BOALT – LEGAL PROFESSION
TENTH WEEK – CIVIL LITIGATION
OCTOBER 30, 2012
FAQ’s
All Students
Read
Ex. 10.1
Mr. Hairpiece
All Read; M-R
ready to discuss
Ex. 10.2
Fisons
All Read; S-Z
ready to discuss
Ex. 10.3
Two Standards?
No one
Ex. 10.4
Qualcomm
All Watch the
Video!
Ex. 10.5
Boss’s Keeper?
No one
Ex. 10.6
Candor
All Read; A-C
ready to discuss
Ex. 10.7
A Liar for a
Client
All Read; D-J
ready to discuss
Ex. 10.8
Outline
regarding
Perjury
All read; K-L
ready to discuss
Read MR 3.1 – 3.9
10. CIVIL LITIGATION
10.1. Frequently Asked Questions
(10.1.1): What are the sources of the law of lawyering for civil litigation?
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In terms of legal ethics rules, we look to the Model Rules 3.1 – 3.9. But we also
look to codes of civil procedure and to the common law of legal malpractice, breach
of fiduciary duty, and malicious prosecution.
(10.1.2): What Model Rules cover civil litigation?
As noted, rules 3.1 – 3.9 do. There are three kinds of litigators regulated in
those rules: (1) the regular rules for all litigators, including civil litigators; (2) the
special rules, especially 3.8, that constrain criminal prosecutors; and (3) the special
rules, especially the second sentence of Rule 3.1, that liberate criminal defense
counsel.
(10.1.3): What are the key differences between the ethics of civil and criminal
litigators?
As noted, the two kinds of criminal litigators have particular regulations that
don’t apply to civil litigators. For example, the criminal prosecutor is supposed to
“do justice,” or “seek just results,” but so long as civil litigators play by the rules
they are allowed to seek beneficial results for their client even if justice doesn’t
result. Criminal defense lawyers are given special license to fight claims that the
lawyer knows are true, but civil litigators can’t litigate that aggressively.
(10.1.4): Rule 3.1 provides that a lawyer may not bring frivolous claims or
defenses.
What does “frivolous” mean? Frivolous usually means a claim that is lacking
any reasonable factual or legal basis. Sometimes that’s easy to spot, as when a civil
litigator realizes that no witness and no documents provide any support for the
client’s legal position, or when all the governing law precludes the claim the lawyer
wants to assert.
But sometimes “frivolous” is harder to define. Litigators need to develop a
sense of what kinds of claims the judges, juries, and opponents will consider to be
unusually weak. We can say that a lawyer needs to develop a “common sense.” We
might even say that the lawyer needs a sense of what, ultimately, counts as “law.”
(10.1.5): What is the duty of candor to the tribunal?
It’s an important rule—one that can trump the duty of confidentiality. You
need to read Rule 3.3 carefully. There is an Appendix to this reading that will help
you understand a lawyer’s obligation when a client intends to commit, or has
committed perjury.
(10.1.6): What duties does the civil litigator owe to the opponent?
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In one sense, all the 3.x rules benefit your opponents, as they preclude you
from unfair litigation. In particular, Rule 3.4 lists duties running to the opponent.
(10.1.7): What are the ethics of pre-trial discovery?
Rule 3.4 deals with discovery, but most of the regulation of the ethics of
discovery is contained in codes of civil procedure. Many of those codes actually
contain mini-codes of ethics, complete with penalties. For that reason, the ethics of
discovery is regulated to a significant degree by law outside the ethics rules.
10.1. Example: Mr. Hairpiece Gags a Maggot
Joe Jamail is a legendary Texas trial lawyer. He won a $1 billion judgment in
the Pennzoil-Texaco case—which he had on a 33% contingent fee. Consider the
following two excerpts from depositions he attended. Does Jamail play legitimate
hardball or is he over the line? How well taken are his complaints?
Excerpt 1. With respect to this excerpt, the Delaware Supreme Court blasted
Jamail. Would you have?
A. [Mr. Liedtke] I vaguely recall [Mr. Oresman’s letter] . . . . I think I did read
it, probably.
Q. (By Mr. Johnston [Delaware counsel for QVC]) Okay. Do you have any
idea why Mr. Oresman was calling that material to your attention?
Mr. Jamail: Don’t answer that. How would he know what was going on in Mr.
Oresman’s mind? Don’t answer it. Go on to your next question.
Mr. Johnston: No, Joe—
Mr. Jamail: He’s not going to answer that. Certify it. I’m going to shut it down
if you don’t go to your next question.
Mr. Johnston: No. Joe, Joe—
Mr. Jamail: Don’t “Joe” me, asshole. You can ask some questions, but get off
of that. I’m tired of you. You could gag a maggot off a meat wagon. Now,
we’ve helped you in every way we can.
Mr. Johnston: Let’s just take it easy.
Mr. Jamail: No, we’re not going to take it easy. Get done with this.
Mr. Johnston: We will go on to the next question.
Mr. Jamail: Do it now.
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Mr. Johnston: We will go on to the next question. We’re not trying to excite
anyone.
Mr. Jamail: Come on. Quit talking. Ask the question. Nobody wants to
socialize with you.
Mr. Johnston: I’m not trying to socialize. We’ll go on to another question.
We’re continuing the deposition.
Mr. Jamail: Well, go on and shut up.
Mr. Johnston: Are you finished?
Mr. Jamail: Yeah, you—
Mr. Johnston: Are you finished?
Mr. Jamail: I may be and you may be. Now, you want to sit here and talk to
me, fine. This deposition is going to be over with. You don’t know what you’re
doing. Obviously someone wrote out a long outline of stuff for you to ask. You
have no concept of what you’re doing. Now, I’ve tolerated you for three hours.
If you’ve got another question, get on with it. This is going to stop one hour
from now, period. Go.
Mr. Johnston: Are you finished?
Mr. Thomas: Come on, Mr. Johnston, move it.
Mr. Johnston: I don’t need this kind of abuse.
Mr. Thomas: Then just ask the next question.
Q. (By Mr. Johnston) All right. To try to move forward, Mr. Liedtke, . . . . I’ll
show you what’s been marked as Liedtke 14 and it is a covering letter dated
October 29 from Steven Cohen of Wachtell, Lipton, Rosen & Katz including
QVC’s Amendment Number 1 to its Schedule 14D-1, and my question—
A. No.
Q. —to you, sir, is whether you’ve seen that?
A. No. Look, I don’t know what your intent in asking all these questions is, but,
my God, I am not going to play boy lawyer.
Q. Mr. Liedtke—
A. Okay. Go ahead and ask your question.
Q. —I’m trying to move forward in this deposition that we are entitled to take.
I’m trying to streamline it.
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Mr. Jamail: Come on with your next question. Don’t even talk with this
witness.
Mr. Johnston: I’m trying to move forward with it.
Mr. Jamail: You understand me? Don’t talk to this witness except by question.
Did you hear me?
Mr. Johnston: I heard you fine.
Mr. Jamail: You fee makers think you can come here and sit in somebody’s
office, get your meter running, get your full day’s fee by asking stupid
questions. Let’s go with it.
Excerpt 2, from a transcript of a deposition taken in St. Louis. Joe Jamail
represented plaintiffs in a suit claiming that the Monsanto Company had exposed
residents of Houston to dangerous chemicals. Edward Carstarphen was the attorney
for the defense. Monsanto settled the case in July for $39 million. The transcript
appeared in the October issue of American Lawyer, a monthly published in New
York City.
Jamail: You don’t run this deposition, you understand?
Carstarphen: Neither do you, Joe.
Jamail: You watch and see. You watch and see who does, big boy. And don’t
be telling other lawyers to shut up. That isn’t your goddamned job, fat boy.
Carstarphen: Well, that’s not your job, Mr. Hairpiece.
Witness: As I said before, you have an incipient—
Jamail: What do you want to do about it, asshole?
Carstarphen: You’re not going to bully this guy.
Jamail: Oh, you big tub of shit, sit down.
Carstarphen:
I don’t care how many of you come up against me.
Jamail: Oh, you big fat tub of shit, sit down. Sit down, you fat tub of shit.
Watch these clips:

Texas Style Deposition: http://www.youtube.com/watch?v=ZIxmrvbMeKc
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
How To Handle a Tough Deposition Question:
http://www.youtube.com/watch?v=RjtnRmy0H-U
If you were a Magistrate Judge, Discovery Commissioner, or Judge in any
these cases, and you were alerted to that conduct, what would you do? What rules
could you use? Or is this simply some of the inevitable “blowing off steam” that
necessarily accompanies high-stakes litigation?
As for the expression “you could gag a maggot off a meat wagon,” what the
hell does that mean? Didn’t he mean either “you could gag a maggot,” or “you could
lure a maggot off a meat wagon”? Isn’t counsel mixing his metaphors? Isn’t that in
itself grounds for sanctions?
10.2. Example: The Fisons Case
In this example, ask yourself about the line between truth and deception. When,
if ever, do literal answers become deliberately misleading? Do what extent is a
litigator entitled to blame the other litigator for asking sloppy questions, or for not
following up? Please read Model Rule 3.3 (Candor toward the Tribunal) and the
Comments.
Washington State Physicians Insurance Exchange & Association v. Fisons
Corporation
SUPREME COURT OF WASHINGTON
122 Wn.2d 299; 858 P.2d 1054; 1993 Wash. LEXIS 241
September 16, 1993, Decided
September 16, 1993, Filed
OPINION: [*306] [**1058]
Facts of Case
We are asked in this case to decide whether a physician has a cause of action
against a drug company for personal and professional injuries which he suffered
when his patient had an adverse reaction to a drug he had prescribed. The
physician claimed the drug [***15] company failed to warn him of the risks
associated with the drug. If such action is legally [*307] cognizable, we are then
asked to determine whether damages awarded by the jury were excessive and
whether attorneys' fees were properly awarded by the trial court. We are also
asked to rule that the trial court erred in denying sanctions against the drug
company for certain abuses in the discovery process.
The physician's action began as part of a malpractice and product liability suit
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brought on behalf of a child who was the physician's patient. On January 18,
1986, 2-year-old Jennifer Pollock suffered seizures which resulted in severe and
permanent brain damage. It was determined that the seizures were caused by an
excessive amount of theophylline in her system. The Pollocks sued Dr. James
Klicpera (Jennifer's pediatrician), who had prescribed the drug, as well as Fisons
Corporation (the drug manufacturer and hereafter drug company) which
produced Somophyllin Oral Liquid, the theophylline-based medication
prescribed for Jennifer.
Dr. Klicpera cross-claimed against the drug company both for contribution and
for damages and attorneys' fees under the Consumer Protection Act [***16] as
well as for damages for emotional distress.
