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Britt Interactive LLC v. A3 Media LLC

United States District Court, S.D. Indiana, Indianapolis Division

March 6, 2018

BRITT INTERACTIVE LLC, and TOWNEPOST NETWORK INC., Plaintiffs and Counterclaim Defendants,
v.
A3 MEDIA LLC, COLLECTIVE PUBLISHING LLC, YELENA LUCAS, NEIL LUCAS, JANELLE MORRISON, CHILLY PANDA MEDIA, LLC, DANN VELDKAMP, and JODY VELDKAMP, Defendants, Counterclaimants and Third Party Plaintiffs, TOM BRITT, JEANNE BRITT, JOSHUA BROWN, and TONI FOLZENLOGEL, Third Party Defendants.

          ORDER ADOPTING MAGISTRATE JUDGE'S REPORT AND RECOMMENDATION (DKT. 257)

          TANYA WALTON PRATT, JUDGE

         This matter is before the Court on a Motion for Default Judgment filed by Plaintiffs, Britt Interactive, LLC and Townepost Network, Inc., and Third-Party Defendants, Tom Britt and Jeanne Britt (collectively, the “Britt Parties”) (Filing No. 210). On August 23, 2017, the Magistrate Judge issued a Report and Recommendation, pursuant to Federal Rule of Civil Procedure 72 and 28 U.S.C. § 636(b)(1), that the Court deny the Britt Parties' Motion for Default Judgment against Defendants/Counterclaimants/Third-Party Plaintiffs, A3 Media LLC, Collective Publishing LLC, Yelena Lucas, and Neil Lucas (collectively, the “Lucas Parties”) (Filing No. 257). Plaintiffs, Britt Interactive, LLC and Townepost Network, Inc., (collectively, the “Plaintiffs”) objected to the Magistrate Judge's Report and Recommendation, contending that the Lucas Parties' continued abuses of the discovery process warrant an entry of default judgment against them and that the Magistrate Judge's recommendation leaves the Britt Parties without any remedy for the Lucas Parties' clear discovery misconduct (Filing No. 261). For the following reasons, the Court OVERRULES the Plaintiffs' Objection and ADOPTS the Magistrate Judge's Report and Recommendation to deny the Britt Parties' Motion for Default Judgment.

         I. BACKGROUND

         Plaintiffs initiated this action against the Lucas Parties on September 23, 2016, in Hamilton County, Indiana state court and alleged several claims, including breach of contract, tortious interference with contracts, and trademark infringement (Filing No. 3-2). On October, 24, 2016, the Lucas Parties removed this case to this Court based on federal question jurisdiction under the Lanham Act (Filing No. 3).

         In light of several disputes that arose between the parties during the discovery process, the Britt Parties filed a Motion to Compel on January 27, 2017, requesting that the Court compel the Lucas Parties to provide substantive responses to the Plaintiffs' interrogatories and requests for production, and to reimburse the Britt Parties for attorneys' fees they incurred in connection to the Lucas Parties' discovery misconduct (Filing No. 130). On April 26, 2017, the Magistrate Judge issued an order granting the Britt Parties' Motion to Compel (the “Discovery Order”) (Filing No. 196). Specifically, the Magistrate Judge found that the Lucas Parties had not made a sufficient effort to respond to the Plaintiffs' discovery requests and ordered the Lucas Parties to supplement their discovery responses by May 17, 2017 (Filing No. 196 at 3-10). The Magistrate Judge further required the Lucas Parties to pay the Plaintiffs' attorneys' fees incurred “in (a) communicating with the Lucas Parties about their [discovery] responses ... and (b) filing and briefing their motion to compel” (Filing No. 196 at 5-6).

         In an effort to comply with the Discovery Order, the Lucas Parties sent a supplemental document production to the Britt Parties on the evening of May 17, 2017 (Filing No. 211 at 5). The Lucas Parties intended to deliver their supplemental document production by including a Google Docs weblink to their document production in an email to the Britt Parties' counsel; however, the Britt Parties were unable to open the weblink (Filing No. 211 at 6-7). The Britt Parties informed the Lucas Parties that they could not open the weblink at approximately 1:10 a.m. on May 18, 2017, and the Lucas Parties sent a new, functional weblink to their supplemental document production at approximately 1:23 a.m. that same morning (Filing No. 211 at 7-8).

