United States District Court, E.D. North Carolina, Western Division
C. DEVER III Chief United States District Judge.
2, 2017, plaintiff/counterclaim defendant Thomas D'Orazio
("D'Orazio" or "plaintiff) moved for
sanctions [D.E. 42]. Defendant OSL Holdings, Inc.,
("OSL"or "defendant") did not respond. As
explained below, the court grants plaintiffs motion for
sanctions, enters judgment against OSL, and dismisses
OSL's counterclaim against D'Orazio with prejudice.
filed this action seeking damages based on OSL's alleged
failure to pay wages [D.E. 1 -1 ]. OSL filed an answer and
counterclaim asserting claims for breach of fiduciary duty
and conversion [D.E. 22].
scheduling order required the parties to exchange Rule 26(a)
disclosures by June 24, 2016. See [D.E. 28]. OSL did not
provide any Rule 26(a) disclosures. On August 12, 2016,
D'Orazio's counsel requested OSL's Rule 26(a)
disclosures [D.E. 37-2]. D'Orazio's counsel requested
them again on August 23, 2016 [D.E. 37-3] and October 31,
2016 [D.E. 37-5]. OSL never made the required Rule 26(a)
August 23, 2016, D'Orazio served his first set of
requests for production on OSL. See [D.E. 37-4]. D'Orazio
did not receive timely responses. On October 31, 2016,
D'Orazio's counsel requested in writing that OSL
either produce the documents by November 4, 2016, or reach
some agreement. See [D.E. 37-5]. OSL did not respond to
D'Orazio's first request for production of documents.
Instead, on November 4, 2016, OSL's counsel wrote to
D'Orazio's counsel and stated that "all known
directors of OSL have resigned and there is no one available
to communicate with or authorize any further work in this
matter." [D.E. 37-6]. On November 4, 2016, OSL's
counsel also moved to withdraw as counsel for OSL and stated
that "a) all of the directors of OSL Holdings have
resigned and there is no one available to communicate with or
authorize any further work in this matter; and b) OSL
Holdings has no funding and is essentially defunct."
November 9, 2016, D' Orazio moved to compel and for
sanctions in light of OSL's failure to makes its Rule
26(a) disclosures and respond to D'Orazio's first
requests for production of documents [D.E. 37]. On March 6,
2017, this court granted D'Orazio's motion to compel
and ordered OSL to provide full and complete Rule 26(a)
disclosures and full and complete responses to
D'Orazio's first requests for production of documents
by March 31, 2017. See [D.E. 41] ("Order"). In its
Order, the court warned OSL that "failure by OSL to
fully comply with this order will result in the imposition of
dispositive sanctions under Federal Rule of Civil Procedure
37(b)(2). Specifically, the Court will dismiss OSL's
Counterclaim and will enter default judgment in favor of
Plaintiff against OSL." Id. at 5, ¶ 1(b).
The court also stated that "OSL is again warned that the
failure to comply with this order can and will be considered
abandonment of its Counterclaim." Id. at 5,
the court's Order and warnings, OSL violated the
court's Order. A court has the discretion to award
various sanctions, including striking pleadings in whole or
in part, dismissing the action or proceeding in whole or in
part, or issuing a default judgment against the disobedient
party. See Fed.R.Civ.P. 37(b)(2); Hathcock v. Navistar
Int'l Transp. Corp.. 53 F.3d 36, 40-41 (4th Cir.
evaluating the imposition of sanctions, the court must
consider: "(1) whether the noncomplying party acted in
bad faith; (2) the amount of prejudice his noncompliance
caused his adversary, which necessarily includes an inquiry
into the materiality of the evidence he failed to produce;
(3) the need for deterrence of the particular sort of
noncompliance; and (4) the effectiveness of less drastic
sanctions." Mut. Fed. Sav. & Loan Ass'n v.
Richards & Assocs.. Inc.. 872 F.2d 88, 92 (4th Cir.
1989); Hathcock. 53 F.3d at 40-41.
Order, the court considered each of the above-referenced
factors, and incorporates that discussion by reference. See
[D.E. 41] 3-5. In addition, the court expressly warned OSL in
the Order that if OSL failed to comply with the Order, the
court would dismiss OSL's counterclaim and would enter
default judgment in favor of D'Orazio. See Id.
Here, imposing sanctions is appropriate based upon the
record, OSL's bad faith, the prejudice to D'Orazio,
the need for deterrence, and OSL's lack of compliance
with the Order.
violated the North Carolina Wage and Hour Act by failing to
pay D'Orazio the unpaid portion of his transition bonus
in the amount of $ 12, 500.00, by failing to pay
D'Orazio's base wages in the amount of $51, 073.00,
and by failing to pay D'Orazio accrued, but unused,
vacation in the amount of $6, 923.00. See [D.E. 43] 5-7.
OSL's failure to pay D'Orazio was not in good faith,
and OSL had no reasonable grounds for believing that its
actions were permissible under the North Carolina Wage and
Hour Act. See Id. Thus, D'Orazio is entitled to
recover from OSL (1) unpaid wages, bonus, and vacation in the
amount of $70, 496.00, and (2) liquidated damages in the
amount of $70, 496.00. See M. In addition, the court awards
D'Orazio his costs and reasonable attorney's fees in
the amount of $10, 838.06. See id.; [D.E. 42-1]. The court
finds such costs and fees to be reasonable and appropriate
for the work performed on D'Orazio's behalf in this
plaintiffs motion for sanctions [D.E. 42] is GRANTED, the
counterclaim of defendant/counterclaim plaintiff OSL
Holdings, Inc., is DISMISSED with prejudice, and judgment is
entered against OSL Holdings, Inc., in the ...