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Entrepreneur Media Inc. v. Smith

United States District Court, E.D. California

July 6, 2017

SCOTT SMITH, Defendant.



         This matter is before the court on plaintiff Entrepreneur Media, Inc.'s (“EMI”) ex parte application for issuance of an order to show cause why sanctions should not be imposed against defendant Scott Smith (ECF No. 186); EMI's motion for reconsideration of the court's order denying its motion to compel the production of Smith's tax returns (ECF No. 189), and Smith's motion to quash a subpoena plaintiff served on non-party (ECF No. 237).[1] For the reasons stated below, the motions are denied.

         I. Application for an Order to Show Cause

         EMI filed an ex parte application for an order directing Smith to show cause why he should not be subject to sanctions for engaging in conduct intended to harass EMI and its counsel, Davis Cook. ECF No. 186. EMI claims that Smith has submitted a series of filings with the Trademark Trial and Appeal Board (“TTAB”) and made personal attacks on Mr. Cook for the sole purpose of harassing EMI and Mr. Cook. ECF No. 186-1 at 5-12. EMI contends that “[n]o lesser sanction than a pre-filing order, judgment of contempt (including 10 days of imprisonment), and a holding that Smith is a vexatious litigant” will provide adequate protection to EMI and its counsel. Id. at 13. As discussed below, EMI has failed to demonstrate that the relief sought is appropriate under the circumstances of this case.

         A. Legal Standards

         1. Sanctions Under the Court's Inherent Power

         The Supreme Court has “recognized the well-acknowledged inherent power of a court to levy sanctions in response to abusive litigation practices.” Roadway Exp. Inc. v. Piper, 447 U.S. 752, 765 (1980). “Through this power, courts have the ability to punish conduct both within their confines and beyond, regardless of whether that conduct interfered with trial.” F.J. Hanshaw Enterprises, Inc. v. Emerald River Development, Inc., 244 F.3d 1128, 1136 (9th Cir. 2001). Thus, “[a] court has the inherent power to sanction a party or its lawyers if it acts in ‘willful disobedience of a court order . . . or when the losing party has acted in bad faith, vexatiously, wantonly, or for oppressive reasons, ' as well as for ‘willful[ ] abuse [of the] judicial processes.'” Gomez v. Vernon, 255 F.3d 1118, 1133-34 (9th Cir. 2001) (modifications in original) (citing Roadway Express, Inc. v. Piper, 447 U.S. 752, 766 (1980)).

         However, courts must exercise their inherent powers “with restraint and discretion, ” and may not invoke them absent “a ‘specific finding of bad faith.'” Yagman v. Republic Ins., 987 F.2d 622, 628 (9th Cir. 1993). “For purposes of imposing sanctions under the inherent power of the court, a finding of bad faith does not require that the legal and factual basis for the action prove totally frivolous; where a litigant is substantially motivated by vindictiveness, obduracy, or mala fides, the assertion of a colorable claim will not bar the assessment of attorney's fees.” Fink v. Gomez, 239 F.3d 989, 992 (9th Cir. 2001). Nonetheless, “the bad faith requirement sets a high threshold.” Mendez v. County of San Bernardino, 540 F.3d 1109, 1132 (9th Cir. 2008). “Even in a case where the district court describes a litigant's arguments as ‘totally frivolous, ' ‘outrageous' and inexcusable' and called his behavior ‘appalling, ' [the Ninth Circuit] nonetheless refused to equate this characterization of conduct as synonymous with a finding of bad faith.” Id.

         To shield against potential abuse, “individuals subject to sanction are afforded procedural protections, the nature of which varies depending upon the violation, and the type and magnitude of the sanctions.” F.J. Hanshaw Enterprises Inc., 244 F.3d at 1137. A party facing sanctions pursuant to a court's inherent power that are criminal in nature is entitled to the same due process protections available in criminal contempt proceedings. Id. at 1139 (citations omitted). This includes the right to be advised of the charges, the right to a disinterested prosecutor, the right to assistance of counsel, a presumption of innocence, proof beyond a reasonable doubt, the privilege against self-incrimination, the right to cross-examine witnesses, the opportunity to present a defense and call witnesses, and the right to a jury trial if the fine or sentence imposed with be serious.” Id.

         2. Issuance of a Pre-Filing Order

         District courts have the inherent power under the All Writs Act, 28 U.S.C. § 1651(a), to declare a party a vexatious litigant and impose appropriate pre-filing restrictions. Ringgold-Lockhart v. Cnty. of L.A., 761 F.3d 1057, 1061 (9th Cir. 2014). However, such orders are an extreme remedy and should rarely issue. Molski v. Evergreen Dynasty Corp., 500 F.3d 1047, 1057 (9th Cir. 2007). “When district courts seek to impose pre-filing restrictions, they must: (1) give litigants notice and an opportunity to oppose the order before it is entered; (2) compile an adequate record for appellate review, including a listing of all the cases and motions that led the district court to conclude that a vexatious litigant order was needed; (3) make substantive findings of frivolousness or harassment; and (4) tailor the order narrowly so as to closely fit the specific vice encountered.” Ringgold-Lockhart, 761 F.3d at 1062 (brackets and internal quotation marks omitted).

         B. Discussion

         As a threshold matter, EMI's motion for an order to show cause was filed as an improper ex parte motion. An ex parte application is “a request a party makes to the court without any notice to the other side.” Mission Power Engineering Co. v. Continental Cas. Co., 883 F.Supp. 488, 490 (C.D. Cal. 1995). These “applications are a form of emergency relief that will only be granted upon an adequate showing of good cause or irreparable injury to the party seeking relief.” Moore v. Chase, Inc., 2015 WL 4393031, at 4 (E.D. Cal. July 17, 2015) (quoting Clark v. Time Warner Cable, 2007 WL 1334965, at *1 (C.D. Cal. May 3, 2007)). EMI's motion provides no explanation for why it should be heard ex parte. Accordingly, EMI should have served and noticed the motion for hearing in compliance with the court's local rules. E.D. Cal. L.R. 135.

         Aside from its procedural deficiency, EMI's motion fails to demonstrate that the sanctions sought are appropriate here. EMI's request seeks the incarceration of Smith for 10 days and an order declaring him a vexatious litigant and imposing to a pre-filing order. EMI bases this request on Smith having initiating trademark cancelation actions before the Trademark Trial and Appeal Board (“TTAB”) and sending EMI's counsel, Mr. Cook, harassing emails in ...

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