Paynton v. American Fresh Food LLC et al

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WO
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF ARIZONA
Michelle Paynton,
Plaintiff,
v.
American Fresh Food LLC, et al.,
Defendants.
No. CV-24-00536-PHX-KML
ORDER
This case involves, at most, approximately $200 in damages based on plaintiff
Michelle Paynton allegedly working 4.6 hours for defendants. Defense counsel’s choice to
participate in this case only sporadically led to the court striking defendants’ answer,
entering their defaults, and Paynton applying for default judgment. (Doc. 59.) Defendants
now seek to set aside their defaults, claiming the present record “is nowhere near the willful
disobedience” that would merit striking their answers. (Doc. 62 at 6.) The record, however,
shows repeated refusals by defense counsel to comply with court orders. The court gives
defendants one final opportunity to litigate this case, but defense counsel must show cause
why he should not be sanctioned in the form of the additional attorneys’ fees incurred as a
result of his repeated obstructive behavior.
BACKGROUND
Paynton filed her complaint on March 14, 2024. The complaint alleged Paynton
worked a few hours on a single day for defendants and was never paid. (Doc. 1 at 8.) There
were early disputes regarding service of process and, on May 17, 2024, plaintiffs applied
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for entry of default against some of the defendants. (Doc. 10.) Those defaults were entered
a few days later. (Doc. 11.) On June 7, 2024, defense counsel Ryan Lorenz filed a motion
to set aside the defaults. (Doc. 13.) That motion indicated Lorenz was not paying close
attention to the case but also suggested, both in tone and substance, that Lorenz would be
extraordinarily aggressive and difficult in litigating this case.
The motion began by seeking to vacate the default of three defendants, including
American Fresh Food LLC. (Doc. 13.) Paynton had not sought, and the court had not
entered, the default of American Fresh Food. (Docs. 10, 11.) Lorenz did not explain why
he was seeking relief regarding an imaginary default. The motion to set aside the defaults
then proceeded with over-the-top accusations against Paynton and her counsel. According
to Lorenz, plaintiff’s counsel had agreed to an extension of time for defendants to respond
to the complaint but plaintiff’s counsel then reneged on that agreement. Lorenz described
this behavior as “inexplicable, at best, and the most deplorable form of unprofessional
attorney behavior, at worse.” (Doc. 13 at 2.) Lorenz claimed plaintiff’s counsel was “trying
to cheat their way to a win” and the “polar opposite” of “a smart litigant.” (Doc. 13 at 3-
4.) Lorenz also seemed to argue the entire case was baseless and stated “[a] motion for
summary judgment is forthcoming.” (Doc. 13 at 4.) No such motion was ever filed.
Plaintiff’s counsel filed a response arguing Lorenz had misrepresented matters, but
Paynton did not oppose setting aside the defaults. (Doc. 16.) The court set aside the defaults
but cautioned counsel that “personal attacks and finger-pointing” would not be tolerated.
(Doc. 22 at 1.) Defendants filed answers and the parties filed their Rule 26(f) Case
Management Report. (Doc. 25, 26, 34.) In the Rule 26(f) report, defendants again stated
some defendants would “soon move for summary judgment.” (Doc. 34 at 4.) No motion
was filed. On September 12, 2024, the court issued a scheduling order requiring the
completion of discovery in July 2025 and dispositive motions in September 2025. (Doc.
35.) The parties then attempted to engage in discovery.
On January 10, 2025, Paynton filed a first notice of discovery dispute. (Doc. 38.)
Paynton did so unilaterally because Lorenz allegedly “declined to participate in the
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discovery dispute process.” (Doc. 38 at 1.) The court waited until January 14, 2025, to see
if Lorenz would file anything, but he did not. The court ordered Lorenz to respond to the
discovery dispute statement by January 21, 2025. (Doc. 39.) Lorenz did not file anything
by that date. On January 27, 2025, the court issued a second order for Lorenz to respond to
the discovery dispute. The court also ordered Lorenz to show cause why he should not be
sanctioned. (Doc. 40.) In that order, the court warned Lorenz and defendants “that
continued failure to comply with court orders will result in sanctions,” possibly including
“the striking of the answer[s] and entry of default judgment.” (Doc. 40 at 1.)
