Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_05-cv-03754/USCOURTS-cand-4_05-cv-03754-2/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 28:1331 Fed. Question

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United States District Court

For the Northern District of California

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IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

MELINDA GARCIA,

Plaintiff,

v.

AMBER HASKETT, and DOES 1 through 50,

inclusive,

Defendants.

 /

No. C 05-3754 CW

ORDER GRANTING

DEFENDANT'S

MOTION TO

DISMISS, DENYING

MOTIONS TO COMPEL

AND DENYING

MOTION FOR

SANCTIONS

Defendant Amber Haskett moves to dismiss Plaintiff Melinda

Garcia's First Amended Complaint (FAC) under Federal Rules of Civil

Procedure 12(b)(1), 12(b)(6) and 9(b) and asks for an award of

sanctions or attorneys' fees. Defendant separately moves pursuant

to Federal Rule of Civil Procedure 11 and 28 U.S.C. § 1927 for an

award of sanctions in connection with Plaintiff's previous motion

to extinguish a lien, and separately moves to compel Plaintiff's

deposition and requests attorneys' fees and costs. Plaintiff

opposes the motions, and herself moves to compel the depositions of

Defendant's attorney, Bernard P. Kenneally, and computer service

provider Eric Katz; she also requests attorneys' fees and costs. 

Defendant opposes the motion to compel Mr. Kenneally's deposition. 

All motions were taken under submission on the papers.

Having considered all of the papers filed by the parties, the

Court grants with prejudice Defendant's motion to dismiss. 

Case 4:05-cv-03754-CW Document 105 Filed 06/30/06 Page 1 of 14
United States District Court

For the Northern District of California

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Accordingly, the parties' cross-motions to compel are denied as

moot. The Court denies Defendant's motion for an award of

sanctions in connection with Plaintiff's motion to extinguish the

lien. 

BACKGROUND

This case arises out of the dissolution of the parties' former

law partnership, Garcia & Haskett, LLP (the Partnership). Among

other documents, the Court has previously taken judicial notice of

the parties' Dissolution Agreement, made on or about March 1, 2005

and effective as of February 1, 2005. In connection with these

negotiations, Plaintiff engaged Mark Figueiredo, Esq., and

Defendant engaged Bernard Kenneally, Esq. Plaintiff now seeks

rescission of the Dissolution Agreement and release from its terms

(including its mandatory arbitration clause), on the grounds that

Defendant illegally accessed Plaintiff's confidential email

communications with Mr. Figueiredo during the negotiations, and

thus fraudulently induced Plaintiff to enter into the agreement. 

For a more detailed summary of Plaintiff's allegations, see the

Court's December 21, 2005 Order Granting in Part and Denying in

Part Defendant's Motion to Dismiss (the December 21, 2005 Order). 

In that Order, the Court denied Defendant's motion to dismiss 

for lack of subject matter jurisdiction, finding that this was not

an exceptional case where the alleged federal claim was immaterial

or wholly insubstantial and frivolous, and thus the Court would

assume the truth of Plaintiff's allegations. However, the Court

granted Defendant's motion to dismiss for failure to state a claim,

finding that Plaintiff had not stated a claim for unlawful

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For the Northern District of California

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interception and disclosure of electronic communications under 18

U.S.C. § 2511(1). The Court granted Plaintiff leave to file an

amended complaint if she could "truthfully, and without

contradicting her original complaint, allege facts showing the

Defendant intercepted email communications while they were in

temporary, transient electronic storage." December 21, 2005 Order

at 12. The Court warned that if Plaintiff could not adequately

allege a federal claim, her remaining State law claims would be

dismissed without prejudice to refiling in State court. The Court

also dismissed Plaintiff's claim under California Penal Code § 632,

a State law counterpart to 18 U.S.C. § 2511, granting Plaintiff

leave to amend if she could allege facts showing that Defendant

"eavesdropped upon or recorded a confidential communication." Id.

at 15. 

Plaintiff filed her FAC on January 10, 2006. Plaintiff again

alleges claims under 18 U.S.C. § 2511 for unlawful interception and

disclosure of electronic communications. Plaintiff also brings a

new federal claim under 18 U.S.C. § 2701(a)(2) for unlawful access

to stored communications. 

