In Fulton v. Livingston Financial LLC, 2016 WL 3976558 (W.D. Wash. July 25, 2016), U.S. District Judge James L. Robart sanctioned a defense lawyer who “inexcusabl[y]” relied on outdated case law and pre-2015 amendments to Federal Rule of Civil Procedure 26(b) in motion practice before the court.

On April 13, 2015, Plaintiff (Richard Fulton) filed suit against Defendants for allegedly violating the Fair Debt Collection Practice Act (“FDCPA”) 15 U.S.C. § 1692, et seq., and several Washington statutes.

On March 17, 2016 (after the Federal Rules were amended), Defendants moved to either compel discovery or exclude medical evidence presented by Mr. Fulton. Specifically, Defendants argued that Fulton “stated on numerous times since the beginning of this case that he was not seeking recovery for any medical condition, so his medical records and treatment were not in issue.”* Judge Robart found defense counsel’s inference “so unreasonable as to constitute a misrepresentation to the court,” as the plaintiff did seek recovery for emotional distress. Id. at *6, *8. More important to this Blog post, however, was Judge Robart’s finding that defendant’s counsel had “misstate[d] the law” regarding discovery by citing cases analyzing pre-amendment Rule 26. Id. at *7. And further finding, defense counsel proceeded to misstate the law in their reply brief continuing to rely upon case law that existed before the highly publicized amendments that took effect December 1, 2015. Judge Robart declared that such citations to outdated case law were “inexcusable” and “inexplicable.” Id. at *7, *8.

Judge Robart then proceeded to sanction defense counsel in an oral ruling. In addition to awarding Fulton his fees and costs incurred in litigating the motion, Judge Robart ordered defense counsel to provide a copy of his offending motion to the supervising members of his firm, with the explanation that the court had entered sanctions against him “for quoting provisions of the civil rules that are badly out of date, and also making direct misrepresentations to the court.” Id. at *8. Judge Robart also threatened an additional sanction of requiring defense counsel to report this sanction on future pro hac vice applications. Id.

Before determining whether to require counsel to report the sanction on future pro hac applications, defense counsel filed a supplemental memorandum in response to the court’s oral ruling, stating that he had acted in good faith and noting that his conduct did not affect the administration of justice in the case. For these reasons, defense counsel requested that the court exercise its discretion in not taking disciplinary action or, in the alternative, limiting the disciplinary action to an informal, private admonition that would not need to be reported on future pro hac vice applications. Id. As the defense counsel’s memorandum was not denominated a motion for reconsideration, Judge Robart declined to reconsider his oral ruling and instead considered only whether to impose the additional pro hac vice reporting sanction. Id. at *8.

Judge Robart rejected as “post hoc speculation” defense counsel’s claim that because pre-amendment Rule 26 could have applied “insofar as just and practicable,” his citation to pre-amendment cases was in good faith. Id. The court held that by relying on pre-amendment cases in an argument on discoverability and making “no reference to the proportionality requirement,” counsel “misrepresented the scope of discoverable information in a motion to compel or exclude evidence” and then failed to “own[] up to his misrepresentation,” which was “tantamount to bad faith.” Id.

In conclusion, Judge Robart noted that despite [defense counsel’s] flawed efforts to excuse his comportment, the previously issued sanctions (i.e., providing a copy of offending motion to supervising members of firm and awarding plaintiff his fees and costs in litigating this motion) “nearly suffice” to deter counsel from misrepresenting facts or the law in the future and thus decided that counsel did not need to report the sanctions on future pro hac vice applications. Id. Judge Robart did add, however, an additional sanction, requiring counsel to disclose the sanctions imposed if, at any point in the next five years, a federal court threatened or imposed sanctions on him. Id. In Judge Robart’s view, “[t]his requirement will alert courts presiding over future cases that [defense counsel’s] misrepresentations in this case constitute strikes one and two against him. Future courts will then be sufficiently informed to properly sanction any further bad faith by [defense counsel].” Id.

This case serves as an important reminder of our obligations to remain current with and conversant in an organic and evolving body of rules and decisions.

*This conclusion was based on Fulton’s statements that “he did not seek formal medical treatment for stress, worry and inconvenience brought on by Defendants’ conduct.”

