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J. Malcolm DeVoy IV (Nevada Bar No. 11950) jmd@Randazza.com RANDAZZA LEGAL GROUP 7001 W. Charleston Boulevard, #1043 Las Vegas, Nevada 89117 Telephone: (888) 667-1113 Facsimile: (305) 437-7662 Randazza.com Attorney for Defendants, NewsBlaze LLC and Alan Gray UNITED STATES DISTRICT COURT DISTRICT OF NEVADA RIGHTHAVEN, LLC, a Nevada limited-liability company vs. Plaintiff, Case No.: 2:11-cv-00720 DEFENDANTS REPLY TO PLAINTIFFS OPPOSITION TO MOTION FOR SANCTIONS AGAINST COUNSEL UNDER 28 U.S.C. 1927

NEWSBLAZE LLC, a California limited liability company; and Alan Gray, an individual, Defendants.

DEFENDANTS REPLY TO PLAINTIFFS OPPOSITION TO MOTION FOR SANCTIONS AGAINST COUNSEL UNDER 28 U.S.C. 1927 Defendants NewsBlaze LLC, and Alan Gray (collectively, NewsBlaze, or the Defendants), by and through their counsel, reply to Plaintiff Righthaven LLCs (the Plaintiffs) opposition to NewsBlazes motion to impose sanctions against Shawn A. Mangano (hereinafter Mangano or Counsel), counsel for Plaintiff, for unreasonably and vexatiously multiplying the proceedings in this action. I. Introduction Mr. Manganos opposition (Doc. # 28) fails to offer any substantive arguments against the imposition of sanctions under 28 U.S.C. 1927. Instead, Mr. Mangano simply attempts to divert the Courts gaze from his sanctionable conduct by throwing mud.

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The fact is that after Mr. Mangano and his client lost the exact same argument eight times, Mangano still persisted in forcing this defendant to litigate the same issue a ninth time. It is the Defendants position that perhaps the first time that Mangano signed pleadings in direct contravention with the 9th Circuits holding in Silvers, it could have been a forgivable attempt. The same may have been true for the second and third times, with declining defensibility. When it came to being told eight times that he brought an unsupportable claim before the court, Mr. Mangano under a clear obligation to exercise some degree of client control; to refuse to bring the exact same arguments; or to dismiss a case with an inescapable outcome, such as this one, rather than to force a defendant to litigate the same exact issue a ninth time on grounds identical to the previous eight defeats. Forcing this issue nine times had no effect except to punitively impose litigation expenses on this Defendant. This Defendant deserves to be made whole for the expenses incurred due to that misconduct. In the Opposition, Mangano strenuously attempts to obfuscate the issues before the Court.1 Mangano argues that since he was given multiple warnings about his conduct before the instant motion was filed, then the motion is not proper. To the contrary, such warnings indicate just how much restraint was shown before bringing this motion, and they indicate the degree of warning afforded to Mr. Mangano - giving him ample opportunity to change course. Finally, after Mr. Mangano forced a defendant to fully litigate Righthavens lack of standing for the ninth time, enough was enough, and a motion for sanctions finally was unleashed. The instant motion came as no surprise to Mangano. He was warned, and he remained arrogant in the face of such warnings. The instant motion is long overdue. // // //

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It is understandable that Righthavens counsel would vigorously oppose a motion for sanctions. Therefore, NewsBlaze asks the Court to forgive Mr. Manganos unnecessarily vituperative invective in the Opposition. However, while doing so, this Court should not fall victim to Manganos attempt to muddy the waters. For example, Mr. Mangano introduces numerous statements that were made in Rule 408 privileged discussions. However, none of it is relevant to the issue at hand.

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II.

Argument A. Nothing But Sanctions Under 1927 Will Curb Manganos Behavior, and The Time for Their Imposition Has Arrived. Manganos conduct in this case alone warrants the imposition of fees under 1927.

