STANLEY A. BOONE, Magistrate Judge.
On December 2, 2015, Plaintiff filed a motion for sanctions against Defendants' counsel H. Ty. Kharazi ("Kharazi"). (ECF No. 43.) On January 12, 2016, Defendants filed an opposition to the motion for sanctions. (ECF No. 56.) On January 15, 2016, Plaintiff filed a reply. (ECF No. 57.) The hearing on the motion for sanctions took place on February 3, 2016. Tanya Moore appeared on behalf of Plaintiff and Kharazi appeared on behalf of Defendants.
For the reasons set forth below, the Court denies Plaintiff's motion for sanctions.
Federal courts are courts of limited jurisdiction which have the power to hear cases which Congress has conferred subject-matter jurisdiction upon them.
Courts also have inherent authority in limited circumstances. The Supreme Court has held that the Courts of justice have certain implied powers based on the nature of their institution, which cannot be dispensed with in a Court, because they are necessary to the exercise of all others.
In a federal civil case, the conduct of counsel may be statutorily sanctionable under Rules 11 and 37 of the Federal Rules of Civil Procedure and 28 U.S.C. § 1927. The Court has the power to require any attorney who so multiplies the proceedings in any case unreasonably and vexatiously to cover the excess costs, expenses and attorneys' fees incurred because of the unreasonable conduct pursuant to 28 U.S.C. § 1927.
Rule 37(b)(2) of the Federal Rules of Civil Procedure provides that if a party fails to obey an order to provide or permit discovery, the court may issue further just orders, which may include the imposition of sanctions upon the disobedient party, including dismissal of the action or proceeding in whole or in part. Fed. R. Civ. P. 37(b)(2)(A). "[T]he court must order the disobedient party, the attorney advising that party, or both to pay the reasonable expenses, including attorney's fees, caused by the failure, unless the failure was substantially justified or other circumstances make an award of expenses unjust." Fed. R. Civ. P. 37(b)(2)(C).
"An attorney is subject to Rule 11 sanctions, among other reasons, when he presents to the court `claims, defenses, and other legal contentions . . . [ not] warranted by existing law or by a nonfrivolous argument for the extension, modification, or reversal of existing law or the establishment of new law [.]"
The Court also has inherent power to sanction parties or their attorneys for improper conduct.
Here plaintiff is asking the court to refer defendants' counsel to the State Bar, admonish that this conduct is not appropriate and for attorney's fees. (ECF No. 43-1 at 22-23.) Since this request does not fall within the statutory confines of either Rules 11 or 37, the Court must determine whether the request falls within its inherent authority.
In exercising the inherent authority, the following Local Rules of the Eastern District of California and California State Bar are relevant to the issues in the instant motion for sanctions:
California State Bar Rules of Professional Conduct Rule 5-310:
As noted, Plaintiff seeks the following sanctions: (1) refer Kharazi to the State Bar for further investigation; (2) admonish Kharazi that if this conduct continues, he will be subject to disqualification from representing Defendants; and (3) monetary sanctions in the amount of Plaintiffs' attorneys' fees incurred in bringing and defending this motion in an amount to be determined subsequent to the Court's order on this motion. (ECF No. 43-1 at 22-23.)
Plaintiff argues that Kharazi is using intimidation and threats to achieve settlement in this action. Specifically, Plaintiff alleges that Kharazi has improperly offered to dismiss the state court lawsuit against Tanya Moore's son, Levinson, in exchange for settlement of this action. Plaintiff asserts that Kharazi is attempting to interfere with her representation of her client by improperly motivating her to recommend a settlement in this action to her client. Plaintiff claims that Kharazi stated that if the matter was dismissed, "[w]e assure you that we will not pursue any matters with the DSA against Mr. Levinson." Plaintiff asserts that this violates Rule 5-100 of the California Rules of Professional Conduct. Plaintiff argues that Kharazi threatened to report Tanya Moore to the State Bar of California if Plaintiff did not settle this case,
Plaintiff alleges that Kharazi has improperly offered to represent Lynn Moore, Plaintiff's wife and a witness for Defendants, in a dissolution action against Plaintiff. Plaintiff alleges that Kharazi's offer of free representation to Lynn Moore in the dissolution action against Plaintiff could result in affecting the testimony Ms. Moore would offer in this action.
Plaintiff alleges that Kharazi improperly required Tanya Moore to restrict her future right to practice law as a condition of settlement in this matter by requiring her to refuse future representation of other disabled clients in future disability access litigation against Kharazi's clients.
