Raya v. Barka

District Court, S.D. California·Decided December 23, 2022·No. 3:19-cv-02295·Unknown

Opinion

ROBERT RAYA, Case No.: 3:19-cv-2295-WQH-AHG Plaintiff, ORDER:

v. (1) DENYING PLAINTIFF’S DAVID BARKA, et al., MOTION FOR SANCTIONS, and

Defendants. (2) DENYING PLAINTIFF’S RECONSIDERATION OF HIS MOTION FOR APPOINTMENT OF

[ECF No. 129] Before the Court is Plaintiff’s Motion for Sanctions. ECF No. 129. Plaintiff seeks an order from the Court sanctioning Defendants and their counsel for interfering with third- party subpoenas and for making false statements in a discovery motion, which Defendants oppose. Id.; ECF No. 133. In addition to monetary sanctions for attorney fees, Plaintiff also requests that the Court reconsider his motion for appointment of counsel (ECF No. 29), which the Court had denied without prejudice (ECF No. 32). ECF No. 129-1 at 11, 15. For the reasons set forth below, Plaintiff’s motion is DENIED. Plaintiff’s request for sanctions is based on Defendants’ conduct with regard to Plaintiff’s third party subpoenas and Defendants’ conduct with regard to statements made in the joint discovery motion. The Court will address each in turn. A. Legal Standard The Court has statutory authority to require anyone “who so multiplies the proceedings in any case unreasonably and vexatiously . . . to satisfy personally the excess costs, expenses, and attorneys’ fees reasonably incurred because of such conduct.” 28 U.S.C. § 1927. Section 1927 is “a penal statute designed to discourage unnecessary delay in litigation[.]” Roadway Express, Inc. v. Piper, 447 U.S. 752, 759 (1980). The imposition of sanctions under § 1927 requires a finding that the person against whom the sanctions are imposed acted “recklessly or in bad faith[.]” United States v. Blodgett, 709 F.2d 608, 610 (9th Cir. 1983) (citation omitted); see also Gomez v. Vernon, 255 F.3d 1118, 1134–35 (9th Cir. 2001). Before a party can recover excess costs under § 1927, the court must find that the attorney created “needless proceedings” or “prolonged litigation,” and that “the conduct was vexatious as well as unreasonable.” Horvath v. JP Morgan Chase & Co., No. 3:21-cv-01665-BTM-AGS, 2022 WL 9569264, at *2 (S.D. Cal. Oct. 13, 2022). Further, this district’s Civil Local Rules provide that “[f]ailure of counsel or of any party to comply with these rules, with the Federal Rules of Civil or Criminal Procedure, or with any order of the Court may be grounds for imposition by the Court of any and all sanctions authorized by statute or rule or within the inherent power of the Court, including, without limitation, … imposition of monetary sanctions or attorneys’ fees and costs, and other lesser sanctions.” CivLR 83.1(a). Under the Court’s inherent power, the court also may levy sanctions, including attorney fees, when a party has “‘acted in bad faith, vexatiously, wantonly, or for oppressive reasons.’” Fink v. Gomez, 239 F.3d 989, 991 (9th Cir. 2001) (quoting Roadway Express, 447 U.S. at 776). The Court’s inherent power “is ‘both broader and narrower than other means of imposing sanctions.’ [] On the one hand, the inherent power ‘extends to a full range of litigation abuses.’ On the other, the litigant must have ‘engaged in bad faith or willful disobedience of a court’s order’” to levy sanctions including attorney fees. Fink, 239 F.3d at 992 (quoting Chambers v. NASCO, Inc., 501 U.S. 32, 46–47 (1991)). “Before awarding sanctions under its inherent powers, however, the court must make an explicit finding that counsel’s conduct constituted or was tantamount to bad faith.” Primus Auto. Fin. Serv. v. Batarse, 115 F.3d 644, 648 (9th Cir. 1997) (internal quotations and citation omitted). An explicit finding of bad faith “is especially critical when the court uses its inherent powers to engage in fee-shifting.” Id. (noting that a “court’s inherent power to impose attorney[] fees as a sanction [is limited] to cases in which a litigant has engaged in bad-faith conduct or willful disobedience of a court’s orders”). A party “demonstrates bad faith by ‘delaying or disrupting the litigation or hampering enforcement of a court order.’” Id. (quoting Hutto v. Finney, 437 U.S. 678, 689 n.14 (1978)). Bad faith is present whenever an attorney “knowingly or recklessly raises a frivolous argument, or argues a meritorious claim for the purpose of harassing an opponent.” Estate of Blas Through Chargualaf v. Winkler, 792 F.2d 858, 860 (9th Cir. 1986). “[C]ourts have substantial discretion to decide whether to award sanctions under § 1927 or their inherent power, and in what amount.” Horvath, 2022 WL 9569264, at *2; see Haynes v. City & County of San Francisco, 688 F.3d 984, 987–88 (9th Cir. 2012). The purpose of a sanctions award “may be to deter attorney misconduct, or to compensate the victims of an attorney’s malfeasance, or to both compensate and deter.” Haynes, 688 F.3d at 987–88. The award is intended only to cover excess costs incurred due to unreasonable conduct; it is not meant to reimburse a party for ordinary trial costs. United States v. Associated Convalescent Enters., Inc., 766 F.2d 1342, 1347-48 (9th Cir. 1985); see Norelus v. Denny’s, Inc., 628 F.3d 1270, 1297 (9th Cir. 2010) (“Sanctions must bear a financial nexus to the excess proceedings and may not exceed the costs, expenses, and attorneys’ fees reasonably incurred because of the sanctionable conduct.”) (internal quotation and brackets omitted). B. Defendants’ Letters to Recipients of Third-Party Subpoenas 1. Background On January 10, 2022, Plaintiff notified Defendants that he was planning to serve subpoenas duces tecum on three non-parties—Pelion Actuarial Services (“Pelion”), John Hancock Life Insurance (“John Hancock”), and Principal Life Insurance (“Principal”)— by the end of the week. ECF No. 129-2 at 27. On January 13, 2022, the Court held a discovery conference regarding other discovery disputes, and the Court was informed about Plaintiff’s intent to serve the subpoenas and Defendants’ intent to object to them. ECF No. 94; ECF No. 129-1 at 5. During the conference, the Court explained that responsive documents received pursuant to the subpoenas after the January 24, 2022, fact discovery cutoff may not be admissible. ECF No. 129-1 at 5; ECF No. 133 at 3. On January 14, 2022, Plaintiff served the subpoenas, requesting that the three non-parties mail the requested documents to Plaintiff by January 31, 2022, after the fact discovery cutoff had expired. ECF No. 129-1 at 5; ECF No. 129-2 at 8–25. The Court had already scheduled a discovery conference for January 31, 2022, regarding unrelated discovery disputes. ECF No. 95. When Defendants’ counsel called chambers on January 25, 2022, to inform the Court that he sought to file a motion to quash Plaintiff’s third-party subpoenas, chambers staff relayed to counsel the Court’s intention to address the subpoena dispute at the January 31, 2022,

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