Pete's Seats, Inc. v. Pete's Sports and Entertainment, LLC, et al.

Filing 87

ORDER DENYING 80 Defendants' Motion for Attorney Fees, signed by Magistrate Judge Jennifer L. Thurston on 10/17/2016. (Hall, S)

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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 11 PETE’S SEATS, INC., Plaintiffs, 12 v. 13 14 PETE’S SPORTS AND ENTERTAINMENT, LLC, et al. 15 Defendants. 16 17 AND RELATED COUNTER-CLAIMS 18 ) ) ) ) ) ) ) ) ) ) ) ) ) Case No.: 1:14-cv-0777 - JLT ORDER DENYING DEFENDANTS’ MOTION FOR ATTORNEY FEES (Doc. 80) The Court dismissed Plaintiff’s claims against Defendant Pete’s Sports and Entertainment, LLC 19 20 and Henry Peter Weseloh with prejudice for failure to prosecute the action and failure to comply with 21 the Court’s orders. (Doc. 75) Defendants now seek an award of fees and costs “[p]ursuant to Rule 54 22 of the Federal Rules of Civil Procedure and Local Rule 293.” (Doc. 80 at 1) For the following reasons, 23 Defendants’ motion for fees is DENIED. 24 I. 25 Background Plaintiff initiated this action by filing a complaint on May 21, 2014, asserting Pete’s Sports and 26 Entertainment, LLC and Henry Peter Weseloh, were liable for trademark infringement, trade name 27 infringement, and unfair competition for their use of the name Pete’s Seats Online. (Doc. 1) The 28 parties elected to engage in early settlement discussions and had a conference with the Court on 1 1 November 14, 2014. 2 The matter did not settle and the Court set a second conference for February 20, 2015. (Doc. 3 25) The Court directed Plaintiff, in advance of the next settlement conference, “to gather competent 4 and admissible evidence of damages suffered as a result of Defendants’ acts or inaction,” and to 5 provide this evidence to Defendants. (Id.) Further, the Court ordered the parties “to submit their 6 confidential settlement conference briefs seven days in advance of the conference.” (Id.) Upon the 7 request of the parties, the second settlement conference was continued to April 3, 2015. (Docs. 26, 27) 8 9 On March 2, 2015, Defendants reported that “despite having nearly four months to gather evidence supporting its alleged damages,” Plaintiff failed to provide the information ordered by the 10 Court. (Doc. 29 at 2) In response, Plaintiff’s counsel, Paul Reidl, reported he had “located an expert 11 who was willing to do the analysis and who was acceptable to his client.” (Doc. 31 at 3) Mr. Reidl 12 reported Plaintiff had provided documents to the expert for analysis, and asserted he could “only 13 encourage the expert and the Plaintiff to expedite the process and complete the analysis as soon as 14 possible, which he has done on multiple occasions.” (Id.) 15 The Court ordered the parties to appear at a telephonic conference, and “noted the apparent 16 failure of compliance with the spirit of the parties’ stipulation to extend the deadline for further 17 settlement conference and for Plaintiff to gather and serve upon Defendants competent and admissible 18 evidence of damages suffered as a result of Defendants’ acts or inaction.” (Doc. 32) Nevertheless, the 19 Court extended the time for Plaintiff to serve damages evidence on Defendants and continued the 20 settlement conference. (Id.) 21 On September 30, 2015, Mr. Reidl reported Plaintiff had not paid for a year him despite Mr. 22 Riedl’s ongoing representation and efforts toward settling the case. (Doc. 45-1 at 2) At the final 23 settlement conference in June 2015, Mr. Reidl informed Plaintiff that he would be withdrawing from 24 his representation if the invoices remained unpaid, but that the company must appear with counsel to 25 proceed with the case. (Id. at 2-3) In addition, Mr. Reidl provided a list of possible attorneys to 26 Plaintiff. (Id.) According to Mr. Reidl, Plaintiff did not take any action to seek new counsel. (Id. at 3) 27 28 On October 29, 2015, the Court granted Mr. Reidl’s request to withdraw as counsel. (Doc. 52) The Court advised Plaintiff “that ‘it is a long standing rule that corporations and other unincorporated 2 1 associations must appear in court through an attorney.’” (Id. at 4, quoting D-Beam Ltd. P’ship v. Roller 2 Derby Skates, Inc., 366 F.3d 972, 973-74 (9th Cir. 2004)). The Court ordered Plaintiff to appear 3 through replacement counsel within twenty-one days of the date of service, or no later than November 4 20, 2015. (Id. at 4) Further, the Court advised Plaintiff that “the failure of the corporation to appear 5 through counsel within 21 days or to comply with any order of the Court will result in the action 6 being dismissed.” (Id., emphasis in original) Plaintiff failed to comply with the Court’s order, and Defendants filed a motion to dismiss the 7 8 matter on November 20, 