Case 3:06-cv-01645-JP Document 398 Filed 02/23/11 Page 1 of 11

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF PUERTO RICO

HERBERT W. BROWN III, et al.,

Plaintiffs

v.
CIVIL NO. 06-1645 (JP)
COLEGIO DE ABOGADOS DE PUERTO
RICO,

Defendant

O R D E R

Before the Court is Defendant Colegio de Abogados de Puerto

Rico’s (“Colegio”) motion for reconsideration1 (No. 386) of the

Court’s Order (No. 384) issuing a Court-approved communication based

on the communication proposed by Colegio at docket number 366. This

Order supplements the Order entered by the Court at docket number

384. For the reasons stated herein, said motion is DENIED.

I. BACKGROUND

The curtain came down on the issue of Colegio’s liability when

the First Circuit Court of Appeals issued its opinion on July 23,

2010. Brown v. Colegio de Abogados de Puerto Rico, 613 F.3d 44 (1st

Cir. 2010). The First Circuit affirmed this Court’s finding that

Colegio acted improperly and unlawfully after the decision in Romero

v. Colegio de Abogados de Puerto Rico, Civil Case No. 94-2503.

1. Colegio’s motion, while filed as an informative motion, is in effect a motion

for reconsideration of the Court’s Order at docket number 384.
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After Romero, not only did Colegio continue to force its members

to pay for the compulsory life insurance which was unlawful, but it

also placed obstacles in front of attorneys wishing to exercise their

right to not be charged for the compulsory life insurance and

misinformed class members. The First Circuit provided the best

explanation of said behavior when it stated:

The first group of attorneys requested that they

be excused from participating in the life
insurance program on November 30, 2005. Colegio
did not issue a response by the deadline for
attorneys to pay their annual dues, so the group
paid in full. On February 2, 2006, Colegio said
that it would reimburse their premiums only on
various conditions, including that the attorneys
make a new request to be excluded every year-the
claim being that one board could not bind the
next-and that their reimbursement not serve as
precedent for future cases. The attorneys
refused and Colegio eventually refunded their
premiums on March 3, 2006.

A second group requested on February 27, 2006

that Colegio refund the portion of their 2006
dues attributable to the life insurance program.
Colegio submitted the matter to a review board
and there argued that the Romero decision “is
not extensive to other Bar Association members”;
that the attorneys' request was untimely because
it occurred after their 2006 dues had already
been paid; and that the board should allow it to
reimburse the attorneys with vouchers for
Colegio seminars, books or other programs rather
than cash. Colegio eventually reimbursed the
attorneys the dues for the portion of their 2006
coverage “unearned” by the insurer.

Brown, 613 F.3d at 47 n.1. In addition, the First Circuit went on to

state about Colegio’s sorry record:

[a]fter Romero, Colegio did not fully advise its

members that they no longer had to buy
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insurance, threw obstacles in front of those

trying to opt out, and delayed refunds. In fact
it moved to disbar one member who refused to pay
the portion of his dues attributable to the
program, see In re Rivera, No. TS-9645, 2006 WL
3782863 (P.R. Nov. 14, 2006).

Id. at 49.

Furthermore, the First Circuit rejected Colegio’s argument that

the class representatives do not adequately represent the interests

of the class based on an October 18, 2008, resolution after

considering the circumstances under which said resolution was passed.

Id. at 50. Again, the First Circuit best expressed the circumstances

under which the resolution was passed:

[i]t appears from the record that the meeting

that adopted the resolution was attended by only
a few hundred of Colegio's 12,000 members; an
affidavit suggests that the matter was voted on
but never discussed; and there is no information
from Colegio to indicate what was actually
disclosed to the members about the nature of the
suit, the interests of the members in the suit,
or the basis for opposing a law suit aiming to
recover damages for the members. Nor do
Colegio's earlier tactics inspire confidence in
the resolution. (Emphasis ours)

Id.

However, even after the First Circuit decision, Colegio

continued with its misinformation campaign. Plaintiffs filed two

motions (Nos. 183 and 188) in which they were requesting a protective

order against Colegio because Colegio was providing misleading

information to class members. After considering the communications,

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the Court determined that a protective order was warranted because

Colegio was misleading class members (No. 202).

Specifically, Colegio was informing class members that it was

authorized to establish the mandatory insurance program, even though

this Court and the First Circuit had already established that the

program violated the rights of class members. Also, Colegio neglected

to mention that it was knowingly violating the rights of class

members since 2002. Further, the Court determined that the protective

order was warranted because Colegio was attempting to mislead class

members into opting out of the class by speculating that the class

brought this action to destroy Colegio and to benefit them

financially. No mention was made by Colegio of the possibility that

this action was brought to protect the rights of class members.

