Mitchell Group USA, LLC et al v. Udeh et al

Filing 117

ORDER terminating 111 Motion for Judgment on Partial Findings; ORDER re 100 Contempt Certification --- By the ATTACHED WRITTEN MEMORANDUM AND ORDER ("M&O"), this Court explains the sanctions imposed at the Order to Show Cause Hearing held on August 20, 2015. At that time and by this Order, this Court adopts the magistrate judge's recommendations made in his Contempt Certification Order of August 12, 2015 and hereby finds the Timite Defendants, Timite and Attorney Pablo E. Bustos in civil contempt of this Court's lawful authority with respect to the court orders referenced in the M&O. Accordingly, the Timite Defendants are precluded from offering any evidence in any future proceedings in this case that includes in formation that heretofore should have been produced. The Timite Defendants were further ordered to remit payment of $16,250.00 to plaintiffs by September 20, 2015 for their repeated failures to produce the requested and court-ordered discovery. Bustos was sanctioned with the imposition of a $500.00 fine payable to the Court by September 20, 2015. Bustos' motion to be relieved as counsel for the Timite Defendants is granted. This Electronic Order and Attached M&O are effective nunc pro tunc to August 20, 2015. SO ORDERED by Judge Dora Lizette Irizarry on 11/5/2015. (Irizarry, Dora)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
---------------------------------------------------------- x
MITCHELL GROUP USA, LLC and
:
GAPARDIS HEALTH AND BEAUTY, INC., :
:
Plaintiffs,
:
:
-against:
:
NKEM UDEH, individually and d/b/a,
:
“BEAUTY RESOURCE”; TIMITE & SON
:
BEAUTY SUPPLIES, INC.; WORLD
:
BEAUTY DISTRIBUTOR, INC.; AFRICAN & :
CARIBBEAN MARKET, INC.; and JOHN
:
DOES 1-10; and UNKNOWN ENTITIES 1-10, :
:
Defendants.
:
---------------------------------------------------------- x

MEMORANDUM & ORDER
14-CV-5745 (DLI)(JO)

DORA L. IRIZARRY, United States District Judge:
On August 12, 2015, the Honorable James Orenstein, U.S.M.J., recommended that
Sahendou Timite (“Timite”), the Timite Defendants 1 and their attorney, Pablo E. Bustos, Esq.
(“Bustos”), be held in civil contempt for failure to: (1) appear in court; (2) comply with
discovery orders; and (3) pay the outstanding fees and fines the Court previously imposed. The
magistrate judge further recommended that: (1) the Timite Defendants and Timite, jointly and
severally, be ordered to pay the outstanding fine of $250.00 for each day of non-compliance with
discovery orders since June 16, 2015; (2) the Court strike the Timite Defendants’ Answer (Dkt.
Entry No. 89) and permit plaintiffs to seek a default judgment; (3) the Court sanction the Timite
Defendants by precluding their submission of any evidence in this matter that includes
information that should have heretofore been produced; (4) the Court order the Timite
Defendants to reimburse plaintiffs for the reasonable attorneys’ fees and costs associated with
their counsels’ appearances at the August 7 and 11, 2015 conferences; and (5) the Court sanction
1

The Timite Defendants refer to Timite & Son Beauty Supplies, Inc. and World Beauty Distributor, Inc.

Bustos by imposing a monetary fine of $500.00. At the Order to Show Cause hearing held on
August 20, 2015, this Court adopted the magistrate judge’s recommendations in their entirety.
This Memorandum and Order explains the reasoning for the Court’s decision.
BACKGROUND
I.

The Complaint
Plaintiffs’ second amended complaint includes the following claims: (i) willful trademark

counterfeiting and infringement in violation of Section 32 of the Lanham Act, 15 U.S.C. § 1114;
(ii) federal trademark infringement through the sale of materially different goods; (iii) unfair
competition under federal law 15 U.S.C. § 1125; (iv) unfair competition in violation of New
York State common law; and (v) trademark infringement in violation of the New York State
common law. (See generally Second Amended Complaint (“Second Am. Compl.”), Dkt. Entry
No. 55.)
II.

