Avilez Soriano et al v. Gulf Coast Lift, LLC et al

Filing 102

ORDER AND REASONS - GRANTING the Nethery defendants' motion 79 to set aside the entry of default. For the same reasons, the Court DENIES plaintiffs' motion 75 for entry of default judgment.. Signed by Chief Judge Sarah S. Vance on 12/8/14. (jjs)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
JOSE SANTILLO AVILEZ SORIANO, ELVIN
ORDONEZ, ODIN MAZARIEGOS, and
ROLANDO ENRIQUE ORTEGA BARCHONA

CIVIL ACTION

VERSUS

NO: 12-02744

GULF COAST LIFT, LLC and DUCKY
JOHNSON HOUSE MOVER, INC.

SECTION: R(2)

ORDER AND REASONS
Before the Court is defendants William Nethery and Nethery
Foundation Services' (collectively "Nethery defendants") motion to
set aside the default entered against them on September 5, 2014.1
Also pending before the Court is plaintiffs' motion for entry of a
default judgment against the Nethery defendants.2
Court

finds

defendants'

failure

to

respond

to

Because the
the

complaint

resulted from defendants' excusable neglect, that plaintiffs will
not

be

prejudiced,

and

that

defendants

present

potentially

meritorious defenses, the Court GRANTS the Nethery defendants'
motion to set aside the entry of default.

For the same reasons,

the Court DENIES plaintiffs' motion for entry of default judgment.

1

R. Doc. 79.

2

R. Doc. 75.
1

I.

PROCEDURAL BACKGROUND
Plaintiffs are laborers allegedly employed by Gulf Coast Lift,

LLC ("Gulf Coast") and Ducky Johnson House Mover, LLC ("Ducky
Johnson") between March 2010 and August 2012. They sued Gulf Coast
and Ducky Johnson on November 13, 2012, bringing claims under the
Fair Labor Standards Act ("FLSA") and Louisiana law.3

Plaintiffs

allege that they were paid a flat-rate of $100-110 per day,
regardless of the number of hours they worked.4

They further

allege that Gulf Coast and Ducky Johnson failed to compensate them
at the statutory rate of one and a half times their regular rate
for hours worked in excess of 40 hours per week.5

Plaintiffs also

assert that when they worked in excess of 83 hours per week, Gulf
Coast and Ducky Johnson failed to pay them the federally-mandated
minimum wage of $7.25 per hour.6
Plaintiffs filed a second amended complaint on March 12, 2014
alleging that various contracts and subcontracts between Gulf
Coast, Ducky Johnson, and the Nethery defendants rendered the
Nethery defendants plaintiffs' "joint employers" under the FLSA.
Moreover, Gulf Coast and Ducky Johnson indicated to plaintiffs that
they intended to file third-party claims against the Nethery

3

R. Doc. 1.

4

R. Doc. 33 at 7.

5

Id.

6

Id. at 8.
2

defendants and that they agreed with plaintiffs that the Nethery
defendants should be added as defendants in this action.7
Plaintiffs served the Nethery defendants on August 7, 2014.8
As of September 3, 2014, the Nethery defendants had failed to file
responsive pleadings, and the Clerk of Court issued an Entry of
Default against the Nethery defendants on September 5, 2014.9

On

September 24, 2014, plaintiffs moved the Court to enter a default
judgment against the Nethery defendants.10

The next day, counsel

for the Nethery defendants filed a notice of appearance and has
subsequently filed a motion to set aside the entry of default11 as
well as an answer to the amended complaint.12

II.

Legal Standard
Federal Rule of Civil Procedure 55(c) provides that a district

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

Good cause, for purposes of Rule 55(c), “is

not susceptible of precise definition, and no fixed, rigid standard
can anticipate all of the situations that may occasion the failure

7

R. Doc. 21-1 at 3-4; R. Doc. 24-4 at 8-9.

8

R. Docs. 67 and 68.

9

R. Doc. 71.

10

R. Doc. 75.

11

R. Doc. 79.

12

R. Doc. 82.
3

of a party to answer a complaint timely.” Dierschke v. O’Cheskey,
975 F.2d 181, 183 (5th Cir. 1992).

In determining whether good

cause exists to set aside an entry of default, the Court considers
"(1) whether the failure to act was willful; (2) whether setting
the default aside would prejudice the adversary; and (3) whether a
meritorious claim has been presented."

Effjohn Int'l Cruise

Holdings, Inc. v. A & L Sales, Inc., 346 F.3d 552, 563 (5th Cir.
2003).

These factors are, however, nonexclusive, and the Court

should consider all relevant circumstances against the background
principles that cases should be resolved on the merits.

See Lacy

v. Sitel Corp., 227 F.3d 290, 292 (5th Cir. 2000) ("[F]ederal
courts should not be agnostic with respect to the entry of default
judgments, which are generally disfavored in the law and thus
should

not

be

granted

on

the

claim,

without

more,

that

the

defendant had failed to meet a procedural time requirement.")
(internal citation omitted).

