George Jarvis Austin v. ABC Legal Services, LLC

Background

ABC Legal Services, LLC sought $840 in costs after defending this action. The opinion states that Austin voluntarily dismissed the case and that ABC characterized it as the fourth nearly identical action Austin had brought against ABC. ABC documented $435 in costs for removing the action from state court and $405 for litigating in federal court.

Austin did not file an opposition to the motion for costs. In filings related to his sanctions motion, however, he argued that ABC was engaging in “gamesmanship” by seeking costs and asserted that the federal court lacked jurisdiction. The court stated that its earlier order terminating the case had not decided jurisdiction, but that it retained authority over collateral matters—issues remaining after the main case ends—including an award of costs.

Motion for Costs

Federal Rule of Civil Procedure 54(d)(1) generally allows costs, other than attorney’s fees, to the prevailing party. The court explained that it also has discretion to award costs after a plaintiff voluntarily dismisses an action. It considered the factors identified in Williams v. Peralta Community College District, including the possible expense of a second lawsuit, the defendant’s preparation and litigation expenses, the progress of the case, the plaintiff’s diligence in seeking dismissal, and the merits of the plaintiff’s case.

The court agreed with ABC that Austin was a “vexatious litigant” and concluded that ABC had been forced to defend a fourth, nearly identical lawsuit. It found the requested costs reasonable under the circumstances and under the relevant factors. The court granted ABC’s motion and ordered Austin to pay ABC $840.00.

Motion for Sanctions and Removal of Counsel

Austin sought sanctions against ABC’s counsel under Federal Rule of Civil Procedure 11 and, if necessary, removal of counsel. He argued that ABC had knowingly and willfully removed the action even though, in his view, the operative complaint contained only state-law claims.

Rule 11 requires that legal filings and arguments not be frivolous, legally unreasonable, or unsupported by facts. ABC argued that Austin had not clearly identified a valid basis for sanctions. It also argued that removal was proper because the complaint included a claim under 42 U.S.C. § 1981. The court noted that the § 1981 claim was present when ABC removed the case, even though Austin later appeared to amend the complaint to remove that claim.

The court concluded that ABC could not have known at the time of removal that the operative complaint contained only California state-law claims, because the § 1981 claim was in the complaint when removal occurred. It therefore found that sanctions were not warranted and denied Austin’s motion for sanctions. The opinion’s discussion refers both to diversity jurisdiction and to the federal § 1981 claim; its stated basis for rejecting sanctions was the presence of the § 1981 claim at removal.