Turfgrass Group Inc et al v. Northeast Louisiana Turf Farms L L C et al

Filing 75

MEMORANDUM ORDER denying 32 Motion for Sanctions. Signed by Magistrate Judge Karen L Hayes on 11/20/2013. (crt,Yocum, M)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF LOUISIANA
MONROE DIVISION
THE TURFGRASS GROUP, INC., ET
AL.

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CIVIL ACTION NO. 10-1354

VERSUS

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JUDGE JAMES T. TRIMBLE, JR.

NORTHEAST LOUISIANA TURF
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MAG. JUDGE KAREN L. HAYES
FARMS, LLC., ET AL.
MEMORANDUM ORDER
Before the undersigned Magistrate Judge, on reference from the District Court, is a
motion for sanctions [doc. # 32] filed by Defendants Northeast Louisiana Turf Farms, LLC and
Jeffrey Clifton Nicolle (collectively, “NELA Turf”). For reasons stated below, the motion is
DENIED.1
Background
On August 27, 2010, Plaintiffs, The Turfgrass Group, Inc. (“TTG”) and the University of
Georgia Research Foundation, Inc. (“UGARF”) filed the instant complaint against NELA Turf
under the Plant Variety Protection Act, 7 U.S.C. § 2321, et seq., and the Lanham Act, 15 U.S.C.
§ 1125(a). Plaintiffs allege that on June 14, 2001, the U.S. Secretary of Agriculture issued Plant
Variety Protection Certificate Number 9600255 for the centipede grass variety known as
TifBlair. (Compl., ¶ 14). UGARF subsequently received an exclusive license to make, have
made, use, sell, and offer for sale TifBlair. Id., ¶ 15. UGARF later issued an exclusive seed

1

As this motion is not one of the motions excepted in 28 U.S.C. § 636(b)(1)(A), nor
dispositive of any claim on the merits within the meaning of Rule 72 of the Federal Rules of
Civil Procedure, this ruling is issued under the authority thereof, and in accordance with the
standing order of this court. Any appeal must be made to the district judge in accordance with
Rule 72(a) and LR 74.1(W).

supply and sublicense agreement to TTG for Plant Variety Protection Certificate Number
9600255, i.e., TifBlair. Id., ¶ 16. Plaintiffs further allege that by virtue of the PVPA Certificate
and the licenses, TifBlair can be grown, offered for sale, marketed or sold only by or with TTG’s
permission in accordance with the Plant Variety Protection Act. Id., ¶ 19. Plaintiffs contend that
NELA Turf violated various provisions of the PVPA and the Lanham Act by marketing and
selling TifBlair without authorization, licensing, requisite labeling, etc.
Plaintiffs discovered NELA Turf’s alleged unlawful practices through the efforts of an
undercover investigator, Zelotis Wofford, Jr., who worked exclusively at the behest of the Nolan
Law Group, PLLC. (Pl. Opp. Memo., pg. 8). On various dates in 2009-2010, Wofford posed as
a customer and questioned personnel at NELA Turf concerning the purchase of centipede grass,
and the TifBlair variety in particular. See M/Sanctions, pgs. 2-4. Wofford surreptitiously
captured the encounters via audio recording. Id.
On May 2, 2013, NELA Turf filed the instant motion for sanctions which seeks to
exclude from evidence the surveillance tapes and testimony of Zelotis Wofford. Plaintiffs filed
their opposition to the motion for sanctions on August 12, 2013. On October 15, 2013, the
undersigned issued an order requiring the parties to submit memoranda addressing
1)

whether Zelotis Wofford, Jr., was required to be registered and
licensed pursuant to the [Louisiana Private Investigators Law] for
purposes of the evidence obtained in this case; and

2)

if so, and assuming that Wofford was not so registered or licensed,
whether the proper remedy for violation of the law is exclusion of
all evidence obtained in violation of the law, and/or imposition of
sanctions (including, but not limited to disqualification) against
Plaintiffs’ counsel and his firm for potential violations of Rules 3.3
and 8.4(a)-(d) of the Louisiana Rules of Professional Conduct.
(Oct. 15, 2013, Order [doc. # 69]).
The parties filed their responses complied on October 29, 2013. The matter is now before the
2

court.
Analysis
Although not clearly delineated in its motion, NELA Turf contends that Plaintiffs’
counsel, Duff Nolan, violated various ethical rules because 1) he employed a private investigator
to surreptitiously record conversations with NELA Turf personnel; 2) the private investigator
relied on deception and artifice to obtain evidence from NELA Turf personnel; and 3) he violated
Louisiana law by using a private investigator who was not licensed or registered in Louisiana.
As a result of these alleged ethical lapses, NELA Turf petitions the court to sanction Plaintiffs by
precluding their private investigator from testifying at the trial in this matter, and by requiring the
return of all pertinent recordings made by the private investigator.
a)

