Wolters Kluwer Fi. v. Scivantage, Adnane Charchour

• Decision Date: 30 November 2007
• Docket Number: No. 07 CV 2352(HB).,07 CV 2352(HB).
• Citation: 525 F.Supp.2d 448
• Parties: WOLTERS KLUWER FINANCIAL SERVICES INC., Plaintiff, v. SCIVANTAGE, ADNANE CHARCHOUR, SANJEEV DOSS, CAMERON ROUTH and GREGORY ALVES, Defendants.
• Court: U.S. District Court — Southern District of New York

525 F.Supp.2d 448

WOLTERS KLUWER FINANCIAL SERVICES INC., Plaintiff, v. SCIVANTAGE, ADNANE CHARCHOUR, SANJEEV DOSS, CAMERON ROUTH and GREGORY ALVES, Defendants.

No. 07 CV 2352(HB).

United States District Court, S.D. New York.

November 30, 2007.

Brian Jason Fischer, Harry Sandick, Charles B. Sklarsky, Jenner & Block LLP (NYC), New York City, for Plaintiff.

Khaled A. El Nabli, Nabli & Associates, P.C., George 0. Richardson, III, Sullivan & Worcester LLP (NY), Frank H. Wohl, Lankier Siffert Wohl LLP, Pery D. Krinsky, Law Offices of Michael S. Ross, Robert Katzberg, Kaplan & Katzberg, New York City, for Defendants.

AMENDED OPINION & ORDER

HAROLD BAER, JR., District Judge.

I. INTRODUCTION

To fulfill its promise of providing the fair and ordered administration of justice, our legal system depends upon lawyers and law firms following ethical guidelines. To be sure, zealous advocacy by attorneys is not only expected, it is commendable. Nonetheless, there is a line beyond which such aggressive representation gives way to misconduct.

While frequently under fire, attorney behavior remains largely self-regulating. Lawyers are entrusted with ensuring that both their own conduct and that of their colleagues fall within the bounds of the rules of professional responsibility. Occasionally, as here, this responsibility leads lawyers to bring questionable conduct to the attention of the court. Often, though, to avoid public criticism, lawyers settle amongst themselves without court involvement. And to a large extent, courts — even when aware of the misconduct — are satisfied to allow such self-governance among lawyers.

However, the expectation that lawyers can and will resolve questions of attorney behavior without the intervention of the courts — and thus without the threat of official oversight — is hardly a license for lawyers to sweep transgressions under the proverbial rug by settling out of court. From time to time, a lawyer's misconduct is so grave and so blatant as to demand more. When such lapses occur in the federal courts, it is not only our prerogative but our responsibility to address them and, where appropriate, impose sanctions.¹ Indeed, as Canon 3B(3) of the Code of Conduct for U.S. Judges makes clear: "A judge should initiate appropriate action when the judge becomes aware of reliable evidence indicating the likelihood of unprofessional conduct by a ... lawyer."²

The instant case, unfortunately, has been marked by a myriad of just such "reliable evidence" of attorney misconduct serious enough that this Court felt compelled to act. Sadly, the nub of the problem may not be just the behavior of one or two attorneys or law firms, but a much broader problem that has affected the practice of law generally over the last twenty or thirty years and has in the eyes of many turned what was once a profession into more of a business.

This distinction between the legal profession and a business was eloquently explained over thirty years ago by the Honorable Charles D. Breitel, while Chief Judge of the New York Court of Appeals:

A profession is not a business. It is distinguished by the requirements of extensive formal training and learning, admission to practice by qualifying licensure, a code of ethics imposing standards qualitatively and extensively beyond those that prevail or are tolerated in the marketplace, a system for discipline of its members for violation of the code of ethics, a duty to subordinate financial reward to social responsibility, and, notably, an obligation on its own members, even in nonprofessional matters, to conduct themselves as members of a learned, disciplined, and honorable occupation. Matter of Freeman, 34 N.Y.2d 1, 7, 355 N.Y.S.2d 336, 311 N.E.2d 480 (1974).

