*1 growth part; on refei’rals ... of AFFIRMED in rel[ies] REVERSED arrangements part controlled business effec- and REMANDED. The parties shall tively healthy of the kind com- appeal. reduce[s] bear their own costs on petition generated by independent set- providers.
tlement service (1982). 9Y-532, No. at
H.R.Rep. concern,
Acting Congress this ex-
empted arrangements controlled business circumstances, liability only in limited 2607(c)(4), §
12 U.S.C. and eliminated the “thing phrasing damages of value” Shelly LAL, individually rep replacing provision, “any charge it with capacity resentative on behalf of the service, paid” for the settlement id. Lal, decedent, Estate of Kamal L. 2607(d)(2). § Calculating penalty representative capacity in her as reference the entire amount set- guardian Sagar Lal; litem ad Es appears tlement service in- address Lal; Sagar tate of Lal, Kamal L. stances in which no direct referral fee has minor, Plaintiffs-Appellants, Indeed, paid. been these no-fee situations v. impetus were the behind Congress’ enact- ment of the 1983 amendment. See CALIFORNIA; STATE OF California 98-123, (1983) No. H.R.Rep. (expect- at 77 Highway Patrol; Newman; Frank ing that RESPA violators in con- “involved Otterby, Defendants-Appel Matthew arrangements trolled business ... shall be lees. ... ... liable the amount of three times No. 08-15645. paid the amount of the charge for the service”). settlement United States Court of Appeals, gives Because RESPA Plaintiff a statu- Ninth Circuit. action, tory cause we hold that Plaintiff Argued and Submitted July 2009. standing pursue has against her claims Defendants. Our holding places us in Filed June agreement with two of our sister circuits. Inc.,
In Realty, Carter Welles-Bowen Cir.2009),
553 F.3d the Sixth plaintiff
Circuit held that a standing has provider
sue settlement service under
RESPA, if even that over-
charged for settlement services. The
court came to that looking conclusion after
at the text of then examining RESPA and legislative history
its and the overall intent at RESPA. Id. 986-88. The Third similarly
Circuit held Country- Alston v. Corp.,
wide Financial
(3d Cir.2009), stating Congress creat- a private right
ed requir- action without
ing overcharge allegation.
Sydney Fairbairn, Novato, CA, E. Ralston, Stephen Chatham, Charles East NY, for appellants. Blake, A. Devine,
Thomas John P. Office General, of the California Attorney San Francisco, CA, for appellees. HALL, Before: CYNTHIA HOLCOMB W. FLETCHER and RICHARD A. PAEZ, Judges. Circuit Opinion by Judge WILLIAM A. FLETCHER; by Judge Dissent HALL. FLETCHER, WILLIAM A. Circuit Judge:
Shelly Lai brought suit against the Cali- (“CHP”) fornia Highway Patrol and offi- cers Frank Newman and Matthew Otterby “Defendants”) (collectively, for the shoot- ing death of her husband. The district court dismissed her prejudice case with her According pro- Procedure sworn statement Rule of Civil under Federal court, her vided to the district Lai called when for failure to check on the mid-December 2006 meet and at- attorney failed to deadlines case. status of her She recounts later learned hearings. When Lai tend participated told her that he had the dismissal attorney’s behavior and call with a conference defense counsel and suit, hired a she new judge judge, a motion for relief filed case, parties wanted settle Proce- pursuant to Federal Rule of Civil meeting place that the next take denied The district court dure approximately two three months. He the motion. *4 about did not tell her the scheduled Janu- hold, to Com- pursuant We reverse. We management ary 18 case conference. Tani, 282 F.3d munity Dental Services v. Spahr appeared Neither nor Lai at the (9th Cir.2002), attorney’s that 1164 management January 18 conference. Lai gross negligence constitutes an extraordi- that did states she not know about the from a warranting relief nary circumstance hearing appeared, and that she would have to dismissing the ease for failure or Spahr, either with without had she 41(b). prosecute under Rule 19, it. On January known about the dis- trict court entered a written order direct- Background I. Spahr why Lai and ing to show cause imposed “including Kamal should not Lai was shot and sanctions be Lai’s husband complaint officers