Mangano argues that his conduct in other cases is irrelevant. However, it is certainly proper for the Court to allow Manganos conduct throughout the Righthaven litigation campaign to inform its decision. Section 1927 reads: Any attorney or other person admitted to conduct cases in any court of the United States or any Territory thereof who so multiplies the proceedings in any case unreasonably and vexatiously may be required by the court to satisfy personally the excess costs, expenses, and attorneys' fees reasonably incurred because of such conduct. To determine whether Manganos conduct was unreasonable or vexatious, it is most certainly proper to examine other cases in order to gauge his knowledge of subjective unreasonableness in this case. In Garza v. Westergren, 908 F.2d 27 (5th Cir. 1990) an attorney received 1927 sanctions for bringing an appeal where the issue was moot and the exact issue was previously on appeal before the court. See also Lahiri v. Universal Music & Video Distrib. Corp., 606 F.3d 1216 (9th Cir. 2010) (copyright plaintiffs counsel who maintained an untenable position was properly sanctioned under 28 U.S.C. 1927). If Manganos argument is accepted, wasting court and party resources is permissible as long as an attorney engages in that conduct in a serial manner before judge after judge with no single judge finding enough bad faith to issue sanctions in his particular case. Such

aggregated behavior causes more damage and waste than could be accomplished in a single case. Eventually, it becomes incumbent upon a judge to examine an attorneys behavior in the aggregate, seeing the misconduct in his own courtroom, and to connect the dots to draw the picture that exists here. That picture is one of a counsel who must be sanctioned, lest he believe that dilatory and wasteful actions before this Court will be indulged without limitation. While Mr. Manganos conduct before the District of Colorado and Ninth Circuit Court of Appeals cannot be the basis for sanctions, it is invaluable for informing the Court that what it has -3-

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witnessed in this case is no singular event, and that the time has come for at least one Court to impose sanctions. Mr. Manganos conduct before other courts is judicially noticeable and of the public record, and it is relevant to evaluating the subjective bad faith of Manganos conduct in this litigation. B.K.B. v. Maui Police Dep't, 276 F.3d 1091, 1107 (9th Cir. 2002); In re Keegan Mgmt. Co., Sec. Lit., 78 F.3d 431, 436 (9th Cir. 1996). A limitation allowing consideration of conduct only occurring before one single judge when evaluating an attorneys bad faith would give license to attorneys to engage in conduct akin to what has occurred here: A district overrun by conduct that may not be sanctionable on its own, but that melds into a pattern of abuse. On November 10, Judge Kane of the District of Colorado acknowledged the rarity of personal sanctions under 1927, but advised Mr. Mangano that he was right on the cusp of imposing such sanctions upon him. Righthaven v. Wolf, Case No. 1:11-cv-00830 (D. Colo. Nov. 10, 2011); a true and correct copy of this transcript, a public record judicially noticeable under Federal Rule of Evidence 201, is attached hereto as Exhibit A. In subsequent a written order, Kane admonished Mangano for his lack of civility. Wolf, Case No. 1:11-cv-00830 (Doc. # 66) (D. Colo. Nov. 10, 2011). Judge Kane further admonished Mangano to exercise greater civility and understanding before the court. (Exh. A 9:22-10:14) (stating further, youve got more stuff to do in this Court, and you better start thinking in terms of civility if you dont want me to jump on you with both feet). In Wolf, Judge Kanes frustration was based on Manganos unnecessarily requiring the Court and the parties to attend a hearing for an issue that was already resolved. (Id.) The

Colorado Court criticized Manganos conduct quite harshly, stating Well, I quite frankly think, Mr. Mangano, that you could have handled this a lot better if you would have placed yourself in the position of somebody other than yourself by looking at it and seeing what hoops you were making opposing counsel jump through that are totally unnecessary. (Exh. A 9:22-10:1). In this case, and in this District, Manganos conduct is more objectionable, but is of the same variety. Again and again, Mr. Mangano has willfully, or at least recklessly, prolonged

