Joachin v. Hometown Eats, Inc. et al

Filing 30

ORDER. IT IS ORDERED that 17 defendants Hometown Eats, Inc. and Alejandra Meza-Cervantes' Motion to Set Aside Entry of Default is GRANTED, and 9 the clerk's entry of default is set aside as to them. IT IS FURTHER ORDERED that defendants Hometown Eats, Inc. and Alejandra Meza-Cervantes have 10 days to answer or otherwise respond to the complaint. Signed by Magistrate Judge Carl W. Hoffman on 1/24/2019. (Copies have been distributed pursuant to the NEF - ADR)

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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***

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ARMANDO JOACHIN,

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Plaintiff,
ORDER

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Case No. 2:18-cv-00793-GMN-CWH

v.
HOMETOWNE EATS, INC., et al.,

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Defendant.

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Presently before the court is defendants Hometown Eats, Inc. and Alejandra Meza-

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Cervantes’ Motion to Set Aside Entry of Default (ECF No. 17), filed on August 2, 2018. Plaintiff

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Armando Joachin filed a response (ECF No. 21) on August 15, 2018. Defendants did not reply.

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I.

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BACKGROUND
The parties are familiar with the facts of this case and the court will not repeat them here

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except where necessary. Joachin brings this Fair Labor Standards Act (“FLSA”) case against

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Hometown Eats and its owners, Meza-Cervantes and Rex Henriott, for failure to pay overtime

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and other alleged violations. (Compl. (ECF No. 1).) Joachin moved for a clerk’s entry of default

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against Hometown Eats and Meza-Cervantes and a default was entered against them on June 8,

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2018. (Entry of Default (ECF No. 9).) Hometown Eats and Meza-Cervantes now jointly move to

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set aside the default, arguing Joachin will not be prejudiced by setting aside the default because

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the case is in its early stages. They further argue they have a meritorious defense and their failure

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to answer was excusable.

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Meza-Cervantes acknowledges she and Hometown Eats were served with the summons

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and complaint. (Aff. of Meza-Cervantes (ECF No. 17-1) at ¶ 4.) When Meza-Cervantes and

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Hometown Eats were served, however, co-defendant Henriott was out of town, and Meza-

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Cervantes states: “I did not read the Summons I was served with and so I was under the

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impression and believed that all of the Defendants needed to be served before the Complaint was

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to be answered.” (Id. at ¶ 7.) As a result, Meza-Cervantes states that she did not consult with an

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attorney until Henriott returned home approximately one month later. (Id. at ¶ 8.) Henriott was

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served and has appeared in this case. (Ans. (ECF No. 19).)
Joachin responds that Hometown Eats and Meza-Cervantes had actual notice of the

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lawsuit and intentionally failed to answer and that they lack a meritorious defense. Joachin does

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not respond to Hometown Eats and Meza-Cervantes’ argument that he will not prejudiced by

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setting aside the default. Joachin states a response on this point is unnecessary because the

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tripartite test is disjunctive and because defendants engaged in culpable conduct and lack a

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meritorious defense.

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II.

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DISCUSSION
Rule 55 of the Federal Rules of Civil Procedure provides a mechanism for obtaining a

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default judgment against a party who has failed to plead or otherwise respond to claims brought

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against it. Where this failure is “shown by affidavit or otherwise,” the clerk must enter that

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party’s default under Fed. R. Civ. Proc. 55(a). “The court may set aside an entry of default for

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good cause.” Id. at 55(c). “Good cause” is determined through three factors: (a) whether the

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defaulting party engaged in culpable conduct that led to the default, (b) whether there is a

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meritorious defense, and (c) whether reopening the case would cause prejudice to the Plaintiff.

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Falk v. Allen, 739 F.2d 461, 463 (9th Cir. 1984). This test is disjunctive, and proof of any of

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these three factors may justify setting aside the default. See Brandt v. American Bankers

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Insurance Co. of Florida, 653 F.3d 1108, 1111 (9th Cir. 2011).

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Overarching these factors is the Ninth Circuit’s stated policy favoring adjudication of

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disputes on their merits, Eitel v. McCool, 782 F.2d 1470, 1472 (9th Cir. 1986), with doubts

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resolved in favor of setting aside the default. Schwab v. Bullock’s, Inc., 508 F.2d 353, 355 (9th

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Cir. 1974). It is within the court’s discretion whether to set aside a default. O’Connor v. State of

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Nev., 27 F.3d 357, 364 (9th Cir. 1994). The court’s discretion is especially broad when it is the

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clerk’s entry of default that is being set aside, rather than a default judgment. Id.

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Turning to the disjunctive Falk factors, the court finds Joachin would not be prejudiced by

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setting aside the default under the circumstances of this case. To determine whether the plaintiff

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would be prejudiced if the default judgment is set aside, “[t]he standard is whether his ability to
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pursue his claim will be hindered.” Falk, 739 F.2d at 463. Setting aside a default must do more

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than simply delay resolution of the case to be considered prejudicial to the plaintiff. TCI, 244

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F.3d at 701. Similarly, requiring a plaintiff to adjudicate a claim on the merits does not constitute

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prejudice. Id. Rather, the delay must result in some tangible harm, such as “loss of evidence,

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increased difficulties of discovery, or greater opportunity for fraud or collusion.” Id. (quotation

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omitted).
Hometown Eats and Meza-Cervantes’ motion to set aside the default was promptly filed

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within two months of the clerk entering default and before Henriott answered or there was any

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other significant activity in the case. This case remains in its early stages, with nearly three of the

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six months of discovery remaining. (Scheduling Order (ECF No. 23).) Although the motion to

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set aside default has been pending, Joachin served written discovery on Hometown Eats and the

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parties’ attorneys have been corresponding regarding discovery. (Pl.’s Mot. to Compel (ECF

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Nos. 28, 29).) Given the case’s procedural posture and the fact that discovery appears to be

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underway, setting aside the default would not hinder Joachin’s ability to pursue his case or result

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in excessive delay. Joachin does not identify any tangible harm he would suffer if default is set

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aside. Setting aside the default also favors the Ninth Circuit’s policy favoring adjudication of the

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case on the merits. The court in its discretion therefore finds that setting aside the default would

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not result in prejudice to Joachin. Having satisfied at least one of the three factors, the court need

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not proceed any further to find that the clerk’s entry of default should be set aside.

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III.

CONCLUSION

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IT IS THEREFORE ORDERED that defendants Hometown Eats, Inc. and Alejandra

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Meza-Cervantes’ Motion to Set Aside Entry of Default (ECF No. 17) is GRANTED, and the

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clerk’s entry of default (ECF No. 9) is set aside as to them.

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IT IS FURTHER ORDERED that defendants Hometown Eats, Inc. and Alejandra MezaCervantes have 10 days to answer or otherwise respond to the complaint.
DATED: January 24, 2019

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C.W. HOFFMAN, JR.
UNITED STATES MAGISTRATE JUDGE
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