Aqua Connect v. Code Rebel LLC et al

Filing 45

ORDER Denying Defendants Code Rebel LLC and Arben Kryeziu's ("Movants") Motion for Sanctions Pursuant to Federal Rules of Civil Procedure, Rule 11(b) and 28 U.S.C. § 1927 32 by Judge Ronald S.W. Lew. The Court also DENIES Plaintiff's own request for sanctions that Plaintiff made in its Opposition to this Motion. (lom)

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UNITED STATES DISTRICT COURT

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CENTRAL DISTRICT OF CALIFORNIA

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12 AQUA CONNECT, INC., a
Nevada Corporation,
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Plaintiff,
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v.
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CODE REBEL, LLC, a Hawaii
16 Limited Liability Company;
ARBEN KRYEZIU, an
17 individual; VLADIMIR
BICKOV, an individual; and
18 DOES 1 through 300,
inclusive,
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Defendants.
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CV 11-5764 (MANx)
ORDER re: Defendants
Code Rebel LLC and Arben
Kryeziu’s Motion for
Sanctions Pursuant to
Federal Rules of Civil
Procedure, Rule 11(b)
and 28 U.S.C. § 1927
[36]

On May 18, 2012, Defendants Code Rebel LLC and

22 Arben Kryeziu’s (“Movants”) Motion for Sanctions
23 Pursuant to Federal Rules of Civil Procedure, Rule
24 11(b) and 28 U.S.C. § 1927 came on for regular calendar
25 before this Court [32].

The Court having reviewed all

26 papers submitted pertaining to this Motion and having
27 considered all arguments presented to the Court, NOW
28 FINDS AND RULES AS FOLLOWS:
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The Court hereby DENIES Movants’ Motion for

2 Sanctions.

As a preliminary matter, in its Opposition,

3 Plaintiff objects to paragraphs three and four of the
4 supplemental declaration of John Houkom as hearsay and
5 lacking personal knowledge.

The Court finds that these

6 objections are misguided and OVERRULES Plaintiff’s
7 objections.
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As to the merits, Movants primarily argue that

9 Plaintiff should be sanctioned because Plaintiff
10 included, in its Proposed Second Amended Complaint
11 (“SAC”), an allegedly frivolous claim that was
12 previously dismissed by this Court without leave to
13 amend.

In its Opposition, Plaintiff, however, contends

14 that it only included this previously dismissed claim
15 for misappropriation of trade secrets for the purpose
16 of preserving the issue on appeal.

In analyzing

17 whether Plaintiff’s filings are sanctionable under Rule
18 11, the Court must determine whether Plaintiff’s
19 actions were objectively reasonable.

Zaldivar v. City

20 of Los Angeles, 780 F.2d 823, 830 (9th Cir. 1986).
21 “The pleader, at a minimum, must have a ‘good faith
22 argument’ for his or her view of what the law is, or
23 should be.”
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Id.

The Court finds that Plaintiff was objectively

25 reasonable in including a previously dismissed
26 misappropriation claim in its Proposed SAC.

The Ninth

27 Circuit has held that a Plaintiff can replead any claim
28 that a district court has previously dismissed with
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1 prejudice in order to preserve the right to appeal a
2 dismissal.

Detabali v. St. Luke’s Hosp., 482 F.3d

3 1199, 1204 (9th Cir. 2007).

Here, Plaintiff’s

4 repleading of a claim that the Court dismissed without
5 leave to amend may appear to be in direct violation of
6 the Court’s prior ruling.

However, in light of Ninth

7 Circuit precedent which allows repleading of dismissed
8 claims, the Court finds that Plaintiff’s actions did
9 not violate the “objectively reasonable” threshold that
10 would warrant sanctions against Plaintiff pursuant to
11 Rule 11.
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In addition, Movants argue that Plaintiff should be

13 issued sanctions because it can be inferred that
14 Plaintiff sought joinder of Moboware for improper forum
15 shopping purposes.

As support, Movants argue that each

16 proposed allegation against Moboware is frivolous.
17 Here, the Court finds that Plaintiff’s Motion to Amend
18 was not objectively baseless and made “without a
19 reasonable and competent inquiry.

Townsend v. Holman

20 Consulting Corp., 929 F.2d 1358, 1362 (9th Cir. 1990).
21 Though the Court denied Plaintiff’s Motion to Amend,
22 Plaintiff’s Motion, nevertheless, applied the correct
23 legal standards, made a legally coherent argument, and
24 ultimately cannot be found to rise to the level of an
25 incompetent and baseless inquiry that merits sanctions.
26 Accordingly, the Court DENIES Movants’ request for
27 sanctions against Plaintiff.
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Finally, in Opposition to this Motion for
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1 Sanctions, Plaintiff makes its own request for
2 sanctions against Movants for failing to meet and
3 confer as required by Local Rule 7-3.

The Court finds

4 this request without merit and DENIES Plaintiff’s own
5 request for sanctions.
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In sum, for the foregoing reasons, the Court DENIES

7 Movants’ Motion for Sanctions Pursuant to Federal Rules
8 of Civil Procedure, Rule 11(b) and 28 U.S.C. § 1927.
9 The Court also DENIES Plaintiff’s own request for
10 sanctions that Plaintiff made in its Opposition to this
11 Motion.
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13 IT IS SO ORDERED.
14 DATED: June 6, 2012
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HONORABLE RONALD S.W. LEW
Senior, U.S. District Court Judge

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