Inside: Lawyer Legislators The Defeat of Issue One Cybersecurity/Privacy Sovereign Immunity Credit Car Debt Buyers Lawsuits Social Determinants of Heatlh and the Law
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PUBLISHER Arkansas Bar Association Phone: (501) 375-4606 Fax: (501) 375-4901 www.arkbar.com
The Arkansas
Lawyer
EDITOR Anna K. Hubbard EXECUTIVE DIRECTOR Karen K. Hutchins EDITORIAL BOARD Anton Leo Janik, Jr., Chair Haley M. Heath Luke K. Burton Dr. Frankie Martin Griffin Judge Brandon J. Harrison Ashley Welch Hudson Jim L. Julian Philip E. Kaplan Tory Hodges Lewis Drake Mann Gordon S. Rather, Jr. David H. Williams OFFICERS President Suzanne Clark Board of Governors Chair J. Cliff McKinney II President-Elect Brian M. Rosenthal Immediate Past President Anthony A. “Tony” Hilliard President-Elect Designee Paul W. Keith Secretary Glen Hoggard Treasurer Joseph F. Kolb Parliamentarian Aaron L. Squyres Young Lawyers Section Chair Sarah C. Jewell BOARD OF GOVERNORS James Paul Beachboard Kandice A. Bell Margaret Hobbs Benson Chase Carmichael Earl Buddy Chadick Sterling Taylor Chaney Brian M. Clary Grant M. Cox Carol C. Dalby Bob Estes Brent Eubanks Robert (Skip) L. Henry III Joshua D. McFadden James E. McMenis Brandon K. Moffitt Brant Perkins Colby T. Roe Amy Lee Stewart Albert J. Thomas III Robert M. Veach Andrea Grimes Woods H. Wayne Young, Jr.
Vol. 54, No. 1
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Humphrey v. Martin and the Defeat of Issue No. 1: The Arkansas Supreme Court Puts a Stop to Unconstitutional Logrolling By David H. Williams and Jeff R. Priebe
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The Lawyer’s Duty When Client Confidential Information is Hacked From the Law Firm By Anton L. Janik, Jr.
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Think Before You Hit “Send” By Mark Murphey Henry and Jessica Guarino
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The California Consumer Privacy Act of 2018: Why It Matters to Clients in Arkansas By Drake Mann
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The Conundrum of Default Judgment Damages in Credit Card Debt Buyer Lawsuits By Kim Petrone and Dr. Vernon J. Richardson
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Social Determinants of Health and the Law: Municipalities’ Supersonic Water Billing Cycles Endanger Arkansans’ Health By Dr. Frankie Griffin
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Sovereign Immunity: Holford Bonds, the Brooks-Baxter War and the Constitutional Convention of 1874 By Mark H. Allison
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Evolution of Sovereign Immunity After Andrews By Haley M. Heath
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Lois Dale: The First Woman to Serve on the Bench in Arkansas By Judge Morris S. Arnold
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Serving Veterans and Offering Second Chances: How Legal Services is Helping Those in Need By Julie Howe
LIAISON MEMBERS Judge Charles E. Clawson Patti Julian Judge Jeff C. Harper Sarah C. Jewell Jason B. Hendren Harry Truman Moore Lori D. Howard Richard L. Ramsay Karen K. Hutchins The Arkansas Lawyer (USPS 546-040) is published quarterly by the Arkansas Bar Association. Periodicals postage paid at Little Rock, Arkansas. POSTMASTER: send address changes to The Arkansas Lawyer, 2224 Cottondale Lane, Little Rock, Arkansas 72202. Subscription price to non-members of the Arkansas Bar Association $35.00 per year. Any opinion expressed herein is that of the author, and not necessarily that of the Arkansas Bar Association or The Arkansas Lawyer. Contributions to The Arkansas Lawyer are welcome and should be sent to Anna Hubbard, Editor, ahubbard@arkbar.com. All inquiries regarding advertising should be sent to Editor, The Arkansas Lawyer, at the above address. Copyright 2019, Arkansas Bar Association. All rights reserved.
Cover Photo by Mike Pirnique Contents Continued on Page 2
Lawyer The Arkansas Vol. 54, No. 1
in this issue A Call to Leadership
8
ArkBar News
4
ArkBar Legislative Corner
10
2018 CLE Speakers and Planners
27
Board of Governors and House of Delegates Report
39
Disciplinary Actions
57
columns
President’s Report Young Lawyers Section Report
61
In Memoriam
63
Classified Advertising
64
9
Sarah C. Jewell
The Arkansas
Lawyer A publication of the Arkansas Bar Association
Arkansas Bar Foundation
7
Suzanne Clark
Inside: Same-Sex Marriage Judicial Campaign Finance The Arkansas Supreme Court During World War II Arkansas LLCs Guardianships of Minors
Vol. 51, No. 1, Winter 2016 online at www.arkbar.com
Advertise in the next issue of The Arkansas Lawyer. Opportunities also available on ArkBar’s website & weekly ebulletins. www.arkbar.com/for-attorneys/ publications/the-arkansas-lawyer/ advertising
Arkansas Bar Association
2224 Cottondale Lane, Little Rock, Arkansas 72202
HOUSE OF DELEGATES Delegate District A-1: Geoffrey Denzil Hamby, Susan K. Kendall, George M. Rozzell, Ryan Scott, Vicki S. Vasser-Jenkins Delegate District A-2: Payton C. Bentley, Earl Buddy Chadick, Leslie Copeland, M. Scott Hall, Jason M. Hatfield, Brian C. Hogue, Sarah Coppola Jewell, Jarid Markus Kinder, Alan Lee Lane, Richard Kyle Lippard, John Pesek Delegate District A-3: James A. Arnold II, Craig L. Cook, Keith M. Kannett, Samuel M. Terry Delegate District A-4: Justice Paul Danielson Delegate District A-5: Johnny L. Nichols Delegate District A-6: Delegate District A-7: Samuel J. Pasthing Delegate District B: Darryl E. Baker, David Biscoe Bingham, Jordan Broyles, Bart W. Calhoun, Tim J. Cullen, Thomas J. Diaz, Tony Anthony DiCarlo III, Jason W. Earley, Edie Ervin, Jesse J. Gibson, Shana Woodard Graves, Christopher Heil, D. Michael Huckabay, Jr., Ashley Welch Hudson, Amy Dunn Johnson, Jamie Huffman Jones, Victoria Leigh, Kathleen Marie McDonald, J. Cliff McKinney II, Jeremy M. McNabb, David Stockley Mitchell, Jr., Meredith S. Moore, Ruthanne Nash Murphy, Jordan Rogers, Molly S. Shepherd, Scott Michael Strauss, Jonathan Q. Warren, David H. Williams, Heather Goodson Zachary Delegate District C-1: Robert F. Thompson Delegate District C-2: Delegate District C-3: Robert J. Gibson, Warren Curt Hawkins, Ryan M. Wilson Delegate District C-4: Kara Lynn Byars Delegate District C-5: Christopher Michael Bryant, Matthew Coe, Kathie A. Hess Delegate District C-6: Danny M. Rasmussen Delegate District C-7: Ginger M. Stuart Delegate District C-8: Margaret Dobson, George A. Lea, Carla M. Martin Delegate District C-9: Katelyn Burch Busby, Lee Douglas Curry Delegate District C-10: Amy Freedman, Joshua R. Thane Delegate District C-11: Sterling Taylor Chaney, Taylor Andrew King Delegate District C-12: Kurt J. Meredith, Brenda Sue Simpson Delegate District C-13: Brian M. Clary, John Andrew Ellis Law Student Representatives: Clayton Rowe, University of Arkansas School of Law; Kyla Bishop, UA Little Rock William H. Bowen School of Law
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A different kind of retirement plan.
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protection from fiduciary liability under ERISA. Find out what many law firms like yours already know. It’s good to be different. The ABA Retirement Funds Program is available through the Arkansas Bar Association as a member benefit. Please read the Program Annual Disclosure Document (April 2018) carefully before investing. This Disclosure Document contains important information about the Program and investment options. For email inquiries, contact us at: joinus@abaretirement.com. Securities offered through Voya Financial Partners, LLC (member SIPC). Voya Financial Partners is a member of the Voya family of companies (“Voya”). Voya, the ABA Retirement Funds, and the Arkansas Bar Association are separate, unaffiliated entities, and not responsible for one another’s products and services. CN1018-37928-1119D - 2017
ArkBar News 2019 Mid-Year Meeting Was a Success The Association held its Mid-Year Meeting in Little Rock February 6-8, 2019. The meeting included two and one-half days of CLE seminars held at the Little Rock Marriott. Jamie Huffman Jones of Friday, Eldredge & Clark served as the chair of this year’s meeting. BXS Insurance kicked off the meeting with a complimentary risk management seminar introducing attorneys to ArkBar’s new endorsed lawyer’s professional liability insurance agent. Association President Suzanne Clark welcomed around 100 attorneys, judges and legislators at the Thursday afternoon reception in the Riverview Room of the Marriott Hotel. Thank you to the ArkBar Annual Sponsors, volunteer speakers, planners and the almost 150 registrants who made the meeting a success. See the list of sponsors and complete photo gallery at www.arkbar.com/midyearmeeting. Be sure to join us next year February 5-7, 2020.
Mid-Year Meeting Chair Jamie H. Jones, Keynote speaker Brian Cuban and JLAP Executive Director Andre Lewis
Chief Justice Dan Kemp and ArkBar President Suzanne Clark
ArkBar’s new insurance provider BXS Insurance
ArkBar Treasurer Joe Kolb and Executive Director Karen K. Hutchins
Thursday afternoon’s reception featured a healthy table with fresh smoothies and refreshments
Kathleen McDonald and John Bass won prizes at the reception
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The Arkansas Lawyer
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ArkBar Welcomes New Staff Member Jay K. Robbins has been named the new director of government relations for the Association. “Jay’s experience will be invaluable in leading the Association’s government relations efforts,” Jay K. Robbins said Executive Director Karen K. Hutchins. “His established relationships and well-respected reputation at the State Capitol will help further the mission of the Association. His expertise in government and public relations will expand the Association’s support of more than 5,000 members. We are happy to have Jay join our team.” Jay previously served as the vice president of government relations for inVeritas, a global public affairs firm specializing in corporate and brand management, public relations, government relations, market research and intelligence. Jay managed the political and government relations services for inVeritas. Prior to joining inVeritas, Jay served as a community relations consultant for a joint venture with Kinder Morgan and Energy Transfer Partners in the development and construction of the Fayetteville Express Pipeline. Jay also worked as a research assistant for the National Agriculture Law Center. Jay is a graduate of Leadership Greater Little Rock Class XXX, and serves as a committee member of ACCESS in Action. Jay serves on the board of directors for the Arkansas Society of Professional Lobbyists. A native of Hot Springs, Jay earned his bachelor’s degree in public relations from the University of Arkansas with a minor in political science. Join an ArkBar Section at www.arkbar.com or call Kristen at 501-801-5678.
ArkBar News
Oyez! Oyez! ACCOLADES
Deadline for submission of Annual Award Nominations due Friday, March 15, 2019
Cary Patterson of Nix Patterson, LLP in Texarkana received the Texarkana Chamber of Commerce’s C.E. Palmer Award for outstanding community service.
APPOINTMENTS AND ELECTIONS Wright Lindsey Jennings partner Jason B. Hendren was elected Southwest Region Director of DRI-The Voice of the Defense Bar. Rebecca Hurst of Smith Hurst in Fayetteville has been appointed to the Advisory Council of the Arkansas Arts Council. Trav Baxter of Mitchell Williams has been elected as a Fellow to the American College of Trust & Estate Council.
WORD ABOUT TOWN Marshall Hubbard has joined Rainwater Holt & Sexton in Little Rock. Friday, Eldredge & Clark, LLP announced that Price C. Gardner has been elected as the firm’s managing partner to succeed J. Shepherd Russell III, who served as the managing partner since 2012. Russell is returning to full-time practice in the firm’s Public Finance Practice Group. In addition, William M. (“Will”) Griffin was elected vicechairman and Alexandra A. Ifrah, Ryan A. Bowman, Jamie H. Jones, Joseph P. McKay, Marshall S. Ney and Robert T. Smith were elected as new members of the firm’s management committee. The firm also announced that three attorneys have been elected to the firm’s partnership: Angela Artherton, Katie Watson Bingham and Tyler D. Bone. McMath Woods P.A. announced that Sarah C. Jewell has joined the firm in Fayetteville. Mitchell, Williams, Selig, Gates & Woodyard, P.L.L.C. have named attorneys Rachael Padgett, Nathan Read and Stanton Strickland as members of the law firm. Kutak Rock has elected Max R. Deitchler and Allissa L. Sims of Fayetteville and Amy C. Bagnall and Frederick H. Davis of Little Rock as partners. Gill Ragon Owen, P.A. announced that Adam Reid joined the firm. Womack Phelps Puryear Mayfield & McNeil, P.A. announced that Keith K. Linder has become an associate of the firm. Wilson & Associates announced the opening of their immigration department led by Kathleen McDonald. Please send Oyez announcements to ahubbard@arkbar.com.
ArkBar Welcome Event
President Suzanne Clark and one of the prize winners Erin Walker
The Association hosted a welcome event on November 30 at the Bar Center for new attorneys who were admitted to the Arkansas Bar in 2017 & 2018. They received a free professional portrait, swag from YLS, and door prizes. Cathy Underwood provided Fastcase training. The event took place at the Bar Center at the same time as the Winter Board of Governors meeting. Everyone had a chance to mingle with members of the judiciary at the reception which followed.
It is time to nominate deserving candidates for this year’s Arkansas Bar Foundation and Arkansas Bar Association Annual Awards. The awards open for nomination are: • Outstanding Lawyer Award • Outstanding Lawyer-Citizen Award • C.E. Ransick Award of Excellence • James H. McKenzie Professionalism Award • Equal Justice Distinguished Service Award • Outstanding Jurist Award • Outstanding Local Bar Association These awards will be presented at the Annual Meeting in Hot Springs in June. You are encouraged to nominate Arkansas lawyers, judges and local bar associations who deserve recognition. Nomination forms may be submitted by any Association member or Foundation Fellow. Forms are available at www.arkbar.com/for-attorneys/ award-nominations or you may submit a written letter of nomination to Ann Pyle at the Arkansas Bar Foundation at 2224 Cottondale Lane, Little Rock, Arkansas. Please call Ann Pyle at 501-375-4606 X 110 with any questions.
New Event Sponsorship Opportunities are available for this year’s Annual Meeting. June 12-14, 2019 Hot Springs Go to www.arkbar.com/ annualmeeting for more information.
Vol. 54 No. 1/Winter 2019 The Arkansas Lawyer
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INNOVATION COMES STANDARD
Fastcase is one of the planet’s most innovative legal research services, and it’s available free to members of the Arkansas Bar Association. LEARN MORE AT
WWW.ARKBAR.COM
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The Arkansas Lawyer
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PRESIDENT’S REPORT
Eyes Toward the Future Suzanne Clark Suzanne Clark is the President of the Arkansas Bar Association. She is the founder of the Clark Law Firm, PLLC in Fayetteville. The Arkansas Bar Association is headed into a season of change. For many years, we have discussed the need to deal with the rapidly changing dynamics in communication systems, business practices, and the practice of law. But change is not easy. We tend to resist change, even when we know it is necessary. In 1963, President Kennedy said: “Change is the law of life and those who look only to the past or present are certain to miss the future.” We need to ensure that the Arkansas Bar Association is positioned to serve our members now and into the future. Our Association is not unique with regard to the challenges we face. Other state bars and the American Bar Association have struggled with similar issues. You will be hearing much more about this in the coming months. We are looking to make changes in the way we engage members, the way we promote our sponsors, and the way our Association is governed. Our current governance structure has been in place for several decades. Unfortunately, it can be a roadblock to efficient and effective decision making. We routinely have challenges establishing a quorum for our Board and House meetings and there are ambiguities in our governing documents that must be corrected.
Last year, we empaneled a Strategic Governance Task Force, under the leadership of its Chair, Past-President Eddie Walker and Vice Chair Aaron Squyres, to address our challenges. President Walker’s task force will make recommendations to the Bar leadership, and then to our full membership, regarding how we should change our governance structure to position the Association for the future. The task force is made up of a diverse group of members from throughout the state, from different practice areas and different practice disciplines. We all owe this task force our gratitude, as they have volunteered an enormous amount of time and effort on behalf of our Association. In addition to the Strategic Governance Task Force, we have two other groups working to make additional recommendations regarding how we operate moving forward. Past YLS Chair Greg Northen is Chairman of our Engagement Task Force. When our members want to be involved in the Association, we need to be sure that the experience serves both our members and the association. The strength of our Association is directly related to the talents and strengths of our members. We need and want you fully engaged at whatever level you choose to be involved. We want
those who have not chosen to be involved, to get involved. Past President Charles Harwell is chairing our Revenue Task Force. Some of our traditional sources of revenue are simply not sustainable. For example, the availability of free or very inexpensive CLE has made it a challenge to maintain the level of CLE revenue the Association has historically enjoyed. That dynamic is not going to change. We need to be looking at alternative means of revenue generation, so we can continue to provide the benefits and services that our members expect and deserve. Sincere thanks to Charlie Harwell and Greg Northen for their leadership on these important projects. We have many irons in the fire that will result in changes over the next year or so. We hope you will take the time to review the information as it is published and provide input. We want the Association to be one that you are proud of and engaged in. Our Association exists to serve its members and the legal community at large. The practice of law is changing rapidly. We need, not only to keep pace, but to act with an eye toward the future. We need your input, talents, and expertise to get there!
Arkansas Bar Association
2025
Strategic Governance Task Force Eddie H. Walker, Chair Aaron L. Squyres, Vice Chair Kandice A. Bell Bryan Burns Brian M. Clary Leslie Copeland Niki Trang Cung Lee Douglas Curry Robert W. George Jesse J. Gibson Sarah Coppola Jewell Jamie Huffman Jones Paul W. Keith Matthew A. Kezhaya Joseph F. Kolb Nathan Cooper Looney Jerald Cliff McKinney Brandon K. Moffitt Barrett Moore Gregory J. Northen Kristin L. Pawlik Brant Perkins Richard L. Ramsay Brian M. Rosenthal Jonathan Q. Warren
Vol. 54 No. 1/Winter 2019 The Arkansas Lawyer
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A Call to Leadership in the Arkansas Bar Association The petitions, current members of both bodies and district maps are listed on the Association’s website at www.arkbar.com. The Board of Governors and House of Delegates links are located from the “For Attorneys/Governance” tab from the home page. The Young Lawyers link is located on the home page. Questions? Contact the Association at 501-375-4606.
Board of Governors Qualifications for Board of Governors The attorney must reside in the geographical area for the Governor’s position and must have served one year in the House of Delegates or must have been an Association member for seven years by the time of joining the Board of Governors in June. One Governor position is available in the districts listed. All are threeyear terms unless otherwise indicated.
Secretary & Treasurer
01-BG
Clay, Craighead, Greene, Mississippi
07-08-BG
Washington
10-BG
Sebastian
12-18-BG
Pulaski 3 Governors
Article III, Section 7 of the Association’s Constitution provides for an annual election of the positions of a Secretary and a Treasurer. Any member interested in serving in either of these capacities should contact Karen K. Hutchins at 501-801-5663.
American Bar Association Delegate
House of Delegates Qualifications for House of Delegates The attorney must be an Association member residing within the delegate district as defined by Article XVI Section 2 of the Association’s Constitution. All are three-year terms. A-01
Benton 3 Delegates
C-06
Faulkner & Van Buren 1 Delegate
A-02
Washington 4 Delegates
C-08
A-03
Crawford, Franklin, Johnson, Sebastian 1 Delegate
Arkansas, Grant, Jefferson, Lee, Lincoln, Phillips 1 Delegate
C-09
Ashley, Bradley, Calhoun, Chicot, Cleveland, Columbia, Dallas, Desha, Drew, Ouachita, Union 1 Delegate
A-07
B C-03 C-05
One of the two ABA Delegate positions is open for election for a two-year term. The Delegate from this Association to the House of Delegates of the American Bar Association shall be nominated by petition signed by at least 75 Association members with at least 25 voting members from each of the three state bar districts. The nominating petitions must be filed with the Secretary at the Arkansas Bar Association, 2224 Cottondale Lane, Little Rock, AR 72202, no later than March 31, 2019.
Baxter, Fulton, Izard, Marion, Searcy, Stone 1 Delegate
C-10
Pulaski 10 Delegates
Miller 1 Delegate
C-12
March 31, 2019 for:
Craighead 1 Delegate
Garland 1 Delegates
C-13
Hot Spring, Saline 1 Delegate
Chair-Elect elected from
Cleburne, Crittenden, Cross, St. Francis, White, Woodruff 1 Delegate
Young Lawyers Section Nominating Petitions are due
District B (one-year term) Secretary/Treasurer elected from any District (one-year term) Representative District A
Election Process for Governors and Delegates For both governors & delegates, a nomination petition, signed by three current members of the Association who reside in the geographical area of election, must be filed with the Secretary at the Arkansas Bar Association, 2224 Cottondale Lane, Little Rock, AR 72202, no later than March 31, 2019. 8
The Arkansas Lawyer
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(three-year term) Representative District B (three-year term) Representative District C (three-year term)
YLS REPORT
What’s New? By Sarah C. Jewell With the holidays in our rearview mirrors, the days are getting longer. With the new year upon us, our “to do” lists may be getting longer, too. As you plan for the coming months, remember all the opportunities for networking, volunteering, and fellowship with YLS and the greater Arkansas Bar Association. YLS had a productive fall and winter, and we are excited about upcoming events. On November 30th, the Arkansas Bar Association hosted a New Attorney Fair at the Arkansas Bar Center. Newly-admitted lawyers posed for complimentary professional headshots and completed Fastcase training to optimize this outstanding benefit of ArkBar membership. The Fair closed with a reception where young lawyers enjoyed networking and fellowship with members of the local bench and bar. This winter, young lawyers gathered data from circuit clerks and courts in all 75 counties across Arkansas, and we are preparing a Local Practice Guidebook. We hope this will be a useful resource not only for young lawyers, but also for practitioners across the state. The Local Practice Guidebook will provide basic circuit clerk and court information, as well as local preferences. The next time you need to file a pleading in a county where you may not regularly practice, you can refer to the Guidebook for quick tips.
From January 24-26th, a few young lawyers represented Arkansas at the 2019 American Bar Association Midyear Meeting in Las Vegas. As Chair-Elect and Chair of the ArkBar YLS, Stefan McBride and I represented Arkansas at the American Bar Association YLD Assembly, where we voted on resolutions. In Las Vegas, ArkBar YLS member and past YLS Chair Greg Northen represented Arkansas and Oklahoma on the American Bar Association YLD Council. YLS assisted the ArkBar Midyear Meeting planner Jamie Huffman Jones in planning an incredible Practical Skills CLE Track for the Arkansas Bar Association Midyear Meeting on February 7-8th in Little Rock. We learned deposition techniques from stellar attorneys, current trends in immigration, practical trial tips from the bench, legislation issues, and we heard from the self-proclaimed “Addicted Lawyer,” Brian Cuban. During the ArkBar Midyear Meeting, the YLS Executive Committee planned the Wills for Heroes events that we are excited to provide this spring for our local heroes, including veterans and police, fire department, and first responder personnel. Our local heroes are always eager to sign up for a will, durable general power of attorney, and/ or a durable power of attorney for healthcare. However, the amount of heroes we can serve
depends on how many lawyers volunteer. Be on the lookout for volunteering opportunities in April. We need you! Like the greater Arkansas Bar Association, YLS has also been looking forward to the 2019 Annual Meeting in Hot Springs. Along with the Annual Meeting planner Vicki Vasser-Jenkins, YLS is excited to incorporate a service component at Annual Meeting in June that you will
Sarah C. Jewell is the Chair of the Young Lawyers Section. She is an attorney with McMath Woods P.A. in Fayetteville.
not want to miss! With so many lawyers gathered for Annual Meeting, there is no better opportunity to help underserved Arkansans.
