ALLGOOD ENTERTAINMENT, INC. et al v. GRIDIRON VIDEO et al

Filing 54

LETTER-ORDER vacating the entry of default & terminating 46 Motion for Default Judgment; Telephone/Status Cnf. set for 2/24/12 @ 11:30 a.m.; Defts. shall answer or respond to Cmp. on or before 3/12/12; Corporate defts. shall obtain counsel on or before 3/12/12.. Signed by Magistrate Judge Michael A. Hammer on 2/6/12. (DD, )

UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
Honorable Michael A. Hammer
United States Magistrate Judge

Martin Luther King, Jr. Federal
Building & U.S. Courthouse
50 Walnut Street, Newark, NJ 07101
February 6, 2012
LETTER ORDER

RE:

AllGood Entertainment, Inc., et. al. v. Gridiron Video, et al.,
Civil Action No. 09-2406 (JLL)

Dear Litigants:
Presently before the Court is Plaintiffs’ motion for default judgment [ECF No. 46]. The
Honorable Jose L. Linares, United States District Judge, referred the motion to the Undersigned
for Report and Recommendation. For the reasons set forth below, the Court vacates the entry of
default, terminates the motion for default judgment, requires the defendants to answer or
otherwise respond to the Complaint on or before March 12, 2012, and requires the corporate
defendants to obtain counsel on or before March 12, 2012. The Court also schedules a telephone
status conference for February 24, 2012, at 11:30 a.m., which plaintiff will initiate.
Brief Factual Background
Plaintiffs AllGood Entertainment, Inc. and AllGood Sports, Inc. (collectively, “AllGood”)
are New Jersey companies. In late 2005 or early 2006, Patrick Allocco, their Chief Executive
Officer, decided that the plaintiffs should enter the professional sports market. (Compl. ¶¶ 3–4,
20–21, May 19, 2009, ECF No. 1.) AllGood began working with defendants Tim Brown, Locker
81 Inc., Lawrence Falk, and the Blackstone Group. (See, e.g., Am. Compl. ¶¶ 22, 24, 48–49.)
Defendants Brown and Falk are Texas residents, and Locker 81 is a Texas company. (Id. ¶¶
6–8.) In 2006, Allocco held a meeting with Brown and Falk in Dallas, Texas, where the parties
allegedly conceived of “Gridiron Video,” a DVD set of instructional videos starring notable
professional football players. (Id. ¶¶ 30–32.) Thereafter, Falk, Brown, and Blackstone allegedly
schemed to undermine investment in AllGood and misled AllGood in an effort to continue the
“Gridiron Video” project without AllGood. (See, e.g., id. ¶¶ 14–15, 56, 65, 67, 72.)
Procedural Background
On May 19, 2009, AllGood filed a Complaint against Falk, Brown, Locker 81,
Blackstone, and “Gridiron Video, Inc.” (Compl. ¶¶ 5–9.) As to the last defendant, the
Complaint states that “defendant Gridiron was and is a corporation duly organized and existing
1

