U.S. District Judge Robert S. Lasnik issues sanctions against Buchalter for impeding proceedings through unsupported arguments and misleading assertions.
In a recent development, U.S. District Judge Robert S. Lasnik of the Western District of Washington has issued a significant ruling against law firm Buchalter, ordering them to pay over $147,000 in sanctions. This decision comes in response to what Judge Lasnik described as the firm’s “unreasonable and vexatious” prolongation of discovery proceedings through unsupported arguments and misleading statements during litigation.
The Class Action Lawsuit
The underlying legal case involves a class action lawsuit in which coffee distributors, wholesalers, and retailers were accused of mislabeling regular coffee as Kona coffee. Buchalter represented one of the defendants in this case, the now-bankrupt Mulvadi Corp.
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Unjustified Delays
Judge Lasnik’s decision to impose sanctions on Buchalter stems from his earlier ruling on July 19, in which he held the law firm responsible for decisions that needlessly extended the discovery process and failed to ensure that their client conducted diligent searches for requested discovery materials. According to Lasnik, Buchalter’s actions resulted in unwarranted delays, if not obstructions, to the discovery process, ultimately making the litigation more arduous and costly for the plaintiffs.
Unsupported Arguments and False Assertions
In his July 19 order, Judge Lasnik noted that Buchalter had put forward entirely unsupported arguments, made false or misleading assertions under oath, and unreasonably delayed the discovery process, all of which contributed to the complications faced by the plaintiffs.
The “Pleading Promise” Defense
One of the key issues highlighted by Judge Lasnik was Buchalter’s use of a “pleading promise” defense, which the firm had invented and continued to employ even after Lasnik had struck it down. This defense was used to justify Mulvadi Corp.’s failure to participate in discovery and alleged that the plaintiffs had breached a pleading promise through bad faith lawsuit claims.
Discovery Troubles
Judge Lasnik recounted the plaintiffs’ struggles with discovery, particularly the challenges posed by Mulvadi Corp. The company made it exceptionally difficult for the plaintiffs to verify various aspects, including the coffee it purchased, the amount it paid for Kona coffee, and its profits from sales. This obstructionist behavior was evident in the company’s refusal to comply with unambiguous discovery orders at nearly every turn.
Document Production
Mulvadi Corp. had initially claimed that its business records were exclusively in paper form, insisting that plaintiffs travel to their warehouse to review voluminous boxes of documents. However, the court ordered Mulvadi Corp. to scan and produce these documents in a searchable format. Despite this, the company made nearly 120,000 pages of paper documents, a significant portion of which had no relevance to Kona coffee products, as pointed out by Judge Lasnik in his July 2022 decision.
Restricted Access to Data
Furthermore, the plaintiffs identified some documents reflecting QuickBooks data and sought corresponding reports. While Judge Lasnik ordered access to this data, the available version severely restricted the plaintiffs’ expert in her ability to analyze it effectively.
False Declarations
A noteworthy instance of misconduct highlighted by Judge Lasnik involved Buchalter’s lawyer, Bradley P. Thoreson. Thoreson had traveled to Kona, Hawaii, to investigate the three farms claimed to supply Kona coffee to Mulvadi Corp. When the plaintiffs could not confirm the existence of one of these farms, Thoreson signed a declaration under penalty of perjury attesting to his visit and even provided photos of the farm entrance. However, a subsequent investigation found no apparent association between the land and Pacifica Services, as Thoreson had asserted.
Sanctions Imposed
In light of these actions and their impact on the proceedings, Judge Lasnik has ordered Buchalter to pay sanctions, covering the legal fees of their opponents related to the sanctions motion. However, the court did not award sanctions for the additional fees and costs incurred by the plaintiffs during their prolonged efforts to obtain fundamental discovery from Buchalter’s client and counter Mr. Thoreson’s declarations.
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