CALIFORNIA ATTORNEY'S FEES

Sanctions: $63,087.50 Sanction Against Los Angeles Vacated Because Deputy City Attorney Did Not Violate In Limine Order

 

Also, Non-compensatory Sanctions Over $5,000 Likely Needs Criminal Contempt Protections.

     Under Chambers v. NASCO, Inc., 501 U.S. 32, 43-46 (1991), district judges have inherent power to sanction for bad faith violations during proceedings. However, there are limits to how far this can go, especially when a substantial sanction over $5,000 is involved.

     Chief Judge Alex Kozinski, in his usual distinctive style, vacated a $63,687.50 sanctions award against the City of Los Angeles for a deputy city attorney’s alleged violation of an in limine order during closing argument in a case eventually resulting in a defense verdict in an excessive force police lawsuit. He did so by authoring a 2-1 opinion in which Circuit Judge Sandra S. Ikuta dissented. That opinion is Miller v. City of Los Angeles, Case No. 10-55235 (9th Cir. Oct. 27, 2011) (for publication).

     Basically, two grounds led to the reversal.

     First, the majority actually found there was no violation so that it would be illogical to infer bad faith (even though the violation was actually admitted by the city attorney). Judge Kozinski put it this way: “We conclude that Arias couldn’t have acted in bad faith if he did not, in fact, violate the district court’s order. You can’t have chicken parmesan without chicken; you can’t have an amazing technicolor dreamcoat without a coat; you can’t have ham and eggs if you’re short of ham or eggs. And you can’t have a bad faith violation without a violation.”

     Second, because the sanctions were non-compensatory and designed to deter future misconduct, they needed to have full criminal contempt protections such as an independent prosecutor, use of the beyond reasonable doubt higher burden of proof, and a jury trial right for sanctions above $5,000 in amount. None of that happened here, which was an independent reason for reversal.

     Judge Kozinski also offered these words of advice to attorneys and district judges: “While we’re at it, we offer some advice to lawyers: Don’t apologize unless you’re sure you did something wrong. And there’s also a lesson for district judges: Don’t accept too readily lawyers’ confessions of error or rely on your own memory of what happened. Trials are complicated and we sometimes misremember details. That’s why we have transcripts.”

MEMORY

Swiss Cheese.  Madison, Wisconsin.  Photographer:  John Vachon.  Library of Congress.

Sanctions: $1 Million Fee/Costs Award For Belated Production Of Computer Embedded Information During Trial Affirmed

 

Jneid II Vindicated Award of Substantial Costs for Dilatory Production of Documents During Trial.

     In our December 20, 2009 post, we explored Jneid v. Tripole, where our local Fourth District, Division 3 appellate court reversed as too severe issue/evidentiary sanctions essentially resulting in a “directed verdict” after defendant belatedly produced 17,000 pages of documents with computer embedded information during trial (even though the documents had been requested way before in the pretrial juncture of the case). However, the appellate court did indicate that costs, inclusive of attorney’s fees and expenses, could be considered by the lower court on remand. We bloggers predicted that this matter should settle, because these costs were likely to be very substantial in nature.

     The matter apparently did not settle, but our prediction came true.

     On remand, the trial judge awarded a little over $1 million to one attorney for fees and expenses resulting from the dilatory document production, which was just one of four remand orders (but the first to reach the appellate court for review). Defendant appealed.

     Our local court, in a 3-0 panel decision by Acting Presiding Justice Rylaarsdam, affirmed in Jneid v. Novell, Inc. (Jneid II), Case No. G044491 (4th Dist., Div. 3 Sept. 23, 2011) (unpublished).

     Although defendant only challenged expenses totaling about $195,000, many of the challenges could not be entertained because appellant did not provide an adequate appellate record--a cardinal transgression which we have discussed in many prior posts. Appellant’s argument that the trial court used too lengthy of a period for purposes of awarding sanctions was rebuffed, given that the appellate court had given the lower court discretion to determine the punishment “in connection with” the trial--allowing a wide berth of prerogative to the trial judge to decide what time period should be properly considered.

Sanctions: Musaelian v. Adams CCP § 128.7 Sanctions Update

 

Case Now Published.

     In our July 3, 2011 post, we discussed Musaelian v. Adams, an unpublished First District decision discussing the standards for awarding attorney’s fees for defending against a CCP § 128.7 motion, using analogous Rule 11 federal case law in reaching its result. We can now report that this decision is citable, with the discussion on this issue being certified for publication on July 29, 2011. However, the discussion on the appellate undertaking issue was not published.

Special Fee Shifting Statute/Equity: Conditioning Leave To File Cross-Complaint Upon Payment Of $80,000 In Fees To Other Side Was No Go

 

Condition Was Too Much of a Sanction, Because Fees Not Causally Related to Cross-Complaint Filing.

     In a convoluted fee dispute between former client and attorney, the trial court granted attorney leave to file a cross-complaint, but conditioned on attorney paying client some $80,000 to compensate her for attorney’s fees she incurred in preparing for an arbitration hearing aborted in part due to attorney’s actions.

     Attorney appealed this “sanctions” order in Mitzner v. Fox, Case No. C061263 (3d Dist. July 19, 2011) (unpublished).

     Care to hazard a guess on the result? If you said reversal, you won!

     Code of Civil Procedure section 426.50 does authorize the trial court to grant leave to file a cross-complaint upon “such terms as may be just to the parties” as long as the requesting party acted in good faith. However, nothing in the statute or legislative comments allowed the court the authority to impose a fee “sanction” for conduct unrelated to any injustice that arose from the filing of the cross-complaint, which is exactly what the lower court did here.

Sanctions: Attorney’s Fees Requested Under CCP § 128.7 Denied Where Motion Not Clearly Targeted And Appeal Was Not Frivolous In Nature

 

Remittitur Cost Apportionment Issue Also Considered.

     The First District, Division 4, in a case it had seen before a couple of times (with the case eventually going to the state supreme court), had decided that an in pro per attorney could not collect an award of attorney’s fees in connection with CCP § 128.7 sanctions--a determination affirmed by the supreme court. A remittitur issued awarding costs to the successful appellant (who was a litigant’s attorney), but the winning attorney defending against the fee request wanted to recover fees as well under section 128.7.

     That request was denied by the lower court and affirmed in Musaelian v. Adams, Case No. A126240 (1st Dist., Div. 4 June 29, 2011) (unpublished).

     The first problem was that the moving party failed to describe the sanction being sought or name the parties to whom it was addressed. That was reason enough to deny the motion. Also, section 128.7 fees are only awarded to the prevailing party “if warranted.” Although finding no California case discussing this language, the appellate court located plenty of F.R.Civ.P. Rule 11 cases holding that fees incurred in defending a Rule 11 motion are infrequently granted unless the sanction was clearly frivolous. (See, e.g., E. Gluck Corp. v. Rothenhaus, 252 F.R.D. 175, 183 (S.D.N.Y. 2008); Richelson v. Yost, 738 F.Supp.2d 589, 602 (E.D.Pa. 2010); Haniotakis v. Nassan (In re Zion), 727 F.Supp.2d 388, 413 (W.D.Pa. 2010); G-I Holdings, Inc. v. Baron & Budd, 2002 U.S.Dist. LEXIS 15443 (S.D.N.Y. Aug. 21, 2002).)

     On the apportionment of costs on appeal between certain parties, the appellate court observed that this task generally resides only in the Court of Appeal. (Ramirez v. St. Paul Fire & Marine Ins. Co., 35 Cal.App.4th 473, 477-479 (1995).) However, the trial court did have authority to interpret the appellate remittitur, an apportionment interpretation upheld in this instance.

     Also, for you appellate practitioners out there, the ending discussion centered on whether the prior winning appellant seeking costs should recover interest on a loan used to fund a cash deposit for the appellate undertaking. It surveyed the tension in different cases (with a similar issue up for review in Rossa v. D.L. Falk Construction, S183523), but decided appellant had failed to meet his evidentiary burden to obtain entitlement to recovery of the claimed costs.

