Charles Carreon Has To Pay $46K In Legal Fees

Legal Issues

from the boom dept

Charles Carreon may not be having a very good day. As you may recall, Carreon “represented” an internet site, Funnyjunk, that threatened Matthew Inman over an Oatmeal cartoon that made fun of that client. When Inman hit back with a (very successful) IndieGoGo campaign to raise money for charity, Carreon, ridiculously, sued Inman, IndieGoGo and the charities. After realizing the case had almost no chance of succeeding, Carreon dropped the lawsuit. However he (along with his wife) have since had an ongoing campaign attacking anyone (including us) who has mocked or criticized the Carreons over the whole Inman/Oatmeal fiasco. In one case, Carreon threatened a satirical, mocking blogger, even promising to wait until the public interest was gone to sue at a later date.

In response, the blogger filed for declaratory judgment that his actions were legit. Carreon responded by literally hiding from being served while also trying to intimidate the blogger, even contacting and threatening to sue his employer. After finally getting served, Carreon basically caved on every point, effectively settling the case. Except, Charles Carreon, brilliant legal mind, apparently didn’t realize that he was still subject to having to pay legal fees. Over the past few months Carreon has done everything possible to avoid having to pay those legal fees, lashing out at the lawyers involved, demanding they submit to discovery and depositions, and even claiming that Paul Levy and Cathy Gellis, the lawyers representing the blogger, were involved in some sort of conspiracy against him, while simultaneously arguing (no joke) that he has a First Amendment right to make vexatious legal threats.

Despite all that impressive tap-dancing, it appears the court was not moved. Carreon has been told to pay $46,100.25. The court is not at all impressed by Carreon’s legal “theories.” Here’s a sample snippet, trashing Carreon’s reasoning:

Defendant first opposes plaintiff’s motion, arguing the traditional American Rule applies, in which litigants “pay their own attorneys’ fees, regardless of the outcome of the proceedings.” … He contends this case not be found to be an exception to that traditional rule, as the action was filed under the Declaratory Judgment Act, 28 U.S.C. § 2201, which does not have a fee-shifting provision. While declaratory relief was the remedy sought, the claim for relief arose under the Lanham Act. Indeed, this Court would not have jurisdiction over this matter without the presence of a federal question, in the form of the Lanham Act. Defendant offers no support for the proposition that the statute supporting the underlying claim should be ignored in favor of the statute providing for the legal remedy. He has pointed to no authority to suggest that when only declaratory relief is sought, as opposed to damages or injunctive relief, the Declaratory Judgment Act supersedes the act providing for the underlying claim for relief. Without such authority, it defies logic to ignore the fee-shifting provision provided by the Lanham Act in favor of the Declaratory Judgment Act.

As for his first amendment claim, and the suggestion that this lawsuit was a SLAPP suit designed to silence him… the court is again, not impressed, noting that this is a standard declaratory judgment case filed over Carreon’s own threatening email, and pointing out that under Carreon’s reading, any declaratory judgment against a threat could be seen as an anti-SLAPP case, which makes no sense. Finally, Carreon tried to argue that no fees should be awarded because the case is not “exceptional”, while also arguing that the blogger had intent to profit because “it contained two links to websites that are operated for-profit.” The court, again, doesn’t see how this makes the case Carreon thinks it makes, noting that two links to commercial websites does not make the original site a for-profit entity. As for the claim that this case is not “exceptional,” well, there’s where the judicial smackdown comes in. No, the court says, the case wasn’t exceptional, until Carreon went nutty:

