Royal Mfg Co v. IXL Premium Lubricants et al
Filing
53
MEMORANDUM DECISION AND ORDER granting in part and denying in part 50 Motion to Strike ; granting in part and denying in part 50 Motion for Default Judgment. See order for details. Signed by Magistrate Judge Paul M. Warner on 4/20/2018. (las)
IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF UTAH
NORTHERN DIVISION
ROYAL MFG CO, L.P., an Oklahoma
limited partnership,
Plaintiff,
MEMORANDUM DECISION
AND ORDER
v.
IXL PREMIUM LUBRICANTS, a Utah
corporation; et al.,
Defendants.
Case No. 1:16-cv-00050-PMW
IXL PREMIUM LUBRICANTS, a Utah
corporation; et al.,
Counterclaim Plaintiffs,
v.
ROYAL MFG CO, L.P., an Oklahoma
limited partnership,
Chief Magistrate Judge Paul M. Warner
Counterclaim Defendant.
All parties in this case have consented to Chief Magistrate Judge Paul M. Warner
conducting all proceedings, including entry of final judgment, with appeal to the United States
Court of Appeals for the Tenth Circuit. 1 See 28 U.S.C. § 636(c); Fed. R. Civ. P. 73. Before the
1
See docket no. 19.
court is Royal Mfg Co, L.P.’s (“Plaintiff”) motion to strike pleadings and enter default
judgment. 2
RELEVANT BACKGROUND
Defendant Mont Ashworth (“Mr. Ashworth”) is a named defendant in this case and is, or
was at the time of the agreement that is the subject of the dispute in this case, the treasurer of
Defendant IXL Premium Lubricants, Inc. (“IXL”). In its initial disclosures, Plaintiff listed Mr.
Ashworth as a potential witness.
Sometime in early 2017, Plaintiff scheduled the deposition of Mr. Ashworth to occur on
March 29, 2017. Mr. Ashworth failed to appear for his deposition on that date and gave no prior
notice to Plaintiff. Plaintiff then rescheduled Mr. Ashworth’s deposition to occur on May 18,
2017. At some point after the deposition was rescheduled, Mr. Ashworth’s counsel notified
Plaintiff’s counsel that he had not been in contact with Mr. Ashworth regarding his appearance at
the rescheduled deposition. Consequently, Plaintiff cancelled Mr. Ashworth’s rescheduled
deposition.
On May 18, 2017, Plaintiff filed a motion to compel the deposition of Mr. Ashworth. 3
On June 30, 2017, the court issued an order (“June 30 Order”) requiring IXL and Mr. Ashworth
to provide Plaintiff with a mutually agreeable date and time for Mr. Ashworth’s deposition. 4 The
court further ordered that said deposition was required to take place within thirty (30) days after
2
See docket no. 50.
3
See docket no. 25.
4
See docket no. 32.
2
the date of the June 30 Order. IXL and Mr. Ashworth failed to make Mr. Ashworth available for
a deposition within the time frame ordered by the court.
On September 19, 2017, Plaintiff filed a motion for order to show cause seeking an order
requiring IXL and Mr. Ashworth to appear before the court to explain their failure to produce Mr.
Ashworth for a deposition as ordered by the court. 5
In response to Plaintiff’s motion,
IXL and Mr. Ashworth contended that (1) Mr. Ashworth “confused the prior two deposition dates
and so missed them”; (2) IXL and Mr. Ashworth had been attempting to set another date for
Mont Ashworth’s deposition, “but he is retired and absent a great deal,” “has no further contact
with” the entities named as defendants in this case, and those entities “have no control over his
coming and going”; (3) IXL and Mr. Ashworth would “continue to seek a new deposition date
for [Mr.] Ashworth”; (4) “[Mr.] Ashworth has little testimony to provide beyond acknowledging
that he signed the documents that have been made exhibits at prior depositions”; and (5)
“Plaintiff has not been prejudiced in any significant way by [Mr.] Ashworth’s absence.” 6
On December 15, 2017, the court issued an order (“December 15 Order”) granting in part
and denying in part Plaintiff’s motion for an order to show cause. 7 In the December 15 Order,
the court concluded that IXL and Mr. Ashworth had advanced entirely frivolous arguments in
opposition to Plaintiff’s motion for an order to show cause and that those arguments provided no
legitimate basis for IXL and Mr. Ashworth’s failure to produce Mr. Ashworth for a deposition as
required by the June 30 Order. The court also concluded that IXL and Mr. Ashworth’s arguments
5
See docket no. 41.
6
Docket no. 43 at 1-2.
7
See docket no. 46.
