REPORT AND RECOMMENDATION

*1 This matter is before the Court on Plaintiffs' Binta M. Mamadou and Visions Braid Bar, LLC (collectively, “Plaintiffs”) Rule 37(b)(A)(vi) Motion for Further Sanctions (“Motion”). This Motion has been fully briefed, and argument on the Motion was held February 26, 2021. At the conclusion of that hearing, the undersigned Magistrate Judge took the matter under advisement to issue this Report and Recommendation. Upon consideration of the Complaint, Motion for Further Sanctions and the relevant portions of the record, the undersigned recommends that Plaintiffs' Motion for Further Sanctions be GRANTED.

I. INTRODUCTION

On February 11, 2020, Plaintiffs filed a Complaint against Stanley Kyungjin Cho, Ellen Jung Mee Kim, Shadetree Management LLC, (collectively, the “Shadetree Defendants” or “Defendants”), Young Woo Bae, John Doe Members of Bae's Woodberry, LLC and Bae's Woodberry, LLC (collectively, the “Bae Defendants”), alleging counts of discrimination in real estate transactions and contract formation in violation of local ordinances and federal laws and intentional interference with prospective economic relationship under common law. Compl. ¶¶ 4a-4d. During the course of discovery, the Court held four hearings on Plaintiffs' Motion to Compel Discovery Responses and Request for Costs [Dkt. No. 43] and issued four orders requiring the Shadetree Defendants to comply with discovery demands. Mem. in Supp. of Pl.'s Rule 37(b)(2(A)(vi) Mot. for Further Sanctions at 2; See also Dkt. Nos. 48, 64, 73 and 103. At the fourth hearing on August 21, 2020, the Court granted Plaintiffs' motion and ordered the Shadetree Defendants to pay sanctions in the amount of $29,000 in attorney's fees Plaintiffs incurred while seeking compliance with discovery demands. Dkt. No. 103. After the Shadetree Defendants failed to pay sanctions, Plaintiffs filed its first Rule 37(b)(2)(A) Motion for Further Sanctions. Dkt. No. 132. On February 5, 2021, the Court ordered the Shadetree Defendants to pay $29,000 in attorney's fees pursuant to its August 21, 2020 Order by February 21, 2021 or they would face default judgment. Dkt. No. 139. Plaintiffs filed the instant Motion for Further Sanctions seeking entry of default judgment pursuant to Rule 37 after the Shadetree Defendants failed to comply with the Court's sanctions orders.[1]

II. FACTS

Upon full review of the pleadings, the undersigned finds Plaintiffs have established the following facts. Plaintiff Binta P. Mamadou (“Mamadou”) is a resident of New York, New York and of Oxon Hill, Maryland and is a licensed and practicing attorney of West African descent, specifically of the Republic of the Niger. Compl. ¶11. Plaintiff Vision Braid Bar, LLC (“VBB”) is a Maryland limited liability company registered with the State of Maryland, with its principal office in Gaithersburg, Maryland. Id. ¶ 12. Defendant Stanley Kyungjin Cho (“Cho”) is a resident of Fairfax, Virginia who, beginning in or around September 2016, worked for Shadetree Management LLC as a property manager of the Woodberry Square Shopping Center (“Woodberry Square”) located in Temple Hills, Maryland. Id. ¶ 13. Defendant Ellen Jung Mee Kim, a resident of Fairfax, Virginia, is purportedly married to Cho and is a member and owner of Shadetree Management LLC (“Shadetree”). Id. ¶ 14. Defendant Shadetree Management is a Virginia limited liability company registered with the Virginia State Corporation Commission, with its principal office in Oak Hill, Virginia. Id. ¶15. Shadetree has acted as the property manager for Woodberry Square. Id. The Bae Defendants' Motion for Summary Judgment was granted, and they were dismissed from this civil action. Dkt. No. 125.

*2 Mamadou reached agreement to purchase Bosstudios Glam Salon from its owner, Chrystal S. Williams. Compl. ¶ 1. The salon was located at Woodberry Square, a shopping center managed or controlled by Defendants. Id. Williams entered into her lease agreement in January 2015, prior to Cho becoming property manager of Woodberry Square on behalf of Shadetree in September 2016. See Decl. of Chrystal Williams at ¶¶ 3-5. On or about late November 2018, Williams notified Cho that Mamadou was interested in assignment of Williams' lease. Id. ¶30. Cho emailed Williams a lease application to provide to Mamadou and stated he could approve the assignment if Mamadou had “good credit and financial condition.” Id. ¶34. Throughout several days in 2018, Cho and Mamadou exchanged emails about documentation required to be submitted with the application. Id. ¶¶36-41. Mamadou, who planned to travel home to Niger for the holidays, informed Cho that she would be out of the country and that she would submit the required financial documents upon her return. Id. ¶41. It was around this time that Cho surmised that Mamadou was of West African descent, and his receptiveness to her tenancy declined. Id. In or about late January 2019, Mamadou emailed Cho several times about continuing the application process, but he did not respond. Id. ¶¶42-46. After speaking with Cho, Williams indicated in an email to Mamadou that Cho would send the lease once he received Mamadou's application. ¶47. Mamadou mailed to Cho's Virginia address a packet of materials—a copy of her driver's license, W-2 for 2017, credit report, and 2016 tax return, among other documents—that indicated she had stable employment, significant disposable income and “Excellent” credit. Id. ¶¶ 46-48. When the package did not arrive by February 4, 2019 as Mamadou indicated it would, Cho emailed her and Williams, “As of today, no mail. How can I trust [Mamadou]? No more attempts.” Id. ¶49. Mamadou responded with a photo of the label that indicated the package was mailed February 1, 2019 and with tracking information. Id. She called Cho twice to no avail and emailed him an update on the arrival based on the tracking information that was available. Id. Upon reviewing Mamadou's application, including her driver's license, Cho reaffirmed his earlier conclusion that Mamadou was of West African descent. Id. ¶ 48. Cho did not respond to Mamadou's emails and thereafter refused to communicate with her or negotiate with her for assignment of the lease. Id. ¶ 50.

On or about March 27, 2019, Williams met with Cho in person at the salon and asked whether Mamadou was being denied the lease assignment and, if so, why, since Mamadou had excellent credit and finances. Id. ¶ 52. Cho explicitly stated that Mamadou was rejected because she is West African and Defendants would not do business with West Africans. Id. See Williams Decl. at ¶10. Williams emailed Cho about his statement, and Cho never denied making it. Id. ¶ 53. See also Ex. A to Defendants' Opposition to Plaintiffs' Motion for Sanctions at 6, Dkt. No. 147-1. Williams subsequently proposed two prospective tenants, both black, to take over her lease, but both were rejected. Id. ¶ 56-57.

III. PROCEEDINGS

As a summary of the procedural history shows, the Shadetree Defendants have repeatedly failed to meet their discovery obligations despite warnings from the Court that it would consider the sanction of default judgment if they continued to act in bad faith.

