1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 CENTRAL DISTRICT OF CALIFORNIA 10 SECURITIES AND EXCHANGE Case No. 2:20-cv-04080-MCS-RAO 11 COMMISSION,

ORDER ACCEPTING REPORT AND

12 Plaintiff, RECOMMENDATION OF UNITED 13 STATES MAGISTRATE JUDGE v. 14

15 ZHUOBIN HONG et al.,

16 Defendants. 17 18 19 Plaintiff Securities and Exchange Commission moves for terminating sanctions 20 against Defendants Zhuobin Hong and Caixia Jiang for Defendants’ failure to appear 21 for deposition. (Mot., ECF No. 91.) Defendants oppose the motion. (Opp’n, ECF No. 22 94.) United States Magistrate Judge Rozella A. Oliver issued a report and 23 recommendation that the motion be denied and that lesser sanctions be imposed. (R&R, 24 ECF No. 120.) Plaintiff submitted objections to the R&R, and Defendants filed a 25 response to the objections. (Pl.’s Objs., ECF No. 127; Defs.’ Resp., ECF No. 128.)1 26

27 1 Defendants’ response to Plaintiff’s objections asks the Court to reject the Magistrate 28 Judge’s recommendation of an adverse inference instruction. (Defs.’ Resp. 11–12.) This 1 Pursuant to 28 U.S.C. § 636(b)(1)(C), the Court has reviewed the record on the 2 | motion and conducted a de novo review of the portions of the R&R to which Plaintiff 3 | directed its objections.” 4 Plaintiff contends that the Magistrate Judge erred in balancing the factors the 5 | Court must consider in evaluating whether to issue terminating sanctions. (See □□□□□□ 6 | Objs. 8-14.) On de novo review, the Court agrees with the reasoning of the Magistrate 7 | Judge. The balance of interests weighs against issuing terminating sanctions. Malone v. 8 | USPS, 833 F.2d 128, 130 (9th Cir. 1987). The recommended sanctions are adequate to 9 | redress Defendants’ willful noncompliance with a court order compelling their 10 | deposition. The extreme sanction of default judgment is inappropriate. Accordingly, the 11 | Court accepts the Magistrate Judge’s recommendation and orders as follows: 12 e Plaintiff's motion for terminating sanctions (ECF No. 91) is denied. 13 e Defendants’ motion for summary judgment (ECF No. 94) is denied. 14 e Defendants shall not use their testimony, statements, or interrogatory responses 15 in support of their defenses in this action, including at trial. 16 e The Court will provide an adverse inference instruction at trial. The jury will be 17 instructed that Defendants were ordered to appear for remote depositions in Hong 18 Kong or the United States by a specific date, that Defendants failed to do so and 19 continue to refuse to sit for their depositions, and that the jury may infer based 20 on Defendants’ refusal to appear for their depositions that Defendants’ testimony 21 would have been harmful to them. 22 Plaintiff indicated it would seek leave from the Court to file a motion for 23 | summary judgment if the Court adopted the recommendation. (PI.’s Objs. 15 n.7.) In 24 2 request was not timely presented in objections to the R&R, so the Court does not 26 | consider it. Fed. R. Civ. P. 72(b)(2). 7 ? Defendants argue that the Court should apply a different standard of review. (Defs.’ Resp. 6-8.) The R&R is subject to de novo review. 28 U.S.C. § 636(b)(1)(B)-(C); Fed. 28 | R. Civ. P. 72(b)(3).

1 | the interest of judicial economy, on its own motion, the Court modifies the schedule to 2 | permit Plaintiff to file a motion for summary judgment. The Court sets and resets the 3 | following dates:

14 | | judgment 9:00 a.m. Is 16

18 2:00 p.m. 2:00 p.m.

20 8:30 a.m. 8:30 a.m. 21 22 | IT IS SO ORDERED. 23 24 | Dated: October 21, 2021 by Laro 5 MARK C. SCARSI

UNITED STATES DISTRICT JUDGE

27 28