Pacific Legal Foundation v. Kayfetz Brief in Opposition to Petition for Writ of Certiorari

    N o. 92-1544

I n T he .

£njtrrm? (ta r t of tljr Itmtrft ^tatro
October T erm, 1992

Pacific Legal Foundation,
Petitioner,

v.

Paul Kayfetz; V ictor A moroso;
Diana Lopez Farnsworth; D oris Elaine LeMieux; 

Jack Bowen McClellan; William N iman; 
Orville Schell; Margueritte Harris; Judith Weston; 

and Bolinas Community Public Utility D istrict,
Respondents.

On Petition for a Writ of Certiorari to the 
United States Court of Appeals 

for the Ninth Circuit

REPLY BRIEF OF PETITIONER

John H. Findley 
Anthony T. Caso 

Pacific Legal Foundation 
2700 Gateway Oaks Drive 
Suite 200
Sacramento, CA 95833 
(916) 641-8888

Rex E. Lee * \
Gene C. Schaerr 
Kurt H. Jacobs 

Sidley & Austin 
1722 Eye Street, N.W. 
Washington, D.C. 20006 
(202) 736-8000

Counsel for Petitioner
April 27,1993 * Counsel of Record

W il s o n  - Efkb  P r in t in g  C o . ,  In c . •  7 8 9 - 0 0 9 6  - W a s h i n g t o n . D .C . 2 0 0 0 1



I

CASES
A ir  Courier Conference V. American Postal Work­

ers Union, 111 S. Ct. 913 (1991) ......... .........
Avirgan  v. Hull, 932 F.2d 1572 (11th Cir. 1991), 

cert, denied, 112 S. Ct. 913, and cert, denied,
113 S. Ct. 405 (1992)............................... ...........

Blank V. Bilker, 135 F.2d 962 (7th Cir. 1943) ....
Blue V. Department of the Arm y, 914 F.2d 525 

(4th Cir. 1990), cert, denied sub nom. Chambers 
V. Department of the Arm y, 111 S. Ct. 1580
(1991) ......  ........ ........ .......  ........ ................

Chambers V. Nasco, Inc., I l l  S. Ct. 2123 (1991)
Cooke v. United States, 267 U.S. 517 (1925) ......
Daubert V. Merrell Dow Pharmaceuticals, Inc., 113

S. Ct. 230 (1992)......................................................
Harris V. Marsh, 123 F.R.D. 204 (E.D.N.C. 1988), 

aff’d in part, rev’d in part, Blue V. Department 
of the Arm y, 914 F.2d 525 (4th Cir. 1990), 
cert, denied sub nom. Chambers V. Department
of the Army, 111 S. Ct. 1580 (1991) .....

Michaelson V. United States ex rel. Chicago, St.
P., M., & O.R. Co., 266 U.S. 42 (1924) ......... .

Missouri V. Jenkins, 495 U.S. 33 (1990) ......
Panther Pumps & Equip. Co. V. Hydrocraft, Inc., 

566 F.2d 8 (7th Cir. 1977), cert, denied sub 
nom. Beck v. Morrison Pump Co., 435 U.S.
1013 (1978) ........... ...................................................

Spallone v. United States, 493 U.S. 265 (1990).... 
Youakim  v. Miller, 425 U.S. 231 (1976)
Young V. U.S. ex rel Vuitton et F'ils S.A., 481

U.S. 787 (1987) .....................................................
Zenith Radio Corp. V. Hazeltine Research, Inc., 

395 U.S. 100 (1969) ................................................

TABLE OF AUTHORITIES

6 ,



REPLY BRIEF OF PETITIONER

Respondents' lengthy brief in opposition to certiorari 
is striking primarily for what it does not dispute. Re­
spondents do not deny that, like the lower court decisions 
reviewed in Missouri v. Jenkins, 495 U.S. 33 (1990), 
Spallone v. United States, 493 U.S. 265 (1990), and 
Daubert v. Merrell Dow Pharmaceuticals, Inc., 1 13 S. Ct. 
230 (1992) (granting certiorari), the Ninth Circuit’s 
decision below authorizes an enormous expansion of the 
“inherent power” of federal district courts— in this case 
the power to impose sanctions arising from an attorney's 
litigating behavior upon an entity that is neither a 
party nor an attorney. See Pet. 8-13. Respondents cite 
no other decisions recognizing such a power. Respond­
ents also do not deny that, during the proceedings before 
the district court, petitioner was never named as a party 
to the litigation or served with legal process— the usual 
means by which a district court obtains in personam 
jurisdiction. See Pet. 13-14.

Nor do respondents dispute that this case is of im­
mense practical importance to the public-interest legal 
community. See Pet. 15-18. Indeed, respondents do not 
even address the enormous and troubling impact of the 
decision below on the complex relationship among public 
interest organizations, their employees, and the people 
they seek to serve— matters addressed at greater lengjh in 
the briefs amici curiae filed by the NAACP and Mextcan- 
American Legal Defense and Educational Funds (at 2- 
4 ); by the American and California Farm Bureau Fed­
erations (at 6-7); by the New England and Atlantic 
Legal Foundations (at 12-13); and by the Mountain 
States Legal Foundation (at 11-13).’ 1

1 While respondents quibble over the impact the Ninth Circuit’s 
ruling likely would have had on the conduct of this litigation 
(opp. 17-18), they do not dispute that the decision below will com­
pel public-interest organizations generally to micro manage any



2

1. Nothing in respondents’ submission casts any doubt 
on the need to resolve the first question presented in the 
petition. j

First, respondents’ principal argument—-that the courts 
below did, m fact, find the imposition of sanctions on 
petitioner toi be “necessary” (Opp. at 8 )— rests upon a 
misreading of this Court’s inherent power decisions. Pe­
titioner will gladly concede (see Pet. 9-10) that the 
courts below believed the imposition of sanctions against 
petitioner was “necessary” to vindicate certain “policy 
concerns” (see App. A - l l ) .  As respondents point out, 
those concerns included the district court’s desire to pro­
tect itself from perceived “misuse,” to “protect the inter­
ests of litigants” (presumably from non-litigants such as 
petitioner), and thus to “fulfill” the “promise of proce­
dural fairness” which the court believed inheres in the 
Federal Rules of Civil Procedure. Opp. 9 (quoting App. 
C-8 to C -9); sec also Opp. 11.

However, concluding that the power to impose sanc­
tions upon a non-party is necessary to achieve policy ob­
jectives such as “ [f lulfilling the ‘promise of procedural fair­
ness’ ” (Opp. 11) is quite different from concluding that 
such a power is “necessary to the exercise of all other[]” 
judicial powers— i.e., necessary for the court to function 
effectively. Chambers v. Nasco, Inc., 111 S .Ct. 2123, 2132 
(1991) (quoting United States v. Hudson & Goodwin), 
11 U.S. (7 Crunch) 32, 34 (1 8 1 2 )). This is the in­
quiry required by the “ rule of necessity.” 2 *

litigation they wish to support, and will therefore either dis­
courage such support or lead to interference with the attorney- 
client relationship. Sec Pet. 16-18.

2 See also Young v. U.S. ex rel. Vuitton et Fils S.A., 481 U.S.
787, 796 (1987) (“f11 he ability to punish disobedience to judicial 
orders is regarded as essential in ensuring that the Judiciary has 
a means to vindicate its own authority”) (emphasis added); 
Cooke v. United States, 267 U.S. 517, 539 (1925) (contempt is a 
power “a judge must have and exercise in protecting the due and

3

Neither of the courts below even purported to address 
this critical question. Had they done so, they plainly 
could not have imposed sanctions upon petitioner, for 
reasons explained in the petition. Pet. 10-1 I.:l

Second, respondents’ attempt to distinguish the Fourth 
Circuit’s decision in Blue v. Department of the Army, 
914 F.2d 525 (4th Cir. 1990), cert, denied, sub nom. 
Chambers v. Dep’t of the Arm y, 111 S. Ct. 1580 (1991) 
(see Opp. 11-13) rests upon a misreading of the facts 
in that case. Contrary to respondents’ claim (Opp. 12- 
13), Julius Chambers, one of the attorneys sanctioned in 
Blue, was sanctioned both for his conduct prior to leav­
ing his firm and for his conduct while Director-Counsel 
of the NAACP Legal Defense Fund (the “LD F” ). See 
Harris v. Marsh, 123 F.R.D. 204, 223-228 (E.D.N.C. 
1988). Indeed, the district court specifically imposed 
$4,000 in sanctions on Chambers for his conduct during 
the merits trial of Blue's claims ( id. at 228), most of 
which occurred after Chambers moved to the LDF. Re­
spondents also overlook the fact that the district court 
initially found the conduct of a second LDF attorney, 
Penda Hair, to be sanctionable as well. Id. at 215 n . l l ,  
219-23. Because of the involvement of LDF attorneys 
in some of the conduct the court found to be sanction- 
able, the district court observed that assessing sanctions 
only against Chambers’ private lav/ firm would be “ a 
problematic and somewhat unjustified proposition.” Id. 
at 215 n . l l .  Hence, respondents arc simply mistakch in

orderly administration of justice . . .”) ; Michaelson V. United 
States ex rel. Chicago, St. P., M., & O.R. Co., 266 U.S. 42, 165-66 
(1924) (contempt power “is essential to the administration of 
justice”) .

3 Moreover, respondents do not dispute that all of the specific 
instances of alleged misconduct found by the court of appeals could 
have been readied under Rule 11. See Pet. 10-11. Therefore, even 
the “policy concerns” cited by the courts below did not require that 
sanctions be imposed upon petitioner rather than the responsible 
attorneys.



4

asserting that all of the sanctioned conduct was “ unre­
lated to . . . LDF employment.” Opp. at 12.

Respondents are also wrong in asserting that unlike the 
petitioners here, LDF did not “finance” the litigation in 
Blue. Opp. a|t 13. LDF “sponsored” or “financed” the 
litigation in Blue by providing the services of its attor­
neys, Chambers and Hair, free of charge. See Harris v. 
Marsh, 123 F.R.D. at 219 n.13 (describing differing de­
grees to which LDF may become involved in cases). 
Similarly, PLF in this case supported the litigation by 
providing the services of attorneys on its staff. The fact 
that only PLF attorneys were involved in the instant case 
while non-LDF as well as LDF attorneys were involved 
in Blue is a distinction without a material difference.

