Berger et al v. Seyfarth Shaw, LLP et al

MOTION to Strike and Memorandum of Points and Authorities in Support of Defendants Seyfarth Shaw LLP and Jack L. Slobodin's Motion to Strike

N.D. Cal.October 24, 2007

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 NOTICE OF MOTION, MOTION, AND MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANTS SEYFARTH SHAW LLP AND JACK L. SLOBODIN’S MOTION TO STRIKE CASE NO. C07-05279 MMC 404999.04 KEKER & VAN NEST, LLP ELLIOT R. PETERS - #158708 DANIEL PURCELL - #191424 KLAUS HAMM - #224905 710 Sansome Street San Francisco, CA 94111-1704 Telephone: (415) 391-5400 Facsimile: (415) 397-7188 Attorneys for Defendants SEYFARTH SHAW LLP and JACK L. SLOBODIN IN THE UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION RICHARD W. BERGER and BRANT W. BERGER, Plaintiffs, v. SEYFARTH SHAW LLP, an Illinois limited liability partnership; JACK L. SLOBODIN, an individual; BURNETT, BURNETT & ALLEN, a California partnership; DOUGLAS B. ALLEN, an individual; and DOES 1-100, inclusive, Defendants. Case No. C07-05279 MMC NOTICE OF MOTION, MOTION, AND MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANTS SEYFARTH SHAW LLP AND JACK L. SLOBODIN’S MOTION TO STRIKE Date: November 30, 2007 Time: 9 a.m. Courtroom: 7, 19th Floor Judge: Hon. Maxine M. Chesney Date Comp. Filed: September 12, 2007 Trial Date: None set. Case 3:07-cv-05279-JSW Document 12 Filed 10/24/2007 Page 1 of 8 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 1 NOTICE OF MOTION, MOTION, AND MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANTS SEYFARTH SHAW LLP AND JACK L. SLOBODIN’S MOTION TO STRIKE CASE NO. C07-05279 MMC 404999.04 NOTICE OF MOTION AND MOTION TO STRIKE TO ALL PARTIES AND THEIR ATTORNEYS OF RECORD: Please take notice that on November 30, 2007 at 9:00 a.m., or as soon thereafter as the matter may be heard, in Courtroom 7 on the 19th Floor of the United States District Court, 450 Golden Gate Avenue, San Francisco, CA, Defendants Seyfarth Shaw LLP and Jack L. Slobodin will, and hereby do will, and hereby do, move this Court to strike plaintiffs’ prayer for punitive damages from the Complaint pursuant to Fed. R. Civ. P. 12(f). This Motion to Strike is based on the Notice of Motion, the Memorandum of Points and Authorities in support, the [Proposed] Order, all pleadings and papers filed herein, the oral argument of counsel, and any other matter that may be submitted at the hearing. MEMORANDUM OF POINTS AND AUTHORITIES I. STATEMENT OF THE ISSUE Whether plaintiffs’ request for punitive damages should be stricken from their Complaint pursuant to Federal Rule of Civil Procedure 12(f)? II. INTRODUCTION This is a poorly pled legal malpractice action. In their accompanying motion to dismiss, Defendants Seyfarth Shaw LLP and Jack L. Slobodin (collectively “Seyfarth”) explain why those core allegations are subject to dismissal pursuant to Fed. R. Civ. P. 12(b)(6). Plaintiffs have also gilded their lily with an illogical fraud claim and an improper prayer for punitive damages. But professional negligence, even if proven, would not entitle plaintiffs to punitive damages. Plaintiffs attempt to justify this prayer by alleging conclusorily that “Defendants’ conduct was willful, fraudulent, malicious, and oppressive” without stating any fact that supports those allegations. Compl. ¶¶ 60, 71. Since plaintiffs’ conclusory allegations are insufficient as a matter of law, this Court should strike the prayer for punitive damages. III. ARGUMENT Pursuant to Federal Rule of Civil Procedure 12(f), the court may strike any “redundant, immaterial, impertinent, or scandalous matter.” Fed. R. Civ. P. 12(f). The function of a Rule 12(f) motion is to avoid the expense of time and money that might arise from litigating spurious Case 3:07-cv-05279-JSW Document 12 Filed 10/24/2007 Page 2 of 8 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 2 NOTICE OF MOTION, MOTION, AND MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANTS SEYFARTH SHAW LLP AND JACK L. SLOBODIN’S MOTION TO STRIKE CASE NO. C07-05279 MMC 404999.04 issues by dispensing with those issues prior to trial. Fantasy, Inc. v. Fogerty, 984 F.2d 1524, 1527 (9th Cir. 1993), rev’d on other grounds, 510 U.S. 517 (1994). Motions to strike are commonly used to “strike a prayer for relief where the damages sought are not recoverable as a matter of law.” Gay-Straight Alliance Network v. Visalia Unified Sch. Dist., 262 F. Supp. 2d 1088, 1110 (E.D. Cal. 2001); see also Bureerong v. Uvawas, 922 F. Supp. 1450, 1478 n. 34 (C.D. Cal. 1996) (motion to strike proper where any part of prayer for relief is not recoverable). A. If the court dismisses plaintiffs’ claims for fraud and breach of fiduciary duty, it also should strike their punitive damages claim. Plaintiffs request punitive damages only in connection with their fraud and breach of fiduciary duty causes of action as a result of Seyfarth’s allegedly “willful, fraudulent, malicious, and