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United States ex rel Salmeron v. Enterprise Recovery Systems

August 18, 2008

UNITED STATES OF AMERICA EX REL. RHONDA SALMERON, RELATOR, PLAINTIFF,
v.
ENTERPRISE RECOVERY SYSTEMS, INC., ET AL., DEFENDANTS.



The opinion of the court was delivered by: Milton I. Shadur Senior United States District Judge

MEMORANDUM OPINION AND ORDER

This matter is before this Court for decision in response to the motions to dismiss with prejudice that have been advanced by all defendants and on which all parties have had their say. This Court of course recognizes the seriousness of imposing that ultimate sanction because of a litigant's or lawyer's conduct rather than deciding a case on the merits (a subject discussed later in the Conclusion of Law section), so that this memorandum opinion and order will begin with a brief recital of the background leading to that conclusion, followed by a more detailed recital of the facts and then by the conclusion itself. For the reasons set forth below, the several motions are granted and this case is dismissed in its entirety.

Background Summary

This action has been pending for over three years. Throughout the course of this litigation, counsel Jorge Sanchez ("Sanchez") for relator Rhonda Salmeron ("Salmeron") has engaged in a virtually unbroken pattern of dilatory and irresponsible conduct that has regularly included missed deadlines, repeated requests for extensions of time, failure to comply with this Court's orders and procedures and failure to attend status conferences. Indeed, this Court took the unusual step of dismissing this case sua sponte for want of prosecution in May 2008, although it then--as it had forecast it would probably do--reinstated the case on Sanchez' claimed explanation as to his past delinquencies and his assurance of future compliance.*fn1

After this Court had thus granted Salmeron's motion to reopen the case, Salmeron--through counsel Sanchez--did not comply with the promise to toe the line going forward. In addition to some further noncompliance with procedural requirements, which although troublesome might not have called for any severe response, counsel Sanchez committed a far more serious breach: He deliberately disclosed confidential and highly sensitive contractual documents that he had obtained through discovery on a limited disclosure basis. Sanchez has admitted providing those confidential documents to a reporter for the Chronicle of Higher Education, to an unidentified potential co-counsel and to Salmeron herself. Sanchez and Salmeron also cannot explain how the documents came to be posted (numbered with the Bates number stamps, an identifier that unequivocally confirms their origin as copies of the documents physically delivered to Sanchez and Sanchez alone) on Wikileaks, a worldwide website devoted (as the name implies) to the leaking of confidential documents.

In sum, the unprofessional and irresponsible conduct of Salmeron's counsel Sanchez leaves this Court no considered choice but to dismiss this case with prejudice so as to protect the integrity of the judicial system. What follows next is the more extended statement of reasons for that conclusion and result.

Findings of Fact

1. Salmeron filed this action on August 4, 2005 pursuant to the False Claims Act, 31 U.S.C. §3730(b)(1). Within the first six months after filing the case, Salmeron's counsel Sanchez began to exhibit a pattern of behavior that involved repeated delays and repeated noncompliance with this Court's orders.

2. On February 3, 2006*fn2 original defendant Enterprise Recovery System ("Enterprise") filed a motion to dismiss pursuant to Fed. R. Civ. P. ("Rule") 9(b) and 12(b)(6)(Dkt. 24). This Court ordered that responses be filed by March 2 (Dkt. 28), with a status date set for March 6 to see whether a reply was called for.*fn3 Just after the March 2 due date (on March 3) Sanchez filed a motion to file the response instanter, to be presented at the March 6 hearing (Dkt. 34). Sanchez cited his workload and personal issues as the reasons for the brief delay (Dkt. 33-1).*fn4

3. On June 6 Enterprise filed a motion for a protective order (Dkt. 59, 64). Sanchez filed a memorandum opposing the proposed protective order, adding that he was "at a loss to even assess whether the defendant's proposed order was made in good faith...." Nonetheless Sanchez told this Court (Dkt. 66):

For the time being plaintiff agrees not to disclose the documents to any third parties (except for the U.S. Attorney), or file any documents publicly until: 1) defendant has had an opportunity to propose documents to be designated as confidential; 2) plaintiff has had a chance to agree or dispute such proposed designations; and 3) this Court has had the opportunity to rule on any disagreement brought before it.

