IN THE UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) )

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1 Paul R. Hansmeier (MN Bar # Class Justice PLLC 0 th St. S. Suite 0 Minneapolis, MN 0 (1-01 mail@classjustice.org Attorney for Objector, Padraigin Browne In re GROUPON MARKETING AND SALES PRACTICES LITIGATION Padraigin Browne, Objector. IN THE UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA No. :-md-0-dms-rbb CLASS ACTION OBJECTOR PADRAIGIN BROWNE S MEMORANDUM OF LAW IN OPPOSITION TO PLAINTIFFS MOTION TO STRIKE PADRAIGIN BROWNE S MOTION FOR ATTORNEY S FEES AND COSTS AND FOR SERVICE AWARD DATE: TIME: CTRM: JUDGE: [TBD] [TBD] 1A Hon. Dana M. Sabraw OBJECTOR PADRAIGIN BROWNE S MEMORANDUM OF LAW IN OPPOSITION TO PLAINTIFFS MOTION TO STRIKE PADRAIGIN BROWNE S MOTION FOR ATTORNEY S FEES AND COSTS AND FOR SERVICE AWARD Objector Padraigin Browne respectfully opposes Plaintiffs Motion to Strike Padraigin Browne s Motion for Attorney s Fees and Costs and For Service Award ( Plaintiffs Motion to Strike ( Browne s Fee Application. ARGUMENT Plaintiffs position can be succinctly summarized as follows: Browne is ineligible to recover an incentive award or her attorneys fees due to the fact that the attorney who signed Browne s Fee

2 Application has a damaged reputation, notwithstanding the significant benefits that Browne has brought to the class in this case. Plaintiffs Motion to Strike is not advanced in good faith. 1 The Court should summarily deny Plaintiffs Motion to Strike and order Plaintiffs counsel to reimburse Browne the costs and fees she has been forced to incur in opposing the motion. I. Standard Of Review. A motion to strike implicates Federal Rule of Civil Procedure 1(f. Rule 1(f provides that the court may order stricken from any pleading any insufficient defense or any redundant, immaterial, impertinent, or scandalous matter. Fed. R. Civ. P. 1(f. Under the express language of the rule, only pleadings are subject to motions to strike. Sidney-Vinstein v. A.H. Robins Co., F.d 0, (th Cir. 1. See also Pickens v. U.S., 0 F. Supp. d 1, (D. Ore. 0 (denying motion to strike an expert statement on the grounds that an expert statement is not a pleading ; U.S. v. Southern Edison California Edison Co., 00 F. Supp. d (E.D. Cal. 00 (observing that motions to strike are limited to pleadings. Motions to strike are disfavored. Montecino v. Spherion Corp., F. Supp. d, - (C.D. Cal. 00 (citation omitted. While certain district courts within the Ninth Circuit appear to have invoked their inherent authority to strike documents, other than pleadings, as a sanction for litigation misconduct, or have sua sponte reinterpreted a motion to strike evidence as an invitation to make an evidentiary ruling, Plaintiffs have failed to cite a case that would justify this Court s departure from the Ninth Circuit s holding in Sidney-Vinstein under the circumstances present here. II. Browne s Fee Application Is Not The Proper Subject Of A Motion To Strike. Browne s Fee Application is not a pleading, and is therefore not the proper subject of a motion to strike. Motions to strike are limited to pleadings. Sidney-Vinstein, F.d at. Federal 1 This is not the first time that Plaintiffs have filed a meritless motion to strike in this case. On August 1, 01, Plaintiffs filed a motion to strike so-called untimely objections. Dkt.. The basis for the motion was that certain objectors filed untimely objections. Id. Although Browne s objection was timely filed and was thus not subject to the motion to strike Browne opposed the Plaintiffs motion to strike on the grounds that Plaintiffs failure to apprise class members of a revised objection deadline caused the objections to be untimely filed. Dkt.. Plaintiffs promptly withdrew the motion to strike. Dkt.. CASE NO. :-md-0-dms-rbb

