Re: 8/29/05 - [UCSY] UCSY vs. Turner: "defendants’ motion for attorneys’ fees and sanctions [D.E. 27] is GRANTED"
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
MIAMI DIVISION
CASE NO. 05-20047-CIV-JORDAN
UNIVERSAL COMMUNICATION SYSTEMS, INC., et al.,
Plaintiffs
vs.
TURNER BROADCASTING SYSTEM, INC. et al.,
Defendants
ORDER
On January 7, 2005, the plaintiffs filed a one-count complaint alleging a claim for defamation against the media defendants. See Compl. [D.E. 1]. The complaint alleges that a third party (not the media defendants) disseminated allegedly defamatory statements about the plaintiffs on the “Raging Bull” website allegedly operated by Lycos, Inc., who is not a defendant in this action. See generally id. On January 21, 2005, the plaintiffs filed an amended complaint, containing the same defamation count against the media defendants, but adding a count for defamation against John Doe #1 and John Doe #2. See Am. Compl [D.E. 8]. The John Does are not alleged to be related in any way to the media defendants. See id.
On February 7, 2005, the media defendants filed a motion to dismiss the amended complaint, [D.E. 17, 8], and on February 28, 2005, they filed a motion for attorneys’ fees and sanctions. [D.E. 27]. On March 18, 2005, I dismissed the amended complaint for lack of subject matter jurisdiction and alternatively for failure to state a claim upon which relief may be granted. See Order of Dismissal [D.E. 32]. I reserved judgment, however, on whether the media defendants would be entitled to attorneys’ fees and/or sanctions under Rule 11. I now address the media defendants’ motion for attorneys’ fees and sanctions [D.E. 27], which is GRANTED.
“Rule 11 stresses the need for some prefiling inquiry.” See Worldwide Primates v. McGreal, 87 F.3d 1252, 1254(11th Cir. 1996). “Rule 11 sanctions are proper (1) when a party files a pleading that has no reasonable factual basis: (2) when the party files a pleading that is based on a legal theory that has no reasonable chance of success and that cannot be advanced as a reasonable argument to change existing law; or (3) when the party files a pleading in bad faith for an improper purpose.” See id. (citations omitted). In the Eleventh Circuit, “a court confronted with a motion for Rule 11 sanctions first determines whether the party’s claims are objectively frivolous - in view of the facts or law - and then, if they are, whether the person who signed the pleadings should have been aware that they were frivolous; that is, whether he would have been aware had he made a reasonable inquiry.” See Id. If the attorney failed to make a reasonable inquiry, then the court must impose sanctions despite the attorney’s good faith belief that the claims were sound. Id. The reasonableness of the inquiry may depend on such factors as how much time for investigation was available to the signer; whether he had to rely on a client for information as to the facts underlying the violative document; or whether he depended on forwarding counsel or another member of the bar. See id.
Here, the plaintiffs’ claim against the media defendants was objectively frivolous. As explained in the order of dismissal, the claim had no reasonable basis in fact or law. Indeed, the plaintiffs concede that the media defendants are “not the source or origin of the defamatory statements,” and that the media defendants “[do] not host the Raging Bull web site, nor [are they] responsible for administration thereof.” See P1. Resp. Memo [D.E. 31] at 2. Further, the plaintiffs admit that their claims against the media defendants are “not based upon their origination of the defamatory posting, but rather seeks to hold [them] accountable for the misuse of [their] intellectual property See Id. As set out in the order of dismissal, however, there is no legal basis under Florida law for the plaintiffs to sue the media defendants for defamation because they were not publishers of the defamatory statements. See Order of Dismissal at 4.
