Celestine v. FCA US LLC

Filing 114

ORDER IMPOSING SANCTIONS on the Parties and Attorneys Higgins, Mikhov, Martinez, Castruita, Daghighian, Schmitt, Suarez, Fadeff and Livedalen, signed by Magistrate Judge Jennifer L. Thurston on 9/16/2019. (Hall, S)

1
2
3
4
5
6
7
8

UNITED STATES DISTRICT COURT

9

EASTERN DISTRICT OF CALIFORNIA

10
11

LARRY CELESTINE,

12

Plaintiff,

13
14

v.
FCA US LLC,

15

Case No.: 2:17-cv-00597 - JLT
ORDER IMPOSING SANCTIONS ON THE
PARTIES AND ATTORNEYS HIGGINS,
MIKHOV, MARTINEZ, CASTRUITA,
DAGHIGHIAN, SCHMITT, SUAREZ, FADEFF
AND LIVEDALEN

Defendant.

16
On July 15, 2019, the Court, court staff and the jury members assembled for trial. However, the

17
18

attorneys and the parties did not appear. The cost of convening the jury and extra court staff totaled

19

$6,884.78. Consequently, the Court imposes monetary SANCTIONS on the parties1 and on attorneys

20

Russell Higgins, Steve Mikhov, Larry Castruita, Sepher Daghighian, Erik Schmitt, Jeanette Suarez,

21

Jeffrey Fadeff and Kristi Livedalen for their failure to notify the Court that the matter had settled.2

22
23
1

24
25
26
27
28

The Court declines to discharge the order to appear and show cause as to the parties. The reason the jury was summoned
at all was due to the parties’ dispute and their demand for a jury trial.
2
At the hearing, the Court discharged the order as to Aaron Brian and Scott Shepardson because it found they were not
responsible for the failure at issue. The Court also discharges the order to show cause issued to James Martinez and Ms.
Kuenstar, as it finds the failure was not attributable to them. Likewise, the Court refuses to impose sanctions on Maite
Colon and Daniel Kalinowski because neither were attorney of record when the failure occurred. Indeed, though both
claimed an oversight role in the “federal” practice group, both admitted that no one in the group performed any role in the
case let alone had any responsibility for filing the notice of settlement. (Doc. 108 at 12)
On the other hand, the Court is quite concerned with what seemed to be a lack of preparation by Ms. Colon and
Mr. Kalinowski for the hearing in that neither could address who was responsible for filing the notice of settlement or,
even, how the matter was resolved. Given their choice to interject themselves into this action, this is unacceptable.

1

1
2

I.

Background
This matter involved claims that the defendant sold the plaintiff a 2012 Dodge Durango in April

3

2012, which he contends had defects and nonconformities to warranty. The Court held a settlement

4

conference in March 2018 (Doc. 35), but the parties’ positions were intractable, and the matter did not

5

resolve.

6

At a trial setting conference on December 12, 2018, the Court set the matter for trial to occur on

7

July 15, 2019. (Doc. 49) In advance of the trial, the Court held the pretrial conference on May 28, 2019

8

at which it set deadlines for trial activities, including filing and opposing motions in limine. Id. In due

9

course, the parties filed their motions which the Court decided without hearing on June 26, 2019 (Doc.

10

78) The parties also filed their witness and exhibit lists (Docs. 63-69, 71-78); their proposed jury

11

instructions and verdict form. (Docs. 59-61) On July 2, 2019, the Court issued an order detailing the

12

expected “courtroom decorum” to be exhibited during the trial (Doc. 79)

13

As noted above, at the duly appointed time on July 15, 2019, the prospective jury members, the

14

Court and staff—which included the Jury Commissioner and an ECRO operator, sent from Fresno to

15

assist with the trial—assembled for trial. Counsel and the parties did not appear. The Court has been

16

informed by the Clerk of the Court that the cost for travel by this extra court staff was $720.86.

