Opinion

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 AARON STANZ, individually and Case No. 3:22-CV-01164-GPC-JLB derivatively on behalf of Jet Genius 12 Holdings, Inc., ORDER ADOPTING REPORT AND 13 RECOMMENDATION GRANTING Plaintiff, IN PART AND DENYING IN PART 14 v. THE MOTION OF CIVIL 15 CONTEMPT OF COURT JORDAN BROWN; JET GENIUS 16 HOLDINGS, INC.; JET GENIUS [ECF Nos. 217, 228, 236] FLORIDA HOLDINGS, INC.; C3 JETS 17 LLC; BOWMAN AVIATION, INC.; JET 18 AGENCY GLOBAL LLC; C3 LIMO LLC; JETCHARTER.COM LLC; and 19 DOES 1-20, 20 Defendants. 21 22 Before the Court is Plaintiff Aaron Stanz (“Plaintiff”)’s Ex Parte Application for 23 Order to Show Cause as to Why Defendants Should Not be Held in Contempt of Court 24 for Failing to Comply with a Court Order. ECF Nos. 217, 228. Defendants Jordan Brown 25 (“Brown”), Jet Genius Holdings, Inc. (“JGH”), Jet Genius Florida Holdings, Inc., 26 Bowman Aviation, Inc., Jet Agency Global, LLC, C3 Jets, LLC, and C3 Limo, LLC 27 1 (collectively, “Defendants”) did not file an opposition. On January 29, 2026, Magistrate 2 Judge Jill L. Burkhart issued a Report and Recommendation (“R&R”) that this Court 3 initiate civil contempt proceedings and impose sanctions in the form of coercive per diem 4 fines but not in the form of adverse inferences, issue preclusion, and entry of default 5 judgment. ECF No. 236. No opposition to the R&R was filed. 6 After careful consideration of the pleadings and relevant exhibits submitted by the 7 parties, the Court ADOPTS the Magistrate Judge's R&R. 8 BACKGROUND 9 Plaintiff is the creator and developer of software and systems that simplify and 10 accelerate aircraft charter brokering, including JetXchange, The Grid, and the Charter 11 Flight Group website, which are also supported by custom applications, reports, lead 12 generation tools, databases, business analytics, and certain client lists (collectively, the 13 “JGH Platform”). ECF No. 78 (“SAC”) ¶ 38. The JGH Platform allows a charter aviation 14 brokerage company to operate more efficiently by facilitating more trips per staff 15 member than any charter brokerage competitor. Id. ¶ 38. 16 Plaintiff and Brown formed JGH, a private jet charter broker, with a non-party, 17 Alexander Wolf (“Wolf”), in 2016. Id. ¶¶ 1, 39. Plaintiff contributed the JGH Platform to 18 JGH and received a 49.5% ownership interest in the company. Id. ¶ 39. Plaintiff and 19 Brown are the two primary shareholders of JGH. Id. ¶ 1. Plaintiff served as the Chief 20 Technology Officer and had principal responsibility for designing and implementing the 21 JGH Platform. Id. ¶¶ 1, 44. Since 2018, Brown has been JGH's Chief Executive Officer 22 (“CEO”) and sole director. Id. ¶ 1. 23 In August 2018, Plaintiff, Wolf, and Brown entered into an agreement, whereby 24 Plaintiff reduced his ownership interest in JGH from 49.5% to 25%, resigned from JGH's 25 Board of Directors, and assigned rights in the JGH Platform to JGH, allowing Brown to 26 become JGH's sole director. Id. ¶¶ 62, 70. The agreement provided for certain safeguards 27 1 to guarantee the collection and payment of FET and to minimize the opportunity for self- 2 dealing by Brown. See id. ¶¶ 65, 68. According to Plaintiff, Brown “repeatedly assured” 3 him that he would operate the business for the benefit of shareholders and that he would 4 not form another business entity for the purposes of transferring JGH operations, leaving 5 behind an “empty shell with only liabilities.” Id. ¶ 57. 6 Plaintiff alleges that Brown used JGH as his “personal piggy bank” and “raided 7 JGH's assets through phony transactions, indefensible self-approved compensation, and 8 wrongful diversion of corporate assets” to the tune of approximately $1.9 million. Id. ¶¶ 9 2, 71. Plaintiff further alleges that Brown “employs a shell game of entities to avoid 10 paying Plaintiff amounts due to him and to avoid other company obligations.” Id. ¶¶ 4, 11 76–136. For example, on September 16, 2019, Brown formed Jet Agency Global, LLC 12 and transferred to Jet Agency ownership of, or licensed rights in and to, the JGH Platform 13 without adequate consideration. Id. ¶¶ 82, 89. Thereafter, on September 11, 2020, Brown 14 formed C3 Limo, LLC with his wife Stacy Brown, who was listed as manager for six 15 months before it was changed to Chasen Dobos, Brown's stepson. Id. ¶ 94. Brown 16 transferred to C3 Limo ownership of, or licensed rights in and to, parts of the JGH 17 Platform without adequate consideration and transferred cash from JGH to C3 Limo. Id. 18 ¶¶ 95, 96. Less than a year later, on April 23, 2021, Brown formed C3 Jets and 19 transferred $100,000 per month from JGH to the new company. Id. ¶¶ 97-98. Brown had 20 no plans to repay JGH for these fund transfers. Id. ¶¶ 95–99. 21 Plaintiff further alleges that Brown “seeks to avoid millions in assessed federal 22 excise taxes (‘FET’) related to chartering aircrafts.” Id. ¶ 4. As a business that collected 23 payment for commercial domestic transportation of persons, JGH was subject to an 24 assessment of FET. Id. ¶ 46. Brown failed to timely and fully pay the FET related to 25 JGH's operations and instead “took actions to saddle Plaintiff personally with much of 26 that burden—$1.3 million in unpaid FET—, despite assurances Brown would account for 27 1 those taxes, while also shifting JGH's operations and assets to a new entity to avoid 2 payments.” Id. ¶¶ 4, 50–70, 108–22. Plaintiff further alleges that Brown utilized 3 Plaintiff's former cell phone number to impersonate him. Id. ¶¶ 5–6, 124–36. 