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Lewis v. Caesars Entertainment Corporation

United States District Court, D. Nevada

April 11, 2019

CLAYTON A. LEWIS, et al., Plaintiffs,
v.
CAESARS ENTERTAINMENT CORPORATION, et al., Defendants.

          ORDERS AND REPORT & RECOMMENDATION

          NANCY J. KOPPE UNITED STATES MAGISTRATE JUDGE.

         Pending before the Court is the third order for Defendant Bingli Yang and her counsel (Aaron Aquino) to show cause why various sanctions should not be imposed on them. Docket No. 77. On November 9, 2018, the Court held a hearing on that order to show cause and for Plaintiffs to prove up damages. Docket No. 81.

         I.BACKGROUND

         Plaintiffs and Defendant Yang have been employed as traveling poker dealers. See, e.g., Compl. (Docket No. 1-1) at ¶¶ 10, 17. Plaintiffs claim Defendant Yang defamed them for the intended purpose of interfering with their future employment opportunities. See, e.g., id. at ¶¶ 17-48, 69-74. Plaintiffs allege that Defendant Yang's tortious conduct was particularly egregious in an encounter in March 2015, during which Defendant Yang engaged in public outbursts in which she accused Plaintiffs of, inter alia, theft. See Id. at ¶¶ 19-20. Plaintiffs allege that Defendant Yang has stated that she engaged in this conduct in retaliation for Plaintiffs providing statements for a witness against Defendant Yang in an earlier employment hearing. See Id. at ¶ 17.

         Defendant Yang appeared in this action. See, e.g., Docket No. 6 (joinder in notice of removal). Nonetheless, Defendant Yang admitted through the discovery process the key facts supporting Plaintiffs' claim, including that she knowingly made false accusations against Plaintiffs for the purpose of interfering with their employment opportunities. See, e.g., Docket No. 56 at 6. On June 7, 2018, summary judgment was entered against Defendant Yang on the issue of liability. See Id. at 7.

         On June 7, 2018, United States District Judge Jennifer A. Dorsey also ordered that a mandatory settlement conference be held. Id. On June 8, 2018, the undersigned issued an order setting that mandatory settlement conference (hereinafter, “the August settlement conference”), and establishing the requirements for that settlement conference. Docket No. 57. One of those requirements was that each party was required to submit a settlement statement containing specified information. Id. at 2-3. The parties' settlement statements were due by August 1, 2018. See Docket No. 58 (advancing settlement conference and deadline to submit settlement statements). The Court cautioned that:

FAILURE TO COMPLY WITH THE REQUIREMENTS SET FORTH IN THIS ORDER WILL SUBJECT THE NON-COMPLIANT PARTY AND/OR COUNSEL TO SANCTIONS UNDER FEDERAL RULE OF CIVIL PROCEDURE 16(f).

Docket No. 57 at 3 (emphasis in original). The Court received Plaintiffs' settlements statement, but, despite the above warning, Defendant Yang and Mr. Aquino did not submit a settlement statement.

         Having not received a settlement statement from Defendant Yang and Mr. Aquino, on August 3, 2018, the Court ordered that they submit a settlement statement by noon on August 6, 2018. Docket No. 61.[1] The Court again warned that “[f]ailure to comply with this order may result in the imposition of sanctions.” Id. Despite that warning, Defendant Yang and Mr. Aquino did not submit a settlement statement.

         Having still not received a settlement statement from Defendant Yang and Mr. Aquino, on August 6, 2018, the Court provided them one final opportunity to comply and ordered a settlement statement be submitted by 10:00 a.m. on August 7, 2018. Docket No. 62. The Court simultaneously ordered Defendant Yang and Mr. Aquino to show cause why they should not be sanctioned for violating the previous orders to submit a settlement statement. Id. The Court also warned that “FAILURE TO COMPLY WITH THIS ORDER MAY RESULT IN THE INITIATION OF CONTEMPT PROCEEDINGS.Id. at 2. The threat of sanctions arising out of the prior violations and the warning against any further violation proved ineffective, as Defendant Yang and Mr. Aquino still did not submit a settlement statement.

