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Treadwell v. Vescom Corp.

United States District Court, D. Maine

May 9, 2018

VESCOM CORPORATION, et al. Defendants.



         Tardily responding to an Order to Show Cause, Defendants urge the Court not to default them, arguing that their failure to timely respond was caused by inadvertence and by practical hurdles, and pleading that their response was only a few days late. As the law strongly favors trial on the merits, the Court declines to order the extreme sanction of default. However, though not so egregious as to justify a default, the Defendants' conduct of this entire litigation requires the imposition of sanctions.

         I. BACKGROUND

         This case began in the usual course. On January 4, 2017, Pamela J. Treadwell filed suit in state of Maine Superior Court for Kennebec County, alleging that Vescom Corporation, American Guard Services, World Wide Sourcing Group, and Ousama Karawia violated the Maine Human Rights Act, 5 M.R.S. §§ 4551, et seq., the Maine Whistleblowers' Protection Act, 26 M.R.S. §§ 831, et seq., and the Maine Equal Pay Act, 26 M.R.S. § 628 to her detriment during her period of employment with them. State Ct. Record, Attach. 1, Compl., Attach. 3, State Ct. Docket (ECF No. 2). On January 31, 2017, through their then attorney, Melissa A. Hewey, the Defendants removed Ms. Treadwell's lawsuit to this Court. Notice of Removal (ECF No. 1). Attorney Hewey and Attorney Timothy E. Steigelman filed an Answer for the corporate defendants and, moved to dismiss the Complaint for Mr. Karawia on February 23, 2017. Answer by Vescom Corporation, Am. Guard Servs., & Worldwide Sourcing Grp. (ECF No. 16); Mot. to Dismiss Def. Ousama Karawia (ECF No. 17).

         The Magistrate Judge duly issued a scheduling order on February 24, 2017, Scheduling Order (ECF No. 18), and Ms. Treadwell filed a motion to amend her Complaint on February 28, 2018. Pl.'s Mot. to Amend the Compl. (ECF No. 20). The Plaintiff's motion to amend the Complaint was granted on March 23, 2017. Order Granting Mot. to Amend Compl. (ECF No. 22). Mr. Karawia moved to dismiss his motion to dismiss on April 7, 2017, which the Court granted on the same day. Oral Mot. to Dismiss without Prejudice Mot. to Dismiss (ECF No. 28); Oral Order Granting without Obj. Mot. to Dismiss without Prejudice Mot. to Dismiss (ECF No. 29). Attorneys Hewey and Steigelman answered the Amended Complaint on behalf of all the Defendants on April 14, 2017. Ans. to Am. Compl. (Revised) (ECF No. 32). It seemed then that the case was ready to proceed.

         Then on June 2, 2017, Attorneys Hewey and Steigelman moved to withdraw their representation of the Defendants and for an order staying discovery and giving the Defendants sixty days to identify new counsel. Mot. to Withdraw and Stay Disc. (ECF No. 38). On June 5, 2017, Ms. Treadwell opposed the motion insofar as it requested sixty days to secure new counsel; Ms. Treadwell argued that two weeks would be more appropriate.. Pl.'s Opp'n to the Mot. to Withdraw and Stay Disc. (ECF No. 39). On June 6, 2017, the Magistrate Judge granted the motion to withdraw, altered the deadlines, and stayed the matter until June 23, 2017 to allow the Defendants to obtain new counsel. Order (ECF No. 40).

         On June 29, 2017, Ms. Treadwell moved for default judgment against all Defendants because they had failed to timely obtain new counsel. Pl.'s Mot. for Default J. (ECF No. 41). On June 30, 2017, Attorneys Ilse Teeters-Trumpy and Gregg R. Frame entered their appearances on behalf of the Defendants. Notices of Appearance (ECF Nos. 44-45). On July 6, 2017, Ms. Treadwell moved to amend the scheduling order, Pl.'s Mot. for Revised Deadlines (ECF No. 46), and on July 11, 2017, the Magistrate Judge granted the motion and mooted the motion for default judgment. Am. Scheduling Order (ECF No. 51).

