J & J Sports Productions, Inc. v. Ngo

Filing 15

ORDER by Judge Lucy H. Koh denying 8 Motion for Default Judgment; granting 10 Motion to Set Aside Default (lhklc2, COURT STAFF) (Filed on 10/24/2012)

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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.,
Plaintiff,

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v.
HUONG THI THUY NGO, INDIVIDUALLY
AND D/B/A BON MUA,
Defendant.

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Case No.: 12-CV-02267-LHK

ORDER GRANTING MOTION TO SET
ASIDE DEFAULT, DENYING MOTION
FOR DEFAULT JUDGMENT AS MOOT

On May 4, 2012, J & J Sports Productions, Incorporated (“Plaintiff”) filed a complaint

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alleging illegal interception and display of a fight program by Huong Thi Tuy Ngo (“Defendant”).

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ECF No. 1. Plaintiff served Defendant with a copy of the complaint on May 22, 2012. ECF No. 5.

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Defendant did not file an answer to the complaint, and Plaintiff requested entry of default on June

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21, 2012. ECF No. 6. The Clerk’s office entered default against Defendant on June 25, 2012.

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ECF No. 7. Plaintiff filed a Motion for Default Judgment (“Default Motion”) on July 17, 2012.

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ECF No. 8. On July 25, 2012, Defendant filed a Motion to Set Aside Default (“Set Aside

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Motion”). ECF No. 10. Pursuant to Civil Local Rule 7-1(b), the Court has determined that these

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matters are suitable for decision without oral argument. Accordingly, the hearing on these motions

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scheduled for November 1, 2012 is hereby VACATED. The Case Management Conference

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scheduled for November 1, 2012 at 1:30 p.m. remains as set. For the reasons set forth below, the

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Court GRANTS Defendant’s Set Aside Motion and DENIES Plaintiff’s Default Motion as moot.
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Case No.: 12-CV-02267-LHK
ORDER GRANTING MOTION TO SET ASIDE DEFAULT

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I.

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BACKGROUND
Plaintiff claims to possess the exclusive nationwide commercial distribution rights to the

May 7, 2011 telecast of “Firepower”: Manny Pacquiao v. Shane Mosley WBO Welterweight

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Championship Fight Program ( “Program”). See ECF No. 1 (“Compl.”). Plaintiff alleges that

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Defendant illegally intercepted and displayed the Program at her business, Bon Mua

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(“Restaurant”). Id. at ¶ 11. In support of Plaintiff’s Default Motion, Plaintiff submitted the

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declaration of Jeff Kaplan. See ECF No. 8, Ex. 3 (“Kaplan Decl.”). Kaplan declares that he visited

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the Restaurant on May 7, 2011 at 9:00 p.m. He paid no cover charge to enter. He observed several

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United States District Court
For the Northern District of California

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flat screen televisions, of which “at least 4 [were] visible all showing the fight.” Id. Kaplan states

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that the Restaurant’s capacity was 50 people, and that he counted 41 people in the Restaurant. Id.

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Based on the allegations in the complaint and the declarations submitted in support of

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Plaintiff’s Default Motion, Plaintiff moves for default judgment against Defendant on the

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following claims in the complaint: (1) Violation of 47 U.S.C. § 605, et seq.; and (3) Conversion.

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Plaintiff’s complaint seeks $100,000 in “statutory damages for each willful violation” and a

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“recovery of full costs, including reasonable attorneys’ fees.” Compl. at ¶ 22. In the Default

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Motion, Plaintiff seeks a total of $110,000 for the violation of 47 U.S.C. § 605 et seq.— the

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$10,000 maximum in statutory damages, plus $100,000 enhanced damages for willfulness.

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Plaintiff also seeks $2,200 in damages for conversion.

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With her Set Aside Motion, Defendant has submitted a declaration explaining that she

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speaks very limited English and did not understand what she was required to do when served with

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the complaint. See ECF No. 10, Ex. 1 (“Ngo Decl.”) at ¶¶ 4-6. On June 23, 2012, the day after

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Defendant received notice of the entry of default, she contacted an attorney, who referred her to

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Michael Chinh Vu, her present counsel. Id. at ¶ 7. Mr. Vu prepared an answer to the complaint

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and contacted counsel for Plaintiff to request a stipulation to set aside the default, but Plaintiff’s

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counsel refused. See Set Aside Motion, ECF No. 10, at 2.

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II.

ANALYSIS
A. Motion to Set Aside Default
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Case No.: 12-CV-02267-LHK
ORDER GRANTING MOTION TO SET ASIDE DEFAULT

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This Court “may set aside an entry of default for good cause.” Fed. R. Civ. P. 55(c). To

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determine whether a defendant has established good cause, “a court must ‘consider three factors:

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(1) whether the party seeking to set aside the default engaged in culpable conduct that led to the

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default; (2) whether it had no meritorious defense; or (3) whether reopening the default judgment

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would prejudice’ the other party.” United States v. Signed Personal Check No. 730 of Yubran S.

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Mesle, 615 F.3d 1085, 1091 (9th Cir. 2010) (quoting Franchise Holding II v. Huntington Rests.

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Group, Inc., 375 F.3d 922, 925-26 (9th Cir. 2004)) (alterations omitted). “[W]hile the same test

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applies for motions seeking relief from default judgment under both Rule 55(c) and Rule 60(b), the

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test is more liberally applied in the Rule 55(c) context.” Id. at 1091 n.1. “This is because in the

United States District Court
For the Northern District of California

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Rule 55 context there is no interest in the finality of the judgment with which to contend.” Id.

