“Show me the note” becomes sanctionable, after being shown the note.

Mortgage-Note-FL11In a wrongful foreclosure case, the borrower alleged that PNC Bank had not proved its ownership of the note.  Then, “an attorney representing [defendants] showed an attorney employed by [Barrett-Bowie’s law firm] the original blue ink note signed by Barrett-Bowie. The Firm’s attorney acknowledged that the note was indorsed from the original lender to First Franklin Financial Corporation and from First Franklin Financial Corporation to PNC Bank. The Firm’s attorney retained a copy of the original note and reported what she had seen to her colleagues at the Firm.”  Nevertheless, the firm filed two more pleadings repeating the standing allegations, and in response to a summary judgment motion — while not directly disputing the servicer’s proof of standing in response — asked that the court “deny [the servicer’s ]motion ‘in its entirety’ and argued that genuine issues of material fact existed ‘on elements in each of Plaintiff’s remaining causes of action.'”  An award of Rule 11 sanctions against the plaintiff’s firm was affirmed in Barrett-Bowie v. Select Portfolio Servicing, Inc., No. 14-11249 (Nov. 25, 2015, unpublished).

I’m a doctor, not a spoliator.

mccoyGuzman sued Celadon Trucking for personal injuries.  On May 9, 2011, Celadon’s counsel asked him to undergo an independent medical exam.  On May 27, Guzman said in his deposition that he intended to undergo back surgery. Celadon later contended that his surgery constituted spoliation of evidence, and requested an adverse jury instruction. The Fifth Circuit affirmed its denial, noting: “After [Celadon’s counsel] received this disclosure in the deposition, they made no request to be informed of his surgery date, nor did they ask that he delay surgery pending his examination. Only after the examination was completed did [they] assert that the surgery had meaningfully altered evidence.  While the timing of Guzman’s surgery may seem strange, there is no evidence to suggest that he acted in a manner intended to deceive [Celadon] or that he undertook the surgery with the intent of destroying or altering evidence.”  Guzman v. Jones, No. 15-40007 (Oct. 22, 2015).

Bad trip

The district court removed a bankruptcy trustee after he sought to bill a family trip to New Orleans to the estate, noting two past situations where the court had an issue with the trustee’s practices.  The Fifth Circuit affirmed, rejecting several challenges to that ruling based primarily on the consideration of the past situations, holding: “The district courts and in turn the bankruptcy courts are the keepers of the temple. These courts rely on the bar to abide by its strict rules and norms of conduct. Bankruptcy practice presents many tasks attended and girded by strict identity of duty and diligence by its officers. The courts below were only minding their role: not to end, but to redirect a distinguished presence at the bar, and to give sustenance to necessarily demanding norms of practice. That this is expected does not diminish its importance.”  Smith v. Robbins, No. 14-20588 (Sept. 25, 2015).

Contempt finding vacated, again.

Continuing a series of opinions that vacated findings of contempt – most recently in Waste Management v. Kattler, 776 F.3d 336 (5th Cir. 2015) – the Fifth Circuit vacated a contempt finding against an attorney for allegedly encouraging his client to make inappropriate online postings.  Test Masters Educational Services v. Singh Educational Services, No. 13-20250 (Aug. 21, 2015).  Applying Waste Management, the Court found inadequate notice from a show-cause order that only named the client.  On the merits, agreeing that the relevant injunction against the client bound the attorney, the Court found no clear and convincing evidence that he personally had violated the injunction.

Evidentiary standard key to disciplinary proceeding — UPDATED

The Eastern District of Texas suspended attorney Robert Booker for three years.  While a magistrate issued a report, which was reviewed and adopted unanimously by the Eastern District Judges, the Fifth Circuit held: “[W]e cannot discern from the record whether the district court specifically found that Booker acted in bad faith under the clear and convincing evidence standard.”  Accordingly, the Court remanded for the district court to “specify whether it finds that Booker has committed any ethics violation based on clear and convincing evidence and whether Booker acted in bad faith in committing any such violations.”  In re: Booker, No. 14-41194 (Aug. 3, 2015, unpublished).  (Subsequently, the Fifth Circuit affirmed on the merits.)

Ouch.

The Fifth Circuit remanded to calculate an attorney fee award when: “At nearly every turn, this Department of Labor investigation and prosecution violated the department’s internal procedures and ethical litigation practices. Even after the DOL discovered that its lead investigator conducted an investigation for which he was not trained, concluded Gate Guard was violating the Fair Labor Standards Act based on just three interviews, destroyed evidence, ambushed a low-level employee for an interview without counsel, and demanded a grossly inflated multi-million dollar penalty, the government pressed on. In litigation, the government opposed routine case administration motions, refused to produce relevant information, and stone-walled the deposition of its lead investigator.”  Gate Guard Services v. Perez (Secretary, Department of Labor),  No. 14-40585 (July 2, 2015, unpublished).