under the laws of the State of Texas [need address].” (Compl. ¶ 5 (bracketed text in original).)
Blackstone was later dismissed pursuant to a stipulation. (See Order, Apr. 20, 2010, ECF No.
27.)
Defendant Falk and Brown are not lawyers, and have defended themselves pro se
throughout the case. Similarly, the defendant companies have not been represented by counsel in
this litigation.
In an application filed July 28, 2009, defendant Falk requested an extension to answer,
move, or otherwise reply to the Complaint. (Falk Extension Appl., filed July 28, 2009, ECF No.
5.) Falk represented that service of process had been effected but that he “[i]n no way desire[d]
to waive any jurisdictional issues the court may consider.” (Id.) In a cover letter and attached
certification, Falk further stated that he “d[id] not believe I am subject to New Jersey
jurisdiction.” (Falk Letter, filed July 28, 2009, ECF No. 5; Falk Certif. ¶ 4, filed July 28, 2009,
ECF No. 5.) In an application filed August 3, 2009, defendant Brown requested the same
extension to answer, move, or otherwise reply. (Brown Extension Appl., filed Aug. 3, 2009,
ECF No. 6.) Brown used the same language as Falk to state that he did not waive any
jurisdictional issues. (Id.)
On August 12, 2009, Falk made a “special appearance” objecting to personal jurisdiction
and included a supporting affidavit. (Falk Special Appearance, Aug. 12, 2009, ECF No. 10; Falk
Aff., dated Aug. 11, 2009, ECF No. 10.) In the alternative, Falk requested that the Court transfer
the case to Texas. (Falk Special Appearance at 2.) On August 18, 2009, Brown also made a
special appearance objecting to personal jurisdiction with a supporting affidavit and requested
the same alternative relief. (Brown Special Appearance, Aug. 18, 2009, ECF No. 12; Brown
Aff., dated Aug. 14, 2009, ECF No. 13.)
On October 1, 2009, the case was reassigned to a different district court judge. (Order
Reassigning Case, Oct. 1, 2009, ECF No. 21.) On March 15, 2010, the case was reassigned for a
second time to another district court judge. (Order Reassigning Case, Mar. 15, 2010, ECF No.
25.) On October 5, 2010, the case was reassigned for a third time to another district court judge.
(Order Reassigning Case, Oct. 5, 2010, ECF No. 28.)
On October 14, 2010, the Court issued a notice of call for dismissal pursuant to Local
Civil Rule 41.1. (Call for Dismissal, Oct. 14, 2010, ECF No. 29.) In response, AllGood filed a
certification and affidavit to demonstrate good cause why this matter should not be dismissed.
(Bordetsky Certif., Oct. 22, 2010, ECF No. 30; Allocco Aff., Oct. 22, 2010, ECF No. 31.)
AllGood represented that Falk and Brown did not properly appear, answer, or move to dismiss.
(Bordetsky Certif. ¶ 6, Oct. 22, 2010.) Specifically, Allgood’s local counsel made the following
assertion: the unadmitted partner of AllGood’s pro hac vice counsel had called the chambers of
the then-assigned district court judge and was told by a law clerk that the Court did not consider
the letters of Falk and Brown to be motions and that no opposition was necessary or required.
(Id. ¶ 7.) The law clerk further allegedly stated that the documents were not answers. (Id.)
2

