Hospital of Barstow Inc v. California Nurses Association/National Nurses Organizing Committee (CNA/NNOC) AFL-CIO

Filing 38

MINUTES OF Motion Hearing held before Judge Christina A. Snyder: Defendant's Motion for Attorneys' Fees as a Sanction 32 is DENIED. Plaintiff's request for limited discovery is also DENIED. Court Reporter: Laura Elias. (gk)

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

5:13-cv-01063-CAS(DTBx)

Title

HOSPITAL OF BARSTOW, INC. v. CALIFORNIA NURSES
ASSOCIATION/NATIONAL NURSES ORGANIZING COMMITTEE

Present: The Honorable

Date

‘O’

September 18, 2014

CHRISTINA A. SNYDER

Catherine Jeang
Deputy Clerk

Laura Elias
Court Reporter / Recorder

N/A
Tape No.

Attorneys Present for Plaintiffs:

Attorneys Present for Defendants:

Robert Rosenthal

Nicole Daro

Proceedings:

I.

DEFENDANT’S MOTION FOR ATTORNEYS’ FEES (Dkt. #32,
filed August 8, 2014)

INTRODUCTION

Plaintiff Hospital of Barstow filed this action on June 13, 2013, against defendant
California Nurses Association/National Nurses Organizing Committee. The underlying
litigation arises from disputes between plaintiff, a hospital, and defendant, the union
certified by the NLRB as the representative of registered nurses employed by plaintiff.
Plaintiff filed its lawsuit under § 301 of the Labor Management Relations Act, 29 U.S.C.
§ 185, et seq. Plaintiff filed a first amended complaint (“FAC”) on July 2, 2013. Dkt. #7.
Defendant filed a motion to dismiss the FAC pursuant to Federal Rules of Civil
Procedure 12(b)(1) and 12(b)(6) on July 26, 2013. By order dated August 26, 2013, the
Court granted defendant’s motion to dismiss. Dkt. #16. Plaintiff filed a second amended
complaint (“SAC”) on September 26, 2013, seeking damages, specific performance, and
declaratory relief under Section 301 of the Labor-Management Relations Act, 29 U.S.C.
§ 185(a), arising from an alleged breach of an oral collective bargaining agreement. Dkt.
#19. By order dated November 18, 2013, the Court granted defendant’s motion to
dismiss the SAC with prejudice. Dkt. #24. Plaintiff appealed the dismissal of the SAC to
the Ninth Circuit on December 18, 2013. Dkt. #25. On July 2, 2014, the Ninth Circuit
granted the parties’ motion to voluntarily dismiss the appeal. Dkt. #29. On July 23,
2014, defendant lodged a proposed entry of judgment with the Court. Dkt. #30. On July
25, 2014, the Court entered judgment for defendant. Dkt. #31.
On August 8, 2014, defendant filed a motion for attorneys’ fees. Dkt. #32. This
motion seeks attorneys’ fees as a sanction pursuant to the Court’s inherent powers and
CV-90 (06/04)

CIVIL MINUTES - GENERAL

Page 1 of 15

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Date

‘O’

Case No.

5:13-cv-01063-CAS(DTBx)

September 18, 2014

Title

HOSPITAL OF BARSTOW, INC. v. CALIFORNIA NURSES
ASSOCIATION/NATIONAL NURSES ORGANIZING COMMITTEE

under 28 U.S.C. § 1927. Id. Plaintiff filed an opposition to the motion on August 25,
2014. Dkt. #33. Defendant replied on September 2, 2014. Dkt. #35. After considering
the parties’ arguments, the Court finds and concludes as follows.
II.

BACKGROUND

Plaintiff operates an acute care hospital in Barstow, California. SAC ¶ 5.
Defendant is a labor organization with its principal place of business in Oakland,
California. Id. ¶ 6. On June 29, 2012, the National Labor Relations Board (“NLRB”)
certified defendant as the exclusive collective bargaining representative of the registered
nurses employed by plaintiff. Id. ¶ 7.1
A.

Litigation in This Court

In its now-dismissed action, plaintiff alleged that, prior to certification,
representatives of defendant entered into an oral collective bargaining agreement with
plaintiff. Id. ¶¶ 15, 18-20. Plaintiff also claimed that, on or about April 12, 2012, the
parties communicated regarding defendant’s service on plaintiff of a notice of intent to
organize. Id. ¶¶ 21-23. Plaintiff alleged that these communications included a telephone
conversation between Don Carmody (“Carmody”) and Jane Lawhon (“Lawhon”), one of
defendant’s attorneys. Id. ¶ 24. Plaintiff contended that, during that telephone
conversation, Carmody proposed to Lawhon that the parties orally agree to the terms
contained in the most recent draft of the proposed labor relations agreement with regard
to several items. Id. ¶ 25. Plaintiff claimed that Lawhon agreed to this proposal. Id. ¶
39. Plaintiff also alleged a course of conduct by defendant that, according to plaintiff,
served to ratify the oral collective bargaining agreement. Id. ¶¶ 31-32. Finally, plaintiff
claimed that defendant breached the alleged oral agreement by refusing to negotiate
pursuant to its standards and filing unfair labor practice (“ULP”) charges with the NLRB
instead of submitting the disputes to arbitration under the purported agreement.

