Gary Siebert v. Gene Security Network, Inc

Filing 122

ORDER DENYING MOTION FOR SANCTIONS by Judge Jon S. Tigar denying 96 Motion for Sanctions. (wsn, COURT STAFF) (Filed on 11/6/2014)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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GARY SIEBERT,

Case No. 11-cv-01987-JST

Plaintiff,
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v.

ORDER DENYING MOTION FOR
SANCTIONS

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GENE SECURITY NETWORK, INC,

Re: ECF No. 96

Defendant.

United States District Court
Northern District of California

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In this action for alleged violations of the False Claims Act, Plaintiff-relator Gary Siebert

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moves for sanctions and fees against Defendant Gene Security Network, Inc., claiming that

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Defendant engaged in bad faith conduct when one of its executives did not attend a private

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mediation in person. ECF No. 96. Plaintiff demands reimbursement of travel costs and other

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reasonable expenses incurred in connection with this motion. The Court will DENY the motion.

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I.

BACKGROUND
This action arises out of Defendant’s alleged actions of (1) knowingly presenting, or

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causing to be presented, a false or fraudulent claim for payment, and (2) knowingly making, or

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causing to be made, a record or statement material to a false or fraudulent claim, in violation of the

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False Claims Act, 31 U.S.C. §§ 3729 et seq. Plaintiff claims Defendant made misrepresentations

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in order to fraudulently obtain funding from the U.S. Department of Health and Human Services.

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Id.

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The present motion for sanctions arises out of Defendant’s alleged bad faith conduct

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related to a private mediation session. Plaintiff asserts that Defendant acted in bad faith by failing

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to have Mr. Matthew Rabinowitz, CEO of Gene Security Network, Inc., attend the first day of

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mediation in person. ECF No. 96 at 3. Mr. Rabinowitz instead joined the mediation via Skype.

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ECF No. 99 at 5. Plaintiff claims that if he knew Mr. Rabinowitz would not attend in person on

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the first day, Plaintiff would not have proceeded with the mediation. ECF No. 96 at 3. As a

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result, Plaintiff demands that Defendant pay $11,121.54 in mediation and administrative fees that

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Plaintiff incurred due to Defendant’s conduct, as well as approximately $5,000 in travel expenses.

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Id.
Defendant opposes the motion, contending that at all times it mediated in good faith, both

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by ensuring that Mr. Rabinowitz participated by videoconference on the first day, and by

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guaranteeing he could appear in person on the second day of mediation. ECF No. 99 at 4-7.

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Defendant also asserts that the Court does not have authority to issue sanctions with regard to a

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private mediation, and that Plaintiff’s motion was untimely pursuant to Civil Local Rule 7-8(c).
Id. at 9-11.

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United States District Court
Northern District of California

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II.

LEGAL STANDARD
“[A] district court has the inherent power to sanction for: (1) willful violation of a court

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order; or (2) bad faith. . . . Either supports the imposition of sanctions.” Evon v. Law Offices of

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Sidney Mickell, 688 F.3d 1015, 1035 (9th Cir. 2012); see also Chambers v. NASCO, Inc., 501

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U.S. 32, 43-46 (1991). Under Civil Local Rule 7-8(c), sanctions motions “must be made as soon

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as practicable, after the filing party learns of the circumstances that it alleges made the motion

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appropriate.” Civ. L.R. 7-8(c).

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III.

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DISCUSSION
The gist of Plaintiff’s complaint is that Defendant made assurances that Mr. Rabinowitz

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would be personally present at the mediation, when in fact he was only available by

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videoconference.

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Sanctions are available for (1) a violation of a court order, or (2) bad faith conduct. Evon,

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688 F.3d at 1035. Here, there was no violation of a court order, because the mediation was

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privately arranged. Plaintiff cites no authority authorizing the imposition of sanctions in such

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circumstances, and the Court is aware of none.

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Bad faith exists when a party acts “vexatiously, wantonly, or for oppressive reasons.” Id.

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Examples of bad faith conduct include a fraud upon the court, delay or disruption of litigation, or

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interference with the enforcement of a court order. Chambers, 501 U.S. at 46. A court can also
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issue sanctions for “willful or improper conduct” or for “recklessness . . . combined with . . .

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frivolousness, harassment, or an improper purpose.” Fink v. Gomez, 239 F.3d 989, 992-94 (9th

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Cir. 2001).
Even assuming that the Court had the authority to impose sanctions here, Plaintiff has not

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succeeded in establishing bad faith. Plaintiff alleges that Defendant falsely assured Plaintiff’s

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counsel that Mr. Rabinowitz would be physically present at the mediation, when instead he was

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present by Skype. Defendant’s counsel states under penalty of perjury that he made no such

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assurances, and that he instead stated clearly that Mr. Rabinowitz would be at the first day of the

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mediation by Skype, and the second day in person. The Court cannot credit Plaintiff’s version of

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events as being more likely than not, and so Plaintiff has failed to show that Defendant’s acts were

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United States District Court
Northern District of California

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willful, harassing, or so improper as to constitute bad faith.1
These deficiencies are compounded by Plaintiff’s delay in bringing the motion, which was

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filed eight months after the allegedly offending conduct. The Court is unable to conclude that

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Plaintiff moved for sanctions “as soon as practicable” under Civil Local Rule 7-8(c).
CONCLUSION

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For the foregoing reasons, the Court hereby DENIES Plaintiff’s motion for sanctions and

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his demand for fees.
IT IS SO ORDERED.

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Dated: November 6, 2014
______________________________________
JON S. TIGAR
United States District Judge

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The Court need not, and does not, reach the question of whether the facts alleged by Plaintiff
would constitute bad faith if they were established.
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