Farese v. Scherer

[PUBLISH]

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT
________________________
FILED
U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
No. 01-14474
AUGUST 19, 2003
________________________
THOMAS K. KAHN
CLERK
D.C. Docket No. 00-08950-CV-DMM

THOMAS R. FARESE,

Plaintiff-Appellant,

versus

KENNETH J. SCHERER,
CHARLES I. COHEN, individually, et. al.,

Defendants-Appellees.

__________________________

Appeal from the United States District Court
for the Southern District of Florida
_________________________
(August 19, 2003)

Before BARKETT and KRAVITCH, Circuit Judges, and FULLAM*, District Judge.

*
Honorable John P. Fullam, United States District Judge for the Eastern District of
Pennsylvania, sitting by designation.
PER CURIAM:

Plaintiff-appellant Thomas R. Farese, a federal prisoner proceeding pro se,

appeals the district court’s sua sponte dismissal of his consolidated action, consisting

of two civil cases alleging violations of 18 U.S.C. § 1961; 42 U.S.C. §§ 1985(2),

1985(3), and 1986; the First, Fifth, and Fourteenth Amendments to the United States

Constitution; and state law.

I. FACTS

Both suits—a civil rights case and a Racketeer Influenced and Corrupt

Organizations Act (“RICO”) case—stem from prior business relationships and

litigation between Farese and defendant-appellee Harold Dude, involving Florida

Ventures, a company that operated a nightclub, Club Diamonds, in West Palm Beach,

Florida. Dude was the majority shareholder and Farese a minority shareholder of

Florida Ventures. Farese’s son-in-law, Glen Agostinelli, also a minority shareholder,

was employed as the manager of Club Diamonds.

Prior to the current litigation, Farese and other shareholders of Florida

Ventures had filed lawsuits against Dude alleging theft, misappropriation, fraudulent

conversion, and breach of fiduciary duty based upon Dude’s control of the club and

the company’s financial accounts. Defendants-appellees Charles I. Cohen and

2
Kenneth J. Scherer and their law firms defended Dude in these actions.

In his current civil-rights complaint, Farese alleged that Dude, his attorneys

Cohen and Scherer, and his attorneys’ law firms (collectively, the “Defendants”)

participated in conspiracies to intimidate, threaten, injure, and treat him adversely in

an effort to force him to withdraw his prior lawsuits against Dude. Specifically,

Farese alleged that (1) Dude personally made several threats designed to coerce him

into abandoning his lawsuits; (2) Dude and Scherer threatened him by stating that

Agostinelli would be terminated from his job unless Farese withdrew his lawsuits; (3)

Dude eventually suspended and then terminated Agostinelli because Farese refused

to dismiss his suits; (4) Dude deducted money from Agostinelli’s paycheck because

Dude had to attend a deposition in Farese’s shareholder case; and (5) the Defendants

deprived Farese, individually, and as a member of a “prisoner class,” of his

constitutional right of access to the courts.

Farese’s civil-rights complaint also alleged that Dude filed for bankruptcy,

placing Club Diamonds and Florida Ventures into bankruptcy, and that when Farese

filed an adversary action in the bankruptcy case to affect placement of assets, the

Defendants filed malicious and frivolous lawsuits against members of Farese’s family

in order to (1) intimidate and threaten him and his subpoenaed witnesses; (2) obstruct

judicial proceedings; and (3) block his access to the courts. Farese sought an

3
injunction prohibiting the alleged threats and intimidation, jury-determined

compensation, punitive damages, costs, and attorney’s fees should he retain an

attorney.

In his RICO complaint, Farese asserted violations flowing from a conspiracy

among Dude and his attorneys to loot companies of which Farese was a shareholder

and creditor. The conspiracy allegedly involved (1) Dude’s fraudulent transfer of

Club Diamonds to an alter ego, while placing Florida Ventures into bankruptcy after

creating a false appearance that Florida Ventures was insolvent; (2) Dude’s and his

attorneys’ concealment of Florida Ventures’s assets from the bankruptcy trustee and

submission of false documents to conceal money laundering in another bankruptcy

case; and (3) the attorneys’ facilitation of perjury, obstruction of justice, bankruptcy

fraud, and the use of the courts to defraud Farese of property and business.