Law
In the Fifth Circuit, “[a] motion to disqualify counsel is the proper method for a party-

litigant to bring the issues of conflict of interest or breach of ethical duties to the attention of the
court.” In re Am. Airlines, Inc., 972 F.2d 605, 611 (5th Cir. 1992). Ethical canons relevant to the
inquiry include (1) the local rules for the Western District of Louisiana; (2) the American Bar
Association's (“ABA”) Model Rules of Professional Conduct; (3) the ABA's Model Code of
Professional Responsibility; and (4) the state rules of conduct. Horaist v. Doctor's Hosp. of
Opelousas, 255 F.3d 261, 266 (5th Cir. 2001). In addition, the Western District of Louisiana
specifically adopted the Rules of Professional Conduct of the Louisiana State Bar Association.
Id. (citing LR 83.2.4W).
The federal courts possess inherent authority to discipline an attorney. Resolution Trust
Corp. v. Bright, 6 F.3d 336, 340 (5th Cir. 1993) (citations omitted). Courts also possess an
inherent power to prevent any unprofessional conduct by attorneys who appear before them.
3

Jackson v. U.S., 881 F.2d 707, 710 (9th Cir 1989). The courts’ inherent powers include the
“authority to impose reasonable and appropriate sanctions on errant lawyers practicing before the
court.” Natural Gas Pipeline Co. of Am. v. Energy Gathering, Inc., 86 F.3d 464, 467 (5th Cir.
1996) (citation omitted). Furthermore, “once a district court has admitted an attorney to practice
before it pro hac vice, it may revoke that attorney's admission if, after following the proper
disciplinary procedure, it concludes that the attorney violated a clearly identifiable ethical rule.”
United States v. Nolen, 472 F.3d 362, 375 (5th Cir. 2006). Not only may the court impose
necessary sanctions against the pro hac vice attorney directly, but sanctions also may be imposed
through “the bar of which the pro hac vice lawyer is a member, as well as through the local
lawyer with whom he is associated.” Sanders v. Russell, 401 F.2d 241, 246 (5th Cir. 1968).
However, “the threshold for the use of inherent power sanctions is high.” Crowe v. Smith, 151
F.3d 217, 226 (5th Cir. 1998) (citation and internal quotation marks omitted). The sanction
imposed must be “the least possible power adequate to the end proposed.” Natural Gas Pipeline
Co. of Am., supra (citations and internal quotation marks omitted).
In addition, “to impose sanctions against an attorney under its inherent power, a court
must make a specific finding that the attorney acted in ‘bad faith.’” Chaves v. M/V Medina Star,
47 F.3d 153, 156 (5th Cir. 1995) (citations omitted). Bad faith “is not simply bad judgment or
negligence, but rather it implies the conscious doing of a wrong because of dishonest purpose or
moral obliquity; . . . it contemplates a state of mind affirmatively operating with furtive design or
ill will.” United States v. Gilbert, 198 F.3d 1293, 1299 (11th Cir. 1999) (citing inter alia,
BLACK'S LAW DICTIONARY 139 (6th ed.1990)). Sanctions are not warranted against an attorney
who acts on an incorrect interpretation of the law, so long as he had a reasonable argument for
his interpretation of the law that was motivated by a proper purpose. See Chaves, supra.
4

b)