Judges, lawyers, and ArkBar leaders welcomed new attorneys at a reception at the Arkansas Bar Center on November 30, 2018.
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ArkansasBar
ASSOCIATION Legislative Corner
A priority of the Arkansas Bar Association is to assist in the enactment of laws which comply with the Arkansas and U.S. Constitutions and improve the legal system in Arkansas. The Association works full time to monitor legislation affecting justice and the legal profession. The Association is your advocate at the state Capitol. The ArkBar Legislation Committee meets every Friday to review all bills that have been filed and keeps you updated throughout the session. ArkBar’s Legislative Resources website is your source for current legislation issues affecting justice and the legal profession. You must first login to www.arkbar.com and then go to Legislative Resources under the For Attorneys tab on the home page. The recently updated website is the place to find the status of bills of interest to the legal profession as well as more resources to keep you updated. The Regular Session of the 92nd General Assembly convened on January 14, 2019. There are five lawyers serving in the Senate and 13 lawyers serving in the House of Representatives. Governor Asa Hutchinson and Attorney General Leslie Rutledge are lawyers and members of the Arkansas Bar Association.
Governor Asa Hutchinson
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The Arkansas Lawyer
Attorney General Leslie Rutledge
www.arkbar.com
BACK THE PAC! Become a supporting member of your non-partisan political action committee. The Arkansas Bar Association Political Action Committee’s primary purpose is to elect more members of the Arkansas Bar Association to the Arkansas Legislature. Only $30 per year. Join today via your Member Portal on www.arkbar.com.
Arkansas Lawyer Legislators Serving in the 92nd General Assembly
Speaker of the House Matthew J. Shepherd 6th District
Senator Bob Ballinger 5th District
Senator Will Bond 32nd District
Representative LeeAnne Burch 9th District
Representative Sarah Capp 82nd District
Representative Nicole Clowney 86th District
Representative Andrew Collins 35th District
Representative Carol Dalby 1st District
Senator Stephanie Flowers 25th District
Senator Trent Garner 27th District
Representative Jimmy Gazaway 57th District
Representative Don Glover 11th District
Representative Douglas House 40th District
Representative Gayla Hendren McKenzie 92nd District
Representative John W. Walker 34th District
Representative David Whitaker 85th District
Representative John Maddox 20th District
Senator Bruce Maloch 12th District
Vol. 54 No. 1/Winter 2019 The Arkansas Lawyer
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Humphrey v. Martin and the Defeat of Issue No. 1: The Arkansas Supreme Court Puts a Stop to Unconstitutional Logrolling
By David H. Williams and Jeff R. Priebe
O
n October 18, 2018, our forefathers’ concept of having three separate and distinct branches of government was affirmed.
In holding that Issue No. 1 was unconstitutional, the Arkansas Supreme Court, relying on precedent, preserved this fundamental constitutional right for future generations of Arkansans.1
David H. Williams practices law at the Law Offices of David H. Williams. He is a past-president of the Arkansas Trial Lawyers Association; a member of the Arkansas Supreme Court Civil Practice Committee; and a member and past chair of the Arkansas Lawyer Editorial Board.
Jeff R. Priebe is a partner with James, Carter & Priebe, LLP and is an adjunct professor of Election Law at the UALR School of Law. 12
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I. In the Beginning: Constitutional Amendments in Arkansas When the Arkansas Constitution was adopted in 1874, the Arkansas General Assembly, not the voter-citizens, had the sole power to begin the process by which voters in Arkansas could vote on, and ultimately approve or disapprove, amendments to the Arkansas Constitution.2 That Constitution allowed the Arkansas General Assembly, by a simple majority vote of both the House and Senate, to refer up to three proposed amendments to be voted on by the electors, though each amendment had to be submitted separately. In the late 1800s and early 1900s, however, a populist movement spread across the United States that sought to change state constitutions to provide citizens with the power to propose initiatives and referendums to both state constitutions and statutory law. Such an amendment was referred to the people by the Arkansas General Assembly in 1910. With support by such people as Williams Jennings Bryan, the amendment passed on September 12, 1910, with the support of over 70% of the Arkansas electorate.3
The 1910 amendment would become the modern-day Article 5, Section 1 of the current Arkansas Constitution. It provides that citizens of Arkansas may initiate proposed constitutional amendments so long as at least 10% of the voters from the last general election sign petitions in support of the amendment.4 In addition to the signature requirements, the Arkansas General Assembly has since passed new and additional requirements related to the integrity of the process, such as the gathering of signatures, the identity of canvassers, the training of canvassers, and other similar matters. These legislative requirements have, for the most part, been upheld by the Arkansas Supreme Court in recent years.5 II. The Issue 1 Precursor: Issue 4—The Petition Amendment In 2016, Health Care Access for Arkansans (“Health Care Committee”), a ballot question committee, sought to initiate a proposed constitutional amendment using the procedure set forth in Article 5, Section 1. The proposed amendment’s popular name was “An Amendment to Limit Attorney Contingency Fees and Non-Economic Damage in Medical Lawsuits.” It sought to: (1) amend Amendment 80 of the Arkansas Constitution to include a cap on attorney contingency fee contracts of one-third of the net recovery; and (2) amend Article 5, Section 2 of the Constitution to include a $250,000 cap on non-economic damages in medical injury cases. The Health Care Committee (funded in large part by nursing homes and nursing-home-related entities) submitted the amendment for approval to the Arkansas Attorney General.6 The Attorney General rewrote part of the popular name and issued her approval of the ballot title and accompanying language.7 The Health Care Committee proceeded to obtain signatures in support of the amendment, and then those signatures were certified by the Arkansas Secretary of State. After the Arkansas Secretary of State certified the Health Care Committee’s proposed constitutional amendment as “Issue 4,” two lawsuits were filed with the Arkansas Supreme Court arguing that the amendment’s ballot title was insufficient and that the signature-gathering process failed to comply with Arkansas law. The Arkansas Supreme Court agreed to
hear both challenges and addressed the ballot title challenges first. In Wilson v. Martin, the Court, in a unanimous decision written by Justice Paul Danielson, ruled that the ballot title was insufficient because the Committee failed to define “non-economic damages.”8 The Court explained that “non-economic damages” was “a ‘technical term’ that is not readily understood by voters.”9 The Arkansas Secretary of State was then enjoined from canvassing or certifying any votes for or against the proposed amendment. There were, however, two concurring opinions in Wilson v. Martin. In his concurring opinion, Chief Justice Howard Brill, in addition to addressing the proposed ballot title’s failure to define “non-economic damages,” went further and stated that the Court should also have taken up some of the amendment’s other “serious issues” including “the impact that this amendment would have on the right to a jury trial;” whether voters were being informed of the “change in the relationship of the three branches of government;” and the amendment’s “limitation on the rule making power of this Court.”10 In an additional concurrence, Justice Rhonda Wood voiced her concern that the other defects in the Health Care Committee’s ballot
title needed to be addressed: “These sponsors are entitled to know each of the defects their ballot title contains so, in the future, they can submit a ballot title that complies with the law.”11 In Ross v. Martin the Arkansas Supreme Court also determined that the proposed ballot title of Issue 4 was insufficient utilizing the same analysis as Wilson v. Martin.12 Of particular note, in Ross v. Martin the Supreme Court referenced its prior decision in Richardson v. Martin, 444 S.W.3d 855 (Ark. 2014), in which the Court summarized the law regarding ballot titles: The applicable standard for review of ballot-title cases requires that “[b]allot titles must include an impartial summary of the proposed amendment that will give voters a fair understanding of the issues presented and of the scope and significance of the proposed changes in the law.” . . . “The ballot title must be (1) intelligible, (2) honest, and (3) impartial.”13 Similar to the first challenge, in Ross v. Martin, Chief Justice Brill and Justice Wood issued one-line concurrences: “I am
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concurring for the general policy reason set forth in Wilson v. Martin.” And “I am concurring for the same reasons set out in Wilson v. Martin.”14 A hearing was held on the remaining signature challenge in front of Special Master Judge Jake Looney who issued a report that included possible findings of potential “material defects” in the signature process and the potential disallowance of signatures. Given that the Court had already determined that the proposed ballot title of Issue 4 was insufficient in Ross v. Martin, the Supreme Court determined that the signature issues were moot.15 Therefore, the Arkansas Supreme Court’s decisions in Wilson v. Martin and Ross v. Martin rendered the Health Care Committee’s proposed constitutional amendment void. III. The rumblings of another amendment Almost immediately after the Arkansas Supreme Court issued its opinions in Wilson v. Martin and Ross v. Martin, rendering the proposed constitutional amendment known as Issue 4 void, rumors began to spread that the same special interests groups involved in Issue 4 were not finished and that they were seeking to draft and have the General Assembly propose a new constitutional amendment that would encompass all aspects of Issue 4. In addition, those proponents, in an apparent response to the Arkansas Supreme Court’s decisions in Wilson v. Martin and Ross v. Martin, sought to propose an amendment that would contain sweeping changes to the fundamental separation of powers between the Legislative and Judicial branches of the Arkansas government. As the efforts to amend the constitution through a citizen-referred amendment were wholly unsuccessful, proponents sought to use the Arkansas General Assembly to pass a legislatively-referred amendment in order to achieve those goals. IV. 2018 Legislative Session: Senate Joint Resolution 8 n/k/a Issue No. 1 Less than four months after the Arkansas Supreme Court’s decisions in Wilson v. Martin and Ross v. Martin, Senate Joint Resolution 8 (“SJR8”) was filed in the 2017 Regular Session of the 91st General Assembly. Though very similar to the 2016 proposed Health Care Committee’s Issue 4 14
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proposed amendment, the final version of SJR8 went much further than its predecessor. On March 1, 2017, less than one month after it was filed, the Arkansas General Assembly passed SJR8. SJR8 was titled “An Amendment Concerning Civil Lawsuits and the Powers of the General Assembly and Supreme Court to Adopt Court Rules.” It sought, on its face, to propose at least four different amendments to the Arkansas Constitution, including: 1) Adding Section 53 to Article 7 that would place caps on attorney contingency fee cases of 33 1/3 of the net recovery; 2) Amending Section 32 of Article 5 and placing caps of $500,000 on non-economic damages along with caps on punitive damages of the greater of three times non-economic damages or $500,000; 3) Amending Section 3 of Amendment 80 and giving the Arkansas Legislature the power to adopt, amend, and repeal rules of pleading, practice and procedures for the Arkansas Judiciary; 4) Amending Section 9 of Amendment 80 to lower the vote threshold to threefifths for the Arkansas Legislature’s ability to change certain judicial division rules. The Arkansas Secretary of State numbered SJR8 as “Issue No. 1” for purposes of the November 2018 general election. V. The challenge to Issue No. 1 On July 12, 2018, a Complaint seeking mandamus, declaratory, and injunctive relief was filed in the Pulaski County Circuit Court. In addition, the Plaintiff, Judge Marion Humphrey (retired Pulaski County Circuit Court Judge) filed a motion and brief seeking a preliminary injunction. The Plaintiff argued that Issue No. 1 was unconstitutional because the General Assembly failed to follow the requirements of Article 19, Section 22. He also sought to preclude the Arkansas Secretary of State from counting or certifying votes for or against Issue No. 1. The basis for the Plaintiff ’s challenge was that Article 19, Section 22 contained the limitation that each referred constitutional amendment must be voted on separately. In other words, if the General Assembly referred a constitutional amendment that
contained more than one amendment or section, each amendment or section must be reasonably germane to each other and to the general purpose of the amendment.16 Since 1874, this specific requirement had only been addressed in two cases: Brockelhurst v. State17 and Forrester v. Martin.18 Although the Arkansas Supreme Court did not find the amendments in those cases unconstitutional, the Forrester decision was particularly instructive for the challenge to Issue No. 1. First, the Forrester case confirmed established precedent that referred constitutional amendments are not afforded any presumption of constitutionality prior to the amendment’s passage by the voters.19 Second, the Forrester case established the appropriate germaneness test that required all the sections of the proposed amendment to be “germane to each other and to the general subject of the amendment.”20 Although he dissented from the majority’s ultimate holding in Forrester, Justice Donald Corbin went further in his legal analysis and argued that the germane test found in the language of Article 19, section 22 prevented the General Assembly from engaging in “logrolling.”21 Justice Corbin described the concept of logrolling, or “pork barrel legislation” as he called it, as forcing voters to “vote for provisions they might not favor in order to secure passage of the provisions that are favored.” The Arkansas Supreme Court had previously held that logrolling was unconstitutional in the context of legislative appropriation bills. Justice Corbin argued that the same logic was applicable to legislative-referred constitutional amendments.22 In the Pulaski County Circuit Court challenge, the named Defendant, Mark Martin, the Arkansas Secretary of State, appeared and argued that Issue No. 1 was constitutional. In addition, Randy Zook, Executive Director of the Arkansas Chamber of Commerce, and as a member of the Arkansans for Jobs and Justice Legislative Question Committee, intervened and argued that Issue No. 1 was constitutional. The case was eventually assigned to Pulaski County Circuit Judge Mackie Pierce. Judge Pierce received numerous briefs and arguments from all parties and held two hearings on the matter. On September 6, 2018, Judge Pierce is-
sued his final ruling and held that Issue No. 1 was unconstitutional. He concluded that the standards set forth in Forrester were mandatory and Issue No. 1 failed to meet that standard. First, Judge Pierce found that Issue No. 1 had no clear general subject and pointed out that even Defendant Martin and Intervenor Zook could not agree on the general subject of the amendment. With no clear or agreed-upon subject, Issue No. 1 could not satisfy the first part of the germaneness test. Second, Judge Pierce ruled that the various sections of Issue No. 1 were not reasonably germane to each other. He found that Section 1 deprived citizens of the right to freely contract for contingent-fee legal services, which was in no way related to the deprival of a citizen’s right to be fully compensated for damages under the damage cap section, Section 2, of the amendment. Furthermore, neither section was related to Section 3 wherein the purpose was the taking of rulemaking authority from the Arkansas Supreme Court and vesting it in the hands of the Arkansas General Assembly. Because Issue No. 1 failed to meet either part of the germaneness test articulated in Forrester, Judge Pierce declared it unconstitutional, and prohibited the Arkansas Secretary of State from counting, canvassing, or certifying any votes for or against the amendment. As expected, both Defendant Martin and Intervenor Zook appealed directly to the Arkansas Supreme Court, and briefing commenced. During the pendency of the appeal, the Arkansas Supreme Court denied oral arguments and Chief Justice Kemp recused. Governor Asa Hutchinson appointed Special Justice Stephen Tabor to fill Chief Justice Kemp’s seat on this case. VI. The Arkansas Supreme Court halts logrolling On October 18, 2018, in Martin v. Humphrey, the Arkansas Supreme Court issued its opinion, in a six-to-one vote, affirming Judge Mackie Pierce.23 In the opinion, written by Justice Josephine Hart, the Court first addressed the question of whether the amendment deserved a presumption of constitutionality. The Court found that precedent dictated that because Issue No. 1 had not been submitted to and adopted by Arkansas voters, there was no presumption of constitutionality.24 Second, the Supreme
Court agreed that Judge Pierce properly applied the germaneness test (“reasonably germane to each other [each section] and to the general subject of the amendment”) set forth in Forrester.25 In applying the germaneness test, the Court agreed with Judge Pierce that Issue No. 1 failed to contain a discernible general subject.26 The Court disagreed with Defendant Martin and Intervenor Zook’s position that the subject of Issue No. 1 was the courts and the judiciary or judicial power. The Court reasoned that a citizen’s contract with an attorney was a “private agreement between [the] client and [the] attorney” and not a judicial action.27 In addressing the second part of the Forrester germane test (each section must be germane to each other), the Court held that the limits on “the rights of private parties to contract for legal services” contained in Section 1 was not germane to Sections 3 and 4 which “broaden and diversify the legislature’s ability to exert influence over judicial rule-making authority.”28 Even though the Supreme Court agreed with Judge Pierce that Issue No. 1 failed to meet either part of the Forrester standard, the Supreme Court went further and specifically noted that the citizens of Arkansas limited the power of the General Assembly to enact constitutional amendments in 1874. The limitation was found in the plain language of Article 5, Section 1 which provided that each amendment must be voted on separately. Although the General Assembly attempted to divide Issue No. 1 into four sections, the Court explained that, even given a generous reading, Issue No. 1 would institute “at least seven individual numerated changes or additions to the constitution that would significantly alter the status quo.”29 In addition, the Court stated that the provisions of Issue No. 1 would significantly alter other parts of the constitution, even though Issue No. 1 was silent as to those changes. The Court summed up its opinion by stating: In short, allowing the General Assembly to submit so many changes to our constitution under the guise of a single amendment, when the alleged links between those proposed changes are so attenuated and tangential (or even non-existent) as they are in this specific case, would
“The language of the Arkansas Constitution has meaning, and that language
should
be
defended regardless of whether it is the right to trial by jury under Article 2, Section 7, the ability to refer constitutional
amendments
pursuant to Article 5, or the separation of power
contained
in
Amendment 80.”
render article 19, section 22’s threeamendment limitation “superfluous, meaningless, or inoperative.”30 In a concurrence, Justice Rhonda Wood, joined by Special Justice Stephen Tabor, agreed that Issue No. 1 was unconstitutional because of the separate vote requirement contained in Article 19, Section 22. Justice Wood, however, opined that there was a link between contingency fee contracts and the courts.31 In his dissent, Justice Shawn Womack criticized the majority for applying a standard that he believed was stricter than Forrester required, and a stricter standard than he would require. He stated that the Forrester court was “not very demanding” and that he would have applied that same, not very demanding, standard as well.32 In affirming Judge Pierce’s decision, the Arkansas Supreme Court agreed that the Plaintiff, and all other voters, had a right to cast a ballot “only on referred constitutional amendments that meet the standards set forth by the Arkansas Constitution” and left in place the “writ of mandamus prohibiting the [Arkansas Secretary of State] Martin from counting, canvassing, or certifying the votes for or against Issue No. 1.”33
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ShopABA.org VII. The future Although the Arkansas Supreme Court’s decision in Martin v. Humphrey was the first to hold a General Assembly’s constitutional referred amendment unconstitutional under the Forrester germaneness test, given both the obvious as well as the hidden effects of Issue No. 1, the result should not have been a surprise. The Court’s prior decisions in both Wilson v. Martin and Ross v. Martin offer (and offered) guidance as to what is constitutionally permissible in drafting and proposing constitutional amendments under the Arkansas Constitution. All of these decisions reinforce the constitutional requirements that constitutional amendments cannot hide behind technical wording (e.g., non-economic damages); have unstated consequences (e.g., the chilling of a citizen’s right to be fully compensated for his/her damages; or the disguised shifting or destruction of the separation of powers); and, most certainly, that the General Assembly cannot refer “logrolling” amendments. The citizens of Arkansas are entitled to vote on constitutional amendments one at a time, know what amendment they are 16
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voting on, and know the amendment’s effects, both plain and hidden. The language of the Arkansas Constitution has meaning, and that language should be defended regardless of whether it is the right to trial by jury under Article 2, Section 7, the ability to refer constitutional amendments pursuant to Article 5, or the separation of power contained in Amendment 80. In 1874, the citizens of Arkansas limited the power of the General Assembly to refer constitutional amendments, just as those citizens limited their own power when they voted for the citizen initiative amendment in 1910. In Martin v. Humphrey, the Arkansas Supreme Court correctly concluded that those limitations are significant and shall be respected.34 Endnotes: 1. The authors of this article note that, while the specific amendments contained in Issue 4 and Issue No. 1 are discussed in this article, the authors do not believe that there exists any crisis, problem, or need for these proposed amendments to the Arkansas Constitution.
2. Ark. Const. art. 19, § 22. 3. Calvin Ledbetter, Jr., Adoption of Initiative and Referendum in Arkansas, The Roles of George W. Donaghey and William Jennings Bryan, The Arkansas Historical Quarterly, Vol. LI, No. 3, Autumn 1992. 4. Ark. Const. art. 5, § 1. 5. See McDaniel v. Spencer, 457 S.W.3d 641 (Ark. 2015). 6. Ark. Atty. General Opinion, No. 2016038. 7. Id. 8. Wilson v. Martin, 500 S.W.3d 160, 167 (Ark. 2016). 9. Id. 10. Id. at 167–68 (emphasis added) (this concurrence was joined by Justice Rhonda Wood). 11. Id. at 168–69 (Justice Wood’s concurrence was joined by Chief Justice Howard Brill). 12. Ross v. Martin, 2016 Ark. 340. 13. Id. at 3–4 (internal citations omitted). 14. Id. at 4–5 (internal citations omitted). 15. Ross v. Martin, 2016 Ark. 362. 16. Forrester v. Martin, 383 S.W.3d 375 (Ark. 2011). 17. Brockelhurst v. State, 111 S.W.2d 527 (Ark. 1937). 18. Forrester v. Martin, 383 S.W.3d 375 (Ark. 2011). 19. Id. at 378. 20. Id. at 381. 21. Id. at 382–83. 22. Id. at 382. 23. Martin v. Humphrey, 558 S.W.3d 370 (Ark. 2018). 24. Id. at 375. 25. Id. at 376. 26. Id. 27. Id. at 377. 28. Id. at 376–77. 29. Id. at 377. 30. Id. at 378 (citations omitted). 31. Id. at 379–80. 32. Id. at 381–82. 33. Id. at 379. 34. At the time of publication, a draft of yet another proposed Constitutional amendment to allow the Arkansas General Assembly to place a cap on damages was circulating.
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The Lawyer’s Duty When Client Confidential Information is Hacked From the Law Firm
By Anton L. Janik, Jr. As attorneys, our livelihood is often heavily dependent upon the keeping of secrets. But in this complex electronic-data driven environment we work in, where physical security via locked doors and piercing alarms may no longer be solely sufficient to keep client confidences from prying eyes, what is the modern attorney supposed to do? ABA Opinion 483 provides guidance on a lawyer’s duty when client confidential information is hacked from the law firm.
I
Anton L. Janik, Jr., has a specialized practice in complex litigation, cybersecurity and privacy, and tax controversies. He leads Mitchell, Williams, Selig, Gates & Woodyard’s Tax Controversy and Litigation practice area and co-leads the Cybersecurity Privacy and Data Protection practice area. 18
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magine it’s a usual Tuesday morning, and coffee in hand you stroll into your office. Right inside the door, you see a handwritten notice on a big whiteboard which says: All network services are down, DO NOT turn on your computers! Please remove all laptops from docking stations & keep turned off. *No exceptions* Finding this odd, you turn to your firm receptionist who tells you that the firm was hit with a ransomware attack overnight, and that if you turn on your computer all of your files will be immediately encrypted, subject to a bitcoin ransom. This really happened. In 2017, DLA Piper was hacked by the NotPetya malware, and until the breach was resolved, the 4,400-attorney law firm was reduced to conducting business by text message and cell phone.1 The reported scope of the damage remediation included 15,000 hours of overtime IT assistance, but no reported loss of client confidential information.2 As one of many large companies and law firms attacked by ransomware, what happened to DLA Piper was unfortunately not unique. In fact, a recent American Bar Association report stated that 22% of law firms reported a cyberattack or data breach in 2017, up from 14% the year before.3 Not all attacks are of the ransomware type. Some hackers are looking for specific information. Back in 2016, the Wall Street Journal reported that two major New York-based law firms were hacked in what was believed to have been a state-sponsored attack focused on front-running the equities markets by gaining advance knowledge of upcoming mergers and acquisitions.4 Let that sink in for a minute. A foreign state hacked into U.S.-based law firms to steal confidential client data in order to front-run Wall Street on upcoming deals. If that can be done on such grand matters, who is to say it can’t be done to uncover your client’s real settlement posture in that next big case, or your litigation defense plan in that class action you’re defending?
