Hooboy! Judge Jeffrey Beaverstock of the Southern District of Alabama sure isn’t happy with Outokumpu Stainless USA, a steel mill, and their attorneys at Littler Mendelson PC. Outokumpu is the defendant in an hour-and-wage lawsuit and Judge Beaverstock has taken them to task for discovery abuses — more than just calling them out, he entered a default judgment on liability in favor of the plaintiffs, and over the course of a 94(!)-page order, he does not hold back.
I mean, he starts out strong from the jump:
This case is lamentable. Mercifully, it is rare. Here, the Court is compelled to protect not only plaintiffs but the Court itself from a defendant’s pervasive bad faith.
And what does “pervasive bad faith” even mean? Well, Judge Beaverstock is happy to detail the issues:
Time and pay records are of primary importance in FLSA actions. Defendant refused to produce complete and accurate records and misrepresented to the Court and Plaintiffs material facts surrounding its refusals. The Magistrate Judge entered orders and imposed sanctions against Defendant through the course of discovery, but Defendant was undeterred. Defendant persisted in its misconduct through the date set for final pre-trial conference, at which point Defendant still had not produced basic time and pay records. As a consequence, the Court was left with no choice but to cancel the pre-trial conference and, instead, conduct a general status conference. This was followed by show cause hearings to address Defendant’s failures. For the reasons set out below, the Court determines default judgment is the only remaining sanction sufficient to address Defendant’s bad faith and the damage wrought by it.
Yeah, Judge Beaverstock details — and I mean DETAILS, the opinion is 94 pages after all — defendant’s problematic behavior including: repeated refusals to produce the necessary documents; blaming its delays on a third-party payroll processor, Automatic Data Processing, Inc. (“ADP”); lack of response to allegations defendants doctored key documents; ignoring a motion to compel; and refusing to take responsibility for the discovery delays. It’s a real journey y’all.
But rather than get mired in the deets, let us peruse the deft way Judge Beaverstock deals with the situation — all emphasis added:
Defendant’s discovery obligations in this action were not novel. Defendant’s discovery failures, though, were extraordinary resulting in a long train of discovery and sanction motions against it.
The record is littered with discovery orders, discovery conferences, motions to compel, and motions for sanctions, all designed to deter Defendant from its continuing obstinate refusal to produce its time and pay records.
Since October 2018, Defendant repeatedly represented to the Magistrate Judge and to Plaintiffs that it would cooperate with discovery requests and comply with court orders. When Defendant failed to cooperate or comply as represented, it offered a variety of excuses, and then made more representations. Defendant then dishonored those representations. Then, Defendant commenced the whole sorry pattern over again. This pattern of Defendant’s misconduct poisoned the entirety of this case. As set out below, it is now clear that Defendant’s misconduct was deliberate and in bad faith.
Defendant did not rebut the substantive, and substantial accusations, it had doctored and produced false records. Likewise, Defendant did not explain, at all, why it had refused to produce records it had previously agreed to provide. Rather, Defendant argued its “production issues” were due to the Plaintiffs’ unreasonable requests and an uncooperative third-party payroll provider, ADP, maintaining there was no evidence to support Defendant’s actions were in bad faith. (Docs. 220 and 246). To be clear, in response to sanctions, twice, Defendant abdicated, dodged and misconstrued its responsibility for its own failures.
At every turn, Defendant delayed, obfuscated, violated or outright ignored the Court’s orders, resulting in inefficiencies and confusion, and ultimately delayed resolution of a case Defendant represented as one that would be fairly simply to resolve. (Doc. 91). Throughout, the alleged violative pay practices continue, a potential boon to Defendant. A clear picture of willful and prejudicial discovery abuse, requiring imposition of the strictest of sanctions, emerges.
The Court cannot ignore Defendant’s calculated sabotage of the judicial process.
Defendant withheld and failed to produce “linchpin” evidence. Defendant engaged in flagrant bad faith designed to derail the orderly resolution of Plaintiffs’ lawsuit.
However, when the pattern is viewed in the context of the entire case, it is clear Defendant’s tactics were subversive and its behavior manipulative, intentionally designed to undermine the Court’s orders and authority over the discovery process.
It really comes across as cartoony behavior — something observers have pointed out.
It’s a good day for those who enjoy legal schadenfreude, but for Littler Mendelson and their client, not so much.
Kathryn Rubino is a Senior Editor at Above the Law, host of The Jabot podcast, and co-host of Thinking Like A Lawyer. AtL tipsters are the best, so please connect with her. Feel free to email her with any tips, questions, or comments and follow her on Twitter (@Kathryn1).
