United States v. Shaffer Equipment Company

11 F.3d 450 (1993)

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Nature of the Case

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Facts

D stored and disposed of residual transformer fluid. Some of the fluid was poured onto the ground. Most of the fluid was stored in drums and containers at the site, some of which later deteriorated and leaked fluid onto the ground. Because of the PCB's in the fluid, P regarded the site as hazardous and in need of remediation. D did not have the resources to undertake a cleanup. P accordingly undertook to clean up the site and designated Caron as the 'On-Scene Coordinator.' P chose to remedy the site's contamination was a new technology recommended by Caron, described as a 'solvent extraction method,' by which contaminated soil is washed on site in methanol to extract the PCB's. P expended over $1 million, but the technique failed to achieve sufficient success to justify its continued use. P removed over 200 truckloads of materials. The entire cleanup was over $5 million. P sued D under CERCLA to recover its response costs. Just before trial, P discovered that Caron, had misrepresented his academic credentials and qualifications in this case and others, and this information had not been brought promptly to the attention of counsel for Ds and the court. P reported it would continue, but D filed a motion to dismiss the action for bad faith conduct. The court found that P's attorneys repeatedly and deliberately violated their duty of candor to the court by failing to disclose Caron's misrepresentations, by obstructing D's efforts to discover them, and by continuing the litigation and filing court papers dependent on an administrative record developed largely by Caron. As early as September 12, 1991, Caron was unable to produce his college diploma, did not complete his class work for a degree from Rutgers and never attended any classes at any of the other schools he claimed to attend. Counsel for P learned that Caron had not formally received a degree from Rutgers, and so advised Snyder, a Department of Justice attorney representing the government at the deposition. At the deposition, however, Caron testified, in the presence of Snyder, that he had completed all of the requirements for a degree at Rutgers and that the only reason he had not received his diploma was a question of paperwork. Caron also testified that he had continued taking courses at Drexel for a master’s degree. He stated that his bachelor’s degree work was in environmental science and that his master’s degree work was in organic chemistry. These were all lies, and the attorneys knew they were lies. Two months later, on November 27, 1991, Caron was shown a copy of a professional resume on which he had claimed to have received a B.S. degree in environmental science from Rutgers and an M.S. degree in organic chemistry from Drexel. Snyder directed Caron not to answer any questions about the resume, claiming that the inquiry was not relevant, despite defense counsel's assertion that Caron's credibility was at issue. A number of government attorneys stonewalled D's attempts to question Caron on its degrees. All of the attorney knew that Caron had lied. Snyder discovered that Caron's credibility was relevant but failed to update or supplement P's response. A civil investigation was commenced by P, but the attorneys involved advised not to tell anyone about it. The EPA inspector general began a criminal investigation. Government attorneys were told not to rely on Caron’s testimony and were further ordered not to disclose the investigation. P prepared motions for summary judgment and did not cite any testimony nor use any affidavits from Caron but used the administrative record prepared by Caron. P did not tell anything to D. D then served subpoenas on the schools and P objected on grounds they were served after the cutoff date. P learned in detail that no records at any of the schools existed for Caron. P still failed to come clean and files motions for summary judgment. D found out from another case, and P then motioned for a stay. The court concluded that P’s attorneys violated the general duty of candor under PC 3.3 and FRCP 26(e)(2). The court ordered dismissal and awarded attorney fees to D. P appealed.