United States District Court, N.D. California
ORDER GRANTING MOTIONS TO SEAL AND GRANTING IN PART
PLAINTIFF’S MOTION FOR SANCTIONS RE: DKT. NO.
MARIA-ELENA JAMES United States Magistrate Judge.
16, 2016, Plaintiff GMYL, L.P. (“Plaintiff”)
filed a Motion for Sanctions against Defendant Peter Coppola
Beauty LLC (“Defendant”), asking Defendant and
its counsel be sanctioned for conduct that occurred during a
settlement conference conducted by the undersigned. Dkt. No.
92. Defendant filed an Opposition (Dkt. No. 93-3), which it
moved to file under seal (Def.’s Mot. to Seal, Dkt. No.
93). Plaintiff filed a Reply (Dkt. No. 97), portions of which
it also moved to file under seal (Pl.’s Mot. to Seal,
Dkt. No. 96). This Order addresses both parties’
Motions to File Under Seal, as well as Plaintiff’s
Motion for Sanctions. Having considered the parties’
arguments and the relevant legal authority, the Court
GRANTS both Motions to Seal and
GRANTS IN PART and DENIES IN
PART Plaintiff’s Motion for Sanctions.
Motions to Seal
moved to seal its opposition to the Motion for Sanctions
(“Opp’n”) and the Declaration of Michael B.
Chesal (“Chesal Decl.”) in support of same. Dkt.
No. 93. The Motion to Seal is premised on ADR Local Rule
7-4(a), which prohibits disclosure of confidential
information from a settlement conference. Local Rule 7-4(a)
defines “confidential information” as “the
contents of any written settlement conference statements,
anything that was said, any position taken, and any view of
the merits of the case expressed by any participant in
connection with any settlement conference.”
Id. Plaintiff moved to file portions of its
reply brief under seal on the same ground. Dkt. No. 96. The
materials the parties seek to file under seal fall within the
definition of “confidential information”
articulated in ADR Local Rule 7-4(a). Given the broad
prohibition on disclosing confidential information connected
to settlement conferences, there is good cause to file the
documents under seal. See Pintos v. Pac. Creditors
Ass’n, 605 F.3d 665, 678 (9th Cir. 2010)
(“good cause” standard applies when parties seek
to seal materials filed in connection with non-dispositive
motions); L.R. 79-5(b). The parties’ requests for a
sealing order therefore are granted.
Plaintiff’s Motion for Sanctions
have the inherent authority to issue sanctions for “(1)
willful violation of a court order; or (2) bad faith.”
Evon v. Law Offices of Sidney Mickell, 688 F.3d
1015, 1035 (9th Cir. 2012) (citing Fink v. Gomez,
239 F.3d 989, 991-93 (9th Cir. 2001)); see also Chambers
v. NASCO, Inc., 501 U.S. 32, 40-46 (1991) (courts may
impose monetary sanctions “for willful disobedience of
court order” in order to deter abuse of judicial
process; moreover, “a court may assess attorneys’
fees when a party has acted in bad faith, vexatiously,
wantonly, or for oppressive reasons.”). Bad faith
conduct includes interfering with the enforcement of a court
order. See Siebert v. Gene Security Network, Inc.,
2014 WL 5808755, at *2 (N.D. Cal. Nov. 6, 2014) (citing
Chambers, 501 U.S. at 46).
order scheduling the settlement conference, the Court
explicitly required lead trial counsel and, for any party who
is not a natural person, “the person(s) with
unlimited authority to negotiate a
settlement, ” to attend a settlement conference
beginning at 10:00 a.m. on May 17, 2016. Scheduling Order,
Dkt. No. 54 at 1-2 (emphasis in original); see also
ADR L.R. 7-3(a). The Scheduling Order emphasized
“[p]arties may only be excused from attending the
settlement conference in person upon written authorization
from Magistrate Judge James. Any such request must be filed
as a motion and proposed order at least 14 days in advance of
the conference.” Id. The Court also informed
the parties that it is “not unusual” for a
conference to last upwards of three hours. Id. at 1.
parties and their attorneys appeared for the settlement
conference. According to defense counsel, “[a]round
1:30pm, when it appeared that the parties were at an impasse,
[Defendant’s corporate representative] Mr. Davidson
informed me that because the parties could not reach an
agreement he did not believe it was necessary to reschedule
his return flight to New York and Mr. Davidson left for the
airport.” Chesal Decl. ¶ 5. Neither Mr. Davidson
nor his counsel informed the Court of Mr. Davidson’s
unilateral decision before he left for the airport, much less
sought permission from the Court to be excused from the
settlement conference. Defense counsel represented to the
Court and to Plaintiff that Mr. Davidson had left him with
full authority to settle “so long as Plaintiff agreed
with certain specified use restrictions with respect to the
PETER COPPOLA mark.” Id. ¶ 6. Thus,
Defendant’s counsel did not have “unlimited
authority” to negotiate the settlement, but was bound
by certain parameters imposed by his now-absent client. An
hour or so later, the parties reached an agreement and
executed a settlement term sheet summarizing the general
terms of settlement. Id. ¶ 7. Counsel for
Defendant offered a clarification on the record regarding the
terms. Id. ¶ 9. The parties then spent several
more weeks negotiating the settlement before entering into a
stipulated order of dismissal. See Dkt. No. 99.
Davidson’s unilateral and unexcused decision to leave
the settlement conference (1) constitutes a violation of this
Court’s Scheduling Order, and (2) was in bad faith.
Allowing Mr. Chesal to continue negotiations when he did not
have unlimited authority to bind his client
did not cure the violation.
to its inherent authority, the Court accordingly sanctions
Mr. Davidson in the amount of $2, 760, the fees Plaintiff
incurred at the May 17, 2016 settlement conference after Mr.
Davidson’s departure. The Court DENIES Plaintiffs
request to recover the $14, 078 in fees it incurred in
negotiating and finalizing the terms of the settlement
agreement thereafter. The Court also DENIES Plaintiffs
request to sanction Defendant’s counsel pursuant to 28
U.S.C. § 1927.
IS SO ORDERED.