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Wilson v. PFS

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA


March 20, 2008

RONALD WILSON, PLAINTIFF,
v.
PFS, LLC DBA MCDONALD'S # 23315; PFS CO. INC.; MCDONALD'S MANAGEMENT CORPORATION, DEFENDANTS.

The opinion of the court was delivered by: Hayes, Judge

ORDER DENYING DEFENDANTS' MOTION FOR ATTORNEYS FEES, COSTS, AND SANCTIONS (Doc. # # 85) AND DEFENDANTS' REQUEST FOR JUDICIAL NOTICE (Doc. # 99)

Pending before the Court are Defendants' motion for attorneys fees, costs, and sanctions (Doc. # 85) and request for judicial notice (Doc. # 99). The Court finds these matters suitable for submission on the papers and without oral argument pursuant to Civil Local Rule 7.1(d)(1).

FACTUAL & PROCEDURAL BACKGROUND*fn1

On October 24, 2005, Plaintiff Ronald Wilson visited Defendants' McDonald's restaurant in San Marcos, California. Plaintiff resides in Dixon, California, approximately 500 miles from Defendants' restaurant. During his visit to Defendants' restaurant, Plaintiff made at least one purchase. On December 26, 2005, Plaintiff visited Defendants' restaurant a second time to perform an Americans with Disabilities Act access survey.

On January 19, 2006, Plaintiff sent a letter to Defendants stating that Plaintiff encountered access barriers during his visit to Defendants' McDonald's restaurant. Plaintiff further stated that Defendants' restaurant was in violation of state and federal access laws, and requested that Defendants respond within ten days of the letter's receipt. On January 27, 2006, and March 22, 2006, Defendants responded to Plaintiff's letter in writing, and advised Plaintiff that Defendants had engaged an accessibility consultant and would correct any access barriers. Plaintiff did not respond to or acknowledge either of Defendants' written responses.

On May 11, 2006, Plaintiff filed the Complaint in this matter, asserting a federal Americans with Disability Act (ADA) claim as well as California state law claims against Defendants. (Doc. # 1). Specifically, Plaintiff asserted that he encountered physical and intangible barriers at Defendants' McDonald's restaurant which denied Plaintiff the ability to use and enjoy the restaurant in violation of federal and state law. (Doc. # 1).

On July 3, 2006, Defendants made a Rule 68 Offer of Judgment whereby Defendants agreed to bring Defendants' McDonald's restaurant into compliance with disability laws. On July 5, 2006, Plaintiff rejected the offer. On July 14, 2006, Defendants moved to dismiss Plaintiff's Complaint for lack of subject matter jurisdiction and failure to state a claim. (Doc. # 7). On July 20, 2006, Defendants tendered a second Rule 68 Offer of Judgment. On July 26, 2006, Plaintiff rejected the second offer. On November 2, 2006, this Court denied Defendants' motion to dismiss. (Doc. # 25). On December 8, 2006, Defendants made a third Rule 68 Offer of Judgment. On December 12, 2006, Plaintiff rejected the third offer.

On January 28, 2007, Defendants filed a motion to dismiss Plaintiff's state law claims for lack of jurisdiction. (Doc. # 35). On May 31, 2007, the Court granted the motion to dismiss and dismissed Plaintiff's state law claims without prejudice. (Doc. # 57).

On April 3, 2007, Plaintiff filed a motion for summary judgment. (Doc. # 42). In April and early June of 2007, Defendants asked Plaintiff to withdraw the motion. On June 15, 2007, Plaintiff withdrew the motion. (Doc. # 62).

On June 22, 2007, Defendants moved for summary judgment on Plaintiff's federal ADA claim. (Docs. # 65, 66). On July 13, 2007, Plaintiff filed a cross-motion for summary judgment on the ADA claim. (Doc. # 68). On August 6, 2007, Plaintiff conceded that there were no longer ADA violations at Defendants' restaurant and that Plaintiff lacked standing. (Doc. # 78).

