UC-BERKELEY SCHOOL OF LAW – LEGAL PROFESSIONTENTH WEEK – CIVIL LITIGATION

NOVEMBER 18, 2014

Ex. 10.1 Mr. Hairpiece All Read; A-C discuss

Ex. 10.2 Fisons All Read; F-J ready to discuss

Ex. 10.6 Candor All Read; K-P ready to discuss

Ex. 10.7 A Liar for a Client

All Read; Q-Z ready to discuss

10.1. Example: Mr. Hairpiece Gags a Maggot

Joe Jamail is a legendary Texas trial lawyer. He won a $1 billion judgment in the Pennzoil-Texaco case—which he had on a 33% contingent fee. Consider the following two excerpts from depositions he attended. Does Jamail play legitimate hardball or is he over the line? How well taken are his complaints?

Excerpt 1. With respect to this excerpt, the Delaware Supreme Court blasted Jamail. Would you have?

A. [Mr. Liedtke] I vaguely recall [Mr. Oresman’s letter] . . . . I think I did read it, probably.

Q. (By Mr. Johnston [Delaware counsel for QVC]) Okay. Do you have any idea why Mr. Oresman was calling that material to your attention?

Mr. Jamail: Don’t answer that. How would he know what was going on in Mr. Oresman’s mind? Don’t answer it. Go on to your next question.

Mr. Johnston: No, Joe—

Mr. Jamail: He’s not going to answer that. Certify it. I’m going to shut it down if you don’t go to your next question.

Mr. Johnston: No. Joe, Joe—

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Mr. Jamail: Don’t “Joe” me, asshole. You can ask some questions, but get off of that. I’m tired of you. You could gag a maggot off a meat wagon. Now, we’ve helped you in every way we can.

Mr. Johnston: Let’s just take it easy.

Mr. Jamail: No, we’re not going to take it easy. Get done with this.

Mr. Johnston: We will go on to the next question.

Mr. Jamail: Do it now.

Mr. Johnston: We will go on to the next question. We’re not trying to excite anyone.

Mr. Jamail: Come on. Quit talking. Ask the question. Nobody wants to socialize with you.

Mr. Johnston: I’m not trying to socialize. We’ll go on to another question. We’re continuing the deposition.

Mr. Jamail: Well, go on and shut up.

Mr. Johnston: Are you finished?

Mr. Jamail: Yeah, you—

Mr. Johnston: Are you finished?

Mr. Jamail: I may be and you may be. Now, you want to sit here and talk to me, fine. This deposition is going to be over with. You don’t know what you’re doing. Obviously someone wrote out a long outline of stuff for you to ask. You have no concept of what you’re doing. Now, I’ve tolerated you for three hours. If you’ve got another question, get on with it. This is going to stop one hour from now, period. Go.

Mr. Johnston: Are you finished?

Mr. Thomas: Come on, Mr. Johnston, move it.

Mr. Johnston: I don’t need this kind of abuse.

Mr. Thomas: Then just ask the next question.

Q. (By Mr. Johnston) All right. To try to move forward, Mr. Liedtke, . . . . I’ll show you what’s been marked as Liedtke 14 and it is a covering letter dated October 29 from Steven Cohen of Wachtell, Lipton, Rosen & Katz including QVC’s Amendment Number 1 to its Schedule 14D-1, and my question—

A. No.

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Q. —to you, sir, is whether you’ve seen that?

A. No. Look, I don’t know what your intent in asking all these questions is, but, my God, I am not going to play boy lawyer.

Q. Mr. Liedtke—

A. Okay. Go ahead and ask your question.

Q. —I’m trying to move forward in this deposition that we are entitled to take. I’m trying to streamline it.

Mr. Jamail: Come on with your next question. Don’t even talk with this witness.

Mr. Johnston: I’m trying to move forward with it.

Mr. Jamail: You understand me? Don’t talk to this witness except by question. Did you hear me?

Mr. Johnston: I heard you fine.

Mr. Jamail: You fee makers think you can come here and sit in somebody’s office, get your meter running, get your full day’s fee by asking stupid questions. Let’s go with it.

Excerpt 2, from a transcript of a deposition taken in St. Louis. Joe Jamail represented plaintiffs in a suit claiming that the Monsanto Company had exposed residents of Houston to dangerous chemicals. Edward Carstarphen was the attorney for the defense. Monsanto settled the case in July for $39 million. The transcript appeared in the October issue of American Lawyer, a monthly published in New York City.

Jamail: You don’t run this deposition, you understand?

Carstarphen: Neither do you, Joe.

Jamail: You watch and see. You watch and see who does, big boy. And don’t be telling other lawyers to shut up. That isn’t your goddamned job, fat boy.

Carstarphen: Well, that’s not your job, Mr. Hairpiece.

Witness: As I said before, you have an incipient—

Jamail: What do you want to do about it, asshole?

Carstarphen: You’re not going to bully this guy.

Jamail: Oh, you big tub of shit, sit down.

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Carstarphen: I don’t care how many of you come up against me.

Jamail: Oh, you big fat tub of shit, sit down. Sit down, you fat tub of shit.

Watch these clips:

Texas Style Deposition: h tt p :/ / ww w . y o u t u b e . c o m / w at c h ? v = Z I x m r v bM eKc

How To Handle a Tough Deposition Question: h tt p :/ / ww w . y o u t u b e . c o m / w at c h ? v = R j t n R m y 0 H - U

If you were a Magistrate Judge, Discovery Commissioner, or Judge in any these cases, and you were alerted to that conduct, what would you do? What rules could you use? Or is this simply some of the inevitable “blowing off steam” that necessarily accompanies high-stakes litigation?

As for the expression “you could gag a maggot off a meat wagon,” what the hell does that mean? Didn’t he mean either “you could gag a maggot,” or “you could lure a maggot off a meat wagon”? Isn’t counsel mixing his metaphors? Isn’t that in itself grounds for sanctions?

10.2. Example: The Fisons Case

In this example, ask yourself about the line between truth and deception. When, if ever, do literal answers become deliberately misleading? Do what extent is a litigator entitled to blame the other litigator for asking sloppy questions, or for not following up? Please read Model Rule 3.3 (Candor toward the Tribunal) and the Comments.

Washington State Physicians Insurance Exchange & Association v. Fisons Corporation

SUPREME COURT OF WASHINGTON122 Wn.2d 299; 858 P.2d 1054; 1993 Wash. LEXIS 241

September 16, 1993, DecidedSeptember 16, 1993, Filed

OPINION: [*306] [**1058]

Facts of Case

We are asked in this case to decide whether a physician has a cause of action against a drug company for personal and professional injuries which he suffered when his patient had an adverse reaction to a drug he had prescribed. The

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physician claimed the drug [***15] company failed to warn him of the risks associated with the drug. If such action is legally [*307] cognizable, we are then asked to determine whether damages awarded by the jury were excessive and whether attorneys' fees were properly awarded by the trial court. We are also asked to rule that the trial court erred in denying sanctions against the drug company for certain abuses in the discovery process.

The physician's action began as part of a malpractice and product liability suit brought on behalf of a child who was the physician's patient. On January 18, 1986, 2-year-old Jennifer Pollock suffered seizures which resulted in severe and permanent brain damage. It was determined that the seizures were caused by an excessive amount of theophylline in her system. The Pollocks sued Dr. James Klicpera (Jennifer's pediatrician), who had prescribed the drug, as well as Fisons Corporation (the drug manufacturer and hereafter drug company) which produced Somophyllin Oral Liquid, the theophylline-based medication prescribed for Jennifer.

Dr. Klicpera cross-claimed against the drug company both for contribution and for damages and attorneys' fees under the Consumer Protection Act [***16] as well as for damages for emotional distress.

In January 1989, after nearly 3 years of discovery, Dr. Klicpera, his partner and the Everett Clinic settled with the Pollocks. The settlement agreement essentially provided that the doctors' insurer, Washington State Physicians Insurance Exchange & Association (WSPIE), would loan $ 500,000 to the Pollocks which would be contributed in the event of a settlement between the Pollocks and the drug company. The Pollocks were guaranteed a minimum total recovery of $ 1 million, and in the event of trial Dr. Klicpera agreed to remain as a party and to pay a maximum of $ 1 million. The settlement between the Pollocks and Dr. Klicpera was determined by the trial court to be reasonable pursuant to RCW 4.22.060.

