In one of the largest sanction orders in recent Colorado history, the U.S. District Court for the District of Colorado ordered Seyfarth Shaw LLP and Howmedica Osteonics Corp, a subsidiary of Stryker Corporation, to pay a $274,818.58 sanction.
The sanctions arose from ORP Surgical, LLC v. Howmedica Osteonics Corp. ORP Surgical and its primary owner Lee Petrides sued Howmedica Corp for alleged wrongful actions done during the winding down of business relations, according to the opinion.
In that case, the court entered a judgment in favor of Stryker on ORP’s “corporate raiding” claim, in favor of ORP on its breach of contract claims and on Stryker’s counterclaims, awarded ORP $1,018,896 and $3,731,791.47 in damages plus prejudgment interest for Stryker’s failure to make restriction payments following its termination of two contracts between the companies. The court also awarded ORP $1.00 in nominal damages for soliciting and diverting ORP’s sales representatives in violation of their contract, awarded ORP reasonable attorney’s fees and ordered Stryker and Seyfarth Shaw LLP to reimburse ORP’s share of the special discovery master’s fees and costs as a sanction for improper discovery tactics.
In the case, the court noted that due to the “volume and antagonistic nature of the discovery disputes that were occurring,” it had appointed a special master to assist in managing the discovery process, according to the sanctions opinion. The special master recommended sanctions against Stryker on two occasions. The first was for Stryker’s failure to preserve and produce certain text messages.
The second recommendation came after the special master found Stryker and/or its counsel at Seyfarth Shaw LLP had engaged in three types of misconduct. First, he found attorney Robyn Marsh had repeatedly made unwarranted form objections and on several occasions made other inappropriate objections. Second, Stryker’s lawyer had improperly coached and insufficiently prepared Rule 30(b)(6) witnesses. Third, that Stryker fell significantly short of its obligation to timely and completely disclose relevant documents, according to the opinion.
Senior Judge R. Brooke Jackson, in the sanctions opinion, wrote that during the trial he “was ‘appalled’ at Stryker’s lawyers’ ‘playing fast and loose’ with discovery obligation.” On his review of a video portion of a deposition in the case, he agreed with the special master that “defense counsel’s conduct was rude, unprofessional, and inappropriate.”
When calculating the sanction order, Jackson determined it based on the discovery process, coming to the sanction figure of $274,818.58.
Chris Carrington, a partner at Richards Carrington, told Law Week via email that he hopes the sanction order will serve as a reminder to the legal community that the rules have a purpose.
“Where the rules are ignored, where evidence is destroyed and manipulated, as here, the end-result (the judgment/verdict) is of a lesser quality,” said Carrington. “Where the court’s judgment is based on less than all of the relevant evidence, or where it is distorted by lies and manipulated evidence, that judgment is less accurate and, as such, less fair.”
Carrington added that it’s important for lawyers to follow the rules and for judges to enforce them, particularly with the decline of public confidence in the legal system. But for lawyers who are playing a ‘catch me if you can’ game with the courts, he said the case sent a strong message.
“I guess the message here is that you can play that game, but if you run into a principled, experienced jurist like Judge Brooke Jackson, you do so at your (and your client’s) own peril,” said Carrington.
Stryker and Seyfarth Shaw LLP didn’t respond to requests for comment.
CORRECTION NOTE: This article was updated June 20 to correct the spelling of Robyn Marsh. Law Week regrets the error.