1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 OPERATING ENGINEERS' HEALTH Case No. 4:17-cv-02365-KAW

AND WELFARE TRUST FUND FOR

8 NORTHERN CALIFORNIA, et al., ORDER GRANTING MOTION FOR

SANCTIONS

9 Plaintiffs, Re: Dkt. No. 56 10 v.

11 CENTRAL VALLEY CONSTRUCTION,

12 Defendant.

13 14 On August 27, 2019, Plaintiffs Operating Engineers’ Health and Wealth Trust Fund, et al. 15 filed a motion for sanctions against Defendant Central Valley Construction for failure to comply 16 with Federal Rule of Civil Procedure 37. 17 On December 5, 2019, the Court held a hearing, and after careful consideration of the 18 parties’ arguments and the applicable legal authority, for the reasons set forth below, GRANTS 19 Plaintiffs’ motion for sanctions. 20 I. BACKGROUND 21 On April 26, 2017, Plaintiffs filed this ERISA action to compel Defendant to comply with 22 an audit of its payroll records for the period from October 29, 2014 through the date of inspection. 23 Defendant retained Counsel David C. Johnston and filed an answer to the complaint on May 25, 24 2017. (Dkt. No. 8.) 25 On July 17, 2017, the Court issued an order referring this case to mediation. (Dkt. No. 14.) 26 On August 28, 2017, the parties participated in a pre-mediation conference call with mediator 27 Geoffrey White, during which the participants concluded that a mediation date would be set after 1 “Stafford Decl.,” Dkt. No. 58 ¶¶ 3-5.) Thereafter, Defendant contacted Plaintiffs’ Auditor and 2 scheduled an audit appointment for October 26, 2017. (Stafford Decl. ¶ 6.) Defendant provided 3 Plaintiffs’ Auditor with some of the documentation that was necessary to conduct the audit. Id. 4 Plaintiffs requested additional documentation that the auditors advised was necessary to 5 complete the audit. (Stafford Decl. ¶ 7.) Specifically, Plaintiffs allege that the Defendant has 6 failed to provide its cash disbursements journal (or equivalent records) to Plaintiffs’ Auditor. Id. 7 Plaintiffs’ counsel has detailed to Defendant’s counsel what equivalent alternative documents can 8 be provided. Id. 9 On or about May 22, 2018, Plaintiffs propounded discovery on Defendant. (Stafford Decl. 10 ¶ 8). The discovery requested information that would ordinarily be disclosed by an employer’s 11 cash disbursements journal. Id. No response to the discovery was received. Id. As such, Plaintiffs 12 sent a detailed meet and confer letter to Mr. Johnston on or about August 2, 2018. (Stafford Decl. 13 ¶ 9.) The discovery responses remain outstanding, and no additional information has been 14 produced by Defendant. Id. In response to the meet and confer letter, Mr. Johnston responded that 15 he would “forward the letter to his client.” Id. Plaintiffs also demanded that Mr. Johnston provide 16 his availability for a meet and confer telephone conference pursuant to Judge Westmore’s 17 Standing Order. Id. No availability was provided. Id. 18 Plaintiffs then demanded that a meet and confer take place telephonically in October 2018. 19 (Stafford Decl. ¶ 10.) The meet and confer call occurred, and Mr. Johnston stated that he would 20 work with his client to attempt to provide responses to the outstanding discovery. Id. Plaintiffs 21 agreed to give Mr. Johnston additional time, but stated that a joint discovery letter brief would 22 need to be filed if Defendant did not respond to the propounded discovery. Id. 23 A joint discovery letter was filed on December 11, 2018. (Dkt. No. 33.) On December 20, 24 2018, the Court issued an order requiring that Defendant produce responses by January 10, 2019.1 25 (Dkt. No. 38; Stafford Decl. ¶ 11.) 26 On March 12, 2019, the parties filed a joint request to continue the case management 27 1 conference set for March 19, 2019. (Dkt. No. 40; Stafford Decl. ¶ 12). Mr. Johnston alleged that 2 Defendant provided hundreds of pages of bank statements and paid checks to Plaintiffs’ counsel to 3 be delivered to the Auditor and that Defendant is/was gathering additional documents requested by 4 the audit. (Dkt. No. 40 at 3.) Mr. Johnston further noted that he has been out of his office due to 5 the serious medical condition of his wife and assisting his brother in a regimen of chemotherapy 6 and radiation for Stage 4 esophageal cancer. Id. As a result, Judge Westmore continued the March 7 19, 2019 Case Management Conference and ordered Defendant to provide its discovery responses 8 and produce all responsive documents within 21 days of the March 13, 2019 order. (Dkt. No. 41 at 9 4.) Defendant again failed to provide any discovery responses and produce responsive documents 10 by the April 3, 2019 deadline, and, to date, has not done so. (Stafford Decl. ¶ 13.) 11 On June 14, 2019, Plaintiffs filed a motion for sanctions. (Dkt. No. 43.) Defendant did not 12 file an opposition or statement of non-opposition. On July 3, 2019, the Court issued an order to 13 show cause requiring Defendant to file an opposition or statement of non-opposition, and to file a 14 response to the order to show cause explaining why it did not file a timely opposition. (Dkt. No. 15 50.) Defendant failed to file an opposition, and did not file a response to the order to show cause. 16 On July 17, 2019, the Court denied Plaintiffs’ motion for sanctions on grounds that 17 Plaintiffs’ declaration did not attempt to itemize the attorneys’ fees or justify the claimed hourly 18 rates. (Dkt. No. 52.) 19 On August 27, 2019, Plaintiffs filed a motion for sanctions based on Defendant’s failure to 20 comply with three prior court orders. (Pls.’ Mot., Dkt. No. 56.) 21 Also on August 27, 2019, the Court held a case management conference, where Defendant 22 did not appear. On August 29, 2019, the Court issued an order to show cause to defense counsel, 23 David Johnston, to respond by no later than September 9, 2019, why he should not pay monetary 24 sanctions in the amount of $500 for his failure to appear at the case management conference. (Dkt. 25 No. 62.) Mr. Johnston was also ordered to address whether he was able to provide continued 26 representation given the personal hardships that he was experiencing. Id. at 1. Mr. Johnston did 27 not file a response to the order to show cause. (See Dkt. No. 63 at 1.) 1 second order to show cause to Mr. Johnston on September 30, 2019 directing him

