*1 This matter is before the Court on plaintiff Martin J. Walsh, Secretary of Labor, United States Department of Labor's (Secretary) motion for sanctions against defendants (Motion). (ECF No. 71.) The Clerk of the Court set the return date for the Motion for November 7, 2022. (ECF entry after ECF No. 74.) Defendants did not file an opposition to the Motion. For the following reasons, I recommend that the Motion be GRANTED, defendants’ answers (ECF Nos. 12, 13) be stricken, and default be entered against defendants.

I. FACTS AND PROCEDURAL HISTORY

This is an action by the Secretary under the Fair Labor Standards Act of 1938 (FLSA) against defendants for their alleged failure to pay overtime wages to “over 1,500 employees who worked at 140-high end auto dealerships throughout New Jersey, New York, Connecticut, and Pennsylvania.” (ECF No. 1 p. 1.) The Secretary claims that defendants’ employees “regularly worked 45 to 70 hours per week, and as many as 90 hours, without receiving any overtime pay.” (Id. p. 2.) Defendants filed answers on February 1, 2021. (ECF No. 12, 13.) At the time, defendants were represented by the Jackson Lewis law firm. (Id.)

The parties filed a joint proposed discovery plan on February 8, 2021 (ECF No. 15) in anticipation of an initial scheduling conference set for February 11, 2021. (ECF No. 9.) The joint proposed discovery plan called for the service of initial discovery requests by March 8, 2021 and for fact discovery to conclude on August 13, 2021. (ECF No. 15 p. 3.) I adopted the parties’ proposed discovery schedule and set a telephone status conference for June 17, 2021. (ECF No. 24.)

The parties then filed a joint proposed amended discovery schedule in anticipation of the June 17, 2021 status conference. (ECF No. 25.) I “so ordered” the proposed amended discovery schedule, which, in part, extended the time for fact discovery through November 19, 2021. (ECF No. 27.) In light of the extension of fact discovery, I continued the June 17, 2021 status conference to September 21, 2021. (ECF No. 26.)

On September 9, 2021, the parties requested a further amendment to the discovery schedule to “allow the parties to continue resolution of ongoing discovery issues and exchange the discovery necessary to consider a motion to amend.” (ECF No. 29.) I “so ordered” the further amendment, which called for motions to amend or to add parties to be filed by October 15, 2021. (ECF No. 30.)

On September 17, 2021, the parties filed a joint status letter in anticipation of the September 21, 2021 status conference. (ECF No. 32.) The joint status letter set forth a dispute relating to the Secretary's claim that defendants’ responses to the Secretary's written discovery requests were deficient. (Id. p. 1.) Generally, the dispute centered around the pace of defendants’ production of information and documents in response to the Secretary's discovery requests, not over whether the requests were proper. In light of the discussions at the September 21, 2021 status conference, I entered an order on September 21, 2021 directing “[d]efendants [to] fully respond to plaintiff's written discovery requests by November 19, 2021” and set a further status conference for December 6, 2021. (ECF No. 33.)

*2 On November 24, 2021, defendants filed a suggestion of bankruptcy, which advised the Court that defendant Ernie's Auto Detailing Inc. (Ernie's) had filed a Chapter 11 petition with the United States Bankruptcy Court for the District of New Jersey (Bankruptcy Court) on November 2, 2021 and requested that this matter be “stayed.” (ECF No. 37.) District Judge Kevin McNulty administratively terminated this matter on November 29, 2021. (ECF No. 39.)

I conducted the status conference on December 6, 2021. Prior to the status conference, the Secretary and defendants filed letters concerning whether this matter should be stayed because of Ernie's bankruptcy proceeding. (ECF Nos. 38, 41, 42.) I scheduled a telephone conference for January 4, 2022 to address this issue and permitted the Secretary to file a supplemental letter by December 13, 2021. (ECF No. 43.) On December 10, 2021, defendants filed another suggestion of bankruptcy, this time informing the Court that defendant Buenaventura Decena, also known as Ernesto Decena, filed a Chapter 7 petition with the Bankruptcy Court on December 8, 2021. (ECF No. 44 p. 3.)

On February 22, 2022, I issued a letter order granting the Secretary's request to reopen this matter. (ECF No. 50.) A further status conference was set for March 10, 2022. (ECF No. 51.)