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(citing Hawaii Carpenters’ Trust Funds v. Stone, 794 F.2d 508, 513 (9th Cir. 1986)). “[J]udgment

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by default is a drastic step appropriate only in extreme circumstances; a case should, whenever

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possible, be decided on the merits.” Falk v. Allen, 739 F.2d 461, 463 (9th Cir. 1984).

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1. Culpable Conduct
“[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 Group Life Ins. Plan v. Knoebber, 244

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F.3d 691, 697 (9th Cir. 2001) (quotation marks omitted). Here, “the term ‘intentionally’ means

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that a movant cannot be treated as culpable simply for having made a conscious choice not to

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answer.” Mesle, 615 F.3d at 1092. Instead, the term means something like “willful, deliberate, or

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evidence of bad faith.” TCI Group, 244 F.3d at 697. “Neglectful failure to answer as to which the

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defendant offers a credible, good faith explanation negating any intention to take advantage of the

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opposing party, interfere with judicial decisionmaking, or otherwise manipulate the legal process is

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not ‘intentional’ under our default cases . . . .” Id. “[S]imple carelessness is not sufficient to treat a

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negligent failure to reply as inexcusable, at least without a demonstration that other equitable

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factors, such as prejudice, weigh heavily in favor of denial of the motion to set aside a default.”

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Mesle, 615 F.3d at 1092.

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The Court finds that Defendant’s conduct was not intentional. She has offered a credible

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explanation as to why she failed to timely answer the complaint: given her limited English skills,
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Case No.: 12-CV-02267-LHK
ORDER GRANTING MOTION TO SET ASIDE DEFAULT

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she simply did not understand what she was supposed to do. Immediately upon receiving the

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notice of default, Defendant contacted an attorney and, through her attorney, contacted Plaintiff to

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discuss moving forward. There is no reason to believe that her initial failure to respond to the

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complaint was willful, deliberate, or in bad faith.

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Because it appears that Defendant did not intend to “take advantage of the opposing party,

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interfere with judicial decisionmaking, or otherwise manipulate the legal process,” she did not

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intentionally fail to answer. Therefore, this factor weights in favor of setting aside the Clerk’s

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entry of default against Defendant.

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United States District Court
For the Northern District of California

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2. Meritorious Defense
“A defendant seeking to vacate a default judgment must present specific facts that would

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constitute a defense. But the burden on a party seeking to vacate a default judgment is not

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extraordinarily heavy.” Mesle, 615 F.3d at 1094 (citing TCI Group, 244 F.3d at 700) (quotation

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marks omitted). “All that is necessary to satisfy the ‘meritorious defense’ requirement is to allege

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sufficient facts that, if true, would constitute a defense: ‘the question whether the factual allegation

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is true’ is not to be determined by the court when it decides the motion to set aside the default.” Id.

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(quotation and alterations omitted). “Rather, that question would be the subject of the later

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litigation.” Id. (quotation marks omitted).

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To show that she has a meritorious defense, Defendant has submitted a proposed answer,

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containing a range of allegations. Specifically, Defendant alleges that she actually paid for and had

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a license to show the program. ECF No. 10, Exh. 1, at 6. If this is true, it constitutes a complete

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defense to all of Plaintiff’s claims. This allegation alone is thus sufficient to satisfy the

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“meritorious defense” prong of the default analysis. Accordingly, this factor weighs in favor of

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setting aside the default.

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3. Prejudice to Plaintiff

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Plaintiff argues that it is Defendant’s burden to prove that Plaintiff will not be prejudiced,

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and that Defendant has failed to carry this burden. Plaintiff cites no authority for the proposition

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that a defendant must affirmatively disprove that a plaintiff will be prejudiced by setting aside a

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default. The one case Plaintiff does cite holds only that a defendant must make some showing of
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Case No.: 12-CV-02267-LHK
ORDER GRANTING MOTION TO SET ASIDE DEFAULT

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good cause, not that a defendant must make an affirmative showing on each factor. See Franchise

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Holding, 375 F.3d at 926. Plaintiff argues, very briefly, that Plaintiff will be prejudiced because

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“[t]he failure of Defendant to provide . . . basic information indicates that there will be increased

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difficulties in discovery.” Plaintiff’s Opposition to Defendant’s Motion to Set Aside Clerk’s Entry

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of Default, ECF No. 12, at 9. This conclusory statement is unpersuasive. Defendant filed her

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motion on July 24, 2012, less than three months after the filing of the complaint. Further,

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Defendant appears ready to file an answer. There is no apparent risk of prejudice in allowing this

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case to proceed. This factor thus weighs in favor of setting aside the default.

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III.

United States District Court
For the Northern District of California

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CONCULSION
Because all three factors weigh in favor of Defendant, the Court finds that Defendant has

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established good cause for setting aside the default entered against her. Therefore, the Court

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GRANTS Defendant’s Motion to Set Aside Default and DENIES Plaintiff’s Motion for Default

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Judgment as moot. The Clerk shall set aside default as to Defendant, individually and d/b/a Bon

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Mua. Defendant shall file and serve an answer to the complaint within 14 days of the date of this

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Order.

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IT IS SO ORDERED.

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Dated: October 24, 2012

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_________________________________
LUCY H. KOH
United States District Judge

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Case No.: 12-CV-02267-LHK
ORDER GRANTING MOTION TO SET ASIDE DEFAULT