Interlabservice, OOO v. Illumina, Inc., et al.

Filing 60

ORDER: Granting Defendant's #44 Motion to Dismiss; and Granting Defendant's #53 Motion for Terminating Sanctions. The final Pretrial Conference scheduled for October 6, 2017 is vacated. No later than November 3, 2017 defendant shall either file a dispositive motion on the counterclaims, seek dismissal of the remainder of the case, or submit a status report setting forth a proposed timetable for further proceedings and trial on the counterclaims. Signed by Magistrate Judge Karen S. Crawford on 9/26/2017. (knb)

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1 r\ L. m-U 17 SEP 26 PM I’SI I 2 3 filFRX, U.S. 0IRJWGT GOURT SautHfmN Dtittt'Sr f' >;.v; .i OKH:A 4 5 fit V-' As MR8JW 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 12 Case No.: 15cv2171-KSC INTERLABSERVICE, OOO, a Russian limited liability company, ORDER GRANTING DEFENDANT’S MOTION TO DISMISS [Doc. No. 44]; Plaintiff, 13 14 v. 15 ILLUMINA, INC., a Delaware corporation, 16 ORDER GRANTING DEFENDANT’S MOTION FOR TERMINATING SANCTIONS [Doc. No. 53] Defendant. 17 18 19 20 Before the Court are two motions submitted by defendant Illumina Inc.: (1) a 21 Motion to Dismiss Plaintiff’s Complaint pursuant to Federal Rule of Civil Procedure 22 41(b) [Doc. No. 44]; and (2) a Motion for Terminating Sanctions against plaintiff 23 pursuant to Federal Rule of Civil Procedure 37(b)(2) [Doc. No. 53]. Plaintiff has 24 opposed both of these Motions. [Doc. Nos. 46, 54.] Defendant also filed Replies to 25 plaintiffs opposing papers. [Doc. No. 47, 55.] 26 The Motion to Dismiss [Doc. No. 44] and Motion for Terminating Sanctions [Doc. 27 No. 53] both seek dismissal of plaintiffs Complaint for similar reasons -- plaintiffs 28 alleged failure to prosecute the case and participate in the litigation as ordered. As l 15cv2171-KSC 1 outlined more fully below, the standards for considering defendant’s Motions are similar. 2 In addition, the conduct alleged against plaintiff in both Motions are part of a pattern of 3 conduct that is relevant to both Motions. Therefore, the Court will consider the Motions 4 together. For the reasons outlined more fully below, the Court finds that defendant’s 5 Motion to Dismiss pursuant to Federal Rule of Civil Procedure 41(b) [Doc. No. 44] and 6 defendant’s Motion for Terminating Sanctions pursuant to Federal Rule of Civil 37(b)(2) 7 [Doc. No. 53] must be GRANTED. 8 Backsround 9 First Amended Complaint 10 Plaintiff’s First Amended Complaint includes causes of action for breach of 11 contract and common counts. Plaintiff Interlabservice, OOO, is a limited liability 12 company based in Russia, and defendant Illumina is a Delaware corporation with 13 headquarters in San Diego. [Doc. No. 20, at pp. 1-2.] 14 Plaintiff alleges in the First Amended Complaint that it entered into a series of 15 distributor agreements with defendant between 2011 and 2014. Under the terms of these 16 agreements, plaintiff believes defendant was required to provide warranty services to end 17 customers who purchased defendant's products through plaintiff. [Doc. No. 20, at pp. 318 4.] According to plaintiff, defendant was obligated under these agreements to reimburse 19 plaintiff for the expense of providing warranty services and replacement parts to end 20 customers. [Doc. No. 20, at pp. 4-8.] 21 Plaintiff alleges that defendant breached the distributor agreements by refusing to 22 honor its warranty obligations. As a result, plaintiff claims it was forced to provide 23 warranty services, supplies, and parts to customers without any compensation from 24 defendant. [Doc. No. 20, at pp. 5-6.] Plaintiffs claims for damages caused by 25 defendant’s alleged failure to meet its contractual obligations exceeds $500,000. [Doc. 26 No. 20, at p. 7.] 27 III 28 III 2 15cv2171-KSC 1 2 Defendant’s Counterclaims Asainst Plaintiff Defendant also filed a Cross-Complaint against plaintiff which the Court recently 3 construed as Counterclaims. [Doc. No. 2; Doc. No. 58, at pp. 9-13.] Defendant’s 4 Counterclaims include the following causes of action: (1) breach of written contract; (2) 5 breach of covenant of good faith and fair dealing; (3) breach of fiduciary duty; and (4) 6 intentional interference with economic advantage. [Doc. No. 2, at p. 1.] Defendant 7 alleges damages in excess of $75,000. [Doc. No. 2, at pp. 7-8.] 8 9 Defendant's Counterclaims generally allege that it entered into distributor agreements with plaintiff which required plaintiff to "use all commercially diligent efforts 10 to market, distribute and support" defendant's medical devices in Russia and to refrain 11 from undertaking any "unilateral activities" involving defendant's medical devices after 12 the agreement terminated. [Doc. No. 2, at p. 3.] In connection with the distributor 13 agreements, defendant alleges that it also issued a written power of attorney authorizing 14 plaintiff to act as its representative in Russia, so that plaintiff could register defendant's 15 products with the Russian government as required under Russian law. [Doc. No. 2, at 16 p. 3.] Defendant believes plaintiff was aware that defendant could not import, market, or 17 sell its medical devices in Russia without "continued registration." [Doc. No. 2, at p. 3.] 