United States Court of Appeals
For the First Circuit
No. 04-1831
04-1861
MARY CHRIS SHEPPARD; ROBERT SHEPPARD,
Plaintiffs, Appellees, Cross-Appellants,
v.
RIVER VALLEY FITNESS ONE, L.P. d/b/a RIVER VALLEY CLUB; RIVER
VALLEY FITNESS ASSOCIATES, INC.; JOSEPH ASCH; ELIZABETH ASCH;
RIVER VALLEY CLUB GP LLC,
Defendants,
W. E. WHITTINGTON IV,
Appellant, Cross-appellee.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW HAMPSHIRE
[Hon. Steven J. McAuliffe, U.S. District Judge]
Before
Torruella, Lipez, and Howard, Circuit Judges.
W. E. Whittington IV for appellant/cross-appellee.
Kelly E. Dowd, with whom Upton & Hatfield, LLP, was on brief,
for appellees/cross-appellants.
October 21, 2005
LIPEZ, Circuit Judge. This is an appeal of a monetary
sanction that was imposed by the magistrate judge on defendants'
lawyer, William E. Whittington IV, for discovery misconduct. The
court required that Whittington personally compensate the opposing
parties for the attorney's fees and costs incurred in opposing a
protective order that he had obtained. Citing the injury to his
professional reputation, Whittington also appeals certain findings
of fact made by the magistrate judge in support of the monetary
sanction. The district court affirmed the sanction and most of the
findings. After a careful review of the record, we affirm the
sanction but vacate a finding that the district court affirmed.
I.
To explain the genesis of the sanction and findings, we
must review the history of the underlying case. River Valley was
a health club located in Hanover, New Hampshire. In early 1999,
Mary C. Sheppard, the principal plaintiff in this case, brought a
claim of sexual harassment against defendants (in essence, the club
and its owners, Joseph and Elizabeth Asch) for offensive incidents
she said she experienced while working at the club. The club's
manager, Robert Aubin, filed a lawsuit of his own, alleging that he
was fired in retaliation for reporting Sheppard's complaints about
harassment.1 In both cases, defendants denied all of the
1
That suit, Aubin v. River Valley Fitness One, LP, was
assigned to a different district-court judge.
-2-
allegations and filed counterclaims against Sheppard and Aubin,
accusing them of conspiring to fabricate their lawsuits. In early
2000, the two cases were consolidated for discovery.
In August 2000, defendants and Aubin discussed settling
their dispute (and, shortly thereafter, did settle). The sanction
in this case and the findings all derive from three instances in
which Whittington made claims about the settlement process in the
Aubin case.
A. Whittington's statements to the Aubin court on August 21, 2000
On August 15, 2000, Whittington sent a letter to Aubin's
counsel to, as the letter put it, "summarize our settlement
discussions." The letter opened by stating that "[t]he parties
will settle on the following terms (subject to details being worked
out on the open items below)." The letter provided that "Aubin
would agree to a stipulated judgment of $50,000" in River Valley's
favor, but that Aubin need pay only $100 of that amount for release
and satisfaction. Also, because River Valley was keenly interested
in getting information from Aubin to help with its dispute with
Sheppard, Aubin would provide details of his discussions with
Sheppard about their claims. In addition, River Valley wanted
corroborating information and documents from two other people,
Barney Brannen and Jack Panzica, who River Valley believed were
involved with the alleged conspiracy against it; to that end, River
Valley had asked the court for subpoenas. The letter stated that
-3-
the parties would not file the stipulated settlement with the court
until after deposing those two witnesses. In the meantime, the
parties "will jointly inform the Court we're close to settlement .
. . and tell the Court that it would help the parties' settlement
negotiations to get a prompt ruling on the Brannen/Panzica motions,
which Aubin will now join." Whittington stressed the importance
that River Valley placed on Aubin's information by underlining the
following sentence: "The settlement is contingent upon defendants'
satisfaction that Aubin is assisting defendants in good faith to
the best of his ability." The letter closed by stating: "If the
above is satisfactory, please indicate by signing below and
returning a copy of this letter." The next day, August 16, Aubin's
counsel signed her agreement and returned the letter.
On August 21, 2000, Whittington, as promised, told the
Aubin court that the parties were close to settlement:
The parties advise the Court that they have seriously
discussed settlement, that they believe the prospects for
settlement are excellent after resolution of the two
pending motions [to get information from Brannen and
Panzica], and that resolution of the motions will be
helpful to the settlement process.
