Cedar Lane Technologies Inc. v. Blackmagic Design Inc.

Background

Cedar Lane Technologies Inc. brought a patent-infringement action against Blackmagic Design Inc. Isaac Rabicoff and Kirk Anderson represented Cedar Lane. Anderson was licensed in California and admitted to the Northern District of California’s bar. Rabicoff was licensed in Illinois and Virginia but was not a member of that district’s bar.

After Blackmagic moved to dismiss, Cedar Lane filed a first amended complaint as permitted by Federal Rule of Civil Procedure 15(a)(1). Five days later, Cedar Lane filed a second amended complaint without Blackmagic’s written consent or the court’s permission. The court made the second amended complaint the operative complaint and denied the first motion to dismiss as moot. Cedar Lane then filed a third amended complaint eleven days later, again without the consent or permission required by Rule 15. The court granted Blackmagic’s motion to strike the third amended complaint.

Cedar Lane’s opposition argued that Rule 15 allowed a plaintiff to amend as of right every time a defendant filed a new motion under certain parts of Rule 12. Neither attorney appeared at the hearing on Blackmagic’s motions to dismiss and strike. The court then issued an order requiring the attorneys to explain why the case should not be dismissed for failure to prosecute and why they should not be sanctioned.

The parties later reached an out-of-court agreement and filed a joint stipulation seeking dismissal with prejudice, with each side bearing its own costs, expenses, and attorney’s fees.

Sanctions analysis

Rule 11 requires attorneys who present papers to the court to make a reasonable inquiry and certify that their legal arguments are supported by existing law or a nonfrivolous argument for changing the law, and that their factual assertions have evidentiary support. The court held that Rabicoff’s interpretation of Rule 15 was objectively frivolous because the rule permits amendment as of right only once after service of a qualifying motion, not after every new motion to dismiss. The court also found that Rabicoff selectively quoted Rule 15 in a misleading way.

The court further found that Rabicoff made misleading statements about when the October 1 hearing had been scheduled, suggesting that he had received only two days’ notice when the hearing had actually been scheduled eight weeks earlier. The court also found his descriptions of his role inconsistent and concluded that his position about Rule 15 amounted to bad faith. The court therefore determined that sanctions against Rabicoff were warranted under both Rule 11 and the court’s inherent authority.

The court held that Anderson also violated Rule 11. Anderson acknowledged that he knew the Rule 15 interpretation was frivolous but did not adequately review the opposition brief before signing and filing it. The court also found that he signed and filed papers containing misleading statements about the hearing schedule. The court characterized Anderson’s conduct as reckless but concluded that he did not appear to have acted in bad faith.

Professional-conduct referral

The court considered information about Rabicoff’s patent litigation practice in the Northern District of California. Rabicoff’s chart represented that he had filed 49 patent lawsuits there from July 2018 through October 2020 and had served as lead counsel in each. The court stated that Rabicoff had not sought permission to appear or paid the required fee in 29 cases, and later described the total as 30 of 49 when including a case in which an associate filed the application and paid the fee but Rabicoff did not.

The court emphasized that it had not verified the chart’s completeness or accuracy and had not fully investigated the potential rule violations. It referred Rabicoff to the district’s Standing Committee on Professional Conduct for further investigation and requested a written report.

Disposition

The court sanctioned Anderson $500 under Rule 11 and Rabicoff $1,000 under Rule 11 and the court’s inherent authority. Payment was ordered to the court clerk within 14 days. The court denied Rabicoff’s motion to appear pro hac vice, meaning his request for special permission to practice in the district in this case. The court also granted the motion to consider the supplemental filings, and granted the parties’ stipulation to dismiss the case with prejudice.