However, before I issued the letter order, the parties filed a joint letter on February 16, 2022 raising a further discovery dispute. (ECF No. 49.) While the Secretary continued to press for the discovery I had ordered defendants to serve by November 19, 2021 (ECF No. 33), defendants argued that the discovery sought by the Secretary was “substantial[ly] overlapping” with the discovery being exchanged in the bankruptcy matters. (ECF No. 49 p. 4.) The parties also proposed a further extension of fact discovery through June 30, 2022. (Id. p. 5.)

I addressed the discovery dispute raised in the parties’ joint letter of February 16, 2022 at the March 10, 2022 status conference. (ECF No. 54.) At the conference, I determined that the information and documents requested by the Secretary are “relevant, proportional, and ... ha[d] to be produced in this case.” (Id. p. 9.) The information and documents that defendants failed to produce are critical in determining whether defendants are liable for violating the FLSA. The documents include pay records, time records, W-2's, and tax returns, and the information sought included Decena's “authority to determine pay, and [whether] employees regularly interact with him on these issues.” (Id. p. 7.) I also directed the parties to meet and confer pursuant to Local Rule 26.1 for an ESI conference to formulate an ESI protocol and agree on search terms. (Id. p. 10.) Finally, I ordered defendants to fully respond to the Secretary's discovery requests by March 31, 2022. (Id. p. 14; ECF No. 53.)

Unfortunately, defendants produced no further discovery. Rather, on April 7, 2022, the Jackson Lewis law firm filed a motion to withdraw as counsel for defendants (Motion to Withdraw). (ECF No. 55.) The declaration of Noel P. Tripp, Esq., then counsel for defendants, painted a bleak picture of defendants’ finances. (ECF No. 55-1.) Defendants had not paid Jackson Lewis in “many months” and owed the firm “in excess of one hundred thousand dollars.” (Id. ¶ 3.) Mr. Tripp believed that defendants “do not have the means to pay [the law firm's] invoices ... to say nothing of tens of thousands of dollars in additional legal fees contemplated by the next phase of the instant litigation.” (Id. ¶ 4.) The Secretary opposed the Motion to Withdraw primarily based on the prior delay in discovery and the potential that Jackson Lewis's withdrawal would further delay discovery. (ECF No. 57.)

*3 I entered an order on May 9, 2022 granting the Motion to Withdraw and terminating Jackson Lewis's representation of defendants. (ECF No. 60 ¶ 1.) I also ordered Ernie's to obtain substitute counsel by May 27, 2022, and granted leave to the Secretary to file for default against Ernie's if substitute counsel did not appear by May 27, 2022. (Id.) Concerning the outstanding discovery, I again ordered defendants to fully respond to the Secretary's discovery requests, this time by June 6, 2022. (Id. ¶ 3.) I set a further status conference for June 28, 2022. (Id. ¶ 6.)

Ernie's failed to timely obtain substitute counsel. Accordingly, the Secretary sought the entry of default (ECF Nos. 62, 63) and the Clerk of the Court entered default against Ernie's on June 1, 2022. (ECF entry after ECF No. 63.) However, on June 27, 2022, Ronald J. Ricci, Esq., entered an appearance for all defendants (ECF No. 65), and in a letter filed on June 27, 2022 requested that the default against Ernie's be vacated (ECF No. 66).

The status conference set for June 28, 2022 proceeded as scheduled. (Minute entry after ECF No. 66.) I entered an order following the conference on June 28, 2022 vacating the default against Ernie's and ordering defendants, for a fourth time, to respond to the Secretary's discovery requests, and warned that “[n]o further extensions shall be granted.” (ECF No. 67 ¶ 2.) A further status conference was set for September 21, 2022. (Id. ¶ 3.)

The parties filed a joint status letter on September 16, 2022 for the status conference scheduled for September 21, 2022. (ECF No. 68.) The Secretary advised the Court that defendants had failed to fully respond to his discovery requests, while defendants advised that:

(Id. p. 2.)

Defendants’ counsel failed to appear for the September 21, 2022 status conference. (See ECF No. 70.) Following the conference, I entered an order permitting the Secretary to file a motion for sanctions and other relief for defendants’ failure to respond to discovery requests. (ECF No. 69.)

The Secretary filed the Motion on October 14, 2022. (ECF No. 71.)

