Toyrrific LLC v. Edvin Karapetian et al

Filing 113

ORDER GRANTING DEFENDANTS REVISED MOTION FOR SUMMARY JUDGMENT 103 by Judge Otis D. Wright, II. MD JS-6. Case Terminated. (lc). Modified on 7/20/2016 (lc).

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UNITED STATES DISTRICT COURT

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CENTRAL DISTRICT OF CALIFORNIA

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TOYRRIFIC, LLC,
v.

Case No. 2:12-CV-04499-ODW

Plaintiff,

EDVIN KARAPETIAN; EDWARD
MINASYAN; LENA AMERKHANIAN;
and EDO TRADING, INC.,

ORDER GRANTING
DEFENDANTS’ REVISED MOTION
FOR SUMMARY JUDGMENT [103]

Defendants.

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I.

INTRODUCTION

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Plaintiff Toyrrific, LLC (“Toyriffic”) maintains that Defendants Edvin

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Karapetian, Edward Minasyan, Lena Amerkhanian, and EDO Trading, Inc.

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(collectively, “Defendants”) violated the terms of the parties’ settlement agreement

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from a predecessor action. In light of the Ninth Circuit’s decision, which reversed and

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remanded this Court’s previous Order, Defendants renew their Motion for Summary

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Judgment. (Motion for Sum. J. (“Mot.”), ECF No. 103.) The Ninth Circuit held that

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when imposing Rule 37(c)(1) exclusionary sanctions, the Court must do so under the

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standard of R&R Sails, Inc. v. Ins. Co. of Penn., 673 F.3d 1240, 1246 (9th Cir. 2012).

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(ECF No. 87.) That is, the Court must find that a plaintiff’s “noncompliance involved

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willfulness, fault or bad faith,” and must consider “the availability of lesser sanctions”

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before imposing a sanction that would amount in the dismissal of a claim. Id. at 1245,

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1247. For the reasons discussed below, the Court GRANTS Defendants’ Motion for

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Summary Judgment pursuant to the standard in R&R Sails.1
II.

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FACTUAL BACKGROUND

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Toyrrific is a leader in the manufacturing, selling, and marketing of airsoft toy

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guns and remote-control toys. (Additional Material Facts (“AMF”) 57, ECF No. 67-

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2.) It also operates HobbyTron, which sells toys through its website, Hobbytron.com.

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(Id. 58.)

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Defendant Minasyan, allegedly stole Toyrrific’s products, trade dress, copyrighted

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materials, trademarks, and trade-secret information to establish a competing business,

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HobbyChase. (Id. 59.)

Defendant Karapetian is a former Toyrrific employee who, along with

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As a result of Karapetian and Minasyan’s alleged infringement, Toyrrific filed

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an action against both individuals in August 2010 for copyright infringement and

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other claims related to the alleged unlawful interference with Toyrrific’s company.

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(Id. 61.); Toyrrific v. Karapetian (“Toyrrific I”), No. CV 10-5813-ODW(Ex) (C.D.

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Cal. Aug. 5, 2010). The parties ultimately resolved Toyrrific I on December 12, 2011,

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through the execution of a Settlement Agreement and Mutual General Release

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(“Agreement”). (Id. 63.)

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Six months later, on May 23, 2012, Toyrrific filed the present action alleging

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that Defendants violated the terms of the Agreement. (Compl. ¶ 21, ECF No. 1.)

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Specifically, Toyrrific alleges that Defendants breached the Agreement by: 1) failing

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to comply with the terms of the Court’s preliminary injunction; 2) failing to stop

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operating a website similar to hobbychase.com; 3) failing to cease operating the

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HobbyChase business; and 4) failing to deliver assets of HobbyChase, as described in

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the Bill of Sale included with the Agreement. (Id. ¶ 49.) On August 16, 2012, the

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After carefully considering the papers filed with respect to this Motion, the Court deems the matter
appropriate for decision without oral argument. Fed. R. Civ. P. 78; L.R. 7-15.

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Court dismissed all claims except for Toyrrific’s breach of contract claim. (ECF No.

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30.)

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On March 25, 2013, Defendants moved for summary judgment on Toyriffic’s

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remaining claim. (ECF No. 50.) The Court entered judgment in favor of Defendants

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on April 16, 2013 based on Rule 37(c)(1) exclusionary sanctions.

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Karapetian (“Toyrrific II”), Case No. 2:12-cv-04499-ODW(Ex) (C.D. Cal. Apr. 16,

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2013, ECF No. 71.) Toyriffic appealed the Court’s order, and the Ninth Circuit

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reversed and remanded the case back to this Court, holding that the district court erred

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as a matter of law by imposing Rule 37(c)(1) exclusionary sanctions without finding

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that Toyrrific’s “noncompliance involved willfulness, fault, or bad faith,” and without

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considering “the availability of lesser sanctions.” (ECF No. 87.); R&R Sails, 673 F.3d

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at 1245, 1247.