Discussion
The instant motion was inspired by a motion for sanctions filed by the defendant(s) in a

similar case against these same Plaintiffs: The Turfgrass Group Incorporated v. Carolina Fresh
Farms, LLC, Civil Action No. 10-0849 (D. S.C.). In the Carolina Fresh Farms, case, the South
Carolina federal court imposed sanctions against Plaintiffs on the basis that, in South Carolina,
there is a blanket prohibition against attorneys clandestinely recording conversations, even if the
attorney (or his agent) is a party to the conversation. Id., Minutes from May 3, 2011, Hearing
[Entry No. 92].
Recently, however, the Fifth Circuit remarked that in 2001, the ABA issued Formal
Opinion 01-422, in which it expressly concluded that a surreptitious recording by a lawyer
without the other party’s consent is not, by itself, unethical if it is otherwise lawful in the
particular jurisdiction. Marceaux v. Lafayette City-Parish Consol. Gov't, 731 F.3d 488, 495 (5th
Cir. 2013) (citing inter alia, ABA Comm. on Ethics and Prof'l Responsibility, Formal Op.
01–422 (2001)). Because Louisiana is a “one-party consent” state,2 and in the absence of any
indication that Louisiana would view such recordings as “unethical” despite the ABA’s current
position on the issue, the Fifth Circuit declined to conclude that one-sided recordings (albeit,
made by a layperson), were obtained unethically. Id. The foregoing reasoning is expansive
enough to compel the same result here, notwithstanding that the surreptitious recording is
attributable to counsel via his employee. See LOUISIANA RULES OF PROF. CONDUCT , RULE 5.3.
Citing Midwest Motor Sports v. Arctic Cat Sales, Inc., 347 F.3d 693, 696 (8th Cir. 2003),

2

I.e., it is not unlawful for a person not acting under color of law to intercept an oral
communication where such person is a party to the communication. Marceaux, supra (citing La.
R.S. § 15:1303(C)(4)).
5

Defendants further argue that Plaintiffs’ counsel violated ABA Model Rule 8.4(c) by employing
an undercover agent or tester to visit Defendants’ place of business to obtain evidence against
NELA Turf. In Midwest Motor Sports, however, the evidence was obtained after suit had filed,
and thus, after the parties were represented by counsel. See Midwest Motor Sports, supra. In
other words, the attorney-directed clandestine discovery operation transgressed ABA Model Rule
4.2. Id. Although the court determined that the attorney’s conduct also violated Rule 8.4(c)’s
prohibition against “conduct involving dishonesty, fraud, deceit or misrepresentation,” it noted,
in this regard, that the attorney resorted to self-help remedies when the information could have
been obtained through the use of formal discovery techniques such as a motion to compel. Id.
Here, in contrast, Plaintiffs’ counsel, Mr. Nolan, stresses that the use of an undercover
investigator or tester is essential to uncover evidence of trademark and patent infringement
before suit is filed. In Carolina Fresh Farms, Nolan informed the court that his investigator had
tested approximately 1500 to 1600 entities for compliance, but obtained evidence that resulted in
only about 30 lawsuits. Carolina Fresh Farms, supra; Transcript of May 3, 2011, Hearing, pg.
21 [Entry No. 92]. In other words, the undercover investigations were only performed for proper
purposes, and only uncovered evidence to support a cause of action in a relatively small number
of instances.
The court further observes that “[t]he prevailing understanding in the legal profession is
that a public or private lawyer's use of an undercover investigator to detect ongoing violations of
the law is not ethically proscribed, especially where it would be difficult to discover the
violations by other means.” Cartier, a division of Richemont N. Am., Inc. v. Symbolix, Inc., 386
F. Supp. 2d 354, 362 (S.D. N.Y. 2005) (citing Gidatex S.r.L. v. Campaniello Imports, Ltd., 82
F.Supp.2d 119, 123 (S.D. N.Y. 1999); Apple Corps. v. International Collectors Society, 15 F.
6

Supp.2d 456, 475 (D. N.J. 1998)).3 In the absence of any indication that NELA Turf was
represented by counsel at the time of the investigation (or if it was, that Mr. Nolan was aware of
that), and in light of the prevailing view that such pre-suit investigations are not unethical, the
undersigned cannot conclude that Mr. Nolan knowingly violated applicable ethical norms by
employing an undercover investigator to determine whether NELA Turf had violated protected
patent and trademark rights.
Nonetheless, the undersigned does find that Mr. Nolan and his firm, Nolan Law Group,
PLLC (“NLG”), violated Louisiana law by employing a private investigator who was not
registered in this state. Under Louisiana’s Private Investigators Law (“PIL”), it is unlawful for
any person knowingly to “[e]mploy an individual to perform the duties of a private investigator
who is not the holder of a valid registration card.” La. R. S. § 37:3520(A)(2). Nolan does not
contend that his private investigator, Zelotis Wofford, Jr., held a valid registration card during the
investigation at issue. Instead, he contends that his firm, and its investigator, were not required
to be registered or licensed in Louisiana because, despite NLG and Wofford’s prior efforts to
designate Wofford as an independent contractor,4 research confirms that Louisiana law actually
considers Wofford to be an employee of NLG. See April 26, 2013, E-Mail from Duff Nolan to

