U.S. Department of Labor

Agency decision

Ask Donna

What actually matters in this document.

Text

Administrative Review Board

200 Constitution Ave. NW

Washington, DC 20210-0001

IN THE MATTER OF:

RHONDA MILLER, O/B/O

EUGENE MITCHELL,

ARB CASE NO. 2024-0002

COMPLAINANT,

ALJ CASE NO. 2021-STA-00041

ALJ LYSTRA A. HARRIS

DATE: July 18, 2024

RHINO, INC.,

RESPONDENT.

Appearances:

For the Complainant:

Rachel B. Canfield, Esq.; The Kirby G. Smith Law Firm, LLC; Atlanta,

Georgia

For the Respondent:

Douglas H. Duerr, Esq. and Andrew C. Suarez, Esq.; Elarbee,

Thompson, Sapp & Wilson, LLP; Atlanta, Georgia

Before WARREN, THOMPSON, and ROLFE, Administrative Appeals

Judges; Judge Rolfe, concurring

ORDER VACATING AND REMANDING

This case arises from a complaint filed by Eugene Mitchell (Complainant)

against his employer, Rhino, Inc., (Respondent), alleging retaliation in violation of

the whistleblower protections of the Surface Transportation Assistance Act of 1982

(STAA) and its implementing regulations.1 After Complainant moved for sanctions

for Respondent’s failure to comply with several discovery orders, the Administrative

Law Judge (ALJ) entered a default judgment against it and a second, corresponding

order awarding damages including $147,974.94 in back pay, $5,565.66 in pre1

49 U.S.C. § 31105(a); 29 C.F.R. Part 1978 (2024).

judgment interest, post-judgment interest, and $150,000.00 in compensatory

damages for emotional distress.

As discussed below, however, we find that the ALJ abused her discretion in

finding that a default judgment was an appropriate sanction under 29 C.F.R. §

18.57(b)(1)(vi) as the record (at this juncture) does not permit such a harsh penalty

for Respondent’s failure to comply with discovery and other orders. We therefore

vacate both orders and remand the case to the ALJ to analyze the factors necessary

to support a default judgment or to determine what sanctions, if any, are

appropriate for Respondent’s failure to respond to the ALJ’s orders. Alternatively,

the ALJ may determine that further adjudication of this claim on the merits is

warranted.

BACKGROUND

On February 22, 2021, Complainant filed a complaint with the Occupational

Safety and Health Administration (OSHA), alleging that Respondent violated the

employee protection provisions of the STAA when it terminated his employment as

a commercial truck driver on September 1, 2020.2 In a letter dated March 10, 2021,

OSHA dismissed the complaint, finding that there was no cause to believe that

Respondent violated the STAA.3

Complainant timely requested a hearing before an ALJ.4 On May 14, 2021,

the ALJ issued a Notice of Assignment, Hearing, and initial Pre Hearing Order

(Hearing Order), which provided the parties directives regarding initial disclosures,

discovery, and prehearing submissions.5 The Hearing Order further provided, in

pertinent part, that “failure to comply with this order may result in sanctions

including, but not limited to, the following: the exclusion of evidence, the dismissal

of the claim, the entry of a default judgment, or the removal of the offending

representative from the case.”6

On August 31, 2021, Complainant filed a “Motion to Compel Discovery and

for Sanctions” alleging that Respondent had failed to respond to his discovery

requests and had not provided the initial disclosures directed by the Hearing

Order Granting Motion for Default Judgment (Default Order) at 1 (ALJ Nov. 8,

2021).

See March 10, 2021 OSHA letter at 1.

Default Order at 1.

Id.

Id. at 3. The May 14, 2021 Hearing Order was served to Respondent at its business

address. See Service Sheet attached to Hearing Order.

Order.7 Complainant attached an August 13, 2021 letter and mailing envelope that

were addressed to “Rhino & K.A.C.E.A. 6 Corp c/o Donald D. Liaping.”8

On September 15, 2021, the ALJ issued an Order Granting Complainant’s

Motion to Compel Discovery (Order to Compel Discovery), which directed

Respondent to respond to Complainant’s previously served discovery requests.9

Respondent, however, did not respond.10

On October 7, 2021, the ALJ issued an Order Directing Respondent to Show

Cause as Why Sanctions Should Not Be Imposed Against It (Order to Show

Cause).11 The order directed Respondent to explain, within 15 days of receipt, why a

default judgment should not be entered against it for its failure to comply with the

ALJ’s previous orders directing initial disclosure and discovery responses.12

Respondent again did not respond.13

On November 8, 2021, the ALJ issued an Order Granting Motion for

Default Judgment against Respondent.14 In the Order, the ALJ reasoned that

a default judgment was justified because “Respondent repeatedly failed to

comply with the discovery and other orders issued by the [ALJ].”15 The ALJ

went on to note that Respondent further failed to provide “any explanation

for its failure to comply with these orders . . . [which] resulted in the denial of

Complainant’s right to discovery, as well as the impeding of the OALJ’s

Default Order at 2.

