Unreported / Non-Citable
Background
Melinda Clark sued Natera, Inc. over her termination, alleging that Natera used an incident at a 2025 sales awards gala as a pretext to fire her for whistleblowing. Natera contends that Clark forcefully grabbed another employee while walking to the stage, leaving nail marks on the employee's shoulder, and that HR official Karie Lau investigated that night and recommended termination the next day. Clark denies the grab.
The sanctions dispute centered on a cell-phone video of Clark walking to the stage, recorded by manager Amy Macalintal. Lau testified that she asked certain managers for videos or photos, received no response, and first watched the Macalintal video while preparing for her deposition, and Natera's interrogatory response adopted that account. Macalintal later testified that she told Lau about the video and texted it to her the night of the event. After that deposition, Lau checked her phone, confirmed the text, and said she still does not remember receiving it and did not consider it. Natera had separately taken the position that employees' personal phones were outside its possession, custody, or control, so it did not search them.
Clark moved under Rule 37(b)(2)(A) and the court's inherent authority for alternative sanctions: striking Natera's answer and entering default, a jury instruction that Natera's stated reason was not the real reason for termination, or an instruction that Natera made untruthful disclosures and Lau testified falsely, plus attorney's fees.
The Court’s Holding
Magistrate Judge Alex G. Tse denied the motion in full by order, explaining that because he was denying rather than granting dispositive sanctions, no report and recommendation was needed. Rule 37(b)(2)(A) sanctions require violation of a discovery order. Clark relied on General Order 71's initial-disclosure requirements, but Natera had stated before the motion that its employees' personal phones were outside its possession, custody, or control, and Clark had never challenged that position through the discovery-dispute process. Whether the position would survive a challenge is an open question, but that does not mean Natera violated the order.
Sanctions under inherent authority require a willful order violation or bad faith, meaning bad intent or improper purpose. Applying the preponderance standard, which is more favorable to Clark, the court found that Lau's testimony was untrue but that concluding she lied deliberately would be too speculative. Her explanation of a hectic night was somewhat hard to believe, yet she had no clear motive to lie, because the video does not show the alleged grab and she could still have relied on witness statements and the marks she observed. Clark's cases involved blatant fraud that would have advanced the offending party's claims or defenses.
The court also found no material prejudice. The evidence was not destroyed, both sides have the video, fact discovery runs through December 18, 2026, and the court would entertain a request to reopen Lau's deposition. Each side bears its own costs. The ruling is without prejudice to impeaching Lau at trial. Clark's separate motion to strike Lau's deposition errata remains for a later order.
Key Takeaways
- Rule 37(b)(2)(A) sanctions require a violated discovery order, and a contested position on possession, custody, or control is not itself a violation.
- A party that doubts an opposing party's control over employees' personal devices should raise it through the court's discovery-dispute process before seeking sanctions.
- Inherent-authority sanctions require bad intent or improper purpose; demonstrably inaccurate testimony is not enough if mistake remains a plausible explanation.
- Prejudice is weighed against remaining discovery time, availability of the evidence to both sides, and the chance to reopen depositions.
- The denial leaves impeachment of the witness at trial available, and the motion to strike the errata remains pending.
Why It Matters
The order shows the high bar for case-dispositive or adverse-instruction sanctions in discovery disputes. Even assuming the lenient preponderance standard, the court demanded evidence of intent, not just a contradiction between testimony and documents, and it preferred additional discovery to punishment.
Several matters remain open: whether Natera must search or produce from the personal phones of Lau and Macalintal if Clark brings that dispute, the ruling on the errata motion, any reopened deposition of Lau, and how a jury weighs Lau's credibility. Employers should note that the court still called Natera's position an open question and that its discovery narrative changed after another witness contradicted it. As a district-court order, it is not binding precedent.