Nutrition Distribution, LLC v. Southern SARMs, Inc. ( 2018 )

Filed 1/31/18
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION SEVEN
NUTRITION DISTRIBUTION, B280983
LLC,
(Los Angeles County
Plaintiff and Respondent, Super. Ct. No. BC616482)
v.
SOUTHERN SARMS, INC.,
Defendant and Appellant.
APPEAL from an order of the Superior Court of
Los Angeles Court, Michael L. Stern, Judge. Affirmed.
Lewis Brisbois Bisgaard & Smith, Arezoo Jamshidi,
Catherine M. Asuncion, Daniel C. DeCarlo, Josephine Brosas and
Griffen J. Thorne, for Defendant and Appellant.
Tauler Smith, Robert Tauler and Lisa M. Zepeda, for
Plaintiff and Respondent.
_______________________
1
Code of Civil Procedure section 128.5 authorizes a trial
court to award sanctions for bad faith actions or tactics that are
frivolous or solely intended to cause delay. Pursuant to former
subdivision (f) of section 128.5, effective from January 1, 2015
until amended by urgency legislation enacted August 7, 2017
(former subdivision (f)), any such sanctions had to be imposed
“consistently with the standards, conditions, and procedures set
forth in subdivisions (c),(d), and (h) of Section 128.7.”
Ruling that former subdivision (f) incorporated the 21-day
safe harbor notice-and-waiting period of section 128.7,
subdivision (c)(1), the trial court denied Southern SARMs Inc.’s
postjudgment motion for sanctions against Nutrition
Distribution, LLC because Southern SARMs had failed to give
Nutrition Distribution the required notice. We affirm. As
reflected in the plain language and legislative history of former
subdivision (f), and confirmed by the August 2017 amendments to
that provision, a 21-day waiting period applies to a motion for
sanctions under section 128.5 that, as here, is directed to
allegedly improper actions or tactics that can be withdrawn or
appropriately corrected.
FACTUAL AND PROCEDURAL BACKGROUND
1. Nutrition Distribution’s Pleadings
In a complaint filed in April 2016 Nutrition Distribution,
LLC, dba Athletic Xtreme, a manufacturer and marketer of
nutritional supplements, sued Southern SARMs, a competing
nutritional supplement company, for unfair competition (Bus. &
1
Statutory references are to this code unless otherwise
stated.
2
Prof. Code, § 17200 et seq.) and false advertising (Bus. & Prof.
Code, § 17500 et seq.). Nutrition Distribution alleged Southern
SARMs had misbranded and unlawfully marketed its product
(MK-2866) Ostarine, which contained as its active ingredient a
selective androgen receptor modulator (SARM). According to
Nutrition Distribution’s pleading, “SARMs, like Defendant’s
Ostarine Product, are synthetic drugs with similar effects to
illegal anabolic steroids.” Specifically, Nutrition Distribution
alleged, although Southern SARMs labeled its product as not
intended to treat, cure or diagnose any condition or disease and
not for human consumption, it simultaneously marketed the
product on its website and otherwise as a new miracle dietary
supplement to bodybuilders and other competitive athletes to
enhance their physiques, promising, for example, lean mass
increase and accelerated fat loss in an easy-to-dose oral form.
According to Nutrition Distribution, Southern SARMs also
misrepresented that its Ostarine product affords similar benefits
to testosterone and other anabolic steroids without the negative
side effects.
As remedies for these alleged violations of the unfair
competition and false advertising laws, Nutrition Distribution
sought compensatory damages, profits earned by Southern
SARMs from its misleading marketing practices, restitution of all
of Southern SARMs’s “ill-gotten gains,” preliminary and
permanent injunctive relief prohibiting Sothern SARMs from
producing, licensing, marketing and selling not only its Ostarine
product but also any other product containing selective androgen
receptor modulators, and attorney fees.
After the parties met and conferred to discuss Southern
SARMs’s contemplated motion to strike and demurrer to the
3
complaint, Nutrition Distribution filed a first amended
complaint, which contained the same two causes of action and
still requested Southern SARMs’s profits, restitution of its
purportedly ill-gotten gains and the broad preliminary and
permanent injunctive relief set forth in the original complaint.
