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Caruso v. Washington State Bar Association

United States District Court, W.D. Washington, Seattle

May 23, 2017

ROBERT E. CARUSO and SANDRA L. FERGUSON, Plaintiffs,
v.
WASHINGTON STATE BAR ASSOCIATION, et al., Defendants.

          ORDER GRANTING MOTION TO DISMISS

          RICARDO S. MARTINEZ CHIEF UNITED STATES DISTRICT JUDGE.

         I. INTRODUCTION

         This matter comes before the Court on Defendants' Motion for Attorneys' Fees and Expenses. Dkt. #22. Defendants seek sanctions against Plaintiffs' counsel, Stephen K. Eugster. Id. Mr. Eugster opposes this Motion on his own behalf. Dkt. #23. For the reasons stated below, the Court GRANTS Defendants' Motion.

         II. BACKGROUND

         Prior to filing this case, Plantiffs' counsel Mr. Eugster has filed several lawsuits on his own behalf against the WSBA addressing the constitutionality of mandatory bar membership and fees and the validity of the WSBA's discipline system. See Eugster v. Wash. State Bar Ass'n, No. CV 09-357-SMM, 2010 WL 2926237 (E.D. Wash. July 23, 2010) (“Eugster II”) (discipline system); Eugster v. Wash. State Bar Ass'n, No. C15-0375JLR, 2015 WL 5175722 (W.D. Wash. Sept. 3, 2015) (“Eugster III”) (membership/fees), aff'd, No. 15-35743, Dkt. #18-1 (9th Cir. Mar. 21, 2017); Eugster v. Wash. State Bar Ass'n, No. 15204514-9 (Spok. Cnty. Super. Ct. 2015) (“Eugster IV”) (discipline system); Eugster v. Littlewood, No. 2:15-CV-0352-TOR, 2016 WL 3632711 (E.D. Wash. June 29, 2016) (“Eugster V”) (discipline system); Eugster v. Wash. State Bar Ass'n, No. 2:16-cv-01765 (W.D. Wash. 2016) (“Eugster VI”) (membership/fees and discipline system). Each of these lawsuits was dismissed at the pleadings stage. See Dkt. # 16 at 2-7 (Defendants' Motion to Dismiss summarizing the outcome of each case).

         This case was filed on January 3, 2017, initially as a putative class action on behalf of all WSBA members, naming Plaintiffs Robert E. Caruso and Sandra L. Ferguson as class representatives. See Id. at 11. On February 21, 2017, Plaintiffs amended their Complaint to abandon all class claims. See Dkt. # 4. Plaintiffs' Amended Complaint described Defendants as: (1) “Washington State Bar Association 1933, ” an entity Plaintiffs alleged was “the Washington State Bar Association created by the State Bar Act, Wash. Sess. ch. 94, 1933 and prior to the amendments made to its Bylaws by the WSBA 1933 Board of Governors the afternoon of September 30, 2016;” (2) “Washington State Bar Association 2017, ” an entity Plaintiffs alleged was “the Washington State Bar Association created by amendments made to Bylaws of the WSBA 1933 by the WSBA 1933 Board of Governors on September 30, 2016;” and (3-21) various WSBA officials. Id. at 1-3.

         Plaintiffs' First Cause of Action was for declaratory judgment and sought, in part, an injunction “enjoining Defendants from compelling Plaintiffs to be a members (sic) of the WSBA 2017 and from compelling Plaintiffs to pay dues to the WSBA 2017.” Id. at 32. Plaintiffs' Second Cause of Action was brought under 42 U.S.C. § 1983 for violation of the First and Fourteenth Amendments to the U.S. Constitution for being “compelled to be a members (sic) of WSBA 1933 or WSBA 2017.” Id. Plaintiffs' Third Cause of Action was similarly brought under the First and Fourteenth Amendments as “[c]ompulsory dues violate Plaintiffs' right of freedom of speech, including the freedom not to speak and to not be forced to finance speech…” Id. at 33. Plaintiffs' Fourth Cause of Action was titled “WSBA Disciple System No Longer Exists.” Id. at 34-35. Plaintiffs' Fifth Cause of Action alleged that the WSBA discipline system violates constitutional due process. Id. at 35. Plaintiffs' Sixth Cause of Action alleges that the WSBA discipline system deprives Plaintiffs' rights “under the doctrine of constitutional scrutiny.” Id. at 36. Plaintiffs' Prayer for Relief essentially requested the Court declare that Plaintiffs, attorneys licensed to practice law in the State of Washington, do not have to be members of the WSBA, do not have to pay WSBA dues, and are not subject to WSBA discipline. Id. at 38-39.

