SECURITIES AND EXCHANGE COMMISSION, Plaintiff, v. PATRICK JEVON JOHNSON et al., Defendants No. CV 20-08985-ODW (DFMx) United States District Court, C.D. California, Western Division Filed November 10, 2021 Counsel Manuel Vazquez, Roberto A. Tercero, Michael Raymond Sew Hoy, US Securities and Exchange Commission, Los Angeles, CA, for Plaintiff. Patrick Jevon Johnson, Dallas, TX, Pro Se. Ramo Robert Amador, Centennial Law Offices, Oxnard, CA, Arnold A. Spencer, Pro Hac Vice, Spencer and Associates, Dallas, TX, for Defendants Charles Everett. Frank Ekejija, Cedar Hill, TX, Pro Se. McCormick, Douglas F., United States Magistrate Judge REPORT AND RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE *1 This Report and Recommendation is submitted to the Honorable Otis D. Wright, II, United States District Judge, under 28 U.S.C. § 636 and General Order 05-07 of the United States District Court for the Central District of California. I. INTRODUCTION Plaintiff Securities and Exchange Commission (“SEC”) has filed a Motion for Sanctions against pro se Defendant Patrick Jevon Johnson (“Johnson”). See Dkt. 105 (“Motion”). Johnson did not file an opposition or appear at the November 9, 2021 hearing.[1] For the following reasons, the Court recommends that the Motion be GRANTED. II. BACKGROUND The SEC filed its Complaint on September 30, 2020, alleging that Johnson was involved in a fraudulent scheme involving three microcap issuers. See Dkt. 1. Johnson answered on December 7, asserting four common law crossclaims against another Defendant and three individuals who were not named in the Complaint. See Dkt. 37. The SEC's unopposed motion to strike Johnson's crossclaims was granted on January 25, 2021. See Dkt. 44. The SEC's Motion identifies four areas where Johnson has failed to cooperate in discovery and to abide by the Federal Rules and the Court's orders. A. Failure to Participate in the Scheduling Process The SEC and Johnson agreed on February 8, 2021 to attend a meet and confer on February 19 pursuant to Rule 26(f)(3) and the Court's November 30 Order. See Dkt. 105-1, Declaration of Michael R. Sew Hoy (“Sew Hoy Decl.”) ¶ 3, Ex. 2. In advance of the meet and confer, the SEC provided a draft report containing its positions on the relevant areas required in the Joint Rule 26(f)(3) Report. See id. ¶ 4, Ex. 3. Johnson responded that he did not agree with the draft and would email a report before March 1, but never did. See id. ¶¶ 5, 8, Ex. 15. Johnson did not attend the February 19 meet and confer. See id. ¶ 6. On March 15, the SEC and Defendant Everett filed a Joint Rule 26(f)(3) Report with no input from Johnson. See id. ¶ 7. B. Failure to Provide Initial Disclosures On March 19, 2021, the SEC requested a meet and confer with Johnson regarding his failure to provide the SEC with initial disclosures. See Sew Hoy Decl. ¶ 9, Ex. 4. Johnson did not respond. See id. ¶ 10. On March 31, the SEC emailed Johnson its portion of the joint stipulation regarding the motion to compel initial disclosures. See id. ¶ 12, Ex. 6. Johnson did not respond. See id. ¶ 13. On April 12, the SEC filed an unopposed motion to compel Johnson's initial disclosures pursuant to Rule 26(a)(1), which the Court granted on May 11. See Dkts. 73, 75. To date, Johnson has failed to provide initial disclosures. See Sew Hoy Decl. ¶ 14. C. Failure to Respond to Discovery Requests On June 1, 2021, the SEC served Requests for Production (“RFP”) and Interrogatories to Johnson. See Sew Hoy Decl. ¶ 15, Exs. 7, 8. When Johnson did not respond by the July 1 deadline, the SEC requested a meet and confer. See id. ¶ 16, Ex. 10. Johnson did not respond. See id. On July 14, the SEC emailed Johnson its portion of the joint stipulation regarding the motion to compel responses to the RFPs and Interrogatories. See id. ¶ 17, Ex. 11. Johnson did not respond. See id. ¶ 18. On July 23, the SEC filed an unopposed motion to compel responses to the RFPs and Interrogatories pursuant to Rule 37, which the Court granted on August 31. See Dkts. 82, 103. To date, Johnson has failed to serve the SEC with any responses to the RFPs and Interrogatories. See Sew Hoy Decl. ¶ 19. D. Failure to Meet and Confer *2 Johnson failed to meet and confer on the SEC's motion to compel the initial disclosures, motion to compel responses to the RFPs and Interrogatories, and the Rule 26(f) conference. See Sew Hoy Decl. ¶¶ 3, 6, 9, 10, 16. Johnson also failed to meet and confer and provide his portions of the joint stipulation in disputed discovery motions. See id. ¶¶ 12, 13, 17, 18. The fact discovery cutoff date is March 16, 2022, the pretrial conference is September 12, 2022, and trial is set for October 4, 2022. See id. ¶ 11. III. LEGAL STANDARD Federal Rule of Civil Procedure 37(b) permits the district court to impose a wide range of sanctions upon a party who “fails to obey an order to provide or permit discovery,” including “prohibiting the disobedient party from supporting or opposing designated claims or defense, or from introducing designated matters in evidence;” “striking