PATEL v. METASENSE, INC. et al

Filing 10

OPINION FILED. Signed by Judge Noel L. Hillman on 2/5/16. (js)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
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KALESH PATEL,
Plaintiff,
v.
METASENSE, INC. and JOHN DOES
1–5 AND 6–10,
Defendants.

Civ. No. 15-004 (NLH/JS)
OPINION

APPEARANCES:
COSTELLO & MAINS, P.C.
By: Deborah L. Mains, Esq.
18000 Horizon Way, Suite 800
Mount Laurel, New Jersey 08054
Counsel for Plaintiff
PENBERTHY & PENBERTHY, PC
By: John C. Penberthy, III, Esq.
2020 Springdale Road, Suite 400
Cherry Hill, New Jersey 08003
Counsel for Defendants
HILLMAN, United States District Judge:
This suit concerns alleged violations of the federal Fair
Labor Standards Act, 29 U.S.C. §§ 201, et seq. (“FLSA”).
Plaintiff Kalesh Patel (“Patel”) brings these claims against
Defendant MetaSense, Inc. (“MetaSense”) and its agents, John
Does 1–5 and 6–10, alleged to be unknown agents of MetaSense.
Presently before the Court are Patel’s Motion for a Hearing to
Determine the Amount of Default Judgment (“Plaintiff’s Motion”
1

or “Pl.’s Mot.”) [Dkt. No. 5] and MetaSense’s Motion to Vacate
Default and Dismiss (“Defendant’s Motion” or “Def.’s Mot.”)
[Dkt. No. 6].

For the reasons set forth below, Plaintiff’s

Motion will be denied and Defendant’s Motion will be denied in
part and granted in part.

I.

FACTUAL BACKGROUND AND PROCEDURAL HISTORY
The following facts are recited in the Complaint [Dkt. No.

1] unless otherwise noted.

Patel was employed by MetaSense from

on or about September 14, 2013 until his termination on October
16, 2014.

(Compl. ¶¶ 4–5.)

Patel initially earned $15.00 an

hour, and beginning on or about January 9, 2014, Patel began
earning $20.00 an hour.

(Compl. ¶¶ 4–5.)

For the entire period

of his employment, Patel was a salaried, non-exempt employee.
(Compl. ¶ 6).

Additionally, Plaintiff alleges that he worked

approximately 50 hours each week, but does not have access to
the necessary time records to provide an accurate number of
hours he worked each week.

(Compl. ¶¶ 7–8.)

At some point in the beginning of February 2014, MetaSense
stopped paying Patel overtime due to a “cash flow” problem, and
did not resume paying Patel overtime through the time of his
termination.

(Compl. ¶¶ 10–11.)

Patel made numerous, repeated

requests to MetaSense’s President, Jatin Mehta (“Mehta”), as
well as MetaSense’s Vice Presidents regarding failure to pay him

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overtime.

(Compl. ¶¶ 13–15.)

On October 9, 2014, Patel was

informed by Mehta that he would no longer be permitted to
telecommute to work and was subsequently directed to turn over
all of his log in and password information for all MetaSense
accounts, systems, and workstations.
declined to comply with this request.

(Compl. ¶¶ 16–18.)
(Compl. ¶ 19.)

Patel

On

October 15, 2014, Mehta emailed Patel to inform him that he had
been overpaid since January 2014, and Patel was terminated the
next day.

(Compl. ¶¶ 20–21.)

As the pending motions both relate to default, the
procedural history is also relevant to this Court’s analysis of
the instant motions.

Patel commenced the instant action on

January 6, 2015 by filing a complaint with this Court.

(See

generally Compl.; Mains Cert. on Default J. [Dkt. No. 5-1] ¶ 2.)
The Summons and Complaint were personally served on Mehta as an
agent of MetaSense on January 13, 2015.

(Mains Cert. on Default

J. ¶¶ 3–4; Affidavit of Service [Dkt. No. 4].)

MetaSense was

required to respond or otherwise move by February 3, 2015, see
Fed. R. Civ. P. 12(a)(1)(A)(i), and failed to do so.

Patel

requested default to be entered against MetaSense on April 15,
2015 pursuant to Federal Rule of Civil Procedure 55(a) for
failure to plead or otherwise defend.
Default [Dkt. No. 3].)

