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ORDER 

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UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF WASHINGTON

AT TACOMA

UNITED STATES COMMODITY

FUTURES TRADING COMMISSION,

Plaintiff,

v.

JAMES A. MAGGIO; TRADE RISK

MANAGEMENT, LLC (Washington); and

TRADE RISK MANAGEMENT, LLC 

(Oregon),

Defendants.

CASE NO. C05-5766RJB

ORDER RE-NOTING

PLAINTIFF’S MOTION FOR

SANCTIONS FOR

DEFENDANTS’ FAILURE TO

COMPLY WITH DISCOVERY

ORDER

This matter comes before the Court on the Plaintiff’s Motion for Sanctions for

Defendants’ Failure to Comply with Discovery Order (Dkt. 47). The Court has considered the

pleadings filed in support of and in opposition to the motion and the remainder of the file herein.

I. FACTUAL AND PROCEDURAL BACKGROUND

According to the complaint, the defendants sell a stock market analysis service known as

Sigma Band Charting through an internet website and materially misrepresent the risk and profitmaking ability of the service. Dkt. 1 at 2. The complaint alleges that the defendants’ conduct

violates the Commodity Exchange Act (“the Act”) and Commodities Futures Trading

Commission regulations. Id. at 7. 

On December 15, 2006, the plaintiff requested “[a]ll documents relating or referring to

any and all algorithms, or mathematical or statistical calculations, utilized to calculate or to

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ORDER 

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determine the ‘Sigma Bands’ referenced or described in any and all versions of the website

www.traderiskmanagement.com.” Dkt. 28 at 1. The Court granted the plaintiff’s motion to

compel a response to this request. Dkt. 33. 

The defendants’ attorney withdrew by Order of this Court on May 31, 2007, and the

defendants were unrepresented in this matter until substitute counsel appeared on behalf of the

defendants on June 25, 2007. Dkt. 38; Dkt. 46. The defendants have not yet complied with the

Order Granting Plaintiff’s Motion to Compel Defendants’ [sic] to Produce Discovery Documents

(Dkt. 33). The plaintiffs now move for sanctions for the defendants’ failure to comply with the

Court’s Order. Dkt. 47.

II. DISCUSSION

Sanctions for failure to comply with an order compelling discovery are governed by

Federal Rule 37(b)(2):

(b) Failure to Comply With Order.

. . . 

(2) Sanctions by Court in Which Action is Pending. If a party or an officer, director, or

managing agent of a party or a person designated under Rule 30(b)(6) or 31(a) to testify

on behalf of a party fails to obey an order to provide or permit discovery, including an

order made under subdivision (a) of this rule or Rule 35, or if a party fails to obey an order

entered under Rule 26(f), the court in which the action is pending may make such orders

in regard to the failure as are just, and among others the following:

(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;

(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;

(E) Where a party has failed to comply with an order under Rule 35(a) requiring

that party to produce another for examination, such orders as are listed in

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ORDER 

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paragraphs (A), (B), and (C) of this subdivision, unless the party failing to comply

shows that that party is unable to produce such person for examination.

In lieu of any of the foregoing orders or in addition thereto, the court shall require the

party failing to obey the order or the attorney advising that party or both to pay the

reasonable expenses, including attorney's fees, caused by the failure, unless the court finds

that the failure was substantially justified or that other circumstances make an award of

expenses unjust.

Fed. R. Civ. P. 37(b)(2). 

In this case, the plaintiff seeks an order either (1) barring the defendants from supporting

their claim that Sigma Band charts give customers a 99% chance of making a profit or (2) striking

parts of the defendants’ answer denying that the defendants committed a material

misrepresentation by claiming that Sigma Band charts give customers a 99% chance of making a

profit. Dkt. 47 at 6. The defendants are willing to comply with the discovery request pursuant to a

protective order, and the Defendant’s Motion for Protective Order (Dkt. 48) is pending before the

Court and noted for consideration on July 19, 2007. The Court cannot determine whether

imposing sanctions would be “just” under Federal Rule 37 before determining whether entry of a

protective order is warranted. The Court should therefor re-note the Motion for Sanctions for

consideration on July 19, 2007.

III. ORDER

Therefore, it is hereby

ORDERED that the Plaintiff’s Motion for Sanctions for Defendants’ Failure to Comply

with Discovery Order (Dkt. 47) is RE-NOTED for consideration on July 19, 2007.

The Clerk of the Court is instructed to send uncertified copies of this Order to all counsel

of record and to any party appearing pro se at said party’s last known address.

DATED this 16th day of July, 2007.

 Robert J Bryan

A

United States District Judge

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