Curtis v. Illumination Arts, Inc.
| Decision Date | 21 November 2013 |
| Docket Number | CASE NO. C12-0991JLR |
| Court | U.S. District Court — Western District of Washington |
| Parties | CHARA CURTIS, et al., Plaintiffs, v. ILLUMINATION ARTS, INC., et al., Defendants. |
Before the court is Plaintiffs Chara Curtis, Cynthia Aldrich, and Alfred Currier's third motion for sanctions and partial summary judgment. (3d Mot. (Dkt. # 45).) Plaintiffs are authors of inspirational children's books, and this lawsuit involves claims for breach of contract and copyright infringement regarding three of their books. Although the court has issued rulings involving the substance of Plaintiffs' claims, the parties' and the court's time and attention has been predominately consumed by Defendants Illumination Arts, Inc. ("IAI"), Illumination ArtsPublishing, LLC ("IAP"), John M. Thompson, and Kimmie Lynn Thompson's repeated discovery abuses. The same holds true with respect to Plaintiffs' present motion.
Due to Defendants' discovery violations and disregard for the court's orders, the court has previously and repeatedly sanctioned Defendants. In addition, Defendants conduct has already forced the court to abandon its trial schedule to avoid compounding the prejudice to Plaintiffs by forcing Plaintiffs to try their claims on an incomplete record. In its last order, the court expressly warned Defendants that if they failed to timely comply with the court's order concerning discovery, the court would consider imposing additional sanctions including adverse evidentiary findings or the entry of default judgment. (7/18/13 Order (Dkt. # 43) at 20.) Nevertheless, Defendants' conduct in ignoring, only partially complying with, or complying in a dilatory manner with the court's orders and their discovery obligations has continued.
Because Defendants have failed to heed the court's warning, the court now considers whether present circumstances warrant the imposition of case-dispositive sanctions, specifically the entry of default or default judgment against Defendants. The court has reviewed Plaintiffs' motion, all submissions filed in support of and opposition thereto, the balance of the record, and the applicable law. Being fully advised, the court GRANTS in part and DENIES in part Plaintiffs' third motion for sanctions and partial summary judgment and for entry of default judgment.1
On June 8, 2012, Plaintiffs filed a complaint against Defendants for breach of contract and copyright infringement. (See generally Compl.) Plaintiffs allege that they terminated their publishing agreements with Defendants after Defendants stopped paying royalties to Plaintiffs for sales of three inspirational children's books and after Defendants electronically reproduced and distributed the books without Plaintiffs' permission. (See generally id.)
On July 25, 2012, Defendants appeared through their counsel. (Not. of App. (Dkt. # 12).) On August 7, 2012, Defendants answered the complaint. (Ans. (Dkt. # 13).) On September 13, 2012, the court notified IAI and IAP that they must file a corporate disclosure statement pursuant to Federal Rule of Civil Procedure 7.1. (See Dkt. Entry dated Sept. 13, 2012.)
On November 29, 2012, Plaintiffs served Defendants with their first set of discovery requests, which included 19 interrogatories, 68 requests for production of documents, and 43 requests for admission. (See 1/31/13 Kruckeberg Decl. (Dkt. # 17) ¶ 2, Ex. A.) After 30 days, Plaintiffs received no response from Defendants. (Id. ¶ 3.) On January 2, 2013, counsel for Plaintiffs emailed counsel for Defendants regarding the status of Defendants' responses. (Id.) On January 4, 2013, counsel for Defendantsrequested an additional 30 days to respond to the discovery requests due to the volume of financial data Plaintiffs requested. (Id. ¶ 4.) On January 9, 2013, Plaintiffs' counsel sent a letter to Defendants' counsel granting Defendants an additional ten days with respect to the production of financial documents, but demanding immediate responses to the remainder of Plaintiffs' discovery requests. (Id. ¶ 5, Ex. B.) Plaintiffs received no response from Defendants with respect to the January 9, 2013, letter. (Id. ¶ 6.)
On January 18, 2013, Plaintiffs' counsel emailed Defendants' counsel requesting a teleconference with respect to the outstanding discovery requests. (Id. ¶ 7.) Counsel conducted a teleconference on January 22, 2013. (Id. ¶ 8.) Counsel for Defendants indicated that Defendants could gather responsive documents by January 31, 2013. (Id.) As of January 31, 2013, Plaintiffs had received no response or objection to any of the discovery requests at issue. (Id. ¶ 12.) On January 31, 2013, Plaintiffs filed their first motion to compel discovery and for sanctions against Defendants. (See 1/31/12 Mot. (Dkt. # 16).) Defendants filed no response to Plaintiffs' first motion to compel discovery. (See generally Dkt.)
