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Delacruz v. State Bar of California

United States District Court, N.D. California, San Jose Division

January 15, 2020

DANIEL DELACRUZ, Plaintiff,
v.
THE STATE BAR OF CALIFORNIA, et al., Defendants.

          ORDER GRANTING MOTIONS TO DISMISS, DENYING PLAINTIFF'S MOTIONS FOR SANCTIONS AND GRANTING IN PART DEFENDANTS' MOTION FOR SANCTIONS RE: DKT. NOS. 33, 34, 35, 49

          LUCY H. KOH, UNITED STATES DISTRICT JUDGE.

         Plaintiff Daniel Delacruz, Sr. brings suit against a number of individuals and entities related to the denial of his license to practice law. Before the Court are two motions to dismiss: a motion to dismiss filed by Defendants City of Fresno, the Fresno Police Department, Steven Card, Cathy Sherman, and the law firm Ferguson, Praet, & Sherman APC (collectively, the “Fresno Defendants”), ECF No. 33; and a motion to dismiss filed by Defendants the State Bar of California and Steven James Moawad (collectively, the “State Bar Defendants”), ECF No. 34. Additionally, both Delacruz and the State Bar Defendants have moved for sanctions. ECF Nos. 35, 49. Having considered the submissions of the parties, the relevant law, and the record in this case, the Court GRANTS both motions to dismiss, DENIES Delacruz's motion for sanctions, and GRANTS in part the State Bar Defendants' motion for sanctions.

         I. BACKGROUND

         This suit is the latest chapter in the protracted litigation between Delacruz and the State Bar of California (the “State Bar”). Because Delacruz's prior cases provide important factual context for the instant case, the Court considers them relevant background information and describes them briefly below.

         A. Delacruz I

         In N.D. Cal. Case No. 14-CV-05336-EJD (“Delacruz I”), Delacruz filed suit in this District, in which he alleged nineteen causes of action against 54 defendants, including the State Bar, various officers of the State Bar, and numerous other individuals and entities. Delacruz I, ECF No. 1 at 1-2. Delacruz's allegations begin in February 1997, when Officer Steven Card arrested Delacruz for domestic violence on the basis of a police report that Delacruz claimed was fabricated. Id. at ¶¶ 32-39. Delacruz pled nolo contendere to one count of domestic violence, which Delacruz claims he did to avoid prison time and to deal with his serious medical condition of Fabry's Disease. Id. at ¶ 40. After receiving successful treatment and mitigating symptoms of his condition, Delacruz completed law school studies and took the California State Bar exam in February 2011, which he passed. Id. at ¶¶ 41-48. However, in September 2011, the State Bar denied Delacruz's bar license on the basis of his moral character and upheld that determination following Delacruz's administrative appeal. Id. at ¶¶ 48-51. Delacruz appealed this decision to both the California Supreme Court and the United States Supreme Court, both of which declined review. See Delacruz on Admission, No. S213363, petition for review denied (Cal. Oct. 20, 2013); Delacruz v. Comm. of Bar Examiners of the State Bar of California, 572 U.S. 1089 (2014).

         Delacruz's complaint in Delacruz I, which spans 105 pages, details a multitude of grievances with the State Bar's process and alleges a vast network of countless individuals and entities that had conspired to “benefit Defendant State Bar of California in denying Plaintiff a license to practice law by engaging in tortious conduct at the expense of Plaintiff's Civil Rights, inter alia.” See Id. at ¶ 27. Delacruz brought numerous claims, including claims for discrimination based on race and disability, fraud, extortion, and breach of contract. Id. at 1-2. Ultimately, in Delacruz I, United States District Judge Edward Davila dismissed all of Plaintiff's claims without leave to amend and entered judgment in favor of the defendants. Delacruz I, ECF No. 332. The Ninth Circuit affirmed in an unpublished memorandum disposition and later denied Delacruz's petition for rehearing en banc. Ninth Circuit Case No. 17-17340, ECF Nos. 66, 68. The United States Supreme Court denied Delacruz's petition for writ of certiorari. Delacruz I, ECF No. 354.

