Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_14-cv-04623/USCOURTS-cand-5_14-cv-04623-1/pdf.json

Nature of Suit Code: 410
Nature of Suit: Antitrust
Cause of Action: 15:1 Antitrust Litigation

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Case No.: 14-cv-04623-NC

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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

HAROLD DUTRA,

Plaintiff,

v.

BFI WASTE MANAGEMENT 

SYSTEMS OF NORTH AMERICA, 

INC.,

Defendant.

Case No.14-cv-04623-NC 

ORDER GRANTING MOTION TO 

DISMISS WITHOUT LEAVE TO 

AMEND AND DENYING MOTIONS 

FOR SANCTIONS

Re: Dkt. Nos. 34, 44, 57

Before the Court are BFI’s motion to dismiss the first amended complaint, BFI’s

motion for sanctions, and Dutra’s cross-motion for sanctions. This is the second time 

Dutra has sued BFI over his dissatisfaction with a settlement agreement the parties entered 

into in 2009. Now, Dutra alleges that BFI has entered into an agreement with Recology to 

bar plaintiff from employment with Recology. The Court finds Dutra’s antitrust 

allegations and breach of the covenant of good faith and fair dealing are meritless and 

GRANTS defendant’s motion to dismiss without leave to amend. However, the Court 

does not find that sanctions are appropriate and DENIES both BFI’s and Dutra’s motions 

for sanctions.

I. BACKGROUND

Plaintiff Harold Dutra is a former employee of defendant, BFI (now Republic), a 

waste management service company. Dkt. No. 30 at ¶ 9. Dutra was a driver who collected 

waste in San Mateo County. Id. BFI terminated Dutra in 2007, and the parties engaged in 

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arbitration, ultimately, ending in a settlement agreement in 2009. Id. at ¶¶ 11-14. The 

settlement agreement provided a $35,000 monetary payment for Dutra, and required Dutra 

to relinquish all employment rights with BFI including right to seek re-employment with 

BFI and its successors. Id. at ¶ 14. 

In June 2012, Dutra sued BFI for a variety of claims, seeking to overturn the 

settlement agreement. Id. at ¶ 15. The district court dismissed Dutra’s complaint in July 

2013. Id. at ¶ 16. 

After July 2013, Dutra applied for a job with Recology, another waste disposal 

company. Id. at ¶ 18. Dutra alleges that he was deemed qualified by Recology, and he 

believes that his application was rejected because of communications between Recology 

and BFI. Id. at ¶ 18.

II. DISCUSSION

Before the Court are two separate motions, which the Court will address in turn. 

First, defendant’s motion to dismiss argues that this Court should dismiss the complaint 

without leave to amend because the complaint is meritless. Dkt. No. 34. Second, 

defendant moves for sanctions under Rule 11, 28 U.S.C. § 1927, and the Court’s inherent 

power, and asks the Court to award it attorney’s fees. Dkt. No. 44. Plaintiff filed a crossmotion for sanctions, seeking recovery of attorney’s fees in defending the motion for 

sanctions. Dkt. No. 57.

A. Motion To Dismiss

A motion to dismiss for failure to state a claim under Rule 12(b)(6) tests the legal

sufficiency of a complaint. Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). On a 

motion to dismiss, all allegations of material fact are taken as true and construed in the 

light most favorable to the non-movant. Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336, 337-

38 (9th Cir. 1996). The Court, however, need not accept as true “allegations that are 

merely conclusory, unwarranted deductions of fact, or unreasonable inferences.” In re 

Gilead Scis. Secs. Litig., 536 F.3d 1049, 1055 (9th Cir. 2008). Although a complaint need 

not allege detailed factual allegations, it must contain sufficient factual matter, accepted as 

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true, to “state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 

550 U.S. 544, 570 (2007). A claim is facially plausible when it “allows the court to draw 

the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft 

v. Iqbal, 556 U.S. 662, 678 (2009). 

If a court grants a motion to dismiss, leave to amend should be granted unless the 

pleading could not possibly be cured by the allegation of other facts. Lopez v. Smith, 203 

F.3d 1122, 1127 (9th Cir. 2000). However, dismissal without leave to amend is proper if it 

is clear that the complaint could not be saved by amendment. Eminence Capital, LLC v. 

Aspeon, Inc., 316 F.3d 1048, 1052 (9th Cir. 2003).

Dutra sues for (1) a violation of the Sherman Antitrust Act §1 alleging a conspiracy 

to restrict trade; (2) a violation of the Sherman Antitrust Act § 2, alleging an unlawful 

monopoly; (3) the Cartwright Antitrust Act; and (4) breach of covenant of good faith and 

fair dealing.

