Boyd et al v. SFS Communications, LLC et al

Filing 101

REPORT AND RECOMMENDATIONS re 95 MOTION for Default Judgment. Signed by Magistrate Judge Timothy J. Sullivan on 9/5/2018. (c/m 09/05/2018 bus, Deputy Clerk)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
JAMES HERBERT BOYD, JR., et al.,

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Plaintiffs,

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v.

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SFS COMMUNICATIONS, LLC, et al.,

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Defendants.

Civil No. PJM-15-3068

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REPORT AND RECOMMENDATION
This Report and Recommendation addresses the “Motion for Entry of a Default Judgment
and Other Sanctions against SFS Communications, LLC, and Ferdous Ahmed Sharif”
(“Motion”) (ECF No. 95) filed by Plaintiffs James Herbert Boyd, Jr., et al. On August 15, 2017,
Judge Messitte referred this case to me for all discovery and related scheduling matters. (ECF
No. 66.) Having considered the submissions of the parties (ECF Nos. 95, 97, 98, 99 & 100), I
find that a hearing is unnecessary.1 See Loc. R. 105.6. For the reasons set forth below, I
respectfully recommend that Plaintiffs’ Motion be granted in part and denied in part.
I.

PROCEDURAL HISTORY
Plaintiffs filed this putative collective action against Defendants on October 8, 2015,

asserting claims under the Fair Labor Standards Act, 29 U.S.C. §§ 201 et seq.; the Maryland
Wage and Hour Law, Md. Code Ann., Lab & Empl. §§ 3-413 and 3-415; and the Maryland
Wage Payment and Collection Law, Md. Code Ann., Lab & Empl. §§ 3-502, 3-503, 3-505, and
3-507.2. (ECF No. 1.) On January 27, 2017, the Court conditionally certified the case pursuant to

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The “Motion for Leave to File Sur-Reply to Plaintiffs’ Motion for Default Judgment”
(ECF No. 100) filed by Defendants CU Employment, Inc., et al. is granted.

29 U.S.C. § 216(b). (ECF Nos. 48 & 49.) The Court entered a Scheduling Order on June 6, 2017,
which was modified at the request of the parties to include a discovery deadline of March 16,
2018. (ECF Nos. 58 & 60.)
On August 14, 2017, Plaintiffs filed a motion to compel answers to interrogatories and
responses to document production requests from Defendants SFS Communications, LLC
(“SFS”) and Ferdous Ahmed Sharif (“Sharif”). (ECF No. 65.) Before Plaintiffs’ motion was
fully briefed, the parties filed a joint motion for a “sixty (60) day stay of all proceedings while
the parties explore the possibility of settlement.” (ECF No. 68.) The Court granted the parties’
joint motion and stayed the case until October 28, 2017. (ECF No. 69.) Before the expiration of
the stay, the parties filed a joint motion to extend the stay until December 27, 2017. (ECF No.
70.) The Court granted this motion, extending the stay until December 27, 2017. (ECF No. 71.)
On February 21, 2018, the parties filed a “Joint Motion to Lift Stay of Proceedings and
Enter Scheduling Order” (ECF No. 76).2 In this motion, the parties stated that they were unable
to resolve the matter through mediation, and requested that the Court lift the stay and issue a new
scheduling order with a discovery deadline of October 26, 2018. (Id. at 2.) The court granted the
parties’ motion and denied the parties’ previously filed motion to compel (ECF No. 65) as moot.
(ECF Nos. 77 & 78.)
Plaintiffs renewed their previously filed motion to compel on March 16, 2018.3 (ECF No.
80.) In their response to the renewed motion to compel, SFS and Sharif acknowledged that “they