Farese’s civil-rights case was referred to a magistrate judge for pre-trial

administration. Subsequently, Farese notified the district court of the pendency of his

RICO case, and the district court consolidated the two actions, assigning the civil-

rights docket number to the consolidated action. The district court then granted

Farese’s motion to proceed in forma pauperis (“IFP”) in his civil-rights action.1

On 6 June 2001, the district court conducted a sua sponte review of the entire

1
Farese paid the appropriate filing fee for the RICO suit.

4
record and dismissed the consolidated cases. The district court noted that

Farese proceeded IFP in the civil-rights case but paid the appropriate filing and

service of process fees when he filed the RICO complaint. Nevertheless, the district

court determined that when the cases were consolidated, Farese was “proceeding

[IFP] in the RICO claim as well.” The district court then dismissed the consolidated

case sua sponte, citing § 1915(d)2 of the Prison Litigation Reform Act (“PLRA”),

which formerly governed IFP proceedings.

In applying § 1915(d), the district court concluded that Farese’s claims had no

basis in law or in fact. The district court determined that (1) Farese lacked standing

to assert alleged wrongs taken against his family members; (2) his other claims sought

to re-argue matters addressed in previous lawsuits or to raise matters pending in other

cases in other courts; (3) his complaints, if taken as true, did not state any claim upon

which relief could be granted; (4) a private attorney who acts within the scope of the

representation does not act pursuant to any state authority; (5) Farese failed to provide

evidence of the alleged conspiracies; and (6) his prisoner status did not constitute

membership in a protected class within the meaning of § 1985(3).

Following the district court’s dismissal, Farese submitted a verified first

amended complaint. Farese also filed a motion to alter or amend the judgment

2
As explained later, § 1915(e)(2) replaced § 1915(d).

5
pursuant to Federal Rule of Civil Procedure 59(e), asserting that the district court

improperly dismissed his pro se complaint without offering him notice and an

opportunity to amend or cure any defects. The district court stamped “DENIED” on

the motion to alter or amend the judgment. Farese timely appealed. While Farese’s

appeal was pending, Cohen and his law firm filed a motion for an award of damages

and costs, including appellate attorney’s fees, pursuant to Federal Rule of Appellate

Procedure 38, arguing that Farese’s appeal was frivolous.

II. ANALYSIS

On appeal, the main issues presented are (1) whether the district court properly

dismissed Farese’s fees-paid RICO claim under the PLRA; (2) whether the district

court properly dismissed Farese’s § 1985 claims; and (3) whether Cohen and his law

firm are entitled to damages and costs under Federal Rule of Appellate Procedure 38.3

A. Dismissal of Farese’s Fees-Paid RICO Case

Farese argues that the district court erred when it dismissed his fees-paid RICO

3
Farese also appeals the district court’s denial of his Rule 59(e) motion. Having reviewed
the district court’s sua sponte dismissal of Farese’s consolidated action, however, we need not
address separately the court’s Rule 59(e) ruling.

6
case consolidated with his IFP civil-rights case pursuant to 28 U.S.C. § 1915(d).4

Farese contends that he paid the filing fee in his RICO action and disputes the district

court’s determination that because of the consolidation, he had “been proceeding

[IFP] in the RICO claim.” While conceding that § 1915, which allows sua sponte

dismissals, “may apply to the civil rights action,” he argues that this section does not

