Mach 4 Construction, LLC v. Operating Engineers Local #3

Filing 127

ORDER denying 117 Motion for Attorney Fees; denying as moot 124 Motion to Strike. Signed by Judge Larry R. Hicks on 09/18/2013. (Copies have been distributed pursuant to the NEF - KR)

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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MACH 4 CONSTRUCTION, LLC.,

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Plaintiff,

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v.

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OPERATING ENGINEERS LOCAL NO. 3,

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Defendant.

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3:09-CV-00565-LRH-RAM

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Before the court is plaintiff Mach 4 Construction, LLC’s (“Mach 4”) Motion for Attorney’s

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Fees (#1171). Defendant Operating Engineers Local No. 3 (“Local 3”) has responded (#122), and

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Mach 4 has replied (#123). Local 3 has moved to strike Mach 4’s reply or, alternatively, for leave

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to file a surreply (#124).

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I.

Facts and Procedural History

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In May 2007, Mach 4, a construction industry employer, and Local 3, a union, signed a

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collective bargaining agreement (CBA). Under this agreement, Mach 4 was obligated to make

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fringe benefit contributions to various employee benefit plans organized under Section 3 of the

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Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. §§ 1002(3), (37).

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Refers to the court’s docket entry number.

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In September 2009, Mach 4 brought four claims for relief against Local 3, each of which

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was based on Mach 4’s argument that it had effectively terminated its contractual relationship with

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the union. (Complaint #1.) Local 3 brought two counterclaims (a breach of contract claim and a

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declaratory judgment claim) based on the premise that Mach 4 had failed to effectively terminate

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this relationship. (Amended Answer #16.)

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The court granted summary judgment to Local 3 with respect to Mach 4’s claims, and the

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parties proceeded to a bench trial on Local 3’s counterclaims. In granting summary judgment to

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Local 3, the court found that the CBA was “clear and unambiguous with respect to Mach 4’s

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termination rights and obligations” and that “Mach 4 failed to effectively terminate its contractual

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relationships with [Local 3].” (Order #33, pp. 6-8.)

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At trial, Local 3 introduced—for the first time—evidence that threw significant doubt on

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the court’s earlier interpretation of the termination provisions. In particular, this evidence supported

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Mach 4’s claim that it had effectively terminated the agreements with Local 3 in June 2008. In light

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of this evidence, the court reversed its previous ruling that the agreements were “clear and

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unambiguous with respect to Mach 4’s termination rights and obligations.” (Trial Transcript

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(“Tr.”), pp. 763-64.) In its verdict, the court ruled against Local 3, finding (largely on the basis of

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this new evidence) that Mach 4 had effectively terminated its CBA on June 30, 2008.

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Mach 4 now moves for attorney’s fees.
II.

Legal Standard
Unless specific authority provides otherwise, the prevailing party in a lawsuit may not

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ordinarily collect attorney’s fees. Int'l Union of Petroleum & Indus. Workers v. W. Indus. Maint.,

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Inc., 707 F.2d 425, 428 (9th Cir. 1983). However, such a fee award may be appropriate “when the

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losing party has acted in bad faith, vexatiously, wantonly, or for oppressive reasons.” Id. (citation

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and quotation marks omitted).

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“The bad faith requirement sets a high threshold.” Primus Auto. Fin. Servs., Inc. v. Batarse,
115 F.3d 644, 649 (9th Cir. 1997). “Mere recklessness” does not alone constitute bad faith; rather,
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an award of attorney's fees is justified when reckless conduct is “combined with an additional

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factor such as frivolousness, harassment, or an improper purpose.” Rodriguez v. United States, 542

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F.3d 704, 709 (9th Cir. 2008) (citation and quotation marks omitted).

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III.

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Discussion
Mach 4 moves for attorney’s fees under the “bad faith” exception to the normal rule,

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arguing that Local 3 acted in bad faith (1) when it failed to produce the new evidence prior to trial

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and (2) when Local 3’s agents testified inconsistently. The court finds that an award of attorney’s

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fees is not appropriate.

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First, during the trial, the court found that Local 3’s new evidence should have been

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produced during discovery. The court reversed its summary judgment ruling and reinstated Mach

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4’s estoppel defense in part as a sanction for Local 3’s failure. (Tr. at pp. 763-64.) However, Mach

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4 was unable to identify a request for production pursuant to which Local 3’s failure to disclose

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merited sanctions. Nor has Mach 4 countered Local 3’s explanation that the new evidence fell

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outside of its disclosure obligations under Federal Rule of Civil Procedure 26(a). And Local 3 has

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explained that it only became aware of the new evidence on the eve of trail. To its credit, Local 3

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introduced the highly prejudicial evidence itself. While Local 3’s failure to produce this evidence

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may have been negligent or even reckless, the court is satisfied that this failure was not coupled

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with an improper purpose. Therefore, fee-shifting on this basis in inappropriate.

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Second, Mach 4 argues that Local 3’s agents perpetrated a fraud on the court by offering

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inconsistent testimony. Yet a fraud upon the court involves a “scheme” to “undermine the judicial

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process,” and Mach 4 has failed to show anything behind Local 3’s agents’ inconsistencies apart

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from bad memories and confusion. Pumphrey v. K.W. Thompson Tool Co., 62 F.3d 1128, 1132 (9th

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Cir. 1995). The court weighed these agents’ credibility and found it wanting; further adverse

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consequences flowing from their inconsistencies are not warranted.

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IV.

Conclusion
IT IS THEREFORE ORDERED that Mach 4’s Motion for Attorney’s Fees (#117) is

DENIED.

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IT IS FURTHER ORDERED that Local 3’s Motion to Strike (#124) is DENIED as moot.

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IT IS SO ORDERED.

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DATED this 18th of September, 2013.

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LARRY R. HICKS
UNITED STATES DISTRICT JUDGE

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