Hsu v. UBS Financial Services, Inc.

Filing 94

ORDER RE 89 91 92 MOTIONS FOR RECONSIDERATION, SUMMARY JUDGMENT, TRANSFER OF JURISDICTION, SANCTIONS, AND TO DECLARE PLAINTIFF A VEXATIOUS LITIGANT by Judge Alsup. (whalc1, COURT STAFF) (Filed on 3/21/2019)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA
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For the Northern District of California

United States District Court

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DARRU K. “KEN” HSU, individually and
as a trustee of the DARRU K. HSU AND
GINA T. HSU LIVING TRUST, and on
behalf of all others similarly situated,

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ORDER RE MOTIONS FOR
RECONSIDERATION,
SUMMARY JUDGMENT,
TRANSFER OF JURISDICTION,
SANCTIONS, AND TO
DECLARE PLAINTIFF A
VEXATIOUS LITIGANT

Plaintiff,

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No. C 11-02076 WHA

v.
UBS FINANCIAL SERVICES, INC.,
Defendant.
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INTRODUCTION
This order arises from a putative class action dismissed in August 2011. Pro se plaintiff

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moves for reconsideration of a prior order and defendant moves to declare plaintiff a vexatious

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litigant. For the reasons explained below, all motions are DENIED.

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STATEMENT

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The background of this action is set forth in prior orders (Dkt. Nos. 35, 69). In brief,

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plaintiff Darru K. “Ken” Hsu entered into a wrap agreement with defendant UBS Financial

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Services, Inc. for investment and advisory services. Prior to this federal action, Hsu, proceeding

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with counsel, filed a claim with the Financial Industry Regulatory Authority. After the arbitration

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panel dismissed all claims over which it had jurisdiction, Hsu commenced this action under the

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Investment Advisers Act, alleging that defendant provided services “in its capacity as an

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investment advisor,” but that a “hedge clause” in his agreement with defendant impermissibly
required Hsu to waive certain rights under the Act (see Dkt. No. 17).

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An August 2011 order dismissed Hsu’s first amended complaint for failure to state a

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claim. Although the dismissal order permitted Hsu an opportunity to propose a second amended

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complaint, Hsu did not amend and judgment was entered in favor of defendant. Shortly

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thereafter, Hsu appealed. During the appeal process, Hsu terminated counsel and has since

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proceeded pro se. In February 2013, our court of appeals affirmed the dismissal for failure to

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state a claim, and later denied an en banc hearing. The Supreme Court denied a petition for a writ

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of certiorari in October 2013 (Dkt. Nos. 35, 41, 49–50, 54).

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In 2014, again proceeding pro se, Hsu moved to set aside the judgment pursuant to FRCP

fraud on the court by falsifying two documents that it proffered for judicial notice on June 3,

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For the Northern District of California

60(b)(6) and FRCP 60(d)(3). The essence of Hsu’s motion was that defendant had committed

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United States District Court

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2011: (1) a signed agreement between Hsu and Horizon, independent of the wrap contract, and

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(2) the FINRA arbitration panel ruling. A March 2014 order denied Hsu’s motion, finding that

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there was no evidence that the August 2011 dismissal order was undermined by the June 3

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documents, nor was there evidence that the dismissal order restricted Hsu’s access to proper

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judicial review. Specifically with respect to plaintiff’s claim of falsification, the 2014 order found

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that plaintiff had failed to clearly and convincingly demonstrate fraud on the court under FRCP

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60(d)(3) because, among other things, the 2011 dismissal order did not rely on either document in

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dismissing Hsu’s complaint. Our court of appeals affirmed the denial of the motion, and the

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Supreme Court denied a petition for writ of certiorari (Dkt. Nos. 57, 69, 74–79).

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In February 2018, Hsu again moved to set aside the judgment, this time pursuant to FRCP

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60(b)(4), but primarily based on the same argument that defendant falsified documents submitted

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in connection with its motion to dismiss and that the 2011 dismissal order had improperly relied

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on these materials without converting the motion to dismiss into a motion for summary judgment.

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Defendant, in turn, moved to have Hsu declared a vexatious litigant. An April 2018 order denied

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both motions, finding that Hsu had failed to establish that relief from judgment was warranted and

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that the record failed to demonstrate that Hsu was vexatious litigant (Dkt. Nos. 80–81, 87).

