1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 PHUONG T. NGUYEN, et al., Case No. 20-cv-07991-EMC
8 Plaintiffs, ORDER GRANTING IN PART AND 9 v. DENYING IN PART DEFENDANTS’ MOTION FOR SANCTIONS 10 WELLS FARGO, N.A., et al., Docket Nos. 71, 73 11 Defendants.
12 13 14 The Court entered a final judgment in the instant action (hereinafter referred to as “Nguyen 15 I”) in January 2021, after concluding that it lacked subject matter jurisdiction. See Docket No. 63 16 (order). Almost two years later, the federal government asked that Nguyen be related to another 17 action (hereinafter referred to as “Nguyen II”).1 Plaintiff Phuong Nguyen opposed relation, as did 18 another party in Nguyen II, Michael Flores.2 After Ms. Nguyen and Mr. Flores filed their briefs in 19 opposition to the motion to relate, some of the defendants in Nguyen I moved for sanctions. That 20 is the motion now pending before the Court. 21 The sanctions motion was formally filed by the Wells Fargo Defendants. The A.J.E. 22 Defendants have joined in the motion. The Wells Fargo Defendants and the A.J.E. Defendants 23 shall hereinafter be referred to collectively as the “Moving Defendants.” Moving Defendants ask 24 the Court to issue two sanctions: (1) a dismissal of Ms. Nguyen’s claims in the related case 25 1 Although the Court refers to the federal actions as Nguyen I and II, it recognizes that they are 26 effectively the same case as they both arose from the same state court action.
27 2 Mr. Flores is a defendant in Nguyen II. However, some of the defendants in Nguyen I and II 1 Nguyen II, and (2) an award of attorneys’ fees (against Ms. Nguyen and Mr. Flores) in the amount 2 of $2,365.20. They contend that such sanctions are justified on the basis that Ms. Nguyen forged 3 an attorney’s signature on her brief filed in opposition to the motion to relate. Having considered 4 the papers filed and the accompanying submissions, as well as all other evidence of record, the 5 Court finds this matter suitable for disposition on the papers and therefore VACATES the hearing 6 on the motion for sanctions. For the reasons discussed below, the motion is hereby GRANTED in 7 part and DENIED in part. 8 I. DISCUSSION 9 A. Legal Standard 10 Moving Defendants request that sanctions be issued pursuant to the Court’s inherent 11 authority.3 “Because of their very potency, inherent powers must be exercised with restraint and 12 discretion.” Chambers v. NASCO, Inc., 501 U.S. 32, 44 (1991). 13 “When acting under its inherent authority to impose a sanction, as opposed to applying a 14 rule or statute, a district court must find” either that a party has willfully disobeyed a court order or 15 that a party “has acted in bad faith, vexatiously, wantonly, or for oppressive reasons.” Am. Unites 16 for Kids v. Rousseau, 985 F.3d 1075, 1090 (9th Cir. 2021). “[B]ad faith, including conduct done 17 vexatiously, wantonly, or for oppressive reasons, requires proof of bad intent or improper purpose. 18 Bad faith . . . is not restricted to situations where the action was filed in bad faith. Bad faith may 19 also be found in the conduct of the litigation.” Id. “[W]hen a court imposes sanctions based on 20 bad faith, the court must make an explicit finding that the sanctioned party's conduct ‘constituted 21 or was tantamount to bad faith.’” Id. 22 If a court does decide to issue a sanction, it must “fashion an appropriate [one].” 