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Animal Blood Bank, Inc., A California Corporation, et al v. Anne S. Hale

June 12, 2012

ANIMAL BLOOD BANK, INC., A CALIFORNIA CORPORATION, ET AL., PLAINTIFFS,
v.
ANNE S. HALE, AN INDIVIDUAL, DEFENDANT.



The opinion of the court was delivered by: Kendall J. Newman United States Magistrate Judge

ORDER and FINDINGS AND RECOMMENDATIONS AND RELATED COUNTERCLAIMS

Presently before the court is plaintiffs' renewed motion to compel further production of documents and compliance with the court's order entered on July 8, 2011.*fn1 (Pls.' Mot. to Compel, Dkt. No. 60; Order, July 8, 2011, Dkt. No. 37.) After a May 3, 2012 hearing on the motion to compel, and having determined that neither defendant nor the Chapter 7 Bankruptcy trustee who "owns" defendant's counterclaims intends to participate in this litigation, the undersigned entered an order to show cause directing defendant to show cause why: (1) her answer should not be stricken; (2) her default not be entered; and (3) her counterclaims not be dismissed with prejudice. (See Order & Order to Show Cause ("OSC"), May 8, 2012, at 3-4, Dkt. No. 66.) The undersigned ordered the Chapter 7 bankruptcy trustee, Michael A. Mason, to similarly show good cause in regards to dismissal of defendant's counterclaims. (Id. at 3.) Neither defendant nor Mason filed a response to the OSC. Accordingly, the undersigned recommends that: (1) the Clerk of Court be directed to strike defendant's answer to plaintiffs' complaint and enter defendant's default; and (2) defendant's counterclaims be dismissed with prejudice. As warned in the OSC, defendant's and Mason's failure to respond to the OSC constitutes their consent to the recommendations stated above. (Id. at 4.)

I. BACKGROUND

The undersigned does not present a labored factual background here. It is sufficient to begin by stating that on March 30, 2012, plaintiffs renewed their motion to compel with leave of court, as the motion had been held in abeyance pending the lifting of a bankruptcy stay triggered by defendant's voluntary Chapter 7 bankruptcy petition in the U.S. Bankruptcy Court for the Eastern District of Michigan. (See Order, Aug. 22, 2011, Dkt. No. 47; Order, Mar. 28, 2012, Dkt. No. 59.) Neither defendant nor Mason opposed or otherwise responded to plaintiffs' renewed motion to compel.

The court heard plaintiffs' motion to compel on May 3, 2012. No appearance was made by or on behalf of defendant or Mason. As a result, and in light of plaintiffs' declarations, the court entered the above-referenced OSC.

As noted in the OSC, plaintiffs' status reports and their counsel's declarations very strongly indicate that defendant has ceased participating in this litigation and is avoiding or rebuffing plaintiffs' counsel's attempts to communicate with defendant. (See generally Koenigsberg Decl., Dkt. No. 64; see also Pls.' Status Report, Mar. 13, 2012, at 1 & Ex. A, Dkt. No. 58; Pls.' Am. Status Report, Apr. 10, 2012, at 1, Dkt. No. 63; accord Order, Mar. 28, 2012, at 2 ("Plaintiffs have filed a report and represented that defendant refuses to participate further in this litigation.").) Defendant's failure to appear at the hearing on plaintiffs' motion to compel and her failure to respond to the May 8, 2012 OSC further support the conclusion that defendant lacks any intention to defend herself in this litigation. Moreover, defendant previously failed to respond to an order entered by the district judge, which warned defendant of the potential sanctions of default as to plaintiffs' claims and dismissal of defendant's counterclaims if defendant failed to participate in this case. (See Order, Mar. 28, 2012, at 2.)

Mason, the Chapter 7 bankruptcy trustee who controls defendant's counterclaims in this case, has been similarly absent and non-responsive. Mason also failed to respond to the OSC and has not given the court any indication whether he intends to pursue defendant's counterclaims. Although plaintiffs' most recent notice to the court indicates that two of the plaintiffs and the "Trustee," ostensibly Mason, entered into a purchase agreement vis-a-vis defendant's shares in Animal Blood Bank, Inc. that requires the dismissal of defendant's counterclaims, but also requires approval by the bankruptcy court, Mason has not communicated with the court in this regard. (Pls.' Notice Re: Status of Bankr. Action at 1, Dkt. No. 67.)

As a result of defendant's and Mason's non-participation, plaintiffs' motion to compel has essentially been transformed into a motion for a default judgment as to plaintiffs' claims against defendant. (See Koenigsberg Decl. ¶¶ 17-20.) Additionally, the question of whether defendant's counterclaims should be dismissed with prejudice is squarely before the court.

In issuing the OSC, the undersigned provided defendant and Mason a "last chance to communicate with the court about whether defendant has any intention to defend herself against plaintiffs' claims and whether Mr. Mason intends to pursue defendant's counterclaims."*fn2

(OSC at 3 (emphasis added).) And as noted above, the OSC warned that defendant's failure to respond to the OSC would constitute defendant's consent to the striking of her answer, the entry of her default as to plaintiffs' claims, and the dismissal of her counterclaims to the extent that defendant retains any control over those counterclaims. (Id. at 4.) Similarly, the OSC warned Mason that his failure to respond to the OSC would constitute Mason's consent, as the Chapter 7 bankruptcy trustee, to the involuntary dismissal of defendant's counterclaims. (Id.)

II. DISCUSSION

Pursuant to Federal Rule of Civil Procedure 41(b) and applicable case law, a district court may dismiss an action for failure to prosecute, failure to comply with the Federal Rules of Civil Procedure, failure to comply with the court's local rules, or failure to comply with the court's orders.*fn3 See, e.g., Chambers v. NASCO, Inc., 501 U.S. 32, 44 (1991) (recognizing that a court "may act sua sponte to dismiss a suit for failure to prosecute"); Hells Canyon Preservation Council v. U.S. Forest Serv., 403 F.3d 683, 689 (9th Cir. 2005) (recognizing that courts may dismiss an action pursuant to Federal Rule of Civil Procedure 41(b) sua sponte for a plaintiff's failure to prosecute or comply with the rules of civil procedure or the court's orders); Ferdik v. Bonzelet, 963 F.2d 1258, 1260 (9th Cir. 1992) ("Pursuant to Federal Rule of Civil Procedure 41(b), the district court may dismiss an action for failure to comply with any order of the court."); Pagtalunan v. Galaza, 291 F.3d 639, 642-43 (9th Cir. 2002) (affirming district court's dismissal of case for failure to prosecute when habeas petitioner failed to file a first amended petition). Additionally, a district court may exercise its inherent power to control its dockets and impose sanctions including a default judgment. See, e.g., Thompson v. Housing Auth. of City of L.A., 782 F.2d 829, 831 (9th Cir. 1986) (per curiam). Furthermore, the court may impose sanctions including dismissal and default where a party fails to comply with a discovery-related order. See Fed. R. Civ. P. 37(b)(2)(A)(v)-(vi).*fn4

A court must weigh five factors in determining whether to enter a dismissal or default sanction. See, e.g., Dreith v. Nu Image, Inc., 648 F.3d 779, 788 (9th Cir. 2011); Ferdik, 963 F.2d at 1260. Specifically, the court must consider:

(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 defendants; (4) the public policy favoring disposition of cases on their ...


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