Stanz v. Brown et al

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UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF CALIFORNIA
AARON STANZ, individually and
derivatively on behalf of Jet Genuis
Holdings, Inc.,
Plaintiff,
v.
JORDAN BROWN, et al.,
Defendants.
Case No.: 22-cv-01164-GPC-JLB
ORDER GRANTING PLAINTIFF’S
REQUEST FOR ATTORNEY’S FEES
AND REPORT AND
RECOMMENDATION RE:
PLAINTIFF’S EX PARTE
APPLICATION FOR OSC AS TO
WHY DEFENDANTS SHOULD NOT
BE HELD IN CONTEMPT OF
COURT FOR FAILING TO
COMPLY WITH A COURT ORDER
[ECF No. 217]
AND RELATED COUNTERCLAIM.
Before the Court is Plaintiff Aaron Stanz’s (“Plaintiff”) Ex Parte Application for
Order to Show Cause as to Why Defendants Should Not be Held in Contempt of Court for
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Failing to Comply with a Court Order (Ex Parte Motion) 1—namely, the Court’s Order
Granting Plaintiff’s Motion to Compel (Motion to Compel Order or Order).2 (ECF Nos.
215, 217; see also ECF No. 188.) 	Defendants Jordan Brown (“Brown”), Jet Genius
Holdings, Inc. (“JGH”), Jet Genius Florida Holdings, Inc., Bowman Aviation, Inc., Jet
Agency Global, LLC, C3 Jets, LLC, and C3 Limo, LLC (collectively, “Defendants”) did
not file an opposition. 	For the reasons set forth below, Plaintiff’s request for attorney’s
fees is GRANTED, subject to Plaintiff’s submission of a supporting declaration and
documentation. The Court RECOMMENDS to the Honorable Gonzalo P. Curiel that the
Court initiate civil contempt proceedings against Defendants. Further, the Court certifies
the 	pertinent 	facts 	in 	connection 	with 	a 	civil 	contempt 	inquiry. 	The 	Court
RECOMMENDS sanctions in the form of coercive per diem fines. However, the Court
RECOMMENDS against the imposition of sanctions in the form of adverse inferences,
issue preclusion, and entry of default judgment.
I. BACKGROUND
A. Second Amended Complaint
The following allegations are taken from the Second Amended Complaint:
Plaintiff is the creator and developer of software and systems that simplify and
accelerate aircraft charter brokering, including JetXchange, The Grid, and the Charter
Flight Group website, which are also supported by custom applications, reports, lead
generation tools, databases, business analytics, and certain client lists (collectively, the
1 By order dated August 13, 2025, the Court construed Plaintiff’s 	Ex Parte
Application for Order to Show Cause as to Why Defendants Should Not be Held in
Contempt of Court for Failing to Comply with a Court Order as a Motion for Sanctions
pursuant to Federal Rule of Civil Procedure 37. (See ECF No. 223 at 2.)
2 On January 9, 2025, Plaintiff filed a Notice of Motion and Motion to Compel
Production of Documents and for an Order Awarding Attorney’s Fees (hereinafter “Motion
to Compel”). (ECF No. 188.)
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“JGH Platform”). (ECF No. 78 at 10, ¶ 38.) The JGH Platform allows a charter aviation
brokerage company to operate more efficiently by facilitating more trips per staff member
than any charter brokerage competitor. (Id. at 10-11, ¶ 38.)
Plaintiff and Brown formed JGH, a private jet charter broker, with a non-party,
Alexander Wolf (“Wolf”), in 2016. (Id. at 1, 11, ¶¶ 1, 39.) Plaintiff contributed the JGH
Platform to JGH and received a 49.5% ownership interest in the company. 	(Id. ¶ 39.)
Plaintiff and Brown are the two primary shareholders of JGH. 	(Id. at 1, ¶ 1.) 	Plaintiff
served as the Chief Technology Officer and had principal responsibility for designing and
implementing the JGH Platform. 	(Id. at 1, 11, ¶¶ 1, 44.) 	Since 2018, Brown has been
JGH’s Chief Executive Officer (“CEO”) and sole director. (Id. at 1-2, ¶ 1.)
In August 2018, Plaintiff, Wolf, and Brown entered into an agreement, whereby
Plaintiff reduced his ownership interest in JGH from 49.5% to 25%, resigned from JGH’s
Board of Directors,3 and assigned rights in the JGH Platform to JGH, and Brown became
JGH’s sole director. 	(Id. at 15, 17, ¶¶ 62, 70.) 	The agreement provided for certain
safeguards to guarantee the collection and payment of FET and to minimize the opportunity
for self-dealing by Brown. (See id. at 15, 17, ¶¶ 65, 68.) 4 According to Plaintiff, Brown
“repeatedly assured” him that he would operate the business for the benefit of shareholders
and that he would not form another business entity for the purposes of transferring JGH
operations and leaving behind an “empty shell with only liabilities.” (Id. at 14, ¶ 57.)
Plaintiff alleges that Brown used JGH as his “personal piggy bank” and “raided
JGH’s assets through phony transactions, indefensible self-approved compensation, and
wrongful diversion of corporate assets” to the tune of approximately $1.9 million. (Id. at
3 Wolf also stepped down from the Board of JGH pursuant to the agreement. (ECF
No. 78 at 15, ¶ 62.)
4 For instance, the agreement provided that JGH would not loan money to or accept
loans from a shareholder or its assigns without Plaintiff’s prior written consent. (ECF No.
78 at 15-16, ¶ 65.)
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2, 18, ¶¶ 2, 71.) Plaintiff further alleges that Brown “employs a shell game of entities to
avoid paying Plaintiff amounts due to him and to avoid other company obligations.” (Id.
at 2, 18–27, ¶¶ 4, 76–136.) 	For example, on September 16, 2019, Brown formed Jet
Agency Global, LLC and transferred to Jet Agency ownership of, or licensed rights in and
to, the JGH Platform without adequate consideration. (Id. at 19–20, ¶¶ 82, 89.) Thereafter,
on September 11, 2020, Brown formed C3 Limo, LLC with his wife Stacy Brown, who
was listed as manager for six months before it was changed to Chasen Dobos, Brown’s
stepson. (Id. at 21, ¶ 94.) Brown transferred to C3 Limo ownership of, or licensed rights
in and to, parts of the JGH Platform without adequate consideration and transferred cash
from JGH to C3 Limo. 	(Id. at 21, ¶¶ 95, 96.) 	Less than a year later, on April 23, 2021,
Brown formed C3 Jets and transferred $100,000 per month from JGH to the new company.
(Id. at 21-22, ¶¶ 97-98.) Brown had no plans to repay JGH for these fund transfers. (Id. at
21-22, ¶¶ 95–99.)
Plaintiff further alleges that Brown “seeks to avoid millions in assessed federal
excise taxes (‘FET’) related to chartering aircrafts.” 	(Id. at 2, ¶ 4.) 	As a business that
collected payment for commercial domestic transportation of persons, JGH was subject to
an assessment of FET. 	(Id. at 12, ¶ 46.) 	Brown failed to timely and fully pay the FET
related to JGH’s operations and instead “took actions to saddle Plaintiff personally with
much of that burden—$1.3 million in unpaid FET—, despite assurances Brown would
account for those taxes, while also shifting JGH’s operations and assets to a new entity to
avoid payments.” (Id. at 2, 12–17, 23–25, ¶¶ 4, 50–70, 108–22.) Plaintiff further alleges
that Brown utilized Plaintiff’s former cell phone number to impersonate him. (Id. at 2-3,
25–27, ¶¶ 5–6, 124–36.)
In August 2022, Plaintiff initiated the instant suit. 	(See ECF No. 1.) 	In a Second
Amended Complaint filed in August 2023, Plaintiff, individually and derivatively on
behalf of Jet Genius Holdings, Inc., levied 19 claims against Defendants, including express
indemnity equitable indemnity, breach of duty to defend, breach of fiduciary duty, breach
of contract, fraud, unjust enrichment, conversion, and a request for declaratory relief. (Id.
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at 28-41.) 	At the time the Second Amended Complaint was filed, Plaintiff remained the
holder of 25% of the outstanding and issued shares of JGH. (Id. at 9, ¶ 28.)
B. Relevant Procedural Background
On February 29, 2024, Plaintiff and Defendants Brown, C3Jets LLC, C3 Limo LLC,
Jet 	Agency 	Global, 	LLC, 	and 	Bowman 	Aviation, 	Inc. 	(collectively, 	the 	“Brown
Defendants”) lodged a Joint Discovery Statement concerning the Brown Defendants’
failure to respond to Plaintiff’s RFPs (Set One). 	(ECF No. 102.) 	The Court held a
Discovery Conference on March 7, 2024, and ordered the Brown Defendants to provide
supplemental responses and production no later than March 22, 2024. (ECF No. 103.) The
Brown Defendants failed to do so.
