Molski v. Evergreen Dynasty Corp.

This appeal presents two orders of the district court for our review. The first order declared Jarek Molski a vexatious litigant and ordered that Molski obtain leave of the court before filing any claims under Title III of the Americans With Disabilities Act (“ADA”) in the United States District Court for the Central District of California. The second order sanctioned the law firm representing Molski, Thomas E. Frankovieh, a Professional Law Corporation (“the Frankovieh Group”), by requiring it to obtain leave of the court before filing any claims under Title III of the ADA in the Central District of California. We dismiss two of the defendants-appellees from this appeal for lack of jurisdiction. As to the remaining parties, we hold that the district court acted within its sound discretion in entering the pre-filing orders against Molski and against the Frankovieh Group, and we affirm the orders of the district court.

I

Molski, who is paralyzed from the chest down, needs a wheelchair to get around. He has filed about 400 lawsuits in the federal courts within the districts in California. Molski lives in Woodland Hills, California, but frequently travels. According to Molski’s amended complaint in this case, during his travels, he stopped at the Mandarin Touch Restaurant in Solvang, California on January 25, 2003. After finishing his meal, Molski decided to use the restroom. Molski was able to pass *1051 through the narrow restroom door, but there was not enough clear space to permit him to access the toilet from his wheelchair. Molski then exited the restroom, and in the course of doing so, got his hand caught in the restroom door, “causing trauma” to his hand. Molski’s amended complaint also alleged that Mandarin Touch contained other accessibility barriers “too numerous to list.”

Asserting claims under the ADA and California law, Molski, along with co-plaintiff Disability Rights Enforcement, Education Services: Helping You Help Others (“DREES”), a non-profit corporation, sought injunctive relief, attorneys’ fees and costs, and damages. Specifically, the complaint sought “daily damages of not less than $4,000/day ... for each day after [Molski’s] visit until such time as the restaurant is made fully accessible” as well as punitive damages and pre-judgment interest. The amended complaint named as defendants Mandarin Touch Restaurant, Evergreen Dynasty Corp., and Brian and Kathy Mclnerney.

Shortly after the defendants answered the complaint, Mandarin Touch and Evergreen Dynasty filed a motion for an order (1) declaring Molski a vexatious litigant; (2) requiring Molski to obtain the court’s permission before filing any more complaints under the ADA; and (3) imposing monetary sanctions against Molski and his counsel, Thomas E. Frankovich. Defendants Brian and Kathy Mclnerney did not join the motion. In a published order, the district court granted the motion in part, declaring Molski a vexatious litigant and granting the defendants’ request for a pre-filing order. Molski v. Mandarin Touch Rest., 347 F.Supp.2d 860, 868 (C.D.Cal. 2004) [hereinafter Mandarin Touch I ].

In determining that Molski was a vexatious litigant, the district court applied the five factors set forth in the opinion of the United States Court of Appeals for the Second Circuit in Safir v. United States Lines, Inc., 792 F.2d 19, 24 (2d Cir.1986). Those factors are: (1) the litigant’s history of litigation and in particular whether it entailed vexatious, harassing, or duplica-tive suits; (2) the litigant’s motive in pursuing the litigation, for example, whether the litigant had a good faith expectation of prevailing; (3) whether the litigant is represented by counsel; (4) whether the litigant has caused unnecessary expense to the parties or placed a needless burden on the courts; and (5) whether other sanctions would be adequate to protect the courts and other parties. Id.

The district court first noted that Molski had an extensive history of litigation. Mandarin Touch I, 347 F.Supp.2d at 864. While acknowledging that the fact that a plaintiff has filed a large number of suits, standing alone, does not warrant a pre-filing order, the district court noted that a large volume of suits might indicate an intent to harass defendants into agreeing to cash settlements. Id. The district court also noted that Molski’s complaints were all textually and factually similar. Id. While again not entirely dispositive, the district court surmised that boilerplate complaints might indicate an intent to harass defendants. Id.

Against this background, the district court’s reasoning made clear that the most important consideration was its specific finding that the allegations in Molski’s numerous and similar complaints were “contrived and not credible.” See id. The court stressed that Molski often filed multiple complaints against separate establishments asserting that Molski had suffered identical injuries at each establishment on the same day. Id. at 865. The district court pointed out that Molski had filed thirteen separate complaints for essentially identical injuries allegedly sustained during one five-day period in May 2003. *1052 Id. In particular, Molski had alleged that, at each establishment, he injured his “upper extremities” while transferring himself to a non-ADA-compliant toilet. See id. at 864-65. The district court explicitly found that, in making these duplicitous injury claims, Molski had “plainly lied” in his filings to the court because the district court “simply [did] not believe that Molski suffered 13 nearly identical injuries, generally to the same part of his body, in the course of performing the same activity, over a five-day period.” Id. at 865, 867.

