Grammar v. Sharinn & Lipshie, P.C.

Filing 27

MEMORANDUM AND ORDER granting 24 MOTION for Sanctions of Default Judgment. In light of the full record in this case, and for the reasons stated above, the plaintiff's motion for sanctions pursuant to Rule 37(b)(2) of the Federal Rules of Civil Procedure (Docket no. 24) is granted. It is hereby ordered that the defendant's answer be stricken and that a default judgment be entered in this matter against the defendant. Within fourteen days, the plaintiff shall file and serve a memorandu m of law, proposed findings of fact, and any other documentation necessary to establish the amount of damages, including attorneys' fees and costs, to which she is entitled. The defendant shall submit any objections to the plaintiff's damages request seven days thereafter. Upon receipt of these submissions, an inquest will be scheduled. (As further set forth in this Order.) (Signed by Magistrate Judge James C. Francis on 2/8/2016) Copies Sent By Chambers. (adc)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
14 Civ.

JUANTEZE GRAMMAR,

'-====::.=--==---=-::::: : .· .::.c.1\

- against LIPSHIE,

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\f USDS SDNY

P. C.,

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Defendant.

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JAMES C. FRANCIS IV
UNITED STATES MAGISTRATE JUDGE
Plaintiff
vio~at1ons

U.S.C.

§

Juanteze

I! '.j'c_,t' ..

the

entry of a

sanction for

its

FILED

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z_jj'

Grammar

brings

failure

Judgment

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'

("FDCPA"), 15

against defendant Sharinn & Lipshie,

default

P.C.

The plaintiff now moves

against

the defendant

as

a

to cooperate in the discovery process.

For the reasons that Follow,

the plaintiff's motion is granted.

Background
On Novernt)er 26,

2013,

Sharr inn

&

Lipshie sent Ms.

Grarrunar a

letter announcing its intention to attempt to collect from her a
debt of $1,596.67 purportedly owed to "GE CAPITAL RETAIL BANK/Care
Credit Dental" for "personal dental services."
11,

14; Letter of Sharrin

&

Lipshie P.C.

(Complaint,

dated November 26,

("Debt Notice"),' attached as Exh. A to Complaint).
not indicate that the debt would accrue interest,

1

~~

9,

2013

The letter did
stated that "no

Although Lhe plaintiff attached a copy of this letter to the
paper version of her complaint, which she filed with the court, it
was not included wt:en the plaintiff filed her complaint on the
court's Case Management/Electronic Case Filing (CM/ECF) system.
1

I
•

. ., ... -·- -----:.:::.:...:-~~=-==~-:~:.:=·_;
this
action alleging

of the Fair Debt Collection Practices Act

1692 et seq.,

\1

' · . .·c-'C:<fT·
''
, , , , d,,,,,.J.,_ .. '

("Sharinn & Lipshie"), a debt collector.
for

(JCF)

MEMORANDUM
AND ORDER

Plaintiff,

SHARINN

6774

attorney with [the defendant’s] firm has personally reviewed the
specific circumstances of [the plaintiff’s] account,” and asked the
plaintiff to “please forward payment to our office or contact your
representative to discuss the resolution your [sic] account.”
(Complaint, ¶¶ 15, 24; Debt Notice).
option.

Ms. Grammar chose the latter

(Complaint, ¶ 16).

Ms. Grammar spoke to the defendant’s representative, Archie
Arrington, a non-attorney, on December 8, 2013. (Complaint, ¶¶ 1617).

In response to Ms. Grammar’s inquiries regarding payment

arrangements, Mr. Arrington told her that “the only way to avoid []
adding interest to the Debt and getting a judgment was for [her] to
make two payments of $159.66.”

(Complaint, ¶ 19).

According to

the Complaint, when Mr. Arrington made this statement he “did not
have any knowledge whether litigation would be initiated against
Plaintiff.”

(Complaint, ¶ 31).

“Due to Defendant’s threats,” Ms.

Grammar provided her checking account information so that the
defendant could first withdraw two payments of $159.66 and monthly
payments of $50 thereafter.

(Complaint, ¶ 20).

When Ms. Grammar

later requested that her first payment be moved from December 31,
2013, to January 17, 2014, Mr. Arrington told her that the request
would result in a $140 fee being added to the debt.