On April 4, 2024, Plaintiff and JGH lodged a Joint Discovery Statement, as did
Plaintiff and the Brown Defendants. 	(ECF No. 107.) 	After a Discovery Conference,
Defendants agreed, inter alia, to provide updated responses and supplemental production
to Plaintiff’s RFPs (Set One) by May 10, 2024. (ECF No. 110.) Plaintiff and Defendants
lodged an updated Joint Discovery Statement on June 21, 2024. (ECF No. 117.) Plaintiff
claimed that Defendants failed to timely serve supplemental responses to Plaintiff’s RFPs
and that he had received a document production in an unreadable format. 	After another
Discovery Conference, Defendants were ordered to serve second supplemental responses
to Plaintiff’s RFPs (Set One) and produce a complete privilege log by July 15, 2024. (ECF
No. 120.)
The Mandatory Settlement Conference was held on July 22, 2024. (ECF No. 125.)
The case did not settle. 	(Id.) 	On July 30, 2024, the Court held another Discovery
Conference. (ECF No. 126.) On August 19, 2024, following another Status Conference,
the 	Court 	ordered 	Defendants 	to 	complete 	their 	document 	production 	by
September 13, 2024. (ECF No. 135.) On August 21, 2024, the parties left a joint voicemail
with Chambers informing the Court that they had resolved their discovery dispute. (ECF
No. 136.)
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Plaintiff’s counsel withdrew from the case on September 23, 2024. (ECF No. 145.)
On September 30, 2024, the Court ordered that all remaining depositions, including that of
Plaintiff, be conducted by November 15, 2024, or fourteen days after Plaintiff retains
counsel, whichever occurs first. (ECF No. 146.)
On October 16, 2024, the Court held a Status Conference because Defendants failed
to meet the September 13, 2024 document production deadline. (ECF No. 150.) The Court
ordered Defendants to provide Plaintiff with supplemental responses to the discovery
requests at issue by October 21, 2024. (ECF No. 150.) Defendants did provide Plaintiff
with supplemental responses on October 21. 	Ten days later, the parties lodged another
Joint Discovery Statement concerning those responses, as Plaintiff asserted they were
deficient. 	A Status Conference was held on November 12, 2024. 	(ECF No. 152.) 	The
Court held a discovery hearing on November 19, 2024. 	(ECF Nos. 151, 153, 158, 162,
164.) 	Following the hearing, the Court authorized a motion to compel to resolve the
dispute. (ECF No. 164.)
On November 20, 2024, the parties filed another Joint Discovery Statement
concerning Defendants’ interrogatory responses. (ECF No. 165.) On December 5, 2024,
the Court held a Discovery Conference and resolved the dispute. 	(ECF No. 175.) 	On
January 6, 2025, the Court extended the deposition deadline to January 31, 2025. 	(ECF
No. 185.)
In January 2025, Plaintiff filed a Motion to Compel, seeking an order for the
production of documents and an award of attorney’s fees. (ECF No. 188.) Plaintiff sought
to compel responses to Plaintiff’s Requests for Production (“RFP”) (Set One) served on
Defendants. (Id. at 2.) Defendants filed an opposition (ECF No. 190), and Plaintiff filed
a reply (ECF No. 191). On May 15, 2025, and May 28, 2025, the Court held hearings on
Plaintiff’s Motion to Compel. 	(ECF Nos. 207, 210, 213, 214.) 	The Court granted
Plaintiff’s Motion to Compel on June 6, 2025, and ordered the following:
1. Brown shall permit Plaintiff (or his designated expert or
representative) to inspect the electronic storage media for all
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agreed upon custodians,5 to include providing access to their
Gmail accounts, at a mutually agreeable date and time within
fourteen (14) days of the date of this Order.
2. Brown shall permit Plaintiff (or his designated expert or
representative) 	to 	inspect 	and 	copy 	physical 	items 	and
documents that may contain responsive material at a mutually
agreeable date and time within fourteen (14) days of the date of
this Order.
3.To the extent Defendants have possession, custody, or control
of the cell phones used by the agreed upon custodians, they shall
make those phones available for inspection by Plaintiff at a
mutually agreeable date and time within fourteen (14) days of
the date of this Order.
4. Brown shall file a declaration with the Court within ten (10)
days of the date of this Order confirming that he has requested
all 	responsive 	bank 	statements 	and 	credit 	card 	statements.
Brown shall produce these statements to Plaintiff within seven
(7) days of receipt of the statements.
5. Within fourteen (14) days of the date of this Order, Defendant
Jet Agency Global, LLC shall produce all documents in its
possession, custody, or control responsive to RFP No. 5,[6] or
allow Plaintiff (or his designated expert or representative) to
inspect and copy the same at a mutually agreeable date and time.
If no further documents exist, Defendant shall amend its response
to state that a reasonable inquiry has been made, and no further
responsive documents exist.
5 These custodians include: (1) Brown; (2) personal assistants, presumed to be but
not limited to, Ileana Garces, Marie Stone, Bianca Feller, Kimberlee Pouykham, and Emile
Rosenow; Executives Chasen Dobos, Ryan Sargent, and Yves Brancheau; (3) accounting
staff Roya Arabi, Deb Fouts, Cindy Grotsky, Maureen Bartzis, and Laurie Rector; (4)
shareholder Wolf; and (5) Stacy Brown.
6 Plaintiff’s RFP No. 5 to Jet Agency Global, LLC requested all client invoices since
December 13, 2016. (ECF No. 188-3 at 55.)
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6. Within fourteen (14) days of the date of this Order, Defendant
C3 Jets, LLC shall produce all documents in its possession,
custody, or control responsive to RFP No. 19 7, or allow Plaintiff
(or his designated expert or representative) to inspect and copy
the same at a mutually agreeable date and time. 	If no further
documents exist, Defendant shall amend its response to state that
a reasonable inquiry has been made, and no further responsive
documents exist.
7. Within 	fourteen 	(14) 	days 	of 	the 	date 	of 	this 	Order,
Defendants shall produce all responsive documents withheld on
the basis of privilege, except for those documents over which
Stacy Brown asserts the marital communications privilege.
8. Within ten (10) days of the date of this Order, Defendants
shall serve on Plaintiff signed copies of their interrogatories in
compliance with Fed. R. Civ. P. 33.
9. Plaintiff shall file a declaration substantiating the reasonable
fees incurred by his counsel in filing the reply and attending the
two related hearings before the Court within ten (10) days of the
date 	of 	this 	Order. 	Defendants 	may 	file 	any 	opposition
challenging the reasonableness of the amount of attorney’s fees
within five (5) days of Plaintiff’s filing of his declaration.
10. Within 	fourteen 	(14) 	days 	of 	the 	date 	of 	this 	Order,
Defendants shall produce a privilege log of any communications
as to which Stacy Brown is asserting marital communications
privilege.
11. Failure to timely comply with any aspect of this Order
may expose Defendants to the imposition of sanctions up to
and including evidentiary and issue preclusion sanctions.
(ECF No. 215 at 25–27.)
7 Plaintiff’s RFP No. 19 to C3 Jets LLC requested production of all check registers
and general ledgers since December 13, 2016. (ECF No. 188-4 at 30.)
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After the initial 10-day timeframe for compliance set forth in the Motion to Compel
Order passed, Plaintiff’s counsel initiated the meet-and-confer process on June 17, 2025.
(ECF No. 217 at 4.) During the meet-and-confer phone call, Defendants’ counsel informed
Plaintiff’s counsel that “he was working on it, but made no promises,” with the subsequent
14-day 	windows 	for 	production 	eventually 	passing 	without 	any 	compliance 	from
Defendants. (Id. at 4-5 (citing ECF No. 217-1 at 2, ¶ 3.)
Plaintiff filed the instant Ex Parte Motion on June 25, 2025. 	(ECF No. 217.)
Pursuant to the undersigned’s Chambers Rules, after service of an ex parte motion,
opposing counsel has until 5:00 p.m. the next court day to file an opposition or to request
an extension. 	J. Burkhardt’s Civ. Chambers R. § VII. 	Defendants neither filed an
opposition nor requested an extension. 	On August 7, 2025, the parties lodged with the
Court pursuant to § V of Judge Burkhardt’s Civil Chambers Rules a Joint Discovery
Statement, improperly styled a “Joint Motion for Determination of Discovery Dispute.”
