A hotly contested civil suit resulted in a more than $7 million judgment against PopCap Games Inc. and PopCap Games International. But it also resulted in a Dallas judge finding that Fulbright & Jaworski partner Rey Rodriguez — one of the lawyers representing those companies — acted in “bad faith” by making “baseless accusations” in open court against opposing counsel.

On March 19, Judge Carl Ginsberg of the 193rd District Court ordered Rodriguez to apologize to Rose•Walker and its attorneys Martin Rose, Mike Richardson, Ross Cunningham, Bryan Rose and Elizabeth Lemoine in a half-page advertisement to beplaced in Texas Lawyer. The judge’s sanction order required Rodriguez to submit the ad by April 16.

But the ad is on hold while the 5th Court of Appeals in Dallas reviews Ginsberg’s sanction order in PopCap Games Inc., et al. v. MumboJumbo, et al. Rodriguez appealed the sanction order on March 26, and on March 30 he filed an emergency motion for stay of the sanction order pending disposition of that appeal. The 5th Court granted the motion for stay in Rodriguez v. MumboJumbo, et al. on March 31.

Richardson, a partner in Rose•Walker who represents MumboJumbo, says, “We felt like and the [trial] judge felt like . . . there was an accusation that I suborned perjury from my witness, the CEO of my client. Unless you’ve got proof of something, you shouldn’t be making those sorts of very serious accusations.”

The trial court made no finding that anyone at MumboJumbo had committed perjury and made no finding that anyone at Rose•Walker had suborned perjury.

Rodriguez, who represents PopCap, isn’t talking about what happened. “Out of a deep respect for the process, I am going to decline to comment while the matter remains pending at the Dallas Court of Appeals,” he says.

But Rodriguez’s attorney, Hankinson & Levinger partner Jeffrey Levinger of Dallas, says his client did nothing wrong. Levinger says, “Contrary to what Judge Ginsberg found, Rey Rodriguez did not accuse opposing counsel of suborning perjury. We’re confident the court of appeals will agree with that once they read the record.”

PopCap ,the underlying suit, involves a contract dispute primarily about a 2006 game distribution agreement. MumboJumbo and MumboJumbo Distribution (collectively known as MumboJumbo) sued PopCap Games Inc. and PopCap Games International (collectively known as PopCap) and Strategic Marketing Partners Inc. on Oct. 10, 2007, in the 193rd District Court, according to the original petition in the suit. On Oct. 24, 2007, PopCap filed a countersuit against MumboJumbo in the 68th District Court.

Acting on a motion filed by MumboJumbo, Ginsberg signed a Nov. 27, 2007, order transferring PopCap’s countersuit to the 193rd District Court and consolidating it with MumboJumbo’s original suit.

The trial in PopCap began Jan. 5 in the 193rd District Court and concluded Jan. 22, according to Rodriguez’s motion for stay filed with the 5th Court. Martin Rose, who also represents MumboJumbo, says his client nonsuited Strategic Partners on the day the trial started.

According to the March 1 final judgment in PopCap ,the jury returned a verdict for MumboJumbo, awarding almost $4.6 million in damages, $2.1 million in attorneys’ fees, $515,343 in prejudgment interest, and postjudgment interest to be calculated at a rate of 5 percent of the damages and attorneys’ fees.

According to the 5th Court’s Web site, PopCap filed its appeal of the judgment on March 12.

Key Dispute

The events that led to the sanction order against Rodriguez occurred a few days before the trial concluded.

On Jan. 19, PopCap filed a “Motion to Determine Applicability of the Offensive Use and Crime/Fraud Exceptions and the Admissibility of Potentially Outcome Determinative Documents” (the fraud motion).

The crime-fraud exception, found in Texas Rule of Evidence 503(d)(1), provides that there is no attorney-client privilege “if the services of the lawyer were sought or obtained to enable or aid anyone to commit or plan to commit what the client knows or reasonably should have known to be a crime or fraud.”

Levinger says Ginsberg denied the fraud motion the same day it was filed. Acting on a motion by MumboJumbo, Ginsberg subsequently sealed PopCap’s fraud motion, along with other documents.

After PopCap filed its fraud motion, MumboJumbo sought sanctions against PopCap and its “counsel.” Among other things, MumboJumbo alleges in its Feb. 10 motion for sanctions that “PopCap’s Fraud Motion accused counsel for MumboJumbo of assisting MumboJumbo’s officers in the provision of alleged false testimony at trial.” MumboJumbo also alleges that “PopCap’s counsel had no evidence of subornation or assistance. Only after PopCap’s counsel made the accusations in the Fraud Motion did they backtrack and state that they did not ‘mean to cast aspersions on counsel.’ “

On March 19, Ginsberg granted in part and denied in part MumboJumbo’s sanctions motion. Although MumboJumbo requested in its motion that the trial court impose sanctions against “PopCap and its counsel,” Ginsberg sanctioned only Rodriguez.