Moreover, it is immaterial that there is no “preclusive 
order” in the present case explicitly preventing PLF 
from shifting the huge monetary sanctions imposed upon 
it to its individual attorney employees. It is unlikely 
that any public interest organization would shift such a 
burden to its employees, or that such organizations could 
long endure if they did so; hence there was no need for 
the court below to issue a “preclusive order” similar to 
that issued in Blue. Respondents, in short, cannot escape 
the fact that, in the decision below, the Ninth Circuit 
upheld just the kind of distributional judgment that the 
Fourth Circuit held impermissible in Blue: a judgment 
between the individual attorneys who committed the al­
leged misconduct and the entity that employed them. 
See id. at 549 (striking down district court’s prohibition 
on contribution from the L D F); id. (striking down dis­
trict court’s sanction on Chambers’ law firm and observ­
ing that “ we are doubtful that . . . sanctions theories 
will support sanctions against an entire firm rather than 
against the individual lawyers who acted improperly” ). 
Had the Ninth Circuit followed the holdings in Blue, 
the sanction imposed upon petitioner would have been 
set aside.

5

Third, much of respondents’ submission (see Opp. 14- 
21) erroneously assumes that petitioner and, presumably, 
the other public-interest legal foundations that have ap­
peared as amici here, are seeking a blanket “sanctions 
immunity” (Opp. 15) for all litigation-oriented public- 
interest organizations.

Thus, for example, respondents seek to minimize the 
significance of the Ninth Circuit’s decision by pointing to 
Avirgan v. Hull, 932 F.2d 1572 (11th C ir .1 9 9 1 ) , cert, 
denied, 112 S. Ct. 913 and cert, denied, 113 S. Ct. 405 
(1992), in which the Eleventh Circuit upheld a sanctions 
award against a public-interest law firm. There, however, 
sanctions were explicitly premised upon the fact that the 
Christie Institute was plaintiffs’ “official law firm” (id. 
at 1582), whereas the Ninth Circuit in this case affirmed 
a sanctions award against petitioner despite its finding 
that petitioner “is not a law firm” and was not itself 
representing the plaintiffs below (App. A ll  & n.2 (em ­
phasis ad ded )).

Petitioners and its amici do not contend that public- 
interest organizations are entitled to blanket immunity 
from litigation sanctions. But where, as here, the organi­
zation is not a party and is not itself representing any 
party (as it was in Avingart), there simply is no justi­
fication for imposing sanctions upon the organization 
rather than the attorney or party who actually committed 
the misconduct at issue. Resort to the court's inherent 
power in such circumstances is lawless and inappropriate. 
See supra at 2; Pet. 8-13. ;

Most of respondents’ remaining arguments are jir­
relevant for the same reason.4 * * The issue here is riot

4 These include respondents’ labored arguments that “California
charitable corporations are regularly held responsible for the acts 
of their employees” (Opp. 14-15) ; that Congress has allowed sanc­
tions to be imposed upon the Legal Services Corporation (Opp. 15-
16) ; that under common-law agency principles a public-interest 
organization may be held liable for the actions of its agents (Opp.



6

whether an organization like petitioner is immune from 
litigation-related sanctions. Rather, the issue is whether 
a federal district court has inherent power to impose 
sanctions upon any person or organization that is neither 
a party nor an attorney, based upon the attorney’s con­
duct of the litigation.5

2. Similarly, nothing in respondents’ brief casts any 
doubt on the need to grant certiorari to resolve the second 
issue presented, i.e., whether a district court may impose 
litigation sanctions upon an entity over whom the court 
lacks in personam jurisdiction. See Pet. i.

First, even if respondents were correct about the de­
gree to which petitioner “participated” in the litigation 
below (Opp. 22-24), such participation is insufficient to 
confer in personam jurisdiction, for reasons explained in 
the petition (at 13-15)." Respondents do not dispute that

20-21) ; that “public interest litigation does not require immunity 
from sanctions” (Opp. 18); and that neither a federal tax exemp­
tion (Opp. 16) nor the First Amendment (Opp. 19) confers im­
munity from sanctions awards. None of these arguments provides 
a basis for the exercise of inherent power to sanction someone who 
is neither an attorney nor a part of the litigation.

c Respondents also argue that, “[sjince the PLF was the potential 
beneficiary of any attorney’s fees awarded, equity also supports 
imposition [of sanctions] on the PI.F.” Opp. 16. While this argu­
ment goes to the merits rather than the need to review the decision 
below, respondents ignore the fact that any fees received by PLF 
would simply reimburse PLF for costs it had already incurred in 
supporting the litigation. A fee award would thus not have con­
ferred a windfall upon PLF, and there is therefore no “equity” 
argument for imposing sanctions upon PLF rather than the attor­
neys who committed the alleged misconduct.

0 Respondents do not and could not dispute that the district court 
was required to obtain personal jurisdiction over petitioner in order 
to impose sanctions against it. See, e.g., Zenith Radio Corp. v. 
Hazeltine Research, Inc., 395 U.S. 100, 110 (1969) (“[A] court has 
no power to adjudicate a personal claim or obligation unless it has 
jurisdiction over the person of the defendant.”).

7

petitioner never became a party to the litigation by suing 
one of the defendants or by being served with process. 
Nor do respondents cite any authority in support of the 
Ninth Circuit’s novel holding that what it termed “spon­
sorship” of litigation— i.e., allegedly using plaintiffs as 
“pawns” or “puppets” (see App. A-l 1 to A-13)-—is suffi­
cient to confer in personam jurisdiction. See Opp. 23-24. 
Instead, respondents simply quote the Ninth Circuit’s 
analysis (id .), as though mere repetition would give it 
more weight.7 *

Second, respondents’ attempts to distinguish Zenith 
Radio Corp. v. Hazeltine Research, Inc., 395 U.S. 100 
(1969), and Panther Pumps & Equipment Co. v. Hydro­
craft, Inc., 566 F.2d 8 (7th Cir. 1977), cert, denied sub 
nom. Beck v. Morrison Pump Co., 435 U.S. 1013 
(1978), are misguided. As petitioner demonstrated (Pet. 
13-14)— and respondents do not dispute— the Ninth Cir­
cuit’s analysis is indistinguishable from the “alter ego” 
theory which Zenith and Panther Pumps expressly re­
jected as a basis for in personam jurisdiction. 395 U.S. 
at 110; 566 F.2d at 23. The fact that those decisions 
“did not involve sanctions issues” (Opp. 26) is irrelevant.

Respondents’ other distinction— their murky sugges­
tion that the parties contesting jurisdiction in those cases 
did not “appear” until a later stage of the proceedings 
(sec Opp. 26-27)— is both irrelevant and false. In both 
of those cases, the parties contesting jurisdiction entered 
appearances as soon as another party proposed thqt a 
judgment be entered against them. See 395 U.S. at 109; 
566 F.2d at 22-23. In this case, petitioner enteredj an 
appearance at precisely the same point, i.e., when re­
spondents first formally proposed to impose sanctions on

7 Respondents’ recitation of the district court’s analysis of the
jurisdictional basis for its order (Opp. 22-23) is irrelevant. As 
explained in the Petition (at 13-14), the court of appeals expressly 
rejected the district court’s conclusion that PLF itself is a law firm 
or that PLF, in its own capacity, represented the plaintiffs below.



8

petitioner itself. See CR 506, 510. The conflict between 
the decisions below on the one hand, and Zenith and 
Panther Pubips on the other, could hardly be more clear.

Third, respondents err in claiming (Opp. 24-25) that 
petitioner waived its jurisdictional objection. As a thresh­
old matter,, the courts below never invoked waiver as a 
reason for rejecting petitioners’ objection.8 Accordingly, 
respondents’ waiver claim would not ordinarily be con­
sidered by this Court, even on the merits. See, e.g., Air 
Courier Conference v. American Postal Workers, 111
S. Ct. 913, 917 (1991); Youakim  v. Miller, 425 U.S. 
231 ,234  (1976).

In any event, PLF repeatedly contested the district 
court’s in personam jurisdiction. For example, PLF’s 
Objections to the Report and Recommendations of the 
Special Master included a section entitled “The Court 
Lacks Jurisdiction to Sanction Pacific Legal Foundation.” 
There, PLF stated:

PLF’s primary objection to these proceedings has 
always been that it is neither a party nor an attorney 
in this action and thus cannot be held liable for 
sanctions. Notwithstanding the indisputable facts 
of PLF’s status, the Report proposes to find PLF 
liable for sanctions under the Court’s “inherent au­
thority.” Such authority can extend only so far as 
the Court’s jurisdiction, however, and thus the Court 
should examine PLF’s status in this case carefully.

CR 648 at 5 (emphasis added, footnote om itted).8 While 
respondents quibble with PL F’s failure to use the phrases

8 As explained in the petition (at 13-14), the district court re­
sponded to that objection by finding that PLF, in its own capacity, 
was the attorney for the plaintiffs, while the court of appeals re­
jected that theory in favor of its theory that PLF was the “sponsor” 
of the litigation and the plaintiffs mere “puppets” or “pawns” of 
PLF.

0 PLF made the same argument in its first responsive pleading, 
which was an opposition to respondents’ motion that petitioner be 
sanctioned :

9

“in personam” or “personal” jurisdiction, the basis for 
PLF’s objection could hardly be more clear: Inasmuch 
as diversity had never been asserted as a basis for juris­
diction, and the district court obviously had subject matter 
jurisdiction over the underlying lawsuit, the court could 
not have understood PLF’s argument as anything other 
than an objection on personal jurisdiction grounds.* 10

As pointed out in the joint brief of the NAACP and 
Mexican American Legal Defense and Educational Funds 
(at 4 ) , the decision below “has grave implications for 
the ability of [public interest] organizations to carry out 
constitutionally protected activities.” Nothing in respond­
ents’ submission casts any doubt on this conclusion or, 
more generally, on the necessity and propriety of review 
by this Court. To the contrary, this case is an excellent 
vehicle for resolving the existing confusion among the 
lower federal courts over the appropriate scope of a dis­
trict court's “inherent power” to impose fee-shifting sanc­
tions on public-interest organizations.

Pacific Legal Foundation is not a party in this case. Pacific 
Legal Foundation has not signed a “pleading, motion, or other 
paper” to be filed in this Court. Pacific Legal FoundatioVi is 
not admitted to practice law before this or any other Court of 
the United States or its territories.

CR 510 at 1. j
10 Respondents also argue that all objections to the court’s lack of 

in personam jurisdiction were waived for failure to enter a “special 
appearance.” Opp. at 24-25. While such an argument would have 
been valid more than half a century ago, the enactment of the 
Federal Rules of Civil Procedure eliminated the distinction between 
special and general appearances in federal court proceedings. See 
Blank V. Bitker, 135 F.2d 962, 966 (7th Cir. 1943).



