Court Opinion

ID: 1011662
Source: CourtListenerOpinion
Date Created: 2013-07-04 20:31:38.357808+00
Date Added: 2024-06-11T09:01:00.972671
License: Public Domain

UNPUBLISHED

UNITED STATES COURT OF APPEALS
                FOR THE FOURTH CIRCUIT

In Re: JACK L. GOULD, Esq.;              
CHRISTOPHER P. SCHEWE, Esq.,
                        Appellants.

LINDA HARSHBARGER,
                            Plaintiff,           No. 00-2256

                 v.
PROFESSIONAL EVALUATION GROUP,
INCORPORATED,
               Defendant-Appellee.
                                         
            Appeal from the United States District Court
         for the Eastern District of Virginia, at Alexandria.
                  Gerald Bruce Lee, District Judge.
                          (CA-99-1513-A)

                       Argued: May 9, 2001

                      Decided: October 7, 2003

                Before WIDENER, Circuit Judge,
             HAMILTON, Senior Circuit Judge, and
   James H. MICHAEL, Jr., Senior United States District Judge
    for the Western District of Virginia, sitting by designation.

Affirmed in part, vacated in part, and remanded with instructions by
unpublished per curiam opinion.
2                            IN RE: GOULD
                              COUNSEL

ARGUED: Jack L. Gould, Fairfax, Virginia, for Appellants. David
Ray Lasso, VENABLE, BAETJER & HOWARD, L.L.P., McLean,
Virginia, for Appellee. ON BRIEF: Christopher P. Schewe, Alexan-
dria, Virginia, for Appellants. John M. Bredehoft, Linda M. Jackson,
VENABLE, BAETJER & HOWARD, L.L.P., McLean, Virginia, for
Appellee.

Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).

                              OPINION

PER CURIAM:

                                   I.

   Linda Harshbarger appeals from an order of the district court
requiring her attorneys to pay attorney’s fees and costs of Professional
Evaluation Group, Inc. pursuant to 28 U.S.C. § 1927. The district
court based this award on its finding that Harshbarger’s attorneys,
Jack Gould and Christopher Schewe, introduced prejudicial evidence
in the presence of the jury that the court had excluded by its prior evi-
dentiary rulings and that Harshbarger’s attorneys had assured the
court would not be offered into evidence. We affirm in part, vacate
in part, and remand with instructions.

                                   II.

   This appeal arises from an incident which occurred during the trial
of Mrs. Harshbarger’s suit against her employer, claiming workplace
sexual harassment for the conduct of her supervisor, William
Tadlock, a former employee. The Group is in the business of coordi-
nating doctors as independent contractors to evaluate insurance
claims, providing medical transcription services for those doctors, and
                             IN RE: GOULD                             3
reporting their medical findings to insurance providers. Before trial,
the Group brought a motion in limine to exclude certain medical
reports identified as Plaintiff’s Exhibit 12. It later withdrew the
motion but, as the district court related, the Group’s general objection
to the introduction of such evidence [referring to the medical reports]
had not been withdrawn.

   During the direct examination of plaintiff’s witness, Christine Hall,
Gould asked her to identify Plaintiff’s Exhibit 12, the medical reports
which were the subject of the Group’s abandoned motion in limine.
Linda Jackson, counsel for the Group, objected to the question on the
ground that the medical reports were irrelevant. The district court held
a sidebar conference on Mrs. Jackson’s objection. At the sidebar con-
ference, Mrs. Jackson asked for a proffer of the evidence Gould
sought to introduce through the reports and Hall’s testimony about the
reports. Gould stated that:

    The proffer, in general terms, Your Honor, is to show, shall
    we say, less than above-board practices by high up people
    in the company, which I think affects the credibility of the
    principals [of the Group] and Mr. Tadlock. . . .
    [O]ccasionally, routinely, [medical] reports would be
    changed, either by Mr. Puleio [a principal of the Group] or
    by Mr. Tadlock, without the doctor’s approval. And the doc-
    tor’s name would be signed by Tadlock, or at his direction,
    by this lady, this witness. And that’s what the testimony has
    to do with.

The court later inquired into the relevance of the proffered evidence.

    Court:      What does all of this have to do with sexual
                harassment?

