Court of Appeal Sanctions Firm for False Notice of Settlement

Division One of the Fourth District Court of Appeal imposed a $3,000 sanction against Laurel Employment Law, APC, after the firm filed a notice stating the case had settled when, in fact, it had not. The misrepresentation led the court to cancel a scheduled oral argument before learning from opposing counsel that no final agreement existed.

The case, Horton v. Takeda Pharmaceuticals USA, Inc. (D085379), involved former employees seeking to invalidate a non-compete provision. Although there had been tentative discussions, the lead plaintiff ultimately refused to sign the agreement, and no binding settlement was reached. Horton v. Takeda Pharmaceuticals USA, Inc. (2025).

False Notice and Failure to Respond

After the court was notified by defense counsel that no settlement existed, the plaintiff’s firm filed an unsigned errata notice citing an internal miscommunication. The Court of Appeal then issued an order to show cause regarding sanctions.

The attorneys responsible for the filing failed to appear at the sanctions hearing and did not submit a written response. The panel described the original notice as “objectively frivolous” because it was “patently false” and served no legitimate purpose.

Sanctions and State Bar Referral

Justice Truc T. Do wrote that filing a notice of settlement when none exists undermines the integrity of the appellate process. The court emphasized that notices of settlement are intended to reflect a concluded agreement, not ongoing negotiations.

In addition to the $3,000 sanction, the court referred the matter to the State Bar. It also authorized further sanctions to compensate the defendants for fees incurred in responding to the misconduct, with the amount to be determined by the trial court.

Merits of the Appeal

On the merits, the Court of Appeal affirmed dismissal of the underlying action. The panel held that the plaintiffs failed to establish standing because they did not allege any actual injury or enforcement of the non-solicitation agreement.

Without allegations of lost employment opportunities or threats of enforcement, the complaint could not proceed.

Practice Considerations

This decision is a reminder that candor to the court is not optional. Filing inaccurate notices, particularly those that affect the court’s calendar, can result in monetary sanctions, reputational harm, and State Bar referral.

If you are handling a significant matter that requires disciplined trial or appellate strategy from intake through resolution, we welcome the opportunity to collaborate or assist by referral.

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