-SS MGA Entertainment, Inc. et al v. National Products Ltd. et al, No. 2:2010cv07083 - Document 593 (C.D. Cal. 2012)
Court Description: MEMORANDUM AND ORDER DENYING DEFENDANTS MOTION FOR LEAVE TO FILE MOTION FOR SANCTIONS IN CONNECTION WITH PLAINTIFFSACTIONS REGARDING THE JANUARY 31, 2012 NEWELL RUBBERMAID PERSON(S) MOST KNOWLEDGEABLE DEPOSITION (Dkt. No. 462 ) by Magistrate Judge Suzanne H. Segal; See order for details. (jy)
Download PDF
<![CDATA[
-SS MGA Entertainment, Inc. et al v. National Products Ltd. et al Doc. 593 1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 CENTRAL DISTRICT OF CALIFORNIA 10 11 MGA ENTERTAINMENT, INC., a ) No. CV 10-07083 JAK (SSx) California corporation; THE ) 12 LITTLE TIKES COMPANY, INC., an ) Ohio corporation, ) MEMORANDUM AND ORDER DENYING 13 ) DEFENDANTS’ MOTION FOR LEAVE TO Plaintiffs, ) FILE MOTION FOR SANCTIONS IN 14 ) CONNECTION WITH PLAINTIFFS’ ) ACTIONS REGARDING THE JANUARY 31, 15 v. ) 2012 NEWELL RUBBERMAID PERSON(S) ) MOST KNOWLEDGEABLE DEPOSITION 16 ) (Dkt. No. 462) NATIONAL PRODUCTS LTD., a Hong ) 17 Kong corporation; PLAYMIND ) LTD., a Hong Kong corporation; ) 18 THE PLAYMIND GROUP, a Hong Kong ) corporation; and DOES 1 through ) 19 10, inclusive, ) ) 20 Defendants. ) ) 21 22 On August 2, 2012, Defendants filed a “Motion for Leave to File 23 Motion for Sanctions in Connection with Plaintiffs’ Actions Regarding 24 the January 31, 2012 Newell Rubbermaid Person(s) Most Knowledgeable 25 Deposition.” (Dkt. No. 462). On August 15, 2012, the District Judge 26 referred the Motion to the Magistrate Judge for determination. 27 No. 495). (Dkt. The Court held a telephonic hearing on the Motion on 28 September 11, 2012. For the reasons stated below, the Motion is DENIED. Dockets.Justia.com 1 I. 2 FACTUAL BACKGROUND AND THE PARTIES’ CONTENTIONS 3 4 Defendants’ request for leave to file a motion for sanctions, as 5 presented in the Motion, arises out of the attempted deposition of 6 Newell Rubbermaid, a corporation. Plaintiff MGA acquired The Little 7 Tikes Company, whose trademark is at issue in this suit, from Newell 8 Rubbermaid in November 2006. (Motion at 2). On January 20, 2012, 9 Defendants noticed the deposition of Newell Rubbermaid’s person most 10 knowledgeable for January 31, 2012 in Atlanta, Georgia. 11 id. Exh. B at 1). On January 30, 2012, the District Judge ordered the 12 Newell Rubbermaid deposition to proceed as noticed. 13 (Dkt. No. 280)). (Id. at ii, 3; (Id. Exh. A at 2 On the evening of January 30, 2012, after Defendants’ 14 counsel had already flown to Atlanta, Plaintiffs informed Defendants via 15 email that they intended to seek a protective order to prevent Newell 16 Rubbermaid from producing the stock purchase agreement between MGA and 17 Newell Rubbermaid on the ground that the document contained confidential 18 business information. (Id. at 5). However, no such protective order 19 was obtained. 20 21 At the deposition, Plaintiffs’ counsel, appearing via 22 videoconference, objected to questions relating to provisions in the 23 agreement covered by the confidentiality clause. 24 at 10 (excerpts of Mark W. Johnson (Id. at 6; id. Exh. E deposition)). According to 25 Defendants, “[b]ased on that objection, Newell Rubbermaid refused to 26 produce the document, or to give any testimony on the transfer of Little 27 Tikes from Newell Rubbermaid to MGA.” 28 2 (Id. at 6; see also id. Exh. E at 1 11). Plaintiffs' challenge this assertion, claiming that the deposition 2 was cancelled because the witness was an inadequate 30(b)(6) witness. 3 4 After an hour of questions, Defendants cancelled the deposition. 5 Plaintiffs eventually withdrew their objection to production of the 6 agreement and provided a copy of the stock purchase agreement to 7 Defendants on February 7, 2012. (Id. at 5). On June 1, 2012, 8 Defendants resumed the deposition in Atlanta, this time with a different 9 witness as Newell Rubbermaid’s person most knowledgeable. (Id. at ii; 10 id., Exh. O (excerpts of Andrew Rudd deposition)). 