3

See also David B. Isbell & Lucantonia N. Salvi, ETHICAL RESPONSIBILITY OF LAWYERS
FOR DECEPTION BY UNDERCOVER INVESTIGATORS AND DISCRIMINATION TESTERS ; AN ANALYSIS
OF THE PROVISIONS PROHIBITING MISREPRESENTATION UNDER THE MODEL RULES OF
PROFESSIONAL CONDUCT , 8 Geo. J. Legal Ethics 791, 816 (1995). Mr. Isbell is the former chair
of the ABA Standing Committee on Ethics and Professional Responsibility.
4

See Dec. 15, 2006, Contract for Investigation Services between Zelotis Wofford and
NLG; Pl. Memo. [doc. # 71], Exh. A.
7

Travis Holley, M/Sanctions, Exh. 4; Pl. Opp. Memo., pgs. 5, 8.5
In this court’s October 15, 2013, Order the undersigned took judicial notice of the fact
that in Carolina Fresh Farms, Mr. Nolan represented and argued to the court that NLG’s
investigator, Zelotis Wofford, Jr. was not an employee of the firm, but an independent contractor.
(Oct. 15, 2013, Order [doc. # 68], and attachments thereto). In its response to the court’s order,
NLG
admit[ted] that the belief from 2006 to 2011 and the intention prior to the hearing
in South Carolina and a short while thereafter was that Wofford had an
independent contractor relationship with NLG, however, it is clear . . . that the
relationship was not one of an independent contractor, but is one of an employeremployee.
(Pl. Reply Memo., pg. 11 [doc. # 71]).
NLG added that it did not discover that Wofford actually was its employee under Louisiana law
until 2011 when it conducted exhaustive research on the issue. Id., pgs. 3-4.6
Nonetheless, even if Mr. Wofford were an employee of NLG, the claimed exemption also
requires that the employee perform “investigative work in connection with the affairs of such
employer exclusively.” La. R. S. § 37:3503(b)(viii). The phrase, “affairs of such employer
exclusively,” cannot be interpreted to include matters that the employer completes on behalf of
other clients. If so, then the exception would swallow the proverbial rule because then all private

5

The PIL exempts the licensing requirement for “[a] person or corporation which
employs persons who do private investigative work in connection with the affairs of such
employer exclusively and who have an employer-employee relationship with such employer.”
La. R. S. § 37:3503(b)(viii) (emphasis added).
6

It is apparent to the court that Mr. Nolan and NLG are treading a fine line. When it
suits their purpose, Mr. Wofford is deemed an independent contractor; when it no longer suits
their purpose, they discover that Wofford is an employee. The court will credit Mr. Nolan’s
proffered epiphany. However, as detailed below, he was obliged to pre-disclose to the court his
prior, inconsistent representations.
8

investigator firms that employ private investigators would fall under the exception. Moreover,
there is a separate exemption that specifically applies to employees of attorneys who are licensed
to practice in Louisiana. La. R. S. § 37:3503(b)(iv). Mr. Nolan, however, is not licensed in
Louisiana.
Accordingly, the court finds that Nolan and the NLG violated Louisiana’s PIL by
employing an unregistered person, Wofford, to conduct a private investigation of NELA Turf.
However, there is no indication that Mr. Nolan knowingly or intentionally violated the law. The
court did not uncover any case law interpreting or applying the PIL. Moreover, Nolan and
NLG’s interpretation of the exemption is not patently unreasonable. Thus, the court cannot
conclude that Nolan acted in bad faith, and sanctions against counsel are not warranted.
Moreover, the court is not persuaded that precluding Plaintiffs from introducing at trial
the illegally obtained evidence is the proper remedy. The PIL itself specifies the remedy for any
violation of its provisions: fines and imprisonment. La. Rev. Stat. Ann. § 37:3521. It does not
further mandate the suppression or exclusion of the illegally obtained evidence.
In addition, the Fifth Circuit has remarked that “[i]n the complex and turbulent history of
the [exclusionary] rule, the [Supreme] Court never has applied it to exclude evidence from a civil
proceeding, federal or state.” Park v. El Paso Bd. of Realtors, 764 F.2d 1053, 1065-66 (5th Cir.
1985) (citation omitted). In Park, the court upheld the district court’s decision to admit into
evidence taped telephone conversations initiated by plaintiffs wherein they posed as prospective
sellers to elicit evidence against defendants – an artifice that violated the local telephone tariff for
recorded calls. Id. The court explained that the public interest in deterrence did not outweigh the
benefit of providing the fact finder with all relevant evidence. Id. Similarly, in a Texas traffic
camera case, the Fifth Circuit upheld the district court’s decision not to exclude evidence from
9

