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Skolnick v. Altheimer & Gray

March 23, 2000

KENNETH SKOLNICK ET AL., APPELLEES, V. ALTHEIMER & GRAY ET AL. (TERRY ROBIN HORWITZ KASS, APPELLANT; SONNENSCHEIN NATH & ROSENTHAL, APPELLEE).


Agenda 18-November 1999.

JUSTICE McMORROW delivered the opinion of the court:

After plaintiffs Kenneth and Julia Skolnick filed a multicount complaint in the circuit court of Cook County against defendants Terry Robin Horwitz Kass and Altheimer & Gray, the trial court entered an agreed protective order that forbade dissemination of designated materials produced during discovery. Subsequently, Kass sought modification of the protective order and leave to file a counterclaim against the plaintiffs. Kass alleged that documents produced as discoverable materials revealed fraudulent conduct by Kenneth Skolnick. Kass argued that the newly revealed information triggered her ethical obligation to report suspected attorney misconduct to the Illinois Attorney and Registration Disciplinary Commission (ARDC), and therefore, that the information should no longer be subject to the restrictions of the protective order. Kass asserted as well that these same documents gave rise to the allegations of her counterclaim.

The trial court granted leave to file the counterclaim, but simultaneously ordered that the counterclaim remain under seal. The court also refused to modify the protective order. The appellate court affirmed the trial court's order placing the counterclaim under seal, and reversed that part of the order refusing to modify the protective order. 303 Ill. App. 3d 27. In this consolidated appeal, which is before the court pursuant to Supreme Court Rule 315 (177 Ill. 2d R. 315), we affirm in part and reverse in part.

BACKGROUND

In 1993, plaintiff Kenneth Skolnick (Skolnick), a lawyer, was employed by the defendant law firm of Altheimer & Gray (Altheimer) as an equity partner. Defendant Terry Robin Horwitz Kass (Kass), also a lawyer, was employed by Altheimer as an associate. In June 1993, Altheimer and Kass sent separate letters to the ARDC. The ARDC is an agency of this court which, inter alia, receives, investigates and prosecutes allegations of professional misconduct by attorneys licensed to practice in Illinois. 134 Ill. 2d R. 751 et seq. In their respective letters, Kass and Altheimer stated that the firm had inadvertently filed a forged document with the circuit court of Cook County and that an unknown person in the firm, possibly a lawyer, had created the bogus document. Neither letter asserted directly that Skolnick was responsible for the purported forgery, but each letter identified Skolnick as an individual who had been questioned concerning the creation of the forged document.

The Administrator of the ARDC filed a complaint against Skolnick, and charged him with several breaches of the Illinois Rules of Professional Conduct (134 Ill. 2d R. 1.1 et seq.). The Administrator alleged that Skolnick had, among other things, caused a forged document to be filed with the circuit court and had engaged in conduct involving dishonesty, fraud, deceit or misrepresentation; engaged in conduct prejudicial to the administration of justice; and in the course of representing a client, knowingly made a misstatement of material fact to a third party. 134 Ill. 2d Rs. 4.1(a), 8.4(a)(4), (a)(5). The ARDC conducted an investigation regarding the allegations contained in the ARDC complaint, but later dismissed the action for lack of evidence.

On May 17, 1995, Skolnick and his wife, Julia Skolnick (collectively, plaintiffs), filed a nine-count complaint against Altheimer and Kass. Plaintiffs alleged that Kass and Altheimer accused Kenneth Skolnick of creating the forged document, and that defendants repeated these accusations to others within the firm, and to clients of the firm, even though Altheimer and Kass knew these accusations to be false. Kenneth Skolnick asserted that he lost present and future business as a result of the accusations, and that he was forced to leave the firm and accept a job paying a reduced salary and benefits. Skolnick pleaded claims for defamation, tortious interference with business relations, breach of fiduciary duty and intentional infliction of emotional distress. Julia Skolnick asserted a separate claim for loss of consortium and joined her husband in seeking damages for intentional infliction of emotional distress.

The circuit court entered an "Agreed Protective Order" on February 1, 1996. The order applied to "all information supplied during discovery [in the lawsuit] that shall be designated by the party or person producing it as `confidential.' " Access to "confidential" information was restricted to the court, the parties, their attorneys, and experts retained for litigation. The order also allowed any party to "seek relief from the court *** from any of the provisions or restrictions" provided in the order, "upon good cause shown."

On February 19, 1998, Kass moved for modification of the protective order, and for leave to file a counterclaim. Kass maintained that, during the course of discovery, she received records generated by nonparty entities indicating that Kenneth Skolnick had engaged in fraudulent conduct. According to Kass, the content of the documents triggered her obligation, under the Illinois Code of Professional Conduct, to report Kenneth Skolnick's alleged misconduct to the ARDC. 134 Ill. 2d R. 8.3(a). She requested modification of the confidentiality provisions of the protective order so she could disclose the contents of the documents to the ARDC. Additionally, Kass argued that these same documents formed the basis for her counterclaim. After a hearing, the trial court denied Kass' motion to modify the protective order, and granted Kass leave to file the counterclaim, although the court directed Kass to file the pleading under seal.

