Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca8-04-02187/USCOURTS-ca8-04-02187-0/pdf.json

Nature of Suit Code: 365
Nature of Suit: Personal Injury - Product Liability
Cause of Action: 

---

United States Court of Appeals

FOR THE EIGHTH CIRCUIT

___________

No. 04-2097

___________

Plaintiffs' Baycol Steering *

Committee, *

*

Plaintiff, *

*

Kenneth B. Moll; Kenneth B. *

Moll & Associates, Ltd., *

 *

Appellants, *

*

v. *

*

Bayer Corporation; Bayer AG; *

GlaxoSmithKline, *

*

Defendants - Appellees. *

___________ 

 Appeals from the United States

No. 04-2187 District Court for the 

___________ District of Minnesota.

Plaintiffs' Baycol Steering *

Committee, *

*

Plaintiff, *

*

K. Amy Lemon, *

*

Appellant, *

*

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v. *

*

Bayer Corporation; Bayer AG; *

GlaxoSmithKline, *

*

Defendants - Appellees. *

___________

Submitted: February 17, 2005

Filed: August 19, 2005

___________

Before BYE, HEANEY, and MELLOY, Circuit Judges.

___________

BYE, Circuit Judge.

Kenneth B. Moll, and his firm Kenneth B. Moll & Associates Ltd. (KBM), and

K. Amy Lemon, appeal the district court's order imposing sanctions against them for

their conduct in the Baycol Multi-District Litigation (MDL). Pursuant to its inherent

power, the district court removed Moll and KBM from the plaintiffs' steering

committee (PSC) and imposed a $50,000 sanction against Moll after finding Moll

committed perjury, violated two pretrial orders, and violated multiple provisions of

the Minnesota Rules of Professional Conduct. Additionally, the district court sua

sponte barred Lemon from the practice of law in the United States District Court for

the District of Minnesota after finding she committed perjury and violated provisions

of the Minnesota Rules of Professional Conduct. We affirm the removal of Moll and

KBM from the PSC, but vacate the $50,000 sanction imposed against Moll and

remand for further proceedings. We reverse the district court's imposition of

sanctions against Lemon. 

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I. Background

The Baycol product liability litigation concerns a medication known as Baycol,

which was used to lower cholesterol before it was withdrawn from the market in

August 2001. On December 18, 2001, the judicial panel on multidistrict litigation

established the Baycol MDL, in which Bayer Corporation, Bayer A.G., and

GlaxoSmithKline are defendants. All federal district court Baycol cases were

transferred to the District of Minnesota. The PSC is a select group of lawyers

charged with coordinating and directing pretrial proceedings on behalf of plaintiffs

in the Baycol MDL. The district court appointed Moll and KBM to serve as one of

the eighteen members of the PSC and one of the seven attorneys on the PSC's

executive committee. 

Pre-Trial Order (PTO) 18 directs all filings in the Baycol MDL "shall be filed

and served through Verilaw Technologies," a provider of electronic document storage

and management services. The order states documents filed through Verilaw "shall

not be filed by traditional paper means" and "will not contain visual representations

of the filing attorneys' signatures." Instead, PTO 18 provides:

On word processing files that they submit, attorneys shall, in place of a

signature and where the signature would normally appear, place

"Original Signature on File with Filing Attorney." A Filing Attorney

shall make an original signature available to any registered user upon

request. The filer of any document requiring multiple signatures . . .

must list thereon all the names of other signatories by means of an

"/s/_____" block for each. By submitting such a document, the filer

certifies that each of the other signatories has expressly agreed to the

form and substance of the document and the filer has their actual

authority to submit the document electronically. The filer must maintain

any records evidencing this concurrence for subsequent production to

the Court if so ordered or for inspection upon request by a party.

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PTO 24 provides confidential documents produced in the Baycol MDL "shall

not be disclosed to anyone other than" the court, the parties to the litigation, the

parties' counsel, and certain outside experts and consultants. PTO 24 further states

"[a]ll parties and their respective counsel . . . shall take all steps reasonably necessary

to prevent the disclosure of confidential discovery material other than in accordance

with the terms of this Order." The order also states unauthorized disclosure "may

subject the disclosing person to such sanctions and remedies as the Court may deem

appropriate." 

In August 2002, at the PSC's request, Moll, who speaks Italian, scheduled a

meeting with Raffaelle Guariniello, an Italian prosecutor, to discuss the criminal

investigation of Bayer A.G. managers in Europe and to review related documents.

In October 2002, Moll met with Guariniello in Torino, Italy. According to Moll, at

this meeting he provided Guariniello with non-privileged documents and he promised

to file a motion to intervene, which would allow Guariniello access to privileged

documents. 

The October 2002 meeting included a teleconference with members of the PSC

who were in the United States. During the teleconference, the PSC members in the

United States were told to "gather as many documents as [they could] or any

documents [they] felt were not privileged" for Guariniello to review. Following the

teleconference, Ron Goldser sent an email to Guariniello's account and attached two

documents: a PowerPoint presentation entitled "Baycol Hot Documents Seminar,"

and a document entitled "Baycol-MDL 1431 Liability Summary." These documents

were created by the PSC and contained portions of Bayer's confidential documents.