See also Amberg v. Fed. Deposit Ins.

Corp., 934 F.2d 681, 686 (5th Cir. 1991) (Federal Rules are
"diametrically opposed to a tyranny of technicality; . . . [s]trict
enforcement of defaults has no place in the Federal Rules . . .
.").

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III. Discussion
A.

The Parties Arguments

In support of their motion to set aside the entry of default,
the Nethery defendants argue that their failure to timely respond
to the amended complaint was the product of their lack of legal
sophistication rather than defendants' willful decision to ignore
this action.13 The Nethery defendants further argue that plaintiffs
will not be prejudiced if the Court sets aside the entry of default
and

that

the

Nethery

defendants

were

not

plaintiffs'

"joint

employers" under the FLSA because "Nethery merely worked alongside
Plaintiffs in an effort to complete the jobs they were hired to
complete."14
Plaintiffs do not dispute that they will not be prejudiced if
the Court sets aside the entry of default or that the Nethery
defendants

have

presented

a

potentially

meritorious

defense.

Rather, plaintiffs contend the defendants willfully ignored the
litigation process.15

Plaintiffs cite an alleged attempt by the

Nethery defendants to dodge service and an alleged interaction
between William Nethery and one of the plaintiffs in which Nethery
demonstrated anger at being sued.16

13

R. Doc. 79-1 at 4.

14

Id. at 5.

15

R. Doc. 87 at 4.

16

Id. at 5-6.
5

The Nethery defendants dispute

plaintiffs' characterization of their conduct.17

For the reasons

that follow, the Court finds the Nethery defendants' have met there
burden to set aside the entry of default against them.
b.

The Nethery Defendants have shown good cause to lift
the entry of default

The Court finds that the Nethery defendants have shown good
cause to set aside the entry of default against them.
P. 55(c).

Fed. R. Civ.

First, the Court finds that the Nethery defendants'

failure to file a timely answer in this matter amounts to excusable
neglect rather than willful conduct.

See Bona Fide Demolition &

Recovery, LLC v. Crosby Const. Co. of Louisiana, CIV. A. No. 073115, 2009 WL 4060192, at *3 (E.D. La. Nov. 20, 2009) (setting
aside default where failure to respond was product of excusable
neglect).

The Nethery defendants state that William Nethery was

unaware that the paperwork with which he was served made him a
defendant in this suit and that his "lack of legal sophistication"
caused this misconception.18

Plaintiffs' allegation regarding the

Nethery defendants' alleged attempts to "dodge service," even if
true, has no bearing on defendants' willfulness or lack thereof, as
the

Nethery

defendants'

obligation

to

participate

in

this

proceeding did not materialize until plaintiffs actually served
defendants with the summons. Lacy, 227 F.3d at 292 n.5 ("[W]illful

17

R. Doc. 94-1 at 2.

18

R. Doc. 79-1 at 4.
6

evasion of process is not grounds to support entry of default
judgment.").

The Court also finds the Nethery defendants' account

of the interaction between defendants and plaintiffs more credible.
Even if the Court doubted the verity of the Nethery defendants'
explanation, "any doubt should, as a general proposition, be
resolved in favor . . . of securing a trial upon the merits."
Jenkens & Gilchrist v. Groia & Co., 542 F.3d 114, 123 (5th Cir.
2008) (finding that even though "there is evidence suggestive of
willfulness on the part of [defendant] . . . we do not believe the
record

conclusively

shows

that

her

default

was

willful").

Accordingly, the Court credits the Nethery defendants' explanation
for their failure to timely respond and finds that the default was
the product of excusable neglect rather than willful conduct.
at

122-23

("We

have

recognized

that

even

where

a

Id.

defendant

mistakenly concludes that he was not served with process, the
defendant's default may not be willful.").
Second, the Court finds that setting the default aside will
not prejudice plaintiffs. To establish prejudice, plaintiffs "must
show that the delay will result in the loss of evidence, increased
difficulties in discovery, or greater opportunities for fraud and
collusion."

Lacy, 227 F.3d at 293 (internal quotations omitted).

Plaintiffs have made no such showing, and the lack of prejudice
counsels in favor of setting aside the default.
Finally, the Nethery defendants vigorously dispute both the

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factual and legal predicates of plaintiffs' claims, and the Nethery
defendants

have

asserted

defenses to those claims.

a

number

of

potentially

meritorious

Plaintiffs do not dispute that the

Nethery defendants have asserted potentially meritorious defenses.
Accordingly, the Court finds that the Nethery defendants have shown
good cause for lifting the default against them.

III. Conclusion
For the foregoing reasons, the Court GRANTS the Nethery
defendants' motion to set aside the default entered against them on
September 5, 2014.

Plaintiffs' motion for entry of a default

judgment against the Nethery defendants is DENIED AS MOOT.

New Orleans, Louisiana, this ___ day of December, 2014.
8th

_____________________________________
SARAH S. VANCE
UNITED STATES DISTRICT JUDGE

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