Gionis v. Bureau For Private Postsecondary Education et al

Filing 93

MEMORANDUM AND ORDER signed by Chief Judge Morrison C. England, Jr on 2/4/14 GRANTING IN PART 33 Motion for Sanctions. Terminating sanctions are IMPOSED against Plaintiff; and plaintiff's claims against PHEC are hereby DISMISSED WITH PREJUDICE. Pacific Health Education Center terminated. (Meuleman, A)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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XANTHI GIONIS,

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No. 2:13-cv-00912-MCE-CKD

Plaintiff,
v.

MEMORANDUM AND ORDER

CALIFORNIA BUREAU FOR PRIVATE
POSTSECONDARY EDUCATION, et
al.,

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Defendants.

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Plaintiff Xanthi Gionis (“Plaintiff”) seeks relief from Defendants for claims arising

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from her term as Provost of Aristotle University and her candidacy for the California

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State Senate. Presently before the Court is Defendant Pacific Health Educational1

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Center’s (“PHEC”) Motion for Sanctions (“Motion”) against Plaintiff and Plaintiff’s

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counsel, Keith Oliver (“Oliver”) pursuant to Federal Rule of Civil Procedure 11.2 Mot.,

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Oct. 1, 2013, ECF No. 33. Plaintiff filed an untimely Opposition to the Motion. Opp’n,

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Oct. 27, 2013, ECF No. 57. For the reasons set forth below, the Motion is denied.3

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Erroneously sued as “Pacific Health Education Center.”

All further references to “Rule” or “Rules” are to the Federal Rules of Civil Procedure unless
otherwise noted.
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Because oral argument would not be of material assistance, the Court ordered this matter
submitted on the briefs. E.D. Cal. Local R. 230(g).

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BACKGROUND

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According to Plaintiff, in May 2007, the Bureau for Private Postsecondary

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Vocational Education (“the BPPVE”) granted Aristotle University a five-year approval to

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operate as a postsecondary institution in California. Then, on June 30, 2007, the

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BPPVE became a defunct agency and began its two-year sunset period; the Bureau for

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Private Postsecondary Education (“BPPE”) succeeded the BPPVE. During this two-year

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period, California was without a regulatory agency in this sector, and postsecondary

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institutions were without agency guidance or guidelines. At this same time, the BPPVE

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offered all approved postsecondary institutions the option of entering into a voluntary

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agreement to continue operating after the BPPVE disbanded. Aristotle, an approved

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institution, was offered this option, and entered into such an agreement with the BPPVE

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in July 2007. Thereafter, the California Private Postsecondary Education Act of 2009

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(“the Act”) was enacted, setting forth new regulations for private postsecondary

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institutions operating in California. The Act was incorporated into the California

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Education Code. The Education Code permitted institutions which had valid approval to

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operate as of June 30, 2007, to continue to operate “for three calendar years after the

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expiration date of the approval.” Compl. at 6. Accordingly, Plaintiff states, Aristotle

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University had approval to operate until April 2015.

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Plaintiff was the Provost of Aristotle University at this time, and was also a

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candidate for the California State Senate seat for the 40th District. At some point during

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the BPPVE’s sunset period, Aristotle University began offering a Masters of Public

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Health Program, under the terms of the voluntary agreement. In January 2013,

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Defendant Julissa Silva-Garcia, an administrator at the BPPE, contacted Plaintiff and

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informed Plaintiff that Aristotle University was going to be closed for operating without

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approval. According to Plaintiff, the BPPE believed that Aristotle University was not

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licensed because Defendant Karin Tausan (“Tausan”), allegedly an employee of PHEC,
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tipped off the BPPE. Plaintiff alleges that Tausan contacted political adversaries and

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opponents of Plaintiff, along with members of Plaintiff’s own political party, to tarnish

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Plaintiff’s reputation and end Plaintiff’s political career. Tausan’s actions allegedly forced

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Plaintiff out of the State Senate race. According to Plaintiff, PHEC employed Tausan

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and needed to ensure that Tausan acted “professionally and without harm to other

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persons and entities in its educational and professional relationships.” Plaintiff also

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contends that she and the PHEC entered into an agreement “that included the

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requirement that the parties to the contract make the necessary efforts for the contract to

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be fully executed.” However, Plaintiff includes no further details regarding the alleged

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contract.

