Taser International, Inc. v. Phazzer Electronics, Inc.

UNITED STATES DISTRICT COURT

MIDDLE DISTRICT OF FLORIDA

ORLANDO DIVISION

TASER INTERNATIONAL, INC.,

Plaintiff,

v. Case No: 6:16-cv-366-PGB-LHP

PHAZZER ELECTRONICS, INC.,

STEVEN ABBOUD, PHAZZER

IP, LLC and PHAZZER GLOBAL

CORPORATION,

Defendants.

/

ORDER

This cause is before the Court on Taser’s Motion for Default and Sanctions

Against Phazzer IP, LLC and Diana Robinson. (Doc. 722 (the “Motion”)).

Defendant Phazzer IP, LLC did not respond, and Defendant Robinson’s Response

is limited to asserting a procedural bar to Plaintiff’s request for Rule 11 sanctions

and fails to address the merits of Plaintiff’s Motion. (Doc. 734). Upon due

consideration, Taser’s Motion is granted.

I. BACKGROUND

The history of this case has been fully discussed elsewhere in the record. (See

Docs. 183, 271, 299, 441, 462). Plaintiff Taser International, Inc. (“Taser”)1

instituted this action in March 2016 against Defendant Phazzer Electronics, Inc.

1 Taser is now known as Axon Enterprise, Inc., however for continuity purposes, the Court

continues to utilize Taser.

(“Phazzer”), asserting claims of patent and trademark infringement, false

advertising, and unfair competition. (Doc. 1). Ultimately, a default judgment was

entered against Phazzer as a sanction. (Doc. 183; see also Docs. 192, 267, 272–73,

300–01). Since then, Taser has engaged in post-judgment collection efforts, the

Court instituted proceedings supplementary, and Taser filed an authorized

supplemental complaint impleading third parties Steven Abboud (Phazzer’s

alleged principal) (“Abboud”), and two other entities, Phazzer Global, LLC

(“Phazzer Global”) and Phazzer IP, LLC (“Phazzer IP”), into these

proceedings. (See Docs. 289, 293, 296, 297, 317, 320, 333, 376, 400).

The post-judgment litigation has fostered several motions to compel

discovery by Taser against the Defendants. (See Docs. 597, 599, 671, 681, 696).

Taser moves for the imposition of sanctions, including entry of default judgment,

against Defendant Phazzer IP, LLC and Ms. Diana Robinson for intentional

discovery obstruction and misdirection, spoliation of evidence, perjury, willful

violation of Court rules and orders, and failure to meaningfully prepare for its Rule

30(b)(6) deposition. (Doc. 722, pp. 1–2).

II. LEGAL STANDARD

Rule 37 allows district court judges broad discretion to fashion appropriate

sanctions for the violation of discovery orders. Malautea v. Suzuki Motor Co., 987

F.2d 1536, 1542 (11th Cir. 1993). This Rule allows for sanctions when a party

violates a discovery order or fails to attend its own deposition. See FED. R. CIV. P.

37(b)(2)(A), (d)(1)(A)(i). For both these offenses, the Rule authorizes various

sanctions, such as striking pleadings, rendering a default judgment, and holding

the disobeying party in contempt of court. FED. R. CIV. P. 37(b)(2)(A)(iii), (b)(2)(A)

(vi), (b)(2)(A)(vii), (d)(3); see also Consumer Fin. Prot. Bureau v. Brown, 69 F.4th

1321, 1330–31 (11th Cir. 2023). The “severe sanction of a dismissal or default

judgment is appropriate only as a last resort, when less drastic sanctions would not

ensure compliance with the court’s orders.” Malautea, 987 F.2d at 1542; see United

States v. One 32%2C Scorpion Go-Fast Vessel, 339 F. App’x 903, 905 (11th Cir.

