Madjid Berd, et. al., Plaintiffs, v. Paul De Bastos, Defendant Case No. 1:16-cv-339 United States District Court, D. North Dakota Signed March 05, 2020 Counsel Anthony Jermaine Akins, Perry, FL, pro se. Bonnie Jean Parrish, Office of the Attorney General, Daytona Beach, FL, for Defendant Hovland, Daniel L., United States District Court Judge ORDER GRANTING PLAINTIFFS' MOTION FOR SANCTIONS *1 Before the Court is the “Plaintiffs' Motion for Sanctions” filed on August 15, 2019. See Docket No. 54. The Defendant failed to file a response to the motion, which the Court deems “an admission that the motion is well taken.” See D.N.D. Civ. L. R. 7.1(F). For the reasons set forth below, the motion is granted. I. BACKGROUND The Plaintiffs filed this action in the wake of proceedings filed against North Dakota Developments, LLC (“NDD”), Robert Gavin, Daniel Hogan, and several “relief defendants” by the United States Securities and Exchange Commission, alleging that NDD, Gavin, and Hogan had fraudulently raised more than $62 million from investors through the sale of interests in North Dakota man camps. See Case No. 4:15-cv-053 (D.N.D. May 5, 2015). In the complaint in this action, the Plaintiffs allege Paul De Bastos and Paul Real Estate, Inc. acting as NDD's sales agents, actively assisted NDD in offering and selling unregistered, nonexempt, and fraudulent securities from May 2012 to April 2015. Specifically, the Plaintiffs asserted claims against Paul Real Estate and De Bastos, by separate counts, for violations of Section 10(b)-5 of the Securities Exchange Act of 1934 (15 U.S.C. § 78(j)) and SEC Rule 10b-5 (17 C.F.R. § 240.10b-5) in connection with the offer or sale of NDD securities and for violations of N.D.C.C. § 10-04-17 by offering and selling unregistered securities and selling securities as an unlicensed agent. De Bastos is president of Paul Real Estate, a Florida corporation and alleged alter ego of De Bastos. Paul Real Estate did not respond to the complaint and a clerk's entry of default was filed as to it on March 2, 2017. See Doc. No. 23. De Bastos responded to the complaint by filing a motion to dismiss for lack of personal jurisdiction. See Doc. No. 16. The motion was denied on November 2, 2017. See Doc. No. 34. Paul Real Estate subsequently filed for bankruptcy in the Southern District of Florida on or about June 8, 2017. See Doc. No. 35. On November 27, 2017, De Bastos filed a motion to stay this action in its entirety pending Paul Real Estate's bankruptcy, averring that his assets and those of Paul Real Estate may be intertwined. The motion was denied. See Doc. No. 38. On November 2, 2018, the Plaintiffs filed a Motion to Compel Discovery pursuant to Federal Rule of Civil Procedure 37, seeking an order directing De Bastos to produce documents responsive to their first request for production of documents and provide more detailed responses to their first set of interrogatories. See Doc. No. 45. Additionally, the Plaintiffs sought an order determining that De Bastos's answers and objections to their requests for admissions were insufficient and that the matters either be admitted or that an amended response be served. On March 18, 2019, Magistrate Judge Charles S. Miller, Jr. granted in part the Plaintiff's Motion to Compel Discovery. See Doc. No. 48. Specifically, Magistrate Judge Miller order that “De Bastos shall have until April 19, 2019, to file a proper response to plaintiff's requests for production of documents.” Id. at 4. Magistrate Judge Miller further ordered De Bastos to answer or supplement his answers to certain interrogatories by April 19, 2019. De Bastos failed to comply with the March 18, 2019 Order. Magistrate Judge Miller then held a status conference with the parties on May 24, 2019. See Doc. No. 50. *2 De Bastos eventually filed an answer to the complaint on June 3, 2019, more than sixty (60) days after the deadline set by Magistrate Judge Miller. See Doc. No. 51. In this motion for sanctions, the Defendants represent to the Court that although De Bastos has complied with some aspects of Magistrate Judge Miller's Order, he has failed to produce any documents to the Plaintiffs in response to their requests for production and has failed to respond to emails from Plaintiffs' counsel. De Bastos reluctance to participate in the discovery phase of this litigation has prevented the Plaintiffs from effectively and efficiently prosecuting their claims, with the case pending for more than three (3) years. II. LEGAL DISCUSSION Pursuant to Federal Rule of Civil procedure 37(b)(2), if a party to an action “fails to obey an order to provide or permit discovery ... the court where the action is pending may issue further just orders.” Fed. R. Civ. P. 37(b)(2). A court may enter an order: (i) directing that the matters embraced in the order or other designated facts be taken as established for purposes of the action, as the prevailing party claims; (ii) prohibiting the disobedient party from supporting or opposing designated claims or defenses, or from introducing designated matters in evidence; (iii) striking pleadings in whole or in part; (iv) staying further proceedings until the order is obeyed; (v) dismissing the action or proceeding in whole or in part; (vi) rendering a default judgment against the disobedient party; or (vii) treating as contempt of court the failure to obey any order except an order to submit to a physical or mental examination. Id. “The court should resort to the sanction of dismissal only ‘when the ‘failure to comply has been due to ... willfulness, bad faith, or any fault of petitioner.’ ” Edgar v. Slaughter, 548 F.2d 770, 772 (8th Cir. 1977) (quoting Societe Internationale v. Rogers, 357 U.S. 197, 212 (1958)). A court's discretion to sanction a party for failing to obey a discovery order is bounded by the requirement of Rule 37(b)(2) that the sanction be “just” and relate to the claim at issue in the order to provide discovery. Avionic Co. v. General Dynamics Corp., 957 F.2d 555, 558 (1992) (citing Shelton v. Am. Motors Corp., 805 F.2d 1323, 1329 (8th Cir. 1986)). Here, the Plaintiffs request “all the above sanctions be levied against [De Bastos].” Doc. No. 55, p. 3. At the onset of this litigation, De Bastos responded to the Plaintiffs' complaint by filing a motion to dismiss for lack of jurisdiction. That Court denied that motion on November 2, 2017. See Doc. No. 34. After such denial, the record demonstrates De Bastos has continually failed to meaningfully defend the claims alleged against him by the Plaintiffs. De Bastos did not file an answer when the Court denied his motion to dismiss, did not respond to the Plaintiffs' requests for production, failed to respond to the Plaintiffs' motion to compel and this motion for sanctions, has not responded to communications from Plaintiffs' counsel, and eventually filed an untimely answer. The Court has given De Bastos ample opportunity to participate in this litigation. The Court has communicated to De Bastos the importance of participating in discovery, has scheduled status conferences with the parties to allow De Bastos an opportunity to address discovery concerns of the Plaintiffs, granted De Bastos extensions of time to respond to discovery requests, respond to motions, and file an answer. Despite the Court's lenience, De Bastos has not followed through. Based on the foregoing, the Court finds the record supports the imposition of sanctions against De Bastos. The measure of such sanctions is left to the discretion of the Court. Under the circumstances, the Court finds DeBastos' repeated failures and delays in responding to the Court's orders and Plaintiffs' discovery requests were willful and done in bad faith. De Bastos was well-aware of the importance to meaningfully participate in this litigation. Yet, despite the Court's best efforts, De Bastos did not comply with the Court's orders. For example, in the March 18, 2019 Discovery Order, Magistrate Judge Miller directed De Bastos to “file his answer with the court within 15 days of the date of this order.” Doc. No. 48. De Bastos filed his answer on June 3, 2019 – more than sixty (60) days after the deadline set by Magistrate Judge Miller. De Bastos has still not responded to the Plaintiffs' requests for production, a direct contravention of Magistrate Judge Miller's Discovery Order. De Bastos's self-representation is no justification for skirting this Court's orders. Moreover, pursuant to Local Rule 7.1(F), the Court deems De Bastos' failure to respond to the Plaintiffs' motion for sanctions as an admission that at least some measure of sanctions are warranted here. See D.N.D. Civ. L. R. 7.1(F). De Bastos' conduct in this matter has caused significant delays and the Plaintiffs are certainly prejudiced as they do not have access to documents to which they are entitled to prosecute their claims more than three (3) years after the commencement of this action. Therefore, the Court finds the imposition of sanctions pursuant to Rule 37(b)(2) is appropriate. III. CONCLUSION *3 The Court has carefully considered the entire record, the parties' briefs, and the relevant case law. Based upon the foregoing, the Court GRANTS the Plaintiffs Motion for Sanctions (Doc. No. 54) and ORDERS as follows: 1. Default judgment be entered against De Bastos upon a motion by the Plaintiffs detailing damages, which are a sum certain or can be made certain by computation. 2. De Bastos is to pay costs and reasonable attorney's fees associated with the Defendant's discovery failures, including the costs to prepare the motion for sanctions. 3. The Plaintiffs are directed to submit billing statements evidencing their costs and attorney's fees associated with the Defendant's discovery failures by April 1, 2020, for the Court's consideration. IT IS SO ORDERED. Dated this 5th day of March, 2020.