Mogan v. Sacks, Ricketts & Case LLP ( 2022 )

1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 MICHAEL MOGAN, Case No. 21-cv-08431-TSH 8 Plaintiff, ORDER DENYING PLAINTIFF’S EX- 9 v. PARTE APPLICATION FOR STAY OF JUDGMENT 10 SACKS, RICKETTS & CASE LLP, et al., Re: Dkt. No. 90 11 Defendants. 12 13 14 I. INTRODUCTION 15 Pending before the Court is an Ex-Parte Application for Stay of Judgment Pending Appeal, 16 filed by Plaintiff Michael Mogan. ECF No. 90. Airbnb Defendants and SRC Defendants filed 17 Oppositions (ECF Nos. 92, 93) and Mogan filed a Reply (ECF No. 94). The Court finds this 18 matter suitable for disposition without oral argument. See Civ. L.R. 7-1(b). Having considered 19 the parties’ positions, relevant legal authority, and the record in this case, the Court DENIES 20 Mogan’s ex-parte application for the following reasons. 21 22 II. BACKGROUND 23 The facts of this case are well known to the parties, and the Court has previously 24 summarized this case’s background in its Order Granting Defendants’ Motions to Dismiss. ECF 25 No. 38; Mogan v. Sacks, Ricketts & Case LLP, Case No. 21-cv-8431-TSH, 2022 WL 94927, at *2- 26 4 (N.D. Cal. Jan. 10, 2022). The Court incorporates by reference the factual background set forth 27 therein. 1 $162,160.20 and costs of $573.90. ECF No. 82. The Court also granted SRC Defendants’ Motion 2 for Attorneys’ Feres of $16,399.00. Id. On May 31, 2022, Mogan filed an Ex-Parte Application 3 for Stay of Judgment. ECF No. 90. On June 14, 2022, Airbnb Defendants and SRC Defendants 4 filed Oppositions. ECF Nos. 92, 93. On June 21, 2022, Mogan filed a reply. ECF No. 94. 5 6 III. DISCUSSION 7 Mogan requests the Court stay judgment in the present action under Federal Rules of Civil 8 Procedure 62(c) and 62(d), and Bankruptcy Code 11 U.S.C. § 362(a). ECF Nos. 90, 94. 9 Defendants oppose a stay. ECF Nos. 92, 93. 10 A. Federal Rule of Civil Procedure 62(c) 11 Mogan argues he is likely to succeed on the merits of his appeal and requests a stay under 12 Federal Rule of Civil Procedure 62(c) (“Rule 62(c)”). ECF No. 90 at 2-9. 13 Unless ordered otherwise, “an interlocutory or final judgment in an action for an injunction 14 or receivership” is “not stayed after being entered.” Fed. R. Civ. P. 62(c). “A stay pending appeal 15 overlaps with the function of an injunction—each prevents ‘some action before the legality of that 16 action has been conclusively determined.’” Tri-Dam v. Frazier, Case No. 20-cv-00408-SKO, 17 2022 WL 2067878, at *4 (E.D. Cal. June 8, 2022) (citing Nken v. Holder, 556 U.S. 418, 428–29 18 (2009)). The party requesting a stay pending appeal must show either (1) a strong likelihood of 19 success on the merits of its appeal and the possibility of irreparable harm, or (2) that serious 20 questions regarding the merits exist and the balance of hardships tips sharply in its favor. See 21 Golden Gate Restaurant Ass'n v. City and County of San Francisco, 512 F.3d 1112, 1115–16 (9th 22 Cir. 2008). The Court has discretion to issue a stay “dependent upon the circumstances of the 23 particular case.” Lair v. Bullock, 697 F.3d 1200, 1203 (9th Cir. 2012). 24 The Court declines to issue a stay under Rule 62(c). Mogan argues he is likely to succeed 25 on the merits of his appeal because Airbnb Defendants did not mitigate fees before filing their 26 Rule 11 motion, Mogan did not consent to magistrate jurisdiction over the Rule 11 motion, 27 Mogan’s lack of notice of the Rule 11 motion, Defendants’ lack of evidence supporting reasonable 1 sua sponte. ECF No. 90 at 2-9. Notably, however, the Court addressed and has already rejected 2 these arguments in the Court’s Order Re: Defendants’ Motions for Attorneys’ Fees and Costs. See 3 ECF No. 82 at 3 n.1 (“The Court addressed Mogan’s argument regarding notice in the Sanctions 4 Order, ECF No. 50 at 7-8, and Mogan consented to magistrate judge jurisdiction. . . [Here,] 5 [s]anctions were imposed under Rule 11. . . upon Airbnb Defendants’ Motion for Sanctions.”), 5 6 (“Mogan argues. . . the O’Melveny Attorneys did not mitigate expenses . . . ‘The duty to mitigate, 7 however, does not require a party to take actions that would impair its rights.’ . . . Given the 8 history of this case, the Court declines to reduce the requested hours for this reason.”), and 6 (“The 9 Court finds Airbnb Defendants’ supporting declarations and exhibits, which include itemized 10 billing records, to be sufficient evidence of the O’Melveny Attorneys’ billing practices.”) 11 Mogan’s arguments ignore the Court’s previous order and Mogan fails to present case law 12 supporting either a strong likelihood of success or serious questions regarding the merits of his 13 appeal. The Court DENIES Mogan’s request to stay under Rule 62(c). 14 B. Federal Rule of Civil Procedure 62(d) 15 Mogan requests a stay under Federal Rule of Civil Procedure 62(d) (“Rule 62(d)”) and 16 seeks a waiver of Rule 62(d)’s bond requirement. ECF No. 90 at 1; 94 at 3-5. 17 “While an appeal is pending from an interlocutory order or final judgment that grants, 18 continues, modifies, refuses, dissolves, or refuses to dissolve or modify an injunction, the court 19 may suspend, modify, restore, or grant an injunction on terms for bond or other terms that secure 20 the opposing party's rights.” Fed. R. Civ. P. 62(d). Rule 62(d) “requires that a party appealing a 21 monetary judgment obtain a supersedeas bond in order to obtain a stay on appeal.” Lowery v. 22 Rhapsody International, Inc., 2022 WL 267442, at * 1 (N.D. Cal. Jan. 28, 2022). However, the 23 Court has the authority to waive the bond requirement. See Rachel v. Banana Republic, Inc., 831 24 F.2d 1503, 1505 n.1 (9th Cir. 1987) (“District courts have inherent discretionary authority in 25 setting supersedeas bonds”). “Courts in the Ninth Circuit regularly use the Dillon factors in 26 determining whether to waive the bond requirement.” Kranson v. Fed. Express Corp., No. 11-cv- 27 05826-YGR, 2013 WL 6872495, at *1 (N.D. Cal. Dec. 31, 2013). The Dillon factors include: required to obtain a judgment after it is affirmed on appeal; (3) the 1 degree of confidence that the district court has in the availability of funds to pay the judgment; (4) whether the defendant's ability to pay 2 the judgment is so plain that the cost of a bond would be a waste of money; and (5) whether the defendant is in such a precarious financial 3 situation that the requirement to post a bond would place creditors of the defendant in an insecure position. 4 Dillon v. City of Chicago, 866 F.2d 902, 904-05 (7th Cir. 1988) (internal citations and quotations 5 omitted). As the party seeking a waiver, Mogan must “objectively demonstrate” the reasons for 6 departing from the usual requirement of a full supersedeas bond. Lowery, 2022 WL 267442 at *1. 7 The Court finds Mogan fails to objectively demonstrate sufficient reasons supporting 8 waiver of Rule 62(d)’s bond requirement. Because Mogan’s bankruptcy proceedings are pending 9 and Mogan is “still seeking reorganization under the Bankruptcy laws,” the first and second Dillon 10 factors weigh against waiver. Compare with Dillon, 866 F.2d at 905 (granting waiver because 11 party “demonstrated the existence of previously appropriated funds, available for the purpose of 12 paying judgments without substantial delay or other difficulty.”). Mogan further argues he is 13 unable to pay the judgment. ECF No. 94 at 5. However, “[t]his argument, almost by necessity, 14 means that [Mogan’s] ability to pay the final judgment is not so plain as to make a bond a waste of 15 money. It also directly