         The violation of the above orders resulted in the vacation of the August settlement conference. Docket No. 63. It also resulted in the issuance of a second order for Defendant Yang and Mr. Aquino to show cause why they should not be sanctioned. Docket No. 64. Mr. Aquino filed a preliminary response to the two orders to show cause identifying health problems as the cause for the noncompliance. Docket No. 67. Given the underdeveloped nature of those representations, the Court provided Defendant Yang and Mr. Aquino with an additional 30 days to file a complete response supported by declaration. Docket No. 68. Notwithstanding the provision of a lengthy extension, Defendant Yang and Mr. Aquino filed a further response that included no additional detail. Docket No. 70. Instead, they filed essentially the same response as before that was supported this time by Mr. Aquino's declaration stating only that:

Due to extreme illness as stated and recounted in this response to myself and my family, deadlines in this case were not met.
The inability to meet these deadlines were substantially justified as the circumstances of the emergency were unavoidable and unforeseeable.

Id. at 4. Because the further response continued to be lacking, on September 17, 2018, the Court ordered Mr. Aquino to appear for a show cause hearing to be held on September 25, 2018. Docket No. 71. The Court also set that hearing to explore the potential for resetting the settlement conference. See Id. at 1 n.1. Mr. Aquino failed to appear at that hearing. Docket No. 72; see also Hearing Rec. (9/25/2018) at 3:16 - 3:17 p.m.

         In summary, as of late September, Defendant Yang and Mr. Aquino had violated three orders to submit a settlement statement and Mr. Aquino had violated an additional order to appear for a show cause hearing. The Court gave them several opportunities, but Defendant Yang and Mr. Aquino failed to provide any reasonable justification for their violations of these orders.[2]Moreover, Mr. Aquino thwarted the Court's ability to obtain a fuller explanation by violating the order to appear for a show cause hearing. See, e.g., Docket No. 76 at 3 n.2. Given the circumstances, the Court ordered Defendant Yang and Mr. Aquino to pay $3, 311 in attorney's fees by October 29, 2018. Id. at 5. The Court further ordered Mr. Aquino to pay a fine of $2, 000 by October 29, 2018. Id. The Court declined at that time to recommend default judgment or to initiate contempt proceedings, but the Court issued another warning:

THE COURT EXPECTS STRICT COMPLIANCE MOVING FORWARD WITH ITS ORDERS AND ALL GOVERNING RULES. FAILURE BY DEFENDANT AND/OR MR. AQUINO TO COMPLY MAY RESULT IN THE IMPOSITION OF SANCTIONS, UP TO AND INCLUDING, CASE-DISPOSITIVE SANCTIONS AND CONTEMPT PROCEEDINGS. THERE WILL BE NO FURTHER WARNINGS PROVIDED.

Id. (emphasis in original). The Court also reset the settlement conference for November 5, 2018 (hereinafter, “the November settlement conference”), and ordered Defendant Yang to submit a settlement statement by October 24, 2018. Id. at 6.

         As with the August settlement conference, the November settlement conference was doomed before it could even begin. Despite the imposition of sanctions for past violations and the Court's emphatic warning against further violations, Defendant Yang and Mr. Aquino again failed to submit a settlement statement as ordered. Docket No. 77.[3] This fourth failure to submit a settlement statement required the vacation of the November settlement conference. Id. at 2. It also resulted in the issuance of a third order to show cause that required Defendant Yang and Mr. Aquino to appear personally to explain why the latest failure to submit a settlement statement should not result in (1) entry of default judgment, (2) initiation of contempt proceedings, (3) an award of further attorney's fees, (4) imposition of fines of up to $10, 000 each, and (5) referral of Mr. Aquino to the Nevada State Bar for potential disciplinary proceedings. Id. at 1.[4] The Court warned that: “FAILURE TO APPEAR AS ORDERED WILL RESULT IN THE IMPOSITION OF SEVERE SANCTIONS.” Id. (emphasis in original).