Discovery Sanctions: Blocking Deposition Questions On Prior Stress Events Justified Discovery Sanctions Against Plaintiff And His Attorney

 

Vinson Allows Such Inquiries During Discovery.

     Where a plaintiff in a wrongful termination suit puts his/her medical condition into controversy, Vinson v. Superior Court, 43 Cal.3d 833 (1987) held that an IME/psychological exam was fair game because this condition was at issue in the suit.

     In like vein, Acting Justice Rylaarsdam on behalf of a 3-0 panel in Cashman v. SWH Corp., Case No. G044531 (4th Dist., Div. 3 May 26, 2011) (unpublished) sustained discovery sanctions of a little over $6,500 against plaintiff and his attorney when plaintiff refused to answer questions about prior stressors in an employment case. Vinson was found on point so as to uphold the sanctions award.

     Plaintiff challenged the sanctions award against his attorney. Although there were standing problems with this attack, the appellate court found that seeking these sanctions through the memorandum of points and authorities was adequate notice that they were being sought against the attorney. (Contrast In re Marriage of Fuller, 163 Cal.App.3d 1070, 1077 (1985) [nothing in notice, pleading, declaration, or memorandum indicated that sanctions targeted against a particular litigant].)

     BLOG OBSERVATION--Although this was an appeal from a sanctions grant, co-contributor Mike remembers his days of practicing in Los Angeles County Superior Court where many judges would deny sanctions request outright against an attorney or other litigant unless the sanctions request was made in the Notice of Motion as well as highlighted in the caption of the Motion request (even if the request was contained elsewhere, such as in a supporting memorandum).

Family Law Awards: Recent Unpublished Decision Reviews Deadlines For Claiming Section 271 Fee Recovery

 

Second District, Division 6 Does So While Affirming $75,000 Sanctions Award.

     In Marriage of Lancashire, Case No. B217022 (2d Dist., Div. 6 May 23, 2011) (unpublished), the Second District, Division 6 discussed deadlines for bringing attorney’s fees motions based on sanctionable conduct of family law litigants under Family Code section 271 before it affirmed a $75,000 sanctions fee award to husband.

     Here is what the court had to say in a 3-0 opinion by Justice Yegan:

     *A 271 motion for attorney’s fees on appeal in affirming a prior sanctions award must be filed no later than 40 days after issuance of the remittitur (In re Marriage of Freeman, 132 Cal.App.4th 1, 7 (2005));

     *In a case involving false accusations of child abuse, 271 sanctions request must be filed within 60 days after service of notice of a judgment exonerating the litigant seeking sanctions or 180 days if no notice is sent (Robert J. v. Catherine D., 171 Cal.App.4th 1500, 1504 (2009)); and

     *A motion for pre-judgment fees for sanctionable conduct must be filed within the deadlines for filing a notice of appeal from the sanctions judgment order at issue pursuant to Cal.Rules of Court, rule 3.1702(b).

Federal Sanctions: Gregory P. Joseph Writes Informative Article On Inherent Power Of The Court Sanctions Issues In The Federal Judicial Arena

Inherent Power of the Court Sanctions Reach a Broad Spectrum of Conduct, As Shown in the Article.

     Gregory P. Joseph, a New York City attorney, has written an article, “Developments in the Federal Law of Sanctions,” which has been published in the April 12, 2011 edition of The United States Law Week. It explores evolving issues of interest with respect to federal sanctions. Here is a summary of what is discussed in this informative article:

     *Whether inherent power of the court sanctions extend to administrative tribunal abuse unless the abuse bears a sufficient nexus to the federal court proceedings (FDIC v. MAXXAM Inc., 523 F.3d 566, 591, 593 (5th Cir. 2008) [no]; Children’s Ctr. for Devel. Enrichment v. Machle, 612 F.3d 518 (6th Cir. 2010) [no]; Wachovia Bank v. Tien, 2010 U.S.App. LEXIS 26089 at *13-*14 (11th Cir. Dec. 22, 2010) [yes]; Carr v. Tillery, 591 F.3d 909 (7th Cir. 2010) [yes]).

     *Whether an offender’s inability to pay is a legitimate consideration for § 1927 sanction imposition, with two appellate courts concluding it is not (Shales v. General Chauffeurs Sales Drivers & Helpers Local Union No. 330, 557 F.3d 746 (7th Cir. 2009); Hamilton v. Voise Cascade Express, 519 F.3d 1197 (10th Cir. 2008); Roth v. Spruell, 388 F.App’x 830 (10th Cir. 2010).)

     *Whether there is viarious liability on the part of a law firm for § 1927 violations (BDT Prods. Inc. v. Lexmark Int’l Inc., 602 F.3d 742 (6th Cir. 2010) [no]; FM Indus. Inc. v. Citicorp Credit Servs., 614 F.3d 335 (7th Cir. 2010) [no].)

     *Whether there is vicarious law firm liability where sanctions are imposed under the inherent power of the court (Lockary v. Kayfetz, 974 F.2d 1166, 1170 (9th Cir. 1992) [yes]; Mroz v. Mroz, 65 F.3d 1567, 1576 (11th Cir. 1995) [yes]; Wolters Kluwer Fin. Servs. v. Scivantage, 564 F.3d 110, 114 (2d Cir. 2009) [no, unless independent evidence of law firm’s bad faith].)

     *Whether inherent power sanctions of the court can be extended to arbitration misconduct (Positive Software Solutions, Inc. v. New Century Mortgage Corp., 619 F.3d 458 (5th Cir. 2010) [no]; but see First Auto. Ser. Corp. v. First Colonial Ins. Co., 2010 U.S. Dist. LEXIS 66974 (M.D. Fla. June 16, 2010) [arbitrators can award bad faith litigation sanctions].)

     *Whether FRCP 30(d)(2) attorney’s fees sanctions can be awarded against clients and/or their counsel for egregious deposition behavior (Craig v. St. Anthony’s Med. Ctr., 384 F.App’x 531 (8th Cir. 2010) [yes; attorney]; GMAC Bank v. HTFC Corp., 248 F.R.D. 182, 197, 198 n.22 (E.D. Pa. 2008) [yes; passive acquiescence by client; 30(d)(2) sanctions levied against both lawyer and client].)

Sanctions: Lower Court Sanctions Under $5,000 Not Immediately Appealable

Appeal of Two Sanctions Orders Are Dismissed.

     Warkentin v. Countrywide Home Loans, Case No. F059782 (5th Dist. Apr. 29, 2011) (unpublished) is a situation where the appellate court dismissed two appeals of sanctions orders, one of $2,012 for a plaintiff reasserting allegations that were earlier stricken from a pleading and the other amounting to $2,331.25 for discovery response “gamesmanship.” The reason for the dismissals? Simple: Code of Civil Procedure section 904.1(a)(11)-(12), which provides that an order granting monetary sanctions is not an appealable order unless the amount is over $5,000. Beyond that, Justice Kane on behalf of a 3-0 panel of the Fifth District observed that sanctions are mandatory for discovery “gamesmanship,” acknowledging that they “are routinely granted in such circumstances.”

Sanctions: Discovery Sanctions And Order Noncompliance Award Totaling $5,870 Against Attorney Appealed

 

You Gotta Read On To See What Happens.

     This one started out badly for attorney. A trial judge imposed three types of awards against plaintiff”s attorney: (1) a $2,035 award for partial discovery referee expenses; (2) a $2,335 award for plaintiff’s deposition nonappearance; and (3) a CCP § 177.5 award of $1,500 for failing to comply with the two prior orders. However, attorney appealed these awards in Fletcher v. Bantan, Case No. B222418 (2d Dist., Div 7 Apr. 19 , 2011) (unpublished).

     Things seemed to be going better for attorney, because the appellate court determined that (1) the discovery referee order against him was erroneous because CCP § 645.1 only orders these costs to be paid by parties (not their counsel); and (2) the discovery referee was assigned without adequate due process.

