*1 In this Title VII discrimination case, the Magistrate Judge on February 26, 2021 granted [Doc. No. 151] Plaintiffs' Rule 37(b)(2)(A)(vi) Motion for Further Sanction [Doc. No. 144] (the “Motion”) and on May 21, 2021 issued a Report and Recommendation [Doc. No. 155] recommending that a default judgment be entered against Defendants Stanley Kyungjin Cho, Ellen Jung Mee Kim, and Shadetree Management LLC (collectively, the “Shadetree Defendants” or “Defendants”) on Counts I and II of the Complaint as a sanction for discovery violations pursuant to Rule 37(b)(2)(A)(vi). The Shadetree Defendants have opposed the entry of the recommended default judgment.[1] See [Doc. No. 156].

Having conducted a de novo review of the record, the Court GRANTS in part and DENIES in part Plaintiffs' Motion. In that regard, judgment will be entered against Shadetree Defendants for the attorney's fees already awarded and the fees incurred in connection with Shadetree Defendants' Opposition, with directions to file current financial information with respect to all sources of income and assets; and the jury will be instructed that it may draw an adverse inference against the Shadetree Defendants based on their refusal to produce and/or spoliation of evidence; and the Motion is otherwise DENIED.

The Court has discretion to sanction litigants for discovery misconduct. If a party fails to obey a discovery order, Rule 37 authorizes courts to, among other things, render a default judgment against the disobedient party. Fed. R. Civ. P. 37(b)(2)(A)(vi). Instead of or in addition to a default judgment or other sanctions, an award or expenses, including attorney's fees, incurred in connection with the discovery violations, must be awarded unless the violation was substantially justified or other circumstances make an award of expenses unjust. Fed. R. Civ. P. 37(b)(2)(C). To determine which Rule 37 sanction to impose, the district court must determine (1) whether the non-complying party acted in bad faith, (2) the amount of prejudice that noncompliance caused the adversary, (3) the need for deterrence of the particular sort of non-compliance, and (4) whether less drastic sanctions would have been effective. See Anderson v. Found. for Advancement, 155 F.3d 500, 504 (4th Cir. 1998). The party facing the possibility of default judgment should be forewarned about such a drastic consequence for failing to comply with the court's order. Hathcock v. Navistar Int'l Transp. Corp., 53 F.3d 36, 40 (4th Cir. 1995).

There is no doubt that Defendants failed in their discovery obligations in this case and the Court must determine what sanction is appropriate with respect to those violations under all the circumstances. In making that assessment, the Court has considered the nature of the violations, Defendants' level of culpability and the extent the violations were willful and in bad faith or attributable to misunderstandings, mistakes or errors in judgment, the impact and prejudice to the Plaintiff, the importance of the discovery withheld relative to the merits of the claims against the Defendants and Defendants' defenses, including centrally the disputed material facts central to Plaintiffs' claim and the relationship the spoliated evidence would likely pertain to those core disputed facts as well as the Plaintiffs' ability to obtain any likely relevant spoliated evidence from other sources and the extent to which the Plaintiff has in fact obtained that evidence, the amount of attorney's fees already awarded and to be awarded, as set forth in this Order, and also the additional that may be awarded, were Plaintiffs to ultimately succeed on their claims. Based on all these considerations, the Court concludes that the entry of a default judgment is not warranted at this point, particularly given that the disputed merits of the case, which revolves centrally around a single disputed statement allegedly made by Defendant Cho, and the possible implications of a default judgment with respect the Plaintiffs' dismissed claims against Defendants Bae's Woodberry, LLC, Young Woo Bae, and Chan Hee Bae, were that dismissal reversed on appeal.

*2 Accordingly, for the reasons stated above, it is hereby

ORDERED that Plaintiffs' Rule 37(b)(2)(A)(vi) Motion for Further Sanction [Doc. No. 44] be, and the same hereby is, GRANTED in part and DENIED in part. It is GRANTED to the extent that judgment is hereby entered in favor of Plaintiffs and against the Shadetree Defendants, jointly and severally, in the amount of $43,985, together with such additional amounts with respect to costs and fees incurred since June 4, 2021 in connection with the Shadetree Defendants' Objections to the Magistrate Judge's Report and Recommendation [Doc. No. 156], to be determined, and an adverse inference instruction will be given to the jury with respect to Defendants' spoliation of documents; and it is otherwise DENIED; and it is further

ORDERED that within 30 days of the date of this Order the Shadetree Defendants file under oath complete current information concerning all sources of income and assets, including bank statements and investment accounts, both business and personal, on the basis of which the Court will determine the amount to be paid on an ongoing basis with respect to the already awarded and to be awarded attorney's fees and expenses; and it is further

ORDERED that within 30 days of this Order, Plaintiffs submit any further request for attorney's fees and expenses, as awarded by this Order; and it is further

ORDERED that a status conference will be held on Wednesday, October 13, 2021, at 10:00 am, at which time the Court will hear argument on any outstanding issues and schedule a trial date.

The Clerk is directed to enter judgment in favor of Plaintiffs Binta P. Mamadou and Visions Braid Bar, LLC and against Defendants Cho, Kim, and Shadetree Management, LLC, jointly and severally, in the amount of $43,985 and forward copies of this Order to all counsel of record.

Alexandria, Virginia