Plaintiff’s Bad Faith Leads to Dismissal of Claims
In the court’s analysis of the sanctions request, it relied heavily upon the plaintiff’s culpability and bad faith. The court noted that even when the evidence pointed to bad faith, the plaintiff did not take responsibility for its actions but instead continued to mislead the court. In defense of its conduct, the plaintiff argued that it mistakenly filed the images and that it sufficiently remedied the misconduct when it asked to file another amended complaint which removed the disputed exhibits and reduced the number of trademark infringement claims against the defendants. The district court did not find either argument credible.
Rather, the court found that the plaintiff’s alteration of the images was “not just purposeful but clearly tailored to gain a litigation advantage.” Moreover, the court concluded that the plaintiff’s “no harm no foul” argument demonstrated a lack of respect for the judicial system. In addition, the plaintiff offered no suggestions to the court for an alternative sanction and merely offered up its belief that dismissal of the case was too severe. The court held that the gravity of the plaintiff’s conduct, and its lack of explanation and ownership of its actions, warranted dismissal and assessment of fees and costs.
The defendants sought a total of $706,177 in fees and costs. After reducing the requested hourly rate and hours expended, the court awarded a lodestar attorney fee figure of $274,860. The court then increased its award by $91,620 (one third of the attorney fee amount) based solely on the exceedingly rare and exceptional result obtained by the defendants: dismissal of the plaintiff’s claims. Finally, the court awarded the full amount of the defendants’ requested expert fees and costs, for a total award of $405,112.33 to the defendants.
Try to Minimize the Damage
“It is rare to see this type of sanction,” remarks John M. Barkett, Miami, FL, cochair of the Litigation Section’s Ethics & Professionalism Committee. “Never underestimate the jurisprudence of anger,” he adds. When facing a situation like this, “correct the deceit immediately, take actions to correct any prejudice that has occurred, be humble, apologize to the court, come totally clean before the judge, and hope you can keep the case alive by advocating for a limitation on sanctions to an attorney fee award only,” Barkett counsels.
While litigators need to recognize the impact that client misconduct may have on their case, ethical issues must also be considered. “When lawyers are confronted with client misconduct, they need to consider not only their obligations to their client but also the obligations placed on them by the Rules of Professional Responsibility in their states,” expounds Paula M. Bagger, Boston, MA, cochair of the Section’s Commercial & Business Litigation Committee. In determining their ethical responsibilities, “lawyers should give special consideration to their state’s ethical rules governing candor to the tribunal as well as any exceptions to client confidentiality,” advises Bagger.