Plaintiffs filed their Motion to Compel [Dkt. No. 43] on June 29, 2020 after the Shadetree Defendants failed to turn over documents responsive to Plaintiffs' production requests, admitted that Cho, even after learning of the lawsuit, deleted emails, and failed to search for electronic versions of the documents. Mem. in Supp. of Pl.'s Rule 37(b)(2(A)(vi) Mot. for Further Sanctions at 8. Despite having managed the Bae Defendants' shopping center since September 2016, the Shadetree Defendants did not produce a single email, text message or any other written communication between the two, and they did not serve any objections to Plaintiffs' request for production of documents. Id. at 6-7. In a June 25, 2020 email to Defendant Cho following a meet-and-confer with Plaintiffs' counsel, defense counsel Jason J. Huh wrote, “I just got off the phone with Plaintiff's counsel who were very frustrated with our responses to discovery. Some of their complaints, we can defend; others, we could not. I believe they will file a motion to compel and ask for attorneys fees.” Dkt. No. 112-1. Following a conference call with the undersigned on July 22, 2020, the Court held the motion in abeyance and ordered the Shadetree Defendants to search all devices for and produce all documents responsive to Plaintiffs' requests. Dkt. No. 48., Mem. in Supp. of Pl.'s Rule 37(b)(2(A)(vi) Mot. for Further Sanctions at 11. The Court warned Defendants that should they fail to comply, it would rule on Plaintiffs' motion to compel. Id.

Defendants ostensibly complied with the July 22, 2020 order, delivering more than 500 documents they initially denied possessing, but the production lacked email exchanges between Cho and the Bae Defendants that were referenced in provided text messages. Id. After Plaintiffs informed the Court of the missing emails, the Court held a second hearing on July 29, 2020 on Plaintiffs' Motion to Compel and ordered the Shadetree Defendants to describe the disposition of any responsive documents no longer in their possession and to file a notice to the Court affirming that they had “provided everything requested by Plaintiffs.” Id. at 12, Dkt. No. 64. The Court warned that “failure to do so may result in sanctions.” Id. On July 30, 2020, Defendants filed a notice representing that they had provided everything Plaintiffs requested but produced another 100 documents the following day. Mem. in Supp. of Pl.'s Rule 37(b)(2(A)(vi) Mot. for Further Sanctions at 12.

*3 Plaintiffs notified the Court of continuing deficiencies in the Shadetree Defendants' production, noting, for example, that Defendants failed to describe the disposition of documents they no longer possessed, in violation of the Court's July 29, 2020 order. Id. On August 7, 2020, the Court again ordered the Shadetree Defendants to describe the disposition of any responsive documents no longer in their possession by August 11, 2020. Id. at 13. The Court warned that if the Shadetree Defendants failed to comply, the Court would grant Plaintiffs' motion to compel and for costs in its entirety. Dkt. No. 73.

On August 19, 2020, Plaintiffs notified the Court that, among other things, the Shadetree Defendants failed to account for the destruction of emails from a secondary account, the existence of which Cho failed to disclose until his deposition. Mem. in Supp. of Pl.'s Rule 37(b)(2(A)(vi) Mot. for Further Sanctions at 14. At a hearing on August 21, 2020, Defendants admitted to deleting documents after becoming aware of litigation. Id. at 15. After having warned the Shadetree Defendants on three prior occasions about the consequences of their discovery production deficiencies, the Court on August 21, 2020 awarded Plaintiffs $29,000 in attorney's fees as sanction against the Shadetree Defendants. Id. at 15. The Court also granted Plaintiffs' request for an adverse inference as sanction for Shadetree Defendants spoliating documents. Id.

On January 22, 2021, Plaintiffs filed a motion for further sanctions after its nine previous attempts to obtain compliance with the Court's sanction order failed. Id. at 16. The District Judge affirmed the attorney's fees sanction against Defendants on January 26, 2021. Dkt. No. 135.

On February 5, 2021, after hearing oral argument, the Court ordered the Defendants to pay the original $29,000 sanction by February 12, 2021, and warned Defendants if they failed to comply with the Court's orders and continue to conduct discovery in bad faith, the undersigned would recommend that the District Judge enter a Default Judgment in favor of Plaintiffs. Mem. in Supp. of Pl.'s Rule 37(b)(2(A)(vi) Mot. for Further Sanctions at 17; Dkt. No. 139. A week later, the Court ordered Defendants to pay by February 19, 2021 the additional $14,985 in attorney's fees Plaintiffs incurred in an effort to secure compliance with the original sanction order. Dkt. No. 143.

With Defendants having failed to pay the original sanction by February 12, 2021, the Court on February 26 held oral argument on Plaintiffs' second motion for further sanctions, this time seeking default judgment. Dkt. No. 150.

IV. LEGAL STANDARD

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). 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).

V. DISCUSSION

Applying the four factors outlined in Anderson, the undersigned Magistrate Judge finds that default judgment pursuant to Rule 37(b)(2)(A)(vi) is an appropriate sanction in this case.

A. Bad Faith

*4 The undersigned finds Defendants have acted in bad faith by refusing to comply with multiple court orders. “Bad faith is clearly evidenced by the repeated and flagrant disregard for the binding orders of the magistrate judge and ... counsel's misrepresentation of material facts concerning [the party's] noncompliance with these orders.” Zhou Jie Plant v. Merrifield Town Ctr. Ltd. P'ship, 711 F. Supp. 2d 576, 587 (E.D. Va. 2010). In the Fourth Circuit, bad faith includes willful conduct, where the party “clearly should have understood his duty to the court” but “deliberately disregarded” it nonetheless. Axiom Res. Mgmt. v. Alfotech Sols., LLC, Civil Action No. 1:10cv1011 (LMB/JFA), 2011 U.S. Dist. LEXIS 69450, at *19 (E.D. Va. June 3, 2011)(citing Rabb v. Amatex Corp., 769 F.2d 996, 1000 (4th Cir. 1985)).

Here, the Court held Plaintiffs' Motion to Compel in abeyance for several weeks to give Defendants a chance to comply with discovery requests. The Court heard argument on four separate occasions and issued four separate orders directing Defendants to search for and produce responsive documents or to account for the disposition of documents. During discovery, Defendants were compelled to produce documents they initially denied existed, withheld the existence of a secondary work-related email account, admitted to spoliating documents, and failed to account for the disposition of documents. Mem. in Supp. of Pl.'s Rule 37(b)(2(A)(vi) Mot. for Further Sanctions at 8-13. On July 30, 2020, defense counsel misrepresented material facts to the Court about Defendants' compliance with its order when he filed a notice attesting to having provided everything Plaintiffs requested, but then produced another 100 documents the following day. Id. at 12. Furthermore, in a June 25, 2020 email to Defendant Cho, defense counsel Jason J. Huh wrote, “I just got off the phone with Plaintiff's counsel who were very frustrated with our responses to discovery. Some of their complaints, we can defend; others, we could not. I believe they will file a motion to compel and ask for attorneys fees.” Dkt. No. 112-1. Defendants knew that their conduct was indefensible, and yet forced Plaintiffs to file their motion to compel, requiring this Court to conduct four separate hearings. Defendants knew of their discovery obligations and disregarded them. They were issued clear warnings by the Court and willfully disobeyed them. They were ordered to pay Plaintiffs' attorneys fees and did not do so. Mem. in Supp. of Pl.'s Rule 37(b)(2(A)(vi) Mot. for Further Sanctions at 19. Such willful disregard for the discovery process and for the Court's orders amounts to bad faith.