Plaintiff alleges that Kharazi made a threat to Tanya Moore during a break between scheduled depositions on September 3, 2015. Plaintiff points to the deposition transcript where Tanya Moore memorialized the conversation between herself and Kharazi. Plaintiff alleges that Kharazi stated that Tanya Moore should expect demonstrators at her house in Sanger that Saturday and that she would be receiving many knocks on her door within the next 60 days that would make her regret filing lawsuits against his clients.
Plaintiff argues that Kharazi revealed information about Tanya Moore's marriage and her former husband's retirement from the practice of law in order to harass Tanya Moore.
Plaintiff alleges that Kharazi uses subtle forms of intimidation and that he seeks to debase Tanya Moore because he does not approve of the type of law she practices. Plaintiff alleges that Kharazi refers to Tanya Moore as "woman" during their conversations, instead of using her full name, that Kharazi has told Tanya Moore that "all the Fresno attorneys and judges hate" her, and that email from Tanya Moore goes into "junk" mail. Plaintiff alleges that Kharazi interrupts Tanya Moore during their conversations, gets angry, and demands to set the agenda. Plaintiff also alleges that Kharazi invited Tanya Moore to pick up a check at his office, but then had an employee meet Tanya Moore outside of Kharazi's office.
Plaintiff alleges that Kharazi has acted inappropriately in a variety of ways during their communications outside of court proceedings. Parties and counsel have a duty to behave civilly and respectfully toward one another, and conduct to the contrary is sanctionable where it undermines the integrity of judicial proceedings. There is a line between zealous advocacy and improper behavior.
Plaintiff seeks referral of Kharazi to the California State Bar. If Plaintiff and Tanya Moore believe that opposing counsel has violated a California Rule of Professional Conduct, then they may report that conduct to the California State Bar, just as Defendants and Kharazi may report Tanya Moore to the California State Bar if they believe that Tanya Moore has violated a California Rule of Professional Conduct.
The Court notes that there is nothing before the Court that the alleged conduct by Kharazi affected the ability of the parties, and specifically Plaintiff, to file motions in this Court. In fact, the parties have had informal discovery disputes in this case and are litigating a motion for summary judgment before the assigned district judge. The undersigned's ability to decide informal discovery disputes was not impacted nor does the record support. Therefore, the alleged conduct has not impacted the parties' ability to litigate this action or this Court in managing and deciding it. If this were shown through factual support, then this Court notes that such facts may be an instance where this court would exercise its inherent authority when it comes to sanctioning conduct of counsel or a party outside of the federal rules or explicitly statutory reference.
Unfortunately, because of the conduct of both counsel in this case, the Court must note some additional basic points of law. The American judicial system of jurisprudence is commonly referred to as the "adversary system," but that description is not without limits and must not be taken literally by counsel when they act in case. The adversary system requires that the parties and their counsel conduct themselves and their case according to the rule of law, which includes the rules of ethics. Parties or counsel who act outside these confines signal to the Court, and possibly the opposing party, that their claim or defense is simply without merit. In exercising this inherent authority, the parties must be aware that this Court refuses to exercise "playground jurisdiction" over the parties and their counsel. Such antics as seen in this case only extend to hurt reputations of counsel with the public and with the Court and can result in reducing the credibility of attorneys who perform such antics when appearing before the Court.
Counsel are reminded that they must work together on this case consistent with the applicable law and the federal rules. Cooperation is clearly not occurring as evidenced by the communication between counsel as set forth in the instant motion. Even cases under the adversarial system are premised on cooperation. This Court is one of the busiest courts in the nation, and hence, should not be required to address such antics. It expects that counsel will be familiar with the Federal Rules of Civil Procedure and Evidence, this Court's Local Rules, and other applicable laws. Counsel are strongly encouraged to resolve their disputes independently. Future efforts at gamesmanship and unprofessional conduct as already exhibited in this case will not be tolerated.
While the Court recognizes its limited inherent authority and declines to exercise it here, this Court's ruling should by no means foreclose nor is it suggesting, any party or counsel from reporting such conduct on their own to the State Bar. The Court will not be the litigation tool nor the conduit on this occasion. However, the parties and their counsel are on notice that any future actions brought to the attention of the court of a similar nature, and which fall within the confines of its inherent authority as described above, may require the Court to exercise its limited authority, hold an evidentiary hearing, make findings and provide an appropriate remedy. With this is mind, counsel and the parties should conduct themselves in an effort to avoid an appearance which could subject them to future court action. Alternatively, vigorous prosecution or defense of one's claim or defense should not also equate to unethical conduct. Here endeth the lesson.
Based upon the allegations in the instant motion, which occurred outside of the courtroom, the Court elects to not hold an evidentiary hearing to delve into issues of credibility.
Accordingly, IT IS HEREBY ORDERED that Plaintiff's motion for sanctions is DENIED.