Chief Judge Breitel's assessment echoes that of former Harvard Law School Dean Roscoe Pound, who had earlier defined a profession as "a group ... pursuing a learned art as a common calling in the spirit of public service — no less a public service because it may incidentally be a means of livelihood."³

More recently, the New York Committee on the Profession and the Courts more frequently referred to as the "Craco Report" after its Chair Louis Craco observed, the rising number of lawyers and the delocalization of practice have "heightened the commercialization" of the practice of law.⁴ Gone are the days where the ambit of a lawyer's practice extended only so far as the county court house on the town square. Today, firms are expanding in size and number, and how often boast national, even international, reach; likewise, clients and their legal needs have become ever more numerous and complex, with the stakes continually rising — not only in terms of the issues and amounts in controversy, but in the fees that attorneys earn. The legal profession has seen a transformation wherein the naked competition and singular economic focus of the marketplace have begun to infiltrate the practice of the law, subordinating high standards of service, collegiality, and professionalism as a result. As the Committee further observed: "[t]he rise in the mobility of lawyers weakened the ties to firms, institutions, and communities, in which professional standards traditionally had been articulated and enforced ... kept in check by the cultural mores of the relatively small legal community."⁵

Thus, a dismaying erosion of civility in practice has often accompanied the expansion of our legal profession. Such incivility "commonly manifests itself as rudeness, refusal to accommodate a colleague's schedule, judge baiting, or harassment during depositions.... [A]lso included under the umbrella are sharp practice tactics such as misrepresenting facts to the court or an adversary and including false information in unsworn documents."⁶ However, while the idealized notion of the small-town lawyer is an anachronism, the idea that civility among lawyers is incompatible with full and effective representation should not be. Indeed, while Rule 7-101 of the Lawyer's Code of Professional Responsibility obligates a lawyer to provide zealous representation, it provides at the same time that "[a] lawyer does not violate [this responsibility] by acceding to reasonable requests of opposing counsel which do not prejudice the rights of the client, by being punctual in fulfilling all professional commitments, by avoiding offensive tactics, or by treating with courtesy and consideration all persons involved in the legal process."⁷

[underlined material was originally omitted from Opinion dated November 29, 2007]

So, while our system is by its very nature adversarial, it goes without saying that such a system expects — indeed, requires — a measure of civility. Nor will our system long survive as it is if we tolerate the use of misleading or downright false statements by lawyers — to opposing parties or to the Court itself — in an attempt to secure a favorable outcome for their clients and themselves.

These and other examples of ethical misconduct are quite simply unacceptable. Such conduct is a drain on valuable judicial resources: when, for example, a litigant misleads the Court, it necessarily takes more time for the Court to try and sift through the facts and separate truth from falsehood. As important, incivility and contentiousness tend to undermine public confidence in the efficacy of the legal system. Finally, when a lawyer deviates from ethical norms he or she acts to the serious detriment of the very individuals that have sought his or her counsel with the expectation of competent, acceptable methods of representation.

Let me begin the story of the present case with the underlying sanctions motion. On April 24, 2007, Defendants Scivantage, Adnane Charchour ("Charchour"), Cameron Routh ("Routh"), Gregory Alves ("Alves"), and Sanjeev Doss ("Doss") (collectively, "Defendants") moved for sanctions pursuant to Fed.R.Civ.P. 37, Fed. R.Civ.P. 16(f), 28 USC § 1927 and the inherent powers of the court, and for civil contempt, against Plaintiff Wolters Kluwer Financial Services Inc. ("Plaintiff' or "Wolters Kluwer"), as well as Plaintiff s then-counsel, Dorsey & Whitney ("Dorsey"), and Dorsey's then-lead counsel on this litigation, Kristan Peters ("Ms. Peters" or "Peters") for a variety of wrongs.

While that motion was withdrawn after a settlement had been reached, my concern was that without more the public and the profession would be deprived of their right to know. The parties sought to seal all the papers surrounding all the motions and, with respect to the hearing, that I seal the courtroom and the transcript. While I acceded to these requests it was with the reservation that depending on the testimony some or all of the sealed material would, on notice to the parties, be unsealed. The issues raised by the motion were troubling.⁸ The sealing and the caveat were to insure that, if proven, the wrongs would see the light of day and, conversely, if unproven, the reputation of those accused would remain unscathed. I scheduled an evidentiary hearing which began on July 23, 2007. That hearing turned out to embrace five days over nearly two months, concluding on September 12, 2007. The following finding of fact come primarily from that proceeding.⁹

II. FINDINGS OF FACT

A. Plaintiffs Activities Prior to Initiation of Action

In or about mid-February 2007, Brian Longe ("Longe"), the president of Wolters Kluwer Financial Services (Plaintiffs parent organization), became aware that three former employees of Plaintiffs "Gainskeeper" business unit who had resigned in June 2006 — i.e., Defendants Cameron Routh, Gregory Alves, and Sanjeev Doss — were now working for a competing software company, Scivantage, that was bidding against Wolters Kluwer for a contract to provide software for tax lot accounting services. 9/4/07 Tr. 40:7-15; Declaration of Deidra D. Gold, July 10, 2007 ("Gold Decl.") ¶ 1, 6. Longe contacted Deidra Gold ("Gold"), General Counsel for Wolters Kluwer...