18 The Counterclaims further allege that the most recent distributor agreement 19 expired by its own terms on December 31, 2014. [Doc. No. 2, at p. 3.] Without 20 defendant's knowledge or consent, defendant alleges that plaintiff secretly and 21 maliciously de-registered defendant's medical devices in Russia sometime between 22 December 2014 and May 2015. [Doc. No. 2, at pp. 3-4.] Defendant's belief is that 23 plaintiff de-registered the medical devices in order to disrupt and interfere with 24 defendant's relationship with its new distributor and to retaliate against defendant for 25 allowing the final distributor agreement to terminate without renewal. [Doc. No. 2, at pp. 26 6-7.] As a result of this de-registration of medical devices, defendant claims it 27 experienced an "actual disruption" of its existing and potential business relationships and 28 its ability to market and sell its medical devices in Russia through its new distributor. 3 15cv2171-KSC 1 Defendant further claims that it incurred attorney's fees and other expenses to reinstate 2 registration of its medical devices. [Doc. No. 2, at pp. 4-7.] 3 Recently, the Court denied defendant’s Motion to Amend the Counterclaims and 4 File Supplemental Counterclaims. [Doc. No. 58.] The Court found that defendant’s 5 Motion to Amend was filed after the deadline expired and without a showing of good 6 cause to re-open the time for amendment. In addition, the record indicated plaintiff 7 would be prejudiced by the late amendments. [Doc. No. 58, at pp. 1-18.] Procedural History 8 9 Plaintiff’s original Complaint was filed in state court on April 29, 2015 and 10 removed to this Court on September 29, 2015, so the case has been pending for more than 11 two years. [Doc. No. 1.] Defendant’s Counterclaims against plaintiff were filed on 12 September 29, 2015. [Doc. No. 2.] Plaintiff then filed the operative First Amended 13 Complaint on November 5, 2015. [Doc. No. 20.] 14 A Scheduling Order was entered on Febmary 12, 2016. [Doc. No. 26.] The 15 Scheduling Order included a deadline of March 4, 2016 for amending or filing additional 16 pleadings and a deadline of June 30, 2016 for completing fact discovery. [Doc. No. 26, 17 at p. 1.] Expert discovery was scheduled to be completed on October 31, 2016. [Doc. 18 No. 26, at p. 3.] The final Pretrial Conference was set for April 21, 2017. [Doc. No. 26, 19 at p. 5.] 20 Next, on March 23, 2016, defendant filed a Motion for Posting of a Bond Pursuant 21 to California Code of Civil Procedure Section 1030. [Doc. No. 30.] “The purpose of 22 [Section 1030] is to enable a California resident sued by an out-of-state resident to secure 23 costs in light of the difficulty of enforcing a judgment for costs against a person who is 24 not within the court’s jurisdiction.” Yao v. Superior Court, 104 Cal.App.4th 327, 331 25 (2002) (internal citations and quotations omitted). Under California law, a defendant 26 seeking to impose a bond under Section 1030 has the burden to show there is a 27 “reasonable possibility” that it will prevail in the action and obtain judgment in its favor. 28 Baltayan v. Estate ofGetemyan, 90 Cal. App. 4th 1427,1432 (2001). 4 15cv2171-KSC In the Motion for Posting of a Bond Pursuant to California Code of Civil 1 2 Procedure Section 1030, defendant argued that plaintiff should be required to post a 3 security bond in the amount of $77,517.50, because plaintiff resides in Russia, is 4 essentially “immune from any California judgment,” and there is a reasonable possibility 5 defendant will prevail in the action. [Doc. No. 30-1, at pp. 12-13.] In Opposition to the 6 Motion, defendant submitted a Declaration by Dmitry Veryutin, a member of plaintiffs 7 board of directors who is responsible for legal affairs, stating in a conclusory fashion that 8 requiring plaintiff to post a large bond “would be [tantamount] to a terminating sanction.” 9 [Doc. No. 33-1, at p. 4.] According to Mr. Veryutin’s Declaration, plaintiff had “no 10 credit history” in the United States, and, as a result, would have to “deposit the full 11 amount of [the] bond in cash in lieu of surety.” [Doc. No. 33-1, at p. 4.] Mr. Veryutin’s 12 Declaration also states in conclusory fashion that plaintiff was “already taxed by being 13 forced to litigate[] a case on the other side of the world against a much bigger and much 14 better financed party in its own back yard.” [Doc. No. 33-1, at pp. 4-5.] Since defendant was able to make the required showing under California Civil 15 16 Code Section 1030 and plaintiff’s arguments in opposition to the bond were 17 unsubstantiated, the Court granted defendant’s Motion for Posting of a Bond. [Doc. No. 18 40, at pp. 9-13.] However, on reasonableness grounds, the Court significantly lowered 19 the amount of the bond or surety from $77,517.50 to $58,422.50. [Doc. No. 40, at pp. 20 13-19.] Plaintiff was ordered to post the bond by November 3, 2016. [Doc. No. 40, at p. 21 19.] However, plaintiff did not post any bond or surety. Nor did plaintiff seek 22 reconsideration or reduction of the amount of the bond based on the submission of 23 additional financial information supporting its contention that it would be unable to 24 litigate the case because of the bond requirement. On March 29, 2016, the parties consented to the jurisdiction of the undersigned 25 26 Magistrate Judge for all purposes. [Doc. No. 31.] The Consent specifically states that 27 III 28 III 5 15cv2171-KSC 1 the parties “voluntarily consent to have United States Magistrate Judge Karen S. 2 Crawford conduct any proceedings in the case, including trial, and order the entry of a 3 final judgment.” [Doc. No. 31.] 4 On June 1, 2016, with 29 days remaining to complete discovery, the parties filed a 5 Joint Motion to Extend the Discovery Cut-Off and Other Related Dates. [Doc. No. 35.] 6 In the Joint Motion, the parties represented they would be unable to complete discovery 7 by the June 30, 2016 deadline because of “logistical challenges.” [Doc. No. 35, at p. 3.] 