Judge's Ruling Condemns Eaton Corp. Lawyers' Court Conduct
A Mississippi judge has issued a scathing, 123-page ruling citing new evidence that Eaton Corporation and its lawyers knew more than they have admitted about attempts to influence a previous judge, and that they tried to cover up the evidence. (A copy of the ruling from Hinds County Circuit Court Judge Jeff Weill Sr. can be found here.)
Its hard to imagine a stronger condemnation of a companys conduct, said J. Clifton Johnson II, of the Jackson law firm Pigott & Johnson, who represents the defendants in the case. Frankly, its stunning. Johnson has not seen the new evidence yet, but says he can hardly wait.
For the first time, the ruling seriously implicates Eaton general counsel Mark McGuire. It cites a 2007 email to McGuire that implies McGuire knew that the company was using a former veteran prosecutor named Ed Peters to try and influence the judge. Judge Weill did not quote directly from the email.
The email evidences Eatons continued attempts to use Peters behind the scenes, the order states. Notably McGuire denied any knowledge of Peters actions in this case, but this email, and [one from a day earlier] clearly indicate otherwise.
Neither McGuire nor Cleveland, Ohio-based Eaton returned messages seeking comment.
Weills ruling came late Wednesday in Eatons $1 billion lawsuit against competitor Frisby Aerospace. The suit claimed that six Eaton engineers who worked at a plant in Jackson left the company to join Frisby and took trade secrets with them.
The court had already dismissed Eatons case due to prior misconduct, which included accusations that it paid off a star witness, lied about the payoff during discovery, and then hired a secret outside counsel (Peters) to influence the then-sitting judge through ex-parte communications.
Eaton, which was ordered to pay $1.5 million in sanctions, is appealing the dismissal of its case to the state supreme court.
But the defendants counter-claims against Eaton are pending in Hinds County before Judge Weill. His new ruling concerns Eatons admission in April that it had found some 15,000 pages of new documents that should have been revealed in 2008 and 2009 during discovery.
Many of the documents herein warrant additional findings of the fraud upon the court perpetrated by Eaton and Peters, Weill wrote. In addition, many of the newly produced documents evidence ongoing cover up efforts by Eaton and its attorneys of the original fraud.
He said missing documentsespecially emails that seem to be missing text or missing responses and corresponding time entriesalso contribute to this courts findings of fraud on the court.
The new documents are especially damaging to two of McGuires in-house counsel who were already fired over the previous misconduct, as well as to Eatons outside law firm of Quarles & Brady. The Milwaukee law firm withdrew from the case, apparently terminated by Eaton, Weill wrote.
Weill calls one email concerning the courts special master the most egregious discovery violation perpetrated by Eaton to date. It is from Quarles & Bradys Michael Schaalman to Peters, and says, We need to discuss how either I can win this guy [the special master] over or how we can convince the judge to appoint a different special master.
A month later the judge removed the special master and hired a new one selected by Peters. Schaalman has declined comment on the case. Peters, who has since been disbarred for other misconduct, could not be reached.
The judges order undertakes a lengthy analysis of hundreds of documents, but rarely quotes from them.
Eaton has claimed the documents are protected by attorney-client and work product privilege. But Weill found a crime-fraud exception applies to many of them and ordered them produced in 21 days.
He also ordered other documents to be produced in camera for his review, as well as more information about other evidence.
The court said the new documents show that Eaton had knowledge of its discovery omissions at least two months before it brought them to the courts attention.
Incensed by Eatons repeated discovery failures, Weill wrote, The issue is much akin to discovering that an incarcerated man, in prison for life, is also responsible for additional crimes. . . . So what should his punishment be, if any?
Similarly Eaton has already been subjected to the ultimate penalty (dismissal of its case), Weill wrote, adding, the documents at issue in this order evidence further fraud on the court by Eaton and its counsel. The question remains -- What now?
Weills order left the question unanswered. But he indicated the answer will come as he hears the defendants counter-claims.
His reply could range from something he devises, such as imposing another huge monetary sanction on Eaton, to granting the engineers motion that he strike all of Eatons defenses to the counter-claims, essentially granting them victory.
See also: The Eaton In-House Lawyers Who Couldn't Stop Suing, CorpCounsel, September 2012.