§ 1927 Sanctions Affirmed for Issuing Trial Subpoena after Court Has Precluded Deposition of Same Apex Witness and While Motion to Compel Witness’s Attendance at Trial Is Pending

Wagner v. Gallup, Inc., 2015 U.S. App. LEXIS 9856 (8th Cir. June 12, 2015):

Rodd Wagner appeals various district court decisions, the sum total of which limited matters of discovery, imposed sanctions on Wagner's attorney and ultimately dismissed Wagner's age discrimination and appropriation claims. We affirm.

I.  BACKGROUND

Rodd Wagner worked for Gallup, Inc., for just over twelve years prior to his termination in October 2011. At the time of his termination, Wagner was a Subject Matter Expert (SME) at Gallup, which Wagner described as someone with extensive experience at Gallup who knew one or more of the practice areas in tremendous depth. He characterized SMEs as likely to have significant experience and as tending to be "an older group within the Gallup workforce." Born in 1961, Wagner was 50 at the time of his termination.

In addition to his billable project work as an SME for Gallup's clients, Wagner also co-authored two books for Gallup. The first, 12: The Elements of Great Managing, became a New York Times bestseller after its [*2]  publication in 2006. As addressed by the district court, both parties acknowledge that Gallup is widely known in the human resource business for its proprietary "Q12" employee engagement metric; and that concept was discussed in Wagner's first book. In 2009 Gallup published a second book co-authored by Wagner, Power of 2: How to Make the Most of Your Partnerships at Work and in Life. Gallup still sells both books. Wagner balanced his billable client work with the non-billable time he spent authoring and promoting books, with billable time being lower when Wagner was busiest with the writing and publication process.

Although Gallup does not administer formal performance reviews, Wagner received very positive verbal feedback from various individuals in management through the years, including his previous "Go-To" (the closest description of a supervisor in Gallup parlance) Mary Trouba, as well as a regional managing partner, both of whom told Wagner that his billable hours were great and he was performing well. Gallup likewise recognized his achievements and presented him with many awards during his employment.

Gallup employees did, however, receive Internal Customer Engagement (ICE) scores [*3]  twice each year based upon surveys completed by coworkers. These scores were aimed at measuring "intercompany relationships" with ratings on items such as "timeliness," "promise," and "partnership." The record reveals that Wagner's ICE scorecards from September 2010, March 2011, and September 2011 reflected a decline in his overall "GrandMean" number. Wagner attributed this fluctuation to differences in evaluators and the number of evaluators. During those years of his employment a large number of his key collaborators left Gallup and thus the people he had worked with closely and developed relationships with were no longer at Gallup to provide Wagner with better reviews.

Sometime around August 2011, Patrick Bogart became Wagner's fifth Go-To at Gallup. Bogart is the only Go-To Wagner claims treated him inappropriately or unfairly or exhibited animus based on his age. Bogart was 35 at the time but had worked for Gallup longer than Wagner. Wagner stated that he and Bogart only interacted twice while Bogart was Wagner's Go To-a phone call on October 6 (that Wagner recorded without permission from Bogart), and a phone call on October 13, during which Bogart terminated Wagner (that Wagner [*4]  likewise recorded). At that time, Wagner was working on a third book that he believed needed to be finished by the end of 2011. However, Larry Emond, executive publisher of the Gallup Press during the relevant time, testified that Wagner had the idea for the book and had been told to write an overview or chapter so that it could be further assessed. Emond stated that they "never got to a place where [they] formally approved" the book and no deadline or time frame had been placed on it.

Regardless, Bogart called Wagner on October 6 and, among other things, the two discussed Wagner's utilization. For example, the two talked about the SMEs' on-going transitional situation at Gallup as well as Bogart's difficulty finding a place for Wagner on a team long term given the perception that Wagner was too "self-referential."  In his deposition, Wagner explained that it was during this phone call that he first learned Bogart was his Go-To, but the two had prior interaction; specifically, Wagner and Bogart had corresponded previously about a possible assignment for Wagner in Iraq that Wagner had turned down. Wagner and Bogart had a second phone conversation on October 13, 2011, during which Bogart [*5]  terminated Wagner, informing Wagner that his position had been eliminated.

Subsequently, Wagner sued Gallup alleging an age discrimination claim under the Minnesota Human Rights Act (MHRA) as well as an invasion of privacy cause of action based on the appropriation of his name and/or likeness by Gallup, invoking this court's diversity jurisdiction under 28 U.S.C. § 1332. In the district court, in order to rebut Gallup's claims that Wagner was difficult to work with, self-oriented and egotistical, as well as to contradict the evidence regarding Wagner's declining ICE scores in 2010 and 2011, Wagner submitted declarations from two individuals who had worked with Wagner in some capacity at Gallup, but both of whom no longer work at Gallup. One of these former Gallup employees attested to Wagner's good reputation with clients as well as coworkers at Gallup. Both employees additionally stated their opinion that Gallup initiated a "youthful movement" at some point and targeted older employees for termination.

