Civil Litigation Sanctions

Earlier this month the Supreme Court decided Goodyear Tire & Rubber Co. v. Haeger et al., a case I wrote about way back in 2012 involving the scope of sanctions (including attorney’s fees) available when a party to a lawsuit brazenly lies about important evidence throughout most of the case.
 
 
 
The case involves a tire defect lawsuit and the extraordinary lengths to which the defendant, Goodyear, went to hide evidence of its culpability.
 
 
 
These are the underlying facts: the Haeger’s motorhome swerved and flipped over when one of the Goodyear G159 tires blew out. Goodyear’s G159 tire was originally designed for regional delivery trucks. In the 1990s, Goodyear started marketing it for Recreational Vehicles, even though the tire wasn’t meant to withstand the weight and heat of an RV traveling at interstate speeds, particularly in the hotter parts of the country. Goodyear’s own testing data showed that the G159 became unusually hot at speeds above 55 miles per hour – but in the Haeger case, Goodyear failed to produce this data. Instead, they repeatedly lied to the plaintiffs, claiming they had produced “all testing data” when, of course, they hadn’t. Continue Reading Goodyear v. Haeger: The Supreme Court Muddles Sanctions Law Again

Earlier this week, I wrote about lawyers obstructing discovery by responding to discovery interrogatories themselves, either by letter or by an unverified response, rather than by having their client answer. Federal Rule of Civil Procedure 33(b) makes clear that’s just plain wrong.

 

When it comes to requests for production of documents (or electronically-stored information), the Rules are a bit more intricate — but, when used properly, more powerful.

 

Unlike Rule 33, Rule 34 (relating to requests for production of documents and electronically stored information) has no similar requirement that the party sign the responses. Thus, a lawyer may indeed sign responses to document requests. But a lawyer signs the response subject to Rule 26(g):

 

(1) Signature Required; Effect of Signature. Every disclosure under Rule 26(a)(1) or (a)(3) and every discovery request, response, or objection must be signed by at least one attorney of record in the attorney’s own name—or by the party personally, if unrepresented—and must state the signer’s address, e-mail address, and telephone number. By signing, an attorney or party certifies that to the best of the person’s knowledge, information, and belief formed after a reasonable inquiry:

 

(A) with respect to a disclosure, it is complete and correct as of the time it is made; and

(B) with respect to a discovery request, response, or objection, it is:

 

(i) consistent with these rules and warranted by existing law or by a nonfrivolous argument for extending, modifying, or reversing existing law, or for establishing new law;

(ii) not interposed for any improper purpose, such as to harass, cause unnecessary delay, or needlessly increase the cost of litigation; and

(iii) neither unreasonable nor unduly burdensome or expensive, considering the needs of the case, prior discovery in the case, the amount in controversy, and the importance of the issues at stake in the action.

 

(2) Failure to Sign. Other parties have no duty to act on an unsigned disclosure, request, response, or objection until it is signed, and the court must strike it unless a signature is promptly supplied after the omission is called to the attorney’s or party’s attention.

 

Again, the rule leaves little doubt: every response must be signed — which means a vague letter generally discussing discovery is insufficient, as are a variety of boilerplate objections without a real answer — and the signing is a certification by the lawyer that the production is consistent and adequate.

 

As I’ve written before, even well-intentioned lawyers can sometimes deceive themselves into lying in service of their clients. The financial and practical incentives can be quite large for some lawyers to become a “truth shield” for their clients by exaggerating “facts” about discovery, and by feigning ignorance (or by intentionally remaining ignorant) about the evidence in the clients’ possession.

 

But the Rules account for those possibilities, and keep lawyers in their rightful place. As Rule 26(g) continues in subsection (3):

 

(3) Sanction for Improper Certification. If a certification violates this rule without substantial justification, the court, on motion or on its own, must impose an appropriate sanction on the signer, the party on whose behalf the signer was acting, or both. The sanction may include an order to pay the reasonable expenses, including attorney’s fees, caused by the violation.

 

When lawyers think of sanctions in federal court, they tend to think of Rule 11 (for false statements in filings) or 28 U.S.C. § 1927 (which allows sanctions against a lawyer who “multiplies the proceedings in any case unreasonably and vexatiously”), but Rule 26(g)(3) is more potent than either. Unlike Rule 11, Rule 26(g)(3) includes no “safe harbor” allowing a lawyer to correct an offending document. Unlike § 1927, which says a court may sanction a lawyer for obstructing the proceedings, Rule 26(g)(3) says the court must sanction a lawyer for filing an improper certification.

