Wyman v. High Times Productions, Inc. ( 2020 )

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 11 RENA WYMAN, No. 2:18-cv-02621-TLN-EFB 12 Plaintiff, 13 v. ORDER 14 HIGH TIMES PRODUCTIONS, INC., and CALIFORNIA EXPOSITION AND 15 STATE FAIR 16 Defendants. 17 18 19 This matter is before the Court on Theodore G. Spanos’s (“Spanos”) Motion to Withdraw 20 as Counsel for Defendant High Times Productions, Inc. (“Defendant”). (ECF No. 45.) Plaintiff 21 Rena Wyman (“Plaintiff”) filed an opposition. (ECF No. 46.) Defendant filed a reply. (ECF No. 22 47.) Also before the Court is Plaintiff’s Motion to Enforce the Settlement Agreement. (ECF No. 23 38.) Defendant filed a non-opposition. (ECF No. 42.) For the reasons set forth below, the Court 24 DENIES Spanos’s motion to withdraw and GRANTS Plaintiff’s motion to enforce the Settlement 25 Agreement. 26 /// 27 /// 28 /// 1 I. FACTUAL AND PROCEDURAL BACKGROUND 2 Plaintiff suffers from a neurological disorder and physical disability, and she uses a 3 wheelchair. (ECF No. 1 at 2.) Plaintiff alleges she has long been interested in attending 4 Defendant’s cannabis-related events, but she has suffered discriminatory treatment and lack of 5 access to the events. (Id.) On September 24, 2018, Plaintiff brought various federal and state law 6 claims against Defendant, seeking declaratory relief, injunctive relief, and damages. (Id. at 2–3.) 7 On September 30, 2019, the parties filed a notice of settlement and attached copies of the 8 Settlement Agreement (“the Agreement”). (ECF No. 36.) The Agreement requires Defendant to 9 provide individual compensation to Plaintiff in the amount of $40,000 in cash and $10,000 worth 10 of stock within 30 days of the Effective Date. (Id. at 11.) The Agreement also requires 11 Defendant to provide a cash payment to Plaintiff’s counsel in the amount of $45,000 within 30 12 days of the Effective Date. (Id. at 12.) The Agreement defines the “Effective Date” as “the date 13 on which this Agreement is fully executed by all the Parties.” (Id. at 6.) The Agreement was 14 executed by all parties on September 25, 2019, making the payments due on October 25, 2019. 15 (See id. at 16.) 16 It is undisputed that Defendant has not complied with the terms of the Agreement. 17 Although Defendant requested three separate extensions from Plaintiff, Defendant repeatedly 18 failed to make the required payments on the promised dates. (See ECF No. 38 at 6.) On 19 November 14, 2019, Plaintiff filed a motion to enforce the Agreement. (ECF No. 38.) Defendant 20 filed a non-opposition, which stated “it is anticipated that [Defendant] will comply with the terms 21 of the Settlement Agreement on or before January 15, 2020.” (ECF No. 42 at 2.) Defendant did 22 not make any payments by January 15, 2020. (See ECF No. 47 at 2.) 23 On February 21, 2020, Spanos filed a motion to withdraw as counsel for Defendant. (ECF 24 No. 45.) Spanos concedes Defendant has not complied with the Agreement, but he asks to 25 withdraw based on a “complete lapse” of communication with Defendant. (Id. at 4.) 26 II. STANDARD OF LAW 27 The local rules of this district require an attorney who would withdraw and leave his or 28 her client without representation to obtain leave of court upon a noticed motion. E.D. Cal. L.R. 1 (“Local Rule”) 182(d). Local Rule 182(d) also requires an attorney to provide notice to the client 2 and all other parties who have appeared, and an affidavit stating the current or last known address 3 of the client. Id. Finally, to comply with Local Rule 182(d), the attorney must conform to the 4 requirements of the California Rules of Professional Conduct. Id. Rule 1.16(b)(4) of the 5 California Rules of Professional Conduct permits an attorney to withdraw from representing a 6 client where the client has rendered it “unreasonably difficult” for the attorney to carry out the 7 representation effectively. 8 The decision to grant or deny a motion to withdraw is within a court’s discretion. 9 McNally v. Eye Dog Found. for the Blind, Inc., No. 09-cv-AWI-SKO-01174, 2011 WL 1087117, 10 at *1 (E.D. Cal. Mar. 24, 2011). District courts within this circuit have considered several factors 11 when evaluating a motion to withdraw, including the reason for withdrawal, prejudice to the 12 client, prejudice to the other litigants, harm to the administration of justice, and possible delay. 13 See, e.g., Deal v. Countrywide Home Loans, No. 09-cv-01643-SBA, 2010 WL 3702459, at *2 14 (N.D. Cal. Sept. 15, 2010); CE Res., Inc. v. Magellan Group, LLC, No. 08-cv-02999-MCE-KJM, 15 2009 WL 3367489, at *2 (E.D. Cal. Oct. 14, 2009); Beard v. Shuttermart of Cal., Inc., No. 07-cv- 16 00594-WQH-NLS, 2008 WL 410694, at *2 (S.D. Cal. Feb. 13, 2008). 