3
did nothing more than demonstrate their total disregard for the June 30 Order. Accordingly, the
court granted all of Plaintiff’s requested relief, with one exception. The court did not order IXL
and Mr. Ashworth to appear before the court to explain their failure to comply with the June 30
Order. However, the court awarded Plaintiff its reasonable expenses, including attorney fees,
incurred in connection with Mr. Ashworth’s failure to appear at his two scheduled depositions
and with the motion for an order to show cause. See Fed. R. Civ. P. 37(b)(2)(A) (“If 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)(C) (providing that in the event of a
failure to obey an order to provide or permit discovery, “the court 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, unless the failure was substantially justified or other
circumstances make an award of expenses unjust.”). In reaching the determination that such an
award was appropriate, the court concluded that, for the reasons set forth above concerning IXL
and Mr. Ashworth’s arguments, IXL and Mr. Ashworth’s failure to comply with the June 30
Order was not substantially justified. See Fed. R. Civ. P. 37(b)(2)(C). The court further
concluded that there were not circumstances that would make such an award unjust. See id.
Based upon those conclusions, the court ordered Plaintiff to, within fourteen (14) days
after the December 15 Order, file an affidavit or declaration detailing the reasonable expenses,
including attorney fees, that it incurred in connection with Mr. Ashworth’s failure to appear at his
two scheduled depositions and with the motion for an order to show cause. The court further
provided IXL and Mr. Ashworth with an opportunity to, within fourteen (14) days after the filing
date of Plaintiff’s affidavit or declaration, file a response to raise any objections to the amount of
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the award sought by Plaintiff. The court indicated that after receiving those filings, it would
make a determination of the amount of the award to Plaintiff. The court also ordered IXL and
Mr. Ashworth to make Mr. Ashworth available for a deposition within thirty (30) days after the
date the December 15 Order. Finally, the court notified IXL and Mr. Ashworth that their failure
to comply with the December 15 Order may subject them to further sanctions, including, but not
limited to, entry of default judgment. See Fed.R. Civ. P. 37(b)(2)(A)(i)-(vii) (providing the
“further just orders” a court may issue in the event that a party fails to obey a discovery order,
including entry of default judgment against the disobedient party).
Thereafter, Plaintiff attempted to schedule the deposition of Mr. Ashworth. Although IXL
and Mr. Ashworth contend that they notified Plaintiff that Mr. Ashworth was “generally available
for a deposition from late January through the end of February,” 8 it does not appear that IXL and
Mr. Ashworth have made Mr. Ashworth available for a deposition within the time frame ordered
by the court in the December 15 Order.
On December 29, 2017, Plaintiff filed its affidavit of reasonable expenses. 9 IXL and Mr.
Ashworth did not file any response within the time frame allowed by the court. Accordingly, on
January 24, 2018, the court issued an order (“January 24 Order”) concluding that the amount of
the award sought by Plaintiff was reasonable and awarding Plaintiff $5,987.50 in reasonable
expenses, including attorney fees. 10 IXL and Mr. Ashworth were ordered to make payment of
8
Docket no. 51.
9
See docket no. 47.
10
See docket no. 49.
5
that award to Plaintiff within fourteen (14) days after the date of the January 24 Order and file
proof of payment with the court.
According to Plaintiff, as of February 16, 2018, the filing date of its motion to strike
pleadings and enter default judgment, IXL and Mr. Ashworth had not made payment of the
award ordered by the court. Furthermore, as of the date of this order, IXL and Mr. Ashworth
have not filed with the court any proof of payment of the award.
LEGAL STANDARDS
As noted above, Rule 37(b)(2)(A) of the Federal Rules of Civil Procedure provides that
“[i]f 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). Rule 37(b)(2)(A)
also provides that the “further just orders” a court may issue in the event of such a failure include
“striking pleadings in whole or in part” and “rendering a default judgment against the
disobedient party.” Fed. R. Civ. P. 37(b)(2)(A)(iii), (vi). Rule 37(b)(2)(C) further provides that
in the event of such a failure, “[i]nstead of or in addition to” the further just orders outlined in
Rule 37(b)(2)(A), “the court 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, unless the
failure was substantially justified or other circumstances make an award of expenses unjust.”
Fed. R. Civ. P. 37(b)(2)(C).
“[C]ourts have broad inherent power to sanction misconduct and abuse of the judicial
process, which includes the power to enter a default judgment.” Klein v. Harper, 777 F.3d 1144,
1147 (10th Cir. 2015) (quotations and citations omitted). “Default judgment is a harsh sanction
that should be used only if the failure to comply with court orders is the result of willfulness, bad
6
faith, or any fault of the disobedient party rather than inability to comply.” Id. at 1147-48
(quotations and citation omitted). To determine whether entry of default judgment is an
appropriate sanction for failure to comply with a discovery order, the court applies the factors
identified in Ehrenhaus v. Reynolds, 965 F.2d 916, 921 (10th Cir. 1992). Those factors are: (1)
the degree of actual prejudice to the non-offending party, (2) the amount of interference with the
judicial process, (3) the culpability of the disobedient party, (4) whether the court warned the
disobedient party in advance that default judgment would be a likely sanction for
noncompliance, and (5) the efficacy of lesser sanctions. See id.; see also Klein-Becker USA,
LLC v. Englert, 711 F.3d 1153, 1159 (10th Cir. 2013) (applying Ehrenhaus factors in
considering whether the sanction of default judgment was appropriate). The Tenth Circuit
reviews a “district court’s decision to enter default judgment as a sanction for abuse of
discretion.” Harper, 777 F.3d at 1148.
