Aaron Stanz, individually and derivatively on behalf of Jet Genuis Holdings, Inc. v. Jordan Brown, et al.

• Court: District Court, S.D. California
• Decided: January 29, 2026
• Docket: 3:22-cv-01164
• Status: Unknown

Opinion

1 2 3 4 5 6 7 8 9 10 UNITED STATES DISTRICT COURT 11 SOUTHERN DISTRICT OF CALIFORNIA 12 13 AARON STANZ, individually and Case No.: 22-cv-01164-GPC-JLB derivatively on behalf of Jet Genuis 14 Holdings, Inc., ORDER GRANTING PLAINTIFF’S 15 REQUEST FOR ATTORNEY’S FEES Plaintiff, AND REPORT AND 16 v. RECOMMENDATION RE: 17 PLAINTIFF’S EX PARTE JORDAN BROWN, et al., APPLICATION FOR OSC AS TO 18 Defendants. WHY DEFENDANTS SHOULD NOT 19 BE HELD IN CONTEMPT OF COURT FOR FAILING TO 20 COMPLY WITH A COURT ORDER 21 [ECF No. 217] 22 23 AND RELATED COUNTERCLAIM. 24 25 Before the Court is Plaintiff Aaron Stanz’s (“Plaintiff”) Ex Parte Application for 26 Order to Show Cause as to Why Defendants Should Not be Held in Contempt of Court for 27 28 1 Failing to Comply with a Court Order (Ex Parte Motion) —namely, the Court’s Order 2 Granting Plaintiff’s Motion to Compel (Motion to Compel Order or Order).2 (ECF Nos. 3 215, 217; see also ECF No. 188.) Defendants Jordan Brown (“Brown”), Jet Genius 4 Holdings, Inc. (“JGH”), Jet Genius Florida Holdings, Inc., Bowman Aviation, Inc., Jet 5 Agency Global, LLC, C3 Jets, LLC, and C3 Limo, LLC (collectively, “Defendants”) did 6 not file an opposition. For the reasons set forth below, Plaintiff’s request for attorney’s 7 fees is GRANTED, subject to Plaintiff’s submission of a supporting declaration and 8 documentation. The Court RECOMMENDS to the Honorable Gonzalo P. Curiel that the 9 Court initiate civil contempt proceedings against Defendants. Further, the Court certifies 10 the pertinent facts in connection with a civil contempt inquiry. The Court 11 RECOMMENDS sanctions in the form of coercive per diem fines. However, the Court 12 RECOMMENDS against the imposition of sanctions in the form of adverse inferences, 13 issue preclusion, and entry of default judgment. 14 I. BACKGROUND 15 A. Second Amended Complaint 16 The following allegations are taken from the Second Amended Complaint: 17 Plaintiff is the creator and developer of software and systems that simplify and 18 accelerate aircraft charter brokering, including JetXchange, The Grid, and the Charter 19 Flight Group website, which are also supported by custom applications, reports, lead 20 generation tools, databases, business analytics, and certain client lists (collectively, the 21

22 23 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 24 Contempt of Court for Failing to Comply with a Court Order as a Motion for Sanctions 25 pursuant to Federal Rule of Civil Procedure 37. (See ECF No. 223 at 2.)

26 2 On January 9, 2025, Plaintiff filed a Notice of Motion and Motion to Compel 27 Production of Documents and for an Order Awarding Attorney’s Fees (hereinafter “Motion to Compel”). (ECF No. 188.) 28 1 “JGH Platform”). (ECF No. 78 at 10, ¶ 38.) The JGH Platform allows a charter aviation 2 brokerage company to operate more efficiently by facilitating more trips per staff member 3 than any charter brokerage competitor. (Id. at 10-11, ¶ 38.) 4 Plaintiff and Brown formed JGH, a private jet charter broker, with a non-party, 5 Alexander Wolf (“Wolf”), in 2016. (Id. at 1, 11, ¶¶ 1, 39.) Plaintiff contributed the JGH 6 Platform to JGH and received a 49.5% ownership interest in the company. (Id. ¶ 39.) 7 Plaintiff and Brown are the two primary shareholders of JGH. (Id. at 1, ¶ 1.) Plaintiff 8 served as the Chief Technology Officer and had principal responsibility for designing and 9 implementing the JGH Platform. (Id. at 1, 11, ¶¶ 1, 44.) Since 2018, Brown has been 10 JGH’s Chief Executive Officer (“CEO”) and sole director. (Id. at 1-2, ¶ 1.) 11 In August 2018, Plaintiff, Wolf, and Brown entered into an agreement, whereby 12 Plaintiff reduced his ownership interest in JGH from 49.5% to 25%, resigned from JGH’s 13 Board of Directors,3 and assigned rights in the JGH Platform to JGH, and Brown became 14 JGH’s sole director. (Id. at 15, 17, ¶¶ 62, 70.) The agreement provided for certain 15 safeguards to guarantee the collection and payment of FET and to minimize the opportunity 16 for self-dealing by Brown. (See id. at 15, 17, ¶¶ 65, 68.)4 According to Plaintiff, Brown 17 “repeatedly assured” him that he would operate the business for the benefit of shareholders 18 and that he would not form another business entity for the purposes of transferring JGH 19 operations and leaving behind an “empty shell with only liabilities.” (Id. at 14, ¶ 57.) 20 Plaintiff alleges that Brown used JGH as his “personal piggy bank” and “raided 21 JGH’s assets through phony transactions, indefensible self-approved compensation, and 22 wrongful diversion of corporate assets” to the tune of approximately $1.9 million. (Id. at 23

24 25 3 Wolf also stepped down from the Board of JGH pursuant to the agreement. (ECF No. 78 at 15, ¶ 62.) 26