Furthermore, the local counsel asserted that he had called the Clerk of the Court who confirmed
the same. (Id. ¶ 8.) AllGood also stated that there had been numerous but unsuccessful
settlement discussions with Falk, “who purported to speak on behalf of the other Defendants.”
(Id. ¶ 9) These discussions and preoccupation with other litigation were the bases for AllGood’s
delay. (Allocco Aff. ¶¶ 3–5; see also Bordetsky Certif. ¶¶ 9–10, Oct. 22, 2010.) Finally,
AllGood stated that it was preparing to move for default against the remaining defendants.
(Bordetsky Certif. ¶ 12, Oct. 22, 2010.)
Following AllGood’s submission, Falk filed letters dated October 29, 2010, and
November 16, 2010. In an October 29, 2010 letter copied to the Court, Falk referred AllGood’s
counsel to his special appearance concerning jurisdictional issues. (Falk Letter, dated Oct. 29,
2010, ECF No. 34.) In a letter dated November 16, 2010, Falk made certain factual assertions,
but stated that the “letter should in no way be considered an answer.” (Falk Letter, dated Nov.
16, 2010, ECF No. 39.)
On November 18, 2010, the Court issued an order directing AllGood to move for entry of
default by a certain date. (Order, Nov. 18, 2010, ECF No. 35.) On November 24, 2010, AllGood
moved for default judgment. (Mots. for Default J., Nov. 24, 2010, ECF Nos. 36–38.) On
February 3, 2011, the Court denied AllGood’s motion for failing to first obtain an entry of default
from the Clerk of the Court. (Order, Feb. 3, 2011, ECF No. 41.) On June 23, 2011, AllGood
requested an entry of default from the Clerk of the Court (Request for Entry of Default, June 23,
2011, ECF No. 42), which the Clerk entered against all the remaining defendants. (Entry of
Default, June 24, 2011, ECF No. 43.)
In an email copied to the Court and filed on July 1, 20011, Falk expressed his concern to
AllGood’s counsel that the Court had not addressed his request for a special appearance, and
asked counsel whether this was an oversight. (Falk Email, filed July 1, 2011, ECF No. 44.) In
addition, Falk added, “[p]ending the outcome of the special appearance I am prepared to answer
the complaint.” (Id.)
On August 23, 2011, the Court issued a letter order directing AllGood to move this action
by requesting default judgment or submitting an extension for the defendants to answer. (LetterOrder, Aug. 23, 2011, ECF No. 45.) On September 1, 2011, AllGood moved for default
judgment against all the remaining defendants. (Mot. for Default J., Sept. 1, 2011, ECF No. 46.)
In an attached certification and affidavit, AllGood added new factual allegations and legal
assertions regarding personal jurisdiction. (See Allocco Aff., Sept. 1, 2011, ECF No. 46;
Bordetsky Certif., Sept. 1, 2011, ECF No. 46.)
In a letter filed on September 27, 2011, Falk requested additional time to respond to the
motion for default judgment. (Falk Letter, dated Sept. 19, 2011, ECF No. 47.) On October 6,
2011, the Court held a telephone conference with AllGood’s counsel and Falk regarding Falk’s
request for an extension. The Court granted the extension and directed that Falk respond to the
motion for default judgment by November 3, 2011. (Order, Oct. 6, 2011, ECF No. 49.)
3

On November 10, 2011, Falk filed an Answer. (Falk’s Answer, filed Nov. 10, 2011,
dated Oct. 31, 2011, ECF No. 50.) On the same day, Falk filed notices of motion to dismiss the
Complaint and to join Blackstone’s motion to dismiss. (Notice of Mot. to Dismiss, filed Nov.
10, 2011, dated Oct. 31, 2011, ECF No. 51; Notice of Mot. to Join Mot. to Dismiss, filed Nov.
10, 2011, dated Oct. 31, 2011, ECF No. 52.) On November 21, 2011, AllGood filed a letter
requesting that the Court reject or strike Falk’s Answer as untimely and unsigned and that the
Court rule on the motion for default judgment. (Pls.’ Letter, Nov. 21, 2011, ECF No. 53.)
On November 29, 2011, the Honorable Jose L. Linares referred the motion for default
judgment to the Undersigned.
Entry of Default and Default Judgment
Under Federal Rule of Civil Procedure 55, the clerk must enter default against a party,
“[w]hen a party . . . has failed to plead or otherwise defend.” Fed. R. Civ. P. 55(a). Thereafter, a
party can move to convert that entry into a default judgment. Fed. R. Civ. P. 55(b); Sourcecorp
Inc. v. Croney, 412 F. App’x 455, 458 (3d Cir. 2011). Entries of default and default judgments
are generally disfavored, and courts should, in doubtful cases, set aside entries of default or
default judgments in order to allow cases to be decided on their merits. United States v.
$55,518.05 in U.S. Currency, 728 F.2d 192, 194 (3d Cir. 1984).
Under Rule 55(c), “[t]he court may set aside an entry of default for good cause.” Fed. R.
Civ. P. 55(c). A court’s decision to set aside an entry of default is primarily left to its own sound
discretion. See U.S. Currency, 728 F.2d at 194 (citing Tozer v. Charles A. Krause Milling Co.,
189 F.2d 242, 244 (3d Cir. 1951)). Also, “[t]here is a distinction between a default standing
alone and a default judgment,” and “[l]ess substantial grounds may be adequate for setting aside
a default than would be required for opening a judgment.” Feliciano v. Reliant Tooling Co.,
Ltd., 691 F.2d 653, 656–57 (3d Cir. 1982); accord Mettle v. First Union Nat’l Bank, 279 F. Supp.
2d 598, 601 (D.N.J. 2003). Normally, the Court considers three factors: (1) the prejudice to the
plaintiff if default is set aside, (2) the existence of a meritorious defense, and (3) whether the
defendant’s culpable misconduct caused the default. Hritz v. Woma Corp., 732 F.2d 1178, 1181
(1984). But in cases where default is improperly entered, the Court may set it aside without
consideration of these factors. Mettle, 279 F. Supp. 2d at 603 n.3 (setting aside default without
considering factors because default was void); accord Gold Kist, Inc. v. Laurinburg Oil Co., Inc.,
756 F.2d 14, 19 (3d Cir. 1985) (“[I]t is not necessary for us to resort to an analysis of those
factors in this case because they apply only when the default judgment was authorized and the
only question before the district court is whether to exercise its discretion to set aside the default.
Obviously, if the default judgment was improperly entered, the district court erred as a matter of
law in refusing to set it aside.”).
Lastly, a magistrate judge has the authority to set aside an entry of default, as it is not
dispositive. See L. Civ. R. 72.1(a)(1); Allyn Z. Lite, N.J. Federal Practice Rules, Comment. 3 to
Rule 72.1(a), 323 (2012 ed. 2011). Cf. Resolution Trust Co. v. Spagnoli, 811 F. Supp. 1005,
4