Due to the substantial overlap between the lodged document and the instant Ex Parte
Motion, the Court advised the parties that it would address all the issues in the context of
the motion. 	The Court provided an additional opportunity for briefing and directed the
parties to address any issues not already included in the initial motion in the remaining
briefing. 	(ECF No. 223.) Specifically, the Court ordered Defendants to file an opposition
to the Ex Parte Motion by August 25, 2025, and Plaintiff to file a reply by September 2,
2025. (ECF No. 223 at 2.) Defendants again did not file an opposition. Plaintiff filed a
Notice of No Reply Brief, informing the Court that it did not file a reply “because there
[was] no opposition for Plaintiff to address.” (ECF No. 225 at 2.)
In his Ex Parte Motion, Plaintiff represents that, with one exception, Defendants
failed to comply with the Motion to Compel Order. 	(ECF No. 217 at 2.) 	However, a
review of the subsequent Joint Discovery Statement reveals that Defendants produced some
discovery subsequent to the filing of the Ex Parte Motion; thus, the Ex Parte Motion no
longer accurately reflects the current status of Defendants’ compliance or noncompliance
with the Order (ECF No. 215). 	(See ECF No. 226 at 1.) 	The Court therefore ordered
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Plaintiff to supplement its Ex Parte Motion no later than October 3, 2025, “to reflect the
aspects of the [Motion to Compel Order] with which Plaintiff maintains Defendants have
still failed to comply,” and ordered Defendants to file an opposition by October 10, 2025.
(Id. at 2.) Plaintiff filed the Court-ordered supplement (“Supplement”) on October 3, 2025.
(ECF No. 228.) Defendants once again filed no opposition.
As Defendants did not file an opposition despite three opportunities to do so, the
Court deems Plaintiff’s Ex Parte Motion unopposed. Because Plaintiff’s representations
in the Ex Parte Motion and the Supplement are facially plausible and uncontested by
Defendants, the Court accepts them as true to the extent set forth in this Relevant
Procedural 	Background, 	and 	the 	Court 	certifies 	them 	as 	part 	of 	this 	Report 	and
Recommendation.
II. DISCUSSION
A. Plaintiff’s Argument
1. Ex Parte Motion
Plaintiff argues in his Ex Parte Motion that “other than [a] single act of ostensible
compliance to inspect hard-copy materials” in accordance with paragraph 2, Defendants
“remain in violation of every operative paragraph [of the Motion to Compel Order],”
asserting 	that 	“[n]o 	declaration 	or 	bank 	statements 	have 	been 	filed; 	no 	verified
interrogatory 	answers 	have 	been 	served; 	no 	productions 	or 	confirmations 	under
[paragraphs] 5–7 have issued; no privilege log for marital communications has been
provided; and no access to e-mail accounts, servers, or custodians’ devices has been
granted.” 	(ECF No. 217 at 2, 4, 8.) 	Contending that he cannot “fairly prepare for trial,
quantify damages, or safeguard shareholder interests while Defendants ignore the Court’s
explicit directives” Plaintiff maintains that “the risk that responsive materials have been
concealed, destroyed, or otherwise spoliated grows with each passing day.” 	(Id. at 2–3.)
Plaintiff asserts that Defendants’ noncompliance “deprives [him] of evidence needed to
prove claims involving misappropriate assets, diverted tax proceeds, and self-dealing
transactions that may expose unknown co-conspirators.” (Id. at 7.) Further, Plaintiff insists
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that Defendants’ “serial, selective non-production is not the benign product of insolvency
or disorganization,” but rather demonstrates willful defiance. (Id. at 6–7.) Plaintiff alleges
that during the May 28, 2025 hearing regarding the Motion to Compel, Defendants’ counsel
disclosed e-mail addressed associated with individuals not identified as custodians in the
Motion to Compel, thus indicating that Defendants possess the requisite technological
capability to locate, access, and transmit the electronically stored information responsive
to Plaintiff’s discovery requests. (Id. at 6.)
Plaintiff requests that the Court issue an order to show cause requiring Defendants
to appear and to explain why the Court should not sanction their continued noncompliance
with the Motion to Compel Order. (Id. at 8.) Should the Court determine that Defendants
have failed to demonstrate good cause for their noncompliance, Plaintiff asks that the Court
enter of finding of civil contempt and impose various sanctions. (Id.) Specifically, Plaintiff
requests that the Court: (i) impose a coercive fine of $1,000 per day until Defendants
achieve compliance; (ii) strike Defendants’ answers and enter default judgment against
Defendants “on all claims and counterclaims,” followed by an expedited “prove-up” to
determine damages; (iii) impose sanctions in the form of adverse inferences and issue
preclusion; 8 (iv) order reimbursement of all reasonable attorney’s fees and costs incurred
since June 6, 2025, including those incurred preparing the instant Ex Parte Motion and as
a result of Defendants’ continued noncompliance; and (v) award Plaintiff “such further
relief as the Court deems mandatory to preserve the orderly administration of justice.” (Id.
at 8–10.)
As addressed above, Defendants failed to oppose the Ex Parte Motion.
///
8 Plaintiff’s request for sanctions in the form of adverse inferences and issue
preclusion “includ[es] deeming all subsequently produced documents authentic and
admissible and establishing that any destroyed, altered, or withheld item would have been
unfavorable to Defendants.” (ECF No. 217 at 10.)
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2. Supplement to Ex Parte Motion
In the Supplement, Plaintiff asserts that “Defendants’ selective, unusable, and
incomplete production” has caused “concrete, case-dispositive prejudice[.]” (ECF No. 228
at 12.) Plaintiff contends that Defendants produced “a limited, mislabeled document-dump
of compressed, partially corrupted ESI served without Bates labeling, load files/metadata,
or the structured form required by Fed. R. Civ. P. 34(b)(2)(E),” consisting, in part, “of
folders (‘Profit & Loss,’ ‘Balance Sheets,’ etc.) that are incongruent with their contents
and cut off around April 10, 2024.” 	(Id. at 3.) 	Further, Plaintiff maintains that Brown
failed to comply with paragraph 1 and that Defendants took no action to comply with
paragraphs 3, 7, and 10 of the Motion to Compel Order. (Id. at 4–8.) With respect to the
remaining provisions in the order, Plaintiff represents the following:
ECF No. 215 Order ¶2: [Brown shall p]ermit Plaintiff (or his
designated expert or representative) to inspect and copy physical
items and documents that may contain responsive material.
Produced: 	Defendants [9] offered 	an 	in-person, 	paper-only
inspection at a private residence within the 14-day window.
Deficiency: 	On 	this 	record, 	no 	discrete 	violation 	of 	¶2 	is
established. However, consistent with prior orders requiring that
electronic production be delivered in parallel, ESI should be
prioritized. 	A physical inspection should follow, rather than
substitute for, completion of ESI production under Fed. R. Civ.
P. 34(b)(2)(E), so that any on-site review is targeted, efficient,
and facilitates organized collection rather than a burden-shifting
paper exercise. The prior in-person invitation would have been
congruent with 	the 	Court’s 	directives 	had 	Defendants 	also
complied with the ESI or cell phone inspection components; by
electing 	to 	proceed 	only 	with 	an 	in-person 	limited 	paper
inspection, Defendants rendered the visit largely untenable. Any
9 The Court notes that paragraph 2 of the Order mandated compliance from Brown
only. (See ECF No. 215 at 25.)
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Fed. R. Civ. P. 37 remedies for ESI noncompliance should guide
the scope and logistics of any inspection under ¶2.
Prejudice to Plaintiff: Shifts burden to Plaintiff and is inferior
to the ordered electronic production. Defendants ignored nearly
every paragraph of the June 6, 2025 order, proffering only a
‘hard-copy inspection[.’] This is classic burden shifting that is
tangential to, and no substitute for, ordered electronic production
under Rule 34(b)(2)(E). The Defendant entities operated on
email, SMS texts, and cloud systems; paper records were highly
limited and are valuable only in the context of full and complete
ESI production as ordered by the Court. In light of Defendants’
ongoing avoidance of ESI production, account inspection, and
compliance, the probative value and reliability of any paper-only
showing are suspect.
(Id. at 5–6; ECF No. 215 at 25.)
ECF No. 215 Order ¶4: Brown declaration confirming that he
has requested all responsive bank statements. 	Brown shall
produce these statements to Plaintiff.
Produced: No ¶4 declaration confirming issuer requests; no
issuer-pulled bank or credit-card statements. Instead, Defendants
produced a single personal Chase account (2017–2023) and
selective and non-compliant consumer credit-card statements not
tied to comprehensive issuer requests.
