MEMORANDUM DECISION AND ORDER I. INTRODUCTION Plaintiff Micro Fines Recycling Owego LLC has sued defendants Ferrex Engineering, Ltd. (“Ferrex”), 1199541 Ontario Inc. (“1199541″), and Tom Clarkson. Dkt. No. 13 (“Amended Complaint”)
1-56. Plaintiff alleges that that Ferrex sold Plaintiff a faulty industrial dryer and that 1199541 and Clarkson are also liable as Ferrex’s alter egos. Id. Before the Court is Plaintiff’s objection to a report-recommendation by the Honorable Miroslav Lovric, United States Magistrate Judge, Dkt. Nos. 53 (“Report-Recommendation”); 54 (“Objection”), as well as Plaintiff’s motion for a default judgment against Ferrex, Dkt. No. 57 (“Default Motion”). For the reasons that follow, the Court grants in part and denies in part Plaintiff’s Default Motion. This moots Plaintiff’s objections to the Report-Recommendation, which the Court then adopts in its entirety. II. BACKGROUND The Court detailed the factual allegations in its April 22, 2019 Memorandum-Decision and Order, familiarity with which is assumed. Dkt. No. 40 (“April 2019 MDO”). To recap briefly, Ferrex sold Plaintiff an allegedly faulty industrial dryer. Am Compl. 9. After Plaintiff sued Ferrex, Ferrex’s counsel informed Plaintiff that Ferrex would not defend the suit and that if Plaintiff obtained a judgement, Ferrex, which is controlled by Clarkson, would simply move its assets to 1199541, which is also controlled by Clarkson. Id. 36. Unsurprisingly, Plaintiff then added 1199541 and Clarkson as defendants and obtained a clerk’s entry of default against Ferrex. See id.; Dkt. No. 22 (“Clerk’s Entry of Default”). In April 2019, the Court denied Clarkson and 1199541′s motion to dismiss for lack of personal jurisdiction on the grounds that Plaintiff had sufficiently alleged, for jurisdictional purposes, that 1199541 and Clarkson were alter egos of Ferrex. April 2019 MDO at 19. The procedural history subsequent to the April 2019 MDO is murkier. The confusion appears to stem from competing interpretations of a letter filed by Plaintiff on April 8, 2019, two weeks before the publication of the April 2019 MDO. In that uncaptioned letter, Plaintiff “request[ed] that the Court schedule an evidentiary Hearing with respect to the issue of Plaintiff’s damages as to Defendant Ferrex.” Dkt. No. 39 (“Letter Motion”) at 1. In the Court’s April 2019 MDO, the Court referred this request to the Honorable David E. Peebles, United States Magistrate Judge, for consideration. In a telephone conference between the parties and Judge Peebles on April 26, 2019, Judge Peebles set a briefing schedule for Plaintiff’s Letter Motion, and the parties agreed that the issue of damages could be decided on the papers. Dkt. Entry for April 26, 2019. On May 5, 2019, Plaintiff filed an affidavit and exhibits in support of its claim for damages. Dkt. Nos. 41 (“Piela Affidavit”), 41-1 to -3 (“Exhibits A-C”). On May 24, 2019, Ferrex made its first appearance in the case and, along with Clarkson and 1199541, filed a response labeled “Defendants’ Memorandum in Opposition to Plaintiff’s Request for Entry of Judgment on Default.” Dkt. No. 47 (“Letter Motion Response”). Plaintiff then filed a reply captioned “Plaintiff’s Reply in Support of Affidavit for Damages and Entry of Default Judgment.” Dkt No. 51 (“Letter Motion Reply”). The case was then reassigned from Magistrate Judge Peebles to Magistrate Judge Lovric. Dkt. No. 52. Judge Lovric denied the Letter Motion as premature. R. & R. at 5. Judge Lovric reasoned that there could not be a hearing on damages because “there has not been an entry of a default judgment against Ferrex nor has Plaintiff filed a motion for default judgment pursuant to Fed. R. Civ. P. 55(b), which would provide notice and an opportunity for Ferrex to show cause why the Court should not enter default judgment.” Id. Plaintiff objected to the Report-Recommendation, arguing that