More than 1 year after this settlement, an attorney for the Pollocks provided Dr. Klicpera's attorney a copy of a letter received from an anonymous source. The letter, dated [*308] June 30, 1981, indicated that the drug company was aware in 1981 of "life-threatening theophylline toxicity "in children who received the drug while suffering from viral infections. The letter was sent from the drug company to only a small number of what [***17] the company considered influential physicians. The letter stated that physicians needed to understand that theophylline can be a "capricious drug".

The Pollocks and Dr. Klicpera contended that their discovery requests should have produced the June 1981 letter and they moved for sanctions against the drug company. The request for sanctions was initially heard by a special discovery master, who denied sanctions, but who required the [**1059] drug company to

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deliver all documents requested which related to theophylline. Documents that the drug company and its counsel had immediately available were to be produced by the day following the hearing before the special master. The remainder of the documents were to be produced within 2 weeks. The trial court subsequently denied Dr. Klicpera's request to reverse the discovery master's denial of sanctions and at the close of trial denied a renewed motion for sanctions.

The day after the hearing on sanctions, the drug company delivered approximately 10,000 documents to Dr. Klicpera's and Pollocks' attorneys. Among the documents provided was a July 10, 1985 memorandum from Cedric Grigg, director of medical communications for the drug company, to [***18] Bruce Simpson, vice president of sales and marketing for the company.

This 1985 memorandum referred to a dramatic increase in reports of serious toxicity to theophylline in early 1985 and also referred to the current recommended dosage as a significant "mistake" or "poor clinical judgment". The memo alluded to the "sinister aspect" that the physician who was the "pope" of theophylline dosage recommendation was a consultant to the pharmaceutical company that was the leading manufacturer of the drug and that this consultant was "heavily into [that company's] stocks". The memo also noted that the toxicity reports were not reported in the journal [*309] read by those who most often prescribed the drug and concluded that those physicians may not be aware of the "alarming increase in adverse reactions such as seizures, permanent brain damage and death". The memo concluded that the "epidemic of theophylline toxicity provides strong justification for our corporate decision to cease promotional activities with our theophylline line of products." The record at trial showed that the drug company continued to promote and sell theophylline after the date of this memo.

On April 27, 1990, [***19] shortly after the 1985 memo was revealed, the drug company settled with the Pollocks for $ 6.9 million. The trial court determined that settlement to be reasonable, dismissed the Pollocks' claims, extinguished Dr. Klicpera's contribution/indemnity claims against Fisons pursuant to RCW 4.22.060 and reserved determination of what claims remained for trial. The trial court then ordered the lawsuit recaptioned, essentially as Dr. James Klicpera, plaintiff v. Fisons Corporation, defendant.

After a month-long jury trial, the court instructed the jury on Dr. Klicpera's claims which were based on the Consumer Protection Act, RCW 19.86, the product liability act, RCW 7.72, and common law fraud. The jury was also instructed on WSPIE's fraud claim seeking to recover the $ 500,000 paid in settlement to the Pollocks. The trial court ruled that WSPIE could not maintain a Consumer Protection Act cause of action against the drug company.

On a special verdict form, the jury concluded that Dr. Klicpera was entitled to recover against the drug company under his Consumer Protection Act claim and

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under his product liability claim, but not under the fraud claim. The jury awarded Dr. Klicpera $ 150,000 [***20] for loss of professional consultations, $ 1,085,000 for injury to professional reputation, and $ 2,137,500 for physical and mental pain and suffering. The jury further found Dr. Klicpera to be 3.3 percent contributorily negligent. The jury found that WSPIE was not entitled to recover under its fraud claim against the drug company the $ 500,000 settlement paid to the Pollocks.

[*310] The trial court denied the drug company's motion for judgment n.o.v. and for a new trial. On a motion for reduction of the jury award, the trial court reduced the amount awarded for loss of professional consultations from $ 150,000 to $ 2,250 but refused to reduce the awards for loss of reputation and for pain and suffering. The trial court also denied WSPIE's motion for judgment n.o.v. or a new trial based on the dismissal of WSPIE's Consumer Protection Act claim.

The trial court awarded $ 449,568.18 to Dr. Klicpera as attorneys' fees under the Consumer Protection Act finding that 50 percent of the attorneys' time in the lawsuit [**1060] was attributable to the Consumer Protection Act cause of action. The court denied Dr. Klicpera's request for further attorneys' fees based upon a theory of equitable [***21] indemnification.

Pursuant to the injunctive relief section of the Consumer Protection Act, the court ordered the drug company to send the June 30, 1981 letter regarding the dangers of theophylline poisoning to the Washington State Medical Association.

The drug company sought direct review by this court and we accepted review. Dr. Klicpera and his insurer (WSPIE) cross-appeal from the trial court's refusal to award discovery sanctions for the alleged discovery violations. WSPIE also appeals the trial court's dismissal of its Consumer Protection Act claim against the drug company.

The parties' 63 assignments of error raise 9 principal issues.* * * * *

Issue Nine.

Conclusion. The trial court applied an erroneous legal standard when ruling on the motion for sanctions for discovery abuse and erred when it refused to sanction the drug company and/or its attorneys for violation of CR 26(g).

The doctor and his insurer, [***74] Washington State Physicians Insurance & Exchange Association (hereinafter referred to [*337] collectively as "the doctor"), asked the trial court to sanction the drug company and its lawyers for discovery abuse. This request was based on the fact that at least two documents crucial to the doctor's defense as well as to the injured child's case were not discovered until March of 1990 -- more than 1 year after the doctor had settled with the child,

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nearly 4 years after the complaint was filed and approximately 1 month before the scheduled trial date. The two documents, dubbed the "smoking guns" by the doctor, show that the drug company knew about, and in fact had warned selected physicians about, the dangers of theophylline toxicity in children with viral infections at least as early as June 1981, 4 years before Jennifer Pollock was injured.

Although interrogatories and requests for production should have led to the discovery of the "smoking gun" documents, their existence was not revealed to the doctor until one of them was anonymously delivered to his attorneys.

A motion for sanctions based on discovery abuse was heard first by a special discovery master on March 28, 1990, before the [***75] child's case was settled. The special master ruled that he could not find "on the basis of this record that there was an intentional withholding of this document." (Italics ours.) Clerk's Papers, at 9693. The special master then turned to what he determined was the more relevant issue, additional and full discovery of other theophylline-related documents in the drug company's possession. The special master ordered the drug company's attorneys to turn over any immediately available documents concerning theophylline to attorneys for the child and the doctor by noon the next day and to review the remainder of the drug company's files and produce other relevant documents at the end of 2 weeks. The next day, the second "smoking gun", a 1985 internal memorandum describing theophylline toxicity in children, was delivered along with about 10,000 other documents.

Although other documents were relevant to the case, the two smoking gun [**1075] documents were the most important. The first, a letter, dated June 30, 1981, discussed an article that [*338] contained a study confirming reports "of life threatening theophylline toxicity when pediatric asthmatics . . . contract viral infections."

[***76] Exhibit 3. The second, an interoffice memorandum, dated July 10, 1985, talks of an "epidemic" of theophylline toxicity and of "a dramatic increase in reports of serious toxicity to theophylline." Exhibit 7.

Both documents contradicted the position taken by the drug company in the litigation, namely, that it did not know that theophylline-based medications were potentially dangerous when given to children with viral infections.

After the 1985 memorandum was discovered and still prior to trial, the special master's denial of the sanctions motion was appealed and affirmed, without specific findings, by a judge of the Superior Court (Judge Knight), who essentially deferred to the special master.

The motion for sanctions was renewed and heard by another judge of the Superior

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Court, the trial judge (Judge French), at the close of trial. The trial court declined to impose sanctions, deferring to the earlier decisions of the special master and Judge Knight. The doctor then appealed the denial of his sanctions motion directly to this court.

* * * * *

The concept that a spirit of cooperation and forthrightness during the discovery process is necessary for the proper functioning of modern trials is reflected in decisions of our Court of Appeals. In Gammon v. Clark Equip. Co., 38 Wash. App. 274, 686 P.2d 1102 (1984), aff'd, 104 Wash. 2d 613, 707 P.2d 685 (1985), the Court of Appeals held that a new trial should have been ordered because of discovery abuse by the defendant. Then Court of Appeals Judge Barbara Durham wrote for the court:

The Supreme Court has noted that the aim of the liberal federal discovery rules is to "make a trial less a game of blindman's buff and more a fair contest with the basic issues and facts disclosed to the fullest practicable extent." The availability of liberal discovery means that civil trials [***86] no longer need be carried on in the dark. The way is now clear . . . for the parties to obtain the fullest possible knowledge of the issues and facts before trial.

