KCI USA, Inc. v. Healthcare Essentials, Inc. ( 2020 )

NOT RECOMMENDED FOR PUBLICATION
File Name: 20a0057n.06
No. 19-3006
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
FILED
KCI USA, INC., ) Jan 28, 2020
) DEBORAH S. HUNT, Clerk
Plaintiff–Appellee, )
)
v. ) ON APPEAL FROM THE
) UNITED STATES DISTRICT
HEALTHCARE ESSENTIALS, INC. et al., ) COURT FOR THE NORTHERN
) DISTRICT OF OHIO
Defendants, )
)
) OPINION
COLIN TENNEBAR, )
)
Defendant–Appellant. )
Before: MOORE, McKEAGUE, and GRIFFIN, Circuit Judges.
KAREN NELSON MOORE, Circuit Judge. Colin Tennebar flouted court orders to
comply with discovery at every turn. As a result of his infractions, the district court sanctioned
him with a default judgment on all counts in KCI’s Third Amended Complaint and found him
jointly and severally liable to KCI, along with his co-defendants, for $645,016,638.00 in monetary
relief and $2,464,313.55 in attorney fees. Colin argues that was improper because his brother
Ryan was in charge of the company that is the subject of this litigation—not him. But that does
not excuse Colin, the sole shareholder of the defendant company and a named defendant in the
case, from the consequences of obstructing discovery. We AFFIRM the district court’s imposition
of case-terminating sanctions in the form of a default judgment and its order granting damages.
We DISMISS as untimely Colin’s appeal of the district court’s order granting attorney fees.
No. 19-3006, KCI USA, Inc. v. Healthcare Essentials, Inc. et al.
I. BACKGROUND
KCI brought a lawsuit in 2014 against Healthcare Essentials, Inc. (“Healthcare Essentials”)
for the alleged unauthorized marketing and distribution of KCI Wound V.A.C.® devices to health
care facilities. R. 1 (Compl. at 3, ¶ 12) (Page ID #3).1 The V.A.C.s “deliver[] negative pressure
(a vacuum) at the wound site through a patented dressing” for “effective treatment for difficult to
treat chronic wounds.” Id. at 2, ¶¶ 7–8 (Page ID #2). In its Complaint, KCI alleged that Healthcare
Essentials was illegally acquiring KCI V.A.C.s and holding them out as Healthcare Essentials
products. Id. at 3–4, ¶¶ 12, 14–20 (Page ID #3–4). KCI also alleged that Healthcare Essentials
made itself a market competitor by falsely representing to healthcare facilities that it is affiliated
with or a part of KCI. Id. at 4, ¶ 16 (Page ID #4).
Healthcare Essentials was operated by twin brothers Ryan and Colin Tennebar. Ryan ran
the business as its sole member. See R. 70 (First Am. Compl. at 3, ¶ 7) (Page ID #1102). Colin
was the sole shareholder. See id. at 3, ¶ 8 (Page ID #1102). It is unclear to what extent Colin
participated in the day-to-day affairs of the company. However, emails show that Ryan kept Colin
in the loop on Healthcare Essentials’s operations, and that Colin and Ryan together met with KCI
representatives to offer to sell the Healthcare Essentials V.A.C. business to KCI in 2013. R. 331
(Show Cause Hr’g Tr. at 76–83) (Page ID #5798–5805). Ryan also drafted a business summary
that stated, “Healthcare Essentials is owned by both Ryan and Colin Tennebar with each having a
fifty percent equity in the company. We are identical twin brothers and work together through our
different partner channels to make this operation both clinically sound and financially successful.”
1
KCI eventually joined as defendants the various alter egos of Healthcare Essentials, Inc. See R. 276 (Third
Am. Compl. at 1–2) (Page ID #4930–31). For simplicity, this opinion will refer to each of these entities as Healthcare
Essentials, unless otherwise specified.
