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Sanction: Dallas Lawyers Discover Forged Corporate Documents, Win $60,000 Attorney-Fee Award

Sanction: Dallas Lawyers Discover Forged Corporate Documents, Win $60,000 Attorney-Fee Award

By Angela Morris | May 05, 2020 at 02:59 PM

stack of documentsPhoto: Sean K/Shutterstock.com
A cautionary tale from Texas: U.S. District Judge Barbara Lynn has awarded $60,000 in attorney fees to sanction a company that submitted altered, fabricated evidence during discovery in a business litigation matter.

Opposing counsel said the documents the defendant allegedly altered had bolstered the defense in the dispute between Merge Office Interiors Inc., which manufactures office furniture, and Alfa Adhesives Inc., supplied textile glue to Merge.

The glue, when exposed to UV light, made orange-brown stains on desk divider panels. Merge sued Alfa to recover the money it spent in replacing its customers’ discolored panels. Alfa countered that it had warned Merge about the glue discoloration problem and explained that over-applying the adhesive was to blame.

Plaintiffs attorney Austin Champion claimed the documents that Alfa’s CEO allegedly fabricated had made alterations to notes of emails, calls and communications between the companies. The changes made it seem that people at Alfa had warned of the discoloration problem, and hadinstructed Merge on how to apply the glue properly.

“We’re pleased that Judge Lynn decided to sanction Alfa for discovery abuses and reimburse Merge for the fees it has incurred as a result of those discovery abuses,” said Champion, partner in Harper Bates & Champion in Dallas.

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Champion added that his firm found one difference between to duplicate documents, thought it was odd, and then did a meticulous and time-consuming document-by-document and line-by-line study of all discovery in the case to identify all of the fabricated documents.

“It was finding a needle in a haystack,” Champion said.
Alfa’s attorney, Jim Walker of Cole Schotz in Dallas, declined to comment.

Fake docs for depos?
The motion for sanctions has been pending since August 2019.

Merge alleged that Alfa had a customer relationship management system that kept records of emails, calls and meetings between Alfa and its customers. Merge claimed that Alfa had altered or outright fabricated some of the records relating to communications between Alfa and Merge. The alterations made the records more favorable to Alfa, claimed the motion for sanctions.

“Alfa’s corporate representatives and fact witnesses then testified based on the fabricated information contained in these call notes,” the motion said. “Alfa even used the fabricated call notes during depositions of another key witness in this case.”

A desk divider panel between workstations shows orange-brown stainsA desk divider panel between workstations shows orange-brown stains. Merge Office Interiors has sued Alfa Adhesives, alleging that glue used to attach fabric to desk divider panels became discolored when exposed to UV light. Photo: motion for sanctions in Merge Office Interiors Inc. v. Alfa Adhesives Inc.
In a response to the motion for sanctions, Alfa denied modifying or altering the notes and communications of its 14-year relationship with Merge. Alfa’s CEO had never been involved in a lawsuit, said the response. He tested his company’s customer relationship management database by creating a copy of it and running some searches. He used the test database because he wanted to determine if it was possible to run accurate searches in the real, original database. He determined it wasn’t possible to search the real system accurately.

“Ultimately, Mr. Gilmore provided his counsel with PDFs of the original, unaltered Merge database and several other databases reflecting his attempt to search the SalesLogix system,” the response said. “The Merge database was in no way altered or modified.”

$450 per hour
At a December hearing on the motion for sanctions, the court ordered Alfa to produce all of the templates in the customer relationship management system, and to do a full search of its database for certain terms, said the opinion and order on the motion for sanctions. The judge also stated that she would grant the plaintiff attorney fees under the motion for sanctions.

Harper Bates & Champion submitted a fee application that said that partner Austin Champion, who bills $450 per hour, associate Ben Jones, who bills $300 an hour, and a paralegal who bills $175 per hour, spent 283 hours on the sanctions filings and proceedings and that the total came to $94,814.20.

The hourly rates were reasonable, the court determined.

But awarding the full $95,000 request would be “an inappropriately large sum, given the amount in controversy and the amount of time that should have been reasonably spent on the motion,” said the opinion. The judge ruled that $60,000 is a reasonable attorney fee for the defendant to pay as a sanction.

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