## Facts

- Several plaintiffs’ firms formed a joint venture to litigate Hurricane Katrina insurance cases and share fees.
- A former joint venturer sued the joint venture and multiple member firms in circuit court over division of attorneys’ fees.
- While the fee dispute was pending, one joint venturer’s principal participated in a conspiracy to bribe the presiding judge in the fee dispute and later pled guilty in federal court.
- Invoking inherent authority, the circuit court sanctioned all joint-venture defendants based on that misconduct, including:
  - Striking their answer
  - Striking their motion to compel arbitration
  - Entering default against all defendants
  - Awarding the plaintiff firm reasonable attorneys’ fees and costs incurred after a specified date, without prejudice to the plaintiff’s underlying fee claim
- Two nonparticipating member firms and an individual associated with one firm pursued interlocutory appeals from the sanctions order.

## Issues

1. Whether the circuit court exceeded its inherent sanctioning power by imputing one joint venturer’s bad-faith misconduct to other joint venturers and entering default-level sanctions.
2. Whether the misconduct could be treated as occurring in the ordinary course of the joint venture’s business for purposes of imputation under partnership/joint-venture principles.
3. Whether the circuit court abused its discretion by imposing severe sanctions without first imposing or exhausting lesser sanctions.
4. Whether the sanctions violated constitutional protections (including due process) by punishing parties who did not personally participate in the wrongdoing.
5. Whether the court could strike the motion to compel arbitration as a sanction, despite prior indications that the dispute was subject to mandatory arbitration.
6. Whether the plaintiff firm’s settlement with other joint-venture parties released the non-settling appellants as a matter of law.

## Decision

- The Supreme Court of Mississippi affirmed the sanctions order.
- The court held the trial court had discretionary authority to impose sanctions against the joint venture and its members based on the acts of a single partner occurring in the ordinary course of the venture’s business.
- The court upheld striking the pleadings, entering default, and awarding attorneys’ fees and costs as within the trial court’s inherent authority in response to egregious litigation-related bad faith.
- The court upheld striking the motion to compel arbitration as part of the sanction package.
- The court rejected constitutional challenges to the sanctions.
- The court held that settlement with other parties did not, by itself, release the non-settling appellants absent a legal basis or clear settlement language requiring that result.

## Legal Principles

- Trial courts possess inherent authority to protect the integrity of judicial proceedings and to sanction bad-faith conduct that abuses the judicial process, including by striking pleadings, entering default, and awarding attorneys’ fees and costs.
- Under partnership/joint-venture principles, misconduct of a partner/venturer may be imputed to the venture and other members when the conduct is undertaken in connection with and in furtherance of the venture’s business, even if the act is unethical or criminal.
- Default-level sanctions may be imposed, in the court’s discretion, when the misconduct is extreme and directly threatens the judicial process; a court need not exhaust lesser sanctions in every case.
- Procedural rights asserted in litigation, including pursuit of arbitration through a motion to compel, may be curtailed through sanctions when the litigating party (including an imputable joint venture) engages in severe bad-faith misconduct connected to the proceeding.
- Due process is satisfied where parties receive notice and an opportunity to be heard on sanctions, and where imputation rests on recognized joint-venture doctrines rather than personal participation.
- Settlement with some joint obligors or joint venturers does not automatically release non-settling parties without an applicable rule or clear agreement language providing for release.

## Conclusion

The court upheld sweeping inherent-power sanctions—including default and loss of arbitration motion practice—because an attempted bribery scheme tied to the fee litigation was imputable to the joint venture and its members as conduct undertaken in the venture’s business, and neither constitutional objections nor settlements with other parties required relief for the non-settling appellants.


Barrett v. Jones, Funderburg, Sessums, Peterson & Lee, LLC, 27 So. 3d 363 (Miss. 2009)