Opinion
5:19-cv-2243
10-19-2021
U.S. DEPARTMENT OF LABOR, PLAINTIFF, v. ELITE SECURITY CONSULTANTS, LLC, et al., DEFENDANTS.
MEMORANDUM OPINION AND ORDER
SARA LIOI, UNITED STATES DISTRICT JUDGE
Before the Court is the motion of plaintiff United States Department of Labor for entry of default against defendants Elite Security Consultants, LLC (“Elite Security” or the “corporate defendant”) and Timothy P. Boyle, Sr. (“Boyle” or the “individual defendant”) (collectively, “defendants”). (Doc. No. 42.) For the reasons set forth herein, the motion is granted in part and denied in part.
I. Background
On September 26, 2019, the United States Department of Labor (the “Secretary”) filed a complaint against Elite Security and Boyle. (Doc. No. 1, Complaint.) The complaint alleges that Elite Security is “an Ohio limited liability company . . . engaged in the training and furnishing of security guards to other persons[,]” and that Boyle is “a member of [d]efendant Elite Security who actively supervised the daily operations and management of” Elite Security, including “the scheduling of work hours, the setting of wages, the supervision of job performance, and the disbursement of pay.” (Id. ¶¶ II(a) and II(b).) The complaint further alleges that defendants employed persons “for wages at a rate less that $7.25/hour for time worked between October 1, 1 2017 and December 31, 2017[,]” and, additionally, failed to pay overtime wages for hours worked in excess of forty (40) hours per week. (Id. ¶¶ V, VI.) Such violations were allegedly “repeated[] and willful[]” and are continuing. (Id. passim.)
On November 15, 2019, attorney James J. Collum appeared on behalf of defendants. (Doc. No. 4.) On November 19, 2019, Mr. Collum filed defendants’ answer, which was amended that same day. (Doc. No. 7, Amended Answer.)
On January 17, 2020, the Court conducted a “counsel only” case management conference (“CMC”), with all parties represented by counsel, including defendants. However, the day before the CMC, defendants’ counsel filed a motion to withdraw his representation (Doc. No. 14), which was granted “effective as of the date that [Mr. Collum] files on the record of the case a certification that he has mailed a copy of the Court’s Case Management Plan and Trial Order [‘CMPTO’] to each of [the] defendants.” (Doc. No. 17-1). Such certification was filed on January 20, 2020. (Doc. No. 18, Notice.)
On April 28, 2020, the Secretary unilaterally filed the required status report (Doc. No. 20)and moved to extend the CMPTO deadlines (Doc. No. 19), which, for good cause shown, was granted. The first amended CMPTO issued on April 29, 2020. (Doc. No. 21.) Another unilateral status report (Doc. No. 22) was filed by the Secretary on July 27, 2020, followed by a motion to further amend the CMPTO (Doc. No. 26), which was granted. The second amended CMPTO issued on August 3, 2020. (Doc. No. 28.) 2
The CMPTO requires joint status reports every 45 days. The first status report does not indicate why defendants did not join it.
In this second report, the Secretary indicated that an attempt was made to obtain defendants’ input for the report, but they “chose [not] to participate.” (Doc. No. 22 at 1 (All page number references herein are to the consecutive page numbers applied to individual documents by the Court’s electronic filing system.).)
On August 28, 2020, the Secretary moved to enforce a non-party subpoena. (Doc. Nos. 29, 30.) On August 31, 2020 the Secretary filed another unilateral status report. (Doc. No. 31.) Since then, there have been no additional status reports filed, even unilaterally. On September 4, 2020, the Secretary withdrew the motion to enforce subpoena. (Doc. No. 32.)
As with the second status report, “neither [d]efendant chose to participate.” (Doc. No. 31 at 1.)
On September 17, 2020, the Secretary moved to compel production of documents from defendants. (Doc. No. 33.) On October 19, 2020, this Court granted the motion to compel, indicating that, if defendants failed to respond to discovery within 60 days, the Court would entertain a motion for an order of contempt. (Doc. No. 34.) The Court also remarked that defendants remained unrepresented by counsel, noting that “[a]lthough Boyle, as an individual, may represent himself in court, ‘a corporation cannot appear in federal court except through an attorney.’” (Id. at 2 (citing cases).) The Court indicated that if new counsel did not appear for Elite Security within 30 days, it would “entertain a motion for default judgment against Elite Security.” (Id. (citing cases).) At that time, the Court was assuming that Boyle would represent, and appropriately defend, himself in this lawsuit. This order was served on each defendant by certified mail on October 21, 2020. (See Doc. No. 35, Certified Mail Receipts.)
Although the complaint and individual summons contain a separate address for defendant Boyle, mailings to him by the Clerk have been to the business address of the corporate defendant, which have been received as evidenced by the certified receipts signed by Boyle.
