defendants’ reply to plaintiff’s opposition to motion for sanctions against counsel under 28...

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Randazza

Legal Group 7001 W Charleston Blvd

#1043 Las Vegas, NV 89117

(888) 667-1113

J. Malcolm DeVoy IV (Nevada Bar No. 11950) [email protected] RANDAZZA LEGAL GROUP 7001 W. Charleston Boulevard, #1043 Las Vegas, Nevada 89117 Telephone: (888) 667-1113 Facsimile: (305) 437-7662 Randazza.com Attorney for Defendants, NewsBlaze LLC and Alan Gray

UNITED STATES DISTRICT COURT

DISTRICT OF NEVADA

RIGHTHAVEN, LLC, a Nevada limited-liability company Plaintiff, vs. NEWSBLAZE LLC, a California limited liability company; and Alan Gray, an individual, Defendants.

Case No.: 2:11-cv-00720

DEFENDANTS’ REPLY TO PLAINTIFF’S OPPOSITION TO MOTION FOR SANCTIONS AGAINST COUNSEL UNDER 28 U.S.C. § 1927

DEFENDANTS’ REPLY TO PLAINTIFF’S OPPOSITION TO MOTION FOR

SANCTIONS AGAINST COUNSEL UNDER 28 U.S.C. § 1927

Defendants NewsBlaze LLC, and Alan Gray (collectively, “NewsBlaze,” or the

“Defendants”), by and through their counsel, reply to Plaintiff Righthaven LLC’s (the Plaintiff’s)

opposition to NewsBlaze’s motion to impose sanctions against Shawn A. Mangano (hereinafter

“Mangano” or “Counsel”), counsel for Plaintiff, for unreasonably and vexatiously multiplying

the proceedings in this action.

I. Introduction

Mr. Mangano’s opposition (Doc. # 28) fails to offer any substantive arguments against

the imposition of sanctions under 28 U.S.C. § 1927. Instead, Mr. Mangano simply attempts to

divert the Court’s gaze from his sanctionable conduct by throwing mud.

Case 2:11-cv-00720-RCJ -GWF Document 30 Filed 11/14/11 of 12

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The fact is that after Mr. Mangano and his client lost the exact same argument eight

times, Mangano still persisted in forcing this defendant to litigate the same issue a ninth time. It

is the Defendants’ position that perhaps the first time that Mangano signed pleadings in direct

contravention with the 9th Circuit’s holding in Silvers, it could have been a forgivable attempt.

The same may have been true for the second and third times, with declining defensibility. When

it came to being told eight times that he brought an unsupportable claim before the court, Mr.

Mangano under a clear obligation to exercise some degree of client control; to refuse to bring the

exact same arguments; or to dismiss a case with an inescapable outcome, such as this one, rather

than to force a defendant to litigate the same exact issue a ninth time on grounds identical to the

previous eight defeats. Forcing this issue nine times had no effect except to punitively impose

litigation expenses on this Defendant. This Defendant deserves to be made whole for the

expenses incurred due to that misconduct.

In the Opposition, Mangano strenuously attempts to obfuscate the issues before the

Court.1 Mangano argues that since he was given multiple warnings about his conduct before the

instant motion was filed, then the motion is not proper. To the contrary, such warnings indicate

just how much restraint was shown before bringing this motion, and they indicate the degree of

warning afforded to Mr. Mangano - giving him ample opportunity to change course. Finally,

after Mr. Mangano forced a defendant to fully litigate Righthaven’s lack of standing for the

ninth time, enough was enough, and a motion for sanctions finally was unleashed. The instant

motion came as no surprise to Mangano. He was warned, and he remained arrogant in the face

of such warnings. The instant motion is long overdue.

//

//

//

1 It is understandable that Righthaven’s counsel would vigorously oppose a motion for sanctions. Therefore, NewsBlaze asks the Court to forgive Mr. Mangano’s unnecessarily vituperative invective in the Opposition. However, while doing so, this Court should not fall victim to Mangano’s attempt to muddy the waters. For example, Mr. Mangano introduces numerous statements that were made in Rule 408 privileged discussions. However, none of it is relevant to the issue at hand.


