San Diegans for Open Government v. City of San Diego, No. D068421 (D4d1 Jun. 7, 2016)
In 1994, the Legislature changed California’s general civil sanctions rules to make them look and work more like Rule 11 of the Federal Rules of Civil Procedure. The 1994 amendments added Code of Civil Procedure § 128.7, which permits a court to sanction attorneys or parties for filing meritless pleadings that are “signed” by a party or its attorney. Like Rule 11, § 128.7(c)(1) includes a “safe harbor” requiring the service of a sanctions motion twenty-one days before filing and an opportunity to correct the sanctionable pleading before the motion can be heard. It also adopts an“objectively unreasonable” standard for sanctions—proof of bad faith or ill intent are unnecessary.
At the same time it added § 128.7, the Legislature sunsetted, but did not formally repeal, § 128.5, the prior sanctions statute. Section 128.5 was both narrower and broader than § 128.7. In particular, it was not limited to singed pleadings and it did not include the safe harbor. But (as interpreted by the courts) it required a showing of subjective bad faith.
And then in 2014, the Legislature deleted the sunset language from § 128.5, making the change effective January 1, 2015. It apparently wanted to open up another avenue for sanctioning litigation misconduct. Thus, currently, California has two different sanctions rules, each with its own peculiarities.
Plaintiff in this case—an organization well-known for litigating against the City of San Diego on government transparency issues—largely prevailed on a Public Records Act claim. It had also, however, brought a taxpayer claim under § 529a alleging waste. It dismissed that claim claim early in the litigation, but after a demurrer had been denied. After the PRA claim was resolved, the City brought a motion for sanctions under § 128.5 regarding the waste claim. The city did not follow the safe harbor procedure in § 128.7. Indeed, it couldn’t have, because the waste claim had been dismissed already, so there was nothing for Plaintiff to withdaw or fix. The trial court denied the motion and the City appeals.
The appeal presents a grab-bag of issues related to the revival of § 128.5: (1) Does revived § 128.5 apply to cases brought before its effective date; (2) Does revived § 128.5 adopt § 128.7’s safe-harbor rules by reference; (3) Does revived § 128.5 still require the proof of bad faith required under old § 128.5; and (4) what is the burden of proof?
On the retroactivity, the court applies the settled rule that collateral matters of procedure apply to litigation that is pending when they come into effect. Thus, the fact that the case was filed and the § 529a claim dismissed prior to §128.5’s revival did not preclude sanctions under the revived law, and any failure to follow § 128.7’s procedures would not doom the motion.
At a high level, that seems right. But shouldn’t it make a difference because it’s sanctions? At the time the complaint was filed, Plaintiff knew that before it could be sanctioned for including an overly-aggressive count in its complaint, the safe-harbor provision would need to be worked through. But then, after Plaintiff voluntarily dismissed the offending count, § 128.5 got resurrected. Given the semi-punitive nature of sanctions, that feels a bit ex post facto, right?
As to the statutory arguments about the safe harbor, a key new feature of re-enacted § 128.5 is a cross reference in § 128.5(f) that any sanctions would be “imposed consistently with the standards, conditions, and procedures set forth in subdivisions (c), (d), and (h) of Section 128.7.” The safe-harbor is in § 128.7(c)(1), so Plaintiff contends it should have applied to the § 128.5 motion. The safe-harbor in (c)(1) sure sounds like a “procedure[ ] set forth in” 128.7(c). The court disagrees, although it’s a little hard to follow the logic of the ruling. It seems to be saying that, the reference to (c) is not to (c)(1), but to the text of the lettered part of that subsection before the Arabic numbering begins, which deals with “who can be sanctioned and whether the party seeking sanctions exercised due diligence.” The court finds further support in the absence of any reference to the safe harbor in the legislative history and based on the practical point that, given § 128.5’s applicability beyond signed pleadings, it would often be impossible to apply the safe harbor’s change to withdraw or correct the sanctionable conduct. I find the practical argument more convincing than the textual one.
So far as whether bad faith is required, both the old and the new versions of § 128.5 are silent on the issue of whether the test is subjective or objective. As I said, the weight of authority under old § 128.5 required a showing of both objective frivolity and subjective bad faith before sanctions could be levied. But relying on the legislative history of the 2014 bill—which includes some references to the subjective standard being “too high”—the court here interprets the same language to hold that the standard should be objective, which brings it into line with the standard that also applies to § 128.7.The court goes on to note that a denial of a demurrer does not necessarily preclude a claim from being factually frivolous.
Finally, on the burden of proof, the court adopts the burden shifting framework from the summary judgment context: The party seeking sanctions needs to come forward with a prima facie showing why the claim is meritless. Following that, the burden shifts to the party against whom sanctions are sought to show a legal and factual basis for its claim. But the moving party always bears the ultimate burden of proof.
Because the trial court did not apply the above standards, it needs to re-address the sanctions motion under the correct standard in the first instance.
Reversed and remanded.
Is it me, or is the upshot of this ruling is that § 128.5 eats § 128.7? If § 128.5 applies to a broader range of conduct, uses the same standard, and does not require the moving party to jump through the hoops that § 128.7 does, why would anyone ever move under § 128.7 anymore?
