Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_13-cv-00287/USCOURTS-caed-2_13-cv-00287-7/pdf.json

Nature of Suit Code: 840
Nature of Suit: Trademark
Cause of Action: 15:1125 Trademark Infringement (Lanham Act)

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UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF CALIFORNIA

WELENCO, INC., et al.,

Plaintiffs,

v.

GARY CORBELL, et al.,

Defendants.

No. 2:13-cv-0287 KJM CKD PS

FINDINGS AND RECOMMENDATIONS

Defendants’ motion for sanctions and joinder therein came on regularly for hearing on 

March 11, 2015. Thomas Cregger appeared for plaintiffs. Richard Zimmer and Joseph Warner 

appeared telephonically for defendant Gary Corbell. Thomas McCartney appeared for defendants 

Craig Corbell and Boredata, Inc. Upon review of the documents in support and opposition, upon 

hearing the arguments of counsel, and good cause appearing therefor, THE COURT FINDS AS 

FOLLOWS:

In this action, plaintiff alleges claims for computer fraud, copyright infringement, 

misappropriation of trade secrets, breach of an employment agreement, and breach of a stock 

purchase agreement. Plaintiff Water Well Technology, Inc. acquired the stock of plaintiff 

Welenco, Inc. from defendant Gary Corbell in 2007. Following the sale, defendant Craig 

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Corbell1continued working for Welenco. In 2012, defendant Craig Corbell left that employment 

and started defendant Boredata, Inc. The gravamen of the complaint is that Craig Corbell unfairly 

competed with Welenco and that Gary Corbell was involved in the wrongful conduct.2 

By order dated February 6, 2015 (ECF No. 99), this court granted defendants’ motions to 

compel and ordered plaintiffs to produce responsive documents and to provide complete 

responses to interrogatories no later than February 13, 2015.3 Plaintiffs were cautioned in that 

order that failure to comply might result in the imposition of sanctions, including monetary 

sanctions and/or a recommendation that terminating sanctions issue. Plaintiffs failed to comply 

with the court’s order by the designated date. Defendants thereafter filed the pending motion for 

sanctions. Defendants seek dismissal of the action for plaintiffs’ failure to comply with the 

court’s discovery order.

In opposition to the motion, plaintiffs submit the declarations of Daniel Guardino, an 

associate of the plaintiff corporations, and Robert Guardino, President and CEO of the plaintiff 

corporations. Plaintiffs contend they did not understand that terminating sanctions would issue if 

they did not comply with the court’s order, yet they concede they were sent an email from their 

counsel on February 6, 2015 advising them that further discovery responses were due the next 

week and that the email from their counsel attached a copy of the order. The lacunae in the 

opposition affidavits are as vast and deep as the craters of the moon. The affidavits are notable 

for not what they aver but for what they do not, and are disingenuous at best. For instance, the 

declaration of Robert Guardino states that he sent documents to his attorney, Glenn Peterson, 

prior to January 21, 2015 but neither states when the documents were sent, nor provides a 

 

1 Craig Corbell is Gary Corbell’s son.

2 A motion to dismiss has been granted in the instant action dismissing the breach of contract and 

declaratory relief causes of action. Parallel to this litigation have been state court proceedings 

wherein Gary Corbell sued to collect the amount owed on the promissory note. Trial began in 

that action in December 2014. Judgment was entered in the state court action in the amount of 

$444,202.15 in favor of Gary Corbell.

3 Under the amended scheduling order, February 13, 2015 was the last day to complete discovery. 

ECF No. 83. 

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description of the documents. The affidavits also appear to be in direct contradiction to the 

affidavit of their prior counsel, who on the motion to withdraw as counsel, described the total lack 

of cooperation by his clients regarding producing documents essential to prosecution of their 

claims. Declaration of Glenn Peterson, ECF No. 102-2 at 4:1-3 (“[p]laintiff’s repeated failures to 

make discovery in this case has severely undermined the tenability of all claims alleged in the 

operative complaint”); 4:7-10 (as of February 18, 2015, plaintiff’s counsel had “yet to receive any 

information with which to supplement Plaintiff’s discovery responses as ordered. This is despite 

the fact that Plaintiffs apparently have the assistance of a paralegal in Southern California, who 

has been involved during the past 3 weeks.”); 6:9-11 (“Plaintiffs are either unwilling or unable to 

cooperate with [counsel] and meet the minimum requirements of a plaintiff in a civil case, such as 

making appropriate discovery . . .”).

Document requests were served by defendant Craig Corbell on September 18, 2014. 

Document requests were served by defendant Boredata on November 14, 2014. Further 

document requests were served on January 9 and February 9, 2015. Despite responses to 

defendants’ requests for production of documents which stated that responsive documents would 

be produced, the only documents which have thus far been produced by plaintiffs consist of 

documents attached to the first amended complaint as exhibits, documents uploaded by defendant 

Craig Corbell to DropBox (a matter not in dispute) and copies of the original Rule 26 disclosures. 

To date, and even in the face of the motion for terminating sanctions, no further documents have 

been produced. Moreover, plaintiffs unilaterally cancelled the depositions of key witnesses to 

their claims (including witnesses who were designated to testify on behalf of the plaintiff 

corporations);4only the deposition of Robert Guardino was partially completed.

In light of the history of this litigation as set forth above, it is readily apparent that 

plaintiffs have thwarted discovery at every turn. There is no dispute that plaintiffs have failed to 

comply with the court’s order requiring plaintiffs to produce responsive documents and provide 

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 The witnesses were John Duffield, Daniel Guardino, Tyler McMillan, and persons designated 

to testify on behalf of the corporate plaintiffs Welenco and Water Well.

