Wash. Metro. Area Transit Comm'n v. Reliable Limousine Serv., LLC, s. 13–7072

• Decision Date: 13 January 2015
• Docket Number: 13–7161.,Nos. 13–7072,s. 13–7072
• Citation: 776 F.3d 1
• Parties: WASHINGTON METROPOLITAN AREA TRANSIT COMMISSION, Appellee v. RELIABLE LIMOUSINE SERVICE, LLC and Paul Benjamin Rodberg, Appellants.
• Court: U.S. Court of Appeals — District of Columbia Circuit

776 F.3d 1

WASHINGTON METROPOLITAN AREA TRANSIT COMMISSION, Appellee

v.RELIABLE LIMOUSINE SERVICE, LLC and Paul Benjamin Rodberg, Appellants.

Nos. 13–7072

13–7161.

United States Court of Appeals, District of Columbia Circuit.

Argued Oct. 23, 2014.

Decided Jan. 13, 2015.

Elyse L. Strickland argued the cause for the appellants. Maurice B. VerStandig was with her on brief.

Jeffrey M. Lehmann argued the cause for the appellee. William S. Morrow Jr., was with him on brief.

Before: HENDERSON and PILLARD, Circuit Judges, and WILLIAMS, Senior Circuit Judge.

Opinion

Opinion for the Court filed by Circuit Judge HENDERSON.

KAREN LECRAFT HENDERSON, Circuit Judge:

The Wise do at once what the Fool does at last.

—Baltasar Gracian

The Art of Worldly Wisdom , cclxvii

Paul Rodberg operated a limousine business in the District of Columbia metropolitan area (District) for many years without authorization from the Washington Metropolitan Area Transit Commission (WMATC). WMATC eventually sued Rodberg and his company in district court, seeking an injunction to shut down his illegal limousine operation. After Rodberg failed to participate in discovery, the district court entered default judgment against him. Not to be outfoxed, Rodberg ignored the default judgment and continued operating his limousine business under a different name. The district court issued yet another order, making perfectly clear that all of Rodberg's companies were enjoined from transporting passengers in the District without a license. Rodberg now appeals the default judgment and the subsequent order. We affirm the district court's default judgment and lack jurisdiction to consider the subsequent order.

I. BACKGROUND

Rodberg is in the limousine business. He has owned several iterations of a company providing limousine service in the District. From 1996 to 2009, Rodberg operated Reliable Limousine, Inc. (RLI). RLI repeatedly failed to pay its federal taxes. The Internal Revenue Service eventually caught up with Rodberg but, instead of paying the taxes owed, Rodberg shifted his limousine business to a new company: Reliable Limousine Service, LLC (RLS). RLS operated from 2009 to 2011 but it too failed to pay taxes. The IRS again pursued and Rodberg again shifted his business to a new company: Reliable Limousine and Bus Service, LLC (RLBS). The United States sued Rodberg, RLI, RLS and RLBS in the District of Maryland, seeking injunctive relief to force their compliance with the tax laws. At one point in the litigation, the district court held Rodberg in contempt for “willfully and deliberately” refusing to participate in discovery. See Order of Contempt at 1, United States v. Reliable Limo. Serv., LLC, No. 8:11–cv–03383 (D.Md. Oct. 22, 2012). Rodberg and the United States ultimately settled.

Rodberg's legal woes did not end there. His limousine companies not only failed to pay their taxes but also transported passengers within the District without a license. In April 2012, WMATC sued Rodberg and RLS in the district court here, seeking an injunction to shut down Rodberg's limousine operation. (Notably, RLBS was not a party to the lawsuit.) The district court originally set the discovery deadline for November 2012. In October 2012, WMATC served Rodberg with interrogatories and document requests. Rodberg never responded. In December, the district court ordered Rodberg to participate in discovery, extended the discovery deadline to January 2013 and set the case for trial in March 2013. Rodberg remained non-compliant. He claimed he was not participating in discovery because he was at that point applying for a WMATC license.¹ In February 2013, the district court rejected Rodberg's excuse and sanctioned him by awarding WMATC a default judgment. See WMATC v. Reliable Limo. Serv., LLC, No. 1:12–cv–00576, 2013 WL 461355, at *1 (D.D.C. Feb. 6, 2013). The default judgment included a permanent injunction that prohibited Rodberg and RLS from transporting passengers for hire in the District.²

But WMATC's victory was short-lived. It soon discovered what the IRS knew all too well: pursuing Rodberg was like playing whack-a-mole. Rodberg continued to provide limousine service in the District via RLBS, not RLS. This prompted WMATC to return to district court to seek a contempt citation. Instead, the district court decided to “clarify” its February injunction. WMATC v. Reliable Limo. Serv., LLC, 985 F.Supp.2d 23, 31–32 (D.D.C.2013). In October 2013, it issued an order expressly placing RLBS under the February 2013 injunction's prohibition on transporting passengers for hire.³

Rodberg⁴ appealed both the February injunction and the October order. We ex mero motu consolidated Rodberg's two appeals.