Deficiency: No issuer pulls; no confirmation of requests to all
relevant issuers.
Prejudice 	to 	Plaintiff: 	Prevents 	tracing 	of 	revenues,
distributions, 	and 	Federal 	Excise 	Tax 	(“FET”) 	collections;
invites selective curation.
(ECF No. 228 at 6.)
ECF No. 215 Order ¶5: Jet Agency Global, LLC to produce all
doc[uments] responsive to RFP 5 or allow inspection; else amend
to state non-existence after reasonable inquiry.
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Produced: No conforming production; any materials received
are facially deficient.
Deficiency: Invoices omitted; no amended response stating non-
existence after reasonable inquiry.
Prejudice to Plaintiff: Forecloses receivables and FET tracing;
impairs damages computation.
ECF 	No. 	215 	Order 	¶6: 	C3 	Jets, 	LLC 	to 	produce 	all
doc[uments] responsive to RFP 19 [10] or allow inspection; else
amend to state non-existence after reasonable inquiry.
Produced: No conforming production; any materials received
are facially deficient.
Deficiency: Registers and general ledgers omitted; no amended
response stating non-existence after reasonable inquiry.
Prejudice to Plaintiff: Blocks fund-flow and inter-company
analysis; invites self-contradictions.
(Id. at 6–7.)
ECF No. 215 Order ¶8: Serve signed interrogatory answers.
Produced: None.
Deficiency: Defendants served unverified interrogatory answers,
a nullity under Fed. R. Civ. P. 33(b)(3), (5).[11]
10 Plaintiff’s RFP 19 to Brown requested all minutes of any meetings of any entity
defendant’s respective committees since December 13, 2016. (ECF No. 188-3 at 8.)
11 Rule 33 of the Federal Rules of Civil Procedure provides, in pertinent part:
(3) Answering 	Each 	Interrogatory. Each 	interrogatory
must, to the extent it is not objected to, be answered separately
and fully in writing under oath.
…
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Prejudice to Plaintiff: Presently unusable at trial; deprives
Plaintiff 	of 	sworn 	admissions 	and 	fixed 	positions; 	forces
litigation against a moving target and invites ambush via late
verification; facilitates self-concealment by omission, prejudices
due process by obscuring notice of positions and evidentiary
bases, and veers toward de facto self-concealing misconduct.
(Id. at 7.)
Plaintiff maintains that Defendants’ noncompliance “warrants calibrated, coercive
remedies,” including adverse inferences and evidentiary bars tied to the missing categories,
signed verifications, and per-diem civil-contempt fines, until Defendants achieve full
compliance with the Motion to Compel Order, and insists that such sanctions are necessary
to “disincentivize ongoing misconduct” and to deter “continued self-dealing, personal
enrichment, and dissipation of assets.” (Id. at 14, 16.)
Defendants failed to file an opposition to the Supplement.
B. Legal Standard
Rule 37 of the Federal Rules of Civil Procedure “authorizes the district court, in its
discretion, to impose a wide range of sanctions when a party fails to comply with the rules
of discovery or with court orders enforcing those rules.” Compass Bank v. Morris Cerullo
World Evangelism, 104 F. Supp. 3d 1040, 1052 (S.D. Cal. 2015) (citation omitted); see
also Guifu Li v. A Perfect Day Franchise, Inc, 281 F.R.D. 373, 390 (N.D. Cal. 2012) (“As
a condition precedent to imposing sanctions pursuant to Federal Rule of Civil Procedure
37 the Defendants must have violated a Court Order”). Pursuant to Rule 37(b)(2)(A), “[i]f
a party or a party’s officer, director, or managing agent—or a witness designated
under Rule 30(b)(6) or 31(a)(4)—fails to obey an order to provide or permit discovery . . .
(5) Signature. The person who makes the answers must
sign them, and the attorney who objects must sign any objections.
Fed. R. Civ. P. 33(b)(3), (5).
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the court where the action is pending may issue further just orders,” which may include the
following:
(i) directing that the matters embraced in the order or other
designated facts be taken as established for purposes of the
action, as the prevailing party claims
(ii) prohibiting 	the 	disobedient 	party 	from 	supporting 	or
opposing designated claims or defenses, or from introducing
designated matters in evidence;
(iii) striking pleadings in whole or in part;
(iv) staying further proceedings until the order is obeyed;
(v) dismissing the action or proceeding in whole or in part;
(vi) rendering a default judgment against the disobedient party;
or
(vii) treating as contempt of court the failure to obey any order
except an order to submit to a physical or mental examination.
Fed. R. Civ. P. 37(b)(2)(A).
There are two limitations to the application of a Rule 37(b)(2) sanction. “First, any
sanction must be ‘just’; second, the sanction must be specifically related to the particular
‘claim’ 	which 	was 	at 	issue 	in 	the 	order 	to 	provide 	discovery.”
Ins. Corp. of Ireland v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 707 (1982)
(quoting Fed. R. Civ. P. 37(b)(2)). 	“Imposition of sanctions under Rule 37(b), and the
selection of the particular sanction, are matters left to the discretion of the trial court.” Liew
v. Breen, 640 F.2d 1046, 1050 (9th Cir. 1981). “The purpose of civil sanctions is to ensure
compliance with court orders and to compensate aggrieved parties for the sanctioned
party’s failure to comply with court rules and orders.” Cruz v. Nike Retail Servs., Inc., 346
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F.R.D. 107, 114 (S.D. Cal. 2024) (citing Oracle USA, Inc. v. Rimini St., Inc., 81 F.4th 843,
858 (9th Cir. 2023)). 12
C. Analysis
1. Civil Contempt
Plaintiff requests that the Court hold Defendants in contempt of court for failing to
comply with the Motion to Compel and impose a coercive per diem fine of $1,000 per
Defendant, payable to the Clerk, “commencing on the date the contempt order is entered”
in order to “disincentivize non-compliance until full compliance has been certified.” (ECF
No. 217 at 9.)
Except in limited circumstances not applicable here,13 United States Magistrate
Judges lack contempt authority. 	See 28 U.S.C. § 636(e); see also HM Elecs., Inc. v. R.F.
Techs., Inc., No. 12CV2884-BAS (MDD), 2014 WL 12102169, at *1 (S.D. Cal. Dec. 16,
2014) (citing 28 U.S.C. § 636(e); Bingman v. Ward, 100 F.3d 653, 656–657 (9th Cir. 1996)
(explaining that “[m]agistrate judges themselves do not have authority to make any
findings of contempt, so must certify their findings to the district judge”). Title 28, Section
636 of the United States Code provides, in pertinent part, that upon the commission of an
act constituting a civil contempt,
the magistrate judge shall forthwith certify the facts to a district
judge14 and may serve or cause to be served, upon any person
12 “Even without a discovery order, discovery misconduct may be punished under
the court’s inherent powers to manage its affairs. Guifu Li, 281 F.R.D. at 390 n.13 (citation
and quotation marks omitted).
13 United States magistrate judges may, for instance, assert civil or criminal contempt
authority in any case in which the magistrate judge presides with the consent of the parties
and may exercise summary criminal contempt authority to sanction any obstruction of the
administration of justice occurring “in the magistrate judge’s presence.” 	28 U.S.C. §
636(e)(2), (4).
14 “The magistrate judge’s certification of facts serve[s] the function of the charging
document,” and “the district court conduct[s] a de novo hearing where it [may] take and
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whose behavior is brought into question under this paragraph, an
order requiring such person to appear before a district judge upon
a day certain to show cause why that person should not be
adjudged in contempt by reason of the facts so certified. The
district judge shall thereupon hear the evidence as to the act or
conduct complained of and, if it is such as to warrant punishment,
punish such person in the same manner and to the same extent as
for 	a 	contempt 	committed 	before 	a 	district 	judge.
28 U.S.C. § 636(e)(6)(B)(iii). 	“Essentially, the magistrate judge’s role is to determine
whether Plaintiff has established a prima facie case of contempt[.]” Moog Inc. v. Skyryse,
Inc., No. 2:22-CV-09094-GW (MAR), 2023 WL 12032095, at *2–3 (C.D. Cal. May 16,
2023).