11 12 Defendants seek $7,575.38 in sanctions against Plaintiffs and their 13 attorneys for “wrongfully obstructing” the January 31, 2012 Newell 14 Rubbermaid deposition. (Id. at ii). Defendants contend that Plaintiffs 15 “knew or should have known” that the confidentiality provision of the 16 stock purchase agreement had lapsed no later than November 2011, well 17 before the January 31, 2012 deposition, and therefore Plaintiffs’ 18 objections were frivolous. 19 that even if the (Id. at 8, 13). agreement did contain Defendants further contend confidential information, 20 Plaintiffs waived their right to object to its discoverability by 21 failing to notify Defendants of their intent to move for a protective 22 order until the evening of January 30, 2012, after Defendants’ counsel 23 had flown to Atlanta for the January 31 deposition. (Id. at 17). 24 25 At the hearing, Plaintiffs conceded that their objection at the 26 deposition based on the confidentiality of the Newell Rubbermaid stock 27 purchase agreement was in error. However, Plaintiffs explained that 28 Defendants’ counsel cancelled the January 31 deposition not because 3 1 Newell Rubbermaid refused to produce a copy of the stock purchase 2 agreement or testify about its contents, but because Defendants’ counsel 3 determined that the witness, Mark Johnson, was not prepared to address 4 some or all of the 30(b)(6) topics. In support of their argument, 5 Plaintiffs read to the Court extended portions of the Johnson deposition 6 transcript that were 7 Defendants’ Motion. not included in the excerpts attached to These passages revealed that Defendants repeatedly 8 expressed concern in the latter part of the deposition that Mr. Johnson 9 was unable to respond knowledgeably about certain topics. Plaintiffs 10 further argued that to the extent that Mr. Johnson was unprepared, 11 Defendants are largely responsible because they did not respond to 12 Newell Rubbermaid’s efforts to confer before the deposition about the 13 topics Defendants intended to pursue and which witness Newell Rubbermaid 14 should prepare. 15 16 II. 17 DISCUSSION 18 19 A. The Court Has Authority To Impose Sanctions For Discovery Abuses 20 Under Its Inherent Power To Oversee Discovery And Under Rule 37, 21 But A Motion For Sanctions Must Be Timely 22 23 Two sources of authority permit a district court to sanction a 24 party for discovery-related abuses: (1) the inherent power of federal 25 courts to levy sanctions in response to “abusive litigation practices,” 26 Fielstad v. Am. Honda Motor Co., 762 F.2d 1334, 1337–38 (9th Cir. 1985), 27 and (2) Rule 37’s authorization to sanction a party who “fails to obey 28 an order to provide or permit discovery.” 4 Fed. R. Civ. P. 37(b)(2)(C). 1 “[D]istrict courts enjoy very broad discretion to use sanctions 2 where necessary to insure . . . that lawyers and parties . . . fulfill 3 their high duty to insure the expeditious and sound management of the 4 preparation of cases for trial.” Lee v. Max Int’l, LLC, 638 F.3d 1318, 5 1320 (10th Cir. 2011) (internal citation and quotation marks omitted). 6 Under its “inherent powers,” in contrast to more specific statutory 7 sanction provisions, a district court may sanction a “broad range of 8 improper litigation tactics,” Knupfer v. Lindblade (In re Dyer), 322 9 F.3d 1178, 1196 (9th Cir. 2003), when a party or counsel acts “in bad 10 faith, vexatiously, wantonly, or for oppressive reasons.” Primus Auto. 11 Fin. Servs., Inc. v. Batarse, 115 F.3d 644, 648 (9th Cir. 1997). “[A]n 12 inherent powers sanction is meant to do something very different than 13 provide a substantive remedy to an aggrieved party. An inherent powers 14 sanction is meant to ‘vindicate judicial authority.’” Mark Indus. v. 15 Sea Captain’s Choice, 50 F.3d 730, 733 (9th Cir. 1995) (quoting Chambers 16 v. NASCO, Inc., 501 U.S. 32, 55, 111 S. Ct. 2123, 115 L. Ed. 2d 27 17 (1991)). 18 19 “[S]anctions imposed under the district court’s inherent authority 20 require a bad faith finding.” 