N O T FO R PUB L ICAT IO N UNITED STATES C OUR T OF APPEALS FOR THE NINTH C IR C U IT
JOAN C ELIA LEE; FR

EUND LEGAL LLP; JONATHAN FR

EUND, Pla i ntiffs - Appe lla

nts, v. POWENTER TAINM ENT, INC . ,

De fe nda n t - Appe lle e . No. 20-55928 D.C . No. 2:19-c v-08353-ODW -FFM M EM O R ANDUM *

Appe a l from

the Unite d

Stat e s Distric t C ourt for the C e ntra l Distric t of C a lifornia Otis D. W

right, II, Distric t Judge , Pre siding Argue d and Subm i tte d Nove m

be r 15, 2021 Pa sa de n a , C a l ifornia B e fore : B ER

ZON a nd R AW LINSON, C irc uit Judge s, a nd ANTOON, * * Distric t Judge
. Appe lla

nts Joa n C e lia Le e (Le e ) and he r tria l c ounse l, Jona tha n D. Fre und and Fre und Le g a l LLP (c olle c tive ly , Fre und), a ppe a l the dism i ssa l of he r c la im s unde r the doc trine of re

s judic ata and im

position of sa

nc tions unde r Fe d e ra l R

ule 

# FIL ED DEC 6 2021 M OLLY C. DW Y E R, CLERK U. S. CO URT O F APPEALS

* This disposition is not a ppropria te for public at ion a

nd is not pre c e de nt e xc e pt a s provide d

by Ninth C irc uit R

ule 36-3.

* * The Honora

ble John Antoon, II, Sr., Unite d State s Distric t Judge for the M iddle Distric t of Florida , sitting by de signa tion.of C ivil Proc e dure 11 (R ule 11). Le e sought de c la ra t ory judgm e nts a

nd injunc tive re lie f a ga inst Appe lle e POW ! Ente rta inm e nt, Inc . (POW ) c onc e rning the nam e and like ne ss of he r fa m ous la

te fa t h e r, c om ic book a

rtist Sta n Le e . The distric t

c ourt dism isse d Le e ’ s c la i m s be c a use prior c a se s ha d de e m e d a n a s signm e nt a g re e m e nt (the SLE Agre e m e nt) be twe e n Sta n Le e an d his e pony

m ous c om

pa ny , Sta n Le e Ente rta inm e nt, Inc . (SLE), une n forc e a ble . The distric t c ourt a lso sa nc tione d Le e $1
m illion a n d a djudge d Fre und jointly and se ve ra lly

lia ble for 25 pe rc e nt of the sa nc tion. W e have jurisdic tion unde r 28 U.S.C . § 1291, a nd we a ffirm in pa

rt a nd re ve rse in pa

rt. 1. W e a g re e with thedistric t c ourt tha t Le e ’ s c la im s a

re ba rre d by re s judic ata . Se e V.V.V. &Sons Edible Oils Ltd. v . Me e nak

shi Ov e rse as, LLC , 946 F.3d 542, 545 (9th C ir. 2019) (stating tha t re s judic ata a

p plie s whe re the re is “ (1) an ide ntity of c la im s, (2) a fina l judgm e nt on them e rits, a nd (3) privity

be twe e n pa rtie s .” ). Le e ’ s a m e nde d c om

pla int de pe nds on the e nforc e a b ility of the SLE Agre e m e nt whic h wa s pre viously found to beune nforc e a

ble
. Se e Abadin v . Marv e l Ente rtainme nt, Inc
. No. 09-c v -0715-PAC , 2010 W L 1257519 (S.D.N.Y. M a r. 31, 2010); se e also Le e v . Marv e l Ente rprise s, Inc
. , 765 F. Supp. 2d 440, 456 (S.D.N.Y. 2011); S

tan Le eMe dia Inc . v . Le e , No. 07-c v-00225-SVW , 2012 W L 24048871, a

t *1–7 (C .D. C a l . Aug. 23, 2012); S tan Le e Me dia, Inc
. v . W

a lt Disne y C o. , No. 12-c v-2663-W JM -KM T, 2013 W L 4776026, a t *4 (D. C olo. Se pt. 5, 2013), aff’d, 774 F.3d 1292 (10th C ir. 2014), a ll of whic h are fina l judgm e nts. Privity be t

we e n pa rtie s is a lso pre se nt. “ Eve n whe n the pa rtie s are not ide n tic a l, privity

m ay e xist if the re is substa

ntia l ide ntity

be twe e n pa

rtie s, tha t is, whe n the re is suffic ie nt c om m ona lity of inte re st.” Tahoe -Sie rra Pre s. C ounc il, Inc
. v . TahoeRe

g’l Plan. Age n c

y , 322 F.3d 1064, 1081 (9th C ir. 2003) (inte rna l quota t ion m arks om itte d). Le e de sc ribe s he rse lf a s a “ suc c e ssor in intere st” and

