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Wiley Rein and its client and cocounsel were sanctioned $1.25 million Monday by a federal judge in Manhattan for withholding and trying to destroy evidence in a case that concerns insurance coverage for the World Trade Center, which was destroyed by terrorists on September 11, 2001. In the June 18 court order, Judge Alvin Hellerstein found that contentions made by Wiley and its cocounsel, New Jersey-based Coughlin Duffy, on behalf of Zurich American Insurance Company, “were either dishonest, or objectively unreasonable, or the product of a failure to make reasonable inquiries.” In some cases, according to Judge Hellerstein, the firms waited nearly a year to hand over critical evidence, hindering the court’s procedure and costing millions. Lead counsel for Wiley were partners Thomas Brunner and Leslie Platt. “The line between zealous representation and being obstinate is very fine,” says Wiley Rein founding partner Bert Rein, who declined to comment on the specifics of the ruling. “We’re not arguing with the judge, we’re deciding what options are available to us, and how to pursue them.” Zurich spokesperson Keith Owens declined to comment on the ruling. Judge Alvin Hellerstein issued the sanctions in response to motions by the Port Authority of New Jersey and New York, the landlord of the World Trade Center, and Westfield Corporation, Inc., the lessee of the retail space. Along with companies owned by Larry Silverstein, who leased the World Trade Center towers themselves, the Port Authority and Westfield have been litigating with insurers, including Zurich, for more than five years. Among the evidence Judge Hellerstein found to have been withheld by Wiley, Zurich, and Coughlin Duffy was a 62-page insurance policy that had been printed on September 11, 2001, and another document containing handwritten notes. Both indicated that the Port Authority and Westfield were insured by Zurich on 9/11. In the litigation Zurich had denied that Westfield and the Port Authority were entitled to insurance. According to the opinion, Wiley had the 62-page policy in its possession as of March 2003, but did not produce it until 2005. Wiley partner Platt argued that an unnamed associate failed to report the document to a supervising partner. The Port Authority will receive more than $600,000, according to the judge, who did not rule on how Zurich and its counsel should split the sanction. Wiley partner Rein and Zurich spokesperson Owens say they are considering an appeal of Hellerstein’s ruling. Attorneys at Coughlin Duffy were not available for comment; nor were attorneys representing Westfield and the Port Authority.

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