Court Orders ‘Harsh’ Sanction after Lawyer Fails To Disclose Stake in Synthetic Turf Manufacturer
A federal judge has dismissed the counterclaims of a synthetic turf manufacturer, after concluding that outside counsel for the manufacturer misled the court about an ownership position he had in his corporate client.
The litigation involved industry giant FieldTurf USA, Inc., which had sued defendant Sports Construction Group, LLC for allegedly infringing on its patents for “Synthetic Grass with Resilient Granular Top Surface Layer.” The patents are generally directed to a synthetic grass assembly comprising a pile fabric with a flexible sheet backing, rows of upstanding synthetic ribbons, and an infill layer between the ribbons.
SCG, in response, asserted seven counterclaims: non-infringement, invalidity, deceptive trade practices, tortious interference with business and pre-contractual relations, violation of Section 43(a) of the Lanham Act, 15 U.S.C. § 1125, violation of 15 U.S.C. § 2, and common law unfair competition.
Noting the proprietary nature of some of the information that was going to be exchanged by the parties during discovery, the Court approved a Stipulated Protective Order that provided a mechanism for designating documents and information as “confidential” or “confidential – attorneys’ eyes only.”
The SPO, entered into in April 2007, provided that “attorneys’ eyes only” material may be disclosed only to the receiving party’s “outside counsel,” which was defined as “attorneys who are not employees of a Party but who are retained to represent or advise a Party in this action.” The term “employees” is not defined in the SPO. The court emphasized that “’the attorneys eyes only’ provision was included to ensure that highly sensitive information belonging to either party does not find its way into the hands of the other, because they are competitors in the synthetic turf market.”
During discovery, the plaintiffs became aware that the purported outside counsel for the defendants, Ronald H. Lasko of Lasko and Associates Co. L.P.A., had what was tantamount to an ownership interest in SCG.
Thus, the plaintiffs moved for default judgment and for dismissal of defendant’s counterclaims or, in the alternative, for disqualification of counsel for, inter alia, violation of the SPO.
After reviewing the evidence, the court reached “the inescapable conclusion that the most serious sanctions of dismissal of SCG’s counterclaims and disqualification of Attorney Lasko and the Lasko firm are warranted. At each stage of litigation over the issue of Attorney Lasko’s relationship with SCG, SCG, Attorney Lasko and the Lasko firm have revealed only so much information as they deemed necessary, even after the Court made clear that it expected full candor and disclosure.
“The Court, pursuant to its inherent powers, therefore grants the plaintiffs’ motion to dismiss SCG’s counterclaims with prejudice. The Court also grants plaintiffs’ motion for disqualification of Attorney Lasko and the Lasko firm from acting further in this matter. While dismissal of SCG’s counterclaims is, admittedly, a harsh sanction – in fact, the Court feels it is the most serious sanction it can grant – the dismissal is not unfair. SCG is responsible for its attorneys’ conduct as well as the misleading statements made by its President Paul Franks. This is especially true given the close relationship of SCG and Mr. Franks with Attorney Lasko and the Lasko firm. The Court also finds that the motion to disqualify was not made for the purpose of harassment. While SCG’s choice of counsel is given much weight, the Court cannot and will not permit Attorney Lasko to continue in this matter given his conduct detailed above.”
Field Turf USA, Inc., et al. v. Sports Construction Group, LLC; N.D.Ohio; CASE NO. 1:06 CV 2624; 2007 U.S. Dist. LEXIS 91238; 12/12/07
Attorneys of Record: (for plaintiffs) Jay E. Krasovec, H. Alan Rothenbuecher, Schottenstein, Zox & Dunn – Cleveland, Cleveland, OH; Jody L. Factor, Michael D. Lake, Nicholas S. Lee, Factor & Lake, Chicago, IL. (for defendants) James Lindon, Lindon & Lindon, Rocky River, OH; John K. Lind, Jr., John E. Voiklis, II, Ronald H. Lasko, Thomas J. Vozar, Cleveland, OH.