Introduction
My journey over the last five years has through some effort allowed me to gain enough knowledge of legal maneuvering to recognize an adjudicator’s first role of deceit, should he choose that path, which is to establish a record of fact. Then, even if that record of fact is completely unfounded based on the evidence, an opinion can be rendered rooted soundly in the law.
This analysis must also clearly identify areas of malpractice, topics that should have been identified and worthy of appeal to the 9th Circuit.
History
On October 2, 2003 an IT manager of a company I owned was fired shortly after he attempted to extort a raise by withholding data files from one of our clients. That data required processing and part of his leverage was refusing to do that processing unless he received that raise and his past transgressions were forgiven.
Once the data was processed and files transmitted he was terminated in writing and with enough notice (45 days) to allow him to start looking for a job. I felt it best to work with him for his future good and mutually for the good of the company. But there were conditions and those conditions were the documentation and training necessary to pass the torch to his successor.
Instead we found ourselves in a tug of war. His self-perceived task was to withhold our database and reporting programs so that he could use that to retain his job. Our task was to secure the programming and to ensure we would not be hurt any further. He succeeded. We did not.
Three week after his termination I received an email from this manager, let’s call him Max, purporting that he received an excel spreadsheet via email from another employee of an affiliated company from which he deduced that the company was over-billing clients. The amount of over-billing the spreadsheet documented was approximately $400. The amount of revenue for the affiliate that month was approximately $400,000.
Max refused to provide the email from which he claimed to receive that spreadsheet. He did encourage an attorney in Albany Oregon to file a complaint on his behalf to the Oregon Department of Justice. That attorney, James Egan, is now an Oregon Appeals Court Judge. The ODJ requested evidence. None was provided. I was contacted and conveyed the context and termination of Max. The ODJ file was closed.
The complaint did not work but Max was resolved. He withheld our programming and after his last day the company had to shut down just before thanksgiving resulting in 150 employees being laid-off. A third party was hired to come in, look for the programming and if necessary recreate it with instruction. Took about 10 days and cost the affiliated companies just over $100,000.
Make no mistake about it. This was a criminal act perpetrated by Max and his co-conspirators. Today, given the greater attention given these cybercrimes, Max may well have been prosecuted. In 2003, no law enforcement agency wanted to touch it.
The District Court’s Assumption of Facts
- “NDT asserts that it terminated Zweizig with 45 days’ notice, via an email message dated October 2, 2003. In support of this assertion, NDT relied at arbitration on a hard copy of theemail message purportedly effecting Zweizig’s termination, bearing the date October 2, 2003.”
Not True. NDT provided the digital copy of the email and the computer on which it was transmitted for evaluation by forensic experts. All forensic experts agreed that the email was sent on October 2, 2003, well before the complaint.
- “It is undisputed that on October 23, 2003, Zweizig contacted Rote to advise him that he had received via email a spreadsheet suggesting that NDT was systematically over-billing some of its clients. Zweizig requested that Rote investigate the matter, which he characterized as potentially illegal conduct. Zweizig retained Oregon counsel in connection with the matter on October 28, 2003. That same day, Zweizig’s counsel referred the matter to the Oregon Department of Justice by letter, setting forth all of the underlying facts, and providing a copy of the letter to Rote.
Not True. There was no evidence of systematic over-billing. In fact the arbitrator opined on the record that there was no evidence of wrong doing by NDT. This fails to state that the ODJ requested evidence supporting Zweizig’s claims, that the letter did not outline all the facts and that the ODJ shut the file down a few days after it opened it, once it determined that Zweizig was fired before the complaint and that he had no evidence to provide. In fact, the spreadsheet was never corroborated and NDT denied ownership.
- “It is further undisputed that on October 29, 2003, the day after Rote received the letter from Zweizig’s counsel, Rote began reassigning Zweizig’s employment duties. Rote ultimately terminated Zweizig’s employment effective November 14, 2003, although (as noted above) the parties dispute whether Rote noticed the termination prior or subsequent to his receipt of the ODOJ letter.”