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II. Argument

A. Nothing But Sanctions Under § 1927 Will Curb Mangano’s Behavior, and

The Time for Their Imposition Has Arrived.

Mangano’s conduct in this case alone warrants the imposition of fees under § 1927.

Mangano argues that his conduct in other cases is irrelevant. However, it is certainly proper for

the Court to allow Mangano’s conduct throughout the Righthaven litigation campaign to inform

its decision. Section 1927 reads: Any attorney or other person admitted to conduct cases in any court of the United States or any Territory thereof who so multiplies the proceedings in any case unreasonably and vexatiously may be required by the court to satisfy personally the excess costs, expenses, and attorneys' fees reasonably incurred because of such conduct.

To determine whether Mangano’s conduct was unreasonable or vexatious, it is most

certainly proper to examine other cases in order to gauge his knowledge of subjective

unreasonableness in this case. In Garza v. Westergren, 908 F.2d 27 (5th Cir. 1990) an attorney

received 1927 sanctions for bringing an appeal where the issue was moot and the exact issue was

previously on appeal before the court. See also Lahiri v. Universal Music & Video Distrib.

Corp., 606 F.3d 1216 (9th Cir. 2010) (copyright plaintiff’s counsel who maintained an untenable

position was properly sanctioned under 28 U.S.C. § 1927).

If Mangano’s argument is accepted, wasting court and party resources is permissible as

long as an attorney engages in that conduct in a serial manner – before judge after judge – with

no single judge finding enough bad faith to issue sanctions in his particular case. Such

aggregated behavior causes more damage and waste than could be accomplished in a single case.

Eventually, it becomes incumbent upon a judge to examine an attorney’s behavior in the

aggregate, seeing the misconduct in his own courtroom, and to connect the dots to draw the

picture that exists here. That picture is one of a counsel who must be sanctioned, lest he believe

that dilatory and wasteful actions before this Court will be indulged without limitation.

While Mr. Mangano’s conduct before the District of Colorado and Ninth Circuit Court of

Appeals cannot be the basis for sanctions, it is invaluable for informing the Court that what it has


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witnessed in this case is no singular event, and that the time has come for at least one Court to

impose sanctions. Mr. Mangano’s conduct before other courts is judicially noticeable and of the

public record, and it is relevant to evaluating the subjective bad faith of Mangano’s conduct in

this litigation. B.K.B. v. Maui Police Dep't, 276 F.3d 1091, 1107 (9th Cir. 2002); In re Keegan

Mgmt. Co., Sec. Lit., 78 F.3d 431, 436 (9th Cir. 1996). A limitation allowing consideration of

conduct only occurring before one single judge when evaluating an attorney’s bad faith would

give license to attorneys to engage in conduct akin to what has occurred here: A district overrun

by conduct that may not be sanctionable on its own, but that melds into a pattern of abuse.

On November 10, Judge Kane of the District of Colorado acknowledged the rarity of

personal sanctions under § 1927, but advised Mr. Mangano that he was “right on the cusp” of

imposing such sanctions upon him. Righthaven v. Wolf, Case No. 1:11-cv-00830 (D. Colo. Nov.

10, 2011); a true and correct copy of this transcript, a public record judicially noticeable under

Federal Rule of Evidence 201, is attached hereto as Exhibit A. In subsequent a written order,

Kane admonished Mangano for his “lack of civility.” Wolf, Case No. 1:11-cv-00830 (Doc. # 66)

(D. Colo. Nov. 10, 2011). Judge Kane further admonished Mangano to exercise greater “civility

and understanding” before the court. (Exh. A 9:22-10:14) (stating further, “you’ve got more stuff

to do in this Court, and you better start thinking in terms of civility if you don’t want me to jump

on you with both feet”).

In Wolf, Judge Kane’s frustration was based on Mangano’s unnecessarily requiring the

Court and the parties to attend a hearing for an issue that was already resolved. (Id.) The

Colorado Court criticized Mangano’s conduct quite harshly, stating “Well, I quite frankly think,

Mr. Mangano, that you could have handled this a lot better if you would have placed yourself in

the position of somebody other than yourself by looking at it and seeing what hoops you were

making opposing counsel jump through that are totally unnecessary.” (Exh. A 9:22-10:1). In

this case, and in this District, Mangano’s conduct is more objectionable, but is of the same

variety. Again and again, Mr. Mangano has willfully, or at least recklessly, prolonged

proceedings and cost opposing parties significant work and fees for no purpose whatsoever.