27 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. 28 1 2, 18, ¶¶ 2, 71.) Plaintiff further alleges that Brown “employs a shell game of entities to 2 avoid paying Plaintiff amounts due to him and to avoid other company obligations.” (Id. 3 at 2, 18–27, ¶¶ 4, 76–136.) For example, on September 16, 2019, Brown formed Jet 4 Agency Global, LLC and transferred to Jet Agency ownership of, or licensed rights in and 5 to, the JGH Platform without adequate consideration. (Id. at 19–20, ¶¶ 82, 89.) Thereafter, 6 on September 11, 2020, Brown formed C3 Limo, LLC with his wife Stacy Brown, who 7 was listed as manager for six months before it was changed to Chasen Dobos, Brown’s 8 stepson. (Id. at 21, ¶ 94.) Brown transferred to C3 Limo ownership of, or licensed rights 9 in and to, parts of the JGH Platform without adequate consideration and transferred cash 10 from JGH to C3 Limo. (Id. at 21, ¶¶ 95, 96.) Less than a year later, on April 23, 2021, 11 Brown formed C3 Jets and transferred $100,000 per month from JGH to the new company. 12 (Id. at 21-22, ¶¶ 97-98.) Brown had no plans to repay JGH for these fund transfers. (Id. at 13 21-22, ¶¶ 95–99.) 14 Plaintiff further alleges that Brown “seeks to avoid millions in assessed federal 15 excise taxes (‘FET’) related to chartering aircrafts.” (Id. at 2, ¶ 4.) As a business that 16 collected payment for commercial domestic transportation of persons, JGH was subject to 17 an assessment of FET. (Id. at 12, ¶ 46.) Brown failed to timely and fully pay the FET 18 related to JGH’s operations and instead “took actions to saddle Plaintiff personally with 19 much of that burden—$1.3 million in unpaid FET—, despite assurances Brown would 20 account for those taxes, while also shifting JGH’s operations and assets to a new entity to 21 avoid payments.” (Id. at 2, 12–17, 23–25, ¶¶ 4, 50–70, 108–22.) Plaintiff further alleges 22 that Brown utilized Plaintiff’s former cell phone number to impersonate him. (Id. at 2-3, 23 25–27, ¶¶ 5–6, 124–36.) 24 In August 2022, Plaintiff initiated the instant suit. (See ECF No. 1.) In a Second 25 Amended Complaint filed in August 2023, Plaintiff, individually and derivatively on 26 behalf of Jet Genius Holdings, Inc., levied 19 claims against Defendants, including express 27 indemnity equitable indemnity, breach of duty to defend, breach of fiduciary duty, breach 28 of contract, fraud, unjust enrichment, conversion, and a request for declaratory relief. (Id. 1 at 28-41.) At the time the Second Amended Complaint was filed, Plaintiff remained the 2 holder of 25% of the outstanding and issued shares of JGH. (Id. at 9, ¶ 28.) 3 B. Relevant Procedural Background 4 On February 29, 2024, Plaintiff and Defendants Brown, C3Jets LLC, C3 Limo LLC, 5 Jet Agency Global, LLC, and Bowman Aviation, Inc. (collectively, the “Brown 6 Defendants”) lodged a Joint Discovery Statement concerning the Brown Defendants’ 7 failure to respond to Plaintiff’s RFPs (Set One). (ECF No. 102.) The Court held a 8 Discovery Conference on March 7, 2024, and ordered the Brown Defendants to provide 9 supplemental responses and production no later than March 22, 2024. (ECF No. 103.) The 10 Brown Defendants failed to do so. 11 On April 4, 2024, Plaintiff and JGH lodged a Joint Discovery Statement, as did 12 Plaintiff and the Brown Defendants. (ECF No. 107.) After a Discovery Conference, 13 Defendants agreed, inter alia, to provide updated responses and supplemental production 14 to Plaintiff’s RFPs (Set One) by May 10, 2024. (ECF No. 110.) Plaintiff and Defendants 15 lodged an updated Joint Discovery Statement on June 21, 2024. (ECF No. 117.) Plaintiff 16 claimed that Defendants failed to timely serve supplemental responses to Plaintiff’s RFPs 17 and that he had received a document production in an unreadable format. After another 18 Discovery Conference, Defendants were ordered to serve second supplemental responses 19 to Plaintiff’s RFPs (Set One) and produce a complete privilege log by July 15, 2024. (ECF 20 No. 120.) 21 The Mandatory Settlement Conference was held on July 22, 2024. (ECF No. 125.) 22 The case did not settle. (Id.) On July 30, 2024, the Court held another Discovery 23 Conference. (ECF No. 126.) On August 19, 2024, following another Status Conference, 24 the Court ordered Defendants to complete their document production by 25 September 13, 2024. (ECF No. 135.) On August 21, 2024, the parties left a joint voicemail 26 with Chambers informing the Court that they had resolved their discovery dispute. (ECF 27 No. 136.) 28 1 Plaintiff’s counsel withdrew from the case on September 23, 2024. (ECF No. 145.) 2 On September 30, 2024, the Court ordered that all remaining depositions, including that of 3 Plaintiff, be conducted by November 15, 2024, or fourteen days after Plaintiff retains 4 counsel, whichever occurs first. (ECF No. 146.) 5 On October 16, 2024, the Court held a Status Conference because Defendants failed 6 to meet the September 13, 2024 document production deadline. (ECF No. 150.) The Court 7 ordered Defendants to provide Plaintiff with supplemental responses to the discovery 8 requests at issue by October 21, 2024. (ECF No. 150.) Defendants did provide Plaintiff 9 with supplemental responses on October 21. Ten days later, the parties lodged another 10 Joint Discovery Statement concerning those responses, as Plaintiff asserted they were 11 deficient. A Status Conference was held on November 12, 2024. (ECF No. 152.) The 12 Court held a discovery hearing on November 19, 2024. (ECF Nos. 151, 153, 158, 162, 13 164.) Following the hearing, the Court authorized a motion to compel to resolve the 14 dispute. (ECF No. 164.) 15 On November 20, 2024, the parties filed another Joint Discovery Statement 16 concerning Defendants’ interrogatory responses. (ECF No. 165.) On December 5, 2024, 17 the Court held a Discovery Conference and resolved the dispute. (ECF No. 175.) On 18 January 6, 2025, the Court extended the deposition deadline to January 31, 2025. (ECF 19 No. 185.) 20 In January 2025, Plaintiff filed a Motion to Compel, seeking an order for the 21 production of documents and an award of attorney’s fees. (ECF No. 188.) Plaintiff sought 22 to compel responses to Plaintiff’s Requests for Production (“RFP”) (Set One) served on 23 Defendants. (Id. at 2.) Defendants filed an opposition (ECF No. 190), and Plaintiff filed 24 a reply (ECF No. 191). On May 15, 2025, and May 28, 2025, the Court held hearings on 25 Plaintiff’s Motion to Compel. (ECF Nos. 207, 210, 213, 214.) The Court granted 26 Plaintiff’s Motion to Compel on June 6, 2025, and ordered the following: 27 1. Brown shall permit Plaintiff (or his designated expert or representative) to inspect the electronic storage media for all 28 1 agreed upon custodians, to include providing access to their Gmail accounts, at a mutually agreeable date and time within 2 fourteen (14) days of the date of this Order. 3 2. Brown shall permit Plaintiff (or his designated expert or 4 representative) to inspect and copy physical items and 5 documents that may contain responsive material at a mutually agreeable date and time within fourteen (14) days of the date of 6 this Order. 7 3.To the extent Defendants have possession, custody, or control 8 of the cell phones used by the agreed upon custodians, they shall 9 make those phones available for inspection by Plaintiff at a mutually agreeable date and time within fourteen (14) days of 10 the date of this Order. 11 4. Brown shall file a declaration with the Court within ten (10) 12 days of the date of this Order confirming that he has requested 13 all responsive bank statements and credit card statements. Brown shall produce these statements to Plaintiff within seven 14 (7) days of receipt of the statements. 15 5. Within fourteen (14) days of the date of this Order, Defendant 16 Jet Agency Global, LLC shall produce all documents in its 17 possession, custody, or control responsive to RFP No. 5,[6] or allow Plaintiff (or his designated expert or representative) to 18 inspect and copy the same at a mutually agreeable date and time. 19 If no further documents exist, Defendant shall amend its response to state that a reasonable inquiry has been made, and no further 20 responsive documents exist. 21 22

23 5 These custodians include: (1) Brown; (2) personal assistants, presumed to be but 24 not limited to, Ileana Garces, Marie Stone, Bianca Feller, Kimberlee Pouykham, and Emile 25 Rosenow; Executives Chasen Dobos, Ryan Sargent, and Yves Brancheau; (3) accounting staff Roya Arabi, Deb Fouts, Cindy Grotsky, Maureen Bartzis, and Laurie Rector; (4) 26 shareholder Wolf; and (5) Stacy Brown. 27 6 Plaintiff’s RFP No. 5 to Jet Agency Global, LLC requested all client invoices since 28 1 6. Within fourteen (14) days of the date of this Order, Defendant C3 Jets, LLC shall produce all documents in its possession, 2 custody, or control responsive to RFP No. 197, or allow Plaintiff 3 (or his designated expert or representative) to inspect and copy the same at a mutually agreeable date and time. If no further 4 documents exist, Defendant shall amend its response to state that 5 a reasonable inquiry has been made, and no further responsive documents exist. 6

7 7. Within fourteen (14) days of the date of this Order, Defendants shall produce all responsive documents withheld on 8 the basis of privilege, except for those documents over which 9 Stacy Brown asserts the marital communications privilege.

10 8. Within ten (10) days of the date of this Order, Defendants 11 shall serve on Plaintiff signed copies of their interrogatories in compliance with Fed. R. Civ. P. 33. 12

13 9. Plaintiff shall file a declaration substantiating the reasonable fees incurred by his counsel in filing the reply and attending the 14 two related hearings before the Court within ten (10) days of the 15 date of this Order. Defendants may file any opposition challenging the reasonableness of the amount of attorney’s fees 16 within five (5) days of Plaintiff’s filing of his declaration. 17 10. Within fourteen (14) days of the date of this Order, 18 Defendants shall produce a privilege log of any communications 19 as to which Stacy Brown is asserting marital communications privilege. 20

21 11. Failure to timely comply with any aspect of this Order may expose Defendants to the imposition of sanctions up to 22 and including evidentiary and issue preclusion sanctions. 23 24 (ECF No. 215 at 25–27.) 25 26