and Otter- dismissal killed CHP Newman 8, 2005, monetary sanctions for by March 2005. On March on and/or repeated comply her refusal to with the Spahr repre- Chesterfield to Lai retained hearing her minor In December court’s orders.” court set sent her and son. February order to show and his Mark Webb on the cause for Spahr co-counsel ap- that fails to against “[i]f Defendants in state court and warned filed suit Lai, son, complaint will pear her her hus- her be dismissed.” on behalf of 23, 2006, August estate. On Defen- band’s Spahr Lai nor on Feb- appeared Neither to dants removed federal court. Lai ruary 1. states that she did not know hearing. hearing, this second At the about 15, 2006, court On November they for that counsel Defendants stated Spahr re- allowed Webb withdraw. no had received communications Lai’s November attorney. mained as On Spahr previous request and renewed a Spahr their Defendants’ counsel sent that the court dismiss the case. The next made no Spahr initial Rule 26 disclosures. order, in a written day, district later, days Two Defen- initial disclosures. pursuant for failure to prosecute dismissed statement. management dants filed case 41(b). Rule of to Federal Civil Procedure conference management The initial case that Spahr for Defense Lai states she called was scheduled November 30. on Spahr appeared at the sched- March to check her case. She states counsel and time, her Spahr the court that told that Defendants need- uled but continued January 18, discovery. time for Lai left 2007. The court ed more conference Spahr Spahr replied for to confer a voicemail on June 1. parties counsel both ordered message, that he Spahr telling to in a text Lai ordered before evening. Spahr that But provide Rule 26 within two call her disclosures Spahr did did not call. left a voicemail about Spahr weeks. neither. later, telling week Lai that he was in the Herron pending could find no cases filed process filing pre-trial motions and that on behalf of Lai or her son. tentatively agreed Webb had to work on Lai states that Spahr she called the next again. her case day, get copies October of the docu- Lai left another Spahr voicemail for ments he claimed Spahr to have filed. told August, but he did not respond. Lai then her he needed to 48 hours to retrieve called message Webb’s office and left a documents, offices, that had he moved respond. Webb. Webb also did not Lai cracks, and “if anything through fell left another voicemail for in Sep- up he would make it Lai me.” tember. He finally returned call on distraught spoke priest, who September 21. He told her he had sched- Spahr. called Spahr left Lai a message on depositions uled in her case for late No- her voicemail at p.m. work at 7:00 vember. When Lai asked about additional October suggesting they aup set depositions, Spahr said it would be better meeting the next morning to discuss to wait to discuss her case until Webb Spahr’s plans for Lai’s Lai case. states following returned the week. then *5 that she was not at morning work on the himself, scheduled a conference call for 4, October and did not message receive the Webb, and Lai for September Spahr 25. in time to meet Spahr. It is unclear did call at the time scheduled for the whether meeting would actually have conference call. Spahr Lai called min- place taken if utes later Lai had and left a voicemail. received the mes- She then sent him day sage an email the time. next about their failed conference call. She received no Lai complaint filed a with the State Bar response to either her voicemail or email. later, eight days on October 12. Lai states she called attorney Wynn called her day that same and told her he Herron at about this time “get a second filing was a “pre-hearing motion” in her opinion.” Herron returned her call on Oc- again case. Lai copies asked for of all of 1, tober 2007. He Lai told that the district the documents filed in her case. After not court had dismissed her ease on February receiving anything weeks, for another two 2, 2007, because Spahr had failed appear Lai called Spahr again. Spahr said he for a hearing. Lai states that she was papers deliver the to her house that shocked and told Herron she was never evening, but he never came. informed of this development. Herron ad- vised her to file a complaint with the Cali- Lai called the State Bar in November fornia State Bar. Lai asked Herron about Shalita, spoke and with Willis the investi- case, the merits of her but Herron told Lai gator assigned to her complaint. Shalita that he did not handle such cases. advised Lai to get another attorney. Lai attempted to retain Canny Paula
