Opinion
Civil Action No. 3:03-CV-1412-G
February 24, 2004
FINDINGS, CONCLUSIONS, RECOMMENDATION OF THE UNITED STATES MAGISTRATE JUDGE
Before the Court are Plaintiff's Motion for Sanctions and Supporting Brief, and Appendix to Plaintiff's Motion for Sanctions, both filed January 20, 2004. No response was filed. The preceding pleadings were referred to the undersigned United States Magistrate Judge for hearing, if necessary, and for determination pursuant to the District Court's Order of Reference, filed January 21, 2004. The Court held a hearing on this matter on Friday, February 6, 2004, at 10:00 a.m. Defendant did not personally appear as ordered, but his counsel was present. Based on the motion and supporting documents, counsel's affidavit, the oral arguments, and the applicable law, the Court is of the opinion that Plaintiff's Motion for Sanctions and Supporting Brief should be GRANTED.
I. BACKGROUND
This is a suit on a promissory note for $758,325.20 executed by Wolverine Pizza, L.L.C., and La-Van Hawkins Food Group, L.L.C., and made payable to the order of McLane Foodservice, Inc., ("Plaintiff). La-Van Hawkins Inner City Foods, L.L.C., and La-Van Hawkins ("Defendant") guaranteed payment of the note, and Plaintiff claims that Defendant is liable to it for $752,684.12. Plaintiff is a Texas corporation, and Defendant is a citizen of and resides in the State of Michigan. Plaintiff alleges that no payment has been made on the note or the guarantee. On June 24, 2003, Plaintiff filed this action on the note and guarantee.
On September 23, 2003, Plaintiff served its first set of interrogatories and requests for production on Defendant. Responses were due October 22, 2003. After an agreement to extend the response deadline, Defendant filed his objections and responses on November 21, 2003. Defendant's counsel filed a motion to withdraw on November 25, 2003. Plaintiff scheduled a deposition of Defendant for December 3, 2003. While the motion to withdraw was pending, Defendant's counsel filed an emergency motion for protection from the deposition on grounds that Defendant's recent surgery made it impossible for him to travel to or attend the deposition for thirty days. On December 5, 2003, the Court granted the motion and ordered Defendant to appear for deposition between January 5 and January 9, 2004, in the Detroit, Michigan area. Additionally, the Court ordered Defendant to supplement his Rule 26(a)(1) disclosures and respond to Plaintiff's discovery requests no later than December 31, 2003.
Thereafter, Plaintiff's counsel wrote Defendant's counsel requesting dates of Defendant's availability for deposition; there was no response. The District Court granted Defendant's counsel's motion to withdraw on December 16, 2003. On December 18, 2003, Plaintiff scheduled the deposition of Defendant for January 8, 2004, in Detroit, Michigan. Because Defendant was proceeding pro se, Plaintiff sent the notice of deposition directly to Defendant's personal address. Defendant failed to supplement his Rule 26(a)(1) disclosures or provide responses to Plaintiff's discovery requests by the December 31, 2003 deadline. Defendant also failed to appear for his deposition as ordered. On January 20, 2004, Plaintiff filed the instant motion for sanctions.
The District Court referred the motion to this Court on January 21, 2004. This Court scheduled a hearing for Friday, February 6, 2004, at 10:00 a.m., and ordered Defendant to appear in person at the hearing and confirm his intent to appear at least two days prior to the hearing. The Court's Order admonished Defendant that his failure to confirm or to attend the hearing without obtaining permission of the Court would result in appropriate sanctions. The Court ordered the U.S. District Clerk's Office to serve a copy of the Order on Defendant via regular mail and certified mail, return receipt requested, at his current Detroit, Michigan address and via fax. In addition, the Court ordered counsel for Plaintiff to attempt to notify Defendant of the date and time of the scheduled hearing via telephone.
On February 5, 2004, Defendant's current counsel filed a notice of appearance and an application for admission pro hac vice. On February 5, 2004, the District Court granted counsel's application for admission pro hac vice. The following day, February 6, 2004, the Court held a hearing on the instant motion. Defendant did not attend the hearing, despite the Court's clear order that he appear in person. Defendant's counsel appeared and informed the Court that he explained the Court's requirement of a personal appearance to Defendant, but Defendant responded that he "was between a rock and a hard place" and could not appear. The Court then requested Defendant's counsel to explain what circumstances prevented Defendant from appearing, but counsel was unaware of any particular circumstances. Defendant's counsel apologized for his client's failure to appear and stated that it was his opinion that Defendant had no justifiable legal defenses to Plaintiff's claims. Subsequently, Defendant's counsel indicated that he was prepared to agree to the entry of a consent judgment in favor of Plaintiff. The Court informed counsel that it was prepared to enter an order granting the motion for sanctions, to strike Defendant's answer and counterclaims, and to recommend to the District Court that it enter judgment against Defendant. However, the Court agreed to withhold its order for a few days in order to give counsel time to reach an agreement on a consent judgment. On February 13, 2004, Plaintiff's counsel mailed a letter to chambers stating that he sent a proposed consent judgment to Defendant's counsel on Friday, February 6, 2003, but that counsel were unable to reach an agreement on the consent judgment. Accordingly, the Court issues this recommendation on Plaintiff's motion for sanctions.