27 7 Plaintiff’s RFP No. 19 to C3 Jets LLC requested production of all check registers 28 1 After the initial 10-day timeframe for compliance set forth in the Motion to Compel 2 Order passed, Plaintiff’s counsel initiated the meet-and-confer process on June 17, 2025. 3 (ECF No. 217 at 4.) During the meet-and-confer phone call, Defendants’ counsel informed 4 Plaintiff’s counsel that “he was working on it, but made no promises,” with the subsequent 5 14-day windows for production eventually passing without any compliance from 6 Defendants. (Id. at 4-5 (citing ECF No. 217-1 at 2, ¶ 3.) 7 Plaintiff filed the instant Ex Parte Motion on June 25, 2025. (ECF No. 217.) 8 Pursuant to the undersigned’s Chambers Rules, after service of an ex parte motion, 9 opposing counsel has until 5:00 p.m. the next court day to file an opposition or to request 10 an extension. J. Burkhardt’s Civ. Chambers R. § VII. Defendants neither filed an 11 opposition nor requested an extension. On August 7, 2025, the parties lodged with the 12 Court pursuant to § V of Judge Burkhardt’s Civil Chambers Rules a Joint Discovery 13 Statement, improperly styled a “Joint Motion for Determination of Discovery Dispute.” 14 Due to the substantial overlap between the lodged document and the instant Ex Parte 15 Motion, the Court advised the parties that it would address all the issues in the context of 16 the motion. The Court provided an additional opportunity for briefing and directed the 17 parties to address any issues not already included in the initial motion in the remaining 18 briefing. (ECF No. 223.) Specifically, the Court ordered Defendants to file an opposition 19 to the Ex Parte Motion by August 25, 2025, and Plaintiff to file a reply by September 2, 20 2025. (ECF No. 223 at 2.) Defendants again did not file an opposition. Plaintiff filed a 21 Notice of No Reply Brief, informing the Court that it did not file a reply “because there 22 [was] no opposition for Plaintiff to address.” (ECF No. 225 at 2.) 23 In his Ex Parte Motion, Plaintiff represents that, with one exception, Defendants 24 failed to comply with the Motion to Compel Order. (ECF No. 217 at 2.) However, a 25 review of the subsequent Joint Discovery Statement reveals that Defendants produced some 26 discovery subsequent to the filing of the Ex Parte Motion; thus, the Ex Parte Motion no 27 longer accurately reflects the current status of Defendants’ compliance or noncompliance 28 with the Order (ECF No. 215). (See ECF No. 226 at 1.) The Court therefore ordered 1 Plaintiff to supplement its Ex Parte Motion no later than October 3, 2025, “to reflect the 2 aspects of the [Motion to Compel Order] with which Plaintiff maintains Defendants have 3 still failed to comply,” and ordered Defendants to file an opposition by October 10, 2025. 4 (Id. at 2.) Plaintiff filed the Court-ordered supplement (“Supplement”) on October 3, 2025. 5 (ECF No. 228.) Defendants once again filed no opposition. 6 As Defendants did not file an opposition despite three opportunities to do so, the 7 Court deems Plaintiff’s Ex Parte Motion unopposed. Because Plaintiff’s representations 8 in the Ex Parte Motion and the Supplement are facially plausible and uncontested by 9 Defendants, the Court accepts them as true to the extent set forth in this Relevant 10 Procedural Background, and the Court certifies them as part of this Report and 11 Recommendation. 12 II. DISCUSSION 13 A. Plaintiff’s Argument 14 1. Ex Parte Motion 15 Plaintiff argues in his Ex Parte Motion that “other than [a] single act of ostensible 16 compliance to inspect hard-copy materials” in accordance with paragraph 2, Defendants 17 “remain in violation of every operative paragraph [of the Motion to Compel Order],” 18 asserting that “[n]o declaration or bank statements have been filed; no verified 19 interrogatory answers have been served; no productions or confirmations under 20 [paragraphs] 5–7 have issued; no privilege log for marital communications has been 21 provided; and no access to e-mail accounts, servers, or custodians’ devices has been 22 granted.” (ECF No. 217 at 2, 4, 8.) Contending that he cannot “fairly prepare for trial, 23 quantify damages, or safeguard shareholder interests while Defendants ignore the Court’s 24 explicit directives” Plaintiff maintains that “the risk that responsive materials have been 25 concealed, destroyed, or otherwise spoliated grows with each passing day.” (Id. at 2–3.) 26 Plaintiff asserts that Defendants’ noncompliance “deprives [him] of evidence needed to 27 prove claims involving misappropriate assets, diverted tax proceeds, and self-dealing 28 transactions that may expose unknown co-conspirators.” (Id. at 7.) Further, Plaintiff insists 1 that Defendants’ “serial, selective non-production is not the benign product of insolvency 2 or disorganization,” but rather demonstrates willful defiance. (Id. at 6–7.) Plaintiff alleges 3 that during the May 28, 2025 hearing regarding the Motion to Compel, Defendants’ counsel 4 disclosed e-mail addressed associated with individuals not identified as custodians in the 5 Motion to Compel, thus indicating that Defendants possess the requisite technological 6 capability to locate, access, and transmit the electronically stored information responsive 7 to Plaintiff’s discovery requests. (Id. at 6.) 8 Plaintiff requests that the Court issue an order to show cause requiring Defendants 9 to appear and to explain why the Court should not sanction their continued noncompliance 10 with the Motion to Compel Order. (Id. at 8.) Should the Court determine that Defendants 11 have failed to demonstrate good cause for their noncompliance, Plaintiff asks that the Court 12 enter of finding of civil contempt and impose various sanctions. (Id.) Specifically, Plaintiff 13 requests that the Court: (i) impose a coercive fine of $1,000 per day until Defendants 14 achieve compliance; (ii) strike Defendants’ answers and enter default judgment against 15 Defendants “on all claims and counterclaims,” followed by an expedited “prove-up” to 16 determine damages; (iii) impose sanctions in the form of adverse inferences and issue 17 preclusion;8 (iv) order reimbursement of all reasonable attorney’s fees and costs incurred 18 since June 6, 2025, including those incurred preparing the instant Ex Parte Motion and as 19 a result of Defendants’ continued noncompliance; and (v) award Plaintiff “such further 20 relief as the Court deems mandatory to preserve the orderly administration of justice.” (Id. 21 at 8–10.) 22 As addressed above, Defendants failed to oppose the Ex Parte Motion. 23 /// 24 25 26 8 Plaintiff’s request for sanctions in the form of adverse inferences and issue 27 preclusion “includ[es] deeming all subsequently produced documents authentic and admissible and establishing that any destroyed, altered, or withheld item would have been 28 1 2. Supplement to Ex Parte Motion 2 In the Supplement, Plaintiff asserts that “Defendants’ selective, unusable, and 3 incomplete production” has caused “concrete, case-dispositive prejudice[.]” (ECF No. 228 4 at 12.) Plaintiff contends that Defendants produced “a limited, mislabeled document-dump 5 of compressed, partially corrupted ESI served without Bates labeling, load files/metadata, 6 or the structured form required by Fed. R. Civ. P. 34(b)(2)(E),” consisting, in part, “of 7 folders (‘Profit & Loss,’ ‘Balance Sheets,’ etc.) that are incongruent with their contents 8 and cut off around April 10, 2024.” (Id. at 3.) Further, Plaintiff maintains that Brown 9 failed to comply with paragraph 1 and that Defendants took no action to comply with 10 paragraphs 3, 7, and 10 of the Motion to Compel Order. (Id. at 4–8.) With respect to the 11 remaining provisions in the order, Plaintiff represents the following: 12 ECF No. 215 Order ¶2: [Brown shall p]ermit Plaintiff (or his 13 designated expert or representative) to inspect and copy physical 14 items and documents that may contain responsive material.

15 Produced: Defendants[9] offered an in-person, paper-only 16 inspection at a private residence within the 14-day window.

17 Deficiency: On this record, no discrete violation of ¶2 is 18 established. However, consistent with prior orders requiring that electronic production be delivered in parallel, ESI should be 19 prioritized. A physical inspection should follow, rather than 20 substitute for, completion of ESI production under Fed. R. Civ. P. 34(b)(2)(E), so that any on-site review is targeted, efficient, 21 and facilitates organized collection rather than a burden-shifting 22 paper exercise. The prior in-person invitation would have been congruent with the Court’s directives had Defendants also 23 complied with the ESI or cell phone inspection components; by 24 electing to proceed only with an in-person limited paper inspection, Defendants rendered the visit largely untenable. Any 25 26

27 9 The Court notes that paragraph 2 of the Order mandated compliance from Brown 28 1 Fed. R. Civ. P. 37 remedies for ESI noncompliance should guide the scope and logistics of any inspection under ¶2. 2

3 Prejudice to Plaintiff: Shifts burden to Plaintiff and is inferior to the ordered electronic production. Defendants ignored nearly 4 every paragraph of the June 6, 2025 order, proffering only a 5 ‘hard-copy inspection[.’] This is classic burden shifting that is tangential to, and no substitute for, ordered electronic production 6 under Rule 34(b)(2)(E). The Defendant entities operated on 7 email, SMS texts, and cloud systems; paper records were highly limited and are valuable only in the context of full and complete 8 ESI production as ordered by the Court. In light of Defendants’ 9 ongoing avoidance of ESI production, account inspection, and compliance, the probative value and reliability of any paper-only 10 showing are suspect. 11 (Id. at 5–6; ECF No. 215 at 25.) 12 ECF No. 215 Order ¶4: Brown declaration confirming that he 13 has requested all responsive bank statements. Brown shall 14 produce these statements to Plaintiff.

