By Casey Sullivan
NEW YORK, Dec 26 (Reuters) - A New York federal judge
wrongly ordered two small law firms to pay $24,400 to cover
legal fees of the New York law firm Cleary Gottlieb Steen &
Hamilton in a dispute over late paperwork, an appeals court
ruled on Wednesday.
The 2nd U.S. Circuit Court of Appeals published its written
decision in the case after issuing a bench ruling earlier this
month ordering Cleary to return the $24,400 in fees.
The decision found that the lower court, the U.S. District
Court in Manhattan, had "abused its discretion" in imposing a
"severe sanction of attorney's fees" on Lankford & Reed, a
three-lawyer firm based in Alexandria, Virginia, and Langrock
Sperry & Wool, a 25-lawyer firm in Middlebury, Vermont.
The two firms had been penalized in September 2011 by U.S.
District Judge Deborah Batts. She had ordered the payment to
Cleary as a sanction for filing court papers four days late in a
The 2nd Circuit ruled that Batts had not given the small
firms opportunity to respond to the impending sanction. The
appeals court also said there was no evidence that the two firms
had acted in bad faith when filing the paperwork after the
Cleary returned the money to the two firms after the bench
ruling by the 2nd Circuit several weeks ago.
A request for comment left with Carmine Boccuzzi, the Cleary
partner handling the matter, was not immediately returned. A
Cleary spokeswoman also did not immediately respond to a request
Terrence Reed, a partner with Lankford & Reed, said he was
happy with the decision, saying that all of the firms involved
had agreed on the extended deadline, including Cleary, and it
was "unfortunate" that Cleary had supported Batts's sanction.
Peter Langrock, a partner with Langrock Sperry, said,
"Obviously we're pleased to have the court unanimously rule on
every ground that there was no basis for the sanction."
LAWSUIT IN 2011
Lankford & Reed and Langrock Sperry represent a Missouri
resident, Robert Wilson, and filed a lawsuit on his behalf in
U.S. District Court in Manhattan against Citigroup and
investment firm Opportunity Equity Partners Ltd in Ma r ch 2011.
Wilson is seeking compensation for work he allegedly did in
helping to manage $1.5 billion in investments that Citigroup and
the investment firm made in Brazilian companies, according to
As part of that lawsuit, Reed sent a letter to the judge on
July 11, 2011, asking that a filing due that day be extended to
July 28, citing other scheduling obligations. His letter
followed a more generic request that the court had denied
without reason earlier that month, the 2nd Circuit said in
Reed submitted the motion for his client four days after the
July 11 deadline.
Batts did not respond to Reed's request until two months
after the July 11 letter, according to the two firms' appeal.
She issued an order acknowledging that the scheduling conflicts
warranted an extension but nevertheless said that Lankford &
Reed and Langrock Sperry must pay Cleary attorneys' fees for its
next brief in the Citibank dispute.
In a brief to the 2nd Circuit, Cleary supported the decision
that the two small firms pay for its work.
The firm said the court did not need to prove Lankford &
Reed and Langrock Sperry acted in bad faith to impose its
sanction of attorneys' fees.
Cleary said the mere fact that the two other law firms
"negligently failed to follow the Federal Rules of Civil
Procedure, the local district court rules and comply with the
district court's instructions" was enough to institute a penalty
for its attorneys' fees to be paid.
Wednesday's decision was issued by Circuit Judges Robert
Katzmann, Barrington Daniels Parker and Richard Wesley.
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