On August 22, 2007, this Court issued an Order granting Defendant's motion for summary judgment and denying Plaintiff's motion for summary judgment. (Doc. # 80). In granting summary judgment, the Court relied upon Plaintiff's concession that all of the ADA violations had been remedied and that Plaintiff lacked standing to pursue the remaining ADA claim. (Doc. # 80).

On September 5, 2007, Defendants filed the pending motion for attorneys fees, costs, and sanctions. (Doc. # 85). On October 12, 2007, Plaintiff filed an opposition. (Doc. # 92). On October 22, 2007, Defendants filed a reply. (Doc. # 93). On March 3, 2008, Defendants requested that this Court take judicial notice of an Order filed on February 29, 2008, in Wilson v. Kayo Oil, et. al., 06CV1035 BEN (AJB), docket entry # 52. (Doc. # 99).

DISCUSSION

Defendants move for attorneys' fees, costs, and sanctions pursuant to 42 U.S.C. § 12205, 28 U.S.C. § 1927, and the Court's inherent power. Defendants contend that Plaintiff filed the Complaint and multiplied these proceedings in bad faith in an attempt to obtain a large monetary settlement. Specifically, Defendants contend that Plaintiff ignored Defendants attempt to settle this matter in bad faith and filed motions for summary judgment which Plaintiff knew were meritless at the time that they were filed.

Plaintiff contends that Defendants are not the prevailing parties in this matter and are therefore not entitled to attorney fees and costs. Plaintiff further contends that he rejected Defendants' settlement demands and offers of judgment because the settlement demands and offers of judgment did not adequately protect Plaintiff's interests. Plaintiff contends that he never filed a motion in bad faith, and notes that Defendants only corrected ADA violations at the McDonald's restaurant after Plaintiff brought this suit.

I. Attorney Fees & Costs Pursuant to the Americans with Disabilities Act

A. Standard for Awarding Fees Under 42 U.S.C. § 12205 of the ADA

"While attorney's fees generally are not recoverable, such fees may be awarded if authorized by enforceable contract or by applicable statute." Peters v. WinCo Foods, 320 F. Supp. 2d 1035, 1037 (E.D. Cal. 2004) (citing Alyeska Pipeline Serv. Co. v. Wilderness Soc'y, 421 U.S. 240, 257 (1975)).

The ADA provides that, "[i]n any action or administrative proceeding commenced pursuant to this Act, the court or agency, in its discretion, may allow the prevailing party, other than the United States, a reasonable attorney's fee, including litigation expenses, and costs . . . ." 42 U.S.C. § 12205. "[P]olicy considerations which support the award of attorneys fees to a prevailing plaintiff are not present in the case of a prevailing defendant." Christianburg Garment Co. v. Equal Employment Opportunity Commission, 434 U.S. 412, 418-19 (1978). Accordingly, "fees should be granted to a defendant in a civil rights action only 'upon a finding that the plaintiff's action was frivolous, unreasonable, or without foundation.'" Summers v. A. Teichert & Son, 127 F.3d 1150, 1154 (9th Cir. 1997) (citing Christianburg Garment Co., 434 U.S. at 421); see also Brown v. Lucky Stores, 246 F.3d 1182, 1190 (9th Cir. 2001); Peters, 320 F. Supp. 2d at 1037.

