United States v. Toth

Filing 110

Judge Allison D. Burroughs: MEMORANDUM AND ORDER entered. For the reasons explained above, the Governments amended motion for sanctions is GRANTED and it is hereby ORDERED that the following facts are taken as established for purposes of this liti gation:1. Defendant had legal control over, and the legal authority to direct the disposition of the funds in, the Account (and any sub-accounts), by investing the funds, withdrawing the funds, and/or transferring the funds to third-parties, bet ween the date the Account was opened and at least December 31, 2008. 2. Should the United States establish that Defendant is liable for the penalty alleged in the complaint, for the purposes of calculating the amount of such penalty, the Ac count (and any sub-accounts) contained $4,347,407 as of the penalty-calculation date. 3. Defendant had a legal obligation to timely file an FBAR regarding the Account in each calendar year that the Account was open, including with regard to calendar year 2007. 4. Defendant willfully failed to file an FBAR regarding the Account with respect to calendar year 2007. The Government may file an itemized statement of costs and attorneys fees documenting the costs and fees that it incurred in preparing the amended motion for sanctions within 30 days of this order, should it wish to recover fees and costs. SO ORDERED.(McDonagh, Christina)

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
UNITED STATES OF AMERICA,
Plaintiff,
v.
MONICA TOTH,
Defendant.

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Civil Action No. 15-cv-13367-ADB

MEMORANDUM AND ORDER GRANTING MOTION FOR ENTRY OF SANCTIONS
BURROUGHS, D.J.
The United States of America filed this case to collect a civil penalty assessed against
Defendant Monica Toth for her alleged failure to timely report her financial interest in, and/or
her signatory or authority over, a bank account opened in Defendant’s name at UBS AG in
Zurich, Switzerland (the “Account”) for the 2007 calendar year. Currently before the Court is
the Government’s amended motion for entry of sanctions. [ECF No. 93]. For the reasons
explained below, the Government’s motion is GRANTED.
I.

BACKGROUND AND PROCEDURAL HISTORY
On September 16, 2015, the Government filed this action against Defendant. [ECF

No. 1]. The Government hired a professional process server who declared under penalty of
perjury that he made a significant number of trips to Defendant’s residence in Weston,
Massachusetts in an attempt to serve Defendant with legal process. [ECF No. 5-2 at ¶¶1–5]. On
January 11, 2016, after concluding that Defendant knew he was attempting to serve her with
legal process and had made a deliberate effort to avoid service, the process server served
Defendant pursuant to Massachusetts Rule of Civil Procedure 4(d)(1) by leaving copies of the

summons and complaint at Defendant’s Weston, Massachusetts residence. [Id. at ¶¶7–8].
Defendant failed to file an answer or otherwise respond to the complaint within 21 days of
service pursuant to Rule 12 and, on February 5, 2016, the Government filed a motion for entry of
default [ECF No. 5], which the Court granted on February 9, 2016 [ECF No. 6]. On February
22, 2016, the Government filed a motion for entry of default judgment. [ECF No. 8]. The Court
allowed two untimely requests by Defendant for extensions of time to respond to the motion for
entry of default judgment. [ECF Nos. 14, 17]. On April 29, 2016, the Court held a hearing on
the motion for entry of default judgment at which Defendant represented herself pro se. At the
hearing, the Court strongly urged Defendant to retain counsel and emphasized that the
Government is looking to impose a very substantial penalty of $2 million. [April 29, 2016 Hr’g
Tr. at 11:14–22]. The Court told Defendant that if she plans to defend the lawsuit, she must get a
lawyer or start defending it herself. [Id. at 9:15–10:1]. Defendant represented that she would
hire a lawyer to defend the suit, and the Court provided guidance to Defendant about how to find
a lawyer to represent her, and granted her an additional 30-day extension to retain an attorney
and move to vacate the default judgment. [Id. at 11:14–12:10, 22:6–24:3]. The Court warned
Defendant not to let any other deadlines go by without responding appropriately. [Id. at 23:15–
19].
Defendant did not hire a lawyer to represent her and, on June 17, 2016, she filed a motion
to vacate the default judgment pro se [ECF No. 29], which the Court granted on August 17, 2016
[ECF No. 43]. On October 13, 2016, Defendant moved to dismiss the complaint [ECF No. 49];
the Court denied the motion to dismiss on May 2, 2017 [ECF No. 59]. After Defendant failed to
timely answer the complaint pursuant to Rule 12, on June 16, 2017, the Government filed a
motion for an order requiring Defendant to answer. [ECF No. 60]. The Court granted the