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When an attorney persists in conduct that has been judicially rebuked already, 28 U.S.C. 1927 fully authorizes sanctions. See Ramirez v. Arlequin, 491 F. Supp. 2d 202, 204 (D.P.R. 2006) (Filing a motion for judgment on the pleadings, based in arguments already rejected by a court of higher level is clearly vexatious conduct that disregards the orderly process of justice and must be sanctioned). This sanctionability applies when attorneys fail to withdraw pleadings when facts are revealed indicating a lack of supportability for the positions advanced. See Alvarado-Morales v. Digital Equipment Corp., 843 F.2d 613, 618 (1st Cir. 1988) (imposing sanctions under Rule 11 and 28 U.S.C. 1927 for counsels failure to properly investigate facts prior to filing suit, and failure to withdraw complaint when facts were revealed to the attorney); Riley v. Philadelphia, 136 F.R.D. 571, 574 (E.D. Pa. 1991) (Counsels failure to dismiss a case in a timely fashion supported an award of fees to the defendant under 1927). This District has taken several ineffective steps to discourage this conduct by imposing sanctions and fees upon Righthaven itself. Since July 1, 2011, Righthaven has racked up more than $225,000 in attorneys fees judgments and sanctions against it.2 Currently, more than $215,000 of that amount has yet to be paid.3 Righthaven will never pay its current creditors. Righthaven is undeterred because there remains one attorney willing to accept money in order to disregard the judicial process. As long as this Court tolerates this conduct, it will send a message to other attorneys who would persist in harassing, unsupportable conduct in exchange for money. That message will be do as you like, there is no penalty for misconduct of this type. Title 28 of the United States Code, Section 1927, is the best option this Court has to correct this conduct. See Good Hope Refineries, Inc. v Brashear, 588 F2d 846, 848 (1st Cir. 1978) (holding that where it is uncertain that imposition of costs against client will be fully effective, and where responsibility for frivolous actions rests with counsel, it is fitting that double costs under 28 USCS 1912 be assessed against appellant's counsel personally under 28 USCS 1927).

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At least one website keeps a running tally of fee awards and sanctions entered against Righthaven, which currently total $227,172.15, and have been accrued entirely since July 1, 2011. See Legal Fees and Sanctions Against Righthaven, http://righthavenvictims.blogspot.com/p/legal-fees-and-sanctions-against.html (last accessed Nov. 10, 2011). 3 Id.