“Civil contempt . . . consists of a party’s disobedience to a specific and definite court
order by failure to take all reasonable steps within the party’s power to comply. 	The
contempt need not be willful, and there is no good faith exception to the requirement of
obedience to a court order.” 15 In re Dual-Deck Video Cassette Recorder Antitrust Litig.,
10 F.3d 693, 695 (9th Cir. 1993) (citation and quotation marks omitted); see also United
States v. Powers, 629 F.2d 619, 627 (9th Cir. 1980) (citation omitted) (explaining that civil
contempt is an appropriate remedy when a court aims to “enforce compliance with a court
order”). 	“[C]ivil contempt sanctions, or those penalties designed to compel future
compliance with a court order, are considered to be coercive and avoidable through
consider additional evidence.” 3A Fed. Prac. & Proc. Crim. § 715 (4th ed.); see also 7A
Fed. Proc., L. Ed. § 17:12 (“Trying the contempt charges de novo, the district judge will
hear the evidence as to the act or conduct complained of and, if it is such as to warrant
punishment, punish the person in the same manner and to the same extent as for a contempt
committed before a district judge.”).
15 Federal Rule of Civil Procedure 37(b)(2)(A)(vii) permits the Court to treat as
contempt of court the failure to obey any order to provide or permit discovery, except for
an 	order 	to 	submit 	to 	a 	physical 	or 	mental 	examination. 	See 	Fed. 	R. 	Civ. 	P.
37(b)(2)(A)(vii).
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obedience, and thus may be imposed in an ordinary civil proceeding upon notice and an
opportunity to be heard.” 	Int’l Union, United Mine Workers of Am. v. Bagwell, 512 U.S.
821, 827 (1994). 	“The party alleging civil contempt must demonstrate that the alleged
contemnor violated the court’s order by clear and convincing evidence, not merely a
preponderance of the evidence.” 	In re Dual-Deck, 10 F.3d at 695 (citation and quotation
marks omitted); see also Bagwell, 512 U.S. at 827 (stating that “civil contempt sanctions,
or those penalties designed to compel future compliance with a court order, are considered
to be coercive and avoidable through obedience, and thus may be imposed in an ordinary
civil proceeding upon notice and an opportunity to be heard,” further explaining that
“[n]either a jury trial nor proof beyond a reasonable doubt is required”).
Thus,
[t]o establish a prima facie case for civil contempt, the moving
party must show, “by clear and convincing evidence,” that the
non-moving party disobeyed “a specific and definite court
order,” and that such disobedience was “beyond substantial
compliance” and “not based on a good faith and reasonable
interpretation of the court’s order.”
Daimler AG v. A-Z Wheels LLC, No. 16-CV-875 JLS (MDD), 2022 WL 281580, at *1
(S.D. Cal. Jan. 31, 2022) (quoting In re Dual-Deck, 10 F.3d at 695). “Once the moving
party meets this standard, the burden shifts to the contemnor to demonstrate that he or
she took every reasonable step to comply, and to articulate reasons why compliance was
not possible.” HM Elecs., Inc., 2014 WL 12102169, at *1 (citing Donovan v. Mazzola,
716 F.2d 1226, 1240 (9th Cir. 1983)); see also Coleman v. Newsom, 131 F.4th 948, 956
(9th Cir. 2025) (explaining that “the substantial compliance defense excuses an alleged
contemnor who, despite not achieving total compliance, has 	achieved near-total
compliance through the exhaustion of all reasonable efforts”); United States v. Ayres,
166 F.3d 991, 994 (9th Cir. 1999) (citation omitted) (stating that “[a]n alleged contemnor
may defend against a finding of contempt by demonstrating a present inability to
comply”); In re Dual-Deck, 10 F.3d at 695 (citation and quotation marks omitted)
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(“Substantial compliance with the court order is a defense to civil contempt, and is not
vitiated by ‘a few technical violations’ where every reasonable effort has been made to
comply”).
Here, the undersigned Magistrate Judge concludes that Plaintiff’s allegations
establish a prima facie case for civil contempt. 	Defendants disobeyed “a specific and
definite court order” by failing to substantially comply with all but one of the discovery
directives set forth in the Motion to Compel Order. Daimler AG, 2022 WL 281580, at *1
(quoting In re Dual-Deck, 10 F.3d at 695). 	In his Supplement, Plaintiff concedes that
Brown has comported, at least nominally, with the second discovery directive since the
filing of the Ex Parte Motion. (See ECF No. 228 at 5 (Plaintiff’s acknowledgement that
“[o]n this record, no discrete violation of ¶2 is established”). With respect to the remaining
discovery directives, however, Plaintiff’s Supplement indicates that Defendant produced
only minimal discovery, subsequent to the filing of the 	Ex Parte 	Motion, andthat
Defendant’s production was substantially incomplete and noncompliant. 	(See ECF No.
228 at 4–8.); see also In re Heritage Bond Litig., 223 F.R.D. 527, 533 (C.D. Cal. 2004)
(holding that plaintiffs demonstrated by clear and convincing evidence that defendants
failed to comply with the court’s order compelling the production of documents, thus
warranting a finding of civil contempt under Federal Rule of Civil Procedure 37(b)(20(D),
where it was “clear that the efforts by [] defendants to obtain relevant and significant
documents for [] plaintiffs was minimal”). 	Thus, the burden shifts to Defendants to
demonstrate a present inability to comply with the Order. 	See Ayres, 166 F.3d at 994.
However, as noted above, Defendants failed to file an opposition to Plaintiff’s Ex Parte
Motion despite three opportunities to do so.
Moreover, as noted in the Motion to Compel Order, this Court has overseen discovery
disputes regarding Defendants’ responses to the discovery requests at issue for more than
a year. 	(ECF No. 215 at 23.) 	On multiple occasions, Defendants agreed to supplement
their responses in accordance with agreements reached at informal Discovery Conferences,
only for Defendants to thereafter revoke or deny those agreements. (Id. at 23-24.) Further,
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Defendants have repeatedly failed to meet deadlines set by the Rules of Civil Procedure
and by Court orders. (Id. at 24.) That pattern continues, as Defendants persist in flagrantly
disregarding the discovery directives set forth in the Order. See HM Elecs., Inc., 2014 WL
12102169, at *1 (quoting Stone v. City and Cnty. of San Francisco, 968 F.2d 850, 856–57
(9th Cir. 1992)) (“To assess whether an alleged contemnor has taken ‘every reasonable
step’ to comply with the terms of a court order, the district court can consider (1) a history
of noncompliance, and (2) a failure to comply despite the pendency of a contempt
motion.”). 	Court orders are not something Defendants can merely “work on” but “make
no promises” to comply with. (See ECF No. 217 at 4.) They must be adhered to.
Defendants have not opposed the Motion and have not met their burden to
demonstrate they were unable to comply, despite taking all reasonable steps to do so. See
Daimler AG, 2022 WL 281580, at *1.
The Court therefore certifies the pertinent facts set forth above in the Relevant
Procedural Background. 	The Court further certifies that Defendants, individually and
collectively, violated a specific and definite order of this Court; did not take every
reasonable step to comply with the order; and have not established that they were unable
to comply with the order. Accordingly, the Court recommends that the Honorable Gonzalo
P. Curiel initiate civil contempt proceedings against Defendants.
a. 	Coercive Fines
One form of relief requested by Plaintiff is the imposition of a coercive fine of
$1,000 per day until Defendants achieve compliance.
“[A] per diem fine imposed for each day a contemnor fails to comply with an
affirmative court order” can constitute a coercive civil sanction. Coleman, 131 F.4th at
962–63 (quoting Bagwell, 512 U.S. at 829). 	“A court, in determining the amount and
duration of a coercive fine, must ‘consider the character and magnitude of the harm
threatened by continued contumacy, and the probable effectiveness of any suggested
sanction in bringing about the result desired.’” Whittaker Corp. v. Execuair Corp., 953
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F.2d 510, 516 (9th Cir. 1992) (quoting United States v. United Mine Workers of Am., 330
U.S. 258, 304 (1947))). The Court determines that daily coercive fines in the amounts
set 	forth 	below 	are 	the 	appropriate 	sanction, 	carefully 	calculated 	to 	incentivize
compliance with the Motion to Compel Order.
In Falstaff Brewing Corp. v. Miller Brewing Co., the Ninth Circuit reversed an
amended order of the district court holding plaintiff in contempt of court for, inter alia,
failing to return documents as required by a protective discovery order. 	702 F.2d 770,
777, 780, 783 (9th Cir. 1983). The Court is mindful of Falstaff’s direction on the need
to clearly differentiate between coercive civil contempt sanctions and punitive criminal
contempt sanctions.16 Importantly, a coercive per diem fine cannot constitute a civil
contempt sanction where the record shows that compliance with the court’s order is
impossible. See id. at 782 (reasoning that “the district court’s order of contempt simply
[could not] be sustained as a coercive civil contempt order,” where “it was impossible
for [the contemnor] to purge itself of contempt by returning documents which were in
the sole possession of its counsel”). “A court’s power to impose coercive civil contempt
depends upon the ability of the contemnor to comply with the court’s coercive order.”
