GONZALO P. CURIEL, District Judge.
Before the Court is Defendant California Nurses Association/National Nurses Organizing Committee ("CNA")'s motion for attorney's fees. (Dkt. No. 29.) Plaintiff Fallbrook Hospital Corporation d/b/a Fallbrook Hospital filed an opposition and Defendant filed a reply. (Dkt. Nos. 37 & 38.) After a review of the briefs, supporting documentation and the applicable law, the Court DENIES Defendant's motion for attorney's fees.
Plaintiff Fallbrook Hospital operates an acute care hospital in Fallbrook, California. Defendant CNA represents employees working at Fallbrook Hospital and is a labor organization. On May 23, 2013, Plaintiff filed a complaint against Defendant seeking declaratory judgment that the parties agreed to submit any disputes related to their collective bargaining negotiations or the agreement to arbitration rather than to any outside entity or agency such as the National Labor Relations Board ("NLRB"). (Dkt. No. 1.) On May 30, 2013, Plaintiff filed a first amended complaint ("FAC") adding causes of action for breach of contract and specific performance. (Dkt. No. 3.) On June 24, 2013, Defendant filed a motion to dismiss for lack of jurisdiction and failure to state a claim. (Dkt. No. 6.) On September 23, 2013, the Court granted Defendant's motion to dismiss the first amended complaint and granted Plaintiff leave to amend. (Dkt. No. 10.) On October 15, 2013, Plaintiff filed a second amended complaint ("SAC") alleging breach of contract, specific performance and declaratory judgment. (Dkt. No. 11.) On November 5, 2013, Defendant filed a motion to dismiss for failure to state a claim. (Dkt. No. 12.) On February 19, 2014, the Court granted Defendant's motion to dismiss second amended complaint with leave to amend. (Dkt. No. 19.) On March 11, 2014, Plaintiff filed a third amended complaint ("TAC") for breach of contract, specific performance and declaratory judgment. (Dkt. No. 20.) On April 1, 2014, Defendant filed a motion to dismiss for failure to state a claim. (Dkt. No. 23.) On June 19, 2014, the Court granted Defendant's motion to dismiss the third amended complaint with prejudice. (Dkt. No. 27.) Judgment was entered in this case on the same date. (Dkt. No. 28.) On July 21, 2014, Plaintiff filed a notice of appeal. (Dkt. No. 31.)
On July 3, 2014, Defendant filed a motion for attorney's fees. (Dkt. No. 29.) Plaintiff filed an opposition on August 8, 2014. (Dkt. No. 37.) Defendant filed a reply on August 15, 2014. (Dkt. No. 38.)
There are three sources of authority to allow courts to sanction parties or their lawyers for improper conduct: "(1) Federal Rule of Civil Procedure 11, which applies to signed writings filed with the court, (2) 28 U.S.C. § 1927, which is aimed at penalizing conduct that unreasonably and vexatiously multiples the proceedings, and (3) the court's inherent power."
Defendant seeks an award of attorney's fees in the amount of $41,840.00 pursuant to the Court's inherent sanctioning power and pursuant to 28 U.S.C. § 1927. Defendant alleges that Plaintiff has acted in bad faith throughout this frivolous litigation and unreasonably multiplied the litigation. It argues that Fallbrook Hospital made numerous misrepresentations that are intentionally false and misleading. Plaintiff opposes and disputes Defendant's factual and legal allegations.
A court has the inherent power to assess attorneys' fees for "willful disobedience of a court order . . . or when the losing part has acted in bad faith, vexatiously, wantonly, or for oppressive reasons . . . ."
A specific finding of bad faith is required for inherent power sanctions while recklessness, without more, does not justify inherent power sanctions.
A party may demonstrate bad faith "by delaying or disrupting the litigation or hampering enforcement of a court order."
In one case, inherent sanctions were warranted where the party being sanctioned submitted misleading information to the court by omitting the second page of an exhibit to the verified complaint that would exonerate defendants from the wrongdoings alleged in the complaint and was done in bad faith since the page was available prior to the lawsuit being filed.
Misstatements of both fact and law can support sanctions based on the court's inherent power.