    Schewe:     Nothing directly. It has to do with credibility.

    Court:      Of whom, the corporation?

    Gould:      Yes.

    Court:      Generally.
4                            IN RE: GOULD
    Gould:      Well, of the three directors, of two of the three
                directors, Tadlock and Puleio.

   Mrs. Jackson indicated that the Group would withdraw its objec-
tion to the medical reports if two conditions were satisfied. First, the
Group sought to use the deposition testimony of Ronald Puleio, a
principal of the Group, to explain why the alterations to the medical
reports were not fraudulent. Second, the Group planned to offer evi-
dence that the witness, Christine Hall, had stolen the medical reports
from the Group and had provided them to other female employees
who used them as leverage in negotiations for settlement of their sex-
ual harassment claims against the Group.

   The court again questioned the probative value of the medical
reports and also considered whether the conditions the Group
imposed upon its stipulation to the admissibility of the reports could
be satisfied.

    Court:       Let me say this . . . I don’t see how this tends
                 to prove or disprove sexual harassment. I don’t
                 know if it has anything to do with the termina-
                 tion, why she was terminated.

    Gould:       It does not.

    Court:       And to generally impugn the integrity of a com-
                 pany generally, I don’t see where it helps the
                 jury decide whether or not there as a hostile
                 work environment to which Ms. Hall or the
                 plaintiff was subjected. So, if you all agree you
                 want it in, I’ll let it in, but I don’t see how it’s
                 relevant.

    Jackson:     Again, I don’t have a problem, as long as we’re
                 allowed to bring in those two points.

    Court:       I understand what you said. To me, it creates a
                 whole separate issue that does not help to define
                 the trial, to me, but if you all want it in, I’ll —
                       IN RE: GOULD                              5
Gould:     I certainly object to reading in deposition testi-
           mony of a principal of the company [Puleio]
           who has been down here since Tadlock was
           fired, many times, and who could come down
           for this trial.

                           ***

Gould:     [W]e won’t use [the medical reports] in our
           case-in-chief. I may only use them, if appropri-
           ate, in rebuttal, and it may not be appropriate.

Court:     Okay

Jackson:   I don’t think that gives me the kind of confirma-
           tion that I —

Court:     Well, I really have questions about whether or
           not [Ronald Puleio], being in New York, is
           unavailable for purposes of civil trial, under the
           Federal Rules of Civil Procedure [such that his
           deposition testimony would be admissible]. If
           you can show me a case or rule that says that,
           I’ll certainly consider it.

Jackson:   In that case . . . I would like the Court to issue
           a ruling, if it could, now, on the relevance of the
           documents. In that case, I would maintain my
           objection, the relevance, undue prejudice, this is
           not related to issues in the case —

Gould:     We withdraw them [the medical reports].

                           ***

Jackson:   It would distract the jury from the main issues
           in the case.

                           ***
6                           IN RE: GOULD
                So, I’m renewing our motion in limine.

    Court:      At this moment, as I understand it, the plaintiff
                is not going to offer this testimony. So I’m, not
                going to make an academic ruling.

   The district court concluded that "the allegedly altered medical
reports would not to be presented during the trial in any light, most
notably not for use in attacking the credibility of the company or its
principals."

   Again, in his redirect examination of Christine Hall, Gould asked
questions which appeared to elicit testimony regarding the allegedly
falsified medical reports, prompting the court to interrupt the ques-
tioning.

    Gould:      You were accused of wrongdoing by the com-
                pany, correct?

    Witness:    I was accused of checks. I never knew what
                checks. Yes.

    Gould:      Did you have any conversations with Mr.
                Sheehy or Mr. Puleio, or both of them, about
                any improprieties in the office after Tadlock
                was dismissed?

    Witness:    What do you mean?

                                ***

    Court:      You [Gould] may be asking to go to something
                else, but the question is so open-ended it seems
                to open up the issues of those reports and fabri-
                cations, which I don’t really want to hold a trial
                on. What are you going into?