2009) (noting that the court need not first impose lesser sanctions if doing so

would be ineffective); see also Griffin v. Aluminum Co. of Am., 564 F.2d 1171, 1172

(5th Cir. 1977) (“Dismissal of a complaint with prejudice is such a drastic remedy

that a district court should apply it only in extreme circumstances.”) (citations

omitted).2 And dismissal or default judgment is appropriate when the party acts

with bad faith and not where its failure to comply results from negligence,

misunderstanding or an inability to comply. See Maus v. Ennis, 513 F. App’x 872,

878 (11th Cir. 2013) (citing Malautea, 987 F.2d at 1542). Bad faith may be found

through “delaying or disrupting the litigation or hampering enforcement of a court

order.” Eagle Hosp. Physicians, LLC V. SRG Consulting, Inc., 561 F.3d 1298, 1306

(11th Cir. 2009).

Furthermore, Rule 37 provides that “the court must order the disobedient

party, attorney advising that party, or both to pay the reasonable expenses,

2 In Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir. 1981) (en banc), the Eleventh

Circuit adopted as binding precedent all decisions of the former Fifth Circuit handed down

prior to the close of business on September 30, 1981.

including attorney’s fees, caused by the failure, unless the failure was substantially

justified or other circumstances make an award of expenses unjust.” FED. R. CIV. P.

37(b)(2)(C), (d)(3). The Supreme Court has held that the intent behind Rule 37

sanctions is both “to penalize those whose conduct may be deemed to warrant such

a sanction, [and] to deter those who might be tempted to such conduct in the

absence of such a deterrent.” Roadway Exp., Inc. v. Piper, 447 U.S. 752, 763–64

(1980) (quoting Nat’l Hockey League v. Metro. Hockey Club, Inc., 427 U.S. 639,

643 (1976) (per curiam)). This deterrence is necessary because “it is not the court’s

function to drag a party kicking and screaming through discovery.” Telectron, Inc.

v. Overhead Door Corp., 116 F.R.D. 107, 134 (S.D. Fla. 1987); see also Malautea,

987 F.2d at 1545 (quoting FED. R. CIV. P. 26(g)).3

III. DISCUSSION

Defendants Phazzer IP, LLC and Diana Robinson have engaged in an

intentional pattern of obfuscation and delay that has plagued this litigation.4 Taser

outlines the abusive discovery tactics perpetrated by Phazzer IP and Robinson, and

the Court will address each in turn. (Doc. 722, pp. 4–25). It is worth repeating that

3 Taser also seeks relief under Rule 11. (Doc. 719, p. 19). Defendant Robinson argues that Rule

11 sanctions are premature because Plaintiff failed to allow her to cure the alleged defect under

Rule 11(c)(2). (Doc. 734, p. 2). Since sanctions are warranted under Rule 37, the Court need

not address Robinson’s concern.

4 The history of this case teaches that Mr. Steven Abboud is the architect behind the Defendants’

delay tactics, but Ms. Robinson is a knowing participant. In many respects, the Defendants’

conduct resembles activities undertaken by a criminal enterprise that employs shell

companies and nominees to avoid detection. The conduct here is nothing short of outrageous.

Ms. Robinson does not challenge the accuracy of Taser’s recitation of the relevant

facts.

1. Robinson as Corporate Representative

Ms. Robinson was designated the corporate representative for Phazzer IP

and was deposed on April 18 and July 12, 2022. (Id. at p. 4). A corporate

representative cannot be an empty suit and Ms. Robinson had a duty to prepare

for the deposition. See Cont’l Cas. Co. v. First Fin. Leasing, Inc., 716 F. Supp. 2d

1176, 1189 (M.D. Fla. 2010). The notice of taking deposition included 14 topics on

which Ms. Robinson was to be questioned. (Doc. 719-85). Ms. Robinson was

unprepared and admitted she could not testify about topics related to Phazzer IP

between 2013 and 2017. (Doc. 722, p. 5). Ms. Robinson claims she “was never a

part of [Phazzer] IP” and “was brought in for convenience . . . just to sign

documents.” (Doc. 719-6, 17:19–24, 108:13–21). Ms. Robinson was offered as a

“strawman” instead of a Rule 30(b)(6) corporate representative to frustrate the

discovery of relevant facts.