(Complaint, ¶¶

28-29).
The plaintiff filed suit on August 20, 2014, alleging six
violations of the FDCPA: Count I alleges violation of 15 U.S.C. §
1692e(2)(A), which prohibits “[t]he false representation of the
character, amount, or legal status of any debt;” Count II alleges
2

violation of 15 U.S.C. § 1692e(5), which prohibits threatening “to
take any action that cannot legally be taken or that is not
intended to be taken;” Count III alleges violation of 15 U.S.C. §
1692e(10), which prohibits the “use of any false representation or
deceptive means” to collect, or attempt to collect, a debt or
information concerning a consumer; Count IV alleges violation of 15
U.S.C. § 1692f(1), which prohibits the “collection of any amount
. . . unless such amount is expressly authorized by the agreement
creating the debt or permitted by law;” Count V alleges (in the
alternative) violation of 15 U.S.C. § 1692g(a)(1), which requires
a debt collector to provide written notice of the amount of the
debt either in its initial communication with the consumer or five
days thereafter; and Count VI alleges violation of 15 U.S.C.
1692g(b), which provides in part that “[a]ny collection activities
and communications” by the debt collector within thirty days after
the initial communication must not “overshadow or be inconsistent
with the disclosure of the consumer’s right to dispute the debt or
request

the

name

and

address

of

the

original

creditor.”

(Complaint, ¶¶ 32-43).
After being served with a summons on October 21, 2014 (Docket
no. 6), the defendant filed its answer to the Complaint on November
20, 2014 (Docket no. 8), and a pre-trial conference was held
telephonically before the Honorable Gregory H. Woods, U.S.D.J., on
December 23, 2014

(Minute Entry dated Dec. 23, 2014).

The parties

subsequently consented to conduct all future proceedings before a
United States Magistrate Judge (Notice, Consent, and Reference of
3

a Civil Action to a Magistrate Judge dated Dec. 23, 2014), and I
held a telephone conference with counsel for both sides on February
11, 2015 (Minute Entry dated February 11, 2015).

Following that

teleconference, I set June 30, 2015, as the deadline for completion
of all discovery.

(Order dated Feb. 11, 2015 (“2/11/15 Order”)).

The defendant has since failed to participate in this litigation in
any way.
The

plaintiff,

having

first

attempted

to

obtain

the

defendant’s voluntary compliance with her discovery requests, moved
on June 25, 2015, for an order compelling the defendant to respond
to her interrogatories, requests for production of documents, and
requests for admissions.

(Plaintiff’s Memorandum Re Motion for

Sanction of Default Judgment (“Pl. Memo.”) at 2).
been

ordered

to

do

so

(Order

dated

June

Despite having

26,

2015

(“6/26/15

Order”)), the defendant never responded to the plaintiff’s motion,
and on August 19, 2015, I entered an order (1) compelling the
defendant

to

interrogatories
September

2,

produce
and
2015,

“complete

requests
(2)

responses

for

production

deeming

to
of

“admitted

Plaintiff’s

documents”

and

by

conclusively

established” all matters raised in the plaintiff’s requests for
admissions, and (3) requiring the defendant to pay the plaintiff
$1,435 in attorneys’ fees (Order dated Aug. 19, 2015 (“8/19/15
Order”)). The defendant failed both to provide any of the required
discovery materials and to pay its $1,435 debt.

(Pl. Memo at 2;

Declaration of Justin Auslaender dated October 5, 2015 (“Auslaender
10/5/15 Decl.”), ¶¶ 8-13).

The plaintiff filed the instant motion
4

seeking a default judgment on October 5, 2015. The defendant never
responded.
Discussion
A.

Legal Standard

Where “a party . . . fails to obey an order to provide or
permit discovery . . . the court where the action is pending may
issue further just orders.”

Fed. R. Civ. P. 37(b)(2)(A).

Such

orders may include: (1) directing that matters in the litigation be
taken as established by the prevailing party; (2) prohibiting the
sanctioned party from supporting or opposing claims or defenses or
from introducing evidence; (3) striking pleadings in whole or in
part; (4) staying further proceedings until the order is obeyed;
(5) entering judgment against the disobedient party; and (6)
requiring

the

disobedient

party

or

her

attorney

reasonable expenses caused by the failure.

to

pay

the

Fed. R. Civ. P.

37(b)(2)(A); see also Agiwal v. Mid Island Mortgage Corp., 555 F.3d
298, 302 (2d Cir. 2009) (noting that party’s failure to comply with
court-ordered discovery may result in terminating sanctions); Daval
Steel Products, a Division of Francosteel Corp. v. M/V Fakredine,
951 F.2d 1357, 1365 (2d Cir. 1991) (“When a party seeks to
frustrate

[discovery]

by

disobeying

discovery

orders,

thereby

preventing disclosure of facts essential to an adjudication on the
merits, severe sanctions are appropriate.”).
Discovery sanctions serve a three-fold purpose: (1) to ensure
that a party will not benefit from its failure to comply; (2) to
obtain compliance

with

the

Court’s
5

orders;

and

(3)

to

deter

noncompliance, both in the particular case and in litigation in
general.