“Recognizing the difficulty in penalizing an attorney for failing to immediately recognize a breach, especially given the sophistication that intrusion methods may employ, the ABA Opinion only finds an ethical violation where an attorney does not take reasonable efforts to avoid data loss or to detect an intrusion, and where the lack of reasonable effort was the cause of the breach.”
As attorneys, our livelihood is often heavily dependent upon the keeping of secrets, sometimes for just a short period, and other times forever. That reality is reflected in Rule 1.6 of our ethical rules, which demands that we keep secure our client confidences. But in this complex electronic-data driven environment we work in, where physical security via locked doors and piercing alarms may no longer be solely sufficient to keep client confidences from prying eyes, what is the modern attorney supposed to do? While Arkansas has yet to issue a formal evaluation of an attorney’s duty in this regard, in mid-October of last year the American Bar Association (“ABA”) stepped in and issued ABA Formal Opinion 483 (“ABA Opinion”), guiding lawyers in their ethical duties to secure client data in this electronic world.5 The ABA Opinion answers that question through a lens centered upon the confluence of three duties under its Model Rules: the duty of competence, the duty of communication, and the duty of confidentiality. While the ABA Opinion focused narrowly upon the ethical duties it sees arising between an attorney and client, it is important that you understand the types of data you work with, and keep yourself abreast of what laws, regulations and contractual provisions govern its loss. That potential breadth is very large, and this article only briefly touches upon additional requirements that may arise under certain of
those federal and state laws and regulations. (Note that the ABA Opinion points out that complying with federal and state laws and regulations does not necessarily mean that an attorney has met, or has been relieved from, the attorney’s ethical obligations under the Model Rules, so you’ll want to keep in mind both your ethical and legal duties.) ABA Model Rule 1.1, the duty of competence, historically focused upon the need for attorneys to keep abreast of changes in the law relevant to the practice. Back in 2012, the ABA clarified Comment 8 to that Rule to sweep into such duty the requirement that an attorney keep abreast of the benefits and risks associated with technology relevant to the attorney’s practice, which in 2012 terms contemplated the use of email and the creation of electronic documents. (Arkansas Rule 1.1 Comment 8 similarly states that attorneys should keep abreast of changes in the law and its practice including the benefits and risks associated with relevant technology.) Refreshing its focus on that 2012 language, in 2018 the ABA Opinion stated that once those technologies are understood, the competent attorney must use those technologies “in a manner that will reasonably safeguard the property and information entrusted to the lawyer,” which may be satisfied by the attorney’s own study and investigation, or by the retaining of qualified assistance. That brings us to the first ethical duty.
1. Monitor for Electronic Data Breaches The ABA Opinion takes an attorney’s duty of competency under Model Rule 1.1 and the duty to supervise firm lawyers and assistants under Model Rule 5.1 and 5.3 (all of which are analogous to Arkansas’ provisions), and finds that an attorney has a duty to “employ reasonable efforts to monitor [for breaches] the technology and office resources connected to the internet, external data sources, and external vendors providing services related to data and the use of data.”6 The term “breach” has many definitions, each driven by the law, regulation or rule through which an event is viewed. With regard to the ABA Opinion, a data breach is defined as “a data event where material client confidential information is misappropriated, destroyed or otherwise compromised, or where a lawyer’s ability to perform the legal services for which the lawyer is hired is significantly impaired by the episode.” The ABA’s definition is broad enough to encompass both the situation where data is actually removed, as well as the situation where the data remains at the law firm but cannot be accessed. Turning to state law, Arkansas’ Personal Information Protection Act (which is discussed more fully under the notice section below), defines a breach as the “unauthorized acquisition of computerized data that compromises the security, confidentiality, or integrity of personal information maintained
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by a person or business.”7 Recognizing the difficulty in penalizing an attorney for failing to immediately recognize a breach, especially given the sophistication that intrusion methods may employ, the ABA Opinion only finds an ethical violation where an attorney does not take reasonable efforts to avoid data loss or to detect an intrusion, and where the lack of reasonable effort was the cause of the breach. Although the ABA Opinion does not find there to be an ethical violation if the failure to reasonably act was merely a contributing factor rather than “the cause,” attorneys should be careful to mitigate their exposure by making such reasonable efforts. While it is expected that most attorneys will hire specialized help to monitor for electronic data breaches, it is recommended that complex, rotating passwords be implemented along with multifactor authentication, that all relevant security patches be installed on servers and computers, that computer logs be set to the longest retention period and depth of capture available, and that access rights and logs be regularly checked for unauthorized activity. You may want to consider software that monitors access, usage, and data flow across your internal networks, and may also consider improving physical security at the worksite and server rooms. 2. Stopping the Breach, Restoring Systems, and Determining What Occurred While not formally required by the ABA Opinion, best practices (and your cybersecurity insurance coverage) dictate that your law firm should draft, and regularly train on, a breach response plan which defines personnel roles and procedural steps to employ in assessing and addressing any given breach, including through the use of outside vendors whose use may be contractually prearranged.8 When drafting your breach response plan, keep in mind any contractual requirements your clients have established which may exceed the duties imposed under federal or state law or regulation and which may go beyond the ethical considerations of the ABA Opinion. For example, many clients require that their data be encrypted “at rest and in motion,” which means while it is sitting in your law firm data repositories as well as when transmitted between that repository and any other location, for example by email or USB drive. Other clients may include requirements that the client be noti20
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fied within a particular time period that differs from that required by the ABA Opinion or by state or federal law or regulation. Your breach response plan should build in those additional requirements. When a breach is discovered, the ABA Opinion finds that the duty of competence under Model Rule 1.1 requires the attorney to act reasonably and promptly to stop the breach and mitigate the damage, using “all reasonable efforts” to restore computer operations to be able to continue client services. The ABA Opinion notes that those efforts may be undertaken through qualified personnel or experts, who should also be used to help evaluate what occurred and what can be done to prevent a reoccurrence. Bringing in non-attorney technical expertise does raise considerations under Model Rule 1.6, the duty of confidentiality, because those personnel may come into contact with any client confidential information. As explained in ABA Formal Rule 477, an attorney’s competence in preserving Model Rule 1.6 is not a strict-liability standard; rather it is an obligation to take reasonable measures.9 Thus, Model Rule 1.6 is not abridged because a technical expert (placed under an appropriate confidentiality agreement) might come into contact with client confidential information, since reasonable efforts to secure that data may necessitate the hiring of such technical expertise. Similarly, bringing in law enforcement, including the FBI, Secret Service and state police, may be appropriate given their investigative tools and reach, and their ability to place a temporary hold on the notice requirement. Regardless of the benefit of obtaining a temporary hold of the notice of requirement, where someone outside the attorneyclient privilege is to be brought in to assist with investigation or recovery, you should have a frank discussion with your client as to each of these points and any risks that could be exposed through recovery of that data. Even with client consent, an attorney may still only disclose information specifically necessary to assist in stopping that breach or recovering that information. 3. Providing Notice to the Client The requirement of notice is driven not only by the ethical rules, but also by federal and state law and regulations, and can even be driven by your client’s contractual requirements. Model Rule 1.4 (and its Arkansas
analogue) requires that an attorney keep the client “reasonably informed about the status of the matter.” The ABA Opinion interprets that Rule to include keeping current clients informed about a data breach, because the data breach involves either the misappropriation, destruction or compromise of client confidential information, or a situation where the lawyer’s ability to perform services is significantly impaired. That disclosure must provide information sufficient for the client to make an informed decision as to what to do next, if anything. At minimum, the attorney must inform the client of the breach, even where the scope is not yet determined, and even if the breach is only reasonably suspected. The attorney should also inform the client what client confidential information was accessed. If the extent is not yet known, that should be communicated as well. Under the ABA Opinion, attorneys have a continuing duty to keep their clients reasonably apprised of material developments in the post-breach investigation that affect client information. The ABA’s Opinion does not extend to alerting prior clients of a breach because, as written, Model Rule 1.9 (and its Arkansas analogue) fails to describe what steps a lawyer must take if a former client’s data is revealed. While that approach may make sense in the context of a ransomware attack where an attorney cannot work on a current client’s matter, in the case of a loss of data this approach does not appear to fully appreciate the realities of modern law practice, where electronic client confidential information may be housed at the law firm or in its repositories for years beyond the conclusion of a particular matter, and perhaps even beyond any relevant statute of limitations. Regardless of a lack of a written Model Rule requirement, you should provide notice to former clients whose confidential information has been compromised, and establish paper and electronic document destruction policies that require confidential client information to be securely destroyed after an appropriate interval. Outside of the ethical notice requirements, disclosure to regulators and those affected is driven by federal and/or state regulation and law. In that context, similar to the ethical rules which are triggered when client confidential information is at issue, the duties to provide notice are controlled by the type of data breached. For example, under HIPAA,
the loss of “protected health information”— in short, information relating to medical diagnoses or care—triggers the requirement to provide notice.10 Under Arkansas state law, the Personal Information Protection Act (“PIPA”) requires notice to those affected if there is a loss of data that includes at least the first initial of the first name and the last name of a person, along with any of several data variants: social security number, driver’s license number, financial account or credit card number and password, or medical information.11 It is important to note that even if the ethical duty to investigate and provide notice is not triggered because no client confidential information was compromised, other data in your repositories may trigger the duty to investigate and provide notice under relevant federal or state laws or regulations. Under HIPAA, you generally have up to 60 days to provide notice to affected persons.12 Under PIPA, the disclosure must be made “without unreasonable delay,” which may take into account a request by law enforcement to delay notice due to investigative actions.13 When considering your requirements, be sure you are considering the local law of the state of residency of those whose data is affected, regardless of the fact
that the loss may have occurred only here in Arkansas. States differ in their notice requirements and in their required breach response steps, and those laws apply to their residents’ data regardless of where the breach actually occurs. This article is necessarily concise, and has only lightly touched upon several of the relevant considerations. Keep in mind that the ABA has framed these responsibilities as ethical duties, and that Arkansas has already adopted the relevant language from the Model Rules. Arkansas has not provided guidance on the duties raised in ABA Opinion 483. If Arkansas adopts the reasonings of ABA Opinion 483, attorneys will need to proceed carefully, because violations of the ethical duties can lead to sanctions far in excess of the financial sanctions imposed under federal and state laws and regulations. Endnotes: 1. See https://www.abc.net.au/news/201706-28/ransomware-virus-hits-computerservers-across-the-globe/8657626 (last visited January 6, 2019). 2. See id. 3. See https://www.lawyersmutualnc.com/ blog/one-in-5-law-firms-hacked-in-2017 (last visited January 6, 2019).
4. See https://www.wsj.com/articles/hackersbreach-cravath-swaine-other-big-lawfirms-1459293504 (last visited January 6, 2019). See also FBI Private Industry Notification 160304-001, available at https://info. publicintelligence.net/FBI-InsiderTradingHacking.pdf (last visited January 6, 2019). 5. American Bar Association, Formal Opinion 483, available at https://www. americanbar.org/content/dam/aba/administrative/professional_responsibility/aba_formal_op_483.pdf (last visited January 6, 2019) (“ABA Opinion”). 6. ABA Opinion, at 5. 7. Ark. Code Ann. § 4-110-101, et seq. 8. See M. Stanton, et al., Cybersecurity Best Practices, 51 The Arkansas Lawyer 4 (2016), for a deeper discussion of the elements of a breach response plan. 9. American Bar Association, Formal Opinion 477, available at https://www.americanbar. org/content/dam/aba/administrative/ law_national_security/ABA%20Formal%20 Opinion%20477.authcheckdam.pdf. 10. 46 C.F.R. § 164.04(a)(1). 11. Ark. Code Ann. § 4-110-103(7). 12. 45 C.F.R. § 164.404 (b). 13. Ark. Code Ann. § 4-110-105(c).
ArkBar Cyberintelligence Summit 2019— Identifying Emerging Threats and Defenses APRIL 4, 2019 FAYETTEVILLE APRIL 5, 2019 LITTLE ROCK Meet with BXS Insurance, ArkBar’s newly endorsed insurance agent, at the Summit and learn about their cyber insurance programs. Vol. 54 No. 1/Winter 2019 The Arkansas Lawyer
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Think Before You Hit “Send”
By Mark Murphey Henry and Jessica Guarino
I Mark Murphey Henry lives and works in Northwest Arkansas and is with the Rose Law Firm. Mark is a registered patent attorney and earned a Master of Laws (LL.M.) in agricultural law. He works in complex federal litigation and also with university institutions and companies to protect intellectual properties.
Jessica Guarino is a 3L at the University of Arkansas School of Law in Fayetteville, Arkansas.
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n a world where cybersecurity breaches are discussed in terms of “when” rather than “if,”1 the legal profession has recognized the need for attorneys to make greater efforts to protect client information. Not only have data breaches in law firms substantially increased, but the FBI has warned that hackers specifically target law firms due to the highly sensitive information stored and exchanged through often insecure methods.2 In light of the Trump Administration’s repeal of FCC privacy rules preventing internet service providers from gathering and selling consumer’s internet usage data,3 it is imperative that attorneys adopt heightened cybersecurity measures in their firms to ensure the confidentiality of their clients’ information. Risks of Inadequate Cybersecurity Massive data breaches have increased in frequency and size with some studies claiming that reported data breaches “[have] increased by 75 per cent over the past two years.”4 IBM indicated that in 2018, “the global average cost of a data breach is up 6.4 percent over the previous year to $3.86 million. The average cost for each lost or stolen record containing sensitive and confidential information also increased by 4.8 percent year over year to $148.”5 Recent breaches of major companies such as Facebook’s in its Cambridge Analytica Scandal6 and Equifax7 demonstrate that no one is wholly immune from data breaches and all must make greater efforts to secure the information they handle. Data breaches among large law firms over recent years exhibit the devastating impact hackers can create: from DLA Piper’s breach in 2017 that temporarily “shut down [its] digital operations around the world” to the theft of more than 2.6 TB of data and 11.5 million “sensitive records”
“Keeping in mind the complexity of cybersecurity and its ever-evolving nature, utilizing third party encryption programs such as Delivery Trust, client portals, and taking preventative measures by turning on features like two-factor authentication will ensure, to the greatest extent possible, that attorneys are meeting the ethical duties imposed upon them as well as reducing the possibility of liability in malpractice lawsuits against them should data breach occur.“ from law firm Mossack Fonesca in 2016, the risks that arise from inadequate security measures have been shown to be extensive.8 The DLA Piper breach left the firm without phones for a day, without email for six days, without access to certain emails and documents for nearly two weeks,9 and cost the firm 15,000 hours of overtime payment to its IT team.10 The “Panama Papers” breach at Mossack Fonesca resulted in the exposure of the names and data of around 214,000 companies it represented,11 leading to so much economic and reputational damage that the firm announced in March of this year that it would be shutting down.12 In the case Jason Shore and Coinabul, LLC v. Johnson & Bell, Ltd.,13 the plaintiff alleges three separate susceptibilities within the law firm Johnson Bell’s electronic security system: (1) that Johnson Bell’s internet-accessible time-tracking system is out-of-date and “does not limit access to individuals with valid usernames and passwords,”14 allowing the installation of malicious software, identification of “further network connected systems,” and installation of “SamSam ransomware to encrypt files”;15 (2) that Johnson Bell utilizes
an insecure VPN to allow employees to access intranet information from offsite, “opening the door to a ‘Man In The Middle Attack’ . . . a well-known type of attack used . . . to eavesdrop on private communications and steal Confidential Client Information;”16 and (3) that Johnson Bell’s email server employed obsolete login measures that left the server “exploitable by a DROWN [Decrypting RSA with Obsolete and Weakened ENcryption]”17 attack, which “allows attackers to break the encryption and read or steal sensitive communications, including passwords, credit card numbers, trade secrets, or financial data.”18 The failure to take reasonable steps to protect client information exposes attorneys to both potential ethical violations (the duties of confidentiality and competence19) and, as this complaint demonstrates, litigation. Ethical Guidelines Emails in particular exist as major avenues hackers use to intercept sensitive information due to their prominent use by attorneys. In fact, the 2017 ABA Legal Technology Survey Report stated that “in the past year, 92 percent of lawyers sent confidential or
privileged communications and documents to clients via email, and the average lawyer emailed 223 confidential or privileged communications and documents to clients.”20 Email communication was traditionally considered no less secure than other forms of communication, but technological developments and increase in email usage over time necessitated an update in the way the legal profession addressed the security issues inherent in its use.21 In 1999, the ABA issued Formal Opinion 99-413 entitled “Protecting the Confidentiality of Unencrypted Email.”22 The opinion concluded that “lawyers have a reasonable expectation of privacy in communications made by all forms of e-mail, including unencrypted e-mail sent on the Internet”23 and that it complied with ethical duties. However, the committee cautioned that “when the lawyer believes that confidential client information being transmitted is so highly sensitive that extraordinary measures to protect the transmission are warranted, the lawyer should consult the client as to whether another mode of transmission . . . is warranted.”24
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As technology has progressed and revealed vulnerabilities, the ABA has reflected these changes in both the Model Rules of Professional Conduct and formal opinions that advise attorneys on how to meet the standards set forth in the Rules. In 2012, the ABA made a number of amendments to the Model Rules, including updating the Comments to Rule 1.1 and 1.6.25 These amendments to Rule 1.1 and 1.6 reflected the need to account for electronically stored and transmitted information as well as the duties attending the electronic medium such as compliance with state and federal laws governing data privacy and “notification requirements upon the loss of, or unauthorized access to, electronic information” (despite compliance with this laws being “beyond the scope of [those] Rules”).26 However, the years following the 2012 amendments to the Model Rules have highlighted the need for even more guidance in conforming to the new elements of the Model Rules, prompting the ABA to issue Formal Opinion 477R in 2017.27 Opinion 477R provided a series of factors in an attempt to aid attorneys’ determinations of when to apply heightened security measures to client communications, including the “sensitivity of the information,” the “likelihood of disclosure if additional safeguards are not used,” the “cost of employing additional safeguards,” the “difficulty of implementing the safeguards,” and the “extent to which the safeguards adversely affect the lawyer’s ability to represent clients.”28 These determinations are to be made using a factbased analysis on a case-by-case basis.29 Further, the opinion suggests that Model Rules 1.4 and 1.6 “may require a lawyer to discuss security safeguards with clients,” and where the circumstances warrant it, “obtain [the client’s] informed consent” to matters like the “use [of ] enhanced security measures, the costs involved, and the impact of those costs on the expense of the representation where nonstandard and not easily available or affordable security methods may be required or requested by the client.”30 The numerous considerations, while essential to fulfilling professional duties owed to clients, can be cumbersome when required of all individual communications with clients. Beyond exposing attorneys to possible violations of the Model Rules, the failure to appropriately implement proper security measures exposes the attorney to liability 24
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for professional malpractice if sensitive client information is compromised, which often requires separate cybersecurity insurance.31 Ultimately, the guidelines in Opinion 477R offer no concrete direction or workable solution. In order to protect against the cybersecurity threats of 2018, more comprehensive, practical, and consistent preventative measures must be taken in order to avoid liability. Available and Suggested Cybersecurity Solutions Encryption of emails is a widely-used method of securing communications. Encryption is a technology that makes information unreadable by normal means in order to protect the information from interception by unintended parties [by using] a mathematical or logical function to transfer data and deliver it to the intended recipient, who then uses appropriate methods to make the information readable again.32 Encryption can be employed across communication mediums beyond emails, including text messages and voice calls. A variety of encryption methods and algorithms exist and provide “different levels of security in different circumstances.”33 Given that most major email service providers like Google and Yahoo only utilize transport layer security (“TLS”)34—encryption that protects data while it transfers from one location to another35—in order to sufficiently protect client communications and data (whether using email, text messages, or other communication mediums), attorneys must either change the settings within their email service provider to implement different and additional encryption methods or employ third-party encryption programs. TLS does not protect information when it is in the outbox nor when it is in the recipient’s inbox.36 Additional available encryption methods include encryption of data at rest,37 full disk encryption,38 and file-level encryption.39 Alternatively, it is possible to alter the settings in the major email service providers to enter into “confidential mode”40 or turn on other encryption methods, but the protections afforded in these settings likely do not protect against all or even a meaningful amount of the risks associated with breaches of client data.41
Given the relative inadequacy of the security measures available through major email service providers, it would be prudent for attorneys to work with third-party programs that provide encryption as well as other cybersecurity protections to adequately safeguard client data. These programs, like Identillect’s Delivery Trust,42 use more advanced forms of encryption and make available additional options to increase cybersecurity. Moreover, these programs consistently employ such methods on communications, which eliminates both the deficiencies of standard encryption methods and removes the necessity for attorneys to employ a burdensome fact-based, case-by-case analysis to determine which communication security measures are appropriate for the type of information being conveyed.43 Third-party cybersecurity programs save time in automatically applying heightened security measures and provide the most reliable method available for protecting client data against cybersecurity threats. Alternatively, some suggest that client portals are not only a viable alternative to email encryption, but preferable in light of the recent repeal of FCC rules protecting consumers’ information from their internet service provider.44 This is so given that internet service providers “can now legally track all of your unprotected web browsing history (including every page within a domain that you visit), app usage, [and] location history,” meaning they can see “information about who you’re communicating with, how often you’re doing so, and for how long.”45 The use of client portals avoids these insecurities because, in doing so, internet service providers can then only “know that users logged into their secure, encrypted practice management platform but would have no knowledge of the actions taken while logged in.”46 Other steps to heighten security within a law firm aside from email encryption and client portals include: • two-factor/multi-factor authentication;47 • using a password manager to create and store secure passwords;48 • moving client data from local servers to the cloud;49 • using a virtual private network (VPN);50 and • using more secure browsers such as TOR or browser extensions implementing encryption methods.51
