‘Vindictive’ discovery results in huge sanctions against lawyer and client

August 1, 2013

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By: ACEDS Staff
Date: Thursday, August 1, 2013

A scorched-earth campaign waged with abusive discovery tactics and “well-pleaded lies” has resulted in career-threatening sanctions for a Virginia lawyer, Stephen Glassman, who must foot with his client, Yvonne Christ, a bill of $879,000.

The penalty, ordered by Fairfax County Judge Jonathan Thacher last month, is a forceful shot across the bow to lawyers who pursue “fishing expeditions” through discovery and frivolous claims.

Judge Thacher found that Glassman had “embarked upon a course of protracted, no-holds-barred litigation” displayed by “numerous rounds of complaints…, burdensome and onerous discovery, and incessant motion practice up to the very morning of trial.”

Glassman filed four complaints alleging four causes of action, each of which, the judge said, was without any “reasonable factual predicate.” Instead, they gave a veneer of legitimacy to what Thatcher in the end called a crusade by the client, Christ, of “retaliate[ion] against her ex-husband” with her “vast financial arsenal.”

The case arose in a suit by Christ against her ex-husband, Wolfgang Wagner, and a trust holding the proceeds of the sale of his company, Flinthill Space Communication. Christ said she did not receive her fair share of the proceeds and alleged breach of contract and of fiduciary duty, conversion and conspiracy. These allegations followed a contentious divorce case that resulted in Christ receiving half of Wagner’s share of the trust funds.

‘Christ sought to re-open discovery’

Accounting records, which Glassman is said by the court to have overlooked before filing the suit and during discovery, show Christ was properly compensated and given an accurate accounting.

“The evidence shows that… Christ sought to re-open discovery and re-litigate the… divorce, expecting to discover an imagined undisclosed banking account belonging to [her ex-husband],” Judge Thacher said in a 38-page ruling of June 14.

Gregory Murphy, attorney for the defendants at Vorys, Sater, Seymour and Pease, in Washington, DC, told ACEDS that, “among the many abuses, [the plaintiffs] were making numerous and extensive discovery requests, most all of them for information… they already had at their disposal.”

“Counsel… (did not look) at the documents until many months after they had filed the complaint. And then, in order to prevent having a claim thrown out, fabricating fallacious factual defenses… over motions heard by the court,” Murphy added.

William Dolan, attorney for Glassman at Venable, in Tysons Corner, Virginia, did not respond to a request for comment. Nor did Glassman, who is co-founder of Glassman & Michael, in Tysons Corner, which also declined to comment.

One of the largest attorney sanctions 

Using 185 pages of time records and invoices from their counsel, the defendants sought $913,000 in sanctions as reimbursement for costs they say they incurred to defend the lawsuit and for their work in the sanctions motion. The final amount, $879,000, is believed to be the largest fine ever levied on an attorney in Virginia, though Judge Thacher did not say how payment of the  sanction should be divided between lawyer and client.

Failure to investigate claims reaps tough penalties

The Glassman case also provides a lesson in the importance of investigating the assertions of clients before instigating litigation and of following that practice throughout  a case. This obligation includes knowing what documents a client possesses and how they relate to the pertinent claims and defenses, Judge Thacher said.

Glassman admitted that he did not examine the voluminous accounting records that his client had obtained in the divorce proceeding, which were crucial to his case. He also failed to review these documents during discovery, according to Judge Thacher’s opinion.

“There’s a basic ‘know your client’ obligation that you can boil out of ethics rules,” Steven Bennett, partner at Jones Day, in New York, who leads the firm’s e-discovery practice, said in a recent ACEDS webinar. Part of “knowing your client,” he added, includes becoming familiar with the location and content of materials that may be relevant in discovery.

Attorney resisted offers to review records

Several times before filing the suit, the defendants offered to meet with Glassman and his client to review accounting records, Judge Thacher said.

“They declined our offer,” Murphy said, “choosing full-fledged, scorched earth litigation tactics instead.”

It was this conduct about which Judge Thacher saved his most pungent reprimand:

“Given how central these accounting documents are to this case, surely the question must be asked: how can you reasonably sign pleadings claiming your client has not received a complete accounting… when you have failed to review the accounting documents that your client has received? Put even more simply, how do you know you are missing (something?), if you do not bother to look at what you have?”

‘Fishing expeditions’ lead to ‘perilous uphill battle,’ professional duty ‘breach’

The case is not one of voluminous electronically stored information, multiple custodians, or complex data repositories, but it provides many lessons for e-discovery professionals.

Among them is that discovery, as Judge Thacher said, cannot be used to ferret out material to support claims that have no evidentiary basis at the time they are lodged. Nor should it serve as a weapon to escalate an adversary’s costs in order to force settlement.

“This court will not host fishing expeditions,” Judge Thacher said. “If you… have facts to reasonably support a cause of action, then plead them. If not, and you choose to… sign pleadings anyway, you are not only fighting a perilous uphill battle, you are breaching your professional [duties].”

Glassman and Christ were given 90 days to pay the monetary sanction to Vorys, which represents the defendants.

“In the end, this ruling should give pause to litigants and attorneys to think before they use frivolous litigation as a weapon,” Murphy, the Vorys attorney, says.

“Lawyers should be the gatekeepers between their clients and the courthouse,” he concluded.

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Court filings from this article

Defendants’ Reply to Memorandum of Stephen Glassman in Opposition to Sanctions

Christ v. Flinthill Space Communications Trust 6-14-13 Opinion