IPI: Request for 60 days to pay $122K not unreasonable

Imperial Pacific International (CNMI) LLC argues that it does not deserve a drastic remedy like default judgment because it has not willfully, or in bad faith, violated any federal court orders in connection with a lawsuit filed by seven former workers against it.

Dotts

IPI, through counsel Michael W. Dotts, said it lacks the economic resources to cover discovery sanctions and has done all in its power to obey discovery orders, despite being short-staffed after having had to furlough and lay off workers.

“IPI has taken affirmative steps to obey court orders and has fallen short on some, but these deficiencies do not warrant a drastic remedy like default judgment,” said Dotts in IPI’s response Wednesday to the federal court’s order to show cause.

Last Monday, U.S. District Court for the NMI Chief Judge Ramona V. Manglona ordered IPI to explain why the court should not enter a default judgment against it for failing to comply with court discovery orders. That came after IPI told the court about its failure to pay the sanctions and costs.

The violations refer to IPI’s failure to pay $29,459 in attorneys’ fees and costs that were due last June 5, and failure to comply with various discovery requirements related to such matters as producing bank records, employee separation dates, and paper discovery. The third category of violations refer to IPI’s failure to pay for and arrange for the transfer of electronically stored information from a vendor in Singapore to a vendor in the U.S. chosen by the seven former workers.

Manglona will hear the show-cause matter today, Friday.

In IPI’s response and opposition to entry of default, Dotts said their failure to pay was unintentional and IPI is willing to pay but needs more time. He said the errors and omission in discovery production are minimal, not material, were unintentional, and that IPI wants to be compliant. He said IPI has found ways to resolve the electronically stored information debacle at no cost to plaintiffs, which will keep the data secure within the CNMI, and will mean IPI can comply with the discovery orders.

True, there have been violations by IPI of discovery orders, he said, but they do not support the entry of default as a sanction.

Dotts said a daily sanction of $2,000 is running until IPI’s full compliance is obtained and that will (and is) motivating IPI to come into compliance.

The lawyer said there will be no prejudice to plaintiffs by the violations as they have yet to amend their complaint against IPI, and this matter is a long way away from trial.

Dotts discussed the actions that IPI has undertaken to comply with the court orders. He said default judgment is inappropriate because after being warned by the court of dismissal IPI has made every effort possible to comply with the court’s orders. He said IPI has taken affirmative steps to produce at least some data, including 49,000 pages of data from WhatsApp, WeChat, and SMS messages from former IPI counsel Kelley Butcher, 38,986 pages of data from IPI’s senior vice president for security and surveillance Donald Browne’s phone, 48,216 pages of paper production put in PDF format, a list of separation dates for alleged custodians who worked for IPI, and it has subpoenaed all alleged custodians, among other efforts.

Dotts said IPI should not be punished for its inability to pay the discovery orders during a time when its business has shut down because of COVID-19 and it lacks money to even make payroll or pay its electric bill. He said IPI’s request for 60 days to pay $122,449 in total sanctions and costs that are due in this case during this time of economic turmoil is “not unreasonable.”

Dotts noted that the U.S. Court of Appeals for the Ninth Circuit has declared that default judgment constitutes a drastic remedy that should only be imposed in “extreme circumstances and…where the violation is due to willfulness, bad faith, or fault of the party.”

The plaintiffs are suing the defendants for allegedly forcing them to work long hours for below minimum wage under extremely dangerous conditions at the casino worksite, among other allegations.

In its response to the lawsuit, IPI said any wage claims by the plaintiffs are barred because they voluntarily illegally entered the CNMI to work.