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Attorneys behaving badly are sanctioned by fed up courts

March 20th, 2013  |  Lorene Park

Whether due to unfamiliarity with procedural rules, being misled by clients, or their own misconduct or negligence, attorneys are often called to task by courts for questionable litigation tactics. On March 4, 2013 for example, even though an employment discrimination case settled days earlier, a federal district court in Alabama sanctioned defense counsel for an “ignominious” trail of “surprise documents” that were not disclosed in discovery but materialized at trial “as if conjured out of thin air” when the defense needed to support its contentions (Moore v J&M Tank Lines, Inc). The court cautioned that litigation should not be a game of hide-the-ball and invited the employee’s counsel to seek the costs incurred in responding to surprise documents, preparing motions for discovery and sanctions, and making other efforts to obtain discovery.

Attorneys should note illustrative cases like Moore and take measures to ensure their litigation tactics pass muster. Paying the other side’s attorneys’ fees or other sanctions can be costly. Indeed, in an EEOC harassment suit, a federal judge ordered Fry’s Electronics, Inc. to pay a $100,000 penalty for withholding evidence, raising a “fallacious” argument and demonstrating a “disturbing lack of candor” to the court. As the following cases show, sanctions often involve more than money, and can include formal reprimands, denial of pending motions, adverse inference jury instructions, and more.

Spoliation

In February 2013, a federal court in Ohio granted the EEOC’s motion for Rule 37 sanctions against JP Morgan, finding that the bank purged data relevant to claims that it discriminated against a class of female mortgage consultants by directing lucrative phone calls to male employees (EEOC v JP Morgan Chase Bank, NA 2013). The lost data would have reflected what skills were assigned to mortgage consultants and thus what calls they would be given. The bank argued the destruction was the result of routine purging of electronic records; however, it was on notice that it should have stopped any such purging and that the claims involved a class of individuals rather than a single person, as the bank also argued. Finding the failure to establish a litigation hold “inexcusable,” the court concluded the conduct deserved “more than a slap on the wrist.” Accordingly, it denied JP Morgan’s separate motion for summary judgment and ruled that an adverse inference jury instruction was necessary regarding the destroyed data.

In a March 14 opinion from the same case, the court scolded the parties that the “case has gone off the rails.” After summarizing the “odd circumstances” that have “infected” the case, such as the parties’ failure to get all of the evidence before the court necessary to resolve pending motions (they merely asked if chambers needed anything beyond their substantial exhibits, which included uncertified deposition excerpts), the court decided that a “partial reset” was in the interests of justice and denied the EEOC’s motion for summary judgment as well as both parties’ motions to strike. The court also set deadlines for expert disclosures and other pre-trial issues, and precluded the parties from filing additional motions to compel, to strike, or for sanctions without first conferring with the court.

Meritless arguments

Also beware of making questionable arguments. For example, in Muhammad v Wal-Mart Stores East, LP, a federal court sua sponte sanctioned an employee’s attorney who tried to avoid summary judgment by “disingenuously” arguing that an unpleaded gender bias claim had merit and could be pursued simply because the employee checked the Title VII box on his form complaint (WDNY 2012). Allegations of discrimination were plainly absent from the complaint but the attorney, who was retained a month after the employee filed suit, never amended it. Nonetheless, she argued that the employee “clearly” pleaded gender discrimination and it was “unclear” to her why the defendant argued otherwise. To the court, it was “bad enough” to raise unpleaded claims, but it was even worse that the claims were frivolous. The attorney was sanctioned with a formal reprimand and a fine of $7,500.

In another case, after granting summary judgment to an employer on a sexual harassment claim, the court sanctioned the employee’s attorney under Rules 11 and 37 for failing to advise her to preserve data on her laptop before she deleted pornography and for making a “legal contention” not “warranted by existing law” (Cajamarca v Regal Entertainment Group, EDNY 2013). The attorney had asserted, in response to the employer’s motion for sanctions, that the court ruled in its summary judgment decision that there was no dispute the employee was sexually harassed. To the contrary, the court only assumed the fact “for the purposes of this motion.”

Cavalier behavior

While preserving evidence and advancing arguments that have merit will go a long way toward avoiding sanctions, attorneys should also simply put their best foot forward in dealing with opposing counsel or the court. For example, a federal court in Colorado sanctioned the EEOC for “dilatory” and “cavalier” behavior towards an employer and the court with respect to discovery of electronically stored information related to sexual harassment claims asserted on behalf of a class of female employees (EEOC v The Original HoneyBaked Ham Company of Georgia, Inc, 2013). Counsel “prematurely made promises about agreed-upon discovery methodology and procedure when they apparently had no authority to do so” and, as a result, backed out of plans made in case management conferences with the court.

The HoneyBaked decision is notable not only for novel issues on discovery of Facebook and other social networking information, but also because of the court’s efforts to find a basis for sanctions. They were not available under Rule 11, Rule 37, or 28 USC Sec. 1927 because the conduct, while “inappropriate and obstreperous,” did not show bad motives (it was obvious to the court that “the powers that be” in the agency kept interfering with commitments made by the trial attorneys). The court therefore imposed sanctions under the lesser-used Rule 16(f), which applies to conduct in scheduling or pretrial conferences, reasoning that the agency repeatedly “caused unnecessary expense and delay” and was “dilatory in cooperating with defense counsel.”

School your clients

Most attorneys know their ethical and other obligations but that does not mean clients or subordinates are equally informed. At the end of the day, it is the attorney’s reputation on the line and judges will not forget misconduct. For this reason (and to avoid sanctions), attorneys should very early on have a conversation with clients, explaining the duty to preserve evidence and to otherwise conduct themselves properly. Some general suggestions include:

  • Make certain your subordinates know and follow procedural rules, including local rules and standing orders (courts usually make standing orders available online).
  • Confirm you have authority to enter a discovery agreement or take other actions that might be called for in judicial conferences; written confirmation for your records is advisable.
  • Educate clients on the need to retain relevant documents through a litigation hold or other means; explain the sanctions available under Rules 11, 16, and 37.
  • Fully review all relevant documents in your client’s possession or control and supplement discovery responses as new evidence or information becomes available.
  • Document attempts to resolve discovery disputes before seeking judicial intervention.

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