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Id. at 126 (Page ID #5848) (quoting business summary). Colin claims that he owned the company
only “for income tax purposes” and had no role in the business beginning in 2012. Id. at 21 (Page
ID #5743). Ryan formed additional entities called Healthcare Essentials, LLC, Healthcare
Essentials South, LLC, and RT Acquisition, Inc. See R. 70 (First Am. Compl. at 2) (Page ID
#1101); R. 331 (Show Cause Hr’g Tr. at 20) (Page ID #5742). In 2016, during the litigation, Ryan
created Healthcare Essentials Medical Devices, LLC and became its sole owner. R. 171 (Order at
1–2) (Page ID #3354–55). KCI offered evidence to the court that showed that each of the
Healthcare Essentials entities “operated interchangeably.” See R. 331 (Show Cause Hr’g Tr. at
20) (Page ID #5742).
In November 2015, KCI named Ryan and Colin as individual defendants in the lawsuit. R.
70 (First Am. Compl. at 2) (Page ID #1101). For years, the defendants resisted requests for
discovery, even upon orders compelling production and under threat of sanctions. See R. 167
(Memorialization of Disc. at 6–8) (Page ID #3027–29); R. 40 (Order Compelling Disc. at 1) (Page
ID #203); R. 42 (Mot. for Sanctions) (Page ID #207). The defendants failed to produce documents
collected from the Healthcare Essentials hard drive, serial numbers and locations for the V.A.C.s,
and any financial or accounting records. R. 167 (Memorialization of Disc. at 6–8) (Page ID
#3027–29). In June 2016, the district court ordered the parties to submit a joint memorialization
of all discovery requests and productions. R. 182 (Order at 1) (Page ID #3670). The defendants
refused to comply. Id. The district court then ordered the parties to submit a joint memorialization
again, and the defendants made a submission but refused to sign under penalty of perjury. Id. The
defendants eventually submitted a supplement to KCI’s memorialization of discovery and attached
affidavits from both Ryan and Colin attesting that Healthcare Essentials has “fully and truthfully
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answered all of KCI USA’s discovery requests.” R. 172 (Defendants’ Supplement at 96–97) (Page
ID #3451–52). Yet, they were hiding and refusing to produce documents stowed at Colin’s
residence and at a storage unit. See R. 331 (Show Cause Hr’g Tr. at 133, 186–87) (Page ID #5855,
5908–09).
On July 1, 2016, the district court granted KCI’s motion for a preliminary injunction
barring the defendants from “[r]epresenting that they are in any way affiliated with KCI” and
“[m]arketing, distributing, selling, leasing, servicing, obtaining, or otherwise disseminating any
KCI VAC® Therapy System and any other KCI products related to that therapy system.” R. 162
(Prelim. Inj. Order at 13) (Page ID #2996). That same month, the district court ordered Healthcare
Essentials, Ryan, and Colin to produce personal and company electronic devices to the district
court by a certain date. R. 191 (Order at 1–2) (Page ID #3751–52). They failed to do so. R. 197
(Sanctions Order at 1–2) (Page ID #3894–95). As a result, the district court collectively sanctioned
them $5,000, jointly and severally. Id. When they eventually tried to comply, they handed over
devices that had the data erased. R. 269 (Mot. to Show Cause at 1–2) (Page ID #4821–22).
On August 5, 2016, the district court held a status conference to address Healthcare
Essentials’s ongoing obstruction of discovery. See R. 233 (Status Conf. Tr. at 6–7) (Page ID
#4197–98). The district court held Ryan in contempt of court and had him taken into custody for
the defendants’ failure to produce a list of all V.A.C.s in use and their serial numbers as ordered
by the court. R. 208 (Contempt Order at 1–2) (Page ID #3999–4000). During the same conference,
KCI revealed that the defendants were violating the preliminary injunction order by putting new
V.A.C.s into service and refusing to remove V.A.C.s that had been in place at healthcare facilities
prior to the order. R. 233 (Status Conf. Tr. at 20–21) (Page ID #4211–12). In response, the district
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court amended the injunction order to expand its terms and to close up any loopholes. R. 218 (Am.
Inj. Order at 1–3) (Page ID #4074–76).