4 PROCEDURAL HISTORY 5 On August 8, 2022, Plaintiff initiated the instant suit. See ECF No. 1. In a Second 6 Amended Complaint filed in August 2023, Plaintiff, individually and derivatively on 7 behalf of Jet Genius Holdings, Inc., levied 19 claims against Defendants, including 8 express indemnity, equitable indemnity, breach of duty to defend, breach of fiduciary 9 duty, breach of contract, fraud, unjust enrichment, conversion, and a request for 10 declaratory relief. SAC at 28-41. At the time the Second Amended Complaint was filed, 11 Plaintiff remained the holder of 25% of the outstanding and issued shares of JGH. Id. ¶ 12 28. 13 On February 29, 2024, Plaintiff and Defendants Brown, C3Jets LLC, C3 Limo 14 LLC, Jet Agency Global, LLC, and Bowman Aviation, Inc. (collectively, the “Brown 15 Defendants”) lodged a Joint Discovery Statement concerning the Brown Defendants' 16 failure to respond to Plaintiff's RFPs (Set One). ECF No. 102. Magistrate Judge Burkhart 17 held a Discovery Conference on March 7, 2024 and ordered the Brown Defendants to 18 provide supplemental responses and production no later than March 22, 2024. ECF No. 19 103. The Brown Defendants failed to do so. 20 On April 4, 2024, Plaintiff and JGH lodged a Joint Discovery Statement, as did 21 Plaintiff and the Brown Defendants. ECF No. 107. After a Discovery Conference, 22 Defendants agreed, inter alia, to provide updated responses and supplemental production 23 to Plaintiff's RFPs (Set One) by May 10, 2024. ECF No. 110. Plaintiff and Defendants 24 lodged an updated Joint Discovery Statement on June 21, 2024. ECF No. 117. Plaintiff 25 claimed that Defendants failed to timely serve supplemental responses to Plaintiff's RFPs 26 and that he had received a document production in an unreadable format. After another 27 1 Discovery Conference, Defendants were ordered to serve second supplemental responses 2 to Plaintiff's RFPs (Set One) and produce a complete privilege log by July 15, 2024. ECF 3 No. 120. 4 The Mandatory Settlement Conference was held on July 22, 2024. ECF No. 125. 5 The case did not settle. Id. On July 30, 2024, Magistrate Judge Burkhart held another 6 Discovery Conference. ECF No. 126. On August 19, 2024, following another Status 7 Conference, the Court ordered Defendants to complete their document production by 8 September 13, 2024. ECF No. 135. On August 21, 2024, the parties left a joint voicemail 9 with the Magistrate Judge’s Chambers informing the Court that they had resolved their 10 discovery dispute. ECF No. 136. 11 Plaintiff's counsel withdrew from the case on September 23, 2024. ECF No. 145. 12 On September 30, 2024, the Court ordered that all remaining depositions, including that 13 of Plaintiff, be conducted by November 15, 2024, or fourteen days after Plaintiff retains 14 counsel, whichever occurs first. ECF No. 146. 15 On October 16, 2024, Magistrate Judge Burkhart held a Status Conference because 16 Defendants failed to meet the September 13, 2024 document production deadline. ECF 17 No. 150. Defendants were ordered to provide Plaintiff with supplemental responses to the 18 discovery requests at issue by October 21, 2024. ECF No. 150. Defendants did provide 19 Plaintiff with supplemental responses on October 21. Ten days later, the parties lodged 20 another Joint Discovery Statement concerning those responses, as Plaintiff asserted they 21 were deficient. A Status Conference was held on November 12, 2024. ECF No. 152. The 22 Court held a discovery hearing on November 19, 2024. ECF Nos. 151, 153, 158, 162, 23 164. Following the hearing, the Court authorized a motion to compel to resolve the 24 dispute. ECF No. 164. 25 On November 20, 2024, the parties filed another Joint Discovery Statement 26 concerning Defendants' interrogatory responses. ECF No. 165. On December 5, 2024, the 27 1 Court held a Discovery Conference and resolved the dispute. ECF No. 175. On January 6, 2 2025, the Court extended the deposition deadline to January 31, 2025. ECF No. 185. 3 In January 2025, Plaintiff filed a Motion to Compel, seeking an order for the 4 production of documents and an award of attorney's fees. ECF No. 188. Plaintiff sought 5 to compel responses to Plaintiff's Requests for Production (“RFP”) (Set One) served on 6 Defendants. Id. at 2. Defendants filed an opposition, ECF No. 190, and Plaintiff filed a 7 reply, ECF No. 191. On May 15, 2025 and May 28, 2025, Magistrate Judge Burkhart 8 held hearings on Plaintiff's Motion to Compel. ECF Nos. 207, 210, 213, 214. The Court 9 granted Plaintiff's Motion to Compel on June 6, 2025, and ordered the following: 10 1. Brown shall permit Plaintiff (or his designated expert or representative) to inspect 11 the electronic storage media for all agreed upon custodians, to include providing 12 access to their Gmail accounts, at a mutually agreeable date and time within 13 fourteen (14) days of the date of this Order. 14 2. Brown shall permit Plaintiff (or his designated expert or representative) to inspect 15 and copy physical items and documents that may contain responsive material at a 16 mutually agreeable date and time within fourteen (14) days of the date of this 17 Order. 18 3. To the extent Defendants have possession, custody, or control of the cell phones 19 used by the agreed upon custodians, they shall make those phones available for 20 inspection by Plaintiff at a mutually agreeable date and time within fourteen (14) 21 days of the date of this Order. 22 4. Brown shall file a declaration with the Court within ten (10) days of the date of this 23 Order confirming that he has requested all responsive bank statements and credit 24 card statements. Brown shall produce these statements to Plaintiff within seven (7) 25 days of receipt of the statements. 26 27 1 5. Within fourteen (14) days of the date of this Order, Defendant Jet Agency Global, 2 LLC shall produce all documents in its possession, custody, or control responsive 3 to RFP No. 5,6 or allow Plaintiff (or his designated expert or representative) to 4 inspect and copy the same at a mutually agreeable date and time. If no further 5 documents exist, Defendant shall amend its response to state that a reasonable 6 inquiry has been made, and no further responsive documents exist. 