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Government’s motion and ordered Defendant to file an answer to the complaint by close of
business on July 10, 2017. [ECF No. 61]. On July 11, 2017, Defendant filed her answer. [ECF
No. 62]. Two days later, Defendant filed an untimely request for an extension of time to file her
answer, which the Court allowed. [ECF Nos. 63, 64].
On September 20, 2017, the Court held a scheduling conference with the parties. [ECF
No. 75]. During the hearing, the Court told Defendant that it would set a discovery schedule that
she must follow, emphasized that Defendant must herself be responsive to the Court’s deadlines
or hire counsel, and told her that the Court would not accept any further excuses for not adhering
to the Court’s deadlines from this point forward. [Sept. 20, 2017 H’rg Tr. at 6:20–7:7; 12:15–
13:1; see also ECF No. 75]. The Court again strongly urged Defendant to hire an attorney to
represent her, given the amount of money at issue in this case. [Id. at 12:19–25]. Following the
hearing, on September 22, 2017, the Court issued a scheduling order requiring the parties to
complete fact discovery by March 21, 2018. [ECF No. 77].
On the day of the scheduling conference, September 20, 2017, the Government
personally served Defendant with requests for production, interrogatories, requests for
admission, and a deposition notice scheduling Defendant’s deposition for November 7, 2017.
[ECF No. 80 at 2]. Defendant did not timely respond to any of the Government’s discovery
requests or seek an extension from the Court. On November 7 and November 13, 2017, the
Government submitted letters to the Court notifying it that Defendant failed to respond to its
requests for production, interrogatories, and requests for admission and served deficient initial
disclosures pursuant to Rule 26. [ECF Nos. 80, 81, and 81-1]. On November 27, 2017, the
Court ordered Defendant to supplement her initial disclosures and respond to the Government’s

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requests for production and interrogatories by December 11, 2017, and warned Defendant that a
failure to provide adequate responses could result in the imposition of sanctions. [ECF No. 82].
In direct violation of the Court’s November 27, 2017 order, Defendant failed to
supplement her initial disclosures or respond to the Government’s written discovery requests by
the December 11, 2017 deadline. On December 22, 2017, the Government filed a motion to
compel and to impose sanctions [ECF No. 83], which Defendant also did not respond to. On
January 19, 2018, the Court granted the Government’s motion to compel and ordered that, inter
alia, Defendant must provide full, complete, and accurate answers to the Government’s
interrogatories and production requests by February 9, 2018, that no further extensions would be
permitted, and imposed the sanction that Defendant waived all objections to the interrogatories
and production requests other than those based on privilege. [ECF No. 84]. The Court expressly
warned Defendant that the Court would consider additional strong sanctions against her if she
failed to comply with the Court’s January 19, 2018 order, which could include an order
precluding Defendant from using responsive documents and from raising or otherwise eliciting
testimony about the subject matters encompassed by the interrogatory responses at trial;
accepting certain facts as established, including that Defendant acted “willfully” when she failed
to file a Financial Bank Account Reports form (“FBAR”); entering a default judgment against
Defendant for the penalty amount requested in the complaint, including fines and interest;
striking her pleadings; or treating her refusal to comply as contempt of court. [Id. at ¶ 3].
Nonetheless, Defendant failed to comply with the Court’s January 19, 2018 order and, as
a result, on March 9, 2018, the Government file a motion for sanctions against Defendant. [ECF
No. 86]. On March 12, 2018, in advance of a status conference before the Court, Defendant
served the Government with revised initial disclosures and responses to the Government’s

