J&J SPORTS PRODUCTIONS, INC. v. SANTILLAN, et al
Filing
16
MEMORANDUM OPINION AND ORDER signed by MAG/JUDGE L. PATRICK AULD on 7/11/2012; that Defendant Lucia Santillan's Motion for Relief from the Entry of Default is GRANTED. Defendant Santillan shall answer or otherwise respond to the Complaint by July 18, 2012. (Sheets, Jamie)
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF NORTH CAROLINA
J & J SPORTS PRODUCTIONS, INC., )
)
Plaintiff,
)
)
v.
)
)
LUCIA SANTILLAN, INDIVIDUALLY
)
and d/b/a LA REGIA LATINA
)
MEXICAN RESTAURANT; and LA
)
REGIA CORP., a business entity )
d/b/a LA REGIA LATINA MEXICAN
)
RESTAURANT,
)
)
Defendants.
)
1:11CV1141
MEMORANDUM OPINION AND ORDER
The instant matter comes before the undersigned United States
Magistrate Judge on Defendant Lucia Santillan’s Motion for Relief
from the Entry of Default (Docket Entry 13).
dated May 25, 2012.)
(See Docket Entry
For the reasons that follow, the instant
Motion will be granted.1
BACKGROUND
Plaintiff,
a
corporation
based
in
Campbell,
California,
brought the instant action against Lucia Santillan, individually
1
The entry of default (and thus the decision to set aside
or to leave in effect such an entry) constitutes a pretrial matter
that does not dispose of any claim or defense; as a result, courts
have treated motions of this sort as subject to disposition by a
magistrate judge under 28 U.S.C. § 636(b)(1)(A). See, e.g., Bailey
v. United Airlines, 279 F.3d 194, 204 (3d Cir. 2002); L & M Cos.,
Inc. v. Biggers III Produce, Inc., No. 3:08CV309-RJC-DCK, 2010 WL
1439411, at *8 & n.3 (W.D.N.C. Apr. 9, 2010) (unpublished). Under
these circumstances, the undersigned Magistrate Judge will enter an
order rather than a recommendation.
and doing business as La Regia Latina Mexican Restaurant, a
commercial establishment located in Durham, North Carolina, as well
as the corporate owner of said commercial establishment.
Entry 1, ¶¶ 5-7.)
(Docket
According to the Complaint, Plaintiff had
exclusive nationwide distribution rights to the program The Event:
Manny Pacquiao v. Joshua Clottey, WBO Welterweight Championship
Fight Program (“the Program”), airing on March 13, 2010.
¶ 9.)
the
(Id.
The Complaint further alleges that Defendants intercepted
Program
authorization
and
exhibited
from
it
Plaintiff.
at
their
(Id.
¶
establishment
12.)
Based
without
on
these
allegations, the Complaint seeks relief under 47 U.S.C. §§ 553 and
605, as well as for conversion under North Carolina law.
(See
id. ¶¶ 8-25.)
On January 24, 2012, Plaintiff filed an executed Proof of
Service of the Summons, in which a private process server affirmed
that she “personally served the summons” on Lucia Santillan at 8:00
PM on January 18, 2012.
(Docket Entry 5.)
On March 18, 2012,
Plaintiff filed a Motion for Entry of Default (Docket Entry 8) “on
the grounds that [Lucia Santillan and La Regia Corp.] [have] failed
to appear or otherwise respond to the Summons and Complaint within
the time prescribed by the Federal Rules of Civil Procedure” (id.
at 1).
The Clerk of Court entered default against Defendants on
March 19, 2012.
(Docket Entry 9.)
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On April 16, 2012, Ms. Santillan filed the instant Motion to
set aside the default.
(Docket Entry 13.)
responded in opposition.
Plaintiff timely
(Docket Entry 15.)
DISCUSSION
The Federal Rules of Civil Procedure provide that “[t]he court
may set aside an entry of default for good cause . . . .”
Civ. P. 55(c).
Circuit
has
Fed. R.
The United States Court of Appeals for the Fourth
set
forth
the
relevant
factors
to
make
this
determination as follows:
When deciding whether to set aside an entry of default,
a district court should consider [1] whether the moving
party has a meritorious defense, [2] whether it acts with
reasonable promptness, [3] the personal responsibility of
the defaulting party, [4] the prejudice to the party, [5]
whether there is a history of dilatory action, and [6]
the availability of sanctions less drastic.
