-CWH Rios v. Wal-Mart Stores, Inc., No. 2:2011cv01592 - Document 39 (D. Nev. 2013)
Court Description: ORDER Denying 35 Defendant's Motion for Reasonable Expenses, Including Attorney's Fees. Signed by Magistrate Judge Carl W. Hoffman on 02/13/2013. (Copies have been distributed pursuant to the NEF - AC)
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-CWH Rios v. Wal-Mart Stores, Inc. Doc. 39 1 2 3 4 UNITED STATES DISTRICT COURT 5 DISTRICT OF NEVADA 6 *** 7 ABBY RIOS, 8 9 10 Plaintiff, vs. WAL-MART STORES, INC., et al., 11 Defendants. ) ) ) ) ) ) ) ) ) ) 2:11-cv-1592-KJD-CWH ORDER 12 This matter came is before the Court on Defendant’s Motion for Reasonable Expenses, 13 Including Attorney’s Fees (#35), filed June 29, 2012; Plaintiff’s Response (#36), filed July 16, 14 2012; and Defendant’s Reply (#37), filed July 26, 2012. This matter was removed on September 15 30, 2011. (#1). It is a premises liability case. 16 BACKGROUND 17 On April 19, 2012, Defendant Walmart (“Walmart”) filed an emergency motion (#22), 18 wherein it sought a litany of sanctions up to and including disqualification or dismissal for the 19 alleged misconduct of Plaintiff’s counsel.1 Plaintiff response was equally accusatory and 20 included a countermotion (#25) seeking sanctions, including disqualification of defense 21 counsel’s firm. The accusations levied by both sides were serious. 22 On June 19, 2012, the undersigned heard oral arguments on Walmart’s motion (#22). 23 During the course of the hearing, Plaintiff’s counsel indicated his belief that these motions were 24 25 26 27 28 1 Walmart’s motion (#22) was premised entirely on its position that “severe” sanctions were warranted due to Plaintiff’s counsel’s violation of multiple rules of professional conduct. Believing only the “most severe sanction” would send the message it sought to send, Walmart sought the following sanctions: (1) dismissal of the action, (2) disqualification of Plaintiff’s counsel, (3) prohibition on the use of information obtained through ex parte communication, (4) disclosure of all information obtained through the ex parte communication, including work product, and (5) monetary sanctions “sufficient to discourage ... future Rule violations.” In support of its request for “severe” sanctions, Walmart cited exclusively to this Court’s Local Rules addressing the conduct of counsel, Nevada’s Rules of Professional Conduct, and cases analyzing these rules. Dockets.Justia.com 1 “highly unnecessary.” See Tr. of Proceedings (#34) at 27:19. Walmart’s counsel stated that if no 2 other sanction other than a “fair deposition” were ordered, Walmart would be “completely 3 content.” Id. at 29:17-19. Ultimately, the Court concluded that (1) Walmart could step in to 4 represent its former employee and (2) neither party submitted sufficient evidence to support a 5 finding of ethical misconduct. Id. at 32:21 - 33:23. The Court held that the deposition should go 6 forward and that Plaintiff’s counsel “may not . . . refer in any way to prior interviews” between 7 his office and the deponent. Id. at 30:17 - 32:20. Consequently, Plaintiff’s motion (#25) was 8 denied. However, because Walmart proposed the adopted resolution during the meet and confer 9 process, its motion (#22) was granted in part and denied in part. Walmart was invited to brief the 10 11 issue of attorney fees, including under what authority the fees were requested. On June 29, 2012, Walmart filed its motion for fees (#35) arguing it is entitled to fees 12 pursuant to 28 U.S.C. § 1927 because: (1) Plaintiff’s counsel failed “to take ‘reasonable remedial 13 action’ in violation of Nevada Rule of Professional Conduct 5.3” (see Def.’s Mot. (#35) at 2:18- 14 21); (2) Plaintiff raised a frivolous argument in support of the motion to disqualify; (3) Plaintiff 15 failed to cite sufficient authority for relief; and (4) Plaintiff’s counsel failed to make a reasonable 16 inquiry into the allegations against Walmart’s counsel. Walmart also argues that the Court 17 should exercise its inherent power to award fees because Plaintiff’s countermotion was filed in 18 bad faith. Lastly, Walmart argues that its motion is “properly characterized as a motion for 19 protective order” and, because it was granted, an award of fees is appropriate under Rule 20 37(a)(5)(A). Walmart also claims that Plaintiff’s countermotion to disqualify (#25) was really a 21 motion to compel so it should be awarded its fees under Rule 37(a)(5)(B). 