1007 n.1 (D.N.J. 1993) (noting without further comment that magistrate judge had previously
vacated defaults against defendants); Home Box Office, Inc. v. Tel-A-View Elecs., Corp., Civ.
No. 86-1491, 1986 WL 12768, at *1 (E.D. Pa. Nov. 7, 1986) (rejecting contention “that the
clerk’s entry of default is dispositive” and noting that “[a]n entry of default is not a default
judgment”).
Default Entered in Error Against Falk and Brown
Entry of default is appropriate when a party “has failed to plead or otherwise defend.”
Fed. R. Civ. P. 55(a). But a review of the record reveals that Falk and Brown have asserted that
this Court lacks personal jurisdiction since their very first submissions. In July 2009, Falk
requested additional time to answer, move, or respond and stated that he did not believe that
jurisdiction in New Jersey was proper. (See Falk Extension Appl., filed July 28, 2009; Falk
Letter, filed July 28, 2009; Falk Certif. ¶ 4, filed July 28, 2009.) In August 2009, Brown made a
similar request and assertion. (Brown App. For Extension, filed Aug. 3, 2009.) Later in August
2009, Falk and Brown made “special appearance[s]” objecting to personal jurisdiction and
including a supporting affidavit. (Falk Special Appearance, Aug. 12, 2009; Falk Aff., dated Aug.
11, 2009; Brown Special Appearance, Aug. 18, 2009; Brown Aff., dated Aug. 14, 2009.) In
October 2010, November 2010, and July 2011, Falk filed more letters with the Court concerning
his special appearance. (Falk Letter, dated Oct. 29, 2010; Falk Letter, dated Nov. 16, 2010; Falk
Email, filed July 1, 2011.)
Notwithstanding AllGood’s assertions, the Court never resolved Falk’s and Brown’s
challenges to personal jurisdiction. AllGood asserts that a judicial law clerk told AllGood’s nonadmitted New York counsel that no opposition was necessary or required because the Court did
not consider the letters of Falk and Brown to be motions or answers. (Bordetsky Certif. ¶¶
12–15, Sept. 1, 2011; see also Bordetsky Certif. ¶¶ 6–7, Oct. 22, 2010.) No order, however,
memorializes any action that the Court took on these letters, and thus the record indicates that the
Court has not yet addressed these assertions. Cf. Moco Invs., LLC v. United States, Civ. No. 064040, 2007 WL 2669326, at *1 (D.N.J. Sept. 5, 2007) (refusing to credit plaintiff’s assertion that
he received a phone call from law clerk regarding an adjournment request where there was no
request on the electronic docket and no signed order granting adjournment). Moreover,
AllGood’s assertion was and continues to be defective because the affiant (local counsel) did not
have personal knowledge of this phone call between the law clerk and the pro hac vice counsel’s
unadmitted partner. L. Civ. R. 7.2(a) (restricting affidavits to facts within the personal
knowledge of the affiant); see, e.g., Sunoco, Inc. (R & M) v. MX Wholesale Fuel Corp., 565 F.
Supp. 2d 572, 576–77 (D.N.J. 2008) (striking attorney certification in part for not containing
facts within the personal knowledge of the affiant).
Furthermore, Falk’s and Brown’s challenges to personal jurisdiction are technically
deficient, but this record is insufficient to conclude that they waived this defense. Normally,
“[t]he threshold defense of lack of personal jurisdiction is waived if it is not included in a
preliminary motion under Rule 12 as required by Rule 12(g), or not included in a responsive
pleading or an amendment as of right to that pleading under Rule 15(a).” Newman v. Axiom
5