the cameras, even though the photographs were obtained without the requisite license under
Texas law. Bell v. Am. Traffic Solutions, Inc., 371 F. App'x 488 (5th Cir. 2010).
In short, movants have not demonstrated that, under Louisiana (or federal) law, the
inadvertent breach of the PIL by Plaintiffs’ counsel requires suppression of the evidence obtained
by the private investigator.
Although the court does not find that sanctions are warranted on the several grounds
raised by Defendants, the court finds that it was disingenuous for Mr. Nolan to fail to disclose or
acknowledge his prior, inconsistent arguments, evidence, and personal belief regarding
Wofford’s employment status that he advanced before another tribunal – until after the
inconsistency was raised by this court.7 At the very least, the undersigned finds that Mr. Nolan’s
conduct violated the spirit of Rule 3.3(a)(1) of the Louisiana Rules of Professional Conduct, as
adopted by the Western District of Louisiana. LR 83.2.4W.8 In so doing, he acted in bad faith.
See Crowe, 151 F.3d at 236-237 (attorney misrepresentations constitute bad faith).
When a federal court’s disciplinary rules fail to provide guidance regarding the
appropriate sanction to be imposed for an attorney’s transgressions, the court appropriately looks
to the ABA’s Standards for Imposing Lawyer Sanctions (the “ABA Standards”). In Re Sealed
Appellant, 194 F.3d 666, 673 (5th Cir. 1999). “In imposing a sanction after a finding of
misconduct, a court should consider the duty violated, the attorney's mental state, the actual or
potential injury caused by the attorney's misconduct, and the existence of aggravating or

7

In counsel’s defense, the court acknowledges that the alleged violation of the PIL was
not the principal thrust of Defendants’ motion.
8

Rule 3.3(a)(1) states that “[a] lawyer shall not knowingly:
(1)
make a false statement of fact or law to a tribunal or fail to correct a false
statement of material fact or law previously made to the tribunal by the lawyer.”
10

mitigating factors.” Id. (citing inter alia, ABA Standards, 3.0).
Applying the above considerations here, the undersigned finds that the least severe
sanction which may be imposed against Mr. Nolan is to admonish him for his lack of candor to
this tribunal to exhort him to avoid such recurrences in his future representations to this, and
other courts, and to caution him that any such violation in the future would be grounds for more
severe sanctions.9
Conclusion
For the reasons set forth above,
The motion for sanctions [doc. # 32] filed by Defendants Northeast Louisiana Turf
Farms, LLC and Jeffrey Clifton Nicolle is hereby DENIED.
THUS DONE AND SIGNED at Monroe, Louisiana, this 20th day of November 2013.

9

Mr. Nolan’s conduct does not provide an additional basis for exclusion of evidence.
See Plan Comm. in the Driggs Reorganization Case v. Driggs, 217 B.R. 67, 72 (D. Md. 1998)
(“the appropriate remedy for any ethical violation that occurred would be disciplinary action
against [the attorney], not . . . suppression of evidence. . . .”). Further, “[e]xclusionary remedies
are strong medicine, normally reserved for constitutional violations . . . .” U.S. v. White, 879
F.2d 1509, 1513 (7th Cir. 1989).
There is no indication that Plaintiffs’ local counsel, Mr. Sartin, was aware of the extent of
Mr. Nolan’s prior representations to the South Carolina court.
11