Cine Forty-Second Street Theatre Corp. v. Allied Artists

Pictures Corp., 602 F.2d 1062, 1066 (2d Cir. 1979); see also Aliki
Foods, LLC v. Otter Valley Foods, Inc., 726 F. Supp. 2d 159, 178
(D. Conn. 2010).

Harsh sanctions such as default judgments are

reserved for extreme situations.

See Agiwal, 555 F.3d at 302; see

also Shcherbakovskiy v. Da Capo Al Fine, Ltd., 490 F.3d 130, 140
(2d Cir. 2007) (noting that “the severity of sanction must be
commensurate with the non-compliance”).
When determining the appropriate sanction to impose under Rule
37, courts in this Circuit weigh several factors, including “(1)
the willfulness of acts underlying noncompliance; (2) the efficacy
of lesser sanctions; (3) the duration of noncompliance; and (4)
whether the noncompliant party was on notice that it faced possible
sanctions.”

Sentry Insurance A Mutual Co. v. Brand Management,

Inc., 295 F.R.D. 1, 5 (E.D.N.Y. 2013). Another factor -- prejudice
to the moving party -- is also relevant, although the Second
Circuit has emphasized that the absence of prejudice should not be
accorded significant weight.

See Southern New England Telephone

Co. v. Global NAPs Inc., 624 F.3d 123, 148-49 (2d Cir. 2010).
fact, none of these factors alone is dispositive.

In

Id. at 144

(noting that “these factors are not exclusive, and they need not
each be resolved against the [sanctioned] party”).
B.

Application
1.

Willfulness

“Noncompliance with discovery orders is considered willful
6

when the court’s orders have been clear, when the party [to be
sanctioned] has understood them, and when the party’s noncompliance
is not due to factors beyond the party’s control.”

Baba v. Japan

Travel Bureau International, Inc., 165 F.R.D. 398, 402-03 (S.D.N.Y.
1996), aff’d, 111 F.3d 2 (2d Cir. 1997).

Moreover, a persistent

refusal to comply with court orders “presents sufficient evidence
of willfulness, bad faith or fault.” Handwerker v. AT&T Corp., 211
F.R.D. 203, 209 (S.D.N.Y. 2002).
When the plaintiff first moved to compel discovery, I ordered
the defendant in very clear terms to answer the plaintiff’s motion.
(6/26/15 Order (“Defendant shall answer plaintiff’s motion by July
10, 2015.”)).

The defendant never complied.

My August 19, 2015,

order was equally clear, stating that the defendant “shall provide
[p]laintiff with complete responses to Plaintiff’s interrogatories
and requests for production of documents, without objection, within
14 days from the date of this order” and “shall pay [p]laintiff a
reasonable attorneys’ fee in the amount of $1,435.00 within 14
days.”
Indeed,

(8/19/15 Order).
the

defendant

Again, the defendant failed to comply.
has

never

explanation for its delinquency.

even

bothered

to

offer

an

Cf. MCI Worldcom Communications,

Inc. v. Gamma Communications Group, Inc., 204 F.R.D. 259, 262
(S.D.N.Y. 2001) (“Courts do not look favorably upon parties that
fail to respond to court orders or remain silent in the face of
repeated discovery requests.”).

Given the clarity and simplicity

of the Court’s orders and the absence of any indication that the
defendant’s noncompliance is the result of factors beyond its
7

control, it is fair to conclude that its misconduct is willful.
2.

Efficacy of Lesser Sanctions

A court should always seek to impose the least harsh sanction
that will remedy the discovery violation and deter such conduct in
the future.

See Hawley v. Mphasis Corp., 302 F.R.D. 37, 46

(S.D.N.Y. 2014).

Severe sanctions such as dismissal and default

judgment are to be applied sparingly, where no other sanction will
suffice.

See Agiwal, 555 F.3d at 302.

The plaintiff argues that the harsh sanction of default
judgment is necessary in light of (1) the defendant’s deliberate
and persistent refusal to comply with court orders, (2) the fact
that the defendant’s conduct has prevented the plaintiff from
prosecuting her case, and (3) the plaintiff’s inability to secure
the defendant’s cooperation without court intervention. (Pl. Memo.
at 8).

As to the third point, plaintiff’s counsel represents that

the defendant has invariably ignored or evaded his attempts to
resolve

discovery

(Auslaender

10/5/15

disputes
Decl.,

without
¶¶

9-13;

the

court’s

Declaration

assistance.
of

Justin

Auslaender dated June 25, 2015 (“Auslaender 6/25/15 Decl.”), ¶¶ 718).