This system obviously cannot succeed without the full cooperation of the parties. Accordingly, the drafters wisely included a provision authorizing the trial court to impose sanctions for unjustified or unexplained resistance to discovery.

(Citations omitted.) Gammon, 38 Wash. App. at 280.

* * * * *

The trial court erred in concluding as it did. As stated above, intent need not be shown before sanctions are mandated. A motion to compel compliance with the rules is not a prerequisite to a sanctions motion. Conduct is to be measured against the spirit and purpose [***91] of the rules, not against the standard of practice of the local bar. Furthermore, the burden placed on the doctor by the trial court in this regard was greater than that mandated under the rule.

* * * * *

Examp le One:

For example, the drug company's response to the following interrogatory propounded by the doctor demonstrates the resistance to comply with discovery. Although we do not

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condone this kind of answer, this answer, alone, would not warrant sanctions as it does raise some legitimate objections. The doctor's simple request, and the answer thereto, are as follows:

INTERROGATORY NO. 2: Can Theophylline cause brain damage in humans?

ANSWER: See general objections [set forth in two pages] attached hereto as Exhibit A and incorporated herein by reference. This interrogatory calls for an expert opinion beyond the scope of Civil Rule 26(b)(4), and is, in any event, premature. Furthermore, this interrogatory appears to call for an opinion based on medical knowledge after January 18, 1986, whereas the relevant time frame is on or before January 18, 1986. In addition, this interrogatory is not reasonably calculated to lead to discovery of admissible evidence under CR 26(b)(1). This interrogatory is also vague, ambiguous and overbroad. For example, the term "cause" is vague and ambiguous in that it does not specify whether it includes indirect, as opposed to direct, causes.

The term "brain damage" is similarly vague and ambiguous and is overbroad as to time and scope. For example, it is unclear whether the term "brain" includes the entire central nervous system; it is further unclear whether the term "brain damage" includes temporary as well as permanent changes.

Examp le No. 2:

[*347] The specific instances alleged to be sanctionable in this case involve misleading or "non" responses to a number of requests which the doctor claims should have produced the smoking gun documents themselves or a way to discover the information they contained. The two smoking gun documents reportedly were contained in files which related to Intal, a cromolyn sodium product, which was manufactured by Fisons and which competed with Somophyllin. The manager of medical communications had a thorough collection of articles, materials and other documents relating to the dangers of theophylline and used the information from those materials to market Intal, as an alternative to Somophyllin Oral Liquid. The drug company avoided production of these theophylline-related materials, and avoided identifying [***95] the manager of medical communications as a person with information about the dangers of theophylline, by giving evasive or misleading responses to interrogatories and requests for production.

The following is but a sampling of the discovery between the parties.

The first discovery documents directed to the drug company were prepared by the child's attorney and were dated September 26, 1986. The interrogatories contained a short definition section stating in part:

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The term "the product" as used hereinafter in these interrogatories shall mean the product which is claimed to have caused injury or damage to JENNIFER MARIE POLLOCK as alleged in pleadings filed on her behalf, namely, to wit: "Somophyllin" oral liquid.

E xamp le N o. 3 :

These first interrogatories requested information about "the product" which is manufactured by the drug company, Fisons, as well as about theophylline, a drug entity which is the primary ingredient of the drug company's product Somophyllin Oral Liquid. The interrogatory regarding theophylline was answered by the drug company, as were the interrogatories about "the product".

[*348] Somophyllin and its primary ingredient, theophylline, [***96] were not distinguished in discussions between the attorneys or in drug company literature. The printed package insert for Somophyllin Oral Liquid (exhibit 93) and marketing brochures refer to the names Somophyllin and theophylline interchangeably. One marketing brochure states:

TheophyllineTheophyllineTheophyllineTheophyllineTheophyllineTheophyllineTheophyllineTheophyllineTheophyllineThe one name to remember . . . SomophyllinExhibit 111.

The drug company's responses to discovery requests contained the following general objection:

Requests Regarding Fisons Products Other Than Somophyllin Oral Liquid. Fisons objects to all discovery requests regarding Fisons products other than Somophyllin Oral Liquid as overly broad, unduly burdensome, harassing, and not reasonably calculated to lead to the discovery of admissible evidence.

Examp le No. 4:

Theophylline is not a Fisons "product". Furthermore, because theophylline is the

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primary ingredient in Somophyllin Oral Liquid, any document focusing on theophylline would, necessarily, be one regarding Somophyllin Oral Liquid.

[**1081] In November 1986 the doctor served his first [***97] requests for production on the drug company. Four requests were made. Three asked for documents concerning Somophyllin. Request 3 stated:

3. Produce genuine copies of any letters sent by your company to physicians concerning theophylline toxicity in children.

The drug company's response was:

Such letters, if any, regarding Somophyllin Oral Liquid will be produced at a reasonable time and place convenient to Fisons and its counsel of record.

Co nclu sio n

The drug company's responses and answers to discovery requests are misleading. The answers state that all information regarding Somophyllin Oral Liquid which had been requested would be provided. They further imply that all documents which are relevant to the plaintiffs' claims were being produced. They do not specifically object to the production of documents that discuss the dangers of theophylline, but which are not within [***104] the Somophyllin Oral Liquid files. They state that there is no relevant information within the cromolyn sodium product files.

It appears clear that no conceivable discovery request could have been made by the doctor that would have uncovered the relevant documents, given the above and other responses of the drug company. The objections did not specify that certain documents were not being produced. Instead the general objections were followed by a promise to produce requested documents. These responses did not comply with either the spirit or letter of the discovery rules and thus were signed in violation of the certification requirement.

The drug company does not claim that its inquiry into the records did not uncover the smoking gun documents. Instead, the drug company attempts to justify its responses by arguing as follows: (1) The plaintiffs themselves limited the scope of discovery to documents contained in Somophyllin Oral Liquid files. (2) The smoking gun documents were not intended to relate to Somophyllin Oral Liquid, but rather were intended to promote another product of the drug company. [*353] (3) The drug company produced all of the documents it agreed to produce [***105] or was ordered to produce. (4) The drug company's failure to produce the smoking gun documents resulted from the plaintiffs' failure to specifically ask for those documents or from their failure to move to compel production of those documents. (5) Discovery is an adversarial process and good lawyering required the responses made in this case.

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If the discovery rules are to be effective, then the drug company's arguments must be rejected.

First, neither the child nor the doctor limited the scope of discovery in this case. Attorneys for the child, the doctor and the drug company repeatedly referred to both theophylline and Somophyllin Oral Liquid. There was no clear indication from the drug company that it was limiting all discovery regarding Somophyllin Oral Liquid to material from that product's file. Nor was there any indication from the drug company that it had information about theophylline, which is not a Fisons "product", or information regarding Somophyllin Oral Liquid that it was not producing because the information was in another product's file. The doctor was justified in relying on the statements made by the drug company's attorneys that all relevant [***106] documents had been produced and he cannot be determined to have impliedly, albeit unknowingly, acquiesced in limiting the scope of discoverable information.

Second, the drug company argues that the smoking gun documents and other documents relating to theophylline were not documents regarding Somophyllin Oral Liquid because they were intended to market another product. No matter what its initial purpose, and regardless of where it had been filed, under the facts of this case, a document that warned of the serious dangers of the primary ingredient of Somophyllin Oral Liquid is a document regarding Somophyllin Oral Liquid.

Third, the discovery rules do not require the drug company to produce only what it agreed to produce or what it was ordered to produce. The rules are clear that a party [*354] must fully answer all interrogatories and all requests for production, unless a [**1084] specific and clear objection is made. n88 If the drug company did not agree with the scope of production or did not want to respond, then it was required to move for a protective order. In this case, the documents requested were relevant. The drug company did not have the option of determining [***107] what it would produce or answer, once discovery requests were made. n89

Fourth, the drug company further attempts to justify its failure to produce the smoking guns by saying that the requests were not specific enough. Having read the record herein, we cannot [***108] perceive of any request that could have been made to this drug company that would have produced the smoking gun documents. Unless the doctor had been somehow specifically able to request the June 30, 1981, "dear doctor" letter, it is unlikely that the letter would have been discovered. Indeed the drug company claims the letter was not an official "dear doctor" letter and therefore was not required to be produced.

Fifth, the drug company's attorneys claim they were just doing their job, that is, they were vigorously representing their client. The conflict here is between the attorney's duty to represent the client's interest and the attorney's duty as an officer

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of the court to use, but not abuse the judicial process.