See Complainant’s August 31, 2021 Motion to Compel, Attachment 1. As discussed

below, after obtaining counsel, Respondent explained that Rhino & K.A.C.E.A.6 Corp. is its

competitor owned by Donald D. Liaping, a relative and former employee who did not

forward the correspondence. Petition for Review at 2.

The September 15, 2021 Order to Compel Discovery was served to Respondent at its

business address and to Rhino & K.A.C.E.A.6 at its Piedmont Circle address. See Service

Sheet attached to Order to Compel Discovery.

Default Order at 3.

The Order to Show Cause also suspended all deadlines and directives set forth in the

May 14, 2021 Hearing Order. Order to Show Cause at 4.

The October 7, 2021 Order to Show Cause was served to Respondent at its business

address and to Rhino & K.A.C.E.A.6 at its Piedmont Circle address. See Service Sheet

attached to Order to Show Cause.

Default Order at 4.

Default Order (formally cited as Mitchell v. Rhino, Inc., ALJ No. 2021-STA-00041

(ALJ Nov. 8, 2021)).

Id. at 4.

adjudication of the instant matter.”16 Thus, the ALJ found that “pursuant to

29 C.F.R. § 18.57(b)[(1)](vi), the issuance of a default decision and order

against Respondent is deemed an appropriate sanction for Respondent’s

persistent noncompliance.”17

On November 10, 2021, Respondent’s general manager contacted the ALJ,

explaining he had received the default order and requesting an opportunity to obtain

counsel to respond to it.18 On November 30, 2021, the ALJ issued an Order Granting

Respondent’s Request for Additional Time to Obtain Representation.19

On January 28, 2022, after retaining counsel, Respondent filed a pleading

entitled “Response to Default Order” that moved the ALJ to set aside the November

8, 2021 Default Order.20 Respondent for the first time alleged it had no notice of the

proceeding, and contended it would have engaged counsel and vigorously defended

OSHA’s preliminary decision had it been aware of the appeal—as it had with

similar litigation Complainant had filed against it.21 While Respondent admitted

the ALJ sent the orders to the correct address, it denied ever receiving them.22 And

it noted that some of Complainant’s correspondence had been sent to a former

employee—Respondent’s nephew—at an allegedly incorrect address and never

forwarded.23

By order dated May 10, 2022, the ALJ denied Respondent’s motion,

specifically finding that Respondent was properly served the May 12, 2021 Hearing

Order, the September 15, 2021 Order to Compel, and the October 7, 2021 Order to

Show Cause.24 The ALJ additionally analyzed the motion as seeking

Id.

Mitchell v. Rhino, Inc., ALJ No. 2021-STA-00041, slip op. at 2 (ALJ Nov. 30, 2021)

(Order Granting Respondent’s Request for Additional Time to Obtain Representation). The

ALJ construed the email as Respondent’s request for additional time. Id.

Id. at 3.

Decision and Order on Damages (D. & O.) at 1 (ALJ Sept. 25, 2023).

Respondent’s Response to Order Granting Motion for Default Judgment at 1-3.

Id. at 2-3.

Id. at 1-2.

Mitchell v. Rhino, Inc., ALJ No. 2021-STA-00041, slip op. at 8 (ALJ May 10, 2022)

(Order Denying Respondent’s Motion). The ALJ primarily relied on the rationale that the

“Mailbox rule” establishes a rebuttable presumption that correctly labeled mail is received

by parties and the fact that the UPS tracking information showed that each of the abovementioned orders were properly addressed and delivered to Respondent’s business address.

Id. at 6-8.

reconsideration, and summarily found that Respondent established no new evidence

or error of law that would permit revisiting the prior order.25 The ALJ further

pointed out that Respondent’s failure to respond to the previous orders constituted

“willful noncompliance throughout the pendency of this case.”26

On May 11, 2022, the ALJ issued an Order Regarding Relief and Damages,

which instructed Complainant to file proof of damages, setting forth the

compensatory and special damages Complainant alleges entitlement to under the

STAA.27

On September 1, 2022, Complainant submitted an unopposed motion

requesting an extension of the deadline for filing submissions regarding the issue of

relief and damages because Complainant had passed away on August 30, 2022.28

The ALJ granted Complainant’s motion on September 8, 2022.29 On January 19,

2023, the ALJ granted the request for Rhonda Miller (Miller) to be substituted in

place of Complainant as his common law wife.30

On March 6, 2023, Miller submitted Complainant’s proof of damages and

evidence in support of Complainant’s request for damages.31 Respondent did not

respond.32 On September 25, 2023, the ALJ issued a Decision and Order Awarding

Damages directing Respondent to pay Complainant: (1) back pay in the amount of

$147,974.94, pre-judgment interest in the amount of $5,565.66, and post-judgment

interest; and (2) compensatory damages in the amount of $150,000.00.33

On October 9, 2023, Respondent timely filed a petition for review of the ALJ’s

November 8, 2021 Default Order and September 25, 2023 D. & O. arguing that it

had not received proper notice and, therefore, default judgment was

Id. at 8.

Id.