In the order for sanctions, Ginsberg made the following findings and conclusions concerning the conduct he found to be sanctionable:

One of the Counsel for PopCap Games, Inc., Oscar Rey Rodriguez, in open court, accused Counsel for Mumbo Jumbo of knowingly suborning perjury. This accusation was without factual basis and was made in bad faith. . . . [T]o accuse a counsel of suborning perjury is a very grave and serious accusation not to be made without basis and for tactical advantage.

Ginsberg then ordered Rodriguez to place an advertisement in Texas Lawyer that reads:

BE IT KNOWN:
During the trial between MumboJumbo, LLLC and PopCap Games, Inc., which occurred before the 193rd Judicial District Court in Dallas, Texas, I improperly accused Rose Walker, LLP and its attorneys, Martin Rose, Mike Richardson, Ross Cunningham, Bryan Rose & Elizabeth Lemoine, of suborning perjury. I was wrong. I apologize.
Sincerely,
Oscar Rey Rodriguez
Fulbright & Jaworski, LLP

Rodriguez appealed the sanction order to the 5th Court on March 26. In his March 30 motion to stay Ginsberg’s sanction order, Rodriguez alleges, among other things, that MumboJumbo’s motion for sanctions did not specifically accuse him of any wrongdoing. As alleged by Rodriguez, MumboJumbo contended in its motion that PopCap (not Rodriguez) filed the so-called Fraud Motion that “baselessly accused” MumboJumbo’s counsel, the Rose•Walker firm, of “suborning perjury” by MumboJumbo’s CEO.

However, Martin Rose says MumboJumbo’s motion for sanctions is about Rodriguez’s conduct.

Rodriguez further alleges in the motion for stay that MumboJumbo relied on a statement Rodriguez made during the trial — to the effect that PopCap did not ” ‘mean to cast aspersions’ on counsel” — as evidence that PopCap had “ backtracked” from allegations allegedly made in PopCap’sfraud motion.

Levinger provided Texas Lawyer a transcript of the Jan. 19 trial proceedings before Ginsberg, which shows the following exchange between Rodriguez and Ginsberg made outside the presence of the jury:

Rodriguez: [T]o the extent the crime-fraud issue implicates the use of attorney services to perpetuate fraud, well, these witnesses are using these attorneys here today to give testimony, to represent them, to advise them in trial. And these attorneys have not sought to clarify or pull back the testimony. We just want the record to be clear on that, Your Honor.

Court: Assuming that’s true and, again, hypothetically, these communications you’re referring to, if you’re saying that these attorneys in the courtroom are somehow conspiring to commit fraud on the Court by giving perjured testimony, these — even assuming that were true, that these are not communications with these attorneys and the witnesses, they’re underlying communications that were made before. . . .

Rodriguez: Your Honor, so the record is clear, we mean to cast no aspersions on counsel. This is a party crime-fraud challenge. . . .

Martin Rose says, “There was no perjured testimony.”

As noted in Rodriguez’s March 30 motion for stay, he was asked by Ginsberg at a March 8 hearing on MumboJumbo’s motion for sanctions to explain what he meant by his Jan. 19 statement that “these attorneys have not sought to clarify or pull back the testimony.” Rodriguez alleges that he explained that he had been arguing about the applicability of the crime-fraud exception to the attorney-client privilege; “that under that doctrine ‘the lawyers may be completely innocent and completely unaware of what the client is doing’ ” and that he had been “ simply reciting objective facts” about that doctrine.

“Without further questions or comment, the trial court announced that ‘to the extent the motion for sanctions asks for relief . . . from Mr. Rodriguez of accusing counsel of suborning perjury, that portion is granted.’ “

Rodriguez alleges in his motion for stay that the trial court, in its sanctions order, sua sponte required him to place a half-page ad in Texas Lawyer to make an apology to the Rose•Walker attorneys.

“When Mr. Rodriguez asked ‘to make a comment for the record,’ the court stated ‘[W]e’re done’ and walked off the bench,” Rodriguez asserts.

Martin Rose says the March 8 hearing was on MumboJumbo’s motion for sanctions but that Rodriguez did not make an appearance until near the end of the hearing, after Ginsberg asked where Rodriguez was.

Levinger says Ginsberg’s order requiring Rodriguez to place an apology ad is compelled speech. “I think it may well violate the First Amendment,” he says.

Linda Eads, a Southern Methodist University Dedman School of Law associate professor who teaches in the area of professional responsibility, says she does not think ordering a lawyer to place an ad to issue an apology raises a First Amendment issue.

Eads, who is not involved in Rodriguez, says, “Lawyers in a courtroom do not have a full panoply of First Amendment rights.” For example, she says, a lawyer cannot curse in a courtroom.

Eads also says that judges are allowed to be “creative” in the sanctions they order. However, she says a judge cannot order an excessive punishment.

Notes Eads, “It’s got to be a measured response in proportion to the harm done.”