Kresich v. Metropolitan Life Insurance Company

Filing 60

ORDER by Judge Maria-Elena James denying 55 Motion for Sanctions. (mejlc2S, COURT STAFF) (Filed on 4/25/2018)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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JOHN KRESICH,
Plaintiff,

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Case No. 15-cv-05801-MEJ
ORDER RE: MOTION FOR
SANCTIONS

v.

Re: Dkt. No. 55
METROPOLITAN LIFE INSURANCE
COMPANY,

United States District Court
Northern District of California

Defendant.
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INTRODUCTION

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Plaintiff John Kresich seeks sanctions against Defendant Metropolitan Life Insurance

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Company based on MetLife’s allegedly unreasonable and vexatious delay tactics throughout this

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litigation. Mot., Dkt. No. 55. MetLife filed an Opposition (Dkt. No. 58), and Plaintiff filed a

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Reply (Dkt. No. 59). Pursuant to Federal Rule of Civil Procedure 78(b) and Civil Local Rule 7-

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1(b), the Court finds this matter suitable for disposition without oral argument. Having considered

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the parties’ positions, the record in this case, and the relevant legal authority, the Court DENIES

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Plaintiff’s Motion.
BACKGROUND

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This action arises out of MetLife’s alleged failure to process Plaintiff’s claim for long term

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disability benefits. On July 13, 2015, Plaintiff initiated this action in San Francisco Superior

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Court, asserting a single claim for intentional infliction of emotional distress (“Kresich I”). See

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Compl., Dkt. No. 1-1. MetLife removed the action to this Court on December 17, 2015. See Not.

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of Removal, Dkt. No. 1.

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On January 19, 2017, Plaintiff filed a second action against MetLife, styled Kresich v.
Metropolitan Life Insurance Co., 17-cv-284 (N.D. Cal.) (“Kresich II”). Kresich II arises out of the

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same set of facts as Kresich I. See Kresich II Compl., -284 Dkt. No. 1. In that case, Plaintiff

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asserts a single claim under the Employee Retirement Income Security Act of 1974, 29 U.S.C. §

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1132(a)(1)(B). Id. The Court related Kresich II to Kresich I. -5801 Dkt. No. 32; -284 Dkt. No. 9.

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On March 31, 2017, pursuant to Federal Rule of Civil Procedure 30(g), the Court

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sanctioned MetLife a total of $2,604.86 for counsel’s failure to notify Plaintiff’s counsel that a

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deposition had been rescheduled. Sanctions Order, Dkt. No. 37. This sum represented the

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reasonable attorneys’ fees and travel expenses incurred by Plaintiff’s counsel. Id. at 3.

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On August 1, 2017, MetLife notified the Court the parties had resolved both cases through
private mediation. -5801 Dkt. No. 44; -284 Dkt. No. 20. MetLife represented “[t]he parties
anticipate that the settlement will be completed and a stipulation for the dismissal of the entire

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United States District Court
Northern District of California

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action with prejudice will be filed within 30 days.” Id. (both).

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When the parties did not dismiss either action, the Court ordered the parties to file a status

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report. Sept. 25 Status Order, -5801 Dkt. No. 45 & -284 Dkt. No. 21. The parties reported they

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were “jointly working to further resolve tangential issues with regard to the settlement that will

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resolve all of the outstanding issues between the parties.” Oct. 2 Status Rep., -5801 Dkt. No. 46 &

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-284 Dkt. No. 22. The parties “believe[d] that they w[ould] file a joint stipulation for dismissal of

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the entire action within the next 14 days.” Id. (both).

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When the parties did not dismiss either action, the Court once more ordered the parties to

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file a status report. Dec. 5 Status Order, -5801 Dkt. No. 47 & -284 Dkt. No. 23. The parties

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“inform[ed] the Court that [they] ha[d] resolved the entirety of the matter” and were again “jointly

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working to further resolve tangential issues with regard to the settlement that will resolve all of the

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outstanding issues between the parties.” Dec. 19 Status Rep., -5801 Dkt. No. 48. The parties

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represented “[t]here [were] complex issues involving the applicable offsets that MetLife should or

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not apply to benefits” which required additional information from Plaintiff’s employer and which

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the parties did not anticipate at the time of the settlement. Id. They nevertheless still “believe[d]

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that they w[ould] file a joint stipulation for dismissal of the entire action within the next 14 days,

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as they have resolved the primary concerns.” Id.

