DEVON INDUSTRIAL GROUP, LLC, and Ford Motor Company, Plaintiffs, v. DEMREX INDUSTRIAL SERVICES, INC., First Sealord Surety, Inc., Altchem Environmental Services, Inc., Barry Portnoy, and Jason Goldberg, Defendants Case No. 2:11-cv-10313 United States District Court, E.D. Michigan, Southern Division Signed December 06, 2012 Counsel Michael T. Price, Lippitt O'Keefe, PLLC, Michael R. Turco, Keefe A. Brooks, Brooks Wilkins Sharkey & Turco, PLLC, Stephen W. King, King & Murray PLLC, Birmingham, MI, Lauren M. Phillips, Dykema Gossett PLLC, Detroit, MI, Marilyn A. Peters, Dykema Gossett, Bloomfield Hills, MI, for Plaintiffs. J. Christian Hauser, Frasco, Caponigro, Wineman & Scheible, PLLC, Bloomfield Hills, MI, for Defendants. Michelson, Laurie J., United States Magistrate Judge REPORT AND RECOMMENDATION TO GRANT IN PART AND DENY IN PART DEVON AND FORD'S RENEWED MOTIONS FOR DEFAULT JUDGMENT [182, 183] *1 In February 2010, Ford Motor Company (“Ford”) contracted with Devon Industrial Group, Inc. (“Devon”) to act as the construction manager for a project at Ford's Wixom, Michigan automotive-assembly plant. (Dkt. 146, Ford's Am. Compl. ¶¶ 23-25.) Devon entered into a “Subcontract” with Demrex Industrial Services, Inc. (“Demrex”) for Demrex to perform the interior demolition and cleanup at the plant. (See id. ¶¶ 1, 29-30.) Demrex separately contracted with its affiliate or sister corporation, Altchem Environmental Services, Inc. (“Altchem”), for asbestos abatement at the plant. (See id. ¶¶ 2, 38.) Barry Portnoy is the CEO and majority shareholder of Demrex and the President and sole shareholder of Altchem. (Id. ¶ 11.) Jason Goldberg is the other principal shareholder of Demrex. (See id. at ¶¶ 11-12.) Another Defendant, First Sealord, issued bonds covering the Wixom project. (Id. ¶ 83.) The project was not completed and the parties dispute where the fault lies. Devon asserts, among other things, that Demrex failed to timely complete the project and pay its subcontractors. (See e.g., Dkt. 145, Devon's Am. Compl. ¶¶ 16, 17.) Ford says, among other things, that Demrex tortiously interfered with its construction-manager contract with Devon and wrongfully transferred Wixom-plant scrap-metal proceeds to Altchem, Portnoy, Goldberg, or others. (See e.g., Dkt. 146, Ford's Am. Compl. ¶¶ 140, 156-57.) Demrex alleges that “Ford wrongfully interfered with Demrex's Subcontract with Devon by joining Devon in ordering that Demrex demobilize its operations at the Wixom Plant, remove its equipment, and leave behind valuable Commodity and Scrap to which Demrex was contractually entitled.” (Dkt. 164, Demrex's Counterclaim against Ford ¶ 64.) Demrex also claims that Devon breached the Subcontract by, among other things, failing to make progress payments, refusing to allow Demrex the right to sell Wixom-plant equipment, and actively interfering with Demrex's work. (Dkt. 161, Demrex's Counterclaim against Devon ¶¶ 50-58.) The merits, however, are not now before the Court. Instead, the parties continue a disagreement over whether Demrex has complied with its discovery obligations, including prior court orders regarding discovery. Devon and Ford say that Demrex has not complied and, for the second time, move the Court for the discovery sanction of a default judgment against Demrex. (Dkt. 182 at 5; Dkt. 183 at 13.) Ford also seeks spoliation sanctions against Demrex for computers and files that Demrex or Portnoy allegedly failed to preserve. (Dkt. 183 at 15-19.) On November 21, 2012, this Court heard oral argument on the pending motions. For the reasons that follow, the Court RECOMMENDS that Devon's Renewed Motion for Default Judgment as to Demrex (Dkt. 182) be GRANTED IN PART and that Ford's Renewed Motion for Default Judgment as to Demrex (Dkt. 183) be GRANTED IN PART.[1] I. BACKGROUND A. Events Giving Rise to this Court's November 2011 Report and Recommendation on Ford and Devon's First Motions for Default Judgment *2 This Court's November 2011 Report and Recommendation (Dkt. 104) summarizes in detail the events giving rise to Ford's first motion for default judgment (Dkt. 63) and Devon's joinder of that motion (Dkt. 65). The Court provides an abbreviated summary here. In May and June 2011, Devon and Ford collectively served three sets of discovery on Demrex and First Sealord: (1) Plaintiff's First Document Requests to Defendant Demrex Industrial Services, Inc. (“Devon's First Document Requests”); Ford Motor Company's First Requests for Production of Documents to Demrex Industrial Services, Inc. and First Sealord Surety, Inc. (“Ford's First Requests for Production”) and (3) Ford Motor Company's First Interrogatories and Second Requests for Production of Documents to Demrex Industrial Services, Inc. and First Sealord Surety, Inc. (“Ford's First Interrogatories and Second Requests for Production”). Neither Ford nor Devon were satisfied with Demrex and First Sealord's responses to these three sets of discovery. Accordingly, Devon filed a motion to compel (Dkt. 33) and Ford filed two such motions (Dkts. 35, 40). On August 29, 2011, this Court entered three stipulated orders resolving the three motions to compel. In brief, Demrex was ordered to (1) “produce for inspection and copying all of the documents requested” in Devon's First Document Requests, and both Demrex and First Sealord were ordered to (2) “produce all of the documents requested in” Ford's First Requests for Production and “certify that the documents being produced are all of the responsive documents in its possession,” and (3) “provide responses to the interrogatories Nos. 1-8, 10, 12, 13, 14, 16, 19 and provide amended answers to the document requests,” “including a full itemization of the amounts set forth in the Demrex Claim of Lien,” and “identify, in their response, the documents responsive to each of the Interrogatories as required by the federal rules.” (Dkts. 53, 54, 55.) In attempt to comply with these orders, on September 9, 2011, Demrex and First Sealord provided “First Supplemental Responses” to Ford's First Interrogatories and Second Requests for