17 III. ANALYSIS 18 A. Motion to Withdraw 19 In moving to withdraw, Spanos states his law firm has been in bankruptcy since January 3, 20 2020. (ECF No. 45 at 6.) Spanos further states that since that date, he has been unable to 21 communicate with Defendant. (Id.) More specifically, Spanos states he notified Defendant by 22 email and telephone that he cannot continue representing it, but Defendant never replied. (Id.) 23 Spanos states he sent Defendant an email on February 19, 2020, notifying Defendant that if it did 24 not respond, Spanos would file a motion to withdraw. (Id.) Spanos also states he attempted to 25 call Defendant “on a number occasions,” but he did not receive a response. (Id.) According to 26 Spanos, this lack of communication renders it “unreasonably difficult” to continue as counsel for 27 Defendant. (Id. at 4.) 28 /// 1 In opposition, Plaintiff argues the Court should not allow Spanos to withdraw for several 2 reasons: (1) Spanos did not identify substitute counsel as required for corporate entities like 3 Defendant; (2) Spanos failed to take reasonable steps to avoid prejudice to both parties; (3) the 4 grounds for withdrawal are unfounded; and (4) withdrawal will cause undue delay and prejudice 5 to Plaintiff. (ECF No. 46 at 4–9.) 6 i. Prejudice to Defendant 7 The California Rules of Professional Conduct require an attorney who is seeking to 8 withdraw to take “reasonable steps to avoid reasonably foreseeable prejudice to the rights of the 9 client.” See Cal. Rules of Prof. Conduct 1.16(d). In this district, a corporation may not appear 10 without representation. E.D. Cal. L.R. 183(a). An unrepresented corporation cannot file any 11 pleadings, make or oppose any motions, or present any evidence, and would thus be subject to the 12 risk of entry of default and default judgment. See Emp. Painters’ Tr. v. Ethan Enters., Inc., 480 13 F.3d 993, 998 (9th Cir. 2007); see also Galtieri-Carlson v. Victoria M. Morton Enters., Inc., No. 14 2:08-CV-1777, 2010 WL 3386473, at *2-3 (E.D. Cal. Aug. 26, 2010). “It is the duty of the trial 15 court to see that the client is protected, so far as possible, from the consequences of an attorney’s 16 abandonment.” Magellan Grp., 2009 WL 3367489, at *2 (denying motion to withdraw where 17 corporation would be left unrepresented by counsel) (citations omitted). 18 Although Spanos claims he has “fulfilled [his] obligations to resolve this matter,” it is 19 undisputed that the matter is not yet resolved. (See ECF No. 45 at 3.) Spanos admits Defendant 20 has not made any payments as required by the Agreement. Until Defendant has complied with 21 the terms of the Agreement, it is likely Defendant will continue to require representation in this 22 matter. If Defendant is unrepresented, it will be unable to file pleadings, make or oppose 23 motions, or present evidence. Emp. Painters’ Tr., 480 F.3d at 998. Thus, Defendant would risk 24 the possibility of default judgments or other sanctions. These risks clearly constitute “reasonably 25 foreseeable prejudice.” 26 Moreover, Spanos has not shown he has taken reasonable steps to avoid such prejudice. 27 Neither Spanos nor Defendant has informed the Court of new substitute counsel. In his reply, 28 Spanos vaguely claims he informed Defendant of the consequences of not having counsel and 1 Defendant declined to consent to a substitution of counsel, but Spanos does not cite any specific 2 attempts he made to assist Defendant in locating substitute counsel. (See ECF Nos. 45, 47.) 3 Absent more details about Spanos’s specific communications with Defendant or attempts to 4 locate substitution, the Court is unable to ascertain whether Defendant fully understands and 5 assents to the consequences of Spanos’s withdrawal. 6 As it is, the Court concludes Defendant would be prejudiced by granting Spanos’s motion 7 to withdraw. 8 ii. Prejudice to Plaintiff and Possible Delay 9 Spanos does not address the potential for undue delay or prejudice to Plaintiff. (See ECF 10 Nos. 45, 47.) Regardless, it is clear that Plaintiff will be prejudiced by granting Spanos’s motion. 11 Defendant’s payment to Plaintiff is long overdue. (ECF No. 38 at 3.) Allowing Spanos to 12 withdraw without identifying a substitution of counsel will inevitably delay Plaintiff’s payment 13 even further. Such delay will likely increase Plaintiff’s costs associated with pursuing the 14 settlement payment. See Magellan Grp, 2009 WL 3367489, at *7 (declining to “allow the undue 15 delay to other litigants that would result from waiting for a party, who is apparently uninterested 16 in litigation, to begrudgingly locate an attorney to assist them in continuing the litigation they 17 seek to avoid”). 18 As such, the Court concludes possible delay and prejudice to Plaintiff weigh against 19 granting Spanos’s motion to withdraw. 