1

More comprehensive factual information is set forth in the Court’s orders granting
defendant’s motions to dismiss Barstow’s FAC, Dkt. #16, and SAC, Dkt. #24.
CV-90 (06/04)

CIVIL MINUTES - GENERAL

Page 2 of 15

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Date

‘O’

Case No.

5:13-cv-01063-CAS(DTBx)

September 18, 2014

Title

HOSPITAL OF BARSTOW, INC. v. CALIFORNIA NURSES
ASSOCIATION/NATIONAL NURSES ORGANIZING COMMITTEE

In its November 18, 2013 order, the Court granted defendant’s motion to dismiss
the SAC with prejudice. Dkt. #24. The Court noted that no case law supported the
proposition that parties may enter into an oral collective bargaining agreement, but relied
on other grounds in finding that plaintiff had failed to state a claim for breach of the
alleged oral agreement. Id. at 7. First, the Court concluded that the SAC failed to allege
that the parties agreed to submit their charges to arbitration or that defendant waived its
right to file ULP charges with the NLRB. Id. In so concluding, the Court reasoned that
plaintiff based its contention that the parties had agreed to arbitrate any disputes on the
terms of a proposed agreement that had not been executed. Id. at 8. The Court also
found that allegations that defendant had submitted some disputes to arbitration were
insufficient to support a contention that defendant waived its right to ever bring ULP
charges before the NLRB. Second, the Court found that even if the SAC contained
allegations of a waiver of defendant’s right to file ULP charges, such a waiver would be
unenforceable under the National Labor Relations Act. Id. at 9-11. Finally, the Court
concluded that dismissal with prejudice was appropriate. The court reasoned that the
SAC “suffers from the same deficiency as the FAC, namely, that it lacks factual
allegations supporting plaintiff’s contention that the parties orally agreed to arbitrate all
disputes” and that amendment would be futile because any waiver plaintiff could allege
would be unenforceable. Id. at 13.
B.

Unfair Labor Practice Proceedings Before the NLRB

As mentioned above, plaintiff’s claims were based largely on defendant’s filing
ULP charges with the NLRB instead of submitting the disputes to arbitration under the
purported agreement. Two of these charges were the subject of an administrative law
judge (“ALJ”) decision adverse to plaintiff. See Hosp. of Barstow, Inc. (“ALJ Hearing”),
JD(SF)-41-13, 2013 WL 4835039 (Sept. 9, 2013), adopted as modified by Hospital of
Barstow, Inc. (“NLRB Order”), 361 N.L.R.B. No. 34 (Aug. 29, 2014). The ALJ ruled
against defendants, on September 9, 2013, finding no agreement to arbitrate, oral or
otherwise. See ALJ Hearing, 2013 WL 4835039. The NLRB affirmed that decision on
August 29, 2014. See NLRB Order, 361 N.L.R.B. No. 34, at *1 n.3 (“The parties have
no collective-bargaining agreement setting forth an agreed-upon grievance-arbitration
procedure.”).

CV-90 (06/04)

CIVIL MINUTES - GENERAL

Page 3 of 15

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

5:13-cv-01063-CAS(DTBx)

Title

HOSPITAL OF BARSTOW, INC. v. CALIFORNIA NURSES
ASSOCIATION/NATIONAL NURSES ORGANIZING COMMITTEE

III.

Date

‘O’

September 18, 2014

ANALYSIS
A.

The Timeliness of Defendant’s Motion

Before turning to the merits of defendant’s motion, the Court addresses plaintiff’s
argument that defendant’s motion is untimely. Plaintiff cites this Court’s Local Rule 5410, which provides: “Any motion or application for attorneys’ fees shall be served and
filed within fourteen (14) days after the entry of judgment or other final order, unless
otherwise ordered by the Court. Such motions and their dispositions shall be governed
by L.R. 7-3, et seq.” Plaintiff argues that the Court’s minute order entered on November
18, 2013 constitutes a final order within the meaning of L.R. 54-10 because (1) it
concludes “IT IS SO ORDERED,” (2) it was signed by the deputy clerk, (3) it was
electronically mailed to all counsel, (4) the Court entered it as an “Order” on its Docket
Report, and (5) the Docket Report states “WARNING: CASE CLOSED on 11/18/13.”
Pl. Response at 12. Plaintiff cites cases to the effect that such a minute order can
constitute a “final order” under federal rules of civil and appellate procedure. Therefore,
plaintiff argues, defendant had until December 2, 2013, to file a motion for attorneys’
fees–a deadline defendant missed by several months.
Defendant responds with several arguments. First, defendant stresses that Local
Rule 54-10 is phrased in the disjunctive, starting the clock for filing of an attorneys’ fees
motion within fourteen days “after the entry of judgment or other final order.” Next,
defendant cites Local Rule 58-6, which states that “[n]otation in the civil docket of entry
of a memorandum of decision, an opinion of the Court, or a minute order of the Clerk
shall not constitute entry of judgment pursuant to F.R. Civ. P. 58 and 79(a) unless
specifically ordered by the judge.” Because the Court did not specifically order that the
minute order constituted entry of judgment, defendant argues, the filing clock did not
start until July 25. Finally, defendant argues that plaintiff’s cited cases are inapplicable
because they interpret different procedural rules and concern deadlines for the taking of
appeals, not the filing of attorneys’ fees motions.
The Court is not convinced that the November 18, 2013 order did not trigger the
timing clock under Local Rule 54. Because the Local Rules incorporate and supplement
the Federal Rules, and because little case law exists interpreting the Local Rules, the
Court takes as instructive cases interpreting the Federal Rules. Authorities interpreting
CV-90 (06/04)