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Summary Judgment.

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Opposition to Defendants’ Revised Motion for Summary Judgment, two days after the

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Court imposed deadline. (Pl.’s Opp’n to Def.’s Mot. for Summary Judgment.

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(“Opp’n.”), ECF No. 105.) On March 07, 2016, Defendants filed a timely Reply.

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(Def.’s Reply to Pl.’s Opp’n (“Reply”), ECF No. 107.)

On February 22, 2016, Defendants filed a renewed Motion for
(ECF No. 103.)

III.

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Toyriffic v.

On March 02, 2016, Toyriffic filed its

LEGAL STANDARD

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Summary judgment should be granted if there are no genuine issues of material

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fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ.

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P. 56(c). The moving party bears the initial burden of establishing the absence of a

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genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323–24 (1986).

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Once the moving party has met its burden, the nonmoving party must go beyond the

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pleadings and identify specific facts through admissible evidence that show a genuine

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issue for trial. Id.; Fed. R. Civ. P. 56(c). Conclusory or speculative testimony in

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affidavits and moving papers is insufficient to raise genuine issues of fact and defeat

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summary judgment. Thornhill’s Publ’g Co. v. GTE Corp., 594 F.2d 730, 738 (9th

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Cir. 1979).

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A genuine issue of material fact must be more than a scintilla of evidence, or

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evidence that is merely colorable or not significantly probative. Addisu v. Fred

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Meyer, 198 F.3d 1130, 1134 (9th Cir. 2000). A disputed fact is “material” where the

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resolution of that fact might affect the outcome of the suit under the governing law.

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Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1968). An issue is “genuine” if

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the evidence is sufficient for a reasonable jury to return a verdict for the nonmoving

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party. Id. Where the moving and nonmoving parties’ versions of events differ, courts

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are required to view the facts and draw reasonable inferences in the light most

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favorable to the nonmoving party. Scott v. Harris, 550 U.S. 372, 378 (2007).
IV.

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DISCUSSION

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As a general rule, a motion for summary judgment is not granted automatically

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solely because no response has been filed. Smith v. Hudson, 600 F.2d 60, 65 (6th Cir.

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1979); Champion v. Artuz, 76 F.3d 483, 486 (2d Cir. 1996). “Such a motion may

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properly be granted only if the facts as to which there is no genuine dispute ‘show that

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the moving party is entitled to a judgment as a matter of law.’” Id. (quoting Fed. R.

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Civ. P. 56(c)). As such, the effect of the nonmovant’s failure to respond to a motion

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for summary judgment is that it constitutes an admission by the nonmovant that there

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are no disputed issues of genuine fact warranting trial, but does not constitute a waiver

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by the nonmoving party of all the legal arguments based upon those undisputed facts.

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Flynn v. Sandahl, 58 F.3d 283, 288 (7th Cir. 1995).

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Central District of California Local Rule 7-9 requires an opposing party to file

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an opposition to any motion at least twenty-one (21) days prior to the date designated

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for hearing the motion. C.D. Cal. L.R. 7-9. Despite the Court imposed deadline,

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Toyriffic failed to timely file its Opposition, and thus the Court takes this Motion as

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unopposed. Throughout this litigation, Toyriffic has shown continued disregard for

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the Rules of the Court.

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In R&R Sails, the Ninth Circuit held that when a court imposes a sanction

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amounting to dismissal of a claim, it is required to consider: (1) whether the

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noncompliance involved willfulness, fault, or bad faith, and (2) the availability of

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lesser sanctions. 673 F.3d at 1247 (internal citations omitted).

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As demonstrated below, the undisputed evidence demonstrates that Toyriffic’s

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noncompliance was based on willfulness and/or bad faith and that lesser discovery

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sanctions would not have deterred it from disregarding the discovery process and this

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Court’s Orders. The Court will analyze each issue in turn.

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A. Willfulness, Fault, or Bad Faith

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Defendants argue that Toyriffic’s noncompliance with Rule 26(a)(1) involved

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willfulness, fault, or bad faith. (Mot. 6.) The Ninth Circuit held that “‘disobedient

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conduct not shown to be outside the control of the litigant’ is all that is required to

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demonstrate willfulness, bad faith, or fault.” See Henry v. Gill Indus., Inc., 983 F.2d

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943, 948 (9th Cir. 1993).

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Rule 26(a)(1)(A)(iii) requires parties to produce “a computation of each

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category of damages claimed” and to “make available for inspection and copying . . .

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the documents . . . on which each computation is based” without awaiting a discovery

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request.

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required by Rule 26(a), that party cannot use that information to supply evidence on a

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motion, at a hearing, or at a trial, unless the failure was substantially justified or is

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harmless. Hoffman v. Constr. Protective Servs., Inc., 541 F.3d 1175, 1179 (9th Cir.