Parties
Plaintiffs brought this action to redress past and ongoing loss and damages sustained as a

result of purported trademark counterfeiting and infringement by Defendant Nkem Udeh
(“Udeh”). Plaintiffs are the owners and/or exclusive licensees of the various federal and state
trademark registrations at issue in this suit. (Second Am. Compl. at ¶ 3.) These beauty products
include: Neoprosone, Lemonvate, Fair & White; and Paris Fair & White. 2 (Id. at ¶¶ 18, 19.)
Udeh is the owner, controlling force and/or operator of Beauty Resources, located at 3311
Church Avenue, Brooklyn New York 11203. (Id. at ¶ 4.) Timite is the owner, controlling force
and/or operator of the Timite Defendants, which include Timite & Son Beauty Supplies, Inc. and
World Beauty Distributor, Inc., having their principal places of business at 1970 Adam Clayton
2

NEOPROSONE (Reg. No. 3,108,357); LEMONVATE (Reg. No. 3,457,390), FAIR & WHITE (Reg. No.
2,839,374), and PARIS FAIR & WHITE (Reg. No. 2,497,918).

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Powell Boulevard and 1964 7th Avenue, New York, New York 10026, respectively (Id. at ¶ 5;
Minute Entry for Status Conference Held on 05/12/2015, Dkt. Entry No. 70.) The Timite
Defendants supply defendant Udeh with counterfeit Lemonvate cream. (Second Am. Compl. at
¶ 93.)
III.

Plaintiff’s Investigation and Defendants’ Infringement Activities
Plaintiffs contend that they extensively have advertised, promoted and otherwise used

their marks in commerce throughout the United States, including within the Eastern District of
New York, and extensively have used their respective marks in interstate commerce. (Second
Am. Compl. at ¶ 21.) Consequently, they have acquired considerable and valuable goodwill and
wide-scale recognition for their mark. (Id. at ¶¶ 22-24.)
Plaintiffs allege that defendants 3 acted in a collective manner to commit acts of
trademark counterfeiting and trademark infringement under the Lanham Act, 15 U.S.C. § 1051 et
seq., as well as state and common law unfair competition in this District. Plaintiffs accuse
defendants of selling, offering for sale, distributing, promoting and advertising merchandise
bearing counterfeits and infringements of the NEOPROSONE, LEMONVATE, and FAIR &
WHITE marks. (Id. at ¶ 25.)
Plaintiffs hired Private Investigator Brad Cole (“Cole”), of Diogenes LLC, to investigate
defendants’ sale of counterfeit goods bearing plaintiffs’ trademarks and replicating plaintiffs’
packaging. As part of his investigation, Cole visited defendants’ stores and purchased products
bearing plaintiffs’ NEOPROSONE, LEMONVATE, and FAIR & WHITE marks. (See Affidavit
of Brad Cole (“Cole Aff.”) ¶¶ 3-7, 10-12, Dkt. Entry No. 24-1.) Cole also compiled a Field
3

The identities of “John Does” 1-10 and Unknown Entities 1-10 currently are not known to plaintiffs, but,
are believed by plaintiffs to be associated with defendants, are additional moving, active and conscious forces
behind defendant's infringing conduct, as well as suppliers and others in the chain of distribution. (Second Am.
Compl. at ¶ 7.) Plaintiffs require discovery and further investigation to identify them and move to amend the
pleadings accordingly. (Id.)

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Authentication Matrix highlighting these differences. (See First Amended Complaint (“First
Am. Compl.”), Ex. C, Dkt. Entry No. 55-1.) The images submitted by plaintiffs clearly show the
replication of plaintiffs’ trademarks and plaintiffs’ packaging.

(See Id.)

