Lumetique, Inc. v. Stone Distributors, Inc.

Filing 21

CERTIFICATION AND ORDER TO SHOW CAUSE RE CONTEMPT by Magistrate Judge Charles F. Eick. The Magistrate Judge has read and considered all papers filed in support o of and in opposition to the "Application of Judgment Creditor Lumetique, Inc., for an Order to Show Cause Why Contempt Sanctions Should Not be Issued Against Third Party Witness Michael Wainer for his Failure to Produce Documents at his Examination to Aid in the Enforcement of a Judgment, etc." filed 1/3/18. The Magistrate Ju dge has taken the Application under submission without oral argument. It is Ordered that Michael Wainer shall appear on 3/19/18 at 2:00 p.m. in the Courtroom of the Honorable Virginia A. Phillips, Chief U.S. District Judge, and then and there to show cause, if there be any, why Wainer should not be adjudged in contempt by reason of the facts certified herein. (See document for details.) Show Cause Hearing set for 3/19/2018 02:00 PM before Judge Virginia A. Phillips. (sp)

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UNITED STATES DISTRICT COURT

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CENTRAL DISTRICT OF CALIFORNIA

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LUMETIQUE, INC.,

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Plaintiff,
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v.
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STONE DISTRIBUTORS, INC.,
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Defendant.
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___________________________________)

NO. CV 17-3473-VAP(Ex)

CERTIFICATION AND ORDER
TO SHOW CAUSE RE CONTEMPT

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The Magistrate Judge has read and considered all papers filed in

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support of and in opposition to the “Application of Judgment Creditor

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Lumetique, Inc., for an Order to Show Cause Why Contempt Sanctions

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Should Not be Issued Against Third Party Witness Michael Wainer for

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his Failure to Produce Documents at his Examination to Aid in the

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Enforcement of a Judgment, etc.” (“the Application”), filed

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January 3, 2018.

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under submission without oral argument.

The Magistrate Judge has taken the Application

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IT IS ORDERED that Michael Wainer (“Wainer”) shall appear on
March 19, 2018, at 2:00 p.m., in the Courtroom of the Honorable

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Virginia A. Phillips, Chief United States District Judge, at 350 West

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1st Street, Courtroom 8A, Los Angeles, California 90012, and then and

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there to show cause, if there be any, why Wainer should not be

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adjudged in contempt by reason of the facts certified herein.

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In accordance with 28 U.S.C. section 636(e), the Magistrate
Judge certifies the following facts:1

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1.

On September 4, 2014, the United States District Court

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for the Eastern District of Texas entered a default

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judgment in the amount of $1,053,000 plus attorneys’ fees

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and expenses in favor of Plaintiff Lumetique, Inc.

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(“Lumetique”) and against Defendant Stone Distributors,

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Inc. (“Stone Distributors”).

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2.

On April 6, 2017, Lumetique registered the default

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judgment in this Court.

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3.

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Appearance and Examination” of Wainer.

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On May 5, 2017, Lumetique filed an “Application for

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The question of whether Wainer should be held in
contempt on these certified facts, and the question of the
appropriate sanctions to be imposed, if any, are commended to the
District Judge for her consideration. See 28 U.S.C. § 636(e);
see also Bingman v. Ward, 100 F.3d 653, 658 (9th Cir. 1996),
cert. denied, 520 U.S. 1188 (1997); Taberer v. Armstrong World
Industries, Inc., 954 F.2d 888, 903-908 (3d Cir. 1992). The
limited contempt powers granted to Magistrate Judges in the
“Federal Courts Improvement Act of 2000” do not extend to the
circumstances presented in the instant case. See 28 U.S.C. §
636(e).
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4.

On May 10, 2017, the Magistrate Judge denied this

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application without prejudice, stating, inter alia, that

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the application “fails to demonstrate that Michael Wainer

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has information concerning the Judgment Debtor sufficient

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to aid in the enforcement of the Judgment.”

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5.

On May 24, 2017, Lumetique filed another “Application

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for Appearance and Examination” of Wainer.

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this application, Lumetique filed a declaration to which

In support of

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were attached exhibits appearing to reflect that: Stone

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Distributors was a candle business; Wainer was an officer

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of Stone Distributors; shortly after Lumetique began its

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2014 lawsuit against Stone Distributors, Stone Candle Bar

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Inc. (“Stone Candle”) filed Articles of Incorporation;

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Stone Candle is a candle business in which Wainer and

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Wainer’s son are involved; and Wainer is the Chief

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Executive Officer (“CEO”), Chief Financial Officer and

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Controller of Stone Candle.