On October 29, 2020, the Secretary sought additional time to add parties (Doc. No. 36), which was granted by non-document order on November 2, 2020.
On January 27, 2021, the Secretary sought another amendment of the dates and deadlines in the CMPTO. (Doc. No. 37.) The third amended CMPTO issued on February 1, 2021. (Doc. No. 38.) 3
On May 7, 2021, the Court issued an order reminding all parties that the case was set for a telephone conference on May 11, 2021 and including directions for dialing in to the conference. (Doc. No. 41.) This order with its directions was mailed to each defendant, as reflected on the docket. On May 11, 2021, the Secretary was represented by new counsel at the telephone conference, prior counsel having been substituted in March 2021; no one appeared for either defendant. In a Minute Order following the conference, the Court reminded defendants “that only Timothy P. Boyle, Sr. is permitted to represent himself in federal court; defendant Elite Security Consultants, LLC must be represented by counsel.” (Minute Order, 05/11/2021.) During the conference, plaintiff’s counsel reported that defendants had thus far failed to produce the documents they were previously ordered to produce under pain of contempt. (Id. (referencing Doc. No. 34).) Upon plaintiff’s request, the Court extended the deadline for plaintiff to file an appropriate motion. (Id.) This minute order was mailed to each defendant, as again reflected on the docket.
On July 30, 2021, the Secretary filed a motion for the entry of default against each defendant and for leave thereafter to file a motion for default judgment. (Doc. No. 42.) On August 3, 2021, noting that “given the procedural history of this case, the Court would be acting within its discretion and the federal rules to immediately direct the Clerk to enter default,” (Doc. No. 43 at 2), the Court nonetheless, “in an abundance of caution[,]” directed defendants “to show cause in writing by no later than Wednesday, August 11, 2021, why default by the Clerk should not be entered against them and, thereafter, a motion for default judgment entertained by the Court, for their failure to comply with the Court’s October 19, 2020 Order and to otherwise defend this matter since filing the answer and amended answer on November 19, 2019.” (Id.) Service of this order on each defendant was ordered by the Court and is reflected on the docket. 4
On August 11, 2021, Boyle filed a response to the show cause order, purporting to represent himself and Elite Security (despite all prior warnings that Elite Security must have counsel). (Doc. No. 44.) The response states that defendants “have been in communication and full cooperation with” the Secretary’s prior counsel, but since “the first few months of 2021,” after new counsel appeared for the Secretary, “have never been able to reach [new counsel] nor anyone from her office.” (Id. at 1.) The response also represents that Elite Security has ceased operations and that “there is no capital available” to hire counsel. (Id.) Even so, Boyle represents that defendants “will gladly aid and cooperate with any requests made” but “will require communication and effort be made on behalf of [the Secretary’s] representation to work with us in doing so.” (Id.)
On August 12, 2021, by non-document order, the Court directed the Secretary to file a reply to defendants’ response to the show cause order by August 26, 2021. None was filed.
This motion for entry of default is now at issue.
II. Discussion
Rule 55 of the Federal Rules of Civil Procedure provides that “[w]hen a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend, and that failure is shown by affidavit or otherwise, the clerk must enter the party’s default.” Fed. R. Civ. P. 55(a) (emphasis added). “Although Rule 55(a) contemplates that entry of default is a ministerial step to be performed by the clerk of court . . . a district judge also possesses the inherent power to enter a default[.]” City of New York v. Mickalis Pawn Shop, LLC, 645 F.3d 114, 128 (2d Cir. 2011) (citations omitted). The entry of a default “formalizes a judicial recognition that a defendant has, through its failure to defend the action, admitted liability to the plaintiff.” Id.
Such entry of default is appropriate even where, as here, “[d]espite the filing of an initial [a]nswer by former counsel, [d]efendant has shown no ability or willingness to continue or 5 ‘otherwise defend’ [the] case.” Zobele Mexico, S.A. de C.V. v. TSS Tech., Inc., No. 1:18-cv-596, 2019 WL 1130752, at *2 (S.D. Ohio Feb. 13, 2019), report and recommendation (adopted by 2019 WL 1125873 (S.D. Ohio Mar. 12, 2019)); see also Mickalis Pawn Shop, LLC, supra, 645 F.3d at 129–30 (authorizing entry of default, and eventually default judgment, where a corporate defendant initially answered, but then withdrew from the litigation, failed to obtain substitute counsel, and failed to “otherwise defend” despite clear warnings) (also collecting cases where default was entered for, inter alia, demonstrating lack of diligence during pre-trial proceedings; engaging in obstructionist litigation tactics; willfully disregarding a court’s order that a corporate entity must appear through counsel; failing to appear for a deposition or at trial); Grace v. Bank Leumi Trust Co. of N.Y., 443 F.3d 180, 192 (2d Cir. 2006) (citing cases noting that a default judgment may be entered against a corporation that fails to appear through counsel), cert. denied, 549 U.S. 1114, 127 S.Ct. 962, 166 L. Ed. 2d 707 (2007); Hoxworth v. Blinder, Robinson & Co., 980 F.2d 912, 918 (3d Cir. 1992) (“the district court in this case could have imposed a default judgment against the defendants for failure to comply with its own unambiguous orders to obtain substitute counsel, file a pretrial memorandum, and respond to plaintiffs’ discovery requests.”) (citing inter alia Eagle Assoc. v. Bank of Montreal, 926 F.2d 1305, 1310 (2d Cir. 1991) (Rule 55 default was proper where “court was confronted by a recalcitrant party who failed to comply with its order to obtain counsel”).