Based on this

information, plaintiffs contend that they have established that defendants are engaged in selling
counterfeit products under plaintiffs’ marks. (Second Am. Compl. at ¶¶ 43, 44, 52.)
Plaintiffs also accuse defendants of selling gray market products, in addition to the
aforementioned counterfeit products.

(Second Am. Compl. at ¶ 14.)

These gray market

products, which are manufactured outside the U.S. and originally were intended for sale outside
the U.S., are being sold under the FAIR AND WHITE and/or PARIS FAIR & WHITE marks in
this District. (Id. at ¶¶ 50, 51.) These gray market goods are materially different from the
genuine product sold by plaintiffs under the FAIR & WHITE and/or PARIS FAIR & WHITE
marks in the United States. (Id.)
PROCEDURAL HISTORY
On June 16, 2015, this Court held a hearing wherein it adjudged the Timite Defendants in
civil contempt of the Court’s lawful authority. (See Minute Entry for Show Cause Hearing held
06/16/2015.) At the conclusion of that hearing, the Court specifically affirmed the magistrate
judge’s June 2, 2015 Order:

(1) compelling the Timite Defendants’ compliance with all

outstanding discovery requests under threat of sanctions; and (2) ordering the reimbursement of
fees and costs in the total amount of $9,064.32, with the possibility of an upward revision of that
amount pursuant to plaintiffs’ service of a supplemental bill of costs by no later than June 9,
2015. (Id.) Plaintiffs timely calculated the supplemental bill of costs to be $6,789.50 and the
Court ordered the Timite Defendants to remit payment. (See Objection to Supplemental Fee
Request and Request for An Extension of time to Pay Last Bill of Costs (“Obj. to Supp. Fee

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Request”), Dkt. Entry No. 87.) The Court further ordered the Timite Defendants to answer
plaintiffs’ second amended complaint by June 19, 2015. In order to compel compliance with all
Court orders, the Court ordered the imposition of a $250.00 fine for each day of non-compliance.
(See Minute Entry for Show Cause Hearing held 06/16/2015.) Finally, the Court directed Pablo
Bustos to file a letter by July 16, 2015 stating whether he planned to continue representing the
Timite Defendants. (Id.)
On June 19, 2015, plaintiffs reported that the Timite Defendants had not complied with
the aforementioned Orders by failing to produce all of the requested discovery or make all of the
required payments. (See generally Letter Reporting Timite Defendants [sic] Failure to Comply,
Dkt. Entry No. 90.) While plaintiffs conceded that the Timite Defendants had provided plaintiffs
with five sets of sales records reflecting the Timite Defendants’ wholesale customers’ purchases
for the first and second quarters of 2015, plaintiffs argued that this submission did not cure the
overall deficiency of the Timite Defendants’ document production. (Id. at 2.)
Bustos failed to meet his deadline and informed the magistrate judge by letter dated July
20, 2015 that he agreed to remain as counsel for the Timite Defendants but would refer this case
to another attorney if settlement could not be reached and the case went to trial. (Status Report
by Timite & Son Beauty Supplies, Inc., Dkt. Entry No. 93.) Bustos also claimed in the letter that
the Timite Defendants had provided a voluminous amount of discovery to plaintiffs and had
virtually exhausted the materials in their possession. (Id.) However, on that same date, plaintiffs
requested a status conference because the Timite Defendants neither had completed the required
discovery nor had paid all of the outstanding fees and costs. (See generally Status Report and
Request for Status Conference (“Plaintiffs’ Status Report”), Dkt. Entry No. 94.) Plaintiffs
further argued that, while the Timite Defendants produced both 2013 and 2014 wholesale sales

