Tuesday, December 28, 2010

11th Circuit Affirms $400,000 Sanction After Counsel Filed Deposition Errata Sheet With 868 Changes

In Norelus v. Denny's Inc. (07-14077), a divided three judge Eleventh Circuit panel released a published opinion and affirmed the district court's order sanctioning the attorneys for the plaintiff.  Judge Carnes wrote the majority opinion. Judge Bowen, United States District Judge for the Southern District of Georgia, sitting by designation, concurred in the opinion with the exception of Section III.C.  The portion of the opinion that Judge Bowen did not concur in is found on pages 49 through 62 of the opinion.  Judge Tjoflat filed a dissenting opinion which begins on page 76.  The trial court's decision was affirmed, however, the portion of the majority opinion which lacked a concurring judge presumably carries the weight of a concurring opinion.  The opinion began:
No one’s memory is perfect. People forget things or get confused, and anyone can make an innocent misstatement or two. Or maybe even three or four. But not 868 of them. In this case, the plaintiff’s attorneys, William and Karen Amlong, filed a sixty-three page errata sheet containing 868 attempted changes to their client’s deposition testimony, which was the sole source of evidentiary support for their client’s claims. The district court exercised its authority under 28 U.S.C. § 1927 to sanction the Amlongs. This is their appeal, or more specifically their second appeal.
This is the second appeal as the trial court had previously entered a sanction order which was reversed with instructions.  See Amlong & Amlong, P.A. v. Denny’s, Inc., 500 F.3d 1230 (11th Cir. 2007).

In this second appeal, the court stated that "n attorney multiplies court proceedings 'unreasonably and vexatiously,' thereby justifying sanctions under 28 U.S.C. § 1927, 'only when the attorney’s conduct is so egregious that it is ‘tantamount to bad faith.’”  Without even attempting to put words into Judge Carnes opinion, I interpret the opinion as having the biggest problem with the fact the the attorneys continued to represent the client, and pursue the same legal theories, after the filing of the errata sheet containing the 868 changes.  The court stated:
As the magistrate judge found and no one (with the possible exception of the dissenting judge on this panel) seriously contests, the improper submission of the massive errata document rendered the eight days spent on Norelus’ deposition a waste of time and money to say nothing of the time the attorneys were forced to spend on the issues created by the document itself. The Amlongs’ decision to press on with Norelus’ claims after the creation of the errata document wasted more time and money. Together, the submission of the errata document and the continued pursuit of Norelus’ claims afterwards unquestionably prolonged and multiplied the proceedings...... 
Still, like Ahab hunting the whale, the Amlongs relentlessly pursued the claims. All the while they blinded themselves to as much of the contradictory evidence as they could. They deliberately did not obtain the deposition testimony of any of Norelus’ co-workers who would have seen or heard something had anything improper occurred. They did not concern themselves with that testimony, according to Karen Amlong, because they assumed all of the witnesses, except for their client, were either lying or simply could not remember witnessing the gross sexual harassment inflicted on her.  When the truth was thrust in the Amlongs’ faces, they stubbornly ignored it and kept on litigating.
The portion of Judge Carnes' opinion which Judge Bowen did not join began: 

Up to this point, we have addressed the issues related to the errata document and the award of sanctions as those issues have been raised and defined since that document was submitted fourteen years ago. Our dissenting colleague, by contrast, has hatched a brand new theory—a theory that was never raised by the parties, never considered by the district court, and never argued to this Court. The theory that he has conjured up is that the errata sheet was really nothing more than a “letter” from Karen Amlong to defense counsel. It was not, he insists, an errata sheet because he thinks it was never presented to the court reporter or affixed to Norelus’ deposition as, he thinks, Federal Rule of Civil Procedure 30 requires. Dissenting Op. at 1. He is wrong on his premises and wrong in his conclusion.
The section later stated:
The first and only time this issue has been raised in the more than fourteen years since the errata document was submitted is now, by our dissenting colleague who wants us to share his novel vision and reverse the district court’s award of sanctions on that basis. Even if his vision had any factual basis, there are two walls of precedent standing against what he wants to do. The first one is our well established rule against reversing a district court judgment on the basis of issues and theories that were never presented to that court—issues not raised in the district court should not be considered on appeal.
Finally, the section concluded "Issues should not sprout like weeds in appellate opinions no matter how fertile the minds of the judges deciding the appeal. We could not reverse the district court based on the dissenting opinion’s new theory of the case, even if it had a factual basis, which it does not."

The final section of the majority opinion, which Judge Bowen did join, addressed whether a party can be awarded those fees and costs that actually stemmed from the sanctions proceeding itself.  The court stated:
This is the first time we have addressed whether a district court may include costs arising from the sanctions proceedings themselves in an award of § 1927 sanctions. Other circuits have tackled this issue in the closely related context of rules-based sanctions. Many of those courts have held that it is within the discretion of a district court to include within a sanctions award costs incurred in obtaining that award.
The court concluded that those fees and costs are awardable and stated:
We begin our analysis of what the statute permits where we always should: the statute’s plain language. See Nguyen v. United States, 556 F.3d 1244, 1250 (11th Cir. 2009). The plain language of 28 U.S.C. § 1927 establishes that, in making a sanctions award to a party, a court may include the “costs, expenses, and attorneys’ fees” that the party victimized by the sanctionable conduct incurred in obtaining the award. Id. After all, those costs are, in the statute’s terms, “incurred because of such conduct.” Id. If there were no sanctionable conduct there would have been no proceeding to impose sanctions. Because the costs arising from the sanctions proceedings were “occasioned by the objectionable conduct,” McMahan, 256 F.3d at 1128 (citing Peterson, 124 F.3d at 1396), a district court may include costs arising from the sanctions proceedings in the sanctions award. 
Because the statutory language is unambiguous, we could end our analysis there.
The opinion went on to discuss policy reasons why the costs incurred in prosecuting a sanctions motion are recoverable.  

The "dissent is organized as follows. Part I sets out Rule 30, explains the purpose of an errata sheet, and addresses how courts enforce Rule 30’s requirements pertaining to errata sheets. Part II initially establishes that Karen Amlong fully understood how, under Rule 30, an errata sheet becomes part of a deponent’s deposition and then explains that she did not intend the 'errata sheet' she sent defense counsel to comply with Rule 30 and become part of Norelus’s deposition. Part III establishes that defense counsel failed to comprehend this and, thus, erroneously concluded and represented to the court that the 'errata sheet' was part of Norelus’s deposition. In turn, part IV shows how defense counsel’s error led to the § 1927 sanctions at issue in this appeal. Finally, part V explains why, in light of the foregoing, levying these sanctions was improper."


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