D'Orazio v. OSL Holdings, Inc.
ORDER granting 42 Motion for Sanctions. The counterclaim of defendant/counterclaim plaintiff OSL Holdings, Inc., is DISMISSED with prejudice, and judgment is entered against OSL Holdings, Inc., in the amount of $151,830.06 plus post-judgment interest at the legal rate. Signed by Chief Judge James C. Dever III on 6/9/2017. (Briggeman, N.)
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF NORTH CAROLINA
OSL HOLDINGS, INC.,
On May 2, 2017, plaintiff/counterclaim defendant Thomas D'Orazio ("D'Orazio" or
"plaintiff'') moved for sanctions [D.E. 42]. Defendant OSL Holdings, Inc., ("OSL"or "defendant")
did not respond. As explained below, the court grants plaintiff's motion for sanctions, enters
judgment against OSL, and dismisses OSL's counterclaim against D'Orazio with prejudice.
D'Orazio filed this action seeking damages based on OSL's alleged failure to pay wages
[D.E. 1-1]. OSL filed an answer and counterclaim asserting claims for breach of fiduciary duty and
conversion [D.E. 22].
The scheduling order required the parties to exchange Rule 26(a) disclosures by June 24,
2016. See [D.E. 28]. OSL did not provide any Rule 26(a) disclosures. On August 12, 2016,
D'Orazio's counsel requested OSL's Rule 26(a) disclosures [D.E. 37-2]. D'Orazio's coUn.sel
requested themagainonAugust23,2016 [D.E. 37-3] and0ctober31, 2016 [D.E. 37-5]. OSLnever
made the required Rule 26(a) disclosures.
On August 23, 2016, D'Orazio served his first set of requests for production on OSL. See
[D.E. 37-4]. D'Orazio did not receive timely responses. On October 31, 2016, D'Orazio's counsel
requested in writing that OSL either produce the documents by November 4, 2016, or reach some
agreement. See [D.E. 37-5]. OSL did not respond to D'Orazio's first request for production of
documents. Instead, on November 4, 2016, OSL's counsel wrote to D'Orazio's counsel and stated
that "all known directors of OSL have resigned and there is no one available to communicate with
or authorize any further work in this matter." [D.E. 37-6]. On November 4, 2016, OSL's counsel
also moved to withdraw as counsel for OSLand stated that "a) all of the directors ofOSL Holdings
have resigned and there is no one available to communicate with or authorize any further work in
this matter; and b) OSL Holdings has no funding and is essentially defunct." [D.E. 35].
On November 9, 2016, D'Orazio moved to compel and for sanctions in light ofOSL' s failure
to makes its Rule 26(a) disclosures and respond to D'Orazio's first requests for production of
documents [D.E. 37]. On March 6, 2017, this court granted D'Orazio's motion to compel and
ordered OSL to provide full and complete Rule 26(a) disclosures and full and complete responses
to D'Orazio's first requests for production of documents by March 31, 2017. See [D.E. 41]
("Order''). In its Order, the court warned OSL that "failure by OSL to fully comply with this order
will result in the imposition of dispositive sanctions under Federal Rule of Civil Procedure 37(b)(2).
Specifically, the Court will dismiss OSL' s Counterclaim and will enter default judgment in favor of
Plaintiff against OSL." ld. at 5, ~ 1(b). The court also stated that "OSL is again warned that the
failure to comply with this order can and will be considered abandonment of its Counterclaim." Id.
Notwithstanding the court's Order and warnings, OSL violated the court's Order. A court
has the discretion to award various sanctions, including striking pleadings in whole or in part,
dismissing the action or proceeding in whole or in part, or issuing a default judgment against the
disobedient party. See Fed. R. Civ. P. 37(b)(2); Hathcock v. Navistar Int'l Transp. Corp., 53 F.3d
36,40-41 (4th Cir. 1995).
In evaluating the imposition of sanctions, 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 ofthe particular sort ofnoncompliance; and (4) the effectiveness
ofless drastic sanctions." Mut. Fed. Sav. & Loan Ass'n v. Richards & Assocs .• Inc., 872 F.2d 88,
92 (4th Cir. 1989); Hathcock, 53 F.3d at 40--41.
In its Order, the court considered each of the above-referenced factors, and incorporates that
discussion by reference. See [D.E. 41] 3-5. In addition, the court expressly warned OSLin the
Order that ifOSL failed to comply with the Order, the court would dismiss OSL's counterclaim and
would enter default judgment in favor ofD' Orazio. See id. Here, imposing sanctions is appropriate
based upon the record, OSL's bad faith, the prejudice to D'Orazio, the need for deterrence, and
OSL's lack of compliance with the Order.
OSL violated the North Carolina Wage and Hour Act by failing to pay D'Orazio the unpaid
portionofhis transition bonus in the amountof$12,500.00, by failing to pay D'Orazio's base wages
in the amount of$51,073.00, and by failing to pay D'Orazio accrued, but unused, vacation in the
amount of$6,923.00. See [D.E. 43] 5-7. OSL's failure to pay D'Orazio was not in good faith, and
OSL had no reasonable grounds for believing that its actions were permissible under the North
Carolina Wage and Hour Act. See id. Thus, D'Orazio is entitled to recover from OSL (1) unpaid
wages, bonus, and vacation in the amount of$70,496.00, and (2) liquidated damages in the amount
of $70,496.00. See id. In addition, the court awards D'Orazio his costs and reasonable attorney's
fees in the amount of $10,83 8.06. See id.; [D.E. 42-1]. The court finds such costs and fees to be
reasonable and appropriate for the work performed on D'Orazio's behalf in this case.
In sum, plaintiffs motion for sanctions [D.E. 42] is GRANTED, the counterclaim of
defendant/counterclaim plaintiffOSL Holdings, Inc., is DISMISSED with prejudice, and judgment
is entered against OSL Holdings, Inc., in the amount of $151,830.06 plus post-judgment interest at
the legal rate.
day of June 2017.
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?