Moll was copied in the email. In the email, Goldser instructed Guariniello to let Moll

review the attached documents for confidentiality before viewing them. Guariniello

did not read Goldser's message before opening the attachments, and Moll did not read

the email until after Guariniello viewed the documents. Moll viewed the PowerPoint

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attachment with Guariniello. Every page of both documents contained the following:

"CONFIDENTIAL - SUBJECT TO PROTECTIVE ORDER." 

On October 21, 2002, after returning from Italy, Moll received an email from

Guariniello's assistant, Patrizia Solia, asking Moll if he had any news regarding

Guariniello's access to privileged documents. In December 2002, Moll and KBM

associate Hal Kleinman exchanged emails with Solia regarding information KBM

needed to prepare a motion to intervene. On January 20, 2003, Kleinman sent an

email to Solia and Guariniello in which he stated he was working on a final draft of

the motion to intervene and requested additional information. Solia responded to

Kleinman the same day and thanked Kleinman for "helping us to receive Baycol

documents." In January and February 2003, Kleinman and Solia exchanged more

emails regarding the motion. In a February 27, 2003, email, Solia asked Kleinman:

"How is going your Motion for Permission to provide us copies of Bayer

documentation?" After March 5, 2003, however, there is no evidence of

communication between Guariniello's office and KBM until June 2003.

Lemon graduated from law school in 2002 and was admitted to the Illinois and

Indiana state bars. After working for a medical malpractice firm for less than a year,

she joined KBM in Chicago. Lemon started with KBM the last week of May 2003.

The first assignment Lemon received from Moll was to prepare the memorandum of

law in support of the motion to intervene. Lemon was also asked to prepare the

motion for filing including obtaining a declaration from Guariniello in support of the

motion. The declarations of Guariniello and Moll had already been prepared by

Kleinman who no longer worked at KBM. Lemon was instructed to get the motion

and supporting papers to the PSC "law committee" by June 6. 

On June 5, at Moll's request, Lemon emailed Guariniello's declaration to Solia.

In her email, Lemon asked Guariniello to sign the declaration, fax it to KBM, and

send the original by mail. On June 10, Lemon had not heard back from Guariniello's

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office so she tried calling Guariniello's office directly, but was unable to speak with

anyone. The same day, Lemon emailed a draft of the motion papers to various

members of the PSC. She also faxed a copy of the motion papers to Moll, who was

out of town. Lemon only received one comment from the PSC "law committee" in

response to her draft. On June 11, Mike Nast emailed Lemon and told her the motion

looked fine and directed Lemon to work with another member of the PSC, Robert

Shelquist of Lockridge Grindal Nauen PLLP (LGN), to coordinate the filing of the

motion. As a courtesy, LGN filed on Verilaw documents prepared by other firms in

the Baycol MDL. 

On the morning of June 12, Lemon, Moll, and Sonia Kinra, another associate

of KBM, met to discuss the motion. The discussion focused on the absence of

Guariniello's signature. Moll attempted to call Guariniello's office but was unable to

speak to anyone. Then Moll directed Lemon to call Shelquist and tell him they were

still missing Guariniello's signature. Apparently, June 12 was the filing deadline for

consideration of matters at the district court's July 2003 status conference. 

 

The district court found at this point KBM's and LGN's versions of the facts

diverge. In her deposition, Lemon testified at Moll's urging she called Shelquist at

LGN the morning of June 12 to tell him the Guariniello declaration was not signed

and to seek his advice. According to Lemon, sometime after meeting with Moll and

before emailing the motion to Shelquist's office at 3:56 p.m., she spoke with Shelquist

over the telephone about filing the motion. Lemon testified during the conversation

she specifically told Shelquist KBM did not have the signature from Guariniello and

she did not know when they would have it. Lemon testified Shelquist told her to

insert the "signature on file" notation and send the file anyway. Lemon stated she

then inserted the "/s/ signature on file" notations and at 3:56 p.m. emailed the motion

papers to Shelquist's assistant for filing. When asked how long the conversation with

Shelquist lasted, Lemon stated: "A few minutes. I couldn't tell you. Maybe 10. I

don't know." 

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In Shelquist's deposition, he disputed Lemon's account of the conversation. He

testified he did not speak with Lemon until after 4:00 p.m. on June 12, after Lemon

emailed him the final draft of the motion. Shelquist testified that based on this

conversation with Lemon he believed KBM had Guariniello's signed declaration in

hand. Shelquist insisted he did not order Lemon to file the unsigned declaration. He

testified he did not learn Guariniello's declaration was unsigned until July. 

Additionally, in his deposition, Shelquist testified it was his "preference to

have the signature on file," but, "in a couple of instances, when we were pushing up

against a 5:00 p.m. deadline, we emailed the affidavit to Verilaw and then faxed the

signature page when it came in." When asked to explain his word choice of

"preference," Shelquist stated:

With regard to MDL filings on both sides, there had been instances

where documents have been filed, affidavits, that say "signature on file."

I believe there has [sic] been discovery responses served by Defendants

that have "signature on file." I don't know if, technically, that's what is

supposed to have been done, but nobody has complained or tried to kick

out those filings on either side until this motion.

