[00:00:52] Speaker 00: Okay. [00:00:53] Speaker 00: The next case is number 15, 1041, captioned Tesco Corporation against National War Well Barco. [00:01:01] Speaker 00: Mr. Harvey. [00:01:02] Speaker 03: May it please the court. [00:01:03] Speaker 03: Thank you. [00:01:04] Speaker 03: Um, I represent Glenn Ballard and John Lumen. [00:01:09] Speaker 03: This is a very simple case. [00:01:11] Speaker 03: The issues that are before you are simple. [00:01:14] Speaker 03: The law is clear. [00:01:15] Speaker 03: The facts on the record are clear. [00:01:18] Speaker 03: There was a complete failure. [00:01:21] Speaker 03: to provide my clients with due process. [00:01:24] Speaker 03: The trial court... Can you start with standing? [00:01:27] Speaker 03: Sure. [00:01:30] Speaker 03: Standing, I think this court has taken care of the issue. [00:01:34] Speaker 03: If you take a look at NYTSIS versus permachain, that's the second case, it follows the case of precision metals. [00:01:42] Speaker 03: I'd like to read you a quote that this court stated. [00:01:45] Speaker 04: And in this case- This was the one about the patent attorney being found to have committed an equitable conduct. [00:01:51] Speaker 04: Correct. [00:01:52] Speaker 04: And this court said there's no standing to hear that patent attorney's appeal on that finding. [00:01:58] Speaker 03: That's correct. [00:01:58] Speaker 03: And that's because that was a situation where the patent attorney was not part of the litigation. [00:02:04] Speaker 03: And what was very important is how this court stated its rule for a non-party to have standing and how it dealt with an attorney. [00:02:12] Speaker 03: And what this court said is, [00:02:15] Speaker 03: It says, the exception that allows a non-party to appeal focuses on when a court imposes a sanction on the attorney. [00:02:26] Speaker 03: When the court is doing that, it is exercising its inherent power to regulate the proceedings before it. [00:02:32] Speaker 03: Now this is on page 1319 of the opinion. [00:02:35] Speaker 03: Once that power to punish is exercised, [00:02:41] Speaker 03: The matter becomes personal to the sanctioned individual and it is treated as a judgment against him. [00:02:48] Speaker 01: Okay. [00:02:48] Speaker 01: So let's, let's deal with that. [00:02:50] Speaker 01: The heart of that question, the sanctioned individual. [00:02:53] Speaker 03: Correct. [00:02:54] Speaker 01: I mean, there is no doubt that there were things that were said in this record that were unflattering to counsel, but the sanction was not against counsel, was it? [00:03:02] Speaker 03: That is with respect, absolutely incorrect. [00:03:06] Speaker 03: If the court takes a look at the order, and in fact, that's the best thing to do. [00:03:09] Speaker 03: After you take a look at these cases, the order was 13 pages. [00:03:13] Speaker 03: Of course you read the order. [00:03:14] Speaker 03: In the court, in the order, I'm sorry, your honor, the order could literally fairly have been titled order for sanctions against John Lemon and Glenn Ballard. [00:03:23] Speaker 01: But it wasn't, the court went out of its way not to sanction counsel, sanction the parties. [00:03:28] Speaker 03: With respect, that's not what the order did. [00:03:30] Speaker 03: What the order did is it went through and it said, I have found that these lawyers have misrepresented to me. [00:03:38] Speaker 03: These lawyers violated the duty of counter. [00:03:41] Speaker 01: You're, you're confusing findings with an actual sanction. [00:03:46] Speaker 01: There's no words that say I'm reprimanding. [00:03:49] Speaker 01: I'm doing a public reprimand of council or I'm imposing a cost or fees upon council. [00:03:56] Speaker 01: The only, the only judgment was against the party. [00:04:00] Speaker 03: Correct? [00:04:01] Speaker 03: Incorrect. [00:04:02] Speaker 03: Because what the order did is it literally said it used the word sanctions. [00:04:06] Speaker 03: 13 times, the only people, the only individuals that were said to have actually done something wrong were my clients. [00:04:15] Speaker 03: That's it. [00:04:15] Speaker 03: And then what the court did is it said, I'm using my inherent powers. [00:04:19] Speaker 03: I find that you lied to me. [00:04:21] Speaker 03: You, you Glenn Ballard, you John Lumen, and here is my sanction. [00:04:26] Speaker 03: The worst sanction that a trial lawyer can ever have ever, which is I'm going to dismiss your client's case with prejudice. [00:04:34] Speaker 04: The reason we have these cases... Well, the district court's order really... I mean, of course, it was referencing these two attorneys, but it was also invoking Tesco. [00:04:45] Speaker 04: I mean, a lot of this order is talking about Tesco attempting to minimize its representation and not being persuaded by Tesco's arguments and concerned about Tesco not being forthright with the court. [00:05:02] Speaker 04: I understand your point, but I don't read the order. [00:05:07] Speaker 04: Again, this is a sanction against Tesco. [00:05:10] Speaker 04: Um, as, as coming out and going out of its way and saying, uh, lawyer X and lawyer Y lied to me. [00:05:19] Speaker 03: Judge, with respect, I don't see how you can read the court's August order and not take that away because literally what the court says is. [00:05:29] Speaker 03: You guys lied to me. [00:05:31] Speaker 03: Mr. Ballard, you lied to me. [00:05:32] Speaker 03: You said X. And then these witnesses were deposed and they said Y. And the court literally ends the statement with, you read the last paragraph where the court says, I think this is totally out of character with these lawyers. [00:05:45] Speaker 03: This is really serious. [00:05:47] Speaker 03: But here is my sanction. [00:05:48] Speaker 03: I'm going to dismiss your client's case. [00:05:51] Speaker 03: The court doesn't actually say, I'm sanctioning Tesco because Tesco lied to me. [00:05:56] Speaker 03: You cannot read that opinion and take away anything other than fairly stated. [00:06:01] Speaker 03: The court is saying, I'm sanctioning you because you lied to me. [00:06:04] Speaker 03: And my sanction is I'm tossing your client's case into the trash can. [00:06:08] Speaker 03: The worst sanction that can ever happen. [00:06:11] Speaker 03: The reason we don't have the words reprimand or admonishment, and the reason we have those lines of cases that talk about reprimand and admonishment is because sometimes