BHS LAW LLP v. WORLDEX INDUSTRY AND TRADING CO., LTD.

Opinion

1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 BHS LAW LLP, Case No. 25-cv-04471-SVK

8 Plaintiff, ORDER GRANTING DEFENDANT’S MOTION TO DISMISS; DENYING 9 v. PLAINTIFF’S MOTION FOR SANCTIONS; ORDERING PARTIES 10 WORLDEX INDUSTRY AND TRADING TO SHOW CAUSE WHY THEY CO., LTD., SHOULD NOT BE SANCTIONED 11 Defendant. Re: Dkt. No. 87, 92. 12

13 Before the Court are two motions. Defendant Worldex Industry and Trading Co., Ltd. 14 (“Worldex”) moves to dismiss Plaintiff Bhs Law, LLP’s (“Bhs”)1 second amended complaint. 15 Dkt. 87 (“Worldex’s Motion”). Plaintiff Bhs moves for sanctions for three assertedly-frivolous 16 arguments raised in Worldex’s Motion. Dkt. 92 (“Bhs’s Motion”). The Court determines that 17 these matters may be resolved without oral argument. Civil L.R. 7-1(b). For the following 18 reasons, the Court GRANTS IN PART Worldex’s Motion and DENIES Bhs’s Motion.2 19 Additionally, in light of the discussion below, the Court issues an ORDER TO SHOW 20 CAUSE: (1) for Bhs to show cause why the filing of its Second Amended Complaint did not, and 21 why the related argument in opposition does not, violate Rule 11; and (2) for Worldex to show 22 cause why its Younger abstention argument does not violate Rule 11. 23 ////

25 1 As explained in the Court’s December 29, 2025 Order, at the end of 2025, Bhs changed from a LLP to a Law Corporation. Dkt. 76 at 1 n. 1. The Court treated Bhs Law Corporation as “either 26 the same plaintiff as Bhs Law LLP or at least its successor in interest” and found that it “may assert all of the same causes of action.” Id. (citing, e.g., Patriot Rail Corp. v. Sierra R.R. Co., No. 27 09-cv-00009-TLN, 2014 WL 1664898, at *6 (E.D. Cal. Apr. 25, 2014). Neither Party has 1 I. BACKGROUND 2 A. The First Amended Complaint, Prior Requests for Judicial Notice and Worldex’s Current Request for Judicial Notice 3 4 The factual background of this dispute, based on the allegations in Bhs’s first amended 5 complaint and based on the Court’s judicial notice of various filings and other matters in related 6 and underlying civil actions, is described by the Court in its December 29, 2025 Order (the “Prior 7 Order”). Dkt. 76 at 2-8. Bhs’s second amended complaint removes many allegations that are no 8 longer relevant to its remaining claim. Compare Dkt. 82 (“SAC”) with Dkt. 3 (“FAC”). 9 Moreover, the Parties’ requests for judicial notice as to Worldex’s Motion are more limited than 10 previous requests, and Bhs does not request judicial notice of any documents. See Dkt. 86 11 (“Worldex’s RJN”). The Court first briefly the issue of judicial notice and the relevance of the 12 First Amended Complaint as providing context to the Court’s analysis. 13 The Ninth Circuit holds to “the general rule is that an amended complaint supercedes the 14 original complaint and renders it without legal effect.” Lacey v. Maricopa Cnty., 693 F.3d 896, 15 927 (9th Cir. 2012) (en banc). Nonetheless, courts in this Circuit routinely take judicial notice of 16 prior allegations that are consistent with current allegations “[w]here necessary to provide context 17 and to assist with the Court’s analysis.” E.g., Waddell v. City of Orange Police, No. 19-cv-1163- 18 MWF (AS), 2019 WL 7494904, at *1 (C.D. Cal. Nov. 22, 2019), report and recommendation 19 adopted, 2020 WL 70837 (C.D. Cal. Jan. 6, 2020) (“[I]n order to provide the necessary context to 20 Plaintiff’s allegations, the Court takes judicial notice of her prior pleadings to the extent that they 21 are consistent with the First Amended Complaint.”). 