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When an attorney persists in conduct that has been judicially rebuked already, 28 U.S.C.

§ 1927 fully authorizes sanctions. See Ramirez v. Arlequin, 491 F. Supp. 2d 202, 204 (D.P.R.

2006) (“Filing a motion for judgment on the pleadings, based in arguments already rejected by a

court of higher level is clearly vexatious conduct that disregards the orderly process of justice

and must be sanctioned”). This sanctionability applies when attorneys fail to withdraw pleadings

when facts are revealed indicating a lack of supportability for the positions advanced. See

Alvarado-Morales v. Digital Equipment Corp., 843 F.2d 613, 618 (1st Cir. 1988) (imposing

sanctions under Rule 11 and 28 U.S.C. § 1927 for counsel’s failure to properly investigate facts

prior to filing suit, and failure to withdraw complaint when facts were revealed to the attorney);

Riley v. Philadelphia, 136 F.R.D. 571, 574 (E.D. Pa. 1991) (Counsel’s failure to dismiss a case

in a timely fashion supported an award of fees to the defendant under § 1927).

This District has taken several ineffective steps to discourage this conduct by imposing

sanctions and fees upon Righthaven itself. Since July 1, 2011, Righthaven has racked up more

than $225,000 in attorneys’ fees judgments and sanctions against it.2 Currently, more than

$215,000 of that amount has yet to be paid.3 Righthaven will never pay its current creditors.

Righthaven is undeterred because there remains one attorney willing to accept money in order to

disregard the judicial process. As long as this Court tolerates this conduct, it will send a message

to other attorneys who would persist in harassing, unsupportable conduct in exchange for money.

That message will be “do as you like, there is no penalty for misconduct of this type.” Title 28

of the United States Code, Section 1927, is the best option this Court has to correct this conduct.

See Good Hope Refineries, Inc. v Brashear, 588 F2d 846, 848 (1st Cir. 1978) (holding that

where it is uncertain that imposition of costs against client will be fully effective, and where

responsibility for frivolous actions rests with counsel, it is fitting that double costs under 28

USCS § 1912 be assessed against appellant's counsel personally under 28 USCS § 1927).

2 At least one website keeps a running tally of fee awards and sanctions entered against Righthaven, which currently total $227,172.15, and have been accrued entirely since July 1, 2011. See Legal Fees and Sanctions Against Righthaven, http://righthavenvictims.blogspot.com/p/legal-fees-and-sanctions-against.html (last accessed Nov. 10, 2011). 3 Id.


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This motion is not an ambush on opposing counsel. After receiving more than one half-

dozen adverse decisions about Righthaven’s lack of standing, Mr. Mangano had a duty to accept

the state of the law. He could have stipulated to NewsBlaze’s motion to dismiss in light of the

eight prior losses on the same issue, without prejudice to his client’s right to appeal. Instead, he

made more defendants re-litigate matters of settled law without any justification, thus supporting

the imposition of fees. See Walter v. Fiorenzo, 840 F.2d 427, 436 (7th Cir. 1988) (finding that

where there is a factual or legal deficiency in a complaint that is made clear, the deficiency

should be remedied or the defendant dismissed or an award of fees and costs are appropriate

under § 1927).

This course of conduct presents two possibilities: Either Mr. Mangano acceded to

Righthaven’s demands to push forward with this litigation, or he raised the arguments before this

Court at by his own volition. If Mr. Mangano chose this course of action, he has done so in

defiance of this Court’s colleagues. If he has merely followed the direct orders of his client, his

conduct is just as sanctionable as if he were the source of the nefarious idea. While an attorney

must zealously represent he must also exercise client control. There is no justification for

pressing forward with proven frivolous positions for no clear litigation purpose. See Good Hope

Refineries, 588 F.2d. at 848. Mr. Mangano violated this duty by forcing nine defendants to fully

fully litigate the question of Righthaven’s standing under the SAA nine separate times.4 This is

conduct that § 1927 was erected to discourage.