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The motion was filed on behalf of Plaintiffs and Defendants CU Employment, Inc.,
Communications Unlimited Contracting Services, Inc., Communications Unlimited, Inc., Jack
Spears, and Martin C. Rocha (collectively, “CUI Defendants”). SFS and Sharif did not
communicate their position on the motion to the parties or to the Court.
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Plaintiffs also requested that the Court reconsider its order denying their previously
filed motion to compel as moot. The Court denied this request and directed that any response to
the renewed motion to compel be filed by March 22, 2018. (ECF No. 81.)
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must now participate in discovery,” and requested “a period of 30 days to prepare substantive
written responses and compile documents responsive to Plaintiffs’ discovery requests.” (ECF
No. 82 at 2.) The Court held an informal telephone conference with the parties on March 29,
2018. (ECF No. 85.) At the conclusion of the call, the Court directed SFS and Sharif to provide
their discovery responses to Plaintiffs no later than April 27, 2018. The Plaintiffs’ renewed
motion to compel was again found to be moot. (ECF No. 86.)
On April 16, 2018, counsel for SFS and Sharif filed a Motion to Withdraw. (ECF No.
87.) In the motion, counsel advised the Court that they had advised their clients “that SFS would
be required to retain new counsel and have him/her file a notice of appearance in this action; and
that Sharif has the option to retain new counsel, or provide notice to the Clerk of the Court that
he intends to proceed without counsel.” (Id. at 1-2.) The Court entered a Memorandum on May
9, 2018, regarding the Motion to Withdraw. (ECF No. 91.) The Court indicated that it was
inclined to grant the motion, but that “Local Rule 101.1(a) requires that all parties other than
individuals must be represented by counsel.” (Id.) Noting that new counsel for SFS had not yet
entered an appearance, the Court stated that SFS would have 20 days to obtain new counsel, and
that if new counsel did not enter an appearance in that time, the Court would be “prepared to
grant the Motion to Withdraw and entertain any Motion for Default Judgment as to SFS.” (Id.)
The Court deferred ruling on the Motion to Withdraw. (Id.)
On April 30, 2018, Plaintiffs filed their “Second Motion to Motion to Compel Answers to
Interrogatories and Responses to Requests for Production of Documents, and for Sanctions”
(ECF No. 89). In that motion, which was Plaintiffs’ third attempt to obtain an order compelling
the production of discovery from SFS and Sharif, Plaintiffs reported that SFS and Sharif had
“improperly refused to respond to proper discovery because of their own statement – for a

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second time – that a bankruptcy filing is near.” (Id. at 1.) Plaintiffs stated that SFS and Sharif had
not provided the discovery responses by April 27, 2018, as they had previously promised. (Id.)
SFS and Sharif did not file a substantive response to the motion.4
The Court granted Plaintiffs’ Second Motion to Compel. (ECF No. 94.) The Court
ordered SFS and Sharif to “produce full and complete Answers to Interrogatories, Responses to
Plaintiffs’ Requests for Production of Documents, and all responsive documents” by June 1, 2018.
(Id.) The Court warned SFS and Sharif that failure to comply with the Court’s Order could result in
the following sanctions:

(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)(i)-(vii).
(Id.)
On June 6, 2018, Plaintiffs filed the Motion for Entry of a Default Judgment (ECF No.
95). In the Motion, Plaintiffs state that SFS and Sharif did not comply with the Court’s Order
granting Plaintiffs’ Second Motion to Compel (ECF No. 94), that SFS did not appear for its
properly noted deposition, and that SFS has failed to obtained new counsel. SFS and Sharif have
not responded to the Motion and the time for doing so has passed. See Loc. R. 105.2.

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Counsel for SFS and Sharif filed a response that stated that they had “provided notice of
Plaintiffs’ Second Motion to Compel to their clients, but have received no response.
Accordingly, they are unable to file a substantive response to the Motion.” (ECF No. 93.)
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II.

ANALYSIS
A.

