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In re Hydroxycut Marketing and Sales Practices Litigation

United States District Court, S.D. California

March 3, 2014

IN RE HYDROXYCUT MARKETING AND SALES PRACTICES LITIGATION
v.
IOVATE HEALTH SCIENCES GROUP, INC., et al., Defendants. ANDREW DREMAK, on Behalf of Himself, All Others Similarly Situated and the General Public, Plaintiff,

ORDER DENYING APPLICATION FOR ORDER TO SHOW CAUSE RE: SANCTIONS AND OTHER RELIEF

BARRY TED MOSKOWITZ, Chief District Judge.

Plaintiff Andrew Dremak has filed an application for an order show cause re: sanctions and other relief against Christopher Bandas and Darrell Palmer. For the reasons discussed below, Plaintiff's application is DENIED.

I. BACKGROUND

On March 22, 2013, Darrell Palmer filed Objections on behalf of Objectors Tim Blanchard and Sasha McBean. According to Mr. Palmer, Mr. Blanchard was referred to him by attorney Christopher Bandas, who is located in Corpus Christi, Texas. On May 29, 2013, Mr. Palmer filed a motion to withdraw as attorney for Mr. Blanchard and Ms. McBean, which the Court granted on May 30, 2013. Kendrick Jan stepped in as counsel of record for Sasha McBean. No new attorney entered an appearance for Mr. Blanchard.

After holding an evidentiary hearing, the Court struck the objections of Ms. McBean and Mr. Blanchard on the ground that they lacked standing. (09md2087-Doc. No. 1711.) During the evidentiary hearing, David Reid, whose firm was hired by the Iovate Defendants to approach the Objectors' attorneys, testified that when he called Mr. Palmer to find out what his clients' objections to the class action settlement were, Mr. Palmer told Mr. Reid that he would have to speak to Mr. Bandas because it was Mr. Bandas's "show" and Mr. Bandas was the person best equipped to answer Mr. Reid's questions. (Tr. of Hr'g on June 20, 2013 (Doc. No. 1672), 37:10-24; 38:14-20.) When Mr. Reid contacted Mr. Bandas, Mr. Bandas assured Mr. Reid that he spoke for himself and Mr. Palmer and would make sure that Mr. Palmer would get his cut of any settlement payment. (Id. at 21:9-14.) In response to Mr. Reid's inquires regarding what the Objectors' issues with the proposed settlement were, Mr. Bandas told Mr. Reid that he didn't care about changing one word of the settlement. (Id. at 21:21-25.) Mr. Bandas explained that he could tie up the settlement for two to three years during the appeals process and that he was willing to wager that the settling parties would gladly pay him close to $400, 000 to make the objections go away. (Id. at 21:21-25; 22:1-13.)

In August 2013, in response to the Court's concerns regarding the proposed settlement's cy pres provisions, the parties amended their Stipulation of Settlement and expanded the class to include personal injury plaintiffs. A Supplemental Class Notice was sent out and the Final Approval Hearing was scheduled for October 22, 2013. Before the Final Approval Hearing, Mr. Blanchard and Ms. McBean filed new objections. Fatima Dorego also filed an objection. Mr. Palmer subsequently filed a Notice of Appearance on behalf of Ms. Dorego.

Class Counsel filed a response to the new Objections. (Doc. No. 1694.) In their response, Class Counsel alleged that it appeared that the signatures of Mr. Blanchard and Ms. Dorego on various documents had been forged. Mr. Oleksow, a certified Forensic Document Examiner, opined that Blanchard's signature on the March 22, 2013 declaration filed in support of his first objection was written by a different writer than any of the three Blanchard signatures submitted in connection with his second objection. (Oleksow Decl. (Doc. No. 1694-3) ¶ 14.) Oleksow also observed that the signature on the declaration filed in support of Blanchard's second objection "is written slowly and deliberately with hesitation, pen lifts and termor in the line flow." (Oleksow Decl. ¶ 16.)

Mr. Oleksow also compared the signature of Ms. Dorego on her claim form in this case and her purported signature on a declaration filed in a different litigation in the District of New Jersey (Brody v. Merck). He observed: "Different styles are noted and no significant similarities are noted." (Oleksow Decl. ¶ 20.) However, due to an insufficient number of signatures for comparison purposes, Mr. Oleskow could not reach any definitive conclusion regarding identity. (Id.)

Responding to Class Counsel's allegations of forgery, Mr. Blanchard filed a notarized affidavit (Doc. No. 1705-1) in which he explained that he authorized Mr. Bandas and/or an employee of his firm to sign his name to certain documents, including his declaration in support of the first objection. Mr. Blanchard stated that he personally signed the other documents submitted in this case.

Ms. Dorego also filed a notarized affidavit (Doc. No. 1702). She declared that she personally signed the claim form in this case. As for the signature on the declaration filed in Brody v. Merck, Ms. Dorego explained that she gave permission for someone else to sign her name because she was traveling that day.

At the final approval hearing, the Court ordered Ms. Dorego to show cause why her objection should not be stricken for lack of standing. (Tr. of Hr'g on October 22, 2013 (Doc. No. 1714), 23:25-24:1.) Mr. Palmer informed the Court that Ms. Dorego would not appear at any evidentiary hearing regarding standing. (Id. at 25:14-18.) Consequently, the Court struck Ms. Dorego's objection. (Id. at 26:2-12.) The Court also struck the objections of Mr. Blanchard and Ms. McBean for lack of standing. (Doc. No. 1711.) At the end of the final approval hearing, the Court set a schedule for briefing regarding whether the Court should issue an order to show cause for Rule 11 sanctions or other types of sanctions against Mr. Bandas, Mr. Palmer, and/or anyone else.

II. DISCUSSION

Plaintiff Andrew Dremak requests that the Court issue an Order to Show Cause why Mr. Bandas and Mr. Palmer should not (1) be referred to the United States Attorney's Office; (2) be referred to the regulatory authorities of their respective state bar organizations; and (3) be sanctioned for violating Fed.R.Civ.P. 11. As discussed below, the Court denies Plaintiffs' request because it is doubtful whether the ...


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