According to the FAC, it was the Partnership practice that no

one other than the email account holder was authorized to access

that account's email. Plaintiff's computer was password-protected

and Plaintiff did not disclose her password to Defendant. 

Defendant's computer was also password-protected and Plaintiff was

not aware of Defendant's password. 

Plaintiff and Defendant maintained email accounts "on the

Parnership account, routed through the Partnership computer server

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which was hosted by a third party, Tri-Valley Internet." FAC ¶ 12. 

Plaintiff alleges that her emails were "electronically stored . . .

for purposes of backup protection of each email after Plaintiff

viewed such emails." Id. ¶ 30. Plaintiff "is further informed and

believes and on that basis alleges that emails transmitted to

Plaintiff while Plaintiff was not logged into her email account

remained in temporary storage until Plaintiff logged into her

account again." Id. ¶ 30. 

Pursuant to the Dissolution Agreement, Plaintiff "retained

possession of the Partnership's computer server" and contributed it

to Garcia Law Group (GLG), her new firm. Id. ¶ 17. A computer

consultant examining it informed Plaintiff that "in February 2005,

[Defendant] had accessed Plaintiff's emails and had forwarded them"

to Mr. Kenneally. Id. ¶ 19. Among the emails allegedly accessed

by Defendant were unread "emails in Plaintiff's inbox that

Plaintiff had received after logging out of her email for the day." 

Id. ¶ 21. Plaintiff alleges that Defendant "used the server late

at night to intercept Plaintiff's Unread Emails while they were

still in transit to Plaintiff's email box, i.e., accessed while in

temporary, transient electronic storage intrinsic to the

communications process, and contemporaneous with their transmission

to Plaintiff." Plaintiff also alleges that Defendant "reviewed

emails from and to Plaintiff that Plaintiff had previously reviewed

("Stored Emails")." Id. ¶ 22. She alleges that Defendant

"intentionally exceeded [her] authority to access the facility

through which electronic communication service is provided to

Plaintiff, and thereby obtained access to Plaintiff's Stored Emails

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while they were in electronic storage for backup purposes." Id.

¶ 32.

As a standard practice, Plaintiff's outgoing email messages

included the following statement at the end:

This communication constitutes an electronic communication

within the meaning of the Electronic Communications Privacy

Act, 18 USC 2510, and its disclosure is strictly limited to

the recipient intended by the sender of this message. This

communication may contain confidential and privileged material

for the sole use of the intended recipient and receipt by

anyone other than the intended recipient does not constitute a

loss of the confidential or privileged nature of the

communication. Any review or distribution by others is

strictly prohibited. If you are not the intended recipient

please contact the sender by return electronic mail and delete

all copies of this communication. For more information about

Garcia & Haskell LLP, contact us at 925-475-2000 or visit us

at http://www.garciahaskett.com. 

Id. ¶ 27.

Defendant filed her motion to dismiss the FAC on March 9,

2006. Meanwhile, she had filed a notice of lien in a case in

Contra Costa County Superior Court, Long v. Sunrise Senior Living,

Inc., No. MSC 04-1664, where Plaintiff Garcia is the attorney of

record for the plaintiffs. In an email to Mr. Kenneally, Mr.

Figueiredo asked Defendant to withdraw the notice of lien and

threatened to file a motion in this Court to extinguish the lien. 

Mr. Kenneally rejected the request, and informed Mr. Figueiredo,

"Your federal jurisdiction thoughts make no sense. This email

constitutes Rule 11 Notice that I will seek sanctions for any

action regarding the Long Case that you bring in Federal Court." 

Kenneally Decl. in Supp. of Mot. for Att'y Fees, Ex. A, Mar. 8,

2006 Email from Mr. Kenneally to Mr. Figueiredo. 

On March 9, 2006, Plaintiff submitted the motion to extinguish

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the lien and moved to shorten time for hearing it. Defendant

opposed the motion to shorten time and the motion to extinguish. 