Lai states that she called Spahr later day. that same Lai was Canny told that day. that same Spahr told her that he had undergoing chemotherapy might missed the district hearing for a case, not be good able to take on her reason and that he and that had re-filed her she would case state court. need to read everything Lai asked before copies papers filed, making along he decision. Lai per- with the case states that a numbers. Lai in Canny’s then called son again couple Herron office told her “a and asked him to find the Canny state court case weeks later” that had a conflict of Spahr claimed he filed on her behalf. interest and could not represent her. (9th Cir.2008). review de attorneys, other several Lai then called underlying the “any of law help questions her. On novo whom declined all of deny a attorney Syd- court’s decision” Lai contacted district December 60(b) Kempthorne, Lai to advised D. v. Fairbairn motion. ney Fairbairn. Jeff (9th Cir.2004). her case files turn over F.3d 850-51 demand copies of her to obtain to hire a service court. from federal state case files III. Discussion days later back four called Fairbairn Lai the district court’s or- appeals Lai both She had hired a service. say that she her action for failure to dismissing der January on Fairbairn then met with denying her mo- and the order on Fairbairn formally Lai retained 2008. We address tion for relief January 22. each turn. 25, 2008, Fairbairn filed On and a of counsel motion for substitution for Failure to Prosecute A. Dismissal judgment under for relief from motion Lai’s The district court dismissed 60. The Procedure Rule of Civil Federal February suit under Rule supported sworn motion was Rule 60 “[ujnless 41(b) states that the dis Lai. from Fairbairn and declarations otherwise, states a dismissal missal order hearing on the held The district court (b) ... operates as under this subdivision from the dismiss- motion for relief Rule 60 on the merits.” The dis adjudication 5, and on March al Lai’s action dismissing trict court order days later. The motion two denied the otherwise and was therefore did not state *6 applicabil- about the expressed doubt court Because adjudication on the merits. Tani, 1164, 282 F.3d ity of our decision on the dismissal order ended Lai’s suit attorney’s gross that an in which we held merits, appealable it is a final decision granting a ground was a negligence § 1291. under 28 U.S.C. judgment. a default motion for relief from that, even if on to hold The court went Proce Appellate Federal Rule of pur- diligently Lai had not applied, 4(a)(1)(A) “In a civil case provides, dure 60(b)(6) and that relief under Rule sued ... must be filed appeal ... the notice of delay prejudiced Defendants. days after district clerk within 30 with the from is timely appealed. judgment appealed Lai or order appeal on Lai filed her notice of entered.” of Review II. Standard year after the over one March dismissed her action. Under district court review for abuse of discretion We Appellate Rule of version of Federal of an action the court’s dismissal a district effect, 4(a)(4)(A)(vi) then Procedure Procedure Federal Rule Civil under filing ap a notice of 41(b) 30-day deadline for Hearns v. prosecute. run from the time the court peal to Dep’t, 530 F.3d started Bernardino Police San (9th Cir.2008). of a Rule 60 disposing an order also review entered 1129 We motion, motion was long as the Rule 60 so discretion a district court’s for abuse of days judg after the “no later than 10 Rule motion. Cal. filed deny to a decision However, Lai filed Leavitt, F.3d ment entered.”1 [was] v. 523 Dep’t Soc. Servs. filing At all 4(a)(4)(A)(vi) the Rule 60 motion. in 2009 to limit for was amended 1. Rule 10-day 28-day provide a limit rather than 524 25, 2008, attorney’s gross negligence Rule 60 motion on constitutes February extraordinary after the court’s such an circumstance. We