In January 1989, after nearly 3 years of discovery, Dr. Klicpera, his partner and
the Everett Clinic settled with the Pollocks. The settlement agreement
essentially provided that the doctors' insurer, Washington State Physicians
Insurance Exchange & Association (WSPIE), would loan $ 500,000 to the
Pollocks which would be contributed in the event of a settlement between the
Pollocks and the drug company. The Pollocks were guaranteed a minimum total
recovery of $ 1 million, and in the event of trial Dr. Klicpera agreed to remain
as a party and to pay a maximum of $ 1 million. The settlement between the
Pollocks and Dr. Klicpera was determined by the trial court to be reasonable
pursuant to RCW 4.22.060.
More than 1 year after this settlement, an attorney for the Pollocks provided Dr.
Klicpera's attorney a copy of a letter received from an anonymous source. The
letter, dated [*308] June 30, 1981, indicated that the drug company was aware in
1981 of "life-threatening theophylline toxicity "in children who received the drug
while suffering from viral infections. The letter was sent from the drug company
to only a small number of what [***17] the company considered influential
physicians. The letter stated that physicians needed to understand that
theophylline can be a "capricious drug".
The Pollocks and Dr. Klicpera contended that their discovery requests should have
produced the June 1981 letter and they moved for sanctions against the drug
company. The request for sanctions was initially heard by a special discovery
master, who denied sanctions, but who required the [**1059] drug company to
deliver all documents requested which related to theophylline. Documents that the
drug company and its counsel had immediately available were to be produced by
the day following the hearing before the special master. The remainder of the
documents were to be produced within 2 weeks. The trial court subsequently denied
Dr. Klicpera's request to reverse the discovery master's denial of sanctions and at
the close of trial denied a renewed motion for sanctions.
The day after the hearing on sanctions, the drug company delivered approximately
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10,000 documents to Dr. Klicpera's and Pollocks' attorneys. Among the documents
provided was a July 10, 1985 memorandum from Cedric Grigg, director of medical
communications for the drug company, to [***18] Bruce Simpson, vice president
of sales and marketing for the company.
This 1985 memorandum referred to a dramatic increase in reports of serious toxicity
to theophylline in early 1985 and also referred to the current recommended dosage
as a significant "mistake" or "poor clinical judgment". The memo alluded to the
"sinister aspect" that the physician who was the "pope" of theophylline dosage
recommendation was a consultant to the pharmaceutical company that was the
leading manufacturer of the drug and that this consultant was "heavily into [that
company's] stocks". The memo also noted that the toxicity reports were not reported
in the journal [*309] read by those who most often prescribed the drug and
concluded that those physicians may not be aware of the "alarming increase in
adverse reactions such as seizures, permanent brain damage and death". The memo
concluded that the "epidemic of theophylline toxicity provides strong justification
for our corporate decision to cease promotional activities with our theophylline line
of products." The record at trial showed that the drug company continued to
promote and sell theophylline after the date of this memo.
On April 27, 1990, [***19] shortly after the 1985 memo was revealed, the drug
company settled with the Pollocks for $ 6.9 million. The trial court determined that
settlement to be reasonable, dismissed the Pollocks' claims, extinguished Dr.
Klicpera's contribution/indemnity claims against Fisons pursuant to RCW 4.22.060
and reserved determination of what claims remained for trial. The trial court then
ordered the lawsuit recaptioned, essentially as Dr. James Klicpera, plaintiff v.
Fisons Corporation, defendant.
After a month-long jury trial, the court instructed the jury on Dr. Klicpera's claims
which were based on the Consumer Protection Act, RCW 19.86, the product
liability act, RCW 7.72, and common law fraud. The jury was also instructed on
WSPIE's fraud claim seeking to recover the $ 500,000 paid in settlement to the
Pollocks. The trial court ruled that WSPIE could not maintain a Consumer
Protection Act cause of action against the drug company.
On a special verdict form, the jury concluded that Dr. Klicpera was entitled to
recover against the drug company under his Consumer Protection Act claim and
under his product liability claim, but not under the fraud claim. The jury awarded
Dr. Klicpera $ 150,000 [***20] for loss of professional consultations, $ 1,085,000
for injury to professional reputation, and $ 2,137,500 for physical and mental pain
and suffering. The jury further found Dr. Klicpera to be 3.3 percent contributorily
negligent. The jury found that WSPIE was not entitled to recover under its fraud
claim against the drug company the $ 500,000 settlement paid to the Pollocks.
[*310] The trial court denied the drug company's motion for judgment n.o.v. and
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for a new trial. On a motion for reduction of the jury award, the trial court reduced
the amount awarded for loss of professional consultations from $ 150,000 to $
2,250 but refused to reduce the awards for loss of reputation and for pain and
suffering. The trial court also denied WSPIE's motion for judgment n.o.v. or a new
trial based on the dismissal of WSPIE's Consumer Protection Act claim.
The trial court awarded $ 449,568.18 to Dr. Klicpera as attorneys' fees under the
Consumer Protection Act finding that 50 percent of the attorneys' time in the
lawsuit [**1060] was attributable to the Consumer Protection Act cause of
action. The court denied Dr. Klicpera's request for further attorneys' fees based
upon a theory of equitable [***21] indemnification.
Pursuant to the injunctive relief section of the Consumer Protection Act, the court
ordered the drug company to send the June 30, 1981 letter regarding the dangers
of theophylline poisoning to the Washington State Medical Association.
The drug company sought direct review by this court and we accepted review. Dr.
Klicpera and his insurer (WSPIE) cross-appeal from the trial court's refusal to
award discovery sanctions for the alleged discovery violations. WSPIE also appeals
the trial court's dismissal of its Consumer Protection Act claim against the drug
company.
The parties' 63 assignments of error raise 9 principal issues.
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Issue Nine.
Conclusion. The trial court applied an erroneous legal standard when ruling on the
motion for sanctions for discovery abuse and erred when it refused to sanction the
drug company and/or its attorneys for violation of CR 26(g).
The doctor and his insurer, [***74] Washington State Physicians Insurance &
Exchange Association (hereinafter referred to [*337] collectively as "the doctor"),
asked the trial court to sanction the drug company and its lawyers for discovery
abuse. This request was based on the fact that at least two documents crucial to the
doctor's defense as well as to the injured child's case were not discovered until
March of 1990 -- more than 1 year after the doctor had settled with the child, nearly
4 years after the complaint was filed and approximately 1 month before the
scheduled trial date. The two documents, dubbed the "smoking guns" by the doctor,
show that the drug company knew about, and in fact had warned selected
physicians about, the dangers of theophylline toxicity in children with viral
infections at least as early as June 1981, 4 years before Jennifer Pollock was
injured.
Although interrogatories and requests for production should have led to the
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discovery of the "smoking gun" documents, their existence was not revealed to
the doctor until one of them was anonymously delivered to his attorneys.
A motion for sanctions based on discovery abuse was heard first by a special
discovery master on March 28, 1990, before the [***75] child's case was settled.
The special master ruled that he could not find "on the basis of this record that there
was an intentional withholding of this document." (Italics ours.) Clerk's Papers, at
9693. The special master then turned to what he determined was the more relevant
issue, additional and full discovery of other theophylline-related documents in the
drug company's possession. The special master ordered the drug company's
attorneys to turn over any immediately available documents concerning theophylline
to attorneys for the child and the doctor by noon the next day and to review the
remainder of the drug company's files and produce other relevant documents at the
end of 2 weeks. The next day, the second "smoking gun", a 1985 internal
memorandum describing theophylline toxicity in children, was delivered along with
about 10,000 other documents.
Although other documents were relevant to the case, the two smoking gun
[**1075] documents were the most important. The first, a letter, dated June 30,
1981, discussed an article that [*338] contained a study confirming reports "of life
threatening theophylline toxicity when pediatric asthmatics . . . contract viral
infections."
[***76] Exhibit 3. The second, an interoffice memorandum, dated July 10,
1985, talks of an "epidemic" of theophylline toxicity and of "a dramatic
increase in reports of serious toxicity to theophylline." Exhibit 7.
Both documents contradicted the position taken by the drug company in the
litigation, namely, that it did not know that theophylline-based medications were
potentially dangerous when given to children with viral infections.
After the 1985 memorandum was discovered and still prior to trial, the special
master's denial of the sanctions motion was appealed and affirmed, without
specific findings, by a judge of the Superior Court (Judge Knight), who
essentially deferred to the special master.
The motion for sanctions was renewed and heard by another judge of the Superior
Court, the trial judge (Judge French), at the close of trial. The trial court declined to
impose sanctions, deferring to the earlier decisions of the special master and Judge
Knight. The doctor then appealed the denial of his sanctions motion directly to this
court.
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The concept that a spirit of cooperation and forthrightness during the discovery process is
necessary for the proper functioning of modern trials is reflected in decisions of our Court
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of Appeals. In Gammon v. Clark Equip. Co., 38 Wash. App. 274, 686 P.2d 1102 (1984),
aff'd, 104 Wash. 2d 613, 707 P.2d 685 (1985), the Court of Appeals held that a new trial
should have been ordered because of discovery abuse by the defendant. Then Court of
Appeals Judge Barbara Durham wrote for the court:
The Supreme Court has noted that the aim of the liberal federal
discovery rules is to "make a trial less a game of blindman's buff
and more a fair contest with the basic issues and facts disclosed
to the fullest practicable extent." The availability of liberal
discovery means that civil trials [***86] no longer need be carried
on in the dark. The way is now clear . . . for the parties to obtain
the fullest possible knowledge of the issues and facts before trial.
This system obviously cannot succeed without the full cooperation
of the parties. Accordingly, the drafters wisely included a
provision authorizing the trial court to impose sanctions for
unjustified or unexplained resistance to discovery.
(Citations omitted.) Gammon, 38 Wash. App. at 280.
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*
The trial court erred in concluding as it did. As stated above, intent need not be shown
before sanctions are mandated. A motion to compel compliance with the rules is not a
prerequisite to a sanctions motion. Conduct is to be measured against the spirit and
purpose [***91] of the rules, not against the standard of practice of the local bar.
Furthermore, the burden placed on the doctor by the trial court in this regard was greater
than that mandated under the rule.
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Example One:
For example, the drug company's response to the following interrogatory propounded by
the doctor demonstrates the resistance to comply with discovery. Although we do not
condone this kind of answer, this answer, alone, would not warrant sanctions as it does
raise some legitimate objections. The doctor's simple request, and the answer thereto, are
as follows:
INTERROGATORY NO. 2: Can Theophylline cause brain damage in humans?
ANSWER: See general objections [set forth in two pages] attached hereto as
Exhibit A and incorporated herein by reference. This interrogatory calls for an
expert opinion beyond the scope of Civil Rule 26(b)(4), and is, in any event,
premature. Furthermore, this interrogatory appears to call for an opinion based on
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medical knowledge after January 18, 1986, whereas the relevant time frame is on or
before January 18, 1986. In addition, this interrogatory is not reasonably calculated
to lead to discovery of admissible evidence under CR 26(b)(1). This interrogatory
is also vague, ambiguous and overbroad. For example, the term "cause" is vague
and ambiguous in that it does not specify whether it includes indirect, as opposed to
direct, causes.
