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Nachman v. Regenocyte Worldwide, Inc.

United States District Court, D. Nevada

August 1, 2014

REGENOCYTE WORLDWIDE, INC., et al., Defendants.

AMENDED ORDER (Report and Recommendation - dkt. no. 75) (Motion for Default Judgment - dkt. no. 60)

MIRANDA M. DU, District Judge.


Before the Court is the Report and Recommendation of Magistrate Judge Peggy A. Leen ("R&R") entered on May 28, 2014, recommending that the answers of Defendants Michael Calcaterra and Intercellular Sciences, LLC be stricken and default judgment be entered against them. (Dkt. no. 75 at 10.) Objections to the R&R were due by June 14, 2014. No objection was filed. For the reasons set out below, the R&R is accepted and adopted in full.

Also before the Court is Plaintiff Leslie Nachman's Motion for Default judgment against Defendants Regenocyte Worldwide, Inc., Regenocyte, LLC, Regenocyte Therapeutic, LLC, and Dr. Zannos Grekos ("Motion"). (Dkt. no. 60.) None of these defendants have responded. For the reasons stated below, the Motion is granted and Plaintiff is ordered to provide further briefing on damages.


Plaintiff Leslie Nachman filed this complaint on February 26, 2013, against Defendants Regenocyte Worldwide, Inc. ("Regenocyte Worldwide"), Regenocyte, LLC ("Regenocyte"), Regenocyte Therapeutic, LLC ("Regenocyte Therapeutic"), Intercellular Sciences, LLC ("Intercellular"), Dr. Zannos G. Grekos, Michael R. Calcaterra, Does I through X, and Roe Corporations I through X. (Dkt. no. 1.)

The Complaint alleges the following. Plaintiff first contacted Regenocyte in 2009 regarding Regenocyte's services and treatments. (Dkt. no. 1 at 3 ¶ 14.) That same year, Plaintiff paid Regenocyte $64, 000 for stem cell treatment for his cardiac condition. ( Id. at 3-4 ¶ 16-18.) The treatment was successful. ( Id. at 4 ¶ 19.) However, Plaintiff continued to follow up with Regenocyte and Dr. Grekos, Regenocyte's employee, to monitor his progress. ( Id. ) In 2012, Regenocyte and Dr. Grekos opined that Plaintiff would require further treatment and began working with Plaintiff to schedule a second treatment. ( Id. at ¶ 21-22.) In September 2012, Plaintiff executed a contract with Regenocyte concerning the second treatment. ( Id. at ¶ 26.) Regenocyte and Dr. Grekos knew at the time of diagnosis that Plaintiff's condition required treatment within a reasonable time. ( Id. at ¶ 23.) On September 12, 2012, Plaintiff paid Regenocyte $49, 950 pursuant to the contract. ( Id. at 5 ¶¶ 35, 37.) However, Regenocyte and Dr. Grekos never performed the treatment. ( Id. at ¶ 46.)

Defendants Regenocyte, Regenocyte Worldwide, Regenocyte Therapeutic and Dr. Grekos failed to respond to the pleadings. The Clerk entered default against Dr. Grekos on May 6, 2013, and against Regenocyte, Regenocyte Worldwide, and Regenocyte Therapeutic on May 31, 2013. (Dkt. nos. 22, 29.) Plaintiff then filed a Motion for Default Judgment against Dr. Grekos, Regenocyte, Regenocyte Worldwide, and Regenocyte Therapeutic. (Dkt. no. 60.)

Defendants Intercellular and Calcaterra's counsel, Mr. Grasso, filed a motion to withdraw on June 12, 2013, after repeated failed attempts to contact his clients. (Dkt. no. 31.) On June 19, 2013, Judge Leen granted this motion and ordered Intercellular to retain new counsel and Calcaterra to either retain new counsel or file notice that he will appear pro se by July 19, 2013 ("June 19, 2013 Order"). (Dkt. no. 32.) By August 1, 2013, neither Intercellular nor Calcaterra had complied with the June 19, 2013, Order. (Dkt. no. 35.) Judge Leen ordered Intercellular and Calcaterra to show cause why sanctions should not be awarded. ( Id. ) Judge Leen also warned Intercellular and Calcaterra that failure to comply would result in a recommendation of sanctions, including case-dispositive sanctions. ( Id. ) On August 22, 2013, Mr. Grasso responded on behalf of Intercellular, stating that Intercellular's non-compliance with the June 19, 2013, Order was the result of Calcaterra's "unintentional neglect of business, and did not arise out of a desire to delay the instant proceedings or to prejudice the other parties to this matter." (Dkt. no. 39.) On the same day, Calcaterra filed a notice of intent to proceed pro se and stated that his non-compliance with the June 19, 2013, Order was a result of his "unintentional neglect to monitor this matter during a period of time wherein [he] was experiencing severe financial and professional difficulties." (Dkt. no. 37.)

