A plaintiff’s attorney in a failed lawsuit seeking a fee for introducing potential business partners has been sanctioned $6,400 for conducting wasteful depositions.
Attorney Michael Q. Carey was put on notice more than once by Southern District Judge Paul Crotty to keep depositions to a minimum or sanctions would be in the offing, but the judge said the attorney kept on going.
“In the face of Mr. Carey’s demand for more and more, wider and wider, and hope-springs-eternal discovery, the court warned him that he would be sanctioned if the depositions were not meaningful and productive,” the judge said in Vioni v. American Capital Strategies Ltd., 08 Civ. 2950.
The $6,400 is a sanction for “$400 per wasted hour” on eight depositions conducted by the attorney on behalf of his client, Lisa Vioni, who sued American Capital Strategies Ltd., a publicly traded investment corporation, and Providence Investment Management LLC and Providence Investment Partners LLC, a small investment management company headed by Russell Jeffrey.
Ms. Vioni and her company, Hedge Connection Inc., claimed that she had separate agreements with American Capital and Providence to act as a finder for new business opportunities and that she met her obligations by bringing the two together in 2007 through the introduction of Mr. Jeffrey and Robert Grunewald, the managing director of American Capital.
The two men began negotiating a series of transactions through which American Capital would acquire Providence’s investments, funds, clients and employees. Ms. Vioni claimed she was repeatedly told, in person and by e-mail, that she would be compensated once the transactions were completed.
But when she was not compensated, she filed suit in 2008. Judge Crotty dismissed claims of breach of contract and promissory estoppel in 2009, leaving only claims in quantum meruit.
The defendants moved for summary judgment on those claims in 2010. In an opinion issued Sept. 26 in which he also sanctioned Mr. Carey, Judge Crotty discussed e-mails between Ms. Vioni and the two men and explained why the statute of frauds barred the claim from proceeding—the e-mails did not provide written assurance that Ms. Vioni had a deal and, in context, “the introduction appears to be a minor happening, incidental to a larger deal that was never consummated.”
As to Mr. Jeffrey, the judge said Ms. Vioni had shown only “a vague offer to meet and talk,” and did not present “a genuine dispute as to whether Jeffrey accepted Vioni’s offer to introduce him to Grunewald with the understanding she expected compensation.”
And as for Mr. Grunewald, the judge said, “Although two emails show that Grunewald accepted Vioni’s offer to arrange the introduction…there is no indication that he understood he was employing her in this respect.”
The motion for sanctions was made by the defendants under 28 U.S.C. §1927 and the court’s inherent power. It targeted depositions of Mr. Jeffrey and three others from Providence and four people from American Capital.
Mr. Carey contended the depositions were necessary to calculate Ms. Vioni’s fee and elicit information about American Capital’s document retention and information technology systems to see if it had failed to produce relevant e-mails.
But Judge Crotty warned him at a March 4, 2010, conference there “would be consequences” if he did not get relevant information.
And again, at a May 13, 2010, conference, Judge Crotty said that if the depositions are “just rambling through, there’ll be consequences in the form of sanctions. I repeat that.”
“Despite these warnings, Mr. Carey made no attempt to target his inquiries or proceed in a deliberate manner,” the judge said in his decision. “Indeed, he seemed to proceed in the opposite direction, beginning with those who knew the least, before proceeding with the key witnesses.”
In the case of some of the witnesses, the judge said, “minimal time was spent on Vioni’s services,” and one witness was never even asked about her.
On one witness, he said, “Mr. Carey took up 60 pages on background questions,” about the employee’s “personal employment history, asking follow up questions about previous jobs on a fishing boat, a shrimp business and a noodle factory.”
“While Vioni and her counsel are entitled to extract information that may be relevant to the reasonable value of Vioni’s services, this does not justify or excuse redundant questioning on topics that are irrelevant or that the witness cannot be expected to know,” Judge Crotty said. “In other words, Mr. Carey has failed to rebut defendants’ demonstration that his depositions were unjustifiably protracted.”
Mr. Carey said Friday he would seek relief from the rulings.
“Plaintiffs will appeal the final decision and expect it will be reversed on sanctions and the ruling on the motion for summary judgment will be reversed and remanded for further proceedings,” Mr. Carey said.
Stewart D. Aaron of Arnold & Porter, one of the attorneys who represented American Capital, said the defendants were heartened by the judge’s decision on summary judgment but declined comment on the sanctions issue.
@|Mark Hamblett can be contacted at firstname.lastname@example.org.