Go West, Young Man, and Find Justice
Edward Wood Dunham is Editor-in-Chief of the Franchise Law Journal. This column expresses Mr. Dunham's personal opinions and does not reflect the viewpoint of the ABA Forum on Franchising or the Franchise Law Journal.
In the legendary director John Ford's "last great film,"1 The Man Who Shot Liberty Valance, James Stewart plays Ransom Stoddard, a lawyer from the East eager to make a life on the Western frontier. Early in the movie, Stoddard recalls his decision to heed Horace Greeley and "Go West" to "seek fame, fortune, and adventure." All those rewards would eventually be his, but as "a youngster, fresh out of law school, bag full of law books," Stoddard's introduction to the West fulfilled every callow easterner's worst nightmare.
The stagecoach carrying Stoddard was held up by Liberty Valance (Lee Marvin) and his henchmen. When Stoddard tried to defend the honor of a female passenger, Valance slapped him to the ground. When Stoddard scrambled up and declared—somehow convinced that this would save the day—"I'm an attorney-at-law, I'll see you jailed for this," Valance bludgeoned him back to earth with a silver-knobbed whip, and when the outlaw, ransacking the luggage on the stagecoach, discovered the law books, an insane rage possessed him. Whipping Stoddard to the edge of death, Liberty Valance screamed: "Lawyer, huh? Well I'll teach you law. Western law."
I am another of those eastern attorneys-at-law. My summons westward came not from Mr. Greeley but from my client Doctor's Associates, Inc. (DAI), the Subway franchisor, which asked me to get involved in a lawsuit already pending in the District Court of Johnson County, Kansas.2 Subway Restaurants, Inc. v. Kessler3 began as a simple collection action by DAI and two affiliates against two former Subway franchisees. It became something very different when the franchisees retained as their counsel David Duree, a frequent (and frequently overzealous) adversary of DAI.4 Mr. Duree filed a series of counterclaims in the Kansas action; by the time I entered the case, his pleading included almost fifty separate allegations of fraud and his boilerplate multimillion-dollar punitive damage claim.
On my first trip to Johnson County, knowledgeable about the forum I was not. Suffice it to say that when I sought pro hac vice admission, I could neither find on a map nor properly pronounce Olathe, the county seat. After certain experiences in other jurisdictions distant from my home, moreover, I wondered whether DAI and its counsel would be treated to a slightly more civilized, institutional version of Liberty Valance's "western law," with comparable rough handling for pilgrims from the East.
As things turned out, this tenderfoot's fears about Kansas justice were totally unfounded. DAI won summary judgment, defeating all those fraud claims with a primary legal argument that many courts, state and federal, would mistakenly have dismissed out of hand. Later, the Johnson County District Court imposed on Mr. Duree one of the heaviest attorney sanctions in U.S. history: an award of over $408,000 for DAI's legal fees and expenses in defeating the counterclaim, plus revocation of his right to practice in Kansas, because his case lacked any good-faith basis and he had directed his expert witness to manufacture a false, amended federal income tax return for use in the litigation.5
The Kansas Supreme Court unanimously affirmed.6 Justice Six emphasized Mr. Duree's admission at deposition that he had instructed his expert to prepare the amended tax return
"on the basis of trial strategy" so that Duree would not be "arguing to some jury and/or judge that the original tax return didn't accurately reflect [my clients'] financial condition . . . [C]ase management was my primary objective." Duree knew the contents of the original return and acknowledged that the original return showed a profit, which was inconsistent with his theory of the case.7
Pointedly noting that Mr. Duree holds an L.L.M. in tax law, the court went on to observe that "Duree continues to advance the notion that there is nothing wrong with the 1989 amended return. He has argued many things on appeal, but he has not admitted that the amended return was essentially a false document. Instead, he points the finger in all directions . . . ."8
In sum, it was "clear" to the supreme court, as it had been to the trial judge, that "Duree himself understood the shortcomings of his clients' case from the outset but tried to cover them up by fabricating evidence. The cover-up proved Duree had acted knowingly and not in good faith both in drafting the fraud counterclaim and in opposing DAI's motion for summary judgment."9
The Kansas Supreme Court issued its Kessler opinion in December 1998. I had to return to Olathe, however, in January 2001 for the hearing on Mr. Duree's extremely belated motion to vacate the sanctions judgment. Judge Lawrence Sheppard of the Johnson County District Court, ruling from the bench, denied the motion. Forced to relive the entire case in preparation for that hearing, I was reminded of the four cardinal virtues of western law, modern-day Kansas style:
• A level playing field
• Prompt decisions
• A willingness to tackle difficult legal issues
• A recognition of the judicial obligation to police attorney misconduct, in order to preserve public confidence in the law.
