The opinion of the court was delivered by: John D. Bates United States District Judge
This case arises from the claims of thirteen plaintiffs that defendants Leon Stern and The Cleaning Infantry, Inc., as their employers, failed to pay plaintiffs the minimum wage, agreed-upon wages, and/or overtime wages for cleaning services they provided, and that plaintiffs suffered retaliation for requesting these wages, allegedly in violation of the Fair Labor Standards Act ("FLSA"), 29 U.S.C. §§ 201 et seq., and District of Columbia and Maryland labor laws. See Second Am. Compl. (Dec. 3, 2008).
On September 21, 2010, this Court issued a memorandum opinion and order granting plaintiffs' motion for sanctions and ordering the Clerk of Court to enter Leon Stern in default for failing to respond to written discovery requests by plaintiffs and to orders of this Court.*fn1 See Azamar v. Stern, 269 F.R.D. 53, 55 (D.D.C. 2010); Order, ECF Docket No. 6 (Sept. 21, 2010).However, based on representations made at an October 1, 2010, hearing by Russ Hecht, counsel for Leon Stern, as well as by Stern himself, the Court directed defendant to file a discovery memorandum by not later than October 15, 2010, as well as a motion to vacate the entry of default. It also authorized defendant to lodge -- without deciding that he would be able to pursue -- a proposed third-party complaint against Coverall Inc. Status Hr'g Tr. 35-36:11 & 40:6-15 (Oct. 1, 2010) ("Tr.").*fn2 Through counsel, Stern subsequently submitted three documents: (1) a discovery memorandum, (2) an unsigned submission purporting to be a proposed third-party complaint against Coverall North America, Inc., but which also contained counterclaims against Azamar, and (3) a motion to vacate the entry of default against Stern. Plaintiffs have moved to strike the third-party complaint and counterclaims, and oppose the motion to vacate the entry of default. For the reasons described below, the Court will grant defendant's motion to vacate the entry of default. It will also grant plaintiffs' motion to strike.
This Court previously granted plaintiffs' motion for sanctions and ordered the Clerk of Court to enter Leon Stern in default. See Azamar, 269 F.R.D. at 55; Order, ECF Docket No. 60 (Sept. 21, 2010). The sanctioning of Stern was based on his failure, through counsel, but also by his own design, to timely respond to written discovery requests propounded by plaintiffs, as well as to orders by this Court. Counsel entered an appearance on Stern's behalf on April 6, 2010, but representation by counsel failed to result in Stern's compliance with the discovery requests. The Court held a status hearing on July 2, 2010, at which the parties discussed Stern's failure to respond to the discovery requests. The Court granted one further extension of time, until July 16, 2010, for Stern to respond. See Second Revised Scheduling Order, ECF Docket No. 54 (July 2, 2010). Stern then failed again to respond to the discovery requests. The Court then ordered Stern to respond to the motion by August 16, 2010. Stern failed to respond to the motion as well. The deadline for all discovery in the case had expired on September 9, 2010, again with no response from Stern. Under those circumstances, the Court found that sanctions were warranted under Federal Rule of Civil Procedure 37(b)(2)(A) and 37(d)(1)(A), and that an order entering default against Stern was the appropriate sanction because Stern had repeatedly failed to respond to plaintiffs' written discovery requests and to this Court's orders.Azamar, 269 F.R.D. at 54-55. On September 22, 2010, an entry of default, ECF Docket No. 62, was made as to Leon Stern.
Shortly thereafter, Stern contacted Chambers, asking the Court to reconsider its decision granting plaintiffs' motion for sanctions and the entry of default, and attempting to raise issues concerning his alleged inability to communicate with defense counsel Hecht. The Court determined that the subjects raised by Stern should be addressed at a status hearing. See Minute Order (Sept. 27, 2010). A hearing was held on October 1, 2010 where counsel for plaintiffs, as well as Hecht and Stern, appeared before this Court. At the hearing, Stern expressed his desire to obtain new counsel, and both Stern and Hecht attempted to explain their communication difficulties, which, they claimed, had a corresponding effect on their ability to respond to discovery obligations and to the directives of this Court. Tr. 13:19-14:7 & 16:10-19:24. Defense counsel also chronicled a series of family illnesses and personal circumstances that required him to be away from his office frequently and which made it difficult for him to timely respond to requests. Tr. 13-14:22. Because of the conduct of Stern and his counsel, the Court stated that the entry of default would remain in place but, upon consideration of the circumstances described by Hecht and Stern and the representations made at the hearing, the Court ordered Stern to file a memorandum outlining the steps taken to comply with his discovery obligations by October 15, 2010. Tr. 35:12-22. The Court also granted leave for defendant to lodge a proposed third-party complaint against Coverall Inc., although it did not determine whether to accept the untimely claims in light of the default. Tr. 40:7-15.
Stern timely filed the discovery memorandum on October 15, 2010. See Counsel for Def. Leon C. Stern's Discovery Mem., ECF Docket No. 66 (Oct. 15, 2010) ("Discovery Mem."). The next day, Stern also lodged his proposed third-party complaint against Coverall North America, Inc. See ECF Docket No. 67. However, in that same filing, he attempted to raise three counterclaims against plaintiff Silverio Azamar -- malicious abuse of process, intentional infliction of emotional distress, and breach of contract. See Def.'s Counterclaims and Third Party Compl. ¶¶ 49-83 (Oct. 26, 2010). Plaintiffs have subsequently moved to strike these counterclaims. See Pl.'s Mot. to Strike, ECF Docket No. 68 (Oct. 22, 2010). Stern also filed a motion to vacate the entry of default against him, see Def.'s Mot. to Vacate Default, ECF Docket No. 69 (Nov. 15, 2010), which plaintiffs, in turn, have opposed. See Pl.'s Mem. in Opp. to Mot. to Vacate Default, ECF Docket No. 70 (Nov. 16, 2010) ("Pl.'s Opp.").
