Santos, Jr. v. Ferguson Enterprises, Inc. et al

Filing 79

ORDER Regarding Order to Show Cause and Issuing Monetary Sanctions. Signed by Magistrate Judge Nita L. Stormes on 3/15/2019.(anh)

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UNITED STATES DISTRICT COURT

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SOUTHERN DISTRICT OF CALIFORNIA

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ESTEBAN SANTOS, JR.,

Case No.: 3:17-cv-00814-CAB-NLS
Plaintiff,

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v.

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ORDER REGARDING ORDER TO
SHOW CAUSE AND ISSUING
MONETARY SANCTIONS

FERGUSON ENTERPRISES, INC., and
DOES 1-10,

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Defendants.

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The Court held an Order to Show Cause (“OSC”) hearing on March 14, 2019.

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Plaintiff, Esteban Santos, Jr. and his counsel appeared as ordered. ECF No. 78. Counsel

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for defendant, Ferguson Enterprises, Inc., also appeared as ordered. The Court heard oral

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argument and took the matter under submission. The Court concludes monetary sanctions

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for failure to appear in violation of this Court’s order are appropriate. As explained below,

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the Court sanctions Plaintiff and the firm, Potter Handy, jointly and severally, in the amount

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of $3,000.00.

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I.

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This case settled during a Mandatory Settlement Conference on November 5, 2018.

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ECF No. 66. On November 7, 2018 the parties filed a joint notice of settlement that

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prompted this Court to set a telephonic settlement disposition conference for January 11,

Background

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2019. ECF Nos. 67, 68.

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The Court held the first settlement disposition conference on January 11, 2019 and

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was informed by the parties that there remained discussion regarding one term. Counsel

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requested additional time to conclude negotiations. The Court obliged, setting a second

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telephonic settlement disposition conference for one month later, February 15, 2019.

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During the second settlement disposition conference, counsel represented they had

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reached agreement on all terms and expected to have the document signed and dismissal

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entered in two weeks. The Court, via its law clerk, informed the parties that a third

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settlement disposition conference would require in person appearances.

The third

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settlement disposition conference was set for March 7, 2019 and required in person

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appearances of counsel and their clients or client representatives. ECF No. 71.

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On March 7, 2019, the Court held the third Settlement Disposition Conference. ECF

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No. 72. Counsel for Plaintiff appeared. Mr. Santos did not appear. Counsel for Defendant

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appeared; no client representative of Ferguson Enterprises, Inc. appeared. The Court

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excused the personal appearance of the defendant’s client representative because defense

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counsel had in hand at the hearing both the Defendant’s executed settlement agreement and

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the check for settlement. Plaintiff’s counsel represented he had trouble contacting his

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client, who was still reviewing the settlement agreement and had no excuse for Mr. Santos’s

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failure to appear, in violation of the Court’s Order. Accordingly, the Court issued an OSC

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due to Plaintiff’s failure to appear, and requested declarations regarding any justification

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for the failure to appear and costs incurred by defense counsel. ECF No. 73.

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On March 12, 2019, the Court received the declarations in relation to the OSC. Mr.

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Santos filed a declaration in which he says he did not receive email notification from his

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lawyers that he was required to attend the March 7 hearing, and further that on the day

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before the hearing when his counsel was attempting to reach him, he was not answering

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his phone because he was “sick and had an accident.” He says he was working on cleaning

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himself and handling the accident. ECF No. 74. He offered no details about the nature of

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his illness or his accident.
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The court also received a declaration from Matthew Valenti, plaintiff’s counsel, in

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which he admits that his law firm, Potter Handy, in violation of their standard procedure

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did not email notice to Mr. Santos that he was required to appear in person for the March

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7, 2019 hearing. ECF. No. 75, ¶ 3. Mr. Valenti did, however, telephone Mr. Santos

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beginning at 3:15pm on March 6 to advise him of the need for a personal appearance, and

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left a voice mail to that effect. Mr. Valenti submitted screen shots of his cell phone records

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that show he called a total of 4 times and left one text message. ECF. No. 75, ¶ 6. He was

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unable to reach Mr. Santos until the morning of March 7 on his way to court, but by that

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time it was too late for Mr. Santos to arrive to the hearing as he resides in El Centro. ECF.

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No. 75, ¶ 7.