II. ANALYSIS

Although Rodberg's appeals are consolidated, we analyze them separately. See Fed. R.App. P. 3(b) advisory committee's note (1998) (“consolidated appeals ... do not merge into one”); D.C. Circuit Handbook of Practice and Internal Procedures 24 (2013) (“Each [consolidated] case retains some of its individual identity....”). In Case No. 137072, Rodberg challenges the February 2013 injunction, which the district court issued via the default judgment. In Case No. 13–7161, Rodberg challenges the district court's October 2013 order, which expressly made RLBS subject to the February 2013 injunction.

A. Case No. 13–7072 (Default Judgment/Injunction)

Rodberg contests the district court's entry of default judgment as a sanction for his discovery lapse. Although he does not dispute that his conduct was sanctionable, Rodberg argues that the punishment does not fit the crime.

We review the district court's imposition of discovery sanctions, including a default judgment award, for abuse of discretion. See NHL v. Metro. Hockey Club, Inc., 427 U.S. 639, 642, 96 S.Ct. 2778, 49 L.Ed.2d 747 (1976) ; Webb v. Dist. of Columbia, 146 F.3d 964, 971 (D.C.Cir.1998). The abuse-of-discretion standard, however, is “a verbal coat of many colors.” Henry J. Friendly, Indiscretion About Discretion, 31 EMORY L.J. 747, 763 (1982) (internal alteration omitted). “[D]efining the proper scope of review ... requires considering in each situation the benefits of closer appellate scrutiny as compared to those of greater deference.” Id. at 756. With a default judgment, our review is more “thorough” because the “drastic” sanction “deprives a party completely of its day in court.” Webb, 146 F.3d at 971. Moreover, there are limitations on the district court's ability to enter default judgment as a discovery sanction. A default judgment is inappropriate unless the litigant's misconduct is accompanied by “willfulness, bad faith, or fault.” Founding Church of Scientology v. Webster, 802 F.2d 1448, 1458 (D.C.Cir.1986) (internal alterations omitted). The district court also has a “duty to explain” its decision to award default judgment instead of a lesser sanction. Webb, 146 F.3d at 971. We then conduct an independent review to determine whether the district court abused its discretion. See id. at 972. Because the parties do not dispute Rodberg's willfulness, we turn to the district court's choice of sanction.

To determine whether the district court abused its discretion by entering default judgment as a discovery sanction, we evaluate the following factors: (1) prejudice to the opposing party, (2) prejudice to the judicial system and (3) the need for punishment and deterrence. See Shea v. Donohoe Constr. Co., 795 F.2d 1071, 1074–79 (D.C.Cir.1986). These factors are non-exhaustive and we must consider “all the relevant circumstances” surrounding the entry of default judgment. Bristol Petrol. Corp. v. Harris, 901 F.2d 165, 167 (D.C.Cir.1990) (R.B. Ginsburg, J.). Still, we pay “great deference” to the district court's decision because it has “a better ‘feel’ ... for the litigation and the remedial actions most appropriate under the circumstances presented.” Founding Church of Scientology, 802 F.2d at 1457 ; see also Bristol Petrol. Corp., 901 F.2d at 167 (appellate court should be “hesitant to type the exercise of a district court's dismissal authority as an abuse of discretion” because district court has “front-line responsibility for operating the judicial system” (citations omitted)). After a careful review of the Shea factors, we are convinced that the district court did not abuse its discretion by entering default judgment against Rodberg.

Prejudice to the Opposing Party: Rodberg's recalcitrance prejudiced WMATC in a direct and obvious manner. Each day of delay was another day that Rodberg illegally operated his limousine business. Granted, delay that merely prolongs litigation “is not a sufficient basis for establishing prejudice.” Berthelsen v. Kane, 907 F.2d 617, 621 (6th Cir.1990) (quoting Davis v. Musler, 713 F.2d 907, 916 (2d Cir.1983) ). But, here, there was more: in transporting passengers in the District without a license, Rodberg jeopardized the public safety. See generally Pub.L. No. 101–505, tit. II, art. XI, 104 Stat. 1300, 1304–09 (outlining requirements WMATC licensees must follow); see also New York v. Green, 420 F.3d 99, 110 (2d Cir.2005) (finding prejudice from delay that “endanger[ed] the public health and safety”). The first Shea factor weighs in favor of the district court's decision.

Prejudice to the Judicial System: Rodberg also interfered with the district court's ability to manage its docket. In February 2013—one month before trial—Rodberg had not responded to any of WMATC's requested discovery. The district court was thus faced with a choice: enter default judgment or postpone the trial. We have described such a choice as “intolerable.” Shea, 795 F.2d at 1075 ; see also Bristol Petrol. Corp., 901 F.2d at 168 n. 5 (“[I]n several cases affirming pre-trial dismissals, courts have featured the fact that the party's delay occurred close to the time of trial and threatened to upset the court's carefully planned calendar.”). Litigants do not exist in a vacuum; misconduct like Rodberg's can reverberate throughout the judicial...