govern his RICO claim and requests that his fees-paid RICO claim be reinstated.5

4
The district court based its decision upon § 1915(d), which was replaced by § 1915(e)(2)
effective 26 April 1996. Section 1915(d) permitted sua sponte dismissals of frivolous and malicious
complaints where the plaintiff proceeded IFP. The district court’s error in citing to the former statute
was harmless because the district court articulated standards, such as failure to state a claim and
frivolity, that currently are listed in § 1915(e)(2)(B). Thus, for purposes of this appeal, we assume
that the district court dismissed Farese’s consolidated cases pursuant to § 1915(e)(2)(B).
5
Because of the language used in the district court’s order, Farese argues that the district
court based its sua sponte dismissal on § 1915(e)(2)(B)(ii). Relying on Judge Lay’s concurring
opinion in Mitchell v. Farcass, 112 F.3d 1483 (11th Cir. 1997), Farese argues that § 1915(e)(2)(B)(ii)
violates an IFP plaintiff’s equal-protection and due-process rights because it allows courts to dismiss
IFP cases sua sponte based on a failure to state a claim, although identical complaints filed by a fee-
paying plaintiff receive the benefits of an adversary proceeding. In Mitchell, Judge Lay concurred
in the majority opinion but wrote separately to note his concern about the constitutionality of §
1915(e)(2)(B)(ii). See Mitchell, 112 F.3d at 1490 (Lay, J., concurring). Because § 1915(e)(2)(B)(ii)
strips the protections of the Federal Rules of Civil Procedure only from IFP plaintiffs, Farese argues
that IFP plaintiffs are denied equal protection and due process.
Farese’s argument, however, is foreclosed by Vanderberg v. Donaldson, 259 F.3d 1321 (11th
Cir. 2001). In Vanderberg, the district court sua sponte dismissed the IFP-plaintiff’s case under §
1915(e)(2)(B)(ii). On appeal, the plaintiff in Vanderberg argued that § 1915(e)(2)(B)(ii) was
unconstitutional, facially and as applied. See Vanderberg, 259 F.3d at 1323. Specifically, the
plaintiff argued that § 1915(e)(2)(B)(ii) denied indigent litigants an equal opportunity to present
meaningful grievances and that the section violated due process because indigent litigants were not
given an opportunity to be heard before dismissal. See id. Using a rational-basis analysis, the
Vanderberg court concluded that § 1915(e)(2)(B)(ii) “is rationally related to the government’s
legitimate interests in deterring meritless claims and conserving judicial resources and, therefore,
does not violate the Equal Protection Clause.” Id. at 1324. Additionally, the court stated that due
process “does not always require notice and the opportunity to be heard” and, thus, “[t]he
complained of procedure [sua sponte dismissal under § 1915(e)(2)(B)(ii)] did not deny Plaintiff due

7
 “We review the district court’s findings of fact for clear error and its legal

conclusions de novo.” Falken v. Glynn County, 197 F.3d 1341, 1345 (11th Cir.

1999). “The district court’s interpretation of the PLRA is a statutory finding and

constitutes a question of law, which is reviewed de novo.” Hubbard v. Haley, 262

F.3d 1194, 1196 (11th Cir. 2001).

Entitled “Proceedings in forma pauperis,” § 1915 governs IFP proceedings.

Section 1915 allows prisoners to proceed in a suit without “prepayment of fees or

security therefor” when the prisoner submits “an affidavit that includes a statement

of all assets such prisoner possesses [and] that the person is unable to pay such fees

or give security therefor.” 28 U.S.C. § 1915(a)(1). A prisoner proceeding IFP must

nevertheless pay a filing fee or a portion thereof as funds become available. Id.

§ 1915(b)(1). Section 1915(e)(2) provides:

Notwithstanding any filing fee, or any portion thereof, that
may have been paid, the court shall dismiss the case at any
time if the court determines that—
(A) the allegation of poverty is untrue; or
(B) the action or appeal—
(i) is frivolous or malicious,
(ii) fails to state a claim on which relief may be
granted; or
(iii) seeks monetary relief against a defendant
who is immune from such relief.

process.” Id. Therefore, based on Vanderberg, we conclude that Farese’s argument regarding the
constitutionality of § 1915(e)(2)(B)(ii) is without merit.

8
Id. § 1915(e)(2). Logically, § 1915(e) only applies to cases in which the plaintiff is

proceeding IFP.

Here, the district court specifically found that Farese had not moved to proceed

IFP in his RICO suit and had paid the filing and service-of-process fees in that action.

The record also reflects that Farese did not proceed IFP in his RICO suit.