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requests for production and interrogatories. [ECF 93 at 3]. In contravention of the Court’s
January 19, 2018 order, Defendant’s amended initial disclosures failed to comply with the
requirements of Rule 26, her written discovery responses were replete with non-privilege
objections, and Defendant withheld documents and information based on these objections. [See
ECF No. 93-2]. In total, Defendant produced just three single-page documents of dubious
relevance, 1 although she identified 32 categories of responsive documents which were withheld
based on non-privilege objections. [ECF No. 93-2 at 27–28, 35–37]. During the status
conference, the Court admonished Defendant for her failure to comply with the Government’s
discovery requests and the Court’s deadlines, reminded Defendant that she could not withhold
documents based on non-privilege objections, and agreed not to rule on the Government’s
motion for sanctions until after Defendant’s deposition in hopes that Defendant would respond to
the status conference by providing additional discovery. [Mar. 12, 2018 H’rg Tr. at 3:14–18;
4:21–25; 7:6–11; 16:8–17].
On July 27, 2018, the Government filed a motion to compel testimony from Defendant
[ECF No. 92] and the instant amended motion for sanctions for Defendant’s repeated
noncompliance with orders of this Court [ECF No. 93]. Specifically, the Government asks that
the Court issue an order an order directing the following facts to be taken as established:
1. Defendant had legal control over, and the legal authority to direct the disposition of the
funds in, the Account (and any sub-accounts), by investing the funds, withdrawing the
funds, and/or transferring the funds to third-parties, between the date the Account was
opened and at least December 31, 2008.

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Defendant produced: (i) a notice of electronic filing in this litigation; (ii) a copy of an envelope
mailed to Defendant by the docket clerk in this litigation; and (iii) a copy of Defendant’s college
transcript. [ECF No. 93-2 at 35–37].
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2. Should the United States establish that Defendant is liable for the penalty alleged in the
complaint, for the purposes of calculating the amount of such penalty, the Account (and
any sub-accounts) contained $4,347,407 as of the penalty-calculation date.
3. Defendant had a legal obligation to timely file an FBAR regarding the Account in each
calendar year that the Account was open, including with regard to calendar year 2007.
4. Defendant willfully failed to file an FBAR regarding the Account with respect to
calendar year 2007.
[ECF No. 93 at 22]. Defendant failed to timely respond to the motion to compel or the motion
for sanctions. On August 27, 2018, the Court granted the Government’s motion to compel [ECF
No. 96] and ordered Defendant to show cause by September 10, 2018 as to why the sanctions
that the Government requested in its amended motion should not be imposed [ECF No. 97]. On
September 10, September 14, September 25, and October 12, 2018, Defendant filed responses to
the Court’s order to show cause and to the Government’s motion for sanctions, none of which
provided additional discovery or an adequate justification for not imposing sanctions. [ECF Nos.
99, 102, 106, 109]. On September 24, 2018, the Government filed a reply in support of its
amended motion for sanctions. [ECF No. 105].
II.

DISCUSSION
Rule 37(b)(2)(A) sets forth the sanctions that a court may impose for a party’s failure to

obey a discovery order, including directing certain facts to be taken as established, prohibiting
the disobedient party from supporting or opposing certain claims or defenses, rendering a default
judgment, and finding a party in contempt of court. Fed. R. Civ. P. 37(b)(2)(A). Rule 37 also
requires a court to order the disobedient party or its attorney to pay the reasonable expenses,
including attorney’s fees, caused by the failure to comply, unless the failure was substantially

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justified or such an award would be unjust. Fed. R. Civ. P. 37(b)(2)(C). “A district court has
wide discretion in choosing sanctions for discovery violations.” Samaan v. St. Joseph Hosp.,
670 F.3d 21, 36 (1st Cir. 2012); see also Torres-Vargas v. Pereira, 431 F.3d 389, 392 (1st Cir.
2005) (“[A] federal district court’s venerable power to sanction a party who repeatedly fails to
comply with court-imposed deadlines cannot be doubted.”) (citations omitted). “In determining
the appropriate sanction, if any, a court should ‘consider the totality of events and then choose
from the broad universe of available sanctions in an effort to fit the punishment to the severity
and circumstances of the violation.’” United States v. Pfizer, Inc., 188 F. Supp. 3d 122, 136–37
(D. Mass. 2016) (quoting Young v. Gordon, 330 F.3d 76, 81 (1st Cir. 2003)), aff’d sub
nom. United States ex rel. Booker v. Pfizer, Inc., 847 F.3d 52 (1st Cir. 2017).
The First Circuit has “set out a non-exhaustive list of factors for consideration when
reviewing a Rule 37 motion for sanctions, some substantive and others procedural.”
AngioDynamics, Inc. v. Biolitec AG, 780 F.3d 429, 435 (1st Cir. 2015). The substantive
considerations include “the severity of the discovery violations, legitimacy of the party’s excuse
for failing to comply, repetition of violations, deliberateness of the misconduct, mitigating
excuses, prejudice to the other party and to the operations of the court, and adequacy of lesser
sanctions.” Id. The procedural considerations include “whether the district court gave the
offending party notice of the possibility of sanctions and the opportunity to explain its
misconduct and argue against the imposition of such a penalty.” Id. “[T]he goal of a sanction is
both to penalize wrongful conduct and to deter future similar conduct by the particular party and
others ‘who might be tempted to such conduct in the absence of such a deterrent.’” Companion
Health Servs., Inc. v. Kurtz, 675 F.3d 75, 84 (1st Cir. 2012) (citation omitted).

