Opinion
99 Civ. 10175 (JSM)
January 16, 2002
For Plaintiff: Norman Zivin, Cooper Dunham L.L.P., New York, NY.
For Defendants: Darren Saunders, Pennie Edmonds, New York, NY, Frank H. Wright, New York, NY, Richard Feldman, Feldman Markman L.L.P., New York, NY, Andrew Spinnell, New York, NY.
OPINION and ORDER
This relatively mundane trademark litigation concerning the right to the trademark "Patsy's" for use on sauce has been turned into a minor legal epic, primarily as a result of the perjury and obstruction of justice engaged in by the principals of the corporate defendants. This final chapter of that epic arises from this Court's sua sponte issuance of an order requiring Pennie Edmonds, the attorneys for the principal defendants, to show cause why it should not be sanctioned for permitting its client to submit a false affidavit.
In an Opinion and Order dated February 21, 2001, the Court granted Plaintiff summary judgment on its trademark claims and sua sponte ordered Defendant I.O.B., its principal, Mr. Brijia and its then counsel, Pennie Edmonds, to show cause why sanctions should not be imposed upon them. A hearing on the sanctions issue was held on June 8, 2001. On August 29, 2001, the Court entered an order identifying additional portions of the client's affidavit that would be considered on the sanctions issue and giving counsel the opportunity to be further heard on that issue. During the pendency of these further proceedings with respect to Pennie Edmonds, the Court issued an Opinion and Order awarding attorneys' fees and sanctions against I.O.B and its principals, as well as sanctions against a successor attorney. Thus, the only open matter is to make findings on the basis of the Court's sua sponte proceeding with respect to Pennie Edmonds.
At the outset, the Court recognizes that the respondent firm, Pennie Edmonds, enjoys a good reputation in the New York legal community, and the Court does not dispute counsel's assertion that they acted with subjective good faith. In the end, however, the Court concludes that, rather than risk offending and possibly losing a client, counsel simply closed their eyes to the overwhelming evidence that statements in the client's affidavit were not true.
FACTS
Plaintiff Patsy's Brand, Inc.,("Patsy's") commenced this action for trademark infringement against the owner of Patsy's Pizzeria, I.O.B. Realty, Inc. ("I.O.B."), its principals, Frank Brija and John Brecevich, and one of its licensees. The case first came before the Court on Plaintiff's application for a preliminary injunction, in which it asserted it had been selling sauce under the name Patsy's since 1994, and that subsequently the defendants began selling sauce under the same name. In opposing the application for a preliminary injunction, I.O.B. submitted an affidavit from one of its principals, Mr. Brija, in which he swore:
15. In the spring of 1992, I decided to jar my sauces and sell them at retail in my restaurant. These labels were to be used on packaged goods, such as my home made cheeses and sauces. The design for both labels were taken directly from PATSY'S ® old menu covers and other features of our restaurant that we have been using for over six decades. The labels display an exact copy of PATSY'S ® restaurant's logo, colors and artwork that we have been using since we opened in 1933. Both labels have the name Patsy's written in script, exactly as it was written on our menus in 1933 and other menus since that time. The sauce label also contains a picture of a woman drinking from a wine glass, exactly as it appeared on our menu in 1933 and other later menus.
16. In February of 1993, I contacted Keller Label Ticket Company (hereinafter, "Keller) to help us design and print PATSY'S ® labels. On or about March 3, 1993, we received a price quote on the artwork, plates and printing for the labels. I immediately accepted Keller's quote. Attached as Exhibit 0 is a true copy of this quote from Keller.
17. After accepting the quote from Keller, I provided Rich Mazzella with a copy of our logos as they appeared on our menu, and asked them to make the label in a dark green color since this was the color PATSY'S is famous for using, an institutional dark green color. In short, the logo on the face of our menu was transferred to our labels. Likewise, I instructed Keller to put the exact image of the woman holding a glass as it appears on early menu and other menus.
18. On March 18, 1993, Keller invoiced PATSY'S ® for 5,000 cheese labels, which were immediately delivered. A true copy of this invoice is attached hereto as EXHIBIT P.