Applying the second Safir factor, the district court concluded that Molski’s moti7 vation in bringing numerous suits alleging both violations of the ADA and California state civil rights laws was to extract cash settlements from defendants. Id. at 866-67. Although the ADA grants private plaintiffs like Molski only the rights to seek injunctive relief, attorneys’ fees, and costs, the California state civil rights laws amplify the scope of relief available under federal law by also permitting the recovery of money damages. Compare 42 U.S.C. §§ 2000a-3(a), 12188(a)(1), with Cal. Civ. Code §§ 51(f), 52(a), 54(c), 54.3(a); see also Moeller v. Taco Bell Corp., 220 F.R.D. 604, 606-07 (N.D.Cal.2004) (discussing the remedies available under California law). The district court acknowledged that raising multiple claims in one suit is, in and of itself, not vexatious. Mandarin Touch I, 347 F.Supp.2d at 866. However, because Molski had tried on the merits only one of his approximately 400 suits and had settled all the others, the district court concluded that Molski’s consistent approach was to use the threat of money damages under California law to extract cash settlements and move on to his next case. Id.

Applying the third factor from Safir; the district court found that Molski had been represented by counsel in every suit he filed. Id. The court wrote that “courts are generally protective of pro se litigants,” but reasoned that “this same protection does not apply to litigants represented by counsel,” and concluded that this factor also weighed in favor of issuing a pre-filing order. Id.

Under the fourth Safir factor, the district court determined that the large number of vexatious claims Molski had filed had placed an undue burden on the courts. Id.

Finally, applying the fifth factor from Safir, the district court found that the only effective way to protect the courts and other parties from future vexatious litigation by Molski was by entering a pre-filing order. Id. Accordingly, the district court held that, “[b]efore filing any new litigation alleging violations of Title III of the ADA in the United States District Court for the Central District of California, Mol-ski[must] file a motion for leave to file a complaint.” Id. at 868. The court required that Molski “submit a copy of this order and a copy of the proposed filing with every motion for leave.” Id.

In the same order, the district court denied the motion of Evergreen Dynasty and Mandarin Touch for sanctions as premature. Id. Finally, the district court issued an order to show cause why it should not impose a pre-filing sanction on Mol-ski’s attorneys, the Frankovich Group. Id. at 867.

About three months later, the district court issued a published memorandum decision regarding that order to show cause. See Molski v. Mandarin Touch Rest., 359 F.Supp.2d 924 (C.D.Cal.2005) [hereinafter Mandarin Touch II]. The district court imposed a pre-filing order on the Franko-vich Group similar to the order that it had imposed on Molski. Id. at 926. In its decision, the district court first observed that in 2004 the Frankovich Group filed at least 223 nearly identical lawsuits in the Northern and Central Districts of Califor *1053 nia, that the complaints all stated an ADA claim and the same four claims under California state law, that the damages requested in each case were identical and that, other than superficial alteration of the names and facts, the complaints were textually identical down to the typos. Id. The district court also noted that plaintiffs represented by the Frankovich Group would often file multiple complaints regarding similar or identical injuries sustained at multiple establishments on a single day. See id. at 926-27. The district court noted that one-third of the suits were against ethnic restaurants and commented that “such establishments are seen as easy prey for coercive claims.” Id at 926.

Supplementing its findings from its decision accompanying the pre-filing order entered against Molski, the district court found that the Frankovich Group had filed sixteen lawsuits on Molski’s behalf alleging injuries sustained over a four-day period from May 20, 2003 to May 23, 2003, all alleging that Molski suffered injuries to his upper extremities as a result of transfers or negotiating barriers. Id. at 928. The district court also noted that, on thirty-seven occasions in 2004 alone, Molski alleged that he had been injured two or more times on the same day. Id. On nineteen occasions, Molski alleged that he had been injured three or more times in one day. Id. And, on nine occasions in 2004, Molski alleged that he suffered' four or more injuries in one day. Id.

Additionally, the district court discussed what it characterized as an “astonishing” letter the Frankovich Group had sent to defendants in at least two cases after suing them. See id. at 928. The letter described itself as “friendly advice” and counseled the unrepresented defendant against hiring a lawyer. Id. The letter warned that a defense attorney would embark on a “billing expedition” and that the defendant’s money would be best spent on settlement and remediation of the ADA violations, rather than hiring a defense attorney. Id. The letter also advised the defendant that its insurance policy might cover the claim. Id. Finally, the letter advised the defendant that it had no bona fide defense to the lawsuit. Id.

