Federal Court Sanctions Defense Attorney Under § 1927 for Unreasonably Vexatious Conduct During Discovery

A Minnesota federal court recently issued a stern warning to attorneys and litigants who ignore court orders and fail to make any effort to engage in meet and confers during the discovery process. In Management Registry, Inc. v. A.W. Companies, et al., the District Court for the District of Minnesota ordered a defense attorney to pay $25,000 in attorney’s fees, pursuant to 28 U.S.C. § 1927, in addition to other forms of sanctions for the attorney’s “pervasive discovery misconduct.”

This case arose from plaintiff’s claims against defendants “after a corporation acquisition went wrong.” The litigation has a tortured procedural history during which the parties fought for almost two years over various discovery disputes, a number of which involved the format of production of certain documents. The parties had participated in a telephonic conference in late 2018, during which time the court ordered defendants to produce ESI in the same manner that plaintiff was required to produce ESI. Following that conference, a number of issues arose with respect to defendants’ production, and counsel for the defendants (at that time) agreed to make a supplemental production to resolve the technical issues.

Defendants then obtained new counsel, and the new counsel proceeded to file a motion to compel without: (1) first reviewing the status of documents that had previously been produced; (2) engaging in any meet and confer attempts prior to filing the motion to compel; and (3) participating in a meet and confer even after the court instructed him to do so after the motion was filed. The court described counsel’s behavior at that time as “astonishing.” Counsel for defendants continued to obstruct discovery by failing to make a supplemental production, as agreed to by defendants’ previous counsel and despite the fact that counsel conceded at an oral argument that the previous production was flawed and “stupid.” Following a subsequent motion to compel, during which time the court found that counsel for defendants was “unprepared to discuss the inadequate production, having not reviewed it…”, the court ordered defendants to produce certain categories of documents.

Plaintiff was forced to file another motion to compel several months later, after defendants had failed to comply with the court’s previous order on plaintiff’s motion to compel. After the court granted the subsequent motion to compel and again required defendants to produce certain documents, defendants produced the documents but tagged each with a Bates prefix of “Irrelevant Non-Responsive Misc. Invoices,” despite the fact that the court explicitly ordered defendants to produce the documents. The court subsequently admonished counsel for “his shockingly unprofessional conduct and warned him about the possibility of sanctions under 28 U.S.C. § 1927.” The court also threatened to revoke his pro hac vice admission.

Based on the conduct of defendants and defense counsel, the magistrate judge invited plaintiff to file a motion for sanctions, which was granted by the court. Ultimately, the magistrate judge issued an order (1) requiring “[d]efendants to pay $20,000 in attorney’s fees incurred in making the October Motion for Sanctions,” (2) recommending that defense counsel “pay $25,000 in § 1927 sanctions,” and (3) as agreeing to give a jury instruction regarding defendants’ misconduct. Defendants filed an objection to the magistrate judge’s order. Specifically, defendants argued that § 1927 sanctions were not warranted because defense counsel “did not vexatiously multiply proceedings and did not engage in bad faith” and was not afforded due process to oppose the sanctions.

Under § 1927, a court may impose sanctions when “an attorney’s conduct, viewed objectively, manifests either intentional or reckless disregard of the attorney’s duties to the court.” Courts apply a two-part test in determining due process requirements for sanctioning an attorney under §1927: “fair notice and an opportunity to be heard before ordering the reimbursement of fees.” The court held that defense counsel was put on sufficient notice that § 1927 sanctions were likely. The court pointed to the fact that “the magistrate judge specifically warned him of the possibility for sanctions under § 1927” during a discovery conference, and to additional notice pursuant to a Report and Recommendation issued by the Magistrate Judge, to which defendants’ counsel ultimately objected.

As to whether the sanctions were appropriate, the court cited to the magistrate judge’s ten-page sanctions order, which clearly articulated defense counsel’s “astonishing” misconduct. The court noted that the misconduct fell into five categories:

1. Defense counsel’s filing of a frivolous motion to compel without first meeting and conferring with plaintiff’s counsel;
2. Defendants’ motion to compel without looking at information that was already produced and other misrepresentations;
3. Defendants’ motion to strike the plaintiff’s modified motion to compel after the court’s recommendation to do so;
4. Defense counsel’s disregard of court orders; and
5. Incorrect bates designations that the court saw as a “vexatious and indicative of bad faith.”

The court made a point to note that each of these examples of misconduct, analyzed collectively, “unnecessarily and vexatious[ly] multiplied litigation.”

This case underscores the importance of engaging in discovery in good faith. It is one thing to be a zealous advocate for your client, but counsel’s apparent gamesmanship and repeated failures to comply with discovery orders, even after being admonished by the court, was an extraordinarily risky path to pursue. Of course, litigation is an inherently adversarial process, but this case is a reminder of the importance of: (1) working collaboratively with opposing counsel to address discovery at the outset, including issues related to format of production; (2) engaging in meet and confers when disputes arise; and (3) maintaining credibility with the court.