2004 D e c i sion s O p inion s of the U nit e d S t at e s C our t of Appe al s for the Thir d C ir c uit 6-8-2004 

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. P at el P r e c e de n t i al or N on-P r e c e de n t i al : N on-P r e c e de n t i al D ocke t N o . 03-3494

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Thi s de c i sion i s br ou gh t t o you for f r e e a nd ope n a c c e s s b y the O p inion s of the U nit e d S t at e s C our t of Appe al s for the Thir d C ir c uit at V i l l a no va U nive r sit y S choo l of L a

w Di g it al Re posit or y

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w Di g it al Re posit or y

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w . v i l l a no va . e du/thir dc ir c uit_2004/606* Hon. Arthur L. Alarcón, Seni or Judge, United States Court of Appeal s for the

Ninth Circui t, s itting by designation. NOT PRE CEDENT IAL UN ITED STA TES CO UR T O F A PPE AL S FO R T HE TH IRD CIR CU IT

NO. 03-3494

RAM ADA FRAN CHISE SY STEM S, INC., aDelaware Corporation

v. JAG DIS H P AT EL , an ind ividua l; RIT A P AT EL , an ind ividua l, Ap pellan ts

On A ppeal from the Un ited States District Co urt

for the Dis tri ct of New Jersey (D.C. Civi l No. 02-CV-597) Distri ct Judge: Hon. John C. Lifl and

Submitte d Under Third Circ uit LAR 34.1(a)

May 28, 2004 Bef or e: SCI RIC A, FI SHER, an d ALAR CÓN * , Circuit Judges (Fil ed: June 8, 2004)

OPINI ON OF THE COURT AL AR CÓ N, Circuit

Judge
. Jagd ish Pa tel and Rita P atel (“the Patels” ) app eal fro m the orde r striking their

answ er and enterin g def ault jud gm ent ag ainst the m b ecau se of their fa ilure to c om ply2

with the co urt’s disc over y orders. T hey seek revers al on f ive gro und s: One. The dist

rict court l acked subje ct-matter j urisdi ction ove r thi s diver sity act ion. Two . The district

court abused its discretion in sancti oning the Patels because R am ad a f ail ed to pr ov id e r ec ip ro ca l d isc ov er y. Three. The di stri ct court abused it s discretion i n attributi ng the Pate ls’ wil lful failu re to abid e by its d isco ver y orde rs so lely to th e Pa tels th em selv es. Four. The di stri ct court denied the Patel s thei r Firs t Amendment right to have access to the court s by ordering t heir out -of-st ate attorneyto assoc iatelocal counsel because he was not

a member of the bar

of the Unit ed State s District Court for the Dis tri ct of N ew Je rse y. Five. The or der barring the Patels fr om their c hoice of couns el was void pur suant to 28 U.S.C. § 636(c) because theydid not voluntari ly consent to the is suance of a disposi tive order by a magistr ate j udge. W e af firm bec aus e w e co nclu de th at ea ch o f the se c ont entio ns la cks me rit. I Bec ause the pa rties are f amiliar with the fa ctual a nd p roced ural ba ckgr oun d ofthis

cas e, w e su mm arize onl y thos e fa cts th at are per tinen t to o ur d ispo sition of th is ap pea l. On February 8, 2002, Ramada Franc hise Sy stems, Inc. ( “Ramada”) fil ed a complaint

against the Pate ls for

breach of a mote l-fr anchise a greement t he two parti es had entere d into on May 19, 1999. The Patel s fil ed a pro se ans wer on May 17, 2002. The3

parties e ntered into a jo int disco very plan dated M ay 15, 20 02 in wh ich the y agreed to exch ange their initial d isclosu res pu rsuan t to Ru le 26 o f the F edera l Rule s of C ivil Pro ced ure by M ay 31 , 200 2. Ra ma da s erv ed its initia l disc losu res b y Ma y 31, 2 002 . Th e Pa tels d id n ot d o so . Rama da uns uc ce ss fu ll y atte mpt ed to co nt ac t t he Patel s’ Cal if

or ni a c oun se l, Fr an k A. Weiser, to dis cuss product ion of thePatels ’ ini tialdiscl osures. On July 2, 2002, Ramada sent a l ette r to Mr. Weise r, i nforming him that thePatels ’ ini tialdiscl osures had y et to be produced, and that Ramada would see k the ass ist ance of the cour t if t he Patel s did not serve their i niti al dis closur es by July9, 2002. Becaus e the Pat els di d not tr ansmit t he initial di sclosures by July9, 2002, Ramada sent a letter to the court

asking t hat thematter be a ddr esse d at th e Ju ly 16, 2 002 statu s co nfe ren ce. Mr. Weiser part

icipated in t

he July16, 2002 st atus confe rence bymeans of a tele phone conference c all. Magistrate Judge Stanl ey R. Chesl er conti nued the st atus conference until August 6, 2002, a fter Mr. Weis er all eged that his medical condit

ion prev ented him f rom respo ndin g to R ama da’s d iscov ery reque st. At the August 6, 2002, st atus confe rence, Judge Chesler advised Mr. Weis er that he could no l onger appear before the court on t

he Patel s’ behal f because he was not admitted to practi ce before the court and had not retained local counsel. The court also entere d a pretrial s cheduli ng order r equiri ng the Pate ls t o serve their Rule26 initial disc losu res b y Au gus t 20 , 200 2, an d th at all d isco ver y be c om plete d by O ctob er 1 5, 20 02.4