    Gould:      [T]hey have attacked her credibility, or honesty,
                and they used the word "embezzlement" . . .
                when she was cross-examined . . . .
                            IN RE: GOULD                             7
                What I want to do is to show that she came for-
                ward — after Mr. Tadlock was gone, she no
                longer had a fear of him, and she brought to
                their attention certain dishonest practices that
                she thought should be corrected. But I think I
                have to be able to rehabilitate her. And it has to
                do - I know it has to do with not only the report
                that we talked about earlier at the bench, but she
                will testify that she told them routinely, rou-
                tinely Tadlock used to change records. And she
                told them that, and they said to do things differ-
                ent.

    Jackson:    Same objection, Your Honor. Those medical
                reports were stolen to extort a settlement from
                the company. They had nothing to do with —
                they had nothing to do with the sexual harass-
                ment issues. . . . If these medical records come
                up, they are not related to the substantive
                charges here. These medical records were taken
                from the office to extort a settlement.

                                ***

    Schewe:     We’re not putting records in; just going to ask
                her.

    Court:      No, I’m not going to have a mini trial on this.
                [Defendant’s] [o]bjection sustained.

   The district court concluded based on this sidebar conference that
it was objectively evident that the court had ruled that the disputed
medical reports were inadmissible.

   Later, during the Group’s direct examination of Tadlock, Mrs.
Jackson asked about vulgar jokes that had been told in the office and,
in particular, vulgar jokes told to Group employees by doctors work-
ing as independent contractors for the Group. Tadlock responded:
8                            IN RE: GOULD
    I think you and the jury need to understand that Professional
    Evaluation Group has an immaculate reputation as a leading
    medical group in this area, in the Washington, D.C. area,
    and is looked upon extremely favorably and as an extremely
    professional organization.

  Later, during Gould’s cross-examination of Tadlock, Gould asked
Tadlock about this assessment of the Group’s reputation.

    Gould:           And . . . you told us yesterday, and I want
                     to make sure that I’m correct, you told us
                     that the company had an immaculate profes-
                     sional reputation; is that right?

    Mr. Tadlock:     In my opinion it did, yes.

    Gould:           Is it not correct, Mr. Tadlock, that you rou-
                     tinely altered medical —

   Mrs. Jackson’s immediate objection on behalf of the Group inter-
rupted Gould’s question and the court held a bench conference on her
objection. During that conference, Jackson moved for a mistrial,
which the court subsequently granted. In defense of his conduct,
Gould argued that Tadlock’s testimony that the Group had an "im-
maculate reputation" opened the door to his impeachment as a princi-
pal of the Group who allegedly participated in falsifying the medical
reports. Gould argued to the district court that he understood the
court’s earlier rulings about the medical reports to extend only to their
admissibility in the plaintiff’s case-in-chief and not to their admissi-
bility for purposes of impeachment. Gould also emphasized that he
did not seek to introduce the medical reports themselves as extrinsic
evidence of the allegedly fraudulent alterations, but only to ask
Tadlock whether he had altered them.

   The district court concluded that Tadlock’s statements about the
nature of the company’s reputation did not open the door to impeach-
ment using the medical reports. The district court further noted that
Gould failed to approach the bench and request reconsideration of the
prior evidentiary ruling before asking the question. The district court
                             IN RE: GOULD                               9
concluded that a curative instruction would not remedy the prejudice
caused by the question and granted the Group’s motion for a mistrial.

   The Group also moved for attorney’s fees and costs. The district
court found that "plaintiff’s counsel recklessly flouted the Court’s rul-
ing and multiplied the proceedings by placing inadmissible evidence
before the jury after being directed by the court not to do so." The dis-
trict court further noted that plaintiff’s counsel had withdrawn "the
same evidence from use in any capacity in the trial during sidebar
conferences . . . ." Finally, the district court noted that the conduct of
plaintiff’s counsel multiplied the proceedings, resulting in excess
costs to the Group. Based on these findings, the district court exer-
cised its authority pursuant to 28 U.S.C. § 1927 to grant the Group’s
motion and ordered both Gould and Schewe to "pay, in equal propor-
tions, the amount of $17,677.86 to Defendant."1

   Subsequent to the mistrial, the district court ordered the parties to
mediate before another district judge. As a result of those negotia-
tions, Mrs. Harshbarger reached a settlement of her claims with the
Group and entered a voluntary dismissal of her suit. Accordingly, nei-
ther party appeals from the district court’s evidentiary rulings or its
judgment granting a mistrial. The only issue presented by this appeal
is the propriety of the district court’s order granting attorney’s fees
and costs to the Group against attorneys Gould and Schewe pursuant
to 28 U.S.C. § 1927.