8 They were in the process of translating and reviewing the 19,491 pages of documents that 9 had been produced in Russian and in English. [Doc. No. 35, at p. 3.] In addition, the 10 parties were trying to informally resolve discovery disputes as to where depositions 11 should take place, which depositions should proceed, and whether plaintiff should 12 produce additional “key documents.” [Doc. No. 35, at p. 3.] 13 The Court granted the parties’ Joint Motion to Extend the Discovery Cut-Off and 14 Other Related Dates and issued an Amended Scheduling Order. [Doc. No. 41.] The time 15 for completing discovery was extended from June 30,2016 to January 31, 2017. [Doc. 16 No. 41, at p. 1.] Expert discovery was to be completed by May 12, 2017. [Doc. No. 41, 17 at p. 3.] The final Pretrial Conference is currently scheduled for October 6, 2017. [Doc. 18 No. 41, atp. 5.] 19 On June 27, 2016, the parties filed two joint discovery motions. [Doc. Nos. 36 and 20 38.] In the parties’ first Joint Motion re Determination of Discovery Dispute, the parties 21 requested that the Court resolve disputes over the depositions of party witnesses. [Doc. 22 No. 36, at p. 2.] The most significant issue was the location for these depositions. 23 Defendant wanted party witnesses to be deposed in San Diego, because the parties 24 “contractually agreed” to litigate any disputes here. [Doc. No. 36, at p. 3.] For equitable 25 reasons, plaintiff wanted the depositions to be taken by videoconference and/or in a third 26 country, such as France or the United Kingdom. [Doc. No. 36, at pp. 10-11.] 27 28 Defendant argued that it would be prejudiced by videoconference depositions. According to defendant, credibility is a key issue in the case, and videoconference 6 15cv2171-KSC 1 depositions would make it more difficult to observe the demeanor of the deponents. In 2 addition, defendant argued that videoconference depositions would be “exceedingly 3 difficult” to conduct because of the need to examine the witnesses using “extensive 4 documentation” in multiple languages. [Doc. No. 36, at p. 3.] 5 Plaintiff acknowledged in the Joint Motion that it does not have any offices, 6 employees, or operations in the United States and that a “proper” deposition of its 7 officers could not take place in Russia. [Doc. No. 36, at pp. 11-12.] However, because 8 of the hardship and expense involved in having its executives obtain visas and travel to 9 San Diego, plaintiff argued that it was unfair to require that depositions take place here. 10 According to plaintiff, defendant “is a multinational corporation with offices in nine 11 countries,” so a trip to San Diego for a deposition would only be “one of the frequent 12 trips to the headquarters.” [Doc. No. 36, at p. 12.] Plaintiff, on the other hand, only has 13 offices in Russia. [Doc. No. 36, at p. 12.] As a result, it was plaintiffs view that 14 defendant wanted the depositions to take place in San Diego to “force” a settlement “on 15 unreasonable terms.” [Doc. No. 36, at p. 13.] Without support, plaintiff also claimed that 16 the parties’ contract was one of “adhesion drafted by [defendant].” [Doc. No. 36, at 17 p. 11.] Asa result, the contract included a “litigation clause,” so plaintiff had no choice 18 but to bring the case in California rather than in Russia “where most events took place 19 and most evidence is located.” [Doc. No. 36, at pp. 11-12.] Although defendant 20 removed the case to this Court, plaintiff filed the action in state court, because state court 21 rules require depositions to be taken near the deponent’s “place of abode” unless the 22 court orders otherwise. [Doc. No. 36, at p. 11.] 23 To ensure that the Court had authority over the witnesses and to protect the 24 integrity of the deposition process under the circumstances presented, the Court ordered 25 that all depositions of all party witnesses were to occur in person within the Southern 26 District of California. [Doc. No. 42, at p. 2.] However, defendant has represented that 27 the depositions of party witnesses were not completed. [Doc. No. 53-1, at pp. 2-5.] 28 III 7 15cv2171-KSC 1 In the parties’ second Joint Motion re Determination of Discovery Dispute, 2 plaintiff argued that defendant’s responses to certain Requests for Production of 3 Documents were inadequate. Plaintiff therefore sought an order compelling defendant to 4 produce all responsive documents. [Doc. No. 38, at pp. 1-13.] Based on the documents 5 sought in these requests, it was apparent that plaintiff’s objective was to undertake a 6 fishing expedition to attempt to uncover documents to support an untimely motion to 7 amend the First Amended Complaint, which would have significantly expanded 8 discovery and the scope of the case. In other words, plaintiff was looking for evidence to 9 support new allegations that defendant unlawfully terminated its distributor agreement 10 with plaintiff on or about December 31, 2014. The anticipated motion to amend would 11 have requested the addition of new parties and causes of action related to defendant’s 12 decision to retain a new distributor rather than renew its distributor agreement with 13 plaintiff. Any such motion to amend would have been filed more than a year after the 14 Complaint was filed in state court on April 29, 2015 [Doc. No. 1]; long after the March 4, 15 2016 deadline for amending the pleadings [Doc. No. 26, at 1]; and without good cause for 16 extending the deadline for amending the pleadings. [Doc. No. 38, at pp. 1-13; Doc. No. 17 43, at pp. 4-9.] As a result, the Court concluded that plaintiff was not entitled to an order 18 compelling defendant to produce additional documents, because plaintiff’s document 19 requests were overly broad and sought access to documents that were not relevant to the 20 matters at issue in the parties’ operative pleadings. [Doc. No. 43, at pp. 1-11.] Discussion 21 22 I. Defendant’s Rule 41(b) Motion to Dismiss Plaintiffs Complaint. 