Worldwide, Civ. No. 06-5564, 2010 WL 2265227, at *1 (D.N.J. June 2, 2010) (citing Fed. R.
Civ. P. 12(h)(1)). Here, Falk and Brown raised their jurisdictional defense either as an
application or as a “special appearance under Rule 12(b)2 [sic] of the Federal Rules of Civil
Procedure.” (See, e.g., Falk Special Appearance, Aug. 12, 2009; Brown Special Appearance,
Aug. 18, 2009.) These applications, however, are not properly filed motions, see L. Civ. R. 7.1,
and “Rule 12 has abolished for the federal courts the age-old distinction between general and
special appearances.” Neifeld v. Steinberg, 438 F.2d 423, 429 (3d Cir. 1971) (quoting Orange
Theatre Corp. v. Rayherstz Amusement Corp., 139 F.2d 871, 874 (3d Cir. 1944), cert. denied 322
U.S. 740) (1944)).1
While Falk and Brown sought to contest personal jurisdiction incorrectly, the Court
cannot find that their actions waived those defenses. Under Rule 12, a defendant “is no longer
required at the door of the federal courthouse to intone that ancient abracadabra of the law, de
bene esse, in order by its magic power to enable himself to remain outside even while he steps
within.” Orange Theatre, 139 F.2d at 874, accord Neifeld, 438 F.2d at 429 . Also, the Court may
be more lenient to pro se litigants when the circumstances permit. See Huertas v. U.S. Dep’t of
Educ., Civ. No. 08-3959, 2010 WL 2771767, at *5 (D.N.J. July 12, 2010) (collecting cases). To
find that these out-of-state pro se litigants waived their defense of personal jurisdiction by
incorrectly using an antedated procedure would employ a standard that the Third Circuit Court of
Appeals rejected in Orange Theatre. On this record, what is important is that these defendants
meant to contest personal jurisdiction under Rule 12 and did so as early as July 28, 2009 and
thereafter.
Thus, this record indicates that Falk and Brown attempted to “otherwise defend,” albeit
defectively. Fed. R. Civ. P. 55(a). Falk and Brown did not challenge personal jurisdiction by
way of formal motion, and therefore the Court has not had occasion yet to address that issue. But
neither has the Court yet denied, terminated, or otherwise resolved their challenges to personal
jurisdiction. The Court must nonetheless conclude from the record that Falk and Brown,
however imperfectly, have preserved the challenge to personal jurisdiction. Therefore, the Court
cannot find that entry of default was proper as to Falk and Brown. Accordingly, the Court finds
that this constitutes good cause to vacate the entry of default as well as necessary to correct a
clerical mistake on the record. See Fed. R. Civ. P. 55(c); see also Fed R. Civ. P. 60(a) (“The
court may correct a clerical mistake or a mistake arising from oversight or omission whenever
1

