The opinion of the court was delivered by: Magistrate Judge Morton Denlow
MEMORANDUM OPINION AND ORDER
This case comes before the Court on Plaintiff's motion for sanctions and for a rule to show cause why Defendants should not be held in contempt of court. Plaintiff Federal Trade Commission ("FTC") alleges that Defendant Johan Hendrik Smit Duyzentkunst ("Smit") deactivated an e-mail account containing communications relevant to this case, after receiving notice of the lawsuit and in violation of a temporary restraining order. Smit denies deactivating the account or having knowledge of who did. The FTC requests that this Court sanction Smit, as well as Defendants Janneke Bakker-Smit Duyzentkunst ("Bakker-Smit"), Repo B.V. ("Repo"), and SBN Peripherals, Inc. ("SBN"). Defendant Asia Pacific Telecom, Inc. ("Asia Pacific"), has not appeared in this case and is not a party to this motion.
The Court held a one-day evidentiary hearing on April 21, 2011, with closing arguments following on April 28. At the hearing, the parties offered witness testimony and introduced depositions and exhibits into evidence. The FTC called three witnesses. Douglas McKenney testified about his role as an FTC investigator in this case. Brick Kane testified about his role with the court-appointed Temporary Equity Receiver. Finally, Smit testified as an adverse witness. Defendants also called Smit to testify in support of their opposition to this motion. The Court has carefully considered the testimony of the three witnesses who testified in person, the various exhibits admitted into evidence, and the closing arguments of counsel.
For the reasons explained below, the Court grants Plaintiff's motion in part and denies it in part. The Court grants the motion for sanctions and contempt against Defendants Smit and SBN, holds them in contempt of court, and sanctions them with an adverse finding. The Court denies the motion for sanctions and contempt against Repo and Bakker-Smit.
The following constitutes the Court's findings of fact and conclusions of law pursuant to Rule 52(a) of the Federal Rules of Civil Procedure. To the extent certain findings may be deemed conclusions of law, they shall also be considered conclusions. Similarly, to the extent matters contained in the conclusions of law may be deemed findings of fact, they shall also be considered findings.
1. Asia-Pacific is alleged by the FTC to be a foreign corporation which holds itself out as having its principal places of business in Kowloon, Hong Kong; Almere, Netherlands; and the Northern Mariana Islands. The other Defendants have denied having knowledge sufficient to admit or deny this allegation. Ans. ¶ 6.*fn2
2. Repo is a Dutch "limited company," with its principal offices in The Netherlands. Ans. ¶ 7.
3. SBN is a California corporation, with its principal offices in Agoura Hills, California. Ans. ¶ 8.
4. Smit resides in California. He is the director and sole officer and shareholder of SBN and a director of Repo. He has denied being an officer, director, or owner of Asia Pacific, or participating in any activities on behalf of Asia Pacific. Ans. ¶ 9.
5. Bakker-Smit also resides in California and serves as a director of Repo. Ans. ¶ 10.
6. Smit and Bakker-Smit are married and reside together at a house with the same address as SBN's principal offices in Agoura Hills, California. T. 122--23.
7. The FTC filed this suit on May 24, 2010. The case involves Defendants' use of "robocalling" technology to facilitate high-volume, pre-recorded telemarketing calls that, among other things, allegedly contacted consumers on the National Do Not Call Registry and contained deceptive content. Compl. ¶¶ 13--28, Dkt. 1. Smit and SBN admit owning and running an "autodialer" capable of making automated telephone calls. T. 90--91. As explained by Smit, the autodialer at issue was a piece of technology consisting of hardware, software, connectivity to telecommunications carriers, and a web interface that allowed access to the system. T. 91. The FTC alleges that Defendants "caused tens of millions of consumers to receive deceptive and abusive telemarketing solicitations" through robocalling campaigns. Compl. ¶ 15.
8. District Judge William T. Hart entered an ex parte temporary restraining order (the "TRO") against all Defendants on May 25, 2010. PX 19.*fn3 Robb Evans and Associates LLC (the "Receiver") was appointed as Temporary Equity Receiver and ordered to assume full control over Asia Pacific, Repo, and SBN. Id. at 4, 15--19. The TRO prohibited all Defendants, as well as their officers and other agents, from destroying or erasing documents "that relate in any way to the business practices or business" of Defendants. Id. at 14. The TRO also ordered them to cooperate with the Receiver by, among other things, "[p]roviding any information to the Receiver that the Receiver deems necessary" to discharging its responsibilities. Id. at 19.
9. The FTC served Smit, and through him SBN, Repo, and Bakker-Smit, with the complaint and TRO on June 2, 2010 at Smit's residence in Agoura Hills, California. Summons, Dkt. 25--28; T. 82, 121--22.
10. All parties consented to magistrate judge jurisdiction on February 3, 2011. Joint Consent, Dkt. 115; Order of the Executive Committee, Dkt. 117.
C. Origin and Use of the Dalong Chin E-mail Account
11. Erick Van der Maas, a long-time acquaintance of Smit, resides in Saipan, Northern Mariana Islands. Van der Maas Decl. ¶¶ 1, 3, PX 4-1.*fn4 He is not a party to this lawsuit.
12. Van der Maas used the Chinese name "Dalong Chin" when he lived in Taiwan from 1984 to 2000, so that Chinese speakers could more easily pronounce and remember his name. Van der Maas Decl. ¶ 2, PX 4-1.
13. Van der Maas created the e-mail account firstname.lastname@example.org on November 29, 2000. Van der Maas Decl. ¶ 2, PX 4-1; Yahoo! Account Management Tool, Attach. to PX 11.
14. Around 2006, Van der Maas provided Smit access to the account. He granted unrestricted access and use of the account to Smit and has never given the account's password to any other person. Since giving Smit the password, Van der Maas has accessed the account "a handful of times" ...