we have situations where there is no sanction. [00:06:23] Speaker 03: There is a court that says, I think your conduct was bad. [00:06:26] Speaker 03: I think you did something wrong." [00:06:27] Speaker 03: And then it kind of ends. [00:06:29] Speaker 03: And what courts sometimes look to is something like a, I hereby therefore reprimand you so that we can distinguish that from the situation where the court is just generally waxing on, making statements about, I'm frustrated with counsel. [00:06:43] Speaker 03: This court went out of its way for one purpose, and that purpose was to exercise its inherent powers to sanction my clients [00:06:51] Speaker 03: by tossing my client's case. [00:06:53] Speaker 01: Even if we accept the proposition that you want us to, which is that the sanction against Tesco was effectively a sanction against counsel, we still have an Article III problem with the fact that there has been a settlement, and that as I understand that, that settlement included mutual releases that included counsel. [00:07:14] Speaker 03: You have zero Article III problems, because go back to what this court has said in this [00:07:20] Speaker 03: Go back to that quote that says, once the power to punish is exercised, the matter becomes personal to the sanctioned individual and is treated as a judgment against him. [00:07:32] Speaker 01: But if the sanction was dismissal and the question of dismissal can no longer be before us because the parties have settled and the parties have granted mutual releases that include counsel, [00:07:47] Speaker 01: And what is left? [00:07:49] Speaker 01: What judgment is left for us to assess? [00:07:52] Speaker 03: The judgment, the sanction. [00:07:54] Speaker 04: And the point is, I guess, I'm sorry. [00:07:57] Speaker 04: Just I want to follow up on Judge O'Malley's question. [00:08:00] Speaker 04: What do you want us to do at this point? [00:08:02] Speaker 04: The case is gone. [00:08:04] Speaker 04: There's been a dismissal, and now there's been a settlement of the case between the two parties. [00:08:09] Speaker 04: So what would we do? [00:08:11] Speaker 04: What would our opinion look like? [00:08:14] Speaker 03: You have two things you can do. [00:08:15] Speaker 03: Number one, you can vacate the order. [00:08:17] Speaker 03: Okay. [00:08:18] Speaker 03: And the cases I would cite you to are, and they're in our brief Kirkland. [00:08:22] Speaker 03: Okay. [00:08:22] Speaker 03: It's an 11th circuit case. [00:08:24] Speaker 03: Uh, in Kirkland, uh, what happened is, is the court Sue Espante. [00:08:28] Speaker 03: Okay. [00:08:29] Speaker 03: Decided to revoke the lawyer's pro-hac-nici status. [00:08:32] Speaker 03: Literally when the case was up before the 11th circuit, it was settled. [00:08:37] Speaker 03: It was all done. [00:08:38] Speaker 03: But the 11th circuit said the way every other court has said, it doesn't matter. [00:08:43] Speaker 03: This is an injury to the lawyer's reputation. [00:08:46] Speaker 03: It has not gone away. [00:08:48] Speaker 03: It has not dissolved. [00:08:48] Speaker 01: But in that case, they said that was an individual separate sanction against the council. [00:08:54] Speaker 01: You've just told us that what we're supposed to assume is that council was effectively sanctioned by the dismissal. [00:09:01] Speaker 01: But we can't set aside the dismissal. [00:09:04] Speaker 03: I agree. [00:09:04] Speaker 03: But what you can set aside is the order. [00:09:07] Speaker 03: You just want us to wipe out the court's findings. [00:09:10] Speaker 03: Absolutely. [00:09:11] Speaker 03: It's part of vacating the order. [00:09:12] Speaker 03: And what I'm saying is the court has the power to do that. [00:09:14] Speaker 03: That's Kirkland. [00:09:16] Speaker 03: and that's a Grider and that's a Barra. [00:09:19] Speaker 03: Or alternatively, the court can send it back. [00:09:22] Speaker 03: Now, by the way, in Grider, the very issue that you're talking about, Judge Imeli, that is there's no place to really send it back. [00:09:30] Speaker 03: What do we do? [00:09:31] Speaker 03: Because the case is gone. [00:09:33] Speaker 03: That's exactly what the court said in Grider. [00:09:36] Speaker 03: In Grider, they said, since it's gone, we are just going to vacate it. [00:09:38] Speaker 03: We are going to vacate the order. [00:09:40] Speaker 03: We are going to vacate the findings. [00:09:43] Speaker 03: The court also has the authority to send it back. [00:09:45] Speaker 03: And the trial court does have jurisdiction. [00:09:49] Speaker 03: And if Judge Ellison wants to, he can have a hearing. [00:09:52] Speaker 03: He can give us the hearing that he deprived us of. [00:09:55] Speaker 03: He can give us the hearing where we have notice. [00:09:57] Speaker 01: Did you go back to Judge Ellison after the settlement and ask her to set aside the hearing? [00:10:03] Speaker 03: No, we followed the notice of appeal because we wanted to protect our rights. [00:10:07] Speaker 03: We wanted to get the court of appeals to weigh in and to correct the error. [00:10:11] Speaker 03: And we're entitled to, there's nothing that says that we have to go back before the court. [00:10:14] Speaker 03: We filed a notice of appeal. [00:10:16] Speaker 03: And by the way, there is no, there's nothing in the record suggesting that we settled this right. [00:10:21] Speaker 03: We did not waive any right at all, this personal right to take care of the injury to our reputation. [00:10:28] Speaker 03: And there literally is no case. [00:10:31] Speaker 03: I know of no case that has ever said that when you have a sanction against a lawyer, and I get it, Tesco, we don't have control over Tesco. [00:10:39] Speaker 03: Tesco can settle. [00:10:40] Speaker 03: Tesco can say, see you later, we're out of here. [00:10:43] Speaker 03: We don't want to have this hanging over our head, uncle. [00:10:47] Speaker 03: But that doesn't take away the fact that Judge Ellison aimed directly at us with an inherent power sanction and sanctioned us by dismissing our client's case from prejudice. [00:10:57] Speaker 04: Why, I mean, the attorney, the patent attorney and niece [00:11:01] Speaker 04: wasn't sanctioned, right? [00:11:03] Speaker 04: I mean, this court concluded that patent attorney wasn't sanctioned. [00:11:07] Speaker 04: Why should we conclude that your clients were sanctioned? [00:11:10] Speaker 03: Well, OK. [00:11:11] Speaker 03: So the reason I think