Breaking Down the SJC Ruling in BBA Amicus Case Wong v. Luu

On Tuesday the SJC released its decision in Wong v. Luu, and we were gratified by the results.  As you may recall, our Amicus Committee filed a brief in this case that played a major role in oral argument.  As it turned out, it played a role in the final holding, too.  Although our brief is not cited, the SJC held, as we had advocated, that the trial judge did not have power to assess nearly $240,000 in sanctions against an attorney for his alleged role in breaking up a potential settlement agreement.  The case helps to clarify the sanctioning power of judges going forward.

How We Got Here

We first learned about this case at the end of 2014, after the SJC granted direct appellate review and issued a formal request for amicus briefs to address: (1) whether the Superior Court judge exceeded his authority by imposing the fine on the grounds that the sanctioned attorney had interfered with an emerging global settlement through his actions and (2) whether the judge erred in assessing sanctions without first conducting an evidentiary hearing, and without adherence to any existing standard.  Our Amicus Committee, chaired by Mark Fleming of WilmerHale, reviewed this request and gathered feedback from the BBA’s LitigationCivil Rights and Civil Liberties, and Bankruptcy Law Sections and Ethics Committee, as well as the parties involved in the case.  They ultimately decided to recommend filing a brief, concluding that the case raised serious concerns regarding the practice of law.

The case arises from two orders issued by a Superior Court Justice for sanctions of $239,928.40 against an attorney in a case involving the attempted sale of a chain of Boston-based supermarkets.  After lengthy discussions, the parties claimed to have reached a framework for settlement.  However, at a later date, certain parties informed the court that the settlement had collapsed and pointed the finger at an attorney involved in the settlement who had made a written solicitation to all known trade creditors of the grocery chain – including some who were parties to the case and were already represented by counsel — informing them of his having achieved a 100-cents-on-the-dollar recovery for his client, and inviting them to contact him if interested in retaining his services.

These other lawyers sought sanctions, claiming that the solicitation caused their clients to rescind their settlement agreement.  The Court agreed and, following oral argument where no witnesses appeared, the Superior Court Justice issued the aforementioned monetary sanction in order to compensate the other lawyers for their time after the breakdown of settlement discussions, explaining that the attorney had acted unreasonably, wasted court and attorney resources, delayed the administration of justice, and breached his duties of good faith and fair dealing to opposing counsel, and his duty of candor to the court.  As a result, the Justice concluded, the Court had been materially prejudiced.

Through the early part of 2015, the Amicus Committee worked with the BBA’s Executive Committee and Council and their chosen drafter, Debra Squires-Lee, Sherin & Lodgen, LLP, to finalize the BBA’s amicus brief.  We were excited about the final product, crafted by Debra with help from Sherin & Lodgen associate Jessica Gray Kelly, which, while taking no position on the underlying facts of the case, requests clarification from the SJC on the scope of a Superior Court’s inherent authority to sanction an attorney for out-of-court conduct that was not in violation of a court order.  It further argues that, before resolving disputed facts in such cases, a trial court should ordinarily conduct an evidentiary hearing to try to establish a basis for finding prejudice to the administration of justice and bad faith.

On March 3, 2015, the SJC heard oral argument in the case.  We hope you will watch the brief video, available here as it was clear that our brief played an integral part.  The brief is mentioned immediately, as the appellant’s attorney opens his remarks with a direct quote.  The brief is mentioned again around 4:42 and at the 10:00 minute mark, when Justice Botsford asks the appellant’s attorney his opinion on our brief’s recommended standard for attorney sanctions.  Much of the discussion revolves around the brief’s main points, most notably at around the 6:00 minute mark, when Chief Justice Gants clarifies with the appellant’s attorney that even if the attorney’s actions at issue in the case were plainly in violation of a disciplinary rule and even if it was found that he was given an evidentiary hearing (two points of contention in the underlying case), that the Superior Court still did not have authority to sanction the attorney for his actions.

The SJC Decision

In an opinion authored by Chief Justice Ralph D. Gants, the SJC appeared to agree with some of our brief’s major points, most notably that the judge here abused his discretion by imposing the harsh sanctions and that the attorney’s conduct was more appropriately addressed by referral to the Board of Bar Overseers.

Although the Court rejected our argument that inherent sanctioning powers should be limited to cases where it finds “bad faith,” it adopted a similarly significant limitation – that sanctioning must be “necessary to preserve the court’s authority to accomplish justice” (Wong v. Luu, SJC-11789, p. 17) or “ensure the fair administration of justice” (20).  Expanding on this standard, the Court includes examples of sanction-worthy conduct including:

  • Failing to comply with an order of the court (18)
  • Undue delay in compliance (18)
  • Making knowingly false misrepresentations to the court, intentionally misleading the court, or knowingly concealing information that an attorney has a duty to provide to the court (19)
  • Engaging in conduct in the courtroom that interferes with a judge’s ability to manage the courtroom fairly, efficiently, and respectfully (20)

Analyzing the attorney’s conduct at issue here, the Court concluded that

“the fair administration of justice does not require the settlement of a case; although the parties are free to settle their case, their entitlement under law is to a trial, not to a settlement in lieu of a trial . . . the failure of settlement negotiations does not threaten a judge’s ability to ensure the fair administration of justice [and] the inherent powers of the court do not extend to claims that an attorney during settlement negotiations did not act honestly.” (22-25).

The case has already garnered national attention and we hope that the SJC’s leadership will help set sound precedent for courts in the Commonwealth and across the country.  We are proud to have been part of this process.

– Jonathan Schreiber
Legislative and Public Policy Manager
Boston Bar Association