On May 11, 2012, defendants filed a Motion for Sanctions, Including Terminating Sanctions, against plaintiff Environmental World Watch (“EWW”) and its Current and Former Officers and Directors. Docket no. 219. Defendants therein sought terminating sanctions against EWW, or, in the event that terminating sanctions were not granted, evidentiary and monetary sanctions. On July 2, 2012, the District Judge issued an order denying the motion to the extent it sought terminating sanctions, as she did “not find that the alleged discovery violations have made it impossible for Defendants to have access to the true facts.” Docket no. 279, at 4. The District Judge further concluded that “not only has the Court not ever previously warned EWW about the possibility of case-dispositive sanctions, the [Magistrate Judge] suggested the possibility of lifting lesser ones.” Id., at 5. The District Judge then determined that the issue of evidentiary sanctions and monetary sanctions are more appropriately addressed by this Court in the first instance, and extended the discovery cutoff for 60 days to allow defendants to re-file their motion as to issue and monetary sanctions.[1] Defendants have now re-filed the same motion that was filed with the District Judge (the “Motion”), along with EWW's opposition, and all supporting and opposing documentation. Docket no. 282. The Court heard argument from the parties on August 7, 2012, and took the matter under submission.[2]

In the Motion, defendants assert that plaintiff EWW, along with its current and former officers and directors (William Dunlap, Doris Nichols, and Dennis Becvar), have engaged in a variety of litigation abuses, including submitting a false declaration to overcome a motion to dismiss; fabricating documents; submitting fabricated documents to government agencies; preventing defendants from discovering the source of the false documents; failing to preserve evidence; and repeatedly failing to attend depositions. These actions “severely delayed Defendants' access to testimony and documents.” Motion, at 1.

*2 As described by defendants in the Motion, this action involved allegations concerning the discharge of cooling water containing hexavalent chromium from defendants' studio to nearby Polliwog Park. While all claims based on the discharge of chromium have been dismissed, alleged violations of the Clean Water Act remain. Defendants assert that EWW contacted various government agencies to investigate the discharge of hexavalent chromium, but no health risk at Polliwog Park was found. EWW and Dunlap then fabricated evidence, in the form of reports by fictional experts, to suggest that chromium from defendants' property in fact posed a health risk at or near Polliwog Park. Defendants contend that by fabricating documents and destroying evidence, EWW has obtained an unfair advantage that cannot be remedied by an instruction or other sanction.[3] At the hearing, counsel argued that EWW, Dunlap, Becvar and Nichols have engaged in and continue to engage in improper conduct in this litigation, that the harm from this conduct to defendants has been severe, and that sanctions up to and including termination of this action are appropriate.[4]

In its Opposition (Docket no. 240), EWW argues among other things that neither Dunlap nor Becvar has engaged in conduct inconsistent with the orderly administration of justice; that Dunlap and Becvar in fact advised Frank Snepp, a reporter looking into the chromium discharge issue, that they could not authenticate an allegedly manufactured memo; that EWW's allegations of chromium discharge are supported by evidence; that defendants responded to an order from the Regional Water Quality Control Board (“RWQCB”) with misleading and inaccurate information; and that materials sought in discovery were lawfully withheld from defendants based on a state court under seal matter.[5]At the hearing, counsel argued that the Motion is a rehashing of discovery issues that have already been dealt with by the Court, that all emails were provided, and that defendants' June 1, 2012, Status Report re Discovery Issues, in which defendants indicated that there were no further discovery issues to raise with the Court at that time, essentially forecloses defendants from seeking the relief being sought by this Motion.

As for defendants' claim that Dunlap created documents, the evidence shows that on February 26, 2011, former EWW counsel Jack Silver sent an email to Dunlap attaching “EEC” Test Results from Polliwog Park and the attic of plaintiff Jackson's home. Motion, Ex. 14. Just hours later, an email from “Dr. Steven Bishop” was sent using Dunlap's email account to the RWQCB and the EPA regarding the test results, and asserting in part that “[t]hese are unique CR VI contamination fingerprints, not previously seen in the environment. The levels of this listed and known cancer causing chemical are at dangerous concentrations to human health.” Motion, Ex. 15. The email attached the testing that had been provided to Dunlap hours earlier. The next morning, Dunlap forwarded the Bishop email to Becvar. Defendants have presented evidence that Dr. Bishop does not exist, that the original Bishop email was in fact sent from Dunlap's computer, and that a copy of the Bishop email was recovered from Dunlap's computer when his computer was made available to defendants for examination. Motion, Exs. 16-17. See also Garza Declaration in Support of Motion, ¶¶ 34-35; Gilbreth Declaration in Support of Motion, ¶ 141.