3 Rule of Civil Procedure (a identifies pleadings as the complaint, answer, and reply, but not motions and other papers. See Fed. R. Civ. P. (a. Plaintiffs seek to strike a motion not a complaint, answer or reply. While certain district courts in the Ninth Circuit have invoked their inherent authority to strike documents other than pleadings as a sanction for litigation misconduct, Plaintiffs do not identify or even allege misconduct conduct in this case. Instead, Plaintiffs devote two-thirds of their Motion to Strike to discussing issues arising in unrelated cases, Plaintiffs do not cite and Browne is unaware of a single district court decision in which a district court justified striking a document in a case for issues arising in an unrelated case. III. Browne s Counsel s Reputation Is Not An Element Of The Legal Standard Governing Plaintiffs Motion To Strike. Plaintiffs devote two-thirds of their Motion to Strike to detailing how Browne s counsel suffers from a damaged reputation. It is undoubtedly true that Plaintiffs counsel suffers from damaged reputation. A district judge in the U.S. District Court for the Central District of California issued a highly punitive order against the undersigned which generated nationwide publicity. The resulting publicity resulted in a brutal domino effect, which forced the undersigned to seek protection under the U.S. Bankruptcy Code to provide for the orderly processing of claims, and sparked an ethics investigation from the Minnesota Lawyer s Board. Yet, notwithstanding the foregoing events, the undersigned remains an attorney in good standing in the State of Minnesota and in the U.S. District Court for the District of Minnesota. He While it is true that the undersigned suffers from a damaged reputation, Plaintiffs recitation of facts pertaining to the undersigned is breathtakingly inaccurate. Browne would encourage the Court to not blindly accept Plaintiffs factual assertions, but to instead carefully examine the evidence that Plaintiffs rely on in support of their assertions. The overwhelming majority of the evidence is: (a judicial opinions that are currently under appeal; (b the allegations in disciplinary proceedings in which no discipline has been imposed; (c a motion filed by an adverse party in another proceeding; and (d judicial opinions that relied on orders that are currently under appeal. None of this is admissible evidence. Further, as is argued below, none of the findings or allegations are capable of judicial notice. The referenced order is attached as an exhibit to Plaintiffs Motion to Strike. See Order Issuing Sanctions, Ingenuity1 LLC v. Doe, No. 1-cv- (C.D. Cal., May, 01. The undersigned never appeared in the underlying case, but was nevertheless subject to punishing sanctions. The pending appeal of the referenced order raises substantial questions of law regarding the limits of a district court s inherent powers. CASE NO. :-md-0-dms-rbb

4 maintains a busy practice and has represented clients in hundreds of matters since. While there is an active investigation by the Minnesota Lawyer s Board, the investigation is ongoing and no discipline has been imposed. Further, the order which sparked the enormous backlash is currently the subject of an appeal before the U.S. Court of Appeals for the Ninth Circuit. Oral argument was presented in May 01 and a decision is pending. A reversal by the Ninth Circuit will substantially restore the undersigned s reputation and significantly undermine many (if not all of the orders referenced in Plaintiffs Motion to Strike. The foregoing points are important for putting Plaintiffs attacks against the undersigned in their proper context. Ultimately, however, Plaintiffs reputational attacks are a red herring. Plaintiffs attacks are totally and completely irrelevant to the legal standard governing Plaintiffs Motion to Strike and Browne s Fee Application. Nothing about Browne s counsel s reputation has any bearing on the legal standard articulated in Section I, supra, applicable to motions to strike. For example, reputation has nothing to do with whether a pleading contains immaterial, impertinent or scandalous matter. Rule 1(f focuses on the substance of submissions to the Court, not the reputation of the person making the submission. See Fed. R. Civ. P. 1(f. Plaintiffs attacks against the undersigned are unrelated to the legal standard governing Plaintiffs Motion to Strike. As for Browne s Fee Application: as is more fully detailed in Browne s Fee Application, binding precedent requires the Court to decide Browne s Fee Application by reference to the benefit Browne has provided to the class. Browne successfully opposed the originally proposed settlement and then successfully appealed the first amended settlement agreement to the Ninth Circuit. In its order vacating the first amended settlement, the Ninth Circuit agreed with Browne that there was insufficient evidence that the amended settlement provided any benefit to the class. As a direct result of Browne s efforts, the parties have now proposed a second amended settlement agreement which provides a significantly greater benefit to the class. Plaintiffs do not dispute a single one of these points. CASE NO. :-md-0-dms-rbb