Kass appealed the circuit court's order to the appellate court pursuant to Illinois Supreme Court Rule 307(a). *fn1 166 Ill. 2d R. 307(a). The appellate court partially reversed and partially affirmed the circuit court order. 303 Ill. App. 3d 27. The appellate court held that Kass' obligation to report attorney misconduct to the appropriate authority was "absolute" and that this absolute duty "must be accompanied by the absolute right to report." 303 Ill. App. 3d at 30. Thus, the trial court's refusal to modify an agreed order to allow the attorneys to fulfill their ethical obligations constituted error. 303 Ill. App. 3d at 30.

The appellate court ruled also that merely reporting Skolnick's suspected attorney misconduct to the trial court did not relieve Kass of her obligation to report to the ARDC. Only the Illinois Supreme Court or its designated agent possesses the authority to punish attorneys for their ethical transgressions. Ipso facto, the supreme court is the only forum that can receive complaints of ethical wrongdoing. 303 Ill. App. 3d at 30.

The appellate court affirmed the trial court's order placing Kass' counterclaim under seal. 303 Ill. App. 3d at 33. The appellate court held that, by agreeing to the protective order, Kass voluntarily relinquished her right to disseminate "confidential" information gathered in the course of discovery. Further, constitutional rights do not attach to information disclosed solely to try a lawsuit, and, given the breadth of discoverable material under our court rules, a trial court must retain authority to block the dissemination of information, as it deems necessary. The appellate court rejected too the contention that "the public" could claim access to the allegations contained in the counterclaim. The court concluded that Kass lacked standing to assert this argument. 303 Ill. App. 3d at 32.

Pursuant to Supreme Court Rule 315 (177 Ill. 2d R. 315), this court granted Kass' petition for leave to appeal the appellate judgment affirming the trial court's order to file her counterclaim under seal. The court has consolidated Kass' appeal (Docket No. 87324) with the Skolnicks' separate appeal (Docket No. 87320), also pursuant to Rule 315, from the appellate judgment reversing the trial court's order refusing to modify the protective order.

ANALYSIS

A. Appellate Court Jurisdiction

The Skolnicks contend that the appellate court lacked jurisdiction to entertain Kass' interlocutory appeal. The Skolnicks argue that Supreme Court Rule 307(a)(1), which formed the basis for the appeal below, only permits interlocutory appeals from orders granting or denying injunctive relief. 166 Ill. 2d R. 307(a)(1). The trial court's order denying the motion to modify the protective order was not in the nature of injunctive relief, Skolnick maintains, but rather a ministerial act "deriving from inherent authority of the [c]circuit [c]court to control its proceedings."

Rule 307(a)(1) states:

"An appeal may be taken to the Appellate Court from an interlocutory order of court:

(a) granting, modifying, refusing, dissolving, or refusing to dissolve or modify an injunction[.]" 166 Ill. 2d R. 307(a)(1).

A court looks to the substance, not the form, of an order to determine if it is injunctive in nature. In re A Minor, 127 Ill. 2d 247, 260 (1989). Illinois courts have construed the meaning of "injunction" in Rule 307(a)(1) broadly. In re A Minor, 127 Ill. 2d at 262; Doe v. Doe, 282 Ill. App. 3d 1078, 1082 (1996). An injunction is "a `judicial process operating in personam and requiring [a] person to whom it is directed to do or refrain from doing a particular thing.' " In re A Minor, 127 Ill. 2d at 261, quoting Black's Law Dictionary 705 (5th ed. 1979). In particular, an interlocutory order circumscribing the publication of information is reviewable as an interlocutory injunctive order, pursuant to Rule 307(a)(1). In re A Minor, 127 Ill. 2d at 263; Doe, 282 Ill. App. 3d at 1082; Cummings v. Beaton & Associates, Inc., 192 Ill. App. 3d 792, 796 (1989).

In this case, the protective order entered by the circuit court allowed the parties to designate information disclosed in discovery as "confidential." Once so designated, the information could be disclosed only to persons expressly identified in the protective order. By its terms, therefore, the order forbade the publication of certain information, or, in other words, circumscribed the parties' opportunity to "do a particular thing."

Nonetheless, the Skolnicks maintain that the protective order was only a ministerial act, resulting from the trial court's inherent authority to control access to court records. Citing to JFS v. ABMJ, 120 Ill. App. 3d 261 (1983), the Skolnicks contend that purely ministerial functions of the trial court, such as "impounding records," do not amount to injunctive relief under Rule 307(a)(1).

The Skolnicks' argument lacks merit. This court has explicitly overruled JFS to the extent that JFS suggests that court-ordered restraints upon publication of information are not appealable under Rule 307(a)(1). See In re A Minor, 127 Ill. 2d at 263. The order denying Kass' motion to modify the protective order and restricting public access to pleadings was in the nature of injunctive ...


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