As reported by Forbes, a U.S. District Court sanctioned a prominent U.S. law firmfor manufacturing a frivolous lawsuit. The case is Lavesky et al. v. ITT Educational Services, Inc., filed under the False Claims Act (“FCA”). The Lavesky court did not mince words in sanctioning plaintiff’s counsel: “From what the Court can gather, [plaintiff’s attorneys’] view is that virtually any ex-employee will do for purposes of manufacturing an FCA lawsuit.”
Lavesky carries implications for all cases, not just those filed under the FCA--it provides a blueprint for the defendant victim of a manufactured lawsuit. If discovery shows that the plaintiff was unaware of the facts upon which she based her lawsuit before an “enlightening conversation” with her attorney, the defendant should consider moving for sanctions pursuant to:(i) Federal Rule of Civil Procedure 11, and (ii) Model Rule of Professional Conduct 7.3, which prohibits lawyers from soliciting “professional employment from a prospective client when a significant motive for the lawyer’s doing so is the lawyer’s pecuniary gain.” This recipe ended up costing the Lavesky’s counsel almost $400,000 in fees.