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On January 18, 2018, the Court held a telephonic status conference to discuss the parties’
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progress on resolving the issues with the settlement. See Jan. 9 Order, -5801 Dkt. No. 49 & -284

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Dkt. No. 24. Based on the parties’ representations at the hearing, the Court ordered them to file a

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stipulation for dismissal by February 15, 2018. Jan. 18 Minutes, -5801 Dkt. No. 50 & -284 Dkt.

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No. 25. The Court scheduled a further status conference for February 15, 2018 in the event the

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parties had not dismissed the actions by that date. Id. (both).
On February 14, 2018, the parties informed the Court that they had “resolved all

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outstanding disputes between them” and that “[t]he issues causing the significant delays in

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finalizing the settlement and submitting the dismissal have been amicably resolved between the

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parties.” Not. of Resolution, -5801 Dkt. No. 51. The parties further represented Plaintiff was
“signing the final settlement agreement at present” and there would be “no impediment to a swift

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United States District Court
Northern District of California

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dismissal once settlement funds are transferred.” Id. The Court vacated the February 15, 2018

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status conference at the parties’ request. -5801 Dkt. No. 52 & -284 Dkt. No. 26.
Success was short lived. On March 23, 2018, Plaintiff requested a status conference before

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the Court. Mar. 23 Request, -5801 Dkt. No. 53. Plaintiff represented he had sent an executed

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settlement release to MetLife’s counsel on February 26, 2018 but had yet to receive payment

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under the terms of the release. Id. Plaintiff further stated “[d]efense counsel ha[d] repeatedly

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ignored phone calls and emails from Plaintiff’s counsel requesting details of when the settlement

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check will arrive.” Id.
The Court held a status conference on April 5, 2018. See Mar. 26 Order, -5801 Dkt. No.

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54. MetLife’s counsel represented he would be sending the settlement check to Plaintiff’s counsel

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by April 6, 2018. Minutes, -5801 Dkt. No. 56. The Court scheduled another status conference for

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April 19, 2018 (id.), which the Court subsequently vacated at the parties’ request (-5801 Dkt. No.

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57). The Court ordered the parties to file a status report no later than April 27, 2018. Id.
Two days prior to the April 5 status conference, Plaintiff filed the instant Motion for

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Sanctions.
LEGAL STANDARD

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A.

28 U.S.C. § 1927
“Any attorney . . . who so multiplies the proceedings in any case unreasonably and
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vexatiously may be required by the court to satisfy personally the excess costs, expenses, and

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attorneys’ fees reasonably incurred because of such conduct.” 28 U.S.C. § 1927. “This statute

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requires proving that the opposing party acted with subjective bad faith.” Kohler v. Flava Enters.,

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Inc., 779 F.3d 1016, 1020 (9th Cir. 2015) (internal quotation marks omitted). “‘Bad faith is

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present when an attorney knowingly or recklessly raises a frivolous argument . . . or argues a

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meritorious claim for the purpose of harassing an opponent[.]’” Id. (quoting Estate of Blas v.

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Winkler, 792 F.2d 858, 860 (9th Cir. 1986)) (ellipses in Kohler). “‘[B]ad faith is present when an

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attorney knowingly or recklessly raises a frivolous argument or argues a meritorious claim for the

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purpose of harassing an opponent.’” Blixseth v. Yellowstone Mountain Club, LLC, 796 F.3d 1004,

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1007 (9th Cir. 2015), cert. denied sub nom. Flynn v. Yellowstone Mountain Club, LLC, 136 S. Ct.

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United States District Court
Northern District of California

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1455 (2016) (quoting New Alaska Dev. Corp. v. Guetschow, 869 F.2d 1298, 1306 (9th Cir. 1989).
While “an attorney subject to discipline is entitled to procedural due process, including

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notice and an opportunity to be heard[,]” this “does not require an oral or evidentiary hearing on

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the issue.” Pacific Harbor Capital, Inc. v. Carnival Air Lines, Inc., 210 F.3d 1112, 1118 (9th Cir.

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2000). “The opportunity to brief the issue fully satisfies due process requirements.” Id.

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B.

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Court’s Inherent Power
“[T]t is firmly established that the power to punish for contempts is inherent in all courts.”

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Chambers v. NASCO, Inc., 501 U.S. 32, 44 (1991) (internal quotation marks and edits omitted).

