This recommendation is based on the following findings:

FINDINGS OF FACT

1. Plaintiff filed its Complaint commencing this lawsuit on December 16, 2013. See Docket No. 1. Defendants were served with the Complaint on December 21, 2013. See Docket Nos. 12-15.

2. Defendants were each served at that time with a spoliation letter advising them of their obligation to preserve documents, things and other evidence that may be relevant to this case. See Docket No. 129 at Exs. 32-35 thereto.

3. The Complaint asserts claims against Defendants for trademark infringement under 15 U.S.C. § 1114, trademark counterfeiting under 15 U.S.C. § 1114, and false designation of origin, false descriptions and representations, and unfair competition under 15 U.S.C. § 1125.

4. As part of its pre-filing investigation, Plaintiff purchased two watches bearing copies of Plaintiff's trademarks from the Time and Gems website and determined both watches to be counterfeit.[1] See Docket No. 1 at ¶¶ 34-38; Docket No. 51.

5. The Complaint alleges, inter alia, that Defendants conduct business as and through the website www.timeandgems.com, through which Defendants offer for sale and sell watches bearing counterfeit copies of Plaintiff's trademarks. See Docket No. 1. The watches sold by Defendants come with an “authentication and appraisal” from defendant Horological Appraisal Group (“HAG”). Id.

6. Defendants failed to respond to the Complaint and allowed default to be entered against them on January 22, 2014. See Docket No. 27. At Defendants' request, the parties filed a stipulation to set aside the default, which the Court granted. See Docket Nos. 29 and 30.

7. Defendants then filed a motion to dismiss the Complaint, which the Court denied on June 16, 2014. See Docket Nos. 31 and 41.

*2 8. After the motion to dismiss was denied, Defendants failed to file a response to the Complaint and allowed default to be entered against them for a second time on July 11, 2014. See Docket No. 45.

9. Plaintiff filed a motion for entry of default judgment on August 12, 2014. See Docket Nos. 48-52. Prior to filing its motion, Plaintiff purchased a third watch from Defendants' Time and Gems website and determined that this third watch also bore counterfeit copies of Plaintiff's trademarks. See Docket Nos. 50 and 51.

10. On August 25, 2014, Defendants filed a motion to set aside the second default and, on August 28, 2014, filed an opposition to Plaintiff's motion for entry of default judgment. See Docket Nos. 53 and 54. On September 24, 2014, the Court set aside the default. See Docket No. 61. Defendants submitted a proposed Answer with their motion, in which they admitted that they conducted business through the Time and Gems website. See Docket No. 53 at [Proposed] Answer to Complaint ¶ 2 (admitting Paragraph 10 of the Complaint).

11. On October 13, 2014, Defendants' counsel, Alexander Escandari and the L.A. Trial Lawyers, Inc. firm, filed requests to withdraw as attorneys for Defendants. See Docket Nos. 64-67.

12. On October 15, 2014, at its earliest opportunity, immediately after the parties conducted the Rule 26(f) conference, Plaintiff served its First Set of Requests for Production of Documents and First Set of Interrogatories. See Docket No. 68 at p. 1 and Docket No. 106 at Exs. 19 and 21 thereto. Plaintiff's discovery requests sought information relating to Defendants' business activities, such as, for example, Defendants' purchase of watches bearing Plaintiff's trademarks, documents relating to the alterations Defendants made to the watches, documents relating to Defendants' use of Plaintiff's trademarks in connection with the watches, documents relating to the sales and marketing of the watches, and documents relating to the nature of Defendants' business.

13. The Court held a Scheduling Conference on November 10, 2014. See Docket No. 90. During the Scheduling Conference, the Court noted Defendants' two defaults and remarked twice that Defendants' conduct had caused a lot of inefficiencies in this case. See Docket No. 106 at Ex. 5 thereto, pp. 4-5. At the Scheduling Conference, the Court also ordered Defendants to file as their Answer the same proposed Answer that was submitted with their motion to set aside the default entered against them. Id. at p. 7. The Court also advised Mr. Escandari that his requests to withdraw were defective and that if he were concerned about publicly disclosing privileged information, he could re-file his request to be relieved as counsel along with an application to file under seal. See id. at pp. 4-5.

14. On November 17, 2014, Defendants filed an Answer; however, it was not the Answer that the Court had previously ordered Defendants to file. Instead, Defendants filed an Answer that differed materially from the prior proposed Answer they had submitted with their motion to set aside the default. See Docket No. 92. The differences included, inter alia, denying that Defendants conducted business through the Time and Gems website.

*3 15. Plaintiff filed a motion to strike Defendants' Answer, which the Court granted on February 5, 2015. See Docket No. 115. In granting the motion, the Court noted that if Defendants wanted to amend their Answer, they must formally request leave to amend. Id. On February 25, 2015, Defendants filed the Answer that had been initially filed with their motion to set aside the default entered against them. SeeDocket No. 120.