     However, the real rub was that the discovery referee order was only voidable, not void in nature. Earlier, the appellate court had dismissed appeals of these orders as time-barred, an order holding up because these orders were not void.

     The § 177.5 order was no abuse of discretion and the lower court had jurisidiction to impose further orders even though attorney substituted out. 

     The voidability versus void distinction came home to roost in this one.    

 

Sanctions: $10,000 Award To Husband For Attorney’s Fees In Family Law Case Reversed

 

Ex-Wife Not Give Proper Due Process Opportunity to Oppose.

     We knew this one was a reversal from the first few sentences--“Summary proceedings are common in family law cases. Nevertheless, however certain a court may be that a party or an attorney in a family law proceeding deserves sanctions, it must keep in mind an immutable principle that cuts cross all areas of the law: sanctions may not be summarily imposed. Due process demands more.”

     In Marriage of Duris and Urbany, Case No. B222002 (2d Dist., Div. 6 March 14, 2011) (certified for publication), without prior notice at a child support modification hearing in which no sanctions request was checked in any Judicial Council form, the lower court assessed $10,000 in sanctions against ex-wife and in favor of husband for unnecessary activity by wife’s ex-attorney (wife was in pro per at the hearing). The sanctions was for “fee sink” activity in the case by the prior attorney causing husband to expend $25,000 in fees. The sanctions were awarded without warning at the child support modification hearing.

     The Second District, Division 6 reversed on due process grounds. This case is a primer in this area, indicating reversal was compelled because (1) wife was given no notice sanctions would be imposed at the hearing, (2) the sanctions were summarily imposed at the hearing, giving wife no opportunity to obtain proof from her ex-attorney explaining why sanctions were not warranted or to file opposition papers, and (3) husband did not file any proof to support the request such that the trial court really could not make any meaningful factual findings.

     The 3-0 opinion was written by Presiding Justice Gilbert.

E-Discovery Sanctions: State Appellate Court Affirms $13,500 Sanction Against Plaintiff And Her Attorney For Being Evasive In E-Discovery Cell Phone Dispute

 

First District, Division 4 Finds Sanctions Proper Under CCP § 2023.030(a).

     We do not see that many e-discovery sanction cases at the state level, with most of the law being decided by federal courts--notwithstanding that the Evidence Code definition of “writing” does include electronic information. Here is one where a $13,500 discovery sanction was affirmed in an e-discovery dispute.

     In Moreno v. Ostly, Case No. A127780 (1st Dist., Div. 4 Feb. 22, 2011) (unpublished), a trial court awarded a $13,500 discovery sanction under CCP § 2023.030(a) (a nonexclusive listing of the types of misconduct that are considered to be a misue of the discovery process) against plaintiff and her attorney in a sexual harassment/retaliation/back wages case. The basis for the sanctions was that both were evasive with respect to the existence of cell phones containing potentially discoverable information, first saying no emails were on the phones and then indicating that the cell phones did not exist at all. The trial court was not amused, and neither was the appellate court under the abuse of discretion standard. “Like the trial court, we are mystified, at the very least, that counsel did not disclose to opposing counsel and the court that at least the cell phones used by [plaintiff] during the relevant period were no any longer in her possession.” (Slip Opn., p. 11.) Lesson from this one: don’t waffle on the existence or non-existence of electronic information.

     Queen Victoria:  “We are not amused.”

     BLOG BONUS--Use our search function and enter “E-Discovery” to get federal decisions in this area.

 

Discovery/Sanctions: $1,750 Sanction Against Losing Party Seeking Protective Order Sustained

 

Losing Party Unsuccessfully Sought to Regulate Deposition Conduct of Opposing Counsel.

     Civil litigators have seen it often--an opposing attorney who overuses privilege objections, instructs deponents not to answer based on nonprivileged grounds, coaches the witness through speaking objections or interruptive conferences outside of the deposition, or insults counsel taking the depositions. Apparently, plaintiff got fed up with opposing counsel’s conduct at a deposition, bringing a protective order to control the future conduct of opposing counsel at upcoming depositions. The trial court felt the request was tantamount to a prior restraint on counsel’s speech to lodge objections at future objections, with the correct remedy being to move to compel responses to specific questions that were not answered or obstructed by counsel. A discovery sanction of $1,750 was imposed for filing a frivolous motion under Code of Civil Procedure section 2025.420(d).

     Plaintiff appealed in Aceves v. Catellus Development Corp., Case No. B212903 (2d Dist., Div. 2 Feb. 8, 2011) (unpublished).

     Plaintiff could not beat the deferential abuse of discretion standard applicable to the lower court’s discovery ruling. The appellate court did observe that it is generally improper to instruct a witness not to answer a question unless a privilege is involved or deposing counsel’s conduct is egregious in nature, with Los Angeles County Superior Court Local Rules 7.12(e)(8) & (9) so holding (including a guideline for counsel not to coach a deponent). The problem was that opposing counsel’s conduct, while labeled as “juvenile at times,” was not really coaching, simply telling the witness not to speculate (although perhaps doing it once too often). Nothing was wrong with telling an employee deponent to refuse to answer questions about attorney notes made during an interview when they were clearly work product protected. The heated exchanges about deposition scheduling did not implicate any suppression of relevant evidence.

      Example of colorful deposition behavior involving different parties in another case, as shown on Youtube:

     BLOG OBSERVATION--In federal court, district judges may have more leeway to dictate deposition protocol guidelines as standing orders in civil matters. (See Hall v. Clifton Precision, 150 F.R.D. 525, 531-532 (E.D. Pa. 1993) [9 guidelines for deposition protocol often used as standing orders by many district judges].) However, there is nothing expressly akin to these rules in the California Code of Civil Procedure, although a party can certainly seek to compel answers to unanswered questions, although it is infrequently done. (Code Civ. Proc., § 2025.480.) With respect to the Los Angeles local rules, they unfortunately have been clarified in a 1999 ethics opinion as only being directory in nature and ordinarily not giving rise to sanctions, unless a lower court enters the guidelines as a mandatory standing order in civil matters. (See L.A. County Bar Assn. Professional Responsibility & Ethics Comm. Formal Ethics Opinion No. 497 (March 8, 1999).)

      BONUS:  Link to Wikipedia entry on Catellus Development Corp.

Family Law: $100,000 In Sanctions Under Family Code Section 271 Upheld On Appeal

 

Family Judge Does Not Have To Expressly State Whether Consideration Was Given to Financial Burdens.

     An ex-wife in In re Marriage of Loumena, Case Nos. H032608/H033027 (6th Dist. Feb. 8, 2011) (unpublished) was hit with a sanctions award of $100,000 (out of a requested $355,000, $250,000 of which comprised attorney’s fees) under Family Code section 271. This is the sanctions statute allowing imposition of fees and costs against a litigant in family law proceedings frustrating settlement, increasing litigation costs, and/or failing to cooperate, as long as the sanction does not impose an unreasonable financial burden on the sanctioned party. It was that last caveat that was at issue in Loumena.

     Wife did submit papers and proof that she was jobless, had no income, and had considerable debts. However, the trial court obviously rejected this because there were other indicia that she had received considerable sales proceeds from the sale of certain community property. Her main challenge was that the family law judge did not consider the financial burden factor because sanctions were imposed only upon the comment the judge “had considered” all of the briefing submitted by the parties. That sufficed, because “[w]ife cites no authority for the proposition that a sanctions order under Family Code section 271, subdivision (a) must expressly state that the court considered whether the award will impose an ‘unreasonable financial burden’ on the party against whom it is imposed.” (Slip Opn, at p. 17.)

Civil Rights/Sanctions: Federal Court of Appeals Provides Guidance on When Fees Should Be Awarded Against Losing Civil Rights Plaintiffs

 

First Circuit Finds Excluded Trial Evidence Could Be Used to Determine Reasonableness of Suit, Reversing Fee Award; Reviewing Court Also Scaled Down Sanctions Against Plaintiffs’ Attorney.

