FILED MAY 2, 2024 In the Office of the Clerk of Court WA State Court of Appeals, Division III
IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON DIVISION THREE
ISAAC GORDON, an individual, and all ) No. 38623-6-III those similarly situated, ) ) Appellant, ) ) v. ) PUBLISHED OPINION ) ROBINHOOD FINANCIAL, LLC, a ) Delaware limited liability company, and ) subsidiary of ROBINHOOD MARKETS, ) INC., a Delaware corporation, ) ) Respondent. )
LAWRENCE-BERREY, C.J. — Isaac Gordon commenced a class action lawsuit
against Robinhood Financial, LLC, asserting that the company’s refer-a-friend text
messaging practices for acquiring new customers violated Washington’s Consumer
Protection Act (CPA), chapter 19.86 RCW, and Washington’s Commercial Electronic
Mail Act (CEMA), chapter 19.190 RCW.
Through discovery, it became apparent that Gordon had received the offending
text message from the brother of one of his attorneys, that Gordon and two of his
attorneys had manufactured his claim, that they had done this in other class action No. 38623-6-III Gordon v. Robinhood Fin.
lawsuits, and that they had made false and misleading statements in pleadings designed to
hide this.
Once caught, Gordon and his attorneys surreptitiously dismissed the lawsuit
without prejudice. On reconsideration of the dismissal order, the trial court dismissed the
lawsuit with prejudice and assessed attorney fee sanctions against Gordon and his
attorneys for almost $750,000. The legal bases for these sanctions were RCW 4.84.250
(the minor claims statute), RCW 4.84.185 (the frivolous claim statute), and CR 11.
On appeal, Gordon and his attorneys argue the trial court erred when it imposed
sanctions. We conclude that a class action lawsuit is not a minor claim for purposes of
RCW 4.84.250—even if the putative class representative’s claim is small, and that
Gordon’s claim was not frivolous within the meaning of RCW 4.84.185. We, however,
conclude that the trial court did not abuse its discretion when it found that Gordon’s and
his attorneys’ misconduct warranted CR 11 sanctions. We remand for the trial court to
reconsider what amount of CR 11 sanctions actually are necessary to deter Gordon and
his attorneys from engaging in claim manufacturing in the future.
FACTS
Robinhood Financial, LLC, is an investment brokerage that allows its customers to
invest commission-free in stocks, exchange-traded funds, options, and cryptocurrency
utilizing Robinhood’s website and mobile applications (Apps). This case concerns a
2 No. 38623-6-III Gordon v. Robinhood Fin.
“refer-a-friend” marketing program operated by Robinhood, through which Robinhood’s
customers can refer another person to join Robinhood. As part of the referral program, if
a customer refers a person and that person signs up for Robinhood, then Robinhood will
give the customer and the person one share of free stock each.
Robinhood provides customers with two methods for sending referral messages.
The first method allows customers to copy a link from Robinhood’s website or Apps and
share it via text message, e-mail, or other social media or messaging application.
The second method allows customers to send messages by sharing their contacts from
their mobile device’s address book. Robinhood does not itself send any of the referral
program messages, and Robinhood customers have ultimate control over the message’s
contents.
In July 2019, Isaac Gordon, a Washington resident, received a text message from
Robinhood’s referral program. The text message contained a hyperlink to Robinhood’s
website and stated, “Your free stock is waiting for you! Join Robinhood and we’ll both
get a stock like Apple, Ford, or Facebook for free. Sign up with my link.” Clerk’s
Papers (CP) at 8-9.
Superior court proceedings
In October 2019, Gordon filed a class action complaint against Robinhood
Financial, LLC, in Spokane County Superior Court. He alleged he received an
3 No. 38623-6-III Gordon v. Robinhood Fin.
unsolicited commercial electronic text message from Robinhood’s referral program that
enabled its existing users to transmit unsolicited text messages to targeted recipients like
himself. He also alleged he did not consent, affirmatively or otherwise, to receive the
text message from Robinhood or its existing users. He further alleged the text message
violated the CPA, chapter 19.86 RCW, through Washington’s CEMA, chapter 19.190
RCW. Gordon sought to represent a class of similarly situated individuals who also
received referral text messages from Robinhood. His complaint alleged that he and other
putative class members were each entitled to recover $500 under the CEMA, $1,000 in
exemplary damages, and attorney fees and costs for each CEMA violation.
Removal to federal court
In November 2019, Robinhood removed the case to the United States District
Court for the Eastern District of Washington under the “Class Action Fairness Act of
2005” (CAFA), Pub. L. No. 109-2, 119 Stat. 4 (2005). In doing so, Robinhood alleged
that the aggregated amount of damages, fees, and costs Gordon sought “surpass CAFA’s
$5,000,000 amount-in-controversy requirement.” CP at 23.
Robinhood offers to settle
In September 2020, Robinhood made a settlement offer to Gordon for $1,501.