Not true. Zweizig’s duties were being moved well before his termination of October 2, 2003 to the person identified as his replacement. The move was accelerated after September in response to Zweizig’s attempt to extort a raise.
4. “It is NDT’s position that, at the time of his termination, Zweizig reformatted two company computers that he had been using to perform his employment duties, effectively destroying certain work product proprietary to NDT. NDT further takes the position that the reformatting constituted spoliation of evidence, specifically the provenance of the spreadsheet reflecting the purported over-billing.
True and not true.
Zweizig withheld his email account from May 2003 through his last day of employment. The email account prior to that was on a discontinued hard drive, which Zweizig had claimed did not work. In order to cover up that this 120 gig hard drive had been working, he reformatted it and in that process of doing so destroyed his emails and FoxPro programs.
Zweizig’s email from May 2003 thru November 2003, and spreadsheet, should have been on the 60 gig hard drive he returned with his Sony Vaio computer, but no Zweizig email account was on that 60 gig hard drive. He testified that it was. He must have had a third hard drive where he maintained his email account, since he did provide hard copies of the emails (those he wanted to provide). At no time did he provide the email by which he claimed to receive the spreadsheet. That email and spreadsheet were never corroborated. The 60 gig hard drive should have also contained the active Foxpro programs, but were never found there nor on any of the other servers Max identified.
5. Crow made several representative conclusions that the court embraced:
A. “The parties are in disagreement about when the October 2, 2003, email was prepared and sent. The testimony of the experts leaves questions open about that controversy, but to the arbitrator it is difficult to harmonize this email with …one written by Mr. Rote just 80-90 hours earlier.”
Not true. All three experts agreed that the email was sent on October 2, 2003. There was no controversy. My email to Max, who wanted to walk out on his job before he processed 5 months of data and transmitted that to our client, was that he could walk if he wanted but I was not going to fire him at that time. He had hidden the files. No one knew where the data was but him. The police were called in. I did not fire him until after he processed & transmitted the data to our client and then only after I completed my investigation of responsibility for the delay in processing. Thereafter he was fired, on October 2, 2003. This is all part of the record.
B. “The regular exchange of emails from October 2, 2003, do not suggest that [Zweizig] has been terminated, but rather are consistent with the expectation of continued employment. As late as October 23, 3003, Mr. Rote sent an email to [Zweizig]: “Hope all is OK Max. let me know if I can help.”
Not true. If you are not civil to employees, you are indicted for being abusive. If you understand and are supportive of the stress a termination causes, someone uses that to fit a narrative that he was not fired. This arbitrator used that to jump to an unfounded conclusion that the termination did not happen. That is an intellectually dishonest conclusion.
C. “Only after the report by [Zweizig] of his concerns over the possibility of over charging and correspondence with the State of Oregon to that effect did Mr. Kawiuk start his search for emails trying to discredit [Zweizig] and did the correspondence between [Zweizig] and Mr. Rote take on the hint that termination was imminent.”
Not true. Mr. Kawiuk was the employee who notified me in 2002 that Zweizig and Bower were setting up a competing business and were prepared to solicit our clients. Zweizig and his attorney girlfriend had threatened to sue Kawiuk if he published that. Zweizig specifically alleged that the suggested over-billing scheme was the effort of Kawiuk, another untruth intended by Zweizig to resurrect his character at the cost of Kawiuk. Naturally, my email to everyone to preserve email involving Zweizig triggered a strong response in Kawiuk. That is not an indictment on the company, the employer.
Again, an intellectually dishonest conclusion by arbitrator Crow to use Kawiuk’s emails to set a time of termination. This was a spoon fed conclusion by Marshall.
The Narrative
While I was concerned about Crow during the arbitration, on being influenced by his former partner Marshall, I had little evidence other than (1) his failure to disclose the relationship, (2) his opening remarks to Marshall every day asking her to explain where they were in the process and (3) his interest in the Judge Jones hearing 10 years earlier (and related challenges to judicial activity). However, after he summarily dismissed our evidence there was no doubt that this was an act of retribution, supported by at least some belief in his former partner.