16. Defendants Watch Empire, Davidi, and Cohanim served their responses to Plaintiff's First Set of First Set of Requests for Production of Documents and First Set of Interrogatories on November 17, 2014. See Docket No. 106 at Exs. 20 and 22 thereto. In their responses, those Defendants asserted, among other things, the same relevance objections to each of Plaintiff's thirty-eight document requests and on that basis refused to produce documents. Instead, Defendants produced only five pages of publicly available documents referenced in their Rule 26(f) initial disclosures. Similarly, those Defendants objected to each of Plaintiff's thirteen interrogatories; only providing vague and incomplete responses to four of them. Id. Defendant HAG did not provide any written responses to Plaintiff's discovery requests.

17. In responding to Plaintiff's discovery requests, the crux of Defendants' refusal to provide the requested documents and information was predicated upon a purported distinction between: Defendants Watch Empire, Davidi, and Cohanim, on the one hand, and Defendant HAG and Time and Gems, on the other hand. Defendants Watch Empire, Davidi, and Cohanim disavowed any association with Time and Gems and HAG, and claimed to have no information to provide about the business conducted by or through those entities.

18. The distinction made by Defendants with Time and Gems and HAG is completely baseless. It is directly contradicted by the evidence, including Defendants' own prior admissions and statements, and by other evidence presented by Plaintiff. The contradictory evidence includes at least the following:

a. Defendants admit in their Answer that they are conducting business through two Time and Gems websites. See Docket No. 120 at ¶ 2 (admitting paragraph 10 of Plaintiff's Complaint).

b. Defendants stated in their sworn amended interrogatory responses that they sell watches “by using the internet and their website www.timeandgems.com.” See Docket No. 125 at Ex. 3 thereto, at Amended Interrogatory Response No. 12 (emphasis added).

c. Defendants' Rule 7.1 Certification and Notice of Interested Parties identified Time and Gems and www.timeandgems.com as a d/b/a of Defendant Watch Empire. See Docket No. 33.

d. Defendants' Memorandum of Points and Authorities in support of their Motion to Dismiss Plaintiff's Complaint admits that Defendants advertise and sell watches bearing Plaintiff's marks and operate the website www.timeandgems.com. See Docket No. 31 at pp. 1 (“The renovating or restoring of R[OLEX] watches and the advertising and sale of the R[OLEX] watches in question were made through Defendant Watch Empire.”), 2 (statements that the timeandgems.com website is Watch Empire's website), 3 (acknowledgements that a screen image of a disclaimer from the timeandgems.com website is from “Defendants' website”), and 7-8 (references to the timeandgems.com website as being Defendants' website).

e. Defendants' counsel of record in the present case filed a complaint in California Superior Court (the “California Superior Court Litigation”) on behalf of Watch Empire alleging that Watch Empire “owns and operates a website named TimeAndGems.com.” See Docket No. 100 at Ex. 4 thereto, ¶ 46.

*4 f. Defendants' present counsel also caused a declaration to be filed in the California Superior Court Litigation on behalf of Mr. Parsa Namazi, whom Defendants identified in their Rule 26(a) disclosures in this case as a person having knowledge about the operations of Watch Empire LLC. Mr. Namazi states in the declaration: “TimeandGems.com is a website that is operated by Plaintiff, Watch Empire LLC.” See Docket No. 100 at Ex. 11 thereto, ¶ 8.

g. “Watch Empire LLC d/b/a Timeandgems” submitted a complaint to the National Arbitration Forum alleging that it owns the domain name “timeandgems.com” as well as a federal trademark registration for the mark Time & Gems. See Docket No. 100 at Ex. 12 thereto, pp. 1 and 3. H. A Fictitious Business Name Statement, filed in California and signed by “Michael Davidi,” states that Watch Empire is doing business as Time and Gems. See Docket No. 100 at Ex. 5 thereto.

i. Records of the U.S. Patent and Trademark Office show a registration for the trademark “TIME & GEMS” is owned by Watch Empire LLC. See Docket No. 100 at Ex. 13 thereto.

j. Mr. Davidi signed a document filed with the Court in this case identifying himself as the owner and operator of HAG. See Docket No. 66.

k. Documents produced by eBay/PayPal in response to third-party discovery served by Plaintiff in this case show that Mr. Davidi and Watch Empire conduct business as Time and Gems. See Docket No. 125 at Ex. 11 thereto.

l. Documents produced by GoDaddy in response to third-party discovery served by Plaintiff in this case show that Mr. Davidi is the owner of the Time and Gems website and also list Watch Empire as a contact. See Docket No. 125 at Ex. 10 thereto.

m. Documents produced by GoDaddy in response to third-party discovery served by Plaintiff in this case show that Mr. Davidi is the owner of HAG's website, www.horologicalappraisers.com. See Docket No. 150 at Ex. 7 thereto.