In September 2016, KCI informed the district court that the defendants were still violating
the injunction order. R. 382 (Status Conf. Tr. at 6–12) (Page ID #7311–17). In January 2017, KCI
moved for the defendants to show cause and requested a discovery hearing regarding the
defendants’ misconduct during the litigation, including the destruction of evidence, refusal to
provide discovery, misrepresentations in discovery, and violations of the injunction orders. R.
269-1 (Mem. in Supp. of KCI’s Mot. to Show Cause at 2–13, 15) (Page ID #4826–37, 4839). The
district court granted the motion and scheduled a hearing that would ultimately take place on
November 9, 2017. R. 304 (Show Cause Hr’g Order at 1) (Page ID #5320). During the course of
discovery, KCI had to resort to subpoenaing third-parties to obtain the communications and
documents necessary to prove its claims. See R. 331 (Show Cause Hr’g Tr. at 66) (Page ID #5788).
Based on those documents, KCI amended its complaint in February 2017 to allege that Healthcare
Essentials was a racketeering enterprise that was stealing KCI V.A.C.s, stripping them of their bar
codes that would identify the devices as belonging to KCI, and then marketing and distributing the
devices as belonging to Healthcare Essentials. R. 276 (Third Am. Compl. at 7–11, ¶¶ 23–40) (Page
ID #4936–40). In its bench brief filed ahead of the show cause hearing, KCI revealed that the
mirror image of a Healthcare Essentials hard drive in the court’s custody provided them with
incriminating documents that KCI had requested and never received. See R. 328 (KCI Bench Br.
at 31–34) (Page ID #5681–84); R. 382 (Status Conf. Tr. at 16) (Page ID #7321).
At some point, the FBI began investigating the Tennebars’ conduct and arrested them for
obstruction of justice. R. 331 (Show Cause Hr’g Tr. at 6–7) (Page ID #5728–29). In April 2017,
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No. 19-3006, KCI USA, Inc. v. Healthcare Essentials, Inc. et al.
KCI discovered that Ryan and Colin were secretly storing Healthcare Essentials records at Colin’s
personal residence and at a storage unit. Id. at 133, 186–87 (Page ID #5855, 5908–09). The
Tennebars never disclosed the records in spite of a court order compelling the defendants to
produce any such documents to KCI. Id. On November 9, 2017, the district court held a show
cause hearing in which KCI presented documents from subpoenas and the Healthcare Essentials
hard drive. See id. at 13–15, 30, 45 (Page ID #5735–37, 5752, 5767). Those documents uncovered
the full extent of the racketeering enterprise and the Tennebars’ misconduct in discovery.
On June 29, 2018, the district court ordered case-terminating sanctions against the
defendants in the form of a default judgment on all counts in the Third Amended Complaint. R.
360 (Order of Default J. at 1–2) (Page ID #6638–39). It did so based on its findings that the
defendants failed to disclose (as ordered) numerous communications and documents, produced
fabricated evidence, violated the court’s injunction orders, filed false affidavits, destroyed
evidence, and intimidated witnesses. Id. at 4–16 (Page ID #6641–53). On September 10, 2018,
the district court awarded KCI $645,016,638.00 in damages, jointly and severally against all
defendants. R. 438 (Order of Damages at 1) (Page ID #8026). The district court pierced the
corporate veil to reach Colin as the sole shareholder of Healthcare Essentials. Id. at 4–5 (Page ID
#8029–30). It also found, in the alternative, that the allegations in the Third Amended Complaint
were sufficient to find Colin individually liable. Id. at 5–6 (Page ID #8030–31). On September
19, 2018, the district court awarded KCI $2,464,313.55 in attorney fees and costs, jointly and
severally against all defendants, along with smaller sums against one of the law firms and three of
its attorneys that initially represented Healthcare Essentials. R. 439 (Order of Att’y Fees at 1–2)
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No. 19-3006, KCI USA, Inc. v. Healthcare Essentials, Inc. et al.
(Page ID #8042–43). Colin filed his notice of appeal of the default judgment, damages, and
attorney fees and costs on December 22, 2018. R. 454 (Notice of Appeal) (Page ID #8486).
