Jeri Farrar v. Catalina Restaurant Group, Inc., 2:16-cv-09066

Plaintiffs (Farrar, Whitney, Graham, Dizon, Jiminez, McMahon) filed a putative class action alleging federal and California WARN Act violations based on an April 2015 reduction in force at Catalina Restaurant Group’s corporate headquarters.
Defendants (Catalina Restaurant Group, Food Management Partners) moved for sanctions under Federal Rule of Civil Procedure 11, arguing Plaintiffs’ suit is duplicative and frivolous because an earlier case (Ross v. Catalina) involving similar facts failed for lack of evidence that at least 50 employees were laid off.
In Ross, summary judgment was granted in part because the Ross plaintiffs did not dispute that fewer than 50 employees were laid off, a threshold required to trigger WARN Act notice obligations.
Plaintiffs submitted declarations (including from former employee Gina McMahon and counsel Jeff Dingwall) asserting they have factual grounds—based on interviews and firsthand knowledge—to believe 50 or more employees were terminated in the April 2015 reduction.
The court applied the two-prong Rule 11 standard: (1) whether the complaint is objectively baseless and (2) whether counsel conducted a reasonable inquiry before filing.
The court denied Defendants’ Rule 11 motion, concluding the complaint was not frivolous and counsel had a reasonable basis to file given Plaintiffs’ declarations and distinct parties/attorneys from Ross.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Plaintiffs’ SAC is frivolous under Rule 11	Counsel had a reasonable factual basis (client interviews, McMahon declaration) to allege 50+ layoffs	SAC is duplicative of Ross and is baseless because Ross established fewer than 50 layoffs	Denied—court found a reasonable inquiry and credible factual assertions, not frivolous
Whether prior Ross judgment binds these Plaintiffs	Plaintiffs are different parties, different counsel; not bound by Ross	Ross’s factual findings show no 50-person threshold, so subsequent suit is frivolous	Denied—Ross does not bind separate plaintiffs in a distinct case
Whether sanctions are appropriate absent clear frivolity	Filing was made in good faith based on declared evidence	Sanctions warranted to deter duplicative, baseless litigation	Denied—sanctions reserved for rare and exceptional cases; not met here
Whether counsel’s inquiry met the Rule 11 reasonableness standard	Counsel conducted interviews and relied on a former employee’s declaration	Inquiry was insufficient given Ross outcome	Denied—court credited counsel’s investigation as reasonable at this stage

Christian v. Mattel, Inc., 286 F.3d 1118 (9th Cir. 2002) (establishes Rule 11 two-prong inquiry and signature-as-warranty principle)
Operating Engineers Pension Trust v. A-C Co., 859 F.2d 1336 (9th Cir. 1988) (sanctions should be reserved for rare and exceptional frivolous suits)