         Notwithstanding all of the above, Defendant Yang did not appear at the show cause hearing as ordered. See Docket No. 81. Mr. Aquino did appear at that hearing. See Id. Mr. Aquino provided no justification for Defendant Yang's violations of the Court's orders. Instead, Mr. Aquino represented that he had been providing written and telephonic notices to Defendant Yang as to what the Court was requiring, but that Defendant Yang had ceased responding months earlier. See, e.g., Hearing Rec. (11/9/2018) at 10:12 - 10:13 a.m. Mr. Aquino expressly represented that he had given Defendant Yang notice of the show cause hearing, id., but Defendant Yang still did not appear. Although Mr. Aquino represented that Defendant Yang had previously indicated a willingness to defend this lawsuit, the circumstances now demonstrate that Defendant Yang has made the conscious decision to abandon this case. See, e.g., id. at 10:12 - 10:14 a.m., 10:24 - 10:28 a.m. In short, there has been no justification provided for Defendant Yang's continued violations of the above orders and, instead, the record demonstrates that Defendant Yang has chosen to cease participating in any defense of this case.

         As to Mr. Aquino, he represented in vague terms that his latest noncompliance stemmed from the fact that he had been suffering from debilitating illness for several months and, in support of that representation, he presented exhibits showing two doctor's appointments. See, e.g., id. at 10:14 - 10:24 a.m. Mr. Aquino's attestation is not credible. As a threshold matter, the Court again notes that the evidence presented is flimsy and not well-developed. One exhibit submitted shows a quick care visit for Mr. Aquino on October 23, 2018, for cough, history of bronchiectasis, and mild intermittent asthma with exacerbation. Show Cause Hrg. Exh. A (emphasis added). The other exhibit is an “excuse slip” showing only that Mr. Aquino had some sort of appointment on November 2, 2018. Show Cause Hrg. Exh. B. These exhibits and Mr. Aquino's representations fall well short of showing that he was completely incapacitated throughout this time such that he could not comply with the order to submit a settlement statement by October 24, 2018.

         Moreover, Mr. Aquino's representations are belied by the record. On October 15, 2018, the Court expressly addressed the need for Mr. Aquino to provide notice to the Court if he was truly too sick to comply with an order. See Docket No. 76 at 3 n.2 (“Mr. Aquino fails to explain, however, why he was unable to contact the Court or opposing counsel during this period to seek an extension of the deadline to submit settlement statements, seek a continuance of the settlement conference, or otherwise provide notice of the circumstances”). This was the same order setting the November settlement conference and ordering the submission of a settlement brief. See Id. at 6. Were Mr. Aquino so sick that he could not submit a settlement statement nine days later, on October 24, 2018, the remedy to that solution was obvious: Mr. Aquino or his staff needed to make that known to the Court. The fact that no such notice was provided seriously undercuts Mr. Aquino's representations of debilitating illness. This shortcoming is especially pronounced given that the Court did not enter the pending order to show cause for another 48 hours after the deadline to submit a settlement statement had expired, compare Docket No. 76 at 6 (settlement statement due by 3:00 p.m. on October 24, 2018) with Docket No. 77 (notice of electronic filing showing that order was issued at 3:14 p.m. on October 26, 2018), but Mr. Aquino still did not provide any notice or make any request for an extension during that additional window.[5]

         Additionally, when Mr. Aquino did appear at the show cause hearing on November 9, 2018, he was not slowed by illness. This was most evident when Mr. Aquino objected to Mr. Lewis' testimony to prove-up damages and provided active, engaged, and extensive cross-examination for which he had clearly expended significant time to prepare beforehand, including researching state court records. See, e.g., Hearing Rec. (11/08/2018) at 10:51, 11:06, 11:14 - 11:38 a.m. Mr. Aquino's assertion of a months-long debilitating illness that prevented him from submitting a settlement statement on October 24, 2018, stands in stark contrast with his ability to prepare for and extensively participate in the prove-up hearing two weeks later. In sum, the Court has provided Mr. Aquino with numerous opportunities to substantiate the assertion that he has been too sick to comply with the Court's orders, and he has failed to do so.[6]

         In short, the Court has issued during this period at least five warnings to Defendant Yang and Mr. Aquino that failure to comply with the Court's orders may result in sanctions, including severe sanctions like default judgment. Docket No. 57 at 3, Docket No. 61, Docket No. 62 at 2, Docket No. 76 at 5, Docket No. 77 at 2. Despite those warnings, Defendant Yang and Mr. Aquino have collectively violated four orders to submit a settlement statement, two orders to appear for a hearing, and two orders to pay sanctions. Two of these violations (the violation of the fourth order to submit a settlement statement and Defendant Yang's violation of the order to appear at the show cause hearing) occurred after sanctions were already imposed on both Defendant Yang and Mr. Aquino.[7]