The Court granted Plaintiff's request to shorten time, and set the

hearing for March 24, 2006. On March 23, 2006, the Court denied

the motion to extinguish on the papers. It found that under

California law, in particular, Carroll v. Interstate Brands Corp.,

99 Cal. App. 4th 1168, 1172 (2002), Plaintiff could not move to

extinguish the notice of lien in Long, and its validity would have

to be determined in a "subsequent, independent action." March 23,

2006 Order at 4. The Court found that Plaintiff's justification

for federal jurisdiction was inadequate, and it declined to

entertain Plaintiff's motion to extinguish the lien "on principles

of federalism and comity." Id. at 5. On March 29, 2006, Defendant

filed her Rule 11 motion for sanctions in connection with the lien

matter. 

The Court explained the legal standards applicable to

Defendant's motion to dismiss in its December 21, 2005 Order. 

DISCUSSION

I. Claims of Unlawful Interception, Use and Disclosure of

Electronic Communications

Defendant moves to dismiss Plaintiff's claims of unlawful

interception, use and disclosure of electronic communications. 

The Wiretap Act, 18 U.S.C. § 2511(1)(a), provides that one who

"intentionally intercepts, endeavors to intercept, or procures any

other person to intercept or endeavor to intercept, any wire, oral,

or electronic communications" shall be subject to criminal

liability and civil suit. Section 2511(1)(c) prohibits the

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intentional disclosure of such intercepted communications, and

§ 2511(1)(d) prohibits the intentional use of intercepted

communications. "Intercept" is defined as "the aural or other

acquisition of the contents of any wire, electronic, or oral

communication through the use of any electronic, mechanical, or

other device." 18 U.S.C. § 2510(4). 

In order to constitute unlawful interception of electronic

communication, the interception of email messages must have

occurred while the messages were in a transient storage facility,

not a place of permanent storage. See United States v. Councilman,

418 F.3d 67, 85 (1st Cir. 2005) (en banc) (holding that "electronic

communication" includes communications in temporary, transient

electronic storage intrinsic to the communication process); Wesley

College v. Pitts, 974 F. Supp. 375 (D. Del. 1997) (concluding that

acquisition of electronic communications in electronic storage does

not constitute interception). 

In the FAC, Plaintiff alleges that her unread email was

intercepted by Defendant while "still in transit to Plaintiff's

email box, i.e., accessed while in temporary, transient" storage. 

Other than this conclusory statement, however, Plaintiff states no

factual allegations to support her assertion that Defendant

intercepted the unread email while it was in temporary, transient

storage. Indeed, the remainder of Plaintiff's allegations suggests

that the reverse is true: that the unread email was accessed while

it was on the Partnership's server, and that the server permanently

stored all email (read and unread). Plaintiff offers no legal

justification for her contention that whether email is read or

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unread determines whether it is located in "temporary, transient"

space or permanent storage. The Ninth Circuit suggested otherwise

when it endorsed the Fifth Circuit's holding that email "stored on

electronic bulletin system, but not yet retrieved by the intended

recipients, was not an 'interception' under the Wiretap Act." 

Konop v. Hawaiian Airlines, Inc., 302 F.3d 868, 876 (9th Cir. 2002)

(citing with approval Steve Jackson Games, Inc., v. United States

Secret Serv., 36 F.3d 457 (5th Cir. 1994)). 

For these reasons, the Court grants Defendant's motion to

dismiss Plaintiff's Wiretap Act claims against it. Because

Plaintiff has already been granted leave to amend these claims, the

dismissal is with prejudice. 

II. Stored Communications Claim

Defendant moves to dismiss Plaintiff's claim for unlawful

access of stored electronic communications. 

The Stored Communications Act (SCA) provides a cause of action

against anyone who 

(1) intentionally accesses without authorization a facility

through which an electronic communication service is provided;

or (2) intentionally exceeds an authorization to access that

facility; and thereby obtains, alters, or prevents authorized

access to wire or electronic communication while it is in

electronic storage in such system . . . . 

18 U.S.C. § 2701(a). The SCA exempts "conduct authorized" "by the

person or entity providing a wire or electronic communications

service." Id. § 2701(c)(1). 

Defendant argues that Plaintiff's SCA claim should be

dismissed because (1) Plaintiff does not allege that Defendant

accessed a "facility through which an electronic communication

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service is provided" and, in the alternative, (2) Plaintiff's

allegation that Defendant exceeded her authorization to access that

facility is inconsistent with the other facts alleged in the FAC. 

These issues are addressed in turn. 