22 Accordingly, the Court takes judicial notice of: (1) the facts alleged in Bhs’s FAC to the 23 extent they are consistent with its SAC and provide helpful context to the Court’s Order and (2) 24 the various filings and other matters in related and underlying civil actions to the same extent as 25 noticed in the Court’s Prior Order. The Court also GRANTS Worldex’s Request for Judicial 26 Notice to the same extent as previously granted and otherwise DENIES the request as moot. 27 Thus, the Court does not re-tread the background already described in the Prior Order, (see 1 B. Relevant Factual and Procedural History 2 On December 29, 2025, the Court dismissed all counts of Bhs’s first amended complaint. 3 Dkt. 76. It dismissed Count VI (against Mr. Mendoza) with prejudice, dismissed Counts II-V 4 (against Worldex as an alleged alter ego of its subsidiary, West Coast Quartz Corporation 5 (“WCQ”)) without prejudice but subject to the requirements of the California’s Mandatory Fee 6 Arbitration Act (“MFAA”) and dismissed Count I with leave to amend. Dkt. 76 at 37. Count I, 7 re-alleged in the SAC, is Bhs’s claim against Worldex for intentional interference with contract. 8 See id. at 4; FAC, ¶¶ 24-30; SAC, ¶¶ 30-38. The gravamen of Count I, as alleged in the SAC, is 9 that Worldex tortiously interfered with Bhs’s representation of two former clients. SAC, ¶¶ 8-27. 10 The first former client is WCQ, “a California corporation that manufactures and distributes 11 silicon ingots and quartz in California.” Dkt. 76 at 4. Bhs represented WCQ as a defendant in a 12 class action in California state court. Dkt. 76 at 4-5 (referring to Mendoza et al. v. West Coast 13 Quartz Corporation, RG18927787 (Alameda County)) (the “Mendoza State Action”). After 14 several adverse rulings in the Mendoza State Action but before a judgment was entered against 15 WCQ, Bhs filed an action in this District on behalf of WCQ against various defendants including, 16 e.g., the state court judge, the named plaintiff in the state court case (Mr. Mendoza) and his 17 attorneys. See id. at 5-6 (referring to West Coast Quartz Corp. v. Markman, et al., No. 25-cv- 18 2643-YGR (N.D. Cal. Feb. 12, 2025) (the “YGR Action,” as referred to in the SAC (see SAC, ¶¶ 19 8-9))). On May 21, 2025, after WCQ lost in the Mendoza Action, the firm O’Hagan Meyer LLP 20 (“O’Hagan”), replaced Bhs in both actions and voluntarily dismissed the YGR Action on behalf of 21 WCQ. Dkt. 76 at 4, 6. In Count I, Bhs alleges that Worldex caused WCQ to terminate its 22 agreement with Bhs by exercising its control over WCQ. SAC, ¶¶ 22-27. 23 The second former client is Eddy Wai Yip Lee. SAC, ¶ 11. Mr. Lee was a supervisor- 24 employee of WCQ and a dissatisfied objector to the class in the Mendoza State Action. Dkt. 76 at 25 5-6. On “June 9, 2025 and after being discharged as WCQ’s counsel, Bhs filed an action in this 26 District on behalf of Eddy Lee … against Capstone[ Law APC, who served as class counsel in the 27 Mendoza Action] and the chief trial counsel for the State Bar of California.” Id. at 6 (referring to 1 Action,” referred to in the SAC as the “Eddy Action,” (SAC, ¶¶ 11-12))). The Lee Action was 2 voluntarily dismissed by Mr. Lee on July 30, 2025. Dkt. 76 at 6. Bhs—without Mr. Lee’s buy- 3 in—attempted to withdraw the notice of dismissal asserting, essentially, that WCQ, O’Hagan, 4 Capstone or some combination thereof “coerced” Mr. Lee into dismissing the action. Dkt. 76 at 6. 