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From: rnewman@cybercom.net (Ron Newman)
Newsgroups: alt.religion.scientology
Subject: CoS sanctioned for litigation abuse, 1/20/93
Date: Wed, 30 Aug 1995 16:57:47 -0400
Organization: Cyber Access Internet Communications, Inc.
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This was forwarded to me. I know nothing else about
this case:
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Here is a decision (Jan 20, 1993) which sanctions Scientology for
using abusive litigation tactics to destroy their opponents rather
than to resolve any legal dispute. Defendants (Mayo and the Church of
the New Civilization) were awarded 2.9 million dollars. Scientology
plaintiffs (RTC, C.S.I., C.S.C.) have appealed the decision (to 9th
Circuit).
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
RTC, et al., Plaintiffs, v. ROBIN SCOTT, et al., Defendants.
No. 85-711-JMI (Bx)
85-7197-JMI (Bx)
MEMORANDUM OF DECISION
I.
INTRODUCTION
On the heels of the order dismissing plaintiffsí amended complaints
for discovery misconduct, defendants-counterclaimants (ìdefendantsî)
have moved for an order awarding them 2.9 million dollars in
attorneysí fees. Defendants argue that they are entitled to all fees
incurred in defending the dismissed cases, citing the Lanham Act (15
U.S.C. 1170, the copyright statute (17 U.S.C. 505), California
contract law, and the courtís inherent power to sanction bad faith
conduct.
Plaintiffs-counterdefendants (ìplaintiffsî) have opposed the motion.
After the motion was submitted, plaintiffs requested that the Special
Master defer ruling on the motion for attorneysí fees until after they
produced the court-ordered discovery and conducted their own discovery
regarding the attorneysí fees.
II.
DISCUSSION
A. DEFENDANTS ARE ENTITLED TO ATTORNEYSí FEES UNDER THE LANHAM ACT
Defendants have requested attorneysí fees pursuant to the Lanham Act,
which authorizes the court to award such fees in an ìexceptional
caseî. See 15 U.S.C. 1117. Courts have found an ìextraordinary
caseî where the ìopposing party is guilty of ëextraordinary,
malicious, wanton and oppressive conductíî. Academy of Motion Picture
Arts v. Creative House, 944 F.2d 1446, 1457 (9th Cir. 1991), citing
Transgo, Inc. v. Ajac Transmission Parts Corp., 768 F.2d 1001, 1026
(9th Cir. 1985).
Plaintiffs have abused the federal court system by using it, inter
alia, to destroy their opponents, rather than to resolve an actual
dispute over trademark law or any other legal matter. This
constitutes ìextraordinary, malicious, wanton and oppressive conductî.
As such, this case qualifies as an ìexceptional caseî and fees should
be awarded pursuant to the Lanham Act.
B. DEFENDANTS ARE ENTITLED TO ATTORNEYSí FEES UNDER THE COPYRIGHT
STATUTE
Defendants have requested attorneysí fees pursuant to the copyright
stature, 17 U.S.C. 505. The statute reads as follows:
In any civil action under this title, the court in its discretion may
allow the recovery of full costs by or against any party other than
the United States or an officer thereof. Except as otherwise
prohibited by this title, the court may also award a reasonable
attorneyís fee to the prevailing party as part of the costs. See 17
U.S.C. 505.
Despite this broad language, the Ninth Circuit has consistently held
that a prevailing defendant must show that the plaintiffsí action was
frivolous or brought in bad faith in order to recover attorneysí fees.
Jartech, Inc. v. Clancy, 666 F. 2d 403, 407, (9th Cir. 1982), cert.
denied, 459 U.S. 879, rehíq denied, 459 U.S. 1059, second rehíq
denied, 463 U.S. 1237 (1983); see also, Bibbero Systems, Inc. v.
Colwell, 893 F.2d 1104, 1108 (9th Cir. 1990) (reaffirming the validity
of the Jartech standard and applying it to pretrial dismissals).
Defendants [ed. Mayos] have met their burden under the Jartech
standard. Plaintiffsí complaints were not frivolous, but they were
brought in bad faith. It is abundantly clear that plaintiffs sought
to harass the individual defendants and destroy the church defendants
through massive overlitigation and other highly questionable
litigation tactics. The Special Master has never seen a more glaring
example of bad faith litigation than this. Therefore, it is
appropriate to award attorneysí fees pursuant to the copyright
statute.
