Lysyuk v. IC System

Filing 20

ORDER signed by District Judge John A. Mendez on 10/5/17 ORDERING that Plaintiff's Amended Motion To Voluntarily Dismiss Her Complaint Pursuant to F.R.C.P. 41(a)(2), ECF No. 13 , is GRANTED IN PART and DENIED IN PART. The Motion is DENIED as to Plaintiff's request that each side bear its costs and GRANTED as to all other provisions. This case is DISMISSED WITH PREJUDICE to Plaintiff's right to re-file same or any part thereof; that each party SHALL BEAR its own fees; and that any eligible costs SHALL BE TAXED against Plaintiff. (Becknal, R)

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1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT 8 EASTERN DISTRICT OF CALIFORNIA 9 10 OLENA LYSYUK, 11 2:17-cv-00283-JAM-CKD Plaintiff, 12 13 No. v. I.C. SYSTEM, INC., a Minnesota corporation, ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFF’S MOTION TO DISMISS 14 Defendant. 15 This matter is before the Court on Plaintiff Olena Lysyuk’s 16 17 Amended Motion to Dismiss with Prejudice. 18 Defendant L.C. System, Inc. filed an opposition to Plaintiff’s 19 motion to dismiss, requesting payment of its costs and attorney’s 20 fees. 21 briefing on the motion and relevant legal authority, the Court 22 will grant in part and deny in part Plaintiff’s Amended Motion to 23 Dismiss with Prejudice and allow Defendant to collect costs under 24 Federal Rule of Civil Procedure 54(d)(1). 1 25 /// Opp’n, ECF No. 14. Am. Mot., ECF No. 13. After consideration of the parties’ 26 27 28 1 This motion was determined to be suitable for decision without oral argument. E.D. Cal. L.R. 230(g). The hearing was scheduled for October 3, 2017. 1 1 I. 2 BACKGROUND On February 10, 2017, Plaintiff, represented by Kimmel & 3 Silverman, P.C., filed suit under the Fair Debt Collection 4 Practices Act, 15 U.S.C. § 1692, et seq. (“FDCPA”) and Rosenthal 5 Act, Cal. Civ. Code § 1788.17. 6 Plaintiff’s Complaint alleged that Defendant “placed repeated and 7 harassing debt collection calls to Plaintiff’s cellular 8 telephone” from phone numbers including (202)870-5891. 9 ¶¶ 14–15. Compl., ECF No. 1. Specifically, Id. at Plaintiff further alleged that Defendant continued to 10 call after she requested not to be contacted on her cellular 11 telephone. 12 allegations on Plaintiff’s “clear memory” that she told Defendant 13 to stop calling and screenshots of calls from the (202)870-5891 14 number continuing into 2016. 15 ¶¶ 4, 7; Reply, Ex. B, ECF No. 15-2. 16 Id. at ¶¶ 16–17. Plaintiff’s counsel based these See Ginsburg Cert., ECF No. 15-1, In April 2017, Defendant sought to have Plaintiff dismiss 17 the case, stating “the last attempt from the IC number identified 18 in your complaint occurred July 7, 2015.” 19 14-2. 20 logs or recordings to verify its statement. 21 ¶¶ 7–8. 22 Plaintiff’s allegations. 23 Dove Decl., ECF No. Defendant did not provide Plaintiff’s counsel with call Ginsburg Cert., Shortly thereafter Defendant filed an Answer, denying Answer, ECF No. 5. The following month, Plaintiff served a document subpoena to 24 Straight Talk Wireless for her telephone records. Subpoena, ECF 25 No. 14-1. 26 Plaintiff’s counsel determined that they did not provide the 27 evidence necessary to continue the suit. 28 Plaintiff’s counsel reached out to Plaintiff, obtained consent to After reviewing the documents from Straight Talk, 2 Ginsburg Cert., ¶ 12. 1 dismiss, and filed the current motion. 