Production; Demrex also produced documents electronically. (Dkt. 78 at 2.) Demrex conceded, however, that it was having financial and/or technical difficulty exporting data from “Master Builder”—accounting software that Demrex used to maintain its accounts payable, accounts receivable, and general ledger. (Id.at 2-3.) The next day, Ford sent Demrex an email outlining deficiencies in Demrex and First Sealord's responses. In response, Demrex provided “Second Supplemental Responses” to Ford's First Interrogatories and Second Requests for Production. (Dkt. 63, Ex. 4.) Ford, however, maintained that these responses were deficient. (See id., Exs. 7, 8.) On September 15, 2011, Ford filed its first motion for default judgment. On October 11, 2011, the same day they filed their response brief to Ford's first motion for default judgment, Demrex and First Sealord served Ford with “Third Supplemental Responses” to Ford's First Interrogatories and Second Requests for Production. (Dkt. 85, Ex. 7.) In its reply brief, Ford maintained that Demrex's Third Supplemental Responses remained deficient. (Id. at 3.) B. This Court's First Report and Recommendation on Ford and Devon's First Motions for Default Judgment *3 Both oral argument on Ford's first motion for default judgment (which Devon joined), and this Court's November 2011 Report and Recommendation, focused on whether Demrex's Third Supplemental Responses to Ford's First Interrogatories and Second Requests for Production were sufficient. For example, regarding Interrogatory No. 1, which asks Demrex to provide a financial breakdown of its claim of lien, this Court directed Demrex as follows: THE COURT: ... Demrex has produced various charts on the lien amount, there is a [chart] in your opposition brief, there's a declaration from Mr. Portnoy that sets out the numbers, and there's some information in this third supplemental response. Demrex should provide Ford with, now, one answer: Here is the calculation that was utilized to make up the construction lien amount, as well as all of the underlying documentation that supports those calculations. And by category, not, here's a thousand documents, Ford, you figure out which ones are this category, which ones are this category. You're going to tell them, here's each of the documents that support each of the various categories that were used to calculate the construction lien. [DEMREX'S FORMER COUNSEL:] Okay. (Dkt. 111 at 72.) After a careful review of Demrex's discovery responses, this Court concluded that a default judgment was not warranted. This Court reasoned that the “issue of bad-faith conduct [was] close,” but that the prejudice to Devon and Ford was “not incurable” where Devon and Ford had some of the discovery they needed, the discovery deadline could be extended, and a fee award could offset some of the costs to Plaintiffs. (Dkt. 104 at 20-21.) As for the remaining two default judgment factors, this Court concluded that Demrex had not yet been warned that “a failure to cooperate in discovery or comply with this Court's orders would lead to dismissal or default judgment,” and found that “no less severe sanctions [had] been imposed on Defendants, and—critically—the effectiveness of lesser sanctions [had] not been evaluated.” (Dkt. 104 at 21.) Although not recommending a default judgment, this Court did recommend that Demrex (and First Sealord) “strictly comply with this Court's orders to compel,” that Demrex (and First Sealord) “retain a vendor recommended by Ford and Devon to image every computer (including any server) containing documents pertaining to the Wixom plant project, including the Master Builder database and associated files,” and that the fact discovery deadline be extended by 90 days. (Id. at 24.) Finally, this Court concluded its November 2011 Report and Recommendation with the following warning: Demrex and First Sealord are warned that further noncompliance with the Federal Rules pertaining to discovery or the Court's orders to compel (Dkts. 53, 54, 55) may result in dismissal of all claims with prejudice and the entry of default judgment in favor of Ford and Devon. The Court will tolerate no further unjustified delays for items subject to the Court's orders to compel. (Id.) C. Stay of Proceedings and Demrex's Retainment of New Counsel On or around December 9, 2011, Demrex filed for bankruptcy triggering an automatic stay of this case. (Dkt. 108, Ex. A.) On December 20, 2011, Demrex's former counsel filed a motion to withdraw its representation. (Dkt. 113.) On December 21, 2011, District Judge Sean F. Cox ordered “that once the bankruptcy stay is lifted, Demrex shall have seven (7) days to fully comply with the directives in the November 22, 2011 R&R.” (Dkt. 115 at 8.) *4 On April 5, 2012, the bankruptcy court entered a stipulated order granting Ford and Devon relief from the automatic bankruptcy stay effective March 20, 2012. (Dkt. 140.) The order, however, further provided that Demrex was not required to take action until the earlier of May 19, 2012 or the date when it obtained new counsel. (Dkt. 140.) On May 21, 2012, J. Christian Hauser filed a notice of appearance as new counsel for Demrex (and First Sealord). (Dkt. 144) That same day, Judge Cox held a status conference with the parties, including Demrex's new counsel. (See Dkt. 141.) Ford informs this Court that at the conference, Judge Cox gave Demrex until June 19, 2012 to comply with the November 2011 Report and Recommendation as adopted by the December 2011 Order, and “requested that Mr. Hauser be allowed to get up to speed on the case.” (Dkt. 183 at 6.) On June 1, 2012, Judge Cox lifted the bankruptcy stay in this case. D. Brief Overview of Demrex's Discovery Responses After The Bankruptcy Stay On June 4, 2012, Spectrum Computer Forensics & Risk Management, LLC imaged the hard drives or copied the contents of several of Demrex's machines. (Dkt. 183, Ex. 3.) On July 9, 2012, Demrex provided Ford with its “Fifth Supplemental Answers” to Ford's First Interrogatories and Second Requests for Production (Dkt. 183, Ex. 7). As noted, these discovery