19. On April 22, 1993, Keller invoiced PATSY'S ® for six (6) lots of 2,500 labels for Marinara, Puttanesca, and Arrabiatta sauces. A true copy of this invoice is attached hereto as EXHIBIT Q.
20. These sauce labels were immediately delivered and immediately put to use. I originally bought the Mason jars from two sources, a local store on 188th and 1st which has since gone out of business and "Wenkel's" located on about 88th and Lexington Ave. Since that time, all of the sauce jars that I sold had the labels that we designed.
Originally they were self adhesive, now they are put on by a machine. Originally, I was the one who put most of them on the thousands of jars. After six years, I think my hands are still sticky.
Relying on these factual assertions, I.O.B.'s brief asserted that: "Defendants have been selling sauce in a mason jar with the label at issue since at least the spring of 1993." (Def.'s Mem. Opp. Mot. P.I. at 2.)
When Plaintiff's reply papers pointed out that 1) Defendants' sauce label contained a bar code that did not exist until 1998; 2) the statement on the label, "For over 65 years PATSY'S Restaurant has served its faithful clientele", would not have been true until 1998 because the restaurant opened in 1933; and 3) the "1993" invoices from the printer listed a telephone number with an area code that did not come into existence until several years later, I.O.B.'S then counsel disclaimed any reliance on the documents and later withdrew from representing I.O.B.
In the opinion granting the preliminary injunction, the Court stated:
I.O.B.'s efforts to mislead the Court about the timing of its entry into the sauce business indicate that it did not choose its sauce label in good faith. It seems more likely that I.O.B. chose the label in an effort to take advantage of plaintiff's successful efforts to create name recognition and consumer goodwill for Patsy's pasta sauce.
Patsy's Brand, Inc. v. I.O.B. Realty, Inc., No. 99 Civ. 10175, 2000 WL 4154, at *2 (S.D.N.Y. Jan. 3, 2000).
After the preliminary injunction was granted, Pennie Edmonds appeared for the I.O.B. defendants. Recognizing the significance of the false statements contained in I.O.B's prior submissions to the Court, the attorneys at Pennie Edmonds questioned Messrs. Brija and Brecevich, who continued to insist that the sauce label had been created in 1993 or 1994. Mr. Brija said that he had simply been confused and attached a label created in 1999 to his papers rather than the original label he created in 1993. When asked about the phony documents produced from the printer, Mr. Brija blamed Richard Mazzella, the person at Keller Labels who handled his account. According to Mr. Brija, Richard Mazzella took it upon himself to fabricate the records because he no longer had his records from 1993, and he did not tell this to Mr. Brija. To support his story, Mr. Brija produced a signed statement from Mr. Mazzella to that effect.
When Pennie Edmonds contacted Mr. Mazzella's lawyer, they were told that Mr. Mazzella did not want to get involved, that the statement he signed was done without the involvement of counsel, and that if Mazzella were subpoenaed, he would testify that he had not even done business with the defendants in that time period.
Thereafter, Plaintiff moved for summary judgment. Plaintiff's Rule 56.1 Statement stated:
26. I.O.B. submitted falsified evidence to the Court to support its position that it entered the sauce market prior to plaintiff. I.O.B.'s efforts to mislead the Court about the timing of its entry into the sauce business indicate that it did not choose its sauce label in good faith.
Pennie Edmonds filed Defendant's Response to Plaintiff's Rule 56.1 Statement of Material Facts, in which they said:
26. Contested
* * * * *
I.O.B. did not intentionally mislead the Court, nor did it falsify or request that anyone falsify a document. (Brija Decl. ¶ 18). The invoice has no bearing on defendant's good faith in using its own registered mark and trading style to sell its sauce in its own restaurants. (See Brija Decl. ¶ 20).