10

CONCLUSION

For ilie foregoing reasons, and for tiiosc stated in the 
petition for cbrliorari. the petition should be granted.

t Respectfully submitted,

John II. F indley 
Anthony T. Caso 

Pacific Legal Foundation 
2700 Gateway Oaks Drive 
Suite 200
Sacramento, CA 05823 
(Ol(i) OIL-8888

Rex E. Lee *
Gene C. Sciiaerr 
Kurt H. Jacobs 

S idley & Austin 
1722 Eye Street, N.W. 
Washington, D.C. 2000G 
(202) 730-8000

Counsel for Petitioner

* Counsel of RecordApril 27,1093

i



• —'

No. 92-1544

In the Supreme Court
i™ gat j 

United States
October Term, 1992

Pacific Legal Foundation, 
Petitioner,

vs.
Paul Kayfetz; Victor Amoroso; D iana Lopez 

Farnsworth; Doris Elaine LeMieux; Jack Bowen 
McClellan; W illiam N iman; Orville Schell;

Marguerite Harris; Judith Weston; and 
Bolin as Community Public Utility District, 

Respondents.

O N  PETITIO N  FOR A W RIT OF CERTIORARI 
TO THE N IN TH  CIRCUIT COURT OF APPEALS

BRIEF IN OPPOSITION 
TO PETITION FOR WRIT OF CERTIORARI

Richard E.V. Harris*
George A. Yuhas 
Orrick, Herrington & Sutcliffe 

Old Federal Reserve Bank Building 
400 Sansome Street 
San Francisco, CA 94111 
Telephone: (415) 392-1122 

Attorneys fo r  Respondent 
Bolinas Community Public 
Utility District

* Counsel of Record

[O f Counsel on inside cover]

i
<

BOW N E O F  SA N  F R A N C ISC O . IN C. • 3 4 3  SANSOM E ST • S  F CA 9 4 1 0 4  •  < 4 t S )  3 6 2 - 2 3 0 0



David J. Becht 
Popelka, Allard,

McGowan & Jones 
633 Battery Street, 5th Floor 
San Francisco, CA 94111 
(415) 982-8955
, Attorneys for Respondent 
' Victor Amoroso

i
Pamela Mills Casey 
Langley, Lamberto & 

Deckard
2470 El Camino Real 
Suite 214
Palo Alto, CA 94306 
(415) 857-1100

Attorneys for Respondent 
Judith Weston

Matthew N. White 
Peavey & White 

160 Spear Street, #214 
San Francisco, CA 94105 
(415) 543-8800

Attorneys for Respondent 
Marguerite Harris

Laurence F. Pulgram, Esq . 
Howard, Rice, Nemerovskj, 

Canady, Roberton & Falk 
Three Embarcadero, #700 
San Francisco, CA 94111 
(415) 434-1600

Attorneys for Respondents 
Diana Lopez Farnsworth 
Jack Bowen McClellan 
Doris Elaine LeMieux

Gary L. G inder 
G inder, Belkin, Foster & 

Doyle
1995 University Ave., #300 
Berkeley, CA 94704 
(510) 548-5200

Attorneys for Respondents 
Orville Schell 
William Niman

Paul Kayfetz 
P.O. Box 310 
Bolinas, CA 94924 
(415) 868-0480

In Propria Persona

Questions Presented

1- \\ hether the district court, in the exercise of its
inherent powers, may impose a limited monetary sanction 
against the entity (the "public interest law firm") employing 
all of the attorneys, where the sanctionable matter permeated 
years of litigation, and where the court expressly found, inter 
nlia, that the entity

(a) had circulated no lewer than eleven attorneys 
through the case, none appearing or withdrawing by 
formal leave of court,”

<b) had “actively participated in all phases of the case”

(c) had been “the sponsor of th|e] litigation;’’

(d) had represented itself “as counsel” exercising “quality 
control in litigation,

(e) had been “one of the intended beneficiaries of Un­
offending conduct," and

(0 where the court further found that "in the
circumstances of this case” imposing such inherent 
powers sanctions directly upon the entity was 
necessary to the operations of the court

Whether a district court, which found that the 
imposition of sanctions directly upon the entity employing the 
attorneys was necessary to the court’s operations, has 
jurisdiction over the entity sufficient to sanction it, where 

inter alia,

(a) the entity was expressly found to have “actively 
participated in all phases of the [underlying! case;”



11

(b) the entity’s attorney employees signed stipulations 
filed in court expressly in the name of the entity 
during the underlying litigation;

(c) I the entity’s name and logo were prominently 
; displayed on virtually every sheet of paper filed in

court by the entity’s attorney employees during the 
1 underlying litigation;

(d) the entity’s out of court statements to a party, to the 
counsel for other parties, and to the public claimed 
that the entity had filed the suit; and

(e) the entity appeared and participated in the sanctions 
proceedings, was expressly represented by counsel for 
the entity, and the entity’s opposition papers filed 
during 1988 and 1989 did not even contain the word
jurisdiction and the entity did not raise 

“jurisdiction” as an objection at any time prior to the 
Special Master’s final liability report in 1990, which 
expressly confirmed that the entity (and not its clients) 
should be sanctioned.

in

TABLE OF CONTENTS

Questions Presented...........................................................  j

STATEMENT OF THE C A S E ........................................ i

1. Background ................................................  j

2. Bolinas Community Public Utility
District (“BCPUD ”) ..................................  2

3. The Individual Respondents ....................  3

4. Petitioner Pacific Legal Foundation
(“P L F " ) ......................................................  3

5. PLF’s C lients.............................................  4

6. The Sanctions Proceedings.......................  5

I The Petition’s First Question Is Not Raised By 
The Decisions Below: Imposing Sanctions 
Directly On The PLF Was Expressly Found 
To Be Necessary Under the Particular 
Circumstances of This Case ...............................  8

n. There is No Conflict Between The Fourth 
Circuit s Decision In Blue And The Decision 
Herein ...................................................  j j

1. Unlike Blue, no preclusive order way
entered herein .....................................  j2



IV

2. Unlike Blue, the sanctionable actions 
herein occurred while the attorneys 
were employed by the PLF acting as 
employees o f the P L F ............................  12

; 3. Unlike Blue, the PLF sponsored and 
financed the litigation herein and did 

1 so from the o u ts e t ..................................  13

HI. The Imposition Of Sanctions On The PLF
Was Neither Novel, Unprecedented, Nor
Inappropriate .....................................................  13

1 California charitable corporations are
regularly held responsible for the acts 
o f their em ployees.................................. 14

2. Congress has expressly recognized the 
propriety and wisdom o f imposing 
sanctions directly upon a pro bono
legal services organization.................... 15

3. The Federal tax exemption policy
regarding tax-exempt law firms like 
PLF neither condones nor immunizes 
abusive litigation ta c tic s ......................  16

4. PLF itself not the individual PLF
attorneys, would have received any 
attorneys ’ fees awarded in this 
litigation.................................................. 16

5. The imposition o f sanctions upon a 
tax-exempt public interest law firm has 
already been reviewed and approved
by the Eleventh C ircuit.........................  17

v

6. The sanctions herein do not require
any impermissible “interference...........  17

7. The sanctions herein do not threaten
any legitimate public interest litigation 
activity ................................................... jg

8. The sanctions award is fully compatible
with the First Amendment ....................  19

9. Numerous traditional common law
principles support the District Court’s 
decision, which further illustrates the 
absence o f any novel question 
requiring this Court’s a tten tion ...........  20

10. Agency issues involving non-profit
entities do not require this Court’s 
attention because they involve *,settled 
rules" which have already been 
adequately addressed in previous 
decisions................................................  21

IV. The Petition’s Second Question Is Not Raised 
By The Decisions Below: The PLF Appeared,
Did Not Contest uIn Personam Jurisdiction”
From The Outset, And Was Not Outside The 
Court’s R eac h ........................................ 22

1 • The District Court expressly found that 
PLF had participated in the underlying 
litigation ................................................  22



VI

2. The Ninth Circuit expressly affirmed 
the findings regarding the PLF's 
participation in the underlying 

| litigation..................................................  23

' 3. The PLF also appeared and
participated in the sanctions 
proceedings without raising or 
preserving an “in personam  
jurisdiction ” objection .........................  24

4. Imposing sanctions on the PLF was not
“in direct conflict’’ with this court’s 
decision in Zenith v. Hazeltine ...........  26

5. Imposing sanctions on the PLF was
also not in conflict with the Seventh 
Circuit’s decision in Panther Pumps . . 26

CONCLUSION .............................................................  28

APPENDIX N ................................................................N-l

APPENDIX O ............................................................... 0-1

APPENDIX P ................................................................ P-1

APPENDIX Q ...................................................................Q_1

APPENDIX R ................................................................... r _1

APPENDIX S ................................................................ s  i

TABLE OF AUTHORITIES

CASES

Allard v. Church o f Scientology, 58 Cal. App. 3d
439, 129 Cal.Rptr. 797 (1 9 7 6 ) ............................... 15

Avirgan v. Hull, 932 F.2d 1572 (11th Cir. 1991),
cert, denied, 112 S.Ct. 913 (1992).............. . 17

Blue v. Department o f the Army, 914 F.2d 525
(4th Cir. 1990)........................................ 11, 12, 13, 18

Claiborne v. NAACP, 458 U.S. 886 (1982) .................  21
Cohen v. Cowles Media, 111 S.Ct. 2513 (1991) . . . .  19 
Continued Casualty Co. v. Phoenix Construction Co.,

46 Cal. 2d 423, 296 P. 2d 801 (1956)....................n
Gilbert et al. v. State o f California et al.,

No. 636481-0 (Nov. 22, 1 9 9 1 ) .................................. 3
Gilbert v. State o f California, 218 Cal. App 3d

234 (1990) .................................................................... ...
Hazeltine Research, Inc. v. Zenith Radio

Corporation, 388 F.2d 25 (7th Cir. 1967) ............ 26
Hydrolevel v. American Society o f Engineers 456

U.S. 556 (1 9 8 2 ) .....................................’ ..................21
In Re Primus, 436 U.S. 412 (1 9 7 8 ) .............. ..  19
Malloy v. Fong, 37 Cal.2d 356, 232 P.2d 241 (1951) . 15 
Miller v. International Church, 225 Cal. App. 2d

243, 37 Cal. Rptr. 309 (1964) ............................... 15
NAACP v. Button, 371 U.S. 415 (1 9 6 2 )....................... 19
Panther Pumps & Equipment Co. v. Hydrocraft, Inc.

