining party. It is the collateral use of the criminal, administrative and disciplinary process which is ethically offensive if the charges are presented solely to obtain a civil advantage.
The public policy of Title VII and the Fair Employment and Housing Act encourages informal settlement methods such as conciliation, negotiation and mediation to serve as a deterrent against employment discrimination. (REEB v. Economic Opportunity Atlanta, Inc. (5th Cir. 1975) 516 F.2d 924, 927; Malone v. North American Rockwell Corporation (9th Cir. 1972) 457 F.2d 779, 781.)
There is a "great emphasis in Title V11 on private settlement and the elimination of unfair practices without litigation" (Oatis v. Crown Zellerbach Corp. (5th Cir. 1968) 398 F.2d 496). In order to promote the '"private settlement" of employment discrimination disputes, attorneys must be given wide latitude to make settlement overtures to the employer conditioned upon a promise not to file administrative charges with EEOC. The Committee recognizes that in some instances an employer will seek to settle with a single employee in exchange for an agreement not to present charges with EEOC as a means of covering up widespread discrimination, in which case the deterrent effect of private settlements may be minimized; However, this is a problem inherent in any statutory scheme that seeks to correct societal wrongs through private action. While the Committee does not condone this type of motive, it is bound to respect and observe the broader goals of equal employment laws and the rules enacted to address the problem of discrimination.
The filing of administrative charges in the context of an employment discrimination dispute is intrinsic rather than collateral, to the purpose for which administrative charges are brought, because exhausting administrative remedies before the EEOC is a prerequisite to filing suit against the employer. Unlike the filing of collateral charges, the filing of a complaint or threat to file a complaint with EEOC may result in a direct benefit to the client by restoring his employment. Conciliation efforts by the EEOC may thus provide as much relief to the client as a civil action. The administrative and civil law remedies provide parallel relief.
Within the specialized statutory scheme in employment discrimination matters, the threat of filing charges with the EEOC cannot materially add leverage to the employee's position. Given that discrimination charges must first be filed with the EEOC before a civil lawsuit may be brought, the administrative and civil proceedings blend, and any qualitative distinction between the administrative complaint and the civil complaint becomes artificial In essence, threatening an employer with administrative charges is the functional equivalent of threatening to file the civil suit itself.2
The rule does not proscribe threatening to file a civil action and therefore could not have been intended to preclude threatening to initiate the legal prerequisite to a civil action. A contrary interpretation would also contravene the public policy as evidenced by the statutory schemes of the United States Congress and the California Legislature in favoring early informal settlement of employment discrimination cases. (See supra, part C.)
An attorney does not violate the second clause of rule 7-104 when he or she files charges with a mixed motive. An attorney who brings administrative charges under EEOC because the law requires the attorney to do so as a prerequisite does not bring such charges "solely" to obtain an improper civil advantage. Rather, the attorney's motive is simply to comply with the procedural and legal requirements to bring an action.
Given the history of rule 7-104 and its purpose in seeking to proscribe the use of collateral, criminal, administrative or disciplinary charges to obtain a civil advantage, the Committee believes that the rule does not encompass situations where the filing of administrative charges is a prerequisite to the filing of a civil complaint under the doctrine of exhaustion of administrative remedies. This result is consistent also with the client's right to zealous representation by counsel.
The Committee recognizes that the rule on its face does not distinguish between collateral and non-collateral proceedings. However, it is apparent, given the underlying purpose of rule 7-104, the rule contemplates a qualitative distinction between the criminal, administrative or disciplinary proceedings, on one hand, and the civil action or matter in which an advantage is sought, on the other.
To the extent that there is an inconsistency between rule 7-104 and the use of private settlement as a means for eliminating discrimination, the Committee believes that the Rules of Professional Conduct must be harmonized with the valid public policy underlying anti-discrimination laws, which seeks to solve discrimination disputes by the use of private conciliation, negotiation, and persuasion. It is a longstanding rule of statutory interpretation, that a statute should be interpreted in such a way that it does not lead to absurd results. (Herbert Hawkins Realtors Inc. v. Milheiser (1983) 140 Cal.App. 3d 334, 338.) "[S]tatutes must be construed in a reasonable and common sense manner consistent with their apparent purpose and the legislative intent--one practical, rather than technical, and one promoting a wide policy rather than mischief or absurdity." Moreover, the Rules of Professional Conduct are not "intended to limit or supersede any provision of law relating to the duties and obligations of attorneys or the consequences of violation thereof." (Rule 1-100.) The rules are intended not only to establish ethical standards for lawyers but are also designed, like anti-discrimination laws, to protect the public. (Ames v. State Bar (1973) 8 Cal.3d 910, 917; Best v. State Bar (1962) 57 Cal.2d 633, 637.) It would be counter-productive to discipline an attorney for violating rule 7-104 for conduct which is encouraged by state and federal discrimination provisions. In harmonizing the objectives of the Rules of Professional Conduct with the objectives of employment discrimination laws, the Committee believes that rule 7-104 does not preclude an attorney from filing or threatening to file administrative charges with the EEOC in connection with an employment discrimination claim.
This opinion is issued by the Standing Committee on Professional Responsibility and Conduct of the State Bar of California. It is advisory only. It is not binding upon the courts, the State Bar of California, its Board of Governors, any persons or tribunals charged with regulatory responsibilities, or any member of the State Bar.
1 DR 7-105(a) stated:
"A lawyer shall not present, participate in presenting, or threatening to present criminal charges solely to obtain an advantage in a civil matter."
2 There is no civil action pending in the matter under consideration in this opinion. We do not reach in this opinion the issue which is raised by the first clause of rule 7-104 regarding whether a civil action must be pending at the time charges are threatened. The first clause in rule 7-104 prohibits an attorney from obtaining an "advantage" in a "civil action." Nevertheless, an argument can be advanced that the phrase refers to a civil action regardless of when it is filed.
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