19. Around the time Defendants began to fabricate a distinction between themselves and Time and Gems and HAG, Defendants' counsel began to claim that they did not represent HAG in this lawsuit, despite being counsel of record for HAG. About six months later, Defendants' counsel filed a motion to amend Defendants' Answer to remove HAG as an answering party, which the Court denied.[2] See Docket Nos. 140 and 167.

20. On January 5, 2015, Plaintiff filed a motion to compel Defendants to produce all documents responsive to Plaintiff's Requests for Production of Documents and to fully respond to Plaintiff's Interrogatories. See Docket Nos. 103-107. A hearing was held on the motion on January 27, 2015. Defendants' counsel, without providing any notification to the Court or to Plaintiff, did not show up for the hearing.

21. At the hearing on Plaintiff's motion to compel, the Court found Defendants' objections to Plaintiff's discovery requests to be frivolous and noted that Defendants had absolutely no justification for requiring Plaintiff to file the motion. See Docket No. 125 at Ex. 1 thereto, p. 3. The Court granted the motion and ordered Defendants to provide full and complete interrogatory responses without objection and produce all responsive documents without objection within ten days.[3] See Docket No. 110. The Court sua sponte also provided Defendants with notice that it intended to award attorneys' fees against them and offered Defendants an opportunity to oppose such amount as would be requested by Plaintiff as well as oppose the requirement that they pay any attorneys' fees at all. Id. After reviewing the briefing by the parties on the issue, the Court ordered Defendants to pay Plaintiff attorneys' fees associated with Plaintiff's motion in the amount of $7,500. See Docket No. 119.

*5 22. Defendants did not comply with the Court's discovery order. Defendant HAG did not provide any discovery responses at all. The remaining Defendants produced only a six-page internet website printout (printed on the deadline for Defendants to comply with the Court's order) and a few select documents from the long-pending California Superior Court Litigation involving Mr. Davidi and Watch Empire. SeeDocket No. 125 at Ex. 2 thereto. In response to 36 of Plaintiff's 38 document requests, Defendants responded as follows: “Defendants' have conducted a thorough search of their belongings and are unable to provide anything related to this request. Defendants' currently reside in Cincinnati, Ohio and do not have any corresponding documents. When Defendant Davidi arrives in California on or around February 25, 2015 for his deposition, he shall immediately conduct further investigations to provide all corresponding documents responsive to this request, should any documents come to light.” Id. Defendants did not produce any additional documents prior to Mr. Davidi's deposition.

23. Defendants provided supplemental interrogatory responses, but they were severely deficient and contained almost no information about the business they conducted through the Time and Gems website. See Docket No. 125 at Ex. 3 thereto. For example, Defendants failed to identify any location where they conducted business after 2011, even though Defendants continued to operate the timeandgems.com website and Plaintiff purchased counterfeit watches from Defendants in 2013 and 2014. See Docket No. 125 at Ex. 3 thereto, at Interrogatory Response Nos. 1, 2, and 9.

24. Despite running an internet business and despite Plaintiff having received e-mail invoices with the three watches it purchased from Defendants, Defendants incredibly claimed to keep only paper invoices. See Docket No. 125 at Ex. 3 thereto, at Interrogatory Response Nos. 4 and 5.

25. As another example, in responding to an interrogatory asking about the identity of individuals involved with Defendants' business, Defendants identified only three individuals. See Docket No. 125 at Ex. 3 thereto, at Interrogatory Response No. 6. However, third-party discovery obtained by Plaintiff revealed the names of other individuals who were involved with Defendants' business. See generally Docket No. 122 at p. 17 (discussing interrogatory response).

26. In response to an interrogatory requesting information about Defendants' relationship with other entities that sell watches bearing Plaintiff's trademarks, Defendants claimed to have no relation to any such entities. See Docket No. 125 at Ex. 3 thereto, at Response to Interrogatory No. 7. However, third-party discovery obtained by Plaintiff revealed the existence of other entities related to Defendants (including other websites registered to Mr. Davidi) that sell or sold watches bearing Plaintiff's trademarks. See generally Docket No. 122 at pp. 18-19 (discussing interrogatory response).

27. In response to interrogatories seeking information about the individuals and entities involved in applying a PVD (black) coating to certain watches offered on Defendants' website, Defendants refused to provide any meaningful information. Instead, Defendants vaguely stated that the watches were sent to “a large industrial complex” and provided the name of one individual (Eddy Chan), without providing any contact information for either. See Docket No. 125 at Ex. 3 thereto, at Response to Interrogatory Nos. 10 and 11.

28. In response to an interrogatory seeking Defendants' sales and profits made from watches bearing Plaintiff's trademarks, Defendants provided only vague and incomplete information. See Docket No. 125 at Ex. 3 thereto, at Response to Interrogatory No. 8.

29. In addition to failing to comply with the Court's discovery order, Defendants also failed to pay Plaintiff attorneys' fees associated with bringing Plaintiff's first motion to compel, as ordered by the Court.