The letter stated that, pursuant to RCW 4.84.250 and .270, Gordon’s maximum recovery
possible on his claim as pleaded was $1,500. The letter further stated that if he failed to
4 No. 38623-6-III Gordon v. Robinhood Fin.
accept the settlement offer, he would be liable for Robinhood’s attorney fees, which
exceeded $100,000 at that time. Robinhood did not receive a response to this settlement
offer.
Class certification
In November 2020, Gordon filed a motion for class certification. Robinhood
opposed the motion. Relying on Gordon’s allegations, the federal court certified the class
and appointed Gordon as the class representative. The court appointed Kirk D. Miller as
class counsel, and Brian G. Cameron and Shayne J. Sutherland as co-class counsel. Soon
after, the court granted Gordon’s motion for E. Michelle Drake and Sophia Rios to appear
as pro hac vice counsel and later appointed E. Michelle Drake as co-class counsel.
Discovery proceeded and, in April 2021, Gordon responded to Robinhood’s first
set of discovery requests. In response to two interrogatories, Gordon stated he received
two unsolicited Robinhood referral text messages. As for the first, he described the
sender as “unknown” with whom he had no relationship, and he was “uncertain” if he
provided the sender with his telephone number. CP at 2133. As for the second, he
described being “uncertain” whether he had a relationship with the sender or knew the
sender’s name. CP at 2134. Gordon also produced screenshots of the text messages:
5 No. 38623-6-III Gordon v. Robinhood Fin.
CP at 2233, 2235. The screenshots showed only the referral text message and no other
messages between Gordon and the senders before or after the referral text message.
In response to another of Robinhood’s interrogatories, Gordon disclosed that he was a
plaintiff in three other class action lawsuits.
Robinhood’s motion to stay
In May 2021, Robinhood filed a motion to stay the case so that it could conduct
additional discovery into “facts that strongly suggest that class counsel orchestrated
sending to Plaintiff Isaac Gordon the very text messages that form the basis for Gordon’s
claim in this lawsuit.” CP at 2078. Robinhood explained it had learned that the first text
message was sent from a telephone number belonging to Nathan Budke, a friend and
classmate of Ewan Cameron, the son of Brian Cameron, one of Gordon’s attorneys.
Robinhood discovered that the second text message was sent from a telephone number
belonging to John Cameron, Brian Cameron’s brother. Robinhood also learned that
Brian Cameron represented Gordon in two of the class actions Gordon identified:
6 No. 38623-6-III Gordon v. Robinhood Fin.
Gordon v. MOD Super Fast Pizza, LLC 1 and Gordon v. Healthy Halo Insurance
Services, Inc. 2 Both of those cases were premised on CEMA violations involving referral
text messages, and their complaints were nearly identical to Gordon’s complaint against
Robinhood. In light of this information, Robinhood explained that it may seek to
disqualify Brian Cameron as counsel, remove Gordon as class representative, decertify
the class due to fraud and misrepresentation, and seek sanctions under Rule 11.
Soon after Robinhood’s motion to stay, Gordon served amended interrogatory
answers on Robinhood in which he admitted, contrary to his prior answers, that he had
been friends with John Cameron for years and had smoked cigars, played fantasy role
play and card games, and attended a concert with him. Gordon admitted to providing his
telephone number to John Cameron. Gordon also produced additional screenshots of text
message conversations that he had with John Cameron immediately before and after the
second Robinhood referral text message. The screenshots showed light-hearted banter
between the two men, making it clear they knew each other well. Gordon continued to
deny that he knew the identity of the sender of the other text message.
In response to Robinhood’s motion to stay, Gordon agreed that the case should be
stayed, but opposed allowing Robinhood to conduct additional discovery. Instead,
1 Spokane County Superior Court Case No. 20-200148-32. 2 Eastern District of Washington Case No. 2:19-cv-00387.
7 No. 38623-6-III Gordon v. Robinhood Fin.
Gordon requested that the court stay all discovery in order for him to file motions for his
class counsel to withdraw and to substitute a new class representative. In a supportive
declaration, Brian Cameron, Gordon’s counsel, stated that he is John Cameron’s brother
and Ewan Cameron’s father. He revealed that his son worked as an assistant at both his
and Kirk Miller’s law firms. He also confirmed that he, John Cameron, Ewan Cameron,
Gordon, and other family and friends met on several occasions for game nights. He
denied instructing his brother to send Gordon the text message at issue in this case and
stated, “To the best of my knowledge” Gordon never consented to receive the referral
text message. CP at 2311.
The federal court granted Robinhood’s motion to stay and allowed Robinhood to
conduct discovery into its allegation that Gordon and class counsel Brian Cameron
orchestrated the referral text message at issue. In its order, the court explained: “[T]he
new allegations raise ethical concerns and the Court will not allow a bait-and-switch
tactic that enables a lawsuit to survive where [Gordon] knew or should have known that
he was an inadequate class representative in the first place.” CP at 2304.