B. Analysis

In order to award fees and costs pursuant to 42 U.S.C. § 12205, the Court must first determine whether "the party seeking fees and costs is the prevailing party." Molski v. Mandarin Touch Restaurant, Case No. CV 04-0450 ER, 2005 U.S. Dist. LEXIS 40260, *2 (C.D. Cal. Dec. 9, 2005); 42 U.S.C. § 12205. The Supreme Court has "identified two judicial outcomes under which a party may be considered a 'prevailing party' for the purpose of awarding attorney's fees: (1) an enforceable judgment on the merits; or (2) a settlement agreement enforceable through a court-ordered consent decree." Perez-Arellano v. Smith, 279 F.3d 791, 793 (9th Cir. 2002) (citing Buckhannon Bd. & Care Home, Inc. v. West Virginia Dep't of Health & Human Resources, 532 U.S. 598, 604 (2001)). A "material alteration of the legal relationship of the parties" is "necessary" to permit an award of attorney's fees. Id. "In the Ninth Circuit, summary judgment on standing grounds is not considered a judgment on the merits entitling defendants to an award of attorney's fees and costs as prevailing parties under the ADA." Feezor v. De-Jesus dba 7-Eleven, 439 F. Supp. 2d 1109, 1111 (S.D. Cal. 2006); see also Molski, Case No. CV 04-0450 ER, 2005 U.S. Dist. LEXIS 40260, *2 (C.D. Cal. Dec. 9, 2005)

On August 22, 2007, the Court granted Defendants' motion for summary judgment and denied Plaintiff's motion for summary judgment. (Doc. # 80). The Court granted Defendants' motion for summary judgment because Plaintiff (1) conceded that Defendants' had corrected each of the alleged ADA violations at the McDonald's restaurant, and (2) admitted that he no longer had standing to pursue the suit. (Doc. # 80 at 2). The "doctrine of standing seeks to ensure that a plaintiff has sufficient stake in the controversy to merit her being the one to litigate it," and in order to have standing to pursue ADA injunctive relief, a plaintiff must show an "actual or imminent injury." De'Lil v. El Torito, No. C 94-3900-CAL, 1997 U.S. Dist. LEXIS 22788, *6 (N.D. Cal. Jun. 24, 1997). Once Defendants remedied the alleged ADA violations at Defendants' restaurant. Plaintiff could not show actual or imminent injury to support injunctive relief, and thus, Plaintiff lacked standing to pursue this action. As summary judgment on standing grounds is not considered a judgment on the merits entitling a defendant to status as the prevailing party, the Court concludes that Defendants are not the prevailing parties in this case. Feezor, 439 F. Supp. 2d at 1111; see also Perez-Arellano, 279 F.3d at 793.

The Court finds that, even if the Defendants were the prevailing party in this case, Defendants would not be entitled to attorney's fees because the Court cannot conclude that Plaintiff's action was "frivolous, unreasonable, or without foundation'" in light of the fact that Defendants remedied each of the violations alleged in the Complaint. Summers, 127 F.3d at 1154; Lucky Stores, 246 F.3d at 1190.

II. Sanctions Pursuant to 28 U.S.C. § 1927

A. Standard for § 1927 Sanctions

28 U.S.C. § 1927 provides that:

Any attorney or other person admitted to conduct cases in any court of the United States or any Territory thereof who so multiplies the proceedings in any case unreasonably and vexatiously may be required by the court to satisfy personally the excess costs, expenses, and attorneys' fees reasonably incurred because of such conduct.

In order for a Court to award sanctions pursuant to 28 U.S.C. § 1927, the Court must make a "finding of subjective bad faith." BKB v. Maui Police Dep't, 276 F.3d 1091, 1107 (9th Cir. 2002). "[R]ecklessness plus knowledge" of a filing's frivolousness will support sanctions pursuant to 28 U.S.C. § 1927. Id.; see also Fink v. Gomez, 239 F.3d 989, 993-94 (9th Cir. 2001). "Because [28 U.S.C. § 1927] authorizes sanctions only for the multiplication of proceedings, it applies only to unnecessary filings and tactics once a lawsuit has begun," and the Court of Appeals for the Ninth Circuit has "twice held that § 1927 cannot be applied to an initial pleading." In re Keegan Management Co., 78 F.3d 431, 435 (9th Cir. 1996) (internal citations omitted); see also Zaldivar v. Los Angeles, 780 F.2d 823, 831 (9th Cir. 1986).

