Opinion
Case No. 2:21-cv-11337-APP
2022-09-30
GLOBAL FREIGHT, INC., Plaintiff v. Sisson TREMELL, Defendant.
Daniel Randazzo, Rochester Hills, MI, for Plaintiff. Kyle Patrick Murphy, All Law PLLC, Southfield, MI, for Defendant.
Daniel Randazzo, Rochester Hills, MI, for Plaintiff. Kyle Patrick Murphy, All Law PLLC, Southfield, MI, for Defendant. OPINION AND ORDER GRANTING IN PART PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT (ECF No. 17) and GRANTING IN PART PLAINTIFF'S MOTION FOR SANCTIONS (ECF No. 21) Anthony P. Patti, UNITED STATES MAGISTRATE JUDGE
I. OPINION:
A. Background
Global Freight initiated this lawsuit in state court on January 15, 2021 ([Case No. 2021-185785-CB (Oakland County)]), pleading claims for: (I) breach of contract to the tune of $137,806.20 (ECF No. 1-1, ¶¶ 4-14); and, (II) conversion to the tune of $7,570.50 (id., ¶¶ 15-20). On June 7, 2021, Tremell removed the lawsuit to this Court. (ECF No. 1.) On June 14, 2021, Tremell filed his answer (ECF No. 2), and, on the following day, he filed a counter-complaint, which sets forth causes of action based on the Fair Labor Standards Act (FLSA), fraud, wage and hour violations, and overtime violations. (ECF No. 3.) He attached his supporting, identical declaration to each of these pleadings. (ECF Nos. 2-2 and 3-4.)
B. Instant Motions
Currently before the Court are: (1) Plaintiff's January 14, 2022 motion for summary judgment as to Defendant's counter-complaint (ECF No. 17), which the Court has effectively deemed unopposed after striking the response brief (ECF No. 25) for being over four months late without explanation or a showing of excusable neglect, in violation of Fed. R. Civ. P. 6(b)(1)(B) and E.D. Mich. LR 7.1(e)(1)(B) (see July 7, 2022 Text-Only Order); and, (2) Plaintiff's March 17, 2022 motion for sanctions (ECF No. 21), regarding which Defendant has filed a response (ECF No. 22) and Plaintiff has filed a reply (ECF No. 23).
Plaintiff filed a one-page reply brief, pointing out the obvious, namely: "Defendant's response is more than 4 months overdue. Defendant did not file a motion to extend the time to respond, which itself precludes the court from accepting the untimely filing under the plain language of the court rule. (See Fed. R. Civ. P. 6(b)(1)(B)[.]) Defendant does not even address the issue of the tardiness of his response in his brief." (ECF No. 26, PageID.294.)
A hearing was held regarding both motions on July 12, 2022, at which counsel for both parties (Attorneys Daniel Randazzo and Kyle Patrick Murphy) appeared, "although the latter was 35 minutes tardy, admittedly because Mr. Murphy [defense counsel] had not read the Court's written notice of hearing, which [was] all the more dumfounding because the stakes were so high, including one dispositive motion and one for sanctions against his client." (ECF No. 27, PageID.296.) Per the Court's post-hearing, interim order, each side has filed a supplemental brief. (ECF Nos. 27-29.)
C. Standards
1. Summary Judgment
Under Federal Rule of Civil Procedure 56, "[t]he court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). A fact is material if it might affect the outcome of the case under governing law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). The Court "views the evidence, all facts, and any inferences that may be drawn from the facts in the light most favorable to the nonmoving party." Pure Tech Sys., Inc. v. Mt. Hawley Ins. Co., 95 F. App'x 132, 135 (6th Cir. 2004) (internal citations omitted).
"The moving party has the initial burden of proving that no genuine issue of material fact exists . . . ." Stansberry v. Air Wis. Airlines Corp., 651 F.3d 482, 486 (6th Cir. 2011) (internal quotations omitted); cf. Fed. R. Civ. P. 56 (e)(2) (providing that if a party "fails to properly address another party's assertion of fact," then the court may "consider the fact undisputed for the purposes of the motion."). "Once the moving party satisfies its burden, 'the burden shifts to the nonmoving party to set forth specific facts showing a triable issue.' " Wrench LLC v. Taco Bell Corp., 256 F.3d 446, 453 (6th Cir. 2001) (quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986)). The nonmoving party must "make an affirmative showing with proper evidence in order to defeat the motion." Alexander v. CareSource, 576 F.3d 551, 558 (6th Cir. 2009); see also Lee v. Metro. Gov't of Nashville & Davidson Cnty., 432 F. App'x 435, 441 (6th Cir. 2011) ("The nonmovant must, however, do more than simply show that there is some metaphysical doubt as to the material facts . . . . [T]here must be evidence upon which a reasonable jury could return a verdict in favor of the non-moving party to create a genuine dispute.") (internal quotation marks and citations omitted).