NISIS is important is because NISIS explains what actually gives standing, OK? [00:11:20] Speaker 03: And that's why the quote that this court made that is, once the power to punish is exercised, it becomes personal. [00:11:25] Speaker 03: See, that never happened in this. [00:11:27] Speaker 03: The court never utilized its inherent powers to sanction anybody. [00:11:31] Speaker 03: This was a third party, essentially a witness, a third party lawyer who had been practicing before the PTO. [00:11:38] Speaker 03: And in the context of the litigation, you know, there were comments that he hadn't done things right. [00:11:43] Speaker 03: The court didn't use its inherent powers to sanction him. [00:11:46] Speaker 03: Here, the court used it. [00:11:49] Speaker 04: The court used its inherent powers to sanction the party, the client, by dismissing the case, which is very much what looks like what happened. [00:11:59] Speaker 03: And I would respectfully [00:12:01] Speaker 03: disagree that the court sanctioned my clients. [00:12:04] Speaker 03: The sanction that it rendered was the worst one that a lawyer can get, which is dismissing his client's case with prejudice. [00:12:11] Speaker 03: I mean, think about what we're saying. [00:12:13] Speaker 03: Literally, we would have standing if the court had said, I'll tell you what, Mr. Ballard and Mr. Lumen, y'all are liars, and y'all have to pay $100 to the court. [00:12:22] Speaker 03: We would now be saying, we have standing to come in and argue this? [00:12:26] Speaker 03: There's not a lawyer in this courtroom [00:12:28] Speaker 03: who would say that that would be a more preferable situation than for two trial lawyers to have their client's case dismissed because of purportedly lying to them. [00:12:38] Speaker 01: But you're missing the whole redressability prong of Article 3. [00:12:43] Speaker 01: In other words, we have to be able to do something that would take away the sanction, not just take away the sting of what happened by muzzling the trial judge. [00:12:55] Speaker 01: That's not within our authority. [00:12:58] Speaker 03: It is within your authority. [00:13:00] Speaker 03: It is absolutely within your authority. [00:13:02] Speaker 03: And I've cited you the three cases to vacate the court's order because my claim- None of those cases are from our jurisdiction. [00:13:08] Speaker 01: What about Williams? [00:13:10] Speaker 03: Let's look at some other cases. [00:13:12] Speaker 03: Ibarra is a Fifth Circuit case. [00:13:14] Speaker 03: But you're right, it's not from the Federal Circuit. [00:13:15] Speaker 03: But I have three cases, again, from other circuits that say you absolutely can do it. [00:13:19] Speaker 03: And the court can absolutely send it back. [00:13:21] Speaker 03: You can send it back to the trial court. [00:13:23] Speaker 03: And the trial court can conduct a hearing. [00:13:25] Speaker 03: He can conduct a hearing that he did not do. [00:13:27] Speaker 03: As I said, there are so many cases that deal with settlement. [00:13:35] Speaker 03: Crowe versus Smith, the Fifth Circuit case. [00:13:38] Speaker 03: The issues arose after everything had been settled. [00:13:41] Speaker 03: The point is that nobody has the right, as this court said, it's personal to us when the judgment hits us. [00:13:48] Speaker 03: It's personal to us. [00:13:49] Speaker 03: Nobody can settle it. [00:13:51] Speaker 03: Nobody has the right to settle that away. [00:13:53] Speaker 03: And it would be a bizarre situation that my clients would be in a better situation [00:13:57] Speaker 03: If they had received a quote, gee, you're a bad person, give me your hands, I'm going to admonish you. [00:14:03] Speaker 03: And now I could come here and I would have standing or you're fined a hundred bucks. [00:14:07] Speaker 03: But in a situation where my client's case was dismissed with prejudice, a much more impactful injury to my clients were going to say, I have no standing. [00:14:16] Speaker 03: That can't be the rule. [00:14:18] Speaker 00: Let's cross over. [00:14:20] Speaker 00: Let's turn, if my colleagues agree to whatever you [00:14:24] Speaker 00: need to tell us about the merits, we'll take some extra time. [00:14:27] Speaker 03: Okay. [00:14:28] Speaker 03: So very quickly, I think in terms of the merits, it's simple. [00:14:33] Speaker 03: There was no due process provided to my clients. [00:14:37] Speaker 03: I would cite the court to obviously Roadway versus Piper, which says that when you utilize inherent sanctions, these are serious, serious powers and that you have to have notice and you have to have a hearing. [00:14:50] Speaker 03: I would cite that court to two other cases that were not [00:14:54] Speaker 03: in our brief, Hazer versus Keller, 983, Fed 2nd, 1061, Procurium, in the Fifth Circuit where they state that that means this is well-settled law, also citing Isch versus Riggins, 757, Fed 2nd, 557. [00:15:14] Speaker 03: Those cases stand for how unbelievably important it is to have notice and a hearing so that you have the opportunity to defend yourself [00:15:22] Speaker 03: when you are accused of wrongdoing and when the court is threatening to use inherent powers. [00:15:28] Speaker 00: Now, your opponent says that there were eight opportunities for a hearing where your clients said, we don't need a hearing. [00:15:38] Speaker 03: If the court looks, this is so important, you have to look at the context of when the statements were made. [00:15:44] Speaker 03: This was all an exceptional case process by which [00:15:49] Speaker 03: And here are the orders. [00:15:50] Speaker 03: If you look at Appendix 31 to 33, February 27, 2014 order, this was all in the context of summary judgments. [00:16:01] Speaker 03: In other words, the other side was moving for exceptional case sanctions and we were defending it. [00:16:07] Speaker 03: We filed a motion for summary judgment. [00:16:10] Speaker 03: There is no question that when you file a motion for summary judgment, if you lose the summary judgment, you get a trial. [00:16:16] Speaker 03: Every statement that was made in the context of where we said we don't need a trial, it was all in the context of grant our summary judgment. [00:16:25] Speaker 03: And if there is one thing for the court to read, it would be the court's, as I mentioned, that order 31 to 33, the February order where he said after the first summary judgment hearing, he said, we're going to have another