23 Citing Federal Rule of Civil Procedure 41(b), defendant argues in the Motion to 24 Dismiss that the Court should dismiss plaintiff’s Complaint with prejudice, because 25 plaintiff failed to comply with the Court’s Order of October 4, 2016 to post a bond 26 pursuant to California Civil Code Section 1030. [Doc. No. 44-1, at pp. 1-5; Doc. No. 40, 27 at pp. 9-13.] 28 III 8 15cv2171-KSC 1 Federal Rule of Civil Procedure 41(b) provides in part as follows: “If the plaintiff 2 fails to prosecute or to comply with these rules or a court order, a defendant may move to 3 dismiss the action or any claim against it. Unless the dismissal order states otherwise, a 4 dismissal under this subdivision (b)... operates as an adjudications on the merits.” 5 Fed.R.Civ.P. 41(b). “Dismissal, however, is so harsh a penalty it should be imposed as a 6 sanction only in extreme circumstances.” Dahl v. City of Huntington Beach, 84 F.3d 363, 7 366 (9th Cir. 1996). 8 II. Defendant’s Rule 37(b)(2) Motion for Terminating Sanctions Aeainst Plaintiff. In the Motion for Terminating Sanctions, defendant argues that the Court should 9 10 dismiss plaintiff’s Complaint pursuant to Federal Rule of Civil Procedure 37(b)(2), 11 because plaintiff willfully disregarded the Court’s Order to make party witnesses 12 available for deposition in San Diego.1 [Doc. No. 53-1, at pp. 2-7; Doc. No. 42, at p. 2.] 13 As a result, defendant argues that it has been prejudiced in its ability to prepare a defense, 14 because it has been unable “to undertake even basic discovery.” [Doc. No. 53-1, at p. 2.] Federal Rule of Civil Procedure 37(b)(2) states in part as follows: “If a party or a 15 16 party’s officer, director, or managing agent—or a witness designated under Rule 30(b)(b) 17 or 31(a)(4)—fails to obey an order to provide or permit discovery ... the court where the 18 action is pending may issue further just order. They may include the following: ... 19 (v) dismissing the action or proceeding in whole or in part....” Fed.R.Civ.P. 20 37(b)(2)(A)(v). 21 III 22 23 i 24 25 26 27 28 Defendant’s moving papers actually request that the Court “enter default” or a “default judgment” against plaintiff. [Doc. No. 53-1, at pp. 3,4, 7.] However, the Court constmes defendant’s request as one for dismissal of the Complaint, because defaults or default judgments are entered against responding parties and not against a party seeking affirmative relief. See, e.g., Fed.R.Civ.P. 55(a); Dreith v. Nu Image, Inc., 648 F.3d 779 (9th Cir. 2011). The Court was unable to locate controlling authority indicating it would be appropriate to enter a default or a default judgment against a plaintiff for failing to prosecute the case or as a terminating sanction for failing to participate in discovery. 9 15cv2171-KSC 1 III. Federal Rule of Civil Procedure 16(f)(1)(C). Although defendant’s moving papers do not rely on it, Federal Rule of Civil 2 3 Procedure 16(f) also provides in part as follows: “The court may issue any just order, 4 including those authorized by Rule 37(b)(2)(A) (ii)-(vii), if a party or its attorney: ... 5 (C) fails to obey a scheduling or other pretrial order.” Fed.R.Civ.P. 16(f)(1)(C). 6 As outlined more fully below, the Court notes that the evidence submitted in 7 support of defendant’s Motion for Terminating Sanctions shows that plaintiff disregarded 8 the Court’s Amended Scheduling Order filed on October 4, 2016 [Doc. No. 41] by 9 repeatedly declining to make its representatives available for depositions during the time 10 permitted for the completion of fact discovery. The Amended Scheduling Order provides 11 that: “All fact discovery shall be completed by all parties on or before January 31. 2017. 12 [Doc. No. 41, at p. 1.] 13 IV. 14 Relevant Factors. The standards for dismissal under the above-referenced rules are “basically the 15 same.” Malone v. U.S. Postal Serv., 833 F.2d 128, 130 (9th Cir. 1987). “A district court 16 must weigh five factors....: (1) the public’s interest in expeditious resolution of 17 litigation; (2) the court's need to manage its docket; (3) the risk of prejudice to the 18 defendants; (4) the public policy favoring disposition of cases on their merits; and (5) the 19 availability of less drastic sanctions.” Id. at 130 (internal quotations and citations 20 omitted). See also In re Phenylpropanolamine (PPA) Prod. Liab. Litig., 460 F.3d 1217, 21 1226 (9th Cir. 2006). “These factors are ‘not a series of conditions precedent before the 22 judge can do anything,’ but a ‘way for a district judge to think about what to do.’” Id. 23 24 25 quoting Valley Eng'rs Inc. v. Elec. Eng'g Co., 158 F.3d 1051, 1057 (9th Cir. 1998). 1. Expeditious Resolution/Docket Management. The public’s interest in expeditious resolution of litigation and the Court's need to 26 manage its docket are “usually reviewed” together. In re Phenylpropanolamine (PPA) 27 Prod. Liab. Litig., 460 F.3d at 1227. Pursuant to Federal Rule of Civil Procedure 1, the 28 public has an interest in securing “the just, speedy, and inexpensive determination of 10 15cv2171-KSC 1 every action and proceeding.” Fed.R.Civ.P. 1. “[Djelay in reaching the merits, whether 2 by way of settlement or adjudication, is costly in money, memory, manageability, and 3 confidence in the process.” In re Phenylpropanolamine (PPA) Prod. Liab. Litig., 460 4 F.3d at 1227. “[Dismissal serves the public interest in expeditious resolution of 5 litigation as well as the court's need to manage the docket when a plaintiffs 6 noncompliance has caused the action to come to a halt, thereby allowing the plaintiff, 7 rather than the court, to control the pace of the docket.” Id. at 1234. Under these 8 circumstances, “the public’s interest in expeditious resolution of litigation always favors 9 dismissal.” Yourish v. California Amplifier, 191 F.3d 983, 990 (9th Cir. 1999). 