Furthermore, the consolidation of Farese’s cases did not alter the fees-paid status of

his RICO case. See Johnson v. Manhattan Ry. Co., 289 U.S. 479, 496–97 (1933); cf.

Xaros v. U.S. Fidelity and Guar. Co., 820 F.2d 1176, 1180 n.1 (11th Cir. 1987)

(“Consolidation does not result in a merger of suits or parties such that federal

jurisdiction in one case can be engrafted upon a case with which it is consolidated.

Each suit must have an independent jurisdictional basis.”). Thus, we conclude that

the evidence does not support the district court’s determination that Farese was

proceeding IFP in his RICO suit. Therefore, because § 1915, which governs only IFP

proceedings, does not apply to Farese’s fees-paid RICO claim, the district court was

not authorized to dismiss the RICO claim pursuant to § 1915.

Because Farese’s RICO complaint was improperly reviewed and dismissed

under an inapplicable statute, the district court erred in dismissing Farese’s RICO

claim. Accordingly, we vacate the district court’s dismissal of Farese’s RICO suit

9
and remand for further proceedings consistent with this opinion.6

B. Dismissal of Farese’s 42 U.S.C. §1985 Claims

Farese also appeals the district court’s dismissal of his § 1985(2) claim against

the Defendants.7 The district court found that Farese lacked standing to raise his §

1985 claims because it determined that the alleged acts of intimidation were taken

against Farese’s family members. In addition, the district court concluded that

Farese’s complaint failed to state a claim upon which relief may be granted.

We review de novo a district court’s determination that a plaintiff lacks Article

III standing to pursue a § 1985(2) claim. See Miccosukee Tribe of Indians of Fla. v.

Fla. State Athletic Comm’n, 226 F.3d 1226, 1228 (11th Cir. 2000). To establish

6
Because we vacate and remand the dismissal of Farese’s RICO case, we do not reach the
following arguments raised by Farese: (1) that defaults, which had been entered against several RICO
defendants, should be reinstated and (2) that the district court abused its discretion by not taking
judicial notice of various lawsuits, which allegedly supported Farese’s RICO claim.
7
Farese appeals the district court’s dismissal of his § 1985(3) claim as well. Section 1985(3)
provides a cause of action for a conspiracy to deprive “any person or class of persons of the equal
protection of laws.” 42 U.S.C. § 1985(3). This court has stated that § 1985(3) protects two types
of classes: (1) “those kinds of classes offered special protection under the equal protection clause,
and (2) classes that Congress was trying to protect when it enacted the Ku Klux Klan Act.” Childree
v. UAP/GA AG CHEM, Inc., 92 F.3d 1140, 1147 (11th Cir. 1996). Farese alleges that he states a
claim against the Defendants under § 1985(3) because he is a member of the “prisoner class.”
Although we have never addressed whether prisoners are a protected class under § 1985(3), we
conclude that the district court properly dismissed Farese’s § 1985(3) claim because prisoners are
neither a class offered special protection under the equal protection clause nor a class that Congress
intended to protect when it enacted § 1985(3). See id. (stating that “we repeatedly have declined to
extend [§ 1985(3)] to apply in non-racial contexts”).

10
Article III standing, a plaintiff must demonstrate “(1) an injury in fact; (2) a causal

connection between the injury and the conduct complained of; and (3) that the injury

is likely to be redressed by a favorable decision.” Id.

Section 1985(2) prohibits conspiracies to intimidate parties or witnesses to

federal lawsuits. Although we have not addressed standing as it relates to violations

of § 1985(2), other circuits have determined that witnesses, as well as parties, have

standing to bring § 1985(2) claims. See, e.g., Brever v. Rockwell Int’l Corp., 40 F.3d

1119, 1125 (10th Cir. 1994). Other circuits also have determined that a party has

standing to bring § 1985(2) claims when the party seeks to argue that there was a

conspiracy to intimidate his witnesses from testifying. See, e.g., Miller v. Glen &

Helen Aircraft, Inc., 777 F.2d 496, 498 (9th Cir. 1985); Chahal v. Paine Webber Inc.,

725 F.2d 20, 24 (2d Cir. 1984). Furthermore, the Supreme Court’s treatment of §

1985(2)’s “injury in person or property” requirement, although not addressing the

“injury in fact” prong of Article III standing, is instructive. See Haddle v. Garrison,

525 U.S. 121, 125–26 (1998). In Haddle, the Supreme Court explained that “[t]he

gist of the wrong at which § 1985(2) is directed is not deprivation of property, but

intimidation or retaliation against witnesses in federal-court proceedings.” Id. at 125.