The opposition papers submitted by Pennie Edmonds also included an affidavit from Mr. Brija in which he swore:
17. I designed the label that we used on the sauces we sold in our restaurants. There were two versions. The first version was created in 1993 or 1994. I simply took the PATSY'S logo exactly as it appears on our menus, and transposed it onto a green background — the same color green as the outside of our restaurant. The labels were printed by Keller Label Ticket Co. of Lodi, New Jersey. Attached as Exhibit I is a copy of this label. In 1999, I designed a newer label. This label has the same script PATSY'S logo on the same colored green background. I also used the design of the woman holding a glass of wine that appeared on the original PATSY'S menu. I added additional text that states "For over 65 years PATSY'S Restaurant has served its faithful clientele the best of its legendary cuisine. Now, PATSY'S offers its famous sauces directly to you at home . . . Enjoy!" Also, I placed on the label our toll free number for gift orders; the "Nutritional Facts" section, required by the FDA; and, at the suggestion of my attorney, a U.P.C. bar code. These labels were also printed by Keller Label. A copy of the 1999 label is attached as Exhibit J.
18. Last year, in connection with the plaintiff's preliminary injunction motion, my counsel requested that I obtain documentation showing the first order for sauce labels placed with the label manufacturer. I called Richard Mazzella at Keller Label and asked for a copy of the earliest purchase order or invoice. Mr. Mazzella did not have a copy of the invoice, so he recreated it to reflect, the best of his recollection, our first order for sauce labels. I never requested that the invoice or any other document be falsified. I did not learn from Mr. Mazzella that he recreated the document until after the documents was submitted to the Court.
With this affidavit as its factual basis, Pennie Edmonds stated in its brief in opposition to the summary judgment motion:
There has been confusion, engendered by the plaintiff, between the two different sauce labels used by I.O.B. Contrary to the plaintiff's arguments, (see Pl. Br. at 5 n1), the defendants never claimed that the label in issue, which was designed and printed in 1999 (Brija Decl. ¶ 17), was created in 1993. (See Op. at 3).
(Def.'s Mem. Opp. Summ. J. at 14 n. 7.)
In the Opinion granting Plaintiff summary judgment and ordering counsel to show cause why sanctions under Rule 11 should not be imposed, the Court noted the affidavit of Mr. Brija cited by counsel was also false, stating:
I.O.B.'s counsel overlooks the irrefutable evidence that Brija's current story concerning an earlier label which he now claims he used in 1993 is as false as his prior claim that the current label had been in use since 1993. In his Declaration dated September 15, 2000, Brija swears that there were two versions of the label, the one currently in use and an earlier version that he created in 1993 or 1994. (Brija Decl. Sept. 15, 2000, ¶ 17.) He annexes to his Declaration as Exhibit I what he represents to be a copy of that earlier label. The problem with this story is that the label, which simply shows the word Patsy's in stylized script against a dark background, also contains on its face clear evidence that what Brija says is not true. Right underneath the letter "S" on that label appears the symbol ®, signifying that the mark is a registered trademark. However, I.O.B. did not apply for the trademark Patsy's for restaurant services until 1995, and it was not issued until 1996. Thus, the label allegedly created in 1993 or 1994, which depicts a registered mark, could not have been prepared at that time.
Patsy's Brand, Inc. v. I.O.B. Realty, Inc., No. 99 Civ. 10175, 2001 WL 170672, at *5 (S.D.N.Y Feb. 21, 2001).
In its opinion the Court observed:
This lengthy opinion and much of the time and effort expended by Plaintiff's counsel would not have been necessary had I.O.B. and its principals simply told the truth and admitted that they did not begin selling sauce until after Plaintiff had launched its sauce business. Rather than admit this basic fact, I.O.B. submitted a fabricated document, made false assertions through counsel, and its principal, Mr. Brija, swore falsely on more than one occasion that he had created I.O.B. sauce labels in 1993 and 1994.
Id. at *14.
DISCUSSION
The court has set forth the background facts at great length and in the specific language contained in the various documents because they are so important in assessing whether counsel had a reasonable basis for accepting the false statements of their client.
In its initial submission, Pennie Edmonds acknowledged that the question presented was whether counsel's conduct was "objectively reasonable," but argued that sanctions should not be imposed because counsel had not relied on Mr. Brija'a statements in any of their arguments to the Court. (Mem. of Pennie Edmonds LLP in Opp'n to Imposition of Sanctions at 23.) After further argument before the Court and a formal notice from the Court that it was considering ¶ 18 of Mr. Brija's affidavit as well as ¶ 17 as a basis for sanctions, the firm changed its position and now argues that sanctions can be imposed only on a finding of subjective bad faith.