         The case again seemed to progress with new defense counsel. The parties contested a motion for attachment and trustee process in the fall of 2017. Mot. for Attach. & Trustee Process (ECF No. 61); Corporate Defs. Vescom Corp., American Guard Services, and Worldwide Sourcing Group's Opp'n to Pl.'s Mot. for Attach. (ECF No. 62); Min. Entry (ECF No. 67). Later, the parties agreed to attempt to settle the case with a mediation before Magistrate Judge Rich scheduled for January 10, 2018; however, contrary to prior orders of the Magistrate Judge, the evening before the scheduled mediation, defense counsel informed Plaintiff's counsel that their clients did not plan to appear at the scheduled mediation, and on January 12, 2018, Ms. Treadwell moved the Court to hold the Defendants in contempt of court. Pl.'s Mot. for Contempt (ECF No. 87). On January 26, 2018, defense counsel moved to withdraw and requested that their clients be granted a stay of forty-five days to obtain new counsel. Mot. to Withdraw and Stay Proceedings (ECF No. 89). On January 28, 2018, Ms. Treadwell objected to the Defendants' motion. Pl.'s Opp'n to the Mot. of Defs.' Second Law Firm to Withdraw and Stay Disc. (ECF No. 90). On February 2, 2018, the Court granted in part and denied in part the motion to stay, giving Defendants until February 26, 2018 to obtain new counsel and stating that the stay would be automatically lifted if no new counsel entered an appearance on behalf of the Defendants. Order on Mot. to Withdraw and Mot. to Stay (ECF No. 93).

         The Defendants did not obtain new counsel by February 26, 2018, and therefore Attorneys Teeters-Trumpy and Frame were deemed to have withdrawn as attorneys for the Defendants, leaving them unrepresented. See Order (ECF No. 99). This posed two problems. First, it was unclear whether the Defendants had in fact received notice of the date by which they were required to obtain new counsel. The Court addressed that possibility in an order dated March 2, 2018. Order (ECF No. 99). Second, unlike Mr. Karawia, who is entitled to represent himself, a corporation is not allowed to represent itself in federal litigation, and therefore the unrepresented corporations risked being defaulted. To respond, the Court's March 2, 2018 order warned the corporate Defendants that they could face sanctions if they failed to obtain an attorney to represent them. Id.

         By March 14, 2018, counsel had not yet entered an appearance on behalf of the Defendants, and the Court issued an Order to Show Cause. Order to Show Cause (ECF No. 101) (Show Cause Order). This order required the Defendants to show cause within twenty-one days of the date of the order as to why a default judgment should not enter against them. Id. at 2-3. A representative of the Defendants signed a certified mail return receipt on March 19, 2018. Certified Mail (ECF No. 102). The twenty-one day period expired on April 5, 2018.

         On April 12, 2018, while the Court was preparing a default judgment, new attorneys for the Defendants entered their appearances. Notice of Appearance (ECF No. 103). On the same day, through new counsel, the Defendants responded to the Order to Show Cause. Defs.' Resp. to Order to Show Cause (ECF No. 104) (Defs.' Show Cause Resp.). On April 17, 2018, Ms. Treadwell filed her reply to the Defendants' response. Pl.'s Reply to Defs.' Resp. to Order to Show Cause (ECF No. 105) (Pl.'s Show Cause Reply). As Ms. Treadwell raised new issues in her reply, the Court allowed the Defendants to respond. Procedural Order (ECF No. 106). On April 24, 2018, the Defendants filed their reply. Defs.' Reply to Pl.'s Reply to Defs.' Resp. to Order to Show Cause (ECF No. 107) (Defs.' Show Cause Sur-reply).

         With this winding history, what to do about the Defendants' inaction is before the Court.


         A. The ...

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