Larry Leavitt et al v. International Paper Company et al

Filing 42

ORDER DENYING THIRD-PARTY DEFENDANTS MOTION TO DISMISS THIRD-PARTY COMPLAINT 34 . Bekiarians counsel is ORDERED TO SHOW CAUSE why sanctions under Rule 11 should not be imposed. Counsel must file a response with the Court by February 11, 2015 by Judge Otis D. Wright, II . (lc) Modified on 1/21/2015. (lc).

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United States District Court
Central District of California

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LARRY LEAVITT; DON SKREDE; and

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Case No. 2:14-cv-03706-ODW(VBKx)

RALPH WINDER,
ORDER DENYING THIRD-PARTY

Plaintiffs,

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DEFENDANT’S MOTION TO

v.

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INTERNATIONAL PAPER COMPANY;

DISMISS THIRD-PARTY

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DOES 1 through 50, inclusive,

COMPLAINT [34]

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Defendants and Third-

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Party Plaintiff,
v.

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YEGHIA BEKIARIAN,
Third-Party Defendant.

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I.

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INTRODUCTION

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Pending before the Court is Third-Party Defendant Yeghia Bekiarian’s Motion

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to Dismiss the Third-Party Complaint. (ECF No. 34.) Defendant and Third-Party

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Plaintiff International Paper Company (“IP”) filed its Third-Party Complaint against

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Bekiarian on November 14, 2014. (ECF No. 34.) The basis for this action is a breach

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of fiduciary duty in a labor and employment dispute. For the reasons discussed

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below, the Motion is DENIED. 1
II.

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FACTUAL AND PROCEDURAL HISTORY

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The Original Complaint in this matter was filed against IP by Plaintiffs Larry

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Leavitt, Don Skrede, and Ralph Winder (collectively “Original Plaintiffs”), all former

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commissioned salesmen at IP. (ECF No. 1.) The Original Plaintiffs allege that they

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accrued and are entitled to a significant amount of promised, unpaid vacation days.

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(Id.) The Original Plaintiffs are not the only former IP employees suing IP for unpaid

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vacation time, and though similar litigation IP learned the basis of the Original

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Plaintiffs’ allegations; Bekiarian, a former manager at IP and supervisor of the

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Original Plaintiffs, allegedly promised employees paid vacation days. (ECF No. 24

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¶ 21.) IP alleges that company policy prohibited paid vacation for commissioned

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salesmen and that to the extent that IP is liable to the Original Plaintiffs for accrued

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vacation time, Bekiarian is responsible for creating this liability. (Id. ¶ 20.) IP’s

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Third Party Complaint “is an action for indemnification, contribution and/or damages”

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and brings causes of action for breach of fiduciary duty, breach of the duty of loyalty,

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gross negligence, and intentional misrepresentation against Bekiarian. (Id. ¶ 2.)

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As mentioned above, other former employees sued IP seeking unpaid vacation

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time. One such action is Farris v. International Paper Co., No. 5:13-cv-0485 (C.D.

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Cal. 2014) (the “Farris Lawsuit”).

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complaint against Bekiarian that is nearly identical to the Third-Party Complaint here.

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See id., ECF. No. 38. Once named a third-party defendant in the Farris Lawsuit,

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Bekiarian filed a motion to dismiss IP’s third-party complaint. See id., Dkt. No. 45.

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Bekiarian’s motion to dismiss in the Farris Lawsuit is nearly identical to the Motion to

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Dismiss Third-Party Complaint in this matter. Both motions contain the same nine

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identical arguments, and the vast majority of the text is word-for-word.

In the Farris Lawsuit, IP filed a third-party

On July 21, 2014, the Farris Lawsuit’s presiding judge, Judge Christina Snyder,

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After carefully considering the papers filed related to the Motion, the Court deems the matter
appropriate for decision without oral argument. Fed. R. Civ. P. 78; L.R. 7-15.
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issued a thorough and well-reasoned opinion denying Bekiarian’s motion to dismiss

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the third-party complaint. Farris, No. 5:13-cv-00485 (C.D. Cal. July 21, 2014) (order

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denying motion to dismiss). Judge Snyder methodically rejected each of Bekiarian’s

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nine legal arguments on the merits. Id. IP and Bekiarian fully litigated the matter, to

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include a hearing, before Judge Snyder. Id.
III.

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DISCUSSION

The resolution of this Motion is a textbook example of the collateral estoppel

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doctrine, which is also known as issue preclusion.

Issue preclusion “forecloses

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relegation of factual or legal issues that have been actually and necessarily decided in

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earlier litigation.” San Remo Hotel, L.P. v. San Francisco City and County, 364 F.3d

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1088, 1094 (9th Cir. 2004). “To preclude parties from contesting matters that they

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have had a full and fair opportunity to litigate protects their adversaries from the

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expense and vexation attending multiple lawsuits, conserves judicial resources, and

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fosters reliance on judicial action by minimizing the possibility of inconsistent

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decisions.” Montana v. United States, 440 U.S. 147, 153–54 (1979). To apply issue

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preclusion, the following elements are required: (1) a full and fair opportunity to

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litigate the issue in the prior action; (2) the issue was actually litigated; (3) a final

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judgment resulted; and (4) the person against whom preclusion is asserted was a party

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to the prior action. In re Palmer, 207 F.3d 566, 568 (9th Cir. 2000).

