Opinion ID: 671105
Heading Depth: 1
Heading Rank: 3

Heading: ges's cross-appeal

Text: 60 The following paragraphs of Judge Battisti's March 10, 1992, order explain his initial decision to sanction defense counsel with attorneys' fees and expenses: 20 61 34. Counsel for Defendants are just as culpable [as defendants themselves]. They too have displayed a willingness to frustrate and obstruct court orders. 62 35. Counsel continued to rely on Swiss discovery procedures to object to deposition questions, interrogatories and document requests, despite the September Order rejecting the applicability of Swiss discovery procedures to this case. Counsel's persistence in resisting discovery on the basis of Defendants' immunity under Swiss law delayed the production of documents and gave Defendants the opportunity to destroy documents. 63 36. Counsel advised their clients that the May Order was not applicable to Defendants' competition with GES so long as Defendants compete behind the mask of Biosphere, a point never refuted by counsel despite the opportunity. Since Defendants are virtually the sole officers, shareholders and employees of Biosphere, counsel's advice is highly contemptuous of this Court's rulings and perpetuates the Defendants' efforts to avoid liability through shell corporations. 64 37. Additionally, in filing Document A7077 under seal and withholding it from Plaintiff, defense counsel represented that the trade secrets issue could be decided on the basis of the contents of Document A7077. At the hearing on November 26, 1991, defense counsel attempted to minimize the significance of Document A7077 and its predecessors. The willingness of defense counsel to manipulate and fabricate facts to sustain whatever their current position might be is evidence of their bad faith. 65 38. Defense counsel's behavior even after the November 26, 1991 hearing demonstrates bad faith. Although counsel was in receipt of the alleged predecessors to Document A7077 on December 2, 1991 defense counsel did not make those documents available to Plaintiff or advise Plaintiff of the existence of such documents until 5:43 P.M. on Friday, December 6, 1991. Furthermore, defense counsel did not advise Plaintiff's counsel of the nature of such documents. 66 39. Counsel's assistance in obstructing discovery is particularly offensive given the fact that defense counsel represented Defendants and reviewed the documents whereby Biosys terminated its contract with GES in May 1990. Had defense counsel just been retained for this lawsuit their claims of good faith might have had more credence. However, because defense counsel were involved at the outset of the alleged scheme, well before the complaint was ever filed, they had every opportunity to assure timely discovery and the preservation of records. Instead, defense counsel has, at every opportunity, resorted to whatever tactic is accommodative to delay this case, including attempts to trivialize Defendants' destruction of discoverable records. 67 40. Defense counsel's principal response to questions about Defendants' failure to provide discovery has been to claim that Plaintiff has no case on the merits. Counsel should be well aware that perceived weaknesses in an opponent's case are no justification for repeated violations of court orders. 68 141 F.R.D. at 455-56. 69 Soon after Judge Battisti entered his order, defense counsel, comprised of Stephen Walters, Jason C. Blackford, and Thomas C. Buford, moved to alter or amend the judgment. Accompanying their motion were several affidavits that purported to refute several of the findings made by Judge Battisti, particularly those listed in paragraphs 35-39 of his March 10 order. For instance, an affidavit of Blackford taken June 4, 1992, was offered to demonstrate that defense counsel did not, in fact, continue to rely on the Swiss Penal Code Objection after the court's September 14 order (paragraph 35). A separate Blackford affidavit, dated June 26, 1992, also disputed the judge's finding that defense counsel had advised their clients that they could continue to compete with GES, despite the judge's express holdings indicating otherwise (paragraph 36). As to the judge's conclusion regarding defense counsel's handling of A7077 and its predecessors, additional affidavits asserted that defendants, not their counsel, were primarily responsible for the obstruction of the discovery process that occurred (paragraphs 37 and 38). 70 Despite having chastised defense counsel for their conduct, Judge Battisti nevertheless granted their motion. In doing so, however, he did not exactly heap praise on defense counsel: 71 While the factual representations and arguments of law made by or on behalf of the attorneys leave much to be desired, the Court has reconsidered its decision to hold them jointly liable for all of Plaintiff's attorneys fees. As egregious and sanctionable as their conduct was, the Court nonetheless, on reconsideration of the exercise of its discretion, has decided to vacate the part of its March 10, 1992 Order holding them jointly and severally liable for all of Plaintiff's attorney fees. Defendants, the principal culprits, remain liable for Plaintiff's damages and attorneys fees. 72 (App. 2660-61.) 