Young et al
Filing
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ORDER GRANTING MOTION TO SET ASIDE ENTRY OF DEFAULT by Judge Jon S. Tigar granting 27 Motion to Set Aside Default. (wsn, COURT STAFF) (Filed on 12/28/2016)
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UNITED STATES DISTRICT COURT
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NORTHERN DISTRICT OF CALIFORNIA
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GLORIA YOUNG, et al.,
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Plaintiffs,
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ORDER GRANTING MOTION TO SET
ASIDE ENTRY OF DEFAULT
v.
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HOLLAND AMERICA LINE, N.V., et al.,
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Re: ECF No. 27
Defendants.
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United States District Court
Northern District of California
Case No. 16-cv-04820-JST
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Before the Court is Carnival Cruise Lines’ (“Carnival”) motion to set aside the Default
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entered by the Clerk on October 21, 2016, pursuant to Rule 55(c) of the Federal Rules of Civil
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Procedure. The motion is unopposed, and Court will grant it.1
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I.
FACTUAL AND PROCEDURAL BACKGROUND
This is a personal injury action arising from Plaintiffs Gloria Young’s and Margaret
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Cephas-Gross’s 14-day Caribbean cruise aboard the MS EURODAM from November 8 to 22,
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2015. The vessel was owned and operated by Defendant Holland America Line, N.V., a foreign
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corporation and subsidiary of Carnival Cruise Lines, and Plaintiffs purchased their tickets on
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September 11, 2015, through Defendant CWC Travel, Inc., dba Costco Travel (“Costco”), a
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Washington corporation. See ECF No. 1. Plaintiffs filed their Complaint on August 22, 2016,
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alleging claims for Negligence, Breach of Contract, violations of the Virginia Consumer
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Protection Act, and violations of the California Consumer Legal Remedies Act. ECF No. 1.
On September 20, 2016, CT Corporation received service of the Summons and Complaint
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on behalf of Carnival. ECF No. 10. Carnival states that on the same date, CT Corporation
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forwarded the served material to Carnival in a document entitled “Service of Process Transmittal”
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It is unclear to the Court why the parties were unable to reach a stipulation to set aside the default
such that a motion was required.
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(the “Transmittal”). ECF No. 27 at 3. Carnival’s Assistant General Counsel, Martha de Zayas,
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received an e-mail notification confirming service of the Transmittal. Id.
Carnival was required to file a responsive pleading by October 10, 2016, pursuant to
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Federal Rule of Civil Procedure 12(a). When Carnival failed to respond, Default was entered
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against Carnival on Friday, October 21, 2016. ECF No. 20. On October 28, 2016, Carnival filed a
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motion to set aside the default judgment, which motion the Court now considers. ECF No. 27.
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II.
LEGAL STANDARD
“The court may set aside an entry of default for good cause, and it may set aside a final
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default judgment under Rule 60(b).” Fed. R. Civ. P. 55(c). “[W]hile the same test applies for
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motions seeking relief from default judgment under both Rule 55(c) and Rule 60(b), the test is
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United States District Court
Northern District of California
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more liberally applied in the Rule 55(c) context,” as where no judgment has been entered, “there is
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no interest in the finality of the judgment with which to contend.” United States v. Signed Pers.
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Check No. 730 of Yubran S. Mesle, 615 F.3d 1085, 1091 n.1 (9th Cir. 2010).
In assessing whether to set aside a default for good cause, a court looks to whether “(1) the
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plaintiff would be prejudiced if the judgment is set aside, (2) defendant has no meritorious
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defense, or (3) the defendant’s culpable conduct led to the default.” In re Hammer, 940 F.2d 524,
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525-26 (9th Cir. 1991). As “[t]his tripartite test is disjunctive,” a showing of any one of the three
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prongs is enough to justify a refusal to set aside the default. Id. Nonetheless, the Ninth Circuit
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has consistently emphasized that “judgment by default is a drastic step appropriate only in extreme
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circumstances; a case should, whenever possible, be decided on the merits.” Falk v. Allen, 739
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F.2d 461, 463 (9th Cir. 1984). “[W]here there has been no merits decision, appropriate exercise of
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district court discretion under Rule 60(b) requires that the finality interest should give way fairly
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readily, to further the competing interest in reaching the merits of a dispute.” TCI Grp. Life Ins.
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Plan v. Knoebber, 244 F.3d 691, 696 (9th Cir. 2001) (emphasis in original).