Because the Court was dealing with lawyers who were flouting

principles of civility and honesty in litigation, the Court entered

a protective order precluding Colegio from communicating with class

members without prior leave of Court regarding this litigation or the

claims therein, until class notice was provided and the opt-out

procedures were completed. The Court narrowly tailored the order to

permit Colegio to continue to communicate with its members on matters

not related to this case and also allowed Colegio to request leave

of Court to communicate with class members if the need to do so

arose. This was the only remedy available to deal with the situation

at hand.
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Thereafter, as is their right, Colegio appealed the Court’s

Order granting the protective order (No. 214). The appeal is still

pending. Colegio also sought a stay which was denied on February 1,

2011 (No. 303-1). In denying the request for a stay, the First

Circuit stated:

In support of its constitutional challenge to

the protective order, Colegio's reliance upon
Gulf Oil Co. v. Bernard, 452 U.S. 89 (1981)
seems misplaced. The facts of this case are
distinguishable from the facts of Gulf because
the record suggests that here the district court
made findings of fact justifying the limitations
imposed upon Colegio, and narrowly tailored such
limits to minimize the restrictions on speech
while protecting against the type of misleading
communications in which it found that Colegio
had engaged. Moreover, the protective order
applied only to communications regarding the
litigation, only during the one-month opt-out
period, and only to communications made without
prior court approval. On this record, it does
not appear likely that Colegio could prevail on
its constitutional claim. See Manual for Complex
Litigation (4th ed.), Pt II §21.12 (stating that
defendants and their counsel “may not give
false, misleading, or intimidating information;
conceal material information; or attempt to
influence the decision about whether to request
exclusion from a class certified under Rule
23(b)(3)”)(emphasis ours).

And if Colegio were to prevail on appeal on its

First Amendment claim, as the appellees point
out, “[t]he notice and opt-out process could
always be repeated post-judgment” without the
restrictions on communications. Therefore,
Colegio has not made the requisite showing of
irreparable harm if the stay is denied.

After the denial of the stay, Plaintiffs filed two motions for

orders to show cause (Nos. 306 and 311) as to Colegio and its
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President, Osvaldo Toledo Martínez (“Toledo”). The motions presented

evidence that Colegio and Toledo had violated the protective order

and another order (No. 305) of the Court denying Colegio’s request

to distribute an opt-out form.2 Specifically, Plaintiffs presented

evidence that: (1) an email was circulating amongst class members

containing the same opt-out form previously rejected by the Court;

(2) Toledo sent out two separate emails in direct violation of this

Court’s protective order; (3) Toledo went on radio to talk about this

case in direct violation of the protective order and bragging about

doing precisely that; and (4) a website had been created with

information only in the possession of Colegio.

The Court granted (Nos. 307, 314, and 315) the motions for

orders to show cause, and ordered Colegio and Toledo to show cause

at a hearing as to why this Court should not find them in contempt

of Court and/or sanction them. At the hearing, Plaintiffs presented

all their evidence.3

2. In denying the motion for the opt-out form, the Court relied, among other
things, on the fact that, even though the preparation of the Class Action
Notice had been ongoing for months, Colegio requested for the first time that
said form be distributed after the Class Action Notice had been distributed.

3. The evidence presented by Plaintiffs included, among many other things, the
radio show interview conducted by Toledo. In the radio show, Toledo
misrepresented the status of the litigation, and the various district court
and court of appeals decisions rendered in this case. In addition, Toledo
made unsupported allegations of ideological conspiracies between federal
courts and Plaintiffs to destroy the Colegio’s name, reputation, and
identity in Puerto Rico’s society. Toledo acknowledged that he was speaking
on the radio show in direct violation of the Court’s protective order.
Toledo spoke about this case, the opt-out procedures, and requested that
class members opt out. He also admitted that he did not follow the Court’s
procedure on instructing attorneys inquiring about the opt-out procedures.
Further, Toledo admitted that he ordered Colegio to email the opt-out form
created by him to class members.
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Surprisingly, Toledo, the president of Colegio, did not appear

at the hearing, even though he had notice of said hearing and his

presence had been required, and Colegio did not present any evidence.

In light of the overwhelming amount of evidence that Colegio and

Toledo willfully violated the Court’s orders, the Court determined

that a finding of civil contempt against Colegio and Toledo was

warranted (No. 319).4 Perhaps the most shocking part of Toledo and

Colegio’s behavior was that they engaged in said behavior even after

the First Circuit stated, at the time of the denial of the request

for a stay, that if Colegio prevailed on its appeal regarding the

protective order, the notice and opt-out process could be repeated

without the limitation on Colegio’s communications.