23 Chambers, 501 U.S. at 44. That is, it must “ensure that the sanction is tailored to address the harm 24 3 Because Moving Defendants are not seeking sanctions pursuant to Federal Rule of Civil 25 Procedure 11, Ms. Nguyen and Mr. Flores’s contention that Moving Defendants failed to give them the safe harbor provided for by Rule 11 is not relevant. The other procedural arguments 26 made by Ms. Nguyen and Mr. Flores are also lacking in merit. For example, Moving Defendants did not violate Civil Local Rule 7-8, which provides that a motion for sanctions “must be 27 separately filed.” Civ. L.R. 7-8(a). That Moving Defendants asked that one of the sanctions be 1 identified.” Republic of the Philippines v. Westinghouse Elec. Corp., 43 F.3d 65, 74 (3d Cir. 2 1994); cf. United States v. Blodgett, 709 F.2d 608, 610-11 (9th Cir. 1983) (noting that “cases that 3 have considered the district court’s inherent power to sanction attorneys for litigating in bad faith 4 have related such sanctions to the amount of fees incurred by the opposing party”). 5 B. Dismissal 6 The Court addresses first the Moving Defendants’ request for a dismissal sanction. As 7 noted above, Moving Defendants assert that the Court should dismiss Ms. Nguyen’s claims in the 8 related case Nguyen II because Ms. Nguyen forged an attorney’s signature on her brief in 9 opposition to the motion to relate. The Court denies this specific request for relief. Even if Ms. 10 Nguyen did forge an attorney’s signature, the sanction sought – i.e., a dismissal of Ms. Nguyen’s 11 claims – is not tailored to address that misconduct. 12 The Court recognizes that the Wells Fargo Defendants have charged Ms. Nguyen (as well 13 as Mr. Flores) with having engaged in other misconduct, as outlined in its motion to dismiss in 14 Nguyen II (located at Docket No. 14 in No. C-22-7166 EMC). However, the only misconduct that 15 has been put at issue in this specific motion is the alleged forgery. Dismissal is therefore 16 inappropriate. 17 C. Attorneys’ Fees 18 The Moving Defendants have also asked for sanctions in the form of attorneys’ fees – 19 specifically, over $2,300, which represents the time spent by counsel for the Wells Fargo 20 Defendants in “discover[ing] [the] fraud and bring[ing] it to the Court’s attention.” Mot. at 5; see 21 also Corder v. Howard Johnson & Co., 53 F.3d 225, 232 (9th Cir. 1994) (stating that, “even in the 22 absence of statutory authority, a court may impose attorney's fees against a non-party as an 23 exercise of the court's inherent power to impose sanctions to curb abusive litigation practices”). 24 According to the Moving Defendants, both Ms. Nguyen and Mr. Flores should be held jointly and 25 severally liable for the attorneys’ fees: the former because she engaged in fraud and the latter 26 because he “aided and abetted [Ms. Nguyen’s] scheme to deceive the Court by allowing [her] to 27 file an identical opposition on his behalf.” Mot. at 5. 1 finds that she has. After the government moved to relate Nguyen I and II, Ms. Nguyen used her 2 ECF account to file three opposition briefs: (1) an opposition from herself as an individual; (2) an 3 opposition from an affiliated company Phuong T. Nguyen, D.D.S., Inc. (“Nguyen DDS”)4; and (3) 4 an opposition from Mr. Flores. For the second opposition brief, an attorney purportedly submitted 5 the brief: Paul Edward Manasian. Mr. Manasian’s name appears on the caption page, and his 6 name and electronic signature appear on the final page of the brief. Whereas Ms. Nguyen and Mr. 7 Flores were able to submit their opposition briefs without being represented by an attorney, 8 Nguyen DDS could not. The District’s Civil Local Rules provide that “[a] corporation, 9 unincorporated association, partnership or other such entity may appear only through a member of 10 the bar of this Court.” Civ. L.R. 3-9(b). Thus, having Mr. Manasian’s name and electronic 11 signature on the brief was critical. The Court finds that Ms.
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1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 PHUONG T. NGUYEN, et al., Case No. 20-cv-07991-EMC
8 Plaintiffs, ORDER GRANTING IN PART AND 9 v. DENYING IN PART DEFENDANTS’ MOTION FOR SANCTIONS 10 WELLS FARGO, N.A., et al., Docket Nos. 71, 73 11 Defendants.