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records, a substantial amount of discovery remained outstanding. (Id.) Plaintiffs specifically
argued that all documents provided thus far by the Timite Defendants related exclusively to its
wholesale operation through World Beauty Distributor, Inc. Plaintiffs had not received any
discovery from the Timite Defendants’ retail entity, Timite & Son Beauty Supplies, Inc. (Id.)
On July 21, 2015, the magistrate judge scheduled a status conference for August 7, 2015
and ordered the appearance of the Timite Defendants either through their attorney of record or
their owner. (Scheduling Order, 07/21/2015; Minute Entry for Status Conference Held on
08/07/2015, Dkt. Entry No. 95.) Neither the Timite Defendants nor their attorney of record
appeared at the conference on August 7, 2015, nor did they ask/ to be excused or to reschedule
the conference. (See Minute Entry for Status Conference Held on 08/07/2015.) The magistrate
judge then scheduled a conference for August 11, 2015 at 10:00 a.m., directing both Timite and
Bustos to appear in person to show cause why the magistrate judge should not recommend that
this Court impose sanctions against each for their failure to appear. (Transcript of August 7,
2015 Proceedings at 3, Dkt. Entry No. 97.)
On August 11, 2015, both Timite and Bustos failed to appear physically. (See Minute
Entry for Status Conference Held on 08/11/2015, Dkt. Entry No. 96.) Instead, Bustos called into
the conference over forty-five minutes after the designated start time. (Id.) During the course of
that proceeding, plaintiffs’ counsel informed the magistrate judge that the Timite Defendants
again failed to: (1) produce all of the required discovery; (2) pay all of the outstanding costs and
fees attendant to the ordered reimbursement; and (3) pay the sanctions of $250.00 per day as
previously ordered by this Court. (Transcript of Civil Cause for Status Conference on August
11, 2015 (“August 11th SC Transcript”) at 4:6-10:5, Dkt. Entry No. 99.)
Bustos claimed he did not have advance notice of the conference. (Id. at 13:8-13.) The

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magistrate judge advised him that the scheduling order had been issued electronically at the same
email address provided by Bustos for the purpose of receiving notifications of electronic filings.
(Id. at 13:14-14:5.) Moreover, Bustos had called in response to an email sent to him that day
from the magistrate judge’s chambers. (Id. at 13:8-9.) Bustos confirmed that the magistrate
judge had his proper email address. (Id. at 13:2-25; 14:17-20.)
This Court held a hearing on August 20, 2015 pursuant to its Order issued August 12,
2015 directing the Timite Defendants and Bustos to show cause why they should not be held in
contempt and sanctioned for their continued failure to comply with this Court’s and the
magistrate judge’s Orders. (See Minute Entry for Show Cause Hearing Held on 08/20/2015.)
During the hearing, the Court found Bustos’ explanations as to why he and Timite did not appear
at the August 7, 2015 and August 11, 2015 hearings to strain credulity. Moreover, the Court
admonished Timite for his failure to comply with the numerous discovery orders and deemed his
conduct throughout the course of the litigation to be obstructionist. Notwithstanding Timite’s
representations that he had made attempts to comply with the discovery orders, the Court
adopted the magistrate judge’s recommendations in their entirety. (Id.) Specifically, the Court
held Timite, the Timite Defendants and Bustos in civil contempt for failure to: (1) appear in
court as directed; (2) comply with discovery orders; and (3) pay the outstanding fees and fines
imposed pursuant to the June 16, 2015 Court . The Court advised the parties that further
penalties would be assessed against the Timite Defendants and Bustos if they failed to comply
with the Court’s Order. Additionally, the Court struck the Timite Defendants’ answer to the
second amended complaint and permitted plaintiffs to move for default judgment before the
magistrate judge. (Id.)
Bustos renewed his request to be removed as counsel during the August 20, 2015 hearing.