Relying on its inherent power to levy sanctions, the district court ordered

that The Frankovich Group, as presently constituted, and as it may hereafter be constituted, including shareholders, associates and employees, is required to file a motion requesting leave of court before filing any new complaints alleging violations of Title III of the Americans with Disabilities Act in the United States District Court for the Central District of California. Such a motion must include a copy of this order.

Id. at 926.

As the basis for its sanction, the court first emphasized the ethics rules violations contained in the letter discussed above. Id. at 929. For example, the letter offered legal advice to an unrepresented party whose interests conflicted with the interests of the Frankovich Group’s clients. Id. (citing Model Rules of Profl Conduct R. 4.3).

Next, the district court found that many of the claims of bodily injury in complaints filed by the Frankovich Group were “contrived.” Id. at 930. The court found in particular that “the rate of physical injury defies common sense,” noting that the plaintiffs alleged similar injuries sustained in a similar fashion at different businesses on the same day. Id. The court noted that the similar injuries did not excuse the existence of accessibility barriers, but that its finding that the injury claims were contrived was “merely a recognition of the fact that reasonable people, once injured, tend to take affirmative steps to avoid similar physical injuries, rather than re *1054 peat that same activity 400 times (or five times in the same day).” Id. at 931.

The district court also criticized the practice of the Frankovich Group of waiting one year before filing their complaints, in order to maximize the damages threatened and to intimidate the small businesses against whom the Frankovich Group frequently filed its suits. Id. at 932.

Finally, the district court found that the high settlement rate in cases brought by the Frankovich Group, coupled with the volume of eases filed, showed a pattern of extortion. Id. at 933-34.

In addition to imposing a pre-filing order on the Frankovich Group, the district court requested that the California state bar investigate the Frankovich Group’s practices and consider disciplinary action. Id. In the same order, the district court dismissed the plaintiffs’ state law claims, declining to exercise supplemental jurisdiction over them. Id. at 937.

On August 31, 2005, the district court, in a third published order, granted the defendants summary judgment on Molski’s ADA claim for lack of standing. Molski v. Mandarin Touch Rest., 385 F.Supp.2d 1042, 1044 (C.D.Cal.2005). Because Mol-ski’s ADA claim was the final claim remaining in the case, the district court also entered an order dismissing with prejudice the plaintiffs’ case in its entirety. Id. at 1048. (The district court had already dismissed DREES’s ADA claim for lack of standing in an unpublished order filed on February 9, 2005.)

On September 13, 2005, Molski and DREES filed their notice of appeal. The notice provided that the plaintiffs were appealing four rulings of the district court: (1) the December 2004 order declaring Molski a vexatious litigant; (2) the February 2005 order dismissing DREES’s ADA claim for lack of standing; (3) the March 2005 order sanctioning the Frankovich Group; 1 and (4) the August 2005 order granting the defendants summary judgment on Molski’s ADA claim for lack of standing and dismissing the case.

II

We first address whether the appeal of the pre-filing orders is timely. 28 U.S.C. § 2107(a) and Federal Rule of Appellate Procedure 4(a)(1)(A) provide that the notice of appeal in a civil case must be filed with the district court clerk within thirty days after the judgment or order appealed from is entered. If a party does not file a notice of appeal within the prescribed time limits, we have no jurisdiction to hear the case. Bowles v. Russell, — U.S. -, 127 S.Ct. 2360, 2363-64, 168 L.Ed.2d 96 (2007).

Under 28 U.S.C. § 1291, parties may appeal to this court only “final decisions” of the district courts. A final decision is one that “ends the litigation on the merits and leaves nothing for the court to do but execute the judgment.” Cunningham v. Hamilton County, 527 U.S. 198, 204, 119 S.Ct. 1915, 144 L.Ed.2d 184 (1999) (internal quotation marks omitted); Catlin v. United States, 324 U.S. 229, 233, 65 *1055 S.Ct. 631, 89 L.Ed. 911 (1945). Neither party disputes that the August 31, 2005 order dismissing the case was an appeal-able final decision. However, the Mclner-neys argue that the December 2004 pre-filing order entered against Molski and the March 2005 pre-filing order entered against the Frankovich Group were also final decisions and therefore immediately appealable. They maintain we must dismiss the appeal because the notice of appeal, filed on September 13, 2005, was filed more than thirty days after the entry of the pre-filing orders. Conversely, Molski and the Frankovich Group argue that the only final decision in this case is the district court’s August 31, 2005 order dismissing the plaintiffs’ case in its entirety and that, because they filed a notice of appeal within thirty days of the entry of that order, their appeal is timely.

