Twins Special Co., Ltd. v. Twins Special, LLC, 3:23-cv-00223

Twins Special Co., Ltd. (Plaintiff), a Thai boxing equipment company, alleged that, after business relationships soured, Defendants (Twins Special, LLC, the Mechlings, and related entities) continued selling goods using Plaintiff’s marks without authorization.
Plaintiff claimed Defendants refused to pay for goods, wrongfully claimed copyright/design ownership, and acquired/sold infringing goods from third parties under confusing markings.
The litigation turned heavily to discovery disputes: Defendants were repeatedly ordered to produce documents and cooperate with a forensic examination of their electronic data and devices.
The Court found evidence that Defendants willfully withheld and deleted thousands of documents and actively obstructed the forensic review, including wiping iPhones and transferring devices to unknown third parties in Thailand.
Plaintiff sought terminating sanctions (dismissal/default), monetary sanctions, and contempt findings for this discovery misconduct; Defendants disputed the need for such harsh sanctions, arguing inadvertence and privacy concerns.
The Magistrate Judge recommended imposing both terminating and monetary sanctions due to willful, prejudicial, and egregious discovery abuses by Defendants.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Terminating sanctions under Rule 37(b) and inherent authority	Defendants willfully violated discovery orders, prejudicing Plaintiff and warranting dismissal/default	Defendants did their best and any deficiencies were inadvertent, mainly due to being overwhelmed or privacy concerns	Sanctions granted; Defendants’ conduct was willful, related to merits, and less drastic sanctions were inadequate
Spoliation under Rule 37(e)	Defendants intentionally deleted/wiped ESI to deprive Plaintiff of evidence; irretrievable loss	Claimed deleted data was re-uploaded or protected privacy only; no intent to deprive	Court found intentional destruction of key evidence; terminating sanctions appropriate
Monetary sanctions (fees/costs)	Plaintiff entitled to all fees/costs caused by Defendants’ conduct, including forensic costs	Sought reduction in fees, arguing exorbitance and overbilling for AI-assisted review	Plaintiff awarded attorneys’ fees and some costs, but forensic costs reduced to reflect only obstruction-related work
Sanctions against defense counsel	Defense counsel should be sanctioned to deter future willful noncompliance	Defense counsel not at fault; clients acted independently	Denied; terminating/monetary sanctions against Defendants sufficed

Wyle v. R.J. Reynolds Indus., 709 F.2d 585 (9th Cir. 1983) (court discretion for Rule 37(b) sanctions)
Leon v. IDX Sys. Corp., 464 F.3d 951 (9th Cir. 2006) (terminating sanctions available for willful destruction of evidence)
Anheuser-Busch, Inc. v. Natural Beverage Distribs., 69 F.3d 337 (9th Cir. 1995) (five-factor test for terminating sanctions; inherent authority)
Payne v. Exxon Corp., 121 F.3d 503 (9th Cir. 1997) (weight of violation findings and prejudice factor)
Conn. Gen. Life Ins. Co. v. New Images of Beverly Hills, 482 F.3d 1091 (9th Cir. 2007) (sanctions when discovery process is irreparably harmed)
Valley Eng’rs Inc. v. Elec. Eng’g Co., 158 F.3d 1051 (9th Cir. 1998) (decisive factors for terminating sanctions)
Malone v. U.S. Postal Serv., 833 F.2d 128 (9th Cir. 1987) (public policy not enough to outweigh discovery abuse)
Hensley v. Eckerhart, 461 U.S. 424 (1983) (lodestar method for fee reasonableness)