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Tuesday, February 15, 2011

In the Matter of the Complaint of Sunoco, Inc. (R&M) v. The Toledo Edison Company, Case no. 2009-0880

In re: D.B., a minor child, Case no. 2010-0240
5th District Court of Appeals (Licking County)

DeWayne Sutton v. Tomco Machining, Inc., Case no. 2010-0670
2nd District Court of Appeals (Montgomery County)

Cincinnati Bar Association v. Robert N. Trainor, Case no. 2010-1894
Hamilton County

Cincinnati Bar Association v. William Farrell, Case no. 2010-1951
Hamilton County

New Destiny Treatment Center, Inc., et al. v. E. Marie Wheeler et al., Case no. 2010-0298
9th District Court of Appeals (Summit County)


Does Contract Clause Granting 'Most Favorable' Treatment Require Extension of Contract's Duration?

In the Matter of the Complaint of Sunoco, Inc. (R&M) v. The Toledo Edison Company, Case no. 2009-0880

ISSUE: When a “most favored nation” clause in an electric utility’s contract with a large industrial customer guarantees that customer may take advantage of any “arrangement, rates or charges” that are extended by the utility to any other comparable customer, does that clause entitle the customer to an extension of the duration of its current contract with the utility if the utility extends its contract with a comparable customer to a later expiration date?

BACKGROUND:  Sunoco and BP Oil company both operate petroleum refining facilities in northern Ohio that receive electric power service from the Toledo Edison Company. As high-volume industrial customers, both Sunoco and BP negotiated special contracts with Toledo Edison granting them “most favorable” rates and terms of service compared to the utility’s other customers. Identical clauses were included in both companies’ contracts guaranteeing that if Toledo Edison granted a more favorable “arrangement, rates or charges” to either of them during the duration of their current contract period, the other competitor could take advantage of that change as well.

As of May 1999, both refineries’ electric service contracts with Toledo Edison were to remain in force through June 2006. In subsequent years, the Public Utilities Commission of Ohio (PUCO) enacted several orders revising Toledo Edison’s rate structure as part of a legislatively mandated  transition of the state’s electric power industry from a regulated to a market-based pricing standard. Following the adoption of each of these orders, special contract customers including Sunoco and BP had the opportunity to extend the terms of their current service contracts. Sunoco exercised its option to extend its current contract to February 2008. BP exercised an additional option that extended its current service contract through December 2008.

In May 2007, Toledo Edison notified Sunoco that its service agreement would expire in February 2008.  In November 2007, Sunoco sent a letter to Toledo Edison stating that it was exercising its right under the “most favored nation” clause in its service agreement to claim the same extension of current service rates until December 2008 as the utility had granted to BP.  The power company disputed Sunoco’s interpretation of the contract clause and refused to extend Sunoco’s existing agreement beyond February 2008.  Sunoco filed a complaint with the PUCO. In February 2009, the commission ruled that the most favored clause in Sunoco’s 1999 service agreement with the power company was limited to the rates and charges set forth in that agreement, and did not entitle Sunoco to an extension of the duration of the contract itself.

Sunoco has exercised its right to appeal the PUCO’s ruling to the Supreme Court.

Among other arguments, attorneys for Sunoco argue that the PUCO wrongfully cited the heading of the most favored nation clause, which is titled “Comparable Facility Price Protection,” as evidence of the parties’ intent to limit the scope of the clause to rates or prices charged for electric service rather than to other issues addressed  in the contract.  They point out, elsewhere in the contract, a provision specifically stating that section titles should not be interpreted to limit the intent or scope of each section.

Attorneys for the PUCO urge the Court to affirm the PUCO’s interpretation of the contract language.

They argue that because the first sentence of the most favored nation clause makes separate references to an “arrangement, rates or charges” that is covered by the clause and to “the term of this Agreement,” the commission acted within its discretion in determining that the term or duration of the agreement was fixed and was not an “arrangement” subject to change if a different customer negotiated a service contract with a later expiration date.

Contacts
David F. Boehm, 513.421.2255, for Sunoco Inc.

John H. Jones, 614.466.4395, for the Public Utilities Commission of Ohio.