Defendant argues that Plaintiff's counsel filed a frivolous action which is demonstrated by Plaintiff changing the basis of its allegation of an "agreement" between Plaintiff and Defendant. Plaintiff's conduct was subject to an injunction proceeding in a related case,
Subsequently, in filing the complaint in this case, the CNA alleges Plaintiff changed its position and now argues that the alleged agreement was not based on a written agreement but rather an oral agreement reached during a phone conference between Don Carmody, Fallbrook Hospital's representative, and Jane Lawhon, CNA's legal counsel on April 12, 2012. (Dkt. No. 8, Carmody Aff. ¶ 9.) Then, the SAC alleged an oral collective bargaining agreement vesting an arbitrator with the sole and exclusive jurisdiction to resolve all disputes arising in connection with the CBA including the conduct of the parties during bargaining. (Dkt. No. 11.) Then in the third amended complaint, Plaintiff alleged an implied-in-fact contract to submit any disputes to arbitration. (Dkt. No. 27.)
The Ninth Circuit has held that there is nothing in the Federal Rules of Civil Procedure preventing a party from filing "successive pleadings that make inconsistent or even contradictory allegations."
In this case, while Plaintiff brought inconsistent allegations as to the creation of a legally enforceable agreement between Fallbrook Hospital and the CNA, the basis of its complaint has been consistent. Plaintiff alleges that the parties agreed on certain terms in April 2012 which included that the parties agreed to submit any unresolved disputes about compliance with or construction of the agreement to final and binding arbitration. Fallbrook Hospital acknowledges "while that there may be some debate as to the precise nature or terms of the parties agreement, there can be no reasonable dispute as to the existence of an agreement between Fallbrook and the Union." (Dkt. No. 37 at 20.) Plaintiff has filed successive complaints, with the Court's permission to amend, to present factual allegations to support a legally enforceable agreement.
Defendant disputes the facts of Plaintiff's allegations by presenting a declaration where Lawlon states that according to her phone records, she did not have a phone conversation with Mr. Carmody on or around April 12, 2012 and did not enter into an oral agreement relating to organizing or bargaining. (Dkt. No. 29-3, Lawhon Decl. 5, 6.) In opposition, Defendant presents Carmody's telephone bill showing that there was an incoming call on April 12, 2012 from the phone number for the Union's headquarters in Oakland, California. (Dkt. No. 37 at 95.) Defendant also presents other exhibits to support the existence of an agreement. The Court is not in a position to resolve factual disputes and the factual disputes reveal that Defendant has not established that Plaintiff acted in "bad faith." Therefore, Defendant has not made a showing of "bad faith" on the part of Plaintiff in filing the complaint and successive pleadings.
In addition, Defendant alleges that Fallbrook Hospital's counsel accused defense counsel of "a surprising lack of candor." (Dkt. No. 8 at 7:5-8.) The CNA alleges that this comment in Fallbrook Hospital's opposition brief was disparaging the professional ethics of CNA's counsel which is prohibited in the California Bar Association's Rule of Professional Conduct 5-200 and in violation of Local Civil Rule 83.4(a)(2)(a).
Fallbrook Hospital's statement concerning "a surprising lack of candor" concerned the fact that the CNA failed to reference in its motion to dismiss that the FAC is based on an oral CBA and not a written agreement. The Court does not find that "a surprising lack of candor" constitutes disparaging conduct subject to sanctions.
Accordingly, the Court DENIES Defendant's motion for attorney's fee pursuant to the Court's inherent sanctioning power.
On the same basis, Defendant also moves for attorney's fees under 28 U.S.C. § 1927 which provides:
28 U.S.C. § 1927. District courts have discretionary authority "to hold attorneys personally liable for excessive costs for unreasonably multiplying proceedings."
Sanctions under § 1927 are warranted when attorneys file repetitive motions or generate an extraordinary volume of paperwork in the case.
In another case, sanctions under § 1927 were imposed because counsel knowingly presented to the Ninth Circuit that the Dole Food company was named in the Judgment, when in fact it was not.
Even under the standard pursuant to 28 U.S.C. § 1927, the Court concludes that Fallbrook Hospital did not multiply the proceedings unreasonably or vexatiously. While Fallbrook Hospital filed four complaints, the Court granted it leave to amend three of them. Once opportunities to amend the complaint failed, the Court dismissed the case with prejudice. Therefore, Plaintiff's counsel did not "vexatiously multiply the proceedings."
Defendant filed a request for judicial notice as to an affidavit filed in the related case of
Courts may take judicial notice of documents filed in other court proceedings.
Based on the above, the Court DENIES Defendant's motion for attorney's fees. The hearing date set for
IT IS SO ORDERED.