Patriot Rail Corp. v. Sierra Railroad Company

Filing 603

ORDER signed by District Judge Troy L. Nunley on 8/5/2015. Court agrees Patriot's legal stances throughout litigating this matter have been attenuated at times and that some of conduct has walked a fine line between vigorously litigating case and being vexatious. However, Court is DECLINING to make a finding of bad faith and thus DENIES Sierra's 528 Motion for Sanctions. (Marciel, M)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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PATRIOT RAIL CORP.,

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No. 2:09-cv-0009-TLN-AC

Plaintiff,
ORDER DENYING SIERRA’S MOTION
FOR SANCTIONS (ECF NO. 528)

v.
SIERRA RAILROAD CO.,

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Defendant.

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AND RELATED COUNTERCLAIMS
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This matter is before the Court pursuant to Counter-Plaintiff Sierra Railroad Company’s

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(“Sierra”) motion for sanctions (ECF No. 528). For the reasons stated below, Sierra’s motion is

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hereby DENIED.

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The Court has broad discretion to impose sanctions under two different, non-exclusive

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legal bases: (1) 28 U.S.C. § 1927, which penalizes unreasonable and vexatious litigation tactics;

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and (2) the Court’s “inherent authority to impose sanctions for a broad range of willful improper

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conduct.” Fink v. Gomez, 239 F.3d 989, 992 (9th Cir. 2001).

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The Court is authorized under 28 U.S.C. § 1927 (“Section 1927”) to require an attorney

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“who so multiplies the proceedings in any case unreasonably and vexatiously . . . to satisfy

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personally the excess costs, expenses, and attorneys’ fees reasonably incurred because of such

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conduct.” Section 1927 gives the Court authority to impose sanctions on the responsible
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attorneys. Id..
The Court may also exercise its inherent authority to order sanctions to penalize conduct

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that abuses the judicial process. The Court may exercise its inherent power independent of, or in

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addition to, any available statutory scheme. Chambers v. NASCO, Inc., 501 U.S. 32, 46 (1991)

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(“These other mechanisms, taken alone or together, are not substitutes for the inherent power, for

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that power is both broader and narrower than other means of imposing sanctions.”). The Court

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may impose sanctions under its inherent authority if a party or counsel has demonstrated by clear

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and convincing evidence to have “acted in bad faith, vexatiously, wantonly, or for oppressive

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reasons.” Chambers, 501 U.S. at 45 (internal quotations omitted).

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Sierra is asking the Court to impose sanctions against Patriot and its counsel. Sierra

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asserts that during the punitive damages phase, Patriot and its counsel disregarded the truth and

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the law, and directly violated their prior assurances to the Court and Sierra, by trying to

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improperly keep key financial evidence from the jury, shielding Patriot’s assets and unjustifiably

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evading punitive damages. (ECF No. 528 at 1.) Sierra further contends that Patriot brought

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frivolous motions to stop Sierra from presenting evidence of Patriot Rail Company LLC’s net

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worth because, they said, “Patriot Rail Company LLC was a separate legal entity from Patriot

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Rail Corp., was not a party to this litigation, and subjecting it to punitive damages would violate

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due process.” (ECF No. 528 at 1.)

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The Court agrees that Patriot’s legal stances throughout litigating this matter have been

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attenuated at times and that some of the conduct has walked the fine line between vigorously

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litigating this case and being vexatious. However, the Court declines to make a finding of bad

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faith and thus DENIES Sierra’s motion for sanctions (ECF No. 528).

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IT IS SO ORDERED.

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Dated: August 5, 2015

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Troy L. Nunley
United States District Judge

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