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III.
DISCUSSION
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A.
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“To be prejudicial, the setting aside of a judgment must result in greater harm than simply
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Prejudice to Plaintiff
delaying resolution of the case,” as “being forced to litigate on the merits” is not considered
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prejudice. TCI, 244 F.3d at 701. Examples of prejudice that courts have concluded weigh against
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the setting aside of a default include “tangible harm such as loss of evidence, increased difficulties
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of discovery, or greater opportunity for fraud or collusion.” Id. (quoting Thompson v. Am. Home
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Assur. Co., 95 F.3d 429, 433-34 (6th Cir. 1996)). Plaintiff has identified no such prejudice that
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would result from the Court’s setting aside default. See ECF No. 33 (stating Plaintiff does not
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oppose Carnival’s motion). This factor weighs in favor of vacating default.
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B. Meritorious Defenses
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“A defendant seeking to vacate a default judgment must present specific facts that would
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constitute a defense.” TCI, 244 F.3d at 700. Still, “the burden on a party seeking to vacate a
default judgment is not extraordinarily heavy.” Id. While Carnival does not raise any specific
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United States District Court
Northern District of California
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defenses in its motion to set aside default, Plaintiff does not oppose the motion and the Court will
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assume “‘some possibility exists that the outcome of the suit after a full trial would differ from the
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result reached by the default.’” Mission Trading Co. v. Lewis, No. 16-cv-01110-JST, 2016 WL
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4268667, at *2 (N.D. Cal. 2016) (quoting Hutchings v. Snell & Co., LLC, No. 09-cv-4680-JCS,
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2010 WL 1980165, at *4 (N.D. Cal. Apr. 23, 2010) report and recommendation adopted sub nom.
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Hutchins v. Snell & Co., LLC, No. 09-cv-4680-JSW, 2010 WL 1980162 (N.D. Cal. May 17,
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2010)).
Defendant’s Culpable Conduct
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C.
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“[A] defendant’s conduct is culpable if he has received actual or constructive notice of the
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filing of the action and intentionally failed to answer.” TCI, 244 F.3d at 697. However, the Ninth
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Circuit has stated that, in the default context, “the term ‘intentionally’ means that a movant cannot
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be treated as culpable simply for having made a conscious choice not to answer; rather, to treat a
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failure to answer as culpable, the movant must have acted with bad faith, such as an ‘intention to
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take advantage of the opposing party, interfere with judicial decisionmaking, or otherwise
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manipulate the legal process.’” Mesle, 615 F.3d at 1092 (quoting TCI, 244 F.3d at 697).
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Carnival argues there is good cause to set aside the default entered against it because its
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failure to respond to the complaint was a result of “honest miscommunications and uncertainties
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regarding Carnival’s legal representation.” ECF No. 27 at 4. Ms. de Zayas, the person who
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initially received the confirmation of service of the Transmittal, forwarded the summons and
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complaint to Aleks Drumalds, Assistant General Counsel for the Holland America Group, for
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further handling. Id. at 3. She did so because the complaint alleged an incident involving a cruise
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aboard a HAL ship involving HAL passengers. Id. The responsive pleading deadline had already
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come and gone by October 20, 2016, when Ms. de Zayas learned that attorney Lisa M. Conner
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was defending the interests of the other named Defendants in this matter, but not Carnival. Id. at
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4. Ms. de Zayas was under the mistaken belief that counsel for the other defendants would also be
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defending the interests of Carnival. Id. On October 21, 2016, Ms. de Zayas retained Ms. Conner
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to defend Carnival as well, and on October 28, 2016, Carnival filed this motion. Id.
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Defendant was properly served by Plaintiff, ECF No. 10, but Plaintiff does not oppose
United States District Court
Northern District of California
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Carnival’s motion and does not argue Defendant “intentionally failed to answer” the Complaint in
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such a way that his conduct should be deemed “culpable,” ECF No. 33. Accordingly, this factor
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also weighs in favor of vacating default.
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Because all three factors support vacating default, the Court grants Defendant’s motion.
CONCLUSION
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Defendant’s Motion to Set Aside Default is granted. Carnival shall have 14 days from the
date of this order to respond to Plaintiff’s Complaint.
IT IS SO ORDERED.
Dated: December 28, 2016
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______________________________________
JON S. TIGAR
United States District Judge
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