Judge: Stephen P. Pfahler, Case: 20STCV24694, Date: 2024-07-16 Tentative Ruling

Case Number: 20STCV24694    Hearing Date: July 16, 2024    Dept: 68

Dept. 68

Date: 7-16-24

Case #20STCV24694

Trial Date: Not Set

SANCTIONS

MOVING PARTY: Defendants, The Five, LLC, et al.

RESPONDING PARTY: Plaintiffs, Will Thatcher, et al.

RELIEF REQUESTED

Motion for Sanctions

SUMMARY OF ACTION

On June 29, 2020, Plaintiffs Will Thatcher and Delia Salgado filed a PAGA complaint. On March 12, 2021, the clerk entered a default against defendant The Bucket. On March 13, 2022, the court entered a default judgment for $312,493.85. On November 9, 2023, the court granted the motion to vacate the default.

On March 5, 2024, Plaintiffs filed a first amended PAGA complaint against The Five LLC, A California Limited Liability Company dba The Bucket aka Bucket; Great White Hut, Inc., A California Corporation; Great White Hut, LLC, A California Limited Liability Company; 5 Potatoes, LLC, A California Limited Liability Company; Juliano Babayan, an individual; Vigen Pogosyan, an individual; Rafi Pogosyan, an individual; Mesrop Abrahamian, an individual; Alik Ghazarian, an individual; Virginia Petikyan, an individual; Henry Doe, an individual, and Does 1-50.

RULING: Denied.

Defendants The Five LLC, 5 Potatoes, LLC, Mesrop Abrahamian, Alik Ghazarian, Henry Ghazaraian (Henry Doe), Vigen Pogosyan, and Juliano Babayan move for $11,189.03 in monetary sanctions due to the lack of any “factual or legal basis” for the subject action. Plaintiffs Will Thatcher and Delia Salgado counter that the first amended PAGA complaint properly alleges a claim for relief.

Defendants move for sanctions pursuant to Code of Civil Procedure section 128.7. The section requires that an attorney sign all pleadings, petitions, notices of motions, and other similar papers.  (Code Civ. Proc., § 128.7, subd. (a).) Thus, by presenting a pleading or other similar paper to the court, an attorney is certifying that to the best of his or her knowledge, information, and belief, “formed after an inquiry reasonable under the circumstances,” all of the following conditions are met:

 (1) It 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) The 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) The 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) The denials of factual contentions are warranted on the evidence or, if specifically so identified, are reasonably based on a lack of information or belief.

(Code Civ. Proc., § 128.7, subd. (b).) 

The section “authorizes trial courts to impose sanctions to check abuses in the filing of pleadings, petitions, written notices of motions or similar papers.” (Musaelian v. Adams (2009) 45 Cal.4th 512, 514.) A violation of any of these certifications may give rise to sanctions. (Eichenbaum v. Alon (2003) 106 Cal.App.4th 967, 976.) An objective standard of review applies to section 128.7. (San Diegans for Open Government v. City of San Diego (2016) 247 Cal.App.4th 1306, 1318; Bockrath v. Aldrich Chemical Co., Inc. (1999) 21 Cal.4th 71, 82.) Whether a claim is meritless or for the sole purpose of harassment must be evaluated by examining whether the factual allegations of the claim had evidentiary support. (580 Folsom Associates v. Prometheus Development Co. (1990) 223 Cal.App.3d 1, 22.) “Code of Civil Procedure section 128.7 imposes a lower threshold for sanctions than is required under Code of Civil Procedure section 128.5. This is because Code of Civil Procedure section 128.7 requires only that the conduct be ‘objectively unreasonable,’ while Code of Civil Procedure section 128.5 also requires ‘a showing of subjective bad faith.’ (Citation.)” (Guillemin v. Stein (2002) 104 Cal.App.4th 156, 167.)

On a procedural level, the motion indicates compliance with the safe harbor provisions, but the motion lacks any evidentiary proof. [Declaration of Farris Ain] (Code Civ. Proc., § 128.7, subd. (c)(1).) The court accepts the unchallenged declaration of counsel.

On the merits of the motion, Defendants challenge the operative first amended complaint on grounds of the statute of limitations, not private right of action under one of the cited statutory sections, and the improper addition of new defendants without DOE substitution. Plaintiffs in opposition maintain the merits of the first amended complaint, or alternatively requests leave to amend.

The court acknowledges the November 9, 2023, order vacating the default judgment, due to the default judgment itself exceeding the amount alleged in the complaint—no identified amount of monetary damages. The motion to vacate default considered the due process issue raised in entering the judgment, but the court declines to consider any further issues regarding the merits of the potential for proceeding with the subject action given the ability to propound a statement of damages or proceed with an amended pleading.

The court docket also shows a demurrer by Virginia Petikyan only to the operative complaint currently scheduled for December 10, 2024. Petikyan is represented by separate counsel.

The subject motion essentially seeks to present a demurrer, raise procedural challenges, and even invoke evidentiary considerations. The action is not even at issue. The myriad arguments require legal considerations and findings that ALL causes of action are legally barred and no additional discovery or amendments will correct the flaws. The court finds insufficient support for this required showing. The court otherwise declines to prematurely rule on the validity of the pleading in the subject motion.

More fundamentally, the filing of a complaint and amended complaint constitutes a right to seek redress of grievances under the First Amendment of the United States Constitution. The court will not punish counsel for rightfully seeking to adjudicate employment claims. The court finds no basis of support for such relief, and declines to use a sanctions motion as a means of initially adjudicating an entire action under the guise of a threat of sanctions against Plaintiffs.

To the extent Defendants find the action egregiously wrongful at this early stage, Defendants may consider an action for malicious prosecution should they prevail. (See Daniels v. Robbins (2010) 182 Cal.App.4th 204, 217.)

The motion is denied.

Case Management and Conference and two OSCs set for July 24, 2024.

Defendants to provide notice.