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Ohio Court of Appeals Upholds Sanctions for Attorney’s Frivolous Conduct

On August 28, 2017, the Ohio Court of Appeals for the Eleventh District upheld a trial court’s order imposing frivolous conduct sanctions in the amount of $22,926.72 on a plaintiff’s attorney and his law firm in the case of Keith-Harper v. Lake Hosp. Sys., Inc., --- N.E.3d ----, 2017-Ohio-7361 (11th Dist. Lake).

The plaintiff, Linda Keith-Harper, filed a complaint asserting seven causes of action against Defendants, alleging that they had engaged in unlawful age discrimination, wrongful termination based on age discrimination, disability discrimination based on Keith-Harper's knee replacement, wrongful termination based on disability discrimination, unlawful FMLA retaliation, workers’ compensation retaliation, and intentional infliction of emotional distress.

After the Court of Common Pleas for Lake County granted summary judgment on all of Keith-Harper’s claims, Defendants moved for an order imposing sanctions under Ohio’s frivolous conduct statute, R.C. 2323.51. Unlike a typical motion for sanctions, which may argue that a party’s allegations were frivolous from the onset, Defendants argued that Keith-Harper’s claims were rendered frivolous by the evidence adduced during the discovery process. Despite this evidence, Defendants had to incur additional fees and costs to litigate the case even after it was clear that Keith-Harper’s claims lacked any objective merit.

Granting Defendants’ motion for sanctions, the trial court agreed that by the time discovery had closed, “it was clear that there was no evidence that the plaintiff had requested or taken FMLA […] that she was disabled or perceived as disabled, […] that she was terminated for claiming workers’ compensation benefits that ended ten months earlier,” or that “she was directly targeted because of her age,” as “[t]he evidence showing she was terminated for just cause [was] overwhelming.” Because Keith-Harper’s attorneys failed to withdraw these claims after it became clear that they were not viable, the trial court awarded Defendants $22,926.72 for legal fees and costs incurred following the close of discovery. This sanction was imposed on Keith-Harper’s individual attorney and his law firm.

On appeal, Keith-Harper’s attorneys argued, among other things, that their conduct was not “frivolous” as a matter of law and that even if it was, the trial court erred by imposing joint and several liability against their law firm.

Affirming the trial court’s decision in a divided opinion, the Eleventh District adopted a deferential standard of review and drew several important distinctions between R.C. 2323.51 and its more well-known counterpart, Civ. R. 11. As an initial matter, the Court of Appeals recognized that unlike Civ. R. 11, which requires a finding of subjective bad faith before sanctions can be imposed, R.C. 2323.51 judges frivolous conduct under an objective standard “without inquiry as to what the individual knew or believed.” Recognizing that the statute provides several grounds for determining the frivolity of a claim or defense, the Court of Appeals also held that where a trial court finds that claims or defenses are factually frivolous (as opposed to legally frivolous) its determination that frivolous conduct took place will be affirmed so long as that decision is supported by competent, credible evidence. A decision that a claim is legally frivolous, on the other hand, is reviewed de novo. If the trial court makes a finding of frivolous conduct and proceeds to order an award of monetary sanctions, that decision is reviewed for abuse of discretion. Because it found that the trial court’s detailed decision outlining the factual frivolity of Keith-Harper’s claims was supported by competent, credible evidence, the Court of Appeals affirmed the lower court’s finding of frivolous conduct. 

The Court of Appeals likewise rejected the argument that it was error to award sanctions under R.C. 2323.51 against a law firm. Citing to the statutory language that permits an award of sanctions against “a party, the party’s counsel of record, or both” the Court reasoned that unlike Civ. R. 11, which was drafted to impose responsibilities and sanctions on individual attorneys who have signed a pleading, R.C. 2323.51 was drafted more broadly to “afford an avenue of relief to a party adversely affected by frivolous conduct.” Acknowledging that several Ohio appellate courts have construed “counsel of record” to include an attorney’s firm as well as an individual lawyer, the Eleventh District affirmed the trial court’s decision to impose joint and several liability on Keith-Harper’s attorneys’ law firm.

The Eleventh District’s decision in Keith-Harper highlights an attorney’s obligation to reevaluate the merits of an asserted claim at each and every stage of litigation, and to pursue only those claims that have objective factual and legal merit. A party’s or her attorney’s failure to do so may result in a violation of R.C. 2323.51 and significant exposure to compensate an opponent for legal fees and costs.

Brennan, Manna & Diamond, LLC represented the Defendants in the trial and appellate courts, with BMD attorneys Christopher Congeni and Daniel Rudary briefing the case at the court of appeals and BMD attorney Daniel Rudary presenting oral argument in defense of the trial court’s sanctions award.

El Contrato Escrito: La Herramienta Predilecta

No existe mejor herramienta a una disputa contractual que un documento firmado por las partes en el cual se expongan las obligaciones y acuerdos entre éstas.

New State Budget Institutes Licensure Requirement for Ohio’s Hospitals

On July 1, 2021, Governor Mike DeWine signed Ohio’s final budget codified at Ohio Revised Code 3722.01 et seq., which includes a new licensing requirement for Ohio’s hospitals. For years, Ohio was the only state in the country that did not license its hospitals. This approach will now be replaced with new, detailed requirements that will require careful review and compliance. Here are some of the highlights concerning these new changes:

Healthcare Provisions in the Ohio FY 22-23 Budget

Governor Mike DeWine signed Ohio’s Fiscal Year 2022-2023 budget bill (HB 110) into law on July 1, 2021. At almost 1,000 pages and 74.1 billion dollars, the budget lays out the State’s spending for the next two years. Below are a few highlighted provisions from the budget that will be important for the healthcare industry in Ohio

Interim Final Rule for Surprise Billing

In an effort to implement the new bipartisan No Surprises Act, on July 1, 2021, the Department of Health and Human Services (HHS), along with the Departments of Labor and Treasury, issued an interim final rule to safeguard patients against unforeseen medical bills arising from out-of-network care.

President Biden Seeks to Limit Non-Compete Agreements

Today, President Biden announced he would issue an Executive Order that calls on the Federal Trade Commission (FTC) to adopt rules to curtail worker non-compete agreements. Interestingly, a week ago, the FTC approved changes to its Rules of Practice to modernize and expedite the way it issues Trade Regulation Rules. If you have followed our alerts, we predicted the elimination of non-competes would probably happen. In 2016, then-Vice President Biden was a vocal opponent against non-compete agreements. He led the Obama administration’s initiative seeking to limit or eliminate non-compete agreements. In his presidential campaign, Biden promised to “work with Congress to eliminate all non-compete agreements, except the very few that are absolutely necessary to protect a narrowly defined category of trade secrets . . ..”