On February 20, 2013, the court found that Defendants had waived any objections to Plaintiffs' discovery requests and ordered Defendants to provide "complete responses without objection" no later than March 1, 2013. (2/20/13 Order (Dkt. # 19) at 6.) The court also order Defendants to pay sanctions to Plaintiffs in the form of Plaintiffs' reasonable expenses and attorneys' fees incurred in bringing its first motion for sanctions. (Id. at 8.) Finally, because IAI and IAP had still not filed their Rule 7.1 corporate disclosure statements, the court again ordered them to do so no later than March 1, 2013.(Id. at 6.) The court warned Defendants that should they fail to produce the ordered discovery or provide the required corporate disclosure statements within the stated timeframe, the court would consider the imposition of additional sanctions. (Id. at 7.) On March 19, 2013, the court entered an additional order specifying the amount of reasonable expenses and attorney fees Defendants were required to pay as sanctions to Plaintiffs pursuant to the court's February 20, 2013, order. (3/19/13 Order (Dkt. # 21) at 3.) The court ordered Defendants to pay $5,594.00 to Plaintiffs within 14 days of the date of the order. (Id. at 5.) To date, Defendants have not complied with the court's order to pay these monetary sanctions. (8/8/13 Kruckeberg Decl. ¶ 6.)
The court also noted in its March 19, 2013, order that Defendants had failed to comply with the court's February 20, 2013, order to file their corporate disclosure statements by March 1, 2013. (Id. at 3-4.) Accordingly, the court sanctioned counsel for IAI and IAP $500.00 (representing $250.00 for each corporate disclosure statement he failed to file), and ordered him to pay the sanctions and to file the required corporate disclosure statements within 14 days. (Id. at 5.) Once again, neither IAI, nor IAP, nor their counsel complied with the court's order or filed the necessary corporate disclosure statements. (5/29/13 Order (Dkt. # 28) at 2-3.) In addition, counsel for IAI and IAP failed to pay the $500.00 sanctions into the court registry. (Id. at 3.) Accordingly, on May 29, 2013, the court issued an order to show cause why the court should not enter default against IAI and IAP. (See generally id.) Counsel for IAI and IAP finally filed the corporate disclosure statements on June 11, 2013 (see Dkt. # 35), but to date has still not paid the $500.00 monetary sanctions ordered by the court. Although counsel for IAI andIAP apologized for the "oversight" of failing to file IAI's and IAP's corporate disclosure statements, he provided no explanation regarding his failure to comply with multiple court orders or his failure to pay the ordered sanctions, except for the statement that "[t]his matter is being handled on a pro bono basis." (Resp. to OSC (Dkt. # 36).)
On March 28, 2013, Plaintiffs filed their first motion for partial summary judgment (Dkt. # 22), which the court granted in part and denied in part. (5/29/13 Order (Dkt. # 29).) Defendants admitted that "IAI and IAP breached their obligations to pay Plaintiffs' royalties" ), and accordingly, the court granted Plaintiffs' motion for summary judgment with respect to their claim for breach of contract against IAI and IAP. (5/29/13 Order at 10.) The court also granted Plaintiffs' motion to disregard the corporate veil between IAI and IAP based on findings that IAP was a mere continuation of IAI and that there had been fraudulent transfers of assets between IAI and IAP. (Id. at 10-18.) The court, however, declined to pierce the corporate veil with respect to the Thompsons personally on summary judgment. (Id. at 18-19.) The court also ruled that Defendants' infringement of Plaintiffs' copyrights was willful, and that the Thompsons were directly liable for the infringement. (Id. at 19-20.) Finally, the court granted Plaintiffs' motion for entry of a permanent injunction prohibiting any further infringement of Plaintiffs' copyrights. (Id. at 23-24.) As a part of this order, the court required Defendants to return all infringing copies of the three books to Plaintiffs. (Id. at 24.)
Meanwhile, on February 20, 2013, the same day that the court issued its first order regarding discovery and sanctions (see generally 2/20/13 Order), Defendants finallyserved Plaintiffs with their initial responses to Plaintiffs' discovery requests. Despite the court's order directing Defendants to provide "complete responses without objection" (2/20/13 Order at 6), Defendants objected to all discovery requests related to Ms. Thompson's finances. Between February 27 and 29, 2013, Defendants began producing financial records relating to Mr. Thompson, IAI, and IAP. (Id. ¶ 6.) However, they produced no information regarding Ms. Thompson's financial records (id.), which Plaintiffs asserted they needed to establish their claim that the corporate veil between IAI and IAP, on one hand, and Ms. Thompson, on the...
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