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Express Grain bankruptcy court finalizes sanctions against attorney Don Barrett

Friday, April 15, 2022, 8:30 pm News Flash Archive

This afternoon, the judge in the Express Grain bankruptcy case entered her opinion and order sanctioning attorney Don Barrett for violating her protective order for documents in the "Data Room."

Barrett went on the Paul Gallo Radio Show and made some comments that appeared to come from unauthorized access to documents produced during the 557 procedure for determining the ownership and interests in EG's grain inventory.

UMB Bank took notice of Barrett's comments, which included disparaging statements against the bank. So it brought a motion before the court to sanction Mr. Barrett's actions. To read our previous reporting on this matter, see here: UMB Bank legal bill presented in sanction order against Don Barrett; $4.4 million more owed for grain

The court had already ruled from the bench that Mr. Barrett be sanctioned, but now the court's reasoning and findings have been published. See here to read the court's opinion and order: Court Opinion and Order regarding Don Barrett sanction

The court agreed with UMB Bank:

... that the timing of this interview was suspect, to say the least, as the Participating Parties in the Section 557 procedures were set to begin mediation the same day to resolve all legal issues regarding the interest in grain and grain assets currently pending before this Court. In the radio interview provided to the Court, Barrett generally referenced documents that he and his law firm had seen. Based on those documents, Barrett went on to assert conclusions about UMB's intentions and conduct. UMB argues that because there has been no production of documents in the Civil Case against UMB, Barrett must have been referencing documents obtained from the Interest Data Room.

During the hearing, Mr. Barrett defended himself and answered questions put to him by the court:

Much to the Court's surprise after a follow up question, Barrett stated that "my firm has attorneys who are looking at the documents and trying to understand the documents." ... Further, Barrett acknowledged that, while he had not seen the documents produced in the Interest Data Room, he had seen "summaries of what they said". When asked directly by the Court whether the documents his law firm were reviewing were the documents from the Interest Data Room, Barrett answered "Yes, ma'am. Yes, ma'am."

The Court then asked Barrett why attorneys in his law firm were reviewing the documents if they were not a part of the Section 557 procedures. Barrett answered "[w]ell, we're monitoring it, Your Honor. We represent those clients, and we've entered an appearance on behalf of some of them. Yes, ma'am." ... The Court then asked whether Barrett represents the Plaintiffs specifically in the Section 557 procedures to which Barrett responded, "[w]ell, I don't know whether I represent them in the 557. They have bankruptcy counsel that's primarily handling all of that." ... After the Court expressed its concerns with attorneys in Barrett's law firm monitoring the documents produced in the Interest Data Room in direct violation of the Protective Order, Barrett stated, "I - if - we certainly hadn't intended to do anything that's improper or wrong . . . ."

The court took all that as an admission that Barrett and his law firm were indeed violating the protective order, as they were accessing and reading materials that were only to be used by parties in the 557 procedure.

The court ordered UMB Bank to prepare an invoice for its costs and fees in bringing the sanction motion, and Mr. Barrett later agreed that the sum of $3,139.40 was reasonable. The court also agreed that the sum was reasonable.

The court then provides its reasoning why Mr. Barrett ought to be sanctioned:

Surprisingly, the Court's imposition of sanctions in this Memorandum Opinion and Order is not due solely to Barrett's radio interview. As discussed in the Court's bench ruling, Barrett's statements in his radio interview on March 17, 2022, run dangerously close to violating this Court's Protective Order. Based on representations made to the Court, no discovery has taken place in the Civil Case. The only documents that could have been referenced by Barrett are either those filed as public record in this bankruptcy case or documents produced in the Interest Data Room for the purposes of the expedited discovery procedures under Section 557. Barrett admitted that the documents discussed in his radio interview are "mostly" available to the public. Mostly, however, does not cut it for this Court. Barrett's conclusory allegations against UMB, considering the context in which the statements were made, could have only come from the documents which UMB has now produced in the Interest Data Room.

While Barrett may consider his statements in such a public way a savvy litigation tactic, this Court is not impressed. Further, it is not lost on the Court that mediation to resolve the complex and intricate issues involved in this bankruptcy case was set to take place on the morning in which Barrett gave his radio interview. The more prudent point, however, is that the Court's Protective Order made clear that any information contained in the documents produced in the Interest Data Room should not be communicated in any way, except for the purposes of the Section 557 procedures. Barrett's discussion of the documents generally, as well as his attached conclusions drawn from the contents of the documents is, at the very least, a communication of protected, confidential information. Despite this communication, however, the Court will not impose sanctions for Barrett's statements in the radio interview because Barrett did not reference specific documents or disclose specific information from those documents. The Court nevertheless formally admonishes Barrett as he undoubtedly has knowledge of the information contained in the documents produced in the Interest Data Room by UMB and communicated his conclusions based on those documents.

Barrett's knowledge of the information contained in the documents produced by UMB sets the stage for this Court's imposition of sanctions, albeit for misconduct that is only tangentially related to the radio interview. Barrett and his law firm's misconduct ... is worthy of sanctions.

... Barrett and his law firm are knowingly and willfully violating the Protective Order by (1) having access to and possession of documents and information produced by UMB in the Interest Data Room and (2) attempting to use documents and information contained in those documents for the Civil Case. Barrett admitted in his pleading and at the hearing that he is aware of the Protective Order and its terms, and Barrett also admitted that he believes he and his law firm are complying with it.

The Court, however, finds these statements difficult to accept considering the clear language of the Protective Order concerning who may have access to the information and for what purposes the information may be used.

Although Barrett did not concede to violating the Protective Order ..., Barrett's further admissions at the hearing - that "my firm has attorneys who are looking at the documents and trying to understand the documents" in connection with the Civil Case - falls squarely in the gambit of misconduct in violation of the Protective Order. This admission, coupled with Barrett's admission that he and other lawyers in his law firm are aware of and have knowledge of the Protective Order and its terms (namely, that only agents, employees, and attorneys of the Participating Parties to the Section 557 procedures may have access to the documents and information contained therein), forces the Court to draw no other conclusion than to impose sanctions for their violation.

After the court reviewed UMB Bank's invoice for its legal costs in bringing this motion, "the Court is satisfied that the $3,139.40 is reasonable."

Based on the above, the Court finds that Barrett and his law firm's misconduct is a clear violation of the Protective Order, which warrants the imposition of sanctions in the amount of $3,139.40. While it is difficult to undo the potential harm to UMB, the Court does have the authority to deter future conduct.

The court ordered Mr. Barrett to send his check to UMB Bank.


To read all our coverage of the Express Grain bankruptcy case, see here: Index of Express Grain articles


John Pittman Hey
The Taxpayers Channel

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