United States v. Lairy ( 2020 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
UNITED STATES OF AMERICA, :
:
Plaintiff, : Civil Action No.: 19-2488 (RC)
:
v. : Re Document No.: 10
:
DURWIN LAIRY, :
:
Defendant. :
MEMORANDUM OPINION
GRANTING THE PLAINTIFF’S MOTION FOR ENTRY OF DEFAULT JUDGMENT
I. INTRODUCTION
Plaintiff United States of America (“the Government”) seeks the inflation-adjusted
maximum civil penalty of $60,517 from Defendant Durwin Lairy for failure to submit a
termination public financial disclosure report required by the Ethics in Government Act (“EIGA”
or “the Act”), 5 U.S.C. app. 4 §§ 101, et seq.; see United States’ Mot. for Default and Final J.
(“Mot. for Default”), ECF No. 10-1, at 2. Before the Court is Plaintiff’s motion for entry of
default judgment pursuant to Fed. R. Civ. P. 55, ECF No. 10.
For the reasons that follow, the Court grants the Government’s motion and enters default
judgment against Mr. Lairy. The Court awards penalties accordingly.
II. FACTUAL AND PROCEDURAL BACKGROUND
Defendant Durwin Lairy was a Consultant in the Department of Energy’s Office of
Economic Impact and Diversity (“DOE”), a position within the Executive Branch, until
September 20, 2017. United States’ Complaint (“Compl.”), ECF No. 1, ¶¶ 9, 13. According to
the Government, Mr. Lairy’s annual income was $135,655. See Mot. for Default ¶ 8.
Consequently, as an employee whose rate of basic pay was greater than 120 percent of the
minimum rate of basic pay payable for GS-15 of the General Schedule, Mr. Lairy was subject to
the Act’s public financial disclosure requirements. See 5 U.S.C. app. 4 § 101(d)–(f)(3); see also
Compl. ¶ 10. This meant he was required to submit a new entrant financial disclosure report and
an annual financial disclosure report during his employment, and to submit a termination
financial disclosure report within 30 days of his termination. See 5 U.S.C. app. 4 § 101(d)–
(f)(3); see also Compl. ¶ 10. Mr. Lairy filed a new entrant financial disclosure report and an
annual financial disclosure report during his employment. Compl. ¶¶ 11–12. His last day of
employment was September 20, 2017, so his deadline to submit a termination report was October
20, 2017. Id. ¶ 15.
On October 20, 2017, an employee in the DOE’s Office of the Assistant General Counsel
for General Law (“DOE employee”) sent Mr. Lairy an email to his personal email address
notifying him of the deadline to submit the termination report. Id. Mr. Lairy responded to the
email that same day and requested an extension of the deadline. Id. ¶ 16. In response to the
request, the DOE employee granted Mr. Lairy an extension and permitted him to file the report
on or before November 20, 2017. Id. ¶ 17. On November 15, 2017, the DOE employee sent
another email to Mr. Lairy reminding him of the deadline and of the $200 late filing fee incurred
for late filing, Mr. Lairy did not respond. Id. ¶ 18. On November 20, 2017, Mr. Lairy failed to
file the required termination report. Id. ¶ 19. After the November deadline, the DOE employee
made several attempts to contact Mr. Lairy by email and by certified letter to his home address,
informing Mr. Lairy that he had failed to file his termination report, that he had incurred the
$200 late filing fee, and that he could be assessed a civil penalty of up to $50,000. Id. ¶ 20. The
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communications also included instructions for filing the overdue termination report and for
mailing the $200 late filing fee. Id.
On December 11, 2018, Mr. Lairy responded by email, apologized for his lack of
communication, expressed that he had “made attempts to login and file the report,” and conveyed
that he had been unable to submit the required files due to technical difficulties. Id. ¶¶ 22–23.
Between December 11, 2018 and January 8, 2019, the DOE employee attempted to help Mr.