Summary judgment is appropriate if the evidence favoring the nonmoving party is merely colorable or is not significantly probative. City Management Corp. v. United States Chem. Co., 43 F.3d 244, 254 (6th Cir. 1994). In other words, summary judgment is appropriate when "a motion for summary judgment is properly made and supported and the nonmoving party fails to respond with a showing sufficient to establish an essential element of its case . . . ." Stansberry, 651 F.3d at 486 (citing Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986)).
2. Rule 37 sanctions
The Sixth Circuit reviews "a district court's decision to invoke discovery sanctions for an abuse of discretion." Harmon v. CSX Transp., Inc., 110 F.3d 364, 366 (6th Cir. 1997) (citing Regional Refuse Sys., Inc. v. Inland Reclamation Co., 842 F.2d 150, 154 (6th Cir. 1988)). "In assessing a district court's decision to dismiss a complaint, we consider four factors in particular:
(1) whether the party's failure to cooperate in discovery is due to willfulness, bad faith, or fault;Harmon, 110 F.3d at 366-367 (quoting Regional Refuse Sys., Inc., 842 F.2d at 153-155). The district court does not abuse its discretion "by ordering dismissal as the first and only sanction[,]" where there is "sufficiently egregious conduct[.]" Harmon, 110 F.3d at 369; see also Universal Health Grp. v. Allstate Ins. Co., 703 F.3d 953, 956 (6th Cir. 2013) ("There is no magic-words prerequisite to dismissal under Rule 37(b)[.]").
(2) "whether the adversary was prejudiced by the dismissed party's failure to cooperate in discovery";
(3) "whether the dismissed party was warned that failure to cooperate could lead to dismissal"; and
(4) "whether less drastic sanctions were imposed or considered before dismissal was ordered."
D. Discussion
1. Plaintiff's Motion for Summary Judgment
In its motion for summary judgment, Plaintiff (Global Freight) seeks dismissal of Defendant's (Sisson's) counter-complaint, arguing, among other things, that the undisputed facts make clear that there was no employment relationship, in which case the counter-claims fail. Defendant's counter-complaint contains four causes of action.
• Count I alleges that Sisson was an employee of Global Freight within the meaning of the Fair Labor Standards Act (FLSA), 29 U.S.C. § 203(e), and that Global Freight violated the statute by failing to pay him minimum wages, 29 U.S.C. § 206, et seq.(ECF No. 3, ¶¶ 68-88.) All of the statutory claims are premised on Sisson's alleged status as an employee of Global Freight and, to some extent, turn on the content of a December 10, 2017 term sheet (ECF No. 17-2), which Global Freight considers binding and Sisson alleges he never signed.
• Count II accuses Global Freight of common-law fraud, namely of forging his signature on the contract which forms the basis of Global Freight's lawsuit.
• Count III alleges that Global Freight violated the Michigan minimum wage and hours laws, Mich. Comp. Laws §§ 408.414 and 408.419.
• The final claim, also, but incorrectly labeled as Count III (hereinafter Count IV), alleges that Global Freight failed to pay him overtime wages as an employee and thus violated the Michigan overtime compensation statute, Mich. Comp. Laws §§ 408.414 and 408.419.
In its motion for summary judgment, Global Freight posits as undisputed that Sisson was not an employee, but an independent contractor, and thus, he cannot prevail on any of his statutory claims, i.e., Counts I, III and IV. Global Freight further argues that Sisson's fraud claim must fail, because he cannot meet the elements under Michigan, law, including reliance and damages.
a. Plaintiff's motion is unopposed.
Local Rule 7.1(c)(1) states that a "respondent opposing a motion must file a response, including a brief and supporting documents then available." E.D. Mich. LR 7.1(c)(1). My Practice Guidelines for motion practice state that, "[i]n instances where the Court has issued a briefing schedule on a motion, that schedule applies. In all other instances, the parties should follow Local Rule 7.1(e)." There was no briefing schedule issued for this motion, and Local Rule 7.1(e) provides a 21-day response deadline for summary judgment motions, which would have applied here. Accordingly, the Court has discretion to refuse the late response and treat this as an unopposed motion. See Howard v. Nationwide Prop. & Cas. Ins. Co., 306 F. App'x 265 (6th Cir. 2009) (upholding district court's grant of summary judgment and refusal to consider late response in opposition to summary judgment where respondent made no showing of excusable neglect); see also Bonga v. Abdellatif, No. 2:16-CV-13685, 2017 WL 6276194, at *2 (E.D. Mich. Dec. 11, 2017) (Patti, M.J.) ("Plaintiff's motion is unopposed, as no existing Defendant has responded to Plaintiff's May 26, 2017 motion to amend."), report and recommendation adopted, No. 16-13685, 2018 WL 1312403 (E.D. Mich. Mar. 14, 2018) (Cox, J.); Powell v. Internal Revenue Serv., No. 2:15-CV-11033, 2016 WL 8253007, at *2 (E.D. Mich. Apr. 20, 2016) (Patti, M.J.) (noting a motion for summary judgment was technically unopposed but acknowledging the need to ensure Defendant had discharged its burden), report and recommendation adopted, No. 15-11033, 2016 WL 7473446 (E.D. Mich. Dec. 29, 2016) (Borman, J.). Since, by failing to respond in even close to a timely manner, Sisson has "failed to properly address" Global Freight's assertions of material fact, as required by Rule 56(c), the Court may consider those facts "undisputed for purposes of the motion" and/or "grant summary judgment if the motion and supporting materials - including the facts considered undisputed - show that the movant is entitled to it[.]" Fed. R. Civ. P. 56(e)(2), (3).