 

It can hardly be denied that no lawyer wants to apply the wrong legal standard in papers or be criticized by the Judge before whom they are appearing.  Regrettably, just that occurred in Henry v. Morgan’s Hotel Group, (15-cv-1789), and Magistrate Judge Cott (SDNY) was quick to point out defense counsel’s errors.  In doing so, the Judge reminded all practitioners that it is critical to remain abreast of the changes in the law – most relevant here – the amendments to the Federal Rules of Civil Procedure, which took effect December 1, 2015 (“Amendments”).

In one of the first decisions in which the Southern District applied the Amendments and explained the import of them, Magistrate Judge Cott criticized a defense firm for issuing third-party subpoenas to plaintiff’s former employers.  Specifically, Judge Cott indicated that attorneys for Morgan’s Hotel Group ran afoul of civil procedure rules—including the Amendments which were passed, in part, to prevent “fishing expeditions”—when they tried to secure background information on plaintiff Philip Henry.

Background

Plaintiff, Henry, a gay, African American male, worked for two years as a server at the former Isola restaurant in the Mondrian Soho Hotel.  Henry brought a lawsuit against the Morgan Hotel Group for discrimination wherein he alleged that his supervisor Akihide Suzuki subjected him to racial and homophobic abuse.  He further alleged that when he complained to more senior supervisors, Suzuki retaliated and gave Henry fewer, less desirable shifts, more banal tasks and subjected Henry to needless disciplinary measures.  Henry alleged that the restaurant director, Greg Cau, joined in the harassment and disciplined Henry for various unfounded grievances.

On December 24, 2015, defense counsel served subpoenas on third parties—each prior employers of Henry’s—wherein counsel sought all documents and communications relating to Plaintiff “including but not limited to personnel files, disciplinary files or any other employment documents or records.”

Henry’s attorneys moved to quash the subpoenas, and Magistrate Judge Cott granted that motion.  In doing so, Judge Cott stated a number of bases for doing so.  First, Judge Cott found that filing subpoenas on third parties and plaintiff’s counsel at the same time violated Federal Rule of Civil Procedure 45, which requires that plaintiff’s counsel be notified of defendant’s intention to subpoena non-parties.  Judge Cote observed, “[t]he subpoenas were served on Christmas Eve (an arguably sharp tactic to begin with) on both third-party employers and Henry’s counsel” and noted that, “[s]ome courts have quashed subpoenas due to untimely notice” only.

Judge Cott further stated that other courts require in addition to untimely notice, a showing of prejudice to the Plaintiff before they will quash the subpoena.  Here, Judge Cott found, Henry made a showing of prejudice.  Specifically, the subpoenas were sent to restaurant groups that own more than a dozen establishments in New York City and, if Henry were to apply for employment with any of these restaurants/hotels, his chances of securing employment could be compromised.  Judge Cott stated specifically, “the court would hardly be surprised that, if defendant (or any other establishment) knew that an applicant for employment had bought a lawsuit against another restaurant for discrimination, it might take that into account in the hiring process.”

Nonetheless, the Court found the subpoenas could be quashed on other grounds. “The scope of the subpoenas themselves is problematic, to say the least,” he said. “Blanket requests of this kind are plainly overbroad and problematic.”  Moreover, Defendant “mistakenly invoked the ‘reasonably calculated to lead to the discovery of admissible evidence’ standard of the prior version of Rule 26(b)(1)….That rule was amended last year and this language, long relied on by counsel to seek wide-ranging discovery, has now been eliminated.”  Ouch.  Motion to quash granted and a written decision noting defense counsel’s error.

Judge Cott went on to note that the new rule requires proportionality such that the information sought must be “proportional to the needs of the case, considering the importance of the issues at stake in the action, the amount in controversy, the parties’ relative access to the relevant information, the parties resources, the importance of the discovery in resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefit.”  The purpose of the Amendments was to discourage overuse of broad reaching discovery by considering “proportionality” before ordering production of the requested material and here Defendant fails the analysis.

The Court noted that “[t]he issue presented here is whether defendant’s actions directed toward Henry were based on valid considerations or violated the discrimination laws.”  Judge Cote noted that “Henry’s prior employment has little if any bearing on this issue.”

So what’s the moral of the story?  If nothing else, the Henry case is important reminder that we must understand and invoke the new federal rules and stay abreast of the case law interpreting those rules.