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Bylin Heating Systems, Inc. et al v. Thermal Technologies

IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF CALIFORNIA


February 28, 2013

BYLIN HEATING SYSTEMS, INC. ET AL., PLAINTIFFS,
v.
THERMAL TECHNOLOGIES, INC., DEFENDANT.

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

ORDER AND FINDINGS AND RECOMMENDATIONS

Presently pending before the undersigned is a motion for discovery sanctions filed by plaintiffs Bylin Heating Systems, Inc. ("Bylin Heating") and Roof Ice Melt Systems, Inc. (collectively "plaintiffs") (Dkt. No. 54.) Plaintiffs request that the court impose terminating sanctions against defendant Thermal Technologies, Inc. ("TTI") based on its failure to comply with this court's previous order regarding discovery, several other court orders, and its discovery obligations in general. (Id.) Defendant TTI has not filed any response to the motion.

A hearing on the motion was conducted on February 28, 2013. (Dkt. No. 56.) Elizabeth Stallard appeared on behalf of plaintiffs and no appearance was made on behalf of defendant TTI. After considering plaintiffs' briefing and supporting documentation, the oral argument at the hearing, and other appropriate portions of the record, the undersigned recommends that plaintiffs' motion be granted in part along the terms outlined in this order and findings and recommendations.

BACKGROUND

The Origins of this Litigation

The background facts are taken from the parties' joint statement previously filed in connection with plaintiffs' motions to compel, unless otherwise indicated. (See Dkt. No. 48.)*fn1

Plaintiff Bylin Heating engineers and supplies commercial and residential winter freeze protection products, including heated roof panel products. Bylin Heating is the exclusive licensee of a patent for an inventive ice dam melting apparatus and system (the "858 Patent"). Various Bylin Heating products incorporate technology from the 858 Patent and are sold in conjunction with the trademarks "Roof Ice Melt Systems," "RIM," and "RIM Systems," of which Bylin Heating is also the exclusive owner. (Dkt. No. 48 at 2.)

In March 2007, Bylin Heating first sued defendant TTI for allegedly infringing on Bylin Heating's patent and trademark rights. Bylin Heating claimed that defendant was manufacturing and selling products that infringed the 858 Patent, and was also using the domain name www.rooficemeltsystems.com in violation of Bylin Heating's trademark rights. Subsequently, in March 2009, Bylin Heating and defendant TTI signed a settlement agreement resolving the 2007 lawsuit. The settlement agreement included various provisions and drawings regarding what would constitute a breach of that agreement. (Dkt. No. 48 at 2-3.)

Thereafter, on May 23, 2011, the instant litigation ensued. (Dkt. No. 1.) Plaintiffs primarily allege that defendant TTI breached the settlement agreement by manufacturing and selling certain products in violation of the settlement agreement, failing to transfer the domain name www.rooficemeltsystems.com to Bylin Heating, and continuing to use that domain name to divert customers from Bylin Heating. (Dkt. No. 48 at 3; see also Second Amended Complaint, Dkt. Nos. 15, 16.)

As set forth in the parties' joint statement, defendant TTI denies these allegations. Defendant contends that, according to the settlement agreement, its panels would not breach the agreement if specified heating elements were used with the panel systems. According to defendant, it nevertheless voluntarily re-designed its panel systems in accordance with the drawings in the settlement agreement, and replaced old panel systems with new panel systems about six months after execution of the settlement agreement. Defendant maintains that during the brief period in 2009 when old panel systems were sold, only the specified heating elements permitted by the settlement agreement were used. Furthermore, defendant claims that it authorized and made efforts to transfer the domain name. However, because defendant did not own the domain name, plaintiffs had to contact the service provider or owner of the domain name to effectuate the transfer, and plaintiffs allegedly did not do so until after this action was filed. According to defendant, the domain name has since been transferred to plaintiffs. (Dkt. No. 48 at 3.) Defendant asserted counterclaims for declaratory relief, rescission of the settlement agreement, trade libel, slander of title, defamation, unfair competition, and intentional interference with prospective economic advantage. (Dkt. No. 20.)

Procedural History of the Instant Litigation and the Parties' Discovery Disputes On April 19, 2012, the district judge entered a pretrial scheduling order requiring all fact discovery to be completed by December 21, 2012. (Dkt. No. 26.)

