UNITED STATES DISTRICT COURT 

EASTERN DISTRICT OF MICHIGAN 

SOUTHERN DIVISION 

Joseph Odish, Cranbrook Capital 

Consulting Group, LLC, 

Plaintiffs, 

v. 

Apple, Inc., Timothy Cook, 

Northrop Grumman Corp., Wesley 

Bush, Nuance Communications, 

Inc. Cognitive Code Corp., Leslie 

Spring, Mimi Chen, John Chen, 

Salvatore Difazio, Robert Rosen, 

International Business Machines 

Corp, Joel Bock, Patrick Miller, 

Oracle Corp., U.S. Dentons, 

Defendants. 

________________________________/

Case No. 15-cv-11955 

Hon. Judith E. Levy 

Mag. Judge Mona K. Majzoub 

ORDER GRANTING IN PART DEFENDANTS’ MOTION 

FOR SANCTIONS [44] 

Before the Court is an unopposed motion by the Cognitive Code 

defendants1 to impose monetary sanctions on plaintiffs under Fed. R. 

Civ. P. 11. (Dkt. 44.) Defendants were granted leave to file such a 

 

1 Cognitive Code Corp., Salvatore Difazio, Leslie Spring, Mimi Chen, and 

John Chen. 

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motion by the Court’s order of October 28, 2015. (Dkt. 35.)2 For the 

reasons stated below, defendants’ motion is partially granted. 

Defendants recount plaintiffs’ repetitive filings against them in 

this Court, and the particularly egregious nature of this lawsuit, which 

has been prosecuted despite the obvious preclusion of the claims against 

defendants through a final judgment on the same and related matters 

by the United States District Court for the Central District of 

California. (Dkt. 44 at 12; See generally Dkt. 35.) Defendants also 

assert that a string of feckless lawsuits brought against them by 

plaintiffs in this District have featured “false accusations, insults and 

implied threats of criminal prosecution” that are not grounded in fact. 

(Dkt. 44 at 14-15.) Defendants argue that plaintiffs had their fair and 

full opportunity to discover any relevant evidence and prosecute the 

core claims against them in the California litigation, in which 

defendants prevailed at summary judgment. (Id. at 16.) Defendants 

support their motion for monetary sanctions with a memorandum of 

 

2 In a separate order based on a show-case order and responses by plaintiffs 

and defendants, the Court found plaintiffs to be “vexatious litigants” and imposed 

Rule 11 sanctions designed to deter that conduct. (Dkt. 34, Dkt. 40, Dkt. 41, Dkt. 

42, Dkt. 47.) 

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law and materials documenting their fees and costs in opposing this 

lawsuit. 

Plaintiffs did not file an opposition to defendants’ motion, but the 

Court will construe plaintiffs’ opposition to its show-cause order 

regarding much of the same behavior (Dkt. 40, 41), as a relevant 

response to this motion. When ordered to justify their having brought 

this lawsuit predicated on matters precluded by final judgment of 

another court, plaintiffs: 

devote[d] their responses to recounting the misdeeds of 

others (see generally, Dkt. 40, 41), accusing the United 

States District Court of the Central District of California of 

having had its proceedings “corrupted by the stench of 

bribery and graft” (Dkt. 40 at [3]), and blaming their 

missteps on their ‘inexperience’ as litigants. 

(Order Imposing Sanctions, Dkt. 47 at 2.) These assertions were set 

forth despite Odish having been a licensed lawyer for twenty years. 

(Id.) Plaintiffs failed to provide an explanation or set forth good cause 

for filing a lawsuit based on precluded claims and issues, and they have 

not demonstrated an inclination to curb their pattern of filing 

duplicative, futile lawsuits against the Cognitive Code defendants. 

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(See generally Dkt. 40, 41.) Significantly, plaintiffs have not argued 

that this lawsuit is not precluded by the California case. 

Defendants filed a supplemental brief in support of their motion 

discussing a recent decision from the California Court of Appeals, 

Fourth District, applying Fed. R. Civ. P. 11 to uphold sanctions against 

a litigant who filed successive lawsuits raising claims that were clearly 

barred by issue and claim preclusion. (Dkt. 60.) 

I. Discussion 

Fed. R. Civ. P. 11(c) empowers courts to impose sanctions on a 

party who has violated Rule 11(b) by litigating in a disingenuous way. 

Rule 11(b) bars a litigant from making submissions to the court “for any 

improper purpose, such as to harass, cause unnecessary delay, or 

needlessly increase the cost of litigation.” Fed. R. Civ. P. 11(b)(1). 