On October 3, 2000, having resolved the Brannen and Panzica issues2
and having obtained a satisfactory affidavit from Aubin,
2
On August 21, 2000, Panzica's attorney told the court that
his client had no documents responsive to the subpoena. On
September 13, 2000, the court ordered Brannen to turn over his
responsive documents, Brannen soon did so, and he was deposed on
September 29.
-4-
Whittington authorized Aubin's counsel to file the stipulated
judgment with the court and release other settlement documents from
escrow. On October 4, 2000, the district court entered judgment in
the Aubin case.
B. Whittington's letter to Sheppard's counsel on October 6, 2000
Whittington then tried to put the settlement in Aubin to
his clients' advantage in Sheppard. On October 6, 2000,
Whittington wrote a letter to Sheppard's counsel, informing her of
the outcome in the Aubin case. Whittington's letter did not say
that River Valley had agreed to accept $100 as satisfaction of a
much larger judgment; the letter referred simply to the "$50,000
judgment." Whittington wrote that it was "clear" that, when
presented with the "extensive evidence" marshaled by River Valley,
"Aubin and his counsel saw that the litigation had only one
possible outcome." The letter explained that River Valley was now
also privy to Aubin's "inside perspective." Referring to "the
press's continuing strong interest in the litigation," the letter
warned that Sheppard might be portrayed in an unflattering light
"once all the facts came out." Consequently, the letter advised,
"[r]eaching a negotiated settlement promptly" would help to avoid
that unpleasant outcome. The letter expressed River Valley's
willingness to settle for payment of $50,000 and an affidavit from
Sheppard backing up River Valley’s version of the disputed events.
-5-
C. Whittington's motion for a protective order on March 29, 2001
Faced with Whittington's letter and wanting to see the
settlement agreement for herself, Sheppard's counsel filed a motion
to compel its production. On March 29, 2001, Whittington responded
by moving for a protective order, seeking to keep the terms of the
agreement secret. Claiming that the settlement agreement in Aubin
had "no bearing on any of the issues in this case," Whittington
offered to let the court review the documents in camera to
determine for itself whether they were relevant to the Sheppard
case. If the court did order the agreement's production,
Whittington asked that access be limited to Sheppard's counsel.
On March 30, 2001, the magistrate judge in the Sheppard
case granted the protective order to the extent that it sought
counsel's-eyes-only review of the settlement agreement. On April
23, 2001, having now received and read the agreement, Sheppard's
counsel filed a motion for relief from the protective order,
seeking full freedom to disclose the agreement, and for "sanctions
pursuant to Rule 26(c)," which governs protective orders.
That motion led to the sanctions at issue in this case.
On May 23, 2001, the magistrate judge ordered the settlement
agreement to be unsealed. Referring to what it called a "lack of
forthrightness" on Whittington's part and "[h]alf-truths about the
Aubin settlement," the magistrate judge also scheduled a hearing on
"appropriate sanctions, if any." At the end of that hearing on
-6-
June 13, 2001, the magistrate judge said: "There will be at least
one sanction. Mr. Whittington is going to demonstrate to me that
he has taken at least 10 hours specifically of CLE related to
professional conduct responsibility rules within the next three
months." Then, addressing the lawyer whom Whittington had retained
for the hearing, the magistrate judge added: "And Mr. Daschbach,
you are to tutor him with regard to how you practice law in the
State of New Hampshire and in this court."
On September 27, 2001, the magistrate judge issued his
order on sanctions, making three main findings. First, the
magistrate judge found that "Whittington misled the court when he
argued that the Aubin settlement is irrelevant to the issues in
this case." Aubin's agreement to cooperate with River Valley was
"directly relevant to Aubin's credibility." Second, the magistrate
judge found that "Whittington intentionally misled the plaintiffs"
in his October 6, 2000 letter "to intimidate them into a $50,000
settlement in this case." Third, the magistrate judge found that
Whittington sought the protective order so as to "conceal his
deceptive conduct in the Aubin case" (i.e., telling the Aubin court
that the parties were merely "close" to a settlement when, in the
magistrate's view, they had already "reached a settlement in
principle"). The magistrate judge concluded that Whittington's
motion for a protective order had not been substantially justified
and ordered a monetary sanction under Fed. R. Civ. P. 37(a)(4):
-7-
specifically, Whittington "shall personally compensate the
plaintiffs for their expenses, including reasonable attorney’s
fees, incurred in connection with their opposition to and the
motion for relief from the protective order."