30. Defendants' discovery misconduct did not end with its deficient responses to Plaintiff's written discovery requests. Defendants also frustrated Plaintiff's efforts to conduct and complete the depositions of Mr. Davidi and Watch Empire.

*6 31. The depositions were scheduled to begin on February 25, 2015 at 9:00 a.m.[4] Mr. Davidi arrived at 9:15 a.m. and immediately stated that he was not feeling well and was ill the night before. See Docket No. 123. Defendants' counsel arrived almost two hours late, and the deposition did not begin until almost 11:00 a.m. Id.

32. Mr. Davidi testified that over the past 15 years, he had severe memory loss resulting from stress and substance abuse, and he relied upon this alleged lack of memory as an excuse for being unable to answer many questions. See Docket No. 125 at Ex. 4 thereto, at 16:24-19:16.

33. During the deposition, Mr. Davidi also testified that neither he nor Watch Empire ever did business as Time and Gems. This testimony is directly contradicted by the evidence identified supra, including Defendants' own Answer and interrogatory responses.

34. Plaintiff's counsel attempted to refresh Mr. Davidi's recollection by showing him numerous documents evidencing that he and Watch Empire conducted business as Time and Gems (many of which were signed by Mr. Davidi), but Mr. Davidi claimed to not recall seeing or filing the documents and continued to deny any association with Time and Gems. See Docket No. 125 at Ex. 4 thereto, at, e.g., 60:4-60:10 (discussing Fictitious Business Name Statement for Time and Gems), 66:14-72:1 (discussing documents produced by eBay/PayPal), 73:2-7 and 73:23-75:14 (discussing complaint filed by Watch Empire in the California Superior Court Litigation), 79:9-19 (discussing United States Patent and Trademark Office registration for TIME & GEMS mark owned by Watch Empire), 80:8-82:9 (discussing decision in arbitration initiated by Watch Empire d/b/a Time and Gems), and 84:17-85:3 (discussing declaration filed by Watch Empire in the California Superior Court Litigation).

35. After less than two and a half hours of testimony time, Defendants' counsel announced that Mr. Davidi was too ill to continue and adjourned the deposition. See Docket No. 125 at Ex. 4 thereto, at 123:25-124:16. Defendants' counsel suggested the deposition would resume the following day or the day thereafter. Id. The next day, February 26, Plaintiff's counsel called Defendants' counsel and was advised that Mr. Davidi was presumably still ill (counsel had been unable to reach his client) and his deposition would not resume that day. See Docket No. 125 at Ex. 5 thereto. That afternoon, Plaintiff received a letter from Defendants stating that Mr. Davidi was flying back to Cincinnati and that they would provide dates to continue his deposition. See Docket No. 125 at Ex. 6 thereto.

36. On March 27, 2015, Plaintiff filed a second motion to compel and for sanctions. See Docket Nos. 121-126. The motion detailed the numerous deficiencies in Defendants' document production and interrogatory responses that remained unaddressed. The motion also addressed Defendants' conduct at the deposition of Mr. Davidi/Watch Empire and failure to provide a date for completing the deposition. In addition, the motion addressed Defendants' refusal to provide an accurate address for Parsa Namazi, who was one of the three individuals (along with Mr. Davidi and Ms. Cohanim) identified in Defendants' Rule 26(a) initial disclosures. Defendants had refused to provide Mr. Namazi's address on the basis that the address was allegedly privileged. Plaintiff sought various sanctions in its second motion to compel, including terminating sanctions or, alternatively, that certain allegations in Plaintiff's Complaint be deemed admitted and that Defendants be precluded from relying upon documents they had not yet produced.

*7 37. On April 28, 2015, the Court issued an order granting Plaintiff's motion to compel. See Docket No. 133.

38. The Court's order described the deficiencies in Defendants' document production, including Defendants' failure to produce a single email, purchase invoice, sales receipt, or financial document relating to their business. The Court found Defendants' assertion that their business never generated such documents to be incredible. The Court explicitly informed Defendants of their obligation to search for and produce all documents in their possession, custody, or control, including documents kept on their behalf by affiliated entities, employees, and consultants. The Court's order also detailed the deficiencies in Defendants' interrogatory responses and noted that Plaintiff had presented evidence strongly suggesting that some of Defendants' responses were false.

39. Although the Court's order declined to recommend terminating sanctions or other severe sanctions at that time, the Court noted that its refusal to recommend potentially case dispositive sanctions at that time was not to suggest that Plaintiff's request for severe sanctions was without foundation. Instead, the Court again ordered all Defendants to produce, without objection, all categories of documents responsive to Plaintiff's document requests and to fully respond, without objection, to Plaintiff's interrogatories. The Court also ordered Defendants to disclose the current address of Mr. Namazi.

