Court Opinion

ID: 4018045
Source: CourtListenerOpinion
Date Created: 2016-07-21 20:01:15.518673+00
Date Added: 2024-06-11T07:44:56.714413
License: Public Domain

NOT FOR PUBLICATION

                    UNITED STATES COURT OF APPEALS
                                                                           FILED
                            FOR THE NINTH CIRCUIT
                                                                            JUL 21 2016
                                                                        MOLLY C. DWYER, CLERK
                                                                         U.S. COURT OF APPEALS
BEST ODDS CORP.,                                 No.   15-15159

              Plaintiff-Appellant,               D.C. No.
                                                 2:14-cv-00932-RCJ-VCF
 v.

IBUS MEDIA LIMITED and IBUS                      MEMORANDUM*
MEDIA HOLDINGS (IOM) LIMITED,

              Defendants-Appellees.

                    Appeal from the United States District Court
                             for the District of Nevada
                    Robert Clive Jones, District Judge, Presiding

                        Argued and Submitted July 7, 2016
                            San Francisco, California

Before: BERZON, and N.R. SMITH, Circuit Judges, and CHRISTENSEN,**
Chief District Judge.

         *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
         **
             The Honorable Dana L. Christensen, United States Chief District
Judge for the District of Montana, sitting by designation.
      Best Odds Corp. appeals the district court’s order issuing sanctions under 28

U.S.C. § 1927. We have jurisdiction pursuant to 28 U.S.C. § 1291. We reverse

and vacate the award of attorneys’ fees.

      The district court abused its discretion by imposing sanctions under § 1927,

because the act of filing a complaint is not sanctionable under that section. See

McCabe v. Arave, 827 F.2d 634, 639 (9th Cir. 1987) (“For a sanction to be validly

imposed, the conduct in question must be sanctionable under the authority relied

on.”). Section 1927 permits a court to require “[a]ny attorney . . . who so

multiplies the proceedings in any case unreasonably and vexatiously . . . to satisfy

personally the excess costs, expenses, and attorneys’ fees reasonably incurred

because of such conduct.” However, “§ 1927 cannot be applied to an initial

pleading.” Moore v. Keegan Mgmt. Co. (In re Keegan Mgmt. Co. Sec. Litig.), 78
F.3d 431, 435 (9th Cir. 1996). “The filing of a complaint may be sanctioned

pursuant to Rule 11 or a court’s inherent power, but it may not be sanctioned

pursuant to § 1927.” Id.

      Defendants appear to justify the use of § 1927 by claiming that the filing of

the complaint in the second lawsuit could be viewed as an attempt to make an

additional filing in the initial lawsuit, thus multiplying the proceedings therein.

However, this claim is not supported by the record. The district court made clear

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that it was imposing sanctions as a result of Best Odds filing a complaint in the

second lawsuit. The court explained, “Defendants argue that the filing of a lawsuit

the Court did not have jurisdiction to enteratin was unreasonable and vexatious.

The Court agrees.”

      Defendants moved for sanctions based on § 1927 or, in the alternative, the

district court’s inherent power. However, the district court relied only on § 1927 in

imposing sanctions. After reviewing the record in this case, we conclude that the

district court also would have abused its discretion had it imposed sanctions on

Best Odds’ attorney based on its inherent power. The record does not support a

finding of bad faith. See In re Keegan Mgmt. Co. Sec. Litig., 78 F.3d at 436–37

(“In sanctioning counsel, courts may not invoke inherent powers without a specific

finding of bad faith.” (internal quotation marks and alterations omitted)).

      The parties shall bear their own costs on appeal.

      REVERSED and VACATED.

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