United States District Court, N.D. California
SONG FI, INC., JOSEPH N. BROTHERTON, LISA M. PELLEGRINO, N.G.B., RASTA ROCK, INC., Plaintiffs,
GOOGLE, INC., YOUTUBE LLC, Defendants.
ORDER GRANTING IN PART MOTION FOR SANCTIONS (DOCKET
NOS. 114 AND 123)
CLAUDIA WILKEN United States District Judge
Google, Inc. and YouTube LLC move for sanctions against
Plaintiffs' counsel under Federal Rule of Civil Procedure
11 for allegations made in the Third Amended Complaint (3AC).
Defendants wish to strike several enumerated paragraphs
within Plaintiffs' 3AC. They also seek reimbursement for
litigation expenses incurred as a result of the Rule 11
violations. As described below, the Court GRANTS in part
of Plaintiffs' allegations can be found in the
Court's Order Granting Motion to Dismiss Second Amended
Complaint and Order on Motion to Dismiss Third Amended
Complaint. The disputed allegations were part of
Plaintiffs' Cartwright Act and fraud claims, which the
Court dismissed with prejudice as the parties were briefing
Rule of Civil Procedure 11 permits a court to impose
sanctions on an attorney when he or she has signed and
submitted to the court a pleading that is not, to the
attorney's knowledge, information and belief after
reasonable inquiry, presented for a proper purpose, warranted
by existing law or by a non-frivolous argument for altering
the law, or supported or likely to be supported with
evidence. Fed.R.Civ.P. 11. Awarding sanctions under Rule 11
"raises two competing concerns: the desire to avoid
abusive use of the judicial process and to avoid chilling
zealous advocacy." Hudson v. Moore Business Forms,
Inc., 836 F.2d 1156, 1159-60 (9th Cir. 1987). An award
of sanctions is "an extraordinary remedy, one to be
exercised with extreme caution." Operating
Eng'rs Pension Trust v. A-C Co., 859 F.2d 1336, 1345
(9th Cir. 1988). The moving party bears the burden to
demonstrate why sanctions are justified. See Tom Growney
Equip., Inc. v. Shelly Irrigation Dev., Inc., 834 F.2d
833, 837 (9th Cir. 1987).
complaint is the primary focus of a Rule 11 motion, a court
must determine that 1) the complaint is legally or factually
baseless from an objective perspective and 2) the attorney
has not conducted a reasonable and competent inquiry before
signing and filing it. Holgate v. Baldwin, 425 F.3d
671, 676 (9th Cir. 2005); In re Keegan Mgmt. Co., Sec.
Litig., 78 F.3d 431, 434 (9th Cir. 1996). The standard
is objective, examined at the time of signing. W. Coast
Theater Corp. v. City of Portland, 897 F.2d 1519, 1526
(9th Cir. 1990). The existence of a non-frivolous claim in a
complaint does not immunize it from Rule 11 sanctions.
Holgate, 425 F.3d at 677.
is well grounded in fact if an independent examination
reveals some credible evidence in support of a party’s
statements. Himaka v. Buddhist Churches of Am., 917
F.Supp. 698, 710 (N.D. Cal. 1995). A claim that has some
plausible basis, even a weak one, is sufficient to avoid
sanctions under Rule 11. See United Nat'l Ins. Co. v.
R&D Latex Corp., 242 F.3d 1102, 1117-18 (9th Cir.
2001). "The reasonable inquiry test is meant to assist
courts in discovering whether an attorney, after conducting
an objectively reasonable inquiry into the facts and law,
would have found the complaint to be well-founded."
Holgate, 425 F.3d at 677.
argue that four sets of allegations were baseless: that
YouTube conspired to allow view count manipulation, that
Defendants and their senior executives conspired to remove
music videos by independent artists, that Defendants and
their senior executives fail to combat view count gaming and
how YouTube calculates view counts. I. Alleged conspiracy to
allow view count manipulation Defendants take issue with
paragraphs 19(a), 22-24, 30, 38, 44, 91, 92, 103, 109 and 110
of Plaintiffs' 3AC. Together, these paragraphs alleged
that Defendants and their named executives agreed to permit
certain record labels to game the view count without
enforcement. First, Defendants argue that Plaintiffs have no
evidentiary basis for this theory. Plaintiffs respond that
significant circumstantial evidence supported their theory.
For example, the 3AC described very high view counts for
certain videos, and noted that Defendants would have
benefitted from such a conspiracy because they shared in
advertising revenue. The Court concludes that it was baseless
to allege that Defendants conspired to game view counts--the
circumstantial evidence does not provide a basis for such an
allegation. These allegations violate Rule 11.
Defendants argue that, contrary to Plaintiffs'
allegations, YouTube has taken action against the alleged
conspirator record labels. See 3AC ¶ 22
(alleging that "G-Y and the G-Y Executives refrain from
4H TOS enforcement action against the Major Labels and the
other Conspiring Entities"). Publicly-available
information demonstrates that Plaintiffs' counsel could
not have undertaken an objectively reasonable inquiry before
presenting this allegation. For example, Defendants submit an
online news article entitled: "YouTube cancels billions
of music industry video views after finding that they were
fake or 'dead, '" discussing a video by Rihanna,
a Universal artist. Haas Dec. Ex. 5. Huffington Post
published a similar story the following day. Id. Ex.
6. Paragraph 22 violates Rule 11.
Defendants argue that Plaintiffs have insufficient factual
support for their allegations regarding Google and YouTube
executives' actions. Plaintiffs make two arguments in
response. They argue that David Drummond's inaction
following Plaintiffs' counsel's May 12, 2014 letter
to him outlining the sequence of events giving rise to their
legal claims could be construed as evidence of his and
others' prior awareness of the conspiracy. See
Docket No. 101-9. The lack of response to this letter does
not serve as a basis for Plaintiffs' specific claims
about Defendants' executives' participation in and
knowledge of a view count gaming conspiracy. Next, Plaintiffs
argue that, if there were a conspiracy, it must have been at
the direction of senior management. However, as explained
above, there was no basis to allege the view count gaming
conspiracy. For these reasons, the allegations pertaining to
the actions and knowledge of particular Google and YouTube
executives violate Rule 11. II. Allegations regarding removal
of independent music videos According to the 3AC, the alleged
conspiracy was "designed to prevent the Independent
Artists from competing fairly in the relevant market."
3AC ¶ 35. In furtherance of the conspiracy, Defendants
allegedly accused these artists of violating the terms of
service, removed their videos and associated view counts and
posted in their place a defamatory notice still at issue in
this case. Id. ¶¶ 23, 80. Defendants argue
that these allegations violate Rule 11.
justify their allegations citing Darnaa v. Google,
Inc., 2015 WL 7753406 (N.D. Cal.), and
Bartholomew v. Youtube, LLC, No. 15-275833
(Cal. Super. Ct. 2015). Joyce Bartholomew is a musician who
creates and publishes original Christian ministry music,
Docket No. 78-2, and Darnaa is the name of both an
independent recording artist and the music label that
promotes Darnaa's music, Darnaa, 2015 WL
7753406, at *1. Like Plaintiffs here, the two cases allege
libel claims based on the notice that replaced the
artists' removed videos stating that they violated
YouTube's terms of service.
allegations that other independent artists experienced a
similar sequence of events are not baseless. However, their
allegations regarding the motivations and machinations
undergirding this repeated take-down sequence are objectively
baseless. Plaintiffs present no evidence to support that the
events were conspiratorial. Further, that treatment of
independent artists stemmed from a conspiracy was not the
only logical inference to make in light of Dar ...