B. Prejudice to the Plaintiff

The undersigned finds that Defendants' failure to preserve and produce responsive documents has caused prejudice to the Plaintiffs by denying them the opportunity to use those documents to support the elements of their claims in the case. Defendants admitted to deleting emails even after learning of Plaintiffs' claims. Mem. in Supp. of Pl.'s Rule 37(b)(2(A)(vi) Mot. for Further Sanctions at 21. The absence of such documents may have played a role in the dismissal of the Bae Defendants from the case. In that regard, the Court ruled that Plaintiffs were unable to provide evidence demonstrating that the Bae Defendants directed Cho's conduct at Woodberry Square. Id. at 22. Additionally, Plaintiffs accumulated $29,000 in attorney's fees seeking discovery from Defendants who knew their failure to fulfill their discovery obligations was indefensible and another nearly $15,000 in attorney's fees seeking compliance with the original sanctions order. The attorney time and effort devoted to these endeavors resulted in undue “expense, annoyance, and delay,” the kind of harms courts have considered prejudicial to aggrieved parties. Anderson, 155 F.3d at 505.

C. Need for Deterrence and Effectiveness of Less Drastic Sanctions

*5 The undersigned finds that the need for deterrence weighs in favor of default judgment and, because less drastic sanctions have not proven to be effective thus far, it is reasonable to conclude that those lesser sanctions would not result in Defendants' fulfillment of their obligations in the future. “Entrance of default judgment against the defendants now is ... an unmistakable message to [defendants] and others that the judicial system will not tolerate repeated misconduct never wholly remedied in the future.” Mut. Fed. Sav. & Loan Ass'n v. Richards & Assocs., 872 F.2d 88, 94 (4th Cir. 1989). Default is appropriate when lesser sanctions failed to deter misconduct. Anderson, 155 F.3d at 505 (holding that default was warranted both as a deterrent and as a last-resort sanction following the Defendants' continued disregard of prior warnings).

Here, the Court warned Defendants on three occasions to comply with discovery demands or face sanctions. Dkt. Nos. 48, 64, 73. Following the Court's July 22, 2020 Order, the Shadetree Defendants failed to produce email exchanges between Cho and the Bae Defendants that were referenced in provided text messages. Defendants failed to describe the disposition of documents they no longer possessed, in violation of the Court's July 29, 2020 order. They did not comply with the Court's August 7, 2020 Order when they failed to account for the destruction of emails from a secondary account, the existence of which Cho failed to disclose until his deposition. Id. at 14. At a hearing on August 21, 2020, Defendants admitted to deleting documents after becoming aware of litigation. Defendants repeatedly disregarded the Court's orders, resulting in the imposition of $29,000 in attorney's fees. Dkt. No. 103. The Court also admonished Defendants to comply with the Court's August 21, 2020 sanctions Order, noting orally at the February 12, 2021 hearing and in the resulting written order that “should they violate this or any previous order in this matter or continue to conduct discovery in bad faith, the undersigned will recommend that the District Judge enter a Default Judgment in favor of Plaintiffs.” Dkt. No. 139 at 2. Defendants have not paid the sanction. Defendants continued to violate Court orders after the Court granted an adverse inference instruction as an additional sanction. Defendants were clearly and adequately warned, and yet prior admonitions by the Court did not deter Defendants' discovery misconduct. The repeated violations of Court orders constitute behavior that warrants deterrence. The warnings about default judgment did not compel Defendants to pay the sanction. Accordingly, Defendants' repeated flouting of this Court's orders is behavior that warrants entry of default judgment as a deterrent and because less drastic sanctions would not be appropriate.

VI. EVALUATION OF PLAINTIFFS' COMPLAINT

Before entering default judgment, the undersigned Magistrate Judge must evaluate the Complaint to ensure that it states a legitimate cause of action. See Anderson, 155 F.3d at 506 (holding that the district court erred in granting default judgment to the plaintiff where the plaintiff failed to state a valid claim). Fed. R. Civ. P. 37(b)(2)(A)(i) permits the court to consider facts sought in discovery or “other designated facts” as established against a party violating a discovery order. See FED. R. CIV. P. 37(B)(2)(A)(I); Trs. of the Heating v. Clean Air Mech., Inc., No. JKB-17-3690, 2019 U.S. Dist. LEXIS 83200, at *13 (D. Md. May 15, 2019). Based upon Defendants' discovery failures as outlined, the Court considers the facts in the Complaint as established against the Defendants. Default does not, however, constitute an admission of the adversary's conclusions of law. Ryan v. Homecomings Fin. Network, 253 F.3d 778, 780 (4th Cir. 2001). Instead, the court must “determine whether the well-pleaded allegations in [the plaintiff's] complaint support the relief sought in [the] action.” Id.

*6 Thus, in issuing this Report and Recommendation, the undersigned Magistrate Judge must evaluate the Plaintiffs' claims against the standards of Rule 12(b)(6) of the Federal Rules of Civil Procedure to ensure that the Complaint contains plausible claims upon which relief may be granted. See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (explaining the analysis for examining a Plaintiff's claims under a 12(b)(6) motion to dismiss). To meet this standard, a complaint must set forth sufficient factual matter, accepted as true, “to state a claim to relief that is plausible on its face.” Id. (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). In determining whether allegations are plausible, the reviewing court may draw on context, judicial experience, and common sense. Francis v. Giacomelli, 588 F.3d 186, 193 (4th Cir. 2009) (citing Iqbal, 556 U.S. at 679).

A. Jurisdiction and Venue

This Court has subject matter jurisdiction over this action pursuant to 28 U.S.C. § 1331 because this case involves federal questions arising under 42 U.S.C. §§ 1981 and 1982, federal laws pertaining to civil rights. Compl. ¶ 6. The Court has supplemental jurisdiction over the state common law claims pursuant to 28 U.S.C. § 1367.

The Court may exercise personal jurisdiction over Defendants Cho and Kim because they are residents of and domiciled in the Commonwealth of Virginia. The Court has personal jurisdiction over Defendant Shadetree Management LLC because it is a Virginia limited liability company registered with the Virginia State Corporation Commission, with its principal office in Oak Hill, Virginia. Venue is proper in this Court, pursuant to 20 U.S.C. § 1391(b)(2), because a substantial part of the events or omissions giving rise to the claims occurred in this judicial district. Compl. ¶9

B. Service of Process

Federal Rule of Civil Procedure 4(e) governs service upon individuals within a judicial district. Rule 4(d) also allows a plaintiff to notify a defendant subject to service under Rule 4(e) “that an action has been commenced and request that the defendant waive service of a summons.” Fed. R. Civ. P. 4(d)(1). On February 12, 2020, Plaintiffs served Defendants Shadetree, Cho, and Kim with notices of the Summons and Complaint, and requests for waiver of service, which were returned executed on March 20, 2020. Dkt. Nos. 14, 15, and 16. Therefore, the undersigned finds that service of process was proper pursuant to Rule 4(d).

C. Liability

Plaintiffs assert five claims in their Complaint: Count I (Discrimination in Real Estate Transactions Based on Race, Ethnicity or Ancestry); Count II (Discrimination in the Formation of Contracts Based on Race, Ethnicity or Ancestry); Count III (Discrimination on the Basis of Race, Color, or National Origin in violation of Maryland state code and Prince George's County Ordinance); Count IV (Intentional Interference with Prospective Economic Relationship under Virginia Common Law); and Count V (Intentional Interference with Prospective Economic Relationship under Maryland Common Law). Because Plaintiffs seek to recover the same relief on each count, it is not necessary to address every claim. The following recommendations are limited to the discrimination counts in violation of federal law because they are the central allegations in this matter, and the facts alleged support a finding of liability.