Lorenz eventually filed a response to the discovery dispute, although he chose to
ignore a previous court order outlining the permissible length of such submissions. (Doc.
42.) As with his earlier motion to set aside default, Lorenz’s response to the discovery
dispute contained melodramatic rhetoric that fell significantly below acceptable standards
of behavior. The response argued Paynton was “overlitigating this case” and based on the
amount of wages at stake “almost any amount of spending on attorneys’ fees is wasted
money.” (Doc. 42 at 2.) Lorenz also argued that having been “given an opportunity to
litigate,” plaintiff’s counsel “will drill to the center of the Earth to run up fees.” (Doc. 42
at 3.) Lorenz then seemed to argue that Paynton was not entitled to discovery on her “sub-
$100 claim.” (Doc. 42 at 3.) According to Lorenz: “Reality check. It is not worth it.” (Doc.
42 at 3.) Finally, Lorenz went on a lengthy tirade about the failure of law schools to teach
lawyers “how to use the telephone.” (Doc. 42 at 3.) Plaintiff’s counsel had sent emails
regarding discovery matters but Lorenz apparently prefers to speak by phone. Thus, Lorenz
was outraged he had received “Zero” phone calls regarding the discovery that was the
subject of the dispute. (Doc. 42 at 3.)
On January 30, 2025, the court issued an order criticizing Lorenz’s behavior and
instructing the parties to confer to see if they could reach an agreement on the discovery
dispute. (Doc. 43.) The court also reminded Lorenz that he had not yet provided any
explanation for ignoring multiple court orders and his explanation was due on February 6,
2025. (Doc. 43.) Lorenz viewed his explanation as yet another chance to lament the lack
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of phone calls from plaintiff’s counsel. (Doc. 45 at 2.) As for his failure to comply with the
court’s order to respond to the discovery dispute by a specific day, Lorenz explained his
assistant was to blame for miscalendaring the deadline. (Doc. 45 at 4.) While ostensibly
accepting personal responsibility, Lorenz included internal emails with his assistant
allegedly to prove his assistant “acknowled[ed] the omission.” (Doc. 45 at 3.)
The day after Lorenz filed his response, the court issued an order stating it would
take no further action regarding Lorenz’s failures. (Doc. 46.) The court documented that
Lorenz had promised discovery responses by December 4, 2024, but did not produce those
responses. Lorenz had also ignored six emails from plaintiff’s counsel regarding the
untimely discovery responses. (Doc. 46 at 1.) But the court merely reminded both parties
to cooperate in the submission of discovery disputes and stated neither party was free “to
ignore discovery-related communications.” (Doc. 46 at 1.)
On July 18, 2025, Paynton applied for an extension of time to complete discovery.
(Doc. 50.) Paynton explained Lorenz claimed to represent a crucial non-party witness but
was allegedly refusing to cooperate in scheduling that witness’s deposition. The court
granted the discovery extension and instructed the parties to confer within three days to
schedule the deposition. (Doc. 51 at 1.) Defendants were ordered to “file a statement
confirming they have complied with this order” to confer. (Doc. 51 at 1.) And defendants
were warned, yet again, that they were at risk of sanctions, including possibly “the striking
of their answer and entry of default judgment.” (Doc. 51 at 1.) The parties were able to
confer but could not agree on a deposition date. Lorenz ignored the court’s order to file a
statement requiring he identify the agreed-upon deposition date.
On August 18, 2025, Paynton filed another motion to extend the discovery deadline
to allow her to take the non-party’s deposition. (Doc. 53.) The court granted that extension,
allowing up until October 3, 2025, to take the deposition. (Doc. 54.) On September 15,
2025, Paynton filed a motion to strike the answers. That motion argued Lorenz had been
difficult throughout the entire case and had failed to respond to recent attempts to schedule
the non-party’s deposition. (Doc. 55.) The response to that motion was due September 29,
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2025. Lorenz did not file a response. To be clear, Paynton moved to strike the answers—
an unusual and significant request—yet no response was filed. It is not clear why Lorenz
concluded no response was necessary, and under Local Rule 7.2(i), the court could have
summarily granted the motion.