“ a s signor a

nd gra n tor of a ll rights a

nd obliga tions re lating to the

Oc tobe r 15, 1998 transfe r of title a gre e m e n t to Sta n Le e ’ s na

m e and like ne ss a

n d c re at or rights.” Re

s judic ata ba

rs he r c la im s a s suc c e ssor in intere st or a ssigne e unde r tha t a gre e m e nt. Se e In reLindsay , 59 F.3d 942, 952 (9th C ir. 1995) (“ R e s judic ata ba rs the c la im s of the suc c e ssors in intere st.” ). 2. Although wea ffirm the dism issa l of Le e ’ s c la im s a s ba rre d by re s judic ata , the distric t

c ourt a buse d its disc re tion whe n it im pose d sa nc tions on Le e and Fre und. Se e Sne lle r v . C ity of Bainbridge

Island, 606 F.3d 636, 638 (9th C ir. 2010) (inte rna l c ita

tion omitte d ) (noting tha

t a distric t c ourt a

buse s its disc re tion whe n it “ a

pplie s the inc o rre c t le ga l sta nda rd or ba se s its ruling ‘ on a c le arly e rrone ous a sse s sm e n t of the e vide nc e .’ ” ). 3R

ule 11 sa nc tions a re re se rve d

for the “ rare and e xc e p tiona l c a se [s] whe re the a c tion is c le arly

frivolous, le ga lly

unre a sona

ble or without le ga l founda tion, or brought for a

n im p rope r purpose .” Ope rating Eng’rs Pe nsion Trust v . A-C

C o. , 859 F.2d 1336, 1344 (9th C ir. 1988). B e c a use awarding sa

nc tions is “ a

n e xtra ordina

ry re m e dy , ” id. a t 1345, it is be st re se rve d for the m ost e gre gious c a se s –for e xam ple , whe n a c a se involve s re pe a t litiga nts. Se e , e .g., Roundtre e v . Unite d State s , 40 F.3d 1036 (9th C ir. 1994); Buste r v . Gre ise n , 104 F.3d 1186 (9th C ir. 1997). This re c o rd doe s not support a finding tha

t Le e ’ s filing wa s c le arly

frivolous, le ga lly unre a sona

ble , or brought for a

n im prope r purpose . Le e wa s not a pa rty to the A badin litiga

tion. 2 S e e Abadin , 2010 W L 1257519 a t *1. Nor wa s she a

pa rty to any of the subse que n t litiga

t ion re ga rding e nforc e a

bility of the SLE Agre e m e nt. Se e Marv e l Ente rprise

s , 765 F. Supp. 2d 440 a

t 456; Stan Le e Me dia Inc
. , 2012 W L 4048871 a

t *1–7; W alt Disne y C o. , 2013 W L 4776026, a

t *4. Although we c onc lude tha

t Le e wa s in privity

with SLE, theprivity

ha d not be e n litiga

te d pre v iously , a

nd the re are at le a st som e a lle gations in the c om pla int–a lthough they are n ot ple a de d distinc tly

e nough to e sta

blish a pla usible c l a im

–whic h sugge st a n a tte m pt to e sta blish a c la i m inde pe nde nt of a

ny c o nne c tion to SLE.

2 The re c ord doe s not sugge st tha t Le e ha d an inte re st in Sta

n Le e M e dia , Inc . during a

ny pe riod re le va

nt to thede c ision in Abadin or any of the othe r c a se s. 4Fina lly , we do not a gre e that Le e file d this a c tion for a n im prope r purpose . The e xiste nc e of a

single artic le re porting thefiling of thea c tion wa s insuffic ie nt e vide nc e of “ fue l[ing] the m e dia fire .” C f. Irv in v . Dow d , 366 U.S. 717, 725 (1961) (de s c ribing the“ unle a sh[ing] ” of “ a ba rra ge of ne wspa

pe r he a dline s, a

rtic l e s, c artoons a

nd pic t ure s” a g a inst a

de fe nda nt). The re fore , we AFFIR M the distric t c ourt’ s dism issa l of this a c tion a s ba rre d by re s judic ata a

n d REVER SE the im position of sa

nc tions. AFFIRM E D IN PART AND RE V E RSE D IN PART . 3

3 B e c a use we re ve rse the award of sa nc tions, wedo not a ddre ss the sa nc tions am ount, or whe the r POWsat isfie d the sa fe ha rbor provisions of R

ule 11. 5