Keeping in mind the complexity of cybersecurity and its ever-evolving nature, utilizing third-party encryption programs such as Delivery Trust, client portals, and taking preventative measures by turning on features like two-factor authentication will ensure, to the greatest extent possible, that attorneys are meeting the ethical duties imposed upon them as well as reducing the possibility of liability in malpractice lawsuits against them should data breach occur. Endnotes: 1. ABA Comm. on Ethics & Prof ’l Responsibility, Formal Op. 477R, at 2 (2017). 2. Id. at 1–2; see also Nicolle L. Schippers, Why Should Law Firms Care About Cybersecurity Breaches?, 34:5 GPSOLO 55 (September/October 2017). 3. Brian Fung, Trump Has Signed Repeal of the FCC Privacy Rules. Here’s What Happens Next, The Wash. Post. (Apr. 4, 2017), https://www.washingtonpost.com/news/theswitch/wp/2017/04/04/trump-has-signedrepeal-of-the-fcc-privacy-rules-heres-whathappens-next/?noredirect=on&utm_term=. ecf513c4e4e0. 4. Data Breach Reports to Information Commissioner Increase by 75%, KROLL (Sept. 4, 2018), https://www.kroll.com/en-us/intelligence-center/press-releases/data-breachreports-to-information-commissioner. 5. IBM, 2018 Cost of a Data Breach Study by Ponemon, https://www.ibm.com/security/ data-breach (last visited Nov. 5, 2018). 6. Bill Hutchinson, 87 Million Facebook Users to Find Out if Their Personal Data was Breached, ABC News (Apr. 9, 2018, 2:58 PM), https://abcnews.go.com/US/87million-facebook-users-find-personal-databreached/story?id=54334187. 7. The Equifax Data Breach, Federal Trade Commission, https://www.ftc.gov/equifaxdata-breach (last visited Nov. 5, 2018). 8. Schippers, supra note 2. 9. Jonathan Crowe, How One of the World’s Largest Law Firms Was Paralyzed by Petya, Barkley (July 2017), https://blog.barkly. com/dla-piper-petya-ransomware-attack. 10. Ry Crozier, DLA Piper Paid 15,000 Hours of IT Overtime After NotPetya Attack, ITNews (May 8, 2018, 11:55 AM). 11. Frederik Obermaier, Bastian Obermayer, Vanessa Wormer, & Wolfgang Jaschensky, About the Panama Papers, Suddeutschezeitung, https://panamapapers. sueddeutsche.de/articles/56febff0a1bb8d3c
3495adf4/ (last visited Nov. 30, 2018). 12. Nicola Slawson, Mossack Fonesca Law Firm to Shut Down After Panama Papers Tax Scandal, The Guardian (Mar. 14, 2018, 5:35 PM), https://www.theguardian.com/ world/2018/mar/14/mossack-fonseca-shutdown-panama-papers. 13. Complaint, No. 16-cv-4363 (N.D. Ill. Apr. 15, 2016) [hereinafter Johnson & Bell Complaint]. 14. Johnson & Bell Complaint, supra note 13, at 7–8; Joseph P. Beckman, Law Firm Cybersecurity Breach Opens Door to Lawsuit, ABA Litigation News (July 31, 2017), https://www.americanbar.org/publications/ litigation-news/featured-articles/2017/lawfirm-cybersecurity-breach-opens-door-tolawsuit/. 15. Johnson & Bell Complaint, supra note 13, at 8 (citing and quoting Cisco Blogs, SamSam: The Doctor Will See You, After He Pays the Ransom (Mar. 23, 2016), https:// blogs.cisco.com/security/talos/samsamthe-doctor-will-see-you-after-he-pays-theransom); Beckman, supra note 14. 16. Johnson & Bell Complaint, supra note 13, at 9 (internal citations omitted); see
Beckman, supra note 14. 17. Johnson & Bell Complaint, supra note 13, at 10; Beckman, supra note 14. 18. Johnson & Bell Complaint, supra note 13, at 10 (citing and quoting The DROWN Attack, https://drownattack.com/ (last updated July 1, 2016)). 19. Model Rules of Prof ’l Conduct R. 1.1, 1.6 (Am. Bar Ass’n 1983, amended 2016). 20. Nicole Black, New Gmail and Outlook Security Features Will Appeal to Lawyers, Above the Law (Apr. 19, 2018 at 2:53 PM) [hereinafter New Gmail and Outlook Security Features], https://abovethelaw. com/2018/04/new-gmail-and-outlook-security-features-will-appeal-to-lawyers/?rf=1. 21. ABA Comm. on Ethics & Prof ’l Responsibility, Formal Op. 99-413 (1999). 22. Id. 23. Id. 24. Id. 25. ABA Comm. on Ethics & Prof ’l Responsibility, Formal Op. 477R, at 1–2 (2017); see also ABA Commission on Ethics 20/20 Report 105A (Aug. 2012), http:// www.americanbar.org/content/dam/aba/
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administrative/ethics_2020/20120808_revised_resolution_105a_as_amended.authc heckdam.pdf. 26. Model Rules of Prof ’l Conduct R. 1.1 (Am. Bar Ass’n 1983, amended 2016); see also ABA Commission on Ethics 20/20 Report 105A (Aug. 2012), http:// www.americanbar.org/content/dam/aba/ administrative/ethics_2020/20120808_revised_resolution_105a_as_amended.authc heckdam.pdf. 27. ABA Comm. on Ethics & Prof ’l Responsibility, Formal Op. 477R (2017). 28. Id. at 4. 29. Id. at 5. 30. Id. 31. Nell Gluckman, Amid Hacking Threats, Law Firms Turn to Cyber Insurance, The American Lawyer (Mar. 21, 2016), https://www.law.com/americanlawyer/ almID/1202752692874/. 32. Onika K. Williams, New ABA Guidance on Electronic Client Communications, ABA Litigation News (Oct. 30, 2017), https://www.americanbar.org/groups/litigation/publications/litigation-news/top-stories/2017/new-aba-guidance-on-electronicclient-communications/. 33. Holly Urban, Common Types of Encryption: What Lawyers Need to Know, Law Technology Today (July 18, 2018), https:// https://www.lawtechnologytoday. org/2018/07/common-types-of-encryption/. 34. See Google, Google Privacy Policy, https://policies.google.com/ privacy?hl=en#infosecurity (last visited Nov. 5, 2018); see also Microsoft, Microsoft Privacy Statement, https://privacy.microsoft. com/en-us/privacystatement (last visited Nov. 5, 2018); see also Yahoo, Security at Yahoo, https://policies.yahoo.com/xa/en/yahoo/privacy/topics/security/index.htm (last visited Nov. 5, 2018). 35. Virtru, ABA Security Compliance: Common Sense Recommendations, Virtu Security Insights (Mar. 26, 2018), https://www.virtru.com/blog/aba-securitycompliance/#newsletter. 36. Id. 37. Urban, supra note 33; “Encryption of data at rest is frequently used to protect information stored on hard drives, thumb drives, laptops, and mobile devices while those devices are not turned on, or being used or accessed.” Id. 38. Id. “Full-disk encryption (FDE) is the encryption of all data on a disk drive, 26
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including the program that encrypts the bootable OS partition [and] is useful for small electronic devices vulnerable to theft or loss, such as laptops.” Techopedia, Full-Disk Encryption (FDE), https://www. techopedia.com/definition/13623/full-diskencryption-fde (last visited Nov. 5, 2018). 39. Urban, supra note 33; “File-level encryption allows each file on your computer, phone, or in cloud storage to be separately encrypted. . . . This provides a secure method of storing files but it also means the file can be securely emailed or otherwise sent to another person who also has the password or key [to access the file].” Id. 40. This setting allows email users to encrypt individual emails, restrict recipients from forwarding or copying emails, or set expiration dates on emails, but privacy policies allow for disclosure of information. New Gmail and Outlook Security Features, supra note 20. 41. Id. 42. The Arkansas Bar Association has identified Identillect’s DeliveryTrust as its preferred email security solution for Arkansas Bar Association members “to meet and exceed the regulatory requirements to protect their client and member sensitive communications.” Arkansas Bar Association, Member Benefits, https://www.arkbar. com/about-arkbar/membership54 (last visited Nov. 5, 2018). 43. Identillect Technologies Corp., Identillect Technologies Launches Seamless Office 365 Mobile Experience for O365 Users, Global News Wire (Sept. 7, 2017 at 7:30 AM), https://globenewswire.com/ news-release/2017/09/07/1113957/0/ en/Identillect-Technologies-LaunchesSeamless-Office-365-Mobile-Experiencefor-O365-Users.html. 44. Nicole Black, Secure Client Communication in the Trump Era, Above the Law (Apr. 6, 2017, 11:41 AM) [hereinafter Secure Client Communications in the Trump Era], https://abovethelaw.com/2017/04/secureclient-communication-in-the-trump-era/. 45. Id. 46. Id. 47. Seth Rosenblatt & Jason Cipriani, Two-Factor Authentication: What You Need to Know (FAQ), Cnet (Jun. 15, 2015, 1:39 PM), https://www.cnet.com/news/two-factor-authentication-what-you-need-to-knowfaq/. “Two-factor authentication adds a second level of authentication to an account
log-in. . . . 2FA requires the user to have two out of three types of credentials before being able to access an account” including “something you know, such as a personal identification number (PIN), password or a pattern[;] something you have, such as an ATM card, phone, or fob[; and] something you are, such as a biometric like a fingerprint or voice print.” Id. 48. See Nicole Black, Cybersecurity for Lawyers: The Nitty-Gritty, Above the Law (Jan. 12, 2017, 10:48 AM), https://abovethelaw. com/2017/01/cybersecurity-for-lawyers-thenitty-gritty/?rf=1. 49. Id. 50. Secure Client Communications in the Trump Era, supra note 44. A VPN is a software that encrypts your data, even before your Internet Service Provider or the coffee shop WiFi provider sees it. The data then goes to the VPN, and from the VPN server to your online destination—anything from your bank website to a video sharing website to a search engine. The online destination sees your data as coming from the VPN server and its location, and not from your computer and your location. John Mason, VPN Beginner’s Guide, TheBestVPN (last updated Nov. 23, 2017), https://thebestvpn.com/what-is-vpn-beginners-guide/. 51. Secure Client Communications in the Trump Era, supra note 44. TOR “protects you by bouncing your communications around a distributed network of relays . . . it prevents somebody watching your Internet connection from learning what sites you visit, and it prevents the sites you visit from learning your physical location.” Tor, Anonymity Online, https://www.torproject.org/ (last visited Nov. 5, 2018).
We are coming to your neck of the woods in June! June 17-21 & 24-28 One-Hour Webinars Twice/Day June 24-28—Best of CLE • Little Rock TBA—Best of CLE • Northwest AR June 27-28—Best of CLE • Jonesboro
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Thank you to the following ArkBar Volunteer CLE Speakers & Planners who made our 2018 CLE seminars possible. Their support for ArkBar’s CLE program is greatly appreciated. Our diverse topics and experienced speakers provide valuable content to the legal community.
2016 ArkBar Volunteer CLE Speakers & Planners
Justin Allen Mark Allison Erin Anderson Joyce Bradley Babin Donald Bacon Amber Wilson Bagley Judge Kristine Baker J. Lauren Ball Senator Bob Ballinger Judge Ben Barry J. Travis Baxter Judge Cristi Beaumont Dean Theresa Beiner Joycelyn Bell Paul Bennett Vada Berger Lee Berman Matthew Boch Adam Bodeker Edward Boltz Senator Will Bond Misty Borkowski George Bradley Judge Wiley Branton, Jr. Judge Troy Braswell, Jr. Robert Brech Professor Howard Brill Shane Broadway Judge Barry Bryant Kim Burnette Charles Buttry John Bynum Judge Chris Carnahan Emmett Chiles IV Dr. William Chrystal Bernard Clark Suzanne Clark Charles Coleman John Collins II Judge Cathleen Compton Waylan Cooper M. Gayle Corley Grant Cox Paul Crawford Christine Cryer David Curran C. Michael Daily Thomas Daily Representative Carol Dalby Justice Paul Danielson Lillian Davenport JaNan Davis Judge Beth Deere Amanda Denton Annie Depper Thomas Diaz Natalie Dickson Dean John DiPippa Melissa Duke Cynthia Edwards Justin Elrod Jamie Ewing James Ferstl Branch Fields
Jennifer Flinn Judge John Fogleman Professor Lynn Foster William Foster Judge Thomas Fowler Jamie Fugitt R. Ray Fulmer II Karey Gardner David Gates Representative Jimmy Gazaway Buck Gibson Ashley Gill Chief Judge Robert Gladwin Jennifer Glover Tamra Glover James Goodhart Jack Gooding Judge David Goodson Judge David Graham, Jr. Betty Guhman Judge Milas Hale III John Hall, Jr. Joshua Hallenbeck Frank Hamlin Dawn Hare Judge Patricia Harris Judge Brandon Harrison Raymon Harvey Kyle Havner Warren Hawkins Vincent Henderson II J. Blake Hendrix Robert “Skip” Henry III Daniel Herrington Judge Robert Herzfeld, Jr. Basil Hicks III Anthony A. Hilliard Judge Kenneth Hixson Kat Hodge Robert Honea Lauren Hoover Matthew Horan Johnathan Horton Matthew House Cassandra Howell Renae Hudson James Hunt Harry Hurst, Jr. Governor Asa Hutchinson Benjamin Jackson Patrick James Amanda Jarvis Sarah Jewell Amy Johnson Michael Johnson Judge Clinton Jones Gregory Jones Michael F. Jones Judge Phyllis Jones Robert Jones Will Jones Kevin Keech Chief Justice John Kemp, Jr. Shane Khoury
Andrew King Lloyd Kitchens III Max Klein Professor Daniel Kleinberger Cynthia Kolb Joseph Kolb Jennifer Lancaster Special Judge David Laser Jeremy Lasiter C. Wesley Lasseigne Janet Lawrence Dean Stacy Leeds Brian Lewis Stark Ligon Julie Linck Judge Mark Lindsay Nick Livers Tisha Long Nathan Looney P. Drake Mann Eric Marks Ronald “RJ” Martino Phillip Massirer Angela Mathews Michael McAlister Patrick McAlpine Dean Margaret McCabe Erin McCartney Benjamin McCorkle James McCormack Bobby McDaniel Brett McDaniel Kathleen McDonald Judge Mary Spencer McGowan Jerald “Cliff” McKinney II Rhonda McKinnis Paul McNeill Christopher McNulty Abtin Mehdizadegan Katie Mehdizadegan Chief Judge Brian Miller Lance Miller Michael Mitchell Cristina Monterrey Judge James Moody, Jr. Charles Mooney, Jr. Collier Moore Judge Charles Moulton Rosalind Mouser Judge Michael Murphy David Nixon Gregory Northen Kevin O’Dwyer Caleb Osborne Jason Owens John Peiserich John V. Phelps Ashley Phillips Jennifer Pierce Judge Mackie Pierce Harrison Pittman Theresa Pockrus Kathryn Pryor William Raftery
Judge Dale Ramsey Joseph Ramsey David Raupp Swalitha Richardson Victor Richardson Spencer Robinson Richard Roderick Jordan Rogers James Roller Jeff Rosenzweig Lucas Rowan Attorney General Leslie Rutledge Courtney Salas-Ford J. G. “Gerry” Schulze Candice Settle Kannon Shanmugam John Shepherd Speaker Matthew Shepherd Cheryl Shuffield Mitchell Simpson Judge Hamilton Singleton James Smith Judge Thomas Smith Judge Vann Smith Stuart Spencer Amanda Stanton Christina Steinbrecker Jack Amy Stewart Mark Stodola Sharon Streett Kimberly Sutton Edward Swaim Joseph E. “Jess” Sweere Louise Tausch Judge Richard Taylor James Tilley Christopher Travis Geoffrey Treece Scott Trotter Justice Annabelle Tuck Clarke Everett Tucker IV Cathy Underwood Vicki Vasser-Jenkins Judge Joe Volpe Richard Wait Elisabeth Walker Bill Warren Stacie Wassell Brett Watson Howard Whatley Kevin White J. Craig Wilson Judge Ralph Wilson, Jr. Ryan Wilson Jordan P. Wimpy Stephen Wood Andrea Woods Judge Wm. Randal Wright Judge Charles Yeargan Alan York Dan Young Danna Young
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The California Consumer Privacy Act of 2018: Why It Matters to Clients in Arkansas By Drake Mann Drake Mann is a Shareholder and Director of Gill Ragon Owen, P.A. Mr. Mann is privacy law specialist certified by the ABA-accredited International Association of Privacy Professionals (IAPP). The IAPP has also designated Mr. Mann a Fellow of Information Privacy and awarded him certifications in privacy technology and privacy management. Mr. Mann is also a Certified Information Systems Auditor (ISACA) and a Certified Cloud Security Professional (ISC)2.
T
he larger contours of new privacy laws may seem intuitively familiar in Arkansas, where the courts have expressly recognized a common law right to privacy since 1962.1 But the explosion of technologies that capture, hold, and distribute massive amounts of personal data has resulted in these larger contours giving way to statutory particulars. The two most significant pieces of civil law that dramatically changed the privacy-law landscape in 2018 are the European Union’s General Data Protection Regulation (the “GDPR”), which became enforceable on May 25, and the California Consumer Privacy Act of 2018 (the “CCPA”),2 which Governor Jerry Brown signed into law on June 28. Although the CCPA will not become effective until January 1, 2020, it appears likely to impact directly thousands of Arkansas businesses (with the added kick that it provides for a private right of action, albeit qualified). The CCPA has already added momentum to the growing demand for federal data privacy legislation, in part, to reduce the risk that 50 states’ different privacy laws will bog down commerce. Congress has begun holding hearings to consider what shape federal consumer privacy laws might take.
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Dismissing the GDPR or the CCPA as inapplicable to most Arkansans and therefore irrelevant carries a cost. Both the GDPR and the CCPA (as well as most other privacy laws) impose obligations regarding how businesses handle information about people—obligations that are similar, if not identical, to each other—and that in some form may be incorporated in federal privacy legislation.3 Making changes to any business process or a data system is rarely simple. Trying to implement a whole suite of changes at one time to comply with new legislation can be disruptive and costly. Because businesses usually make small changes to their operations and computer systems on an on-going basis, by having a rough sense of California’s new law, Arkansas businesses can begin now to implement incremental changes that will get them closer to compliance with whichever privacy law particulars eventually come to govern them. In addition, as noted in one recent study, many companies are embracing privacy legislation “as an opportunity to improve privacy, security, data management or as catalyst for new business models, rather than simply a compliance issue or impediment.”4 The CCPA appears poised to apply to thousands of Arkansas businesses. The CCPA is also a useful subject of study because it appears likely to apply to thousands of businesses in Arkansas. The CCPA will become enforceable sometime next year.5 The CCPA will apply to for-profit legal entities that collect California consumers’ personal information, that do business in California, and that either (a) have more than $25 million in annual gross revenue, (b) buy, receive, or share the personal information of 50,000 or more “consumers, households, or devices,” or (c) derive 50 percent or more of their annual revenues from selling consumers’ information.6 By one analysis,7 more than 10,000 Arkansas businesses meet the first threshold (i.e., they have more than $25 million in annual gross revenue). Given the nature of modern interstate commerce, it is no great stretch to conclude that thousands of those Arkansas businesses do enough business in California to come within the reach of California’s long-arm jurisdiction. Larger Arkansas businesses that process consumers’ personal information therefore have particular reason to become familiar with the CCPA.
In addition, the CCPA’s definition of “personal information” is notably broad and includes information “capable of being associated with, or [which] could reasonably be linked, even indirectly,” with a particular consumer or household.8 Identifying information includes obvious identifiers such as a natural person’s name, address, email address, social security number, or driver’s license number, but also includes information captured automatically by many website management tools, such as an advertising identifier, Internet Protocol address, or similar identifiers. Thus, if an Arkansas company hosts a website that performs basic tracking functions (logs an IP address and online advertising identifiers), there is risk that the CCPA will apply. If an Arkansas business’s website merely receives these personal identifiers for 50,000 or more Californians (or California households), it should look closely at the CCPA.9 What sorts of obligations does the CCPA impose? The CCPA, a brand-new statute, hurriedly written,10 with more than 10,000 words and still-unwritten regulations, is not susceptible to a complete analysis in this article. But, by getting a sense of the CCPA’s broader outlines, Arkansans can better understand these areas of current legislative concern and begin to adapt their business processes with the expectation that similar obligations are likely to come along soon. Among other things, the CCPA provides California consumers with (1) the right to know what types of data a business has about an individual and the sources of that information; (2) the right to know what a business does with the data, including sharing it with, or selling it to, third parties;11 (3) some right to deletion; (4) the right to opt out of the sale of personal information; (5) the right to know, at or before collection, the categories of information that will be collected and the purposes for which the information will be used; and (6) a prohibition against discriminating against consumers who exercise rights under the CCPA. Some implications of these obligations. Several of these obligations require businesses to track, and in some cases create, data that they never have before. For example, consider an Arkansas-based food company that periodically offers recipes and discounts
“People, generally speaking, do not like being forced to do things, and the story of businesses chafing at any government regulation is as old as government regulation itself. Arkansas businesses can wait until they come under the jurisdiction of the CCPA, the GDPR, or some future federal legislation, and they can make only those changes they are forced to make. Or Arkansas businesses can adopt a different attitude— an attitude expressed by one writer as the Golden Rule of Privacy: ‘that companies should put the interests of the people whom data is about ahead of their own.’”
to customers on its mailing list. These customers may have subscribed to the mailing list from the company’s own website or the company may have bought the names and email addresses from an affiliated company that had gotten fine-print permission to share the data. In the past, the food company may not have cared where it got the names on its subscription list. Going forward, its databases will need to track the source of the information so the company can respond to requests from California consumers. In like manner, if the food company shares this information with others, the company will need to track at least the categories of third parties with whom it does so. Many companies are treating these legislatively-imposed changes as opportunities to improve the efficiency of their information-processing operations. For example, the CCPA requires a business to disclose the business purpose for collecting personal information. A business may find, on reflection, that it no longer has a good business purpose for collecting or retaining certain data. It may choose to cease doing so and thereby save storage and processing resources
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and reduce its potential data-liability footprint. In the same way, the CCPA’s transparency and notice obligations create an opportunity to earn points with customers who have grown suspicious of data gathering in the face of public scandals involving data-processing and profiteering techniques. Opaque or vague disclosures can be replaced by simple and clear versions that engender trust. Responding to consumers’ requests. Among other things, a California consumer is entitled to know what specific information a business has collected about that consumer and to request its deletion. A business must respond within 45 days of a “verifiable consumer request.” The California Attorney General has not yet issued regulations regarding how a business might verify a request or document its response, but the GDPR imposes analogous obligations, and it should therefore come as no surprise if future federal legislation imposes a similar duty. In addition, the CCPA gives consumers the right to opt out of the sale of their information before a business sells it, and a business that collects information from consumers between the ages of 13 and 16 must obtain from a parent or guardian an affirmative opt-in before selling that information. As Arkansas businesses make on-going changes to their data-processing systems, they should consider planning mechanisms to implement a wide range of granular datahandling requests from consumers and regulators and to document their responses to those requests. Private right of action. The most-distinguishing feature of the CCPA is its qualified private right of action. The CCPA provides that a consumer whose nonencrypted or nonredacted personal information is subject to an unauthorized access and exfiltration, theft, or disclosure as a result of a failure to implement and maintain “reasonable security procedures and practices appropriate to the nature of the information” may institute a civil action for damages of not less than $100 and not more than $750 per consumer per incident or actual damages, whichever is greater, or injunctive relief. To pursue statutory damages, the consumer must first give a business 30-days written notice of the alleged violation, and, if the busi30
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ness “actually cures” the violation, no action may be initiated. There is no notice requirement, however, for a California consumer to pursue an action for actual pecuniary damages. An Arkansas business serving Californians can therefore protect itself from the risk of a private civil judgment by encrypting or redacting personal information and implementing reasonable security procedures and practices. Practices such as these should already be commonplace, of course, even without the threat of a lawsuit from a consumer in California. Conclusion. People, generally speaking, do not like being forced to do things, and the story of businesses chafing at any government regulation is as old as government regulation itself. Arkansas businesses can wait until they come under the jurisdiction of the CCPA, the GDPR, or some future federal legislation, and they can make only those changes they are forced to make. Or Arkansas businesses can adopt a different attitude—an attitude expressed by one writer as the Golden Rule of Privacy: “that companies should put the interests of the people whom data is about ahead of their own.”12 This approach regards the relationship between business and consumer as one of trust where companies holding data do so as “good stewards.” Such a lodestar simplifies organizational governance and enables a company to express itself with clarity and congruence throughout—from its public notices to its computer code. Dismissing others’ concerns about privacy may further erode trust, and, in the not-toodistant future, result in potentially significant liability. Endnotes: 1. In 1962, the Arkansas Supreme Court recognized the tort of invasion of the right to privacy when it upheld a $2,500 jury verdict in favor of a Searcy housewife whose picture had been reproduced on thousands of advertising postcards for a photography studio. Olan Mills v. Dodd, 234 Ark. 495, 353 S.W.2d 22 (1962). 2. Cal. Civ. Code §§ 1798.100–1798.199. 3. Examining Safeguards for Consumer Data Privacy, U.S. Senate Committee on Commerce, Science, and Transportation, hearing held September 26, 2018, https://
www.commerce.senate.gov/public/index. cfm/2018/9/examining-safeguards-for-consumer-data-privacy (last accessed January 7, 2018). 4. IBM Study: Majority of Businesses View GDPR as Opportunity to Improve Data Privacy and Security (May 16, 2018), https:// newsroom.ibm.com/2018-05-16-IBMStudy-Majority-of-Businesses-View-GDPRas-Opportunity-to-Improve-Data-Privacyand-Security (last accessed January 7, 2018). 5. “The Attorney General shall not bring an enforcement action under this title until six months after the publication of the final regulations issued pursuant to this section or July 1, 2020, whichever is sooner.” Cal. Civ. Code § 1798-185(c). 6. Cal. Civ. Code § 1798.140. 7. In July 2018, Rita Heimes and Sam Pfeifle, Research Director and Content Director, respectively, of the International Association of Privacy Professionals published an analysis based on “a rule of thumb in the business-reporting world that estimates a company’s revenue by the number of employees it has. Under this assumption, a company will gross an average of at least $100,000 per employee.” Using information from the U.S. Census Bureau, in 2015, 11,378 Arkansas businesses had “more than 500 employees, which translates to more than $50 million in revenue.” Heimes and Pfeifle add: “consistent with well-established jurisprudence on long-arm jurisdiction, ‘doing business’ in California applies to companies that sell goods or services to California residents even if the business is not physically located in the state.” 8. “Personal information” means information that identifies, relates to, describes, is capable of being associated with, or could reasonably be linked, directly or indirectly, with a particular consumer or household. Personal information includes, but is not limited to, the following if it identifies, relates to, describes, is capable of being associated with, or could be reasonably linked, directly or indirectly, with a particular consumer or household: (A) Identifiers such as a real name, alias, postal address, unique personal identifier, online identifier, Internet Protocol address, email address, account name, social security number, driver’s license number, passport number, or other similar identifiers.
