Miletak v. Acuity Mutual Insurance Company
Filing
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ORDER DENYING 66 MOTION FOR SANCTIONS. Signed by Judge Beth Labson Freeman on 11/21/2022. (blflc2, COURT STAFF) (Filed on 11/21/2022)Any non-CM/ECF Participants have been served by First Class Mail to the addresses of record listed on the Notice of Electronic Filing (NEF)
Case 5:22-cv-00633-BLF Document 75 Filed 11/21/22 Page 1 of 6
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UNITED STATES DISTRICT COURT
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NORTHERN DISTRICT OF CALIFORNIA
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SAN JOSE DIVISION
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NICK MILETAK,
Plaintiff,
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Case No. 22-cv-00633-BLF
ORDER DENYING PLAINTIFF’S
RULE 11 SANCTIONS MOTION
v.
ACUITY MUTUAL INSURANCE
COMPANY,
[Re: ECF No. 66]
United States District Court
Northern District of California
Defendant.
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In this case, pro se Plaintiff Nick Miletak sues Defendant Acuity Mutual Insurance
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Company for defamation, intentional infliction of emotional distress, and intentional interference
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with economic advantage. Miletak alleges that Darcel Lang, an employee of Acuity, falsely
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reported Miletak to Miletak’s employer about improper conduct related to an insurance claim
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made by Miletak’s goddaughter. Miletak alleges that the report caused him humiliation and led
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him to resign from his employment.
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Miletak filed this lawsuit in Santa Clara Superior Court on November 10, 2021. See ECF
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No. 6–1. Defendant Darcel Lang brought a cross-claim for defamation, which accompanied
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Defendants’ Answer. See ECF No. 6–2. Defendants removed the case to this Court on January
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31, 2022. See ECF No. 1. Miletak then filed a motion to dismiss and a motion to strike Lang’s
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cross-claim, as well as a motion to remand the case in its entirety for lack of subject matter
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jurisdiction. See ECF Nos. 16, 17, 20. Defendants also filed a motion to deem Miletak a
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vexatious litigant. See ECF No. 41. The Court denied Miletak’s motion to remand, granted
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Miletak’s motion to dismiss Lang’s cross-claim with leave to amend, denied Miletak’s motion to
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strike without prejudice, and denied Defendants’ motion to declare Miletak a vexatious litigant.
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See ECF No. 51 at 10–11 (“Order re. Pending Mots.”). Defendant filed an amended answer, as
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well as cross-claims by Lang for Intentional Infliction of Emotional Distress (“IIED”) and
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Negligent Infliction of Emotional Distress (“NIED”) and by Acuity for malicious prosecution.
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See ECF No. 55 (“Am. Answer & Cross-cl.”). Miletak then filed a motion to dismiss and a
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motion to strike each of these cross-claims, see ECF 59, both of which the Court granted, see ECF
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No. 74 (“Order re Am. Mots.”).
Now before the Court is Miletak’s motion for sanctions. Miletak’s motions to dismiss the
United States District Court
Northern District of California
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cross-claims that accompanied Defendant’s amended answer also included a cursory assertion that
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cross-plaintiffs’ counsel should be sanctioned pursuant to Federal Rule of Civil Procedure 11. See
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ECF 59–1 (“Original Mot.”) at 15. Defendants then filed an opposition, arguing their counsel
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should not be sanctioned. See ECF No. 64 (“Opp.”). Subsequently, Miletak filed a separate, more
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detailed motion for sanctions that identified the allegedly violative conduct, as required by Rule
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11(c)(2). See ECF No. 66–1 (“Mot.”) at 4 (citing the requirement in Rule 11(c)(2) that “[a]
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motion for sanctions must be made separately from any other motion and must describe the
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specific conduct that allegedly violates Rule 11(b)”). Miletak also filed the required Certificate of
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Service for his motion for sanctions. See ECF No. 73; Fed. R. Civ. P. 11(c)(2) (“The motion must
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be served under Rule 5 . . .”); see also Mot. at 4. Defendants did not file any further opposition,
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and the deadline for doing so has passed. See ECF No. 66.
For the reasons discussed herein, the Court DENIES Miletak’s motion for this Court to
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sanction Defendants’ counsel pursuant to Rule 11.
I.