Vigorous advocacy is not contingent on lawyers being free to pursue litigation tactics that they cannot justify as legitimate. The lawyer's duty to place his client's interests ahead of all others presupposes that the lawyer will live with the rules that [*355] govern the system. Unlike the polemicist haranguing the public from his soapbox in the park, the lawyer enjoys the privilege of a professional license that entitles him to entry into the justice [***109] system to represent his client, and in doing so, to pursue his profession and earn his living. He is subject to the correlative obligation to comply with the rules and to conduct himself in a manner consistent with the proper functioning of that system.

10.6. Example: Candor

You’re a 4th-year litigation associate at a 150-lawyer firm. A corporate partner, Miriam McKenna, asks you to represent her major client, Rittenhouse Securities, a securities brokerage that employees 50 sales people. One of Rittenhouse’s sales people, Bill Lightfoot, was terminated and has filed a binding arbitration claim against Rittenhouse, seeking sales commissions of about $300,000.

Virtually everyone in the securities industry is licensed by the National Association of Securities Dealers (NASD), and as part of that licensing process everyone agrees to use the NASD’s arbitration process to resolve securities- related disputes with other licensees. As is typical of that process, you fly to a hotel in the salesperson’s hometown and participate in a 3-4- hour hearing in a conference room, with three retired securities professionals presiding over the hearing. The award is rendered about fifteen minutes after the conclusion of the hearing, and there is no appeal process.

At the hearing itself, you appear with Joe Bloomquist, the Executive VP of Rittenhouse. His version of why Lightfoot left Rittenhouse is quite different than Lightfoot’s. In fact, their respective versions of the entire story don’t match particularly well.

After taking evidence, the panel briefly confers and then enters a judgment for the defense. You’re in high spirits as you and Bloomquist leave the conference room, walk into the hotel lobby, and wait for an elevator. As you step out of the elevator on your floor, Bloomquist says, “You did great. Since it’s too late to grab a flight back home tonight, why don’t we grab a celebration dinner at that a nice restaurant across the street? Over dinner, I can tell you what really happened between me and

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Lightfoot—what neither of us wanted to tell the panel.” The elevator doors shut and Bloomquist is gone before you can make a reply. As you enter your room, you check your Blackberry. McKenna has sent you an urgent email asking how the hearing went.

10.7. Example: A Liar for a Client (Kelley)"If I had a dollar for every time a client asked me to lie,

I wouldn't be sitting here. I would be in the south of France, living it up."-Walter Stratton, partner in Gibson,

Dunn & Crutcher, testifying in Breezevale, Ltd. v. Dickinson, et al.

John Millian, a senior associate with Gibson, Dunn & Crutcher, was in London for the firm's client, Breezevale, Ltd. Breezevale, an agent for volume tire sales in the Middle East, had sued Bridgestone-Firestone, Inc. for breach of contract. The suit, pending in federal court in Cleveland, Ohio, was based on Firestone's alleged breach of Breezevale's exclusive agency for the sale of tires to Iraq during the late 1980s, and for backing out of a project to build a tire manufacturing plant in Nigeria. On Sunday evening, October 13, 1991, Millian was in the suburban London home of Rebecca Paul, a Breezevale employee, preparing her for a deposition to begin in the morning. Paul was facing days of questioning by a lawyer from Jones, Day, Reavis & Pogue, a Clevelandbased firm with a hardball reputation, and she was noticeably apprehensive. "Can't I just be sick or something?" she asked. Millian replied that they couldn't lie about her health and the two proceeded to review a stack of sales documents that Paul had been responsible for generating. Late in the evening, Millian recalled that Paul "started hinting that there were forged documents." He asked: "Is there something you're trying to tell me?" Paul began to pour out a story of how the documents had been forged. She described the impact of her disclosure: "I was in tears and I called my husband. John Millian was, I have to say, poleaxed. He was just white, shell-shocked. He said to me: "This isn't bloody Nigeria."

Millian took a cab back to his Central London hotel, arriving around midnight. Appreciating the gravity of the situation, he telephoned the firm's New York office, attempting to reach Wesley Howell, a senior partner and lead lawyer in the Breezevale case; he tried to call Walter Stratton, a Gibson, Dunn partner also working on the case who was staying at another London hotel. Unable to reach either, Millian went to bed. He succeeded in reaching Stratton around 7 the next morning and summarized Paul's forgery story. Stratton instructed him to bring her to the Gibson, Dunn office before proceeding to the deposition. The three met there

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about 8:30 a.m. and Millian and Stratton debriefed Paul about her allegations. During the debriefing, Charles Awit, a senior Breezevale official, telephoned the office and spoke with Stratton who said nothing about Paul's unfolding story.

Paul's deposition was scheduled for 10 a.m. at the London office of Jones, Day. Stratton, the senior lawyer present, had to make a decision: whether to go forward with Paul's deposition; whether to request Jones, Day's consent to a postponement, without giving a reason; or, if consent were refused, whether to postpone the deposition unilaterally. Stratton and Millian had not investigated Paul's allegations. Nor had they informed Breezevale, whose chairman, Habib Habib, was in its London office and who was deeply implicated in Paul's allegations. Stratton decided to go forward with Paul's deposition, hoping (but not realistically expecting) that the Jones, Day lawyer would not inquire into the genuineness of the documents. Stratton's heat-of-battle decision would be second-guessed, and not only by opposing counsel in the malpractice suit it would precipitate. Wesley Howell, the senior Gibson, Dunn partner on the case, told the partner who had brought Breezevale in as a client that he would have postponed Paul's deposition. As it happened, however, Howell had been unreachable—fishing for steelheads in British Columbia—when Paul dropped her bombshell.

The subject of forgery didn't come up during the Monday morning session of the deposition. During the lunch break, Stratton and Millian went to the Breezevale office and informed Habib of Paul's allegations, without indicating whether they believed her—an issue which (it seemed to Stratton) Habib did not wish to address. Millian already had doubts about the Breezevale Chairman's integrity. Habib had told him that Breezevale had bribed officials in Nigeria to get business there. Paul had told Millian about a "pep talk" Habib had given her the preceding Friday about her upcoming deposition, telling her that "he was confident in me, that I could outsmart them." Subsequent testimony of Habib and Stratton about that lunchtime discussion would conflict. According to Habib, he had instructed Stratton to postpone the deposition and undertake an immediate investigation. As Stratton recalled, Habib had given no such instructions; rather, they had discussed the implications of seeking a postponement and that Stratton had advised against, calling it a "very bad idea."

Early in the afternoon session, Jones, Day's lawyer focused her questions on offer letters that included price quotations for various types of tires and which purportedly had been sent to Iraq during 1987. Copies of the letters and other documents had been turned over to Jones, Day in response to discovery requests.

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Displaying them to Paul, the Jones, Day lawyer asked: "Do you have any reason to believe that these were created at a time after they are dated?" Ms. Paul replied: "I think so." With that, the cat was out of the bag. In response to further questions that afternoon and the next day, Paul testified in detail about how she and senior officials of Breezevale had gone about creating offer letters and supporting documentation to bolster their case against Firestone.

The forged documents had been created in February 1991 after Paul reviewed the files and informed Habib that Breezevale hadn't made offers to Iraq in 1987, a critical time period in the pending suit against Firestone. Habib had responded: "Well, you had better make sure we did." Whereupon, Paul and Joseph Abou Jouade, a senioi Breezevale official in charge of the Beirut office then working in London, worked together at the same desk creating back-dated offer letters. They consulted a 1987 calendar to make sure their fictitious dates corresponded to business days four years earlier. When Abou Jouade had to return to Beirut before the fake letters were completed, he signed a single sheet of paper eight times so that Paul could cut and paste the signatures to letters she would complete and photocopy later.

Paul testified that she and Abou Jouade had also created back-dated "spread sheets"—file documentation of manufacturer prices, transportation costs, and Breezevale's overhead and mark-ups—-as back-up for the fake offering documents. Breezevale had not owned computers in 1987; at that time, Paul had prepared spread sheets by hand. By 1991, the company had acquired computers that Paul used to prepare drafts of the fake spread sheets. The computer-generated drafts were then edited by Abou Jouade and copied by hand to make them appear genuine. Abou Jouade was concerned that their spread-sheet paper looked too new. Paul recalled: "There was a bit of a joke about [Abou Jouade] scrunching it up and sitting on it to make it look old."