         II.STANDARDS

         Orders are not suggestions or recommendations, they are directives with which compliance is mandatory. See, e.g., Chapman v. Pacific Tel. & Tel. Co., 613 F.2d 193, 197 (9th Cir. 1979); see also Weddell v. Stewart, 261 P.3d 1080, 1085 & n.9 (Nev. 2011). There are several sources of legal authority by which federal courts enforce their orders. Most pertinent here, Rule 16(f) of the Federal Rules of Civil Procedure provides for sanctions for failing to obey a “scheduling or other pretrial order.” Fed.R.Civ.P. 16(f)(1)(C). When attorneys or parties fail to comply with an order regarding a settlement conference, Rule 16(f) is triggered. See, e.g., Ayers v. City of Richmond, 895 F.2d 1267, 1270 (9th Cir. 1990).

         Rule 16(f) is “broadly remedial and its purpose is to encourage forceful judicial management.” Sherman v. United States, 801 F.2d 1133, 1135 (9th Cir. 1986) (per curiam). When a court determines that Rule 16(f) has been triggered, it has broad discretion in fashioning an appropriate sanction. See, e.g., Official Airline Guides, Inc. v. Goss, 6 F.3d 1385, 1397 (9th Cir. 1993). Violations of orders are “neither technical nor trivial, ” Martin Family Trust v. Heco/Nostalgia Enters. Co., 186 F.R.D. 601, 603 (E.D. Cal. 1999), and can have severe ramifications. Rule 16(f) itself provides that courts may issue “any just orders.” The range of sanctions include those authorized by Rule 37(b)(2)(A)(ii)-(vii), such as entry of case-dispositive sanctions. Fed.R.Civ.P. 16(f)(1). Although not expressly enumerated, the imposition of a fine is also among the “just orders” authorized by Rule 16(f). See, e.g., Nick v. Morgan's Food, Inc., 270 F.3d 590, 595-96 (8th Cir. 2001).

         III.ANALYSIS

         As noted above, the order to show cause presently before the Court arises out of the violation of Defendant Yang and Mr. Aquino of the fourth order to submit a settlement statement, which resulted in the vacation of the November settlement conference. That order to show cause identifies five different potential repercussions for that violation: (1) entry of default judgment, (2) initiation of contempt proceedings, (3) award of further attorney's fees, (4) imposition of fines of up to $10, 000, and (5) referral of Mr. Aquino to the Nevada State Bar for potential disciplinary proceedings. The Court will address each issue in turn below.

         A. DEFAULT JUDGMENT

         The Court first addresses default judgment. In particular, the Court must decide whether this harsh, case-dispositive sanction against Defendant Yang is warranted and, if so, the amount of damages and fees that should be awarded. For the reasons discussed below, the undersigned recommends that default judgment be entered against Defendant Yang and that damages be set in the amount of $81, 319 in compensatory damages and $162, 638 in punitive damages, as well as $2, 564 in additional attorney's fees.

         1. Appropriateness of Entering to Default Judgment

         Courts are mindful that entry of default judgment is a severe sanction that is justified by willfulness, bad faith, or fault. Connecticut Gen. Life Ins. Co. v. New Images of Beverly Hills, 482 F.3d 1091, 1096 (9th Cir. 2007). When considering whether to impose default judgment, courts weigh five factors identified by the Ninth Circuit: (1) the public's interest in expeditious resolution of litigation; (2) the court's need to manage its dockets; (3) the risk of prejudice to the party seeking sanctions; (4) the public policy favoring disposition of cases on their merits; and (5) the availability of less drastic sanctions. Id. This is not a “mechanical” test, but rather provides courts with a way to think about the appropriate result. Id. The Court addresses each factor in turn below.

         a. Public Interest in Expeditious Resolution of Litigation

         Where an order is violated, the first factor supports case-dispositive sanctions. Adriana,913 F.2d 1412. “Orderly and expeditious resolution of disputes is of great importance to the rule of law. By the same token, delay in reaching the merits, whether by way of settlement or adjudication, is costly in money, memory, manageability, and confidence in the ...


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