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Wilson & Associates is proud to announce the opening of their immigration department, led by Kathleen McDonald. Kathleen McDonald
Let us help guide you and your pride through business or family visa and green card matters. The Wilson Law Group Wilson & Associates, PLLC Wilson+Miller, PLLC 400 West Capitol Ave. Suite 1400 Little Rock, AR 72201 (501) 219-9388 Pride in Practice. (B) Any categories of personal information described in subdivision (e) of Section 1798.80. (C) Characteristics of protected classifications under California or federal law. (D) Commercial information, including records of personal property, products or services purchased, obtained, or considered, or other purchasing or consuming histories or tendencies. (E) Biometric information. (F) Internet or other electronic network activity information, including, but not limited to, browsing history, search history, and information regarding a consumer’s interaction with an Internet Web site, application, or advertisement. (G) Geolocation data. (H) Audio, electronic, visual, thermal, olfactory, or similar information. (I) Professional or employment-related information. (J) Education information, defined as information that is not publicly available personally identifiable information as defined in the Family Educational Rights and Privacy Act (20 U.S.C. section 1232g, 32
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www.thewilsonlawfirm.com 34 C.F.R. Part 99). (K) Inferences drawn from any of the information identified in this subdivision to create a profile about a consumer reflecting the consumer’s preferences, characteristics, psychological trends, predispositions, behavior, attitudes, intelligence, abilities, and aptitudes. Cal. Civ. Code § 1798-140(o)(1). 9. Although the CCPA contains an ambiguously-worded exception for de-identified data, the process of de-identifying data to the point that it could not be reasonably linked, even indirectly, to a household is no simple feat. 10. The Unlikely Activists Who Took On Silicon Valley — and Won, The New York Times Magazine (August 15, 2018), https://www.nytimes.com/2018/08/14/ magazine/facebook-google-privacy-data. html (last accessed January 7, 2019). 11. (a) A consumer shall have the right to request that a business that collects personal information about the consumer disclose to the consumer the following: (1) The categories of personal information it has collected about that consumer.
(2) The categories of sources from which the personal information is collected. (3) The business or commercial purpose for collecting or selling personal information. (4) The categories of third parties with whom the business shares personal information. (5) The specific pieces of personal information it has collected about that consumer. (b) A business that collects personal information about a consumer shall disclose to the consumer, pursuant to paragraph (3) of subdivision (a) of Section 1798.130, the information specified in subdivision (a) upon receipt of a verifiable consumer request from the consumer. (c) A business that collects personal information about consumers shall disclose, pursuant to subparagraph (B) of paragraph (5) of subdivision (a) of Section 1798.130: (1) The categories of personal information it has collected about that consumer. (2) The categories of sources from which the personal information is collected. (3) The business or commercial purpose for collecting or selling personal information. (4) The categories of third parties with whom the business shares personal information. (5) The specific pieces of personal information the business has collected about that consumer. Cal. Civ. Code § 1798.110. 12. Cameron F. Kerry, Why protecting privacy is a losing game today—and how to change the game, Brookings Institution (July 12, 2018), https://www.brookings.edu/research/ why-protecting-privacy-is-a-losing-gametoday-and-how-to-change-the-game/ (last accessed January 7, 2019).
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Experienced in Complex Public Service Matters For over 40 years, Dave Wilson has specialized in regulated and unregulated public and private service provider utility cases, both at state and federal levels. He’s maintained ongoing relationships within industries doing business in Arkansas and would be a valuable ally when the need arises. His work includes regulatory hearings, mediation, contract matters, trials, and appeals. In addition to being admitted to practice before the Supreme Court of the United States and the Washington D.C. Circuit Court of Appeals, his experience includes working closely with State and Federal authorities in Washington D.C. and Arkansas: • The Federal Energy Regulatory Commission (FERC) • The Arkansas Public Service Commission • Arkansas General Assembly and US Congress, and many local and cooperative boards and city councils • The Arkansas Department of Environmental Quality (ADEQ) • The Environmental Protection Agency (EPA) • The Pollution Control and Ecology Commission • The Nuclear Regulatory Commission
To visit with Dave about a legal matter where he may be of service, call 501-376-4090. To learn more about Dave’s practice, and to see case examples, visit zacharydavidwilsonpa.com. References available upon request Vol. 54 No. 1/Winter 2019 The Arkansas Lawyer
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The Conundrum of Default Judgment Damages in Credit Card Debt Buyer Lawsuits
By Kim Petrone and Dr. Vernon J. Richardson
I
n the past decade, attorneys, judges, regulators, and scholars across the U.S. have criticized the growth of credit card debt buyer lawsuits leading to high rates of default judgments. This situation prompted an empirical study of the situation in Arkansas.1 Among other things, the study found that 97% of defendants do not have legal counsel in these cases. The study highlighted conundrums and problematic legal questions. This article takes a close look at only one conundrum—when a debt buyer complaint has chain-of-title exhibits disclaiming the accounts sold and an affidavit affirming the account in question. We’ll begin by identifying relevant law. Then, we’ll describe some findings of the study and governmental challenges to debt buying chain of title documents. Finally, we’ll identify a possible way practitioners and judges may address this conundrum.
Kim Petrone, J.D. is an Instructor in the Walton College of Business at the University of Arkansas.
Dr. Vernon J. Richardson is a Distinguished Professor in the Walton College of Business at the University of Arkansas. 34
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I. Relevant Law Arkansas Rule of Civil Procedure 55(b) governs default judgments and states in pertinent part: “If, in order to enable the court to enter [default] judgment or to carry it into effect, it is necessary to take an account or to determine the amount of damages or to establish the truth of any averment by evidence or to make an investigation of any other matter, the court may conduct such hearings as it deems necessary and proper and may direct a trial by jury.” Precedent provides guidance on how to determine damages in default judgment. The first precedent involves a default judgment in the personal injury setting. “In Arkansas, a default judgment establishes liability but not the extent of damages. … [I]n Arkansas, unlike some jurisdictions, a hearing is required after default to establish damages, and the plaintiff must introduce evidence to support damages.”2 Default judgment damages in credit card account cases are often proven via an affidavit made pursuant to Arkansas Code Ann. § 16-45-104. That statute allows a plaintiff to “establish the account” with an “affidavit of the plaintiff.” However, if a “defendant denies under oath the correctness of the account,” then plaintiff must provide other evidence. In 2012, the Arkansas Supreme Court stated that an affidavit under § 16-45-104 that “complies with the rules of evidence, might offer proof of the account
amount (“establish the account”) . . . .”3 The conundrum identified in credit card debt buyer lawsuits is that sometimes the chain-of-title exhibits disclaim the account, while the plaintiff ’s affidavit affirms the account. When 97% of defendants do not have legal representation to raise this issue, what should happen? Should judges read chain-of-title exhibits before making damage awards? The answer to this question may be influenced by an understanding of the debt buying industry and government findings related to that industry. II. Study Findings First, let’s consider the facts of debt buyer litigation in Arkansas. In 2018, faculty at the University of Arkansas completed a study of all lawsuits filed by credit card debt buyers (“Plaintiffs”) in 2016 in circuit courts of Columbia, Pulaski, and Washington Counties.4 The study found that 1,581 cases were filed, but only 1,250 reached decision in the circuit court by January 1, 2018. (The nondecision cases were dismissed for failed service, removed to bankruptcy court, or still pending.) The Plaintiffs were typically high volume filers. Midland Funding LLC (“Midland”) alone filed 1,066 of the 1,581 lawsuits. Midland, owned by publicly-traded Encore Capital Group, was represented almost exclusively by a Kentucky law firm, Lloyd & McDaniel, PLC. Ninety-seven percent of the defendants did not have an attorney. Unrepresented defendants incurred money judgments in 64% of those cases, whereas represented defendants incurred money judgments in 10% of cases. Judgments exceeded $1.3 million. Records show approximately half of those judgments were satisfied by January 1, 2018. All judgments were pretrial, with judges granting 99% of all default judgment motions. A total of 661 default judgments were entered. One percent of default judgment motions led to dismissal of the complaint. When a defendant had counsel, outcomes were dramatically better for them. The 38 represented defendants were very successful, obtaining dismissals in 34 of the cases and incurring money judgments in only four of the cases. (Three of those money judgments were technical: two summary judgments after defense failed to answer requests for admissions and one where defense did not reply to plaintiff ’s motion for summary judgment.) Not only did represented defendants seldom lose,
they sometimes received settlement payments from plaintiffs based on counterclaims. The following exploration of the debt buying industry may give insights as to why defense attorneys have such a high success rate. III. Background Information on Debt Buying When a bank’s records show that a credit card account is not being paid, the bank typically does the following: 1) collect the debt itself, 2) hire a third-party debt collector, and/ or 3) sell the account to a debt buyer.5 Some banks pursue multiple efforts; for example, a bank initially may hire a third-party debt collector and then sell any remaining uncollected debt to a debt buyer. Also, debt buyers may resell debts to another debt buyer. If a bank decides to sell an account, the account is bundled with others into a “portfolio.” The Federal Trade Commission reports, “[o]n average, debt buyers paid 4.0 cents for each dollar of debt.”6 The debt buyer may get limited records, likely not to include the instrument of the debt signed by defendant or information as to amount of interest, fees, or principal beyond the charge off year.7 A 2015 article in the Harvard Journal of Legislation explains that movements of credit card accounts from different departments within banks to collectors to debt buyers may cause problems with the “flow and integrity of information” unique to debt buying.8 Information—such as payments after initial default, communications, and disputes as
to charges—can be lost in these transfers of information between different systems.9 To further compound the problem a lawsuit may not occur until years after default and thus a debtor may have poor records and poor memories as to exactly how much was owed, what was paid, and what was disputed. Related to this information problem, banks often refuse to warrant the accounts.10 Usually, two contracts govern the sale of a debt portfolio: 1) a bill of sale (often a onepage document attached to a complaint) and 2) a purchase agreement, sometimes called a forward flow agreement. Experts and regulators report that purchase agreements may contain disclaimers as to the accuracy of the debt and are seldom produced in litigation.11 Indeed, Midland (by far the most common plaintiff in our study) consented to a Consent Order with the Consumer Financial Protection Bureau (“CFPB”)12 replete with “Findings” including these: incidents of seller’s disclaimers that debts may be approximations, time-barred, or disputed13 and filing misleading affidavits.14 The CFPB entered a similar Consent Order with Portfolio Recovery Associates, which filed 61 cases.15 Consistent with the foregoing CFPB findings and scholarly article, we observed debt sellers’ disclaimers in our study, including the following examples from bills of sale: …Assignor … sells … to Portfolio Recovery Associates, LLC, ... on an “AS IS” and “WITH ALL FAULTS” ba-
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sis, without recourse and without representations or warranties of any type, kind, character or nature, express or implied, all of Assignor’s right, title and interest in and to each of the assets identified in the Asset Schedule …”16 MHC Receivables … sells … to Sherman Originator III LLC … without recourse, representation or warranty, all of its right, title and interest in and to (i) the Accounts identified on an account level basis on the data file titled “CreditOne_Encore_062014.xlsx” attached to this Agreement …”17 The foregoing discusses the integrity problems with a simple transfer of a portfolio from the original creditor to a debt buyer. However, a portfolio may be sold multiple times, leading to a confusing collection of affidavits. For example, Sherman Originator III LLC (“Sherman”), referenced above, held the Coleman debt for seven days and then sold it to Midland. The bills of sale list somewhat different data file names, but plaintiff relies on this to establish ownership without explanation of file name differences. Also, a Sherman director, Jon Mazzoli, signed an affidavit with affirmations and business record language attesting to integrity of information in an account it held for only seven days. Broadly speaking, academics, attorneys general (including the Arkansas attorney general in 2014),18 and regulators have raised many areas of concern, such as the following: a. Affidavit problems, i. robo-signed affidavits by debt buyer employees with little account information, ii. affidavits not based on original creditor’s personal knowledge of the specific defendant’s account (as opposed to a blanket statement that the entire Portfolio data is accurate) b. Lack of admissible documentation i. relying on documents not original to the debt (e.g. charge-off statements with no proof as to when created or whether mailed to debtor) ii. credit card agreements not signed by debtor or with no proof of connection to debtor c. Chain of title documents disclaiming or limiting accuracy of debt 36
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i. Bill of Sale with disclaimers ii. Non-production of chain-of-title agreements referenced in Bill of Sale, which may have terms related to accuracy of records. IV. Addressing a conflict in chain-oftitle disclaimers and affidavits We begin this section by noting that Arkansas judges have broad discretion regarding default judgments. Rule 55 begins “When Entitled. When a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend as provided by these rules, judgment by default may be entered by the court.” The word “may” replaced the word “shall” in 1990 amendments to the rule. The Arkansas Supreme Court summarized general precedent on default judgment as follows: The standard by which we review the granting of a default judgment and the denial of a motion to set aside the default judgment is whether the trial court abused its discretion. Default judgments are not favorites of the law and should be avoided when possible. In fact, the purpose for the 1990 amendment to Ark. R. Civ. P. 55 was to liberalize Arkansas practice regarding default judgments, and the revised rule reflects a preference for deciding cases on the merits rather than on technicalities.19 In 1996, Professor Watkins of the University of Arkansas wrote an article surveying default judgments in Arkansas and quoted the Second Circuit to explain this discretion: “default judgments implicate sharply conflicting policies, and the trial judge, who is usually the person most familiar with the circumstances of the case and is in the best position to evaluate the good faith and credibility of the parties, is entrusted with the task of balancing these competing considerations.”20 As outlined in the opening of this article, default judgment damages are analyzed apart from default judgment liability. In the credit card account context, § 1645-104 affidavits made by an employee of the debt buyer are often offered as proof. However, the records given to debt buyers (and on which their affidavits are based) are often disclaimed by account sellers. While the Arkansas Supreme Court in
LVNV Funding, LLC v. Nardi stated that a § 16-45-104 affidavit “might offer proof,” at least one appellate court describes such affidavits as “an exception to the proof requirement.”21 We found no case addressing the conundrum presented here where plaintiff ’s own exhibit may refute its affidavit, requiring plaintiff to provide other evidence of damages. Pragmatically, how would a judge conduct this analysis? Also, in the few cases where an attorney represents a defendant, how may the attorney address a § 16-45-104 affidavit? The two steps below outline the inquiry: 1. Does a chain-of-title exhibit (usually 1, 2, or 3 bills of sale, depending on how many times the portfolio has been sold) have disclaiming language? If yes, then plaintiff must provide evidence beyond the § 1645-104 affidavit to rebut its own exhibit. 2. Does any chain-of-title document (bills of sale) reference or incorporate any unproduced agreement? If yes, then plaintiff must produce the agreements so that the judge has access to the full chain-of-title documentation and may identify any disclaiming language. If disclaiming language is found in subsequently produced documents, then plaintiff must provide evidence beyond the § 16-45-104 affidavit to rebut its own exhibit. In conclusion, the phenomenon of credit card debt buyer litigation warrants special attention from academics, judges, and lawyers. This phenomenon impacts thousands of lowincome Arkansans, yet leads to judgments totaling in the millions. This phenomenon challenges members of the bar to look afresh at our rules, statutes, and precedents in this unusual litigation context. This article highlights one possible fresh application of the rules related to default judgment damages in light of possible debt buyer information integrity problems and chain-of-title disclaimers. Endnotes: 1. The research contained in this article was made possible by a grant from the Bank of America Research Fund Honoring James H. Penick which was established by the First Arkansas, Bankstock Corporation, Little Rock, Arkansas, as an endowed fund of the University of Arkansas. We are grateful to research assistant Lindsay Isroff. 2. Volunteer Transport, Inc. v. House, 357 Ark. 95, 101, 162 S.W.3d 456, 460 (2004). 3. LVNV Funding, LLC v. Nardi, 2012 Ark. 460. 4. The study used information and docu-
ment hyperlinks from the Court Connect website maintained by the Arkansas Administrative Office of the Courts: https:// caseinfo.aoc.arkansas.gov/. 5. U.S. Federal Trade Comm’n, The Structure and Practices of the Debt Buying Industry (2013), available at http://www.ftc. gov/os/2013/01/debtbuyingreport.pdf. at 11–12. 6. Id. at 23. Study involved general consumer debt (credit card, medical, telecommunications and more) from July 1, 2006, to June 30, 2009. 7. This may create problems under Ark. R. Civ. P. 10. See LVNV Funding, LLC v. Nardi, 2012 Ark. 460; Cavalry SPV, LLC v. Anderson, 99 Ark. App. 309, 260 S.W.3d 331 (2007) (Rule 10(d) satisfied where plaintiff attached to complaint a credit card application with defendant’s signature and three account statements showing charges and payments made on the account, among other items); Unifund CCR Partners v. Thornton, 2013 Ark. App. 92, 2013 Ark. App. LEXIS 108. 8. Dalie Jimenez, Dirty Debts Sold Dirt Cheap, 52 Harv. J. on Legis. 41 (Winter 2015) at 49.
9. Id. at 48–55. 10. Id. at 56. 11. Id. at 55–64. See also Jeff Horwitz, Bank of America Sold Card Debt to Collectors Despite Faulty Records, Am. Banker, March 29, 2012. 12. Consent Order, In re Encore Capital Group, Inc., et. al., CFPB No. 2015-CFPB0022 (Sept. 3, 2015). 13. Id. at 7 and 8. 14. Id. at 14 and 15. 15. Consent Order, In re Portfolio Recovery Associates, LLC, CFPB No. 2015-CFPB0023 (September 8, 2015). 16. Portfolio Recovery Assoc. LLC v. Ricks, 60CV-16-3144 (Ark. Cir. Ct. Pulaski County). 17. Midland Funding LLC v. Coleman, 60CV-16-1115 (Ark. Cir. Ct. Pulaski County). 18. February 28, 2014 letter of 31 Attorneys General to Richard Cordray, Director, Bureau of Consumer Financial Protection, available at http://www.mass.gov/ago/ docs/press/2014/states-debt-collectionanpr-comment.pdf, at 5 (“Collectors have attempted to surmount their lack of debt documentation through business practices
ArkBar 23rd Annual Debtor/Creditor Law Institute March 28-29 • Little Rock such as robo-signing affidavits and through legal theories aimed at relaxing certain evidentiary standards. Collectors routinely file affidavits in support of their lawsuits that have either been robo-signed or are signed by persons who lack personal knowledge of the debt that is being collected.”). 19. Volunteer Transport, Inc. v. House, 357 Ark. 95, 99, 162 S.W.3d 456, 458 (2004) (citations omitted). 20. John J. Watkins, Revised Rule 55, Five Years Later, 49 Ark. L. Rev. 23, 56 (1996) (citations omitted). 21. Miller v. Transamerica Commercial Finance Corporation, 74 Ark. App. 237, 47 S.W.3d 288 (2001) (involving a suit by an original creditor, not a debt buyer, on a secured debt).
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ArkBar MARCH 2019 CLE Roll into the 2019 CLE Season with some Spring Classics: • Digital Client Communication Webinar • Adverse Childhood Experiences Webinar • 58th Annual Natural Resources Institute • 42nd Annual Labor & Employment Law Conference • 23rd Annual Debtor/ Creditor Law Conference • Ethics & Social Media Webinar
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ArkBar News Report from the December 2018 Board of Governors and 2019 House of Delegates Special and Mid-Year Meetings By Karen K. Hutchins
The Association’s Board of Governors met in December at the Arkansas Bar Center in Little Rock. Chair Cliff McKinney called the meeting to order. Secretary Hoggard certified to the Board the election of Paul Keith of District C as the Association’s President-Elect Designee. Mr. Keith will advance to the office of President-Elect at the end of our Annual Meeting this June. The Chair of the Association’s Professional Ethics Committee, Brad Hendricks, presented proposed changes to the Rules of Professional Responsibility 7.1–7.3. The Board voted to recommend that the House of Delegates support the adoption of the proposed changes. ArkBar Political Action Committee (PAC) Chair, Brent Eubanks, presented a proposed amendment to the PAC’s By-Laws that permits the PAC to expend funds to support the legislative efforts of the Association’s lobbyist. The Board approved the changes as presented. Executive Director Hutchins presented a report on the development of payment options for membership dues. Additionally, she introduced new staff members: Jay Robbins, Director of Government Relations, and Jennifer Jones, Meetings and Membership Director. Mr. Robbins reported on the Association’s lobbying activities and preparations for the 2019 General Assembly. President Clark requested that the Board delay the final report of the Redistricting Task Force until the Association finalizes their decision on the Strategic Governance Task Force’s recommended governance structure. The Board voted to approve. President Clark recommended the creation of the Engagement Task Force and the Revenue Task Force. Greg Northen will chair the Engagement Task Force which will focus on communication of mem-
ber involvement opportunities while Past President Charlie Harwell will chair the Revenue Task Force that will focus on additional revenue-generating programs and opportunities for the Association. The Board approved the creation of both task forces. President Clark reported that BXS Insurance would begin January 1 as the Association’s broker for lawyer’s professional liability insurance. Additionally, BXS will offer members options on additional types of insurance including court bonds, cyber security and business overhead policy options. President-Elect Brian Rosenthal recommended the Association create a Public Service Academy in partnership with the Clinton School of Public Service. The Board voted to approve. Treasurer Kolb presented the Finance Committee Report; Governor Kandice Bell presented the Member Benefits Committee Report; Continuing Legal Education (CLE) Committee Chair Lori Howard reported on the wide variety of CLE activities; and Young Lawyers Section (YLS) Chair, Governor Sarah Jewell, presented a report on upcoming projects and activities of the YLS Section. Mock Trial Committee Chair Anthony McMullen presented a report on the committee’s effort to change the competition format to three regional competitions culminating in a state tournament. The Board of Governors will hold their next meeting on April 26–27, 2019, at the Winthrop Rockefeller Institute on Petit Jean Mountain. President Clark called a special meeting of the House of Delegates on January 4, 2019, to consider the Association’s Jurisprudence and Law Reform Committee’s proposed legislation for inclusion in the Association’s legislative package that addresses transparency in independent expenditures in
appellate judicial elections. President Clark noted that House of Delegates approval is required for any legislation offered by the Association. Jurisprudence and Law Reform Committee Chair Paul Keith explained the proposed legislation, the need for the legislative reform, and the efforts made by the Committee to draft legislation that would pass Constitutional review. Upon motion and vote the proposed legislation was adopted and made a part of the Association’s legislative package. The regularly scheduled Mid-Year meeting of the House of Delegates was held on February 8, 2019. The House heard several reports but was prevented from taking any action due to a lack of quorum. Chair of the Strategic Governance Task Force, Past President Eddie Walker, reported on the extensive work of the group and the consultants over the past year. The Task Force reached a consensus that a new governance structure is needed to create efficiency and agility. The final package of recommendations of the Task Force will be posted on the Arkansas Bar Association website and feedback will be solicited from the full membership. It is anticipated the final resolution will be presented to the House of Delegates at their June 14, 2019, meeting in Hot Springs during the Association’s Annual Meeting.