Sanctions may also be imposed if “a reasonable inquiry discloses the 

pleading, motion, or paper is (1) not well grounded in fact, (2) not 

warranted by existing law or a good faith argument for the extension, 

modification or reversal of existing law, or (3) interposed for any 

improper purpose such as harassment or delay.” Merritt v. Int'l Ass'n of 

Machinists & Aerospace Workers, 613 F.3d 609, 626 (6th Cir. 2010) 

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(quoting Herron v. Jupiter Transp. Co., 858 F.2d 332, 335 (6th Cir. 

1988)). The rule “stresses the need for some pre-filing inquiry into both 

the facts and the law to satisfy the affirmative duty imposed.” Id. 

(quoting Herron, 613 F.3d at 626; Fed. R. Civ. P. 11 advisory 

committee’s note to the 1983 amendment). This duty is an ongoing 

obligation, and the evaluation of counsel’s conduct in meeting this 

ongoing duty of inquiry “is measured by an objective standard of 

reasonableness under the circumstances.” Id. 

In addition to the Court’s statutory authority to impose sanctions 

when a litigant’s conduct does not meet this reasonableness standard, 

the Court separately holds inherent power to “assess attorney’s fees 

when a party has ‘acted in bad faith, vexatiously, wantonly, or for 

oppressive reasons.’” Chambers v. NASCO, Inc., 501 U.S. 32, 45-46 

(1991) (holding that Rule 11 did not displace the Court’s inherent power 

to impose sanctions for bad-faith conduct) (quoting Alyeska Pipeline 

Serv. Co. v. Wilderness Soc'y, 421 U.S. 240, 258-59 (1975)). This power 

is a “narrow exception” to the American Rule, which holds that 

recuperation of ones fees in the successful defense of a lawsuit is 

generally not allowed in the United States, absent a statutory provision 

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or enforceable contract granting them. Id. at 46-37; Shimman v. Int'l 

Union of Operating Engineers, Local 18, 744 F.2d 1226, 1229 (6th Cir. 

1984) (en banc), cert. den’d, 469 U.S. 1215 (1985) (discussing the 

“American Rule” announced in Arcambel v. Wiseman, 3 U.S. 306 (1796) 

& citing cases). “Attorney fees may not be awarded based solely on prelitigation conduct giving rise to the underlying claim. However, prelitigation misconduct ‘in bringing an action or in causing an action to be 

brought’ and misconduct ‘during the course of the litigation’ may rise to 

the level of sanctionable bad faith.” Griffin Industries, Inc. v. U.S. 

E.P.A., 640 F.3d 682, 685 (6th Cir. 2011) (quoting Shimman, 744 F.2d 

at 1230-31). That said, a party “who harms another in bad faith is 

nonetheless entitled to defend a lawsuit in good faith. ‘A party is not to 

be penalized for maintaining an aggressive litigation posture . . . .’” 

Shimman, 744 F.2d at 1232 (quoting Lipsig v. National Student 

Marketing Corp., 663 F.2d 178, 180–81 (D.C. Cir. 1980)). 

 Because the award of attorney fees in the case of bad faith is a 

punitive, rather than a deterrent sanction, there must be findings “(1) 

that the position advanced or maintained by a party was meritless, (2) 

that the meritlessness was known to the party, and (3) that the position 

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was advanced or maintained for an improper purpose, such as 

harassment.” Griffin Indus., Inc., 640 F.3d at 685-86 (citing BDT 

Products, Inc. v. Lexmark Intern., Inc., 602 F.3d 742, 752 (6th Cir. 

2010); Stalley v. Methodist Healthcare, 517 F.3d 911, 920 (6th Cir. 

2008); Big Yank Corp. v. Liberty Mut. Fire Ins. Co., 125 F.3d 308, 313 

(6th Cir. 1997)). This finding requires more than the knowing pursuit 

of a meritless claim. Id. at 686. “Harassing the opposing party, 

delaying or disrupting litigation, hampering the enforcement of a court 

order, or making improper use of the courts are all examples of the sorts 

of conduct that will support a finding of bad faith or improper purpose.” 

Id. (quoting BDT Products, 602 F.3d at 754). 

Here, plaintiffs admit that they have frivolously filed inaccurate 

complaints, which is conduct not only objectively unreasonable under 

Rule 11, but also qualifies for the bad-faith exception to the American 

Rule. In a filing purportedly providing reasons why defendant’s counsel 

Howard Fredman should not be allowed to appear before this Court, 

plaintiffs admit that their first amended complaint was filed “[i]n a 

move to outsmart [Fredman] and render his motion [to dismiss] moot.” 