requests were specifically covered by the November 2011 Report and Recommendation as adopted by the December 2011 Order. Also on July 9, 2012, Demrex provided responses to “Ford Motor Company's Requests for Admissions, For Production of Documents and Second Interrogatories” (“Ford's Requests for Admissions and Production and Second Interrogatories”). (Dkt. 193, Ex. 6.) These requests were served on Demrex on November 29, 2011 (after this Court's prior Report and Recommendation). (Dkt. 183, Ex. 6 at 2.) On or around August 6, 2012, Demrex—along with Altchem and Portnoy—mailed their “Answers to Ford Motor Company's Requests for Admissions, for Production of Documents and Interrogatories.” (Dkt. 183 at 9, Ex. 11.) As of October 9, 2012, when Devon filed the now-pending renewed motion for default judgment, Demrex had apparently not supplemented its responses to Devon's First Document Requests (discovery specifically covered by the Court's prior directives) and failed to answer Devon's Fourth and Fifth Interrogatories, served on August 2, 2012 and September 1, 2012, respectively. II. STANDARD FOR DEFAULT JUDGMENT Among the variety of discovery sanctions available in a district court's “arsenal,” the entry of a default judgment against a defendant or an order of dismissal against a plaintiff are the court's “strongest weapon[s].” Grange Mut. Cas. Co. v. Mack, 270 Fed.Appx. 372, 376 (6th Cir. 2008) (“A district judge holds a variety of sanctions in his arsenal, the most severe of which is the power to issue a default judgment.”); Regional Refuse Sys., Inc. v. Inland Reclamation Co., 842 F.2d 150, 154 (6th Cir. 1988) (“Dismissal of an action for failure to cooperate in discovery is a sanction of last resort.”). In Regional Refuse, the Sixth Circuit articulated four factors for courts to consider when evaluating a motion for dismissal or default judgment under Rule 37, namely: (1) whether the party's failure to cooperate in discovery is due to wilfulness, bad faith, or fault; (2) whether the adversary was prejudiced by the dismissed party's failure to cooperate in discovery; (3) whether the dismissed party was warned that failure to cooperate could lead to dismissal; and (4) whether less dramatic sanctions were imposed or considered before dismissal was ordered. 842 F.2d at 155. “Although no one factor is dispositive, dismissal is proper if the record demonstrates delay or contumacious conduct,” United States v. Reyes, 307 F.3d 451, 458 (6th Cir. 2002), i.e., conduct that is “ ‘perverse in resisting authority’ and ‘stubbornly disobedient,’ ” Schafer v. City of Defiance Police Dept., 529 F.3d 731, 737 (6th Cir. 2008) (quoting Webster's Third New International Dictionary 497 (1986)). III. ANALYSIS *5 The parties present two differing views of Demrex's efforts to comply with this Court's prior discovery directives and its discovery obligations generally. On the one hand, the Court agrees with Ford and Devon that Demrex has not completely complied with its discovery obligations. First, it appears that there are still some deficiencies in Demrex's responses or production. Second, it appears that Demrex has not made every reasonable effort to provide timely responses to Plaintiffs' discovery requests. Third, Demrex has not completely complied with this Court's directives on computer imaging. On the other hand, the Court recognizes that Demrex has made considerable efforts to comply with very lengthy, comprehensive discovery requests. The Court details these findings below and then reconciles them in evaluating the default judgment factors. A. Examples of Deficiencies in Demrex's Current Responses or Production First, Demrex's response to Ford's Interrogatory No. 1 suggests that Demrex's production remains incomplete despite this Court's directives from almost one year ago. Interrogatory No. 1 essentially asks Demrex to itemize and document its lien against the Ford Wixom plant. Demrex's Fifth Supplemental Answers provide an itemization that includes $3,532,308 for “Overtime due to Devon Delay & Interference” and directs Ford to “[s]ee attached for chart of calculations.” (Dkt. 183-8 at 4.) At oral argument, the Court inquired into the referenced “attached ... chart of calculations” (a chart that neither party has provided to the Court). Demrex's counsel unsatisfactorily provided that “this may be something we need to go back and look at.”[2] But even assuming that the referenced “attached ... chart” itemizes the $3,532,308 figure, nothing suggests that it identifies the underlying documentation supporting those itemizations. Thus, it appears that Demrex has not complied with this Court's direction at the November 2011 hearing on Ford's first motion for default judgment: Demrex should provide Ford with, now, one answer: Here is the calculation that was utilized to make up the construction lien amount, as well as all of the underlying documentation that supports those calculations. And by category, not, here's a thousand documents, Ford, you figure out which ones are this category, which ones are this category. You're going to tell them, here's each of the documents that support each of the various categories that were used to calculate the construction lien. (Dkt. 111 at 72 (emphasis added).) Second, Demrex's responses to Devon's First Document Requests also appear to be deficient. As an initial matter, it appears that Demrex did not supplement its responses after this Court's November 2011 Report and Recommendation as adopted by Judge Cox's December 2011 Order. Although Demrex has attached supplemental responses dated December 13, 2011 to its current briefing, Devon maintains that Demrex never served those responses. (Dkt. 194 at 2 n.1.) The facts favor Devon's position: the supplemental responses were prepared by Demrex's prior counsel, the supplement is dated after Demrex filed for bankruptcy, and Demrex has produced no certificate of service. (Id.) The likely inference is that while Demrex's prior counsel prepared the supplemental responses, Demrex did not serve them on Devon until it filed its November 