Geography aside, of course, these are the cornerstones of all good judging and of the proper administration of any effective justice system.
A Level Playing Field
Every court in America embraces the credo that all litigants stand equal before the bar of justice. Nobody likes to say this out loud, but in some places the reality falls short of that lofty standard, especially when a large out-of-state corporation is adverse to local individuals claiming fraud or serious personal injury.
Not in Kansas, at least in my experience. All proceedings, while not stiff or stilted, were conducted with the order that is indispensable to justice. In my numerous appearances in Kansas trial and appellate courtrooms, there was never any question that the judges were in charge, ready to keep the lawyers to the merits. Nor was there any doubt that an out-of-state corporation and its visiting lawyer would receive precisely the same treatment as parties and lawyers from Johnson County or elsewhere in Kansas, or that all rulings would be based entirely upon an objective assessment of the actual facts and law.
"Our law says well, ‘to delay justice, is injustice.' "10 So wrote William Penn more than three centuries ago. Every modern litigant and trial lawyer knows that Penn had it exactly right—that an essential element of justice is denied, and confidence in the judicial system eroded, when trial judges take months to decide simple motions; summary judgment motions languish, fully briefed and argued, for over a year before decision; bench trials have receded even further into the past before judges bestir themselves to rule; and appellate courts wait many months to write short opinions disposing of even the most straightforward matters.
The Kansas judiciary clearly comprehends the vices of delay. The Kansas Supreme Court decided Mr. Duree's appeal about six weeks after oral argument—and this was no fender bender. As Justice Six pointed out, the supreme court conducted its own "review of the voluminous record" that "consist[ed] of 55 volumes. The 32 volumes of pleadings span[ ] 7,274 pages. The 23 volumes of transcripts exceed 1,500 pages."11 The size of the record, complexity of the issues, and unpleasantness of grappling with egregious lawyer misconduct also did not keep the district court from acting promptly. Judge Russell filed her sanctions decision about five weeks after completing the evidentiary hearing.12 Similarly, she handed down her twenty-eight-page opinion granting summary judgment less than two months after oral argument.13 On all other motions, Judges Russell and Sheppard, who heard Mr. Duree's repeated challenges to the sanctions, both before and after appeal, read the parties' briefs, listened to testimony (if any), conducted oral argument, and ruled from the bench at the close of each hearing, thereby ensuring that the case did not disappear into a black hole.
How were the Kansas courts able to decide important issues, including a dispositive motion and the sanctions appeal, so promptly? In part, because Kansas judges do not stagger under the same caseload that afflicts their counterparts in many other jurisdictions. That is not, however, the only explanation. As the Kansas courts prove, the ultimate weapon against judicial delay is judicial attitude. Trial lawyers conduct their professional lives according to deadlines (established, not incidentally, by judges), as does most of the business world, owing to the requirements of customers and the demands of competition. Since most courts are free of any such externally imposed constraints, the only real hope for justice undelayed is judges who recognize the wisdom of Penn's adage and discipline themselves to make efficient use of their time and rule promptly.
The Kansas Supreme Court publishes a Visitor's Guide to Oral Argument, which makes this promise:
Once the week of oral arguments is over, the court begins the task of deciding the cases and writing the opinions. The process usually takes four to six weeks. In most cases, the court's decisions are filed on Friday of the next scheduled week of oral arguments. For example, a decision in the appeals argued in September should be filed on the last day of oral arguments in October.14
An express warranty of prompt judicial action! A first, for sure, in my two decades of practice. Before oral arguments began, the clerk of the court reiterated the promise, informing the assembled counsel that the presumed release date for opinions in all cases heard that day was five weeks hence. The court actually breached its warranty by a week, but for many appellate courts, state and federal, it would obviously take far longer to body forth the opinion that the Kansas Supreme Court produced in a month and a half.