On January 22, 2004, the district court affirmed the
sanction imposed by the magistrate judge. The court also found
that the record "fully support[ed] the Magistrate Judge's . . .
findings and conclusions," with one exception. The district court
rejected the magistrate judge's finding that Whittington sought a
protective order partly "to conceal his deceptive conduct in the
Aubin case." Referring to Whittington's suggestion that the
magistrate judge inspect the settlement agreement in camera, the
district court noted that this was "hardly the kind of offer likely
to be made by one bent upon concealing his misconduct." The
district court then referred the matter to the magistrate judge for
calculation of attorney's fees.
On April 27, 2004, the magistrate judge issued an order
assessing $6,538 in fees. On May 25, 2004, the district court
entered judgment in the case. On June 16, 2004, Whittington filed
this timely appeal, asking that we vacate the sanctions and set
aside the magistrate judge's findings about his misconduct before
the Aubin court and in his letter to Sheppard’s counsel.
II.
We have jurisdiction to review the sanction in this case
-8-
as an appeal from a final decision of the district court. See 28
U.S.C. § 1291. We can review the underlying factual findings as
well. "The imposition of a sanction on an attorney is universally
regarded as an order, and, if an appellate tribunal has
jurisdiction to review such an order, its examination will
encompass the underlying findings." Williams v. United States (In
re Williams), 156 F.3d 86, 90 (1st Cir. 1998) (footnote omitted).
In certain circumstances, even factual findings by themselves
(i.e., unattached to any sanctions) can be appealed because of the
"serious practical consequences" they may have on counsel's
reputation. Obert v. Republic W. Ins. Co., 398 F.3d 138, 143 (1st
Cir. 2005), remand order modified, 2005 U.S. App. LEXIS 4793 (1st
Cir. Mar. 24, 2005).
"Like the district court, we review [the magistrate
judge's] factual findings under the 'clearly erroneous' rubric."
Phinney v. Wentworth Douglas Hosp., 199 F.3d 1, 4 (1st Cir. 1999).
As for the magistrate judge's decision itself, "[w]e have long
recognized that the decision as to whether discovery sanctions are
warranted and the choice of what sanctions should be imposed are
matters within the sound discretion of the trial court. As such,
review of . . . discovery sanctions is only for abuse of
discretion." United States v. Soto-Beniquez, 356 F.3d 1, 30 (1st
Cir. 2003), cert. denied, 124 S. Ct. 2432 (2004) (internal
quotation marks and citations omitted). "An abuse of discretion
-9-
occurs when a material factor deserving significant weight is
ignored, when an improper factor is relied upon, or when all proper
and no improper factors are assessed, but the court makes a serious
mistake in weighing them." Id. (internal quotation marks omitted).
In the Rule 11 context, the Supreme Court has explained that a
court "would necessarily abuse its discretion if it based its
ruling on an erroneous view of the law or on a clearly erroneous
assessment of the evidence." Cooter & Gell v. Hartmax Corp., 496
U.S. 384, 405 (1990); see also Obert, 398 F.3d at 143. We apply
that logic to our review of the sanction and findings at issue
here.
A. Factual findings
1. Whittington's statements to the Aubin court
We first examine the magistrate judge's finding that
Whittington misrepresented the settlement status of the Aubin case
when he told the Aubin court that the parties were close to
settlement ("the prospects for settlement are excellent") but had
not yet settled.
Before we reach the merits of this issue, however, we
reject at the outset Whittington's argument that the magistrate
judge somehow lacked jurisdiction to make findings (which
Whittington here calls "sanctions") about his conduct in the Aubin
case. These cases--Sheppard and Aubin--are closely related. They
have a common defendant, River Valley. Aubin alleged that he was
-10-
fired in retaliation for reporting Sheppard's complaints about
harassment. The cases were consolidated for discovery before the
same magistrate judge.