No appeal of referral to disciplinary committee

In Zente v. Credit Management, L.P., an attorney sought to appeal the district court’s referral of a Rule 11 matter to the Western District of Texas disciplinary committee.  The Fifth Circuit found that he had no standing: “In accordance with the cases from our sister circuits, we conclude that a referral of attorney conduct to a disciplinary committee, absent a specific finding of misconduct, is not a sanction that confers standing to appeal.  Thus, [Attorney] has standing to appeal in the instant case only if the district court’s referral to the Admissions Committee was accompanied by a specific finding of misconduct.  In the circumstances of this case, we conclude that the court made no finding of misconduct. The district court made no findings like those that courts have found conferred standing to appeal. It made no factual findings or legal conclusions regarding the alleged misconduct, and made no implied or explicit finding that [Attorney] violated any ethical rule or canon. No. 14-50910 (June 15, 2015).

How to defend against civil contempt —

An attorney challenged sanctions and contempt orders on appeal; one of her major points was inability to pay.  The Fifth Circuit reminded that inability to pay is a defense to a charge of civil contempt, as to which “[t]he alleged contemnor bears the burden of producing evidence of his inability to comply.  Failure to do so waives further consideration of this issue, even in the face of an order that added $100/day for noncompliance.  Garrett v. Coventry, No. 14-10525 (Feb. 6, 2015).

E-Discovery Sanction on Attorney Reversed

sandisk driveWaste Management sued Kattler, a former employee, for misappropriating confidential information and other related claims.  A dispute about what information Kattler had in is possession expanded to include a contempt finding against Kattler’s attorney, Moore.  Waste Management v. Kattler, No. 13-20356 (Jan. 15, 2015).  The Fifth Circuit reversed, reasoning as follows:

1.  The order setting a hearing referenced a motion, by Pacer docket number, that only sought relief against Kattler and not the attorney.  It was not an adequate “show-cause order naming [both] Moore and Kattler as alleged contemnors[.]”

2.  On the merits, the Court found that Kattler had misled Moore as to the existence of a particular “San Disk thumb drive,” that Moore had acted prudently in consulting ethics counsel and withdrawing after he learned of the untruthfulness, and that new counsel made a prompt disclosure about the drive that avoided unfair prejudice.  This part of the opinion reviews Circuit authority about the failure to correct incorrect court filings.

3.  Also on the merits, “while Moore clearly failed to comply with the terms of the December 20 preliminary injunction by not producing the iPad image directly to [Waste Management] by December 22, this failure is excusable because the order required Moore to violate the attorney-client privilege.”  Further, the relevant order only “required Kattler to produce an image of the device only, not the device itself,” which created a “degree of confusion” that excused the decision not to produce the actual iPad.

Law360 has also reported on this decision, and an expanded version of this article appears in the Texas Lawbook.

What is an objectively reasonable removal?

The issue in Omega Hospital LLC v. Louisiana Health Service & Indemnity was whether the defendant (also known as Blue Cross Blue Shield of Louisiana), had an objectively reasonable basis for removal.  No. 13-31085 (Nov. 18, 2014, unpublished).  Some of the Blue Cross insureds at issue were federal employees covered by a plan overseen by the U.S. Office of Personnel Management.  The Fifth Circuit reversed an award of attorneys fees against Blue Cross, noting “case law arguably supporting Blue Cross, and the absence of a ruling from this court,” and thus concluding: “We cannot say that Blue Cross lacked a reasonable belief in the propriety of removal” under the “federal officer” statute, 28 U.S.C. § 1442(a)(1).

Some jurisdiction, but not much.

The Fifth Circuit withdrew its original opinion in Scarlott v. Nissan North America to issue a revised opinion on rehearing.  No. 13-20528 (Nov.10, 2014).  The Court did not materially change its earlier holding that the amount-in-controversy requirement for diversity jurisdiction was not satisfied, or its disposition by a remand to the district court for purposes of remand to state court.  The Court added discussion — and a dissent — about how the district court should handle a sanctions award on remand.  The plurality simply said: “In light of our holding that the district court did not have jurisdiction over this case, the district court should reconsider whether to award attorneys’ fees and costs to the defendants; and if the court decides that attorneys’ fees and costs are still appropriate, the court should reconsider the amount of the award.”  The dissent would vacate the award; among other points, it made this basic one: “By its very nature, section 1927 involves assessing the merits of the claim, which establishes the inappropriateness of the district court’s order in light of the lack of jurisdiction.”

Don’t say “unopposed,” if in fact “opposed.”

“[Attorney] Grodner filed a motion requesting that certain inmates housed in the same correctional facility as [Grodner’s client] be allowed to provide testimony by video. The state did not oppose this form of testimony. Judge Jackson denied the order, however, requiring the incarcerated inmates to appear in court. As a result, Grodner filed five new motions requesting that the district court subpoena certain inmates to testify in court. Grodner styled those motions ‘unopposed,’ although she admittedly never contacted opposing counsel to confirm this. Even after opposing counsel filed a memorandum clarifying their opposition to the subpoenas, Grodner proceeded to file three more ‘unopposed’ motions requesting subpoenas.”  In re Grodner, No. 14-98001 (Nov. 3, 2014, unpublished).  The Fifth Circuit affirmed the district court’s sanction of a 60-day suspension from practice before the Middle District of Louisiana.

