United States District Court, D. Idaho
L.J. GIBSON, et al., Plaintiffs,
CREDIT SUISSE AG, a Swiss corporation, et al., Defendants,
ORDER ON REMAND AND MEMORANDUM DECISION AND ORDER RE:
MOTION TO (1) DISBURSE FINES FROM REGISTRY OF THE COURT; (2)
DISCHARGE SANCTIONS ORDER; AND (3) VACATE SANCTIONS ORDERS
(DOCKET NO. 866)
E. Bush Chief U.S. Magistrate Judge
Court issues the following Order on Remand in response to the
Ninth Circuit's April 26, 2018 Memorandum Opinion.
See Gibson v. Credit Suisse Group Sec. (USA) LLC,
733 Fed.Appx. 342 (9th Cir. 2018). Also pending is
the Motion of Robert Huntley, James Sabalos, Michael J.
Flynn, Christopher J. Conant, and Philip H. Stillman (present
and former counsel of record for Plaintiffs, collectively
referred to as “Movants”) to “(1) Disburse
Fines from Registry of the Court; (2) Discharge Sanctions
Order; and (3) Vacate Sanctions Orders” (the
“Motion”). See Mot. (Dkt. 866). Having
carefully considered the record, heard oral argument, and
otherwise being fully advised, the Court enters the following
Memorandum Decision and Order:
March 29, 2013, the undersigned issued a Memorandum Decision
and Order (the “Sanctions Order”), (1) granting
Defendant Cushman & Wakefield's Motion for Sanctions,
(2) granting Defendant Credit Suisse's Motion for Order
to Show Cause, and (3) denying Plaintiffs' Motion for
Award of Attorneys' Fees Re: Motions by Defendants.
See 3/29/13 MDO (Dkt. 352). The Sanctions Order
addressed the circumstances surrounding certain of
Plaintiffs' counsel's (Movants) conduct and
representations relating to Michael L. Miller's
declaration, affidavit, and deposition testimony. See
generally id. Ultimately, this Court was
“convinced, after considering the written and oral
arguments of counsel, that there has been a material failure
on the part of Plaintiffs' counsel in their
responsibilities to this Court, as officers of this Court, in
the circumstances underlying the pending motions.”
See id. at pp. 17-18. The Court found that, because
Plaintiffs' counsel repeatedly relied upon and made
representations on the record regarding a declaration
attributed to Mr. Miller but unsigned by him, they had a duty
to inform the Court and opposing counsel when an affidavit
that Mr. Miller subsequently did sign was materially
different. See id. at pp. 18-23. Specifically, the
Such a failure is an abuse of the duties owed to the Court
and constituted or was tantamount to bad faith. Such a
failure delayed and hampered the litigation process by
presenting a flawed and arguably false record before the
Court, while at the same time asking the court to focus upon
the flawed portion of that same record as a basis for
deciding critical motions in the case. The Court properly can
sanction such failures by Plaintiffs' counsel under its
Plaintiffs' counsel had a duty under Idaho Rule of
Professional Conduct 3.3(a)(1) not to knowingly “make a
false statement of fact or law to a tribunal or fail to
correct a false statement of material fact or law previously
made to the tribunal by the lawyer.” Plaintiffs'
counsel's failure to file the signed statement of Mr.
Miller, once it was received and in the context of
representations in writing and orally about the facts and
circumstances of Mr. Miller's unsworn testimony,
constituted the equivalent of an affirmative
misrepresentation. The signed “affidavit” was not
the same document as the unsigned declaration. The statement
of fact that the witness, Mr. Miller, would not sign a
statement under oath because of fear of retaliation was no
longer true, even if true at the outset, at the moment he did
sign the affidavit. Further, Plaintiffs' counsel's
failure to remedy such matters is a breach of a lawyer's
“duty of candor to the tribunal” which warrants
“reasonable remedial measures.” Plaintiffs'
counsel's failure to file the signed statement when it
came into their possession had the inevitable, and intended,
effect of unreasonably multiplying the proceedings in this
case pertaining to briefing, argument, consideration and
decision upon motions to dismiss, and motions to amend.
Whether or not Judge Lodge ultimately changed any of his
decision upon objections (or reconsideration of his decision)
to the undersigned's Report and Recommendation dated
February 17, 2012 does not change this analysis or the
finding made here. The failure to file the signed affidavit
necessarily meant that the nature of the briefing and the
argument, and the court's consideration of the evidence
and decision upon the same, was different than it would have
been with the addition of such evidence to the record. The
Court acknowledges that Plaintiffs' counsel would have
been free to argue, and no doubt would have argued, that the
signed statement was of no different evidentiary importance
than the unsigned affidavit. But, defense counsel would also
have the argument that the signed statement was substantively
different, that the characterization of a whistleblower
witness worried about retaliation was unfounded, and the
Court would have had that full panoply of evidence and
argument to consider. When the signed statement came to
light, a new round of motion practice ensued and even the
very fact of the Memorandum Decision and Order is evidence
that proceedings have been multiplied and additional
resources of the parties and the court have been drawn upon.
The Court finds that the failure of Plaintiffs' counsel
to file the signed, sworn affidavit in the circumstances
described in this Decision was done recklessly at a minimum,
and that such reckless conduct on the part of lawyers to this
case, as officers of the court, justifies a finding that the
attorneys are personally liable for excessive costs
associated with such conduct. There is no question but that
Plaintiffs' counsel was aware of the signed, sworn
affidavit. Indeed, the record indicates that they were in
repeated contact with Mr. Miller requesting him to make the
sworn statement, so that it could be submitted to the Court.