1. Sherman Antitrust Act § 1 

Section 1 of the Sherman Act prohibits “[e]very contract, combination in the form 

of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several 

States, or with foreign nations.” 15 U.S.C. § 1. In antitrust claims, the Supreme Court has 

required a heightened pleading standard:

In applying these general standards to a § 1 claim, we hold that 

stating such a claim requires a complaint with enough factual 

matter (taken as true) to suggest that an agreement was made. 

Asking for plausible grounds to infer an agreement does not 

impose a probability requirement at the pleading stage; it 

simply calls for enough fact[s] to raise a reasonable expectation 

that discovery will reveal evidence of illegal agreement.... [A]n 

allegation of parallel conduct and a bare assertion of 

conspiracy will not suffice.

Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 556-57 (2007). “This is because 

discovery in antitrust cases frequently causes substantial expenditures and gives the 

plaintiff the opportunity to extort large settlements even where he does not have much of a 

case.” Kendall v. Visa U.S.A., Inc., 518 F.3d 1042, 1046-47 (9th Cir. 2008). 

To state a claim under Section 1 of the Sherman Act, claimants must plead not just 

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ultimate facts (such as a conspiracy), but evidentiary facts which, if true, will prove: (1) a 

contract, combination or conspiracy among two or more persons or distinct business 

entities; (2) by which the persons or entities intended to harm or restrain trade or 

commerce among the several States, or with foreign nations; (3) which actually injures 

competition. Kendall v. Visa U.S.A., Inc., 518 F.3d 1042, 1047 (9th Cir. 2008); Les 

Shockley Racing Inc. v. Nat’l Hot Rod Ass’n, 884 F.2d 504, 507 (9th Cir.1989); see also 

Twombly, 550 U.S. at 553-56. To satisfy the first prong, a plaintiff may not simply allege 

an agreement or conspiracy, but rather must provide information as to the “specific time, 

place, or person involved in the alleged conspiracies.” Twombly, 550 U.S. at 564; Kendall 

v. Visa U.S.A., Inc., 518 F.3d 1042, 1046-47 (9th Cir. 2008).

Here, Dutra alleges that sometime after the July 22, 2013 dismissal, he applied for a 

job with Recology. Dkt. No. 30 at ¶ 18. “[O]n information and belief, after 

communications between Recology and BFI (Republic), Plaintiff’s application was 

rejected.” Id. Dutra alleges that he learned in late 2013 and early 2014 “of the collusion 

between BFI (Republic) and Recology as that collusion or conspiracy relates to Plaintiff’s 

re-employment.” Id. at ¶ 21. These allegations do not include any factual information to 

give rise to plausible grounds that a conspiracy exists. The Court finds that such 

allegations are exactly the sort that the Twombly court rejected, and so too, this Court 

rejects the conspiracy claim as insufficiently pled.

On the restraint of trade, Dutra alleges “[b]y locking up certain markets, with fixed 

rates and single company locales, BFI (Republic) and Recology are able to harm persons 

seeking employment, consumers of their products, and others.” Id. at ¶ 26. Dutra alleges 

that BFI and Recology control all of the San Francisco Bay Area’s waste management 

services, and “have divided the Area into sections or regions within which there is no 

competition.” Id. at ¶ 5. “BFI and Recology set wages, rates for collection, and dictate 

hiring and collection practices throughout the Bay Area.” Id. 

On a motion to dismiss, the Court may take judicial notice of matters of public 

record. Harris v. County of Orange, 682 F.3d 1126, 1132 (9th Cir. 2012). BFI has 

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provided public record information that Bay Area municipalities, such as San Mateo 

County and the City of San Francisco, grant exclusive licenses to both companies within 

particular boundaries. Dkt. No. 34 at 9. Thus, Dutra’s restraint of trade claims are both 

unsupported legal conclusions and factually inaccurate statements. Dutra’s Sherman 

Antitrust Act § 1 claim is dismissed.

2. Sherman Antitrust Act § 2

Section 2 of the Sherman Act requires allegations that the defendant (1) possesses 

monopoly power in a valid relevant market; and (2) willfully acquired, maintained, or used 

that power by anti-competitive or exclusionary means. United States v. Grinnell Corp., 

384 U.S. 563, 570-71 (1966). To satisfy the first prong, a plaintiff must allege that the 

defendant has market power within a legally cognizable relevant market. Newcal Indus., 

Inc. v. Ikon Office Solution, 513 F.3d 1038, 1044 (9th Cir. 2008). “[T]he plaintiff must 

allege both that a ‘relevant market’ exists and that the defendant has power within that 

market.” Id.; see also Tanaka v. Univ. of S. Cal., 252 F.3d 1059, 1063 (9th Cir. 