B. The Arguments Re-Brought By Mangano Were Neither Novel nor Brought

in Good Faith; They Served Only to Waste Time and Increase The

Defendants’ Costs of Litigation.

Despite Mangano’s representations, the foundational elements of Righthaven’s many

losses were never novel issues of copyright law. To the contrary, Righthaven’s lack of standing

is squarely addressed by Silvers v. Sony Pictures Entertainment Corporation, 402 F.3d 881 (9th

4 The question of Righthaven’s standing under its SAA with Stephens Media LLC is still pending in Righthaven v. Virginia Citizens Defense League, Case No. 2:10-cv-01683 (Docs. 27) (D. Nev. June 30, 2011), Righthaven v. Vote for the Worst LLC, Case No. 2:10-cv-01045 (Doc. # 33) (D. Nev. Apr. 17, 2011), and Righthaven v. Kelleher, 2:10-cv-01184 (Doc. # 28) (D. Nev. Nov. 1, 2011).


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Cir. 2005), a decision more than half-a-decade old, and Sybersound Records, Incorporated v.

UAV Corporation, 517 F.3d 1137 (9th Cir. 2008). It also ignores the many rulings from this

Court finding that Righthaven lacked standing to sue.5

Similarly, Mangano’s allegation that this District’s analysis is purely jurisdictional takes

an unreasonably narrow view of jurisdiction – one that has not been supported by this Court’s

colleagues. Mangano’s argument disregards the intertwining between the facts and merits of

Righthaven’s numerous dismissals. Williston Basin Interstate Pipeline Co. v. An Exclusive Gas

Storage Leasehold & Easement in the Cloverly Subterranean, Geological Formation, 524 F.3d

1090, 1094 (9th Cir. 2008); Safe Air for Everyone v. Meyer, 373 F.3d 1035, 1039 (9th Cir. 2004).

Further belying the argument that Righthaven’s losses have been purely jurisdictional are the

awards of attorneys’ fees made to two of Righthaven’s prevailing defendants. DiBiase, Case No.

2:10-cv-01343 (Doc. # 96) (D. Nev. Oct. 26, 2011); Hoehn, Case No. 2:11-cv-00050 (Doc. # 43)

(D. Nev. Aug. 15, 2011). These findings demonstrate that Righthaven’s losses are not merely

jurisdictional dismissals, but adjudications entitled to preclusive effect.

Even accepting Mr. Mangano’s argument as true, he has still raised the exact same losing

contention at least nine times since May 2011. This is an untenable position, and the law on this

issue, even if non-precedential, had coalesced with five written decisions adverse to Righthaven

before the Plaintiff filed its opposition to the Defendants’ motion to dismiss and sought to amend

its Complaint. This litigation has served no purpose but to consume the clients’ resources with

no justification whatsoever. In fact, this case is closely analogous to Finance Inv. Co. (Bermuda)

v. Geberit AG, 165 F.3d 526 (7th Cir. 1998). In that case, an attorney lost a trademark

infringement case in one jurisdiction due to a lack of standing. Knowing, after this one loss, that

his client had no claim, the attorney nonetheless maintained an identical action in another court.

5 See Righthaven v. Newman, Case No. 2:10-cv-01762, 2011 U.S. Dist. LEXIS 116654 (D. Nev. Oct. 7, 2011); Righthaven v. Hyatt, Case No. 2:10- cv-01373, 2011 U.S. Dist. LEXIS 93115 (D. Nev. Aug. 19, 2011); Righthaven v. Pahrump Life, Case No. 2:10-cv-01575, 2011 U.S. Dist. LEXIS 90345 (D. Nev. Aug. 12, 2011); Righthaven v. Mostofi, Case No. 2:10-cv-01066, 2011 WL 2746315 (D. Nev. July 13, 2011); Righthaven v. Barham, Case No. 2:10-cv-02150, 2011 WL 2473602 (D. Nev. June 22, 2011) Righthaven v. DiBiase, Case No. 2:10-cv-01343 2011 WL 2473531 (D. Nev. June 22, 2011); Righthaven v. Hoehn, Case No. 2:11-cv-00050 2011 WL 2441020 (D. Nev. June 20, 2011); Righthaven v. Democratic Underground, Case No. 2:10-cv-01356 2011 WL 2378186 (D. Nev. June 14, 2011).