D. & O. at 2; see also Mitchell v. Rhino, Inc., ALJ No. 2021-STA-00041, slip op. at 1-2

(ALJ May 11, 2022) (Order Regarding Relief and Damages). The ALJ subsequently granted

two requests for extensions by Complainant regarding submissions on the issue of relief

and damages.

D. & O. at 2.

Id.

Id. at 8.

inappropriate.34 Miller filed a Response Brief on December 11, 2023, defending the

ALJ’s orders. Respondent filed a Reply Brief.

JURISDICTION AND STANDARD OF REVIEW

The Secretary of Labor has delegated authority to the ARB to hear appeals

from ALJ decisions and issue agency decisions in cases arising under the STAA.35

The Board reviews ALJ’s determinations on procedural issues, evidentiary rulings,

and sanctions under an abuse of discretion standard.36

DISCUSSION

1. The Process an ALJ Must Follow Prior to Entering a Default Judgment

The Department of Labor’s Rules of Practice and Procedure for hearings

before the Office of Administrative Law Judges (OALJ) permit an ALJ to issue

sanctions against parties for failing to comply with a judge’s discovery order,

including to “[r]ender[] a default decision and order against the disobedient party.”37

The Board has recognized that ALJs have a reasonable degree of discretion in

the imposition of discovery sanctions under the OALJ’s rules, as well as sanctions

pursuant to the inherent authority of ALJs to manage the orderly and expeditious

disposition of cases.38 ALJs, however, still “must exercise this power cautiously . . .

Complainant’s Response Brief (Resp. Br.) at 17 and Respondent’s Reply Brief (Reply

Br.) at 3-4.

Secretary’s Order No. 01-2020 (Delegation of Authority and Assignment of

Responsibility to the Administrative Review Board (Secretary’s discretionary review of ARB

decisions)), 85 Fed. Reg. 13,186 (Mar. 6, 2020).

Butler v. Anadarko Petroleum Corp., ARB No. 2012-0041, ALJ No. 2009-SOX-00001,

slip op. at 2 (ARB June 15, 2012) (the Board reviews an ALJ’s imposition of discovery

sanctions on an abuse of discretion standard); Waechter v. J.W. Roach & Sons Logging and

Hauling, ARB No. 2004-0183, ALJ No. 2004-STA-00043, slip op. 2 (ARB Dec. 29, 2005)

(same) see also Forrand v. FedEx Express, ARB No. 2019-0041, ALJ No. 2017-AIR-00016,

slip op. at 2 (ARB Jan. 4, 2021) (“The Board reviews an ALJ’s determinations on procedural

issues under an abuse of discretion standard, examining whether the ALJ abused [their]

power to preside over the proceedings in ruling as [they] did.”).

29 C.F.R. § 18.57(b)(1)(vi).

Jenkins v. EPA, ARB No. 2015-0046, ALJ No. 2011-CAA-00003, slip op. at 8 (ARB

Mar. 1, 2018); Newport v. Fla. Power & Light Co., ARB No. 2006-0110, ALJ No. 2005-ERA00024, slip op. at 4 (ARB Feb. 29, 2008); see Link v. Wabash R. R. Co., 370 U.S. 626, 630-31

(1962) (“The authority of a court to dismiss sua sponte for lack of prosecution has generally

been considered an ‘inherent power,’ governed not by rule or statute but by the control

and should take care in fashioning sanctions for conduct that abuses the judicial

process.”39 And given the drastic nature of a default sanction, ALJs must follow

uniquely strict guidelines prior to imposing such a sanction: default “deserves closer

scrutiny within the abuse-of-discretion framework.”40

Given its uniquely harsh consequence, the Board has held that an ALJ

should consider several factors when determining whether a default judgment or

dismissal under 29 C.F.R. § 18.57(b)(1)(vi) is warranted:

(1) the prejudice to the other party, (2) the amount of

interference with the judicial process, (3) the culpability,

willfulness, bad faith or fault of the litigant, (4) whether

the party was warned in advance that dismissal of the

action [or default judgment] could be a sanction for failure

to cooperate or noncompliance, and (5) whether the efficacy

of lesser sanctions [was] considered.[41]

The Eleventh Circuit, which has appellate jurisdiction over this case, has

limited the “severe” sanction of default to instances where “a party demonstrates a

necessarily vested in courts to manage their own affairs so as to achieve the orderly and

expeditious disposition of cases.”).

Pfeifer v. AM Retail Grp., Inc., ARB No. 2023-0009, ALJ No. 2021-SOX-00030, slip

op. at 3-4 (ARB Mar. 22, 2023) (citing Newport, ARB No. 2006-0110, slip op. at 4).

Adm’r, Wage & Hour Div., U.S. Dep’t of Lab. v. Global Horizons Manpower, Inc.,

ARB No. 2009-0016, ALJ No. 2008-TAE-00003, slip op. at 11 (ARB Dec. 21, 2010); see also

Jenkins, ARB No. 2015-0046, slip op. at 10 (citing Washington Metro. Area Transit Comm’n

v. Reliable Limousine Serv., 776 F.3d 1, 4 (D.C. Cir. 2015) (noting that “where a lower

court’s order of dismissal or default as a discovery sanction is under review, the review ‘is

more thorough because the drastic sanction deprives a party completely of its day in

court.’”)).

