Hornady et al v. Outokumpu Stainless USA, LLC

Filing 344

Order ADOPTING IN PART, MODIFYING IN PART the 261 Report and Recommendations re 238 Motion for Sanctions. The Motion for Sanctions is GRANTED and Default shall be entered against defendant and in favor of plaintiffs on liability. The Clerk is DIRECTED to strike Defendant's 228 Answer. The following motions are TERMINATED: 277 Report and Recommendations re 233 MOTION to Strike, 245 MOTION for Partial Summary Judgment, 316 MOTION for Reconsideration, 269 Consol idated MOTIONS to Strike (and Alternative Requests for Leave to File Substantive Briefs), 283 MOTION to Strike Defenses from Answer to Third Amended Complaint. A Hearing on Damages is set for 12/15/2021 10:00 AM in US Courthouse, Courtroom 4A, 155 St. Joseph Street, Mobile, AL 36602 Chief District Judge Jeffrey U. Beaverstock. Signed by Chief District Judge Jeffrey U. Beaverstock on 11/18/2021. (Attachments: # 1 Appendix) (tgw

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ALABAMA
SOUTHERN DIVISION
WILLIAM HEATH HORNADY, et al.,
Plaintiffs,
v.
OUTOKUMPU STAINLESS USA,
Defendant.

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CIVIL ACTION NO. 1:18-00317-JB-N
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ORDER

I.

INTRODUCTION
A. Background and Recent Procedural History
1. The Report and Recommendation
2. The Court’s Review of the Record
3. February 2021 Hearing, Show Cause Orders
B. The Collective Action
1. The Parties
2. Plaintiffs’ Claims
3. Defendant’s Pay and Timekeeping Practices
a. The Significance of the Regular Rate of Pay and Defendant’s Pay
Rates
b. The Parameters of Defendant’s Workweek
c. Rounding Principles under the FLSA and Defendant’s Rounding
Policies
d. Regulations Applicable to Bonuses and Defendant’s Incentive Plan
e. Defendant’s Duty to Maintain Records
C. Summary of Opinion

II.

DISCUSSION
A. Legal Standards
1. Finding of Bad Faith Required
2. The Nature of the Misconduct
3. Rule 37 of the Federal Rules of Civil Procedure
B. Evidence of Bad Faith: Defendant’s Response to Numerous Discovery Orders
1. September 4, 2018: The Initial FLSA Scheduling Order
2. October 9, 2018: Initial Scheduling Conference
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3. October 25, 2018: Superseding Preliminary Scheduling Order
4. Companion Case and Discovery Therein
5. First Quarter 2019: First Settlement Conference and Phase I Discovery
Order
6. June 12, 2019: Plaintiffs’ First Motion to Compel and Defendant’s First
Sanction
7. August 19, 2019: Scheduling Conference and Amended Phase I
Scheduling Order
a. September 13, 2019: Plaintiffs Second Motion to Compel
b. November 5, 2019: Hearing on Second Motion to Compel
8. December 9, 2019: Hearing on Third Motion to Compel
9. January 17, 2020: Discovery Conference and January 21, 2020 Order
a. March Deposition of the Corporate Representative
10. May 2020: Discovery Conference and June 2, 2020 Stipulated Order
11. Orders Requiring the Production of Incentive Plan Data
12. June 15, 2020: Plaintiffs’ Initial Motion for Sanctions
C. Evidence of Bad Faith: Defendant’s Misrepresentation and Manipulations
1. July, 2020: Context within which ADP Records were Subpoenaed
2. February 5, 2021: Informal Conference
3. February 17, 2021: Status Hearing
4. Defendant’s failure to tell ADP about March 5, 2021 Hearing
5. March 12, 2021: The Show Cause Hearing
D. Other Considerations and Factors
1. Format of Document Production
2. Defendant’s Other Scapegoat
3. Spoliation of Time and Pay Records
4. Defendant’s Familiarity with Complex Litigation
5. The Efficacy of Lesser Sanctions
6. Prejudice to the Efficient Administration of Justice and Plaintiffs
7. Deterrence to other Employers
III.

Conclusion

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I.

Introduction
This case is lamentable. Mercifully, it is rare. Here, the Court is compelled to protect not

only plaintiffs but the Court itself from a defendant’s pervasive bad faith. Plaintiffs1 in this FLSA
action seek to be paid for all time they worked for Outokumpu Stainless USA, LLC (“Defendant”)
as reflected in Defendant’s time and pay records. (Doc. 223). Time and pay records are of
primary importance in FLSA actions. Defendant refused to produce complete and accurate
records and misrepresented to the Court and Plaintiffs material facts surrounding its refusals.
The Magistrate Judge entered orders and imposed sanctions against Defendant through the
course of discovery, but Defendant was undeterred. Defendant persisted in its misconduct
through the date set for final pre-trial conference, at which point Defendant still had not
produced basic time and pay records. As a consequence, the Court was left with no choice but
to cancel the pre-trial conference and, instead, conduct a general status conference. This was
followed by show cause hearings to address Defendant’s failures. For the reasons set out below,
the Court determines default judgment is the only remaining sanction sufficient to address
Defendant’s bad faith and the damage wrought by it.
A.

Background and Recent Procedural History

This matter is before the Court on the Report and Recommendation of United States
Magistrate Judge Nelson (“Magistrate Judge”) (Doc. 261), as well as briefing and evidentiary
support submitted in response to the undersigned’s Show Cause Orders. (Docs. 288, 298, 300,
302). Plaintiffs William Heath Hornady, Christopher Miller, Colin Hartery, and Takendric Stewart

1

Plaintiffs include named plaintiffs William Heath Hornady, Christopher Miller, Colin Hartery, and Takendric Stewart,
as well as members of the Collective, or all other similarly-situated hourly employees who opted-into this Action.
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brought this collective wage and hour action under Section 216(b) of the Fair Labor Standards
Act, 29 USC § 201 et seq. (“FLSA”) against Defendant employer, Outokumpu Stainless USA, LLC
(“Defendant”). (Doc. 223). The Report and Recommendation addressed Plaintiffs’ “Renewed
Motion for Sanctions and/or Related Motion to Compel,” filed on September 3, 2020. (Doc. 238).
Defendant’s discovery obligations in this action were not novel. Defendant’s discovery
failures, though, were extraordinary resulting in a long train of discovery and sanction motions
against it. Plaintiffs filed their initial “Motion for Sanctions and/or Related Motion to Compel”
on June 15, 2020 (“Initial Motion”). (Doc. 216). In response to the Initial Motion, Defendant
represented to the Magistrate Judge that its third-party payroll processor, Automatic Data
Processing, Inc. (“ADP”) was being uncooperative, impeding Defendant’s ability to meet its
discovery obligations to produce its time and pay records for Plaintiffs. (Doc. 220). Defendant
further represented to the Magistrate Judge it needed ADP’s data, in order to accurately respond
to the production requests for Defendant’s time and pay records. (Doc. 332). Based on those
representations, and in lieu of recommending additional sanctions, the Magistrate Judge ordered
Defendant to serve ADP with a subpoena. (Doc. 229). Defendant served ADP with a subpoena
as ordered, but, thereafter, misrepresented that ADP failed to comply with it. (Docs. 242, 299
and 333). Defendant produced no records to Plaintiffs as a result of the subpoena. Defendant’s
continued refusal to produce its records resulted in Plaintiffs’ Renewed Motion for Sanctions,
seeking, again, a default judgment (“Renewed Motion”). (Doc. 238).
In both the Initial and Renewed Motions, Plaintiffs cataloged Defendant’s violations of
numerous discovery orders, resulting in Defendant’s failure to produce complete and accurate
time and pay records, records which are the linchpin in this FLSA action. Plaintiffs correctly

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argued Defendant’s production of complete and accurate discovery was essential to analyzing
the underlying claims, calculating whether all time had been paid, overtime had been paid at the
correct rate of pay, and overtime had been paid timely. (See Docs. 216 and 238). In addition,
Plaintiffs’ argued Defendant’s obstruction was fatal to their ability to calculate damages. (Id.).
1. The Report and Recommendation
The Report and Recommendation, as well as related filings, were forwarded to the Court
on October 26, 2020. (Doc. 261).2 The Magistrate Judge recommended sanctions lesser than
default, because the record at the time did not demonstrate the full extent of Defendant’s bad
faith. (Id.). Moreover, the Magistrate Judge observed, even if the record arguably supported a
finding of bad faith, lesser sanctions were available, by amending the remedial, and “burden
shifting,” procedure set out in Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680, 687, 66 S. Ct.
1187, 90 L. Ed. 1515 (1946). (Id.).
In Mt. Clemens, the Supreme Court acknowledged, under the FLSA, the employee bears
the burden of proving he performed work for which he was not properly compensated.
Anderson, 328 U.S. at 687. “Because of ‘the remedial nature of [the FLSA] and the great public
policy which it embodies,’ courts are careful to construe the statute so as not to create impossible
hurdles for employees.” Rafferty v. Denny's, Inc., 2021 U.S. App. LEXIS 27680 (11th Cir.
September 15, 2021) (citing Anderson, 328 U.S. at 686-87, superseded by statute on other

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In response to the Report and Recommendation, Plaintiffs filed an Objection. (Doc. 266). The Defendant filed both
an Objection to the Report and Recommendation (Doc. 267), as well as an Objection to the Plaintiffs’ Objection (Doc.
270). Plaintiffs also filed a Consolidated Motion to Strike (Doc. 269) a potential affidavit Defendant said it would be
submitting as support for its objection to the Report and Recommendation. Defendant filed a response in
opposition. (Doc. 271). The Report and Recommendation (Doc. 261), as well as the related filings, including
Defendant’s Objections (Doc. 267), Plaintiffs’ Objections (Doc. 266), Defendant’s Response to Plaintiffs’ Objections
(Doc. 270), Plaintiffs’ Consolidated Motion to Strike (Doc. 269), and Defendant’s Response in Opposition (Doc. 271)
were referred to the District Judge in November, 2020.
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grounds, Portal-to-Portal Act of 1947; quoting Allen v. Board of Public Educ. for Bibb County, 495
F.3d 1306, 1315 (11th Cir. 2007)).
The Eleventh Circuit has “emphasized that it is the duty of the employer—not the
employee—to keep track of the employee's ‘wages, hours, and other conditions of
employment.’” Rafferty, 2021 U.S. App. LEXIS 27680, at *57 (quoting Allen, 495 F.3d at 1315.)
“That is so because the employer enjoys a better position to be aware of and create records of
the most probative facts about the nature and amount of work performed. And denying a claim
simply because the employee cannot produce records of her time worked would reward an
employer's failure to comply with its statutory duty to maintain proper records.” Id.
To remedy this situation, the Supreme Court in Mt. Clemens authorized a burden-shifting
scheme: an employee “satisfies her burden if she ‘proves that [she] has in fact performed work
for which [she] was improperly compensated and if [she] produces sufficient evidence to show
the amount and extent of that work as a matter of just and reasonable inference.’” Rafferty,
2021 U.S. App. LEXIS 27680, at *57 (quoting Anderson, 382 U.S. at 687). In Rafferty, the Eleventh
Circuit determined plaintiff met her burden, through her deposition testimony, and
demonstrated there were weeks where her untipped work exceeded twenty percent of the hours
she worked as a tipped employee, resulting in her performing work for which she was not paid.
Rafferty, 2021 U.S. App. LEXIS 27680, at *60. Reversing summary judgment in favor of the
defendant, the Eleventh Circuit, in accordance with Mt. Clemens, determined defendant must
come forward with evidence to negate the inferences from plaintiff’s testimony that she worked
more than twenty percent of her time on untipped related duties. Id. (See Anderson, 382 U.S. at
687 (“The burden then shifts to the employer to produce either evidence of the specific amount

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of work the employee performed or evidence that tends to refute the reasonableness of the
inference the employee seeks for the factfinder to draw from her evidence.”)).
Applying the Mt. Clemens burden-shifting approach to this case, the Magistrate Judge
determined an appropriate sanction would permit Plaintiffs to prove the amount and extent of
the work for which they were allegedly improperly compensated, while prohibiting the
Defendant under Rule 37(b)(2)(A)(ii) from introducing any evidence to challenge the Plaintiffs’
calculations. (Id.). Effectively, the Magistrate Judge recommended Plaintiffs calculate their
damages based on their knowledge of when they performed work for which they were not
accurately or correctly compensated. The record before the Magistrate Judge did not yet reveal
Defendant’s material misrepresentations about its records and ADP.
Both parties objected to the Report and Recommendation. Plaintiffs argued it would be
impossible to calculate damages without Defendant’s time and pay records.

(Doc. 266).

Defendant contended the recommendations were “no longer applicable” and the records
produced to date were reliable and accurate. (Doc. 267). Defendant then reversed course on
blaming ADP, instead representing the subpoena to ADP and its records were not needed in order
to produce reliable pay records. (Id.). Defendant represented ADP’s records had been sought
based on mistaken testimony of its 30(b)(6) corporate representative, Melissa Pledger
(“Corporate Representative”) concerning the timeliness of overtime and “true up” payments,
stemming from her confusion as to the “regular rate of pay” process. (Id.). As proof, Defendant
assured the Court it was “working on an affidavit” to correct the record in that respect. (Id.). The
Defendant never submitted an affidavit.

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Once a “party objects to any portion of the magistrate judge's report and
recommendation, the district court judge must ‘make a de novo determination of those portions
of the report or specified proposed findings or recommendations to which objection is made,’
before adopting or rejecting the report and recommendation.” Doye v. Colvin, 378 Fed. Appx.
926, 927 (11th Cir. May 7, 2010) (citing 28 U.S.C. § 636(b)(1)). Defendant advocated, in its
Response to Plaintiffs’ Objections, the “Court should find it unnecessary to address the additional
sanctions sought by Plaintiffs, like [the Magistrate Judge].” (Doc. 270). However, the Court has
a duty to undertake an “independent consideration of factual issues based on the record” when
reviewing a Report and Recommendation. See Diaz v. United States, 930 F.2d 832, 836 (11th Cir.
1991). The Court rejected Defendant’s attempt to avoid deeper scrutiny and undertook an
exhaustive review of the record.
2. The Court’s Review of the Record
Here is what the Court found. The record is littered with discovery orders, discovery
conferences, motions to compel, and motions for sanctions, all designed to deter Defendant from
its continuing obstinate refusal to produce its time and pay records. Indeed, Plaintiffs’ Renewed
Motion was their fifth motion to compel and second motion for sanctions against Defendant.
Plaintiffs’ chief complaint in the Renewed Motion, as in most every discovery motion against
Defendant preceding it, was Defendant’s failure to produce complete and accurate sets of its
own data. Three (3) discrete categories of data production3 are at issue:

3

Various terms are used throughout the record to denote these documents; the Court will identify the requested
documents herein as pay records, time records, and incentive plan data.

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1. Pay records, demonstrating “the regular rate of pay,” as well as any shift
derivations, and an itemized amount of any “true up” pay for each paycheck per
collective action plaintiff (hereinafter “pay records”);
2. Time records, whether all time clocked in was rounded up or down, and
whether the rounded time was paid, for each shift per collective action plaintiff
(hereinafter “time records”); and,
3. Incentive plan data, and the time period during which it was gathered, in order
to calculate the monthly incentive plan payment (hereinafter “incentive plan
data”).
By this Court’s count, twelve (12) orders were entered requiring Defendant to produce these
records.

See Appendix I.

In addition, the Magistrate Judge held eleven (11) discovery

conferences and motion hearings with the parties focused, for the most part, on the production
of these records. Significant judicial resources have been expended, and continue to be
expended, to address Defendant’s failures to produce its time and pay records. These are records
Defendant presumably relied on, and continues to rely on, in the usual course of its business, to
pay its employees, every two weeks.4
Since October 2018, Defendant repeatedly represented to the Magistrate Judge and to
Plaintiffs that it would cooperate with discovery requests and comply with court orders. When
Defendant failed to cooperate or comply as represented, it offered a variety of excuses, and then
made more representations.

Defendant then dishonored those representations.

Then,

Defendant commenced the whole sorry pattern over again. This pattern of Defendant’s

4

As recently as September 10, 2021, the parties sought the Court’s intervention, yet again. Plaintiffs filed a motion,
asking this Court “to allow them to issue a non-party subpoena to ADP to update the same sort of time records, and
pay records, ADP previously provided through December 31, 2020 (time) and January 31, 2021 (pay records).” (Doc.
339). In support of the motion, Plaintiffs represented Defendant had been consulted and had no opposition to
seeking a Court-ordered subpoena to produce its own time and pay records. The Court denied the motion and
suggested Defendant work with ADP, its own payroll contractor, to provide the records to the Plaintiffs.

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misconduct poisoned the entirety of this case. As set out below, it is now clear that Defendant’s
misconduct was deliberate and in bad faith.
3. February 2021 Hearing and Show Cause Orders
The pre-trial conference was set for February 17, 2021. However, recognizing the number
of unresolved discovery disputes, the Court determined that this action was not ready for pretrial and asked Plaintiffs to file a list of Defendant’s remaining discovery deficiencies.5 Plaintiffs
filed their list on February 10, 2021. (Doc. 279). On February 17, the Court conducted a hearing
and again questioned Defendant about ADP’s noncompliance with the subpoena and
Defendant’s shifting rationales for its discovery failures.6 (Doc. 299). Defendant responded by
reasserting its previous representations that ADP was being uncooperative, had failed to respond
to the subpoena, and had not provided records. (Id.).
Based on those representations, on February 19, 2021, the Court issued a show cause order
to ADP, requiring it to appear on March 5, 2021, and explain its failure to comply with a subpoena.
(Doc. 288). ADP was also ordered to “provide a detailed chronology of its efforts to comply (if
any) and all communications with Defendant, through the date of the hearing, concerning the
Subpoena.” (Id.). The Court ordered Defendant to serve ADP with the show cause order.
Defendant failed to do so until ten days later, which gave ADP only four days notice of the
hearing. Defendant also sent ADP an email stating, contrary to the Court’s order, ADP may not

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Plaintiffs had previously provided a chronological account of their effort to obtain certain discovery, and recounted
Defendant’s repeated stonewalling and procrastinations, in its “Miscellaneous Submission in advance of January 17,
2020 Conference.” (Doc. 170). Many of the issues addressed in January 2020 remained unresolved and had to be
re-addressed in a February 2021 Submission. (Doc. 279).

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In its objection to the Report and Recommendation (Doc. 267), Defendant asserted it did not need ADP to produce
the records, that the whole point of the subpoena was irrelevant because Pledger’s testimony was inaccurate.
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have to attend the hearing if the records were produced beforehand. (Doc. 300). When a
corporate representative of ADP failed to appear at the scheduled hearing, the Court entered a
second show cause order and ordered a second hearing to take place on March 12, 2021. (Doc.
298).
Prior to the second hearing, ADP filed a brief addressing the show cause orders and its
compliance with the subpoena. (Docs. 300 and 302). The second hearing was attended by
Plaintiffs’ counsel, Defendant’s Corporate Representative and its counsel, an ADP corporate
representative and ADP’s counsel. ADP presented evidence establishing it had provided or
attempted to provide to Defendant the data requested five (5) days after the Subpoena was
served, some seven months prior to the hearing. (Doc. 300). ADP’s evidence squarely belied
Defendant’s repeated representations to the Magistrate Judge, Plaintiffs, and this Court that ADP
had failed to respond to the subpoena and been otherwise uncooperative for some seven
months.
B.

The Collective Action
1. The Parties

Plaintiffs are employed at Defendant’s manufacturing facility in Calvert, Alabama (“Mill”).
Named Plaintiffs William Heath Hornady, Christopher Miller, Colin Hartery, and Takendric
Stewart filed this action on July 16, 2018. Two weeks later, they amended the complaint to assert
a collective action under Section 216(b). (Doc. 5). The collective action includes named Plaintiffs
and “all other similarly situated employees, former and present, who worked for Defendant at
[the Mill], who were paid on an hourly basis and who were/are affected by Defendant’s acts,

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omissions, timekeeping and wage payment practices described in this Amended Complaint (‘The
Collective’).” (Doc. 223). All Plaintiffs in the Collective are or were hourly employees.
Defendant is a subsidiary of Outokumpu Oyj, a Finnish international steel fabricator and
manufacturer. (Doc. 25). Defendant purchased the Mill from ThyssenKrupp AG in 2012. (Doc.
22-1).

Defendant holds itself out as “the global leader in sustainable stainless steel.”

(https://www.outokumpu.com/en; see also, “Outokumpu boasts the widest product portfolio in
the market, state-of-the-art and modern mills, our own unique source of chrome and 100 years
of expertise in metals, technology and mining.”). Outokumpu’s Mill in Calvert is described as
“America’s most technically advanced stainless steel mill” which “offers a comprehensive
product portfolio combined with industry-leading technical support and services.” (Id.). The Mill
portfolio includes black coils, white hot rolled coils, strips, sheets and plates, cold rolled coils,
strips, sheets and plates, and slag products. (Id.). Defendant supplies stainless steel in national
and international markets, for use in a variety of industries, including building and infrastructure,
automotive and transportation, appliances, energy, and heavy industry. (Id.).
The Eleventh Circuit recognizes Defendant as a “sophisticated employer.”

