*1 TO THE HONORABLE ANDREW L. CARTER, JR.:

Following an evidentiary hearing, the Court held Defendant Lawson Foods, LLC (“Lawson”) and non-parties Fortress Foods, LLC (“Fortress Foods”) and Simon Law (together, the “Contemnors”) in contempt of Court for repeatedly failing to comply with discovery orders. Opinion & Order, dated November 1, 2019, at ECF No. 172 (the “Contempt Order”). The Court imposed a fine of $100 per day, jointly and severally upon Lawson, Fortress Foods and Simon Law, from October 15, 2018. The Court allowed Lawson a 14-day period to cure its noncompliance and have the fine set aside. Lawson was warned that failure to comply with the Court's order could result in entry of default.

Plaintiff Vista Foods Exchange, Inc. (“Vista”) now moves for an entry of default judgment against Lawson, additional contempt sanctions against Lawson, Fortress Foods, and Simon Law, and an award of attorney's fees and costs. ECF Nos. 185, 186. I recommend that Vista's motion be GRANTED in part and DENIED in part.

The Court set forth the factual background of this litigation and entered findings of the Contemnors’ conduct and noncompliance with prior court orders in its Contempt Order. See Contempt Order at 2-8. Since the Contempt Order was issued, none of the Contemnors have complied with the Contempt Order by either responding to Vista's subpoena or paying the court-ordered daily fine. See Plaintiff's Memorandum of Law in Support (“Pl.’s Br.) 6-7, ECF No. 185; Declaration of Jonathan C. Scott (“Scott Decl.”) ¶ 2; Letter of Jonathan C. Scott, dated September 25, 2020, ECF 196. Lawson moved for a stay of the Contempt Order pending an interlocutory appeal, which was denied. See ECF No. 183. The Court of Appeals dismissed Lawson's appeal for lack of jurisdiction. See ECF No. 195.

I. Motion for Default Judgment

Plaintiff seeks entry of default judgment against Defendant Lawson as a sanction for its failure to comply with the Court's orders.

Rule 37 provides, in relevant part, that if a party “fails to obey an order to provide ... discovery,” the court may “render[ ] a default judgment against the disobedient party.” Fed. R. Civ. P. 37(b)(2)(A); Ramgoolie v. Ramgoolie, 333 F.R.D. 30, 34 (S.D.N.Y. 2019). In determining whether to impose such a sanction, courts consider the following factors: “(1) the willfulness of the non-compliant party or the reasons for noncompliance; (2) the efficacy of lesser sanctions; (3) the duration of the period of noncompliance; and (4) whether the noncompliant party has been warned of the consequences of ... noncompliance.” World Wide Polymers, Inc. v. Shinkong Synthetic Fibers Corp., 694 F.3d 155, 159 (2d Cir. 2012) (internal citations omitted). These factors are not exclusive, and it is not an abuse of the court's discretion to impose sanctions where only some of the factors are implicated. S. New England Tel. Co. v. Global NAPS Inc., 624 F.3d 123, 144 (2d Cir. 2010) (noting district court's wide discretion in imposing sanctions). So long as the Court's order is “just,” it will fall within the Court's discretion. Id. (citing Rule 37 of the Federal Rules of Civil Procedure).

*2 Lawson raises only two arguments against a finding of default judgment: (1) that Lawson lacked possession, custody or control over Fortress Foods's documents and therefore could never comply with the Courts orders; and (2) the District Court should wait for a ruling on Lawson's appeal. Because the Court of Appeals has dismissed Lawson's appeal of an interlocutory order for lack of jurisdiction, the Court considers only Lawson's first argument. The Court finds each factor weighs in favor of entering a default against Lawson.

