Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-1_05-cv-00393/USCOURTS-caed-1_05-cv-00393-7/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332 Diversity-Breach of Contract

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UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

SHAUKAT “SAL” MAREDIA,

 Plaintiff,

 v. 

PHILLIP MORRIS USA, and DOES 1

through 10, inclusive, 

 Defendants.

1:05-CV-00393 OWW SMS

ORDER RE: PHILIP MORRIS USA

INC.’S REQUEST FOR

TERMINATING SANCTIONS. 

I. INTRODUCTION

This lawsuit arises out of a contract dispute between

Shaukat “Sal” Meredia (“Maredia” or “Plaintiff”) and Philip

Morris USA (“PM”). Plaintiff asserts that PM owes him money for

promotional sales of cigarettes. PM contends that it overpaid

Maredia and has filed a counterclaim to recover the overpayments. 

Before the court for decision is PM’s motion for terminating

sanctions based upon Maredia’s continuing failure to comply with

his discovery obligations. (Doc. 66, filed May 31, 2006.) PM

asserts that (1) Maredia has failed to respond to its discovery

requests; (2) since Maredia’s counsel withdrew as a result of

Maredia’s failure to cooperate with him during the discovery

process, Maredia has failed to communicate with PM directly

regarding discovery; and (3) Maredia has failed to appear for a

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hearing on PM’s motion to compel and has failed to comply with an

order compelling discovery. Specifically, PM requests that

Maredia’s complaint be dismissed, that his answer to PM’s

counterclaims be stricken, and that default be entered against

Maredia on PM’s counterclaims. (Id. at 10.)

II. PROCEDURAL HISTORY

A. The Underlying Lawsuit.

Maredia and PM entered into a series of contracts in 2001

and 2002, pursuant to which Maredia could earn promotional

payments based upon the sale of cigarettes at Maredia’s retail

stores. (Chanco Decl. at ¶4(a).) The agreements explicitly

provide that Maredia is only entitled to promotional payments for

sales to adult consumers in face-to-face transactions, and that

Maredia was not entitled to payments fro products sold to other

retailers, wholesalers, or trade accosts. (Chanco Decl. at

¶4(b).) Maredia’s promotional payments were based on the volume

of product sold pursuant to the agreement. PM relied upon

Maredia to report his sales volume. (Id. at ¶¶4(a), 5.) PM

asserts that in 2002 it learned that Maredia was seeking

promotional payments for products sold to other retail,

wholesale, and trade accounts. Based upon this knowledge, PM

refused to make certain promotional payments to Maredia. 

Maredia filed the instant lawsuit in February 2005, seeking

to obtain the promotional payments PM refused to make. (Doc. 1,

Notice of Removal, Ex. A.) PM removed on the basis of diversity

(Doc. 1), and later filed a counterclaim based upon its belief

that Meridia received significant overpayments from PM (Doc. 35). 

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B. The Alleged Discovery Violations. 

PM served Maredia with its First Set of Interrogatories and

Requests for production on December 5, 2005. Answers were due on

January 9, 2006. (Chanco Decl., ¶7, Exs. C & D.) Maredia,

through his former counsel, Mr. Charles Doerksen, asked for and

received two extensions to respond to the discovery requests. 

(Id. at ¶8.) A few days prior to the final due date, Doerksen

informed PM that Maredia’s discovery responses would not contain

any substantive information because Maredia refused to cooperate

with him in preparing answers. (Id.) Doerksen, on Maredia’s

behalf, served answers and responses on January 20, 2006, which

were devoid of any substantive information. (Id. at ¶9, Ex. E &

F.) 

Counsel for both parties participated in a teleconference

with Magistrate Judge Sandra M. Snyder on February 14, 2006, at

which time Doerksen conceded that the discovery responses were

deficient and that Maredia refused to cooperate with him. 

(Chanco Decl. at ¶11, Ex. H.) A hearing date of March 24, 2006,

was set to hear PM’s motion to compel further discovery and for

sanctions. (Id. at ¶12.) 

Doerksen, meanwhile, had moved to withdraw as counsel. 

