NORTHSTAR LITIGATION TECHNOLOGIES, LLC v. TYSON FOODS, INC.

Filing 7

OPINION. Signed by Judge William H. Walls on 1/9/12. (jd, )

NOT FOR PUBLICATION

UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY

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NORTHSTAR LITIGATION
TECHNOLOGIES, LLC,
Plaintiff,
v.
TYSON FOODS, INC.,
Defendant.

OPINION
Civ. No. 11-5856 (WHW)

Walls, Senior District Judge
Defendant Tyson Foods, Inc. moves to set aside entry of default entered against it on
November 8, 2011. Pursuant to Rule 78 of the Federal Rules of Civil Procedure, the motion is
decided without oral argument. Defendant’s Motion to Set Aside/Vacate Entry of Default is
granted.
FACTUAL AND PROCEDURAL BACKGROUND
This case arises out of litigation support services that Plaintiff Northstar Litigation
Technologies, LLC, a company in Roseland, New Jersey, provided to Defendant Tyson Foods
Inc., a company in Springdale, Arkansas. Compl. ¶ 1. Defendant allegedly accepted and agreed
to pay for Plaintiff’s services provided from February 2010 to May 2010. Id. ¶¶ 2-3. Plaintiff
alleges that it performed all work requested by Defendant. Id. ¶ 9. Defendant made three
payments to Plaintiff for services rendered. Id. ¶¶ 5-8. On May 20, 2010, Plaintiff submitted
invoice #101066 to Defendant in the amount of $300,906.23. Id. ¶ 7. Plaintiff alleges that on

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January 6, 2011, Defendant paid Plaintiff $95,000.00, leaving an outstanding balance of
$195,906.23, which Plaintiff alleges that Defendant refuses to pay despite several attempts by
Plaintiff to collect. Id. ¶¶ 8-9.
On August 30, 2011, Plaintiff filed suit against Defendant in the Superior Court of New
Jersey, Law Division, Essex County, alleging breach of contract. Id. at 1, 3. Defendant received
and signed for the Complaint on September 13, 2011. Request to Enter Default, Ex. B. On
October 7, 2011, Defendant removed the case to this Court pursuant to 28 U.S.C. §§ 1331 and
1441, et. seq. Not. of Removal 1. On November 8, 2011, Plaintiff requested that the Clerk enter
default against Defendant for failing to appear or otherwise respond to the Complaint pursuant to
Fed. R. Civ. P. 55(a). Request to Enter Default; Aff. of David M. Freeman ¶ 4. The Clerk
entered default against Defendant on November 9, 2011. Defendant on November 14, 2011,
filed a Motion to Set Aside Entry of Default pursuant to Fed. R. Civ. P. 55(c). Plaintiff’s
attorney, David M. Freeman, has consented to Defendant’s application to vacate default and has
not otherwise responded to Defendant’s motion. Mot. to Set Aside Entry of Default ¶ 15.
STANDARD OF REVIEW
Rule 55 of the Federal Rules of Civil Procedure allows a court to set aside an entry of
default for “good cause.” Fed. R. Civ. P. 55(c). The decision to grant a motion to set aside
default is left to the discretion of the district court. Bailey v. United Airlines, 279 F.3d 194, 204
(3d Cir. 2002). In reviewing such a motion, the court must consider: “(1) whether lifting the
default would prejudice the plaintiff; (2) whether the defendant has a prima facie meritorious
defense; (3) whether the defaulting defendant’s conduct is excusable or culpable; and (4) the
effectiveness of alternative sanctions.” Emasco Ins. Co. v. Sambrick, 834 F.2d 71, 73 (3d Cir.
1987). The Third Circuit disfavors defaults, and prefers “doubtful cases to be resolved in favor

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of the party moving to set aside the default . . . so that cases may be decided on their merits.”
United States v. $55,518.05 in U.S. Currency, 728 F.2d 192, 194-95 (3d Cir. 1984) (quotations
omitted).
DISCUSSION
Good cause exists to set aside the entry of default for Defendant. First, lifting the default
will not prejudice the plaintiff. See Emasco Ins. Co., 834 F.2d at 73. Sufficient prejudice
includes hindrance of a plaintiff’s ability to pursue its claim or loss of relevant evidence. Id. at
74. Pursuant to Fed. R. Civ. P. 81(c)(2)(c), Defendant had up to “7 days after the notice of
removal [was] filed1,” or until October 14, 2011, to answer or otherwise respond to the
complaint. By the time of Defendant’s November 14, 2011 motion to vacate entry of default, its
answer was one month late. This delay is not long enough to have hindered Plaintiff’s ability to
prosecute or have led to a loss of evidence. See Foy v. Dicks, 146 F.R.D. 113, 115-118 (E.D. Pa.
1993) (vacating entry of default where defendant filed answer over seven weeks after served
with complaint). That Plaintiff does not oppose vacating the entry of default further supports
that lifting the default will not prejudice Plaintiff. See Mot to Vacate Entry of Default ¶ 16.
Second, Defendant has a prima facie meritorious defense to this action. A meritorious
defense is one that, “if established on trial, would constitute a complete defense to the action.”
U.S. v. $55,518.05 in U.S. Currency, 728 F.3d 192, 195 (3d Cir. 1984). In defense to Plaintiff’s
allegation of breach of contract and unjust enrichment, Defendant argues that it “is not in privity

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Fed. R. Civ. P. 81(c)(2) provides that:
“A defendant who did not answer before removal must answer or present other defenses or objections
under these rules within the longest of these periods:
(A) 21 days after receiving – through service or otherwise – a copy of the initial pleading stating
the claim for relief;
(B) 21 days after being served with the summons for an initial pleading on file at the time of
service; or
(C) 7 days after the notice of removal is filed

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to the cont[r]act with the Plaintiff” and that, “if [Defendant] is liable under the contract, the
amount sought by Plaintiff is three times as much as the estimate quoted to them.” Mot. to Set
Aside Entry of Default ¶ 12. Defendant has set forth specific facts “beyond simple denials or
conclusory statements” from which the Court can determine the basis for validity of its defense.
$55,518.05 in U.S. Currency, 728 F.3d at 195.
Third, Defendant’s default is not the result of culpable conduct. Culpable conduct in the
context of Rule 55(c) must constitute “willfulness” or “bad faith,” rather than “mere negligence.”
Hritz v. Woma Corp., 732 F.2d 1178, 1182-83 (3d Cir. 1984). Defendant’s default here appears
to be due to negligence on the part of its attorney, who asserts that he “did not intentionally,
willfully, or recklessly fail to file a response to Plaintiff’s complaint.” See Mot. to Set Aside
Entry of Default ¶ 13. Defendant’s counsel asserts that he has prepared a response which is
ready to be filed as soon as the entry of default is vacated. Id.
Fourth, alternative sanctions would not be effective here. Plaintiff has consented to
vacating the entry of default and all other factors weigh in favor of vacating the default.
Alternative sanctions, such as imposing a monetary sanction on Defendant to compensate
Plaintiff for any effort in opposing Defendant’s motion, are not appropriate.
CONCLUSION
Defendant’s Motion to Set Aside/Vacate Entry of Default is granted.

s/ William H. Walls
United States Senior District Judge

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