In what is a telling indication of how cavalierly the

defendant has taken this litigation, when plaintiff’s counsel
contacted defendant’s counsel after the latter failed to respond to
the Court’s August 19 order, “[defendant’s counsel] responded that
she was on vacation and will look into the matter upon returning
the following week” and then never followed up.
10/5/15 Decl., ¶¶ 9-11).
8

(Auslaender

I can find no indication that anything short of terminating
sanctions will rectify this situation.
have proved ineffective.
the

attorneys’

fees

and

First, lesser sanctions

The defendant was already ordered to pay
costs

incurred

preparing her motion to compel.

by

the

plaintiff

in

Nonetheless, the litigation

remains at a standstill, with the defendant having neither produced
any

discovery

material

attorneys’ fees.

nor

complied

with

the

order

to

pay

Second, if the defendant had any interest in

defending this action, one would expect it to at least respond to
a motion seeking terminating sanctions, yet the Court has not heard
from the defendant since the February 11, 2015, teleconference.
Cf. Alvarado v. Manhattan Worker Career Center, No. 01 Civ. 9288,
2002 WL 31760208, at *8 (S.D.N.Y. Dec. 10, 2002) (“A hollow warning
of the imposition of sanctions cannot serve as an efficacious
deterrent to dilatory tactics, deception, or pettifoggery, in a
particular

case

or

within

the

system

of

federal

courts

generally.”).
It therefore appears that terminating sanctions are the least
harsh sanction that will remedy the discovery violation and deter
such conduct in the future. Cf. Southern New England Telephone Co.
v. Global NAPs, Inc., 251 F.R.D. 82, 95 (D. Conn. 2008) (awarding
default where “orders compelling disclosure and imposing monetary
sanctions have not worked” and “any adverse inference sufficient to
sanction defendant[] . . . would effectively amount to a directed
verdict or the equivalent of a default judgment”), aff’d, 624 F.3d
123 (2d Cir. 2010).
9

3.

Duration of Non-Compliance

Following the February 11 teleconference, I entered an order
requiring all discovery in this matter to be completed by June 30,
2015.

(2/11/15 Order).

However, when the plaintiff filed her

motion to compel on June 25 after attempting for months to persuade
the defendant to cooperate, the defendant had not produced any
discovery.
deadline

(Auslaender 6/25/15 Decl., ¶¶ 5-18).

having

passed,

the

defendant

then

The discovery

ignored

requiring it to respond to the plaintiff’s motion.

an

order

My August 19

order compelling discovery and sanctioning the defendant yielded
only further contumacy.
In sum, the defendant’s conduct amounts to a months-long
campaign of noncompliance that also weighs in favor of severe
sanctions.

See Embuscado v. DC Comics, 347 F. App’x 700, 700-01

(2d Cir. 2009) (affirming terminating sanctions in case involving
three months of noncompliance); Gurvey v. Cowan, Liebowitz &
Lathman, P.C., No. 06 Civ. 1202, 2014 WL 715612, at *6 (S.D.N.Y.
Feb. 25, 2014) (finding noncompliance that “has lasted months and
is still ongoing” to weigh in favor of sanctions).
4.

Notice of Possible Sanctions

Courts are generally hesitant to impose terminating sanctions
before warning the offending litigant.

See Johnson v. Strive East

Harlem Employment Group, 990 F. Supp. 2d 435, 455 (S.D.N.Y. 2014).
However, parties have no “absolute entitlement to be ‘warned’ that
they disobey court orders at their peril.”
at 1366.

Daval Steel, 951 F.2d

Precedent and Rule 37 of the Federal Rules of Civil
10

Procedure require that the imposition of sanctions be “just,” id.,
“in light of the full record in the case,” Cine Forty-Second Street
Theatre Corp., 602 F.2d at 1068. Determining appropriate sanctions
for discovery abuses is entrusted to the Court’s discretion.
Johnson, 990 F. Supp. 2d at 454; see

also Matteo v. Kohl’s

Department Stores, Inc., 533 F. App’x 1, 3 (2d Cir. 2013) (“A
district court has wide latitude to impose discovery sanctions
. . . .”).
Because the defendant has not been explicitly warned that its
noncompliance with court orders will result in the entry of a
default judgment, this factor weighs against imposing terminating
sanctions.

However, all of the circumstances convince me that

terminating sanctions are nevertheless appropriate. First, even if
the defendant had bothered to answer the instant motion, it could
not argue that it lacked notice that it faced the possibility of
terminating sanctions, as such notice was provided on the face of
the plaintiff’s motion.
v.