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Does Statutory Rape Law Apply When Both Parties to Non-Forcible Sex Acts Are Under 13 Years of Age?

Case Questions Identifying One Child As Perpetrator, Other as Victim

In re: D.B., a minor child, Case no. 2010-0240
5th District Court of Appeals (Licking County)

ISSUE: When two children who are both under the age of 13 engage in sexual activity with each other, and there is no finding of force or coercion, does a juvenile court violate the equal protection and due process clauses of the U.S. and Ohio Constitutions by charging one of the participants with statutory rape under R.C. 2907.02(A)(1)(b)?

BACKGROUND: R.C. 2907.02(A)(1)(b), a subsection of Ohio’s statutory rape statute, prohibits any person from “engaging in sexual conduct with another person when ... the other person is less than 13 years of age.”  In order to obtain a conviction under R.C. 2907.02(A)(1)(b), which is a strict liability statute, the state is required to prove only that an “other person” engaged in sexual conduct with child under the age of 13. 

In this case, a 12-year-old boy identified as D.B. and his 11-year-od friend, identified as M.G. engaged in sex acts with each other on several occasions.  In each instance,  D.B., who was physically taller and heavier than M.G., was the instigator of and dominant party in the sexual conduct.  Both boys and a mutual friend who witnessed some of the acts testified that M.G. consented to the conduct, and that on several occasions M.G. asked D.B. to give him one of D.B.’s video games or something else of value in exchange for engaging in anal sex.

When the boys’ parents discovered the conduct, D.B. was charged with multiple delinquency counts of rape in the Licking County Juvenile Court. The complaint alleged that D.B. had committed forcible rape under R.C. 2907.02(A)(2) or in the alternative had committed statutory rape in violation of R.C. 2907.02(A)(1)(b) by engaging in non-forcible sexual conduct with a child under the age of 13. 

Attorneys for D.B. filed a pretrial motion to dismiss the statutory rape charges on the basis that both participants had “engaged in sexual conduct” with a person under the age of 13, and therefore applying R.C. 2907.02(A)(1)(b) to charge one participant as the perpetrator and the other as the victim violated the equal protection and due process provisions of the state and federal constitutions. 

The juvenile court deferred ruling on the motion to dismiss until after it had reviewed the evidence and testimony presented at trial. After dismissing several of the original rape counts based on insufficient evidence, and concluding that D.B. had not coerced M.G. by force or threat of force on any of the occasions they engaged in sexual conduct, the court adjudicated D.B. guilty of five delinquency counts of statutory rape based on the facts that M.G. was under the age of 13 and that D.B. had been the initiator and dominant party on every occasion of sexual activity between the two boys.  D.B. was sentenced to a term of commitment to the Ohio Youth Commission of a minimum of five years to a maximum of his 21st birthday. The full term of commitment was suspended pending D.B.’s successful completion of probation and participation in sex offender treatment at a nearby facility.

D.B. appealed, arguing that after finding that the sexual conduct between the boys had not been forcible, and that both fell into the under-13 age group protected by the statutory rape statute, the trial court should have granted the defense motion to dismiss the remaining charges on equal protection and due process grounds.  The 5th District Court of Appeals upheld the juvenile court’s judgment, holding that the trial court’s application of R.C. 2907.02(A)(1)(b) to convict D.B. of delinquent statutory rape under the facts of this case was not unconstitutional. D.B. sought and was granted Supreme Court review of the 5th District’s ruling.

Attorneys for D.B. argue that the plain language of the statutory rape statute makes it illegal for any “other person,” regardless of age, to “engage in sexual conduct” with a child who is under 13 years of age. Thus, they assert, when two children under 13 years of age engage in sexual conduct with each other, and there is no finding of force or coercion, applying R.C. 2907.02(A)(1)(b) to that situation would result in the absurd outcome that both participants in the underage sexual conduct would simultaneously be victims of statutory rape and chargeable as perpetrators of the same crime.

Attorneys for the state respond that while the juvenile court did not find that D.B. forcibly raped  M.G., many of the state laws defining sex offenses against children prohibit other, nonviolent forms of influence and control that can be used to get a child to submit to sexual conduct.  In this case, they point out, the trial judge made specific findings that D.B. was always the instigator of sexual activity and was much bigger and stronger than M.G., that he would wrestle with M.G. until he agreed to have sex, and that he gave M.G. video games in exchange for sex and that he used other tactics that would be illegal if employed by an adult or older teenager to induce M.G. to engage in sex acts. 