CIVIL MINUTES - GENERAL

Page 4 of 15

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Date

‘O’

Case No.

5:13-cv-01063-CAS(DTBx)

September 18, 2014

Title

HOSPITAL OF BARSTOW, INC. v. CALIFORNIA NURSES
ASSOCIATION/NATIONAL NURSES ORGANIZING COMMITTEE

Fed. R. Civ. P. 54 confirm the applicability of its definition of “judgment” as “including
any order from which an appeal lies.” Fed. R. Civ. P. 54(a). The U.S. Court of Appeals
for the District of Columbia explained in analyzing the timeliness of a motion for
attorneys’ fees that Rule 54 “posits a relationship between a judgment and its
appealability.” Castro County v. Crespin, 101 F.3d 121, 128 (D.C. Cir. 1996). That
court cited the Advisory Committee’s commentary that “[o]ne purpose of this provision
is to assure that the opposing party is informed of the claim before the time for appeal has
elapsed.” Id. (citing Fed. R. Civ. P. 54 advisory committee’s notes (1993 Amendments)).
See also Pavlovich v. Nat’l City Bank, 461 F.3d 832, 836 (6th Cir. 2006) (“Fed. R. Civ.
P. 54(d)(2)(B) provides that [an attorney’s fee] motion ‘must be filed no later than 14
days after entry of judgment.’ Rule 54 defines ‘judgment’ as including ‘any order from
which an appeal lies.’”); Sakon v. Andreo, 119 F.3d 109, 113 (2d Cir. 1997) (“Rule 54
as a whole deals with ‘judgment[s], which it defines as decisions that are appealable.
Rule 54(d) allows claims for attorneys’ fees . . . to be made by motion within 14 days
after entry of the ‘judgment.’” (citations omitted)). Here, the November 18 order was
clearly appealable; in fact, plaintiff did appeal the order to the Ninth Circuit. And it does
not appear the circuit courts have drawn defendant’s suggested distinction between “final
judgments” for purposes of appeals and fee motions.
Nevertheless, the date of filing does not bar consideration of defendant’s motion.
Fed. R. Civ. P. 54 excludes from its timing provisions “claims for fees and expenses . . .
as sanctions under 28 U.S.C. § 1927.” Fed. R. Civ. P. 54(d)(2)(E). There is no indication
that the Local Rules were intended to do away with this clear exception, even assuming
they could. Moreover, both the Federal and Local Rules give district courts discretion to
alter the timeline. See Fed. R. Civ. P. 54(d)(2)(B) (“Unless a statute or a court order
provides otherwise, the motion must be filed no later than 14 days after entry of
judgment.”); L.R. 54-10 (stating that the motion shall be filed within fourteen days
“unless otherwise ordered by the Court.”). Finally, to the extent defendant’s motion is
based on the Court’s inherent powers to police itself, the Supreme Court has made clear
that district courts have broad latitude to sanction bad faith litigation conduct even if
sanctions would not be permitted by statute or the Federal Rules. See, e.g., Chambers v.
NASCO, Inc., 501 U.S. 32, 50 (1991). Therefore, the Court turns to the merits of
defendant’s motion.

CV-90 (06/04)

CIVIL MINUTES - GENERAL

Page 5 of 15

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

5:13-cv-01063-CAS(DTBx)

Title

HOSPITAL OF BARSTOW, INC. v. CALIFORNIA NURSES
ASSOCIATION/NATIONAL NURSES ORGANIZING COMMITTEE
B.