On Wednesday morning, Paul arrived at the Jones, Day office, bringing from her home a green, plastic bag full of documents corroborating her allegations, including computer-generated drafts of spread sheets with Abou Jouade's handwritten edits and the sheet of paper with his eight signatures. These documents were made a part of the deposition record, and Paul's deposition was terminated without further questioning.

Within days, Jones, Day began to prepare a motion for sanctions, alleging fraud and misconduct and seeking costs, attorneys' fees and dismissal of Breezevale's suit against Firestone. Before the forgery came to light, Firestone had

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made a settlement offer of $3.5 million, plus a lucrative new sales agreement, which Breezevale had rejected. Under threat of the sanctions motion, Firestone made a take-it-or-leave settlement offer of $100,000. Gibson, Dunn advised Breezevale that the judge in Cleveland would probably impose sanctions, possibly including outright dismissal of their case, and that if they went to trial, they might later be indicted for perjury. Habib thought he might be able to cut a better deal with a Firestone official he knew, but that door turned out to be closed. On Gibson, Dunn's recommendation, Breezevale reluctantly accepted the settlement.

In October 1994, Breezevale sued Gibson, Dunn & Crutcher in the Superior Court of the District of Columbia, charging its former lawyers with "negligent, reckless, and intentional malpractice and breach of fiduciary and ethical obligations" focusing on their handling of the Paul deposition. Gibson, Dunn undertook further investigation of Paul's allegations and, in October 1995, filed a counterclaim alleging that Breezevale, by relying on fake documents, was litigating in bad faith. The case was assigned to Judge Steffen Graae who bifurcated the two claims, ruling that Breezevale's malpractice claim would be tried first to a jury, after which Gibson, Dunn's equitable counterclaim would be decided by the court.

The jury phase was tried in the fall of 1996. Breezevale's theory was that Gibson, Dunn should have postponed Paul's deposition, that had they done so, her allegations of forgery could have been disproved, and that Breezevale could have prevailed at trial and recovered some $20 million from Firestone. Under that theory, Stratton's decision to allow Paul's deposition to go forward, rather than first conducting an investigation, became the linchpin of the malpractice case.

Walter Stratton, a veteran trial lawyer, had been an associate and partner with the New York firm of Donovan, Leisure, Newton & Irvine for twenty-eight years. For seven years preceding the Paul deposition in 1991, he had been a partner with Gibson, Dunn. He testified at length concerning his handling of the Paul deposition. When Millian first related Paul's allegations to him by phone on Monday morning, he had been "very shocked"; they represented an "earth-shaking event," even "an atomic explosion." After listening to Paul's story at the Gibson, Dunn office, Stratton had no firm opinion whether she was telling the truth, but she appeared to be sincere and her story seemed plausible. On the other hand, he had reservations at that point because "she was not a person who was totally averse to manufacturing a story." In any event, Stratton realized that they "had a witness who was going to present a huge problem."

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Stratton hadn't considered canceling the deposition a realistic option. Although the time and place had been set by agreement of counsel, not by court order, he thought that Gibson, Dunn had been legally obligated to present Paul for questioning that morning in London. Legality aside, Stratton believed that, from a tactical standpoint, "no matter what we did, the story was coming out," and a suspension request "might look like we were trying to cover up something." He also thought the damage would be greater if Gibson, Dunn were to suspend the deposition unilaterally, causing Jones, Day to seek an enforcement order from the presiding judge in Cleveland—in the home state of Firestone and the home city of Jones, Day—who might impose severe sanctions for forgery.

In the days following, Stratton and Millian investigated Paul's claims in an effort to prove them false (a perspective dictated by Breezevale's client status). Habib and Abou Jouade called Paul a liar, charging, without proof, that she had been bribed by Firestone to sabotage Breezevale's case. They disavowed any involvement in forgery and maintained that the offer letters and spread sheets were genuine, but other evidence cast doubt on their denials. In interviews with Stratton, Abou Jouade was asked about the sheet of signatures he had left with Paul. Abou Jouade thought he might have "made it in order to illustrate to her the difference" between English and Arabic script, an explanation Stratton found "absurd." Stratton repeatedly suggested that "a questioned documents expert might be able to examine the paper and ink on the allegedly-backdated documents to see whether they have been created in 1987 or 1991," but Habib "threw cold water" on that idea. Habib's negative attitude toward expert testing had been, in Stratton's mind, "one of the principal bases upon which I concluded that it would not be possible to prove Rebecca's story false, because it was true."

Breezevale called Sherman Cohn, a Professor at Georgetown University Law Center, for expert testimony in support of its position that Gibson, Dunn had committed malpractice in allowing the Paul deposition to go forward, and on related issues. Cohn had impressive qualifications. He had been a teacher of professional responsibility and civil procedure at Georgetown for some twenty-five years, and had written extensively on those subjects. He had testified as an expert in numerous legal malpractice cases, for both plaintiffs and defendants. Cohn is a member of the American Law Institute and a consultant to its project-in progress, a Restatement of the Law Governing Lawyers.

Cohn began by stressing the concept of the lawyer as fiduciary, with attendant duties of utmost care and loyalty to the client. He cited metaphors for the

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relationship suggested by Harvard Professor Charles Fried ("a best friend"), and by Georgetown Professor Robert Drinan ("parent and child"). According to Cohn's view of the record, Stratton had crossed a Rubicon and violated the standard of care when he decided to go forward with Paul's deposition without investigating her allegations or consulting Breezevale. "Going forward under those circumstances colored and controlled the rest of the case," and was tantamount to “selling their own client down the river.”

Among the jurisdictions adopting the Model Rules of Professional Conduct, the effect of the rules in determining standards of care in legal malpractice cases ranges from none to near conclusive. Cohn's opinions rested substantially on the Model Rules, as they have been modified and adopted in the District of Columbia, and where the courts have recognized them as evidence of standards of care. Cohn testified that Stratton had violated Rule 1.4(a), "Communications," in his initial meeting with Paul on Monday morning. The rule provides: "A lawyer shall keep a client reasonably informed about the status of a matter and promptly comply with reasonable requests for information." When Breezevale's Awit had phoned the Gibson, Dunn office while Paul was telling her story, Stratton "had a duty [under Rule 1.4] to [tell him] that something very significant had happened" and that he needed to talk to Awit and Habib as soon as possible. Cohn went on to fault Stratton at virtually every step of his involvement in Paul's deposition.

Cohn testified that when Stratton had heard Paul's story, he should have realized that her deposition had to be postponed. Postponement wasn't a judgment call; under the circumstances, it was the only reasonable thing to do. Specifically, Stratton should have called the Jones, Day lawyer and told her: "I must postpone this deposition. I ask your indulgence and permission to do so. But if you do not [agree], I still must do so." If pressed for a reason, he could say: "I cannot tell you at this time." He could offer to pay Jones, Day's costs associated with the postponement. In failing to postpone, Cohn opined that Stratton had violated Rule 1.1 which requires lawyers to provide "competent representation" to their clients. He further opined that he had violated Rule 1.3, which requires "zealous and diligent" representation of the client. Implicit in Cohn's argument was a cost-benefit analysis: unilateral postponement of the deposition, while representing a minor breach of legal obligation by Gibson, Dunn, had been necessary in order to avoid serious, and possibly irreparable, damage to their client's interest. In Cohn's view, Gibson, Dunn "in effect abandoned their client that Monday morning. ... They were more concerned about themselves."

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Had they postponed the deposition, Cohn continued, Stratton and Millian should have immediately begun a thorough investigation of Paul's allegations, including "calling paper and ink experts in London"—as Stratton had suggested, but not insisted on—and "checking the files in Iraq as to whether [the offer letters] had actually arrived in 1987." (Abou Jouade testified that he had drafted the offer letters in Beirut and had them hand-carried to Baghdad.) Cohn contended that had they been able to discredit Paul's allegations, the Paul deposition could have gone forward later with greatly reduced injury to Breezevale's interests. In Cohn's opinion, their investigation had been incomplete and amounted to belated damage control, more for the benefit of Gibson, Dunn than for Breezevale.

Stratton and Millian testified that their client at the deposition had been Breezevale, not Paul, that they were not representing her personally, but only in a limited sense as Breezevale's employee, and that they had explained that relationship to Paul. Stratton had taken the view that the interests of Paul and Breezevale had not become "adverse" in the conflict-ofinterest sense until Tuesday evening when Habib had decided to fire Paul and was considering suing her to recover records. On Wednesday morning Stratton had advised Paul not to return to the Breezevale office, and to consult her own solicitor. Paul never did return to the Breezevale office.

