Individual Lawyers-Not Firms- Must Pay Discovery Sanctions

• Date: 01 April 2024

Published i n Litigation New s Volume 49, Numbe r 3, Spring 2024 . © 2024 by the Ameri can Bar Asso ciation. Rep roduced with pe rmission. A ll rights rese rved. This inf ormation or any p ortion there of

may not be copied o r disseminated i n any form or by any means o r stored in an elec tronic databas e or retrieval system w ithout the expres s written consen t of the American Ba r Association .

federal appellate court has held

that individual lawyers, and

not their law rm, are jointly

and severally liable for

sanctions for misconduct

during discovery. In NPF Franchising,

LLC v. SY Dawgs, LLC, the court

reasoned that Federal Rule of Civil

Procedure 37, which “makes no men-

tion of a party’s law rm, but explicitly

lists a party and a party’s attorney,” does

not allow for sanctions against the rm

itself. The appellate court left the door

open, however, for the trial court to

use its inherent power upon remand to

impose sanctions on the rm.

Following the termination of one

of its franchisee teams in 2018, the

National Pro Fastpitch League sued

that franchisee alleging that it had

solicited league suppliers, sponsors,

and others for a separate and com-

peting league in violation of its non-

compete agreement. Thereafter, the

parties began the discovery process.

The franchisee f‌iled numerous discov-

ery motions alleging that the league’s

lawyers failed to show up to multiple

discovery conferences and deposi-

tions, provided insucient discovery

responses to written discovery, and

failed to act in a cooperative manner to

move the case through the discovery

phase. The league later voluntarily with-

drew the lawsuit.

The lower court determined, based

on a recommendation from a magis-

trate judge, that the franchisee had

been seriously prejudiced by the

league’s failure to participate in the

discovery process. The district court

determined pursuant to Rule 37 that

the four individual attorneys admit-

ted pro hac vice in the case, as well as

their law f‌irm, were jointly and sever-

ally liable with their client for sanctions

associated with their failure to actively

participate in discovery.

Individual Lawyers—Not Firms—

Must Pay Discovery Sanctions

The lawyers and the f‌irm appealed to

the U.S. Court of Appeals for the Sixth

Circuit. They argued that the franchisee

and the lower court failed to outline the

violations personally attributable to the

attorneys. The court disagreed, holding

that at multiple points during discov-

ery the attorneys were notif‌ied of the

alleged misconduct and the associated

penalties for noncompliance. The court

reasoned that it would be an impossible

task, and something not required under

the rules, to determine which of the

league’s lawyers failed to attend a depo-

sition or respond to written discovery.

The appellate court agreed with the dis-

trict court that the four individual attor-

neys were jointly and severally liable for

over $280,000.00 pursuant to Rule 37.

However, the appellate court

reversed with respect to the imposi-

tion of sanctions on the law f‌irm itself,

which it held could not be liable under

the language of Rule 37. “Rule 37 makes

no mention of a party’s law f‌irm but

explicitly lists a party and a party’s

attorney,” the court explained.

The court’s holding cuts against the

meaning and intent of Rule 37, requir-

ing revision to better protect lawyers

who may not be the decision-maker

on a case, explains Alan R. Jampol,

Los Angeles, CA, chair of the Attorney

Liability Subcommittee of the ABA

Litigation Section’s Professional

Liability Committee. “The court’s insis-

tence that Rule 37 implies that only

an individual lawyer can be liable is

unsupported by the rule or by logic,”

he argues. “It is too dicult and com-

plicated to analyze which lawyers were

directly responsible for the oending

conduct and which were not. It is prob-

able that several of the lawyers named

in the opinion were associates or lower-

level partners who were just doing what

the team leaders in charge instructed

them to do,” Jampol continues.

By Josephine M . Bahn, Litigatio n News Associate Editor

Additionally, if law f‌irms are not

responsible for sanctions payments,

“there is little incentive for law f‌irms

to ensure their lawyers are conducting

themselves appropriately and no incen-

tive to develop and maintain a f‌irm

culture that promotes professionalism

and ethical conduct,” cautions Michael

S. LeBo, Newport Beach, CA, cochair

of the Litigation Section’s Professional

Liability Committee.

Although the attorneys and not

the f‌irm were subject to sanctions

in this case, f‌irms may still be on the

hook for Rule 37 sanctions awards,

explains Tiany A. Rowe, cochair of

the Professional Liability Litigation

Committee. “Law f‌irms are responsible

for their partners, their associates, and

their sta. There is no veil to protect the

f‌irm, which is part and parcel of the LLP,

LLC, or member structure of a law f‌irm.

There is no freestanding corporate entity

and one cannot be created for purposes

of avoiding liability,” oers Rowe.

But law f‌irms can help protect

themselves from individual lawyer

misconduct with better training and

mentoring. “Firms have an ethical and

professional responsibility to train and

mentor their attorneys to act ethically

and professionally throughout all facets

of a case. Firms should utilize this opin-

ion to reignite the mentorship of their

attorneys,” suggests Naomi M. Berry,

Miami, FL, cochair of the Section’s

Corporate Counsel Committee.

RESOURCES

Federal Rul e of Civil Procedure 37: Failure

to Make Disclosu res or to Cooperate in

Discovery ; Sanctions.

Hon. Karen L . Stevenson, “Want to

Recover Attorney Fe es under Rule 37? Be

Reasonable!,” Litigation News (June 1 5,

2021).

SPRING 20 24 • VOL. 49 NO. 3

8 | A BA LITIGATION SECTION

ETHICS STRU GGLES IN THE LEGAL WOR LD