Justia Legal Ethics Opinion Summaries

The Haegers sued Goodyear, alleging that the failure of a Goodyear G159 tire caused their motorhome to swerve and flip over. After years of contentious discovery, marked by Goodyear’s slow response to repeated requests for internal G159 test results, the parties settled. Months later, the Haegers’ lawyer learned that, in another lawsuit involving the G159, Goodyear had disclosed test results indicating that the tire got unusually hot at highway speeds. Goodyear conceded withholding the information. The district court exercised its inherent power to sanction bad-faith behavior to award the Haegers $2.7 million—their legal fees and costs since the moment, early in the litigation, of Goodyear’s first dishonest discovery response. The court held that in cases of egregious behavior, a court can award all attorney’s fees incurred in a case, without any need to find a causal link between the expenses and the sanctionable conduct. The court made a contingent award of $2 million, to take effect if the Ninth Circuit reversed the larger award, deducting fees related to other defendants and to proving medical damages. The Ninth Circuit affirmed the $2.7 million award. The Supreme Court reversed. When a federal court exercises its inherent authority to sanction bad-faith conduct by ordering a litigant to pay the other side’s legal fees, the award is limited to fees that the innocent party would not have incurred but for the bad faith. The sanction must be compensatory, not punitive. The Haegers did not show that this litigation would have settled as soon as Goodyear divulged the heat-test results and cannot demonstrate that Goodyear’s non-disclosure so permeated the suit as to make that misconduct a but-for cause of every subsequent legal expense. View "Goodyear Tire & Rubber Co. v. Haeger" on Justia Law

In 2012, NITEL filed this breach of contract suit in an Illinois state court against PNC Bank. PNC Bank removed to federal court and the district court granted summary judgment for PNC Bank. This appealed stemmed from the district court's post-judgment award of Rule 11 sanctions against both NITEL and its lawyer, Robert Riffner. In this case, PNC Bank failed to comply with Rule 11(c)(2)'s requirement that a party seeking Rule 11 sanctions first to serve a proposed motion on the opposing party and to give that party at least 21 days to withdraw or correct the offending matter. PNC Bank argued that the two letters it sent containing both settlement demands and threats to seek Rule 11 sanctions if its demands were not met amounted to "substantial compliance" with Rule 11(c)(2) and thus preserved its right to move for sanctions after the district court granted summary judgment in its favor. The district court agreed and imposed sanctions. The court need not revisit here whether substantial compliance can ever satisfy the warning shot requirement of Rule 11(c)(2). In this case, the court concluded that PNC Bank's warning shot letters fell far short of even the generous target of substantial compliance. Accordingly, the court reversed the award of sanctions against Riffner. View "Northern Illinois Telecom, Inc. v. PNC Bank" on Justia Law

Former counsel moved to withdraw from representing a client, alleging another attorney had agreed to handle (and was already handling) postjudgment motions, and that the other attorney would also handle the appeal of an adverse judgment. The client sued former counsel for malpractice more than one year after the motion to withdraw was made, but less than one year after the motion was granted. The question this case presented for the Court of Appeal's review was whether the trial court properly granted summary judgment to former counsel based on the one-year statute of limitation provided by Code of Civil Procedure section 340.61 on the ground that the client could not have had an objectively reasonable expectation that former counsel was continuing to represent him after the motion to withdraw had been served. The Court concluded the trial court was correct in granting summary judgment. "Once the former counsel told the client, via the motion to withdraw, that the case had already been handed off to another attorney, the client was on notice that former counsel was no longer working for him. . . . because this lawsuit was filed more than one year after that time, no triable issue of fact remains as to the statute of limitation defense." View "Flake v. Neumiller & Beardslee" on Justia Law

Sam Perroni filed a complaint with the Arkansas Judicial Discipline and Disability Commission and its former executive director (collectively, Commission) against Circuit Judge Tim Fox, alleging that Judge Fox violated several provisions of the Arkansas Code of Judicial Conduct. A three-member panel of the Commission found no probable cause on the complaint filed against Judge Fox and dismissed the complaint. Perroni then filed a second complaint with the Commission alleging that Judge Fox violated several laws and abused the prestige of his office. The Commission dismissed the second judicial complaint. Thereafter, Perroni filed an original complaint, an amended complaint, and a second amended complaint against the Commission. The circuit court dismissed the complaint for lack of subject-matter jurisdiction. The Supreme Court dismissed Perroni’s appeal, holding that the circuit court properly dismissed Perroni’s complaint for lack of subject-matter jurisdiction because a review of the Commission’s decision lies exclusively with the Supreme Court. View "Perroni v. Sachar" on Justia Law

Gonzalez challenged an administrative order declaring that she should be reported to the statewide child abuse index for what was deemed excessive discipline of her 12-year old daughter. She had spanked the girl with a wooden spoon. After she successfully appealed the trial court’s denial of relief, she sought an award of approximately $60,000 in attorney fees incurred to four separate law practices. The trial court awarded $7,500, denying her claim as to all but her current counsel and finding the evidence in support of two other claims technically deficient, although no evidentiary objection had been asserted against them. It denied the third claim on the basis of objections that were only raised when the court permitted the opposing party to file a third opposition memorandum. The court of appeals remanded, stating that the rulings “may have grown out of an understandable frustration with counsel for plaintiff, whose several failings included the belated assertion of arguments and the devotion of considerably more attention to unsound technicalities than to making a bulletproof showing on the merits.” The court stated that complete denial of relief as to three of plaintiff’s four attorneys exceeded the bounds of sound discretion. View "Gonzalez v. Santa Clara County Department of Social Services" on Justia Law