2 Id. at ¶¶ 14–15. Plaintiff’s motion to voluntarily dismiss her Complaint with 3 prejudice asks “each side to bear its own costs.” 4 Although Defendant opposes Plaintiff’s motion, the substance of 5 Defendant’s brief makes clear that it does not oppose dismissal 6 with prejudice. 7 should have to pay Defendant’s attorney’s fees and costs. 8 4. 9 U.S.C. § 1692k(a)(3), Federal Rule of Civil Procedure 54(d), and 10 See Opp’n. Mot. at 1. Rather, Defendant argues Plaintiff Id. at Defendant seeks to recover costs and attorney’s fees under 15 28 U.S.C. § 1927. Id. at 4–9. 11 12 II. OPINION 13 A. Legal Standard 14 Federal Rule of Civil Procedure 41(a) governs the voluntary 15 dismissal of an action in federal court. Rule 41(a) provides 16 that “an action may be dismissed at the plaintiff’s request only 17 by court order, on terms that the court considers proper,” unless 18 a plaintiff files a notice of dismissal before the opposing party 19 serves either an answer or a motion for summary judgment, or the 20 parties stipulate to the dismissal. 21 Whether to grant a Rule 41(a)(2) motion lies within the district 22 court’s discretion. 23 277 (9th Cir. 1980). Fed. R. Civ. P. 41(a)(1–2). Sams v. Beech Aircraft Corp., 625 F.2d 273, 24 A Rule 41(a)(2) motion should be granted unless a defendant 25 can show it will suffer “some plain legal prejudice” as a result 26 of dismissal. 27 2001). 28 a plaintiff who is granted a voluntary dismissal under [Rule] Smith v. Lenches, 263 F.3d 972, 975 (9th Cir. “Although costs and attorney fees are often imposed upon 3 1 41(a)(2), no circuit court has held that payment of the 2 defendant’s costs and attorney fees is a prerequisite to an order 3 granting voluntary dismissal.” 4 Armilla Int’l B.V., 889 F.2d 919, 921 (9th Cir. 1989). Stevedoring Servs. of Am. v. 5 Although the Ninth Circuit has yet to resolve the issue, 6 district courts have concluded that fees and costs should not 7 ordinarily be imposed on a plaintiff 2 as a condition of a Rule 8 41(a) motion. 9 05438-JST, 2016 WL 540812, at *2 (N.D. Cal. Feb. 11, 2016); Internmatch, Inc. v. Nxtbigthing, LLC, No. 14-CV- 10 Burnette v. Godshall, 828 F. Supp. 1439, 1443 (N.D. Cal. 1993). 11 In other circuits, attorney’s fees may be imposed as a 12 consequence of voluntary dismissal only under “exceptional 13 circumstances” or pursuant to Federal Rule of Civil Procedure 11. 14 See Cauley v. Wilson, 754 F.2d 769, 772 (7th Cir. 1985) (“Fees 15 are not awarded when a plaintiff obtains a dismissal with 16 prejudice because the ‘defendant cannot be made to defend 17 again.’ ” (quoting Smoot v. Fox, 353 F.2d 830, 833 (6th Cir. 18 1965))); AeroTech, Inc. v. Estes, 110 F.3d 1523, 1528 (10th Cir. 19 1997) (“[A] defendant may not recover attorneys’ fees when a 20 plaintiff dismisses an action with prejudice absent exceptional 21 circumstances.”). 22 B. Analysis 23 In this case, Plaintiff moves to dismiss her claims against 24 Defendant with prejudice, asking each party to bear its own fees 25 and costs. See Mot. Defendant opposes having to bear its own 26 27 28 2 In the Ninth Circuit, Rule 41(a)(2) does not provide an independent base of authority for sanctioning lawyers. Heckethorn v. Sunan Corp., 992 F.2d 240, 242 (9th Cir. 1993). 4 1 fees and costs. 2 the Court will grant Plaintiff’s motion to the extent that her 3 claims are dismissed with prejudice under Rule 41(a)(2). 