II. JURISDICTION
We have jurisdiction to review Colin Tennebar’s timely appeal of the entry of default
judgment and damages. See 28 U.S.C. § 1291. The district court was required to issue the
judgment in a separate document but failed to do so. See FED. R. CIV. P. 58(a) (“Every judgment
and amended judgment must be set out in a separate document . . . .”). When that happens, we
consider the judgment to be entered 150 days from its entry on the docket. FED. R. CIV. P.
58(c)(2)(B); FED. R. APP. P. 4(a)(7)(A)(ii). The appellant then has 30 days from entry of judgment
to file a notice of appeal. FED. R. APP. P. 4(a)(1)(A). Here, the district court ordered default
judgment on June 29, 2018, R. 360 (Order of Default J. at 28) (Page ID #6665); ordered damages
on September 10, 2018, R. 438 (Order of Damages at 16) (Page ID #8041); and entered its final
order and terminated the case on September 19, 2018, R. 439 (Order of Att’y Fees at 27–28) (Page
ID #8068–69). Colin timely appealed the district court’s order of default judgment and damages
by filing his notice on December 22, 2018. See R. 454 (Notice of Appeal) (Page ID #8486). We
accordingly have jurisdiction over his appeal of each.
We lack jurisdiction, however, to review Colin’s appeal of the district court’s order
granting attorney fees. Unlike a judgment, an order granting attorney fees does not require a
separate document. See FED. R. CIV. P. 58(a)(3) (“[A] separate document is not required for an
order disposing of a motion . . . for attorney’s fees under Rule 54.”). Instead, the order is
considered entered on the date of entry on the docket. See FED. R. APP. P. 4(a)(7)(A)(i). The 30-
day time-clock to file a notice of appeal starts running on that date. See FED. R. APP. P. 4(a)(1)(A).
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Here, Colin’s notice of appeal was due to be filed by October 19, 2018—30 days after the district
court issued its order granting attorney fees on September 19, 2018. See FED. R. APP. P. 4(a)(1)(A).
Because he did not file his notice of appeal until December 22, 2018, we dismiss as untimely his
appeal of the attorney fees order. See R. 454 (Notice of Appeal) (Page ID #8486).
III. DEFAULT JUDGMENT
A district court may sanction parties with entry of default judgment for failure to comply
with discovery orders. FED. R. CIV. P. 37(b)(2)(A)(vi). We affirm the district court’s sanction of
default judgment against Colin Tennebar based on the court’s factual finding that Colin was
individually responsible for misconduct in discovery. We do not, however, endorse the district
court’s decision to pierce the corporate veil to find Colin liable for the company’s discovery
misconduct.
For Colin to be liable under a veil-piercing theory, the district court would need to make
factual findings that Colin had actual and total control of Healthcare Essentials and used it for
fraudulent or criminal purposes. Dombroski v. WellPoint, Inc., 895 N.E.2d 538, 542–43 (Ohio
2008) (“The corporate form may be disregarded and individual shareholders held liable for wrongs
committed by the corporation when (1) control over the corporation by those to be held liable was
so complete that the corporation has no separate mind, will, or existence of its own, (2) control
over the corporation by those to be held liable was exercised in such a manner as to commit fraud
or an illegal act against the person seeking to disregard the corporate entity, and (3) injury or unjust
loss resulted to the plaintiff from such control and wrong.”) (quoting Belvedere Condo. Unit
Owners’ Ass’n v. R.E. Roark Cos., 617 N.E.2d 1075, 1086 (Ohio 1993)). The district court made
no such findings with respect to Colin. But because we hold that the district court’s individualized
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findings were sufficient to sanction Colin, the court’s error is inconsequential. We are not
persuaded by Colin’s argument that the district court’s veil-piercing analysis “tainted” its
alternative analysis, which is well supported by individualized factual findings detailing Colin’s
misconduct in discovery. See infra pp. 10–11.
