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Swearingen v. Haas Automation

April 14, 2010

MARK SWEARINGEN DBA SEMCO MANUFACTURING, INDIVIDUALLY AND AS A REPRESENTATIVE OF OTHERS SIMILARLY SITUATED, PLAINTIFF,
v.
HAAS AUTOMATION, INC., CNG ASSOCIATES, INC., MACHINING TIME SAVERS, INC., HAI CAPITAL, INC., AND DOES 1 THROUGH 20, INCLUSIVE, DEFENDANTS.



The opinion of the court was delivered by: Honorable Barry Ted Moskowitz United States District Judge

ORDER DENYING MOTIONS FOR ATTORNEY'S FEES

Defendants Haas Automation, Inc., CNC Associates, Inc. and HAI Capital, Inc. ("Haas Defendants") and Defendant Machining Time Savers, Inc. ("MTS") have filed motions for attorney's fees. For the reasons discussed below, Defendants' motions are DENIED.

I. BACKGROUND

All Haas machines are manufactured to trigger a "lock out" alarm (displayed as an error code of "144") after 800 hours of logged use. (SAC ¶ 16.) If a Haas distributor does not provide the machine operator with an access code within the defined time period, the machine shuts down and will not operate. (Id.) According to Plaintiff, only if a customer is completely up to date on all payments and in compliance with all terms in the agreement(s) will Haas allow its distributors to provide the customer with an access code that will permit another 800 hours of use. (Id.) Plaintiff alleges that although he knew about the 800 hour lock-out mechanism (which was described in the machine's manual), he was never told that Defendants could refuse to give him the code as a means of ensuring collections.

Plaintiff, on behalf of himself and a class of similarly situated individuals, commenced this suit in the Superior Court of California, County of San Diego. On March 10, 2009, Defendants removed the case. Plaintiff's original complaint asserted the following claims:

(1) violation of the Comprehensive Computer Data Access and Fraud Act, Cal. Penal Code § 502; (2) violation of California's Unfair Competition Law, Cal. Bus. & Prof. Code § 17200; and (3) violation of the Fair Debt Collection Practices Act, 15 U.S.C. § 1692, et seq.

Subsequent to removal, Defendants filed motions to dismiss. These motions to dismiss were denied as moot due to Plaintiff's filing of a First Amended Complaint ("FAC") on April 16, 2009. Plaintiff's FAC eliminated the Fair Debt Collection Practices Act claim.

On June 5, 2009, Defendants filed a motion to dismiss Plaintiff's FAC. Shortly thereafter, Defendants also filed a motion to deny class certification. In an order filed on August 10, 2009, the Court granted Defendants' motion to dismiss. In the Order, the Court explained that Plaintiff's claims were deficient because, inter alia, Plaintiff had failed to allege that Defendants had ever refused to provide him with an access code, resulting in additional efforts on the part of Plaintiff to obtain the code or in the machine shutting down. Absent allegations that he was injured by Defendants denying him the code, Plaintiff had failed to state a claim under Cal. Penal Code § 502 or Cal. Bus. & Prof. Code § 17200. Accordingly, the Court dismissed the FAC for failure to state a claim but granted Plaintiff leave to file a Second Amended Complaint. The Court denied without prejudice Defendants' motion to deny class certification as premature.

On August 27, 2009, Plaintiff filed his Second Amended Complaint ("SAC"). Plaintiff's SAC added a few factual allegations but did not remedy the deficiencies identified by the Court in its August 10 order. Defendants filed a motions to dismiss the SAC, which was granted in an order filed on November 12, 2009. With respect to the Cal. Penal Code § 502 claim, the Court held that Plaintiff had failed to state a claim because he had not alleged that any interruption in the operation of his machine was due to Defendants denying him the code because he was behind in payments. The Court also held that Plaintiff lacked standing to bring a § 17200 claim because he had failed to allege that he suffered injury as a result of the alleged unfair/unlawful actions -- i.e., that he had to make special or additional efforts to obtain the code because Defendants denied or threatened to deny Plaintiff the code because he was not current on payments.

The Court dismissed the SAC. However, the Court granted Plaintiff leave to file a motion for reconsideration on or before November 23, 2009, if Plaintiff in fact requested the access code from a defendant and the defendant refused to provide it. Plaintiff did not file a motion for reconsideration, and judgment was entered on December 1, 2009.

II. DISCUSSION

The Haas Defendants and MTS have filed motions for attorney's fees in the aggregate amount of approximately $130,000. As discussed below, the Court holds that Defendants are not entitled to the recovery of attorney's fees under statute or contract.

A. Cal. Penal Code § 502(e)(2)

California law governs whether Defendants have a right to recover their attorney's fees. MRO Communications, Inc. v. American Tel. & Tel. Co., 197 F.3d 1267, 1281 (9th Cir. 1999). California law provides for the recovery of attorney's fees when authorized ...


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