7 6. Within fourteen (14) days of the date of this Order, Defendant C3 Jets, LLC shall 8 produce all documents in its possession, custody, or control responsive to RFP No. 9 197, or allow Plaintiff (or his designated expert or representative) to inspect and 10 copy the same at a mutually agreeable date and time. If no further documents exist, 11 Defendant shall amend its response to state that a reasonable inquiry has been 12 made, and no further responsive documents exist. 13 7. Within fourteen (14) days of the date of this Order, Defendants shall produce all 14 responsive documents withheld on the basis of privilege, except for those 15 documents over which Stacy Brown asserts the marital communications privilege. 16 8. Within ten (10) days of the date of this Order, Defendants shall serve on Plaintiff 17 signed copies of their interrogatories in compliance with Fed. R. Civ. P. 33. 18 9. Plaintiff shall file a declaration substantiating the reasonable fees incurred by his 19 counsel in filing the reply and attending the two related hearings before the Court 20 within ten (10) days of the date of this Order. Defendants may file any opposition 21 challenging the reasonableness of the amount of attorney's fees within five (5) days 22 of Plaintiff's filing of his declaration. 23 10. Within fourteen (14) days of the date of this Order, Defendants shall produce a 24 privilege log of any communications as to which Stacy Brown is asserting marital 25 communications privilege. 26 27 1 11. Failure to timely comply with any aspect of this Order may expose Defendants to 2 the imposition of sanctions up to and including evidentiary and issue preclusion 3 sanctions. 4 ECF No. 215 at 25–27. 5 After the initial 10-day timeframe for compliance set forth in the Motion to 6 Compel Order passed, Plaintiff's counsel initiated the meet-and-confer process on June 7 17, 2025. ECF No. 217 at 4. During the meet-and-confer phone call, Defendants' counsel 8 informed Plaintiff's counsel that “he was working on it, but made no promises,” with the 9 subsequent 14-day window for production eventually passing without any compliance 10 from Defendants. Id. at 4-5 (citing ECF No. 217-1 ¶ 3). 11 Plaintiff filed the instant Ex Parte Motion on June 25, 2025. ECF No. 217. 12 Pursuant to the Magistrate Judge’s Chambers Rules, after service of an ex parte motion, 13 opposing counsel has until 5:00 p.m. the next court day to file an opposition or to request 14 an extension. J. Burkhardt's Civ. Chambers R. § VII. Defendants neither filed an 15 opposition nor requested an extension. On August 7, 2025, the parties lodged with the 16 Court pursuant to § V of Judge Burkhardt's Civil Chambers Rules a Joint Discovery 17 Statement, improperly styled a “Joint Motion for Determination of Discovery Dispute.” 18 Due to the substantial overlap between the lodged document and the instant Ex 19 Parte Motion, the Court advised the parties that it would address all the issues in the 20 context of the motion. The Court provided an additional opportunity for briefing and 21 directed the parties to address any issues not already included in the initial motion in the 22 remaining briefing. ECF No. 223. Specifically, the Court ordered Defendants to file an 23 opposition to the Ex Parte Motion by August 25, 2025 and Plaintiff to file a reply by 24 September 2, 2025. ECF No. 223 at 2. Defendants again did not file an opposition. 25 Plaintiff filed a Notice of No Reply Brief, informing the Court that it did not file a reply 26 “because there [was] no opposition for Plaintiff to address.” ECF No. 225 at 2. 27 1 In his Ex Parte Motion, Plaintiff represents that, with one exception, Defendants 2 failed to comply with the Motion to Compel Order. ECF No. 217 at 2. However, a review 3 of the subsequent Joint Discovery Statement revealed that Defendants produced some 4 discovery subsequent to the filing of the Ex Parte Motion; thus, the Ex Parte Motion no 5 longer accurately reflected the current status of Defendants' compliance or 6 noncompliance with the Order. ECF No. 215. See ECF No. 226 at 1. The Court therefore 7 ordered Plaintiff to supplement its Ex Parte Motion no later than October 3, 2025, “to 8 reflect the aspects of the [Motion to Compel Order] with which Plaintiff maintains 9 Defendants have still failed to comply,” and ordered Defendants to file an opposition by 10 October 10, 2025. Id. at 2. Plaintiff filed the Court-ordered supplement (“Supplement”) 11 on October 3, 2025. ECF No. 228. 12 In the Supplement, Plaintiff asserts that Defendants produced “a limited, 13 mislabeled document-dump of compressed, partially corrupted ESI served without Bates 14 labeling, load files/metadata, or the structured form required by Fed. R. Civ. P. 15 34(b)(2)(E),” consisting, in part, “of folders (‘Profit & Loss,’ ‘Balance Sheets,’ etc.) that 16 are incongruent with their contents and cut off around April 10, 2024.” ECF No. 228 at 3. 17 Further, Plaintiff maintains that Brown failed to comply with directive 1 and that 18 Defendants took no action to comply with directives 3, 7, and 10 of the Motion to 19 Compel Order. Id. at 4–8. With respect to the remaining provisions in the order, Plaintiff 20 represents the following: 21 ECF No. 215 Order ¶2: [Brown shall p]ermit Plaintiff (or his designated expert or 22 representative) to inspect and copy physical items and documents that may contain 23 responsive material. 24 Produced: Defendants offered an in-person, paper-only inspection at a private 25 residence within the 14-day window. 