Failure to Respond to Discovery and Noncompliance with Court Order

Plaintiffs state that neither SFS nor Sharif has “responded to Plaintiffs’ discovery as they
were directed to in this Court’s May 29, 2018, Order. Dkt. 94.” (ECF Nos. 95-1 at 3 & 95-2 at
2.)
District courts have the authority to enter a default judgment against a party as a
discovery sanction. Under Rule 37(b)(2)(A), courts can sanction a party by entering a default
judgment against them if the party “fails to obey an order to provide or permit discovery.”
Similarly, under Rule 37(d), courts can enter default judgment as a sanction against a party who,
“after being properly served with interrogatories under Rule 33 or a request for inspection under
Rule 34, fails to serve its answers, objections, or written response.”
While a district court has broad discretion to impose sanctions under Rule 37, “[w]hen
the sanction involved is judgment by default, the district court’s ‘range of discretion is more
narrow’ because the district court’s desire to enforce its discovery orders is confronted head-on
by the party’s rights to a trial by jury and a fair day in court.” Mut. Fed. Sav. & Loan Ass’n v.
Richards & Assocs., Inc., 872 F.2d 88, 92 (4th Cir. 1989) (quoting Wilson v. Volkswagen of
America, Inc., 561 F.2d 494, 503-04 (4th Cir. 1977)).
The Fourth Circuit has developed a four-part test for a district court to use when
determining what sanctions to impose under Rule 37. The Court must consider:
(1) whether the noncomplying party acted in bad faith; (2) the amount of
prejudice his noncompliance caused his adversary, which necessarily includes an
inquiry into the materiality of the evidence he failed to produce; (3) the need for
deterrence of the particular sort of noncompliance; and (4) the effectiveness of
less drastic sanctions.
Mut. Fed. Sav. & Loan Ass’n, 872 F.2d at 92 (citing Wilson, 561 F.2d at 503-04). The “extreme
sanction” of default judgment is reserved for “only the most flagrant case, where the party’s
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noncompliance represents bad faith and callous disregard for the authority of the district court
and the Rules.” Id.
Here, all of the factors weigh in favor of the entry of default judgment against SFS and
Sharif. With regard to the first factor, the bad faith of SFS and Sharif, the defendants failed to
respond to Plaintiffs’ discovery requests on three separate occasions, which resulted in Plaintiffs
having to file three motions to compel. In March 2018, the defendants promised to produce
responses to the discovery requests, but failed to do so. In May 2018, after the Court ordered the
defendants to produce responses to the discovery requests, they again failed to do so. SFS and
Sharif’s noncompliance and dilatory tactics indicate that they have acted in bad faith. Initially,
SFS and Sharif stated that they would be filing for bankruptcy, but they did not do so. Later, they
promised to produce responses to the discovery requests, but they did not do so. Finally, after
their attorneys communicated that Plaintiffs had again moved to compel discovery responses,
SFS and Sharif did not respond to their attorneys. I find that SFS and Sharif have acted in bad
faith in failing to produce responses to Plaintiffs’ discovery requests and in failing to comply
with the Court’s Order of May 29, 2018. See Lance v. Megabus Northeast, LLC, No. PWG-163459, 2017 WL 3480800, at *3 (D. Md. Aug. 14, 2017) (“[N]oncompliance with discovery
orders supports a finding of bad faith.”).
Consideration of the second factor, the amount of prejudice to Plaintiffs, also weighs in
favor of severe sanctions against SFS and Sharif. Plaintiffs’ discovery requests relate to issues of
liability and damages that are central to Plaintiffs’ claims. “The purpose of pre-trial discovery is
for a litigating attorney to obtain information from the opposing party, information which in
many cases is not otherwise available.” Middlebrooks v. Sebelius, No. PJM-04-2792, 2009 WL
2514111, at *3 (D. Md. Aug. 13, 2009). Without discovery from SFS and Sharif, Plaintiffs are