15 Produced: No ¶4 declaration confirming issuer requests; no 16 issuer-pulled bank or credit-card statements. Instead, Defendants produced a single personal Chase account (2017–2023) and 17 selective and non-compliant consumer credit-card statements not 18 tied to comprehensive issuer requests.

19 Deficiency: No issuer pulls; no confirmation of requests to all 20 relevant issuers.

21 Prejudice to Plaintiff: Prevents tracing of revenues, 22 distributions, and Federal Excise Tax (“FET”) collections; invites selective curation. 23

24 (ECF No. 228 at 6.) 25 ECF No. 215 Order ¶5: Jet Agency Global, LLC to produce all doc[uments] responsive to RFP 5 or allow inspection; else amend 26 to state non-existence after reasonable inquiry. 27 28 1 Produced: No conforming production; any materials received are facially deficient. 2

3 Deficiency: Invoices omitted; no amended response stating non- existence after reasonable inquiry. 4

5 Prejudice to Plaintiff: Forecloses receivables and FET tracing; impairs damages computation. 6

7 ECF No. 215 Order ¶6: C3 Jets, LLC to produce all doc[uments] responsive to RFP 19[10] or allow inspection; else 8 amend to state non-existence after reasonable inquiry. 9 Produced: No conforming production; any materials received 10 are facially deficient. 11 Deficiency: Registers and general ledgers omitted; no amended 12 response stating non-existence after reasonable inquiry. 13 Prejudice to Plaintiff: Blocks fund-flow and inter-company 14 analysis; invites self-contradictions. 15 (Id. at 6–7.) 16 ECF No. 215 Order ¶8: Serve signed interrogatory answers. 17

18 Produced: None.

19 Deficiency: Defendants served unverified interrogatory answers, 20 a nullity under Fed. R. Civ. P. 33(b)(3), (5).[11] 21 22 10 Plaintiff’s RFP 19 to Brown requested all minutes of any meetings of any entity 23 defendant’s respective committees since December 13, 2016. (ECF No. 188-3 at 8.)

24 11 Rule 33 of the Federal Rules of Civil Procedure provides, in pertinent part: 25 (3) Answering Each Interrogatory. Each interrogatory 26 must, to the extent it is not objected to, be answered separately 27 and fully in writing under oath. … 28 1 Prejudice to Plaintiff: Presently unusable at trial; deprives 2 Plaintiff of sworn admissions and fixed positions; forces 3 litigation against a moving target and invites ambush via late verification; facilitates self-concealment by omission, prejudices 4 due process by obscuring notice of positions and evidentiary 5 bases, and veers toward de facto self-concealing misconduct.

6 (Id. at 7.) 7 Plaintiff maintains that Defendants’ noncompliance “warrants calibrated, coercive 8 remedies,” including adverse inferences and evidentiary bars tied to the missing categories, 9 signed verifications, and per-diem civil-contempt fines, until Defendants achieve full 10 compliance with the Motion to Compel Order, and insists that such sanctions are necessary 11 to “disincentivize ongoing misconduct” and to deter “continued self-dealing, personal 12 enrichment, and dissipation of assets.” (Id. at 14, 16.) 13 Defendants failed to file an opposition to the Supplement. 14 B. Legal Standard 15 Rule 37 of the Federal Rules of Civil Procedure “authorizes the district court, in its 16 discretion, to impose a wide range of sanctions when a party fails to comply with the rules 17 of discovery or with court orders enforcing those rules.” Compass Bank v. Morris Cerullo 18 World Evangelism, 104 F. Supp. 3d 1040, 1052 (S.D. Cal. 2015) (citation omitted); see 19 also Guifu Li v. A Perfect Day Franchise, Inc, 281 F.R.D. 373, 390 (N.D. Cal. 2012) (“As 20 a condition precedent to imposing sanctions pursuant to Federal Rule of Civil Procedure 21 37 the Defendants must have violated a Court Order”). Pursuant to Rule 37(b)(2)(A), “[i]f 22 a party or a party’s officer, director, or managing agent—or a witness designated 23 under Rule 30(b)(6) or 31(a)(4)—fails to obey an order to provide or permit discovery . . . 24 25 26 (5) Signature. The person who makes the answers must 27 sign them, and the attorney who objects must sign any objections.

28 1 the court where the action is pending may issue further just orders,” which may include the 2 following: 3 (i) directing that the matters embraced in the order or other designated facts be taken as established for purposes of the 4 action, as the prevailing party claims 5 (ii) prohibiting the disobedient party from supporting or 6 opposing designated claims or defenses, or from introducing 7 designated matters in evidence;

8 (iii) striking pleadings in whole or in part; 9 (iv) staying further proceedings until the order is obeyed; 10

11 (v) dismissing the action or proceeding in whole or in part;

12 (vi) rendering a default judgment against the disobedient party; 13 or

14 (vii) treating as contempt of court the failure to obey any order 15 except an order to submit to a physical or mental examination.

16 Fed. R. Civ. P. 37(b)(2)(A). 17 There are two limitations to the application of a Rule 37(b)(2) sanction. “First, any 18 sanction must be ‘just’; second, the sanction must be specifically related to the particular 19 ‘claim’ which was at issue in the order to provide discovery.” 20 Ins. Corp. of Ireland v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 707 (1982) 21 (quoting Fed. R. Civ. P. 37(b)(2)). “Imposition of sanctions under Rule 37(b), and the 22 selection of the particular sanction, are matters left to the discretion of the trial court.” Liew 23 v. Breen, 640 F.2d 1046, 1050 (9th Cir. 1981). “The purpose of civil sanctions is to ensure 24 compliance with court orders and to compensate aggrieved parties for the sanctioned 25 party’s failure to comply with court rules and orders.” Cruz v. Nike Retail Servs., Inc., 346 26 27 28 1 F.R.D. 107, 114 (S.D. Cal. 2024) (citing Oracle USA, Inc. v. Rimini St., Inc., 81 F.4th 843, 2 858 (9th Cir. 2023)).12 3 C. Analysis 4 1. Civil Contempt 5 Plaintiff requests that the Court hold Defendants in contempt of court for failing to 6 comply with the Motion to Compel and impose a coercive per diem fine of $1,000 per 7 Defendant, payable to the Clerk, “commencing on the date the contempt order is entered” 8 in order to “disincentivize non-compliance until full compliance has been certified.” (ECF 9 No. 217 at 9.) 10 Except in limited circumstances not applicable here,13 United States Magistrate 11 Judges lack contempt authority. See 28 U.S.C. § 636(e); see also HM Elecs., Inc. v. R.F. 12 Techs., Inc., No. 12CV2884-BAS (MDD), 2014 WL 12102169, at *1 (S.D. Cal. Dec. 16, 13 2014) (citing 28 U.S.C. § 636(e); Bingman v. Ward, 100 F.3d 653, 656–657 (9th Cir. 1996) 14 (explaining that “[m]agistrate judges themselves do not have authority to make any 15 findings of contempt, so must certify their findings to the district judge”). Title 28, Section 16 636 of the United States Code provides, in pertinent part, that upon the commission of an 17 act constituting a civil contempt, 18 the magistrate judge shall forthwith certify the facts to a district judge14 and may serve or cause to be served, upon any person 19

20 21 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 22 and quotation marks omitted). 23 13 United States magistrate judges may, for instance, assert civil or criminal contempt 24 authority in any case in which the magistrate judge presides with the consent of the parties 25 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. § 26 636(e)(2), (4). 27 14 “The magistrate judge’s certification of facts serve[s] the function of the charging 28 1 whose behavior is brought into question under this paragraph, an order requiring such person to appear before a district judge upon 2 a day certain to show cause why that person should not be 3 adjudged in contempt by reason of the facts so certified. The district judge shall thereupon hear the evidence as to the act or 4 conduct complained of and, if it is such as to warrant punishment, 5 punish such person in the same manner and to the same extent as for a contempt committed before a district judge. 6

7 28 U.S.C. § 636(e)(6)(B)(iii). “Essentially, the magistrate judge’s role is to determine 8 whether Plaintiff has established a prima facie case of contempt[.]” Moog Inc. v. Skyryse, 9 Inc., No. 2:22-CV-09094-GW (MAR), 2023 WL 12032095, at *2–3 (C.D. Cal. May 16, 10 2023). 11 “Civil contempt . . . consists of a party’s disobedience to a specific and definite court 12 order by failure to take all reasonable steps within the party’s power to comply. The 13 contempt need not be willful, and there is no good faith exception to the requirement of 14 obedience to a court order.”15 In re Dual-Deck Video Cassette Recorder Antitrust Litig., 15 10 F.3d 693, 695 (9th Cir. 1993) (citation and quotation marks omitted); see also United 16 States v. Powers, 629 F.2d 619, 627 (9th Cir. 1980) (citation omitted) (explaining that civil 17 contempt is an appropriate remedy when a court aims to “enforce compliance with a court 18 order”). “[C]ivil contempt sanctions, or those penalties designed to compel future 19 compliance with a court order, are considered to be coercive and avoidable through 20 21 22 consider additional evidence.” 3A Fed. Prac. & Proc. Crim. § 715 (4th ed.); see also 7A 23 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 24 punishment, punish the person in the same manner and to the same extent as for a contempt 25 committed before a district judge.”).

