Lee v. City of Sacramento

Opinion

IVAN S. LEE, No. 2:17-cv-118-JAM-EFB Plaintiff, v. FINDINGS AND RECOMMENDATIONS Defendant. The case was before the court on September 16, 2020, for hearing on defendant’s motion for sanctions. ECF No. 68. Deputy City Attorney Kathleen Rogan appeared on behalf of defendant; attorney George Jones appeared on behalf of plaintiff. For the reasons stated below, defendant’s motion should be denied. I. Background Plaintiff, proceeding without counsel, originally filed this employment discrimination action against his former employer, defendant City of Sacramento, in the California Superior Court for the County of Sacramento. ECF No. 1 at 4 7. After defendant removed this action, plaintiff retained counsel and filed a second amended complaint. ECF Nos. 10 & 22. The second amended complaint alleged four causes of action: (1) racial discrimination in violation of Title VII of the Civil Rights Act, 42 U.S.C. § 2000e-2, and (2) California’s Fair Employment and Housing Act, Cal. Gov’t Code § 12940; (3) failure to prevent discrimination; and (4) retaliation. ECF No. 22. In February 2020, the court granted plaintiff’s request to voluntarily dismiss all claims except for his cause of action for retaliation. ECF No. 46 at 4. A court-supervised settlement conference was held on March 5, 2020, at which the parties reached a verbal settlement agreement. ECF Nos. 48 & 51. However, following the settlement conference plaintiff refused to sign a formal settlement agreement. He also fired his counsel who represented him at the settlement conference. Plaintiff claimed that his attorney failed to adequately represent him at the conference. See ECF No. 65. Defendant subsequently moved to enforce the agreement that was reached at the court-supervised settlement conference. ECF No. 54. Defendant’s motion also sought reimbursement for the attorney’s fees defendant incurred in bringing its motion to enforce the settlement agreement. Id. at 6. In response, plaintiff moved to set aside the settlement agreement. ECF No. 57. On July 29, 2020, the court approved plaintiff’s substitution of attorney, which substituted attorney George Jones as the attorney of record in place of plaintiff. ECF No. 67. Also on that date, the undersigned recommended defendant’s motion to enforce the settlement agreement be granted, plaintiff’s motion to set the agreement aside be denied, defendant be directed to pay plaintiff $8,750.00, and the action be dismissed pursuant to the terms of the parties’ settlement agreement. ECF No. 66. With respect to defendant’s request for attorney’s fees, it was recommended that the request be denied due to defendant’s failure to demonstrate that awarding fees was appropriate. More specifically, the findings and recommendations observed that the parties’ settlement agreement did not provide for the recovery of attorney’s fees, and defendant had not presented any authority in support of its request. Id. at 5. Consequently, it was recommended that defendant’s request for attorney’s fees be denied without prejudice to filing a properly-supported motion for attorney’s fees. Id. at 5-6. Before the assigned district judge had an opportunity to rule on the findings and recommendations1, defendant filed the instant motion for sanctions, which seeks to recover the