The term "brain damage" is similarly vague and ambiguous and is overbroad
as to time and scope. For example, it is unclear whether the term "brain"
includes the entire central nervous system; it is further unclear whether the
term "brain damage" includes temporary as well as permanent changes.
Example No. 2:
[*347] The specific instances alleged to be sanctionable in this case involve
misleading or "non" responses to a number of requests which the doctor claims
should have produced the smoking gun documents themselves or a way to discover
the information they contained. The two smoking gun documents reportedly were
contained in files which related to Intal, a cromolyn sodium product, which was
manufactured by Fisons and which competed with Somophyllin. The manager of
medical communications had a thorough collection of articles, materials and other
documents relating to the dangers of theophylline and used the information from
those materials to market Intal, as an alternative to Somophyllin Oral Liquid. The
drug company avoided production of these theophylline-related materials, and
avoided identifying [***95] the manager of medical communications as a person
with information about the dangers of theophylline, by giving evasive or
misleading responses to interrogatories and requests for production.
The following is but a sampling of the discovery between the parties.
The first discovery documents directed to the drug company were prepared by the
child's attorney and were dated September 26, 1986. The interrogatories contained
a short definition section stating in part:
The term "the product" as used hereinafter in these interrogatories
shall mean the product which is claimed to have caused injury or
damage to JENNIFER MARIE POLLOCK as alleged in pleadings
filed on her behalf, namely, to wit: "Somophyllin" oral liquid.
Example No. 3:
These first interrogatories requested information about "the product" which is
manufactured by the drug company, Fisons, as well as about theophylline, a drug
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entity which is the primary ingredient of the drug company's product Somophyllin
Oral Liquid. The interrogatory regarding theophylline was answered by the drug
company, as were the interrogatories about "the product".
[*348] Somophyllin and its primary ingredient, theophylline, [***96] were not
distinguished in discussions between the attorneys or in drug company literature.
The printed package insert for Somophyllin Oral Liquid (exhibit 93) and marketing
brochures refer to the names Somophyllin and theophylline interchangeably. One
marketing brochure states:
Theophylline
Theophylline
Theophylline
Theophylline
Theophylline
Theophylline
Theophylline
Theophylline
Theophylline
The one name to remember . . . Somophyllin
Exhibit 111.
The drug company's responses to discovery requests contained the following
general objection:
Requests Regarding Fisons Products Other Than Somophyllin Oral
Liquid. Fisons objects to all discovery requests regarding Fisons
products other than Somophyllin Oral Liquid as overly broad,
unduly burdensome, harassing, and not reasonably calculated to lead
to the discovery of admissible evidence.
Example No. 4:
Theophylline is not a Fisons "product". Furthermore, because theophylline is the
primary ingredient in Somophyllin Oral Liquid, any document focusing on
theophylline would, necessarily, be one regarding Somophyllin Oral Liquid.
[**1081] In November 1986 the doctor served his first [***97] requests for
production on the drug company. Four requests were made. Three asked for
documents concerning Somophyllin. Request 3 stated:
3. Produce genuine copies of any letters sent by your company to
physicians concerning theophylline toxicity in children.
The drug company's response was:
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Such letters, if any, regarding Somophyllin Oral Liquid will be
produced at a reasonable time and place convenient to Fisons and
its counsel of record.
Conclusion
The drug company's responses and answers to discovery requests are misleading.
The answers state that all information regarding Somophyllin Oral Liquid which
had been requested would be provided. They further imply that all documents which
are relevant to the plaintiffs' claims were being produced. They do not specifically
object to the production of documents that discuss the dangers of theophylline, but
which are not within [***104] the Somophyllin Oral Liquid files. They state that
there is no relevant information within the cromolyn sodium product files.
It appears clear that no conceivable discovery request could have been made by the
doctor that would have uncovered the relevant documents, given the above and
other responses of the drug company. The objections did not specify that certain
documents were not being produced. Instead the general objections were followed
by a promise to produce requested documents. These responses did not comply with
either the spirit or letter of the discovery rules and thus were signed in violation of
the certification requirement.
The drug company does not claim that its inquiry into the records did not uncover
the smoking gun documents. Instead, the drug company attempts to justify its
responses by arguing as follows: (1) The plaintiffs themselves limited the scope of
discovery to documents contained in Somophyllin Oral Liquid files. (2) The
smoking gun documents were not intended to relate to Somophyllin Oral Liquid,
but rather were intended to promote another product of the drug company. [*353]
(3) The drug company produced all of the documents it agreed to produce [***105]
or was ordered to produce. (4) The drug company's failure to produce the smoking
gun documents resulted from the plaintiffs' failure to specifically ask for those
documents or from their failure to move to compel production of those documents.
(5) Discovery is an adversarial process and good lawyering required the responses
made in this case.
If the discovery rules are to be effective, then the drug company's arguments must
be rejected.
First, neither the child nor the doctor limited the scope of discovery in this case.
Attorneys for the child, the doctor and the drug company repeatedly referred to both
theophylline and Somophyllin Oral Liquid. There was no clear indication from the
drug company that it was limiting all discovery regarding Somophyllin Oral Liquid
to material from that product's file. Nor was there any indication from the drug
company that it had information about theophylline, which is not a Fisons
"product", or information regarding Somophyllin Oral Liquid that it was not
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producing because the information was in another product's file. The doctor was
justified in relying on the statements made by the drug company's attorneys that all
relevant [***106] documents had been produced and he cannot be determined to
have impliedly, albeit unknowingly, acquiesced in limiting the scope of
discoverable information.
Second, the drug company argues that the smoking gun documents and other
documents relating to theophylline were not documents regarding Somophyllin Oral
Liquid because they were intended to market another product. No matter what its
initial purpose, and regardless of where it had been filed, under the facts of this
case, a document that warned of the serious dangers of the primary ingredient of
Somophyllin Oral Liquid is a document regarding Somophyllin Oral Liquid.
Third, the discovery rules do not require the drug company to produce only what it
agreed to produce or what it was ordered to produce. The rules are clear that a party
[*354] must fully answer all interrogatories and all requests for production, unless a
[**1084] specific and clear objection is made. n88 If the drug company did not
agree with the scope of production or did not want to respond, then it was required
to move for a protective order. In this case, the documents requested were relevant.
The drug company did not have the option of determining [***107] what it would
produce or answer, once discovery requests were made. n89
Fourth, the drug company further attempts to justify its failure to produce the
smoking guns by saying that the requests were not specific enough. Having read the
record herein, we cannot [***108] perceive of any request that could have been
made to this drug company that would have produced the smoking gun documents.
Unless the doctor had been somehow specifically able to request the June 30, 1981,
"dear doctor" letter, it is unlikely that the letter would have been discovered. Indeed
the drug company claims the letter was not an official "dear doctor" letter and
therefore was not required to be produced.
Fifth, the drug company's attorneys claim they were just doing their job, that is,
they were vigorously representing their client. The conflict here is between the
attorney's duty to represent the client's interest and the attorney's duty as an officer
of the court to use, but not abuse the judicial process.
Vigorous advocacy is not contingent on lawyers being free to
pursue litigation tactics that they cannot justify as legitimate.
The lawyer's duty to place his client's interests ahead of all
others presupposes that the lawyer will live with the rules that
[*355] govern the system. Unlike the polemicist haranguing
the public from his soapbox in the park, the lawyer enjoys the
privilege of a professional license that entitles him to entry
into the justice [***109] system to represent his client, and in
doing so, to pursue his profession and earn his living. He is
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subject to the correlative obligation to comply with the rules
and to conduct himself in a manner consistent with the proper
functioning of that system.
10.3: Example: Two Standards of Doc Review?
Associate supervises document review and production. Associate brings
troubling hot document to Partner before producing it. Partner reads document
request and construes it quite narrowly, in a way that is arguably frivolous but
possibly legitimate. Partner decides not to produce the hot document. Associate asks
if you can review the documents under two different standards or if he should go
back and re-do production decisions under the new, narrower standard. Partner says
not to re-do prior decisions, that Associate should not produce the hot document, and
Associate should sign the document production responses. Associate feels the
Partner's construction of the document request is not tenable.
10.4. Example: The Qualcomm Controversy
Watch this video: http://vimeo.com/10815873
10.4.1. Qualcomm Lawyers Taken to the Woodshed
(Seyfer)
It may take a while to erase the black mark two San Francisco law firms—and
their client, Qualcomm Inc.—received Monday courtesy of a San Diego federal
judge, but the company and firms have all vowed to fight.
In a strongly worded 54-page ruling, San Diego federal Judge Rudi Brewster
accused Qualcomm and its trial counsel of committing "gross litigation misconduct"
by withholding crucial evidence in Qualcomm's patent infringement case against
Broadcom Corp. Though the judge did not identify the law firms by name, he
specifically referred to Qualcomm's representation up until the spring of this year, a
time when the company was represented by Heller Ehrman and Day Casebeer
Madrid & Batchelder.
Heller partner Stanley Young and Day Casebeer partner James Batchelder were
among the outside counsel representing Qualcomm.
Brewster criticized "Qualcomm's constant stonewalling, concealment and
repeated misrepresentations" during discovery, scolded the company's "presentation
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of numerous witnesses who steadfastly testified falsely" and condemned its counsel,
which "adamantly denied the obvious, and then, when the truth was discovered and
exposed by the document production, sequentially contended denial of relevance,
justification, mistake, and finally non-awareness."
Brewster ordered Qualcomm to pay all Broadcom's litigation fees, which
David Rosmann, vice president of intellectual property litigation for Broadcom, said
could be around $10 million. The judge also disqualified two of Qualcomm's patents.
He is expected to issue a ruling in the next couple of weeks on possible formal
sanctions against Qualcomm and its attorneys.
Wilmer Cutler Pickering Hale and Dorr represented Broadcom in the litigation.
Broadcom is seeking an evidentiary hearing to find out how the evidence came
to be concealed, Rosmann said. The company is also asking for a discovery master to
monitor Qualcomm's conduct in other litigation.
"I think they've proven they really can't be trusted," Rosmann said.
Brewster ordered Qualcomm to pay all Broadcom's litigation fees, which
David Rosmann, vice president of intellectual property litigation for Broadcom, said
could be around $10 million. The judge also disqualified two of Qualcomm's patents.
After Qualcomm was found to be infringing on a Broadcom patent in a
separate case, the International Trade Commission issued a ban in June on the
importation of cell phones using Qualcomm chips that infringe on the patent. On
Monday, the Bush administration declined to reverse that ban.
In a statement on Brewster's ruling, Qualcomm said it "respectfully disagrees
with the court's findings" and intends to appeal them.
"Qualcomm acknowledges the seriousness of the court's findings and reiterates
its previous apology to the court for the errors made during discovery and for the
inaccurate testimony of certain of its witnesses," the statement read.