1. Willfulness

Defendant's failure to comply with the Court's orders is willful. Following an evidentiary hearing, the Court found that Fortress Foods is the alter ego of Lawson and Simon Law. See Contempt Order at 10 (the argument that Lawson is wholly separate from Fortress Foods is “not credible”). The Court reviewed the evidence and determined that:

Contempt Order at 8. Lawson raises the same arguments it made during the contempt proceedings, which were unavailing then and remain so now. To the extent Lawson's arguments are interpreted as a motion for reconsideration, such motion is untimely and denied on the merits. See Local Civ. Rule 6.3. Lawson points to no evidence in the record to question the Court's finding and fails to respond to the evidence that is in the record: namely, documents that establish that Lawson was using Fortress Foods to continue the Lawson business in violation of its commitment to Vista. Lawson's further efforts to argue is position—based only on counsel's say so—is also barred by the law of the case doctrine. The law of the case doctrine “forecloses relitigation of issues expressly or impliedly decided by the [ ] court.” United States v. Quintieri, 306 F.3d 1217, 1229 (2d Cir. 2002) (internal citations omitted). Lawson has not presented any compelling reason why the Court's prior findings should not control. See Johnson v. Holder, 564 F.3d 95, 99-100 (2d Cir. 2009) (“We may depart from the law of the case for ‘cogent’ or ‘compelling’ reasons”) (citing Quintieri, 306 F.3d at 1230).

Finally, Lawson still has not “presented a credible reason why [it has] failed, repeatedly, to turn over discovery in a timely fashion.” Lopez v. J & K Floral USA, Inc., 307 F. Supp. 3d 257, 259 (S.D.N.Y. 2018) (striking defendant's answer and authorizing a motion for default judgment). The record firmly established that, at a minimum, Lawson allowed Fortress Foods to (i) use its USDA credentials, (ii) benefit from its shipping contracts, (iii) operate in its space and using its telephone lines, while Lawson (iv) paid for Fortress Foods's shipping freights and (v) was paid by Fortress Foods's Chinese customers. These documents are unquestionably within Lawson's control and have not been produced. Accordingly, Lawson's repeated refusal to comply with court-ordered discovery and, now, to pay court-ordered fines is ample evidence of willfulness. See id. (citing Handwerker v. AT & T Corp., 211 F.R.D. 203, 209 (S.D.N.Y. 2002)).

2. Efficacy of Lesser Sanctions

The Court need not consider the efficacy of lesser sanctions in the abstract because Lawson has already demonstrated its unwillingness to comply with non-dispositive sanctions. Lawson had 14 days to avoid a contempt order by complying with the subpoena served on Fortress Foods but failed to do so. Then, Lawson refused to pay monetary sanctions in defiance of the Court's order. Courts are not required to exhaust all possible lesser sanctions before imposing default. S. New England Tel. Co., 624 F.3d at 148. And lesser sanctions are evidently ineffective here, where Lawson has already been sanctioned and found in contempt for failure to comply with discovery orders. See id.

3. Duration of Noncompliance

*3 “Periods of noncompliance as brief as a few months may merit dispositive sanctions.” Ramgoolie, 333 F.R.D. at 37 (collecting cases). Vista served Fortress Foods with a subpoena on October 15, 2018, which remains unanswered. And the Court issued the Contempt Order on November 1, 2019, one year ago, which has not been complied with. This lengthy period favors dispositive sanctions.

4. Prior Warnings

Finally, the Contempt Order provided Lawson with clear and unambiguous notice that: “[i]f ... Lawson again fails to produce responsive documents, Lawson is warned that, upon application from Vista, the Court will enter a default against Lawson and move the case to a determination of the appropriate judgment.” Lawson “cannot seriously contend that [it] [was] not on notice of [its] discovery obligations or of the consequences of noncompliance[.]” S. New England Tel. Co., 624 F.3d at 148.

For these reasons, I recommend that the District Court enter a default judgment Lawson pursuant to Rule 37(b)(2)(A)(vi). Because Lawson's failure to comply was not “substantially justified,” I further recommend that Vista be awarded reasonable attorney's fees associated with making this motion. See Fed. R. Civ. P. 37(b)(2)(C). Consistent with the Contempt Order, I recommend that Lawson, Fortress Foods, and Simon Law be held jointly and severally liable for the attorney's fee award and any judgment.

II. Motion for Attorney's Fees

Vista requests that the Court further sanction Lawson by ordering it to pay Vista's attorney's fees as of April 2018, when Law submitted his misleading, if not perjurious, declaration. Vista argues persuasively that Lawson's conduct has needlessly multiplied the proceedings, and that the Court should exercise its inherent authority to order Lawson to pay its attorney's fees to correct the harm imposed. See Goodyear Tire & Rubber Co. v. Haeger, 137 S. Ct. 1178 (2017) (the district court has inherent authority to order payment of fees incurred because of bad-faith conduct). Vista has not proposed a fee award or submitted supporting documents for its fee request.