In June 2021, attorneys Drake and Rios filed a motion for leave to withdraw as
Gordon’s counsel. In the motion, Drake explained that she and Rios were under the
impression that Gordon’s initial discovery responses were complete and accurate, and
that they would not have become involved in the case had they known the truth. On the
8 No. 38623-6-III Gordon v. Robinhood Fin.
same day as Drake and Rios moved to withdraw as class counsel, Gordon moved to
withdraw as the class representative. Robinhood opposed both motions.
Robinhood’s motion to decertify the class and disqualify class counsel
In late June 2021, Robinhood moved to decertify the class and disqualify class
counsel. In its motion and supportive declarations, Robinhood alleged that Brian
Cameron, Shayne Sutherland, and Kirk Miller have a history of manufacturing claims.
Robinhood explained that the same attorneys represented Gordon as plaintiff in Gordon
v. MOD Super Fast Pizza, LLC, and that MOD’s attorneys also uncovered evidence
suggesting John Cameron sent Gordon the referral text message at issue. Gordon
voluntarily dismissed his claims in that case when MOD brought this connection to Brian
Cameron’s attention. Robinhood also said it learned that Gordon’s attorneys “routinely
encourage their friends to make small purchases at cannabis stores, provide their phone
numbers for store loyalty programs, and then commence CEMA lawsuits when they
receive a text from the store.” CP at 3221. Robinhood identified 10 of these CEMA
class actions, filed by Gordon’s attorneys, including three where Nathan Budke is the
named plaintiff.
In response to Robinhood’s motion, Gordon agreed to withdraw as class
representative and agreed there were sufficient grounds to decertify the class.
However, Gordon continued to deny he consented to receive the text message sent by
9 No. 38623-6-III Gordon v. Robinhood Fin.
John Cameron. Moreover, he argued, even if he was found to have colluded with some
other party to receive the text message at issue, that would not be a defense to a CEMA
violation. In his supportive declaration, Gordon declared he did not arrange or agree with
Brian Cameron, John Cameron, or anyone else to receive the Robinhood referral text
message. He also denied consenting to receive the text message in the MOD Pizza case.
Similarly, in his supportive declaration, Kirk Miller denied manufacturing the
lawsuit and denied having knowledge about the identity or involvement of his co-
counsel’s brother, John Cameron. He characterized Robinhood’s allegations as nothing
more than a distraction. He declared it was his legal opinion that if a Robinhood referral
text message that violates CEMA is sent by a friend or family member, it would not
change the viability of a claim against Robinhood.
The federal court dismisses Gordon as class representative and remands his individual claim to superior court
On July 27, 2021, the federal court entered an order (1) dismissing Gordon as class
representative, (2) decertifying the class, and (3) allowing Michelle Drake and Sophia
Rios to withdraw as Gordon’s counsel. The federal court declined to disqualify the
remaining class counsel on the current record.
In its order, the federal court sua sponte raised and considered whether it had
subject matter jurisdiction in light of its rulings. The court explained:
10 No. 38623-6-III Gordon v. Robinhood Fin.
The basis for this Court’s jurisdiction was that this class action concerned an amount in controversy exceeding $5,000,000 thereby invoking 28 U.S.C. § 1332(d). . . . This matter is no longer a class action and the amount at issue does not exceed $5,000,000. Even if the Court were to invoke the basic diversity of citizenship statute as to Plaintiff’s single allegation of a violation of CEMA, subject matter jurisdiction fails because Plaintiff Isaac Gordon’s damages do not exceed $75,000. See 28 U.S.C. § 1332(a). Accordingly, this matter must be remanded back to the State Court.
CP at 4210.
Robinhood moved the federal court for partial reconsideration of its decision,
arguing that decertification does not divest a federal court of CAFA jurisdiction and
requesting the court vacate the remand order. The federal court denied Robinhood’s
motion. In its order denying Robinhood’s motion for partial reconsideration, the court
explained that post-filing developments usually do not defeat CAFA jurisdiction, but that
there are exceptions to that rule “‘such as . . . when there was no jurisdiction to begin
with because the jurisdictional allegations were frivolous from the start.’” CP at 4251
(quoting United Steel, Paper & Forestry, Rubber, Mfg., Energy, Allied Indus. & Serv.
Workers Int’l Union v. Shell Oil Co., 602 F.3d 1087, 1092 n.3 (9th Cir. 2010).
Superior court proceedings on remand
On July 30, 2021, the same day the federal court denied Robinhood’s motion for
partial reconsideration, Robinhood filed a motion to stay in the superior court.
11 No. 38623-6-III Gordon v. Robinhood Fin.
Robinhood argued, absent a stay, Gordon would likely seek to voluntarily dismiss his
case to avoid judgment on the merits.
On August 4, 2021, Gordon filed an ex parte motion in the superior court seeking
voluntary dismissal without prejudice under CR 41(a). His motion did not mention
Robinhood’s pending motion to stay. The superior court granted Gordon’s motion.