In addition to Wagner's allegation that Bogart discriminated against him because of his age, Wagner also advanced a claim that Gallup, in general, maintained a culture of age discrimination. He claimed in his deposition that Gallup had a pattern of replacing more experienced people with someone junior, giving examples of times when he believed that had happened. Wagner stated that few people retire from Gallup, that they are either squeezed out or terminated before they reach the age of retirement, surmising that "[i]f [the most senior people] were more appreciated, better managed, more of them would still be there." Wagner pointed out that all SMEs that Gallup terminated since 2008 were over the age of 42.

Wagner raised the appropriation claim after realizing that Gallup still described Wagner as a [*7]  principal of the company on a web page advertising Wagner's books long after Wagner's termination. According to Wagner the website stated "Rodd Wagner is a New York Times bestselling author and a principal of Gallup," and Wagner argued that by failing to amend this statement to indicate Wagner was a "former" principal after his termination, Gallup was liable for appropriation.

Gallup filed a motion for summary judgment on all claims. Initially, the district court granted judgment in favor of Gallup on the Minnesota age discrimination claim, but denied summary judgment on the name and likeness dispute. As to the age claim, the court held that given the evidence presented, the matter must be analyzed under the McDonnell Douglas3 framework. In conducting that analysis, the court determined that even though Wagner's evidence sufficed to establish a prima facie case, he did not present evidence from which a reasonable jury could conclude that Gallup's proffered reasons for Wagner's termination were pretextual. Later, pursuant to Federal Rule of Civil Procedure 56(f), the court determined that Wagner lacked evidence that Gallup intended to appropriate his name or likeness and dismissed that claim as well.

3 McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1973).

On appeal, in addition [*8]  to the district court's adverse rulings on the age discrimination and appropriation claims, Wagner challenges certain discovery rulings and also the court's imposition of sanctions against Wagner's counsel for issuing particular trial subpoenas.

II.  DISCUSSION

A.  Standards of Review

***As to the district court's imposition of sanctions under 28 U.S.C. § 1927, "[w]e review the district court's factual findings for clear error and its decision to award sanctions for an abuse of discretion." Id. at 743-44 (quotation omitted).

***

D.  Sanctions

In early 2013, during discovery, Wagner sought to depose Jim Clifton, Gallup's chief executive officer, among others. In response, Gallup filed a motion for a protective order to quash the notices of depositions issued by Wagner purporting to set six depositions and to prohibit Wagner from [*31]  taking the depositions of Clifton and James Krieger, Gallup's chief financial officer. Relevant here, the magistrate judge granted the motion in part at a hearing, granting Gallup's request to prohibit Wagner from making further attempts to depose Jim Clifton. Then, in March 2014 Wagner filed a motion and amended motion seeking to compel attendance at trial, either in person or via video conference; or in the alternative, for trial depositions before trial, three Gallup executives, including Clifton; Miller; and Emond. Gallup filed a motion to quash the subpoenas for all three witnesses. At the pretrial conference where the pending motions were heard, the court denied Wagner's motion and confirmed that any subpoenas for such testimony, two of which were already served, were invalid in response to Gallup's then-pending motion to quash them.

Ms. Neumann, Wagner's counsel, invoked the authority of the issuing court — here the United States District Court for the District of Minnesota — when the subpoenas were issued. Fed. R. Civ. P. 45(a)(1)(A)(i). The subpoenas Ms. Neumann served prior to the hearing on the pending motions to compel, commanded the recipients' appearance at the federal district courts for Nebraska and [*32]  the District of Columbia, respectively, in order to appear "[v]ia video conference with" the Minnesota District Court for five days in April 2014. The district court rightly admonished that "an attorney issuing a subpoena may not take her role lightly and is duty-bound to ensure the propriety of a subpoena that she signs and serves." At the pretrial conference, at which counsel was given the opportunity to address the matter,

Ms. Neumann did not identify any authority for commanding appearance for five days at courts in other jurisdictions for an unauthorized "video conference" with the Minnesota District Court. Indeed she could not do so because there was no authority for such action. Even for the alternative purpose of taking depositions, the subpoenas were wholly improper as Miller had already been deposed, as had Emond, so any further deposition would require leave of the court, see Fed. R. Civ. P. 30(a)(2)(A)(ii), and a protective order was in place regarding Clifton's deposition testimony.

The district court ultimately issued sanctions pursuant to its inherent authority to do so as well as 28 U.S.C. § 1927, which provides that an attorney "who so multiplies the proceedings in any case unreasonably and vexatiously may be required [*33]  by the court to satisfy personally the excess costs, expenses, and attorneys' fees reasonably incurred because of such conduct." As noted by the district court, sanctions are permitted under the statute after notice and an opportunity for the attorney to be heard have been provided, "when an attorney's conduct, viewed objectively, manifests either intentional or reckless disregard of the attorney's duties to the court." Clark v. UPS, Inc., 460 F.3d 1004, 1011 (8th Cir. 2006) (internal quotation omitted).

On appeal, Ms. Neumann argues that the district court failed to make a finding that her behavior was objectively unreasonable or made in bad faith. She claims she issued the subpoenas only because trial was approaching and she had no other method of securing these witnesses. However, the district court's reasoning is clear and when an attorney represents that actions are taken with leave of court, when in fact they are not, such behavior is necessarily objectively unreasonable. See id. The district court did not abuse its discretion in its imposition of sanctions under § 1927.

III.  CONCLUSION

For the reasons stated herein, we affirm.

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