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The Court is troubled by Bustos’ vacillation between qualified representation of the Timite
Defendants and a newfound desire to withdraw as counsel. This Court’s Order of June 16, 2015
accorded Bustos ample time to determine whether he would remain as Timite Defendants’
counsel. In a July 20, 2015 letter to the Court, Bustos indicated his intention to remain as
counsel provided the matter did not proceed to trial. (See Status Report by Timite & Son Beauty
Supplies, Inc., Dkt. Entry No. 93.) While Bustos’ articulated reasons for this reversal of position
are insufficient to satisfy the standards for withdrawal of counsel set forth in U.S. Dist. Ct. Rules
S.D.N.Y. & E.D.N.Y., Civil Rule 1.4, based upon Bustos’ representations of intransigence on the
part of the Timite Defendants, against his advice, the Court granted Bustos’ request to be
relieved as counsel. (See Minute Entry for Show Cause Hearing Held on 08/20/2015.)
DISCUSSION
Since the inception of this matter, the Timite Defendants’ demonstrated recalcitrance
toward this Court’s lawful authority permits no other conclusion than that it is willful and
deliberate. Both Timite’s and Bustos’ repeated failures to appear before this Court at scheduled
status conferences throughout the pendency of this litigation have unduly delayed the resolution
of this action and wasted precious Court time and resources. For the reasons set forth below, the
Court finds the Timite Defendants, Timite and their counsel, Bustos, in civil contempt of court
for violating the Court’s Orders.
I.

Standard for Civil Contempt
The power to punish litigants for contempt is inherent in all courts, and “[a] sanction

imposed to compel obedience to a lawful court order or to provide compensation to a
complaining party is civil” in nature. New York State Nat. Organization for Women v. Terry, 886
F.2d 1339, 1351 (2d Cir. 1989); see United States v. United Mine Workers of America, 330 U.S.

8

258, 303-04 (1947); Hess v. New Jersey Transit Rail Operations, Inc., 846 F.2d 114, 115 (2d Cir.
1988). In the Second Circuit, the district court must find the following in order to hold a party in
civil contempt:

(1) the issuance of a clear and unambiguous court order; (2) clear and

convincing proof of noncompliance with said order; and (3) lack of reasonable diligence by
defendant in attempting to accomplish what was ordered. King v. Allied Vision, Ltd., 65 F.3d
1051, 1058 (2d Cir. 1995); see also Drywall Tapers and Pointers, Local 1974 etc. v. Local 530
of Operative Plasterers & Cement Masons International Association, 889 F.2d 389, 394 (2d Cir.
1989) (quoting Powell v. Ward, 643 F.2d 924, 931 (2d Cir. 1981), cert. denied, 454 U.S. 832
(1981)).
The Court is prohibited from imposing sanctions punitively; however, coercive and
compensatory inducements may appropriately underlie the imposition of civil sanctions.
Paramedics Electromedicina Comercial, Ltda v. GE Medical Systems Information Technologies,
Inc., 369 F.3d 645, 657 (2d Cir. 2004). Furthermore, it need not be established that a party’s
violation of a court order was willful in order to hold that party in contempt. Id. at 655; see also
Donovan v. Sovereign Sec. Ltd., 726 F.2d 55, 59 (2d Cir. 1984). “Inability to comply is, of
course, a ‘long-recognized defense to a civil contempt citation,’ but the burden is on defendants
to substantiate their claimed inability” without equivocation. Donovan, 726 F.2d at 59 (quoting
United States v. Wendy, 575 F.2d 1025, 1030-31 (2d Cir. 1978)). However, prior to being
adjudged in contempt, due process requires that a party must be properly noticed that it is a
defendant in a contempt hearing. Drywall Tapers and Pointers, 889 F.2d at 394; see Fed. R.
Crim. P. 42(b); Remington Rand Corporation-Delaware v. Business Systems, Inc., 830 F.2d
1256, 1258 (3d Cir. 1987) (applying Rule 42(b) to civil cases); Dole Fresh Fruit Co. v. United
Banana Co., Inc., 821 F.2d 106, 109 (2d Cir. 1987) (same).

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II.

Application of Standard for Civil Contempt
A. Three-Pronged Analysis
Applying the standard delineated above, the Court’s Order of June 16, 2015 as well as the

magistrate judge’s Orders of April 30, 2015, May 12, 2015, June 2, 2015, July 21, 2015 and
August 7, 2015 are all clear and unambiguous. The April 30, 2015 Order directed defense
counsel Bustos to appear personally at the May 12, 2015 status conference, notwithstanding his
request to have another attorney appear in his stead.