4 See Opp’n. After consideration of this matter, Because Rule 41(a) does not automatically impose fees and 5 costs upon dismissal, Defendant argues that it is entitled to an 6 award of fees and costs under three other means: 15 U.S.C. 7 § 1692k, Federal Rule of Civil Procedure 54(d), and 28 U.S.C. 8 § 1927. 9 1. 10 FDCPA Fee Provision Defendant first asserts it is entitled to fees and costs 11 under the FDCPA. Opp’n at 4–6. A debt collector may recover 12 attorney fees upon a finding that the plaintiff brought a FDCPA 13 claim in bad faith and for purposes of harassment. 14 § 1692k(a)(3). 15 against an unsuccessful plaintiff, but not her counsel. 16 Midland Credit Mgmt., Inc., 567 F.3d 1137, 1140–42 (9th Cir. 17 2009) (“We hold that 15 U.S.C. § 1692k(a)(3) does not authorize 18 the award of attorney’s fees and costs against a plaintiff’s 19 attorneys.”). 20 must provide evidence that “the plaintiff both knew that his or 21 her claim was meritless and pursued it with the purpose of 22 harassing the defendant.” 23 2:13–CV–00819–JAD, 2014 WL 6455986, at *1 (D. Nev. Nov. 17, 2014) 24 (alterations omitted). 25 bad faith “with more than conclusory assertions.” 26 Northland Grp., No. CV-09-2521-PHX-LOA, 2011 WL 317482, at *5 (D. 27 Ariz. Feb. 1, 2011). 28 /// See 15 U.S.C. Section 1692k(a)(3) authorizes an award of fees Hyde v. To show bad faith or harassment, the defendant Millard v. Northland Grp., Inc., No. The defendant must show the plaintiff’s 5 Chavez v. 1 In support of its bad faith allegation, Defendant contends 2 that Plaintiff’s counsel did not seek pre-litigation discovery, 3 maintained claims after Defendant provided evidence to counter 4 them, and has filed similar suits against Defendant with other 5 plaintiffs. Opp’n at 5–6. 6 The Court does not find these assertions sufficient to 7 establish that Plaintiff brought this action in bad faith or to 8 harass Defendant. 9 cite any case law discussing the application of § 1692k(a)(3). The Court first notes that Defendant did not 10 See Chavez, 2011 WL 317482, at *5 (denying a defendant’s motion 11 for attorney fees under § 1692k(a)(3) where the defendant failed 12 to cite any case law discussing the application of 13 § 1692k(a)(3)); Millard, 2014 WL 6455986, at *1 (same). 14 Defendant does not allege any bad faith or harassment on behalf 15 of Plaintiff herself. 16 this section rely on Plaintiff’s counsel’s conduct. Second, Instead, all of Defendant’s allegations in 17 Accordingly, Defendant has not shown that Plaintiff both 18 knew that her claim was meritless and pursued it with the purpose 19 of harassing Defendant. 20 The Court therefore denies Defendant’s request for attorney fees 21 and costs under § 1692k(a)(3). 22 23 2. See Millard, 2014 WL 6455986, at *1. Costs Under Rule 54(d)(1) Next, Defendant relies on the Supreme Court’s opinion in 24 Marx v. General Revenue Corporation, 133 S. Ct. 1166 (2013), to 25 argue that it is entitled to fees and costs under Federal Rule 26 of Civil Procedure 54(d). 27 that “[u]nless a federal statute, these rules, or a court order 28 provides otherwise, costs—other than attorney’s fees—should be Opp’n at 6–8. 6 Rule 54(d)(1) provides Fed. R. Civ. P. 54(d)(1). 3 1 allowed to the prevailing party.” 2 Marx, the Supreme Court held that “a district court may award 3 costs to prevailing defendants in FDCPA cases without finding 4 that the plaintiff brought the case in bad faith and for the 5 purpose of harassment.” 