Rule 11 Sanctions: Know When to Drop Your Sails

In Moody v. Arc of Howard Cnty., Inc., 2011 U.S. Dist. LEXIS 73540 (D. Md. July 7, 2011), Judge Bredar sanctioned counsel for the plaintiff under Rule 11 where counsel persisted in contending that individuals are suable under Title VII.  In concluding his opinion, the judge had the following to say, all of which should guide all of us during the heat of litigation:

“A license to practice law brings with it substantial responsibilities, and one of those is an obligation of prudence when bringing and pressing a claim. Attorneys are entitled, and sometimes even obligated, to sail into shallow waters as investigation and discovery reveal weaknesses in the factual and legal theories of a case. However, once the ship has not just bumped a shoal or two, but instead has collided with rocks and begun taking water, the voyage is over and counsel is required to drop his sails. A reasonable and prudent attorney would have known and accepted that his claims were finished — that his voyage had ended — upon reading and reflecting upon the Rule 11 notice filed on February 22, 2011. It was clear then that the plaintiffs had no case, legally or factually. Under generous rules of procedure, safe harbor remained available to Mr. Ostendorf even after this grounding, see Fed. R. Civ. P. 11(c)(2), and had he elected that course and dismissed his claims before March 15, 2011, he would have avoided the wreck that has now ensued.”  Moody, 2011 U.S. Dist. LEXIS 73540 at *27-*28.

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Sternly, and In Writing, Warn Clients Not to Mess With Facebook

Sternly, and In Writing, Warn Clients Not to Mess With Facebook

In Lester v. Allied Concrete Co., Nos. CL08-150, CL09-223 (Va. Cir. Ct. Oct. 21, 2011), Judge Edward Hogshire of the Circuit Court for the City of Charlottesville, Virginia issued an order which reduced by fifty-percent a $10.6 million jury verdict and imposed $722,000 in sanctions.  $542,000 of the sanctions were imposed on counsel for plaintiff-Lester, and the remaining $180,000 on plaintiff Lester himself.  The basis for the court’s sanction was an “extensive pattern of deceptive and obstructionist conduct of Murray and Lester…”  In March of 2009 plaintiff’s counsel received a discovery request for the contents of plaintiff’s Facebook account.  At that time, plaintiff’s Facebook account contained a photo of plaintiff wearing a “I [heart] Hot Moms” t-shirt and holding a beer can with other young adults.  According to later deposition testimony, plaintiff’s counsel instructed a paralegal to tell plaintiff to “clean up” his Facebook page because “we don’t want blowups of this stuff at trial.”  Thereafter, plaintiff’s counsel allegedly came up with a scheme to take down or deactivate plaintiff’s Facebook account so that he could respond to defendant’s discovery request by stating that plaintiff had no Facebook page on the date the discovery was signed.  Allegedly, when defense counsel filed a motion to compel, plaintiff’s counsel instructed plaintiff to reactivate the account. Plaintiff denied deactivating the account during a later deposition.  Plaintiff’s counsel was also accused of withholding an e-mail from the paralegal instructing plaintiff to “clean up” his Facebook page.  Finally, plaintiff’s counsel allegedly claimed, falsely, after the trial, that the failure to produce the e-mail was the paralegal’s mistake.

 

In addition to the $542,000 sanction imposed on plaintiff’s counsel, the judge referred the matter to the Virginia state bar.  

Tip of the hat to Christopher Danzig, writing for Above the Law, whose post called this to our attention. 

See also

• Lisa Provence, Sanctions: Allied Concrete Attorneys Want $900K in Legal Fees, The Hook, (Sept. 24, 2011) (cite online: http://www.readthehook.com/100997/sanctions-allied-concrete-attorneys-wants-900k-legal-fees accessed: November 14, 2011).
• Lisa Provence, Unusual Outcome: $722K in Sanctions, Juror Judges Judge, The Hook, (Nov. 4, 2011) (cite online: http://www.readthehook.com/101759/final-order-plaintiffs-sanctioned-722k-juror-judges-judge accessed: November 14, 2011).
• Lester v. Allied Concrete Co., 80 Va. Cir. 454 (Va. Cir. Ct. 2010) (Court held that plaintiff’s counsel violated Rule 3:3(a) of the Virginia Rules of Professional Conduct by when he alleged that defendant had “hacked into” plaintiff’s Facebook account based on no inquiry into the relevant facts “beyond the bare, unsubstantiated assertions of his client.”)

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Sanctions Issue Submitted To Supreme Court

In Scott v. Metropolitan Health Corp., 2007 U.S. App. LEXIS 8103 (6th Cir., Apr. 3, 2007), petition for cert. filed (07-360), the Sixth Circuit affirmed a $1.6 million sanction against plaintiff , pursuant to its "inherent powers", finding that Ms. Scott had acted with subjective bad faith. Recently, the National Employment Lawyers Association and the National Whistleblower Center filed an amicus brief in support of Ms. Scott's petition for cert. The principal issue presented is whether imposing sanctions without holding a hearing constitutes a violation of the Due Process Clause.