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Federal Trade Commission v. 6654916 Canada

July 21, 2010

FEDERAL TRADE COMMISSION, PLAINTIFF,
v.
6654916 CANADA, INC., ET AL., DEFENDANTS.



The opinion of the court was delivered by: Blanche M. Manning United States District Judge

MEMORANDUM AND ORDER

Magistrate Judge Cox's June 2, 2010, report and recommendation (R&R") recommending that default judgment be entered against defendants Riaz A. Butt, Faheem Ahmed Mughal, 9187-4131 Québec Inc., Bilal Ahmed Malik, Sohail Azmat, and Nabeel Azmat as a discovery sanction is before the court. For the following reasons, the court accepts the recommendation and enters default against those defendants.

Background

The Federal Trade Commission ("FTC") contends that Riaz A. Butt, Faheem Ahmed Mughal, 9187-4131 Québec Inc., Bilal Ahmed Malik, Sohail Azmat, Nabeel Azmat, 6654916 Canada Inc., National Yellow Pages Online, LLC and DRS Without Prejudice made false and misleading representations to consumers to induce them to purchase listings in defendants' Internet directory. The court granted the FTC's motion for a preliminary injunction on June 22, 2009. Dkt. 53.

On September 17, 2009, the court defaulted 6654916 Canada Inc., National Yellow Pages Online, LLC and DRS Without Prejudice, and referred this matter to Magistrate Judge Cox on October 1, 2009, to consider non-dispositive motions and supervise discovery. On May 19, 2010, James McGonnagle, current counsel for the Azmats, filed an appearance. In the two months since then, discovery has remained at a standstill.

On June 2, 2010, Magistrate Judge Cox issued a report and recommendation (R&R") recommending that default judgment be entered against the remaining defendants. The R&R details the defendants' lengthy history of failing to comply with discovery requests:

After this matter was referred, on October 1, 2009, the parties submitted to the Court a proposed scheduling order. The parties agreed that all disclosures pursuant to Federal Rule of Civil Procedure 26(a)(1) would be made by October 23, 2009, and that fact discovery would be completed by September 24, 2010. The Court entered the proposed dates into a scheduling order on October 8, 2009.

The FTC provided Rule 26(a) disclosures to defendants on October 22, 2009.

Defendants, however, failed to submit initial disclosures by the October 23, 2009 deadline. The FTC contacted defendants on October 27, 2009 to notify them that Rule 26(a) disclosures were due on October 23, 2009. Defendants failed to respond. At a December 16, 2009 status hearing, the FTC informed the Court that defendants were two months late in providing initial disclosures. The Court then provided defendants with a second opportunity and ordered defendants to provide the FTC with their initial disclosures on or before January 8, 2010. To date, defendants have failed to provide initial disclosures as ordered.

All defendants have also failed to respond to the FTC's request for production of documents, which were due on January 19, 2010. On January 21, 2010, the FTC attempted to meet and confer with defendants to reach an agreement on document production; however, defendants failed to even respond to the FTC's meet and confer request. All defendants have also failed to respond to the FTC's interrogatories, which were due on February 10, 2010. Additionally, defendants Bilal Ahmed Malik, Nabeel Azmat, and Sohail Azmat failed to appear for properly scheduled depositions, which were scheduled for February 4, 2010, February 11, 2010 and February 25, 2010, respectively. To date, each and every defendant has failed to respond to all of the FTC's discovery requests.

As a result of these failures, on February 10, 2010, the FTC filed a motion for discovery sanctions, which requested that a default judgment be entered against [the defendants who had not already been defaulted] . . . . [The Azmats] responded but still made no guarantees that they would respond to discovery. On April 6, 2010, the Court granted the FTC attorneys' fees for bringing the discovery sanctions motion and ordered defendants to respond to all outstanding discovery on or before April 23, 2010 or risk a recommendation that default judgment be entered. On April 26, 2010, the FTC's counsel contacted the Court by telephone and represented that defendants had still failed to respond to any outstanding discovery requests.

In addition to these discovery failures, defendants have failed to appear before this Court for status hearings. For example, defendants did not appear on July 21, 2009, September 17, 2009, and April 20, 2010. In addition, on December 16, 2009 and April 6, 2010, only counsel for [defendants other than the Azmats] appeared.

Dkt. 124 at 2-4.

The magistrate judge also noted that former counsel for the Azmats (as well as counsel for other defendants) had ongoing difficulties communicating with their clients. Former counsel for the Azmats eventually withdrew, citing "poor communication and cooperation with defendants regarding ...


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