United States, ex rel. et al v. T L Peterson, Inc. et al

Filing 189

ORDER by Judge Kandis A. Westmore denying Plaintiff's 126 Motion for Sanctions. (kawlc1, COURT STAFF) (Filed on 9/23/2019)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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UNITED STATES, EX REL., et al.,
Plaintiffs,

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United States District Court
Northern District of California

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Case No. 4:17-cv-02277-KAW
ORDER DENYING PLAINTIFF'S
MOTION FOR SANCTIONS

v.

Re: Dkt. No. 126
T L PETERSON, INC., et al.,
Defendants.

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On November 14, 2018, Plaintiff Matthew Zugsberger filed a motion for sanctions, or in

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the alternative, to show cause for failure to pay maintenance and cure, as required by the Court’s

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September 28, 2018 order. (Pl.’s Mot., Dkt. No. 126.)

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The Court held a hearing on the motion for sanctions on December 20, 2018, and a

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subsequent hearing on the order to show cause on January 31, 2019. Upon consideration of the

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parties’ filings, as well as arguments made during the hearings, and for the reasons set forth below,

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Plaintiff’s motion for sanctions is DENIED.

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I.

BACKGROUND

Plaintiff Matthew Zugsberger allegedly sustained injuries while employed as a

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commercial diver by Defendants Galindo Construction Company, Inc. and Ron Galindo. In

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admiralty cases, “a seaman can ‘establish his entitlement to maintenance,’ by proving only that he

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‘bec[ame] ill’ or ‘injured while in the service of the ship.’” Barnes v. Sea Hawaii Rafting, LLC,

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889 F.3d 517, 538 (9th Cir. 2018) (quoting Vella v. Ford Motor Co., 421 U.S. 1, 3 (1975)).

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On September 28, 2018, the Court granted Plaintiff’s partial motion for summary

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judgment, and awarded maintenance and cure to Plaintiff during the pendency of the case.

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(9/28/18 Order, Dkt. No. 116.) Specifically, the Court ordered Defendants to (1) pay all past cure

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incurred by Plaintiff within 60 days; (2) pay all past maintenance, in the amount of $33,476.86,

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within 60 days; (3) pay maintenance in the amount of $53.33 per day going forward; and (4) “pay

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and authorize on an ongoing basis all reasonable cure incurred by Plaintiff on or after the date of

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this Order until Plaintiff reaches maximum cure for his injuries which manifested during the

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Project.” Id. at 20-21. All past due amounts were due on or before November 27, 2018.
On November 14, 2018, Plaintiff filed a motion for sanctions for failure to pay

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maintenance at $53.33/day commencing on September 28, 2018, and to authorize and pay cure on

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an ongoing basis from September 28, 2018 forward. (Pl.’s Mot., Dkt. No. 126 at 3.) On

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November 28, 2018, Defendants filed an opposition. (Defs.’ Opp’n, Dkt. No. 127.) On December

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6, 2018, Plaintiff filed a reply. (Pl.’s Reply, Dkt. No. 137.)
On December 13, 2018, Defendants filed objections to evidence Plaintiff filed in support

United States District Court
Northern District of California

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of his reply. On December 14, 2018, Plaintiff filed a request for court approval to submit a

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response to Defendants’ evidentiary objections. On December 20, 2018, the Court held a hearing

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on Plaintiff’s motion for sanctions.
Following the hearing, the Court issued an order to show cause to Defendants to show why

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they should not be subject to sanctions for not fully complying with the Court’s September 28,

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2018 order. (Dkt. No. 145.) Therein, the Court overruled Defendants’ objections, and denied

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Plaintiff’s request as moot. On January 31, 2019, the Court held a hearing on the order to show

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cause.

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II.