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Here, analysis of the substantive and procedural factors confirms that Defendant leaves
the Court no choice but to deem as established the four facts identified supra at 5–6. Defendant’s
persistent violations of the Court’s discovery orders are severe, repeated, and deliberate. When
issuing the September 22, 2017 scheduling order—after Defendant had already demonstrated a
pattern of dilatory conduct by evading service, submitting untimely requests for extensions of
time, and filing an untimely answer—the Court warned Defendant that she must follow the
Court’s discovery schedule, and that any further excuses for missing deadlines would not be
accepted. [Sept. 20, 2017 H’rg Tr. at 6:20–7:7; 12:15–13:1; ECF No. 75]. After her October 20,
2017 deadline for responding to the Government’s written discovery requests lapsed, on
November 27, 2017, the Court ordered Defendant to serve her discovery responses by December
11, 2017 or risk sanctions. [ECF No. 82]. Defendant flouted that order without seeking any
extension, and on January 19, 2018, the Court: (i) entered sanctions against her prohibiting her
from withholding documents or information based on non-privilege objections; (ii) ordered
Defendant to serve her discovery responses by February 9, 2018; and (iii) expressly set forth the
strong sanctions that Defendant would face if she failed to meet that deadline. [ECF No. 84].
Defendant, ignoring yet another order and deadline, did not serve her discovery responses until
March 12, 2018, just nine days before the discovery cut-off date. [ECF No. 77; ECF No. 93 at
3]. Further, Defendant’s discovery responses, themselves, were facially deficient. Her
document production consisted of just three single-page documents, her responses to the
Government’s requests for production and interrogatories disregarded the Court’s sanction
precluding Defendant from withholding documents based on non-privilege objections, and her
amended initial disclosures failed to comply with Rule 26. [ECF No. 93-2].

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Defendant has offered no legitimate excuse for her serial failures to comply with the
Court’s discovery orders. In one of the letters that she submitted in response to the Court’s order
to show cause, she concedes that she failed to complete the discovery responses on time, but
essentially contends that it took her 143 days after the deadline to review the necessary
information and complete her responses. [ECF No. 99]. 2 Recognizing that Defendant has
litigated this case pro se, throughout the course of this litigation, the Court has been very
accommodating to her, affording her numerous extensions, ample notice, and many opportunities
to explain herself. The Court has also repeatedly urged Defendant to retain counsel and given
her ample time to do so. “While the filings of pro se litigants should be liberally construed, . . .
pro se litigants are not excused from compliance with procedural rules or substantive law.”
Faust v. Cabral, No. 1:12-cv-11020, 2015 WL 3953185, at *3 (D. Mass. May 15, 2015) (citing
Ahmed v. Rosenblatt, 118 F.3d 886, 890 (1st Cir. 1997)). Here, Defendant has exhibited a
pattern of stonewalling this litigation, including not meeting her discovery obligations despite
numerous chances to do so, and then failing to provide any explanation for her non-compliance.
Defendant seeks to avoid sanctions on the ground that deeming her failure to file an
FBAR in 2007 to be “willful” would be tantamount to entering a default judgment. [ECF No.
102 at 2]. The Court disagrees. The sanctions adopted herein are not the equivalent of a default
judgment because they do not foreclose Defendant from arguing her affirmative defense that the

