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U.S.A. Dawgs, Inc. v. CROCS, Inc.

United States District Court, D. Nevada

May 29, 2019

U.S.A. DAWGS, INC., a Nevada corporation, Plaintiff,
v.
CROCS, INC., a Delaware corporation, KIM LAWRIE, a Washington resident, ERIK RUFER, a Washington resident, and KELLY GRAY, a Colorado resident, Defendants.

          JOLLEY URGA WOODBURY HOLTHUS & ROSE WILLIAM R. URGA (Nev. Bar No. 1195) ARNOLD & PORTER KAYE SCHOLER LLP MICHAEL A. BERTA (admitted pro hac vice) SEAN M. CALLAGY (admitted pro hac vice) Attorneys for Defendants CROCS, INC., KIM LAWRIE, ERIK RUFER, and KELLY GRAY

          ORDER GRANTING DEFENDANTS' THIRD MOTION FOR SANCTIONS (ECF. NO. 53)

          HONORABLE JAMES C. MAHAN, UNITED STATES DISTRICT JUDGE

         Presently before the court is defendants Crocs, Inc. (“Crocs”), and Kim Lawrie, Erik Rufer, and Kelly Gray's (together, “Defendants”) Third Motion for Sanctions. (ECF No. 53). Plaintiff U.S.A. Dawgs, Inc. (“Dawgs” or “Plaintiff”) opposed (ECF No. 61), and Defendants filed a reply. (ECF No. 62). Defendants also filed a supplemental brief in support of its motion, as directed by the court. (ECF Nos. 63, 64). Dawgs filed a response to Defendants' supplemental brief. (ECF No. 65). On April 15, 2019, counsel for Dawgs and Defendants appeared and presented argument concerning the present Motion. (ECF Nos. 80 (minutes of hearing), 81 (transcript of hearing)). Consistent with the reasons stated on the record, which are incorporated herein, the court makes the following findings of fact and conclusions of law, and hereby GRANTS Defendants' Motion.

         I. Legal Standard

         A. Rule 11[1]

         The main objective of Rule 11 is to deter baseless filings and curb litigation abuses. Salman v. State of Nevada Comm. On Judicial Discipline, 104 F.Supp.2d 1262, 1270 (D. Nev. 2000). Further, Rule 11 addresses two separate problems: “first, the problem of frivolous filings; and second, the problem of misusing judicial procedures as a weapon for personal or economic harassment.” Aetna Life Ins. Co. v. Alla Med. Servs., Inc., 855 F.2d 1470, 1475 (9th Cir.1988) (quoting Zaldivar v. City of Los Angeles, 780 F.2d 823, 830 (9th Cir. 1986)).

         A court considering a Rule 11 motion must decide (1) whether a violation has occurred and, if so, (2) whether to impose sanctions. Smith & Green Corp. v. Trustees of Const. Indus. & Laborers Health & Welfare Trust, 244 F.Supp.2d 1098, 1103 (D. Nev. 2003). Where “the complaint is the primary focus of Rule 11 proceedings, a district court must conduct a two-prong inquiry to determine (1) whether the complaint is legally or factually baseless from an objective perspective, and (2) if the attorney has conducted a reasonable and competent inquiry before signing and filing it.” Christian v. Mattel, Inc., 286 F.3d 1118, 1127 (9th Cir. 2002) (quoting Buster v. Greisen, 104 F.3d 1186, 1190 (9th Cir. 1997)).

         When Rule 11(b) has been violated, the court may impose appropriate sanctions upon the attorneys, law firms, or parties that are responsible for the violation. Smith & Green, 244 F.Supp.2d at 1103. The identity of the person(s) subject to sanctions depends on the nature of the Rule 11(b) violation. For a violation of Rule 11(b)(2), as distinguished from Rule 11(b)(3), sanctions must be imposed on the offending party's attorney, not the party itself. Chien v. Skystar Bio Pharm. Co., 256 F.R.D. 67, 72 (D. Conn. 2009) (citing Rule 11(c)(5)(A) for proposition that “[s]anctions for the legal insufficiency or frivolousness of the complaint must run against the attorney alone”).

         B. Local Rule 54-14(b)(3)

         Local Rule 54-14(b)(3) sets out the following factors relevant to a motion for attorneys' fees:

(A) The results obtained and the amount involved;
(B) The time and labor required;
(C) The novelty and difficulty of the questions involved;
(D) The skill requisite to perform the legal service properly;
(E) The preclusion of other employment by the attorney due to acceptance of the case;
(F) The customary fee;
(G) Whether the fee is fixed or contingent;
(H) The time limitations imposed by the client or the circumstances;
(I) The experience, reputation, and ability of the attorney(s);
(J) The undesirability of the case, if any;
(K) The nature and length of the professional relationship ...

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