21 Distrib. Corp., 606 F.3d 1216, Lahiri v. Universal Music & Video 1219 (9th Cir. 2010). A party 22 “demonstrates bad faith by delaying or disrupting the litigation or 23 hampering enforcement of a court order.” Primus Auto. Fin. Servs., 115 24 F.3d at 649 (internal quotation marks omitted). “[A] finding of bad 25 faith ‘does not require that the legal and factual basis for the action 26 prove totally frivolous; where a litigant is substantially motivated by 27 vindictiveness, obduracy, or mala fides, the assertion of a colorable 28 claim will not bar the assessment of attorney’s fees.’” 5 In re Itel Sec. 1 Litig., 791 F.2d 672, 675 (9th Cir. 1986) (quoting Lipsig v. Nat’l 2 Student Mktg. Corp., 663 F.2d 178, 182 (D.C. Cir. 1980) (per curiam)); 3 see also Fink v. Gomez, 239 F.3d 989, 992 (9th Cir. 2001) (“[S]anctions 4 are justified when a party acts for an improper purpose -- even if the 5 act consists of making a truthful statement or a non-frivolous argument 6 or objection.”). The bad faith requirement ensures that the district 7 court’s of exercise its broad power is properly restrained, and 8 “preserves a balance between protecting the court’s integrity and 9 encouraging meritorious arguments.” Primus Auto. Fin. Servs., 115 F.3d 10 at 649. 11 12 In addition to the Court’s inherent powers to impose sanctions, 13 “[a] district court has wide discretion to impose sanctions, including 14 severe sanctions, under Federal Rule of Civil Procedure 37, and its 15 ruling will be reversed only if it constitutes an abuse of discretion.” 16 Design Strategy, Inc. v. Davis, 469 F.3d 284, 294 (2nd Cir. 2006). 17 Unlike sanctions imposed under a court’s inherent powers, Rule 37 18 sanctions generally do not require a showing of bad faith or willfulness 19 unless the sanction is case-dispositive. See Hyde & Drath v. Baker, 24 20 F.3d 1162, 1171 (9th Cir. 1994) (“We have not required a finding of bad 21 faith on the part of the attorney before imposing sanctions under Rule 22 37. . . . While a finding of bad faith is not a requirement for imposing 23 sanctions, good or bad faith may be a consideration in determining 24 whether imposition of sanctions would be unjust.”); Commodity Futures 25 Trading Commission v. Noble Metals International, Inc., 67 F.3d 766, 26 770–71 (9th Cir. 1995) (case-dispositive sanctions require showing of 27 “willfulness, bad faith, or fault of the party”). 28 6 1 Rule 37 authorizes the imposition of sanctions against a party who: 2 unsuccessfully brings or opposes a discovery motion without substantial 3 justification; disobeys a court’s discovery order; fails to make 4 required Rule 26(a) or (e) disclosures or to participate in framing a 5 discovery plan as required by Rule 26(f); or fails to respond to 6 properly served discovery requests. Fed. R. Civ. P. 37(a-d & f). The 7 purpose of the Rule is to “protect courts and opposing parties from 8 delaying or harassing tactics during the discovery process.” Cunningham 9 v. Hamilton County, 527 U.S. 198, 208, 119 S. Ct. 1915, 144 L. Ed. 2d 10 184 (1999). Discovery conduct is “substantially justified if it is a 11 response to a ‘genuine dispute or if reasonable people could differ as 12 to the appropriateness of the contested action.’” Devaney v. 13 Continental American Ins. Co., 989 F.2d 1154, 1163 (11th Cir. 1993) 14 (quoting Pierce v. Underwood, 487, 552, 565, 108 S. Ct. 2541, 101 L. Ed. 15 2d 490 (1988)). The trial court has “broad discretion” to evaluate the 16 justification proffered. Carr v. Deeds, 453 F.3d 593, 602 (4th Cir. 17 2006); see also Marquis v. Chrysler Corp., 577 F.2d 624, 642 (9th Cir. 18 1978). 