while “Micro Fines may have confused Magistrate Lovric by neglecting to file the Letter Motion as a more formal motion under Rule 55(b),…the record clearly shows that the parties were unmistakably under the impression that the Court was treating the letter motion as a formal motion for entry of default judgment.” Obj. at 4. Plaintiff noted that both parties had filed papers captioned as briefs pertaining to an entry of default judgement and that Judge Peebles, in granting an extension request, had also referred to the pending Letter Motion as a “request for entry of a default judgment against Ferrex.” Id. (quoting Dkt. No. 45). That same day, Plaintiff requested leave to file a formal motion for default judgment. Dkt. No. 55. The Court granted the request, Dkt. No 56, and Plaintiff filed the Default Motion — captioned unambiguously as a “Motion for Default Judgment Pursuant to Fed. R. Civ. P. 55(b)(2)” — on August 15, 2019. Mot. for Default Judgment at 1; see also Dkt. No. 57-1 (“Default Motion Memorandum”). In the Default Motion Memorandum, Plaintiff requested that the Court consider the papers previously filed by both sides in reference to the Letter Motion, which the parties had treated as a motion for default judgment. Default Mot. Mem. at 1 n.1. Defendants filed a response to the Default Motion, which also incorporated Defendants’ previously filed Letter Motion Response. Dkt. No. 61 (“Default Motion Response”) at 2 n.2. Plaintiff filed a reply in support of its Default Motion. Dkt. No. 62 (“Default Motion Reply”). III. LEGAL STANDARD A. Default Judgment After the Clerk has filed an entry of default against a party that has failed to plead or otherwise defend, a court may enter default judgment upon application of the opposing party. Fed. R. Civ. P. 55(b). Default judgment is an extreme sanction, and decisions on the merits are favored. Meehan v. Snow, 652 F.2d 274, 277 (2d Cir. 1981). However, default judgment is ordinarily justified when a party fails to respond after having received proper notice. Bermudez v. Reid, 733 F.2d 18, 21 (2d Cir. 1984). After the clerk’s entry of default, all of the well-pleaded allegations in a complaint pertaining to liability are deemed true. Transatlantic Marine Claims Agency, Inc. v. Ace Shipping Corp., 109 F.3d 105, 108 (2d Cir. 1997) (recognizing that the factual allegations in the complaint, except those relating to damages, are deemed true after default). However, a court cannot take allegations in a complaint regarding damages as true. Credit Lyonnais Sec. (USA), Inc., v. Alcantara, 183 F.3d 151, 154-55 (2d Cir. 1999). After establishing liability, a court must conduct an inquiry to ascertain the amount of damages with reasonable certainty. Transatlantic, 109 F.3d at 111. To determine the amount of damages in the context of a default judgment, “the court may conduct such hearings or order such references as it deems necessary and proper.” Fed. R. Civ. P. 55(b)(2). However, “it [is] not necessary for the District Court to hold a hearing, as long as it ensured that there [is] a basis for the damages specified in the default judgment.” Fustok v. ContiCommodity Serv., Inc., 873 F.2d 38, 40 (2d Cir. 1989); see also Action S.A. v. Marc Rich & Co., Inc., 951 F.2d 504, 508 (2d Cir. 1991) (a full evidentiary hearing was not necessary where district judge was “inundated with affidavits, evidence, and oral presentations”); Bricklayers and Allied Craftworkers Local 2, Albany, N.Y. Pension Fund v. Northeast King Construction Co., No. 06-CV-806, 2009 WL 1706586, at *1 (N.D.N.Y. June 16, 2009) (Kahn, J.) (same). B. Report-Recommendation Within fourteen days after a party has been served with a copy of a magistrate judge’s report-recommendation, the party “may serve and file specific, written objections to the proposed findings and recommendations.” Fed. R. Civ. P. 72(b); L.R. 72.1(c). If objections