Payne v. Brake, 439 F.3d 198, 204-05 (4th Cir. 2006).
The Court
must liberally construe Rule 55(c) “to provide relief from the
onerous consequences of defaults and default judgments[,]” Lolatchy
v. Arthur Murray, Inc., 816 F.2d 951, 954 (4th Cir. 1987) (internal
quotation
marks
omitted),
because
the
Fourth
Circuit
has
“repeatedly expressed a strong preference that, as a general
matter, defaults be avoided and that claims and defenses be
disposed of on their merits[,]” Colleton Prep. Acad., Inc. v.
Hoover Universal, Inc., 616 F.3d 413, 417 (4th Cir. 2010).
-3-
A.
Meritorious Defense
“A meritorious defense requires a proffer of evidence which
would permit a finding for the defaulting party . . . .”
Augusta
Fiberglass Coatings, Inc. v. Fodor Contracting Corp., 843 F.2d 808,
812 (4th Cir. 1988); see also United States v. Moradi, 673 F.2d
725, 727 (4th Cir. 1982) (“[A]ll that is necessary to establish the
existence of a ‘meritorious defense’ is a presentation or proffer
of evidence, which if believed would permit either the Court or the
jury to find for the defaulting party.”); Maryland Nat’l Bank v.
M/V Tanicorp I, 796 F. Supp. 188, 190 (D. Md. 1992) (“The mere
assertion of a meritorious defense is not enough, Defendant must
state the underlying facts to support the defense.”).
Ms. Santillan claims she has “strong, meritorious defenses to
any and all claims stated in Plaintiff’s Complaint . . . .”
(Docket Entry 14 at 4.)
She asserts that she “rarely spent much
time at the [commercial establishment in which the unauthorized
publication allegedly occurred,] . . . [she] was not even at the
[establishment] at the time of the alleged unlawful publication
. . . [and] [i]f the Program was unlawfully publicized, it would
have been without Santillan’s knowledge or approval.”
(Id. at 3.)
As a result, she states that “Plaintiff could only prevail on its
claim against her if it were to successfully pierce the corporate
veil of La Regia.”
(Id. at 4.)
Plaintiff, on the other hand,
argues that “[t]he fact that [Ms. Santillan] may not have been
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physically present or that she did not personally approve the
interception of the Program are [sic] not, in and of themselves,
meritorious defenses.”
(Docket Entry 15 at 6.)
An individual defendant who has “the right and ability to
supervise the violations and a strong financial interest in the
activity” may be liable under §§ 553 and 605. Joe Hand Promotions,
Inc. v. Angry Ales, Inc., Civil Case No. 3:06cv73, 2007 WL 3226451,
at *4 (W.D.N.C. Oct. 29, 2007) (unpublished) (citing J & J Sports
Prods., Inc. v. Benson, No. CV-06-119 (CPS), 2007 WL 951872, at *7
(E.D.N.Y. Mar. 27, 2007) (unpublished)).
However, courts have
noted that, in order to show individual liability, “[a]llegations
of ownership of the establishment, without more, are insufficient
to establish personal liability under this section.”
J & J Sports
Prods., Inc. v. Dougherty, Civil Action No. 12-cv-1255-JD, 2012 WL
2094077, at *2 (E.D. Pa. June 11, 2012) (unpublished); see also J
& J Sports Prods., Inc. v. MayrealII, LLC, __ F. Supp. 2d __, __,
2012 WL 346649, at *5 (D. Md. Feb. 1, 2012) (finding no individual
liability where plaintiff alleged, “without distinguishing between
the
individual
defendants
and
[the
establishment],
that
‘[d]efendants and/or their agents, servants, workmen or employees
did unlawfully publish, divulge and exhibit the Program,’ and that
the violation ‘by each of the Defendants [was] done willfully and
for purposes of direct or indirect commercial advantage or private
financial gain’”); J & J Sports Prods., Inc. v. Centro Celvesera La
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Zaona, LLC, No. 5:11-CV-00069-BR, 2011 WL 5191576, at *3 (E.D.N.C.
Nov. 1, 2011) (unpublished) (rejecting individual liability under
these circumstances: “The only allegation in the complaint that
pertains to [the defendant] individually is the allegation of his
being the principal of the corporate defendant, which defendants
admit.
conduct
No allegation concerns his participation in the offending
or
obtaining
any
direct
financial
benefit
from
that
only
that
conduct.”).