26 15 Federal Rule of Civil Procedure 37(b)(2)(A)(vii) permits the Court to treat as 27 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. 28 1 obedience, and thus may be imposed in an ordinary civil proceeding upon notice and an 2 opportunity to be heard.” Int’l Union, United Mine Workers of Am. v. Bagwell, 512 U.S. 3 821, 827 (1994). “The party alleging civil contempt must demonstrate that the alleged 4 contemnor violated the court’s order by clear and convincing evidence, not merely a 5 preponderance of the evidence.” In re Dual-Deck, 10 F.3d at 695 (citation and quotation 6 marks omitted); see also Bagwell, 512 U.S. at 827 (stating that “civil contempt sanctions, 7 or those penalties designed to compel future compliance with a court order, are considered 8 to be coercive and avoidable through obedience, and thus may be imposed in an ordinary 9 civil proceeding upon notice and an opportunity to be heard,” further explaining that 10 “[n]either a jury trial nor proof beyond a reasonable doubt is required”). 11 Thus, 12 [t]o establish a prima facie case for civil contempt, the moving 13 party must show, “by clear and convincing evidence,” that the non-moving party disobeyed “a specific and definite court 14 order,” and that such disobedience was “beyond substantial 15 compliance” and “not based on a good faith and reasonable interpretation of the court’s order.” 16 17 Daimler AG v. A-Z Wheels LLC, No. 16-CV-875 JLS (MDD), 2022 WL 281580, at *1 18 (S.D. Cal. Jan. 31, 2022) (quoting In re Dual-Deck, 10 F.3d at 695). “Once the moving 19 party meets this standard, the burden shifts to the contemnor to demonstrate that he or 20 she took every reasonable step to comply, and to articulate reasons why compliance was 21 not possible.” HM Elecs., Inc., 2014 WL 12102169, at *1 (citing Donovan v. Mazzola, 22 716 F.2d 1226, 1240 (9th Cir. 1983)); see also Coleman v. Newsom, 131 F.4th 948, 956 23 (9th Cir. 2025) (explaining that “the substantial compliance defense excuses an alleged 24 contemnor who, despite not achieving total compliance, has achieved near-total 25 compliance through the exhaustion of all reasonable efforts”); United States v. Ayres, 26 166 F.3d 991, 994 (9th Cir. 1999) (citation omitted) (stating that “[a]n alleged contemnor 27 may defend against a finding of contempt by demonstrating a present inability to 28 comply”); In re Dual-Deck, 10 F.3d at 695 (citation and quotation marks omitted) 1 (“Substantial compliance with the court order is a defense to civil contempt, and is not 2 vitiated by ‘a few technical violations’ where every reasonable effort has been made to 3 comply”). 4 Here, the undersigned Magistrate Judge concludes that Plaintiff’s allegations 5 establish a prima facie case for civil contempt. Defendants disobeyed “a specific and 6 definite court order” by failing to substantially comply with all but one of the discovery 7 directives set forth in the Motion to Compel Order. Daimler AG, 2022 WL 281580, at *1 8 (quoting In re Dual-Deck, 10 F.3d at 695). In his Supplement, Plaintiff concedes that 9 Brown has comported, at least nominally, with the second discovery directive since the 10 filing of the Ex Parte Motion. (See ECF No. 228 at 5 (Plaintiff’s acknowledgement that 11 “[o]n this record, no discrete violation of ¶2 is established”). With respect to the remaining 12 discovery directives, however, Plaintiff’s Supplement indicates that Defendant produced 13 only minimal discovery, subsequent to the filing of the Ex Parte Motion, andthat 14 Defendant’s production was substantially incomplete and noncompliant. (See ECF No. 15 228 at 4–8.); see also In re Heritage Bond Litig., 223 F.R.D. 527, 533 (C.D. Cal. 2004) 16 (holding that plaintiffs demonstrated by clear and convincing evidence that defendants 17 failed to comply with the court’s order compelling the production of documents, thus 18 warranting a finding of civil contempt under Federal Rule of Civil Procedure 37(b)(20(D), 19 where it was “clear that the efforts by [] defendants to obtain relevant and significant 20 documents for [] plaintiffs was minimal”). Thus, the burden shifts to Defendants to 21 demonstrate a present inability to comply with the Order. See Ayres, 166 F.3d at 994. 22 However, as noted above, Defendants failed to file an opposition to Plaintiff’s Ex Parte 23 Motion despite three opportunities to do so. 24 Moreover, as noted in the Motion to Compel Order, this Court has overseen discovery 25 disputes regarding Defendants’ responses to the discovery requests at issue for more than 26 a year. (ECF No. 215 at 23.) On multiple occasions, Defendants agreed to supplement 27 their responses in accordance with agreements reached at informal Discovery Conferences, 28 only for Defendants to thereafter revoke or deny those agreements. (Id. at 23-24.) Further, 1 Defendants have repeatedly failed to meet deadlines set by the Rules of Civil Procedure 2 and by Court orders. (Id. at 24.) That pattern continues, as Defendants persist in flagrantly 3 disregarding the discovery directives set forth in the Order. See HM Elecs., Inc., 2014 WL 4 12102169, at *1 (quoting Stone v. City and Cnty. of San Francisco, 968 F.2d 850, 856–57 5 (9th Cir. 1992)) (“To assess whether an alleged contemnor has taken ‘every reasonable 6 step’ to comply with the terms of a court order, the district court can consider (1) a history 7 of noncompliance, and (2) a failure to comply despite the pendency of a contempt 8 motion.”). Court orders are not something Defendants can merely “work on” but “make 9 no promises” to comply with. (See ECF No. 217 at 4.) They must be adhered to. 10 Defendants have not opposed the Motion and have not met their burden to 11 demonstrate they were unable to comply, despite taking all reasonable steps to do so. See 12 Daimler AG, 2022 WL 281580, at *1. 13 The Court therefore certifies the pertinent facts set forth above in the Relevant 14 Procedural Background. The Court further certifies that Defendants, individually and 15 collectively, violated a specific and definite order of this Court; did not take every 16 reasonable step to comply with the order; and have not established that they were unable 17 to comply with the order. Accordingly, the Court recommends that the Honorable Gonzalo 18 P. Curiel initiate civil contempt proceedings against Defendants. 19 a. Coercive Fines 20 21 One form of relief requested by Plaintiff is the imposition of a coercive fine of 22 $1,000 per day until Defendants achieve compliance. 23 “[A] per diem fine imposed for each day a contemnor fails to comply with an 24 affirmative court order” can constitute a coercive civil sanction. Coleman, 131 F.4th at 25 962–63 (quoting Bagwell, 512 U.S. at 829). “A court, in determining the amount and 26 duration of a coercive fine, must ‘consider the character and magnitude of the harm 27 threatened by continued contumacy, and the probable effectiveness of any suggested 28 sanction in bringing about the result desired.’” Whittaker Corp. v. Execuair Corp., 953 1 F.2d 510, 516 (9th Cir. 1992) (quoting United States v. United Mine Workers of Am., 330 2 U.S. 258, 304 (1947))). The Court determines that daily coercive fines in the amounts 3 set forth below are the appropriate sanction, carefully calculated to incentivize 4 compliance with the Motion to Compel Order. 5 In Falstaff Brewing Corp. v. Miller Brewing Co., the Ninth Circuit reversed an 6 amended order of the district court holding plaintiff in contempt of court for, inter alia, 7 failing to return documents as required by a protective discovery order. 702 F.2d 770, 8 777, 780, 783 (9th Cir. 1983). The Court is mindful of Falstaff’s direction on the need 9 to clearly differentiate between coercive civil contempt sanctions and punitive criminal 10 contempt sanctions.16 Importantly, a coercive per diem fine cannot constitute a civil 11 contempt sanction where the record shows that compliance with the court’s order is 12 impossible. See id. at 782 (reasoning that “the district court’s order of contempt simply 13 [could not] be sustained as a coercive civil contempt order,” where “it was impossible 14 for [the contemnor] to purge itself of contempt by returning documents which were in 15 the sole possession of its counsel”). “A court’s power to impose coercive civil contempt 16 depends upon the ability of the contemnor to comply with the court’s coercive order.” 17 Id. at 778 (citing Shillitani v. United States, 384 U.S. 364, 371 (1966)). Where a coercive 18 sanction is imposed, the civil contemnor “carries the keys of his prison in his own 19 pocket,” either literally or figuratively; whereas if the penalty is fixed, the criminal 20 contemnor “is furnished no key, and he cannot shorten the term by promising not to 21 repeat the offense.” Gompers v. Buck’s Stove & Range, Inc., 221 U.S. 418, 442 (quoting 22