In 2008, Kimberly Bond sued her former attorney, James McLaughlin, alleging legal malpractice. The trial court entered a summary judgment in favor of McLaughlin. In February 2006, Bond hired McLaughlin to provide legal services involving the estate of her husband, Kenneth Pylant II, who was killed in a motorcycle accident in 2005. McLaughlin allegedly failed to properly contest a copy of Pylant's will that was admitted to probate on November 29, 2005, and, as a proximate result of McLaughlin's breach of duty, Bond was injured and suffered damage. The Supreme Court found that Bond did not contest the will before probate, and, because of McLaughlin's negligence, she did not properly contest the will within six months after probate by filing a complaint with the circuit court. The Supreme Court determined that Bond presented evidence sufficient to overcome summary judgment, and accordingly reversed the circuit court’s order. The case was remanded for further proceedings. View "Bond v. McLaughlin" on Justia Law

Waldman defrauded Stone more than a decade ago. In Waldman’s first appeal, the Sixth Circuit found ample evidence that Waldman and attorney Atherton defrauded Stone, but vacated the judgment on grounds unrelated to the merits. The district court entered a new judgment, awarding Stone over $1 million in compensatory damages and $2 million in punitive damages. The Sixth Circuit again affirmed that defendants committed fraud, but reduced Stone’s compensatory damages to $650,776, vacated the determination of joint and several liability, and remanded for the limited purpose of apportioning liability. The district court found defendants each 50% responsible for Stone’s damages and reduced the punitive damages to $1.2 million to retain the 2:1 ratio of punitive to compensatory damages. In Waldman’s third appeal, the Sixth Circuit granted Stone’s request for $4,157.50 in sanctions (his attorney’s fees in the third appeal). Waldman’s arguments concerning the award of punitive damages and the ratio were “patently beyond the scope of our limited remand and therefore out of bounds in this appeal” and had been waived; they were legally frivolous. Waldman’s arguments concerning apportionment of responsibility essentially argued, for a third time, that he did not commit fraud, and were also frivolous. His argument that Stone bore some fault for his damages because he should have uncovered Waldman’s fraud sooner was plainly meritless. View "Waldman v. Stone" on Justia Law

Attorney Susan Thiem represented Ann Thomas, an allegedly incapacitated person, during this action for appointment of a guardian and conservator. During the proceedings, the probate court issued an order imposing sanctions against Thiem based on a finding that she had “unreasonably interfered” with the discovery process. The sanctions order required Thiem to pay reasonable expenses, including attorney fees. Thiem appealed, arguing that the court abused its discretion by imposing sanctions. The Supreme Judicial Court dismissed the appeal as interlocutory without reaching the merits, holding that because the court had not yet quantified the amount of any attorney fees and expenses to be paid by Thiem as a sanction, the sanctions order was not a final judgment suitable for appellate review. View "Conservatorship & Guardianship of Ann B. Thomas" on Justia Law

Walker filed suit in December 2012, alleging patent infringement. In May 2014, Walker and HSN, both represented by counsel, entered into a Mediated Settlement Agreement, requiring that HSN pay Walker $200,000; Walker was to deliver a release and the parties were to stipulate to dismissal. On May 9, HSN moved to stay deadlines based on the Agreement “that resolves all claims.” Walker opposed the motion, stating that “significant issues” remained. The court denied HSN’s motion. On May 12, HSN sought reconsideration, filing the Agreement and a memorandum arguing that all claims were resolved. During May, Walker moved to file a Third Amended Complaint, moved to set a Markman Hearing, and opposed the filing of the Agreement. On May 29, HSN moved to enforce the Agreement, attaching correspondence from Walker’s counsel acknowledging that the case was settled, but requesting additional discovery. Walker delivered a general release and HSN forwarded the $200,000 payment. Walker filed motions opposing enforcement and attorneys’ fees for HSN. HSN sought sanctions based on Walker’s “meritless filings … on a matter that has been fully resolved.” At a status conference, both parties agreed the case should be dismissed, but disagreed about over what the court retained jurisdiction. The court dismissed and awarded HSN “reasonable attorneys’ fees and costs resulting from Plaintiff’s vexatious actions after the filing of the Notice of Settlement.” Walker unsuccessfully sought reconsideration, then filed an unsuccessful objection to fees. In April 2015, the court entered final judgment awarding HSN $20,511.50 in attorneys’ fees. The Federal Circuit affirmed and, finding Walker’s appeal frivolous, awarded damages and double costs under Federal Rule of Appellate Procedure 38. View "Walker v. Health International Corp." on Justia Law

Under California’s anti-SLAPP statute, unless a plaintiff establishes a probability of prevailing on a cause of action arising from constitutionally protected speech or petitioning activity, the court must grant the defendant’s motion to strike the claim and, generally, must also award the defendant attorney’s fees. In the instant case, Plaintiff, an attorney, filed an action against the State Bar after she was disciplined for committing violations of the rules of professional conduct. The State Bar filed a special motion to strike the complaint under the anti-SLAPP statute. The superior court granted the motion and awarded attorney’s fees to the State Bar, concluding that Plaintiff’s claims arose from protected petitioning activity and that Plaintiff had not shown a likelihood of prevailing because, inter alia, a superior court lacks subject matter jurisdiction over attorney discipline matters. The Court of Appeal reversed, concluding that because the trial court had no jurisdiction to rule on the anti-SLAPP motion, it also lacked jurisdiction to award attorney fees under Cal. Civ. Proc. Code 425.16. The Supreme Court reversed, holding that a court that lacks subject matter jurisdiction over a claim may grant a special motion to strike the claim under section 425.16 and thus may award attorney’s fees and costs to the defendant. View "Barry v. State Bar of California" on Justia Law