Falk and Brown, who are Texas-residents and are proceeding pro se, may have had
Texas civil procedure in mind, which still permits special appearances to contest personal
jurisdiction. See Tex. R. Civ. P. 120a(1) (“[A] special appearance may be made by any party
either in person or by attorney for the purpose of objecting to the jurisdiction of the court over the
person or property of the defendant on the ground that such party or property is not amenable to
process issued by the courts of this State.”). Incidentally, New Jersey has eliminated special
appearances. See N.J. Ct. R. 4:6-2 (“Special appearances are superceded”). Regardless, the
parties should take note that, in federal court, the Federal Rules of Civil Procedure govern the
manner in which litigants contest personal jurisdiction. Neifeld, 438 F.2d at 426.
6

one is found in a judgment, order, or other part of the record. The court may do so on motion or
on its own, with or without notice.”).
Default Entered in Error Against Gridiron Video
The Court also finds that default was improperly entered against Gridiron Video. In its
Complaint, AllGood alleges that “defendant Gridiron was and is a corporation duly organized
and existing under the laws of the State of Texas [need address].” (Compl. ¶ 5 (bracketed text
in original) (emphasis added).) Also, throughout the factual narrative of the Complaint, Gridiron
Video is generally described as a project, not a company. (See id. ¶¶ 11–84.)2 Not only does the
Complaint lack an address for defendant Gridiron Video, but the Complaint provides no
indication as to who its officers are. These facts are important because when AllGood served
Gridiron, it simply served Falk at his address at the very same time. (See Aff. of Serv. on Falk,
filed Sept. 18, 2009, ECF No. 17 (noting service at July 8, 2009, at 7:16 p.m.); Aff. of Serv. on
Gridiron, filed Sept. 18, 2009, ECF No. 16 (same).) These same affidavits were used to support
the entry of default. (See Bordetsky Decl. Exs. A, D, June 23, 2011, ECF No. 42.)
The Court fails to understand how AllGood has complied with service under Rule 4 of
the Federal Rules of Civil Procedure. First, AllGood apparently does not know where defendant
Gridiron Video is located as AllGood merely wrote “[need address]” to describe Gridiron
Video’s address. (Compl. ¶ 5.) Moreover, nothing in the Complaint indicates that Falk is an
“officer, a managing or general agent, or any other agent authorized by appointment or by law to
receive service of process.” Fed. R. Civ. P. 4(h)(1)(B). In contrast, AllGood alleges that Brown
is the CEO of Locker 81. (Compl. ¶ 23.)
Relatedly, Falk has repeatedly asserted that no company called Gridiron Video ever
existed. (Falk Letter, dated Nov. 16, 2010, 2010 (“They was never, nor has any such company
existed called; [sic] Gridiron Video Incorporated . . . .”); Falk Email, filed July 1, 2011
(requesting that AllGood’s counsel “address future correspondence to me personally rather than
Gridiron Video, In., to ensure proper delivery of correspondence as there is no such entity that I
am aware of.”).) Importantly, Falk cannot represent Gridiron Video, because a corporation
cannot defend itself either pro se or by a representative or agent of the corporation; a corporation
must be represented by counsel. Simbraw, Inc. v. United States, 367 F.2d 373, 373 (3d Cir.
1966); accord American Corporate Soc’y v. Valley Forge Ins. Co., 424 F. App’x 86, 87 n.1 (3d
Cir. 2011). But to the extent that AllGood views Falk and Gridiron Video as having the same
identity, any judgment that the Court grants as to Gridiron would be imposed on Falk.
2