22 Plaintiff’s counsel responds that sanctions are not appropriate under section 1927 because 23 his argument in support of the countermotion to disqualify (#25) was substantially justified. 24 Plaintiff’s counsel further argues that Walmart’s attempt to cast its motion as a one for a 25 protective order is disingenuous because Walmart did not refer to or brief the issues under Rule 26 26(c). Counsel argues further that, even if Walmart’s motion is construed as a motion for 27 protective order, it was granted in part and denied in part so an award of fees, if any, should be 28 apportioned under Rule 37(a)(5)(C). In reply, Walmart reiterates its prior arguments. -2- 1 DISCUSSION 2 Because both Walmart’s motion (#22) and Plaintiff’s countermotion (#25) sought 3 disqualification, the Court reviewed both with particularly strict judicial scrutiny. See Optyl 4 Eyewear Fashion Int’l Corp. v. Sytle Cos., Ltd., 760 F.2d 1045, 1050 (9th Cir. 1985) (citations 5 omitted) (particularly strict judicial scrutiny should be given to a motion to disqualify opposing 6 counsel because there is a significant possibility of abuse for tactical advantage). The Court 7 concluded that there was insufficient information to conclude that either Walmart’s or Plaintiff 8 counsel had committed an ethical violation. Consequently, Plaintiff’s countermotion to 9 disqualify (#25) was denied. However, the Court did impose the remedy proposed by Walmart’s 10 counsel during the personal consultation. Thus, even though the majority of its motion (#22) was 11 denied, Walmart was granted some relief. Upon request, Walmart’s counsel was granted the 12 opportunity to brief the issue of whether attorney fees were appropriate and, if so, under what 13 authority. Citing 28 U.S.C. § 1927, the Court’s inherent authority, Rule26(c), and Rule 37(a), 14 Walmart filed this motion (#35) claiming it is entitled to fees. 15 1. Rule 26(c) 16 Acknowledging that it did not cite or brief Rule 26(c) in its motion, Walmart, 17 nevertheless, asserts that its motion (#22) should be construed as a motion for protective order 18 because the relief ordered by the Court is typical of relief that would be granted under Rule 26(c). 19 The argument is not well taken. First, Walmart did not file points and authorities for relief under 20 Rule 26(c). The Local Rules require that a motion be supported by points and authorities and the 21 failure to do so is consent to denial of the motion. See LR 7-2(a) and (d). The Court will not 22 permit Walmart to characterize the motion as one proceeding under a rule that it did not cite or 23 analyze in its original motion. The Court also rejects Walmart’s attempt to carve out the granted 24 relief from the entirety of the requested relief in its effort to obtain fees. In its motion (#22), 25 Walmart requested, among other things, dismissal, disqualification, and unenumerated monetary 26 sanctions designed to punish Plaintiff’s counsel for perceived ethical misconduct. Walmart has 27 not submitted any compelling authority that supports its carve out proposition. 28 Moreover, Walmart’s contention that its motion (#22) was granted in its entirety is not -3- 1 factually accurate. The vast majority of the relief Walmart requested was denied. Thus, even 2 construing Walmart’s motion (#22) as one for relief under Rule 26(c), Walmart is still not 3 entitled to fees under Rule 37. See Fed. R. Civ. P. 37(a)(5)(C) (“If the motion is granted in part 4 and denied in part, the court may issue any protective order authorized under Rule 26(c) and may, 5 after giving an opportunity to be heard, apportion the reasonable expenses of the motion.”). The 6 Court will not apportion fees. 7 2. Rule 37(a)(5)(B) 8 9 Walmart also asserts that Plaintiff’s countermotion (#25) is properly construed as a motion to compel discovery and, therefore, an award of fees is appropriate under Rule 10 37(a)(5)(B) because the countermotion was denied. The Court rejects this characterization as 11 well. Plaintiff’s countermotion (#25) was a motion to disqualify, nothing more. Plaintiff did not 12 seek an order compelling disclosure of statements. Plaintiff sought, as part of the larger request 13 for disqualification, that the subject statements be discoverable not that the statements be 14 disclosed. Because the Court construes Plaintiff’s countermotion (#25) as one for 15 disqualification, the request for fees under Rule 37(a)(5)(B) is denied. 