Opinion
A143541
10-20-2016
CONCEPCION VINAS et al., Plaintiffs, v. QUEEN OF THE VALLEY MEDICAL CENTER, Defendant; JOSEPH ANTONELLI, Appellant and Objector.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Napa County Super. Ct. No. 2661568)
I.
INTRODUCTION
Plaintiffs' counsel, appellant Joseph Antonelli, appeals from an award of sanctions imposed on him pursuant to Code of Civil Procedure section 128.7. The court sanctioned Antonelli, but not plaintiffs, for filing a second amended complaint containing the same allegations against which defendant Queen of the Valley Medical Center (QVMC) had successfully demurred, or which had been stricken from the first amended complaint. Antonelli argues the court abused its discretion in awarding sanctions and the amount of sanctions was unreasonable. We affirm.
All subsequent statutory references are to the Code of Civil Procedure unless otherwise identified.
Antonelli does not appeal from the sustaining of the last demurrer to the second amended complaint, or the granting of QVMC's motion to strike. Therefore, our discussion will be limited to the procedural and factual backgrounds necessary only in the context of the sanctions award, and we accept as well-founded the grounds stated by the trial court for sustaining the demurrers and the granting of the motions to strike that led to the sanctions.
II.
FACTUAL AND PROCEDURAL BACKGROUND
Plaintiffs have filed six versions of their complaint in this action in three different counties: (1) the original complaint filed in Alameda County in November 2011;(2) the first amended complaint filed in Alameda County in January 2012; (3) a complaint filed in Orange County in June 2012; (4) the original complaint filed in Napa County; (5) the first amended complaint filed in Napa County; and (6) the second amended complaint filed in Napa County.
A. Original Complaint in Alameda County Superior Court
The original complaint in Alameda County Superior Court alleged six causes of action against defendants QVMC and St. Joseph Health Systems. Shortly thereafter, plaintiffs filed an amended complaint, again in the Alameda County Superior Court, adding eight new defendants. QVMC and the other named defendants filed a motion to change venue to Orange County because no defendant had a principal place of business in Alameda County. QVMC requested sanctions because it had offered to stipulate to a change of venue and plaintiffs had refused the offer. QVMC also alleged that Antonelli knew plaintiffs were never employed in Alameda County.
In opposition, plaintiffs alleged that the action was filed in Alameda County because plaintiffs work at QVMC in Napa County, but the Napa County Superior Court could not handle complex civil matters.
The court granted QVMC's motion for a change of venue to Orange County. The parties agreed that liability did not arise in Alameda County and no defendant had a place of business there. The court ordered plaintiffs to pay the costs and fees of transfer and awarded QVMC's attorney fees because Antonelli failed to stipulate to a change of venue where the facts and the law were known to plaintiffs, and "[p]laintiffs['] counsel did not act in good faith" pursuant to section 396b, subdivision (b). The trial court went on to find that "[c]ounsel knew that liability for the actions did not arise in Alameda County, nor are any Defendants' principal places of business here. Worse, counsel's assertion that Alameda County is 'the county closest to [Plaintiffs'] and defendants' place of residence that maintained a Complex Department' is factually incorrect and Plaintiffs provide absolutely no legal basis" for filing in Alameda County. The court ordered Antonelli, but not plaintiffs, to pay QVMC's attorney fees of $2,750.
"In its discretion, the court may order the payment to the prevailing party of reasonable expenses and attorney's fees incurred in making or resisting the motion to transfer . . . [when] an offer to stipulate to change of venue was reasonably made and rejected[.]" (§ 396b.) --------
B. First Amended Complaint in Napa County Superior Court
After filing and dismissing a separate complaint in Orange County, plaintiffs refiled a class action complaint in Napa County Superior Court. The complaint contained seven causes of action alleging: (1) violation of Business and Professions Code section 17200; (2) violation of Labor Code sections 204, 218, 510, 511, 1194, and 1198; (3) violation of Labor Code sections 200 et seq.; (4) failure to pay meal break penalties under Labor Code sections 226.7 and 512; (5) inaccurate wage statements; (6) Private Attorney General Act (PAGA) penalties and; (7) violation of Labor Code sections 221, 223, and 224.
Before QVMC responded to the complaint, plaintiffs filed a first amended complaint (FAC) alleging 10 causes of action that added claims for: (1) unpaid wage violations due to illegal "rounding" (eighth cause of action); (2) failure to provide meal periods (ninth cause of action); and (3) breach of contract (tenth cause of action).
