The 5th U.S. Circuit Court of Appeals has reversed a sanctions order issued by U.S. District Judge Lynn Hughes of Houston. The 5th Circuit ruled that a lawyer’s filing of a "sexually-explicit Internet chat" in an employment case was not sanctionable conduct; rather it was "zealous representation of his client."
The background to the 5th Circuit’s May 14 decision in Kenyon International Emergency Services Inc. v. Mark Malcolm, et al. is as follows, according to the decision.
Kenyon International Emergency Services (Kenyon) provides emergency services for governments and companies that have mass-casualty catastrophes. Because mass casualties are rare, most of its employees are independent contractors. In 2009, several independent contractors left Kenyon or started to work on their own, according to the decision.
Kenyon sued eight of the independent contractors and some of their affiliated companies to enforce noncompetition clauses [NCC] the former employees had signed. In February 2010, the district court ruled that the NCC was "unenforceable because it is too broad in all respects," a decision the 5th Circuit affirmed on appeal. The district court later awarded attorney fees and costs incurred for defending the case both at the trial court and at the appellate court, according to the decision.
In 2011, the defendants sought post-judgment discovery based on their theory that Kenyon was seeking to evade the fee award by selling its assets and fleeing the jurisdiction. Attached to the defendants’ motion was an affidavit from one of the defendants, who conveyed various anecdotes relating to the supposed plans of Kenyon to relocate to the United Kingdom, including information provided by a former Kenyon vice president referred to in the opinion as "Employee A," according to the opinion.
Kenyon’s response characterized defendants’ allegations as "absurd" and "utterly false."
Kenyon averred that it had "recently discharged two employees, including [Employee A], for performance reasons . . . [Employee A] was first reprimanded and demoted . . . [and] subsequently discharged . . . for failing to correct his non-performance."
Attached to Kenyon’s response, among other things, was a two-page, unsealed email that contained the record of a sexually explicit Internet chat between two individuals including Employee A, according to the decision.
At a subsequent hearing, the district court engaged in an extended colloquy with Kenyon’s attorney, Dax Faubus about the explicit email. Near the end of the hearing, the district court stated that "for having filed the irrelevantly scurrilous e-mail, Mr. Faubus, you will contribute $3,500 to the Center for AIDS Research." Later, Hughes signed a sua sponte order directing Faubus to give $3,500 to the Center for AIDS Research at Baylor College of Medicine at UT Houston Medical School.
Kenyon appealed the award of attorney fees and Faubus’ sanction to the 5th Circuit. In its Oct. 10 amended brief to the appellate court, Kenyon argued that the defendants failed to meet their evidentiary burden for the attorney fee award and that Faubus was acting in his client’s best interest by revealing the motivations behind Employee A, who they argued was a "disgruntled former employee."
Specifically, Kenyon’s amended brief argues that Faubus should not be sanctioned for filing the two-page email thread. "Presumably because the email thread was between two consenting homosexuals having a sex-chat, Judge Hughes ordered Faubus to pay $3,500 to the Center for AIDS Research at Baylor University Medical Center . . ."
"Obviously this appeal of a sanctions order is about Faubus’s personal and professional integrity. Not only does the district court’s sanction implicate Faubus’s professionalism — all sanctions do that — but the sanction implies that Faubus is mean spirited and a bigot," Kenyon’s amended brief states."Faubus was attempting to protect his clients’ legitimate interests by clearly and with documented evidence demonstrating the basis for the [defendants'] motion to compel was motivated by an individual with malicious intent."
In their Oct. 19 brief, the defendants argue that the sanction was appropriate because the filing of the email was a "calculated maneuver done solely to humiliate a former employee who was providing information to Appellees in this lawsuit."
In the unpublished opinion, the 5th Circuit affirmed the attorney fees award.
It also found that the district court committed reversible error by failing to issue a show-cause order before issuing the sanction.
But instead of returning the sanctions issue to the district court for further consideration, the panel reversed the sanctions order.
"Faubus has consistently maintained that his sole purpose in filing the explicit email was to demonstrate that Employee A’s termination was for cause rather than part of Kenyon’s plan to flee the jurisdiction," wrote Judge Jerry Smith in an opinion joined by Chief Justice Carl Stewart and Senior Judge Jacques Wiener.
"The district court characterized Faubus’s unsealed filing of the offending document as a ‘vicious, deliberate smear.’ Whatever might have been the negative effecton Employee A’s public reputation, however, we can discern no improper purpose in Faubus’s zealous representation of his client. Because the district court ‘based its ruling . . . on a clearly erroneous assessment of the evidence’ . . . we reverse the sanctions order," Smith wrote.
Josh Davis, a Houston solo who worked on the sanctions appeal, says the 5th Circuit made the right call in the case.
"Thankfully, the 5th Circuit upheld zealous advocacy. That’s really what’s at stake — whether you can attack and cross-examine in a way that may be embarrassing," Davis says. "If there is a legitimate basis to attack a witness’ credibility, that legitimate interest will overcome any embarrassment or attack on that cross-examination."
Hughes declines comment.
Faubus, a partner in Houston’s Faubus & Scarborough, did not return a call seeking comment.
Jim Staley, a shareholder in the Houston office of Ogletree Deakins Nash Smoak Stewart and Matt McCormick of Huntsville’s Moak & Moak who represent the defendants on appeal, also did not return one call each for comment.