40. The Court's order also explicitly warned Defendants of the sanctions that it would recommend if Defendants did not comply with the Court's order. The Court explained: “The Court thus takes the opportunity to strongly warn defendants that if they continue in their current pattern of flouting their discovery obligations and disobeying the Court's orders, the Court will recommend to the District Judge terminating sanctions, the admission of certain facts, the dispositions of certain issues and/or the preclusion of defendants' reliance on evidence not already produced.” See Docket No. 133 at p. 9.

41. After Plaintiff filed its second motion to compel, but before the hearing on that motion, Defendants offered a date to complete the deposition of Mr. Davidi and Watch Empire. Plaintiff accepted the date offered by Defendants and subsequently notified the Court that the parties had agreed upon a date to complete the deposition. As a result, the Court did not address the deposition in its order, other than to note that it was now scheduled for April 28, 2015. See Docket No. 133, at p. 3 n.1. However, during a conversation among counsel in the courthouse immediately after the hearing on the motion concluded, Defendants withdrew the deposition date. See Docket No. 148 at ¶¶ 7-8. Defendants did not previously notify Plaintiff, or the Court at the hearing, that they would be withdrawing the deposition date.

42. After granting Plaintiff's second motion to compel, the Court also issued an order requiring Defendants to pay Plaintiff attorneys' fees associated with bringing the motion in the amount of $10,500. See Docket No. 145.

*8 43. Defendants did not comply with the Court's second discovery order. Defendants did not provide any supplemental interrogatory responses, and they did not produce all responsive documents as ordered by the Court. Instead, Defendants produced only: (1) a one page letter from a lender notifying Mr. Davidi and Ms. Cohanim that one of their mortgage loans was past due; (2) three business cards and three prescriptions presumably relating to medical treatment received by Mr. Davidi; and (3) an envelope addressed to “Parsa Namaz” that contained three ROLEX watch bracelets and one ROLEX watch dial (all of which Plaintiff asserts are counterfeit) with a sham invoice dated March 21, 2015 identifying the items as five “Precision Instrument Sample(s).” See Docket No. 161 at Ex. 8 thereto.[5]

44. Defendants also did not pay Plaintiff its attorneys' fees as ordered by the Court.

45. After unilaterally withdrawing the date for completing the deposition of Mr. Davidi and Watch Empire, Defendants never provided a date for completing the deposition.

46. On May 22, 2015, Plaintiff filed a renewed motion for sanctions. See Docket No. 146-148. In the motion, Plaintiff renewed its request for terminating sanctions. Plaintiff alternatively requested that certain facts be deemed admitted and that Defendants be precluded from relying upon documents that Defendants had not produced.

47. In opposing the motion, Defendants repeated their prior and incredible assertion that they had produced all responsive documents. Defendants also repeated their claim that they “have consistently remained under the belief that the timeandgems website was no longer operative.” See Docket No. 147 at p. 5.

48. Defendants' assertions are unbelievable given the substantial and credible evidence provided by Plaintiff and cited supra showing that Defendants conduct business through the Time and Gems website. Plaintiff also has provided evidence throughout this case showing that the timeandgems.com website has been operational. See, e.g., Docket No. 1 at Exhibit 2 thereto (printed copy of website dated December 5, 2013); Docket No. 52 at Exhibit 6 thereto (printed copy of website dated July 29, 2014); Docket No. 100 at Exhibit 7 thereto (printed copy of website dated December 5, 2014); Docket No. 106 at Exhibit 1 thereto (printed copy of website dated December 15, 2014); Docket No. 125 at Exhibit 13 thereto (printed copy of website dated February 19, 2015); Docket No. 129 at Exhibit 29 thereto (printed copy of website dated March 19, 2015); Docket No. 132 at Exhibit 3 thereto (printed copy of website dated April 28, 2015).

49. In addition, Plaintiff has provided evidence showing that, since the filing of the Complaint, the Time and Gems website has listed over 1,000 watches for sale bearing Plaintiff's trademarks with a total retail price of over $7 million dollars. See, e.g., Docket No. 52 at ¶ 19 and Ex. 6 thereto.

50. In opposing the motion, Defendants also asserted that they had searched their “place of residence” in Cincinnati and Los Angeles. SeeDocket No. 147 at p. 4. Defendants claimed, without any supporting citation, that Mr. Davidi and Ms. Cohanim had testified at their depositions about the searching they conducted. However, Mr. Davidi provided no such testimony. Ms. Cohanim testified at her deposition that she only searched in her garages for paper files related to Beverly Crown, which is a defunct business previously operated by Mr. Davidi. See Docket No. 161 at Ex. 7 thereto, at 18:7-21 and 93:4-95:14. Ms. Cohanim also was not aware of any searches of electronically stored documents, such as e-mail. Id. at 95:20-21.

*9 51. In opposing the motion, Defendants did not address their failure to provide supplemental interrogatory responses.