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hampered in their ability to prove their claims. The prejudice to Plaintiffs’ from SFS and Sharif’s
failure to produce discovery responses is substantial and warrants a severe sanction.
With regard to the third factor, the need for deterrence, SFS and Sharif have failed to
comply with the Federal Rules regarding their discovery obligations and have ignored the
Court’s Order directing them to produce discovery responses. Such conduct “must obviously be
deterred.” Id. (quoting Mut. Fed. Sav. & Loan Ass’n, 872 F.2d at 93 (noting that “not only does
the noncomplying party jeopardize his or her adversary’s case by such indifference, but to ignore
such bold challenges to the district court’s power would encourage other litigants to flirt with
similar misconduct”)).
As for the fourth factor, the effectiveness of less drastic sanctions, I find that any sanction
less drastic than default judgment will not be effective. The Court previously warned SFS and
Sharif that noncompliance with its Order of May 29, 2018, could result in sanctions, including
the entry of default judgment against them. Nonetheless, SFS and Sharif ignored the Court’s
Order. There is no reason to believe that a sanction less drastic than default judgment will be
effective. See Lance, 2017 WL 3480800, at *2 (considering “whether the party facing dismissal
or a default judgment is aware of these possible sanctions”).
In consideration of the four Wilson factors, I find that default judgment is warranted as a
sanction against SFS and Sharif for their failure to respond to Plaintiffs’ interrogatories and
document production requests, and for their failure to comply with the Court’s Order of May 29,
2018.5 I recommend that the Court enter default judgment as to liability against SFS and Sharif,

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Because I recommend that default judgment be entered against SFS and Sharif for
failing to produce discovery responses and for noncompliance with the Court’s May 29, 2018,
Order, I do not reach the issue of whether default judgment is also warranted (1) against SFS or
Sharif for SFS’s failure to attend its deposition (see ECF No. 95-1 at 6 n.1); or (2) because of
SFS’s failure to obtain counsel, as required by Local Rule 101.1(a). Both of these issues were
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and “that damages and attorneys’ fees and costs . . . be determined at the same time and in the
same manner as against the non-defaulting Defendants.” (See ECF No. 95-7 at 1.)
B.

Propriety of Additional Sanctions

Plaintiffs also request that the Court prohibit SFS and Sharif “call[ing] any witnesses,
offer[ing] any evidence, or testify[ing] at any further proceedings in this case.” (ECF No. 95-1 at
7.) The CUI Defendants oppose this request in part.6 (ECF No. 97.) They argue that Sharif has
knowledge relevant to Plaintiffs’ claims against the CUI Defendants, and that the CUI
Defendants should not be prevented from calling Sharif as a witness at trial. “Precluding [Sharif]
from offering testimony at a trial of this matter . . . would be prejudicial to the CUI Defendants
who have no control over SFS or [Sharif] and are not responsible for [their misconduct during
discovery].” (Id. at 2.)
Plaintiffs rely on three cases to support their position that barring Sharif from testifying
as a witness at trial is an appropriate sanction: In re Rood, 482 B.R. 132 (D. Md. 2012); S. Mgmt.
Corp. Ret. Tr. v. Rood, 532 F. App’x 370 (4th Cir. 2013); and Angiodynamics, Inc. v. Biolitec
AG, 991 F. Supp. 2d 283 (D. Mass. 2014). The CUI Defendants argue that these cases are
factually distinguishable.
In Angiodynamics, Inc. v. Biolitec AG, 991 F. Supp. 2d 283, the court entered default
judgment against the defendants for committing several egregious discovery violations. One of
the most serious discovery violations was the defendants’ refusal to produce their managing

only addressed in passing in Plaintiffs’ Motion. The bulk of the Motion was directed at the issue
of default judgment as a sanction for SFS and Sharif’s dilatory conduct during discovery and
noncompliance with the Court’s Order of May 29, 2018.
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The CUI Defendants do not argue that SFS or Sharif should be permitted to call any
witnesses or offer evidence on their own behalf (related to issues other than damages or
attorneys’ fees and costs) at any trial in this case. I recommend that the Court prohibit SFS and
Sharif from calling any witnesses or offering any evidence on their own behalf related to issues
other than damages and attorneys’ fees and costs in any further proceedings in this case.
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agents for continued depositions. Because the defendants had refused to produce their managing
agents for depositions, the court stated that it would be unfair to consider the affidavits that the
managing agents submitted in connection with the defendants’ motion for summary judgment
because “Plaintiff ha[d] not had a full opportunity to depose the witnesses.” Id. at 297.
Throughout the opinion, the court summarized how the defendants and their chief executive
officer were responsible for the discovery violations, including the refusal to produce the
managing agents for a continued deposition.
The facts in Angiodynamics are unlike the facts in this case. Most importantly, that case
concerned a party’s efforts to keep its own agents from providing discovery. Here, the CUI
Defendants did not cause SFS or Sharif to flout the rules of discovery and violate the Court’s
orders.7 Had the CUI Defendants been responsible for SFS and Sharif’s refusal to produce
discovery and the refusal of SFS to appear for its deposition, the relief that Plaintiffs seek would
be warranted. But there is no indication, as there was in Angiodynamics, that the CUI Defendants
are responsible for the misconduct of SFS and Sharif.

