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Equal Employment Opportunity Comm. v. Recession Proof Usa LLC

United States District Court, Ninth Circuit

December 5, 2013

Equal Employment Opportunity Comm., Plaintiff,
v.
Recession Proof USA LLC, et al., Defendants.

MEMORANDUM OF DECISION AND ORDER

STEPHEN M. McNAMEE, District Judge.

Pending before the Court is Magistrate Judge Bridget S. Bade's Report and Recommendation recommending that Plaintiff's motion for default judgment be granted in part and denied in part. (Doc. 48.) Plaintiff has filed a limited objection to the Report and Recommendation. (Doc. 67.) After considering the Report and Recommendation and the arguments raised in Plaintiff's Objection, the Court will deny the objection and affirm in part and deny in part Judge Bade's Report and Recommendation.

STANDARD OF REVIEW

When reviewing a Magistrate Judge's Report and Recommendation, this Court "shall make a de novo determination of those portions of the report... to which objection is made, " and "may accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate judge." 28 U.S.C. § 636(b)(1)(c); see also Baxter v. Sullivan , 923 F.2d 1391, 1394 (9th Cir. 1991) (citing Britt v. Simi Valley Unified Sch. Dist. , 708 F.2d 452, 454 (9th Cir. 1983)).

Failure to object to a Magistrate Judge's recommendation relieves the Court of conducting de novo review of the Magistrate Judge's factual findings; the Court then may decide the dispositive motion on the applicable law. Orand v. United States , 602 F.2d 207, 208 (9th Cir. 1979) (citing Campbell v. United States Dist. Ct. , 501 F.2d 196 (9th Cir. 1974)). By failing to object to a Report and Recommendation, a party waives its right to challenge the Magistrate Judge's factual findings, but not necessarily the Magistrate Judge's legal conclusions. Baxter , 923 F.2d at 1394; see also Turner v. Duncan , 158 F.3d 449, 455 (9th Cir. 1998) (failing to object to a Magistrate Judge's legal conclusion "is a factor to be weighed in considering the propriety of finding waiver of an issue on appeal"); Martinez v. Ylst , 951 F.2d 1153, 1156 (9th Cir. 1991) (citing McCall v. Andrus , 628 F.2d 1185, 1187 (9th Cir. 1980)).

DISCUSSION[1]

Plaintiff Equal Employment Opportunity Commission ("EEOC") moved for default judgment in this case alleging race discrimination and retaliation. (Doc. 47.) In its First Amended Complaint (Doc. 16), EEOC brought claims against Defendants Recession Proof USA LLC ("Recession Proof"), Phillip D. Smith d/b/a Recession Proof USA LLC, Phillip Smith d/b/a Prime Time Marketing Solutions LLC, and Prime Time Marketing Solutions LLC d/b/a/USA Supreme Technology. (Doc. 16.) EEOC alleged that Defendants terminated Recession Proof employee Richard Miller for opposing what he reasonably believed was discrimination, and that they terminated Recession Proof employee Ron Frasso for participating in a proceeding under Title VII, in violation of Section 704(a) of Title VII, 42 U.S.C. §§ 2000e-3(a). (Doc. 16 at 16-17.) EEOC further alleged that Miller was terminated based on his race in violation of Section 703(a) of Title VII, 42 U.S.C. § 2000e-2(a). (Doc. 16 at 14.)

EEOC properly served Defendants (Docs. 32, 33, and 34), but Defendants failed to appear or otherwise respond to the First Amended Complaint. Subsequently, the Clerk of Court entered default against Defendants. (Docs. 37 and 46.) Judge Bade held a hearing on the EEOC's motion for default judgment. (Doc. 53.) Following the hearing, Judge Bade recommended that default judgment be entered in favor of the EEOC and against Recession Proof USA LLC and Prime Time Marketing Solutions LLC d/b/a USA Supreme Technology. (Doc. 60.) Judge Bade found that Recession Proof USA LLC and Prime Time Marketing Solutions LLC d/b/a USA Supreme Technology were joint employers of Miller and Frasso. (Id. at 21.) However, Judge Bade further recommended that EEOC's request for default judgment against Defendants' Phillip Smith d/b/a Recession Proof USA LLC and Phillip Smith d/b/a Prime Time Marketing Solutions LLC be denied. (Id. at 16.)

Objection

EEOC objects to Judge Bade's factual findings that EEOC failed to adequately plead an alter-ego/veil-piercing theory of liability that would hold Smith personally liable for the actions of Recession Proof USA LLC. (Doc. 67.) EEOC further objects to the Judge Bade's recommendation that the Court not allow EEOC to further amend its complaint. (Id.)

Judge Bade's Report and Recommendation discussed in detail the factual and procedural background of this case. Judge Bade found that EEOC had not explained why it failed to included any factual allegations relevant to its alter ego/veil piercing theory in its First Amended Complaint. (Doc. 60 at 15.) After thoroughly reviewing the controlling legal principles at issue, Judge Bade concluded that default judgment should not be entered against Phillip D. Smith d/b/a Recession Proof USA LLC or Phillip Smith d/b/a Prime Time Marketing Solutions LLC. (Id. at 15-16.) As to further amendment, Judge Bade recommended that the Court deny any further amendment of the complaint because it was untimely and would prolong completion of a case that has proceeded to the judgment stage. (Id. at 16.) Moreover, Plaintiff seeks to rectify its earlier omissions at the end of the case. Plaintiff is a prodigious litigator in the courts of the United States. Plaintiff's counsel is well aware of the legal theories when it seeks to impose liability against an adversary.

Having reviewed Judge Bade's legal conclusions and the objection made by Plaintiff, the Court finds that Judge Bade adequately addressed all of Plaintiff's arguments and adopts her reasoning finding that default judgment should not be entered against Phillip D. Smith d/b/a Recession Proof USA LLC or Phillip Smith d/b/a Prime Time Marketing Solutions LLC. The Court further agrees that any further amendment of the complaint be denied because it was untimely and would prolong completion of a case that has proceeded to the judgment stage.

Damages Following the default damages hearing, Judge Bade recommended that Miller and

Frasso be granted back pay, compensatory and punitive damages against Defendants Recession Proof USA LLC and Prime Time Marketing Solutions LLC d/b/a USA Supreme Technology. The Court has reviewed these recommendations and finds that Miller and Frasso are entitled to back pay, compensatory and punitive damages against these Defendants. Further, the Court has reviewed the damages recommendations and finds reasonable the back pay and compensatory damages, but will reduce the punitive damage award. The Court finds that Miller's and Frasso's back pay and compensatory damages awards are sizeable and that a further sizeable punitive award is not appropriate. Finally, Judge Bade ...


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