The amended pleading, however, deleted the prayer for
compensatory damages and attorney fees. It also omitted
allegations that Southern SARMs’s marketing of its Ostarine
product without any label statements on its packages or
containers violated the federal Food, Drug, and Cosmetic Act,
averring instead that the product was currently under
investigation by the Food and Drug Administration as a new
pharmaceutical drug.
2. Southern SARMs’s Demurrer and the Trial Court’s
Ruling
Southern SARMs demurred to the first amended complaint,
arguing Nutrition Distribution was not entitled to any of the
relief it had demanded. First, as to its request for a monetary
recovery, Southern SARMs asserted that Nutrition Distribution
was seeking standard tort damages, which are not recoverable in
an action for unfair competition or false advertising. Nutrition
Distribution was not entitled to restitution or restitutionary
disgorgement, which are ordinarily available remedies, Southern
SARMs contended, because it had failed to allege Southern
SARMs had wrongfully acquired money or property in which
Nutrition Distribution had a vested interest. Second, as to the
prayer for injunctive relief, Southern SARMs argued the request
by Nutrition Distribution was overly broad, seeking a wholesale
proscription of Southern SARMs’s production, marketing or sales
of any product containing selective androgen receptor modulators
4
rather than prohibiting the allegedly false or misleading
advertising of Ostarine. In the absence of a right to the relief
sought, Southern SARMs contended, Nutrition Distribution had
failed to plead viable causes of action.
The final section of Southern SARMs’s memorandum of
points and authorities in support of its demurrer argued that
Nutrition Distribution’s assertion of frivolous claims and bad
faith conduct warranted imposition of sanctions pursuant to
sections 128.5 and 128.7, subdivision (c)(2). Counsel for Southern
SARMs insisted he had repeatedly pointed out that Nutrition
Distribution was not entitled to the relief it sought and its
pleadings were therefore legally insufficient. Accordingly, in
addition to sustaining its demurrer in its entirety, Southern
SARMs requested that the court issue an order to show cause to
Nutrition Distribution and its counsel as to why sanctions should
not be awarded.
After full briefing and oral argument, the court sustained
2
Southern SARMs’s demurrer without leave to amend. No
minute order reflecting that ruling or the court’s reasoning is
included in the record on appeal, and no reporter’s transcript of
the hearing has been provided. However, the notice of ruling
prepared by counsel for Southern SARMs includes the following
statement, “The Court denied Defendant’s request for sanctions
but indicated that Defendant could file a separate motion for
sanctions if Defendant chooses.” A judgment and order of
dismissal was entered on September 15, 2016.
2
The court at the same hearing denied Nutrition
Distribution’s motion for a preliminary injunction and denied
Southern SARMs’s motion to strike as moot.
5
3. Nutrition Distribution’s Appeal of the Judgment
Nutrition Distribution appealed the order of dismissal. We
affirmed, holding Nutrition Distribution had failed to allege facts
that would entitle it to restitution under the unfair competition
or false advertising laws or that would justify the broad
injunctive relief it sought prohibiting all production and sales of
any product containing selective androgen receptor modulators.
(Nutrition Distribution, LLC v. Southern SARMs, Inc. (Nov. 28,
2017, B278132).)
4. Southern SARMs’s Postjudgment Motion for Sanctions
On November 17, 2016, more than six weeks after
Nutrition Distribution had filed its notice of appeal, Southern
SARMs moved for sanctions pursuant to section 128.5 against
3
Nutrition Distribution and its counsel. As grounds for sanctions
Southern SARMs argued Nutrition Distribution had filed its
complaint without pleading facts demonstrating its entitlement
to the relief sought and, notwithstanding Southern SARMs’s
attempts to meet and confer in good faith, Nutrition Distribution
persisted in including the same unwarranted requests in its first
amended complaint. Southern SARMs also explained that
Nutrition Distribution had filed a series of similar frivolous
lawsuits across the country, demonstrating its intent to drive its
competitor out of business. In addition, Southern SARMs’s
counsel complained that Nutrition Distribution’s lawyer had
repeatedly insulted him and called him unethical. In discussing
3
Southern SARMs requested “at least $26,089.50” in
attorney fees and costs incurred as a result of the alleged
misconduct of Nutrition Distribution and its lawyers.
