Ninth Circuit Finds Sanctions Were Warranted and Were Not Excessive in Nature.
28 U.S.C. § 1927 allows a district judge to sanction an attorney “who so multiplies the proceedings in any case unreasonably and vexatiously” for those excess costs, expenses, and attorney’s fees reasonably incurred as a result of attorney’s conduct. Recklessness suffices under § 1927, but the district court must find there was bad faith. (B.K.B. v. Maui Police Dept., 276 F.3d 1091, 1107-08 (9th Cir. 2002).) An open issue in the Ninth Circuit is whether this bad faith finding must be supported by clear and convincing evidence. (In re Lehtinen, 564 F.3d 1052, 1061 n.4 (9th Cir. 2009.) I bet you readers might think the next case we review resolved this issue. Actually, you would be wrong, because the Ninth Circuit found that a substantial sanctions award under § 1927 was supported by clear and convincing evidence—dodging the open issue.
In Lahiri v. Universal Music and Video Distribution Corp., Case No. 09-55111 (9th Cir. June 7, 2010) (for publication), the district judge awarded defendants $247,397.28 in fees and $10,808.76 in costs under § 1927 for conduct in a lengthy copyright infringement action. This award was affirmed by a 3-0 panel.
The main problem for losing attorney was that Indian copyright law clearly established his client (a composer) has no copyright interest in a movie score composed for compensation for a film company; the film company had the rights. Attorney did himself no good by citing to an immaterial concurring Indian Supreme Court opinion. The Ninth Circuit found bad faith could be inferred when attorney attempted to retain the district judge’s former law firm to defend him in an attempt to gain a recusal and an assignment to a new judge unfamiliar with the protracted history of his conduct in the litigation.
What about the amount of the sanctions award? Not so much of a problem, either. The district judge drastically reduced the $894,539.44 fee/costs request based on apportioning work only to attorney’s client, correctly reduced 80% of block billing personnel’s work by 30%, and properly made an additional 10% across-the-board reduction for excessive/redundant work. (In so doing, the Ninth Circuit cited to two authorities: (1) for block billing, a California State Bar’s Committee Mandatory Fee Arbitration’s report indicating that block billing may increase time by 10% to 30% (Welch v. Metro. Life Ins. Co., 480 F.3d 942, 948 (9th Cir. 2007)); and (2) for excessive billing, adoption of the 10% permissible, unexplained “hair cut” approach adopted in Moreno v. City of Sacramento, 534 F.3d 1106, 1112 (9th Cir. 2008).