Haley v. Clark Construction Group-California, Inc.

Background

Lawrence Haley originally filed the case in San Francisco Superior Court. His complaint asserted seven state-law causes of action and one federal cause of action for retaliation under Title VI of the Civil Rights Act of 1964. Clark Construction Group-California, Inc. removed the case to federal court based on the Title VI claim.

Clark later moved for sanctions and summary judgment on all of Haley’s claims. At the hearing, Haley conceded that summary judgment was appropriate on the Title VI claim. Haley’s counsel explained that the claim had been inadvertently labeled as a Title VI claim when counsel intended to plead a Title VII claim, but also stated that counsel believed the facts did not support retaliation under Title VII either.

Sanctions

Clark sought sanctions under 28 U.S.C. § 1927 and the court’s inherent powers. It argued that Haley and his counsel had litigated a frivolous Title VI claim and had failed to dismiss it, seek remand, or advise the court and Clark that the claim had been abandoned.

The court denied the sanctions motion. For sanctions under Section 1927, the court explained, the record had to show recklessness or bad faith. Sanctions under the court’s inherent powers required a specific finding of bad faith. The court found no evidence that Haley’s counsel knew the claim had been mislabeled before Clark filed its summary-judgment motion, and no evidence that counsel continued litigating the claim for a vexatious or dishonest purpose. The court concluded that negligence or ignorance, without bad faith, did not justify sanctions.

Summary Judgment and Remand

Title VI prohibits discrimination in programs or activities receiving federal financial assistance. The court explained that, for the employment-related claim at issue, the primary objective of the federal assistance had to be providing employment. Clark submitted evidence that it did not receive, and had never received, federal funding to provide employment to its employees or subcontractors’ employees. Haley did not respond to Clark’s Title VI argument and did not contest dismissal of that claim at the hearing.

The court granted Clark’s motion for summary judgment on Haley’s Title VI claim. Because that was the only federal claim, the court declined to exercise supplemental jurisdiction over the remaining state-law claims. The court stated that it had not adjudicated the merits of those claims and that judicial economy and respect for state courts favored returning them to state court. The court therefore remanded the remaining claims to the Superior Court for San Francisco County and directed the Clerk to remand the case and close the federal file.

Motions to File Under Seal

Both parties sought to seal exhibits submitted with the summary-judgment briefing. Because the exhibits were attached to a dispositive motion, the court applied the “compelling reasons” standard, which requires specific reasons for sealing that outweigh the public’s interest in access to judicial records.

Clark sought to seal seven exhibits containing excerpts from Haley’s medical and mental-health records and testimony about his mental-health treatment. Haley sought to seal seven exhibits, most of which also contained medical or mental-health information. The court found that Haley’s privacy interest in confidential medical information outweighed the public’s interest in access to that information.

The court granted Clark’s motion to seal Exhibits M, N, O, P, R, W, and X. It granted in part and denied in part Haley’s motion: it granted the request as to Exhibits 1, 3, 9, 10, 11, and 12, but denied the request as to Exhibit 7. The court found that Haley had provided no justification for sealing Exhibit 7 in its entirety and that the exhibit did not contain medical or mental-health information. The court directed Haley to file a public version of Exhibit 7 within seven days. Judge Haywood S. Gilliam, Jr. entered the order denying sanctions, granting summary judgment on the Title VI claim, remanding the remaining state claims, granting Clark’s sealing motion, and granting in part and denying in part Haley’s sealing motion.