ANALYSIS
As an initial matter, the court notes that Plaintiff seeks an order striking the pleadings of
all named Defendants in this case and entering default judgment against them. However, as
demonstrated above, the June 30 Order, the December 15 Order, and the January 24 Order were
directed at only IXL and Mr. Ashworth. Therefore, any named Defendants other than IXL and
Mr. Ashworth could not be considered to have violated those orders. Accordingly, the court will
consider only whether the pleadings of IXL and Mr. Ashworth should be stricken and whether
default judgment should be entered against them. The court turns to addressing the Ehrenhaus
factors as they apply to this case.
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I.
Degree of Actual Prejudice
Based on IXL and Mr. Ashworth’s failures described above, Plaintiff has been
significantly hindered in prosecuting its case. Additionally, those failures have unnecessarily
extended this case for many months. Furthermore, Plaintiff has expended unnecessary time and
expense in its multiple attempts to depose Mr. Ashworth, seeking court orders requiring that
deposition to take place, and seeking court orders for sanctions. For those reasons, the court
concludes that Plaintiff has suffered a significant amount of actual prejudice.
II.
Amount of Interference with Judicial Process
IXL and Mr. Ashworth’s actions, including their repeated failures to comply with and
respond to court orders, have caused significant delays in this case, required the court to expend
unnecessary resources, and hindered the court’s management of its docket. The court concludes
that those actions have substantially interfered with the judicial process.
III.
Culpability
IXL and Mr. Ashworth have failed to make any showing that they are not completely
responsible for their actions in this case. IXL and Mr. Ashworth have not provided any
justifiable excuse or explanation for failing to produce Mr. Ashworth for a deposition, as ordered
by the court, or for failing to comply with this court’s orders. Accordingly, the court has
determined that IXL and Mr. Ashworth are fully culpable for their actions.
IV.
Advance Warning
As noted above, in the December 15 Order, the court specifically warned IXL and Mr.
Ashworth that their failure to comply with the December 15 Order may subject them to further
sanctions, including, but not limited to, entry of default judgment. Nevertheless, IXL and Mr.
8
Ashworth did not comply with the December 15 Order requiring them to produce Mr. Ashworth
for a deposition within thirty (30) days after the date of that order. IXL and Mr. Ashworth then
continued their pattern of ignoring the court’s orders by failing to comply with the directives in
the December 15 Order and January 24 Order to pay the reasonable expenses award to Plaintiff
and file proof of payment with the court. The court concludes that the warning in the December
15 Order was adequate to put IXL and Mr. Ashworth on notice that their continued failure to
comply with court orders could subject them to entry of default judgment.
V.
Efficacy of Lesser Sanctions
As detailed above, the court has already imposed an award of reasonable expenses
against IXL and Mr. Ashworth by way of the December 15 Order and the January 24 Order. IXL
and Mr. Ashworth have failed to pay that award or provide any explanation for their failure to do
so. Based on their clear pattern of ignoring court orders detailed above, the court does not
believe that any lesser sanctions than entry of default judgment would have any efficacy in this
case.
CONCLUSION AND ORDER
Based on consideration of the Ehrenhaus factors, the court concludes that IXL and Mr.
Ashworth’s pleadings should be stricken and default judgment should be entered against them.
Accordingly, IT IS HEREBY ORDERED:
1.
Plaintiff’s motion to strike pleadings and enter default judgment 11 is GRANTED
IN PART and DENIED IN PART. Plaintiff’s motion is granted with respect to
IXL and Mr. Ashworth, but is denied with respect to any other named Defendants.
11
See docket no. 50.
9
2.
The pleadings of both IXL and Mr. Ashworth are STRICKEN.
3.
The Clerk of the Court is instructed to enter certificates of default against IXL and
Mr. Ashworth. Pursuant to Rule 55(b) of the Federal Rules of Civil Procedure,
Plaintiff has thirty (30) days from the date of this order to submit an affidavit
showing the amount due, if the amount sought is for a sum certain or a sum that
can be made by computation. In the amount due, Plaintiff may include any
reasonable expenses, including attorney fees, incurred in connection with Mr.
Ashworth’s failure to appear at any scheduled depositions and with any related
motions. Those reasonable expenses may include any portion of the sanction
imposed by the December 15 Order and January 24 Order that remains unpaid.
Otherwise, Plaintiff may request a hearing to determine the amount of damages.
IT IS SO ORDERED.
DATED this 20th day of April, 2018.
BY THE COURT:
PAUL M. WARNER
Chief United States Magistrate Judge
10
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