Because R.C. 2907.02(A)(1)(b) plainly prohibited D.B. from engaging in sex acts with M.G. or any other child under 13, and because the juvenile court made specific findings that D.B. used his physical size and strength, bribes and other inducements to pressure a younger and smaller boy for sex, the state urges the Court to affirm the 5th District’s finding that the juvenile court acted within its discretion in finding that D.B.’s conduct was punishable as delinquent violations of the statutory rape law.

NOTE: A number of amicus curiae (friend of the court) briefs have been submitted in this case by interested parties including the National Juvenile Defense Center, Midwest Juvenile Defender Center, Children and Families Justice Center and the Ohio Prosecuting Attorneys Association. Those briefs and other filings in the case may be accessed by following this link to the Court’s online docket http://www.sconet.state.oh.us/Clerk/ecms/searchbycasenumber.asp  Enter the eight-digit case number (2010-0240) in the space provided, and click “Search.”

Contacts
Brooke M. Burns, 614.466.5394, for D.B.

Christopher A. Reamer, 740.670.5255, for the state and Licking County Prosecutor's Office.

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Does Ohio Recognize a 'Common Law' Cause of Action for Wrongful Discharge of Injured Worker?

Where Worker Fired Immediately After Reporting Job Injury to Employer

DeWayne Sutton v. Tomco Machining, Inc., Case no. 2010-0670
2nd District Court of Appeals (Montgomery County)

ISSUE: Under Ohio law, when a worker is fired immediately after reporting a work-related injury to his employer, before the worker has initiated a claim for state workers’ compensation benefits, may the worker assert a “common law” tort claim against the employer for wrongful discharge in violation of the public policy underlying the workers’ compensation system?

BACKGROUND: R.C. 4123.90, a section of the state’s workers’ compensation law, provides that:
“No employer shall discharge, demote, reassign, or take any punitive action against any employee because the employee filed a claim or instituted, pursued or testified in any proceedings under the workers’ compensation act for an injury or occupational disease which occurred in the course of and arising out of his employment with that employer.”

In April 2008, approximately one hour after Tomco Machining Co. employee DeWayne Sutton reported to company president Jim Tomasiak that he had been injured in a workplace accident, Sutton was terminated from his job. No reason was given for Sutton’s termination. Sutton later filed for and was granted state workers’ compensation benefits for the injuries he suffered in the accident, however he had taken no action to initiate that claim in the brief period between his injury and his firing.

Sutton subsequently filed a civil suit against Tomco in the Montgomery County Court of Common Pleas, asserting two different causes of action: 1) a statutory claim for unlawful retaliation (wrongful discharge) in violation of R.C. 4123.90; and 2) a common law claim for wrongful discharge in violation of Ohio public policy. Tomco moved for and the trial court granted summary judgment  dismissing both of Sutton’s claims.  The court ruled that because Sutton had not taken any action to initiate a workers’ compensation claim prior to his firing, he could not assert a statutory claim for retaliation under R.C. 4123.90.  It also held that, under the Supreme Court of Ohio’s 2007 decision in Bickers v. Western & Southern Life Ins. Co., an employee who could not assert an actionable claim under R.C. 4123.90 was also barred from asserting a common law claim based on the public policy underlying that statute.

Sutton appealed.  On review, the 2nd District Court of Appeals affirmed the trial court’s dismissal of his statutory claim, but distinguished the facts of this case from the facts underlying the Supreme Court’s ruling in Bickers,  and remanded the case to the trial court for further proceedings on Sutton’s public policy claim. Tomco sought and was granted Supreme Court review of the 2nd District’s ruling.