In this case, the corporate defendant (who cannot appear without counsel) has refused to obtain substitute counsel. Although Boyle relies on lack of funds for the failure of Elite Security to obtain counsel, that is not a suitable excuse for failure to defend. See, e.g., Hesco Bastion Ltd. v. ACS Holdings USA, LLC, No. 08-266, 2011 WL 13377582, at *2–3 (D. Del. Apr. 15, 2011) (granting default judgment against ACS Holdings despite its inability to hire substitute counsel 6 due to lack of funds); Woods v. K.C. Masterpiece, No. 4:04-cv-936, 2006 WL 1875524, at *1 (E.D. Mo. June 30, 2006) (granting plaintiff’s motion to strike the corporate defendant’s answer (filed by its original attorney) for failure to comply with court’s order to obtain substitute counsel after original counsel was permitted to withdraw, and granting default judgment).
As for the individual defendant, the Court is not inclined to find that Boyle has failed to defend. In fact, in his response to the show cause order, Boyle indicated his repeated unsuccessful attempts to contact plaintiff’s new counsel, a fact that has not been denied by plaintiff’s counsel despite being given an opportunity to do so. Boyle represents that he has “over a dozen bankers boxes containing files . . . waiting for collection.” (Doc. No. 44 at 1.) Presumably the contents of those boxes are responses to discovery requests. Plaintiff has given no indication to the Court that it has attempted to respond to Boyle and/or to avail itself of an opportunity to inspect and copy the documents at defendant’s corporate facility-the third method of producing responses that was offered to defendants by plaintiff. (See, Doc. No. 33, Plaintiff’s First Set of Requests for Production of Documents Propounded to Defendants, at 5 (“written responses to the Document Requests must be served on the Secretary within 30 calendar days after their date of service”) (emphasis added); at 6–7 (“production of the documents . . . shall occur by whichever of the following methods the [d]efendants prefer: (1) the delivery of accurate, complete, and legible paper copies of the documents by the U.S. Postal Service or common carrier to the office of the Solicitor of Labor at 1240 East Ninth Street, Room 881, Cleveland, Ohio 44199, no later than August 28, 2020; (2) the transmittal of accurate, complete, and legible electronic copies of the documents to the e-mail address of the Secretary’s undersigned attorney (marta.wayne.p@dol.gov) no later than August 28, 2020; and (3) the delivery of the original documents for inspection and copying by the Secretary in the office of [d]efendant Elite Security Consultants, LLC, at 1340 Market Avenue, 7 North Canton, Ohio or the office of the Solicitor of Labor at 1240 East Ninth Street, Room 881, Cleveland, Ohio on August 28, 2020, beginning at 10:00 a.m. EDT.”).)
Under these circumstances, the Court will not order entry of default against Boyle at this time. That said, going forward, Boyle must actively defend himself (either pro se or through new counsel). Failing that, the Court will, at an appropriate time, entertain a new motion for entry of default or a motion for summary judgment, as appropriate.
Further, to be clear, the Court expects counsel for the plaintiff to contact Boyle forthwith to make a plan for obtaining the discovery plaintiff seeks that Boyle stands ready to produce.
III. Conclusion
The Court concludes that defendant Elite Security Consultants, LLC has failed to show cause why default should not be entered against it, but defendant Timothy P. Boyle, Sr. has shown good cause. Conversely, Boyle must cooperate fully in providing requested discovery in a prompt and timely fashion.
The Secretary’s motion for entry of default against the corporate defendant is granted, but against the individual defendant, it is denied. (Doc. No. 42.) The Clerk of Court is directed to note the default of defendant Elite Security Consultants, LLC on the docket of this case.
The Court will entertain a properly supported motion for default judgment against the corporate defendant, provided it is filed within forty-five (45) calendar days from the date of this order. 8
Further, the Court will expect joint status reports to resume immediately, with the first one due within 14 days of this order.
IT IS SO ORDERED. 9