In September 2021, Robinhood moved for relief from the superior court’s order
dismissing Gordon’s case without prejudice, citing irregularity in the proceedings and the
misconduct of Gordon’s counsel. Robinhood requested that the court dismiss the case
with prejudice because dismissal without prejudice was pointless, and it would be an
appropriate sanction for Gordon’s misconduct. Robinhood argued that Gordon
“surreptitiously obtained” voluntary dismissal by ex parte motion without providing
notice, then served the motion on Robinhood by mail to delay notice, despite having an
e-mail service agreement that Gordon requested. Rep. of Proc. (Oct. 8, 2021) at 7.
In October 2021, following oral argument, the superior court agreed with
Robinhood, vacated its earlier order, and dismissed the case with prejudice.
Gordon filed a motion for reconsideration, arguing that he had an absolute right to
voluntarily dismiss his claims. The superior court denied Gordon’s motion for
reconsideration by written order. The superior court pointed to facts it perceived
as irregularities in how Gordon obtained voluntary dismissal that warranted relief
12 No. 38623-6-III Gordon v. Robinhood Fin.
under CR 60. The court explained that Gordon had an absolute right to dismiss at any
time before resting, but that there is no right to a dismissal without prejudice. The court
noted that it would not have signed Gordon’s ex parte order had it known about
Robinhood’s pending motion to stay.
Robinhood’s motion for attorney fees
Following dismissal with prejudice, Robinhood moved the superior court for an
award of attorney fees for defending against Gordon’s claim. Robinhood requested fees
under (1) RCW 4.84.250, which permits recovery of attorney fees in an action for
damages where the amount pleaded is $10,000 or less, (2) RCW 4.84.185, which permits
recovery of attorney fees for actions that are frivolous, and (3) CR 11, which permits
courts to deter frivolous filings by awarding monetary sanctions. Gordon opposed the
motion.
After a hearing, the superior court issued a letter decision and then later entered an
order that contained extensive findings and conclusions to support its award of reasonable
attorney fees in favor of Robinhood and against Gordon and attorney Brian Cameron, his
firm, and attorney Kirk Miller, and his firm, jointly and severally, on each of the three
bases requested. With respect to RCW 4.84.250, the court determined that Gordon’s
pleaded claim for damages was for $10,000 or less. With respect to RCW 4.84.185, the
court determined that the case was frivolous and advanced without reasonable cause,
13 No. 38623-6-III Gordon v. Robinhood Fin.
partly because the federal court’s determination that the case was frivolous from the start
was the law of the case. With respect to CR 11, it found that (1) the federal court’s
finding of frivolousness was the law of the case, (2) Gordon and his counsel signed
various pleadings and discovery documents that were false and misleading, (3) Gordon’s
counsel failed to conduct a reasonable inquiry into the facts, and (4) the sanctions were
necessary to deter Gordon and his counsel from fabricating future claims. Robinhood
requested $1,248,862.62 in attorney fees and filed nearly 500 pages of billing records to
support its fee request. Gordon and his counsel opposed the fee request.
In February 2023, the superior court awarded Robinhood $749,393 in attorney
fees. In its written order, the superior court noted that it reviewed the voluminous
submissions supporting and opposing the fee award, considered the parties’ arguments,
removed billing entries for duplicative or unsuccessful efforts, and discounted the total
award by 33 percent to reflect reasonable Spokane attorney rates. In March 2023, the
superior court entered judgment consistent with its attorney fee award against Gordon
and his counsel, which they timely appealed.
ANALYSIS
A. DISMISSAL WITH PREJUDICE
Gordon first contends the trial court erred when it dismissed his complaint with
prejudice. We disagree.
14 No. 38623-6-III Gordon v. Robinhood Fin.
Standard of review
We review a trial court’s order on a motion to dismiss under CR 41 for manifest
abuse of discretion, which occurs when the ruling is manifestly unreasonable or
discretion was exercised on untenable grounds. Escude v. King County Pub. Hosp. Dist.
No. 2, 117 Wn. App. 183, 190, 69 P.3d 895 (2003).
Here, the trial court initially dismissed the case without prejudice on Gordon’s
motion for voluntary dismissal under CR 41(a)(1)(B), but after Robinhood’s motion for
relief, it vacated the order and dismissed the case with prejudice. In doing so, it
determined that dismissal with prejudice was warranted because (1) dismissal without
prejudice would be pointless, given Gordon’s frivolous claim, and (2) dismissal with
prejudice was warranted as a sanction due to Gordon’s frivolous claim and his attorney’s
litigation misconduct. We first set forth the relevant legal principles and then separately
review whether the trial court abused its discretion.
Voluntary dismissals under CR 41
CR 41(a) pertains to voluntary dismissals. CR 41(a)(1)(B) mandates a trial court
to grant a plaintiff’s voluntary motion to dismiss an action if the motion is made prior to
the close of the plaintiff’s opening case. CR 41(a)(4) explains when the dismissal is with
prejudice or without prejudice. CR 41(a)(4) provides:
15 No. 38623-6-III Gordon v. Robinhood Fin.
Unless otherwise stated in the order of dismissal, the dismissal is without prejudice, except that an order of dismissal operates as an adjudication upon the merits when obtained by a plaintiff who has once dismissed an action based on or including the same claim in any court of the United States or of any state.