Uncivil contempt — UPDATED

The district court ordered Glay Collier, a bankruptcy attorney, to stop advertising for “no money down” Chapter 7 services.  Despite efforts by Collier, some online ads remained. The district court found him in contempt and ordered him confined for 48 hours “[a]s a result of the violation of this Court’s order, without any reasonable excuse other than ‘I forgot[.]'”  In re Glay Collier, No. 14-30887 (Sept. 19, 2014, unpublished).  The Fifth Circuit granted mandamus, finding that this order involved criminal rather than civil contempt, and thus triggered procedural safeguards that had not been invoked.  Among other considerations, the Court noted that “the sanction was for an unconditional term of imprisonment,” that Collier “could have taken additional steps to comply with the court’s order by the time he was remanded into custody,” and that the district court cited “‘the violation’ of [its] order (not the continued non-compliance) as the basis for its finding of civil contempt.”  A similar order was treated in the same fashion in the later case of Wheeler v. Collier, No. 14-30961 (March 5, 2015, unpublished).

“Unsupported . . . irrelevant . . ., and legalistic gibberish”

Appellant did not fare well in Bell v. Bell Family Trust, where the Fifth Circuit observed: “The inadequacy of her briefing on appeal does not fall far from her pleadings below, upon which the magistrate judge reflected: ‘The undersigned spent a significant amount of time parsing through the morass of Bell’s voluminous, rambling, and unintelligible pleadings, which proved to be a substantial waste of time and resources. They contain a “hodgepodge of unsupported assertions, irrelevant platitudes, and legalistic gibberish.” As succinctly stated by the late Judge Alvin B. Rubin: “[t]he ability to fill more than 36 pages with no more than legal spun sugar does not make an argument substantial.”’  Construing liberally Bell’s continued hodgepodge of assertions, we discern only one issue for review . . . . .”  No. 13-31219 (July 8, 2014, unpublished)

How to (not) litigate “CONFIDENTIAL” designations under an agreed protective order

The agreed protective order said:  “At any time after the delivery of documents designated ‘confidential,’ counsel for the receiving party may challenge the confidential designation of any document or transcript (or portion thereof) by providing written notice thereof to counsel for the opposing party.”  The producing party then has 15 days to seek protection; if it does not do so, “then the disputed material shall no longer be subject to protection as provided in this order.”  Moore v. Ford Motor Co., No. 13-40761 (June 20, 2014).

Pursuant to the order, Ford produced four boxes of documents related to Volvo safety issues.  These communications ensued:

  • On May 11, 2004, plaintiffs’ counsel emailed to challenge the confidentiality designations of several documents.
  • On June 4, Ford’s counsel asked for Bates numbers.
  • On June 23, plaintiffs’ counsel responded, expanded on the confidentiality argument, and said it “will begin passing them out to any and everyone that is interested”
  • In July, plaintiffs’ counsel asked: “what’s the word . . . on confidentiality?”
  • The next day, Ford’s counsel withdrew its designations as to some documents, said it was “evaluating your claims” as to others, and “expects you to abide by the terms of the Protective Orders in the meantime”
  • Plaintiffs’ counsel responded: “I gave Ford adequate time.  I am sending the materials out.  Thanks for trying.”  (He did not specify what “materials”)
  • On February 22, 2005, plaintiffs’ counsel asked for an update on the “confidentiality issue”
  • On March 8, 2005, Ford responded that “in the spirit of cooperation” it would “officially de-designate from the Protective Order” specified other documents.

In 2012, documents surfaced in other litigation that Ford had produced pursuant to the above protective order; while the opinion does not specify what they were, it seems clear that they were documents which Ford had not formally “de-designated.”  Ford moved to enforce the protective order and the district court agreed, finding no “clear written notice . . . challenging the confidential designation of these documents.”

On appeal, plaintiffs argued that the 15-day period ran from the first email, and Ford thus waived its designations by not moving for protection.  The Fifth Circuit disagreed, finding the protective order ambiguous on this issue, and stating: “This interpretation may well be the better reading without more, but the parties understanding of these agreed orders bears upon the interpretation, and the actions of both parties strongly suggest” otherwise, noting the lengthy dialogue between the parties.    Noting that “[a]lthough on de novo review a different outcome may obtain,” the Court found the district court’s conclusion that no waiver occurred to not be clearly erroneous.

A dissent, among other arguments, noted that (1) the 15-day provision only requires that confidentiality be “in dispute,” (2) Ford drafted the agreement so any ambiguity should be construed against it, and (3) Ford had the burden to establish confidentiality.  The dissent concluded the majority opinion undermined “efficient resolution of discovery disputes” by allowing “Ford . . . to undermine this purpose through vague, non-responsive answers.”