See

Outokumpu Stainless USA, LLC v. NLRB, 773 Fed. Appx. 531, 535 (11th Cir. 2019) (affirming default
judgment against this Defendant for undermining a NLRB settlement agreement). Defendant
operates the Mill 365 days a year, 24 hours a day, and employs approximately 1000 people. (Doc.
268-1). It runs, in general, two twelve-hour shifts, with the first shift beginning at 6 am and the
second shift, the night shift, beginning at 6 pm. (Docs. 258-5 and 206-2). There are also twelve-

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hour shifts that begin at 7 am and 7 pm, respectively, in the Melt Shop. (Docs. 206-2 and 2631).7
2. Plaintiffs’ Claims
Plaintiffs asserts three counts against Defendant.8 (Doc. 223). In Count I, Plaintiffs claim
Defendant violated the FLSA by failing to properly pay regular wages, overtime wages, and
bonuses. (Id.). Specifically, Plaintiffs allege Defendant (i) failed to pay wages for all time they
were clocked in, working, or available to work, (ii) failed to pay overtime at 1.5 times an hourly
rate that included monthly bonuses and for all hours worked in excess of 40 hours in a workweek,
and (iii) incorrectly paid overtime as “trued up” wages calculated after regular payment dates.

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Defendant concedes “some of its employees are subject to the regulations of the FLSA.” (Doc. 228). Indeed,
Defendant is precisely the type of employer the FLSA was intended to regulate. Congress enacted the FLSA in 1938
to "guarantee either regular or overtime compensation for all actual work or employment." Tennessee Coal, Iron &
R. Co. v. Muscoda Local No. 123, 321 U.S. 590, 597, 64 S. Ct. 698, 703, 88 L. Ed. 949 (1944). The Supreme Court
explained:
The Fair Labor Standards Act set up a comprehensive legislative scheme for preventing the
shipment in interstate commerce of certain products and commodities produced in the United
States under labor conditions as respects wages and hours which fail to conform to standards set
up by the Act. Its purpose. . . is to exclude from interstate commerce goods produced for the
commerce and to prevent their production for interstate commerce, under conditions detrimental
to the maintenance of the minimum standards of living necessary for health and general wellbeing; and to prevent the use of interstate commerce as the means of competition in the
distribution of goods so produced, and as the means of spreading and perpetuating such
substandard labor conditions among the workers of the several states.
United States v. Darby, 312 U.S. 100, 109-110 (1941). The Supreme Court has explained the “primary purpose of the
Act [FLSA] is not so much to regulate interstate commerce as such, as it is, through the exercise of legislative power,
to prohibit the shipment of goods in interstate commerce if they are produced under substandard labor conditions.”
Roland Electrical Co. v. Walling, 326 U.S. 657, 669-670 (1946) (citing United States v. Darby, 312 U.S. 100, 115; United
States v. Carolene Products Co., 304 U.S. 144, 147 (1938). “Savings resulting from substandard labor conditions
would be reflected directly into competitive costs.” Roland Electrical Co. v. Walling, 326 U.S. 657, 668 (1964). In
summary, the FLSA regulations are intended to foreclose the ability of manufacturers to gain any market advantage,
and/or increased profits, through the manipulation of pay practices resulting in artificially lowered labor costs.

8

The Third Amended Complaint (“TAC”) is the operative complaint. (Doc. 223). Plaintiffs also assert alternative state
law claims for quantum merit and/or unjust enrichment based on Defendant’s failure to pay for all time worked.
(Id.).

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(Id.).

Count II alleges alternative common law claims for quantum merit and/or unjust

enrichment. Count III asserts similar claims for the Collective. (Id.). Plaintiffs seek compensation
for all time worked, and “all unpaid and/or underpaid and/or late time paid overtime,” as
reflected in Defendant’s “time and pay records.” (Id.). On May 2, 2019, the Court conditionally
certified the Collective Action under 29 U.S.C. § 216(b). (See Doc. 93, "Order for Conditional Class
Certification"). Though the number is somewhat in dispute, the current collective size stands
somewhere around 280 employees.
3. Defendant’s Pay and Timekeeping Practices
Plaintiffs’ FLSA claims are standard, but Defendant’s pay and timekeeping practices are
not. They are complicated, if not convoluted. Essentially, Plaintiffs claim Defendant’s pay
practices violate the FLSA by failing to properly and timely pay overtime at 1.5 times the “regular
rate of pay.” (Doc. 223). Two factors, both regulated by the FLSA, can impact the determination
of an employee’s “regular rate of pay” for the purposes of calculating the overtime rate of pay.
The first factor is how the employer calculates the employee’s regular rate of pay. The second
factor is whether the employer pays a nondiscretionary bonus, which requires the regular rate
of pay to be recalculated.
Next, Plaintiffs claim Defendant’s timekeeping practices violate the FLSA by failing to pay
Plaintiffs for all hours worked. (Id.). Similarly, two factors, also regulated by the FLSA, impact
how much time an employee is paid for overtime versus straight time. The amount of overtime
due depends on the temporal relationship between an employee’s work schedule and the
employer-determined work week, which shall remain fixed. Second, an employer’s “rounding

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policy” may create a discrepancy between the time employees are clocked in and time for which
wages are paid, affecting the amount of straight and overtime paid.
At the Mill, all four factors are in play: Defendant uses varying pay rates which can change
by shift, a time clock rounding policy and monthly incentive plan. Plaintiffs question whether,
based on the varying rate of pay, overtime is paid correctly. This question depends on the
parameters of Defendant’s workweek and whether it is fixed or not; application of Defendant’s
time clock rounding policy and whether it results in employees not being paid for all time worked;
and, Defendant’s incentive plan and whether Defendant properly calculates overtime inclusive
of the monthly payment. Defendant’s complicated pay practices heightened the need for good
faith compliance with its discovery obligations, as ordered by this Court. The record establishes
by clear and convincing evidence that Defendant refused to comply with these obligations and
did so in bad faith.
a. The Significance of the Regular Rate of Pay and Defendant’s Pay
Rates
The significance of Defendant’s refusal to produce complete and accurate pay records is
best understood in the context of the FLSA and corresponding regulations. Section 7(a)(1) of the
FLSA requires that employers compensate their employees for hours worked in any workweek in
excess of forty “at a rate not less than one and one-half times the regular rate at which [they are]
employed.” 29 U.S.C. § 207(a)(1).

Overtime compensation, therefore, depends on an

employee’s “regular rate” of pay and the employee’s work schedule in relation to the employerdetermined “workweek.” In order to determine whether overtime has been paid correctly, the
analysis commences with the identification of the employee-plaintiff’s “regular rate of pay.” An
employee-plaintiff’s “regular rate” of pay is the “keystone” of Section 7(a) claims. Walling v.
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Youngerman-Reynolds Hardwood Co., 325 U.S. 419, 424 (1945); Childress v. Grady Mem. Hosp.
Cop., 2016 U.S. Dist. LEXIS 199051, *77 - 79 (N.D. Ga. May 12, 2016); see also Urnikis-Negro v.
Am. Family Property Servs., 616 F.3d 665, 673 (7th Cir. 2010) (“The employee’s ‘regular rate’ of
pay is thus the ‘keystone’ of section 7(a).”) (quoting Walling, 325 U.S. at 424). In Walling, the
Supreme Court declared “the amount of overtime payments which are necessary to effectuate
the statutory purposes” depends on the “regular rate,” and “[t]he proper determination of that
rate is therefore of prime importance.” 325 U.S. at 424.
The “regular rate” of pay is “the hourly rate actually paid the employee for the normal,
non-overtime workweek for which he is employed.” Boylve v. City of Pell City, 866 F.3d 1280,
1286 (11th Cir. 2017) (citing Walling, 325 U.S. at 424). “The ‘regular rate’ of pay under the Act is
the amount of compensation an employee receives per hour.” Martin v. Southern Premier
Contrs., Inc., 2013 U.S. Dist. LEXIS 30017, *26 (N.D. Ga. March 6, 2013) (citing 29 C.F.R. § 778.109
(“The regular hourly rate of pay of an employee is determined by dividing his total remuneration
for employment (except statutory exclusions) in any workweek by the total number of hours
actually worked by him in that workweek for which such compensation was paid.”)). “The regular
rate by its very nature must reflect all payments which the parties have agreed shall be received
regularly during the workweek, exclusive of overtime payments." Id. (citing Walling, 325 U.S. at
424).
Defendant‘s varying pay rates are assigned to its employees according to the type of
position and level of skill required to perform the work. (Doc. 220). An employee is assigned a
pay rate upon hire; however, thereafter, a number of factors may result in an adjustment to an
employee’s regular rate of pay, effectively resulting in a new or revised regular rate of pay. For

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example, any employee who works the night shift receives 50 cents more an hour per night shift,
above his assigned rate.9 (Doc. 206-2). Employees also receive holiday pay. (Id.).10 Finally, on
occasion an employee may be asked to work in a higher job classification for a particular shift.
When this occurs the employee receives a step-up rate of pay for that work.11 (Id.). Step-up
rates can be layered on top of the night shift and holiday shift differentials. Overtime rates are,
then, calculated by multiplying the adjusted regular rate of pay, by one and a half times. (Id.).
A paycheck for any given pay period might have multiple rates of pay: a regular rate, a
night shift rate, a step-up rate, a single overtime rate or multiple overtime rates.12 (Id.). Despite
this, Plaintiffs receive pay stubs that do not itemize hours and the applicable rates. The pay stubs
do categorize total straight time, overtime pay, or holiday pay. Step-up rates are not identified
on the employees’ pay stubs.13 (Id.). Defendant’s Senior Payroll Specialist and 30(b)(6) Corporate

9

Defendant assigns pay rates based on position and the required skill level to perform that position.

10

Defendant’s 30(b)(6) deponent could not articulate how holiday pay is paid when it is combined with overtime or
the nightshift premium. (Doc. 206-2).

11

Step-up pay rates are paid when an employee works in a position with a rate of pay higher than his regular rate.
His time for that shift is coded at the higher pay rate. This is referred to as the step-up rate.

12

The Court observes, in order for an employee to be assured he is being paid overtime correctly, he would need to
maintain his own log of daily pay rates, clock-in and clock-out times.

13

The C.F.R. addresses how the regular rate of pay is calculated when an employee works one or more pay rates
within a workweek:
Where an employee in a single workweek works at two or more different types of work
for which different nonovertime rates of pay (of not less than the applicable minimum
wage) have been established, his regular rate for that week is the weighted average of
such rates. That is, his total earnings (except statutory exclusions) are computed to
include his compensation during the workweek from all such rates, and are then divided
by the total number of hours worked at all jobs. Certain statutory exceptions permitting
alternative methods of computing overtime pay in such cases are discussed in §§ 778.400
and 778.415 through 778.421.
See 29 C.F.R. § 778.115. Therefore, hours and rates worked per shift are needed in order to understand if the
“regular rate of pay” is arrived at correctly.
17

Representative, Melissa Pledger (hereinafter “Corporate Representative” or “Pledger”),
explained employees’ paychecks are “trued up” by ADP at least once a month. (Doc. 206-2).
Generally, “true ups” occur when an employee works a step-up rate or earns holiday pay, and
overtime is recalculated accordingly. (Id.). Rather than itemizing “true up” payments on
employees’ pay stubs, Defendant blends these payments into the overtime pay for the current
pay period. (Id.). Given the many derivations, and adjustments, Defendant’s pay records are
indispensable to accurately assess Plaintiffs’ claims concerning whether overtime was paid at the
correct rate of pay and, in compliance, with the FLSA.
b. The Parameters of Defendant’s Workweek
Understanding the parameters of Defendant’s “workweek” is also essential to
determining “regular rate of pay” and Plaintiffs’ overtime claims. Overtime required under the
FLSA cannot be calculated without determining “workweek.” See Tenn. C. v. Muscoda, 321 U.S.
590, 597-598 (1944) (“It is vital, of course, to determine first the extent of the actual workweek.
Only after this is done can the minimum wage and maximum hour requirements of the Act be
effectively applied.”). “Under the Fair Labor Standards Act, overtime is calculated on a workweek
basis.” Jenkins v. Anton, 922 F.3d 1257, 1269 (11th Cir. 2019) (citing 29 U.S.C. § 207(a)(1); 29
C.F.R. § 778.103). The FLSA “maximum hours” provision (29 U.S.C. § 207(a)(1)) states “the unit
of time . . . within which to distinguish regular from overtime [work] is the week.” Abshire v.
Redland Energy Servs., LLC, 695 F.3d 792, 794 (11th Cir. 2019) (citing Overnight Motor Transp.
Co. v. Missel, 316 U.S. 572, 579 (1942)). “An employee's workweek is a fixed and regularly
recurring period of . . . seven consecutive 24-hour periods” that “need not coincide with the
calendar week but may begin on any day and at any hour of the day.” Jenkins, 922 F.3d at 1269

18

(citing 29 C.F.R. § 778.105). Once the beginning time of an employee's workweek is established,
it remains fixed regardless of the schedule of hours worked. Abshire, LLC, 695 F.3d at 794 (citing
29 C.F.R. § 778.105).
The amount of overtime an employee earns, then, depends on how his schedule aligns
with the workweek. Defendant’s workweek has been in dispute for a portion of the time
encompassed by this suit. Prior to January 27, 2019, the Pay Summaries (and/or Earning
Statements) produced by Defendant reflected a Monday to Sunday workweek, while Defendant’s
operation schedule reflected a Saturday to Sunday workweek. (Doc. 206-2). With the pay period
beginning January 27, 2019, Defendant changed its pay period ending dates, on the spreadsheets
it produced, to reflect a Sunday to Saturday workweek which was consistent with its operation,
or time and attendance, schedule. (Id.). Further, while Defendant pays its employees biweekly,
Defendant’s Corporate Representative testified the duration of the workweek changes according
to an employee’s schedule. For example, the workweek either ends at 6:00 am Sunday morning,
or if an employee is nearing the end of a shift at that time, the workweek ends when the
employee clocks out of the overnight Saturday night shift. (Id.). Therefore, the workweek is
dictated by the shift and is not a fixed, 168-hour period. (Id.). Defendant’s time records, together
with pay records detailing the pay period ending date and the work week within which the
clocked in time was attributed, were necessary in order to assess whether overtime was paid
properly.
c. Rounding Principles under the FLSA and Defendant’s Rounding
Policies
Defendant’s time records are also essential to determine whether its Time-Clock Policy
(“Rounding Policy”) complies with the FLSA by compensating Plaintiffs for all time worked. (Doc.
19

244-4). The Code of Federal Regulations accompanying the FLSA generally permit rounding
practices. 29 C.F.R. § 785.48. The regulation provides, where time clocks are used, employees
do not have to be paid for arriving before their regular starting time or remaining after their
closing time if the employees do not engage in any work. (Id. at § 785.48(a) (“Their early or late
clock punching may be disregarded.”)). Likewise, an employer may round time “to the nearest 5
minutes, or to the nearest one-tenth or quarter of an hour.” 29 C.F.R. § 785.48(b) (“Presumably,
this arrangement averages out so that the employees are fully compensated for all the time they
actually work.”). Rounding is an acceptable method to compute time “provided that it is used in
such a manner that it will not result, over a period of time, in failure to compensate the
employees properly for all the time they have actually worked.” Id.
Plaintiffs allege Defendant’s policy violates this regulation and results in Plaintiffs not
being paid for all time worked. (Doc. 223). Defendant employed two rounding policies during
the time encompassed by this suit. Defendant’s first rounding policy, in place prior to August 1,
2018, automatically rounded employees’ clock-ins and -outs, up and down, by thirty minutes.
(Doc. 189-6). For example, if an employee clocked-in at 5:30 am, the time record is automatically
rounded up to 6:00 am. Similarly, if an employee clocked-out at 6:30 pm, the time was rounded
down to 6:00 pm. (Id.).
On August 31, 2018, shortly after this action was filed, Defendant amended its policy to
round by seven minutes rather than thirty. Defendant’s amended policy provided, “Team
members may clock in up to 7 minutes prior to scheduled shift start time, without penalty. Pay
will begin at the scheduled shift time.” (Doc. 244-4). Clock-ins more than seven minutes prior to
scheduled shift time required approval, or would constitute “unapproved, unpaid time and just

20

be adjusted to reflect such.” (Id.). As explained by Defendant’s Corporate Representative, any
clock-out seven minutes after the scheduled shift end time is rounded back. (Doc. 206-2). An
employee who clocked-out more than seven minutes after the scheduled shift end time is subject
to discipline and/or the time must be approved. Id. Defendant’s Corporate Representative
testified employees may be approved for more than a 12 hour shift. Approvals occur after the
fact, and are maintained in a separate “electronic time card” system. Employees [including
Plaintiffs] had no access to these electronic time cards. (Id.).
Although there is no Eleventh Circuit precedent establishing how FLSA “rounding” rules
should be interpreted, the Tenth Circuit, relying on the Ninth Circuit opinion in Corbin v. Time
Warner Entm't-Advance/Newhouse P'ship, 821 F.3d 1069, 1075 (9th Cir. 2016), explained:
Federal regulation permits rounding as long as “it will not result, over a period of
time, in failure to compensate the employees properly for all the time they have
actually worked.” Id.; see also Corbin v. Time Warner Entm't-Advance/Newhouse
P'ship, 821 F.3d 1069, 1075 (9th Cir. 2016) (noting that federal regulation has
endorsed use of rounding for over 50 years). Stated differently, a valid rounding
policy must be “neutral, both facially and as applied.” Corbin, 821 F.3d at 1076
(quoting See's Candy Shops, Inc. v. Superior Court, 210 Cal.App.4th 889, 148 Cal.
Rptr. 3d 690, 701 (2012)).
Aguilar v. Mgmt. & Training Corp., 948 F.3d 1270, 1287 - 88 (10th Cir. 2020). In Aguilar, the court
reversed summary judgment for the employer based on evidence that the rounding favored the
employer approximately 94% percent of the time. Aguilar, 948 F.3d at 1288.
Other courts rely on time clock records to evaluate “rounding claims.” See Boone v.
Primeflight Aviation Servs., 2018 U.S. Dist. LEXIS 28000 (E.D.N.Y. Feb. 20, 2018) (court had the
benefit of 111,450 clock entries of 138 employees to determine whether an employer’s rounding
policy was neutral); see also Wey v. City of St. Petersburg, 2020 U.S. Dist. LEXIS 230115, *7-11

21

(M.D. Fla. Dec. 8, 2020) (summary judgment denied where employer’s “rounding policy appears
to have worked against the employees – and in the [employer’s] favor – 96% of the time, resulting
in thousands of dollars of backpay owed to Plaintiff and his colleagues.”). An employer’s time
clock records are essential to determine whether its rounding policy is both facially neutral and
neutral as-applied for purposes of the FLSA.
d. Regulations Applicable to Bonuses and Defendant’s Incentive Plan
Finally, Defendant’s Incentive Plan also affects Plaintiffs’ regular rate of pay. The Incentive
Plan provides for a nondiscretionary bonus payment once a month totaling up to 25% of an
employee’s monthly earned wage. (Docs. 181-1 and 181-2). These incentives constitute
“renumeration” under FLSA, and therefore must be included in calculating an employee’s regular
rate of pay. 29 C.F.R. 778.209(a); see also Opinion Letter Fair Labor Standards Act (FLSA), 2019
WL 2914103, at *1–2 (July 1, 2019) (“The FLSA defines ‘regular rate of pay’ to include ‘all
remuneration for employment paid to, or on behalf of, the employee,’ excluding certain types of
compensation provided in 29 U.S.C. § 207(e).”). Once the regular rate of pay has been revised to
include the bonus amount, any overtime pay must be recalculated at the revised regular rate. 29
C.F.R. § 778.209(a).
The regulations provide an alternative: an employer, however, is not required to
retrospectively recalculate the regular rate if the employer pays a fixed percentage bonus that
simultaneously pays overtime compensation due on the bonus. See 29 C.F.R. § 778.210; Brock v.
Two R Drilling Co., 789 F.2d 1177, 1179-81 (5th Cir. 1986).
From a mathematical perspective, a percentage bonus under Section 778.210
achieves the same result as recomputation. Thus, percentage bonuses are

22

permissible not because they have some independent legal justification, but
because they achieve the same ultimate result for the employee.
Weninger v. Gen. Mills Operations LLC, 344 F. Supp. 3d 1005, 1009 (E.D. Wis. 2018).
Defendant’s Incentive Plan payment is made at the beginning of each calendar month.
The amount of the incentive payment is determined by applying a bonus percentage, based on
considerations such as safety and production during the bonus period, to earnings from the prior
two pay periods. (Docs. 187-2, 265-1 and 268-1). Therefore, the period of performance on which
the bonus percentage is based is generally different from the pay period to which the percentage
is applied. (Id.). Plaintiffs argue this “temporal” disconnect results in an incorrect calculation of
the overtime rate of pay during the bonus period. (Doc. 223). For this reason, Plaintiffs sought,
and the Court ordered, Defendant to produce information on the time period over which the
different performance goals were measured in order to establish the monthly incentive
percentage.
e. Defendant’s Duty to Maintain Records
As an employer subject to the FLSA, Defendant is required to “keep, and preserve such
records of the persons employed by him and of the wages, hours, and other conditions and
practices of employment . . ..” 29 U.S.C. § 211(c). The Eleventh Circuit has established: “It is the
employer's duty to keep records of the employee's wages, hours, and other conditions and
practices of employment. The employer is in a superior position to know and produce the most
probative facts concerning the nature and amount of work performed and employees seldom
keep such records themselves.” Allen v. Bd. of Pub. Educ. for Bibb Cty., 495 F.3d at 1315 (citation
and quotation omitted).