5 The Honorable Beth Labson Freeman denied the attempted withdrawal of dismissal on August 5, 6 2025. Id. (citing Lee Action, Dkt. 44). In Count I, Bhs alleges that Worldex caused Mr. Lee to 7 dismiss the Lee Action by exercising its “influence over WCQ’s officers.” SAC, ¶¶ 22-27. 8 Bhs seeks to recover for the harm allegedly caused by Worldex’s tortious interference with 9 these two engagements, the “YGR Agreement” and the “Lee Agreement.”3 SAC, ¶¶ 8, 11, 28-29. 10 Based on ambiguous allegations in the FAC, but construing them in Bhs’s favor upon a motion to 11 dismiss, the Court previously explained that it viewed Bhs as alleging a “hybrid fee structure with 12 WCQ,” whereby it would earn both an hourly and contingent fee. Dkt. 76 at 17-18. Bhs’s SAC, 13 however, omits any mention of hourly or “market rate” fees and pleads only contingency fee 14 contracts. SAC, ¶ 31; see also, generally, SAC. 15 On February 3, 2026, Worldex moved to dismiss the SAC. Dkt. 85. On February 27, 16 2026, separate and apart from its opposition, Bhs served upon Worldex a motion for sanctions 17 under Federal Rule of Civil Procedure 11. Dkt. 90. After 21 days had elapsed pursuant to Rule 18 11’s safe harbor provision, Bhs filed the motion, which challenges two of the arguments set forth 19 by Worldex as frivolous on three grounds. Dkt. 92. Briefing concluded on Bhs’s Motion, which 20 is intertwined with Worldex’s Motion, on April 8, 2026. See Dkt. 95.

21 II. LEGAL STANDARDS 22 A. Motion to Dismiss 23 1. Orders Granting Leave to Amend Under Rule 15 24 Apart from a limited opportunity to “amend [a] pleading once as a matter of course,” 25 Federal Rule of Civil Procedure 15 requires an opposing party’s consent or leave of court for 26 amendment. Fed. R. Civ. P. 15(a). As relevant here, “[d]istrict courts in the Ninth Circuit often 27 1 permit litigants to add new claims to their pleadings when motions to dismiss are granted with 2 leave to amend without limitation.” Robinson v. Clear Recon Corp., No. 22-CV-01874-KJM 3 (CKD), 2022 WL 2110502, at *3 (E.D. Cal. June 10, 2022) (collecting cases). “When district 4 courts have granted leave to amend to cure specific shortcomings, by contrast, they have usually 5 stricken or dismissed claims based on new or different legal theories.” Id. (collecting cases); see 6 also Javier v. Assurance IQ, LLC, No. 20-CV-02860-CRB, 2023 WL 3933070, at *3 n. 6 (N.D. 7 Cal. June 9, 2023) (“When leave to amend is granted with limitation, a court may strike new 8 allegations outside the scope that limitation.”). 9 2. Rule 12(b)(1) – Lack of Subject Matter Jurisdiction 10 “A motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(1) tests whether 11 the court has subject matter jurisdiction.” Williams v. Apple, Inc., 449 F. Supp. 3d 892, 900 (N.D. 12 Cal. 2020). Subject matter jurisdiction is lacking where there is no case or controversy before the 13 Court, including where the plaintiff lacks standing under Article III. See id. “A Rule 12(b)(1) 14 jurisdictional attack may be facial or factual.” Safe Air for Everyone v. Meyer, 373 F.3d 1035, 15 1039 (9th Cir. 2004). In a “facial” 12(b)(1) challenge, as is presented here, the Court assumes a 16 plaintiff’s factual allegations to be true and draws all reasonable inferences in plaintiff’s favor. 17 Oracle Corp. v. ORG Structure Innovations LLC, No. 11-cv-03549 SBA, 2012 WL 12951187, at 18 *3 (N.D. Cal. Mar. 30, 2012) (citing Doe v. See, 557 F.3d 1066, 1073 (9th Cir. 2009)).

