Alexis Lopez v. Pama Management, Inc. et al

Filing 43

ORDER GRANTING, IN PART, AND DENYING, IN PART, PLAINTIFFS MOTION FOR SANCTIONS #30 ; AND DENYING DEFENDANTS APPLICATION FOR LEAVE TO FILE SURREPLY #42 by Judge Otis D. Wright, II (lc)

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United States District Court
Central District of California

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Plaintiff,

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v.

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Case No. 2:16-CV-9390-ODW-JCx

ALEXIS LOPEZ,

PAMA MANAGEMENT, INC.; NIJJAR
REALTY, INC.; GROUP XII
PROPERTIES, LP; GROUP XIII
PROPERTIES, LP, and DOES 1-20,

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ORDER GRANTING, IN PART, AND
DENYING, IN PART, PLAINTIFF’S
MOTION FOR SANCTIONS [30];
AND DENYING DEFENDANTS’
APPLICATION FOR LEAVE TO
FILE SURREPLY [42]

Defendants.

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I. INTRODUCTION

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On December 20, 2016, Plaintiff Alexis Lopez sued Defendants Pama

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Management, Inc., Nijjar Realty, Inc., Group XII Properties, LP, and Group XIII

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Properties, LP (collectively, “Defendants”) for claims relating to disability

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discrimination. (Compl., ECF No. 1.) During the course of discovery, Defendants

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failed to comply with an order from Magistrate Judge Chooljian to provide further

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responses to Interrogatories and Requests for Production of Documents. (Order, ECF

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No. 27.) Lopez now moves for monetary sanctions, terminating sanctions, or an

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adverse inference instruction, in the alternative. (Mot., ECF No. 30.)1 On October 12,

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After considering the moving papers, the Court deems the matter appropriate for decision
without oral argument. Fed. R. Civ. P. 78(b); C.D. Cal. L.R. 7-15.

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2017, while the Motion was under submission, Defendants filed an Application for

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Leave to File a Surreply to Plaintiff’s Motion for Terminating/Issuing Sanctions.

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(Appl., ECF No. 42.) The Court DENIES Defendants’ Application for Leave to File

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a Surreply. For the reasons set forth below, the Court GRANTS, IN PART, and

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DENIES, IN PART, Plaintiff’s Motion to Terminate/Issue Sanctions.
II. FACTUAL BACKGROUND

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In June 2016, Lopez was in a motorcycle accident that left him paralyzed.

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(Compl. ¶ 13.) As a result, Lopez is confined to a wheelchair. (Id.) Lopez resides in

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an apartment in El Monte, California (the “Property”), with his parents and siblings.

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(Id. ¶¶ 11, 13.) Defendants are the owners and/or managers of the Property. (See id.

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¶¶ 4–7.)

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After being released from the hospital, in June 2016, Lopez’s father requested

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that Defendants replace the carpet in his apartment with flooring because the carpet

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made it difficult for Lopez to move around the Property in his wheelchair. (Id. ¶ 15.)

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Defendants allegedly refused to provide such accommodation for Lopez and, as a

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result, Lopez filed this action alleging violations of the Fair Housing Act, the

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California Fair Employment and Housing Act, and the California Disabled Persons

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Act. (See generally Compl.) Lopez alleges that Defendants acted willfully, and thus

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seeks an award of punitive damages, in addition to actual damages. (Id. ¶ 24 (citing

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42 U.S.C. § 3613(c)(1), which provides for punitive damages for violations of the Fair

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Housing Act)).

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On March 22, 2017, Lopez propounded discovery on Defendants seeking,

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among other things, information regarding Defendants’ financial well-being to support

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his punitive damages claim. (Belisle Decl. ¶ 2, ECF No. 30; Opp’n 2, ECF No. 31.)

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On May 31, 2017, after not receiving satisfactory responses to discovery requests

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pertaining to Defendants’ financial status, Lopez filed a Motion to Compel Further

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Responses to Interrogatories and Requests for Production of Documents before

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Magistrate Judge Chooljian. (ECF No. 23.) On July 14, 2017, Judge Chooljian

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ordered Defendants to provide further responses to Interrogatories and Requests for

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Production of Documents sent by Lopez no later than August 1, 2017 (“the Discovery

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Order”). (Order 10.) The Discovery Order limited the temporal scope of the financial

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discovery requested by Lopez. (Order 4 (“Accordingly, the relevance objections are

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sustained to the extent the [requests] seek information/documents predating January

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2015 and overruled to the extent the [requests] seek information/documents from

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January 2015 to present….”).) The Discovery Order also noted that the parties had

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not sought the Court’s approval to bifurcate liability and damages, or discovery

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regarding the same. (Id.) Further, the Discovery Order specifically ordered Lopez not

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to disclose any of the information received, and only to use it as necessary to

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prosecute the instant action, in order to alleviate Defendants’ apparent concern that the

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information could be used for an improper purpose. (Id. at 10.)