6
the standards for an award of sanctions under section 128.5 in its
memorandum in support of the motion, Southern SARMs quoted
San Diegans for Open Government v. San Diego (2016)
247 Cal.App.4th 1306, 1317 (San Diegans for Open Government),
which had held, “[A] party filing a sanctions motion under
section 128.5 does not need to comply with the safe harbor
waiting period described in section 128.7, subdivision (c)(1).”
In opposition Nutrition Distribution argued, because the
motion was filed after the court had entered judgment dismissing
the action, it was untimely. It also asserted its lawsuit had
merit, there was factual and legal support for its claims for relief,
and the action had not been initiated in bad faith or for an
improper purpose.
In a reply memorandum Southern SARMs responded, in
part, that the case law cited by Nutrition Distribution in support
of its untimeliness argument concerned sanctions motions under
section 128.7 and was based on the 21-day safe harbor waiting
provision in that section. It again quoted the holding of San
Diegans for Open Government, supra, 247 Cal.App.4th at
page 1317 that no comparable waiting period applied to a motion
under section 128.5.
Following argument the court denied the motion. The
minute order, entered January 9, 2017, states, “The motion for
sanctions is called and the motion is denied pursuant to the Safe
Harbor Rule.” Southern SARMs filed a timely notice of appeal.
DISCUSSION
1. Former Subdivision (f) and Its Cross-reference to
Section 128.7, Subdivision (c)
Section 128.5, authorizing sanctions for certain bad faith
actions or tactics, was originally enacted in 1981. (Stats. 1981,
7
ch. 762, § 1, p. 2968.) As subsequently amended in 1994, the
provision applied only to proceedings initiated on or before
December 31, 1994. (Stats. 1994, ch. 1062, § 1, p. 6396; see
Olmstead v. Arthur J. Gallagher & Co. (2004) 32 Cal.4th 804,
810.) Concurrently with the creation of the 1994 sunset date for
section 128.5, the Legislature adopted section 128.7, which
permitted the court to award sanctions for pleadings and motions
filed for an improper purpose and applied to complaints or
petitions filed on or after January 1, 1995 and to any pleading,
motion or similar paper filed in those proceedings. (Stats. 1994,
4
ch. 1062, § 3, p. 6398; see Olmstead, at p. 810.)
Section 128.5 was revived in 2014 by Assembly Bill
No. 2494 (2013-2014 Reg. Sess.), effective January 1, 2015
(Stats. 2014, ch. 425, § 1). It authorizes a trial court to order a
party, the party’s attorney or both to pay reasonable expenses,
including attorney fees, incurred as a result of bad faith actions
or tactics that are frivolous or solely intended to cause
4
Section 128.7, still in effect in slightly amended form, was
modeled on rule 11 of the Federal Rules of Civil Procedure. (See
Musaelian v. Adams (2009) 45 Cal.4th 512, 518, fn. 2.) It applies
to every “pleading, petition, written notice of motion, or other
similar paper” presented to a court (§ 128.7, subd. (a)) and
requires attorneys (or parties if they are unrepresented) to
certify, through their signatures on documents filed with the
court, that the pleading or motion has merit and is not being
presented for an improper purpose. (§ 128.7, subd. (b)(1)-(4); see
Musaelian, at p. 516.) If, after notice and a reasonable
opportunity to respond, the court determines the certification was
improper under the circumstances, it may impose an appropriate
sanction. (§ 128.7, subd. (c).)
8
5
unnecessary delay. (§ 128.5, subd. (a).) Former subdivision (f),
in effect from January 1, 2015 to August 7, 2017, at issue in this
case, provided, “Any sanctions imposed pursuant to this section
shall be imposed consistently with the standards, conditions, and
procedures set forth in subdivisions (c), (d), and (h) of
Section 128.7.”
6
Pursuant to section 128.7, subdivision (c)(1), a motion for
sanctions must be made separately from any other motion and
describe with specificity the allegedly sanctionable misconduct.
In addition, the party seeking sanctions must serve the motion on
the opposing party without filing or presenting it to the court.
Service of the motion initiates a 21-day (formerly a 30-day) hold
or safe harbor period. (Li v. Majestic Industrial Hills LLC (2009)
5
Section 128.5, subdivision (b)(1), provides, “‘Actions or
tactics’ include, but are not limited to, the making or opposing of
motions or the filing and service of a complaint, cross-complaint,
answer, or other responsive pleading.”