26 27 1 Deficiency: On this record, no discrete violation of ¶2 is established. However, 2 consistent with prior orders requiring that electronic production be delivered in parallel, 3 ESI should be prioritized. A physical inspection should follow, rather than substitute for, 4 completion of ESI production under Fed. R. Civ. P. 34(b)(2)(E), so that any on-site 5 review is targeted, efficient, and facilitates organized collection rather than a burden- 6 shifting paper exercise. The prior in-person invitation would have been congruent with 7 the Court's directives had Defendants also complied with the ESI or cell phone inspection 8 components; by electing to proceed only with an in-person limited paper inspection, 9 Defendants rendered the visit largely untenable. Any Fed. R. Civ. P. 37 remedies for ESI 10 noncompliance should guide the scope and logistics of any inspection under ¶2. 11 Prejudice to Plaintiff: Shifts burden to Plaintiff and is inferior to the ordered 12 electronic production. Defendants ignored nearly every paragraph of the June 6, 2025 13 order, proffering only a ‘hard-copy inspection[.’] This is classic burden shifting that is 14 tangential to, and no substitute for, ordered electronic production under Rule 34(b)(2)(E). 15 The Defendant entities operated on email, SMS texts, and cloud systems; paper records 16 were highly limited and are valuable only in the context of full and complete ESI 17 production as ordered by the Court. In light of Defendants' ongoing avoidance of ESI 18 production, account inspection, and compliance, the probative value and reliability of any 19 paper-only showing are suspect. 20 21 ECF No. 215 Order ¶4: Brown declaration confirming that he has requested all 22 responsive bank statements. Brown shall produce these statements to Plaintiff. 23 Produced: No ¶4 declaration confirming issuer requests; no issuer-pulled bank or 24 credit-card statements. Instead, Defendants produced a single personal Chase account 25 (2017–2023) and selective and non-compliant consumer credit-card statements not tied to 26 comprehensive issuer requests. 27 1 Deficiency: No issuer pulls; no confirmation of requests to all relevant issuers. 2 Prejudice to Plaintiff: Prevents tracing of revenues, distributions, and Federal 3 Excise Tax (“FET”) collections; invites selective curation. 4 5 ECF No. 215 Order ¶5: Jet Agency Global, LLC to produce all doc[uments] 6 responsive to RFP 5 or allow inspection; else amend to state non-existence after 7 reasonable inquiry. 8 Produced: No conforming production; any materials received are facially 9 deficient. 10 Deficiency: Invoices omitted; no amended response stating non-existence after 11 reasonable inquiry. 12 Prejudice to Plaintiff: Forecloses receivables and FET tracing; impairs damages 13 computation. 14 15 ECF No. 215 Order ¶6: C3 Jets, LLC to produce all doc[uments] responsive to 16 RFP 19 or allow inspection; else amend to state non-existence after reasonable inquiry. 17 Produced: No conforming production; any materials received are facially 18 deficient. 19 Deficiency: Registers and general ledgers omitted; no amended response stating 20 non-existence after reasonable inquiry. 21 Prejudice to Plaintiff: Blocks fund-flow and inter-company analysis; invites self- 22 contradictions. 23 24 ECF No. 215 Order ¶8: Serve signed interrogatory answers. 25 Produced: None. 26 27 1 Deficiency: Defendants served unverified interrogatory answers, a nullity 2 under Fed. R. Civ. P. 33(b)(3), (5). 3 Prejudice to Plaintiff: Presently unusable at trial; deprives Plaintiff of sworn 4 admissions and fixed positions; forces litigation against a moving target and invites 5 ambush via late verification; facilitates self-concealment by omission, prejudices due 6 process by obscuring notice of positions and evidentiary bases, and veers toward de facto 7 self-concealing misconduct. 8 Id. at 5-7. 9 Defendants once again filed no opposition. 10 On January 29, 2026, Magistrate Judge Jill L. Burkhart issued a Report and 11 Recommendation (“R&R”) that this Court initiate civil contempt proceedings and impose 12 sanctions in the form of coercive per diem fines but not in the form of adverse inferences, 13 issue preclusion, and entry of default judgment. ECF No. 236. Neither party filed an 14 opposition to the R&R. 15 LEGAL STANDARD 16 I. Standard of Review of Magistrate Judge’s Report and Recommendation 17 In reviewing a magistrate judge's report and recommendation, a district court 18 “must make a de novo determination of those portions of the report ... to which objection 19 is made” and “may accept, reject, or modify, in whole or in part, the findings or 20 recommendations made by the magistrate.” 28 U.S.C. § 636(b)(1)(C); Fed. R. Civ. P. 21 72(b); see also United States v. Raddatz, 447 U.S. 667, 675 (1980). 22 Where a party fails to object, however, the court is not required to conduct “any 23 review at all ... of any issue that is not the subject of an objection.” Thomas v. Arn, 474 24 U.S. 140, 149 (1985) (“We are therefore not persuaded that the statute positively requires 25 some lesser review by the district court when no objections are filed.”); United States v. 26 Reyna–Tapia, 328 F.3d 1114, 1121 (9th Cir. 2003) (“statute makes it clear that the 27 1 district judge must review the magistrate judge's findings and recommendations de novo 2 if objection is made, but not otherwise”); Wang v. Masaitis, 416 F.3d 992, 1000 n. 13 3 (9th Cir. 2005) (“Of course, de novo review of a R&R is only required when an objection 4 is made to the R&R”) (citing Reyna-Tapia, 328 F.3d at 1121); see also Schmidt v. 5 Johnstone, 263 F. Supp. 2d 1219, 1226 (D. Ariz. 2003) (interpreting Ninth Circuit's 6 decision in Reyna–Tapia as adopting the view that district courts are not required to 7 review “any issue that is not the subject of an objection”). Here, no objection was filed. 