(Doc. 51, filed Feb. 2, 2006.) While that motion was still

pending, Doerksen agreed to convey a “meet and confer” letter

prepared by PM to Maredia. (Chanco Decl. at ¶14.) The letter

was emailed to Maredia by Doerksen on February 22, 2006. (Chanco

Decl. at ¶14, Ex. L.) The letter advised Maredia of his

obligations under Local Rule 37-251 to confer with counsel for PM

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and asked Maredia to contact PM’s counsel by March 14, 2006 to

confer about discovery. (Chanco Decl. at ¶15, Ex. J.) 

PM filed its notice of motion and motion to compel further

discovery responses on February 22, 2006. (Doc. 54.) At the

request of PM’s counsel, Doerksen emailed a copy of the notice to

Maredia on February 23, 2006. (Chanco Decl. at ¶16, Ex. M.)

 On March 2, 2006, Doerksen’s motion to withdraw was

granted. (Doc. 57.) The order granting that motion advised

Maredia to obtain counsel, informed him that he was expected to

comply with the requirements and deadlines set forth in the

original scheduling order, and warned maredia that failure to

comply with an order of the court might result in a

recommendation that the matter be dismissed. (Doc. 57 at 3-4.)

Maredia failed to communicate with PM by the March 14, 2006

deadline set forth in PM’s “meet and confer” letter. (Chanco

Decl. at ¶18.) PM filed a declaration with the court regarding

this failure on March 17, 2006. (Id. at ¶19; Doc. 58.)

On March 24, 2006, counsel for PM appeared before Magistrate

Judge Snyder on the motion to compel. (Chanco Decl. at ¶20.)

Maredia failed to appear. (Doc. 59.) The Magistrate Judge

granted PM’s motion to compel and awarded $2,250 in monetary

sanctions against Maredia, finding:

(1) MAREDIA failed to provide adequate responses to PM

USA’s interrogatories and made improper

boilerplate and baseless objections;

(2) MAREDIA failed to produce any documents in

response to PM USA’s requests for production and

once again made improper boilerplate and baseless

objections; and

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(3) MAREDIA breached his discovery obligations under

Local Rule 37-251 by ignoring attempts by counsel

for PM USA to informally confer and attempt to

resolve this discovery dispute, thereby

prejudicing PM USA’s right to obtain information

relating to MAREDIA’s claims and its preparations

for trial.

(Doc. 62.) The Order gave Maredia until April 14, 2006 “to serve

full and complete answers and responses to all of PM[’s]

interrogatories and requests for production without objection,

and to produce all documents in MAREDIA’s possession that are

responsive to all of PM[’s] requests for production.” (Id.) 

Maredia failed to serve any discovery upon PM by April 14,

2006, nor has he paid the monetary sanctions or otherwise

communicated with counsel for PM. (Id.) PM filed the instant

request for terminating sanctions at the direction of the

Magistrate Judge. (See Doc. 64.) Maredia has filed no

responsive documents. 

III. DISCUSSION

A. Legal Standard. 

Federal Rule of Civil Procedure 37(b)(2) provides that if a

party “fails to obey an order to provide or permit discovery” a

court “may make such orders in regard to the failure as are

just,” including issuing:

(A) An order that the matters regarding which the order

was made or any other designated facts shall be taken

to be established for the purposes of the action in

accordance with the claim of the party obtaining the

order;

(B) An order refusing to allow the disobedient party to

support or oppose designated claims or defenses, or

prohibiting that party from introducing designated

matters in evidence;

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(C) An order striking out pleadings or parts thereof,

or staying further proceedings until the order is

obeyed, or dismissing the action or proceeding or any

part thereof, or rendering a judgment by default

against the disobedient party;

(D) In lieu of any of the foregoing orders or in

addition thereto, an order treating as a contempt of

court the failure to obey any orders except an order to

submit to a physical or mental examination;

Fed. R. Civ. Pro. 37(b)(2). “Where it is determined that counsel

or a party has acted willfully or in bad faith in failing to

comply with the rules of discovery or with court orders enforcing

the rules or in flagrant disregard of those rules or orders, it

is within the discretion of the trial court to dismiss the action

or to render judgment by default against the party responsible

for noncompliance.” G-K Properties v. Redevelopment Agency of

the City of San Jose, 577 F.2d 645, 647 (9th Cir. 1978).

“Disobedient conduct not shown to be outside the control of the

litigant is all that is required to demonstrate willfulness, bad

faith, or fault.” Henry v. Gill Industries, Inc., 983 F.2d 943,

948 (9th Cir. 1993).