Yet, after submitting an unsworn declaration, and
representing that a sworn statement could not be obtained
because of the witness's fear of retaliation, they failed
to file the actual sworn affidavit when it came into their
possession. Such conduct is reckless at a minimum. Therefore,
the Court finds that an award of sanctions against
Plaintiffs' counsel is also appropriate under 28 U.S.C.
Id. at pp. 21-23 (internal citations omitted).
Having determined that an award of sanctions against
Plaintiffs' counsel was justified under (1) the
Court's inherent powers, (2) Idaho Rule of Professional
Conduct 3.3, and (3) 28 U.S.C. § 1927, the undersigned
ordered that Plaintiffs were precluded from using testimonial
evidence of Mr. Miller for any purpose unless such evidence
was obtained in deposition or courtroom testimony. See
id. at pp. 23-24. Relevant here, the Court also imposed
monetary sanctions upon certain of Plaintiffs' counsel
(Movants) as follows:
Plaintiffs' counsel, jointly and severally, shall pay a
sum to each Defendant - Credit Suisse and [Cushman &
Wakefield] - to be determined upon consideration of
appropriate evidence, to recompense said Defendant for the
attorneys' fees and costs necessitated by the motions
filed seeking sanctions as a result of the failure to file
the sworn affidavit of Mr. Miller. Plaintiffs' counsel is
each individually sanctioned in the sum of $6, 000.00. The
Court arrives at that sum by considering the very serious
nature of the decision not to file the sworn affidavit of Mr.
Miller, or to advise opposing counsel of the existence of
that sworn affidavit, all as further previously discussed in
this Decision. Such failure unnecessarily multiplied the
proceedings in this lawsuit, caused an unnecessary and
unjustifiable use of the resources of the parties and the
Court, constituted a material misrepresentation of the
evidentiary record, and violated an attorney's duty of
candor to the Court. Any sanction for those serious
professional failings must serve both as a sanction for the
fact of the improper conduct and as a deterrent to the
lawyer, and other lawyers, who might consider taking such
actions in the future.
Id. at pp. 24-25.
April 8, 2013, in anticipation of objecting to the Sanctions
Order, Plaintiffs moved to stay the briefing and payment
protocols outlined therein. See Mot. to Stay (Dkt.
358). Plaintiffs formally objected to the Sanctions Order on
April 12, 2013. See Opp. to Sanctions Order (Dkt.
367). On April 22, 2013, the Court stayed the deadlines
referenced within the Sanctions Order, pending resolution of
Plaintiffs' objections. See 4/22/13 Order (Dkt.
April 24, 2013, Plaintiffs moved to reconsider the Sanctions
Order. See Mot. to Recon. (Dkt. 392). On August 15,
2013, the undersigned denied Plaintiffs' request for
reconsideration. See 8/15/13 Order (Dkt. 408).
October 17, 2014, U.S. District Judge Edward J. Lodge
affirmed the Sanctions Order (and likewise denied
Plaintiffs' objections to the same). See
10/17/14 Order (Dkt. 531). In doing so, Judge Lodge agreed
that Plaintiffs' counsel's conduct was sanctionable
in the above-referenced respects under (1) Idaho Rule of
Professional Conduct 3.3, (2) 28 U.S.C. § 1927, and (3)
the Court's inherent powers. Id. at pp. 7-23.
Additionally, Judge Lodge lifted the stay. See id.
at p. 23.
November 7, 2014, Plaintiffs' counsel appealed the March
29, 2013 Sanctions Order, as well as Judge Lodge's
October 17, 2014 Order affirming the Sanctions Order.
See Not. of Appeal (Dkt. 540). On December 3, 2014,
the U.S. Court of Appeals for the Ninth Circuit dismissed
Plaintiffs' appeal for lack of jurisdiction. See
Order (Dkt. 553).
September 8, 2015, the undersigned granted Credit
Suisse's and Cushman & Wakefield's motions for
costs and attorneys' fees, ordering that “[t]he
previously-identified Plaintiffs' counsel, jointly and
severally, shall pay $27, 834.50 to Credit Suisse . . . [and]
$29, 903.50 to Cushman & Wakefield.” 9/8/15 MDO, p.
18 (Dkt. 674). The sanction represented by the reimbursement
of attorneys' fees to Credit Suisse and Cushman &
Wakefield thus totaled $57, 738.00. See id.
October 28, 2015, Plaintiffs moved to reconsider Judge
Lodge's October 17, 2014 Order affirming the Sanctions
Order. See Mot. to Recon. (Dkt. 706). On February 2,
2016, Judge Lodge denied Plaintiffs' request for
reconsideration. See 2/2/16 Order (Dkt. 777).
July 27, 2016, U.S. District Judge Justin L.
Quackenbush granted Defendants' Motions for
Summary Judgment. See 7/27/16 MDO (Dkt. 815). On
August 2, 2016, the Court issued a Judgement in
Defendants' favor, dismissing Plaintiffs' Fifth
Amended Complaint and the claims therein with prejudice.
See 8/2/16 J. (Dkt. 816).
August 17, 2016 and August 23, 2016,  Plaintiffs' counsel
appealed (1) the undersigned's March 29, 2013 Sanctions
Order, (2) Judge Lodge's October 17, 2014 Order affirming
the Sanctions Order, (3) the undersigned's September 8,
2015 Order granting Defendants' motions for costs and
attorneys' fees, and (4) Judge Lodge's February 2,
2016 denial of Plaintiffs' efforts to reconsider his
October 17, 2014 Order affirming the Sanctions Order.
See Not. of Appeal (Dkt. 819 &
April 26, 2018, the Ninth Circuit upheld the ruling that
Plaintiffs' counsel acted in bad faith and affirmed the
Court's award of attorneys' fees. See Mem.,
pp. 2-7 (Dkt. 859). However, only as to the Court's
imposition of sanctions in the amount of $6, 000 per