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Plaintiffs argue that the CUI Defendants “have had, over the course of this litigation, a
substantial ability to influence Sharif’s conduct but have chosen not to exert this power for
purposes of discovery.” (ECF No. 98 at 2.) In support of this argument, Plaintiffs point to (1) the
CUI Defendants’ business relationship with SFS and Sharif, (2) the fact that the CUI Defendants
paid SFS nearly $1 million in 2017, (3) the fact that the CUI Defendants deducted its legal costs
in this case from its payments to SFS, and (4) the CUI Defendant’s non-appearance at the May
24, 2018, deposition of SFS. (Id. at 2-3.) Had the CUI Defendants truly desired for SFS and
Sharif to comply with their discovery obligations and this Court’s orders, Plaintiffs argue, the
CUI Defendants could have “used their economic leverage to direct SFS and Sharif to participate
in discovery.” (Id. at 3.) Plaintiffs further argue that the CUI Defendants are planning to “wait
until trial to question Sharif about matters relevant to this case and their defense.” (Id.) I do not
find that these facts establish that the CUI Defendants had the “substantial ability” to influence
Sharif’s conduct in this case. According to the CUI Defendants, the legal costs were deducted
from the payments to SFS pursuant to an indemnification agreement, and the CUI Defendants
did not appear at the SFS deposition because they learned from SFS’s counsel that SFS would
likely not appear for the deposition. (ECF No. 100-1 at 3-4.)
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The circumstances of In re Rood, where this Court affirmed the judgment of the United
States Bankruptcy Court following a bench trial, are similar to the present case. 482 B.R. 132. As
part of its ruling, this Court affirmed the bankruptcy court’s order imposing sanctions against a
debtor, Robert F. Rood, IV (“Rood”), for Rood’s violations of discovery orders. As part of its
sanction, the bankruptcy court prohibited Rood “from giving testimony” in the case. Id. at 149.
When another party sought to call Rood as a witness during the trial, the bankruptcy court
ordered that Rood would not be allowed to testify because of the sanctions order. Upon review of
the decision of the bankruptcy court, this Court noted that “there are conflicting considerations
involved” when a party seeks to call a sanctioned party to testify as a witness. Id. at 150. “On the
one hand, [the party seeking to call the sanctioned party] was effectively sanctioned for the
conduct of Mr. Rood. On the other hand, permitting Mr. Rood to testify as a witness . . . would
likely have constituted an end-run around the sanction.” Id. The Court considered the degree of
prejudice that the party seeking to call Rood as a witness suffered as a result of the bankruptcy
court’s ruling, and found that no prejudice resulted from the ruling. Accordingly, the Court
affirmed the sanctions order imposed by the bankruptcy court. Id.
This Court’s decision in Rood was affirmed by the Fourth Circuit in an unpublished
decision. S. Mgmt Corp. Ret. Tr., 532 F. App’x 370. The Fourth Circuit held that “in light of
Rood’s continuing violations of discovery orders and failure to comply with the bankruptcy
court’s prior sanctions order, the bankruptcy court did not abuse its discretion by prohibiting
Rood from testifying or presenting evidence.” Id. at 373.
There is a significant procedural distinction between this case and the circumstances in
Rood. In Rood, the Court considered whether to preclude a sanctioned witness from testifying
during the course of a trial. Because the decision was made during the trial, the Court was able to