Instead of summarily granting, on October 7, 2025, the court issued an order
recounting the history of this case and concluding defendants’ behavior (through Lorenz)
merited striking the answers. As explained in that order:
Defendants refused to submit a joint discovery dispute, ignored
an order calling for their position on discovery disputes, failed
to comply with an order requiring they confer and identify a
deposition date, stopped responding to Paynton’s counsel, and
failed to respond to the motion seeking to strike their answers.
Defendants’ behavior is delaying resolution of this case and
requiring unusual court intervention.
(Doc. 56 at 3.) The answers were stricken and defendants’ defaults entered. (Doc. 58.)
Paynton was instructed to apply for default judgment by October 20, 2025.
Strangely, the order granting the motion to strike the answers prompted Lorenz to
file an opposition to the motion. That opposition offered no explanation why it was
untimely, nor did it acknowledge that the motion had already been granted. (Doc. 58.) But
in terms of substance, the opposition lamented—in the same fashion as Lorenz’s prior
laments—that everything could have been solved by phone calls. (Doc. 58 at 3.) Lorenz
then concluded Paynton and her counsel actually “do[] not want to take [the non-party’s]
deposition.” (Doc. 58 at 3.) Instead, Paynton and her counsel are just hoping to produce “a
discovery fight [and] to waste more of the court’s time.” (Doc. 58 at 3.) Lorenz requested
“the court deny the instant motion”—the motion that had already been granted—and allow
the deposition to proceed on a date chosen “unilaterally” by Lorenz. (Doc. 58 at 4.) The
court ignored the untimely response.
On October 20, 2025, Paynton applied for default judgment. That motion seeks an
award of treble damages totaling $198.03. (Doc. 59.) Lorenz waited the full fourteen days
to file an opposition. That opposition reflects Lorenz misunderstood the appropriate basis
to oppose a motion for default judgment. Once defendants’ defaults were entered, “the
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factual allegations of the complaint, except those relating to the amount of damages, will
be taken as true.” Geddes v. United Fin. Grp., 559 F.2d 557, 560 (9th Cir. 1977). Despite
that, Lorenz’s opposition focuses on disputing the underlying facts, claiming there is
evidence that might controvert Paynton’s allegations. The opposition indicated Lorenz
knew a motion to set aside the defaults was needed, as the opposition stated such a motion
was “imminently being filed.” (Doc. 60 at 6.) The opposition later stated the motion to set
aside the defaults was being “contemporaneously filed.” (Doc. 60 at 6.) But Lorenz’s
promised motion to set aside the defaults was not filed then and Paynton filed her reply in
support of default judgment. (Doc. 61.)
On December 9, 2025, Lorenz finally decided to file a motion to set aside the
defaults. (Doc. 62.) That filing came two months after Lorenz described the motion as
“imminent[].” Unsurprisingly, Lorenz’s fixation regarding the telephone makes an
appearance in his motion to set aside the defaults. (Doc. 62 at 4) (“counsel never picked
up the phone to discuss” discovery matters). And the motion also returns to Lorenz’s
refrain that this litigation is inappropriate. He describes the entire case as an attempt “to
extort a settlement” and a “shakedown.” (Doc. 62 at 4, 6.) The support he offers for this is
a settlement offer that would require payment of Paynton’s full wages and her attorneys’
fees and costs. Lorenz does not explain why this qualifies as a “shakedown.” Paynton filed
an opposition to the motion to set aside defaults, but Lorenz chose not to file a reply. (Doc.
65.)