However, while "[t]he court need consider only the cited materials . . . it may consider other materials in the record." Fed. R. Civ. P. 56(c)(3) (emphasis added). At the July 12, 2022 motion hearing, that is exactly what Sisson asked the Court to do, pointing to the declaration he filed with his initial pleadings in this Court (ECF Nos. 2-2, 3-4) without having cited it in a timely opposition. This approach is rejected. Having failed to provide a timely response, and leaving it within the Court's discretion to treat the motion as unopposed, the Court opts to consider only the materials cited in the motion itself. See Doe v. Univ. of Denver, 952 F.3d 1182, 1191 (10th Cir. 2020) (when material is made part of the record, but party fails to cite to particular part of record that supports an argument, district court is under no obligation to parse through the record to find uncited materials); 11 Moore's Federal Practice, § 56.97 ("Rule 56 makes it clear that, although a court has the option to do so, a court is never obligated to search the record for materials not cited by a party.")
But beyond the mere questions of timeliness and form of response, the determination of excusable neglect is "an equitable one, taking account of all relevant circumstances surrounding the party's omission." Pioneer Inv. Serv. Co. v. Brunswick Assocs. P'ship, 507 U.S. 380, 395, 113 S.Ct. 1489, 123 L.Ed.2d 74 (1993). In the instant matter, as will be spelled out in greater detail below in the Court's discussion of Rule 37 sanctions, Sisson has repeatedly flouted court deadlines and orders, showing little consideration for his opponent and little respect for the Court. The equities do not favor a liberal treatment of Sisson's failures with respect to either the summary judgment motion or his discovery obligations. Indeed, the prejudice done "to judicial administration in this case[,]" Pioneer Inv. Serv., 507 U.S. at 398, 113 S.Ct. 1489, favors the discretion here being exercised in: (i) treating Plaintiff's summary judgment motion as unopposed, with the consequences effectively being a dismissal of the counterclaims; and, (ii) finding certain facts as "undisputed for purposes of the motion" under Fed. R. Civ. P. 56(e)(2); while also, (iii) preserving Sisson's right to dispute these facts in his defense of Global Freight's claims against him, to the extent not otherwise precluded by the discovery sanction ruling appearing below. See also, Howard, 306 F. App'x at 267 ("The Supreme Court noted it would not have found an abuse of discretion if there was any evidence of, inter alia, prejudice to judicial administration.") Nonetheless, "even where a motion for summary judgment is unopposed, a district court must review carefully the portions of the record submitted by the moving party to determine whether a genuine dispute of material fact exists." F.T.C. v. Nationwide, Inc., 767 F.3d 611, 630 (6th Cir. 2014). For the reasons that follow, after engaging in such a review, the Court finds that the material facts as propounded by Global Freight, and the motion and supporting materials themselves, demonstrate that Global Freight is entitled to summary judgment on each of Plaintiff's four counterclaims.