10 Here, the record indicates that plaintiff has essentially disregarded three separate 11 Orders of this Court, and, as a result, the litigation has been stalled for quite some time. 12 First, on October 4, 2016, after considering briefing from the parties on defendant’s 13 Motion for Posting of a Bond Pursuant to California Code of Civil Procedure Section 14 1030, the Court ordered plaintiff to post a bond in the amount of $58,422.50 within 30 15 days. [Doc. No. 40.] As outlined more fully above, plaintiff was ordered to post a 16 Section 1030 bond, because defendant was able to make the required showing and 17 plaintiff’s opposing arguments were unsubstantiated. 18 “Typically federal courts, either by rule or by case-to-case determination, follow 19 the fomm state's practice with regard to security for costs, as they did prior to the federal 20 rules; this is especially common when a non-resident party is involved.” Simulnet East 21 Associates v. Ramada Hotel Operating Co., 37 F.3d 573, 574 (9th Cir. 1994), citing 10 22 Wright, Miller & Kane, Federal Practice and Procedure: Civil 2nd § 2671. California 23 Civil Code Section 1030(d) states as follows: “If the plaintiff fails to file the undertaking 24 within the time allowed, the plaintiffs action or special proceeding shall be dismissed as 25 to the defendant in whose favor the order requiring the undertaking was made.” Cal. 26 Code Civ. Proc. 1030(d) (emphasis added). See also Pittman ex rel. L.P. v. Avish P'ship, 27 525 F. App'x 591, 594 (9th Cir. 2013) (finding that dismissal was appropriate under Rule 28 41(b) when the plaintiff failed to post a Section 1030 bond within the time allotted); AF li 15cv2171-KSC 1 Holdings LLC v. Trinh, No. C 12-02393 CRB, 2013 WL 677564, at 2 (N.D. Cal. Feb. 25, 2 2013) (dismissing complaint when plaintiff had not shown inability to post a Section 3 1030 bond in the amount ordered and stating there was “no compelling reason to let the 4 case languish” any longer). 5 The November 3, 2016 deadline for posting the bond has long since passed, and 6 plaintiff did not post a bond. Nor has plaintiff requested any relief from the bond 7 requirement, such as a lower bond amount or additional time to file a bond. In addition, 8 on December 27, 2016, plaintiff’s counsel represented to defense counsel that plaintiff 9 “does not plan to post the bond ordered by this Court.” [Doc. No. 44-2, at p. 2.] Then, in 10 Opposition to defendant’s Motion to Dismiss, plaintiff simply stated, without 11 explanation, that it “did fail to post the bond as ordered by this court.” [Doc. No. 46, at p. 12 2.] 13 Second, on October 5, 2016, the Court issued an Order requiring plaintiff to make 14 seven of its representatives available for deposition within the Southern District of 15 California. [Doc. No. 42, at p. 2.] In support of its Motion for Terminating Sanctions, 16 defendant submitted counsel’s Declaration and copies of e-mails indicating defendant 17 noticed the depositions of these witnesses and attempted a number of times to schedule 18 the depositions, but was advised by plaintiff’s counsel that the witnesses would not be 19 made available for their depositions. [Doc. No. 53-2, at pp. 2-3.] Plaintiff did not make 20 these witnesses available even after defense counsel indicated he would file the Motion 21 for Terminating Sanctions. [Doc. No. 53-2, at p. 3.] 22 Third, the Amended Scheduling Order filed on October 4, 2016 states that: “All 23 fact discovery shall be completed by all parties on or before January 31, 2017. [Doc. 24 No. 41, at p. 1.] Plaintiff disregarded the Amended Scheduling Order by allowing the 25 January 31, 2017 deadline to lapse without making its representatives available for 26 deposition even though it was ordered to do so and even though defense counsel made 27 repeated attempts to schedule the depositions. [Doc. No. 53-2, at pp. 2-3.] 28 III 12 15cv2171-KSC 1 In sum, the public’s interest in expeditious resolution of litigation and the Court's 2 need to manage the docket both favor dismissal under the circumstances presented. 3 Plaintiff’s failure to comply with three separate Orders of this Court have needlessly 4 caused this litigation to stall indefinitely with no viable means to proceed to a fair 5 determination of the case on the merits. 6 7 2. Prejudice to Defendant. “A defendant suffers prejudice if the plaintiffs actions impair the defendant's 8 ability to go to trial or threaten to interfere with the rightful decision of the case.” 9 Adriana Int'l Corp. v. Thoeren, 913 F.2d 1406, 1412 (9th Cir. 1990). “]F]ailure to 10 prosecute diligently is sufficient by itself to justify a dismissal, even in the absence of a 11 showing of actual prejudice to the defendant from the failure.” Anderson v. Air W., Inc., 12 542 F.2d 522, 524 (9th Cir. 1976). In other words, “[t]he law presumes injury from 13 unreasonable delay.” Id. The presumption can be rebutted with a non-frivolous excuse, 14 but this simply shifts the burden to the opponent to establish “at least some actual 15 prejudice.” In re Phenylpropanolamine (PPA) Prod. Liab. Litig., 460 F.3d at 1228. 