Plaintiffs served their Requests for Production, Set One; Requests for Admission, Set One; and Interrogatories, Set One, on July 24, 2012. (Dkt. No. 48 at 4.) Defendant served initial responses to these discovery requests on August 27, 2012, but did not produce any responsive documents at that time pending the negotiation, execution, and court approval of a stipulated protective order. (Id. at 4-5.) On November 8, 2012, plaintiffs filed their first motion to compel, which pertained to these discovery requests. (Dkt. No. 35.) The court ultimately entered a stipulated protective order on November 15, 2012 (dkt. no. 38), and on November 29, 2012, defendant produced 104 pages of documents and served supplemental responses to the Interrogatories, Set One, and Requests for Admission, Set One, but did not serve supplemental responses to the Requests for Production, Set One. (Dkt. No. 48 at 6.) By the time that the parties submitted their joint statement regarding their discovery dispute on December 10, 2012, the primary issues remaining with respect to the above-mentioned discovery requests were that (a) defendant's document production appeared to be incomplete for several reasons; (b) defendant had failed to provide a privilege log and supplemental responses to the Requests for Production, Set One, clarifying whether any documents were still withheld; and (c) defendant had failed to substantively respond to one interrogatory on the grounds that the requested information was confidential and proprietary, despite the fact that a protective order had been entered. (Dkt. No. 48 at 11-13.)

Additionally, on October 17, 2012, plaintiffs propounded their Requests for Production, Set Two, and on October 22, 2012, plaintiffs propounded their Requests for Production, Set Three, and Requests for Admission, Set Two. (Dkt. No. 39-1, ¶¶ 15, 18.) Thereafter, on November 29, 2012, plaintiffs filed their second motion to compel, which pertained to these discovery requests. (Dkt. No. 44.) Similar to the issues raised with respect to plaintiffs' Requests for Production, Set One, plaintiffs complained that they were unable to ascertain whether defendant's production in response to plaintiffs' Requests for Production, Set Two, was complete, because no privilege log had been provided, and the documents that had been produced were ostensibly not organized as they were kept in the usual course of business or by category of request pursuant to Rule 34(b)(2)(E)(i) of the Federal Rules of Civil Procedure. (Dkt. No. 48 at 13.)

The issues regarding defendant's responses to plaintiffs' Requests for Admission, Set Two, and Requests for Production, Set Three, were somewhat different. According to a declaration filed by plaintiffs' counsel, he discovered on October 18, 2012, that Michael Gurr, defendant's president/CEO, may have shifted defendant's operations to a new company, Engineered Roof De-Icing, Inc. ("ERDI"). (Declaration of Courtland C. Chillingsworth, Dkt. No. 39-1, ¶ 17.) When plaintiffs' counsel attempted to access defendant's website, he was apparently redirected to a website for ERDI. (Id.) Organizational documents for ERDI also indicated that Heather Gurr, Michael Gurr's wife, registered ERDI with the State of Utah in September 2012. (Declaration of Elizabeth B. Stallard, Dkt. No. 48-1, ¶ 16, Ex. H.)

Based on the foregoing, plaintiffs became concerned that defendant TTI's operations and customers were being transferred to ERDI in a concerted effort to frustrate plaintiffs' ability to prove their claims and/or collect on a potential judgment against defendant TTI. (Dkt. No. 48 at 14-15.) Thus, plaintiffs' Requests for Admission, Set Two, were primarily targeted at defendant's relationship with ERDI and ERDI's activities (such as basic facts about each entity, the relationship between the entities' officers and employees, the ownership and transfer of domain names between defendant and ERDI, and the transfer of assets between defendant and ERDI). (Dkt. No. 48-3, Ex. M.) Plaintiffs' Requests for Production, Set Three, elicited similar information, requesting documents that supported any denials of the accompanying Requests for Admission, Set Two, as well as document requests that directly pertained to the above-mentioned subject matter. (Id., Ex. N.)

Defendant refused to substantively respond to these discovery requests. Apart from asserting the attorney-client privilege, the work product doctrine, and a few other form objections, defendant primarily asserted that each request was not relevant to the action, nor reasonably calculated to lead to the discovery of admissible evidence. (Dkt. No. 48-3, Exs. M, N.)