b. The term sheet
According to Global Freight, the terms of the commercial relationship between it and Sisson were memorialized in a document signed by both parties on December 10, 2017. (ECF No. 17-2.) That document, although hardly a model of legal craftsmanship, focuses on the sale of a truck by Global Freight to Sisson and calls for payments over time toward ownership, including a down payment of $25,000 and financing in the amount of $10,000. To the extent the document refers to Sisson "working" for Global Freight, it indicates that he will do so "until said debt is settled and all payroll matters will be handled by" Global Freight. Global Freight is referred to throughout as the "seller" and Sisson is referred to as the "buyer." As the buyer, Sisson is responsible for paying various fees on the truck, including registration, International Fuel Tax Agreement (IFTA) tax, insurance, a 10% charge "for using Seller Company authority," and a 10% charge "for using third-party dispatch." There is also language as to what happens if Sisson "defaults on the loan[.]" The president of Global Freight, Margus Kala, has submitted an affidavit in support of the summary judgment motion authenticating the signature for the buyer as Sisson's, specifically attesting: "On December 10, 2017, I watched Tremell Sisson sign the agreement." (ECF No. 17-8, ¶ 5.) Kala also attests, "I prepared an agreement on December 8, 2017 . . . [,]" and "The signature on the agreement was not 'cut and pasted' from some other document[,]" (id., ¶¶ 4, 7), which Sisson suggests when counterclaiming that he "NEVER SIGNED the alleged contract despite that his signature seems to appear on the copy supplied by Global Freight, Inc." (see ECF No. 3, ¶ 33). Global Freight also attaches a screen shot of the native file for the creation of the term sheet, showing that the content was created on December 8, 2017 and last saved on December 12, 2017, i.e., two days after it was reportedly signed. (ECF No. 17-3.) Accordingly, pursuant to Fed. R. Civ. P. 56(e)(2), the Court considers the authenticity of the document and Sisson's signature, as well as that the document reflects the commercial arrangement between the parties, as undisputed facts for purposes of this summary judgment motion.
(See https://www.michigan.gov/taxes/business-taxes/ifta.)
c. Statutory wage claims: Counts I, III, & IV
Global Freight's liability, if any, under the federal and state wage statutes cited in Sisson's counter-complaint is dependent upon whether Sisson was Global Freight's employee, as opposed to an independent contractor. Global Freight provides various pieces of evidence in support of its contention that Sisson was not its employee for purposes of the alleged statutory wage and hours obligations. First, Plaintiff provides the Kala affidavit, wherein Kala attests:
• At no time was there an employee/employer relationship between Global Freight, Inc. and Tremell Sisson.(ECF No. 17-8, PageID.200, ¶¶ 10-12.) In further support, Global Freight attaches the referenced 1099s to Sisson, each showing only nonemployee compensation and no federal income tax withholdings. (ECF No. 17-6.) Additional submitted evidence shows that Sisson incorporated his own Illinois business entity, Applied Pressure, Inc., in January 2016, with an annual report filed in January 2021 (ECF No. 17-4), and that Global Freight made a "Quickpay With Zelle" payment to Sisson's Corporation in December 2019. (ECF No. 17-5.) Of particular note - although not completely consistent in terms of payment terms expressed in the term sheet, which may well have been modified during the course of dealing - Global Freight submits texts between it (presumably Kala) and Sisson, in which Kala references their agreement for Sisson to pay $6,500 by the 15th of every month and expresses: "I can't finance Your ventures out of my pocket. I already financed You last year by almost 70,000 so I am completely out of money." Sisson responds by acknowledging this arrangement: "I know what we agreed on[.] I'm going to get you money[,] just gotta keep running." Kala responds, "Okay, let's stick to the plan[,]" to which Sisson replies, "I'm trying my best with out [sic] having a stroke with all this stress[.]" (ECF No. 17-7.) Accordingly, pursuant to Fed. R. Civ. P. 56(e)(2), the Court considers Sisson's status as an independent contractor, and not as an employee, to be an undisputed fact for purposes of this motion.
• Tremell Sisson booked his own loads mostly through Centraldisptach.Com. He chose when to work and what . . . loads to book.
• Global Freight sent him 1099's for the years 2018, 2019 and 2020.
"Whether a particular situation is an employment relationship is a question of law." Fegley v. Higgins, 19 F.3d 1126, 1132 (6th Cir. 1994). Whether an employment relationship exists under a given set of circumstances "is not fixed by labels that parties may attach to their relationship nor by common law categories nor by classifications under other statutes." Powell v. U.S. Cartridge Co., 339 U.S. 497, 528, 70 S.Ct. 755, 94 L.Ed. 1017 (1950). Rather, it is the "economic reality" of the relationship between parties that determines whether their relationship is one of employment or of something else. Tony & Susan Alamo Found. v. Sec'y of Labor, 471 U.S. 290, 295, 105 S.Ct. 1953, 85 L.Ed.2d 278 (1985). "The issue of the employment relationship does not lend itself to a precise test, but is to be determined on a case-by-case basis upon the circumstances of the whole business activity." Donovan v. Brandel, 736 F.2d 1114, 1116 (6th Cir. 1984); see also Reyes-Trujillo v. Four Star Greenhouse, Inc., 513 F. Supp.3d 761, 797-798 (E.D. Mich. 2021) (Levy, J.) (applying economic reality test under Michigan's wage laws, and noting that "no one factor is controlling"). For example, when there is a question of whether an individual is an independent contractor or an employee, courts use the economic reality test. Donovan, 736 F.2d at 1116. The economic reality test analyzes: (1) the permanency of the parties' relationship; (2) the degree of skill required to render the services; (3) the investment of the worker in equipment or materials for the task; (4) the worker's opportunity for profit or loss, depending on the worker's skill; (5) the degree of the alleged employer's right to control how the work is performed; and (6) whether the service rendered is an integral part of the alleged employer's business. Donovan, 736 F.2d at 1116. Courts may also consider whether the business had "authority to hire or fire the plaintiff" and whether the defendant "maintains the plaintiff's employment records." Ellington v. City of East Cleveland, 689 F.3d 549, 555 (6th Cir. 2012). "It is dependence that indicates employee status." Usery v. Pilgrim Equip. Co., Inc., 527 F.2d 1308, 1311 (5th Cir. 1976).