Local

100,

Hotel

See Metropolitan Opera Association, Inc.
Employees

and

Restaurant

Employees

International Union, No. 00 Civ. 3613, 2004 WL 1943099, at *10
(S.D.N.Y. Aug. 27, 2004) (“[W]hen any notice requirement does
exist, it is satisfied when a notice of a motion has been served
seeking the particular sanctions which ultimately are awarded.”);
see also International Business Machines Corp. v. Tokyo Electron
America, Inc., No. 2:04 CV 260, 2005 WL 6133903, at *8 (D. Vt. Oct.
5, 2005) (noting that possibility of “sanction of dismissal can
hardly have come as a surprise” where opposing counsel’s “filings
11

and communications . . . had given [the offending party] ample
notice

that

it

obligations”).

was

not

in

compliance

with

its

discovery

Second, the defendant is a law firm representing

itself, which boasts forty years of experience and “a renowned
reputation

of

excellence.”

See

Sharinn

&

Lipshie,

P.C.,

http://www.collectthedebt.com (last visited Feb. 5, 2016).

Under

these circumstances, it was not necessary to warn that disregarding
court orders for months without comment or justification can result
in terminating sanctions.

Cf. In re Payne, 707 F.3d 195, 206 (2d

Cir. 2013) (“[I]t is an elementary fact and expectation of legal
practice that an attorney who fails to abide by a court rule or
order may be subject to sanctions or other adverse consequences.”);
Gurvey, 2014 WL 715612, at *6 (“Although [the offending party] was
not expressly warned of the consequences of disobeying my Orders,
she is an attorney and is chargeable with knowing the consequences
of violating a court order.” (footnote omitted)).
5.

Prejudice

Although

courts

often

consider

whether

a

party

suffered

“prejudice” as a result of discovery abuses in determining what
sanctions are appropriate, e.g. Design Strategy, Inc. v. Davis, 469
F.3d 284, 296-97 (2d Cir. 2006), “[the Second Circuit], along with
the Supreme Court, [has] consistently rejected the ‘no harm, no
foul’ standard for evaluating discovery sanctions,” Southern New
England Telephone Co., 624 F.3d at 148.

In any event, as the

plaintiff points out, “[the defendant’s] failure to participate in
discovery

and

produce

relevant
12

information

has

prejudiced

Plaintiff’s ability to prosecute her case.”
While

the

defendant

could

theoretically

(Pl. Memo. at 8).
cure

the

prejudice

occasioned by its noncompliance, given the defendant’s conduct so
far, putting this case back on track will likely involve further
waste of the plaintiff’s and the Court’s resources.

Cf. Penthouse

International, Ltd. v. Playboy Enterprises, Inc., 663 F.2d 371, 388
(2d

Cir.

1981)

(“[I]f

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.” (quoting Cine Forty-Second Street Theatre Corp., 602 F.2d
at 1068)).
“While

the

[C]ourt

has

many

possible

sanctions

at

its

disposal, the fact that [the] defendant[] [has] failed to respond
in any way to this court’s orders or discovery requests indicates
that the ultimate sanction -- striking of the Answer and entry of
a default judgment -- is an appropriate sanction.”

MCI Worldcom

Communications, Inc., 204 F.R.D. at 262.
Conclusion
In light of the full record in this case, and for the reasons
stated above, the plaintiff’s motion for sanctions pursuant to Rule
37(b)(2) of the Federal Rules of Civil Procedure (Docket no. 24) is
granted.

It is hereby ordered that the defendant’s answer be

stricken and that a default judgment be entered in this matter
against the defendant.

Within fourteen days, the plaintiff shall
13

file and serve a memorandum of law, proposed findings of fact,
any

ether

damages,

er. ~-i tled _

documentation
incll1ding

The

necessary

attorneys'

defendant

fees

shall

lo
and

submit

establish
costs,

any

to

which

SO ORDERE:D.

~ C.C·:bw-t~~
JAMES
FRANCIS IV
UNITED STATES MAGISTRATE JUDGE

Dated: New York, New York
February 8, 2016
Copies transmitted this date:
Justin Auslaender, Esq.
Thompson Consumer I.aw Group, PLLC
5235 E. Southern Ave. D 106-618
Mesa, AZ 8'J206
Arnanda

~J.

Moreno,

t.;sq.

Sharinn & Lipshie, P.C.
333 Earle Ovington Blvd.
Suite 302
Uniondale, NY 11553

14

she

to

cf
is

the

Upon receipt oi

an inquest will be scheduled.

()

amount

objections

plaintiff's damages request seven days thereafter.
these submissions,

the

and