2 1) to file an opposition or statement of non-opposition to the pending motion [for sanctions], and 3 2) to file a response to this second order to show cause explaining 4 why the opposition was not timely filed, why the motion for sanctions should not be granted as unopposed and sanctions be paid 5 by him personally instead of by his client, why the Court should not impose sanctions of $1000.00 on him personally for failing to 6 appear at the case management conference, and whether he is able to continue representing his client. 7 8 (Dkt. No. 63.) The Court acknowledged that “personal obligations can negatively impact an 9 attorney’s ability to manage their case load[,]” but that “does not relieve the attorney of their 10 responsibility of keeping the court, opposing counsel, and their client informed of the 11 circumstances, and may require that counsel withdraw from representation rather than abandon 12 their client.” Id. at 2. 13 On October 15, 2019, Defendant filed its opposition to the motion for sanctions, in which 14 defense counsel represented that he expects to serve full and complete responses, without 15 objection, by the November 7, 2019 hearing date. (See Def.’s Opp’n, Dkt. No. 65 at 2:5-7.) On 16 October 22, 2019, Plaintiff filed a reply. (Pls.’ Reply, Dkt. No. 68.) 17 On November 4, 2019, the Court continued the hearing date, and ordered the parties to 18 meet and confer and file a joint status report on or before November 18, 2019 to inform the Court 19 regarding the status of the promised production. (Dkt. No. 69.) 20 On November 18, 2019, the parties filed a joint status report to inform the Court that the 21 discovery has not been produced due to Mr. Johnston’s familial obligations and his own health 22 issues, and that Defendant will be moving forward with new counsel. (11/18/19 Joint Status 23 Report, Dkt. No. 70 at 1-2.) 24 II. LEGAL STANDARD 25 Federal Rule of Civil Procedure 37 allows the court to sanction a party that fails to obey a 26 discovery order by:

27 (i) directing that the matters embraced in the order or other 1 (ii) prohibiting the disobedient party from supporting or opposing designated claims or defenses, or from introducing designated 2 matters in evidence;

3 (iii) striking pleadings in whole or in part;

4 (iv) staying further proceedings until the order is obeyed;

5 (v) dismissing the action or proceeding in whole or in part;