Adm’r, Wage & Hour Div., U.S. Dep’t of Lab. v. Deepali Co., LLC, ARB No. 20210028, ALJ No. 2017-DBA-00022, slip op. at 4 (ARB Sept. 20, 2021) (citing Howick v.

Campbell-Ewald Co., ARB Nos. 2003-0156, 2004-0065, ALJ Nos. 2003-STA-00006, 2004STA-00007, slip op. at 8 (ARB Nov. 30, 2004)); see also Jenkins, ARB No. 2015-0046. The

Board acknowledges that it has not consistently applied the above-mentioned factors when

determining whether the issuance of a default judgment or dismissal was a proper sanction

under the OALJ’s Rules of Practice and Procedure and that the current case requires

stronger consideration of lesser sanctions as required by the Eleventh Circuit. Because

these factors have not been consistently applied, we are providing clarification in this

Decision and Order. Accordingly, as the concurrence notes, the ALJ’s approach in this case

is understandable.

flagrant disregard for the court and the discovery process.”42 Thus, violation of a

discovery order caused by “simple negligence, misunderstanding, or inability to

comply” will not justify default judgment.43 Instead, the factfinder must make a

determination of willfulness or bad faith to comply with a discovery order. 44

2. The ALJ Abused Their Discretion by Not Considering the Relevant

Factors Prior to Entering Default Judgment

The Eleventh Circuit, in reviewing default judgments as a sanction, has

made clear that a tribunal abuses its discretion “if it applies an incorrect legal

standard, follows improper procedures in making the determination, or makes

findings of fact that are clearly erroneous.”45 In the present case, the ALJ did not

properly consider the above-mentioned factors before issuing a default judgment

against Respondent under 29 C.F.R. § 18.57(b)(1)(vi). The ALJ thus abused her

discretion.46

Aztec Steel Co. v. Fla. Steel Corp., 691 F.2d 480, 481-82 (11th Cir. 1982) (in which

the Eleventh Circuit concluded that the district court did not abuse its discretion in

dismissing the claim as a discovery sanction after Aztec Steel willfully refused to provide

the defendants with basic information in the six years that the case was pending); see also

Cox v. Am. Cast Iron Pipe Co., 784 F.2d 1546, 1556 (11th Cir. 1986) (“The decision to

dismiss a claim, like the decision to enter a default judgment, ought to be a last resort—

ordered only if noncompliance with discovery orders is due to willful or bad faith disregard

for those orders.”).

In re Se. Banking Corp., 204 F.3d 1322, 1332 (2000) (quoting Malautea v. Suzuki

Motor Co., 987 F.2d 1536, 1542 (11th Cir. 1993)); see also EEOC v. Troy State Univ., 693

F.2d 1353, 1357 (11th Cir. 1982) (“A party’s simple negligence or other action grounded in a

misunderstanding of a court order does not warrant dismissal.”) (citation omitted).

Maus v. Ennis, 513 F. App’x 872, 878 (11th Cir. 2013) (in which the Eleventh Circuit

concluded that the district court did not abuse its discretion when it imposed a default

judgment based on the pro se defendant’s disrespectful conduct and refusal to participate in

discovery); Malautea, 987 F.2d at 1542 (citation omitted) (“a default judgment sanction

requires a willful or bad faith failure to obey a discovery order.”) (citing Societe

Internationale pour Participations Industrielles et Commerciales v. Rogers, 357 U.S. 197,

212 (1958)).

Vega v. T-Mobile USA, Inc., 564 F.3d 1256, 1264 (11th Cir. 2009) (quoting Klay v.

Humana, Inc., 382 F.3d 1241, 1251 (11th Cir. 2004)).

See Pfeifer, ARB No. 2023-0009, slip op. at 4 (dismissal as a discovery sanction was

not warranted when complainant made “good-faith efforts to comply with the ALJ’s orders

and directives”); see also Stalworth v. Justin Davis Enters., Inc., ARB No. 2009-0038, ALJ

No. 2009-STA-00001, slip op. at 5 (ARB June 16, 2010) (in which the Board concluded the

ALJ abused his discretion in finding Respondent defaulted because Respondent’s conduct

was “not so egregious that [it] should be denied the opportunity to present its case”); Adm’r,

Wage & Hour Div., U.S. Dep’t of Lab. v. Siliconlinks, Inc., ARB No. 2009-0131, ALJ 2009LCA-00024, slip op. at 6-7 (ARB Oct. 28, 2009) (in which the Board concluded that the ALJ

In this case, while the ALJ referenced some of the factors listed above when

determining that a default judgment was a proper sanction for Respondent’s

repeated failure to comply with the discovery and other orders, the ALJ did not

address all the factors necessary to properly balance the harsh consequence of a

default judgment with the effects of Respondent’s conduct. Specifically, the ALJ

briefly referenced prejudice to the other party, interference with the judicial

process,47 willful noncompliance,48 and advanced warning of the possibility of a

default judgment in both the May 14, 2021 Hearing Order and October 7, 2021

Order to Show Cause.49

The ALJ erred, however, by failing to address why lesser sanctions would be

ineffective.50 Here, default constituted the first and only sanction by the ALJ.