The motion was filed on Verilaw by LGN at 4:15 p.m. on June 12. Moll's

declaration included a notation of "/s/ Signature on File." Moll's declaration stated

he was "counsel for the purpose" of the motion to intervene. Guariniello's declaration

included a notation that the declaration was executed on June 12, 2003, and a notation

of "/s/ Signature on File." Neither Moll nor Guariniello had signed their declarations.

Half an hour after the motion was filed, Verilaw sent an email to Moll

confirming the motion had been filed. Moll forwarded the email to Lemon with the

message: "that was fast." According to Lemon, Moll directed Lemon to send another

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email to Guariniello requesting his signature. Lemon drafted an email to

Guariniello's office requesting a signature at approximately 6:19 p.m. on June 12. 

Moll testified that he did not learn the motion to intervene was filed until he

received the notification from Verilaw, that he was surprised Shelquist had given

Lemon permission to file the motion without proper signatures, and that he told

Lemon it was wrong to file the motion without having a signed signature page. 

However, after learning the motion had been filed, rather than attempting to

have the motion withdrawn, Moll and Lemon continued to request Guariniello's

signature. On June 16, Solia sent Lemon an email stating Guariniello would not sign

his declaration because he had decided to pursue the privileged documents through

a rogatory rather than a motion to intervene. On June 20, Lemon sent Guariniello an

email stating: "Please know that we have already prepared the motion on your behalf

. . . and feel the court will rule in our favor." Lemon discussed the contents of the

email with Moll before it was sent. On the same day, Moll also sent Guariniello an

email stating: "You may sign your affidavit . . . so that we may attach it to the

motion." In the email, Moll informed Guariniello he could pursue the documents

both by using a rogatory and by filing the motion to intervene. Guariniello responded

that he did not feel comfortable pursuing both options. 

In a June 23 letter to Moll and Shelquist's partner, Richard Lockridge, who was

also co-lead counsel in the MDL, Susan Weber, counsel for Bayer, requested a signed

copy of Guariniello's declaration. In response, Moll called Weber and admitted the

PSC did not have a signed copy of Guariniello's declaration, stated Guariniello had

decided to pursue discovery through other channels, and stated the motion to

intervene would be withdrawn. On June 23, Moll instructed Lemon to email

Shelquist to notify him the motion should be withdrawn and to obtain Shelquist's

verification that Shelquist had instructed Lemon to file Guariniello's declaration with

an electronic signature knowing there was no original signature on file. Lemon sent

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Shelquist an email stating the motion should be withdrawn because Guariniello had

decided to pursue the privileged documents through a rogatory. Lemon did not ask

Shelquist for verification he had instructed Lemon to file the motion without an

original signature on file. In her deposition, Lemon stated she did not want to seem

rude or difficult in her email to Shelquist. The PSC formally withdrew the motion on

June 26.

Bayer conducted discovery into the filing and withdrawal of the motion to

intervene. Moll was deposed on September 4, 2003, and was represented by Warren

Lupel. Lemon was deposed on September 5. As an employee of KBM, Lemon was

also represented at the deposition by Lupel. Lemon did not retain Lupel or pay his

fees. On September 6, the day after she was deposed, Lemon quit her job at KBM.

Shelquist was deposed on September 29. 

Because of the conflict between Lemon's testimony and Shelquist's testimony,

Bayer obtained copies of telephone records from both LGN and KBM for June 12,

2003. The telephone records document the following calls were placed between

KBM and LGN on June 12:

(1) 1.0 minute call from KBM to LGN at 10:37 a.m.

(2) 2.6 minute call from Shelquist to KBM at 10:48 a.m.

(3) 4.0 minute call from KBM to LGN at 10:57 a.m.

(4) 0.9 minute call from Shelquist's assistant to KBM at 2:30 p.m.

(5) 4.0 minute call from Shelquist's assistant to KBM at 3:10 p.m.

(6) 2.7 minute call from Shelquist's assistant to KBM at 3:18 p.m.

(7) 2.0 minute call from KBM to LGN at 4:50 p.m.

(8) 3.6 minute call from Shelquist to KBM at 4:56 p.m. 

On January 14, 2004, Bayer filed a motion for sanctions against Moll and

KBM. Bayer did not seek sanctions against Lemon, and Lemon was not served with

notice of the motion. The district court sua sponte ordered briefing from LGN.

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Shelquist, Lockridge, and Shelquist's assistant Barbara Gilles provided supplemental

affidavits explaining the phone calls reflected in the June 12 telephone records. Oral

argument on the motion for sanctions was held on February 24, 2004, and the district

court heard argument from counsel for LGN, Bayer, and KBM. Lemon did not

receive notice of the hearing, was not present at the hearing, and was not represented

at the hearing. 

On April 12, 2004, the district court issued its order on the motion for

sanctions. The court found Moll committed perjury, violated two pretrial orders, and

violated multiple provisions of the Minnesota Rules of Professional Conduct.

Pursuant to its inherent power, the district court removed Moll and KBM from the

PSC and imposed a $50,000 monetary sanction against Moll. 

