FINAL BRIEFS DUE IN APPEAL OF HISTORIC RULE 11 AWARD

On May 18, 2005, United States District Judge Jane J. Boyle of the Northern District of Texas awarded $530,667.32 in attorneys fees as Rule 11 sanctions to eleven defendants represented by George W. Lederer, Jr. of Crain Caton & James as lead counsel. The sanctions were ordered to be paid 25% by the Plaintiffs Skidmore Energy, Inc. and Geoscience International, Inc. and 75% by their attorney Gary Sullivan. The highest previously reported award of sanctions in Texas was in the amount of $203,641 (See Mercury Air Group, Inc. v. Mansour, 237 F3d 542 (2001)).

Gary Sullivan has not appealed the sanctions award. Skidmore and Geoscience have appealed to the U.S. Fifth Circuit Court of Appeals for their 25% of the sanctions. Final briefs are due January 23, 2006.

The Plaintiffs filed suit on September 19, 2003, against Maghreb Petroleum Exploration S.A. and 20 other defendants, most of whom were foreign citizens or foreign corporations, alleging violations of the Sherman Antitrust Act, the Racketeer Influenced and Corrupt Organizations Act, as well as fraud, breach of fiduciary duty, civil conspiracy and other claims. Plaintiffs sought damages of $3 billion dollars.

Eleven of the Defendants moved for Rule 11 sanctions on the grounds that the Plaintiffs’ claims were frivolous, inflammatory and wholly lacking in evidentiary or legal support. The Court found that the bulk of Plaintiffs’ causes of action, including sensational allegations of racketeering, money laundering, financing terrorism, bribery and extortion were without evidentiary support and had been filed for an improper purpose, namely to harass and embarrass the Defendants.

The 11 Defendants who moved for sanctions, included George Lederer’s partner, Reuven Bisk and the Crain Caton law firm. The other 9 Defendants were foreign individuals and corporations residing outside the United States.

All of the 21 Defendants were dismissed from the case for pleading and jurisdictional defects. Of the 11 Defendants who moved for sanctions, nine were dismissed for lack of personal jurisdiction. The remaining two Defendants were dismissed for failure to state a claim under Rules 12(b)(6) and 9(b) of the Federal Rules of Civil Procedure.

George Lederer praised Judge Boyle for her actions. “Judge Boyle was meticulous and exhaustive in her analysis and review of this case. She held two hearings on the motion for sanctions, including an evidentiary hearing that lasted a full day. Her ruling is great for Texas litigants because it puts people on notice that the courts are not going to be a vehicle for frivolous and outrageous claims.”