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Hsu now brings a motion for reconsideration of the April 2018 order, rearguing the same

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arguments he raised in his motion to set aside the judgment pursuant to FRCP 60(b)(4). He also
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moves to “transfer jurisdiction” and to disqualify the undersigned judge. Defendant again moves

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to declare Hsu a vexatious litigant (Dkt. Nos. 89–92). This order follows full briefing and oral

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argument.

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ANALYSIS

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1.

MOTION FOR RECONSIDERATION.

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This order treats Hsu’s motion for “reconsideration and summary judgment” as a motion

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for reconsideration. Hsu’s motion merely repeats arguments that have already been rejected in

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prior orders, namely that (1) the Court lacked subject-matter jurisdiction over the complaint, (2)

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defendant falsified two documents submitted in connection with its motion to dismiss, and (3) the
2011 dismissal order relied on these falsified materials and improperly failed to convert

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For the Northern District of California

United States District Court

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defendant’s FRCP 12(b)(6) motion into a motion for summary judgment. Because Hsu merely

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repeats arguments previously rejected and fails to show “an intervening change of controlling

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law, the availability of new evidence, or the need to correct a clear error or prevent manifest

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injustice,” Pyramid Lake Paiute Tribe of Indians v. Hodel, 882 F.2d 364, 369 n.5 (9th Cir. 1989),

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the motion for reconsideration is DENIED.

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2.

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Under Section 455 of Title 28 of the United States Code, a judge must disqualify himself

MOTION TO DISQUALIFY.

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“in any proceeding in which his impartiality might reasonably be questioned,” or, among other

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circumstances, where he has a “personal bias or prejudice concerning a party, or personal

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knowledge of disputed evidentiary facts concerning the proceeding.” The applicable standard is

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whether “a reasonable person with knowledge of all the facts would conclude that the judge’s

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impartiality might reasonably be questioned.” Yagman v. Republic Ins., 987 F.2d 622, 626 (9th

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Cir. 1993) (citation omitted). Hsu fails to provide any basis on which a reasonable person would

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conclude that the undersigned’s impartiality might reasonably be questioned or otherwise indicate

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any bias or prejudice. The motion to disqualify is DENIED.

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MOTION TO TRANSFER.

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Hsu next seeks to “transfer jurisdiction,” although it is unclear to which court he would

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like this action to be transferred. Because Hsu fails to provide an appropriate basis to transfer this

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closed action, the motion is DENIED.

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MOTION TO DECLARE PLAINTIFF A VEXATIOUS LITIGANT.

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This is defendant’s second request to declare Hsu a vexatious litigant. The April 2018

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order denied defendant’s first request on the ground that the record failed to demonstrate that

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Hsu’s motions were so numerous and abusive so as to require a pre-filing order. The April 2018

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warned Hsu, however, “that he ha[d] no right to file frivolous and harassing motions, and that
doing so violates FRCP 11.” The order also warned Hsu that if he “continue[d] with

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For the Northern District of California

United States District Court

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unmeritorious litigation, he [would] soon be declared a vexatious litigant.”
Since that time, nearly a year has passed and the only motions filed by Hsu are those

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addressed herein. Although Hsu’s latest filing is certainly duplicative and repetitive, this order

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cannot conclude that Hsu’s conduct has been sufficiently abusive to warrant a pre-filing order.

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This, however, will be Hsu’s final warning. Should he file any new filings that are duplicative of

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those that have already been definitively resolved in this case, he will be declared a vexatious

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litigant and will be required to submit for pre-filing review any pro se papers filed in this district

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against or having to do with defendant or any of its current or former employees.1
CONCLUSION

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Based on the foregoing, Hsu’s motion for reconsideration, to transfer, and to disqualify, as

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well as his request for sanctions against defense counsel, are DENIED. Defendant’s motion to

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declare Hsu a vexatious litigant is also DENIED.
IT IS SO ORDERED.

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Dated: March 21, 2019.

WILLIAM ALSUP
UNITED STATES DISTRICT JUDGE

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In opposing defendant’s motion to declare him a vexatious litigant, Hsu moves for sanctions against
defense counsel. The request for sanctions in unmeritorious and is DENIED.

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