Plaintiff’s
Complaint
in
this
case
alleges
“defendant, Lucia Santillan, is an owner, and/or operator, and/or
licensee, and/or permitee [sic], and/or person in charge, and/or an
individual with dominion, control, oversight and management of the
commercial establishment doing business as La Regia Latina Mexican
Restaurant . . .,” that “each and every of the above named
defendants and/or their agents, servants, workmen or employees did
unlawfully publish, divulge and exhibit the Program[,]” and that
such
“unauthorized
interception,
publication,
exhibition
and
divulgence by each of the defendants were done willfully and for
purposes of direct or indirect commercial advantage or private
financial gain.”
(Docket Entry 1, ¶¶ 6, 12.)
Although “a division of authority” appears to exist as to the
outer limits of individual liability, MayrealII, LLC, __ F. Supp.
2d at __, 2012 WL 346649, at *4 (collecting cases), at this stage,
Ms. Santillan’s proffer suffices to establish that “either the
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Court or the jury [could] find for the defaulting party,” Moradi,
673 F.2d at 727.
The first factor thus weighs in favor of setting
aside the Clerk’s entry of default.
B.
Reasonable Promptness
“Whether a party has taken ‘reasonably prompt’ action, of
course, must be gauged in light of the facts and circumstances of
each occasion . . . .”
Id.
Ms. Santillan filed her motion to set
aside entry of default on April 16, 2012, approximately three
months after service of the Complaint and 28 days after the Clerk
entered a default.
(See Docket Entries 5, 9, 13.)2
Other courts
in this Circuit have weighed this factor in favor of the defaulting
party where the defaulting party waited longer to move to set aside
the default.
See, e.g., Vick v. Wong, 263 F.R.D. 325, 330 (E.D.
Va. 2009) (finding that reasonable promptness factor weighed in
favor of setting aside default where moving party did not respond
for more than two months after clerk entered default, but did
respond a few weeks after plaintiff filed motion for entry of
default judgment); Wainwright’s Vacations, LLC v. Pan Am. Airways
2
Ms. Santillan claims she “was never served a copy of the
Summons in this action[,]” and therefore was “unaware that there
was a deadline to file a formal response to Plaintiff’s Complaint.”
(Docket Entry 14 at 3; see also Docket Entry 14-1, ¶¶ 2-6; Docket
Entry 14-3, ¶ 3.)
She states that she “did not discover the
deadline until she received the motion for entry of default and the
order thereon. As such, there is sufficient good cause for the
Court to grant relief from such entry of default.” (Docket Entry
14 at 3.) In light of the Court’s treatment of this factor, no
need exists to consider Ms. Santillan’s foregoing argument in this
context.
-7-
Corp., 130 F. Supp. 2d 712, 718 (D. Md. 2001) (concluding that
moving party acted with reasonable promptness by making motion to
vacate default slightly more than a month after entry of default).
Under these circumstances, the second factor supports setting
aside the entry of default.
C.
“[J]ustice
also
Personal Responsibility
demands
that
a
blameless
party
not
be
disadvantaged by the errors or neglect of his attorney which cause
a final, involuntary termination of proceedings.” Moradi, 673 F.2d
at 728.
The Fourth Circuit has explained the significance of this
factor as follows:
This focus on the source of the default represents an
equitable balance between our preference for trials on
the merits and the judicial system’s need for finality
and efficiency in litigation.
When the party is
blameless and the attorney is at fault, the former
interests control and a default judgment should
ordinarily be set aside. When the party is at fault, the
latter interests dominate . . . .
Augusta Fiberglass Coatings, 843 F.2d at 811.
Ms. Santillan contends that she “was never served a copy of
the Summons in this action” and therefore “was never informed that
there was a pending deadline.”
Ms.
Santillan
admits
that
(Docket Entry 14 at 3.)
she
did
receive
“a
However,
letter
Plaintiff’s counsel and a copy of Plaintiff’s Complaint.”
She did not include a copy of the “letter” with her Motion.
Docket Entries 14, 14-1, 14-2, 14-3.)
from
(Id.)
(See
Plaintiff argues that “the
‘letter’ to which [Ms. Santillan] refers is actually the Summons
-8-
(which provides [Plaintiff’s attorney’s] name and address on the
first page as counsel for Plaintiff).”
(emphasis in original).)