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2008); Torres v. City of L.A., 548 F.3d 1197, 1213 (9th Cir. 2008). “[E]xclusion is an

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appropriate remedy for failing to fulfill the required disclosure requirements of Rule

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26(a).” Yeti by Molly, Ltd. v. Deckers Outdoor Corp., 259 F.3d 1101, 1106 (9th Cir.

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2001). The Ninth Circuit “give[s] particularly wide latitude to the district court’s

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discretion to issue sanctions under Rule 37(c)(1)” because subsection 37(c)(1) “is a

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recognized broadening of the sanctioning power.” Yeti by Molly, Ltd., 259 F.3d at

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1106; R&R Sails, 673 F.3d at 1245.

Rule 37(c)(1) provides that if a party fails to provide any information

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In its Opposition to Defendants’ Statement of Uncontroverted Facts, Toyriffic

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admits that it is an undisputed fact that it did not serve any documents in connection

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with its Initial Disclosures under Rule 26. (Pl.’s Opp’n to Def.s’ Statement of

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Uncontroverted Facts (“SUF”) ¶ 56; ECF No. 52.) Toyriffic also does not dispute that

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it served zero documents in the case prior to the discovery cutoff. (Id.) In fact,

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Toyriffic admits that its only production of documents in this case was made

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contemporaneously with the filing of its Opposition to Defendants’ Motion for

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Summary Judgment, when it “provided all of the evidence [it relied] on in its

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Opposition. . . .” (Id.) In addition, a review of the late produced documents shows

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that Toyriffic still had not produced a single document that could be used to prove

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damages based upon a breach of contract. (Undisputed Facts (“UF”), ¶ 22, ECF No.

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103-2.)

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Because Toyrific did not submit any evidence to raise a dispute of material

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fact, the Court finds that it cannot show that its discovery misconduct was “outside [of

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its] control” under the R&R Sails standard. Thus, the Court agrees with Defendants

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that Toyriffic’s failure to participate in discovery involved willfulness, fault, and/or

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bad faith.

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B. Whether Lesser Sanctions Are Available

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Defendants next argue that lesser sanctions will not be a deterrent for

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Toyriffic’s actions in this case based on its history of discovery misconduct. (Mot. 7.)

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The Ninth Circuit has held that it is proper to consider all of a party’s discovery

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misconduct in evaluating the propriety of sanctions. See Henry, 983 F.2d at 947;

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Halaco Eng’g Co. v. Costle, 843 F.2d 376, 381 n. 2 (9th Cir. 1988) (“courts may

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indeed consider prior conduct that has already been subject to sanction, when it is

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weighing a subsequent sanction motion”).

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There have been numerous instances where Toyriffic has shown contempt for

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the discovery process. (UF ¶¶ 1–23.) It is undisputed that Toyriffic and/or its

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affiliates have failed to show up for no less than eight corporate and/or fact

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depositions. (Id. ¶¶ 5–11, 15, 17, and 23.) Additionally, it is undisputed that Toyriffic

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and/or its affiliates have refused to comply with the Federal Rules of Civil Procedure

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and California Rules of Civil Procedure regarding objecting and responding to written

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discovery. (Id. ¶¶ 3–4, 12–14, 16, 18–19.) Based on the Statement of Undisputed

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Facts, the Court finds that Toyriffic has shown a pattern of misconduct throughout the

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discovery process. In addition, Toyriffic continues to violate Court orders by failing

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to timely submit its Opposition after the Court imposed deadline. Thus, the Court

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holds that lesser sanctions against Toyriffic would be an ineffective deterrent based on

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the party’s continued disregard for the Federal Rules of Civil Procedure. Wanderer v.

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Johnston, 910 F.2d 652, 655 (9th Cir. 1990) (“The record demonstrates the defendants

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have been given numerous opportunities to comply . . . [t]here is therefore no reason

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to suppose that the imposition of lesser sanctions to a future noncompliance will be

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any more successful than in the past.”).
V.

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CONCLUSION

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The Court accordingly finds that Defendants are entitled judgment as a matter

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of law. Toyriffic’s failure to participate in discovery was based on willfulness, fault,

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and/or bad faith and lesser sanctions would be insufficient to deter future discovery

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misconduct under the standard of R&R Sails. Thus, Toyriffic’s failure to provide

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documents and other information to support its damages theory as required by Rule 26

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entitles Defendants’ to an exclusionary sanction pursuant to Rule 37(c). Defendants’

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Revised Motion for Summary Judgment is GRANTED. (ECF No. 103.)

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IT IS SO ORDERED.

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July 20, 2016

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____________________________________
OTIS D. WRIGHT, II
UNITED STATES DISTRICT JUDGE

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