Tackling Difficult Issues
In certain jurisdictions, defendants' summary judgment motions are dead on arrival, regardless of the merits, especially if the case involves a fact-intensive cause of action like fraud. Some judges may be reflexively skeptical because they see so many hopeless summary judgment motions that never should have been filed. Others may be reluctant to deny a sympathetic plaintiff their day in court. Also, in any reasonably complicated lawsuit, granting summary judgment is hard work for the judge. It requires "a thorough and careful examination" of an often "voluminous record," and a "disciplined analysis" of fact and law.15 The temptation to let the jury do that work must sometimes be overwhelming, especially with appellate judges poised to comb the record for error and require a trial on remand.
For all these reasons, an attentive judicial audience for a serious summary judgment motion is sometimes hard to find, and many plaintiffs' lawyers believe that, whatever the actual record, a refrain of "you can't do that, Judge, there's a disputed material fact" will always carry the day. Mr. Duree assumed that this would do the trick in Kansas and ultimately paid an enormous price for his miscalculation.
When DAI moved for summary judgment in Kessler, it submitted a statement of 267 undisputed facts with detailed record citations.16 As Judge Russell said in her summary judgment opinion, most of the facts were taken either directly from Subway's Uniform Franchise Offering Circular, franchise agreement, and marketing brochures, or from the deposition testimony of the counterclaim plaintiff.17 That did not stop Mr. Duree and his co-counsel, who "attempted to deny most of [the facts] without any citation to where conflicting evidence might be found,"18 frequently objected on grounds of relevance and moved to strike the stated fact, and used the false amended tax return to argue that DAI and its counsel should be sanctioned for filing a frivolous motion.19
The latter ploy badly misfired. Following summary judgment and before imposing the major sanction, the district court sanctioned Mr. Duree a smaller amount for his own sanctions motion, concluding that he had tried to draw the court's attention away from the facts with bad-faith accusations of misconduct against DAI and its attorneys.20 As the Kansas Supreme Court later recognized, revelation of Mr. Duree's transgressions concerning the tax return "would probably not have taken place but for Duree's attempt to divert Judge Russell's attention from the merits of the case by accusing DAI of impropriety. Duree's predicament is self induced. . . ."21
After studying what the supreme court called "Duree's deliberate ‘red herring' distracting responses" and determining that only four facts, none of them material, "were genuinely in controversy,"22 Judge Russell entered judgment for DAI. Her principal ground, among many, was the doctrine known under the federal securities laws as "loss causation": she held that the franchisees could not prove that any alleged fraud by DAI caused any of their supposed damages. Because the franchisees, among other things, had failed to deposit about half the store's receipts in any bank, could not account for the missing funds, and had bounced 224 checks during nineteen months of operation, the court found that "the evidence of defendants' mismanagement of their store is overwhelming. The only conclusion that a jury could reasonably reach is that defendants failed in their business because of their mismanagement."23
The most obvious price of judicial reluctance to grant summary judgment, when warranted by the undisputed facts and controlling law, is unnecessary trials. This means in turn that courts have less time for the truly deserving, and it probably produces excessive settlement costs, too, as defendants overpay to avoid the transactional costs and risks of trial. But there is another equally significant danger: lawyers who believe that judges will never have the fortitude to grant summary judgment can get sloppy, and sometimes downright unscrupulous, in assembling and presenting their cases. Fostering that behavior is a disservice to the profession and to the justice system.