Qualcomm originally accused rival chip maker Broadcom of infringing on
several of its patents that dealt with transmission of video data. Broadcom prevailed
in a January trial, yet sought additional relief when it was revealed during trial that
Qualcomm engineers had participated in industrywide meetings to set a common
standard for video transmission.
If Qualcomm participated in such standards-setting, then its patents could be
voided.
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Before and throughout most of the trial, Qualcomm denied that its engineers
had consulted with the standards body during the relevant years and resisted turning
over more information about its involvement.
"Qualcomm counsel produced none of the over 200,000 pages of emails and
electronic documents... which were clearly within the scope of the requests and that
were finally produced four months post-trial," Brewster wrote. Those e-mails
detailed Qualcomm's involvement with the standards setting group.
The judge rejected an apparent contention that Qualcomm had misled its
lawyers about what evidence was available.
"Qualcomm counsel's indefensible discovery conduct belie counsel's later
implied protestation of having been 'kept in the dark' by their client," the judge
wrote.
Day Casebeer's Batchelder and Qualcomm's General Counsel Louis Lupin sent
letters of apology to the court in April, saying they failed to do a detailed enough
keyword search of Qualcomm e-mails.
Batchelder was out of town Tuesday and was not available to comment. His
colleague Craig Casebeer declined to comment Tuesday and referred to Qualcomm's
released statement.
Although Brewster didn't name him, the judge accused Heller's Young of first
telling the court that the relevant e-mails did not exist. But Young then changed his
stance, Brewster wrote, saying he was somehow "not cognizant" of the e-mails—
even though Young admitted "there was fleeting mention" of e-mails in his presence.
Young released a statement on behalf of his firm denying any allegations that it
knowingly misled the court.
"The arguments that Heller Ehrman made during the course of the Qualcomm
litigation were based on the facts as Heller Ehrman understood them," the statement
read. Young also said the firm wasnot in charge of responding to requests for
evidence about Qualcomm's consulting in the standard-setting body.
According to State Bar of California rules, judges are required to notify the Bar
of sanctions against an attorney—but not if those sanctions are imposed only because
of failure to comply with discovery orders.
10.4.2: Qualcomm Ruling Sends a Warning on Discovery
(McCarthy)
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A federal magistrate’s ruling last month that wireless giant Qualcomm
committed a “monumental discovery violation” in a patent infringement case should
serve as a cautionary tale to lawyers who handle complex litigation, say legal
experts. The judge’s findings highlighted issues involving electronic discovery, the
division of labor and responsibilities in matters involving corporate clients and
outside counsel, and the predicament faced by lawyers accused of misconduct who
cannot defend themselves because
of the attorney-client privilege.
11 Qualcomm Lessons
In the wake of January’s Qualcomm discovery ruling,
University of San Diego law professor David
McGowan offers the following suggestions for
lawyers involved in big-case litigation:
1.
Division of labor. Where outside counsel are not
directly responsible for discovery, they must take
steps to protect themselves.
2. Responsibility should follow authority. Firms that
do not have responsibility for the actual collection
and/or selection of documents should not sign
discovery responses relating to document
production or make representations about the
completeness of discovery. If the client insources,
it should take responsibility for the completeness
of discovery.
3. If labor is divided, demand an advance privilege
waiver for communications relevant to any
discovery disputes.
4. Don’t trust standard procedures or formal
systems. Don’t trust; verify.
5. Try to de-bias yourself. Appoint one member of
the team to be devil’s advocate. Write a list of
conditions that would have to exist for the
document to be unresponsive and ask if all the
necessary conditions exist.
6. Err in favor of production.
7. The more you have to explain a decision to
withhold, the less likely a court is to buy it.
8. The more you don’t want to produce a document,
the more important it is to produce it.
9. Be prepared to walk away.
10. Associates: You have to look out for yourselves.
If you feel strongly about production, fight for it.
11. If you mess up, fess up.
San
Diego
Federal
Magistrate Judge Barbara L.
Major sanctioned Qualcomm for
withholding “tens of thousands of
e-mails” in a lawsuit it brought
against Broadcom Corp. and
ordered Qualcomm to pay
Broadcom’s legal bills, which
total more than $8.568 million. In
an unusual move, she also
referred six of Qualcomm’s
outside attorneys, whom she
described as “talented, welleducated and experienced,” to the
State Bar for discipline. She chose
not to sanction 13 other lawyers
involved in the litigation.
“This is significant as an
event that should cause other
lawyers to wonder, ‘How do I
keep it from happening here and
happening to my client?’” said
David McGowan, a professor at
University of San Diego Law
School who followed the case
closely.
“I think most lawyers think,
‘This would never happen to
me,’” said another lawyer
involved in the case who asked not to be quoted by name. “They think, ‘Thank God I
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wasn’t there.’”
Qualcomm, the world’s second largest maker of semiconductors for mobile
phones, sued Broadcom in 2005, alleging the Irvine chip-maker was infringing on
two patents held by Qualcomm. A jury found that Broadcom had not infringed on the
patents. But in the final days of the trial, a Qualcomm engineer disclosed that key emails had not been turned over to the defense. After the trial, thousands more
documents were discovered. Trial Judge Rudi Brewster found “clear and convincing
evidence” of litigation misconduct and ordered Qualcomm to pay Broadcom $9.2
million in attorneys’ fees and related costs. (Major’s order will be part of the higher
amount; Qualcomm is not required to pay both.)
After trial, Qualcomm located more than 46,000 documents, totaling more than
300,000 pages, that had been requested but not produced in discovery. Although
Qualcomm denied any wrongdoing, it replaced its general counsel. Major, the
discovery magistrate, ordered 19 lawyers involved in the case to appear at an
October hearing, where they submitted declarations and said they did not
intentionally withhold evidence. But their efforts were hamstrung when Qualcomm
asserted the attorney-client privilege, in essence preventing them from defending
themselves.
Major said her review led “to the inevitable conclusion that Qualcomm
intentionally withheld tens of thousands of decisive documents from its opponent in
an effort to win this case and gain a strategic business advantage over Broadcom.
Qualcomm could not have achieved this goal without some type of assistance or
deliberate ignorance from its retained attorneys.”
She referred to the State Bar six Day Casebeer Madrid & Batchelder lawyers—
James R. Batchelder, Adram A. Bier, Kevin K. Leung, Christian E. Mammen and
Lee Patch—and Heller Ehrman lawyer Stanley Young. In an unusual move, Major
specified that the lawyers may have violated two Rules of Professional Conduct:
Rule 5-200, which prohibits misleading a judge or jury with false statements, and
Rule 5-220, which prohibits suppressing evidence that an attorney or client has a
legal obligation to reveal.
Scott Drexel, the bar’s chief trial counsel, would not comment on the case but
said typically, the bar awaits the outcome of litigation before taking any disciplinary
action against attorneys. “We do not want to interfere or have an impact on a
pending case unless it’s absolutely necessary,” he said.
San Francisco attorney James Wagstaffe, who represents Patch, emphasized
that Major acknowledged that the lawyers were unable to present exculpatory
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evidence and did not award any monetary sanctions against the lawyers she referred
to the bar.
“In this case, I think this nightmare will be addressed by courts that have a
chance to review it,” Wagstaffe said, adding he believes his client will be
exonerated. “In this country, when you’re unable to defend yourself, we normally
don’t allow punishment.”
He stressed that Major rejected the notion of bad faith on the part of the
lawyers, and he disagreed with her finding that they ignored red flags that they
should have acted on. Wagstaffe said he expects both the trial judge and the federal
circuit to review Major’s findings.
Should Qualcomm sue its lawyers for malpractice, the attorney-client privilege
will be waived. Qualcomm issued a statement after Major’s ruling saying it “regrets
the discovery errors” but denied it engaged in intentional misconduct.
Although most states permit attorneys to disclose confidential client
information to defend themselves against allegations brought by a third party, that is
not the case in California. And Judge Major rejected the self-defense exception to the
privilege, leaving the lawyers vulnerable.
The self-defense exception is well-founded in common scenarios where a
lawyer is defending against a direct claim by a client, such as malpractice or in an
action for fees. But, says State Bar ethics expert Randall Difuntorum, the exception
“isn’t all that well-developed. What makes it interesting now is that cases are coming
up where the lawyer and the client are not necessarily the adversaries in the
litigation. It’s not lawyers versus client,” he said. “It’s some other equation, but
privilege is getting in the way of what the lawyers can say.”
McGowan suggested the Qualcomm case may lead to increased scrutiny of
advance privilege waivers so counsel can protect themselves.
The case also placed a spotlight on the issue of who controls the litigation,
particularly when it involves electronic discovery and thousands of documents.
Dozens of lawyers, if not more, are frequently involved in complex litigation.
Because of the expense, the trend is to allow in-house counsel and corporate
employees to handle discovery and document review. Large tech companies in
particular routinely handle their own discovery. Major’s findings suggest that in a
digital environment, it is wise for attorneys to be exhaustive in their searches and to
err on the side of producing documents.
“Qualcomm took my breath away because it’s sending a very clear message
that discovery abuses will not be tolerated,” said Los Angeles ethics expert Diane
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Karpman.
Major herself acknowledged challenges presented by electronic discovery,
writing, “For the current ‘good faith’ discovery system to function in the electronic
age, attorneys and clients must work together to ensure that both understand how and
where electronic documents, records and e-mails are maintained and to determine
how best to locate, review and produce responsive documents. Attorneys must take
responsibility for ensuring that their clients conduct a comprehensive and appropriate
document search.”
She ordered Qualcomm and the sanctioned lawyers to identify the failures of
discovery in the case and create a “case management protocol” to avoid such
problems in the future.
Legal experts said clear lines of responsibility must be drawn at the outset of a
case and remain clear throughout. But who is in charge?
“Most observers would say outside litigation counsel should never let in-house
counsel handle (discovery) for you,” Difuntorum said. “The reason you’ve been
hired is because of the old adage—the lawyer who represents himself has a fool for a
client.” Although insiders may have greater familiarity with information and with
where it is stored, “it’s really the obligation of the outside attorneys to take
responsibility for it,” he said.
But John McGuckin, general counsel for Union Bank of California, disagrees.
“There is no doubt in my mind that in-house general counsel is responsible for
running the show,” he said. They need to manage the litigation, understand the issues
and make decisions about what’s important. “There has to be quality control on the
inside because we’re the first line of defense, but outside counsel cannot stick their
heads in the sand,” McGuckin said. “I would think that both sides would want to be
clear in the engagement letter who’s responsible for what.”
Several lawyers agreed that regardless of the issues the Qualcomm ruling
raised, there’s never been a finding quite like it. The magnitude of the monetary
sanctions is large, the players are sophisticated and experienced, the volume of
evidence—particularly what came out after the trial concluded—was enormous, and
the issue of client confidentiality handcuffed outside counsel.