                                   III.

   We first address Schewe’s argument that the district court’s award
of attorney’s fees against him was without proper notice, in violation
of his due process rights. Jackson’s oral motion for attorney’s fees in
open court requested that attorney’s fees be assessed either against
Mrs. Harshbarger "or her counsel," without specifying whether the
Group sought sanctions against the plaintiff, or Gould, or Schewe, or
both, of plaintiff’s counsel. The district court’s scheduling instruction
from the bench, however, stated that the court would give Mrs. Jack-
son until June 2nd to file her itemization of fees and costs, and "give
  1
   No question is made as to the amount of $17,677.86.
10                           IN RE: GOULD
Mr. Gould until the 9th [of June] to submit his opposition [to the
Group’s motion for attorney’s fees]." (emphasis added) The Group
clearly understood this to mean that only sanctions against Gould
would be considered by the court, as demonstrated by the written
motion for attorney’s fees the Group later submitted to the court
which sought sanctions only against Gould. Although Schewe
attended the sanctions hearing and testified, the memoranda filed by
Mrs. Harshbarger, through counsel, in opposition to the motion for
sanctions only presented arguments against the imposition of sanc-
tions against Gould. (Memoranda in district court record)

   "Like other sanctions, attorney’s fees should not be assessed lightly
or without fair notice . . . ." Roadway Express, Inc. v. Piper, 447 U.S.
752, 767 (1980). See also Kunstler v. Britt, 914 F.2d 505, 522 (4th
Cir. 1990) (reversing Rule 11 sanctions against plaintiff’s attorneys
because they were not given adequate opportunity to respond to
defendant’s previously submitted fee statements as required by due
process). Because Schewe had no notice that the district court was
considering sanctions against him and no opportunity to present the
district court with his argument against the sanctions, we vacate the
imposition of attorney’s fees and costs against Schewe.

                                  IV.

   We now consider Gould’s argument that his conduct did not war-
rant sanctions. The district court sanctioned Gould under the authority
to award statutory attorney’s fees conferred by 28 U.S.C. § 1927
which provides:

     Any attorney or other person admitted to conduct cases in
     any court of the United States . . . who so multiplies the pro-
     ceedings in any case unreasonably and vexatiously may be
     required by the Court to satisfy personally the excess costs,
     expenses, and attorney’s fees reasonably incurred because of
     such conduct.

28 U.S.C.A. § 1927 (1994).

   "Section 1927 focuses on the conduct of the litigation and not on
its merits." DeBauche v. Trani, 191 F.3d 499, 511 (4th Cir. 1999).
                             IN RE: GOULD                             11
Merely negligent conduct will not support an imposition of sanctions
under 28 U.S.C. § 1927. See United States v. Wallace, 964 F.2d 1214,
1219 (D.C. Cir. 1992). Instead, § 1927 requires "a finding of coun-
sel’s bad faith as a precondition to the imposition of fees." See
Chaudhry v. Gallerizzo, 174 F.3d 394, 411 n.14 (4th Cir. 1999) (inter-
nal quotations omitted). Thus, § 1927 authorizes sanctions only when
counsel’s bad faith conduct multiplies the proceedings, resulting in
excess costs for the opposing party.

   A district court’s decision to impose sanctions is entitled to sub-
stantial deference because the district court "is in the best position to
review the factual circumstances and render an informed judgment as
[it] is intimately involved with the case, the litigants, and the attor-
neys on a daily basis." Blue v. United States Dep’t of the Army, 914
F.2d 525, 538 (4th Cir. 1990) (internal quotations omitted) (alteration
in original). We review the district court’s decision to impose sanc-
tions under § 1927 for an abuse of discretion. Chaudhry v. Gallerizzo,
174 F.3d 394, 410 (4th Cir. 1999); see Miltier v. Beorn, 896 F.2d 848,
853 (4th Cir. 1990). A district court’s finding of bad faith, however,
is a factual finding subject to review only for clear error. See Wallace,
964 F.2d at 1217.