Although Bayer did not move for sanctions against Lemon, the district court

sua sponte imposed sanctions against Lemon. The district court adopted Shelquist's

and Gilles's version of the facts, as presented in their affidavits and argued by LGN's

attorney at oral argument, and concluded Lemon's deposition testimony was in

conflict with the telephone records. The court found Lemon committed perjury when

she testified in her deposition that Shelquist instructed her to file the motion to

intervene without a signature on file. The court also found Lemon, together with

Moll, covered up the fact the motion to intervene was filed without the possession of

a signed original of the Guariniello declaration. The court ordered that Lemon be

prohibited from the practice of law in the District of Minnesota. Lemon learned of

the sanction imposed against her after Lupel mailed a copy of the order to her. 

Finally, the district court directed the clerk of the court to send copies of the

order to the Illinois Attorney Registration and Disciplinary Commission and the

United States Attorney for the District of Minnesota. 

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II. Inherent Power

"It has long been understood that '[c]ertain implied powers must necessarily

result to our Courts of justice from the nature of their institution,' powers 'which

cannot be dispensed with in a Court, because they are necessary to the exercise of all

others.'" Chambers v. NASCO, Inc., 501 U.S. 32, 43 (1991) (quoting United States

v. Hudson, 11 U.S. (7 Cranch) 32, 34 (1812)). "These powers are 'governed not by

rule or statute but by the control necessarily vested in courts to manage their own

affairs so as to achieve the orderly and expeditious disposition of cases.'" Id. (quoting

Link v. Wabash R., 370 U.S. 626, 630-31 (1962)). The inherent power of the federal

courts includes the power to "control admission to its bar and to discipline attorneys

who appear before it," but the Supreme Court cautioned "this power 'ought to be

exercised with great caution.'" Id. (quoting Ex parte Burr, 22 U.S. (9 Wheat.) 529,

531 (1824)). Because of the potency of inherent powers, "[a] court must exercise its

inherent powers with restraint and discretion, and a primary aspect of that discretion

is the ability to fashion an appropriate sanction." Harlan v. Lewis, 982 F.2d 1255,

1262 (8th Cir. 1993) (citing Chambers, 501 U.S. at 44-45). Furthermore, in invoking

its inherent power, a court "must comply with the mandates of due process."

Chambers, 501 U.S. at 50. Thus, before a district court may impose sanctions, the

individual must receive notice that sanctions against her are being considered and an

opportunity to be heard. In re Clark, 223 F.3d 859, 864 (8th Cir. 2000) (citing

Chambers, 501 U.S. at 56-57; Jensen v. Fed. Land Bank of Omaha, 882 F.2d 340, 341

(8th Cir. 1989)). 

We review a district court's imposition of sanctions against an attorney under

its inherent power for an abuse of discretion. United States v. Gonzalez-Lopez, 403

F.3d 558, 564 (8th Cir. 2005) (citing Chambers, 501 U.S. at 55; Bass v. General

Motors Corp., 150 F.3d 842, 851 (8th Cir. 1998)). "A district court would necessarily

abuse its discretion if it based its ruling on an erroneous view of the law or on a

clearly erroneous assessment of the evidence." Cooter & Gell v. Hartmarx Corp., 496

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U.S. 384, 405 (1990); accord Gordon v. Unifund CCR Partners, 345 F.3d 1028, 1030

(8th Cir. 2003). 

III. Moll & KBM

Moll contends the district court abused its discretion in imposing sanctions

against him arguing the district court erred in finding Moll's conduct in connection

with the filing of the motion to intervene constituted perjury, violated PTO 18 and the

rules of professional conduct, and demonstrated bad faith. Moll also argues the

district court erred in finding his actions in connection with Guariniello viewing

confidential documents violated PTO 24 and Rule 3.4(c) and demonstrated bad faith.

Even if the district court's findings are upheld, Moll argues the sanctions imposed by

the district court are excessive. 

In addressing Moll's arguments, we first consider whether the district court

clearly erred in finding Moll committed perjury, violated pretrial orders and the rules

of professional conduct, and acted in bad faith. We then examine whether it was an

abuse of discretion for the district court to invoke its inherent powers to impose

sanctions against Moll and whether the sanctions are appropriate.

 

A. Motion to Intervene

In connection with the filing of the motion to intervene, the district court found

Moll committed perjury, violated PTO 18, violated various provisions of the rules of

professional conduct, and acted in bad faith. We hold the district court did not clearly

err in finding Moll violated PTO 18 and Rules 3.4(c), 8.4(c), and 8.4(d), and acted in

bad faith. However, we find the district court clearly erred in holding Moll

committed perjury and violated Rule 8.4(b) and Rule 3.3(a)(1). 

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1. Perjury, Rule 8.4(b), Rule 3.3(a)(1)

The district court concluded Moll committed perjury by filing a declaration

purportedly on behalf of Guariniello with a signature on file notation and by filing his

own declaration with a signature on file notation although Moll knew neither

declaration was in fact signed. The district court also found Moll committed perjury

by stating in his declaration he was "counsel for the purpose of" Guariniello's motion

to intervene, stating the "clear import of the statement was that Moll was Guariniello's

attorney." Based on its determination Moll committed perjury, the district court

found Moll violated Minnesota Rule of Professional Conduct 8.4(b), which provides:

"It is professional misconduct for a lawyer to: . . . (b) commit a criminal act that

reflects adversely on the lawyer's honesty, trustworthiness or fitness as a lawyer in

other respects." Minn. R. Prof. Conduct 8.4(b). Additionally, the district court found

Moll violated Minnesota Rule 3.3(a)(1), which states: "A lawyer shall not

knowingly: . . . make a false statement of fact to a tribunal." Minn. R. Prof. Conduct

3.3(a)(1). According to the district court, "filing a declaration with an electronic

signature constituted a false statement" made to the court. 