Furthermore, I conclude that the plaintiffs did not have a good faith basis for seeking an extension of currently existing law. See Fox v Acadia State Bank. 937 F.2d 1566, 1570(11th Cir. 1991) (affirming grant of Rule 11 sanctions where the plaintiffs presented “no argument, let alone good faith argument” for the reversal or modification of existing law); Di Sisto College, Inc. v. Line. 888 F.2d 755, 766 (11th Cir. 1989) (affirming grant of Rule 11 sanctions because the plaintiffs’ counsel failed to acknowledge that “the binding precedent of [the Eleventh] Circuit disfavored [the] plaintiffs’ position on legislative immunity,” and although counsel insisted that his position was warranted by the law of another circuit. he failed to make any argument that the Eleventh Circuit’s existing law should be extended to incorporate that position).
The next question, then, is whether the plaintiffs’ counsel knew, or would have known upon a reasonable inquiry, that the claims were frivolous. I conclude that Mr. Faro failed to make a reasonable inquiry into the facts on which the plaintiffs’ defamation claim was predicated. Had he made such a reasonable inquiry, he would have discovered that the plaintiffs’ defamation claim against the media defendants was frivolous. Indeed, a reasonable inquiry into the law of defamation would have revealed that the fundamental elements of a defamation claim were lacking, and that there was no legal authority for recovery under any of the theories the plaintiffs alleged.
Under Worldwide Primates, my findings thus far mandate the award of sanctions against Mr. Faro. See 87 F.3d at 1254. Rule 11 sanctions are even more appropriate here, however, because there is evidence that the plaintiffs filed their amended complaint in bad faith or for improper purposes. See id.
As the media defendants have pointed out, the plaintiffs filed several other lawsuits against Lycos, Inc. and other third parties related to the web sites also at issue in this action. See Universal Communication Systems, Inc. et al. v Lycos. Inc. ,et al., Case No. 04-21618 (S.D. Fla.); Universal Communication Systems, Inc., et al. V Lycos, Inc., et al., Case No. 05-20 149 (S.D. Fla.); Zwebner, et al. v. Coughlin, et al., Case No. 05-20 168 (S.D. Fla.). The media defendants are not named in these lawsuits. Significantly, however, the plaintiffs attached to the amended complaint a letter dated January 6, 2005 - a day or two after Lycos opposed the plaintiffs’ motion to compel discovery - from Mr. Faro to Johnita Due, in-house counsel for CNN. In that letter (attached as Exhibit 3 to the first amended complaint), Mr. Faro states:
[My] clients believe that there are both political and business pressures that can be brought to bear by CNN/AOL upon Lycos to cause them to exercise responsible internet community citizenship and, once and for all, permanently deny’ access to their Raging Bull web sites by individuals whom they know are abusive and misuse their web services to manipulate securities and/or extortion.
This statement evinces that the plaintiffs filed their complaint in federal court for the sole underlying purpose of exerting “political and business pressures” upon a defendant in another lawsuit, and to obtain discovery it had been denied in the other cases. See Pelletier v. Zwefel, 921 F .2d 1465, 1515 (11th Cir. 1991) (“Where.... . [the court has] no direct evidence of the party’s and counsel’s state of mind, [the court] must examine the circumstantial evidence at hand and ask, objectively, whether an ordinary person standing in the party’s or counsel’s shoes would have prosecuted the claim.”). Given the plaintiffs’ lack of reasonable inquiry, and the statements in Mr. Faro’s letter to one of the media defendants, I conclude that an ordinary person in the plaintiffs’ and Mr. Faro’s shoes would not have prosecuted this claim. On the record available to me, I find strong circumstantial evidence that the plaintiffs brought this defamation suit against the media defendants for an improper purpose.
For the foregoing reasons, and pursuant to Rule 11, the media defendants’ motion for attorneys’ fees and sanctions [D.E. 27] is GRANTED. In accordance with Rule 11 (c)(2), the media defendants are entitled to their reasonable attorneys’ fees and costs related to the defense of this action from plaintiffs’ counsel. If the parties cannot agree as to the amount, the media defendants shall file a more detailed motion as required by Local Rule 7.3(B) by no later than September 10, 2005.
DONE and ORDERED in chambers in Miami, Florida, this 29th day of August, 2005.
Adalberto Jordan
United States District Judge
Copy to: Magistrate Judge Klein
All counsel of record
AI