The Patels fail ed to serve thei r Rule 26 ini tialdiscl osures byAugust 20, 2002, or respond to Ramada’s discovery requests. Ram ada re ques ted lea ve to f ile a m otion to strike the answ er and for d efau lt jud gm ent o n A ugu st 26 , 200 2. Ju dge Ch esle r gra nted this r equ est o n S epte mb er 3 , 200 2. Judge Chesler

entere d an amended pretrial s cheduli ng order on November 4, 2002, extendi ng the dis coverywindow to January15, 2003. Ramada fi led it s motion to strike the answer and for

default judgment on December 3, 2002. The Patel s did not file a respo nse to the m otion. O n Fe brua ry 5, 200 3, M agistrate Judg e M ark F alk sen t the Pa tels a letter in w hich h e stated that the y were being prov ided “ one m ore o ppo rtunity to respond” t o the moti on to st rike t heir ans wer and for the e ntryof a default by February 20, 200 3. A lthoug h the P atels sign ed the return receip t for the cour t’s letter, they fa iled to sub mit a resp ons e. On Ap ri l 2 3, 200 3, Ju dgeFalk f il ed hi s r ep or t and rec omme ndati on. He

re comme nde d that

Rama da’ s mo ti on s hou ldbe g ra nt ed. Dis tric t Co ur t J udg e J ohn C. Lifland adopted the re commendation and i ssued an orde r on July 18, 2003 st

riki ng the answer, and entered judgment in favor of Ramada awardi ng it $186, 941.46 plus prejudgm ent interest of $15 ,726.36. Th e Patels hav e timely appealed f rom that ord er. II A. The Patels contend that thecourt l acked subje ct-matter j urisdi ction to enter t he5

default judgment becaus e it f

aile d to make a findi ng that t he parti es were diver se and that the am oun t in con trover sy excee ded $ 75,00 0. N o auth ority was cited to supp ort this contention. It

is frivolous. The complaint

alle ges in par agraph 1 that Ramada is a Dela ware corporation which has its principal pl ace of business in New Jersey. It al so alleges in paragraphs 2 and 3 that the Patels a re eac h resid ents o f Ca lifornia . The amo unt in c ontro versy is allege d to ex ceed $75 ,000. In their an swe r, the Pa tels adm it the fac ts set fo rth in paragraphs 1, 2, and 3. In a fa cial atta ck on subject -matte r jurisdi ction, the fact ual alleg ation s in a com plain t are a cce pted as tru e. See Turicent ro, S. A. v. Am. Airl ines I nc. , 303 F.3d 293, 300 n. 4 (3rd Cir . 2002) ( factualfindings and an evidentiaryhearing are not requ ired w here n o fac tual ch alleng e is raised regard ing the cour t’s jurisdic tion). W e note also that t

he Patels concede in their opening brief that the amount in controversy

exce eded that jurisd ictiona l amo unt. T he dis trict cou rt had s ubjec t-matte r jurisdic tion to enter a defa ult judgme nt in this matter. B. The Patels assert

the dis tri ct court

abused it s discretion i n sancti oning them for fail ure to compl y with the dis closur e orders . This c ourt r eviews a dis tri ct court ’s deci sion reg ard ing a dis cov ery san ction for abu se o f dis creti on. Q ui nn v. C on so l. F re ig ht w ays Corp. , 283 F.3d 572, 576 (3d Cir. 200 2). Purs uant to Ru le 37(a )(2)(A ) of the Fed eral R ules o f Civ il Proce dure , “[i]f a p arty1 Ru le 26(a ) prov ides in p ertinen t part:

(a) R equ ired Dis clos ure s; M etho ds to Dis cov er A ddi tion al M atter . (1) Ini tialDisclosures. Except in cat egories of proceedi ngs speci fied in Rule 26(a )(1)( E), or to the ext ent othe rwise stipulated or directed by order, a party

must, wit

hout awaiting a dis coveryrequest , provi de to othe r parties: (A) the name and, if known, theaddress and tele phone num ber o f eac h ind ividua l likely to hav e disco verab le inform ation th at the d isclosin g par ty may use to supp ort its clai ms or defenses , unle ss sol elyfor impeachment , ide ntifying the subj ects of t

he information; (B) a copyof, or a de scri ption by category and l ocati on of, al l documents, data compil ations , and t angiblethings that are in t he possess ion, c ustody , or cont rol of t he party and that the disclosi ng party may use to support its cl aims or defenses, unl ess s olely f or im pea chm ent . . . . 6 fails to make a disclosure req uired by Rule 2 6(a), 1 any ot her party maymove to compel disclos ure an d fo r app ropria te sanc tions.” F ed. R . Civ. P . 37(a)( 2)(A ). Entry of a def ault jud gm ent is an a vaila ble s anc tion for failu re to com ply w ith a c our t’s di sco ver y orde r. Hoxworth v. Blinde r, Robins on & Co., Inc. , 980 F.2d 912, 919 (3d Cir. 199 2). In de termin ing w hethe r to ente r a def ault jud gm ent ag ainst a p arty that fails to comp ly with a discovery order, a co urt must con sider:

(1) the extent

of the party ’s pers onal res ponsibi lit y; (2) the prejudi ce to the adversary caus ed by t he fail ure to meet scheduli ng orders and respond t o discovery; (3) a hi story of dilatorines s; (4) whether theconduct of the party of the attorney was wil lful or

in bad fai th; ( 5) the ef

fecti veness of sancti ons other

than dis missal , which ent ails an analy sis of alterna tive san ctions; a nd (6 ) the m eritoriou sness of the claim or defense. Id. at 919 (quoting Poulis v. State Farm Fire & Cas. Co. , 747 F.2d 863, 868 (3d Cir.7

1984)). It i s not neces sary , however, that all t he Pou lis facto rs hav e to be met in orde r to uph old a sa nctio n of def ault j udg me nt. Id. ; M indek v. Rig atti , 964 F.2d 1369, 1373 (3d Cir 199 2). The Patels argue that the sancti on imposed by the court was improper because Ramada did not complywith it s reci procal di scoveryobligat ions under

Rule 26(a). The Patels d id no t cite any au thority in sup port o f this co ntentio n, nor did the y demo nstrate that Ram ada’s disclosu res were d eficient. Furtherm ore, the Patels’ argu ment is con trary to Rule 2 6’s express m andate that “[ a] party . . . is not excuse d from making its discovery discl osures . . . be cause it chall enges the s uffici ency of another par ty ’s dis closur es or bec aus e an oth er p arty ha s no t ma de its disc losu res.” Fed . R. C iv. P . 26( a)(1 ). Accordingly , the Patels ’ all egati on that Ramada’s Rule 26(a) di sclosures were ins uffici ent doe s no t exc use their failu re to com ply w ith th e co urt’s disc ove ry ord er. C. The Patels a lso arg ue tha t the distric t court m isapp lied the first Pou lis fac tor, i.e ., the ext ent of the party ’s pers onal res ponsibi lit y. The Patels cite Community Dental Services v. Tani , 282 F.3d 1164 ( 9th Cir. 2002), i n support of this proposit

ion. I n Tani , the co urt held “that w here th e clien t has d emo nstrated gross neglig ence on th e part o f his counsel, a default

judgment agai nst the cli ent may be set as ide purs uant to Rul e 60(b)( 6).” Id. at 1169. The Patels ’ rel iance on Tani is mis placed. In thi s matter , the Patels appeared pro se throu gho ut the p rocee ding s. The district co urt did n ot abu se its disc retion in8

attributin g the P atels’ w illful failu re to ab ide by its disc over y orders s olely to the P atels themselves. D. The Patels next cont end that the dis tri ct court

deprived t

hem of their

right s under the F irst Am endm ent by no t allow ing the m to b e repre sented by M r. We iser. Th is contention is als o meritless. The Patels file d a pro se ans wer in thi s matter . They appeared pr o se thr oughout these proce edings. A t no time did M r. Weiser m ake a m otion to represen t the Patels pro hac vice, no r did he or the P atel’s challenge the c onstitutionality of the district court’s local ru les. Th us, the q uestion wh ether th e requ ireme nt in N ew Jersey L ocal C ivil Ru le 101.1(c) (1) that attorney s who appear pro hac vi ce must “ass ign local counselfor purpose s of receiving and servin g court filings, and comp ly with the court’s disciplinary rules” is not properl y before us. E. Finall y, the Pate ls contend that the order

barri ng them from their choice of counsel was void pursuant

to 28 U.S.C. § 636(c) because theydid not voluntari ly consent to the issuan ce of a disp ositive o rder b y a mag istrate jud ge. A s discu ssed a bov e, the P atels appeared pr o se thr oughout thes e proceedi ngs and never moved t o have Mr. Weiser represent them pro hac v ice. Acco rdingly, the magistrate judge d id not enter an o rder, disposi tive or

otherwis e, barring the Patels fr om their c hoice of couns el. To the extentthat t

he magistr ate j udge inst ructed t he Patel s to comply

with the l ocal rul es regar ding the pro ced ure for pro hac vice adm issio n, w e fin d no erro r. See Bayls on v. Disci plinar y Bd. of S up. C t. , 975 F.2d 102, 107 (3d Cir. 1992) (st ating t hat a di stri ct court

may enfor ce loca l rule s reg ulati ng t he c ond uct o f atto rne ys pra cticin g be for e the m). The refor e, for th e reaso ns set f orth ab ove, w e A FFIR M the ord er ente ring a d efau lt judgment against the Patels.