Moll argues a finding of perjury requires criminal mens rea and the evidence

does not demonstrate Moll made misstatements motivated by criminal intent to

deceive. According to Moll, the record shows a communication breakdown resulted

in the Guariniello declaration being filed without a signature on file. He states he

believed Guariniello agreed with the declaration and Lemon believed the signature

was en route. Additionally, Moll argues there is no evidence he approved the

electronic filing of the motion and declarations with a signature on file notation,

noting the version of Guariniello's declaration Lemon faxed to him did not have a

signature on file notation. He asserts he only learned the motion had been filed

without receipt of Guariniello's signature page after receiving notice the motion had

been filed. He also contends he did not commit perjury by representing in his

declaration he was counsel for the purpose of the motion to intervene. Moll argues

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the record establishes he had a good faith belief to believe Guariniello wanted Moll

to file the motion to intervene on his behalf to access confidential documents. For

these same reasons, Moll contends he did not violate Rules 8.4(b) and 3.3(a)(1).

The district court rejected Moll's argument that his prior relationship with

Guariniello led him to reasonably believe Guariniello wanted him to act as his

attorney and file the motion. The court noted any prior conduct was not important in

light of the fact Guariniello did not sign his declaration and did not respond to emails

when asked to sign the declaration. The court noted Moll knew Guariniello had not

signed his declaration at the time the motion was filed and stated allowing an

unsigned declaration to be filed while representing it is signed is willful misconduct.

The district court found: "In short, Moll allowed the PSC to file a motion he knew

to be improper," noting it is undisputed Moll knew Guariniello had not signed his

declaration at the time it was filed. The court stated that "[a]s a member of the

Executive Committee, Moll had an obligation to prevent improper filings."

Additionally, the court stated it was "unimpressed" with Moll's claim he was

surprised the motion was filed without Guariniello's signature. The court stated if

Moll believed such a filing was wrong he had an obligation to inform the court

immediately, but instead Moll "did nothing but try to obtain Guariniello's after-thefact signature, and after-the-fact confirmation of Shelquist's approval." The court

noted that "[i]nstead of immediately withdrawing the improper filing, or at least

questioning Shelquist about the propriety of the filing, Moll let it sit for days, and

then attempted only to obtain documentation that would place any potential blame on

LGN." 

We hold the record fails to support the district court's finding of perjury. "A

witness testifying under oath or affirmation violates [the federal perjury statute] if she

gives false testimony concerning a material matter with the willful intent to provide

false testimony, rather than as a result of confusion, mistake, or faulty memory."

United States v. Dunnigan, 507 U.S. 87, 94 (1993) (citing 18 U.S.C. § 1621(1);

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United States v. Debrow, 346 U.S. 374, 376 (1953); United States v. Norris, 300 U.S.

564, 574, 576 (1937)). The evidence in the record demonstrates Lemon, whether at

the direction of Shelquist or on her own initiative or as a result of miscommunication,

entered the signature on file notations in the declarations and sent the motion to

intervene to LGN for filing on Verilaw. There is no evidence in the record

demonstrating Moll instructed or gave Lemon approval to file the motion to intervene

with false signature on file notations. The district court's finding of perjury is based

on the court's finding that even if Moll did not explicitly instruct Lemon to file the

motion, Moll essentially "allowed" the improper filing to occur. However, Moll's

failure to prevent the filing of the declarations with false signature on file lines is

insufficient to establish Moll committed perjury. Additionally, Moll's failure to take

immediate corrective steps after learning of the improper filing does not establish

perjury, although it supports the district court's findings Moll violated PTO 18 and

Rules 3.4(c) and 8.4(c) and (d), as discussed below. 

We also do not believe the record supports the finding Moll committed perjury

by stating in his declaration he was counsel for the purposes of filing the motion to

intervene. The district court found "[t]he clear import of the statement was that Moll

was Guariniello's attorney," and "there can be no other reasonable interpretation of

this statement." We hold this finding is clearly erroneous. There is no evidence in

the record demonstrating this statement was made with a willful intent to provide

false testimony. At the time the declaration was drafted, we believe the record shows

Moll was counsel for the purposes of filing the motion to intervene. Although this

assertion finds less support at the time the motion to intervene was filed, as discussed

above, the record does not show Moll instructed Lemon to file the motion to

intervene without obtaining Guariniello's signature. 

For the same reasons as stated above, we conclude the record does not support

the finding Moll violated Rule 3.3(a)(1) or Rule 8.4(b). 