Karen K. Hutchins, J.D., CAE, is the Executive Director of the Arkansas Bar Association.
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Social Determinants of Health and the Law: Municipalities’ Supersonic Water Billing Cycles Endanger Arkansans’ Health
By Dr. Frankie Griffin, M.D., J.D.
I
Dr. Frankie M. Griffin, M.D., J.D., teaches health law and policy at the University of Arkansas School of Law and also does some private medical-legal consulting work.
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magine arriving home from Arkansas Children’s Hospital (ACH) on a Saturday afternoon with your child fresh from a major heart surgery requiring access to water for urgent hydration, postoperative wound care, and toileting, only to find that your family’s water had been shut off without your knowledge while you were at ACH with your child—even though you had paid your last water bill less than 30 days ago; this happened to a friend of mine a few years ago. In a recent collaborative study, we found that almost one in four Arkansans (24%) recovering from orthopedic injuries “fear[ed] losing my utilities like . . . water due to my health.”1 One easily remediable reason that Arkansas patients may fear loss of water service is because many Arkansas municipalities use billing cycles that allow less than 30 days from mailing the first bill to shut-off of water service for non-payment—a billing cycle termed “supersonic” in this article due to the speed demanded for compliance with the billing cycle. In fact, billing cycles shorter than 22 days are fairly common among Arkansas municipalities, and at least one municipality only allows 10 days from mailing the bill to shut-off for non-payment.2 Supersonic billing cycles fail to allow adequate mail time and predictably lead to water deprivation without effective notice. Aggressive billing practices involving a vital resource like water place patrons at foreseeable health risk and make municipalities susceptible to lawsuit for violating basic due process principles and for discriminating against vulnerable populations making them pay unfair exactions while depriving them of water without notice. City attorneys should consider steering municipalities toward more reasonable billing cycles allowing adequate time for proper due process to avoid erroneous water deprivation of patrons, and state legislators should look for ways to ensure that all Arkansans receive due process, receive notice, and have at least 30 to 45 days from the time the first bill is mailed by the municipality to pay water bills before they are deprived of water.
“Supersonic billing cycles fail to allow adequate mail time and predictably lead to water deprivation without effective notice. Aggressive billing practices involving a vital resource like water place patrons at foreseeable health risk and make municipalities susceptible to lawsuit for violating basic due process principles and for discriminating against vulnerable populations making them pay unfair exactions while depriving them of water without notice.”
Unexpected Water Deprivation is Dangerous Water is vital to health. Deprivation of water without notice can lead to dangerous health consequences. According to the Centers for Disease Control (CDC), “basic water and sanitation services are important to overall health”; “[h]aving in-home running water and flush[ing] toilets helps to keep people healthy” and reduces “the spread of infectious diseases.3 Lack of running water is associated with respiratory illnesses, skin infections, severe bacterial infections (including sepsis and meningitis), and dental cavities—all of which can negatively impact recovery from injuries/diseases.4 Further, unexpected, short-term shut-off of water can endanger the health of people dealing with chronic illness, overall poor health, recent illness, or dehydration related to heat, work, or exercise. The U.S. Supreme Court noted that “indeed the discontinuance of water . . . for even short periods of time may threaten health and safety.”5 Elderly populations and people with chronic illnesses like diabetes, kidney failure, and heart disease can develop life-altering complications quickly from water deprivation.6 Patients arriving home from the hospital in a vulnerable state after a major surgery or illness can suffer significant complications from water deprivation related to dehydration, poor wound care, and unsanitary toileting. For small children experiencing
extremely high fevers, lukewarm sponge baths might be recommended by the child’s physician to help control the fever but this would be unavailable during an unexpected shut-off.7 Acute water intake during short term illnesses involving fluid loss—like the flu, diarrhea, vomiting, etc.—can also be vital to recovery. In addition, people arriving home from a long day in the heat (e.g., a teenage athlete during football “two-a-days,” a farm worker, a highway worker, etc.) can be placed at immediate risk by unexpected water deprivation.8 While recovering from some illnesses, patrons may not be in a physical condition conducive to fast administrative resolution of a sudden and unexpected crisis created by deprivation of water without notice. In other words, the patron may not be in condition to go immediately to the water department to remedy the unexpected shut-off—potentially leading to even worsening complications and problems. If the shut-off is not discovered until after business hours, immediate resolution may not even be possible in some situations. Therefore, foreseeable negative health consequences can occur.9 Supersonic Water Billing Cycles Deny Due Process Due process is a fundamental principle of a free society.10 Due process is vitally important in denying life-sustaining services such
as water. It also reflects common decency. The Fourteenth Amendment forbids government from depriving any person of life, liberty or property without due process of law.11 Procedurally, the government is generally required to provide a person with notice and an opportunity to be heard prior to depriving that person of a property or liberty interest.12 Expectation of water services will usually rise to the level of a “legitimate claim of entitlement” implicating a property interest, so that municipalities are generally constitutionally obligated to provide procedural due process to patrons prior to depriving them of water services.13 Government water utilities generally must provide notice to customers prior to shut-off that is “reasonably calculated” to give patrons an “opportunity to present their objections” prior to termination of water services.14 “Due process require[s] that municipal utilit[ies provide] . . . customers with some administrative procedure for entertaining customer complaints prior to termination of services, in order to afford reasonable assurance against erroneous or arbitrary withholding of essential services.”15 Supersonic billing cycles are not reasonably calculated to prevent erroneous deprivation of vital water services, and therefore, place government water utilities with short billing cycles at risk for liability when damages occur as a result. Ten-day to 22-day billing cycles are simply too short to reasonably
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allow for (1) mailing time for the first bill to arrive, (2) mailing time for payment to be returned, (3) mailing time for receipt of effective notice if payment is not received, and (4) a fair opportunity for resolution of any dispute prior to shut-off. Some municipalities must mail shut-off notices within a few days of mailing the first bill, so that payment and shut-off notice frequently cross in the mail—making notice ineffective because the patron reasonably assumes the payment and shut-off notice simply “crossed in the mail” as usual due to the supersonic cycle. A few Arkansas municipalities reportedly do not even mail notices or otherwise provide notice prior to water shut-off. Mail service timing should be included in municipalities’ “reasonable calculations.” Mail service predictably does not always move fast enough to accommodate supersonic billing cycles. A quick search of several Arkansas water utilities’ websites reveals that they are aware of the limitations of mail service and even include warnings that “it can take 7 to 10 days for us to receive [your] check.”16 If it can take 10 days to receive the patron’s check, then it can also take 10 days for the patron to receive the bill in the first place. Thus, predictably, if a patron’s bill is mailed on the 1st day of the month, she may not receive the bill until the 11th day of the month. Assuming the patron is not in the hospital for a few days or away on vacation, even if the patron pays the bill the next day on the 12th, the water department may not receive the payment until 10 days later on the 22nd—which is too late to avoid shut-off in a substantial number of Arkansas municipalities. Further, mail is sometimes lost or misdelivered. While the exact percentage of lost mail is not reported (and potentially unknowable), personal experience dictates that a significant amount of mail addressed to other people ends up in the author’s mail box suggesting that the percentage of delayed or lost mail is not insignificant.17 Water bills, often printed on small postcards, may be even more prone to being lost or mis-delivered in the mail because small postcards may slip into other packages, magazines, etc. At any rate, municipalities should allow adequate time that is “reasonably calculated” to give patrons an opportunity to clear up a lost bill and handle foreseeable mail delays prior to water deprivation. In addition, policies should be reasonably calculated to provide the patron with effective notice that shut-off is imminent 42
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and an opportunity to resolve any billing disputes prior to water deprivation. Supersonic Billing Cycles May Discriminate Against Protected Populations Punitive policies that penalize patrons financially (with fines or fees) and deprive them of water based upon their race, age, or socioeconomic status may also place municipalities at risk—especially if statistics show that vulnerable populations are more likely to be fined or have their water disconnected. There are several reasons why supersonic billing cycles may be discriminatory. Some municipalities may argue that patrons can simply sign up for automatic bank drafting or online billing to address the issues created by their supersonic billing cycle; however, automatic bank drafting requires the patron to have a large enough bank balance to accommodate an unknown debit amount each month prior to review, and online payment requires computer and internet access—and sometimes tacks on an additional processing fee. Supersonic billing cycles that necessitate automatic bank drafting or online bill payment may disparately impact racial and ethnic minorities, the poor, and the aged—leading to discrimination. For example, under Title VI disparate impact discrimination is defined as “policies or practices that may be neutral on their face but have the effect of discriminating on the basis of race, color, or national origin.”18 Additional legal theories may apply to the aged and the poor. First, policies that effectively require automatic bank drafting to meet supersonic billing cycles potentially discriminate against people living in poverty. In Arkansas, only 12% of whites live in poverty, compared to 29% of African Americans and 25% of Hispanics—so racial and ethnic minorities may be disparately impacted by policies that disfavor the impoverished.19 People living in poverty may be living “paycheck to paycheck,” and automatic bank drafting may simply not work with their pay schedules and cash flow concerns. Further, automatic bank drafting does not give the patrons an opportunity to review and “present their objections” to a variable water bill (varies from month to month) or an administrative procedure to prevent arbitrary or erroneous billing—so patrons may have legitimate due process concerns with the practice.20 Second, policies that effectively require the
patron to sign up for online billing or face frequent penalties and water deprivation without notice may also be discriminatory because racial and ethnic minorities and the aged are less likely to have access to computers and the internet. The U.S. Census Bureau found that only 80.1% of black households had a computer compared to 88% of white households.21 Further, only 64.9% of black households had any internet subscription versus 79.9% of white households.22 The Census Bureau noted “households with a Black householder were the least likely to own or use each type of computer or to have a broadband subscription.”23 In addition to discriminating against minorities, age and socioeconomic status discrimination may come into play with effectively requiring online bill pay. The Census Bureau found that both computer and internet availability increased with socioeconomic status.24 Specifically, the Census Bureau found that only 62% of Americans had “high connectivity,” meaning they had a desktop or laptop, a handheld computer or smartphone, and a broadband internet connection—more commonly available in households with a householder under 65 years of age and with incomes over $150,000; thus, essentially mandatory online bill pay may disparately impact those in lower socioeconomic statuses and the elderly.25 In 2018, only 66% of people over 65 years of age used the internet26—meaning 34% effectively do not have access to online billing as an option. Age discrimination can be problematic for government entities like municipalities. A complete discussion of the civil rights implications of supersonic billing policies that disparately impact people based upon age, socioeconomic status, and race/ethnicity is beyond the scope of this article. However, municipality water billing policies that punish people in protected or vulnerable categories disproportionately by making them pay fines or by shutting off their water may land the municipality in hot water over disparate impact of their policies. Conclusion Arkansas municipalities’ use of supersonic billing cycles leading to unexpected shut-off of water to patrons is dangerous to the health of vulnerable Arkansans. Such policies run afoul of the Due Process Clause. Further, such policies—where they basically force patrons to adopt internet billing or automatic
bank drafting—likely lead to discriminatory practices against racial and ethnic minorities, as well as promote age-based discrimination and discrimination based on socioeconomic status. City attorneys and municipalities should be aware of the legal risks associated with supersonic billing cycles and the negative health impact such policies have on Arkansans. The state legislature should find ways to require municipalities to have billing cycles no shorter than 30 to 45 days before shut-off or penalty. Endnotes: 1. Frank Griffin, M.D., J.D.; Ashleigh Giovannini; Jay O. Howe, J.D.; Angie Doss, J.D.; C. Lowry Barnes, M.D., The Law and Social Determinants of Health: A Clinical Study of Orthopedic Outpatients, J. Health and Biomedical Law (forthcoming Spring 2019) (201 orthopedic outpatient clinic patients were administered a survey assessing social/ legal needs during June 2018). 2. Based upon review of multiple Arkansas municipal water suppliers, more than half appear to have policies in place that lead to fines, penalties, and/or shut-off within 30 days of mailing the first bill. Therefore, no particular municipality is singled out in this article. 3. Centers for Disease Control and Prevention (CDC), Division of Preparedness and Emerging Infections, Water and Sanitation, available at https://www.cdc.gov/ ncezid/dpei/aip/water-sanitation.html. 4. Id. 5. Memphis Light, Gas and Water Division v. Craft, 98 S. Ct. 1554, 1562 (1978). 6. National Kidney Foundation, Can dehydration affect your kidneys?, available at https://www.kidney.org/newsletter/ can-dehydration-affect-your-kidneys (last visited November 3, 2018); American Heart Association, Staying hydrated, staying healthy, available at http://www.heart. org/en/healthy-living/fitness/fitness-basics/ staying-hydrated-staying-healthy (last visited November 3, 2018); Centers for Disease Control, Water and Nutrition, available at https://www.cdc.gov/healthywater/drinking/ nutrition/index.html (last visited November 3, 2018); Harvard Health Topics A-Z on Drugs.com, Diabetic Ketoacidosis, available at https://www.drugs.com/health-guide/ diabetic-ketoacidosis.html (last visited November 3, 2018). 7. WebMD, Treating fever in children, available at https://www.webmd.com/first-aid/
fever-in-children-treatment#1 (last visited on November 4, 2018). 8. CDC, Heat Stress, Hydration, https:// www.cdc.gov/niosh/mining/UserFiles/ works/pdfs/2017-126.pdf (noting, “Drinking enough fluids is one of the most important things you can do to prevent heat illness.”); see also, CDC, Tips to prevent heatrelated illness, https://www.cdc.gov/disasters/ extremeheat/heattips.html. 9. Even where compassionate policies may be in place for people with special needs, if the water is shut off before the patron is aware of the problem (i.e., without effective notice), these policies are ineffective in preventing sudden, short-term, unexpected water deprivation to vulnerable Arkansans. 10. Library of Congress, Magna Carta: Muse and Mentor: Due Process of Law, available at https://www.loc.gov/exhibits/ magna-carta-muse-and-mentor/due-process-of-law.html (last visited November 4, 2018) (noting that “[d]ue process of law is a constitutional guarantee that prevents governments from impacting citizens in an abusive way.”). 11. U.S. Const. amend. 14. 12. Warren v. City of Athens, Ohio, 411 F.3d 697, 708 (6th Cir. 2005) (noting, “Procedural due process generally requires that the state provide a person with notice and an opportunity to be heard before depriving that person of a property or liberty interest.”). 13. Memphis Light, Gas and Water, supra note 5 (noting the expectation of utility services may rise to the level of a property interest protected by the Due Process Clause). 14. Memphis Light, Gas and Water, supra note 5 (quoting Mulane v. Center Hanover Trust Co., 339 U.S. 306, 314 (1950) (“An elementary and fundamental requirement of due process in any proceeding which is to be accorded finality is notice reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections.”) (emphasis added)). 15. Id. at 1565. 16. Again, this article is not singling out any particular water department; this admonition was present on more than one municipality water supplier’s website. 17. Reference.com, What is the percentage of lost standard mail?, available at https:// www.reference.com/business-finance/ percentage-lost-standard-usps-mail-
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839882afe0b991dd (noting that around 4.7% of mail was undeliverable as addressed in 2010, and the amount of mail lost is not reported and likely unknowable). 18. Institute of Medicine of the National Academies (IOM), Unequal Treatment: Confronting racial and ethnic disparities in health care, The National Academies Press 638 (2003), available at www.nap.edu; Alexander v. Sandoval, 532 U.S. 275 (2001). 19. Kaiser Family Foundation, State Health Facts: Poverty Rate by Race/Ethnicity, available at https://www.kff.org/other/state-indicator/ poverty-rate-by-raceethnicity/?currentTimef rame=0&sortModel=%7B%22colId%22:% 22Hispanic%22,%22sort%22:%22desc%22 %7D (last visited November 4, 2018). 20. Memphis Light, Gas and Water, supra note 5. 21. United States Census Bureau, Camille Ryan and Jamie Lewis, Computer and internet use in the United States, 2015 (issued September 2017), available at https://www. census.gov/content/dam/Census/library/ publications/2017/acs/acs-37.pdf (last visited November 4, 2018). 22. Id. 23. Id. 24. Id. 25. Id. 26. Pew Research Center, Internet and Technology: Internet and broadband fact sheet, available at http://www.pewinternet.org/ fact-sheet/internet-broadband/ (last visited November 4, 2018).
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Sovereign Immunity: Holford Bonds, the Brooks-Baxter War, and the Constitutional Convention of 18741
By Mark H. Allison
O
Mark Allison is a member at Dover Dixon Horne PLLC and represents clients in a range of environmental, energy and commercial matters. 44
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n January 18, 2018, in Board of Trustees, Univ. of Arkansas v. Andrews,2 the Arkansas Supreme Court dismissed a complaint by a former state employee for overtime pay under the Arkansas Minimum Wage Act. Reversing years of precedent, the Court held that the Arkansas Legislature could not waive the state’s sovereign immunity under Article 5, Section 20 of the 1874 Arkansas Constitution which states: “The State of Arkansas shall never be made a Defendant in any of her Courts.” The Court observed that the previous 1868 Constitution allowed the legislature to waive sovereign immunity; thus, the 1874 Constitution meant what it said. However, a deeper look reveals that all four of the previous constitutions (1836,3 1861,4 18645 and 18686) allowed legislative waiver of sovereign immunity. This raises the question— What happened in 1874? Others have written about the Court’s application of sovereign immunity under the 1874 Constitution, as well as predictions about the future of the doctrine.7 This article, however, briefly explores some of the reasons why the 1874 Constitutional Convention eliminated the legislature’s power to waive sovereign immunity, and concludes that Article 5, Section 20 was part of a package of reforms intended to save the State from bankruptcy. As Delegate J. W. House said at the outset of the Convention, the purpose of the assembled delegates was “to set a new policy for the State and inspire our people with a new hope and confidence.”8 We begin in 1836. The 1836 Constitution, which allowed Arkansas to gain admission to the Union, planted one of the seeds that led to the reforms in the 1874 Convention. Article 7 authorized two state banks—the Arkansas State Bank and the Arkansas Real Estate Bank. Both were promptly formed, and both issued bonds backed by the state’s credit. Within a year the Arkansas Real Estate Bank was already failing and faced charges of waste and favoritism. A tragic episode in this tale was the fatal stabbing in 1837 on the floor of the House of Rep. Joseph Anthony, a bank critic, by House Speaker John Wilson, who also was president of the Real Estate Bank.9 By 1840, the Real Estate Bank had to issue additional bonds that ultimately were pledged to James Holford & Co. of London.10 These
bonds became known as “Holford Bonds,” and several lawsuits were brought against the state over the next decades to collect on these bonds.11 In 1846, the Constitution was amended to prohibit the establishment of banks altogether.12 While litigation over the Holford Bonds continued, the 1860s were marked by the Civil War and Reconstruction, resulting in four constitutions in just 13 years. Reconstruction in Arkansas saw a tenfold increase in education spending, and new efforts to attract and promote industry.13 Arkansas also joined the railroad craze. Between 1868 and 1874, 86 railroad companies were chartered, 662 miles of track were laid, and $9 million in railroad bonds and $1.8 million in levee bonds were issued, all backed by the state’s credit.14 These undertakings were supported mainly by the state property tax. From 1860 to 1870, state, county and local taxes quadrupled, from $635,393 to $2,866,890.15 In 1868, the legislature increased the property tax rate to 1.425%, compared to 0.166% before the war.16 Yet, this was not sufficient to support the state’s debt. By 1874, state debt—including the Holford Bonds, the railroad bonds, and the levee bonds—was estimated to be $25,000,000.17 Of this, $18,000,000 was disputed.18 With a property tax base of just $104,000,000, annual state tax revenue was just over $1,000,000. Payments on the state debt were approximately $850,000 per year, leaving just $150,000 to fund the state government.19 Extrapolated to today, based on 2017 state revenue of $5.5 billion, the state’s debt would be approximately $137.5 billion. Another feature of Reconstruction was the prohibition of former Confederates—mainly Democrats—from participation in state government. The 1870s saw the return of these Democrats to positions of power. In the 1872 elections, Democrats aligned with national liberal Republicans to support Horace Greeley for president and Joseph Brooks for governor. On the other side, the regular Republicans supported Ulysses S. Grant for president and Elisha Baxter for governor.20 Both sides claimed victory in the governor’s race; however, Baxter was certified as governor, and took office fearing that the Brooks forces would establish a rival government. In the spring of 1873, disenfranchisement ended, and Baxter began appointing some Democrats to state offices to the dismay of his regular Republican supporters. Baxter also opposed another railroad bond bill in the legislature, again against the wishes of regular Republicans, and joined in calls for a new constitution.21
In June 1873, the Brooks forces filed a petition with the Arkansas Supreme Court challenging Baxter’s claim to the governor’s office; however, the Court held that the Constitution (1868) did not give it jurisdiction to remove the governor.22 Shortly afterwards, the Brooks forces filed another lawsuit in the Pulaski County Circuit Court to recover Baxter’s salary as governor. In April 1874, contrary to the Supreme Court’s holding, the circuit court decided that it did have jurisdiction and issued a writ recognizing Brooks as governor. The sheriff delivered the writ and Baxter was removed from the State House. The Brooks forces seized the state armory and distributed arms, while Baxter set up new headquarters east of the State House. Both sides appealed to President Grant, who directed that federal troops not get involved unless civil war broke out.23 By early May, skirmishes between the two sides broke out around Little Rock. Although negotiations had proceeded to call a legislative session to resolve the election dispute, Baxter issued his own call for the legislature to meet at his headquarters. On May 13, a quorum of the legislature assembled, and on May 15, President Grant recognized Baxter as governor. The Brooks-Baxter war ended, and the next day, the legislature called for a constitutional convention. Six weeks later voters approved the convention call by a 10 to 1 margin.24 The convention met in Little Rock from July 14 to September 7, 1874. Seventy-nine of the delegates were Democrats and 12 were Republicans. The 1874 Constitution was one of the “redeemer” constitutions adopted in several states after the Civil War, which were characterized by limited executive power, elected constitutional officers, and a return to local self-government. The Arkansas Constitution reflected these trends by limiting the governor’s appointment powers, creating a plural executive, limiting the legislature’s power to raise revenue, and providing for an elected judiciary, decentralized government, and retrenchment in the areas of taxation, education and state improvements.25 The delegates established rules for the Convention and began selecting committees to draft the various sections of the new constitution. However, from the beginning the delegates voiced concern about the financial condition of the state. On July 16, 1874, a motion was offered for the state auditor to report on “all outstanding claims and indebtedness of the State” since the liabilities of the state were “an unknown mystery” to the people.26 On
the fourth day of the Convention, delegate William Fishback offered resolutions for the State Auditor to “cease issuing any scrip, warrants, bonds or other evidence of debt” and for the State Treasurer to “suspend payment of any and all money for any purpose whatever, until otherwise ordered by this Convention.” This resolution was followed by another: During the long period in which the people of Arkansas have been under such duress, a large number of state bonds have been issued by the usurping state authorities, to wit: Of what are known as Holford Bonds $1,370,000; Of what are known as state aid railroad bonds - $5,350,000; Of levee bonds - $3,000,000 There exists no innocent holder of these bonds . . . It is the duty of this body to prevent by constitutional provision any subsequent legislation from ever levying a tax or making an appropriation for the payment of either the principal or interest of the same or any part thereof.27 Fishback was elected U.S. senator in 1864, but by the 1870s, he had become a Democrat, and served as chair of the Finance Committee during the 1874 Convention. He was elected governor in 1893. Ultimately, Fishback became known as the “Great Repudiator” and was successful in passing Amendment 1 to the 1874 Constitution, now codified as Article 20, which prohibited the State from repaying the Holford, railroad and levee bonds.28 On the fifth day, Delegate J. W. House offered the following resolution: Our state credit has been much impaired and her people bankrupt in consequence of the enormous taxes heaped upon them . . . The financial condition of the state is involved in much doubt and uncertainty in consequence of the vast amount of railroad aid bonds and levee bonds having been issued upon the part of the state within the last few years . . . Our future prosperity, in a great measure, depends upon the financial policy that may be adopted by this convention, that it is highly important that our state credit should be sustained, and our people inspired with new hope and confidence.