LEGAL STANDARD
Rule 11 of the Federal Rules of Civil Procedure imposes upon attorneys a duty to certify
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that they have read any pleadings or motions they file with the court and that such
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pleadings/motions are well-grounded in fact, have a colorable basis in law, and are not filed for an
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improper purpose. See Fed. R. Civ. P. 11(b); Bus. Guides, Inc. v. Chromatic Commc’ns Enters.,
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Inc., 498 U.S. 533, 541–542 (1991). If a court finds that Rule 11(b) has been violated, the court
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may impose appropriate sanctions to deter similar conduct. Fed. R. Civ. P. 11(c)(1); see also
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Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 393 (1990) (“[T]he central purpose of Rule 11 is
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to deter baseless filings in district court.”). However, “Rule 11 is an extraordinary remedy, one to
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be exercised with extreme caution.” Operating Eng'rs Pension Trust v. A-C Co., 859 F.2d 1336,
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1345 (9th Cir. 1988). Rule 11 sanctions should be reserved for the “rare and exceptional case
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where the action is clearly frivolous, legally unreasonable or without legal foundation, or brought
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for an improper purpose.” Id. at 1344. “Rule 11 must not be construed so as to conflict with the
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primary duty of an attorney to represent his or her client zealously.” Id.
In determining whether Rule 11 has been violated, a “court must consider factual questions
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Northern District of California
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regarding the nature of the attorney's prefiling inquiry and the factual basis of the pleading.”
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Cooter, 496 U.S. at 399. However, courts should “avoid using the wisdom of hindsight and
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should test the signer's conduct by inquiring what was reasonable to believe at the time the
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pleading, motion, or other paper was submitted.” Fed. R. Civ. P. 11 Advisory Comm. Notes
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(1983 Amendment). “[T]he imposition of a Rule 11 sanction is not a judgment on the merits of an
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action. Rather, it requires the determination of a collateral issue: whether the attorney has abused
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the judicial process, and, if so, what sanction would be appropriate.” Cooter, 496 U.S. at 396.
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In the Ninth Circuit, Rule 11 sanctions are appropriate where: “(1) attorneys make or use a
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court filing for an improper purpose; or (2) such a filing is ‘frivolous.’” See Townsend v. Holman
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Consulting Corp., 929 F.2d 1358, 1362 (9th Cir. 1990) (en banc); see also Christian v. Mattel,
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Inc., 286 F.3d 1118, 1127 (9th Cir. 2002). A “frivolous” argument or claim is one that is “both
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baseless and made without a reasonable and competent inquiry.” Townsend, 929 F.2d at 1362.
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II.
DISCUSSION
Miletak argues that the Court should order sanctions because Defendants’ cross-claims are
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frivolous. See Mot. at 6. Miletak argues that the cross-claims are frivolous because they fail to
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plead the required elements, as the underlying statements are protected by litigation privilege. See
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id. Additionally, Miletak asserts that Defendants’ cross-claims are frivolous because Defendants
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allegedly did not follow the directions the Court provided in a previous order. See id. Defendants
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counter that, in a previous case management conference, this Court indicated that malicious
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prosecution was different than the previous defamation claim — presumably to address the
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accusation that they did not follow the Court’s orders. See Opp. at 2. Defendants also assert that
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the “gravamen of a malicious prosecution is the filing of a frivolous lawsuit,” and that, therefore,
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the allegedly frivolous lawsuit by Miletak merits their claim of malicious prosecution. See id.
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The Opposition does not appear to address Miletak’s arguments as to their cross-claims for IIED
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and NIED. See Opp.
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Defendants’ cross-claims might ultimately be without merit, an “imposition of
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a Rule 11 sanction is not a judgment on the merits of an action.” Cooter, 496 U.S. at 396.
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Instead, the Court analyzes the “collateral issue” of whether counsel has abused the judicial
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process. There is little evidence of such abuse.
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United States District Court
Northern District of California
Miletak’s motion for sanctions is clearly not warranted under the circumstances. While the
For the malicious prosecution cross-claim, Miletak is incorrect that the substance of this
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claim remains protected by litigation privilege. See Mot. at 6. This is because “[c]ourts have
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applied the litigation privilege to all torts, with the exception of actions for malicious prosecution.”
