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Trials & Litigation

4th Circuit upholds $1M sanction for law firm that tried to ‘sabotage’ federal court’s authority

By Debra Cassens Weiss

October 29, 2024, 3:50 pm CDT

A federal judge had inherent power to impose a $1.05 million sanction against a Maryland law firm for asking state courts to order an end to U.S. district court litigation, a federal appeals court ruled last week.

The 4th U.S. Circuit Court of Appeals at Richmond, Virginia, affirmed the sanction against Napoli Law, which was accused of breaching a contract to share attorney fees promised in a referral deal. Napoli Law had filed lawsuits in two New York state courts that sought an order for the plaintiff, the Keyes Law Firm, to dismiss the federal case.

“District courts are not powerless to act in the face of contumacious conduct so expressly designed to undercut, and even sabotage, their adjudicative authority,” the 4th Circuit said in an Oct. 24 opinion by Judge J. Harvie Wilkinson III, an appointee of former President Ronald Reagan.

Napoli Law had filed the state court suits after the district court in Maryland rejected its motion to dismiss the fee case.

“In every practical sense,” Wilkinson said, “Napoli asked a state court in New York to overrule a federal district court in Maryland. It is hard to imagine a more flagrant challenge to the district court’s authority or a more obvious spur to litigation hither and yon.”

The 4th Circuit rejected Napoli Law’s argument that federal courts only have power to sanction conduct outside the courtroom when it is in direct defiance of a court order.

“To ask a district court to foresee and expressly prohibit through court order every conceivable abuse of process is to ask it to chase its tail,” Wilkinson wrote. “Litigation is complicated enough as it is. District courts should not have to wage a sprawling, three-front war to defend their rightful role.”

Law360 and the Maryland Daily Record have coverage of the decision.

The sanction against Napoli Law followed a December 2019 verdict of more than $861,000 for the Keyes Law Firm. It also followed a previous sanction of nearly $317,000 against Napoli Law for defiance of discovery orders.

The second sanction was for the state court suits and “other bad-faith misconduct,” the appeals court said. “The full list of Napoli’s sanctioned misconduct is long and troubling. It included repeated defiance of court orders, frivolous motions, and last-minute document dumps, to name just a few examples.”

Lawyer Paul J. Napoli formed Napoli Law after the breakup of Napoli Bern Ripka Shkolnik, according to Law360. The suit by the Keyes Law Firm had claimed that the prior firm violated fee-sharing agreements for referrals of asbestos cases. The Keyes Law Firm’s suit named 17 defendants alleged to be alter egos of the original firm and lawyer Napoli, according to Law360.

Marc Bern, a former Napoli Bern name partner, settled the case and was dropped from the Keyes Law Firm suit.

In a statement to Law360, lawyer Napoli said Napoli Law and Napoli Bern are distinct entities. The appeals court disregarded the distinction and overlooked the fact that many of the underlying cases have concluded through settlement or dismissal, he said.

“Keyes consistently held the misconception that there were still tens of millions in fees outstanding, despite having already received millions, a view the jury ultimately sided with us on,” Napoli said. “In the end, it became evident that we had prevailed in the underlying case. The firm is evaluating further briefing to remedy these misconceptions.”

Louis Malick of the Keyes Law Firm told the Maryland Daily Record that the firm is pleased with the 4th Circuit’s decision.

“It sends a strong message to certain members of the profession that the sort of tactics employed in this case will not be tolerated and that district judges have ample authority to sanction misconduct,” Malick told the Maryland Daily Record in an email.

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3. Client escapes sanction for lawyer’s refusal…

Trials & Litigation

Client escapes sanction for lawyer’s refusal to appear on camera in Zoom deposition

By Debra Cassens Weiss

January 25, 2024, 12:01 pm CST

A client won’t have to pay a sanction of nearly $10,000 for his lawyer’s refusal to appear on camera during a remote deposition, a California appeals court ruled Tuesday.

In an unpublished opinion, the California Court of Appeal’s Second Appellate District ruled that the client doesn’t have to pay because a motion to compel the attorney’s on-camera appearance had been withdrawn.

Law360 and the Metropolitan News-Enterprise covered the Jan. 23 opinion.

The lawyer, Jeffrey Katofsky, represented a man alleged to be taking sports bets. The client was subpoenaed by a wife in divorce proceedings who wanted his testimony about thousands of dollars in sports bets said to be placed by her husband, mostly in the last five years of their marriage.

The wife is Shawn Agnone, and her husband, Frank Charles Agnone II, is an award-winning Hollywood producer, according to the Metropolitan News-Enterprise.

The opinion described what happened at the deposition.

Katofsky was in the same room as his client during the deposition. The client appeared on camera, but Katofsky refused to turn on his webcam. The lawyer for Shawn Agnone complained that he wouldn’t be able to see whether Katofsky was “making any visual signs” or “otherwise coaching” his client.

Katofsky referenced the subpoena notice, which required Katofsky and his client to participate in a Zoom deposition “using their own computer equipped with a webcam,and with a stable landline/wired ethernet connection to the internet.”

Katofsky told the opposing lawyer that his computer was equipped with a webcam, “so we complied with your notice,” according to the opinion.

The lawyer for Shawn Agnone ended the deposition. He filed a motion to compel the appearance of Katofsky’s client in accordance with the terms of the deposition notice and sought sanctions against Katofsky and his client.

The wife later notified the judge that she had settled the divorce case with her husband, and she withdrew the motion to compel. The trial judge partly granted the sanction request anyway, ordering Katofsky’s client to pay $9,981.

The appeals court said under the applicable laws, the judge could not impose any sanction because no order had been entered requiring compliance with the subpoena.

Katofsky told the ABA Journal that the appeals court made the right decision. He also says as a lawyer, he doesn’t have to be on camera in a deposition.

“I have no interest in ever being on camera. Ever,” he says.

“No lawyer has to be on camera,” he says. “It’s completely inappropriate to demand it. If they were worried about seeing me, they could have taken the deposition in person.”

Katofsky also says his client is an insurance agent, not a person who takes sports bets.

“He has nothing to do with sports betting at all,” Katofsky says.

The case is Agnone v. Agnone.