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7th Circuit Affirms Sanctions Against Jones Day
The sanctions stem from a trial that dealt with a contract dispute over the pricing of stainless steel tubing
The National Law Journal
May 15, 2008
The 7th Circuit U.S. Court of Appeals has affirmed sanctions against Jones Day for bringing a baseless counterclaim in a contract dispute in Wisconsin.
The three judge panel on May 13 affirmed $30,000 in sanctions against the law firm for violating Rule 11, the federal rule of civil procedure that prohibits parties from bringing frivolous claims.
The appeals court found that U.S. District Judge Barbara B. Crabb, in the Western District of Wisconsin, did not abuse her discretion when she required Jones Day to pay $30,000 for unsupported claims it made while representing an automotive parts manufacturer.
The sanctions stem from a contract dispute between United Stars Industries and Plastech Engineered Products, the Jones Day client. During a trial that dealt with a dispute over the pricing of stainless steel tubing supplied by United Stars, Jones Day asserted in a counterclaim that Plastech had conducted an in-depth audit on alleged overcharges, which revealed nearly $1 million in overcharges by United Stars.
However, Jones Day was able to present only one Plastech employee who it claimed had conducted the internal audit, the lower court found. In addition, the lower court determined that during the employee's deposition, he denied conducting an internal audit or even knowing what an audit staff was.
Even so, Jones Day named the employee as a witness and called him despite his lack of knowledge about the alleged overcharges, the lower court noted.
In affirming the lower court's decision in United Stars Industries v. Plastech Engineered Products, No. 07-2919, the appeals court found that the sanctions were modest.
"But for this baseless counterclaim the suit could have been resolved without a trial," the decision stated.
In a written statement, Jones Day said that it "respectfully disagreed" with the decision. "We believe the positions asserted on behalf of our client were appropriate," the statement said.