5, 2012 response brief to the current renewed motions for default judgment. And even assuming that Demrex served the supplemental responses in December 2011, they are not fully responsive. Demrex's supplemental response to Request No. 1, which seeks Demrex's tax returns, directs Devon to “bates labeled [documents] DEMREX017—DEMREX017128.” (Dkt. 193, Ex. 8 at 3.) Devon explained at oral argument, however, that they do not have the tax returns, that there is no document numbered DEMREX017, and that a review of the bates labeled documents numerically preceding DEMREX017128 reveals that they are not tax returns. *6 As a third example, on August 6, 2012, Demrex, Altchem, and Portnoy mailed Ford their “Answers to Ford Motor Company's Requests for Admissions, for Production of Documents and Interrogatories.” (Dkt. 183 at 9, Ex. 11.) The answers are far from complete: there are 31 requests and Defendants answered only the first five. (Id.) While the Court is mindful that many of the requests appear directed to Altchem and Portnoy and thus, Defendants' collective failure to answer is not solely the fault of Demrex, all of the Defendants are represented by the same counsel.[3] B. Examples of Demrex's Untimely Responses or Production One of Ford's primary bases for default judgment is that Demrex has not produced the underlying documentation supporting its claimed costs or damages on the Wixom plant project, and, relatedly, has not accounted for the amounts in its claim of lien. (See Dkt. 195 at 3.) In fact, at oral argument, Ford emphasized that it had little documentation supporting the itemization in Demrex's claim of lien, and that its damage experts could not dispute the claimed amounts based on Demrex's production. Accordingly, the Court specifically asked about backup documentation for Demrex's claim that, due to Devon's default on the Subcontract, Demrex lost equipment sales valued at $6,000,000. (See Dkt. 183, Ex. 7 at 4.) Demrex informed the Court that there was no underlying documentation for this figure because it was based on an estimate made by an expert after a walkthrough of the Wixom plant. This, however, is not plainly indicated in Demrex's Fifth Supplemental Answer to Interrogatory No. 1. There, Demrex stated, “Per the original bid specification, Demrex was to have the right to sell equipment that was removed for the purpose of reuse. Based on Demrex's activities in the inception of the work, Demrex estimates that the minimum worth would have been approximately $6,000,000.00 in net sales.” (Dkt. 183, Ex. 7 at 5.) Based on the fact that Ford has repeatedly sought additional documentation supporting Demrex's itemization of its claim of lien, including Ford's position at oral argument, it is apparent that Ford believed that Demrex was withholding the documentation underlying its $6,000,000 estimate (as well as other claimed amounts). In light of the Court's prior instructions to Demrex to identify for Ford “each of the documents that support each of the various categories that were used to calculate the construction lien” (Dkt. 111 at 72), the Court would have hoped that Demrex's answer to Interrogatory No. 1 would have been more forthright—i.e., not provided for the first time at a hearing on a second motion for default judgment. Another development at oral argument also leads the Court to question whether Demrex has made all reasonable efforts to timely respond to Ford and Devon's discovery requests. Although Demrex's counsel represented that it was his “understanding” that Demrex had produced the documents at issue, counsel nonetheless presented a new, well-organized hard drive containing, in counsel's words, “tens of thousands of documents.” The hard drive included, for example, a folder for each subcontractor containing Demrex's documents for that subcontractor. The hard drive also included all documents that Demrex produced in Operating Engineers' Local 324 Fringe Benefit Funds v. Demrex Indus. Servs., Inc. et al., No. 10-15072 (E.D. Mich. filed Dec. 22, 2010) and all the financial reports listed in Exhibit 7 of Demrex's response to the now-pending default judgment motions. Counsel informed the Court that it was prepared to copy the new hard drive for Ford and Devon “today.” It is unclear, however, why Demrex was not prepared to do the same months ago. In light of the Court's directives at the end of 2011, Demrex would have done well to produce the organized, comprehensive hard drive it created for oral argument back on July 9, 2012 when it served its responses to Ford discovery requests. At a minimum, Demrex should have produced it when disputes arose over the sufficiency of Demrex's production in August 2012. (See Dkts. 183-5, 183-6, 183-11.) Instead, Demrex waited until it was haled into court. *7 Perhaps the clearest indicator, however, that Demrex has not made every reasonable effort to provide timely discovery responses is the manner in which Demrex answered Devon's Fourth and Fifth Interrogatories. As noted, Devon served its Fourth and Fifth Interrogatories on August 2, 2012 and September 1, 2012, respectively. (Dkt. 182, Ex. A at 3; Dkt. 182, Ex. B at 3.) Yet, in its November 5, 2012 response brief to Devon's renewed motion for default judgment, Demrex provided that it had not answered these interrogatories due to an “oversight” but that “the issue is moot as the interrogatories are now answered.” (Dkt. 193 at 13.) This turned out not to be the case, however. On November 13, 2012, Devon filed its reply brief and indicated that it still had not received the answers. Accordingly, the Court asked Demrex, via email to all counsel, to produce the responses to the Court. Demrex responded: By way of background, while referenced in our Response [Brief] and dated November 5, 2012 (the same day our response was filed with the court), I believe that they were inadvertently not sent out to opposing counsel on that same day as indicated. That said, I have modified the certificate of service to reflect today's date and apologize for any confusion. To be clear, opposing counsel is being