Media Group, Inc.

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UNITED STATES BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
In re 	No. 01-45924 TD
Chapter 7
MEDIA GROUP, INC.,
Debtor.
___________________________/
MEMORANDUM OF DECISION ON REMAND RE MOTION FOR SANCTIONS
Lois 	I. 	Brady 	(the 	“Trustee”), 	the 	duly 	appointed 	chapter 	7
trustee of the above-captioned estate, filed a motion seeking civil
contempt 	sanctions 	against 	Linda 	Shao 	and 	the 	Law 	Office 	of 	Linda
Shao (collectively “Shao”) in the amount of $29,062.50 pursuant to 11
U.S.C. 	§ 	105(a). 	The 	Court 	issued 	a 	Memorandum 	of 	Decision 	on
October 	12, 	2005 	(the 	“2005 	Decision”), 	granting 	the 	motion. 	Shao
filed a notice of appeal from the 2005 Decision, and the appeal was
heard by the Bankruptcy Appellate Panel (“BAP”).
On 	November 	14, 	2006, 	the 	BAP 	issued 	its 	Memorandum 	decision
(the 	“BAP 	Decision”), 	reversing 	in 	part, 	affirming 	in 	part, 	and
vacating 	and 	remanding 	in 	part 	the 	2005 	Decision. 	Having 	now
reconsidered 	the 	issues 	remanded 	to 	the 	Court, 	in 	light 	of 	the
rulings made by the BAP, the Court again grants the Trustee’s motion
Signed: April 05, 2007
________________________________________
LESLIE TCHAIKOVSKY
U.S. Bankruptcy Judge
________________________________________
Entered on Docket
April 05, 2007
GLORIA L. FRANKLIN, CLERK
U.S BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
Case: 01-45924 Doc# 416 Filed: 04/05/07 Entered: 04/05/07 12:52:20 Page 1 of
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for civil contempt sanctions against Shao but in the reduced amount
of $26,663. 	The reasons for the Court’s decision is set forth below.
DISCUSSION
A. 	BACKGROUND
The facts giving rise to the motion for sanctions are set forth
in 	the 	2005 	Decision 	and 	the 	BAP 	Decision 	and 	will 	not 	be 	repeated
here. 	In brief, the Trustee sought sanctions against Shao for having
issued a subpoena in a state court action directing Reidun Stromsheim
(“Stromsheim”), the Trustee’s attorney, to appear at a deposition and
to 	produce 	documents. 	The 	state 	court 	action 	was 	based 	on 	acts
performed 	long 	before 	the 	appointment 	of 	the 	Trustee 	and 	the
employment of Stromsheim as her counsel. 	Shao admitted having issued
the 	subpoena 	to 	investigate 	the 	Trustee’s 	administration 	of 	the
bankruptcy estate. 	The Court found that this constituted an improper
litigation tactic. 	The BAP affirmed this ruling.
The Trustee also contended that Shao was required to obtain the
Court’s leave before issuing a subpoena directed to her attorney in
connection with a lawsuit pending in another forum. 	The Court also
agreed with this contention. 	The BAP reversed this holding. 	It also
reversed the Court’s holding that Shao had acted in bad faith, thus
warranting sanctions, by repeatedly requesting continuances, filings
pleadings 	late, 	and 	citing 	cases 	in 	oral 	argument 	not 	cited 	in 	her
briefs. 	The BAP remanded the matter to the Court for reconsideration
of 	the 	appropriate 	amount 	of 	sanctions, 	if 	any, 	based 	on 	the 	sole
remaining ground: i.e., Shao’s issuance of the state court subpoena
for an improper purpose.
Case: 01-45924 Doc# 416 Filed: 04/05/07 Entered: 04/05/07 12:52:20 Page 2 of
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B. 	DECISION ON REMAND
The Court has reviewed the time sheets submitted by Stromsheim
to 	eliminate 	any 	time 	spent 	in 	connection 	with 	the 	issues 	with
respect to which the 2005 Decision was reversed. 	With respect to the
issue 	of 	whether 	leave 	of 	court 	is 	required 	before 	initiating
discovery against a bankruptcy trustee’s counsel in connection with
an 	action 	filed 	in 	a 	nonbankruptcy 	forum, 	the 	Court 	concluded 	that
the 	following 	time 	entries 	and 	the 	resulting 	charges 	should 	be
eliminated:
5/4/04 	EM 	reviewed TRO procedure and caselaw
re: immunity from suit 	.6 @ $250/hr. 	$ 150.00
5/18/04 	LS 	Research re Barton doctrine .8 @
$325/hr. 	260.00
Prepare letter to J. Erhlich re
not a witness, including
additional citations 	1.1 @ $325/hr. 	357.50
EM 	researched and reviewed caselaw re:
leave to sue requirement for trustee’s
attorneys 	.6 	@ $250/hr. 	150.00
5/21/04 	EM 	researched caselaw re: trustee and
immunity from discovery process
outside bankruptcy court 	.7 	@ $250/hr. 	175.00
5/24/04 	EM 	researched federal caselaw re:
immunity in discovery proceedings
1.2 	@ $250/hr. 	300.00
6/2/04 	EM 	reviewed caselaw re: leave to sue
bankruptcy trustee in preparation
of hearing on preliminary injunction
and revised arguments re same
6/11/04 	EM 	prepared opposition to Motion for
Leave to Sue trustee 	.7 @ $250/hr. 	210.00
6/14/04 	EM 	reviewed caselaw cited by Shao re
judicial immunity (.4), revised
opposition to shao Motion for
Leave to take deposition (.7)
1.1 	@ $275/hr. 	302.50
Case: 01-45924 Doc# 416 Filed: 04/05/07 Entered: 04/05/07 12:52:20 Page 3 of
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6/15/04 EM 	reviewed and revised opposition
to Motion for leave to sue trustee
and count motion for partial
summary judgment (1.5), prepared
Notice of counter motion (.3)
1.8 	@ 275 	495.00
Total: 	$2,399.50
The 	Court 	found 	no 	time entries to be eliminated based on the
BAP’s reversal of the Court’s finding that Shao acted in bad faith by
repeatedly requesting continuances, filing late, and citing cases in
oral argument not mentioned in her briefs. 	As the BAP noted, these
bases for sanctions were not asserted by the Trustee and rather were
raised by the Court sua sponte in the 2005 Decision.
In sum, the Court concludes that the amounts of the time entries
noted 	above 	should 	be 	subtracted 	from 	the 	amount 	of 	the 	sanction
previously 	imposed 	on 	Shao 	so 	that 	the 	amount 	of 	the 	sanctions 	is
reduced to $26,663. 	Counsel for the Trustee is directed to submit a
proposed form of order in accordance with this decision.
END OF DOCUMENT
Case: 01-45924 Doc# 416 Filed: 04/05/07 Entered: 04/05/07 12:52:20 Page 4 of
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COURT SERVICE LIST
Reidun Stromsheim
Stromsheim & Associates
201 California St., Ste. 350
San Francisco, CA 94111
Linda Shao
Law Offices of Linda Shao
20380 Town Center Lane, Ste. 218
Cuperetino, CA 95014
Case: 01-45924 Doc# 416 Filed: 04/05/07 Entered: 04/05/07 12:52:20 Page 5 of
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