In the instant matter, given the facts which the Court has considered undisputed for purposes of this motion, the economic reality test points to Sisson's status as an independent contractor. Nothing in the agreement, term sheet or course of dealing indicates an employee status; to the contrary, it references work being done as part of an arrangement to pay off financed debt. That arrangement also demonstrates Sisson's responsibility for multiple expenses and service fees, which one would expect an independent contractor to have to pay, but which an employer would normally pay for a W-2 employee. Sisson had his own corporation. He received 1099s and was responsible for his own payroll taxes. He acknowledged by text that he was a debtor to Global Freight, not a creditor. He took certain payments from Global Freight through his own corporation. He booked his own loads through a third party website, and, according to Kala, chose when to work and what loads to book.
Taken together - the term sheet, Kala's affidavit, and the economic reality test - the undisputed material facts do not support Sisson's claim that he was an employee of Global Freight. Instead, the record, in multiple ways, points to Sisson being an independent contractor who was trying to work off a debt, seemingly incurred through the attempted purchase of a truck, which, we learned at the hearing, he ultimately abandoned. See Swinney v. AMcomm Telecommunications, Inc., 30 F. Supp. 3d 629, 632 (E.D. Mich. 2014) (Edmunds, J.) ("It is well-established that '[t]he requirements of the FLSA apply only to employees[.]' ") (citation omitted). Accordingly, the state and federal wages and hours statutes under which he pleads his counterclaims do not apply. The Court thus GRANTS summary judgment in Global Freight's favor on Counts I, III and IV of the counter-complaint.
And even if the Court had considered Sisson's declaration from much earlier in the litigation, it would not necessarily help him, as it craftily avoids specifics and uses such vague language as to raise more questions than it answers. (ECF No. 3-4.) For example, Sisson declares that he "previously" was "employed" by Global Freight and that this "employment" began in September 2017, which was "directed . . . entirely" by Global Freight (id., ¶¶ 3-4); however, Sisson never says that he was an "employee," much less a W-2 employee, does not explain why he was being paid through his own corporation, never states when the employment ended, and does not explain what he means by "employ." He speaks of being "required" by Global Freight "to work so much[,]" including more than forty hours per week from "time to time" (id., ¶¶ 11-12); yet, he does not explain what he means by "required" or requirements. And, even while disavowing the term sheet, Sisson's declaration sheds no light on the aforementioned texts or the documentary record of the actual course of dealing used to support Plaintiff's motion for summary judgment, such as tax and payment records.
d. Fraud claim (Count II)
The second count of the counter-complaint alleges common-law fraud under Michigan law. But the alleged fraud is not a fraud upon Sisson; rather, he posits that Global Freight perpetrated a fraud upon the Court by presenting it with the fully executed term sheet that Sisson denies ever signing. (ECF No. 3, PageID.48, ¶¶ 74-78; see also ECF No. 1, PageID.11, 18; ECF No. 3-2, PageID.53.) Because Sisson pleads no detrimental reliance upon this alleged misrepresentation - and indeed cannot have relied upon it or suffered damages because of it, since he disavows its authenticity - he has no cognizable claim for fraud. See Titan Ins. Co. v. Hyten, 491 Mich. 547, 555, 817 N.W.2d 562 (2012) (elements include acting in reliance and injury) (internal citation omitted); see also Zaremba Equip., Inc. v. Harco Nat'l Ins. Co., 280 Mich. App. 16, 39, 761 N.W.2d 151 (2008) (reasonable reliance required under theories of fraudulent or innocent misrepresentation). Since he only alleges the existence of fraud in Global Freight's own pleading, Sisson is misconstruing a defense - which could have been placed in his answer (ECF No. 2) - as a counterclaim. The alleged forging or "pasting" of his signature does not form the basis for an independent cause of action for which he could recover damages. Moreover, the counterclaim for fraud is certainly not pleaded with the particularity required by Fed. R. Civ. P. 9(b). Perhaps recognizing all of these insufficiencies, Sisson's counsel agreed at the hearing that indeed the Court should GRANT summary judgment in favor of Global Freight on Count II. Accordingly , the Court hereby does so .