         B. Delacruz II

         In N.D. Cal. Case No. 16-06858-BLF (“Delacruz II”), Delacruz again sued the State Bar and various officials associated with the State Bar, as well as unnamed Does 1 through 64. Delacruz II, ECF No. 1 at 1. After United States District Judge Beth Labson Freeman dismissed with leave to amend the Complaint in part, Delacruz filed a First Amended Complaint, which added a law firm and its employee as defendants. Delacruz II, ECF No. 52 (“FAC”) at 1. In the FAC, Delacruz alleged that, after he was denied admission to the State Bar the first time, in September 2013, he applied a second time for a law license. Id. ¶ 16. As part of this process, he created a survey and published it on his website “seeking the public's opinion about the moral character of several individuals” who Delacruz alleged had “unjustly denied [his] first law license application. Id. ¶ 17. Officials at the State Bar attempted to investigate Delacruz's website. However, Delacruz had imposed various disclaimers as terms and conditions to access Delacruz's website, such as requiring waiver of immunities including “Eleventh Amendment Immunity, absolute litigation privilege, Judicial Immunity, Anti-SLAPP statute, Rooker-Feldman doctrine, and Noerr-Pennington doctrine.” Id. ¶¶ 24-26. Delacruz alleged that, in March 2015, he again received correspondence indicating that he “lacks the good moral character to become an attorney in the State of California at this time.” Id. ¶ 37.

         Based on those allegations, Delacruz brought claims of conspiracy to commit computer fraud, conspiracy to violate equal protection and race and disability discrimination laws, and violation of the California Public Records Act. Id. Judge Freeman dismissed the claims without leave to amend and entered judgment in favor of the defendants. Delacruz II, ECF Nos. 97, 98. The Ninth Circuit again affirmed in an unpublished memorandum disposition and again denied Delacruz's petition for rehearing en banc. Ninth Circuit Case No. 18-16956, ECF Nos. 42, 46.

         C. Delacruz III

         In the instant suit, N.D. Cal. Case No. 19-CV-03241-LHK (“Delacruz III”), Delacruz filed his Complaint on June 10, 2019. ECF No. 1 (“Complaint”), in which he alleges RICO violations against the State Bar and Steven James Moawad, who serves as the Chief Trial Counsel for the State Bar (collectively, the “State Bar Defendants”), as well as against the City of Fresno, the Fresno Police Department, Officer Steve Card, Cathy Sherman, and the law firm of Ferguson, Praet, & Sherman APC (collectively, the “Fresno Defendants”). Specifically, in Claim One, Delacruz alleges against all defendants:

The defendants are colluding with the State Bar to use the U.S. postal service, telephone and internet in violation of 18 U.S.C. § 1341 (mail fraud) and § 1343 (wire fraud) spanning several years to conduct their pattern of multiple false and fraudulent misrepresentations to Delacruz in violation of 18 U.S.C. § 1962 a.k.a. RICO that his aforementioned federal and constitutional rights would be recognized pursuant to Business & Professions Code §6085 of the State Bar Act.

Id. at 6. In Claim Two, Delacruz alleges against Ferguson, Praet, & Sherman[1]:

The law firm of Ferguson, Praet & Sherman representing the City of Fresno, the Fresno Police Department and police officer Steve Card violated RICO because they violated Delacruz' constitutional rights to privacy when they disseminated a police report around June 11, 2015 - that was falsified by police officer Steve Card containing Delacruz' social security number - via email to . . . twenty four email addresses.

Id. Although the Complaint provides scant detail about the facts underlying the alleged RICO violations, Delacruz contends that he “is preparing to submit his third law license application.” Id. at 2-3. As a result, Delacruz's Complaint seeks, inter alia, over $2, 100, 000 in damages from “lost income as an attorney, ” an injunction against all of the defendants to stop conspiring in violation of RICO, and an injunction requiring all of the defendants to “destroy all physical and digital copies” of Officer Card's police report. Id. at 7. The Complaint also includes a request for a preliminary injunction. Id. at 6-7.