We hold at the outset that the Third Amended Complaint offered sufficient grounds for the
district court to enter default judgment against Colin on all claims as a matter of law. Although
Colin (once subject to sanctions) cannot contest the truth of the allegations, he may argue that the
allegations in the Third Amended Complaint do not support a judgment against him on certain
claims. See United States v. Conces, 507 F.3d 1028, 1038 (6th Cir. 2007) (“[U]pon the entry of a
default judgment, Conces’s liability was deemed to be established as a matter of law and the factual
allegations of the complaint were no longer open to dispute.”); Gen. Conf. Corp. of Seventh-day
Adventists v. McGill, 617 F.3d 402, 407 (6th Cir. 2010) (“A default judgment does not preclude
review of whether the allegations in the complaint, if taken as true, ‘were sufficient to state a claim
and support a judgment of liability.’”) (quoting Conces, 507 F.3d at 1038–39). Colin argues that
KCI’s Third Amended Complaint does not “contain sufficient factual matter, accepted as true, to
‘state a claim to relief that is plausible on its face.’” See Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). He says it is not enough
for the complaint to incorporate allegations against the “defendants” as allegations against him.
We disagree.
The Third Amended Complaint names Colin as an individual defendant and explains that
Colin “is the sole shareholder” of Healthcare Essentials. R. 276 (Third Amended Compl. at 2; 4,
¶ 8) (Page ID #4931, 4933). It alleges that Ryan and Colin together “exerted sole control over
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No. 19-3006, KCI USA, Inc. v. Healthcare Essentials, Inc. et al.
Healthcare Essentials” and operated Healthcare Essentials for unlawful purposes. Id. at 11–12,
¶¶ 41–44 (Page ID #4940–41). With that framework, we understand the detailed allegations
against the defendants as plausibly implicating Colin, the sole shareholder of the company.
Designating Colin as both the sole shareholder and as someone who shares control of the business
was not a bare legal conclusion, and contrary to Colin’s view, his role as such is relevant for an
individualized analysis of his conduct, not just veil piercing. It was not necessary for KCI to list
Colin by name in each allegation against the defendants.
Colin does not dispute that the allegations in the Third Amended Complaint (if
incorporated against him) are sufficient to create liability under the Ohio Deceptive Trade Practices
Act, RICO, and the Ohio Corrupt Activities Act, or for conversion, unfair competition, tortious
interference with current and prospective business relationships, and civil theft. See id. at 12–22,
¶¶ 45–113 (Page ID #4941–51). Because the allegations in the Third Amended Complaint
plausibly state a claim on all counts, the entry of default judgment was proper as a matter of law.
The remaining issue is whether default judgment was an appropriate sanction for Colin.
We review the district court’s sanction order and entry of default judgment for abuse of discretion.
Bank One of Cleveland, N.A. v. Abbe, 916 F.2d 1067, 1073 (6th Cir. 1990). Courts consider four
factors in this analysis:
1) whether the disobedient party acted in willful bad faith;
2) whether the opposing party suffered prejudice;
3) whether the court warned the disobedient party that failure to cooperate could
result in a default judgment; and
4) whether less drastic sanctions were imposed or considered.
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Grange Mut. Cas. Co. v. Mack, 270 F. App’x 372, 376 (6th Cir. 2008). Bad faith is generally the
most important factor. Ndabishuriye v. Albert Schweitzer Society, USA, Inc., 136 F. App’x 795,
800 (6th Cir. 2005).
First, there is overwhelming evidence that Colin acted in willful bad faith. He failed to
turn over personal and work electronic devices as ordered. R. 360 (Order of Default J. at 13, 21)
(Page ID #6650, 6658); R. 197 (Sanctions Order at 1–2) (Page ID #3894–95). He failed to disclose
documents that would have established that Healthcare Essentials was doing business from 2008–
2011, contrary to the defendants’ representations; that Colin and Ryan attempted to sell the V.A.C.