hearing. [00:16:39] Speaker 03: We're going to have a hearing on March 10th. [00:16:42] Speaker 03: And the only reason we're going to have this hearing, folks, by the way, the trial is still set for the 17th. [00:16:48] Speaker 03: The only reason we're having this hearing on the 10th is because I have still continued concerns about Mr. Beerbox's testimony, the testimony about the washers. [00:16:58] Speaker 03: And I want you lawyers to come to me and be prepared to explain to me, what would a trial look like? [00:17:04] Speaker 03: What evidence would actually be putting forth in front of me? [00:17:08] Speaker 03: Because that is the issue that I have concern with. [00:17:12] Speaker 03: When my clients came to that hearing, they said, well, there's no reason to have a trial on that issue because you have all the deposition testimony. [00:17:22] Speaker 03: If that's the only issue, then either you can rule on the papers. [00:17:26] Speaker 03: And what's so important is the court said, because there was a discussion again about the brochure, the court said, I think we've already dealt in many respects with the August brochure. [00:17:36] Speaker 03: I know that you feel like additional sanctions are warranted. [00:17:39] Speaker 03: And he said that to my colleagues. [00:17:41] Speaker 03: But my focus is really on Mr. Baerbach's testimony, which does concern me. [00:17:45] Speaker 03: And then he said the last parting words. [00:17:47] Speaker 03: So my clients at that point are fine. [00:17:50] Speaker 03: That's the only issue we're dealing with is the washers. [00:17:53] Speaker 03: Because if there's anything else, we're going to have a trial. [00:17:56] Speaker 03: And what the court said is, assume that we're not going to have a trial. [00:18:01] Speaker 03: Trial's set for a week. [00:18:02] Speaker 03: Assume we're not going to have a trial. [00:18:04] Speaker 03: But I'll let you know if we're going to. [00:18:07] Speaker 03: And so under those circumstances, [00:18:09] Speaker 03: It's not just that we didn't receive notice and we didn't receive a trial. [00:18:13] Speaker 03: It was worse because we had a separate process that was set up. [00:18:17] Speaker 03: We did what we were supposed to do. [00:18:19] Speaker 03: We filed motions for summary judgment. [00:18:22] Speaker 03: They didn't. [00:18:22] Speaker 03: And if we lost on summary judgment, the result was supposed to be a trial. [00:18:27] Speaker 03: At no time were we ever told, inherent power sanctions are coming at you. [00:18:32] Speaker 03: I'm going to dismiss your client's case. [00:18:34] Speaker 03: uh, with prejudice, uh, it's coming at you, especially in the context of my colleague saying, we are not pointing the fingers at the lawyers. [00:18:42] Speaker 03: If the court wants to, uh, on its own do that, we are not seeking sanctions against them. [00:18:47] Speaker 03: The case law is clear. [00:18:49] Speaker 03: We did not get appropriate due process notice. [00:18:52] Speaker 03: And I'm sorry, I went over my time on this. [00:18:55] Speaker 00: Let me take another moment to ask you the question that the court was concerned with at that time was the brochure. [00:19:02] Speaker 03: So the question that the court was concerned with in the most important hearing, the last hearing, which was March 10th, right on the eve of the March 17th trial, was the beer back washers. [00:19:16] Speaker 03: And indeed the order that he sent telling everybody come to this hearing, come to this hearing on March 10th, so we can figure out what we're going to do with this trial, he had one issue on his plate and the one issue that he had on the plate [00:19:29] Speaker 03: was, I want you to come to talk about Mr. Bierbach's testimony and what we would actually try if I can't dispose of this on summary judgment. [00:19:39] Speaker 03: He didn't say, hey, I have a concern about Mr. Carr and Okerton's testimony and Mr. Ballard, your representations to the court. [00:19:46] Speaker 03: Come on. [00:19:47] Speaker 03: Let's talk about how we're going to deal with that. [00:19:50] Speaker 03: I have a concern. [00:19:51] Speaker 03: I have a concern about that. [00:19:53] Speaker 03: I'm thinking of using my inherent powers to sanction you and to dismiss your client's case. [00:19:57] Speaker 03: We didn't have notice and it was actually the opposite. [00:20:00] Speaker 01: What would the hearing have entailed beyond just rehashing of all of the trial descriptions and the trial testimony that the court cited in such detail? [00:20:14] Speaker 03: I can tell you, I would surely hope that if Judge Ellison had said to my clients and it said to Mr. Ballard, you know what? [00:20:22] Speaker 03: I'm concerned. [00:20:23] Speaker 03: Okay. [00:20:24] Speaker 03: I think you lied to me. [00:20:25] Speaker 03: I think you lied to the court when you told me what Mr. Carr told you all. [00:20:30] Speaker 03: And I'm thinking of using sanctions and entering sanctions against you. [00:20:33] Speaker 03: God, I hope and would expect that Mr. Ballard would have called me then, not after the court entered an order. [00:20:39] Speaker 03: And I can tell you what I would have done. [00:20:41] Speaker 03: The first thing I would have done is I would have said, you know, all of those emails and all of the notes that you've referenced and said, hey, they're available. [00:20:48] Speaker 03: Let me tell you, we're going to box those up and I'm going to walk into the court after I deal with all of the issues that you have to deal with, right? [00:20:55] Speaker 03: Because you have to have the self-defense exception to the attorney-client privilege. [00:20:59] Speaker 03: There were attorney-client privilege issues. [00:21:01] Speaker 03: So those would have been stuck in front of the judge. [00:21:04] Speaker 03: Number two, I would have given unbelievably strong consideration to having both Mr. Lumen and Mr. Ballard get on the witness stand and testify as to the exact discussion [00:21:14] Speaker 03: in order to rebut the, and let me tell you, when Fairley read the testimony of Mr. Carr and Mr. Oakerton three years after the conversation that they had with the lawyers, this record would have been totally different. [00:21:27] Speaker 03: And that's one of the problems when you deprive somebody of notice and you deprive somebody of a hearing, you can't afterwards say, well, where's all the evidence that you would have put in? [00:21:36] Speaker 03: Well, the evidence is not there because I didn't have notice and I didn't have the hearing. [00:21:40] Speaker 03: But again, to directly answer the court's question, the notes, [00:21:44] Speaker 03: emails, and indeed, most likely, my two clients would have been on the witness stand. [00:21:49] Speaker 03: And it would have been a whole different ballgame. [00:21:53] Speaker 00: OK, let's hear from the other side. [00:21:55] Speaker 00: Thank you. [00:21:55] Speaker 00: Thank you, Mr. Harvey. [00:22:01] Speaker 00: OK, Mr. Rayleigh. [00:22:13] Speaker 02: Yes, ma'am. [00:22:14] Speaker 02: May I present the court, your honors? [00:22:17] Speaker 02: I want to first correct the record on something. [00:22:21] Speaker 02: The issue that was before Judge Ellison was a bench trial on the defendant's counterclaim of exceptional case, principally for litigation misconduct involving the brochure. [00:22:34] Speaker 02: That was very, very clear. [00:22:35] Speaker 02: And I'll reference pages 32 and 33 of our brief where we quote from Tesco's counsel, [00:22:42] Speaker 02: NOB's and OES's claim for exceptional case does not need to be tried. [00:22:47] Speaker 02: The court has heard all of this over and over again. [00:22:50] Speaker 02: Tesco has also fully responded to these allegations each time they have been made. [00:22:55] Speaker 02: This wasn't about their motion for summary judgment. [00:22:58] Speaker 02: It wasn't about the washers. [00:23:00] Speaker 02: It was about our counterclaim. [00:23:02] Speaker 02: Not just a motion, but a counterclaim, and the court might recall [00:23:06] Speaker 02: that after summary judgment was initially granted, they noticed an appeal checking the box that all issues were disposed of when our counterclaim for exceptional case, which they had moved to be bifurcated, was still pending. [00:23:18] Speaker 02: And Judge Elson had to take the rather unusual step of writing this court and saying, I'm not quite finished with all that's before me. [00:23:25] Speaker 02: If I could please have it back to finish. [00:23:28] Speaker 02: So what we were waiting for was that trial, that bench trial. [00:23:31] Speaker 02: We do not need to have a trial, Tesco's counsel said. [00:23:35] Speaker 02: on whether these circumstances render the case exceptional. [00:23:38] Speaker 02: That's a quote. [00:23:40] Speaker 01: Isn't that still different from whether or not they would like to have a hearing and notice that the court was considering entering sanctions predicated on what is characterized as misrepresentations by counsel? [00:23:55] Speaker 02: I think that's a very fair question, Your Honor. [00:23:56] Speaker 02: And I'm sure the court recognizes there's a lot of overlap between litigation misconduct [00:24:01] Speaker 02: about lying in court about this case dispositive, we submit brochure, that showed the only novel step of the invention, which the inventor at trial actually identified and agreed with, that they had denied existed despite, we found invoices for thousands of publications of it, and it had been dispersed months before the critical date, even though we now know [00:24:27] Speaker 02: that they held it in their hands on two different occasions and refused to produce it. [00:24:32] Speaker 00: Then they made false statements in court about it. [00:24:34] Speaker 02: All of these things. [00:24:35] Speaker 00: You said they produced the black and white copies at the threshold. [00:24:41] Speaker 02: That's their claim. [00:24:42] Speaker 02: And it was shrunk. [00:24:46] Speaker 02: It was blurry. [00:24:47] Speaker 02: There was a whole punch over the tool. [00:24:48] Speaker 02: And nobody at the time thought that was responsive to the discovery request. [00:24:53] Speaker 02: And in response to our motions to compel, they never said, oh, we produced it already. [00:24:58] Speaker 02: Here it is. [00:25:00] Speaker 02: You see. [00:25:02] Speaker 02: And we found, as the court knows and is now a matter of record, the brochure in an old production from another case where other lawyers represented Tesco. [00:25:10] Speaker 02: We produced it. [00:25:11] Speaker 02: We marked it as an exhibit. [00:25:12] Speaker 02: We used it at trial. [00:25:14] Speaker 02: And they had it and chose not to produce it. [00:25:17] Speaker 02: And then they made false representations in court about it, said, we've talked to the people who did the rendering, the graphic rendering, and they were prepared to testify unequivocally that that's not it. [00:25:28] Speaker 02: And as a matter of record now, on page 10 of their brief, they admit that they knew what they said in court was false. [00:25:38] Speaker 02: Three days later, in the middle of trial, and they never corrected the record. [00:25:44] Speaker 02: They never came clean. [00:25:46] Speaker 02: And so all those were part of our counterclaim. [00:25:48] Speaker 02: Yes, Your Honor. [00:25:49] Speaker 01: OK, let's talk about the standing issue. [00:25:53] Speaker 01: As I see it, there are two different pieces to it. [00:25:55] Speaker 01: The first is whether or not the sanction of dismissal is effectively a sanction against counsel, regardless of whether the word reprimand was used. [00:26:05] Speaker 01: The second would be whether, even if that were the case, that settlement renders us incapable of reaching that question. [00:26:15] Speaker 01: So as to the first question, do you contend that this isn't really a sanction against counsel, given the harsh language that was in the court's order? [00:26:25] Speaker 02: Absolutely, Your Honor. [00:26:26] Speaker 02: Using this court's authority in Nises versus Permachink 2007 case, which is directly on point, that was an inequitable conduct case. [00:26:36] Speaker 01: And in that case... But the lawyer wasn't involved in that litigation. [00:26:40] Speaker 01: Correct. [00:26:40] Speaker 01: The lawyer was a witness. [00:26:41] Speaker 01: It was involved in administrative proceeding. [00:26:43] Speaker 01: I mean, it's still additional step removed, is it not? [00:26:47] Speaker 02: But the courts, in the language of the opinion, does not make that limitation, Your Honor. [00:26:52] Speaker 02: I know they want to make that limitation. [00:26:54] Speaker 02: But the court's language in the opinion, first it says, we resolve [00:26:58] Speaker 02: questions like this based on our law and not the regional circuit. [00:27:02] Speaker 02: And it says, a court's