The 2nd U.S. Circuit Court of Appeals on Tuesday affirmed sanctions against Cleary Gottlieb Steen & Hamilton for allegedly trying to convince a non-party witness not to attend a deposition.
The circuit's summary order came less than a week after Cleary appeared before the appeals court to argue for the reversal of the sanctions imposed last August by Southern District of New York Judge Loretta Preska.
But the panel of Judges Ralph K. Winter, Roger J. Miner and Jose A. Cabranes said in Cleary Gottlieb Steen & Hamilton v. Kensington International, 07-4075-cv, that nothing in the record indicated Preska had ruled incorrectly.
The sanctions arose in a case in which Cleary had represented the Republic of Congo in litigation with Kensington International Ltd., an investment fund trying to collect on some of the nation's sovereign debt.
With the aim of locating Congolese assets, Kensington, represented by Dechert, had sought to depose Médard Mbemba, a French-Congolese businessman who had formerly been a close friend of Congolese President Denis Sassou Nguesso. When Cleary lawyers proved unable to attend the Washington, D.C., deposition and Kensington declined to reschedule, Cleary partner and executive committee member Jean-Pierre Vignaud reached Mbemba directly.
Mbemba would later testify that Vignaud appealed to him as a "Congolese patriot" and told him his deposition testimony would only benefit a "vulture fund" out to hurt Congo.
In granting Kensington's motion for sanctions, Preska said in Kensington International v. Republic of Congo, 03 Civ. 4578, that Vignaud had clearly been chosen because, though the Paris-based lawyer was not directly involved in the case at hand, he was well known in Congo political circles and could best "make a convincing argument that the deposition was 'us vs. them' and force Mbemba to pick a side."
She said Cleary's behavior amounted to intimidation. The law firm "has shown a willingness to operate in the murky area between zealous advocacy and improper conduct, and here it crossed the line," Preska wrote.
Though Preska did not impose any monetary sanction, she ordered Cleary to pay Kensington's costs and attorney fees in bringing the sanctions motion. She also ordered the firm to circulate a formal reprimand to all of its 950 lawyers.
Arguing last week before the 2nd Circuit, Cleary's lawyer, Roy Reardon of Simpson Thacher & Bartlett, denied that Vignaud appealed to Mbemba's patriotism and said Cleary had merely encouraged the witness to retain counsel and permissibly explained their side of the case. He said Kensington had brought the sanctions motion for strategic reasons, hoping to embarrass and impugn the integrity of the law firm that is its frequent foe in sovereign debt disputes (NYLJ, June 26).
Kensington was represented before the Second Circuit by Kevin S. Reed of Quinn Emanuel Urquhart Oliver & Hedges.
In a statement Tuesday, Cleary expressed disappointment with the appeals court's ruling.
"We continue to believe that all of our attorneys acted properly and professionally and regret that the Second Circuit did not reverse the decision for the reasons cited in our briefs," the firm said.