Cohn acknowledged that a lawyer representing a corporation may ordinarily appear in the deposition of an employee, including one who gives testimony damaging to the employer, without becoming involved in a conflict of interest—for example, the Safeway employee who admits seeing, but not picking up, a banana peel. But "where you have an employee about to testify that the corporation may have committed a crime, their interests have diverged." At that point, an employee in Paul's position, who may also be guilty of a crime, has an interest in being believed that conflicts directly with her employer's interest in her being disbelieved. Stratton and Millian had represented Breezevale and Paul in just those circumstances. Cohn expressed the view that, if Paul were considered a "client," Gibson, Dunn had violated Rule 1.7, the rule generally prohibiting representation of clients with conflicting interests. On the other hand, if the situation were analyzed under Rule 1.13 governing representation of entities, the practical result was the same. Official commentary to that rule states that: "The lawyer should advise any [employee] whose interest the lawyer finds adverse to the organization of the conflict of interest, that the lawyer cannot represent the [employee], and that [the employee] may wish to obtain independent representation."

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Close questions arose whether Gibson, Dunn was either obligated, or permitted, to reveal the forgeries to Jones, Day, either before the deposition or before any settlement could be reached. If Paul's story were true, the Gibson, Dunn lawyers had unknowingly made misstatements of fact when they provided Jones, Day with forged documents and false interrogatory answers based on those documents during discovery. The District of Columbia's modification of Rule 1.6, "Confidentiality of Information," provides that "a lawyer shall not knowingly" reveal a "secret" the disclosure of which would be "embarrassing" or "detrimental" to the client—standards plainly applicable to the Breezevale documents and statements of its officers, if, indeed, they were false. Cohn stressed the importance of knowing that documents are false before any duty arises to tell the other side, pointing to the Rule definition of knowing as "actual knowledge" of the matter in question, implying the person's mental state and its accurate perception of reality. (The Rule goes on the state, however, that "knowledge may be inferred from circumstances.") Putting himself in Stratton's position before the deposition and in the days immediately following, Cohn stated: "I don't know whether those documents are false or whether the interrogatories are untruthful." Lacking that knowledge, loyalty to the client precludes the lawyer from disclosing damaging information.

The rules concerning false evidence and access to evidence are ambiguous as applied to this situation. Rule 3.3, "Candor Towards the Tribunal," prohibits offering false evidence, but, again, only if the lawyer knows it is false. Moreover, Cohn pointed out that under case law the rule only applies when false evidence is offered in court, not when it is turned over to the opposing lawyer in discovery. Even assuming the rule applies in discovery, as it can be read to do, when the lawyer discovers that he has turned over forged documents, his duty is to "call upon the client to rectify the fraud," not to rectify it himself.

Rule 3.4, "Fairness to Opposing Counsel," governs access to evidence. It does apply to both pretrial and trial interactions between opposing lawyers. Among other things, the rule prohibits "obstructing access to" or "concealing" evidence, language which arguably requires a lawyer who learns he has been a conduit of fake documents and false answers to tell the other side. One can argue, however, that keeping quiet about discovered forgery does not amount to obstruction or concealment.

Going into the Paul deposition, Stratton had been aware of these considerations and the need for some delicate balancing. "I hoped that the story

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would not come out. I had no reason to believe that Jones, Day knew about It. We still have an adversary system. It was up to them to dig it out, not up to me to give it to them. I wasn't going to make it any easier, but I wasn't going to mess them up either." He took the position, however, that "Jones, Day had been misled by fraud and we couldn't settle as long as the record is in that shape." For Stratton, then, disclosure became a matter of timing.

On cross-examination, Gibson, Dunn's lawyer probed Cohn's position With a hypothetical case, asking him to assume that:

While food shopping, your client slips on a banana peel, injuring her neck. She complains of pain and inability to do household chores. You sue Safeway for damages. Your client's orthopedist sends you x-rays showing serious damage to vertebrae in her neck which you turn over to Safeway's lawyer. Safeway offers $10,000 in settlement. While that offer is on the table, your client's orthopedist phones to tell you that they sent you the wrong x-ray by mistake, and that your client's x-ray shows no damage. You call your client, who insists you have her x-ray.

Cohn was then asked whether he could ethically phone Safeway's lawyer and say: "Hey, I'll take the $10,000" without telling them about a possible mix-up with the x-ray. Cohn replied: "Yes, sir. If you have evidence from one witness and others are denying it, it's not your job to be judge and jury and decide who is telling the truth. At that point, your case IS weaker and you can certainly go ahead and settle it before the other side finds out about it. You're not God. You're a lawyer, an advocate, and you owe loyalty to your client."

Gibson, Dunn's lawyer asked Cohn what the hypothetical woman's lawyer should do if she has a change of heart and tells the lawyer: "I can't live with myself any longer. I've got to tell the truth. It's not my x ray." Cohn replied that the lawyer now has actual knowledge: not merely conflicting evidence, about the x-ray, and that he cannot ethically accept the $10,000 settlement, at least not at that point. Assuming that Rule 3.3 applies in discovery, the lawyer's obligation is to tell the client to take back the x-ray; the lawyer may not take it back on his own. In any event, under Rule 26(c) of the federal discovery rules, it is the "party," not the lawyer, who is required to amend discovery responses when she learns they are incorrect. If the client refuses to do so, the lawyer may then withdraw from the case, leaving the client free to look for a less scrupulous lawyer. Withdrawal by the lawyer is optional, however, a "may," not a "shall," under Rule 1. 16(b). The lawyer may continue to represent such a client and go on to settle or try the case, knowing

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that the other side is ignorant of the fraud. Cohn appeared to reach that conclusion with some reluctance, observing that: "That’s what the rules seem to say," and adding: "That's called the adversary system."

Gibson, Dunn called Thomas Morgan, a professor at George Washington University Law School, as an expert witness in support of its position that the law firm had met applicable standards of care in the Firestone litigation. Like Cohn, Morgan had impressive qualifications. He had taught law for twenty-five years, specializing in professional responsibility and antitrust law. Morgan is co-author of a widely used textbook on professional responsibility and is one of three reporters for the American Law Institute's proposed Restatement of the Law Governing Lawyers. Like Cohn, Morgan had testified as an expert witness in numerous legal malpractice cases. . .

Morgan and Cohn tended to agree on general principles, while disagreeing at virtually every point in their application to the facts. On the overarching issue, Morgan testified that Stratton's decision to go forward with Paul's deposition, without first investigating her story and without consulting Breezevale, had complied with the same rules of ethics Cohn had cited for the opposite conclusion. As he viewed the situation, Gibson, Dunn had been legally obligated to produce Paul that Monday morning.

Morgan also defended Stratton's decision on tactical grounds. After hearing her story, Stratton had believed that Paul might well be telling the truth, that she would have to testify sometime, and that Gibson, Dunn should avoid the appearance of a cover-up. Moreover, if Paul were lying, it would be prudent to pin her down by getting her story on the record. (Morgan did not explain why it was preferable to pin her down in the presence of Jones, Day.) Furthermore, Morgan thought that “putting it over would have made matters worse, whichever way you conclude about the truthfulness of her accusations. If the accusations were true, [postponement] would have established a history of delay and, while not literally lying, of being less than candid with respect to the evidence. And if what she is saying is a lie, you haven't lost the ability to demonstrate that” —implying that Paul's fabrications could have been explained away. Wesley Howell, the senior Gibson, Dunn lawyer on the case, disagreed with his own expert on Morgan's last point. Howell believed that Paul's allegations had destroyed the settlement value of the case, whether true or false.

Morgan defended Stratton's decision to allow the deposition to begin before informing Breezevale's Habib. He stressed that Rule 1.4 requires that the client be

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kept "reasonably" informed. As he saw it, as a lawyer one should "try to get the picture before you discuss it with the client."

Morgan testified that Gibson, Dunn had not had a conflict of interest in representing Paul and Breezevale at the deposition. Paul could not be considered a "client" because clients within the meaning of Rule 1.7 are people or entities whose "interests" are adverse. Morgan read the "interest" concept narrowly to mean those having an interest in winning or losing the case—a type of interest Breezevale had, but Paul lacked. He rejected the suggestion that Paul's interest in not committing perjury, versus her employer's interest in her doing so, fell within the rule.