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This motion is not an ambush on opposing counsel. After receiving more than one halfdozen adverse decisions about Righthavens lack of standing, Mr. Mangano had a duty to accept the state of the law. He could have stipulated to NewsBlazes motion to dismiss in light of the eight prior losses on the same issue, without prejudice to his clients right to appeal. Instead, he made more defendants re-litigate matters of settled law without any justification, thus supporting the imposition of fees. See Walter v. Fiorenzo, 840 F.2d 427, 436 (7th Cir. 1988) (finding that where there is a factual or legal deficiency in a complaint that is made clear, the deficiency should be remedied or the defendant dismissed or an award of fees and costs are appropriate under 1927). This course of conduct presents two possibilities: Either Mr. Mangano acceded to Righthavens demands to push forward with this litigation, or he raised the arguments before this Court at by his own volition. If Mr. Mangano chose this course of action, he has done so in defiance of this Courts colleagues. If he has merely followed the direct orders of his client, his conduct is just as sanctionable as if he were the source of the nefarious idea. While an attorney must zealously represent he must also exercise client control. There is no justification for pressing forward with proven frivolous positions for no clear litigation purpose. See Good Hope Refineries, 588 F.2d. at 848. Mr. Mangano violated this duty by forcing nine defendants to fully fully litigate the question of Righthavens standing under the SAA nine separate times.4 This is conduct that 1927 was erected to discourage. B. The Arguments Re-Brought By Mangano Were Neither Novel nor Brought in Good Faith; They Served Only to Waste Time and Increase The Defendants Costs of Litigation. Despite Manganos representations, the foundational elements of Righthavens many losses were never novel issues of copyright law. To the contrary, Righthavens lack of standing is squarely addressed by Silvers v. Sony Pictures Entertainment Corporation, 402 F.3d 881 (9th
The question of Righthavens standing under its SAA with Stephens Media LLC is still pending in Righthaven v. Virginia Citizens Defense League, Case No. 2:10-cv-01683 (Docs. 27) (D. Nev. June 30, 2011), Righthaven v. Vote for the Worst LLC, Case No. 2:10-cv-01045 (Doc. # 33) (D. Nev. Apr. 17, 2011), and Righthaven v. Kelleher, 2:10cv-01184 (Doc. # 28) (D. Nev. Nov. 1, 2011).
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Cir. 2005), a decision more than half-a-decade old, and Sybersound Records, Incorporated v. UAV Corporation, 517 F.3d 1137 (9th Cir. 2008). It also ignores the many rulings from this Court finding that Righthaven lacked standing to sue.5 Similarly, Manganos allegation that this Districts analysis is purely jurisdictional takes an unreasonably narrow view of jurisdiction one that has not been supported by this Courts colleagues. Manganos argument disregards the intertwining between the facts and merits of Righthavens numerous dismissals. Williston Basin Interstate Pipeline Co. v. An Exclusive Gas Storage Leasehold & Easement in the Cloverly Subterranean, Geological Formation, 524 F.3d 1090, 1094 (9th Cir. 2008); Safe Air for Everyone v. Meyer, 373 F.3d 1035, 1039 (9th Cir. 2004). Further belying the argument that Righthavens losses have been purely jurisdictional are the awards of attorneys fees made to two of Righthavens prevailing defendants. DiBiase, Case No. 2:10-cv-01343 (Doc. # 96) (D. Nev. Oct. 26, 2011); Hoehn, Case No. 2:11-cv-00050 (Doc. # 43) (D. Nev. Aug. 15, 2011). These findings demonstrate that Righthavens losses are not merely jurisdictional dismissals, but adjudications entitled to preclusive effect. Even accepting Mr. Manganos argument as true, he has still raised the exact same losing contention at least nine times since May 2011. This is an untenable position, and the law on this issue, even if non-precedential, had coalesced with five written decisions adverse to Righthaven before the Plaintiff filed its opposition to the Defendants motion to dismiss and sought to amend its Complaint. This litigation has served no purpose but to consume the clients resources with no justification whatsoever. In fact, this case is closely analogous to Finance Inv. Co. (Bermuda) v. Geberit AG, 165 F.3d 526 (7th Cir. 1998). In that case, an attorney lost a trademark

infringement case in one jurisdiction due to a lack of standing. Knowing, after this one loss, that his client had no claim, the attorney nonetheless maintained an identical action in another court.
See Righthaven v. Newman, Case No. 2:10-cv-01762, 2011 U.S. Dist. LEXIS 116654 (D. Nev. Oct. 7, 2011); Righthaven v. Hyatt, Case No. 2:10- cv-01373, 2011 U.S. Dist. LEXIS 93115 (D. Nev. Aug. 19, 2011); Righthaven v. Pahrump Life, Case No. 2:10-cv-01575, 2011 U.S. Dist. LEXIS 90345 (D. Nev. Aug. 12, 2011); Righthaven v. Mostofi, Case No. 2:10-cv-01066, 2011 WL 2746315 (D. Nev. July 13, 2011); Righthaven v. Barham, Case No. 2:10-cv-02150, 2011 WL 2473602 (D. Nev. June 22, 2011) Righthaven v. DiBiase, Case No. 2:10-cv-01343 2011 WL 2473531 (D. Nev. June 22, 2011); Righthaven v. Hoehn, Case No. 2:11-cv-00050 2011 WL 2441020 (D. Nev. June 20, 2011); Righthaven v. Democratic Underground, Case No. 2:10-cv-01356 2011 WL 2378186 (D. Nev. June 14, 2011).
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The court held both client and attorney liable for sanctions. Maintaining an identical suit after a clear loss on the same issue in another court fits 1927 to a T. Id. at 533. However, in that case, it was one single loss on the same issue. This case multiplies that justification eightfold. C. Attempted Resolution of This Motion Was Proper, and Mangano Chose to Leave the Matter to the Court. A motion for sanctions against an individual attorney is rare. As set forth by the