long defining do the Third order. We therefore not have followed Circuit dismissal that gross negligence “neglect gross as so jurisdiction review the district court’s (quoting it is inexcusable.” Id. at pros- dismissal Lai’s action for failure Health, Sec’y v. Boughner Educ. & Wel- ecute. Cir.1978)). (3d fare, F.2d B. Judgment Relief from “virtually attorney in Tani aban- Federal Procedure Rule of Civil by failing proceed doned his client 60(b) provides, part: in relevant despite his client’s defense court orders to terms, just may motion the court On deliberately do so” and his client deceived party representa- or legal relieve its (or doing doing). about what he was order, from a final judgment, tive or Id. at 1170-71. The issued a district court proceeding following for the reasons: default When Tani learned of judgment, promptly the default he hired a (6) any justifies other reason that re- attorney and new filed a motion for relief lief. default Rule under 60(b)(6). Id. at 1167. court 60(b)(6) The district A motion under Rule “must be motion. denied the within a time.” made reasonable Fed. 60(c)(1). R.Civ.P. We use that the We held behavior of Tani’s first “sparingly equitable remedy pre as an gross negligence constituted injustice.” vent manifest United States abused its discretion Co.,
Alpine Land & Reservoir
refusing
grant
Tani relief under Rule
1047, 1049
Cir.1993). To receive relief
wrote,
on the
“[C]onduct
60(b)(6),
must
party
under
demon
part
alleged representative
of a client’s
“extraordinary
strate
circumstances which
receiving prac-
results
the client’s
or
prevented
pros
rendered him unable to
tically
representation
clearly
no
at all
con-
Tani,
[his
ecute
times relevant to this limit the attorney’s the conduct ties between than the defendant suffers rather Spahr’s conduct in this case are Tani and judgment. adverse First, attorneys “virtually striking. both with Latshaw holding is consistent Our by failing to [their] client[s] abandoned Co., Inc., 452 F.3d & Trainer Wortham despite with proceed [their] clients’] [case] Cir.2006). plaintiff-appel Tani, to do so.” 282 F.3d at court orders 60(b)(6) requested Rule in Latshaw lant attorney in filed the an- 1170. The resulting from her judgment relief from provided plaintiffs swer late and never under judgment an offer of acceptance of copy. [plain- He “failed to contact at Procedure 68. Id. Rule of Civil Federal preliminary settlement discussions tiff] accepted that she stated 1102-03. She so, to do failed to despite being ordered attorney’s coercion and on her offer based oppose [plaintiffs] motion to strike the advice, argued and she legal erroneous answer, and failed to attend various hear- gross negli conduct constituted that his Spahr at 1171. failed to ings.” Id. make meriting Rule relief. Id. gence being initial Rule 26 disclosures after or- judgments, which distinguished default so; meet, confer, disfavored, judgments, to do failed to from Rule 68 dered are joint “actively participate management courts. case supported” are which so; being therefore declined conference after ordered to do Id. at 1103. We judgments hearings. to allow relief from and failed to attend extend Tani holding Rule entered under Second, attorney in both the Tani and conduct, attorney’s plaintiff-appellant’s “deliberately Spahr clients] misle[d] [their negligent, if did constitute grossly even opportunity deprived] [them] 60(b)(6)relief. for Rule grounds preserve rights.” [their] take action to Id. prose A dismissal attorney “explicitly represented Tani’s 41(b) like a is much more cute under proceeding proper- Tani that the case was than a Rule 68 judgment default ly.” only Id. Tani learned of the default “the our decision Tani on We based him judgment against when the considerations we policy well-established at was mailed to his office. Id. 1167. Sim- recognized underlying as default have ilarly, continued to tell Lai that her 60(b).” Tani, judgments and Rule it moving case was forward even after had policy The same consider F.3d at 1169. In been dismissed. mid-December dismissal for failure ations underlie meeting told Lai that the next have stated that dismissal prosecute. We months, in two to three her case would be penalty it “is so harsh under though management the case confer- even *8 only in imposed