QVMC then filed a demurrer and a motion to strike the FAC. QVMC argued that plaintiffs' third cause of action pursuant to Labor Code sections 200 et seq. failed to state a cause of action because plaintiffs are current employees of QVMC, and thus, could not claim wages due at the time of their termination. The demurrer contended the seventh cause of action failed because it did not allege QVMC had collected or received any part of the wages previously paid to plaintiffs pursuant to Labor Code section 221, or that plaintiffs were paid below the wage scale designated by contract or statute pursuant to Labor Code section 223. QVMC claimed that the tenth cause of action failed because it did not adequately set forth the terms of any contract QVMC allegedly breached.
In support of the demurrer, QVMC submitted the deposition transcripts of the two named plaintiffs, who both stated they were currently employed by QVMC, and that there were no errors in their wage statements or pay stubs.
In its motion to strike, QVMC argued that plaintiffs' overtime allegations were false and improper because QVMC never used a "dual rate" system. The motion asserted that plaintiffs also improperly sought to add three new causes of action to the FAC by alleging the claims related back to plaintiffs' original complaint in order to avoid the statute of limitations. The motion to strike was accompanied by the declaration of QVMC's director of human resources, who stated QVMC did not use a dual rate pay plan as described in the FAC.
The court held a hearing on April 29, 2014. After hearing from counsel, the court took the matter under submission and later issued an order sustaining the demurrer with leave to amend. The court found as to the third cause of action that plaintiffs failed to allege they were no longer employed by QVMC, and they had failed to allege civil penalties under the PAGA as former employees. In the seventh cause of action, plaintiffs had failed to allege cognizable violations of Labor Code sections 221, 223, or 224. The demurrer was sustained as to the tenth cause of action for breach of contract because plaintiffs failed to allege the relevant terms of any contract, how a breach occurred, or any damages. The court rejected plaintiffs' expansion of the complaint to include all hourly employees because this "does not relate back to the original complaint as it rests on different facts (payment of wages and overtime to employees that work shorter shifts), and different injury (any alleged underpayment to employees that work shorter shifts)."
The court also granted, with leave to amend, the motion to strike the dual rate allegations because plaintiffs' own arguments indicated that the system was no longer in effect during the relevant statutory period. As to that claim, "[u]pon amendment, if any, specific dates must be alleged." The court also granted the motion to strike the alternative work schedule allegations because the law did not require an employer to explain how wages were previously paid (Wage Order 5-2001). The court struck the allegations under Labor Code section 204 because plaintiffs failed to allege QVMC did not pay wages in a timely fashion. The Labor Code section 1194.2 allegations also were stricken because plaintiffs did not allege they were paid less than minimum wage. In addition, the court found there were no allegations regarding the "rounding policy" in the original complaint, so those allegations were stricken. Finally, the court found that the new ninth cause of action for meal breaks did not relate back to the original complaint, and was outside the statute of limitations period.
C. Second Amended Complaint Filed in Napa County Superior Court
On May 19, 2014, plaintiffs filed a second amended complaint (SAC). The SAC contained nine causes of action alleging the same violations as those in the FAC, with the exception that the new seventh cause of action alleged only a violation of Labor Code section 223 (removing Lab. Code, §§ 221 and 224), and the SAC did not include a breach of contract claim. Plaintiffs also added allegations that their causes of action were equitably tolled from the time the original complaint was filed in Alameda County in November 2011.
QVMC filed a motion to strike portions of the SAC, and a motion for sanctions. QVMC argued that Antonelli defied the court's order sustaining the demurrer to the FAC, and the earlier motion to strike by raising claims again that had already been found to have no legal support. QVMC complained it was being forced to file another lengthy motion to strike and the court was required to re-hear the same issues. In addition, QVMC pointed out that it unnecessarily had to bring motions to correct Antonelli's actions in the past, including the motion to change venue, and the demurrer and motion to strike the FAC. Therefore, QVMC sanctions against Antonelli in the amount of its attorney fees of $28,080.
The court held a hearing on the motion on August 29, 2014. Antonelli argued that his office did not file a frivolous pleading in violation of section 128.7. Antonelli pointed out that after the court granted the demurrer with leave to amend, he included more specific factual details in the SAC. He admitted the "statute of limitations is a problem," and this was why he raised the equitable tolling defense. Antonelli contended the claims under Labor Code sections 204 and 1194.2 were valid even though the court had granted the motion to strike them from the FAC.
QVMC's counsel replied that counsel had met with Antonelli before filing the demurrer and motion to strike and explained why the challenged allegations in the SAC lacked merit, but Antonelli included them anyway.