In the meantime, while the discovery disputes were ongoing, on October 24, 2012, defendant's counsel, Krista Dunzweiler and M. Taylor Florence of Locke Lord LLP, filed a motion to withdraw as counsel for defendant based on failure to pay outstanding attorneys' fees. (Dkt. No. 32.) Subsequently, on December 11, 2012, the day after the parties' joint statement regarding the discovery motions was filed, the district judge extended the deadline for completion of fact discovery to the deadline of February 1, 2013. (Dkt. No. 49.) Thereafter, on December 14, 2012, the district judge granted defendant's counsel's motion to withdraw and ordered defendant to appear through new counsel within 21 days, i.e., by January 4, 2013. (Dkt. No. 50.)

In a previous November 30, 2012 order, in light of the then-pending motion to withdraw, the undersigned specified that if defendant's counsel were permitted to withdraw, an authorized representative of defendant had to be personally present at the December 20, 2012 hearing on the discovery motions. (Dkt. No. 46.) Subsequently, on December 14, 2012, after the district judge granted the motion to withdraw, the undersigned issued a minute order again emphasizing that the December 20, 2012 hearing on the discovery motions would proceed as scheduled, and that either defendant's new counsel or an authorized representative of defendant must be personally present at the hearing. (Dkt. No. 51.) That minute order was served on defendant via mail at defendant's address of record, c/o Michael Gurr, CEO, 14807 Heritagecrest Way, Suite B, Bluffdale, UT 84055-4829.

Neither new counsel for defendant nor an authorized representative of defendant appeared at the December 20, 2012 hearing on plaintiffs' motions to compel. (Dkt. No. 52.) However, out of abundance of caution, defendant's former counsel, Krista Dunzweiler, specially appeared at the hearing, stating that she had not received the electronic notices of the district judge's December 14, 2012 order granting the motion to withdraw and the undersigned's above-mentioned December 14, 2012 minute order due to the fact that she had apparently been prematurely taken off the service list, and that she had only learned of the orders' existence the previous evening. She also charitably suggested that defendant may not have received notice of these orders.

Nevertheless, although the court was appreciative of Ms. Dunzweiler's special appearance, there was little doubt that defendant knew that it was required to have new counsel or an authorized representative present at the hearing on the motions to compel. As the court explained at the hearing, defendant was initially advised of this requirement by the court's November 30, 2012 order, which preceded defendant's counsel's withdrawal and which Ms. Dunzweiler presumably provided to her client at that time. Moreover, even though Ms. Dunzweiler did not receive the subsequent December 14, 2012 minute order and thus could not have passed it on to her former client, the court served that minute order and the district judge's order granting the motion to withdraw on defendant via mail at its address of record on December 14, 2012. Thus, defendant had more than sufficient notice that its appearance at the hearing was required.

Despite defendant's essential failure to appear in compliance with the court's order, the court nonetheless considered both parties' arguments articulated in the joint statement regarding the discovery disagreement. On December 21, 2012, the court substantially granted plaintiffs' motions to compel, and for the reasons outlined in that order, required defendant to serve supplemental responses, supplemental document productions, privilege logs, and any outstanding verifications no later than January 7, 2013. (Dkt. No. 53.) The court noted that if new counsel for defendant appeared and required some additional time to provide these materials, the court would consider a stipulation by the parties for a reasonable extension of the January 7, 2013 deadline. (Id.) The court declined to impose sanctions at the time and instead took plaintiffs' request for sanctions under advisement, cautioning defendant that sanctions would be imposed for failure to comply with the court's order and failure to otherwise cooperate with the discovery process. (Id.) The court's December 21, 2012 order was served on defendant that same day via mail at its address of record. Plaintiffs' counsel also forwarded a courtesy copy of the order to defendant's former counsel on December 21, 2012. (Dkt. No. 54-2, Ex. A.)

On February 8, 2013, plaintiffs filed the instant motion for discovery sanctions. (Dkt. No. 54.) According to plaintiffs, hours after the undersigned issued the order granting plaintiffs' motions to compel on December 21, 2012, plaintiffs' counsel received an e-mail from defendant's CEO, Michael Gurr, instructing plaintiffs that all correspondence regarding the litigation should be directed to an attorney named David M. Wahlquist with the firm of Kirton & McConkie in Salt Lake City, Utah. (Dkt. No. 54-2, Ex. B.) The e-mail added that TTI was closed on September 30, 2012, and that Mr. Gurr himself had filed for Chapter 7 bankruptcy. (Id.) Thereafter, on December 25, 2012, plaintiffs' counsel sent a letter to Mr. Wahlquist, requesting Mr. Wahlquist to confirm that he would be representing defendant in this matter and advising him of the district judge's deadline for an appearance by new counsel and the undersigned's order on plaintiffs' motions to compel, which plaintiffs' counsel attached to the letter. (Id. Ex. C.) Plaintiffs' counsel represents that she did not receive any response from Mr. Wahlquist and that, to date, neither defendant nor any attorney purporting to act on behalf of defendant has provided any supplemental responses or documents in accordance with the court's order, or requested an extension to do so. (Id. ¶¶ 5-6; see also Dkt. Nos. 55, 55-1.)