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Issue preclusion requires the Court to deny Bekiarian’s Motion to Dismiss the

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Third-Party Complaint. All four elements from In re Palmer are easily satisfied; (1)

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Bekiarian and IP had a “full and fair opportunity” to litigate the same legal issues in

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the Farris Lawsuit; (2) the motion to dismiss in the Farris Lawsuit was fully litigated,

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to include a hearing; (3) Judge Snyder issued a final judgment on the merits; and (4)

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Bekiarian was a party to the Farris Lawsuit. See In re Palmer, 207 F.3d at 568. It

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would be a gross misuse of judicial resources to allow Bekiarian another bite at these

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legal issues. Bekiarian’s arguments are precluded.

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IV.

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SANCTIONS

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Federal Rule of Civil Procedure 11(b)(2) states that when a lawyer files a

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motion with the court, the lawyer represents that “the claims, defenses, and other legal

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contentions are warranted by existing law or by nonfrivolous argument for the

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extension, modification, or reversal of existing law . . . .” Fed. R. Civ. P. 11(b)(2).

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The Ninth Circuit recognizes sanctions under Rule 11(b)(2) against an attorney for

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repeatedly filing a rejected claim. See Roundtree v. United States, 40 F.3d 1036, 1040

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(9th Cir. 1994). A district court may impose Rule 11(b)(2) sanctions on its own

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initiative as long as the court provides sufficient due process protections. See Hudson

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v. Moore Bus. Forms., Inc., 836 F.2d 1156, 1163 (9th Cir. 1987).

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This Motion to Dismiss (ECF No. 34) is the epitome of frivolity. As explained

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earlier, Bekiarian’s counsel filed this exact motion in the Farris Lawsuit and Judge

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Snyder denied all nine legal arguments on the merits. Counsel failed to make a single

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argument “for extending, modifying, or reversing” Judge Snyder’s opinion. Fed. R.

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Civ. P. 11(b)(2). In fact, counsel did not even notify the Court that Judge Snyder

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previously ruled on the identical motion.

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In this present motion, Bekiarian’s counsel had the audacity to request sanctions

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against IP’s counsel for filing the Third-Party Complaint. Bekiarian’s Motion to

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Dismiss argues:

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Defendant chose to harass its former employee and force

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him to incur additional attorneys’ fees and costs to oppose

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this motion [sic]. Prior to filing this motion [sic], Defendant

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was informed that claim splitting is impermissible and still

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failed to dismiss its suit. This was solely an intimidation

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tactic in an effort to get Mr. Bekiarian to dismiss his own

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suit against Defendant and recant his testimony. Defendant

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and its counsel are abusing the judicial process for the

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improper purpose of intimidating and harassing its

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employee. Thus sanctions are warranted.

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(ECF No. 34 at 14.)

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This canned paragraph was included word-for-word in Bekiarian’s denied

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motion in the Farris Lawsuit. For counsel to represent to the Court that IP “was

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informed that claim splitting is impermissible” is patently false—Judge Snyder

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informed Bekiarian that this legal argument is wrong. See Farris, No. 5:13-cv-00485

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at *5 (“[T]he Court finds that dismissal on claim-splitting grounds is inappropriate.”).

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Not only is counsel’s representation false, but the request for sanctions only adds to

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the egregious nature of the motion.

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The Court hereby notifies Bekiarian’s counsel—the law firm of Kesluk,

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Silverstein & Jacob, P.C., and the individual attorneys Douglas Silverstein and Lauren

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Morrison—of its intent to order sanctions. Counsel are ordered to show cause why

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sanctions are not appropriate under Rule 11(b)(2). See Feminst Women’s Health Ctr.

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V. Codispoti, 63 F.3d 863, 869–70 (9th Cir. 1995) (requiring notification of sanctions

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and an opportunity to explain allegedly frivolous motion before a court can impose

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sanctions). Counsel are specifically ordered to explain why they requested sanctions

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against IP in their Motion to Dismiss.
IP’s counsel is directed to lodge a request for attorneys’ fees, with supporting

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declarations, for all fees associated with defending this present motion.

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V.

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CONCLUSION

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For the reasons discussed above, the Court DENIES Third Party Defendant

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Bekiarian’s Motion to Dismiss Third Party Complaint. (ECF No. 34.) Bekiarian’s

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counsel is ORDERED TO SHOW CAUSE why sanctions under Rule 11 should not

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be imposed. Counsel must file a response with the Court by February 11, 2015.

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IT IS SO ORDERED.

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January 21, 2015

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____________________________________
OTIS D. WRIGHT, II
UNITED STATES DISTRICT JUDGE

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