United States District Court, N.D. Alabama, Northeastern Division
MEMORANDUM OPINION REGARDING FINAL JUDGMENT BY DEFAULT
T. MICHAEL PUTNAM, Magistrate Judge.
This cause is before the court on plaintiff's motion for a final judgment by default and other relief against the defendants (doc. 62) as a sanction for the defendants repeated failures to comply with the court's orders on discovery. By order entered August 21, 2013, the court granted the plaintiff's motion to order the defendants to show cause (doc. 55) and ordered the defendants to show cause in seven (7) days why default judgment against them should not be entered. No response has been filed or received.
The complaint commencing this action was filed on June 18, 2013. The plaintiff, Automobili Lamborghini, S.p.A., ("Lamborghini") alleges that defendants Jackie Johnson (a/k/a as Jack Monroe Johnson) and Car Kit, Inc., have produced automobile bodies made to look like certain models of the Lamborghini cars produced by plaintiffs, and that the production of these fiberglass auto bodies infringed on patents and trademarks held by the plaintiff. (Doc. 1). The plaintiff seeks injunctive relief in the form of: (a) an injunction prohibiting defendants from using the Lamborghini trademarks and design or from selling any models that use the Lamborghini trademarks; (b) a recall of all offending car kits sold by the defendants; (c) impoundment and destruction of all infringing body parts and molds; and (e) cessation of any advertising or internet postings using the plaintiff's trademarks. (Doc. 1, pp. 13-16). Plaintiff further seeks what the court construes as some sort of declaratory relief in the form of: (a) an order finding that the defendants infringed on the trademarks and patents; (b) an order finding that defendants used counterfeit marks; and (c) an order that the defendants violated Sections 1125(a) and (c) of the Lanham Act. (Doc. 1, p. 16). Finally, plaintiff seeks damages to be determined at trial for Lanham Act violations, treble damages pursuant to 115 U.S.C. §§ 1117(a) and (b), statutory damages pursuant to 115 U.S.C. § 1117(c), a declaration that the case is exceptional pursuant to 35 U.S.C. § 285, punitive damages, costs, expenses, disbursements and attorney's fees, and pre-judgment and post-judgment interest. (Doc. 1, p. 17).
Defendants filed an answer and were represented by counsel. (Doc. 8). Plaintiff filed an amended complaint, without seeking leave to do so, after the defendants had answered. Defendants filed an answer to the amended complaint. (Doc 12). The parties have consented to the dispositive jurisdiction of the undersigned magistrate judge pursuant to 28 U.S.C. § 636(c). (Doc. 14).
Discovery did not proceed smoothly. The plaintiff filed its first motion to compel on October 21, 2013. (Doc. 18). Defendants did not file a response, and after a hearing on the motion, the court granted the motion to compel (doc. 22), and awarded fees to plaintiff against defendants in the amount of $3, 757.50, with both defendants jointly and severally liable for payment of the fees (doc. 26).
Plaintiff filed its motion for an order to show cause on January 8, 2014, (doc. 32), supported by an affidavit, which asserted that defendants had failed to pay the fees as ordered by the court. Plaintiff sought a finding that the defendants were in contempt and an accompanying fine. Defendants were given time in which to respond to the motion (doc. 33), but did not file any response. Plaintiff filed a motion for reconsideration and a second motion to compel (doc. 34), asserting that newly discovered evidence, in the form of a YouTube video, contradicted defendants' assertion that Car Kit, Inc., is a cash-only business with no employees. The motion also sought a default judgment as a sanction for the failure to provide discovery and the failure to pay the sanctions previously ordered by the court. Defendants have not filed any response to the motion.
On February 18, 2014, plaintiff filed a third motion to compel (doc. 37), supported by an affidavit,  and a motion for leave to file a second amended complaint (doc. 38). The motion for leave to amend was granted, and defendants filed an amended answer (doc. 43). The court set the pending motions (docs. 32, 34, and 37) for hearing and further directed defendant Johnson to appear and attend the hearing with counsel. Counsel for the defendants filed a motion to withdraw the day before the motion hearing. Although counsel attended the hearing, neither Johnson nor a corporate representative of Car Kit appeared. Defendants' counsel's motion to withdraw was granted. (Doc. 48).