Date

‘O’

September 18, 2014

Whether Sanctions Are Appropriate

28 U.S.C. § 1927 provides that any “attorney . . . who so multiplies the
proceedings in any case unreasonably and vexatiously may be required by the court to
satisfy personally the excess costs, expenses, and attorneys’ fees reasonably incurred
because of such conduct.” The statute “applies only to unnecessary filings and tactics
once a lawsuit has begun.” In re Keegan Mgmt. Co., Securities Litig., 78 F.3d 431, 435
(9th Cir. 1996).
Before § 1927 sanctions can be imposed, the court must make a finding of
subjective bad faith, not simply objectively unreasonable behavior. Salstrom v. Citicorp
Credit Services, Inc., 74 F.3d 183, 184 (9th Cir.1996). “Bad faith is present when an
attorney knowingly or recklessly raises a frivolous argument, or argues a meritorious
claim for the purpose of harassing an opponent.” In re Keegan Mgmt. Co., 78 F.3d at
436 (quoting Estate of Blas v. Winkler, 792 F.2d 858, 860 (9th Cir.1986)). Put
differently, “[f]or sanctions to apply, if a filing is submitted recklessly, it must be
frivolous, while if it is not frivolous, it must be intended to harass.” Id. at 436.
The decision to sanction a party under § 1927 rests in the sound discretion of the
district court. See, e.g., Trulis v. Barton, 107 F.3d 685, 694 (9th Cir.1996) (finding that
the district court abused its discretion by not awarding § 1927 sanctions); MGIC
Indemnity Corp. v. Moore, 952 F.2d 1120, 1121 (9th Cir.1991) (holding that the district
court abused its discretion by awarding § 1927 sanctions). As with sanctions awarded
pursuant to the court's inherent powers, § 1927 sanctions must be tailored to the particular
conduct challenged. See, e.g., Blodgett, 709 F.2d at 610–11 (“Section 1927 only
authorizes the taxing of excess costs arising from an attorney's unreasonable and
vexatious conduct; it does not authorize imposition of sanctions in excess of costs
reasonably incurred because of such conduct.”).
Similarly, the Ninth Circuit has emphasized that the level of misconduct required
before it is appropriate to impose sanctions under the court's inherent authority must meet
“a high threshold.” Mendez v. County of San Bernardino, 540 F.3d 1109, 1132 (9th
Cir.2008) (citing Primus Automotive Financial Services, Inc. v. Batarse, 115 F.3d 644,
649 (9th Cir.1997)). “Even in a case where the district court described a litigant's
arguments as ‘totally frivolous,’ ‘outrageous' and ‘inexcusable’ and called his behavior
CV-90 (06/04)

CIVIL MINUTES - GENERAL

Page 6 of 15

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Date

‘O’

Case No.

5:13-cv-01063-CAS(DTBx)

September 18, 2014

Title

HOSPITAL OF BARSTOW, INC. v. CALIFORNIA NURSES
ASSOCIATION/NATIONAL NURSES ORGANIZING COMMITTEE

‘appalling,’ [the Ninth Circuit] nonetheless refused to equate this characterization of
conduct as synonymous with a finding of bad faith.” Id. Like an award of sanctions
under § 1927, whether to impose sanctions pursuant to the court's inherent authority is
left to the court's sound discretion. See Del Nero v. Midland Credit Management, No.
CV 04–1040 ABC (SHx), 2010 WL 1227453, *2 (C.D.Cal. Mar.30, 2010) (“‘Because of
their very potency, inherent powers must be exercised with restraint and discretion.’”
(quoting Chambers v. NASCO, Inc., 501 U.S. 32, 44 (1991))).
Defendant argues (1) that plaintiff’s litigation of the claim that the parties entered
into an oral agreement was brought in bad faith and supported by two wholly or partially
fabricated telephone conversations; and (2) that plaintiff’s briefing on a motion to dismiss
deliberately misrepresented the nature of defendant’s ULP charges before the NLRB.
The Court finds that defendant has not presented clear evidence of the subjective bad
faith necessary to merit sanctions under the high standards described above.
1.

Alleged Bad Faith Claims that the Parties Entered into an Oral
Agreement

Defendant’s central contention is that plaintiff pursued in bad faith a claim that the
parties agreed to an oral collective bargaining agreement. Defendant points to two
alleged fabrications in particular.
a.

The Allegedly Fabricated April 12, 2012 Telephone
Conversation in Which Plaintiff Claims Defendant’s Attorney
Entered into the Purported Oral Agreement

Defendant argues that plaintiff’s bad faith in alleging an oral agreement is apparent
from representations regarding the alleged April 12, 2012 conversation between Carmody
and Lawhon. The original complaint and FAC alleged that the parties entered into an
agreement in April 2012 and that defendant began organizing “[o]n or about April 12,
2012,” but did not mention Daro or any telephone call. Compl. ¶ 12-13; FAC ¶¶ 13-14.
The SAC specifically alleged an oral agreement, see SAC ¶ 2, and a telephone
conversation between Carmody and Lawhon on April 12, 2012, id. ¶ 23. The SAC
further alleged that, during the April 12, 2012 conversation, Carmody “proposed to Ms.
Lawhon that the Parties should simply orally agree to apply the terms memorialized in
CV-90 (06/04)

CIVIL MINUTES - GENERAL

Page 7 of 15

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Date

‘O’

Case No.

