The Eighth and Ninth Circuits overturn sanctions against attorneys

Sec. Nat’l Bank of Sioux City v. Jones Day, No. 14-3006 (8th Cir. Aug. 27, 2015); Kaass Law v. Wells Fargo Bank, N.A., No. 13-56099 (9th Cir. Aug. 27, 2015).

In both of these cases, a court of appeals overturns the sanction imposed by a district court. And in both cases, the sanction is overturned not necessarily because it was unmerited, but rather because the district court imposed the sanction in the wrong way. 

The Eighth Circuit case arises from a well-publicized sanction. After a jury returned a defense verdict in a product liability case, Judge Mark W. Bennett of the Northern District of Iowa found that defense counsel, a partner at Jones Day, had made improper objections at depositions. Judge Bennett imposed what he called an “outside-the-box” sanction: defense counsel would write and produce a training video in which she would explain the district court’s decision and provide “specific steps lawyers must take to comply” with the decision “in future depositions.” Defense counsel was ordered to provide access to the video to more or less every litigation attorney at Jones Day. 

The Eighth Circuit now reverses this sanction, mainly for two reasons. First, counsel for the plaintiff didn’t object to defense counsel’s conduct during depositions, and the district court didn’t sanction defense counsel until after the trial, about a year and a half after the depositions. The Eighth Circuit holds that this was too long a delay. Note that this part of the court’s holding makes sua sponte sanctions for deposition conduct considerably more difficult to impose, for a district court will usually learn about counsel’s deposition conduct only at the summary-judgment stage or afterward. The Eight Circuit’s second reason for reversing the sanction is lack of notice: “no advance notice was given of the unusual nature of the sanction being considered.”

I also read the Eighth Circuit’s opinion to hint at another concern. In more than one place, it notes that Judge Bennett objected to what he saw as the obstructionist conduct of large, out-of-state law firms, and that his sanction was intended to deter it. The Eighth Circuit may believe that Judge Bennett was effectively punishing one “biglaw” attorney for the conduct of other such attorneys. 

In the Ninth Circuit case, a district court, invoking 28 U.S.C. § 1927, imposed sanctions on a law firm for filing a glaringly deficient pleading. Section 1927 authorizes sanctions against “[a]ny attorney or other person admitted to conduct cases.” A law firm is not an “attorney,” nor can a law firm as a whole be “admitted to conduct cases.” So a district court may not impose a sanction against a whole law firm under § 1927. The district court’s sanction is vacated.