         On September 12, 2019, the Fresno Defendants filed a motion to dismiss for failure to state a claim, pursuant to Federal Rule of Civil Procedure 12(b)(6). ECF No. 33 (“Fresno MTD”). On September 24, 2019, Delacruz filed an opposition, ECF No. 38 (“Opp'n to Fresno MTD”), and, on October 3, 2019, the Fresno Defendants filed a reply, ECF No. 43 (“Reply to Fresno MTD”).

         Separately, on September 18, 2019, the State Bar Defendants filed a separate motion to dismiss for lack of subject matter jurisdiction, pursuant to Rule 12(b)(1) and for failure to state a claim pursuant to Rule 12(b)(6). ECF No. 34 (“State Bar MTD”). On October 1, 2019, Delacruz filed an opposition. ECF No. 41 (“Opp'n to State Bar MTD”). On October 9, 2019, the State Bar Defendants filed a reply. ECF No. 45 (“Reply to State Bar MTD”).

         On the same day that the State Bar Defendants filed their motion to dismiss, the State Bar Defendants also filed a motion for Rule 11 Sanctions. ECF No. 35 (“Defs.' Mot. for Sanctions”). On October 1, 2019, Delacruz filed an opposition to the motion for sanctions. ECF No. 42 (“Opp'n to Defs.' Mot. for Sanctions”). On October 9, 2019, the State Bar Defendants filed a reply. ECF No. 46 (“Reply to Defs.' Mot. for Sanctions”).

         On October 15, 2019, Delacruz filed his own motion for sanctions pursuant to Rule 11 and 28 U.S.C. § 1927. ECF No. 49 (“Pl.'s Mot.”). The Fresno Defendants filed an opposition on October 28, 2019, ECF No. 50 (“Fresno Opp'n to Pl.'s Mot.”), and the State Bar Defendants filed a separate opposition on October 29, 2019, ECF No. 51 (“State Bar Opp'n to Pl.'s Mot.”). Delacruz filed a reply on November 4, 2019. ECF No. 52 (“Reply to Pl.'s Mot.”).

         Finally, in support of their motions, the parties filed a number of requests and motions for judicial notice. Specifically, in support of their motion to dismiss, the Fresno Defendants requested that the Court judicially notice filings in Delacruz I, ECF No. 33-2, which Delacruz opposed, ECF No. 39. A court “may take notice of proceedings in other courts, both within and without the federal judicial system, if those proceedings have a direct relation to matters at issue.” United States ex rel. Robinson Rancheria Citizens Council v. Borneo, Inc., 971 F.2d 244, 248 (9th Cir. 1992). Because the proceedings in Delacruz I are clearly relevant to the case at hand, and because the Court determines that Delacruz's objections are without merit, the Court GRANTS Defendants' request for judicial notice.

         Delacruz also requested that the Court judicially notice a number of filings in various other court proceedings, ECF No. 40, which the Fresno Defendants opposed, ECF No. 44. In his reply Delacruz moved the Court to judicially notice additional documents that he argues are relevant to the motion for sanctions, ECF No. 48, such as an order from Delacruz's criminal proceedings in California state court. Because judicially noticing these documents does not impact the Court's decision below, the Court GRANTS Delacruz's motions for judicial notice. However, while a court may take judicial notice of the existence of matters of public record, the Court may not accept the truth of the disputed facts cited therein. Lee v. City of Los Angeles, 250 F.3d 668, 689- 90 (9th Cir. 2001).