      In a civil rights political discrimination case, a district judge granted the defendants’ motion for judgment as a matter of law after a 15 day trial, in a ruling adverse to suing public employees. Plaintiff officers were then hit with an attorney’s fees award of $194,808 in favor of defendant mayor when the district judge found the suit was groundless and unreasonable. The district judge also ordered plaintiffs’ attorney to pay a third of the fee award ($64,936) for vexatious trial conduct under 28 U.S.C. § 1927, reducing the fee award against the plaintiffs to $129,872. The First Circuit, in Lamboy-Ortiz v. Ortiz-Velez, No. 09-1640 (1st Cir. Dec. 17, 2010), reversed the fee award against plaintiffs and scaled back the sanctions award against plaintiffs’ attorney.

     Fee Award

     The major problem with the district judge’s approach was putting too much weight on the ultimate failure of plaintiffs’ claims and ignoring excluded trial evidence that showed the reasonableness of the claims. Because the reasonableness compass focuses on circumstances existing at the time the complaint was filed, the fee order contravened the “non-hindsight” test of Christiansburg Garment Co. v. EEOC, 434 U.S. 412 (1978).

     Attorney Sanctions

     F.R.Civ. P. 11 was out as a basis for sanctions, because the “safe harbor” provisions were not satisfied and it only applies to misconduct in written papers filed with the district judge. The sanctions here were imposed for plaintiffs’ attorney’s trial conduct, meaning that they had to be gauged under 27 U.S.C. § 1927.

     Although finding that § 1927 has both compensatory and punishment purposes (agreeing with the Seventh and Tenth Circuit versus the punitive goal singularly latched onto by the Second, Third, Sixth, and Federal Circuits), the sanctions were justified given the trial misconduct at issue. However, it was the amount of the sanctions that troubled the First Circuit. It found that the nearly $65,000 amount was “outside the mainstream in this circuit,” reducing the sanction to $5,000. (The federal court of appeals also noted the earlier sanctions would impose an unjustifiable hardship on plaintiff’s attorney, who operates a small law office with his son--a rationale we would label the “pocketbook mitigation rule.”)

Sanctions: Vexatious Litigant Does Not Need Prefiling Permission When Represented By Counsel In A Case.

Fifth District So Holds.

     In Flores v. Georgeson, Case No. F059173 (5th Dist. Jan. 10, 2011) (certified for publication), the Fifth District held that a vexatious litigant does not need to satisfy the CCP § 391.7(a) permission-prefiling requirement when the litigant is represented by counsel in a case.

     The 3-0 decision was penned by Justice Detjen.

E-Discovery 2010: Sanctions Are Down For The First Time Since The 2006 F.R.Civ.P Amendments

Level of Culpability and Prejudice Are Still Key Factors Driving Sanctions Awards.

     Just as we are giving you our top 20 attorney’s fees decisional redux for 2010, Williams Mullen, a 300-attorney firm with offices in Virginia, North Carolina, D.C. and London, has posted a December 17, 2010 Alert that provides a nice summary of trends for 2010 in the area of e-discovery law and practice. We cherry pick some interesting trends that were traced by this firm in the Alert with respect to sanctions, which typically include reimbursement of attorney’s fees relating to e-discovery battles.

     E-discovery sanctions were sought and awarded in slightly fewer cases in 2010, the first dip since the 2006 e-discovery amendments to the Federal Rules of Civil Procedure. Of the 209 e-discovery opinions issued in 2010, sanctions were sought in 79 (35%) and awarded in 49 (62% of the cases in which sanctions were requested, or 23% of all e-discovery cases). This represents a decrease from 2009, where sanctions were sought in 42% of all e-discovery cases and were awarded in 70% of the cases in which they were requested (30% of all e-discovery cases). Fees and costs were the most common sanction, awarded in 60% of the cases involving sanctions. Terminating sanctions, adverse inferences, and counsel sanctioning decreased significantly in 2010, according to a chart presented by Williams Mullen in its Alert.

      The spoliator’s level of culpability resulting in a loss is an important factor in the sanctions area, although this is where sharp conflicts arise among different jurisdictions. (See discussions in Pension Comm. of the Univ. of Montreal Pension Plan v. Banc of America Securities, 2010 U.S. Dist. LEXIS 4546 (S.D.N.Y. Jan. 15, 2010) [District Judge Schiendlin]; Rimkus Consulting Grp. v. Cammarata, 2010 U.S. Dist. LEXIS 14573 (S.D. Tex. Feb. 19, 2010) [District Judge Rosenthal]; Victor Stanley, Inc. v. Creative Pipe, Inc., 250 F.R.D. 251, 2010 WL 3703696 (D. Md. Sept. 9, 2010) (Victor Stanley II) [District Judge Grimm].) However, the factor driving the outcome in most of the 2010 failure-to-preserve cases was the prejudice or harm to the aggrieved party.

     The Alert also has some other interesting discussions on e-discovery topics. We thank Williams Mullen for such a nice year end survey in this important area.

"Silent E" by Tom Lehrer

 

“Silent E” by Tom Lehrer

Family Law: A Two-Fer . . . No Abuse In Awarding Fees Under Family Code Section 271

 

Marriage of Yassin and Aboutaleb, Case No. B205958 (2d Dist., Div. 7 Dec. 8, 2010) (Unpublished)--Case #1.

     Ex-husband was ordered to pay $5,000 to cover ex-wife fees and expenses under Family Code section 271, which permits the trial court to award fees as a sanctions for uncooperative or cost producing conduct. Although the financial situation of each side must be considered, the lower court did not err based on the fact ex-husband had a real estate license, was obtaining some income from other real estate agents, was being supported by his family, and had improperly diverted income due him in order to reduce his support payments.

Marriage of Elgammal and Aboutaleb, Case No. B205957 (2d Dist., Div. 7 Dec. 8, 2010) (Unpublished)--Case #2.

     In this one, ex-husband was ordered to pay sanctions in the sum of $15,000 in attorney’s fees to his ex-wife. This, too, was ordered as a section 271 sanctions. No abuse of discretion occurred under the relevant facts, including ex-husband’s filing of false income/expense declarations (showing he had negative net worth when he had earned income), concealing assets from ex-wife in an effort to avoid paying child/spousal support, interfering with ex-wife’s relationship with and custody of the minor child, and making baseless allegations against ex-wife for inappropriate sexual conduct.

     Both decisions contrasted section 271 sanctions against fee awards under Family Code sections 2030 and 2032, which allow the trial court to award fees and costs based upon several factors, including the parties’ respective needs, income and ability to pay.

SLAPP/Sanctions: Sanctions To Winning In Pro Per Defendants Reversed

Defendant Was In Pro Per, So No Fee; CCP § 128.5 Did Not Provide Basis.

     In Skerston v. Newman, Case No. G043164 (4th Dist., Div. 3 Dec. 7, 2010) (unpublished), the good news for an in pro per defendant is that he won a SLAPP motion. The bad news is that in pro per defendants representing themselves usually cannot obtain SLAPP fees. However, the in pro per defendant here tried to gain compensation through a twist--he asked for sanctions under Code of Civil Procedure section 128.5. It worked--the trial court granted him filing fee sanctions recovery in the amount of $710.

     Well, the appellate court did not agree with the circumvention.

     CCP § 128.5 was defunct at the time of the order, and has been defunct with respect to actions filed on or after January 1, 1995. Instead, section 128.7, complete with safe harbor requirements, is the governing provision--a provision not complied with. Because the wrong section was considered and no real reason was given for the sanctions, the order had to be reversed on appeal. (Cf. Morin v. Rosenthal, 122 Cal.App.4th 673, 682-683 (2004) [due process violation to issue sanctions order without specifying the frivolous or dilatory conduct].)

     Skerston, a 3-0 decision, was penned by Acting Presiding Justice Bedsworth.

Sanctions: CCP § 128.7 Sanctions Of $24,324 Against Attorney Affirmed

 

Fourth District, Division 2 Agrees that Sanctions Could Not Be Imposed For Amended Complaint, But Found Attorney Waived Any Error.