True, it would be odd for Sheppard to win her attorney's
fees and costs for Whittington's conduct in a case to which she was
not a party. However, that is not what happened here. Sheppard
sought compensation for costs incurred in challenging the
protective order in her case. In considering that request, the
magistrate judge had to look at Whittington's conduct in Aubin to
evaluate what Whittington was trying to achieve with a protective
order in Sheppard. Moreover, Whittington himself made the events
surrounding the Aubin settlement an issue in this case when he
decided to try to use that settlement to encourage settlement here,
too. The magistrate judge's findings of fact, including the
finding about Whittington's conduct in the Aubin case, were all
related to his decision to impose sanctions for Whittington's
discovery misconduct in this case.
We now examine the merits of the finding at issue. In
his September 27, 2001 order, the magistrate judge said that
Whittington, when he told the Aubin court that the parties were
close to settlement instead of settled, had engaged in "deceptive
conduct" and "misrepresentations" before the Aubin court. The
district court, for its part, said that Whittington’s conduct
certainly qualifies as "sharp practice," well outside the
boundaries of complete and full candor owed to the court
-11-
by those who practice in this district.3 At worst,
counsel intentionally sought to mislead the court with
regard to the actual settlement status of the Aubin case
in order to obtain rulings on pending motions that
otherwise probably would not have been made.
In this instance, we cannot agree with such a harsh view of
Whittington's conduct.
First and foremost, we take seriously River Valley's
concerns, expressed in the letter to Aubin's counsel, about being
able to corroborate Aubin's testimony with information obtained
from Brannen and Panzica. The magistrate judge dismissed that
concern, writing that "[n]othing in the settlement documents even
suggests that this is true." But Whittington's letter to Aubin’s
3
The Rules of Professional Conduct of the New Hampshire
Supreme Court are the relevant ethical standards for lawyers
practicing before the United States District Court for the District
of New Hampshire. See D.N.H.R. 83.5 DR-1. All lawyers have a duty
of candor to the tribunal, which is violated by "knowingly" making
a "false statement of material fact or law to a tribunal." N.H.
Rules of Prof'l Conduct R. 3.3(a)(1).
Although neither the magistrate judge nor the district court
referred to specific rules of New Hampshire's Rules of Professional
Conduct in their analysis of Whittington's conduct, it is apparent
to us that the rules informed their analysis of that conduct. In
their briefs on appeal, the parties also rely on those rules and
commentary to the ABA's Code of Professional Responsibility, see
infra, fn. 5, in defending and criticizing Whittington's conduct.
We also refer to the rules and that commentary in evaluating
Whittington's conduct. However, in making his findings about
Whittington's conduct, the magistrate judge did not explicitly make
a finding that a specific rule of New Hampshire's Rules of
Professional Conduct had been violated and neither did the district
court. We take a similar approach here, focusing our analysis only
on the factual findings of the magistrate judge. As noted above,
factual findings themselves about unprofessional conduct can be the
subject of appeal because of the "serious practical consequences"
they have on counsel's reputation. Obert, 398 F.3d at 143.
-12-
counsel could hardly have been clearer when it stated that
"settlement is contingent upon defendants' satisfaction that Aubin
is assisting defendants in good faith to the best of his ability."
That statement came at the end of a paragraph stressing River
Valley's interest in Aubin's "actions/discussions" with Brannen and
Panzica. Two paragraphs later, the letter referred to the
importance of "getting a ruling on the Brannen and Panzica motions,
and defendants receiving their documents and taking their
depositions." Read fairly in context, these statements are
evidence of River Valley's reluctance to settle until it had
exhausted its ability to corroborate Aubin's affidavit. As
Whittington argues, "no prudent litigant in these circumstances
would have given up leverage by settling just before obtaining the
cooperation it was bargaining for." Thus it was fair for
Whittington to characterize the parties as being close to
settlement after the August 15, 2001 letter, but not yet settled.
The magistrate judge placed considerable emphasis on the
notion that the parties would have reached a settlement regardless
of what happened with the pending discovery motions. At the
sanctions hearing, Whittington said that he believed that the case
would have settled even if River Valley had been unable to
corroborate Aubin’s affidavit. But Whittington's post hoc
speculation, even if accurate, does not tell us much about how
close the parties were to a final settlement. To the contrary, in
-13-
almost any negotiation, a lawyer would presumably begin with
various ambitions that he hopes to realize in the end--a best-case
scenario, as it were. Yet at the same time, he may be able to
concede privately that his client is still better off settling even
if it proves too difficult to secure some particular favorable
concession or other benefit. Presumably, Whittington simply meant
that River Valley's ability to corroborate the affidavit of an
untrusted adversary was one such aim: valuable if he could get it,
but not a deal-breaker if he could not. Importantly, Whittington
never said that River Valley would have settled if the information
from Brannen and Panzica had fatally undermined Aubin's affidavit
or critically impeached his credibility.
