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Rita's Water Ice Franchise Company, LLC v. S.A. Smith Enterprises

March 29, 2011

RITA'S WATER ICE FRANCHISE COMPANY, LLC, PLAINTIFF,
v.
S.A. SMITH ENTERPRISES, LLC, ET. AL., DEFENDANTS.



The opinion of the court was delivered by: Slomsky, J.

OPINION

I. INTRODUCTION

Before the Court is Plaintiff's Motion for Sanctions in which a default judgment is sought pursuant to Federal Rule of Civil Procedure 37(b)(2)(A)(vi). Defendants through their counsel have failed to make initial disclosures pursuant to Federal Rule of Civil Procedure 26(a), to confer with counsel for Plaintiff and submit a Joint Report for the Federal Rule of Civil Procedure 26(f) Meeting, to attend the Pretrial Conference held on February 18, 2011, to attend the Hearing on Plaintiff's Motion to Compel held on March 1, 2011, to respond to the Motion to Compel, and to attend the status conferences held on November 23, 2010 and March 22, 2011. This repeated failure to comply with this Court's Orders and the discovery provisions of the Federal Rules of Civil Procedure represents a sanctionable pattern of abuse which the Court finds can only be remedied through the entry of default judgment in favor of Plaintiff. Thus, the Court will grant the Motion for Sanctions and enter a default judgment in favor of Plaintiff.

II. BACKGROUND

This case arises out of Defendants S.A. Smith Enterprises, LLC, Shirley A. Smith, and Jeffrey B. Smith's alleged breach of their Franchise Agreement with Plaintiff Rita's Water Ice Franchise Company, LLC. On August 24, 2010, Plaintiff initiated this lawsuit by filing the Complaint and an Emergency Motion for a Temporary Restraining Order and Preliminary Injunction. (Doc. Nos. 1, 2.) Following a hearing on the Motion for a Temporary Restraining Order, the Court denied the Motion on August 25, 2011. (Doc. No. 4.)

On September 8 and 10, 2010, the Court held a hearing on Plaintiff's Motion for a Preliminary Injunction. The Court delayed issuing an Opinion on the Motion for a Preliminary Injunction because the parties were in settlement negotiations. On November 17, 2010, having received notice from the parties that they were unable to settle the case, the Court ordered that the parties and their counsel appear at a status conference on November 23, 2010. (Doc. No. 14.) A representative of Plaintiff, counsel for Plaintiff, and defense counsel attended the November 23, 2010 status conference. Defendants failed to appear. Defense counsel was unable to offer an explanation for the failure of Defendants to appear. Further, Defendants did not contact the Court prior to the conference to inform the Court they were unable to attend, or after the conference to explain their absence.

By Order dated January 10, 2011, the Court granted the Motion for a Preliminary Injunction and enjoined Defendants from operating their business in violation of the Franchise Agreement. (Doc. Nos. 24, 25.) That same day the Court entered an Order scheduling a Rule 16 Pretrial Conference for February 18, 2011. (Doc. No. 16.) The Court further ordered that:

1. The parties . . . make the required initial disclosures under Fed. R. Civ. P. 26(a) within 14 days of the date of th[e] Order.

2. The parties . . . commence discovery immediately because it is expected that the parties shall have conducted substantial discovery before the Rule 16 conference.

3. Counsel . . . consult and . . . complete and file with the Clerk the required Report of the Rule 26(f) Meeting incorporating all the information described in [the Court's] form Report on or before February 16, 2011.

On February 18, 2011, the Court held a Rule 16 Pretrial Conference. Counsel for Plaintiff and a representative of Plaintiff attended the Conference. Defendants failed to appear either in person or through counsel. Further, defense counsel failed to respond to the request of Plaintiff's counsel for initial disclosures. Defense counsel also failed to consult with counsel for Plaintiff to enable the parties to complete and file a Rule 26(f) Report or to commence discovery.*fn1

On February 22, 2011, Counsel for Plaintiff filed a Motion to Compel Defendants to provide Initial Disclosures as required by Fed. R. Civ. P. 26(a) and by this Court's January 11, 2011 Order. (Doc. No. 32.) By Order dated February 23, 2011, the Court scheduled a Hearing on the Motion to Compel for March 1, 2011. (Doc. No. 33.) In the Order, the Court stated that at the March 1, 2011 hearing, the Court would also conduct a Rule 16 Conference since defense counsel failed to attend the originally scheduled conference.

Defense counsel again failed to appear at the March 1, 2011 hearing. Neither Defendants or defense counsel contacted the Court to inform the Court that they were unavailable or otherwise unable to attend the hearing.

On March 2, 2011, the Court ordered that the parties and their counsel appear at a status conference on March 22, 2011. (Doc. No. 37.) The Court ordered that a copy of the Order be sent to Defendants at their last known address. By its Order, the Court informed all parties that the failure of Defendants or defense counsel to appear would cause the Court to consider entering a default judgment in the case. Finally, the Court ordered that defense counsel file a Response to the Motion to Compel by March 8, 2011.*fn2

For a third time defense counsel failed to appear. Defendants failed to appear for a second time. Again, neither Defendants nor their counsel contacted the Court to inform the Court that they were unable to appear. Defendants also failed to respond to the Motion to Compel. At the status conference on March 22, 2011, Plaintiff moved for sanctions in the form of default judgment pursuant to Fed. R. Civ. P. 37(b)(2)(A)(vi). This Motion is now before the Court.

III. DISCUSSION

A Court is permitted to impose sanctions for a party's non-compliance with discovery obligations pursuant to Federal Rule of Civil Procedure 37(b). Rule 37(b)(2)(A) provides:

If a party or a party's officer, director, or managing agent--or a witness designated under Rule 30(b)(6) or 31(a)(4) - fails to obey an order to provide or permit discovery, including an order under Rule 26(f), 35, or 37(a), the court where the action is pending may issue further just orders. They may include the following:

(i)directing that the matters embraced in the order or other designated facts be taken as established for purposes of the action, as the prevailing party claims;

(ii)prohibiting the disobedient party from supporting or opposing designated claims or defenses, or from introducing ...


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