     Here is an interesting nonpublished decision in the CCP § 128.7 area. Basically, the appellate court agreed with the merits of the appellant attorney’s argument, but affirmed because he had agreed to continue a sanctions motion such that any irregularities were cured in our reading of the decision.

     In Armstrong v. Oberg (Green), Case No. E049346 (4th Dist., Div. 2 Nov. 17, 2010) (unpublished), attorney representing a cross-complainant was not happy with getting hit with CCP § 128.7 sanctions of $24,324 (albeit a 25% reduction of the requested sanctions). He filed an appeal, but was unsuccessful based on his own stipulated conduct.

Discovery Sanctions: $52,600 In Discovery Sanctions Reversed On Appeal

 

Third District Finds Substantial Justification for Sanctioned Parties’ Position, Many of Which Involved Attorney-Client Privilege Concerns.

      Although involving a convoluted set of facts for which we will only give you the “Reader’s Digest” version, Truckee Carson Irrig. Dist. v. Sierra Pacific Power Co., Case No. C061004 (3d Dist. Nov. 9, 2010) (unpublished) does reinforce that appellate courts--even under the abuse of discretion standard--will reverse discovery sanctions when they feel they were unfair or there was “substantial justification” for the sanctioned parties’ positions.

     There, around $52,600 in total discovery sanctions were imposed on utility and water companies for not producing certain documents, although many were claimed as attorney-client privileged even after an asset sale resulted in a transfer of documents from one company to another. Beyond that, the rulings and recommendations of the trial court and discovery referee were incongruous in certain material respects. The upshot was that the appellate court could not sustain the discovery sanctions, even under the deferential abuse of discretion standard, given the convoluted state of the discovery proceeding and given the overall reasonableness of appellants’ positions throughout. Sanctions reversed.

Family Law/Discovery Sanctions: Attorney Sanctioned To Pay $1,650 In Discovery Sanctions Still Must Pay Them

Court of Appeal Did Not Condone Keeping OSC Contempt Hearing On Calendar With No Intent to Proceed.

     The next one is an object lesson, likely reinforcing that sanctions can follow from not showing professional courtesy--at the least.

     In Marriage of Booth, Case No. A127140 (1st Dist., Div. 1 Nov. 4, 2010) (unpublished), wife’s attorney in a child custody proceeding was sanctioned a total of $1,650 (some payable to an expert and some payable to the court) as a discovery sanction for keeping an OSC contempt hearing on calendar against an expert when there was no intent to go forward. Sanctioned attorney appealed, to no avail.

     The appellate court likely felt the lower court’s award was charitable, since a total of $8,330 in sanctions was requested. However, it found no justification for taking up calendar space and inconveniencing the court by not serving the contempt OSC or not taking the matter off calendar. Under the circumstances, the lower court was fully justified in sanctioning the attorney for “wasting everyone’s time.”

Discovery Sanctions: Over $1.9 Million In Fee Sanctions Reversed With Overturning of Terminating Sanctions Award

Second District, Division 3 Finds No Prior Predicate Discovery Order to Underpin Large Sanctions Award.

     This one is a whopper of a reversal . . . demonstrating that appellate courts will insist that large sanctions awards for discovery abuses be based strictly on predicate rulings required under the Discovery Act.

     Callan v. CRC Ins. Services, Inc., Case Nos. B206505 et al. (2d Dist., Div. 3 Nov. 2, 2010) (unpublished) involved a situation where a plaintiff was hit with hard sanctions for alleged misuse of the discovery process: defendant was awarded over $2.3 million in damages under a cross-complaint and plaintiff was hit with over $1.9 million in attorney’s fees as a result of the terminating sanctions ruling. Although a convoluted procedural and discovery history was involved, the nub of the lower court’s ruling was its perception that plaintiff failed to appear for depositions under certain stipulated discovery schedules filed with the court. However, no formal order was ever entered compelling plaintiff’s deposition attendance and testimony. Plaintiff appealed the substantial sanctions assessed against her. 

     Whopper.

Discovery Sanctions: Sanctions Against Attorney For Evasive RFA Response Affirmed On Appeal

Fourth District, Division 3 Reminds Us That Prior Motion to Compel Is No Precondition to Sanctions Request.

     This next case is not so much remarkable for the result, but for reminders on what should be done by litigators when responding to discovery requests.

     In Mallard v. Progressive Choice Ins. Co. (Kent), Case No. G042778 (4th Dist., Div. 3 Oct. 26, 2010) (unpublished), attorney was imposed with $1,090 in monetary sanctions for making an evasive RFA response on behalf of his client. Basically, attorney responded having no knowledge to respond to the request despite filing a verified complaint saying the request was indeed what happened. During the discovery hearing, attorney admitted he made a mistake, but the trial court was not persuaded because attorney did not try to correct the error during the meet and confer process. Attorney appealed the sanctions award.

     Justice Fybel, on behalf of a 3-0 panel of the Fourth District, Division 3, affirmed.

     Granting the motion to compel further responses was no abuse of discretion, much like the sanctions award. Trial judges have a range of penalties that they can impose for discovery abuses, especially making evasive responses to discovery under Code of Civil Procedure section 2023.030. In fact, an order upon a motion to compel further responses is not a necessary predicate to a sanctions motion under section 2023.030. (Tucker v. Pacific Bell Mobile Services, 186 Cal.App.4th 1548, 1561 (2010).) This case showed no misuse of sanctioning power, since the attorney did not even provide the factual basis for responding to the RFA as he did on behalf of the client.

E-Discovery Sanctions: Holy Smokes! Pay Attorney’s Fees For Spoliation Or Go To Jail!

Federal Magistrate Judge Issues Such An Order, Finding It To Be Within the Ambit of Civil Contempt Discovery Sanctions.

     Here is a very interesting e-discovery sanctions order fashioned by a federal magistrate who did more than enter a default judgment as to a liability on a copyright infringement count against corporate defendant and its president Mark Pappas, who was found to have pervasively and willfully violated several court orders to preserve and produce electronically stored information.

     U.S. Chief Magistrate Judge Paul W. Grimm , in Stanley v. Creative Pipe, Inc., 2010 WL 3530097 (D.Md. Sept. 9, 2010), took the unusual additional step of ordering that Mr. Pappas be imprisoned for 2 years unless he paid to Plaintiff the attorney’s fees and costs awarded as a result of ESI spoliation. Magistrate Judge Grimm found basis to levy this as a civil contempt sanction under Federal Rule of Civil Procedure 37(b)(2)(C).

     The opinion has a very scholarly discussion of the different states of mind relating to ESI spoliation, the success of different sanctions in various courts, and the bases for spoliation sanctions.

     BLOG FAVORITE QUOTE—In describing the paperwork that resulted from Plaintiff’s request to file the sanctions motion, the magistrate judge put it this way . . . “[it] resulted in filings and exhibits exceeding the Manhattan telephone directory in girth . . .”

Sanctions: Second Circuit Holds That FRCP 11 “Safe Harbor” Filing Requirements Are Reset With Filing Of New Amended Complaint

$113,667 Rule 11 Sanctions Award Against Plaintiffs and His Attorneys Falls as a Result.

     Although we do not venture out of California that often, here is an interesting recent decision about a vacated sanctions award under Federal Rules of Civil Procedure, Rule 11 that comes out of the U.S. Court of Appeals, Second Circuit.

     Lawrence v. Richman Group of CT LLC, __ F.3d __, 2010 WL 3583415 (2d Cir. Sept. 16, 2010) involved a Rule 11 sanctions award against plaintiff and his attorneys in the amount of $113,667. It was hinged upon a determination that plaintiff filed a second amended complaint without a reasonable basis in law and fact. The sanctions decision was vacated, reminding all federal court litigators that Rule 11” “safe harbor” filing requirements are strictly construed in many, many situations.