In their motion for discovery sanctions, plaintiffs argue that terminating sanctions are warranted, because defendant's refusal to cooperate in the discovery process has frustrated plaintiffs' ability to establish their claims, learn the scope of defendant's alleged misconduct, and ascertain the extent of plaintiffs' damages. Plaintiffs state that, in addition to defendant's failure to comply with the discovery rules and procedure, defendant also failed to comply with the court's order compelling discovery, failed to appear at noticed court hearings, and failed to appear via new counsel as ordered by the district judge. Simultaneously, defendant has purportedly been transferring its operations and assets to ERDI in a further attempt to prevent plaintiffs from obtaining any relief for defendant's alleged misconduct and render itself judgment proof.

DISCUSSION

Defendant's Failure to Appear Through New Counsel Before turning to plaintiffs' motion for discovery sanctions, the undersigned notes that, despite the district judge's deadline of January 4, 2013, for defendant's new counsel to appear (dkt. no. 50), no new counsel has yet filed a notice of appearance. Defendant, as a corporation, cannot appear in federal court without an attorney. Rowland v. California Men's Colony, 506 U.S. 194, 202 (1993) (holding that corporations, partnerships, or associations may not appear in federal court otherwise than through a licensed attorney). Therefore, on this basis alone, defendant's answer and counterclaims should be stricken.

This recommendation is particularly appropriate in light of the fact that defendant was provided with an adequate opportunity to obtain new counsel and has not made any efforts to seek an extension of the deadline to obtain new counsel from the court. Furthermore, as noted above, even if defendant's former counsel did not receive the district judge's December 14, 2012 order granting the motion to withdraw and setting a deadline by which to obtain new counsel, the order was served on defendant itself that same day via mail at defendant's address of record. Thus, defendant had sufficient notice of the deadline by which to obtain new counsel.

Plaintiffs' Motion for Discovery Sanctions

In the alternative, the undersigned also proceeds to consider plaintiffs' motion for discovery sanctions. In particular, plaintiffs request terminating sanctions (under either Federal Rule of Civil Procedure 37 or the court's "inherent power") as well as monetary sanctions (attorneys' fees and costs).

In regards to a party's failure to obey a court's discovery order, Federal Rule of Civil Procedure 37(b)(2) provides, in relevant part:

(2) Sanctions in the District Where the Action Is Pending.

(A) For Not Obeying a Discovery Order. If a party or a party's officer, director, or managing agent . . . fails to obey an order to provide or permit discovery . . . , the court where the action is pending may issue further just orders. They 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 9 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. . . .

(C) 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, unless the failure was substantially justified or other circumstances make an award of expenses unjust.

As the Ninth Circuit Court of Appeals has observed, "[a] terminating sanction, whether default judgment against a defendant or dismissal of a plaintiff's action, is very severe," and "[o]nly willfulness, bad faith, and fault justify terminating sanctions." Conn. Gen. Life Ins. Co. v. New Images of Beverly Hills, 482 F.3d 1091, 1096 (9th Cir. 2007); see also Leon v. IDX Sys. Corp., 464 F.3d 951, 958 (9th Cir. 2006) (describing the sanction of dismissal as "harsh"); Computer Task Group, Inc. v. Brotby, 364 F.3d 1112, 1115 (9th Cir. 2004) (per curiam) (stating that where "the drastic sanctions of dismissal or default are imposed, . . . the range of discretion is narrowed and the losing party's noncompliance must be due to willfulness, fault, or bad faith").