While a court is not required to issue lesser sanctions before finding default

judgment appropriate, the Board has held it must at least “explain its reason for

issuing a default judgment rather than a lesser sanction.”51 Likewise, the Eleventh

Circuit has established that default judgment is “appropriate only as a last resort,

when less drastic sanctions would not ensure compliance with the court’s orders.”52

Here, the ALJ failed to provide any discussion of the other sanctions allowed under

abused his discretion in dismissing the claim as a discovery sanction where the

Administrator did not receive the pre-hearing order and had no notice of the hearing until

the day before it was scheduled); Adm’r, Wage & Hour Div., U.S. Dep’t of Lab. v. Mitchem

Transports, Inc., ARB No. 2003-0115, ALJ No. 2002-SCA-00016, slip op. 7-8 (ARB June 30,

2004) (in which the Board concluded that the ALJ abused his discretion in entering default

judgment when the respondents had filed an answer to the complaint).

Default Order at 4.

Order Denying Respondent’s Motion at 8.

Default Order at 3-4.

In re Se. Banking Corp., 204 F.3d at 1333, 1334-35 (in which the Eleventh Circuit

agreed with district judge’s determination that defendant’s violation of discovery orders was

willful, not due to misunderstanding or negligence, but nonetheless reversed dismissal of

the claim under Fed. R. Civ. P. 41(b) because the district judge failed to consider lesser

alternative sanctions); see also Pfeifer, ARB No. 2023-0009, slip op. at 4 (the Board noted

that it was error “for the ALJ to conclude that sanctions less than dismissal would be

ineffective.”).

Jenkins, ARB No. 2015-0046, slip op. at 11 (citing Webb v. Dist. of Columbia, 146

F.3d 964, 971 (D.C. Cir. 1998)); see also Malautea, 987 F.2d at 1544 (“A default sanction

may be proper even when not preceded by the imposition of lesser sanctions.”).

Malautea, 987 F.2d at1542 (citing Navarro v. Cohan, 856 F.2d 141, 142 (11th Cir.

1988)); see also Wouters v. Martin Cnty., Fla., 9 F.3d 924, 933-34 (11th Cir. 1993) (“We have

consistently held that while district courts have broad powers under the rules to impose

sanctions for a party’s failure to abide by court orders, dismissal is justified only in extreme

circumstances and as a last resort.”).

29 C.F.R. § 18.57(b)(1), nor did they offer an explanation as to why these sanctions

would be insufficient to induce Respondent to comply with the previous orders.53

Because the ALJ did not follow the process outlined in Board precedent and

required by the Eleventh Circuit, the Board finds the ALJ abused their discretion in

issuing a default judgment against Respondent as a discovery sanction under

29 C.F.R. § 18.57(b)(1)(vi) and, therefore, remands this matter to the ALJ. On

remand, the ALJ should consider the above-mentioned factors as applied to

Respondent’s conduct and consider what other sanction(s), if any, are appropriate

under the applicable factors and circumstances of this case.

CONCLUSION

For the above reasons, we VACATE the ALJ’s Order Granting Motion for

Default Judgment and REMAND this matter for further proceedings consistent

with this order. Furthermore, in light of this Order Vacating and Remanding the

default judgment against Respondent, the Decision and Order on Damages issued

on September 25, 2023, and the Supplemental Decision and Order Awarding

Attorney’s Fees and Costs are hereby VACATED as well.

SO ORDERED.

____________________________________

IVEY S. WARREN

Administrative Appeals Judge

____________________________________

ANGELA W. THOMPSON

Administrative Appeals Judge

See Manoharan v. HCL Am., Inc., ARB No. 2021-0060, ALJ Nos. 2018-LCA-00029,

2021-LCA-00009, slip op. at 7 (ARB Apr. 14, 2022) (The Board specifically noted that the

ALJ had concluded that “lesser sanctions would not alter Complainant’s conduct . . . .”).

Judge Rolfe, concurring:

I agree with my colleagues that the ALJ did not do enough under controlling

ARB and Eleventh Circuit precedent in discussing why lesser sanctions would not

be effective before entering the extreme sanction of a default judgment. I therefore

concur in the decision to remand the case for a determination of what lesser

sanction, if any, is appropriate under the circumstances.

I write separately, however, to express my view that in addition to not

considering whether lesser sanctions would be effective, the ALJ also did not

sufficiently address the remaining factors of Respondent’s culpability, the prejudice

suffered by Complainant, or the amount of interference with the judicial process to

adequately sustain a default sanction.

Balancing those factors, I do not believe the prejudice suffered by the delay at

the outset of the ALJ proceedings -- at a time when Respondent was not represented

by counsel -- reasonably can justify the $322,940.60 in resulting fines the ALJ

ultimately imposed. I would therefore instruct the ALJ on remand to take default

off the table for now and consider a more proportional sanction for Respondent’s

misconduct, while keeping default available in the event of future misconduct.