Lawson's arguments against an award of fees incurred since April 2018 are twofold: (1) Lawson did not violate the Court's prior orders because it could not comply (an argument the Court again rejects); and (2) any fee award must be tailored to cover only the fees incurred because of the bad faith acts and nothing more. Lawson's second argument is on firm ground. The Supreme Court declared that the district court may shift only those fees incurred because of the misconduct at issue. “But if an award extends further than that – to fees that would have been incurred without the misconduct – then it crosses the boundary from compensation to punishment.” Goodyear Tire & Rubber Co., 137 S. Ct. at 1186. Accordingly, I recommend that Vista be awarded only such fees as were incurred because of Lawson's misconduct. I further recommend, for the reasons stated in the Contempt Order, that Lawson, Fortress Foods, and Simon Law be held jointly and severally liable for any attorney's fee award.

Because I find that an order of attorney's fees incurred because of Lawson's misconduct is justified under the Court's inherent power to manage its cases, I decline to address whether Lawson is contractually obligated to pay such fees under the Continuing Guarantee.

III. Motion for Additional Contempt Sanctions

*4 Finally, Vista seeks further sanctions against all Contemnors to coerce compliance of the Court's orders. Vista asks that the Court order escalating monetary sanctions for four days, followed by Simon Law's imprisonment if Lawson fails to comply. The Court has already held Lawson and Fortress Foods in contempt and ordered per diem fines as a sanction. Though the Court would be justified in recommending further fines, it is not clear that additional monetary sanctions would be effective here where Lawson has already demonstrated its willingness to flout the Court's order. Moreover, despite Lawson's disregard for the authority of the Court, I do not recommend confinement as a sanction for civil contempt in this case. See Close-Up Int'l, Inc. v. Berov, 411 F. App'x 349, 354 (2d Cir. 2010) (though valid in certain circumstances, confinement as a sanction for civil contempt is an antiquated method to assure compliance). Finally, because I recommend the ultimate sanction of a default, coercive sanctions are no longer relevant.

For the foregoing reasons, I recommend that Vista's motion be GRANTED in part and DENIED in part. See ECF No. 184. I recommend that the District Court strike Lawson's answer, enter default against Lawson and remand the matter to me to conduct a damages inquest. I recommend that any judgment be held against Lawson, Fortress Foods and Simon Law jointly and severally.

I further recommend that the District Court award attorney's fees incurred as of April 2018 and caused by Lawson's misconduct, which includes the filing of this motion. I recommend that the District Court remand the matter to me to conduct a review of Vista's attorney's fees occasioned by Lawson's abuses. I recommend that any attorney's fee award be held against Lawson, Fortress Foods and Simon Law jointly and severally.

I further recommend that any judgment include the $100 fine issued by the Contempt Order, starting on October 15, 2018, until the date the District Court adopts, modifies or rejects this Report. The Court has already imposed this fine jointly and severally upon Lawson, Fortress Foods and Simon Law. I recommend, however, that the Court decline to impose further monetary sanctions or imprison Simon Law because I find that further coercive sanctions will not be effective.

The parties shall have fourteen days from the service of this Report and Recommendation to file written objections pursuant to 28 U.S.C. § 636(b)(1) and Rule 72(b) of the Federal Rules of Civil Procedure. See also Fed. R. Civ. P. 6(a), (d) (adding three additional days when service is made under Fed. R. Civ. P. 5(b)(2)(C), (D), or (F)). A party may respond to another party's objections within fourteen days after being served with a copy. Fed. R. Civ. P. 72(b)(2). Such objections shall be filed with the Clerk of the Court, with courtesy copies delivered to the chambers of the Honorable Andrew L. Carter Jr. at the United States Courthouse, 40 Foley Square, New York, New York 10007, and to any opposing parties. See 28 U.S.C. § 636(b)(1); Fed. R. Civ. P. 6(a), 6(d), 72(b). Any requests for an extension of time for filing objections must be addressed to Judge Carter. The failure to file these timely objections will result in a waiver of those objections for purposes of appeal. See 28 U.S.C. § 636(b)(1); Fed. R. Civ. P. 6(a), 6(d), 72(b); Thomas v. Arn, 474 U.S. 140 (1985).