Id. at 778 (citing Shillitani v. United States, 384 U.S. 364, 371 (1966)). Where a coercive
sanction is imposed, the civil contemnor “carries the keys of his prison in his own
pocket,” either literally or figuratively; whereas if the penalty is fixed, the criminal
contemnor “is furnished no key, and he cannot shorten the term by promising not to
repeat the offense.” Gompers v. Buck’s Stove & Range, Inc., 221 U.S. 418, 442 (quoting
16 The Falstaff Court cautioned, “[w]here . . . a judgment of contempt contains an
admixture of criminal and civil elements, ‘the criminal aspect of the order fixes its character
for purposes of procedure on review.’” Falstaff, 702 F.2d at 778 (quoting Penfield Co. of
California v. Securities & Exchange Commission, 330 U.S. 585, 591 (1947)). The Ninth
Circuit also addressed the distinction between compensatory civil contempt sanctions,
payable to the opposing party, and coercive civil contempt sanctions, payable to the Court.
See id. at 779-80. Here, Plaintiff is only requesting, and the Court is only recommending,
the imposition of coercive civil contempt sanctions.
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In re Nevitt, 117 F. 448, 461 (8th Cir. 1902)); see also Coleman, 131 F.4th at 962
(explaining that “just as a conditional sentence of imprisonment is coercive and civil if
the contemnor ‘carries the keys of his prison in his own pocket,’ a purgeable civil fine is
one that is forward-looking and conditional, allowing the contemnor to avoid its
imposition by altering some behavior”) (quoting Bagwell, 512 U.S. at 828).
In this case, certain aspects of the Order are, on their face, clearly well within
Defendants’ power to comply. All Defendants have failed to serve Plaintiff with signed
interrogatory responses in violation of the Federal Rules of Civil Procedure and the
Motion to Compel Order. Defendant Brown has failed to submit a declaration as ordered
by the Court. All Defendants have failed to provide a privilege log as ordered by the
Court. 	All Defendants have failed to produce discovery they had agreed in their
discovery responses and in the pleadings and hearings related to the Motion to Compel
to produce, even after production was ordered by the Court. 	With respect to other
aspects of the Motion to Compel Order, specifically directives 1 and 3, it is not as
obvious on its face that Defendants have the current ability to comply, but the burden
had shifted to them to articulate reasons why compliance was not possible, and they
declined to file any opposition to the Ex Parte Motion. Nonetheless, the Court, in this
recommendation, still allows for Defendants to avoid civil coercive sanctions either by
complying 	with 	directives 	1 	and 	3 	of 	the 	Order 	or 	by 	submitting 	declarations
demonstrating impossibility. Thus, each Defendant truly “carries the keys of his prison
in his own pocket,” as each possesses the ability to purge contempt through compliance
with any contempt order hereafter issued by Judge Curiel. 	See Gompers, 221 U.S. at
442.
The Court recommends daily coercive sanctions, to be paid to the Court, in the
following amounts until the required actions are completed.
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Defendant 	¶ Number
from
Order/RFP
Number
Required Action to End Sanctions 	Daily
Sanction
Amount
Brown 	¶¶ 1, 3
RFP Nos.
28, 31, 32,
33, 37, 38,
39, 43, 53,
54, 58, 64,
65, 66, 67,
68, 69, 70
Permit Plaintiff (or his designated expert
or representative) to inspect the servers,
email accounts, cell phones, and any
other electronic storage media within
Brown’s possession, custody, or control
for all agreed upon custodians AND file
a declaration with the Court signed by
Brown: (1) specifically identifying which
electronic storage media he currently has
possession, custody or control of and has
made available to Plaintiff; (2)
specifically identifying which electronic
storage media he maintains he never had
possession, custody or control of and the
basis for that assertion; (3) specifically
identifying any electronic media storage
devices he previously had possession,
custody or control of and no longer does;
and (4) for each electronic storage media
device identified under (3), setting forth
why it is not available for inspection,
when and how it became unavailable for
inspection, and what efforts were made,
and when, to preserve the devices and
their data for this litigation.
$500 per
day
Brown 	¶ 4
RFP Nos.
5, 7, 8, 9
Produce all responsive bank and credit
card statements to Plaintiff AND file a
declaration with the Court confirming
that he has requested all responsive bank
statements and credit card statements
from his financial institutions and that all
responsive documents have been
produced. All transactional information
beyond that which is requested may be
redacted.
$250 per
day
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Defendant 	¶ Number
from
Order/RFP
Number
Required Action to End Sanctions 	Daily
Sanction
Amount
Jet Agency
Global,
LLC
¶ 5
RFP No. 5
Produce all client invoices since
December 13, 2016, AND file a
declaration confirming that this has been
completed.
$200 per
day
C3 Jets,
LLC
¶ 6
RFP No. 19
Produce all check registers and general
ledgers since December 13, 2016 AND
file a declaration confirming this has
been completed.
$200 per
day
All
Defendants
¶¶ 7, 10 	Produce a privilege log of any
communications as to which Stacy
Brown is asserting marital
communications privilege; produce all
responsive documents withheld on the
basis of privilege, except for those
documents over which Stacy Brown
asserts the marital communications
privilege; AND file a declaration with
the Court affirming that no responsive
documents are being withheld on the
basis of privilege outside of those on the
Stacy Brown marital communications
privilege log.
$100
(joint and
several)
All
Defendants
¶ 8 	Serve on Plaintiff signed copies of their
interrogatories in compliance with Fed.
R. Civ. P. 33 AND file a declaration with
the Court confirming that it has been
completed.
$100 per
Defendant
per day
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Defendant 	¶ Number
from
Order/RFP
Number
Required Action to End Sanctions 	Daily
Sanction
Amount
All
Defendants
except for
Brown,
because,
for Brown,
this action
is already
addressed
in the first
entry in
this chart
¶ 3 	To the extent they have possession,
custody, or control of the cell phones
used by the agreed upon custodians,
make those phones available for
inspection by Plaintiff AND file a
declaration with the Court: (1)
specifically identifying which cell
phones they currently have possession,
custody or control of and have made
available to Plaintiff; (2) specifically
identifying which electronic cell phones
they maintain they never had possession,
custody or control of and the basis for
that assertion; (3) specifically identifying
any cell phones they previously had
possession, custody or control of and no
longer do; and (4) for each cell phone
identified under (3), setting forth why it
is not available for inspection, when and
how it became unavailable for
inspection, and what efforts were made,
and when, to preserve the device and its
data for this litigation.
$500 per
Defendant
per day
Should Judge Curiel issue an order imposing the recommended civil coercive
sanctions, the Court further recommends that the sanctions be suspended for five days after
such order is issued.
b. Default Liability on All Claims and Counterclaims
Plaintiff requests that the Court “strike Defendants’ answers and enter default as to
liability on all claims and counterclaims.” (ECF No. 217 at 9.) Furthermore, “upon entry
of default, Plaintiff asks that the Court set an expedited prove-up to determine damages,
shifting 	to 	Defendants 	the 	burden 	of 	disproving 	amounts 	that 	would 	have 	been
ascertainable had they produced the ordered records.” (Id.)
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The District Court has the discretion to strike pleadings, dismiss the action, or render
default judgment in response to noncompliance with a discovery order. 	Fed. R. Civ. P.
37(b)(2)(A)(iii, v-vi). 	“Dismissal, however, is authorized only in extreme circumstances
and only where the violation is due to willfulness, bad faith, or fault of the party.” 	In re
Exxon Valdez, 102 F.3d 429, 432 (9th Cir. 1996) (citation and quotation marks omitted);
see also Henry v. Gill Indus., Inc., 983 F.2d 943, 946 (9th Cir. 1993) (citationomitted)
(“Where the drastic sanctions of dismissal or default are imposed, however, the range of
discretion is narrowed and the losing party’s non-compliance must be due to willfulness,
fault, or bad faith.”).
In deciding whether to dismiss a case or render default judgment, a court must weigh
the following five factors: “(1) the public’s interest in expeditious resolution of litigation;
(2) the court’s need to manage its docket; (3) the risk of prejudice to the [moving party];
(4) the public policy favoring disposition of cases on their merits; and (5) the availability
of less drastic sanctions.” In re Phenylpropanolamine (PPA) Prods. Liab. Litig., 460 F.3d
1217, 1226 (9th Cir. 2006) (citation omitted); see also Adriana Int’l Corp. v. Thoeren, 913
F.2d 1406, 1412 (9th Cir.1990). 	“These factors are ‘not a series of conditions precedent
before the judge can do anything,’ but a ‘way for a district judge to think about what to
do.’” 	Id. (quoting Valley Eng’rs Inc. v. Elec. Eng’g Co., 158 F.3d 1051, 1057 (9th Cir.