Lairy resolve his technical problems. Id. ¶ 23. However, Mr. Lairy’s technical difficulties
extended into January 2019 when the Government shutdown and subsequent lapse in
appropriations made technical support unavailable. Id. ¶ 24. On February 12, 2019, after the
restoration of appropriations, the DOE employee advised Mr. Lairy by email that Mr. Lairy’s
access to the electronic filing system had been restored and that he should “go in and access the
report and complete and submit as soon as possible.” Id. ¶ 25. Mr. Lairy did not respond to the
February email and did not file the report. Id.
On April 10, 2019, the DOE employee sent another email to Mr. Lairy giving him a
“final opportunity” “to complete and submit th[e] required report.” Id. ¶ 26. According to the
Government, Mr. Lairy has yet to file his required termination report or pay the $200 late filing
fee. Id. ¶ 27.
The Government filed this suit on August 16, 2019. Mr. Lairy completed and signed the
Waiver of the Service of Summons form, see ECF No. 3, at the request of the Government in
accordance with Fed. R. Civ. P. 4(d), extending the time to answer to the complaint to November
12, 2019. However, despite extending his time to answer to the complaint by signing a waiver of
service of process, Mr. Lairy failed to file an answer or a response by November 12, 2019. As a
result, the Clerk of Court entered default on December 6, 2019. ECF No. 7. The Government
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now asks this Court to enter a default judgment against Mr. Lairy pursuant to Fed. R. Civ. P. 55.
Mot. for Default.
III. LEGAL STANDARD
Federal Rule of Civil Procedure 55 establishes a two-step process for default judgment.
Fed. R. Civ. P. 55; see, e.g., Bricklayers & Trowel Trades Int’l Pension Fund v. KAFKA Constr.,
Inc., 273 F. Supp. 3d 177, 179 (D.D.C. 2017). First, the Clerk of the Court must enter default.
Fed. R. Civ. P. 55(b). After the clerk’s entry of default, the plaintiff may move for a default
judgment. Id. Furthermore, the determination of default judgment is up to the trial courts
discretion. See Jackson v. Beech, 636 F.2d 831, 835 (D.C. Cir. 1980). While courts prefer to
resolve disputes on their merits, a default judgment is appropriate when the adversarial process
has been effectively halted by a party’s failure to respond. Id. at 836. Therefore, in a default
judgment, the defendant must be an “essentially unresponsive party” whose default is “plainly
willful, reflected by its failure to respond to the summons and complaint, the entry of default, or
the motion for default judgment.” Carazani v. Zegarra, 972 F. Supp. 2d 1, 12 (D.D.C. 2013)
(internal citations omitted).
While default judgment establishes a defendant’s liability, the court is required to make
an independent determination of the sum to be awarded unless the amount is certain. Adkins v.
Teseo, 180 F. Supp. 2d 15, 17 (D.D.C. 2001). “[I]n cases involving statutory penalties that leave
discretion to the court, courts ‘have generally tailored the penalty to the offense and attendant
circumstances.’” United States v. Chaney, No. 04-cv-2219, 2005 WL 8178308, at *2 (D.D.C.
Feb. 28, 2005) (quoting United States v. Gant, 268 F. Supp. 2d 29, 33 (D.D.C. 2003)). In
making this determination, the “court may rely on detailed affidavits or documentary evidence to
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determine the appropriate sum for default judgment.” Flynn v. Mastro Masonry Contractors,
237 F. Supp. 2d 66, 69 (D.D.C. 2002) (internal citations omitted).
IV. ANALYSIS
Section 101 of the EIGA requires all executive branch employees at a pay grade GS-15
or above to file a final public disclosure report unless they have accepted another covered
position. 5 U.S.C. app. 4 § 101(e); see also Gant, 268 F. Supp. 2d at 33 (internal citations
omitted). Section 104(a) of the EIGA authorizes the Attorney General to bring a civil action in
federal court against any individual “who knowingly and willfully fails to file or report any
information that such individual is required to report” under the EIGA. 5 U.S.C. app. 4
§ 104(a)(1). An individual “knowingly and willfully” fails to comply with the EIGA
requirements when “that individual intentionally disregards the statute or is indifferent to its
requirements.” Gant, 268 F. Supp. 2d at 33 (internal citations omitted). Section 104(a) also
provides that a court may assess a civil penalty of up to $50,000 against an individual who fails
to file under the EIGA requirements. 5 U.S.C. app. 4 § 104(a)(1). The civil penalty is then
adjusted in accordance with the adjustment procedures prescribed in the Federal Civil Penalties
Inflation Adjustment Act of 1990. 28 U.S.C. § 2461 note. At the time of the Government’s
filing, the maximum civil penalty, adjusted for inflation was $60,517. 5 C.F.R. § 2634.701(b)
(2019).