Attorneys for Tomco urge the Court to follow its holding in Bickers that a statutory claim for retaliation under R.C. 4123.90 “provides the exclusive remedy for employees claiming termination in violation of rights conferred by the Workers’ Compensation Act.”  While acknowledging that there are compelling public policy interests that favor protecting injured workers against the loss of their jobs, they argue that it is the role of the General Assembly, rather than the courts, to write laws that strike a balance between the interests of employers and employees.  In this case, they assert, when it drafted the state’s current workers’ compensation statutes including R.C. 4123.90, the legislature barred the discharge of an injured worker only in response to or retaliation for the filing of a workers’ compensation claim. Because Sutton had not filed a workers’ compensation claim prior to his firing, they urge the Court to reinstate the trial court’s holding that Sutton has no legal basis to assert either a statutory or a public policy wrongful discharge claim against Tomco.

Attorneys for Sutton point out that in Bickers the Supreme Court ruled that an injured employee who was already receiving workers’ compensation benefits could not bring a public policy complaint based on R.C. 4123.90 when he was fired for allegedly violating workplace rules unrelated to his injury.  In this case, they contend, Sutton’s firing within an hour after reporting his workplace injury to his employer made it impossible for him to trigger the job protection offered by R.C. 4123.90 by initiating a workers’ compensation claim.

They assert that the state has clear public policy interests in encouraging workers to promptly report on-the-job injuries to their employers in order to obtain immediate medical attention and allow timely fact-gathering about their accidents. They argue that those interests will be  frustrated if employers like Tomco are permitted to evade the anti-retaliation statute by firing employees like Sutton so quickly that they have no reasonable opportunity to file a workers’ compensation claim.  They urge the Court to affirm the 2nd District’s ruling, which they say recognizes a limited public policy cause of action for wrongful discharge based on R.C. 4123.90 under the unique circumstance that an injured worker was fired so soon after reporting his injury to his employer that the employee had no reasonable opportunity to initiate a workers’ compensation claim prior to his firing.

Contacts
Jason P. Matthews, 937.228.3731, for DeWayne Sutton.

Jonathan Hollingsworth, 937.424.8556, for Tomco Machining Inc.

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Attorney Discipline

Cincinnati Bar Association v. Robert N. Trainor, Case no. 2010-1894
Hamilton County

The Board of Commissioners on Grievances & Discipline has recommended that the Ohio law license of attorney Robert N. Trainor of Covington, KY be suspended for 24 months, with the final 18 months of that term stayed on conditions, for violations of two state attorney discipline rules.

The board found that Trainor failed to advise a client at the time she retained his services that he was not covered by professional liability insurance and did not obtain a required signed statement from the client agreeing to the representation despite his lack of insurance.  The board also found that Trainor failed to promptly return to the same client a $225 refund of court costs to which she was entitled despite her repeated requests for those funds.

Trainor has admitted the rule violations with which he is charged, but filed objections to the board’s recommended penalty as overly severe punishment for his misconduct.  He asks the Court to impose an actual suspension from practice of no more than three months in light of mitigating factors in his case.

The bar association did not submit a brief responding to Trainor’s objections. Therefore, pursuant to Supreme Court rules of practice and procedure, only Trainor will present oral argument before the justices.

Contacts
Joseph N. Gross, 216.363.4500, for the Cincinnati Bar Association.

Robert Trainor, pro se, 859.581.2822.

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Attorney Discipline

Cincinnati Bar Association v. William Farrell, Case no. 2010-1951
Hamilton County

The Board of Commissioners on Grievances & Discipline has recommended that Cincinnati attorney William I. Farrell be permanently disbarred for engaging in a pattern of misconduct that included failing to file tax returns or pay federal, state or local income taxes for himself and his then-wife for tax years 2001-2006. The board also found that Farrell knowingly filed a false affidavit with the Hamilton County Domestic Relations Court during 2007 divorce proceedings, and gave false testimony before a hearing panel in a prior disciplinary case in which he denied knowledge of any liability by himself or his ex-wife for unpaid taxes. 

The board found as significant aggravating factors the facts that Farrell’s law license had previously been suspended for separate acts of misconduct including falsification of financial records and forgery of his wife’s signature on a credit line application, and that during the proceedings in that previous case Farrell deliberately concealed the tax-related misconduct that has resulted in this new disciplinary proceeding against him.

