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Lawyer Sanctioned for Pursuing Baseless Case to Summary Judgment

By Andrew J. Kennedy, Litigation News Associate Editor – June 30, 2016


Vigorous advocacy crosses the line into sanctionable conduct when an attorney pursues a suit long after it becomes clear there is no evidence to support the claims. In Keister v. PPL Corporation, the sanctionable conduct incensed the court to the extent that it ordered the plaintiff’s attorney to pay the defendants’ attorney fees—at a higher rate than charged—to deter any such future conduct.

Defendants’ Motions for Summary Judgment and Attorney Fees
The plaintiff alleged he was the victim of age discrimination and he sued both his employer and his union in the U.S. District Court for the Middle District of Pennsylvania. As the litigation wore on, the plaintiff filed two amended complaints. Discovery, however, showed that the evidence did not match the allegations in the complaints. In fact, the court found some of the plaintiff’s allegations “were unrepresentative of the truth” and “wholly at odds with the plaintiff’s own deposition testimony.” The court found the case was “needlessly kept alive at several junctures that should have resulted in outright termination.”

The defendants filed motions for summary judgment and sanctions. On the same day the court granted summary judgment for the defendants, it also granted the defendants’ request for sanctions. The court then ordered the parties to file papers regarding the proper amount of the sanctions.

Court Increases Hourly Rate in Lodestar Fee and Cost Award Calculation
The fact the plaintiff’s counsel was a repeat offender appeared to drive the court’s discipline. Previously, a judge of the Eastern District of Pennsylvania criticized the plaintiff’s lawyer for poor work performed in another employment discrimination case. In yet another employment discrimination case, a judge of the Middle District of Pennsylvania also sanctioned the plaintiff’s lawyer.

The plaintiff’s lawyer had also been in disciplinary trouble before. The Disciplinary Board of the Supreme Court of Pennsylvania had publicly reprimanded him twice. Given these prior misdeeds, the court found that an award of reasonable attorney fees was the least severe sanction necessary to deter the attorney’s vexatious conduct in the future.

The court acknowledged the American Rule generally prohibits fee shifting. One of the exceptions to this rule is where, as here, the losing party litigated in bad faith, vexatiously, or for oppressive reasons. The court reasoned it should grant an award under the lodestar approach, wherein the court multiplies the number of hours reasonably expended by a reasonable hourly rate. The reasonable hourly rate is the prevailing market rate in the relevant community.

The court awarded attorney fees using the lodestar approach for the employer’s defense attorneys at the rate they charged the employer. However, the low hourly rate charged by the union’s attorneys concerned the court. The court found that lawyers who represent unions in labor and employment matters do so at a substantial discount. The court also recognized the attorneys’ superior work product. Adjusting upwardly the rates charged to correct for the “artificially low hourly rates” caused by the market distortion requiring discounts for unions, the court ordered the plaintiff’s attorney to pay nearly $116,000 in attorney fees.

Will Six-Figure Sanctions Award Chill Future Litigants?
Although the sanction is hefty, ABA Section of Litigation leaders doubt that it is likely to chill future litigants. “Nothing in Keister suggests that the same sanctions would have been imposed if the lawsuit had been dismissed after discovery revealed that the allegations were unsupported by the evidence,” says Teresa Rider Bult, Nashville, TN, cochair of the Section of Litigation’s Employment & Labor Relations Committee.

“It should not chill future cases—it should chill this attorney from filing a case just to strong-arm a settlement from the other side,” agrees Scott E. Reiser, Roseland, NJ, cochair of the Section’s Ethics & Professionalism Committee. The court suggested that by perpetuating this case for so long, counsel had been attempting to coerce the defendants into settling a meritless claim. Model Rule of Professional Conduct 3.1, Reiser observes, requires the attorney to have a basis in fact to assert a claim. The court found that any basis disappeared after discovery.

Section leaders also agree that the reasonableness of the defense attorney fees request helped their cause. “The defendants did not overbill the case. That made it easier to award fees,” suggests Reiser. “One important takeaway for defendants is to ensure that the time and manner spent defending a law suit is reasonable,” advises Bult.

To avoid such sanctions, litigators should reevaluate cases as they proceed. “If it becomes apparent that the allegations are unsupported by evidence, it is important to step back and reevaluate the case,” Bult says. “Do not push forward with the case in hopes that opposing counsel will wear out and settle,” she adds.

Keywords: Federal Rules of Civil Procedure, attorney fees, sanctions, ethics, Rules of Professional Conduct

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