United States District Court, D. Colorado
A. BRIMMER UNITED STATES DISTRICT JUDGE.
matter is before the Court on Crocs, Inc.'s Motion for
Sanctions Under Rule 11 and the Court's Inherent Powers
[Docket No. 409] and Defendants' Motion for Sanctions
Under Rule 11, 28 U.S.C. § 1927 and the Court's
Inherent Powers [Docket No. 429]. The Court has jurisdiction
pursuant to 28 U.S.C. § 1331.
Crocs, Inc. (“Crocs”) filed Case No.
06-cv-00605-PAB-KMT on April 3, 2006, alleging, inter
alia, infringement of United States Patent Nos. 6, 993,
858 (the “'858 patent”) and D 517, 789 (the
“'789 patent”). Docket No. 1.
12, 2006, defendants Effervescent, Inc., Holey Soles
Holdings, Ltd., and former defendant Collective Licensing
International, LLC moved to stay this case pending
proceedings under Section 337 of the Tariff Act of 1930
before the International Trade Commission
(“ITC”). Docket No. 26. The Court granted the
motion on May 16, 2006 and administratively closed the case.
Docket No. 31. In 2012, during a brief reopening of the case,
Crocs added one of the Dawgs entities as a named defendant and
Dawgs asserted counterclaims, Docket No. 119, before the
action was stayed pending a reexamination of the
patents-in-suit. Docket No. 137. In February 2016, Dawgs
filed motions to reopen the case and lift the stay, Docket
Nos. 167, 168, which the Court granted. Docket No. 184. On
May 31, 2016, Dawgs filed its first amended answer to the
amended complaint and counterclaims against Crocs, Scott
Seamans, and John and Jane Does 1 through 100. Docket No.
On June 28, 2016, Crocs and Seamans moved to dismiss
Dawgs' counterclaims. Docket Nos. 227, 231.
August 5, 2016, Dawgs filed its complaint in Case No.
16-cv-2004 (“the 2016 lawsuit”). Case No.
16-cv-02004, Docket No. 1. The 2016 lawsuit named eighteen
individual defendants (“Individual Defendants”),
all of whom are current or former employees of Crocs.
Id. at 10-19, ¶¶ 9-14.
counterclaims in this case and the complaint in the 2016
lawsuit allege that Crocs is aware that the '858 and
'789 Patents are unenforceable because “the patents
identif[y] incorrect inventorship and [were] obtained by
withholding material information from the patent
examiner.” Docket No. 209 at 36, ¶ 51; Case. No.
16-cv-02004, Docket No. 1 at 21-22, ¶ 20. Dawgs claims
that Crocs has improperly pursued claims related to its
patents in this court and before the ITC. See Docket
No. 209 at 32, ¶¶ 57-58. Dawgs further claims that
the Individual Defendants “directed, participated in,
sanctioned, ratified, or acquiesced” in the decision to
sue Dawgs and to continue the 2006 lawsuit through the
present. Case No. 16-cv-02004, Docket No. 1 at 10-18,
¶¶ 9-13. On January 27, 2017, the Court
consolidated Case No. 06-cv-00605 with Case No. 16-cv-02004.
Docket No. 426.
January 13, 2017, Crocs filed a motion for sanctions alleging
that Dawgs' counterclaims are premised on false
statements and barred legal theories. Docket No. 409. On
January 30, 2017, the Individual Defendants filed a motion
for sanctions based on similar grounds. Docket No. 429.
March, 31, 2017, the Court granted Crocs' motion to
dismiss Dawgs' amended counterclaims in part. Docket No.
504. On September 25, 2017, the Court granted defendants'
motion to dismiss the complaint in the 2016 lawsuit in part.
Docket No. 673.
Federal Rule of Civil Procedure 11
and the Individual Defendants claim that sanctions under
Fed.R.Civ.P. 11 are appropriate because Dawgs has made false
statements to the Court and has maintained its sham
litigation claim despite a Supreme Court case barring such a
claim. Docket No. 409 at 3-15; Docket No. 429 at 10-15. The
Individual Defendants additionally argue that Dawgs'
complaint in that case warrants sanctions because Dawgs has
alleged personal liability against those defendants without
any reasonable basis for doing so. Docket No. 429 at 6-10.
11(b) of the Federal Rules of Civil Procedure provides that:
By presenting to the court a pleading, written motion, or
other paper . . . an attorney or unrepresented party
certifies that to the best of the person's knowledge,
information, and belief, formed after an inquiry reasonable
under the circumstances:
(1) it is not being presented for any improper purpose, such
as to harass, cause unnecessary delay, or needlessly increase
the cost of litigation; [and]
(2) the claims, defenses, and other legal contentions are
warranted by existing law or by a nonfrivolous argument for
extending, modifying, or reversing existing law or for
establishing new law . . . .
Civ. P. 11(b). “If, after notice and a reasonable
opportunity to respond, the court determines that Rule 11(b)
has been violated, the court may impose an appropriate
sanction on any attorney, law firm, or party that violated
the rule or is responsible for the violation.”
Id. at 11(c)(1).
imposes an “affirmative duty to conduct a reasonable
inquiry into the facts and the law before filing” and
the “applicable standard is one of reasonableness under
the circumstances.” Business Guides, Inc. v.
Chromatic Communications Enters., Inc., 498
U.S. 533, 551 (1991). “Because our adversary system
expects lawyers to zealously represent their clients, this
standard is a tough one to satisfy; an attorney can be rather
aggressive and still be reasonable.” Predator
Int'l, Inc. v. Gamo Outdoor USA, Inc., 793
F.3d 1177, 1182 (10th Cir. 2015). An attorney may present a
legal position that is contrary to law so long as the
position “is warranted ‘by a nonfrivolous
argument for extending, modifying, or reversing existing law
or for establishing new law.'” Id.
(quoting Fed.R.Civ.P. 11(b)(2)). “Rule 11 neither
penalizes overstatement nor authorizes an overly literal
reading of each factual statement.” F.D.I.C. v.
Refco Grp., Ltd., 989 F.Supp. 1052, 1090 (D. Colo. 1997)
(citing Navarro-Ayala v. Hernandez-Colon, 3 F.3d
464, 467 (1st Cir. 1993)).