CR 41(a)(4) therefore provides the trial court with the discretion to make the dismissal
with prejudice in an appropriate case. See Escude, 117 Wn. App. at 192.
“Our Supreme Court has held that a trial court has the discretion to grant a
nonsuit with or without prejudice, especially as a part of the court’s inherent power to
impose a sanction of dismissal in a proper case.” Id. at 191 (citing In re Detention of
G.V., 124 Wn.2d 288, 297-98, 877 P.2d 680 (1994)). A trial court also has discretion
under CR 41(a)(4) to order dismissal with prejudice where dismissal without prejudice
would be pointless. Gutierrez v. Icicle Seafoods, Inc., 198 Wn. App. 549, 557, 394 P.3d
413 (2017) (quoting Escude, 117 Wn. App. at 187). Thus, here, once the superior court
vacated its prior dismissal order, 3 it had the discretion to enter dismissal with prejudice as
3 Gordon did not assign error to the trial court’s decision to vacate its initial order of dismissal. His only argument that might be construed as challenging the trial court’s decision to vacate its initial order of dismissal is in a footnote where he argues that Robinhood completely “ignored any procedure required by CR 60.” Br. of Appellant at 13 n.6. His argument is insufficient, however, because this court does not address errors raised only in footnotes, which are “at best, ambiguous or equivocal as to whether the issue is truly intended to be part of the appeal.” State v. Johnson, 69 Wn. App. 189, 194 n.4, 847 P.2d 960 (1993).
16 No. 38623-6-III Gordon v. Robinhood Fin.
part of the court’s inherent power as a sanction and where dismissal without prejudice
would be pointless. We now review whether the trial court abused its discretion.
Gordon argues the trial court erred when it dismissed the action with prejudice as a
sanction without first addressing the Burnet/Rivers factors. Burnet v. Spokane
Ambulance, 131 Wn.2d 484, 494, 933 P.2d 1036 (1997); Rivers v. Wash. State Conf. of
Mason Contractors, 145 Wn.2d 674, 686, 41 P.3d 1175 (2002). As a threshold issue,
Robinhood notes that Gordon did not raise the Burnet/Rivers factors as an issue in the
trial court.4 We generally decline to review claims of error not raised in the trial court.
RAP 2.5. We exercise our discretion nevertheless and review Gordon’s argument.
In Washington, when a trial court imposes dismissal in a proceeding as a sanction
for violation of a discovery order, it must be apparent from the record that (1) the party’s
refusal to obey the discovery order was willful or deliberate, (2) the party’s actions
substantially prejudiced the opponent’s ability to prepare for trial, and (3) the trial court
explicitly considered whether a lesser sanction would probably have sufficed. Rivers,
145 Wn.2d at 686 (citing Burnet, 131 Wn.2d at 494).
4 Gordon counters that he did raise these factors by attaching a law review article as an exhibit to Brian Cameron’s declaration in opposition to Robinhood’s motion for attorney fees. The law review article is 24 pages long and generally focuses on the imposition and calculation of attorney fees as sanctions. Gordon did not discuss the Burnet/Rivers factors in his trial court briefing or argument. For this reason, we are not persuaded that he raised this issue in the trial court.
17 No. 38623-6-III Gordon v. Robinhood Fin.
The trial court is required to consider the Burnet/Rivers factors when it imposes
dismissal in a proceeding as a sanction “for violation of a discovery order.” Id. Both
Rivers and Burnet dealt with sanctions under CR 37 for discovery order violations. Id.;
Burnet, 131 Wn.2d at 494-95. That is not what occurred here. Rather, the trial court here
sanctioned Gordon by dismissing his case with prejudice as part of its inherent power
under CR 41(a)(4) for Gordon’s frivolous claim and litigation misconduct.
Gordon does not meaningfully challenge the trial court’s finding that dismissal as
a sanction was warranted because of litigation misconduct, which it detailed in its written
findings. The trial court meticulously identified the instances of Gordon and his counsel
being untruthful or deceptive in the complaint, amended complaint, discovery responses,
and declarations. Gordon did not assign error to any of these findings. We conclude the
trial court did not abuse its discretion when it dismissed Gordon’s claim with prejudice as
a sanction.
B. THE SUPERIOR COURT’S ATTORNEY FEE AWARD
Gordon next argues the trial court erred in awarding attorney fees to Robinhood
under (1) RCW 4.84.250, (2) RCW 4.84.185, and (3) CR 11. We address each argument
separately.
18 No. 38623-6-III Gordon v. Robinhood Fin.
1. RCW 4.84.250: the minor claims statute is inapplicable to class action lawsuits
RCW 4.84.250 provides that a trial court shall award attorney fees to the
prevailing party, in “any action for damages where the amount pleaded” is $10,000
or less, if the statutory requirements are satisfied. Target Nat’l Bank v. Higgins, 180
Wn. App. 165, 173, 321 P.3d 1215 (2014). The defendant is the prevailing party if the
plaintiff recovers nothing, or if the recovery, exclusive of costs, is the same or less than
the amount the defendant offered to settle. RCW 4.84.270.