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complete responses to the interrogatories. The court turns, therefore, to the issue of the 

appropriate sanction.

Defendants seek the drastic sanction of dismissal. Terminating sanctions may issue only 

upon a finding of willful disobedience or bad faith. In re Exxon Valdez, 102 F.3d 429, 432 (9th 

Cir. 1996). Given the utter lack of response to discovery requests even in the face of the pending 

motion and the declaration of plaintiff’s former counsel submitted in connection with the motion 

to withdraw as counsel, the court finds unpersuasive the anemic declarations submitted by 

plaintiffs in opposition to the motion for sanctions. The court finds that plaintiffs willfully 

disobeyed the court’s order. However, such a finding does not end the analysis. In determining 

whether terminating sanctions are appropriate, the court must consider five factors: (1) the 

public’s interest in expeditious resolution of litigation, (2) the court’s need to manage its docket, 

(3) the risk of prejudice to the party seeking sanctions, (4) the public policy favoring disposition 

of cases on their merits, and (5) the availability of less drastic sanctions. See Connecticut Gen. 

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

Valley Eng’rs Inc. v. Elec. Eng’g Co., 158 F.3d 1051, 1056-1057 (9th Cir. 1998). 

This case was filed February 14, 2013 and has been pending for over two years. The first 

factor therefore supports defendants’ position. Because plaintiffs have failed to produce any 

discovery or produce key witnesses for deposition, defendants have been severely hampered in 

properly litigating this case and have been prejudiced thereby; thus the third factor also favors 

defendants. The second factor ties in with the third: to avoid prejudice to defendants, discovery 

would have to be reopened and the scheduling order modified. But extension of the discovery 

cut-off would also prejudice defendants because they would incur additional costs litigating a 

matter which for over two years has failed to produce any evidence in support of plaintiff’s 

claims. On balance, the second factor weighs in favor of defendants. However, the fourth factor 

weighs against the imposition of terminating sanctions because there is a potentially dispositive 

motion for summary judgment noticed for hearing on March 27, 2015, which will adjudicate the 

matter on the merits. With respect to the fifth factor, the court finds that imposition of monetary 

sanctions would be of little avail. Plaintiffs already have a judgment against them in favor of 

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defendants in the amount of several hundreds of thousands of dollars and plaintiffs have a dismal 

history of meeting their financial obligations with respect to their attorneys and accountant. A 

sanction less drastic than dismissal, however, appears to be readily available and which mirrors 

plaintiffs’ culpable conduct. 

Having failed to comply with the court’s order to produce responsive documents and 

provide complete responses to the interrogatories, plaintiffs should be precluded from introducing 

documentary evidence not previously provided to defendants and precluding testimonial evidence 

from any witness whose deposition was properly noticed by defendants but unilaterally cancelled 

by plaintiffs.5 See Fed. R. Civ. P. 37(b)(2)(A)(ii). Whether terminating sanctions should issue in 

this matter is, in this court’s view, a very close question. Given, however, the imminency of the 

motion for summary judgment, which will decide the case on the merits, and the availability of a 

less drastic sanction, the court finds that balance of the five factors set forth above can be suitably 

struck by imposing evidentiary sanctions against plaintiffs. The court therefore declines to 

recommend terminating sanctions against plaintiffs6but will recommend the issuance of 

evidentiary sanctions as set forth below.

Accordingly, IT IS HEREBY RECOMMENDED that:

1. Defendants’ motion for sanctions and joinder therein (ECF Nos. 100, 101) be granted

in part; and

2. Evidentiary sanctions be imposed on plaintiffs precluding plaintiffs from introducing 

into evidence, in opposition to the motion for summary judgment or at trial, any documents that 

were not produced by plaintiffs prior to February 14, 2015 and any testimonial evidence from

 

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The witnesses whose depositions were unilaterally cancelled by plaintiffs were John Duffield, 

Daniel Guardino, Tyler McMillan, and persons designated to testify on behalf of the corporate 

plaintiffs Welenco and Water Well.

6 At the hearing, defense counsel urged the court to forthwith grant the motion for terminating 

sanctions so that defendants would not be forced to incur further costs in litigating the motion for 

summary judgment. Because this court must proceed by findings and recommendations on a 

dispositive motion under 28 U.S.C. § 636(b) and a fourteen day objection period is allowed under 

the statute, the motion for summary judgment calendared for hearing on March 27, 2015 will 

have been fully briefed by the expiration of the objection period. Thus, even if this court 

recommended terminating sanctions, no cost savings would accrue to defendants.

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witnesses John Duffield, Daniel Guardino, Tyler McMillan, or any person designated to testify on 

behalf of the corporate plaintiffs Welenco and Water Well.

These findings and recommendations are submitted to the United States District Judge 

assigned to the case, pursuant to the provisions of 28 U.S.C. § 636(b)(l). Within fourteen days 

after being served with these findings and recommendations, any party may file written 

objections with the court and serve a copy on all parties. Such a document should be captioned 

“Objections to Magistrate Judge’s Findings and Recommendations.” Failure to file objections 

within the specified time may waive the right to appeal the District Court’s order. Martinez v. 

Ylst, 951 F.2d 1153 (9th Cir. 1991).

Dated: March 12, 2015

4 welenco.sanc.57

_____________________________________

CAROLYN K. DELANEY

UNITED STATES MAGISTRATE JUDGE

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