1. Counts One and Two—Violation of 42 U.S.C. § 1982 and § 1981: Discrimination in Real Estate Transactions and Discrimination in the Formation of Contracts Based on Race, Ethnicity, or Ancestry

Section 1981 of Title 42 holds that “All persons within the jurisdiction of the United States shall have the same right in every State and Territory to make and enforce contracts, to sue, be parties, give evidence, and to the full and equal benefit of all laws and proceedings for the security of persons and property as is enjoyed by white citizens....” 42 U.S.C. § 1981. Section 1982 further secures the right of nonwhites to hold property: “All citizens of the United States shall have the same right, in every State and Territory, as is enjoyed by white citizens thereof to inherit, purchase, lease, sell, hold, and convey real and personal property.” 42 U.S.C. § 1982. Because of the historic interrelationship of §§ 1981 and 1982, courts have consistently construed these statutes together. Saunders v. Gen. Servs. Corp., 659 F. Supp. 1042, 1063 (E.D. Va. 1987). Thus, the undersigned evaluates Counts I and II together.

*7 To succeed on a § 1981 or § 1982 claim, a plaintiff must ultimately establish both discriminatory intent on the basis of race, and that the discrimination interfered with a contractual interest or legitimate property right. Hill v. John Foster Homes, Inc., No. 3:10-CV-209, 2010 U.S. Dist. LEXIS 67511, at *9 (E.D. Va. July 7, 2010) (citing Denny v. Elizabeth Arden Salons. Inc., 456 F.3d 427, 434 (4th Cir. 2006)). A plaintiff may establish liability by demonstrating direct or circumstantial evidence of race discrimination or by relying on the burden-shifting scheme set forth in McDonnell Douglas Corp. v. Green, 411 U.S. 792, 93 S. Ct. 1817, 36 L. Ed. 2d 668 (1973). See Satterfield v. City of Chesapeake, No. 2:16cv665, 2017 U.S. Dist. LEXIS 224885, at *29 (E.D. Va. Aug. 31, 2017). Because Plaintiffs offer direct and circumstantial evidence of race-based discrimination, the Court will not apply the burden-shifting framework of McDonnell Douglas.

To establish a prima facie case of discrimination, Plaintiffs must establish that: (1) Mamadou is a member of a protected class; (2) she sought to enter into a contractual relationship with Defendants; (3) she met the Defendants' ordinary requirements to pay for and be granted a lease ordinarily provided by defendants to other similarly situated customers; and (4) under § 1981, she was denied the opportunity to contract for goods or services that was otherwise afforded to persons outside the protected class, or under § 1982, she was denied the opportunity to lease property. See Williams v. Staples, Inc., 372 F.3d 662, 667 (4th Cir. 2004); Jones v. K&R Nutrition, Inc., No. 1:09CV413, 2010 U.S. Dist. LEXIS 92460, at *14 (M.D.N.C. Aug. 4, 2010).

Here, Plaintiffs allege enough facts to show Defendants impeded Plaintiffs' rights to enter into a contract to lease the salon at the property Defendants managed because of Mamadou's race. First, under the Williams framework for establishing a prima facie case of discrimination, Mamadou is a U.S. citizen of West African ancestry. Compl. ¶65. Thus, Mamadou is a member of a protected class. See Guessous v. Fairview Prop. Invs., LLC, 828 F.3d 208, 224-25 (4th Cir. 2016)(Although § 1981 applies exclusively to racial discrimination, race encompasses any class of people subjected to intentional discrimination solely because of their ancestry or ethnic characteristics). See also Nnadozie v. Genesis Healthcare Corp., 730 F. App'x 151, 157 (4th Cir. 2018) (“[W]ith evidence of some nexus between ethnic or ancestral characteristics and ... discrimination, there is no reason why a plaintiff cannot bring a Section 1981 claim on the basis of being ‘African’ or ‘Nigerian.’ ”).

Second, Plaintiffs sought to enter into a contract with Defendants to lease salon space at a shopping center the Defendants managed. Third, Plaintiffs met the Defendants' ordinary requirements to pay for and be granted a lease ordinarily provided by Defendants to other similarly situated customers. Prior to learning about Mamadou's ancestry, Cho indicated that he would approve the assignment if Mamadou had “good credit and financial condition.” Compl. ¶34. As part of her application for lease assignment, Mamadou mailed to Cho her 2017 W-2, credit report, 2016 tax return and other documents that indicated she had stable employment, significant disposable income, and “Excellent” credit. Id. ¶¶ 46-48. Thus, Mamadou met the defendants' ordinary requirements.

Finally, Plaintiffs were denied the opportunity to contract for goods or services that was otherwise afforded to persons outside the protected class, in violation of § 1981. Mamadou was also denied the opportunity to lease property, in violation of § 1982. Although Cho stopped communicating with Mamadou, he reportedly told Williams that Mamadou's application for lease assignment was rejected because she is West African and Defendants would not do business with West Africans. Williams Decl. at ¶10. Williams emailed Cho about his statement, and Cho never denied making it. Id. ¶ 53. Thus, if Mamadou was of a different ancestry, one outside Mamadou's protected class, Cho would have afforded Plaintiffs the opportunity to enter into a contract to lease the property.

*8 Plaintiffs provide direct and circumstantial evidence of Cho's intention to discriminate on the basis of race or ancestry. Around the time that Mamadou, who planned to travel home to Niger for the holidays, informed Cho that she would submit required financial documents when she returned, Cho surmised that Mamadou was of West African descent and his receptiveness to her tenancy declined. Compl. ¶ 41. Upon reviewing Mamadou's application, including her driver's license, Cho reaffirmed his earlier conclusion that Mamadou was of West African descent. Id. ¶ 48. Despite receiving an application that showed Plaintiffs' credit and financial standing were excellent, Cho refused to communicate with Mamadou or negotiate with her for assignment of the lease. Id. ¶ 50.

Cho told Williams that he denied Mamadou's application for lease assignment because Defendants don't work with West Africans. Williams Decl. at ¶10. As a result of his refusal to work with West Africans, Cho denied the lease assignment on the basis of Mamadou's race or ancestry, thereby unlawfully interfering with Mamadou's legitimate property right. Therefore, the undersigned recommends default judgment as to Counts I and II of the Complaint be granted.

VII. RECOMMENDATION

For the reasons set forth above, the undersigned Magistrate Judge recommends that Plaintiffs' Motion for Sanctions be GRANTED. The Motion should be granted as to entering default judgment as a sanction against the Shadetree Defendants on Counts I and II of the Complaint.

VIII. NOTICE

By mailing copies of this Report and Recommendation, the parties are notified that objections to this Report and Recommendation, pursuant to 28 U.S.C. § 636 and Rule 72(b) of the Federal Rules of Civil Procedure, must be filed within fourteen (14) days of service on you of this Report and Recommendation. A failure to file timely objections to this Report and Recommendation waives appellate review of the substance of the Report and Recommendation and waives appellate review of a judgment based on this Report and Recommendation.

The Clerk is directed to send a copy of this Report and Recommendation to all counsel of record.

Alexandria, Virginia

Footnotes

[1]

In their Memorandum in Support of the Motion for Further Sanctions, Plaintiffs seek a finding of liability and propose to brief damages later. Thus, the undersigned makes no recommendations regarding damages to which Plaintiffs may be entitled.

Mamadou v. Cho

Citation: 2021 WL 11443247 (E.D. Va. 2021)

Summary: The Plaintiffs alleged that the Defendants impeded their rights to enter into a contract to lease a salon at the property Defendants managed because of Mamadou's race. The court found that the Defendants had acted in bad faith by deleting emails and failing to search for electronic versions of documents, which was important to the case as it provided evidence of Mamadou's credit and financial standing. As a result, the court recommended default judgment as to Counts I and II of the Complaint.

