Physician's Surrogacy, Inc. v. German, Case No.: 17cv718–MMA (WVG)

• Court: United States District Courts. 9th Circuit. United States District Court (Southern District of California)
• Citation: 311 F.Supp.3d 1190
• Docket Number: Case No.: 17cv718–MMA (WVG)
• Parties: PHYSICIAN'S SURROGACY, INC., Plaintiff, v. Kenia GERMAN; Elite Women Surrogacy LLC; Glory Nash; Veronica Munoz ; Jessica Simas; Xochitl Rachelle Macias; Claudia Escamilla; Karla Jimenez ; Rafael Martinez; Esmerelda Leon; and Does 1 through 50, Defendants.
• Decision Date: 19 April 2018

311 F.Supp.3d 1190

PHYSICIAN'S SURROGACY, INC., Plaintiff,
v.
Kenia GERMAN; Elite Women Surrogacy LLC; Glory Nash; Veronica Munoz ; Jessica Simas; Xochitl Rachelle Macias; Claudia Escamilla; Karla Jimenez ; Rafael Martinez; Esmerelda Leon; and Does 1 through 50, Defendants.

Case No.: 17cv718–MMA (WVG)

United States District Court, S.D. California.

Signed April 19, 2018

311 F.Supp.3d 1192

William F. Small, III, Small & Schena LLP, San Diego, CA, for Plaintiff.

Joseph W. Singleton, Law Office Of Joseph W. Singleton, Woodland Hills, CA, for Defendants.

ORDER DENYING DEFENDANTS' MOTION FOR ATTORNEYS' FEES

Presently before the Court is Defendants Claudia Escamilla's, Karla Jimenez's, Rafael Martinez's, Glory Nash's, Veronica Munoz's, Jessica Simas', Xochitl Rachelle Macias', Esmeralda Leon's, Kenia German's, and Elite Women Surrogacy, LLC's (collectively, "Defendants") motion for attorneys' fees pursuant to Federal Rule of Civil Procedure 54. Doc. No. 54–1 ("Mtn."). Plaintiff Physician's Surrogacy, Inc. ("Plaintiff") opposes the motion [Doc. No. 55 ("Oppo.") ], and Defendants replied [Doc. No. 56 ("Reply") ]. The Court took the matter under submission on the papers and without oral argument pursuant to Civil Local Rule 7.1.d.1. Doc. No. 57. For the following reasons, the Court DENIES Defendants' motion for attorneys' fees.

RELEVANT BACKGROUND

On April 7, 2017, Plaintiff filed this action alleging multiple causes of action against Defendants German, Nash, Munoz, Simas, Macias, Escamilla, Jimenez, Martinez, and Leon. Doc. No. 1. Defendants filed five separate motions to dismiss Plaintiff's claims for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6), and for insufficient service of process pursuant to Federal Rule of Civil Procedure 12(b)(5). Doc. Nos. 4, 14, 15, 17, 19. Also, Defendants German and Leon moved to strike state law claims pursuant to California's anti-SLAPP statute, California Code of Civil Procedure § 425.16. Doc. Nos. 16, 18. Lastly, Plaintiff moved for a preliminary injunction. Doc. No. 13. On August 23, 2017, the Court quashed service as to Defendants Escamilla, Jimenez, Martinez, and German and denied their motions as moot. Doc. No. 33. Additionally, the Court granted in part Defendants Nash's, Simas', Munoz's, Leon's, and Macias' motions to dismiss. Id. Specifically,

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the Court dismissed Plaintiff's federal claims as to all properly served defendants and declined to exercise supplemental jurisdiction over all state law claims asserted against all properly served defendants. Id. The Court also denied without prejudice Defendant Leon's motion to strike and Plaintiff's motion for a preliminary injunction. Id.

After the Court's Order, Plaintiff filed a First Amended Complaint ("FAC"), adding Elite Women Surrogacy, LLC as a defendant. Doc. Nos. 33, 34. The FAC asserted the following causes of action against all Defendants: violation of the Economic Espionage Act ("EEA"), for misappropriation of trade secrets, 18 U.S.C. § 1831 et seq. , as amended by the Defend Trade Secrets Act of 2016 ("DTSA"), PL 114–153, May 11, 2016, 130 Stat 376; violation of the California Comprehensive Computer Data Access and Fraud Act, Cal. Pen. Code § 502 ; violation of the California Business and Professions Code, Cal. Bus. & Prof. Code § 17200 ; conversion; and civil conspiracy. Doc. No. 34 ("FAC"). The FAC also alleged: breach of contract claims against Defendants German, Nash, Simas, Macias, and Munoz; claims for violation of the Computer Fraud and Abuse Act, 18 U.S.C. § 1030, against Defendants Escamilla, Jimenez, and Martinez; claims for breach of the duty of loyalty against Defendants German, Nash, Simas, Macias, and Munoz; and a cause of action for "claim and delivery" against Defendant German. See id.