Gordon argues that RCW 4.84.250 does not apply here because the amount
pleaded in his complaint was substantial, as reflected in Robinhood’s motion to remove
the lawsuit to federal court. In its motion, Robinhood advised the federal court that the
damages Gordon sought exceeded $5,000,000, CAFA’s jurisdictional requirement.
Robinhood counters that we should look at Gordon’s individual claim, notwithstanding
that both Gordon’s and the putative class’s claims were pending at the time Robinhood
made its settlement offer. We view the issue as whether RCW 4.84.250 applies to
lawsuits seeking class action certification of small claims.
We review questions of statutory interpretation de novo. Jametsky v. Olsen,
179 Wn.2d 756, 761, 317 P.3d 1003 (2014). The primary goal of statutory interpretation
is to determine and give effect to the legislature’s intent. Gray v. Suttell & Assocs.,
19 No. 38623-6-III Gordon v. Robinhood Fin.
181 Wn.2d 329, 339, 334 P.3d 14 (2014). To determine legislative intent, we look at the
plain language of the statute, consider the text of the provision, the context of the statute,
any related statutory provisions, and the statutory scheme as a whole. Id. If the plain
meaning of the statute is unambiguous, we apply that meaning. Ronald Wastewater Dist.
v. Olympic View Water & Sewer Dist., 196 Wn.2d 353, 364, 474 P.3d 547 (2020). If the
plain language of the statute is susceptible to more than one reasonable interpretation,
then the statute is ambiguous. Jametsky, 179 Wn.2d at 762. We resolve ambiguity by
considering outside sources that may indicate legislative intent, including principles of
statutory construction, legislative history, and relevant case law. Id. Our paramount
concern is to ensure that the statute is interpreted consistently with the underlying policy
of the statute. Safeco Ins. Cos. v. Meyering, 102 Wn.2d 385, 392, 687 P.2d 195 (1984).
We note that the statutory scheme repeatedly refers to the prevailing party, the
plaintiff, and the defendant, all in singular terms. Yet in many lawsuits, there is more
than one plaintiff and more than one defendant. Nothing in the statutory scheme answers
the question of whether the “$10,000 or less” requirement applies individually or in the
aggregate. We conclude the statute is susceptible to more than one reasonable
interpretation, and so we must discern legislative intent from analyzing the purposes of
the statute.
20 No. 38623-6-III Gordon v. Robinhood Fin.
“The purpose of RCW 4.84.250 is to encourage out-of-court settlements and to
penalize parties who unjustifiably bring or resist small claims.” Beckmann v. Spokane
Transit Auth., 107 Wn.2d 785, 788, 733 P.2d 960 (1987). Another purpose is to “‘enable
a party to pursue a meritorious small claim without seeing [their] award diminished in
whole or in part by legal fees.’” Id. (quoting Northside Auto Serv., Inc. v. Consumers
United Ins. Co., 25 Wn. App. 486, 492, 607 P.2d 890 (1980)).
Here, Gordon was a nominal party, seeking to be the putative class representative
in an action for over $5 million. Because the action was not a small claim, the first
purpose of the rule would not be furthered by its application. Also, attorneys in class
action lawsuits recover their fees on a contingent basis from the class. Because Gordon
could pursue his small claim without it being further diminished beyond the agreed
contingent fee arrangement, the second purpose of the rule would not be furthered by its
application here.
Moreover, application of RCW 4.84.250 to class action lawsuits could interfere
with maintaining such lawsuits. “A ‘primary function of the class action is to provide a
procedure for vindicating claims [that], taken individually, are too small to justify
individual legal action but which are of significant size and importance if taken as a
group.’” Chavez v. Our Lady of Lourdes Hosp., 190 Wn.2d 507, 514, 415 P.3d 224
(2018) (alteration in original) (quoting Brown v. Brown, 6 Wn. App. 249, 253, 492 P.2d
21 No. 38623-6-III Gordon v. Robinhood Fin.
581 (1971)). Here, Robinhood sought to pressure Gordon, the putative class
representative, to settle his claim for $1,501 or potentially be responsible for more than
$100,000 of Robinhood’s attorney fees. Settlement of the putative class representative’s
claim would have cost Robinhood only $1,501, but it would have forced plaintiffs’
counsel to find a new putative class representative, who might then have received a
similar settlement offer. Interpreting RCW 4.84.250 as applying to class action lawsuits
could and likely would interfere with the orderly administration of such actions. Partly
because class action lawsuits are complex cases where millions of dollars are often at
stake, we believe the legislature did not intend for RCW 4.84.250 to apply to such
lawsuits.
We conclude that RCW 4.84.250 does not apply to class action lawsuits, and
express no opinion whether small claims should otherwise be viewed singularly or in the
aggregate when determining if they fall within RCW 4.84.250.
2. RCW 4.84.185: Gordon’s claim is not frivolous
Gordon argues the trial court erred by determining that his lawsuit was frivolous
under RCW 4.84.185. We agree.