The court considers five factors in evaluating whether a case-dispositive sanction imposed pursuant to Federal Rule of Civil Procedure 37(b)(2) is justified: "(1) the public's interest in expeditious resolution of litigation; (2) the court's need to manage its dockets; (3) the risk of prejudice to the party seeking sanctions; (4) the public policy favoring disposition of cases on their merits; and (5) the availability of less drastic sanctions." Conn. Gen. Life Ins. Co., 482 F.3d at 1096; accord Computer Task Group, Inc., 364 F.3d at 1115. As to the fifth factor, the court further considers "whether the court has considered lesser sanctions, whether it tried them, and whether it warned the recalcitrant party about the possibility of case-dispositive sanctions." Conn. Gen. Life Ins. Co., 482 F.3d at 1096; accord Leon, 464 F.3d at 960. The Ninth Circuit Court of Appeals has stated that this multi-factor test is "not mechanical," Conn. Gen. Life Ins. Co., 482 F.3d at 1096, and the court "need not make explicit findings regarding each of these factors," Leon, 464 F.3d at 958. Rather, the test "provides the district court with a way to think about what to do, not a set of conditions precedent for sanctions or a script that the district court must follow." Conn. Gen. Life Ins. Co., 482 F.3d at 1096. "What is most critical for casedispositive sanctions, regarding risk of prejudice and of less drastic sanctions, is whether discovery violations threaten to interfere with the rightful decision of the case." Id. at 1097.

Courts may also impose sanctions, including terminating sanctions, as part of their inherent power "to manage their own affairs so as to achieve the orderly and expeditious disposition of cases." Chambers v. NASCO, Inc., 501 U.S. 32, 43 (1991). The Ninth Circuit has held that the same five-factor test utilized in the context of Rule 37 sanctions applies when considering sanctions under the court's "inherent power." Leon, 464 F.3d at 958 n.4.

An evaluation of the above-mentioned five factors suggests that terminating sanctions in this case are appropriate. Factors One and Two (the public's interest in expeditious resolution of litigation and the court's need to manage its dockets) strongly militate in favor of terminating sanctions, because defendant's refusal to comply with its discovery obligations, even when ordered to do so by the court, has delayed resolution of the action and consumed scarce judicial time and resources.

The third factor (the risk of prejudice to the party seeking sanctions) likewise counsels that terminating sanctions are appropriate. While delay alone has been held to be insufficient prejudice to support terminating sanctions, "[f]ailure to produce documents as ordered, however, is considered sufficient prejudice." Adriana Int'l Corp. v. Thoeren, 913 F.2d 1406, 1412 (9th Cir. 1990). Here, although the February 1, 2013 deadline for completion of fact discovery has now passed and a pretrial conference and trial are set for June 6, 2013 and July 8, 2013, respectively (dkt. no. 49), plaintiffs still have not received compliant responses to their written discovery requests, which relate to the extent of defendant's breach of the settlement agreement and plaintiffs' potential damages. Thus, defendant's failure to respond to the discovery has significantly hampered plaintiffs' ability to prove their claims and defend against defendant's counterclaims. It therefore impairs plaintiffs' ability to go to trial and threatens to interfere with the rightful decision of the case. Adriana Int'l Corp., 913 F.2d at 1412; see also Leon, 464 F.3d at 959 (prejudice results when a party's refusal to provide documents forces the other party to rely on incomplete and spotty evidence at trial).

With respect to the fifth factor (the availability of less drastic sanctions), the court finds that less drastic sanctions would not be effective. Apart from defendant's dilatory discovery conduct, defendant has failed to comply with the undersigned's order compelling supplemental discovery responses, failed to comply with the district judge's order to obtain new counsel, failed to appear at noticed hearings, and failed to oppose plaintiffs' motion for discovery sanctions, despite having been appropriately notified of these orders, hearings, and motions. It appears that defendant has opted to simply ignore the court's orders, and its conduct is indicative of willfulness and bad faith. This conclusion is reinforced by defendant's continued refusal to substantively respond to discovery requests regarding defendant's alleged transfer of assets and operations to ERDI (a company registered by the wife of defendant's CEO), which plaintiffs suspect may have been done in an attempt to insulate defendant from any potential judgment. See Anheuser-Busch, Inc. v. Natural Beverage Distributors, 69 F.3d 337, 352 (9th Cir. 1995) ("It is appropriate to reject lesser sanctions where the court anticipates continued deceptive misconduct"). ////