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Defendant spends the majority of her responses to the Court’s order to show cause disputing
that she evaded service of process [ECF No. 99 at 2], denying that she failed to confer with the
Government as required by the Federal Rules of Civil Procedure [Id.], criticizing the
Government’s document production [Id. at 2–3], and addressing the merits of the Government’s
claim [ECF Nos. 102, 106, 109]. These issues, however, are irrelevant as to whether there is
good cause for Defendant’s failures to comply with this Court’s discovery orders.
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fine imposed by the Government violates the Excessive Fines Clause of the Eighth Amendment. 3
See Chilcutt v. United States, 4 F.3d 1313, 1320 (5th Cir. 1993) (where district court allowed the
defendant to present its case in chief on its affirmative defense issue, sanction deeming certain
facts established “was a far cry from a default judgment”). Moreover, the Court has attempted
warnings and lesser sanctions to no avail, leaving it with no other option, particularly
recognizing the burden to the Government of having to continue to litigate discovery issues in a
case that was filed more than three years ago. Before resorting to this sanction, the Court
repeatedly admonished Defendant for her failure to meet deadlines, and cautioned Defendant in
both written orders and open court that she must comply with the discovery schedule. These
warnings seemingly had no effect on the conduct of Defendant. Defendant then ignored the
milder sanctions imposed by the Court in its January 19, 2018 order by withholding documents
and information from her discovery responses based on non-privileged objections. Under the
totality of the circumstances, the Court finds that sanctions short of those ordered here have been
and will continue to be inadequate and futile.
As set forth above, the Court sees no effective options other than to impose strong
sanctions against Defendant. Less severe sanctions would be unfair to the Government and
undermine this Court’s efforts to manage efficiently its docket. Defendant’s failure to provide
timely, substantive information regarding the nature of her defenses and the facts of this case has
prevented the Government from using that information at Defendant’s deposition, and has
frustrated the Government’s ability to seek third party discovery and prepare its case for trial. In
addition, “the court’s independent interest in administering its docket . . . is strong, and the

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Defendant set forth her affirmative defense in her memorandum in support of her motion to
dismiss. [ECF No. 50 at 3–4].
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court’s efforts at stewardship are undermined where, as here, a party cavalierly flouts the court’s
scheduling orders.” Tower Ventures, Inc. v. City of Westfield, 296 F.3d 43, 46 (1st Cir. 2002).
Thus, the Court determines that taking as established the four facts identified in the
Government’s motion for purposes of this litigation is warranted and appropriate under the
standards of Rule 37.
Finally, “[a] plain reading of Rule 37 makes the award of reasonable expenses upon any
violation of a discovery order, as a general matter, mandatory, not permissive.” Ins. Recovery
Grp., Inc. v. Connolly, 977 F. Supp. 2d 16, 26–27 (D. Mass. 2013) (citing Fed. R. Civ. P.
37(b)(2)(C) (supplying courts a menu of options from which to choose when fashioning an
appropriate sanction for failure to comply with a discovery order, but providing that courts “must
order the disobedient party, the attorney advising that party, or both to pay the reasonable
expenses, including attorney’s fees, caused by the failure”)). Rule 37 “carves out two
exceptions, however, granting a court the leeway to withhold sanctions: (1) where ‘the failure
was substantially justified’ and (2) where ‘other circumstances make an award of expenses
unjust.’” Id. (quoting Fed. R. Civ. P. 37(b)(2)(C)). The Court finds that Defendant’s failure to
comply with this Court’s discovery orders was not substantially justified, and that no
circumstances exist which would make an award of expenses unjust. Accordingly, the Court is
obligated to grant reasonable expenses under Rule 37(b)(2)(C), and awards to the Government
the reasonable costs and attorney’s fees incurred in making its motion for sanctions.
III.

CONCLUSION
For the reasons explained above, the Government’s amended motion for sanctions is

GRANTED and it is hereby ORDERED that the following facts are taken as established for
purposes of this litigation:

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1. Defendant had legal control over, and the legal authority to direct the disposition of the
funds in, the Account (and any sub-accounts), by investing the funds, withdrawing the
funds, and/or transferring the funds to third-parties, between the date the Account was
opened and at least December 31, 2008.
2. Should the United States establish that Defendant is liable for the penalty alleged in the
complaint, for the purposes of calculating the amount of such penalty, the Account (and
any sub-accounts) contained $4,347,407 as of the penalty-calculation date.
3. Defendant had a legal obligation to timely file an FBAR regarding the Account in each
calendar year that the Account was open, including with regard to calendar year 2007.
4. Defendant willfully failed to file an FBAR regarding the Account with respect to
calendar year 2007.
The Government may file an itemized statement of costs and attorney’s fees documenting
the costs and fees that it incurred in preparing the amended motion for sanctions within 30 days
of this order, should it wish to recover fees and costs.
SO ORDERED.
October 15, 2018

/s/ Allison D. Burroughs
ALLISON D. BURROUGHS
U.S. DISTRICT JUDGE

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