The United States Court of Appeals for the Seventh Circuit has ruled that a whistleblower lawsuit filed under the federal False Claims Act may be thrown out of court as a penalty for the lawyer’s misconduct. The issue arose when Judge Milton Shadur, a federal court judge in Chicago, dismissed a whistleblower suit against Sallie Mae and other defendants after the plaintiff’s lawyer’s “virtually unbroken pattern of dilatory and irresponsible conduct.”

The whistleblower in the suit was Rhonda Salmeron, formerly employed by Enterprise Recovery Systems (ERS), a student loan collection agency. Salmeron alleged that ERS, Sallie Mae, USA Funds and other companies submitted false claims to the government in connection with their collection of delinquent federally guaranteed student loan payments.
But during the lawsuit, Salmeron’s lawyer was himself engaged in misconduct – repeatedly missing filing deadlines and failing to attend status conferences. Having had enough, the federal judge dismissed the lawsuit. Later, the court agreed to reinstate the case, and gave a “final warning” about further misconduct. But after the case was on again, Salmeron’s lawyer leaked a sensitive document to the press, despite an agreement that the lawyers in the case were to share the document with no one until Judge Shadur entered a formal protective order. The document ultimately wound up on “wikileaks,” a Web site that publishes leaked documents.

This was too much for Judge Shadur and it was too much for the Seventh Circuit. The appellate court affirmed the judge’s second and final dismissal of the suit.

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