McGowan praised Major for a thoughtful decision and said she tried hard to
place responsibility for the failure to produce documents.
“This is not a case with a smoking gun,” he said. “It’s a case with reputable,
good people doing things, each one on their own, that seemed reasonable. There’s no
evidence of willful bad conduct. I tend to give them the benefit of the doubt.
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“Nobody wants to have this happen to them. It’s cautionary in that it says you
can wind up in a spot like this and that means be careful.”
10.5.
Example: Am I My Boss’s Keeper?
Associate works with Partner who, from time to time, has quite a few drinks,
usually at the end of the work week. In the last few months, Partner’s drinking seems
to have had an uptick. One Wednesday morning, at a deposition, Partner appears
unusually unprepared, harried, and perhaps even hung-over. What should the
associate do?
10.6.
Example: Candor
You’re a 4th-year litigation associate at a 150-lawyer firm. A corporate partner,
Miriam McKenna, asks you to represent her major client, Rittenhouse Securities, a
securities brokerage that employees 50 sales people. One of Rittenhouse’s sales
people, Bill Lightfoot, was terminated and has filed a binding arbitration claim
against Rittenhouse, seeking sales commissions of about $300,000.
Virtually everyone in the securities industry is licensed by the National
Association of Securities Dealers (NASD), and as part of that licensing process
everyone agrees to use the NASD’s arbitration process to resolve securities- related
disputes with other licensees. As is typical of that process, you fly to a hotel in the
salesperson’s hometown and participate in a 3-4- hour hearing in a conference room,
with three retired securities professionals presiding over the hearing. The award is
rendered about fifteen minutes after the conclusion of the hearing, and there is no
appeal process.
At the hearing itself, you appear with Joe Bloomquist, the Executive VP of
Rittenhouse. His version of why Lightfoot left Rittenhouse is quite different than
Lightfoot’s. In fact, their respective versions of the entire story don’t match
particularly well.
After taking evidence, the panel briefly confers and then enters a judgment for
the defense. You’re in high spirits as you and Bloomquist leave the conference room,
walk into the hotel lobby, and wait for an elevator. As you step out of the elevator on
your floor, Bloomquist says, “You did great. Since it’s too late to grab a flight back
home tonight, why don’t we grab a celebration dinner at that a nice restaurant across
the street? Over dinner, I can tell you what really happened between me and
Lightfoot—what neither of us wanted to tell the panel.” The elevator doors shut and
Bloomquist is gone before you can make a reply. As you enter your room, you check
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your Blackberry. McKenna has sent you an urgent email asking how the hearing
went.
10.7. Example: A Liar for a Client (Kelley)
"If I had a dollar for every time a client asked me to lie,
I wouldn't be sitting here. I would be in the south of France, living it up."
-Walter Stratton, partner in Gibson,
Dunn & Crutcher, testifying in Breezevale, Ltd. v. Dickinson, et al.
John Millian, a senior associate with Gibson, Dunn & Crutcher, was in
London for the firm's client, Breezevale, Ltd. Breezevale, an agent for volume tire
sales in the Middle East, had sued Bridgestone-Firestone, Inc. for breach of
contract. The suit, pending in federal court in Cleveland, Ohio, was based on
Firestone's alleged breach of Breezevale's exclusive agency for the sale of tires to
Iraq during the late 1980s, and for backing out of a project to build a tire
manufacturing plant in Nigeria. On Sunday evening, October 13, 1991, Millian was
in the suburban London home of Rebecca Paul, a Breezevale employee, preparing
her for a deposition to begin in the morning. Paul was facing days of questioning by
a lawyer from Jones, Day, Reavis & Pogue, a Cleveland-based firm with a hardball
reputation, and she was noticeably apprehensive. "Can't I just be sick or
something?" she asked. Millian replied that they couldn't lie about her health and
the two proceeded to review a stack of sales documents that Paul had been
responsible for generating. Late in the evening, Millian recalled that Paul "started
hinting that there were forged documents." He asked: "Is there something you're
trying to tell me?" Paul began to pour out a story of how the documents had been
forged. She described the impact of her disclosure: "I was in tears and I called my
husband. John Millian was, I have to say, poleaxed. He was just white, shellshocked. He said to me: "This isn't bloody Nigeria."
Millian took a cab back to his Central London hotel, arriving around
midnight. Appreciating the gravity of the situation, he telephoned the firm's New
York office, attempting to reach Wesley Howell, a senior partner and lead lawyer in
the Breezevale case; he tried to call Walter Stratton, a Gibson, Dunn partner also
working on the case who was staying at another London hotel. Unable to reach
either, Millian went to bed. He succeeded in reaching Stratton around 7 the next
morning and summarized Paul's forgery story. Stratton instructed him to bring her
to the Gibson, Dunn office before proceeding to the deposition. The three met there
about 8:30 a.m. and Millian and Stratton de-briefed Paul about her allegations.
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During the debriefing, Charles Awit, a senior Breezevale official, telephoned the
office and spoke with Stratton who said nothing about Paul's unfolding story.
Paul's deposition was scheduled for 10 a.m. at the London office of Jones,
Day. Stratton, the senior lawyer present, had to make a decision: whether to go
forward with Paul's deposition; whether to request Jones, Day's consent to a
postponement, without giving a reason; or, if consent were refused, whether to
postpone the deposition unilaterally. Stratton and Millian had not investigated Paul's
allegations. Nor had they informed Breezevale, whose chairman, Habib Habib, was
in its London office and who was deeply implicated in Paul's allegations. Stratton
decided to go forward with Paul's deposition, hoping (but not realistically
expecting) that the Jones, Day lawyer would not inquire into the genuineness of the
documents. Stratton's heat-of-battle decision would be second-guessed, and not only
by opposing counsel in the malpractice suit it would precipitate. Wesley Howell, the
senior Gibson, Dunn partner on the case, told the partner who had brought
Breezevale in as a client that he would have postponed Paul's deposition. As it
happened, however, Howell had been unreachable—fishing for steelheads in British
Columbia—when Paul dropped her bombshell.
The subject of forgery didn't come up during the Monday morning session of
the deposition. During the lunch break, Stratton and Millian went to the Breezevale
office and informed Habib of Paul's allegations, without indicating whether they
believed her—an issue which (it seemed to Stratton) Habib did not wish to address.
Millian already had doubts about the Breezevale Chairman's integrity. Habib had
told him that Breezevale had bribed officials in Nigeria to get business there. Paul
had told Millian about a "pep talk" Habib had given her the preceding Friday about
her upcoming deposition, telling her that "he was confident in me, that I could
outsmart them." Subsequent testimony of Habib and Stratton about that lunchtime
discussion would conflict. According to Habib, he had instructed Stratton to
postpone the deposition and undertake an immediate investigation. As Stratton
recalled, Habib had given no such instructions; rather, they had discussed the
implications of seeking a postponement and that Stratton had advised against,
calling it a "very bad idea."
Early in the afternoon session, Jones, Day's lawyer focused her questions on
offer letters that included price quotations for various types of tires and which
purportedly had been sent to Iraq during 1987. Copies of the letters and other
documents had been turned over to Jones, Day in response to discovery requests.
Displaying them to Paul, the Jones, Day lawyer asked: "Do you have any reason to
349
believe that these were created at a time after they are dated?" Ms. Paul replied: "I
think so." With that, the cat was out of the bag. In response to further questions that
afternoon and the next day, Paul testified in detail about how she and senior
officials of Breezevale had gone about creating offer letters and supporting
documentation to bolster their case against Firestone.
The forged documents had been created in February 1991 after Paul reviewed
the files and informed Habib that Breezevale hadn't made offers to Iraq in 1987, a
critical time period in the pending suit against Firestone. Habib had responded:
"Well, you had better make sure we did." Whereupon, Paul and Joseph Abou
Jouade, a senioi Breezevale official in charge of the Beirut office then working in
London, worked together at the same desk creating back-dated offer letters. They
consulted a 1987 calendar to make sure their fictitious dates corresponded to
business days four years earlier. When Abou Jouade had to return to Beirut before
the fake letters were completed, he signed a single sheet of paper eight times so that
Paul could cut and paste the signatures to letters she would complete and photocopy
later.
Paul testified that she and Abou Jouade had also created back-dated "spread
sheets"—file documentation of manufacturer prices, transportation costs, and
Breezevale's overhead and mark-ups—-as back-up for the fake offering documents.
Breezevale had not owned computers in 1987; at that time, Paul had prepared
spread sheets by hand. By 1991, the company had acquired computers that Paul
used to prepare drafts of the fake spread sheets. The computer-generated drafts were
then edited by Abou Jouade and copied by hand to make them appear genuine.
Abou Jouade was concerned that their spread-sheet paper looked too new. Paul
recalled: "There was a bit of a joke about [Abou Jouade] scrunching it up and sitting
on it to make it look old."
On Wednesday morning, Paul arrived at the Jones, Day office, bringing from
her home a green, plastic bag full of documents corroborating her allegations,
including computer-generated drafts of spread sheets with Abou Jouade's
handwritten edits and the sheet of paper with his eight signatures. These documents
were made a part of the deposition record, and Paul's deposition was terminated
without further questioning.
Within days, Jones, Day began to prepare a motion for sanctions, alleging
fraud and misconduct and seeking costs, attorneys' fees and dismissal of
Breezevale's suit against Firestone. Before the forgery came to light, Firestone had
made a settlement offer of $3.5 million, plus a lucrative new sales agreement, which
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Breezevale had rejected. Under threat of the sanctions motion, Firestone made a
take-it-or-leave settlement offer of $100,000. Gibson, Dunn advised Breezevale that
the judge in Cleveland would probably impose sanctions, possibly including
outright dismissal of their case, and that if they went to trial, they might later be
indicted for perjury. Habib thought he might be able to cut a better deal with a Firestone official he knew, but that door turned out to be closed. On Gibson, Dunn's
recommendation, Breezevale reluctantly accepted the settlement.
In October 1994, Breezevale sued Gibson, Dunn & Crutcher in the Superior
Court of the District of Columbia, charging its former lawyers with "negligent,
reckless, and intentional malpractice and breach of fiduciary and ethical
obligations" focusing on their handling of the Paul deposition. Gibson, Dunn
undertook further investigation of Paul's allegations and, in October 1995, filed a
counterclaim alleging that Breezevale, by relying on fake documents, was litigating
in bad faith. The case was assigned to Judge Steffen Graae who bifurcated the two
claims, ruling that Breezevale's malpractice claim would be tried first to a jury, after
which Gibson, Dunn's equitable counterclaim would be decided by the court.
The jury phase was tried in the fall of 1996. Breezevale's theory was that
Gibson, Dunn should have postponed Paul's deposition, that had they done so, her
allegations of forgery could have been disproved, and that Breezevale could have
prevailed at trial and recovered some $20 million from Firestone. Under that theory,
Stratton's decision to allow Paul's deposition to go forward, rather than first
conducting an investigation, became the linchpin of the malpractice case.
