Mogan v. Sacks, Ricketts & Case LLP

Background

Michael Mogan, an attorney licensed in California, sued Airbnb and three of its employees over matters related to a sanction award against him in an earlier state-court action brought on behalf of a client. The court had previously dismissed this case. The defendants then moved for sanctions under Federal Rule of Civil Procedure 11 and asked the court to declare Mogan a vexatious litigant and impose restrictions on his future filings. Mogan opposed the sanctions motion but did not oppose the vexatious-litigant motion.

Rule 11 sanctions

Rule 11 requires an attorney to certify that a filing has a reasonable factual and legal basis and is not submitted for an improper purpose. The court found that Mogan’s seven causes of action were based on allegations that Airbnb had failed to pay an arbitration fee on time, misrepresented that payment, and pursued sanctions for improper purposes. State courts had previously rejected those allegations. The state trial court found Mogan’s motion to lift a stay factually and legally frivolous, sanctioned him $22,159.50 for fees incurred by Airbnb in opposing that motion, and admonished him for accusations that Airbnb and its counsel had lied and committed fraud. The state appellate court affirmed the award.

The court concluded that Mogan’s complaint was frivolous because the claims were barred by issue preclusion, which prevents a party from relitigating issues already finally decided, and because the state-law claims were barred by California’s litigation privilege. The court also found that no reasonable attorney could have believed the complaint was well founded after an objectively reasonable investigation. It further found that the complaint was filed to harass and retaliate against the defendants by attempting to relitigate matters already decided.

The court rejected Mogan’s arguments that the defendants had not addressed each claim, had not challenged the factual support for the complaint, or had failed to provide adequate notice. The defendants served the sanctions motion more than the required safe-harbor period before filing it, and the motion identified the challenged conduct as Mogan’s filing of the complaint. The court also declined to consider Mogan’s request for sanctions against the defendants because he had not complied with Rule 11’s procedural requirements for making a sanctions motion.

The court granted the defendants’ motion for sanctions in the form of attorney’s fees and costs. Because the defendants had not submitted evidence of their fees and costs, the court ordered them to file a separate motion. Any award would be limited to reasonable expenses directly resulting from the Rule 11 violation and to the amount needed to deter repetition of the conduct.

Vexatious-litigant request

A vexatious-litigant order can restrict a person’s ability to file future cases without prior court approval. The court explained that such restrictions must satisfy procedural requirements, be based on findings of frivolousness or harassment, and be narrowly tailored to the specific misconduct.

The court denied the defendants’ motion to declare Mogan a vexatious litigant. It found that Mogan had filed only two cases in the district, that this appeared to be the only one he had filed against the Airbnb defendants, and that these appeared to be the only cases he had filed on his own behalf. The court also found that the related state-court and arbitration proceedings did not establish that a pre-filing order in this district was warranted.

Disposition

The court granted the defendants’ motion for sanctions and ordered them to submit a separate motion for attorney’s fees and costs by February 10, 2022. It denied the motion to declare Mogan a vexatious litigant. The court warned that if Mogan filed another action against the defendants based on the same group of underlying facts, it would be more likely to consider a pre-filing injunction.