   Gould argues on appeal that the district court abused its discretion
by imposing sanctions against him on the grounds that his question
to Tadlock about the medical reports was a vexatious, unreasonable,
and bad-faith violation of the court’s evidentiary rulings. Gould
asserts that the district court’s rulings did not clearly prohibit him
from asking questions about the medical reports for the purpose of
impeachment. Gould further argues that he did not, as the district
court concluded, represent to the court that he would ask no questions
related to the medical reports. We find the argument unpersuasive.

   The district court concluded that in view of the statements made by
the court and attorneys in the sidebar conferences at trial, it was
objectively unequivocal that the court had ruled that the medical
reports and related testimony were inadmissible. We agree. At the
second sidebar conference conducted on the issue of the medical
reports, after the district court interrupted a question which appeared
to elicit testimony about the medical reports, Mrs. Jackson renewed
12                           IN RE: GOULD
her objection to the medical reports. At that time the following collo-
quy took place:

     MR. SCHEWE:         We’re not putting records in, just going
                         to ask her.

     COURT:              No, I’m not going to have a mini-trial on
                         this. [Defendant’s] [o]bjection sustained.

  Thus, we agree with the district court that "it was objectively
unequivocal that the allegedly altered medical reports were not to be
used as evidence in the trial or for any other purpose . . . ."

   Gould further argues that, even if the district court ruled that testi-
mony about the medical reports was not admissible on the merits, the
court had not ruled on the permissibility of questions about the reports
in cross-examination for the purpose of impeachment. We find this
argument unconvincing for the same reason.

   Additionally, the Federal Rules of Evidence state that specific
instances of conduct may be inquired into on cross-examination "in
the discretion of the district court, if probative of truthfulness or
untruthfulness" of the witness or of another witness. Fed. R. Evid.
608(b) (emphasis added). The district court’s discretion to allow
impeachment of a witness with specific instances of conduct is guided
by Rule 403. Rule 403 empowers a trial court to exclude evidence if
the probative value of that evidence is outweighed by the unfair preju-
dice it creates or by its tendency to cause confusion of the issues or
to otherwise mislead the jury. Fed. R. Evid. 403. The Rules Advisory
Committee’s note to Rule 608(b) clarifies that "the overriding protec-
tion of Rule 403" acts as a safeguard against abuse of Rule 608. See
Fed. R. Evid. 608(b) advisory committee’s note; 28 Wright & Gold,
Fed. Practice and Procedure: Evid. § 6118 (1993).

   As stated, Gould argued that the medical reports were admissible
because they were probative of Tadlock’s credibility, even though
they were not relevant to the merits of the trial. The basis of Mrs.
Jackson’s original objection to the medical reports on behalf of the
Group, which she subsequently renewed in opposition to Gould’s
                              IN RE: GOULD                              13
redirect question eliciting testimony about the reports, was that the
reports were irrelevant and prejudicial and that they would distract the
jury from the main issues in the case. In response, the district court
noted in the first sidebar conference that the reports "created a whole
separate issue that [did] not help to define the trial." After the second
sidebar conference, the district court clearly sustained Mrs. Jackson’s
objection that the medical reports and related questions did not sur-
vive Rule 403 scrutiny. We conclude that a reasonable attorney would
have been put on notice that questions concerning the medical reports
for purposes of impeachment were prohibited because the district
court had ruled that the prejudice and confusion of the issues that
would result from testimony about the reports would outweigh their
probative value for the issue of Tadlock’s credibility. The district
court did not abuse its discretion in declining to admit the evidence
for the purpose of impeachment.