*3 The evidence further shows that on February 27, 2011, a letter purportedly from Dr. Carpenter S. Blanchard, MD PhD, of the Center for Cancer Risk Assessment of the EPA, was scanned into a Canon brand copier, and that Dunlap owned such a copier. Garza Dec., ¶¶ 39-40. The Blanchard letter, dated February 25, 2011, is addressed to Lisa Hanusiak of the EPA, attaches the results attached to the Bishop email, and uses substantially the same language as in the Bishop email to conclude that the levels of CR VI near defendants' property are dangerous to human health. Motion, Ex. 18. The evidence establishes that no person by the name of Carpenter Blanchard exists within the EPA (Motion, Ex. 28), and that the Blanchard letter was printed on the back side of paper bearing EWW's letterhead when it was scanned into the Canon copier on February 27. Garza Dec., ¶¶ 39-40.

The evidence supporting defendants' claim that EWW through Becvar and Dunlap failed to maintain evidence reveals that Dunlap had software on his computer to save incoming emails, but not to preserve outgoing emails (Motion, Ex. 4, pp. 487-89), and that he did not preserve out-going emails even after the commencement of this action (which the EWW board of directors, of which he was a member, initiated on behalf of EWW). Docket nos. 1, 29. Becvar admitted that he deleted and did not keep reports and emails (Motion, Ex. 5, pp. 48-49, 102-04); that he “didn't save” “a lot of the stuff” but instead “threw it away” (Motion, Ex. 5, p. 102); that he did not keep much of the documentation he received from EWW and Dunlap (Motion, Ex. 5, pp. 103-04); and that he did not save emails he received from Dunlap and other third parties because they “had no relevant, credible evidentiary value to the EWW case” and because documents he received from Dunlap “were of no evidentiary value and frankly useless as evidence in the EWW chrome VI contamination matter.” Becvar Dec., ¶¶ 6-7.

Dunlap claims that the Blanchard letter was never submitted by him or EWW to any government agency (Dunlap Dec., ¶ 10), and while he testified that he remembers a Dr. Bishop and believes he communicated with him (Motion, Ex. 2, p. 121), he also testified that he thinks defendants created both Dr. Bishop and Dr. Blanchard, i.e., that these individuals do not exist. Motion, Ex. 4, pp. 633-34. Dunlap also asserts that he and Becvar received and examined the Blanchard letter for authenticity, and when they could not ascertain who Blanchard was or with whom he was connected, they advised reporter Snepp that there was no such person at the EPA; that the costs incurred by defendants in pursuing documents were of their own doing as they insisted on trying to determine the nature of the evidence that was under seal in the state case; that Dunlap was entitled to “whistle blower” protection as of June 2009, before any discovery or deposition subpoenas were ever served on EWW or Dunlap by defendants; and that new EPA monitoring wells will determine defendants' contribution of chromium to the groundwater, which in turn will settle any question as to party or attorney misconduct. See Dunlap Declaration in Opposition to Motion.

For his part, Becvar states that he received “numerous unsolicited emails from Mr. Dunlap” involving another company with no relationship to EWW but which had filed another action against defendants, and that Dunlap and the other company are not in Becvar's control and were unknown to him until up to many months after he became president; he was sent numerous unsolicited, irrelevant, and unauthenticated documents by Dunlap; the Blanchard letter was described to him by Frank Snepp, was presented to him at deposition, and he has no knowledge of its origins or its credibility; since Dunlap left EWW, Becvar and EWW have had no control over or direction of Dunlap; and he usually discarded, “without even reading, any unsolicited, unauthenticated documents received from Mr. Dunlap or others, as such documents had no relevant, credible evidentiary value to the EWW case.” Becvar represents that he turned over “all relevant, responsive EWW documents in [his] possession which were not duplicates of documents already produced, during the time period [he] was a member of EWW.... Any deleted email was simply either a copy of what was produced earlier in the litigation or was an unsolicited, irrelevant, unauthenticated and non-evidentiary document sent to [him] (or copied to [him] ) by Mr. Dunlap after he left EWW. These documents, given their quality and nature were of no evidentiary value 26 and frankly useless as evidence in the EWW chrome VI contamination matter.” See Becvar Declaration in Opposition to Motion.[6]