 

There’s also no “bad faith” requirement, either. A lawyer can run into mandatory sanctions, without any safe harbor, for an inadequate investigation of their client’s documents. As recently explained by Magistrate Judge Terence P. Kemp in Brown v. Tellermate Holdings Ltd., 2014 U.S. Dist. LEXIS 90123 (S.D. Ohio July 1, 2014), copy available at ediscoverylaw.com:

 

Those sanctions can be imposed if an attorney fails in his or her “duty to make a reasonable investigation to assure that their clients have provided all available responsive information and documents.” Bernal v. All American Investment Realty, Inc., 479 F.Supp.2d 1291, 1333 (S.D. Fla. 2007). This rule, like the parallel provisions of Fed.R.Civ.P. 11, contains “an objective standard” governing the reasonableness of counsel’s actions, see National Ass’n of Radiation Survivors v. Turnage, 115 F.R.D. 543, 555 (N.D. Cal. 1987), so that counsel may not simply plead lack of subjective good faith as a way to avoid sanctions. “An attorney has made a ‘reasonable inquiry’ if the ‘investigation undertaken by the attorney and the conclusions drawn therefrom are reasonable under the circumstances…. Ultimately, what is reasonable is a matter for the court to decide on the totality of the circumstances.'” Quinby v. WestLB AG, 2005 U.S. Dist. LEXIS 35583, 2005 WL 3453908, *4 (S.D.N.Y. Dec. 15, 2005), quoting the 1983 Advisory Committee Notes to Rule 26.

 

On the basis of those principles, the Court in Tellermate Holdings awarded sanctions against the attorneys for the responding party, which had tried every trick in the book, from “failure either to learn or communicate the truth about matters related to discovery,” to “counsel’s failure to make the reasonable inquiries required by Rule 26(g),” to a “document dump … largely consisting of irrelevant and unresponsive documents,” to the excessive designation of documents as “Attorney’s Eyes Only.”

 

In short, Rule 34 allows a lawyer to stand in for their client in responding to discovery, but, when a lawyer does so, they are representing to the opposing party and to the court that they have done a reasonable investigation to assure that their clients have provided all available responsive information and documents.

 

 

A couple weeks ago, I wrote about how lawyers abuse “meet and confer” requirements to obstruct civil discovery. This time, let’s talk about lawyers obstructing discovery by responding to discovery interrogatories themselves, rather than by having their client answer.

 

It’s a common progression of events:

 

1. Lawyer A serves a bunch of interrogatories on Lawyer B.

2. Lawyer B responds with a bunch of boilerplate objections. (See my prior post for more.)

3. Lawyer A threatens to file a motion to compel.

4. Lawyer B “answers” some of the requests either:

a. by sending a letter that generally discusses discovery (rather than a formal discovery answer actually answering the specific interrogatories) or

b. by serving a formal discovery answers signed by the lawyer (rather than signed by the party).

 

Tellingly, small and mid-sized casualty insurance firms that litigate and try cases all day long rarely insult plaintiff’s counsel intelligence or the court’s time with such nonsense. I wish I could say the same of the big corporate law firms I’ve dealt with, but they seem to do this as a matter of routine, repeatedly sending vague letters about discovery that never answer the discovery requests. Often, they act insulted when I gently point out that their vague letters and emails mean far less to me than their client’s sworn answers.

 

It may seem pedantic to just quote the Rules at length, but I have come to believe that a significant percent of lawyers — including highly-paid litigators — either haven’t read the rule or don’t care about their contents. Continue Reading A Lawyer’s Letter Is Not A Substitute For Interrogatory Answers

Two weeks ago, I attended the Pennsylvania Bar Institute’s Federal Bench-Bar Conference, which featured a panel discussion on “Ethical Issues During Depositions: Hypothetical Scenarios.” The panel included two federal judges and two Fellows of the American College of Trial Lawyers.

 

The panel raised a number of interesting issues. It also tried to tackle the vexing questions of how, exactly, you stop an opponent from obstructing your deposition and how you identify and prevent manipulation of a witness’s testimony. Deposition misconduct and discovery obstructionism are subjects I’m keenly interested in (and subjects I’ve spoken on as part of an ABA panel), so I had to go.