Farese’s § 1985(2) claim is based on an alleged conspiracy among Dude and

Dude’s attorneys to force Farese to withdraw both his shareholder’s lawsuit against

11
Dude and his adverse action in Dude’s bankruptcy proceedings. Farese alleged that

the Defendants threatened him by stating that they would fire Agostinelli if Farese did

not withdraw his suits against Dude and that Dude ultimately did terminate

Agostinelli. Farese also alleged that Dude engaged in a conspiracy with Scherer and

Cohen to bring frivolous suits against Farese’s family members. The Defendants and

the district court correctly noted that these alleged threats were taken against Farese’s

family, not Farese. Farese, however, contends that the Defendants took these actions

to intimidate him and cause him to withdraw his lawsuits against Dude.

Based on Farese’s allegations, we conclude that Farese satisfies Article III’s

standing requirements. First, Farese has alleged an injury, intimidation. See

Miccosukee Tribe of Indians of Fla., 226 F.3d 1228–29. Second, Farese has alleged

that a causal connection exists between the intimidation and the alleged threatened

and actual termination of Agostinelli and the filing of malicious and frivolous

lawsuits against Farese’s subpoenaed witnesses. See id. at 1228; see also Miller, 777

F.2d at 498 (holding that a party has standing to bring a § 1985 claim that his

witnesses were intimidated). Finally, considering that Farese requested an injunction

against future intimidation and monetary damages, Farese’s intimidation injury likely

would be redressed by a favorable decision. Therefore, Farese has standing to raise

his § 1985 claim.

12
 Although Farese has standing, we conclude that the district court correctly

determined that he failed to state a claim upon which relief could be granted. We

review de novo a district court’s sua sponte dismissal for failure to state a claim,

pursuant to § 1915(e)(2), using the same standards that govern Federal Rule of Civil

Procedure 12(b)(6) dismissals. See Mitchell v. Farcass, 112 F.3d 1483, 1490 (11th

Cir. 1997).

Section 1985 provides a vehicle to redress conspiracies to interfere with civil

rights. See Childree v. UAP/GA AG CHEM, Inc., 92 F.3d 1140, 1146–47 (11th Cir.

1996). Subsection (2) provides a cause of action to victims of conspiracies intended

to injure or deter “any party or witness in any court . . . from attending such court, or

from testifying to any matter pending therein.” 42 U.S.C. § 1985(2).

Because Farese alleges a conspiracy among Dude and Dude’s attorneys, his

appeal raises an issue of first impression in our circuit: whether attorneys operating

within the scope of their representation may be deemed conspirators in a § 1985

conspiracy.8 Unless we conclude that attorneys acting within the scope of their

8
Because Farese alleges a conspiracy between Dude and his attorneys, this appeal does not
implicate the intracorporate-conspiracy doctrine. See McAndrew v. Lockheed Martin Corp., 206
F.3d 1031, 1035 (11th Cir. 2000) (en banc) (“The intracorporate conspiracy doctrine holds that acts
of corporate agents are attributed to the corporation itself, thereby negating the multiplicity of actors
necessary for the formation of a conspiracy. Simply put, under the doctrine, a corporation cannot
conspire with its employees, and its employees, when acting in the scope of their employment,
cannot conspire among themselves.”).

13
representation may be deemed conspirators in a § 1985 conspiracy, Farese’s § 1985

claim would fail to state a claim upon which relief may be granted, as he would not

have alleged a conspiracy.