Policing Attorney Misconduct
According to U.S. District Judge William W Schwarzer, "[o]f all the duties of the judge, imposing sanctions on lawyers is perhaps the most unpleasant. A desire to avoid doing so is understandable."24 Rule 11 and its state law analogs "place [ ] a heavy burden on judges, one many judges would just as soon pass up."25 The aversion to sanctions has only increased with the "Rambo-like use of Rule 11 by too many lawyers," which has also "resulted in increased acrimony within the profession, thereby exacerbating the public's discontentment with it."26 In his 1999 lecture "Professional Responsibility in Appellate Practice: A View from the Bench," Senior Judge Roger J. Miner of the U.S. Court of Appeals for the Second Circuit lamented:
A profession lacking in collegiality is a profession lacking in integrity. Lawyers are engaged in a joint enterprise, a fact that is often overlooked in the modern practice of law. Lawyers are responsible for each other, and what one does reflects on all. When I see briefs that seek sanctions against other lawyers for bringing or defending appeals that are clearly meritorious, when I see unfounded accusations of conflict of interest littering the record, when I hear arguments in which attorneys spend their allotted time in criticizing each other rather than in arguing the merits, I worry about the integrity of the legal profession.27
Far too often, lawyers lead the way, not just in courtrooms but in elected office and as television talking heads, in the petty squabbling and name calling that debase public discourse. But the judicial recoil from lawyers' puerile behavior, understandable though it is, also creates opportunities for the truly unethical practitioners whose dishonesty corrodes the profession. As Judge Miner conceded in the same lecture, "appellate judges do not do enough to advance the cause of professional responsibility."28 Notwithstanding frequent "robing room" complaints about the performance of counsel, the judge acknowledged, "it is a rare case in which we sanction even those who take frivolous appeals," and when "appellate judges generally ignore violations of ethical norms . . . they are in great part responsible for the problems of which they complain."29
That is obviously true of the trial bench as well. The Kansas courts, trial and appellate, understand that if unethical conduct goes unpunished, "the message to those inclined to abuse the litigation process will be clear. Misconduct, once tolerated, will breed more misconduct and those who seek relief against abuse will instead resort to it in self-defense."30
America's preeminent writer from and about the West, Wallace Stegner, said that "[t]he West has had a way of warping well-carpentered habits, and raising the grain on exposed dreams."31 Participants in the Kessler litigation could vouch for that. I am not dreaming, however, when I report that, contrary to my Hollywood-induced fantasies, the principled rule of law is secure in Kansas, whose judges are a model for their colleagues across the country.32
1. Ronald L. Davis, John Ford, Hollywood's Old Master 307 (1995).
2. A purist would argue that Johnson County is not even in the West. See Wallace Stegner, Living Dry, in Where the Blue Bird Sings to the Lemonade Springs: Living and Writing in the West 59 (1992) (the West starts at a "perceptible line of real import," further west in Kansas. "This is the isohyetal line of twenty inches, beyond which the mean annual rainfall is less than the twenty inches necessary for unirrigated crops"). But shortly after James Butler "Wild Bill" Hickock emigrated to Kansas in the 1850s, he lived for a time in Olathe, proof enough for me that the Johnson County seat is a western town. Joseph G. Rosa, Wild Bill Hickock, The Man and His Myth 18 (1996).
3. [1995–1996 Transfer Binder] Bus. Franchise Guide (CCH)
¶ 10,813 (Kan. Dist. Ct. June 9, 1995) (granting summary judgment for plaintiffs on defendants' counterclaims), aff'd, 931 P.2d 1270 (Kan. Ct. App. Feb. 21, 1997), unpublished opinion reprinted in [1996–1997 Transfer Binder] Bus. Franchise Guide (CCH) ¶ 11,109, rev. denied, 262 Kan. ___ (1997), sanctions imposed, Subway Restaurants, Inc. v. Kessler, No. 90-C-12370 (Kan. Dist. Ct. May 31, 1996), aff'd, 970 P.2d 526 (Kan. 1998), cert. denied sub nom. Duree v. Doctor's Associates, Inc., 526 U.S. 1112 (1998).