In In re JetBlue Airways Corp. Privacy Litig., 379 F. Supp. 2d

299, 307 (E.D. N.Y. 2005), the district court found that an

airline's computer servers and reservation system did not

constitute a "facility through which electronic communication

service is provided" because despite the fact that customers could

use the airline's system to transmit data, the airline itself was a

consumer, not a provider, of electronic communication services. 

Thus, the court held that the airline could not be held liable

under 18 U.S.C. § 2702 as a matter of law for its alleged

disclosure of customer records. 379 F. Supp. 2d at 310. Similar

reasoning applies here. According to the Complaint, the

Partnership is a limited liability partnership engaged in the

practice of law, and it purchases electronic communication services

through Tri-Valley; it is not a "facility through which an

electronic communication service is provided." 

It may be that the facility which Plaintiff alleges that

Defendant illegally accessed is Tri-Valley Internet, the internet

service provider that "hosted" the Partnership's computer server. 

If so, however, Plaintiff has failed to state a claim because she

has not stated that Defendant exceeded her authority to access TriValley Internet's facility. In fact, the FAC indicates that the

Partnership had a single account with Tri-Valley Internet. See FAC

¶ 12 ("Each of Plaintiff and [Defendant] maintained email accounts

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on the Partnership account, routed through the Partnership computer

server . . ."). Although the FAC alleges that it was "the

Partnership's practice" that no one other than the holder of a

particular email account was authorized to access that account

holder's emails, id., this does not mean that Defendant's access of

Plaintiff's stored emails was conduct unauthorized by Tri-Valley

Internet. To the extent that Plaintiff claims that Defendant

violated the Partnership's internal practices, she may have stated

a State law claim for violation of a fiduciary duty, but she has

not stated a claim for violation of federal law. 

For these reasons, the Court finds that Plaintiff has failed

to state a claim under 18 U.S.C. § 2701(a). Because the Court has

already granted Plaintiff leave to amend her complaint to state a

federal claim, and because it is apparent that she cannot do so

without contradicting the allegations in the FAC, this dismissal is

with prejudice. As the Court stated in its prior order, because

Plaintiff cannot adequately allege a federal claim, her remaining

State law claims are dismissed without prejudice to refiling in

State court. The parties' cross-motions to compel are denied as

moot. 

III. Attorneys' Fees Connected with Plaintiff's Motion to 

Extinguish Lien

Defendant moves pursuant to Federal Rule of Civil Procedure 11

and the Court's inherent powers for an award of her attorneys' fees

and costs incurred in opposing Plaintiff's motion to extinguish the

notice of lien in Long. Plaintiff opposes the motion, arguing that

Defendant has failed to meet Rule 11's safe harbor requirement and

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that she did have sufficient legal basis to bring the motion to

extinguish in federal court. 

Rule 11 requires a court to impose sanctions on an attorney, a

represented party, or both when the attorney has signed and

submitted to the court a pleading, motion or other paper that is

not, to the attorney's knowledge and belief after reasonable

inquiry, "well grounded in fact" and "warranted by existing law or

a good faith argument for the extension, modification, or reversal

of existing law." Fed. R. Civ. P. 11. An attorney's signature

also constitutes a warranty that the paper is not "interposed for

any improper purpose, such as to harass or to cause unnecessary

delay." 

 The "safe harbor" provision of Rule 11 requires a party

seeking sanctions to allow the party against whom sanctions are

sought an opportunity to withdraw the challenged pleading or

filing. See Fed. R. Civ. P. 11(c)(1)(A). A motion for sanctions

shall be made separately from other motions and may not be filed

until twenty-one days after it is served upon the other party. Id.

During this time, the party against whom sanctions are sought has

the opportunity to withdraw or appropriately correct the challenged

filing. Id. Courts have held that the twenty-one day hold on

filing a motion for Rule 11 sanctions is a prerequisite to

recovering sanctions. See Thomas v. Treasury Management

Association, Inc., 158 F.R.D. 364, 369 (D. Md. 1994). 