But see Compl. ¶ 63 (“However, upon information and belief, Blackstone, Brown, Falk
and the Players raised the capital for Gridiron Video and their company, defendant Gridiron.”); ¶
80 (“Upon information and belief, to date, Blackstone has partially or fully funded Gridiron
Video for Gridiron, Brown Falk and the Players.”); ¶ 83 (“Hence, Brown and Falk wrongfully
and intentionally misdirected all of the Players to their own company, defendant Gridiron, and
directly interfered with the contractual relationships AllGood had with the Players.”)
7

Accordingly, given the deficiencies in AllGood’s Complaint, the doubts over proper
service, and the disfavor of entries of default (let alone default judgment), the Court sets aside
default against defendant Gridiron Video, Inc. See Mettle, 279 F. Supp. 2d at 601–03 (setting
aside default because of insufficient service of process); accord Grand Entm’t Group, Ltd. v. Star
Media Sales, Inc., 988 F.2d 476, 493 (3d Cir. 1993) (setting aside default judgment because of
improper service).
Default Vacated Against Locker 81, Inc.
The Court also vacates the default against the one remaining defendant, Locker 81, Inc.
Like defendant Gridiron Video, Locker 81 is a corporation and therefore must be represented by
counsel. Simbraw, 367 F.2d 373. No assertion of a lack of personal jurisdiction has been made
on behalf of Locker 81. Nonetheless, the open question of the existence of personal jurisdiction
over Brown leaves similar, if not the same, questions as to defendant Locker 81.
AllGood’s Complaint is unclear as to what extent Brown acted as an individual and to
what extent he acted as a corporate officer. AllGood ascribes some responsibilities and liabilities
solely with Brown as an individual, and not as CEO of Locker. For example, AllGood alleges
that Brown “was hired to be the high profile face of the project and to solicit his friends and the
biggest names in the NFL.” (Compl. ¶ 13.) AllGood allegedly paid Brown a $50,0000 signing
bonus, which AllGood seeks to recover exclusively from Brown, and not from Locker 81.
(Compl. ¶¶ 186–189.) Similarly, AllGood alleges that “all defendants” committed fraud, but
then inconsistently specifies acts committed by every defendant except Locker 81. (See Compl.
¶¶ 85–92.) Thus, AllGood apparently intends to direct these claims against Brown as an
individual separate from any corporate liability that attaches to Locker 81.
AllGood ascribes other conduct and liability, however, to both Brown and Locker 81.
For example, AllGood alleges that both Brown and Locker 81 breached a marketing agreement
and tortiously interfered with contracts with players whom Brown had solicited for AllGood.
(Compl. ¶¶ 113–122, 142–150.) The same goes for claims of breach of partnership and joint
venture agreements, breach of implied covenant of good faith, breach of fiduciary duty,
promissory estoppel, unfair competition, and misappropriation of trade secrets. (Compl. ¶¶
107–112, 123–141, 151–165.) Importantly, the actions of Locker 81 are alleged to have occurred
only through Brown; no other agent of Locker 81 is alleged to have acted on its behalf.
Normally, “[e]ach defendant’s contacts with the forum State must be assessed
individually.” Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 781 n.13 (1984). Yet, it is well
known that “a corporation can act only through its officers, directors and other agents.”
Ramsbottom v. First Pa. Bank, N.A., 718 F. Supp. 405, 412 (D.N.J. 1989). Personal jurisdiction
over Locker 81 can only exist if Brown’s acts toward New Jersey are sufficient to subject Locker
81 to the Court’s jurisdiction. Failure to find personal jurisdiction over Brown may mean that
the Court cannot find personal jurisdiction over Locker 81 either. The same is not necessarily
true for Brown, since he may be subject to personal jurisdiction on those claims that solely apply
8

