Sanctioned firm settles on legal fees

An Indianapolis law firm sanctioned for the conduct of some of its attorneys in an environmental cleanup case won't appeal the sanction and has agreed to pick up some of the opposing counsel's legal tab as part of a settlement agreement.

With a settlement reached late Friday, Bose McKinney & Evans has agreed to pay an unspecified amount of legal fees as a result of the June 5 order from U.S. District Judge Larry McKinney, who determined the firm should be sanctioned for essentially helping its client abuse the discovery process, failing to correct misleading or false statements made by the client, and not properly turning over to the court or opposing counsel key documents relating to the case.

Notice of a settlement was filed with the court on Friday, saying the parties, "resolved the issues between them, including the relief the Court granted to 1100 West as against BME."

In a statement from managing partner Kendall C. Crook, he says the firm is pleased with being able to resolve its differences in a "mutually satisfactory manner," but doesn't delve into specifics of the agreement reached in 1100 West LLC v. Red Spot Paint & Varnish Co., 1:05-CV-1670.

The case involves a business's 7-acre site in the Evansville area that it claims was heavily contaminated with toxic chemicals from the nearby Red Spot property. The plaintiff asked the judge to order the removal of all the chemicals near its property and for the company to stop discharging hazardous and solid waste from its nearby property, and a central issue in the case was whether particular chemicals were used at the site. Red Spot denied that they were stored or used there, but Judge McKinney determined otherwise based on discovery initially withheld from the court and opposing counsel.

Specifically, the judge's order focused on former Bose attorneys Richard VanRheenen and Amy Cueller, who firm leaders asked to leave late last year because of this case. A declaration submitted by Crook shows that VanRheenen voluntarily resigned his partnership effective Jan. 1, 2009, and remained on a limited contract attorney basis until Feb. 20 to transition his practice and clients to a new firm; Cueller declined to resign and was fired Jan. 6.

Others mentioned include partner Kathleen Lucas, who remains at the firm; former associate Matthew Klein and former partner Jan Nelson, both of whom are no longer listed on the firm's Web site; and an unnamed paralegal who assisted on the case.

Aside from the firm sanctions, Judge McKinney entered a default judgment against Red Spot and determined the company had forfeited the right to have these issues determined on the merits.

In his 66-page order, Judge McKinney wrote that 1100 West was entitled to attorneys' fees and costs from all discovery dating back to May 23, 2006, and for all the costs associated with the sanctions' motions and hearings. Bose was ordered to pay half those costs, splitting the tab with Red Spot.

While details of the settlement are confidential, the costs are expected to run into the millions. Firm spokesman Roger Harvey, senior vice president of Bose Public Affairs Group, declined to discuss details but said this settlement resolves all issues so there will be no appeal by the firm.

"We won't let this define us," he said. "The true test of an organization is its ability to recover from an unfortunate situation like this, and we're certainly committed to doing that."

Court documents show that Red Spot has argued that Bose McKinney & Evans collected almost $3 million in legal fees on this case and that the firm threw its former client "under the bus" in an effort to distract the court from its own misconduct, while the firm says that Red Spot's continued evasion of the truth shows that the client was the problem, not the attorneys.

Lead counsel for 1100 West, Tom Barnard with Taft Stettinius & Hollister, said that this settlement doesn't end the case against Red Spot, which has new counsel after Bose McKinney & Evans stepped down from that role earlier this year. The company is now represented by attorneys at Indianapolis-based Ice Miller and two out-of-state firms, Michigan's Butzel Long and Chicago's Foley & Lardner.

Barnard says that Judge McKinney's order allows 1100 West to move forward with a remediation plan and determine what the cost will be for cleanup. That proposed plan is due Aug. 4, and a show cause hearing is set for Nov. 4.

He declined to discuss specifics of the settlement or comment on sanctions against the entire firm – something that plaintiffs did not request from the judge in this case. But he said he hopes the default judgment and fees sanction against Red Spot will move the case along.

"This has been a remarkably frustrating process for me as a trial lawyer, and it was unfortunate for us to have to seek sanctions," he said. "But sometimes those are the only mechanisms left to obtain justice."