23 16 The Falstaff Court cautioned, “[w]here . . . a judgment of contempt contains an 24 admixture of criminal and civil elements, ‘the criminal aspect of the order fixes its character 25 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 26 Circuit also addressed the distinction between compensatory civil contempt sanctions, 27 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, 28 1 In re Nevitt, 117 F. 448, 461 (8th Cir. 1902)); see also Coleman, 131 F.4th at 962 2 (explaining that “just as a conditional sentence of imprisonment is coercive and civil if 3 the contemnor ‘carries the keys of his prison in his own pocket,’ a purgeable civil fine is 4 one that is forward-looking and conditional, allowing the contemnor to avoid its 5 imposition by altering some behavior”) (quoting Bagwell, 512 U.S. at 828). 6 In this case, certain aspects of the Order are, on their face, clearly well within 7 Defendants’ power to comply. All Defendants have failed to serve Plaintiff with signed 8 interrogatory responses in violation of the Federal Rules of Civil Procedure and the 9 Motion to Compel Order. Defendant Brown has failed to submit a declaration as ordered 10 by the Court. All Defendants have failed to provide a privilege log as ordered by the 11 Court. All Defendants have failed to produce discovery they had agreed in their 12 discovery responses and in the pleadings and hearings related to the Motion to Compel 13 to produce, even after production was ordered by the Court. With respect to other 14 aspects of the Motion to Compel Order, specifically directives 1 and 3, it is not as 15 obvious on its face that Defendants have the current ability to comply, but the burden 16 had shifted to them to articulate reasons why compliance was not possible, and they 17 declined to file any opposition to the Ex Parte Motion. Nonetheless, the Court, in this 18 recommendation, still allows for Defendants to avoid civil coercive sanctions either by 19 complying with directives 1 and 3 of the Order or by submitting declarations 20 demonstrating impossibility. Thus, each Defendant truly “carries the keys of his prison 21 in his own pocket,” as each possesses the ability to purge contempt through compliance 22 with any contempt order hereafter issued by Judge Curiel. See Gompers, 221 U.S. at 23 442. 24 The Court recommends daily coercive sanctions, to be paid to the Court, in the 25 following amounts until the required actions are completed. 26 27 28 1 Defendant ¶ Number Required Action to End Sanctions Daily from Sanction 2 Order/RFP Amount 3 Number Brown ¶¶ 1, 3 Permit Plaintiff (or his designated expert $500 per 4 RFP Nos. or representative) to inspect the servers, day 5 28, 31, 32, email accounts, cell phones, and any 33, 37, 38, other electronic storage media within 6 39, 43, 53, Brown’s possession, custody, or control 7 54, 58, 64, for all agreed upon custodians AND file 65, 66, 67, a declaration with the Court signed by 8 68, 69, 70 Brown: (1) specifically identifying which 9 electronic storage media he currently has possession, custody or control of and has 10 made available to Plaintiff; (2) 11 specifically identifying which electronic storage media he maintains he never had 12 possession, custody or control of and the 13 basis for that assertion; (3) specifically identifying any electronic media storage 14 devices he previously had possession, 15 custody or control of and no longer does; and (4) for each electronic storage media 16 device identified under (3), setting forth 17 why it is not available for inspection, when and how it became unavailable for 18 inspection, and what efforts were made, 19 and when, to preserve the devices and their data for this litigation. 20 Brown ¶ 4 Produce all responsive bank and credit $250 per 21 RFP Nos. card statements to Plaintiff AND file a day 5, 7, 8, 9 declaration with the Court confirming 22 that he has requested all responsive bank 23 statements and credit card statements from his financial institutions and that all 24 responsive documents have been 25 produced. All transactional information beyond that which is requested may be 26 redacted. 27 28 1 Defendant ¶ Number Required Action to End Sanctions Daily from Sanction 2 Order/RFP Amount 3 Number Jet Agency ¶ 5 Produce all client invoices since $200 per 4 Global, RFP No. 5 December 13, 2016, AND file a day 5 LLC declaration confirming that this has been completed. 6 C3 Jets, ¶ 6 Produce all check registers and general $200 per 7 LLC RFP No. 19 ledgers since December 13, 2016 AND day file a declaration confirming this has 8 been completed. 9 All ¶¶ 7, 10 Produce a privilege log of any $100 Defendants communications as to which Stacy (joint and 10 Brown is asserting marital several) 11 communications privilege; produce all responsive documents withheld on the 12 basis of privilege, except for those 13 documents over which Stacy Brown asserts the marital communications 14 privilege; AND file a declaration with 15 the Court affirming that no responsive documents are being withheld on the 16 basis of privilege outside of those on the 17 Stacy Brown marital communications privilege log. 18 All ¶ 8 Serve on Plaintiff signed copies of their $100 per 19 Defendants interrogatories in compliance with Fed. Defendant R. Civ. P. 33 AND file a declaration with per day 20 the Court confirming that it has been 21 completed. 22 23 24 25 26 27 28 1 Defendant ¶ Number Required Action to End Sanctions Daily from Sanction 2 Order/RFP Amount 3 Number All ¶ 3 To the extent they have possession, $500 per 4 Defendants custody, or control of the cell phones Defendant 5 except for used by the agreed upon custodians, per day Brown, make those phones available for 6 because, inspection by Plaintiff AND file a 7 for Brown, declaration with the Court: (1) this action specifically identifying which cell 8 is already phones they currently have possession, 9 addressed custody or control of and have made in the first available to Plaintiff; (2) specifically 10 entry in identifying which electronic cell phones 11 this chart they maintain they never had possession, custody or control of and the basis for 12 that assertion; (3) specifically identifying 13 any cell phones they previously had possession, custody or control of and no 14 longer do; and (4) for each cell phone 15 identified under (3), setting forth why it is not available for inspection, when and 16 how it became unavailable for 17 inspection, and what efforts were made, and when, to preserve the device and its 18 data for this litigation. 19 Should Judge Curiel issue an order imposing the recommended civil coercive 20 sanctions, the Court further recommends that the sanctions be suspended for five days after 21 such order is issued. 22 b. Default Liability on All Claims and Counterclaims 23 Plaintiff requests that the Court “strike Defendants’ answers and enter default as to 24 liability on all claims and counterclaims.” (ECF No. 217 at 9.) Furthermore, “upon entry 25 of default, Plaintiff asks that the Court set an expedited prove-up to determine damages, 26 shifting to Defendants the burden of disproving amounts that would have been 27 ascertainable had they produced the ordered records.” (Id.) 28 1 The District Court has the discretion to strike pleadings, dismiss the action, or render 2 default judgment in response to noncompliance with a discovery order. Fed. R. Civ. P. 3 37(b)(2)(A)(iii, v-vi). “Dismissal, however, is authorized only in extreme circumstances 4 and only where the violation is due to willfulness, bad faith, or fault of the party.” In re 5 Exxon Valdez, 102 F.3d 429, 432 (9th Cir. 1996) (citation and quotation marks omitted); 6 see also Henry v. Gill Indus., Inc., 983 F.2d 943, 946 (9th Cir. 1993) (citationomitted) 7 (“Where the drastic sanctions of dismissal or default are imposed, however, the range of 8 discretion is narrowed and the losing party’s non-compliance must be due to willfulness, 9 fault, or bad faith.”). 10 In deciding whether to dismiss a case or render default judgment, a court must weigh 11 the following five factors: “(1) the public’s interest in expeditious resolution of litigation; 12 (2) the court’s need to manage its docket; (3) the risk of prejudice to the [moving party]; 13 (4) the public policy favoring disposition of cases on their merits; and (5) the availability 14 of less drastic sanctions.” In re Phenylpropanolamine (PPA) Prods. Liab. Litig., 460 F.3d 15 1217, 1226 (9th Cir. 2006) (citation omitted); see also Adriana Int’l Corp. v. Thoeren, 913 16 F.2d 1406, 1412 (9th Cir.1990). “These factors are ‘not a series of conditions precedent 17 before the judge can do anything,’ but a ‘way for a district judge to think about what to 18 do.’” Id. (quoting Valley Eng’rs Inc. v. Elec. Eng’g Co., 158 F.3d 1051, 1057 (9th Cir. 19 1998). “Where a court order is violated, the first two factors support sanctions and the 20 fourth factor cuts against a default. Therefore, it is the third and fifth factors that are 21 decisive.” Adriana Int’l Corp., 913 F.2d at 1412. The moving party suffers prejudice 22 where the actions of the non-moving party impair the “ability to go to trial or threaten to 23 interfere with the rightful decision of the case.” Id. “Delay alone has been held to be 24 insufficient prejudice” but “[f]ailure to produce documents as ordered, . . . is considered 25 sufficient prejudice.” Id. “The district court’s finding of prejudice deserves substantial 26 deference because the district court is in the best position to assess prejudice.” In re 27 Phenylpropanolamine, 460 F.3d at 1228 (citation and quotation marks omitted). 28 1 Plaintiff argues that Defendants’ “non-compliance immediately deprives [him] of 2 evidence needed to prove claims involving misappropriated assets, diverted tax 3 proceedings, and self-dealing transactions that may expose unknown co-conspirators. 4 Further, Plaintiff insists that “[t]he resulting prejudice is manifest,” as “without the 5 requested financial records and verified interrogatories, [he] cannot quantify damages or 6 test the veracity of Defendants’ anticipated defenses.” (ECF No. 217 at 7.) The Ninth 7 Circuit has held that “[t]he district court abuses its discretion if it imposes a sanction of 8 dismissal without first considering the impact of the sanction and the adequacy of less 9 drastic sanctions.” Malone v. U.S. Postal Serv., 833 F.2d 128, 131 (9th Cir. 1987) 9citation 10 omitted). “Failure to Warn has frequently been a contributing factor in [Ninth Circuit] 11 decisions to reverse orders of dismissal.” Id. at 133 (citations omitted). Reviewing courts 12 may consider whether a district court: (1) explicitly discussed the feasibility of less drastic 13 sanctions; (2) implemented alternative methods of sanctioning before ordering dismissal; 14 or (3) warned the non-moving party of the possibility of dismissal before ordering 15 dismissal. Id. at 132. In this case, the Court expressly warned Defendants that failure to 16 comply with the Motion to Compel Order could result in more serious sanctions, up to and 17 including evidentiary and issue preclusion sanctions. (ECF No. 215 at 27 (“Failure to 18 timely comply with any aspect of this Order may expose Defendants to the imposition of 19 sanctions up to and including evidentiary and issue preclusion sanctions.”).) Further, the 20 Court previously ordered Defendants to pay, within 30 days, Plaintiff’s reasonable 21 attorney’s fees incurred in bringing the Motion to Compel (ECF No. 224), which 22 Defendants have allegedly failed to do. (ECF No. 230). 23 The Court recognizes that Defendants’ repeated failure to provide discovery 24 beginning in February 2024, compounded by their continued refusal to comply with court 25 orders, constitutes an interference with the rightful decision of the case. However, the 26 Court is not persuaded that invoking the drastic sanction of dismissal or default—which 27 has been characterized as the “most severe penalty” authorized only in “extreme 28 circumstances”—is appropriate at this time. U.S. for Use & Ben. of Wiltec Guam, Inc. v. 1 Kahaluu Const. Co., 857 F.2d 600, 603 & 603 n.5 (9th Cir. 1988) (citation omitted); see 2 also Gen. Atomic Co. v. Exxon Nuclear Co., 90 F.R.D. 290, 307 (S.D. Cal. April 23, 1981) 3 (citation omitted) (“[D]ismissal and default judgment, the sanctions of last resort, run 4 counter to the strong public policy of deciding cases on their merits and affording litigants 5 their fair day in court.”). Instead, less drastic sanctions, such as those outlined in the instant 6 Order, should be utilized first. Defendants are once again warned, though, that continued 7 noncompliance may result in terminating sanctions. Because the Court recommends 8 against entry of default, the Court need not address Plaintiff’s request for an expedited 9 prove-up to determine damages. 10 c. Adverse Influence and Issue Preclusion 11 In his Ex Parte Motion, Plaintiff requests sanctions in the form of “adverse-influence 12 and issue-preclusion findings, including deeming all subsequently produced documents 13 authentic and admissible and establishing that any destroyed, altered, or withheld item 14 would have been unfavorable to Defendants.” (ECF No. 217 at 10.) Plaintiff maintains 15 that “Defendants’ defiance is willful, not inadvertent.” (Id. at 6.) In the court-ordered 16 Supplement, Plaintiff asserts that the record in this case warrants the imposition of 17 sanctions in the form of “adverse inferences and evidentiary bars tied to the missing 18 categories[.]” (ECF No. 228 at 14.) 19 As a sanction for failure to comply with a discovery order, a District Court may issue 20 an order “directing that the matters embraced in the order or other designated facts be taken 21 as established for purposes of the action, as the prevailing party claims.” Fed. R. Civ. P. 22 37(b)(2)(A)(i); Guifu Li, 281 F.R.D. at 393 (citation omitted). Courts have held that 23 “[a]n adverse inference instruction can take many forms, [] ranging in degrees of harshness.” Apple Inc. [v. Samsung Elecs. 24 Co., Ltd.,], 881 F. Supp. 2d [1132,] 1150 [N.D. Cal. 2012]. The 25 level of harshness should be commensurate with the egregiousness of the conduct. Id. There are three levels of 26 instructions generally considered: (1) “when a spoliating party 27 has acted willfully or in bad faith, the jury can be instructed that certain facts are deemed admitted and must be accepted as true”; 28 1 (2) “when a spoliating party has acted willfully or recklessly, a court may impose a mandatory presumption”; and (3) the least 2 harsh instruction “permits (but does not require) a jury to 3 presume that the lost evidence is both relevant and favorable to the innocent party.” Id. (citation omitted). 4

