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Operating Engineers' Health and Welfare Trust Fund v. Central Valley Construction

United States District Court, N.D. California

December 9, 2019

OPERATING ENGINEERS' HEALTH AND WELFARE TRUST FUND FOR NORTHERN CALIFORNIA, et al., Plaintiffs,
v.
CENTRAL VALLEY CONSTRUCTION, Defendant.

          ORDER GRANTING MOTION FOR SANCTIONS Re: Dkt. No. 56

          KANDIS A. WESTMORE UNITED STATES MAGISTRATE JUDGE

         On August 27, 2019, Plaintiffs Operating Engineers' Health and Wealth Trust Fund, et al. filed a motion for sanctions against Defendant Central Valley Construction for failure to comply with Federal Rule of Civil Procedure 37.

         On December 5, 2019, the Court held a hearing, and after careful consideration of the parties' arguments and the applicable legal authority, for the reasons set forth below, GRANTS Plaintiffs' motion for sanctions.

         I. BACKGROUND

         On April 26, 2017, Plaintiffs filed this ERISA action to compel Defendant to comply with an audit of its payroll records for the period from October 29, 2014 through the date of inspection. Defendant retained Counsel David C. Johnston and filed an answer to the complaint on May 25, 2017. (Dkt. No. 8.)

         On July 17, 2017, the Court issued an order referring this case to mediation. (Dkt. No. 14.) On August 28, 2017, the parties participated in a pre-mediation conference call with mediator Geoffrey White, during which the participants concluded that a mediation date would be set after the parities had a further opportunity to meet and confer. (See Decl. of Michele R. Stafford, “Stafford Decl., ” Dkt. No. 58 ¶¶ 3-5.) Thereafter, Defendant contacted Plaintiffs' Auditor and scheduled an audit appointment for October 26, 2017. (Stafford Decl. ¶ 6.) Defendant provided Plaintiffs' Auditor with some of the documentation that was necessary to conduct the audit. Id.

         Plaintiffs requested additional documentation that the auditors advised was necessary to complete the audit. (Stafford Decl. ¶ 7.) Specifically, Plaintiffs allege that the Defendant has failed to provide its cash disbursements journal (or equivalent records) to Plaintiffs' Auditor. Id. Plaintiffs' counsel has detailed to Defendant's counsel what equivalent alternative documents can be provided. Id.

         On or about May 22, 2018, Plaintiffs propounded discovery on Defendant. (Stafford Decl. ¶ 8). The discovery requested information that would ordinarily be disclosed by an employer's cash disbursements journal. Id. No response to the discovery was received. Id. As such, Plaintiffs sent a detailed meet and confer letter to Mr. Johnston on or about August 2, 2018. (Stafford Decl. ¶ 9.) The discovery responses remain outstanding, and no additional information has been produced by Defendant. Id. In response to the meet and confer letter, Mr. Johnston responded that he would “forward the letter to his client.” Id. Plaintiffs also demanded that Mr. Johnston provide his availability for a meet and confer telephone conference pursuant to Judge Westmore's Standing Order. Id. No availability was provided. Id.

         Plaintiffs then demanded that a meet and confer take place telephonically in October 2018. (Stafford Decl. ¶ 10.) The meet and confer call occurred, and Mr. Johnston stated that he would work with his client to attempt to provide responses to the outstanding discovery. Id. Plaintiffs agreed to give Mr. Johnston additional time, but stated that a joint discovery letter brief would need to be filed if Defendant did not respond to the propounded discovery. Id.

         A joint discovery letter was filed on December 11, 2018. (Dkt. No. 33.) On December 20, 2018, the Court issued an order requiring that Defendant produce responses by January 10, 2019.[1](Dkt. No. 38; Stafford Decl. ¶ 11.)

         On March 12, 2019, the parties filed a joint request to continue the case management conference set for March 19, 2019. (Dkt. No. 40; Stafford Decl. ¶ 12). Mr. Johnston alleged that Defendant provided hundreds of pages of bank statements and paid checks to Plaintiffs' counsel to be delivered to the Auditor and that Defendant is/was gathering additional documents requested by the audit. (Dkt. No. 40 at 3.) Mr. Johnston further noted that he has been out of his office due to the serious medical condition of his wife and assisting his brother in a regimen of chemotherapy and radiation for Stage 4 esophageal cancer. Id. As a result, Judge Westmore continued the March 19, 2019 Case Management Conference and ordered Defendant to provide its discovery responses and produce all responsive documents within 21 days of the March 13, 2019 order. (Dkt. No. 41 at 4.) Defendant again failed to provide any discovery responses and produce responsive documents by the April 3, 2019 deadline, and, to date, has not done so. (Stafford Decl. ¶ 13.)

         On June 14, 2019, Plaintiffs filed a motion for sanctions. (Dkt. No. 43.) Defendant did not file an opposition or statement of non-opposition. On July 3, 2019, the Court issued an order to show cause requiring Defendant to file an opposition or statement of non-opposition, and to file a response to the order to show cause explaining why it did not file a timely opposition. (Dkt. No. 50.) Defendant failed to file an opposition, and did not file a response to the order to show cause.

         On July 17, 2019, the Court denied Plaintiffs' motion for sanctions on grounds that Plaintiffs' declaration did not attempt to itemize the attorneys' fees or justify the claimed hourly rates. (Dkt. No. 52.)

         On August 27, 2019, Plaintiffs filed a motion for sanctions based on Defendant's failure to comply with three prior court orders. (Pls.' Mot., Dkt. No. 56.)

         Also on August 27, 2019, the Court held a case management conference, where Defendant did not appear. On August 29, 2019, the Court issued an order to show cause to defense counsel, David Johnston, to respond by no later than September 9, 2019, why he should not pay monetary sanctions in the amount of $500 for his failure to appear at the case management conference. (Dkt. No. 62.) Mr. Johnston was also ordered to address whether he was able to provide continued representation given the personal hardships that he was experiencing. Id. at 1. Mr. Johnston did not file a response to the order to show cause. (See Dkt. No. 63 at 1.)

         Defendant did not file a timely opposition to the motion for sanctions, so the Court issued a second order to show cause to Mr. Johnston on September 30, 2019 directing him

1) to file an opposition or statement of non-opposition to the pending motion [for sanctions], and
2) to file a response to this second order to show cause explaining why the opposition was not timely filed, why the motion for sanctions should not be granted as unopposed and sanctions be paid by him personally instead of by his client, why the Court should not impose sanctions of $1000.00 on him personally for failing to appear at the case management conference, and whether he is able to continue representing his client.

(Dkt. No. 63.) The Court acknowledged that “personal obligations can negatively impact an attorney's ability to manage their case load[, ]” but that “does not relieve the attorney of their responsibility of keeping the court, opposing counsel, and their client informed of the circumstances, and may require that counsel withdraw from representation rather than abandon their client.” Id. at 2.

         On October 15, 2019, Defendant filed its opposition to the motion for sanctions, in which defense counsel represented that he expects to serve full and complete responses, without objection, by the November 7, 2019 hearing date. (See Def.'s Opp'n, Dkt. No. 65 at 2:5-7.) On October 22, 2019, Plaintiff filed a reply. (Pls.' Reply, Dkt. No. 68.)

         On November 4, 2019, the Court continued the hearing date, and ordered the parties to meet and confer and file a joint status report on or before November 18, 2019 to inform the Court ...


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