20 iii. The Reason for Withdrawal 21 As mentioned, California Rule of Professional Conduct 1.16(b)(4) permits an attorney to 22 withdraw from representing a client where the client has rendered it “unreasonably difficult” for 23 the attorney to carry out the representation effectively. However, conclusory assertions that there 24 was a communication breakdown is not sufficient to warrant withdrawal. Amazon Logistics, Inc. 25 v. Mann Bros. Transp., Inc., No. 1:19-cv-01060-DAD-SAB, 2020 WL 2194005, at *4 (E.D. Cal. 26 May 6, 2020). Courts in this circuit have considered how much effort an attorney must expend in 27 trying to contact an unresponsive client. See, e.g, Correia v. The Nat’l R.R. Passenger Corp., 28 Civ. No. 14-4504 DMR, 2015 WL 4606064, at *2 (N.D. Cal. July 31, 2015) (granting an 1 attorney’s motion to withdraw when attorney obtained a comprehensive report of the client’s 2 contact information, called, emailed, and mailed the client notice with return receipt requested, 3 used an address obtained through Facebook, contacted the client’s friends and acquaintances, and 4 hired an investigator to help locate the client and serve him with the motion to withdraw); El 5 Hage v. U.S. Sec. Assocs., Inc., No. C06-7828 TEH, 2007 WL 4328809, at *1-2 (N.D. Cal. Dec. 6 10, 2007) (granting an attorney’s motion to withdraw when the attorney called, mailed, and 7 emailed the client, contacted the publisher of a book written by the client, performed internet 8 searches on three different websites that specialized in compiling personal information, conducted 9 a search using Accurint, completed a forwarding address request with the United States Postal 10 Service, and sent notice by registered mail to all reasonable potential addresses located by the 11 attorney’s investigation). These cases demonstrate that although each attorney’s contact attempts 12 are evaluated on a case-by-case basis, the attorney must make a reasonably diligent effort in good 13 faith to contact his or her unresponsive client. 14 Here, Spanos provides only vague, conclusory statements regarding his attempts to 15 contact Defendant. (See ECF No. 45 at 6.) Spanos indicates he only has one client contact for 16 Defendant, and he has only attempted to contact this one individual. (Id.) Yet Spanos fails to 17 demonstrate that he was unable to contact Defendant through other sources. Further, Spanos 18 claims his attempts to contact the client contact were “by email and by telephone.” (Id.) Yet 19 Spanos does not specify details such as how many emails he sent or how many phone calls he 20 made, only that he reached out “on numerous occasions.” (See id.) Likewise, Spanos does not 21 provide the dates for the majority of these alleged attempts, although it bears mentioning that 22 Spanos sent Defendant an email threatening withdrawal from representation a mere two days 23 prior to filing the instant motion. (See ECF No. 45.) In the absence of sufficient detail and given 24 the prejudice both parties may suffer if Spanos withdraws without substitute counsel, Spanos fails 25 to persuade the Court that it was unreasonably difficult to communicate with Defendant. 26 In sum, based on the prejudice to the parties, undue delay, and Spanos’s failure to 27 convince the Court that there are grounds for withdrawal, the Court DENIES Spanos’s motion to 28 withdraw. 1 B. Motion to Enforce the Settlement Agreement 2 “Generally, federal courts lack jurisdiction to enforce settlement agreements.” Holst v. 3 Ridge, 78 F. App’x 580, 581 (9th Cir. 2003) (citations omitted). “However, an exception to this 4 rule occurs where the order dismissing the action, by agreement of the parties, incorporates the 5 terms of the settlement agreement or otherwise expressly indicates that the court intends to retain 6 jurisdiction over the settlement agreement.” Id. 7 In approving the Agreement and dismissing the case, the Court expressly stated that it 8 “retains jurisdiction over this case with respect to Defendant High Times Productions, Inc. to 9 enforce the terms of the settlement of Plaintiff’s claims against High Times.” (ECF No. 37 at 2.) 10 As such, the Court retains jurisdiction to enforce the Agreement. As already discussed, it is 11 undisputed that Defendant has failed to comply with the terms of the Agreement. Therefore, the 12 Court GRANTS Plaintiff’s motion to enforce the Agreement. 13 IV. CONCLUSION 14 Based on the foregoing, the Court hereby DENIES the Motion to Withdraw without 15 prejudice (ECF No. 45). In addition, the Court GRANTS Plaintiff’s Motion to Enforce the 16 Settlement Agreement (ECF No. 38) as follows: 17 1. Defendant is ordered to pay the balance due under the Settlement Agreement 18 — $40,000 in cash and $10,000 worth of stock to Plaintiff, plus $45,000 in 19 cash to Plaintiff’s counsel — within seven (7) days of this Order; 20 2. The Court concurrently issues a separate Judgment against Defendant for the 21 balance due; and 22 3. This Court retains jurisdiction over settlement enforcement and may issue 23 further orders in order to effectuate the settlement and do justice. 24 IT IS SO ORDERED. 25 DATED: November 2, 2020 26 27 28