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9 and 10 to the Declaration of Ryan T. Koczara, filed

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May 24, 2017.

See Exhibits 1, 2, 3, 4, 6, 7,

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6.

On May 25, 2017, the Magistrate Judge granted the

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application for an examination of Wainer, and ordered that

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Wainer appear before the Magistrate Judge on June 30, 2017,

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at 9:30 a.m. in Courtroom 750 of the Roybal Courthouse.

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7.

On June 1, 2017, counsel for Lumetique issued a

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subpoena to Wainer requiring the production of certain
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documents relating to Stone Distributors, as well as

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documents relating to Stone Candle and Ecolight Inc.

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(“Ecolight”).

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Wainer is (or was) involved.2

Ecolight is another candle business in which

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8.

On June 30, 2017, counsel for Lumetique appeared for

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the examination of Wainer, but Wainer failed to appear.

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The Magistrate Judge continued the examination to

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August 18, 2017, at 9:30 a.m. in Courtroom 750.

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9.

On July 28, 2017, Lumetique filed a proof of service

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purporting to reflect a July 11, 2017 service on Wainer (through

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“Deluca Densmore”) of the “Notice of Continuance of Appearance

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and Examination of Third Party Re: Enforcement of Judgment and

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Subpoena to Produce Documents to Michael Wainer.”

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10.

On August 18, 2017, Wainer and counsel for Lumetique

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appeared before the Magistrate Judge for the examination of

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Wainer.

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subpoena, Wainer orally objected to producing any document

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responsive to the subpoena.

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relevance, trade secret, and his purported lack of access to the

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documents of Stone Candle.

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relevance objection as untimely and invalid in light of the

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potential relevance of Stone Candle documents to issues of

Although Wainer had not filed any objections to the

Wainer objected on grounds of

The Magistrate Judge overruled the

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The Application includes Ecolight filings with the
California Secretary of State identifying Wainer as a director of
Ecolight. See Exhibits 3 and 9 to the Declaration of Ryan T.
Koczara, filed January 3, 2018.
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possible successor liability.

See Cleveland v. Johnson, 209

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Cal. App. 4th 1315, 1326-34, 147 Cal. Rptr. 3d 772 (2013).3

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regard to Wainer’s trade secret objection, the Magistrate

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Judge restricted Lumetique’s access to the subpoenaed

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documents to access by Lumetique’s attorneys only (a ruling

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as to which Wainer responded “Fair enough”).

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to the objection based on Wainer’s purported lack of access

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to Stone Candle documents, the Magistrate Judge overruled

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the objection in light of the corporate documents on file

With

With regard

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and because Wainer had admitted in open court that he is

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the Controller of Stone Candle, and that he is the CEO of

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Stone Candle.4

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produce all documents responsive to the subpoena at a

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continued examination of Wainer to occur on September 15,

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2017, at 9:30 a.m. in Courtroom 750.

The Magistrate Judge then ordered Wainer to

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On September 15, 2017, Wainer and counsel for Lumetique

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appeared for the continuation of the examination.

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Wainer again failed to bring with him any document responsive to

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the subpoena.

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the subpoena supposedly did not require the production of any

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documents other than the documents of Stone Distributors.

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Magistrate Judge rejected this argument on the basis of a plain

However,

Instead, Wainer made a frivolous argument that

The

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It now appears that Stone Distributors’ web address
routes potential customers to Stone Candle’s website. See
Declaration of Dayna Decker, Exhibit B, and Declaration of Ryan
T. Koczara, filed February 14, 2018, ¶ 5.
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After admitting in open court that he is the CEO of
Stone Candle, Wainer then denied in open court that he is the CEO
of Stone Candle.
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reading of the subpoena.

Counsel for Lumetique then indicated

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an intention to proceed by way of contempt.

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12.

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now appear to claim Wainer does not have and has never had

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possession, custody or control of any document responsive to the

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subpoena.

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made by Wainer and also appears inconsistent with public filings

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previously made by the corporations whose documents are

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In opposition to the Application, Wainer and Wainer’s son

This claim is inconsistent with admissions previously

involved.

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In the Application, Lumetique proposes a “Statement of

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Facts to be Certified by the Court.”

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proposed statement includes matters as to which the Magistrate

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Judge lacks personal knowledge and cannot properly take judicial

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notice, the Magistrate Judge has declined to adopt the proposed

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statement verbatim.

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the present certification.

Because Lumetique’s

Instead, the Magistrate Judge now issues

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DATED: February 15, 2018.

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/s/
CHARLES F. EICK
UNITED STATES MAGISTRATE JUDGE

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