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The court held both client and attorney liable for sanctions. Maintaining an identical suit after a

clear loss on the same issue in another court “fits § 1927 to a ‘T’.” Id. at 533. However, in that

case, it was one single loss on the same issue. This case multiplies that justification eightfold.

C. Attempted Resolution of This Motion Was Proper, and Mangano Chose to

Leave the Matter to the Court.

A motion for sanctions against an individual attorney is rare. As set forth by the

undersigned in the original motion, this is a somber occasion that has significant consequences

for all involved. However, there must be consequences for bad faith conduct.

As set forth in Righthaven’s Opposition (Doc. # 28), after this action was dismissed, the

Defendants sought to move on and stop litigating anything further in this case except the

proposed appeal.6 The Defense sought a mere fraction of the incurred attorneys’ fees –

foregoing motion practice for full fees – and were willing to withdraw this Motion without

prejudice to Righthaven’s rights to appeal as part of a global resolution of all pending matters

before the trial court. This willingness, as stated in the offer to compromise, was due to the fact

that Mr. Mangano could atone for his unnecessary multiplication of these proceedings by

truncating them at this end of the case. He refused.

After defending against Righthaven’s meritless arguments for the ninth time, the

Defendants are allowed to recover their attorneys’ fees and costs arising from Mangano’s

vexatious conduct.7 If anything, an offer to compromise this claim, and claims about Mangano’s

bad faith conduct, shows extreme restraint and good faith on the part of the defense. If Mr.

Mangano believes that offering to limit an opponent’s risk and provide finality through

settlement – as an alternative to lengthy litigation8 – is improper (Doc. # 28 at 2), then he may

wish to reconsider the duties of an attorney.

6 Mangano’s entry of the Defendants’ offers to compromise is improper under Fed. R. Evid. 408, though the bell cannot be un-rung at this point. 7 It is worth noting that the Defense does not even seek all of the fees incurred in this case. The Defense only seeks fees from the date when Mangano could not possibly, under any questionable theory, have maintained a good faith basis for a belief that his client could prevail. 8 Not one of Righthaven’s cases has ever gone to trial. When it seemed that one case would go to trial, Righthaven v. Kelleher, Mangano invited the Court to dismiss Righthaven’s action on subject matter jurisdiction grounds, which Righthaven contends is reversible error in its appeals. Case No. 2:10-cv-01184 (Doc. # 25) (D. Nev. Oct. 24, 2011).


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Another of Mr. Mangano’s tactics to obfuscate the merits of Defendants’ motion,

complaining of language used by the undersigned’s colleague in settlement discussions in other

cases, should not be countenanced. These communications are inadmissible under Federal Rule

of Evidence 408, except to disprove an allegation of delay – and they seem to do the precise

opposite. Accordingly, it would have been proper for the Defendants to introduce them, but the

Defense showed class and restraint in not doing so. Now that Mr. Mangano has opened the door

to them, this discussion is in order.

Mangano’s introduction of these emails is a strategy designed to try and curry favor for

himself by painting a vulgar picture of an attorney who is not even part of this case. This tactic

reveals considerable hypocrisy, as Mr. Mangano now objects to a tenor of discourse that he

fostered. The undersigned has personally participated in email exchanges and phone calls with

both Mangano and Randazza in which the vocabulary used by all parties would make a

longshoreman blush. The undersigned will not sully the Court with their content, except to

loosely describe them as jocular and jovial exchanges punctuated with vulgarity on all sides. It

was always clear that none found them offensive, and the tenor of the conversations was always

collegial, even if not consisting of vocabulary that the attorneys would use before the Court. Mr.

Mangano, most certainly, did not express anything but an acknowledgment that we could all be

very collegial with each other, even if the irreverence might be unseemly on a public record (see

Doc. # 29 ¶ 5).9

Based on Randazza's out-of-context statements, nobody would mistake him for Ned

Flanders. But, the comments of attorneys unrelated to this litigation have no bearing upon Mr.