23

Defendant does not dispute its duty to maintain the records. To the contrary, as Plaintiffs
correctly note in their Renewed Motion, “Defendant has made promise after promise that it will
produce the records.” (Doc. 238). Defendant, though, also misrepresented that its production
was thwarted by ADP. (Doc. 242). Defendant’s misrepresentation notwithstanding, the record
retention obligations are Defendant’s alone, absolute and non-delegable. “The employer at its
peril, had to keep track of the amount of overtime worked by those of its employees in fact within
the Act.” Caserta v. Home Lines Agency, Inc., 273 F.2d 943, 946 (2d Cir. 1959) (quotation
omitted). Accord Kuebel v. Black & Decker Inc., 643 F.3d 352, 363 (2d Cir. 2011) (“[A]n employer's
duty under the FLSA to maintain accurate records of its employees' hours is non-delegable.”).
C.

Summary of Opinion

Twice, Plaintiffs moved for sanctions pursuant to Rules 37 and 26 of the Federal Rules of
Civil Procedure, as well as the Court's inherent power to sanction. (Docs. 216 and 238). As
grounds, Plaintiffs argued “Defendant’s personnel [David Scheid and Pledger] have repeatedly
violated this Court’s discovery orders and that those violations justify significant sanctions.”
(Doc. 216).

More specifically, Plaintiffs alleged Defendant doctored spreadsheets and

propounded false and inaccurate pay records, twice; produced partially responsive time records;
and, failed to produce the incentive plan data, at all, after being ordered to do so multiple times.
(Docs. 216, 238 and 247). Plaintiffs allege Defendant frustrated, manipulated and delayed the
discovery process in order to reduce its own liability, concluding that the information it refused
to produce will “quantify more in damages than Plaintiffs can otherwise guess at.” (Doc. 247).
Defendant did not rebut the substantive, and substantial accusations, it had doctored and
produced false records. Likewise, Defendant did not explain, at all, why it had refused to produce

24

records it had previously agreed to provide. Rather, Defendant argued its “production issues”
were due to the Plaintiffs’ unreasonable requests and an uncooperative third-party payroll
provider, ADP, maintaining there was no evidence to support Defendant’s actions were in bad
faith. (Docs. 220 and 246). To be clear, in response to sanctions, twice, Defendant abdicated,
dodged and misconstrued its responsibility for its own failures.
The March 12, 2021 show cause hearing before this Court marked the culmination of a
two-and-a-half-year endeavor to have Defendant produce accurate and complete pay and time
records. At this hearing, Defendant’s misrepresentations regarding ADP’s participation in its
discovery failures were revealed, leading to the Court’s ultimate understanding of the depth of
Defendant’s misconduct. When the procedural history is reviewed in the context of the facts
now known to this Court, the extent of Defendant’s bad faith becomes all too apparent. At every
turn, Defendant delayed, obfuscated, violated or outright ignored the Court’s orders, resulting in
inefficiencies and confusion, and ultimately delayed resolution of a case Defendant represented
as one that would be fairly simply to resolve. (Doc. 91). Throughout, the alleged violative pay
practices continue, a potential boon to Defendant. A clear picture of willful and prejudicial
discovery abuse, requiring imposition of the strictest of sanctions, emerges.
The Court cannot ignore Defendant’s calculated sabotage of the judicial process. The
issue squarely before the Court, at this juncture, is what sanction is appropriate. The Court has
attempted to describe each incident of Defendant’s bad faith refusals to produce its records and
intentional misrepresentations to the Court and Plaintiffs. First, the Court finds clear and
convincing evidence Defendant acted in bad faith when it violated numerous discovery orders
and failed its obligations in every respect to produce accurate and complete time and pay

25

records. Second, the Court finds clear and convincing evidence Defendant acted in bad faith
when it attempted to foist responsibility for its failures on ADP, an attempt based on
misrepresentations Defendant continued for ten months.
Based on the testimony and evidence submitted at the March 12, 2021 show cause
hearing, related filings, and a complete review of the record, the Magistrate’s Report and
Recommendation granting sanctions is adopted in part and modified in part. The Court finds
Defendant’s bad faith, stalling, inconsistent answers, falsehoods, and all-around subversive
approach to discovery undermined this case and the ability to decide it on the merits. For the
reasons set out herein, the Court determines default judgment is the sole remaining sanction
sufficient to address Defendant’s bad faith. All pending motions are mooted by this opinion.
II.

Discussion
A.

Legal Standards

“The district court has broad discretion to control discovery.” Jenkins v. Sec. Eng'rs, Inc.,
798 Fed. Appx. 362, 369 (11th Cir. 2019) (citing Phipps v. Blakeney, 8 F.3d 788, 790 (11th Cir.
1993)). “This power includes the ability to impose sanctions on litigants who do not comply with
court ordered discovery deadlines.” Id. A district court possesses the authority to sanction a
party for violating discovery obligations under either its inherent power, Rule 26(g), Rule 37(b),
or any combination thereof.
A district court may impose case-ending sanctions for litigation misconduct under its
inherent power. See Eagle Hosp. Physicians, LLC v. SRG Consulting, Inc., 561 F.3d 1298, 1307
(11th Cir. 2009) (citing Chambers v. NASCO, Inc., 501 U.S. 32, 43-44 (1991); In re Sunshine Jr.
Stores, Inc., 456 F.3d 1291, 1304 (11th Cir. 2006)). The Court’s inherent power to sanction is

26

“governed not by rule or statute but by the control necessarily vested in courts to manage their
own affairs so as to achieve the orderly and expeditious disposition of cases.” Link v. Wabash R.
Co., 370 U.S. 626, 630-31 (1962); see also Mingo v. Sugar Cane Growers Co-op. of Florida, 864
F.2d 101, 102 (11th Cir. 1989) (“The district court possesses the inherent power to police its
docket . . .. Incident to this power, the judge may impose formal sanctions upon dilatory litigants.
The sanctions imposed can range from a simple reprimand to an order dismissing the action with
or without prejudice.”). A court possesses “an inherent power to sanction errant parties before
it” within the confines of restraint and discretion. Malautea v. Suzuki Motor Corp., 148 F.R.D.
362, 370 (S.D. Ga. 1991) (aff’d Malautea v. Suzuki Motor Co., 987 F.2d 1536, 1545 (11th Cir. 1993)
(citing Roadway Express, Inc. v. Piper, 447 U.S. 752, 764 (1980) (“These inherent powers,
however, ‘must be exercised with restraint and discretion.’”)).
While Rule 37 governs sanctions for discovery-related misconduct only, a court may
exercise its inherent sanctioning power to punish all types of contumacious conduct. Roche
Diagnostics Corp. v. Priority Healthcare Corp., 2020 U.S. Dist. LEXIS 81449, *9 (N.D. Ala. May 8,
2020) (citing Malautea v. Suzuki Motor Co., 987 F.2d 1536, 1545 (11th Cir. 1993)). The Supreme
Court has determined that “the inherent power of a court [to sanction] can be invoked even if
procedural rules exist which sanction the same conduct.” Chambers v. NASCO, Inc., 501 U.S. 32,
49 (1991). In Chambers, the Supreme Court stated, “[w]e discern no basis for holding that the
sanctioning scheme of the statute and the rules displaces the inherent power to impose sanctions
for the bad-faith conduct described above . . . [and] neither is a federal court forbidden to
sanction bad-faith conduct by means of the inherent power simply because that conduct could
also be sanctioned under the statute or the Rules.” Chambers, 501 U.S. at 50. Courts should

27

ordinarily rely on procedural rules “when these black-letter provisions clearly apply to the
sanctionable conduct at issue.” Id. However, when the bad-faith conduct is “beyond the reach
of the Rules,” and the “conduct sanctionable under the Rules [is] intertwined within conduct that
only the inherent power could address,” courts may exercise their inherent powers. Roche
Diagnostics Corp., 2020 U.S. Dist. LEXIS 81449, at *9 (citing Chambers, 501 U.S. at 51); see also
Peer v. Lewis, 606 F.3d 1306, 1314 (11th Cir. 2010). A district judge may rely on “informed
discretion” to employ the court’s inherent power to sanction a party before it. Chambers, 501
U.S. at 50.
1. Finding of Bad Faith Required
A finding of bad faith is essential to the Court’s inherent power to sanction. See Barnes
v. Dalton, 158 F.3d 1212, 1214 (11th Cir. 1998) (“The key to unlocking a court's inherent power
[to sanction] is a finding of bad faith.”). In the Eleventh Circuit, courts apply the “subjective bad
faith standard” when determining whether a party should be sanctioned pursuant to inherent
powers. See Purchasing Power, LLC v. Bluestem Brands, Inc., 851 F.3d 1218 (11th 2017) (“As a
starting point, the inherent-powers standard is a subjective bad-faith standard.”).
“A party demonstrates bad faith by, inter alia, delaying or disrupting the litigation or
hampering enforcement of a court order.” Eagle Hosp., 561 F.3d at 1306 (determining a
physician intercepting confidential emails and privileged information acted in bad faith).
Recklessness, with nothing more, does not amount to bad faith. Id. (“The standard is a subjective
standard with a narrow exception for conduct tantamount to bad faith. Furthermore,
recklessness alone does not constitute conduct tantamount to bad faith.”). Bad faith “exists
when the court finds that a fraud has been practiced upon it, or that ‘the very temple of justice

28

has been defiled,’ or where a party or attorney knowingly or recklessly raises a frivolous
argument.” Allapattah Servs. v. Exxon Corp., 372 F. Supp. 2d 1344, 1373 (S.D. Fla. 2005) (citing
Chambers, 501 U.S. at 46).
A fundamental inquiry is whether the conduct “abused the judicial process.” Purchasing
Power, LLC v. Bluestem Brands, Inc., 851 F.3d 1218, 1223 (11th Cir. 2017) (citing Chambers, 501
U.S. at 45). “Courts considering whether to impose sanctions under their inherent power should
look for disobedience and be guided by the purpose of vindicating judicial authority.” Purchasing
Power, LLC, 851 F.3d at 1223-1225.
2. The Nature of the Misconduct
In addition to a finding of bad faith conduct, “several federal courts have held that the
need for sanctions is heightened when the misconduct relates to the pivotal or linchpin issue in
the case.” People For The Ethical Treatment of Animals, Inc. v. Dade City's Wild Things, Inc., 2020
U.S. Dist. LEXIS 31853, *13-14 (M.D. Fla. Feb. 25, 2020) (issuing sanction against defendant who
removed 22 tigers prior to a court-ordered site inspection where the housing and care of the
endangered species was the issue in the case) (citing Qantum Commc’ns. Corp. v. Star Broad, Inc.,
473 F. Supp. 2d 1249, 1269 (S.D. Fla. 2007)). The court in Roche Diagnostics Corp. concluded its
inherent sanctioning power, rather than Rule 37, applied to a defendant’s bad-faith behavior
which included doctoring “linchpin” evidence and committing perjury. Roche Diagnostics Corp.,
2020 U.S. Dist. LEXIS 81449, at *9-10 (citing Qantum Commc’ns. Corp., 473 F. Supp. 2d at 1269).
Just as tigers and cubs went missing in People for the Ethical Treatment of Animals,
Defendant’s “keystone” time and pay records have been missing for the duration of this action;
an action that has languished for more than three years. Defendant’s pay and time records are

29

“linchpin” records and Defendant’s withholding of them may warrant a terminal sanction.
Githieya v. Global Tel*Link Corp., 2020 U.S. Dist. LEXIS 222628, *89-91 (N.D. Ga. Nov. 30, 2020)
(entering severe sanctions against defendant for withholding a “call script” because it was “the
lynchpin of this case.”).
Defendant withheld and failed to produce “linchpin” evidence. Defendant engaged in
flagrant bad faith designed to derail the orderly resolution of Plaintiffs’ lawsuit. Therefore, the
Court will rely on its inherent power to sanction Defendant’s bad faith conduct, in addition to
Rule 37, to be discussed in further detail below. See Roche Diagnostics Corp., 2020 U.S. Dist.
LEXIS 81449, at *9-10 (citing Qantum Commc’ns. Corp., 473 F. Supp. 2d at 1269).
3. Rule 37 of the Federal Rules of Civil Procedure
The Court’s reliance on its inherent power does not preclude a finding that Rule 37
sanctions are also due to be granted. As discussed, Plaintiffs have sought relief under the Federal
Rules as well.14 Most relevant here, Rule 37(b) of Federal Rules of Civil Procedure empowers the
Court to impose “just” sanctions against a party that violates a discovery order. Fed. R. Civ. P.
37(b)(2). “Federal courts have authority to impose a variety of sanctions under Federal Rule of

14

“Failure to comply with discovery obligations constitutes a violation of the Federal Rules and triggers the Court's
authority to impose sanctions under, either or both, Rules 26(g) and 37(b).” B-K Cypress Log Homes v. Auto-Owners
Ins. Co., 2011 U.S. Dist. LEXIS 168794, *5-6 (N.D. Fla. May 13, 2011). Though both Rule 26(g) and Rule 37(b)
contemplate discovery violations as a prerequisite to a sanction, the rules contemplate separate grievances. Rule
26(g) addresses situations where the quality, completeness, and authenticity of the discovery is not acceptable or
has been improperly certified by the counsel of record. “Failure to properly certify or to erroneously certify the
discovery calls for ‘an appropriate sanction’ Fed. R. Civ. P. 26(g)(3).” B-K Cypress Log Homes, 2011 U.S. Dist. LEXIS
168794, at *5-6 (finding Auto-Owners and its attorneys deserve severe sanctions for extensive discovery violations
where they failed to respond to several discovery orders and offered no rationale for its failure to comply with its
discovery obligations). Though Plaintiffs moved for Rule 26(g) sanctions, the opinion herein contemplates sanctions
pursuant to Rule 37 and the Court’s inherent power. The evidence in the record reveals the discovery responses
were signed by a Corporate Representative. (See Doc. 206-2).

30

Civil Procedure 37(b).” People For The Ethical Treatment of Animals, Inc., 2020 U.S. Dist. LEXIS
31853, at *11-12. Under Rule 37, a court may sanction a party who “fails to obey an order to
provide or permit discovery” by:
(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;
(iii) striking pleadings in whole or in part;
(iv) staying further proceedings until the order is obeyed;
(v) dismissing the action or proceeding in whole or in part;
(vi) rendering a default judgment against the disobedient party; or
(vii) treating as contempt of court the failure to obey any order
except an order to submit to a physical or mental examination.
Fed. R. Civ. P. 37(b)(2)(A).
“The Supreme Court has interpreted the Rule 37 requirement of a ‘just’ sanction to
represent ‘general due process restrictions on the court's discretion.’” Malautea v. Suzuki Motor
Co., 987 F.2d 1536, 1542 (11th Cir. 1993) (quoting Insurance Corp. of Ireland, Ltd. v. Campagnie
des Bauxites de Guinee, 456 U.S. 694, 707 (1982)). Beyond the due process constraint, courts are
given broad discretion in fashioning appropriate sanctions for violation of discovery orders. Id.
A default judgment entered as a sanction for violation of Rule 37 is only appropriate when
there has been a violation of discovery order or motion to compel. United States v. Certain Real
Property Located at Route 1, Bryant, Ala., 126 F.3d 1314, 1317-18 (11th Cir. 1997). The Court’s
authority to enter a default judgment against the disobedient party is the harshest sanction, of
the seven options, granted only as a “last resort when less drastic sanctions would not ensure

31

compliance with the court’s order.” Malautea, 987 F.2d at 1542 (citing Navarro. v. Cohan, 856
F.2d 141, 142 (11th Cir. 1988)).
As with inherent power, a default judgment entered as a sanction to address a violation
of Rule 37 “requires a finding by the court that there was a willful or bad faith failure to obey a
discovery order.” Malautea, 987 F.2d at 1542 (finding bad faith where defendants failed to
produce documents following three clear orders by the district judge to do so); see also Aztec
Steel Co., 691 F.2d at 481 (finding defendant “willfully flouted court ordered discovery”). A delay,
caused by negligence, is not enough to warrant the imposition of a default judgment: “Violation
of a discovery order caused by simple negligence, misunderstanding, or inability to comply will
not justify a Rule 37 default judgment or dismissal.” Malautea, 987 F.2d at 1542. In addition to
finding a “party exhibited a willful or bad faith failure to obey a discovery order,” the district court
must find that “the moving party was prejudiced by that violation; and that a lesser sanction
would fail to punish the violation adequately and would not ensure future compliance with court
orders.” Inmuno Vital, Inc. v. Telemundo Group, Inc., 203 F.R.D. 561, 571 (S.D. Fla. 2001) (citing
Malautea, 987 F.2d at 1542).
Finally, to impose a sanction under Rule 37, the district court must “clearly state its
reasons so that meaningful review may be had on appeal.” Carlucci v. Piper Aircraft Corp., 775
F.2d 1440, 1453 (citing Wilson v. Volkswagen of America, Inc., 561 F.2d 494, 505 (4th Cir. 1977)).
“Permissible purposes of a sanction include: (1) compensating the court and other parties for
the added expense caused by the abusive conduct; (2) compelling discovery; (3) deterring others
from engaging in similar conduct; and (4) penalizing the guilty party or attorney.” Carlucci, 775
F.2d at 1453.

32

Several other courts have considered the issue of sanctions in an FLSA collective action
where egregious and dilatory misconduct involved withholding time and pay records or the
fraudulent production of such records in discovery. In most every instance, a default judgment
was entered against a defendant who had been given fewer opportunities to comply with the
court’s discovery orders than this Defendant. See, e.g., Sec'y of Labor v. Caring First, Inc., 2018
U.S. Dist. LEXIS 13957, *6, 9-10 (M.D. Fla. Jan. 19, 2018) (finding default judgment to be the only
suitable sanction in light of defendant’s repeated and willful actions, “blatant disregard” of the
court’s orders, and the filing of three motions for sanctions ); Zavala-Alvarez v. Darbar Mgmt.,
2021 U.S. Dist. LEXIS 88212, *28-29 (N.D. Ill. Jan. 25, 2002) (finding defendant “unquestionably
prejudiced plaintiff and obstructed discovery” by giving false evidence on plaintiff’s work hour
and wages, a “central issue” in the FLSA action); Aristidou v. Aviation Port Servs., 2021 U.S. Dist.
LEXIS 113899 (E.D.N.Y. June 27, 2021) (adopting recommendation that default be entered where
defendants instigated a pattern of delay and repeatedly failed to comply with court orders to
provide discovery basic to a wage and hour case).
Similarly, the Eleventh Circuit recently affirmed the dismissal of FLSA cases where the
plaintiffs failed to engage in discovery and violated discovery orders. See Jenkins v. Sec. Eng'rs,
Inc., 798 Fed. Appx. 362, 363 (11th Cir. 2019) (affirming dismissal based on plaintiff’s “clear record
of willful delay and failure to follow the district court's orders to produce complete discovery
responses in a lawsuit pending for nearly a year.”); see also Williams v. Bank of Am. Corp., 824
Fed. Appx. 790, 791 (11th Cir. 2020) (affirming dismissal of FLSA and § 1981 claims based on
plaintiff’s failure to appear for his deposition).

33

B.

Evidence of Bad Faith: Defendant’s Response to Numerous Discovery Orders

In this case, the Court finds clear and convincing evidence of specific misconduct on the
part of the Defendant in response to various discovery orders which establishes its bad faith and
the justification for case-ending sanctions.15 “In assessing whether a party should be sanctioned,
a court examines the wrongdoing in the context of the case, including the culpability of other
parties.” Purchasing Power, 851 F.3d at 1225 (citing Chambers, 501 U.S. at 50 (reviewing
sanctions “in the circumstances of this case.”)). A detailed review of the record reveals the pay
and time records, along with the incentive plan production, were ordered to be produced on
twelve (12) separate occasions spanning almost three years. See Appendix I. These orders were
entered on various motions to compel, motions for sanctions and even stipulated agreements
between the parties. On numerous occasions, Defendant represented, on the record, that it
would produce its records. Despite these orders and Defendant’s representations, Defendant
never provided complete and accurate pay records, time records or the documents related to
the incentive plan.
In response to the Initial Motion for Sanctions (Doc. 216), and later the Renewed Motion
(Doc. 238), Defendant did not dispute it had failed its discovery obligations to provide the time
and pay records long sought by the Plaintiffs. (Docs. 220 and 242). Anticipating sanctions,

15

The evidentiary standard in the Eleventh Circuit, when determining whether to exercise its inherent power to
order case-ending sanctions for a party's misconduct is not settled. See Roche Diagnostics Corp., 2020 U.S. Dist.
LEXIS 81449, *10-12. Though some district courts apply a clear and convincing standard to determine whether bad
faith conduct occurred, the Eleventh Circuit recently stated there “is no binding precedent for that proposition . . ..”
Zeltser v. Little Rest Twelve, Inc., 662 Fed. Appx. 887, 889 (11th Cir. 2016) (citing Porto, 645 F.3d at 1304 (internal
quotation omitted)). Nevertheless, “a court must do more than conclude that a party acted in bad faith; it should
make specific findings as to the party's conduct that warrants sanctions.” Id. In Zeltser, the Eleventh Circuit affirmed
a bankruptcy court’s determination of bad faith based on specific findings of delay, forum shopping, and knowledge.
(Id.).

