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IN THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF TEXAS

SAN ANTONIO DIVISION

JONATHAN VILLAREAL, 

INDIVIDUALLY AND DERIVATIVELY 

ON BEHALF OF ZROBLACK, LLC;

 Plaintiff,

vs.

JOHN SAENZ, 

 Defendants.

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5-20-CV-00571-OLG-RBF

REPORT AND RECOMMENDATION

OF UNITED STATES MAGISTRATE JUDGE

To the Honorable Chief United States District Judge Orlando Garcia:

This Report and Recommendation concerns Plaintiff ZroBlack, LLC’s failure to obtain 

counsel in violation of the Court’s Order, dated June 25, 2021. See Dkt. No. 62. All pretrial 

matters are referred for resolution pursuant to Rules CV-72 and 1 of Appendix C to the Local 

Rules for the United States District Court for the Western District of Texas. See Dkt. Nos. 22 & 

36. Authority to enter this recommendation stems from 28 U.S.C. § 636(b)(1)(B). 

For the reasons set forth below, it is recommended that all claims asserted by ZroBlack 

against the remaining Defendant John Saenz be DISMISSED. It is further ORDERED that 

within 21 days from the date of this Order Saenz shall address—via a motion to dismiss or as 

otherwise may be appropriate—whether and to what extent Plaintiff Jonathan Villarreal has any 

remaining individual claims in this action. 

Case 5:20-cv-00571-OLG Document 74 Filed 11/18/21 Page 1 of 6
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Factual and Procedural Background

Plaintiff Jonathan Villarreal, on behalf of himself and his company ZroBlack, LLC, sued

his former business partner John Saenz, attorney Miguel Villarreal, Jr., and Gunn, Lee & Cave 

P.C. Defendants subsequently moved to dismiss Plaintiffs’ claims. After reviewing Defendants’ 

motions, the Court recommended dismissal of the majority of Plaintiffs’ claims against Saenz. 

See Dkt. No. 59. The Court further recommended that the District Court decline to exercise 

supplemental jurisdiction over Plaintiffs’ claims against the law firm and attorney defendants. 

See id. The District Court adopted the Report and Recommendation. See Dkt. No. 67. 

Accordingly, only Plaintiffs’ claims against Saenz for breach of fiduciary duty and for violations 

of the Computer Fraud and Abuse Act (“CFAA”), 18 U.S.C. § 1030(g), and Anti-cybersquatting 

Consumer Protection Act (“ACPA”), 15 U.S.C. § 1125(d), premised on Saenz’s alleged conduct 

after the parties executed a certain release remain at issue. See id.

On June 25, 2021, while the Report and Recommendation was pending before the 

District Court, the Court granted counsel for Plaintiffs’ motion to withdraw. See Dkt. No. 62. In 

that order, the Court advised Plaintiffs that ZroBlack, an entity organized as a single-member 

LLC, must be represented by counsel to proceed with any claims asserted on its behalf. See Dkt. 

No. 62. The Court directed ZroBlack to obtain counsel and have counsel enter an appearance 

within 30 days to avoid dismissal of its claims. See id. The Court subsequently extended this 

deadline up to and including September 20, 2021, at Plaintiff Villarreal’s request. See Dkt. No. 

66 & Aug. 6, 2021 text order. In extending the deadline the Court reminded Villarreal that 

ZroBlack must have counsel enter an appearance in order to avoid dismissal of ZroBlack’s 

claims. See Aug. 6, 2021 text order. To date, no attorney has entered an appearance on behalf of 

ZroBlack. 

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Analysis

A. ZroBlack’s Claims Against Saenz Should Be Dismissed. 

As the Court previously advised Plaintiffs, because ZroBlack is a LLC, it—like a 

corporation—is “a fictional legal person” that “can only be represented by licensed counsel.” Joe 

Hand Promotions, Inc v. Behind The Fence, LLC, No. CV 16-00196, 2016 WL 5416836, at *3 

(W.D. La. Aug. 22, 2016), report and recommendation adopted sub nom., 2016 WL 5477977 

(W.D. La. Sept. 28, 2016) (citing Donovan v. Road Rangers Country Junction, 736 F.2d 1004, 

1005 (5th Cir. 1984)). Plaintiff Villarreal isn’t a licensed attorney; he cannot represent ZroBlack 

in this action. The Court already provided ZroBlack ample opportunity to retain counsel and

avoid dismissal. Because ZroBlack has failed to comply with the Court’s order and reminders, 

dismissal is appropriate. See Memon v. Allied Domecq QSR, 385 F.3d 871, 873 & n.4 & 5 (5th 

Cir. 2004) (finding dismissal of company for failure to retain counsel appropriate either under 

Rule 41(b) where a litigant fails to comply with a court order or a judicial interpretation of 28 

U.S.C. § 1654). 

In making this recommendation, the Court recognizes that “[t]he scope of the court’s 

discretion is narrower when a Rule 41(b) dismissal is with prejudice or when a statute of 

limitations would bar re-prosecution of an action dismissed under Rule 41(b) without prejudice.” 

