Lines Overseas Management's (LOM) chairman Donald Lines has been awarded more than $3 million in damages after a court ruled that process serving company Stokes & Levin had falsely claimed to have served him with subpoenas issued by the US Securities and Exchange Commission (SEC).

The Massachusetts Superior Court found that Stokes & Levin provided a false "Return of Service" to the SEC and submitted that "Return of Service" in legal proceedings in a US District Court and published false statements in the media that Mr. Lines had been served with the subpoenas.

The court found in favour of Mr. Lines on five counts against Stokes & Levin, including unfair or deceptive acts or practices, negligence, fraud, intentional or negligent infliction of emotional distress and interference with advantageous business relations.

Stokes & Levin was ordered to pay Mr. Lines $175,000 for lost wages and compensation, $325,000 for pain and suffering and severe emotional distress caused and $500,000 for harm to his reputation, totalling $1 million plus interest, which was trebled to $3 million due to the violations being knowing, willful and deliberate, with a further $153,032.40 in attorneys fees and $12,265.07 in costs to be paid.

In summing up, Judge Robert Cosgrove said: "It doesn't seem to me that your client (Mr. Lines) is lacking in financial resources, not that he's not entitled to every last dime that he could recover, but unlike some plaintiffs, and I have a strong sense that what your client most wants to recover is, I won't say recover his good name because I don't think he's ever lost that, but remove whatever shadow this incident has unfairly cast over his good name.

"To the extent that I can give him that back on behalf of this court, I'm happy to do so."

"An egregious wrong was committed against Mr. Lines," said Henry Sullivan, attorney to Mr. Lines. "Contrary to the strident public statements made by the SEC suggesting Mr. Lines had been served with SEC formal process, the court has made an express finding that he was not.

"The award to Mr. Lines is exceptional and reflects the seriousness of the injustice done to him. We believe this ruling will restore Mr. Lines' reputation in the business community."

According to court documents obtained by The Royal Gazette, Stokes & Levin, a Massachusetts-based firm, was hired by the SEC to serve Mr. Lines with three administrative third party witness subpoenas in a case to which he was not party. The company claimed it served them on him in November 2005, submitting a sworn "Return of Service" signed and dated the following day to the SEC.

The following month the SEC filed the "Return of Service" in an action against LOM, claiming that Mr. Lines had been served with the subpoenas, and it stated that Mr. Lines had failed to comply with properly served subpoenas in an article later that year.

Mr. Lines first became aware that the SEC was alleging he had been served at the end of December 2005 and he "firmly and consistently" denied that he was ever served as indicated on the "Return of Service".

Almost a year later, as a result of an investigation by Mr. Lines, Gerson Maciel, the purported process server, signed a sworn affidavit saying he did not recall ever serving anyone at the hotel in Boston where Mr. Lines was staying on any date. On seeing a picture of Mr. Lines, Mr. Maciel denied ever having served him at all, and that he was not even working for Stokes & Levin on the day it was alleged Mr. Lines was served.

The documents revealed that the physical description of Mr. Lines on the "Return of Service" was inaccurate and the manner in which he was summoned from his hotel room as recorded in the "Return of Service" were contrary to the hotel's policies. In April 2007 Mr. Lines filed a complaint against Stokes & Levin in a bid to prove he was never served with the subpoenas and to contest the false statements made against him.

Despite repeated requests before he filed his suit, investigations during the case, duly served subpoenas and even several court orders, Stokes & Levin failed to produce any material discovery regarding the case. The company also failed to appear to defend the case and effectively admitted the factual allegations in the complaint. Following the repeated failure of the company's principal and officer Darren Stokes and office manager Maria Barrios to appear for duly noticed dispositions, the court ordered in September 2007 that the pair appear for their depositions the following month and pay attorneys' fees and costs to Mr. Lines.

But Mr. Stokes and Ms Barrios failed to appear for their depositions and Stokes & Levin failed to pay Mr. Lines' attorneys' fees and the court. The court found that the company's failure to comply with its investigations was tantamount to failure to disclose the facts of the purported service and constituted an ongoing effort to cover up or withhold facts or information about the service.

Based on these facts, the court also found that Stokes & Levin did not serve the subpoenas on Mr. Lines and that it "willfully, deceptively and unfairly generated a false Return of Service regarding Mr. Lines", provided a false Return of Service to the SEC, and that to the detriment and harm of Mr. Lines, the SEC submitted that Return of Service in legal proceedings in the US District Court for the District of Columbia and published false statements in the media that Mr. Lines had been served.

The fact that Stokes & Levin is in the business of serving process for the court, the documents stated, compounded the offence it committed against Mr. Lines and as a direct result of the company's conduct, he suffered lost compensation he would otherwise have earned, severe emotional duties, pain, suffering and substantial harm to his good name, reputation and business relations. He had also spent substantial amounts of money on legal fees and investigative costs to expose Stokes & Levin's fraud and unfair and deceptive acts and practices.