(See Pl.’s Request for

The Clerk then entered default against

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MetaSense on April 16, 2015.

(See Clerk’s Docket Entry of April

16, 2015.)
Plaintiff’s Motion seeking a hearing to determine the
amount of default judgment to be entered against MetaSense
pursuant to Federal Rule of Civil Procedure 55(b)(2) was then
filed on August 13, 2015, and set for a motion date of September
8, 2015.

(See Clerk’s Docket Entry of August 13, 2015.)

Under

the Local Rules, opposition to Plaintiff’s Motion would have
been due on August 25, 2015.

See L.Civ.R. 7.1(d)(2).

No

opposition was filed.
Subsequently, on October 14, 2015, Defendant filed a motion
seeking to vacate the entry of default pursuant to Federal Rule
of Civil Procedure 55(c) and also apparently seeking dismissal
under Federal Rule of Civil Procedure 12(b)(6).

II.

JURISDICTION
Patel brings claims at least under the FLSA.1

Accordingly,

this Court exercises federal question subject matter
jurisdiction pursuant to 28 U.S.C. § 1331.

1

There is language in the Complaint that indicates Patel may
also be seeking relief under the New Jersey Wage and Hour Law
(“NJWHL”), N.J.S.A. 34:11–56a, et seq. (See Compl. ¶ 30(a).)
If this is indeed the case, this Court would exercise
supplemental jurisdiction over the NJWHL claims pursuant to 28
U.S.C. § 1367.
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III. STANDARD
A.

ENTERING DEFAULT JUDGMENT UNDER RULE 55(B)(2) AND
VACATING AN ENTRY OF DEFAULT UNDER RULE 55(C)

Entry of default judgment requires two steps - first, the
Clerk must enter default under Rule 55(a), and then either the
Clerk or the Court may enter default judgment under Rule 55(b).
See Nationwide Mut. Ins. Co. v. Starlight Ballroom Dance Club,
Inc., 175 F. App’x 519, 521 n.1 (3d Cir. 2006) (“Prior to
obtaining a default judgment under either Rule 55(b)(1) or Rule
55(b)(2), there must be an entry of default as provided by Rule
55(a).”) (quoting 10A Wright, Miller & Kane, Fed. Prac. & Proc.
Civ. § 2682 at 13 (3d ed. 1998)).

When default has been entered

and before default judgment has been entered, “[t]he court may
set aside an entry of default for good cause.”
55(c).

Fed. R. Civ. P.

“A decision to set aside an entry of default . . . ‘is

left primarily to the discretion of the district court.’”
Bailey v. United Airlines, 279 F.3d 194, 204 (3d Cir. 2002)
(quoting Hritz v. Woma Corp., 732 F.2d 1178, 1180 (3d Cir.
1984)).
The same standard is used when determining whether to enter
default judgment under Rule 55(b) or set aside an entry of
default under Rule 55(c).

See Chamberlain v. Giampapa, 210 F.3d

154, 164 (3d Cir. 2000) (discussing the standard for entering
default judgment and citing United States v. $55,518.05 in U.S.

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Currency, 728 F.2d 192, 195 (3d Cir. 1984), which discusses the
standard for setting aside an entry of default).2

In either

situation, the Court must consider three factors:

“(1)

prejudice to the plaintiff if default is denied; (2) whether the
defendant appears to have a litigable defense; and (3) whether
defendant’s delay is due to culpable conduct.”

Id. (citing

$55,518.05 in U.S. Currency, 728 F.2d at 195).

In conducting

this analysis, the Court must also consider that default
judgments are generally disfavored in the Third Circuit, as they
prevent claims from being determined on the merits.

See Budget

Blinds, Inc. v. White, 536 F.3d 244, 258 (3d Cir. 2008) (citing
$55,518.05 in U.S. Currency, 728 F.2d at 194–95).

B.

DISMISSING A COMPLAINT UNDER RULE 12(B)(6)

Federal Rule of Civil Procedure 12(b)(6) provides that a
court may dismiss a complaint “for failure to state a claim upon
which relief can be granted.”