C. THE COURT WILL NOT AWARD ATTORNEYSí FEES BASED ON CALIFORNIA
STATUTORY LAW
Plaintiffs [ed. Scientology] have argued that California statutory law
authorizing an award of attorneys fees for the prevailing party on
contract claims should not be applied where, as here, the contract
claims were dismissed as non-justiciable under the first amendment
freedom of religion clauses.
Plaintiffsí argument is not without merit. Applying state statutory
law might impinge upon important constitutionally guaranteed
individual rights. California contract law might collide with the
first amendment in this particular context.
Nevertheless, the court clearly has the power to award attorneysí fees
for the contract claims, and all other claims, based upon its inherent
power to sanction bad faith litigation conduct. See, infra at 5-6.
As set forth below, the court will exercise that power. Therefore,
the Special Master need not, and will not, address this unsettled and
complex constitutional question.
D. DEFENDANTS ARE ENTITLED TO AN AWARD OF ATTORNEYSí FEES UNDER THE
BAD FAITH EXCEPTION TO THE AMERICAN RULE
It is well established that, under the ìAmerican ruleî, courts
ordinarily will not award the prevailing party attorneysí fees absent
statutory authority to do so. See e.q., Hensley v. Eckerhart, 461
U.S. 424, 429 (1983).
It is equally well established that there is an exception to the
American rule when the losing party has engaged in bad faith or
oppressive litigation tactics. See, Alyeska Pipeling Service Co.v.
Wilderness Society, 421 U.S 240, 258 (1975) (ìAlso, a court may assess
attorneysí fees for the willful disobedience of a court order . . . or
when the losing party has ëacted in bad faith, vexatiously, wantonly,
or for oppressive reasonsí.î); see also, Chambers v. NASCO, Inc.,
_U.S._, 111 S.Ct. 2123, 2135 (1991) (ìThere is, therefore, nothing in
the other sanctioning mechanisms or prior cases interpreting them that
warrants a conclusion that a federal court may not, as a matter of
law, resort to its inherent power to impose attorneyís fees as a
sanction for bad faith conduct.î)
As already stated, the Special Master finds that plaintiffs engaged in
egregious bad faith litigation conduct. Therefore, to the extent that
fees are not awarded pursuant to the courtís inherent power to
sanction such bad faith conduct.
E. THE SUBMITTED ATTORNEYSí FEES ARE FAIR AND REASONABLE
The Special Master has reviewed the attorneysí bills submitted by
defendants with an eye towards the twelve factors enunciated in Kerr
v. Screen Extras Guild, Inc., 526 F.2d 67, 70 (9th Cir. 1975) -- the
cornerstone ìlodestarî for attorneysí fees motions.
The defendants submission passes muster under this lode-star test.
The submission reflects that many attorneys worked many, many hours on
this case. However, the hours are reasonable given the plethora of
constitutional issues, discovery stand-offs, appeals and, most
importantly, plaintiffsí practice of endlessly litigating issues.
The hourly rates are reasonable for federal civil practice within the
Central District of California. The submission is complete and
accurate. It does not contain billings for the pending counterclaims
or extraneous matters. Redactions due to privileges are at a minimum
and appear fair. Overall, the submission is extensive and convincing.
The Special Master has considered plaintiffís numerous objections to
the submission in writing and at the hearing on the motion, but finds
that these objections are meritless. Therefore, the court will award
the requested amount of 2.9 million dollars.
A recommended order will follow.
* * *
IT IS ORDERED THAT plaintiffsí motion to defer ruling on the motion
for attorneys fees is DENIED. IT US FURTHER ORDERED THAT defendants
motion for attorneysí fees is GRANTED and plaintiffs are to pay
defendants 2.9 million dollars for attorneysí fees.
IT IS SO ORDERED.
DATED: January 20, 1993
JAMES G. KOLTS
U.S. Special Master
--
Ron Newman rnewman@cybercom.net
Web: http://www.cybercom.net/~rnewman/home.html
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