Under RCW 4.84.185, a prevailing party in a civil action is entitled to seek fees
for defending a frivolous action. The statute authorizes a court to award reasonable
attorney fees when, after considering the evidence presented, it determines that “the
22 No. 38623-6-III Gordon v. Robinhood Fin.
position of the nonprevailing party was frivolous and advanced without reasonable
cause.” RCW 4.84.185. “‘A frivolous action is one that cannot be supported by any
rational argument on the law or facts.’” Hanna v. Margitan, 193 Wn. App. 596, 612,
373 P.3d 300 (2016) (quoting Rhinehart v. Seattle Times, Inc., 59 Wn. App. 332, 340,
798 P.2d 1155 (1990)).
Gordon argues that even if he engaged in claim manufacturing, his CEMA claim is
not frivolous because it can be supported by a rational legal and factual argument.
As noted earlier, CEMA prohibits businesses from sending or assisting in the
transmission of commercial text messages to Washington residents:
No person conducting business in the state may initiate or assist in the transmission of an electronic commercial text message to a telephone number assigned to a Washington resident for cellular telephone or pager service . . . .
RCW 19.190.060(1). But a business does not violate CEMA if it initiates or assists in the
transmission of a text message to a person who has “clearly and affirmatively consented
in advance to receive these text messages.” RCW 19.190.070(1)(b).
The trial court found that Gordon, John Cameron, attorney Brian Cameron, and
attorney Kirk Miller orchestrated the referral text message so as to initiate this and other
class action lawsuits. Gordon consented to receiving the Robinhood text from John
Cameron, his friend, and attorneys Brian Cameron and Kirk Miller knew this.
23 No. 38623-6-III Gordon v. Robinhood Fin.
Nevertheless, one can reasonably argue that the consent that renders refer-a-friend
type of text messages legal is the recipient giving consent to the business that initiated or
assisted in transmitting the message. Here, there is no evidence that Gordon “clearly and
affirmatively” gave consent to Robinhood to receive the text message. Because Gordon’s
claim can be supported by a rational argument of the facts and law, it is not frivolous.
We conclude the trial court erred in holding otherwise. 5
3. CR 11 sanctions were warranted
Gordon raises various arguments why the trial court erred in assessing CR 11
sanctions. Having concluded that Gordon’s case was not frivolous, we distill Gordon’s
remaining arguments to (1) whether Robinhood provided adequate notice it would seek
CR 11 sanctions, (2) whether Gordon and his attorneys engaged in conduct warranting
CR 11 sanctions, and if so, (3) what are the appropriate limitations of those sanctions in
this case.
a. Robinhood provided adequate notice
Gordon argues Robinhood failed to provide notice it would seek CR 11 sanctions.
We disagree.
5 The parties dispute whether the trial court erred in applying the law-of-the-case doctrine to the federal court’s determination that Gordon’s case was frivolous from the start. Regardless, the doctrine does not limit our review of a trial court’s application of the law. Lodis v. Corbis Holdings, Inc., 192 Wn. App. 30, 56, 366 P.3d 1246 (2015).
24 No. 38623-6-III Gordon v. Robinhood Fin.
Under Washington’s CR 11, attorneys and judges who perceive a possible
violation of CR 11 must bring it to the offending party’s attention as soon as possible.
Biggs v. Vail, 124 Wn.2d 193, 198, 876 P.2d 448 (1994). Without timely notice, CR 11
sanctions are unwarranted. Id. The purpose of this requirement is to give the offending
party an opportunity to mitigate the sanction by amending or withdrawing the baseless
filing. Id. Another reason is to deter the offending party from submitting additional
baseless filings. Id.
Here, the trial court found that Gordon received proper notice under CR 11 when
Robinhood, just days after discovering Gordon’s relationship with John Cameron, stated
in a court filing that it was considering a “Rule 11” motion for sanctions. CP at 4554.
Gordon did not assign error to this finding. Moreover, it is supported by substantial
evidence. Robinhood put Gordon on notice that it may have grounds to bring a Rule 11
motion for sanctions in its motion to stay, which Robinhood filed soon after it discovered
who sent Gordon the referral text messages.
Gordon argues Robinhood did not comply with the safe harbor provision in the
Fed. R. of Civ. P. 11. However, the trial court did not impose sanctions under the federal
rule. Rather, the trial court imposed sanctions under Washington’s CR 11. Accordingly,
Robinhood was not required to comply with the Fed. R. of Civ. P. 11 safe harbor
provision.