8 II. Civil Contempt and Sanctions 9 Federal Rule of Civil Procedure 70(e) allows the Court to find a party in contempt 10 for failure to comply with a court order. Fed. R. Civ. P. 70(e). Civil contempt “consists of 11 a party's disobedience to a specific and definite court order by failure to take all 12 reasonable steps within the party's power to comply.” Inst. of Cetacean Rsch. v. Sea 13 Shepherd Conservation Soc'y, 774 F.3d 935, 945 (9th Cir. 2014) (quoting In re Dual– 14 Deck Video Cassette Recorder Antitrust Litig., 10 F.3d 693, 695 (9th Cir.1993)). 15 However, good faith actions based on reasonable interpretations of a court order are a 16 defense to civil contempt. Reno Air Racing Ass'n., Inc. v. McCord, 452 F.3d 1126, 1130 17 (9th Cir.2006) 18 In a civil contempt action, “[t]he moving party has the burden of showing by clear 19 and convincing evidence that the contemnors violated a specific and definite order of the 20 court. The burden then shifts to the contemnors to demonstrate why they were unable to 21 comply.” Fed. Trade Comm'n v. Enforma Nat. Prod., Inc., 362 F.3d 1204, 1211 (9th Cir. 22 2004) (citation and internal quotation marks omitted). 23 If a party has been found in civil contempt, the Court has discretion to impose 24 sanctions. United States v. United Mine Works of Am., 330 U.S. 258, 701, 67 S.Ct. 677, 25 91 L.Ed. 884 (1947); United States v. Bright, 596 F.3d 683, 696 (9th Cir. 2010) 26 (“[A]lthough the district court generally must impose the minimum sanction necessary to 27 1 secure compliance ... the district court retains discretion to establish appropriate 2 sanctions[.]”). Within the scope of civil contempt, courts can impose sanctions that (1) 3 “coerce compliance with a court order” or (2) are “meant to compensate the complainant 4 for actual losses.” See Ahearn ex rel. N.L.R.B. v. Int'l Longshore & Warehouse Union, 5 Locals 21 & 4, 721 F.3d 1122, 1129 (9th Cir. 2013) (“[A] sanction generally is civil if it 6 coerces compliance with a court order or is a remedial sanction meant to compensate the 7 complainant for actual losses.”); Cruz v. Nike Retail Servs., Inc., 346 F.R.D. 107, 114 8 (S.D. Cal. 2024) (“The purpose of civil sanctions is to ensure compliance with court 9 orders and to compensate aggrieved parties for the sanctioned party's failure to comply 10 with court rules and orders.”). 11 DISCUSSION 12 I. Civil Contempt 13 As previously stated, civil contempt “consists of a party's disobedience to a 14 specific and definite court order by failure to take all reasonable steps within the party's 15 power to comply.” Inst. of Cetacean Rsch. v. Sea Shepherd Conservation Soc'y, 774 F.3d 16 935, 945 (9th Cir. 2014) (quoting In re Dual–Deck Video Cassette Recorder Antitrust 17 Litig., 10 F.3d 693, 695 (9th Cir.1993)). However, good faith actions based on reasonable 18 interpretations of a court order are a defense to civil contempt. Reno Air Racing Ass'n., 19 Inc. v. McCord, 452 F.3d 1126, 1130 (9th Cir.2006). 20 Here, Defendants disobeyed “a specific and definite court order” by failing to 21 substantially comply with all but one of the discovery directives set forth in the Motion to 22 Compel Order. See Inst. of Cetacean Rsch. v. Sea Shepherd Conservation Soc'y, 774 F.3d 23 935, 945 (9th Cir. 2014) (quoting In re Dual–Deck Video Cassette Recorder Antitrust 24 Litig., 10 F.3d 693, 695 (9th Cir.1993)). In the Supplement, Plaintiff concedes that Brown 25 has comported, at least nominally, with the second discovery directive since the filing of 26 the Ex Parte Motion. See ECF No. 228 at 5 (“On this record, no discrete violation of ¶2 is 27 1 established.”). As for the remaining discovery directives, however, Plaintiff's Supplement 2 indicates that Defendant produced only minimal discovery, subsequent to the filing of the 3 Ex Parte Motion, and that Defendant's production was substantially incomplete and 4 noncompliant. See ECF No. 228 at 4–8; see also In re Heritage Bond Litig., 223 F.R.D. 5 527, 533 (C.D. Cal. 2004) (holding that plaintiffs demonstrated that defendants failed to 6 comply with the court's order compelling the production of documents where it was 7 “clear that the efforts by [ ] defendants to obtain relevant and significant documents for [ 8 ] plaintiffs was minimal”). Thus, the burden shifts to Defendants to demonstrate a present 9 inability to comply with the Order. See United States v. Ayres, 166 F.3d 991, 994 (9th 10 Cir. 1999). However, Defendants failed to file an opposition to Plaintiff's Ex Parte 11 Motion despite three opportunities to do so. 12 Moreover, “[t]o assess whether an alleged contemnor has taken ‘every reasonable 13 step’ to comply with the terms of a court order, the district court can consider (1) a 14 history of noncompliance, and (2) a failure to comply despite the pendency of a contempt 15 motion.” See HM Elecs., Inc. v. R.F. Techs., Inc., No. 12CV2884-BAS (MDD), 2014 WL 16 12102169, at *1 (S.D. Cal. Dec. 16, 2014) (quoting Stone v. City and Cnty. of San 17 Francisco, 968 F.2d 850, 856–57 (9th Cir. 1992)). On multiple occasions, Defendants 18 agreed to supplement their responses in accordance with agreements reached at informal 19 Discovery Conferences, only for Defendants to thereafter revoke or deny those 20 agreements. Id. at 23-24. Defendants have also repeatedly failed to meet deadlines set by 21 the Rules of Civil Procedure and by Court orders. Id. at 24. That pattern continues, as 22 Defendants persist in disregarding the discovery directives despite the pendency of this 23 instant motion. As highlighted by the R&R, court orders are not something Defendants 24 can merely “work on” but “make no promises” to comply with. See ECF No. 217 at 4. 