19 20 It is generally agreed that a motion for sanctions, regardless of 21 the source of authority for the imposition of sanctions, must be timely 22 filed. Although Rule 37 does not establish “any express time limits 23 within which a motion for sanctions must be filed, unreasonable delay 24 may render such a motion untimely.” Long v. Howard University, 561 F. 25 Supp. 2d 85, 91 (D. D.C. 2008) (citing Brandt v. Vulcan, Inc. 30 F.3d 26 752, 756 (7th Cir. 1994)); see also Mercy v. County of Suffolk, New 27 York, 748 F.2d 52, 56 (2d Cir. 1984) (“[A] motion for Rule 37 sanctions 28 should be promptly made, thereby allowing the judge to rule on the 7 1 matter when it is still fresh in his mind.”). Courts have also found 2 that unreasonable delay in filing a motion for sanctions under the 3 court’s inherent powers may render the request untimely. See Clark v. 4 United States, 2011 WL 66181 at *4 (D. Hawaii Jan. 7, 2011); cf. Peer v. 5 Lewis, 606 F.3d 1306, 1313 (11th Cir. 2010) (“‘Ordinarily the motion 6 [for sanctions under Rule 11] should be served promptly after the 7 inappropriate paper is filed, and, if delayed too long, may be viewed as 8 untimely . . . .’”) (quoting Fed. R. Civ. P. 11 advisory committee note 9 (1993 amendments)). “The timeliness of a motion for sanctions [relating 10 to discovery] depends on such factors as when the movant learned of the 11 discovery violation, how long he waited before bringing it to the 12 court’s attention, and whether discovery has been completed.” Long, 561 13 F. Supp. 2d at 91. 14 15 B. Defendants’ Fail To Persuade The Court That Plaintiffs' Conduct 16 Caused The Cancellation Of The Deposition 17 18 Defendants do not specify whether they are seeking sanctions based 19 on the Court’s inherent powers or under Rule 37. To the extent that 20 Defendants are relying on the Court’s inherent powers, the sanctions 21 motion would fail because Defendants have not shown that Plaintiffs’ 22 isolated objection, subsequently withdrawn, was made in bad faith or was 23 “substantially motivated by vindictiveness, obduracy, or mala fides.” 24 In re Itel Sec. Litig., 791 F.2d at 675. Even if the objection was 25 mistaken, negligence or ignorance do not compel a finding of bad faith. 26 Additionally, the materiality of Plaintiffs’ objection to the costs that 27 Defendants incurred in connection with the January 31 deposition is 28 questionable. The Court is not persuaded that Defendants’ decision to 8 1 cancel Mr. Johnson’s deposition was based entirely on the parties’ 2 dispute over the discoverability of the stock purchase agreement as 3 opposed to Defendants’ objection to the selection of Mr. Johnson as 4 Newell Rubbermaid’s person most knowledgeable. Defendants did not 5 dispute at the hearing that they were dissatisfied with Mr. Johnson’s 6 preparation or that they negotiated with Newell Rubbermaid following the 7 deposition to designate another witness with personal knowledge of the 8 facts at issue. At the very least, it appears that Mr. Johnson’s 9 ability to serve as Newell Rubbermaid’s person most knowledgeable was a 10 significant, and perhaps deciding, factor in Defendants’ decision to 11 cancel the deposition. Accordingly, Defendants have failed to persuade 12 the Court that they are entitled to sanctions based upon Plaintiff's 13 conduct. 14 15 C. In The Alternative, The Motion Must Be Denied As Untimely 16 17 Even if the Court were persuaded that Plaintiffs were largely at 18 fault for the cancellation of Mr. Johnson’s deposition or that their 19 objection could somehow be construed under Rule 37 as a violation of the 20 District Judge’s Order that the Newell Rubbermaid deposition go forward, 21 the Court would still deny Defendants’ motion because it is untimely. 22 Defendants were fully on notice of Plaintiffs’ purportedly improper 23 behavior as of January 31, 2012 but did not file the instant Motion 24 until over six months later, on August 2, 2012, after the main discovery 25 period had closed. (Dkt. No. 462). Even taking into account the one- 26 month stay in this matter between February 27, 2012 and March 26, 2012, 27 Defendants’ delay was unreasonable. 28 9 1 The discovery period in this matter has been extended only in 2 increments and the Parties have been on notice since the beginning of 3 this year that the close of discovery was imminent. 