"Strong Medicine" - Prescribed

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The First Circuit has described default judgment - a ruling, as sanction, against a defendant on all of the factual allegations in the plaintiff's complaint - as "strong medicine," that "should be prescribed only in egregious cases." See Hooper-Hass v. Ziegler Holdings, LLC, 690 F.3d 34, 37-38 (1st Cir. 2012).

Judge Ponsor of the U.S. District Court for the District of Massachusetts recently administered such "strong medicine" in a case with millions of dollars at stake "[b]ecause the Defendants' misconduct during the course of discovery... traveled well beyond the boundary of what is even remotely acceptable in the conduct of litigation." See Angiodynamics, Inc. v. Biolitec, AG, 2014 WL 129035 at *1, --- F.Supp.2d --- (D.Mass. 2014). In Angiodynamics, the Plaintiff brought claims against two related corporations and their CEO ("Defendants") alleging that Defendants engaged in a corporate shell game to avoid a judgment totaling roughly $16.5 million (before interest). See id. Plaintiff initially sought - and obtained - an injunction forbidding the Defendant parent corporation from merging with a foreign subsidiary and, thereby, becoming virtually "judgment-proof." See id. Defendants pushed forward with the merger anyway, "in direct, admitted defiance of the injunction" and refused to unwind the transaction despite subsequent orders and fines imposed. See id. at *2.

Defendants' "outrageous misconduct" in discovery, however, "thwarted" the Plaintiff "at virtually every turn," and had "a devastatingly prejudicial impact," ultimately providing the grounds for default. See id. at *1, 3, 10. Defendants produced Defendant CEO for deposition - without producing a substantial number of documents key to the factual allegations in the case - so Plaintiff's counsel postponed completion of the deposition, and the parties jointly filed related notices with the court. See id. When it came time to schedule Defendant CEO's continued deposition, however, Defendants refused to produce him for deposition in Massachusetts, citing potential contempt-related consequences for him (a resident of Germany) resulting from Defendants' own violation of the merger injunction. See id. at *4. Even after the court rejected the two protective orders Defendants sought on those grounds - to which Judge Ponsor referred as "looking-glass logic" that "compounds absurdity" - they still refused to produce Defendant CEO. See id. at *3-4, 6-7. Defendants then moved for summary judgment, "placing Plaintiff in the impossible position of having to respond... without the opportunity to depose... possibly the most important witness in the case." Id. at *4-5. Defendants similarly produced three top employees for deposition - without producing critical documents - and refused to produce them for subsequent continued depositions with "no legitimate explanation." See id. at 12-13. Nonetheless, Defendants "relied on these witnesses extensively" throughout the case, including in their summary judgment pleadings. See id. at *13. "At the end of this long road of blatant misconduct," Judge Ponsor wrote, "there is only one terminus: entry of judgment by default." Id. at *15.

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