Part 4, Appendix I — Role of the Board of Directors in Reviewing and Ratifying Ethics Hearing Panel Decisions
Alleged violations of the Code of Ethics are considered by Hearing Panels of the Professional Standards Committee of the Board or Association having jurisdiction. Part Four of the Code of Ethics and Arbitration Manual provides that the decision of the Hearing Panel will be made by a majority vote and will be in writing, containing findings of fact, conclusions, and any discipline proposed. Any member of a Hearing Panel dissenting can write a separate opinion that will be provided to the parties and will be reviewed by the Board of Directors together with the Hearing Panel’s decision.
The decisions of ethics Hearing Panels are actually recommendations to the Board of Directors. They also serve as the basis on which the Hearing Panel’s decision can be appealed.
Even where no appeal is filed, the Hearing Panel’s decision must be provided to the Board of Directors for their review and ratification. The Directors are not required to adopt a Hearing Panel’s decision, even if the decision is not appealed. The procedures establish when and how a decision can be modified, sent back to the Hearing Panel, or sent to a new Hearing Panel.
A frequent question is how the Directors can be concerned about the adequacy of the procedures by which a hearing was conducted if no appeal is filed. Some argue the Board of Directors should be required to adopt all decisions that aren’t appealed or that decisions not appealed should be final and binding without any action by the Board of Directors because the Directors don’t have the benefit of the in-person testimony and evidence the Hearing Panel had.
Questions arise as to how the Directors can legitimately be concerned about a possible failure of due process without an appeal being filed or without listening to a recording or reviewing a written transcription of the entire hearing. Questions also arise regarding the severity of discipline recommended by Hearing Panels and the appropriateness of Directors’ involvement suggesting that discipline be increased or decreased in severity.
There are sound, fundamental reasons for decisions (even if not appealed) being acted on by the Directors.
First, the Board of Directors has the ultimate responsibility for ensuring the rights of members are safeguarded and that the Association is operated in a legally defensible manner consistent with its governing documents.
Second, it is not always possible to ensure absolute impartiality in every professional standards proceeding. At times facts may come to light calling into question the impartiality of a Hearing Panel, or whether the parties received a fair, due process hearing. These concerns arise through threats of litigation made against the association, and while a court might direct a respondent-plaintiff to exercise the appeal remedy available through the association prior to filing a lawsuit against the association, dismissal of a legal challenge is not a certainty, particularly if the respondent-plaintiff can argue that the association’s appeal remedy, though available, would result in a predetermined or sham conclusion. The procedural safeguards built into the Code of Ethics and Arbitration Manual provide associations with a simple way to correct mistakes without expending their human and financial resources on unnecessary litigation. In other words, the Directors’ review provides associations with an internal, administrative “safety valve” to correct mistakes, particularly serious procedural mistakes, without becoming involved in litigation.
Third, in certain instances, the Directors may reasonably be concerned about the severity of discipline proposed by a Hearing Panel without knowing all the hearing details. For example, where a violation of the Code is a REALTOR®’s first, and the findings of fact demonstrate that only a minor violation occurred, likely the result of inadvertence or ignorance rather than gross negligence or intentional misconduct, and the proposed discipline is suspension or expulsion from membership, the Directors may be reasonably concerned about the severity of the proposed discipline. On the other hand, if the violation is part of a pattern of repeated unethical conduct and the findings of fact show the violation is serious but the discipline recommended is relatively insubstantial, the Directors might be reasonably concerned about the severity of the proposed discipline and could recommend to the Hearing Panel that the discipline be increased. In neither of these scenarios would the Directors need to refer to the transcript or the recording of the hearing to be legitimately concerned.
Last, in some cases, Directors can be frustrated by the lack of detail in ethics decisions. Every decision, whether a finding of a violation is reached or not, needs to include a succinct, narrative description of the relevant facts based on the evidence and testimony presented to the Hearing Panel. A well written, comprehensive decision with detailed findings of fact not only enables the parties to understand the basis for the Hearing Panel’s decision whether the Code was violated, it also enables the Directors to ratify the decision without an appeal, confident in the knowledge the Hearing Panel correctly applied the Code to the facts. (Revised 11/11)