5 Instead, Plaintiffs devote their memorandum to presenting a full scale assault on the undersigned s reputation. Yet, to use hyperbole to make a point, even if the Court were to find that the undersigned has the worst reputation of any attorney in the United States, the Court would nevertheless abuse its discretion by weighing that factor in deciding Plaintiffs Motion to Strike. The undersigned s reputation is totally and completely irrelevant to the legal standard governing Plaintiffs Motion to Strike and Browne s Fee Application. To grant Plaintiffs Motion to Strike on the grounds presented by Plaintiffs would be to punish Browne for her choice of counsel. This would put the Court in the position of impermissibly interfering with Browne s right to retained counsel of her choice. Cf. U.S. v. Gonzalez-Lopez, U.S. (00 (holding that denying a defendant s right to retained counsel of choice is error that can never be harmless. While Gonzalez-Lopez was decided in the criminal context, it is not at all difficult to reason by analogy to Due Process and First Amendment concerns in the civil context. To grant Plaintiffs Motion to Strike on the grounds presented by Plaintiffs would also trigger significant jurisdictional issues. It is axiomatic that federal courts are courts of limited jurisdiction. While the Court has unquestionable power to decide issues that are properly presented to it, nothing in the Constitution or federal law authorizes a federal court to punish a litigant or her counsel for alleged misconduct in other proceedings. This Court does not sit in general jurisdiction to punish litigation misconduct in unrelated cases. There is no suggestion by Plaintiffs (or in the record that Browne or her counsel engaged in misconduct during this proceeding. To the contrary, Browne has prevailed on the merits against Plaintiffs counsel at every turn in this proceeding. Given the nationwide publicity generated by the Central District of California order, it should not surprise the Court to learn that attorneys in other cases have attempted the same strategy employed by Plaintiffs counsel in this case, i.e. using the undersigned s reputational issues as a This would be a particularly unusual result given Browne s record of success in this case. One could very well conclude that Plaintiffs counsel s extreme focus on the undersigned s reputation is a misdirection away from the fact that Browne had to go to extreme lengths to protect the class from a bad settlement that was negotiated and advanced by Plaintiffs counsel in this case. On appeal, the Ninth Circuit concluded that the record lacked evidence that the settlement negotiated by Plaintiffs counsel provided any benefit to the class. Rather than submit evidence to the Court about the benefit the vacated settlement provided to the class, the settling parties elected to present a completely revised settlement. CASE NO. :-md-0-dms-rbb