6 (vi) rendering a default judgment against the disobedient party; or

7 (vii) treating as contempt of court the failure to obey any order except an order to submit to a physical or mental examination. 8 9 Fed. R. Civ. P. 37(b)(2)(A). 10 A district court “has great latitude in imposing sanctions for discovery abuse.” Dahl v. City 11 of Huntington Beach, 84 F.3d 363, 367 (9th Cir. 1996); Sloan v. Oakland Police Dep't, 2005 WL 12 8156878, at *3 (N.D. Cal. July 26, 2005) (“As indicated by the clear language of Rule 37, the 13 above-listed orders are not intended to constitute an exhaustive list of the orders a judge may issue 14 as sanctions.”). However, any such sanction must be “just” in light of the particular circumstances 15 of the case. Ins. Corp. of Ireland v. Compagnie des Bauxites, 456 U.S. 694, 707 (1982). 16 When choosing among possible sanctions, the Court should consider a sanction designed 17 to: (1) penalize those whose conduct may be deemed to warrant such a sanction; (2) deter parties 18 from engaging in the sanctioned conduct; (3) place the risk of an erroneous judgment on the party 19 who wrongfully created the risk; and (4) restore a prejudiced party to the same position he or she 20 would have been in absent the wrongdoing. See Nat'l Hockey League v. Metro. Hockey Club, Inc., 21 427 U.S. 639, 643 (1976); Wyle v. R.J. Reynolds Indus., Inc., 709 F.2d 585, 589 (9th Cir. 1983). 22 Rule 37 mandates the imposition of monetary sanctions on a party that fails to obey a 23 discovery order, by requiring that the offending party “pay the reasonable expenses, including 24 attorney’s fees, caused by the failure, unless the failure was substantially justified or other 25 circumstances make an award of expenses unjust.” Fed. R. Civ. P. 37(b)(2)(C); Leon v. IDX Sys. 26 Corp., 464 F.3d 951, 958 (9th Cir. 2006) (citation and internal quotation marks omitted). 27 “Willfulness, fault, or bad faith is not required for the imposition of monetary sanctions under 1 5372477, at *6 (N.D. Cal. Oct. 30, 2012). 2 III. DISCUSSION 3 A. Motion for Sanctions 4 i. Sanctions are appropriate 5 Plaintiffs move for an award of sanctions under Rule 37 on the grounds that Defendant has 6 failed to comply with three court orders requiring that responsive documents be produced. (See 7 Pls.’ Mot. at 7.) 8 In opposition, Defendant apologized to the Court for the delay, and stated that Mr. 9 Johnston “expect[ed] to have full and complete responses, without objections, to the discovery 10 responses signed and served on Plaintiffs’ counsel” by November 7, 2019. (Def.’s Opp’n at 2.) 11 This did not occur. (11/18/19 Joint Status Report at 1-2.) Defendant then attempts to argue the 12 merits of the case, including that this case would not be in federal court if it did not involve a labor 13 union. (Def.’s Opp’n at 3.) These arguments are irrelevant to the instant motion, which addresses 14 Defendant’s abject failure to comply with its discovery obligations. 15 The Court first ordered that Defendant provide responsive documents by January 10, 2019, 16 so this discovery has been delinquent for almost one year. Mr. Johnston has been given multiple 17 opportunities to provide these documents, and he has been unable to comply with multiple court 18 orders mandating that production. That Mr. Johnston has experienced personal hardships over the 19 past year and a half does not justify his noncompliance nor render an award of attorney’s fees and 20 costs unjust under Rule 37. 21 As a result, Plaintiffs’ motion for sanctions is GRANTED. 22 ii. Amount of Attorneys’ Fees and Costs 23 In making the motion, Plaintiffs seek $7,390.39 in attorneys’ fees and costs incurred in 24 their attempts to obtain responses to discovery since August 2, 2018, as well as the preparation of 25 the instant motion for sanctions. (Pls.’ Mot. at 10; Stafford Decl. ¶¶ 19-22.) 26 Defendant only objects to the amount of sanctions requested, because it is “far more than 27 could ever be in issue in the case in chief and are[,] therefore[,] unreasonable. (Def.’s Opp’n at 2.) 1 sanctions for failure to comply with discovery needs to be related to the potential recovery should 2 Plaintiffs prevail in their lawsuit. 3 In reply, Plaintiffs contend that this is a misrepresentation, because Plaintiffs’ Auditors 4 have already identified $46,508.04 in unpaid contributions, and that amount may increase 5 depending on the information that has been withheld. (Pls.’ Reply at 3.) 6 a. Attorneys’ Fees 7 Plaintiffs seek an award of $6,986.50 in attorneys’ fees for 34.3 hours of work. (Pls.’ Mot. 8 at 10.) Plaintiffs submitted a declaration detailing time spent seeking the discovery at issue, as 9 well as the time spent on the instant motion for sanctions. (Stafford Decl. ¶¶ 18-20.) The fees 10 were incurred as follows: Attorney Fees 11 Name Hours Rate Amount 12 George R. Nemiroff 9.5 $230 $2,185.00 Matthew P. Minser 10.3 $230 $2,369.00 13 Luz E. Mendoza 5.0 $230 $1,150.00 Attorney Fees Total: $5,704.00 14 Paralegal Fees 15 Name Hours Rate Amount Alicia Wood 4.4 $135 $594.00 16 Nargis Shaghasi 5.1 $135 $688.50 Paralegal Fees Total $1,282.50 17 Total: $6,986.50 18 See ids. 19 The Court finds that the number of hours spent is reasonable with the exception of Mr. 20 Minser’s time spent on the first motion for sanctions, which was denied for failure to provide 21 billing records. As a result, the Court deducts five hours of Mr. Minser’s time or $1,150.00. The 22 Court finds that the requested billing rates of $230 for attorneys2 and $135 for paralegals are well 23 within the range that courts have approved in similar cases. See Bd. of Trs. of the Boilermaker 24 Vacation Trust v. Skelly, Inc., 389 F. Supp. 2d 1222, 1227-28 (N.D. Cal. 2005) (finding hourly 25 rates of $210 and $345 to be reasonable). 26 Accordingly, the Court awards $5,836.50 in attorneys’ fees to Plaintiffs in connection with 27 1 this motion. 2 b. Costs 3 Plaintiffs seek an award of $403.89 in costs. (Pls.’ Mot. at 10.) Plaintiffs claim that the 4 costs incurred include the filing fee for the complaint, service of summons, courtesy copy 5 delivery, and Lexis research. (Stafford Decl. ¶ 22.) The court filing fee alone is $400.00, so the 6 Court assumes that the assertion that the costs incurred include the case filing fee and service of 7 the summons and complaint was in error. After the hearing, Plaintiffs filed a supplemental 8 declaration that clarified that the costs were for Lexis research and courtesy copy delivery. (Decl. 9 of Luz E. Mendoza, Dkt. No. 72 ¶ 3.) 10 Thus, the Court finds the $403.89 in costs to be reasonable, and awards Plaintiffs that 11 amount in connection with this motion. 12 iii. Who should pay the sanctions. 13 Mr. Johnston did not address whether he should be required to personally pay the sanctions 14 rather than his client, as required by the Court’s September 30, 2019 order. (Dkt. No. 63 at 2.) 15 Instead, Mr. Johnston’s response to the second order to show cause was replete with excuses 16 pertaining to how his law practice is run3 and his personal hardships. (See Dkt. No. 64 at 2-4.) 17 At the hearing, Mr. Johnston took responsibility for his failure to produce the documents 18 and delay the discovery of responsive information for more than one year, and agreed that he 19 should be personally responsible for paying the award. 20 Accordingly, Mr. Johnston is ordered to personally pay the sanctions award, and may not 21 pass on any of the expense to Defendant. 22 B. Order to Show Cause 23 Finally, the September 30, 2019 order to show cause ordered Mr. Johnston to explain “why 24 the Court should not impose sanctions of $1000.00 on him personally for failing to appear at the 25 case management conference, and whether he is able to continue representing his client.” (Dkt. 26