1998). 	“Where a court order is violated, the first two factors support sanctions and the
fourth factor cuts against a default. Therefore, it is the third and fifth factors that are
decisive.” 	Adriana Int’l Corp., 913 F.2d at 1412. 	The moving party suffers prejudice
where the actions of the non-moving party impair the “ability to go to trial or threaten to
interfere with the rightful decision of the case.” 	Id. 	“Delay alone has been held to be
insufficient prejudice” but “[f]ailure to produce documents as ordered, . . . is considered
sufficient prejudice.” 	Id. 	“The district court’s finding of prejudice deserves substantial
deference because the district court is in the best position to assess prejudice.” 	In re
Phenylpropanolamine, 460 F.3d at 1228 (citation and quotation marks omitted).
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Plaintiff argues that Defendants’ “non-compliance immediately deprives [him] of
evidence 	needed 	to 	prove 	claims 	involving 	misappropriated 	assets, 	diverted 	tax
proceedings, and self-dealing transactions that may expose unknown co-conspirators.
Further, Plaintiff insists that “[t]he resulting prejudice is manifest,” as “without the
requested financial records and verified interrogatories, [he] cannot quantify damages or
test the veracity of Defendants’ anticipated defenses.” 	(ECF No. 217 at 7.) 	The Ninth
Circuit has held that “[t]he district court abuses its discretion if it imposes a sanction of
dismissal without first considering the impact of the sanction and the adequacy of less
drastic sanctions.” Malone v. U.S. Postal Serv., 833 F.2d 128, 131 (9th Cir. 1987) 9citation
omitted). 	“Failure to Warn has frequently been a contributing factor in [Ninth Circuit]
decisions to reverse orders of dismissal.” Id. at 133 (citations omitted). Reviewing courts
may consider whether a district court: (1) explicitly discussed the feasibility of less drastic
sanctions; (2) implemented alternative methods of sanctioning before ordering dismissal;
or (3) warned the non-moving party of the possibility of dismissal before ordering
dismissal. 	Id. at 132. In this case, the Court expressly warned Defendants that failure to
comply with the Motion to Compel Order could result in more serious sanctions, up to and
including evidentiary and issue preclusion sanctions. 	(ECF No. 215 at 27 (“Failure to
timely comply with any aspect of this Order may expose Defendants to the imposition of
sanctions up to and including evidentiary and issue preclusion sanctions.”).) 	Further, the
Court previously ordered Defendants to pay, within 30 days, Plaintiff’s reasonable
attorney’s fees incurred in bringing the Motion to Compel (ECF No. 224), which
Defendants have allegedly failed to do. (ECF No. 230).
The Court recognizes that Defendants’ repeated failure to provide discovery
beginning in February 2024, compounded by their continued refusal to comply with court
orders, constitutes an interference with the rightful decision of the case. 	However, the
Court is not persuaded that invoking the drastic sanction of dismissal or default—which
has 	been 	characterized 	as 	the 	“most 	severe 	penalty” 	authorized 	only 	in 	“extreme
circumstances”—is appropriate at this time. U.S. for Use & Ben. of Wiltec Guam, Inc. v.
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Kahaluu Const. Co., 857 F.2d 600, 603 & 603 n.5 (9th Cir. 1988) (citation omitted); see
also Gen. Atomic Co. v. Exxon Nuclear Co., 90 F.R.D. 290, 307 (S.D. Cal. April 23, 1981)
(citation omitted) (“[D]ismissal and default judgment, the sanctions of last resort, run
counter to the strong public policy of deciding cases on their merits and affording litigants
their fair day in court.”). Instead, less drastic sanctions, such as those outlined in the instant
Order, should be utilized first. Defendants are once again warned, though, that continued
noncompliance may result in terminating sanctions. 	Because the Court recommends
against entry of default, the Court need not address Plaintiff’s request for an expedited
prove-up to determine damages.
c. 	Adverse Influence and Issue Preclusion
In his Ex Parte Motion, Plaintiff requests sanctions in the form of “adverse-influence
and issue-preclusion findings, including deeming all subsequently produced documents
authentic and admissible and establishing that any destroyed, altered, or withheld item
would have been unfavorable to Defendants.” 	(ECF No. 217 at 10.) 	Plaintiff maintains
that “Defendants’ defiance is willful, not inadvertent.” 	(Id. at 6.) 	In the court-ordered
Supplement, Plaintiff asserts that the record in this case warrants the imposition of
sanctions in the form of “adverse inferences and evidentiary bars tied to the missing
categories[.]” (ECF No. 228 at 14.)
As a sanction for failure to comply with a discovery order, a District Court may issue
an order “directing that the matters embraced in the order or other designated facts be taken
as established for purposes of the action, as the prevailing party claims.” Fed. R. Civ. P.
37(b)(2)(A)(i); Guifu Li, 281 F.R.D. at 393 (citation omitted). Courts have held that
“[a]n adverse inference instruction can take many forms, []
ranging in degrees of harshness.” Apple Inc. [v. Samsung Elecs.
Co., Ltd.,], 881 F. Supp. 2d [1132,] 1150 [N.D. Cal. 2012]. The
level 	of 	harshness 	should 	be 	commensurate 	with 	the
egregiousness of the conduct. Id. There are three levels of
instructions generally considered: (1) “when a spoliating party
has acted willfully or in bad faith, the jury can be instructed that
certain facts are deemed admitted and must be accepted as true”;
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(2) “when a spoliating party has acted willfully or recklessly, a
court may impose a mandatory presumption”; and (3) the least
harsh instruction “permits (but does not require) a jury to
presume that the lost evidence is both relevant and favorable to
the 	innocent 	party.” 	Id. 	(citation 	omitted).
Ramos v. Swatzell, No. EDCV121089BROSPX, 2017 WL 2857523, at *14 (C.D. Cal. June
5, 2017), report and recommendation adopted, No. ED CV 12-1089-BRO (SPx), 2017 WL
2841695 (C.D. Cal. June 30, 2017) (declining to impose a requested sanction in the form
of an adverse inference jury instruction suggesting that defendants concealed evidence that
one defendant was counseled for dishonesty in a government investigation, where plaintiffs
“failed to show that was the case”).
Further, Rule 37(b)(2) sanctions are limited by two considerations: the sanction must
be “just” and must be “specifically related to the particular claim which was at issue in the
order to provide discovery.” 	Guifu Li, 281 F.R.D. at 393 (quotation marks and citation
omitted). 	Here, Plaintiff fails to specify which “particular claim[s]” of the 19 causes of
action set forth in his Second Amended Complaint are at issue in connection with his
request for Rule 37(b)(2) sanctions in the form of adverse inferences and issue preclusion.
See Guifu Li, 281 F.R.D. at 393; (see also ECF No. 217 at 7) (contending generally that
“Defendants’ non-compliance immediately deprive[d] Plaintiff of evidence needed to
prove claims involving misappropriated assets, diverted tax proceeds, and self-dealing
transactions that may expose unknown co-conspirators”). 	Plaintiff also does not address
whether the requested sanctions are “specifically related” to those claims. 	Id. at 393-94
(deeming facts pertaining to the issue of alter ego liability set forth in two paragraphs of
the complaint established, subject to rebuttal at trial, where one defendant “repeatedly
refused to produce documents and deponents that would clarify its corporate ownership
and structure, concluding that “[t]his [was] an appropriate and narrowly tailored sanction
to address the Court’s orders that have been violated”). 	Moreover, despite raising the
specter of the destruction of evidence by Defendants (see ECF No. 217 at 10), Plaintiff
fails to develop this potential argument with any specificity. 	See, e.g., Ramos, 2017 WL
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2857523, at *13 (explaining that a party seeking an adverse inference instruction based on
the destruction of evidence must establish: (1) that the party having control over the
evidence had an obligation to preserve it at the time it was destroyed; (2) that the records
were destroyed with a culpable state of mind; and (3) that the evidence was relevant to the
party’s claim or defense such that a reasonable trier of fact could find that it would support
that claim or defense). The record, at this time, does not establish that evidence has been
destroyed. 	The Court is not persuaded that the imposition of adverse inference
instructions and issue preclusion are the appropriate sanctions at this time. See Dr. Lokesh
Tantuwaya MD, Inc. v. Jetsuite, Inc., No. 19-CV-49-W-BLM, 2023 WL 6378012, at *6
(S.D. Cal. Sept. 27, 2023) (awarding attorneys’ fees and costs but declining to impose
terminating sanctions under Rule 37(b), where plaintiff failed to produce responsive
documents, respond to interrogatories, participate in the meet and confer process, or
respond to defendant’s motion to compel); see also AMC Tech., LLC v. Cisco Sys., Inc.,
No. 11-CV-3403 PSG, 2013 WL 3733390, at *4 (N.D. Cal. July 15, 2013) (citation and
quotation marks omitted) (holding that sanctions in the form of adverse inferences “have
similar effect to default judgment and should only be awarded with very great restraint”).