34

Defendant claimed there was “absolutely no evidence to suggest that Defendant is acting in bad
faith or willfully refusing to participate in discovery or comply with a discovery order.” (Doc. 220).
The record belies Defendant’s claim. As discussed further below, Defendant’s material
misrepresentations were intentional, as were its violations of the Federal Rules of Civil Procedure
and numerous Court Orders that disrupted the litigation process and, ultimately, deferred the
proper administration of justice. See Stimson v. Stryker Sales Corp., 835 Fed. Appx. 993, 998 (11th
Cir. 2020) (citing Chambers, 501 U.S. at 46). Defendant succeeded in its endeavor by employing
various techniques intended to thwart its obligations to produce complete and accurate
discovery essential to this case.
1. September 4, 2018: The Initial FLSA Scheduling Order
Given the “linchpin” importance of pay records in FLSA cases, the Court, at the outset of
every FLSA case, orders the employer-defendant to produce a “Verified Summary of all hours
worked by the Plaintiff(s) during each relevant pay period, the rate of pay and wages paid,
including overtime pay, if any . . .” and to serve the employee-plaintiff with a “copy of all time
sheets and payroll records that support or relate to the time periods in the Verified Summary.”
(Doc. 24). As in all FLSA cases, that order was entered in this case. (Id.). The order required
Defendant to produce its pay and time records by October 16, 2018. (Id.).
The FLSA Scheduling Order directs a number of interrogatories to each plaintiff. The
interrogatories query each plaintiff’s work history with the company, pay rates and position.
After entry of the Court’s standard FLSA scheduling order, however, the parties proposed a
different order with discovery requirements directed to Defendant and more narrowly tailored
to Plaintiffs’ claims. On September 21, 2018, the parties filed a joint motion to set aside the

35

standard FLSA Scheduling Order and requested a teleconference with the Magistrate Judge to
discuss their proposed order. (Doc. 47). The parties agreed that the interrogatories in the
standard FLSA scheduling order were not best suited to Plaintiffs’ claims. The parties explained
“the most important of the interrogatories [in the standard FLSA order required] an accounting
of claims . . . [but] none of the Plaintiffs have a complete set of either time records or Earnings
Statements and, therefore, none of them could provide a complete answer.” (Id. (emphasis
added)). Therefore, Defendant and Plaintiffs agreed that “Defendant should produce a copy of
all time sheets and payroll records as the first part of discovery.” (Id.). Defendant further agreed
to “produce that information [all time sheets and payroll records] in a reasonable format
intended for efficient use for all Plaintiffs who have so far opted in by October 18, 2018.” (Id.).
2. October 9, 2018: Initial Scheduling Conference
At the Initial Scheduling Conference, Plaintiffs explained the three alleged wage and hour
violations and the corresponding set of data it would need Defendant to produce. First, to
evaluate the rounding claim, Plaintiffs needed time clock records; second, to understand how
Defendant paid overtime, Plaintiffs needed detailed, daily pay records; and, finally, to understand
how and when Defendant calculated bonuses, Plaintiffs needed data pertaining to Defendant’s
monthly incentive calculations. (Doc. 336). Defendant represented to the Magistrate Judge it
would not be helpful to put the parties in the “current box,” meaning the standard FLSA
scheduling order. (Id.). Then, while acknowledging the “Court isn’t crazy about parties. . . taking
off on their own flight,” Defendant assured the Magistrate Judge the parties had been working
together and would continue to do so “effectively.” (Id.).

36

Thus, from the initiation of this case, Plaintiffs made clear Defendant would need to
produce records of when its employees clocked in and out, their earnings, and Defendant’s
incentive plan. Defendant immediately acquiesced and represented its willingness and ability to
comply. (Doc. 336) (“We should be able to get those numbers. . . fairly soon.”). Defendant
further acknowledged the data was critical to early settlement discussions. (Id.). Defendant
represented there was no point in issuing a notice to the collective, because once the Plaintiffs’
counsel “gets that data” from Defendant the parties would be able to figure out “what the track
is on this thing.” (Id.). Defendant represented there would be “further discussions made to try
to get this thing resolved.”

(Id.).

Unfortunately, Defendant immediately dishonored its

representations. Plaintiffs never “get[] that data.” (Id.). Instead, as the Court will now detail,
Defendant spent the next several years violating discovery orders and misrepresenting its efforts
to produce “linchpin” documents.
3. October 25, 2018: Superseding Preliminary Scheduling Order
The Magistrate Judge indulged the parties’ request to shelve the FLSA Scheduling Order
and ordered the parties to file a joint proposal. On October 12, 2018, Plaintiffs unilaterally filed
a Proposed Amended Scheduling Order. (Doc. 58). Plaintiffs explained, scheduling conflicts on
the part of defense counsel prevented the Plaintiffs from conferring with Defendant prior to
filing. Defendant responded with red line comments to the document. Of particular interest,
Defendant struck through the reference to provide the pay and time records in Excel format.
(Doc. 59-1). In the comment to the redline, Defendant represented: “The ADP pay records in
question are not in Excel format, and it would be extremely burdensome to recreate an
exceptional number of ADP payroll documents in an Excel format.” (Id.). Nevertheless, the final

37

“Superseding Preliminary Scheduling Order” retained the requirement that Defendant produce
the data in an Excel file, unless the parties agreed that the information could be provided in a
different format. (Doc. 64). Among other things, the Court directed Defendant to produce the
pay records, including multiple regular shift hourly rates if applicable, pay date, pay period
ending date, gross pay and overtime pay, daily clock-in and clock-out records, and the amount of
the monthly bonus by pay date. (Id. (emphasis added)).16 Defendant was required to produce
these verified records by October 31. (Id. (emphasis added)).
Given the terms of this order, Defendant knew, from the outset, it had to produce pay
records in Excel format that included multiple hourly rates and ADP’s participation in discovery
would be crucial to providing its time and pay records. Likewise, from the initiation of this case,
Defendant telegraphed its willingness to blame ADP for its future failures to provide these
records. In spite of Defendant’s assertion, there is no evidence in the record that Defendant, in
2018 or 2019 sought records from ADP. The evidence in the record reveals Defendant did not
engage ADP until Summer 2020. At that time, Defendant was ordered to subpoena ADP for the
very same records Defendant agreed, and was ordered, to produce in October, 2018.

16

See Doc. 64, paragraph 3: “No later than Wednesday, October 31, 2018, the Defendant shall produce the following
information for each Plaintiff. If additional Plaintiffs choose to join this litigation prior to Tuesday, January 1, 2019,
the Defendant shall provide the same information in a reasonable time: . . .
a)

A separate Excel Data file for each Plaintiff showing daily clock-in/ clock-out time records from July 1,
2015 – present (or employment termination date). This information shall be verified by the Defendant.

b) A separate Excel Data file for each Plaintiff reflecting the following information as set out in the
“Earnings Statements” provided to each employee every two weeks: pay date; pay period ending date;
gross pay; total overtime earnings; regular shift hourly rate(s), including multiple regular shift hourly
rates if applicable. . . This data shall be for July 1, 2015 – present (or employment termination date).
This information shall be verified by the Defendant.”
(Emphasis added).

38

4. Companion Case and Discovery Therein
The verified pay and time records Defendant agreed to produce, and required by the
Superseding Scheduling Order, were based on discovery Defendant submitted in a companion
case, Hartery v. Outokumpu Stainless USA, LLC (1:18-cv-00291-KD-B), moving through the
Southern District at that time.17 On October 3, 2018, Defendant sent Plaintiffs a sample “verified
pay summary of hours worked” from that case. (Doc. 216-1). This document, in Excel, contained
a column entitled “pay rate.” (Doc. 216-2). Defendant represented to Plaintiffs these verified
summaries were accurate, complete and would be propounded for the Hornady Plaintiffs. (See
Doc. 216 (“Plaintiffs emphasize that at the time they jointly proposed the Amended Scheduling
Order on October 19, 2018 they had been (mis)led to believe that what Defendant had produced
in the Hartery case for exactly the same sort of information was legitimately and truthfully
verified.”)). Plaintiffs had no reason to disbelieve Defendant’s representation.
On October 31, 2018, Defendant produced verified pay records for the first 32 Hornady
Plaintiffs in an Excel data file and in substantially the same form as the Hartery Documents. (Doc.
216-4). The production included a pay rate column, which indicated that each Plaintiff had the
same pay rate per pay period. Turning to the time records, Defendant provided several
spreadsheets of daily clock-in and clock-out records (some in PDF and some in Excel), as required
by the Superseding Scheduling Order. (Docs. 170 and 279). All of these records were produced
in black and white. (See, e.g., Doc. 216-10).

17

Hartery v. Outokumpu Stainless USA, LLC (1:18-cv-00291-KD-B). The Hartery action, also a wage and hour action,
was dismissed on November 19, 2018, so that the Plaintiff could opt-in to this action.

39

5. First Quarter 2019: First Settlement Conference and Phase I Discovery Order
After Defendant produced its first batch of verified time and pay records, which at that
time Plaintiffs continued to believe to be accurate and helpful, discovery paused. The first
settlement conference was held on January 31, 2019. The inaccurate verified time and pay
records were used to compile damages for that settlement negotiation. A settlement was not
reached. Defendant’s bad faith conduct, though not yet apparent, continued.
The parties filed a “Report of Parties’ Planning Meeting” pursuant to Fed. R. Civ. P. 26(f)
on March 18, 2019. (Doc. 83). The Parties proposed a bifurcated approach to discovery, so that
the initial phase could be concluded, prior to a second settlement conference, to be scheduled
after the deadline for opt-in Plaintiffs. The bifurcated approach to discovery was intended to
tease out the information necessary to reach a settlement, as well as to “avoid addressing very
time-consuming alternative damages calculations on issues that turn out to be simplified by
partial summary judgment rulings.” (Doc. 83). Defendant agreed Phase I discovery would
include:
•
•
•
•
•
•
•

What day and time of the week defendant designated as the workweek.
Bonus methodology.
Time and pay methodology.
Statute of limitations period and liquidated damages.
Waiver, estoppel, unclean hands and/or laches defenses.
Maintenance of time and pay records.
Exemplar Plaintiffs’, and their supervisors’, knowledge/belief about pay
practices and working hours (as affects them individually).

(Id.).
The parties’ approach was discussed, again, at a scheduling conference held on March 28.
During that conference, the Magistrate Judge sought assurances that the “parties agree” that

40

Phase I discovery would commence right away. On behalf of the Defendant, defense counsel
indicated yes, and further “I don’t have a problem in general. What I think we both don't want
to do right now is to overdo discovery. But I understand why the plaintiffs need it [discovery].”
(Doc. 334).
Satisfied, the Magistrate Judge entered the Phase I Scheduling Order on April 8, 2019.
(Doc. 91). The next day, Plaintiffs served their First Set of Interrogatories and Request for
Production. (Doc. 92). In these discovery requests, Plaintiffs sought time and pay records for all
Opt-in Plaintiffs, and to the extent not previously produced, for six Exemplar Plaintiffs (RFP# 1, 6,
10, and 11). (Id.). Plaintiffs also sought production / bonus incentive data (RFP# 3, 4, 5). (Id.).
Plaintiffs requested assurance that records were not maintained in any other formats, and if they
were, they too were to be produced. (RFP# 11). (Id.). The “Phase I Scheduling Order” also
required Defendant to respond to Interrogatories and Requests for Production on the workweek
and bonus methodology. (Doc. 91). Defendant’s responses and production were due on or
around May 9, 2019.
Defendant failed to produce initial disclosures, discovery responses or document
production by the deadline. Defendant’s failures occurred despite its representations regarding
the need for discovery to expedite settlement.
6. June 12, 2019: Plaintiffs’ First Motion to Compel and Defendant’s First
Sanction
As a consequence of Defendant’s failures, Plaintiffs filed a Motion to Compel on June 12,
2019. (Doc. 96). As Plaintiffs advised the Court, Defendant explained “it had not intentionally
failed to respond to discovery and had not intentionally decided not to provide the required
disclosures.” (Id.). Rather, as Defendant represented, “there had been some sort of mistake,
41

confusion, or misunderstanding.” (Id.). Defendant assured Plaintiffs it would “put together a
plan to provide responses as soon as reasonably possible. . .” (Id.). It did not.
Plaintiffs shared “the only progress” was a meeting with one of Defendant’s employees
about Defendant’s pay and timekeeping records. (Doc. 96). Plaintiffs explained: “[b]y agreement
of the parties, the meeting was not formal discovery. The information provided orally was not
recorded, it was not intended as the equivalent of sworn testimony . . .. The purpose of the
conference was purely to exchange information in a non-formal way to try and streamline future
discovery . . .. That conference, however, does not eliminate Plaintiffs’ need for discovery
responses and disclosures it can use. . .” (Id.).
Defendant, on the other hand, characterized the meeting quite differently. In its motion
for an extension of time to reply to the motion to compel, Defendant claimed this meeting “led
to considerable information being provided to Plaintiffs’ counsel.” (Doc. 102). Defendant
indicated both parties had conferred “in an effort to avoid having to trouble the Court with a
discovery dispute.” (Id.) As justification for its request, Defendant reasoned, with additional time
and added clarification from Plaintiffs’ counsel, “it seems unlikely that Court assistance will be
needed related to the current discovery matters.” (Id.). And further, “in light of the above…the
discovery matters and perhaps the affirmative defense issues can be resolved without the
assistance of the Court.” (Id.).
Though the Magistrate Judge granted Defendant’s motion, the Defendant never replied
to the Plaintiffs’ Motion to Compel. (Doc. 97). On July 12, 2019, the Magistrate Judge granted
Plaintiffs’ Motion to Compel and struck five of Defendant’s affirmative defenses as a sanction. In
doing so, the Magistrate Judge observed Defendant had been given 28 days to reply and did not.

42

(Doc. 108). Defendant was ordered “to serve the Plaintiffs with (1) the information required by
Section 3 of the Phase I Scheduling Order (Doc. 91), and (2) complete responses to the Plaintiffs’
First Set of Interrogatories and Requests for Production (Doc. 96-1) . . ..” (Doc. 108). By this
Court’s count, this was the fourth order requiring Defendant to produce its time and pay records.
This episode marks the initiation of new pattern concerning Defendant’s misconduct
which persisted in this case until March, 2021. First, Defendant would claim there was confusion
over the discovery requests, and Defendant offered to “meet and confer.” (See, e.g., Doc. 102)
(“The discussion lead [sic] to clarification and agreement on most, if not all issues, including
avoiding Defendant having to send several thousand documents regarding pay data.”). Next, at
the meeting, Defendant promised to produce, but generally did not. Or, Defendant would
provide some information at the meeting, but would not put it in the record. Defendant claimed
the information should not be put in the record to “avoid having to trouble the Court with a
discovery dispute” and “can be resolved without the assistance of the Court.” (Doc. 102).
Defendant’s offers to hold meetings or provide “voluntary information” may have seemed in
good faith, at the time. However, when the pattern is viewed in the context of the entire case,
it is clear Defendant’s tactics were subversive and its behavior manipulative, intentionally
designed to undermine the Court’s orders and authority over the discovery process.
7. August 19, 2019: Scheduling Conference and Amended Phase I Scheduling
Order
Notwithstanding continuing orders from the Magistrate Judge, Defendant persisted in its
discovery abuses. Defendant served objections and responses to the First Set of Interrogatories
and Requests for Production on the same day the Magistrate Judge granted Plaintiffs’ first motion
to compel. Thirty days later, the parties were back before the Magistrate Judge. At this
43

conference, Plaintiffs explained there were still concerns with Defendant’s discovery responses,
which were largely objections to producing the linchpin documents. (Doc. 335). Defense counsel
indicated he still needed to consult with his client, presumably regarding the discovery, and
would be further supplementing. (Id.). Again, defense counsel stated he was optimistic the case
would settle through mediation: “The mediation is -- I am relatively optimistic.” (Id.). Defendant
represented to the Magistrate Judge it had produced enough data for the parties to figure out a
settlement formula. (Doc. 335). Plaintiffs agreed to give Defendant more time to supplement its
discovery responses and extend the Phase I deadline.
The Magistrate Judge, therefore, issued an Amended Phase I Scheduling Order, which
ordered Defendant to supplement its discovery by September 6, 2019. (Doc. 137). The Order
extended the Phase I Discovery Deadline to December 31, 2019, after the second settlement
conference. Further, the Order included a timeline for resolution of current discovery disputes
and ordered Defendant to supplement all discovery on or before September 6, 2019. (Id.) This
Order marked the fifth time Defendant was told to produce the pay and time records for all of
the Plaintiffs. Plaintiffs were instructed to “file any motion to compel on or before September
13, 2019 . . ..” (Doc. 137).
a. September 13, 2019: Plaintiffs’ Second Motion to Compel
In keeping with the Amended Scheduling Order, Defendant supplemented its responses
on September 6, 2019. After receiving these supplemental responses, Plaintiffs filed a second
motion to compel pursuant to the Order on September 13, 2019. (Doc. 146). Plaintiffs identified
numerous deficiencies. Specifically, of the six interrogatories and eight requests for production,

44

Defendant either objected, provided partial or incomplete responses, or lacked sufficient detail.
(Id.). In addition, the Court notes the responses were not verified.18
While the Second Motion to Compel raised a number of disputes, the Court is most
concerned with the Defendant’s response to the requests for additional pay and time records
where Defendant represented it only agreed to provide pay and time records for the eleven
exemplar Plaintiffs. 19 (Doc. 146-1, RFP#10). Plaintiffs agreed, but noted “[t]here are now
approximately 290 Plaintiffs, and it would not be feasible (nor necessary) to have all of their
pay/time records before mediation. However, Plaintiffs will need all the time and pay records
for all Plaintiffs over the next couple of months so individuals can make informed decisions about
any potential settlement.” (Doc. 146). With this, Defendant retreated from its previous position
and agreed to “provide such records [pay records for each opt-in Plaintiff] within a reasonable
time period…” (Doc. 148). Defendant acknowledged Plaintiffs would ultimately need this data.
(Id.). Defendant, once again, assured the Magistrate Judge her intervention was not needed
because “[i]f this case is not resolved at mediation [scheduled for September 2019] it would
provide the records within a reasonable time period.” (Id.).
In reply, Plaintiffs, again, identified Defendant’s dilatory and defiant tactics to avoid
discovery: “Defendant attempts to substitute what it has done on a limited, voluntary basis. . .

Defendant claimed this was an oversight. (Doc. 148). The submission of unverified discovery responses is but
another example of Defendant’s pattern of misconduct in this case. The supplemental responses were not
submitted and verified until January 27, 2020. At that time, Defendant materially changed the responses. In her
deposition, Pledger admitted that the January 2020 responses were known in January 2019, establishing that
Defendant’s first responses were false. (Doc. 206-2).

