Month: January 2014

District Court Sanctions Pharmaceutical Company For Discovery Abuses


This is an opinion of Judge Herndon of the Southern District of Illinois sanctioning the defendant pharmaceutical company for a long litany of discovery abuses. The order is significant because the pharmaceutical company filed a writ of mandamus to the Seventh Circuit. The Seventh Circuit affirmed the monetary sanctions but reversed a portion of the district judge’s order requiring certain depositions to be moved from the Netherlands to the United States. The Seventh Circuit explained (on January 24, 2014) in an opinion by Judge Posner as follows:

“This is one of those rare “safety valve” cases  for  mandamus  because  of  the  risk  of international complications  arising  from  a  U.S.  judge’s  having  ordered foreigners to be brought to the United States to be deposed, when there is no legal authority for such an order; because alternative  sanctions are readily available; and because the particular sanction punishes innocents—the inventors whom the order requires Boehringer to fly to the United States to be deposed, rather than their being deposed in nearby Amsterdam as the parties had agreed. We therefore  direct that the  order  be rescinded;  in  all other respects the petition for a writ of mandamus is denied. ”

Judge Hamilton filed a lengthy dissent, arguing that the district court’s proposed remedy (moving the depositions from Amsterdam to the United States) was properly tailored to remedy the misconduct. Judge Hamilton argued that the district judge had authority to move the depositions.

Edward X. Clinton, Jr.

District Court Remands Ugly Feud Between Lawyers To State Court

Fenton v. DUDLEY, Dist. Court, ND Illinois 2014 – Google Scholar.

This is an unusual removal action. Kelli Dudley is a lawyer in Chicago, Illinois. She represents a client, Tonya Davis, who brought a legal malpractice action against Ernest Fenton.

Davis alleged legal malpractice, as well as violations of the Fair Housing Act and the Civil Rights Act.  That case is pending in federal court before Judge Castillo.

Fenton then filed his own state court complaint against Dudley, alleging tortious interference with contract, defamation and other torts. Fenton’s case against Dudley alleged state law causes of action. Dudley and a co-defendant removed the case to federal court on the ground that the case implicated concerns under the Fair Housing Act and the Civil Rights Act.

Judge Pallmeyer remanded the Fenton v. Dudley case to state court. To remove a case to federal court, the party seeking removal must establish jurisdiction. Dudley chose to use 28 U.S.C. 1441(a), which requires a showing of a federal question.  The boilerplate law on this issue is as follows:

“The question whether the court has federal-question jurisdiction is “governed by the well-pleaded complaint rule, which provides that federal jurisdiction exists only when a federal question is presented on the face of the plaintiff’s properly pleaded complaint.” Caterpillar Inc. v. Williams, 482 U.S. 386, 392 (1987) (internal quotations omitted). The fact that a state claim involves a contested federal issue is not by itself sufficient to trigger the federal court’s jurisdiction. Merrell Dow Pharm. Inc. v. Thompson, 478 U.S. 804, 813 (1986). Instead, federal jurisdiction over a state-law action “demands not only a contested federal issue, but a substantial one, indicating a serious federal interest in claiming the advantages thought to be inherent in a federal forum.” Grable & Sons Metal Prods., Inc., v. Darue Eng’g & Mfg., 545 U.S. 308, 313 (2005).”

Here, there was no federal question because the complaint filed in the state court did not allege a federal cause of action. Instead, it alleged state court claims under Illinois law. The court followed the recent decision of the Supreme Court in Gunn v. Minton, 133 S.Ct. 1059 (2013), which held that cases alleging legal malpractice concerning patents did not implicate federal concerns and did not raise a federal question.

The court declined to sanction the attorneys for removing the case to federal court.

Conclusion: removal issues and federal jurisdiction issues can often cause a layperson’s eyes to glaze over. Here the case was remanded because no federal cause of action was alleged in the complaint. Had the complaint alleged a violation of the civil rights law or the Fair Housing Act, the case would then have raised a federal question and it would then have been properly removed to federal court. In my experience, many cases that are removed are often remanded promptly because the federal courts often find a flaw in the jurisdictional arguments. Removal of a case often leads to disappointment.

Edward X. Clinton, Jr.

Losing Party In State Court Sues the Judge – And Is Sanctioned

J. EDWARD KLOIAN FOUNDATION v. FINDLING, Dist. Court, ED Michigan 2013 – Google Scholar.

Rule 11 sanctions are rarely granted. In this case, the district court awarded sanctions against a plaintiff (J. Edward Kloian Foundation) that lost a lengthy state court legal fee dispute.

The Underlying Dispute In State Court

The case began in the most routine and mundane way: an attorney sued his former client for legal fees. At the end of the fee litigation, the state court judge entered a legal fee judgment against Edward Kloian. Somehow the J. Edward Kloian Foundation became involved in the state court litigation. The state court judge also held that the foundation was the alter ego of Edward Kloian and entered judgment accordingly.

The Foundation then filed suit in federal court against a number of defendants, including the judge. Because the judge had absolute immunity, the case was dismissed and the plaintiff was sanctioned.

The court explained the ruling in this way:

“It is well established that “Rule 11 sanctions are appropriate when an attorney refuses to dismiss a claim after becoming aware that it lacks merits.” Baker v. Chevron U.S.A., Inc., ___ Fed. App’x. ___, 2013 WL 3968783 (6th Cir. 2013); Merritt v. International Ass’n. of Machinists, 613 F.3d 609, 628 (6th Cir. 2010) (“Rule 11 imposes a continual obligation on attorneys to refrain from pursuing meritless or frivolous claims at any stage of the proceedings . . .”).

This Court shall sanction counsel for the Foundation, who filed this action despite the fact that it is clearly barred by the Rooker-Feldman doctrine, and despite Judge Swartz being entitled to absolute judicial immunity.”

Edward X. Clinton, Jr.