SLEP-TONE ENTERTAINMENT CORP. v. CDBG Enterprises Inc. et al
Filing
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ORDER & OPINION entered by Judge Joe Billy McDade on 7/27/15. For the reasons stated above, Defendants' Motion To Set Aside Default Judgment 19 is DENIED.IT IS SO ORDERED. (See Full Written Order).(VP, ilcd)
E-FILED
Monday, 27 July, 2015 11:38:18 AM
Clerk, U.S. District Court, ILCD
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF ILLINOIS
PEORIA DIVISION
SLEP-TONE ENTERTAINMENT
CORPORATION,
Plaintiff,
v.
CDBG ENTERPRISES INC., an Illinois
corporation, and BILLY MYERS,
Defendants.
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Case No. 15-cv-1008
ORDER &OPINION
Before the Court is Defendants’ Motion To Set Aside Default Judgment. (Doc.
19). For the reasons stated herein, the motion is DENIED.
BACKGROUND
Plaintiff
Slep-Tone
Entertainment
Corporation
(“Slep-Tone”)
is
the
manufacturer and distributor of karaoke accompaniment tracks sold under the
trademark “SOUND CHOICE”. It sells its products exclusively on CD+G discs as its
preferred media. Slep-Tone permits karaoke operators, such as Defendants, to use
purchased discs to provide karaoke services to patrons under certain conditions.
Karaoke operators have used the available technology to copy one purchased disc to
two or more computer systems for simultaneous use and other similarly
unauthorized uses.
Defendants provide karaoke entertainment at their venue BG Karaoke
Saloon in Peoria, Illinois. In order to provide services, rather than using original
karaoke discs, Defendants rely upon one or more computer hard drives that store
files containing karaoke accompaniment tracks. Defendants did not pay royalties or
fees to Slep-Tone or to the owners of copyright in the underlying musical works for
the privilege of using these materials.
On January 6, 2015, Slep-Tone filed its Complaint (Doc. 1) seeking various
relief for trademark and trade dress infringement and unfair competition arising
under §§ 32 and 43 of the Trademark Act of 1946 codified at 15 U.S.C. §§ 1114 and
1125 and under Illinois state law. On January 7, 2015, the Clerk for the Central
District of Illinois issued a summons directed to CDBG. On February 17, 2015,
CDBG was duly served with the Complaint and summons, by corporate service
effectuated by a private process server on Billy Gene Meyers at 1001 Edgewater
Drive, Pekin, IL 61554, U.S.A. Mr. Meyers is the registered agent and President of
CDBG. (Doc. No. 8). CDBG’s answer or other response was due no later than March
10, 2015. Fed. R. Civ. P. 12(a)(1)(A)(i). (See Doc. 8). On March 26, 2015, Plaintiff
moved for entry of default. (Doc. 10). The motion for entry of default had attached a
certificate of service where Plaintiff’s counsel swears he mailed a copy of the motion
and proposed order of default to Meyers at the same address above, 1001 Edgewater
Drive, Pekin, IL 61554. A response to that motion was due April 13, 2015. CDBG
failed to appear or file an answer or other response to the Complaint, timely or
otherwise.
Magistrate Judge Hawley allowed the motion as to entry of default, which
was entered against CDBG on April 14, 2015. Because the entry of default and the
entry of default judgment are separate events under Federal Rule of Civil Procedure
55, Judge Hawley left Plaintiff’s motion pending for this Court to rule on the entry
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of default judgment. More than a month later, on May 19, 2015, this Court ruled on
the motion and entered a default judgment against CDBG. Defendants never
responded to the motion for entry of default judgment. On July 10, 2015, about fiftytwo days later, counsel for CDBG filed a motion for leave to appear in this matter,
the instant motion and a belated answer.
DISCUSSION
Default judgment establishes, “as a matter of law, that defendants are liable
to plaintiff on each cause of action.” e360 Insight v. Spamhaus Project, 500 F.3d 594,
602 (7th Cir. 2007). The well-pleaded facts of the complaint relating to liability are
taken as true upon default. Dundee Cement Co. v. Howard Pipe & Concrete Prods.,
Inc., 722 F.2d 1319, 1323 (7th Cir. 1983). Defendant’s default Complaint was
entered on April 14, 2015. Accordingly, Defendant is liable to Plaintiff for its acts as
alleged in the Complaint.
Rule 55(c) allows for default judgment to be set aside for reasons set out
under Rule 60(b). In this jurisdiction, the standard under Rule 60(b) is that the
movant must show (1) “good cause” for the default; (2) quick action to correct the
default; and (3) the existence of a meritorious defense to the original complaint.