In 1994, the Legislature changed California’s general civil sanctions rules to make them look and work more like Rule 11 of the Federal Rules of Civil Procedure. The 1994 amendments added Code of Civil Procedure § 128.7, which permits a court to sanction attorneys or parties for filing meritless pleadings that are “signed” by a party or its attorney. Like Rule 11, § 128.7(c)(1) includes a “safe harbor” requiring the service of a sanctions motion twenty-one days before filing and an opportunity to correct the sanctionable pleading before the motion can be heard. It also adopts an“objectively unreasonable” standard for sanctions—proof of bad faith or ill intent are unnecessary.
At the same time it added § 128.7, the Legislature sunsetted, but did not formally repeal, § 128.5, the prior sanctions statute. Section 128.5 was both narrower and broader than § 128.7. In particular, it was not limited to singed pleadings and it did not include the safe harbor. But (as interpreted by the courts) it required a showing of subjective bad faith.
And then in 2014, the Legislature deleted the sunset language from § 128.5, making the change effective January 1, 2015. It apparently wanted to open up another avenue for sanctioning litigation misconduct. Thus, currently, California has two different sanctions rules, each with its own peculiarities.
Plaintiff in this case—an organization well-known for litigating against the City of San Diego on government transparency issues—largely prevailed on a Public Records Act claim. It had also, however, brought a taxpayer claim under § 529a alleging waste. It dismissed that claim claim early in the litigation, but after a demurrer had been denied. After the PRA claim was resolved, the City brought a motion for sanctions under § 128.5 regarding the waste claim. The city did not follow the safe harbor procedure in § 128.7. Indeed, it couldn’t have, because the waste claim had been dismissed already, so there was nothing for Plaintiff to withdaw or fix. The trial court denied the motion and the City appeals.
The appeal presents a grab-bag of issues related to the revival of § 128.5: (1) Does revived § 128.5 apply to cases brought before its effective date; (2) Does revived § 128.5 adopt § 128.7’s safe-harbor rules by reference; (3) Does revived § 128.5 still require the proof of bad faith required under old § 128.5; and (4) what is the burden of proof?
On the retroactivity, the court applies the settled rule that collateral matters of procedure apply to litigation that is pending when they come into effect. Thus, the fact that the case was filed and the § 529a claim dismissed prior to §128.5’s revival did not preclude sanctions under the revived law, and any failure to follow § 128.7’s procedures would not doom the motion.
At a high level, that seems right. But shouldn’t it make a difference because it’s sanctions? At the time the complaint was filed, Plaintiff knew that before it could be sanctioned for including an overly-aggressive count in its complaint, the safe-harbor provision would need to be worked through. But then, after Plaintiff voluntarily dismissed the offending count, § 128.5 got resurrected. Given the semi-punitive nature of sanctions, that feels a bit ex post facto, right?
As to the statutory arguments about the safe harbor, a key new feature of re-enacted § 128.5 is a cross reference in § 128.5(f) that any sanctions would be “imposed consistently with the standards, conditions, and procedures set forth in subdivisions (c), (d), and (h) of Section 128.7.” The safe-harbor is in § 128.7(c)(1), so Plaintiff contends it should have applied to the § 128.5 motion. The safe-harbor in (c)(1) sure sounds like a “procedure[ ] set forth in” 128.7(c). The court disagrees, although it’s a little hard to follow the logic of the ruling. It seems to be saying that, the reference to (c) is not to (c)(1), but to the text of the lettered part of that subsection before the Arabic numbering begins, which deals with “who can be sanctioned and whether the party seeking sanctions exercised due diligence.” The court finds further support in the absence of any reference to the safe harbor in the legislative history and based on the practical point that, given § 128.5’s applicability beyond signed pleadings, it would often be impossible to apply the safe harbor’s change to withdraw or correct the sanctionable conduct. I find the practical argument more convincing than the textual one.
So far as whether bad faith is required, both the old and the new versions of § 128.5 are silent on the issue of whether the test is subjective or objective. As I said, the weight of authority under old § 128.5 required a showing of both objective frivolity and subjective bad faith before sanctions could be levied. But relying on the legislative history of the 2014 bill—which includes some references to the subjective standard being “too high”—the court here interprets the same language to hold that the standard should be objective, which brings it into line with the standard that also applies to § 128.7.The court goes on to note that a denial of a demurrer does not necessarily preclude a claim from being factually frivolous.
Finally, on the burden of proof, the court adopts the burden shifting framework from the summary judgment context: The party seeking sanctions needs to come forward with a prima facie showing why the claim is meritless. Following that, the burden shifts to the party against whom sanctions are sought to show a legal and factual basis for its claim. But the moving party always bears the ultimate burden of proof.
Because the trial court did not apply the above standards, it needs to re-address the sanctions motion under the correct standard in the first instance.
Reversed and remanded.
Is it me, or is the upshot of this ruling is that § 128.5 eats § 128.7? If § 128.5 applies to a broader range of conduct, uses the same standard, and does not require the moving party to jump through the hoops that § 128.7 does, why would anyone ever move under § 128.7 anymore?