J & J Sports Productions Inc v. Patterson et al

Filing 34

ORDER granting 32 Motion to Set Aside Default and 32 on to Set Aside Judgment 29 . Signed by Judge Susan Webber Wright on 11/22/13. (kpr)

IN THE UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF ARKANSAS
WESTERN DIVISION
J & J SPORTS PRODUCTIONS, INC. *
*
Plaintiff,
*
*
vs.
*
*
*
*
BREWSTER “2” CAFÉ, LLC D/B/A *
BREWSTERS “2” CAFÉ,
*
*
Defendant.
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No. 4:11-cv-00690-SWW

ORDER
Plaintiff J & J Sports Productions, Inc., a California corporation, brings this
action against Brewster “2” Café, LLC d/b/a Brewsters “2” Café (Brewsters), a
commercial establishment in Little Rock, Arkansas, pursuant to the Cable &
Television Consumer Protection and Competition Act of 1992, as amended, 47
U.S.C. § 553 et seq., and the Communications Act of 1934, as amended, 47 U.S.C.
§ 605 et seq. Plaintiff alleges Brewsters violated its rights as the exclusive
commercial domestic distributor of the televised fight program, “Number One”
Floyd Mayweather, Jr. v. Juan Marquez Championship Fight Program.
The matter is before the Court on motion [doc.#32] of Brewsters to set aside
default order and default judgment. Plaintiff has not responded to Brewsters’

motion and the time for doing so has long since passed. Having considered the
matter, the Court grants Brewsters’ motion to set aside default order and default
judgment.
I.
Plaintiff filed this action on September 16, 2011 and, on October 13, 2011,
filed proof of service as to Brewsters. On December 8, 2011, plaintiff filed a
motion to extend by 120 days the time in which to effect service of process on
then-separate defendant Dena M. Patterson. Plaintiff stated that since the
commencement of this action, it has served Brewsters and has been attempting to
serve Patterson pursuant to Ark.R.Civ.P. 4 and 5, including service by certified
restricted mail and personal service by process server, but has been unsuccessful.
Plaintiff stated that “[i]t is felt as she is aware of the suit and she is evading
service.”
By order entered December 12, 2011, the Court granted plaintiff’s motion to
extend the time in which to effect service of process and extended that time 120
days from the date of entry of the December 2011 order. However, over a year
passed with no relevant case activity since the entry of the Court’s December 2011
order and the Court, by order entered April 3, 2013, ordered that plaintiff file proof
of service on Patterson and file a status report on this action no later than April 12,
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2013.
On April 10, 2013, plaintiff responded to the Court’s April 2013 order by
filing a motion for default judgment against Brewsters. Plaintiff also filed a
proposed order to dismiss Patterson but the docket sheet reflects that the
“document was filed in error.” In any case, plaintiff did not file proof of service as
to Patterson and the Court, by order entered April 17, 2013, dismissed Patterson
from this action without prejudice. The Court informed the parties that it would
consider plaintiff’s motion for default judgment against Brewsters by separate
order.
By order entered April 17, 2013, the Court construed plaintiff’s motion for
default judgment against Brewsters as one for entry of default by the Clerk
pursuant to Fed.R.Civ.P. 55(a) and for entry of default judgment by this Court
pursuant to Fed.R.Civ.P. 55(b).1 The Court referred plaintiff’s motion to the Clerk
for consideration and informed the parties that in the event a Clerk’s default is
entered, the Court would then consider plaintiff’s motion for default judgment
pursuant to Fed.R.Civ.P. 55(b). The Court informed Brewsters that it would have
1

Rule 55 of the Federal Rules of Civil Procedure sets forth a two step process for the
entry of default judgments. First, pursuant to Rule 55(a), the party seeking a default judgment
must have the Clerk enter the default by submitting the required proof that the opposing party
has failed to plead or otherwise defend. Second, pursuant to Rule 55(b), the moving party may
seek entry of judgment on the default under either subdivision (b)(1) or (b)(2) of the rule. Entry
of default under Rule 55(a) must precede grant of a default judgment under Rule 55(b).
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14 days from the date of entry of any Clerk’s default in which to respond to
plaintiff’s motion for default judgment.
On April 17, 2013, the Clerk entered a Clerk’s default. On April 23, 2013,
Brewsters filed a letter with the Court stating as follows:
Please review attachments included with this letter. A reply from
Brewster's 2 Café was filed with Law Offices of Thomas Riley
beginning on November 23, 2009 all the way through March 1, 2010
at that time by our attorney Lisa Rutledge. The documents also shows
were a reply was received certified on November 27, 2009. No default
judgment, no answer or response should be entered on the behalf of
Brewster's 2 Café.2
By order entered May 13, 2013 [doc.#13], the Court granted plaintiff’s
motion for default judgment. In so ruling, the Court determined that neither
Brewsters’ letter nor its attachments constituted an answer or other responsive
pleading to plaintiff’s complaint and Brewsters did not advance any sufficient
argument why plaintiff’s motion for default judgment should not be granted. The
Court further noted that corporations and other business entities cannot proceed
pro se, see, e.g., Tribult Const. Group, LLC v. International Fidelity Ins. Co., No.