12 13 14 The Court entered a final judgment in the instant action (hereinafter referred to as “Nguyen 15 I”) in January 2021, after concluding that it lacked subject matter jurisdiction. See Docket No. 63 16 (order). Almost two years later, the federal government asked that Nguyen be related to another 17 action (hereinafter referred to as “Nguyen II”).1 Plaintiff Phuong Nguyen opposed relation, as did 18 another party in Nguyen II, Michael Flores.2 After Ms. Nguyen and Mr. Flores filed their briefs in 19 opposition to the motion to relate, some of the defendants in Nguyen I moved for sanctions. That 20 is the motion now pending before the Court. 21 The sanctions motion was formally filed by the Wells Fargo Defendants. The A.J.E. 22 Defendants have joined in the motion. The Wells Fargo Defendants and the A.J.E. Defendants 23 shall hereinafter be referred to collectively as the “Moving Defendants.” Moving Defendants ask 24 the Court to issue two sanctions: (1) a dismissal of Ms. Nguyen’s claims in the related case 25 1 Although the Court refers to the federal actions as Nguyen I and II, it recognizes that they are 26 effectively the same case as they both arose from the same state court action.
27 2 Mr. Flores is a defendant in Nguyen II. However, some of the defendants in Nguyen I and II 1 Nguyen II, and (2) an award of attorneys’ fees (against Ms. Nguyen and Mr. Flores) in the amount 2 of $2,365.20. They contend that such sanctions are justified on the basis that Ms. Nguyen forged 3 an attorney’s signature on her brief filed in opposition to the motion to relate. Having considered 4 the papers filed and the accompanying submissions, as well as all other evidence of record, the 5 Court finds this matter suitable for disposition on the papers and therefore VACATES the hearing 6 on the motion for sanctions. For the reasons discussed below, the motion is hereby GRANTED in 7 part and DENIED in part. 8 I. DISCUSSION 9 A. Legal Standard 10 Moving Defendants request that sanctions be issued pursuant to the Court’s inherent 11 authority.3 “Because of their very potency, inherent powers must be exercised with restraint and 12 discretion.” Chambers v. NASCO, Inc., 501 U.S. 32, 44 (1991). 13 “When acting under its inherent authority to impose a sanction, as opposed to applying a 14 rule or statute, a district court must find” either that a party has willfully disobeyed a court order or 15 that a party “has acted in bad faith, vexatiously, wantonly, or for oppressive reasons.” Am. Unites 16 for Kids v. Rousseau, 985 F.3d 1075, 1090 (9th Cir. 2021). “[B]ad faith, including conduct done 17 vexatiously, wantonly, or for oppressive reasons, requires proof of bad intent or improper purpose. 18 Bad faith . . . is not restricted to situations where the action was filed in bad faith. Bad faith may 19 also be found in the conduct of the litigation.” Id. “[W]hen a court imposes sanctions based on 20 bad faith, the court must make an explicit finding that the sanctioned party's conduct ‘constituted 21 or was tantamount to bad faith.’” Id. 22 If a court does decide to issue a sanction, it must “fashion an appropriate [one].” 23 Chambers, 501 U.S. at 44. That is, it must “ensure that the sanction is tailored to address the harm 24 3 Because Moving Defendants are not seeking sanctions pursuant to Federal Rule of Civil 25 Procedure 11, Ms. Nguyen and Mr. Flores’s contention that Moving Defendants failed to give them the safe harbor provided for by Rule 11 is not relevant. The other procedural arguments 26 made by Ms. Nguyen and Mr. Flores are also lacking in merit. For example, Moving Defendants did not violate Civil Local Rule 7-8, which provides that a motion for sanctions “must be 27 separately filed.” Civ. L.R. 7-8(a). That Moving Defendants asked that one of the sanctions be 1 identified.” Republic of the Philippines v. Westinghouse Elec. Corp., 43 F.3d 65, 74 (3d Cir. 2 1994); cf. United States v. Blodgett, 709 F.2d 608, 610-11 (9th Cir. 1983) (noting that “cases that 3 have considered the district court’s inherent power to sanction attorneys for litigating in bad faith 4 have related such sanctions to the amount of fees incurred by the opposing party”). 