*4 Rule 37(b)(2)(A) of the Federal Rules of Civil Procedure directs that a party that fails to obey an order to provide or permit discovery may be sanctioned by, among other things, directing that certain facts be deemed established, prohibiting the disobedient party from supporting certain defenses or introducing designated matters in evidence, “striking pleadings in whole or in part,” and “rendering a default judgment against the disobedient party.” The Court can also order that the matters at issue be deemed established for purposes of the action. Id.; Insurance Corp. of Ireland, Ltd. v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 707, 102 S.Ct. 2099, 72 L.Ed.2d 492 1982) (within trial court's discretion to impose sanction that court had personal jurisdiction when petitioner failed to comply with court's order for production of information). In lieu of or in addition to the above, the Court can enter an order treating the failure to obey the order as a contempt of court. Fed.R.Civ.P. 37(b)(2)(A)(vii). “[A]ny sanction imposed must be reasonably related to the claim or defense at which the discovery was directed, but ‘was frustrated by sanctionable conduct.’ ” Moe v. System Transport, Inc., 2010 WL 4736292, at *2 (D. Mont. Nov. 16, 2010) (quotingNavellier v. Sletten, 262 F.3d 923, 947 (9th Cir. 2001), cert. denied, McLachlan v. Simon, 536 U.S. 941 (2002)); seeInsurance Corp. of Ireland, Ltd., 456 U.S. at 707 (“the sanction must be specifically related to the particular ‘claim’ which was at issue in the order to provide discovery”). Belated compliance with discovery orders does not preclude the imposition of sanctions. Fair Housing of Marin v. Combs, 285 F.3d 899, 906 (9th Cir. 2002).

Before imposing the sanction of dismissal, a court must consider the following factors: “(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 [party seeking dismissal]; (4) the public policy favoring disposition of cases on their merits; and (5) the availability of less drastic sanctions.” Toth v. Trans World Airlines, Inc., 862 F.2d 1381, 1385 (9th Cir. 1988) (citation omitted) (order of dismissal affirmed where based on continued refusal to respond to requests to produce, even after the court ordered responses, and less drastic sanctions were imposed to no avail). “While the district court need not make explicit findings regarding each of these factors, ... a finding of willfulness, fault, or bad faith is required for dismissal to be proper.” Leon v. IDX Systems Corp., 464 F.3d 951, 958 (9th Cir. 2006) (internal quotations and citations omitted); see also Connecticut General Life Ins. Co. v. New Images of Beverly Hills, 482 F.3d 1091, 1096 (9th Cir. 2007); Computer Task Group, Inc. v. Brotby, 364 F.3d 1112, 1115-17 (9th Cir. 2004) (per curiam). Further, before issuing an outright dismissal, the district court must consider whether issuing less severe sanctions would be more appropriate. See Leon, 464 F.3d at 958. Applying the standard set out above, the District Judge concluded that imposition of terminating sanctions in this action was not warranted. See July 2, 2012, Order, Docket no. 279.

Turning to the imposition of lesser sanctions, this Court if appropriate may impose sanctions of issue or evidence preclusion pursuant to Rule 37(b)(2)(A)(i)-(ii) and (c)(1). “If a party or a party's officer, director, or managing agent ... fails to obey an order or permit discovery,” Rule 37(b)(2)(A)(i)-(ii) permits the Court to impose sanctions “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,” or “prohibiting the disobedient party from supporting or opposing designated claims or defenses, or from introducing designated matters in evidence.” Additionally, ursuant to Rule 37(c)(1), “if a party fails to provide information or identify a witness as required by Rule 26(a) or (e), the party is not allowed to use that information ... to supply evidence on a motion, at a hearing, or at a trial, unless the failure was substantially justified or is harmless.” Finally, pursuant to Rule 37(b)(2)(C), the Court must “order the disobedient party, the attorney advising that party, or both to pay reasonable expenses, including attorney's fees, caused by the failure, unless the failure was substantially justified or other circumstances make an award of expenses unjust.”