52. In opposing the motion, Defendants' counsel stated that he spoke to Mr. Davidi's physician on April 23, 2015 and the physician said the deposition would be “detrimental” to Mr. Davidi's health. See Docket No. 154 at ¶ 7. Defendants provided no declaration from Mr. Davidi or his physician regarding the status of Mr. Davidi's health or his alleged inability to appear for a deposition.

53. Notwithstanding the unsupported claims of poor health, Mr. Davidi was well enough to travel from Cincinnati to Los Angeles in February 2015 to attend a portion of his deposition. And despite having terminated the deposition because of his claimed stomach flu, Mr. Davidi traveled back to Cincinnati the next day, rather than continuing the deposition that day or soon after as the parties had agreed. He was also well enough to again travel from Cincinnati to Los Angeles in late March 2015, as Plaintiff learned at Ms. Cohanim's deposition. See Docket No. 161, at Ex. 7 thereto, at 23:23-24:1 and 24:18-20.

54. Plaintiff went to great lengths to accommodate Mr. Davidi's alleged health issues, including offering to complete the deposition in Cincinnati. See Docket No. 160 at p. 4. Yet, Defendants never provided a date for completing the deposition of Mr. Davidi and Watch Empire.

55. On May 13, 2015, Defendants' counsel filed a motion to withdraw as attorneys for Defendants and Defendants filed a motion to amend their Answer to remove HAG as an answering party.[6] See Docket Nos. 139 and 140.

56. On June 16, 2015, the Court held a hearing on Plaintiff's renewed motion for sanctions. Defendants' counsel, without providing any notification to the Court or to Plaintiff, did not show up for the hearing. At the hearing, the Court ordered Plaintiff to submit proposed findings regarding a recommendation to strike Defendants' Answer and enter judgment in favor of Plaintiff.

DISCUSSION

1. Legal Standard

Fed. R. Civ. P. Rule 37(b)(2)(A) states that if a party fails to obey an order to provide or permit discovery, the Court may issue further just orders, including striking the pleadings of the disobedient party in whole or in part and rendering a default judgment against that party. Whether to issue these sanctions is a matter of discretion. See Fed. R. Civ. P. Rule 37; Dahl v. City of Huntington Beach, 84 F.3d 363, 367 (9th Cir. 1996) (“The district court has great latitude in imposing sanctions for discovery abuse.”) (internal quotations omitted).

*10 Courts consider five factors when deciding whether terminating sanctions are appropriate: (1) the public's interest in expeditious resolution of litigation; (2) the court's need to manage its dockets; (3) the risk of prejudice to the party seeking sanctions; (4) the public policy favoring disposition of cases on their merits; and (5) the availability of less drastic sanctions. Thompson v. Housing Authority of Los Angeles, 782 F.2d 829, 831 (9th Cir. 1986); see also Green v. City of Santa Monica, No. CV 05-5252 DSF (FFM), 2009 WL 3713081, at *4 (C.D. Cal. Nov. 5, 2009).

Where a Court order is violated, factors (1) and (2) support sanctions, factor (4) cuts against case-dispositive sanctions, and so factors (3) and (5) are decisive. Adriana Int'l Corp. v. Thoeren, 913 F.2d 1406, 1412 (9th Cir. 1990).

A party suffers prejudice if the disobedient party's actions impair the other party's ability to go to trial or threaten to interfere with the rightful decision of the case. Adriana, 913 F.2d at 1412. Moreover, the failure to produce documents, as ordered, is considered sufficient prejudice. Id.

2. Analysis

Because Defendants have twice violated the Court's discovery orders, the Court need only consider factor 3 (the risk of prejudice to Plaintiff) and factor 5 (the availability of less drastic sanctions) in deciding whether to impose terminating sanctions. The Court finds that both of those factors weigh decidedly in favor of terminating sanctions.

Defendants' repeated discovery misconduct, including Defendants' failure to produce documents and supplement their interrogatory responses as twice ordered by the Court, has materially and significantly prejudiced Plaintiff. Defendants have repeatedly thwarted Plaintiff's efforts to learn even the most basic facts and information relating to Defendants' business operations. Defendants relied upon a fabricated and baseless distinction with Time and Gems and HAG as an excuse for refusing to provide the discovery Plaintiff requested. Defendants continued to persist with this incredible distinction even after the Court found it to be frivolous.

Defendants' discovery misconduct has hampered the search for the truth and has prevented Plaintiff from learning facts essential to preparing its case for trial. Defendants withheld documents and information relating to virtually every facet of their business. For example, Defendants withheld documents and information regarding their purchase, reconditioning, and sale of watches bearing Plaintiff's trademarks. Defendants also produced no communications relating to their business operations. In fact, despite operating a sophisticated e-commerce business, which continued to operate until as recently as April 28, 2105 and at last count offered over 1,000 watches for sale bearing Plaintiff's trademarks, Defendants did not produce a single e-mail. As a result, Plaintiff was prevented from learning basic and fundamental information regarding the scope of Defendants' counterfeiting activities.

