J&J Sports Productions, Inc -v- Ngoc Ha T. Nguyen

Filing 38

ORDER by Judge Edward J. Davila denying 17 Motion for Default Judgment; granting 20 Motion to Set Aside Default. (ejdlc2, COURT STAFF) (Filed on 12/14/2011)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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SAN JOSE DIVISION

United States District Court
For the Northern District of California

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J & J SPORTS PRODUCTIONS, INC.,
Plaintiffs,

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v.
NGOC HA T. NGUYEN,
Defendant.

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Case No.: 5:11-CV-01166 EJD
ORDER GRANTING MOTION TO
SET ASIDE DEFAULT AND
DENYING MOTION FOR DEFAULT
JUDGMENT
(Re: Docket Nos. 17 and 20)

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On September 23, 2011, the court heard oral argument on (1) Defendant Ngoc Ha T.

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Nguyen’s motion for an order setting aside the default entered in the above-entitled action on June

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2, 2011 and (2) Plaintiff’s motion for a default judgment. For the reasons discussed below, at the

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hearing the court GRANTED Defendant's motion to set aside the default and DENIED Plaintiff’s

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motion for a default judgment.

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Pursuant to Federal Rule of Civil Procedure 55(c), a court may set aside entry of default for

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good cause. The Ninth Circuit utilizes a three-factor test to determine whether good cause exists.

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See United States v. Mesle, 615 F.3d 1085, 1091 (9th Cir. 2010) (“good cause” determination

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requires consideration of three factors: (1) whether defendant engaged in culpable conduct; (2)

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whether defendant has no meritorious defense; or (3) whether opposing party will suffer prejudice).

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Pursuant to Mesle, “a finding that any one of these factors is true is sufficient reason for the district

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Case No.: 5:11-CV-01166 EJD
ORDER GRANTING MOTION TO SET ASIDE DEFAULT AND DENYING MOTION FOR
DEFAULT JUDGMENT

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court to refuse to set aside the default.” Id. As the party seeking relief from the entry of default,

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Defendant here bears the burden of showing that the three Mesle factors favor such relief. See

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Franchise Holding II, LLC. v. Huntington Restaurants Grp., Inc., 375 F.3d 922, 926 (9th Cir.

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2004).

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With respect to the first Mesle factor, the court concludes that Defendant has not engaged in

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culpable conduct. A Defendant’s conduct is culpable “if he has received actual or constructive

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notice of the filing of the action and intentionally failed to answer.” Mesle, 615 F.3d at 1092

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(culpability requires the defendant to have “acted with bad faith, such as an ‘intention to take

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advantage of the opposing party, interfere with judicial decision-making, or otherwise manipulate

United States District Court
For the Northern District of California

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the legal process”) (citing TCI Group Life Ins. Plan v. Knoebber, 244 F.3d 691, 697 (9th Cir.

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2001)). Here, Defendant mistakenly believed this action was related to another pending action

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brought against her for similar conduct (Case No. 5:11-CV-506), in which Defendant had already

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filed an answer. Thus, Defendant believed she had already responded to the complaint.

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Furthermore, Defendant was unrepresented, a fact that warrants added consideration. See Mesle,

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615 F.3d at 1093 (declining to attribute intentionality to an unrepresented defendant's mere failure

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to answer a complaint, holding that such a stringent culpability standard was reserved for a “legally

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sophisticated entity or individual” who is presumed to have “an understanding of the consequences

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of its actions”). In view of these facts, the court concludes that Defendant has not intentionally

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failed to answer or respond to the complaint. Therefore, Defendant has not engaged in culpable

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conduct under Mesle.

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Nor is Defendant devoid of a potentially meritorious defense. To satisfy the meritorious

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defense requirement, “[a] defendant seeking to vacate a default judgment must present specific

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facts that would constitute a defense.” See Mesle, 615 F.3d at 1094. However, the burden to show a

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meritorious defense in support of a motion to set aside “is not extraordinarily heavy.” Id.

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Defendant need only “allege sufficient facts that, if true, would constitute a defense . . . .” Id.

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Furthermore, the meritorious defense requirement is also more liberally applied on a Rule 55(c)

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motion to set aside entry of default than on a Rule 60(b) motion to set aside default judgment. See

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Case No.: 5:11-CV-01166 EJD
ORDER GRANTING MOTION TO SET ASIDE DEFAULT AND DENYING MOTION FOR
DEFAULT JUDGMENT

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id. at 1091 n. 1. Here, Defendant's motion to set aside the default challenges the complaint on the

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ground that the program was not shown at her restaurant on March 13, 2010. See, Mot. Set Aside

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Def. at 4. Liberally construed, defendant's motion challenges the allegations of the complaint on its

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merits, for failure to state a claim. Thus, Defendant has presented a legally cognizable defense.
Finally, there is no prejudice to Plaintiff that results from setting aside the default. “To be

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prejudicial, the setting aside of a judgment must result in greater harm than simply delaying

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resolution of the case. Rather, the standard is whether plaintiff's ability to pursue his claim will be

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hindered.” TCI Group, 244 F.3d at 701 (internal citation and quotation marks omitted). Here,

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Defendant filed her answer on October 3, 2011, a delay of several months. Plaintiff, however, has

United States District Court
For the Northern District of California

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not shown that this delay would result in “tangible harm such as loss of evidence, increased

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difficulties of discovery, or greater opportunity for fraud or collusion.” Thompson v. American

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Home Assur. Co., 95 F. 3d 429, 433-434 (6th Cir. 1996). Moreover, particularly—as here—where

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default judgment has not been entered, the lack of prejudice to Plaintiff favors granting the motion

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to set aside entry of default.

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In sum, therefore, the three factors in the good cause analysis under Mesle favor setting

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aside the entry of default pursuant to Rule 55(c). This conclusion is furthermore consistent with the

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strong public policy that generally disfavors default judgments in favor of resolving a case on its

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merits. See Pena v. Seguros La Comercial, S.A., 770 F.2d 811, 814 (9th Cir. 1985). Accordingly,

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Defendant’s motion to set aside the default against him is GRANTED. Because Defendant is no

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longer in default, Plaintiff’s motion for a default judgment is DENIED as moot.

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IT IS SO ORDERED.

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Dated:

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_________________________________
EDWARD J. DAVILA
United States District Judge

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Case No.: 5:11-CV-01166 EJD
ORDER GRANTING MOTION TO SET ASIDE DEFAULT AND DENYING MOTION FOR
DEFAULT JUDGMENT