566 F.2d 8 (7th Cir. 1977) ............................... ' . 26
Phoenix Assur. Co. v. Salvation Army, 83 Cal. App

455, 256 P. 1106 (1 9 2 7 )...........................................I5
Rice v. California Lutheran Hospital, 27 Cal 2d

296, 163 P.2d 860 (1 9 4 5 ) ........................................15
Silva v. Providence Hospital o f Oakland, 14 Cal 2d

762, 97 P. 2d 798 (1939) ........................................15

vii



Valentine v. La Societe Francaise De Bienfaisance 
Mutuelle De Los Angeles, 76 Cal. App. 2d 1, 172
P.2d 359 (1 9 4 6 ) ........................................................ 15

Vind v. Asamblea Apostolica De La Fe En Christo
[Jesus, 148 Cal. App. 2d 597, 307 P.2d 85 (1957) 15

Zenith Corp. v. Hazelrine, 395 U.S. 100 (1968) . . . .  26
t

, STATUTES

California Labor Code § 2802 ...................................... 11
California Labor Code § 2865 ...................................... 11
California Corporation Code § 5238 ...............................  11
28 U.S.C. § 1927 .................................................. ’ ’ ’ ’ io
42 U.S.C. § 2996e (0 .............................................  15, 18

OTHER

Fed. R. Civ. P. 11 ...........................................................10
Restatement of Torts (Second), § 886B,

344 (1977) ................................................................ 11
Restatement of Agency (Second) § 7, p .  28 (1958) . . .  20
Restatement of Agency (Second) § 8, p. 30 (1958) . . .  20
Restatement of Agency (Second) § 8A, p .  36 (1958) . . 21
Rev. Proc. 71-39, 1971 C.B. 565 .................................. 16
Rev. Proc. 75-13, 1975 C.B. 662 .........................  16, 23

Vlll

STATEMENT OF THE CASE

1. Background. These sanctions arose out of litigation filed 
by the Pacific Legal Foundation (“PLF”) in 1982 against 
Bolinas Community Public Utility District (“BCPUD”), a 
small semi-rural district, and against numerous present and 
former directors and private citizens who had participated in 
civic affairs. Clerk’s Record (hereinafter “CR”) 1. The 
complaint included a plethora of purported antitrust and 
constitutional claims, which the Court quickly recognized 
“were supported by little more than overbroad, legally 
conclusory allegations that fail[ed] to adequately identify their 
legal or factual bases.” See, e.g., C-20-22.' The damages 
sought — more than $30 million plus attorneys’ fees (over 
100 times the operating budget of BCPUD) -  were also 
sought personally from the individual defendants, who were 
sued in their personal capacities (as well as any official 
capacity they might have or they might ever have had during 
a period extending back more than a decade). CR L C-17 
C-34.

Recognizing early that the mere pendency of the 
litigation could have a potentially chilling impact on 
defendants’ exercise of their First Amendment rights, the 
District Court directed that certain information be provided 
in an amended complaint. C-20-22. Despite the District 
Court s order, and despite its other warnings and expressions 
of concern regarding the potentially chilling impact of this 
type of litigation, the additional information was not 
provided. C-26.

Petitioner’s Appendix "C". Citations to Petitioner’s 
Appendices A" through "M" will be in this form, as will citations 
to Respondent’s Appendices "N" through "S” (which are at the end 
of this opposition).



2

Instead, the amended complaint expanded the number 
of vague claims and added still more parties. After 
reviewing the circumstances of this case, the Special Master 
concluded during the sanctions proceedings, as did the 
District Court Judge, that this refusal to comply with the 
Court’s order had been in bad faith.I

i It was but one of several specific situations involving 
bad faith litigation conduct where PLF had

attempted to contort what could have been a relatively 
straightforward case into a massive, complex, 
conceptually dense, expensive litigation, and, along 
the way, persisted in pursuing theories . . .  for which 
there was no credible factual support.

E-9.

2. Bolinas Community Public Utility District (“BCPUD"). 
BCPUD is a small public utility district in western Marin 
County. Formed in 1967, BCPUD operates a water system 
inherited from two even smaller districts; it provides water 
services to approximately 580 water meter connections. In 
1977 BCPUD enacted a moratorium on water hookups to its 
systems, which was in effect when this action was filed. 
(Previous moratorium resolutions, enacted in 1971 and 1973, 
were repealed in 1977. CR 384, Exh. A.) In 1982 the 
California Department of Health Services (“DOHS”) 
expressly conditioned BCPUD’s operating permit on a 
continuation of the BCPUD moratorium on new hookups, 
although BCPUD had made significant improvements to the 
system. See CR 350, Exh. D (DOHS Engineering Rptr., 
Aug. 1982) (“Due to the limited storage capacity and the 
many leaks in the aged distribution system, it is not possible 
for the system to support additional connections at this 
time.”). The DOHS imposed this condition on BCPUD’s

3

operating permit prior to the filing of this litigation. The 
DOHS condition has been upheld by the state courts in other 
PLF litigation involving the parties herein, see Gilbert v. 
State o f California, 218 Cal. App. 3d 234 (1990), as has the 
BCPUD moratorium, which the state court found to have 
been “justified from its inception”. Gilbert et al. v. State o f 
California et al., No. 636481-0 (Nov. 22, 1991).2

3. The Individual Respondents. The nine individual 
respondents include three current BCPUD board members 
(Kayfetz, Amoroso and McClellan) and six former board 
members (Niman, Schell, Harris, Weston, LeMieux and 
Farnsworth). They were among the more than twenty 
individual defendants who were sued personally for more 
than $30 million in this litigation. Several respondents, 
unable to secure representation, appeared in propria persona 
during parts of the litigation.

4. Petitioner Pacific Legal Foundation (“PLF"). PLF 
generally describes itself to the federal and state 
governments, the legal community and the public as a “public

The final state court decision upholding the BCPUD 
moratorium concluded that (a) "there is a solid factual basis for 
declaring a water shortage emergency" and (b) "the moratorium has 
been justified from its inception to the present based upon realistic 
concerns . . . about the capacity of the District’s water system to meet 
conservative demands in times of continuing drought, particularly 
given the marginal capacity not only of the storage system, but the 
delivery system, as well." R-l-4. Ignoring the final, binding decision 
about the moratorium, the petition points to an earlier preliminary 
decision of the Ninth Circuit which reversed part of an earlier 
summary judgment as to certain claims, none o f which affected the 
bases o f  the District Court's sanctions. Moreover, the Ninth Circuit’s 
decision "at this preliminary stage" reflected an express preference for 
"[r]esolution by plenary hearing rather than by summary 
judgment . . . [in] claims for regulatory taking.” H-8-9.



4

interest law firm.” See, e.g., C-35; 0-3-7, 10; and CR 537, 
Exhs. A, B, D. It claims to be the largest law firm of its 
type in the country. 0-3-7, 10; CR 500, Exhs. I, J; see also 
Q-3, 12 (PLF revenues during this litigation). The PLF’s 
President, CEO and Board Member (and the senior PLF 
attorney in this litigation) has said of this case: “The PLF 
filed suit” against BCPUD. The case was “brought by the 
PLIj.” It was “[o]ne of the most significant PLF law suits.” 
“This case will be an extremely important one for PLF.” 
C-33-34. It was, he said, “The case we have been waiting 
for.” 0-6-7; CR 536, Exh. C. The District Court found 
that “PLF has circulated no fewer than eleven attorneys 
through this case.” C-34. The PLF’s CEO was also joined 
on this case by the PLF’s Deputy Director and a PLF Section 
Chief. See CR 500, Exhs. G, I, J; CR 1 & CR 168; CR 
249; and CR 607, Tab 40. “Plaintiffs have been represented 
throughout this action only by PLF attorneys.” C-34, 139. 
“PLF was . . . actively involved in all phases of the case.” 
C-33. 136.

5. PLF’s Clients? PLF’s clients in this litigation were 
real estate developers, Anton Holter and Mesa Ranch (his 
partnership) and the Lockarys, Gilberts and Macey. 
Holter/Mesa Ranch owned 210 acres. All was outside 
BCPUD boundaries, except one acre with a water meter. 
Contrary to the petition’s suggestion (Pet 3), Holter/Mesa 
Ranch were not seeking a water hookup; Holter already had 
one and was receiving water from BCPUD. See C-14-15, 1 
5. The other plaintiffs owned small, unimproved lots within 
BCPUD’s boundaries without water meters. The Lockarys 
and Macey bought their land just before the litigation with

5 The PLF refers to a person represented by PLF attorneys 
as a "client" of the entity. C-35, 1 40.

5

full awareness of the existing moratorium. C-14, & C-26.4

6. The Sanctions Proceedings. BCPUD and the 
individual defendants filed motions for sanctions and 
attorneys’ fees in February 1988. CR 472, CR 480-503. 
The District Court Judge directed that the motion be referred 
initially to a special master. CR 528. United States 
Magistrate Judge Wayne D. Brazil, an agreed-upon 
candidate, acted as Special Master. CR 543.

Additional briefing of sanctions issues for the Special 
Master was completed in early March 1989. At a conference 
on March 14, 1989, the Special Master noted shortcomings 
in the responses and submissions of PLF and the plaintiffs; 
he then provided them yet another opportunity to file papers. 
Leaving the choice up to them, he also offered the 
opportunity to present testimony through affidavits, or live at 
an evidentiary hearing (an option they declined). At the 
March 14 conference, the Special Master prompted sua 
sponte a special discussion of the First Amendment. He also 
provided a separate briefing opportunity to address 
specifically “what, if any, significance arises in the context 
of these proceedings due to the nature of PLF as a non­
profit, public interest law firm.” CR 599, 1 4. PLF filed a 
brief on this issue (CR 616), to which defendants responded. 
CR 631-32.

4 Contrary to the petition’s suggestion (Pet 2), plaintiffs were 
not simply "parties who could not otherwise afford to present their 
claims in court." The developer plaintiffs (Holter/Mesa Ranch) used 
private counsel when suing the United States, an adversary far more 
formidable than tiny BCPUD, in contemporaneous litigation for taking 
the same property. See, e.g. , 222 Ct. CL 623 (1980) & 2 CL Ct. 700 
(1983).



6

A draft recommendation was filed by the Special 
Master in early September 1989. CR 634. After receiving 
comments from BCPUD, PLF and Holter/Mesa Ranch, the 
Special Master filed a Report and Recommendation re: 
Liability Aspects of Defendants Motions for Sanctions on 
January 11, 1990. C-l-106. The 103-page report contained 
detailed findings, including multiple findings of bad faith, as 
welj as a finding that PLF had “abundant” notice of the 
sanctions risk from the beginning, that PLF had “actively 
participated in all aspects of the case,” and that “in every 
meaningful sense of the word, PLF shared responsibility for 
the bad faith actions. ” The report also found that the District 
Court needed and possessed the inherent powers authority to 
sanction the PLF itself, and, with respect to certain identified 
matters, but not others, it recommended that sanctions be 
imposed on the PLF.

PLF filed objections on January 29. CR 648. A 
review followed by the District Court Judge, who had 
handled the underlying action since its filing in 1982. On 
April 2, the Court adopted the findings of fact and 
conclusions of law and accepted the recommendations in the 
Special Master’s report. S-l-2. The Court additionally 
found that the “circumstances of this case clearly support” 
the imposition of monetary sanctions on PLF.

