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  • Writer's pictureKirk Hartley

Lawsuit Dismissed as Sanction for Breach of Confidentiality Order – Papers Leaked to Wikileaks

There’s lots of room for debate about whether and how confidentiality orders can and should be used in tort and other litigation. That debate now includes an interesting opinion from the Northern District of Illinois by our well-respected Judge Milton I. Shadur. In the opinion, Judge Shadur dismisses a lawsuit as a sanction for apparently unquestionable leaking to of material that was subject to a confidentiality order, with that problem emerging after many deadlines were missed. The posted doceument is a “guarantee services agreement,” a contract with Sallie Mae.

The opinion is summarized below in an article from the Chicago Daily Law Bulletin. The text of the article is set out below as a fair use. I’ve posted the opinion here.

Judge slams lawyer for leaks, dismisses suit By Patricia Manson Law Bulletin staff writerCiting the need to protect the integrity of the justice system, a federal judge has thrown out a lawsuit as a sanction for the leak of confidential documents obtained during discovery. U.S. District Judge Milton I. Shadur on Monday dismissed with prejudice a suit that Rhonda Salmeron filed under the False Claims Act against certain players in the student loan industry. Shadur said an attorney for Salmeron, Jorge Sanchez of Depres, Schwartz & Geoghegan in Chicago, admitted that he provided to unauthorized individuals documents produced on a limited-disclosure basis. Those individuals included Salmeron and a reporter for The Chronicle of Higher Education, Shadur said. Shadur blamed Sanchez for the appearance of one of the documents — complete with identifying numbers that Shadur said ”unequivocally” demonstrated its source — on the Web site That document was a 51-page contract between Sallie Mae Inc. and United States Aid Funds Inc., Shadur said. He said a link to the Wikileaks article and the documents later was posted on Yahoo’s finance message board. The disclosure of the documents came after Sanchez had engaged in ”a virtually unbroken pattern of dilatory and irresponsible conduct” during the course of the litigation, Shadur said. He said the conduct included repeatedly missing deadlines, skipping status conferences and breaking promises to file documents in a more timely manner. And the lawyer’s argument at a hearing last month on defense motions to dismiss ”plainly evidenced his failure to appreciate the seriousness of his actions,” Shadur said. Shadur did note that the lead attorney for Salmeron, John Thomas Moran Jr. of Moran Law Group in Chicago, had appeared in court in her case occasionally. And Shadur said he had not listened to tape recordings of proceedings on the dates set for hearings in the case to determine ”if any of those dates involved Moran’s presence and Sanchez’ absence.” But Shadur added, ”[T]here is not the slightest question that virtually all (if not all) of the appearances that involved claimed explanations of and excuses for delayed filings were by Sanchez.” Shadur conceded that dismissing a suit on the basis of a lawyer’s behavior without deciding the merits of the case is an extreme step. But Shadur said he did not need to decide whether the attorney’s ”persistent flouting of court deadlines, coupled with periodic no-shows at scheduled status dates” warranted throwing out Salmeron’s suit. Instead, Shadur said, Sanchez’ release of confidential documents was enough by itself to support dismissal of the action. ”It is truly inexcusable, no real explanation has been offered, and its damaging effect cannot be quantified in the same way that looking at defense counsel’s time charges and compelling Salmeron to pay them might provide a remedy for the earlier procedural violations,” Shadur wrote in a 23-page opinion. Shadur said the U.S. Supreme Court’s ruling in National Hockey League v. Metropolitan Hockey Club Inc., 427 U.S. 639 (1976), left no question that he had the authority ”to order the ultimate sanction of dismissal in the face of such egregious conduct.” And in Wade v. Soo Line Railroad Corp., 500 F.3d 559 (7th Cir. 2007), the 7th U.S. Circuit Court of Appeals affirmed ”the propriety of visiting a lawyer’s sins upon the client,” Shadur said.

The case is U.S. ex rel. Rhonda Salmeron v. Enterprise Recovery Systems Inc., et al., No. 05 C 4453.

Sanchez and Moran could not be reached for comment. But in a filing opposing motions to dismiss, attorneys for Salmeron argued that throwing out the suit would be ”disproportionate” to the alleged wrongdoing. Salmeron’s attorneys also contended that the defendants had not demonstrated that the contract posted on Wikileaks was confidential or would have been covered by a protective order. And the attorneys argued that the protective order that was in place related only to defendant Enterprise Recovery Systems Inc. ”To dismiss a case for publication of a document that was not under a protective order nor even marked ‘confidential’ would be unprecedented,” the attorneys said.

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