undermines the Court's confidence in [Mogan’s] ultimate ability to pay the 16 judgment.” Lowery, 2022 WL 267442 at * 2. “Given that [Mogan] asserts that the judgment in 17 this case presents an extreme financial burden, the Court believes a bond is necessary to protect 18 [Defendants’] interest in eventual collection of the judgment.” Id.; see N.L.R.B. v. Westphal, 859 19 F.2d 818, 819 (9th Cir. 1988) (“The posting of a bond protects the prevailing [party] from the risk 20 of a later uncollectible judgment and compensates him for delay in the entry of the final 21 judgment.”) Accordingly, the Court DENIES request to stay and waive the bond requirement 22 under Rule 62(d). 23 C. Bankruptcy Code 11 U.S.C. § 362(a) 24 Mogan argues Section 362(a)(1) prohibits the commencement or continuation of judicial 25 proceedings because Mogan’s bankruptcy proceedings are still pending. ECF No. 90 at 10-11. 26 The Court disagrees and has addressed Mogan’s Section 362(a) arguments in its March 3, 27 2022 Order Denying Mogan’s Motion to Stay. ECF No. 76. The Court’s order explained: Generally, the filing of a bankruptcy petition operates to stay the 1 continuation of a judicial proceeding against the debtor that was commenced prior to the filing of the petition. 11 U.S.C. § 362(a)(1). 2 However, there are exceptions to the automatic stay provisions. Id. § 362(b). 3 . . . . 4 [B]oth the Ninth Circuit and the Seventh Circuit (where Mogan filed 5 for bankruptcy) have found that sanctions for misconduct are exempt from the automatic stay pursuant to § 362(b)(4), which exempts 6 actions brought pursuant to governmental police or regulatory powers. See Alpern v. Lieb, 11 F.3d 689, 690 (7th Cir. 1993) (“[A] 7 proceeding to impose sanctions under Rule 11 is exempt from the automatic stay, pursuant to 11 U.S.C. § 362(b)(4)[.]”; In re Berg, 230 8 F.3d 1165, 1168 (9th Cir. 2000) (“the § 362(b)(4) governmental regulatory exemption applies to this court’s award of attorneys’ 9 fees”). The purpose of this exception “is to prevent the bankruptcy court from becoming a haven for wrongdoers.” CFTC v. Co Petro 10 Mktg. Group, Inc., 700 F.2d 1279, 1283 (9th Cir. 1983). 11 ECF No. 76 at 1-2. Here, the Court granted Airbnb Defendants’ Rule 11 Motion for Sanctions and 12 ordered sanctions in the form of attorneys’ fees and costs. ECF Nos. 32, 50. “As an award of 13 sanctions under Rule 11 is not subject to the automatic bankruptcy stay, there is no reason to stay 14 the Airbnb Defendants’ motion.” ECF No. 76 at 2. 15 Regarding the Court’s award of attorneys’ fees to SRC Defendants, “California courts 16 have similarly applied Berg in finding ‘the automatic stay does not preclude [] court[s] from 17 imposing sanctions on a party and/or his attorney for abusing the appellate process or otherwise 18 violating the rules of this court.’” Id. at 2-3 (citing Keitel v. Heubel, 103 Cal. App. 4th 324, 334 19 (2002)). “[A]llowing Mogan to evade the attorney fee award would run contrary to the purpose 20 of anti-SLAPP statutes, which are ‘designed to allow the early dismissal of meritless lawsuits 21 aimed at chilling expression through costly, time-consuming litigation.’” Id. at 3 (internal 22 citations omitted). Therefore, “the Court finds Mogan’s bankruptcy filing has no bearing on the 23 Court’s authority to award attorney’s fees under Federal Rule of Civil Procedure 11 and 24 California’s anti-SLAPP statute.” Id. at 4. The Court DENIES Mogan’s request to stay under 25 Bankruptcy Code 11 U.S.C. § 362(a). 26 27 1 IV. CONCLUSION 2 For the reasons stated above, the Court DENIES Mogan’s Application for Stay of 3 || Judgment. 4 IT IS SO ORDERED. 5 6 || Dated: July 25, 2022 TAA. Ip THOMAS S. HIXSON 8 United States Magistrate Judge 9 10 11 a 12 13 © 15 16 = 17 Z 18 19 20 21 22 23 24 25 26 27 28