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Resolved that the judiciary committee examine the constitutionality of the railroad aid bond act of 1868 and the levee bond act of 1871.29 Against this backdrop, the delegates began drafting the 1874 Constitution. Fifteen committees were formed to write the various articles, such as Judiciary, Executive, and Legislative. No records of the committee work exists, and the primary record of the Convention is the Convention Journal itself, and newspaper reports.30 The final version consisted of 19 articles, including articles on the legislature (Article 5) and on finance and taxation (Article 16). The legislative article was introduced on August 6, and was debated eight days later. During the debate, a motion was introduced to strike the section prohibiting legislative waiver of sovereign immunity. As reported in the Daily Arkansas Gazette, various opinions were voiced on the provision including that the state was no different than an individual, that the “king can do no wrong,” that sovereignty rests in the people, not the legislature, that the state had recent experiences in being sued, that sovereign immunity is contrary to the bill of rights, and that only the legislature could rule on claims against the state.31 Ultimately, the motion was defeated by a vote of 21–51, and Section 20 of Article 5 remained in the Constitution as it exists today. On September 7, 1874, the enrolled constitution was adopted by a vote of 72–8. Delegate Barnes offered a statement of his reasons for voting against the constitution, including that it repudiated the state’s debt, that the limitations on the taxing power would destroy the state’s credit, that it destroyed the school system, that it subverted the rights and liberties of the people, and that it denied the Republican Party participation in state government. On October 18, 1874, the voters adopted the Constitution by a vote of 78,697 to 24,807. In the end, the 1874 Convention did not entirely repudiate the state’s debt.32 The prohibition on lawsuits against the state in Article 5, Section 20 almost certainly was a reaction to the lawsuits filed over the years to collect on the Holford Bonds. In addition to that provision, the legislature capped property taxes (Article 16, Section 8) and prohibited lending of the state’s credit “for any purpose whatever” (Article 16, Section 1); however, the legislature also was authorized from time to time to provide “for the payment of all just and legal debts of the State” (Article 16, Section 2). 46
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Conclusion In 1874, the delegates to the Constitutional Convention were faced with an overwhelming state debt, and limited ability to repay it. Although much of the debt had been incurred recently by the reconstruction governments in the 1860s, the Holford Bond debt dated from the first days of the state. The delegates acted to right the state’s financial affairs by cutting off lending of the state’s credit and prohibiting lawsuits against the state. Faced with refinancing the Holford, railroad and levee bond debt or repudiating it, the state ultimately chose repudiation through a series of constitutional provisions. Article V, Section 20 was one of those provisions. Endnotes: 1. This article is adapted from a presentation given at the Arkansas Bar Association Annual Meeting, June 13, 2018. 2. 2018 Ark. 12, 535 S.W.3d 616 (2018). 3. Ark. Const. of 1836, art. 4, § 22. 4. Ark. Const. of 1861, art. 4, § 21. 5. Ark. Const. of 1864, art. 4, § 22. 6. Ark. Const. of 1868, art. 5, § 45. 7. Burks, C., Ford, D., and Dillard, M.C., Is the Trend Back to Sovereign Immunity?, The Arkansas Lawyer, Vol. 53, No. 2, p. 14 (Spring 2018). “The Court has further expounded on sovereign immunity in cases such as Arkansas Dept. of Veterans Affairs v. Mallet, 2018 Ark. 217, 549 S.W.3d 351; Walther v. FLIS Enterprises, Inc., 2018 Ark. 64, 540 S.W.3d 264; and Arkansas Oil & Gas Commission v. Hurd, 2018 Ark. 397, 564 S.W.3d 248 (2018). 8. Daily Arkansas Gazette, Sunday, July 19, 1874, p. 4. 9. See entries for “Arkansas Real Estate Bank” and “Wilson-Anthony Duel” in the Encyclopedia of Arkansas History and Culture, available at http://www.encyclopediaofarkansas.net; Dougan, Michael B., Arkansas Odyssey, The Saga of Arkansas from Prehistoric Times to Present, p. 92 (Rose Publishing Co. 1994). See also, Wilson v. Fowler, 3 Ark. 463 (1841). 10. Dougan, Arkansas Odyssey, pp. 90–92; Blocher, W.D., History of Arkansas Finances, pp. 6–7 (Evening Star, Little Rock, 1876). 11. See, e.g., Ex Parte Conway, 4 Ark. 302 (1842); Platenius v. State, 17 Ark. 518 (1856); Beers v. Arkansas, 61 U.S. 527 (1858); President and Directors of Bank of Washington v. Arkansas, 61 U.S. 530 (1858); Whitney v. Peay, 24 Ark. 22 (1862); McCreary v. State, 27 Ark. 425 (1872); Crofton v.
State, 34 Ark 271 (1879). 12. Ark. Const. of 1836, amend. 1, Nov. 17, 1846. 13. Nunn, Walter, The Constitutional Convention of 1874, Arkansas Historical Quarterly, Vol. 27, No. 3, 177, pp. 178–179 (1968). 14. Harris, Rodney W., Arkansas’s Divided Democracy: the Making of the Constitution of 1874, pp. 113–114 (2017). Theses and Dissertations. 2446. University of Arkansas, Fayetteville. http:// scholarworks.uark.edu/etd/2446; Blocher, supra note 10, at 42–53 (Act of July 21, 1868, railroad bonds), and pp. 54–60 (Act of March 16, 1869, levee bonds). 15. Nunn, Constitutional Convention of 1874, p. 182. 16. Harris, supra note 10 at 55. 17. In 1869, the state issued $4,000,000 in new bonds to fund the old bank bonds. Blocher, supra note 10 at 37–38. 18. The Holford Bonds continued to be a sore spot because the state had received less than 25% of the face amount of the bonds. Blocher, supra note 10 at 6–7; Dougan, supra note 9 at 90–92. 19. Harris, supra note 14, at 62. 20. Woodward, Earl F., The Brooks-Baxter War in Arkansas, 1872–1874, Arkansas Historical Quarterly, Vol. 30, No. 4, p. 315, at pp. 315–316 (1971). 21. Woodward, supra note 20 at 319–323; Dougan, supra note 9 at 257–262. 22. State ex rel. Brooks v. Baxter, 28 Ark. 129 (1873). 23. Woodward, supra note 20 at 327–331. 24. Woodward, supra note 20 at 332–334; Dougan supra note 9 259–262. 25. Harris, supra note 14 at 5–8. 26. Daily Arkansas Gazette, July 17, 1874, p. 4. 27. Daily Arkansas Gazette, July 18, 1874, p. 4. 28. See entry for “Fishback, William Meade” in the Encyclopedia of Arkansas History and Culture, available at http://www.encyclopediaofarkansas.net. 29. Daily Arkansas Gazette, July 19, 1874, p. 4. 30. The Convention Journal is available on microfilm at the Arkansas History Commission. 31. Daily Arkansas Gazette, August 16, 1874, p. 1. 32. That did not occur until Amendment 1 to the Constitution in 1884.
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Evolution of Sovereign Immunity After Andrews
By Haley M. Heath The Arkansas Supreme Court issued its monumental sovereign immunity opinion in Andrews in January of 2018. Several other opinions issued later in 2018 also addressed sovereign immunity issues in Arkansas. The evolution is as follows: Board of Trustees of the University of Arkansas v. Andrews, 2018 Ark 12. In Andrews the Court held the University of Arkansas could not be sued for alleged violations of the Arkansas Minimum Wage Act, which included a legislative allowance of suits against the state. The Court ruled the General Assembly could not waive the sovereign immunity of the state from suit for financial liability given to the state by the Arkansas Constitution. The Court relied on article 5 section 20 of the Arkansas Constitution, which states, “The state of Arkansas shall never be made a defendant in any of her courts.” The Court concluded that the legislature could not waive the state’s immunity by statute. The Court stated the proper redress for claims against the state is through the Arkansas Claims Commission. Williams v. McCoy, 2018 Ark. 17. In Williams, the Court recognized the exception to sovereign immunity where the state is alleged to have acted illegally, unconstitutionally, or when a state agency refuses to do a purely ministerial action required by statute still existed, but that it had not yet been challenged after Andrews, leaving open the question of whether the exception would survive a challenge. Walther v. FLIS Enterprises, 2018 Ark. 64. In FLIS, the Court refused to allow the defendant to assert sovereign immunity as a defense for the first time on appeal. The Court concluded the issue of sovereign immunity does not implicate questions of subject-matter jurisdiction, thus it is not an issue the Court itself can insert into a 48
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lawsuit. That is, the sovereign immunity of the state is an affirmative defense and can be waived if the state elects not to plead it. Essentially, this would mean that though the General Assembly cannot waive sovereign immunity by statute, an agency or department can waive it by choice in pleadings. McClinton v. State, 2018 Ark. 116. In a concurring opinion, Justice Hart stated that Arkansas Rule of Criminal Procedure 37, which addresses criminal defendants’ rights for relief for ineffective assistance, could be unconstitutional based on Andrews. Although a concurring opinion, this sheds light on how broadly at least one justice views the breadth of the Andrews opinion. Arkansas Community Corrections v. Barnes, 2018 Ark. 122. Here, the Court reaffirmed its ruling that the Arkansas General Assembly cannot waive the state’s sovereign immunity by statute. The Court dismissed the plaintiff ’s complaint alleging discrimination by the Department of Corrections under Arkansas’ Whistle-Blower Act, as the Department was immune from suit. Arkansas Department of Veterans Affairs v. Mallett, 2018 Ark. 217. In Mallett, the Court granted the Department of Veterans Affairs’ request to dismiss the plaintiff ’s suit under the Arkansas Minimum Wage Act, noting that the provision of the Act allowing suit against the state had been declared unconstitutional in Andrews. Three justices dissented, noting that Mallett could be interpreted as doing away with FLIS’s rule that sovereign immunity is an affirmative defense rather than an issue of jurisdiction. Martin v. Haas, 2018 Ark. 283. In this case, Haas challenged the state’s adoption of voting rights’ restrictions that required a voter to present an identification when voting. The state, acting through Secretary of State Mark Martin, asserted that Haas’
attempt to enjoin the voting rights’ restrictions was barred by sovereign immunity. The Arkansas Supreme Court ruled that the sovereign immunity defense did not apply because the plaintiff was alleging that the state had engaged in acts that were illegal, unconstitutional, or ultra vires and those acts needed to be enjoined. In the words of the Court, “Because appellee ha[d] asserted that Act 633 violates qualified voters’ constitutional right to vote and seeks declaratory and injunctive relief, not money damages, this action is not subject to the asserted sovereign-immunity defense.” •Notably, Governor Hutchinson has advised state agencies not to raise the sovereign immunity defense without approval. •There are many remaining questions including whether Andrews will be extended to FOIA requests and other issues not involving financial liability of the state. There appears to be some disagreement among the justices as to whether taxpayer challenges would be barred by sovereign immunity. Yet, the majority of the divided Court appears committed to the idea that the General Assembly cannot waive sovereign immunity by statute. •Chief Justice Kemp has reminded the public in a concurrence that the voters could amend the Constitution to alter the state’s sovereign immunity.
Haley M. Heath is an attorney with Fuqua Campbell, P.A. in Little Rock.
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Lois Dale: The First Woman to Serve on the Bench in Arkansas By Judge Morris S. Arnold This article reproduces a speech the author delivered before the Arkansas Association of Women Lawyers on May 4, 2012. The account relies heavily on newspaper clippings that his grandmother, Kate Lewis Arnold, collected in family scrapbooks now deposited in the archives of the University of Central Arkansas. Mrs. Arnold was among the first women to run for statewide office in Arkansas, having been elected Democratic National Committeewoman in the 1932 primary. Photo courtesy of Lindenwood University.
T
Judge Morris S. Arnold is a judge on the United States Court of Appeals for the Eighth Circuit. 50
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he admission of large numbers of women into the legal profession over the last three or four decades is surely one of the single most significant events in the recent history of our bar. An enormous storehouse of energy and talent has been opened up and the public and the profession have benefitted greatly. Though it did not happen without some upheaval and turmoil, in the general view of things it is remarkable how swiftly the change has occurred: In my 1968 law school graduation class, there were no women at all; now, the law school student bodies are almost 50% women. For such a profound change, its pace has been and continues to be quite extraordinary. I have witnessed this transformation not just as a law student, lawyer, law professor, and judge, but in my family as well. Since 1882, when my grandfather was admitted to the Arkansas bar, at least 15 of his descendants or collateral relatives have followed in his footsteps. Five of them, I’m proud to say, have been women, which is an excellent record, especially since the number of women lawyers, even as recently as 30 years ago, was relatively small. What is more, all five of the last five family members admitted were women, so they bid fair to overtake the men in numbers and have blitzed them entirely in recent years. I thought that today would be a good time to turn the clock back briefly and talk about one of the first women called to the Arkansas Bar, partly because it was exactly 100 years ago this year that a woman first graduated from an Arkansas law school. Her name was Erle Chambers and she was in the class of 1912 of the Law Department of the University of Arkansas, which was located here in Little Rock. But I want to concentrate on a woman named Lois Dale, who was born in Arkadelphia in 1889 and moved to Texarkana in 1902. The Daily Texarkanian of 25 Jan. 1922 noted that “one of the most elaborate receptions of the entire social season took place yesterday afternoon at the house of Mrs. John R. Dale” when she and her daughter, Miss Lois Dale, entertained their houseguests, one of whom was “Mrs. William H. Arnold, Jr., a beautiful and popular bride who is being welcomed in Texarkana’s social circles.” The newspaper reporter then expatiated on the venue: “The Dale House is perhaps the most ideally appointed of all the homes of the city for entertaining ... The spaciousness of the home permitted the most effective grouping of the large
handsomely gowned houseparty ... The great hall with its mammoth fireplace which is one of the charming features of the home was most artistic with branches of red haw and oriental draperies making a quaint Japanese setting. The music room and library were beautified with quantities of Russell roses.” Sixty guests, all women, including my great-grandmother, grandmother, and aunts, attended. The new bride who was honored was my Aunt Grace, just married to my Uncle, William Arnold. Obviously, the Dales and the Arnolds were good friends. They lived within a block or two of each other on Texarkana’s east side, which is to say, in Arkansas. Dr. John R. Dale, Lois’s father, was the city’s most prominent physician and owned a hospital called Dale Sanatorium; my Uncle William was a lawyer practicing with his brother and father, the latter having been an attorney in Texarkana since 1883 and having served as mayor in 1894–96. Well, so what? Apart from revealing a rather surprising level of civilization for a south Arkansas town not yet even 50 years old, what is the possible relevance of this story to you? The backstory will begin to reveal why this little tableau gave me more than a small frisson when I first read it in my grandmother’s scrapbook. The first relevant datum is that the hostess, Miss Lois Dale, scion of the bourgeois Dales, was also Texarkana’s first female lawyer. She was a 1909 graduate of Lindenwood College in St. Charles, MO, by then already a very old and distinguished school for women. She had graduated from Tulane Law School in 1920 (the year women got the vote in federal elections and only three years after women were eligible for admission to the bar of Arkansas) and was admitted to the Arkansas bar that year. Only three women had been admitted previously. She had of course created a kind of sensation in town, and the Texarkana bar was trying to come to terms with the innovation. Not long after Lois was admitted, four federal judges were honored with a dinner at a Texarkana hotel at which my grandfather gave a talk about the federal judiciary. Judge Kimbrough Stone of the Eighth Circuit acknowledged the presence of the city’s only woman at the bar and exuded: “There is a very fine place in the law for a woman. They are able to touch so many phases of life dealing with women’s sphere, and rights, and especially of children. A much better insight into cases where women and children are involved is had by a woman; much more so than a man!” Judge Stone was warming to his subject. “I have,” he con-
tinued, “been in many cases where money and property were at issue concerning women and children, and I realize that a man often cannot realize what it means to take a child from its mother.” He concluded, “We have women in our bar in Kansas City, and I think it splendid to have so fine a representative woman in your Texarkana bar.” While Judge Stone intended to be complimentary in his remarks, and in fact many women’s groups that had pushed for the admission of women to the bar made arguments similar to his, those constructions sometimes had a way of restricting women lawyers’ opportunities to domestic relations cases. Dale herself, however, according to an interview in a Texarkana newspaper in 1920, said that she “did not plan to specialize, but like the businesswoman one expects she is, says that she is going to accept all that comes her way.” The Four States Press, a Texarkana daily newspaper, gave her a polite and enthusiastic reception when she opened her practice. In a story headlined, “Woman Lawyer Hangs Out Her Shingle Here,” the paper noted that she was one of only two women at Tulane Law School when she entered it and the only woman in her graduating class. She was “alone in her femininity save for the sturdy strength of a middle-aged woman who had also had the temerity to beard Blackstone in his den.” Now, the paper said, “The slender little brown-eyed woman has become a conqueror and bears her laurels in the form of a portentous looking document.” She had earned the esteem of her law school colleagues. In explaining why Dale went to law school, the paper noted that Dale had become “one of the popular girls of the younger social set upon graduation from college,” but this was not enough for her: “Society,” the article opined, “must pall sooner or later upon anyone save the fluffy-brained and it was inescapable that Miss Dale would not be content with merely dancing, so, as she says, ‘I had to decide upon some kind of profession. I like some aspects of medicine, but the Dale family is already pretty well represented there, and so I took that on which I thought I would best succeed.’” The second relevant datum has to do with my Uncle William—whose new bride, remember, was the honoree at the elaborate shindig at the Dales’ that I described at the beginning. He had gone to Exeter and Harvard, became a Rhodes Scholar, graduated from Oxford, returned to Texarkana, and became a member of the bar just before Lois Dale did. So while you might have thought that Miss Dale was the most exotic duck in
town in 1920, you can now see that there were two of them, birds of a feather if ever there were any. So, of course, they opened a law office together. Probably they had been friends as children; they certainly had known each other well, as they had lived around the corner from each other for 20 years and their mothers were involved in the women’s club movement together. In any event, they must have cut quite a figure on Texarkana’s Broad Street in 1920, the Oxford dude and the lady lawyer (you know they called her that), two very conspicuous young Progressives. And so when Uncle William got married, it was only natural that his friend and former law partner, Lois Dale, would have thrown a party for his bride. I want to pause here and wonder if I can take credit for my family having perhaps been the first to take a woman partner into the practice of law in south Arkansas, maybe in the state. But perhaps it’s Lois Dale who deserves credit for taking a man into her practice. Anyway, what I have so far revealed is not even the beginning of the wonder of Miss Dale’s tale, for it seems that she had political ambitions and perhaps had harbored them for some time. Remember, as I said, women got the vote in national elections the very year that she graduated from law school. There was enormous ferment and agitation for women’s equality at the time and women with sufficient courage began to seek office in some numbers. Exactly when Lois Dale purposed in her heart to run for office does not appear. But she was certainly suspected of harboring political ambitions as soon as she hung her shingle out. The Four States Press interview I mentioned earlier remarked elliptically that “with the future all before her, Miss Dale looked a bit wise [i.e., coy, cautious] when it was prophesied that one day she might be the choice of the people for some high post, but she was quick to grasp possibilities and then and there asked for a vote.” In other words, she wouldn’t say she was running but asked her interviewer if he would vote for her! Anyway, only three months after the reception she gave for Uncle William’s wife, Lois Dale announced her candidacy for the Democratic nomination for state senator. A local newspaper crooned that Lois was the only woman lawyer in Miller County, “and as far as we know the only woman in south Arkansas ever to be licensed” (which was wrong). The paper reported approvingly that Lois had been endorsed by the Association of Women Voters of Texarkana, the Miller County
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League of Women Voters, and the local chapter of the Business and Professional Women’s Club. Perhaps the big party Lois had thrown was for testing the waters among Texarkana’s elite women or solidifying their support. Lois’s political news was all quite exciting, but here’s the rub: the candidate against whom Lois had announced was none other than Uncle William’s brother, David! David’s wife had of course been among the guests at the party. Well, this may have put Uncle William in a fine pickle, but we’ll leave him behind now and take up the saga of David against Lois. David was state representative at the time, a lawyer, and was very popular. In fact, my brother, Richard, always said that Uncle David was the only Arnold anyone ever really liked. David had lost his first bid for state representative four years earlier at the age of 21 by only 25 votes, but he won the seat the next time out and was now very firmly established. He wanted to move up to the Senate. The Daily Texarkanian received Dale’s announcement with a noticeable enthusiasm. In fact, it plumped vigorously for her. It said that her decision “required courage and confidence, but Miss Dale has these qualities which everyone admires.” Attitudes toward class and gender were evident in this editorial. The writer adverted to the commonplace that a woman deserved the same consideration as a man, but then went beyond that: “With a woman,” the editorialist maintained, “the aspiration more often springs from sincere patriotism than with men, for with her the chief motive is a desire to serve and to win the honor of capable service. Then, too, the finer sense of integrity in public service is firmer and more highly developed [in women] than with most men.” Remarkably, the editorial proceeded to assert that “women as a class stand for the right, regardless of personal interest, more than do men.” This was a claim, by the way, that women’s groups promoting women’s admission to the bar sometimes advanced themselves. It was related to the argument that women were the selfless, moral guardians of hearth and home, so it had both a limiting and a liberating face. There was more: “Miss Dale is a young woman of rare attainments,” the writer rhapsodized. “She is of one of the best families in the state. Her character, her social and religious standing is of the highest order. There has never been a blemish upon it. Of her there has never been a breath of unfavorable criticism uttered.” And then Dale’s longstanding ambition, hinted at earlier, was made explicit: “Miss Dale has been persistently importuned 52
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David C. Arnold by many friends, including many lawyers and leading men, to offer for this office. For many months, and long before any other candidate announced [a reference here to David], she has deliberated seriously and carefully over the matter before definitely taking the step.” Dale was obviously off to an excellent start with important women’s groups and a daily newspaper solidly behind her. In a political advertisement in that paper titled, “Miss Dale Leads in Senatorial Race,” she wisely made no claim, as the paper had, about the special or superior competence of women, being content to say merely that “if you believe a woman is as much entitled to political honors as a man, and her intelligence and capabilities are of the highest order, vote for Miss Dale.” She stumped the hustings with all of the other candidates for office, but I have not yet discovered any report of what she had to say. There’s no way to sugarcoat this, so I’ll just give it to you straight: Despite the confidence of her prediction that she would win, and the obvious enthusiasm that many had for her, Lois Dale lost. The vote revealed an interesting split: She won the city by a small margin but came up way short in the country. David won without a run-off, carrying his home county with 57% of the vote; Dale took 35%. But the Daily Texarkanian took up Dale’s cause yet again post-election and praised her effusively in a piece called “Miss Dale’s Splendid Race.” “Miss Lois Dale,” it said, “is being highly complimented on the remarkable strength she developed in the recent political race... Being the first woman ever to offer for a high office in this section, she was confronted with the widespread prejudice against a woman seeking public office. This was especially strong in
the country precincts.” In other words, rural voters had triumphed over the progressive cosmopolites in the metropole. Dale, though, was far from through. She soon got a job as a juvenile probation officer, where she served about a year. In 1923, Governor Tom McRae appointed her to fill a vacancy in the judgeship in the County and Probate Court of Miller County, making her the first woman ever to sit on an Arkansas bench. I believe that in those days the County Judge was the juvenile judge; so this jurisdiction, combined with the probate work, made her judicial duties extensive and varied. When her term expired, she went to George Washington University and, in a year, earned a bachelor’s degree. When she was sworn into the United States Supreme Court bar, on March 2, 1925, she witnessed the oath of office that Harlan Fiske Stone took when he assumed his seat on that court. Mr. Justice Stone had been dean of the Columbia Law School and would in time become, as you will remember, Chief Justice of the United States. Lindenwood College soon awarded Judge Dale the first honorary doctorate in its 96 years to recognize her high achievements. In 1925, Dale returned to Texarkana where she practiced, chiefly, and for obvious reasons, in the probate area. A few years later, she retired from the practice to manage her deceased father’s estate. But she maintained her interest in the advancement of women, serving for many years as the Arkansas vice president of the National Association of Women Lawyers. She died in 1934, in her 45th year. The proceedings of the Arkansas Bar Association noted her death the following year. The obituary ended with these arresting observations: Miss Dale was a woman of marked ability and of the highest character. She was handsome in person, charming in manner, and learned in the law. She devoted herself chiefly to the practice in the Courts of Probate and Chancery where she won the respect and kind regards of the courts and of the bar. She was justly popular and her death brought sorrow to many hearts. Judge Lois Dale deserves to be remembered for her instructive life. Carry her in your hearts today for a time, if you will, and lift a glass tonight in tribute to her courage and her achievements.