II. DISCUSSION

Federal Rules of Civil Procedure 16 and 37 authorize the imposition of sanctions for failure to comply with a court order. Fed.R.Civ.P. 16(f), 37(b)(2). In Poulis v. State Farm Fire & Cas. Co., 747 F.2d 863, 868 (3d Cir. 1984), the Third Circuit identified six factors to weigh in determining whether a sanction, such as striking a pleading, is appropriate: (1) the extent of the party's personal responsibility; (2) the prejudice to the adversary caused by the failure to meet scheduling orders and respond to discovery; (3) the history of dilatoriness; (4) whether the conduct of the party or the attorney was willful or in bad faith; (5) the effectiveness of sanctions other than dismissal, which entails an analysis of alternative sanctions; and (6) the meritoriousness of the claim or defense. Id. No single Poulis factor is determinative. Mindek v. Rigatti, 964 F.2d 1369, 1373 (3d Cir. 1992). While striking the pleading and entering default is a drastic sanction, it is appropriate when no other sanction can be effective and it is not possible to proceed with the litigation. Malia v. Amazon.com, Inc., No. 17-05155, 2019 WL 6498919, at *3 (D.N.J. Nov. 12, 2019), report & recommendation adopted, 2019 WL 6493235 (D.N.J. Dec. 3, 2019).

*4 After weighing the Poulis factors, I recommend that the Motion be granted, defendants’ answers be stricken, and default be entered against them.

The first factor weighs in favor of striking the answers. Defendants did not file opposition to the Motion. Defendants’ personal responsibility in failing to respond to the Secretary's discovery requests and to comply with Court orders, however, was evident during status conferences and in defendants’ position in letters filed with the Court.

For example, one of the arguments advanced by defendants to prevent the production of information was that the “review ... of electronically stored information” would cost “tens of thousands of dollars” and would be “a disproportionate cost and burden at this juncture.” (ECF No. 40 p. 3; ECF No. 49 p. 5.) I rejected this argument and ordered the information to be produced. (ECF No. 53 ¶ 3.) After defendants were compelled to respond, defendants’ original counsel never indicated that there was a lack of communication between counsel and defendants, which might have led me to conclude that defendants were unaware of their discovery obligations or the Court's orders directing defendants to respond to the discovery requests. Indeed, in Mr. Tripp's declaration in support of the Motion to Withdraw, he testified that:

(ECF No. 55-1 ¶ 8 (emphasis added).)

Similarly, defendants’ present counsel, Mr. Ricci, has not advised the Court of any difficulty in communicating with defendants or that defendants are unaware of their discovery obligations and the Court's orders. Rather, Mr. Ricci has advised the Court only that he has had “difficulty getting the file from [defendants’] former attorney, which has hindered getting the responses to the Secretary.” (ECF No. 68 p. 2.) However, in Mr. Ricci's most recent letter to the Court, he advised that he was “actively trying to obtain the information sought by the” Secretary. (ECF No. 70.) Additionally, Mr. Ricci advised the Secretary's counsel, Amy Tai, Esq., upon her communicating to Mr. Ricci her intention to file the Motion, that he would “speak with his clients and let [her] know their intention.” (ECF No. 73 ¶ 2.) Ms. Tai did not receive a further response. (Id.)

I conclude that defendants are aware of their discovery obligations and the Court's orders and, therefore, the responsibility for their failure to respond to the Secretary's discovery requests and to comply with the Court's orders rests squarely with defendants.

Delays in the discovery process have resulted in prejudice not only to the Secretary but to the “1,500 employees who worked at 140-high end auto dealerships throughout New Jersey, New York, Connecticut, and Pennsylvania.” (ECF No. 1 p. 1.) Prejudice includes non-cooperation with discovery and costs expended in obtaining court orders to force compliance. Adams v. Trs. of N.J. Brewery Emps. Pension Tr. Fund, 29 F.3d 863, 874 (3d Cir. 1994).

*5 The second factor weighs in favor of granting the Motion.

Discovery has been ongoing for a substantial time. The parties’ joint discovery plan suggested that fact discovery should conclude by August 13, 2021. (ECF No. 15 p. 3.) Despite several extensions for the time for discovery and the Court's orders compelling responses to the Secretary's discovery requests, this matter is still in the document-discovery phase of the litigation. “Extensive or repeated delay or delinquency constitutes a history of dilatoriness, such as consistent non-response to interrogatories, or consistent tardiness in complying with court orders.” Adams, 29 F.3d at 874; Chiarulli v. Taylor, No. 08-04400, 2010 WL 1371944, at *3 (D.N.J. Mar. 31, 2010) (recommending dismissal of a complaint, sua sponte, where plaintiff's “consistent failure to participate in the litigation weighs in favor of dismissal of the complaint”), report & recommendation adopted, 2010 WL 1566316 (D.N.J. Apr. 16, 2010).