Via three separate motions, Defendants moved to dismiss Plaintiff's claims pursuant to Federal Rule of Civil Procedure 12(b)(6). Doc. Nos. 41, 42, 43. Plaintiff also moved for a preliminary injunction. Doc. No. 40. On January 31, 2018, the Court granted in part Defendants' motions to dismiss, specifically dismissing Plaintiff's federal claims and declining to exercise supplemental jurisdiction over all state law claims asserted, and denied without prejudice Plaintiff's motion for a preliminary injunction. Doc. No. 49. The Court permitted Plaintiff to file a Second Amended Complaint ("SAC") on or before March 5, 2018. Id. at 23. Instead, Plaintiff filed a Notice of Voluntary Dismissal Without Prejudice pursuant to Federal Rule of Civil Procedure 41(a)(1)(A)(i) on March 2, 2018. Doc. No. 50. Accordingly, the case was dismissed without prejudice. Doc. No. 51.

On March 12, 2018, Plaintiff filed a complaint in state court alleging: (1) violation of California Civil Code section 3426, et seq. ; (2) violation of California Business and Professions Code section 17200, et seq. ; (3) conversion; (4) civil conspiracy; (5) breach of contract; (6) breach of the duty of loyalty; and (7) claim and delivery. Oppo. at 13. Plaintiff's state court complaint does not contain causes of action under the DTSA or the Computer Fraud and Abuse Act. See id.

LEGAL STANDARD

Federal Rule of Civil Procedure 54(d)(2) provides that "[a] claim for attorney's fees and related nontaxable expenses must be made by motion .... no later than 14 days after the entry of judgment[.]" Fed. R. Civ. P. 54(d)(2)(A)-(B)(i). The motion must "specify the judgment and the statute, rule, or other grounds entitling the movant to the award; state the amount sought or provide a fair estimate of it; and disclose, if the court so orders, the terms of any agreement about fees or services for which the claim is made." Fed. R. Civ. P. 54(d)(2)(B)(ii)-(iv).

Rule 54(d)(2)"creates a procedure but not a right to recover attorneys' fees." MRO Commc'ns, Inc. v. AT & T Co. , 197 F.3d 1276, 1280 (9th Cir. 1999). Accordingly, "there must be another source of authority for such an award." Id. at 1281 (quoting

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Abrams v. Lightolier, Inc. , 50 F.3d 1204, 1224 (3d Cir. 1995) ). "The requirement under Rule 54(d)(2) of an independent source of authority for an award of attorneys' fees gives effect to the ‘American Rule’ that each party must bear its own attorneys' fees in the absence of a rule, statute, or contract authorizing such an award." MRO Commc'ns., Inc. , 197 F.3d at 1281.

With respect to costs other than attorney's fees, Rule 54(d)(1) provides that "[u]nless a federal statute, these rules, or a court order provides otherwise, costs—other than attorney's fees—should be allowed to the prevailing party." Fed. R. Civ. P. 54(d)(1).

DISCUSSION

Defendants' contend two statutes provide an independent source of authority for the Court to award attorneys' fees—a provision under the DTSA and California Penal Code § 502(e)(2) under the California Comprehensive Computer Data Access and Fraud Act. Mtn. at 6. Defendants also contend they are entitled to attorneys' fees under the Court's inherent powers. Id. at 9–10. Plaintiff contends Defendants' motion must be denied because there is no judgment and because Defendants' are not eligible for attorneys' fees under the statutes provided or by the Court's inherent powers.¹ See generally , Oppo.

1. Judgment

Plaintiff argues the motion does not identify a "judgment," as defined by Rule 54. Oppo. at 20. Rule 54 defines a judgment as "a decree and any order from which an appeal lies." Fed. R. Civ. P. 54(a). As Plaintiff correctly identifies, "a voluntary dismissal without prejudice is ordinarily not a final judgment from which the plaintiff may appeal." Concha v. London , 62 F.3d 1493, 1506 (9th Cir. 1995) ; see Romoland Sch. Dist. v. Inland Empire Energy Ctr., LLC , 548 F.3d 738, 747–51 (9th Cir. 2008) (finding a voluntary dismissal without prejudice to be appealable because the "unambiguous evidence of intent and the ambiguous language of the dismissal order" led the Ninth Circuit to conclude that dismissal of the claims were "with prejudice" and presented the Ninth Circuit "with an unquestionably final judgment"). Here, Plaintiff filed a notice of voluntary dismissal without prejudice pursuant to Federal Rule of Civil Procedure 41(a)(1)(A)(i). Doc. No. 50. Because there is no document labeled "judgment" in this case and no decree entered by the court and because a voluntary dismissal without prejudice is ordinarily not an appealable order, there is no judgment in this case for purposes of Rule 54. See Keith Mfg., Co. v. Butterfield , 256 F.Supp.3d 1123, 1129–30 (D. Or. 2017). As such, a prerequisite for an award of attorneys' fees under Rule 54 is missing. Nevertheless, the Court will evaluate Defendants' argument that they are entitled to attorneys' fees as the prevailing party and pursuant to the Court's inherent powers.

2. Cal. Penal Code § 502(e)(2)

Defendants argue they are entitled to fees under California Penal Code § 502(e). Plaintiff counters that the "statute only allows fees to a prevailing party" and that Defendants are not the prevailing party. Oppo. at 21.

In "action[s] involving state law claims,...