The Court therefore recommends against imposing sanctions in the form of adverse
inferences and issue preclusion.
2. Attorney’s Fees
Pursuant to Federal Rule of Civil Procedure 37(b)(2)(C), Plaintiff requests an award
of all reasonable attorneys’ fees and costs incurred since June 6, 2025, as a result of
Defendants’ noncompliance with the Motion to Compel Order, including all attorney’s fees
and costs incurred preparing the instant Ex Parte Motion. (ECF No. 217 at 10.) Plaintiff
seeks “to ensure that Defendants do not profit from their discovery misconduct and to
restore the parties to level litigation footing.” (Id.)
“Imposition of sanctions under Rule 37(b), and the selection of the particular
sanction, are matters left to the discretion of the trial court.” 	Liew, 640 F.2d at 1050
(citations omitted). Federal Rule of Civil Procedure 37(b) provides, relevant part:
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Payment of Expenses. Instead of or in addition to the orders
above, the court must order the disobedient party, the attorney
advising that party, or both to pay the reasonable expenses,
including attorney’s fees, caused by the failure [to obey an order
to 	provide 	or 	permit 	discovery], 	unless 	the 	failure 	was
substantially justified or other circumstances make an award of
expenses unjust.
Fed. R. Civ. P. 37(b)(2)(A), (C). “The party against whom an award of expenses is sought
has the burden of showing the special circumstances that make his failure to comply
‘substantially justified.’” Liew, 640 F.2d at 1050 (quoting Fed. R. Civ. P. 37b)(2)).
As noted above, Defendants failed to oppose Plaintiff’s Ex Parte Motion. 	Thus,
Defendants have not attempted to meet their burden of showing that special circumstances
render their failure to comply with the Order “substantially justified.” Id. The Court finds
no substantial justification for Defendants’ noncompliance and is not aware of any
circumstances that would make awarding expenses unjust. The Court therefore concludes
that Plaintiff is entitled to reasonable attorney’s fees and costs incurred following June 6,
2025, as a result of Defendants’ noncompliance with the Motion to Compel Order. 	See
Richmark Corp. v. Timber Falling Consultants, 959 F.2d 1468, 1482-83 (9th Cir. 1992)
(affirming award of approximately $24,000 in attorney’s fees and costs incurred obtaining
an order compelling discovery); Ramos, No. EDCV121089BROSPX, 2017 WL 2857523,
at *15 (citing Fed. R. Civ. P. 37(b)(2)(C)) (holding that plaintiffs were entitled to monetary
sanctions in the form of attorney’s fees and expenses, where defendant failed to obey the
court’s order to produce documents”).
It is of no moment that Plaintiff concedes in the Supplement that “[o]n this record,
no discrete violation of ¶2 is established” where Brown afforded Plaintiff the opportunity
to inspect and copy physical items and documents within the 14-day window provided for
in the Motion to Compel Order (ECF No. 228 at 5) or that the Defendants partially
complied with the Order in other, modest ways.
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As Defendants’ counsel has only been attorney of record since April 21, 2025 (ECF
No. 204), and Defendants have been disregarding discovery deadlines since February 2024,
the Court finds Defendants to be the disobedient party and orders the Defendants, jointly
and severally, to pay the reasonable attorney’s fees and costs.
However, Plaintiff has not detailed the amount of reasonable attorney’s fees and
costs incurred in connection with Defendants’ noncompliance. 	See RG Abrams Ins. v. L.
Offs. of C.R. Abrams, 342 F.R.D. 461, 523 (C.D. Cal. 2022) (stating that “[t]he party
seeking the award of fees must submit evidence to support the request”). As this Court has
explained:
In the Ninth Circuit, a district court determines a reasonable fee
award first by “calculating the lodestar amount, which is the
‘number 	of 	hours 	reasonably 	expended 	on 	the 	litigation
multiplied by a reasonable hourly rate.’” Chaudhry v. City of Los
Angeles, 751 F.3d 1096, 1110 (9th Cir. 2014) (quoting Hensley
v. Eckerhart, 461 U.S. 424, 433 (1983)). To assess a reasonable
hourly rate, the court must look to the “rate prevailing in the
community 	for 	similar 	work 	performed 	by 	attorneys 	of
comparable 	skill, 	experience, 	and 	reputation.” 	Camacho
v.Bridgeport Fin., Inc., 523 F.3d 973, 979 (9th Cir. 2008)
(quoting Barjon v. Dalton, 132 F.3d 496, 502 (9th Cir. 1997)).
“Affidavits of the [fee applicant] and other attorneys regarding
prevailing fees in the community, and rate determinations in
other cases, . . . are satisfactory evidence of the prevailing market
rate.” United Steelworkers of Am. v. Phelps Dodge Corp., 896
F.2d 403, 407 (9th Cir. 1990).
Kirschner v. J.P. Morgan Chase Bank, N.A., No. 20-CV-01712-LAB-JLB, 2021 WL
2633592, at *2–3 (S.D. Cal. June 25, 2021). 	Accordingly, Plaintiff SHALL FILE
supporting declarations and documentation sufficient to support its request for attorney’s
fees and costs within ten (10) days of the date of this Order. See id. at *3 (citing Blum v.
Stenson, 465 U.S. 886, 895 n.11 (1984) (“To inform and assist the court in the exercise of
discretion, the burden is on the fee applicant to produce satisfactory evidence—in addition
to the attorney’s own affidavits—that the requested rates are in line with those prevailing
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in the community for similar services by lawyers of reasonably comparable skill,
experience[,] and reputation.”); McCwon v. City of Fontana, 565 F.3d 1097, 1102 (9th Cir.
2009) (citation omitted) (“The party seeking the award should provide documentary
evidence to the court concerning the number of hours spent, and how it determined the
hourly 	rate(s) 	requested.”)). 	Defendants 	may 	file 	an 	opposition 	challenging 	the
reasonableness of the amount of attorney’s fees within five (5) days of the date of
Plaintiff’s filing of his declaration. 	See RG Abrams Ins., 342 F.R.D. at 523 (“The party
opposing the fee request bears the burden of rebuttal that requires submission of evidence
to the district court challenging the accuracy and reasonableness of the hours charged or
the facts asserted by the prevailing party in submitted affidavits.”) (citation and quotation
marks omitted).
III. CONCLUSION AND RECOMENDATION
For the foregoing reasons, Plaintiff’s request for attorney’s fees is GRANTED.
Plaintiff SHALL FILE a declaration and documentation sufficient to support its request
for attorney’s fees and costs within ten (10) days of the date of this Order. 	Defendants
may file an opposition challenging the reasonableness of the amount of attorney’s fees
within five (5) days of the date of Plaintiff’s filing of his supporting declaration and
documentation. The Court RECOMMENDS to the Honorable Gonzalo P. Curiel that the
Court initiate civil contempt proceedings against Defendants. Further, the Court certifies
the pertinent facts in connection with a contempt inquiry, as set forth in the relevant
procedural background above. 	The Court RECOMMENDS that Plaintiff’s request for
sanctions in the form of coercive per diem fines be GRANTED in the amounts set forth in
this Report and Recommendation. 	The Court further RECOMMENDS, however, that
Plaintiff’s request for sanctions in the form of adverse inferences, issue preclusion, and
entry of default judgment be DENIED.
IT IS HEREBY ORDERED that, pursuant to 28 U.S.C. § 636(b)(1)(C), any party
to this action may file written objections with the Court and serve a copy on all parties no
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later than February 12, 2026. The document should be captioned “Objections to Report
and Recommendation.”
IT IS FURTHER ORDERED that if objections are filed, any reply is due by
February 26, 2026. 	The parties are advised that failure to file objections within the
specified time may waive the right to appeal the district judge’s order. 	Martinez v. Ylst,
951 F.2d 1153, 1157 (9th Cir. 1991).
IT IS SO ORDERED.
Dated: January 29, 2026
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