power to punish is not exercised simply because the court in course of resolving the issues in the underlying case criticizes the conduct of a non-party. [00:27:13] Speaker 00: You know, you can't pluck a sentence out of its facts. [00:27:17] Speaker 00: Sure. [00:27:19] Speaker 00: Yes. [00:27:21] Speaker 00: Do you have something else you want to tell us? [00:27:24] Speaker 00: Is that your authority for this? [00:27:27] Speaker 02: Well, there are two federal circuit cases directly on point. [00:27:31] Speaker 02: Both require a formal reprimand or admonishment at a minimum. [00:27:36] Speaker 02: It's true that monetary sanctions are not required. [00:27:40] Speaker 02: But both have language, Your Honor, throughout. [00:27:43] Speaker 02: In the other cases, precision specialty versus United States. [00:27:49] Speaker 02: They recognize that critical comments by court may adversely affect a reputation. [00:27:55] Speaker 02: But that does not make it appealable. [00:27:59] Speaker 02: And it says, in the present case, the district court did not exercise its power to sanction Mr. Teshner. [00:28:05] Speaker 02: That's the attorney. [00:28:06] Speaker 02: The court's comments about Mr. Teshner were simply subsidiary findings made in support of the court's ultimate findings and conclusion. [00:28:13] Speaker 02: And then I think the court did something extremely important. [00:28:15] Speaker 02: And I want to share that with the court. [00:28:17] Speaker 02: It's a matter of public policy in NISIS. [00:28:21] Speaker 02: It said, to allow appeals by attorney, [00:28:24] Speaker 02: merely because a court criticized them or characterized their conduct in an unfavorable way, would invite an appeal by any non-party who feels aggrieved by some critical statement made by a court or in an opinion from the bench. [00:28:39] Speaker 02: It said, nor would it be appropriate to limit such appeals to attorneys while forbidding others from appealing critical court comments, if such a limitation would smack a special treatment for members of the bar and would be difficult to justify as a matter of principle. [00:28:54] Speaker 02: So I submit that there's an important public policy consideration for this court's ruling on this subject, equal justice under the law. [00:29:03] Speaker 01: Let me talk about the settlement. [00:29:05] Speaker 01: Yes. [00:29:05] Speaker 01: So tell me about the settlement. [00:29:06] Speaker 01: So did the settlement resolve all attorney's fee questions as well? [00:29:10] Speaker 01: Yes. [00:29:12] Speaker 02: Your Honor, it's spot on. [00:29:14] Speaker 02: The only matter pending at the time of the settlement was our claim for attorney's fees. [00:29:20] Speaker 02: All matters have been resolved fully. [00:29:23] Speaker 02: Tesco and Franks and OES and NOV have all joined in this settlement and signed mutual releases. [00:29:32] Speaker 02: And Mr. Ballard and Mr. Luman, the attorneys who are doing this personal appeal, have also joined in the settlement and signed mutual releases. [00:29:41] Speaker 02: So there can be no further monetary matters involving any of these parties or the lawyers. [00:29:48] Speaker 02: And we submit that your honor is right in your questions, if that's where you were going. [00:29:52] Speaker 02: We do not believe there is a case or controversy. [00:29:56] Speaker 01: This may be obvious here, but what stake do you feel like your client has in this? [00:30:03] Speaker 01: If really all they're requesting is that we have the lower court opinions vacated so that the unkind comments are removed. [00:30:13] Speaker 02: We believe Judge Ellison was trying to send a message to litigators. [00:30:16] Speaker 02: and to parties in his court that they cannot look a federal judge in the eye and lie. [00:30:24] Speaker 02: And we don't want to be a part of it. [00:30:27] Speaker 00: Excuse me? [00:30:27] Speaker 00: They're asking for a hearing in order to provide evidence that they didn't lie. [00:30:33] Speaker 00: And they tell us, and apparently it seems clear, that that hearing has not been held. [00:30:39] Speaker 02: There have been so many hearings about this brochure. [00:30:42] Speaker 02: And the evidence about the brochure [00:30:44] Speaker 02: and the evidence of false statements in court about the brochure. [00:30:48] Speaker 02: And as I just mentioned, on page 10 of their brief, you can see that they knew three days after these statements that they were untrue, and yet they never, ever came clean. [00:30:57] Speaker 00: That wasn't the question. [00:30:58] Speaker 00: At least what they emphasize is that we have these depositions taken three years after the fact. [00:31:06] Speaker 00: One of the deponents says, I don't even remember talking to them. [00:31:10] Speaker 00: And the other one says whatever he says. [00:31:14] Speaker 00: Their principal argument here, as I see it, is that they have had no opportunity and have been denied the opportunity to clarify or straighten that out or whatever it is that the purpose is, but at least to diminish the power of what was said against them. [00:31:35] Speaker 02: We have hearings at length on the very issue, Your Honor mentioned, where I personally laid out these depositions. [00:31:42] Speaker 02: They responded. [00:31:43] Speaker 00: We were waiting for the trial on- But the deponents before the court? [00:31:47] Speaker 02: Yeah. [00:31:47] Speaker 02: The opponents were before the court in video depositions, which the court reviewed at the request of Texco, because Texco didn't want a trial on litigation of misconduct. [00:31:57] Speaker 02: And Texco recommended that the court just review the video depositions to assess the credibility of the witnesses. [00:32:04] Speaker 00: So how do you resolve the issue of the second of these deponents? [00:32:10] Speaker 00: I forget his name. [00:32:11] Speaker 00: He says, I don't even remember talking to them. [00:32:13] Speaker 02: Well, that's further evidence that this was Mr. Orcherton, Your Honor. [00:32:18] Speaker 02: They said that they talked to him. [00:32:21] Speaker 02: And he did the brochure graphic. [00:32:23] Speaker 02: He was one of the ones involved. [00:32:25] Speaker 02: And he will testify unequivocally that the rendering is not the invention. [00:32:30] Speaker 02: That's the representation they made to court. [00:32:33] Speaker 02: He said in his deposition, there's no way I did that. [00:32:37] Speaker 02: And if