In federal court, parties can be ordered to pay sanctions. Mentioning that to clients always attracts interest. If a person or entity “mis-behaves” in court, the judge can sanction them. Sanctions include anything from paying money, paying the opposition attorney’s fees to even outright dismissal. In one recent Fifth Circuit decision, a lawyer was ordered to pay sanctions by a bankruptcy court. The law firm and lawyer were ordered to pay $5,000 to the opposing party for discovery abuse. The lawyer and law firm then filed a frivolous motion for contempt against the opposing party, said the court. So, the bankruptcy judge ordered the lawyer to pay another $20,000 in sanctions. The law firm appealed to the Fifth Circuit and lost. During the appeal, the law firm did not post a supersedeas bond or otherwise pay the sanctions.
The opposition in the bankruptcy, Coventry II DDR then filed a motion for contempt. The bankruptcy court found the lawyer and law firm in contempt and ordered them to pay $100 per day until the sanctions are paid and to pay another $6,000 in expenses for having to enforce the original sanctions award. Six months later, the lawyer, Mpatanishi Tayari Garrett, filed an emergency motion to stay all orders. She filed with the district court. The district court denied the motion, finding the law firm did not explain why they did not file the motion with the bankruptcy court. After the first Fifth Circuit decision, the district court then finalized the bankruptcy court’s Contempt Order. The law firm then appealed a second time.
But, as before, the Fifth Circuit was not sympathetic. The law firm advanced several arguments, none of which had merit, said the appellate court. The lawyer did mention in her brief that the court did not consider her ability to pay when it issued the additional sanctions. Inability to pay is a defense against civil contempt. But, said the Fifth Circuit, if the lawyer could not pay, she should have presented such evidence at the bankruptcy court level. As the Fifth Circuit noted, Ms. Garrett, now owes $100,000 in sanctions. if she cannot pay that amount, she should have presented such evidence much earlier in the process. See decision here.
As I tell my clients, always produce more than is required in discovery. Always, cooperate more than is required during the discovery process. No one should have to deal with potential sanctions motions. If a party is dealing with sanctions issues, then s/he is not dealing with the lawsuit itself.