Jenkins, ARB No. 2015-0046, slip op. at 10 (citation omitted) (the choice of penalty

initially must be “guided by the ‘concept of proportionality’ between offense and

sanction.”).54

The bar under the relevant factors for entering either a default judgment or a

dismissal as a sanction is high. As a threshold matter, a party’s offending conduct

must go beyond mere negligence. The ARB has held an ALJ may only impose these

sanctions after she first concludes “willfulness, bad faith, or fault” caused “a party’s

failure to cooperate in discovery.” Global Horizons Manpower, Inc., ARB No. 20090016, slip op. at 11 (citation omitted). The Board has further explained that if

“‘fault’ has any meaning not subsumed in ‘willfulness’ and ‘bad faith,’ it must at

least cover gross negligence amounting to a ‘total dereliction of professional

responsibility’ even though not a conscious disregard of a court’s orders.” Jenkins,

ARB No. 2015-0046, slip op. at 12 (citation omitted).

The ALJ entered default in this case six months after issuing the initial scheduling

order and less than two months after Complainant filed a motion to compel production of

initial disclosures and responses to his initial discovery requests. That failure to respond to

discovery at the outset of the case was the only misconduct at issue. In calculating

damages, the ALJ subsequently accepted Complainant’s unopposed submission in its

entirety, awarding: $147,974.94 in backpay with pre-judgment interest of $5,565.66 and

post-judgment interest pursuant to 26 U.S.C. § 6621(a)(2) compounding quarterly;

compensatory damages of $150,000.00 for emotional distress; and attorney fees of

$19,400.00. Default Order at 5; D. & O. at 8; Attorney Fee Order at 2.

The Eleventh Circuit similarly holds “the severe sanction of a dismissal or

default judgment is appropriate only as a last resort, when less drastic sanctions

would not ensure compliance with the court’s orders.” Malautea, 987 F.2d at 1542.

“Violation of a discovery order caused by simple negligence, misunderstanding, or

inability to comply” does not justify “a default judgment or dismissal.” Id.

Moreover, the prejudice suffered by the opposing party must be severe,

quantifiable, and attributable to the bad faith action. An ALJ must determine a

party “severely hampered the other party’s ability to present his case,” to the point

where “it would be unfair to require him to proceed” or that it “impairs [his] ability

to determine the factual merits of [his] claim.” Jenkins, ARB No. 2015-0046, slip op.

at 12 (citations omitted). The Eleventh Circuit has likewise affirmed default

sanctions in instances where a party prejudiced their opponent’s preparation for

trial, preventing it from effectively litigating the case. See, e.g., Lyons v. O’Quinn,

746 F. App’x 898, 902 (11th Cir. 2018).

An ALJ must be similarly direct when addressing the harm to the judicial

process. Rather than speaking in generalities, an ALJ should explain how the

misconduct “put an intolerable burden on the trial court” by explaining the extent to

which a party’s failure to comply with a discovery order required the ALJ “to modify

its own docket and operations to accommodate the delay.” Jenkins, ARB No. 20150046, slip op. at 12. The Eleventh Circuit similarly limits default to instances where

“a party demonstrates a flagrant disregard for the court and the discovery process.”

Aztec Steel Co., 691 F.2d at 481.

In my view, the ALJ did not do enough under these demanding standards to

establish either Respondent’s bad faith or a significant enough harm to

Complainant or the judicial process to justify a default as a sanction. In her initial

order granting default, the ALJ first found “self-represented parties are not excused

from any orders issued regarding initial disclosures and discovery in these

proceedings.” Default Order at 2.

The ALJ then provided a general justification for the sanction, stating only

Respondent’s unexplained failure to comply with her discovery order “has resulted

in the denial of Complainant’s right to discovery, as well as the impeding of the

OALJ’s adjudication of the instant matter.” Id. at 4. Without explaining how an

unrepresented party’s failure to initially answer discovery automatically amounted

to bad faith or quantifying the degree of harm to Complainant and the process, the

ALJ then concluded “the issuance of a default decision is deemed an appropriate

sanction for Respondent’s persistent noncompliance.” Id.55

Default would comprise the first and only sanction the ALJ would contemplate in

the case; as my colleagues correctly hold, the ALJ independently erred by not discussing

whether lesser sanctions would be effective.

In her order denying reinstatement after Respondent retained counsel, the

ALJ primarily relied on the rationale that the “mailbox rule” establishes a

rebuttable presumption that correctly labeled mail is received by parties and that

Respondent failed to rebut the presumption. Order Denying Respondent’s Motion

at 6. The ALJ additionally analyzed the motion as seeking reconsideration, and

summarily found that Respondent established no new evidence or any error of law

that would permit revisiting her prior order. Id. at 8.