4 Judge’s January 30, 2012 Order authorizing the The District Newell Rubbermaid 5 deposition to proceed on January 31 extended the fact discovery deadline 6 only until February 14, 2012. (Dkt. No. 280). The Court subsequently 7 ordered a one-month stay on proceedings, which was lifted on March 26, 8 2012. (Dkt. No. 350). In the Order lifting the stay, the Court stated 9 “given that the discovery cut-off date has passed, counsel are directed 10 not to file any additional motions before Magistrate Judge Segal until 11 after April 9, 2012, at which time the Court will determine whether it 12 will continue any dates set in this matter, including the cut-off for 13 the filing of motions.” (Id. at 2). On April 9, 2012, the District 14 Judge extended the fact and expert discovery cut-off to June 29, 2012. 15 (Dkt. No. 357 at 3). The Court also set July 30, 2012 as the “[l]ast 16 day to hear motions” and specified that “[a]ll motions are to be 17 authorized by the Court prior to filing.” (Id.). On April 18, 2012, 18 the District Judge ordered the Newell Rubbermaid deposition to be 19 completed. (Dkt. No. 373 at 1). On May 10, 2012, more than seven weeks 20 before the pending discovery cut-off, the District Judge denied without 21 prejudice Defendants’ request to file a motion for sanctions and ordered 22 the parties to meet and confer regarding sanctions issues relating to 23 the “initial [January 31, 2012] session of the [Newell Rubbermaid] 24 deposition or the [scheduled] May 18, 2012 session.” 25 1). (Dkt. No. 393 at After June 29, 2012, the District Judge has allowed limited 26 discovery motion practice only upon prior approval of the Court. (See, 27 e.g., July 10, 2012 Order, Dkt. No. 441 at 1 (granting Plaintiffs’ Ex 28 Parte Application for Permission to File Motion to Compel); July 30, 10 1 2012 Order, Dkt. No. 465 (authorizing Defendants and Plaintiffs to file 2 specific motions to compel)). 3 4 In sum, with certain ad hoc exceptions relating to motions to 5 compel the production of evidence relating to the Parties’ substantive 6 claims and defenses, discovery closed at the end of June 2012. 7 Defendants were well aware that the fact discovery cut-off was June 29 8 and that the Court had set July 30 as the last day to hear motions, and 9 yet did not file a motion for sanctions before those dates. Even if the 10 District Judge had continued the discovery cut-off for all purposes, 11 Defendants could not have relied on that possibility and should have 12 filed any motion for sanctions by the end of June to allow for a hearing 13 before the end of July. Furthermore, unlike the discovery motion 14 practice the District Judge has specifically authorized since June 29, 15 2012, Defendants’ request for permission to file a motion for sanctions 16 does not involve the production of evidence relevant to the substantive 17 issues in this case. Despite having had ample opportunity to file a 18 motion for sanctions, and indeed, after being specifically ordered by 19 the District Judge on May 10, 2012 to meet and confer regarding 20 sanctions issues, Defendants allowed the June 29, 2012 fact discovery 21 cut-off and the July 30, 2012 motion hearing cut-off to pass without 22 bringing the matter to the Court’s attention, which constituted an 23 unreasonable delay. 24 25 The Court 26 entitlement to finds that sanctions Defendants on the have merits failed because to the establish Court is an not 27 convinced that Plaintiffs’ objection was the motivating reason behind 28 the cancellation of Mr. Johnson’s deposition. The Court also finds that 11 1 Defendants’ proposed Motion is untimely. Consequently, Defendants’ 2 Motion for Leave to File Motion for Sanctions is DENIED. 3 4 IT IS SO ORDERED. 5 6 DATED: September 14, 2012 7 8 9 /S/ SUZANNE H. SEGAL UNITED STATES MAGISTRATE JUDGE 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 12
]]>
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You
should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google
Privacy Policy and
Terms of Service apply.