2

The Court noted that based on the attachments to Brewsters’ letter, the “Law Offices of
Thomas Riley” are located in South Pasadena, California but that this action was filed by
attorneys based in Little Rock, Arkansas, and no attorneys or law firms from California were
listed of record in this action. Brewsters’ letter also referred to its attorney, “Lisa Rutledge,” but
the Court noted, again based on the attachments, that it appeared that this reference was to the
law firm of “Lisle/Rutledge,” located in Springdale, Arkansas. The Court noted, however, that
no attorney had entered an appearance on behalf of Brewsters.
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2:10-cv-02052, 2011 WL 2357659, *1 (W.D. Ark. June 13, 2011) (citing Ackra
Direct Marketing Corp. v. Fingerhut Corp., 86 F.3d 852, 857 (8th Cir. 1996)), and
that Brewsters was technically in default for that reason as well given that no
counsel had entered an appearance on its behalf. See id. (noting that business
entities “were technically in default when they failed to obtain substitute counsel,
as the law does not allow a corporation or other business entity to proceed pro se”).
The Court determined, however, that prior to entering judgment, the Court would
have a hearing on the amount of plaintiff’s damages.
Upon further reflection, the Court, by order entered June 17, 2013, gave
Brewsters until and including June 24, 2013, in which to inform the Court why
plaintiff’s damages could not be ascertained on the basis of the current record and
that a hearing is necessary. The Court informed Brewsters that should it fail to so
inform the Court, the Court would cancel the July 2nd hearing and proceed to
address plaintiff’s damages on the basis of the current record.
In the meantime, on June 18, 2013, Thomas P. Riley, plaintiff’s California
counsel, requested leave to appear telephonically at the July 2nd damages hearing.
The Court granted Riley’s request.3
3

After filing this action, plaintiff’s Little Rock counsel, Becky A. McHughes and Josh E.
McHughes, filed pleadings on plaintiff’s behalf up to June 2013. Upon receiving Riley’s request
to appear telephonically at the damages hearing, the Court directed that Riley file a motion for
admission pro hac vice, which he did. The Court granted Riley admission pro hac vice as lead
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On June 25, 2013, Brewsters, still appearing pro se, sent a letter to the Court
requesting that the July 2nd hearing on damages proceed but not indicating why the
matter could not be resolved on the basis of the current record. The Court
determined that a telephone conference on plaintiff’s damages rather than a live
hearing would be appropriate and set a telephone conference for the same date and
time for which the hearing was scheduled.
On July 2, 2013, the Court held a telephone conference on plaintiff’s
damages. During the telephone conference, Riley indicated that he would file an
affidavit regarding damages that same day. No such affidavit was filed, however,
and on July 23, 2013, the Court entered an order directing that plaintiff file an
affidavit regarding damages.
On July 24, 2013, plaintiff filed its affidavit regarding damages. Brewsters
did not respond to plaintiff’s affidavit or otherwise contest its assertions and on
September 3, 2013, the Court entered default judgment in favor of plaintiff and
against Brewsters in the sum of $50,000.00 together with costs accrued to date in
the amount of $465.76.
On October 3, 2013, California attorney Matthew Paré moved for admission
pro hac vice on behalf of Brewsters. The Court granted Paré’s motion after which