B. Analysis

Defendants contend that Plaintiff's multiplied these proceedings unreasonably and in bad faith, and that Plaintiff's actions forced Defendants to expend significant resources unnecessarily. Specifically, Defendants contend that Plaintiff negotiated and communicated in bad faith, ignored Defendants' promises to remedy alleged ADA violations, and filed two motions for summary judgment which were meritless at the time of filing. Plaintiff contends that he was entitled to a court-backed injunction and did not have to rely on Defendants promises to remedy ADA violations. Plaintiff further contends that he did not negotiate and communicate in bad faith.

After reviewing the record in this case, the Court cannot conclude that Plaintiff acted in bad faith in this case. While it is true that Defendants represented on numerous occasions that they would remedy all alleged ADA violations, the Court finds that Plaintiff was not required to assume that the violations would be corrected based on Defendants' representations. The Court further finds that the parties' access experts disagreed as to whether there were ADA violations at Defendants' restaurant on May 21, 2007, and therefore the Court cannot conclude that Plaintiff's April 3, 2007, motion for summary judgment was frivolous or unreasonable. Finally, the Court cannot conclude that Plaintiff's July 13, 2007, motion for summary judgment was unreasonable or frivolous because Defendants have not established that Plaintiff knew that each of the alleged ADA violations had been corrected on the day that the motion was filed, and Plaintiff withdrew the motion less than a month later.

The Court concludes that sanctions are not warranted pursuant to 28 U.S.C. § 1927 because the Court cannot conclude that Plaintiff acted in bad faith or recklessly and with an improper purpose. Defendant's request for sanctions and fees pursuant to 28 U.S.C. § 1927 is DENIED.

III. Sanctions Pursuant to the Court's Inherent Power

A. Standard for Sanctions Pursuant to the Court's Inherent Power

A federal court has the "inherent power to levy sanctions, including attorneys' fees for 'willful disobedience of a court order . . . or when the losing party has acted in bad faith, vexatiously, wantonly, or for oppressive reasons . . . ." Fink, 239 F.3d at 991 (citing Roadway Express, Inc. v. Piper, 447 U.S. 752, 766 (1980)). A court may sanction a party pursuant to the court's inherent power if "a party acts for an improper purpose--even if the act consists of making a truthful statement or a non-frivolous argument or objection." Id. at 992. In order to sanction a party pursuant to a court's inherent power, the court must find "bad faith or conduct tantamount to bad faith," which could include an "attorney's reckless misstatements of law and fact" coupled with "an improper purpose." Id. at 994.

B. Analysis

As noted above, the Court cannot conclude that Plaintiff acted in bad faith or exhibited conduct which was tantamount to bad faith. Plaintiff's initial Complaint was not frivolous or unreasonable, and while Plaintiff ignored Defendants pre-Complaint letters, the Court cannot say that such conduct establishes bad faith. Though Defendants diligently worked to correct the alleged ADA violations and Plaintiff rebuffed Defendants' attempts to settle, the Court cannot conclude that Plaintiff acted in bad faith where Defendants ultimately cured each of the ADA violations alleged in the Complaint. For these reasons, and for those stated above with respect to sanctions pursuant to 28 U.S.C. § 1927, Defendants' request for fees and sanctions Plaintiff pursuant to the Court's inherent power is DENIED.

IV. Defendants' Rule 68 Offers of Judgment

Defendants made three Rule 68 Offers of Judgment in this case, one on July 3, 2006, one on July 20, 2006, and one on December 8, 2006. Defendants' first Rule 68 Offer of Judgment offered to pay the sum of $4,001 to Plaintiff in exchange for Plaintiff's dismissal of the entire Complaint with prejudice. (Doc. # 86, Ex. 4). Defendants' second Rule 68 Offer of Judgment offered to pay the sum of $6,001 to Plaintiff and to remedy all ADA violations alleged in the Complaint in exchange for Plaintiff's dismissal of the entire Complaint with prejudice. (Doc. # 86, Ex. 6). Defendants' third Rule 68 Offer of Judgment offered to remedy all ADA violations immediately and diligently in exchange for Plaintiff's dismissal of the ADA cause of action. Plaintiff rejected each of the Rule 68 Offers. On August 22, 2007, the Court granted Defendants' motion for summary judgment on the grounds that Plaintiff conceded that none of the ADA violations alleged in the Complaint remained at Defendants' restaurant. Defendants contend that they are entitled to the attorneys fees and costs which accrued after Plaintiff rejected Defendants' various Rule 68 Offers of Judgment.