We are given further pause by the magistrate judge's own
somewhat varying descriptions of the settlement status in Aubin.
At one point, for example, the magistrate judge describes the
August 15, 2001 letter as, if not a true settlement, then at least
a "settlement in principle." A "settlement in principle" may well
have justified Whittington's statement to the court that "the
prospects for settlement are excellent after resolution of the two
pending motions." In the same vein, the magistrate judge wrote:
"Even if the Aubin matter was not settled on August 16, it was
settled prior to the court's September 12, 2000 ruling on the
Brannen motion." But in that case, then, it was not wrong for
Whittington to describe the parties as close to settlement on
-14-
August 16. Anyway, it seems to us that a finding of ethical
misconduct, so fraught with consequences for a lawyer's
professional reputation, should not rest on such fine distinctions.
If the court has trouble coming to an unqualified conclusion about
the parties' settlement status, then Whittington can hardly be
charged with telling a knowing falsehood--the standard set forth by
the Rules of Professional Conduct--under such circumstances.
Similarly, we are reluctant to affirm a finding of
unethical conduct on the basis of a foray into contract law. The
district court described the letter agreement as being a
settlement subject to a few conditions subsequent. . . .
Had those conditions not been met, perhaps defendants
could rescind the agreement and declare the settlement
null and void.
In the district court's view, "there was nothing of substance left
to negotiate," although in truth the settlement may not have been
"fully accomplished." This conclusion, though--that the letter
agreement may have had some legal force--seems to us to miss the
point. Even though the letter agreement may have been enforceable
in some circumstances, many contingencies remained. The most
crucial legal documents--the mutual releases, Aubin's affidavit,
the stipulated judgment--had not even been drafted, let alone
signed or delivered. In short, given the evident uncertainties
that remained, we conclude that Whittington gave a reasonably apt
summary of the situation when he advised the court that settlement
with Aubin was close. The magistrate judge's finding to the
-15-
contrary was erroneous.
2. Letter to Sheppard's counsel
In this second finding, the magistrate judge found that
"[i]n his October 6 letter, Whittington intentionally misled the
plaintiffs into believing that Aubin did commit to a $50,000
payment in order to intimidate them into a $50,000 settlement in
this case."4 In that letter, Whittington wrote:
Attached please find a Stipulation to Judgment signed by
Judge Barbadoro on October 4 in the amount of $50,000 in
RVC’s [River Valley’s] favor in the Aubin case. It is
clear that, when presented with the extensive evidence
that we have compiled in support of our counterclaims
against him and our motion for summary judgment on his
own claims, Aubin and his counsel saw that the litigation
had only one possible outcome.
The $50,000 judgment, and the likelihood that it will
soon become public, prompt us to re-visit with you the
subject of settlement.
He then stated River Valley’s willingness to settle for "[p]ayment
of $50,000 by the Sheppards to [River Valley]," among other demands
similar to the Aubin settlement (for example, a truthful affidavit
confirming River Valley's version of events). He never disclosed
that the true cost of the settlement for Aubin was $100.
New Hampshire's Rules of Professional Conduct impose a
duty of truthfulness on lawyers with respect to people other than
4
The magistrate judge also noted that Whittington made this
representation not only to opposing counsel, but to the court as
well. In River Valley's motion for summary judgment, a footnote
referred to the $50,000 judgment without saying that it could be
satisfied for $100.
