Unite Here! Local 2 v. Stix Holdings, LLC

CourtDistrict Court, N.D. California
DecidedAugust 4, 2023
Docket3:23-cv-01498
StatusUnknown

This text of Unite Here! Local 2 v. Stix Holdings, LLC (Unite Here! Local 2 v. Stix Holdings, LLC) is published on Counsel Stack Legal Research, covering District Court, N.D. California primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Unite Here! Local 2 v. Stix Holdings, LLC, (N.D. Cal. 2023).

Opinion

1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT 8 NORTHERN DISTRICT OF CALIFORNIA 9 UNITE HERE! LOCAL 2, 10 Case No. 23-cv-01498-RS Plaintiff, 11 v. ORDER GRANTING IN PART AND 12 DENYING IN PART ATTORNEYS' STIX HOLDINGS, LLC, et al., FEES AND COSTS 13 Defendants. 14

15 I. INTRODUCTION 16 Following the previous order granting its motion to enforce an arbitration award, Plaintiff 17 United Here! Local 2 has moved to recover its attorneys’ fees and costs from Defendants Pick Up 18 Stix SFO LLC and Stix Holdings LLC under the district court’s “inherent powers” to issue 19 sanctions. Pursuant to Civil Local Rule 7-1(b), this matter is suitable for disposition without oral 20 argument; the hearing set for August 10, 2023 is therefore vacated. For the reasons articulated 21 below, the motion for fees and costs is granted in part and denied in part. 22 II. BACKGROUND1 23 Plaintiff and Defendant were parties to a Card Check Neutrality Agreement (”Agreement”) 24 requiring strict neutrality from Defendant Pick Up Stix SFO LLC as to the unionization of 25 employees at the Pick Up Stix in SFO airport. Rather than abide by the Agreement, the SFO store 26