16 Actual prejudice can, of course, be shown by a party’s failure or refusal to appear 17 for depositions. Similar to the circumstances at issue in this case, the plaintiffs in Hyde & 18 Drath v. Baker, 24 F.3d 1162 (9th Cir. 1994), were Hong Kong corporations who sued the 19 defendants in the Northern District of California. Id. at 1165. When the District Court 20 ordered plaintiffs’ depositions to occur by a certain date, the defendants attempted 21 without success to make arrangements to conduct the depositions in Hong Kong. Id. The 22 defendants moved to compel, and the District Court ordered the depositions to take place 23 in the Northern District of California where the plaintiffs filed suit, so that the District 24 Court “could oversee and enforce the deposition schedule.” Id. Despite the imposition of 25 monetary sanctions, the plaintiffs repeatedly failed to appear for their depositions, so the 26 District Court dismissed the case. Id. at 1165-1166. On appeal, the plaintiffs argued it 27 was error to order them to travel so far for their depositions. Id. at 1166. The Ninth 28 Circuit disagreed, noting that the plaintiff’s filed suit in the Northern District of 13 15cv2171-KSC 1 California “and should therefore expect to have to appear there.” Id. In addition, the 2 Ninth Circuit agreed with defendants that they were prejudiced, because they were 3 “completely unable” to depose plaintiffs’ representatives. Id. at 1167. Prejudice was 4 apparent because the defendant “faced a fast approaching court date, a lack of crucial 5 information, and an inability to construct a defense.” Id. See also Adriana Int'l Corp. v. 6 Thoeren, 913 F.2d at 1412 (finding prejudice based on repeated failure of the plaintiff to 7 appear at scheduled dispositions and produce documents). 8 Here, plaintiff’s failure to comply with the Court’s Amended Scheduling Order 9 and the Order requiring it to make its witnesses available for deposition have impaired 10 defendant’s ability to prepare a defense and meet pending pre-trial deadlines, because its 11 theory of the case depends on its ability to depose plaintiff’s representatives. In a 12 Declaration submitted in support of defendant’s request for an order compelling the 13 depositions of plaintiff’s representatives, defense counsel represented as follows: 14 “[Defendant] believes this case will turn on the credibility of [plaintiff’s] witnesses, who 15 have denied that a critical agreement was made between the parties despite [defendant’s] 16 possession of contrary evidence.” [Doc. No. 36-1, at p. 2.] All of plaintiff’s 17 representatives that defendant sought to depose had direct knowledge of the parties’ 18 commercial dealings over the course of their relationship. [Doc. No. 36, at pp. 5, 7-8; 19 Doc. No. 36-1, at pp. 2-3.] In addition, the parties’ business relationship ended in 2014 20 [Doc. No. 20, at pp. 3-4], almost three years ago. As defendant contends, “[v]aluable 21 time has been lost,” so that defendant faces a significant risk that memories have faded 22 over time. [Doc. No. 53-1, at p. 4.] Accordingly, the prejudice factor weighs in favor of 23 dismissal. 24 25 3. Policy Favorine Disposition of Cases on the Merits. Typically, the policy favoring disposition of cases on the merits weighs against 26 dismissal. In re Phenylpropanolamine (PPA) Prod. Liab. Litig., 460 F.3d at 1228. On 27 the other hand, this policy “‘lends little support’ to a party whose responsibility it is to 28 move a case toward disposition on the merits but whose conduct impedes progress in that 14 15cv2171-KSC 1 direction.” Id. Plaintiffs are responsible for moving the case towards disposition on the 2 merits at a reasonable pace and for identifying convincing reasons why it is important for 3 the case to be resolved on its merits, but this cannot be accomplished by the use of 4 evasive or dilatory tactics. In re Eisen, 31 F.3d 1447, 1454 (9th Cir. 1994). Here, plaintiff has not fulfilled its responsibility to move the case toward a 5 6 disposition on the merits at a reasonable pace. Rather, as outlined above, plaintiff 7 disregarded three separate Court Orders, which caused the case to come to a virtual 8 standstill, making a disposition on the merits of its Complaint impossible. From the 9 information made available to the Court, it is unclear whether plaintiff is being evasive 10 and/or dilatory or has simply made a decision to abandon the litigation. For example, in 11 connection with the Motion for Terminating Sanctions, defense counsel submitted 12 portions of e-mail chains as exhibits to his Declaration, which strongly suggest plaintiff 13 has simply decided not to pursue the litigation. These e-mails began after the Court’s 14 Order of October 5, 2016, compelling plaintiff to make its representatives available for 15 deposition in San Diego. [Doc. No. 42.] On October 5,2016, defense counsel requested 16 available deposition dates from plaintiff’s counsel, who apparently did not respond. 17 [Doc. No. 53-2, at p. 10.] Defense counsel then sent a follow-up e-mail on October 17, 18 2016, and plaintiff’s counsel responded that his client had been “incommunicado.” [Doc. 19 No. 53-2, at pp. 9-10; Doc. No. 53-2, at p. 2.] Following another follow-up e-mail on 20 October 24, 2016 by defense counsel, plaintiff’s counsel responded as follows: “Despite 21 my advice they do not want to deposit costs or appear for deposition. They believe 22 (against my opinion) that the court is politically motivated and a [fair] trial could not be 23 achieved. They want to try in different jurisdiction such as Russia.” [Doc. No. 53-2, at 24 p. 7.] 