Morgan further testified that Gibson, Dunn had complied with Rule 1.13 governing representation of a corporation and appearing for its employees in depositions incident to representation. Under that rule, Breeze vale, not Paul, was Gibson, Dunn's client. As an employee under oath, Paul was obliged to tell the truth but, as Morgan put it, "if the truth was inconsistent, or embarrassing, or troublesome to Breezevale that doesn't constitute a conflict of interest" in the technical sense. Morgan disagreed with Cohn that Paul's dilemma—commit perjury or lose your job—rose to the level of an adverse interest such that the firm was disqualified from representing her from the time they first heard her story. Morgan agreed, however, that by Tuesday evening when Paul had been fired and Breezevale was considering suing her, "you clearly had a conflict" and it was "appropriate to advise her to seek a solicitor of her own."

Morgan was asked whether Gibson, Dunn could have postponed Paul's deposition and, without investigating her allegations and with Breezevale's officers denying them, proceeded to settlement without disclosing those allegations to Jones, Day. Disagreeing with Cohn, Morgan responded: "The answer is no." Gibson, Dunn may not have actual knowledge of fraud at that point. "But you never know something one hundred percent." More importantly, Morgan continued: If there is a consistent understanding in this area, it is that a lawyer may not intentionally prevent himself from becoming knowledgeable." Where there is reason to inquire further, the lawyer must do so. And if he settles the case without further inquiry, and without disclosing what he knows, according to Morgan the settlement "wouldn't be worth the paper it is written on. If Firestone ever found out what happened, they could set aside the settlement for fraud." Furthermore, the lawyer would be vulnerable to a charge of misconduct and possible disbarment under Rules 1.2 and 8.4 for assisting a client to commit a fraud.

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The questions whether Firestone would find out what happened, and therefore whether the lawyer would face disciplinary action were left hanging. Morgan agreed with Cohn that the duty under Rule 3.3 to reveal fraud would be the client's, not the lawyer's, and that under the District of Columbia's version of Rule 1.6, the lawyer would be barred from revealing the client's fraud. Morgan pointed out, however, that some States—including Ohio, where the Firestone case had been filed—have adopted an exception to the general prohibition of revealing client information in situations where the client has used the lawyer's services to commit a fraud causing injury to the financial interest of another—an exception seemingly applicable to this case.

The conflicting testimony of Cohn and Morgan, of document and handwriting experts, and of a parade of fact witnesses went to the jury on Breezevale's malpractice claim in October 1996, following seven weeks of testimony. The jury was given a verdict form and instructed to decide a series of questions. They returned a mixed verdict, but the bottom line favored Breezevale:

Breezevale established the applicable standard of care which Gibson, Dunn breached;

Gibson, Dunn's breach proximately caused damage to Breezevale's case;

Forgeries occurred in which Breezevale executives had participated, but;

The forgeries had not played a substantial part in damaging Breezevale's case;

Breezeyale would have won its suit against Firestone; and

Breezevale is entitled to a total of $4,930,000 in damages from Gibson, Dunn.

The jury was not asked to find whether Jones, Day would have discovered that the documents in question were false if the deposition had been postponed, an issue which Judge Graae would consider critical.

Gibson, Dunn filed motions to set aside two of the jury's findings: that it had breached the standard of care in going forward with Paul's deposition, and that the breach was the proximate cause of damages. Judge Graae acknowledged the tactical considerations Stratton had cited to justify his decision to allow the deposition to go forward. He went on to note, however, that "there can be little doubt [that decision]

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implicated a lawyer's duties to disclose information and follow a client's instructions." Citing the conflicting testimony of Cohn and Morgan, the judge concluded: "These polar-opposite views by noted experts do not lend themselves to judgment as a matter of law." The jury's finding that Gibson, Dunn had breached the standard of care was allowed to stand.

The jury's finding of proximate cause was a different matter. The jury found that the disputed documents were forged, yet it went on to find that Breezevale would have prevailed over Firestone. As Judge Graae viewed them, those findings were inconsistent. The finding of forgery was fully supported in the evidentiary record. As the judge observed: "Neither side left any stone unturned on the forgery issue; there can be no doubt the jury had all available information on which to make its finding." Given that finding, the judge reasoned that a postponement for purposes of investigation inevitably would have "validated" Paul's allegations. A warning flag would have gone up as a result of an unexplained postponement of the deposition. A Jones, Day lawyer testified that postponement would have made them "suspicious" and that there was "not a chance in the world" his firm would have foregone taking Paul's deposition before any settlement. With Jones, Day's knowledge of the forgeries, the jury would have had no basis for finding that Firestone would have paid more than the nuisance amount of $100,000 it had, in fact, paid to settle Breezevale's claim. Judge Graae granted Gibson, Dunn's motion for judgment for lack of a proximate cause relationship between its malpractice and Breezevale's losses, thus erasing the jury's award of $4,930,000.

Following the jury verdict, Judge Graae heard Gibson, Dunn's counterclaim against Breezevale alleging bad faith litigation for relying on false documents. The jury had found that the documents in issue were forged under the "preponderance of the evidence" standard, but since bad faith litigation must be proved by the higher "clear and convincing evidence" standard, it was necessary for the judge to make an independent determination, based on the record already made before the jury.

Focusing on Paul's credibility, Judge Graae found nothing to suggest that she had a motive to lie. "Moreover, it is difficult, is not impossible, to believe she would invent a story so deeply implicating herself in serious misconduct and so rich in odd detail." Abou Jouade's credibility was destroyed by the evidence. His story that the offer letters had emanated from the Beirut office and had been hand-carried to Baghdad was at odds with Breezevale's practice and made no commercial sense. Abou Jouade disavowed the multiple signatures on the paper Paul had brought to her deposition from her home, but Gibson, Dunn's handwriting expert testified to

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the contrary. Gibson, Dunn's computer expert "conclusively proved" (Judge Graae's phrase) that an offer letter introduced by Breezevale was a forgery. Committing perhaps his most obvious blunder, Abou Jouade signed two fake offer letters which had been mistakenly typed on a Breezevale letterhead that had not existed in 1987.

Judge Graae found that Breezevale had litigated in bad faith and held a separate hearing to determine Gibson, Dunn's damages. Having represented itself, the law firm claimed $2,970,000 for its attorneys' time and $1,091,000 for expenses incurred in defending against Breezevale's bad faith litigation. It had called on the services of eleven of its lawyers and numerous support personnel for thousands of hours of work. Judge Graae rated the lawyers’ performance "among the best" and allowed in full the claims for fees and expenses. Gibson, Dunn also claimed $295,000 for unpaid fees and expenses associated with the Firestone litigation which the judge also allowed. .

Gibson Dunn asked for $8 million in punitive damages to punish Breezevale for its bad faith. Judge Graae wrote: "The evidence at trial was absolutely clear and convincing that the documents were forged, thereby exposing the sworn testimony of Messrs. Habib, Awit, and Abou Jouade as cynical lies. The court cannot imagine a worse abuse of the judicial process or a more deserving cause for punishment." The judge concluded, however, that Gibson, Dunn's $8 million figure was "arbitrary, high, and bore no relationship to Breezevale's ability to pay." He awarded $1 million in punitive damages, an amount he believed "will hurt, but is not so great as to be beyond Breezevale's ability to pay."

On November 24, 1997, Judge Graae entered final judgment in the case, awarding Gibson, Dunn a total of $5,356,000 which, compared to the jury's verdict for Breezevale, improved the law firm's position by some $10 million.

Breezevale appealed to the Court of Appeals of the District of Columbia, raising numerous issues in addition to Stratton's decision to go forward that Monday morning in London. On September 21, 2000 (the wheels turn slowly) the Court of Appeals unanimously reversed the trial court's decision in major part. The court held that Judge Graae had applied the wrong legal standard in granting Gibson, Dunn's motion to set aside the jury's damages award in Breezevale's favor (except for a relatively minor part relating to the proposed tire factory in Nigeria). The court also reversed the trial court's bad faith litigation finding and damage award in Gibson, Dunn's favor on the ground that the erroneous ruling on the jury's award to Breezevale was "inextricable" from the trial court's finding of Breezevale's bad faith. The Court of Appeals directed reconsideration of a Gibson, Dunn motion for a

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new trial which, it ruled, would turn on a less stringent standard than the erroneously granted motion to set aside the jury's damages award—potentially putting the whole complex and protracted matter back to square one.