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Ingrid & Isabel, LLC v. Baby Be Mine, LLC, 70 F. Supp. 3d 1105, 1140 (N.D. Cal. 2014)
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(emphasis added). The filing of this cross-claim consequently heeds the Court’s prior admonition
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that Defendants should be cautious to not bring amended cross-claims that would be invalid due to
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litigation privilege. See Order re Pending Mots. at 7; see also Order re Am. Mots. Thus, there is
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no basis for this Court to conclude that Defendants’ cross-claim for malicious prosecution would
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merit a Rule 11(b) sanction, as it is certainly not “clearly frivolous, legally unreasonable or
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without legal foundation.” Operating Eng'rs Pension Trust., 859 F.2d at 1344. Defendants are
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indeed correct that that the “gravamen of a malicious prosecution is the filing of a frivolous
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lawsuit.” Opp. at 2; see Barry A. Lindahl, Misuse of legal process: Malicious prosecution,
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malicious use of civil process and abuse of process compared, 4 MODERN TORT LAW: LIABILITY
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AND LITIGATION,
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free from unjustifiable litigation.”). Therefore, while the failure of Defendants’ counsel to
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adequately plead the prima facie case for malicious prosecution did lead to its dismissal, see Order
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re Am. Mots. at 4–5, a failure to adequately plead the elements in this case does not meet the high
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bar required to justify sanctions.
§ 39:2 (2d ed.) (May 2022) (“The essence of the tort is said to be the right to be
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The filing of the IIED and NIED cross-claims presents a closer question. However, while
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the Court has already found that Darcel Lang’s amended cross-claims for IIED and NIED cannot
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Northern District of California
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move forward because the underlying statements are protected by litigation privilege, see Order re
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Am. Mots. at 3–4, the filing of these cross-claims still fails to constitute an abuse of the judicial
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process that would merit Rule 11(b) sanctions. The Court had allowed an amended filing by Lang
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in its initial order because it determined that Lang may have a colorable claim that would not be
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blocked by litigation privilege. See Order re Pending Mots. at 7 (“[I]t is not absolutely clear that
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amendment would be futile.”). Defendants’ counsel ultimately failed to plead a cause of action
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that would overcome litigation privilege. While Defendants’ counsel should have realized that the
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amended cross-claims would fail due to litigation privilege, see Am. Answer & Cross-Cl. ¶ 9
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(basing IIED cross-claim on Miletak’s “frivolous litigation alleging defamation and related causes
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of action”); id. ¶ 15 (basing NIED cross-claim on Miletak’s filing of “a frivolous, ridiculous and
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baseless lawsuit”), the Court still finds it inappropriate to grant Miletak’s motion for sanctions in
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this matter.
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The Court has significant discretion in determining whether Rule 11 sanctions shall be
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applied. See Cooter, 496 U.S. at 402–404. Moreover, it bears repeating that “Rule 11 is an
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extraordinary remedy, one to be exercised with extreme caution.” Operating Eng'rs Pension
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Trust, 859 F.2d at 1345 (emphasis added). Sanctions should only be brought under “rare and
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exceptional” circumstances. Id. at 1344 (emphasis added). Defendants’ counsel brought these
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claims ostensibly in a good faith effort to address the harm done to their client by an allegedly
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frivolous lawsuit. Moreover, though Defendants’ counsel did not provide counterarguments to
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defend their claims of NIED and IIED against Miletak’s motion for sanctions, this was likely
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because the Defendants’ opposition was filed before Miletak’s official motion for sanctions.
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Miletak only made cursory mention of sanctions in his initial motion to dismiss/strike and failed to
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identify any specific, violative conduct. See Original Mot. at 15. Miletak then filed a separate,
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formal motion for sanctions in a later motion over a month later. See Mot. Though Miletak’s
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unorthodox filings are permitted in light of the liberal constructions afforded to pro se litigants,
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see Hebbe v. Pliler, 627 F.3d 338, 342 (9th Cir. 2010), the reality that Defendants’ counsel has
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been responding to such unconventional motion practice colors the Court’s perception of whether
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they have engaged in abuse of judicial process. Ultimately, the purpose of Rule 11, which, inter
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alia, is to discourage “dilatory or abusive tactics,” would simply not be served by sanctions
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against Defendants’ counsel in this matter. See Kathleen M. Dorr, Annotation, Comment note—
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general principles regarding imposition of sanctions under Rule 11, Federal Rules of Civil
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Procedure, 95 A.L.R. FED. 107, § II.3 (1989).
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III.
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ORDER
For the foregoing reasons, IT IS HEREBY ORDERED that Miletak’s motion for Rule 11
sanctions is DENIED.
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United States District Court
Northern District of California
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Dated: November 21, 2022
______________________________________
BETH LABSON FREEMAN
United States District Judge
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