pleadings in whole or in part;” and “rendering a default judgment against the disobedient party.” Rule 16(f) provides the same sanctions if a party “fails to appear at a scheduling or other pretrial conference” or “fails to obey a scheduling or other pretrial order.” See Dreith v. Nu Image, Inc., 648 F.3d 779, 787 (9th Cir. 2011) (affirming default judgment pursuant to Rule 16(f) for failure to provide initial disclosures). The Ninth Circuit has identified five factors that a district court must consider before dismissing a case or declaring a default for failing to comply with a court order: “(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 defendants; (4) the public policy favoring disposition of cases on their merits; and (5) the availability of less drastic sanctions.” Malone v. U.S. Postal Serv., 833 F.2d 128, 130 (9th Cir. 1990) (citation omitted). “The list of factors amounts to a way for a district judge to think about what to do, not a series of conditions precedent before the judge can do anything, and not a script for making what the district judge does appeal-proof.” Valley Eng'rs Inc. v. Elec. Eng'g Co., 158 F.3d 1051, 1057 (9th Cir. 1998). “The first two of these factors favor the imposition of sanctions in most cases, while the fourth cuts against a default or dismissal sanction. Thus the key factors are prejudice and availability of lesser sanctions.” Wanderer v. Johnston, 910 F.2d 652, 656 (9th Cir. 1990). Additionally, to warrant the severe sanction of dismissal, the violation(s) must be “due to willfulness, bad faith, or fault of the party.” Wyle v. R.J. Reynolds Indus., 709 F.2d 585, 589 (9th Cir. 1983). IV. DISCUSSION A. The Public's Interest in Expeditious Resolution of Litigation and the Court's Need to Manage Its Docket “[T]he public's interest in expeditious resolution of litigation always favors dismissal.” Yourish v. Cal. Amplifier, 191 F.3d 983, 990 (9th Cir. 1999). This case was filed a year ago and has a rapidly approaching March 2022 discovery cutoff date. Nevertheless, Johnson “has not complied with the very first discovery obligation of identifying relevant persons and documents. Thus, the first two factors weigh in favor of dismissal.” Sanders v. Matthews, No. 15-395, 2018 WL 1470473, at *5 (E.D. Cal. Mar. 26, 2018); see also BWP Media USA Inc. v. Urbanity, LLC, 696 F.App'x 795, 797 (9th Cir. 2017) (affirming sanctions for party's failure to provide initial disclosures). There is also no dispute that Johnson has been twice ordered to provide discovery, both initial disclosures and responses, and has not done so. See Dkts. 75, 103. Johnson's conduct hinders the Court's ability to move this case toward disposition. *3 The first and second factors favor the SEC. B. The Risk of Prejudice to the Party Seeking Sanctions Prejudice looks to whether Johnson's actions impaired the SEC's “ability to go to trial or threatened to interfere with the rightful decision of the case.” U.S. for Use & Ben. of Wiltec Guam, Inc. v. Kahaluu Const. Co., 857 F.2d 600, 604 (9th Cir. 1988); see also Conn. Gen. Life Ins. Co. v. New Images of Beverly Hills, 482 F.3d 1091, 1097 (9th Cir. 2007) (explaining that terminating sanctions are proper when discovery abuses “make it impossible for a court to be confident that the parties will ever have access to the true facts.”). “The law ... presumes prejudice from unreasonable delay.” In re Phenylpropanolamine (PPA) Prod. Liab. Litig., 460 F.3d at 1227. However, “[d]elay alone, without a focus on its effects, will not justify dismissal or default.” Wanderer, 910 F.2d at 656. The SEC argues that this case is like Connecticut General, in which the Ninth Circuit affirmed terminating sanctions following the defendants' failure to provide plaintiffs with the names, addresses, and phone numbers of former employees in a fraud case despite a court order compelling the information. See 482 F.3d at 1095 (explaining that defendants' conduct indicated “continued deceptive misconduct” for which terminating sanctions would be proper). The Court agrees. Like the discovery abuse in that case, Johnson, who the SEC has charged with violating section 5 of the Securities Act, has refused to engage in necessary discovery in violation of the Federal Rules of Civil Procedure, the Local Rules for the Central District of California, and this Court's orders. Without his participation, the SEC has been denied access to basic preliminary information and affirmative defenses, interfering with the rightful decision in this case. See Adriana Int'l Corp. v. Thoeren, 913 F.2d 1406, 1412 (9th Cir. 1990) (“Failure to produce documents as ordered, however, is considered sufficient prejudice.”). With over six months of stonewalling, Johnson's conduct has created a reality of prejudice against the SEC. See id. (holding that the “continuing refusal to comply with court-ordered production of documents constitutes an interference with the rightful decision of the case”). This factor favors the SEC. C. The Public Policy Favoring Disposition of Cases on Their Merits The fourth