Court: United States District Court, E.D. Virginia

Date decided: May 21, 2021

Judge: Davis, Ivan D.

BINTA M. MAMADOU, et al., Plaintiffs, v. STANLEY K. CHO, et al., Defendants Civil Action No. 1:20-cv-00146 (AJT/IDD) United States District Court, E.D. Virginia Filed May 21, 2021 Davis, Ivan D., United States Magistrate Judge REPORT AND RECOMMENDATION *1 This matter is before the Court on Plaintiffs' Binta M. Mamadou and Visions Braid Bar, LLC (collectively, “Plaintiffs”) Rule 37(b)(A)(vi) Motion for Further Sanctions (“Motion”). This Motion has been fully briefed, and argument on the Motion was held February 26, 2021. At the conclusion of that hearing, the undersigned Magistrate Judge took the matter under advisement to issue this Report and Recommendation. Upon consideration of the Complaint, Motion for Further Sanctions and the relevant portions of the record, the undersigned recommends that Plaintiffs' Motion for Further Sanctions be GRANTED. I. INTRODUCTION On February 11, 2020, Plaintiffs filed a Complaint against Stanley Kyungjin Cho, Ellen Jung Mee Kim, Shadetree Management LLC, (collectively, the “Shadetree Defendants” or “Defendants”), Young Woo Bae, John Doe Members of Bae's Woodberry, LLC and Bae's Woodberry, LLC (collectively, the “Bae Defendants”), alleging counts of discrimination in real estate transactions and contract formation in violation of local ordinances and federal laws and intentional interference with prospective economic relationship under common law. Compl. ¶¶ 4a-4d. During the course of discovery, the Court held four hearings on Plaintiffs' Motion to Compel Discovery Responses and Request for Costs [Dkt. No. 43] and issued four orders requiring the Shadetree Defendants to comply with discovery demands. Mem. in Supp. of Pl.'s Rule 37(b)(2(A)(vi) Mot. for Further Sanctions at 2; See also Dkt. Nos. 48, 64, 73 and 103. At the fourth hearing on August 21, 2020, the Court granted Plaintiffs' motion and ordered the Shadetree Defendants to pay sanctions in the amount of $29,000 in attorney's fees Plaintiffs incurred while seeking compliance with discovery demands. Dkt. No. 103. After the Shadetree Defendants failed to pay sanctions, Plaintiffs filed its first Rule 37(b)(2)(A) Motion for Further Sanctions. Dkt. No. 132. On February 5, 2021, the Court ordered the Shadetree Defendants to pay $29,000 in attorney's fees pursuant to its August 21, 2020 Order by February 21, 2021 or they would face default judgment. Dkt. No. 139. Plaintiffs filed the instant Motion for Further Sanctions seeking entry of default judgment pursuant to Rule 37 after the Shadetree Defendants failed to comply with the Court's sanctions orders.[1] II. FACTS Upon full review of the pleadings, the undersigned finds Plaintiffs have established the following facts. Plaintiff Binta P. Mamadou (“Mamadou”) is a resident of New York, New York and of Oxon Hill, Maryland and is a licensed and practicing attorney of West African descent, specifically of the Republic of the Niger. Compl. ¶11. Plaintiff Vision Braid Bar, LLC (“VBB”) is a Maryland limited liability company registered with the State of Maryland, with its principal office in Gaithersburg, Maryland. Id. ¶ 12. Defendant Stanley Kyungjin Cho (“Cho”) is a resident of Fairfax, Virginia who, beginning in or around September 2016, worked for Shadetree Management LLC as a property manager of the Woodberry Square Shopping Center (“Woodberry Square”) located in Temple Hills, Maryland. Id. ¶ 13. Defendant Ellen Jung Mee Kim, a resident of Fairfax, Virginia, is purportedly married to Cho and is a member and owner of Shadetree Management LLC (“Shadetree”). Id. ¶ 14. Defendant Shadetree Management is a Virginia limited liability company registered with the Virginia State Corporation Commission, with its principal office in Oak Hill, Virginia. Id. ¶15. Shadetree has acted as the property manager for Woodberry Square. Id. The Bae Defendants' Motion for Summary Judgment was granted, and they were dismissed from this civil action. Dkt. No. 125. *2 Mamadou reached agreement to purchase Bosstudios Glam Salon from its owner, Chrystal S. Williams. Compl. ¶ 1. The salon was located at Woodberry Square, a shopping center managed or controlled by Defendants. Id. Williams entered into her lease agreement in January 2015, prior to Cho becoming property manager of Woodberry Square on behalf of Shadetree in September 2016. See Decl. of Chrystal Williams at ¶¶ 3-5. On or about late November 2018, Williams notified Cho that Mamadou was interested in assignment of Williams' lease. Id. ¶30. Cho emailed Williams a lease application to provide to Mamadou and stated he could approve the assignment if Mamadou had “good credit and financial condition.” Id. ¶34. Throughout several days in 2018, Cho and Mamadou exchanged emails about documentation required to be submitted with the application. Id. ¶¶36-41. Mamadou, who planned to travel home to Niger for the holidays, informed Cho that she would be out of the country and that she would submit the required financial documents upon her return. Id. ¶41. It was around this time that Cho surmised that Mamadou was of West African descent, and his receptiveness to her tenancy declined. Id. In or about late January 2019, Mamadou emailed Cho several times about continuing the application process, but he did not respond. Id. ¶¶42-46. After speaking with Cho, Williams indicated in an email to Mamadou that Cho would send the lease once he received Mamadou's application. ¶47. Mamadou mailed to Cho's Virginia address a packet of materials—a copy of her driver's license, W-2 for 2017, credit report, and 2016 tax return, among other documents—that indicated she had stable employment, significant disposable income and “Excellent” credit. Id. ¶¶ 46-48. When the package did not arrive by February 4, 2019 as Mamadou indicated it would, Cho emailed her and Williams, “As of today, no mail. How can I trust [Mamadou]? No more attempts.” Id. ¶49. Mamadou responded with a photo of the label that indicated the package was mailed February 1, 2019 and with tracking information. Id. She called Cho twice to no avail and emailed him an update on the arrival based on the tracking information that was available. Id. Upon reviewing Mamadou's application, including her driver's license, Cho reaffirmed his earlier conclusion that Mamadou was of West African descent. Id. ¶ 48. Cho did not respond to Mamadou's emails and thereafter refused to communicate with her or negotiate with her for assignment of the lease. Id. ¶ 50. On or about March 27, 2019, Williams met with Cho in person at the salon and asked whether Mamadou was being denied the lease assignment and, if so, why, since Mamadou had excellent credit and finances. Id. ¶ 52. Cho explicitly stated that Mamadou was rejected because she is West African and Defendants would not do business with West Africans. Id. See Williams Decl. at ¶10. Williams emailed Cho about his statement, and Cho never denied making it. Id. ¶ 53. See also Ex. A to Defendants' Opposition to Plaintiffs' Motion for Sanctions at 6, Dkt. No. 147-1. Williams subsequently proposed two prospective tenants, both black, to take over her lease, but both were rejected. Id. ¶ 56-57. III. PROCEEDINGS As a summary of the procedural history shows, the Shadetree Defendants have repeatedly failed to meet their discovery obligations despite warnings from the Court that it would consider the sanction of default judgment if they continued to act in bad faith. Plaintiffs filed their Motion to Compel [Dkt. No. 43] on June 29, 2020 after the Shadetree Defendants failed to turn over documents responsive to Plaintiffs' production requests, admitted that Cho, even after learning of the lawsuit, deleted emails, and failed to search for electronic versions of the documents. Mem. in Supp. of Pl.'s Rule 37(b)(2(A)(vi) Mot. for Further Sanctions at 8. Despite having managed the Bae Defendants' shopping center since September 2016, the Shadetree Defendants