Burgin v. Windsor Fashions, Inc.

Filing 21

OPINION AND ORDER: GRANTS 16 MOTION to Set Aside Default by Defendant Windsor Fashions, Inc; GRANTS Windsor Fashions, Inc. leave to answer or otherwise plead to the complaint within twenty-one (21) days of the entry of this Opinion and Order; and DENIES AS MOOT 10 MOTION for Default Judgment as to Windsor Fashions, Inc. by Plaintiff Reahna Burgin. Signed by Chief Judge Philip P Simon on 12/8/2016. (lhc)

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF INDIANA
HAMMOND DIVISION
REAHNA BURGIN,
Plaintiff,
v.
WINDSOR FASHIONS, INC.,
Defendant.

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) CAUSE NO. 2:16-CV-175-PPS-PRC
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OPINION AND ORDER
Reahna Burgin filed the complaint in this matter on May 18, 2016 alleging
discrimination based on race and sex in violation of Title VII of the Civil Rights Act of
1964 and retaliation. [DE 1.] Service of the summons and complaint was received by
Windsor Fashions, Inc.’s Registered Agent on June 6, 2016. [DE 5, 5-1.] Windsor
Fashions failed to appear, plead, or otherwise defend the lawsuit. Accordingly, Burgin
filed an application for clerk’s entry of default on August 17, 2016, DE 6, which the
Clerk of the Court entered on August 30, 2016, DE 7. Burgin then moved for default
judgment on October 14, 2016 seeking unpaid wages in the amount of $23,400.00,
compensatory damages in the amount of $300,000.00, attorneys fees and costs, and
prejudgment interest. [DE 10.]
On November 3, 2016, I ordered Burgin to file a dated copy of her 90-day right to
sue letter to confirm that this action was timely filed and directed the clerk to mail a
copy of my order to Windsor Fashions at the address at which it was served. [DE 11.]
Windsor Fashions says that this was the first notice of this action that it received, which

was on or about November 11, 2016. [DE 16 at 1.] Windsor Fashions asserts that it
immediately contacted its attorney, who investigated the status of the case, entered her
appearance on November 11, 2016, and immediately filed the motion now pending
before me seeking to set aside the Clerk’s entry default pursuant to Federal Rule of Civil
Procedure 55(c). [DE 15, 16].
Windsor Fashions tells me it responded to Burgin’s charges before the EEOC,
which resulted in the EEOC’s dismissal of Burgin’s charges. [DE 16 at 1.] Windsor
Fashions also tells me that it calendared the deadline for Burgin to file a lawsuit and
when it did not receive a notification of any filing, Windsor Fashions assumed that
Burgin had opted not to file one. [Id.] Windsor Fashions explains that it is at a loss to
understand how it did not know that Burgin filed this action in May 2016, noting that it
has no records of it in its files and its Human Resources Department has no recollection
of receiving such a notice, despite the fact that it generally reacts promptly and with
urgency when it receives such notices. [Id. at 2.] Windsor Fashions surmises that the
summons either was not forwarded by its Registered Agent or was overlooked in the
company email. [Id.]
Federal Rule of Civil Procedure 55(c) governs relief from clerk’s entry of default.
It provides that “[t] he court may set aside an entry of default for good cause, and it
may set aside a final default judgment under Rule 60(b).” FED. R. CIV. P. 55(C). The
Seventh Circuit adopted a three-prong test in considering motions to set aside the entry
of default that requires a defaulting party to demonstrate: (1) good cause for its default,
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(2) quick action to correct the entry of default, and (3) a meritorious defense to
plaintiff’s complaint. See e.g. Cracco v. Vitran Exp., Inc., 559 F.3d 625, 631 (7th Cir. 2009);
O’Brien v. R. J. O’Brien & Assocs., Inc., 998 F.2d 1394, 1401 (7th Cir. 1993).
The above-stated standard for setting aside the entry of default and the standard
for vacating a default judgment are the same. See, e.g., United States v. DiMucci, 879 F.2d
1488, 1495 (7th Cir.1989). Importantly, however, the standard is applied in a more
stringent way when a default judgment has been entered. Id. This makes sense given
the text of Rule 55(c), which makes a distinction between entries of default on the one
hand, and default judgments on the other. Vacating a default judgment is more
difficult because Rule 60(b) and its respect for the “finality of judgments” comes into
play. Jones v. Phipps, 39 F.3d 158, 162 (7th Cir. 1994). Thus, in the context of a motion to
vacate a default judgment, a party must show “something more compelling than
ordinary lapses of diligence or simple neglect.” Id. In other words, to vacate a default
judgment, the defaulting party must surmount a “high hurdle.” Id. By contrast, when a
party is seeking to set aside a clerk’s entry of default, the test is “more liberally
applied.” Pretzel & Stouffer v. Imperial Adjusters, Inc., 28 F.3d 42, 45 (7th Cir. 1994).
Overlaying all of this is the general proposition that disposition on the merits of a
lawsuit is preferable to disposition by default. Cracco., 559 F.3d at 631.
It’s important to keep in mind that Rule 55(c) requires “good cause” for the
judicial action. So the focus is not necessarily on whether there is “good cause” for the
defendant’s error. In other words, it is not a synonym for “excusable neglect.” Sims v.
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EGA Products, 475 F.3d 865, 868 (7th Cir. 2007). In any event, Windsor Fashions’ failure
to respond to the summons and complaint was through inadvertence. There is no
evidence that Windsor Fashions acted willfully when it failed to respond to Ms.
Burgin’s complaint. I will note, however, that Windsor Fashions should have taken
measures to ensure that service of process on its registered agent was forwarded to the
appropriate employee. Nevertheless, Windsor Fashions acted with dispatch once it
found out that it had been sued by filing its motion within four days, which
demonstrates quick action to correct the default.
Windsor Fashions also made a sufficient showing of a potential meritorious
defense. It attached its EEOC Statement of Position as an exhibit to its motion, DE 16-2,
that documents Burgin’s alleged history of tardiness, missing work shifts, bringing her
child to work, leaving work early without permission, and other misconduct, which
Windsor Fashions says was the reason for Burgin’s discipline and eventual termination
rather than the discriminatory purposes alleged by Burgin. [DE 16 at 2-3.] Whether any
of this is true will be for another day. But for now, given the lenient standards that the
Seventh Circuit has established for the application of Rule 55(c) and the fact that
Windsor Fashions stated the nature of its defense and provided the factual basis for that
defense, I believe that Windsor Fashions made a sufficient showing of a potential
meritorious defense. Cracco, 559 F.3d at 631.
ACCORDINGLY, the Court:
C

GRANTS Windsor Fashions, Inc’s Motion to Set Aside Default and for
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Leave to Answer or Otherwise Plead [DE 16];
C

GRANTS Windsor Fashions, Inc. leave to answer or otherwise plead to
the complaint within twenty-one (21) days of the entry of this Opinion
and Order; and

C

DENIES AS MOOT Reahna Burgin’s Motion for Default Judgment [DE
10].

SO ORDERED.
ENTERED: December 8, 2016
s/Philip P. Simon________________
PHILIP P. SIMON, CHIEF JUDGE
UNITED STATES DISTRICT COURT

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