16 3. Inherent Authority 17 Walmart next argues that the Court should exercise its inherent power to award fees 18 because Plaintiff’s motion was filed in bad faith. The Court has the inherent power to levy 19 sanctions for abusive litigation tactics. Roadway Express, Inc. v. Piper, 447 U.S. 752, 765-66 20 (1980). The court’s inherent authority to issue sanctions was reiterated in Chambers v. NASCO, 21 Inc., 501 U.S. 32 (1991) and extends “to a full range of litigation abuses.” Fink v. Gomez, 239 22 F.3d 989, 992 (9th Cir. 2001) (quoting Chambers, 501 U.S. at 46-47). Nevertheless, “[b]ecause 23 of their very potency, inherent powers must be exercised with restraint and discretion.” 24 Chambers, 501 U.S. at 44. “When there is bad-faith conduct in the course of litigation that could 25 be adequately sanctioned under the [Federal] Rules, the court ordinarily should rely on the Rules 26 rather than the inherent power.” Id. at 50. Imposition of sanctions using the court’s inherent 27 powers must “be preceded by a finding of bad faith, or conduct tantamount to bad faith.” Gomez 28 v. Vernon, 255 F.3d 1118, 1134 (9th Cir. 2001) (citing Fink, 239 F.3d at 993). -4- 1 The Court has reviewed the briefing and record in this matter and concludes that 2 exercising its inherent authority to impose sanction is not appropriate. Though denied, the Court 3 finds that Plaintiff’s countermotion (#25) was not filed in bad faith and was not frivolous, 4 reckless, intended to harass, or advanced for an improper purpose. Walmart’s continued 5 insistence that Plaintiff violated Nevada Rule of Professional Conduct 5.3 by not agreeing to the 6 “reasonable remedial action” proposed by Walmart thereby “forcing Walmart to file its motion 7 for sanctions” is untrue. There has never been a finding that Plaintiff violated the Rules of 8 Professional Conduct and any suggestion or argument otherwise is not predicated on anything 9 that has occurred within the context of this litigation. 10 11 4. Section 1927 Lastly, Walmart requests that the Court impose fees under 28 U.S.C. § 1927. Section 12 1927 provides that “[a]ny attorney . . . who so multiplies proceedings in any case unreasonably 13 and vexatiously may be required by the court to satisfy personally the excess costs, expenses, and 14 attorneys’ fees reasonably incurred because of such conduct.” Id. Before imposing sanctions 15 under section 1927, there must be a finding of subjective bad faith, not simply unreasonable 16 behavior. Cf. Salstrom v. Citicorp Credit Services, Inc., 74 F.3d 183, 184 (9th Cir. 1996). “Bad 17 faith is present when an attorney recklessly raises a frivolous argument, or argues a meritorious 18 claim for the purpose of harassing an opponent.” In re Keegan Managment Co., 78 F.3d 431, 19 436 (9th Cir. 1996); see also Fink v. Gomez, 239 F.3d 989, 993 (9th Cir. 2001) (recklessness 20 suffices for section 1927). District courts have wide discretion in determining whether sanctions 21 are appropriate under section 1927. See cf. Trulis v. Barton, 107 F.3d 685, 694 (9th Cir. 1995). 22 Walmart argues that because the parties had already stipulated to conduct the 23 deposition of the identified witness outside of discovery, there was no basis for Plaintiff’s claim 24 that Walmart attempted to obstruct Plaintiff’s access to evidence. Plaintiff’s obstruction 25 argument was a single argument among several in its countermotion to disqualify (#25). Once 26 again, Walmart is attempting to carve out a small piece of a much larger motion to serve its own 27 purposes. As with other attempts, Walmart has not provided any compelling support for the 28 request. The Court also disagrees with Walmart’s claim that Plaintiff’s counsel failed to cite to -5- 1 “sufficient judicial decisions” in support of the countermotion (#25). Plaintiff did cite to 2 adequate authority, that authority simply was not found to be compelling. Lastly, the Court 3 disagrees that Plaintiff filed the countermotion (#25) without making a reasonable inquiry into 4 the relevant facts. When looking at the entirety of the briefing, the Court finds that sanctions 5 under section 1927 are not warranted. 6 Based on the foregoing and good cause appearing therefore, 7 IT IS HEREBY ORDERED that Defendant’s Motion for Reasonable Expenses, 8 9 Including Attorney’s Fees (#35) is denied. DATED this 13th day of February, 2013. 10 11 12 C.W. Hoffman, Jr. United States Magistrate Judge 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -6-
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