6
Section 128.7, subdivision (c)(1), provides, “A motion for
sanctions under this section shall be made separately from other
motions or requests and shall describe the specific conduct
alleged to violate subdivision (b). Notice of motion shall be served
as provided in Section 1010, but shall not be filed with or
presented to the court unless, within 21 days after service of the
motion, or any other period as the court may prescribe, the
challenged paper, claim, defense, contention, allegation, or denial
is not withdrawn or appropriately corrected. If warranted, the
court may award to the party prevailing on the motion the
reasonable expenses and attorney’s fees incurred in presenting or
opposing the motion. Absent exceptional circumstances, a law
firm shall be held jointly responsible for violations committed by
its partners, associates, and employees.”
9
177 Cal.App.4th 585, 590-591; Martorana v. Marlin & Saltzman
(2009) 175 Cal.App.4th 685, 698.) During this time the offending
document may be corrected or withdrawn without penalty. If
that occurs, the motion for sanctions may not be filed. (§ 128.7,
subd. (c)(1); see Li, at p. 591.) “[T]he central principle to be
distilled from section 128.7’s language and remedial purpose, as
well as from appellate opinions interpreting section 128.7 and
rule 11, is that the safe harbor period is mandatory and the full
21 days must be provided absent a court order shortening that
time if sanctions are to be awarded.” (Li, at p. 595.)
2. The Analysis of Former Subdivision (f) in San Diegans
for Open Government
San Diegans for Open Government, supra, 247 Cal.App.4th
1306 is the only published decision interpreting former
subdivision (f). The defendants in that case had moved for
sanctions under section 128.5 after the plaintiff dismissed its
taxpayer action for waste of public funds with prejudice,
contending the plaintiff had no evidence to support that claim
and had used it, together with a publicity campaign, in an
attempt to wrongfully leverage a settlement. (San Diegans for
Open Government, at p. 1312.) The trial court denied the motion.
The court of appeal reversed, rejecting the plaintiff’s argument
the sanctions motion was procedurally defective and agreeing
with the defendants that the trial court had applied an incorrect
legal standard when evaluating the merits. (Id. at pp. 1315-1317,
1318-1319.)
As it relates to the issue now before us, and as quoted
several times by Nutrition Distribution in the trial court and
again on appeal, the appellate court in San Diegans for Open
Government rejected the plaintiff’s contention that the
10
requirement in former subdivision (f) that sanctions be imposed
consistently with section 128.7, subdivisions (c), (d) and (h),
obligated a party moving under section 128.5 to comply with the
21-day safe harbor waiting period contained in section 128.7,
subdivision (c)(1). (San Diegans for Open Government, supra,
7
247 Cal.App.4th at p. 1316.) The court gave three reasons for its
conclusion.
First, section 128.7, subdivision (c), begins with an
unnumbered paragraph, which provides sanctions may be
awarded against attorneys, law firms and parties that have
violated section 128.7, subdivision (b), or are responsible for the
violation. It also states, “In determining what sanctions, if any,
should be ordered, the court shall consider whether a party
seeking sanction has exercised due diligence.” Next, paragraph
“(1)” sets forth the safe harbor requirement, and paragraph
“(2)” provides for a similar 21-day safe harbor period if the court
8
elects to order sanctions on its own motion. The court held the
7
The court in San Diegans for Open Government also held
the revived version of section 128.5 applied to all cases pending
as of January 1, 2015, not only to cases filed on or after that date,
and required use of an objective standard, rather than a
subjective standard of bad faith. (San Diegans for Open
Government, supra, 247 Cal.App.4th at pp. 1315, 1318.)
8
Section 128.7, subdivision (c)(2), provides, “On its own
motion, the court may enter an order describing the specific
conduct that appears to violate subdivision (b) and directing an
attorney, law firm, or party to show cause why it has not violated
subdivision (b), unless, within 21 days of service of the order to
show cause, the challenged paper, claim, defense, contention,
allegation, or denial is withdrawn or appropriately corrected.”
11
plain language of former section 128.5, subdivision (f), referred
only to “subdivision (c),” pertaining to who can be sanctioned and
whether the party seeking sanctions exercised due diligence, and
did not specify that motions under section 128.5 needed to be
imposed consistently with the safe harbor provisions contained in
the numbered subparts of section 128.7, subdivision (c).