B. Defendant’s Request that Maredia’s Claims Be Dismissed.

In this matter, Plaintiff has shown consistent and complete

disregard for his discovery obligations. He has failed to

respond with any substantive discovery, despite having the

benefit of numerous extensions and despite several warnings from

the court and counsel. Although Maredia is no longer represented

by counsel, he was warned that his obligation to respond to

discovery continued despite his pro se status. It has been more

than two months since the issuance of the order on PM’s motion to

compel, which required Maredia to provide full and complete

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answers and responses to PM USA’s discovery by April 14, 2006 and

ordered him to pay a $2,250 monetary sanctions to PM for

noncompliance with his discovery obligations. Maredia still has

yet to produce a single substantive discovery response, has

failed to pay the monetary sanction as orderd, and has failed to

communicate either with counsel for PM or the court. Given this

pattern of conduct, and absent any contrary indication or

communication from Plaintiff, it is appropriate to conclude that

Maredia’s failures constitute willful disobedience of this

Court’s Order and his discovery obligations. 

Having found that a plaintiff has wilfully disregarded his

obligations, a court must weigh five factors in determining

whether to impose a terminating sanction:

(1) the public interest in expeditious resolution of

litigation;

(2) the court's need to manage its docket;

(3 prejudice to other parties from the discovery

violations (which includes inquiry into

materiality of the evidence withheld);

(4) public policy favoring disposition of cases on

their merits ; and

(5) whether less drastic sanctions are available and

would provide effective deterrence for the

particular violation.

Hyde & Drath v. Baker, 24 F.3d 1162, 1166-67 (9th Cir. 1994) 

The outcome usually depends on the third and fifth factors, as

the first two usually favor the issuance of terminating sanctions

for violating a court order, while the fourth usually weghs

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against such sanctions. Computer Task Group, Inc. v. Brotby, 364

F.3d 1112, 1115 (9th Cir. 2004).

Here, PM argues that the Maredia’s conduct has caused severe

prejudice, essentially paralyzing PM’s ability to defend against

Maredia’s claims. 

[The] prejudice caused by Maredia’s discovery

violations could not be more egregious. He has failed

to produce a single document or interrogatory answer

supporting the claims made in the complaints that he

filed over a year ago seeking more than $300,000 in

damages from PM USA. In essence, he has failed to

produce any information upon which he can prosecute his

claims, or that PM USA can analyze to defend Maredia’s

claims. As a result of Maredia’s continuing failure to

comply with his discovery obligations, PM USA cannot

comply with the deadline of July 14, 2006 to make

expert witness designations and disclosures as set

forth in this Court’s Scheduling Conference Order.

Maredia has unilaterally nullified the Scheduling

Conference Order and disrupted this Court’s ability to

manage its docket.

(Doc. 66 at 8-9.) PM does not overstate the prejudice created by

Maredia’s total disregard of his obligations to the Court and to

Defendant. 

Moreover, no less drastic sanctions will effectively deter

Maredia’s conduct. Plaintiff has offered no indication that he

intents to comply with his obligations. Dismissal of his claims

against PM is appropriate under the circumstances. 

Defendant’s request that Maredia’s claims against it be

dismissed is GRANTED. 

C. Defendant’s Request to Strike Maredia’s Answer and for

the Entry of Default.

 

PM also requests that Maredia’s answer to its counterclaims

be stricken and that default be entered against Maredia on PM’s

counterclaims. This request differs from PM’s request for

dismissal of Maredia’s claims in one important respect: the

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record does not reflect that Maredia has ever been clearly warned

that default judgment might be entered against him. PM’s request

that Maredia’s answer to its counterclaims be stricken and for

entry of default against Maredia is DENIED WITHOUT PREJUDICE. PM

shall file any such motion separately. 

IV. CONCLUSION

For the reasons set forth above, Defendant’s motion for

terminating sanctions is GRANTED IN PART. Plaintiff’s complaint

in this case is DISMISSED for failure to comply with orders of

the court and with his discovery obligations. Defendant’s

request that Plaintiff’s answer to its counterclaims be stricken

and that default be entered against Plaintiff on those claims is

DENIED WITHOUT PREJUDICE.

SO ORDERED

Dated: July 17, 2006

/s/ OLIVER W. WANGER

OLIVER W. WANGER

 United States District Judge

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