In order to survive a motion to

dismiss, a complaint must allege facts that make a right to

2

Judge Rendell in Hill v. Williamsport Police Dep’t, 69 F. App’x
49 (3d Cir. 2003), raised the concern that subjecting both
entering default judgment and setting aside entry of default to
the identical standard may be inappropriate. 69 F. App’x at 52–
53 (Rendell, J., concurring). However, her concern was that
plaintiffs were held to too high of a standard in attempting to
obtain default judgment where no defendant had moved to set
aside default or otherwise answered. Id. That is not the case
here.
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relief more than speculative.

Bell Atl. Corp. v. Twombly, 550

U.S. 544, 555 (2007); see also Fed. R. Civ. P. 8(a)(2).
While a court must accept all allegations in the
plaintiff’s complaint as true, viewing them in the light most
favorable to the plaintiff, Phillips v. Cnty. of Allegheny, 515
F.3d 224, 231 (3d Cir. 2008), a court is not required to accept
sweeping legal conclusions cast as factual allegations.

Morse

v. Lower Merion Sch. Dist., 132 F.3d 902, 906 (3d Cir. 1997).
The complaint must state sufficient facts to show that the legal
allegations are not simply possible, but plausible.
515 F.3d at 234.

Phillips,

“A claim has facial plausibility when the

plaintiff pleads factual content that allows the court to draw
the reasonable inference that the defendant is liable for the
misconduct alleged.”

Ashcroft v. Iqbal, 556 U.S. 662, 678

(2009).

IV.

DISCUSSION
The instant motions present two distinct issues:

(1) the

entering of default judgment, or conversely, the setting aside
of an entry of default; and (2) dismissal of the complaint as
barred by claim preclusion or issue preclusion.
address each in turn.

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The Court will

A.

DEFAULT AND DEFAULT JUDGMENT

Plaintiff’s Motion is more accurately described as a notice
of motion requesting a hearing and an accompany certification of
Patel’s Counsel laying out the procedural history and
establishing that there are complicated issues for determining
an amount of damages that require the intervention of the Court
in setting damages.
Default J.)

(See generally Pl.’s Mot.; Mains Cert. on

Without the intervening motion from MetaSense, the

request would have been granted, a hearing on proofs and damages
would have been held, and then the factors for granting default
judgment would have become relevant.
motion changes that.

However, the intervening

As a result, the Court must primarily

determine whether it is appropriate to set aside the entry of
default, rather than actually evaluating the appropriateness of
entering default judgment for Patel.
In evaluating the three factors for vacating entry of
default, as explained below, the Court concludes that
Defendant’s Motion must be granted with respect to the request
for vacating entry of default.3

The Court will consider the two

3

Of important note here is that the actual moving papers filed
by MetaSense are wholly inadequate. The “motion” is an unsworn
series of averments by counsel for MetaSense that address none
of the factors for vacating judgment, but rather asserts a res
judicata defense as an apparent excuse for failing to reply to
any action taken in this Court. (Def.’s Mot. ¶¶ 1–9.) Further,
it is apparent that counsel failed to even consult the docket in
crafting the motion, as the relief requested is to “Strike the
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factors in dispute.4

The most important of the factors to be

considered is whether the defendant has a litigable or
meritorious defense.

See Reed v. N.J. State Police, Civ. No.

15-1305 (NLH/JS), 2015 WL 5821965, at *1 (D.N.J. Oct. 2, 2015)
(citing Nat’l Specialty Ins. Co. v. Papa, Civ. No. 11-2798
(RMB/KMW), 2012 WL 868944, at *2 (D.N.J. Mar. 14, 2012)).

Thus,

the Court will analyze this factor first.

1.

Meritorious or Litigable Defense

The Court determines that MetaSense has a meritorious or
litigable defense.

“The showing of a meritorious defense is

accomplished when ‘allegations of defendant’s answer, if
established on trial, would constitute a complete defense to the
action.’”

$55,518.05 in U.S. Currency, 728 F.2d at 195 (citing

Tozer v. Charles A. Krause Milling Co., 189 F.2d 242, 244 (3d
Cir. 1951)).