(Dkt. 7 at 2.) Plaintiff Odish adds, “I revised and amended the 

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complaint, asserting new claims. The complaint on file is still not the 

true complaint. The true complaint will be filed and served next week, 

along with injunctive relief and eventually [sic].” (Id.) This admission 

depicts conduct that departs from zealous advocacy and instead falls 

squarely within Rule 11’s facial prohibitions against filing a pleading 

with the Court for the improper purposes of harassment and needlessly 

increasing the costs of litigation. Indeed, this conduct meets the far 

stricter standard for bad faith that separately authorizes the Court to 

award attorney’s fees through the exception to the American Rule. This 

conduct alone suffices to grant defendants their fees and costs 

associated with addressing the first amended complaint, as well as 

plaintiffs’ two filings directed at barring Fredman from representing his 

clients in this case. (See Dkt. 6, 7.) 

 But, the sanctionable conduct goes on. As discussed in the 

October 28, 2015 order dismissing all claims against the Cognitive Code 

defendants, plaintiffs filed their first amended complaint one month 

after the California district court issued its order denying plaintiffs’ 

Rule 60 motion in that matter. (Dkt. 35 at 29-30.) The issues and 

claims decided by the California court were the same as, or closely 

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related to, the issues and claims raised by plaintiffs here; therefore, the 

Court found that subject-matter jurisdiction was lacking with regard to 

the case against the Cognitive Code defendants. (Dkt. 35 at 25-40.) 

Plaintiffs have not provided any argument that the Court erred in 

its analysis of the preclusive effect of the California court’s decision, and 

neither have they explained why they have persisted in asserting in 

this lawsuit allegations that the California court rendered invalid. See, 

e.g., Smith v. S.E.C., 129 F.3d 356, 363 n.7 (6th Cir. 1997); Erebia v. 

Chrysler Plastics Products Corp., 891 F.2d 1212, 1216 n.1 (6th Cir. 

1989) (a judgment retains its preclusive effect even when an appeal is 

pending). After the California court’s July 20, 2015 decision denying 

plaintiffs’ motion for relief from judgment, it was plainly clear to 

plaintiffs that, as a matter of law, their assertions in this lawsuit could 

no longer rely on any issues and claims inconsistent with the California 

court’s rulings. (See discussion, Dkt. 35 at 25-40.) 

Here, where the attorney is also the client and the matter was of 

direct knowledge to him, plaintiffs’ counsel violated his duty to the 

Court and his adverse parties to withdraw claims when he discovered 

they were meritless as a matter of law. Yet, he failed to do so when he 

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amended his complaint on August 24, 2015, and he also persisted in 

bringing these meritless issues and claims in his motion for leave to 

amend. (Dkt. 5, Dkt. 16.) In short, there is no reasonable basis, after 

the California court’s denial for plaintiffs’ Rule 60 motion on July 20, 

2015, for plaintiffs to have persisted with their claims against the 

Cognitive Code defendants. 

Defendants also challenge the legitimacy of plaintiffs’ “Ex Parte

Emergency Motion for Injunction Barring California Attorney Howard 

Fredman from Appearing in this Matter for Being Unfit per Michigan 

Rules of Conduct” filed on August 24, 2015 (Dkt. 6), and the “Response 

to Motion” filed by plaintiffs the next day on the same topic (Dkt. 7). 

Defendants opposed these filings by responsive memorandum that was 

filed on September 1, 2015, the same day plaintiffs withdrew the 

motion. (Dkt. 14, 15.) Given that plaintiffs withdrew their motion only 

after defendants were forced to expend resources to oppose it, and also 

considering the incendiary language and admissions of Rule 11 

violations within plaintiffs’ two filings related to defendants’ counsel, 

see discussion p. 7-8, supra, sanctions are warranted on this aspect of 

the litigation. 

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Plaintiffs’ prosecution of this lawsuit, particularly after the 

California court upheld its decision, is not objectively reasonable; 

rather, it is an impermissible attempt to press legal claims and issues 

already dismissed by another court of competent jurisdiction, and it has 

been conducted in admitted violation of Rule 11. Defendants are 

eligible to recover their fees and costs related to their motion to dismiss, 

the briefing of the motion targeting Fredman, as well as other 

documented resources expended to defend this lawsuit after July 20, 

2015. 