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However, “inherent powers must be exercised with restraint and discretion. A primary aspect of

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that discretion is the ability to fashion an appropriate sanction for conduct which abuses the

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judicial process.” Id. at 44-45 (citation omitted).

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“[A] district court may levy sanctions pursuant to its inherent power for ‘willful

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disobedience of a court order . . . or when the losing party has acted in bad faith, vexatiously,

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wantonly, or for oppressive reasons.’” Evon v. Law Offices of Sidney Mickell, 688 F.3d 1015,

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1035 (9th Cir. 2012) (quoting Fink v. Gomez, 239 F.3d 989, 992 (9th Cir. 2001)).

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“[A] ‘willful’ violation of a court order does not require proof of mental intent such as bad

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faith or an improper motive, but rather, it is enough that a party acted deliberately.” Id. “For

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purposes of imposing sanctions under the inherent power of the court, a finding of bad faith does
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not require that the legal and factual basis for the action prove totally frivolous; where a litigant is

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substantially motivated by vindictiveness, obduracy, or mala fides, the assertion of a colorable

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claim will not bar the assessment of attorney’s fees.” Fink, 239 F.3d at 992 (internal quotation

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marks omitted).
DISCUSSION

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Plaintiff seeks a total of $100,000 in sanctions: $48,000 in attorneys’ fees plus a $52,000

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punitive award. Mot. at 4-5. Plaintiff argues this will punish MetLife and its “counsel for their

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unreasonable multiplication of these proceedings and vexatious litigation tactics.” Id. at 5.

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A.

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28 U.S.C. § 1927
The record does not support Plaintiff’s request. Since August 2017, the Court has had to

United States District Court
Northern District of California

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repeatedly involve itself in the proceedings, issuing numerous status orders and holding status

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conferences when the parties failed to dismiss the actions according to their representations and

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otherwise failed to apprise the Court of the reasons for the lack of dismissals.

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But the parties’ status reports show the parties were “jointly working” to resolve

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“complex” and unanticipated issues that were ultimately “amicably resolved.” Oct. 2 Status Rep.;

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Dec. 19 Status Rep.; Not. of Resolution. Nothing in the record suggests MetLife vexatiously

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created these issues or took advantage of these issues to harass Plaintiff. On the contrary, the

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parties’ October 2 Status Report shows delays were caused by circumstances outside of MetLife’s

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control, and their December 19 Status Report shows the parties were waiting for additional

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information from Plaintiff’s employer.

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It was not until March 23, 2018 that Plaintiff notified the Court that he was experiencing

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problems communicating with MetLife’s counsel. Mar. 23 Request. But Plaintiff’s

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unauthenticated telephone records (Dkt. No. 55-2) do not support his request for sanctions, nor

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does the fact that Plaintiff’s counsel exchanged numerous emails with MetLife’s counsel and the

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Courtroom Deputy. The Court cannot find that unreturned phone calls and multiple emails, in and

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of themselves, show MetLife and/or its counsel sought to vexatiously multiply the proceedings. It

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is also unclear how Plaintiff’s communications with the undersigned’s Courtroom Deputy

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establish bad faith on the part of MetLife’s counsel.
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Even if Plaintiff had shown sanctions were warranted, he fails to demonstrate that his

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request is reasonable. Plaintiff’s request for $48,000 in attorneys’ fees seeks compensation for

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120 billable hours at a rate of $400 per hour for his two attorneys. Mot. at 5.

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Plaintiff’s earlier request for sanctions was “unsupported by affidavit or declaration.”

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Sanctions Order at 3. Plaintiff’s Motion again does not attach declarations or affidavits from his

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counsel describing what these 120 hours entailed or showing why those hours are reasonable;

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counsel also fail to describe their experience or otherwise establish that $400 per hour is a

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reasonable billable rate. See Civ. L.R. 7-5(a) (“Factual contentions made in support of . . . any

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motion must be supported by an affidavit or declaration and by appropriate references to the
record.”). It is only on Reply that Plaintiff offers the Declaration of Eric Whitehead. Whitehead

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United States District Court
Northern District of California

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Decl., Dkt. No. 59-2. There is no declaration from his other counsel, Ray Bourhis.

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The Court finds the Whitehead Declaration does not support sanctions. First, Plaintiff

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offers no explanation as to why he was unable to provide this declaration with his Motion. By

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providing it with his Reply, he has deprived MetLife of a meaningful opportunity to respond to the

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assertions therein. Mr. Whitehead also does also not attest to his or Ray Bourhis’ qualifications or

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experience so as to justify a $400 per hour billing rate.

