Best Odds Corp. v. IBUS MEDIA LIMITED and IBUS MEDIA HOLDINGS (IOM) LIMITED

NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
BEST ODDS CORP.,
Plaintiff-Appellant,
v.
IBUS MEDIA LIMITED and IBUS
MEDIA HOLDINGS (IOM) LIMITED,
Defendants-Appellees.
No. 15-15159
D.C. No.
2:14-cv-00932-RCJ-VCF
MEMORANDUM*
Appeal from the United States District Court
for the District of Nevada
Robert Clive Jones, District Judge, Presiding
Argued and Submitted July 7, 2016
San Francisco, California
Before: BERZON, and N.R. SMITH, Circuit Judges, and CHRISTENSEN,**
Chief District Judge.
FILED
JUL 21 2016
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
* This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
** The Honorable Dana L. Christensen, United States Chief District
Judge for the District of Montana, sitting by designation.

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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 the second lawsuit could be viewed as an attempt to make an
additional filing in the initial lawsuit, thus multiplying the proceedings therein.
However, this claim is not supported by the record. The district court made clear
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that it was imposing sanctions as a result of Best Odds filing a complaint in the
second lawsuit. The court explained, “Defendants argue that the filing of a lawsuit
the Court did not have jurisdiction to enteratin was unreasonable and vexatious.
The Court agrees.”
Defendants moved for sanctions based on § 1927 or, in the alternative, the
district court’s inherent power. However, the district court relied only on § 1927 in
imposing sanctions. After reviewing the record in this case, we conclude that the
district court also would have abused its discretion had it imposed sanctions on
Best Odds’ attorney based on its inherent power. The record does not support a
finding of bad faith. See In re Keegan Mgmt. Co. Sec. Litig., 78 F.3d at 436–37
(“In sanctioning counsel, courts may not invoke inherent powers without a specific
finding of bad faith.” (internal quotation marks and alterations omitted)).
The parties shall bear their own costs on appeal.
REVERSED and VACATED.
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