         On March 1, 2017, Plaintiffs filed a Motion for Summary Judgment. Dkt. # 8. On March 3, 2017, Plaintiffs also filed a Motion for Preliminary Injunction, making similar arguments. See Dkt. # 15. On March 21, 2017, Defendants filed a Motion to Dismiss, and followed that up with the instant Motion for Attorney Fees on April 27, 2017. Dkts. #16 and #22.

         On May 11, 2017, the Court granted Defendants' Motion and dismissed all of Plaintiffs' claims with prejudice. Dkt. #28. In that Order, the Court disagreed with Plaintiffs' argument that the WSBA was reborn as a new entity on September 30, 2016, finding that “Plaintiffs offer no argument against Defendants' reasoned analysis, above, and the Court cannot imagine any valid argument.” Id. at 5. The Court found that Plaintiffs' counsel had previously raised the claims that bar membership and dues were unconstitutional and “been sharply rebuked by the Honorable James L. Robart for ‘mischaracterization of case law' and making ‘nonsensical' arguments. Id. at 6 (citing Eugster v. Washington State Bar Ass'n, No. C15-0375JLR, 2015 WL 5175722, at *5-6 (W.D. Wash. Sept. 3, 2015), aff'd, No. 15-35743, 2017 WL 1055620 (9th Cir. Mar. 21, 2017). The Court was able to dismiss all of Plaintiffs' claims based on these arguments without further analysis. See id. As to Plaintiffs' remaining claims that Defendants' actions violated procedural due process and constitutional scrutiny, the Court found that “Plaintiffs' due process and constitutional scrutiny claims fail under the law cited by Defendants, ” that “Plaintiffs make no effort to argue otherwise, ” and that instead Plaintiffs devoted “nearly all of their brief to addressing tangential issues raised by Defendants.” Id. at 8. The Court found that dismissal with prejudice was warranted because “Plaintiffs have given the Court no reason to believe they are capable of alleging facts sufficient under the law, given that Plaintiffs have previously amended their Complaint and given their counsel's familiarity with the law surrounding this issue.” Id.

         Plaintiffs subsequently appealed the Court's Order of Dismissal and associated judgment. Dkt. #30. That appeal is pending.

         III. DISCUSSION

         A. Legal Standard

         The instant Motion seeks sanctions on three grounds: Rule 11, 28 U.S.C. § 1927, and the Court's inherent power. The Ninth Circuit Court of Appeals has set forth the considerations for Rule 11 sanctions:

An attorney is subject to Rule 11 sanctions, among other reasons, when he presents to the court “claims, defenses, and other legal contentions . . . [not] warranted by existing law or by a nonfrivolous argument for the extension, modification, or reversal of existing law or the establishment of new law[.]” Fed.R.Civ.P. 11(b)(2). When, as here, a “complaint is the primary focus of Rule 11 proceedings, a district court must conduct a two-prong inquiry to determine (1) whether the complaint is legally or factually baseless from an objective perspective, and (2) if the attorney has conducted a reasonable and competent inquiry before signing and filing it.” Christian v. Mattel, Inc., 286 F.3d 1118, 1127 (9th Cir. 2002) (internal quotations and citation omitted). As shorthand for this test, we use the word ...

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