Few circuits have addressed the issue presented. The Third Circuit in

Heffernan v. Hunter, 189 F.3d 405 (3d Cir. 1999), embarked on an exhaustive

discussion of § 1985 conspiracies in the attorney-client context. In Heffernan, the

plaintiff, an official with the Securities and Exchange Commission, filed suit pursuant

to § 1985 against Hunter, an individual under investigation for insider trading, and

Hunter’s attorney, alleging that they conspired to file frivolous lawsuits and

disseminate defamatory information to the media to intimidate and prevent him from

testifying as a witness against Hunter in federal-court proceedings. See Heffernan,

189 F.3d at 408. The Heffernan court held that when an attorney’s conduct falls

within the scope of his representation of his client, a § 1985 conspiracy cannot exist.

See id. at 413. The court stated that “[t]he right of a litigant to independent and

zealous counsel is at the heart of our adversary system and, indeed, invokes

constitutional concerns.” Id.

Noting that disciplinary structures are currently in place to address any

wrongful conduct by an attorney, the court stated that an attorney’s conduct “within

the scope of representation is regulated and enforced by disciplinary bodies

14
established by the courts.” Id. In fact, “[a]buses in litigation are punishable by

sanctions administered by the courts in which the litigation occurs.” Id.; see also

Chambers v. NASCO, Inc., 501 U.S. 32, 46–47 (1991) (finding that federal courts

enjoy inherent powers to sanction attorney conduct and that “the inherent power

extends to a full range of litigation abuses”). Moreover, the court noted that an

offended third party may also proceed against the offending attorney under state law

or report the conduct to state disciplinary bodies. See Heffernan, 189 F.3d at 413.

The court concluded that this regulatory framework “provides third parties with

protection that is lacking in the corporate field.” Id.

The Heffernan court further stated that as long as an attorney’s conduct falls

within the scope of his representation, the attorney is immune from allegations of §

1985 conspiratorial conduct. See id. The court noted, however, that it is “axiomatic

that if the challenged conduct occurs outside the scope of representation, no reason

for immunity exists and the attorney and the client, as individuals, could form a

conspiracy.” Id. The court cautioned that the scope of the attorney-client relationship

is broad and that even if the challenged activity violates the canons of ethics, “so long

as it is within the scope of representation, it does not eliminate the exemption from

15
a conspiracy charge under section 1985.”9 Id. Therefore, the Third Circuit explained

that in order to plead a § 1985 conspiracy involving a client and his attorneys, one

must prove that the attorneys were operating outside the scope of their representation.

See id.; see also Travis v. Gary Comty. Mental Health Center, Inc., 921 F.2d 108,

111 (7th Cir. 1990) (holding that no conspiracy existed between corporate executives

and outside counsel in violation of § 1985(2) and stating that “[t]reating involvement

of a lawyer as the key unlocking § 1985 would discourage corporations from

obtaining legal advice before acting, hardly a sound step to take”); Doherty v. Am.

Motors Copr., 728 F.2d 334, 339–40 (6th Cir. 1984) (concluding that the plaintiff did

not present any evidence proving the existence of a conspiracy between the defendant

and the defendant’s attorneys because the attorneys “were motivated not by personal

concerns but by concerns for their clients”).

We agree with the well-reasoned opinion of the Third Circuit and hold that as

long as an attorney’s conduct falls within the scope of the representation of his client,

such conduct is immune from an allegation of a § 1985 conspiracy.10 Although

9
Even so, such unethical conduct could obviously be addressed by either the court in which
the offending attorney appears or the appropriate state disciplinary bodies.
10
In so holding, we acknowledge our line of cases applying a criminal-conspiracy exception
to the intracorporate-conspiracy doctrine. See McAndrew, 206 F.3d at 1038. This exception states
that the intracorporate-conspiracy doctrine does not apply to alleged intracorporate criminal
conspiracies. See id. We, however, agree with the Third Circuit’s conclusion that although the
intracorporate-conspiracy doctrine is similar to and at first glance appears to provide “a convenient

