Mogan v. Sacks, Ricketts & Case LLP

Background

Michael Mogan sued Airbnb, three of its employees, Sacks, Ricketts & Case, LLP, and two of that firm’s attorneys. The opinion says the claims concerned a sanction award in an underlying state-court action. On January 10, 2022, the court granted the defendants’ motions to dismiss all claims. It also directed the Sacks, Ricketts & Case defendants to file a separate motion for attorney fees after granting their motion under California’s anti-SLAPP statute, a law providing an early procedure for challenging lawsuits that target protected speech or petitioning activity.

On January 12, 2022, the court granted the Airbnb defendants’ motion for sanctions under Federal Rule of Civil Procedure 11 and directed them to file a separate fee motion. Both fee motions were pending when Mogan filed a bankruptcy petition in the Northern District of Illinois. One day before his opposition to the Airbnb defendants’ motion was due, Mogan asked the court to stay all proceedings or, alternatively, extend his response deadline by two weeks.

Court’s analysis

A bankruptcy petition generally pauses judicial proceedings against the person who filed for bankruptcy. The court concluded that this exception did not apply to the pending fee proceedings.

As to the Airbnb defendants’ Rule 11 fee motion, the court relied on decisions from the Ninth and Seventh Circuits holding that sanctions for litigation misconduct fall within the bankruptcy statute’s exception for actions enforcing governmental police or regulatory powers. The court reasoned that judgment had already been entered, sanctions had already been granted, and only the monetary amount remained to be determined. It also stated that the exception applied even though the money would go to private defendants rather than the government, because monetary sanctions can serve a deterrent and regulatory purpose.

As to the Sacks, Ricketts & Case defendants, the court applied the same reasoning to the attorney-fee award under California’s anti-SLAPP statute. It said allowing Mogan to avoid or delay that award through bankruptcy would conflict with the statute’s purpose of quickly addressing meritless lawsuits that chill protected expression through expensive litigation.

The court separately considered Mogan’s notice of appeal. It said the notice was premature as to the Rule 11 sanctions because the amount had not yet been fixed, so the notice did not remove the district court’s authority to determine the amount. The court also said the anti-SLAPP ruling was interlocutory and could not be immediately appealed, and therefore the appeal did not stay the fee proceedings.

Disposition

The court held that Mogan’s bankruptcy filing did not affect its authority to award attorney fees under Rule 11 or California’s anti-SLAPP statute. It denied Mogan’s request to stay the proceedings. Because the opposition deadline passed while the request was pending, the court extended Mogan’s deadline to file opposition to the fee motions to March 10, 2022, and directed defendants to file replies by March 24, 2022. The court stated that it would decide after briefing whether oral argument was necessary.