A plaintiffs law firm that specializes in securities class action litigation was ordered to pay sanctions to Boeing over a lawsuit the firm pressed even though the crucial witness behind it didn’t know anything relevant.
San Diego-based Robbins Geller Rudman & Dowd was hit with sanctions in an 18-page order last month by U.S. District Judge Ruben Castillo in Chicago.
The judge said he’s “always reluctant to sanction a member of the bar.”
But he ordered Robbins Geller to pay Boeing’s attorneys’ fees and other costs for filing a frivolous lawsuit accusing the aircraft maker of concealing structural problems with the 787 Dreamliner that delayed its roll out and caused the company’s shares to fall in price.
The Public Securities Litigation Reform Act directs judges to impose sanctions on attorneys who violate the pleading requirements of the act, such as failing to verify allegations to support a complaint.
Robbins Geller has been involved in FCPA-related shareholder litigation against companies, board members, and executives involving Walmart, Parker Drilling, and Johnson & Johnson, among others.
In the Boeing case, now dismissed, Robbins Geller based the complaint on a “confidential witness” it said was an engineer with inside knowledge about the 787 wing problems, Forbes said.
Judge Castillo said the so-called witness was actually “employed by a Boeing contractor to perform low-level engineering work on a different airplane months after the events at issue in this case.”
Robbins Geller should have known about the problem with the witness because he couldn’t even name the members of the management team he supposedly worked for.
The investigator who interviewed him had her own doubts about his veracity, but undeterred, Robbins Geller partner Thomas Egler continued to argue that the case was based on valid information. Egler, by the way, hadn’t even spoken to his star witness before filing the complaint. And Robbins Geller lawyers kept arguing against dismissal even after their star witness recanted.
Judge Castillo cited Robbins Geller for:
- Filing the initial complaint before interviewing their one and only source.
- Arguing repeatedly before the court that the complaint was based on valid facts when it wasn’t, and lawyers should have known that. And,
- Failing to pick up on obvious clues, like the witness’s fudged resume and failure to identify his bosses, that any competent attorney would see as problematic.
The judge said the sanctions were partly justified by Robbins Geller’s recidivism. He said the firm had been cited in two earlier cases for not having a witness or evidence to back its allegations.
Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here.