Angry federal court enters default judgment as sanction for repeated litigation abuses

This week in Wilson v. Pasquale’s DaMarino’s, Inc., 2013 WL 1195603, 10-cv-2709 (March 25, 2013) – a discrimination and wage/hour lawsuit brought by several restaurant workers – Southern District Judge Paul Gardephe issued a stern warning to litigants that flouting court deadlines and misrepresenting facts to the court will not be tolerated, and that such conduct will give rise to sanctions under Federal Rule of Procedure 37(b) and the court’s inherent power.

He wrote:

Defendants have shown nothing but contempt for this Court. They have refused to comply with discovery orders, refused to produce relevant documents, refused to appear at deposition, refused to attend court conferences ordered by the Court, failed to respond to show cause orders—even those warning that sanctions might be imposed—made misrepresentations to the Court, and have repeatedly—and in violation of court order—disrupted these proceedings by firing and retaining new counsel. …

The Court concludes that Defendants’ misconduct has been willful, that it has continued for more than two years, that no valid reason for the conduct has been offered, that the Defendants were warned about the consequences of their misconduct, and that a sanction less severe than a default judgment is unlikely to be efficacious.As discussed above, Defendants have deliberately obstructed these proceedings in a variety of ways, including by refusing to produce discovery or to appear at deposition, failing to attend court conferences, and failing to respond to orders to show cause. The most disruptive aspect of Defendants’ misconduct, however, has been their frequent retention and dismissal of lawyers. No credible explanation for this conduct has been offered. While Defendants now seek to blame Cavanagh for their failure to attend court conferences and respond to orders to show cause, responsibility for the repeated retention and dismissal of lawyers rests squarely on the Defendants. Given this fact, that this behavior has continued for more than two years, and that Defendants’ misconduct continued even after the Court warned Defendants that no further change in counsel would be tolerated, the Court concludes that no sanction short of a default judgment is likely to be efficacious.

Plaintiffs were entitled to a default judgment on their wage and overtime claims under the New York Labor Law and the Fair Labor Standards Act, because they presented a prima facie case of liability and defendants failed to offer a meritorious defense.

As to plaintiff’s prima facie case, the court held:

Plaintiffs have offered declarations and pay stubs demonstrating that they were not paid in compliance with the Labor Law or the FLSA. (See Wilson Decl. (Dkt. No. 34 at 19)) (“I worked over forty hours a week and never got paid even the minimum wage, let alone overtime rate for the hours I worked”; “the hourly wage I was paid at DaMarino Restaurant was even below the tip-credit minimum wage”); (Synyuk Decl. (Dkt. No. 34 at 34)) (“I still did not receive any higher overtime rate for the hours I worked in excess of forty … in a given week”); (Wisniewski Decl. (Dkt. No. 159), Exhs. 20–23); (Luberadzka Decl. (Dkt. No. 34 at 3)) (“my per hour rate never exceeded two dollars … per hour, which evidently was in violation of the so-called tip-credit minimum wage.”)

Defendants’ allegation that one plaintiff was “paid properly” was insufficient to demonstrate a “meritorious defense”.

Plaintiffs were not, however, entitled to a default judgment on the issue of anyone’s status as an “employer” other than one individual defendant, nor on their retaliation, sexual harassment, or hostile work environment claims.

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