Pretzel & Stouffer, 28 F.3d at 45; United States v. DiMucci, 879 F.2d 1488, 1495 (7th
Cir.1989), Jones v. Phipps, 39 F.3d 158, 162 (7th Cir. 1994).
CDBG first contends that good cause exists because “Defendants did not
receive notice of Plaintiff’s Motion for Default in March 2015.”1 (Doc. 19 at 3). The
CDBG’s only challenge to the default judgment is that it did not receive adequate
notice of the motion for entry of default judgment. Rule 55(b)(2) provides that notice
of a motion for default judgment is only given to a defendant who has appeared
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motion is silent as to when Defendants purportedly did receive notice of the motion.
Plaintiff’s motion contains a certificate of service in which Plaintiff’s attorney
certified that on March 26, 2015, he served Billy Myers with copies of Plaintiff’s
Motion for Entry of Default Judgment and other ancillary documents by mailing the
same to Mr. Myers at 1001 Edgewater Drive, Pekin, IL 61554. Granted, only five
calendar days remained in the month of March, but there were still ample days left
before the Court took any action on the motion, let alone entering default judgment.
CDBG makes no real attempt to explain its delay in filing an appropriate paper
with the Court in the period between the point when it claims it received notice of
the motion for default judgment and the Court’s entry of default judgment.
In Jones v. Phipps, the Seventh Circuit examined whether a district court
abused its discretion in disallowing a motion to vacate a default judgment brought
under Rule 60(b)(1). 39 F.3d 158. The Jones court explained district courts are given
great latitude in assessing the circumstances of the individual cases to discern if
either good cause or excusable neglect exists. Id. at 164. A movant must show
“extraordinary circumstances as a sufficient condition to justify disturbing a default
judgment.” Id. at 163. In Jones, neither incarceration nor lack of legal counsel
provided the movant with the requisite good cause for defaulting. Id. Default will
not be set aside if the circumstances show the movant chose to ignore the lawsuit
despite possessing the ability to attend to it. Id.
personally or by a representative. So even if CDBG never received notice of the
motion, such failure to receive notice of the motion was a consequence of CDBG’s
failure to answer or otherwise respond to the Complaint, inaction CDBG does not
attempt to explain in the instant motion.
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CDBG’s explanations do not satisfy the standards set out in Jones because
they do not provide the Court with an adequate basis to determine CDBG did
nothing but sit on its hands without excuse. The motion provides
Without appreciating the imminence of deadlines to file a responsive
pleading, Defendants was under the impression that he had additional
time to respond. Defendants neither knew nor expected a default to
take place, as he was not notified of Plaintiff’s Motion for Default, the
deadline to respond to such motion, or the entry of default judgment
against him. When Defendant learned of the default judgment, he
immediately retained counsel and files this instant motion.
(Doc. 19 at 3). The motion does not answer crucial and relevant questions. For
example: On what basis did Defendants think they had “additional time to
respond”? How could “Defendants neither [know] nor [expect] a default to take
place” when the summons they do not contest they were served provides on its face
that “[i]f you fail to respond, judgment by default will be entered against you for the
relief demanded in the complaint. You also must file your answer or motion with
the court.”? (Doc. 8 at 1). Obviously, in the time between being served with the
complaint and summons and entry of default, between February 17, 2015 and May
19, 2015, CDBG knew it took no steps to make the Court aware that it had any
intention on participating in the case, let alone filing an answer or a responsive
motion.
If anything, the assertion in the motion that “when Defendant learned of the
default judgment, he immediately retained counsel and file[d] this instant motion”
supports the inference that CDBG sat on its hands doing nothing until it learned of
the default judgment, which again, was several months after Plaintiff’s process
server swears he served Mr. Meyers.
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In short, the Court finds that Defendant CDBG has not demonstrated good
cause for its failure to act before the imposition of default judgment. Having found
no good cause for the default, the Court need not inquire further into whether
CDBG has a meritorious defense or whether it took quick action to correct the
default, which by the way it probably did not. After all, default judgment was
entered on May 19, 2015 and the instant motion was not filed until fifty-two days
later on July 10, 2015.
CONCLUSION
For the reasons stated above, Defendants’ Motion To Set Aside Default
Judgment (Doc. 19) is DENIED.
IT IS SO ORDERED.
Entered this 27th day of July, 2015.
s/ Joe B. McDade
JOE BILLY McDADE
United States Senior District Judge
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