Following the District Court’s April 2 order, the 
Special Master conducted further proceedings to determine 
the amount of the sanctions. On January 28, 1991, the 
Special Master issued his Recommendation re Character and 
Magnitude of Sanctions. E-1-105. The report ftrrther
addressed considerations that shaped the sanctions 
recommendation, general mechanics of the calculations, and

7

specific calculations for each defendant. Id.5 PLF filed 
objections. CR 741. On February 11, 1991 the District 
Court adopted the Special Master’s recommendations and 
awarded the sanctions. CR 743. On September 9, 1992, the 
Ninth Circuit affirmed in part and reversed in part the 
sanctions award. A-1-32.

The Special Master’s January 11, 1990, report had also 
recommended additional show cause proceedings with respect to 
potential personal liability of certain individual PLF attorneys for 
sanctions, and the District Court’s April 2 order accepted the 
recommendation. Pursuant to the briefing schedule established at the 
June 21 conference, briefs for the individual PLF attorneys were filed 
on July 23 (CR 671 & CR 674), with responses and replies on 
August 17 (CR 688-89 & CR 692-93) and August 30 and 31 (CR694- 
702). On October 22, the Special Master recommended that the 
proceedings regarding the amount of the PLF sanctions continue but 
that those regarding personal sanctions awards be terminated CR 
710. Despite believing that he could proceed with "an open, 
persuadable mind" in considering personal sanctions awards against 
individual PLF attorneys, the Special Master observed that the way 
the findings had been articulated in the January 1990 liability report 
might suggest otherwise. The Court accepted the Special Master’s 
recommendation, noting expressly that (i) "the expenditure of time 
and effort to further adjudicate these issues is not outweighed by any 
benefit that might accrue from the continued adjudication" (ii) the 
proceedings may already ‘have given counsel an opportunity to reflect 
upon their conduct in this case ” which ‘may be helpful to counsel in 
their future practice ‘ and (iii) the Special Master was to be 
commended “for the thorough and fair assessment of the sanctions 
issues. CR711 (emphasis supplied).



8

I. The Petition’s First Question Is Not Raised By The 
Decisions Below: Imposing Sanctions Directly On 
The PLF Was Expressly Found To Be Necessary 
Under The Particular Circumstances Of This Case

I
The Petition notes that inherent power sanctions may 

not be imposed “absent a determination that the exercise of 
such, power is necessary to the courts’ operation” (Pet 8) but 
then states, inaccurately, that no court here found that the 
imposition of sanctions was “necessary to protect the district 
court’s authority.” Pet 11.

The District Court herein was keenly aware of the 
care, caution and restraint appropriate to the exercise of its 
inherent powers. See, e.g., C-36-38; E-2-12; see also CR 
634 at 60-62. Sanctions were imposed only after a District 
Court Judge, intimately familiar with the litigation since its 
Filing in 1982, and an agreed-upon Special Master, previously 
unfamiliar with the litigation, each found that sanctions were 
appropriate and that imposing those sanctions upon the PLF 
was both appropriate and necessary under the particular 
circumstances of this litigation.6

Necessity was directly addressed and ruled on by the 
District Court. For example, the court found:

6 The PLF "appeared before the district court to defend against 
the sanctions motions" (Pet 13) and had a full opportunity to respond 
to them. See, e.g., CR 599 (Special Master sua sponte (a) provided 
PLF and others a third opportunity to submit additional evidence in 
response to sanctions motions, (b) requested briefing whether PLF’s 
status as public interest law firm raised any special First Amendment 
issues, and (c) provided the PLF an opportunity to review and 
comment on an initial draft report.)

9

In the circumstances of this case, which we describe 
in detail infra, we feel that the District Court must 
have the authority to impose sanctions on PLF itself 
if the Court is to be able to protect itself from 
misuse, to protect the interests of litigants who 
proceed in good faith, and to protect the viability of 
the rules of procedure that Congress and the 
Supreme Court have adopted. In every meaningful 
sense of the word, PLF shared responsibility for the 
bad faith actions that we describe below. As we 
show in subsequent sections, PLF was the source, the 
sponsor, and one of the intended beneficiaries of the 
offending conduct. There is no reason to believe that 
PLF did not know how this litigation was being 
handled, or that PLF was a mere passive and abstract 
institutional backdrop against which an individual 
attorney acted independently. Instead, PLF’s 
principal officers formally associated themselves with 
and publicly claimed credit for the pleadings and 
other papers that we have concluded were filed in bad 
faith. Moreover, because PLF circulated at least 11 
different attorneys through this case (without ever 
seeking permission for any attorney to join or to 
withdraw as counsel of record), it would be 
impossible for the District Court to meaningfully 
enforce the norms that Congress and the Supreme 
Court have established if the Court could not impose 
liability for offending those norms on PLF itself. 
These norms carry a promise of procedural fairness 
that the courts could not fulfill if they could not 
impose sanctions on an entity like PLF in 
circumstances like those described in the pages that 
follow. Thus we recommend that, relying on its 
inherent authority, the Court impose sanctions on 
PLF.



10

C-8-9 (Emphasis supplied.); see S-l-2 (District Court 
adoption of findings). These findings of necessity were well- 
supported by the record.7

, Moreover, Rule 11 of the Federal Rules of Civil 
Prodedure (“Rule 11”) and 28 U.S.C. § 1927 (“Section 
1927”), to the extent applicable to the individual PLF 
attorneys, were expressly considered, and proceedings were 
unddrtaken to employ them. See, e.g., C-9-10, C-105-106, 
E-l-2. Considerations of overall fairness, not lack of 
culpability, resulted in those proceedings terminating without 
individual monetary sanctions awards. See, e.g., F-l-2 & 
note 5, supra; see also A-9, nl. Although that process did 
not result in monetary sanctions being imposed separately on 
individual PLF attorneys, the PLF has no cause to 
complain.8 Under the particular circumstances of this

7 See e g. C-60-61 & n.25 (an example of bad faith conduct 
extending ‘‘throughout the course of this litigation” ; six attorneys 
identified on the papers; “difficult .. to point to the specific PLF 
attorneys responsible”), C-92-95 (continued impact of “no 
meaningful effort to comply with Judge Williams’ order”) & F-1 2 
(district court order: sanctions proceedings attempting to allocate
responsibility among individual PLF attorneys terminated; 
“continuation ... may harm individual attorneys not at fault, and the 
expenditure of time and effort to further adjudicate these issues is not 
outweighed by any benefit that might accrue from the continue 
adjudication”; “past process ... [has] given counsel an opportunity to 
reflect upon their conduct in this case and highlighted improper 
behavior ... and may be helpful to counsel in their future practice”; 
"PLF sanctions proceedings not terminated.”)

8 Significantly, PLF did not object at any time to termination 
of the sanctions proceedings against the individual PLF attorney 
employees, and it did not appeal the District Court’s decision to 
terminate those proceedings. See note 5, sopra. If anyone had cause 
to complain, it would have been the defendants. See. e.g., A-9, nl.

11

litigation, Rule 11 and Section 1927 were found to be 
inadequate to protect the Court “from misuse,” “the interests 
of litigants” and “the viability of the rules of procedure.” 
Fulfilling the “promise of procedural fairness” required use 
of the court’s inherent powers.

The petition’s first question assumes “the absence of 
any determination” that invocation of the court’s inherent 
powers was necessary. Such a determination was made. 
Thus, the first question is not presented, and the petition 
should be denied.

n . There Is No Conflict Between The Fourth Circuit’s
Decision In Blue And The Decision Herein.

The petition claims that the decision herein is in 
“conflict with the decision of the Fourth Circuit in Blue v. 
Department o f the Army, 914 F.2d 525 (4th Cir. 1990). ” Pet 
12. In attempting to manufacture a conflict, the petition has 
ignored both the facts of Blue and the facts herein. No such 
conflict exists, as a brief comparison of the two cases readily 
confirms. For example:

Moreover, as the corporate employer, PLF remained free to explore 
indemnification, if indemnification was appropriate. See e g Cal 
Labor Code §§ 2802, 2865, Cal. Corp. Code § 5238. ’ See,’also, 
Continued Casualty Co. v. Phoenix Construction Co., 46 Cal. 2d 423, 
428 296 P. 2d 801 (1956) (An employer who has been held liable for 
the unauthorized negligent act of his employee may recoup his loss in 
an action against the employee), and Restatement (Second) of Torts 
§ 886B, p. 344 (1977). The PLF’s current objections are simply 
another attempt to secure practical immunity for the sanctionable 
conduct.



12

1 Unlike Blue, no preclusive order was entered 
herein. In Blue, the District Court’s sanctions order 
prohibited the NAACP Legal Defense Fund (LDF) from 
paying the sanctions imposed on an attorney. The order 
there was clearly preclusive. No preclusive order was 
entered herein; the sanctions were imposed on the entity 
withput any effort to restrict its financial sources or to 
preclude internal allocations of responsibility within the 
organization. Moreover, the record below demonstrates 
appropriate sensitivity to such issues. See, e.g., CR 565 
(BCPUD suggested that, if desired by PLF, any sanctions 
order could expressly preserve any rights to contribution that 
PLF might have.). The absence of a preclusive order is but 
one fatal flaw in the claimed conflict.

2. Unlike Blue, the sanctionable actions herein 
occurred while the attorneys were employed by the PLF 
acting as employees o f the PLF. The situation was very 
different in Blue. One of the attorneys sanctioned 
(Chambers) happened to be employed by LDF when the 
sanctions were imposed, and he was sanctioned for conduct 
unrelated to his LDF employment. The sanctionable conduct 
was related to his private law practice. See Blue, supra at 
531-32.9 In Blue the sanctionable litigation had been

0 The pre-filing investigation by Chambers’ private law firm 
began in the spring of 1980. The action was filed in September 1981. 
The junior associate, Sumter, joined the law firm in January 1983, 
and trial began January 1984. With Sumter acting as counsel, Blue 
abandoned numerous claims. The U.S. Army moved for sanctions 
regarding the “abandoned claims,’’ and the “remainder of Blue’s 
claims went to trial in April 1984.” In 1987 the court “awarded 
sanctions based on the abandoned claims". The “claims which Blue 
... had dropped were frivolous, ... both plaintiffs and their counsel 
had either entered into or maintained the baseless litigation in bad 
faith. The sanctions for the bad faith pursuit of the frivolous claims, 
which were dropped in April 1984, were unrelated to LDF, because.

13

investigated, filed and handled by attorneys at the private law 
firm acting as such, and Chambers was sanctioned in his 
private law firm role. Id. at 546 (“as an experienced senior 
partner in charge of the case from its outset”). The PLF’s 
relationship herein stands in shatp contrast to the LDF’s in 
Blue. PLF circulated no fewer than eleven attorneys 
through this case,” and the plaintiffs were “represented 
throughout ... only by PLF attorneys.” C-34, 1 39.