25 Defense counsel continued to send follow-up e-mails as late as February 27, 2017, 26 after the time to complete discovery expired on January 31, 2017. [Doc. No. 53-2, at 27 pp. 3,17; Doc. No. 41, at p. 2.] In a response dated February 3, 2017, plaintiff’s counsel 28 stated as follows: “As to the depositions, I asked client to comply with the order to 15 15cv2171-KSC 1 appear for deposition several times now.” [Doc. No. 53-2, at p. 17.] On February 13, 2 2017, plaintiffs counsel simply responded, “Let me ask again.” [Doc. No. 53-2, at p. 3 17.] Soon thereafter, defense counsel filed the Motion for Terminating Sanctions. [Doc. 4 No. 53.] Based on the record before the Court, defendant’s filing of the Motion for 5 Terminating Sanctions did not motivate plaintiff to take any steps to move the case 6 toward a resolution on the merits. As far as the Court is aware, plaintiff did not make a 7 single witness available for deposition as ordered. 8 On the other hand, plaintiff did file an Opposition to defendant’s Motion to 9 Dismiss [Doc. No. 46] and an Opposition to defendant’s Motion for Terminating 10 Sanctions [Doc. No. 54]. However, plaintiff’s Oppositions could only be characterized as 11 perfunctory. Each barely contains two pages of undeveloped arguments, some of which 12 are irrelevant under controlling precedents. For example, plaintiff’s Opposition to the 13 Motion to Dismiss admits that plaintiff did fail to post the bond as ordered but argues in 14 conclusory fashion that dismissal is “too drastic” and that the Court is biased against “a 15 powerful domestic player.” [Doc. No. 46, at p. 2.] Plaintiff’s bald assertions in this 16 regard are unsupported. Similarly, plaintiff’s Opposition to the Motion for Terminating 17 Sanctions merely states in conclusory fashion that plaintiff did not “willfully” disregard 18 the Court’s Order, and plaintiff did not indicate “in any way that it does not intend to 19 participate in this litigation.” [Doc. No. 54, at p. 2.] However, for the reasons outlined 20 herein, the record belies both of these self-serving, unsupported arguments. Likewise, 21 defendant’s previous Motion for Posting of a Bond was thinly opposed by plaintiff with 22 conclusory arguments and an unsupported, conclusory declaration by counsel. [Doc. No. 23 33, at pp. 1-10; Doc. No. 33-1, at pp. 1-5.] 24 Tellingly, plaintiff’s Opposition to defendant’s Motion to Dismiss and Opposition 25 to the Motion for Terminating Sanctions do not explain why plaintiff completely 26 disregarded the Court’s Amended Scheduling Order; the Court’s Order to post a bond; 27 and the Court’s Order to make its representatives available for deposition. Therefore, 28 based on the facts and circumstances presented, the Court finds that plaintiff has not 16 15cv2171-KSC 1 fulfilled its duty to move the case towards a disposition on the merits at a reasonable 2 pace. Accordingly, based on the record, the Court can only conclude that plaintiff’s 3 inaction and failure to comply with the Court’s Orders have so impeded the progress of 4 the case that the preference for deciding cases on the merits weighs in favor of dismissal. 5 4. 6 In opposition to defendant’s Motions, plaintiff asserts, without support, that it 1 Feasibility of Less Drastic Sanctions. “believes that outright dismissal is too drastic of the measure.” [Doc. No. 46, at p. 2; 8 Doc. No. 54, at p. 2.] Defendant argues that less drastic sanctions would be useless, 9 because plaintiff has already been given sufficient warning that its decision to disregard 10 the Court’s Orders by failing to post a bond and by failing to make its representatives 11 12 available for deposition would likely result in a dismissal. [Doc. No. 44-1, at p. 5.] Generally, a District Court must consider the feasibility of less drastic sanctions 13 before actually dismissing a case. Adriana Int'l Corp. v. Thoeren, 913 F.2d at 1413. 14 “There is no requirement that every single alternate remedy be examined by the court 15 before the sanction of dismissal is appropriate. The reasonable exploration of possible 16 and meaningful alternatives is all that is required.” Anderson v. Air W., Inc., 542 F.2d at 17 525. When less drastic sanctions have already been imposed and/or the court has 18 previously warned the plaintiff of the possibility of a dismissal but these measures have 19 had little or no effect, the “consideration of alternatives” requirement has been satisfied. 20 In re Phenylpropanolamine (PPA) Prod. Liab. Litig., 460 F.3d at 1229. On the other 21 hand, “it is not always necessary for the court to impose less serious sanctions first, or to 22 give any explicit warning.” Valley Eng’rslnc. v. Elec. Eng'g Co., 158 F.3d 1051, 1057 23 (9th Cir. 1998). For example, the Ninth Circuit has “rejected the argument that an 24 express warning regarding the possibility of dismissal is a prerequisite to a Rule 41(b) 25 dismissal when dismissal follows a noticed motion under Rule 41(b).” In re Eisen, 31 26 F.3d at 1455. 27 Under the circumstances, the Court has no reason to believe that less drastic 28 sanctions would cause plaintiff to change course at this late date in the proceedings. As 17 15cv2171-KSC 1 outlined above, plaintiff disregarded and made no effort whatsoever to comply with three 2 separate Orders by this Court, so ordering monetary sanctions would be useless. Having 3 disregarded the Amended Scheduling Order, the time for fact and expert discovery 4 expired quite some time ago, and the above-described e-mail exchange between counsel 5 strongly indicate the absence of good cause to re-open discovery. The “good cause” 6 standard primarily focuses on a party’s diligence in complying with Court-ordered 7 deadlines. “Rule 16(b)'s ‘good cause’ standard primarily considers the diligence of the 8 party seeking the amendment. The district court may modify the pretrial schedule ‘if it 9 cannot reasonably be met despite the diligence of the party seeking the extension.’” 