From Saturday’s decision in Rogers v. Low Income Investment Fund, decided by Judge William Alsup (N.D. Cal.):
In this employment-discrimination action, a non-profit community development organization and its then-employees move for summary judgment against a job applicant’s claims that they did not hire him for a job monitoring grants in low-income communities because he is black. The head of human resources who communicated the denial and bore the brunt of his accusations now also moves for summary judgment. Both motions are GRANTED. A motion for sanctions is GRANTED….
The whole opinion is long (over 8700 words), so I just thought I’d excerpt the sanctions section, which also discusses some of the facts and some of the bases the court gave for granting summary judgment; for more, see the full opinion:
As a result, the merits of this action have been decided against Rogers, as have the merits of every one of Rogers’s previous discrimination actions brought and concluded in this district. Now, LIIF moves for sanctions.
Rogers is a perpetual claimant. Over ten years ago, a state court [in San Diego County] found Rogers vexatious. Recently, after Rogers had not requested to file a new action in that county for more than five years, Rogers’s repeated application for the order to be vacated was finally granted. {The form order does not provide a reasoned decision, but the five-year threshold for filings in the county may have been decisive ….} Rogers by then had relocated to the Bay Area, and the record shows his litigation energies are now directed here.
Rogers has abused the right to come to court by pursuing an unmeritorious cause and by trying to extort a settlement by threat of defamation. The sanctions motion explains that such conduct could amount to criminal extortion, and plainly amounts to bad faith. The motion also identifies attorney’s fees that but for Rogers’s improper conduct LIIF and its employees would not have incurred.
As examples of the conduct:
- When LIIF wrote asking for a time Rogers could sit for his deposition, Rogers did not respond. Instead, the next day, he emailed one of LIIF’s donors to assert that on “numerous occasions” LIIF “has refused to hire African Americans” and that it should defund LIIF. His sworn deposition revealed that he did not then have even one example of another black applicant having been rejected. Defense counsel prepared a cease-and-desist letter[.]
- With three days to go before his Court-ordered deposition, Rogers publicly filed LIIF’s insurance policy and his demand they settle his claims for an amount under its limits. Eight minutes later, he emailed LIIF’s counsel to state that “I won’t rule out [contacting donors again] in the future depending on how you respond.” Defense counsel responded.
- With two days to go before close of discovery, Rogers emailed defense counsel, asserting among other things that “a failure to respond will cause me to contact your donors and supporters which could financially jeopardize your organization,” that “[i]n furtherance, I just may notify certain press release agencies such as BUSINESS WIRE,” and that “Things will escalate. I promise.”
Notably, Rogers’s emails and letters broadly alleged gross discrimination while attaching no documentation for those claims. He later admitted that he lacked evidence, as one example, showing that LIIF “has refused to hire African Americans in its Finance and Operations Department on numerous occasions.” By contrast, Rogers’s emails and letters specifically asserted what he did know: The “settlement offer is around 13.4% of the Employment Practices (Part 2) liability value on [your] insurance policy.” And, he attached documented evidence to one such letter: The insurance policy, which his diligence had dug up.
To compensate for the time spent responding to these improper settlement offers as well as preparing the sanctions motion here, the motion tallies and seeks $5,830.00 in fees accrued by LIIF’s attorneys.
In Rogers’s two-page opposition, which he filed more than a week late, Rogers states: “Defendant has decided to waste the Court’s time with this senseless, incompetent, and ridiculous motion.” Rogers does not bother to rebut that he contacted donors in bad faith. Instead, he invokes a totally new fundamental right: free speech. He fails to appreciate the limits to that right. E.g., United States v. Hutson (9th Cir. 1988) (re extortionate speech) (adopting United States v. Quinn (5th Cir. 1975)). More to the point, he fails to remain focused on the conduct for which the motion seeks compensation.
The right to be free from discrimination is fundamental, and the right to petition preserves that right and is likewise fundamental. And yet, for the same reasons, defending against aggressive accusations about such grave concerns is costly—for private defendants and the public’s courts. Those costs bring no benefit when claims are brought and litigated in bad faith or through conduct tantamount to bad faith. Such costs are compensable.
A court may exercise its inherent power to impose sanctions for bad-faith conduct. Across this case, Rogers combined reckless disregard for the truth and worse, with frivolousness (claims he prosecuted for months by “mistake”), harassment (badgering, baiting, and belittling remarks in his pre-litigation emails, pleadings, and even summary judgment papers on points unrelated to the merits), and improper purpose (diligence in getting a payout, not in much else). The most egregious examples of his conduct were the threats to make false or reckless statements to third parties to imperil LIIF’s finances if LIIF did not settle. Just as Rogers was entitled to bring his claims in court, defendants were entitled to reject settlement and bring their defenses there, too. Instead, turning the norms inside out, Rogers filed his settlement demands on the public record. Not only is Brian Rogers a perpetual claimant, he is a holdup artist.
