FILED

NOT FOR PUBLICATION

DEC 16 2016

UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK

U.S. COURT OF APPEALS

FOR THE NINTH CIRCUIT

R. PRASAD INDUSTRIES, a Guyanese No. 14-17088

company, D.C. No. 3:12-cv-08261-JAT Plaintiff-Appellee,

v. MEMORANDUM*

FREDERIC M. DOUGLAS,

Defendant-Appellant,

v.

FRANKLIN THOMAS HOVORE; JANE

DOE HOVORE; POWERS & HOVORE

PLLC; HOVORE LAW PLLC,

Third-party-defendants- Appellees.

Appeal from the United States District Court for the District of Arizona James A. Teilborg, District Judge, Presiding

Argued and Submitted November 15, 2016 San Francisco, California

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. Before: SCHROEDER, REINHARDT, and OWENS, Circuit Judges.

Frederic M. Douglas appeals the order of the district court imposing

sanctions pursuant to 28 U.S.C. § 1927. The sanctions were imposed after Douglas

filed a document entitled “First Amended Answer Counterclaims, Cross-Claims

and Jury Demand” (“FAACC”), in contentious proceedings arising out of a

fertilizer contract. Although sanctions had been sought by Plaintiff and its counsel,

Hovore, the court imposed sanctions only for the filings aimed at attorney Hovore.

The district court correctly observed that Hovore was not a party to the action. The

claims Douglas attempted to assert in those filings were not authorized by the

Federal Rules of Civil Procedure and included claims based on allegations of

extortion founded on conduct that was lawful under the relevant Arizona statute.

Section 1927 authorizes the imposition of sanctions against an attorney who

“multiplies the proceedings in any case unreasonably and vexatiously . . . .” The

filings unreasonably multiplied proceedings for, as the district court observed,

Douglas failed to respond to Plaintiff’s and Hovore’s original motions to dismiss

the counterclaims and instead realigned the claims and added an additional claim.

The district court found this a transparent attempt to preserve diversity jurisdiction

and re-raise baseless claims, instead of responding to the pending motions. The

2 district court’s finding that Douglas acted recklessly is fully supported by the

record.

Douglas contends that, as a matter of law, the FAACC was an “initial

pleading” to which § 1927 does not apply. See Moore v. Keegan Mgmt. Co., 78

F.3d 431, 435 (9th Cir. 1996). Douglas’s sanctioned filings did not initiate this

litigation. It was already underway. Sanctions were not imposed upon Douglas’s

original pleadings, but on the claims as asserted in the FAACC. These

unreasonably prolonged and complicated the litigation. We cannot conclude the

district court abused its discretion by imposing sanctions. See MGIC Indem. Corp.

v. Moore, 952 F.2d 1120, 1122 (9th Cir. 1991).

Douglas also challenges the amount of the award. It was determined by use

of the lodestar method after careful review of the record. We have recognized that

lodestar is the appropriate method for calculating attorney’s fees. See Jordan v.

Multnomah County, 815 F.2d 1258, 1262 (9th Cir. 1987). There was no abuse of

discretion in the district court’s refusal to reduce the award, because Douglas’s

mere assertion of financial hardship provided no basis on which the court could

tailor a reduction.

3 Whatever improprieties there may have been in the documentation provided

in support of Hovore’s reply, they were not material, as the district court did not

rely on those exhibits.

AFFIRMED.

4

FILED

Douglas v Hovore 14-17088

DEC 16 2016

REINHARDT, Circuit Judge, dissenting: MOLLY C. DWYER, CLERK

U.S. COURT OF APPEALS

This litigation began when Hovore, on behalf of Prasad Industries, filed

thirteen civil claims -- including RICO -- in what Hovore’s counsel on appeal

described at oral argument as a “simple contract case.” Hovore followed up with a

demand letter threatening criminal action if a large sum of money was not

immediately transferred. Douglas filed the “First Amended Answer,

Counterclaims, Cross-Claims and Jury Demand” in response. I do not believe that

Douglas’s action was sufficiently reckless to justify sanctions under 28 U.S.C. §

1927. Contrary to the District Court’s conclusion, a “cursory reading” of the

Federal Rules of Civil Procedure does not show that the filing was improper.

Moreover, the filing did not require Prasad “to obtain independent representation

during the pendency of the improperly pleaded claims against Hovore,” as the

District Court incorrectly stated. I would, therefore, reverse the award of sanctions

against Douglas.