2015. (Doc. 53) The Court issued an order to Plaintiff to show cause why the 9 action should not be dismissed for failure to comply with the Court’s order and failure to prosecute the 10 action. (Doc. 54) The Court once again advised Plaintiff that “failure to comply with this order or 11 the failure of the corporation to appear through counsel will result in the action being dismissed 12 without further notice.” (Id. at 3, emphasis in original) On the date for the corporation to show cause—December 7, 2015—Plaintiff’s president, Pete 13 14 Kennedy, requested an extension of time to respond to the Court’s order. (Doc. 55) Mr. Kennedy 15 asserted, “Plaintiff has taken steps and is in the process of retaining a lawyer to represent it in this 16 case.” (Id. at 1) However, Mr. Kennedy failed to describe any steps taken, or how Plaintiff was “in the 17 process” of hiring a lawyer. (Id.) The Court denied the request for an extension of thirty days, and 18 ordered the corporation to “appear through counsel or show cause why the matter should not be 19 dismissed no later than December 18, 2015.” (Doc. 56 at 2, emphasis in original) Again, the Court 20 advised Plaintiff it would dismiss the action if the corporation failed to comply with the Court’s order. 21 (Id.) 22 On December 21, 2015, the Court held a hearing on Defendants’ first motion to dismiss. 23 Attorney Thomas Bundy specially appeared on behalf of Plaintiff, and represented to the Court that he 24 would be admitted to the Eastern District of California and, once that occurred, would take on 25 Plaintiff’s representation. Mr. Bundy informed the Court he was not prepared to respond to the motion 26 to dismiss. Accordingly, the Court ordered Plaintiff to file any opposition to the motion no later than 27 December 28, 2015. (Doc. 57) Plaintiff filed its opposition to the motion on December 23, 2015 (Doc. 28 58), to which Defendants filed a reply on January 8, 2015. Because the Court found Defendant 3 1 “suffered little prejudice” at that time due to Plaintiff’s conduct, it denied the motion to dismiss. (Doc. 2 61 at 7) However, the Court forewarned Plaintiff, “any further failures to comply with Court 3 orders, to cooperate in discovery or to make all efforts to move this case to completion will result 4 in an order dismissing this case.” (Id., emphasis in original, footnote omitted) Accordingly, Plaintiff 5 was directed to “serve[] its responses to this discovery by the close of business on February 8, 2016.” 6 (Id., n.2) Defendants were authorized to seek terminating sanctions if Plaintiff failed to comply with 7 the Court’s deadline. (Id.) 8 On February 9, 2016, Defendants filed a motion to dismiss for lack of prosecution, asserting 9 Plaintiff had not complied with the Court’s order. (Doc. 62) However, Defendants failed to present 10 any admissible evidence to support the motion. Therefore, the Court denied Defendants’ motion to 11 dismiss without prejudice. (Doc. 66) In doing so, the Court observed, Plaintiff should not be heartened by this ruling. The Court is significantly concerned about the lack of attention paid to this matter by Plaintiff. If, indeed, it is too much of a burden for Plaintiff to fulfill its obligations to the Court, Plaintiff is strongly urged to dismiss the action. Plaintiff is also advised that had the moving papers been adequate, dismissal could have been a distinct possibility. This, of course, could subject Plaintiff to the possibility of payment of Defendants’ costs and attorney’s fees. 12 13 14 15 16 (Doc. 66 at 3 n. 3, emphasis in original) On April 15, 2016, Defendants renewed their motion to dismiss for Plaintiff’s failure to comply 17 18 with the Court’s orders. (Doc. 68) The Court granted the motion on May 17, 2016. (Doc. 75) 19 Defendants now seek an award of attorneys’ fees. (Doc. 80) 20 II. 21 Motion for Fees under Rule 54 “Pursuant to Rule 54 of the Federal Rules of Civil Procedure and Local Rule 293, Defendants 22 request that the Court order Plaintiff to pay Defendants reasonable costs and attorneys’ fees.” (Doc. 80 23 at 1) Under Rule 54, “[a] claim for attorney’s fees and related nontaxable expenses must be made by 24 motion,” which must: 25 26 27 (i) (ii) be filed no later than 14 days after the entry of judgment; specify the judgment and the statute, rule, or other grounds entitling the movant to the award; (iii) state the amount sought or provide a fair estimate of it; and (iv) disclose, if the court so orders, the terms of any agreement about fees for the services for which the claim is made. 28 4 1 Fed. R. Civ. P. 54(d)(2). Thus, this Court explained: “Rule 54 establishes the procedure to obtain 2 attorney’s fees, and a party seeking attorney’s fees must provide another source for the award of fees 3 such as a rule, statute, or contract.” Schultz v. Ichimoto, 2010 U.S. Dist. LEXIS 118964 at *10 (E.D. 4 Cal. Nov. 9, 2010) (citing Drake v. Lowe’s Cos., Inc., 2005 U.S. Dist. LEXIS 23405 (E.D. Cal. Oct. 11, 5 2005); MRO Comms., Inc. v. AT & T Co., 197 F.3d 1276, 1282 (9th Cir. 1999)) (emphasis in original). 