6 courts are not required to award costs to prevailing defendants 7 and “may appropriately consider an FDCPA plaintiff’s indigency 8 in deciding whether to award costs.” 9 568 U.S. at 374. In Marx maintained that Id. at 387 n.9. In determining whether to award costs under Rule 54(d)(1), 10 the Court must first determine whether Defendant is a 11 “prevailing party.” 12 with prejudice is sufficient to confer prevailing party status 13 on a defendant, enabling the defendant to recover costs under 14 Rule 54(d)(1). 15 (9th Cir. 1997), abrogated on other grounds by Ass’n of Mexican- 16 Am. Educ. v. Cal., 231 F.3d 572 (9th Cir. 2000); see also 17 Nutrivita Labs., Inc. v. VBS Distribution Inc., 160 F. Supp. 3d 18 1184, 1190 (C.D. Cal. 2016), aff’d, No. 16-55329, 2017 WL 19 4217454 (9th Cir. Sept. 22, 2017) (analyzing Ninth Circuit 20 precedent to conclude that voluntary dismissal with prejudice 21 confers prevailing party status). 22 filed a motion to dismiss her case with prejudice, Defendant In the Ninth Circuit, a voluntary dismissal Zenith Ins. Co. v. Breslaw, 108 F.3d 205, 207 Here, where Plaintiff has 23 24 25 26 27 28 3 Rule 54(d)(1) provides for costs other than attorney’s fees, which must be requested by a separate motion under Rule 54(d)(2). Compare Fed. R. Civ. P. 54(d)(1) with Fed. R. Civ. P. 54(d)(2)(A) (“A claim for attorney’s fees and related nontaxable expenses must be made by motion unless the substantive law requires those fees to be proved at trial as an element of damages.” (emphasis added)). Defendant did not file a motion for attorney’s fees, so it is not eligible to receive fees under Rule 54(d)(2). 7 1 qualifies as the prevailing party. 2 Defendant presumptively should be allowed to collect its costs 3 pursuant to Rule 54(d)(1). 4 As the prevailing party, Based on this presumption, the losing party—here, 5 Plaintiff—must show why costs should not be awarded. Save Our 6 Valley v. Sound Transit, 335 F.3d 932, 944–45 (9th Cir. 2003). 7 The district court need only give affirmative reasons when 8 denying costs; no explanation is needed when awarding costs. 9 Id. at 945. Plaintiff’s arguments against costs are that 10 (1) Defendant has not incurred any recoverable costs and 11 (2) Defendant is not a prevailing party. 12 p. 7. 13 is incorrect in this circuit. 14 not yet filed a bill of costs, so the Court is unable to 15 determine what eligible costs Defendant incurred. 16 Reply, ECF No. 15, As analyzed above, Plaintiff’s argument as to the latter As to the former, Defendant has The Court finds that these reasons for denying costs are 17 not sufficiently persuasive to overcome the presumption in favor 18 of an award. 19 00186-DCG, 2017 WL 2105679, at *4 (W.D. Tex. May 12, 2017) 20 (awarding the defendant Rule 54(d)(1) costs after the plaintiff 21 voluntarily dismissed FDCPA claims with prejudice). 22 may file a proposed bill of costs, defined by 28 U.S.C. § 1920, 23 in conformance with Local Rule 292. 24 25 3. See, e.g., Rodriguez v. IC Sys., No. EP-16-CV- Defendant Attorney’s Fees and Costs Under 28 U.S.C. § 1927 Defendant’s final argument seeks attorney’s fees and costs 26 from Plaintiff’s counsel under 28 U.S.C. § 1927. 27 Section 1927 provides that any counsel who “multiplies the 28 proceedings in any case unreasonably and vexatiously” may be 8 Opp’n at 8. 1 required to pay “costs, expenses, and attorneys’ fees reasonably 2 incurred because of such conduct.” 