somebody said, I did that, that's how it's. [00:32:39] Speaker 00: He didn't say. [00:32:40] Speaker 00: He said, I don't remember. [00:32:43] Speaker 00: petitioners tell us that they have all of the notes of the conversation, and that there was no opportunity to bring all of these out. [00:32:53] Speaker 02: If I could share with Your Honor what he said in the deposition? [00:32:59] Speaker 00: Is that in the record? [00:33:00] Speaker 02: Yes, Your Honor. [00:33:01] Speaker 02: A40404 to 06. [00:33:08] Speaker 02: This is Mr. Orcherton. [00:33:11] Speaker 02: identifying the graphical rendering. [00:33:13] Speaker 02: Did you participate in this graphical rendering? [00:33:15] Speaker 02: No. [00:33:19] Speaker 02: I know it was not me. [00:33:21] Speaker 02: They represented in court that he did do it. [00:33:26] Speaker 02: And so there's more involved than just remembering a conversation. [00:33:30] Speaker 02: They stated something in court that was not true. [00:33:33] Speaker 02: And the court's order focused on Mr. Carr's deposition, which is A39134 to 41, [00:33:41] Speaker 02: and A488 to 402, where they went into detail on, not only did I not do it, but I told them when they first called me, it wasn't clear to me. [00:33:55] Speaker 02: When they sent me a higher resolution image, I told them, yes, I see the invention, which is completely night from day from what they told the judge. [00:34:04] Speaker 02: And most importantly to us, they now admit that, [00:34:08] Speaker 02: when this higher resolution image, not a blow up, higher resolution image was seen. [00:34:12] Speaker 02: And I'll share with the court that what happened in that interim, the first one we found was a computer scan. [00:34:19] Speaker 02: And then later, another co-defendant, Franks, found a hard copy from one of their old matters. [00:34:25] Speaker 02: And so the hard copy was a clearer resolution. [00:34:29] Speaker 02: When Mr. Carr saw that resolution, he told the appellants, I see the invention in it. [00:34:37] Speaker 02: They never came clean with the court. [00:34:39] Speaker 02: They continued to take the position. [00:34:41] Speaker 02: The invention wasn't in there. [00:34:42] Speaker 02: In briefing, in calling paid witnesses, in closing arguments, in post-trial briefings, it wasn't for three years before they finally made that admission. [00:34:51] Speaker 02: Meanwhile, back to your honor's question about our stake in it, our stake in it, our client's stake in it is they have spent millions of dollars defending a case that should never have been filed because the patent was invalid because prior art, their prior art disclosed [00:35:06] Speaker 02: the only novel step of the invention. [00:35:08] Speaker 02: And so the dismissal was just what inevitably would have happened if the truth had come out. [00:35:18] Speaker 02: So our stake in it is stopping the bleeding on legal fees. [00:35:24] Speaker 02: And quite frankly, Your Honor, the people that have suffered the most in this are the defendants. [00:35:30] Speaker 02: Because as you might imagine, settlements are never 100% [00:35:35] Speaker 02: amount you had to pay. [00:35:36] Speaker 02: And now they want us to pay more, defending their honors, which we submit. [00:35:40] Speaker 02: The record shows their worth. [00:35:45] Speaker 02: I'm almost out of time. [00:35:48] Speaker 02: I'm happy to answer any of the court's other questions. [00:35:51] Speaker 02: If not, I'll wrap up. [00:35:53] Speaker 00: Any questions? [00:35:55] Speaker 00: Thank you, Mr. Williams. [00:35:55] Speaker 02: Your Honor, to close. [00:36:02] Speaker 02: Professor Randy Posh. [00:36:04] Speaker 02: In the book, the last lecture, as he was dying of cancer, told his students, if I could only give you three words, they would be tell the truth. [00:36:14] Speaker 02: And if I could give you three more words, they would be all the time. [00:36:19] Speaker 02: This case is a history of over and over and over and over again, false representations to a federal judge. [00:36:28] Speaker 02: He has tried to reluctantly, sadly, [00:36:33] Speaker 02: as he expressed, and sad for all of us, craft an order which stands for integrity and which sends a message to everybody that you cannot look this court in the eye and lie. [00:36:46] Speaker 02: I request that this honorable court give honor to Judge Ellison's order. [00:36:56] Speaker 02: Rarely do parties or lawyers get caught red-handed, like in this case. [00:37:01] Speaker 02: And if you send a message that they'll get another chance and another chance and do-overs when they've had all of these hearings and all of this briefing and said they didn't want a trial on litigation misconduct, and they reference mysterious emails that are not in the record because they didn't produce them even in camera, if you send that message, it's going to be much easier for people who [00:37:28] Speaker 02: are not interested in telling the truth to get away with it, because some people will always push the boundaries. [00:37:34] Speaker 02: So we want a message to stand that the rule of law will be followed, Your Honor. [00:37:38] Speaker 00: I think we have your message. [00:37:39] Speaker 02: Thank you very much, ma'am. [00:37:41] Speaker 00: Thank you, Mr. Rayleigh. [00:37:43] Speaker 00: Mr. Harvey. [00:37:44] Speaker 03: Do I have time for a brief moment? [00:37:50] Speaker 03: Thank you. [00:37:50] Speaker 03: A couple of things that are, again, so important. [00:37:53] Speaker 03: Every statement where it's professed that we said we don't want a trial, [00:37:58] Speaker 03: That's in the context of saying, because you can rule in our favor on summary judgment. [00:38:04] Speaker 03: That is crystal clear. [00:38:06] Speaker 03: If the court looks at appendix 40839, that's the order that the court put out. [00:38:13] Speaker 03: I think it was in January of 2014 where he said, this is how we're going to do it. [00:38:18] Speaker 03: You all have filed your summary judgments. [00:38:20] Speaker 03: By the way, my clients, Tesco, my client's clients were the only ones that filed a summary judgment. [00:38:26] Speaker 03: They did not. [00:38:27] Speaker 03: Okay. [00:38:27] Speaker 03: The court gave them more time to respond. [00:38:29] Speaker 03: And then he set for trial. [00:38:31] Speaker 03: If summary judgment wasn't granted, he set trial from March 17th. [00:38:36] Speaker 03: We never said, Hey, if you deny summary judge