*5 Moreover, the Court can sanction a non-party under its inherent powers. See, e.g., In re Rainbow Magazine, Inc., 77 F.3d 278, 282 (9th Cir. 1996) (acknowledging that sanctions can be “imposed against a nonparty and nonattorney under the court's inherent powers”); Corder v. Howard Johnson, 53 F.3d 225, 232 (9th Cir. 1995) (“a court may impose attorney's fees against a non-party as an exercise of the court's inherent power to impose sanctions to curb abusive litigation practices”). The Court's inherent powers come from the “control necessarily vested in courts to manage their own affairs so as to achieve the orderly and expeditious disposition of 14 cases.” Chambers v. NASCO, Inc., 501 U.S. 32, 43, 111 S.Ct. 2123, 115 L.Ed.2d 27 (1991) internal quotation omitted); see also The Sunrider Corp. v. Bountiful Biotech Corp., 2010 WL 4589156, at *6 (C.D. Cal. Nov. 3, 2010). “Because of their very potency, inherent powers must be exercised with restraint and discretion.” Chambers, 501 U.S. at 44. This power is “both broader and narrower than [statutory and rule-based] means of imposing sanctions.” Id. at 46. It is broader in that it “extends to a full range of litigation abuses and reaches conduct both before the court and beyond the court's confines.” Anchondo v. Anderson, 2011 WL 4549279, at *2 (D.N.M. Sept. 29, 2011) (citing Chambers, 501 U.S. at 46, 57). But the power is more narrow in that a finding of “bad faith is required for sanctions under the court's inherent power.” Fink v. Gomez, 239 F.3d 989, 993 (9th Cir. 2001); see Chambers, 501 U.S. at 47. In the Ninth Circuit, “bad faith” includes “a variety of types of willful actions, including recklessness when combined with an additional factor such as frivolousness, harassment, or an improper purpose.” Fink, 239 F.3d at 994. “ ‘[T]o be subject to the Court's inherent power to sanction, a non-party not subject to court order must (1) have a substantial interest in the outcome of the litigation; and, (2) substantially participate in the proceedings in which he interfered.’ ” Bartos v. Pennsylvania, 2010 WL 1816674, at *7 (M.D. Penn. May 5, 2010) (quoting Helmac Products v. Roth, 150 F.R.D. 563, 568 (E.D. Mich. June 15, 1993)); see Anchondo, 2011 WL 4549279, at *4 (quoting Bartos); ANZ Advanced Tech., LLC v. Bush Hog LLC, 2012 WL 715099, at *9 (S.D. Ala. Feb. 7, 2012) (same).

The Court acknowledges that discovery in this action has been a lengthy, difficult, and costly process. The process has, at a minimum, been hindered by the shifting roles of Dunlap, Becvar and Nichols at EWW, among other things. It indeed appears that these three individuals have moved in and out of their positions with EWW based on a desire to avoid being deposed (or to make the taking of depositions more complicated), and/or a desire to avoid the discovery of and liability for their actions.[7] In its Opposition to the Motion, EWW attempts to distance itself from the numerous actions that Dunlap took on behalf of EWW (see Becvar Dec. in Opposition to Motion; defendants' Reply, at 6-8); lays blame for the Blanchard memo on Frank Snepp; and asserts that anything withheld was done so lawfully in light of the state court sealing order. The evidence shows, however, that Becvar, while an EWW officer, was well aware of Dunlap's actions. See, e.g., Motion, Supp. Ex. 153, p. 377. Moreover, EWW has presented no evidence that it took any steps whatsoever to disavow any of Dunlap's actions, such as sending an email to him to cease his actions on EWW's behalf, or admonishing Dunlap that he had no authority to act for EWW. Instead, EWW seeks to turn this Motion from one focusing on its conduct and that of its officers into an evaluation of the merits of the underlying case. This Motion is not the appropriate setting for that discussion.

Nevertheless, the Court does not recommend that evidentiary sanctions against EWW be posed. Neither does the Court recommend that monetary sanctions now be imposed against EWW. On November 3, 2011, in granting defendants' motion to compel discovery against EWW, the Court stated:

Docket no. 94, p. 5. In light of Becvar's alleged conduct in not preserving emails, the Court ordered that defendants be allowed to review EWW's computers. But the Court denied defendants' request to impose monetary sanctions against EWW. Id., p. 8.

While defendants' frustration with EWW's conduct through Becvar is understandable, defendants' Motion restates many of the same arguments made in their October 25, 2011, motion, which the Court already considered and as to which it already declined to impose sanctions against EWW beyond compelling computer searches. It appears that EWW complied with this Court's November 3, 2011, discovery Order. Further, as recognized by the District Judge in her earlier order, EWW has not been the subject of other discovery sanctions or been notified that its behavior could lead to severe sanctions. Indeed, this Court declined to impose monetary sanctions against EWW in the one discovery motion brought by defendants against EWW. Neither has there been a showing that, despite the alleged discovery violations, defendants have been unable to obtain certain documents. They are in possession of the Bishop email and the Blanchard letter. Gilbreth Dec., ¶¶ 148-49. In fact, the District Judge concluded that despite the discovery violations, defendants had not been prevented from discovering the true facts. Docket no. 279. Defendants searched EWW's computers, and yet have not convinced the Court that any evidence was destroyed by EWW that was clearly relevant to any of the issues involved in this litigation. Nor can it conclude that any evidence was withheld that defendants have not been able to obtain through other means. Even considering EWW's conduct through its officers together with the various alleged discovery violations set forth in the instant Motion, and its conduct since the filing of the Motion, the Court concludes that further sanctions should not be imposed against it. See Mar Com v. F/V Hickory Wind, 2005 WL 946789, at **2-5 (D. Alaska Apr. 19, 2005) (the court first imposed sanctions against a defendant that responded to discovery in a “slow and incomplete manner,” but when plaintiff again moved for discovery sanctions for essentially the same conduct it declined to impose further sanctions even after “considering the totality of circumstances”). Defendants' ability to defend this case has not been “inalterably prejudiced” by the conduct of EWW. Columbia Pictures, Inc. v. Bunnell, 2007 WL 4877701, at *5 (C.D. Cal. Dec. 13, 2007).