Gibson Dunn petitioned for rehearing en banc, arguing that, as a matter of law, Breezevale should be completely barred from suit as a sanction for its forgeries and the perjured testimony of its witnesses. Gibson, Dunn's rehearing petition was granted, but on October 18, 2001, the full court rejected the "clean hands" argument, reaffirmed the panel decision, and once again remanded the case to the trial court. As this book went to press, a Gibson, Dunn renewed motion for sanctions was pending. If, as seems likely, that motion were to be denied, the parties may explore other options, but settlement seems unlikely.

10.8 Appendix A: Steele, An Outline of an Attorney's Ethical Duties Regarding Witness Perjury

An Overview of the Ethics of Witness Perjury

Being associated with witness perjury can severely damage or even end an attorney's career. Although this outline discusses the various lines that have been drawn, attorneys will not want to "walk the fine line." Two pieces of conventional wisdom seem pertinent. First, if you need to analyze whether or not a particular act related to witness perjury is over the line, then it's probably true that neither you nor the client wants to be involved with that act. Second, seeking sound advice can be a career-saver. For the zealous attorney caught up in the partisan struggle, the advice of a disinterested counselor can often be a lifeline.

Although perjury is a crime everywhere, laws vary regarding an attorney's appropriate response to witness perjury. California's uniquely strong duty of confidentiality apparently does not permit the California lawyer to remedy client perjury as freely as can those lawyers governed by the ABA Model Rules. But that unique approach does not allow the California lawyer any greater latitude in presenting falsehoods to the tribunal-with the exception of testimony of criminal defendant clients where, as discussed below, the "narrative technique" may be available to the lawyer. To the contrary, California's ethics rules forbid the lawyer from using means inconsistent with the truth. (CRPC 5-200; Cal. Bus. & Prof Code section 6068(d))

A. Non-Client Perjury.

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Dealing with non-clients is easier than dealing with clients. Because the attorney owes little or no duties to the non- client, and because an attorney's duty to a client does not include a duty to present non-client perjury, the attorney's duty of candor to the tribunal (Cal. Bus. & Prof. Code section 6068(d); California Rules of Professional Conduct, Rule 5-200) precludes the attorney's participation in non-client perjury. Generally, the attorney should:1. Attempt to dissuade the witness from committing perjury.

2. Refuse to put the witness on the stand if the witness intends to commit perjury.

3. If the attorney learns that he or she has offered perjury, the attorney must take reasonable remedial measures, such as informing the court.

a. The duty to remedy the testimonial falsehoods applies to material facts.

b. The duty to remedy the testimonial falsehoods continues to the conclusion of the proceeding.

c. Under the Model Rules approach, the duty to remedy the testimonial falsehoods preempts the duty to maintain client confidences in civil and criminal cases.

d. Under California's unique approach to client confidentiality, if remedying a non-client's perjury requires disclosure of a client confidence, the attorney may be caught between two conflicting duties. In that case, the attorney should follow the procedures set forth below for correcting a client's perjury.

B. Client Perjury

Dealing with client perjury is more difficult than dealing with non-client perjury. Because the attorney owes duties to the client, and because the criminal defendant has certain constitutional rights, these must be weighed against the duty of candor to the court.

Cr i mi nal Case s: F utur e & An t icip ated P erj ur y

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Attorneys representing criminal defendants must provide "effective assistance of counsel." The United States Supreme Court has held that the United States Constitution does not require that criminal defendants be allowed to commit perjury or that defense attorneys be allowed to participate in the presentation of perjury. Nix v. Whiteside, 475 U.S. 157 (1986).

But some states, including California, believe that balancing the competing concerns in criminal cases is best done through the so-called "narrative technique." People v. Johnson, 62 Cal.App.4th 608 (1998). Under that technique, the defendant takes the stand and offers the perjury in a self-directed narrative, rather than through the usual question and answer technique, and defense counsel does not argue the perjury in the closing.

An attorney aware of a criminal client's intent to commit perjury should:

1. Attempt to dissuade the client from committing perjury;

2. If attempts to dissuade the client fail, the attorney should, if possible, attempt to withdraw from the representation.

One California case, People v. Brown, 203 Cal.App.3d 1335 (1988) suggests that attorneys must withdraw when the client insists upon testifying falsely. However, that holding has been criticized, at least in the criminal context, because it would either result in an endless string of withdrawals and continuances or would result in the defendant lying to the subsequent counsel. People v. Gadson, 19 Cal.App.4th 1700 (1993). A mandatory withdrawal approach seems in tension with California's adoption of the narrative technique.3. Then proceed as permitted in the jurisdiction, either by refusing to put the

client on the stand or by putting the client on the stand and using the narrative technique.

4. Please note: It is not clear that the narrative technique would be acceptable in the federal courts in California.

Although the California courts have permitted the narrative technique, and although the United States District Courts in California have adopted the California Rules of Professional Conduct by local rule, it would appear that federal courts within California could still forbid, and do still forbid, the presentation of perjury

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under the narrative technique on the basis of numerous federal rules, statutes, and standards.

Cr i mi nal Case s: Co mp le ted Per j ur y

When the attorney becomes aware that the criminal client has committed perjury, the attorney should determine the approach take in that jurisdiction:

1. Under the older Model Code approach, the duty of confidentiality trumped the duty of candor to the court, and the attorney could not reveal the perjury if doing so would reveal a client confidence (which it almost always did).

2. Under the Model Rules approach, the duty of-candor to the court trumps the duty of confidentiality in criminal and civil cases alike. Note, however, that the ethical duties in criminal cases are heavily debated. (Comments to Model Rule 3.3)

a. The duty to remedy the testimonial falsehoods applies only if the false facts were material.

b. The duty to remedy the testimonial falsehoods continues to the conclusion of the proceeding.

c. Under the Model Rules approach, the duty to remedy the testimonial falsehoods preempts the duty to maintain client confidences, even in criminal cases.

3. California's Rules of Professional Conduct do not expressly cover this point.

The State Bar Act imposes a duty of confidentiality that appears to have no exceptions besides the prevention of a crime leading to death or substantial bodily harm. (Cal. Bus. & Prof. Code section 6068(e)) Given that California law permits the defense counsel to utilize the narrative technique when the defendant insists upon committing perjury, one is tempted to conclude that under California law criminal defense counsel is under no duty to remedy client perjury in this situation, but presumably would have to seek the client's permission to rectify the perjury, would have to seek (or consider) withdrawal, and would be forbidden to make any use of the perjury in argument.

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4. Again, please note that the decisions of California courts on this topic do not necessarily set the standard for practice in federal courts within California.

This issue is more difficult than the issue of whether federal courts will allow the use of the narrative technique. In the latter case, the federal courts could presumably disallow behavior which the California state court found to be distasteful but ultimately acceptable. But in the case of revealing past client perjury, if the federal courts were to insist that criminal defense counsel reveal the perjury, the federal courts might be requiring behavior that the California ethical rules forbid.

Civ il Ca ses: F ut ur e & Anticip ated P erj ur y

An attorney aware of the civil client's intent to commit perjury should:

1. Attempt to dissuade the client from committing perjury;

2. Withdraw if necessary;

3. In any case, the attorney should refuse to put on a client who intends to commit perjury.

Civil Cases: Completed Perjury

When the attorney becomes aware that the civil client has committed perjury, the attorney should determine the approach taken in that jurisdiction:

1. Under the older Model Code approach, the duty of confidentiality trumped the duty of candor to the court, and the attorney was obligated to reveal the perjury unless doing so would breach a client confidence (which it almost always did).

2. Under the Model Rules approach, the duty of candor to the court trumps the duty of confidentiality.

3. California's Rules of Professional Conduct do not expressly cover this point.

An ethics opinion states that that the proper approach in California is to seek the client's consent to rectify the perjury. If the client refuses, the attorney should explain the consequences of perjury and the fact that counsel would be forced to withdraw. The attorney can also seek a stipulation from opposing counsel striking

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the perjury from the record (without disclosing the fact of perjury). If those steps do not rectify the situation, the attorney should seek to withdraw (without disclosing the fact of perjury). Cal. State Bar Formal Opinion 1983-74.

4. If through no fault of the attorney a client is called and commits perjury, the proper course under California law is not clear.

Suppose attorney refuses to call client, who intends to perjure. If the opposing side calls client as an adverse witness and client perjures, it has been suggested in an ethics committee opinion that counsel in California should act as if the testimony had never been offered or had been stricken (i.e., should not mention the perjury in examinations, arguments to the court, or the closing). California State Bar Formal Opinion 1983-74.

5. Again, please presume that the standards enunciated by California authorities may not be controlling in federal courts on this issue.

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