16
Farese alleged that Dude and his attorneys engaged in conspiratorial conduct in

violation of § 1985, the attorneys did not engage in any conduct outside the scope of

their representation. Furthermore, the actions and advocacy of the attorneys appear

to have been for the sole benefit of their client rather than for their own personal

benefit.11

Because we cannot say that the actions of Dude’s attorneys were beyond the

scope of the attorney-client relationship so as to make them susceptible to

characterization as a conspiracy under § 1985, we affirm the district court’s dismissal

of Farese’s § 1985 claims against them. Furthermore, because § 1985 requires

conduct by more than one actor, the allegations of misconduct by Dude alone may not

support Farese’s § 1985 claims. Therefore, we affirm the dismissal of Farese’s §

analogy for the attorney-client situation, there are important differences between the agency
relationships involved in private corporate activities and those arising in the practice of law.”
Heffernan, 189 F.3d at 413. Our holding today leaves untouched our cases dealing with the pure
intracorporate-conspiracy doctrine and criminal-conspiracy exception applicable to corporate agents.

11
If Farese believes that Cohen and Scherer have engaged in wrongful conduct that does not
arise to the level of a viable claim under § 1985(2), this suit is not the appropriate vehicle in which
to air those grievances. The appropriate forum would be the court where the wrongful conduct
occurred. We have long held that powers incidental to the federal court include the authority to
“control and discipline attorneys appearing before it.” In re Mroz, 65 F.3d 1567, 1575 (11th Cir.
1995). If the attorneys engaged in wrongful conduct during Farese’s shareholder lawsuit against
Dude, Farese could have brought this to the attention of the court hearing the shareholder lawsuit.
In turn, the bankruptcy court would have been the appropriate forum for Farese to allege any
wrongful conduct of Dude’s attorneys during that proceeding.

17
1985 claims against Dude.12

C. Federal Rule of Appellate Procedure 38 Motion

Appellees Cohen and the law firm of Furr & Cohen, P.A. argue that this court

should grant them attorney’s fees under Federal Rule of Appellate Procedure 38.

Rule 38 states that, upon a determination that an appeal is frivolous, an appellate

court may, “after a separately filed motion or notice from the court and reasonable

opportunity to respond, award just damages and single or double costs to the

appellee.” Fed. R. App. P. 38. “Rule 38 sanctions have been imposed against

appellants who raise ‘clearly frivolous claims’ in the face of established law and clear

facts.” Misabec Mercantile, Inc. De Panama v. Donaldson, Lufkin & Jenrette ACLI

Futures, Inc., 853 F.2d 834, 841 (11th Cir. 1988). Because Farese has raised valid

arguments as to why the district court’s dismissal should be reversed or vacated, we

conclude that the Rule 38 motion is without merit and deny the motion.

III. CONCLUSION

For the reasons stated, we (1) VACATE the district court’s dismissal of

12
Because § 1986 claims are derivative of § 1985 claims, see Park v. City of Atlanta, 120
F.3d 1157, 1159–60 (11th Cir. 1997) (per curiam), we also affirm the district court’s dismissal of
Farese’s § 1986 claim.

18
Farese’s RICO suit and REMAND for further proceedings consistent with this

opinion; (2) AFFIRM the dismissal of Farese’s § 1985 claims for failure to state a

claim upon which relief may be granted; and (3) deny Cohen and Furr & Cohen,

P.A.’s Rule 38 motion.13

AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.

13
We also affirm the district court’s dismissal of Farese’s First, Fifth, and Fourteenth
Amendment claims. The First, Fifth, and Fourteenth Amendments “do not apply to private parties
unless those parties are engaged in an activity deemed to be ‘state action.’” NBC, Inc. v.
Communications Workers of Am., 860 F.2d 1022, 1024 (11th Cir. 1988). Because Farese has not
alleged state action, the district court properly dismissed his constitutional claims.
Additionally, we vacate and remand for further proceedings Farese’s state-law claims because
the district court did not make any findings of fact or conclusions of law regarding these claims. See
Bruschi v. Brown, 876 F.2d 1526, 1532 (11th Cir. 1989) (vacating the portion of a district court’s
order relating to state-law claims where the district court made no findings of fact or conclusions of
law).

19