On June 14 this Court granted Enterprise's motion for a protective order "on a counsel's eyes only basis with a formal written order to be submitted" (Dkt. 68).

4. Next, on July 28 Enterprise filed its Second Amended Motion for Entry of a Protective Order (Dkt. 74). On August 2 this Court granted the motion but directed counsel for the parties to revise the order (Dkt. 75). Then on August 3 Enterprise and Salmeron submitted the revised protective order, which this Court signed and entered (Dkt. 77).

5. On October 16 added defendant United States Aid Funds, Inc. ("USA Funds") filed a motion to dismiss the First Amended Complaint (Dkt. 96). This Court ordered Salmeron to file her response to the motion by November 17 (Dkt. 100), again setting a status date shortly thereafter to consider whether to schedule a reply.

6. On November 13 counsel for Salmeron and for USA Funds held their initial discovery planning conference, with USA Funds represented by its former counsel Mark Sweet ("Sweet") of Wiley Rein, LLP (then known as Wiley Rein & Fielding, LLP). Sweet participated by telephone and told Sanchez that to protect USA Funds' documents, it would want the same undertakings and assurances that were afforded by the protective order in place between Enterprise and Salmeron. In response Sanchez agreed during that conference to treat certain documents identified by USA Funds as being for "attorneys' eyes only" until such time as a modified protective order could be entered.

7. On November 20 (once again after the due date had passed) Sanchez filed a motion to file Salmeron's response to USA Funds' motion to dismiss instanter, to be presented at the November 27 status hearing date (Dkt. 109). To complete the parallel to Finding 2, Sanchez again cited his workload and family obligations as the reasons for the delay.

8. On January 31, 2007*fn5 USA Funds made its first production of documents, which included the Third Amended and Restated Guarantee Services Agreement between USA Funds and Sallie Mae, Bates-labeled USAF00000001-USAF00000060. In the cover letter accompanying that production, Sweet specifically stated that there were certain documents for which USA Funds would be seeking confidential treatment, expressly including the Guarantee Services Agreement between USA Funds and Sallie Mae. Sweet went on to say that he had circulated a draft joint motion for entry of a modified protective order and that USA Funds would "move for confidential treatment of these documents when that order has been entered."

9. Sanchez had informed USA Funds' counsel that he wanted to make some additional modifications to the protective order so that it would cover documents from Salmeron's home computer. On February 1 Sanchez e-mailed Sweet, explaining that he had not yet had an opportunity to review the proposed modification (in part because of his workload), but that he would do so and that he was "sure we can get this worked out to the parties' and Court's satisfaction."

10. Salmeron's responses to USA Funds' interrogatories and its request for production of documents were due on February 19, but USA Funds received no such responses. Nonetheless, on March 2 USA Funds made its second production of documents. In the cover letter accompanying that production, Sweet reiterated that USA Funds "remains interested in seeking confidential treatment" for the Guarantee Services Agreement between USA Funds and Sallie Mae. Sweet again asked Sanchez to provide edits to the draft motion for entry of a modified protective order he had circulated in January, and he again stated that USA Funds would move for confidential treatment once the order had been entered. Sweet also inquired about the status of Salmeron's overdue responses to interrogatories and discovery requests.

11. On March 23 this Court held a previously-scheduled status conference, but Sanchez failed to appear. Nor did Sanchez submit the delinquent responses to the interrogatories until April 30, more than two months after they were due.

12. On May 18 Enterprise filed a motion to compel and for sanctions (Dkt. 145) because Salmeron had also failed to respond to Enterprise's interrogatories and requests for production, which had become due on or about April 9. Although Sanchez had previously represented that the information would be provided before May 11, he had failed to provide any of the items. This Court granted Enterprise's motion to compel in part but ...


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