undersigned in the original motion, this is a somber occasion that has significant consequences for all involved. However, there must be consequences for bad faith conduct. As set forth in Righthavens Opposition (Doc. # 28), after this action was dismissed, the Defendants sought to move on and stop litigating anything further in this case except the proposed appeal.6 The Defense sought a mere fraction of the incurred attorneys fees

foregoing motion practice for full fees and were willing to withdraw this Motion without prejudice to Righthavens rights to appeal as part of a global resolution of all pending matters before the trial court. This willingness, as stated in the offer to compromise, was due to the fact that Mr. Mangano could atone for his unnecessary multiplication of these proceedings by truncating them at this end of the case. He refused. After defending against Righthavens meritless arguments for the ninth time, the Defendants are allowed to recover their attorneys fees and costs arising from Manganos vexatious conduct.7 If anything, an offer to compromise this claim, and claims about Manganos bad faith conduct, shows extreme restraint and good faith on the part of the defense. If Mr. Mangano believes that offering to limit an opponents risk and provide finality through settlement as an alternative to lengthy litigation8 is improper (Doc. # 28 at 2), then he may wish to reconsider the duties of an attorney.
Manganos entry of the Defendants offers to compromise is improper under Fed. R. Evid. 408, though the bell cannot be un-rung at this point. 7 It is worth noting that the Defense does not even seek all of the fees incurred in this case. The Defense only seeks fees from the date when Mangano could not possibly, under any questionable theory, have maintained a good faith basis for a belief that his client could prevail. 8 Not one of Righthavens cases has ever gone to trial. When it seemed that one case would go to trial, Righthaven v. Kelleher, Mangano invited the Court to dismiss Righthavens action on subject matter jurisdiction grounds, which Righthaven contends is reversible error in its appeals. Case No. 2:10-cv-01184 (Doc. # 25) (D. Nev. Oct. 24, 2011).
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Another of Mr. Manganos tactics to obfuscate the merits of Defendants motion, complaining of language used by the undersigneds colleague in settlement discussions in other cases, should not be countenanced. These communications are inadmissible under Federal Rule of Evidence 408, except to disprove an allegation of delay and they seem to do the precise opposite. Accordingly, it would have been proper for the Defendants to introduce them, but the Defense showed class and restraint in not doing so. Now that Mr. Mangano has opened the door to them, this discussion is in order. Manganos introduction of these emails is a strategy designed to try and curry favor for himself by painting a vulgar picture of an attorney who is not even part of this case. This tactic reveals considerable hypocrisy, as Mr. Mangano now objects to a tenor of discourse that he fostered. The undersigned has personally participated in email exchanges and phone calls with both Mangano and Randazza in which the vocabulary used by all parties would make a longshoreman blush. The undersigned will not sully the Court with their content, except to loosely describe them as jocular and jovial exchanges punctuated with vulgarity on all sides. It was always clear that none found them offensive, and the tenor of the conversations was always collegial, even if not consisting of vocabulary that the attorneys would use before the Court. Mr. Mangano, most certainly, did not express anything but an acknowledgment that we could all be very collegial with each other, even if the irreverence might be unseemly on a public record (see Doc. # 29 5).9 Based on Randazza's out-of-context statements, nobody would mistake him for Ned Flanders. But, the comments of attorneys unrelated to this litigation have no bearing upon Mr. Manganos liability under 28 U.S.C. 1927. Nevertheless, it is worth noting that there is both honor and logic to attorneys speaking to one another in frank terminology when discussing settlement, when it is at a level that they all accept as inoffensive. This strategy is also