5:13-cv-01063-CAS(DTBx)

September 18, 2014

Title

HOSPITAL OF BARSTOW, INC. v. CALIFORNIA NURSES
ASSOCIATION/NATIONAL NURSES ORGANIZING COMMITTEE

the most recent written draft copy of the Proposed [Labor Relations Agreement] with
respect to” several provisions. Id. ¶ 25. The complaint claimed that “Lawhon said that
Mr. Carmody’s proposal made sense and she agreed to his proposal.” Id.
In support of this motion, Lawhon submitted a declaration in which she denies ever
having a telephone conversation with Carmody during which she agreed that defendant
would enter into an oral agreement with plaintiff. See Lawhon Decl. ¶ 5. Lawhon
declares that her telephone conversations with Carmody were limited to details of the
organizing campaign at defendant hospital, and that she and Carmody “never discussed
the negotiation of an initial collective bargaining agreement should [defendant] win the
election.” Id. ¶ 7. She avers that she is “certain that [she] never agreed . . . to enter into
an oral agreement” because she “had not been given authority” to do so by defendant, her
client. Id. ¶ 8. Lawhon also averred that she has checked her telephone records and
found no record of any phone call with Carmody “on or about April 12, 2012, on any
subject.” Id. ¶ 6. In its response, plaintiff stands by its pleading of an agreement “based
upon a meeting that occurred on March 13, 2012, a phone call that took place on April
12, 2012, as well as later extensive dealings between the parties.” Pl. Resp. at 10.
However, plaintiff has never submitted a declaration by Carmody or anyone else stating
under oath that Carmody and Lawhon entered into the alleged oral agreement. Reply at
8-9. Plaintiff also contests Lawhon’s citation of phone records, submitting its own
evidence that plaintiff received a call on April 12, 2012, from a phone number registered
to defendant’s headquarters in Oakland.2 See Rosenthal Decl. Ex. J. Finally, plaintiff
points to course-of-conduct evidence purportedly confirming the existence of the claimed
oral agreement. See id. Ex. K.3

2

In reply, defendant states that over 100 employees work in its Oakland office, and
that Carmody was in contact with two other representatives of defendant during March
and April of 2012. See Reply at 12 (citing Dkt. #12 ¶¶ 4-6).
3

In its opposition to this attorneys’ fee motion, plaintiff requests that the Court
“authorize expedited discovery limited to the subjects of whether an agreement existed
between the parties as to the Union’s organizing campaign, the election supervised by the
Board, and the conduct of the parties’ negotiations.” Pl. Resp. at 23. The Court’s
dismissal with prejudice of the SAC precluded exactly this sort of discovery.
CV-90 (06/04)

CIVIL MINUTES - GENERAL

Page 8 of 15

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Date

‘O’

Case No.

5:13-cv-01063-CAS(DTBx)

September 18, 2014

Title

HOSPITAL OF BARSTOW, INC. v. CALIFORNIA NURSES
ASSOCIATION/NATIONAL NURSES ORGANIZING COMMITTEE

Defendant further argues that Carmody’s failure to mention this alleged
conversation during the NLRB proceedings supports defendant’s position that plaintiff
maintained the litigation in bad faith and presented misleading statements to the court.
Plaintiff denies that these omissions evidence bad faith.
As outlined above, defendant filed multiple ULP charges with the NLRB,
including two that were the subject of an administrative law judge (“ALJ”) decision
adverse to plaintiff. During the investigation leading to this hearing, Carmody submitted
a sworn affidavit to an NLRB investigator. See Def.’s Req. Judicial Notice (“DRJN”)
Ex.1 (dated Nov. 6, 2012). The Regional Director of the NLRB later submitted this
affidavit in proceedings wherein this Court ultimately granted an injunction against
plaintiff. See Dkt. #1 at 361-496, Case No. 5:13-cv-00933-CAS; Rubin v. Hosp. of
Barstow, Inc., No. ED CV 13-933 CAS (DTBx), 2013 WL 3618802 (C.D. Cal. Aug. 26,
2013). In this affidavit, Carmody described a purported labor relations agreement
between the parties, but did not mention any conversation with Lawhon on or around
April 12, 2012, or at any time. See generally id. Defendant contends that this omission
shows that later allegations of an oral agreement based on the telephone conversation
were recently fabricated and therefore made in bad faith. Plaintiff responds that there is
no showing that the affidavit, which “was prepared by one of the NLRB’s agents, and not
Mr. Carmody, was designed to address the circumstances under which the agreement
came about. Instead, Mr. Carmody’s affidavit focuses upon the terms of the agreement.”
Pl. Resp. at 21 n.7 (emphasis in original).
The affidavit focuses on negotiations between the two parties in the summer and
fall of 2012. See generally DRJN Ex. 1. It quotes various provisions of a purported “ad
hoc labor relations agreement,” see, e.g., id. at 2:5 - 3:4, but does not discuss the
negotiation of that purported agreement or any other events before the union election on