5 Ramos v. Swatzell, No. EDCV121089BROSPX, 2017 WL 2857523, at *14 (C.D. Cal. June 6 5, 2017), report and recommendation adopted, No. ED CV 12-1089-BRO (SPx), 2017 WL 7 2841695 (C.D. Cal. June 30, 2017) (declining to impose a requested sanction in the form 8 of an adverse inference jury instruction suggesting that defendants concealed evidence that 9 one defendant was counseled for dishonesty in a government investigation, where plaintiffs 10 “failed to show that was the case”). 11 Further, Rule 37(b)(2) sanctions are limited by two considerations: the sanction must 12 be “just” and must be “specifically related to the particular claim which was at issue in the 13 order to provide discovery.” Guifu Li, 281 F.R.D. at 393 (quotation marks and citation 14 omitted). Here, Plaintiff fails to specify which “particular claim[s]” of the 19 causes of 15 action set forth in his Second Amended Complaint are at issue in connection with his 16 request for Rule 37(b)(2) sanctions in the form of adverse inferences and issue preclusion. 17 See Guifu Li, 281 F.R.D. at 393; (see also ECF No. 217 at 7) (contending generally that 18 “Defendants’ non-compliance immediately deprive[d] Plaintiff of evidence needed to 19 prove claims involving misappropriated assets, diverted tax proceeds, and self-dealing 20 transactions that may expose unknown co-conspirators”). Plaintiff also does not address 21 whether the requested sanctions are “specifically related” to those claims. Id. at 393-94 22 (deeming facts pertaining to the issue of alter ego liability set forth in two paragraphs of 23 the complaint established, subject to rebuttal at trial, where one defendant “repeatedly 24 refused to produce documents and deponents that would clarify its corporate ownership 25 and structure, concluding that “[t]his [was] an appropriate and narrowly tailored sanction 26 to address the Court’s orders that have been violated”). Moreover, despite raising the 27 specter of the destruction of evidence by Defendants (see ECF No. 217 at 10), Plaintiff 28 fails to develop this potential argument with any specificity. See, e.g., Ramos, 2017 WL 1 2857523, at *13 (explaining that a party seeking an adverse inference instruction based on 2 the destruction of evidence must establish: (1) that the party having control over the 3 evidence had an obligation to preserve it at the time it was destroyed; (2) that the records 4 were destroyed with a culpable state of mind; and (3) that the evidence was relevant to the 5 party’s claim or defense such that a reasonable trier of fact could find that it would support 6 that claim or defense). The record, at this time, does not establish that evidence has been 7 destroyed. The Court is not persuaded that the imposition of adverse inference 8 instructions and issue preclusion are the appropriate sanctions at this time. See Dr. Lokesh 9 Tantuwaya MD, Inc. v. Jetsuite, Inc., No. 19-CV-49-W-BLM, 2023 WL 6378012, at *6 10 (S.D. Cal. Sept. 27, 2023) (awarding attorneys’ fees and costs but declining to impose 11 terminating sanctions under Rule 37(b), where plaintiff failed to produce responsive 12 documents, respond to interrogatories, participate in the meet and confer process, or 13 respond to defendant’s motion to compel); see also AMC Tech., LLC v. Cisco Sys., Inc., 14 No. 11-CV-3403 PSG, 2013 WL 3733390, at *4 (N.D. Cal. July 15, 2013) (citation and 15 quotation marks omitted) (holding that sanctions in the form of adverse inferences “have 16 similar effect to default judgment and should only be awarded with very great restraint”). 17 The Court therefore recommends against imposing sanctions in the form of adverse 18 inferences and issue preclusion. 19 2. Attorney’s Fees 20 Pursuant to Federal Rule of Civil Procedure 37(b)(2)(C), Plaintiff requests an award 21 of all reasonable attorneys’ fees and costs incurred since June 6, 2025, as a result of 22 Defendants’ noncompliance with the Motion to Compel Order, including all attorney’s fees 23 and costs incurred preparing the instant Ex Parte Motion. (ECF No. 217 at 10.) Plaintiff 24 seeks “to ensure that Defendants do not profit from their discovery misconduct and to 25 restore the parties to level litigation footing.” (Id.) 26 “Imposition of sanctions under Rule 37(b), and the selection of the particular 27 sanction, are matters left to the discretion of the trial court.” Liew, 640 F.2d at 1050 28 (citations omitted). Federal Rule of Civil Procedure 37(b) provides, relevant part: 1 Payment of Expenses. Instead of or in addition to the orders above, the court must order the disobedient party, the attorney 2 advising that party, or both to pay the reasonable expenses, 3 including attorney’s fees, caused by the failure [to obey an order to provide or permit discovery], unless the failure was 4 substantially justified or other circumstances make an award of 5 expenses unjust.