17

At the behest of the Court, the Courtroom Deputy Clerk contacted Sepher Daghighian’s office

18

but could reach only a secretary. Mr. Daghighian had identified himself as the attorney that would

19

handle the trial for the plaintiff. The secretary informed the CRD that the case had settled on July 1,

20

2019. The CRD informed the secretary that the jury was waiting and that the Court expected a call

21

back from a lawyer immediately. Thirty minutes later, the secretary called back and indicated she had

22

spoken to Mr. Daghighian, but there was nothing to add and confirmed the matter settled on July 1,

23

2019. She relayed that Mr. Daghighian was “only” trial counsel, implying that filing a notice of

24
25
26
27
28

In addition, the Court is convinced that these attorneys were not honest with the Court. For example, when asked
who assigned Ms. Colon to draft the response to the order to appear and to be present at the hearing, she claimed no one
had and that it was merely her responsibility. Given what they had already told the Court, related to their absolute lack of
connection to the case, this is inherently ludicrous, not the least of which was because the Court’s “notice of electronic
filing” of the order did not go to either Ms. Colon or Mr. Kalinowski, so someone must have instructed them to come to
court.
Ms. Colon and Mr. Kalinowski are reminded that their ethical duty is to the Court, not to their workmates or
supervisors. They SHALL NEVER again fail to be scrupulously honest with the Court.

2

1
2

settlement was not his responsibility.
Despite that jury members in federal court generally serve for one month, if they are not first

3

selected on a jury, the Court was forced to discharge the entire panel of jurors due to its concern over

4

the damage suffered to the dignity of the court in the jurors’ eyes and because of the imposition on the

5

jurors that the parties’ and lawyers’ conduct had caused. Indeed, five prospective jurors had traveled

6

from Stanislaus County, one from Mariposa County, one from Merced County, six from Fresno County

7

and four from Tulare County. Though nine were from Kern County, one traveled from Ridgecrest—a

8

two-and-half to three-hour drive, depending upon traffic—and one came from California City, which is

9

about a 90-minute drive. Many of the jurors were forced to travel the day before and spend the night,

10

due to the prohibitive distance. The Court has been informed by the Jury Commissioner that the cost of

11

summoning this jury was $6,163.92.

12

Though the settlement occurred on July 1, 2019, the parties and counsel did not file a notice of

13

settlement. Even though the Court issued an order related to the conduct of the jury trial on July 2, 2019

14

(Doc. 79), once again, the attorneys and the parties did not file a notice of settlement. Despite the

15

passage of two weeks after the case settled and until the trial was to start, the attorneys and the parties

16

did not file a notice of settlement. Consequently, the Court ordered the attorneys of record and the

17

parties to appear on August 2, 2019 to show cause why sanctions should not be imposed for the costs

18

incurred caused by summoning the unneeded jury (Doc. 81).

19

In advance of the hearing, counsel filed a joint statement indicating that,

20

1. On July 1, 2019, the Parties reached a settlement in principle in the above
referenced matter.
2. On July 12, 2019, Plaintiff emailed a draft joint notice of settlement for
Defendant’s review and signature prior to filing with the Court.
3. Trial counsels for Defendants, Jeanette C. Suarez and Jeffery Fadeff, were
not included in the July 12, 2019 email and did not receive such a copy of the draft of
the notice of settlement prior to July 15, 2019.

21
22
23
24

(Doc. 83 at 2) The statement then continued, “as of the date of the filing of this Joint Response, the

25

Parties have yet to complete all the terms of the settlement.” Id. at 2-3.

26
27

The Court held a hearing and required all counsel of record to appear. (Doc. 81) At the hearing,
the Court was informed that, in fact, there was no “settlement in principle” reached on July 1, 2019.

28
3

1

Rather, the plaintiff, through a lawyer at the Knight law firm3, signed an acceptance of a Rule 68 offer

2

made sometime earlier. The Court was told by counsel for the defense that this is a typical course of

3

conduct between FCA, its lawyers and the lawyers on the other side, because, though the acceptance of

4

the Rule 68 offer should be filed, FCA prefers that judgment is not entered and the parties will settle on

5

terms consistent with the Rule 68 offer. Mr. Castruita, counsel with Mr. Daghighian’s firm, took the

6

position that Rule 68 controlled, despite his prior contention that the trial attorneys have nothing to do

7

with settling these types of cases4.5
Because certain attorneys, Mr. Mikhov, Mr. Higgins, Mr. Daghighian and Mr. Schmidt, failed

8
9

to appear at the hearing on the order to show cause re: sanctions, the Court cited them to appear to show

10

cause why they should not be held in civil contempt. Each appeared, including Mr. Craig Marcus who

11

purported to represent Mr. Mikhov and Mr. Higgins and the entire Knight law firm.6 Mr. Marcus

12

asserted that the fault for the failure to file the notice of settlement was Ms. Colon’s. Indeed, he told

13

the Court that Ms. Colon was the person responsible for drafting the notice of settlement on July 12,

14

2019. Contrary to this assertion, at the original hearing Ms. Colon told the Court she had no connection

15

to the case until after the Court issued the order to show cause on July 15, 2019 (Doc. 81).