After hearing from counsel, the court found that Antonelli persisted in making claims that were not warranted by existing law. "The Court isn't finding that there were frivolous arguments made in many of the pleadings, it was the fact that allegations were made in the second amended complaint that the Court had ordered struck[.]" Reading the FAC, it was apparent that Antonelli ignored the court's direction regarding Labor Code sections 204, 1194.2, the dual rate system and the alternative work schedule disclosure, and simply restated the same unfounded allegations. Further, Antonelli "ignored the court's direction regarding the new claims that did not relate back[.]" "As a result, both [QVMC] and the court expended significant amounts of time and resources analyzing meritless allegations for a second time."
The court then noted that under section 128.7 the court was authorized to impose sanctions sufficient to deter repetition of the conduct, and the court was awarding $10,000 to achieve this purpose. While this amount did not fully compensate the defense for its attorney fees, the court deemed it sufficient to deter repetition of the misconduct, and the full amount of sanctions requested was not justified because plaintiffs were permitted leave to amend as to some allegations. The award was imposed on Antonelli, and not plaintiffs.
III.
DISCUSSION
We review a section 128.7 sanctions award under the abuse of discretion standard. (Peake v. Underwood (2014) 227 Cal.App.4th 428, 441 (Peake).) "We presume the trial court's order is correct and do not substitute our judgment for that of the trial court." (Id. at p. 441, citing Shelton v. Rancho Mortgage & Investment Corp. (2002) 94 Cal.App.4th 1337, 1345.) To be entitled to relief on appeal, the court's action must be "sufficiently grave to amount to a manifest miscarriage of justice." (Kurinij v. Hanna & Morton (1997) 55 Cal.App.4th 853, 867.)
Section 128.7 "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 (Musaelian).) Subdivision (c) of section 128.7 authorizes imposition of sanctions on attorneys or parties who have violated subdivision (b) of the section. Subdivision (b) provides that by filing papers with the court, an attorney is certifying that counsel does not present them for an improper purpose, the claims are warranted by existing law or a nonfrivolous argument for extension or modification of existing law, and the allegations have evidentiary support. (See Eichenbaum v. Alon (2003) 106 Cal.App.4th 967, 972 (Eichenbaum) [upholding sanctions order for presenting an improper amended complaint].) Sanctions may include payment to the moving party of attorney fees incurred due to the violation. (Ibid.; § 128.7, subd. (d).)
Despite appellant's insistence that Eichenbaum, Peake and "other authorities are of little, if any value in reviewing the sanctions imposed in this case," we believe them relevant to our analysis. In Eichenbaum, the court had sustained the defendant's demurrer to the second amended complaint with leave to amend and had also granted the defendant's motion to strike all language listing Barry Alon as a defendant. (Eichenbaum, supra, 106 Cal.App.4th at p. 971.) In the third amended complaint, plaintiff again named Alon as a defendant. The defendant again demurred and moved to strike references to Alon. The court sustained the demurrer and granted the motion. (Ibid.) Plaintiff filed a fourth amended complaint, again alleging the deficient claims and listing Alon as a defendant. (Ibid.) Defendant filed a demurrer, motion to strike, and two motions for sanctions. (Id. at p. 972.)
In support of the section 128.7 motion, the defendant pointed out that plaintiff's counsel had been given 30 days to amend or withdraw the complaint, but he ignored defendant's concerns. (Eichenbaum, supra, 106 Cal.App.4th at p. 976.) The plaintiff argued that the court's granting of the motion to strike Alon from the complaint did not preclude the bringing of a fraud cause of action against him. The court found this contention to be not only "facile," but "frivolous[]." (Id. at p. 976.) The reviewing court concluded that awarding attorney fees as sanctions was not an abuse of discretion, especially in light of the fact the trial court limited the amount to half of what the defendant requested. (Id. at p. 977.)
Similarly, here appellant has not established the trial court abused its discretion. While perhaps not frivolous, the court found that Antonelli filed the SAC in violation of the court's prior orders and specific earlier findings, resulting in a waste of both the court's time and that of opposing counsel. (§ 128.7, subd. (b)(1); Musaelian, supra, 45 Cal.4th at p. 519 [the primary purpose of § 128.7 is to deter filing abuses]; Levy v. Blum (2001) 92 Cal.App.4th 625, 636 [§ 128.7 imposes an obligation on counsel to ensure pleadings have legal and factual merit].)
Additionally, QVMC's counsel alerted Antonelli to these defects before filing the demurrer and motion to strike, and Antonelli ignored this "safe-harbor" opportunity by filing the SAC with the duplicative allegations and claims. (§ 128.7, subd. (c)(1); Optimal Markets, Inc. v. Salant (2013) 221 Cal.App.4th 912, 920.)