19 B. Sanctions Under Rule 11 20 By presenting a pleading, written motion, or other paper to the court (“whether by signing, 21 filing, submitting or later advocating it”), an attorney “certifies that to the best of [his] knowledge, 22 information, and belief, formed after an inquiry reasonable under the circumstances, … [that] the 23 claims, defenses and other legal contentions” contained in the document “are warranted by 24 existing law or by a nonfrivolous argument for extending” existing law. Fed. R. Civ. P. 11(b)(2). 25 “A filing is frivolous if no competent attorney would believe it was well-grounded in fact and 26 warranted by law.” Adriana Int’l Corp. v. Thoeren, 913 F.2d 1406, 1415 (9th Cir. 1990). The 27 “central purpose” of Rule 11 sanctions “is to deter baseless filings in district court.” Cooter & 1 appropriate sanction on any attorney, law firm, or party that violated the rule or is responsible for 2 the violation.” Fed. R. Civ. P. 11(c)(1). Moreover, upon either a motion by a party or an order to 3 show cause (which may be issued sua sponte), a court may impose monetary sanctions, including 4 a penalty payable into court. Fed. R. Civ. P. 11(c)(3)-(4).

5 III. DISCUSSION 6 A. Worldex’s Motion to Dismiss is Granted 7 Worldex argues that the SAC must be dismissed “for five principal reasons.” Dkt. 85 at 6. 8 First, Worldex argues that Bhs again fails to establish Article III standing to seek recovery of its 9 contingency which, as the Court previously explained, “is too speculative.” Id. at 6, 14-15. 10 Second and relatedly,4 Worldex argues that “Bhs was not given leave to replead a contingency fee 11 claim.” Id. at 6-7, 11. Third and fourth, Worldex also argues that Bhs lacks Article III standing 12 because it fails to sufficiently allege facts establishing traceability and redressability, respectively. 13 Id. at 7, 15-16, 16-17. Fifth, Worldex argues that the Court must abstain from hearing the case 14 based on the Younger doctrine. Id. at 6, 17-20. 15 The Court begins with Worldex’s second argument, relating to Bhs’s impermissible 16 amendment realleging its contingency fee. Then, because the Court determines that the SAC was 17 not authorized and that further leave to amend would be futile, the Court DISMISSES Count I on 18 that ground and Bhs declines to address Worldex’s other arguments (except as relevant to Bhs’s 19 Motion and the Court’s sua sponte Order to Show Cause, below). 20 1. Bhs’s Second Amended Complaint Impermissibly Realleges its Contingency Fee Claims 21 22 As an initial matter, the Court finds that Bhs’s SAC did not comply with the Court’s Prior 23 Order. The Court’s Prior Order found, in relevant part: 24 //// 25 4 Worldex’s Motion is poorly organized. This argument appears in Worldex’s introduction and 26 background sections but is absent from its argument section. The third argument, challenging traceability appears second in the argument section while being labeled “Fourth” in the 27 introduction. The fourth argument, challenging redressability, does not appear in the introduction 1 [C]ontingent fees which would become payable to Bhs only upon its successful defense against the Mendoza State Action are too 2 speculative to support relief. See Corrales, 760 F. Supp. 3d at 1061- 62 (in a case where Plaintiff, an attorney proceeding pro se, had “Fee 3 Agreement [of] a hybrid quality, meaning Plaintiff earned both an hourly fee as well as a contingency fee,” Plaintiff had “not suffered a 4 pecuniary injury [as to his asserted contingent fee interest] because he has not been deprived of any fees to which he is entitled. Only after 5 [Plaintiff’s client] recovers its funds from the Commission will Plaintiff’s right to collect his fees be triggered.”). In other words, 6 even assuming that Bhs could successfully challenge and vacate the Mendoza State Action judgment by way of this action, because Bhs 7 alleges that the fee was “contingent on, among other things, the successful defense of” the underlying case, Bhs would need to first 8 prevail in such a defense before its injury crystalized. However, Bhs’s injury as to its fixed fees is not speculative. 