Commercial Litigation and Arbitration

Neither Willful Ignorance Nor Division of Labor States a Defense to § 1927 Sanctions when Asserted by Lead Counsel

From In re Girardi (Franco v. Dow Chemical Co.), 2010 U.S. App. LEXIS 14292 (9th Cir. July 13, 2010) (adopting R&R of Senior Circuit Judge Tashima, sitting as Special Master):

The young associate drafted the Opening Brief, which contends that Dole Food Company was the judgment debtor. He repeated that contention in the Reply Brief, although he knew that the Judgment was not against Dole Food Company. As he wrote in his August 9 memo to Traina, "Dole Food Company, Inc. was NOT named in the judgment." See TE 32-001 (emphasis in the original). By the time Traina finished reading the young associate's memo, Traina of course knew that Dole Food Company was not named in the Judgment. Despite this knowledge, Lack, Traina, and the young associate stated to the Ninth Circuit that Dole Food Company was named in the Judgment. Girardi also knew that the Judgment was against Dole Food Corporation, and not Dole Food Company. On April 22, 2004, days before the Respondents filed their Opening Brief with the Ninth Circuit, which argues that the Respondents had a Nicaraguan Judgment against Dole Food Company, Lack and Girardi signed an agreement with Venezuelan lawyers to enforce this same Nicaraguan Judgment in Venezuela. *** That agreement expressly recognized that "[a] judgment for the amount of $ 489,400, 000.00 (four hundred eighty nine million, four hundred thousand dollars) was obtained . . . against Dole Food Corporation, Inc . . . ." Despite this, Girardi contends that he was unaware of the fact that the briefs bearing his signature represented to the Ninth Circuit that Dole Food Company was named as the judgment debtor in Nicaragua, or as he put it, at "some point" he learned that "there was a problem with one of the named defendants," but he was "told that the matter had been corrected." *** Nevertheless, Girardi's willful ignorance of positions he propagates to the Ninth Circuit does not insulate him from sanctions. See, e.g., In re Mitchell, 901 F.2d 1179, 1188 (3d Cir. 1990) ("The fact that an attorney of record may make an agreement with some other person, attorney or layman, regarding a division of labor, does not diminish the attorney's personal responsibility for compliance with the rules of this court, and liability for discipline if those rules-are not complied with" (emphasis in original)). At the very least, Girardi was reckless in failing to live up to his personal obligation as the leading attorney of record.

[Footnote 47] Girardi stated, and Lack confirmed, that he (Girardi) authorized Lack to affix Girardi's signature to the Venezuelan agreement.

Respondents, including Girardi, are also subject to § 1927 sanctions for recklessly making frivolous filings to the Ninth Circuit. A "frivolous" filing is one "that is both baseless and made without a reasonable and competent inquiry." See Holgate v. Baldwin, 425 F.3d 671, 677 (9th Cir. 2005) (construing "frivolous filing" in the context of Rule 11 and quoting Keegan Mgmt., 78 F.3d at 434). That is, in the contexts of § 1927, frivolousness should be understood as referring to legal or factual contentions so weak as to constitute objective evidence of improper purpose. Cf. Gregory P. Joseph, Sanctions: The Federal Law of Litigation Abuse § 27 (3d ed. 2000) (discussing frivolousness in the context of the court's inherent powers to sanction bad-faith conduct). ***

[Footnote 52] "Appellate Rule 38 and § 1912 are read in pari materia to authorize the imposition of a monetary sanction for the filing and prosecution of any frivolous appeal." Joseph, supra, § 31***.

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