6 misdirection away from the merits of a case. Such attorneys are routinely admonished by the courts before which such tactics are employed. A transcript of a proceeding in which very similar tactics failed is attached as an exhibit to this memorandum. A similar admonishment is warranted here. A final point bears mentioning: Plaintiffs Motion to Strike lacks an evidentiary foundation. This Court may take judicial notice of the existence of other proceedings, orders, and filings, but contrary to Plaintiffs argument, a Court may not take judicial notice of findings of fact or allegations associated with third-party proceedings. See, e.g., Wyatt v. Terhune, 1 F.d 0, 1 (th Cir. 00 (holding that taking judicial notice of findings of fact from another case exceeds the limits of [Federal Rule of Evidence] Rule 01; M/V Am. Queen v. San Diego Marine Constr. Corp., 0 F.d 1, 11 (th Cir. 1 (stating the general rule that a court may not take judicial notice of proceedings or records in another cause so as to supply, without formal introduction of evidence, facts essential to support a contention in a cause then before it. Based on these authorities Browne objects to the introduction into evidence on the grounds of lack of foundation and hearsay and opposes the taking of judicial notice of the findings in Exhibits 1, -,, and 1 to Plaintiffs Motion to Strike. As a result, the overwhelming majority of the factual assertions in Plaintiffs Motion to Strike carry no more weight than an Internet blog post. IV. Plaintiffs Substantive Arguments Fail. While the overwhelming majority of Plaintiffs Motion to Strike is devoted to attacking the undersigned s reputation, Plaintiffs Motion to Strike briefly touches upon three substantive arguments. Plaintiffs argue: (1 Browne s motion should be stricken because the undersigned did not perform all of the work in this case; ( Browne s motion should be stricken because the undersigned The Ninth Circuit in Wyatt went on to state: Factual findings in one case ordinarily are not admissible for their truth in another case through judicial notice. See 1 Charles Alan Wright & Kenneth A. Graham, Jr., Federal Practice & Procedure (Supp. 001 (stating "courts should distinguish between taking judicial notice of the truth of some extrajudicial fact recited in a court record and the use of those facts for some purpose that does not depend on the truth of the facts recited". In agreement with M/V Am. Queen, other circuits have held that a court may not take judicial notice of findings of fact from a different case for their truth. Taylor v. Charter Med. Corp., 1 F.d, 0 (th Cir. 1; Int'l Star Class Yacht Racing Ass'n v. Tommy Hilfiger U.S.A., Inc., 1 F.d, 0 (d Cir. 1; Gen. Elec. Capital Corp. v. Lease Resolution Corp., 1 F.d, - & n. (th Cir. 1; Orix Credit Alliance, Inc. v. Delta Res., Inc. (In re Delta Res., Inc., F.d, (th Cir. 1; United States v. Jones, F.d 1, 1 (th Cir. 1; Holloway v. Lockhart, 1 F.d, - (th Cir. 1. CASE NO. :-md-0-dms-rbb

7 did not include a claim for fees in his bankruptcy schedules; and ( Browne s motion should be stricken because the undersigned is not a member of the bar of the U.S. District Court for the Southern District of California. As an initial matter, while Plaintiffs substantive arguments may be appropriate in the context of a memorandum opposing Browne s motion, none of these arguments are proper grounds for striking a document. Rule 1(f allows courts to strike from any pleading an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter. Fed. R. Civ. P. 1(f. Even if Browne s motion was a pleading, Plaintiffs arguments do not touch on Browne s Fee Application being redundant, immaterial, impertinent or scandalous. These arguments suffer from a further fatal flaw: absent exceptions not relevant here, the attorneys fee award is Browne s property interest, not her attorneys. For example, in Commissioner v. Banks, U.S. (00, the Court approvingly cited Judge Posner s observation: [T]he contingent fee lawyer is not a joint owner in his client s claim in the legal sense any more than the commission salesman is a joint owner of his employer s accounts receivable. Banks, U.S. at. In Evans v. Jeff D., U.S. 1 (1, Justice Brennan observed, As a formal matter, of course, the statutory [attorneys ] fee belongs to the plaintiff, and thus technically the decision to waive entails a sacrifice only by the plaintiff. Evans, U.S. at (Brennan, J. dissenting. Each of Plaintiffs substantive arguments attacks the undersigned s standing to move for an award of attorney s fees, even though it is Browne on whose behalf the Browne Fee Application has been submitted. Thus, each of Plaintiffs substantive arguments fail. First, Plaintiffs argument that it is improper for the undersigned to seek fees for work performed by other attorneys is irrelevant because the undersigned is not attempting to do that. Browne is the party in interest. Any recovery of fees will be Browne s property, will be taxable to Browne, and will be distributed to her attorneys by her, less applicable taxes. Banks, U.S. at. Nathan Wersal, for example, an attorney who successfully represented Browne in her appeal before the Ninth Circuit stands to receive a substantial distribution of any award of fees by this Court. See also Evans, U.S. at 0 n.1 (collecting cases. CASE NO. :-md-0-dms-rbb