Mangano’s liability under 28 U.S.C. § 1927. Nevertheless, it is worth noting that there is both

honor and logic to attorneys speaking to one another in frank terminology when discussing

settlement, when it is at a level that they all accept as inoffensive. This strategy is also

9 On September 29, 2011, inexplicably, Mr. Mangano did send an email to Mr. Randazza and the undersigned in which he stated a wish that the tone of the conversation should change. At that time, it did, and it has remained un-jovial and un-jocular ever since. Mr. Mangano set the tone initially, and then when he asked to change it, all parties respected that request. Therefore, it is even more unseemly that Mr. Mangano would place such comments in the record for such a transparent purpose.


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regrettable because it diminishes the utility of settlement discussions – counsel must now

anticipate Mr. Mangano using their candor against them by seeking to prejudice the Court in

unrelated matters. What makes these conversations introduced by Mr. Mangano offensive is not

the vocabulary used, but that Mr. Mangano attempts to use them to try and paint a false picture

of someone unrelated to this case, based on communications unrelated to this matter, in order to

throw mud, hoping that it will daze the Court so that he may escape liability for his actions.

It is unseemly for Mr. Mangano to attempt to selectively capitalize upon privileged

settlement discussions from other cases, by counsel who is irrelevant to this case, in order to try

to obtain some kind of sympathetic advantage. Forcing the Defense to even dignify his efforts

with a reply is distasteful. To the extent that these statements are admissible under Rule 408 to

counteract allegations of delay, they fortify Defendants’ contention that Mangano’s conduct is

vexatious and dilatory, and undertaken in bad faith. These conversations have little bearing on

the sanctionability of Mr. Mangano’s conduct. If they have any significance, it should be to

show that he will do anything to obtain an advantage, however small, before this Court.

Conclusion

Zealous prosecution of Righthaven’s cases may have been proper six months and eight

adverse decisions ago. But, in this case, Mangano pressed forward where he should not have.

After losing the very same issue eight times, it would have been proper to stipulate to the same

result in this case – and to let the Ninth Circuit overrule Silvers if it so chose. Nonetheless,

Mangano forced the Defendants to pay to defend an action that held a foregone conclusion. This

was a dereliction of his duty as an attorney, and one that is subject to consequences under 28

U.S.C. § 1927.

The District Courts of the United States are not voluntary dispute resolution forums.

Mangano, like any reasonable attorney, should have known long ago that the arguments he

advanced in this case were directly counter to prior decisions, and could not be advanced in good

faith or for any legitimate purpose. He should have abandoned the conduct seen in this litigation

and counseled his client to do the same.


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Instead, Mr. Mangano chose to press on into the breach, for the ninth time, at the

Defendants’ expense. Defendants’ motion for sanctions is self-explanatory. The Court should

also allow Defendants to submit supplemental affidavits for their fees incurred after the instant

motion's filing, to better represent the fees they have incurred in redressing this matter. The need

for sanctions in this case is manifest, even if it is regrettable. However, this Court’s imposition

of them will finally curtail Mangano’s improper conduct, and it will reaffirm the issue with other

attorneys – that when this District issues identical rulings eight times in a row, forcing a ninth

party to defend the same issue will not be suffered without consequence to the attorney involved.

Dated: November 14, 2011 Respectfully Submitted,

RANDAZZA LEGAL GROUP

J. Malcolm DeVoy IV

Attorney for Defendants, NewsBlaze LLC and Alan Gray


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CERTIFICATE OF SERVICE

Pursuant to Federal Rule of Civil Procedure 5(b), I hereby certify that I am a

representative of Randazza Legal Group and that on this 14th day of November, 2011, I caused

documents entitled: DEFENDANTS’ REPLY TO PLAINTIFF’S OPPOSITION TO MOTION FOR SANCTIONS AGAINST COUNSEL UNDER 28 U.S.C. § 1927

and attachments to be served as follows:

[ X ] by the Court’s CM/ECF system.

/s/ J. Malcolm DeVoy

J. Malcolm DeVoy


defendants’ reply to plaintiff’s opposition to motion for sanctions against counsel under 28...

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