16

THE COURT: What work did you do on this case?

17

MS. COLON: Your Honor, when the OSC re: sanctions was issued I met and conferred with

18
3

19
20
21
22
23
24
25
26
27
28

The statements at the hearing were unclear as to whether the person who signed the offer had the authority to settle the
case. This lawyer, named Amy Morse, is not an attorney of record.
4
The Court is perplexed by the urged contention that the Knight law firm and Mr. Daghighian’s law firm are completely
separate such that they have discrete roles and the one firm does not have any involvement in what the other firm does.
This is belied by Mr. Castruita’s statements that he has seen emails over the last two years on a hundred settlements in
these types of cases and by the fact that these firms are located at the same physical address and share the same suite of
offices. When appearing on this case, each of plaintiff’s attorneys in either the Knight law firm or in Mr. Daghighian’s firm
used the same address and suite number. The sole exception was Mr. Schmitt, though the State Bar website lists the same
address and suite number on Constellation Boulevard for him as the other lawyers use. Thus, they seem to be more akin to
separate “divisions” of the same law firm.
Likewise, this seems to be contradicted by the report that Mr. Daghigian’s firm was “engaged” to act as lead trial
counsel in August 2017. (Doc. 101-3 at 5) If this is true, the Court is perplexed by Mr. Daghighian’s failure to appear at the
settlement conference held on March 20, 2018. (Doc. 35) Rather, Christopher Swanson, of the Knight law firm appeared
despite the Court’s express order that, “Unless otherwise permitted in advance by the Court, the attorneys who will try
the case shall appear at the Settlement Conference . . .” (Doc. 19 at 6, emphasis in the original). To comply with the
Court’s order, Mr. Swanson had to be trial counsel—at least that was the implication caused by his appearance.
5
The Court rejects that trial counsel are not responsible for filing a notice of settlement. All counsel have an ethical
obligation to the Court and all counsel are required by the Court’s Local Rule 160(a) to file the notice of settlement. There
is no requirement that the notice be jointly filed to allow any attorney of record to file the notice.
6
Because the purpose of the contempt citation was to coerce compliance with the Court’s order to appear and explain the
failure to appear at trial, the Court DISCHARGES the contempt.

4

Ms. Suarez from FCA -- counsel for FCA in order to develop an approach into how to do this
and we drafted a declaration which we filed with the Court.

1
2

THE COURT: The facts that you put into that declaration I assume you had to get from
somebody else because you didn’t have any personal knowledge of it, is that true? Did you
negotiate the settlement for example?

3
4

MS. COLON: I did not.

5
6

THE COURT: Did you have any connection, either through oversight or direct work that
you did, related to any aspect of this case before you appeared on July 19th?

7

MS. COLON: No, Your Honor.

8

(Doc. 108 at 12, emphasis added) When the Court questioned Mr. Marcus about what appeared to be an

9

inconsistency between what counsel said at the original hearing and what he said at the “contempt”

10

hearing, Mr. Marcus saw no inconsistency.7
Just as at the original hearing, at the “contempt” hearing no attorney admitted that it was his

11
12

responsibility to file the notice of settlement. In fact, it appeared that each attorney simply walked

13

away from the case without giving it or the Court any further consideration. In any event, the joint

14

statement makes clear that no attorney did anything from July 1, 2019 through July 12, 2019 to alert the

15

Court the matter had settled. The statement makes clear also that though counsel were fully aware as of

16

the last business day before the trial, that no notice of settlement had been filed, they took no action.

17

As pointed out previously, the Court’s Local Rule 160(a) provides,
When an action has been settled or otherwise resolved by agreement of the parties, or
when any motion seeking general or interim relief has been resolved by agreement
outside of Court, and whether the action is pending in the District Court or is before an
appellate court, it is the duty of counsel to immediately file a notice of settlement or
resolution.

18
19
20
21

Emphasis added.
Despite the obligations of the Local Rule, at he hearings, no one said, “this was my fault.”