a. Bad Faith Concealment of Phazzer IP’s Ownership

Taser establishes that Jason Abboud, Steven Abboud’s third cousin and

general counsel for Phazzer Electronics, Inc., filed the documents to form Phazzer

IP with the Nebraska Secretary of State. (Doc. 722, p. 6 (citing Doc. 719-2, 20:4–9;

Doc. 719-9, 6:25–7:5)). Steven Abboud was identified in the forming documents as

a member of Phazzer IP. (Docs. 719-35, 719-37, 719-38, 719-51). Jason Abboud

admitted that his cousin, Steven was at all times material the manager of Phazzer

IP. (Doc. 719-9, 14:14–21, 22:23–23:7). And yet, Ms. Robinson prepared Phazzer

IP’s federal tax return for 2015—2017, listing herself as the company’s 100%

owner/member. (Doc. 719-52). Still, Ms. Robinson failed to identify Steven

Abboud as Phazzer IP’s manager.

Ms. Robinson had a duty to conduct a reasonable inquiry as the corporate

representative to determine Steven Abboud’s affiliation with Phazzer IP. Cont’l

Cas. Co., 716 F. Supp. 2d at 1189. And Ms. Robinson lived with Steven Abboud, so

all she had to do was ask Abboud if he had been a manager or officer of Phazzer IP.

(See Doc. 719-6, 25:4–25; 719-85, ¶ 5). Ms. Robinson’s failure to prepare for

testimony on the 14 topics identified in the Notice of Taking Deposition, and her

failure to identify Steven Abboud’s role in Phazzer IP is not an innocent omission.

Ms. Robinson prepared tax returns identifying her as the managing member of the

LLC, when she knew this was false (Doc. 719-52, p. 8) to conceal Steven Abboud’s

control over that entity.

2. Bad Faith Funneling of Assets through Phazzer IP

Taser next asserts that Ms. Robinson was complaisant in funneling assets to

Leonidas, a Nevis corporation, via Phazzer IP. (Doc. 722, pp. 9–10). Exhibit A to

the Notice of Taking 30(b)(6) Deposition includes these topics:

9. Phazzer IP’s financial information and status,

including tax returns, profit and loss statements, bank and

credit card statements, accounts receivable/payable, . . . owed

by, or passed through Phazzer IP.

10. All payments made by Phazzer IP intended for Steven

Abboud whether paid directly to him or through any other

person or entity.

(Doc. 719-85) (Emphasis added).

While Ms. Robinson facilitated wire transfers to Leonidas’ Nevis bank

account through Phazzer IP and executed assignments of intellectual property to

Leonidas, she denied knowledge of who benefited from these transactions. (See

Doc. 719-66 (Conversion Plan identifying Steven Abboud as sole member and

100% owner of Leonidas LLC); see also Doc. 719-2, 67:7–12 (Abboud admits

forming Leonidas)). Ms. Robinson denied knowing who owned Leonidas and who

benefited from the royalty payments from intellectual property assigned by

Phazzer IP to Leonidas. (Doc. 719-59; Doc. 719-6, 77:8–79:19, 81:3–11, 60:2–24,

79:20–80:11). Ms. Robinson also denied knowing if Steven Abboud was Leonidas’

original manager. (Doc. 719-6, 60:11–21; Doc. 719-7, 102:19–23). And yet Ms.

Robinson notarized the Leonidas Business Plan signed by Steven Abboud as CEO

(Doc. 719-44), notarized the Nevis bank application signed by Abboud as Chairman

and sole owner of Leonidas, and she is listed as Phazzer Global’s agent on a

Trademark Licensing Agreement signed by Steven Abboud as Leonidas’ manager.

(Doc. 719-50). Ms. Robinson also created several emails related to Leonidas,

including one attaching Leonidas’ minutes signed by Steven Abboud as “Sole

Owner/Manager.” (Doc. 719-65).

Taser correctly notes that Robinson only admits a fact when confronted with

a document, often secured via a motion to compel or third-party practice. (Doc.

722, p. 13). The Court finds that Ms. Robinson’s feigned ignorance was intended to

frustrate Taser’s post-judgment collection efforts. This conduct alone warrants

imposing severe sanctions, including entry of default judgment against Phazzer IP

and Ms. Robinson.