FED. R. CIV. P. 68(d) provides that, "[i]f the judgment that the offeree finally obtains is not more favorable than the unaccepted offer, the offeree must pay the costs incurred after the offer was made." The Court's Judgment reads: "IT IS ORDERED AND ADJUDGED Defendants' motion for summary judgment is granted on the grounds that none of the violations alleged by Plaintiff in the Complaint currently exist at Defendants' McDonald's restaurant. Plaintiff's motion for summary judgment is denied as moot." (Doc. # 81). The Court concludes that Plaintiff, the offeree with respect to Defendants' Rule 68 Offers of Judgment, did not obtain judgment in its favor in this case.*fn2 Accordingly, the Court concludes that FED. R. CIV. P. 68 has no bearing in this case. See MRO Comm. v. AT&T, 197 F.3d 1276, 1280 (9th Cir. 1999) ("Federal Rule 68 is inapplicable in a case in which the defendant obtains judgment."); Amati v. City of Woodstock, 176 F.3d 955, 957 (7th Cir. 1999) ("Rule 68 bites only when the plaintiff wins but wins less than the defendant's offer of judgment."). The Court further notes that even if the judgment were construed to be in favor of Plaintiff, Defendants have not established that the judgment was not "more favorable than the unaccepted offer." FED. R. CIV. P. 68(d).

Defendants' motion for fees and costs pursuant to FED. R. CIV. P. 68(d) is DENIED.

V. Bill of Costs

On September 4, 2007, Defendants submitted a bill of costs. (Doc. # 83). The Court has previously concluded that Defendants are not the prevailing parties in this action, and therefore, Defendants' bill of costs is DENIED. See Fed. R. Civ. P. 54(d); Miles v. California, 320 F.3d 986, 988 (9th Cir. 2003); Lucky Stores, 246 F.3d at 1189-90.

VI. Request for Judicial Notice

On March 3, 2008, Defendants filed a request for judicial notice. (Doc. # 99). Specifically, Defendants request that this Court take judicial notice of an Order filed on February 29, 2008, in Wilson v. Kayo Oil, et. al., 06CV1035 BEN (AJB), docket entry # 52.

Courts may take judicial notice of their own records, and may also take judicial notice of other courts' proceedings if they "directly relate to matters before the court." Hayes v. Woodford, 444 F. Supp. 2d 1127, 1136-37 (S.D. Cal. 2006). However, a court may not take judicial notice of findings of fact from another case, nor may a court take judicial notice of any matter that is in dispute. See Wyatt v. Terhune, 315 F.3d 1108, 1114 & n.5 (9th Cir. 2003); Lee v. City of Los Angeles, 250 F.3d 668, 689-90 (9th Cir. 2001). Though it is not entirely clear, it appears that Defendants request judicial notice of the findings of fact in Wilson v. Kayo Oil, et. al., 06CV1035 BEN (AJB), docket entry # 52. See (Doc. # 99 at 2). The Court concludes that it cannot take judicial notice of findings of fact, and therefore, Defendants' request for judicial notice (Doc. # 99) is DENIED. See Wyatt, 315 F.3d at 1114.

CONCLUSION

Defendants' motion for fees and costs pursuant to 42 U.S.C. § 12205 (Doc. # 85) is DENIED. Defendants' motions for fees and/or sanctions pursuant to 28 U.S.C. §1927 or the Court's inherent power (Doc. # 85) is DENIED.

Defendants' Bill of Costs (Doc. # 83) is DENIED.

Defendants' request for judicial notice (Doc. # 99) is DENIED.

IT IS SO ORDERED.

WILLIAM Q. HAYES United States District Judge


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