ANALYSIS
Paynton seeks default judgment while defendants request the court set aside their
defaults and allow for litigation to resume. The striking of the answers and entry of defaults
was appropriate at the time. After all, Lorenz did not even oppose the motion to strike the
answers. And failing to oppose the motion to strike the answers was only Lorenz’s latest
failure at the time. Based on the present record, proceeding with default judgment would
be merited. But Lorenz claims defendants wish to defend on the merits and based on the
strong policy favoring resolving cases on the merits, the more prudent course is to set aside
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the defaults. See Mendoza v. Wight Vineyard Mgmt., 783 F.2d 941, 945–46 (9th Cir. 1986)
(“doubt, if any, should be resolved in favor of the motion to set aside the [default] so that
cases may be decided on their merits”). This does not mean Lorenz’s behavior has been
acceptable and he must show cause why he should not be sanctioned.
A court may “order an attorney ‘who so multiplies the proceedings in any case
unreasonably and vexatiously . . . to satisfy personally the excess costs, expenses, and
attorneys’ fees reasonably incurred because of such conduct.’” Blixseth v. Yellowstone
Mountain Club, LLC, 796 F.3d 1004, 1007 (9th Cir. 2015) (quoting 28 U.S.C. § 1927). The
court also has “the ability to fashion an appropriate sanction,” such as an award of
attorneys’ fees, “for conduct which abuses the judicial process.” Goodyear Tire & Rubber
Co. v. Haeger, 581 U.S. 101, 107 (2017) (simplified). Lorenz must show cause why he
should not be sanctioned in form of an award of attorneys’ fees to Paynton for the
following:
1) Failing to participate in the submission of the January 10, 2025, discovery
dispute;
2) Failing to file a response as required by the court’s January 14, 2025 order;
3) Filing an impermissibly lengthy response on January 27, 2025;
4) Failing to cooperate in setting the non-party’s deposition as evidenced in the
motions filed on July 18, 2025, and August 18, 2025;
5) Failing to respond to the motion to strike;
6) Filing an untimely opposition to the motion to strike after the motion was
granted;
7) Opposing the motion for default judgment on inapplicable legal basis;
8) Unprofessional language throughout this case, including the accusation that
Paynton and counsel were trying “to cheat their way to a win” (Doc. 13 at 3-4)
and arguing Paynton’s counsel “will drill to the center of the Earth to run up
fees” over a claim that “Reality check . . . is not worth it.” (Doc. 42 at 3.).
The only remaining discovery that must be completed is the deposition of the non-
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party. The parties must confer and agree upon a date certain for that deposition between
February 4, 2026, and February 13, 2026. Once they agree, they must file a joint statement
identifying the date and the court will issue an order requiring the deposition proceed on
that date. If the parties cannot agree on a date, the joint statement may include no more
than two proposed dates from each side. The court will then select from those dates and
issue an order requiring the deposition on that date. Once set, the deposition will not be
rescheduled. After the deposition, the case will be ready for dispositive motions or to
proceed to trial.
Defendants and Lorenz are warned this is their final opportunity to avoid default
judgment. Failure to participate in good faith in the remainder of this litigation will result
in the court once again striking the answers and entering default judgment.
IT IS ORDERED the Motion for Default Judgment (Doc. 59) is DENIED.
IT IS FURTHER ORDERED the Motion to Set Aside Defaults (Doc. 62) is
GRANTED. The answers previously stricken (Docs. 25, 26.) are REINSTATED.
IT IS FURTHER ORDERED no later than February 4, 2026, the parties shall
file a joint statement identifying an agreed-upon date for the remaining deposition, or two
proposed dates from each side. All proposed dates must be between February 4 and
February 13, 2026.
IT IS FURTHER ORDERED dispositive motions shall be filed no later than
February 20, 2026. No extensions of this deadline will be granted. If no dispositive
motions are filed, no later than February 23, 2026, the parties shall file a joint statement
identifying the expected length of trial.
/
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/
/
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IT IS FURTHER ORDERED no later than February 13, 2026, attorney Ryan
James Lorenz shall show cause why he should not be sanctioned for the behavior outlined
above. Paynton may file a response to Lorenz’s response no later than February 20, 2026.
No reply is allowed.
Dated this 2nd day of February, 2026.
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