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2. PTO 18, Rules 3.4(c), 8.4(c), (d) 

The district court found Moll violated PTO 18 when he filed the motion to

intervene although he knew Guariniello's signature was not on file. PTO 18 states an

attorney who files a document with an electronic signature "shall make an original

signature available to any registered [Verilaw] user upon request." PTO 18 further

states "[b]y submitting such a document, the filer certifies that each of the other

signatories has expressly agreed to the form and substance of the document and that

the filer has their actual authority to submit the document electronically." In violating

PTO 18, the district court found Moll also violated Minnesota Rule 3.4(c), which

provides a lawyer shall not "knowingly disobey an obligation under the rules of a

tribunal except for an open refusal based on an assertion that no valid obligation

exists." Minn. R. Prof. Conduct 3.4(c). 

Moll argues he did not intentionally violate PTO 18 and Rule 3.4(c) because

he believed he had Guariniello's authority to file the motion to intervene and believed

Guariniello approved the form and substance of the motion to intervene having

received no objection to the draft he sent to his office. Moll notes LGN was

technically the "filer" of the motion. He also asserts there is no evidence he knew the

declaration would be filed without Guariniello's signature. 

We hold the district court did not clearly err in finding Moll knowingly

disobeyed his obligation under PTO 18 in violation of Rule 3.4(c). We conclude it

is clear Moll did not have Guariniello's express agreement to the form and substance

of the motion and Guariniello's actual authority to file the motion, as required by PTO

18. We believe the evidence on the record supports the district court's rejection of

Moll's claim his prior relationship with Guariniello led him to believe he had

Guariniello's permission to file the motion to intervene. The record shows Moll had

not heard from Guariniello in the three months prior to filing the motion, and when

Moll's office sent the declaration to Guariniello for his approval, Guariniello

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"'disappeared' and did not respond to emails when asked to sign the declaration."

Moreover, Moll testified that on June 12 he instructed Lemon to tell Shelquist

Guariniello had not signed the declaration and to seek his advice. Moll also testified

that on June 12, after he learned the motion to intervene had been filed, he told

Lemon it was wrong to file the declaration without a signature on file. These facts

contradict Moll's claim he believed he had Guariniello's permission to file the motion

to intervene and that Guariniello approved the form and substance of the motion. We

also believe the district court did not clearly err in finding Moll was the "filer" of the

motion. Although LGN filed the motion on Verilaw, the district court found LGN

performed this function merely as a professional courtesy and Shelquist and

Lockridge did not have any control over the documents before filing them. We

believe this finding is not clearly erroneous. Additionally, Moll's argument he did not

know the motion would be filed without Guariniello's signature does not excuse his

failure to withdraw the motion as soon as he learned the motion was filed without

Guariniello's signature on file. 

Next, the district court held Moll violated paragraphs (c) and (d) of Minnesota

Rule 8.4 after finding Moll attempted to cover up the fact the motion to intervene was

filed without Guariniello's signature. Paragraphs (c) and (d) provide: "It is

professional misconduct for a lawyer to: . . . (c) engage in conduct involving

dishonesty, fraud, deceit or misrepresentation; [or] (d) engage in conduct that is

prejudicial to the administration of justice." Minn. R. Prof. Conduct 8.4(c), (d). 

Moll admits he tried to obtain an executed signature page from Guariniello

after the motion was filed, but argues this demonstrates he understood the importance

of possessing a signed original declaration and for a short time labored under the

impression Guariniello's signature was en route or that he might still sign the

document. When it became clear Guariniello no longer consented to the motion, it

was withdrawn shortly thereafter. He argues the record does not show he

intentionally misled Bayer or the court, but readily admitted to Bayer's counsel upon

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receiving a formal letter requesting a copy of the signature page that KBM did not

possess it. 

We hold the district court did not clearly err in finding Moll violated Rule

8.4(c) and 8.4(d). The record supports the district court's finding that Moll engaged

in dishonest conduct by attempting to cover up and his actions. The evidence shows

Moll knew on June 12 they had not obtained Guariniello's signature. By June 16,

Moll learned Guariniello did not plan to sign the declaration. Rather than informing

the court and opposing counsel, Moll continued to attempt to change Guariniello's

mind. The record shows Moll did not tell Guariniello the motion to intervene had

already been filed. Moll did not take any action to withdraw the motion until June

23, which was the same day counsel for Bayer formally requested a copy of the

original signature. These facts also support the district court's finding Moll's actions

prejudiced the administration of justice in the Baycol MDL "by calling into question

the veracity of electronic signatures and the integrity of Moll and Lemon, and by

forcing the Court and the parties to focus on this issue, rather than the main issues of

th[e] MDL." These facts also support the district court's finding of bad faith. 

B. Confidential Documents

In addition to Moll's conduct relating to the motion to intervene, the district

court based its imposition of sanctions against Moll on its finding that Moll violated

PTO 24 when he "allowed Guariniello to see the documents containing Bayer's

confidential information." The district court held Moll, in violating PTO 24, also

violated Rule 3.4(c), which states a lawyer shall not "knowingly disobey an

obligation under the rules of a tribunal except for an open refusal based on an

assertion that no valid obligation exists." Additionally, the court found Moll's

conduct demonstrated bad faith, stating "preventing the dissemination of confidential

information . . . by failing to take appropriate precautions to prevent improper release,

is sanctionable conduct." 