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The parties subsequently stipulated to allow Defendants an additional two

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weeks to comply with the Discovery Order. (Belisle Decl. ¶¶ 4–5.) On August 14,

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2017—one day before they were required to comply with the Discovery Order—

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Defendants requested an additional week extension, which Lopez denied. (Id. ¶¶ 8–

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9.)

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compelled discovery responses, but defense counsel did not respond. (Id. ¶ 11.) Later

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that day, Defendants filed a Petition for Writ of Mandamus in the Ninth Circuit. (Id. ¶

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12; Ex. I, ECF No. 30-7.) Defendants have not sought a stay of this action while their

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Petition pends before the Ninth Circuit.

On August 16, 2017, Lopez’s counsel emailed defense counsel requesting

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On September 28, 2017, while Lopez’s Motion was pending before the Court,

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and fully briefed by the parties, Defendants substituted in new counsel. (ECF No. 35.)

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Defendants then filed what they styled as a “Motion to Continue Motion for

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Terminating-Issue Sanctions,” which the Court struck because: 1) it did not provide

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adequate notice, as required by the Central District’s Local Rules; 2) the Court had

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already taken Lopez’s Motion for Sanctions under submission; and 3) the Motion was

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fully briefed by the parties. (ECF Nos. 37, 40.)

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III.

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DISCUSSION

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Federal Rule of Civil Procedure 37(b)(2)(A) authorizes a district court to

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impose appropriate sanctions where a party has failed to comply with an order to

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provide or permit discovery. In imposing sanctions pursuant to Rule 37(b), the Court

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may render a “default judgment against the disobedient party[,]” direct that the

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“matters embraced in the order or other designated facts be taken as established for

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purposes of the action, as the prevailing party claims[,]” or issue any other just order.

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Lopez seeks the entry of default judgment against Defendants as a sanction for

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their refusal to comply with the Discovery Order. (Mot. 7–8.) In the alternative,

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Lopez seeks an adverse inference instruction that “Defendants’ finances support an

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award of punitive damages.”

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reasonable expenses incurred in bringing this Motion. (Id. at 9.) Defendants contend

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that Lopez is not entitled to terminating sanctions because: 1) Defendants’ Petition for

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Writ of Mandamus regarding the Discovery Order is pending before the Ninth Circuit;

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2) there is no basis for the discovery sought; and 3) terminating sanctions are too

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extreme for these circumstances. (Opp’n 2–5.)

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A.

(Id. at 8–9.)

Lastly, Lopez seeks to recover the

Default Judgment

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Lopez contends that issuing default judgment against Defendants is an

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appropriate sanction because Defendants’ “refusal to provide discovery responses is

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calculated to delay litigation in this matter and [Lopez] is prejudiced by Defendants

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[sic] refusal.” (Mot. 8.) In their Opposition, Defendants argue that Lopez is not

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entitled to punitive damages and thus discovery regarding Defendants’ financial

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condition is unwarranted. (Opp’n 3.) However, Judge Chooljian already considered

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and rejected this argument when she ordered Defendants to produce limited financial

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information. (Order 3–4, 10.)

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In determining whether terminating sanctions are appropriate, a district court

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must weigh: “(1) the public’s interest in expeditious resolution of litigation; (2) the

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court’s need to manage its docket; (3) the risk of prejudice to the party seeking

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sanctions; (4) the public policy favoring disposition of cases on their merits; and (5)

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the availability of less drastic sanctions.” Henry v. Gill Indus., Inc., 983 F.2d 943, 948

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(9th Cir. 1993) (quoting Porter v. Martinez, 941 F.2d 732, 733 (9th Cir. 1991)). The

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Ninth Circuit has “said that where a court order is violated, factors 1 and 2 support

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sanctions and 4 cuts against case-dispositive sanctions, so 3 and 5 . . . are decisive.”

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Valley Eng’rs Inc. v. Elec. Eng’g Co., 158 F.3d 1051, 1057 (9th Cir. 1998).