 

Before we get into the substance, let’s discuss a bit of background. Most of my writings on the subject are gathered in this post on deposition preparation, along with links to others’ reactions. An ABA article (“Ethical Preparation of Witnesses for Deposition and Trial”) a few years ago summarized the general ethical considerations at play:

 

A lawyer has a duty to prepare a witness to testify. This preparation may include discussion concerning the application of law to the events in issue. But “[a]n attorney must respect the important ethical distinction between discussing testimony and seeking improperly to influence it.” Geders v. United States, 425 U.S. 80, 90 n.3(1976); Hall v. Clifton Precision, 150 F.R.D. 525, 528 (E.D. Pa. 1993). Thus, the prohibition of counseling or assisting a witness to testify falsely also applies to the influence that an attorney may have on the substance of a witness’s testimony in the preparation process.” An attorney enjoys extensive leeway in preparing a witness to testify truthfully, but the attorney crosses a line when she influences the witness to alter testimony in a false or misleading way.” Ibarrav. Baker, 338 F. App’x 457, 465 (5th Cir. 2009) (citing John S. Applegate, Witness Preparation, 68 Tex. L. Rev. 277(1989)).

 

Now, let’s get back to the substance of the panel. The most interesting part to me was the discussion over when a lawyer can stop a deposition, despite a pending question, to speak with their client. We’ll call this a “witness conference.”  Continue Reading Can A Lawyer Interrupt A Deposition For A “Conference” With A Witness?

Conventional legal wisdom holds that 95% of lawsuits settle. Is that true? Maybe not, according to this 2009 analysis, but it’s clear that most civil disputes are indeed resolved by the parties before the trial, appeal, and judgment enforcement process is completed. That, in turn, leads civil litigators to spend far too much time and energy trying to psychologically manipulate their opponents into capitulating.

 

Another fact is that civil litigators tend to be, both by training and by nature, writers. The Curmudgeon’s Guide to Practicing Law, written primarily from a litigator’s perspective,  emphasizes repeatedly the importance of taking writing seriously and of producing briefs, memos, and letters of which the author can be proud. There are quite a few litigators who have spend more time agonizing over word choice, sentence construction, and synonyms — is my opponent’s argument frivolous, meritless, groundless, irrelevant, immaterial, not germane, inapposite, inapt or just plain wrong? — than they have perusing the relevant case law.

 

Those two factors create a combustible mix in the demand letter. Thousands of demand letters are sent every day and they are, by and large, boring: here’s why I think I’ll win the case, here’s what my client’s damages are, and here’s how much I’m asking you to pay. They only get exciting when: (1) the damages exceed the available insurance policy limits, and the plaintiff’s lawyer is trying to set up the insurance company for claim of bad faith; (2) when the lawyer threatens to cause harm by way of the legal system itself (e.g., the infamous “legal equivalent of a proctology exam” letter, which was reversed on appeal); or, (3) when the plaintiff attempts to threaten the defendant with some consequence beyond the mere pursuit of the lawsuit, like exposing them to embarrassment or criminal prosecution.

 

The third part is where the problem comes in: the definitions of embezzlement and blackmail differ from state to state, but, by and large, an attempt to obtain money from someone else by threatening to expose them or report them to the authorities arguably constitutes embezzlement or blackmail. So, when does a lawyer’s demand letter become extortion? Continue Reading When Does A Lawyer’s Demand Letter Become Extortion?

About two weeks ago, a deposition Paula Deen gave in the midst of an employment discrimination lawsuit became public. To say she burned her roux would be an understatement. I’ll leave to others the race and media issues: there’s plenty for us to explore as civil litigators, and much to learn from a disastrous celebrity deposition going public.

 

Criticism of Deen’s lawyers has already begun. Jack Chin at PrawfsBlawg concludes “Paula Deen’s participation in a deposition where everyone knew that she would say the things that she said reflects such catastrophically bad judgment that it is almost inexplicable,” suggesting Deen’s lawyers should have urged her to settle in advance of the deposition.

 

Surely all lawyers, plaintiffs’ side and defendants’ side, should keep their clients apprised on the risks of proceeding with litigation and the benefits of settlement, and I sure hope Deen’s lawyers advised her of the risks. That said, as a plaintiffs’ lawyer I can tell you that few plaintiffs’ lawyers will settle significant cases in advance of the defendant’s deposition for anything less than their highest demand. It’s possible Deen offered the plaintiff a fair and reasonable settlement, but the plaintiff held out for the whole stick of butter, not a dollop less. Continue Reading Could Paula Deen’s Lawyers Have Prevented Her Deposition Disaster?