The court, by order entered April 23, 2014, advised defendant Johnson that he should have counsel appear on his behalf or indicate to the court that he intended to proceed pro se; the court further advised Car Kit, Inc., that, as a corporation, it could not be represented by a non-lawyer, and ordered Car Kit, Inc., to retain counsel and have counsel enter an appearance within 30 days. (Doc. 52). The court further warned the defendants that failure to respond to the order could result in entry of a default judgment, along with award of injunctive relief, damages, attorney's fees, costs, and expenses. On May 8, 2014, Johnson filed a response, stating that he would appear pro se, and asserting that he had "provided as much response to discovery as is possible." (Doc. 53). Johnson filed a separate document, purporting to be the response on behalf of Car Kit, Inc., stating that the corporation "cannot afford" to retain an attorney and that it "understands that the Court is likely to enter a default judgment against it and consents to same." (Doc. 54).
On June 19, 2014, plaintiff filed its motion for entry of a an order requiring the defendants to show cause why default judgment should be entered against them. (Doc. 55). In one last attempt to allow the defendants to respond appropriately to plaintiff's discovery requests, the court entered an Order on July 30, 2014, requiring defendants Johnson and a Rule 30(b)(6) corporate representative of Car Kit, Inc., to appear on August 15, 2014, and be deposed on several expressed subject areas. Defendants failed to appear and the depositions never occurred. After plaintiff renewed its motion for a default judgment, the court gave the defendants seven (7) days to response to the motion, but, again, they have not.
Entry of a default judgment is an extreme sanction that is appropriate only when a party's disobedience to discovery orders is willful and after it is clear that lesser sanctions are ineffective. As the Eleventh Circuit has explained:
The sanction of striking the defendants' answers and entering a default judgment against them was authorized by Rule 37(b)(2)(C). This rule provides in relevant part:
If a party... fails to obey an order to provide or permit discovery... the court in which the action is pending may make such orders in regard to the failure as are just, and among others the following:.... (C) An order striking out pleadings... or rendering a judgment by default against the disobedient party....
FED.R.CIV.P. 37(b)(2)(C). This rule gives district judges broad discretion to fashion appropriate sanctions for violation of discovery orders; however, this discretion is guided by judicial interpretation of the rule. For example, a default judgment sanction requires a willful or bad faith failure to obey a discovery order. Societe Internationale pour Participations Industrielles et Commerciales v. Rogers, 357 U.S. 197, 212, 78 S.Ct. 1087, 1096, 2 L.Ed.2d 1255 (1958). Violation of a discovery order caused by simple negligence, misunderstanding, or inability to comply will not justify a Rule 37 default judgment or dismissal. In re Chase and Sanborn Corp., 872 F.2d 397, 400 (11th Cir. 1989) (inability to comply); Equal Employment Opportunity Comm'n v. Troy State Univ., 693 F.2d 1353, 1357 (11th Cir. 1982)(simple negligence or misunderstanding). In addition, the Supreme Court has interpreted the Rule 37 requirement of a "just" sanction to represent "general due process restrictions on the court's discretion." Insurance Corp. of Ireland, Ltd., v. Campagnie des Bauxites de Guinee, 456 U.S. 694, 707, 102 S.Ct. 2099, 2106, 72 L.Ed.2d 492 (1982). Finally, the severe sanction of a dismissal or default judgment is appropriate only as a last resort, when less drastic sanctions would not ensure compliance with the court's orders. See Navarro v. Cohan, 856 F.2d 141, 142 (11th Cir. 1988).
Malautea v. Suzuki Motor Co., Ltd.,
987 F.2d 1536, 1542 (11th Cir. 1993); see also United States v. Certain Real Property Located at Route 1, Bryant, Alabama, 126 F.3d 1314, 1317-18 (11th Cir.1997); Allstate Ins. Co. v. Palterovich, 2008 WL 2741119 (S.D. Fla. July 12, 2008). In the instant case, it does appear that defendants have disobeyed previous court orders related to discovery. The court's skepticism regarding the defendants' willingness to comply with their discovery duties was confirmed by their failure to appear for depositions on August 15, 2014. The court did not receive the defendants' ...