Judge Leen extended the discovery cutoff pursuant to the parties' stipulated need for more time to conduct discovery. (Dkt. no. 47.) A second stipulation to extend the time for discovery was filed on January 17, 2013. (Dkt. no. 51.) At a hearing regarding the stipulation on February 11, 2013, Judge Leen extended the time for discovery after Mr. Grasso assured Judge Leen that he had been in contact with Intercellular and that his client had agreed to provide the requested discovery by the following day. (Dkt. no. 62.) After Intercellular and Calcaterra failed to respond to discovery requests, Judge Leen granted Plaintiff's Motion to Compel and awarded sanctions against the two Defendants in the amount of $2, 025.00. (Dkt. no. 67.) Judge Leen again warned Intercellular and Calcaterra that a failure to comply would result in a recommendation to the Court that the two Defendants' answers be stricken and default judgment be entered against them. ( Id. ) Mr. Grasso filed a second motion to withdraw (dkt. no. 71), which was granted on March 24, 2014 (dkt. no. 73). Intercellular was given until April 21, 2014, to retain new counsel. ( Id. )

However, Intercellular and Calcaterra have failed to provide the required and requested discovery and Intercellular has failed to retain new counsel. (Dkt. no. 74 at 3.) Plaintiff filed a Motion for Sanctions against Intercellular and Calcaterra requesting that this Court: (1) deem all requests for admissions admitted; and (2) strike the Defendants' answers and enter default against them. ( Id. at 3-4.) The R&R recommends granting both requests. (Dkt. no. 75.)


A. Legal Standard

This Court "may accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate." 28 U.S.C. § 636(b)(1). Where a party timely objects to a magistrate judge's report and recommendation, then the court is required to "make a de novo determination of those portions of the [report and recommendation] to which objection is made." Id. Where a party fails to object, however, the court is not required to conduct "any review at all... of any issue that is not the subject of an objection." Thomas v. Arn, 474 U.S. 140, 149 (1985). Indeed, the Ninth Circuit has recognized that a district court is not required to review a magistrate judge's report and recommendation where no objections have been filed. See United States v. Reyna-Tapia, 328 F.3d 1114 (9th Cir. 2003) (disregarding the standard of review employed by the district court when reviewing a report and recommendation to which no objections were made). Thus, if there is no objection to a magistrate judge's recommendation, then the court may accept the recommendation without review. See, e.g., Johnstone, 263 F.Supp.2d at 1226 (accepting, without review, a magistrate judge's recommendation to which no objection was filed).

Nevertheless, the Court finds it appropriate to engage in a de novo review of all issues to determine whether to adopt the R&R.

B. Analysis

Rule 26(a) requires parties to make certain initial disclosures. Fed.R.Civ.P. 26(a). If a party fails to provide the required disclosures within the time allowed, that party may not admit this evidence in motion, hearing, or trial unless the failure to disclose is justified or harmless. Fed.R.Civ.P. 37(c)(1). Furthermore, the Court is authorized to issue sanctions for a party's failure to obey a scheduling order or other pretrial order. Fed.R.Civ.P. 16(f). Rule 37(b) authorizes the court to issue a wide variety of sanctions in these situations, including case-dispositive sanctions, such as striking pleadings and rendering a default judgment. Fed.R.Civ.P. 37(b)(2)(A)(iii)-(vi).

A district court's decision to award case-dispositive sanctions is reviewed for abuse of discretion by the Ninth Circuit. Dreith v. Nu Image, Inc., 648 F.3d 779, 788 (9th Cir. 2011) (citation omitted). The Ninth Circuit has identified five factors that must be considered by the district court before issuing case-dispositive sanctions under Rule 37(b)(2). Id. These factors are: "(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 other party; (4) the public policy favoring the disposition of cases on their merits; and (5) the availability of less drastic sanctions." Id. In determining whether or not a district court considered the availability of less drastic sanctions, the Ninth Circuit examines whether the court: "(1) discussed explicitly the feasibility of less drastic sanctions and explained why alternative sanctions would be inappropriate, (2) implemented alternative sanctions before entering default, and (3) warned the party of the possibility of default before actually ordering it." Stars' Desert Inn Hotel & Country Club, Inc. v. Hwang, 105 F.3d 521, 524 (9th Cir. 1997) (citation omitted).

The R&R considers these factors and concludes that Intercellular and Calcaterra's failure to follow orders and other obligations in this action warrant striking their answers and entering default against them. (Dkt. no. 75 at 9-10.) According to the R&R, the only factor weighing against entering default against Intercellular and Calcaterra is the public policy of disposition of a case on its merits. ( Id. at 9.) The Court agrees with the R&R's conclusion.

Intercellular and Calcaterra have repeatedly failed to comply with court orders. These Defendants have not responded to Plaintiff's discovery requests despite multiple discovery extensions. This disregard of the Court's orders has prevented the expeditious resolution of litigation and has interfered with the Court's ability to manage its docket. Defendants' failure to comply with Judge Leen's orders and to provide discovery has halted this litigation and prevented Plaintiff from being able to proceed. Thus, the Court finds that the first three factors weigh in favor of entering default judgment against Intercellular and Calcaterra.

The fifth factor also weighs in favor of entering default against Intercellular and Calcaterra. The Court has repeatedly warned Intercellular and Calcaterra that a failure to comply with Court orders would result in a recommendation of default judgment against them. However, Intercellular and Calcaterra have continuously failed to comply with Court orders and have failed to provide the necessary disclosures. The Court previously awarded a monetary sanction against Intercellular and Calcaterra and yet these Defendants have still failed to respond to Plaintiff's requests for discovery. Given the repeated failure to comply, in spite of the sanction already ...

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