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Patsy's Brand, Inc. v. I.O.B. Realty, Inc. - 2002 U.S. Dist. LEXIS 491 (S.D.N.Y. Jan. 16, 2002)

Rule:

Fed. R. Civ. P. 11 sanctions are appropriate where the attorney has negligently or recklessly failed to perform his responsibilities as an officer of the court. Few responsibilities of an attorney, as an officer of the court, are more important than the duty to insure that his client does not commit perjury or obstruct justice. It is, therefore, appropriate to apply an objectively reasonable standard to determine whether counsel has been negligent or reckless in this regard.

Facts:

Law firm Pennie & Edmonds represented defendant I.O.B. Realty, Inc. (“IOB”) in a trademark infringement case filed by plaintiff Patsy’s Brand, Inc. (“Patsy’s”). In its affidavit, I.O.B. asserted that it has been selling sauce in a mason jar with the label at issue since the spring of 1993; however, it was found out that the I.O.B.’s sauce label contained a bar code that did not exist until 1998. There were several other misrepresentations found in I.O.B.’s affidavit. Thereafter, the district court ordered I.O.B.’s counsel to show cause why they should not be sanctioned for permitting its client to submit a false affidavit.

Issue:

Should trademark infringement defendant I.O.B.’s counsel be sanctioned for permitting its client to submit a false affidavit?

Answer:

Yes

Conclusion:

The District Court held that the firm referred to and relied upon an affidavit that the attorneys could not, under the circumstances, have reasonably believed to be true. The Court did not dispute their assertion that they acted with subjective good faith, but found that, rather than risk offending and possibly losing a client, counsel simply closed their eyes to overwhelming evidence of falsehood. The Court found that a sanction was appropriate, but that the publication of the order, and its review by members of the firm, was a sufficient sanction.

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