Mogan v. Sacks, Ricketts & Case LLP

Background

Michael Mogan, an attorney licensed in California, sued Airbnb, three Airbnb employees—Jeff Henry, Dave Willner, and Sanaz Ebrahini—and the law firm Sacks, Ricketts & Case LLP and two of its attorneys, Michele Floyd and Jacqueline Young. Mogan’s claims concerned a sanctions award against him in an underlying state-court action.

On January 10, 2022, the court granted the defendants’ motions to dismiss all claims. Mogan then moved under Federal Rule of Civil Procedure 59(e) for relief from the judgment. That rule permits a court to alter or amend a judgment in limited circumstances, such as a clear legal or factual error, newly discovered evidence, a seriously unjust result, or an intervening change in controlling law.

Arguments concerning the Airbnb Defendants

The court’s earlier order held that Mogan’s state-law claims against the Airbnb Defendants were barred by California’s litigation privilege and issue preclusion, a rule that prevents a party from relitigating an issue already decided in an earlier case. The court also held that issue preclusion barred Mogan’s federal-law claims.

Mogan argued that the litigation privilege did not cover communications connected to an unfiled sanctions motion because, in his view, those communications were merely threats rather than steps taken in a genuine effort to pursue litigation. The court rejected that argument, reiterating that serving the motion complied with California law and was part of the litigation process. The court also stated that Mogan could not use a Rule 59(e) motion to raise arguments that he could reasonably have raised earlier.

Mogan separately argued that issue preclusion did not apply to Airbnb because Airbnb was not a party to the underlying state-court case, and that Mogan himself lacked the required relationship to a party in that earlier case. The court disagreed. It stated that identical parties are not required when the party against whom issue preclusion is asserted was in a legally sufficient relationship with a party to the earlier case. The court again relied on its prior determination that Mogan was in such a relationship with his client and should reasonably have expected to be bound by the state court’s timeliness finding, particularly because the state court had personally sanctioned and admonished him.

Mogan also argued that the court improperly took judicial notice of records from the state-court and arbitration proceedings, which he said required treating the dismissal motion as a summary-judgment motion. The court rejected that contention, explaining that it could consider undisputed public records and materials relied on in Mogan’s complaint without converting the motion to dismiss into a summary-judgment proceeding.

The court therefore denied Mogan’s motion as to the Airbnb Defendants.

Arguments concerning the SRC Defendants

Mogan asserted one abuse-of-process claim against the SRC Defendants. The court had previously dismissed that claim under California’s anti-SLAPP statute, which provides a procedure for challenging claims based on protected speech or petitioning activity. The court had concluded that the claim rested entirely on litigation-related speech and conduct protected by California law.

Mogan argued that the SRC Defendants had not submitted the original unfiled sanctions motion and related communications as evidence, but the court found that the complaint itself discussed those materials, the SRC Defendants had addressed them in their dismissal motion, and Mogan had personally asked the court to take judicial notice of them. The court therefore found no error in considering them.

Mogan also argued that the lawyers’ conduct was unethical, deceptive, and an extortionate demand not protected by the anti-SLAPP statute. The court stated that it had already considered and rejected that argument in its earlier order. Disagreement with the court’s earlier reasoning was not enough to justify relief under Rule 59(e).

The court therefore denied Mogan’s motion as to the SRC Defendants.

Disposition

The court denied Mogan’s motion for relief from judgment. It stated that Mogan had not met the demanding standard for changing a judgment in extraordinary or highly unusual circumstances. The court also stated that the time for filing a notice of appeal from the judgment begins when the denial is docketed.