Defendants also failed to produce any financial documents relating to their business operations. Further, Defendants did not produce their tax returns (documents which Defendants presumably have), as ordered by the Court. As a result, Plaintiff was prejudiced in determining the amount of damages to which it is entitled.

Based on evidence presented by Plaintiff obtained through third-party discovery, Defendants also concealed the identity of individuals employed by Defendants or otherwise associated with Defendants' business. Defendants' withholding of that information prejudiced Plaintiff by preventing it from obtaining discovery from those individuals concerning Defendants and Defendants' business operations.

*11 Defendant HAG also never provided any responses whatsoever to Plaintiff's discovery requests, and the remaining Defendants provided only a phony business address for HAG in their responses.[7] Consequently, Plaintiff was prejudiced because it was unable to learn any information from HAG regarding its business activities.

“In deciding whether to impose case-dispositive sanctions, the most critical factor is not merely delay or docket management concerns, but truth. ‘What is most critical for case-dispositive sanctions, regarding risk of prejudice and of less drastic sanctions, is whether the discovery violations ‘threaten to interfere with the rightful decision of the case.’ ” See Conn. Gen. Life Ins. Co. v. New Images of Beverly Hills, 482 F.3d 1091, 1097 (9th Cir. 2007) (quoting Valley Eng'rs Inc. v. Electric Eng'g Co., 158 F.3d 1051, 1057 (9th Cir. 1998) ).

The information regarding Defendants' business operations is almost entirely within the control of Defendants. Defendants' continued discovery misconduct has made it impossible for the Court to be confident that Plaintiff will ever have access to the true facts regarding Defendants' business operations and has interfered with the rightful decision of this case on the merits.

Moreover, Defendants' unsubstantiated assertions that they have no additional documents or information to provide is not credible. Those assertions are predicated upon the false distinction that Defendants have drawn with Time and Gems and HAG. The evidence presented by Plaintiff, including evidence obtained through third-party discovery, shows that Defendants conducted business as and through the Time and Gems website, continued to do so well after this lawsuit was filed, and must have documents and information responsive to Plaintiff's discovery requests. Significantly, while Defendants deny that they have documents or information relating to business conducted as and through Time and Gems, Defendants admit in their Answer that they conduct business as and though the Time and Gems website. SeeDocket No. 120 at ¶ 2 (admitting paragraph 10 of Plaintiff's Complaint).[8]

Defendants' failure to comply with this Court's discovery orders and provide the documents and information requested by Plaintiff is willful, egregious, and demonstrates that Defendants' ultimate goal is to prevent the disposition of this case on the merits.

The willful and egregious nature of Defendants' conduct is further highlighted by Mr. Davidi's deposition testimony, in which he incredibly feigned any knowledge of business conducted as and through Time and Gems (despite being confronted with numerous documents linking him and Watch Empire to Time and Gems), and by his subsequent failure to appear for and complete the deposition.

Defendants' intent to delay and obstruct the progress of this case is apparent from their misconduct since the beginning. After the Complaint was served, Defendants failed to respond to the Complaint and allowed default to be entered against them twice. Defendants also filed a motion to dismiss, which was denied, and thereafter filed an Answer (which was later stricken) in violation of the Court's order. As a result of Defendants' actions, discovery did not begin until ten months after the Complaint was filed, and Plaintiff was put to significant and unnecessary expense. In the meantime, Defendants' Time and Gems website was actively selling watches allegedly bearing counterfeit copies of Plaintiff's trademarks.

*12 Defendants' misconduct then carried over into the discovery phase. This misconduct not only delayed and obstructed discovery, it also revealed Defendants' intent to hide the truth. Defendants' misconduct forced Plaintiff to file three discovery motions at significant expense. Even though the Court ordered Defendants to pay Plaintiff $18,000 in attorneys' fees in connection with bringing the first two motions, Defendants have failed to pay.

Defendants have suggested that their ability to provide the requested discovery has been hampered because Mr. Davidi and Ms. Cohanim moved from California to Ohio after this case was filed. However, that those Defendants may have moved did not absolve them of their obligation to provide the discovery as twice ordered by this Court. Nor does that move, or other health-related issues that have been raised at various times by Defendants, justify Defendants' utter failure to produce virtually all categories of documents requested by Plaintiff or to supplement their interrogatory responses. Plaintiff served its discovery requests in October 2014. Defendants have had more than sufficient time to provide the requested documents and information and to comply with this Court's discovery orders. Defendants' failure to comply with their discovery obligations and this Court's prior orders is inexcusable.

Defendants have the burden of showing they were unable to comply with the Court's prior orders. See, e.g., F.T.C. v. Affordable Media, 179 F.3d 1228, 1241 (9th Cir. 1999) (noting in context of reviewing civil contempt order that party asserting an impossibility defense must show categorically and in detail why it is unable to comply). Defendants have failed to demonstrate an inability to comply with the Court's orders. Instead, Defendants incredibly contend they have no further documents or information to provide.