II. Evaluation of Defendants’ Documentation of Fees 

Defendants document fees and costs of $52,760.00, and ask for an 

award of $38,446.50. (Dkt. 44 at 20.) This amount reflects 134.9 hours 

of work. (Id.) Defendants document their lodestar, that is, “the product 

of the number of hours billed and a reasonable hourly rate,” and then 

adjust that downward to reflect the mean billing rate for attorneys in 

the Eastern District of Michigan—$285.00 per hour for an attorney of 

Fredman’s experience. (Id. at 19-20 (citing Hensley v. Eckerhart, 461 

U.S. 424, 434 (1983)).) 

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The Court finds defendants’ calculation of the $285 hourly rate to 

be a reasonable rate in this District. However, in light of the evaluation 

of defendants’ claims and plaintiffs’ conduct, a portion of defendants’ 

documented hours must be excluded. First, hours expended on this case 

prior to the July 20, 2015 ruling by the California court are excluded, 

other than those hours applied to the motion to dismiss, because up 

until that time, plaintiffs still had a pending claim related to those 

contested issues and claims. Second, some of defendants’ hours are 

described as work related to Odish’s qui tam case filed separately in 

this Court on September 28, 2015, and dismissed on October 29, 2015. 

(Case No. 15-cv-13395.) Defendants were not served, and they did not 

file an appearance in that matter. As a result, there is no basis to grant 

defendants fees and costs related to that separate case. 

In light of these rulings, the following hours are not to be included 

in defendants’ award of sanctions: 

Docket and Page Hours to be Removed 

Dkt. 44-3 at 1 1.5 on 6/4/2015 

1.0 on 6/5/2015 

Id. at 2 1.0 on 6/17/2015 

1.0 on 6/18/2015 

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0.7 on 6/19/2015 

Id. at 3 0.5 on 6/22/2015 

Id. at 4 0.8 on 7/2/2015 

0.5 on 7/6/2015 

1.0 on 7/8/2015 

Id. at 5 0.5 on 7/13/2015 

Id. at 10 4.0 on 10/6/2015 

Id. at 11 0.6 on 10/14/2015 

0.4 on 10/26/2015 

Total Hours Reduced 13.6 hours at $285 = $3,876.00 

 The total reasonable amount of fees and costs owed to defendants 

is their proposed lodestar calculation of $38,446.50, less $3,876.00 for 

hours not attributable to plaintiffs’ Rule 11 violations in this particular 

case, which equals $34,570.50. 

III. Plaintiffs’ Ability to Pay 

The Court is aware of its responsibility to “make some inquiry 

concerning an attorney’s ability to pay a monetary sanction . . . even 

when the offended party’s actual expenditures appear reasonable.” 

Jackson v. Law Firm of O”Hara, Ruberg, Osborne and Taylor, 875 F.2d 

1224, 1230 (6th Cir. 1989). The burden to prove inability to pay lies 

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with the individual sanctioned. Garner v. Cuyahoga Cty Juvenile 

Court, 554 F.3d 624, 642 (6th Cir. 2009); Kratage v. Charter Twp. Of 

Commerce, 926 F. Supp. 102, 105 (E.D. Mich. 1996) (citing Gaskell v. 

Weir, 10 F.3d 626, 629 (9th Cir. 1993); In re Kunstler, 914 F.2d 505, 524 

(4th Cir. 1990)). 

Here, plaintiffs did not file an opposition to this motion for 

sanctions, even for the sole purpose of asserting their inability to pay a 

potential sanction. Therefore, in consideration of the Court’s duty, 

plaintiffs are granted until no later than March 21, 2016 to submit 

competent evidence probative of their capacity to pay the reasonable 

attorney fees and expenses of $34,570.50 resulting from plaintiffs’ Rule 

11 violations. 

IV. Conclusion 

For the reasons stated above, plaintiffs are granted until no later 

than March 21, 2016 to make a showing supported by competent 

evidence that they are not able to pay the full sanction. Absent such a 

showing, plaintiffs will be ordered to compensate defendants’ 

reasonable attorney fees and expenses of $34,570.50 resulting from the 

Rule 11 violations set forth above. 

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IT IS SO ORDERED. 

Dated: March 11, 2016 s/Judith E. Levy 

Ann Arbor, Michigan JUDITH E. LEVY 

United States District Judge 

CERTIFICATE OF SERVICE

The undersigned certifies that the foregoing document was served 

upon counsel of record and any unrepresented parties via the Court’s 

ECF System to their respective email or First Class U.S. mail addresses 

disclosed on the Notice of Electronic Filing on March 11, 2016. 

s/Felicia M. Moses 

FELICIA M. MOSES 

Case Manager 

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