Perez v. Customer Care Services, LLC et al

Filing 23

ORDER: Defendants Customer Care Services, LLC, "GMR" Global Marketing Resources, LLC, Erica Koenig, and Scott David Alan Hedger's Motion to Set Aside Default and Motion for Leave to File Responsive Pleading (Doc. # 21 ) is GRANTED . The Clerk's entry of Default as to each of the Defendants (Doc. ## 13 , [17-19]) is SET ASIDE pursuant to Rule 55(c) of the Federal Rules of Civil Procedure. Defendants are authorized to file their proposed Answer and Affirmative Defenses on or before May 4, 2016. Signed by Judge Virginia M. Hernandez Covington on 4/29/2016. (KAK)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
THOMAS E. PEREZ, SECRETARY OF THE
UNITED
STATES
DEPARTMENT
OF
LABOR,
Plaintiff,
v.

Case No. 8:16-cv-222-T-33JSS

CUSTOMER CARE SERVICES, LLC, ET
AL.,
Defendants.
________________________________/
ORDER
This cause is before the Court pursuant to Defendants
Customer Care Services, LLC, “GMR” Global Marketing Resources,
LLC, Erica Koenig, and Scott David Alan Hedger’s Motion to Set
Aside Default and Motion for Leave to File Responsive Pleading
(Doc.

#

21),

filed

on

April

11,

2016.

Plaintiff,

the

Secretary of United States Department of Labor, filed a
Response in Opposition to the Motion on April 25, 2016. (Doc.
# 22).
I.

The Motion is granted as follows.

Background
On January 28, 2016, the Secretary filed a Complaint

alleging

that

Defendants

violated

the

minimum

wage

and

overtime requirements of the Fair Labor Standards Act. (Doc.
# 1).

On March 28, 2016, the Secretary filed an Application

for Entry of Clerk’s Default against Hedger. (Doc. # 11). The

Secretary supported the Application with proof of service
documentation explaining that personal service was effected on
Hedger at a state courthouse in Polk County, Florida. (Doc. #
12). The Clerk entered a Rule 55(a), Fed. R. Civ. P., Default
against Hedger on March 29, 2016. (Doc. # 13).
Thereafter, on April 8, 2016, the Secretary filed an
Application

for

Entry

of

Default

as

to

the

remaining

Defendants, Koenig, “GMR” Global Marketing Resources, LLC, and
Customer Care Services, LLC “for failure of said Defendants to
answer, plead, or otherwise defend as required by law.” (Doc.
# 15).

The Secretary supported the Application with an

affidavit and return of service documentation. (Doc. ## 15-1,
16).

The Clerk entered Rule 55(a), Fed. R. Civ. P., Defaults

against Koenig, “GMR” Global Marketing Resources, LLC, and
Customer Care Services, LLC on April 11, 2016. (Doc. ## 1719).
On April 11, 2016, Robert W. Rasch, Esq. entered a Notice
of Appearance on behalf of all named Defendants (Doc. # 20),
accompanied by the Motion to Set Aside Default and Motion for
Leave to File Responsive Pleading. (Doc. # 21). In connection
therewith, counsel tendered the affidavit of Defendant Hedger
and a proposed Answer and Affirmative Defenses. (Doc. # 21).

2

Among other Defenses, Defendants postulate that they
“relied on the Plaintiff DOL representatives’ representations
and DOL regulations that withholding money from employees’
paychecks to pay for required licenses was not considered by
the DOL as a reduction in the minimum wage.” (Id. at 13).
Defendants also contend that they “operated at all times in
good faith” and “did not engage in any willful unlawful
conduct.” (Id.).
The Secretary argues that the Court should not set aside
entry of the Clerk’s Defaults because Defendants “have engaged
in

a

pattern

of

deception

and

misconduct

that

has

and

continues to deprive their employees of proper compensation”
and “have willfully and culpably disregarded the judicial
process such that default should not be set aside.” (Doc. # 22
at 1-2).
II.

The Court will address these issues below.

Discussion
A district court can set aside a clerk’s default “for

good cause shown.” Fed. R. Civ. P. 55(c).

“‘Good cause’ is a

mutable standard, varying from situation to situation.

It is

also a liberal one – but not so elastic as to be devoid of
substance.” Compania Interamericana Export-Import, S.A. v.
Compania Dominicana de Aviacion, 88 F.3d 948, 951-52 (11th
Cir. 1996).
3

The Eleventh Circuit has noted that “defaults are seen
with disfavor because of the strong policy of determining
cases on their merits.” Fla. Physician’s Ins. Co. v. Ehlers,
8 F.3d 780, 783 (11th Cir. 1993).
set

aside

a

Clerk’s

entry

of

In determining whether to
default,

courts

generally

consider the following factors: (1) whether the default is
culpable or willful; (2) whether setting aside the default
would prejudice the adversary; and (3) whether the defaulting
party presents a meritorious defense. Compania Interamericana
Export-Import, S.A., 88 F.3d at 951.

