September 2016 | Earn one hour of MCLE Credit in Legal Ethics
Misconduct has its price: Sanctions against attorneys
Attorneys who commit misconduct face a number of possible repercussions that can include monetary and other sanctions.
It is important for attorneys to understand the ethical and other limits to advocacy, what conduct qualifies for sanctions and what powers the court has to issue sanctions. Under certain circumstances, a sanctions award must be reported to the State Bar and can lead to a disciplinary investigation. It is important to be familiar with the rules concerning when sanctions must be reported to the State Bar and what ethical obligations a lawyer has when sanctions are sought against both the attorney and the client.
No inherent power to impose monetary sanctions
California courts have inherent power to control proceedings before the court and to punish and redress litigation misconduct, including the power to preclude evidence and dismiss actions. However, courts’ inherent authority does not extend to the imposition of monetary sanctions. Therefore, trial courts may not award attorney’s fees as a sanction for misconduct under its supervisory power unless they do so pursuant to statutory authority or an agreement of the parties. Bauguess v. Paine, 22 Cal.3d 626, 637 – 38 (1978).
There is no “common law” authority for imposing monetary sanctions. Courts do have inherent power to issue evidence preclusion or other sanctions where an attorney has engaged in conduct that compromises confidentiality. Peat, Marwick, Mitchell & Co. v. Sup. Ct., 200 Cal. App. 3d 272, 289 (1988). Not all sanctions may be assessed against both attorneys and clients. Sanctions for violations of California Rules of Court or local rules may not be assessed against a client, nor may a client’s case be adversely affected when the rule violation was solely counsel’s responsibility. CCP 575.2(b); CRC 2.30(b)
Civil procedure sanctions
Under Code of Civil Procedure section 128.7, a lawyer who presents a pleading, motion or similar papers to the court may be subject to sanctions for violation of an implied “certification” as to its legal and factual merit. By signing the document, the attorney or unrepresented party is certifying to the court, to the best of his or her knowledge, information and belief that (1) the document is not being presented for an improper purpose (such as to harass the opposing party or cause unnecessary delay), (2) the claims, defenses and legal contentions are supported by existing law or a nonfrivolous argument extending, modifying or reversing existing law, (3) the allegations and factual contentions are likely to have evidentiary support and (4) the denials of factual contentions are warranted.
CCP section 128.7 provides the court may impose sanctions against attorneys, law firms and parties who have violated CCP section 128.7(b). By its terms, section 128.7 does not apply to discovery matters. Section 128.7 applies to all attorneys who present a paper to the court, “whether by signing, filing, submitting or later ”that document. Section 128.7(b).
Section 128.7 requires a two-step procedure: (1) The moving party must first serve the sanctions motion on the offending party without filing it. The opposing party then has a 21-day “safe harbor” period to withdraw the improper pleading and avoid sanctions; (2) at the end of the waiting period, if the pleading is not withdrawn, the moving §128.7(c)(1).
The trial court may issue an order to show cause as to why sanctions should not be imposed under section 128.7, but it, too, must comply with the “safe harbor” provision, permitting the party time to correct the offending conduct. CCP § 128.7(c)(1),(2). If the improper pleading is withdrawn during the safe harbor period, sanctions may not be imposed. See Malovec v. Hamrell, 70 Cal. App. 4th 434, 440 (1999) (“[t]he offending party may withdraw the improper pleading during [the Safe Harbor] period,” and “[i]f the improper pleading is withdrawn, sanctions may not be imposed”) (decided under the previous version of §128.7 with 30-day safe §128.7(c)(2).
The safe harbor provision provides the opportunity for a lawyer to withdraw an offending pleading without penalty, once the impropriety of the pleading and the consequences of non-withdrawal have been made clear. If the attorney withdraws the pleading, no sanctions will be awarded under section 128.7. However, the attorney must provide notice to the other side that the pleading is being withdrawn. Otherwise, a court still may impose sanctions.
Section 128.5 sanctions
Effective Jan. 1, 2015 and lasting until 2018, the California legislature revived CCP section 128.5, which allows a court to impose monetary sanctions against a party or attorney for bad faith actions or tactics. The prior version of the statute applied only to actions filed in 1994 or earlier. The new version of the statute expressly states that it is to be interpreted in accordance with Section 128.7.
Discovery Act sanctions
Sanctions are also authorized by the Discovery Act. The Discovery Act authorizes the court to impose monetary sanctions against “one engaging in the misuse of the discovery process, or any attorney advising that conduct, or both.” CCP §2023.030(a) (emphasis added). “An attorney may only be penalized under this provision for advising disobedience. It is not enough that the attorney’s actions were in some way improper and contributed to the disobedience of the court order.” Corns v. Miller, 181 Cal. App. 3d 195, 200 (1986) “Unlike monetary sanctions against a party, which are based on the party’s misuse of the discovery process, [m]onetary sanctions against the party’s attorney requires a finding the ‘attorney advis[ed] that conduct.’ ” Ghanooni v. Super Shuttle, 20 Cal. App. 4th 256, 261 (1993). The attorney against whom sanctions are sought must be provided notice and given the opportunity to be heard. See CCP § 2023.030, 2023.040. Where the court does find grounds upon which to sanction an attorney, discovery sanctions may not be penal and must be proportionate to the offending party’s misconduct. Williams v. Russ, 167 Cal. App.4th 1215, 1223 (2008). It is an abuse of discretion to impose discovery sanctions “solely for punishment purposes” because the main purpose of discovery sanctions is to enable the propounding party to obtain the “rather than simply to punish a disobedient party or lawyer.” Ghannoni, 20 Cal. App. 4th at 262.