Walter Stratton, a veteran trial lawyer, had been an associate and partner with
the New York firm of Donovan, Leisure, Newton & Irvine for twenty-eight years.
For seven years preceding the Paul deposition in 1991, he had been a partner with
Gibson, Dunn. He testified at length concerning his handling of the Paul deposition.
When Millian first related Paul's allegations to him by phone on Monday morning,
he had been "very shocked"; they represented an "earth-shaking event," even "an
atomic explosion." After listening to Paul's story at the Gibson, Dunn office,
Stratton had no firm opinion whether she was telling the truth, but she appeared to
be sincere and her story seemed plausible. On the other hand, he had reservations at
that point because "she was not a person who was totally averse to manufacturing a
story." In any event, Stratton realized that they "had a witness who was going to
present a huge problem."
Stratton hadn't considered canceling the deposition a realistic option.
Although the time and place had been set by agreement of counsel, not by court
351
order, he thought that Gibson, Dunn had been legally obligated to present Paul for
questioning that morning in London. Legality aside, Stratton believed that, from a
tactical standpoint, "no matter what we did, the story was coming out," and a
suspension request "might look like we were trying to cover up something." He also
thought the damage would be greater if Gibson, Dunn were to suspend the
deposition unilaterally, causing Jones, Day to seek an enforcement order from the
presiding judge in Cleveland—in the home state of Firestone and the home city of
Jones, Day—who might impose severe sanctions for forgery.
In the days following, Stratton and Millian investigated Paul's claims in an
effort to prove them false (a perspective dictated by Breezevale's client status).
Habib and Abou Jouade called Paul a liar, charging, without proof, that she had
been bribed by Firestone to sabotage Breezevale's case. They disavowed any
involvement in forgery and maintained that the offer letters and spread sheets were
genuine, but other evidence cast doubt on their denials. In interviews with Stratton,
Abou Jouade was asked about the sheet of signatures he had left with Paul. Abou
Jouade thought he might have "made it in order to illustrate to her the difference"
between English and Arabic script, an explanation Stratton found "absurd." Stratton
repeatedly suggested that "a questioned documents expert might be able to examine
the paper and ink on the allegedly-backdated documents to see whether they have
been created in 1987 or 1991," but Habib "threw cold water" on that idea. Habib's
negative attitude toward expert testing had been, in Stratton's mind, "one of the
principal bases upon which I concluded that it would not be possible to prove
Rebecca's story false, because it was true."
Breezevale called Sherman Cohn, a Professor at Georgetown University Law
Center, for expert testimony in support of its position that Gibson, Dunn had
committed malpractice in allowing the Paul deposition to go forward, and on related
issues. Cohn had impressive qualifications. He had been a teacher of professional
responsibility and civil procedure at Georgetown for some twenty-five years, and
had written extensively on those subjects. He had testified as an expert in numerous
legal malpractice cases, for both plaintiffs and defendants. Cohn is a member of the
American Law Institute and a consultant to its project-in progress, a Restatement of
the Law Governing Lawyers.
Cohn began by stressing the concept of the lawyer as fiduciary, with
attendant duties of utmost care and loyalty to the client. He cited metaphors for the
relationship suggested by Harvard Professor Charles Fried ("a best friend"), and by
Georgetown Professor Robert Drinan ("parent and child"). According to Cohn's
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view of the record, Stratton had crossed a Rubicon and violated the standard of care
when he decided to go forward with Paul's deposition without investigating her allegations or consulting Breezevale. "Going forward under those circumstances
colored and controlled the rest of the case," and was tantamount to “selling
their own client down the river.”
Among the jurisdictions adopting the Model Rules of Professional Conduct,
the effect of the rules in determining standards of care in legal malpractice cases
ranges from none to near conclusive. Cohn's opinions rested substantially on the
Model Rules, as they have been modified and adopted in the District of Columbia,
and where the courts have recognized them as evidence of standards of care. Cohn
testified that Stratton had violated Rule 1.4(a), "Communications," in his initial
meeting with Paul on Monday morning. The rule provides: "A lawyer shall keep a
client reasonably informed about the status of a matter and promptly comply with
reasonable requests for information." When Breezevale's Awit had phoned the
Gibson, Dunn office while Paul was telling her story, Stratton "had a duty [under
Rule 1.4] to [tell him] that something very significant had happened" and that he
needed to talk to Awit and Habib as soon as possible. Cohn went on to fault Stratton
at virtually every step of his involvement in Paul's deposition.
Cohn testified that when Stratton had heard Paul's story, he should have
realized that her deposition had to be postponed. Postponement wasn't a judgment
call; under the circumstances, it was the only reasonable thing to do. Specifically,
Stratton should have called the Jones, Day lawyer and told her: "I must postpone
this deposition. I ask your indulgence and permission to do so. But if you do not
[agree], I still must do so." If pressed for a reason, he could say: "I cannot tell you at
this time." He could offer to pay Jones, Day's costs associated with the
postponement. In failing to postpone, Cohn opined that Stratton had violated Rule
1.1 which requires lawyers to provide "competent representation" to their clients.
He further opined that he had violated Rule 1.3, which requires "zealous and
diligent" representation of the client. Implicit in Cohn's argument was a cost-benefit
analysis: unilateral postponement of the deposition, while representing a minor
breach of legal obligation by Gibson, Dunn, had been necessary in order to avoid
serious, and possibly irreparable, damage to their client's interest. In Cohn's view,
Gibson, Dunn "in effect abandoned their client that Monday morning. ... They were
more concerned about themselves."
Had they postponed the deposition, Cohn continued, Stratton and Millian
should have immediately begun a thorough investigation of Paul's allegations,
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including "calling paper and ink experts in London"—as Stratton had suggested, but
not insisted on—and "checking the files in Iraq as to whether [the offer letters] had
actually arrived in 1987." (Abou Jouade testified that he had drafted the offer letters
in Beirut and had them hand-carried to Baghdad.) Cohn contended that had they
been able to discredit Paul's allegations, the Paul deposition could have gone
forward later with greatly reduced injury to Breezevale's interests. In Cohn's
opinion, their investigation had been incomplete and amounted to belated damage
control, more for the benefit of Gibson, Dunn than for Breezevale.
Stratton and Millian testified that their client at the deposition had been
Breezevale, not Paul, that they were not representing her personally, but only in a
limited sense as Breezevale's employee, and that they had explained that
relationship to Paul. Stratton had taken the view that the interests of Paul and
Breezevale had not become "adverse" in the conflict-of-interest sense until Tuesday
evening when Habib had decided to fire Paul and was considering suing her to
recover records. On Wednesday morning Stratton had advised Paul not to return to
the Breezevale office, and to consult her own solicitor. Paul never did return to the
Breezevale office.
Cohn acknowledged that a lawyer representing a corporation may ordinarily
appear in the deposition of an employee, including one who gives testimony
damaging to the employer, without becoming involved in a conflict of interest—for
example, the Safeway employee who admits seeing, but not picking up, a banana
peel. But "where you have an employee about to testify that the corporation may
have committed a crime, their interests have diverged." At that point, an employee
in Paul's position, who may also be guilty of a crime, has an interest in being
believed that conflicts directly with her employer's interest in her being disbelieved.
Stratton and Millian had represented Breezevale and Paul in just those
circumstances. Cohn expressed the view that, if Paul were considered a "client,"
Gibson, Dunn had violated Rule 1.7, the rule generally prohibiting representation of
clients with conflicting interests. On the other hand, if the situation were analyzed
under Rule 1.13 governing representation of entities, the practical result was the
same. Official commentary to that rule states that: "The lawyer should advise any
[employee] whose interest the lawyer finds adverse to the organization of the
conflict of interest, that the lawyer cannot represent the [employee], and that [the
employee] may wish to obtain independent representation."
Close questions arose whether Gibson, Dunn was either obligated, or
permitted, to reveal the forgeries to Jones, Day, either before the deposition or
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before any settlement could be reached. If Paul's story were true, the Gibson, Dunn
lawyers had unknowingly made misstatements of fact when they provided Jones,
Day with forged documents and false interrogatory answers based on those
documents during discovery. The District of Columbia's modification of Rule 1.6,
"Confidentiality of Information," provides that "a lawyer shall not knowingly"
reveal a "secret" the disclosure of which would be "embarrassing" or "detrimental"
to the client—standards plainly applicable to the Breezevale documents and
statements of its officers, if, indeed, they were false. Cohn stressed the importance
of knowing that documents are false before any duty arises to tell the other side,
pointing to the Rule definition of knowing as "actual knowledge" of the matter in
question, implying the person's mental state and its accurate perception of reality.
(The Rule goes on the state, however, that "knowledge may be inferred from
circumstances.") Putting himself in Stratton's position before the deposition and in
the days immediately following, Cohn stated: "I don't know whether those
documents are false or whether the interrogatories are untruthful." Lacking that
knowledge, loyalty to the client precludes the lawyer from disclosing damaging
information.
The rules concerning false evidence and access to evidence are ambiguous as
applied to this situation. Rule 3.3, "Candor Towards the Tribunal," prohibits
offering false evidence, but, again, only if the lawyer knows it is false. Moreover,
Cohn pointed out that under case law the rule only applies when false evidence is
offered in court, not when it is turned over to the opposing lawyer in discovery.
Even assuming the rule applies in discovery, as it can be read to do, when the
lawyer discovers that he has turned over forged documents, his duty is to "call upon
the client to rectify the fraud," not to rectify it himself.
Rule 3.4, "Fairness to Opposing Counsel," governs access to evidence. It
does apply to both pretrial and trial interactions between opposing lawyers. Among
other things, the rule prohibits "obstructing access to" or "concealing" evidence,
language which arguably requires a lawyer who learns he has been a conduit of fake
documents and false answers to tell the other side. One can argue, however, that
keeping quiet about discovered forgery does not amount to obstruction or
concealment.
Going into the Paul deposition, Stratton had been aware of these
considerations and the need for some delicate balancing. "I hoped that the story
would not come out. I had no reason to believe that Jones, Day knew about It. We
still have an adversary system. It was up to them to dig it out, not up to me to give it
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to them. I wasn't going to make it any easier, but I wasn't going to mess them up
either." He took the position, however, that "Jones, Day had been misled by fraud
and we couldn't settle as long as the record is in that shape." For Stratton, then,
disclosure became a matter of timing.
On cross-examination, Gibson, Dunn's lawyer probed Cohn's position With a
hypothetical case, asking him to assume that:
While food shopping, your client slips on a banana peel, injuring her neck.
She complains of pain and inability to do household chores. You sue Safeway
for damages. Your client's orthopedist sends you x-rays showing serious
damage to vertebrae in her neck which you turn over to Safeway's lawyer.
Safeway offers $10,000 in settlement. While that offer is on the table, your
client's orthopedist phones to tell you that they sent you the wrong x-ray by
mistake, and that your client's x-ray shows no damage. You call your client,
who insists you have her x-ray.
