Can violating a legal ethics rule qualify as an unfair trade practice under a state’s consumer protection statute? A Florida district court recently said “Yes.” The question arose in motion practice over the admissibility of expert testimony in a timeshare-exit case.
And then there was one
A group of entities connected to Wyndham Vacation Resorts sued several defendants for inducing and assisting timeshare owners to get out of their contracts with Wyndham – including the lawyer the defendants used to review documents and send letters on behalf of timeshare owners who wanted out of their obligations. All the claims settled except the ones against the lawyer, including claims that he had conspired to interfere with the timeshare owners’ contracts with Wyndham, and that he violated the Sunshine State’s unfair trade practices Act. According to the court’s opinion, the lawyer was licensed in California, not Florida.
Wyndham sought to have a legal ethics expert testify on issues supporting its unfair trade practices claim—specifically that the lawyer’s violation of several ethics rules met the definition of unfair and deceptive trade practices under Florida law. The expert’s opinion centered on the lawyer’s noncompliance with the rules of professional conduct, including Florida’s versions of the Model Rules on fee sharing practices, interference by non-lawyers with the professional judgment of lawyers, supervision of non-lawyers and the unauthorized practice of law.
The lawyer moved to exclude Wyndham’s expert’s opinions, arguing that any supposed violation of Florida’s professional conduct rules was irrelevant to the claims against him, particularly the unfair trade practices act claim, and that ethical misconduct could not support such a claim.
Ethics and trade practices
The district court rejected the lawyer’s motion to exclude the expert’s opinions and held that “a violation of a legal ethics rule can potentially qualify as a deceptive act or unfair trade practice” under Florida’s act. The court noted the statute’s liberal construction, and that under it a claim could be based on any rule or regulation that “proscribes … deceptive or unconscionable acts or practices.”
Further, the court said, while the preamble to the Florida rules notes that they don’t give rise to an independent cause of action against a lawyer, they do establish “standards of conduct by lawyers [; therefore] a lawyer’s violation of a rule may be evidence of a breach of the applicable standard of conduct.” The Model Rules of Professional Conduct express the same idea in the Preamble at [20].
Here, said the court, Wyndham was not trying to assert a claim for violating the ethics rules, but to use evidence that the lawyer had committed ethical misconduct to support the unfair trade practices claim. That was legitimate, the court held.
Time to share
While the court cited a Connecticut supreme court case as support for its holding, commentators have noted that the states have taken a variety of positions on whether and how deceptive trade practice and consumer protection acts apply to lawyer conduct. Ultimately, the court dismissed the case with prejudice on November 23, following a settlement. However, the take-home here is that the ethics rules can supply the standard of conduct for tort and statutory claims even outside the lawyer discipline rubric. All jurisdictions now have some version of the Model Rules of Professional Conduct, and therefore your rules likely contain language to this effect. Thus, your future noncompliance with the Rules of Professional Conduct may not only be scrutinized by discipline authorities, but by a jury as well.