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Court stands firm on sanctions against Wis. attorney

By: Erika Strebel, [email protected]//August 16, 2016//

Court stands firm on sanctions against Wis. attorney

By: Erika Strebel, [email protected]//August 16, 2016//

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The 7th Circuit Court of Appeals isn’t backing down on its decision to sanction a Platteville lawyer for filing a case in an Arkansas state court rather than in a federal court in Wisconsin.

In June, a three-judge panel of the federal appeals court imposed more than $34,500 in sanctions on the trial lawyer Christopher Stombaugh, who also practices in Maryland, for his initially filing a lawsuit in Arkansas state court instead of a federal district court within the 7th Circuit’s jurisdiction.

The panel conceded that the suit had brought up legitimate claims but nonetheless chose to sanction Stombaugh because his decision to file the suit in Arkansas was “objectively unreasonable” and “vexatiously” multiplied the proceedings. The panel found that Stombaugh’s choice amounted to “forum shopping” because Arkansas state court had nothing to do with the case.

In reaching that conclusion, the panel reversed Judge Barbara Crabb’s decision not to impose the sanctions that the defendants in the case, Burlington Northern Santa Fe Railway Co., had called for in various motions.

The 8th Circuit Court of Appeals, which had jurisdiction over the case while it was in Arkansas state court, also chose not to impose penalties on Stombaugh.

A Thomson Reuters editor and blogger noted that Stombaugh, during oral arguments in the case, had pointed out that the 8th Circuit had rejected imposing sanctions. Even so, Judge Illana Rovner, one member of the federal appeals panel that ultimately sanctioned Stombaugh, later said, “That was the 8th Circuit. You are now in the 7th.”

Stombaugh fought the sanctions, making a motion for rehearing en banc. He contended that the federal law the 7th Circuit judges had cited when sanctioning him could not be used to punish a lawyer who had filed a case in a state court that was outside a federal appeals court’s jurisdiction. Arkansas, he noted, is within the jurisdiction of the 8th Circuit, not the 7th.

Disagreeing with Stombaugh last week, the three-judge panel in the Chicago-based 7th Circuit clarified that even if it couldn’t sanction Stombaugh under a federal law, the court has authority to impose sanctions for both abuses of the judicial process and uses of inappropriate litigation strategies.

“There is no dispute as to what Stombaugh did; the only question is whether he should be sanctioned for it, and that question has been thoroughly litigated,” according to the court’s opinion.

Stombaugh said last week that he and his colleagues at his firm, Stombaugh, Smith & Co., were surprised and disappointed by the decision, especially after learning of the court’s additional reasoning.

“Our case was simply filed where the defendant conducted its business, which we honestly believed was in the best interests of our clients,” Stombaugh said. “We are carefully considering review.”

The 7th Circuit in June had also dismissed the lawsuit Stombaugh had filed on behalf of his clients, which were a group of 50 property owners whose homes, in Bagley, Wis., were flooded in July 2007 when a ditch under a railway bridge got clogged with debris, causing water to flow into the town. The property owners sued the bridge’s owner, Burlington Northern Santa Fe Railway Co., in 2014. That legal action came after another group of property owners from Bagley saw a similar lawsuit dismissed in 2012.

Both cases were heard by the same panel of appeals court judges: Ilana Rovner, William Bauer and Ann Williams. Stombaugh also represented the property owners in the first case, although he did not appear in court on their behalf.

The first group’s lawsuit, filed in 2008 in Grant County Circuit Court, contended that BNSF did not properly maintain or design the bridge. The case bounced back and forth between state and federal courts and was eventually dismissed in 2010 by Crabb, who found the claim was barred because no complaint had first been filed with the railroad, as required by state statute, and that state statute barred claims for damages. The 7th Circuit affirmed Crabb’s ruling in 2012.

More than a year later, the second group of residents brought suit. This time, Stombaugh was the lead attorney and filed the lawsuit in Arkansas state court because BSNF also did business there and because the law there could have produced a more favorable result. The case was identical to the earlier lawsuit except that it made no allegations about the construction and design of the bridge.

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