United States v. Schaffer Equipment
11 F.3d 450 (4thCir. 1993)

  • The EPA was suing under CERCLA to recover the costs ($5M) of hazardous waste cleanup from a company that was dumping hazardous PCBs into the ground. (Schaffer).
    • The on-site coordinator of the CERCLA cleanup site (Caron) had misrepresented his credentials.
      • This was material because Caron was responsible for making the administrative record that was used to determine liability.
        • Nobody argued that Caron’s analysis was wrong, just that he didn’t have the academic degrees he had claimed to have had.
    • The EPA failed to disclose this fact to Schaffer or the Court until after discovery and the deadline for filing summary judgment motions.
      • EPA attorneys (Snyder and Hutchins) were aware of Caron’s deception, but continued to press the cases Caron was involved in.
      • They decided to not disclose that they doubted Caron’s credentials, and just not rely on Caron’s analysis in further proceedings.
  • The Trial Court dismissed the case. The EPA appealed.
    • The Trial Court found that the EPA had violated Rule 3.3. They found that there was an effort by an important EPA witness to cover up a long history of fraud. The EPA’s attorneys compounded the problem by obstructing Shaffer’s efforts to uncover Caron’s perjury and in failing themselves to reveal it. In addition, EPA made a motion for summary judgment based on Caron’s tainted analysis.
      • Rule 3.3 says that a lawyer must disclose to the court all facts that would otherwise assist a fraudulent act.
      • The Trial Court found that Snyder and Hutchins had acted egregiously because they both knew about Caron’s deception and obstructed discovery requests which could have revealed the deception to Schaffer.
    • EPA argued that Shaffer had failed to establish all three elements necessary to show a Rule 3.3 violation:
      • That the attorneys had actual knowledge of the misrepresentation.
      • That Caron’s credentials were a material fact to the case.
      • That the attorneys’ conduct assisted EPA in a fraudulent act.
  • The Federal Appellate Court affirmed the fact that the EPA had violated Rule 3.3, but reversed the Trial Court’s decision to dismiss the case.
    • The Appellate Court remanded the case back to the Trial Court to determine a sanction short of dismissal.
      • The Appellate Court noted that dismissal is a legitimate sanction for a Rule 3.3 violation.
      • However, in this case dismissal would provide relief beyond the harm caused by the violation and would frustrate resolution on the merits of the case.
    • The Appellate Court found that while all attorneys have a duty of confidentiality to their client and must advocate their client’s position vigorously, they also have a duty to assure the integrity of the process and guard against the corruption that justice will be dispensed on an act of deceit.
    • The EPA’s main argument was that Caron’s credentials were not material to the case. But the Court found that evidence showed that Snyder admitted that the fact was material in internal memos.
  • They also violated Rule 3.4(a), by obstructing Schaffers’ access to information via discovery.