25 No. 38623-6-III Gordon v. Robinhood Fin.
Gordon argues he took mitigating steps following Robinhood’s motion to stay
by attempting to withdraw as class representative. However, as Robinhood points out,
the federal court denied Gordon’s attempt to withdraw, characterizing his actions as a
“bait-and-switch tactic that enables a lawsuit to survive where [Gordon] knew or should
have known that he was an inadequate class representative in the first place.” CP at
2304.
b. Gordon and his attorneys engaged in sanctionable conduct
CR 11 allows a trial court to impose upon parties and counsel sanctions for
certifying pleadings, motions, and legal memoranda that (1) are not well grounded in fact,
(2) are not warranted by existing law or a good faith argument for a change in existing
law, (3) are interposed for an improper purpose, or (4) contain denials of factual
contentions that are not warranted on the evidence or reasonably based on a lack of
information and belief. CR 11(a)(1)-(4), (b)(1)-(4). The purpose behind CR 11 is to
deter baseless filings and to curb abuses of the judicial system. Bryant v. Joseph Tree,
Inc., 119 Wn.2d 210, 219, 829 P.2d 1099 (1992).
A trial court’s ruling on a motion for CR 11 sanctions is reviewed for an abuse of
discretion. Watness v. City of Seattle, 11 Wn. App. 2d 722, 735, 457 P.3d 1177 (2019).
“The trial court abuses its discretion where its conclusion was the result of an exercise of
discretion that was manifestly unreasonable or based on untenable grounds or reasons.”
26 No. 38623-6-III Gordon v. Robinhood Fin.
Id. at 736. We can affirm a trial court’s sanctions award on any basis supported by the
evidence. Id.
Here, aside from imposing CR 11 sanctions based on its reversed determination of
frivolousness, the trial court imposed CR 11 sanctions because Gordon and his counsel
made repeated false statements with respect to their lack of knowledge of who sent the
offending text messages to Gordon. These false statements occurred in the original
complaint, the amended complaint, the motion for class certification, the original
discovery responses, one of Gordon’s declarations, and a declaration from Gordon’s
counsel after the allegations of claim manufacturing were made. Gordon’s counsel hid
the relationship between Gordon and the Cameron brothers to prevent Robinhood from
learning that the class action claim was manufactured.
The trial court explained:
CR 11 sanctions are necessary to deter Plaintiff and his counsel from fabricating claims in the future. In addition to Plaintiff’s counsel’s misconduct in this case and in Gordon v. Mod Pizza, discussed above, Plaintiff’s counsel Brian Cameron, Kirk Miller, and their law firms have initiated several other CEMA-based putative class actions, where plaintiffs claim to have received unsolicited commercial electronic text messages that appear similarly suspect. Several of these cases were on behalf of plaintiffs alleging that they received loyalty program text messages after visiting multiple cannabis stores on the same day. . . . The plaintiff in one of these cases testified at his deposition that Brian Cameron drove him from one store to the next. . . . After the misconduct of Brian Cameron and Kirk Miller came to light in these cases, Brian Cameron and/or Kirk Miller declined to file the previously served complaints . . . or voluntarily
27 No. 38623-6-III Gordon v. Robinhood Fin.
dismissed the cases without prejudice . . . . This is the same tactic that Plaintiff and his counsel employed in this case.
CP at 4556-57.
Our rules of professional conduct prohibit a lawyer from knowingly making a
false statement of fact to a tribunal. RPC 3.3(a)(1). Filing a document in violation of the
rules is a filing for an improper purpose for which CR 11 sanctions may be imposed.
Watness, 11 Wn. App. 2d at 740. Here, attorneys Brian Cameron and Kirk Miller
repeatedly made knowingly false statements in pleadings, including when they alleged in
the original complaint that Gordon did not consent, affirmatively or otherwise, to receive
the text message from Robinhood or its existing users. As noted earlier, although Gordon
did not give Robinhood consent, he did give John Cameron, Robinhood’s existing user,
consent to send him the text.
c. In this context, CR 11 sanctions should be limited to the amount necessary to deter the misconduct
As noted previously, the purpose of CR 11 sanctions is to deter baseless filings
and to curb abuses of the judicial system. Bryant, 119 Wn.2d at 219. The trial court
found that Gordon’s and his counsel’s misconduct began at the inception of the case,
continued throughout it, and that “substantial sanctions” were necessary to deter Gordon
and his counsel from fabricating claims in the future. CP at 4558. These findings are
28 No. 38623-6-III Gordon v. Robinhood Fin.
supported by the record. Nevertheless, the trial court awarded all ofRobinhood's
reasonable attorney fees, nearly $750,000, as sanctions.
Had we found Gordon's claim to be frivolous, we might have allowed this amount
to stand. But because the trial court's CR 11 sanctions were partly tied to its reversed
frivolous determination, we remand for the trial court to determine what amount of
sanctions actually are necessary to deter Gordon's and his legal counsels' claim
manufacturing practices. See Biggs, 124 Wn.2d at 197-98 (noting that one purpose of
CR 11 sanctions is to deter baseless filings). In making its determination, the trial court
should consider the financial resources of the sanctioned individuals and firms. Although
we do not disturb the trial court's finding that "substantial sanctions" are necessary,
"substantial" is a relative term. Small ships do not need large rudders to tum around.
Reversed in part and remanded for determination of CR 11 sanctions.
l...,. ....,.,n.L,\.J!,..._..._ , C..~- Lawrence-Berrey, C.J. ~ 1 ~
WE CONCUR:
Fearing, J. ) Pennell, J.