5 B. Dismissal 6 The Court addresses first the Moving Defendants’ request for a dismissal sanction. As 7 noted above, Moving Defendants assert that the Court should dismiss Ms. Nguyen’s claims in the 8 related case Nguyen II because Ms. Nguyen forged an attorney’s signature on her brief in 9 opposition to the motion to relate. The Court denies this specific request for relief. Even if Ms. 10 Nguyen did forge an attorney’s signature, the sanction sought – i.e., a dismissal of Ms. Nguyen’s 11 claims – is not tailored to address that misconduct. 12 The Court recognizes that the Wells Fargo Defendants have charged Ms. Nguyen (as well 13 as Mr. Flores) with having engaged in other misconduct, as outlined in its motion to dismiss in 14 Nguyen II (located at Docket No. 14 in No. C-22-7166 EMC). However, the only misconduct that 15 has been put at issue in this specific motion is the alleged forgery. Dismissal is therefore 16 inappropriate. 17 C. Attorneys’ Fees 18 The Moving Defendants have also asked for sanctions in the form of attorneys’ fees – 19 specifically, over $2,300, which represents the time spent by counsel for the Wells Fargo 20 Defendants in “discover[ing] [the] fraud and bring[ing] it to the Court’s attention.” Mot. at 5; see 21 also Corder v. Howard Johnson & Co., 53 F.3d 225, 232 (9th Cir. 1994) (stating that, “even in the 22 absence of statutory authority, a court may impose attorney's fees against a non-party as an 23 exercise of the court's inherent power to impose sanctions to curb abusive litigation practices”). 24 According to the Moving Defendants, both Ms. Nguyen and Mr. Flores should be held jointly and 25 severally liable for the attorneys’ fees: the former because she engaged in fraud and the latter 26 because he “aided and abetted [Ms. Nguyen’s] scheme to deceive the Court by allowing [her] to 27 file an identical opposition on his behalf.” Mot. at 5. 1 finds that she has. After the government moved to relate Nguyen I and II, Ms. Nguyen used her 2 ECF account to file three opposition briefs: (1) an opposition from herself as an individual; (2) an 3 opposition from an affiliated company Phuong T. Nguyen, D.D.S., Inc. (“Nguyen DDS”)4; and (3) 4 an opposition from Mr. Flores. For the second opposition brief, an attorney purportedly submitted 5 the brief: Paul Edward Manasian. Mr. Manasian’s name appears on the caption page, and his 6 name and electronic signature appear on the final page of the brief. Whereas Ms. Nguyen and Mr. 7 Flores were able to submit their opposition briefs without being represented by an attorney, 8 Nguyen DDS could not. The District’s Civil Local Rules provide that “[a] corporation, 9 unincorporated association, partnership or other such entity may appear only through a member of 10 the bar of this Court.” Civ. L.R. 3-9(b). Thus, having Mr. Manasian’s name and electronic 11 signature on the brief was critical. The Court finds that Ms. Nguyen knew about this requirement 12 as she has demonstrated through her briefing that she is knowledgeable about the Civil Local 13 Rules in this District. 14 As it turns out, Mr. Manasian did not authorize his name and/or signature to be used on the 15 opposition brief. Counsel for the Wells Fargo Defendants learned such because he contacted Mr. 16 Manasian. See Bailey Decl. ¶ 3 (“I . . . emailed [Mr. Manasian] to inquire into whether he actually 17 filed the Opposition . . . . He responded that he did not prepare or file the document and did not 18 authorize anyone to include his signature on it. A true and correct copy of this email exchange is 19 attached as Exhibit B.”). Ms. Nguyen suggests that the Court cannot consider defense counsel’s 20 declaration because statements about what Mr. Manasian said or wrote constitute hearsay. But the 21 Court need not consider defense counsel’s declaration in order to find that Mr. Manasian did not 22 give authorization. Evidence that Ms. Nguyen has submitted herself establishes that Mr. 23 Manasian did not give authorization. Specifically, Ms. Nguyen has provided a copy of an email 24 exchange between herself and Mr. Manasian (who she claims represented her in the state court 25 case – presumably, the state court case that gave rise to Nguyen I and II). See Nguyen Decl. at 12 26 & Ex. D (email). In the email exchange, Ms. Nguyen asked Mr. Manasian to sign “DDS Inc’s 27 1 Opposition to [the Small Business Administration’s] Related Case” and then file it. Nguyen Decl., 2 Ex. D. Mr. Manasian’s response was as follows: “I