18

19

This request can be found at RFP No.10, which reads as follows: “Produce time and pay records for each opt-in
Plaintiff in the same manner as previously produced within 28 days of the filing of each opt-in and update such
records for all Plaintiffs within 14 days of the close of the opt-in period (and including the next bonus payments).”
(Doc. 146-1).
45

for what it is required to do under the Court’s scheduling orders and the federal discovery rules
(which is to respond to discovery).” (Doc. 149). In short, Plaintiffs accused (correctly as the Court
now knows) Defendant of flaunting Court orders and the Federal Rules of Civil Procedure.
b. November 5, 2019: Hearing on Plaintiffs’ Second Motion to Compel
The mediation, which was held on October 3, 2019, did not resolve the case. The
Magistrate Judge conducted a hearing on November 5, 2019 to address Plaintiffs’ Second Motion
to Compel. At the hearing, Defendant, again, agreed to provide the pay and time records (“we’ve
agreed to do [RFP Number] Ten”). (Doc. 337). Defendant, however, moved the target delivery
date, once again, and said it would provide the records prior to the second settlement
conference, which was scheduled for December 9. Lending credence to Plaintiffs’ concern, and
foreshadowing Defendant’s future behavior, defense counsel grumbled “that is an awful lot of
information for 290 people . . . It’s going to take some time . . ..” (Doc. 337). At that point, the
case had been pending for eighteen months.
At the end of the hearing, the Magistrate Judge instructed the parties to prepare a joint
order memorializing the various agreements reached during the hearing. Although Plaintiffs and
Defendant traded drafts, a final order was never prepared or entered because Defendant failed
to respond to the Plaintiffs’ edits. (Doc. 270).
8. December 9, 2019: Hearing on Third Motion to Compel
Defendant neither complied with the Magistrate Judge’s directives nor honored its own
representations. Defendant failed to produce the records prior to the settlement conference
scheduled for December 9. This failure was not Defendant’s only discovery abuse in December
2019. Three weeks earlier, Plaintiffs had filed their third motion to compel to “require Defendant

46

to provide responses or supplemental responses to certain discovery items in Plaintiffs’ Second
Set of Interrogatories and Requests for Production served September 5, 2019.” (Doc. 160). As
Plaintiffs noted, “Defendant objected to almost every request as being overly broad, or simply
did not respond at all.” (Id).
The Magistrate Judge conducted yet another hearing on December 9, prior to the
settlement conference. The Magistrate Judge commented on how ineffective the settlement
conference would be with the cloud of discovery disputes looming. (Doc. 338). In an attempt to
facilitate matters, the Magistrate Judge spent an hour and a half reviewing each disputed
interrogatory and request for production with the parties. (Id.). Plaintiffs, again, complained
Defendant’s answers were vague and incomplete.20 Meanwhile, Defendant’s counsel asserted,
incredibly, he did not “want to look like I'm holding up the ship. I frankly detest fights over
discovery. It just increases the cost and makes it harder to settle.” (Doc. 338). Plaintiffs’ counsel
was understandably pessimistic and suspected they would be “ambushed” down the road. (Id.).
The Magistrate Judge entered an order, which granted in part, denied in part, and mooted in
part, Plaintiffs Third Motion to Compel, “consistent with the rulings made on the record at the
December 9, 2019 motion hearing.” (Doc. 166). At this hearing, Defendant agreed to supplement
its responses to discovery and initial disclosures. (See Doc. 338) (“If that's what we're doing, that
helps”; “I don't have a problem with that.”; “If it's 2015, I think we can handle that.”).

20

“They're not telling me who said what. They're barely saying when. And if that's all they got, the point of
interrogatories isn't so that you can say, why don't you spend a couple of hours deposing somebody while we make
it up on the fly.” (Doc. 338).

47

9. January 17, 2020: Discovery Conference and January 21, 2020 Order
Plaintiffs’ pessimism was well founded. Contrary to previous representations, Defendant
continued to “hold up the ship.” Defendant failed, yet again, to produce. The Magistrate Judge
ordered the parties to participate in yet another scheduling conference, to be held on January
17, 2020.21 (Doc. 169).
The order noted “[a]ll deadlines in the amended Federal Rule of Civil Procedure 16(b)
scheduling order (Doc. 137) have expired, and the two settlement conferences held with the
[Magistrate Judge] have not resulted in settlement.” (Id.). The parties were ordered to:
[B]e prepared to discuss the status of (1) the Plaintiffs’ motion to compel filed
September 13, 2019 (Doc. 146), on which a hearing was held November 5, 2019,
and for which the parties agreed to prepare a joint proposed order consistent with
the rulings made on the record at the hearing, and (2) the Defendant’s compliance
with the Court’s order dated and entered December 16, 2019 (Doc. 166), granting
in part, denying in part, and mooting in part the Plaintiffs’ Motion to Compel
Concerning Second Set of Discovery to Defendant (Doc. 160).
(Id.).

21

By the time of this January 2020 discovery conference, Plaintiffs’ First Set of Interrogatories and Request for
Production had been pending for seven months. (Doc. 92). The critical items Plaintiffs were seeking in this discovery
were the time and pay records of the Plaintiffs, since 2015 (or the date of employment) forward. (Doc. 92, RFP #10).
To recap, in April, when discovery was first propounded, Defendant did not respond at all. Plaintiffs filed a Motion
to Compel sixty days later. Defendant did not respond to the Motion to Compel. The Court sanctioned Defendant
by striking its Affirmative Responses. Defendant then asserted, for the most part, objections and incomplete
responses on the day the order granting the motion to compel was granted (July 12) – four months after the
discovery was first propounded. Plaintiffs raised this issue at yet another scheduling conference on August 8. The
Magistrate Judge addressed the deficiencies in her order amending the scheduling order, issued on August 28, and
gave the Defendant until September 6th to supplement its July 12 responses (now, five months since discovery was
first propounded). The Defendant supplemented on September 6. Plaintiffs then filed another motion to compel,
in compliance with the Amended Scheduling Order. In response, Defendant acknowledged Plaintiffs needed the pay
records and promised to provide such records if mediation was unsuccessful. Mediation was unsuccessful. A hearing
was held on the motion to compel; and, there, Defendant promised, yet again, to provide the records by “the
settlement conference.” The settlement conference was held in early December. Records were not provided or
supplemented.

48

The scheduling conference immediately turned into a discovery conference. Prior to this
conference, Plaintiffs filed a document entitled “Plaintiffs’ Miscellaneous Submission in Advance
of January 17, 2020 Teleconference Scheduling Conference.” (Doc. 170). Plaintiffs noted: “Since
November 5, 2019, Defendant has not supplemented any of the discovery responses that were
the subject of the [Second Motion to Compel filed September 13, 2019]” and had filed nothing
in response to the Third Motion to Compel. (Doc. 170). Plaintiffs informed the Magistrate Judge
that Defendant still refused to produce complete time and pay records for all Plaintiffs. (Id.).
When queried about electronically stored information, and the data formats in which Defendant
could make it available, Plaintiffs informed the Magistrate Judge Defendant had made “no
substantive response to any of these inquires.” (Doc. 170).
During the conference, Plaintiffs’ counsel pointed out, again, that without the time and
pay records, which Defendant had been repeatedly ordered to produce, it was impossible for
them to ascertain a settlement amount and engage in productive settlement discussions.22 (Doc.
325). Of course, Plaintiffs simply could not go forward with their case. Plaintiffs also recalled
Defendant’s representation to the Magistrate Judge, made during the first settlement
conference in December 2018, that it “couldn't know anything or do anything until they knew
who all the plaintiffs were.” (Doc. 325). Thereafter, at the mediation in Fall of 2019, when
Defendant knew “who all the plaintiffs were,” Defendant retreated to the position that it

22

“But the other thing . . . I also mentioned at our last settlement conference and at the first settlement conference
is that every time anybody asks me for numbers for these people and how much money is at stake, I say the same
thing which is I can't guesstimate it with any precision that anybody should rely on without the data for time and
pay.” (Doc. 325).
49

“couldn't have any real discussion about what amounts were at stake because now that we knew
all the people, we still didn't have the data.” (Id.).
Six months later, after having been informed of the identify of all collective plaintiffs,
Defendant still had not compiled the time and pay records. Defendant then resorted to yet
another position. For the first time, after nineteen months of litigation, Defendant represented
that it was too burdensome on its staff to produce the linchpin time and pay records and sought,
once again, additional time. (Doc. 325). Defendant claimed it only had one employee who was
responsible for producing the time and pay records, stating “we literally got nobody else that can
do it other than her [Pledger].” (Id.). Plaintiffs’ counsel, once again, was incredulous: “But the
idea that at the end of April they are going to give me all this data that we've been chasing now
for a year . . ..” (Id.).
To accommodate Defendant’s “too burdensome” claim, the Magistrate Judge asked
Defendant if it could produce the time and pay records in one-third increments, beginning almost
immediately. Defense counsel responded: “[I] think that's doable.” (Doc. 325). The Magistrate
Judge admonished Defendant it was time for the deadlines “to start meaning something,” (id.)
and ordered Defendant to “provide time and pay records for all of the Plaintiffs, in Microsoft
Excel spreadsheet format, and in 1/3 increments, said increments to be served no later than
Friday, February 28, 2020, Tuesday, March 31, 2020, and Thursday, April 30, 2020, respectively.”
(Doc. 172). Defendant was also ordered to produce the incentive plan data. (Id.). Defendant
was granted an extension to respond to Phase I Discovery until March 31, 2020, six months
beyond its original deadline.

50

a. March 11, 2020: Deposition of the Corporate Representative
Defendant’s pattern of delay and misconduct had become apparent by January 2020; by
March, its obfuscations became patently obvious. Plaintiffs’ counsel long suspected the 2018
Excel pay records Defendant propounded as “verified pay summaries” were inaccurate for the
first 32 plaintiffs. (See Doc. 170 (“The Excel pay records previously produced did not appear to
have any information about days when an employee’s usual pay rate was changed on a
temporary basis…”)). These suspicions were sound. The verified pay summaries Defendant
produced indicated Plaintiffs worked the same rate of pay throughout the pay period.
The explanation for the omissions and inaccuracies in Defendant’s pay records came to
light during the deposition of Pledger, Defendant’s Corporate Representative/Payroll Specialist,
on March 11, 2020. Pledger explained employees sometimes worked different rates, during a
single pay period, and those pay rates were not on the spreadsheet she created for the first 32
plaintiffs. (Docs. 216-11, 280 and 206-2). Pledger also revealed Defendant occasionally made a
“true up” payment by recalculating overtime that had been previously configured at the wrong
rate of pay, i.e., the “true up.” (Id.). This “true up” amount is added to the “overtime payment”
for the current check, rather than for the pay period in which it was earned. (Doc. 206-2).
In her position as payroll specialist, Pledger created, exclusively for this litigation, the
“verified pay summaries” (i.e., pay records) produced in spreadsheet form for the first 32
Plaintiffs. (Docs. 216-5, 216-11 and 206-2). Defendant’s verified pay summaries indicated there
was a single pay rate per pay period for each Plaintiff, but that is inconsistent with Defendant’s
pay practices. (See, e.g., Doc. 216-2). The verified pay summaries failed to account for true up

51

payments, step-up rates, holiday pay; they even failed to suggest that any of these rates existed.23
Pledger’s testimony revealed Defendant created and produced inaccurate pay records, leaving
Plaintiffs to discover these inaccuracies months after the records were produced.24
At Pledger’s deposition, Plaintiffs also learned the time records, produced by the
Defendant in black and white, were meaningless. (See, e.g., Doc. 188-8). Defendant produced
spreadsheets of daily clock-in and clock-out records (some in PDF and some in Excel), as required
by the Superseding Scheduling Order. (Docs. 216 and 279). All of these records were in black
and white. (See, e.g., Doc. 216-10). The sample record reveals that what appears to be the “Total
Time” (for example, 12) often varies from the sum of the clock-in and clock-out time (for example,
the amount of time clocked in on July 30, 2015 was 12 hours and 23 minutes). In their
Miscellaneous Submission, Plaintiffs noted: “The “time records [produced] since mid-2017
sometimes shows total shift time in excess of 12 . . . from what we understand, that does not
necessarily mean the employee might have been paid for additional time. We assume there is
data that is electronically transmitted to the payroll company to inform them whether the
employee is actually paid for 12.0 hours or 12.25 (or some other amount).” (Doc. 170).
To be clear, the spreadsheets produced did not reveal what time was paid or unpaid.
When questioned about this issue, the Defendant’s Corporate Representative explained in order

23

With one exception, Plaintiffs were instructed to add $.50 to each day rate to achieve the nighttime rate of pay.

24

In their Initial Motion for Sanctions, Plaintiffs contend: “Over about 17 months, Defendant never disclosed that
the Pay Summaries, Earnings Statements, Excel spreadsheets, and purportedly supporting documents it had
produced and verified for Hartery, and then for the other Hornady Plaintiffs (a) showed inaccurate and incomplete
pay rates, (b) included amounts of overtime pay from earlier pay periods, at various rates, that had been “trued up,”
or (c) had overtime pay rates and hours that were inaccurate. This was only substantively admitted by Defendant’s
deposition representative in March 2020.” (Doc. 216). Defendant claimed its errors were inadvertent and,
proposed, as a remedy, it retrieve its own time and pay records from its third-party payroll provider, ADP. (Doc. 220).
52

to understand whether the “rounded time” was paid, the Plaintiffs would need a color-coded
version of the same spreadsheet and / or the “time card.” (Doc. 206-2). In sum, Defendant
produced black and white time records which it knew was meaningless. Not until Plaintiffs
deposed Defendant’s Corporate Representative did they learn these verified records were
inaccurate and incomplete. This deposition occurred contemporaneously with Defendant’s
production of records in response to the January 21, 2020 Order. (Doc. 172).
10. May 2020: Discovery Conference and June 2, 2020 Stipulated Order
Defendant’s misconduct and obfuscations continued.
The Magistrate Judge conducted yet another discovery conference on May 6, 2020, this
time to discuss trial dates. There, Plaintiffs advised that, though they received columns of Excel
data per employee per pay period, in response to the Magistrate Judge’s January 2020 order, the
pay rate information was not included.

(Docs. 216 and 327). Defendant produced Excel

spreadsheets in three batches throughout March, April and May of 2020.25 These spreadsheets,
also created by Defendant’s Corporate Representative, contained 123 columns of data per
employee per pay period. However, the spreadsheets did not contain a rate of pay column, much
less columns for step-up rates, holiday, overtime or nighttime pay rates. (Docs. 216, 206-2, and
327). The spreadsheets contained no pay rates at all. (See, e.g., 216-8). Plaintiffs argued the
removal of the pay rates was in bad faith: “It's not an accident that [Defendant] is called upon to
produce 270 sets of records in the same format as before and [Defendant] changes the format
and takes out the pay rate data. . . it’s not inadvertent that [Defendant] deleted the one column
that matters a lot.” (Doc. 327). In response, Defendant contended it was acting in good faith.

25

Sample pages of the spreadsheets can be found at Doc. 216-8.
53

First, Defendant indicated this was the first it heard of the missing pay rates. In the alternative,
Defendant represented it did not know, based on the language in the most recent Order requiring
“time and pay records” (Doc. 172), that it was supposed to produce verified pay summaries,
including pay rates. (Doc. 327). Defendant represented it produced “check details” as opposed
to “verified pay summaries” which led to an inadvertent omission of the pay rates. (Id.).
Shifting its position once again, Defendant acknowledged this may be an ESI
(“Electronically-Stored Information”) issue that would take some time to resolve: “That's going
take a little bit of time. We're going to have to work our way through what the search terms
would be. That's going to take a little time, as well, because it always does.” (Doc. 327
(emphasis added)).

In response, Plaintiffs reviewed the chronology at length, reminding

everyone that they had been seeking verified summaries since 2018, and that Defendant could
not feign ignorance. (Id.).
When asked about the trial schedule, Plaintiffs pointed out once again that Defendant’s
failure to produce accurate time and pay rate data undermined their ability to assess damages
and prepare for trial: “And that's easy and I should already have done it except they didn't give
us the accurate time data and they didn't give us pay rate data.” (Doc. 327). Once again, Plaintiffs
explained, because of the variations in pay rates, the quantification of damages, could not be
reversed engineered. (Id.). Defendant did not concede the pay rates were always required by
the discovery order (Doc. 172), “but for things like that, don’t have a problem with responding
with [pay data] in a reasonable period of time.” (Doc. 327). Defendant continued to ask for even
more time and another settlement conference: “Its going to take more time;” and, “This case I
think still needs time to ripen and resolve.” (Id.). Plaintiffs’ counsel, once again, was incredulous:

54

It has been a year and a half. Their story over and over is wait until after mediation.
Wait until after a settlement conference. We have had two of them and a
mediation. Zero offers have been made. . . . They can do whatever they want to
try and settle this case any time they want. . . The other thing is in a wage-andhour case, nothing happens to a defendant if it drags on for two years, five years,
ten years. The plaintiffs don't get prejudgment interest. It just delays how long it
is before they get paid money that they were entitled to in 2015. And to say now,
well, you know, it's going to be four months before we can get you wage and time
data . . .
(Id.). The Court agrees. At this point, this FLSA action had been pending for twenty-two months.
At the conclusion of the May 6 discovery conference, a new scheduling order was entered.
Discovery cutoff was set for September 11, 2020. (Doc. 201). Defendant was ordered to
supplement initial disclosures not later than June 1, 2020. The Order included the following
warning: “SANCTIONS. The unjustified failure of a party or a party’s attorney to timely comply
with the requirements of this scheduling order shall be deemed a failure to obey the scheduling
order and shall subject said party or party’s attorney to one or more of the sanctions authorized
by Fed. R. Civ. P. 16(f).” (Id.).
Confronted with Defendant’s pervasive discovery deficiencies, a stipulated discovery
order was proposed which established more detailed production requirements. 26 (Docs. 207,
208 and 212). The order was entered by the Magistrate Judge on June 2, 2020, and imposed on
the parties’ the following agreed upon timeline and production requirements:
1. With regard to 11 Plaintiffs, in order to ensure the accuracy of the
time and pay records, Defendant would submit
a) On or before May 29, 2020 Defendant will produce in
separate (for each employee) native and excel formats
26

The jointly Stipulated Order was also immediately preceded by an affidavit, filed by defense counsel on May 12,
2021, as an exhibit to a Rule 56(d) motion in opposition to summary judgment. Defense counsel, in the affidavit,
represented to the Court Defendant needed more time to complete discovery, which would have, potentially,
demonstrated the existence of disputed facts. (Doc. 202-1). Defendant never conducted that discovery.
55

data files reflecting pay rates, start date and time, for
each shift worked from June 15, 2015 – present as shown
on the electronic time cards described by Pledger at pages
133, 136-1367, 22-225 of her deposition. If that data
cannot include pay rates in dollars and cents, then
Defendant will also provide information showing the
monetary amounts that correspond to each pay rate
code;” for the “11 Exemplar” plaintiffs by May 29, 2020;
b) On or before June 5, 2020, Defendant will produce all
documents and data reflecting the amounts, and
underlying calculations of any “trued up” payments from
July 1, 2015 – present as described by Pledger at pages
38-46, 58-60, 138 of her deposition, including but not
limited to the “payroll register” referred to at page 61 of
her deposition;
c) On or before May 29, 2020 Defendant will produce in
separate (for each employee) native and excel formats
data files reflecting the colorized data that Defendant
uses to show whether time is, or is not, authorized for
payment, along with any comments as described by
Pledger at pages 76-80 of her deposition;
2. On or before June 2, 2020 the parties would confer on when
Defendant will produce the same data for all other Plaintiffs, and
will advise the Court of any agreement or disagreement;
3. On or before May 29, 2020 Defendant will provide dates on or
before June 15, 2020 that a 30(b)(6) deponent is available to testify
who can provide informed and accurate testimony on “Time and
Pay Methodology” as it applies to the “trued up” calculations and
payments Melissa Pledger referred to, but could not provide
detailed testimony about, in her deposition. If Defendant does not
have a 30(b)(6) deponent due to the “trued up” calculations being
done within the ADP pay process and outside the payroll process
role of Outokumpu, the Parties agree to confer regarding how to
obtain such information from ADP on or before June 2, 2020.

56

4. Assuming it still exists, on or before June 5, 2020 Defendant will
produce the SOP from 2015 referred to by Ms. Pledger at page 16
of her deposition. Defendant agrees to make every reasonable
effort to locate the document in question.
5. Assuming it still exists, on or before June 5, 2020 Defendant will
produce the written policy or SOP describing Defendant’s rounding
practices before 2018 described by Ms. Pledger at page 93-94 of
her deposition. Defendant agrees to make every reasonable effort
to locate the document in question.
6. Assuming they still exist, on or before June 5, 2020, Defendant will
produce all emails containing the text prepared by Melissa Pledger
reflected in Exhibit 3 of her deposition which Ms. Pledger testified
was sent to “all of my time managers.” (Pledger 119-120).
Defendant agrees to make every reasonable effort to locate the
documents in question.
7. Assuming they still exist, on or before June 5, 2020, Defendant will
produce the pre-approval and post-approval Monthly Bonus
Incentive documents, and accompanying emails circulated by email
to David Scheid and any other recipients from July, 2015 – present
as described by Mr. Scheid at pages 78-84 of his deposition. .
.Defendant agrees to make every reasonable effort to locate the
documents in question.27
(Doc. 208). As is apparent from the text in the Order, it was designed to cure Defendant’s
outstanding discovery deficiencies and to provide clarity to issues raised in both David Scheid
(Defendant’s Vice President of Human Resources) and Pledger’s depositions.
paragraphs 1 and 3-7).

27

To be discussed further in section II(B)(11), below.

57

(See, e.g.,

This jointly stipulated order was the tenth order seeking discovery related to Defendant’s
pay and timekeeping practices. This was the tenth time the Defendant agreed to comply.
11. Orders Requiring the Production of Incentive Plan Data
Defendant’s discovery violations were not limited to its failures to produce pay and time
records. As part of the First Set of Discovery served on Defendant, it was required to produce
data relating to the calculation of its incentive plan payment on a monthly basis. Specifically,
Defendant was to identify the “time frame” during which the various categories of data were
collected, counted and /or measured.28 (Doc. 92, RFP#5).
Defendant objected to the “overbroad nature of the request.” (Doc. 216-7).
Defendant’s response was identified as one of the subjects at issue in both Plaintiffs’
Second and Third Motion to Compel (Docs. 146 and 160). The parties participated in a lengthy
discussion on this topic before the Magistrate Judge as part of the hearing conducted on
Plaintiffs’ Third Motion to Compel (November 5, 2019).