4. Mr. Duree has been sanctioned seven times in litigation against DAI: three times in Kessler; twice by a California state court; once by the Connecticut federal court; and once by the U.S. Court of Appeals for the Second Circuit. See Kessler, No. 90-C-12370 (Kan. Dist. Ct. May 31, 1996), No. 91-C-2679 (Kan. Dist. Ct. Sept. 11, 1995), No. 91-C-12370 (Kan. Dist. Ct. Aug. 24, 1993); Weible v. Doctor's Associates, Inc., Case No. BC035502 (Cal. Super. Ct. Aug. 10, 1994), aff'd, Case No. B084533, B087278 (Cal. Ct. App. Nov. 27, 1996), reprinted at [1996–1997 Transfer Binder] Bus. Franchise Guide (CCH) ¶ 11,062; Doctor's Associates, Inc. v. Kroll, 94 CV1738 (PCD) (D. Conn. 1995); Doctor's Associates, Inc. v. Kroll, Appeal Nos. 95–7804 and 96–7048 (2d Cir. Apr. 29, 1996).
5. Kessler, 970 P.2d at 528.
6. Id. See also William L. Killion, Subway Restaurants, Inc. v. Kessler: The Final Round?, 2 Franchise Law. 7 (Spring 1999).
7. Kessler, 970 P.2d at 530 (emphasis in the original).
8. Id. at 535.
10. William Penn, Fruits of Solitude 69 (11th ed. 1906) (orig. 1693). See Fred R. Shapiro, The Oxford Dictionary of American Legal Quotations 229 (1993). The more familiar formulation, "justice delayed is justice denied," is attributed to William Gladstone. See John Bartlett, Familiar Quotations 446 (Justin Kaplan ed., 16th ed. 1992).
11. Kessler, 970 P.2d at 536.
12. See Kessler, No. 90-C-12370 (Kan. Dist. Ct. May 31, 1996).
13. See Kessler, [1995–1996 Transfer Binder] Bus. Franchise Guide (CCH) ¶ 10,813 (Kan. Dist. Ct. June 9, 1995).
14. Supreme Court of Kansas, Visitor's Guide to Oral Argument at 1 (emphasis added).
15. Kessler, 970 P.2d at 530, quoting unpublished Kansas Court of Appeals decision affirming summary judgment, 931 P.2d 1270 (Kan. Ct. App. Feb. 21, 1997), reprinted in [1996–1997 Transfer Binder] Bus. Franchise Guide (CCH) ¶ 11,109.
16. Kessler, [1995–1996 Transfer Binder] Bus. Franchise Guide (CCH) ¶ 10,813, at 27,546.
18. Kessler, 970 P.2d at 535.
20. See Kessler, No. 91-C-2679 (Kan. Dist. Ct. Sept. 11, 1995).
21. See Kessler, 970 P.2d at 535.
23. Kessler, [1995–1996 Transfer Binder] Bus. Franchise Guide (CCH) ¶ 10,813 (Kan. Dist. Ct. June 9, 1995).
24. William W Schwarzer, Sanctions Under the New Federal Rule 11—A Closer Look, 104 F.R.D. 181, 205 (1985).
25. William W Schwarzer, Rule 11, Entering A New Era, 28 Loy. L.A. L. Rev. 7, 37 (1994).
26. Georgene Vairo, Rule 11 and the Profession, 67 Fordham L. Rev. 589, 647 (1998).
27. Roger J. Miner, Professional Responsibility in Appellate Practice: A View from the Bench, 19 Pace L. Rev. 323, 338 (1999).
28. Id. at 341.
30. Schwarzer, supra note 24, at 205.
31. Stegner, supra note 2.
32. How Kansas judges are chosen and then remain on the bench is interesting. The justices of the Kansas Supreme Court, and judges of the Kansas Court of Appeals, are "appointed by the governor from nominations submitted by a Supreme Court nominating commission." The American Bench: Judges of the Nation 994 (10th ed. 1999). They serve initial one-year terms and then "stand for retention," the supreme court justices for six-year terms and the court of appeals judges for four-year terms. Id. The selection process for trial judges is an interesting hybrid. In seventeen of the thirty-one judicial districts in the state, including the Tenth District, of which Johnson County is a part, the governor appoints the district judges, from a list provided by district nominating commissions, for one-year terms, and the judges "then stand for retention for four-year terms." Id. at 995. In the fourteen other districts, the "judges are elected in partisan elections to four-year terms." Id.