The Government has submitted a declaration of the DOE employee, Yvonne Stewart,
who communicated through email with Mr. Lairy, and multiple exhibits of the email
communications between Mr. Lairy and Ms. Stewart. See Decl. of Yvonne Stewart, ECF No.
10-2 (“Stewart Decl.”); Ex. A, No. 10-3 (“Ex. A”); Ex. B, No. 10-4 (“Ex. B”); Ex. C, No.10-5
(“Ex. C”); Ex. D, No. 10-6 (“Ex. D”); Ex. E, No. 10-7 (“Ex. E”); Ex. F, No. 10-8 (“Ex. F”); Ex.
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G, No. 10-9 (“Ex. G”). The Stewart declaration and the accompanying exhibits demonstrate that
Mr. Lairy intentionally disregarded the statute by failing to file the required report for over six
months, even after repeated attempts by Ms. Stewart to provide clear instructions to help Mr.
Lairy file the report. See Ex. A; Ex. B; Ex. C; Ex. E; Ex. F; Ex. G. The Government’s exhibits
also lend support of Mr. Lairy’s knowledge of the requirements because he had filed two other
required financial reports during his employment, Stewart Decl. ¶ 5, and responded to Ms.
Stewart’s emails acknowledging that he had failed to file the required termination report but was
“ready to resolve this manner”, Ex. E at 20. Mr. Lairy’s request to extend the deadline to file the
report in October 2017 further demonstrates Mr. Lairy’s knowledge that he was under a time-
sensitive deadline to submit the report. See Ex. A at 2.
In Gant, the court, also reviewing a plaintiff’s motion for default judgment after
defendant failed to comply with the requirements of the EIGA and failed to answer the
complaint, awarded the maximum civil penalty because the defendant’s violation of the EIGA
filing requirements was “flagrant and ongoing.” 268 F. Supp. 2d at 34. Mr. Gant, like Mr.
Lairy, had received multiple reminders and had been given many opportunities to comply with
the EIGA requirements. Id.Here, the Government’s evidence of Mr. Lairy’s flagrant and ongoing nonfulfillment of
the EIGA filing requirements demonstrate Mr. Lairy’s indifference to the requirements of the
statute. Because Mr. Lairy has also failed to refute or otherwise respond to the Government’s
complaint, the entry of default, or the motion for default judgment, default judgment is
appropriate in this case. But the Court believes that the maximum penalty should be reserved for
the most egregious of cases and applied only in situations where the non-filant has the greatest
incentive to avoid public reporting. The Court has reviewed Mr. Lairy’s prior financial
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disclosures and concludes that Mr. Lairy is a man of modest means whose financial disclosures
are simple and do not reflect a sophisticated financial operator with a strong motive to hide
problematic transactions. See ECF Nos. 12, 13 (disclosures filed under seal). And, as the record
indicates, he may have experienced some struggles in life. See ECF No. 10-6 at 1 (email from
Mr. Lairy to an Ethics Program Specialist explaining that his failure to file was at least partially
the result of serious personal distress). Accordingly, the Court will not impose the maximum
penalty.
For the foregoing reasons, the Court GRANTS the Government’s Motion for Entry of
Default Judgment and assesses a civil penalty in the amount of $10,200 against the Defendant.
An order consistent with this Memorandum Opinion is separately and contemporaneously issued.
SO ORDERED.
Dated: July 17, 2020 RUDOLPH CONTRERAS,
United States District Judge
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