On May 12, 2015, both the Timite

Defendants and Bustos failed to appear in court. The magistrate judge then scheduled an Order
to Show Cause Hearing for June 2, 2015 as to why the Timite Defendants and Bustos should not
be held in civil contempt for their contravention of the magistrate judge’s lawful authority.
While Bustos appeared for the June 2, 2015 hearing, Timite again failed to appear. Accordingly,
the magistrate judge ordered that the Timite Defendants: (1) provide all records and information
responsive to all outstanding discovery requests by June 9, 2015; and (2) reimburse plaintiffs for
all reasonable fees and costs totaling $9,064.32, no later than June 9, 2015. (See Minute Entry,
Status Conference held 06/02/2015.) The magistrate judge then issued another Order on June 3,
2015 compelling the Timite Defendants and Bustos to appear before this Court for an Order to
Show Cause Hearing as to why Timite and Bustos should not be adjudged in civil contempt.
On June 16, 2015, at the conclusion of the show cause hearing, this Court ordered the
Timite Defendants to: (1) provide plaintiffs’ attorneys with all requested discovery by June 19,
2015 and incur a $250.00 fine per day for each day of delay in disclosing said discovery; and (2)
pay by June 30, 2015 plaintiffs’ reasonable costs and fees pursuant to the magistrate judge’s
Order. (See Minute Entry, Status Conference held 06/02/2015.) Bustos was directed to inform

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the Court whether he planned to remain as counsel to the Timite Defendants by July 16, 2015.
(Id.)
On June 19, 2015, plaintiffs filed a letter with both the Court and the magistrate judge
reporting that the Timite Defendants’ document production was woefully deficient. (See Letter
Reporting Timite Defendants [sic] Failure to Comply, Dkt. Entry No. 90.) On July 20, 2015,
plaintiffs further summarized the Timite Defendants’ lax discovery progress in a letter filed with
both the Court and the magistrate judge requesting another status conference. (See Status Report
and Request for Status Conference, Dkt. Entry. No. 94.) The magistrate judge granted this
request and scheduled a conference for August 7, 2015. The clarity of each of these Orders
reasonably cannot be contested.
The Timite Defendants’, Timite’s, and Bustos’ repeated failures to appear at scheduled
status conferences and to comply with discovery orders are clear and convincing proof of their
contempt for the authority of this Court. Specifically, Timite’s failure to appear at the May 12,
2015 status conference and his failure to appear at the June 2, 2015 Order to Show Cause
Hearing constituted categorical noncompliance with the magistrate judge’s Orders of April 30,
2015 and May 12, 2015, respectively. Similarly, Bustos’ failure to appear for the May 12, 2015
status conference represented an unambiguous failure to comply with the Court’s April 30, 2015
directive. The Timite Defendants’ unexcused failure to comply with all outstanding discovery
requests and reimburse plaintiffs $9,064.32 in fees and costs by June 9, 2015 pursuant to the
magistrate judge’s June 2, 2015 Order was also clear and convincing proof of their willful
noncompliance.
The Timite Defendants’ subsequent failure to satisfy all discovery demands by the new
June 19, 2015 deadline and pay plaintiffs’ reasonable costs and fees by June 30, 2015 in