judgment, go ahead and Sue Espante, please feel free to just go ahead and hit us with sanctions. [00:38:45] Speaker 03: We never said that. [00:38:46] Speaker 03: Not in a million years. [00:38:47] Speaker 03: And indeed, if the court looks at 43851, that is our co-counsel during the hearing, making clear the obvious that if [00:38:57] Speaker 03: There's, if you don't grant summary judgment, if you think that there's a lingering fact issue, then presumably we'll all get together for a scheduling conference and figure out how to handle this. [00:39:06] Speaker 03: And the judge agreed, which of course was what happened when we had the March 10th hearing. [00:39:11] Speaker 03: The only issue being open was the beer box. [00:39:14] Speaker 03: My client never said we're forfeiting a right to trial if you don't grant a summary judgment point to that. [00:39:20] Speaker 03: I failed to hit on the first round. [00:39:23] Speaker 03: Not only was there no due process, no notice, no hearing. [00:39:27] Speaker 03: But the court erred in its burden of proof. [00:39:31] Speaker 03: Look at the order. [00:39:32] Speaker 01: You can't raise a new issue on rebuttal. [00:39:36] Speaker 03: OK. [00:39:37] Speaker 03: Let me talk about, then it's in our brief. [00:39:39] Speaker 03: If you look at memorandum and order. [00:39:42] Speaker 00: Which new issue are you concerned with? [00:39:44] Speaker 00: He's raising an issue that he didn't raise the first time around. [00:39:48] Speaker 00: OK, because I think you're saying that the due process is not due for us? [00:39:52] Speaker 03: Well, this is part of the due process. [00:39:54] Speaker 03: The fact that the court didn't apply [00:39:56] Speaker 03: the correct burden of proof. [00:39:58] Speaker 03: Nowhere in his order does he say, I'm applying clear and convincing evidence. [00:40:02] Speaker 03: That's a requirement. [00:40:03] Speaker 03: Under Fifth Circuit law, you can't sanction, you can't impose inherent power sanctions without basing it on clear and convincing evidence. [00:40:09] Speaker 03: Let me read the court's last paragraph to address your point, Judge Romali, about was this directed at my clients? [00:40:16] Speaker 03: The court reaches its decision with great reluctance. [00:40:19] Speaker 03: The court is entirely confident that the conduct that it finds so troubling is entirely out of character for, [00:40:26] Speaker 03: not Tesco, for the attorneys. [00:40:29] Speaker 03: However, the attorney's conduct is serious and has had significant and costly ramifications to the court and the defendants. [00:40:37] Speaker 03: For the reasons stated above, the case is dismissed with prejudice pursuant to the court's inherent authority. [00:40:43] Speaker 03: With respect, I don't see how the order can be read without it being it's clear that this is aimed directly at the lawyers for their alleged misrepresentations. [00:40:52] Speaker 03: The arguments about [00:40:54] Speaker 03: All of the other supposed bad acts that my clients did, they're wrong. [00:40:58] Speaker 03: They're answers to it. [00:40:59] Speaker 03: That's why the court didn't touch them. [00:41:01] Speaker 03: The court didn't mention it. [00:41:02] Speaker 03: And most importantly, on appeal, the court is required to stay within the record. [00:41:08] Speaker 03: This is Fifth Circuit precedent that binds this court in terms of how to review this. [00:41:13] Speaker 03: Crowe versus Smith and Abara says when you are reviewing the utilization of inherent power sanctions, [00:41:21] Speaker 03: We have to look exactly at what the court talked about in its order and exactly what it cited to. [00:41:27] Speaker 03: We don't go outside the order to see if there's something else we can come up with to plug in any holes. [00:41:32] Speaker 03: In other words, all of the arguments about when my clients didn't, for example, when the witnesses changed their mind later that week, my clients didn't come to the court and say, hey, wait a minute, our clients have changed their mind. [00:41:45] Speaker 03: That wasn't before the court. [00:41:46] Speaker 03: The court didn't. [00:41:47] Speaker 03: make that a basis for the sanctions. [00:41:49] Speaker 03: And as we pointed out, indeed, the model rules in Texas are real clear. [00:41:54] Speaker 03: It's a little bit different than the model rules, the ABA model rules. [00:41:58] Speaker 03: The obligation to correct the record doesn't exist when it's a statement to the tribunal. [00:42:03] Speaker 03: It does exist if it's actual evidence in the record. [00:42:07] Speaker 03: And the Fifth Circuit, again, critical, in the Crow v. Smith case says footnote 40. [00:42:15] Speaker 03: When you are trying to figure out using inherent powers and whether a lawyer should be sanctioned based upon a misrepresentation and you're thinking about the disciplinary rules, every ambiguity in the disciplinary rules is read in favor of the lawyers. [00:42:31] Speaker 03: That is Fifth Circuit precedent, footnote 40 Crowe versus Smith. [00:42:35] Speaker 03: But the key is that those issues were not part of the judge's sanction order and they cannot be used. [00:42:41] Speaker 03: And in fact, if you look at their brief at the end of the day, [00:42:44] Speaker 03: Most of their brief doesn't address what should be addressed. [00:42:47] Speaker 03: The standard of review, de novo under N. Ray Moore, the burden of proof, clear and convincing. [00:42:54] Speaker 03: They don't get that right. [00:42:55] Speaker 03: And 90% of their brief is about other issues that were not part of the order, which the Fifth Circuit has said cannot be considered. [00:43:03] Speaker 03: With respect to Carr and, oh, I'm over. [00:43:06] Speaker 03: It looks like I'm over. [00:43:07] Speaker 03: And I appreciate the court's time. [00:43:10] Speaker 03: And we would ask that you vacate [00:43:12] Speaker 03: the opinion and that vacate the order or alternatively remanded to Judge Ellison to conduct a hearing with notice. [00:43:20] Speaker 02: Your Honor, since he raised the standard of review for the first time... I think it's in the record. [00:43:25] Speaker 00: I think that we can straighten out the standard of review. [00:43:28] Speaker 00: That's not our biggest problem with this case. [00:43:31] Speaker 00: Thank you, Your Honor. [00:43:32] Speaker 00: Thank you both. [00:43:33] Speaker 00: Thank you all. [00:43:34] Speaker 00: The case is taken under submission.