03-1592 Ty, Inc. v. Softbelly’s, Inc.

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“Nizamian’s deposition, in conjunction with Warner’s admission to having called Nizamian on the eve of trial to discuss the case, required further investigation by the judge. Had the judge concluded that Nizamian’s version of the phone conversation was accurate, there would have been compelling evidence of serious misconduct on Warner’s part, requiring a commensurately severe sanction, quite possibly dismissal of Ty’s suit. Weibrecht v. Southern Illinois Transfer, Inc., 241 F.3d 875, 884 (7th Cir. 2001); Lightning Lube, Inc. v. Witco Corp., 4 F.3d 1153, 1178-79 and n. 15 (3d Cir. 1993). In hindsight it is apparent that Softbelly’s should have protected itself against Nizamian’s having a change of heart by taking his deposition before rather than after the trial, but Softbelly’s was rushed in its trial preparations and in any event negligence is not a defense to fraud or other deliberate wrongdoing. E.g., Shropshear v. Corporation Counsel of City of Chicago, 275 F.3d 593, 597 (7th Cir. 2001); Eastern Trading Co. v. Refco, Inc., 229 F.3d 617, 625 (7th Cir. 2000).”

Reversed and Remanded.

Appeal from the United States District Court for the Northern District of Illinois, Norgle, J., Posner, J.