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The public possesses an interest in maintaining “the just, speedy, and

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inexpensive determination of every action.” Fed. R. Civ. P. 1. Furthermore, “District

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Courts have the inherent power to control their dockets.” Thompson v. Hous. Auth. of

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City of Los Angeles, 782 F.2d 829, 831 (9th Cir. 1986). These factors typically weigh

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in favor of issuing sanctions. Valley Eng’rs Inc., 158 F.3d at 1057. Lopez claims

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prejudice because Defendants’ failure to comply with the Discovery Order results in

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undue delay. (Mot. 8.) Because trial is set for February 6, 2018, however, the

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prejudice Lopez will suffer may be remedied by less harsh sanctions. At this juncture,

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Defendants still may comply with the Discovery Order sufficiently in advance of trial

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to allow Lopez to prepare his punitive damages case. Accordingly, these factors do

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not mandate as harsh a sanction as default.

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A party suffers prejudice where the opposing party’s actions “impair [their]

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ability to go to trial or threaten to interfere with the rightful decision of the case.”

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Adriana Int’l Corp. v. Thoeren, 913 F.2d 1406, 1412 (9th Cir. 1990); Malone v. U.S.

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Postal Service, 833 F.2d 128, 131 (9th Cir. 1987). Failure to produce court-ordered

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documents may be indicative of prejudice. Adriana Intern. Corp., 913 F.2d at 1412.

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Here, Defendants are withholding information that would assist the jury in calculating

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punitive damages. (Mot. 9.) However, this information would not necessarily affect

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the outcome of the case from a liability perspective, which is another factor the Court

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must consider.

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Generally, the public policy in favor of adjudicating cases on the merits weighs

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strongly against terminating sanctions. See In re Phenylpropanolamine (PPA) Prods.

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Liability Litig., 460 F.3d 1217, 1228 (9th Cir. 2006). This factor only weighs lightly

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in cases where the “party whose responsibility it is to move a case toward disposition

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on the merits . . . impedes progress in that direction.” Id. In other words, this factor

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weighs heavily against terminating sanctions unless it is the plaintiff who fails to

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produce discovery. See id. Here, this factor weighs against terminating sanctions as it

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is Defendants who have refused to comply with the Discovery Order, and the

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information being withheld goes to a portion of Lopez’s alleged damages.

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There are less drastic sanctions that are feasible and appropriate here. In his

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Motion, Lopez seeks monetary sanctions as well as an adverse inference instruction in

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the alternative to default judgment. (Mot. 8–9.) The Court finds monetary sanctions

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are a more appropriate sanction at this time, as discussed below. A terminating

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sanction is “a harsh penalty and is to be imposed only in extreme circumstances.”

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Henderson v. Duncan, 779 F.2d 1421, 1423 (9th Cir. 1986). If Defendants continue

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to disregard the Discovery Order, those extreme circumstances may arise.

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B.

Adverse Inference Instruction

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Under Rule 37(b), “a court has authority to instruct a jury that it may make an

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inference with respect to certain factual matters based on a party’s failure to produce

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evidence on those factual matters.” Parrick v. FedEx Ground Package Sys., Inc., No.

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CV 09-95-MDWMJCL, 2010 WL 3724825, at *5 (D. Mont. Sept. 17, 2010). Where

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“a party fails to produce [evidence] . . . the fair inference is that that evidence would

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have weighed against the party who held it back.” Computer Assocs. Int’l, Inc. v. Am.

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Fundware, Inc., 133 F.R.D. 166, 170 (D. Colo. 1990) (citing Hammond Packing Co.

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v. Arkansas, 212 U.S. 322, 350–51 (1909)).

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Lopez argues that an adverse inference instruction is appropriate because

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Defendants refuse to comply with the Discovery Order and that “the discovery sought

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here is relevant to punitive damages calculations.” (Mot. 9.) The Court finds this

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form of sanction to be too harsh at this time. The Court orders Defendants to comply

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with the Discovery Order within seven days of the date of this Order.

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Despite Defendants’ qualms with the Discovery Order, it is the order of the

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Court, and cannot be disregarded. See Pasadena City Bd. of Educ. v. Spangler, 427

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U.S. 424, 439 (1976) (“It is for the court of first instance to determine the question of

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the validity of the law, and until its decision is reversed for error by orderly review,

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either by itself or by a higher court, its orders based on its decision are to be respected,

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and disobedience of them is contempt of its lawful authority, to be punished.”). This

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matter is not automatically stayed pending the resolution of Defendants’ Petition for

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Writ of Mandamus, nor have Defendants sought a stay of this action. See Powertech

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Tech. Inc. v. Tessera, Inc., No. C 11–6121 CW, 2013 WL 1164966, at *1–2 (N.D.

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Cal. March 20, 2013) (denying stay pending party’s petition for writ of mandamus in

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light of discovery order, and explaining standard for stay as analogous to that of a

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preliminary injunction). In any event, the Court would not look favorably on a request

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for a stay, given that Defendants would have to show likelihood of success on their

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Petition for Writ of Mandamus, which would be difficult to do given that it is a

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discretionary, drastic remedy. See Cole v. U.S. Dist. Court for D.C., 542 U.S. 367,

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379 (2004).