Nevertheless, appellant argues that since the court granted the demurrer to the FAC with leave to amend, which "expressly invited" him to file the SAC, sanctions were not appropriate. The court's order on the demurrer and motion to strike does allow leave to amend certain allegations where Antonelli could provide additional facts to support the claims. It did not, however, permit appellant to file the SAC relying on the same allegations as in the FAC. The fact that appellant added additional language and details did not necessarily alter the claims or make them viable. We note also that in reducing the amount of sanctions from the requested amount of $28,080, the court took into account that some of the amendments included in the SAC were consistent with the court's earlier ruling.
Further, appellant ignored the court's earlier order on several specific points. For instance, the court granted the motion to strike the dual rate allegations from the FAC because appellant's complaint indicated that a dual rate system was no longer in effect during the relevant statutory period. In granting sanctions, the court found that Antonelli ignored the court's direction regarding the dual rate system, and the claim was contrary to evidence presented by QVMC that it never used a dual rate system. Rather than alleging dates within the statute of limitations, which Antonelli admitted was a "problem," Antonelli added arguments regarding equitable tolling. "[A] plaintiff's attorney cannot 'just cling tenaciously to the investigation he had done at the outset of the litigation and bury his head in the sand.' [Citation.] Instead, 'to satisfy [the] obligation under [section 128.7] to conduct a reasonable inquiry to determine if his [or her] client's claim was well-grounded in fact,' the attorney must 'take into account [the adverse party's] evidence . . . .' " (Bucur v. Ahmad (2016) 244 Cal.App.4th 175, 190, quoting Childs v. State Farm Mutual Automobile Ins. Co. (5th Cir. 1994) 29 F.3d 1018, 1025.)
Similarly, the court had granted the motion to strike the alternative work schedule allegations because Wage Order 5-2001 did not require an employer to explain how wages were previously paid. In the SAC, Antonelli persisted in making allegations under Wage Order 5-2001, changing the wording from a duty to disclose, but the substance of the allegation remained the same.
Likewise, the SAC continued to assert a violation of Labor Code section 204 even though there was no allegation that QVMC failed to pay wages on regular paydays. It also included a claim under Labor Code section 1194 even though the court had earlier ruled that the statute is designed to protect against unpaid minimum wages, which were not properly alleged in this case. In light of this duplication, the court found that Antonelli ignored the Court's direction regarding Labor Code [s]section[s] 204 and 119[4].2" by "re-stating the same allegations, adding some details; but, in essence, they were allegations that the Court had already ruled on." Therefore, the court properly found that Antonelli violated its order and continued to make claims that were not warranted by existing law or the facts.
Antonelli alternatively argues the amount of the sanction award was not reasonable. He contends there is a strong public interest in wage and hour litigation, and sanctions discourage attorneys from pursuing meritorious claims. He repeatedly asserts that he is an attorney with a "stellar reputation," who has never previously been sanctioned, and he should not be sanctioned here. As QVMC points out, an attorney's reputation and conduct in other cases is not relevant to the court's award of sanctions under section 128.7. Moreover, as appellant concedes in his reply brief, his claim that he has never been sanctioned before is factually incorrect. Appellant was previously sanctioned by the Alameda County Superior Court in this lawsuit for his refusal to stipulate to a change of venue.
Finally, appellant argues a lesser amount of sanctions would have had the same deterrent effect. We disagree that the trial court abused its discretion in awarding $10,000. We note that the court declined to impose the full sanctions requested by QVMC of $28,080 in attorney fees, but rather imposed a sanction of $10,000 because, in part, it deemed that lower amount sufficient to deter repetition of counsel's conduct. "A sanction imposed [under section 128.7] shall be limited to what is sufficient to deter repetition of this conduct or comparable conduct by others similarly situated," and "the sanction may consist of, or include, . . . an order directing payment to the movant of some or all of the reasonable attorney's fees and other expenses incurred as a direct result of the violation." (§ 128.7, subd. (d), italics added.)
As we have discussed, the court issued a detailed order explaining why it elected to impose sanctions with the goal of effecting deterrence rather than punishment. In sum, we conclude it was not a miscarriage of justice for the court to sanction Antonelli in the amount of $10,000.
IV.
DISPOSITION
The judgment is affirmed. Appellant to pay QVMC's costs on appeal.
/s/_________
RUVOLO, P. J. We concur: /s/_________
REARDON, J. /s/_________
RIVERA, J.