copied on this email and they will be receiving these attachments as well. As for the Answers to the Fifth Set of Interrogatories, there appears to be a miscommunication on our end regarding this particular document and my client is reviewing his system to provide me a response to your note below. As soon as I receive same from the client, I will immediately forward to your office and to opposing counsel so we can clear up this issue. I apologize for any confusion. (Demrex's Nov. 14, 2012 Email to Court (on file with chambers).) Demrex's responses to Devon's Fifth Interrogatories were ultimately served two days later, November 16, 2012. (Demrex's Nov. 16, 2012 Email to Court (on file with chambers).) Thus, Demrex's responses to Devon's Fourth and Fifth Interrogatories were answered about six and two weeks late, respectively, and then only after inquiry by the Court, due to “oversight” followed by “inadvert[ence]” and “miscommunication.” (Moreover, Demrex's answers are not complete; in some instances, it qualifies its answers as “relative examples” and “not all inclusive” when the request seeks “each and every instance.”) These latest responses are, unfortunately, consistent with the pattern of delayed discovery production and are simply not the hallmarks of one making every reasonable effort to provide timely discovery responses.[4] C. Demrex Failed to Fully Comply With This Court's Imaging Directive As noted, on June 4, 2012, Spectrum Computer Forensics & Risk Management, LLC was given access to Demrex's machines. The corresponding report from Spectrum provides that it imaged the hard drives of two personal computers as well as an external hard drive used to backup Wixom plant data files. (Dkt. 183, Ex. 3 at 4.) Spectrum also copied[5] the backups of three laptop computers (the laptops of Bill Fleck, Jeff Green, and Ken Brydges) and the “Z:\” drive of the Demrex server. (Dkt. 183, Ex. 3 at 1, 4.) After prompting from Plaintiffs, Demrex later produced a “thumb” drive used by Portnoy for imaging. (Dkt. 183 at 7.) *8 Although Spectrum was able to perform the above imaging and copying, Ford maintains that Demrex did not comply with the November 2011 Report and Recommendation as adopted by Judge Cox's December 2011 Order. (See Dkt. 195 at 4-5.) There, the Court directed Demrex to “retain a vendor recommended by Ford and Devon to image every computer (including any server) containing documents pertaining to the Wixom plant project.” (Dkt. 104 at 24; Dkt. 115.) Ford maintains that Demrex did not comply with this directive because Demrex (1) did not produce Portnoy's laptop and desktop for imaging, (2) deleted files prior to Spectrum's imaging, (3) did not produce three external hard drives used by Portnoy for imaging, and (4) did not produce computers used by Goldberg, Ian Boyle or others who worked on the Wixom plant project for imaging. (Dkt. 195 at 4-5.)[6] Beginning with Portnoy's laptop and desktop, it is not clear that these computers were covered by the Court's imaging directive. Demrex provides that the laptop was destroyed before this Court's order: [W]hile the project was ongoing the [laptop] was dropped and broken. It is important to note that this was before litigation was even contemplated! Given the cost of repair and the disposable nature of laptops relative to the cost to purchase a new one, the laptop was disposed of at that time. However, the destruction of the laptop should not be interpreted to mean that data or documents were lost. In fact, no documents were stored on the laptop. Rather, documents were maintained on a flash drive brought to and from the project. Upon arrival at Demrex's main office, the documents were immediately uploaded to the server and copied. It must be noted that because the laptop was broken prior to litigation and the discovery Order being issued by the Court, Defendants were not under any obligation to maintain the laptop in its broken condition. (Dkt. 193 at 20.) As for the desktop, Demrex's counsel explained at oral argument that it was not used to store any project documents but instead used as a “medium” for server or external drive access. Thus, the Court cannot conclude that Demrex's failure to produce the laptop or desktop violated prior orders. The Court, however, largely agrees with the remainder of Ford's alleged imaging deficiencies. For instance, the Court agrees that Demrex should have produced the three external hard drives referenced by Portnoy in Demrex's Fed. R. Civ. P. 30(b)(6) deposition. Portnoy testified that he had one external hard drive that stored communications to First Sealord's attorney (communications, however, that Portnoy maintained were attorney-client privileged). (Dkt. 195, Ex. C at 39-40.) A second drive stored an excel spreadsheet with scrap proceeds along with photos and records of scrap loads removed from the Wixom plant that, according to Portnoy, “were [also] supplied to Devon on a daily basis.” (Dkt. 195, Ex. C at 22-23, 39-40.) The third drive stored Portnoy's communications with Ford. (Dkt. 195, Ex. C at 39-40.) Based on the contents of these drives, the Court believes that Demrex's failure to produce them was in violation of this Court's directive to “image every computer (including any server) containing documents pertaining to the Wixom plant project.” Moreover, at oral argument, Demrex's counsel could not inform the Court of the present whereabouts of these three hard drives. *9 Finally, the Court is troubled by the fact that computers used by Goldberg, Boyle, and perhaps others who worked on the project were not produced for imaging. Although the Court cannot know for certain, supporting documents attached to certain of Demrex's interrogatory responses suggest that Goldberg's computer would have responsive documents. If any of these computers contained project documents, the fact that they were not imaged would be a violation of this Court's imaging directive. Further, at oral argument, Demrex's counsel informed the Court that Goldberg was “MIA a little bit” and that the whereabouts of his laptop are