22
23

Rather, while admitting a willingness “to take responsibility,” these statements were couched in vague

24

and ambiguous terms. The only attorney that counsel truly blamed for the failure was a lawyer who

25

was not of record until after the Court ordered the parties and counsel to show cause re: sanctions. The

26

Court expects more. When the Court asks a direct question, counsel should give a direct answer. There

27
28

7

Mr. Marcus admitted no personal knowledge of the events. The Court presumes, therefore, that Mr. Marcus simply
misread the transcript that he reported to have reviewed.

5

1

should be no attempt to avoid blame, no attempt to obfuscate the facts and no attempt to place

2

responsibility on others for the attorney’s own failure. Counsel are reminded that they practice a

3

profession and do not merely work a job. Their ethics require their attention to their cases from

4

“cradle-to-grave” and this means that they exercise diligence throughout.
To the extent that any attorney thought about the case once Ms. Morse signed the Rule 68 offer,

5
6

apparently each believed that someone else would take care of filing the notice of settlement. This,

7

however, does not excuse that every attorney representing either the plaintiff or the defendant was duty-

8

bound to do it. The fact that no one would simply admits this, speaks of a bigger issue.

9

Local Rule 272 allows the Court to recover its costs in this instance. The Rule provides,

10

If for any reason attributable to counsel or parties, including settlement, the Court is
unable to commence a jury trial as scheduled when a panel of prospective jurors has
reported for voir dire, the Court may assess against counsel or parties responsible all or
part of the cost of the panel.

11
12
13

Thus, the Court will impose on the parties and counsel the costs of assembling the jury, which includes

14

the costs of the Jury Commissioner to travel to Bakersfield to orient the jury and the cost of the ECRO

15

operator to take down the appearances. In addition, the Court will impose sanctions jointly on Mr.

16

Mikhov, Mr. Higgins, Mr. Daghighian and Mr. Schmidt to reimburse Ms. Suarez’s8 reasonable costs to

17

attend the hearing caused by their failure to appear at the original hearing and/or to seek a timely

18

continuance of that hearing. According to the website MapQuest, the distance between Mr. Suarez’s

19

office and the courthouse is 114 miles and the trip should take 2 hours and 21 minutes each way.

20

Because she was admitted to the California State Bar (according to the Bar’s website) in 2008, and the

21

Court awarded an hourly rate of $250 to Kristina Stephenson-Cheang who was admitted in 2008,

22

counsel SHALL pay to Ms. Suarez $1,200 in fees and $116.28 in mileage.

23

From the information presented at the hearings and in the joint response to the order to appear,

24

it is apparent that the plaintiff’s attorneys were fully aware on the last business day before trial that the

25

notice had not yet been filed. Had they acted on that day, the Court could have cancelled the jury. In

26

addition, it was clear that the parties and counsel believed that plaintiff’s counsel would prepare a

27
28

8

The Court recognizes that Ms. Suarez was not required to appear at the hearing. However, representing her client at a
hearing held in a case in which her client is the defendant, is what attorneys are supposed to do.

6

1

notice of settlement. This does not excuse the defense from failing to ensure that the notice was filed or

2

filing it themselves, but it does explain how the failure occurred. Thus, the Court ORDERS:
1.

3

Sanctions in the amount of $6,884.78 are imposed as follows:
a.

4

Seventy-five percent of this total ($5,163.58), SHALL be paid by Larry

5

Celestine and his counsel, Russell Higgins, Steve Mikhov, Larry Castruita, Sepher Daghighian and Erik

6

Schmitt. The obligation is joint and several and the amount is immediately due and payable to the

7

Court;
b.

8
9
10
11

Twenty-five percent of this total ($1,721.20), SHALL be paid by FCA and its

counsel Jeanette Suarez, Jeffrey Fadeff and Kristi Livedalen. The obligation is joint and several and the
amount is immediately due and payable to the Court;
2.

Sanctions in the amount of $1,316.28 SHALL be paid by Russell Higgins, Steve

12

Mikhov, Sepher Daghighian and Erik Schmitt to attorney, Jeanette Suarez. The obligation is joint and

13

several and the amount is immediately due and payable.

14
15
16
17

IT IS SO ORDERED.
Dated:

September 16, 2019

/s/ Jennifer L. Thurston
UNITED STATES MAGISTRATE JUDGE

18
19
20
21
22
23
24
25
26
27
28
7