1 The parties were granted fourteen days to file objections to the July 29, 2020 findings and recommendations. ECF No. 66 at 6; see 28 U.S.C. § 636(b)(1)(C). Defendant filed the instant motion on August 11, 2020, before the objection period expired. attorney’s fees incurred in filing its motion to enforce the settlement agreement. ECF No. 68. Plaintiff filed an opposition to the motion (ECF No. 72), and defendant has filed a reply to plaintiff’s opposition (ECF No. 73). The assigned district judge subsequently adopted the July 29, 2020 findings and recommendations in full and ordered the parties’ settlement agreement be enforced. ECF No. 74. Accordingly, defendant’s motion for sanctions is the only remaining matter that needs to be resolved in this action. Defendant seeks sanctions against plaintiff in the amount of $1,574, which defendant contends is the amount of attorney’s fees it reasonably incurred in seeking enforcement of the settlement agreement. ECF No. 68. Defendant argues that the requested sanction may be imposed pursuant to the court’s inherent power and 28 U.S.C. § 1927. II. Relevant Legal Standards Districts courts retain the inherent power to summarily enforce settlement agreements entered into by the parties in cases pending before it. In re City Equities Anaheim, Ltd., 22 F.3d 956, 957 (9th Cir. 1994). This enforcement power includes the “authority to award damages for failure to comply with the settlement agreement.” TNT Mktg., Inc. v. Agresti, 796 F.2d 276, 278 9th Cir. 1986). Before a court may exercise its inherent power to shift fees, it “must make an explicit finding that [the party’s] conduct constituted or was tantamount to bad faith.” Primus Automotive Financial Services, Inc. v. Batarse, 115 F.3d 644, 648 (9th Cir. 1997) (quotations omitted); Chambers v. NASCO, Inc., 501 U.S. 32, 45-46 (1991 (“[A] court may assess attorney’s fees when a party has acted in bad faith, vexatiously, wantonly, or for oppressive reasons.” (quotations omitted)). “[S]anctions should be reserved for the rare and exceptional case where the action is clearly frivolous, legally unreasonable or without legal foundation, or brought for an improper purpose.” Id. at 649 (quotations omitted). “Section 1927 authorizes the imposition of sanctions against any lawyer who wrongfully proliferates litigation proceedings once a case has commenced.” Pacific Harbor Capital, Inc. v. Carnival Air Lines, Inc., 210 F.3d 1112, 1118 (9th Cir. 2000). Sanctions under 1927 may be imposed upon a pro se plaintiff. Wages v. I.R.S., 915 F.2d 1230, 1236 (9th Cir. 1990). Like sanctions imposed under the court’s inherent power, sanctions pursuant to 28 U.S.C. § 1927 require a finding of bad faith. Pacific Harbor, 210 F.3d at 1118. A party’s bad faith is assessed under a subjective standard, which is established by knowing, willful, or reckless conduct. Id. A party facing sanctions “is entitled to procedural due process, including notice and an opportunity to be heard.” Id. (opportunity to brief issue satisfies due process requirements). III. Discussion Defendant argues that the requested sanctions are appropriate under Doi v. Halekulani Corp., 276 F.3d 1131, 1140 (9th Cir. 2002). In Doi, the U.S. Court of Appeals for the Ninth Circuit evaluated whether the district court abused its discretion by imposing a $1,000 sanction against the plaintiff based on her refusal to sign a written settlement agreement after the parties reached a verbal agreement. The court ultimately concluded that the plaintiff had not demonstrated that the sanction was improper under the court’s inherent authority, explaining: Doi raises but one objection to the sanction on appeal: she contends that “If the district court erred in ordering the enforcement of the oral ‘settlement agreement’, then there was no basis for the district court to impose a sanction upon Doi and the sanction order must be reversed accordingly.” But as discussed above, the district court did not err in enforcing the settlement agreement. Because this is the only challenge brought against the sanction, and it is without merit, she has failed to show that the district court abused its discretion by imposing the sanction. Id. at 1140. As in Doi, plaintiff only raises one argument in opposition to imposition of sanctions—the verbal settlement agreement is unenforceable because the record does not demonstrate that the parties reached a binding agreement to settle plaintiff’s claims. 2 ECF No. 72. And as detailed above, the court has already rejected that argument and ordered the settlement agreement be enforced. ECF No. 74. But Doi does not mandate the imposition of sanctions in this case. Instead, the panel in Doi merely concluded that the plaintiff’s sole argument against sanctions did not show that the district court abused its discretion in imposing them. 276 F.3d at 1140. The /////

2 Plaintiff’s opposition to the instant motion was filed prior to the court’s order adopting the July 29, 2020 findings and recommendations and granting defendant’s motion to enforce the settlement agreement. question still remains whether the record in this case demonstrates that the plaintiff here acted in bad faith. Batarse, 115 F.3d at 648; Pacific Harbor, 210 F.3d at 1118. Here, plaintiff’s conduct, while misguided, does not rise to the level of bad faith. Plaintiff appears to genuinely believe that his former attorney failed to adequately represent him at the settlement conference. While the undersigned, as the judge presiding over the settlement conference has found to the contrary, plaintiff has consistently articulated his belief that his former counsel failed to adequately include plaintiff in the settlement discussions. See ECF Nos. 57, 61. While this court found that plaintiff was well represented at the settlement conference, it cannot say that plaintiff’s subjective but ill-informed belief is the result of an improper motive. Under these circumstances, the court does not find that plaintiff was acting in bad faith by refusing to sign the formal settlement agreement and subsequently seeking to set aside the agreement. See Ortiz v. Alvarez, 2018 WL 1603847 (E.D. Cal. Apr. 3, 2018) (recommending sanctions not be imposed based on finding that plaintiff’s “attempt to rescind the settlement agreement appears to be based on a sincere belief that the settlement judge had unduly influenced his decision to settle. He alerted the District Defendants to his change of mind promptly. He is not well versed in the law and appears to have believed he could change his mind under these circumstances. He attended court and appeared genuinely troubled by the circumstances.”). Accordingly, the requested sanctions are not warranted. IV. Conclusion Accordingly, it is hereby RECOMMENDED that defendant’s motion for sanctions (ECF No. 68) be denied. These findings and recommendations are submitted to the United States District Judge assigned to the case, pursuant to the provisions of 28 U.S.C. § 636 (b)(l). Within fourteen days after being served with these findings and recommendations, any party may file written objections with the court and serve a copy on all parties. Such a document should be captioned “Objections to Magistrate Judge’s Findings and Recommendations.” Failure to file objections ///// ///// within the specified time may waive the right to appeal the District Court’s order. Turner v. Duncan, 158 F.3d 449, 455 (9th Cir. 1998); Martinez v. Yist, 951 F.2d 1153 (9th Cir. 1991). DATED: March 19, 2021. tid, PDEA UNITED STATES MAGISTRATE JUDGE 1]