In what it described as "unavoidably lengthy," a federal district court issued a 148-page opinion and order explaining its rationale for imposing a fine of $9.1 million. The court sanctioned two Florida law firms for unnecessarily consuming significant judicial resources. The court found that the firms filed over 1,000 frivolous claims in over 3,700 lawsuits filed in federal courts in Florida. ABA Section of Litigation leaders believe In re Engle Cases provides a professional responsibility primer on ethical duties to clients and to courts.
Failure to Investigate and Obtain Client Authorization Violates Ethical Rules
In the opinion and order, the U.S. District Court for the Middle District of Florida noted the named partners in the firms violated many ethical standards, among other things. They neither investigated the facts underlying the plaintiffs' claims, nor obtained authorizations from clients before filing lawsuits against tobacco companies on behalf of plaintiffs in Florida courts. Of the more than 3,700 lawsuits filed by the firms in 2008, they filed over 500 lawsuits on behalf of dead plaintiffs. Furthermore, the firms had not received permission to file wrongful death claims.
In 2012, the district court initiated sanctions proceedings against the firms after sending, over the objection of the firms, questionnaires to several of the plaintiffs. The firms objected to the questionnaires arguing several points. They argued that since the firms certified, under Federal Rule of Civil Procedure Rule 11, that the complaints they filed were legitimate, the questionnaires would not yield new information. In addition, the firms argued no sizeable group of cases appropriate for dismissal existed. Nonetheless, the plaintiffs' responses to the court's questionnaires showed many of them had never heard of the firms, much less allowed them to file lawsuits.
Moreover, the district court benefitted from a decision in the U.S. Court of Appeals for the Eleventh Circuit, similarly titled In re Engle Cases. There the circuit court noted in dicta the firms possessed "dubious authority" to represent the plaintiffs. The appeals court also noted the firms did not have the resources to litigate the many complaints they filed on behalf of Florida plaintiffs in state and federal courts. The district court then assigned a special master to investigate the firms and accepted the special master's recommendation to sanction the firms. Against that backdrop, the district court began sanctions proceedings.
Significant Procedural and Substantive History and Motion Practice
With the prior framework for the firms' 2008 lawsuits established, the district court discussed the genesis of the Engle tobacco lawsuits in Florida. From 1994 to 2006, the court noted, a class action between Florida cigarette smokers and tobacco companies made its way through Florida state courts. The proposed class certified included over 700,000 Florida citizens. In 1999, a Florida jury found smoking causes lung diseases and cancer and that the tobacco companies were negligent in their manufacture and marketing of cigarettes in Florida.
Years later, in 2006, Florida's highest state court decertified the Engle class for, among other reasons, issues unique to each plaintiff. However, the high court also concluded the original Engle plaintiffs, who had not settled their tobacco lawsuits, would not have to reestablish issues found by the 1999 jury. The high state court gave the non-settling plaintiffs until January 2008 to file individualized actions against the tobacco defendants.
The tobacco defendants removed to federal courts, based on federal question jurisdiction, state cases that plaintiffs had not filed timely by January 2008. Further, the procedural motions and hearings in which the firms took part suggested they did not have adequate case management resources. The firms dismissed voluntarily hundreds of cases as not viable in federal court for a variety of reasons, including claim duplication, but over 3,700 complaints remained in the district court.
Sanctions Levied Based on Frivolous Cases in Federal Court
Pursuant to 28 U.S.C § 1927 and Rule 11 of the Federal Rules of Civil Procedures, the court imposed $9,164,404 in sanctions against the firms for wasting judicial resources by litigating 1,250 frivolous lawsuits. "The big picture thing to take away from the court's order is that lawyers have to constantly be aware of their logistical capabilities and limitations. Properly managing thousands of clients would be a tremendous undertaking for even the largest law firms in the country," emphasizes Robert E. Poundstone IV, Montgomery, AL, cochair of the ABA Section of Litigation's Ethics & Professionalism Committee.
Echoing the sentiments expressed by Poundstone, Scott E. Reiser, Roseland, NJ, cochair of the Section's Ethics & Professionalism Committee, opines "you could probably design a professional responsibility course on this case alone, based on the number of ethical concerns and standards which the court found to have been violated." Among the many provisions of the Model Rules of Professional Conduct that Reiser thinks the firm violated were Rules 1.1, 1.2(a), 1.4(a), 3.1, 3.3, and 3.4(c).
Kelso L. Anderson is an associate editor for Litigation News.