Plaintiffs established they were

prejudiced by Defendant’s failure to produce this data: “One of the issues that we think just as
a matter of law matters a great deal . . . how they pay production bonuses . . . whether or not the
period that the bonus is earned is different from the period that they're paying it on, the
percentage they're paying it on . . . which is why [what] I'm trying to get nailed down here . . .”
28

Request for Production No. 5 reads as follows: “5. Produce the underlying data (and make available such programs
which will enable review of that data) which was used to evaluate whether bonuses were awarded each month, and
in what amounts. As non-exclusive examples, (i) if Defendant contends that production numbers were a criteria,
then the documents and data showing the time frame (start date and time to end date and time) of production that
was counted; (ii) if Defendant contends that safety incidents were a criteria, then the documents and data showing
the time frame (start date and time to end date and time) that counted; (iii) if Defendant contends that quality
control was a criteria, then the documents and data showing the time frame that was measured, and what was
measured. Note, to the extent this information can be fully and accurately provided through documents, printouts,
or images of electronic data, production of those items may be an acceptable substitute for production electronic
data files so long as the underlying electronic data files are preserved and available to substantiate the completeness
and accuracy of the produced documents.” (Doc. 92).
58

(Doc. 337). Plaintiffs again requested the time frame during which the data was collected and
used to form the basis of the incentive percentage. (Id.). This time, Defendant represented “as
part of the mediation, we’ve agreed . . . to try and pull up data on 20 people. That data I think is
going to provide the information about the timing. And I think that will solve the problem.” (Id.).
Defendant represented, “[w]e should have that back to him by no later than tomorrow.” (Id.).
The Magistrate Judge sought clarity as to whether this data Defendant represented it would
produce would be responsive to the request for production. (Id.). Defendant responded, “I think
it’s going to be answered for 20 people.” (Id.).
Defendant produced a spreadsheet demonstrating the monthly bonus payment for
certain employees in 2015 and 2016. As the Magistrate Judge suspected, this data was simply
not responsive to the RFP. (See Doc. 180-1 at Ex. 1). Defendant also produced its “Monthly
Incentive Spreadsheets” for 2017, 2018 and 2019. (Doc. 180-1 at Ex. 2). At the January discovery
conference, Defendant represented it would produce data demonstrating how the incentive plan
percentages were calculated for two independent six-month periods. (Doc. 325). The parties
agreed they would assess the need for the production of additional data once Defendant
produced the data for the agreed six-month periods. (Id.). Plaintiffs pointed out Defendant had
represented it had information in November and would produce it then. (Id.).
Defendant did not produce the data.
The Magistrate Judge conducted another hearing on March 6, 2020. This time she
attempted to address Defendant’s failures by ordering briefs concerning Plaintiffs’ Request for
Production No. 5. (Docs. 180 and 181). Plaintiffs argued this briefing was superfluous:
Defendant’s employees know exactly the information the Plaintiffs have asked for
because Defendant’s employees look at, and use, that data every month.
59

Sometime in the last 9 days, Defendant calculated “results” for the current
Production Incentive, just like Defendant has done every month since July, 2015.
It is preposterous that Defendant opposes Plaintiffs’ discovery and, as pertinently,
Defendant has submitted nothing that would provide the Court with any basis to
let Defendant persist in stonewalling.
(Doc. 181). Defendant argued, again, the request was overbroad. Relying on the use of the word
“monthly” in the title of the “Monthly Production Incentive” spreadsheets, Defendant argued
they need not produce how precisely the underlying data is tallied to demonstrate that it is done
so on a monthly basis.

(Id.).

Plaintiff argued the substance of the “Monthly Incentive

Spreadsheets” did not provide detail necessary to ascertain the time frame from which the data
was compiled. (Doc. 180).
The Magistrate Judge agreed with Plaintiffs’ position. Upon review of the briefs, on March
10, 2020, the Magistrate Judge ordered Defendant to produce “information from which they can
reasonably ascertain the timeframe from which the criteria underlying each incentive bonus
award was drawn, so that it can be ‘apportioned back over the workweeks of the period during
which it may be said to have been earned’ within 21 days of the date of the order.” (Doc. 182,
citing 29 C.F.R. § 778.209(a)). The Magistrate Judge explained “that information concerning the
timeframe from which the criteria that determined each bonus payment were drawn is relevant
and, considering the potential amount of damages at stake, not disproportional to the needs of
the case.” (Id.). Defendant was ordered to produce the documents by March 31, 2020. (Id.).
The Defendant did not produce the documents.
On March 11, 2020, Defendant’s Vice President, David Scheid was deposed. When asked
about the monthly data used to calculate the incentives, Scheid explained that he received a
spreadsheet, via email, each month, which compiled data from various departments. (Doc. 265-

60

2). Scheid explained the monthly incentive was arrived at by tabulating an aggregate of these
data points. As Vice President of Human Resources, Scheid reviewed the final tabulation and
incentive percentage prior to authorizing payroll to calculate the incentive payment for each
employee. (Id.). Examples of the final spreadsheets were included as exhibits to the deposition.
On May, 28, 2020, Defendant represented to the Magistrate Judge it would produce the
incentive plan documents which Scheid had testified was in his email account, by June 15, 2020.
(Doc. 208).
The Defendant did not produce the data.
At the time of the March 12, 2021 Show Cause hearing before this Court, some six months
after discovery had closed and nine months after the last order had been entered to produce
these records, Defendant had still not produced the data. Defendant has never offered an
explanation for its serial violations of Court’s orders.
12. June 15, 2020: Plaintiffs’ Initial Motion for Sanctions
In June, Plaintiffs filed their Initial Motion for Sanctions and Related Motion to Compel.
(Doc. 216). By this time, Defendant had violated repetitive orders to produce three discrete data
sets: pay records, time records, and incentive plan data. First, Defendant produced fabricated
and inaccurate pay rates on the spreadsheets it represented as “verified” pay records. (Doc. 2165). Within these same “verified” records, Defendant’s Corporate Representative admitted she
altered the pay period ending date, so that it no longer corresponded with the Plaintiffs’ Earning
Statements, for a portion of the records. (Doc. 206-2). Thereafter, Defendant shifted from the
production of “verified pay records” in Excel format to the production of spreadsheets containing
“check details” in PDF format. (Doc. 216-8). The check details did not include pay rate

61

information, per shift, for each employee. (Id). To be clear, neither data set included the
fundamental pay rate data Defendant was ordered to produce. Regarding its time records,
Defendant produced spreadsheets of Plaintiffs’ clock in and clock out time per shift, but did not
include the color-coded version of the same data necessary to decipher and analyze whether the
time was paid as clocked in, or rounded up or down. (Doc. 216-9-10). Despite being ordered to
do so on multiple occasions, Defendant never produced the incentive plan data.
Without these data sets, Plaintiffs could not put on their case. Indeed, all three data sets
are indispensable to determine whether Defendant’s pay and timekeeping practices comply with
the FLSA. To that end, Plaintiffs and Defendant crafted, and the Magistrate Judge entered, a
Stipulated Discovery Order (Docs. 208) intended to remedy Defendant’s various failures,
obfuscations and delays. The Defendant flouted that order as well. Regarding pay records,
Defendant violated this aspect of the order, produced nothing, and, eventually, blamed ADP (to
be discussed further in subsection II(C)). (Doc. 216). Regarding time records, the order addressed
Defendant’s earlier production of meaningless black and white time clock records. Defendant
violated this aspect of the order, persisting in its refusal to produce meaningful color-coded time
records. (Id.). Finally, the order required Defendant, once again, to produce data relating to its
incentive plan. Defendant violated this aspect of the order; it never produced its incentive plan
data. (Id.).
In response to Plaintiffs’ Initial Motion for Sanction, Defendant maintained there were
“issues with production” and “inadvertent errors or oversight” but not evidence of “any willful
or bad faith conduct.” (Doc. 220). The Court finds otherwise. For all of the reasons above, the
Court finds all of Defendant’s violations, and its pattern of pervasive discovery abuses, to be

62

evidence of Defendant’s bad faith and willful disregard of the justice system. See Local Union No.
40 of the Int'l Ass'n of Bridge, Structural & Ornamental Iron Workers v. Car-Win Constr., Inc., 88
F. Supp. 3d 250, 264 (“In other words, we gave an order and defendants had the ability to comply,
but they purposefully chose not to do so for reasons all their own and without first asking
permission from this court. Without our resorting to the dictionary, this seems as good a
definition of ‘willful’ as any.”). At this point, the case had been pending for almost two years.
C.

Evidence of Bad Faith: Defendant’s Misrepresentations and Manipulations

While addressing this Motion, the Court learned of an even more troubling aspect of
Defendant’s bad faith. Incredibly, the full magnitude of Defendant’s misconduct was not reached
by its serial violations of discovery orders. Defendant’s bad faith culminated in its deceitful
attempt to blame ADP for its failure to produce subpoenaed records. The Court finds clear and
convincing evidence of intentional misrepresentations surrounding ADP and its efforts to comply
with the subpoena. Those misrepresentations facilitated an attempt to avoid sanctions for
protracted discovery violations. Further, Defendant manipulated the Court’s Show Cause Orders
in an attempt to conceal its misrepresentations.
1. July, 2020: Context within which ADP Records were Subpoenaed
Additional context reveals the true nature and gravity of Defendant’s misconduct. By the
time the ADP subpoena was served, and the Show Cause Order entered, Defendant had
repeatedly represented (to both this Court and the Magistrate Judge) it needed assistance from
ADP to produce its own pay and time records accurately and completely. Simultaneous with
these representations, Defendant misrepresented to this Court and the Magistrate Judge that
ADP was not being cooperative.

63

Defendant first raised the need for ADP’s data in October 2018, in response to the draft
superseding scheduling order proposed by Plaintiffs. (Doc. 59-1). In its comments to the draft,
Defendant referred to the requested time and pay records as “ADP pay records” and “ADP payroll
documents.” (Doc. 59-1). At that time, Defendant also represented it would be “burdensome”
to produce the documents in Excel format. (Doc. 59-1). Despite Defendant’s concerns, the
requirement that Defendant produce its time and pay records in Excel format remained in the
final Superseding Scheduling Order. (Doc. 64: “A separate Excel data file for each Plaintiff . . .”).
In April 2019, Plaintiffs sought specific information about all individuals (whether employees of
Defendant or not) responsible for creating, revising, modifying and/or reviewing data fields for
the Pay Statements. (Doc. 146-1). In its Supplemental Response to this interrogatory, dated
September 6, 2019, Defendant represented ADP “would have to provide details of the operation
of the systems for the data that has been provided to date.” (Id.).
Seven months later, on March 11, 2020, Defendant’s Corporate Representative revealed
ADP’s help was necessary to produce accurate pay records, admitting the records Defendant
previously produced were inaccurate. (Doc. 206-2). Finally, on May 6, 2020, when it came to
light the pay records Defendant had produced in response to the January 21 order (Doc. 172)
were missing pay rates, Defendant said it would need to “chase down” the information from ADP.
(Doc. 327).
In June, in response to Plaintiffs’ Initial Motion for Sanctions (Doc. 216), Defendant
blamed ADP for its inability to produce complete and accurate pay records. (Doc. 220).
Defendant explained ADP, not Defendant, created the pay practices resulting in the “true up”
payments and represented it had “asked ADP to provide information to how and why its system

64

does the ‘true up’.” (Id.). Defendant represented, however, “[t]hus far ADP has not been very
helpful.” (Id). Two days later, on June 24, 2020, at a hearing before this Court on its Rule 56(d)

motion (Doc. 202), Defendant argued the Court should defer consideration of Plaintiffs’ Motion
for Partial Summary Judgment (Doc. 191) until more discovery had been gathered. At the
hearing, as an example of why the summary judgment motions were premature, Defendant
claimed, once again, it needed information from ADP on its “true up” process. Defendant argued
it “[doesn’t] have anymore information than [Plaintiffs ]. . ..” Defense counsel also claimed he
“was just as frustrated as [Plaintiffs’ counsel] on this particular situation.” Further, “We need to
be digging into that. We need to find out. [Plaintiffs’ counsel] needs to find out. . ..” (Id.).
Defendant suggested they may need to seek a subpoena. The Court, over strident objections
from Plaintiffs, granted Defendant’s Motion in order “to allow completion of discovery
referenced in said Motion.”29 (Doc. 221).
There is no evidence in the record Defendant pursued, or even attempted to pursue this
discovery. Nevertheless, Defendant persisted in representing to the Magistrate Judge and
Plaintiffs that ADP was to blame. (Doc. 332). On July 16, 2020, in a hearing on Plaintiffs’ First
Motion for Sanctions before the Magistrate Judge, Defendant again asked to subpoena ADP to
retrieve the time and pay records. (See id: “And your solution is to subpoena the records from
ADP.”). The Magistrate Judge was now incredulous. She wanted to know why Defendant needed
a subpoena to retrieve its own records, and, why the need for a subpoena was just now coming

29

Defendant attached a declaration of its defense counsel to its Rule 56(d) motion to defer Plaintiffs’ Motion for
Partial Summary Judgment. (Doc. 202-1). In this Declaration, filed May 12, 2020, Defendant outlined all the
discovery it intended to take.

65

to light, two years after the case had been file. (Id.). (“Why -- I mean, if you've been using this
third-party payroll service and this is information that [they] have, why didn't --why is it just now
coming to light two years after the fact.”)). Defendant again represented “there has been some
frustration” and they needed “help.” (Id.). Defendant represented it had sent two letters to ADP
requesting assistance and intended to send a third that day. (Id.). The Magistrate Judge was
dubious and questioned what sort of letter Defendant sent; was there was a deadline or was this
merely Defendant “casting about to see” if ADP would help? (Id.).30 The Magistrate Judge
concluded by saying she would get an order out quickly. Five days later, the Magistrate Judge
denied Plaintiffs’ Motion “at this time to allow the Defendant an opportunity to subpoena
relevant information from third-party payroll timekeeping servicer ADP.” (Doc. 229). In agreeing
to subpoena ADP’s records, the Magistrate Judge observed the discovery disputes had been
going on far too long and needed to be resolved. (Doc. 332).
It must be emphasized that the subpoena was issued at Defendant’s request, in lieu of
further sanctions against it, and following its creation and production of inaccurate and
incomplete pay and time records. To be clear, Defendant presented the subpoena to ADP (its
own payroll contractor) as a solution to its discovery deficiencies and omissions. Defendant then
undermined its own solution.
On September 3, 2020, Plaintiffs filed a Renewed Motion for Sanctions when the
subpoena yielded nothing. (Doc. 238). In its Response to Plaintiffs’ Renewed Motion for

30

See Doc. 332 (THE COURT: “And tell me again for the record – so you've written them a please help us out letter
because you don't want to sever a relationship with a client. But what exactly -- and not having seen the letter, is it
one of those -- I mean, is it a letter where you have given them a deadline? What kind of letter is it? It's just a letter,
casting about to see if you can get them to help you out without having to go through legal channels and
subpoenas?”).
66

Sanction, Defendant again expressed its frustration with ADP: “It is worth noting that Defendant,
like Plaintiffs, has some frustration with ADP’s response to the subpoena.” (Doc. 242). At the
hearing on the motion before the Magistrate Judge on October 8, 2020, Defendant continued to
blame both ADP and Plaintiffs. (Doc. 333). Defendant represented to the Magistrate Judge that
it needed more time for compliance because ADP could only provide PDF format documents.
(Id.). Further, Defendant represented it could not meet its obligation to produce the records
because Plaintiffs insisted they be produced in Excel. (Id.). This insistence, of course, was simply
insistence on the terms of the subpoena Defendant requested and on many previous orders
directed to Defendant. The Court now knows Defendant’s assertion that ADP could only produce
records in PDF format was a convenient half-truth, exploited to shift blame to ADP for its own
failures. This was a “half-truth” because Defendant itself could have produced the records in
Excel format.
2. February 5, 2021: Informal Conference
This Court finds the following statement in Dellums v. Powell to be apropos:
If parties are allowed to flout their obligations, choosing to wait to make a
response until a trial court has lost patience with them, the effect will be
to embroil trial judges in day-to-day supervision of discovery, a result directly
contrary to the overall scheme of the federal discovery rules.
Dellums v. Powell, 566 F.2d 231, 235-236 (D.C. Cir. 1977).
With the benefit of a full review of the record to that point, the Court was troubled by
ADP’s apparent decision to the ignore the subpoena. Further, given Plaintiffs’ Objection to the
Report and Recommendation (Doc. 266), the Court recognized liability and damages could not
be decided without Defendant’s linchpin time and pay records. The Court held an informal
conference call with the parties on February 5, 2021 to better understand this chronic discovery
67

dispute, as well as both parties’ objections to the report and recommendation.

At this

conference, the Court directed the parties’ attention to an opinion from the District Court of New
Mexico, in which an FLSA employer, also represented by Defendant’s counsel’s firm, was directed
to produce ADP-maintained records in Excel format.31 Defendant was instructed to confer with
ADP in an effort to illicit a response (i.e., time and pay records) prior to another hearing set for
February 17, 2021. The Court also directed Plaintiffs to provide a summary of outstanding
discovery issues. (See Doc. 279).
3. February 17, 2021: Status Hearing
The Court now knows Defendant’s misconduct manifested itself in a number of ways.
The Court conducted the hearing on February 17 as scheduled. When queried as to
whether there had been any follow-up with ADP, Defendant represented “We did reach out . . .
and we advised ADP that there was a case out there that indicated that ADP records in an excel
format . . . and we have not gotten a response yet. But we did raise that point.” (Doc. 299
(emphasis added)). While Defendant’s response was technically true, the Court now knows,
based on responses to its Show Cause order, Defendant reached out to ADP at 11:00 am on the
morning of February 17, just three hours before the hearing. (See Doc. 302-1). Defendant waited
until 12 days after the February 5 conference with this Court to engage ADP. Once contacted,
ADP responded in a timely manner, two hours after the conclusion of the hearing and five hours
after receiving the email from Defendant.32 (Id.).

31

See Landry v. Swire Oilfield Servs., 2017 U.S. Dist. LEXIS 230606, *2-3 (D. N.M. Sept. 19, 2017).

32

In its response, ADP offered to create a custom report, in Excel, if Defendant would identify the time period and
fields. (Doc. 302-1).
68

Defendant’s attempts to misrepresent and manipulate ADP’s involvement in the Court’s
inquiry did not end with the disingenuous assertion about having reached out to ADP. At this
same hearing, the Court, having been convinced by Defendant that ADP neither responded nor
objected to the subpoena, discussed its intent to issue a Show Cause Order to ADP. (Doc. 299).
When the Court pointed out Defendant subpoenaed ADP, and ADP neither responded nor
objected, there was no correction from Defendant. (See Doc. 299 (Mr. Appleby: “Yes”)). To the
contrary, a few minutes later, defense counsel expressed his frustration at not having the time
and pay records. (See Doc. 299 (“It's – as you probably can tell, it would be nice if we had the
information as well.”)). Alternatively, defense counsel repeated the false contention that ADP’s
data was no longer necessary because Defendant’s Corporate Representative was mistaken
about the “true up” process. (Doc. 299). The Court was told Defendant was working on
“examples to clarify that issue.” (Id.). Defendant never produced such examples, just as it never
produced a clarifying affidavit on the true-up process, as it represented it would do in its
Objection to the Report and Recommendation. (See Doc. 267).
4. Defendant’s Failure to tell ADP about March 5, 2021 Hearing
The Court entered a Show Cause Order on February 19, 2021, directing an ADP corporate
representative to appear before it on March 5, 2021. (Doc. 288). The Court’s requirement that
ADP appear was not contingent on whether records were produced in advance of the hearing.
(See Doc. 288). However, this did not stop Defendant from manipulating ADP’s response. First,
Defendant waited until March 1 to notify ADP that it was ordered to appear in Mobile four days

69

later, on March 5.33 (Doc. 300). Once Defendant served the order, it led ADP to believe “the
Show Cause Hearing would likely be cancelled if [it] provided the Excel spreadsheet before March
5, 2021.” (Doc. 302-1). Relying on this representation, ADP produced an Excel report to the
Defendant on March 3, 2021.34 (Id.). Just hours before the Show Cause hearing, Defendant filed
a notice, informing the Court “ADP transmitted to Defendant a large Excel report of pay data for
hourly employees, including the employee’s hourly rate, regular hours, overtime hours, etc., for
all hourly employees for every pay date from January 2018 to January 2021.” (Doc. 297). This
filing illuminated, first, how readily the pay records could have been produced, in Excel, prior to
this point in time; and, second, ADP no longer possessed all the records required for Defendant
to properly respond to the discovery requests.
Defendant continued its efforts to manipulate through the evening of March 4 when
defense counsel called Chambers to determine whether the hearing was indeed moving forward
and if they needed to appear in person. Defense counsel then, for the first time, informed ADP,
at 5:40 pm on March 4, it was required to participate in the hearing as ordered. (Doc. 300).
Following up, ADP called Chambers the morning of the hearing seeking similar assurances they
were to appear in person. Counsel for ADP, retained only few hours before the hearing, appeared
but was understandably unable to offer a response. (Doc. 298). The Court set a second Show
33

This delay marks the third time Defendant waited until the very last minute to interact with ADP when ordered by
the Court to do so. First, as discussed, the Magistrate Judge ordered Defendant (on July 22, 2020) to serve ADP with
a subpoena by July 29, 2020. (Doc. 229). Though Defendant sought this subpoena and the assistance of the Court,
it waited until the deadline (July 29) to serve ADP with the subpoena. (Docs. 230 and 302-1). Next, it waited until
the day of the hearing (February 17) to reach out to ADP. Lastly, it delayed service of the show cause order for ten
days.