25 They must be adhered to. 26 27 1 Given the above and that Defendants have not opposed the instant motion, have 2 not opposed the Supplement, have not opposed the R&R, and have not established their 3 burden of being unable to comply, the Court finds that Plaintiff has shown Defendants 4 violated and continues to be in violation of the Court’s discovery orders. Accordingly, the 5 Court GRANTS the Plaintiff’s motion for civil contempt and finds Defendants in 6 contempt of the Motion to Compel Order. 7 II. Sanctions 8 Rule 37 of the Federal Rules of Civil Procedure “authorizes the district court, in its 9 discretion, to impose a wide range of sanctions when a party fails to comply with the 10 rules of discovery or with court orders enforcing those rules.” Compass Bank v. Morris 11 Cerullo World Evangelism, 104 F. Supp. 3d 1040, 1052 (S.D. Cal. 2015) (citation 12 omitted); see also Guifu Li v. A Perfect Day Franchise, Inc, 281 F.R.D. 373, 390 (N.D. 13 Cal. 2012) (“As a condition precedent to imposing sanctions pursuant to Federal Rule of 14 Civil Procedure 37 the Defendants must have violated a Court Order”). Pursuant to Rule 15 37(b)(2)(A), “[i]f a party or a party's officer, director, or managing agent—or a witness 16 designated under Rule 30(b)(6) or 31(a)(4)—fails to obey an order to provide or permit 17 discovery ... the court where the action is pending may issue further just orders,” which 18 may include the following: 19 (i) directing that the matters embraced in the order or other designated facts be 20 taken as established for purposes of the action, as the prevailing party claims 21 (ii) prohibiting the disobedient party from supporting or opposing designated 22 claims or defenses, or from introducing designated matters in evidence; 23 (iii) striking pleadings in whole or in part; 24 (iv) staying further proceedings until the order is obeyed; 25 (v) dismissing the action or proceeding in whole or in part; 26 (vi) rendering a default judgment against the disobedient party; or 27 1 (vii) treating as contempt of court the failure to obey any order except an order to 2 submit to a physical or mental examination. 3 Fed. R. Civ. P. 37(b)(2)(A). 4 There are two limitations to the application of a Rule 37(b)(2) sanction. “First, any 5 sanction must be ‘just’; second, the sanction must be specifically related to the particular 6 ‘claim’ which was at issue in the order to provide discovery.” Ins. Corp. of Ireland v. 7 Compagnie des Bauxites de Guinee, 456 U.S. 694, 707 (1982) (quoting Fed. R. Civ. P. 8 37(b)(2)). 9 Plaintiff requests that the Court: (i) impose a coercive fine of $1,000 per day until 10 Defendants achieve compliance; (ii) strike Defendants' answers and enter default 11 judgment against Defendants “on all claims and counterclaims,” followed by an 12 expedited “prove-up” to determine damages; (iii) impose sanctions in the form of adverse 13 inferences and issue preclusion; (iv) order reimbursement of all reasonable attorney's fees 14 and costs incurred since June 6, 2025, including those incurred preparing the instant Ex 15 Parte Motion and as a result of Defendants' continued noncompliance; and (v) award 16 Plaintiff “such further relief as the Court deems mandatory to preserve the orderly 17 administration of justice.” ECF No. 217 at 8–10. 18 a. Coercive Fines 19 A coercive sanction is imposed to coerce further obedience with court 20 order. United States v. United Mine Works of Am., 330 U.S. 258, 701 (1947). A per diem 21 fine imposed for each day a contemnor fails to comply with an affirmative court order “is 22 fundamentally coercive and civil because, so long as ‘the jural command is obeyed, the 23 future, indefinite, daily fines are purged.’” Coleman v. Newsom, 131 F.4th 948, 963 (9th 24 Cir. 2025) (quoting Int'l Union, United Mine Workers of Am. v. Bagwell, 512 U.S. 821, 25 829 (1994)). “A court, in determining the amount and duration of a coercive fine, must 26 ‘consider the character and magnitude of the harm threatened by continued contumacy, 27 1 and the probable effectiveness of any suggested sanction in bringing about the result 2 desired.’” Whittaker Corp. v. Execuair Corp., 953 F.2d 510, 516 (9th Cir. 3 1992) (quoting United States v. United Mine Workers of Am., 330 U.S. 258, 304 (1947)). 4 However, a coercive per diem fine cannot constitute a civil contempt sanction where the 5 record shows that compliance with the court's order is impossible. Falstaff Brewing 6 Corp. v. Miller Brewing Co., 702 F.2d 770, 782 (9th Cir. 1983) (reasoning that “the 7 district court's order of contempt simply [could not] be sustained as a coercive civil 8 contempt order,” where “it was impossible for [the contemnor] to purge itself of 9 contempt by returning documents which were in the sole possession of its counsel”). 10 Here, all Defendants have failed to serve Plaintiff with signed interrogatory 11 responses in violation of the Federal Rules of Civil Procedure and the Motion to Compel 12 Order. Defendant Brown has failed to submit a declaration as ordered by the Court. All 13 Defendants have failed to provide a privilege log as ordered by the Court. All Defendants 14 have failed to produce discovery they had agreed upon in their discovery responses and in 15 the pleadings and hearings related to the Motion to Compel. 16 In terms of directives 1 and 3 of the Motion to Compel Order, it is not clear 17 whether Defendants have the current ability to comply. However, the burden had shifted 18 to them to articulate reasons why compliance was not possible, and they declined to file 19 any opposition to the Ex Parte Motion. Nonetheless, this Court will adopt the Magistrate 20 Judge’s recommendation and allow for Defendant to avoid civil coercive sanctions either 21 by complying with directives 1 and 3 of the Order or by submitting declarations 22 demonstrating impossibility. 23 Thus, the Court imposes the following daily civil coercive sanctions, to be paid to 24 the Court, in the following amounts until the required actions are completed. The 25 sanctions, further, are to be suspended for five days after this instant order is issued. 