I. Vacating entry of default
A court has broad discretion to assess sanctions -- including that of dismissal or default judgment -- for conduct that has "severely hampered the other party's ability to present his case," for conduct that has placed "an intolerable burden . . . by requiring the court to modify its own docket and operations in order to accommodate the delay," and for conduct that is "disrespectful to the Court and to deter similar misconduct in the future." See Webb v. District of Columbia, 146 F.3d 964, 971 (D.C. Cir. 1981) (internal quotations and citations omitted). However, federal policy instructs that the resolution of an action on the merits is favored over the dismissal of a case through default judgment. See Webb, 146 F.3d at 971 (calling default judgment a "sanction of last resort"); Jackson v. Beech, 636 F.2d 831, 835 (D.C. Cir. 1980); Keegel v. Key West & Caribbean Trading Co., 627 F.2d 372, 373 (D.C. Cir. 1980).
In addition to the preference for resolving a case on the merits, courts in this jurisdiction have also applied a more lenient standard for setting aside an entry of default under Rule 55 than for setting aside a default judgment under Rule 60 of the Federal Rules of Civil Procedure.*fn3 See Keegel, 627 F.2d at 375 n.5 (citing 10 Charles Alan Wright & Arthur R. Miller, Federal Practice & Procedure § 2694); Capital Yacht Club v. Vessel Aviva, 228 F.R.D. 389, 392 (D.D.C. 2005) (noting that in a motion to vacate default judgment, "the higher burden for upsetting a default judgment attaches rather than the lower burden for vacatur of default.") Accordingly, pursuant to Rule 55(c), a court can use its discretion to set aside an entry of default for "good cause shown." Before granting a motion to set aside an entry of default, however, a court must consider and weigh three factors: (1) whether the default was willful, (2) whether the plaintiff would suffer substantial prejudice by a decision to set aside the default and, (3) whether the defendant has presented a meritorious defense. Haskins v. U.S. One Transp, LLC, 755 F. Supp. 2d 126, 129 (D.D.C. 2010) (citing Whelan v. Abell, 48 F.3d 1247, 1259 (D.C. Cir. 1995), and Keegel, 627 F. 2d at 374 n.5). All doubts are resolved in favor of the party seeking relief from the default. Jackson, 636 F.2d at 835.
The Court need not necessarily find that Stern acted in bad faith in order to establish that the delays and lack of responsiveness to his discovery obligations were willful. See Capital Yacht Club, 228 F.R.D. at 393 (stating that "[t]he court need not find bad faith to conclude that the defendant acted willfully" in considering a motion to set aside default); see also Jackson, 636 F.2d at 836 (assuming without deciding the issue that negligence can constitute willful default). Stern maintains that discovery had been provided to plaintiffs in advance of the July 16, 2010 due date. SeeDef.'s Mot. to Vacate Default ¶ 3; Discovery Mem. ¶¶ 3-8, 13; Tr. 7:23-9:5.Specifically, he claims that he provided all responsive documents he had in his possession in April 2010, and then supplemented these documents with photocopies of two checks showing lump-sum payments made to plaintiff Azamar in October 2010. Discovery Mem. ¶¶ 3-7, 12. Stern also maintains that his responses, particularly in response to requests for documents, reflect his position that he had no employees and hence no records related to plaintiffs' employment with him. Id. ¶ 14; Def.'s Mot. to Vacate Default ¶ 9. Stern also claims that he sent draft responses to interrogatories and document requests on June 24, 2010 and final, verified responses on July 28, 2010, which, he concedes, is twelve days after the deadline for final responses to plaintiffs' interrogatories and document requests. Discovery Mem. ¶¶ 8-9 & 17. Both the draft and final responses to the interrogatories and document requests were attached to and filed with Stern's discovery memorandum. See ECF Docket Nos. 64-1, 64-2, 64-3 & 64-4.
After considering this record, as well as the submissions and representations made by Stern, the Court cannot conclusively say that Stern's actions with respect to his discovery obligations and failure to respond were willful. Stern maintains that he responded to the document requests and interrogatories, though he also concedes that the final responses to such requests and interrogatories sent on July 28, 2010 were untimely. See Discovery Mem. ¶ 17. Plaintiffs do not dispute that they received these draft interrogatory and document request responses, nor that Stern ultimately sent verified interrogatory answers, as well as a supplement to the initial document production. Tr. 26:1-6. Instead, plaintiffs point to the number of Stern's missed deadlines as well as the repeated extensions of time granted to defendant by this Court as indicative of the willfulness of Stern's behavior. And, in fact, the Court admonished Stern for his disregard of discovery obligations and court orders, calling such behavior unacceptable.Tr. 15:6-16:1 & 36:12-21. But the Court is also cognizant of Stern's initial status as a pro se litigant, and defense counsel's unfortunate personal circumstances regarding a series of serious family illnesses, and therefore gave Stern an opportunity to file both a memorandum explaining the steps taken to ...