did not produce a single email, text message or any other written communication between the two, and they did not serve any objections to Plaintiffs' request for production of documents. Id. at 6-7. In a June 25, 2020 email to Defendant Cho following a meet-and-confer with Plaintiffs' counsel, defense counsel Jason J. Huh wrote, “I just got off the phone with Plaintiff's counsel who were very frustrated with our responses to discovery. Some of their complaints, we can defend; others, we could not. I believe they will file a motion to compel and ask for attorneys fees.” Dkt. No. 112-1. Following a conference call with the undersigned on July 22, 2020, the Court held the motion in abeyance and ordered the Shadetree Defendants to search all devices for and produce all documents responsive to Plaintiffs' requests. Dkt. No. 48., Mem. in Supp. of Pl.'s Rule 37(b)(2(A)(vi) Mot. for Further Sanctions at 11. The Court warned Defendants that should they fail to comply, it would rule on Plaintiffs' motion to compel. Id. Defendants ostensibly complied with the July 22, 2020 order, delivering more than 500 documents they initially denied possessing, but the production lacked email exchanges between Cho and the Bae Defendants that were referenced in provided text messages. Id. After Plaintiffs informed the Court of the missing emails, the Court held a second hearing on July 29, 2020 on Plaintiffs' Motion to Compel and ordered the Shadetree Defendants to describe the disposition of any responsive documents no longer in their possession and to file a notice to the Court affirming that they had “provided everything requested by Plaintiffs.” Id. at 12, Dkt. No. 64. The Court warned that “failure to do so may result in sanctions.” Id. On July 30, 2020, Defendants filed a notice representing that they had provided everything Plaintiffs requested but produced another 100 documents the following day. Mem. in Supp. of Pl.'s Rule 37(b)(2(A)(vi) Mot. for Further Sanctions at 12. *3 Plaintiffs notified the Court of continuing deficiencies in the Shadetree Defendants' production, noting, for example, that Defendants failed to describe the disposition of documents they no longer possessed, in violation of the Court's July 29, 2020 order. Id. On August 7, 2020, the Court again ordered the Shadetree Defendants to describe the disposition of any responsive documents no longer in their possession by August 11, 2020. Id. at 13. The Court warned that if the Shadetree Defendants failed to comply, the Court would grant Plaintiffs' motion to compel and for costs in its entirety. Dkt. No. 73. On August 19, 2020, Plaintiffs notified the Court that, among other things, the Shadetree Defendants failed to account for the destruction of emails from a secondary account, the existence of which Cho failed to disclose until his deposition. Mem. in Supp. of Pl.'s Rule 37(b)(2(A)(vi) Mot. for Further Sanctions at 14. At a hearing on August 21, 2020, Defendants admitted to deleting documents after becoming aware of litigation. Id. at 15. After having warned the Shadetree Defendants on three prior occasions about the consequences of their discovery production deficiencies, the Court on August 21, 2020 awarded Plaintiffs $29,000 in attorney's fees as sanction against the Shadetree Defendants. Id. at 15. The Court also granted Plaintiffs' request for an adverse inference as sanction for Shadetree Defendants spoliating documents. Id. On January 22, 2021, Plaintiffs filed a motion for further sanctions after its nine previous attempts to obtain compliance with the Court's sanction order failed. Id. at 16. The District Judge affirmed the attorney's fees sanction against Defendants on January 26, 2021. Dkt. No. 135. On February 5, 2021, after hearing oral argument, the Court ordered the Defendants to pay the original $29,000 sanction by February 12, 2021, and warned Defendants if they failed to comply with the Court's orders and continue to conduct discovery in bad faith, the undersigned would recommend that the District Judge enter a Default Judgment in favor of Plaintiffs. Mem. in Supp. of Pl.'s Rule 37(b)(2(A)(vi) Mot. for Further Sanctions at 17; Dkt. No. 139. A week later, the Court ordered Defendants to pay by February 19, 2021 the additional $14,985 in attorney's fees Plaintiffs incurred in an effort to secure compliance with the original sanction order. Dkt. No. 143. With Defendants having failed to pay the original sanction by February 12, 2021, the Court on February 26 held oral argument on Plaintiffs' second motion for further sanctions, this time seeking default judgment. Dkt. No. 150. IV. LEGAL STANDARD 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). 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). V. DISCUSSION Applying the four factors outlined in Anderson, the undersigned Magistrate Judge finds that default judgment pursuant to Rule 37(b)(2)(A)(vi) is an appropriate sanction in this case. A. Bad Faith *4 The undersigned finds Defendants have acted in bad faith by refusing to comply with multiple court orders. “Bad faith is clearly evidenced by the repeated and flagrant disregard for the binding orders of the magistrate judge and ... counsel's misrepresentation of material facts concerning [the party's] noncompliance with these orders.” Zhou Jie Plant v. Merrifield Town Ctr. Ltd. P'ship, 711 F. Supp. 2d 576, 587 (E.D. Va. 2010). In the Fourth Circuit, bad faith includes willful conduct, where the party “clearly should have understood his duty to the court” but “deliberately disregarded” it nonetheless. Axiom Res. Mgmt. v. Alfotech Sols., LLC, Civil Action No. 1:10cv1011 (LMB/JFA), 2011 U.S. Dist. LEXIS 69450, at *19 (E.D. Va. June 3, 2011)(citing Rabb v. Amatex Corp., 769 F.2d 996, 1000 (4th Cir. 1985)). Here, the Court held Plaintiffs' Motion to Compel in abeyance for several weeks to give Defendants a chance to comply with discovery requests. The Court heard argument on four separate occasions and issued four separate orders directing Defendants to search for and produce responsive documents or to account for the disposition of documents. During discovery, Defendants were compelled to produce documents they initially denied existed, withheld the existence of a secondary work-related email account, admitted to spoliating documents, and failed to account for the disposition of documents. Mem. in Supp. of Pl.'s Rule 37(b)(2(A)(vi) Mot. for Further Sanctions at 8-13. On July 30, 2020, defense counsel misrepresented material facts to the Court about Defendants' compliance with its order when he filed a notice attesting to having provided everything Plaintiffs requested, but then produced another 100 documents the following day. Id. at 12. Furthermore, in a June 25, 2020 email to Defendant Cho, defense counsel Jason J. Huh wrote, “I just got off the phone with Plaintiff's counsel who were very frustrated with our responses to discovery. Some of their complaints, we can defend; others, we could not. I believe they will file a motion to compel and ask for attorneys fees.” Dkt. No. 112-1. Defendants knew that their conduct was indefensible, and yet forced Plaintiffs to file their motion to compel, requiring this Court to conduct four separate hearings. Defendants knew of their discovery obligations and disregarded them. They were issued clear warnings by the Court and willfully disobeyed them. They were ordered to pay Plaintiffs' attorneys fees and did not do so. Mem. in Supp. of Pl.'s Rule 37(b)(2(A)(vi) Mot. for Further Sanctions at 19. Such willful disregard for the discovery process and for the Court's orders amounts to bad faith. B. Prejudice to the Plaintiff The undersigned finds that Defendants' failure to preserve and produce responsive documents has caused prejudice to the Plaintiffs by denying them the opportunity to use those documents to support the elements of their claims in the case. Defendants admitted to deleting emails even after learning of Plaintiffs' claims. Mem. in Supp. of Pl.'s Rule 