2001)(“Failure to identify a relevant market is a proper ground for dismissing a Sherman 

Act claim”). A plaintiff must delineate a relevant market and show that the defendant 

plays enough of a role in that market to impair competition significantly. Bhan v. NME 

Hospitals, Inc., 929 F.2d 1404, 1413 (9th Cir. 1991). Additionally, antitrust laws are

intended to protect only those activities that have anticompetitive effects on the market as a 

whole. Broad. Music, Inc. v. Columbia Broad. Sys., Inc., 441 U.S. 1, 23 (1979); Eichorn v. 

AT&T Corp., 248 F.3d 131, 148 (3d Cir. 2001), as amended (June 12, 2001).

Here, Dutra alleges that BFI possesses a monopoly on the “waste labor market,” but 

also that BFI and Recology together control the market. Dkt. No. 30 at ¶¶ 5, 17. 

Additionally, Dutra alleges that the relevant market is “waste drivers and related industries 

in the Bay Area and throughout the State.” Id. at ¶ 26. Finally, Dutra does not allege any 

specific injury to anyone but himself. Together, these legal conclusions do not support a 

claim of § 2 antitrust liability. Dutra has not alleged a cognizable relevant market or 

alleged BFI’s role in the market with any specificity. Plaintiff has proffered no further 

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facts in briefing or at the hearing that could provide even a plausible allegation of 

monopoly power or antitrust liability. Therefore, the Court dismisses the Sherman 

Antitrust Act § 2 claim.

3. Cartwright Antitrust Act

“The analysis under California’s antitrust law mirrors the analysis under federal law 

because the Cartwright Act, Cal. Bus. & Prof.Code § 16700 et seq., was modeled after the

Sherman Act.” Cnty. of Tuolumne v. Sonora Cmty. Hosp., 236 F.3d 1148, 1160 (9th Cir. 

2001). Because plaintiff’s Sherman Antitrust Act claims lack merit, so too does his 

Cartwright Antitrust Act claim. This claim is also dismissed.

4. Breach of the Implied Covenant of Good Faith and Fair Dealing

The covenant of good faith and fair dealing is implied in a contract and requires the 

party to uphold the contract’s purposes and the parties’ legitimate expectations. Carma 

Developers (Cal.), Inc. v. Marathon Dev. Cal., Inc., 3 Cal.4th 342, 373 (1992). 

Dutra claims that BFI breached its duty of good faith by refusing to set aside part of 

the settlement agreement between the parties. Dkt. No. 30 at ¶ 35. This statement is at 

odds with the law of good faith and fair dealing, which requires parties to uphold contract 

terms, not to set them aside. Additionally, Dutra claims that BFI breached a duty by 

“interfer[ing] in Plaintiff’s efforts to gain hire with another company.” Dkt. No. 30 at ¶ 

36. Again, such a claim is not properly within the scope of the law, as plaintiff does not 

claim that BFI was obligated to refrain from any actions in the parties’ settlement 

agreement. 

5. Conclusion

Although generally, leave to amend should be granted freely, plaintiff has not 

proffered any additional facts that could cure the deficiencies in the complaint. Instead, at 

hearing, plaintiff noted that a different cause of action, interference with prospective 

economic advantage, might be more appropriate. This was not presented in briefing, and 

the Court declines to rule on the permissibility of that claim because, brought alone, it is 

not a federal claim within the Court’s jurisdiction. In addition, plaintiff has amended the 

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complaint once with the benefit of defendant’s pending motion to dismiss, so he was put 

on notice of defendant’s arguments and had an opportunity to cure the complaint’s 

deficiencies. Therefore, the Court believes amendment would be futile and dismisses 

without leave to amend. See Kendall v. Visa U.S.A., Inc., 518 F.3d 1042, 1051-52 (9th Cir. 

2008)(finding amendment of the complaint futile when plaintiff proffered no additional 

facts or discovery that could be conducted to cure the complaint).

B. Sanctions

“Three primary sources of authority enable courts to sanction parties or their 

lawyers for improper conduct: (1) Federal Rule of Civil Procedure 11, which applies to 

signed writings filed with the court, (2) 28 U.S.C. § 1927, which is aimed at penalizing 

conduct that unreasonably and vexatiously multiplies the proceedings, and (3) the court’s 

inherent power.” Fink v. Gomez, 239 F.3d 989, 991 (9th Cir. 2001).