as a sanction should be 18, ence was scheduled for City extreme circumstances.” Dahl the district court had dismissed Although (9th Beach, 363, F.3d 366 Huntington on Lai’s action Cir.1996). almost identical to our This is 2, 2007, in March February Spahr told her judgments, which are stance on default needed more time for dis- that Defendants only in extreme circum “appropriate 2007, 21, covery. September Spahr On Allen, 461, F.2d Falk v. stances.” Lai, telling her he had scheduled lied curiam). Cir.1984) (per in her case for November. On depositions 1, told Lai that he had re- Spahr October the conduct of It is obvious in state court. On October filed her suit gross negli Lai’s constituted 12, filing “pre- told Lai he was Spahr facts recounted in Lai’s sworn gence. The Throughout motion” her case. disputed. hearing The similari- statement are not October, Spahr Second, repeatedly assured Lai the district court held give that he would copies of all of the that Defendants would significant suffer falsely documents he 60(b)(6) claimed to have filed prejudice if Lai’s Rule motion circumstances, in her case. In these Here, we too, granted. were disagree. we gross hold that acted negli- The court relied aon declaration from gence and that Lai has demonstrated “ex- Bjork, Professor Psy Robert Chair of the traordinary beyond circumstances” chology Department University at the control that merit relief under Rule California, Angeles. Bjork Los specializes forgetting,” “directed which he de scribes as the “forgetting process trig
After expressing doubt about whether gered by an explicit implicit or instruction Tani should be applied grant presented that some information or stud 60(b)(6) relief from a dismissal for failure ied earlier should forgotten.” now be De 41(b), under Rule fendants’ counsel had sent defendants deny went on to relief even on the Newman Otterby letters dated March assumption that applied. The court 22, 2007, informing them that Lai’s case grounds. relied on two had been dismissed on the merits and that First, the district court held that the dismissal was final because the time pursued Lai had not relief for appealing the order lapsed. Bjork had diligently. disagree. quite Not four stated that the dismissal of Lai’s case elapsed months between when Lai learned “served as an unambiguous cue to the on October 2007 that her case had been they officers that were free to move on dismissed and when she filed her motion with their lives—and free to not re keep October, for relief. During all of membering and replaying of a memories told her that he working was on her case. highly traumatic episode that happened learning Two weeks after that her case years almost two Bjork earlier.” stated dismissed, had been Lai a complaint filed that “the testimony officers’ will lacking be with the State Bar. Lai called the State in the color expected and detail police Bar in November and tracked down the situations, officers in such meaning, among investigator assigned complaint. to her other things, may that it appear less credi investigator get advised her to a new ble than it would have had the officers not attorney. Lai Canny’s contacted Paula of been lead to believe that the resolution in day. fice that Canny same couple took “a their favor was final.” deciding weeks” before not to take the case. Lai then contacted several other Newman Otterby shot and killed attorneys, none of whom agreed to take Lai’s husband on March 2005. Lai’s case her case. later, dismissed almost two years 27, 2007,
On
February
December
Lai
contacted
2007. On March
Sydney Fairbairn. Fairbairn told Lai how Defendants’ counsel
informed Newman
to obtain copies of the
Otterby
documents filed in and
that Lai’s case had been dis-
her case. Lai obtained the documents and missed.
elapsed
Ten months
between the
*9
met with Fairbairn
January
on
2008.
time they were informed that the case had
Fairbairn then acted promptly to assess
been dismissed and the time Lai filed her
60(b)(6)
Lai’s case. Fairbairn
a
filed
substitution
Rule
motion
January
on
2008.
60(b)(6)
motion
a
and
Even if it is
that
true
Defendants’ memo-
motion, accompanied by
statements,
sworn
ries significantly
during
deteriorated
these
months,
ten
and that this deterioration was
(9th
Tani,
v.