Pennie Edmonds does not seem to dispute the fact that where a party properly serves a Rule 11 notice and then moves for sanctions, counsel's conduct is to be judged under an objective reasonableness standard. See Lapidus v. Vann, 112 F.3d 91, 96 (2d Cir. 1997); Int'l Telepassport Corp. v. USFI, Inc., 89 F.3d 82, 86 (2d Cir. 1996); K.M.B. Warehouse Distribs., Inc. v. Walker Mfg. Co., 61 F.3d 123, 131 (2d Cir. 1995); United States v. International Brotherhood of Teamsters, 948 F.2d 1338. 1344 (2d Cir. 1991) ("In deciding whether the signer of a pleading, motion, or other paper has crossed the line between zealous advocacy and plain pettifoggery, the court applies an objective standard of reasonableness.").
Respondent argues, however, that this standard does not apply to sua sponte sanctions, citing a comment to the 1993 Amendment to Rule 11 which states that "show cause orders [issued on the Court's own initiative] will ordinarily be issued only in situations that are akin to contempt of court." Fed.R.Civ.P. 11 advisory committee's note. While a few courts in this Circuit have referred to this Advisory Committee Note as indicating that a heightened standard of misconduct is required in order for a court to impose sanctions sua sponte, see, e.g., Hadges v. Yonkers Racing Corp., 48 F.3d 1320, 1329 (2d Cir. 1995); Littel v. Twentieth Century-Fox Film Corp., No. 89 Civ. 8526, 1996 WL 376971, at *4 n. 2 (S.D.N.Y. July 5, 1996), rev'd on other grounds, DeStefano v. Twentieth Century Fox Film Corp., 111 F.3d 123 (2d Cir. 1997), only one court has actually imposed such a standard, see Provident Mutual Life Ins. Co. v. Vergara, No. 91 Civ. 5657, 1995 WL 746379, at *2 (S.D.N.Y. Dec. 15, 1995).
Moreover, the only Second Circuit decision to make reference to the comment, Hadges, also cites Calloway v. Marvel Entertainment Group, 854 F.2d 1452, 1470 (2d Cir. 1988), rev'd in part on other grounds sub nom, Pavelic LeFlore v. Marvel Entertainment Group, 493 U.S. 120, 110 S.Ct. 456, (1989), for the proposition that
'[a]n attorney is entitled to rely on his or her client's statements as to factual claims when those statements are objectively reasonable.' This interpretation is in keeping with the advisory committee notes on former Rule 11, which indicates that the reasonableness of an inquiry depends upon the surrounding circumstances . . . .
Hadges, 48 F.3d at 1329 (internal citations omitted).
Most recently, in Wilder v. GL Bus Lines, 258 F.3d 126, 128 (2d Cir. 2001) the Second Circuit noted that Rule 11 sanctions "are appropriate . . . where the attorney has negligently or recklessly failed to perform his responsibilities as an officer of the court." (Emphasis added.) Few responsibilities of an attorney, as an officer of the court, are more important than the duty to insure that his client does not commit perjury or obstruct justice. It is, therefore, appropriate to apply an "objectively reasonable" standard to determine whether counsel has been negligent or reckless in this regard.
Thus, the Hadges Court's passing reference to the Advisory Committee comment can not be viewed as a holding that conduct that is objectively unreasonable may not form the basis of a Court's sua sponte sanction.
Indeed, such a ruling would be inconsistent with the Advisory Committee comment's use of the word "ordinarily," which clearly implies that there would be instances where the court would initiate Rule 11 proceedings where the conduct at issue does not meet the standard applied to contempt of court.
