October 22, 2009 4:34 PM CST by Michelle Lore Associate Editor

A massive $4.2 million sanction award against a railroad for its conduct in defending a wrongful death action has gotten the attention of the local bar. Sanctions awarded for litigation-related conduct are exceedingly rare here, but one of such massive size is virtually unheard of.

State District Court Judge Ellen Maas found that Burlington Northern Santa Fe Railway had destroyed and/or fabricated evidence; knowingly advanced lies and misrepresentations by its employees in depositions, sworn affidavits and/or trial testimony; and interfered with and/or obstructed the plaintiffs’ investigation of the case.

“Taken alone, some of BNSF’s abuses might not be sanctionable, and indeed might have been understandable given the complexities of this case,” Maas wrote. “But the breadth of BNSF’s misconduct in this case is staggering; beginning within minutes of the accident, up to and through the trial. Plaintiffs have established that BNSF’s misconduct did indeed strain the limits of the civil justice system and this Court is on firm ground to impose significant sanctions.”

Maas declined to attribute the defendant’s misconduct to its trial counsel, instead noting that the falsehoods were likely due to the poor handling and destruction of evidence on the part of the defendant’s employees under the direction of its employees and management.

The case nonetheless raises an interesting question: At what point will some of the blame fall on the attorney when a client crosses the line to gain an unfair advantage in litigation?

Ethics experts acknowledge it’s a difficult question with no clear-cut answer.

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“I don’t think anyone should say that the attorney necessarily did anything wrong because [his or her] client did something wrong,” said Minneapolis attorney Eric Cooperstein, who practices in attorney ethics and malpractice. “These are hard, and they are fact-based situations. There isn’t a one-size rule that fits every situation.”

Litigation misconduct

The BNSF sanctions order stems from litigation surrounding a car-train collision that killed four young adults six years ago. BNSF reportedly argued that the decedents’ car went around the lowered crossing arm. The plaintiffs contended that the crossing signal wasn’t working properly.

In June 2008, following a six-week trial, an Anoka County jury determined that it was the failure of the warning devices at the BNSF railroad crossing that led to the crash. The jury awarded the families of the victims $24 million.

Since the verdict came down, attorneys for the families have been fighting for sanctions against the defendant, arguing that the railroad lost, destroyed, and altered critical evidence, made misrepresentations to the court and the plaintiffs, and obstructed the plaintiffs’ ability to prosecute their case.

In an order issued Oct. 15, Maas agreed.

“This Court is satisfied that the record, which has developed over a period of six years, overwhelmingly supports a finding that BNSF did, in fact, engage in conduct and decision making that compromised critical evidence, interfered with witnesses, impeded the investigation by law enforcement, and misled and/or misrepresented a number of facts to Plaintiffs and this Court,” she wrote.

The court was not persuaded by BNSF’s attempt to explain away its misconduct in piecemeal fashion by attributing it to inadvertence, coincidence, honest mistake, and/or legitimate business practices.

Twin Cities attorneys Julius Gernes and Joann Toth, who represented the defendants at trial, declined to comment on the sanction order. Minneapolis attorney Timothy Thornton, who represented the defendants at the sanctions hearing (but not for trial), declined comment.

BNSF, through its spokesperson, Suann Lundsberg, told Minnesota Lawyer that there was an issue six years ago regarding evidence preservation and acknowledged that BNSF could have done a more thorough job of documenting that the gates and lights were properly activated.

“But this was not a malicious attempt to hide evidence,” she said. “Unfortunately, the court focused on a field employee who failed to follow the procedures at that time.”

Lundsberg said that BNSF intends to appeal both the jury’s verdict and the sanctions order.

Knowledge is power

It’s Ethics 101 that lawyers can’t knowingly assist clients in perpetrating a fraud or misrepresentation on the court. Rule 3.3 of the Minnesota Rules of Professional Conduct requires lawyers who know that their clients have lied during the representation to take remedial measures, including, if necessary, disclosure to the court.

Ethics experts stress the knowledge component of the rule.

“It’s not necessary to act on a feeling,” said Cooperstein. “[But there] are cases that say you can’t ignore what is plainly apparent.”

University of Minnesota Law School ethics professor Richard Painter said that lawyers have an obligation in the course of representation to use “reasonable diligence” to find out what the facts really are and ensure that their clients are fully complying with discovery.