37(b)(2(A)(vi) Mot. for Further Sanctions at 21. The absence of such documents may have played a role in the dismissal of the Bae Defendants from the case. In that regard, the Court ruled that Plaintiffs were unable to provide evidence demonstrating that the Bae Defendants directed Cho's conduct at Woodberry Square. Id. at 22. Additionally, Plaintiffs accumulated $29,000 in attorney's fees seeking discovery from Defendants who knew their failure to fulfill their discovery obligations was indefensible and another nearly $15,000 in attorney's fees seeking compliance with the original sanctions order. The attorney time and effort devoted to these endeavors resulted in undue “expense, annoyance, and delay,” the kind of harms courts have considered prejudicial to aggrieved parties. Anderson, 155 F.3d at 505. C. Need for Deterrence and Effectiveness of Less Drastic Sanctions *5 The undersigned finds that the need for deterrence weighs in favor of default judgment and, because less drastic sanctions have not proven to be effective thus far, it is reasonable to conclude that those lesser sanctions would not result in Defendants' fulfillment of their obligations in the future. “Entrance of default judgment against the defendants now is ... an unmistakable message to [defendants] and others that the judicial system will not tolerate repeated misconduct never wholly remedied in the future.” Mut. Fed. Sav. & Loan Ass'n v. Richards & Assocs., 872 F.2d 88, 94 (4th Cir. 1989). Default is appropriate when lesser sanctions failed to deter misconduct. Anderson, 155 F.3d at 505 (holding that default was warranted both as a deterrent and as a last-resort sanction following the Defendants' continued disregard of prior warnings). Here, the Court warned Defendants on three occasions to comply with discovery demands or face sanctions. Dkt. Nos. 48, 64, 73. Following the Court's July 22, 2020 Order, the Shadetree Defendants failed to produce email exchanges between Cho and the Bae Defendants that were referenced in provided text messages. Defendants failed to describe the disposition of documents they no longer possessed, in violation of the Court's July 29, 2020 order. They did not comply with the Court's August 7, 2020 Order when they failed to account for the destruction of emails from a secondary account, the existence of which Cho failed to disclose until his deposition. Id. at 14. At a hearing on August 21, 2020, Defendants admitted to deleting documents after becoming aware of litigation. Defendants repeatedly disregarded the Court's orders, resulting in the imposition of $29,000 in attorney's fees. Dkt. No. 103. The Court also admonished Defendants to comply with the Court's August 21, 2020 sanctions Order, noting orally at the February 12, 2021 hearing and in the resulting written order that “should they violate this or any previous order in this matter or continue to conduct discovery in bad faith, the undersigned will recommend that the District Judge enter a Default Judgment in favor of Plaintiffs.” Dkt. No. 139 at 2. Defendants have not paid the sanction. Defendants continued to violate Court orders after the Court granted an adverse inference instruction as an additional sanction. Defendants were clearly and adequately warned, and yet prior admonitions by the Court did not deter Defendants' discovery misconduct. The repeated violations of Court orders constitute behavior that warrants deterrence. The warnings about default judgment did not compel Defendants to pay the sanction. Accordingly, Defendants' repeated flouting of this Court's orders is behavior that warrants entry of default judgment as a deterrent and because less drastic sanctions would not be appropriate. VI. EVALUATION OF PLAINTIFFS' COMPLAINT Before entering default judgment, the undersigned Magistrate Judge must evaluate the Complaint to ensure that it states a legitimate cause of action. See Anderson, 155 F.3d at 506 (holding that the district court erred in granting default judgment to the plaintiff where the plaintiff failed to state a valid claim). Fed. R. Civ. P. 37(b)(2)(A)(i) permits the court to consider facts sought in discovery or “other designated facts” as established against a party violating a discovery order. See FED. R. CIV. P. 37(B)(2)(A)(I); Trs. of the Heating v. Clean Air Mech., Inc., No. JKB-17-3690, 2019 U.S. Dist. LEXIS 83200, at *13 (D. Md. May 15, 2019). Based upon Defendants' discovery failures as outlined, the Court considers the facts in the Complaint as established against the Defendants. Default does not, however, constitute an admission of the adversary's conclusions of law. Ryan v. Homecomings Fin. Network, 253 F.3d 778, 780 (4th Cir. 2001). Instead, the court must “determine whether the well-pleaded allegations in [the plaintiff's] complaint support the relief sought in [the] action.” Id. *6 Thus, in issuing this Report and Recommendation, the undersigned Magistrate Judge must evaluate the Plaintiffs' claims against the standards of Rule 12(b)(6) of the Federal Rules of Civil Procedure to ensure that the Complaint contains plausible claims upon which relief may be granted. See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (explaining the analysis for examining a Plaintiff's claims under a 12(b)(6) motion to dismiss). To meet this standard, a complaint must set forth sufficient factual matter, accepted as true, “to state a claim to relief that is plausible on its face.” Id. (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). In determining whether allegations are plausible, the reviewing court may draw on context, judicial experience, and common sense. Francis v. Giacomelli, 588 F.3d 186, 193 (4th Cir. 2009) (citing Iqbal, 556 U.S. at 679). A. Jurisdiction and Venue This Court has subject matter jurisdiction over this action pursuant to 28 U.S.C. § 1331 because this case involves federal questions arising under 42 U.S.C. §§ 1981 and 1982, federal laws pertaining to civil rights. Compl. ¶ 6. The Court has supplemental jurisdiction over the state common law claims pursuant to 28 U.S.C. § 1367. The Court may exercise personal jurisdiction over Defendants Cho and Kim because they are residents of and domiciled in the Commonwealth of Virginia. The Court has personal jurisdiction over Defendant Shadetree Management LLC because it is a Virginia limited liability company registered with the Virginia State Corporation Commission, with its principal office in Oak Hill, Virginia. Venue is proper in this Court, pursuant to 20 U.S.C. § 1391(b)(2), because a substantial part of the events or omissions giving rise to the claims occurred in this judicial district. Compl. ¶9 B. Service of Process Federal Rule of Civil Procedure 4(e) governs service upon individuals within a judicial district. Rule 4(d) also allows a plaintiff to notify a defendant subject to service under Rule 4(e) “that an action has been commenced and request that the defendant waive service of a summons.” Fed. R. Civ. P. 4(d)(1). On February 12, 2020, Plaintiffs served Defendants Shadetree, Cho, and Kim with notices of the Summons and Complaint, and requests for waiver of service, which were returned executed on March 20, 2020. Dkt. Nos. 14, 15, and 16. Therefore, the undersigned finds that service of process was proper pursuant to Rule 4(d). C. Liability Plaintiffs assert five claims in their Complaint: Count I (Discrimination in Real Estate Transactions Based on Race, Ethnicity or Ancestry); Count II (Discrimination in the Formation of Contracts Based on Race, Ethnicity or Ancestry); Count III (Discrimination on the Basis of Race, Color, or National Origin in violation of Maryland state code and Prince George's County Ordinance); Count IV (Intentional Interference with Prospective Economic Relationship under Virginia Common Law); and Count V (Intentional Interference with Prospective Economic Relationship under Maryland Common Law). Because Plaintiffs seek to recover the same relief on each count, it is not necessary to address every claim. The following recommendations are limited to the discrimination counts in violation of federal law because they are the central allegations in this matter, and the facts alleged support a finding of liability. 