27 3 That Mr. Johnston relies on his part-time secretary to open his mail and calendar his deadlines to 1 No. 63.) In his response, Mr. Johnston explained that he failed to appear at the August 27, 2019 2 || case management conference, because it was not properly calendared, because he did not email the 3 notice to his part-time secretary. (Dkt. No. 64 at 2.) Mr. Johnston did not address whether the 4 || Court should impose sanctions for his failure to appear nor did not he explain why he failed to 5 || respond to the first order to show cause. Mr. Johnston is solely responsible for representing his 6 || client, appearing at all scheduled hearings, and otherwise complying with court orders, and the 7 myriad of excuses cited are not sufficient to preclude the imposition of sanctions. 8 Notwithstanding, given that Mr. Johnston has found new counsel for his client, and he 9 expects to have a substitution of counsel filed by the end of the month. Thus, the Court declines to 10 || impose sanctions for his failure to appear and DISCHARGES the order to show cause. 11 IV. CONCLUSION 12 In light of the foregoing, the Court GRANTS Plaintiffs’ motion for sanctions in the amount 13 of $6,240.39. Attorney David C. Johnston shall pay the award personally, and is not permitted to 14 || pass on the costs to Defendant, who bore no responsibility for Mr. Johnston’s conduct. Sanctions 3 15 shall be paid directly to Plaintiffs within 60 days of this order. a 16 Additionally, Defendant shall produce the documents as previously ordered within 30 days 3 17 of this order. 18 Finally, the September 30, 2019 order to show is DISCHARGED. 19 IT IS SO ORDERED. 20 Dated: December 9, 2019 □

22 United States Magistrate Judge 23 24 25 26 27 28