Judge imposes default judgment against former Littler Mendelson client for 'subversive approach to discovery'

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A federal judge in Mobile, Alabama, has imposed a default judgment against an Alabama steel mill once represented by Littler Mendelson because an attempt to hide payroll records “poisoned the entirety of this case.”

U.S. District Judge Jeffrey U. Beaverstock of the Southern District of Alabama ruled against Outokumpu Stainless USA on Nov. 18 in a lawsuit contending that it underpaid its employees in Calvert, Alabama, Law360 reports.

Beaverstock ruled for the plaintiffs, set a hearing on damages and said the plaintiffs are entitled to attorney fees as a result of the defendant’s conduct.

Federal law requires companies to keep payroll records for at least three years. The suit was filed in July 2018, yet it’s still unclear whether the company has complete records for 2015 to 2017, Beaverstock said.

When Outokumpu Stainless USA’s long-term employment law counsel was asked about the company’s retention policy for time and pay records, the lawyer said he didn’t know the answer.

Beaverstock also noted “inconsistency” over whether defense lawyers issued a litigation hold letter when the suit was filed in July 2018 and, if so, whether the company abided by it.

Littler Mendelson represented Outokumpu before the company hired new lawyers. Littler Mendelson previously agreed to pay at least $63,000 in legal fees to payroll company ADP after it claimed that a law firm partner lied about its compliance with a subpoena for payroll records by the plaintiffs. The partner no longer works for Littler Mendelson.

Beaverstock’s new opinion focuses on Outokumpu Stainless USA and its foot-dragging response to the plaintiffs’ requests for pay records, time records and incentive plan data.

“Since October 2018, defendant repeatedly represented to the magistrate judge and to plaintiffs that it would cooperate with discovery requests and comply with court orders,” Beaverstock wrote. “When defendant failed to cooperate or comply as represented, it offered a variety of excuses and then made more representations. Defendant then dishonored those representations. Then defendant commenced the whole sorry pattern over again.”

The pattern of misconduct “poisoned the entirety of this case,” Beaverstock said.

“At every turn, defendant delayed, obfuscated, violated or outright ignored the court’s orders, resulting in inefficiencies and confusion and ultimately delayed resolution of a case defendant represented as one that would be fairly simply to resolve,” Beaverstock wrote.

Beaverstock said the company acted in bad faith when it violated numerous discovery orders and “when it attempted to foist responsibility for its failures on ADP.”

Information from ADP “demonstrates defendant’s fraudulent and manipulative tactics, constituting clear and convincing evidence of defendant’s bad faith,” Beaverstock wrote.

ADP “was not defendant’s only scapegoat,” Beaverstock said.

He pointed to the company’s complaint that its corporate representative and payroll specialist was out of her depth when responding to discovery requests. The same specialist was said to be a high-level manager, however, when it selected her to represent the company in a court hearing.

“The court finds defendant’s bad faith, stalling, inconsistent answers, falsehoods and all-around subversive approach to discovery undermined this case and the ability to decide it on the merits,” Beaverstock wrote.

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