Commissioner of Labor of State v. Ward
| Decision Date | 03 June 2003 |
| Docket Number | No. COA02-838.,COA02-838. |
| Parties | COMMISSIONER OF LABOR OF THE STATE OF NORTH CAROLINA, Plaintiff, v. TERRY JUDSON WARD, HOUSECALLS HEALTHCARE GROUP, INC., HOUSECALLS HOME HEALTH CARE, INC., HOUSECALLS NURSING SERVICES, INC., HOUSECALLS OF RESEARCH TRIANGLE, INC., and COAST TECHNOLOGIES, INC., Defendants. |
| Court | North Carolina Court of Appeals |
Roy Cooper, Attorney General, by Susan R. Lundberg and Daniel S. Johnson, Assistant Deputy Attorneys General, for plaintiff.
Johnson Younce Moore & Moseley, LLP, by J. Sam Johnson, Jr., for defendants-appellants.
Defendants, Terry Judson Ward, Housecalls Healthcare Group, Inc., Housecalls Home Health Care, Inc., Housecalls Nursing Services, Inc., Housecalls of Research Triangle, Inc., and CoastTechnologies, Inc., appeal judgments ordering sanctions against them and granting default judgments against them in an action involving the North Carolina Wage and Hour Act. For the reasons discussed herein, we affirm the trial court's determination.
Employees of defendants contacted the Commissioner of Labor and complained that defendants were withholding their wages. The Commissioner of Labor filed a complaint on 10 June 1999. The complaint sought the following relief: (1) an injunction to enjoin defendants from further withholdings, monetary relief and liquidated damages for violations of the Wage and Hour Act; (2) a declaration that transfers from some defendants to other defendants were fraudulent and void; (3) a declaration that defendant Coast Technologies, Inc. was a continuation of the business of other defendant corporations; (4) a declaration that corporate defendants were mere instrumentalities of defendant Ward; and (5) attorney fees.
On 20 April 2000, plaintiff served upon each defendant a first set of interrogatories, first request for admissions and first request to produce documents. Defendants filed a motion for a protective order on 5 June 2000 and responded to discovery requests on 14 June 2000. Only three of some forty questions were fully answered by defendant Ward. The other questions were objected to, citing to the motion for the protective order. On 11 August 2000, plaintiff filed a motion to compel discovery. On 16 October 2000, the trial court granted plaintiff's motion to compel in part. Plaintiff was restricted to fifty interrogatories. Defendants were ordered to permit plaintiff to examine, review and copy stored documents. Defendants were further ordered to produce or make a good faith search for other documents for inspection and review by plaintiff.
When plaintiff's counsel arrived to examine defendants' documents stored in a building located on Swannanoa Avenue in Liberty, North Carolina on 26 October 2000, defendant Ward informed them that the building was without electricity. Plaintiff had brought portable copiers. Defendant Ward initially refused to allow entry. However, plaintiff's counsel and staff were eventually allowed into the storage area of the building. There, they encountered little natural light and holes in the floor. Further, defendant Ward insisted plaintiff take breaks when he did.
Due to the lack of electricity, plaintiff attempted to remove the documents to be copied at another location. Defendant Ward refused this suggestion and retrieved his generator. When the generator failed to operate the portable copiers, defendant Ward insisted that everyone go to the other location to copy the documents.
On 27 October 2000, defendant Ward refused entry unlessplaintiff's representatives agreed to not remove any documents. Plaintiff's counsel had to call defendants' counsel to gain entry into the building. Upon entry, plaintiff found that boxes had been moved and re-stacked since the previous visit. Due to the hostility and difficulties involved with the discovery process, plaintiff's counsel wrote defendants' counsel requesting an agreement on terms and conditions to foster discovery. Defendants would not agree on such an arrangement. Consequently, plaintiff filed a second motion to compel discovery on 16 January 2001. Prior to a hearing on this motion, the parties entered into a consent order outlining discovery procedures.
This order provided that: (a) plaintiff could inspect and copy all documents at the Swannanoa Avenue site, including documents removed and replaced by defendant Ward; (b) plaintiff could conduct discovery at the Swannanoa Avenue site regardless of the presence of defendant Ward; (c) plaintiff was permitted to enter premises at a different Liberty site located on North Greensboro Street to examine, inspect and copy all information stored in computers, computer hard drives, removable electronic data storage media, diskettes, magnetic tapes, CD ROMs, zip discs and jazz discs, (d) defendant Ward represented to the trial court that he had removed equipment from the North Greensboro Street site and made a backup copy of the data and then returned the equipment; (e) within fivedays, defendant Ward was to provide plaintiff with a copy of the backup copy and to describe in writing the process used to access the data; (f) if electricity was not available at the site, plaintiff may remove computer equipment to a location where the information could be downloaded and deciphered; (g) a detailed discovery schedule was set forth; and (h) if defendants or defendants' counsel found additional documents responsive to discovery requests, they would be immediately disclosed.
At the North Greensboro Street location, plaintiff found over forty DAT tapes which stored electronic data of defendants' business operations. This method of electronic data storage is no longer frequently used. Due to the lack of electricity, plaintiff attempted to remove the tapes to another location where they could be accessed. Defendant Ward refused to allow plaintiff to remove the discs, cassettes, videos, CD ROMs and other electronic data from the premises.
On 26 April 2001, plaintiff filed a third motion to compel discovery. On 11 May 2001, the trial court granted the motion and found that defendants were in violation of the prior discovery orders. The order directed defendants to deliver copies of all materials requested in plaintiff's third motion to compel, including all electronic data, within fourteen days. The court further stated that "Defendants' failure to comply with this Orderwill result in this Court ordering appropriate sanctions against the Defendants." Nonetheless, defendants did not provide copies of any of the DAT tapes and the majority of the materials covered under the 11 May 2001 order, although some materials were provided and original DAT tapes were delivered to plaintiff on 25 May 2001. Defendants advised that they could not copy the DAT tapes.
Plaintiff's representatives met with C.H. Burnett, President of Research Triangle Media, Inc., in an attempt to access the information on the DAT tapes. Burnett confirmed that he could open, display and copy the information stored on the DAT tapes to CD-ROMs. However, the information stored on the DAT tapes would not be usable without detailed knowledge of the complex software program that created and stored the data.
In May 2001, plaintiff spent several days deposing defendant Ward. Ward initially testified that it would be impossible to restore the...
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