Metricolor LLC v. L Oreal USA, Inc

• Court: Court of Appeals for the Ninth Circuit
• Decided: November 25, 2025
• Docket: 24-3747
• Status: Unpublished

Opinion

NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS NOV 25 2025 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT

METRICOLOR LLC, No. 24-3747 D.C. No. Plaintiff - Appellant, 2:18-cv-00364-CAS-E v. MEMORANDUM* L OREAL USA, INC; L OREAL USA PRODUCTS, INC.; L OREAL USA S D INC; REDKEN 5TH AVENUE NYC, LLC,

Defendants - Appellees.

Appeal from the United States District Court for the Central District of California Christina A. Snyder, District Judge, Presiding

Argued and Submitted October 22, 2025 Pasadena, California

Before: R. NELSON and VANDYKE, Circuit Judges, and COLE, District Judge.**

Plaintiff-Appellant Metricolor LLC appeals the district court’s order

dismissing its trade secret misappropriation case as a sanction for fabricating,

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. ** The Honorable Douglas Russell Cole, United States District Judge for the Southern District of Ohio, sitting by designation. withholding, and destroying evidence. We have jurisdiction under 28 U.S.C. § 1291.

We review the imposition of discovery sanctions for abuse of discretion. Conn. Gen.

Life Ins. Co. v. New Images of Beverly Hills, 482 F.3d 1091, 1096 (9th Cir. 2007).

And we do not set aside factual findings underlying a sanctions order unless they are

clearly erroneous. Anheuser-Busch, Inc. v. Nat. Beverage Distribs., 69 F.3d 337,

348 (9th Cir. 1995). We affirm.

1. The district court did not abuse its discretion by imposing a terminating

sanction under Federal Rule of Civil Procedure 37, its inherent powers, or both. See

Fed. R. Civ. P. 37(b)(2)(A); Anheuser-Busch, 69 F.3d at 348. The district court

properly applied our multi-part “test” to determine the appropriateness of a

case-dispositive discovery sanction. See Conn. Gen., 482 F.3d at 1096. “This ‘test’

is not mechanical. It 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.” Id.

Given the sheer volume of Metricolor’s misconduct in the record—and

Metricolor’s unimpressive excuses both below and on appeal—the district court’s

conclusion that Metricolor’s misconduct resulted from “willfulness, bad faith, and

fault” was not clearly erroneous. Id. Metricolor forfeited any arguments about “the

public’s interest in expeditious resolution of litigation” and the district court’s “need

to manage its dockets” by not addressing these factors below or in its opening brief.

2 24-3747 Id. And L’Oréal was at significant “risk of prejudice” because Metricolor deleted

evidence that could have been relevant to L’Oréal’s claims. Id.; see Leon v. IDX

Sys. Corp., 464 F.3d 951, 960 (9th Cir. 2006). Further, “public policy favoring

disposition of cases on their merits” weighs against Metricolor because its

misconduct made “it impossible for [the] court to be confident that the parties

[would] ever have access to the true facts.” Conn. Gen., 482 at 1096–97 (cleaned

up). And not only did the district court find that Metricolor’s actions “cast doubt on

the veracity and integrity of all evidence in this case,” it also found very little

non-fabricated evidence to support Metricolor’s claims on the merits. See id. at

1097. These conclusions were not clearly erroneous. Finally, the district court

properly considered “the availability of less drastic sanctions,” id. at 1096,

implemented lesser sanctions first, and warned Metricolor of the possibility of

dismissal. Together, these factors make clear that the district court did not abuse its

discretion by issuing a terminating sanction for Metricolor’s fabrication,

withholding, and destruction of evidence.

Metricolor’s arguments to the contrary are either forfeited or wholly

unpersuasive. First, because Metricolor never argued to the district court that it

needed to segregate its sanctions analysis by type of document or spoliation,

Metricolor forfeited its argument about cumulative sanctions. See O’Guinn v.

Lovelock Corr. Ctr., 502 F.3d 1056, 1063 n.3 (9th Cir. 2007). In any event, this

3 24-3747 argument fails because “all the misconduct is of the same type: discovery abuses.”

Adriana Intern. Corp. v. Thoeren, 913 F.2d 1406, 1412 (9th Cir. 1990). Second, the

district court sanctioned Metricolor for fabricating, deleting, and withholding

documents—not for waiting too long to turn over an expert’s computer forensic

report that evidenced some of these violations. Metricolor misapprehends the

district court’s order on this point. Finally, Metricolor’s arguments about the

availability of lesser sanctions fail because the district court did consider and reject

lesser sanctions. See Conn. Gen., 483 F.3d at 1096.

2. Metricolor’s argument that the district court failed to make the

necessary findings under Federal Rule of Civil Procedure 37(e) to impose a sanction

for destroying evidence also fails. Metricolor forfeited this argument by failing to

argue below that the district court had to make a different set of findings. See

O’Guinn, 502 F.3d at 1063 n.3. Regardless, the district court evaluated the

appropriate factors and made the findings necessary to satisfy Rule 37(e), even if it

did not explicitly invoke that rule. See Jones v. Riot Hosp. Grp., 95 F.4th 730, 735

(9th Cir. 2024). The court found that the information was permanently lost,

Metricolor acted with the intent to deprive L’Oréal of the ESI in the litigation, and

lesser sanctions could not address the deletion. See Fed. R. Civ. P. 37(e)(2).

Additionally, any error stemming from the court not relying on Rule 37(e) was

harmless because Metricolor’s misconduct also included withholding and

4 24-3747 fabricating evidence, not just destroying ESI. Whether under Rule 37, its inherent

powers, or both, the district court did not abuse its discretion by imposing

terminating sanctions.

AFFIRMED.

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