JCDecaux Airport, Inc. v. Tom Sawyer Productions, Inc.

Background

JCDecaux Airport, Inc. and Miami Airport Concession LLC sued Tom Sawyer Productions, Inc., doing business as Tom Sawyer Company, Interactive Airport Advertising, LLC, and Carolyn Sawyer. The case involved subcontractor agreements under which Tom Sawyer Company was to sell airport advertising and transfer the proceeds to JCDecaux under the agreements. The amended complaint asserted, among other claims, breach of contract against all defendants and breach of fiduciary duty and conversion claims against Sawyer. It also alleged that Interactive and Sawyer were alter egos of Tom Sawyer Company, meaning that they should be treated as legally responsible for the company’s conduct.

The defendants initially admitted breaching the subcontractor agreements, then withdrew that admission. They also asserted a counterclaim against the plaintiffs. The court described the discovery needed to resolve the claims as consisting largely of the agreements, business records, sales agreements, payment records, and disbursement records.

Discovery violations

The defendants failed to meet several discovery obligations. They did not timely provide required initial disclosures, did not produce documents responsive to undisputed document requests, and did not comply with a later discovery order requiring production of all responsive documents or affidavits stating that no responsive documents existed. The court found that the defendants had not timely and fully complied with any discovery schedule or other court directive in the litigation. The failure to comply with the discovery order continued for approximately four months, and the defendants did not submit a certification of complete production until their opposition to the sanctions motion.

The plaintiffs moved for sanctions under Federal Rule of Civil Procedure 37(b)(2), which permits sanctions when a party fails to obey a discovery order. They requested default judgment, dismissal of the defendants’ counterclaim, attorneys’ fees and costs, and an order barring the defendants from using evidence that had not already been produced.

Default judgment

The court concluded that the defendants’ repeated discovery failures, the length of the noncompliance, the defendants’ prior warnings, and the apparent futility of lesser sanctions supported making default judgment available as a sanction. A default judgment is a judgment entered because a party failed to comply or participate, rather than because the claim was resolved through a full trial.

The court nevertheless declined to enter the requested default judgment. Before entering such a judgment, the court had to determine whether the amended complaint contained enough factual allegations to support it. The court concluded that the amended complaint did not contain sufficient allegations to support the requested alter-ego finding against Sawyer. The opinion noted that a later deposition might provide evidence supporting that claim and that the plaintiffs could seek default judgment on their breach-of-contract claims against Tom Sawyer Company in later proceedings, but the court did not enter that judgment in this order.

Dismissal of the counterclaim

The court dismissed the defendants’ counterclaim with prejudice as a sanction under Rule 37 and, alternatively, under Federal Rule of Civil Procedure 41(b). Dismissal with prejudice bars the claim from being brought again. The court found that the same circumstances supporting sanctions—including the defendants’ prolonged discovery failures, lack of prompt corrective action, and prior warnings—supported dismissal.

The court also found that the defendants had not taken affirmative steps to prosecute their counterclaim. Their discovery responses did not provide the requested damages computation, and the record did not show that they had attempted to depose a witness identified as having relevant information about the counterclaim. The court concluded that failing to dismiss the counterclaim would encourage parties to assert claims without seriously pursuing them.

Evidence and deposition

The court granted the request to bar the defendants from introducing or relying on evidence that had not already been produced. Sawyer had certified that she searched accessible records and could not provide additional responsive documents, and the court concluded that the preclusion order would not prejudice the defendants.

The court also directed the plaintiffs to propose three dates on or before February 28, 2020, for Sawyer’s deposition. Sawyer was required to select one of those dates, and the parties were required to notify the court of the selected date within five days.

Fees and final disposition

The court found that the defendants had not substantially justified their repeated discovery failures and that awarding expenses would not be unjust. It awarded the plaintiffs $12,500, inclusive of attorneys’ fees and costs.

The court stated that the plaintiffs’ sanctions motion was granted in part and denied in part. It dismissed the defendants’ counterclaim with prejudice, granted the evidence-preclusion request, ordered the deposition-related steps, and directed the defendants to pay $12,500 within 30 days. The court did not enter the requested default judgment.