8 Second, Plaintiffs argument that the undersigned is estopped from seeking a recovery of his fees due to his bankruptcy proceeding is similarly irrelevant. Again, the undersigned is not seeking a recovery of his fees; Browne is seeking a fee recovery. Nothing in the Bankruptcy Code requires the undersigned to list the property interests of his clients on a bankruptcy schedule, and nothing in the law of estoppel can possibly bind one of the undersigned s clients with respect to a proceeding to which his client is not a party. Third, Plaintiffs argue that the undersigned is not entitled to move for a fee award because he is not admitted to the U.S. District Court for the Southern District of California. Once again, the undersigned is not moving for a fee award; his client is. Further, and perhaps more to the point, there is no admission requirement in this district with respect to multidistrict litigation cases. For example, the attorney registration portal of this court contains the following language: Attorneys appearing in MDL cases are not required to be admitted to our court or appear pro hac vice. There are no fees for attorneys appearing in MDL cases, unless otherwise specified by the Court. See Admission & CM/ECF Registration, located at (last visited on February, 01. There is no order in the docket that imposes a special registration requirement on out-of-state attorneys appearing in this case; unsurprisingly, then, there are no applications for pro hac vice admission in the docket of this case. Contrary to Plaintiffs assertions, Browne s counsel was not required to file a pro hac vice application to appear in this multidistrict litigation. V. Plaintiffs Counsel Should Be Required To Personally Satisfy The Costs And Fees Browne Incurred In Opposing Plaintiffs Motion To Strike. Plaintiffs counsel should be required to personally satisfy the costs and fees Browne incurred in opposing Plaintiffs Motion to Strike. All of the requirements of U.S.C. 1 and all of the requirements inherent authority sanctions are satisfied. Sanctions are warranted under U.S.C. 1 and the court s inherent sanctioning authority. Pursuant to U.S.C. 1, [a]ny attorney who multiplies the proceedings in any case unreasonably and vexatiously may be required by the court to satisfy personally the excess costs, Unlike the attachments to Plaintiffs motion, this is a fact capable of judicial notice. CASE NO. :-md-0-dms-rbb

9 expenses, and attorney s fees reasonably incurred because of such misconduct. The Court also possesses an inherent sanctioning authority. Recklessness suffices for 1 sanctions, but sanctions imposed under the district court s inherent authority require a bad faith finding. See Lahiri v. Universal Music and Video Distribution, 0 F.d (th Cir. 0. Either standard is satisfied where an attorney knowingly and recklessly files improper documents. See B.K.B. v. Maui Police Dep't, F.d 1, 0-0 (th Cir.00 (attorney's knowing and reckless introduction of inadmissible evidence was tantamount to bad faith and warranted sanctions under 1 and the court's inherent power. Plaintiffs Motion to Strike easily satisfies either standard. Plaintiffs Motion to Strike does not reference, much less apply, the legal standard applicable to motions to strike. Two-thirds of Plaintiffs Motion to Strike is devoted to attacking the undersigned s reputation based on statements that are unsupported by admissible evidence. When Plaintiffs Motion to Strike finally turns to substantive arguments, the arguments are frivolous under any legal standard. For example, an argument that Browne s motion should be stricken because her attorney is not admitted to practice before the Court is made in bad faith where no such admission requirement exists. As a result of Plaintiffs bad faith Motion to Strike, the proceedings have been multiplied and Browne has incurred excess costs and fees, i.e. costs and fees she would not have incurred had Plaintiffs Motion to Strike never been filed. Plaintiffs counsel are experienced attorneys who have been entrusted with the significant responsibility of representing the interests of a nationwide class of plaintiffs; they have no excuse for presenting bad faith arguments to the Court and should be held accountable for doing so. CASE NO. :-md-0-dms-rbb

10 CONCLUSION The Court should deny Plaintiffs Motion to Strike and order Plaintiffs counsel to reimburse Browne the costs and fees she incurred in opposing Plaintiffs Motion to Strike Dated: February 1, 01 Respectfully submitted, /s/ Paul Hansmeier Paul R. Hansmeier (MN Bar # Class Justice PLLC 0 th St. S. Suite 0 Minneapolis, MN 0 (1-01 mail@classjustice.org Attorney for Objector Browne CASE NO. :-md-0-dms-rbb

11 CERTIFICATE OF SERVICE The undersigned hereby certifies that on February 1, 01, all individuals of record who are deemed to have consented to electronic service are being served a true and correct copy of the foregoing document using the Court s ECF system. /s/ Paul R. Hansmeier CASE NO. :-md-0-dms-rbb