Robbins Geller Sanctioned for Securities Lawsuit
SEATTLE, Wash. - (September 4, 2014) Perkins Coie scored a landmark sanctions ruling for client Boeing against Robbins Geller Rudman & Dowd. A federal court in Chicago concluded that the prominent class action plaintiffs firm violated Rule 11 in filing multiple complaints without reasonable investigation and attempting to avoid dismissal by misrepresenting the status and credibility of a confidential source. The complaints alleged that Boeing hid information about the 787 Dreamliner that eventually delayed its launch and caused Boeing’s share price to decline. [The case is City of Livonia Employees’ Retirement System v. The Boeing Co. et al., case number 1:09-cv-07143, in the U.S. District Court for the Northern District of Illinois.]
The suit was dismissed on the merits in 2011, but the plaintiffs appealed. In 2013, the Seventh Circuit affirmed the dismissal but remanded for the district court to determine if Robbins Geller violated Rule 11 and should be sanctioned for filings and representations made without reasonable investigation or evidentiary support.
In his ruling dated August 21, Chief Judge Castillo of the Northern District of Illinois found misconduct in Robbins Geller’s use of a confidential source in its allegations: “The information turned out to be blatantly false, and if counsel had made any attempt to verify the information, they would have easily discovered this.” Instead, Robbins Geller persisted in confidently assuring the district court regarding the credibility of the source and the allegations in the complaint. In doing so, Chief Judge Castillo found, Robbins Geller “made fundamental misrepresentations to the court. Counsel failed to verify the allegations so as to remain ignorant of the truth, and this conduct is reckless and unjustified.” The court ordered Robbins Geller to pay Boeing’s attorneys’ fees.
Chief Judge Castillo noted how rarely Rule 11 sanctions are imposed, identifying only two other cases in which he had imposed such sanctions. Given how uncommon Rule 11 sanctions are, the high-profile nature of this case, the relative prominence of the plaintiffs firm, and the scope of the violation, the sanctions ruling was hailed as significant and unprecedented.
The August 29, 2014 Wall Street Journal editorialized about how, in its view, the sanctions ruling was a long time coming:
“Some of our best friends are lawyers, and sometimes they wonder why the public holds their profession in such disrepute. Exhibit A could be the shakedown specialists at Robbins Geller Rudman & Dowd, who have been ordered to pay sanctions over a lawsuit against Boeing in which the key witness was a fabrication. … The witness’s details were either incorrect or concocted by the plaintiffs attorneys, who filed the complaint before speaking to the witness. … This is the fourth time Robbins Geller has been called out by federal courts for misconduct, and the first time it will have to pay up for its abuse of the legal system. It’s a shame its lawyers are still allowed to practice.”
The Perkins Coie team that successfully represented Boeing in this landmark ruling included, from Seattle, partner Steve Y. Koh and senior counsel Eric B. Wolff, and from Chicago, partner Eric D. Brandfonbrener.
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