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Laureate Education, Inc. v. Laureate Learning Center, Inc.

United States District Court, N.D. Georgia, Atlanta Division

September 15, 2017

LAUREATE EDUCATION, INC., Plaintiff,
v.
LAUREATE LEARNING CENTER, INC., LAUREATE MEDICAL INSTITUTE, INC., and CARLA B. JONES, Defendants.

          ORDER

          RICHARD W. STORY United States District Judge.

         This case comes before the Court on Plaintiff's Renewed Motion for Entry of Default Judgment, or, in the Alternative, for a Status Conference [103]. After a thorough review of the record and the parties' briefs, the Court enters the following Order.

         Background

         This case arises out of the operation of two allegedly infringing websites thought to be owned and operated by Defendants. Plaintiff Laureate Education, Inc. (“Plaintiff”) operates an international network of institutions of higher learning. (Compl., Dkt. [2] ¶ 2.) It owns several U.S. Trademark registrations for LAUREATE, including LAUREATE for educational services and for audio and video pre-recordings. (Id. ¶¶ 3-4.)

         Plaintiff originally filed suit against Defendants Laureate Learning Center, Inc. (“LLC”) and Laureate Medical Institute, Inc. (“LMI”) in the Southern District of New York. (Id.) Plaintiff claimed that LLC and LMI were violating Plaintiff's trademark by “using the name LAUREATE or LAUREATTE in connection with educational services.” (Id. ¶ 7.) On March 11, 2015, default judgment was entered against LLC and LMI, and a permanent injunction was granted in Plaintiff's favor. (Order, Dkt. [16].) Default was set aside, and the case was transferred to the Northern District of Georgia, on May 8, 2015. (Order, Dkt. [21].)

         During discovery, Plaintiff learned of the involvement of Defendant Carla B. Jones (“Jones”). The Court granted Plaintiff's Motion to Amend the Complaint [50]. (Order, Dkt. [57].) Plaintiff amended its complaint to add Jones as a defendant on April 21, 2016, seeking alter ego liability. (First Am. Compl., Dkt. [59].)

         Since that time, Plaintiff has made various unsuccessful attempts to proceed with discovery. On June 27, 2016, Plaintiff filed a Motion to Compel Discovery after Jones failed to respond to Plaintiff's first set of discovery requests. (Mot. to Compel, Dkt. [67], at 2.) The Court granted that Motion and ordered Jones to respond to the discovery request. (Order, Dkt. [72].) In July, Plaintiff filed a Motion to Compel Production and Enforce Subpoena after Laureatte School of Medical Training, Inc. (“LSMT”) failed to respond to a subpoena that was sent to both LSMT and Jones. (Mot. to Enforce Subpoena and Compel Produc., Dkt. [73], at 2.) On August 8, 2016, Plaintiff filed its First Motion for Entry of Default Judgment, noting that Defendants had not complied with the Court's July 19, 2016 Order [72] compelling discovery. (Mot. for Entry of Default J. and for Atty's Fees and Expenses, Dkt. [75], at 2.) Finally, on August 12, 2016, Plaintiff filed a Motion for Sanctions after Defendants failed to appear at a scheduled LSMT deposition for which both LSMT and Jones received a subpoena. (Mot. for Sanctions Given Failure of LSMT to Appear for Dep., Dkt. [76], at 2.)

         On September 26, 2016, the Court ruled as follows on each of the above-mentioned motions. Plaintiff's Motion to Compel Production and Enforce Subpoena [73] was granted, and Defendants were ordered to pay all Plaintiff's fees and expenses incurred as a result of bringing the Motion. (Order, Dkt. [93], at 2.) Plaintiff's Motion for Sanctions for Failure to Appear at a Deposition [76] was granted in part and denied in part, and Defendants were ordered to pay Plaintiff's attorney's fees in connection with the deposition. (Id. at 4-5.) In an effort to give Defendants a final opportunity to cooperate in discovery, the Court denied Plaintiff's Motion for Default Judgment [75]. (Id. at 3-4.) Defendants objected to Plaintiff's statement of fees in connection with the Order for Sanctions. (Objection to Statement on Atty's Fees and Expenses, Dkt. [96].) On November 14, 2016, the Court made a final determination on attorney's fees and expenses and ordered Defendants to pay Plaintiff $24, 811.50 in attorney's fees and $586.28 in expenses within 21 days. (Order, Dkt. [99], at 2-3.) The Court further held Jones personally jointly and severally liable for the payment of the fees along with the other Defendants. (Id. at 3.)

         On December 5, 2016, the day the fees were due to Plaintiff, Jones filed for bankruptcy; two days later, Jones filed a Notice of Automatic Stay Due to Filing of Chapter 13 Bankruptcy Proceeding [102]. Because Jones had a prior bankruptcy case dismissed within the preceding year, the automatic stay of these proceedings was for 30 days only, and it expired on January 4, 2017. (Ex. A, Notice of Filing of Bankr. Court's Order Confirming Termination of Stay, Dkt. [104-1], at 3.) Despite the Court's November 14, 2016 Order [99], to date, neither Jones nor any other Defendant has paid the required attorney's fees and expenses to Plaintiff. (Renewed Mot. for Entry of Default J., or, in the Alternative, for a Status Conference, Dkt. [103], at 2.) Accordingly, on January 6, 2017, Plaintiff filed this Renewed Motion for Entry of Default Judgment as to Defendants [103] requesting that the Court strike Defendant's May 16, 2016 Answer to the First Amended Complaint [65] and enter default judgment against all Defendants. (Id. at 1.)

         Discussion

         I. Legal Standard

         The Supreme Court has held that federal courts have the inherent power to “fashion an appropriate sanction for conduct which abuses the judicial process.” Chambers v. NASCO, Inc., 501 U.S. 32, 44-45 (1991). Rule 37 of the Federal Rules of Civil Procedure offers guidance on appropriate sanctions, stating “[i]f a party or a party's officer, director, or managing agent-or a witness designated under Rule 30(b)(6) or 31(a)(4) fails to obey an order to provide or permit discovery, including an order under Rule 26(f), 35, or 37(a), the court where the action is pending may issue further just orders.” Fed.R.Civ.P. 37(b)(2)(A). The rule further states that sanctions may include “striking pleadings in whole or in part” and “rendering a default judgment against the disobedient party.” Id.

         While “Rule 37 gives district judges broad discretion to fashion appropriate sanctions, ” the 11th Circuit has noted that “this discretion is guided by a judicial interpretation of the rule.” OneBeacon Ins. Co. v. Millbourne, No. 1:04-cv-3596, 2005 WL 3797628, at *3 (N.D.Ga. Oct. 20, 2005) (quoting Malautea v. Suzuki Motor Co., Ltd., 987 F.2d 1536, 1542 (11th Cir. 1993)). Given the finality of a default judgment, a judge should only use default as a sanction “as a last resort, when less drastic sanctions would not ensure compliance with the court's orders.” Id. However, this Court has held that “[s]triking answers and entering default judgments are appropriate when a party fails to appear for a deposition, fails to respond to interrogatories and request for production, fails to appear again when so ordered by a court, and fails to make a reasonable offer to appear.” Functional Prod. Trading, S.A. v. JITC, LLC, No. 1:12-cv-00355, 2013 WL 4482507, at *3 (N.D.Ga. Aug. 20, 2013) (emphasis added).

         II. ...


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