LEGAL STANDARD

A court may impose sanctions under its inherent powers where a party has willfully

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disobeyed a court order, or where the party has “acted in bad faith, vexatiously, or for oppressive

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reasons.” Octane Fitness, LLC v. ICON Health & Fitness, Inc., 134 S. Ct. 1749, 1758 (2014)

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(citation omitted). These powers, however, “must be exercised with restraint and discretion.”

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Chambers v. NASCO, Inc., 501 U.S. 32, 44 (1991). Accordingly, the bad-faith requirement sets a

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“high threshold,” Primus Auto. Fin. Servs., Inc. v. Batarse, 115 F.3d 644, 649 (9th Cir. 1997),

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which may be met by willful misconduct, or recklessness that is coupled with an improper

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purpose. Fink v. Gomez, 239 F.3d 989, 993-94 (9th Cir. 2001). It is the moving party’s burden to
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demonstrate that the party against whom it seeks sanctions acted with the requisite bad faith or

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improper purpose. See Burnett v. Conseco, Inc., 87 F. Supp. 3d 1238, 1249 (N.D. Cal. 2015).
III.

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DISCUSSION

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At the December 20, 2018 hearing, the parties informed the Court that the only provision

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of the September 28, 2018 order that Defendants had complied with was the paying maintenance

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rate of $53.33 per day going forward. The Court notes that the past due maintenance and cure

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were not due until sixty days after the order was issued, or November 27, 2018. At the time the

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motion was filed on November 14, 2018, however, those amounts were not yet due.
On January 31, 2019, the Court held a hearing on the order to show cause, and the parties

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informed the Court that ongoing maintenance was being paid on the first and fifteenth days of the

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United States District Court
Northern District of California

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month. The Court reminded the parties that ongoing maintenance and cure was due before the

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motion was filed, and that the undersigned had already found Plaintiff’s course of treatment

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reasonable. As a result, the fact that Defendants’ expert disagreed on the course of treatment was

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immaterial at that juncture. As of January 31, 2019, the parties agreed that all payments were

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being made as required by the September 28, 2018 order. The only exception was that Defendants

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were experiencing some difficulty paying for certain appointments due to Plaintiff filling out

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paperwork incorrectly, and the parties were working on prepaying for an upcoming medical

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appointment.

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At the hearing, Plaintiff argued that he had to file the motion for sanctions to receive his

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payments. It is unclear to the Court, however, because Plaintiff filed the motion prematurely. The

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past due payments were not due until sixty days after the order, or November 27, 2018. He filed

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his motion on November 14, 2018. Thus, sanctions are not appropriate for the past due amounts.

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Defendants claim to have experienced some financial hardship, which made it difficult to make

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the payments, but have since received a large payment and are drawing on the company’s line of

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credit for the remaining funds.

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On February 19, 2019, Defendants filed a motion to adjust the maintenance rate on the

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grounds that Plaintiff had moved back to Upper Lake, California on August 12, 2018, which has a

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lower cost of living than Chula Vista, California, and did so without informing Defendants. (Dkt.
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No. 159.) On March 29, 2019, the Court granted the motion, and ordered Plaintiff to pay back the

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difference in maintenance rates within six months. (Dkt. No. 173.)

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On September 5, 2019, the parties filed a joint status report, and Plaintiff appears to have

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received his maintenance and cure until his incarceration in August 2019. The parties agree,

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although Plaintiff reserves the right to later contest, that he is not entitled to maintenance and cure

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while he is in jail or prison. (Dkt. No. 188 at 3,5.)

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In light of the foregoing, the Court finds that Plaintiff has not satisfied his burden of

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showing that Defendants acted in bad faith or with an improper purpose, and declines to exercise

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its inherent powers to impose sanctions.

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IV.

CONCLUSION

United States District Court
Northern District of California

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In light of the foregoing, the Court DENIS Plaintiff’s motion for sanctions.

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IT IS SO ORDERED.

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Dated: September 23, 2019
__________________________________
KANDIS A. WESTMORE
United States Magistrate Judge

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