Hello and welcome to this Ethics Alert blog which will discuss the recent U.S. Fifth Circuit Court of Appeal opinion affirming monetary sanctions against a Florida law firm which inadvertently disseminated confidential discovery documents of Cooper Tire & Rubber Company to lawyers who were attending a conference on discovery related to Cooper. The opinion is Smith & Fuller, P.A.; Hugh N. Smith v. Cooper Tire & Rubber Company, U.S. Fifth Circuit Case No. 11-20557 (June 21, 2012) and the link is here: https://www.ca5.uscourts.gov/opinions/pub/11/11-20557-CV0.wpd.pdf.
According to the opinion, Hugh N. Smith and Smith & Fuller, P.A. represented the Trenado family in a federal products liability lawsuit against Cooper in the U.S. Southern District of Texas. Prior to trial, the district court judge issued an Amended Protective Order of Confidentiality protecting Cooper’s trade secrets and confidential information which was to be produced during discovery. The protective order limited access of protected information to “authorized persons, solely in the performance of their duties in connection with the trial preparation of this case.”
Smith and the law firm inadvertently disseminated Cooper’s trade secrets and confidential information to a number of lawyers during a conference about obtaining discovery from Cooper after an individual from Smith’s firm apparently mistakenly copied the information onto compact discs which were distributed to the lawyers attending the conference. Cooper discovered the violation when its counsel in Trenado received the documents from a plaintiff’s attorney in an unrelated lawsuit against Cooper. Many of the documents were Bates stamped and Smith and the law firm also did not dispute that they violated the protective order.
The Fifth Circuit opinion affirmed the judge’s sanction of $29,667.71 against the lawyer and the law firm for fees and costs incurred by Cooper Tire & Rubber Co. in pursuing the matter. The district court judge had also ordered Smith and the firm to take immediate action to enforce the protective order and to correct the violation. The judge ultimately held that the firm did not willfully violate the protective order but that sanctions should still be imposed pursuant to Federal Rule of Civil Procedure 37(b), which gives the court authority to impose attorney sanctions for failure to obey discovery orders. The judge also noted that Smith had previously violated a similar protective order in another case.
The law firm argued that the amount of fees imposed was unreasonable since it, inter alia, included fees of Cooper’s lead counsel and national discovery counsel; however, the opinion stated that “our review of the record shows no abuse of discretion by the district court…(t)his is particularly true since Cooper did not learn of the violation until the eve of trial in the underlying action when its lead counsel was engaged in trial preparation, thereby causing a need for additional involvement by Cooper’s national discovery counsel.” The opinion also held that, in addition to a broad range of sanctions, including contempt, Rule 37(b) authorizes the court to impose a concurrent sanction of reasonable expenses, including attorney’s fees, which were caused by the failure to obey a protective order.
Bottom line: Although the disclosure of the protected confidential documents to numerous lawyers was inadvertent, the lawyer and law firm were sanctioned by the federal court for violating the discovery order. By that time; however, the cat was out of the bag…
Be careful out there!
As always, if you have any questions about this Ethics Alert or need assistance, analysis, and guidance regarding these or any other ethics, risk management, or other issues, please do not hesitate to contact me.
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