However, to the extent Global Freight invites the Court to award Rule 11(c) sanctions for violation of Fed. R. Civ. P. 11(b) (see ECF No. 17, PageID.180), Plaintiff's request is DENIED. Preliminarily, such sanctions are discretionary under Rule 11(c)(1). Moreover, just because Sisson's fraud claim may have been poorly pleaded or ill-advised, the fact that he mistook a defense for a claim does not necessarily equate to frivolity. Nor does Sisson's failure to abide by briefing deadlines. Additionally, "Rule 11 is inapplicable to any requests for or responses to disclosure or discovery[,]" 2 Moore's Federal Practice § 11.02[5] (2020); instead, such requests are more appropriately taken up under Rule 37(b)(2), as the Court does below. Furthermore, Global Freight failed to present its motion for sanctions "separately from any other motion[,]" and made no showing that such a motion was served in advance under Rule 5, as required by Fed. R. Civ. P. 11(c)(2). See 2 Moore's Federal Practice § 11.22[1b] (2020) ("The [Rule 11] 'safe harbor' provision, granting a time period between the time of service and the time for filing, is designed to allow for the correction of the alleged violation."); see also Morganroth & Morganroth v. DeLorean, 123 F.3d 374, 384 (6th Cir. 1997) (motion for Rule 11 sanctions denied for failure to comply with safe harbor provisions of rule).
Finally, as explained from the bench at the hearing, Global Freight's insistence that the absence of Sisson's FLSA claims deprives this Court of subject matter jurisdiction and requires a remand to state court due to the lack of a federal question (see ECF No. 17, PageID.178) is incorrect. The fact remains that Global Freight alleges that: (a) it is "a Michigan Corporation . . . [:]" (b) its own damages significantly exceed $75,000; and, (c) Sisson is "an individual who resides in Illinois." (ECF No. 1-1, PageID.13-14, ¶¶ 1, 2, 14.) As such, Sisson had the right to remove this case to federal court and this tribunal has subject matter jurisdiction due to diversity of citizenship, even if only state law claims remain. 28 U.S.C. §§ 1332(a)(1), 1446. Indeed, Sisson specifically invoked the Court's diversity jurisdiction as a basis for removal. (ECF No. 1, PageID.2, ¶ 3.) To the extent Global Freight seeks a remand to state court in this motion, that request is DENIED.
2. Plaintiff's Motion for Rule 37(b) Sanctions
Sisson's compliance with his discovery obligations and this Court's discovery-related orders has been poor, to say the least. Under the Court's original scheduling order, fact discovery was to be completed by December 3, 2021. (ECF No. 10, PageID.111.) Soon after the parties consented to have me preside over this matter, the Court held a status conference and extended various deadlines by way of a December 15, 2021 text-only order, which included an April 15, 2022 extended deadline for completion of factual discovery and a January 15, 2022 deadline for discovery motions. The day before the discovery motion deadline, Global Freight filed a motion to compel discovery, alleging a significantly delayed response to its August 11, 2021 requests for production, and explaining that when Sisson finally got around to responding to those requests on November 5, 2021, the majority of his responses were objections or promises to later supplement that went unfulfilled. (ECF No. 16, PageID.134.) Plaintiff's motion was well supported, and Sisson filed no response. Accordingly, on February 28, 2022, the Court granted the motion as unopposed, deemed Sisson's objections waived and overruled as untimely, and ordered him "to provide full and complete responses to these production requests, along with copies of the documents requested, on or before March 14, 2022, without objection and without promises of production at some future date." (ECF No. 20, PageID.208 (emphasis in original).) The Court also awarded Global Freight its reasonable expenses incurred in making the motion, including attorney's fees, under Fed. R. Civ. P. 37(a)(5)(A), giving it until March 21, 2022 to file its sworn bill of costs and giving Sisson until March 30, 2022 to file his objections thereto. (Id.) In the second to the last line of its order, the Court stated: "Finally, Sisson is hereby warned that failure to comply with this order may result in sanctions under Fed. R. Civ. P. 37(b)(2), up to and including having the Court render default judgment against him." (Id. (emphases in original).) When the court-ordered deadline for production came and went without compliance from Sisson, Global Freight filed the instant motion for sanctions, which requests a default judgment against Sisson for failing to provide discovery and for disobeying the Court's discovery order, and also included its bill of costs from the original motion to compel. (ECF Nos. 21, 21-3.) Remarkably, rather than humbly admitting that he had failed to comply with the court order and begging for indulgence, Sisson instead doubled-down and attacked the appropriateness of the original discovery requests themselves, notwithstanding the fact that he had waived all of those arguments by failing to respond to the original motion to compel. (ECF No. 22.) While recognizing that the Court's order was "valid . . . requiring production before March 14, 2022[,]" and seemingly conceding that the Court may "choose from a range of sanctions to craft the just sanction[,]" he nonetheless sought to excuse or deflect his blame by arguing that he is "an over the road trucker" and by pointing the finger back at his opponent, stating, "Plaintiff is asking for something it is not willing to produce itself." (Id., PageID.238-239.) Notably, Sisson never filed a motion to compel of his own. Sisson further argued that, "Plaintiff failed to meaningfully engage before filing the motion." (Id. (emphasis added).) These arguments do not sit well with the Court, in part because Sisson waived these arguments by failing to respond to the motion to compel in the first instance, and particularly because this Court does not espouse deflection of obvious blame onto another party.