oppressive” conduct. Compl. ¶¶ 60 & 71 & Prayer for Relief. Thus, if the Court grants Seyfarth’s motion to dismiss the fraud and breach of fiduciary duty causes of action, it should also strike plaintiffs’ punitive damages request. B. Plaintiffs’ have not alleged facts supporting their punitive damages claim, thus it must be stricken. Plaintiffs’ request for punitive damages should be stricken from the complaint because they have not sufficiently pled facts against Seyfarth showing fraud, malice, or oppression. While Rule 9(b) creates a heightened pleading requirement for averments of the “circumstances constituting fraud or mistake,” the Rule also states that “[m]alice, intent, knowledge, and other condition of mind of a person may be averred generally.” Fed. R. Civ. Pro. 9(b). This exception to Rule 9(b)’s heightened pleading standard, however, does not mean that no pleading standards apply to allegations of “[m]alice, intent, knowledge, and other condition of mind.” Instead the normal pleading requirement of Rule 8(a) applies. See Bureerong, 922 F. Supp. at 1480-81 (applying Rule 8(a) to prayer for punitive damages). Rule 8(a) requires pleadings to “contain . . . a short and plain statement of the claim showing that the pleader is entitled to relief, and . . . a demand for judgment for the relief the pleader seeks,” in order to “give the defendant fair notice of what the . . . claim is and the grounds upon which it rests.” Conley v. Gibson, 355 U.S. 41, 47 (1957); Fed. R. Civ. Pro. 8(a). In a recent opinion, the United States Supreme Court clarified that under Rule 8(a) “a plaintiff’s Case 3:07-cv-05279-JSW Document 12 Filed 10/24/2007 Page 3 of 8 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 3 NOTICE OF MOTION, MOTION, AND MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANTS SEYFARTH SHAW LLP AND JACK L. SLOBODIN’S MOTION TO STRIKE CASE NO. C07-05279 MMC 404999.04 obligation to provide the ‘grounds’ of his ‘entitlement to relief’ requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Bell Atl. Corp. v. Twombly, 127 S. Ct. 1955, 1964-65 (2007). In other words, a complaint must set out alleged facts rather than simply legal conclusions: Rule 8(a)(2) “requires a ‘showing,’ rather than a blanket assertion, of entitlement to relief. Without some factual allegation in the complaint, it is hard to see how a claimant could satisfy the requirement of providing not only ‘fair notice’ of the nature of the claim, but also ‘grounds’ on which the claim rests.” Id. at 1065 n. 3. Further, when “naked assertion[s] . . . stop[] short of the line between possibility and plausibility,” they fail to establish an “entitle[ment] to relief” under Rule 8(a). Id. at 1966. Here, plaintiffs allege only legal conclusions, and not facts, in support of their claim for punitive damages. California Civil Code section 3294 provides for punitive damages “in an action for breach of an obligation not arising from a contract, where it is proven by clear and convincing evidence that the defendant has been guilty of oppression, fraud, or malice.” Cal. Civ. Code § 3294 (emphasis added). Plaintiffs’ mere allegation that Seyfarth’s conduct was “willful, fraudulent, malicious, and oppressive” cannot support the request for punitive damages. In the first place, the allegation that Seyfarth’s conduct was “willful” cannot support a request for punitive damages because California Civil Code section 3294 allows for punitive damages only when a plaintiff proves oppression, fraud, or malice. Plaintiffs’ allegations that Seyfarth’s conduct was “fraudulent, malicious, and oppressive” is nothing more than a bare legal conclusion that parrots California Civil Code section 3294. Under Bell Atlantic Corp., this legal conclusion and “formulaic recitation” of section 3294 cannot meet the pleading requirements of Rule 8(a). Nothing else in the complaint even comes close to an allegation that Seyfarth’s conduct was fraudulent, malicious, or oppressive. As discussed in Seyfarth’s motion to dismiss, filed herewith, plaintiffs have not alleged any fraudulent conduct in their complaint, nor have they alleged conduct from which fraud could be plausibly inferred. See Memo. of P. & A. in Supp. of Mot. to Dismiss at 8-14. In addition, to the extent they attempt to rely on alleged concealments by Seyfarth as a basis for an inference of fraud, they have not identified those concealments with Case 3:07-cv-05279-JSW Document 12 Filed 10/24/2007 Page 4 of 8 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 4 NOTICE OF MOTION, MOTION, AND MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANTS SEYFARTH SHAW LLP AND JACK L. SLOBODIN’S MOTION TO STRIKE CASE NO. C07-05279 MMC 404999.04 sufficient particularity. See id. Accordingly, their fraud claim is fatally defective, must be dismissed, and cannot support punitive damages. Neither do plaintiffs allege any facts showing that Seyfarth’s conduct was “malicious” or “oppressive.” Under California law, “‘[m]alice’ means a wrongful intent to vex or annoy. ‘Oppression’ means subjecting a person to cruel and unjust hardship in conscious disregard of his rights.” Monge v. Superior Court, 176 Cal. App. 3d 503, 511 (1986). Although plaintiffs contend conclusorily in paragraphs 60 and 71 of the complaint that Seyfarth’s conduct was “malicious” and “oppressive,” they fail to include any factual allegations which even remotely support that conclusion. Finally, even if plaintiffs’ claim for breach of fiduciary duty survives Seyfarth’s motion to dismiss, because there are no actionable allegations of fraud in the complaint, and no facts alleged showing oppressive or malicious behavior, plaintiffs cannot recover punitive damages on a breach of fiduciary duty theory under California law. See American Airlines v. Sheppard, 96 Cal. App. 4th 1017, 1051 (2002) (“[A] breach of a fiduciary duty alone without malice, fraud or oppression does not permit an award of punitive damages.”) (quotations and citations omitted). In sum, the only basis that plaintiffs assert for their entitlement to an award of punitive damages is the bare legal conclusion that Seyfarth’s conduct was “fraudulent, malicious, and oppressive.” Compl. ¶¶ 60 & 71. Because these naked assertions without any supporting factual allegations fail to establish a plausible basis for plaintiffs’ entitlement to an award of punitive damages, they should be stricken from the complaint for failure to comply with Rule 8(a). Plaintiffs’ prayer for an award of punitive damages should also be stricken because it, too, fails to comply with Rule 8(a). /// /// /// /// /// Case 3:07-cv-05279-JSW Document 12 Filed 10/24/2007 Page 5 of 8 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 5 NOTICE OF MOTION, MOTION, AND MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANTS SEYFARTH SHAW LLP AND JACK L. SLOBODIN’S MOTION TO STRIKE CASE NO. C07-05279 MMC 404999.04 IV. CONCLUSION For the foregoing reasons, plaintiffs have no basis in law for seeking an award of punitive damages here. The Court should strike that request from the Complaint. Dated: October 24, 2007 KEKER & VAN NEST, LLP By: /s/ Daniel Purcell DANIEL PURCELL Attorneys for Defendants SEYFARTH SHAW LLP AND JACK L. SLOBODIN Case 3:07-cv-05279-JSW Document 12 Filed 10/24/2007 Page 6 of 8 i PROOF OF SERVICE Case No. C07-05279 MMC 404999.04 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 PROOF OF SERVICE I am employed in the City and County of San Francisco, State of California in the office of a member of the bar of this court at whose direction the following service was made. I am over the age of eighteen years and not a party to the within action. My business address is Keker & Van Nest, LLP, 710 Sansome Street, San Francisco, California 94111. On October 24, 2007, I served the following document(s): NOTICE OF MOTION, MOTION, AND MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANTS SEYFARTH SHAW LLP AND JACK L. SLOBODIN’S MOTION TO STRIKE [PROPOSED] ORDER GRANTING DEFENDANTS SEYFARTH SHAW LLP’S AND JACK L. SLOBODIN’S MOTION TO STRIKE by E-MAIL VIA PDF FILE, by transmitting on this date via e-mail a true and correct copy scanned into an electronic file in Adobe “pdf” format. The transmission was reported as complete and without error. Attorneys for Plaintiffs RICHARD W. BERGER and BRANT W. BERGER Justin T. Beck, Esq. Ron C. Finley, Esq. Alfredo A. Bismonte, Esq. Craig Alan Hansen, Esq. Jeremy M. Duggan, Esq. Beck, Ross, Bismonte & Finley, LLP 50 W. San Fernando Street, Suite 1300 San Jose, CA 95113 Tel.: (408) 938-7900 Fax: (408) 938-0790 Email: jbeck@beckross.com Email: rfinley@beckross.com Email: abismonte@beckross.com Email: chansen@beckross.com Email: jduggan@beckross.com by E-MAIL VIA PDF FILE, by transmitting on this date via e-mail a true and correct copy scanned into an electronic file in Adobe “pdf” format. The transmission was reported as complete and without error. and Case 3:07-cv-05279-JSW Document 12 Filed 10/24/2007 Page 7 of 8 404918.02 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 by FEDERA EXPRESS, by placing a tre and correct copy in a sealed envelope addressed as shown below. I am readily familiar with the practice of Keker & Van Nest, LLP for correspondence for delivery by FedEx Corporation. According to that practice, items are retreved daily by a FedEx Corporation employee for overnght delivery. Appearng In Pro Per Douglas B. Allen Burett, Burett & Allen 333 West San Carlos Street, 8th Floor San Jose, CA 95110 TeL.: (408) 298-6540 Fax.: (408) 298-0914 burettburettallenlqyahoo.com I declare under penalty of peijur under the laws of the State of Californa that the above is tre and correct. Executed on October 24, 2007, at San Francisco, Californa. ~~~~J'QJ~ Lauren Harz-Lewis 11 PROOF OF SERVICE Case No. C07-05279 MMC Case 3:07-cv-05279-JSW Document 12 Filed 10/24/2007 Page 8 of 8