Additionally, the Court notes that the NLRB recently affirmed an ALJ’s finding after an
investigation and evidentiary hearing that the purported agreement did not exist. See
NLRB Order, 361 N.L.R.B. No. 34, at *1 n.3 (“The parties have no collective-bargaining
agreement setting forth an agreed-upon grievance-arbitration procedure.”). Regardless,
the Court’s decision to deny the motion for attorneys’ fees moots the reason for plaintiff’s
discovery request, which is therefore DENIED.
CV-90 (06/04)

CIVIL MINUTES - GENERAL

Page 9 of 15

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Date

‘O’

Case No.

5:13-cv-01063-CAS(DTBx)

September 18, 2014

Title

HOSPITAL OF BARSTOW, INC. v. CALIFORNIA NURSES
ASSOCIATION/NATIONAL NURSES ORGANIZING COMMITTEE

May 10, 2012, see id. at 1:2-8. Therefore, the Court does not find that the affidavit is
clear evidence that the oral agreement was alleged in subjective bad faith.
In the subsequent proceeding before an ALJ, plaintiff raised as an affirmative
defense that an arbitrator had exclusive jurisdiction over the dispute. Carmody called
Lawhon to testify at that hearing, but did not ask any questions about the alleged April
12, 2012 phone call during which Lawhon purportedly entered into an oral agreement.
See Lawhon Decl. ¶ 10; see generally Rosenthal Decl. Ex. I. Because Carmody did not
testify either, defendant argues, plaintiff presented no evidence of the alleged oral
agreement, despite its apparent centrality to plaintiff’s defense at the hearing. See
Lawhon Decl. ¶ 11. The ALJ ruled against defendants, on September 9, 2013, finding no
agreement to arbitrate, oral or otherwise. The NLRB affirmed that decision on August
29, 2014.
Plaintiff responds that there was no point in asking Lawhon about the alleged
agreement at the hearing because of her “incessant, bad faith invocation of the attorney
client privilege in response to questions that could not possibl[y] invade the privilege.”
Pl. Resp. at 22. Plaintiff contends that “there was no reason to believe that Ms. Lawhon
would acknowledge the facts of the parties’ relationship.” Id. Although it is true that
Lawhon frequently invoked the attorney client privilege during the her examination,
plaintiff’s contention that Carmody did not inquire about the alleged oral argument
because doing so would have been pointless strains credulity. As the transcript plaintiff
attached to its response shows, Carmody asked numerous questions attempting to
establish the “parties’ relationship” in less direct ways. See, e.g., Rosenthal Decl. Ex. I at
526:25 - 527:25 (asking about the parties’ course of conduct during the organizing
campaign); id. at 528:1 - 532:11 (asking about arbitration of previous disputes between
the parties).
Moreover, if it did occur, the telephone conversation allegedly took place between
Lawhon and a non-client party (Carmody), such that the attorney client privilege would
obviously not apply. The record shows that, in response to Carmody’s complaints about
Lawhon’s invocations of privilege, the ALJ made clear that Carmody could ask questions
about conversations with parties other than Lawhon’s client. See, e.g., id. at 516:4-22
(“[I]f third parties were involved in these communications, then they’re not privileged.”);
id. at 517:4-11 (similar); id. at 533:15 - 534:4 (colloquy between Carmody and the ALJ
CV-90 (06/04)

CIVIL MINUTES - GENERAL

Page 10 of 15

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Date

‘O’

Case No.

5:13-cv-01063-CAS(DTBx)

September 18, 2014

Title

HOSPITAL OF BARSTOW, INC. v. CALIFORNIA NURSES
ASSOCIATION/NATIONAL NURSES ORGANIZING COMMITTEE

over whether a conversation would be privileged). At one point, Lawhon stated, “With
respect to subpoenaed documents of communications with counsel, obviously my
communications with counsel [Carmody] are not privileged.” Id. at 552:3-5. At many
points during the examination, Carmody asked about Lawhon’s conversations with nonclient parties–including Carmody–and Lawhon responded without invoking the attorneyclient privilege. See, e.g., id. at 512:12 -22 (asking if Lawhon talked to Carmody about
the selection of an arbitrator); id. at 518:4-17 (asking if Lawhon had “any conversations
at all with any representatives” of defendant with regard to the consent agreement and
alluding to conversations between Lawhon and Carmody); id. at 519:14 - 520:10 (asking
if Lawhon had post-certification communications with representatives of the hospital,
including Carmody); id. at 523:7 - 526:10 (asking Lawhon about May 2012 emails and
telephone conversations between her and Carmody); id. at 536:13 - 538:6, 538:20 541:14 (questions regarding phone calls between Lawhon and Carmody); id. at 544:2-19
(asking if Carmody and Lawhon discussed organizing campaign literature in a telephone
call); id. at 548:3 - 550:23 (asking if Lawhon recalled having a conversation with any
representative of defendant regarding six different topics).
In light of the foregoing, plaintiff’s contention that Carmody did not ask about the
alleged conversation because to do so would have been futile is unpersuasive. But the
Court cannot say that counsel’s arguably strategic decision not to ask certain questions
during the hearing demonstrates that the litigation was conducted in bad faith so as to
multiply the proceedings unreasonably or vexatiously.
b.