(San Diegans for Open Government, supra, 247 Cal.App.4th at
pp. 1316-1317.)
Second, to the extent section 128.5 could be considered
ambiguous regarding adoption of the safe harbor provisions of
section 128.7, subdivision (c)(1) and (2), the court reported its
review of the legislative history “reveal[ed] no mention of the
section 128.7 safe harbor waiting period.” (San Diegans for Open
Government, supra, 247 Cal.App.4th at p. 1317.) “It is
inconceivable,” the court stated, “the Legislature intended to
incorporate by reference a prerequisite filing requirement
without mentioning the requirement.” (Ibid.)
Third, section 128.7 is limited to misconduct in the filing or
advocacy of groundless claims in signed pleadings and other
papers. Section 128.5 is not so limited. As a practical matter, the
court explained, requiring a party to comply with the safe harbor
waiting period before filing a sanctions motion under
section 128.5 makes little sense with respect to bad faith actions
or tactics that, once performed, cannot be withdrawn. (San
Diegans for Open Government, supra, 247 Cal.App.4th at
p. 1317.)
3. Former Subdivision (f) Incorporated Section 128.7,
Subdivision (c)’s Safe harbor Provision
The plain language of former subdivision (f) mandating
that a court ordering sanctions adhere to the “standards,
12
conditions, and procedures” set forth in section 128.7,
subdivisions (c), (d), and (h), given its ordinary and common
meaning, appears unambiguous: All the conditions and
procedures in subdivision (c)—not only those in the first,
unnumbered paragraph, but also those contained in the two
subsequent paragraphs, numbered (1) and (2)—must be imposed
to the extent they are compatible with the other requirements of
9
section 128.5. (See Voices of the Wetlands v. State Water
Resources Control Bd. (2011) 52 Cal.4th 499, 519 [“[i]f the
language [of the statute] is unambiguous, the plain meaning
controls,” and no further analysis is warranted]; Wells v.
One2One Learning Foundation (2006) 39 Cal.4th 1164, 1190
[same].) That the Legislature chose to incorporate the safe
harbor waiting provisions by general cross-reference, rather than
specify them by name, is not a sufficient basis for ignoring the
plain meaning and obvious intent of the statute, as the court in
San Diegans for Open Government concluded. (See San Diegans
for Open Government, supra, 247 Cal.App.4th at pp. 1316-1317.)
a. The legislative history of former subdivision (f)
establishes the Legislature’s intent to include a safe
harbor provision
Even if the language of former subdivision (f) allowed for
more than one reasonable construction, the legislative history of
Assembly Bill No. 2494 unquestionably reflects an intent to adopt
9
Similarly, the standards, conditions and procedures in all of
subdivision (d) of section 128.7—that is, subdivision (d)(1) and
(d)(2), which limit the monetary sanctions that may be awarded
under certain circumstances, and not simply the unnumbered
first paragraph of subdivision (d)—are incorporated by reference
by former subdivision (f).
13
the safe harbor provisions of section 128.7, subdivision (c)(1) and
(2), as part of the revitalized section 128.5, effective January 1,
2015. (See John v. Superior Court (2016) 63 Cal.4th 91, 96 [“[i]f
we find the statutory language ambiguous or subject to more
than one interpretation, we may look to extrinsic aids, including
legislative history or purpose to inform our views”]; Fluor Corp. v.
Superior Court (2015) 61 Cal.4th 1175, 1198 [if the statutory
language may reasonably be given more than one interpretation,
“‘“‘courts may consider various extrinsic aids, including the
purpose of the statute, the evils to be remedied, the legislative
history, public policy, and the statutory scheme encompassing the
statute’”’”].)
As originally introduced on February 21, 2014, Assembly
Bill No. 2494 (2013-1014 Reg. Sess.) did not include any cross-
10
reference to section 128.7. A number of organizations, including
the California Chamber of Commerce, the California Farm
Bureau Federation and the California Manufacturers &
Technology Association, jointly wrote Hon. Bob Wieckowski, chair
of the Assembly Judiciary Committee, in support of the bill as
introduced. Letters in opposition were sent by a number of public
interest organizations and labor unions, including the Western
Center on Law & Poverty, the Lawyers’ Committee for Civil
Rights of the San Francisco Bay Area and the California
Immigrant Policy Center. In separate letters each of those three
10
We provided the parties with copies of the legislative
history materials for Assembly Bill No. 2494 that we expected to
consider in deciding the case and advised them we intended to
take judicial notice of those materials pursuant to Evidence Code
sections 452 and 459. We now take judicial notice of the items
cited in our opinion.