         Additionally, despite already delivering its supplemental document production, the Lucas Parties filed a Motion for Extension of Time on May 17, 2017, requesting a one-day extension to fully comply with the Discovery Order's requirements pertaining specifically to their interrogatory responses (Filing No. 204). On May 18, 2017, the Lucas Parties filed two amended motions for extensions of time (Filing No. 205; Filing No. 206). In its first Amended Motion for Extension of Time to Comply with Court's Order on Motion to Compel, the Lucas Parties requested that they have until noon on May 18, 2017 to comply with the Discovery Order (Filing No. 205). Later that day, the Lucas Parties filed their Second Amended Motion for an Extension of Time to Comply with Court's Order on Motion to Compel and Motion to Withdraw Appearance, in which the Lucas Parties requested the Court (1) withdraw the appearance of their attorney, P. Adam Davis; (2) allow them thirty days to find new counsel; and (3) grant them a two-week extension starting the day their new counsel appears to comply with the Discovery Order (Filing No. 206).

         Before the Court ruled on the Lucas Parties' motions for extensions of time, the Britt Parties filed their Motion for Default Judgment on May 22, 2017 (Filing No. 210). The Britt Parties asserted that default judgment against the Lucas Parties is appropriate pursuant to Federal Rule of Civil Procedure 37 and the Court's inherent authority because the Lucas Parties participated in a pattern of discovery abuses and failed to comply with the Discovery Order (Filing No. 210; Filing No. 211 at 14-17). The Britt Parties further argue that they are entitled to recover the attorneys' fees they incurred by reviewing the Lucas Parties' supplemental document production and filing their Motion for Default Judgment from the Lucas Parties (Filing No. 211 at 18).

         On June 12, 2017, the Magistrate Judge granted the Lucas Parties' Second Amended Motion for an Extension of Time to Comply with Court's Order on Motion to Compel and Motion to Withdraw Appearance and allowed the Lucas Parties until June 30, 2017 to comply with the Discovery Order (Filing No. 219). The Lucas Parties opposed the Britt Parties' Motion for Default Judgment, claiming that they made a good faith attempt to comply with the Discovery Order, that they provided additional supplemental discovery responses since the Britt Parties filed their Motion for Default Judgment, and that default judgment is too severe a sanction in this instance (Filing No. 240). The Britt Parties further acknowledged that it received additional discovery responses from the Lucas Parties after filing its initial Motion for Default Judgment in their Reply in Support of their Motion for Default Judgment (Filing No. 252 at 5).

         On August 23, 2017, the Magistrate Judge entered its Report and Recommendation regarding the Britt Parties' Motion for Default Judgment (Filing No. 257). In its Report and Recommendation, the Magistrate Judge advised the Court to deny the Britt Parties' Motion for Default Judgment because: (1) Third-Party Defendants, Tom Britt and Jeanne Britt, did not serve any discovery on the Lucas Parties that was subject to the Discovery Order; (2) the Britt Parties filed their Motion for Default Judgment before receiving and reviewing all of the Lucas Parties' supplemental discovery responses; and (3) default judgment is too extreme of a remedy for the Lucas Parties' non-compliance with the Discovery Order (Filing No. 257). The Britt Parties now object to the Magistrate Judge's Report and Recommendation because the Lucas Parties have continuously abused the discovery process and because the Magistrate Judge acknowledged deficiencies in the Lucas Parties' discovery responses required by the Discovery Order but left the Britt Parties without any remedy to cure these deficiencies (Filing No. 261). The Lucas Parties oppose the Britt Parties' objection and argue that they have worked to provide sufficient responses to the Plaintiffs' discovery requests and that the Britt Parties have not been sufficiently prejudiced by any deficiencies in their discovery responses to warrant an entry of default judgment against them (Filing No. 264).

         II. LEGAL STANDARD

         A. Magistrate Review

         A district court may assign dispositive motions to a magistrate judge, in which case the magistrate judge may submit to the district judge only a report and recommended disposition, including any proposed findings of fact. Schur v. L.A. Weight Loss Ctrs., Inc., 577 F.3d 752, 760 (7th Cir. 2009). See 28 U.S.C. § 636(b)(1)(B); Fed.R.Civ.P. 72(b). “The magistrate judge's recommendation on a dispositive matter is not a final order, and the district judge makes the ultimate decision to adopt, reject, or modify it.” Schur, 577 F.3d at 760. See 28 U.S.C. § 636(b)(1)(B); Fed.R.Civ.P. 72(b)(3). After a magistrate judge makes a report and recommendation, either party may object within fourteen days. 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 72(b)(2). “A judge of the court shall make a de novo determination of those portions of the report or specified proposed findings or recommendations to which objection is made.” 28 U.S.C. § 636(b)(1). Further, a judge “may accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate judge.” Id.

         B. Default Judgment under Federal Rule of ...


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