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The BPPE failed to investigate Tausan’s tip, or the veracity of its content, and

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instead took actions which were intended to close Aristotle University and harm Plaintiff

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and her potential political career.

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On July 18, 2013, Plaintiff filed a verified First Amended Complaint, bringing

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causes of action against PHEC for unfair business practices, negligence, breach of

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contract, and intentional infliction of emotional distress, based on PHEC’s alleged

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position as Tausan’s employer and PHEC’s alleged contract with Plaintiff. On August

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13, 2013, PHEC sent a letter to Oliver, detailing the reasons that the lawsuit has no merit

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as alleged against PHEC—namely, according to PHEC, because Tausan is an

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independent contract for PHEC, not an employee. Oliver was provided a copy of the

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contract between PHEC and Tausan, which reveals the independent contractor nature of

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their relationship. Oliver was provided with additional facts, including that Tausan is self-

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employed; receives no benefits from PHEC; pays all of her own federal, state, and

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employment taxes; receives a 1099 from PHEC; maintains her own malpractice

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insurance; is not subject to disciplinary action or performance evaluations; and has

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control over her work and teaching methods at PHEC. Mot. at 6. Tausan also teaches

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at multiple learning institutions. Id.

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PHEC offered Oliver more time to review facts with his client and conduct his own

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independent investigation; however, Oliver ignored this offer. Then, in compliance with

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the twenty-one day safe harbor of Rule 11, PHEC served Oliver with a copy of the

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Motion for Sanctions on September 9, 2013.

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STANDARD

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Federal Rule of Civil Procedure 11(b) provides, “By presenting to the court a
pleading, written motion, or other paper . . . an attorney or unrepresented party certifies

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that to the best of the person's knowledge, information, and belief, formed after an

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inquiry reasonable under the circumstances: (1) it is not being presented for any

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improper purpose, such as to harass, cause unnecessary delay, or needlessly increase

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the cost of litigation; (2) the claims, defenses, and other legal contentions are warranted

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by existing law or by a nonfrivolous argument for extending, modifying, or reversing

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existing law or for establishing new law; [and] (3) the factual contentions have

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evidentiary support or, if specifically so identified, will likely have evidentiary support after

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a reasonable opportunity for further investigation or discovery.” Fed. R. Civ. P. 11(b). “If,

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after notice and a reasonable opportunity to respond, the court determines that Rule

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11(b) has been violated, the court may impose an appropriate sanction on any attorney,

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law firm, or party that violated the rule . . . .” Fed. R. Civ. P. 11(c).

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The Rule “is designed to deter attorneys and unrepresented parties from violating

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their certification that any pleading, motion or other paper presented to the court is

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supported by an objectively reasonable legal and factual basis; no showing of bad faith

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or subjective intent is required.” Truesdell v. S. Cal. Permanente Med. Grp., 209 F.R.D.

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169, 173-74 (C.D. Cal. 2002). Rather, Rule 11 is governed by an objective standard of

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reasonableness. See, e.g., Conn v. CSO Borjorquez, 967 F.2d 1418, 1420 (9th Cir.

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1992).

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Thus, where a party “pursues causes of action for which there is no legal basis

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whatsoever,” sanctions may be warranted. Bhambra v. True, No. 09–cv–4685–CRB,

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2010 WL 1758895, at *3 (N.D. Cal. Apr. 30, 2010). Pro se plaintiffs are equally subject to

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Rule 11's mandates and sanctions as represented parties. See Warren v. Guelker, 29

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F.3d 1386, 1390 (9th Cir. 1994).

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“Under the plain language of the rule, when one party files a motion for sanctions,

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the court must determine whether any provisions of subdivision (b) have been violated.”

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Id. If Rule 11(b) was violated, the court “may” impose sanctions. Id. at 1390. However,

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a court cannot simply assert that it “declines to impose sanctions.” Id.