Cohn was then asked whether he could ethically phone Safeway's lawyer and say:
"Hey, I'll take the $10,000" without telling them about a possible mix-up with the xray. Cohn replied: "Yes, sir. If you have evidence from one witness and others are
denying it, it's not your job to be judge and jury and decide who is telling the truth.
At that point, your case IS weaker and you can certainly go ahead and settle it
before the other side finds out about it. You're not God. You're a lawyer, an
advocate, and you owe loyalty to your client."
Gibson, Dunn's lawyer asked Cohn what the hypothetical woman's lawyer
should do if she has a change of heart and tells the lawyer: "I can't live with myself
any longer. I've got to tell the truth. It's not my x- ray." Cohn replied that the lawyer
now has actual knowledge: not merely conflicting evidence, about the x-ray, and
that he cannot ethically accept the $10,000 settlement, at least not at that point.
Assuming that Rule 3.3 applies in discovery, the lawyer's obligation is to tell the
client to take back the x-ray; the lawyer may not take it back on his own. In any
event, under Rule 26(c) of the federal discovery rules, it is the "party," not the
lawyer, who is required to amend discovery responses when she learns they are
incorrect. If the client refuses to do so, the lawyer may then withdraw from the case,
leaving the client free to look for a less scrupulous lawyer. Withdrawal by the
lawyer is optional, however, a "may," not a "shall," under Rule 1. 16(b). The lawyer
may continue to represent such a client and go on to settle or try the case, knowing
that the other side is ignorant of the fraud. Cohn appeared to reach that conclusion
356
with some reluctance, observing that: "That’s what the rules seem to say," and
adding: "That's called the adversary system."
Gibson, Dunn called Thomas Morgan, a professor at George Washington
University Law School, as an expert witness in support of its position that the law
firm had met applicable standards of care in the Firestone litigation. Like Cohn,
Morgan had impressive qualifications. He had taught law for twenty-five years,
specializing in professional responsibility and antitrust law. Morgan is co-author of
a widely used textbook on professional responsibility and is one of three reporters
for the American Law Institute's proposed Restatement of the Law Governing
Lawyers. Like Cohn, Morgan had testified as an expert witness in numerous legal
malpractice cases.
.
.
Morgan and Cohn tended to agree on general principles, while disagreeing at
virtually every point in their application to the facts. On the overarching issue,
Morgan testified that Stratton's decision to go forward with Paul's deposition,
without first investigating her story and without consulting Breezevale, had
complied with the same rules of ethics Cohn had cited for the opposite conclusion.
As he viewed the situation, Gibson, Dunn had been legally obligated to produce
Paul that Monday morning.
Morgan also defended Stratton's decision on tactical grounds. After hearing
her story, Stratton had believed that Paul might well be telling the truth, that she
would have to testify sometime, and that Gibson, Dunn should avoid the appearance
of a cover-up. Moreover, if Paul were lying, it would be prudent to pin her down by
getting her story on the record. (Morgan did not explain why it was preferable to pin
her down in the presence of Jones, Day.) Furthermore, Morgan thought that “putting
it over would have made matters worse, whichever way you conclude about the
truthfulness of her accusations. If the accusations were true, [postponement] would
have established a history of delay and, while not literally lying, of being less than
candid with respect to the evidence. And if what she is saying is a lie, you haven't
lost the ability to demonstrate that” —implying that Paul's fabrications could have
been explained away. Wesley Howell, the senior Gibson, Dunn lawyer on the case,
disagreed with his own expert on Morgan's last point. Howell believed that Paul's
allegations had destroyed the settlement value of the case, whether true or false.
Morgan defended Stratton's decision to allow the deposition to begin before
informing Breezevale's Habib. He stressed that Rule 1.4 requires that the client be
kept "reasonably" informed. As he saw it, as a lawyer one should "try to get the
picture before you discuss it with the client."
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Morgan testified that Gibson, Dunn had not had a conflict of interest in
representing Paul and Breezevale at the deposition. Paul could not be considered a
"client" because clients within the meaning of Rule 1.7 are people or entities whose
"interests" are adverse. Morgan read the "interest" concept narrowly to mean those
having an interest in winning or losing the case—a type of interest Breezevale had,
but Paul lacked. He rejected the suggestion that Paul's interest in not committing
perjury, versus her employer's interest in her doing so, fell within the rule.
Morgan further testified that Gibson, Dunn had complied with Rule 1.13
governing representation of a corporation and appearing for its employees in
depositions incident to representation. Under that rule, Breeze- vale, not Paul, was
Gibson, Dunn's client. As an employee under oath, Paul was obliged to tell the truth
but, as Morgan put it, "if the truth was inconsistent, or embarrassing, or troublesome
to Breezevale that doesn't constitute a conflict of interest" in the technical sense.
Morgan disagreed with Cohn that Paul's dilemma—commit perjury or lose your
job—rose to the level of an adverse interest such that the firm was disqualified from
representing her from the time they first heard her story. Morgan agreed, however,
that by Tuesday evening when Paul had been fired and Breezevale was considering
suing her, "you clearly had a conflict" and it was "appropriate to advise her to seek a
solicitor of her own."
Morgan was asked whether Gibson, Dunn could have postponed Paul's
deposition and, without investigating her allegations and with Breezevale's officers
denying them, proceeded to settlement without disclosing those allegations to Jones,
Day. Disagreeing with Cohn, Morgan responded: "The answer is no." Gibson, Dunn
may not have actual knowledge of fraud at that point. "But you never know
something one hundred percent." More importantly, Morgan continued: If there is a
consistent understanding in this area, it is that a lawyer may not intentionally
prevent himself from becoming knowledgeable." Where there is reason to inquire
further, the lawyer must do so. And if he settles the case without further inquiry, and
without disclosing what he knows, according to Morgan the settlement "wouldn't be
worth the paper it is written on. If Firestone ever found out what happened, they
could set aside the settlement for fraud." Furthermore, the lawyer would be
vulnerable to a charge of misconduct and possible disbarment under Rules 1.2 and
8.4 for assisting a client to commit a fraud.
The questions whether Firestone would find out what happened, and
therefore whether the lawyer would face disciplinary action were left hanging.
Morgan agreed with Cohn that the duty under Rule 3.3 to reveal fraud would be the
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client's, not the lawyer's, and that under the District of Columbia's version of Rule
1.6, the lawyer would be barred from revealing the client's fraud. Morgan pointed
out, however, that some States—including Ohio, where the Firestone case had been
filed—have adopted an exception to the general prohibition of revealing client
information in situations where the client has used the lawyer's services to commit a
fraud causing injury to the financial interest of another—an exception seemingly
applicable to this case.
The conflicting testimony of Cohn and Morgan, of document and
handwriting experts, and of a parade of fact witnesses went to the jury on
Breezevale's malpractice claim in October 1996, following seven weeks of
testimony. The jury was given a verdict form and instructed to decide a series of
questions. They returned a mixed verdict, but the bot-tom line favored Breezevale:

Breezevale established the applicable standard of care which Gibson, Dunn
breached;

Gibson, Dunn's breach proximately caused damage to Breezevale's case;

Forgeries occurred in which Breezevale executives had participated, but;

The forgeries had not played a substantial part in damaging Breezevale's
case;

Breezeyale would have won its suit against Firestone; and

Breezevale is entitled to a total of $4,930,000 in damages from Gibson,
Dunn.
The jury was not asked to find whether Jones, Day would have discovered that the
documents in question were false if the deposition had been postponed, an issue
which Judge Graae would consider critical.
Gibson, Dunn filed motions to set aside two of the jury's findings: that it had
breached the standard of care in going forward with Paul's deposition, and that the
breach was the proximate cause of damages. Judge Graae acknowledged the tactical
considerations Stratton had cited to justify his decision to allow the deposition to go
forward. He went on to note, however, that "there can be little doubt [that decision]
implicated a lawyer's duties to disclose information and follow a client's
instructions." Citing the conflicting testimony of Cohn and Morgan, the judge
concluded: "These polar-opposite views by noted experts do not lend themselves to
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judgment as a matter of law." The jury's finding that Gibson, Dunn had breached the
standard of care was allowed to stand.
The jury's finding of proximate cause was a different matter. The jury found
that the disputed documents were forged, yet it went on to find that Breezevale
would have prevailed over Firestone. As Judge Graae viewed them, those findings
were inconsistent. The finding of forgery was fully supported in the evidentiary
record. As the judge observed: "Neither side left any stone unturned on the forgery
issue; there can be no doubt the jury had all available information on which to make
its finding." Given that finding, the judge reasoned that a postponement for
purposes of investigation inevitably would have "validated" Paul's allegations. A
warning flag would have gone up as a result of an unexplained postponement of the
deposition. A Jones, Day lawyer testified that postponement would have made them
"suspicious" and that there was "not a chance in the world" his firm would have
foregone taking Paul's deposition before any settlement. With Jones, Day's
knowledge of the forgeries, the jury would have had no basis for finding that
Firestone would have paid more than the nuisance amount of $100,000 it had, in
fact, paid to settle Breezevale's claim. Judge Graae granted Gibson, Dunn's motion
for judgment for lack of a proximate cause relationship between its malpractice and
Breezevale's losses, thus erasing the jury's award of $4,930,000.
Following the jury verdict, Judge Graae heard Gibson, Dunn's counterclaim
against Breezevale alleging bad faith litigation for relying on false documents. The
jury had found that the documents in issue were forged under the "preponderance of
the evidence" standard, but since bad faith litigation must be proved by the higher
"clear and convincing evidence" standard, it was necessary for the judge to make an
independent determination, based on the record already made before the jury.
Focusing on Paul's credibility, Judge Graae found nothing to suggest that she
had a motive to lie. "Moreover, it is difficult, is not impossible, to believe she would
invent a story so deeply implicating herself in serious misconduct and so rich in odd
detail." Abou Jouade's credibility was destroyed by the evidence. His story that the
offer letters had emanated from the Beirut office and had been hand-carried to
Baghdad was at odds with Breezevale's practice and made no commercial sense.
Abou Jouade disavowed the multiple signatures on the paper Paul had brought to
her deposition from her home, but Gibson, Dunn's handwriting expert testified to
the contrary. Gibson, Dunn's computer expert "conclusively proved" (Judge Graae's
phrase) that an offer letter introduced by Breezevale was a forgery. Committing
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perhaps his most obvious blunder, Abou Jouade signed two fake offer letters which
had been mistakenly typed on a Breezevale letterhead that had not existed in 1987.
Judge Graae found that Breezevale had litigated in bad faith and held a
separate hearing to determine Gibson, Dunn's damages. Having represented itself,
the law firm claimed $2,970,000 for its attorneys' time and $1,091,000 for expenses
incurred in defending against Breezevale's bad faith litigation. It had called on the
services of eleven of its lawyers and numerous support personnel for thousands of
hours of work. Judge Graae rated the lawyers’ performance "among the best" and
allowed in full the claims for fees and expenses. Gibson, Dunn also claimed
$295,000 for unpaid fees and expenses associated with the Firestone litigation
which the judge also allowed.