II. COLEGIO’S MOTION FOR APPROVAL OF A PROPOSED COMMUNICATION

With this background in mind and on February 22, 2011, Colegio

filed a motion requesting leave of Court to send out a communication

to rectify information allegedly distributed by Colegio detractors

(No. 366). The motion included the proposed communications, but did

not even include copies of the alleged inaccurate information that

was being distributed.

Without the benefit of being presented with the allegedly

inaccurate information, the Court examined the proposed

communication. After examining the communication, the Court

determined on February 22, 2011, that the proposed communication was

4. The Court notes that Judge Patti Saris also entered a separate civil contempt
order against Colegio in the Romero case.
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misleading and, for the benefit of Colegio, revised said

communication in order to allow Colegio to issue an accurate

statement to class members (No. 384). The Court’s explanation as to

why the communication was misleading was limited because the Court

wanted to provide Colegio with sufficient time to issue the

authorized communication before the February 26 opt-out deadline.

In the Order, the Court explained how Colegio attempted to

present itself in the proposed communication as being completely

willing to accommodate the requests of attorneys to be reimbursed for

the amount paid for the compulsory life insurance after the decision

in Romero. As explained in the First Circuit opinion in this case and

in this Order, this version of the facts is not in tune with reality.

As fully explained above and in the First Circuit opinion, Colegio

took numerous actions to avoid refunding class members the money said

class members were forced to pay unlawfully for the compulsory life

insurance, including moving to disbar an individual. Moreover, the

Court explained how in its proposed communication Colegio attempts

to misinform class members that it was “forced” to post its real

estate as a security. In reality, Colegio “elected” to post its real

estate as security.

III. MOTION FOR RECONSIDERATION

In the instant motion for reconsideration, Colegio states that

it will issue the Court-approved communication and states its

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objections to the Court-approved communication. The Court will only

address two of Colegio’s arguments.

Colegio first suggests that their proposed communication better

served the interest of providing class members with all the

information necessary to make an informed decision in an easy to

reach and useful manner. Said statement relies on the flawed

assumption that Colegio is providing accurate and complete

information.

As expressed in the Court’s Order (No. 384), Colegio’s proposed

communication is misleading. Further, other misleading statements not

detailed in the Order at docket number 384 were made by Colegio.

Colegio states how there is a protective order in this case, but

makes no mention of the fact that said protective order was issued

because Colegio made statements to class members which the Court

found to be misleading. Colegio also goes on to emphasize how the

class representatives in this case did not request reimbursement or

object. Said statement is irrelevant and misleading as the First

Circuit has already rejected that argument. See Brown, 613 F.3d at

52-53.

Further, Colegio’s description of the history of the life

insurance program presents another misleading picture that all of

Colegio’s members benefitted from the life insurance program. This

is seen in the first sentence of the section on the history of the

life insurance program in which Colegio states how it established

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the group life insurance program “for the benefit of all its

members.” The First Circuit has already rejected said argument and

made clear that it relies on the flawed assumption “that the

insurance was in fact desired by the class members on whom it was

inflicted.” Id. at 52.

Also, the Court notes that there is no better place for class

members to find an accurate history of this case than in the cases

cited to in the authorized communication. Colegio also suggests that

the cases are not accessible to all class members. Class members are

attorneys, and suggesting that they cannot access cases is simply

ludicrous. The cases and the official information are the controlling

sources from where any legal professional can find what is needed to

make a decision.

Secondly, Colegio argues that the sentence added by the Court

which states “[i]f an organization or law firm paid an attorney’s

Colegio membership for any year covered for this suit, it is up to

the individual attorney to decide whether to opt-out or not as

outlined here[]” is improper because it could be considered a tacit

adjudication of three separate motions filed by non-profit legal

organizations (Nos. 327, 336 and 351). The Court expressly included

said sentence because it has not ruled on the motions by the non-

profit legal organizations and did so based on Colegio’s request at

yesterday’s in-chambers conference on the subject.

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Said sentence was included solely for the benefit of Colegio

while the Court rules on the non-profit associations’ motions and on

Colegio’s motions for an extension of time (Nos. 359 and 365).

Neither the authorized communication nor this Order represent any

ruling on either the non profit organizations motions (Nos. 327, 336,

and 351) or Colegio’s motions (Nos. 359 and 365) for extension of

time. Accordingly, the Court DENIES Colegio’s motion for

reconsideration.

IT IS SO ORDERED.

In San Juan, Puerto Rico, this 23rd day of February, 2011.

S/JOSE ANTONIO FUSTE

JOSÉ ANTONIO FUSTÉ
CHIEF U.S. DISTRICT JUDGE