1. Counts One and Two—Violation of 42 U.S.C. § 1982 and § 1981: Discrimination in Real Estate Transactions and Discrimination in the Formation of Contracts Based on Race, Ethnicity, or Ancestry Section 1981 of Title 42 holds that “All persons within the jurisdiction of the United States shall have the same right in every State and Territory to make and enforce contracts, to sue, be parties, give evidence, and to the full and equal benefit of all laws and proceedings for the security of persons and property as is enjoyed by white citizens....” 42 U.S.C. § 1981. Section 1982 further secures the right of nonwhites to hold property: “All citizens of the United States shall have the same right, in every State and Territory, as is enjoyed by white citizens thereof to inherit, purchase, lease, sell, hold, and convey real and personal property.” 42 U.S.C. § 1982. Because of the historic interrelationship of §§ 1981 and 1982, courts have consistently construed these statutes together. Saunders v. Gen. Servs. Corp., 659 F. Supp. 1042, 1063 (E.D. Va. 1987). Thus, the undersigned evaluates Counts I and II together. *7 To succeed on a § 1981 or § 1982 claim, a plaintiff must ultimately establish both discriminatory intent on the basis of race, and that the discrimination interfered with a contractual interest or legitimate property right. Hill v. John Foster Homes, Inc., No. 3:10-CV-209, 2010 U.S. Dist. LEXIS 67511, at *9 (E.D. Va. July 7, 2010) (citing Denny v. Elizabeth Arden Salons. Inc., 456 F.3d 427, 434 (4th Cir. 2006)). A plaintiff may establish liability by demonstrating direct or circumstantial evidence of race discrimination or by relying on the burden-shifting scheme set forth in McDonnell Douglas Corp. v. Green, 411 U.S. 792, 93 S. Ct. 1817, 36 L. Ed. 2d 668 (1973). See Satterfield v. City of Chesapeake, No. 2:16cv665, 2017 U.S. Dist. LEXIS 224885, at *29 (E.D. Va. Aug. 31, 2017). Because Plaintiffs offer direct and circumstantial evidence of race-based discrimination, the Court will not apply the burden-shifting framework of McDonnell Douglas. To establish a prima facie case of discrimination, Plaintiffs must establish that: (1) Mamadou is a member of a protected class; (2) she sought to enter into a contractual relationship with Defendants; (3) she met the Defendants' ordinary requirements to pay for and be granted a lease ordinarily provided by defendants to other similarly situated customers; and (4) under § 1981, she was denied the opportunity to contract for goods or services that was otherwise afforded to persons outside the protected class, or under § 1982, she was denied the opportunity to lease property. See Williams v. Staples, Inc., 372 F.3d 662, 667 (4th Cir. 2004); Jones v. K&R Nutrition, Inc., No. 1:09CV413, 2010 U.S. Dist. LEXIS 92460, at *14 (M.D.N.C. Aug. 4, 2010). Here, Plaintiffs allege enough facts to show Defendants impeded Plaintiffs' rights to enter into a contract to lease the salon at the property Defendants managed because of Mamadou's race. First, under the Williams framework for establishing a prima facie case of discrimination, Mamadou is a U.S. citizen of West African ancestry. Compl. ¶65. Thus, Mamadou is a member of a protected class. See Guessous v. Fairview Prop. Invs., LLC, 828 F.3d 208, 224-25 (4th Cir. 2016)(Although § 1981 applies exclusively to racial discrimination, race encompasses any class of people subjected to intentional discrimination solely because of their ancestry or ethnic characteristics). See also Nnadozie v. Genesis Healthcare Corp., 730 F. App'x 151, 157 (4th Cir. 2018) (“[W]ith evidence of some nexus between ethnic or ancestral characteristics and ... discrimination, there is no reason why a plaintiff cannot bring a Section 1981 claim on the basis of being ‘African’ or ‘Nigerian.’ ”). Second, Plaintiffs sought to enter into a contract with Defendants to lease salon space at a shopping center the Defendants managed. Third, Plaintiffs met the Defendants' ordinary requirements to pay for and be granted a lease ordinarily provided by Defendants to other similarly situated customers. Prior to learning about Mamadou's ancestry, Cho indicated that he would approve the assignment if Mamadou had “good credit and financial condition.” Compl. ¶34. As part of her application for lease assignment, Mamadou mailed to Cho her 2017 W-2, credit report, 2016 tax return and other documents that indicated she had stable employment, significant disposable income, and “Excellent” credit. Id. ¶¶ 46-48. Thus, Mamadou met the defendants' ordinary requirements. Finally, Plaintiffs were denied the opportunity to contract for goods or services that was otherwise afforded to persons outside the protected class, in violation of § 1981. Mamadou was also denied the opportunity to lease property, in violation of § 1982. Although Cho stopped communicating with Mamadou, he reportedly told Williams that Mamadou's application for lease assignment was rejected because she is West African and Defendants would not do business with West Africans. Williams Decl. at ¶10. Williams emailed Cho about his statement, and Cho never denied making it. Id. ¶ 53. Thus, if Mamadou was of a different ancestry, one outside Mamadou's protected class, Cho would have afforded Plaintiffs the opportunity to enter into a contract to lease the property. *8 Plaintiffs provide direct and circumstantial evidence of Cho's intention to discriminate on the basis of race or ancestry. Around the time that Mamadou, who planned to travel home to Niger for the holidays, informed Cho that she would submit required financial documents when she returned, Cho surmised that Mamadou was of West African descent and his receptiveness to her tenancy declined. Compl. ¶ 41. Upon reviewing Mamadou's application, including her driver's license, Cho reaffirmed his earlier conclusion that Mamadou was of West African descent. Id. ¶ 48. Despite receiving an application that showed Plaintiffs' credit and financial standing were excellent, Cho refused to communicate with Mamadou or negotiate with her for assignment of the lease. Id. ¶ 50. Cho told Williams that he denied Mamadou's application for lease assignment because Defendants don't work with West Africans. Williams Decl. at ¶10. As a result of his refusal to work with West Africans, Cho denied the lease assignment on the basis of Mamadou's race or ancestry, thereby unlawfully interfering with Mamadou's legitimate property right. Therefore, the undersigned recommends default judgment as to Counts I and II of the Complaint be granted. VII. RECOMMENDATION For the reasons set forth above, the undersigned Magistrate Judge recommends that Plaintiffs' Motion for Sanctions be GRANTED. The Motion should be granted as to entering default judgment as a sanction against the Shadetree Defendants on Counts I and II of the Complaint. VIII. NOTICE By mailing copies of this Report and Recommendation, the parties are notified that objections to this Report and Recommendation, pursuant to 28 U.S.C. § 636 and Rule 72(b) of the Federal Rules of Civil Procedure, must be filed within fourteen (14) days of service on you of this Report and Recommendation. A failure to file timely objections to this Report and Recommendation waives appellate review of the substance of the Report and Recommendation and waives appellate review of a judgment based on this Report and Recommendation. The Clerk is directed to send a copy of this Report and Recommendation to all counsel of record. Alexandria, Virginia Footnotes [1] In their Memorandum in Support of the Motion for Further Sanctions, Plaintiffs seek a finding of liability and propose to brief damages later. Thus, the undersigned makes no recommendations regarding damages to which Plaintiffs may be entitled.