9 Thus, the Court GRANTS IN PART and DENIES IN PART 10 Worldex’s Motion on this ground. The Court finds that Bhs has standing to pursue its claims for non-payment of its fixed fees but not 11 for failure to pay the contingency fees. As any attempt to amend as to the contingent-fee injury would be speculative, dismissal of such 12 claims is without leave to amend. 13 Dkt. 76 at 18 (emphasis in original). Bhs’s claim for tortious interference based upon the 14 contingency fee at issue was dismissed without leave to amend. Id. Bhs’s SAC is thus improper. 15 Bhs argues that its amendment was authorized by other language in the Court’s Prior Order 16 which “permitted amendment to clarify Plaintiff’s theories and allegations” as to Count I. Dkt. 87 17 at 11 (citing Dkt. 76 without a pin cite). Assuming that Bhs refers to Section III.E. of the Court’s 18 Prior Order, wherein the Court specifically evaluated Bhs’s then-proffered amended complaint and 19 granted in part and denied in part amendment, Bhs’s argument is unavailing. See Dkt. 76 at 31-33. 20 The Court stated unequivocally: “[A]ny proposed amendments relating to recovery of Bhs’s 21 contingent fee would be futile.” Id. at 32 (emphasis added). The Court did not give Bhs’ 22 blanket-leave to amend “to clarify [its] theories and allegations” as to Count I, as Bhs argues, but 23 only “with regard to proffered allegations (b)–(d),” which were:

24 b. Bhs would plead details as to its alleged fee arrangement with WCQ; 25 c. Bhs would allege it never received Worldex’s confidential 26 information;

27 d. Bhs would add allegations that Worldex also tortiously interfered 1 Id. at 31 (internal citations omitted). The allegations added to the SAC now before the Court go 2 far beyond what was permitted and are all “relate[d] to recovery of Bhs’s contingent fee,” which 3 was explicitly disallowed. Id. at 31-32. 4 Accordingly, the Court GRANTS Worldex’s Motion on this ground, STRIKES Bhs’s 5 SAC and, because Bhs has failed to amend despite multiple opportunities and detailed guidance 6 from this Court, agrees with Worldex further leave to amend would be futile. See Dkt. 85 at 23- 7 24. Bhs’s claim for tortious interference against Worldex is dismissed with prejudice for lack of 8 standing. Dkt. 76 at 17-18. Bhs’s prior claim for tortious interference against Worldex as it 9 relates to any potential hourly fees is dismissed with prejudice on the merits, as Bhs did not lack 10 standing to pursue that claim. See id. 11 B. Bhs is Ordered to Show Cause as to Why the Filings of its Second Amended 12 Complaint and Opposition Were Not Frivolous Pursuant to Rule 11 13 Having considered the Parties’ submissions, including the SAC and Bhs’s opposition, the 14 Court is deeply troubled by Bhs’s flagrant disregard of this Court’s Prior Order, discussed above, 15 as well as by the “merits” of the contingency-fee argument advanced by Bhs. Specifically, Bhs 16 argues that under Herron v. State Farm Mutual Insurance Co., 56 Cal. 2d 202 (1961), it has 17 Article III standing to bring an action for intentional interference with contract where the contract 18 is an attorney-client engagement with a contingency fee. Even if Bhs had raised Herron via the 19 appropriate vehicle (e.g., a motion for reconsideration of the Court’s Prior Order), Bhs’s argument 20 is frivolous. Bhs fails to: : 21 • explain how Herron, which does not address or even mention Article III standing, 22 provides such standing merely by holding that there is a cause of action for 23 intentional interference with an attorney-client agreement that includes a 24 contingency fee;5 and 25

26 5 The Court does not doubt that there is such a cause of action, as explained in the Court’s Prior Order. See Dkt. 76 at 17-18. Even so, “a plaintiff whose cause of action is perfectly viable in 27 state court under state law may nonetheless be foreclosed from litigating the same cause of action 1 • address, let alone cite, any of the authority relied by this Court in its Prior Order.6 2 Accordingly, Bhs is ORDERED TO SHOW CAUSE why it should not be sanctioned for 3 making this argument both via its SAC and its opposition, as directed in Section IV, below. 