Family Law And Discovery: $9,000 Joint/Several Sanctions Award Against Ex-Wife and Her Attorney Reversed On Appeal

Fourth District, Division 2 Finds Substantial Justification for Motion to Quash Subpoenas

     Code of Civil Procedure section 1987.2 provides for an award of reasonable expenses and attorney’s fees to a party making or opposing a motion to quash a subpoena if his/her actions were made in bad faith or undertaken without substantial justification. Usually, the “substantial justification” part of the equation is key because it is very rare to have sufficient proof of bad faith.

     In Marriage of Nelson, Case No. E048975 (4^th Dist., Div. 2 Aug. 30, 2010) (unpublished), ex-wife and her attorney were jointly and severally sanctioned $9,000 by the lower court for bringing certain motions to quash subpoenas addressed to institutions holding the divorced parties’ accounts, motions which followed earlier rulings by which wife was ordered to reimburse $53,034 in community property funds used to fight a Marvin v. Marvin oral contract battle against husband (notwithstanding the absence of any fee shifting mechanism to reallocate fees).

Lee Marvin in Cat Ballou

     The appellate court reversed the $9,000 in subpoena sanctions because it found there was “substantial justification” in bringing the motions to quash. Specifically, the subpoenas were untimely and issued after the applicable discovery cutoff. Given the correctness of this timeliness challenge, it was error to assess sanctions against ex-wife and her attorney.

Sanctions: Litigants’ Attorney and Litigant Properly Sanctioned For Failure To Have A Person With Settlement Authority Participate In Court-Ordered Mediation

L.A. Local Rule, Based on CCP § 575.2(a), Authorizes Sanctions For Violation of Local Rules.

     If you are ordered to appear in a mediation, do it (obviously)! However, an attorney must make sure that he/she has a client representative with settlement authority when representing a corporate or public entity client present or on stand by for the mediation (or at least obtain permission to have the person attend telephonically if the person cannot personally attend). If not, you and your client could be sanctioned under applicable local superior court rules. And, the sanctions order will likely stick on appeal.

     An attorney and his clients in Ellerbee v. County of Los Angeles, Case No. B216848 (2d Dist., Div. 1 Aug. 27, 2010) (unpublished) were sanctioned jointly and severally in the amount of $6,194 for defendants’ failure to have someone with settlement authority participate in a court-ordered mediation. The defendants were public entities, and the sanctions were awarded to plaintiff’s attorney to cover the costs he incurred in preparing for and attending the mediation.

     Losing defendants appealed the sanctions award.

     No go, on appeal.

     L.A. Superior Court Local Rule 12.15 and CRC 3.894(a) require the attendance of a client representative with settlement authority on stand-by basis during the course of a mediation. In turn, Code of Civil Procedure section 575.2(a) authorizes sanctions for violation of local rules if the local rules authorize such a penalty. L.A. Local Rule 7.13 did just that, permitting the trial judge to impose sanctions for failure to comply with local rules, not to mention CRC 2.30(b) authorizing sanctions against a party and/or its attorney “for failure without good cause to comply with the applicable rules.

Thomas Worth, artist. 1883.  Library of Congress.

Discovery Sanctions: $2,500 Sanctions Award Reversed Because Nothing Showed Attorney Advised Client’s Failure To Appear At Deposition

Second District, Division 8 Believes Attorney Was Blameless Under the Circumstances.

     In Scarola v. Dedicated Talent Agency (Pettigrew), Case No. B220482 (2d Dist., Div. 8 August 13, 2010) (unpublished), attorney for an apparently uncooperative cross-complainant was sanctioned $2,500 after her client failed to appear for a deposition in New York (even though defense counsel asked for $18,000, with the sanctions also jointly imposed against cross-complainant). Attorney appealed, and won a reversal.

     The basis for sanctions was misuse of the discovery process under Code of Civil Procedure section 2023.030(a). However, under this ground, an attorney may only be penalized for advising disobedience, with the burden of proving that no such advice was given resting with the attorney. (Corns v. Miller, 181 Cal.App.3d 195, 200-201 (1986).) In fact, sanctions have been reversed in other cases where the facts demonstrated that the attorney tried to convince the client to submit to a particular discovery process. (See, e.g., Ghanooni v. Super Shuttle, 20 Cal.App.4^th 256, 261 (1993).) If the evidence shows an attorney is blameless, it is an abuse of discretion to impose sanctions against counsel. (Weinkauf v. Superior Court, 64 Cal.2d 662, 665 (1966).)

     The circumstances in Scarola showed that cross-complainant’s counsel did try to get her client to appear for the deposition in New York, and that defense counsel appeared to travel out for the deposition even though being warned that the client would not be present for a deposition. Obviously, the appellate panel believed that attorney was blameless, expressing the view that defense counsel should have promptly sought a protective order that the deposition be held in Los Angeles (where defense counsel practiced) or that cross-complainant pay defense counsel’s fees and expenses for traveling to New York. (Code Civ. Proc., § 2019.030(a), (b); Snyder v. Superior Court, 9 Cal.App.3d 579, 586 (1970) [statutory predecessor to § 2010(b)].) Also, the reviewing panel did not believe that attorney had to inform opposing counsel of any client control problems (although it was obvious that there were problems), because to do so would likely breach a lawyer’s ethical duty to keep confidential any communications with a client. (Slip Op., p. 10.)

     The end result was a reversal of the sanctions against attorney, although the sanctions remained against cross-complainant (who apparently did not appeal the order).

Sanctions: Longstanding Family Battle Draws Unusual “Order Of Shanda” As Sanctions By Bankruptcy Judge

Use of Yiddish Word in Order Found Appropriate for Family-Based Tragedy.

     Now we describe one of the most unusual (and amusing, but candid) sanctions orders entered by Judge Cristol in In re Herskowitz, 166 B.R. 764 (S.D. Fla. 1994).

     In this case, the judge entered an “Order of Shanda” that was inspired out of these events. Susan Chaney, debtor’s sister, asked for an award of sanctions against her sister for bringing a meritless motion for continuance of a hearing that followed in a case where the sisters and two other relatives had been engaged in 17 years of bitterly contested litigation. Debtor’s main basis for a continuance was that she had a cold, a ground found wanting by the judge after an exhaustive search of legal authority. The jurist noted that debtor Judith Herskowitz had a history of wanting to go forward with scheduled matters. However, Judge Cristol also observed that the litigation had been bitter between family members and that it was likely both sisters were entrenched in the battle, because it usually takes “two to tango.”

     The judge denied the continuance request and granted the sanctions request. With respect to sanctions, he ordered “that Ms. Herskowitz shall obtain and mail to Ms. Chaney, at least five days before Susan Chaney’s next birthday, a birthday card which contains the words “Happy Birthday Sister” and the signature of Ms. Herskowitz. The card shall not contain any negative, inflammatory or unkind matters but may contain an overture to family reconciliation and settlement.”

     As the judge explained in a footnote, “shanda” is Yiddish for shame. He noted that Yiddish was supplanting Latin as the spice of American legal argot, with “shanda” being entirely descriptive of what was at play in a controversy he dubbed as tragic in nature.

Costs and 998 Expert Witness Fees: Court Of Appeal Affirms Most Of Trial Court Decision Awarding Routine Costs, Denying Expert Witness Fees, and Denying Attorney’s Fees

First District, Division 5, Except for a $49 Adjustment, Tells Everyone to Go Home But For a Minor $1,000 Appellate Sanctions.

     Salvio Street, LLC v. Lee, Case Nos. A122408/A123080 (1^st Dist., Div. 5 July 29, 2010) (unpublished) is an interesting case, not just for the legal issues, but because it demonstrates how pragmatic appellate courts are when reviewing costs/fees issues after years and years of litigation. Yep, you guessed it—they affirm (with minor adjustments), reminding litigants that enough is enough. Or, as our post suggests, time for everyone to go home (if any house is remaining after the expenditure of costs and fees)!