There is no merit to the con- Id. use of that name. at 1172. tention that the petitioner’s dismissal of claim because of his counsel’s unexcused The dismissal of Lai’s lawsuit for failure unjust conduct imposes penalty on prosecute, like the dismissal of the law- the client. voluntarily Petitioner chose Link, suit does not raise inequi- similar attorney representative this as his in the indicated, ties. As the Supreme Court has action, and he cannot now avoid the Lai can compensated through be a mal- consequences of the acts or omissions practice action against attorney, freely this agency selected ... if an And she will not be saddled with a substantial attorney’s conduct falls substantially be- money judgment injunction or in the inter- low what is reasonable under the cir- A plaintiff im. bodily, who has suffered cumstances, the client’s remedy is injuries emotional or economic certainly against attorney the in a suit for mal- may be forced to bear the costs of those practice. keeping But this suit alive injuries until the malprac- resolution of a merely plaintiff because the should not suit, tice but protracted nature of civil penalized be for the omissions of his own litigation likely plaintiff would have forced attorney visiting would be the sins of to bear these costs had the initial lawsuit plaintiffs lawyer upon the defendant. proceeded to a judgment on the merits. consequences The to Lai of 633-634 & 370 U.S. n. dismissal of 82 S.Ct. (1962). her lawsuit for failure to 8 L.Ed.2d do not Even though justify departure lawyer- from the usual Link may have lost the Link, agency client principles set forth in opportunity to recover from the defendant lawyer’s therefore her misconduct personal injuries, his Supreme does not constitute “extraordinary cir- Court reasoned that the defendant should required cumstances” for relief under Rule penalized be for the misconduct of plaintiffs lawyer. plaintiffs proper avenue of relief after a dismissal for failure II. damages was to seek from his Tani were Even if applicable malpractice in a in the con- lawsuit. text of dismissal for failure to prosecute, I Tani Our spells decision why out do not believe the district court abused its malpractice may lawsuit be an ineffective discretion in of Tani. application its
remedy for a judgment, default and in doing A why so demonstrates a default judg- district court abuses its discretion ment likely is more irreparable to have when it applies the incorrect legal stan- consequences than a dismissal for failure “application dard or its legal correct prosecute. (1) subject (2) was to a standard illogical, implausible, $2 (3) million default him enjoining or support without in inferences that continuing to use his may business name. be drawn from the facts in the rec- Even if he were able Hinkson, ord.” United States v. to recover in a mal- practice day future, (9th Cir.2009) (en action some banc) (inter- the interim he might omitted). need to sig- sacrifice nal citations quotation marks personal nificant and business may assets and We not “simply substitute our view drastically cut back on his familial court,” ex- for that of the district and we must *11 expert opinion on an submitted primarily firm convic- the definite and “left with be regarding has been committed.” the effects of by that a mistake defendants tion to afford sufficient majority fails testimony. Id. The officers’ memory loss on the the district the deference shooting had since the years passed Three court. year almost one had of Lai’s husband and “prompted” since the officers were passed primary on two court relied
The district (1) their memories of the event go to let Lai’s motion: denying Lai’s factors the final order of through the motion notification of delay pursuing four month (2) dismissal, Nevertheless, majority discovering the the after dismissal. percipient to defendants. prejudice cites to the existence several interviews contemporaneous witnesses and Lai acted dili- majority finds that cannot and concludes that “Defendants months between during the four gently they be convincingly argue” that of her lawsuit and learning of the dismissal if it substantially prejudiced “even is true 60(b) It first cred- motion. filing the significantly that Defendants’ memories continued to that she its Lai’s statement during these ten months” be- deteriorated by Spahr and “misled” “represented” be 60(b) conclusion, tween dismissal and the Rule mo- This throughout October. however, Defendants, however, her bear no bur- arguably by least belied tion. is at Bar on complaint with the State The burden filing establishing prejudice. a den of by calling another 2007 and upon moving party October the to dem- entirely is 1, 2007 to confirm attorney on October “extraordinary onstrate circumstances” refiling her lying about control, beyond their and the court majority next in state court. The action equities involved. The dis- evaluate the lawyer emphasizes Lai’s efforts secure expert opinion the credi- trict court found November, yet, January, December and persuasive, object and Lai did not ble and court, Lai pointed as out ex- to the district court’s reliance the in her declaration that she also stated testimony hearing. pert at the without her appeared would have court repeatedly stated that Rule We have hearing about the attorney had she known sparingly, motions should be used se attorney pro missed. She filed see, Latshaw, e.g., 452 F.3d at the against her complaint district court acted within its discretion weeks after bar less than two California The district denying Lai’s motion. dismissal, yet she no learning of the made as weigh equities was entitled to in the four contact with the district court it, and in presented by the record before motion. preceding months majority improperly supplants my view representation just days two Lai found analysis of its own views for the reasoned death, represented after her husband’s the district court. “gotten would have to the court she long time legal representation elsewhere III. Spahr’s prob- known about ago” had she AFFIRM the district court’s I would might ar- though Even the record lems. motion for relief from the denial of Lai’s majority’s conclusion guably support I Accordingly, dissent. dismissal. supports it also diligently, that Lai acted the con- court’s district conclusion trary. finding prejudice court’s
The district It supported. is also relied
to defendants