Brown v. King, 250 Fed. App’x 28, 29 (5th Cir. 2007). Such is the case here, at least with respect 

to ZroBlack’s CFAA claim. See 18 U.S.C. 1030(g) (providing for a two-year statute of 

limitations after the date of the act complained of or the date of the discovery of the damage). 

Nevertheless, the more-exacting scope of discretion reflects that dismissal is warranted here 

because (1) there is a clear record of delay or contumacious conduct by ZroBlack and (2) the 

Court determines that lesser sanctions would not serve the interests of justice by prompting 

diligent prosecution, or where lesser sanctions have been employed but were futile. See Coleman 

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v. Sweetin, 745 F.3d 756, 766 (5th Cir. 2014). In addition, at least one of the following three 

aggravating factors is present: “(1) delay caused by [the] plaintiff [itself] and not [its] attorney; 

(2) actual prejudice to the defendant; or (3) delay caused by intentional conduct.” Id. at n. 9. 

Indeed, “[t]he presence of one aggravating factor, along with a record of delay or contumacious 

conduct and consideration of lesser sanctions, will support a dismissal with prejudice.” Price v. 

McGlathery, 792 F.2d 472, 475 (5th Cir. 1985). As is required, “[t]he [ ] court’s consideration of 

lesser sanctions [ ] appear[s] in the record for review of the court’s exercise of its discretion.” 

Sturgeon v. Airborne Freight Corp., 778 F.2d 1154, 1159 (5th Cir. 1985). The requirements for 

dismissal are met under the circumstances presented, and dismissal is warranted.

The record reflects that ZroBlack has still failed to retain counsel in the over four months 

since the Court first directed it to do so. Indeed, ZroBlack has failed to comply even in the face 

of the Court’s repeated warnings. Accordingly, lesser sanctions have been employed here but 

were futile, and there are no other sanctions to employ under these circumstances. Moreover, any 

delay here can only be attributed to ZroBlack. Thus, dismissal—even employing the more 

exacting standard discussed above—is warranted. Agreeing with this conclusion, Saenz urges 

dismissal with prejudice. This Court agrees that a prejudicial dismissal is warranted. A court, 

however, has considerable discretion in this regard, and so the issue of a with-prejudice or 

without-prejudice dismissal ultimately rests with the District Court. The issue is therefore 

highlighted here for the District Court’s attention and consideration upon its review of this 

Report and Recommendation.

B. More Briefing Is Needed to Address Whether Villarreal May Proceed 

Individually with the Remaining Claims Against Saenz. 

Assuming the District Court adopts this Report and Recommendation in full, only 

Plaintiff Villarreal’s claims against Saenz for breach of fiduciary duty and for CFAA and ACPA

Case 5:20-cv-00571-OLG Document 74 Filed 11/18/21 Page 4 of 6
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violations remain. In a recent filing, however, Saenz argued that these remaining claims “all 

necessarily belong to, and have been pleaded solely as claims of, ZroBlack, LLC (“ZroBlack”)—

not Villareal in his individual capacity.” Dkt. No. 72 at 2. At first blush, this contention appears 

to have merit. Saenz, however, hasn’t filed a motion to dismiss on this basis. Accordingly, this 

matter is not ripe for resolution and should be the subject of further briefing.

Conclusion and Recommendation

For the reasons discussed above, it is recommended that all claims asserted by ZroBlack 

against the remaining Defendant Saenz be DISMISSED. 

It is further ORDERED that within 21 days from the date of this Order Saenz shall 

address—via a motion to dismiss or as otherwise may be appropriate—whether and to what 

extent Villarreal has any remaining individual claims in this action. 

Instructions for Service and Notice of Right to Object/Appeal

The United States District Clerk shall serve a copy of this report and recommendation on 

all parties by either (1) electronic transmittal to all parties represented by attorneys registered as 

a “filing user” with the clerk of court, or (2) by mailing a copy by certified mail, return receipt 

requested, to those not registered. Written objections to this report and recommendation must be 

filed within fourteen (14) days after being served with a copy of same, unless this time period is 

modified by the district court. 28 U.S.C. § 636(b)(1); Fed. R. Civ. P. 72(b). The objecting party 

shall file the objections with the clerk of the court, and serve the objections on all other parties. A 

party filing objections must specifically identify those findings, conclusions, or 

recommendations to which objections are being made and the basis for such objections; the 

district court need not consider frivolous, conclusory, or general objections. A party’s failure to 

file written objections to the proposed findings, conclusions, and recommendations contained in 

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this report shall bar the party from a de novo determination by the district court. Thomas v. Arn, 

474 U.S. 140, 149-52 (1985); Acuña v. Brown & Root, Inc., 200 F.3d 335, 340 (5th Cir. 2000). 

Additionally, failure to timely file written objections to the proposed findings, conclusions, and 

recommendations contained in this report and recommendation shall bar the aggrieved party, 

except upon grounds of plain error, from attacking on appeal the unobjected-to proposed factual 

findings and legal conclusions accepted by the district court. Douglass v. United Servs. Auto. 

Ass’n, 79 F.3d 1415, 1428-29 (5th Cir. 1996) (en banc).

IT IS SO ORDERED. 

SIGNED this 18th day of November, 2021.

RICHARD B. FARRER

UNITED STATES MAGISTRATE JUDGE

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