   Gould also argues that the district court erred by concluding that
he had represented to the court that he would not elicit testimony
about the reports and by considering that representation, which the
court concluded was misleading, as an additional basis for sanctions.
Gould argues that he expressly reserved the possibility that he would
raise the issue of the medical reports later in the trial when he stated
to the court that "we won’t use [the medical reports] in our case-in-
chief. I may only use them, if appropriate, in rebuttal, and it may not
be appropriate." The sidebar did not end there, however. After
Gould’s representation to the court that he would only use the medical
reports in rebuttal, Mrs. Jackson, concerned that she would not be
able to use the deposition testimony of Puleio to explain the alleged
alterations to the medical reports, asked for a clear ruling from the
court on her objection to the "relevance and undue prejudice" caused
by the reports. At that point, Gould interrupted Mrs. Jackson’s expla-
nation for the basis of her objection, stating that "[w]e withdraw them
[the medical reports]." On the basis of this statement, the court
declined to rule on Mrs. Jackson’s objection because such a ruling
would be academic in light of the court’s understanding that Gould
was "not going to offer this testimony." In summary, Gould reserved
the right to raise the medical reports later in trial, to which possibility
Jackson objected and sought an immediate ruling on the admissibility
of the reports, prompting Gould to revise his statement and uncondi-
tionally withdraw the medical reports. We agree with the district court
14                           IN RE: GOULD
that Gould represented to the court that he would not pursue questions
about the medical reports.

   We also find no abuse of discretion in the district court’s finding
that Gould acted vexatiously and unreasonably. For reasons already
discussed, we agree with the district court’s conclusion that Gould
represented to the court that he would not offer evidence about the
medical reports. Gould tried to ask a question about the medical
reports once without consulting the court and forced the court to inter-
rupt his questioning and hold a sidebar conference which culminated
in a clear ruling that testimony regarding the reports was inadmissi-
ble. Schewe testified at a hearing on the motion for sanctions that he
and Gould consulted the night before the final day of trial and devel-
oped a plan to admit testimony about the medical reports as impeach-
ment of Tadlock. He also testified that he and Gould had arranged for
witnesses to be present to testify about the alleged alterations to the
medical reports, should Tadlock deny the alterations on cross-
examination.2 We find no error in the district court’s conclusion that
the conduct of an experienced attorney who asks a forbidden question
on these facts is in bad faith. Accordingly, we conclude that the dis-
trict court did not abuse its discretion by awarding sanctions against
Gould for unreasonable and vexatious conduct.

   Finally, Gould argues that his conduct did not result in multiplica-
tion of the proceedings or excess costs as required by 28 U.S.C.
§ 1927. The district court concluded that Gould’s disregard for the
rulings of the court converted the last day of trial into a hearing on
the motion for mistrial and awarded attorney’s fees and costs to the
Group reflecting the cost of the third day of trial. Gould speculates
that completion of the trial would have taken as long as the hearings
on the mistrial and that no additional proceedings were required. The
effect of the mistrial, however, was to end the trial prematurely, leav-
ing both Mrs. Harshbarger and the Group without resolution of the
underlying claim. Gould’s conjecture that the trial on the merits, if not
cut short by the mistrial ruling, would have lasted as long as the hear-
ing on the mistrial, ignores the fundamental distinction between con-
  2
   Schewe testified that he did not believe Rule 608 prohibited extrinsic
evidence such as testimony offered to prove prior conduct denied by a
witness on cross-examination.
                             IN RE: GOULD                            15
clusion of a trial on the merits and a mistrial. The attorney’s costs
incurred by the Group for the mistrial proceedings were in no way
related to the merits of its defense and were not expenses that the
Group would have incurred absent Gould’s conduct. We agree with
the district court that Gould multiplied the proceedings resulting in
excess costs for PEG within the meaning of § 1927. Gould also chal-
lenges the district court’s calculation of the excess costs, expenses
and attorney’s fees incurred because of the mistrial. We review the
district court’s order for abuse of discretion, however, and find no
such abuse here.

                                  V.

    In summary, the district court’s order is vacated to the extent that
it awards attorney’s fees and costs against Schewe and affirmed to the
extent that it awards attorney’s fees and costs against Gould. Because
the district court’s order instructed Schewe and Gould to pay the sum
of $17,677.86 in equal proportions, we eliminate half of that award
to reflect Schewe’s contribution, and remand to the district court to
award $8,838.93 in attorney’s fees, costs and expenses against Gould,
consistent with this opinion.

  Accordingly, the judgment of the district court is

                         AFFIRMED IN PART, VACATED IN PART,
                          AND REMANDED WITH INSTRUCTIONS.