Becvar, on the other hand, while an officer of EWW, wilfully destroyed documents based on his unilateral determination as to what was relevant to this action. Relevance was not for him to decide. Inconsistently, he asserts both that he did not read documents he received, and that he deleted documents that were “useless” and not relevant to this action. Compare Becvar Dec., ¶ 6 with ¶¶ 5, 7. EWW has offered no evidence to rebut the statements that Becvar deleted emails. His recent statements that communications from Dunlap were unsolicited and that Dunlap's actions were unknown to him until after the fact (Becvar Dec., ¶ 4), are in direct conflict with the evidence that Dunlap was acting on behalf of EWW with Becvar's knowledge. As noted by defendants (Reply to Opposition to Motion, at 14), Becvar had a duty to preserve all relevant documents once this litigation was filed. SeeZubulake v. UBC Warburg LLC, 220 F.R.D. 212, 216 (S.D.N.Y. 2003). He failed to do so. His actions are all the more egregious given the fact that he was the officer of the party that instituted these proceedings. There is no justification for his conduct, his actions are not harmless (both as to the expense incurred by defendants in searching for deleted documents and the harm to the judicial system), and an award of sanctions would not be unjust.[8]

*7 Dunlap, for his part, appears to be connected with the manufacturing of evidence related to this action, an issue that was not squarely before this Court in connection with his prior alleged discovery violations. First, the evidence convincingly shows that shortly after Dunlap received an email containing test results, the Bishop email was created to which those same test results were attached. The Bishop email was then sent from Dunlap's computer. The next day, the Blanchard letter, which contained language nearly identical to that in the Bishop email, was scanned into a Canon copier (Dunlap owned such a copier), on the back of EWW letterhead. While Dunlap at first asserted that he had met Bishop, he later contended that Bishop is not even a real person but was created by defendants. EWW's opposition to the Motion and Dunlap's declaration in support of that opposition are strangely silent as to defendants' compelling evidence concerning the Bishop email claims; counsel's assertion at the hearing that the Bishop email was not on Dunlap's computer is belied by the evidence. Defendants' evidence as to the origins of this email is unrefuted. Next, Dunlap's credibility is seriously undermined by his inconsistent statements concerning his relationship with EWW. In his September 11, 2009, declaration submitted to the Court in an effort to defeat a motion to dismiss, he represented that he was at that time “a member of the board of directors of” EWW. Docket no. 29. In contrast, in an April 5, 2011, email, Dunlap wrote that he has “not been a part of EWW since June 2009.” Motion, Ex. 87. In his October 27, 2011, deposition, he again stated that he had not been an officer or director of EWW since June 2009 (with the exception of the month of September 2010). Motion, Ex. 2, pp. 53-56. In his April 2, 2012, deposition, he verified that he had not been part of EWW since June 2009. Motion, Ex. 4, p. 476. Nevertheless, he filed pleadings in various actions as “William P. Dunlap, DBA nv[i]ronmental World Watch, Inc.” on January 3, 2011 (Motion, Ex. 72), as “William P. Dunlap, Esq., aka Environmental World Watch” on April 11, 2011 (Motion, Ex. 59), and as “William P. Dunlap, aka Environmental World Watch” on June 7, 2011 (Motion, Ex. 89). All this was after his purported resignation from EWW.

