Archive Message - 1995

From!!!agate!!!!!!user Thu Aug 31 10:51:12 1995 Path:!!!agate!!!!!!user From: (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. Lines: 186 Message-ID: <> NNTP-Posting-Host: This was forwarded to me. I know nothing else about this case: ------- 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 Web: ÿ


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