Also on February 5, 2004, Plaintiff's counsel submitted an affidavit attesting to his efforts to reach Defendant by telephone, as required by the Court's Order. Counsel stated that he called Defendant on January 27, 2004, and his call was answered by someone other than Defendant. The individual could not provide a contact number for Defendant. Counsel left Defendant a message stating that the Court had scheduled a hearing on February 6, 2004, and counsel requested a return call by Defendant. The affidavit does not reflect that Defendant returned counsel's call. On February 5, 2004, counsel faxed Defendant a copy of the affidavit.
II. ANALYSIS
Plaintiff moves under FED. R. Civ. P. 37(b)(2) for an order striking Defendant's affirmative defenses, dismissing Defendant's counterclaims, and rendering a default judgment against Defendant. Pursuant to Rule 37(b)(2)(C), a court may award default judgment if a party fails to obey an order of the court or permit discovery. See FED. R. CIV. P. 37(b)(2). While Rule 37 allows for the entry of a default judgment as a sanction, "[l]itigation-ending sanctions are, by their very nature, the last resort." Fuqua v. Horizon/CMS Healthcare Corp., 199 F.R.D. 200, 204 (N.D. Tex. 2000) (citing FDIC v. Conner, 20 F.3d 1376, 1380 (5th Cir. 1994)). "Nevertheless, in certain circumstances, they are justified `not merely to penalize those whose conduct may be deemed to warrant such a sanction, but to deter those who might be tempted to such conduct in the absence of such a deterrent.'" Id. (citing National Hockey League v. Metropolitan Hockey Club, 427 U.S. 639, 643 (1976)). "[W]here a district court awards default judgment as a discovery sanction, two criteria must be met." United States v. $49,000 Currency, 330 F.3d 371, 376 (5th Cir. 2003) (citing Batson v. Neal Spelce Associates, Inc., 765 F.2d 511, 514 (5th Cir. 1985) (discussing the criteria to be used when reviewing a district court's dismissal of a claim as a Rule 37 sanction)). "First, the penalized party's discovery violation must be willful." Id. "Also, the drastic measure is only to be employed where a lesser sanction would not substantially achieve the desired deterrent effect." Id. "The reviewing court may also consider whether the discovery violation prejudiced the opposing party's preparation for trial, and whether the client was blameless in the violation." Id.
Rule 37(b)(2)(C) states
If a party . . . fails to obey an order to provide or permit discovery, . . . the court in which the action is pending may make such orders in regard to the failure as are just, and among others the following:
. . .
(C) An order striking out pleadings or parts thereof, or staying further proceedings until the order is obeyed, or dismissing the action or proceeding or any part thereof, or rendering a judgment by default against the disobedient party[.]
Based on the facts of this case, the Court finds that Defendant's conduct is willful. This Court's orders required Defendant to provide complete Rule 26(a)(1) disclosures and responses to written discovery requests by December 31, 2003. As of the February 6, 2004 hearing, Defendant failed to provide such discovery. The Court also ordered Defendant to appear for deposition in Detroit, Michigan, between January 5 and January 9, 2004, pursuant to Defendant's request. Defendant failed to appear at the January 8, 2003 deposition. Moreover, this Court clearly ordered Defendant to personally appear at the February 6, 2003 hearing to explain such failures. Despite the Court's clear orders, Defendant failed to appear. Defendant's counsel appeared at the hearing and attempted to excuse only his client's failure to appear at the hearing, without discussing his client's other failures because he had just been retained. Defendant's counsel stated to the Court that he explained the requirement that Defendant "personally appear," but that Defendant "was between a rock a hard place" and could not attend. Defendant's counsel was unable to explain exactly circumstances prevented Defendant's appearance. Based on the procedural history of this case, and counsel's arguments, there is no reason to believe that Defendant's failures to follow the Court's orders were due to anything other than Defendant's own decisions and actions. Defendant's willful disregard of this Court's orders satisfies the first criterion for striking Defendant's answer and entering a default judgment against him. See $49,000 Currency, 330 F.3d at 376.