14
organizations identified two primary reasons for their concern
with the proposed legislation. First, the complex differences
between section 128.7 and the proposed new version of
section 128.5 would leave viable and necessary litigation in limbo
while a series of appeals worked their way through the appellate
courts for clarification and determination. Second, in the words
of the Western Center, echoed by the other two organizations in
their letters, “[U]nlike section 128.7, section 128.5 does not
include a safe harbor provision. . . . Section 128.5 does not have a
‘safe harbor’ provision and thus will become a weapon by parties
to stall and intimidate parties into dropping litigation. This is
contrary to the public interest of using courts to resolve disputes
and will significantly impact organizations like [the Western
Center] from protecting the legitimate interests of its clients.”
(Letter from Michael Herald, Legislative Advocate, Western
Center, to Hon. Bob Wieckowski, April 20, 2014; see Letter from
Robert Coleman, Government Affairs Manager, California
Immigrant Policy Center, to Hon. Bob Wieckowski, April 24,
2014; Letter from Meredith Desautels, Staff Attorney, Lawyers’
Committee for Civil Rights of the San Francisco Bay Area, to
Hon. Bob Wieckowski, April 24, 2014.)
On May 7, 2014 Assembly Bill No. 2494 was amended to
add subdivision (f), containing the language now at issue in this
appeal. In a bill analysis prepared for the Assembly Committee
on Judiciary for an April 29, 2014 hearing, the proposed addition
of subdivision (f), together with several other changes, were
identified as “author’s amendments” to “clarify the intent of the
bill and address opposition concerns.” (Assem. Com. on
Judiciary, Analysis of Assem. Bill No. 2494 (2013-2014 Reg.
Sess.), as amended April 10, 2014, p. 4.) The bill analysis
15
explained, “As proposed to be amended, this measure makes clear
that it is intended to be read in harmony with the salutary
cognate provisions of section 128.7.” (Ibid.) The analysis
concluded by stating that, as proposed to be amended, there was
no known opposition to the measure. (Id. at p. 7.)
Given the expressed opposition to the original version of
Assembly Bill No. 2494 as introduced by public interest groups
because it did not include a safe harbor provision and the
withdrawal of any objection to the legislation with the proposed
addition of subdivision (f), the inference is unmistakable that the
intent of the new subdivision was to incorporate the safe harbor
provisions of section 128.7, subdivision (c), by cross-reference.
b. The 2017 amendment of former subdivision (f)
confirms the Legislature’s intent to include a safe
harbor provision
In urgency legislation enacted August 7, 2017 (Stats. 2017,
ch. 169, § 1), the Legislature amended section 128.5 “to clarify the
previous legislative intent.” (Assem. Com. on Judiciary, Analysis
of Assem. Bill No. 984 (2017-2018 Reg. Sess.), as amended
11
April 20, 2017, p. 1.) Specifically as it relates to the issue
presented by this appeal, rather than simply cross-referencing
subdivision (c) of Section 128.7, as it formerly had, section 128.5,
11
Although Nutrition Distribution’s respondent’s brief and
Southern SARMs’s reply brief were filed after the effective date of
Assembly Bill No. 984, neither party mentioned the amendment
to section 128.5, subdivision (f), or the discussion of San Diegans
for Open Government in the accompanying legislative reports.
We advised the parties of this development and requested that
they be prepared to discuss at oral argument its effect, if any, on
the issue presented by Southern SARMs’s appeal.
16
subdivision (f), was amended to import (with minor language
modifications) the conditions and procedures contained in that
provision, including in subdivision (f)(1)(B) a 21-day safe harbor
provision “[i]f the alleged action or tactic is the making or
opposing of a written motion or the filing and service of a
complaint, cross-complaint, answer, or other responsive pleading
12
that can be withdrawn or appropriately corrected . . . .”