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Moll argues any improper disclosure of confidential information was

inadvertent. He notes he asked the attorney sending the documents to send only

non-privileged information and that he did not send the email to Guariniello. He

further points out the email containing confidential information was sent directly to

Guariniello's email account, and Guariniello opened the attachment before Moll could

review it. 

Although Moll may not have been the only attorney responsible for the release

of confidential documents to Guariniello, or even the attorney mostly at fault, this

does not mean Moll did not engage in sanctionable conduct. The district court's

findings are supported by the fact that after Moll knew or should have known the

documents sent to Guariniello contained confidential information he did not take any

steps to protect them. As the district court found, "[w]hile it may be true that

Guariniello opened the attachments before Moll could read the explanatory e-mail,

once Moll saw the documents, he should have been alerted to their potential

confidential nature." The documents were clearly marked "CONFIDENTIAL -

SUBJECT TO PROTECTIVE ORDER." Rather than attempting to take any action

to stop Guariniello from viewing the confidential information by asking Guariniello

to stop reviewing the documents or by notifying the court, the record indicates Moll

merely sat by Guariniello's side while Guariniello viewed the documents. Moll's

inaction is inconsistent with his obligation under PTO 24 to "take all steps reasonably

necessary to prevent the disclosure of confidential discovery material." Accordingly,

we do not believe the district court clearly erred in finding Moll knowingly violated

PTO 24 and Rule 3.4(c). 

C. Appropriateness of Sanctions

 

Moll argues, even if the district court's findings are upheld, the sanctions

imposed by the district court are excessive. 

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In its motion before the district court, Bayer suggested three sanctions: 1)

removing Moll from the PSC; 2) disqualifying KBM from further participation in the

MDL as counsel for individual plaintiffs and voiding any retention or fee agreements

with KBM's individual plaintiffs; and 3) fining KBM $50,000. The district court

reviewed Bayer's submissions and concluded the appropriate sanction was 1) to

remove Moll and KBM from the PSC, and 2) to impose a monetary sanction against

Moll personally in the amount of $50,000. Additionally, the court directed the clerk

of the court to send copies of the order to the Illinois Attorney Registration and

Disciplinary Commission and the United States Attorney for the District of

Minnesota. 

We hold the district court acted well within its discretion in ordering Moll's and

KBM's removal from the PSC. The district court's explanation for the sanction is

reasonable and supported by the facts: 

By allowing a motion to be filed without signatures and by failing

to correct the problem in a timely manner, Moll exhibited poor judgment

and a profound lack of the appropriate forthrightness and candor

necessary from a member of the PSC. Moll deliberately tried to

cover-up his actions and mislead the Court and the parties as to the true

status of the motion. In addition, Moll failed to exercise due care

regarding the handling of confidential documents. This improper

handling, and failure to even attempt to correct the problem, demonstrate

that Moll is not qualified to perform the duties of a PSC member with

the zeal and integrity this Court requires. 

Additionally, we do not believe it was an abuse of discretion for the district

court to invoke its inherent power to impose a monetary sanction against Moll based

on the record in this case. See Harlan, 982 F.2d at 1259. Thus, the only issue is

whether the amount of the sanction, $50,000, is appropriate. Moll contends a

$50,000 sanction is excessive compared to the $5,000 sanction imposed in Harlan,

982 F.2d at 1257, and the $10,795.85 award of attorney's fees in Greiner v. City of

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1

Our opinion in Greiner does not indicate the amount of the attorney's fees

award. Moll obtained the amount from the district court's docket sheet for Greiner,

which discloses the amount of the award. 

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Champlin, 152 F.3d 787 (8th Cir. 1998).1

 Bayer argues the $50,000 sanction is not

excessive, citing In re Kujawa, a case in which our court affirmed a reduced award

of attorney's fees for $66,656.33 assessed by the bankruptcy court, but reversed as

excessive the imposition of an additional punitive monetary sanction of $100,000.

270 F.3d 578, 583-84 (8th Cir. 2001). 

In Kujawa, the $66,000 award of attorney's fees was remedial—it was paid to

the opposing party as compensation for the attorney's fees incurred as a direct result

of the unethical behavior. See id. at 582-83. We held the imposition of an additional

$100,000 punitive sanction was an abuse of discretion because the amount was "not

related concretely to redressing the harm" of the attorney's misconduct and was "not

supported by the facts as being necessary to deter" the attorney in the future. Id. at

584. We noted "[t]he cornerstone of imposing a monetary sanction . . . should be the

selection of an amount no greater than sufficient to deter future misconduct by the

party." Id. at 583. In this case, the $50,000 sanction does not compensate Bayer for

fees incurred as a direct result of Moll's conduct because the district court's order

directs Moll to pay $50,000 to the clerk of the court. Additionally, the record does

not show the $50,000 sanction relates concretely to costs the court directly incurred

because of Moll's actions. See, e.g., Lasar v. Ford Motor Co., 399 F.3d 1101, 1111-

12 (9th Cir. 2005) (affirming monetary sanction payable to the court for violation of

pretrial orders which was "carefully limited" "to an amount 'necessary to reimburse

. . . the Court' for the costs related to empaneling the jury"); United States v. Dowell,

257 F.3d 694, 699-700 (7th Cir. 2001) (affirming contempt fine where district court

tailored sanction to compensate the court for the actual costs resulting from attorney's

refusal to appear at trial). It is also not apparent from the record a $50,000 fine is

necessary to deter Moll from repeating the sanctioned conduct. See., e.g., MHC Inv.