factor typically weighs against dismissal. See Wanderer, 910 F.2d at 656. However, this factor is given less weight where a fair trial appears impossible due to a party's refusal to cooperate. See Hyde & Drath v. Baker, 24 F.3d 1162, 1167 (9th Cir. 1994); see also In re Phenylpropanolamine (PPA) Prods. Liab. Litig., 460 F.3d at 1228 (“[T]his factor ‘lends little support’ to a party whose responsibility it is to move a case toward disposition on the merits but whose conduct impedes progress in that direction.”) (citation omitted). Johnson cannot use this factor as a shield to protect himself from the consequences of his misconduct. This factor favors the SEC or is neutral. D. The Availability of Less Drastic Sanctions *4 The fifth factor involves consideration of three subparts: “whether the court explicitly discussed alternative sanctions, whether it tried them, and whether it warned the recalcitrant party about the possibility of dismissal.” Valley Eng'rs Inc., 158 F.3d at 1057 (citing Malone, 833 F.2d at 132). “But despite all this elaboration of factors, we have said that it is not always necessary for the court to impose less serious sanctions first, or to give any explicit warning.” Id. As to the first and second factor, the Court has repeatedly discussed and ordered alternative sanctions. Upon motions by the SEC, the Court has ordered Johnson to provide discovery responses on separate occasions with no response. See Dreith, 648 F.3d at 788-89 (“[T]he court's April 18 order represented a first, lesser sanction than default; the Companies were ordered to produce documents and answer interrogatories.”). For the third factor, the Court has explicitly and repeatedly warned Johnson that he risked terminating sanctions due to his repeated failures. The Court's November 30, 2020 Order warned all parties that the failure to submit a joint report or attend the scheduling conference “may result in the dismissal of the action, striking the answer and entering a default, or the imposition of sanctions.” Dkt. 27 at 4. Johnson failed to do both. On July 27, 2021, the Court struck Johnson's pleading and cited Local Rule 83-2.12, which states that failure to comply with the rules could be grounds for default. See Dkt. 93. Johnson did not respond. On August 31, the Court again warned Johnson that failure to comply with the Court's order compelling discovery could result in “further just orders as set forth in Fed. R. Civ. P. 37(b)(2)(A)(i)-(vii),” which includes the power to “render a default against the disobedient party.” Dkt. 103. Still yet, Johnson did not comply. Johnson's conduct represents a pattern of behavior on which a lesser sanction will have no effect. E. Willfulness, Bad Faith, or Fault “Disobedient conduct not shown to be outside the control of the litigant is sufficient to demonstrate willfulness, bad faith or fault warranting default.” Stars' Desert Inn Hotel & Country Club, Inc. v. Hwang, 105 F.3d 521, 525 (9th Cir. 1997). Here, there is no question that Johnson's refusal to participate in discovery and comply with the Court's orders is a matter within his control. The Court agrees with the SEC's assessment that between “missed deadlines, violated rules, unheeded court orders, unattended hearings, and unanswered discovery, Johnson has shown no indication that he is willing [to] proceed with this case in good faith.” Motion at 17. F. Resolution The SEC requests that the Court issue an order (1) precluding Johnson from offering testimony or evidence related to the subjects contained in certain discovery; (2) striking Johnson's answer; and (3) entering default judgment against Johnson on Claim 1 (Section 10(b) of the Exchange Act and Rule 10b-5(b)) and Claim 2 (Section 10(b) of the Exchange Act and Rules 10b-5(a), (c)). See Motion at 17. The Court recommends that the SEC's proposal be adopted. As the SEC correctly notes, where delay is necessary to avoid an inconsistent result as to similarly situated defendants, Rule 54(b) requires deferring the entry of default judgment. Here, the Motion seeks default judgment against Johnson for his conduct in the allegedly fraudulent “pump” part of the matter, of which Defendant Everett had no involvement. See Compl. ¶¶ 269-80. It does not seek default judgment for Johnson's conduct in the section 3(a)(10) part of the matter, of which Everett was involved. V. RECOMMENDATION *5 IT IS HEREBY RECOMMENDED that the SEC's Motion for Sanctions against Johnson be GRANTED. IT IS FURTHER RECOMMENDED that (1) Johnson be precluded from offering testimony or evidence related to the subjects contained in the RFPs and Interrogatories in any pleading and at trial; (2) Johnson's answer be stricken; and (3) default judgment be entered against Johnson on Claim 1 (Section 10(b) of the Exchange Act and Rule 10b-5(b)) and Claim 2 (Section 10(b) of the Exchange Act and Rules 10b-5(a), (c)). Footnotes [1] “The failure to file any required document, or the failure to file it within the deadline, may be deemed consent to the granting or denial of the motion.” Local Rule 7-12.