The Daily Business Review by Jose Pagliery - January 3, 2011
MIAMI, FL - In a long-awaited decision arising from a protracted South Florida harassment case, a federal appeals panel has ruled that lawyers seeking sanctions against opposing attorneys may now recover fees accrued during the time it took to pursue the punishment. A sharply worded opinion issued this week by a three-judge panel of the 11th Circuit Court of Appeals upheld a Miami federal judge’s imposition of $387,738 in sanctions against the legal team of Bill and Karen Amlong. With a 2-1 vote, the panel concluded the Amlongs’ Fort Lauderdale firm should not have continued to press a sexual harassment case for their client after both sides discovered various inconsistencies in the plaintiff’s testimony during depositions. The Amlongs had represented Floride Norelus, an undocumented Haitian immigrant who worked at a Denny’s restaurant from 1993 to 1994. She alleged her boss and his friend raped her countless times and threatened to report her to immigration authorities if she told police about the assaults. But during an eight-day deposition with defense counsel and an interpreter, Norelus contradicted several of her statements. In her 1996 lawsuit, she alleged her boss, Asif Jawaid, forced her to have sex near the restaurant freezer. During the deposition, she testified that never happened at that location. The suit also alleged she was forced to have oral, vaginal and anal sex in her manager’s office, but she later said neither vaginal nor anal sex occurred there. Her attorneys subsequently prepared an errata sheet to make corrections and adjustments to her testimony — one that was 63 pages long and included 868 changes to her deposition. The Amlongs blamed a bad translation. But defense counsel moved to dismiss the case, accusing Norelus of perjury. When the Amlongs refused to pay for another deposition in late 1996, the case was dismissed. For more than a decade, the defense attorneys sought sanctions against the Amlongs for violating a federal code that forbids pursuing cases "unreasonably and vexatiously." Tuesday’s federal appellate panel’s majority decision was written by Judge Ed Carnes, who stated: "We compare the conduct at issue with how a reasonable attorney would have acted under the circumstances. The Amlongs’ conduct was at least objectively reckless." In an e-mail to the Review on Thursday, Bill Amlong wrote that "[Our] credentials and the record evidence is inconsistent with the behavior ascribed to us by the majority opinion." Carnes noted that many of Norelus’ coworkers at Denny’s did not support her allegations of abuse. "Still, like Ahab hunting the whale, the Amlongs relentlessly pursued the claims. … "When the truth was thrust in the Amlongs’ faces, they stubbornly ignored it and kept on litigating." In his dissent, Judge Gerald Bard Tjoflat held Karen Amlong was not wrong in submitting corrections to meet "her obligations under the Florida Rules of Professional Responsibility." But Carnes sarcastically criticized Tjoflat’s questioning of the status of the errata sheet. "The first and only time this issue has been raised in the more than fourteen years since the errata document was submitted is now, by our dissenting colleague who wants us to share his novel vision and reverse the district court’s award on sanctions on that basis," he wrote. Dale Friedman, the Hollywood attorney representing Norelus’ former boss, said she was delighted. She noted how shocked she was when dealing with the document at the center of the storm — the long list of corrections to Norelus’ testimony. "I’ve never in my career seen an errata sheet like this," said Friedman, a partner with Conroy Simberg Ganon Krevans Abel Lurvey Morrow & Schefer. She and other defense attorneys involved in the case were ordered to receive any funds disbursedby the Amlong firm, which will amount to more than $387,738 because of accrued interest. The list of defense attorneys includes the one representing Denny’s, Stearns Weaver Miller Weissler Alhadeff & Sitterson shareholder Jon K. Stage, and a Denny’s franchisee’s solo Miami attorney Averill G. Marcus. In issuing its opinion, the 11th Circuit also established precedent, addressing for the first time whether "a district court may include costs arising from the sanctions proceedings themselves in an award of sanctions." "The additional reason supporting our conclusion is the fact that a categorical rule excluding from a sanctions award the costs incurred in obtaining it would undercut the purposes of providing for sanctions. The time, effort, and money a party must spend to get another party sanctioned realistically is part of the harm caused by that other party’s wrongful conduct," Carnes wrote.
A Stark Warning
Attorneys who practice in federal court noted that awarding fees incurred while seeking sanctions has been a common practice, but some see the recent opinion as a message of caution. "I think it’s telling everyone that if you’re going to contest a sanctions award, be wary because that may not be the finish line," said Paul Lopez, president of the Federal Bar Association’s Broward County chapter. The Tripp Scott partner added the opinion is "a strong message to lawyers: Don’t engage in misconduct. It’s going to be very expensive." Novak Druce + Quigg partner Joseph Bain, who previously headed the Palm Beach County chapter of the Federal Bar, said chasing down those fees has never been an issue — but only because the cost of doing so pales in comparison with the cost of the actual case. But the biggest effect could be in the minds of judges, according to Miami defense attorney David Oscar Markus, who himself has a pending appeal in a case involving sanctions against federal prosecutors. "There is a bubbling debate about whether judges should use their authority to sanction lawyers more often. This case will certainly give comfort to judges in this arena. At the end of the day, trial judges are in the best position to determine whether sanctions should be imposed," Markus wrote in an e-mail Thursday. The Amlongs say they will try to overturn the recent decision. "We are disappointed. We are tired. But we are not defeated," Bill Amlong wrote. He noted Tjoflat’s dissenting opinion and a U.S. magistrate judge in Miami ruled in their favor. "The widely variant tones of the several judges who have looked at this case … compel further review."