73 GES now contends that Judge Battisti erred by retracting his previous decision to sanction defense counsel. Rule 37 states that, if a party fails to obey a discovery order, the court in which the action is pending may make such orders in regard to the failure as are just. Fed.R.Civ.P. 37(b)(2); see also Metrocorps, Inc. v. Eastern Massachusetts Junior Drum & Bugle Corps Ass'n, 912 F.2d 1, 2 (1st Cir.1990). Rule 37 also provides that: 74 In lieu of any order or in addition thereto, the court shall require the party failing to act or the attorney advising that party or both to pay the reasonable expenses, including attorney's fees, caused by the failure unless the court finds that the failure was substantially justified or that other circumstances make an award of expenses unjust. 75 Fed.R.Civ.P. 37(d). The notes on the rule add that: 76 Subdivision (b)(2) is amplified to provide for payment of reasonable expenses caused by the failure to obey the order.... The provision places the burden on the disobedient party to avoid expenses by showing that his failure is justified or that special circumstances make an award of expenses unjust. Allocating the burden in this way conforms to the changed provisions as to expenses in Rule 37(a), and is particularly appropriate when a court order is disobeyed. 77 Fed.R.Civ.P. 37(b)(2) advisory committee's note (citations omitted). 78 GES argues that, under Rule 37, Judge Battisti effectively had no choice but to sanction defense counsel; his ultimate failure to do so, it is urged, constitutes an abuse of discretion. As GES observes, to find support for its argument this court need look no further than Judge Battisti's order granting defense counsel's motion to amend the judgment; after all, the judge granted the requested relief while simultaneously characterizing defense counsel's conduct as egregious and sanctionable. Judge Battisti's doublespeak aside, GES asserts that there are other reasons justifying the imposition of sanctions against defense counsel. Not only did defense counsel withhold A7077 from GES until it became clear that their reliance on Swiss law was indefensible, but also they deliberately chose to present no defense to the motion for sanctions as a litigation strategy. (Cross-Appellant's Brief at 42.) Sanctioning defense counsel, according to GES, would also promote the venerable goals of enhancing the public's perception of attorneys and judges and deterring other litigants from similarly abusing the discovery process. 79 Perhaps GES's arguments would be determinative were we merely reviewing Judge Battisti's initial decision to award sanctions. GES's task is not so easy, however, where, as here, it must persuade the court that an abuse of discretion has occurred. Indeed, in view of the affidavits submitted by defense counsel, we cannot conclude that this is an occasion in which a reversal of Judge Battisti's decision not to sanction is in order. Even if we were to subscribe to GES's view that Judge Battisti rejected defense counsel's post-judgment evidence, the question would still remain whether, at the time he issued his judgment, Judge Battisti could have justifiably reached the opposite conclusion. 21 We feel that he could have, and accordingly, we reject GES's argument founded on Rule 37. 80 GES also contends that Rule 59(e) establishes a separate basis for reversing the court's decision not to sanction defense counsel. Rule 59(e) provides that [a] motion to alter or amend the judgment shall be served not later than 10 days after entry of the judgment. At issue here is not whether defense counsel filed their motion in a timely manner, but instead, whether Rule 59(e) is an appropriate vehicle through which to secure the relief sought. GES argues that defense counsel could not properly invoke the rule in this instance because they failed to offer their arguments and evidence prior to judgment. 22 Defense counsel's belief that they would have compromised their clients' position by mounting a defense of their own is, for GES, unavailing. GES cites case law and various ethical rules to support its claim that defense counsel should have responded to the accusations against them from the outset, instead of waiting until the judgment already had been rendered. 81 Although we agree in the abstract that counsel may not first encourage their clients to obstruct discovery and then use those clients to shield themselves from discovery sanctions, we do not feel that this scenario accurately depicts what occurred in this particular case. Here, defense counsel obtained GES's supplemental memorandum in support of its renewed motion for sanctions only one day before the hearing on the motion was to take place. This memorandum alleged that defendants had destroyed documents and that defense counsel had, themselves, either condoned or participated in obstructive discovery tactics. Thus, both practical--i.e., the need to respond expeditiously--and ethical-- i.e., the duty to zealously represent their clients--considerations factored into defense counsel's decision not to pursue their defense at that time. Viewed from this perspective, defense counsel did not act improperly by opting to focus, at least initially, on the arguments supporting their clients' position. We therefore reject GES's assertion that, pursuant to Rule 59(e), Judge Battisti abused his discretion by reconsidering his earlier decision to sanction defense counsel. 23 See Healey v. Chelsea Resources, Ltd., 947 F.2d 611, 623 (2d Cir.1991) (A potential for conflict is inherent in a sanctions motion that is directed against both a client and a lawyer....) (citing In re Ruben, 825 F.2d 977, 985 (6th Cir.1987), cert. denied, 485 U.S. 934 (1988)). 82 We VACATE the default judgment and REMAND for proceedings consistent with this opinion. As to plaintiff's cross-appeal, we AFFIRM the denial of sanctions.