Global Master Intl Group, Inc. v. Esmond Natural, Inc.

• Court: Court of Appeals for the Ninth Circuit
• Decided: August 11, 2023
• Docket: 21-55809
• Status: Unpublished

Opinion

NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS AUG 11 2023 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT

GLOBAL MASTER INTERNATIONAL No. 21-55809 GROUP, INC.; GLOBAL MASTER CORPORATION, D.C. No. 2:19-cv-10360-RGK-PLA Plaintiffs-Appellants,

v. MEMORANDUM*

ESMOND NATURAL, INC.; PAUL CHIA- YIN WEI,

Defendants-Appellees.

Appeal from the United States District Court for the Central District of California R. Gary Klausner, District Judge, Presiding

Argued and Submitted August 30, 2022 Submission Withdrawn January 18, 2023 Resubmitted August 7, 2023 Pasadena, California

Before: M. SMITH and R. NELSON, Circuit Judges, and DRAIN,** District Judge.

Plaintiffs-Appellants Global Master International Group, Inc. (“GMIG”) and

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. ** The Honorable Gershwin A. Drain, United States District Judge for the Eastern District of Michigan, sitting by designation. Global Master Corporation (“GMC”) (collectively, “Global Master”) appeal the

district court’s denial of their motion to extend discovery; denial of sanctions against

defendants; grant of summary judgment on GMIG’s Racketeer Influenced and

Corrupt Organizations Act (RICO) claim; and exclusion of evidence at trial on their

related state-law claims. We have jurisdiction under 28 U.S.C § 1291.

The panel reviews the grant of summary judgment on GMIG’s RICO claim

de novo, and the rest of Global Master’s claims for abuse of discretion. See, e.g.,

Ikuno v. Yip, 912 F.2d 306, 309 (9th Cir. 1990) (applying de novo review to RICO

appeal of summary judgment grant); Zivkovic v. S. Cal. Edison Co., 302 F.3d 1080,

1087 (9th Cir. 2002) (reviewing scheduling order extension motion for abuse of

discretion); Adriana Int’l Corp. v. Thoeren, 913 F.2d 1406, 1408 (9th Cir. 1990)

(reviewing imposition of discovery sanctions for abuse of discretion); United States

v. Mitchell, 502 F.3d 931, 964 (9th Cir. 2007) (reviewing evidentiary exclusions for

abuse of discretion).

1. The district court did not abuse its discretion by not extending the

discovery cutoff beyond January 23, 2021. The district court applied the correct

legal standard by determining whether Global Master showed good cause and

properly determined whether Global Master was diligent. See Johnson v. Mammoth

Recreations, Inc., 975 F.2d 604, 609–10 (9th Cir. 1992); Fed. R. Civ. P. 16(b)(4).

In so doing, the district court determined that Global Master’s untimely motion

2 lacked good cause for yet another extension. As in Noyes v. Kelly Services, we apply

a discretionary, fact-intensive inquiry. 488 F.3d 1163, 1173, 1174 n.6 (9th Cir.

2007). Given the extensive motions practice between the parties and the court,

Global Master was on notice of the scheduling order’s strict application, and they

should have been diligent in discovery.

2. The district court did not abuse its discretion by not imposing sanctions

against Esmond Natural for alleged discovery violations. The court declined to

impose sanctions because it perceived the sanctions motion as an attempt to

circumvent the previously denied discovery extension and denied the motion for the

same reasons. Because the district court’s denial of the discovery extension was not

an abuse of discretion, its denial of sanctions was not a “clear error of judgment.”

See Halaco Eng’g Co. v. Costle, 843 F.2d 376, 379 (9th Cir. 1988).

3. The district court did not err in granting summary judgment on GMIG’s

RICO claim because GMIG failed to establish any triable issues of fact with respect

to Esmond Natural’s alleged predicate acts. See United Bhd. of Carpenters &

Joiners of Am. v. Bldg. & Constr. Trades Dep’t, AFL-CIO, 770 F.3d 834, 837 (9th

Cir. 2014) (listing elements of civil RICO claims). GMIG alleged predicate acts of

mail and wire fraud, but the only evidence proffered were two exhibits containing

(1) copies of purchase orders between Defendants and GMIG and (2) “certificates

of analysis” between the Defendants and various out-of-state manufacturers that

3 allegedly show that the Defendants “communicated” with out-of-state

manufacturers. These do not establish mail or wire fraud. Even if communication

transmission could be a “step in the plot” of a fraudulent scheme, GMIG proffered

no evidence to support that Esmond Natural used wire or mail to specifically further

any fraudulent scheme directed at GMIG. See United States v. Garlick, 240 F.3d

789, 795 (9th Cir. 2001).

4. The district court did not err in excluding the contents of Esmond

Natural’s alleged work order sheets as inadmissible hearsay. At trial, the district

court authenticated the form of the work order sheets because they were similar to

work order sheets that Global Master’s witness, Anson Hsu, had worked with. But

because Hsu was unfamiliar with the contents of the proffered work order sheets and

played no role in creating them, the court excluded their contents. The district

court’s evidentiary rulings were not “(1) illogical, (2) implausible, or (3) without

support in inferences that may be drawn from the facts in the record.” United States

v. Hinkson, 585 F.3d 1247, 1262 (9th Cir. 2009) (en banc). The district court

appropriately considered the facts in the record and determined that the contents of

the orders were out-of-court statements offered to prove the truth of the matter

asserted: that Esmond Natural was incorrectly filling Global Masters’ orders.

Nor did the district court abuse its discretion by finding that the contents of

the work orders were not covered by exceptions or exclusions to the hearsay rule

4 under Federal Rules of Evidence 801(d)(2) and 803(6). The district court did not err

in declining to admit the work order contents as statements of an opposing party

under Rule 801(d)(2). Esmond Natural disputes that the work order sheets proffered

by Global Master were theirs, and the record is unclear as to when, and by whom,

the orders were made.

The district court did not abuse its discretion in its application of Rule 803(6).

To establish a business record exception, the sponsoring witness must provide

trustworthy testimony that the record was written at or near the time by, or from

information transmitted by, someone with knowledge and that the record was made

and kept during regularly conducted business. See FED R. EVID. 803(6). Because

Hsu’s involvement in the record-keeping process was disputed; Hsu did not allege

that he had any involvement in or knowledge of the orders’ creation; the validity of

the proffered sheets was in question; and the record provides no support that the

sheets were kept as part of regular business, the district court did not err in

concluding that the sheets do not qualify for the business records exception.

AFFIRMED in part.1

1 We address GMC’s RICO challenge separately in an opinion filed concurrently with this memorandum disposition. For the reasons explained in our separate opinion, we REVERSE the district court’s grant of summary judgment on GMC’s RICO claim.