     In this “long-running saga” over the ownership of certain real property in the Bernal Heights neighborhood of San Francisco (the appellate court’s words, not ours), Salvio Street sought to quiet title to the property, but an attorney representing two parties claiming an ownership in the property (Lien and Yen) actually claimed his own separate interest in the property based on a fee agreement with his two clients. Salvio Street won, with attorney found to have no interest in the property. Salvio Street was awarded $8,190.05 in costs (out of a requested $13,183.97), but was denied any award of attorney’s fees (out of a requested $176,470.75). [Salvio Street relied on the fees clause in the Woo-Lien-Yen Purchase Agreement, which was involved in a prior appeal in the long-running saga.] Salvio Street and attorney Lee both appealed.

 

                                                                                                       Sources:  Yahoo Maps – Satellite view (left); Wikipedia (right)

Sanctions: Coaching at a Deposition Leads to Monetary Sanctions . . .

But First District, Div. 5 Rules That Sanctions For Expenses Incurred Cannot Include Expenses of Taking Another Deposition.

     In a proposed class action, defendant deposed one of the plaintiffs.  Plaintiff’s counsel, J. David Franklin, wrote on a legal pad and showed it to his client, the deponent.  Counsel also instructed the deponent not to answer questions related to her standing to bring the action, and refused to permit defense counsel to question the deponent about the notes on the legal bad.  After the deposition, Mr. Franklin threw away the notes.  Defendants moved for sanctions against plaintiffs and Mr. Franklin.

     The trial court accepted the defense version of what occurred at the deposition, explaining:  “putting a note in front of a witness during a deposition and then telling the witness not to say what it is, it certainly has the objective appearance of being improper coaching.”  The trial court imposed sanctions in the amount of $7,500 pursuant to CCP section 2030.030.  (Note:  An order directing payment of monetary sanctions by a party or an attorney may be appealed if the amount exceeds $5,000).  Plaintiffs appealed.  Tucker v. Pacific Bell Mobile Services, A126077 (1st Dist., Div. 5 July 29, 2010) (certified for publication).    

Above:  Children playing in sandbox.  Tulare migrant labor camp.  March 1940.  Photographer:  Arthur Rothstein, 1915-1985.  Library of Congress.

Appeal Sanctions: Law Firm Pays $390,000 In Appellate Monetary Sanctions Relating To Ninth Circuit Appeal In Nicaraguan Banana Dispute With Dow Chemical

 

Appellants' Attorneys Are Reprimanded or Face 6-Month Suspensions from Ninth Circuit Practice.

     Quite a lot of news was generated about a dismissed case brought by some Nicaraguan plaintiffs about Dow Chemical relating to use of DBCP on banana plantations in Nicaragua. Nicaraguan plaintiffs appealed, with an appointed special master finding that monetary sanctions and attorney discipline was justified for the filing of a frivolous appeal based on a spurious Nicaraguan judgment. Plaintiff's law firm agreed to monetary sanctions of $390,000 under Federal Rules of Appellate Procedure 38 and 46 as well as 28 U.S.C. §§ 1912 and 1927.

     That brought the Ninth Circuit, in In re Girardi, Case Nos. 08-80090/03-57038 (9^th Cir. July 13, 2010) (for publication), to consider the appropriate discipline for four attorneys representing plaintiffs/appellants. The federal appellate panel decided that a formal reprimand was in order for one attorney, a 6 month suspension from practicing before the Ninth Circuit was appropriate for two attorneys, and a private reprimand for a junior associate who did write an internal memorandum questioning the appeal.

     Attached to the opinion is a scholarly report by Justice Tashima, who analyzed the different standard for and elements of appellate sanctions. So, be careful what representations you make before appellate courts and what appeals you prosecute when the facts are against you.

Costs: Government Entity Entitled To Award Of Routine Costs, Even If Verification Does Not Exactly Track The Statute

 

Government Entity Entitled to Filing Fees as Costs, and Supplemental Memorandum Was Appropriately Filed.

     The Fourth District, Division 3, in a tandem pair of decisions authored by Acting Presiding Justice Rylaarsdam, have confronted when governmental entities are entitled to recover filing costs even when no judgment is entered and that a costs memorandum does not have to exactly track the verification statute language to be valid in nature. The two cases are Hong v. Drake, Case No. G042565 (4^th Dist., Div. 3 June 29, 2010) (unpublished) and Hong v. Grant, Case No. G042769 (4^th Dist., Div. 3 June 29, 2010) (unpublished).

     There, governmentally sued defendants apparently obtained a dismissal of actions brought by plaintiff at the pleading stages. They sought either trial or appellate costs as the prevailing party in the overall disputes. However, defendants used the Judicial Council costs memorandum forms that contain costs verification language “to the best of my knowledge and belief” rather than CRC 3.1700(a)(1) language “to the best of his or her knowledge.” The trial court denied plaintiff’s motions to tax costs on various grounds, prompting an appeal by plaintiff.

Sanctions: $247,397.28 Fee and $10,808.76 Cost Awards Affirmed Against Attorney As Sanctions Under 28 U.S.C. § 1927 In Copyright Infringement Case

Ninth Circuit Finds Sanctions Were Warranted and Were Not Excessive in Nature.

     28 U.S.C. § 1927 allows a district judge to sanction an attorney “who so multiplies the proceedings in any case unreasonably and vexatiously” for those excess costs, expenses, and attorney’s fees reasonably incurred as a result of attorney’s conduct. Recklessness suffices under § 1927, but the district court must find there was bad faith. (B.K.B. v. Maui Police Dept., 276 F.3d 1091, 1107-08 (9^th Cir. 2002).) An open issue in the Ninth Circuit is whether this bad faith finding must be supported by clear and convincing evidence. (In re Lehtinen, 564 F.3d 1052, 1061 n.4 (9^th Cir. 2009.) I bet you readers might think the next case we review resolved this issue. Actually, you would be wrong, because the Ninth Circuit found that a substantial sanctions award under § 1927 was supported by clear and convincing evidence—dodging the open issue.

     In Lahiri v. Universal Music and Video Distribution Corp., Case No. 09-55111 (9^th Cir. June 7, 2010) (for publication), the district judge awarded defendants $247,397.28 in fees and $10,808.76 in costs under § 1927 for conduct in a lengthy copyright infringement action. This award was affirmed by a 3-0 panel.

     The main problem for losing attorney was that Indian copyright law clearly established his client (a composer) has no copyright interest in a movie score composed for compensation for a film company; the film company had the rights. Attorney did himself no good by citing to an immaterial concurring Indian Supreme Court opinion. The Ninth Circuit found bad faith could be inferred when attorney attempted to retain the district judge’s former law firm to defend him in an attempt to gain a recusal and an assignment to a new judge unfamiliar with the protracted history of his conduct in the litigation.

     What about the amount of the sanctions award? Not so much of a problem, either. The district judge drastically reduced the $894,539.44 fee/costs request based on apportioning work only to attorney’s client, correctly reduced 80% of block billing personnel’s work by 30%, and properly made an additional 10% across-the-board reduction for excessive/redundant work. (In so doing, the Ninth Circuit cited to two authorities: (1) for block billing, a California State Bar’s Committee Mandatory Fee Arbitration’s report indicating that block billing may increase time by 10% to 30% (Welch v. Metro. Life Ins. Co., 480 F.3d 942, 948 (9^th Cir. 2007)); and (2) for excessive billing, adoption of the 10% permissible, unexplained “hair cut” approach adopted in Moreno v. City of Sacramento, 534 F.3d 1106, 1112 (9^th Cir. 2008).

Family Law: Section 2031 Fee Denial Was No Abuse Of Discretion

 

Thirteenth Appellate Proceedings By Wife In Longtime Dissolution Action Ends in Affirmance.

     Marriage of Falcone and Fyke, Case No. H033619 (6^th  Dist. May 28, 2010) (unpublished) is the 13^th appellate proceeding initiated by wife, the respondent in a longtime marital dissolution action. Wife moved for a needs-based award of attorney’s fees under Family Code section 2031, a statute we have examined many times before in the Column “Family Law.” The problem is that the motion was a renewal of similar requests made several times earlier before a different family law judge. The new judge did not abuse her discretion in denying the request.

