When can the court impose sanctions for a party’s bad faith involving discovery?

How May The Court Infer Bad Faith Regarding Discovery Compliance?

Author: Eli Crozier
Case Citation: Fulton v. Livingston Fin. LLC, 2016 U.S. Dist. LEXIS 96825 (W.D. Wash. July 25, 2016).
Employee/Personnel/Employer implicated:   Defense counsel / Hinshaw and Culbertson
eLesson Learned:  Because sanctions issued under a court’s inherent power are available if the court specifically finds bad faith or conduct tantamount to bad faith, attorneys should avoid recklessly misrepresenting the law and the facts to the court.
Tweet This: Never misstate the law to gain a competitive advantage
 

While the backdrop of this case concerns a lawsuit and eventual settlement regarding a party’s violation of the Fair Debt Collection Practices Act, it is the actions of Defendant’s attorney that are reprehensible here.  This case involved the imposition sanctions on an attorney for his alleged bad faith in briefing Defendant’s motion to compel discovery.
Courts are vested with inherent powers to issue discovery sanctions.  The courts are governed by the control necessarily vested in them to manage their own affairs so as to achieve the orderly and expeditious disposition of cases.  Additionally, a court has the inherent authority to impose sanctions for bad faith, which include a broad range of willful improper conduct.

Sanctions issued under a court’s inherent power are available if the court specifically finds bad faith or conduct tantamount to bad faith.  Upon a finding of bad faith, courts can levy an assortment of sanctions under their inherent power, including monetary awards, attorneys’ fees, adverse inference jury instructions, and even dismissal of claims.
With this as a background, defense counsel was either trying to pull a fast one or was so completely reckless in his efforts concerning the reply brief he wrote to a motion to compel discovery.  In essence, counsel misstated the law in his brief and cited caselaw that analyzed a version of Federal Rule of Civil Procedure 26(a)(1) that existed before the highly publicized amendments took effect several months beforehand.  The court found by clear and convincing evidence that counsel misrepresented the law and the facts to the court in an effort to limit the evidence that Plaintiff could present at trial.
In the end, the court ordered the attorney to explain to the managing partners of his firm that the court was entering sanctions against one of its attorneys for quoting provisions of the civil rules that were extremely out of date, and also making direct misrepresentations to the court.  Additionally, the court awarded fees and costs to Plaintiff for defending the motion in question.  The court contemplated, but ultimately decided against, requiring the attorney to report this sanction on future pro hac vice applications.  However, the court imposed a special sanction: if at any point in the next five years a federal court threatens or imposes sanctions on the attorney, he must immediately disclose to that court the sanctions imposed by this court.
The attorney here got busted for playing fast and loose with the facts and the law.  Even if we assume that the attorney did not knowingly misstate the law (and that is a big assumption), the lesson learned is that an attorney must be extremely careful with whatever representations he makes to the court.  Before anything is ever submitted, that document should be checked, and re-checked, to verify that everything is accurate and current.  While “alternative facts” may be the norm in today’s political climate, they have no role in a court of law.

 

Eli Crozier, a Seton Hall University School of Law student (Class of 2017), focuses his studies in the area of criminal law, is a member of Seton Hall’s interscholastic mock trial team, and will be an Assistant District Attorney with the New York County District Attorney’s Office upon graduation.

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