-16-
the tribunal. Again, the Rules prohibit knowing falsehoods. See
N.H. Rules of Prof'l Conduct R. 4.1(a) ("In the course of
representing a client a lawyer shall not knowingly make a false
statement of material fact or law to a third person. . . ."). The
commentary accompanying New Hampshire Rule 4.1 in effect at the
time states that "[m]aking a false statement includes the failure
to make a statement in circumstances in which nondisclosure is
equivalent to making such a statement." N.H. Rules of Prof'l
Conduct R. 4.1, ABA Model Code Comments (2000). The magistrate
judge's finding that Whittington's omission constituted a
misrepresentation is consistent with the commentary's elaboration
of Rule 4.1.5
5
Before the ABA promulgated the Model Rules of Professional
Conduct in 1983, which many states have now adopted wholesale or
piecemeal, the ABA had promulgated the Code of Professional
Responsibility, also known as the Model Code. Following a period
during which New Hampshire lawyers were subject to the Model Code,
the New Hampshire Supreme Court adopted the present Rules of
Professional Conduct, also known as the Model Rules, effective
February 1, 1986. There is ABA commentary to both the Model Code
and the Model Rules. Oddly, publications setting forth the New
Hampshire Rules of Professional Conduct include commentary that
accompanied the now supplanted Code of Professional Responsibility,
i.e. the "ABA Model Code Comments". Although the New Hampshire
Supreme Court has never formally adopted these comments, it has
stated that "Although the text of each rule is authoritative, the
comments are intended as guides to interpretation." Carpenito's
Case, 139 N.H. 168, 173 (N.H. 1994).
Therefore, the Model Code commentary can inform judgments
about the professional conduct of an attorney in New Hampshire. In
fact, this is how it appears the New Hampshire Supreme Court uses
the "ABA Model Code Comments," in the wake of the switch from the
Code to the Rules. See e.g., Carpenito's Case, supra; In re
Coffey's Case, 880 A.2d 403, 413 (N.H. 2005); In re Richmond's
Case, 152 N.H. 155, 158-59 (N.H. 2005). As we noted in footnote 3,
-17-
It is evident from the letter, read in its entirety, that
Whittington wanted Sheppard to believe that the Aubin case had
settled for a payment of $50,000. True, Whittington did not say so
explicitly. However, he managed to convey that impression anyway
by selecting certain words and omitting certain details with
studied precision. As the district court wrote: "[T]he words used
(and not used) by Whittington seem carefully chosen, and, if
dissected and construed from a minimalist point of view, are
defensible as 'literally true.' But it is likewise plainly
apparent that those words were meant to convey more." After all,
the letter's purpose--to encourage Sheppard to pay $50,000 to
settle her case--depended considerably on leaving the impression
that Aubin, in a similar position, had already committed to doing
the same thing.
We are not saying that Whittington had a general
obligation to disclose the full terms of the Aubin settlement to
Sheppard just by mentioning the fact of the settlement. However,
Whittington did more than that. He chose to disclose the face
dollar value of the judgment against Sheppard without disclosing
the real dollar value of the settlement, in an attempt to induce
Sheppard to settle on terms comparable to the Aubin judgment.
that appears to be what the magistrate judge and the district court
did here. The parties took a similar approach on appeal, and we do
the same here. (So far as we can tell, the New Hampshire Supreme
Court has not addressed the status or use of the commentary to the
ABA's Rules of Professional Conduct.)
-18-
Having made that choice, Whittington had an obligation not to
misrepresent, affirmatively or by omission, the true value of the
settlement. In other words, Whittington's overall conduct created
the very circumstances under which his failure to act, i.e. his
failure to inform Sheppard's counsel of the real dollar value of
the settlement, became a misrepresentation. Therefore, the
magistrate judge correctly concluded that Whittington's too-artful
words "intentionally misled the plaintiffs into believing that
Aubin did commit to a $50,000 payment in order to intimidate them
into a $50,000 settlement in this case."6
6
In defending his conduct, Whittington refers to the
following language from the ABA Model Code Comments:
A lawyer is required to be truthful when dealing with
others on a client's behalf, but generally has no
affirmative duty to inform an opposing party of relevant
facts. A misrepresentation can occur if the lawyer
incorporates or affirms a statement of another person
that the lawyer knows is false. Misrepresentation can
also occur by act as well as deed. Making a false
statement includes the failure to make a statement in
circumstances in which nondisclosure is equivalent to
making such a statement. Thus, where a lawyer has made a
statement that the lawyer believed to be true when made
but later discovers that the statement was not true, in
some circumstances failure to correct the statement is
equivalent to making a statement that is false.
N.H. Rules of Prof'l Conduct R. 4.1, ABA Model Code Comments
(2000). Whittington emphasizes the statement that a lawyer
"generally has no affirmative duty to inform an opposing party of
relevant facts." Also, he asserts that the last sentence -- which
outlines a situation where a lawyer makes a statement he later
discovers to be false -- describes the only circumstances in which
a nondisclosure is equivalent to a false statement.