Farrell has filed objections to the board’s recommended sanction. He urges the Court to give greater weight to the mitigating factors that he suffered from a depressive mental disorder during the time period in which his misconduct took place, and that his actions did not involve his work as an attorney or cause harm to any of his clients because they involved only his own personal and family finances. He asks the Court not to impose the ultimate sanction of disbarment and instead to adopt the punishment that was  recommended by the hearing panel that heard all the evidence in his case, which was an indefinite license suspension with strict preconditions for any future reinstatement.

The Cincinnati Bar Association, which prosecuted the charges against Farrell before the disciplinary board, urges the Court to overrule Farrell’s objections and permanently revoke his law license as the appropriate penalty for his unlawful and unethical conduct. They point out that his violations included not only illegal conduct involving moral turpitude, but also lying to a previous disciplinary panel and filing a false sworn statement with the domestic relations court in his own divorce case in order to avoid the consequences of his past misdeeds.

Contacts
Kevin P. Roberts, 513.233.3666, for the Cincinnati Bar Association.

William Farrel, pro se, 513.871.0336.

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After Failed Takeover, Can Corporation Sue Lawyer Who Represented Unsuccessful Dissidents for Malpractice?

Case Questions Whether Corporate Attorney-Client Relationship Existed

New Destiny Treatment Center, Inc., et al. v. E. Marie Wheeler et al., Case no. 2010-0298
9th District Court of Appeals (Summit County)

ISSUE:  When a group of dissident trustees of a nonprofit corporation retain the services of an attorney to help them in an attempt to unseat the organization’s current leadership and establish a new corporate board, if the dissident faction assumes temporary control of corporate assets and operations, even though the dissidents’ purported takeover is later voided by a court as a legal nullity, do the actions of the dissidents’ attorney during the takeover attempt establish an attorney-client relationship with the corporation sufficient to support a subsequent malpractice lawsuit by the corporation against the dissidents’ attorney?

BACKGROUND:  Barberton Rescue Mission (BRM), which has since been renamed New Destiny Treatment Center, was established as a religious and charitable organization for the purpose of operating a treatment center in Barberton to assist individuals with substance abuse problems. BRM subsequently began a new program called the Christian Brotherhood Newsletter (CBN) through which subscribers to a Christian newsletter provided mutual assistance to each other to help pay for uninsured medical bills. Both BRM and CBN, as a division of BRM, were founded by members of the Hawthorn family. Bruce Hawthorn became the president of BRM and he and members of his family sat on the organization’s board of trustees.

Over a period of years, CBN grew to the point that millions of dollars were passing through its accounts each month to pay subscribers’ medical bills. In the late 1990s, several government agencies undertook investigations of the financial affairs of BRM/CBN based on allegations that Bruce Hawthorn and members of his family had used corporate assets for their personal benefit including the payment of excessive compensation and the purchase of homes, vehicles and other items. A faction of the BRM board opposed to Hawthorn, led by Howard Russell and Richard Lupton, succeeded in taking control of the board of trustees. The board placed Hawthorn on a leave of absence and stripped him of authority as president. Acting in the name of the corporation, the  Russell-Lupton faction retained the law firm of Vorys, Sater, Seymour & Pease to represent BRM in lawsuits it filed in the Summit County Court of Common Pleas against Hawthorn and others.

In December 2000, Hawthorn issued a notice scheduling a meeting of the BRM board of trustees on Dec. 11, 2000.  The Russell-Lupton faction did not attend the meeting.  Acting in their absence, a slate of new trustees supportive of Hawthorn was “elected” to the BRM board. This new board immediately passed resolutions reinstating Hawthorn as president, removing Russell from his position as a trustee, firing the attorneys the Russell-Lupton faction had hired to represent BRM in litigation against Hawthorn and retaining the law firm of Roderick Linton LLP and attorney E. Marie Wheeler as legal counsel for the corporation. Pursuant to those resolutions,  Russell was ordered to vacate his office at the BRM facility, and locks at the company’s facilities were changed to prevent access by persons not approved by the Hawthorn-faction board.  On Dec. 22, 2000, the state attorney general’s office filed a “quo warranto” action in the 9th District Court of Appeals seeking a declaration that the Hawthorn faction had no authority to call the Dec. 11, 2000 meeting, and that all actions taken by the “new” BRM board established at that meeting were void and invalid.