3. Unlike Blue., the PLF sponsored and financed the 
litigation herein and did so from the outset. Nothing in Blue 
supports the petition’s suggestion that the LDF “financed the 
litigation {see Pet 12) or that the Fourth Circuit’s opinion 
creates a conflict over a district court’s “authority to make 
distributional judgments as between attorneys and non-parties 
who fund their litigation activities.” Pet 13. In addition to 
there being no such preclusive order here, the precluded 
entity in Blue had not financed the litigation in which the 
sanctionable conduct occurred. Sanctions must be adapted to 
the circumstances of the case. Blue and PLF are materially 
different. Here, PLF was the “sponsor of the litigation,” 
“was actively involved in all phases of the case,” arid 
represented that it “exercises ‘quality control’ in litigation.” 
Its president, the senior PLF attorney on the case, asserted 
not only that “[t]he PLF filed suit,” but also that this “PLF 
suit .. .[would be] an extremely important one for PLF” See 
C-33-35.

No conflict exists between the decision herein and the 
Fourth Circuit’s decision in Blue. If anything, Blue provides 
additional support for denying the petition. See III. 7.

inter alia, it was not until “July 1984” that Chambers assumed his 
position at LDF. Id. at 532.



14

m . The Imposition of Sanctions On The PLF Was
Neither Novel, Unprecedented, Nor Inappropriate.

During sanctions proceedings, the PLF itself 
appeared, was represented by counsel and enjoyed multiple 
opportunities to present evidence after knowing that 
defendants had requested that, inter alia, sanctions should be 
imposed on the PLF itself. The factual findings adopted by 
the District Court by its April 2, 1990, order included: (i) 
PLF circulated eleven attorneys through the case (C-9); (ii) 
“deliberate” bad faith conduct “extended throughout the 
course of the litigation” including instances where more than 
half the PLF attorneys were involved (C-60 & C-56-61); (iii) 
PLF was “the source, sponsor and one of the intended 
beneficiaries of the offending conduct” (C-8); (iv) PLF 
shared responsibility “in every meaningful sense of the 
word,” (C-8) and (v) express findings of necessity that, under 
the circumstances of this case, the District Court “must have 
the authority to impose sanctions on the PLF itself” to 
protect the “court from misuse,” to protect the “viability of 
the rules of procedures,” and to “protect litigants who 
proceed in good faith”. C-8.

These factual findings, and the extensive record 
supporting them, show that imposing sanctions upon the PLF 
itself was appropriate under the circumstances of this 
litigation. It is important, however, to appreciate that 
holding such an entity responsible for the acts of its 
employees is not novel, and the decision to do so presents no 
new policy issue or significant question requiring this Court’s 
attention.

1. California charitable corporations are regularly 
held responsible for the acts o f their employees. PLF is a 
California non-profit corporation. Such organizations are 
regularly held accountable for the misconduct of the entity

15

and of the entity’s employees or other agents. PLF has no 
reasonable basis for expecting the sanctions immunity which 
it continues to seek.10

2. Congress has expressly recognized the propriety 
and wisdom o f imposing sanctions directly upon a pro bono 
legal services organization. The petition suggests that 
holding the PLF responsible is both novel and bad policy. It 
is not, as Congress itself has already recognized. See, e.g., 
42 U.S.C. § 2996e (f) (Legal Services Corporation: Costs

10 See, e.g .. Malloy v. Fong, 37 Cal.2d 356, 232 P.2d 241,247 
(1951) ( The incorporated chanty should respond to private 
individuals, business corporations and others, when it does good in a 
wrong way.’"); Rice v. California Lutheran Hospital, 27 Cal. 2d 296, 
163 P.2d 860 (1945) (non-profit hospital liable for professional 
employee’s negligence); Miller v. International Church, 225 Cal. 
App. 2d 243, 37 Cal. Rptr. 309 (1964) (church held liable for 
negligence of minister); Vind v. Asamblea Apostolica De La Fe En 
Christo Jesus, 148 Cal. App. 2d 597, 307 P.2d 85 (1957) (church 
liable for employee’s negligence); Phoenix Assur. Co. v. Salvation 
Army, 83 Cal. App. 455, 461-62 256 P. 1106 (1927) (rejected 
immunity because it would cause "the agents of charitable institutions 
to render less than due care"); Valentine v. La Societe Francaise De 
Bienfaisance Mutuelle De Los Angeles, 76 Cal. App. 2d 1, 172 P.2d 
359(1946) (hospital liable for employees’ negligence); see also Allard 
v. Church o f Scientology, 58 Cal. App. 3d 439, 129 Cal.Rptr. 797 
(1976) (church liable for both punitive damages and compensatory 
damages caused by church employee’s statements; "egregious case of 
malicious prosecution subjects the judicial system itself to abuse, 
thereby interfering with the constitutional rights of all litigants") and 
Silva v. Providence Hospital o f Oakland, 14 Cal. 2d 762, 97 P.2d 798 
(1939) ( To require an injured individual to forego compensation for 
harm when he is otherwise entitled thereto, because the injury was 
committed by the servants of a charity, is to require him to make an 
unreasonable contribution to the charity, against his will, and a rule 
of law imposing such burdens cannot be regarded as socially desirable 
nor consistent with sound policy").



16

and fees imposed in action commenced or pursued for 
harassment purpose or involving abuse of legal process “shall 
be paid by the Corporation.”) California has also recognized 
that holding charitable corporations responsible financially is 
good public policy. See, e.g., supra, note 10.

/
3. The Federal tax exemption policy regarding tax- 

exempt law firms like PLF neither condones nor immunizes 
abusive litigation tactics. In both courts below, the PLF 
asserted its tax-exempt status as if it somehow should confer 
upon the PLF some immunity from court-awarded sanctions. 
It does not. If anything, the PLF’s tax-exempt status imposes 
upon it additional obligations to ensure that litigation abuse 
does not occur. See, e.g., Rev. Proc. 71-39, 1971 C.B. 565 
(Requirement: The organization does not attempt to achieve 
its objectives through a program of disruption of the judicial 
system, illegal activity, or violation of the applicable canons 
of ethics.)

4. PLF itself, not the individual PLF attorneys, would 
have received any attorneys’ fees awarded in this litigation. 
This litigation was authorized by the PLF. The complaints 
expressly sought attorneys’ fees. See, e.g., CR 1, (complaint 
sought statutorily authorized attorneys’ fees.). The attorneys’ 
fees, however, could not properly have gone to the individual 
attorneys. See Rev. Proc. 75-13, 1975 C.B. 662 (attorneys’ 
fees received by public interest law firms go “to the 
organization rather than to individual staff attorneys.”); see 
also CR 500 (IRS Form 990, Part IV, schedule 7: PLF’s 
receipt of “court-awarded attorneys’ fees”). Since the PLF 
was the potential beneficiary of any attorneys’ fees awarded, 
equity also supports imposition on the PLF of the modest 
sanction which partially reimbursed defendants for some of 
the additional attorneys’ fee burdens caused by the 
sanctionable conduct.

17

5. The imposition o f sanctions upon a tax-exempt 
public interest law firm has already been reviewed and 
approved by the Eleventh Circuit. The Ninth Circuit’s 
decision approving the imposition of sanctions upon the PLF 
was not the first circuit court to approve a sanctions award 
against a tax-exempt, public interest law firm. See A-14 
(“We agree with the Eleventh Circuit that ‘[sjtatus as a 
public interest law firm or the nature of a claim does not 
confer immunity from attorneys’ fees for bringing and 
maintaining frivolous lawsuits.”) In Avirgan v. Hull, 932 
F.2d 1572, 1582-83 (11th Cir. 1991), cert, denied, 112 
S Ct. 913 (1992) a sanction of more than $1 million was 
affirmed. The sanction herein was modest and only a small 
fraction of PLF revenues. See also Q-3 (PLF revenues 
exceeded $25 million from the filing of the complaint to 
sanctions determination) & CR 500, Exh. A; N-3 (BCPUD’s 
entire annual operating budget when sued herein for $30 
million was approximately $280 thousand).

6. The sanctions herein do not require any 
impermissible minterference. ’ The petition’s “interference” 
point is a red herring. First, the PLF has long touted itself 
as exercising “‘quality control’ in litigation.” C-35, 140 
(finding); C-61 (“self professed ‘quality control’ monitor 
over the litigation”); see also CR 676, 11 9-11. Second, no 
evidence offered by the PLF even suggested that the PLF’s 
management wanted the PLF attorney employees to behave 
differently but were afraid to “interfere.” Third, the PLF 
management had actual control all along, so no 

interference” was needed. Throughout the litigation, the 
PLF s CEO, a PLF Board Member, was the senior attorney 
of record, aided herein by the PLF’s Deputy Director and a



18

PLF Section Chief.11 Fourth, as Congress expressly 
recognized, prohibiting inappropriate interference need not 
prevent ensuring professionalism of the highest degree.12

| 7. The sanctions herein do not threaten any legitimate
public interest litigation acthity. Contrary to the petition’s 
suggestion, the decision herein will not cause the decline of 
pubjic interest litigation. Pet 18. First, public interest 
litigation does not require immunity from sanctions for bad 
faith litigation conduct. See, e.g, Blue v. Department o f the 
Army, 914 F.2d 525 (4th Cir. 1990) (Sanctions affirmed; 
distinguished civil rights attorney held responsible for 
conduct of subordinates: “The authority which the federal 
courts possess, an authority often summoned to the side of 
racial justice is ... built upon respect for the judicial process. 
That authority cannot, in the long run, be effectively invoked 
on behalf of civil rights enforcement if civil rights litigants 
could themselves disregard it with impunity.”) Second, the 
decisions herein reflect consideration and sensitivity towards 
public interest litigation, further demonstrating the judicial 
caution and restraint employed here, as well as the absence

" See, e.g., Appellees’ Brief on Appeal, p.23 nl5 (linking 
names lo PLF reports identifying management positions); CR 500, 
Exh. G, I & J; C-18-19, & CR 607, Tab 40 (state court litigation 
harassing BCPUD; another PLF Section Chief at trial level where 
state court found case “clearly frivolous," “brought to harass the 
District" and “for an improper motive"; PLF CEO and PLF Deputy 
Director were also on the meritless appeal for which the appellate 
court awarded additional fees).