The language Whittington cites -- that "[m]aking a false
statement includes the failure to make a statement in circumstances
-19-
B. Monetary sanction
In the magistrate judge's view, Whittington's "true
purpose for seeking the protective order" was to conceal his
unethical conduct, as the magistrate judge saw it, reflected in his
statements to the Aubin court and his letter to Sheppard’s counsel.
Like the district court, we are not persuaded by this account of
Whittington's motivations. As the district court wrote:
Whittington did, after all, offer to file the Aubin
settlement documents with the court for in camera
inspection--hardly the kind of offer likely to be made by
one bent upon concealing his misconduct. Whittington
vigorously denies any such motive, and his actions
generally support his denials, as does the general tenor
of the record.
Also, we agree with the district court's observation that "[i]t is
highly unlikely that [Whittington] was motivated to file the motion
for protective order to conceal misconduct he did not (and still
does not) recognize as misconduct." Moreover, we have now
concluded that Whittington had no reason to conceal his statements
before the Aubin court. In the end, however, his motivation for
seeking the protective order does not matter. Whatever his
motivation, Whittington’s arguments for the order, simply taken at
in which nondisclosure is equivalent to making such a statement" --
actually captures the wrongfulness of his conduct. The manner in
which Whittington drafted his letter to Sheppard's counsel created
a situation in which his failure to make a statement constituted a
false statement. Simply because his own actions created the
circumstances that gave rise to his duty to disclose does not
relieve him of that duty. Finally, it is plainly obvious that the
last sentence of the paragraph is one example of a nondisclosure
that is equivalent to a false statement, not the only example.
-20-
face value, were so unjustified that he must personally bear the
costs of opposing it. The monetary sanction imposed by the
magistrate judge must therefore stand.
Motions for protective orders are first governed by Rule
26(c), which provides for the award of expenses if the motion
fails:
If the motion for a protective order is denied in whole
or in part, the court may, on such terms and conditions
as are just, order that any party or other person provide
or permit discovery. The provisions of Rule 37(a)(4)
apply to the award of expenses incurred in relation to
the motion.
Fed. R. Civ. P. 26(c). Rule 37 provides in relevant part:
If the motion [to compel] is granted or if the disclosure
or requested discovery is provided after the motion was
filed, the court shall, after affording opportunity to be
heard, require the party . . . whose conduct necessitated
the motion [here, Whittington] . . . to pay to the moving
party the reasonable expenses incurred in making the
motion, including attorney's fees, unless the court finds
that the motion was filed without the movant's first
making a good faith effort to obtain the disclosure or
discovery without court action, or that the opposing
party's nondisclosure, response, or objection was
substantially justified, or that other circumstances make
an award of expenses unjust.
Fed. R. Civ. P. 37(a)(4)(A) (emphasis added). In a similar
context, the Supreme Court has said that "substantially justified"
does not mean "justified to a high degree," but only "justified in
substance or in the main-–that is, justified to a degree that could
satisfy a reasonable person." Pierce v. Underwood, 487 U.S. 552,
565 (1988) (internal quotation marks omitted) (construing
government's obligations under Equal Access to Justice Act).
-21-
The specific wording of Whittington’s motion for
protective order is important. Whittington wrote:
3. Robert Aubin settled his claims by and against
defendants--in a different case from this case--in a
confidential settlement agreement. That settlement
agreement has no bearing on any of the issues in this
case, and is not calculated to lead to admissible
evidence.
4. Settlement agreements with related parties--absent a
showing of identity of issues or factual stipulations
having bearing on the subsequent case--are generally held
inadmissible as not relevant. Centillion Data Systems,
Inc. v. Ameritech Corp., 193 F.R.D. 550 (S.D. Ind. 1999);
Doe v. Methacton School Dist., 164 F.R.D. 175 (E.D. Pa.
1995); Thornton v. Syracuse Saving Bank, 961 F.2d 1042
(2d Cir. 1992); Griffin v. Mashariki, 1997 WL 756914
(S.D.N.Y. 1997).
Whittington argues in a conclusory way that these four cases
substantially justified his position. He complains in passing that
the magistrate judge never even noted that he had cited them before
imposing sanctions.
We have examined the cases and find them wanting. The
general proposition for which Whittington cites them is valid.