to him as an individual. Because Locker 81’s acts toward New Jersey are entirely bound together
with Brown’s acts, it is entirely possible that Brown’s challenge to personal jurisdiction will
undermine (or clarify) the Court’s jurisdiction over Locker 81.
Accordingly, a lack of personal jurisdiction over Brown would constitute a meritorious
defense for Locker 81, and eventually the Court will have to consider whether personal
jurisdiction over Locker 81 exists. A court cannot enter default judgment without personal
jurisdiction over a defendant; such a judgment is void. HICA Educ. Loan Corp. v. Lepera, Civ.
No. 11-960, 2011 WL 3515911, at *2 (D.N.J. Aug. 10, 2011). Before entering default judgment,
the court has “an affirmative duty to look into its jurisdiction both over the subject matter and the
parties.” Bank of Am., N.A. v. Hewitt, Civ. No. 07-4536, 2008 WL 4852912, at *2 (D.N.J. Nov.
7, 2008) (quoting Williams v. Life Sav. & Loan, 802 F.2d 1200, 1203 (10th Cir. 1986)) (internal
quotation marks omitted); accord Sinoying Logistics Pte Ltd. v. Yi Da Xin Trading Corp., 619
F.3d 207, 213 n.7 (2d Cir. 2010) (collecting cases and “agree[ing] with our sister circuits that
before a court grants a motion for default judgment, it may first assure itself that it has personal
jurisdiction over the defendant”). A party may waive personal jurisdiction, but when a court
inquires sua sponte into personal jurisdiction on a motion for default judgment, a court is
determining whether it has the power to enter default judgment. D’Onofrio v. Il Mattino, 430 F.
Supp. 2d 431, 437–38 (E.D. Pa. 2006) (citing Williams v. Life Sav. & Loan, 802 F.2d 1200,
1203 (10th Cir. 1986)).3
As the Third Circuit Court of Appeals has stated
Between the extremes of repeated contumacious conduct and innocent procedural
error are the manifold instances of neglect and inadvertence that require trial
courts to weigh the equities of the situation and the need for the efficacious
resolution of controversies. The exercise of such judgment does not lend itself to
a rigid formula or to a per se rule.
Hritz, 732 F.2d at 1181. Here, vacation of default will clarify the Court’s jurisdiction over the
remaining defendants. Also, it will permit Brown, Locker 81’s CEO, to either obtain counsel for
his company or choose to subject it to default. See O’Brien v. Biobanc USA, Civ. No. 09-2289,
2011 WL 2532465, at *2 (D.N.J. June 23, 2011) (noting that corporate defendant was given
specific deadline to obtain counsel before entry of default).
3

Notably, AllGood appears to implicitly recognize the need to establish personal
jurisdiction here as the Allocco affidavit supporting the motion for default judgment adds factual
detail regarding personal jurisdiction that is wholly absent from the Complaint. (Allocco Aff. ¶
9, Sept. 1, 2011 (stating that Brown and Falk came to New Jersey to negotiate the Brown/Locker
81 agreement, and that they made follow-up calls to New Jersey.) Also, AllGood’s counsel
purports to add a legal basis as well. Counsel states inexplicably and without elaboration that
personal jurisdiction is based on “FRCP §2.4(3)” despite the fact that no such provision exitss in
the Federal Rules of Civil Procedure. (Bordetsky Certif. ¶ 20, Sept. 1, 2011.)
9

Accordingly, the Court vacates the entry of default to allow the parties to clarify the
questions raised by the record.
Conclusion
For the reasons set forth above, the Court vacates the entry of default for having been
improperly entered and terminates [ECF No. 46] the motion for default judgment.
Additionally, the Court imposes the following deadlines:
1.

There will be a telephone status conference before the Undersigned on February
24, 2012, at 11:30 a.m. Plaintiff will kindly initiate the conference.

2.

On or before March 12, 2012, defendants shall answer or otherwise respond to
the Complaint. Any motion to dismiss for lack of personal jurisdiction or
otherwise shall be filed in compliance with Local Civil Rule 7.1 of the Local
Rules for the United States District Court for the District of New Jersey.

3.

On or before March 12, 2012, any corporate defendants shall obtain counsel, who
shall file a notice of appearance in this action.

So Ordered,
s/Michael A. Hammer
UNITED STATES MAGISTRATE JUDGE

10