Dunlap, at a minimum, is a nonparty with a substantial interest in this case. Helmac, 150 F.R.D. at 568. He is the founder of plaintiff EWW, a former member of EWW, and the initiator of this lawsuit. He has identified himself as “a lifelong founding member of EWW” and has even stated that he has a “vested interest” in this case. Dunlap Declaration in Opposition to Motion for Summary Adjudication, Docket no. 299-1, ¶¶ 11, 19. His interest in this litigation is evident from his own representations. Dunlap has stated that every time he is at the “affected area” surrounding Polliwog Park, he is “reminded of the pollutants discharged by Disney,” and how “they are harming neighboring life and contributing to the cumulative toxic impairment of the area.” He has also represented that he “worr[ies] that the people [he] observe [s in the area], as well as their families, are exposed to pollutants or absorb pollutants through their skin.” Dunlap Declaration in Opposition to Motion to Dismiss, Docket no. 29, ¶¶ 10-11. Further, Dunlap's conduct also hows his substantial interest in this case. Even if the manufactured documents were not intended for use at trial, they nevertheless are directly related to this case. The Bishop email was sent to the EPA and the RWQCB regarding testing at defendants' subject property. The Blanchard letter was sent to Lisa Hanusiak of the EPA on the same matter. “These actions speak eloquently to the direct, substantial and personal interest[ ] that th[is] [non-party] had in matters relating to [this case].” Bartos, 2010 WL 1816674, at *7.

Dunlap also has substantially participated in the proceedings in which he interfered by creating and sending the Bishop and Blanchard letters, and by being evasive about doing so. 12 See, e.g., Docket no. 144, pp. 5-6, 11, 13, 35-36, 38-43, 50, 58, 60-65, 76, 80-83 (transcript of Feb. 22, 2012, hearing). Under oath, he originally stated that he remembers and believes he communicated with Dr. Bishop, but more recently stated that this person was created by defendants and does not even exist. “[B]y compounding [his] decision to create and send [these communications] with a decision to lie under oath about this activity during depositions conducted in litigation, [Dunlap] amply demonstrated that [he] also substantially participated in these proceedings in which this interference with the search for the truth took place.” Bartos, 2010 WL 1816674, at *7; see also Amerisource v. RxUSA International, 2010 WL 2730748, at **6-8 (E.D.N.Y. July 6, 2010) (sanctioning non-party for doctoring emails even though non-party continued to deny culpability). As aptly stated by the Bartos court: the defendants have been “prejudiced in this litigation and [they have been] compelled to expend time, expense and effort to ferret out who was responsible for the[se] act[s]. Moreover, at all times [Dunlap] could have completely avoided this litigation prejudice to [the defendants] through the simple expedient of obeying the oath [he] took ... to tell the truth” in his depositions. Bartos, 2010 WL 1816674, at *8. As a result, “defendants have been put to enormous additional effort and expense to ferret out [Dunlap's] lies and to double check every piece of information.” Garcia v. Berkshire Life Insurance, 569 F.3d 1174, 1179 (10th Cir. 2009) (discussing prejudice caused by plaintiff's lies during discovery). That the email and letter were identified as fraudulent before trial does not undo the prejudice. Amerisource, 2010 WL 2730748, at *7 (“[T]he actual effect of the altered emails on the litigation is not relevant to whether the conduct is sanctionable.”).

*8 Not only is Dunlap an attorney (see, e.g., Motion, Ex. 59 (document filed by Dunlap in state court as “William P. Dunlap, Esq.”)) and thus an officer of the Court (Pauley v. United Operating Co., 606 F.Supp. 520, 526 (E.D. Mich. 1985) (asserting that as an attorney, the principal defendant could not claim to be “a naive litigant [who was] misled by his unschooled conviction as to the merits of his position into ignoring a Court order”)), he has been warned by this Court multiple times about the possible repercussions of his behavior. See, e.g., Docket no. 147, p. 6 (“Moreover, Mr. Dunlap is hereby advised, again, as he was at the hearing on this matter, that if he fails to comply to the letter with this Order, he bears a substantial risk that he will be found in contempt and that substantial monetary sanctions will be awarded to Defendants for his non-compliance.”) (emphases added).

The Court notes that, weighing against sanctioning Dunlap, there are no allegations that any fabricated documents were ever presented to the Court. Further, the Court previously denied defendants' application for an Order to Show Cause re Contempt (Docket nos. 147, 157), which they sought based on Dunlap's violation of this Court's Order of January 13, 2012, as he did not produce all documents in his possession, custody or control, did not produce a sufficient privilege log or declaration, did not fully respond to all questions at his deposition, and did not pay the ordered sanctions to defendants. In ruling on the application, the Court ordered Dunlap, not for the first time, to comply with various conditions, including appearing for his deposition. Docket no. 147. If he was in full compliance, the monetary sanctions were to be lifted and he would not be found in contempt for his failure to comply with prior orders of the Court. As of June 1, 2012, defendants informed the Court that there were no discovery disputes warranting additional motion practice. Docket no. 238.