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Finally, the Court received a declaration from defense counsel submitting the costs

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and fees associated with attending the March 7, 2019 hearing. Defense counsel submitted

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a total of 5.7 hours of time, inclusive of travel at a rate of $525/hr, and $30.00 of parking

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for a total of $3,022.50. ECF. No. 77, ¶ 4. The declaration further submits that her office

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sent emails and made calls to plaintiff’s counsel on March 4, 5, 6 and 12, 2019 in an effort

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to get the settlement agreement and dismissal satisfied in advance of the third settlement

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disposition conference and the OSC hearing, but there was no response to any of these

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inquiries. ECF. No. 77, ¶ 8.

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II.

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Courts are “endowed with inherent powers which are necessary to the conduct of

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their business, including the power to sanction.” Yagman v. Republic Ins., 987 F.2d 622,

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628 (9th Cir. 1993). A court has the inherent authority to issue sanctions against parties

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and non-parties to an action based on their conduct. In re Rainbow Magazine, Inc., 77 F.3d

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278, 282 (9th Cir. 1996). Additionally, under Federal Rule of Civil Procedure 16(f), the

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Court may issue “any just orders,” including Rule 37 sanctions, “if a party or its attorney

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. . . fails to appear at a scheduling or other pretrial conference.” Fed. R. Civ. P. 16(f)(1)(A).

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Furthermore, “the court must order the party, its attorney, or both to pay the reasonable

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expenses—including attorney’s fees—incurred because of any noncompliance . . . unless

Legal Standards

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the noncompliance was substantially justified or other circumstances make an award of

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expenses unjust.” Fed. R. Civ. P. 16(f)(2); see also Sedgwick v. Unknown K-9 Handler,

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2013 U.S. Dist. LEXIS 77063, *11-12 (S.D. Cal. Apr. 23, 2013) (citing Ninth Circuit cases

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demonstrating the circuit court has repeatedly upheld monetary sanctions imposed for

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failure to comply with orders regarding settlement conferences); Lucas Automotive

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Engineering, Inc. v. Bridgestone/Firestone, Inc., 275 F.3d 762 (9th Cir. 2001) (sanctions

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award upheld against president of vintage tire company for failure to appear at a mediation

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session, although the president asserted that his failure to appear was not intentional, in that

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he suffered from an incapacitating headache at that time, the president did not notify the

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parties beforehand of his nonappearance).

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III.

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Here, the Court does not find that Mr. Santos’s failure to appear was “substantially

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justified or other circumstances make an award of expenses unjust,” however, it does

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appear that there were several factors that contributed to his nonappearance, including the

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failure of the firm to follow its standard practice to inform clients by email when an in

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person appearance is required along with Mr. Santos’s accident and his failure to respond

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to calls and texts from Mr. Valenti. Each contributed to the need for the Court to hold two

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hearings, impeding judicial time and resources; and requiring defense counsel to appear on

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two separate occasions after the case had settled and Defendant had complied with all of

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its obligations. It is appropriate under these circumstances for sanctions to be borne by

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each of the contributing parties—Mr. Santos individually and the firm, Potter Handy—to

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reimburse the Defendant for reasonable expenses incurred by defense counsel, including

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attorneys’ fees.

Discussion

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Defendants submit that the fees incurred for participation at the March 7, 2019

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hearing total $3,022.50. However, the hearing was short, and it does not appear that

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significant preparation was required on counsel’s part as the settlement agreement had been

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executed and the check issued. Thus, much of the time appears to account for travel. Under

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the circumstances, the Court finds the sum of $1,500.00 to be reasonable to cover parking,
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appearance, and preparation.

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With regard to fees incurred for the second court appearance on March 14, 2019, the

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Court assumes they would be nearly identical to the expenses incurred for the prior court

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appearance. Therefore, the Court will award $1,500 for that appearance as well.

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IV.

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IT IS HEREBY ORDERED that

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1. Plaintiff Esteban Santos, Jr. and the firm of Potter Handy, are jointly and

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severally responsible for payment of sanctions in the amount of $3,000.00 to

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Greenberg Traurig, for fees incurred relating to the representation of the

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Conclusion

defendant Ferguson Enterprises in this matter.
2. Said sum shall be paid within 15 days of the date of this order.
IT IS SO ORDERED.
Dated: March 15, 2019

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