Additional factors

include: (4) whether the public interest is implicated; (5)
whether the defaulting party will experience significant
financial loss; and (6) whether the defaulting party acted
promptly to correct the default.

See Global Aerospace, Inc.

v. Platinum Jet Mgmt., LLC, No. 09-cv-60756, 2010 U.S. Dist.
LEXIS 12700, at *10 (S.D. Fla. Jan. 28, 2010).
In this case, the Court’s analysis of the relevant
factors

leads

to

the

conclusion

that

Defendants

have

demonstrated good cause to set aside the Clerk’s entry of
Default as to each Defendant.
Concerning

the

willfulness

or

culpability

of

the

Defaults, the Secretary points out that Defendants Hedger and
Koenig moved their residence without informing the Secretary,
4

that

Defendants

failed

to

supply

promised

documents

in

response to an administrative subpoena, and that Hedger failed
to

complete

a

financial

affidavit

(and

instead

financial information in an unsigned document).

provided

By raising

these issues and others, the Secretary points out conduct
calling

into

question

Defendants’

veracity

in

on-going

settlement negotiations.1 The Court acknowledges that “if a
party willfully defaults by displaying either an intentional
or reckless disregard for the judicial proceedings, the court
need make no other findings in denying relief.” Compania
Interamericana Export-Import, S.A., 88 F.3d at 952. Here, the
Secretary has not convinced the Court that the Defaults,
entered

against

pro

se

parties

before

the

retention

of

counsel, should stand based on willfulness or culpability.
Consideration

of

the

remaining

factors

leads

to

a

determination that the Defaults should be set aside. As an
initial

matter,

Defendants

correctly

point

out

that

the

Secretary will face little prejudice if the Defaults are set
aside because this litigation is in its infancy, with the
Secretary having filed the Complaint on January 28, 2016.

1

On

“Mr. Hedger has been in regular and near constant
negotiations with the DOL for 1 - 11/2 years over these
allegations of violation of the Fair Labor Standards Act.”
(Doc. # 21 at 6).
5

the

other

hand,

Defendants

will

experience

significant

financial prejudice in the instance that the Defaults are not
set aside.

Sophia Haynes, counsel for the Secretary, has

filed a Declaration tallying up FLSA back wages sought in the
amount of $78,380.73. (Doc. # 22-1 at ¶¶ 4-6).

The Secretary

also seeks an equal amount in liquidated damages, raising the
amount to $156,761.46. (Doc. # 1).

These amounts demonstrate

that Defendants will experience financial hardship if the
Defaults are not set aside.
In addition, Defendants have tendered a proposed Answer
and, without making a merits determination at this early
juncture, the Court determines that Defendants have presented
facially

valid

defenses

to

the

Secretary’s

allegations.

Furthermore, “the public interest is best served when the
Court rules on the merits,” rather than in the posture of a
default judgment. Dunkin’ Donuts Franchising, LLC v. Gulf to
Bay Donuts, Inc., 8:10-cv-1087-T-24-TBM, 2010 U.S. Dist. LEXIS
93409, at *6 (M.D. Fla. Aug. 18, 2010); see also Perez v.
Wells

Fargo,

N.A.,

774

F.3d

1329,

1333

(11th

Cir.

2014)(reversing a district court’s denial of a defendant’s
motion to file an answer out of time, reversing entry of
judgment in favor of plaintiff, and explaining that the court
“strives to afford a litigant his or her day in court, if
6

possible.”).
Last, the Court notes that Defendants did not delay in
seeking an Order to set aside the Defaults.

As previously

noted, the Clerk entered a Default against Hedger on March 29,
2016, and entered Defaults against the remaining Defendants on
April 1, 2016.

Defendants retained counsel and moved to set

aside the Defaults on April 11, 2016.
The relevant factors to be considered militate in favor
of setting aside the Clerk’s entry of Default as to each
Defendant. Thus, upon due consideration, the Court sets aside
the

Clerk’s

authorizes

entry

of

Defendants

Default
to

file

as

to

their

each

Defendant

proposed

Answer

and
and

Affirmative Defenses on or before May 4, 2016.
Accordingly, it is
ORDERED, ADJUDGED, and DECREED:
(1)

Defendants Customer Care Services, LLC, “GMR” Global
Marketing Resources, LLC, Erica Koenig, and Scott David
Alan Hedger’s Motion to Set Aside Default and Motion for
Leave to File Responsive Pleading (Doc. # 21) is GRANTED.

(2)

The Clerk’s entry of Default as to each of the Defendants
(Doc. ## 13, 17-19) is SET ASIDE pursuant to Rule 55(c)
of the Federal Rules of Civil Procedure.

(3)

Defendants are authorized to file their proposed Answer
7