While defendant’s threatened claims were not “exceptional” at the outset of this case, defendant’s actions throughout the litigation certainly transformed this case into an “exceptional” matter, deserving of an award of attorney fees. The Ninth Circuit has stated that “bad faith or other malicious conduct satisfies the exceptional circumstances requirement.” Boney, 127 F.3d at 827. Evidence supports a finding of malicious conduct during the course of this case. Defendant first went to great lengths, imposing unnecessary costs on plaintiff, to avoid service. Then, in response to this motion for attorney fees under the Lanham Act, defendant engaged in unnecessary, vexatious, and costly tactics in preparation of his opposition to the motion. The Ninth Circuit discourages major litigation with respect to attorney fees. See, e.g., Camacho, 523 F.3d at 981; Hensley v. Eckerhart, 461 U.S. 424, 437 (1983) (“A request for attorney’s fees should not result in a second major litigation.”). Defendant’s serving of interrogatories and taking of plaintiff’s deposition amounted to a mini-trial on plaintiff’s motion for fees. Indeed, plaintiff incurred an additional $37,650.25 in fees and costs after his motion was filed. Despite this additional discovery, defendant has presented no evidence to support his initial contention that plaintiff’s attorney is on a mission to “turn Internet gripe sites into profit centers for him and Public Citizen Law Group.” Doc. #45, at 4. Defendant has failed to show that his additional discovery efforts led to anything other than additional frustration for plaintiff and his attorneys. Accordingly, plaintiff’s efforts to respond to defendant’s litigation tactics merit the imposition of a fees award.

The court then laughs off Carreon’s suggestion that legal fees should be merely $200, by noting that Carreon provides no explanation for why, and that this ignores all the time and effort Levy and Gellis had to put in. As for the breakdown of the fees, it’s $8,450 for the initial case… and the other $37,650.25 all stems from Carreon’s crazy fight against attorney fees. All of this from a case that came about because of his own ridiculous legal threats.

So… the question remains: will Charles Carreon stop digging?

Update: Paul Levy has posted his own analysis, noting that while it’s good, it is not a complete victory for consumers:

The opinion is not a perfect one, from a consumer perspective. The Ninth Circuit does not limit fee awards to those who successfully defend against frivolous trademark claims; under Ninth Circuit law, it is enough that the suit be “groundless or unreasonable.” On the other hand, the fact that Judge Seeborg drew a different distinction in the context of trademark claims that were only threatened, and never actually made the basis for a complaint, allows future successful defendants to argue that the “groundless or unreasonable” standard still applies in that sort of case.

He also points out that the old adage of lawyers representing themselves holds true:

First, it reminds us of the adage that a lawyer who represents himself has a fool for a client. Carreon did himself a disservice by representing himself after we sought a declaratory judgment. A good lawyer would have counseled him not to duck service, and he could have given Carreon good advice about his offer of judgment — we would have been happy to discuss a compromise on fees at that point of the litigation, and indeed it does not appear to me that Carreon understood, when he sent the offer of judgment, that it was going to subject him to an award of fees by making Recouvreur a prevailing party. And a lawyer would likely have advised him not to embark on the course of frivolous and abusive discovery. I urged Carreon on more than one occasion to get himself a lawyer, if not to negotiate with me then at least to give him an objective opinion about what he was facing. This was particularly important because Carreon is a sole practitioner who does not have colleagues off whom he can bounce ideas, and because he rejected private advice from at least one lawyer who has told me of his efforts to help Carreon to steer himself into safer waters. And a document that Carreon showed Recouvreur during his deposition makes clear that he actually was talking to another lawyer when he made his first threat to Register.com.

Carreon made clear at various points in the fee proceedings, that he had made his threats out of anger at the public obloquy he was facing, making independent judgment from a lawyer he could respect particularly important. He seemed to be asking me to put myself in his shoes and take pity. On a human level, I can understand how this could happen, and there is no way that Carreon would be facing this judgment if he had obtained independent counsel. But it is not an excuse for what he put Recouvreur through.

Separately, he points out that in the whole fight over whether or not Carreon could engage in discovery, demanding information from Levy, the judge warned Carreon not to go overboard, and then used Carreon’s excessive discovery against him in the ruling. As Levy notes, “be careful what you ask for, because you might get it.”

Filed Under: carreon effect, cathy gellis, charles carreon, legal fees, paul levy, vexatious litigation