Opinion ID: 655794
Heading Depth: 3
Heading Rank: 1

Heading: Basis for Sanctions

Text: 17 The district court must apply an objective standard in determining whether Trojan made a reasonable inquiry, under all the circumstances of the case, into the legal and factual basis for the claims. Townsend v. Holman Consulting Corp., 929 F.2d 1358, 1362, 1364 (9th Cir.1991) (en banc). The existence of one nonfrivolous claim will not preclude the imposition of sanctions for frivolous claims. Id. The district court apparently concluded that the entire complaint was frivolous and awarded all of Intel's attorney fees. 18 No competent lawyer could have reasonably researched the constitutional claims and failed to learn that governmental action was a necessary element. See Lugar, 457 U.S. at 924, 102 S.Ct. at 2747; Price v. State of Hawaii, 939 F.2d 702, 709 (9th Cir.1991), cert. denied, --- U.S. ----, 112 S.Ct. 1479, 117 L.Ed.2d 622 (1992). This claim was clearly frivolous. 19 Trojan's factual inquiry regarding the § 1981 claim was limited to what he discovered in the infringement action. It was seriously flawed. Moreover, his legal research was incomplete. Trojan failed to identify or allege a right listed in § 1981 of which Terabyte was deprived. Thus, there is no abuse of discretion in the district court's conclusion that this claim was frivolous. 20 Trojan researched the elements of a wrongful seizure claim, but did not consider whether Terabyte was estopped from litigating that claim. Sanctions may be imposed for filing a complaint which is barred by res judicata. See In re Grantham Bros., 922 F.2d 1438, 1442 (9th Cir.), cert. denied, --- U.S. ----, 112 S.Ct. 94, 116 L.Ed.2d 66 (1991); Huettig & Schromm, Inc. v. Landscape Contractors Council, 790 F.2d 1421, 1427 (9th Cir.1986). However, the position that a wrongful seizure claim includes a seizure order which was wrongfully obtained is based on a good faith argument for the extension of existing law. See Fed.R.Civ.P. 11. Moreover, an argument could have been made that collateral estoppel did not apply at the time the complaint was filed, even though it did at the time summary judgment was entered. Thus, this claim was not frivolous when filed. 21 The district court also found that Trojan filed the action for the improper purposes of harassing and retaliating against the individual defendants, and to improperly pressure a settlement of the infringement action. However, a nonfrivolous complaint cannot be sanctioned, even though the complaint may have been filed for an improper purpose. Townsend, 929 F.2d at 1362. Therefore, sanctions may not be imposed on the wrongful seizure claim even if Trojan did admit that he filed it for an improper purpose. 22 The sanction order is therefore reversed and remanded so that the district court can redetermine the portion of the expenses which flowed from the two frivolous claims. See Townsend, 929 F.2d at 1367. When sanctions are based on attorney fees, the district court must differentiate between fees incurred to defend frivolous claims and fees unrelated to the sanctioned conduct. Lockary v. Kayfetz, 974 F.2d 1166, 1178 (9th Cir.1992), cert. denied, --- U.S. ----, 113 S.Ct. 2397, --- L.Ed.2d ---- (1993).