Nevertheless, “the Court's power to impose sanctions is derived from the inherent power ‘vested in courts to manage their own affairs so as to achieve the orderly and expeditious disposition of cases.’ ” ANZ Advanced, 2012 WL 715099, at *9 (quoting Chambers, 501 U.S. at 43). Dunlap's behavior, his creation of these documents, and his initial refusal to appear for and cooperate in his depositions, compounded with the fact that he initiated this lawsuit, has, to put it mildly, slowed the “orderly and expeditious disposition” of this case. Some of these violations have been met with this Court's leniency toward Dunlap in the past. See Docket no. 144, pp. 80-84; see also Klayman v. Judicial Watch, Inc., 802 F.Supp. 2d 137, 150-51 (D.D.C. 2011) (“This Court has been exceedingly generous –– perhaps too generous –– in affording Klayman multiple opportunities to come into compliance with the Court's orders .... Klayman's flagrant disregard of this Court's authority, in face of the Court's patient efforts to secure his compliance, simply cannot stand without repercussions.”). That leniency apparently is not effective with Dunlap. There is clear evidence here that Dunlap created the Bishop email, and then created a story concerning (the apparently fictitious) Dr. Bishop. His actions were reckless, and were intended to influence these proceedings. This amounts to bad faith, and sanctions are warranted.

The Court already entered a discovery order as to EWW, and defendants did not thereafter assert non-compliance with that order. Nor do defendants contend that EWW is attempting to rely on evidence at trial that it did not produce to defendants (and which was found to exist only upon defendants' forensic examination of computers). Instead, defendants complain that, because of the actions of Dunlap, Becvar and Nichols, defendants had to go to great efforts to find the evidence to which they were always entitled. The Court has not previously addressed Becvar's conduct in destroying evidence as it relates to Becvar himself, or his recent sworn statement that he was unaware of Dunlap's actions. Neither has the Court previously addressed the totality of Dunlap's conduct, including the creation of documents impacting on this litigation.[9] Becvar's and unlap's conduct as described above is sanctionable. The Court has considered the imposition of evidentiary sanctions against EWW as suggested by defendants in the Motion, but finds that in the instant circumstances, where the overriding prejudice to defendants is financial in nature, monetary sanction is the type of sanction most reasonably related to the conduct of Dunlap and Becvar. However, the Court also recommends that the jury be informed of Becvar's and Dunlap's misconduct, so that it can consider these facts in assessing the weight to be given to any testimony they may offer. See, e.g., Network Computing Services Corp. v. Cisco Systems, Inc., 223 F.R.D. 392, 399-401 (D.S.C. 2004); Bernal v. All American Investment Realty, Inc., 479 F.Supp.2d 1291, 1301-02 (S.D. Fla. 2007) (“As part of the sanction, the Court shall instruct the jury on [the individual defendant's] spoliation of evidence and procurement of false evidence, which they may consider in assessing his credibility.”); Jung v. Neschis, 2009 WL 762835, at *24 (S.D.N.Y. Mar. 23, 2009) (“The District Court should inform the jury that Plaintiffs provided to their experts and Defendants, and planned to offer in evidence, fabricated documents ... that Plaintiffs either knew or should have known that the documents were fabricated; and that the jury may consider these facts in assessing what weight to accord Plaintiffs' experts' opinions.”).

*9 Defendants initially itemized costs of $64,894.99 associated with their pursuit of discovery in this action, and attorney's fees in excess of $65,000. Gilbreth Declaration, ¶ 156. They then itemized additional costs of $76,137.83, for a total of $141,032.80 in costs. Wilkinson Declaration re Updated Costs. The pursuit of the fake email and Blanchard letter, and the search for deleted emails, formed the basis of a portion of defendants' discovery expenses, and some of those expenses are thus appropriately recovered from Dunlap and Becvar. It is also appropriate to compensate defendants for exposing actions that could impact on this litigation. For the bad faith creation of evidence and failure to acknowledge this behavior, and for the destruction of documents, sanctions are warranted, to compensate defendants, to vindicate the judicial system, and to instruct the jury of the misconduct.

Accordingly, the Court recommends that the District Court issue an Order: (1) adopting this Report and Recommendation; (2) granting in part defendants' Motion; (3) ordering Dunlap to pay defendants, within ten days of the entry of an Order by the District Court, the sum of $20,000; 28 (4) ordering Becvar to pay defendants, within ten days of the entry of an Order by the District Court, the sum of $10,000; and (5) informing the jury at trial of the misconduct set forth herein.[10]

DATED: August 10, 2012.