 As the Court has already explained in the context of

Defendant's request for sanctions in connection with her first

motion to dismiss (as well as Plaintiff's purported "Rule 11

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inquiry" into Defendant's request for sanctions), "the 'safe

harbor' provision is a prerequisite, non-compliance with which

results in the denial of a Rule 11 motion for sanctions." December

21, 2005 Order Granting in Part and Denying in Part Def.'s Mot. to

Dismiss at 18 (citing Cannon v. Cherry Hill Toyota, Inc., 190

F.R.D. 147, 158-59 (D. N.J. 1999) (finding that plaintiff's failure

to comply with safe harbor provisions necessitates a denial of

plaintiff's motion for sanctions)). 

Defendant presents no support for her suggestion that her

counsel's March 8, 2006 email was sufficient as a "'short form' or

'catch all'" to fulfill Rule 11's twenty-one day notice

requirement. In fact, the Ninth Circuit has held in a case where a

party was given multiple informal warnings about the defects of a

claim, that such warnings are "not motions, . . . and the Rule

requires service of a motion." Barber v. Miller, 146 F.3d 707, 710

(9th Cir. 1988). It noted that the Advisory Committee anticipated

that in addition to formal service of the proposed motion on the

opposing party, "counsel should be expected to give informal notice

to the other party, whether in person or by a telephone call or

letter, of a potential violation before proceeding to prepare and

serve a Rule 11 motion." Id. (quoting Fed. R. Civ. P. 11 Advisory

Committee's Note). The Ninth Circuit concluded, "[i]t would

therefore wrench both the language and purpose of the amendment to

the Rule to permit an informal warning to substitute for service of

a motion." Id. 

In Barber, the allegedly faulty pleading had already been

dismissed when the Rule 11 motion was filed with the court;

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similarly, here, by the time Defendant filed her Rule 11 motion,

the Plaintiff's allegedly sanctionable motion had already been

denied. Defendant argues that the 21 day waiting period was

therefore moot. Yet the Ninth Circuit in Barber concluded the

reverse, explaining that the purpose of the safe harbor period is

to allow the other party to "withdraw the offending pleading and

thereby escape sanctions." Id. The Court finds that the fact that

Plaintiff's motion had already been denied does not excuse

Defendant's failure to comply with the Rule 11 procedural

requirements, and denies Defendant's motion on this basis. 

Even if Defendant had properly complied with Rule 11's safe

harbor requirements, however, the Court would deny her motion for

sanctions. As Plaintiff notes, at least one other federal court

has entertained a motion to strike a notice of lien arising out of

a dispute in California State court. See In re Hijacking of Pan

Am. World Airways, Inc., Aircraft at Karachi Int'l Airport, 698 F.

Supp. 479, 482-83 (S.D. N.Y. 1988) (holding that under California

law, an attorney could not file notices of attorney lien because

clients' retainer agreements were with law firm, not attorney). 

Although that case was distinguishable on the facts and was decided

prior to Carroll, the California case on which the Court relied to

deny Plaintiff's motion to extinguish the lien, In re Hijacking of

Pan Am. World Airways does provide some support for Plaintiff's

argument that the Court could have exercised jurisdiction over her

motion to extinguish. 

Furthermore, the Court finds that both parties' constant

requests and regular motions for attorneys' fees and sanctions have

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themselves contributed to needless delay and increased the cost of

this litigation. See, e.g., December 21, 2005 Order at 17-18

(denying parties' cross-requests for Rule 11 sanctions based in

part on both parties' failures to comply with safe harbor

requirements). For this reason, the Court presently is not

inclined to grant any motion for sanctions to any party in this

case. 

CONCLUSION

For the foregoing reasons, the Court GRANTS Defendant's motion

to dismiss (Docket No. 32). Plaintiff's federal claims are

dismissed with prejudice, and her remaining State law claims are

dismissed for lack of subject matter jurisdiction, without

prejudice to refiling in State court. The Court denies Defendant's

request for judicial notice of various previous filings in these

case (Docket No. 33); these documents are already in the record

before the Court, and no further judicial notice is necessary. The

Court DENIES the parties' motions to compel and for attorneys' fees

(Docket Nos. 60, 79 and 100). 

The Court DENIES Defendant's motion for sanctions in

connection with Plaintiff's motion to extinguish a lien (Docket No.

55). 

The Clerk shall enter judgment accordingly. Each party shall

bear her own costs.

IT IS SO ORDERED.

Dated: 6/30/06 

CLAUDIA WILKEN

United States District Judge

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