Cleveland Hair Clinic, Inc. v. Puig

200 F.3d 1063 (7th Cir. 2000)

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Nature of the Case

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Facts

D represented Carlos J. Puig, a doctor who tried to commandeer the Cleveland Hair Clinic (CHC), with whom Puig had a long-standing contract to perform hair transplants. Taking most of the clinic's other hair transplant doctors with him, Puig terminated his contract with CHC in May 1996. The next month CHC went to federal court (under diversity jurisdiction) and accused Puig of breaching the contract and violating his fiduciary duties as a CHC officer and shareholder. A few days later Puig sought a temporary restraining order to gain control of the patients' medical records. On June 12 the district court denied Puig's TRO motion but scheduled a preliminary injunction hearing for July 8. D thought the chances of winning access to the medical records in federal court were slim. D and Puig decided instead to try to get the records through a state court. The plaintiff in the state action would be Rodney Haenschen, who had not been named as a defendant in the federal case even though he worked for Puig, and was in cahoots with Puig in the attempted coup d'etat. The attorney of record in the state case would be Joseph Curcio, a friend of D's. CHC filed an emergency motion to add Haenschen as a defendant in the federal case and to enjoin him from filing claims anywhere other than in the federal district court. D decided to expedite the state suit before the federal suit decided anything. A revised version of the state complaint went through at 12:49 p.m. In an attempt to beat the federal court to the punch. Curcio then hot-footed it over to the Daley Building, where he filed Haenschen's state complaint at 1:17 p.m. and filed an emergency motion for a temporary restraining order at 1:32 p.m. The hearing regarding CHC's emergency motion got under way at 1 p.m. CHC's attorneys were in Judge Shadur's courtroom; D was on the telephone. D affirmatively claimed to the judge that he did not represent anybody else and claimed he did not represent Dr. Haenschen nor would he in the future. D said nothing about Curcio and said nothing about the state complaint or its filing. CHC found out about the state complaint (which went nowhere) and sought sanctions. After a 6-day evidentiary hearing, Judge Shadur concluded that D, D's law firm, Puig, the Puig Medical Group, and Haenschen all had engaged in sanctionable conduct and were jointly and severally liable for CHC's legal expenses. In total, Puig paid $60,777.50 in sanctions, Haenschen paid $15,000, and Tinaglia paid $185,143.53, including $183,343.50 for CHC attorneys fees and a $ 1,800.03 fine for contempt of court. P appealed arguing that he did nothing sanctionable and, alternatively, that if he committed sanctionable conduct, the size of the sanction is excessive.