4 C. Bhs’s Motion for Sanctions is Denied 5 In Bhs’s Motion for Sanctions, Bhs argues that two of Worldex’s arguments are 6 sanctionable for three reasons: (1) Worldex’s Article III standing argument; (2) Worldex’s 7 invocation of the Younger doctrine substantively under Sprint Communications, Inc. v. Jacobs, 8 571 U.S. 69, 73 (2013) and (3) Worldex’s invocation of the Younger doctrine because it 9 “depend[s] on collapsing the distinction between” Worldex and WCQ, despite this Court’s prior 10 dismissal of such alter-ego arguments with regard to Count I. Dkt. 92 at 7. 11 The Court DENIES Bhs’s Motion as to Worldex’s Article III standing argument. 12 Worldex’s argument is not unwarranted by existing law or frivolous in any way; it is persuasive, 13 as detailed in the Court’s Prior Order. See Dkt. 76 at 17-18. 14 The Court DENIES Bhs’s Motion as to Worldex’s substantive Younger-based argument. 15 Under Younger abstention, federal courts are prohibited from enjoining certain state court 16 proceedings. Yelp Inc. v. Paxton, 137 F.4th 944, 950 (9th Cir. 2025). Younger abstention applies 17 where there are state proceedings that: “(1) are ongoing, (2) are [criminal or] quasi-criminal 18 enforcement actions or involve a state’s interest in enforcing the orders and judgments of its 19 courts, (3) implicate an important state interest, and (4) allow litigants to raise federal 20 challenges.’” Yelp v. Paxton, 137 F.4th at 950. The same elements, specifically elements (2) and 21 (3) were identified by the Supreme Court in Sprint Communications and are discussed by the 22 Parties. See 571 U.S. 69, 72-73. Having reviewed the Parties’ submissions, the Court is not 23 persuaded that Worldex’s arguments as to these elements—i.e., the requirement for an ongoing 24 related state action that implicates an important state interest and involves the enforcement of a 25 state order or judgment—are entirely unwarranted or frivolous. Contra Dkt. 92 at 12-14. 26

27 6 See Dkt. 76 at 17-18 (citing Clapper v. Amnesty Int’l USA, 568 U.S. 398, 413-14 (2013); Fruci 1 Finally, the Court DENIES Bhs’s Motion as to the Younger-alter-ego basis. The Court 2 agrees with Worldex that neither its motion nor its reply make or depend on the alter ego doctrine. 3 See, e.g., Dkt. 89 at 12-13 (arguing not that Worldex and WCQ are alter egos, but that Younger 4 does not require identity of the parties so long as their “interests” are “sufficiently intertwined that 5 direct interference with the state court proceedings is inevitable.”). 6 D. Worldex is Ordered to Show Cause as to Why the Inclusion of its Younger 7 Argument Was Not Unwarranted and Frivolous Under Gilbertson v. Albright 8 As an independent matter, however, the Court finds Worldex’s assertion of the Younger 9 doctrine troubling for a different reason. Specifically, as Worldex acknowledges, even if the other 10 requirements of Younger abstention are met, the Court may only abstain from hearing the case 11 before it “if the court’s action would enjoin, or have the practical effect of enjoining, ongoing state 12 court proceedings.” Dkt. 85 at 18 (quoting Gilbertson v. Albright, 381 F.3d 965, 978 (9th Cir. 13 2004)). In its initial motion, Worldex includes a barebones, unexplained assertion that “[t]he final 14 Younger element is present here [because] Bhs’ present federal court action seeks to invalidate the 15 Mendoza Action and will directly interfere with active state appellate proceedings.” Dkt. 85 at 20. 16 Worldex cites—without any explanation—three other Ninth Circuit decisions. Id. These cases 17 discuss the rule Worldex correctly acknowledges, that “there is a vital and indispensable fourth 18 element” to Younger abstention. See AmerisourceBergen Corp. v. Roden, 495 F.3d 1143, 1149 19 (9th Cir. 2007). However, none appears to apply to the situation at bar. First, and most 20 significantly, Worldex does not cite to any portion of Bhs’s SAC as requesting injunctive or 21 similar relief. Nor does Worldex even attempt to explain how the cited cases support its argument 22 or proffer any analogous authority. In short, Worldex’s argument for Younger abstention is 23 grounded in neither fact nor law. Dkt. 85 at 20. 24 This is not the first time Worldex has made threadbare arguments without citing pertinent 25 authorities. The Court previously admonished Worldex for taking a similar approach to its request 26 for dismissal of Count VI of the FAC. See Dkt. 76 at 15 (explaining that, pursuant to Civil Local 27 Rule 7-5(a)(5), “a brief or memorandum … in support, opposition, or reply to a motion must 1 time, Worldex has at least quoted the basic rule-statement from Gilbertson. Dkt. 85 at 18, 20. 