Federal Trade Commission v. Hope for Car Owners, LLC et al

Filing 38

ORDER denying 31 Motion for Default Judgment signed by Magistrate Judge Edmund F. Brennan on 9/18/12. (Matson, R)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE EASTERN DISTRICT OF CALIFORNIA

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FEDERAL TRADE COMMISSION,

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Plaintiff,

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No. 2:12-cv-778-GEB-EFB

vs.
HOPE FOR CAR OWNERS, LLC;
PATRICK FREEMAN,

ORDER

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Defendants.
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Presently pending for hearing before the undersigned on September 26, 2012 is plaintiff’s

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motion for default judgment against defendant Hope for Car Owners, LLC (“HCO”). Dckt. No.

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31. On August 28, 2012, the undersigned issued an order requiring plaintiff to file a

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supplemental brief explaining why default judgment should be entered against HCO even though

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defendant Freeman is not in default,1 and even though the preferred practice when default is

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entered against one defendant in a multi-defendant case is for the court to withhold granting

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default judgment until trial of the action on the merits against the remaining defendant. Dckt.

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On August 1, 2012, this case was stayed as to defendant Freeman for 120 days because
“Freeman and counsel for the FTC have negotiated a final settlement in this matter,” and that
settlement is currently awaiting approval. Dckt. Nos. 32, 33. The request for a stay indicates
that “[i]f the FTC approves the settlement, further litigation with respect to Defendant Patrick
Freeman will not be necessary.” Dckt. No. 32 at 2.
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No. 35 at 1-2 (citing Fed. R. Civ. P. 54(b), which provides: “When an action presents more than

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one claim for relief--whether as a claim, counterclaim, crossclaim, or third-party claim--or when

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multiple parties are involved, the court may direct entry of a final judgment as to one or more,

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but fewer than all, claims or parties only if the court expressly determines that there is no just

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reason for delay.”).

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Plaintiff filed a supplemental brief on September 12, 2012, arguing that default judgment

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against HCO is proper and that this court should expressly find under Rule 54(b) that there is no

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just reason to delay entering judgment against HCO. Dckt. No. 37 at 3. Plaintiff argues that in

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this case “eliminating issues and parties . . . justifies the entry of final judgment on a claim.” Id.

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at 2 (citing Cadillac Fairview/California, Inc. v. United States, 41 F.3d 562, 564 n.1 (9th Cir.

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1994)). Plaintiff also contends that default judgment as to HCO “likely would not result in

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inconsistent adjudications or logically inconsistent results,” since the Court, in entering a

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temporary restraining order and preliminary injunction against each of the defendants, already

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found that there was a likelihood of success on the merits as to HCO. Id. at 2-3.

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However, plaintiff’s brief also notes that since filing its motion for default judgment,

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plaintiff and defendant Freeman “have reached a tentative settlement that is currently being

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reviewed for approval by the several FTC Commissioners before filing with the Court.” Id. at 3,

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n.1. In light of that representation, it appears that, assuming the negotiated settlement is

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approved, this case will likely be resolved as to defendant Freeman in relatively short order.

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Moreover, both defendants have been preliminarily enjoined from engaging in the conduct at

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issue in this action. Therefore, it does not appear that plaintiff would suffer any prejudice from a

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short delay in the entry of default judgment against HCO. Additionally, assuming that the

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negotiated settlement between plaintiff and defendant Freeman were to fall through and this case

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were to proceed against defendant Freeman, this court cannot say that the entry of default

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judgment against HCO would not result in inconsistent judgments or logically inconsistent

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results.
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For those reasons, the court declines to find that there is no just reason to delay entering

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default judgment against defendant HCO. As a result, plaintiff’s motion for default judgment,

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Dckt. No. 31, is denied without prejudice and the September 26, 2012 hearing thereon is vacated.

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DATED: September 18, 2012.

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