unknown. D. Demrex Has Expended Considerable Efforts to Comply With Ford and Devon's Extensive Discovery Requests While the above findings would support a default judgment against Demrex, the Court would be remiss if it did not present Demrex's side of the story. First, the Court does not doubt that Demrex's present counsel, while he perhaps should have done even more, has made considerable efforts to ensure that Demrex complies with its discovery obligations. Given the comprehensive, even onerous, discovery requests served by Plaintiffs, the Court does not question Demrex's representation that “[h]ours upon hours, and days upon days were spent attempting to comply with the Court Orders.” (Dkt. 193 at 4.) Indeed, many of Plaintiffs' discovery requests include multiple subparts, including one interrogatory with subparts A through L. (See Dkt. 182, Ex. B.) Further, the Court credits Demrex's counsel's claim that his discovery-compliance efforts included numerous emails between legal counsel for Plaintiffs, filing a motion for clarification in an effort to have the court review the discovery responses to date, ... attending a meeting with opposing counsel to discuss the outstanding discovery issues[,] [and] ... propos[ing] a conference call wherein Mr. Portnoy was willing to discuss the document production to date and answer questions from opposing counsel regarding certain responses. (Dkt. 193 at 13.) Second, the Court acknowledges that Demrex's present production is markedly more complete than it was a year ago. When Plaintiffs' first motions for default were filed, Demrex had produced little—it even admitted that it lacked the financial and technical ability to produce its Master Builder accounting database. Further, many of the discovery requests now at issue had not even been served on Demrex. In contrast to November 2011, Demrex's current production includes its “general ledger that is approximately 7,000 pages in length,” two imaged computers, an image of an external hard drive used to backup Wixom plant data files, and the contents of the Demrex server “Z:\” drive. (See Dkt. 193 at 6, 10.) It also includes, or, at least soon will include, “approximately 100 different financial reports comprising of several thousand pages of Demrex and Altchem including, but not limited to, balance statements, income statements, trial balances, job cost totals, and general journal source.” (See Dkt. 193 at 10.) Moreover, Demrex has provided that it would immediately produce the seemingly comprehensive hard drive that it presented to the Court at the hearing. Although Demrex may not have produced every responsive document, the Court is confident that Plaintiffs have the overwhelming majority of documents in Demrex's possession needed to pursue their claims. Third, it appears that some of the perceived deficiencies in Demrex's production are attributable to poor document management rather than intentional withholding of responsive documents. As a significant example, at the hearing, Demrex informed the Court that after entering data from subcontractor invoices into its accounting system, it would not preserve the invoices. As another example, regarding Ford's claim that “Defendants have not produced documents reflecting their reports to First Sealord on the status of the Project” (Dkt. 195 at 4), Defendants' counsel explained that Demrex would not regularly report to First Sealord. It appears that the set of communications between Demrex and First Sealord, and even Demrex and its subcontractors, may simply not be as complete as Ford and Devon expected. In short, some of the underlying documentation that Plaintiffs seek, Demrex perhaps should have in its possession, but in fact does not. *10 Fourth, even though the Court has found that Demrex violated the Court's order regarding computer imaging, the resulting prejudice to Ford and Devon is less clear. Regarding the deleted files, Demrex explains that it has since reproduced the drive for imaging: Prior to Spectrum copying the hard drive, a Demrex employee who assists with certain IT issues reviewed the harddrive and decided, without any direction of management or counsel, to place some of the data files belonging to former Demrex safety manager Ken Brydges into the recycling bin as he did not believe those files to be relevant. The files include but are not limited to personal pictures, resumes, information concerning a company Mr. Brydges had started identified as Brydges Consulting, and Demrex projects both before and after Wixom. Upon learning of this issue, Defense counsel offered to immediately produce the hard drive but with the suggestion that Plaintiffs' execute a confidentiality agreement as counsel questioned whether the files would be covered under the previously executed confidentiality agreement. (Exhibit 11). Plaintiffs never responded to this request. In preparation of this responsive brief, Defendants reviewed the hard drive and found approximately twenty-five files that contain the word “Wixom”. All of these inconsequential files were previously produced to Plaintiffs. However, despite the fact that Plaintiffs ignored Defendants request for a confidentiality agreement, in the spirit of cooperation, Defendants forwarded the hard drive to Spectrum for imaging. (Dkt. 193 at 21.) Relatedly, Demrex's counsel indicated that two of Portnoy's three external hard drives had been imaged by Spectrum either directly or indirectly because the contents of the drives were mirrored on other hard drives that Spectrum had imaged. Counsel also informed the Court the contents of the third hard drive, apparently the one containing scrap proceed documents, had been copied to the hard drive that counsel had brought to oral argument and was willing to produce to Ford and Devon. Fifth, the Court notes that Ford conceded at oral argument that the content on the drives that Spectrum imaged are in “a form not accessible, at this moment, to [Ford].” It was this Court's understanding that, despite the expense, Ford or Devon would hire a vendor to extract the necessary data from the imaged drives. In its response to Demrex's objections to the November 2011 Report and Recommendation, Ford said, Demrex and First Sealord's excuse that Ford and DIG will not be able to use the information unless they buy a license for Master Builder, is no basis for Objections. It is not their concern, and nothing in the Magistrate's ruling requires them to do anything but pay for 2/3 of the cost of imaging. Nor have Ford or DIG demanded that they pay for anything beyond their share of the imaging. Demrex and First Sealord are obligated to image the data in full. At that point, it will be up to Ford and DIG to determine how to access and utilize that information. (Dkt. 107 at 8.) Indeed, it was this Court's hope that by allowing a vendor to image Demrex's computers, Demrex would remove itself from the jeopardy of not producing all responsive documents.