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Beck v. Atlantic Coast PLC2/11/2005
best of his knowledge, and based on reasonable inquiry, such papers are factually accurate and presented for a proper purpose. Specifically, an attorney certifies under Rule 11(b)(2) that "claims, defenses, and other legal contentions therein are warranted by existing law or by a non-frivolous argument for the extension, modification, or reversal of existing law or the establishment of new law," and under Rule 11(b)(3) that "the allegations and other factual contentions have evidentiary support or, if specifically so identified, are likely to have evidentiary support after a reasonable opportunity for further investigation or discovery." Rule 11(c) permits the court to impose appropriate sanctions for violations of 11(b).
The second of the Rules is Delaware Court of Chancery Rule 37, in particular, that aspect of Rule 37 stating that failure to produce documents in response to a discovery request constitutes sanctionable misconduct. Rule 37(d) provides that, if a party fails to honor a legitimate discovery request, then it may be required to pay the reasonable expenses, including attorneys' fees, caused by the failure. An award of expenses and fees is mandatory under Rule 37 where a party is found to have failed to honor a discovery request "unless the Court finds that the failure was substantially justified or that other circumstances make an award of expenses unjust." A party found to have violated Rule 37 has the burden to show that his actions were justified or that other circumstances make the award unjust.
Under each of these rubrics, I conclude that the behavior of Beck and his counsel cannot be excused and that an appropriate remedy for Atlantic Coast must supplement the dismissal of this case. In so concluding, I move from a general observation about how this case might have been more appropriately litigated to a discussion focusing on the key particulars of misconduct that cannot be tolerated.
My general observation begins with an acknowledgement that Beck came across, and his counsel acted upon, conduct that very well might have constituted tortious conduct. There is no doubt that a variety of shady characters are using the Internet to mislead and dupe consumers, a phenomenon that does not reflect any new defect in human character, but simply represents the use by the current generation of confidence men (and women) of the newest means of communication available to them. Although Beck has proposed that the worst of the alleged wrongdoers - DMI and its controller, Zafar - be dismissed from the case it appears true that Atlantic Coast, at the very least, probably acted as a fulfillment house for a retailer selling a bogus product. Put bluntly, I do not write this opinion under the impression that the fulfillment house for a reputable software company has been wrongly maligned.
That said, there are proper and improper ways of addressing disreputable conduct. Beck and his counsel would not be in the pickle they are in now had they acted with candor. Imagine a complaint that (distilled down) read as follows:
Plaintiff Heinrich Beck was working on his computer one day. A popup advertisement emerged on his screen in the guise of a warning that his computer system was vulnerable and his operating system might crash. The advertisement mentioned a product that could, in a very substantial and specific way, increase the operational efficiency of a personal computer. Beck, a software engineer by training, suspected that the product was bogus and that the representations were fraudulent. He therefore undertook, through artifice, to communicate with the manufacturer in order to learn more about the product and to confirm his suspicions. Ultimately, in order t
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