Then matters got worse. The Court scheduled a hearing on this motion for July 12, 2022. At that hearing, the Court learned that Sisson had still not fully complied with the February 28th discovery order (see ECF No. 27, PageID.297), including, inter alia, failing to produce certain bank, tax and dispatch records, responsive to the August 11, 2021 requests for production of documents, the significance of which ought to be obvious from the Court's above analysis of the course of dealing between the parties and Sisson's apparent operation as an independent contractor through his own trucking company, a scenario which could best be meaningfully explored through these records. Sisson's counsel also represented to the Court "that he has either lost or now only has sporadic contact with his client[.]" (ECF No. 27, PageID.298.)
Trip reports and log books, which are also relevant to Sisson's theory of this case, were apparently produced in an electronic format that could not be accessed by Global Freight's counsel.
In its post-hearing interim order, in addition to ordering Sisson's counsel to pay $150 for making everyone wait in Court for him to appear thirty-five minutes after the scheduled hearing was supposed to begin, and in addition to ordering Sisson to pay $1,575 in attorney's fees associated with the original motion to compel, the Court ordered supplemental briefing from each party by the end of the month to explain whether the court-ordered production had been completed. (ECF No. 27.) The interim order likewise contained language stating: "[T]he Court again warns defendant Sisson that failure to comply with the terms of this order may result in sanctions under Fed. R. Civ. P. 37(b)(2), up to and including having the court render default judgment against him." (Id., PageID.298 (emphasis in original).) The Court also directed that Sisson's counsel "should: (1) take immediate steps to assure that his client sees this order; and, (2) carefully document those efforts." (Id.) Likewise, Plaintiff has a responsibility to keep in touch with his attorneys. Rogers v. City of Warren, 302 F. App'x 371, 377 (6th Cir. 2008) ("Rogers's apparent inability to keep his counsel informed of his whereabouts and contact information demonstrates a reckless disregard for the effect that his conduct would have on the underlying case.") (citing Schafer v. Defiance Police Dep't, 529 F.3d 731, 737 (6th Cir. 2008)).
In its supplemental brief, Global Freight informed the Court that Sisson did not tender the $1,575.00 sanction by July 22, 2022, the date ordered, although Sisson's attorney informed the Court that Sisson "forwarded that sum to Defendant/Counter-Plaintiff [sic] office on July 20th, [sic] 2022." (ECF No. 28; ECF No. 29, PageID.301.) More significantly, Sisson also did not produce any additional discovery, and by July 25, 2022, Global Freight was still owed "tax records, limited bank records, logbooks, trip reports [and] Zelle statements" for both Sisson and his corporation. (ECF No. 28, PageID.299-300.)
Failure to fully comply with the Court's then-four-and-a-half month old February 28, 2022 order compelling discovery by the time of the July 12, 2022 hearing, which was held eleven months after the August 10, 2021 discovery requests were originally served, was readily admitted by Sisson's counsel on the record. Then, in his July 29, 2022 supplemental brief, Sisson represented that:
Defendant/Counter-Plaintiff did not provide all required additional documents on or before July 22nd, [sic] 2022 as ordered by this Honorable Court. Defendant/Counter-Plaintiff did provide Defendant/Counter-Plaintiff's counsel with additional banking records. Exhibit 2. Said banking records were not formatted correctly and requisite correspondence via email to Plaintiff/Counter failed. Responsibility for the failure to forward those records belongs to Defendant/Counter-Plaintiff's counsel.[](ECF No. 29, PageID.302 (emphases added).)
Beyond those previously addressed, additional documents were not produced timely.
To the extent Sisson's counsel attempts to deflect some minor blame to himself, which may be admirable, the response brief and hearing made clear that the client has been uncommunicative and otherwise excused himself from timely discovery responses because he is on the road a lot; but, in any case, "each party is deemed bound by the acts of his lawyer-agent and is considered to have 'notice of all facts, notice of which can be charged upon the attorney' " because the party "voluntarily chose this attorney as his representative in the action, and he cannot now avoid the consequences of the acts or omissions of this freely selected agent." Link v. Wabash R. Co., 370 U.S. 626, 633-634, 82 S.Ct. 1386, 8 L.Ed.2d 734 (1962) (quotations and citations omitted).