are timely filed, a court “shall make a de novo determination of those portions of the report or specified proposed findings or recommendations to which objection is made.” 28 U.S.C. §636(b). However, if no objections are made, a district court need review the report-recommendation only for clear error. Barnes v. Prack, No. 11-CV-857, 2013 WL 1121353, at *1 (N.D.N.Y. Mar. 18, 2013); Farid v. Bouey, 554 F. Supp. 2d 301, 306-07, 306 n.2 (N.D.N.Y. 2008), abrogated on other grounds by Widomski v. State Univ. of N.Y. at Orange, 748 F.3d 471 (2d Cir. 2014). “A [district] judge…may accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate judge.” §636(b). IV. DISCUSSION A. Default Judgment Because there is no question that a motion for default judgment is pending before the Court, and because the parties agree that the issue of damages can be decided on the papers, Dkt. Entry for April 26, 2019; see also Obj. at 4, the Court now considers the Default Motion. As both Plaintiff and Defendants requested, the Court considers the briefing on both the Letter Motion and Default Motion. See Default Mot. Mem. at 1 n.1; Default Mot. Resp. at 2 n.2. Defendants raise two primary objections to the Default Motion. First, they argue that the Court should stay entry of default judgment against Ferrex while the litigation against Clarkson and 1199541 continues. Letter Mot. Resp. at 2-5. Second, if the Court grants default judgment against Ferrex, Defendants argue that the amount of damages should be significantly lower than the $578,874.82 requested by Plaintiff. Id. at 5-7. Default Mot. Resp. at 2-5. 1. Timing a. Stay Defendants argue that the court should stay the Default Motion against Ferrex because of a risk of inconsistent judgments. Letter Mot. Resp. at 2-4. This argument is unconvincing. Defendants’ argument is as follows: When there are multiple defendants who might be jointly and severally liable (as defendants who are alter egos of other defendants would be), and only one of those defendants has defaulted thus far, a court should stay the determination of damages to avoid the possibility of conflicting judgments. Applying that to the case at hand, the Court should stay the Default Motion against Ferrex to avoid the possibility that 1199541 or Clarkson is found liable for a different amount of damages. Letter Mot. Resp. at 2-4. While Defendants correctly recite the law, it is not applicable to Ferrex. “[T]he Supreme Court long ago warned that ‘absurdity might follow’ in instances involving motions for default judgment[]s where a court ‘can lawfully make a final decree against one defendant…while the cause was proceeding undetermined against the others.’” Societe d’Equipments Internationaux Nigeria, Ltd v. Dolarian Capital, Inc., No. 15-CV-1553, 2016 WL 6868023, at *2 (E.D. Cal. Nov. 21, 2016) (quoting Frow v. De La Vega, 82 U.S. 552, 554 (1872)). Defendants base their argument on cases that have applied Frow’s holding to alter ego liability in the modern context, and argue that this Court should do the same. See Letter Mot. Resp. at 2-4 (citing, inter alia, Chiquita Fresh N. Am., LLC v. Long Island Banana Corp., No. 14-CV-982, 2018 WL 1786991 (E.D.N.Y. Feb. 28, 2018), report and recommendation adopted, 293 F. Supp. 3d 305 (E.D.N.Y. 2018); Mercury Venture Int’l Ltd. v. DGM Commodities Corp., No. 13-CV-1521, 2015 WL 893652 (E.D.N.Y. Mar. 2, 2015)). Both Chiquita and Mercury, however, addressed situations in which the plaintiff had direct claims against the non-defaulting defendants. Chiquita, 2018 WL 1786991 at 1; Mercury, 2015 WL 893652, at *1. Those plaintiffs could obtain independent judgments based on the causes of action they directly brought against the non-defaulting defendants, creating the potential for inconsistent judgments. But here, Plaintiff does not directly bring any causes of action against 1199541 or Clarkson. See Am. Compl.
