Yu v. Diguojiaoyu, Inc.

Background

In an earlier order, the court directed the defendants to explain why it should not strike their answer and enter default judgment because of their repeated failures to comply with court orders and discovery obligations. The defendants did not respond by the December 13, 2019 deadline.

Rulings

The court struck the defendants’ answer filed on March 29, 2019, and entered default judgment for the plaintiffs on all claims. The opinion states that the claims included fraud, defamation, unjust enrichment, and other deceptive acts. The court found that no less severe sanction would effectively secure compliance with its orders and that the litigation could not proceed without the defendants’ cooperation. The clerk was not required to remove the answer from the docket.

The court explained that damages generally must be proven after a default judgment when they are not certain. Because the plaintiffs’ damages were not yet supported by enough affidavits or records, the court directed that the case be referred to the assigned magistrate judge for a damages proceeding. The plaintiffs were directed to contact that judge’s chambers by January 3, 2020, to schedule it.

The court also addressed an earlier order requiring the defendants and defense counsel Leonard X. Gillespie to reimburse the plaintiffs for fees and costs caused by discovery failures and problems preparing joint pretrial submissions. After reviewing the plaintiffs’ submissions and noting that no opposition was filed, the court awarded $8,595 in sanctions against the defendants and Mr. Gillespie, jointly and separately. They were ordered to pay within 30 days of the order or face additional sanctions.

Classification

This is a procedural order because the court entered default judgment as a consequence of the defendants’ noncompliance rather than resolving the underlying claims after an adversarial merits determination. The court also imposed discovery-related sanctions and directed a damages proceeding.