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Co. v. Racom Corp., 323 F.3d 620, 628 & n.13 (8th Cir. 2003) (noting district court's

explanation that, given the large amounts of money involved, $25,000 was minimum

amount it could assess to deter law firms from sanctioned conduct). Furthermore, a

$50,000 sanction, which is payable to the clerk of the court and not concretely

tailored to compensate the court for actual costs resulting from the misconduct has

characteristics of a criminal penalty which other courts have held to require the

procedural protections of a criminal trial. See, e.g., Bradley v. Am. Household, Inc.,

378 F.3d 373, 378-79 (4th Cir. 2004) (holding $200,000 sanction and $100,000

sanction imposed pursuant to district court's inherent power and Rule 37 were

criminal in nature and thus required full protections of criminal contempt

proceedings); F.J. Hanshaw Enters. v. Emerald River Dev., Inc., 244 F.3d 1128,

1137-39 (9th Cir. 2001) (holding "when a court uses its inherent powers to impose

sanctions that are criminal in nature, it must provide the same due process protections

that would be available in a criminal contempt proceeding" and finding $500,000

sanction was criminal in nature where it was payable to the United States and could

not be avoided through future compliance); Mackler Prods., Inc. v. Cohen, 146 F.3d

126, 130 (2d Cir. 1998) (holding $10,000 punitive sanction imposed against an

individual under the court's inherent power required full protections of criminal

proceeding); Crowe v. Smith, 151 F.3d 217, 227-29 (5th Cir. 1998) (holding $75,000

sanction imposed against individual under court's inherent power was criminal fine

requiring standard criminal protections). 

In any event, the district court's failure to explain the basis for the amount of

the sanction makes it difficult for our court to evaluate whether the sanction is

appropriate. We believe the district court in imposing a monetary sanction as large

as $50,000 was required to explain the basis for the amount of the sanction. See

Vollmer v. Publishers Clearing House, 248 F.3d 698, 711 (7th Cir. 2001) (vacating

$50,000 Rule 11 sanction imposed sua sponte against law firm and remanding for

more detailed explanation for the district court's imposition of such a significant

monetary sanction). Furthermore, we are unable to determine from the record the

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extent to which the $50,000 amount was based on the district court's finding of

perjury, which we hold is clearly erroneous. Accordingly, we vacate the $50,000

sanction imposed against Moll and remand for proceedings consistent with this

opinion. 

IV. Lemon

The district court sua sponte imposed sanctions against Lemon by barring her

from the practice of law in the District of Minnesota after determining she committed

perjury and violated several rules of professional conduct. 

Lemon raises numerous arguments challenging the district court's order barring

her from practicing law in the District of Minnesota. We need only address one. We

hold the district court abused its discretion by imposing sanctions against Lemon

without first providing Lemon with notice the court was considering sanctions against

her in violation of Lemon's right to procedural due process . Accordingly, we reverse

the district court's imposition of sanctions against Lemon. 

The record reflects the first time Lemon was provided with notice that the

district court was considering imposing sanctions against her was after Moll's

attorney mailed Lemon a copy of the district court's order for sanctions. Lemon

resigned from KBM well before Bayer moved for sanctions against Moll and KBM

and well before Shelquist's deposition was taken. There is no indication in the record

Lemon was contacted and informed of Bayer's motion for sanctions against Moll and

KBM or that there was a dispute between her testimony and Shelquist's testimony.

Even if Lemon learned of the motion for sanctions, Bayer moved to impose sanctions

against Moll and his firm, not Lemon. See Clark, 223 F.3d at 864-65 (stating

knowledge that violations of bankruptcy rules are at issue is insufficient notice,

"rather, notice must be given that the court is considering imposing sanctions"). 

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Not only did the district court fail to provide Lemon with notice, which

violated Lemon's right to due process, the district court deprived Lemon of an

opportunity to respond and then cited the lack of response from Lemon as evidence

to support the court's finding Lemon committed perjury. In finding Lemon lied, the

district court relied largely on the fact that Lemon did not submit a brief to dispute

certain facts or to explain how the telephone records supported her deposition

testimony. Of course, without notice that the district court was considering imposing

sanctions against her, Lemon did not have any reason to submit such a brief.

Additionally, the district court found Lemon testified she obtained Shelquist's

permission to file the motion during a ten minute phone conversation with him and

found the telephone records did not reflect a ten minute phone call. An examination

of the transcript of Lemon's deposition shows, when asked how long the conversation

with Shelquist lasted, Lemon testified: "A few minutes. I couldn't tell you. Maybe

10. I don't know." This is a point Lemon could have brought to the district court's

attention if she had been provided with proper notice. 

V. Conclusion

The district court's order removing Moll and KBM from the PSC is affirmed.

The $50,000 sanction imposed against Moll is vacated and remanded for proceedings

consistent with this opinion. The district court's imposition of sanctions against

Lemon is reversed. 

______________________________

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