Finally, the ALJ briefly analyzed reinstatement under Fed. R. Civ. P. 60(b),

which provides an “excusable neglect” standard for reinstatement of final

judgments. Id. The ALJ found under that standard that Respondent did “not offer

any credible reason for its failure to comply” and is not entitled to relief “for that

reason alone.” Id. at 10. The ALJ then mentioned Complainant’s multiple

allegations of prejudice, but did not evaluate any of them, finding “[r]egardless of

the veracity of Complainant’s claims [of harm]” there “would certainly be some

amount of prejudice to Complainant if the undersigned set aside the default

decision.” Id. The ALJ thus refused to reinstate the action.56

Once again, however, the ALJ did not discuss whether bad faith motivated

Respondent (other than arguably suggesting the failure to respond itself

automatically amounted to “willful noncompliance” notwithstanding that some of

Complainant’s discovery correspondence was sent to the wrong address), the degree

to which the delay prejudiced Complainant or to the OALJ’s ability to manage its

docket (other than to generally infer reinstatement would necessarily cause “some”

prejudice to Complainant), or whether something less drastic than a default

judgment could remedy Respondent’s failure to initially respond. The ALJ

concluded instead that the regulations authorize “rendering a default decision as a

discovery sanction” and “the undersigned did just that.” Id. at 8.

But that, in my view, is just not enough to bypass the merits of this case and

subsequently enter fines of this magnitude. While Respondent did not participate at

The ALJ erred to the extent she analyzed reinstatement under Fed. R. Civ. P. 60

instead of Fed. R. Civ P. 55(c). As noted, Rule 60 applies only to final judgments. The

judgment here was not final: a final judgment “ends the litigation on the merits and leaves

nothing for the court to do but execute [it,]” Pearson v. Kemp, 831 F. App’x 467, 470 (11th

Cir. 2020), and the ALJ had yet to determine damages in this case. Significantly, the

importance in distinguishing these two rules “lies in the standard to be applied in

determining whether or not to set aside the default.” EEOC v. Mike Smith Pontiac GMC,

Inc., 896 F.2d 524, 528 (11th Cir. 1990) (emphasis added). Good cause, the standard under

Rule 55(c), is far more lenient than excusable neglect: “‘Good cause’ is a mutable standard,

varying from situation to situation.” Compania Interamericana Exp-Imp, S.A. v. Compania

Dominicana de Aviacion, 88 F.3d 948, 951 (11th Cir. 1996). “It is also a liberal one[.]” Id.

(emphasis added).

the ALJ level prior to the default order, I find it unreasonable, without more, to

automatically infer the kind of bad faith, willfulness, or even gross negligence

amounting to a blatant disregard for the process necessary to support default,

motivated Respondent’s inaction.

Instead, Respondent’s initially unrepresented status provides a much more

likely cause of its unresponsiveness. Although proceeding pro se does not give

unfettered license to ignore court orders as the ALJ correctly noted, it does provide

meaningful context to Respondent’s explanation why it failed to initially respond -particularly since Respondent actively participated both below and at the Board

after retaining counsel.

Indeed, that lack of counsel must be considered in determining “the standard

of gross negligence amounting to a ‘total dereliction of professional responsibility,’”

Jenkins, ARB No. 2015-0046, slip op. at 12, the Board has required for a negligencebased default rather than one based on intentional bad faith: whether a party is

represented by counsel necessarily establishes the standard of care covering

professional responsibility. It also makes intentional bad faith more difficult to

establish in these circumstances where Respondent alleges it thought the action

was over when OSHA dismissed Complainant’s complaint and further points out

that it did hire counsel and vigorously defend the other actions it was aware of

arising out of the same facts.57

Regardless of Complainant’s motivation, in my view the roughly two-month

period between the time Complainant filed his motion to compel and the time the

ALJ entered the default order also cannot be shown to cause the degree of harm

independently necessary to justify “the death penalty of sanctions.” EEOC v.

General Dynamics, 999 F.2d 113, 119 (5th Cir. 1993). While on remand that delay

The ARB recently has held that a party’s unrepresented status does not insulate it

from a default sanction. Smith v. Akal Express, Inc., ARB No. 2022-0041, ALJ No. 2021STA-00028 (ARB Apr. 21, 2023). That much is true. Smith, however, inexplicably did not

address the factors the ARB and the courts have long held must be considered prior to

entering a default, including whether a party’s pro se status can be a consideration in

establishing bad faith or gross negligence. It merely held that a party’s pro se status,

standing alone, is not enough to avoid a default. Id. at 6 (holding “ignorance of the law is

neither a sufficient basis for granting equitable tolling nor by itself an independent ground

for establishing entitlement.”). Moreover, the facts of the two cases are materially distinct

on this issue. In Smith, the offending party had appeared before the OALJ and entered

some pleadings that the Board held undermined its argument it thought the case was over.