[7] E. Balancing the Default Judgment Factors *11 Determination of two of the default judgment factors is relatively straightforward. Demrex has previously been warned: Demrex and First Sealord are warned that further noncompliance with the Federal Rules pertaining to discovery or the Court's orders to compel (Dkts. 53, 54, 55) may result in dismissal of all claims with prejudice and the entry of default judgment in favor of Ford and Devon. The Court will tolerate no further unjustified delays for items subject to the Court's orders to compel. (Dkt. 104 at 24.) Second, the Court previously imposed sanctions on Demrex, and those sanctions have not led to complete compliance with this Court's orders regarding discovery. Determining the prejudice to Ford and Devon is only slightly more difficult. Undoubtedly Ford and Devon have been prejudiced in terms of delay. The fact discovery deadline is December 20, 2012 and it is clear that Plaintiffs will either not have all of the discovery they need from Demrex by that date or, at a minimum, be prejudiced in their ability to use that discovery to timely pursue their claims and defenses. It is also clear that Ford and Devon have expended considerable funds in bringing the now-pending motions for default judgment and otherwise attempting to resolve discovery issues with Demrex. On the other hand, although delay and financial prejudice support a default judgment, see Harmon v. CSX Transp., Inc., 110 F.3d 364, 368 (6th Cir. 1997), they are also types of prejudice that can be almost entirely remedied through scheduling relief and fee and cost awards. Further, certain sanctions could mitigate the prejudice to Ford and Devon on the merits. For one, the Court could order Demrex to review its production and then certify that it has produced all responsive documents to all of the discovery requests served by Plaintiffs. The Court could additionally direct Demrex to redraft its responses, especially those to Devon's Fourth and Fifth Interrogatories and Ford's Requests for Admissions, for Production of Documents and Interrogatories collectively served on Demrex, Altchem, and Portnoy. Further still, the Court could direct Demrex to list specific bates numbered documents that are responsive to each interrogatory and document request and then limit Demrex to the cited evidence going forward. Accordingly, the prejudice factor favors Plaintiffs—but not conclusively. Another key issue is whether Demrex has acted in bad faith. On the one hand, the Court recognizes that Demrex's discovery burdens in this case are significant. And the Court recognizes that Demrex's new counsel has put in considerable effort to ensure that Demrex complied with those obligations. Further, it is difficult for the Court to determine with precision what areas of Demrex's production are deficient because it has failed to produce documentation, and what areas are deficient simply because it does not have documentation. On the other hand, the Court is seriously troubled by the need for Ford and Devon to resort to discovery-sanction motion practice before Demrex produces responses that should have been produced without any prodding from Plaintiffs. For one, Demrex should have been more forthcoming in informing Ford and Devon what underlying documentation it had and did not have in support of its costs, damages, and claim of lien. Similarly, Demrex should have prepared the hard drive it presented at oral argument long ago. And the Court cannot overlook the fact that even as recent as answering Devon's Fourth and Fifth Interrogatories, Demrex has continued to fall short of its discovery demands. Nor can the Court simply ignore the fact that, as to Demrex's key players, its computer imaging order was not strictly complied with. Further, this Court does not write on clean slate: it previously informed Demrex that its “conduct treads precariously close to willful noncompliance with this Court's orders to compel.” (Dkt. 104 at 16.) *12 In all, while close, the Court finds that there is some element of “wilfulness, bad faith, or fault,” Patton v. Aerojet Ordnance Company, 765 F.2d 604, 607 (6th Cir. 1985)—and/or “stubborn disobedience” Schafer v. City of Defiance Police Dept., 529 F.3d 731, 737 (6th Cir. 2008)—in Demrex's failure to completely comply with its discovery obligations. At a minimum, the Court is compelled to find that Demrex had the ability to comply with this Court's prior directives but has not completely done so. See Stamtec, Inc. v. Anson, 195 Fed.Appx. 473, 478 (6th Cir. 2006) (“This Circuit has taken the position ... consistent with Supreme Court precedent, that ‘if a party has the ability to comply with a discovery order and does not, dismissal is not an abuse of discretion.’ ” (quoting Regional Refuse Systems, 842 F.2d at 154)). In sum, the balance of the factors tips in favor of a default judgment. But not strongly. Accordingly, the Court believes that the following compromise remedy is proper. IV. RECOMMENDATION For the foregoing reasons, the Court RECOMMENDS that Devon's Renewed Motion for Default Judgment as to Demrex (Dkt. 182) be GRANTED IN PART and that Ford's Renewed Motion for Default Judgment as to Demrex (Dkt. 183) be GRANTED IN PART as follows: 1. Demrex's counterclaims against Ford and Devon be DISMISSED WITH PREJUDICE; 2. Within 7 days of adoption of this Report and Recommendation, Demrex shall provide a complete image of the hard drive presented to the Court at the November 21, 2012 hearing (in the exact form that it was presented at the hearing) to each of Ford and Devon; 3. Within 45 days of adoption of this Report and Recommendation, a. Ford, Devon, and Demrex be directed to work together to identify those discovery requests that remain relevant given the dismissal of Demrex's counterclaims, and Demrex shall produce all documentation in its possession or control responsive to the still-relevant requests and/or completely and fully answer still-relevant interrogatories; b. Ford and Devon (unless contrary to the terms of a protective order) be given remote access to Demrex's Master Builder database in the manner that counsel for The Trustees of the Operating Engineers' Local 324 Fringe Benefit Funds was given in Operating Engineers' Local 324 Fringe Benefit Funds v. Demrex Indus. Servs., Inc. et al., No. 10-15072 (E.D. Mich. filed Dec. 22, 2010); 4. The December 20, 2012 fact discovery deadline be extended 90 days. V. FILING OBJECTIONS *13 The parties to this action may object to and seek review of this Report and Recommendation within fourteen (14) days of service of a copy hereof as provided for in 28 U.S.C. § 636(b)(1). Failure to file specific objections constitutes a waiver of any further right of appeal. Thomas v. Arn, 474 U.S. 140 (1985); Frontier Ins. Co. v. Blaty, 454 F.3d 590, 596 (6th Cir. 2006); United States v. Sullivan, 431 F.3d 976, 984 (6th Cir. 2005). The parties are advised that making some objections, but failing to raise others, will not preserve all the objections a party may have to this Report and Recommendation. McClanahan v. Comm'r Soc. Sec., 474 F.3d 830 (6th Cir. 2006) (internal quotation marks omitted); Frontier, 454 F.3d at 596-97. Objections are to be filed through the Case Management/Electronic Case Filing (CM/ECF) system or, if an appropriate exception applies, through the Clerk's Office. See E.D. Mich. LR 5.1. A copy of any objections is to be served upon this magistrate judge but this does not constitute filing. SeeE.D. Mich. LR 72.1(d)(2). Once an objection is filed, a response is due within fourteen (14) days of service, and a reply brief may be filed within seven (7) days of service of the response. E.D. Mich. LR 72.1(d)(3), (4). Footnotes [1] This Report and Recommendation references many motions, briefs, and orders, and the titles of these papers are not short. The Court has therefore cited documents solely by docket number. For convenience, however, the following is a listing of the primary documents with their corresponding docket number: • Dkt. 104, November 2011 Report and Recommendation on Ford and Devon's First Motions for Default Judgment • Dkt. 111, Transcript of the November 2011 Hearing on Ford and Devon's First Motions for Default Judgment • Dkt. 115, Judge Cox's December 2011 Order Regarding the November 2011 Report and Recommendation • Dkt. 182, Devon's Renewed Motion For Default Judgment of Demrex • Dkt. 183, Ford's Renewed Motion for Default Judgment of Demrex • Dkt. 193, Defendants' Response to Ford and Devon's Renewed Motions for Default Judgment • Dkt. 194, Devon's Reply to Defendants' Response to Ford and Devon's Renewed Motions for Default Judgment • Dkt. 195, Ford's Reply to Defendants' Response to Ford and Devon's Renewed Motions for Default Judgment [2] Counsel also suggested that the chart might be some type of total or subtotal amount. But if the $3,532,308 figure is removed because it is a subtotal of costs separately listed in the lien breakdown, then the total claimed contract amount falls $3,532,308 short. [3] The Court recognizes that one potentially large production deficiency is Demrex's accounting of, and underlying support for, the $11.5 million it received in scrap proceeds. But, in its reply, Ford acknowledges that it has received an accounting of these proceeds. (Dkt. 195 at 3 (referencing “schedules [Demrex] prepared for its bankruptcy hearing listing proceeds that exceed $11.5 million”).) As for the underlying sales records, the parties present a fact dispute that the Court cannot readily resolve. (Compare Dkt. 195 at 3 (“no back up is included and there is no accounting of who received what amounts”) with Dkt. 193 at 6 (“Defendants have created for litigation and produced to Plaintiffs summary spread sheets on the project revenues in the amount of approximately $11,500,000 received by Defendants along with all back up in support.”).) [4] Indeed, the Court is equally troubled by the deficient discovery responses to Devon's First Interrogatories to Altchem and Portnoy provided by the same counsel. (Dkt. 199.) [5] The Spectrum report actually uses the word “preserved,” which means “captur[ing] the contents of the folders and their metadata” but not “captur[ing] the unallocated clusters/free space of the partition on which the folder resides (which may contain deleted content and file/system artifacts).” (Dkt. 183, Ex. 3 at 1.) [6] The Court is aware that Ford has raised Demrex's alleged destruction of digital evidence in the context of spoliation. (Dkt. 183 at 15-17; Dkt. 195 at 4-5.) The Court believes that the issue is better addressed as a violation of this Court's imaging directives and, therefore, will not separately address spoliation. The Court has, however, considered as a discovery sanction Ford's claim that it is entitled to “a presumption that the deleted documents, the ‘recycled’ computer, and Portnoy's missing laptop, and hard drive contain relevant documents relating to the Project, above and beyond those imaged onto Demrex's server that were captured by Spectrum.” (Dkt. 183 at 17.) [7] The Court also notes that in emails to Demrex, Ford has repeatedly mentioned metadata. It would appear to the Court that the imaged drives would include metadata. (Dkt. 111 at 29 (“MS. PETERS: ... The image will give us the meta data.”).)