         II. LEGAL STANDARD

         A. Dismissal Pursuant to Federal Rule of Civil Procedure 12(b)(1)

         A defendant may move to dismiss an action for lack of subject matter jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(1). A jurisdictional challenge may be facial or factual. See Safe Air for Everyone v. Meyer, 373 F.3d 1035, 1039 (9th Cir. 2004). Where the attack is facial, the court determines whether the complaint's allegations are sufficient on their face to invoke federal jurisdiction and accepts all material allegations as true and construes them in favor of the party asserting jurisdiction. See Warth v. Seldin, 422 U.S. 490, 501 (1975). Where the attack is factual, “the court need not presume the truthfulness of the plaintiff's allegations.” Safe Air, 373 F.3d at 1039. In resolving a factual dispute regarding subject matter jurisdiction, a court may review extrinsic evidence beyond the complaint without converting a motion to dismiss into one for summary judgment. See id.; McCarthy v. United States, 850 F.2d 558, 560 (9th Cir. 1988) (holding that a court “may review any evidence, such as affidavits and testimony, to resolve factual disputes concerning the existence of jurisdiction”). Once a party has moved to dismiss for lack of subject matter jurisdiction under Rule 12(b)(1), the opposing party bears the burden of establishing the Court's jurisdiction. See Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994); Chandler v. State Farm Mut. Auto. Ins. Co., 598 F.3d 1115, 1122 (9th Cir. 2010).

         “[A]lthough sovereign immunity is only quasi-jurisdictional in nature, Rule 12(b)(1) is still a proper vehicle for invoking sovereign immunity from suit.” Pistor v. Garcia, 791 F.3d 1104, 1111 (9th Cir. 2015). Thus, once a defendant has asserted sovereign immunity pursuant to Rule 12(b)(1), “‘the party asserting subject matter jurisdiction has the burden of proving its existence,' i.e. that immunity does not bar the suit.” Id. (quoting Miller v. Wright, 705 F.3d 919, 923 (9th Cir. 2013)).

         B. Dismissal Pursuant to Federal Rule of Civil Procedure 12(b)(6)

         Rule 8(a) of the Federal Rules of Civil Procedure requires a complaint to include “a short and plain statement of the claim showing that the pleader is entitled to relief.” A complaint that fails to meet this standard may be dismissed pursuant to Federal Rule of Civil Procedure 12(b)(6). Rule 8(a) requires a plaintiff to plead “enough facts to state a claim to relief that is plausible on its face.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). “The plausibility standard is not akin to a probability requirement, but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Id. (internal quotation marks omitted). For purposes of ruling on a Rule 12(b)(6) motion, the Court “accept[s] factual allegations in the complaint as true and construe[s] the pleadings in the light most favorable to the nonmoving party.” Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008).

         The Court, however, need not accept as true allegations contradicted by judicially noticeable facts, see Shwarz v. United States, 234 F.3d 428, 435 (9th Cir. 2000), and it “may look beyond the plaintiff's complaint to matters of public record” without converting the Rule 12(b)(6) motion into a motion for summary judgment, Shaw v. Hahn, 56 F.3d 1128, 1129 n.1 (9th Cir. 1995). Nor must the Court “assume the truth of legal conclusions merely because they are cast in the form of factual allegations.” Fayer v. Vaughn, 649 F.3d 1061, 1064 (9th Cir. 2011) (per curiam) (quoting W. Mining Council v. Watt, 643 F.2d 618, 624 (9th Cir. 1981)). Mere “conclusory allegations of law and unwarranted inferences are insufficient to defeat a motion to dismiss.” Adams v. Johnson, 355 F.3d 1179, 1183 (9th Cir. 2004).

         C. Leave to Amend

         If the Court determines that a complaint should be dismissed, it must then decide whether to grant leave to amend. Under Rule 15(a) of the Federal Rules of Civil Procedure, leave to amend “shall be freely given when justice so requires, ” bearing in mind “the underlying purpose of Rule 15 to facilitate decisions on the merits, rather than on the pleadings or technicalities.” Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir. 2000) (en banc) (alterations and internal quotation marks omitted). When dismissing a complaint for failure to state a claim, “a district court should grant leave to amend even if no request to amend the pleading was made, unless it determines that the pleading could not possibly be cured by the allegation of other facts.” Id. at 1130 (internal quotation marks omitted). Accordingly, leave to amend generally shall be denied only if allowing amendment would unduly prejudice the opposing party, cause undue delay, or be futile, or if the moving party has acted in bad faith. Leadsinger, Inc. v. BMG Music Publ'g, 512 F.3d 522, 532 (9th Cir. 2008).