In evaluating the fifth factor (the availability of less drastic sanctions), courts may consider the following: (1) whether the court considered less drastic sanctions, (2) whether the court tried less drastic sanctions, and (3) whether the court warned the disobedient party. Valley Eng'rs Inc., 158 F.3d at 1057. However, depending upon the facts, it is not necessary that the Court have tried lesser sanctions. Id. Each of these three factors weighs in favor of terminating sanctions.

Here, the Court considered and tried less drastic sanctions. The Court twice ordered Defendants to pay Plaintiff attorneys' fees associated with Plaintiff's first two discovery motions. See Docket Nos. 119 and 145. However, Defendants never paid any portion of either fee award.

In ruling on Plaintiff's second discovery motion, the Court also clearly warned Defendants of the sanctions that it would recommend – including terminating sanctions – if Defendants did not comply with the Court's order.

The Court finds that no less drastic sanctions would be appropriate. Defendants have now blatantly violated two of this Court's discovery orders and violated two orders requiring Defendants to pay Plaintiff attorneys' fees. Defendants ignored the Court's clear warning that it would recommend sanctions – including terminating sanctions – if Defendants did not comply with the Court's most recent discovery order.

Defendants failed to comply with their discovery obligations from the beginning of this case. Defendants instead engaged in a drawn-out and calculated pattern of delay and gamesmanship designed to obstruct discovery and hamper the search for the truth.

*13 Discovery closed on June 29, 2015, and Defendants have provided almost none of the discovery that the Court twice ordered Defendants to provide. Because Defendants failed to produce virtually all categories of documents requested by Plaintiff, did not further supplement their interrogatories responses, and because Mr. Davidi and Watch Empire failed to appear for and complete their depositions, any sanctions short of terminating sanctions would be insufficient to remedy the prejudice to Plaintiff caused by Defendants' repeated discovery misconduct.

Defendants' failure to provide discovery implicates all of Plaintiff's claims, as well as the defenses that have been raised by Defendants. For this additional reason, the Court concludes that no sanctions short of terminating sanctions would be appropriate.

RECOMMENDATION

IT THEREFORE is recommended that the District Court issue an order (1) approving and adopting this Report and Recommendation, (2) striking Defendants' Answer, and (3) entering judgment in favor of Plaintiff on all causes of action asserted in Plaintiff's Complaint.

NOTICE

Reports and Recommendations are not appealable to the Court of Appeals, but are subject to the right of any party to timely file Objections as provided in the Local Rules Governing the Duties of the Magistrate Judges, and review by the District Judge whose initials appear in the docket number. No Notice of Appeal pursuant to the Federal Rules of Appellate Procedure should be filed until entry of the Judgment of the District Court.

Marc Esposito, Vice President, Service Operations of Plaintiff determined, among other things, that the dials on both watches were non-genuine and bore counterfeit copies of Plaintiff's trademarks and that the bracelet on one of the watches was non-genuine and bore counterfeit copies of Plaintiff's trademarks. See Docket No. 51.

On the same day Defendants filed a motion to amend their Answer, Defendants' counsel also filed a motion to withdraw as counsel of record for all Defendants. See Docket No. 139. The Court denied that motion too. See Docket No. 167.

The Court denied Plaintiff's motion, without prejudice, as to a document request that sought Defendants' tax returns. In response to a second motion to compel filed by Plaintiff, the Court later ordered Defendants to produce the tax returns. SeeDocket No. 133. Defendants have failed to produce their tax returns.

Mr. Davidi testified as the company representative for Watch Empire.

In response to the Court's order that Defendants give a current address for Mr. Namazi, Defendants provided a P.O. Box in San Pedro and said they believed Mr. Namazi is currently residing in Iran. See Docket No. 154 at Ex. 1 thereto.

On June 23, 2105, the Court issued an order denying the motions and stated that “the reasons for withdrawal put forth by Mr. Escandari are not credible ....” See Docket No. 167 at p. 5. The Court also cited the prior order regarding Plaintiff's motion to compel and for sanctions, in which the Court had stated: “Watch Empire's and the individual defendants' continuing (and inconsistent) claims that they have no ownership of or control over Time and Gems/timeandgems.com and HAG smacks of a bad-faith attempt to avoid producing discovery bearing on plaintiff's claims.” See Docket No. 167 at p. 7 n.3.

The address Defendants provided in their interrogatory responses for HAG was a UPS store location. See Docket No. 125 at Ex. 3 thereto, at Response to Interrogatory No. 1 and at Ex. 14 thereto.

Defendants recently filed motion to amend (Docket No. 140), which did not seek to amend Defendants' admission that they conduct business as and through the Time and Gems website, further belies their repeated denials of a relationship to Time and Gems.