6 Fed. R. Civ. P. 37(b)(2)(A), (C). “The party against whom an award of expenses is sought 7 has the burden of showing the special circumstances that make his failure to comply 8 ‘substantially justified.’” Liew, 640 F.2d at 1050 (quoting Fed. R. Civ. P. 37b)(2)). 9 As noted above, Defendants failed to oppose Plaintiff’s Ex Parte Motion. Thus, 10 Defendants have not attempted to meet their burden of showing that special circumstances 11 render their failure to comply with the Order “substantially justified.” Id. The Court finds 12 no substantial justification for Defendants’ noncompliance and is not aware of any 13 circumstances that would make awarding expenses unjust. The Court therefore concludes 14 that Plaintiff is entitled to reasonable attorney’s fees and costs incurred following June 6, 15 2025, as a result of Defendants’ noncompliance with the Motion to Compel Order. See 16 Richmark Corp. v. Timber Falling Consultants, 959 F.2d 1468, 1482-83 (9th Cir. 1992) 17 (affirming award of approximately $24,000 in attorney’s fees and costs incurred obtaining 18 an order compelling discovery); Ramos, No. EDCV121089BROSPX, 2017 WL 2857523, 19 at *15 (citing Fed. R. Civ. P. 37(b)(2)(C)) (holding that plaintiffs were entitled to monetary 20 sanctions in the form of attorney’s fees and expenses, where defendant failed to obey the 21 court’s order to produce documents”). 22 It is of no moment that Plaintiff concedes in the Supplement that “[o]n this record, 23 no discrete violation of ¶2 is established” where Brown afforded Plaintiff the opportunity 24 to inspect and copy physical items and documents within the 14-day window provided for 25 in the Motion to Compel Order (ECF No. 228 at 5) or that the Defendants partially 26 complied with the Order in other, modest ways. 27 28 1 As Defendants’ counsel has only been attorney of record since April 21, 2025 (ECF 2 No. 204), and Defendants have been disregarding discovery deadlines since February 2024, 3 the Court finds Defendants to be the disobedient party and orders the Defendants, jointly 4 and severally, to pay the reasonable attorney’s fees and costs. 5 However, Plaintiff has not detailed the amount of reasonable attorney’s fees and 6 costs incurred in connection with Defendants’ noncompliance. See RG Abrams Ins. v. L. 7 Offs. of C.R. Abrams, 342 F.R.D. 461, 523 (C.D. Cal. 2022) (stating that “[t]he party 8 seeking the award of fees must submit evidence to support the request”). As this Court has 9 explained: 10 In the Ninth Circuit, a district court determines a reasonable fee award first by “calculating the lodestar amount, which is the 11 ‘number of hours reasonably expended on the litigation 12 multiplied by a reasonable hourly rate.’” Chaudhry v. City of Los Angeles, 751 F.3d 1096, 1110 (9th Cir. 2014) (quoting Hensley 13 v. Eckerhart, 461 U.S. 424, 433 (1983)). To assess a reasonable 14 hourly rate, the court must look to the “rate prevailing in the community for similar work performed by attorneys of 15 comparable skill, experience, and reputation.” Camacho 16 v.Bridgeport Fin., Inc., 523 F.3d 973, 979 (9th Cir. 2008) (quoting Barjon v. Dalton, 132 F.3d 496, 502 (9th Cir. 1997)). 17 “Affidavits of the [fee applicant] and other attorneys regarding 18 prevailing fees in the community, and rate determinations in other cases, . . . are satisfactory evidence of the prevailing market 19 rate.” United Steelworkers of Am. v. Phelps Dodge Corp., 896 20 F.2d 403, 407 (9th Cir. 1990).

21 Kirschner v. J.P. Morgan Chase Bank, N.A., No. 20-CV-01712-LAB-JLB, 2021 WL 22 2633592, at *2–3 (S.D. Cal. June 25, 2021). Accordingly, Plaintiff SHALL FILE 23 supporting declarations and documentation sufficient to support its request for attorney’s 24 fees and costs within ten (10) days of the date of this Order. See id. at *3 (citing Blum v. 25 Stenson, 465 U.S. 886, 895 n.11 (1984) (“To inform and assist the court in the exercise of 26 discretion, the burden is on the fee applicant to produce satisfactory evidence—in addition 27 to the attorney’s own affidavits—that the requested rates are in line with those prevailing 28 1 in the community for similar services by lawyers of reasonably comparable skill, 2 experience[,] and reputation.”); McCwon v. City of Fontana, 565 F.3d 1097, 1102 (9th Cir. 3 2009) (citation omitted) (“The party seeking the award should provide documentary 4 evidence to the court concerning the number of hours spent, and how it determined the 5 hourly rate(s) requested.”)). Defendants may file an opposition challenging the 6 reasonableness of the amount of attorney’s fees within five (5) days of the date of 7 Plaintiff’s filing of his declaration. See RG Abrams Ins., 342 F.R.D. at 523 (“The party 8 opposing the fee request bears the burden of rebuttal that requires submission of evidence 9 to the district court challenging the accuracy and reasonableness of the hours charged or 10 the facts asserted by the prevailing party in submitted affidavits.”) (citation and quotation 11 marks omitted). 12 III. CONCLUSION AND RECOMENDATION 13 For the foregoing reasons, Plaintiff’s request for attorney’s fees is GRANTED. 14 Plaintiff SHALL FILE a declaration and documentation sufficient to support its request 15 for attorney’s fees and costs within ten (10) days of the date of this Order. Defendants 16 may file an opposition challenging the reasonableness of the amount of attorney’s fees 17 within five (5) days of the date of Plaintiff’s filing of his supporting declaration and 18 documentation. The Court RECOMMENDS to the Honorable Gonzalo P. Curiel that the 19 Court initiate civil contempt proceedings against Defendants. Further, the Court certifies 20 the pertinent facts in connection with a contempt inquiry, as set forth in the relevant 21 procedural background above. The Court RECOMMENDS that Plaintiff’s request for 22 sanctions in the form of coercive per diem fines be GRANTED in the amounts set forth in 23 this Report and Recommendation. The Court further RECOMMENDS, however, that 24 Plaintiff’s request for sanctions in the form of adverse inferences, issue preclusion, and 25 entry of default judgment be DENIED. 26 IT IS HEREBY ORDERED that, pursuant to 28 U.S.C. § 636(b)(1)(C), any party 27 to this action may file written objections with the Court and serve a copy on all parties no 28 1 || later than February 12, 2026. The document should be captioned “Objections to Report 2 |}and Recommendation.” 3 IT IS FURTHER ORDERED that if objections are filed, any reply is due by 4 February 26, 2026. The parties are advised that failure to file objections within the 5 || specified time may waive the right to appeal the district judge’s order. Martinez v. □□□□□ 6 F.2d 1153, 1157 (9th Cir. 1991). 7 IT IS SO ORDERED. 8 ||Dated: January 29, 2026

n. Jill L. Burkhardt 10 ited States Magistrate Judge 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28