         III. DISCUSSION

         A. Defendants' Motion to Dismiss

         As an initial matter, Delacruz repeatedly argues that Defendants' filings, including both motions to dismiss, should be denied because they are “defective” for failing to include an affidavit or declaration. See, e.g., Opp'n to Fresno MTD at 1 (citing 7-5). Civil L.R. 7-5 provides that “Factual contentions made in support of or in opposition to any motion must be supported by an affidavit or declaration and by appropriate references to the record.” However, as the State Bar Defendants correctly note, on a motion to dismiss, the Court accepts factual allegations in the Complaint as true and merely construes the allegations in the plaintiff's complaint in the light most favorable to the nonmoving party. See Reply to State Bar MTD at 1; Manzarek, 519 F.3d at 1031 (explaining that, on a motion to dismiss, a court “accept[s] factual allegations in the complaint as true and construe[s] the pleadings in the light most favorable to the nonmoving party.”). Accordingly, Defendants' motions are not defective and the Court proceeds to address Defendants' arguments on the merits.

         The State Bar Defendants move to dismiss pursuant to Rule 12(b)(1) on the ground that the State Bar Defendants are entitled to sovereign immunity. Additionally, both the State Bar Defendants and the Fresno Defendants move for dismissal pursuant to Rule 12(b)(6). State Bar MTD at 4-13; Fresno MTD at 3-14. The Court first considers the State Bar Defendants' argument for dismissal under Rule 12(b)(1), and then turns to the Defendants' arguments for dismissal pursuant to Rule 12(b)(6).

         1. Dismissal Pursuant to Federal Rule of Civil Procedure 12(b)(1)

         The State Bar Defendants argue that the Court lacks subject matter jurisdiction over Delacruz's claims against the State Bar Defendants because the Eleventh Amendment bars Delacruz from raising his claims against the State Bar and against Moawad. State Bar MTD at 4- 8. The Court agrees that the Eleventh Amendment bars Delacruz's claims against the State Bar, but disagrees that Moawad is also entitled to Eleventh Amendment immunity for all of Delacruz's claims.

         The Eleventh Amendment provides:

The Judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State, or by Citizens or Subjects of any Foreign State.

         U.S. Const. amend. XI. As such, “the Eleventh Amendment bars suits which seek either damages or injunctive relief against a state, an ‘arm of the state,' its instrumentalities, or its agencies.” Franceschi v. Schwartz, 57 F.3d 828, 831 (9th Cir. 1995).

         The Ninth Circuit has explicitly held that the “Eleventh Amendment's grant of sovereign immunity bars monetary relief from state agencies such as California's Bar Association.” Hirsch v. Justices of Supreme Court of State of Cal., 67 F.3d 708, 715 (9th Cir. 1995). Thus, the Court lacks subject matter jurisdiction to adjudicate claims brought against the State Bar unless an exception applies. Specifically, the Court may retain subject matter jurisdiction where: (1) Congress has abrogated that immunity pursuant to its lawmaking powers conferred by the United States Constitution, Kimel v. Fla. Bd. of Regents, 528 U.S. 62, 80 (2000); (2) a state has waived its Eleventh Amendment immunity by consenting to suit, College Sav. Bank Florida v. Prepaid Postsecondary Educ. Expense Bd., 527 U.S. 666, 670 (1999); or (3) the plaintiff sues a state official in his or her official capacity for prospective injunctive relief under the Ex parte Young doctrine, Seminole Tribe of Fla. v. Florida, 517 U.S. 44, 73 (1996). Here, Delacruz argues that the following two exceptions apply: that ...


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