What do you say about an arbitrator, someone who is respected by his colleagues for his high moral character, who is falling asleep at the wheel? You respect him but you must not waive an appeal right just because you believe that his cognitive skills have seen better days. Moreover, when Marshall, his former partner, is committing one count of perjury after another, you have to call them out.
One of the more important elements to the case was Max’s considerable destruction to the companies programming infrastructure. Our programs were gone. That was confirmed by three witnesses and three forensic experts. And this crime by law terminated Max’s claims. Of all the actions taken by Crow in concert with Marshall, nothing is more stunning than Crow concluding that we did not preserve the evidence and therefore could not prove Max’s acts of destruction. Sure we did. Three witnesses were there when it happened in 2003, one of those the IT programmer who came in and regenerated the programs. One of our clients testified as a witness and confirmed that we did shut down over our inability to produce daily reports. The three Forensic experts concluded that not only were Foxpro programs form May 2003 through November 15, 2003 not there, but that the FoxPro software was not even loaded to Max’s computer until the day before he returned the computer to me. Zweizig’s testimony that he processed files from this computer and that the programming code was there was refuted in its totality.
The District Court skirted this question. Could they have looked at it? Certainly this damage should have been explored in detail, especially given our argument of bias. However, our attorney did not present this with the strength that I wanted and now looking back it seems clear this was a serious mistake. I would be reticent however to not point out that the District Court could have vacated the arbitration on this matter alone.
So what assumptions or conclusions by the District Court influenced their thinking on this case?
Well, first and foremost the arbitrator was a respected member of the legal community and it was hard for the court to see his cognitive deterioration. It was not hard for Marshall, who exploited it. The court gave him the benefit of evidenciary review, when in fact it did not happen.
Second, the court’s assumption that Max’s termination email was provided only in hard copy form was untrue and attributed to us what Max actually engaged in. We turned over my computer with the email in its native digital form. Three forensic experts examined the computer and email and determined it had been sent prior to the time Max filed his complaint. Three witnesses, plus three experts, all agreeing with the October 2, 2003 termination date. When evaluating bias, or in this case an inability by the arbitrator to evaluate the evidence, the aforementioned was material.
Third, the court did not adequately consider that Max engaged in a host of discovery violations designed to hide the truth. He kept his email account on a different hard drive and did not turn that over for review. There were two material issues there. First, the email terminating him and second, the email by which he claimed to receive the spreadsheet. His destruction of that email evidence should have allowed us an inference in our favor as to his receipt of the termination email.
Fourth, he did not turn over the email by which he claimed to have received the spreadsheet. Therefore, the spreadsheet was not corroborated and cannot be used as evidence. He had no proof. He had no justified reliance. Moreover, it looks to me that he broke into one of our servers and took an admin sheet tracking the write-down of time and used it to create write-ups to support his position. The unauthorized access to our network searching for something to support his claim shows that he was already fired and seeking some leverage to reverse that conclusion.
Fifth and final point is that while the ASP did decide that Crow could continue as arbitrator, the District Court could review that decision because we preserved it. The ASP’s decision necessitated Crow continuing as arbitrator and the court could reverse that with or without considering Crow’s punitive behavior. Crow dismissing all of our evidence certainly supports a decision of apparent bias, since Crow had found all of these witnesses credible. Max’s own forensic expert testified in our favor!
Legal Malpractice
The most glaring of our attorney’s failures was allowing the “assumption” by the District Court, that the evidence of Max’s termination was only a hard copy of a termination email and letter, to go unchallenged. We covered the forensic conclusions extensively in our memorandum of support. Neither did Marshall skirt the existence of forensic reports in her Opposition to our Motion to Vacate. It is an unusual error to make and suggests to me that this was an act of reverse engineering of facts to support the confirmation of the award. The assumption itself negates even Crow’s statement that the forensic experts did not resolve this issue in his mind. And in so far as all three forensic experts agreed that the email was sent October 2, 2003, why this remained a point of confusion for Crow points to his incompetence or his bias. Ultimately, Crow would have needed to make a finding that we spoliated this evidence, which is not a position supported by law. Counsel should have challenged that assumption in a motion for reconsideration and/or through appeal to the 9th Circuit.