From Dec. 11, 2000 until April 21, 2001, while the common pleas court and quo warranto actions remained pending, the Hawthorn faction exercised day-to-day control over the assets and operations of BRM. During that period Wheeler advised BRM and made legal filings on its behalf in both court cases, and also filed pleadings on behalf of Hawthorn and other defendants in those cases.  On April 21, 2001, a receiver appointed by the common pleas court notified Wheeler that he was terminating any ostensible authority she had exercised to speak or act as legal counsel for the corporation.

In October 2001, the 9th District granted summary judgment in favor of the Russell/Lupton faction in the quo warranto case, holding  that the Dec. 11, 2000 board meeting called by the Hawthorn faction was invalid for lack of a quorum, that the election of new trustees at that meeting was invalid and that all actions taken by the new “board” created at that meeting, including retention of Roderick Linton and Wheeler as counsel for BRM, were void. The common pleas court case was litigated over a period of several years, and ultimately resulted in a multi-million dollar verdict in favor of the corporation against Hawthorn and other defendants.

BRM filed a legal malpractice suit against Wheeler and Roderick Linton, alleging that their improper and inaccurate legal advice in December 2000 had enabled Hawthorn and his faction to regain control over BRM and its assets despite the ongoing investigations of their looting of assets.  The complaint also alleged that Roderick Linton and Wheeler had engaged in a conflict of interest by purporting to represent both the plaintiff (BRM) and the defendants (Hawthorn and his family) in the common pleas court case. Wheeler and Linton moved for dismissal on the basis that, under the 9th District’s ruling in the quo warranto action, there had never been an actual lawyer-client relationship between them and the corporation, and therefore BRM lacked standing to sue them for malpractice. The trial court granted summary judgment in favor of Wheeler and Roderick Linton. BRM appealed. On review, the 9th District reversed the trial court and reinstated the corporation’s malpractice complaint for further proceedings. Wheeler and Roderick Linton sought and were granted Supreme Court review of the 9th District’s decision.

Attorneys for Wheeler and Roderick Linton contend that because BRM specifically argued in the common pleas court and quo warranto cases that Wheeler and Roderick Linton had never been the corporation’s attorneys but rather had acted only on behalf of the discredited Hawthorn faction, BRM should be barred by the doctrine of judicial estoppel from later pursuing a malpractice action based on a contradictory claim that there had, in fact, been an attorney-client relationship between them and the corporation. They assert that from before the date of the Dec. 11, 2000 board meeting until a court-appointed receiver was appointed to oversee BRM, the Russell-Lupton faction had relied exclusively on Vorys, Sater for legal representation and had never acknowledged or considered Wheeler or Roderick Linton to be their lawyers. In the absence of such recognition or reliance, they argue, the Russell-Lupton board members never had a lawyer/client relationship with Wheeler or Roderick Linton, and therefore do not have standing to pursue a malpractice claim against them.

Attorneys for BRM respond that although the 9th District ultimately declared that the Dec. 11, 2000 action by the Hawthorn dissidents hiring Roderick Linton as the corporation’s legal counsel was void, that does not alter the fact that for more than four months Wheeler and Roderick Linton provided legal services for which they billed and were paid more than $80,000 out of BRM’s corporate funds.

They also argue that by acting as counsel for both BRM and Hawthorn in the common pleas court case, despite the fact that the corporation’s interests in that litigation were directly contrary to those of Hawthorn, Wheeler and Roderick Linton engaged in legal malpractice, and the 9th District correctly held that they should not escape liability for that wrongdoing.

Contacts
Brian D. Sullivan, 216.687.1311 and Alan M. Petrov, 216.522.1073, for E. Marie Wheeler and Roderick Linton LLP.

Michael J. Moran, 330.929.0507, for New Destiny Treatment Center (f.k.a. Barberton Rescue Mission).

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These informal previews are prepared by the Supreme Court's Office of Public Information to provide the news media and other interested persons with a brief overview of the legal issues and arguments advanced by the parties in upcoming cases scheduled for oral argument. The previews are not part of the case record, and are not considered by the Court during its deliberations.

Parties interested in receiving additional information are encouraged to review the case file available in the Supreme Court Clerk's Office (614.387.9530), or to contact counsel of record.