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ANALYSIS

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PHEC seeks sanctions against Plaintiff and Oliver on the following grounds: (1)

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Oliver and Plaintiff did not conduct a reasonable inquiry into the facts prior to filing the

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First Amended Complaint against PHEC; (2) there exists no legal theory or colorable

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extension of the law in which PHEC would be liable for the acts and injuries alleged by

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Plaintiff in the First Amended Complaint; and (3) the present suit, as alleged against

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PHEC, was filed for improper purposes.

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Plaintiff filed an untimely opposition to the Motion, arguing that the Motion is moot

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because Plaintiff filed a motion to voluntarily dismiss the Complaint. Opp’n at 1. Plaintiff

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also argues that sanctions are not warranted because “the complaint against PHEC is

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not frivolous and was brought and maintained in good faith.” Plaintiff also argues that

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“PHEC is named as a defendant based on extensive discussions with [P]laintiff

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regarding PHEC’s relationship with [P]laintiff’s institution, and its relationship with an

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individual defendant.” Opp’n at 2; Oliver Decl. 2, Oct. 27, 2013, ECF No. 57-1. Plaintiff

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provides no additional evidence to support her Opposition.

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A.

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First, the Court rejects Plaintiff’s argument that the Motion is moot. A court retains

Rule 11 Violation

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jurisdiction to impose sanctions pursuant to Rule 11 even if a complaint is voluntarily

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dismissed. Soto v. Bank of Am., No. 09-cv-03429-JAM-KJM, 2010 WL 1779892, *2

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(E.D. Cal. Apr. 29, 2010) (citing Cooter & Gell v. Hartmarx Corp., 598 U.S. 386 (1990)

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(“The view more consistent with Rule 11’s language and purposes . . . is that district

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courts may enforce Rule 11 even after the plaintiff has filed a notice of dismissal under

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Rule 41(a)(1).”)).
Next, the Court must assess whether Plaintiff violated Rule 11. Here, the Court

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must conclude that Plaintiff’s action against Defendant PHEC is frivolous. The

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Complaint consists of vague allegations against PHEC; the allegation regarding PHEC’s

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contract with Plaintiff is practically indiscernible. Additionally, the Complaint provides

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absolutely no facts suggesting that Defendant Tausan’s actions were taken in the course

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of her employment. PHEC has submitted evidence to the Court showing that Tausan is

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an independent contractor for PHEC; Plaintiff has submitted absolutely no evidence,

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even in the form of a declaration by Plaintiff or Oliver, to call that fact into question.

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Because PHEC is not Tausan’s employer, and otherwise appears to have no connection

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with the incidents alleged in the Complaint, the Complaint as alleged against PHEC is

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frivolous. Even assuming that Oliver had limited time to investigate the facts, PHEC

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contacted Oliver and offered him additional time to investigate, as made evidence

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available to him showing that PHEC is not involved in the matters alleged in the

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Complaint. Although Oliver states that the Complaint was filed in good faith, Rule 11

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does not require a finding of bad faith. Truesdell, 209 F.R.D. at 173-74. Rather, as

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stated above, Rule 11 is governed by an objective standard of reasonableness. See,

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e.g., Conn, 967 F.2d at 1420.
Accordingly, the Court finds that the allegations concerning PHEC are frivolous

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and in violation of Rule 11.

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B.

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Rule 11 allows payment to the movant of part or all of the reasonable attorney's

Sanctions

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fees and other expenses directly resulting from the violation. Fed. R. Civ. P. § 11(c)(4).

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Here, PHEC requests sanctions in the amount of $8,618.78, to issue jointly and

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severally against Plaintiff and Oliver. However, the Court declines to issue a sanction of

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attorneys’ fees, as PHEC has not provided adequate evidentiary support for the amount

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of fees requested.

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Instead, the Court finds that the appropriate sanction is dismissal of PHEC from

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this case with prejudice. Terminating sanctions are therefore imposed against Plaintiff,

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in favor of PHEC.

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CONCLUSION

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For the reasons set forth above, IT IS HEREBY ORDERED THAT:

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PHEC’s Motion for Rule 11 Sanctions, ECF No. 33, is GRANTED IN
PART;

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Terminating sanctions are imposed against Plaintiff; and

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3.

Plaintiff’s claims against PHEC are hereby DISMISSED WITH

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PREJUDICE.
IT IS SO ORDERED.
Dated: February 4, 2014

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