Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_06-cv-03852/USCOURTS-cand-4_06-cv-03852-7/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332 Diversity-Other Contract

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UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

STERILE CONTAINMENT 

TECHNOLOGIES, LLC

Plaintiff, No. C 06-3852 PJH 

v. ORDER DENYING MOTION FOR

RULE 11 SANCTIONS

 NELSON LABORATORIES, INC.

Defendant.

_______________________________/

The motion of defendant Nelson Laboratories, Inc. (“Nelson”) for Rule 11 Sanctions

Against Plaintiff Sterile Containment Technologies, LLC (“Sterile”) and Plaintiff’s counsel

came on for hearing on April 18, 2007. Having carefully read the papers filed in conjunction

with the motion and considered the arguments of counsel and the relevant legal authority,

the court hereby DENIES Nelson’s motion for sanctions for the following reasons and for

the other reasons stated at today’s hearing.

Nelson moves for dismissal of plaintiff’s fifth cause of action for fraud and deceit and

for fees in bringing the instant motion under Federal Rule of Civil Procedure 11. However,

the court does not find that Sterile’s allegations of fraud are so egregious as to warrant a

dismissal sanction, especially here where defendant has bypassed the procedures under

Rule 12(b)(6) and Rule 56. See Gemisys Corp. v. Phoenix American, Inc., 186 F.R.D. 551,

557 (N.D. Cal. 1999). On the record before it at this stage, the court cannot determine that

plaintiff’s attorney failed to conduct a reasonable and competent inquiry before signing and

filing the complaint and that complaint is legally or factually baseless from an objective

perspective where Nelson has conceded in its reply brief that Sterile’s theory appears to at

least superficially satisfy the elements of fraud on its face. See Holgate v. Baldwin, 425

Case 4:06-cv-03852-PJH Document 56 Filed 04/18/07 Page 1 of 2
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F.3d 671, 676 (9th Cir. 2005). 

In sum, the court does not find that this case is the “rare and exceptional case where

the action is clearly frivolous, legally unreasonable or without legal foundation, or brought

for an improper purpose.” Operating Eng’rs Pension Trust v. A-C Co., 859 F.2d 1336, 1344

(9th Cir. 1988). Accordingly, defendant’s motion is DENIED.

IT IS SO ORDERED.

Dated: April 18, 2007

_______________________________

PHYLLIS J. HAMILTON

United States District Judge

Case 4:06-cv-03852-PJH Document 56 Filed 04/18/07 Page 2 of 2