Nicole Daro’s Purported Admission of an Oral Agreement

Defendant also argues that plaintiff’s counsel supported its claim of an oral
agreement with a fabricated admission by Nicole Daro (“Daro”), an attorney for
defendant. As noted above, plaintiff filed its original complaint on June 13, 2013. The
parties agree that on July 3, 2013, Daro and plaintiff’s attorney Robert Rosenthal
(“Rosenthal”) engaged in a telephone conference regarding defendant’s intention to file a
motion to dismiss, pursuant to Local Rule 7-3. See Daro Decl. ¶ 9; Pl. Resp. at 18.
Following this conversation, Rosenthal sent Daro an email memorializing his view of the
discussion. Daro Decl. Ex. 2. In this email, Rosenthal stated that he had “repeatedly
asked [Daro] on what basis [defendant was] claiming that an agreement did not exist” in
light of actions by plaintiff allegedly evincing cooperation that would be unusual in the
CV-90 (06/04)

CIVIL MINUTES - GENERAL

Page 11 of 15

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Date

‘O’

Case No.

5:13-cv-01063-CAS(DTBx)

September 18, 2014

Title

HOSPITAL OF BARSTOW, INC. v. CALIFORNIA NURSES
ASSOCIATION/NATIONAL NURSES ORGANIZING COMMITTEE

absence of an agreement. See id. at 1. He also stated that Daro “responded that there was
never a meeting of the minds.” Id.
On July 22, 2013, Daro and Rosenthal conducted another telephonic Rule 7-3
conference, this time regarding a motion to dismiss the FAC. See Daro Decl. ¶ 10; Pl.
Resp. at 18. Daro has declared that “[a]t no time during the July 22, 2013 phone call, nor
at any other time, did I concede or make any statements that could be construed as
conceding that [defendant] had entered into an oral agreement” with plaintiff. Daro Decl.
¶ 10. She further states that Rosenthal “said that there was no need to ‘beat a dead horse,’
since the parties were already familiar with each other’s positions from the earlier Local
Rule 7-3 conference” and related briefing. Id. On July 25, 2013, Daro and Rosenthal
exchanged emails that Daro characterizes as “follow up” to the July 22 conference. See
Daro Decl. ¶ 11. This correspondence–submitted by defendant and not supplemented or
contested by plaintiff–discusses only the parties’ hearing and briefing schedule for the
motion to dismiss the FAC. See id. Ex. 3. Daro asserts that Rosenthal never
memorialized his view that Daro had “admitted or conceded that there was an
agreement.” Daro Decl. ¶ 11.
In a declaration filed August 5, 2013 in support of plaintiff’s opposition to
defendant’s motion to dismiss the FAC, Rosenthal claimed that, during the July 22, 2013
phone call, Daro
responded at the time [defendant] went to arbitration, it expected that
the Parties would sign the Proposed [Labor Relations Agreement];
however, after the arbitrations occurred, [plaintiff] did not live up to
its promises, and as a consequence, [defendant] believed it had the
right to claim there was never any sort of agreement in place between
the Parties.
Ms. Daro’s comments constitute an admission against interest because
what Ms. Daro essentially conceded was, “Yes, we entered into the
oral agreement, and we were performing it with the expectation that
we would be memorializing the oral agreement in a written
agreement, but when we concluded that [plaintiff] breached the oral
agreement, we thought we could just take the position that we
CV-90 (06/04)

CIVIL MINUTES - GENERAL

Page 12 of 15

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Date

‘O’

Case No.

5:13-cv-01063-CAS(DTBx)

September 18, 2014

Title

HOSPITAL OF BARSTOW, INC. v. CALIFORNIA NURSES
ASSOCIATION/NATIONAL NURSES ORGANIZING COMMITTEE
therefore never had the oral agreement.” Due to the fact that
[defendant] obviously believed there was an oral CBA between the
Parties . . . .