will file your pleading for you as it is in 3 Federal court, but you should probably find out how you can file there in pro per. You need to 4 sign it. I am not comfortable filing the pleading for the LLC.” Nguyen Decl., Ex. D (emphasis in 5 original). As indicated by Mr. Manasian’s emphasized language, he did not want his name on the 6 opposition brief. Nevertheless, Ms. Nguyen went ahead and submitted the brief with his name 7 (and electronic signature) on it. 8 In her papers, Ms. Nguyen suggests that she did nothing improper because Mr. Manasian 9 said that he did not want to sign the “pleading for the LLC” but she did not file any “pleading for 10 the LLC” with his signature; rather, she filed an opposition brief for Nguyen DDS with his 11 signature. Ms. Nguyen emphasizes that there is actually an LLC with which she is affiliated. See 12 Nguyen Decl., Ex. C (articles of organization for Nguyen Building Investment LLC). But this 13 argument elevates form over substance. The subject line of Ms. Nguyen’s email clearly indicated 14 that she wanted Mr. Manasian to sign an opposition brief for Nguyen DDS. That Mr. Manasian 15 essentially misspoke by referring to a pleading and the LLC is not enough to immunize Ms. 16 Nguyen. 17 To be clear, the Court finds that Ms. Nguyen’s act of filing the opposition brief with Mr. 18 Manasian’s name and electronic signature was not an innocent mistake or negligence but rather 19 was done in bad faith. That Mr. Manasian did not want his name on the brief is underscored by 20 the fact that he cautioned Ms. Nguyen in his email that “it is almost certain that the two removals 21 are ‘related’” because “the case is literally the same state action that was previously removed.” 22 Nguyen Decl., Ex. D. Moreover, he added that, “[i]f you believe the case was improperly 23 removed [as stated in the opposition brief] because not all defendants agreed to the removal you 24 will need to file a separate motion to remand.” Nguyen Decl., Ex. D. 25 Because the Court finds that Ms. Nguyen did act in bad faith, the next question is whether 26 a sanction in the form of attorneys’ fees is appropriate. The Court finds that the sanction is 27 appropriate in that it is tailored to Ms. Nguyen’s misconduct. However, the Court finds that the 1 discovering the fraud and bringing the issue to the Court (including the filing of the motion). He 2 adds that he anticipates spending an additional 2 hours to review the opposition briefs and file a 3 reply brief. Thus, the fee request is $2,365.20, representing 7.3 hours of work (including 4 anticipated work). The fee request is excessive for several reasons. First, the Court is issuing its 5 order now before any significant time will be spent on reviewing opposition briefs or filing a 6 reply. Second, given the simplicity of the issue, it should have taken counsel no longer than 5 7 hours to investigate and prepare the motion. Because defense counsel’s hourly rate is $324 (which 8 is reasonable), the Court finds that an appropriate sanction is in the amount of $1,620 (5 hours x 9 $324/hour). 10 The Court now turns to the issue of whether Mr. Flores should be held jointly and severally 11 liable for the monetary sanction. It declines to hold Mr. Flores so accountable. The Court does 12 have serious concern about whether Ms. Nguyen and Mr. Flores are essentially conspiring 13 together. However, even if they are conspiring together in this litigation, the record does not 14 sufficiently demonstrate that Mr. Flores knew that Ms. Nguyen was falsifying Mr. Manasian’s 15 signature on the opposition brief for Nguyen DDS. 16 II. CONCLUSION 17 For the foregoing reasons, the Court grants in part and denies in part the motion for 18 sanctions. The request for a dismissal sanction is denied. The request for a monetary sanction is 19 granted, but only in the amount of $1,620 and only Ms. Nguyen is liable for this amount. Ms. 20 Nguyen shall pay the Wells Fargo Defendants the amount of $1,620 within thirty (30) days of this 21 decision. Ms. Nguyen is warned that any further acts of dishonesty in the prosecution of this case 22 will result in more severe sanctions which may include dismissal of the case with prejudice. 23 This order disposes of Docket No. 71. 24 IT IS SO ORDERED. 25 26 Dated: December 16, 2022 27 ______________________________________