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In a one-page order that brought sighs of relief to two plaintiff’s lawyers, U.S. District Judge Berle M. Schiller of the Eastern District of Pennsylvania has lifted a sanctions order handed down more than seven months ago that said the lawyers should be punished for “a pattern of deception and dilatory tactics.” Schiller’s Dec. 19 order in Murray v. Gemplus International offers no explanation for the judge’s about-face, but court papers filed by the sanctioned lawyers show that they set out to convince the judge that he was mistaken when he found that they had engaged in “bad faith” conduct that was designed to “frustrate” discovery. The order also clarifies which lawyers were involved. In the first paragraph, Schiller said he was vacating the sanctions imposed on attorneys David Picker of Spector Gadon & Rosen and former co-counsel Mari Shaw. In the second paragraph, Schiller noted that there was “some confusion” about the scope of the April 23 order and that “at no time did the court impose sanctions upon [lead plaintiff's attorney] Paul R. Rosen or Dorian S. Mazurkevich.” Court records also show that the case — a dispute over patents for “smart card” technology — has now settled. The sanctions ordered by Schiller in April stemmed from complaints by defense attorneys David J. Wolfsohn, Mark A. Aronchick and Shanon Levin Lehman of Hangley Aronchick Segal & Pudlin. In their motion, defense lawyers argued that the plaintiff’s lawyers violated discovery orders when they chose to turn over only 19 of the 247 pages in their client’s “inventor notebooks,” and later dodged efforts by the defense team to inspect the originals. “When defense counsel asked to review the originals of the 19 pages, plaintiff’s counsel attempted to put him off, knowing that review of the 19 pages produced would reveal that at least 228 pages had not been produced,” the motion said. The defense team also argued that Shaw — who at the time was “of counsel” to the Spector Gadon firm for the purpose of handling plaintiff Joseph Murray’s case — had attempted to hide her true relationship with Murray by suggesting that she was nothing more than his lawyer. In imposing the sanctions, Schiller was critical of both Picker and Shaw. Picker’s explanation for his failure to produce the client’s notepads was “insufficient,” Schiller said. And the plaintiff’s team should have come forward more quickly with all of the patent applications that showed Murray and Shaw as co-inventors, he said. “In both episodes,” Schiller wrote in April, ” … plaintiff’s counsel have demonstrated bad faith and a reckless disregard for the rules of discovery. Plaintiff’s counsel have exhibited gross professional negligence with regard to their duty to the court.” Shaw, who withdrew as counsel for the plaintiff, hired attorneys Thomas A. Leonard and Richard P. Limburg of Obermayer Rebmann Maxwell & Hippel to file a motion urging Schiller to reconsider. In the motion, Leonard and Limburg argued that the evidence — including some newly discovered evidence — showed that Shaw “did not intend to mislead or confuse the court … or to frustrate discovery of vital material.” Defense lawyers had argued that Shaw was hiding her true business relationship with the plaintiff, noting that she ultimately “admitted that she was a co-inventor” with the plaintiff on an invention. They complained in their motion that Shaw at first produced only one patent application but had to be pressed to turn over two more patent applications. However, Leonard and Limburg argued that a close examination of the discovery events in the case shows that Shaw was the first to mention the patent filings, and when she learned that they had not been turned over to the defense, she personally hand delivered them to the Spector Gadon firm so they could be disclosed. In a separate motion, lawyers at the Spector Gadon firm set out to convince Schiller that Picker had not engaged in any “bad faith” conduct. Attorneys Alan B. Epstein, along with Rosen and Picker, argued that Schiller inferred too much from a comment made by Shaw about the atmosphere at the Spector Gadon firm. According to the brief, Shaw was trying to convince the judge that no one on the plaintiff’s team had committed any discovery violations. Transcripts of the hearing show that Shaw said: “I have been around the Spector Gadon firm and I can tell you that if I — my observation is that there is disorganization and chaos — Paul [Rosen] is going to kill me for saying this, but my observation is also I have not seen anybody purposefully or heard anybody say something about don’t produce this don’t produce that, let’s hold this off. I personally, personally, have told Mr. Picker that he’s just too overworked, he needs to get more help, he’s got to deal with these things. But, Your Honor, nobody in my observation or in my discussions has in any way indicated that anything has to do with bad faith.” The remarks backfired, the brief says, because they formed the basis for the judge’s decision to impose sanctions. In his April decision, Schiller wrote: “By Ms. Shaw’s own admission at oral argument, when she described plaintiff’s counsel’s firm as ‘disorganized and chaotic’ and indicated that she had told Mr. Picker that he could not manage all the necessary discovery work, plaintiff’s counsel have exhibited gross professional negligence with regard to their duty to the court.” In the brief urging Schiller to reconsider, the Spector Gadon lawyers said they “strongly dispute Ms. Shaw’s characterization of this firm as ‘disorganized and chaotic.’ It is not accurate.” But at the hearing, they said, it was impossible to make that argument. “We could not make that argument at the hearing. We could not, and were not going to, engage in finger pointing and counter-accusations against co-counsel in open court. Such a spectacle would have been unseemly, unprofessional and an affront to the court, as well as potentially detrimental to plaintiff’s case,” the brief said. “Under these circumstances, we respectfully submit it was unfair … for the court to accept these inaccurate allegations to support a conclusion of bad faith with respect to Mr. Picker’s actions,” the brief said. Focusing only on Picker’s conduct, the brief said that the evidence showed he did not commit any discovery violations relating to the plaintiff’s notebooks. “It is undisputed that Mr. Picker had not read the notepads when he first saw them … and so was not consciously aware of the relevance of the remainder of the entries. Nor did he deliberately withhold them. To the contrary, when he did become aware of the relevance of their content, the notepads were produced,” the brief said.

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