The second specific failure was allowing the arbitrator to dance around the question of spoliation in all its forms. Not only did this go to bias of the arbitrator but also to a manifest disregard of the law.
The arbitrator, without reference to spoliation, disallowed our losses from the shutdown, arguing that we did not preserve the evidence on the Sony Vaio, but of course that was not true. We looked for and could not find the Foxpro programs within hours of securing the computer. We hired an outside consultant who within days concluded the FoxPro programs were not there and flew out from Chicago to rewrite the programs. We did not pretend to shut down. We did and supplemented the evidence by testimony of five witnesses. Three forensic experts confirmed that there were no FoxPro reporting, database programs or processed files on that 60 gig hard drive. Moreover, they testified that the FoxPro program itself was not installed until the day before Max returned the computer. There were two points of interest to us on this point. The first is our damage claim for the loss and costs to rewrite programs and the second is that this action by Max cutoff his damages. Counsel failed to separate the two important components to destroying the FoxPro programs. Counsel failed to properly attack the arbitrator for essentially dismissing all the witness testimony and forensic evaluations on this issue. Even if the forensic experts were dismissed, the other witnesses provided absolute confirmation that the company’s owned programs were no where to be found. This was not just a question of manifest disregard for the law. It absolutely showed bias. Counsel failed to take this issue to the 9th Circuit.
Crow, without reference to spoliation, nonetheless decided to dismiss the forensic expert opinions about what they found even though none of them argued that evidence had been destroyed. He dismissed them after going on the record as to how important they were going to be. And so under an unstated theory of destruction of evidence, Crow found against us but allowed Max to get away with it. Max refused to provide an email by which he claimed he received the spreadsheet. He admitted to destroying his personal computer. He admitted to saving emails from May 2003 through November 2003, but refused to turn over the email file itself, choosing instead to provide scanned copies. All three experts agreed that he did not have an email account on the 60 gig hard drive. The abuse of this decision making was that we were tainted with a dismissal for not destroying evidence and Max was allowed to destroy evidence ad nauseam without an equal dismissal. He provided no proof. Counsel should have appealed and done a much better job of raising this issue in the District Court. Not only do we have bias and a manifest disregard of the law, but have a violation of public policy. Max engaged in cybercrime, computer fraud and violated the CFAA by destroying his email account.
More than anything else, counsel failed to make an appropriate amount of noise over what they knew was a breach of the public trust. The trust was first violated by the arbitrator, a former OR STATE BAR President and current Chair of the Discipline Board. Counsel was afraid to attack the decisions out of fear of retribution. I removed Scott Cliff over his failure to be aggressive on these issues while in the arbitration and not seeking a new arbitrator when he had reason to know that Crow was not up to the effort. Counsel’s failure on the motion to vacate however rests on the shoulder of Jeff Hasson, who should have challenged the facts introduced by the court to justify a decision to confirm. A motion for reconsideration was appropriate as was an appeal to the 9th Circuit.
Conclusion
It is decidedly difficult to reconcile the great faith one places in our federal court with a Judges casual introduction of facts not in evidence, the purpose of which appears to be to support a legal opinion. I have seen this in Denver and Clackamas County. The arbitrator’s decision was replete with some version of it. Our attorney should have attacked it, filing motions for reconsideration and otherwise creating a record for appeal. He did not.
The arbitrator’s version of this same tactic was to build an opinion around a few emails–rejecting all other emails, rejecting all witness testimony, rejecting forensic evidence and testimony, rejecting the former employee’s crimes—so he could provide an award beneficial to his former partner and friend. During the arbitration the arbitrator and his former partner were updating each other on their children, family health past and present, reminiscing about firm Christmas parties, their old firm, etc. The arbitrator’s duty to disclose this past relationship was ignored even when the issue was raised and preserved.
The court touched on this issue as we asked them to but ultimately decided that we had in our pleadings believed the arbitrator was an honest and fair man. And so we did before the opinion. After the opinion, not so much anymore.
What’s going on here Portland?
Until next time.
When Justice Fails 