These tools are part of the modus operandi of every lawyer. This article may use dead language and assonance as running themes, but some lawyers take zealous advocacy ad infinitum. Such attorneys are rarely even admonished by the courts, much less sanctioned. That said, the Ninth Circuit has approved sanctions against an attorney for “misrepresentations” made in the complaint of a trade secret lawsuit.
Wait a minute…the COMPLAINT? The boiler-plate statement “upon information and belief” was somehow omitted? After the trial is over and the bad, bad defendant is found to be not so bad after all, is not all that bluster and bravado in the complaint long forgotten?
N.B.: Perhaps not.
Although they are called “pleadings” for a reason, statements in the pleadings must be at least “grounded in fact” to pass muster as fact, even in the complaint. Synonyms used to impress clients might better be left to other writing exercises, e.g., fantasy novels and fairy tales.
In Heller v. Cepia LLC et al., 11-cv-1146 (N.D. Cal. 2011), Jason Heller claimed that Cepia, the makers of “Zhu Zhu Pets” robot toy hamsters, used the same features and accessories he had disclosed to toy manufacturers in his prototype designs. Mr. Heller asserted, inter alia, that the manufacturers forwarded his trade secrets to Cepia, who then used his ideas in the Zhu Zhu Pets products.
In the 2011 complaint, Mr. Heller’s attorney alleged that visitor logs at one of the manufacturers “appeared to confirm” that Cepia had visited the manufacturer. Mr. Heller then “confronted” the manufacturing company who “refused” to provide information about any relationship with Cepia.
Sort of benign, isn’t it? Some visitor logs and a request for additional information that was denied. Prima facie this does not seem to be sanctionable writing or behavior. Yet the use of “appeared to confirm” and “confronted” are why Mr. Heller’s attorney was sanctioned.
This puffing seems rather tame in comparison to the damages Mr. Heller sought: over $2,000,000,000. Yes, two Billion. For a toy hamster? Such a damage request, seemingly made rather boldly across several pages in the complaint, appears somewhat less bona fide than something couched with “appeared,” and, remarkably, did not even rate a de minimis or dicta mention by the court as raising any cause for concern.
No wonder there are so many cries for tort reform.
Fast forward to a year later, where, on joint stipulation, the complaint was dismissed against Cepia with prejudice. Per se no sanctions, right?
In part of the quid pro quo for the dismissal stipulation, Cepia received Mr. Heller’s acknowledgement that “he did not find any evidence that Cepia had any access to any of Mr. Heller’s hamster toy ideas or information” in the documents and evidence produced during discovery.
First mistake: saying, “There is nothing in any of the evidence showing the defendant was bad.” Because then the complaint looks like, oh, a big lie.
Second mistake: letting a client say, “There is nothing in any of the evidence showing the defendant was bad.” Because then it looks like the attorney fabricated the complaint ab initio. And yes, now sanctions may be apropos, in this case to the tune of $5,000.00 from the Northern District of California.
Mr. Heller’s attorney appealed, arguing in his appellate brief that “in hindsight, my wording could have been better.” Admitting the wording was misleading is likely a third mistake.
Mr. Heller’s attorney then tried to save the day, ibid, by arguing that his letter to one of the manufacturers constituted a “method of confronting them on the issues.”
Fourth mistake: unless you are a Court of Appeals for the Federal Circuit judge, you are not allowed to construe the meaning of words de novo.
Confront means “to oppose or challenge (someone) especially in a direct and forceful way” or “to directly question the action or authority of (someone).” (Merriam-Webster).
The complaint implied that someone went to the defendant’s place of business and spoke to them face-to-face, or challenged them to prove they were innocent. Nope. His attorney dashed off a quick note saying, in essence, “Hey, thanks for the visitor logs, can you tell us a little more about your relationship with Cepia?” The defendants did not answer. There was no confrontation, and the visitor logs didn’t confirm any visits by Cepia.
In reality, the only mistake here was somebody thinking it was a good idea to make the defendants appear uncooperative and/or hiding the truth. Had the complaint contained the facts, instead of something that sounded a little more ominous, the lawsuit would have still gone forward exactly as it did.
Everything except for the sanctions.
For more on Heller v. Cepia, see the Law360 Article.