St. Paul attorney Judith Rush, who will become the head of the Lawyers’ Professional Responsibility Board next year, said attorneys should have a good handle on who their client is and how its business is organized so they will be on alert when something seems unusual. “Know your client,” she stressed.

In addition to being candid with the tribunal, attorneys have an ethical duty not to obstruct another party’s access to evidence.

“Lawyers have to act in an honest manner toward the court, the tribunal and other parties in litigation and that’s also true in responding to discovery requests,” said Painter.

Rush agreed. “You can’t fail to make reasonably diligent efforts to comply with discovery,” she said, adding, however, that the rules don’t provide clear direction on this point.

“Good faith is our hallmark so we do need to make sure we’re not somehow being used to interfere with discovery. We are the [client’s] mouthpiece.”

Red flags

The question for lawyers then, is at what point does a client’s suspicious conduct trigger a duty to investigate further.

Cooperstein said that when the client’s facts become unusual or inconsistent, the lawyer’s responsibility, at a minimum, is to run the situation by a disinterested third party.

“Doing a reality check with another lawyer when you think you may have evidence the client is lying is probably a good first step, and you can do that without breaching any confidences or losing the client’s trust,” he said.

University of St. Thomas School of Law ethics professor Neil Hamilton said that sound practice and judgment require that attorneys investigate if they have any hint of misconduct.

“A good lawyer who … sees red flags should be strongly counseling the client about nondestruction of documents,” he said. “The lawyer should counsel aggressively that it’s not only unlawful to consider going down that path but it’s not in the client’s self interest and could become a supplementary charge and lead to sanctions.”

When representing corporate clients in particular, experts suggest that attorneys report suspected misconduct on the part of employees to the CEO, general counsel, or the board of directors.

Painter said that if the CEO or the board fails to act on the lawyer’s suspicions, resigning from the representation is a viable option. Depending on the suspected misconduct, it may be even necessary to report it to the court, he added.

Blind eye

Rather than investigate, however, some attorneys turn a blind eye to the client’s conduct, thereby attempting to absolve themselves of responsibility to act.   

In effect, the lawyer doesn’t want to discover enough facts to trigger his or her duty, said Hamilton.

Minneapolis attorney David Gross strongly advises against such a tactic. He handled a patent infringement matter last year where the opposing party’s persistent misconduct — providing false discovery answers, destroying relevant documents, acting inappropriately during depositions — caused U.S. District Court Chief Judge Michael Davis to enter a default judgment for Gross’s client.

According to Gross, at some point all attorneys face the scenario where they sense a client is hiding evidence or lying in response to discovery requests. The attorney has two options — act as if he or she doesn’t know what’s going on or take a stand and confront the client.

“Avoid the temptation to refrain from asking the really hard questions,” Gross suggested. “Instead, speak up and say ‘this doesn’t look like it’s getting done and it needs to get done.’ Insist on it.”

Hamilton agreed. “I really urge proactive lawyering; it’s in the lawyer’s interest and the client’s interest. It’s risk management for the lawyer, I think, and necessary for effective representation and counsel.”

‘Should have known?’

The plaintiffs in the BNSF case were represented by local attorneys Allan Shapiro, Paul Godlewski, Sharon Van Dyck, William Bongard and Patrick Sauter. Manhattan, Kan., attorney Robert Pottroff, who is experienced in handling railroad-crossing cases, was brought in as lead counsel.

Bongard and Van Dyck acknowledged that there isn’t proof that the defendant’s trial attorneys knew what their client was doing or whether they simply turned a blind eye to its conduct.

“There is no question that the attorneys were the mouthpiece for a lot of the misrepresentations,” said Van Dyck. “I can’t tell you they, for a fact, knew what they were saying was false. But for a certain percentage of it, they should have known it was false.”

Van Dyck said that the plaintiffs did not specifically request sanctions against the defense attorneys or their law firm, but instead left open who should be sanctioned. “It was the judge’s call,” she said.

To date, the plaintiffs’ lawyers have also not filed any ethical complaints against BNSF’s trial attorneys.

“I don’t feel I can say that I am confident that [trial counsel] violated an ethical rule,” said Van Dyck.