     Wife also raised a new statute as a basis for fee entitlement on appeal. However, the appellate court refused to consider the argument, observing that it had discretion to consider a new theory based on a pure question of law. (Resolution Trust Corp. v. Winslow, 9 Cal.App.4^th 1799, 1810 (1992).) It declined to consider the new theory.

     Finally, Husband moved for sanctions, arguing wife’s appeal was frivolous. The appellate court found that the appeal was without merit, but not quite clearly egregious enough to be frivolous in nature. Beyond that, the Sixth District had upheld a total of nearly $90,000 in previous sanctions awards against her, such that it could not find awarding additional sanctions would act as much of a deterrent.

FRCP Rule 11: Plaintiffs’ Withdrawal Of Claims By A Dismissal Without Prejudice, Through Service of A Motion to Amend Adding Other Claims, Satisfied Rule 11 Safe Harbor

Ninth Circuit So Holds in 2-1 Decision, Drawing a Sharp Dissent.

     Federal Rule of Civil Procedure 11(b) has a safe harbor by which a party may deflect exposure if it timely withdraws claims identified by the opponent within 21 days after service of the safe harbor request. At issue before the Ninth Circuit was this issue: whether plaintiffs properly withdrew challenged claims during the safe harbor period when they dismissed them without prejudice by serving a motion to amend that deleted the offending claims. The answer to that question drew very disparate conclusions by a panel of the Ninth Circuit Court of Appeals.

     In Sneller v. City of Bainbridge Island, Case No. 09-35056 (9^th Cir. May 25, 2010) (for publication), the majority, in an opinion authored by Circuit Judge Tashima, held that plaintiffs did not face sanctions, reversing a sanctions order entered by a district judge under both Rule 11 and 28 U.S.C. § 1927.

     The majority found that plaintiffs were not required to dismiss the withdrawn claims with prejudice and properly withdrew them through filing of the new motion to amend. (This occurs because a motion for leave to amend under Rule 15 constitutes an effective withdrawal of claims.) With respect to the new claims added to the motion to amend, the proper procedure for challenge was to file a new Rule 11 motion.

     The sanction under section 1927 was reversed because (1) the district judge erroneously imposed it against both counsel and client (even though the section only authorizes imposition of sanctions against counsel), and (2) the lower court made no finding that counsel acted with the purpose to unreasonably and vexatiously multiply the proceedings.

     Circuit Judge Tallman, in dissent, surveyed the past conduct of plaintiffs and found it to be intolerable, if not frivolous in nature. He believed that there was invited error, given that plaintiffs had even asked the district judge to rule on the Rule 11

motion—conduct inconsistent with claiming safety under the safe harbor provision. The dissent believed the majority took a more charitable view of the plaintiffs’ behavior than did the district judge who observed it firsthand, justifying an opinion that departed company with the majority’s rationale.

CCP § 128.7 Sanctions: $20,500 Family Law Sanctions Award Reversed For Failure To Support With Admissible Evidence In Timely Fashion

Fourth District, Division 3 Finds The Only Timely-Filed Declaration Was Devoid In Setting Forth The Attorney Work Performed Or Credible Fee Total to Support the Award.

     The next case teaches that, after service of the CCP § 128.7 “safe harbor” motion, if you then file the motion after noncompliance by the putatively sanctionable party/attorney, you must present admissible proof of the work actually performed and of the corresponding amount of fees for which sanctions are being sought.

     Marriage of Tang, Case No. G040994 (4^th Dist., Div. 3 Mar. 19, 2010) (unpublished) involved a situation where wife and her attorney were sanctioned for filing an independent civil action for breach of fiduciary duty when the law was clear that the action needed to be filed with the family law dissolution court. The family law judge sanctioned them $20,500 under Code of Civil Procedure section 128.7. Though there was no doubt that the conduct was sanctionable, an inadequacy of proof submitted by husband in support of the sanctions request necessitated a reversal of the award, ruled the Fourth District, Division 3 (in a 3-0 decision authored by Justice Fybel).

     To recover monetary sanctions, a moving party must submit admissible evidence in support of the amount of sanctions sought. The safe harbor provision of section 128.7(c)(1) does not prohibit the moving party from submitting such evidence at the same time as the moving papers or, at the very least, at the time of filing and service of reply papers. However, husband’s attorney, who submitted three declarations, filed the last two declarations in untimely fashion and without critical “penalty of perjury” language, even though the declarations were sufficiently detailed as far as supporting the amount of sanctions.

     Because the second and third declarations had to be disregarded, that brought Justice Fybel and his colleagues to see if the first declaration could underpin the sanctions award. It could not. Reason? The first declaration, though signed under penalty of perjury, failed to describe the work performed and to identify the attorney’s fees incurred for which sanctions were being sought. So, a lack of proof doomed the sanctions award, with both parties ordered to bear their own costs on appeal.

     For information on new and original Tang, click here.

Sanctions: CCP Section 128.7 Sanctions Of $20,468.06 Affirmed On Appeal

 

Fourth District, Division 2 Finds Summary Judgment Grant Did Not Divest Trial Court of Jurisdiction to Rule on Previously Served 128.7 Sanctions Motion.

     The next case reminds all litigators that some client control becomes necessary when a plaintiff contradicts the main theory of his/her complaint at a deposition. Sanctions frequently will result unless the complaint is withdrawn after a 128.7 “safe harbor” motion is served.

     In Umberger v. Mount Baldy Ski Resort, Case No. E048337 (4^th Dist., Div. 2 Mar. 18, 2010) (unpublished), plaintiff undermined the slope accident theory espoused in her complaint at a deposition, with her litigation attorney refusing to dismiss the complaint under a threat that ski resort would seek sanctions. Ski resort moved for summary judgment and, while the motion was pending for hearing, served (but did not file) the 128.7 sanctions under the “safe harbor” requirements. Only then did plaintiff’s attorney wake up, offering to dismiss the complaint for a cost waiver, an offer rejected by ski resort because of the summary judgment costs it had incurred.

     (BLOG OBSERVATION—Plaintiff’s counsel could have still withdrawn the complaint, but might have faced a routine cost bill—which would have been less painful than what occurred.) Plaintiff’s attorney failed to file any summary judgment opposition and had another attorney appear to argue at the SJ hearing, which all resulted in a granting of the motion. Then, Mount Baldy filed its 128.7 motion on a complaint false allegations theory, winning $20,468.06 against plaintiff’s attorney.

     Attorney’s appeal was unsuccessful. Defense counsel did serve the 128.7 “safe harbor” motion in timely fashion, serving it by mail but allowing 28 days for a response before filing the motion. Attorney primarily argued that the sanctions motion was moot after the summary judgment grant, but the appellate panel found that this was not a voluntary dismissal (the aim of the 128.7 “safe harbor” procedure in the first place) and that the trial court was not divested of jurisdiction to hear the sanctions motion. (Day v. Collingwood, 144 Cal.App.4^th 1116, 1126-1129 (2006).) The trial court also did not abuse its discretion in awarding sanctions, because plaintiff’s deposition testimony showed she stepped outside the delineated slope boundaries and assumed the risk of what happened next (collision with a tree resulting in facial injuries). Also, attorney’s failure to dismiss before ski resort ran up significant litigation expenses showed the sanctions was a proper penalty.

     BLOG UNDERVIEW—Successful defense counsel was none other than Joseph P. Collins, one of co-contributors Marc and Mike’s colleagues at Adorno Yoss Alvarado & Smith, who had the assistance of Mikel Glavinovich. Congratulations, Joe and Mikel, for following the proper 128.7 procedure and the appellate triumph.

In The News . . . . Update: $20,000 Sanctions Against Ms. Taitz Affirmed By Eleventh Circuit Court of Appeals.

     In our October 19, 2009 post, we reported on the $20,000 sanctions award imposed against Orly Taitz by U.S. District Judge Clay D. Land in one of the “birther” cases. We can now report that the Eleventh Circuit Court of Appeals affirmed the sanctions order, finding the arguments on appeal to be “unpersuasive” in nature in a short two-page decision.