6 III. 7 Discussion and Analysis Defendants rely upon Rule 37 to argue they are entitled to fees in this action. (See Doc. at 1-2) 8 Pursuant to Rule 37, if a party “fails to obey an order to provide or permit discovery . . . the court 9 where the action is pending may issue further just orders.” Fed. R. Civ. P. 37(b). “Just orders” may 10 include the following: 11 (i) 12 (ii) 13 (iii) (iv) (v) (vi) (vii) 14 15 directing that the matters embraced in the order or other designated facts be taken as established for the purposes of the action, as the prevailing party claims; prohibiting the disobedient party from supporting or opposing designated claims or defenses, or from introducing designated matters in evidence; striking pleadings in whole or in part; staying further proceedings until the order is obeyed; dismissing the action or proceedings in whole or in part; rending a default judgment against the disobedient party; or treating as contempt of court the failure to obey any order except an order to submit to physical or mental examination. 16 17 Fed. R. Civ. P. 37(b)(2)(A). The Ninth Circuit explained, “Federal Rule of Civil Procedure 37 18 authorizes the district court, in its discretion, to impose a wide range of sanctions when a party fails to 19 comply with the rules of discovery or with court orders enforcing those rules.” Wyle v. R. J. Reynolds 20 Indus., Inc., 709 F.2d 585, 589 (9th Cir. 1983) (citing Nat’l Hockey League v. Metro. Hockey Club, 427 21 U.S. 639, 643 (1976)). In addition, Rule 37 provides for an award of monetary sanctions: “[T]he court 22 must order the disobedient party, the attorney advising that party, or both to pay the reasonable 23 expenses, including attorney’s fees, caused by the failure, unless the failure was substantially justified 24 or other circumstances make an award of expenses unjust.” Fed. R. Civ. P. 37(b)(2)(C). 25 Defendants argue the Court should award fees “[i]n light of the Court’s finding that Plaintiff 26 repeatedly failed to comply with the Court’s orders; Plaintiff’s refusal to comply with its discovery 27 obligations; and Plaintiff’s bad faith actions by not negotiating in good faith or prosecuting this matter.” 28 (Doc. 80 at 7) Specifically, Defendants assert they “incurred $6,175.00 in attorney’s fees (at a rate of 5 1 $250 per hour) in efforts to make Plaintiff comply with its discovery obligations.” (Id. at 3) In 2 addition, Defendants report they “incurred $3,950.00 in attorney’s fees … in efforts to make Plaintiff 3 comply with the Court’s orders.” (Id. at 5) Finally, Defendants contend Plaintiff acted in bad faith 4 during the settlement conferences with the Court by refusing to meet with Defendants, comment on the 5 settlement offers, or negotiate.1 (Id. at 6) For failure to engage in settlement discussions, Defendants 6 seek $3,591.00 and $1,411.77 in fees and travel costs. (Id. at 7) 7 Significantly, however, the Court previously sanctioned Plaintiff for failure to comply with the 8 Court’s orders —including those related to discovery—by dismissing Plaintiff’s claims with prejudice. 9 (Doc. 75) In light of the terminating sanctions previously imposed, the Court finds the imposition of 10 additional monetary sanctions unjust. See Fed. R. Civ. P. 37(b)(2)(C); see also Reddy v. Precyse 11 Solutions LLC, 2015 U.S. Dist. LEXIS 79352 (E.D. Cal. June 18, 2015) (finding the plaintiff willfully 12 refused to comply with discovery orders and imposing terminating sanctions, but denying an “award 13 for further monetary sanctions [as] unjust”); Meador v. Macy’s Corporate Servs., 2016 U.S. Dist. 14 LEXIS 128163 (D. Haw. Aug. 26, 2016), adopted by 2016 U.S. Dist. LEXIS 127197 (D. Haw. Sept. 15 16, 2016) (finding “awarding monetary sanctions in addition to terminating sanctions would be 16 unjust”); Townsend v. Ihde, 2015 U.S. Dist. LEXIS 1496 (D.Mon. Jan. 7, 2015) (declining a monetary 17 award where dismissal sanctions were imposed). 18 IV. Conclusion and Order 19 Defendants fail to demonstrate the imposition of monetary sanctions is appropriate under Rule 20 37, or support the assertion that fees are appropriate under Rule 54. Accordingly, Defendants’ motion 21 for fees is DENIED. 22 23 24 IT IS SO ORDERED. Dated: October 17, 2016 /s/ Jennifer L. Thurston UNITED STATES MAGISTRATE JUDGE 25 26 27 28 1 Defendants fail to present any admissible evidence regarding the alleged bad faith conduct. 6

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