The legislative reports accompanying this amendment
confirm the Legislature’s intent to include a safe harbor provision
in former subdivision (f). (See Eu v. Chacon (1976) 16 Cal.3d 465,
470 [“[a]lthough a legislative expression of the intent of an earlier
act is not binding upon the courts in their construction of the
prior act, that expression may properly be considered together
with other factors in arriving at the true legislative intent
existing when the prior act was passed”]; see also Western
Security Bank v. Superior Court (1997) 15 Cal.4th 232, 244 [“the
Legislature’s expressed views on the prior import of its statutes
are entitled to due consideration, and we cannot disregard
12
Section 128.5, subdivision (f)(1), now states, in part, “(A) A
motion for sanctions under this section shall be made separately
from other motions or requests and shall describe the specific
alleged action or tactic, made in bad faith, that is frivolous or
solely intended to cause unnecessary delay. [¶] (B) If the
alleged action or tactic is the making or opposing of a written
motion or the filing and service of a complaint, cross-complaint,
answer, or other responsive pleading that can be withdrawn or
appropriately corrected, a notice of motion shall be served as
provided in Section 1010, but shall not be filed with or presented
to the court, unless 21 days after service of the motion or any
other period as the court may prescribe, the challenged action or
tactic is not withdrawn or appropriately corrected.”
17
them”]; Mt. Hawley Ins. Co. v. Lopez (2013) 215 Cal.App.4th
1385, 1408 [same].)
Discussing the need for the amendment to former
subdivision (f), the analysis of Assembly Bill No. 984 prepared for
the Assembly Committee on the Judiciary explained that the
committee had adopted several amendments to the 2014
legislation reviving section 128.5 “to ensure that Section 128.5
would be ‘read in harmony with the salutary cognate provisions
of section 128.7.’” (Assem. Com. on Judiciary, Analysis of Assem.
Bill No. 984, supra, at p. 8.) The 2017 amendment, the report
continued, “seeks to clarify the intent behind the enactment of
AB 2494 . . . and abrogate several of the holdings under
San Diegans [for Open Government].” (Ibid.; see id. at p. 7
[interpretation of subdivision (f) by San Diegans for Open
13
Government “is inconsistent with [its] legislative history”];
Sen. Com. on Judiciary, Rep. on Assem. Bill No. 984 (2017-2018
Reg. Sess.), as amended June 19, 2017, for hearing on June 27,
13
The Assembly Judiciary Committee analysis also
commented, “[T]he San Diegans court held that ‘a party filing a
sanctions motion under 128.5 does not need to comply with the
safe harbor waiting period described in section 128.7,
subdivision (c)(1).’ [Citation.] In the court’s reasoning, it held
that since Section 128.5 is broader, safe harbor provisions of
Section 128.7 ‘cannot be used to withdraw or appropriately
correct past bad faith actions or tactics.’ [Citation.] Again, while
this legal analysis appears to be well-reasoned, it is inconsistent
with the legislative intent that Section 128.5 should be imposed
‘consistently with the standards, conditions, and procedures set
forth in subdivisions (c), (d), and (h) of Section 128.7.’” (Assem.
Com. on Judiciary, Analysis of Assem. Bill No. 984, supra, at
p. 8.)
18
2017, p. 3. [“Since AB 2494 took effect, courts have interpreted
provisions of Section 128.5 inconsistently and, at times, at odds
with the intent of the Legislature. This bill seeks to address the
apparent confusion in the courts and make the provisions of
Section 128.5 completely clear.”].)
*****
In sum, former subdivision (f) required a party moving for
sanctions to make the motion separately from other motions and
requests and to describe the specific conduct alleged to be subject
to sanctions, as specified in section 128.7, subdivision (c)(1). In
addition, when the motion for sanctions was based on a
purportedly frivolous complaint, written motion or court filing
that could be withdrawn or on some other alleged action or tactic
that could be appropriately corrected, former subdivision (f)
required the moving party to comply with the safe harbor waiting
provisions of section 128.7, subdivision (c)(1). Because Southern
SARMs failed to provide Nutrition Distribution with the safe
harbor opportunity to withdraw its first amended complaint
before filing its motion for sanctions, the trial court properly
denied the motion.
DISPOSITION
The order denying the motion for sanctions is affirmed.
Each part is to bear its own costs on appeal.
PERLUSS, P. J.
We concur:
ZELON, J. SEGAL, J.
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