Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_10-cv-01632/USCOURTS-azd-2_10-cv-01632-17/pdf.json

Nature of Suit Code: 440
Nature of Suit: Other Civil Rights
Cause of Action: 28:1446 Petition for Removal

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IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Leanna Smith, 

Plaintiff, 

vs.

Barrow Neurological Institute, et al., 

Defendants. 

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No. CV 10-01632-PHX-FJM

ORDER

We have before us defendants Banner Health System and Scott Elton, M.D.'s motion

for sanctions (doc. 252), plaintiff's response (doc. 286), defendants' reply (doc. 304),

plaintiff's motion to strike Exhibit A to defendants' reply (doc. 308), defendants' response

(doc. 311), and plaintiff's reply (doc. 329). 

As an initial matter, plaintiff's motion to strike Exhibit A to defendants' reply is

inappropriate. A motion to strike under Fed. R. Civ. P. 12(f) is limited to pleadings. Neither

Exhibit A nor the Reply are pleadings under Fed. R. Civ. P. 7(a). Accordingly, we deny

plaintiff's motion to strike. In the alternative, plaintiff seeks leave to file a sur-response to

address the contents of Exhibit A. Plaintiff's Motion at 2. But plaintiff has had the

opportunity to substantively discuss, and object to Exhibit A in her reply. Therefore, we

deny plaintiff leave to file a sur-response.

Defendants move for sanctions against plaintiff and plaintiff's counsel pursuant to

Rule 37(b), Rule 11, Fed. R. Civ. P., 28 U.S.C. § 1927, and this court's inherent authority.

Pursuant to Rule 37(b), Fed. R. Civ. P., we may impose fees as a sanction for failing to

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1

 We note that § 1927 applies only to unnecessary filings and tactics once a lawsuit

has begun, but not to an initial pleading. In re Keegan Mgmt. Co., Securities Litigation, 78

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comply with court-ordered discovery. The court "must order the disobedient party, the

attorney advising that party, or both to pay the reasonable expenses, including attorney's fees,

caused by the failure, unless the failure was substantially justified or other circumstances

make an award of expenses unjust." Fed. R. Civ. P. 37(b)(2)(C). The fees must be

reasonable and caused by plaintiff's failure to engage in discovery. Henry v. Gill Indus., Inc.,

983 F.2d 943, 946 (9th Cir. 1993). Here, plaintiff disobeyed this court's orders by failing to

promptly obtain records from the juvenile court and to comply with Rule 26, Fed. R. Civ. P.

regarding expert disclosures. See Doc. 103 at 2; Doc. 255 at 2. Because plaintiff has not

offered substantial justification for her failures, sanctions against plaintiff and her counsel

are appropriate. 

Defendants also assert that plaintiff's counsel violated Rule 11 by pursuing frivolous

claims, and needlessly increasing the costs of litigation. See Rule 11(b), Fed. R. Civ. P.

Under Rule 11(c)(2), Fed. R. Civ. P., a motion for sanctions “must be served under Rule 5,

but it must not be filed or be presented to the court if the challenged paper, claim, defense,

contention, or denial is withdrawn or appropriately corrected within 21 days after service.”

This "safe harbor" provision is strictly enforced. Holgate v. Baldwin, 425 F.3d 671, 678 (9th

Cir. 2005). Defendants do not discuss the "safe harbor" provision requirements for a motion

under Rule 11(c)(2), Fed. R. Civ. P., presumably because they have not been met, and would

preclude an award of sanctions. See Winterrowd v. Am. Gen. Annuity Ins. Co., 556 F.3d

815, 826 (9th Cir. 2009). Nor has the procedure under Rule 11(c)(3), Fed. R. Civ. P., been

invoked. We have issued no order to show cause in this case. Thus, there is no procedural

basis for awarding Rule 11 sanctions, even though sanctions under Rule 11 may have been

substantively appropriate.

With respect to 28 U.S.C. § 1927, defendants argue that plaintiff's counsel needlessly

prolonged the proceedings by filing three frivolous amended complaints.1

 Defendants'

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F.3d 431, 435 (9th Cir. 1996). Therefore, sanctions under § 1927 are not available for filing

the original complaint. 

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Motion at 14. Under 28 U.S.C. § 1927, sanctions may be imposed on any attorney who

"multiplies the proceedings in any case unreasonably and vexatiously." The sanctions "must

be supported by a finding of subjective bad faith," which "is present when an attorney

knowingly or recklessly raises a frivolous argument, or argues a meritorious claim for the

purpose of harassing an opponent." In re Keegan Mgmt. Co., 78 F.3d at 436 (citations

omitted). In the context of § 1927, frivolousness is understood as "referring to legal or

factual contentions so weak as to constitute objective evidence of improper purpose." In re

Girardi, 611 F.3d 1027, 1062 (9th Cir. 2010). Because Judge Campbell granted plaintiff's

motion to file a second amended complaint, we cannot conclude that plaintiff's second

amended complaint was frivolous. However, Judge Campbell denied plaintiff's motion to

file a third amended complaint and found that it caused "much unnecessary litigation." See

Doc. 103 at 2. Moreover, plaintiff's counsel must have known that the proposed amendments

were frivolous, given that they were related to a minor child that had never been part of the

litigation. See id. ( Judge Campbell noting, "Now is not the time to more than double the size

of the case, adding claims and many defendants related to a minor child whose removal has

never been part of this litigation . . ."). Therefore, we find plaintiff's counsel recklessly filed

a frivolous third amended complaint which resulted in multiple and unnecessary filings. See

Docs. 85, 88, 91-93, 97, 98, 101, 102. Sanctions under § 1927 are warranted. 

Finally, defendants argue that plaintiff's failure to conduct settlement negotiations in

good faith warrants sanctions under our inherent powers. Defendants' Motion at 14. A

finding of bad faith is required for sanctions under the court's inherent power. Fink v.

Gomez, 239 F.3d 989, 993 (9th Cir. 2001). Moreover, "inherent powers must be exercised

with restraint and discretion." Yagman v. Republic Ins., 987 F.2d 622, 628 (9th Cir. 1993).

Here, defendants contend that plaintiff's absurdly high settlement demand was in bad faith.

The forty million dollar demand could not have been in good faith. Moreover, it was just

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part of a pattern and practice of conduct that falls short of the "Lawyer's Creed of

Professionalism of the State Bar of Arizona." Membership Directory at 76 (2012-2013). We

think this may be an educational deficit on plaintiff's counsel's behalf, and, in lieu of

monetary sanctions, urge him to give serious thought to how he practices law and to consider

educational programs in professionalism. 

IT IS ORDERED DENYING plaintiff's motion to strike Exhibit A or in the

alternative to file a sur-response (doc. 308).

IT IS FURTHER ORDERED GRANTING IN PART AND DENYING IN PART

the motion for sanctions (doc. 252). It is ordered DENYING defendants' request for

sanctions under Rule 11 and this court's inherent powers. It is ordered GRANTING

defendants' request for sanctions under Rule 37(b) for discovery failures and 28 U.S.C. §

1927 for plaintiff's filing of a frivolous third amended complaint. Within 10 days of the

filing of this order, defendants must file an application for attorneys' fees caused by (1)

plaintiff's failure to promptly obtain records from the juvenile court and to comply with Rule

26, Fed. R. Civ. P., and (2) plaintiff's filing of the third amended complaint. The application

shall include a task-based itemized statement of fees and expenses. Plaintiff may file a

response within 10 days of the filing of defendant's application. Defendants may file a reply

within 5 days thereafter. 

DATED this 11th day of February, 2013.

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