The third factor weighs in favor of granting the Motion.

Willfulness or bad faith exists where no reasonable excuse for the conduct in question exists. Ware v. Rodale Press, Inc., 322 F.3d 218, 224 (3d Cir. 2003). Here, defendants do not claim that the information and documents sought by the Secretary are not relevant, and I have already rejected defendants’ argument that the discovery requests are overburdensome. And despite being aware of their obligation to comply with the Court's orders, defendants have failed to respond to the Secretary's discovery requests.

The fourth factor weighs in favor of granting the Motion.

Alternative sanctions would do little to resolve the standstill in discovery. Defendants have not opposed the Motion or suggested an alternative sanction. At this point, after defendants’ willful failure to comply with the Court's orders, no sanction, other than striking of defendants’ answers, will be effective to move this matter to resolution.

The fifth factor weighs in favor of granting the Motion.

Although this matter has been ongoing since December 2020, the litigation has not proceeded beyond written discovery. No depositions have been taken. So, it may appear, under these circumstances that there is an insufficient basis to evaluate the meritoriousness of the claims or defenses. Here, however, there is evidence that I can review to determine the relative strengths and weaknesses of the claims and defenses.

First, after being ordered to respond to the Secretary's discovery request, Decena “offered to stipulate to [ ] individual liability” to “streamline discovery and reduce the associated burden” in responding to the Secretary's discovery requests. (ECF No. 58 p. 1.) Second, defendants were named-defendants in other FLSA-lawsuits that were recently resolved in a manner that strongly implies that Ernie's was being operated in violation of the FLSA. For example, in: (a) Rosario v. Ernie's Auto Detailing Inc., No. 20-03762 (E.D.N.Y.), final judgment was entered on July 20, 2021 against Ernie's after it accepted an offer of judgment in the amount of $10,000 to resolve FLSA claims, id. ECF Nos. 35, 36; (b) Ortega v. Ernie's Auto Detailing Inc., No. 20-03007 (E.D.N.Y.), Ernie's agreed on July 16, 2021 to resolve the FLSA claims of 12 claimants for $90,000, which was an “amount ... in excess of [defendants’] view of the full FLSA overtime wages owed,” id. ECF No. 49 p. 2; and (c) Perez v. Ernie's Auto Detailing Inc., No. 20-04798 (E.D.N.Y.), Ernie's accepted on July 16, 2021 an offer of judgment for $10,000 to resolve FLSA claims, id. ECF Nos. 31, 32.

*6 Although discovery has been hampered by defendants’ conduct and discovery has been limited, “[i]n considering whether a claim or defense appears to be meritorious for this inquiry, [the Court need] not ... use summary judgment standards. A claim, or defense, will be deemed meritorious when the allegations of the pleadings, if established at trial, would support recovery by plaintiff or would constitute a complete defense.” Poulis, 747 F.2d at 869–70. The Court is “not required to have a mini-trial before it can impose a default.” Days Inns Worldwide, Inc. v. Al Noor Corp., No. 10-00479, 2012 WL 715252, at *6 (D.N.J. Mar. 5, 2012).

Here, the allegations in the complaint, if true, support recovery by the Secretary for defendants’ FLSA violations, including Decena's individual liability for the FLSA violations. (ECF No. 1 ¶¶ 13–36.) Thus, the allegations in the complaint, in combination with the resolution of the recent FLSA-matters against Ernie's in the Eastern District of New York, weigh the sixth factor in favor of granting the Motion.

For the reasons stated above, it is:

1. RECOMMENDED that the Motion be GRANTED, defendants’ answers be stricken, and default be entered against defendants.

2. ORDERED that the Clerk of the Court administratively terminate the Motion (ECF No. 71) pending the review of this report and recommendation.

3. ORDERED that the Clerk of the Court activate this report and recommendation to indicate that it requires further action by the District Judge.

4. ORDERED that the parties have 14 days to file any objections to this report and recommendation pursuant to Local Civil Rule 72.1(c)(2).