Dkt. #12 at 45 (paragraph number omitted). Daro specifically denies having made the
statements attributed to her. Daro Decl. ¶ 10.4 Defendant further argues that, given the
context, it is implausible that Daro would have admitted the existence of the oral
agreement and that Rosenthal would fail to memorialize that admission in an email, as he
had done with Daro’s denial of an agreement in the first Rule 7-3 conference.
The Court is essentially confronted with a he-said-she-said scenario. Rosenthal’s
failure to memorialize the July 22 conversation was perhaps unwise, but it does not prove
a complete fabrication. Moreover, defendant takes particular issue with Rosenthal’s use
of quotation marks in his declaration, but when read in light of the words “what Ms. Daro
essentially conceded,” the third paragraph of the declaration plausibly stated his
interpretation of Daro’s alleged statement in the second paragraph (however implausible
that interpretation may be). It is at least conceivable that Daro made that statement,
which is more naturally read as consistent with defendant’s position that a “proposed”
agreement was discussed but never entered into. Therefore, the requisite subjective bad
faith has not been clearly shown.
2.

Plaintiff’s Alleged Mischaracterization of Defendant’s ULP Charges

Defendant also claims that plaintiff’s opposition to the motion to dismiss the SAC
mischaracterized defendant’s ULP charges filed with the NLRB in order to evade the
Court’s ruling that the FAC failed to allege the “clear and unmistakable” waiver required
of defendant’s statutory right to bring such charges before the NLRB. See Dkt. #16 at 78. Plaintiff’s opposition argued that the “‘clear and unmistakable waiver’ analysis does
not apply because the ULPs . . . did not contend that [plaintiff] violated any specific
statutory rights . . .; rather, the ULPs simply alleged that during collective bargaining

4

Defendant also argues that plaintiff’s presentation of evidence of conduct from the
Rule 7-3 conference violates Fed. R. Evid. 408 and itself shows bad faith. The Court
finds this argument unavailing.
CV-90 (06/04)

CIVIL MINUTES - GENERAL

Page 13 of 15

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Date

‘O’

Case No.

5:13-cv-01063-CAS(DTBx)

September 18, 2014

Title

HOSPITAL OF BARSTOW, INC. v. CALIFORNIA NURSES
ASSOCIATION/NATIONAL NURSES ORGANIZING COMMITTEE

sessions, [plaintiff] did not comply with the bargaining standard agreed upon by the
Parties.” Dkt. #22 at 9 (emphasis in original); see id. at 10 (“[T]he ULPs filed by
[defendant] never implicated statutory rights.” (emphasis in original)). Defendants
submit copies of these ULP charges, which allege that plaintiff violated Sections 8(a)(1)
and 8(a)(5) of the National Labor Relations Act (“NLRA”), 29 U.S.C. § 158 and do not
mention any agreed-upon bargaining standard. See DRJN Ex. 3. Defendant also points
out that, before the filing of plaintiff’s opposition, an ALJ had found that plaintiff did
violate sections of the NLRA. See ALJ Hearing, 2013 WL 4835039.5 Defendant argues
that the alleged misrepresentation “could not have been inadvertent or merely negligent”
because plaintiff’s counsel also represented plaintiff in a related case in which the ULP
charges were filed as exhibits. Each charge states that the “above-named employer has
engaged in and is engaging in unfair labor practices within the meaning of section 8(a),
subsections (1) and (5) of the National Labor Relations Act.” DRJN Ex. 3. Therefore,
defendant contends that, because plaintiff’s counsel presumably made a reasonable
inquiry into the charges as required by Fed. R. Civ. P. 11, the argument in defendant’s
opposition evinces bad faith. Plaintiff responds that as a “matter of advocacy,” plaintiff
had the right to argue that the ULP charges “masked the essence of the Union’s objection,
which was the notion that [plaintiff] was not complying with the standard developed by
the parties for their negotiations.” Pl. Resp. at 20.
As indicated by the Court’s dismissal with prejudice of the SAC, plaintiff’s
characterization of the ULP charges is far from persuasive. But as with the other conduct
alleged, the Court cannot say that it clearly shows a deliberate attempt to mislead the
Court.
4.

Conclusion

While the Court has significant doubts about the existence of the oral agreement
alleged by plaintiff, the bar for awarding sanctions for bad faith pursuant to § 1927, or

5

Defendant further argues that even the fact that the NLRB heard the ULP charges
on the merits should have put plaintiff on clear notice that NLRA claims had been raised,
because the NLRB’s jurisdiction is limited to statutory rights under the NLRA. 29
U.S.C. § 160.
CV-90 (06/04)

CIVIL MINUTES - GENERAL

Page 14 of 15

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Date

‘O’

Case No.

5:13-cv-01063-CAS(DTBx)

September 18, 2014

Title

HOSPITAL OF BARSTOW, INC. v. CALIFORNIA NURSES
ASSOCIATION/NATIONAL NURSES ORGANIZING COMMITTEE

otherwise, is a high one. On the record before the Court, it cannot be said that plaintiff’s
actions in the litigation clearly demonstrate bad faith.
IV.

CONCLUSION

Based on the foregoing, defendant’s motion for attorneys’ fees as a sanction is
DENIED. Plaintiff’s request for limited discovery is also DENIED.
IT IS SO ORDERED.
00
Initials of Preparer

CV-90 (06/04)

CIVIL MINUTES - GENERAL

:

04

CMJ

Page 15 of 15