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consider the actual implications of precluding the witness from testifying on behalf of another
party. Here, the Court is asked to make a decision in the abstract, without the benefit of a proffer
of what Sharif’s testimony will even be. As such, it is challenging to consider how Plaintiffs will
be prejudiced if the testimony is allowed, or how the CUI Defendants will be prejudiced if the
testimony is not allowed. For this reason, this Court’s decision in Rood is of little persuasive
value.
As the Court recognized in Rood, there are competing interests at stake when a party
seeks to call a sanctioned party to testify as a witness. The CUI Defendants have an interest in
presenting evidence that is relevant to their defense. At the same time, Plaintiffs should not be
ambushed during trial by a witness who has not complied with the rules of discovery and the
orders of this Court. At this stage, I find that prohibiting Sharif from testifying on behalf of the
CUI Defendants is not warranted. I recommend that the Court deny Plaintiffs’ motion to the
extent that it seeks an order precluding Sharif from offering testimony if called as a witness by
the CUI Defendants, without prejudice to the Plaintiffs’ right to renew the motion as a motion in
limine at a later time.
Barring the CUI Defendants from calling Sharif as a witness would protect Plaintiffs
from unfair prejudice, but it could also unfairly prejudice the CUI Defendants. A decision on this
issue should be made by the trial court based on a proffer of Sharif’s likely testimony and an
analysis of the importance of that testimony to the issues at stake and the degree to which the
CUI Defendants have attempted to obtain the same evidence through less objectionable and
potentially prejudicial means.
At this time, it is not clear what testimony Sharif will offer if called as a witness by the
CUI Defendants, and it is equally unclear how important that testimony might be to the issues in

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dispute. The discovery deadline is still more than one month away. It would be prudent for the
CUI Defendants to attempt to obtain whatever evidence they would otherwise offer through
Sharif’s testimony from sources whose admissibility cannot be as readily challenged. The
diligence of the CUI Defendants in attempting to obtain such evidence from other sources during
discovery will be relevant if Plaintiffs renew their motion to preclude Sharif from testifying as a
witness during the trial.
For these reasons, I respectfully recommend that the Court deny without prejudice
Plaintiffs’ request for an order prohibiting Sharif from testifying at trial if called as a witness by
the CUI Defendants. I further recommend that Plaintiffs be granted leave to renew their request
for an order prohibiting Sharif from testifying in a motion in limine, at which time the Court will
be in a better position to evaluate the competing interests at stake.
III.

CONCLUSION
In sum, I recommend that the Court grant in part and deny in part Plaintiffs James

Herbert Boyd, Jr., et al.’s “Motion for Entry of a Default Judgment and Other Sanctions against
SFS Communications, LLC, and Ferdous Ahmed Sharif” (ECF No. 95). Specifically, I
recommend that the Court:
1.

GRANT the Motion to the extent that it seeks the entry of a default judgment

against SFS Communications, LLC, and Ferdous Ahmed Sharif as to liability;
2.

ORDER that damages and attorneys’ fees and costs be determined at the same

time and in the same manner as against the non-defaulting Defendants;
3.

GRANT the Motion to the extent that it seeks an order prohibiting SFS

Communications, LLC and Ferdous Ahmed Sharif from calling any witnesses or offering any

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evidence on their own behalf related to issues other than damages and attorneys’ fees and costs
in any further proceedings in this case; and
4.

DENY WITHOUT PREJUDICE the Motion to the extent that it seeks an order

barring any other party from calling SFS Communications, LLC, or Ferdous Ahmed Sharif to
testify as a witness at the trial of this case.
I also direct the Clerk to mail a copy of this Report and Recommendation to Defendants
SFS Communications, LLC, and Ferdous Ahmed Sharif. Objections to this Report and
Recommendation must be served and filed within fourteen (14) days, pursuant to Fed. R. Civ. P.
72(b) and Local Rule 301.5(b).

September 5, 2018
Date

/s/
Timothy J. Sullivan
United States Magistrate Judge

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