34

Just hours before the Show Cause Hearing, Defendant filed a notice, informing the Court, “ADP transmitted to
Defendant a large Excel report of pay data for hourly employees, including the employee’s hourly rate, regular hours,
overtime hours, etc., for all hourly employees for every pay date from January 2018 to January 2021.” (Doc. 297).

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Cause hearing for March 12, 2021, requiring both a Corporate Representative of Defendant and
ADP to appear. (Id.).
5. March 12, 2021: Show Cause Hearing
Defendant’s motivation for preventing ADP’s appearance before this Court, including the
delayed service of the Show Cause Order and misleading statements interpreting it, became clear
when ADP filed a brief, with related evidentiary support, addressing the Show Cause Order(s).
(Docs. 300 and 302). In this brief as well as a signed declaration from an ADP corporate
representative, ADP documented its efforts to work with Defendant to provide payroll data
dating back to August 2020. (Id.). Seven months after Defendant avoided additional sanctions
by serving a subpoena, ADP explained to the Court that it believed it had fully complied with the
subpoena shortly after it was issued. (Id.). The reason ADP believed it had fully complied is set
out in its brief, evidentiary materials, and declaration.

ADP’s submission put the lie to

Defendant’s misrepresentations about ADP to this Court and the Magistrate Judge.
For months, Defendant blamed ADP for its failure to produce linchpin time and pay
records, both prior to and after the subpoena was issued to ADP at Defendant’s request and in
lieu of additional sanctions against it.35 The Show Cause Order was issued against ADP based on
Defendant’s misrepresentations that it received no response to the subpoena: “By all accounts,
including the representations of the Defendant when pressed by the Court, ADP has failed
and/or refused to comply with this Court’s Subpoena.” (Doc. 288 (emphasis added)). Plaintiffs
were similarly misled by Defendant: “As it turns out, ADP provided nothing in response to the

35

See Doc. 220 (Defendant’s June 2020 Response to Motion for Sanctions); Doc. 242 (Defendant’s September 2020
Response to Motion for Sanctions); Doc. 332 (July 16, 2020 Hearing); Doc. 333 (October 8, 2020 Hearing); Doc. 299
(February 17, 2021 Hearing).
71

inadequate subpoena [Defendant] issued.” (Doc. 247 (emphasis added)). The Court now knows
both it and Plaintiffs were misled.
In fact, ADP communicated with Defendant the day after the subpoena was served in
order to coordinate its response. (Docs. 300 and 302-1). During a telephone conference on
August 3, 2020, ADP explained it only produced PDF images, and does not create reports in
response to non-party subpoenas. (Id.). On August 5, 2020, ADP provided Defendant with
samples of the “standard output reports” produced in PDF format. (Docs. 300 and 302-1).
Further ADP informed Defendant it could create its own Excel spreadsheets with the assistance
of an identified ADP employee. (Id.). Specifically, ADP informed Defendant the “payroll contact
for the Defendant should be able to create the requested report in Excel format, as its payroll
software has a tool that allows [Defendant] to create reports.” (Doc. 302-1). After several email
exchanges, on August 17, 2020, ADP also provided Defendant’s counsel with the contact
information for the ADP payroll contact for Defendant. (Doc. 302-1).
Defendant persisted in its refusal to produce, and two weeks later, on September 3, 2020,
Plaintiffs filed a renewed motion for sanctions. Even in the face of another sanctions motion,
Defendant failed to reach back out to ADP. Indeed, “ADP never received any indication that there
were problems with ADP’s efforts or that there were significant discovery disputes in the case
generally.” (Doc. 300). Rather than working with ADP, Defendant misrepresented to the Court
on multiple occasions it was “frustrated” with ADP’s response. (See Docs. 220, 242, 332, 333,
and 299).
Defendant did not contact ADP again until October 8, 2020, the date of the Magistrate
Judge’s hearing on Plaintiffs’ renewed motion for sanctions. At that time, defense counsel

72

emailed ADP to request the reports produced in PDF: “Unfortunately our client has not been
able to make progress with [payroll contact] on obtaining individualized reports [in Excel].
Despite the PDF format of the standard output report, I think we need ADP to run those . . ..”
(Doc. 302-1). ADP responded with the Standard Output Reports in PDF format on October 13,
2020. (Doc. 302-1). Defendant did not produce these documents to Plaintiffs, even though the
Magistrate Judge “strongly encourage[d]” Defendant at the October 8 hearing to “continue to
produce the information that was required under the Court's prior discovery orders.” (Doc. 333).
The fact that ADP produced these documents was not communicated to this Court or Plaintiffs.
Four more months passed. During this time the Report and Recommendation was issued,
and this Court set the matter for hearing. As discussed, Defendant waited until February 17 to
advise ADP that the Court required it to respond to the subpoena or be faced with a show cause
order. As discussed, on February 17, Defendant misrepresented to the Court ADP had neither
responded nor objected to the subpoena. The truth was revealed, finally, by ADP. It had heard
nothing from Defendant regarding the subpoena from October 2020 to mid-February 2021, and
therefore believed it had adequately complied with the subpoena. (Doc. 302-1).
At the Show Cause hearing, Defendant represented they were now working with ADP to
ensure all the material ordered by the subpoena was in the process of being produced. (Doc.
303). Defense counsel encouraged the Court, and ADP, to move forward, and avoid “a blame
game.” (Id.). However, Defense counsel claimed his client, not him, had been involved in the
efforts to procure information from ADP which was now seeing results. (Doc. 303). When asked
whether Defendant had attempted to run its own reports in Excel, as ADP testified Defendant
was able to do, Defendant could not provide a response. (Id.). Defendant offered no substantive

73

reason for its failures to coordinate with ADP prior to the Show Cause Hearing. (Doc. 303).
Plaintiff argued it was “beyond disingenuous to pretend that we are here today because of back
and forth between them and ADP about their own records over the last three or four months.”
(Id.).
The Court finds ADP’s submission demonstrates Defendant’s fraudulent and manipulative
tactics, constituting clear and convincing evidence of Defendant’s bad faith. Based on the
submission from ADP, it is now evident to this Court Defendant intentionally concealed ADP’s
response to the subpoena in an attempt to divert blame, and sanctions, from itself to ADP. ADP’s
timely and continued production of the records in Excel format is additionally clear and
convincing evidence of Defendant’s bad faith. Defendant has offered no rebuttal or evidence to
contradict this conclusion.
D.

Other Considerations
1. Format of Document Production

Defendant suggests ADP’s practice of producing only PDF records as the “records kept in
the ordinary practice of business” justifies its discovery misconduct. The Court takes a contrary
view: Defendant exploited ADP’s company policy to conceal and advance its discovery abuse. A
primary point of contention between the parties was the format in which Defendant could
produce its data. However, since the scheduling order in 2018, Defendant was required to
produce its linchpin time and pay records in Excel format. Likewise, every subsequent order,
required Defendant to produce these records in Excel. (See, e.g., Docs. 24, 64, 208 and 229).
At the October 8, 2020 hearing on ADP’s supposed failure to comply with the subpoena,
Defendant contended ADP could only produce the data in PDF and that was why production had

74

stalled or been nonexistent. (Doc. 333). Indeed, Defendant insisted, on three separate occasions,
ADP could have complied with the subpoena if the Plaintiffs would have allowed them to produce
it in PDF format: “But the problem here isn't quite so much do we have data . . . And we still
think we can get it but we think we can only get it in PDF format. And we still have gone back.”;
“We really are trying. And if we can do it by PDF -- but I know that's really frustrating . . .”; and,
“I think if we can do it as a PDF, I believe they will work with us on that. They effectively said
that. They don't seem to be willing to do it any other way.” (Doc. 333 (emphasis added)).
ADP told Defendant on August 3, 2020 it could produce its own reports in Excel format.36
Defendant never did so. Defendant never mentioned this possibility during the October 8

36

Defendant’s Response in Opposition to Plaintiffs’ Renewed Motion for Sanctions (Doc. 242), filed on
September 17, 2020, referenced “a copy of the communications between Defendant and ADP” (Exhibit B) concerning
the subpoena and related information. In its response, Defendant stated “ADP advised that it could not provide
reports on an individualized basis which is unacceptable to Plaintiffs. See Exhibit B.” (Doc. 242). Defendant
continued, “ADP did advise that Defendant could work directly with its assigned contact to seek individualized
reports in an Excel format. (Id.). Defendant sought to do so, however, the contact has been unable to speak with
Defendant without first coordinating with its managers and legal department (Id.).” (Id.). Defendant, once again,
referenced Exhibit B.
Exhibit B, however, contains 29 pages, 13 pages of which are redundant or useless material. (Doc. 242-2).
Removing these 13 pages, the Court is left to parse through 16 pages, which contain a mishmash of material,
including emails between defense counsel and ADP (NJ Office), correspondence between Sid Johnson (Defendant’s
ADP Payroll Contact) and Defendant, and a two-page document entitled “Update.” It is unclear who authored the
“Update” document. The “Update” document as well as the correspondence between ADP and Sid Johnson focused
entirely on the “Regular Rate of Pay” / “true-up” discussion. (Doc. 242-2). The emails between ADP and defense
counsel concerned the delivery of the subpoena and the request for excel, and later, PDF, payroll reports. (Id.).
Page 28 of Exhibit B, 70 percent of which is redacted, contains an email from the ADP payroll contact,
Johnson, to Pledger. (Doc. 242-2). In this email, Johnson wrote, “As this is a legal matter, unfortunately, I cannot
exclusively provide direction or explanation without additional details for me to research. I need to provide that
information with confirmation from the Legal Team.” (Id. at 28). This email responded to a request from defense
counsel, forwarded by Pledger to Johnson, for a call with Johnson. (Id. at 29).
Though Defendant’s Response (Doc. 242) implied ADP had hindered its efforts to create its own Excel
spreadsheets, none of the emails between Defendant and ADP reference any request to Johnson to assist with the
creation of reports in Excel format. In the hearings, Defendant never discussed its own ability, to either this Court
or the Magistrate Judge, to produce its data in Excel format.

75

hearing. (Doc. 333). In fact, Defendant insisted it could only produce PDF data. In sum,
Defendant failed to produce its records in Excel format as it was able and ordered to do.
After the March 12, 2021 hearing on the Show Cause Order, ADP immediately began
producing data in Excel format. ADP further confirmed that had Defendant advised them earlier
the PDF documents ADP provided were not sufficient ADP would have then assisted in the
production of Excel data. (Doc. 302-1). Of course, that would have required Defendant’s good
faith. Defendant had none.
2. Defendant’s Other Scapegoat
ADP was not Defendant’s only scapegoat. On July 16, 2020, Defendant complained its
Corporate Representative and pay roll specialist was out of her depth when it came to responding
to discovery requests. (Doc. 332). Defendant offered her failings and production of inaccurate
spreadsheets as the reason it needed ADP’s records:
[The Corporate Representative] is one of the nicest people in Alabama. She will
try and do anything for everybody. I have come around to the idea that, relative
to some of this, she is in a little above her head.
(Doc. 332). Again, at the hearing on Plaintiffs’ Renewed Motion for Sanctions, Defendant blamed
Pledger for misunderstanding ADP’s “true up” and/or “regular rate of pay” calculations:
DEFENSE COUNSEL APPLEBY: [the] underlying issue that ended up being projected
in her deposition was that there was something in the ADP system that sometimes
modified pay. It would typically modify it by bringing something back from the
previous pay week and putting it into this particular paycheck, the next one out.
And there was nothing that explained that. And that's when Ms. Pledger used the
term, true-up. Again, it's her term, not an ADP term. But we needed to find out
how that worked and does that change the pay. . .
DEFENSE COUNSEL DALY. . . And what she is describing or where she comes up
with a formula is how ADP gets to a regular rate of pay if there is varying pay rates
that happen in a workweek. And so what she kind of describes seeing on her
payroll register is something that says RROP, which is standing for regular rate of
76

pay. And then there's a number that's different than the base pay rate or the day
pay rate. . .And how ADP gets that number -- she is not exactly sure how they do
that. . . And I have since asked her if she has any records that relate to showing
what this true-up that she describes -- and I will just preface, Your Honor, that,
obviously, this was her description. I understand we put her up as someone to
testify on this. And I just -- it's her description of her understanding of it. And I
don't – I don't think -- I guess I don't think she fully probably understood or knew
what she was -- what exact –
[Cross-talking.]
THE COURT: No. She knew there was a formula because she had had it written
down. She knew there was some sort of special secret sauce formula that they
used to come to this number.
MS. DALY: Right . . ..
(Doc. 333).37
In its Objection to the Report and Recommendation, Defendant again blamed its
Corporate Representative for the confusion over the need for ADP’s records and represented
that its Corporate Representative’s misunderstanding of the “regular rate of pay process”
rendered ADP’s records irrelevant. (Doc. 267). Specifically, Defendant argued “there was some
inadvertent mistaken testimony from an employee, who also acknowledged she did not have a
complete understanding of the process she testified to at the time of her testimony.” (Doc. 267).
Defendant explained a corrective affidavit was forthcoming, with examples to assist the Court,
and Plaintiffs, in understanding exactly how the process work. (Id.). As the Plaintiffs point out,
“[The Corporate Representative] is not some random lay witness. She has been the Senior Payroll
Specialist for [Defendant] since May 2017. [Defendant] selected her to testify about its ‘Time

37

The Court observes, had Defendant produced the pay records as ordered (pay rates per shift), many of the
questions surrounding “true up” payments and the calculation of the regular rate of pay, as well as the accuracy of
Pledger’s testimony, would not be at issue.

77

and pay methodology for hourly, non-exempt, employees from July 2015 – present.’ (Doc. 1871, PageID.1177-1178).” (Doc. 247). Defendant never provided the affidavit, and examples,
clarifying Pledger’s testimony regarding “true up” payments.
Despite Defendant’s criticisms of its Payroll Specialist, when Defendant was ordered to
bring a Corporate Representative to the second show cause hearing (Doc. 298), Defendant
selected her and represented her to the Court as a “high level manager” who was capable of
adding clarification.38 (Doc. 303). Further, Defendant explained she had been “authorized to
deal with whatever we need to deal with.” (Id.). The Court finds the exploitation of Defendant’s
own employee deeply troubling and additional evidence of its pervasive and intentional
misconduct.
3. Spoliation of Time and Pay Records
The Eleventh Circuit defines spoliation as the “destruction or significant alteration of
evidence, or the failure to preserve property for another's use as evidence in pending or
reasonably foreseeable litigation.” Ala. Aircraft Indus. v. Boeing Co., 319 F.R.D. 730, 739 (S.D. Ala.
2017) (quoting Graff v. Baja Marine Corp., 310 Fed. App'x. 298, 301 (11th Cir. 2009) (internal
quotation marks omitted)); see also Green Leaf Nursery v. E.I. DuPont de Nemours & Co., 341 F.3d
1292, 1308 (11th Cir. 2003) (spoliation is the destruction of evidence or the significant and
meaningful alteration of a document or instrument).

38

Even during this hearing, Defendant’s scapegoating of its Corporate Representative continued. Defense counsel
asserted, “[Pledger] was in charge of the process of gathering the data. She was having some difficulty with aspects
of that process. And I was not involved with ADP at all that I can remember. I may have been on one call . . . But
the real stuff that was going on was that Ms. Pledger was engaged with them to get a better understanding of what
it is that was being asked and how to fulfill that response.” (Doc. 303).
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In some circumstances, a party's “spoliation of critical evidence may warrant the
imposition of sanctions such as exclusion of certain evidence or outright dismissal of the case.”
Flury v. Daimler Chrysler Corp., 427 F.3d 939, 945 (11th Cir. 2005). Sanctions for spoliation of
evidence are intended to “prevent unfair prejudice to litigants and to insure the integrity of the
discovery process.” Flury, 427 F.3d at 944. When deciding whether to impose sanctions, the
Eleventh Circuit “borrowed a multi-factor test” from Georgia spoilation law: “(1) whether the
party seeking sanctions was prejudiced as a result of the destruction of evidence and whether
any prejudice could be cured, (2) the practical importance of the evidence, (3) whether the
spoliating party acted in bad faith, and (4) the potential for abuse if sanctions are not imposed.”
ML Healthcare Servs., LLC v. Publix Super Mkts., Inc., 881 F.3d 1293, 1307 (11th Cir. 2018) (citing
Flury, 427 F.3d at 945).
In Plaintiffs’ motion for sanctions, they do not accuse Defendant of spoliating time and
pay records; however, Plaintiffs note they had queried Defendant, on multiple occasions, as to
whether the problems with production were ESI issues. (See Doc. 216) (“In addition to the much
more recent efforts to get ESI information under the May 28, 2020 Stipulated Order, Plaintiffs’
counsel also asked about ESI discussions on August 21, 2019, September 19, 2019, September
23, 2019, October 6, 2019, October 25, 2019, and December 12, 2019. There was never a
substantive response of any sort.”). The Court also inquired about the extent, as well as
limitations, of Defendant’s data at the March 12 Show Cause Hearing:
THE COURT: Okay. So, Mr. Appleby, my question for you, sir, is: Does OTK have
that data that ADP – that you're trying to get from them? . . .
MR. APPLEBY: OTK does not have all that information . . .

79

THE COURT : . . . it's all over [ADP’s] correspondence and it's also in Ms. Quinn's
declaration that ADP is not the records custodian for OTK.
MR. APPLEBY: Agreed. Yeah.
THE COURT: But you requested ADP to reconstitute, recreate records going back
as far as they could. And I'm putting air quotes around that. As far as they could
and asked for costs to do that and I presume paid the costs to do what ADP could,
which was 2018, which was when the lawsuit was filed.
MR. APPLEBY: Correct. And certainly OTK did not have that data and needed to
get it from ADP.
(Doc. 303). When asked about Defendant’s document retention policy for time and pay records,
Defendant’s long term employment law counsel responded: “I don't know the answer to that,
Your Honor. I would be guessing.” (Doc. 303). The Court, once again, confirmed Defendant did
not have all the data, which is why Defendant needed ADP’s records. (Id.).
There is also inconsistency over whether defense counsel issued a litigation hold letter
when the lawsuit was filed in 2018 and, if so, whether Defendant abided by it. When asked by
the Court, defense counsel responded that a letter had been sent but stopped short of saying
Defendant had preserved the data: “I don't think we're looking at what do we have versus what
do we have. I really don't. I think we're looking if we can understand what we have versus what
we have.” (Doc. 300). A month later, on April 13, 2021, defense counsel Powell stated he knew
the Court asked and he knew what the response was, but “[I] will tell you that I have not gotten
down that checklist.” (Doc. 318).
Defendant’s various responses to exceedingly straightforward questions may have been
murky; however, the law is not murky. This case was filed on July 16, 2018. Under the FLSA, an
employer is required to retain its time and pay records for three years. (See 29 C.F.R. § 516.5
“Each employer shall preserve for at least 3 years: (a) Payroll records.”). Therefore, in July 2018,
80

when this case was filed, Defendant should have had on hand records dating back to July 2015.
It either had not maintained these records or maintained inaccurate copies.
On March 19, 2021, ADP advised the Court on the status of its production of the time and
pay records. As a result, the Court learned ADP does not have any data, responsive to the
subpoena, prior to July 1, 2017, and in some instance, January 1, 2018. (See Doc. 304, “For the
period since July 1, 2017 (and in some instances, January 1, 2018, as explained below), ADP only
has some of the information that would otherwise be responsive to the subpoena previously
served on ADP. ADP does not maintain other information described in the subpoena, nor does
ADP have any responsive information for the period before July 1, 2017.”). At a hearing held on
April 13, 2021, Plaintiffs’ counsel also explained: “And in slightly more detail, they have given us
excel files for three different types of information. The first is a single pay file intended to cover
all of the plaintiffs who have been employed during 2018, 2019, and 2020. Because that's the
period they have . . . The information we do not have is because ADP doesn't maintain it.” (Doc.
318).
At the least, the record establishes that ADP, which testified it is not a “record retentions
firm” for Defendant, does not have payroll data prior to January 1, 2018 and time records prior
to July 1, 2017. When asked how Defendant intended to rectify this situation, at that same
hearing, defense counsel stated as follows:
MR. POWELL: So the answer to your question about documentation, Your Honor,
is in the payroll system, the plaintiffs themselves have had access to their what I
would call pay stubs. In ADP's world they're called earning statements. They can
get them on line. We have since -- since I got in the case, I have located all of
those. We have produced them for what I would call the exemplary plaintiffs.
There was a group of plaintiffs. Some were deposed. Some were identified
earlier in the case between Mr. Appleby and Ian. The pay stubs for all of that
group have already been produced. The pay stubs for the remainder of the opt81

in plaintiffs are -- should be produced before the end of the week if not by the
end of the day.
(Doc. 318). Plaintiffs’ counsel responded, “Mr. Powell says that the step-up rates are shown on
the earning statements. I say this in the most literal way: That's not the way I remember it, but
it is obviously either true or not. And you can look at an earning statement.” (Id.). As discussed,
at section I(B)(4) herein, the pay stubs the employees receive do not itemize the various pay rates
per shift, including step-up rates, an employee may or may not work during a particular pay
period.
After three years of discovery, the posture of the case can be summed up as follows:
Defendant might possess time and pay records from 2015-2017, which ADP no longer retains;
Defendant might have produced these records in April 2021, eight months after the close of
discovery and numerous orders to do so; however, the Plaintiffs were fairly certain the records
Defendant was proposing to produce would be inaccurate and incomplete because they would
not contain all of the “step up rates.” The Court agrees and notes this is why ADP’s records were
needed in the first place.
Defendant’s “confusion” over what records it preserved, or no longer has access to, is
even more dubious given the records it failed to produce correspond to the time period during
which its exposure could be the greatest. Shortly after the case was filed, Defendant amended
its rounding policy to reduce the time it rounds, potentially, an employee’s clocked-in time from
30 minutes to seven minutes.