3 imposition of sanctions under § 1927 requires a finding of bad 4 faith.” 5 210 F.3d 1112, 1118 (9th Cir. 2000). 6 sanctionable under § 1927 may be knowing or reckless. 7 Ninth Circuit has clarified, though, that § 1927 applies only to 8 the unnecessary multiplication of filings and tactics once a 9 lawsuit has begun. 28 U.S.C. § 1927. Pac. Harbor Capital, Inc. v. Carnival Air Lines, Inc., Bad faith conduct Id. The In re Keegan Mgmt. Co., Sec. Litig., 78 F.3d 10 431, 435 (9th Cir. 1996). 11 not include the original complaint’s filing. 12 “The Sanctionable conduct under § 1927 does Id. Here, Defendant argues that Plaintiff’s counsel’s conduct 13 was unreasonable and vexatious because: (1) counsel did not 14 secure a document subpoena during the pre-suit investigation; and 15 (2) counsel did not amend or dismiss in April 2017 when Defendant 16 stated there were not records of calls after July 2015. 17 8. 18 Plaintiff’s Complaint, as well as factual disputes where evidence 19 counters the allegation of bad faith. 20 15-1; Reply Ex. B, ECF No. 15-2. 21 sanctionable under § 1927. 22 78 F.3d at 436. 23 Opp’n at These arguments focus predominately on the merits of See Reply, Ex. A, ECF No. This conduct is not 28 U.S.C. § 1927; In re Keegan Mgmt., This case is still at an early stage. Neither party took 24 any depositions and Defendant has not filed any dispositive 25 motions. 26 limited to (1) filing an answer; (2) working on the joint 27 scheduling report; and (3) opposing Plaintiff’s motion to 28 dismiss. Indeed, Defendant’s involvement in the case appears See Answer, ECF No. 5; Joint Sched. 9 Order, ECF No. 7; 1 Opp’n. 2 Complaint and sought to dismiss it, proceedings were not 3 unreasonably and vexatiously multiplied. 4 In the few months between when Plaintiff filed her Defendant has not provided any citations to cases where 5 conduct like Plaintiff’s counsel’s has been sufficient to 6 constitute bad faith or harassment. 7 claims that Plaintiff’s counsel has harassed Defendant through 8 conduct in cases involving other consumers. 9 have found similar allegations of misconduct insufficient to Instead, Defendant relies on Opp’n at 6. Courts 10 warrant fees or costs under § 1927. 11 317482, at *7–8 (denying a request for § 1927 sanctions); 12 Anderson v. Asset Acceptance, LLC, No. C 09-2970 MEJ, 2010 WL 13 1752609, at *5 (N.D. Cal. Apr. 29, 2010) (same). 14 See, e.g., Chavez, 2011 WL The Court finds that Plaintiff’s counsel’s conduct in these 15 proceedings, while of concern to the Court, is not sanctionable 16 under § 1927, and denies Defendant’s request for fees and costs 17 under this section. 18 19 III. 20 ORDER For the reasons set forth above, IT IS ORDERED THAT 21 Plaintiff’s Amended Motion To Voluntarily Dismiss Her Complaint 22 Pursuant to F.R.C.P. 41(a)(2), ECF No. 13, is GRANTED IN PART and 23 DENIED IN PART. 24 that each side bear its costs and GRANTED as to all other 25 provisions. 26 /// 27 /// 28 /// The Motion is DENIED as to Plaintiff’s request 10 1 IT IS THEREFORE ORDERED that this case is DISMISSED WITH 2 PREJUDICE to Plaintiff’s right to refile same or any part 3 thereof; that each party SHALL BEAR its own fees; and that any 4 eligible costs SHALL BE TAXED against Plaintiff. 5 IT IS SO ORDERED. 6 Dated: October 5, 2017 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 11

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