(Docket Entry 15 at 5
The process server averred that she
delivered a copy of the Complaint and the Summons to Ms. Santillan
on January 18, 2012.
(Docket Entry 15-2, ¶ 4; see also Docket
Entry 5 at 1.)
The Proof of Service indicating the process server served the
Summons on Ms. Santillan (Docket Entry 5), in addition to the
process server’s affidavit averring the same (Docket Entry 15-2,
¶ 4), establish a prima facie showing of proper service. See Blair
v. City of Worcester, 522 F.3d 105, 111 (1st Cir. 2008) (“A return
of service generally serves as prima facie evidence that service
was validly performed.”); Trademark Remodeling, Inc. v. Rhines, No.
PWG-11-1733,
2012
WL
1123875,
at
*6
(D.
Md.
Mar.
30,
2012)
(unpublished) (“Generally, the filing of a proper proof of service
is prima facie evidence of valid service of process.” (internal
citations omitted)).
The affidavits of Ms. Santillan and her son
(Docket Entries 14-1, 14-3), absent a copy of the alleged “letter
from
Plaintiff’s
counsel”
(Docket
Entry
14
at
3),
do
not
unequivocally rebut the proof of valid service, particularly in
light of Plaintiff’s claim that the Summons included Plaintiff’s
attorney’s name and address on the first page (Docket Entry 15 at
5; Docket Entry 15-1, ¶ 4).
-9-
Even if Ms. Santillan did not in fact receive a copy of the
Summons, she did receive a copy of the Complaint (Docket Entry 14
at 3), yet apparently did not contact an attorney at that point
(see id.).
The docket shows that Ms. Santillan’s counsel, Edward
H. Maginnis, entered his appearance while simultaneously filing the
instant Motion.
(See Docket Entries 10 & 14.)
Accordingly, Ms. Santillan is “personally responsible” for the
entry of default, and, as a result, the third factor weighs against
setting it aside.
D.
Prejudice
In support of a showing of prejudice, Plaintiff asserts that
“Defendant’s actions, including her apparent loss of the Summons,
indicates that there will be increased difficulties in discovery.
In addition, based on the Affidavits of Defendant and her son,
which both present the same facts, but which, objectively are
unsupportable, there is certainly an opportunity for fraud and
collusion.”
(Docket Entry 15 at 7.)
The prejudice Plaintiff asserts is purely speculative and
unrelated to the delay.
The Fourth Circuit has found prejudice
lacking under the following circumstances:
There was no missing witness in the case whose testimony
was made unavailable by the delay; there was similarly no
dead witness; neither were there any records made
unavailable by the delay, nor was there any evidence for
the plaintiff which could have been presented earlier,
the presentation of which was prevented by the delay.
. . . So the record shows without contradiction that the
plaintiff suffered no prejudice on account of the delay.
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Lolatchy, 816 F.2d at 952-53.
this case.
These same circumstances exist in
Thus, this factor weighs in favor of setting aside the
entry of default.
E.
History of Dilatory Action
This case is in an early stage of litigation and, separate
from the delayed response to the Complaint, the record does not
reflect evidence of dilatory conduct by Ms. Santillan. This factor
therefore favors setting aside the entry of default.
F.
Less Drastic Sanctions
“Neither party has suggested alternative sanctions, but the
Court [can] certainly consider any suggestions that are brought
before it, such as a motion for reimbursement of Plaintiff’s costs
associated with [his] . . . response to Defendant’s motion to set
aside default. Therefore, this factor counsels in favor of setting
aside default.”
Pinpoint IT Servs., L.L.C. v. Atlas IT Export
Corp., 812 F. Supp. 2d 710, 727-28 (E.D. Va. 2011) (internal
citation omitted).
CONCLUSION
To summarize, factors one, two, four, five and six identified
by the Fourth Circuit in Payne support setting aside the entry of
default and factor three does not. Furthermore, the Fourth Circuit
has stated a strong preference that “defaults be avoided and that
claims and defenses be disposed of on their merits.”
-11-
Colleton
Prep. Acad., 616 F.3d at 417.
Under these circumstances, good
cause exists to set aside the entry of default.
IT IS THEREFORE ORDERED that Defendant Lucia Santillan’s
Motion for Relief from the Entry of Default is GRANTED.
Defendant
Santillan shall answer or otherwise respond to the Complaint by
July 18, 2012.
/s/ L. Patrick Auld
L. Patrick Auld
United States Magistrate Judge
July 11, 2012
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