Judge: Maurice A. Leiter, Case: 21STCV38223, Date: 2022-10-27 Tentative Ruling

Case Number: 21STCV38223    Hearing Date: October 27, 2022    Dept: 54

Hearing Date: October 27, 2022

Department 54, Judge Maurice Leiter

Motion for Sanctions

Moving Party: Defendants Intrivo Diagnostics, Inc. and Reeve Benaron

Responding Party: Plaintiff Crystal Nguyen

T/R:     DEFENDANTS’ MOTION FOR SANCTIONS IS DENIED.

PLAINTIFF’S REQUEST FOR SANCTIONS IS DENIED.

DEFENDANTS TO NOTICE.

If the parties wish to submit on the tentative, please email the courtroom at SMCdept54@lacourt.org with notice to opposing counsel (or self-represented party) before 8:00 am on the day of the hearing.

The Court considers the moving papers, opposition, and reply.

CCP § 128.7(b) provides that by signing and filing a pleading, an attorney “is certifying that to the best of the person’s knowledge, information, and belief, formed after an inquiry reasonable under the circumstances, all of the following conditions are met: (1) [i]t is not being presented primarily for an improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation[;] (2) [t]he claims, defenses, and other legal contentions therein are warranted by existing law or by a nonfrivolous argument for the extension, modification, or reversal of existing law or the establishment of new law[;] (3) [t]he allegations and other factual contentions have evidentiary support or, if specifically so identified, are likely to have evidentiary support after a reasonable opportunity for further investigation or discovery[;] (4) [t]he denials of factual contentions are warranted on the evidence or, if specifically so identified, are reasonably based on a lack of information or belief.” CCP § 128.7 authorizes the court to impose appropriate sanctions upon attorneys or parties that have violated subsection (b). (CCP § 128.7(c).) 

CCP § 128.5 provides that “[a] trial court may order a party, the party’s attorney, or both, to pay the reasonable expenses, including attorney’s fees, incurred by another party as a result of actions or tactics, made in bad faith, that are frivolous or solely intended to cause unnecessary delay.”  (CCP § 128.5(a).)  “‘Actions or tactics’ include, but are not limited to, the making or opposing of motions or the filing and service of a complaint, cross-complaint, answer, or other responsive pleading.”  (CCP § 128.5(b)(1).)  “‘Frivolous’ means totally and completely without merit or for the sole purpose of harassing an opposing party.”  (CCP § 128.5(b)(2).) 

            Defendants move for sanctions on the ground that Plaintiff’s complaint is an “obscene defiance, subversion, and abuse of the judicial system.” Defendants assert that Plaintiff’s motivation for filing this employment action for Labor Code and FEHA violations was to drive up Defendants’ costs and “manufacture leverage” to force a buyout of Plaintiff’s ownership interest in Intrivo Holding Corp.

In support of this assertion, Defendant presents the declaration of Jack Sahagian, Chief Legal Officer of Intrivo Diagnostics, Inc. Sahagian declares,

On June 29, 2022, I had a telephone conversation with Crystal Nguyen and Thang Nguyen (“the Nguyens”), who had contacted me while they were in Vietnam. The call lasted nearly one hour and five minutes. During this telephone call, the Nguyens emphasized how they had attempted to speak with Mr. Benaron regarding a buyout of the Nguyens’ equity interests in Intrivo Holding Corporation (“IHC”), but because Mr. Benaron would not engage with them in those discussions, they chose to file their respective lawsuits against Intrivo, and they would not have had Mr. Benaron agreed to engage in discussions of equity valuation. The clear takeaway of this conversation with the Nguyens was that each of their lawsuits against Intrivo and Mr. Benaron were not about the actual claims alleged, but were merely being used as a conduit by which to force Intrivo and IHC to negotiate with the Nguyens over the valuation of their equity interests in IHC, and that if Mr. Benaron had engaged with them previously over the value of their equity in IHC, neither of the Nguyens would have filed their present lawsuits.

(Decl. Sahagian ¶ 3.)

            Defendants also argue that Plaintiff is an exempt employee and brought the Labor Code claims in bad faith.

            In opposition, Plaintiff asserts that Sahagian claims are untrue. Plaintiff points to the allegations of racial discrimination against Defendants and argues she was a misclassified employee.

            The Court declines to award sanctions based on the contested declaration of Sahagian. This is wholly insufficient to conclude that Plaintiff has abused the legal system and brought this action solely to harass Defendants. Defendants’ motion is DENIED.

            The Court declines to award sanctions to Plaintiff.