The opinion of the court was delivered by: Marilyn L. Huff, District Judge United States District Court
ORDER DENYING DEFENDANT'S MOTION FOR SANCTIONS AND ATTORNEY'S FEES [Doc. No. 70]
On April 10, 2013, Defendant In-N-Out Burgers ("In-N-Out") filed a motion for sanctions and attorney's fees. (Doc. No. 70.) On April 29, 2013, Plaintiff A.J. Oliver filed a response in opposition to In-N-Out's motion. (Doc. No. 78.) On May 6, 2013, In-N-Out filed its reply. (Doc. No. 81.) On May 8, 2013, Plaintiff filed objections to In-N-Out's reply. (Doc. No. 84.) On May 7, 2013, the Court took the matter under submission. (Doc. No. 83.) For the reasons below, the Court denies In-N-Out's motion for sanctions and attorney's fees.
Plaintiff suffered a stroke 13 years ago and requires the use of a motorized wheelchair. (Doc. No. 28 ¶ 8.) Plaintiff alleges that he encountered several barriers at Defendant's restaurant that interfered with his ability to use and enjoy the amenities that were offered at the facility. (Id. ¶¶ 11-12.)
On March 30, 2012, Plaintiff filed a complaint against In-N-Out. (Doc. No. 1.) On October 24, 2012, Plaintiff filed a first amended complaint ("FAC") against In-NOut alleging causes of action for: (1) violation of the Americans with Disabilities Act of 1990 ("ADA"); (2) violation of the California Disabled Persons Act ("CDPA"), California Civil Code § 54; (3) violation of the Unruh Civil Rights Act ("the Unruh Act"), California Civil Code § 51; and (4) denial of full and equal access to public facilities, in violation of the California Health and Safety Code. (Doc. No. 28.)
On October 16, 2012, In-N-Out filed a motion for an order to show cause as to why sanctions should not be imposed on Plaintiff and his counsel. (Doc. No. 23.) In the motion, In-N-Out argued that Plaintiff had committed perjury and his counsel promoted his perjury. (Id. at 15-21.) Specifically, In-N-Out explained that Plaintiff stated in his complaint, in his discovery responses, and at his deposition that he visited the restaurant at issue on March 29, 2012, and produced in response to discovery requests a receipt from the restaurant for that date. (Id. at 1-5.) In-N-Out stated that surveillance video evidence shows that Plaintiff was not the person that obtained the receipt from the restaurant on March 29, 2012. (Id. at 5-6.) In-N-Out contended, therefore, that sanctions were appropriate. (Id. at 2, 10-15.)
In response, Plaintiff argued that his misstatements did not amount to perjury and that he mistakenly produced the March 29, 2012 receipt. (Doc. No. 29 at 2-3.) Plaintiff also stated that he had previously suffered a stroke and that he may have issues remembering the exact date he visited the restaurant. (Id. at 2.) In addition, Plaintiff explained that once his counsel realized Plaintiff's mistake, Plaintiff's counsel offered to dismiss the action or allow Defendant to take an additional deposition of Plaintiff. (Id. at 2-5.)
On November 26, 2012, the Court denied without prejudice In-N-Out's motion for an order to show cause. (Doc. No. 34.) The Court concluded that In-N-Out had failed to establish that Plaintiff committed perjury, and that Plaintiff's counsel was aware of the alleged perjury and promoted the perjury. (Id. at 2.) The Court stated that In-N-Out could continue to engage in discovery to support its allegations. (Id.) Since that Order, the Magistrate Judge quashed Plaintiff's subpoena for a witness, Doug Hubbard, on procedural grounds because it was issued by the wrong court. (Doc. No. 45 at 4-5.) In-N-Out was later unable to serve another subpoena on the witness. (Doc. No. 66 at 4.)
On March 7, 2013, Plaintiff filed a motion to dismiss the action for lack of subject matter jurisdiction due to lack of standing. (Doc. No. 49.) Along with his motion to dismiss, Plaintiff filed the declaration of Scottlynn Hubbard under ex parte seal detailing the circumstances that were the basis for his motion to dismiss. (Doc. No. 51.) On March 25, 2013, In-N-Out filed an opposition to Plaintiff's motion, arguing that the Court should deny the motion and sanction Plaintiff's counsel for its alleged fraudulent misrepresentations pursuant to 28 U.S.C. § 1927, Federal Rules of Civil Procedure 11 and 26, and the Court's inherent powers. (Doc. No. 66.) On March 26, 2013, the Court granted Plaintiff's motion to dismiss, and on March 27, 2013, the Court entered judgment in favor of In-N-Out and against Plaintiff. (Doc. Nos. 68, 69.)
I. In-N-Out's Motion for Sanctions
In-N-Out for the third time requests that the Court sanction Plaintiff and his counsel pursuant to 28 U.S.C. § 1927, the Court's inherent powers, and Federal Rules of Civil Procedure 11 and 26(g). (Doc. No. 70; see also Doc. Nos. 23, 66.)
28 U.S.C. § 1927 provides: "Any attorney . . . 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." Section 1927 sanctions must be supported by a finding of bad faith or recklessness. Lahiri v. Universal Music & Video Distrib. Corp., 606 F.3d 1216, 1219 (9th Cir. 2010). In re Keegan Mgmt. Co., Sec. Litig., 78 F.3d 431, 436 (9th Cir. 1996). "'Bad faith is present when an attorney knowingly or recklessly raises a frivolous argument, or argues a meritorious claim for the purpose of harassing an opponent.'" Id. The bad faith requirement sets a high threshold. Primus Auto. Fin. Servs. v. Batarse, 115 F.3d 644, 649 (9th Cir. 1997). Sanctions pursuant to section 1927 are also available for "recklessness when combined with an additional factor such as frivolousness, harassment, or an improper purpose." Fink v. Gomez, 239 F.3d 989, 994 (9th Cir. 2001).
Federal courts also have inherent power to impose sanctions against attorneys and parties for bad faith conduct in litigation. See Chambers v. NASCO, 501 U.S. 32, 43 (1991). Before a court may award sanctions under its inherent powers, the court must make an explicit finding that counsel's conduct constituted or was tantamount to bad faith. Mendez v. County of San Bernardino, 540 F.3d 1109, 1131 (9th Cir. 2008); see also Primus, 115 F.3d at 648 (explaining that a finding of bad faith is critical when a party requests that the Court use its inherent powers to engage in fee-shifting). "Because inherent powers ...