Not long after Rule 11 was amended in 1983 to provide greater authority for the imposition of sanctions, Judge Pratt observed in Oliveri v. Thompson, 803 F.2d 1265, 1267 (2d Cir. 1986):
Most lawyers who litigate in our federal courts perform their function at a commendable level of professionalism, advancing claims and defenses with the zeal of a trained advocate, but properly tempering enthusiasm for a client's cause with careful regard for the obligations of truth, candor, accuracy, and professional judgment that are expected of them as officers of the court. Because, we suppose, in a system as large and diverse as our federal court system, it is inevitable that a few attorneys will occasionally fall short in these professional obligations, sanctions against attorneys play a limited but necessary role in the administration of our civil justice system. Severe forms of misconduct have traditionally been subject to contempt citations, review by bar association grievance committees, and in extreme cases, suspension or disbarment. In recent years, however, increasing attention has been focused upon lesser sanctions as a means of fine-tuning our litigation system to weed out some of its abuses and to improve its dispute-resolving function.
There is no reason to conclude that the 1993 Amendments to Rule 11 were intended to restrict the Court's sua sponte power to use "lesser sanctions as a means of fine-tuning our litigation system to weed out some of its abuses and to improve its dispute-resolving function." Since the Court as an institution has a far greater interest in weeding out abuses than does any individual litigant, there is no reason not to apply the well-established "objective reasonableness" standard to Rule 11 proceedings initiated by the Court.
Pennie Edmonds argues further that because Rule 11 was amended in 1993 to require only that "the allegations or other factual contentions have evidentiary support," they can not be sanctioned because Mr. Brija was willing to swear to the truth of his assertions, and his partner, Mr. Brecevich, was willing to corroborate him.
There are few precepts governing a lawyer's conduct that are as firmly established as the rule that a lawyer shall not "offer evidence that the lawyer knows to be false." Model Rules of Prof'l Conduct R. 3.3(a)(4). Surely, it could not have been the intention of the Rules Committee that wrote the 1993 Amendments to protect an attorney from sanctions for making false statements of fact simply because a witness was willing to sign an affidavit that any reasonable lawyer would recognize as perjury. As noted above, subsequent to the 1993 Amendments to Rule 11, the Second Circuit reaffirmed that "[a]n attorney is entitled to rely on his or her client's statements as to factual claims when those statements are objectively reasonable." Hadges, 48 F.3d at 1329 (emphasis added).
The question thus becomes whether, in light of all the information available to them, Pennie Edmonds could reasonably rely on the factual representations of Mr. Brija and his partner to the effect that they had sold sauce under the Patsy's label in 1993 and that they had no responsibility for the false documents submitted in connection with the preliminary injunction motion.
In assessing Pennie Edmonds' conduct, it is important to note that this is not a case where the client was telling a story for the first time and counsel had only vague suspicions that the client's assertions were not true. By the time Pennie Edmonds took on the representation of I.O.B., a highly detailed affidavit of Mr. Brija had been conclusively proven to be false in very material respects, and had been disavowed by predecessor counsel who then withdrew from representing I.O.B.
While, as noted above, the court accepts the firm's assertion that it acted in subjective good faith, the entire record leaves the Court convinced that the firm could not have had a reasonable belief that the statements in Mr. Brija's affidavit were true.
1. As noted above, at the time they prepared their client's false affidavit, counsel knew that their client had been caught in a lie when he swore in a prior affidavit and deposition that a label and invoice had been prepared in 1993, although each of those documents contained evidence on their face that proved they were created several years later.
2. While counsel argues that they accepted their client's argument that he had been "confused" at the time of his earlier false statements under oath, which he claimed were prepared under the time pressure of a preliminary injunction motion, counsel fails to note the significance of the fact that prior counsel had withdrawn all reliance on the facts set forth in the original affidavit and withdrew from representing the I.O.B. defendants after the earlier perjury was disclosed. The fact that prior counsel had not offered the excuse that their client had been confused because of the press of time and attached the wrong label to his affidavit should have made it apparent to Pennie Edmonds that prior counsel did not believe that the false statements Mr. Brija made were the result of some confusion. In addition, the original affidavit was replete with details that indicated that it was not prepared in undue haste and Brija repeated the false statements a month later in his deposition.