“[S]imple denials or conclusory statements” by the

Judgment if one has been entered.” (Def.’s Mot. ¶ 10.) A
cursory review of the docket would have revealed to counsel that
no judgment had been entered. Additionally, the procedural
facts as recited in Defendant’s Motion are incorrect, as
conceded by MetaSense in its reply brief. (See Def.’s Mot.
¶¶ 1–2; Def.’s Reply [Dkt. No. 9] at 1.) The first attempt at
any explanation for failure to reply is only provided in
Defendant’s Reply Brief. Counsel for MetaSense is directed to
review L.Civ.R. 7.1 and 7.2 and in the future to comply with
them as well as all other applicable Local Civil Rules.
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Patel has stipulated that there is no prejudice to him should
default be vacated. (See Pl.’s Opp. [Dkt. No. 7] at 3.)
Patel’s Opposition is not paginated, so any page number
references are to those issued by the CM/ECF system.
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defaulting party are insufficient to show a meritorious defense.
Id.

“While the defaulting party need not prove that it will win

at trial, it must raise a defense that is meritorious on its
face.”

Pooler v. Mrs. Kurbitis Realty, LLC, Civ. No. 14-429

(WHW/CLW), 2015 WL 5897455, at *2 (D.N.J. Oct. 7, 2015)
(citations omitted).
Construing MetaSense’s moving papers broadly, MetaSense
appears to assert that it has res judicata defenses - both claim
preclusion and issue preclusion - based on a hearing conducted
in front of the Pennsylvania Unemployment Compensation Board of
Review (“the Board”).
2.)5

(See Def.’s Mot. ¶¶ 4–8; Def.’s Reply at

Specifically, the preclusion argument is based on (1) a

finding by the referee that Patel was terminated for cause and
not for retaliation for requesting overtime; and (2) admissions
by Patel during the hearing that he was the individual
responsible for payroll and that he did not request any overtime
until Mehta asked for his passwords.

(Def.’s Reply. at 2.)

MetaSense alleges specific facts by asserting that the prior

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For the purposes of treating Defendant’s Motion as one to
vacate an entry of default, the Court will generally consider
the “Certification” of Jatin Mehta [Dkt. No. 6-1], filed as an
attachment to Defendant’s Motion, without ascribing to it much
weight or value. The “certification” is unsigned, rendering its
averments unsworn, and thus of little use to this Court. All
future affidavits, declarations, and certifications must be
signed in accordance with 28 U.S.C. § 1746 and L.Civ.R. 7.2(a)
to be considered.
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adjudication before the Board bars the instant action.

Without

deciding the merits of these arguments, the Court finds that
these are colorable affirmative defenses that, if established,
would constitute a complete defense.

Accordingly, this factor

weighs in favor of vacating default.

2.

Culpable Conduct

The Court next considers whether MetaSense’s delay in
responding to the complaint is due to any culpable conduct on
the part of MetaSense.

“Culpable conduct surpasses mere

negligence, and consists of willful, intentional, reckless or
bad faith behavior.”

S.G. Enterprise, LLC v. Seaboard Paper &

Twine, Civ. No. 14-3471 (WHW/CLW), 2015 WL 3630965, at *3
(D.N.J. June 10, 2015) (citing Hritz, 732 F.2d at 1182).
“Reckless disregard for repeated communications from plaintiffs
and the court . . . can satisfy the culpable conduct standard.”
Nationwide, 175 F. App’x at 523 (quoting Hritz, 732 F.2d at
1183) (omission in original).
As explained in MetaSense’s Reply Brief, counsel for
MetaSense was handling issues related to a death in his family
at the time approximately one to two weeks after service of the
Complaint.

(Def.’s Reply at 1–2.)6

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Counsel believed that

MetaSense’s reply brief is also not paginated. Accordingly,
any page number references are to those issued by the CM/ECF
system.
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MetaSense would be obtaining another attorney to handle the
issue, and Metasense believed that current counsel was handling
the matter.

(Id.)

Failure to respond in a timely manner due to

a death in the family has been held not to be culpable conduct
by other courts of this district.

See Pooler, 2015 WL 5897455,

at *3.
However, this Court does find it troubling that in the
intervening nine months, neither counsel nor his client thought
it prudent to discuss the matter pending before this Court while
being in contact regarding an appeal before the Board.

Further,

counsel provides no explanation for why he did not immediately
file any papers in response to Patel’s Motion for a hearing,
which was served on MetaSense by counsel for Patel, or why it
took two months for anything to be filed in this Court once
Patel’s Motion was filed.