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violation of this Court’s June 16, 2015 Order further demonstrates a willful noncompliance.
Moreover, the Timite Defendants’ recurrent failures to appear at the August 7 and 11, 2015
status conferences represented clear and convincing proof of noncompliance with the magistrate
judge’s Orders of July 21, 2015 and August 7, 2015, respectively. The Court also finds that
Bustos’ failure to appear at the status conference on August 7, 2015 constituted clear and
convincing evidence of noncompliance with the magistrate judge’s July 21, 2015 Order.
As to the third and final prong of the civil contempt analysis, no evidence has been
proffered to demonstrate that Timite exercised any diligence in attempting to comply with the
magistrate judge’s Orders to appear for the May 12, 2015 status conference or the June 2, 2015
Order to Show Cause Hearing. Indeed, Timite’s cavalier attitude towards his responsibilities in
this litigation only continued with his consecutive failures to appear in court on August 7 and 11,
2015. Similarly, Timite neither provided reasons for his absence nor offered proof of any
attempts to comply with the respective Orders of July 21, 2015 and August 7, 2015. The alleged
failure of Bustos to inform Timite of his obligation to appear in court on the aforementioned
dates, while problematic, does not absolve Timite of being adjudged in civil contempt. Because
it is not necessary to show that Timite’s noncompliance was willful, his absence from court on
the dates at issue is sufficient to demonstrate satisfaction of this element of the analysis. See
Donovan, 726 F.2d at 59.
Bustos also failed to demonstrate reasonably diligent efforts to comply with the April 30,
2015 Order to appear in court on May 12, 2015. He again failed to appear before the magistrate
judge on August 7, 2015, offering the incredulous excuse that he had not received the electronic
notice of the status conference, in the face of evidence to the contrary. At the Order to Show
Cause Hearing conducted before this Court on August 20, 2015, Bustos again offered no valid

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reason for his failure to appear in court on these dates. Neither these excuses nor Bustos’ other
actions satisfy the reasonable diligence standard articulated in the third prong of the civil
contempt analysis.
Moreover, the Timite Defendants’ meager attempts at satisfying their discovery
obligations do not rise to the level of reasonable diligence in complying with the Court’s
numerous orders. Beginning on February 20, 2015, the Timite Defendants failed to make initial
disclosures pursuant to Federal Rule of Civil Procedure 26(a)(1) (“Rule 26(a)(1)”) as well as
respond to interrogatories and document production requests in accordance with the magistrate
judge’s scheduling order. (See Scheduling Order, Dkt. Entry No. 37.)

On May 12, 2015, the

magistrate judge issued yet another order compelling the completion of all outstanding discovery
by May 19, 2015. On May 19, 2015, Bustos responded to plaintiffs’ discovery request with a
rather vacuous letter reporting the difficulty he was experiencing in coordinating discovery
compliance with the Timite Defendants, but offering no answers to the discovery demands. On
June 2, 2015, the magistrate judge again ordered the Timite Defendants to discharge their
discovery obligations and complete the Rule 26(a)(1) initial disclosures by June 9, 2015. The
Timite Defendants’ responses to plaintiffs’ interrogatories and their answer to the second
amended complaint were woefully deficient and their initial disclosures incomplete.
On June 16, 2015, this Court struck the Timite Defendants’ answer to the second
amended complaint and their responses to plaintiffs’ interrogatories as both were deficient and
directed the Timite Defendants to comply with all of their discovery obligations by June 19,
2015. (Minute Entry, Show Cause Hearing held 06/16/2015.) By letter dated June 19, 2015,
plaintiffs informed the Court that the Timite Defendants again failed to comply with the
discovery order. Inexorably, each instance of failure by the Timite Defendants has compelled

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plaintiffs to seek the intervention of the Court and the magistrate judge, which has unnecessarily
prolonged the adjudication of this matter and strained the resources of this Court and the
magistrate judge.