3. The firm also contends that it obtained comfort that Mr. Brija's sworn statements that the labels were purchased in 1993 were the result of inadvertence because Mr. Brija showed them a statement from the printer which in effect took the blame for submitting the back dated invoices. First, the story that the printer had some motive to create a back dated invoice, and would have done so without telling Mr. Brija, on its face strains credibility. More important, however, the firm knew from the printer's lawyer that the printer would say he signed the statement without seeking the advice of a lawyer and that, if called as a witness, the printer would say he had not even done business with I.O.B. in 1993. In view of the printer's statement that he did not even do business with I.O.B in 1993, how could Pennie Edmonds accept Mr. Brija's assertion that he simply made a mistake as to which label was printed in 1993 and that the same printer printed the 1993 label? Indeed how could any reasonable attorney not clearly understand that the printer's lawyer was telling him that, if called to testify, the printer would contradict Mr. Brija in every material respect? Thus, the evidence that Pennie Edmonds had from the printer's lawyer was alone enough to put the firm on notice that it could not accept Mr. Brija's sworn statement.
4. The firm contends that Mr. Brija's statement that he did sell sauce in 1993 was confirmed by the fact that in 1994 I.O.B. granted a license to another company that provided: "In the event the Licensor shall establish a line of products, Licensee shall have the option to purchase said Products . . . ." (emphasis added.) It would seem that anyone critically looking at the question whether Brija had sold sauce in 1993 would view the underscored language as evidence that as of the time of the license Brija had not established a line of food products and had not sold sauce in 1993.
5. The firm also argues that the fact that a ® appeared on the label Mr. Brija swore he used in 1993, did not raise any concern that the label was not created until after the mark was registered in 1996 because some companies put the ® on products they intend to market before the application to register the mark is filed. While this explanation might make some sense in the case of a major company such as Proctor Gamble, which has innumerable registered marks, it is ludicrous when applied to a small company like I.O.B., which registered its first mark in 1996. While standing alone counsel's failure to note the significance of the ® on the label might not establish that counsel was not objectively reasonable in accepting Mr. Brija's assertion that he created the label in 1993, the fact that skilled trademark counsel did not even question Mr. Brija about this inconsistency simply emphasizes the extent to which counsel were willing to close their eyes to obvious red flags in order to avoid a confrontation with their client.
In sum, all of the facts available to Pennie Edmonds should have convinced a lawyer of even modest intelligence that there was no reasonable basis on which they could rely on Mr. Brija's statements, even if his partner, Mr. Brecevich, was prepared to support him.
Nor can the Court accept the argument of Pennie Edmonds that their conduct is excusable because they did not rely on Mr. Brija's factual assertions in their submission on I.O.B's behalf. While it is true that Pennie Edmonds did not rely on Mr. Brija's statements in I.O.B's motion for summary judgment, it also opposed the Plaintiff's Motion for Summary Judgment and affirmatively used Mr. Brija's false statement in its opposition papers.
In its brief in support of summary judgment, Plaintiff argued that under the Polaroid test, one of the factors to be considered is whether the defendant has acted in bad faith. (P. Br. 15-16). Plaintiff also argued that the equities were in its favor because it used the mark Patsy's for sauce long before I.O.B. In support of these arguments, Plaintiff referred in ¶ 26 of its Rule 56.1 Statement, quoted above, to the fact that I.O.B. had submitted falsified evidence in opposition to the motion for a preliminary injunction, as evidence that I.O.B. had not adopted its sauce label in good faith.
In response, Pennie Edmonds did not concede either that Plaintiff had been selling sauce under the Patsy's label prior to I.O.B. or that it deliberately submitted falsified documents. Instead, it filed a reply to Plaintiff's Rule 56.1 statement in which it contested ¶ 26 of Plaintiff's statement, as well as the affidavit of Mr. Brija, which contained another elaborate story as to how he created I.O.B.'s label in 1993. A law firm such as Pennie Edmonds, which holds itself out as an expert in trademark law, could not have been oblivious to the importance of the timing of I.O.B.'s entry into the sauce market and its good faith in adopting its label to the analysis the Court was required to undertake in applying the Polaroid test. Indeed, over six pages of the Court's Opinion on the summary judgment motion were needed to address the issues of priority and good faith raised by Mr. Brija's false affidavit.