Turning to potential alternative sanctions, in light of defendant's failure to appear at hearings and comply with the court's previous orders, as well as defendant's closing and purported transfer of assets and operations to ERDI, the court has little confidence that defendant would pay monetary sanctions if it were imposed. Also, an evidence preclusion sanction or an instruction regarding a presumption in favor of plaintiffs would not cure the prejudice resulting from plaintiffs' inability to obtain from defendant the evidence needed to support plaintiffs' claims and alleged damages. Furthermore, although the court did not explicitly warn defendant regarding the potential for terminating sanctions, the Ninth Circuit has stated than "an explicit warning is not always necessary." Anheuser-Busch, Inc., 69 F.3d at 353. In this case, the court's order granting plaintiffs' motions to compel warned defendant that sanctions would be imposed if defendant failed to comply with that order and its discovery obligations in this matter. Additionally, plaintiffs' subsequent motion for discovery sanctions provided defendant with sufficient notice that terminating sanctions would be considered, and defendant failed to even respond to that motion in writing or appear at the hearing. Indeed, defendant can hardly claim to be surprised by the imposition of terminating sanctions when it failed to abide by its discovery obligations, failed to follow several court orders, and failed to appear at noticed hearings. Therefore, the fifth factor also militates in favor of terminating sanctions.

Finally, the fourth factor (the public policy favoring disposition of cases on their merits) is outweighed by the other factors. In fact, even the policy favoring disposition of cases on their merits lends little support to defendant, because defendant's refusal to cooperate in discovery and comply with the court's orders obstructed resolution of the case on its merits. In re Exxon Valdez, 102 F.3d 429, 433 (9th Cir. 1996).

Accordingly, after a careful evaluation of all the relevant factors, and finding defendant's noncompliance to be the result of willfulness, fault, and/or bad faith, the undersigned concludes that terminating sanctions under Rule 37 and/or the court's inherent power are warranted.*fn2

CONCLUSION

Therefore, in light of defendant's failure, as a corporation, to appear through new counsel, the undersigned finds it appropriate to recommend that defendant's answer and counterclaims be stricken, and that the Clerk of Court be directed to enter defendant's default. Alternatively, the undersigned recommends that such relief be granted pursuant to Federal Rule of Civil Procedure 37 or the court's inherent power, based on defendant's failure to comply with the court's discovery order and its discovery obligations generally.

Plaintiffs' motion requests the entry of a default judgment, but plaintiffs have not provided appropriate briefing and evidence in support of such a request. Plaintiffs' motion also does not provide a proposed judgment or otherwise address the terms on which such a judgment should be entered. Therefore, plaintiffs' request for a default judgment at this juncture is premature. However, if the district judge adopts the findings and recommendations, strikes defendant's answer and counterclaims, and directs the Clerk of Court to enter defendant's default, plaintiffs may thereafter file a properly supported motion for default judgment.

Plaintiffs also request that they be awarded monetary sanctions pursuant to Rule 37, i.e., their costs and attorneys' fees with respect to this motion and their prior efforts in pursuing defendant's compliance with discovery, including the two prior motions to compel. However, plaintiffs do not request any particular amount of monetary sanctions and have not submitted any declarations and supporting documentation regarding their fees and costs, merely indicating that it would be "subject to proof." As such, the court is unable to address plaintiffs' request at this time. Nevertheless, plaintiffs may pursue such a request either as part of any subsequent motion for default judgment or by a separate supported motion, as appropriate.

Accordingly, for the reasons outlined above, IT IS HEREBY RECOMMENDED that:

1. Plaintiffs' motion for discovery sanctions (dkt. no. 54) be GRANTED IN PART along the terms outlined in this order and findings and recommendations.

2. Defendant TTI's answer and counterclaims (dkt. no. 20) be STRICKEN.

3. The Clerk of Court be directed to enter defendant TTI's default. IT IS ALSO HEREBY ORDERED that:

1. All scheduled dates in this matter are VACATED.

2. Within 30 days after the district judge adopts these findings and recommendations, if they are adopted, plaintiffs shall either file a motion for default judgment before the undersigned, or file a statement indicating how plaintiffs would like to otherwise proceed with the action. Such a statement should include any request for the scheduling of additional appropriate proceedings.

IT IS SO RECOMMENDED AND ORDERED.

These findings and recommendations are submitted to the United States District Judge assigned to the case, pursuant to the provisions of 28 U.S.C. § 636(b)(l). Within fourteen

(14) days after being served with these findings and recommendations, any party may file written objections with the court and serve a copy on all parties. Such a document should be captioned "Objections to Magistrate Judge's Findings and Recommendations." Any reply to the objections shall be served on all parties and filed with the court within fourteen (14) days after service of the objections. The parties are advised that failure to file objections within the specified time may waive the right to appeal the District Court's order. Turner v. Duncan, 158 F.3d 449, 455 (9th Cir. 1998); Martinez v. Ylst, 951 F.2d 1153, 1156-57 (9th Cir. 1991).


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