Plaintiff’s counsel in Wade v. Soo Line R.R., 2007 U.S. App. LEXIS 20617 (7th Cir. Aug. 29, 2007), acted sanctionably — withholding damaging medical records and perhaps stealing some of them back from defense counsel at a deposition. The District Court imposed $110,000 in sanctions, an amount equivalent to the defendant’s fees and costs for the entire litigation. Sanctions were imposed on plaintiff’s counsel, alone. The Seventh Circuit was appalled by the conduct but reversed the sanctions award because the sum was not limited to fees and costs incurred after and as a result of the misconduct. ‛Sanctions in the form of attorneys' fees are analogous to damages in a tort case, so the party that misbehaved pays for the injury caused by the misconduct. When a factually independent part of the case is entirely legitimate, there is no justification for extending the sanction to cover that part.“

Plaintiff’s counsel raised an interesting textual argument about Rule 37(c)(1) — namely, that the rule by its terms applies only to parties and not to attorneys, and, therefore, could not sustain the sanctions award against him. This argument had substantial Seventh Circuit support. See, e.g., Maynard v. Nygren, 332 F.3d 462, 470 (7th Cir. 2003); see also Apex Oil Co. v. Belcher Co. of N.Y., 855 F.2d 1009, 1014 (2d Cir. 1988). The issue was not raised below, however, and was waived, the Court observing that, had the issue been raised, ‛the judge could have given a different justification for holding him personally liable. Several alternative bases are plausible: the district court might have used its inherent authority to sanction attorneys ... or relied on 28 U.S.C. § 1927 ... or Fed. R. Civ. P. 26(g)(3).“

The Seventh Circuit was disturbed, as a matter of professional ethics, by what it took to be the implicit corollary of counsel’s Rule 37(c)(1) argument — namely, that his client must pay the fees personally. ‛That argument puts [counsel’s] interests (and, indirectly, his law firm's) in conflict with his client's, which puts [counsel] and his firm on the wrong side of their professional obligations.“ Worse, counsel ‛conceded at argument that [plaintiff] did not consent to the making of an argument that, if accepted, would have saddled him with a $ 110,000 judgment.“ Judge Easterbrook noted that, if counsel had agreed to indemnify his client for any sanctions, ‛then there would be no conflict, but that doesn’t seem to have happened.“ In light of the conflict, the Court entered an Order to Show Cause ‛why [plaintiff’s counsel] should not be disciplined by this court pursuant to Fed. R. App. P. 46(b)-(c) for conduct unbecoming members of the bar.“