In its original memorandum opposing sanctions, Pennie Edmonds noted the fact that, once I.O.B's fraudulent documents were unmasked, prior counsel had advised the Court that I.O.B. withdrew its reliance on its claim that it had sold sauce under the Patsy's label prior to Plaintiff. Pennie Edmonds argued that this showed that they were not relying on these arguments. If that were so, then there should have been no ¶¶ 17 or 18 in Mr. Brijia's affidavit and no contesting of ¶ 26 of Plaintiff's Rule 56.1 statement. The only reasonable inference from the fact that the Brijia affidavit contained ¶¶ 17 18 and that ¶ 26 was contested was that Pennie Edmonds was withdrawing the concession of predecessor counsel and that these facts were contested.
Thus, Pennie Edmonds had to understand the significance of Mr. Brija's false affidavit to the court's assessment of Plaintiff's motion for summary judgment and it had an obligation to the Court to see that it was truthful. Since the court has concluded that objective reasonableness is the proper standard on which to judge counsel's conduct and that counsel did not have an objectively reasonable basis to believe in the truth of the facts they put into Mr. Brija's affidavit, Rule 11 sanctions are appropriate. The questions that remain are who is the appropriate party to be sanctioned — the individual lawyer who handled the litigation or the law firm — and what the appropriate sanction should be.
The Court is familiar enough with large law firm practice in New York to know that this is a typical large law firm situation in which a client is introduced to the firm by one partner but the litigation is handled by another. The Court is also aware of the substantial economic benefits that flow to "finders", the partners who find the clients, and the pressure to please the client that is felt by the "minders", the lawyers that actually do the client's work. Thus, the litigating partner in this case no doubt felt an obligation to his partners not to jeopardize the firm's relationship with the client by telling the client that the client's factual statements were not credible in light of all of the contrary evidence. While the record does not clearly reflect the extent to which the originating partner was involved in the decision to allow the client to submit the false affidavit, it seems clear that the ultimate responsibility should rest with the firm and not its litigating partner. Given the economic pressures of big firm practice, it is the responsibility of the firm to insure that each of its partners is aware that it is firm policy that its partners and associates adhere to the highest ethical standards and that if a lawyer's adherence to those standards results in the loss of a client, large or small, the lawyer will not suffer any adverse consequence. If the lawyers involved in the preparation of Mr. Brija's affidavit truly believed their firm had such a policy then they might not have closed their eyes to the significance of all of the facts which established that they could not reasonably accept Mr. Brija false statements.
Pennie Edmonds' fine reputation in the New York legal community and the fact that the firm has been candid with the Court in admitting the damaging information it learned from the lawyer for the printer are highly relevant in determining what sanction the Court should impose.
Rule 11 provides:
A sanction imposed for violation of this rule shall be limited to what is sufficient to deter repetition of such conduct or comparable conduct by others similarly situated.
The Advisory Committee comments on Rule 11 note that, "The court has available a variety of possible sanctions to impose for violations, such as striking the offending paper; issuing an admonition, reprimand, or censure; requiring participation in seminars or other educational programs." Fed.R.Civ.P. 11 advisory committee's note.
Given Pennie Edmonds' reputation and its candor in these proceedings, the Court is persuaded that little sanction beyond the publication of this Opinion is required to prevent repetition of similar conduct. Thus all that the Court will require is that a partner of the firm submit to the Court an affidavit stating that a copy of this Opinion has been delivered to each of the lawyers in the firm with a memorandum that states that it is firm policy that its partners and associates adhere to the highest ethical standards and that if a lawyer's adherence to those standards results in the loss of a client, large or small, the lawyer will not suffer any adverse consequence.
The Court does not take lightly the exercise of its sanction power. For that reason, this Opinion has detailed at length the significance of Mr. Brija's affidavit and the facts indicating that no reasonable lawyer could accept his statements as true.
In this age, where law firms have become bottom line oriented, it is important for lawyers to be reminded that there are certain lines lawyers can not cross in their endeavor to increase the bottom line, and that their duty of candor toward the Court can not be sacrificed to please a client.
SO ORDERED.