Next, the Court considers whether a less drastic sanction than striking Defendant's answer and entering a default judgment against Defendant would "substantially achieve the desired deterrent effect." Id. Defendant disregarded two consecutive orders of this Court without explanation. First, the Court's December 5, 2003 Order granted Defendant's emergency motion for protection and rescheduled Defendant's deposition to the extent requested by Defendant in order to give him time to recover from surgery. The Order also required Defendant to provide complete Rule 26(a)(1) disclosures and respond to Plaintiff's discovery. Nevertheless, Defendant failed to appear at the deposition in Michigan, notify counsel that he would not be appearing, or explain his nonappearance. Further, Defendant failed to provide the required disclosures or discovery or explain his nonresponsiveness. Second, the Court's January 22, 2004 Order required Defendant to "appear in person" at the February 6, 2004 hearing to explain such failures. Despite this clear order, Defendant failed to personally appear. Rather, Defendant retained counsel to appear in this case only one day before the hearing. Defendant's new counsel failed present any assurance from his client that he would comply with the Court's previous orders or any forthcoming order. Instead, counsel stated that it was his opinion that his client lacked any defense to this action, and that he was prepared to agree to a consent judgment.
Although Defendant was proceeding pro se until he obtained new counsel, a change in counsel may not avoid dismissal as an appropriate sanction. See Fisher v. Henderson, 105 F.R.D. 515, 518-19 (N.D. Tex. 1985) ("While a change in counsel may temporarily disrupt or delay litigation, it cannot be used as a shield or excuse for overlooking legitimate discovery requests."); see also Acrea v. Johnson Controls, Inc., 2002 WL 1758184, at *2 (N.D. Tex. July 26, 2002) (finding that even though the plaintiff was proceeding pro se, she did "so because she terminated her attorney's employment. Since then, she has failed to participate in adjudicating her claims in any substantial manner. This Court finds that Acrea's actions warrant a default judgment against her.").
Based on Defendant's continued willful recalcitrance and blatant disregard of court orders, the Court finds that a lesser sanction than default judgment would not substantially achieve the necessary deterrent effect. See Fisher, 105 F.R.D. at 519 ("willful disregard and misconduct justified dismissal"). In this case, dismissal is necessary not only to penalize Defendant for his conduct, "but to deter those who might be tempted to such conduct in the absence of such a deterrent.'" Fuqua, 199 F.R.D. at 204. The ineffectiveness of a lesser sanction satisfies the second criterion. See $49,000 Currency, 330 F.3d at 376.
Finally, the Court also considers the additional factors of prejudice and blame. Plaintiff claims that Defendant's actions have prejudiced Plaintiff's ability to prepare for this case and discover the bases for Defendant's affirmative defenses and counterclaims. The Court notes that Defendant has had significant time to provide Rule 26(a)(1) disclosures and respond to Plaintiff's written discovery requests — Defendant's responses were originally due October 22, 2003. Further, it is apparent, and the Court so finds, that Defendant is solely to blame for the discovery violations. In addition, the Court originally withheld this recommendation in order to give Defendant an opportunity to agree to a consent judgment. According to Plaintiff's counsel, there has been no discussion of the form of a consent judgment. Accordingly, a lesser sanction would not substantially achieve the necessary deterrent effect in this case.
III. RECOMMENDATION
For the foregoing reasons, the Court finds that Defendant should be sanctioned pursuant to Rule 37(b)(2) for failing to obey the Court's orders. Although the motion for sanctions was referred for determination, the appropriate sanctions are litigation-ending, and therefore, this Court must recommend such sanctions to the District Court in accordance with 28 U.S.C. § 636(b). See, e.g., Herbst v. Brown, 2001 WL 548721, at *2 (S.D.N.Y. May 23, 2001) (noting a prior recommendation of dismissal by Magistrate Judge "based on plaintiff's repeated failures to appear at pretrial conferences, his failure to attempt to explain or justify his absences, and his failure to take any steps to prepare the case for trial."). Accordingly, it is hereby RECOMMENDED that Plaintiff's Motion for Sanctions and Supporting Brief be GRANTED and that Plaintiff's answer be STRICKEN and that a DEFAULT JUDGMENT be entered against La-Van Hawkins.Plaintiff also requests all costs and attorney's fees incurred in preparing the instant motion and the costs and fees incurred in connection with the aborted deposition of Defendant. Accordingly, Plaintiff may file an application for reasonable expenses and attorney's fees, supported by case law and billing records, no later than March 9, 2004. Defendant may file a response, supported by case law, no later than March 19, 2004.
SO RECOMMENDED