Ken over at Popehat has been chronicling the implosion of Prenda Law, a law firm that, on paper, represented copyright holders (particularly of adult films) suing individuals who had shared the films online. I would not dare try to summarize Ken’s comprehensive coverage, nor claim any direct knowledge of the facts, other than to point out the handful of allegations against the firm — and their tactical response — that prompted this post. Allegedly, Prenda Law’s “clients” were merely shells for the lawyers themselves (a fraud on the court), and the firm allegedly forged someone’s signature on corporate documents to create the appearance of a legitimate attorney–client relationship. The federal judge overseeing a number of lawsuits caught wind of this and held a sanctions hearing yesterday, in which essentially everyone associated with Prenda Law asserted their Fifth Amendment right against self-incrimination, and so did not testify.
 
 
 
That’s the issue I wanted to pick up for this post: the ramifications of asserting the Fifth Amendment right against self-incrimination in civil litigation. As a bonus, we’ll discuss what an adversary can do to maximize the negative impact of that assertion on their opponent. The issue comes up more often than you’d think; we see it frequently in egregious wrongful death cases (where the defendant is trying to avoid a manslaughter prosecution), drunk driving cases, and (obviously) fraud cases. I have a handful of civil cases now where the opposing party has either already asserted the Fifth or is expected to do so.
 
 
 
The Fifth Amendment says that “No person. . . shall be compelled in any criminal case to be a witness against himself.” As the Supreme Court has long held, “The privilege afforded not only extends to answers that would in themselves support a conviction under a federal criminal statute but likewise embraces those which would furnish a link in the chain of evidence needed to prosecute the claimant for a federal crime.” Hoffman v. United States, 341 U.S. 479, 486-487 (1951). There are rare circumstances in which a judge can deny the privilege and then compel the testimony, but that’s highly unusual. Once you assert it, your refusal to testify cannot be used against you in criminal proceedings.
 
 
 
But two problems remain for civil cases.  Continue Reading Pleading The Fifth Amendment And Adverse Inferences In Civil Litigation

Last week, we took a ride on the corporate defense lawyer baloney train, this week we jump on the express. Two months ago, pharmaceutical manufacturer Roche Laboratories filed a motion asking Atlantic County, New Jersey Superior Court Judge Carol E. Higbee to recuse herself from the over 7,000 Accutane cases still pending in that consolidated litigation.

 

The 39-page brief Roche filed in support of the motion didn’t have much substance to it, but it was met with much fanfare across the tort reform world as a bold effort to attack a judge who wasn’t sufficiently accommodating to their scorched earth litigation tactics. Roche argued, for example, that Judge Higbee shouldn’t have mentioned at a conference for defense lawyers that Roche was not settling cases because “Roche considers the fact of whether settlements have or have not occurred … to be confidential,” as if we should care that Roche “considers” a publicly-available fact anyone can see on a docket to be “confidential.”

 

Last week, Judge Higbee denied the motion (opinion here, good LexisNexis summary here), shedding more light on how forgiving she has been of the defense misconduct in the case.  Continue Reading Defense Lawyer Earns A Well-Deserved Benchslap For Misguided Recusal Motion

[Update, August 26, 2013: After some further bickering and litigation in the Haeger case, the Court granted the plaintiff’s motion for attorney’s fees, then ordered “judgment in favor Plaintiffs and against Graeme Hancock in the amount of $548,240.23 and against Basil J. Musnuff and the Goodyear Tire and Rubber Co. in the amount of $2,192,960.93.”]

 

Over at Safety Research, Sean Kane details a recent order from the federal court in Arizona entering sanctions against Goodyear and its lawyers for concealing testing data in a tire failure case. As every product liability lawyer knows well, the concealment of evidence by tire manufacturers and car companies is pretty much routine these days. It doesn’t matter how specific your request is, how many times you ask, or if you have several court hearings or court orders on your side: the car and tire companies will tell you that they have no safety testing or crash investigations that relate in any way to the products involved in your case. That is, of course, until you retain an expert to point out that the company apparently didn’t do any safety testing of its own products — at which point you will have thousands of studies and investigations dumped on your lap, but none involving the product at issue in your case. It’s a funny coincidence that way.

 

I’ve written before about the national scandal of tire failures, in which old and otherwise defective tires kill people every day. Tires are more than just rubber — numerous compounds are woven and glued together — but, when all is said and done, the tire is only as strong as its weakest link, and that weakest link is often a rubber compound or an adhesive. In hotter temperatures, and at higher speeds, the temperature of the tire goes up, making failure more likely. Simple chemistry.

