clearyJudge Loretta Preska's sanction of New York law firm Cleary Gottlieb shall be left undisturbed, the Second Circuit Court of Appeals ruled today in a summary order.

Last August, Judge Preska gave the firm a lashing, saying in a sanction order that it had shown "a willingness to operate in the murky area between zealous advocacy and improper conduct" in attempting to interfere with the deposition of a non-party witness in the case of Republic of Congo v. Kensington International. Preska ordered Cleary to pay its opponent's costs and circulate a formal reprimand to each of its 950 lawyers around the world.

"That's a pretty stigmatizing statement for a court to make about an entire firm," Cleary's lawyer, Roy Reardon of Simpson Thacher & Bartlett, told a three-judge panel last week. According to this NYLJ article, Reardon called the sanction order the result of a calculated campaign by a global hedge fund out to impugn the integrity of the law firm that frequently opposes its efforts to collect on distressed sovereign debt.

The sovereign debt at issue in the underlying case was that of the Republic of Congo, a longtime Cleary client. Kensington, a branch of hedge fund Elliot Associates, had obtained a $57 million judgment on Congolese debt from a London court and went to federal court in Manhattan seeking enforcement and discovery to determine the money's whereabouts, according to the NYLJ.

Kensington, represented by Dechert, subpoenaed Médard Mbemba, a French-Congolese businessman and one-time confidant of Congolese President Denis Sassou-Nguesso. Mbemba, who lives in Paris, agreed to appear for a deposition to be conducted in D.C.

The Cleary lawyers were unavailable, so they proposed an alternative date and place. But Dechert informed Cleary that it would go ahead with the deposition in D.C. Then the Cleary reportedly asked the firm's relationship partner for Congo to call Mbemba. Cleary claims the subsequent communications between the two were totally above board, with the relationship partner urging Mbemba not to attend a U.S. deposition without a lawyer. At most, Cleary says, the relationship partner for Congo permissibly explained the point of view of Cleary's client that the case involved a "vulture fund" whose activities could "destabilize" Congo.

But Kensington, and Judge Preska, disagreed. "This court can but conclude that Cleary feared Mbemba might reveal damaging information or offer evidence of illegal conduct and, thus, attempted, in bad faith, to influence Mbemba's testimony or, better still, to avoid the deposition altogether," Judge Preska wrote in her August sanctions order.

Simpson's Reardon, arguing the appeal last week on behalf of Cleary, reportedly called Preska's finding of bad faith "absolutely inappropriate." Kevin Reed of Quinn Emanuel argued the appeal for Kensington. "You don't go to the witness and say the sort of things [Cleary lawyers] said," argued Reed, "which can only have the effect of intimidating a witness and shaping his testimony."