The appeal of the Frankovich Group is timely under the Supreme Court’s decision in Cunningham and our subsequent decision in Stanley v. Woodford, 449 F.3d 1060 (9th Cir.2006). In Cunningham, the Supreme Court held that an order imposing sanctions on an attorney pursuant to Federal Rule of Civil Procedure 37(a)(4) was not an immediately-appealable “final decision.” 527 U.S. at 200, 119 S.Ct. 1915. In Stanley, we extended Cunningham and held that we do not have jurisdiction to entertain interlocutory appeals of district court orders sanctioning attorneys pursuant to the district court’s inherent power to levy sanctions. 2 Stanley, 449 F.3d at 1065. In this case, the district court entered the pre-filing order against the Frankovich Group under its inherent sanctioning power. Mandarin Touch II, 359 F.Supp.2d at 928. Because the Franko-vich Group could not immediately appeal the pre-filing order entered against it, and because it filed its notice of appeal within thirty days of the district court’s August 31, 2005 order dismissing the entire case, its appeal is timely.

Molski’s appeal is also timely. As a general matter, a district court order imposing sanctions on a party is not ap-pealable before the entry of a final judgment. See Riverhead Sav. Bank v. Nat’l Mortg. Equity Corp., 893 F.2d 1109, 1113 (9th Cir.1990); Johnny Pflocks, Inc. v. Firestone Tire & Rubber Co., 634 F.2d 1215, 1216 (9th Cir.1980). However, we have not previously and specifically addressed whether pre-filing orders entered against vexatious litigants are immediately-appealable final decisions. As far as we can tell, no other circuit has considered this question either. We begin with the general presumption that “an appeal ordinarily will not lie until after final judgment has been entered in a case.” Cunningham, 527 U.S. at 203, 119 S.Ct. 1915. For vexatious litigant orders to be appealable immediately, then, those orders would have to fall within the small category of decisions in which appeal is grounded on the collateral order doctrine which permits immediate appeal of orders that are conclusive and that cannot be effectively reviewed on the appeal of the final judgment. Swint v. Chambers County Comm’n, 514 U.S. 35, 42, 115 S.Ct. 1203, 131 L.Ed.2d 60 (1995).

As we see it, pre-filing orders entered against vexatious litigants are not conclusive and can be reviewed and corrected (if necessary) after final judgment. Though *1056 during the pendency of the appeal, the order might delay or prohibit a litigant from filing claims without leave of court, we have the authority to vacate the order entirely if we conclude the order was unjustified on the merits. Johnny Pflocks, 634 F.2d at 1216. Moreover, allowing immediate appeals of pre-filing orders would permit piecemeal appeals and result in a costly succession of appeals from the district court’s rulings before entry of final judgment. Firestone Tire & Rubber Co. v. Risjord, 449 U.S. 368, 374, 101 S.Ct. 669, 66 L.Ed.2d 571 (1981). We see no good reason to part ways from our case law holding that sanctions orders entered against a party are not immediately ap-pealable, and we hold that pre-filing orders entered against vexatious litigants are also not immediately appealable. Because Mol-ski filed his notice of appeal within thirty days of the district court’s August 31, 2005 order dismissing the plaintiffs’ entire case, Molski’s appeal is timely.

Ill

Before we address the merits of the pre-filing orders, we must address a second jurisdictional issue. Brian and Kathy Mclnerney ask us to dismiss them from this appeal because they were not parties to the motion that led to the pre-filing orders entered against Molski and the Frankovich Group. Because Article III limits our jurisdiction to “cases” and “controversies,” we dismiss appeals as moot when “the parties lack a cognizable interest in the outcome of the suit.” H.C. v. Koppel, 203 F.3d 610, 612 (9th Cir.2000); see City of Erie v. Pap’s A.M., 529 U.S. 277, 287, 120 S.Ct. 1382, 146 L.Ed.2d 265 (2000); Powell v. McCormack, 395 U.S. 486, 496, 89 S.Ct. 1944, 23 L.Ed.2d 491 (1969). As noted above, the plaintiffs initially appealed four rulings of the district court: the two pre-filing orders and the two orders dismissing Molski and DREES’s claims for lack of standing. However, in their briefs, Molski and the Frankovich Group limit their arguments to the two pre-filing orders entered against them. 3 The Mclnerneys were not a party to the motion that led to the pre-filing orders that now form the sole basis of the appeal in this case. See Mandarin Touch I, 347 F.Supp.2d at 861. The Mclnerneys thus have no cognizable interest in whether we affirm or vacate the pre-filing orders, and there is no justiciable dispute between the Mclnerneys and Molski and the Frankovich Group. We dismiss Brian and Kathy Mclnerney from this appeal for lack of jurisdiction.