3. Bad Faith Bankruptcy Filings

Other evidence of Ms. Robinson and Phazzer IP’s bad faith is seen in Phazzer

IP’s false assertion as a creditor in Phazzer Electronics’ Nebraska bankruptcy case.

Phazzer IP asserted a claim against Electronics for $22,506.31 for royalties owed

under a Trademark License Agreement. (Doc. 719-79). And yet, that sum was

transferred from Electronics to Phazzer IP before the Court entered a default

judgment in July 2017. (Doc. 719-56, p. 4; Doc. 719-55, pp. 4–5; Doc. 719-6, 129:9–

25, 130:15–17). Phazzer IP was ultimately forced to dismiss its petition with

prejudice and agree to a permanent refiling injunction. (Doc. 461-1). Taser outlines

in detail how the Nebraska filing was part of a coordinated series of bankruptcy

filings designed to delay post-judgment collection efforts by Taser. (Doc. 722, pp.

15–16 (record citations omitted here)). This conduct was perpetrated in bad faith

and resulted in unnecessary delay and expense incurred by Taser. (Docs. 376, 382,

383, 398, 400, 459, 460).

4. Spoliation and Obstruction

Taser also notes that Phazzer IP and Robinson were aware of their duty to

preserve ESI (Doc. 719-6, 121:13–122:12), and failed to put safeguards in place to

ensure the preservation of devices and email accounts. (Doc. 722, p. 17). Taser

submits the duty to preserve ESI attached on October 21, 2019, at the latest, when

Taser moved for leave to implead Phazzer IP. (Id.). And yet, Ms. Robinson

admitted in deposition that the laptop she used for Phazzer IP business was

replaced in 2021, and failed to explain why its contents were not backed up. (Doc.

719-29, Resp. #1, 2; Doc. 719-6, 122:3–10). She also admitted that the Phazzer-

ip@phazzer.info email was used for business between 2019 to July 2022, but the

contents of the account before October 2021 were deleted during the pendency of

this case. (Doc. 719-7, 9:19–21, 10:8–25, 13:22–14:6, 15:23–25). Further, Ms.

Robinson admitted she was responsible for deleting the data. (Doc. 719-7, 11:1–3,

12:16–13:3; Doc. 719-6, 203:3–8). Intentional destruction of evidence is a serious

matter, but here it is merely par for the course.

IV. CONCLUSION

The Court finds that Defendant Phazzer IP and Ms. Robinson engaged in the

above-described misconduct with the subjective intent to abuse the judicial

process. Purchasing Power, LLC v. Bluestem Brands, Inc., 851 F.3d 1218, 1223–

24 (11th Cir. 2017) (“The key to unlocking a court’s inherent power is a finding of

bad faith.”). The Court further finds that the severe sanction of default judgment

is appropriate because less drastic sanctions will not ensure compliance with the

Court’s orders. Consumer Fin. Prot. Bureau, 69 F.4th at 1330–31.

For these reasons, it is ORDERED AND ADJUDGED as follows:

1. Taser’s Motion for Default and Sanctions against Phazzer IP, LLC and

Diana Robinson (Doc. 722) is GRANTED;

2. Default Judgment is entered in favor of Taser on its Fraudulent

Transfer Claim (Doc. 659, Count 3), and judgment is awarded in the

amount of $270,981.00;

3. The Court further Orders direct avoidance and execution on all

intellectual property transferred from Phazzer IP, LLC to Leonidas

acquired with Phazzer Electronics’ funds, including Patent No.

7,554,786 (Doc. 659, p. 27; Doc. 401-2, p. 3), and

4. Taser is awarded its reasonable attorney’s fees and costs jointly and

severally against Phazzer IP, LLC and Diana Robinson in an amount

to be determined.

DONE AND ORDERED in Orlando, Florida on January 10, 2024.

/ □□ / s

PAUL G.

UNITED STATES*DISTRICT JUDGE

Copies furnished to:

Counsel of Record

Unrepresented Parties