The banking records Sisson references are attached as ECF No. 29-2. What is most astonishing from this submission is that Sisson: (1) admits that - notwithstanding discovery requests from the previous August, the court order from February (which contained a warning), an admonishment from the bench on July 12, and an interim order dated July 14, 2022 (which also contained a warning) - "Defendant/Counter-Plaintiff did not provide all required additional documents on or before July 22nd, [sic] 2022 as ordered [for the second time] by this Honorable Court." (ECF No. 29, PageID.302); and, (2) fails to address Global Freight's report that it had not received "tax records, limited bank records, logbooks, trip reports [and] Zelle statements" for both Sisson and his corporation. (ECF No. 28, PageID.299-300.) Since then, there have been no further updates to assure the Court that Sisson's discovery obligations and court-ordered directives have finally been met, now thirteen months after the original discovery requests, seven months after the Court ordered production, and five months after the April 15, 2022 extended fact discovery deadline. (See Dec. 15, 2021 Text-Only Order.)
The pattern has been stark and unmistakable. Sisson simply refuses to engage unless he chooses to do so. He - and/or his counsel - failed to respond to the motion to compel, failed to comply with the order compelling production, failed to respond to the motion for summary judgment with even the semblance of a timely brief, kept the Court and opposing counsel waiting to begin the hearing, failed to complete his production as further ordered at the hearing, and failed to heed multiple warnings of impending and possibly severe sanctions. Rule 37 gives the Court wide latitude in crafting a sanction for failure to obey a discovery order, including, inter alia: (i) "directing that the matters embraced in the order or other designated facts be taken as established for purposes of the action, as the prevailing party claims;" (ii) "prohibiting the disobedient party from supporting or opposing designated claims or defenses, or from introducing designated matters in evidence;" and, (iii) "striking pleadings in whole or in part[.]" Fed. R. Civ. P. 37(b)(2)(A)(i)-(iii). Applying the factors set forth in Harmon, 110 F.3d at 366-367, the Court has no difficulty finding that: (1) Sisson's failure to cooperate in discovery is due to willfulness, bad faith or fault; (2) Global Freight has been prejudiced by Sisson's failure to cooperate in discovery, particularly with respect to the exploration of Sisson's assertion that he was not an independent contractor and he was driving the truck in question as an employee, rather than as a purchaser; (3) Sisson was warned repeatedly that failure to cooperate could lead to significant sanctions, up to and including a default judgment; and, (4) less drastic sanctions were imposed and considered before imposing the sanction ordered herein. "Discovery abusers must be sanctioned, because '[w]ithout adequate sanctions, the procedures for discovery would be ineffectual.' " Grange Mut. Cas. Co. v. Mack, 270 F. App'x 372, 378 (6th Cir. 2008) (affirming default judgment) (quoting 8A Wright, Miller & Marcus, Federal Practice and Procedure § 2281 (2d ed. 1994)). In light of this history, and Sisson's flagrant violation of both his discovery obligations and this Court's orders, Plaintiff's motion for sanctions under Rule 37(b) (ECF No. 21) is hereby GRANTED IN PART. Having considered the Harmon factors, each of which weighs against Sisson, the Court orders sanctions as follows:
"The burden is on the noncomplying party to show that the failure was due to inability and not to willfulness, bad faith, or fault." Intercept Sec. Corp. v. Code-Alarm, Inc., 169 F.R.D. 318, 322 (E.D. Mich. 1996) (Gadola, J.) (citing Regional Refuse Systems, 842 F.2d at 154). Sisson has failed to meet that burden here.
Albeit in the context of excluding evidence as a sanction, I am persuaded by the guidance that, "while 'prejudice' . . . does not mean 'irremediable harm,' the burden imposed by impeding a party's ability to prepare effectively a full and complete trial strategy is sufficiently prejudicial." Ware v. Rodale Press, Inc., 322 F.3d 218, 222 (3d Cir. 2003).
• All of the designated facts as stated in the affidavit of Margus Kala (ECF No. 17-8) shall be taken as established for purposes of this action, as Global Freight claims; and,
• Sisson is hereby prohibited from supporting the claim stated in his counter-complaint.
II. ORDER:
Accordingly, Plaintiff's January 14, 2022 motion for summary judgment (ECF No. 17) is GRANTED IN PART and the counter-complaint (ECF No. 3) is HEREBY DISMISSED WITH PREJUDICE, and Plaintiff's March 17, 2022 motion for sanctions (ECF No. 21) is GRANTED IN PART and sanctions are awarded under Fed. R. Civ. P. 37(b)(2), as listed above.