2 Even so, it is not enough to quote three cases in four sentences without explanation and conclude 3 with an unsupported assertion about the SAC. 4 In reply, Worldex expands on its argument,7 finally explaining its reliance on Gilbertson 5 and how it views that case as relevant to this one. See Dkt. 89 at 12. Worldex’s reply argument, 6 however, contains two glaring omissions and appears just as frivolous as its opening argument. 7 The only case relied on by Worldex is Gilbertson v. Albright, 381 F.3d 965 (9th Cir. 2004)), 8 which Worldex quotes for the proposition that “Younger principles apply to actions at law as well 9 as for injunctive or declaratory relief because a determination that the federal plaintiff’s 10 constitutional rights have been violated would have the same practical effect as a declaration or 11 injunction on pending state proceedings.” Dkt. 89 at 12 (quoting id. at 968). However, Worldex 12 never explains how, by hypothetically determining that Worldex tortiously interfered with Bhs’s 13 agreement with WCQ, court-awarded damages would have the “practical effect” of enjoining the 14 state appellate proceedings brought by WCQ that challenge the Mendoza judgment. Even more 15 severely, Worldex ignores the very next sentence of Gilbertson, where the Ninth Circuit explains 16 that, for an action relating to money damages rather than an injunction, “federal courts should not 17 dismiss actions where damages are at issue; rather, damages actions should be stayed until the 18 state proceedings are completed.” Id. (emphasis added). 19 Accordingly, Wordlex is ORDERED TO SHOW CAUSE why it should not be 20 sanctioned for its unwarranted and frivolous arguments relating to the Younger doctrine’s 21 “practical effects” limitation and disregard of the Court’s prior admonitions. 22 IV. CONCLUSION AND ORDERS TO SHOW CAUSE 23 For the foregoing reasons, the Court DISMISSES Bhs’s SAC with prejudice. The Court 24 will temporarily retain jurisdiction of this matter, however, for the purposes of its Order to Show 25 Cause to both Parties. 26 7 The Court previously admonished Worldex that such an approach is also inappropriate: 27 “[a]lthough Worldex included authorities and argument in its brief in reply, (Dkt. 28), … [a] party ] Bhs is ORDERED TO SHOW CAUSE why it should not be sanctioned for its blatant 2 || disregard of the Prior Order and re-pleading its contingency fee claim and defending its disregard 3 on the basis of Herron. Bhs shall file its response, not to exceed 5 pages, no later than May 18, 4 || 2026. This response is not an opportunity for Bhs to raise new arguments as to why its 5 contingency fee is justified; rather, to the extent Bhs contends that it should not be sanctioned on 6 || the merits as opposed to procedural or other grounds, Bhs must explain why the allegations and 7 || arguments raised in its SAC and opposition, based on Herron, were warranted under existing law 8 or were non-frivolous arguments for an extension of existing law. 9 Worldex is ORDERED TO SHOW CAUSE why it should not be sanctioned for its 10 || blatant disregard of the Court’s prior admonitions by making unwarranted and frivolous 11 arguments relating to the Younger doctrine’s “practical effects” limitation. Worldex shall file its 12 || response, not to exceed 5 pages, no later than May 18, 2026. As with the Court’s admonition to 13 Bhs, Worldex’s brief is not an opportunity for it to raise new arguments as to why Younger 14 abstention is justified; rather, to the extent it contends it should not be sanctioned on the merits as 3 15 || opposed to procedural or other grounds, Worldex must explain why Gilbertson v. Albright 1s a 16 || analogous authority and why it argued that the Court should dismiss the case, rather than stay, 2 17 || despite apparently binding authority to the contrary of which Worldex was clearly aware. Z 18 The Court SETS the Parties for a show cause hearing on June 9, 2026 at 10:00 a.m. 19 20 SO ORDERED. 21 Dated: May 11, 2026 22 23 Season yan SUSAN VAN KEULEN 24 United States Magistrate Judge 25 26 27 28