The only sanctions that may be imposed for violations of specific sections of the Discovery Act are limited to the sanctions that are specifically authorized in those sections; disgorgement of fees and costs is not one of those sanctions. See New Albertsons, Inc. v. Superior Court, 168 Cal. App. 4th 1403, 1422 (2008) (Section 2023.030 authorizes a court to impose the specified types of sanctions “[t]o the extent authorized by the chapter governing any particular discovery method or any other provision of [the Civil Discovery Act]”); London v. Dri-Honing Corp., 117 Cal. App. 4th 999, 1005-06 (2004) (statutes governing the particular discovery method limit the permissible sanctions to those sanctions provided under the applicable §2023(b)).
Attorneys can also face sanctions in the course of handling appellate proceedings. Rule 8.276 of the California Rules of Court provides that the Court of Appeal may impose sanctions, including the award or denial of costs, on a party or an attorney for various forms of misconduct, including filing a frivolous appeal, appealing solely to cause delay, including in the record “any matter not reasonably material to the court’s determination,” or committing any other “unreasonable violation” of the court rules. The rule applies to writ petitions filed with the Court of Appeal. The rule does not allow the imposition of sanctions in the form of attorney fees.
An attorney who filed writ petitions that “grossly and repeatedly misrepresent the law and the facts” provided sufficient basis for an order to show cause why the court should not impose a $25,000 monetary sanction to be paid to the court for “the cost of processing, reviewing and deciding the writ petitions.” In re White, 121 Cal. App. 4th 1453 (2004).
An attorney facing sanctions would face a possible ethical dilemma arising from the duty to protect client confidential information and the obligation not to reveal privileged communications if defending against such sanctions would require disclosure of such protected information. The attorney-client privilege and the duty of confidentiality is held to be so important that where an attorney is unable to defend himself without disclosing privileged or confidential communications, California courts have consistently held that such an action must be dismissed.
In Luke v. Baldwin-United Corp., 167 Cal. App. 3d 664 (1985), a law firm filed a motion to quash on behalf of its client, a foreign corporation, asserting that California did not have personal jurisdiction over the corporation. During discovery when it was found that the corporation in fact had a number of California contacts, the motion was withdrawn, but the plaintiff filed a request for sanctions. Luke, 167 Cal. App. 3d at 667. The trial court entered an order imposing sanctions jointly against the law firm and its client for filing a frivolous motion to quash, pursuant to Code of Civil Procedure section 128.5, which authorized the court to order a party, a party’s attorney or both to pay any reasonable expenses, including attorney fees, incurred by another party as a result of frivolous or dilatory tactics. Id.
The Court of Appeal reversed the order only as to the law firm and held that the trial court abused its discretion in imposing sanctions on the law firm jointly with its client because the court could not allocate responsibility between counsel and its client without invading the attorney-client privilege, and the attorneys could not defend themselves because of the privilege. Luke, 167 Cal. App. 3d at 670-71. In reaching its decision, the Court in Luke considered – and rejected – plaintiff’s “strenuous object[ion] to shielding [a]ttorneys behind a naked assertion of the attorney-client privilege” and his contention that “recognition of the privilege in this context would allow the bar to misuse the ”Id.
In Custom Craft Carpets, Inc. v. Miller, 137 Cal. App. 3d 120 (1982), the court declined to impose sanctions for a frivolous appeal against prior counsel even though “[i]t is evident that our discussion in this matter has been critical of prior counsel” because “[w]ithout invading the attorney-client privilege, we have no available means of determining whether it was the client or counsel who was responsible for pressing this litigation and imposing on both the trial and appellate courts.”Id.at 123.
When sanctions are sought against both the attorney and the client, a potential conflict is created between them. However, if the attorney and client agree to take a common position with respect to the motion, there is no conflict that would require compliance with Rule 3-310, the conflict of interest rule. State Bar of California Formal Opinion No. 1997-151. Whenever an attorney faces a motion for sanctions, the attorney must disclose to the client the fact that the motion has been filed (or order to show cause entered), the fact that sanctions are being sought against the attorney and the practical consequences of the motion. Rule 3-500; Bus. & Prof. Code § 6068(m).
In defending against the motion, the attorney may continue to represent the client if they agree to present a common defense. However, if the attorney seeks to exonerate himself and the client does not agree, that situation would give rise to a conflict of interest, and the attorney must withdraw from the representation.
State Bar reporting requirements
Attorneys must report to the State Bar within 30 days of knowledge of any judicial sanctions of $1,000 or more, excluding sanctions for failure to make discovery, Bus. & Prof. Code § 6068(o)(3). Failure to report may subject an attorney to discipline. Courts must also report attorneys to the State Bar when they impose more than $1,000 in sanctions, other than discovery sanctions. Bus. & Prof. §6086.7(a)(3).
In California, various rules and statutes authorize monetary sanctions against attorneys as well as parties. Attorneys face monetary sanctions for various forms of misconduct, including filing frivolous pleadings or bad faith appeals, or advising a client to engage in discovery abuse. Ethical obligations come into play when sanctions are sought against attorneys.
Attorneys owe their clients ethical duties in the event of a motion for sanctions against the attorney, including a duty to fully disclose the facts concerning the motion. Potential conflicts exist where sanctions are sought against both an attorney and client, unless they share a common position in defense against the sanctions.
Merri A. Baldwin is a shareholder in the San Francisco office of Rogers Joseph O’Donnell P.C., where she focuses on business litigation and attorney liability and conduct, including legal malpractice, attorney-client fee disputes, ethics, professional responsibility and State Bar discipline defense. Chair of the State Bar of California Committee on Professional Responsibility and Conduct, Baldwin is an adjunct professor at the University of California, Berkeley School of Law and a co-editor of “The Law of Lawyers’ Liability”(ABA/First Chair Press 2012). For information on COPRAC go to calbar.ca.gov/ethics. The views expressed herein are her own.