IV

We next address whether the district court erred in declaring Molski a vexatious litigant and in entering a pre-filing order against him. Two district courts in our circuit disagree about whether Molski’s frequent litigation is vexatious. In this ease, the Central District of California deemed Molski a vexatious litigant. See Mandarin Touch I, 347 F.Supp.2d at 868. However, the Northern District of California has denied a motion to declare Molski a vexatious litigant in that district. See Molski v. Rapazzini Winery, 400 F.Supp.2d 1208, 1212 (N.D.Cal.2005). We review a pre-filing order entered against a vexatious litigant for abuse of discretion. De Long v. Hennessey, 912 F.2d 1144, 1146 (9th Cir.1990). A district court abus *1057 es its discretion when it bases its decision on an incorrect view of the law or a clearly erroneous finding of fact. United States v. Finley, 301 F.3d 1000, 1007 (9th Cir.2002); Does 1-5 v. Chandler, 83 F.3d 1150, 1152 (9th Cir.1996).

The All Writs Act, 28 U.S.C. § 1651(a), provides district courts with the inherent power to enter pre-filing orders against vexatious litigants. Weissman v. Quail Lodge Inc., 179 F.3d 1194, 1197 (9th Cir.1999). However, such pre-filing orders are an extreme remedy that should rarely be used. De Long, 912 F.2d at 1147. Courts should not enter pre-filing orders with undue haste because such sanctions can tread on a litigant’s due process right of access to the courts. Cromer v. Kraft Foods N. Am., Inc., 390 F.3d 812, 817 (4th Cir.2004); Moy v. United States, 906 F.2d 467, 470 (9th Cir.1990); see also Logan v. Zimmerman Brush Co., 455 U.S. 422, 429, 102 S.Ct. 1148, 71 L.Ed.2d 265 (1982) (noting that the Supreme Court “traditionally has held that the Due Process Clauses protect civil litigants who seek recourse in the courts, either as defendants hoping to protect their property or as plaintiffs attempting to redress grievances”); 5A Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1336.3, at 698 (3d ed.2004). A court should enter a pre-filing order constraining a litigant’s scope of actions in future cases only after a cautious review of the pertinent circumstances.

Nevertheless, “[f]lagrant abuse of the judicial process cannot be tolerated because it enables one person to preempt the use of judicial time that properly could be used to consider the meritorious claims of other litigants.” De Long, 912 F.2d at 1148; see O’Loughlin v. Doe, 920 F.2d 614, 618 (9th Cir.1990). Thus, in De Long, we outlined four factors for district courts to examine before entering pre-filing orders. First, the litigant must be given notice and a chance to be heard before the order is entered. De Long, 912 F.2d at 1147. Second, the district court must compile “an adequate record for review.” Id. at 1148. Third, the district court must make substantive findings about the frivolous or harassing nature of the plaintiffs litigation. Id. Finally, the vexatious litigant order “must be narrowly tailored to closely fit the specific vice encountered.” Id.

The district court in this case did not apply the factors we outlined in De Long. Instead, the district court looked to Second Circuit case law for guidance, applying that circuit’s vexatious litigant standard as outlined in Safir. See Mandarin Touch I, 347 F.Supp.2d at 863-64. Molski argues that the district court erred by structuring its analysis around the Safir factors rather than the factors we have identified.

One district court in our circuit has correctly observed that the Safir factors “have never been adopted by the Ninth Circuit.” Doran v. Vicorp Rests., Inc., 407 F.Supp.2d 1115, 1117 n. 3 (C.D.Cal.2005); see also Wilson v. Pier 1 Imports (US), Inc., 411 F.Supp.2d 1196, 1198 (E.D.Cal.2006) (noting that the Ninth Circuit has developed a vexatious litigant standard separate from Safir). However, the Second Circuit’s standard is not irreconcilable with our standard, but rather can be viewed as a tool for analyzing some of the factors we set forth in De Long, insofar as Safir and De Long in substance cover much of the same ground. As we noted above, we held in De Long that district courts