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On September 29, 2011, inexplicably, Mr. Mangano did send an email to Mr. Randazza and the undersigned in which he stated a wish that the tone of the conversation should change. At that time, it did, and it has remained unjovial and un-jocular ever since. Mr. Mangano set the tone initially, and then when he asked to change it, all parties respected that request. Therefore, it is even more unseemly that Mr. Mangano would place such comments in the record for such a transparent purpose.

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regrettable because it diminishes the utility of settlement discussions counsel must now anticipate Mr. Mangano using their candor against them by seeking to prejudice the Court in unrelated matters. What makes these conversations introduced by Mr. Mangano offensive is not the vocabulary used, but that Mr. Mangano attempts to use them to try and paint a false picture of someone unrelated to this case, based on communications unrelated to this matter, in order to throw mud, hoping that it will daze the Court so that he may escape liability for his actions. It is unseemly for Mr. Mangano to attempt to selectively capitalize upon privileged settlement discussions from other cases, by counsel who is irrelevant to this case, in order to try to obtain some kind of sympathetic advantage. Forcing the Defense to even dignify his efforts with a reply is distasteful. To the extent that these statements are admissible under Rule 408 to counteract allegations of delay, they fortify Defendants contention that Manganos conduct is vexatious and dilatory, and undertaken in bad faith. These conversations have little bearing on the sanctionability of Mr. Manganos conduct. If they have any significance, it should be to show that he will do anything to obtain an advantage, however small, before this Court. Conclusion Zealous prosecution of Righthavens cases may have been proper six months and eight adverse decisions ago. But, in this case, Mangano pressed forward where he should not have. After losing the very same issue eight times, it would have been proper to stipulate to the same result in this case and to let the Ninth Circuit overrule Silvers if it so chose. Nonetheless, Mangano forced the Defendants to pay to defend an action that held a foregone conclusion. This was a dereliction of his duty as an attorney, and one that is subject to consequences under 28 U.S.C. 1927. The District Courts of the United States are not voluntary dispute resolution forums. Mangano, like any reasonable attorney, should have known long ago that the arguments he advanced in this case were directly counter to prior decisions, and could not be advanced in good faith or for any legitimate purpose. He should have abandoned the conduct seen in this litigation and counseled his client to do the same. - 10 -

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Instead, Mr. Mangano chose to press on into the breach, for the ninth time, at the Defendants expense. Defendants motion for sanctions is self-explanatory. The Court should also allow Defendants to submit supplemental affidavits for their fees incurred after the instant motion's filing, to better represent the fees they have incurred in redressing this matter. The need for sanctions in this case is manifest, even if it is regrettable. However, this Courts imposition of them will finally curtail Manganos improper conduct, and it will reaffirm the issue with other attorneys that when this District issues identical rulings eight times in a row, forcing a ninth party to defend the same issue will not be suffered without consequence to the attorney involved.

Dated: November 14, 2011

Respectfully Submitted, RANDAZZA LEGAL GROUP

J. Malcolm DeVoy IV Attorney for Defendants, NewsBlaze LLC and Alan Gray

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CERTIFICATE OF SERVICE Pursuant to Federal Rule of Civil Procedure 5(b), I hereby certify that I am a representative of Randazza Legal Group and that on this 14th day of November, 2011, I caused documents entitled: DEFENDANTS REPLY TO PLAINTIFFS OPPOSITION TO MOTION FOR SANCTIONS AGAINST COUNSEL UNDER 28 U.S.C. 1927 and attachments to be served as follows: [X] by the Courts CM/ECF system.

/s/ J. Malcolm DeVoy J. Malcolm DeVoy

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