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Serving Veterans and Offering Second Chances: How Legal Services is Helping Those in Need By Julie Howe, Center for Arkansas Legal Services The Department of Veterans Affairs recently released the results of its CHALENG 2017 survey on veteran homelessness.1 Based on the survey, the top 10 overall needs for male homeless veterans included: at fifth, Legal Assistance for Child Support Issues; at eighth, Legal Assistance to Help Restore a Driver’s License; at ninth, Legal Assistance for Outstanding Warrants and Fines; and at tenth, Legal Assistance to Prevent Eviction and Foreclosure.2 Female homeless veterans listed all those items highly, with the addition of legal assistance for discharge upgrades.3 The Center for Arkansas Legal Services (CALS) has recognized the need for legal assistance among the homeless veteran population. In 2014, CALS formalized a partnership with the Central Arkansas Veterans Health Care System and created the Veterans’ Legal Assistance Program (VLAP). VLAP is a monthly legal clinic conducted at the Central Arkansas Veterans Healthcare System’s Day Treatment Center in Little Rock. At the clinic, pro bono attorneys give legal assistance to veterans free of charge. Many veterans have multiple related legal issues and attorneys often address more than one legal issue for a client during an appointment. Program staff and volunteers are often able to resolve veterans’ concerns at the clinic. Attorneys most frequently help veterans with family law issues, obtaining stable housing, preventing an eviction, removing barriers to employment by sealing criminal records, accessing healthcare, securing disability or VA benefits, and obtaining other public benefits. CALS also takes on many veterans as clients for extended representation to meet their legal needs. Since its inception in 2014, VLAP has assisted veterans with over 686 legal problems. Because of the success of the Little Rock clinic, in January 2018, CALS extended VLAP to our branch office in Fort Smith. The Fort Smith clinic is modeled after the 54
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Little Rock VLAP clinic and the same legal issues and screening techniques are used. Due to the success of CALS’ VLAP clinics, CALS and Arkansas Access to Justice hosted a three-hour training on the VA certification process in November of 2018. The sessions were led by two VA certified attorneys, Ms. Julie Howe, Staff Attorney at the Center for Arkansas Legal Services and Ms. Fritzie Moore Vammen, Attorney at Law. Topics covered included: attorney representation before the VA; accreditation; basic eligibility for VA Benefits; claims procedures; three major VA benefits; disability compensation; dependency and indemnity compensation; pension; and the VA appeals process. Approximately 60 attorneys from across the state attended the training either in person or via webinar. In addition to its work with veterans, the Center for Arkansas Legal Services has also added an expungement attorney to its staff. Citizens reentering the community after incarceration face many challenges due to their criminal records, including inability to gain substantial employment and housing. CALS has been active within the re-entry community for some time through its inhouse staff and through its many successful pro se record sealing clinics. However, CALS felt that an attorney dedicated to providing representation in the more difficult recordsealing cases was greatly needed. The proof speaks for itself. Here are a couple of our success stories: Ms. Scott4 had been hired and subsequently dismissed from several jobs based on an offense that occurred in 1996. Ms. Scott had unsuccessfully tried to seal the record in the past and had been denied a pardon twice. A CALS staff attorney filed a petition to seal and represented her in a contested hearing where Ms. Scott’s petition was granted over the state’s objection. She was subsequently hired for a new job making $20.55 an hour.
Ms. Scott was able to move from a minimum wage job to a professional career. Mr. Polk5 had been homeless and denied employment and housing assistance many times because of a felony burglary conviction. The problem was, Mr. Polk was never convicted of a felony. Instead, a misdemeanor conviction from 1978 was being inaccurately reported as a felony. The background check provided virtually no details of the case. Likewise, the district and circuit courts had no record of the case. After being denied assistance to help him break out of homelessness because of this inaccurate criminal background check, Mr. Polk eventually found the Center for Arkansas Legal Services. A staff attorney was able to locate an old report in the police department’s microfiche records, which proved that Mr. Polk was not a felon. We were then able to correct the erroneous background check and get the record of the old misdemeanor sealed. This meant that Mr. Polk was eligible to receive housing benefits. Because of CALS’ help, Mr. Polk now has a safe place to live. To volunteer to help with the Veterans’ Legal Assistance Clinic or an expungement case, contact Julie Howe at jhowe@arkansaslegalservices.org or 501.376.3423 ext. 119. Endnotes: 1. U.S. Dep’t of Veterans Affairs, Community Homelessness Assessment, Local Education and Networking Groups (CHALENG), U.S. Dep’t of Veterans Affairs (May 2018) https://www.va.gov/HOMELESS/docs/ CHALENG-2017-factsheet-508.pdf. 2. Id. 3. Id. 4. A pseudonym has been used to protect the client’s privacy. 5. A pseudonym has been used to protect the client’s privacy.
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DISCIPLINARY ACTIONS
Judicial Discipline & Disability Commission Actions On November 21, 2018, the Arkansas Judicial Discipline and Disability Commission ruled on Motions to Dismiss in relation to JDDC Cases: 17-181, Supreme Court Chief Justice John Dan Kemp; 17182, Supreme Court Justice Robin Wynne; 17-183, Supreme Court Justice Courtney Goodson; 17-184, Supreme Court Justice Jo Hart; 17-186, Supreme Court Justice Karen Baker; 17-187, Supreme Court Justice Rhonda Wood. The full press releases can be found online at http://www.state.ar.us/jddc/ decisions.html. Attorney Disciplinary Actions
Final actions from October 1, 2018 December 31, 2018, by the Committee on Professional Conduct. Summaries prepared by the Office of Professional Conduct (OPC). Full text documents are available on-line either at http:// courts.arkansas.gov and by entering the attorney’s name in the attorney locater feature under the “Directories” link on the home page, or also on the Judiciary home page by checking under “Opinions and Disciplinary Decisions.” [The “Model” Rules of Professional Conduct are for conduct prior to May 1, 2005. The “Arkansas” Rules are in effect from May 1, 2005.] SURRENDER: HART, CHRISTOPHER ROBERT, Bar No. 2003084, of Little Rock, offered the surrender of his Arkansas law license in Case No. D-18-881, which was accepted and ordered by the Supreme Court on November 15, 2018. Hart’s petition acknowledged his felony convictions for drug possession offenses, a 24-month prison sentence in Garland County on May 1, 2018, and a 36-month prison sentence in Johnson County on May 29, 2018, and that his sentences had been placed into execution. The Committee on Professional Conduct had placed Hart’s law license on interim suspension on August 25, 2017.
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INTERIM SUSPENSION: HAYNES, JEFFREY LEE, Bar No. 95243, of Fort Smith, on information provided by law enforcement in Ozark, Franklin County, Arkansas, and by Sebastian County Circuit Judge Stephen Tabor, in Committee Case No. CPC 2018-28, by Panel Order filed October 29, 2018, had his Arkansas law license placed on interim suspension as a result of his arrest on a felony drug possession charge in that county on October 24, 2018, and due to issues in cases before Judge Tabor. Haynes had a felony drug possession conviction in Sebastian County in 2000 which led to his surrender of his law license on October 12, 2000. His 2011 application for readmission to the Bar was approved by the Arkansas Board of Law Examiners and granted by the Supreme Court in March 2013. SUSPENSION: OLIVER, CHARLES DWAIN, of Hampton, AR, Bar No. 2001009, in Committee Case No. CPC 2018-007, by
Findings & Order filed October 19, 2018, was suspended for a period of 60 months for violations of Rules 1.1, 1.3, 1.4(a)(3), 1.4(a) (4), 8.1, and 8.4(c). Oliver was ordered to pay $800.00 restitution and assessed $50.00 cost. Oliver was also reprimanded for his failure to respond to the formal complaint. The complaint was based on information provided to the Committee by Milton Parker in a criminal record expungement matter. In June 2010, Parker hired Oliver to get prior criminal records expunged and paid him $800.00 for the representation. Parker later made several unsuccessful attempts at contacting Oliver. Oliver obtained an Order to Seal on September 1, 2011. The order sealed Parker’s criminal record from a conviction on May 20, 1992, in Calhoun County, Arkansas. Parker moved to Illinois. In 2015, he and his wife desired to adopt a child and completed the necessary paperwork, which included a background check. Parker failed the background check. Parker again unsuccessfully attempted to contact Oliver to inquire as to why his criminal records were not expunged,
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$50.00 cost. Oliver was also reprimanded for his failure to respond to the formal complaint. The complaint was based on information provided to the Committee by Steven Harrelson in a criminal record expungement matter. On October 31, 2014, Harrelson hired Oliver to get Harrelson’s prior criminal record expunged. Harrelson paid Oliver $800.00 for the representation. Harrelson later made several attempts at contacting Oliver. When Harrelson was able to contact Oliver, Oliver would make excuses as to why he had not filed the expungement petition. Eventually Oliver stopped responding to Harrelson’s attempts to contact him. Oliver did not take any action or file any pleadings on behalf of Harrelson, nor did he refund the $800.00 paid to him. Harrelson filed a grievance with the Office of Professional Conduct (OPC) in late 2017. OPC made several unsuccessful attempts at getting Oliver to respond in writing to the allegations made against him in Harrelson’s grievance by written communication and telephone calls to Oliver. No written response was received from Oliver to the OPC requests. CAUTION: including making several trips to Arkansas to talk with Oliver. Parker states that Oliver was hired to expunge all of his criminal records, and that even though Oliver managed to seal one of his criminal records in Calhoun County, he failed to include and get sealed his other criminal records in Calhoun and Union Counties. After unsuccessfully attempting to contact Oliver, Parker filed a grievance with the Office of Professional Conduct (OPC) in mid-2015. From 2015, OPC made several unsuccessful attempts at getting Oliver to respond in writing to the allegations made against him in Parker’s grievance by written communication and telephone calls to Oliver. No written response was received from Oliver to the OPC requests. OLIVER, CHARLES DWAIN, of Hampton, AR, Bar No. 2001009, in Committee Case No. CPC 2018-008, by Findings & Order filed October 19, 2018, was suspended for a period of 60 months for violations of Rules 1.1, 1.3, 8.1, and 8.4(c). Oliver was ordered to pay $350.00 restitution and assessed $50.00 cost. Oliver was also reprimanded for his failure to respond to the formal complaint. The complaint was based 58
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on information provided to the Committee by Larry Romine, Sr., in a criminal record expungement matter. On August 25, 2015, Romine hired Oliver to get his son’s prior criminal record expunged. Romine paid Oliver $350.00 for the representation. Oliver did not take any action or file any pleadings on behalf of Romine’s son. Oliver did not provide Romine or his son with a refund of the $350.00 paid to him. Romine filed a grievance with the Office of Professional Conduct (OPC) on June 12, 2017. OPC made several unsuccessful attempts at getting Oliver to respond in writing to the allegations made against him in Romine’s grievance by written communication and telephone calls to Oliver. No written response was received from Oliver to the OPC requests. OLIVER, CHARLES DWAIN, of Hampton, AR, Bar No. 2001009, in Committee Case No. CPC 2018-009, by Findings & Order filed October 19, 2018, was suspended for a period of 60 months for violations of Rules 1.1, 1.3, 1.4(a)(3), 1.4(a) (4), 8.1, and 8.4(c). Oliver was ordered to pay $800.00 restitution and assessed
NEWCOMB, ROBERT ALSTON, Bar No. 73087, of Little Rock, in Committee Case No. CPC 2017-025, on a complaint by Bernstine Bullard, by Consent Findings & Order filed October 19, 2018, to which Newcomb consented, received a caution and was ordered to pay restitution of $1,000, for violation of Rule 1.4(a)(3) for failing to keep Ms. Bullard reasonably informed in 2016-2017 about the status of her federal employment discrimination lawsuit against the Arkansas Department of Correction. In early 2017, Newcomb failed to file a response to a second motion for summary judgment, which was later granted. Newcomb stated that he was dealing with medical issues during this period but that was no excuse for his neglect of this client matter. He also stated that after discovery there was a substantial chance his client would not have prevailed in her case.
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From the ordinary to the most complex, no appeal is too small or large Writing Briefs to the Arkansas Court of Appeals, the Arkansas Supreme Court, the Federal Circuits and the United States Supreme Court
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Arkansas Bar Foundation Memorials and Honoraria The Arkansas Bar Foundation acknowledges with grateful appreciation the receipt of the following memorial and scholarship contributions received during the period October 15, 2018, through January 31, 2019.
In Memory of Dale Adams Judge Bill Wilson and Judge Cathi Compton In Memory of Barbara Amsler Baxter Sharp In Memory of Judge Alan Dishongh Judge Bill Wilson and Judge Cathi Compton In Memory of Judge G. Thomas Eisele Judge James M. Moody
In Memory of George E. “Jetty” Steel George Steel, Jr. and George Nathan “Nate” Steel In Memory of Gus Walton Diane Allen Hayden and Gordon Rather In Memory of Roxanne Tomhave Wilson Judge James M. Moody Judge Dick and Beverly Moore
In Memory of Judge Robert Fussell Judge James M. Moody Judge Dick and Beverly Moore
In Memory of William H.L. Woodyard Judge Dick and Beverly Moore
In Memory of Judge Melinda Gilbert Judge Dick and Beverly Moore
SCHOLARSHIP CONTRIBUTIONS, HONORARIA AND OTHER GIFTS
In Memory of Marion Gill Judge Bill Wilson and Judge Cathi Compton
Arkansas Bar Foundation Mark A. Bennett Jason B. Hendren Mary Lou and William A. Martin
In Memory of Leon Helms Hayden and Gordon Rather In Memory of Robert W. Henry Hayden and Gordon Rather Charles D. Roscopf In Memory of Greg Kitterman Hyden, Miron & Foster, PLLC B. Jeffery Pence Judge John Plegge and Sue Plegge In Memory of Dean J. W. “Jake” Looney Sherry and Alan Epley David R. and Mary Beth Matthews In Memory of James H. McKenzie Judge James M. Moody In Memory of Judge William Overton Judge James M. Moody In Memory of John “Jack” E. Pruniski John C. Calhoun, Jr. In Memory of Joy Ramsay Baxter Sharp
The Arkansas Bar Foundation is grateful for a generous contribution from The Stella Boyle Smith Trust Establishing the Stella Boyle Smith Scholarship fund
The Arkansas Bar Foundation is grateful for a generous contribution from Arkansas Association of Defense Counsel and Defense Research Institute (DRI) Establishing a scholarship fund in memory of Justice Andree Layton Roaf
Giving Tuesday 2018 #ElevateEducation Program
Arkansas Bar Foundation #GivingTuesday Colleen Boardman John C. Calhoun, Jr. Judge John N. Fogleman Mary Claire Hyatt James D. Sprott E. Charles Eichenbaum Scholarship Fund Peggy and L.R. Jalenak James H. Larrison, Jr., Scholarship Fund Diane Allen McKinley Family Scholarship Fund Jeffrey and Lester McKinley
Funds raised through #GivingTuesday 2018 for the #ElevateEducation program allowed the Foundation to purchase at cost 100 copies of the book, “Scales of Justice,” written by Taylor Dugan, with a goal to educate elementary school children to understand the law and judicial system. Interested in reading the book to a group of students at your local elementary school? Please contact Ann Pyle at apyle@arkansasbarfoundation. com to request a copy at no charge as long as supplies last.
Upcoming Events:
Charles B. Roscopf Scholarship Fund Charles D. “Chuck” Roscopf
Foundation Fellows’ Dinner June 12, 2019 • Hot Springs
In Honor of Ann Dixon Pyle Judy and Glenn Vasser
Third Annual Friendraiser October 11, 2019 • Little Rock Vol. 54 No. 1/Winter 2019 The Arkansas Lawyer
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IN MEMORIAM Howard Allan Dishongh of Little Rock died on October 30, 2018, at the age of 87. After attending Military School and Little Rock Central High School he joined the U.S. Marine Corp serving during the Korean Conflict as a Sergeant. Fresh from the service he joined the Arkansas State Police and was assigned for a time to guard Gov. Orval Faubus and his family. He attended UALR Law School at night. He received his Juris Doctorate and passed the Arkansas Bar. In the late 1960’s, he was elected State Representative in the Legislature. During the next decade he was Chief Deputy Prosecuting Attorney for the 17th Judicial District. For a while he served as assistant Prosecutor in Pulaski County. He was then elected Little Rock Municipal Judge. Allan served as a criminal lawyer, Prosecuting Attorney and Judge for over 40 years. Alter Leon Helms, Jr., of Little Rock, died on December 30, 2018, at the age of 87. He graduated from Arkadelphia High School in 1949 and received a Bachelor of Arts in Psychology from Henderson State University in 1953. He served in the Army as a 1st Lieutenant from 1953 until 1957. He attended law school at the University of Arkansas in Little Rock and received his JD in 1962. Leon was an attorney who had a distinguished 45year career in banking until he retired the first time from Regions Bank in 2000. His second retirement came in 2011 from Delta Trust and Bank where he was a senior trust advisor.
until his father’s untimely death in 1958. Bob later practiced with his son, Cliff, from 1985 until Bob’s retirement on August 22, 2018. He served as a special justice of the Arkansas Supreme Court and was a member of the Arkansas Board of Law Examiners for six years, serving as chairman for two years. He also served as Conway City Attorney for 20 years and was a Commander, United States Naval Reserve, retired. Gus B. Walton of Little Rock died on December 27, 2018, at the age of 77. Gus graduated from Phillips (Andover) Academy, Washington and Lee University, and the University of Arkansas School of Law. Gus was commissioned as an officer in the United States Marine Corps in 1967 and served in the Marine Reserve for six years until his honorable discharge, having attained the rank of Captain. After law school and Marine officer training, Gus practiced law with the firm of Wright, Lindsey and Jennings in Little Rock for 16 years. He served on the executive committee of the Arkansas Bar Association and as a member of its house of delegates. Following his practice of law, in what was described by some as a blip on the Richter Scale of a midlife crisis, Gus joined Poe Travel and, later, World Wide Travel, thereby nurturing his lifelong passion for travel and adventure. He later became president of World Wide Travel and also was president of The Arkansas Travel Agents Association. He loved to explore, and traveling satisfied his insatiable curiosity.
The information contained herein is provided by the members’ obituaries.
Become a Benefactor or Patron Member
2018-2019 Your gift strengthens the Association by helping to support its mission and many projects. You will receive: • recognition as an individual sponsor in The Arkansas Lawyer magazine • a specialty ribbon for your name badge at the Annual Meeting • recognition at the Annual and Mid-Year Meetings $100/year for Patron member $250/year for Benefactor member Call Michele Glasgow at 501-801-5661 for more information
Robert W. Henry of Conway died November 22, 2018, at the age of 90. Bob graduated from Conway High School in 1946 and he received his Bachelor of Arts degree from Hendrix College in 1949. He graduated from the University of Arkansas School of Law in Fayetteville in 1952 with an LLB degree. Following law school, Bob returned to Conway and joined his father’s law practice Vol. 54 No. 1/Winter 2019 The Arkansas Lawyer
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Classified Advertising
Index to Advertisers
WANT TO PURCHASE MINERALS AND OTHER OIL/GAS INTERESTS.
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Send details to: P.O. Box 13557, Denver, CO 80201.
Advertise in the next issue of The Arkansas Lawyer. Opportunities are also available on ArkBar’s website and weekly ebulletins. Go to www.arkbar.com/ for-attorneys/publications/the-arkansas-lawyer/advertising
ABA Retirement
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121st Annual Meeting June 12-14, 2019 Arkansas Bar Association Annual Joint Meeting with the Arkansas Judicial Council
Hot Springs Convention Center Keynote Speaker Shannon Miller Shannon Miller remains the most decorated Olympic gymnast in American history with seven Olympic medals! She is the only female athlete to be inducted into the U.S. Olympic Hall of Fame—twice! After retiring from Olympic competition, Shannon received her undergraduate degrees in marketing and entrepreneurship from the University of Houston and her law degree from Boston College. Now retired from competition, Shannon has moved from Olympic athlete to advocate for the health and wellness of women and children. Shannon has taken the lessons she learned through the obstacles she faced as an elite athlete, as a young adult and those from her journey with cancer to publish an inspirational new book: It’s Not About Perfect: Competing for my Country, Fighting for my Life.
Featured Speakers Mark Lanterman, Chief Technology Officer of Computer Forensic Services and former member of the U.S. Secret Service Electronic Crimes Taskforce Daryl Parks, civil rights attorney who has represented families of Trayvon Martin, Michael Brown and Corey Jones Joshua Koskoff, attorney who represents 10 families who lost a child or spouse in the shooting at Sandy Hook Elementary School in 2012 Toussaint Romain, Public Defender in Charlotte who became a key peace-keeper during the protests of the shooting of Keith Lamont Scott in September 2016 Bill Haltom, Memphis lawyer, best-selling author and award-winning newspaper columnist
Host Hotels
Entertainment Reserve your rooms now at one of the host hotels: • The Waters Hotel • (501) 321-0001 • Hotel Hot Springs • (501) 623-6600
Nicky Parrish featuring the Kemestri Band on Thursday, June 13 Also watch for new exhibit hall experience and layout this year.
Watch for the complete agenda and registration at www.arkbar.com
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