27 1 As a more complete factual and procedural background is recited in the order granting Plaintiff’s 1 attempted various tactics to dissuade its employees from unionizing, before finally closing (and 2 terminating all employees) on February 7, 2023, the very day after the union demanded 3 recognition. Defendant further knowingly and openly refused to participate in an expedited 4 arbitration hearing before the arbitrator specified in that Agreement, despite notice from Plaintiff 5 and instructions from the Arbitrator that all argument and evidence had to be presented at a 6 hearing, rather than via the various ex parte presentations Defendant attempted. On March 6, 7 2023, the Arbitrator found in favor of Plaintiff, ordering Defendant to, among other things, reopen 8 its SFO location and reinstate its employees, with back pay. Defendant did not comply, 9 necessitating Plaintiff’s filing of a motion to confirm and enforce the arbitration award a month 10 thereafter, on April 6, 2023, which was granted on May 19, 2023. 11 III. LEGAL STANDARD 12 There are “[t]hree primary sources of authority” which “enable courts to sanction parties or 13 their lawyers for improper conduct: (1) Federal Rule of Civil Procedure 11, which applies to 14 signed writings filed with the court, (2) 28 U.S.C. § 1927, which is aimed at penalizing conduct 15 that unreasonably and vexatiously multiplies the proceedings, and (3) the court's inherent power.” 16 Fink v. Gomez, 239 F.3d 989, 991 (9th Cir. 2001). Plaintiff proceeds under the third—the court’s 17 inherent powers—which requires a showing that “the losing party has acted in bad faith, 18 vexatiously, wantonly, or for oppressive reasons.” Id. (quoting Roadway Express, Inc. v. Piper, 19 447 U.S. 752, 766 (1980)); see also Leon v. IDX Sys. Corp., 464 F.3d 951, 961 (9th Cir. 2006) 20 (“[T]he court must make an express finding that the sanctioned party’s behavior “constituted or 21 was tantamount to bad faith.”). 22 IV. DISCUSSION 23 Defendants raise five main areas of objection: (1) fees are not warranted against Stix 24 Holdings, LLC; (2) fees incurred prior to the motion to confirm and enforce the arbitration 25 award—e.g., those relating to the arbitration—are not recoverable; (3) opposition to the motion to 26 confirm and enforce the arbitration award was not in bad faith, and therefore should not give rise 27 to fees; (4) Plaintiff’s requested fees are excessive; and (5) Plaintiff’s costs are not recoverable. 1 A. Pick Up Stix SFO LLC vs. Stix Holdings LLC 2 As Defendants correctly identify, Stix Holdings LLC was not party to the Agreement, and 3 therefore not subject to the arbitration provisions contained in that Agreement. Though Plaintiff 4 acknowledges that a delineation between the two entities was clearly outlined in the previous 5 order, it refers only to its “alter ego allegations in the Petition to Confirm and Enforce Arbitration 6 Award,” which alleges in a single paragraph, on information and belief, “a unity of interest 7 between Respondents STIX SFO LLC and STIX HOLDINGS, LLC, such that any individuality 8 and separateness between them has ceased,” and either entity is “the alter ego” and “a mere shell, 9 instrumentality, and conduit” for the other. Dkt. 1 at 2-3. 10 “Under California law, there are two general requirements for establishing an alter ego 11 theory: (1) there is such unity of interest and ownership that the separate personalities of the 12 corporation and the individual no longer exist; and (2) that, if the acts are treated as those of the 13 corporation alone, an inequitable result will follow.” Baker v. Chin & Hensolt, Inc., 2010 WL 14 147954 (N.D. Cal. 2010) (quotation marks and citation omitted). “Conclusory allegations of ‘alter 15 ego’ status are insufficient to state a claim. Rather, a plaintiff must allege specifically both of the 16 elements of alter ego liability, as well as facts supporting each.” Orosa v. Therakos, Inc., 2011 WL 17 3667485, *6 (N.D. Cal. 2011) (quoting Neilson v. Union Bank of California, 290 F.Supp.2d 1101, 18 1116 (C.D. Cal. 2003)) (quotation marks omitted). 19 Though certain facts in this case certainly may support the alter ego theory, Plaintiff here 20 has neither advanced arguments to establish it, nor mounted a response to the declaration by Lorne 21 Goldberg, CEO of Stix Holdings LLC, which Defendants filed to bolster their argument that Stix 22 Holdings LLC and Pick Up Stix SFO LLC are distinct business entities. See Dkt. 34-1 (noting that 23 the two entities have different dates and places of formation, articles of organization, financial 24 accounts, employees, and labor policies). Without those specifics, Plaintiff’s allegations are too 25 conclusory to disturb the corporate form. Accordingly, Plaintiff’s motion as to STIX HOLDINGS 26 LLC is denied. 27 B. Scope of Recoverable Fees 1 As to Defendant Pick Up Stix SFO LLC, a finding of bad faith has already been made on 2 the basis of both its “knowing refusal to participate in the arbitration,” and its decision to “simply 3 refuse[] to honor the award rather than filing a petition to vacate it, and request[ing] a vacation of 4 the award only in response to the union’s petition to confirm it.” Dkt. 26 at 7-8. The finding has 5 clear support in the caselaw. Contrary to Defendant’s belief that fees can only be recovered for 6 “actions taken before the Court itself”—or that Plaintiff’s motion proceeds under 28 U.S.C. 7 § 19272—the Ninth Circuit has indicated that “[i]t is clear that bad faith supporting an award of 8 attorneys' fees may be found in conduct that led to the lawsuit or in conduct occurring during the 9 course of the action,” Int'l Union of Petroleum & Indus. Workers v. W. Indus. Maint., Inc., 707 10 F.2d 425, 428 (9th Cir. 1983) (cleaned up) (emphasis added), and that “[b]ad faith may be 11 demonstrated by showing that a defendant's obstinancy in granting a plaintiff his clear legal rights 12 necessitated resort to legal action with all the expense and delay entailed in litigation.” Id. (citation 13 omitted).

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Unite Here! Local 2 v. Stix Holdings, LLC, Counsel Stack Legal Research, https://law.counselstack.com/opinion/unite-here-local-2-v-stix-holdings-llc-cand-2023.