Indiezone, Inc. v. Todd Rooke
14-16895
| 9th Cir. | Dec 14, 2017Background
- Plaintiffs (Indiezone and eoBuy-related parties) faced a sanctions hearing after the district court found repeated failures to comply with court orders and missed deadlines despite warnings and extensions.
- At the hearing plaintiffs presented no evidence; the court found their declarations (primarily from Fennelly) were inconsistent with each other and with public CRO records.
- Public records showed Laraghcon Chauffeur Drive Ltd. operated as a taxi company from 2008–2014 and held no apparent IP assets; plaintiffs could not show transfers or connections to eoBuy before 2014.
- The district court concluded plaintiffs attempted to manufacture a sham eoBuy plaintiff in 2014 to avoid arbitration, relying on false or misleading declarations and documents.
- The court sanctioned the plaintiffs, their non-party declarant Fennelly, and counsel Dollinger, and dismissed the case with prejudice.
- Plaintiffs’ subsequent Rule 60(b) motion (asserting newly discovered CRO metadata and other grounds) was denied; the Ninth Circuit affirmed both the sanctions order and denial of relief.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether district court abused discretion finding sanctionable bad faith conduct | Plaintiffs disputed wrongdoing and later submitted CRO metadata as newly discovered evidence | Defendants argued plaintiffs fabricated an eoBuy plaintiff and submitted false declarations/documents | No abuse: factual record showed conflicting declarations, lack of supporting documents, and conduct indicating a sham plaintiff; sanctions upheld |
| Whether court could sanction non-party Fennelly under inherent authority | Plaintiffs contended Fennelly should not be sanctioned as a non-party | Defendants pointed to Fennelly’s central role, authorship of misleading declarations, and refusal to comply with court order to testify | Court properly sanctioned Fennelly under inherent powers given his authorship of false declarations and disobedience of a court order |
| Whether counsel Dollinger could be sanctioned (inherent power and §1927) | Plaintiffs denied counsel acted in bad faith | Defendants argued Dollinger recklessly advanced Fennelly’s misrepresentations after being on notice of inconsistencies | Sanctions appropriate: counsel recklessly adopted/made filings that misled the court, satisfying bad-faith standard |
| Whether dismissal with prejudice and denial of Rule 60(b) relief were proper | Plaintiffs sought relief based on newly discovered metadata and alleged procedural infirmities (Rule 60(b)(2),(3),(4),(6)) | Defendants urged dismissal as only adequate sanction given egregious fraud and risk of refiling | Affirmed: dismissal warranted after weighing factors; metadata would not have changed outcome and did not show fraud on the court or void judgment; Rule 60(b) relief denied |
Key Cases Cited
- F.J. Hanshaw Enters. v. Emerald River Dev., 244 F.3d 1128 (9th Cir.) (standard of review for sanctions)
- Exp. Grp. v. Reef Indus., Inc., 54 F.3d 1466 (9th Cir.) (standard of review for Rule 60(b)(4))
- Solis v. Matheson, 563 F.3d 425 (9th Cir.) (waiver of arguments raised first on appeal)
- Corder v. Howard Johnson & Co., 53 F.3d 225 (9th Cir.) (inherent power to sanction non-parties)
- Fink v. Gomez, 239 F.3d 989 (9th Cir.) (bad faith requirement for inherent-power sanctions)
- Blixseth v. Yellowstone Mountain Club, LLC, 796 F.3d 1004 (9th Cir.) ( §1927 requires bad faith)
- Franco v. Dow Chem. Co. (In re Girardi), 611 F.3d 1027 (9th Cir.) (misleading court or frivolous filings can establish bad faith)
- Thompson v. Hous. Auth. of L.A., 782 F.2d 829 (9th Cir.) (factors for dismissal as discovery sanction)
- Hamilton Copper & Steel Corp. v. Primary Steel, Inc., 898 F.2d 1428 (9th Cir.) (dismissal only in extreme circumstances)
- Anheuser-Busch, Inc. v. Nat. Beverage Distribs., 69 F.3d 337 (9th Cir.) (deceptive practices that undermine integrity of judicial proceedings)
- Coastal Transfer Co. v. Toyota Motor Sales, U.S.A., 833 F.2d 208 (9th Cir.) (Rule 60(b)(2) newly discovered evidence standard)
- Jones v. Aero/Chem Corp., 921 F.2d 875 (9th Cir.) (materiality standard for newly discovered evidence)
- U.S. Air Funds, Inc. v. Espinosa, 559 U.S. 260 (U.S.) (judgment voidness under Rule 60(b)(4))