Delaware Business Litigation Report

Court Sanctions Counsel Under R.11 & R.37 For Inexcusable Violations

Heinrich Beck v. Atlantic Coast PLC., et al., C.A. No. 303-N, (Del. Ch. Feb. 11, 2005)(published at 868 A.2d 840 (Del. Ch. 2005)). This opinion deals with attorney sanctions under Court of Chancery Rules 11 and 37. Plaintiff originally brought a software product liability class action in the Superior Court that was later transferred to the Court of Chancery because an injunction request was added. The court held that the plaintiff's attorney had violated the Court's Rules 11 and 37 and that the action was prosecuted in "bad faith" because the counsel had filed "false and misleading complaints with this court." The court further added that the attorney had: (1) violated the discovery Rule 37 by concealing and not providing information to the defense counsel; (2) exhibited "bad faith" by unnecessarily delaying or prolonging the frivolous litigation; and (3) made "material" misrepresentations to the court. The court awarded $25,000 to the defendant corporation, reducing the quantum of fees by $35,000 that it may have otherwise spent in dismissing the suit if plaintiff and his attorney had been candid from the outset. The court also admonished local counsel to sufficiently review lead counsel's pleadings and discovery responses to ensure their correctness and completeness. Additionally, the court awarded $2,500 toward court costs, representing its one-day mediation costs. Authored by: Raj Srivatsan 302-888 6831 rsrivatsan@morrisjames.com Share