The District Judge also converted the issue of whether William Dunlap (the founder and sometimes board member of EWW), Doris Nichols (former board member and current officer of EWW) and Dennis Becvar (at times EWW's vice president, EWW's principal environmental scientist, and from November or December 2010 until recently, EWW's sole president, director and shareholder) are alter egos of EWW –– also raised by defendants in the Motion –– into a motion for partial summary adjudication of issues. See, e.g., Dunlap Declaration in Opposition to Motion, ¶ 1; Becvar Declaration in Opposition to Motion, ¶¶ 1, 3; Motion, Ex. 2, pp. 53-55, Ex. 5, pp. 44-45, 69, Ex. 8, pp. 334-35, Supp. Ex. 154, p. 22; Docket nos. 29-30, 236.

At the hearing on the Motion, counsel for EWW represented that he was also appearing on behalf of Dunlap, Nichols and Becvar. Each of those individuals confirmed to the Court that counsel was appearing on his/her behalf.

In their Opposition to the Motion, the individual plaintiffs in this action (Dennis Jackson, William McCall and Robin McCall) take no position concerning defendants' allegations of misconduct by EWW and its officers raised in the Motion, but contend that any sanctions imposed should exclude communications with any agency relating to the specific tests and results that were properly conducted and that remain at issue concerning these plaintiffs' claims under the Clean Water Act; and that any terminating sanctions against EWW should not have any preclusive effect on these plaintiffs. Defendants for their part do not seek to preclude these plaintiffs from relying on the testing that they submitted in support of their motion for summary judgment. Defendants' Reply, at 18, fn.20.

This Court will not address defendants' contention raised at the hearing that terminating sanctions are appropriate and should be recommended by this Court. The District Judge already decided not to impose terminating sanctions, and defendants did not seek reconsideration of that decision from Judge Gee.

Dunlap refused to produce certain documents and answer certain deposition questions in this action based on documents submitted under seal in a qui tam action filed in state court naming the same defendants as in this action. While the sealing order in that action was continued beyond February 27, 2012 (see docket no. 146), defendants' request for permission of the state court judge to proceed with discovery in this federal action was signed on April 19, 2012. Docket no. 170.

On November 3, 2011, the Court granted in part defendants' motion to compel production of documents and for sanctions against EWW. Based in part on defendants' evidence that Dunlap and Becvar had deleted emails and discarded documents, the Court required, among other things, that EWW search various computers and electronic devices in its possession, custody or control and allow defendants to conduct forensic reviews of its computers. Monetary sanctions were denied. Docket no. 94. It does not appear that defendants filed any discovery motions against EWW following the November 3 Order, prior to bringing the instant Motion. While multiple discovery motions were filed as to Dunlap, and monetary sanctions were imposed based on his failure to produce ordered documents and either attend, or respond to questions at, his deposition, defendants indicated that as of June 1, 2012, there were no discovery disputes warranting additional motion practice at that time. Docket no. 238. Defendants' Motion for Terminating Sanctions was originally filed with the District Judge on May 11, 2012. Docket no. 177.

For example, Becvar took over as president of EWW in May, 2011, when defendants were attempting to depose Dunlap and Nichols; Becvar was president of EWW when he was deposed on April 27, 2012 (Motion, Ex. 8, pp. 334-35), but was no longer president the next day and was not president by the time he filed his declaration in opposition to defendants' original motion for terminating sanctions. See Becvar Dec., ¶ 1; Nichols Declaration in opposition to alter ego motion (Docket no. 299), ¶ 1. Nichols was back in as president as of May 21, 2012. Id.

Any claim by EWW that Becvar's conduct has already been considered by the Court and thus cannot form the basis for a sanctions order against him is rejected. First, his conduct in destroying emails was initially considered in connection with a motion to compel EWW to produce documents. Sanctions against Becvar were not addressed. Second, Becvar's unbelievable statements disavowing knowledge of Dunlap's actions on behalf of EWW were made to the Court only since the filing of this Motion, and thus were not previously examined in connection with any prior motion.

EWW's argument that defendants' June 1, 2012, statement –– that there were no discovery disputes warranting additional motion practice ––precludes defendants from now seeking relief through this Motion is rejected. The original motion for terminating sanctions had already been filed by that time and was pending with the District Judge.

If the District Court should find that EWW is the alter ego of Dunlap and/or Becvar, the Court recommends that Dunlap, Becvar and EWW be held jointly and severally liable for these monetary sanctions, and that any adverse inference instructions apply to EWW as well.