Federal Rule of Civil Procedure 11(b) provides in part that “[b]y presenting to the 

court a pleading, written motion, or other paper,” an attorney certifies that “to the best of 

the person’s knowledge, information, and belief, formed after an inquiry reasonable under 

the circumstances”: “it is not being presented for any improper purpose, such as to harass, 

cause unnecessary delay, or needlessly increase the cost of litigation”; and “the factual 

contentions have evidentiary support or, if specifically so identified, will likely have 

evidentiary support after a reasonable opportunity for further investigation or discovery.” 

Fed. R. Civ. P. 11(b). 

For § 1927 sanctions to apply, “if a filing is submitted recklessly, it must be 

frivolous, while if it is not frivolous, it must be intended to harass . . . . [R]eckless 

nonfrivolous filings, without more, may not be sanctioned.” B.K.B. v. Maui Police Dep’t, 

276 F.3d 1091, 1107 (9th Cir. 2002) (quoting In re Keegan Mgmt. Co., Sec. Lit., 78 F.3d 

431, 436 (9th Cir. 1996)). 

Under its inherent powers, a court may impose sanctions in the form of attorneys’

fees when the losing party has acted “in bad faith, vexatiously, wantonly, or for oppressive 

reasons.” Primus Auto. Fin. Servs., Inc. v. Batarse, 115 F.3d 644, 648 (9th Cir. 1997)

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(quoting Alyeska Pipeline Serv. Co. v. Wilderness Soc’y, 421 U.S. 240, 258-59 (1975)). 

However, “because of their very potency, inherent powers must be exercised with restraint 

and discretion.” See B.K.B., 276 F.3d at 1108 (quoting Chambers v. NASCO, Inc., 501 

U.S. 32, 44 (1991)). “[A]n attorney’s reckless misstatements of law and fact, when 

coupled with an improper purpose . . . are sanctionable under a court’s inherent power.”

Fink, 239 F.3d at 994.

The Ninth Circuit instructs courts to be reluctant in imposing sanctions, “especially 

errors in papers filed before an opportunity for discovery.” Greenberg v. Sala, 822 F.2d 

882, 887 (9th Cir. 1987). “The court is expected to avoid using the wisdom of hindsight 

and should test the signer’s conduct by inquiring what was reasonable to believe at the 

time the pleading . . . was submitted.” Id.

The Court denies BFI’s request to impose sanctions because it finds that the 

requested relief is disproportionate to the sanctions requested and not in the interest of 

justice. BFI’s motion is premised in large part on argument that the 2012 case was 

frivolous. This is irrelevant to the inquiry that this Court is permitted to entertain on the 

current case, except as it may demonstrate Dutra or his counsel’s intent to harass. Here, 

the action is only at the pleading stage, and BFI only had to engage in one round of 

pleading. Additionally, the complaint is short, lacking in factual matter, and generally 

straightforward. Therefore, the Court does not agree that BFI was required to expend 

significant time and money to defend the action. In addition, BFI argues that Dutra 

required BFI to spend unnecessary time and money preparing for two motions to dismiss; 

however, the Court notes, and BFI acknowledges, that the original complaint and the first 

amended complaint were substantially similar and suffered from the same flaws. Thus, 

there was no need for defendant engage in an extensive effort to submit the second motion 

to dismiss. Finally, although the action is meritless, the Court does not find evidence of 

intention to harass.

The Court also denies plaintiff’s motion for sanctions. “A motion for sanctions 

must be made separately from any other motion and must describe the specific conduct 

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that allegedly violates Rule 11(b).” Fed. R. Civ. P. 11(c)(2). Dutra moved for sanctions 

under Rule 11 at the end of his opposition to BFI’s sanctions, not on a separate motion. 

Dkt. No. 57 at 16-17. Dutra does not describe BFI’s conduct that merits sanctions, except 

to suggest that BFI’s motion for sanctions is meritless. Id. Thus, Dutra has not complied 

with the procedural requirements for bringing a motion for sanctions under Rule 11. 

Additionally, Dutra must demonstrate that BFI’s motion was filed for an improper 

purpose, such as to harass, which he has not done. Fed. R. Civ. P. 11(b). The Court 

disagrees with Dutra’s arguments because his complaint did lack factual and legal merit, so 

BFI’s motion was not improper. Therefore, Dutra’s motion for sanctions is denied.

III. CONCLUSION

In conclusion, the Court dismisses the complaint without leave to amend and denies 

all motions for sanctions. 

IT IS SO ORDERED.

Dated: May 13, 2015 _____________________________________

NATHANAEL M. COUSINS

United States Magistrate Judge

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