On March 23rd Success by Health’s attorneys filed a motion to withdraw.
At the time attorneys represented the Success by Health corporate entities, as well individual defendants James D Noland, Jr, Lina Noland, Thomas Sacca and Scott Harris.
Stated reasons in the withdrawal motion are as follows:
1. The clients have failed to substantially fulfill their obligations to the Firm regarding the Firm’s services and has been given reasonable warning that the Firm would withdraw unless the obligation is fulfilled; and
2. Continued representation will result in an unreasonable financial burden on the lawyer or has been rendered unreasonably difficult by the client.
Rules 1.16(a) and 1.16(b) of the Arizona Rules of the Supreme Court were also cited.
Rule 1.16(a) only requires withdrawal in three circumstances:
(1) the representation will result in violation of the Rules of Professional Conduct or other law;
(2) the lawyer’s physical or mental condition materially impairs the lawyer’s ability to represent the client; or
(3) the lawyer is discharged.
Rule 1.16(b) states:
(1) withdrawal can be accomplished without material adverse effect on the interests of the client;
(2) the client persists in a course of action involving the lawyer’s services that the lawyer reasonably believes is criminal or fraudulent
(3) the client has used the lawyer’s services to perpetrate a crime or fraud;
(4) the client insists upon taking action that the lawyer considers repugnant or with which the lawyer has a fundamental disagreement
(5) the client fails substantially to fulfill an obligation to the lawyer regarding the lawyer’s services and has been given reasonable warning that the lawyer will withdraw unless the obligation is fulfilled;
(6) the representation will result in an unreasonable financial burden on the lawyer or has been rendered unreasonably difficult by the client; or
(7) other good cause for withdrawal exists.
This wasn’t good enough for the FTC, who argued that explicit reasoning should be provided in their response.
In his March 30th reply to the FTC’s response, Success By Health’s attorneys stated:
Counsel hereby clarify that they are seeking to withdraw pursuant to the mandate in subpart (a)(1) because ethical and professional considerations mandate withdrawal.
The explicit reason(s) for the withdrawal were stated to be “confidential information”.
On April 2nd the court granted Success By Health’s attorneys permission to withdraw.
On April 3rd the FTC filed a motion seeking clarification on the court’s approval of the withdrawal motion.
Later that same day the court made an order in which it stated the withdrawal motion was granted on the assumption the underlying reason for the motion was “non-payment of legal bills”.
To the extent Defense Counsel were seeking to withdraw for ethical reasons unrelated to the non-payment of bills, such considerations also constitute justifiable cause for the withdrawal request, and it was (and is) unnecessary under the circumstances to require Defense Counsel to elaborate about the nature of those considerations.
This satisfied the FTC’s clarification motion, and leaves the exact reason why Success By Health’s attorneys withdrew unknown.
All we know is that the withdrawal was involuntary and initiated by the attorneys, not the Success By Health defendants.
In the fallout of the withdrawal, individual defendants in the case are now represented by new counsel. Success By Health and Success By Media are now represented by the court-appointed Receiver.
Separately, the FTC is seeking to hold the Success By Health individual defendants in contempt.
The FTC alleges that James Noland Jr., his Success by Media companies, Scott Harris and Thomas Sacca should be held in contempt, for violating a previously ordered injunction.
The 2002 injunction pertains to fraud perpetuated by Noland through the BigSmart pyramid scheme.
The FTC alleges Harris and Sacca have disclosed they knew of Noland’s previous injunction (referenced as the “final order”), prior to launching Success by Health.
In response to the Noland Contempt Motion, Noland submitted sworn declarations from Harris and Sacca.
In those declarations, Harris and Sacca admitted to having knowledge of the Final Order from the outset.
They also identified themselves as responsible for “ensuring SBH Affiliate compliance with . . . the 2002 Permanent Injunction against Jay Noland.”
The Final Order binds Harris and Sacca because they knew of it and acted with Noland to violate it.
The FTC filed a show cause motion against Noland on January 17th. The motion against Harris and Sacca was filed on April 10th.
As at the time of publication a decision on both show cause motions remains pending. Stay tuned…