(Doc. 206-2).

Defendant’s greatest exposure, then, for

underpayment may have occurred during the years 2015, 2016 and 2017, which were the three
years before the lawsuit was filed. Defendant either no longer possesses or has access to

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accurate and complete time and pay records from this time period. The Court finds Defendant’s
failure to maintain complete time and pay records for 2015-2017 constitutes spoliation.
4. Defendant’s Familiarity with Complex Litigation
Defendant is no stranger to complex federal litigation. Contemporaneous with this FLSA
action, Defendant navigated a suit involving an international arbitration issue that was filed in
this Court, appealed to the Eleventh Circuit, and then to the United States Supreme Court. The
appeal was heard by the Supreme Court on January 21, 2020.39
This is not the first time Defendant’s subversive and undermining tactics resulted in a
default judgment entered against it. In 2019, the Eleventh Circuit affirmed the decision of the
National Labor Relations Board (the “Board”), finding that the Board was correct to hold a “side
letter” constituted non-compliance with the terms of a settlement agreement. In so finding, the
Eleventh Circuit described the side letter posted by the Defendant as follows:
The Side Letter, posted and distributed before the Notice, blamed the union
for delaying the election, emphasized that the Company did nothing wrong, and
suggested that the Company had no other obligations under the Settlement
Agreement. The Side Letter thus subverted the purpose and effectiveness of the
Notice, constituting non-compliance with the terms of the Settlement
Agreement under Gould and other precedent by undermining the negotiated
resolution of the unfair practice charges lodged by the union. See id.; Gould, 260
N.L.R.B. at 57-58. In the face of decades of Board and circuit-level law, the
Company’s argument that “the terms of the Settlement Agreement” only included
express terms spelled out in the Settlement Agreement is simply unavailing.

39

See GE Energy Power Conversion Fr. SAS, Corp. v. Outokumpu Stainless USA, LLC, 140 S. Ct. 1637, 1642-1643 (2020)
(“The question in this case is whether the Convention on the Recognition and Enforcement of Foreign Arbitral
Awards, June 10, 1958, 21 U. S. T. 2517, T. I. A. S. No. 6997, conflicts with domestic equitable estoppel doctrines that
permit the enforcement of arbitration agreements by non-signatories. We hold that it does not.”).

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Outokumpu Stainless USA, LLC v. NLRB, 773 Fed. Appx. 531, 535 (11th Cir. 2019) (emphasis
added).
Several years earlier, Defendant’s predecessor, Thyssenkrupp Steel USA, LLC (“TK”), was
sanctioned for discovery violations in this Court. The Court affirmed the Magistrate Judge’s
rulings on two separate motions for sanctions. The Court found the Defendant’s argument on
appeal missed the context of the magistrate judge’s ruling:
The problem is that the Magistrate Judge did not award fees based on failure to
appear at deposition on December 1 but on the defendant’s protracted failure to
cooperate with the plaintiff in the scheduling of depositions of witnesses
employed by the defendant and vital to the plaintiff’s case. . . The protestations
of defendant’s counsel about their willingness to cooperate with plaintiff with
respect to the scheduling of his client’s employees and Rule 30(b)(6)
representative is not supported by the record . . . This is not an indictment of a
failure to appear at deposition but the summation of an extensive history of noncooperation, which the succeeding ten pages catalog in unflattering detail.
White v. Thyssenkrupp Steel USA, LLC, 2010 U.S. Dist. LEXIS 52237, *5 (S.D. Ala. May 20, 2010)
(internal citations omitted).
In White, Defendant’s Vice President David Scheid held the same position with TK,
Defendant’s predecessor. (Doc. 265-1). David Scheid remains Defendant’s Vice President of
Human Resources. Mr. Scheid was Defendant’s Vice President in 2012, when (as set out above)
Defendant was sanctioned for breaching an NLRB settlement agreement. Defendant’s counsel
in this case (through March 12, 2021) was counsel at the time as well. Defendant has been
involved in at least eight employment related cases in this Court. In each of those cases,
Defendant had the same Vice President (Mr. Scheid) and counsel as in this case.
Defendant has had a close and enduring relationship with its counsel. Defendant is bound
by the acts of its longstanding “freely-selected agent.” Link v. Wabash R. Co., 370 U.S. 626, 633-

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634 (1962) (citing Smith v. Ayer, 101 U.S. 320, 326 (1879)). “Any other notion would be wholly
inconsistent with our system of representative litigation, in which 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.’” Id. The Eleventh Circuit has clearly indicated “a party should
not be punished for his attorney’s mistake absent a clear record of delay or willful contempt and
a finding that lesser sanctions would not suffice.” Ford v. Fogarty Van Lines, 780 F.2d 1582, 1583
(11th Cir. 1986) (citing Hildebrand v. Honeywell, Inc., 622 F.2d 179, 181 (5th Cir. 1978)). “The
appellate decisions that have reversed dismissals based on failure of counsel have generally dealt
with relatively short periods of delay and few violations of court orders that may understandably
have escaped the attention of the clients.” State Exchange Bank v. Hartline, 693 F.2d 1350, 1353
(11th Cir. 1982) (finding where there was a large sum of money involved, a lengthy period during
which the suit remained pending without going to trial, and changes of counsel suggested
defendants must have acquiesced in the delays that their attorneys were improperly causing). In
this case, there is also a large sum of money involved; potential damages have been accruing for
six years. Plaintiffs’ claims have the potential to impact how Defendant operates, 365-days-ayear. The case has been pending for three and a half years without trial. As demonstrated,
Defendant is a “sophisticated employer,” familiar with complex litigation. Defendant’s Vice
President and its longtime counsel have been privy to similar misconduct and sanctions before.
There has been willful contempt here. The numerous orders and violations in the record cannot
“understandably have escaped” Defendant’s attention. Defendant is responsible for the bad
faith which permeates the entirety of this record.

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5. The Efficacy of Lesser Sanctions
Having found Defendant’s bad faith based on clear and convincing evidence, this Court
must next consider whether sanctions less severe than a default judgment will suffice or,
conversely, whether the imposition of a default is commensurate to the Defendant’s degree of
misconduct. See Roche Diagnostics Corp., 2020 U.S. Dist. LEXIS 81449, *27 (“Because Roche has
clearly and convincingly established that Defendants doctored hundreds of critical discovery
documents, the court must next determine the appropriate sanction to reflect the relative gravity
of Defendants’ bad-faith behavior.”); see also Eagle Hosp., 561 F.3d at 1307 (concluding, on
appeal, a default was “commensurate with the level of misconduct” where defendant had
acquired privileged information which he could not unlearn and the extent of defendant’s bad
faith activities which disrupted the litigation process could not be known).
The “severe sanction of a dismissal or default judgment is appropriate only as a last resort,
when less drastic sanctions would not ensure compliance with the court’s orders.” Malautea,
987 F.2d at 1542. However, Rule 37 does not require “the vain gesture of first imposing . . .
ineffective lesser sanctions” before terminating the case when the district judge properly
concludes sanctions less harsh than a default judgment would not have changed the defendant’s
behavior. Id. at 1544 (concluding “defendants have failed to show that the harshness of the
sanction rendered it unjust where the judge found the defendants and their attorneys engaged
in an unrelenting campaign to obfuscate the truth; improperly objected to interrogatories; gave
incomplete and unreasonably narrow answers; delayed, either deliberately or carelessly,
compliance with orders to produce deposition transcripts; and never produced the information
as ordered).”

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The Court heeds the Eleventh Circuit’s instruction here.

The Magistrate Judge

recommended the Court, as a sanction, bar Defendant from submitting evidence to counter
Plaintiffs’ claims they were not paid overtime correctly or for all time worked. The Magistrate
Judge believed there was evidence of negligence, but not bad faith, on the part of the Defendant.
As set out herein, the report and recommendation was based on an incomplete understanding
of the situation, manufactured by Defendant. Now, though, with the benefit of a complete and
truthful record, the Court finds there is clear and convincing evidence Defendant acted in
pervasive bad faith throughout the discovery process of this entire case, pending since July 2018.
Accordingly, the Court declines to accept the Magistrate Judge’s recommendation and finds no
compelling reason to first impose even more sanctions less severe than a default judgment.
As demonstrated by the procedural history set forth above in unflattering detail, this case
has been “marked by a pattern of delay and failure to comply” with the Orders of this Court. See
Aristidou v. Aviation Port Servs., LLC, 2020 U.S. Dist. LEXIS 31348, *37 (E.D.N.Y. February 21, 2020)
(citing Local Union No. 40 of the Int'l Ass'n of Bridge, Structural & Ornamental Iron Workers, 88
F. Supp. 3d at 264.) (declining to consider misconduct in isolation when “[t]aken out of context,
perhaps, any individual incident of discovery misconduct may appear forgivable—especially
when framed by some post hoc excuse that rings of reasonableness”)); see also Bates v. Michelin
N. Am., Inc., 2012 U.S. Dist. LEXIS 191007, *3-4 (N.D. Ga. January 13, 2012) (“Viewed in isolation,
Michelin's failure to produce certain documents . . . could be seen as legitimate mistakes and
misunderstandings. However, Plaintiffs have demonstrated that Michelin has engaged in a
pattern of subterfuge and withholding relevant and responsive documents until Plaintiffs are
forced to seek the Court's intervention. In light of this pattern of prejudicial discovery abuse by

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Michelin throughout the course of the litigation, the Court finds that Michelin acted willfully in
violating the Court's discovery Orders.”).
When Defendant’s conduct is considered throughout the entire course of this litigation,
its proclivities for misconduct are not isolated mistakes, which can be remedied through the
imposition of yet another lesser sanction. Here, the record makes clear sanctions less severe
than a default judgment would be ineffective in compelling Defendant to comply with their
discovery obligations. See In re Sunshine Jr. Stores, Inc., 456 F.3d at 1306 (affirming default
against defendant where its failure to participate in discovery amounted to bad faith and no other
sanctions would have resulted in compliance). In Sunshine, the Eleventh Circuit observed the
bank’s failure to “provide the debtor with documents and witnesses as required constituted
‘slacking off,’ ‘dawdling, putting up barriers and obfuscating’” resulted in the forfeiture of the
bank’s opportunity to dispute its liability. Id. at 1305-06. Here, Defendant not only willfully
violated discovery orders, it attempted to shift blame for its failures onto a third party. “The
policy of resolving lawsuits on their merits must yield when a party has intentionally prevented
the fair adjudication of the case.” Carlucci, 102 F.R.D. at 486 (entering default judgment against
the defendant aircraft manufacturer following Piper's willful destruction of test flight records
which were potentially detrimental to its interests in the case). Though the Defendant in Carlucci
was found to have “deliberately destroyed documents,” Defendant’s deceitful, subversive and
manipulative conduct, though less obvious, has been no less detrimental. As with the defendant
in Sunshine, given the Defendant’s “clear history of bad faith stonewalling,” the Court finds
Defendant has forfeited its opportunity to dispute its liability. Id. at 1306.

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6. Prejudice to the Efficient Administration of Justice and to Plaintiffs
Defendant’s discovery abuses frustrated both the purposes of the FLSA collective action,
and the efficient administration of justice. The FLSA collective action mechanism was crafted to
benefit the employer, the employee and the court. Participation in a collective action “reduces
the burden on low wage employees through the pooling of resources” and the judicial system
benefits by efficient resolution in one proceeding “of common issues of law and fact that arise
from the same illegal conduct.” Billingsley v. Citi Trends, Inc., 560 Fed. Appx. 914, 920 (11th Cir.
2014) (citing Morgan v. Family Dollar Stores, Inc., 551 F.3d 1233, 1264-65 (11th Cir. 2008)). As a
benefit to employers, and, in part, in response “to excessive litigation spawned by plaintiffs
lacking a personal interest in the outcome,” the Portal to Portal act amended the collective action
procedure, disallowing participants in the action to be “representatives.” Hoffmann—La Roche,
493 U.S. at 173). The Eleventh Circuit has also observed “Congress passed the FLSA to protect
workers from overbearing practices of employers who had greatly unequal bargaining power
over their workers.” Billingsley, 560 Fed. Appx. at 920 (citing Roland Elec. Co. v. Walling, 326 U.S.
657, 668 n.5 (1946)). Defendant’s corruption of the discovery process resulted in significant
litigation delays, ensuring the loss of any efficiencies and the increase of burden on Plaintiffs and
the Court. The Court finds Defendant soundly defeated the goals of the collective action process
through its discovery abuses.
In addition, the gravity of Defendant’s misconduct, and the appropriate sanction, must
be considered in light of the prejudice caused to Plaintiffs. In 2018, Plaintiffs sought to ascertain
whether they were being accurately and fully compensated for their work in accordance with
the Fair Labor Standards Act. Time and pay records speak directly to how and whether the FLSA

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was violated. Without time and pay records, the linchpin of most FLSA actions, it is impossible
to fully comprehend the extent to which employees were, or were not, paid for all time worked,
whether the regular rate of pay was calculated correctly, and, therefore, whether overtime was
paid correctly. Finally, without these records, it is impossible for Plaintiffs to comply with the
Court’s Orders and approximate damages prior to scheduled settlement conferences.
An employer who frustrates plaintiffs’ ability to obtain the discovery necessary to
prosecute their claims is no different than an FLSA employer who has failed to meet its record
keeping requirements. See Wirtz v. Mississippi Publishers Corp., 364 F.2d 603, 607 (5th Cir. 1966)
(“Failure to keep accurate records can obscure a multitude of minimum wage and overtime
violations.”); see, e.g., Garcia v. Chirping Chicken NYC, Inc., 2016 U.S. Dist. LEXIS 32750, *27-28
(E.D.N.Y. March 11, 2016) (noting the Second Circuit allows a plaintiff to meet his burden by
relying on memory, “[o]therwise, defendants in FLSA cases would stand to benefit from
choosing not to cooperate with discovery or litigation efforts, and [o]ne should not be permitted
to profit by its own wrongful act.” (internal citations omitted)).
The Court first ordered Defendant to produce its time and pay records in 2018. See
Appendix I. The Defendant refused to do so. As a result of Defendant’s pervasive misconduct,
the adjudication of Plaintiffs’ claims on the merits has been delayed and ultimately thwarted.
Whether Plaintiffs are being compensated fully for their work remains at issue today. Defendant
continues to operate its mill. Plaintiffs continue to work. Defendant’s failures and manipulation
of the discovery process frustrates “the rights of those who toil, of those who sacrifice a full
measure of their freedom and talents to the use and profit of others.” Tenn. C. v. Muscoda, 321
U.S. 590, 597 (1944) (“Those are the rights that Congress has specially legislated to protect.”).

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7. Deterrence to other Employers
In addition, the Court cannot allow an FLSA employer to reap the benefits of its own
misconduct. Plaintiffs contend “[a]ll of the information the Defendant has mis-stated, concealed,
or omitted” through the discovery proceedings “is information which would increase Defendant’s
liabilities to the Plaintiffs (as compared to the information which was disclosed). . .” (Doc. 216).
Plaintiffs suggest, as motivation for its actions, Defendant recognized it is substantively liable and
“made the informed decision that it can stall the inevitable outcome without triggering any worse
result by simply not bothering to produce the information that will quantify its liability.” (Doc.
247). In the alternative, Plaintiffs submit Defendant “has concluded that the information it
refuses to produce is so much worse in terms of quantifying its liability that - as a business
proposition - it is against [it’s] interest to spend time or money complying with Court Orders that
will only quantify more in damages than the Plaintiffs can guess otherwise at.” (Doc. 247).
The Court finds both alternatives to be plausible. However, no matter the explanation,
Defendant is the only party who benefits. Throughout the pendency of this suit, Defendant has
not been hampered – it has continued to operate the Mill. Defendant continues to hold and use
potential damages, and, without a ruling on the merits, its questionable pay practices continue.
It is imperative the Court deter this sort of recalcitrance. In the words of the Supreme Court:
But here, as in other areas of the law, the most severe in the spectrum of sanctions
provided by statute or rule must be available to the district court in appropriate
cases, 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.
NHL v. Metro. Hockey Club, 427 U.S. 639, 643 (1976).

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III.

Conclusion
A plaintiff is entitled to a default judgment only if the complaint states a claim for relief.

Descent v. Kolitsidas, 396 F. Supp. 2d 1315, 1316 (M.D. Fla. 2005) (citing Nishimatsu Construction
Co., Ltd. v. Houston Nat'l Bank, 515 F.2d 1200, 1206 (5th Cir.1975)). Allegations in a complaint
“must present a sufficient basis to support the default judgment on the issue of liability.”
Nishimatsu Constr., 515 F.2d at 1206. “A default defendant may, on appeal, challenge the
sufficiency of the complaint, even if he may not challenge the sufficiency of the proof.” Eagle
Hosp., 561 F.3d 1298 at 1307 (reviewing whether the well-pleaded facts stated a claim where the
district court ordered a default judgment pursuant to its inherent powers to sanction litigants),
(citing Nishimatsu Constr., 515 F.2d at 1206). “Regardless of the willfulness of a party's discovery
violation, a default judgment cannot stand on a complaint that fails to state a claim.” Chudasama
v. Mazda Motor Corp., 123 F.3d 1353, 1371 n.41 (11th Cir. 1997). “A default judgment is
unassailable on the merits, but only so far as it is supported by well-pleaded allegations.”
Nishimatsu, 515 F.2d at 1206. Plaintiffs allege Defendant failed to pay for all time worked and
incorrectly calculated overtime as required by the FLSA. The Court finds Plaintiffs’ Third
Amended Complaint states a claim for relief and presents sufficient bases to support the entry of
a default judgment. (Doc. 223.). Therefore, the Court may and hereby does enter a DEFAULT
JUDGMENT in favor of Plaintiffs as a sanction for Defendant's bad faith misconduct.
Accordingly, it is ORDERED:
1) The Report and Recommendation of the Magistrate Judge, dated October 23, 2020
(Doc. 261), is ADOPTED IN PART, MODIFIED IN PART, as described above. It is made a
part of this Order for all purposes including appellate review.

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2) Plaintiffs Renewed Motion for Sanctions (Doc. 238) is GRANTED as follows:
a. Default shall be entered against defendant and in favor of plaintiffs on
liability.
b. Plaintiffs are entitled to reasonable attorneys’ fees and expenses incurred as
a result of Defendant’s conduct. Plaintiffs’ attorneys are directed to submit a
detailed list of fees and expenses which they contend were incurred
unnecessarily, including but not limited to the costs and fees expended in
having to file and attend conferences and hearings held to adjudicate the
numerous motions to compel and for sanctions. The parties are directed to
confer in order to reach an agreement regarding the amount of the award of
fees and expenses and to seek intervention from Magistrate Judge if they
should be unable to resolve the total amount within fourteen days of the
issuance of this Order.
3) The Clerk of Court is directed to strike Defendant’s Answer and to terminate the
following pending motions:
a. Motion to Strike Defenses from Answer to Third Amended Complaint (Doc.
233);
b. Plaintiffs’ Motion for Partial Summary Judgment (Doc. 245);
c. Consolidated Motions to Strike (and Alternative Requests for Leave to File
Substantive Briefs) (Doc. 269);
d. Motion to Strike/Objection to Plaintiffs’ Miscellaneous Submission about
Discovery Chronology (Doc. 283);

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e. Motion for Reconsideration Order on Defendant’s Motion for Partial Summary
Judgment (Doc. 316).
4) This matter is set for a hearing to discuss issues surrounding Plaintiffs’ proof of
damages. This hearing will take place before the Court, December 15, 2021 at 10:00
a.m. in Courtroom 4A of the Courthouse in Mobile, Alabama.
DONE and ORDERED this 18th day of November, 2021.
/s/ JEFFREY U. BEAVERSTOCK
CHIEF UNITED STATES DISTRICT JUDGE

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