Best Odds Corp. v. Ibus Media Ltd.

MEMORANDUM

Best Odds Corp. appeals the district court’s order issuing sanctions under 28 U.S.C. § 1927 . We have jurisdiction pursuant to 28 U.S.C. § 1291 . We reverse and vacate the award of attorneys’ fees.

The district court abused its discretion by imposing sanctions under § 1927, because the act of filing a complaint is not sanctionable under that section. See McCabe v. Arave, 827 F.2d 634, 639 (9th Cir. 1987) (“For a sanction to be validly imposed, the conduct in question must be sanctionable under the authority relied on.”). Section 1927 permits a court to require “[a]ny attorney ... who so multiplies the proceedings in any case unreasonably and vexatiously ... to satisfy personally the excess costs, expenses, and attorneys’ fees reasonably incurred because of such conduct.” However, “§ 1927 cannot be applied to an initial pleading.” Moore v. Keegan Mgmt. Co. (In re Keegan Mgmt. Co. Sec. Litig.), 78 F.3d 431, 435 (9th Cir. 1996). “The filing of a complaint may be sanctioned pursuant to Rule 11 or a court’s inherent power, but it may not be sanctioned pursuant to § 1927.” Id.

Defendants appear to justify the use of § 1927 by claiming that the filing of the complaint in…