Imposition
of
sanctions
is
not
to
be
undertaken
lightly.
It
is
particularly
difficult
to
do
so
when
attorneys
of
unblemished
reputation
and
a
distinguished
law
firm
are
among
the
sanctioned
parties.
But
reluctance
to
enter
sanctions
cannot
excuse
a
failure
to
impose
them
when
they
are
warranted.
If
the
filing
of
duplicative,
vexatious
litigation
were
allowed
to
escape
sanction,
the
costs
would
exceed
those
imposed
on
the
defendants
here.
Courts
and
other
parties
may
be
encouraged
to
undertake
burdensome
and
duplicative
litigation.
The
administration
of
justice
would
suffer.
—
Judge
Denise
L.
Cote
Everyone
knows
that
if
mom
tells
you
no,
it’s
not
acceptable
—
even
if
tempting
—
to
try
to
get
approval
from
dad.
It
doesn’t
get
any
smarter
if
you
replace
mom
and
dad
with
the
Southern
District
of
New
York
and
the
Eastern
District
of
Virginia.
Last
February,
Skadden
client
and
mobile
gaming
outfit
Papaya
Gaming’s
counterclaims
against
Skillz
Platform
were
dismissed
in
the
Southern
District.
At
that
point,
Papaya
moved
to
amend
those
claims
and
filed
an
“essentially
identical”
suit
in
Virginia.
The
Virginia
action
found
its
way
back
to
New
York
and
an
understandably
peeved
Judge
Cote.
Papaya
Gaming
operates
in
the
“real-money
skill-based”
mobile
gaming
market
—
which
is
apparently
a
term
of
art
—
running
multiplayer
tournaments
where
players
compete
for
cash
prizes.
Theoretically,
users
compete
against
people,
but
Papaya
was
deploying
bots
in
some
of
these
tournaments
without
telling
anyone.
On
occasion,
a
single
human
player
would
be
competing
against
an
entire
field
of
bots.
Skillz,
one
of
Papaya’s
competitors,
sued
in
March
2024,
asserting
a
false
advertising
claim
under
the
Lanham
Act.
Papaya
eventually
admitted
it
had
been
using
bots
until
2024
—
but
not
before
first
trying
to
resist
discovery
by
claiming
Israeli
law
prevented
it
from
producing
records.
(That
gambit
also
failed.)
Papaya
fired
back
with
counterclaims
alleging
Skillz
had
created
a
“false
front”
organization
called
4FairPlay,
which
maintained
a
website
encouraging
consumers
to
file
complaints
about
Papaya
with
state
attorneys
general.
Judge
Cote
dismissed
Papaya’s
counterclaims
about
the
4FairPlay
website
in
February
2025.
Papaya
attempted
to
amend,
and
that
earned
a
dismissal
a
month
later.
BUT,
after
filing
its
motion
to
amend
—
though
before
the
denial
—
Papaya
filed
a
new
lawsuit
in
the
Eastern
District
of
Virginia
against
4FairPlay,
its
operators,
and
related
entities
as
defendants,
asserting
claims
under
Virginia
law.
Papaya’s
counsel
then
“scrubbed”
the
Virginia
complaint
to
remove
references
to
Skillz’s
direct
involvement
and
delete
allegations
about
bots
—
in
what
Judge
Cote
described
as
“an
apparent
attempt
to
circumvent
the
preclusion
doctrines
that
its
adversaries
had
identified
in
correspondence
threatening
sanctions.”
Judge
Nachmanoff
in
the
Eastern
District
of
Virginia
didn’t
mince
words
when
he
transferred
the
case
to
New
York,
stating
that
Papaya
“blatantly
attempted
to
get
a
second
bite
at
the
apple
by
pursuing
different
but
clearly
related
defendants
in
a
different
forum
after
Judge
Cote
conclusively
rejected
Papaya’s
counterclaim
and
motion
for
leave
to
file
a
second
amended
counterclaim
on
virtually
identical
claims.”
Once
the
case
came
back
to
Judge
Cote,
the
strategy
of
playing
the
parents
against
each
other
was
already,
inevitably
cooked.
Judge
Cote
found
that
Papaya
and
Skadden
“operated
in
bad
faith
in
filing
the
Virginia
Action.”
The
evidence
of
bad
faith
included
the
“ineffective
scrubbing”
of
the
Virginia
complaint
to
make
it
appear
less
duplicative
and
the
“strained
arguments”
attempting
to
distinguish
the
two
litigations.
The
court
explicitly
identified
the
strategy
at
work:
Papaya
was
pursuing
claims
against
Skillz
affiliates
“to
place
pressure
on
Skillz
and
thereby
unreasonably
increased
the
cost
of
litigation.”
Because
the
underlying
Lanham
Act
case
is
still
ongoing,
with
Skillz
seeking
over
$700
million
in
damages.
While
that’s
a
significant
chunk
of
change,
as
the
court
noted,
“large
potential
damages
figures
cannot
excuse
litigation
tactics
that
improperly
and
unfairly
increase
the
burden
of
litigation.”
Trial
is
slated
to
begin
in
April.
This
is
a
rough
outcome
for
Skadden.
The
court’s
finding
of
bad
faith
—
not
“oopsie”
level
negligence
—
is
about
as
bad
as
a
sanctions
opinion
gets.
The
only
way
this
week
could
get
any
worse
for
Skadden
is
if
they
found
out
they
spinelessly
gave
away
$100
million
for
no
good
reason.
Oh.
Well,
maybe
the
DOJ
will
be
able
to
convince
a
court
to
allow
it
to
reverse
its
own
position
from
24
hours
before.
Failing
that…
maybe
the
government
can
try
filling
essentially
identical
claims
in
another
court?
I
wonder
if
they
could
find
a
firm
to
help
them
do
that
pro
bono?
(Check
out
the
full
opinion
and
order
on
the
next
page…)
Joe
Patrice is
a
senior
editor
at
Above
the
Law
and
co-host
of
Thinking
Like
A
Lawyer.
Feel
free
to email
any
tips,
questions,
or
comments.
Follow
him
on Twitter or
Bluesky
if
you’re
interested
in
law,
politics,
and
a
healthy
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college
sports
news.
Joe
also
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Managing
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