 

Simple, but still too much for Goodyear. The deadly Goodyear G159 tire is well-known among trial lawyers. The tire was first designed for use on regional delivery trucks, which typically don’t travel at high speeds and which often stop. As baby-boomers began to age into their fifties in the 1990s, the Recreational Vehicle market grew rapidly, and Goodyear wanted to capitalize on it, so they re-branded the G159 as an RV tire, and it was adopted as the standard tire on several Fleetwood and Monaco RVs.

 

Problem was, the G159 wasn’t meant to withstand the weight of an RV at high interstate speeds (and sometimes in high temperatures in the South and the Southwest) for long durations. The tires began to fail at an alarming rate, prompting a wave of litigation, but no recall — and plenty of G159 tires are still out there, some as spares, getting older and even less reliable as the rubber and glue compounds dry out over time.

 

The Haeger case is thus almost routine by product liability standards: back in 2003, a husband and wife were seriously injured when the Goodyear G159 tires on their motor home failed while they were driving on the interstate. In the Haeger lawsuit, Goodyear was asked to produce a variety of high temperature and high speed testing, but didn’t, and repeatedly told the Court and the plaintiff’s lawyers otherwise. The case settled on the eve of trial; nearly a year later, the plaintiff’s lawyer was reading about another G159 case that went to trial and resulted in a $5.6 million verdict. The newspaper article mentioned the plaintiffs there had used at trial “Goodyear documents including internal heat and speed testing and 13 failure rate data” — the same studies Goodyear and its lawyers said didn’t exist in the Haeger lawsuit.

 

The plaintiff’s lawyer was, shall we say, upset, and wrote to Goodyear’s lawyer, who promptly admitted they hadn’t produced the studies, and claimed everyone — Court included — knew it! Unsurprisingly, the plaintiff’s lawyer disagreed, and so filed for sanctions.  Sean Kane’s post includes the sanction order itself, and I must admit it’s comforting to see, in a court order, confirmation of what product liability plaintiff’s lawyers like me say all the time: corporations routinely conceal evidence. As the Court dug up while considering the sanctions motion, Goodyear’s lawyers didn’t disclose evidence as required by court rules and court orders; instead, their internal emails showed they only produced what, they said, “serves our best interest to produce.”

 

But I don’t want to dwell on those details.  Continue Reading Discovery Sharing By Plaintiff’s Lawyers (Or, The Dog Ate Goodyear’s Homework)

On Thursday, I was on a CLE panel for the American Bar Association’s “Torts and Insurance Practice Section” annual leadership retreat at the idyllic Palm Springs, where we (two state court trial judges, one federal magistrate judge, a defense lawyer, and yours truly) discussed a mix of discovery practice. As described by the ABA TIPS website:

We are also offering a Professionalism and Ethics CLE session on Thursday afternoon immediately before our Welcome Reception entitled: “Through the Looking Glass: What Lawyers Can Learn From Judges and What Judges Can Learn From Lawyers”, where a distinguished panel of lawyers and judges will discuss the deposition practice under the Federal Rules limiting objections, including how lawyers can effectively represent their clients while also complying with the rule and how judges and lawyers characterize compliance. The judges on our panel also will comment on the behavior they observe during the discovery process and provide guidance about ways that lawyers can improve the process, when judicial intervention is or is not necessary, and how judges respond to lawyers’ inappropriate conduct. In addition, the panelists will discuss how lawyers can work cooperatively and professionally with opposing counsel and what judges want to see from lawyers — and lawyers want to see from judges — to promote civility in the courtroom.

My contribution to the written materials was this prior post of mine about sanctions for coaching witnesses in depositions. Judge Jeffrey Cole, author of one of the opinions I discussed at length in that post, was on the panel, which was a thrill for me, and he was as enthused, energetic, and accurate (“read the statute, read the statute, read the statute”) as you would expect from his opinions.

 

The conversation wandered, as all good discussions of law wander across scenarios with consistent themes, through depositions, motions, ethics, sanctions, and what to do in troubling situations. As we seemed to agree (at least in my view), much of the sanctionable and otherwise inappropriate conduct by counsel arises not from an intentional decision to conceal evidence in a particular case, but from mindless clinging to default obstructionist tactics that they use in all cases.  These lawyers start cases in a “NO” posture, which can escalate to sanctionable conduct when it causes needless objections, a failure to produce evidence or honest testimony, and, finally — after the obstructionism has persisted long enough — an irreversible situation that is impossible to explain away.

 

One troubling situation raised by an audience member (who, from the context given in the question, was likely a defense lawyer, as are most of the active members of the ABA) involved a client you’re defending at a deposition saying something that you know to be incorrect. What do you do then?

Continue Reading What To Do If Your Witness Gives An Inaccurate Answer At A Deposition