12 See, e.g., 42 U.S.C. § 2996e (h)(3) (Legal Services 
Corporation. “ensuring]” compliance with professional 
responsibilities and not “interfer[ing] with carrying out professional 
responsibilities both mandated in same section)

19

of any threat. The district court itself observed herein:

“No litigant should be penalized for a good faith, 
straightforward effort to extend, modify, or reverse 
the course of the law. Reasonable people may 
disagree about what the law is or ought to be, and it 
is imperative to the vitality of our democracy that 
individuals be afforded fair opportunities to try to 
persuade those who fix the terms of the law to change 
them. If PLF had engaged in a straightforward effort 
to change the law, there would be no occasion for 
these sanctions proceedings. That is not the course, 
however, that PLF chose to pursue. ”

E-8-9; see also -1 & DA-14.

8. The sanctions award is fully compatible with the 
First Amendment. In the courts below, the PLF also tried to 
avoid responsibility by claiming that it had some type of First 
Amendment immunity from sanctions. Although PLF has 
abandoned that argument, the petition closes by citing the 
same two cases on which it had relied, NAACP v. Button, 
371 U.S. 415, 431 (1962) and In re Primus, 436 U.S. 412  ̂
428 (1978), neither of which supported immunity from 
sanctions for litigation misconduct. See A-14 (Ninth Circuit: 
Cases cited by PLF do not support the “PLF’s position that 
abuse of the court system is constitutionally protected when 
a public interest law organization is the perpetrator.”); see 
also Appellee’s Brief on Appeal, p.33, n.26; c f Cohen v. 
Cowles Media, 111 S.Ct. 2513, 2518 (1991) (“generally 
applicable laws do not offend the First Amendment simply 
because their enforcement against the press has some 
incidental effects on its ability to gather and report the 
news”; “‘publisher of a newspaper has no special immunity 
from the application of the general laws. He has no special 
privilege to invade the rights and liberties of others.’”).



20

9. Numerous traditional common law principles 
support the District Court's decision, which further illustrates 
the absence o f any novel question requiring this Court’s 
attention. The PLF is a corporation and, as such, can only 
act through its agents. Even without the District Court’s 
express findings of responsibility and of active participation, 
traditional principles of agency would adequately support the 
District Court’s decision. Here, the senior attorney was the 
PLF’s CEO, and the PLF’s Deputy Director was also 
involved. Here, the PLF paid the “improper motive” and 
“harassment” sanctions for other litigation against BCPUD 
which had been supervised by a PLF Section Chief and, 
following the sanctions award, promoted him to PLF 
Director of Litigation. See, supra, note 11 and compare CR 
500, Exh. I with CR 500, Exh. J. Both actual authority and 
apparent authority were reasonable inferences.13 In addition 
to the principles of actual authority, apparent authority, and 
estoppel,14 there is the doctrine of “inherent agency power” 
which is power derived “solely from the agency relation and 
exists for the protection of persons harmed by or dealing with

15 See, e.g., Restatement o f Agency (Second), § 7, p. 28 (1958) 
(“Actual Authority”), Comment b (“agent’s conduct is authorized if 
he is reasonable in drawing an inference that the principle intended 
him so to act although that was not the principle’s intent"); 
Comment c (“most authority is created by implication”); & § 8, p. 30 
(“Apparent Authority”), Comment a (“manifestation of the 
principle . . .  or by continuously employing the agent”), Comment c 
(“to the extent that it is reasonable to believe that the agent is 
authorized”).

14 PLF attorneys signed in the PLF’s name; the PLF told 
everyone that it was a “law firm”; and one PLF attorney making an 
application in the PLF’s name wrote BCPUD that "PLF is the 
attorney for the plaintiffs in Lockary” . See 0-8-10; P-4; Q-4-14.

21

a servant or other agent.”13

10. Agency issues involving non-profit entities do 
not require this Court’s attention because they involve 
"settled rules " which have already been adequately addressed 
in previous decisions. The responsibility of non-profit 
organizations for the acts of their employees acting under 
colorable authority is not a new question. See, e.g., 
Claiborne v. NAACP, 458 U.S. 886, 930 (1982) (“The 
NAACP -  like any other organization — o f course may be 
held responsible fo r  the acts o f its agents throughout the 
country that are undertaken within the scope of their actual 
or apparent authority. ”) (emphasis supplied) and Hydrolevel 
v. American Society o f Engineers, 456 U.S. 556, 565-70 
(1982) (“The apparent authority theory has long been the 
settled rule in the federal system." “In a wide variety of 
areas, the federal courts . . . have imposed liability upon 
principals for the misdeeds of agents acting with general 
authority.” Non-profit corporation held liable for act of 
employee writing on corporation’s stationery) (emphasis 
supplied).

Imposing sanctions upon the PLF itself under the 
circumstances of this particular case was neither novel, 
unprecedented nor inappropriate. Numerous separate, 
sufficient and independent bases exist to support the District 
Court’s decision and the Ninth Circuit’s affirmance. The 
petition should be denied.

15 Sec, e.g.. Restatement o f Agency (Second), § 8A, p. 36 
(1958) (“Inherent Agency Power”), Comment a (power based “neither 
upon consent nor upon . . . manifestations" is applicable to numerous 
situations including where “agent does something similar to what he 
is authorized to do, but in violation of orders,” where “an agent acts 
purely for his own purposes,” and where an agent “departs from the 
authorized method.”)



22

IV. The Petition’s Second Question Is Not Raised By 
The Decisions Below: The PLF Appeared, Did Not 
Contest uIn Personam Jurisdiction” From The 
Outset, And Was Not Outside The Court’s Reach.

t

The petition’s second question assumes that the 
District Court did not have uin personam jurisdiction” over 
the PLF. Pet i. The question is not presented by the petition 
or the record, and the petition should be denied.

1. The District Court expressly found that PLF had 
participated in the underlying litigation. The District Court 
found that the PLF had been “actively involved in all phases 
of the case” (C-33, 1 36), and had been “on notice from the 
beginning that defendants were likely to seek sanctions. 
C-32, 1 34; see also C-106 (“PLF has had abundant notice 
that sanctions were possible”). The PLF’s own public 
statements regarding the litigation asserted that it had 
“actively participated” in the underlying litigation. C-34, 1 
38. Early in the case, a PLF attorney repeatedly signed 
papers Filed in the litigation in the PLF’s name. See 0-7-9, 
noting examples at CR-5, CR-6, CR-9, CR-15, CR-17, & 
CR-18. A government records act application expressly in 
the PLF’s name {see CR 604, 1 6 & Exh. B) was made to 
help circumvent the court’s discovery stay order. C-18. 
Another PLF attorney wrote on PLF letterhead to BCPUD 
stating openly that: “PLF is the attorney for plaintiffs in
Lockary.” Id., 14 & Exh. A. The PLF’s CEO, counsel of 
record in the underlying litigation, also repeatedly referred to 
the case as one that “PLF filed. ” C-33-34. “Virtually every 
page of every pleading filed by plaintiffs ... has been on 
paper imprinted with the PLF logo, name, address, and 
telephone number.” C-35, 1 39. That same PLF logo is 
used by the PLF to represent itself as a “public interest law 
firm.” See CR 500, Exh. J and 0-10 (logo and PLF’s

23

description). Moreover, the underlying litigation sought 
attorneys’ fees under federal statutes, and any such fee 
recovery would have gone “to the [PLF] organization rather 
than to individual [PLF] staff attorneys.” See Rev. Proc. 
75-13, 1975 C.B. 662. Under these circumstances, the PLF 
cannot reasonably be said to be the stranger to the underlying 
proceedings that its petition tries to portray.* 16

2. The Ninth Circuit expressly affirmed the findings 
regarding the PLF s participation in the underlying litigation. 
The Ninth Circuit said:

PLF also takes issue with the district court’s factual 
finding that it was responsible for the sanctionable 
conduct. PLF contends that it merely provided 
logistical support to the individual attorneys who 
represented the plaintiffs, and did not participate as an 
entity in any way in this suit. The record belies this 
assertion. While the PLF attorneys did not identify 
themselves as PLF employees in the signature block 
of the motions and pleadings, the heading of each 
court paper they filed listed the attorneys’ names, 
followed by the name and address of PLF. 
Moreover, the plaintiffs were represented by a 
constantly changing cast of PLF attorneys, including 
PLF s president. PLF funded the litigation in its 
entirety. In its analysis of PLF’s involvement, the 
district court relied on statements by PLF’s president

The record is also replete with PLF’s official publications and 
tilings with the government that describe itself as a “public interest 
Jaw fina.” J « , a . .O -3 -8 W Q -4 - l4 . Although the Ninth Circuit
was willing to accept the PLF’s protestations that it was not really a 

law firm,” it also concluded that PLF had actively participated in the 
underlying litigation. A-12.



24

vaunting the importance of the Bolinas suit for PLF, 
and placing the case in the context of other, similar 
suits by PLF. The district court found that PLF was 
not “a mere passive and abstract institutional 

I backdrop”, but was, rather, “the sponsor of this 
litigation, and was actively involved in all phases of 
the case.” We agree.

I
A-12.17 *

3. The PLF also appeared and participated in the 
sanctions proceedings without raising or preserving an “in 
personam jurisdiction ” objection. The petition concedes, as 
it must, that the PLF “appeared before the District Court to 
defend against the sanctions motions” . Pet 13. Did it 
attempt to file a “special” appearance? No. See, e.g., CR 
506 (first paper signed by attorney who separately appeared 
for PLF in sanctions hearing), & CR 510 (PLF’s first

17 The quoted portion of the Ninth Circuit’s opinion deals with
the findings actually made by the District Court. It clearly states its 
agreement with the District Court’s findings of actual participation, 
sponsorship and responsibility. Contrary to this clear affirmance, the 
petition dwells on the Ninth Circuit’s incidental observations regarding 
post-remand events subsequent to the sanctions ruling, points on 
which the District Court did not rely and could not have relied, and 
other later events involving claims for which the PLF was not 
sanctioned. See BCPUD Opposition to PLF’s Petition for Rehearing, 
p. 5-7. From these irrelevancies, however, the petition tries to 
suggest that the Ninth Circuit rejected the District Court’s findings 
and “found" its own facts on which it affirmed. While the Ninth 
Circuit may not have thought it necessary to characterize the PLF as 
a“law firm ,” something the PLF itself had been doing for decades, it 
clearly agreed with the District Court that the PLF was “actively 
involved in all phases of the case” and was the entity “directly 
responsible for the sanctioned misconduct.” A-11-13 & n.2.

25

opposition brief.)1* Did it promptly raise an objection in 
terms of “inpersonam jurisdiction” or “personal jurisdiction” 
in the first paper filed? No. Did it do so in the second or 
third paper? No. See CR 510 & CR 585. The petition 
asserts, inaccurately, that when the PLF filed CR 510 (April 
1988) and CR 585 (February 1989), it “opposed the sanctions 
motions, arguing, among other things that the district court 
lacked in personam jurisdiction over petitioner.” Pet 3-4. 
The PLF’s opposition papers, however, do not even contain 
the word “jurisdiction,” let alone the expressions in 
personam jurisdiction” or “personal jurisdiction.” In fact, 
the PLF did not express an objection to “in personam 
jurisdiction” while participating for nearly two years in the 
sanctions proceedings during 1988-1989.

