In the Matter of Douglas M. Schmidt

THE STATE OF SOUTH CAROLINA
In The Supreme Court
In the Matter of Douglas M. Schmidt, Respondent
Appellate Case No. 2015-001524
Opinion No. 27582
Heard September 22, 2015 – Filed October 14, 2015
PUBLIC REPRIMAND
Lesley M. Coggiola, Disciplinary Counsel, and Barbara
M. Seymour, Deputy Disciplinary Counsel, both of
Columbia, for Office of Disciplinary Counsel.
J. Steedley Bogan, Esquire, of Bogan Law Firm, of
Columbia, for Respondent.
PER CURIAM: In this attorney disciplinary matter, respondent and the Office
of Disciplinary Counsel have entered into an Agreement for Discipline by Consent
(Agreement) pursuant to Rule 21 of the Rules for Lawyer Disciplinary
Enforcement (RLDE) contained in Rule 413 of the South Carolina Appellate Court
Rules (SCACR). In the Agreement, respondent admits misconduct and consents to
the imposition of a public reprimand. We accept the Agreement and issue a public
reprimand. The facts, as set forth in the Agreement, are as follows.
Facts
On January 6, 2005, a Norfolk Southern Railway train derailed in Graniteville,
resulting in the release of chlorine gas from a tanker car. The area surrounding the
train derailment was evacuated. Several people died from exposure to the chlorine
and many more people suffered physical injuries and property damage. At the
time of the derailment, respondent was licensed to practice law in South Carolina
and Louisiana, with his primary office in New Orleans. Shortly after the
derailment, respondent opened an office in Graniteville for the purpose of
representing clients in claims related to the chlorine exposure.
More than one hundred of the clients respondent represented had signed releases in
exchange for payment from Norfolk Southern (the Railroad) prior to respondent's
representation. Respondent filed suit against the Railroad on behalf of these clients
but did not advise the clients that South Carolina law requires that a plaintiff who
attempts to set aside a release must return the funds received to the defendant prior
to filing suit. Respondent admits he knew about the releases and should have
known about the law regarding repayment; therefore, he should have advised his
clients of the law even if he believed there was a legal argument to be made against
the tender requirement.
As a result of the failure to tender, the Railroad filed a motion for summary
judgment. Respondent asserted that case law supported his position that his clients
were not required to tender the money prior to filing suit; however, shortly
thereafter, he sent letters to his clients informing them that within four days they
must return the money paid to them by the Railroad four years earlier or their
lawsuit would be dismissed.1 Respondent assured the clients they would not lose
their money and that even if the money were returned to the Railroad and the court
ruled against the clients, they would get their money back. He also informed the
clients that repayment of the funds was necessary in order to negotiate a larger
settlement. However, respondent was aware the Railroad was not negotiating
settlements for these clients and that it considered their claims settled and released.
Ultimately, the court upheld the releases and dismissed the lawsuits on several
grounds, including the failure of the clients to tender the funds.
Some of respondent's clients informed the local media of respondent's letter
requesting return of the settlement funds. In an interview with a reporter,
respondent commented on his clients' ability to return the funds and on the merits
of his claim that the releases were signed under duress, and he admitted failure to
return the money would result in dismissal of the claims. Respondent also stated
the Railroad was asking for the return of the money and that his clients would be
1
Even if respondent was not aware of the tender requirement when he filed suit, he
was on notice of it when the Railroad raised the issue in its answer and during
discovery many months before the motion for summary judgment was filed. In
addition, if respondent was correct that tender was not required under the law, then
his statements to his clients that the claims would be dismissed if they did not
tender the money would have been incorrect.
able to negotiate higher settlements or seek additional damages if the funds were
returned. These statements were not true. The Railroad did not ask for a return of
the funds and had asked the court to dismiss the lawsuit because the clients had
released their claims. Further, the Railroad was not negotiating settlements for
these clients and considered the claims settled and released.
Following the media reports, the Railroad sought a gag order. The trial court
found respondent's statements to the media were inaccurate and misleading and
clearly violated Rule 3.6 of the Rules of Professional Conduct, Rule 407, SCACR.
Respondent was ordered to pay the Railroad's fees and costs and to refrain from
further public comment on the matter. Respondent filed an appeal, but after his
clients' cases were dismissed, the parties stipulated to a dismissal of the appeal and
vacation of the gag order and sanction.
Law
Respondent admits that by his conduct he has violated the following provisions of
the Rules of Professional Conduct, Rule 407, SCACR: Rule 1.1 (lawyer shall
provide competent representation to client which requires legal knowledge, skill,
thoroughness, and preparation reasonably necessary for the representation); Rule
1.2 (lawyer shall abide by client's decisions concerning objectives of representation
and shall consult with client as to means by which they are to be pursued); and
Rule 3.6 (lawyer participating in litigation shall not make extrajudicial statement
lawyer knows or reasonably should know will be disseminated by means of public
communication and will have substantial likelihood of materially prejudicing
adjudicative proceeding in matter).
Respondent also admits he has violated the following Rules for Lawyer
Disciplinary Enforcement, Rule 413, SCACR: Rule 7(a)(1) (it shall be ground for
discipline for lawyer to violate Rules of Professional Conduct) and Rule 7(a)(5) (it
shall be ground for discipline for lawyer to engage in conduct tending to pollute
administration of justice, tending to bring courts or legal profession into disrepute
and demonstrating unfitness to practice law).
Conclusion
We find respondent's misconduct warrants a public reprimand.2 Accordingly, we
accept the Agreement and publicly reprimand respondent for his misconduct.
PUBLIC REPRIMAND.
TOAL, C.J., PLEICONES, BEATTY, KITTREDGE and HEARN, JJ.,
concur.
2
The Court publicly reprimanded respondent in 2007. In the Matter of Schmidt,
374 S.C. 167, 648 S.E.2d 584 (2007).