Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_07-cv-00206/USCOURTS-azd-2_07-cv-00206-0/pdf.json

Nature of Suit Code: 320
Nature of Suit: Assault, Libel, and Slander
Cause of Action: 28:1332 Diversity-Libel,Assault,Slander

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WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

S. Jay Matsumaru, 

Plaintiff, 

vs.

Suguru Sato, et al., 

Defendants. 

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No. cv-07-00206-PHX-ROS

ORDER

Pending before the Court is Plaintiff’s Motion for Reconsideration of the Court’s

Order Filed on May 13th (Doc. 44). Plaintiff contests a May 13, 2008 (Doc. 43) Order of

the Court which ordered Plaintiff to pay Defendants $19,295 in attorneys’ fees. An earlier

motion, dated March 31, 2008 (Doc. 41), found Defendants entitled to sanctions under Rule

11. Plaintiff cites Ninth Circuit caselaw holding that

Rule 11 provides that sanctions may include ‘an order to pay a penalty into

court, or, if imposed on motion and warranted for effective deterrence, an order

directing payment to the movant of some or all of the reasonable attorneys’

fees and other expenses incurred as a direct result of the violation.’ Thus, if

the present sanctions payable to [a party] are considered to be sanctions

imposed upon the court’s initiative, they are unauthorized.

Barber v. Miller, 146 F.3d 707 (1998) (internal citations omitted). Despite this, however, the

Court’s May 13th Order awarded attorneys’ fees under Rule 11, writing “[u]nder Rule

11(c)(1)(B), the Court may impose sanctions on its own initiative after the complaint is

dismissed.” It found that “Matsumaru’s conduct in continuing to pursue the lawsuit after

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gaining knowledge that the lawsuit was frivolous warrants the imposition of Rule 11

sanctions,” and then awarded “all reasonable attorneys’ fees incurred after the filing of the

motion to dismiss to the present.” 

Under the District of Arizona’s local rules, a Motion for Reconsideration shall

ordinarily be granted with a showing of “manifest error.” Plaintiff has made such a showing.

L.R. 7.2(g). Accordingly, the Court’s order granting attorneys’ fees was invalid and must

be vacated.

It is worth considering that this Court is not without power to award attorneys’ fees

of its own initiative for conduct it deems reckless or in bad faith. 

The inherent powers of federal courts are those which are necessary to the

exercise of all others. The most prominent of these is the contempt sanction,

which a judge must have an exercise in protecting the due and orderly

administration of justice and in maintaining the authority and dignity of the

court. Because inherent powers are shielded from direct democratic controls,

they must be exercised with restraint and discretion. There are ample grounds

for recognizing, however, that in narrowly defined circumstances federal

courts have inherent power to assess attorney’s fees against counsel.

Roadway Express v. Piper, 447 U.S. 752, 765 (1980). It is “preferable that courts utilize the

range of federal rules and statutes dealing with misconduct and abuse of the judicial system,”

however “courts may rely upon their inherent powers to sanction bad faith conduct even

where such statutes and rules are in place.” F.J. Hanshaw Enters. v. Emerald River Dev., Inc.,

244 F.3d 1128 (9th Cir. 2001). “Like other sanctions, attorney’s fees certainly should not

be assessed lightly or without fair notice and an opportunity for a hearing on the record.”

Roadway Express, 447 U.S. at 767. Such notice and opportunity was provided here as the

Court held a Show Cause hearing and provided opportunity for briefing on the issue. That

the particular sanctions imposed by the Court were improper under Rule 11 does not change

that the notice and hearing were also provided for purposes of considering sanctions under

the Court’s inherent power. 

However, courts must exercise particular “restraint and discretion” in exercising their

inherent power because such powers “are shielded from direct democratic controls.” Id. at

764. Sanctions under the court’s inherent power must be accompanied by “[a] specific

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finding of bad faith.” Zambrano v. Tustin, 885 F.2d 1473, 1478 (9th Cir. 1989); see also

McCave v. Arave, 827 F.2d 634, 640 (noting that before imposing sanctions “by exercising

its inherent power, the district court would “have to make a finding of bad faith.”). In its

March 31 Order, the Court cited Roadway Express for the proposition that a Court may

impose sanctions under Rule 11 on its own initiative when a party “has acted in bad faith,

vexatiously, wantonly, or for oppressive reasons.” 447 U.S. at 766. The Court then found

Matsumaru’s filings “frivolous,” and noted that these actions were “especially egregious

considering that Matsumaru[, a pro-se litigant,] is a licensed attorney.” This, however, falls

short of making a specific finding of bad faith. To make such a finding long after the

hearing, not having asked specifically for briefing on the issue, would not fall within the

spirit of the “restraint and discretion” required for such an exercise. The Court can, however,

schedule a new Show Cause hearing to consider whether sanctions under the Court’s inherent

power should be granted.

Defendant suggests that the Court could also award attorneys’ fees under the fee

shifting provision of the Settlement Agreement. However, this Court has already found that

attorneys’ fees should not be awarded pursuant to that Settlement Agreement (Doc. 37).

Defendant has not filed for reconsideration of this decision, nor does there appear to be cause

to grant it. The Court, thus, will not reconsider its decision on this matter and has no reason

to do so.

Accordingly,

IT IS ORDERED Plaintiff’s Motion for Reconsideration is GRANTED. The

Court’s May 13th Order (Doc. 43) shall be vacated and no attorneys’ fees assessed. 

IT IS FURTHER ORDERED a Show Cause hearing will be set for January 29, 2009

at 10:00 A.M. to determine whether sanctions should be granted under the Court’s inherent

power.

 

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DATED this 17th day of December, 2008.

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