Moreover, when the District Court indicated that it 
was going to refer the sanctions motions to a special master, 
the PLF participated in the process of nominating and 
recommending the agreed-upon candidates. See CR 528 & 
CR 543 (request for nominations; agreed nominations 
letter & referral order). The criticism (Pet 4) that the 
“district court ignored petitioner’s jurisdictional argument and 
referred the motions to a federal magistrate sitting as special 
master” is unfounded. None of the PLF papers filed before 
the referral (CR 506 & CR 510) even contained the word 
“jurisdiction.”

" ,n CR 506, through counsel expressly signing for the PLF, 
the PLF joined with the others in a stipulation setting forth and 
requesting a briefing and hearing schedule, but PLF did not assert or 
reserve any objection to “in personam jurisdiction.” . On CR 510, the 
attorneys for PLF in the sanctions proceedings simply listed their 
appearance as “Attorneys for Pacific Legal Foundation” without any 
attempt to qualify or restrict their appearance.



26

4. Imposing sanctions on the PLF was not “in direct 
conflict ” with this court's decision in Zenith v. Hazeltine. In 
this litigation, the District Court imposed sanctions on the 
PLF, which not only appeared and actively participated in the 
sanctions proceedings, but also was found to have “actively 
participated” in the underlying litigation. Zenith Corp. v. 
Hazeltine, 395 U.S. 100, 108-112 (1968) did not involve 
sanctions issues or a court’s need to protect itself or its 
procedures from misuse. The case is inapposite, and no 
conflict exists requiring this court’s attention.19

5. Imposing sanctions on the PLF was also not in 
conflict with the Seventh Circuit's decision in Panther Pumps. 
Similarly, there is no conflict between the Seventh Circuit’s 
decision in Panther Pumps & Equipment Co. v. Hydrocraft, 
Inc., 566 F.2d 8 (7th Cir. 1977), and the Ninth Circuit’s 
decision herein. It is also inapposite, another non-sanctions

19 For example, in contrast to the PLF’s participation in both the
underlying litigation and the sanctions proceedings, Hazeltine, the 
corporation whose name appeared in a judgment “based wholly on the 
stipulation of HRI,” “did not execute the stipulation,” “never formally 
appeared at trial,’’ and “never had its day in court” . The judgment 
against Hazeltine was on a counterclaim which only named HRI as a 
defendant. “Hazeltine made no appearance in the litigation until 
Zenith proposed that judgment be entered against it, at which time, 
Hazeltine filed a ‘special appearance.’” The Supreme Court also 
noted that the record did not show that, when Hazeltine made its 
special appearance, the district court found it to have been “in active 
concert or participation” with HRI. See also Hazeltine Research, Inc. 
v. Zenith Radio Corporation, 388 F.2d 25, 30 (7th Cir. 1967) (“At 
no time during the trial did [Hazeltine] have an opportunity to show 
that it was not the alter ego.") The PLF herein had numerous 
opportunities to address the sanctions issues and actually appeared and 
participated in the sanctions proceedings.

27

case involving a company which did not participate in either 
the underlying litigation or the post-judgment proceedings. 
If anything, the Seventh Circuit’s willingness to hold Beck in 
contempt based on his relationship to the underlying 
litigation, although he had not been a party to the underlying 
litigation, would tend to support the District Court’s decision 
herein. That it dismissed the appeal as to Universal, a 
company formed by Beck after the initial judgment,’ is 
immaterial. Unlike Universal, which apparently did not 
participate in Beck’s show cause proceedings, the petition 
herein concedes that the PLF “appeared before the district 
court to defend against the sanctions motions”. Pet. 13.

The District Court found that “PLF actively 
participated” in the underlying litigation. The petition 
concedes PLF’s appearance and participation in the sanctions 
proceeding. The petition, however, inaccurately asserts that 
PLF raised and argued an “in personam jurisdiction” 
objection in CR 510 and CR 585. Pet. 3-4. The petition’s 
second contention is not presented by the petition or the 
record, and the petition should be denied.20

The absence o f  an express “in personam  jurisdiction" 
objection and argument is telling, because the PLF did argue even 
minor technical points if  it desired to raise them. A court order had 
expressly extended the time in Local Rule 270-1. CR 472. 
Nevertheless, PLF did try to argue in CR 510 that the motions were 
untimely for failure to comply with that very rule, despite the court’s 
express order and despite that rale’s express reference permitting the 
judge to “grant extensions o f  time for the filing o f an application." 
This “point" would hardly have been “jurisdictional," and it was 
certainly not an “in personam  jurisdiction" argument. It does 
illustrate, however, that the PLF’s failure to raise “in personam  
jurisdiction" expressly was a conscious decision. The argument now 
made is merely a contrivance.



28

CONCLUSION

j . The claims presented by PLF’s petition are neither 
significant nor meritorious, and the lower court’s actions are 

■ . y supported by the copious record that was developed so 
painstakingly by the Special Master and the District Court.

or these reasons, granting the petition would serve no useful 
purpose. By contrast, allowing PLF to prolong these
D rm m in^  W° Uld ,mpose serious additional hardship upon 
BCPUD. Its meager financial resources have already been 
severely taxed, and further litigation in this Court would only

bur,denS' 71,31 hardshiP ™uld remain even after 
BCPUD prevailed on the merits of the issues which PLF’s 
petition attempts to raise.

RICHARD E.V. HARRIS
GEORGE A. YUHAS
ORRICK, HERRINGTON & SUTCLIFFE
Old Federal Reserve Bank Building
400 San some Street
San Francisco, CA 94111
Telephone: (415) 392-1122

By: Richard E.V. Harris

Attorneys for Respondent
Bolinas Community Public Utility District

APPENDICES



N-l

APPENDIX N

RICHARD E. V. HARRIS
GEORGE A. YUHAS
ORRICK, HERRINGTON & SUTCLIFFE
600 Montgomery Street
San Francisco, CA 94111
Telephone: (415)392-1122

Attorneys for Defendant Bolinas 
Community Public Utility District

IN THE UNITED STATES DISTRICT COURT 

FOR THE NORTHERN DISTRICT OF CALIFORNIA

MATTHEW LOCKARY, SUSAN 
IRLAND LOCKARY; PHYLLIS 
GILBERT; CHARLES GILBERT; 
JAMES MACEY; ANTON 
HOLTER: MESA RANCH INC., a 
California limited partnership,

Plaintiffs,

v.

PAUL KAYFETZ; VICTOR 
AMOROSO; MARY LOWRY;

) Civ. No.
) C-82-6191 SW
)
) DECLARATION OF 
) RICHARD E.V. HARRIS 
) IN SUPPORT OF 
) BCPUD’S 
) APPLICATION FOR 
) ATTORNEYS’ FEES 
) AND EXPENSES 
)
) Date: April 6, 1988 
) Time: 10:00 a.m.



N-2

DIANA LOPEZ FARNSWORTH; ) 
EDWARD C. RILEY; PETER ) 
WARSHALL; DORIS ELAINE ) 
LeMIEUX; JACK BOWEN )
McCLELLAN; J. MICHAEL )
GROSHONG; WILUAM NIMAN; ) 
ORVILLE SCHELL; )
‘MARGUERITTE HARRIS; )
JUDITH WESTON; BOLIN AS ) 
COMMUNITY PUBLIC UTILITY ) 
DISTRICT,an incorporated public ) 
utility district; BOLINAS )
PLANNING COUNCIL, a )
non-profit corporation; JOHN )
GOODCHILD; GREGORY C. ) 
HEWLETT; STEVE MATSON; ) 
PATRICIA L. SMITH; RAY )
MORITZ; ROBERT J. SCAROLA; ) 
DIANE MIDDLETON McQUAID; ) 
FREDERICK G. STYLES; and the ) 
COUNTY OF MARIN, )

)
Defendants. )

_____ ___________________________  )

I, Richard E. V. Harris, do hereby declare as follows:

1. I am a partner with the law firm of Orrick, 
Herrington & Sutcliffe and am one of the attorneys for 
defendant Bolinas Community Public Utility District 
("BCPUD"). If called as a witness, I could testify to the 
following of my own personal knowledge.

2. My firm was retained by BCPUD to represent 
it in this action in November 1982. BCPUD is a public 
utility district which provides water service and sewer service

N-3

to customers in the Bolinas area. As indicated by financial 
and other reports, BCPUD has always been in precarious 
financial condition. Attached to this Declaration as Exhibit A 
is a true and correct copy of BCPUD’s audited financial 
statement for the fiscal year ending June 30, 1982. As 
shown therein, for the fiscal year which preceded the filing 
of this lawsuit, BCPUD’s total revenues amounted to only 
$278,571. For that same period, BCPUD’s expenses totalled 
$277,115. To finance its defense efforts, BCPUD was forced 
to impose a special assessment which, I am informed, 
substantially increased the economic burden on users of 
BCPUD water sources.

3. The financial difficulties which BCPUD would 
(and did) face in defending the claims asserted against it in 
this action were well-known. Attached to this Declaration as 
Exhibit B are the reported comments of one of the plaintiffs, 
Matthew Lockary, who is said to have commented about a 
month before this action was filed that BCPUD was "nearly 
broke" and would be hard pressed to defend the suit.

* * *

8. In recognition of the fact that focused 
discovery would be virtually impossible in light of the broad, 
garbage-can nature of the complaint and amended complaints, 
I proposed to this Court at an early stage that all discovery 
be stayed until the motions to dismiss were resolved. On 
March 3, 1983, in its initial status conference order, this 
Court ordered a stay of discovery until defendants’ motions 
to dismiss were resolved.

9. Notwithstanding the stay of discovery which 
was ordered by the Court, plaintiffs’ counsel made a request 
on September 30, 1983 under the California Public Records 
Act that asked BCPUD to produce virtually each and every



S i d l e  y  8 c  A u s t i n
A PARTNERSHIP INCLUDING PROFESSIONAL CORPORATIONS

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(202) 736-8378

May 7, 1993

Charles Stephen Ralston, Esq. 
NAACP Legal Defense and 

Educational Fund, Inc.
99 Hudson Street 
Sixteenth Floor 
New York, NY 10013

Dear Mr. Ralston:

Enclosed for your information are copies of the briefs
filed by all amici in the Pacific Legal Foundation case, along 
with a copy of the respondents' opposition brief, and Pacific 
Legal Foundation's reply brief.

Thank you again for supporting Pacific Legal
Foundation's cert, petition. The conference in which the 
petition will be reviewed is expected to take place on Friday, 
May 14th, with the result being reported on May 17th.

Y

Kurt H. Jacobs

Enclosures