26 27 1 Defendant ¶ Number from Required Action to End Sanctions Daily 2 Order/RFP Sanction 3 Number Amount 4 Brown ¶¶ 1, 3 RFP Nos. Permit Plaintiff (or his designated $500 per 5 28, 31, 32, 33, 37, expert or representative) to inspect the day 6 38, 39, 43, 53, 54, servers, email accounts, cell phones, 7 58, 64, 65, 66, 67, and any other electronic storage media 8 68, 69, 70 within Brown's possession, custody, or 9 control for all agreed upon custodians 10 AND file a declaration with the Court 11 signed by Brown: (1) specifically 12 identifying which electronic storage 13 media he currently has possession, 14 custody or control of and has made 15 available to Plaintiff; (2) specifically 16 identifying which electronic storage 17 media he maintains he never had 18 possession, custody or control of and 19 the basis for that assertion; (3) 20 specifically identifying any electronic 21 media storage devices he previously 22 had possession, custody or control of 23 and no longer does; and (4) for each 24 electronic storage media device 25 identified under (3), setting forth why 26 it is not available for inspection, when 27 1 and how it became unavailable for 2 inspection, and what efforts were 3 made, and when, to preserve the 4 devices and their data for this 5 litigation. 6 Brown ¶ 4 RFP Nos. 5, 7, Produce all responsive bank and credit $250 per 7 8, 9 card statements to Plaintiff AND file a day 8 declaration with the Court confirming 9 that he has requested all responsive 10 bank statements and credit card 11 statements from his financial 12 institutions and that all responsive 13 documents have been produced. All 14 transactional information beyond that 15 which is requested may be redacted. 16 Jet Agency ¶ 5 RFP No. 5 Produce all client invoices since $200 per 17 Global, LLC December 13, 2016, AND file a day 18 declaration confirming that this has 19 been completed. 20 C3 Jets, ¶ 6 RFP No. 19 Produce all check registers and general $200 per 21 LLC ledgers since December 13, 2016 AND day 22 file a declaration confirming this has 23 been completed. 24 All ¶¶ 7, 10 Produce a privilege log of any $100 25 Defendants communications as to which Stacy (joint and 26 Brown is asserting marital several) 27 1 communications privilege; produce all 2 responsive documents withheld on the 3 basis of privilege, except for those 4 documents over which Stacy Brown 5 asserts the marital communications 6 privilege; AND file a declaration with 7 the Court affirming that no responsive 8 documents are being withheld on the 9 basis of privilege outside of those on 10 the Stacy Brown marital 11 communications privilege log. 12 All ¶ 8 Serve on Plaintiff signed copies of $100 per 13 Defendants their interrogatories in compliance Defendant 14 with Fed. R. Civ. P. 33 AND file a per day 15 declaration with the Court confirming 16 that it has been completed. 17 All ¶ 3 To the extent they have possession, $500 per 18 Defendants custody, or control of the cell phones Defendant 19 except for used by the agreed upon custodians, per day 20 Brown, make those phones available for 21 because, for inspection by Plaintiff AND file a 22 Brown, this declaration with the Court: (1) 23 action is specifically identifying which cell 24 already phones they currently have possession, 25 addressed in custody or control of and have made 26 the first available to Plaintiff; (2) specifically 27 1 entry in this identifying which electronic cell 2 chart phones they maintain they never had 3 possession, custody or control of and 4 the basis for that assertion; (3) 5 specifically identifying any cell phones 6 they previously had possession, 7 custody or control of and no longer do; 8 and (4) for each cell phone identified 9 under (3), setting forth why it is not 10 available for inspection, when and how 11 it became unavailable for inspection, 12 and what efforts were made, and when, 13 to preserve the device and its data for 14 this litigation. 15 16 Accordingly, the Court GRANTS the motion as to sanctions in the form of 17 coercive per diem fines. 18 b. Default Liability on All Claims and Counterclaims 19 The District Court has the discretion to strike pleadings, dismiss the action, or 20 render default judgment in response to noncompliance with a discovery order. Fed. R. 21 Civ. P. 37(b)(2)(A)(iii, v-vi). However, “[w]here the drastic sanctions of dismissal or 22 default are imposed, however, the range of discretion is narrowed and the losing party's 23 non-compliance must be due to willfulness, fault, or bad faith.” Henry v. Gill Indus., Inc., 24 983 F.2d 943, 946 (9th Cir. 1993) (quoting Fjelstad v. American Honda Motor Co., 762 25 F.2d 1334, 1337 (9th Cir.1985)); see also In re Exxon Valdez, 102 F.3d 429, 432 (9th Cir. 26 27 1 1996) (“Dismissal, however, is authorized only in ‘extreme circumstances’ and only 2 where the violation is ‘due to willfulness, bad faith, or fault of the party.’”). 3 In deciding whether to dismiss a case or render default judgment, a court must 4 weigh the following five factors: “(1) the public's interest in expeditious resolution of 5 litigation; (2) the court's need to manage its docket; (3) the risk of prejudice to the [other 6 party]; (4) the public policy favoring disposition of cases on their merits; and (5) the 7 availability of less drastic sanctions.” In re Phenylpropanolamine (PPA) Prods. Liab. 8 Litig., 460 F.3d 1217, 1226 (9th Cir. 2006) (citation omitted); see also Adriana Int'l 9 Corp. v. Thoeren, 913 F.2d 1406, 1412 (9th Cir.1990). “Where a court order is violated, 10 the first two factors support sanctions and the fourth factor cuts against a default. 11 Therefore, it is the third and fifth factors that are decisive.” Adriana Int'l Corp., 913 F.2d 12 at 1412. 