Id. at 6, n.35 (“Filing a response with the OALJ contradicts Respondents’ argument that

they believed the matter to be over following the OSHA dismissal. If Respondents thought

the matter was truly over, there would have been no reason for [it] to have prepared and

filed such a response.”) Here, Respondent’s behavior, not appearing in the case at all prior

to the default, is in line with such a belief.

absolutely could be shown to prejudice Complainant to some degree in developing

her claim, it cannot be reasonably found so severe at this point to prevent

Complainant from developing her case going forward. Jenkins, ARB No. 2015-0046,

slip op. at 12. Neither the ALJ’s decision, nor Complainant’s Response Brief, contain

any discussion of the kind of spoilation of evidence that can support a default

judgment. Likewise, there is nothing inherent about the several month delay that

can reasonably be said to have put an “intolerable burden” on OALJ’s docket. Id.58

Indeed, a survey of ARB cases and those arising in the Eleventh Circuit

demonstrates that default or dismissal are typically reserved for far longer delays

caused by far more serious intentional disruptions of the judicial process. See, e.g.,

Pfeifer, ARB No. 2023-0009, slip op. at 5 (dismissal not warranted despite party

intentionally ignoring several court orders and warnings because “errors and lack of

proper courtesy” do not warrant the extreme sanction of dismissal); Deepali Co.,

LLC, ARB No. 2021-0028, slip op. at 4 (default justified where party’s repeated

misconduct over three years generated extensive back and forth between the

parties, three motions to compel, and a postponed hearing); Jenkins, ARB No. 20150046, slip op. at 32-37 (default justified where EPA’s intentional refusal to

participate in discovery resulted in several motions to compel and a postponement

of the hearing); In re Sunshine Jr. Stores, Inc., 456 F.3d 1291, 1305, 1306 (11th Cir.

2006) (affirming default where a party’s bad faith “stonewalling,” including ignoring

multiple discovery orders and orders to appear over several years, interfered with

the “courts ability to manage its case load”); Aztec Steel Co., 691 F.2d at 481-82

(dismissal warranted after party willfully refused to provide basic information in

the six years that the case was pending); Hornady v. Outokumpu Stainless USA,

572 F.Supp.3d 1162, 1175 (S.D. Ala. 2021) (granting default judgment where the

record was “littered with discovery orders, discovery conferences, [five] motions to

The ALJ’s entering of the default judgment (while premature and in my view

counter to controlling law) was understandable given the difference between the Federal

Rules of Civil Procedure and OALJ’s Rules of Practice and Procedure. The Federal Rules

contemplate default in two distinct circumstances: under Rule 55 when a party fails to

respond to a complaint and under Rule 37 when a party who has responded subsequently

fails to cooperate in discovery. Because ordinarily there is no need to respond to a complaint

under the OALJ rules, there is no OALJ corollary to Fed. R. Civ. P. 55. Instead, OALJ Rule

18.57 is based on Fed. R. Civ. P. 37, which requires a continued pattern of abuse to justify

default rather than a simple failure to initially respond to discovery requests. This case -where Respondent did not appear at all before the default was entered -- is much more

analogous to a Rule 55 default rather than a Rule 37 default. But the distinction ultimately

makes no difference: whether analyzed under the demanding Rule 37 standards to impose

the sanction or under the “liberal” good cause standard to forgive it under Rule 55, the

degree of Respondent’s bad faith and resulting harm to Complainant simply are not

significant enough to sustain a default judgment.

compel, and [two] motions for sanctions” all designed to “deter Defendant’s . . .

continued obstinate refusal” to participate in discovery).59

This is not to say Complainant should go without recourse or Respondent

should get a free pass for its conduct to this point. To the contrary, to the extent

Respondent’s delay can be shown to have caused the spoilation of evidence or other

difficulties in the prosecution of Complainant’s case, more measured responses -such as creating inferences regarding credibility for unavailable witnesses or

unpreserved documents or limiting defenses affected by any lost or damaged

evidence -- should be considered on remand to appropriately address the

circumstances.

I would therefore instruct the ALJ to hold off on default (for now). And I would

also vacate the damage and attorney fee orders.60

____________________________________

JONATHAN ROLFE

Administrative Appeals Judge

Given the lack of discussion in some recent ARB cases regarding default, the ALJ’s

approach is, once again, understandable. In Deepali, for example, the Board provided a onepage summary affirmance of an ALJ’s default judgment. But while the discussion was

similar to that in this case, the underlying substance dramatically differed. The

Department of Labor’s Wage and Hour Division concluded there the respondent

disregarded labor standards under several contracts, failed to pay employees their full

hourly rate, failed to pay required overtime, did not submit certified payrolls, and

misclassified workers as independent contractors. During the debarment procedures in

front of the ALJ, the respondent continued to engage in a continued pattern of abuse of

discovery lasting nearly three years. By contrast, OSHA dismissed Complainant’s action

here finding both that Respondent legitimately terminated Complainant after he was

involved in an accident and that he had not engaged in any protected activity prior to his

termination. Miller, for her part, continues to vigorously dispute OSHA’s findings. These

legitimate conflicts, in my view, should be resolved based on substance: “Defaults are seen

with disfavor because of the strong policy of determining cases on their merits.”

Fla. Physician’s Ins. Co. v. Ehlers, 8 F.3d 780, 783 (11th Cir. 1993) (citation omitted).

Notably, Respondent’s failure to respond to the ALJ’s Order Regarding Relief and

Damages after retaining counsel remains deeply concerning and highly relevant to any

future sanction the ALJ might impose. But in my view it is not yet enough (even when

combined with Respondent’s prior misconduct) to sustain a default judgment under the

authority cited above.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.