counsel for plaintiff on July 1, 2013. The McHughes remain as co-counsel for plaintiff.
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Brewsters, on October 15, 2013, filed the motion to set aside default order and
default judgment now before the Court.
II.
A.
“The court may set aside an entry of default for good cause, and it may set
aside a default judgment under Rule 60(b).” Fed.R.Civ.P. 55(c). Although the
same factors are typically relevant in deciding whether to set aside entries of
default and default judgments, relief from a default judgment requires a stronger
showing of excuse than relief from a mere default order. Johnson v. Dayton Elec.
Mfg. Co., 140 F.3d 781, 783 (8th Cir. 1998) (quotation marks and citations
omitted).
In determining whether “good cause” exists to set aside the entry of default,
or whether “excusable neglect” exists to set aside the entry of default judgment, the
Court considers a number of factors including “whether the conduct of the
defaulting party was blameworthy or culpable, whether the defaulting party has a
meritorious defense, and whether the other party would be prejudiced if the default
were excused.” Id. at 784 (citation omitted). “In deciding whether to set aside a
default judgment for ‘excusable neglect,’ a district court ought not to focus
narrowly on the negligent act that caused the default and ask whether the act itself
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was in some sense excusable. Instead, the court should take account of ‘all
relevant circumstances surrounding the party’s omission.’” Union Pacific R. Co. v.
Progress Rail Services Corp., 256 F.3d 781, 782 (8th Cir. 2001) (quoting Pioneer
Investment Services Co. v. Brunswick Associates Limited Partnership, 507 U.S.
380, 395 (1993)). “The inquiry is essentially an equitable one.” Id.
B.
The Court has considered the matter and concludes that the circumstances of
this action weigh in favor of setting aside the default order and default judgment.
Patterson has submitted an unrebutted affidavit on behalf of Brewsters claiming
that she was in contact with plaintiff since 2009 and was involved in settlement
negotiations that she believed would resolve the matter without resort to default
proceedings. The record supports Patterson’s assertion that she was involved in
discussions with Riley since 2009, including with the assistance of an attorney
provided through a pre-paid legal services program, and courts have held that a
reasonable belief that settlement negotiations would resolve a dispute without
resort to a court is grounds to set aside a default. See, e.g., Whitman v. U.S. Lines,
Inc., 88 F.R.D. 528 (E.D. Tx. 1980) (vacating entry of default where default was
result of defendant’s good faith belief that settlement negotiations were ongoing
and that the matter could be resolved without resort to court). While Brewsters
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may not be entirely blameless in the significant delay caused by its failing to
properly respond to plaintiff’s complaint, there is no evidence that Brewsters’
conduct was intentional, contumacious, or in bad faith, and the delay and impact on
the judicial proceedings occasioned by Brewsters’ conduct was no more significant
than the delay and impact on the judicial proceedings plaintiff caused by failing to
diligently prosecute this action.
In addition, the Court finds that Brewsters has met the standard for showing
a meritorious defense to plaintiff’s claims. See Stephenson v. El-Batrawi, 524 F.3d
907, 914 (8th Cir. 2008) (noting that whether a meritorious defense exists is
determined by examining whether the proffered evidence would permit a finding
for the defaulting party; the underlying concern is whether there is some possibility
that the outcome after a full trial will be contrary to the result achieved by the
default) (quotation marks and citations omitted)). In this respect, plaintiff does not
dispute that Brewsters has meritorious defenses consistent with Stephenson,
including that Brewsters was authorized by the cable provider to exhibit the
program at issue thereby precluding a violation of 47 U.S.C. § 553 and that 47
U.S.C. § 605 does not apply to this action as the signal at issue was from a cable
system and not a satellite broadcast. Cf. J & J Productions, Inc. v. Tee’s, Inc., No.
2:11-cv-15003, 2012 WL 6193882, *3 (E.D. Mich. Dec. 12, 2012) (denying
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plaintiff’s motion for summary judgment where trier of fact could determine that
commercial establishment that broadcast professional boxing match over which
commercial distributor of sporting events had exclusive rights was specifically
authorized to do so by its cable operator and, thus, establishment did not violate §
553 absent evidence showing that defendants knew or reasonably should have been
aware that the cable operator lacked authority to provide the cable service); J & J
Sports Productions, Inc. v. Manzano, No. C-08-01872, 2008 WL 4542962, *2
(N.D. Cal. Sept. 29, 2008) (“A signal pirate violates section 553 if he intercepts a
cable signal, he violates section 605 if he intercepts a satellite broadcast. But he
cannot violate both by a single act of interception.”).
Finally, plaintiff does not allege that it will be prejudiced in setting aside the
default order and default judgment, such as by the loss of evidence or increased
difficulty in discovery. See Johnson, 140 F.3d at 785 (noting that prejudice may
not be found from delay alone or from the fact that the defaulting party will be
permitted to defend on the merits; instead, the prejudice must be more concrete,
such as the loss of evidence, increased difficulties in discovery, or greater
opportunities for fraud and collusion) (citations omitted). The Court finds on this
record that plaintiff will suffer no prejudice beyond that of any other plaintiff that
has a default judgment set aside.
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III.
For the foregoing reasons, the Court grants Brewsters’ motion [doc.#32] to
set aside default order and default judgment.
IT IS SO ORDERED this 22nd day of November 2013.
/s/Susan Webber Wright
UNITED STATES DISTRICT JUDGE

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