You are going to like this story from Law.com. Counsel and their client have just been sanctioned to the tune of $1.25 million for withholding evidence in discovery:
Wiley Rein and its client and co-counsel were sanctioned $1.25 million Monday by a federal judge in Manhattan for withholding and trying to destroy evidence in a case that concerns insurance coverage for the World Trade Center, which was destroyed by terrorists on Sept. 11, 2001.
Here's the ruling [PDF], hot off the presses. It's a New York case, so not in the same circuit as Utah, but if ever you wanted to know what it takes for a lawyer to get sanctioned, this is your day.
The sanctioned side had, in opposing a motion to dismiss, represented to the court that it had "plenty of evidence" to support its opposition, and hence the motion was denied. Then followed discovery, and eventually it turned out that the sanctioned side in fact knew of evidence that would prove that the motion should have been victorious. The court, which relied upon those representations, says that they were "either dishonest, or objectively unreasonable, or the product of a failure to make reasonable inquiriers."
Here's part of how the ruling reads, the part you will enjoy, in the sanctions section which begins on page 16 of the PDF:
Rule 11 of the Federal Rules of Civil Procedure governs the conduct of attorneys in connection with their representations to the court, whether by signing, filing, submitting, or later advocating a pleading, written motion, or other paper. Fed. R. Civ. P. 11(b). Rule 11 provides that an attorney shall not make any representation to the court for any improper purpose, such as to harasss or cause unnecessary delay or needless increase in the cost of litigation... that an attorney shall not assert claims, defenses, or other legal contentions unless warranted by existing law or by a non-frivolous argument for the extension, modification or reversal of existing law or the establishment of new law... that an attorney shall not make allegations and other factual contentions without evidentiary support unless, if specifically so identified, such contentions are likely to have evidentiary support after a reasonable opportunity for further investigation or discovery... and similarly that an attorney shall not deny factual contentions unless the evidence warrants such denials or unless, if specifically so identified, such denials are based on a lack of information or belief....
If after notice and an opportunity to respond, the court determines that an attorney has not complied with his obligations set forth in Rule 11(b), it may impose an appropriate sanction on the attorney, law firm, or party that violated or is responsible for the violation. Fed. R. Civ.P. 11(c)....
"The standard for triggering the award of fees under Rule 11 is objective unreasonableness, and is not based on the subjective beliefs of the person making the statement." Storey v. Cello Holdings, 347 F.3d 370, 387 (2d Cir. 2003).... "With regard to factual contentions, sanctions may not be imposed unless a particular allegation is utterly lacking in support."....
A baseless factual contention poses a greater threat to justice than a baseless legal contention. The evidentiary foundation upon which an attorney rests his assertions of fact is, for the most part, exclusively within the control of the attorney and his client. In order to function, the court must repose trust in the attorneys who come before it to make factual representations supported by evidence. The legal process contemplates and requires that when the time comes for a judge or jury to find facts, both sides will have legally sufficient evidence to present in support of those facts. In a complex case, baseless factual contentions can delay the time for presentation of evidence to the fact-finder for years, at an expense running into the millions of dollars. An attorney who abuses the trust of the court in this manner, and who causes such delay and needless expense thereby, should be penalized. In contrast, a misstatement of law is much more easily remedied, by the adverse partyís research, or the courtís own research....
The duty to disclose that arises under Rule 26 does not terminate after the first responsive answer or production, but is a continuing obligation....Discovery is run largely by attorneys, and the court and the judicial process depend upon honesty and fair dealing among attorneys. Thus the court may impose appropriate sanctions on a party that, without substantial justification, fails to disclose information required by Rule 26(a) or 26(e)(2).... A failure to disclose under Rule 37 encompasses both the destruction of evidence, or spoliation, and untimely production of documents and information required to be produced. ...
Nor has Zurich offered any evidence to the contrary, arguing not that it was right, but that in the absence of evidence, the Port Authority could not prove it was wrong. This approach shielded Zurich from judgment on Port Authority's motion for judgment on the pleadings, but it will not suffice under Rule 11. The Port Authority's motion for sanctions pursuant to Rule 11, Fed.R.Civ.P., is GRANTED.
The evidence that was not timely produced was actually erased from computers, and the paper copies, according to the ruling, was obtained by the law firm who copied it "but they left it buried in a box for nearly two years and failed to timely produce it. Counsel's failure to recognize the importance of this document, and to produce it timely, especially when alerted to its possible existence by opposing counsel, also constitutes a violation of discovery obligations." Why $1.25 million? Because the judge wrote, sanctions should be "limited to what is sufficient to deter repetition of such conduct or comparable conduct by others similarly situated." I told you you'd like this. I wonder if SCO no regrets asking the court to revisit a couple of motions, including the one about trying to include evidence it didn't timely present?
The public, the judge continues, has an interest in "fair adjudication" of litigation:
Clearly, Zurich's decision to assert and maintain its denials and defenses regarding the Port Authority's status as Additional Insured multiplied proceedings, causes substantial expense to the parties, caused substantial waste of court time, and insulted public and judicial expectations of the standard of conduct expected of attorneys....And having multiplied proceedings by asserting denials and defenses that could not be supported by the evidence, the conduct of Zurich and its counsel, in their efforts to do away with evidence, to not produce evidence, and to slow up production of evidence until its utility might be attenuated, compounded the wrongdoing that they perptrated.
You might also find a case referenced on page 23 of interest:
"Although a party's uncommunicated subjective intent cannot supply the ultimate meaning of an ambiguous contract, it is quite another thing to hold that such evidence is wholly irrelevant and inadmissible for other purposes." SR Int'l Bus.Ins.Co....
SCO's "evidence" regarding the meaning of the APA and amendments, should the judge find that the contract is ambiguous, probably won't help it, then, since most of it is precisely subjective intent, folks telling now what they thought it was supposed to mean back then.