business to KCI in 2013; and that the Healthcare Essentials business summary stated that Colin
and Ryan own and operate the business together. R. 360 (Order of Default J. at 6–9) (Page ID
#6643–46); R. 331 (Show Cause Hr’g Tr. at 27–32, 76–83, 126) (Page ID #5749–5754, 5798–
5805, 5848). He failed to produce or disclose Healthcare Essentials records he was storing at his
residence and at a storage space, even when he was ordered to produce them. R. 360 (Order of
Default J. at 10, 22–23) (Page ID #6647, 6659–60); R. 331 (Show Cause Hr’g Tr. at 186) (Page
ID #5908). He failed to produce or disclose KCI V.A.C.s and supplies that he had secreted away
at an undisclosed location. R. 360 (Order of Default J. at 21) (Page ID #6658); R. 331 (Show
Cause Hr’g Tr. at 186) (Page ID #5908). He executed a false affidavit attesting that he had “fully
and truthfully answered all of KCI USA’s discovery requests.” R. 360 (Order of Default J. at 12,
23) (Page ID #6649, 6660) (quoting R. 172 (Defendants’ Supplement at 97) (Page ID #3452)).
Colin offers no serious argument that he was incapable of complying. The district court fairly
assessed him as acting in willful bad faith.
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Second, the district court’s findings show that KCI was prejudiced by Colin’s discovery
abuses. KCI was “deprived of its right to discoverable evidence which it could have used to
properly litigate this case before the Court.” R. 360 (Order of Default J. at 26) (Page ID #6663).
Specifically, the defendants “deprived KCI of, at the least, evidence demonstrating to whom KCI
VACs were leased and when, Defendants’ financial data, Defendants’ email correspondence, the
number of KCI VACs acquired by Defendants, Defendants’ telephone records, and serial numbers
on VACs that were utilized and distributed by Defendants.” Id. at 25 (Page ID #6662). The district
court came to its conclusion based in part on Colin’s individual obstructions and frauds—all of
which deprived KCI of the information it was entitled to receive and caused this case to linger long
past its due end. See supra pp. 10–11. “[I]t is in cases like this one, where the obstruction
prevented the other party from accessing evidence needed to bring the case, that default is most
likely to be the appropriate sanction.” Mack, 270 F. App’x at 378. The district court properly
found that Colin’s personal failure to comply with discovery mandates prejudiced KCI.
Third, Colin was on notice that he could be sanctioned with a default judgment. He had
already been sanctioned with a $5,000 fine for failing to produce personal and work devices to the
court by its deadline. R. 197 (Sanctions Order at 1–2) (Page ID #3894–95). In that order for
sanctions, the district court announced that “[t]he parties remain on notice that continued
noncompliance will not be tolerated” and specified that “[f]inancial penalties, litigative
disadvantage, and incarceration remain among the penalties likely to greet this unacceptable
conduct.” Id. at 2 (Page ID #3895). Earlier that month, the district court warned in its order
scheduling a hearing on KCI’s motion to show cause that “Colin Tennebar[] and Ryan H. Tennebar
are hereby on notice that, should the Court find by clear and convincing evidence any violation of
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court orders . . . the Court will impose any sanction it considers appropriate, including . . . entering
default judgment against Defendants and in Plaintiff’s favor on Plaintiff’s claims.” R. 182 (Order
at 5) (Page ID #3674). Notice is satisfied.
Fourth, the district court imposed alternative sanctions on Colin when it assessed him the
$5,000 fine, and this did not deter his conduct. See R. 197 (Monetary Sanctions Order at 1–2)
(Page ID #3894–95). “[A]fter at least two warnings that continued noncompliance would lead to
sanctions,” the district court issued monetary sanctions on Colin and the other defendants jointly
and severally for $5,000 for their failure to produce their personal and work electronic devices by
the court’s deadline. Id. Even after being slapped with the fine, Colin persisted in his misconduct
by, for instance, continuing to store KCI V.A.C.s and KCI supplies at his residence and at a storage
space. R. 360 (Default J. Sanctions Order at 22–23) (Page ID #6659–60). Monetary sanctions
evidently were not enough. With all four factors weighing in favor of default judgment as an
appropriate sanction, the district court did not abuse its discretion in imposing a default judgment
as a sanction against Colin in this case.
