United States v. 2013-04-30 | 11-56147 | Einstein Cosmetics, LLC V. Cvs Caremark Corp. |…

This disposition is not appropriate for publication and is not precedent*
except as provided by 9th Cir. R. 36-3.
The panel unanimously finds this case suitable for decision without oral**
argument. Fed. R. App. P. 34(a)(2).
NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
EINSTEIN COSMETICS, LLC, ) No. 11-56147
)
Plaintiff – Appellant, ) D.C. No. 2:10-cv-00640-AHM-AGR
)
v. ) MEMORANDUM*
)
CVS CAREMARK CORP.; )
CVS PHARMACY, INC., )
)
Defendants – Appellees. )
)
Appeal from the United States District Court
for the Central District of California
A. Howard Matz, District Judge, Presiding
Submitted April 8, 2013**
Pasadena, California
Before: FERNANDEZ, RAWLINSON, and BYBEE, Circuit Judges.
Einstein Cosmetics, LLC (“Einstein”) appeals the district court’s grant of
summary judgment and terminating sanctions in favor of CVS Pharmacy, Inc. and
FILED
APR 30 2013
MOLLY C. DWYER, CLERK
U .S. C OU R T OF APPE ALS

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Cal. Corp. Code § 17151(b).1
Id. § 17054(c)(2).2
Nor was he the Chief Executive Officer.3
See Cal. Corp. Code § 17501; see also Paclink Commc’ns Int’l, Inc. v.4
Superior Court, 90 Cal. App. 4th 958, 963–64, 109 Cal. Rptr. 2d 436, 439 (2001).
2
CVS Caremark Corp. (collectively “CVS”). We affirm.
(1) Einstein first asserts that the district court erred when it determined
that Einstein’s complaint must be dismissed because the person who purported to
file and pursue the action had no authority to do so on Einstein’s behalf. We
disagree. The evidence before the court made it plain that Einstein was an LLC so
structured that sole “management [was] vested in only one manager,” a1
requirement that could not be changed absent an amendment to the articles of
organization. The evidence showed that Shalant was not that manager, and had2 3
no authority to bring an action on behalf of Einstein. In short, he was not an agent
of Einstein for that purpose. See S. Sacramento Drayage Co. v. Campbell Soup
Co., 220 Cal. App. 2d 851, 856, 34 Cal. Rptr. 137, 139–40 (1963). On appeal it is
suggested that this was a stockholder’s derivative action on behalf of Einstein.4
However, that issue was not raised before the district court and is waived. See
Crawford v. Lungren, 96 F.3d 380, 389 n.6 (9th Cir. 1996). Moreover, we note
that the prerequisites to filing a derivative action were never pled. See Cal. Corp.

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While the district court referred to its inherent power, it is not clear that it5
relied upon that power separately.
We note that Einstein did not oppose the motion for terminating sanctions,6
but now, surprisingly, appeals their grant.
See Conn. Gen. Life Ins. Co. v. New Images of Beverly Hills, 482 F.3d7
1091, 1096 (9th Cir. 2007).
See Virtual Vision, Inc. v. Praegitzer Indus., Inc., 124 F.3d 1140, 1143–448
(9th Cir. 1997).
3
Code § 17501(a)(2); see also Cal. Corp. Code § 800(b); Potter v. Hughes, 546 F.3d
1051, 1055 (9th Cir. 2008); Bader v. Anderson, 179 Cal. App. 4th 775, 782–83,
101 Cal. Rptr. 3d 821, 826–27 (2009).
(2) Einstein then argues that the district court erred when it granted
terminating sanctions as to CVS’s counterclaim because of Einstein’s discovery
violations. See Fed. R. Civ. P. 37(d)(1)(A)(i), (b)(2)(A)(vi); see also Leon v. IDX
Sys. Corp., 464 F.3d 951, 958 (9th Cir. 2006). Again, we disagree. While the5 6
district court did not expressly find bad faith on Einstein’s part, the apparent7
refusal of Einstein to produce its manager and CEO — the most important
witnesses to the arrangement with CVS — for their depositions and its failure to
otherwise comply with its discovery obligations were redolent of bad faith.8
Especially in light of the lack of opposition at the district court and the whole
flavor and course of the litigation before it, we cannot say that the district court

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See Leon, 464 F.3d at 957–58; Anheuser-Busch, Inc. v. Natural Beverage9
Distribs., 69 F.3d 337, 348 (9th Cir. 1995).
See Conn. Gen., 482 F.3d at 1096; Valley Eng’rs Inc. v. Elec. Eng’g Co.,10
158 F.3d 1051, 1057 (9th Cir. 1998).
Einstein’s general comment that none of the five factors applies is not “a11
viable argument on appeal.” Alcock v. Small Bus. Admin. (In re Alcock), 50 F.3d
1456, 1461 n.9 (9th Cir. 1995); see also Brooks v. City of San Mateo, 229 F.3d
917, 922 n.1 (9th Cir. 2000).
4
abused its discretion when it applied the five-factor test that the district courts9
must use in determining whether a terminating sanction is appropriate.10
Moreover, the district court’s determination that lesser sanctions would not be
effective is not specifically disputed on appeal, and it cannot be doubted that the11
inability to obtain discovery would be prejudicial to CVS’s presentation of its case.
On this record, we are unable to hold that the district court erred.
AFFIRMED.

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