A federal court has ordered that an attorney and his law firm pay tens of thousands of dollars in attorney fees following that attorney’s failure to alert the court of “directly contrary authority” in a motion. ABA Litigation Section leaders warn that the obligation to zealously advocate for clients nevertheless requires the disclosure of adverse authority to the court.
An Attempt to Stop an Impending Labor Strike
In St. Charles Health System, Inc. v. Oregon Federation of Nurses and Health Professionals, Local 5017, AFT, AFL-CIO, a hospital filed an action in state court against a union, claiming that an upcoming strike would violate the National Labor Relations Act (NLRA). The union removed the action to the U.S. District Court for the District of Oregon. The next day, the hospital moved for a temporary restraining order enjoining the impending strike and requested an expedited hearing.
Although section 10(j) of the NLRA provides that the National Labor Relations Board is the only entity that may seek an injunction to prevent an unfair labor practice under the NLRA, the attorney moving for the injunction did not include this information in the brief. The union quickly prepared a response alerting the court to the adverse authority, and the court denied the motion. After the denial, the hospital dismissed the case.
Thereafter, the union moved for sanctions. The court entered an order to show cause why the attorney should not be sanctioned for violating his ethical obligation to inform the court of contrary authority and pursuant to 28 U.S.C. 1927 for filing the action in bad faith.
Sanctions Issued Against Firm and Attorney
The attorney for the hospital argued that his firm was merely arguing for an “extension” of existing case law; however, the court found this argument “meritless.” The court explained that “nowhere in [the attorney’s] briefings did he alert the Court of the fact that existing caselaw–caselaw that any attorney practicing in this area of law would certainly be well-aware of—presented huge jurisdictional issues that Plaintiff could only clear by first obtaining an ‘extension’ of existing caselaw.” The court held it was “not credible to believe this was merely an inadvertent omission.” In its order to show cause, the court had previously noted the lead attorney’s extensive experience in labor law and collective bargaining.
Likewise, although the attorney argued that time was short when his firm filed the brief, the court rejected this argument, noting that the urgency of the matter actually worked against the plaintiff here because the court was being asked to take immediate action: “Had the defense not cobbled together a quick brief, the Court was prepared to issue a completely illegal order based on the law as presented by the hospital; law the court later learned to be a fiction.”
In addition to being subject to sanctions under the court’s inherent authority, the court also sanctioned the attorney pursuant to 28 U.S.C. § 1927. The court found bad faith based on the fact that the hospital had previously cited the relevant section of the NLRA in a motion asking the NLRB to enjoin the strike, yet omitted any mention of that section in its own motion for injunctive relief before the federal court. The court held that the goal of the action was to “gain a valuable negotiating chip (in the form of an injunction prohibiting a rapidly approaching strike) during longstanding discussions with the union” and, thus, was not filed in good faith.
Ultimately, the court sanctioned the attorney and his law firm $40,625.52, the amount of fees incurred by the union. The court did not sanction the hospital itself, explaining that [n]othing on this record indicates that…the hospital did anything other than rely on the advice of its attorneys.”
Hide the Ball, Feel the Wrath
“One of the things that most angered the judge is that the plaintiff’s counsel did not disclose the contrary authority at all, leaving the court in the dark. The court felt itself misled, and maybe even embarrassed, that it almost embarked on an illegal order. If it had not been for the union’s response, the judge would not have been aware of the jurisdictional issue,” explains Joseph V. Schaeffer, cochair of the Litigation Section’s Pretrial Practice & Discovery Committee. “You can still zealously advocate for your client when saying the authority cannot and should not apply,” he continues.
In addition to violating the rules of professional conduct, the failure to disclose contrary, controlling authority is bad for the client as well, adds John S. Austin, cochair of the Section’s Trial Practice Committee. The “stain and impact” of violations of the professional rules of conduct “naturally flows to the client,” he notes. And, after the firm’s attempt to secure early injunctive relief ended in sanctions, Austin “cannot see a client having any faith and confidence in this firm moving forward.”
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