.
Gibson Dunn asked for $8 million in punitive damages to punish Breezevale
for its bad faith. Judge Graae wrote: "The evidence at trial was absolutely clear and
convincing that the documents were forged, thereby exposing the sworn testimony
of Messrs. Habib, Awit, and Abou Jouade as cynical lies. The court cannot imagine
a worse abuse of the judicial process or a more deserving cause for punishment."
The judge concluded, however, that Gibson, Dunn's $8 million figure was
"arbitrary, high, and bore no relationship to Breezevale's ability to pay." He
awarded $1 million in punitive damages, an amount he believed "will hurt, but is
not so great as to be beyond Breezevale's ability to pay."
On November 24, 1997, Judge Graae entered final judgment in the case,
awarding Gibson, Dunn a total of $5,356,000 which, compared to the jury's verdict
for Breezevale, improved the law firm's position by some $10 million.
Breezevale appealed to the Court of Appeals of the District of Columbia,
raising numerous issues in addition to Stratton's decision to go forward that Monday
morning in London. On September 21, 2000 (the wheels turn slowly) the Court of
Appeals unanimously reversed the trial court's decision in major part. The court
held that Judge Graae had applied the wrong legal standard in granting Gibson,
Dunn's motion to set aside the jury's damages award in Breezevale's favor (except
for a relatively minor part relating to the proposed tire factory in Nigeria). The court
also reversed the trial court's bad faith litigation finding and damage award in
Gibson, Dunn's favor on the ground that the erroneous ruling on the jury's award to
Breezevale was "inextricable" from the trial court's finding of Breezevale's bad
faith. The Court of Appeals directed reconsideration of a Gibson, Dunn motion for a
new trial which, it ruled, would turn on a less stringent standard than the
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erroneously granted motion to set aside the jury's damages award—potentially
putting the whole complex and protracted matter back to square one.
Gibson Dunn petitioned for rehearing en banc, arguing that, as a matter of
law, Breezevale should be completely barred from suit as a sanction for its forgeries
and the perjured testimony of its witnesses. Gibson, Dunn's rehearing petition was
granted, but on October 18, 2001, the full court rejected the "clean hands" argument,
reaffirmed the panel decision, and once again remanded the case to the trial court.
As this book went to press, a Gibson, Dunn renewed motion for sanctions was
pending. If, as seems likely, that motion were to be denied, the parties may explore
other options, but settlement seems unlikely.
10.8 Appendix A: Steele, An Outline of an Attorney's Ethical
Duties Regarding Witness Perjury
An Overview of the Ethics of Witness Perjury
Being associated with witness perjury can severely damage or even end an
attorney's career. Although this outline discusses the various lines that have been
drawn, attorneys will not want to "walk the fine line." Two pieces of conventional
wisdom seem pertinent. First, if you need to analyze whether or not a particular act
related to witness perjury is over the line, then it's probably true that neither you nor
the client wants to be involved with that act. Second, seeking sound advice can be a
career-saver. For the zealous attorney caught up in the partisan struggle, the advice
of a disinterested counselor can often be a lifeline.
Although perjury is a crime everywhere, laws vary regarding an attorney's
appropriate response to witness perjury. California's uniquely strong duty of
confidentiality apparently does not permit the California lawyer to remedy client
perjury as freely as can those lawyers governed by the ABA Model Rules. But that
unique approach does not allow the California lawyer any greater latitude in
presenting falsehoods to the tribunal-with the exception of testimony of criminal
defendant clients where, as discussed below, the "narrative technique" may be
available to the lawyer. To the contrary, California's ethics rules forbid the lawyer
from using means inconsistent with the truth. (CRPC 5-200; Cal. Bus. & Prof Code
section 6068(d))
A.
Non-Client Perjury.
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Dealing with non-clients is easier than dealing with clients. Because the
attorney owes little or no duties to the non- client, and because an attorney's duty to a
client does not include a duty to present non-client perjury, the attorney's duty of
candor to the tribunal (Cal. Bus. & Prof. Code section 6068(d); California Rules of
Professional Conduct, Rule 5-200) precludes the attorney's participation in non-client
perjury. Generally, the attorney should:
1.
Attempt to dissuade the witness from committing perjury.
2.
Refuse to put the witness on the stand if the witness intends to commit
perjury.
3.
If the attorney learns that he or she has offered perjury, the attorney
must take reasonable remedial measures, such as informing the court.
a. The duty to remedy the testimonial falsehoods applies to material facts.
b. The duty to remedy the testimonial falsehoods continues to the
conclusion of the proceeding.
c. Under the Model Rules approach, the duty to remedy the testimonial
falsehoods preempts the duty to maintain client confidences in civil and
criminal cases.
d. Under California's unique approach to client confidentiality, if remedying
a non-client's perjury requires disclosure of a client confidence, the
attorney may be caught between two conflicting duties. In that case, the
attorney should follow the procedures set forth below for correcting a
client's perjury.
B.
Client Perjury
Dealing with client perjury is more difficult than dealing with non-client
perjury. Because the attorney owes duties to the client, and because the criminal
defendant has certain constitutional rights, these must be weighed against the duty of
candor to the court.
Criminal Cases: Future & Anticipated Perjury
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Attorneys representing criminal defendants must provide "effective assistance
of counsel." The United States Supreme Court has held that the United States
Constitution does not require that criminal defendants be allowed to commit perjury
or that defense attorneys be allowed to participate in the presentation of perjury. Nix
v. Whiteside, 475 U.S. 157 (1986).
But some states, including California, believe that balancing the competing
concerns in criminal cases is best done through the so-called "narrative technique."
People v. Johnson, 62 Cal.App.4th 608 (1998). Under that technique, the defendant
takes the stand and offers the perjury in a self-directed narrative, rather than through
the usual question and answer technique, and defense counsel does not argue the
perjury in the closing.
An attorney aware of a criminal client's intent to commit perjury should:
1. Attempt to dissuade the client from committing perjury;
2. If attempts to dissuade the client fail, the attorney should, if possible,
attempt to withdraw from the representation.
One California case, People v. Brown, 203 Cal.App.3d 1335 (1988) suggests
that attorneys must withdraw when the client insists upon testifying falsely.
However, that holding has been criticized, at least in the criminal context, because it
would either result in an endless string of withdrawals and continuances or would
result in the defendant lying to the subsequent counsel. People v. Gadson, 19
Cal.App.4th 1700 (1993). A mandatory withdrawal approach seems in tension with
California's adoption of the narrative technique.
3. Then proceed as permitted in the jurisdiction, either by refusing to put the
client on the stand or by putting the client on the stand and using the narrative
technique.
4. Please note: It is not clear that the narrative technique would be acceptable in
the federal courts in California.
Although the California courts have permitted the narrative technique, and
although the United States District Courts in California have adopted the California
Rules of Professional Conduct by local rule, it would appear that federal courts
within California could still forbid, and do still forbid, the presentation of perjury
under the narrative technique on the basis of numerous federal rules, statutes, and
standards.
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Criminal Cases: Completed Perjury
When the attorney becomes aware that the criminal client has committed
perjury, the attorney should determine the approach take in that jurisdiction:
1. Under the older Model Code approach, the duty of confidentiality trumped the
duty of candor to the court, and the attorney could not reveal the perjury if
doing so would reveal a client confidence (which it almost always did).
2. Under the Model Rules approach, the duty of-candor to the court trumps the
duty of confidentiality in criminal and civil cases alike. Note, however, that
the ethical duties in criminal cases are heavily debated. (Comments to Model
Rule 3.3)
a. The duty to remedy the testimonial falsehoods applies only if the false
facts were material.
b. The duty to remedy the testimonial falsehoods continues to the
conclusion of the proceeding.
c. Under the Model Rules approach, the duty to remedy the testimonial
falsehoods preempts the duty to maintain client confidences, even in
criminal cases.
3. California's Rules of Professional Conduct do not expressly cover this point.
The State Bar Act imposes a duty of confidentiality that appears to have no
exceptions besides the prevention of a crime leading to death or substantial bodily
harm. (Cal. Bus. & Prof. Code section 6068(e)) Given that California law permits the
defense counsel to utilize the narrative technique when the defendant insists upon
committing perjury, one is tempted to conclude that under California law criminal
defense counsel is under no duty to remedy client perjury in this situation, but
presumably would have to seek the client's permission to rectify the perjury, would
have to seek (or consider) withdrawal, and would be forbidden to make any use of
the perjury in argument.
4. Again, please note that the decisions of California courts on this topic do not
necessarily set the standard for practice in federal courts within California.
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This issue is more difficult than the issue of whether federal courts will allow
the use of the narrative technique. In the latter case, the federal courts could
presumably disallow behavior which the California state court found to be distasteful
but ultimately acceptable. But in the case of revealing past client perjury, if the
federal courts were to insist that criminal defense counsel reveal the perjury, the
federal courts might be requiring behavior that the California ethical rules forbid.
Civil Cases: Future & Anticipated Perjury
An attorney aware of the civil client's intent to commit perjury should:
1. Attempt to dissuade the client from committing perjury;
2. Withdraw if necessary;
3. In any case, the attorney should refuse to put on a client who intends to commit
perjury.
Civil Cases: Completed Perjury
When the attorney becomes aware that the civil client has committed perjury,
the attorney should determine the approach taken in that jurisdiction:
1. Under the older Model Code approach, the duty of confidentiality trumped the
duty of candor to the court, and the attorney was obligated to reveal the perjury
unless doing so would breach a client confidence (which it almost always did).
2. Under the Model Rules approach, the duty of candor to the court trumps the duty
of confidentiality.
3. California's Rules of Professional Conduct do not expressly cover this point.
An ethics opinion states that that the proper approach in California is to seek
the client's consent to rectify the perjury. If the client refuses, the attorney should
explain the consequences of perjury and the fact that counsel would be forced to
withdraw. The attorney can also seek a stipulation from opposing counsel striking
the perjury from the record (without disclosing the fact of perjury). If those steps do
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not rectify the situation, the attorney should seek to withdraw (without disclosing the
fact of perjury). Cal. State Bar Formal Opinion 1983-74.
4. If through no fault of the attorney a client is called and commits perjury, the
proper course under California law is not clear.
Suppose attorney refuses to call client, who intends to perjure. If the opposing
side calls client as an adverse witness and client perjures, it has been suggested in an
ethics committee opinion that counsel in California should act as if the testimony had
never been offered or had been stricken (i.e., should not mention the perjury in
examinations, arguments to the court, or the closing). California State Bar Formal
Opinion 1983-74.
5. Again, please presume that the standards enunciated by California authorities
may not be controlling in federal courts on this issue.
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