However, his motion is more notable for what it does not
acknowledge: namely, that settlement agreements may be used to
impeach a witness like Aubin, whose testimony–-which, to be sure,
was supposed to be "truthful"--entitles him to a $49,900 discount
on a judgment of $50,000.7 This omission is all the more glaring
given that the first case he cites makes that very point. In
7
It appears that, for some reason, Aubin never even paid the
$100 that he owed.
-22-
Centillion Data Systems, the court carefully noted that "evidence
of settlement offers and acceptances . . . may be admissible for
other purposes 'such as proving bias or prejudice of a witness.'"
193 F.R.D. at 553 (quoting Fed. R. Evid. 408). As Whittington had
to know, that is precisely the reason why Sheppard’s counsel was
interested in seeing the settlement agreement for herself.
Therefore, while Whittington may have felt no ethical concerns
about revealing his representations to the Aubin court or his
letter to Sheppard's counsel, he should not have fought disclosure
of a settlement agreement so obviously relevant to the impeachment
of Aubin's testimony in a future trial. The magistrate judge's
call on this point was exactly right.
C. Arguments rejected for procedural defects
At the June 13, 2001 hearing, the magistrate judge
announced that he would impose certain nonmonetary sanctions on
Whittington, requiring at least 10 hours of CLE credits and
tutoring from Whittington's attorney in ethics. Although
Whittington says that he is appealing these particular sanctions on
several grounds, he has not preserved his right to do so. He did
not object to these sanctions at the hearing or shortly thereafter
in the time provided by Fed. R. Civ. P. 72(a).8 When he filed
8
Rule 72(a) provides, for nondispositive rulings like this
one: "Within 10 days after being served with a copy of the
magistrate judge's order, a party may serve and file objections to
the order; a party may not thereafter assign as error a defect in
the magistrate judge's order to which objection was not timely
-23-
objections to the magistrate judge's September 27, 2001 order, he
did not mention the nonmonetary sanctions at all. For that reason,
presumably, the district court did not review them in its January
22, 2004 ruling. Neither will we. "It is a firmly settled rule
that a party's appeal of a magistrate judge's order to the district
court delimits his right to further appellate review." Phinney,
199 F.3d at 3. Whittington's failure to appeal these nonmonetary
sanctions when he first had the chance prevents him from
challenging them now.9
Whittington is not alone in suffering from a self-
inflicted wound on appeal. On April 12, 2004, the magistrate judge
issued his order fixing the amount that Whittington would have to
pay in attorney's fees. Sheppard now cross-appeals that order as
being too small, but she failed to object to that order within Rule
72(a)'s time limit. Before briefs had been filed in this case,
Whittington moved to dismiss Sheppard's cross-appeal as
unpreserved. We provisionally denied that motion and ordered the
made."
9
According to Whittington, these nonmonetary sanctions are
less important to him than the factual findings that we have
addressed. In any event, as we explained, even if the specific
nonmonetary sanctions are not appealable, the findings themselves
are because of their effect on the lawyer's professional reputation
and because they contributed to the imposition of monetary
sanctions for Whittington's discovery misconduct in this case.
Although we have vacated the finding based on Whittington's conduct
in the Aubin case, there remained ample grounds, as we have
explained, for the magistrate judge's imposition of a monetary
sanction for discovery misconduct.
-24-
parties to "address the issue raised by the motion papers in their
relevant briefs." Sheppard completely failed to address the issue
in her opening brief, only belatedly doing so in a reply brief.
"It is well settled in this court, for good reason which need not
be rehearsed here, that a legal argument made for the first time in
an appellant's reply brief comes too late and need not be
addressed." Rivera-Muriente v. Agosto-Alicea, 959 F.2d 349, 354
(1st Cir. 1992). At this point, the issue raised by Sheppard's
cross-appeal has been forfeited twice-over, and we decline to
consider it on the merits.
III.
For the reasons stated, we affirm the award of a monetary
sanction assessed personally against Whittington. We also affirm
the magistrate judge's finding that Whittington's letter to
Sheppard's counsel "intentionally misled the plaintiffs into
believing that Aubin did commit to a $50,000 payment in order to
intimidate them into a $50,000 settlement in this case." We vacate
the magistrate judge's finding that Whittington misrepresented the
settlement status of the Aubin case when he told the Aubin court
that the parties were close to settlement but had not yet settled.
Costs are taxed in favor of the appellee.
So ordered.
-25-