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Teri v. Oxford Management Services

November 18, 2009

RACHEL M. TERI AND DANIEL WATKINS, ON BEHALF OF THEMSELVES AND ALL OTHER SIMILARLY SITUATED CURRENT AND FORMER EMPLOYEES AS CLASS REPRESENTATIVES, PLAINTIFFS,
v.
OXFORD MANAGEMENT SERVICES, INC., A NEW YORK CORPORATION, RICHARD A. PINTO, CHAIRMAN OF THE BOARD OF OXFORD MANAGEMENT SERVICES, INC., CHARLES HARRIS, BOARD MEMBER AND EXECUTIVE VICE PRESIDENT OF OXFORD MANAGEMENT SERVICES, INC., PATRICK R. PINTO, VICE CHAIRMAN OF THE BOARD OF OXFORD MANAGEMENT SERVICES, INC., PETER C. PINTO, PRESIDENT OF OXFORD MANAGEMENT SERVICES, INC., JOHN P. FIUMANO, CHIEF OPERATING OFFICER OF OXFORD MANAGEMENT SERVICES, INC., SALVATORE SPINELLI, SALVATORE SPINELLI LAW OFFICE, DEFENDANTS.



The opinion of the court was delivered by: Hurley, Senior District Judge

MEMORANDUM AND ORDER

Plaintiffs Rachel M. Teri and Daniel Watkins ("Plaintiffs"), on behalf of themselves and on behalf of a class of individuals, commenced this action against Oxford Management Services, Inc. and several current and former officers of Oxford (hereinafter collectively referred to as "Oxford"), seeking to recover their unpaid overtime compensation pursuant to the Fair Labor Standards Act and New York labor laws. On September 30, 2008, Magistrate Judge Wall issued a Report and Recommendation (the "Report") granting Plaintiffs' motion for sanctions pursuant to Federal Rule of Civil Procedure ("Rule") 37(b)(2)(A) and recommended that Oxford's Answer be stricken and a default judgment entered. Presently before the Court are defendants' objections to the Report. For the reasons that follow, the Report is adopted in its entirety.

BACKGROUND

The background of this case is more fully set forth in the Report, familiarity with which is assumed. Thus, the Court will only state the facts necessary for disposition of the instant motion.

Oxford Management Services, Inc. is a New York corporation located in Melville, New York and is in the business of providing collections and accounts receivables services. Plaintiffs are former collections agents of Oxford Management Services, Inc. who regularly worked more than 40 hours per week but were allegedly not paid overtime wages. Plaintiffs' Complaint seeks to recover from Oxford, jointly and severally, their unpaid overtime compensation pursuant to the Fair Labor Standards Act and the New York labor laws.

Plaintiffs served document demands and requests for interrogatories on Oxford on January 30, 2006, and when Oxford's counsel indicated that he had not received those demands, re-served them on April 27, 2006. The demands requested, inter alia, that Oxford produce all personnel, payroll and time records for all persons performing collections work from June 9, 1999 forward. According to Plaintiffs, Oxford's responses failed to include a single time sheet, payroll record or paycheck stub.

Thereafter, Plaintiffs made three motions to compel the production of various documents, dated July 27, 2006, August 21, 2006, and October 6, 2006. The first motion was granted in part by Judge Wall on August 24, 2007, and the latter two motions were granted in their entirety on September 1, 2006, and March 9, 2007, respectively. (See docket nos. 29, 30, 51, and 54.) As explained in Judge Wall's thorough Report, these motions were the result of a "pattern not unfamiliar in this litigation -- defendants fail to produce materials, plaintiffs move for relief before the court, and defendants respond by providing some, but not all, of the outstanding discovery." (Report at 2.) Judge Wall's March 9, 2007 Order also awarded sanctions to Plaintiffs in the form of "attorney's fees and costs in connection with all three motions that [Plaintiffs] had to make and the cost of their two inspections, which were totally inadequate." (Docket no. 54 at 7.) None of these Orders was appealed.

After Oxford failed to comply with Judge Wall's March 9, 2007 Order, including failing to pay Plaintiffs' attorneys' fees and costs, Plaintiffs sought permission to make a motion to strike Oxford's Answer. Oxford opposed the application. By Order dated May 11, 2007, Judge Wall granted Plaintiffs' request and Plaintiffs' fully briefed motion seeking to strike Oxford's Answer was filed on August 13, 2007.

On September 18, 2007, this Court granted Plaintiffs' motion to amend their Complaint to add Salvatore Spinelli ("Spinelli"), Oxford's General Counsel, as an individual defendant. On September 30, 2008, the Report was issued.

In the Report, Judge Wall details Oxford's repeated and flagrant violations of Court Orders and failure to produce documents "that represent the very heart of [P]laintiffs' case for unpaid overtime wages." (Report at 16.) After a review of the five factors courts apply in determining whether to impose sanctions under Rule 37 (see id. at 10-18), Judge Wall concluded that all five factors supported a determination that Plaintiffs' motion should be granted. Judge Wall therefore recommended that Oxford's Answer be struck and default judgment entered.

Oxford has filed timely objections to the Report. For the reasons stated below, Oxford's objections are denied and the Report is adopted in its entirety.

DISCUSSION

I. Applicable Legal Standard

This Court reviews a magistrate judge's decision regarding non-dispositive pretrial matters under a "clearly erroneous or contrary to law" standard; dispositive matters to which written objections have been made are reviewed de novo. See Fed. R. Civ. P. 72. Here, Judge Wall's recommendation that Oxford's Answer be struck and ...


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