13 As for the third factor, the moving party suffers prejudice where the actions of the 14 non-moving party impair the “ability to go to trial or threaten to interfere with the rightful 15 decision of the case.” Id. “Delay alone has been held to be insufficient prejudice” but 16 “[f]ailure to produce documents as ordered, ... is considered sufficient prejudice.” Id. 17 Here, Plaintiff argues that Defendants' “non-compliance immediately deprives 18 [him] of evidence needed to prove claims involving misappropriated assets, diverted tax 19 proceedings, and self-dealing transactions that may expose unknown co-conspirators.” 20 ECF No. 217 at 7. Further, Plaintiff insists that “[t]he resulting prejudice is manifest,” as 21 “without the requested financial records and verified interrogatories, [he] cannot quantify 22 damages or test the veracity of Defendants' anticipated defenses.” Id. 23 However, in terms of the fifth factor, the Ninth Circuit has held that “[t]he district 24 court abuses its discretion if it imposes a sanction of dismissal without first considering 25 the impact of the sanction and the adequacy of less drastic sanctions.” United States v. 26 National Medical Enterprises, Inc., 792 F.2d 906, 912 (9th Cir.1986). Reviewing courts 27 1 may consider whether a district court: (1) explicitly discussed the feasibility of less 2 drastic sanctions; (2) implemented alternative methods of sanctioning before ordering 3 dismissal; or (3) warned the non-moving party of the possibility of dismissal before 4 ordering dismissal. Malone v. U.S. Postal Serv., 833 F.2d 128, 132 (9th Cir. 1987). 5 In this case, Magistrate Judge Burkhart expressly warned Defendants that failure to 6 comply with the Motion to Compel Order could result in more serious sanctions, up to 7 and including evidentiary and issue preclusion sanctions. ECF No. 215 at 27 (“Failure to 8 timely comply with any aspect of this Order may expose Defendants to the imposition of 9 sanctions up to and including evidentiary and issue preclusion sanctions.”). Further, the 10 Magistrate Judge previously ordered Defendants to pay, within 30 days, Plaintiff's 11 reasonable attorneys’ fees incurred in bringing the Motion to Compel, ECF No. 224, 12 which Defendants have allegedly failed to do, ECF No. 230. 13 However, while Defendants’ actions constitute interference with the processes of 14 this case, the Court agrees with the Magistrate Judge and declines to invoke the drastic 15 sanction of default as an appropriate sanction at this time. The per diem coercive fines 16 should be utilized first. However, if Defendants continue their noncompliance, 17 terminating sanctions may be warranted. 18 Accordingly, the Court DENIES the motion as to sanctions in the form of entry of 19 default judgment. 20 c. Adverse Influence and Issue Preclusion 21 As a sanction for failure to comply with a discovery order, a District Court may 22 issue an order “directing that the matters embraced in the order or other designated facts 23 be taken as established for purposes of the action, as the prevailing party claims.” Fed. R. 24 Civ. P. 37(b)(2)(A)(i). However, Rule 37(b)(2) sanctions are limited by two 25 considerations: the sanction must be “just” and must be “specifically related to the 26 particular claim which was at issue in the order to provide discovery.” Ins. Corp. of 27 1 Ireland v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 707 (1982) (citations and 2 quotations omitted); Guifu Li v. A Perfect Day Franchise, Inc, 281 F.R.D. 373 (N.D. Cal. 3 2012). 4 Here, Plaintiff fails to specify which particular claims of the SAC’s 19 causes of 5 action are at issue in connection with his request for Rule 37(b)(2) sanctions in the form 6 of adverse inferences and issue preclusion. See ECF No. 217 at 7 (contending generally 7 that “Defendants' non-compliance immediately deprive[d] Plaintiff of evidence needed to 8 prove claims involving misappropriated assets, diverted tax proceeds, and self-dealing 9 transactions that may expose unknown co-conspirators”). Plaintiff also does not address 10 whether the requested sanctions are specifically related to those claims. 11 Moreover, despite raising the specter of evidence destruction by Defendants, 12 see ECF No. 217 at 10, Plaintiff fails to develop this potential argument with any 13 specificity. See, e.g., Ramos v. Swatzell, No. 12-CV-1089-BRO-SPX, 2017 WL 2857523 14 (C.D. Cal. June 5, 2017), report and recommendation adopted, No. 12-CV-1089-BRO- 15 SPX, 2017 WL 2841695 (C.D. Cal. June 30, 2017) (explaining that a party seeking an 16 adverse inference instruction based on the destruction of evidence must establish: (1) that 17 the party having control over the evidence had an obligation to preserve it at the time it 18 was destroyed; (2) that the records were destroyed with a culpable state of mind; and (3) 19 that the evidence was relevant to the party's claim or defense such that a reasonable trier 20 of fact could find that it would support that claim or defense). The record, at this time, 21 does not establish that evidence has been destroyed. 22 Accordingly, the Court is not persuaded that the imposition of adverse inference 23 instructions and issue preclusion are the appropriate sanctions at this time. The Court, 24 thus, DENIES the motion as to sanctions in the form of adverse inferences and issue 25 preclusion. 26 / / / 27 1 CONCLUSION 2 Based on the above, the Court ADOPTS the Report and Recommendation, 3 || GRANTS IN PART the motion as to civil contempt and as to sanctions in the form of 4 || coercive per diem fines, and DENIES IN PART the motion as sanctions in the form of 5 || adverse inferences, issue preclusion, and entry of default judgment. 6 IT IS SO ORDERED. 7 Dated: March 9, 2026 < 9 United States District Judge 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 26 28 22-CV-01164-GPC-JLB