Indeed, an audacious holdup artist: Our hearing on this motion addressed extortion directly, an existing hearing respecting the upcoming trial announced that an order on the still-pending motions would issue within five days, and still Rogers did as follows:
- With four days to go before an order on the motions was said to issue, Rogers emailed LIIF’s CEO and employees, but not LIIF’s litigation counsel, stating “LIIF has nobody worthy to represent you in court in two weeks. Now is the time to try to develop a settlement in this case as you know the trial may begin as early as January 6, 2025 which is two weeks from now [sic]. Your failure to respond to my prior settlement letters will now result in me contacting YOUR donors and grant providers again about your conduct which could impair your organization as a going concern.” LIIF’s litigation counsel docketed Rogers’s email, and responded to Rogers with a renewed cease-and-desist letter; and,
- With three days to go before an order on the motions was said to issue, Rogers responded to defense counsel: “You are wasting your time and the Court’s time with these frivolous motions. In fact, they are quite laughable. The judge does not have the time to respond to your silly diatribe and ridiculous arguments. My speech and communication is protected under the FIRST AMENDMENT TO THE CONSTITUTION. The Court can’t do anything about my FIRST AMENDMENT rights. Let’s wake-up ! Have you been to law school ? It appears that you have forgotten much and learned little of anything.
This order finds that Rogers pressed his extortionate settlement demands in bad faith, rather than litigate his claims with diligence in court, and that but for this unreasonable conduct LIIF would not have needed reasonably to respond to those demands or to prepare the sanctions motion here, which resulted in $5,830 in extra attorney’s fees. Rogers now lacks the resources to compensate the movant, as he proceeds in forma pauperis. Therefore, THE FOLLOWING SANCTIONS ARE ORDERED:
- A LIEN ON SETTLEMENTS OR JUDGMENTS is imposed in the amount of $5,830.00 payable to the movant, Low Income Investment Fund, against any monies Rogers receives from any settlement(s) or judgment(s) of any claim(s) brought by Rogers in any court anywhere;
- Low Income Investment Fund MAY FILE a “Notice of Lien on Settlements or Judgments” in any pending or future action brought by Rogers in any court, wherein it shall assert the lien imposed by Paragraph 1 and attach this order; and,
- The Court shall retain jurisdiction to the extent necessary to enforce these sanctions.
This means that the first $5,830.00 of any future settlements or judgments in favor of plaintiff will go to the movant (until $5,830.00 is paid)….
Note that the line between permissible litigation activity and sanctionable or even criminal extortion can often be hard to draw. (That’s a special case of the Blackmail Paradox.) If you have at least a plausible claim, and you offer to settle it before filing a Complaint, that’s good lawyering. Indeed, it’s permissible even if it’s clear to everyone that, once the Complaint is filed, the media will pick up the Complaint and publicize the allegations against the defendant. And it’s permissible even if your firm has in the past itself put out press releases about the claims, so the defendant knows you’re likely to do it again.
But if the claim is clearly baseless, or the amount you demand is clearly in excess of what’s allowed (see also here), then that may be criminal extortion. Expressly threatening publicizing your allegations may also get you in trouble, especially if you’re threatening accusing someone of crime.
Cases such as this seem to be near the borderline. Here, for instance, is an excerpt from Chandler v. Berlin (D.D.C. 2020):
That leaves Plaintiff’s counsel’s threats to “take all appropriate steps and leverage our contacts in the media … to put your prior clients on notice regarding ICI’s fraudulent business model, and to prevent you from defrauding others with fake reports in the future.” This, too, is not sanctionable. “Mere warnings by a party of its intention to assert nonfrivolous claims, with predictions of those claims’ likely public reception, are not improper.” Sussman v. Bank of Israel (2d Cir. 1995). As discussed, Plaintiff asserted at least one colorable claim of defamation, which was largely premised on the factual assertions regarding Defendants’ business practices outlined in the Demand Letter. Thus, it was not improper for Plaintiff to threaten to publicize these allegations and predict their “likely … reception” with Defendants’ clients, particularly given that Plaintiff never directly contacted Defendants’ clients or otherwise interfered with Defendants’ businesses. See also Revson v. Cinque & Cinque, P.C. (2d Cir. 2000) (reversing the district court’s finding that counsel’s “threat[] to interfere with the Firm’s other clients provide[d] a basis for sanctions” in part because counsel never directly contacted the clients (cleaned up)); cf. Bouveng v. NYG Capital LLC (S.D.N.Y. 2016) (holding that a plaintiff’s counsel’s “references to potentially embarrassing litigation” in a prelitigation demand letter and email were not extortionary where they were “part of a larger endeavor to obtain recompense for a perceived wrong”).
Here, to be sure, there were threats to “directly contact[]” defendant’s donors, though query how much of a difference that should make. In any event, this struck me as an interesting case to pass along.
Theodora Lee and Pamela Woodside (Littler Mendelson, P.C.) represent defendants.