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Second, in his Motion, Plaintiff represented he “requests an award of $48,000 in attorneys’

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fees for Attorney Ray Bourhis and Attorney Eric Whitehead’s time (120 billable hours at a rate of

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$400 per hour).” Mot. at 5; see id. at 3 (“Defense counsel’s . . . tactics have caused Plaintiff’s

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attorneys Eric Whitehead and Ray Bourhis to waste far in excess of 120 billable hours since

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mediation on June 29, 2017.”). But the Whitehead Declaration indicates Plaintiff in fact seeks

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compensation for an additional three individuals not identified in the Motion: attorney Matthew

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Bourhis, firm Executive Director Suzanne McCafferty, and paralegal Heather Hendrickson. See

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Whitehead Decl. ¶ 24(1) (“Attorney Eric Whitehead, Attorney Ray Bourhis, and the firm’s

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Executive Director Suzanne McCafferty spent 35 hours conferring with Plaintiff John Kresich”);

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id. ¶ 24(2) (“Attorney Eric Whitehead and Paralegal Heather Hendrickson spent more than 60

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hours emailing, writing, and calling Attorney James Castle, Attorney Royal Oakes, and support

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staff at Hinshaw & Culbertson LLP concerning the status of the settlement release and the status
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of the settlement payment.”); id. ¶ 24(3) (“Attorney Eric Whitehead and Attorney Matthew

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Bourhis spent a total of 3 hours emailing and calling Mediator Arnie Levinson concerning

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Defendant’s conduct. . . .”); see also Fed. R. Civ. P. 11. Plaintiff offers no explanation as to why

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the Court should award fees for hours expended by Matthew Bourhis, Suzanne McCafferty, or

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Heather Hendrickson when his Motion only seeks compensation for work performed by Mr.

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Whitehead and Ray Bourhis. Moreover, Plaintiff does not describe the qualifications and

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experience of Matthew Bourhis, Ms. McCafferty, or Ms. Hendrickson or provide their hourly

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rates. See Mot.; Reply; Whitehead Decl. For instance, there is no indication whether Ms.

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Hendrickson, a paralegal, seeks the same $400 hourly rate as attorneys Mr. Whitehead and Ray
Bourhis. Even if the Court were inclined to award attorneys’ fees for these three individuals’

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United States District Court
Northern District of California

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work, it lacks sufficient information to determine whether their rates are reasonable.

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Finally, Mr. Whitehead does not provide billing records to support his claimed hours. This

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is problematic for two reasons. First, a review of the Whitehead Declaration and the record in this

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case shows possible inaccuracies. For instance, Mr. Whitehead declares he “spent 6 hours

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preparing for and attending Status Conferences with the Court on January 18, 2018 (Doc. 50),

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February 15, 2018 (Doc. 52), and April 5, 2018 (Doc. 56). The conference on January 18 took 64

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minutes.” Whitehead Decl. ¶ 24(5). As phrased, it is unclear whether the 64 minutes for the

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January 18, 2018 telephonic status conference includes preparation time; however, the Court’s

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minutes for the January 18, 2018 telephonic status conference shows that the hearing lasted only

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four minutes. Jan. 18 Minutes (“Time: 11:00 am – 11:04 am”). Second, without billing records,

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the Court cannot determine how many hours Mr. Whitehead and Ray Bourhis spent on this matter

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– the attorneys identified in Plaintiff’s Motion – versus the number of hours expended by Matthew

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Bourhis, Ms. McCafferty, and Ms. Hendrickson.
As such, Plaintiff fails to establish that his $48,000 fee request is reasonable. Based on the

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foregoing, the Court cannot find the record supports a $52,000 punitive award.

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B.

Inherent Powers

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The Court also declines to exercise its inherent powers to impose sanctions. The record

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does not show, and Plaintiff does not offer, evidence of willful disobedience of a Court order or
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bad faith on the part of MetLife’s counsel. On the contrary, as discussed above, many of the

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issues precluding finalizing the settlement were outside of counsel’s control or were unanticipated

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by either party.
CONCLUSION

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The Court DENIES Plaintiff’s Motion.

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IT IS SO ORDERED.

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Dated: April 25, 2018
______________________________________
MARIA-ELENA JAMES
United States Magistrate Judge

United States District Court
Northern District of California

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