Robbins Geller Fights Sanctions Request in Boeing Case

, The Litigation Daily


Robbins Geller Rudman & Dowd has so far avoided sanctions for its controversial use of confidential witness testimony in securities fraud complaints. But its fortunes could soon change.

On Monday the firm submitted a written argument to U.S. District Judge Ruben Castillo in Chicago, who is weighing whether to sanction Robbins Geller for bringing an unsuccessful securities fraud complaint against the Boeing Company based on allegedly false testimony from an anonymous witness. The firm maintains that it acted reasonably.

Robbins Geller sued Boeing in 2009, alleging the company misled shareholders about the production schedule for its Dreamliner planes. The firm's complaint, filed on behalf of lead plaintiff City of Livonia Employees' Retirement System, was peppered with anonymous quotes from an engineer, later identified as Bishnujee Singh, who supposedly had firsthand knowledge of efforts by Boeing executives to hide the Dreamliner's problems.

When Boeing's lawyers at Sullivan & Cromwell deposed Singh, he denied making those statements. U.S. District Judge Suzanne Conlon in Chicago dismissed the case in March 2011, finding Singh's testimony unreliable. 

Robbins Geller urged the U.S. Court of Appeals for the Seventh Circuit to revive the case. In a fiery decision this March, Judge Richard Posner not only affirmed the dismissal, but instructed Castillo (who inherited the case upon Conlon's death) to consider whether Robbins Geller should be sanctioned. Posner faulted Robbins Geller attorneys for not meeting Singh before filing their complaint and for not following up on "red flags" that their investigator gave them bad information.

Boeing's lawyers at Perkins Coie have argued that Robbins Geller should be sanctioned because it failed to reasonably investigate its claims. Perkins Coie doesn't suggest a monetary amount for the sanction.

In its response filed Monday, Robbins Geller argues that it was reasonable to rely on interviews of Singh conducted by its investigator. Robbins Geller also reiterated its argument that Singh told the truth in those interviews, but changed his story out of fear of angering Boeing.

Robbins Geller has had trouble with a recanting witness before. In 2011 Suntrust Banks Inc. and its lawyers at Troutman Sanders sought sanctions against Robbins Geller, arguing that it brought a securities fraud complaint based on false allegations by a former Suntrust employee who later recanted. U.S District Judge William Duffey Jr. in Atlanta opted not to sanction the firm, but wrote that it was a "close and reluctant call."

In 201, Lockheed Martin Corp. and its counsel at DLA Piper sought dismissal of a Robbins Geller complaint, arguing that the firm mischaracterized confidential witness testimony. But after a seven-hour hearing, U.S. District Judge Jed Rakoff in Manhattan refused to toss the case, and the litigation settled for $19.5 million in February.

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