Notably, the sanctions inquiry does not ask whether another party was more culpable. The
district court had no obligation to consider relative culpability of Colin compared to his brother in
deciding whether to impose sanctions, and neither do we. Our task instead is to evaluate whether
Colin’s misconduct, standing alone, merits the severity of the sanction imposed. Colin committed
repeated discovery abuses, including hiding evidence and defrauding the court, after multiple
warnings that continued disregard for court orders would result in severe consequences. See, e.g.,
R. 195 (6/30/2016 Prelim. Inj. Hr’g Tr. at 99) (“Mr. Colin Tennebar, you will sign this document
under penalty of perjury. And I will take swift action if any attestation, statement made, you write
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and sign is not true.”); R. 197 (Monetary Sanctions Order at 1–2) (ordering sanctions “[a]fter at
least two warnings that continued noncompliance would lead to sanctions”).
If the concern, instead, is with the amount of damages, the district court gave Colin the
opportunity to distinguish his conduct from his brother’s, but he did not take it. R. 438 (Order of
Damages at 8–9) (Page ID #8033–34). The district court instructed Colin that he could negotiate
and propose his own stipulation of damages, and he never did. Id. at 9 (Page ID #8034). “Colin
Tennebar’s only argument on the topic was that he should not be assessed damages at all because
Plaintiff’s Third Amended Complaint failed to state a claim for relief against him.” Id. at 9 n.2
(Page ID #8034 n.2). “At no point, either in briefing or at the damages hearing, did Colin Tennebar
dispute KCI’s damages estimates.” Id. at 9 (Page ID #8034). “Having failed to submit evidence
challenging [KCI’s] . . . submissions with regard to damages, [Colin] cannot now seek review of
the court’s reliance on [KCI’s] figures.” See Bank One, 916 F.2d at 1081. The district court did
not abuse its discretion by assessing Colin the same amount of damages as the other defendants.
Finally, entering a default judgment did not, as Colin contends, violate his Seventh
Amendment right to a jury trial. The Federal Rules of Civil Procedure permit courts to enter
default judgment as a sanction for disobeying discovery orders. FED. R. CIV. P. 37(b)(2)(A)(vi).
The Supreme Court has not indicated that a default judgment implicates the right to a jury trial.
See CHARLES ALAN WRIGHT & ARTHUR R. MILLER, FEDERAL PRACTICE AND PROCEDURE § 2283
(3d ed. 2019). Although our circuit has not addressed this precise question, we have held that
dismissal as a sanction does not violate the right to a jury trial. Russell v. Clark, 178 F.3d 1296,
at *2 (6th Cir. 1999) (table); see also Wyle v. R.J. Reynolds Indus., Inc., 709 F.2d 585, 592 (9th
Cir. 1983) (“Rule 37 authorizes the sanction of dismissal, and a punitive dismissal is equivalent to
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an adjudication on the merits. That the court here chose to hold hearings to decide upon sanctions,
in effect determining the merits of the case, did not violate PFEL’s jury trial right.” (citation
omitted)). The Fourth Circuit, however, has addressed this question and has acknowledged that a
default judgment “represents in effect an infringement upon a party’s right to trial by jury.” Wilson
v. Volkswagen of Am., Inc., 561 F.2d 494, 503–04 (4th Cir. 1977) (quotation omitted). But the
Fourth Circuit concluded that “the sanction of a default judgment [is] a rational method of
enforcement of the discovery rules, in an appropriate case,” and simply stated that the existence of
the right to a jury trial suggests that “the exercise of the power should be confined to the flagrant
case.” Id. (quotations omitted); see also Wyle, 709 F.2d at 592. That concern is already embodied
in our case law. Courts in our circuit may exercise the power to enter a default judgment only in
the rare case of willful bad faith, and often only in combination with prejudice to the other party,
notice to the defendant, and consideration of alternative sanctions. See id.; Mack, 270 F. App’x at
376. This is such a case. See supra pp. 10–13. The district court did not violate Colin’s Seventh
Amendment right to a jury trial.
IV. CONCLUSION
We AFFIRM the district court’s imposition of case-terminating sanctions in the form of a
default judgment and its order granting damages. We DISMISS as untimely Colin’s appeal of the
district court’s order granting attorney fees.
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