Therefore, the Court finds that the Timite Defendants did not exercise

reasonable diligence in attempting to accomplish the discovery duties judicially imposed upon
them throughout the pendency of this litigation.
Based on the foregoing, the Court finds the Timite Defendants and Timite in civil
contempt of this Court’s lawful authority with regard to the failures to comply with the
magistrate judge’s April 30, 2015, May 12, 2015, July 21, 2015 and August 7, 2015 Orders to
appear in court for status conferences and Orders to Show Cause. The Timite Defendants and
Timite are further adjudged in civil contempt of court due to the obstructionist manner in which
they have repeatedly failed to comply with their discovery obligations. The Court also finds
Bustos in civil contempt of this Court’s lawful authority for failing to comply with the magistrate
judge’s April 30, 2015 and July 21, 2015 Orders to appear in court for both status conferences.
Pursuant to this judgment, the Court imposes both evidentiary and monetary sanctions upon the
Timite Defendants and Bustos as set forth below.
B. Coercive and Compensatory Nature of Sanctions
While compensatory sanctions are principally designed to reimburse the aggrieved party
for its actual damages, coercive sanctions serve a deterrent purpose. United States v. United
Mine Workers of America, 330 U.S. 258, 303-04 (1947). The Second Circuit has articulated
certain factors for the court to consider in determining whether to impose coercive civil contempt
sanctions: “(1) the character and magnitude of the harm threatened by the continued contumacy,
(2) probable effectiveness of the sanction in bringing about compliance, and (3) the contemnor’s
financial resources and the consequent seriousness of the sanction’s burden.” Terry, 886 F.2d at

14

1353. The ultimate consideration of whether the coercive sanction—here, a $16,500.00 fine—is
reasonable in relation to the facts is a determination “left to the informed discretion of the district
court.” Id.; see In re Grand Jury Witness, 835 F.2d 437, 443 (2d Cir. 1987).
The Court initially imposed compensatory sanctions of $6,789.50 upon the Timite
Defendants to reimburse plaintiffs for the reasonable fees and costs associated with plaintiffs’
counsel’s court appearances from which the Timite Defendants, as well as Bustos, absented
themselves. At the August 20, 2015 Order to Show Cause Hearing, plaintiffs’ counsel advised
the Court that the Timite Defendants had remitted payment and fully complied with this
sanction. Notably, the $16,250.00 fine assessed against the Timite Defendants pursuant to this
Court’s imposition of a $250.00 fine per day for each day that the Timite Defendants failed to
comply with the Court’s June 16, 2015 discovery order constitutes a coercive sanction to which
the Court must apply the analysis set forth in Terry. Without imposing some sanction based on
the Timite Defendants’ continued refusal to comply with their discovery obligations, this
litigation would be prolonged unduly, straining the Court’s and plaintiffs’ time and resources.
More importantly, it would neutralize the Court’s power and authority to enforce lawful orders.
Furthermore, the threat of a daily fine of $250.00 is a reasonable sanction designed to compel
compliance with a lawful court order. Finally, since the fine was conditional, and thereby
avoidable, there is no need to calibrate it to the Timite Defendants’ financial resources. New
York State Nat. Organization for Women v. Terry, 952 F. Supp. 1033, 1041 (S.D.N.Y. 1997).
The Court, thus, determines that the sanctions satisfy the considerations enumerated in Terry.
C. Due Process Concerns
There are no due process concerns at issue in holding the Timite Defendants, Timite and
Bustos in civil contempt of this Court’s lawful authority because all parties received notice by

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Court Orders issued by both the magistrate judge and this Court in June and August 2015 as
previously described. Therefore, no additional due process analysis is required.

CONCLUSION
For the reasons set forth above, the Court adopts the magistrate judge’s recommendations
in their entirety and hereby finds the Timite Defendants, Timite and Bustos in civil contempt of
this Court’s lawful authority with respect to the specifically referenced court orders discussed
above. Accordingly, the Timite Defendants are precluded from offering any evidence in any
future proceedings in this case that includes information that heretofore should have been
produced. The Timite Defendants were further ordered to remit payment of $16,250.00 4 to
plaintiffs by September 20, 2015 for their repeated failures to produce the requested and courtordered discovery. Bustos was sanctioned with the imposition of a $500.00 fine payable to the
Court by September 20, 2015.

Bustos’ motion to be relieved as counsel for the Timite

Defendants is granted.

SO ORDERED.
Dated: Brooklyn, New York
November 5, 2015
Nunc Pro Tunc to August 20, 2015
/s/
DORA L. IRIZARRY
United States District Judge

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The $250.00 daily fine imposed against the Timite Defendants has been assessed as of June 16, 2015 up to August
20, 2015.

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