Despite these reservations, and

especially in light of the Third Circuit’s preference for
disposing of cases on the merits when practicable, it is
unlikely that such conduct could be said to surpass mere
negligence, and thus this factor also supports vacating default.
Thus, all three factors weigh in favor of vacating the
entry of default.

Accordingly, this court will deny Plaintiff’s

Motion for a hearing to determine the amount of default and
grant Defendant’s Motion as to the request to vacate judgment.

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B.

MOTION TO DISMISS

Defendant’s Motion also appears to present the issue of
dismissal of the Complaint on the theory that the Complaint and thus this entire suit - is precluded under both possible
theories of res judicata by the prior determination of the
Board.

The Court assumes this is being brought as a motion

under Rule 12(b)(6) as none of the other grounds in Rule 12(b)
apply.

The Court will take judicial notice of the decision of

the Board, but will disregard the transcript of the proceedings,
as this Court will not convert Defendant’s Motion into a one for
summary judgment.

See S. Cross Overseas Agencies, Inc. v. Wah

Kwong Shipping Grp. Ltd., 181 F.3d 410, 426–27 & n.7 (3d Cir.
1999) (explaining that a court may judicially notice an opinion
on a motion to dismiss, but may not examine a transcript to find
facts without converting the motion into one for summary
judgment) (citing Kauffman v. Moss, 420 F.2d 1270, 1274–75 (3d
Cir. 1970)).7

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Similarly, the Court will disregard both the letter from the
Berlin Township Police Department [Dkt. No. 6-2] and the pay
records [Dkt. No. 6-3]. As to the former, this is not a public
record, and so cannot be considered on a motion to dismiss under
Rule 12(b)(6). See Schmidt v. Skolas, 770 F.3d 241, 249 (3d
Cir. 2014) (permitting consideration on a motion to dismiss of
“the allegations contained in the complaint, exhibits attached
to the complaint and matters of public record” as well as
“document[s] integral to or explicitly relied upon in the
complaint”). As to the latter, there is an argument that these
are explicitly relied upon in the complaint. (See Compl. ¶ 8.)
However, Patel states in the Complaint that he was not in
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The so-called “Third Circuit Rule” permits affirmative
defenses listed in Rule 8(c) such as statute of limitations
defenses or preclusion to be raised in a motion to dismiss under
Rule 12(b)(6), but “if the bar is not apparent on the face of
the complaint, then it may not afford the basis for a dismissal
of the complaint.”

Schmidt v. Skolas, 770 F.3d 241, 249 (3d

Cir. 2014) (internal quotations omitted); see also Rycoline
Prods., Inc. v. C&W Unltd., 109 F.3d 883, 886 (3d Cir. 1997)
(clarifying that the Third Circuit Rule applies to claim and
issue preclusion defenses).
Regarding MetaSense’s argument that the Board decision bars
the Complaint, this Court does not find these facts to be
apparent on the face of the Complaint.

The Complaint does not

reference the Board proceedings, nor are the Board proceedings
necessarily implicated by the allegations in the Complaint.
This is not a finding either way on the ultimate merits of
whatever res judicata defense that MetaSense may have; rather,
this is a determination that at this juncture with this

possession of the records at the time he filed the Complaint,
and so he has not actually had the opportunity to review these
records. (See id.) Further, these documents have not been
certified to be true and correct copies of what they purport to
be due to the unsigned certification of Mr. Mehta. Finally, the
pay records are not relevant to the res judicata defenses, the
only grounds on which Defendant’s Motion can be read to be the
basis for a motion to dismiss. Accordingly, this Court will not
consider these specific documents at this time.
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procedural vehicle, MetaSense cannot successfully claim res
judicata as a basis for failure of Patel to state a claim.
Therefore, to the extent Defendant’s Motion is one for dismissal
on a theory of res judicata, it will be denied without prejudice
to renew as a motion for summary judgment at the appropriate
time.

V.

CONCLUSION
For the foregoing reasons, Plaintiff’s Motion will be

denied and Defendant’s Motion will be granted in part to the
extent it seeks to vacate the entry of default, but denied in
all other respects.

An appropriate order accompanies this

opinion.

Date:

February

5th , 2016

s/ Noel L. Hillman
NOEL L. HILLMAN, U.S.D.J.

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