10 Johnson v. Mammoth Recreations, Inc., 975 F.2d 604, 609 (9th Cir. 1992). The e-mails 11 described above, as well as plaintiff’s nominal responses to defendant’s Motions and its 12 failure to comply with three separate Court orders, all serve as convincing evidence that 13 plaintiff has not been diligent and has instead decided, for its own reasons, not to 14 vigorously pursue the case here. As a result, imposing less drastic sanctions would be 15 pointless. 16 17 5. Unreasonable Delay. “A Rule 41(b) dismissal “must be supported by a showing of unreasonable delay.’” 18 Omstead v. Dell, Inc., 594 F.3d 1081,1084 (9th Cir. 2010), quoting Henderson v. 19 Duncan, 779 F.2d 1421,1423 (9th Cir. 1986). The delay here is unreasonable. First, 20 plaintiff filed the case more than two years ago on April 29, 2015. [Doc. No. 1-2, at p. 21 3.] Second, for reasons that have not been explained in a satisfactory manner, plaintiff 22 caused the litigation to stall indefinitely when it failed to comply with the Court’s Order 23 to Post a Bond and the Order to make its representatives available for depositions. 24 Second, as outlined more fully above, from October 4, 2016, when the Amended 25 Scheduling Order was entered to allow the parties additional time to complete fact 26 discovery, through January 31, 2017, when that time expired, plaintiff simply let the 27 clock run with no effort whatsoever to make any its representatives available for 28 deposition or to take any steps to move the case toward a determination on the merits. 18 15cv2171-KSC 1 2 6. Willfulness. Bad faith, or Fault. “Only ‘willfulness, bad faith, and fault’ justify terminating sanctions.” 3 Connecticut Gen. Life Ins. Co. v. New Images of Beverly Hills, 482 F.3d 1091, 1096 (9th 4 Cir. 2007). “Disobedient conduct not shown to be outside the control of the litigant is 5 sufficient to demonstrate the willfulness, bad faith, or fault.” Hyde & Draft v. Baker, 24 6 F.3d at 1167. Particularly given the e-mail exchange discussed above, the Court is 7 convinced that plaintiff’s failure to comply with the Court’s Orders was willful. 8 Arguably, if plaintiff was financially or otherwise unable to post a bond or to make its 9 representatives available here for their depositions in the time permitted by the deadline 10 set forth in the Amended Scheduling Order, it would have submitted persuasive evidence 11 to support its position, and the Court would have responded accordingly. However, 12 plaintiff did not submit any persuasive evidence to that effect and then simply and 13 repeatedly chose not to comply with the Court’s Orders. In addition, plaintiff chose not 14 to comply with the Court’s Orders despite a number of attempts by defense counsel, and 15 even by its own counsel, to urge plaintiff to take action to protect its own interests in the 16 case. Therefore, based on the record, this Court can only conclude plaintiff’s failure to 17 comply with the Court’s Orders was willful. 18 In sum, dismissal for failure to prosecute is appropriate under Rule 41(b), because 19 plaintiff caused an unreasonable delay in this case by disregarding three separate Court 20 Orders, including an Order to post a bond; an Order to make its representatives available 21 for deposition; and an Order requiring the completion of discovery no later than 22 January 31, 2017. Since one of these Orders is an Amended Scheduling Order, dismissal 23 is also appropriate under Federal Rule of Civil Procedure 16(f)(1)(C). In addition, 24 dismissal is appropriate under Rule 41(b), because a plaintiff is responsible for moving a 25 case towards a resolution on the merits at a reasonable pace, but plaintiff in this case has 26 not taken any significant steps to do so since approximately October 2016. Asa result, 27 the case has essentially been stalled since then, resulting in an unreasonable delay. 28 Dismissal is appropriate under Rule 37(b)(2) as well, because plaintiff willfully 19 15cv2171-KSC 1 disregarded a discovery Order requiring it to make certain of its representatives available 2 for deposition. Finally, dismissal is justified under Rule 41(b) and Rule 37(b)(2), because 3 the record shows that all of the factors set forth by the Ninth Circuit in Malone v. U.S. 4 Postal Service, 833 F.2d at 130, weigh in favor of dismissal. 5 Conclusion 6 Based on the foregoing, IT IS HEREBY ORDERED that: 7 1. 8 9 10 11 Defendant’s Motion to Dismiss for failure to prosecute pursuant to Federal Rule of Civil Procedure is GRANTED. [Doc. No. 44.] 2. Defendant’s Motion for Terminating Sanctions pursuant to Federal Rule of Civil Procedure 37(b)(2) is GRANTED. [Doc. No. 53.] 3. The final Pretrial Conference scheduled for October 6, 2017 is VACATED 12 based on the current status of the case. 13 4. No later than November 3, 2017. defendant shall either file a dispositive 14 motion on the counterclaims, seek dismissal of the remainder of the case, or submit a 15 status report setting forth a proposed timetable for further proceedings and trial on the 16 counterclaims. 17 IT IS SO ORDERED. Dated: September 2^?. 2017 18 19 20 Hon. Karen'S. Crawford United States Magistrate Judge 21 22 23 24 25 26 27 28 20 15cv2171-KSC

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