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In addition, Defendants failed to follow the appropriate procedure for

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challenging the Discovery Order, which will likely be fatal to their Petition for Writ of

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Mandamus. See Cole v. U.S. Dist. Court for Dist. of Idaho, 366 F.3d 813, 819–20

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(9th Cir. 2004) (noting narrow exception, and holding “[a]part from this necessarily

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narrow exception, failure to seek reconsideration of a magistrate judge’s non-

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dispositive ruling by statutory appeal to the district court under 28 U.S.C.

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§ 636(b)(1)(A) will preclude a finding that the first Bauman factor is shown, which, in

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turn, will weigh heavily against the granting of the writ.”) Further, Central District

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Local Rule 72 provides:

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Any party objecting under [Federal Rule of Civil Procedure] 72(a) to

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a Magistrate Judge’s ruling on a pretrial matter not dispositive of a

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claim or defense must file a motion for review by the assigned District

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Judge, designating the specific portions of the ruling objected to and

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stating the grounds for the objection. Such motion shall be filed within

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fourteen (14) days…of service of a written ruling.

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C.D. Cal. Local Rule 72-2.1 (emphasis added).

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procedure. Moreover, the Local Rules explicitly provide that “[r]egardless of whether

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a motion for review has been filed, the Magistrate Judge’s ruling remains in effect

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unless the ruling is stayed or modified by the Magistrate Judge or the District Judge.”

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Id. 72-2.2 (emphasis added). Defendants completely disregarded the Local Rules and

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the proper procedure. Defendants did not seek review of the Discovery Order, and

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now the time to do so has long expired. See C.D. Cal. Local Rule 72-2.1 (establishing

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deadline for filing motion for review of magistrate judge’s order as fourteen days after

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entry of order—here, no later than July 28, 2017). Should Defendants choose to

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continue to disregard the Discovery Order, the Court is inclined to issue an adverse

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inference instruction. In the event Defendants fail to comply with the Court’s Order

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as detailed here, Lopez is invited to move the Court for an adverse inference, and

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submit proposed wording of such an inference for the Court’s review.

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C.

Defendants did not follow this

Reasonable Expenses

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Rule 37 allows for courts to “order the disobedient party, the attorney advising

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that party, or both to pay the reasonable expenses, including attorney’s fees, caused by

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the failure” to comply with a discovery order. Fed. R. Civ. P. 37(b)(2)(C). Here,

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Lopez seeks to recover $1,885.00 in costs and fees incurred on this Motion. (Mot. 9.)

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Defendants’ Opposition does not address the monetary sanction sought by Lopez.

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(See generally Opp’n). Therefore, the Court finds that Lopez’s proposed amount is

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reasonable and orders Defendants to pay Lopez $1,885.00, within fourteen days of

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this Order.

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D.

Defendants’ Application to File Surreply

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On October 12, 2017, Defendants filed an Application for Leave to File

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Surreply to Plaintiff’s Motion for Terminating/Issuing Sanctions. (Appl.) Defendants

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argue that they should be granted leave to file a surreply because they substituted in

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new counsel on September 28, 2017, and claim to have new arguments to oppose

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Lopez’s Motion. (Appl. 2–3.) The parties fully briefed this Motion nearly one month

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ago, and Defendants have had ample time to bring their application in a timely

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fashion, and through the proper procedures.2 In fact, Defendants’ Application largely

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regurgitates arguments set forth in Defendants’ Motion to Continue (ECF No. 37),

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which the Court struck. (ECF No. 40.) For these reasons, the Court DENIES

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Defendants’ Application.
IV.

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CONCLUSION

For the reasons set forth above, Defendants are:

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1. ORDERED to pay $1,885.00 to Lopez for the reasonable costs and fees

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associated with bringing this Motion within fourteen days of the date of

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this Order;
2. ORDERED to comply with the Discovery Order (ECF No. 27), within

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seven days of the date of this Order; and

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3. ORDERED to file a declaration with this Court on, or before October

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25, 2017, stating whether they have complied with Judge Chooljian’s

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Order.

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Should Defendants disregard this Court’s Order, and continue to disregard the

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Discovery Order, Defendants will be further sanctioned, and ordered to pay to the

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Clerk of the Court, $200.00 per day, for each day they fail to comply with the

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Discovery Order after October 24, 2017. Defendants cannot continue to disregard the

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proper procedures, and orders of the Court.

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//

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Briefing closed on September 18, 2017, fourteen days before the scheduled hearing.

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