J&J SPORTS PRODUCTIONS, INC. v. CASILLAS

Filing 17

MEMORANDUM OPINION AND ORDER signed by MAG/JUDGE L. PATRICK AULD on 3/1/13, that Defendant Jose Francisco Casillas' Motion to Set Aside Entry of Default (Docket Entry 11 ) is GRANTED. Defendant shall answer or otherwise respond to the Complaint by March 15, 2013. (Law, Trina)

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF NORTH CAROLINA

J & J SPORTS PRODUCTIONS, INC., )
)
Plaintiff,
)
)
v.
)
)
JOSE FRANCISCO CASILLAS,
)
individually and d/b/a
)
EL CAMINO REAL,
)
)
Defendant.
)

1:12CV5

MEMORANDUM OPINION AND ORDER
The instant matter comes before the undersigned United States
Magistrate Judge on Defendant Jose Francisco Casillas’ Motion to
Set Aside Entry of Default (Docket Entry 11).
dated June 15, 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 Defendant, individually and
doing business as El Camino Real, a commercial establishment
located in Greensboro, North Carolina.
1

(Docket Entry 1, ¶¶ 5-6.)

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1439411, at *8 & n.3 (W.D.N.C. Apr. 9, 2010) (unpublished).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.

According to the Complaint, Plaintiff had exclusive nationwide
distribution rights to the program “Firepower”: Manny Pacquiao v.
Miguel Cotto, WBO Welterweight Championship Fight Program (“the
Program”), airing on November 14, 2009.
further

alleges

exhibited

it

Plaintiff.

at

that

Defendant

his

intercepted

establishment

(Id. ¶ 11.)

(Id. ¶ 8.)

without

The Complaint

the

Program

authorization

and
from

Based on these allegations, the Complaint

seeks relief under 47 U.S.C. §§ 553 and 605 (the “Cable Act”), as
well as for conversion under North Carolina law.

(See id. ¶¶ 7-

25.)
On January 24, 2012, Plaintiff filed an executed Proof of
Service of the Summons, in which a private process server affirmed
that he “personally served the summons” on “Jose Francisco Casillas
DBA El Camino Real” at 8:10 PM on January 16, 2012.
5 at 1.)

(Docket Entry

On March 18, 2012, Plaintiff filed a Motion for Entry of

Default (Docket Entry 7) “on the grounds that [] Defendant has
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 Defendant

on March 19, 2012.
On

April

26,

(Docket Entry 11.)

(Docket Entry 8.)
2012,

Defendant

filed

the

instant

Motion.

Plaintiff timely responded in opposition

(Docket Entry 13) and Defendant replied (Docket Entry 16).

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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).
1.

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

-3-

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.”); cf. 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.”).
Defendant

argues

that,

“given

the

early

stages

of

this

proceeding and the fact that [Defendant] was not properly served
with process, the meritoriousness of [Defendant’s] defenses does
not weigh heavily in favor of either party as the parties simply do
not yet have a full record.”

(Docket Entry 12 at 3.)

Further,

Defendant states that:
he does have a meritorious defense. In order to award
the relief sought by [] [P]laintiff, both Federal
statutes giving rise to this Court’s jurisdiction require
that the defendant’s actions were committed willfully and
for purposes of commercial advantage or private financial
gain. [Defendant] contends that Plaintiff will be unable
to prove either element. Therefore, this factor weighs
in favor of setting aside the default.
(Id. (internal citation omitted).)

Plaintiff, on the other hand,

asserts that, “[w]hile the burden of establishing a meritorious
defense

is

denials.”

not

significant,

it

cannot

be

met

by

conclusory

(Docket Entry 13 at 4.)

Defendant’s argument concerning a meritorious defense does
appear to consist merely of conclusory denials and to omit any
proffer of evidence.

(See Docket Entry 12 at 3.)
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However, in his

Reply (Docket Entry 16), Defendant reasserts that he does have a
meritorious defense in that he did not show the Program for
purposes of commercial advantage (id. at 2) and offers an affidavit
in support (Docket Entry 16-1).

In the affidavit, Defendant avers

that:
(1)

he “did not show [the Program] for the purposes commercial
[sic] advantage or private financial gain” (id. ¶ 3);

(2)

he did not advertise that his establishment would show the
Program (id. ¶ 4);

(3)

he “did not charge a fee for patrons to enter El Camino Real”
on the night of the Program (id. ¶ 5);

(4)

he ordered the Program at the request of his friends and
family “so that [they] could all watch it together” (id. ¶ 6);

(5)

he “paid for [the Program] through the Direct TV website, and
[he] thought that since [he] paid for it, [his] family and
friends were allowed to watch it” (id. ¶ 7); and

(6)

“El Camino Real made less money on November 14, 2009 [the
night of the Program] than some of the other days in November
of 2009 when no fight was shown” (id. ¶ 12).
Defendant’s affidavit clearly challenges in a non-conclusory

fashion the Complaint’s allegation that Defendant acted “willfully
and for purposes of direct or indirect commercial advantage or
private financial gain” (Docket Entry 1, ¶ 12).

Under the Cable

Act, “[i]n any case in which the court finds that the violation was

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committed

willfully

and

for

purposes

of

direct

or

indirect

commercial advantage or private financial gain, the court in its
discretion may increase the award of damages, whether actual or
statutory,
violation

by
of

an

amount

subsection

of
(a)

not
of

more
this

than

$100,000

section.”

for
47

each

U.S.C.

§ 605(e)(3)(C)(ii); see also 47 U.S.C. § 553(b)(2) (laying out
similar penalty scheme).

Count I of Plaintiff’s Complaint alleges

that Defendant’s exhibition of the Program “[was] done willfully
and for purposes of direct or indirect commercial advantage or
private financial gain” (Docket Entry 1, ¶ 11) and that Plaintiff
is therefore “entitled to . . . [s]tatutory damages for each
willful violation in an amount to [sic] $100,000.00 pursuant to
Title 47 U.S.C. 605(e)(3)(C)(ii)” (id. ¶ 15).

Count II likewise

seeks “[s]tatutory damages for each willful violation in an amount
to [sic] $50,000.00 pursuant to Title 47 U.S.C. 533(b)(2) . . . .”
(Id. ¶ 20.)
Under

these

circumstances,

Defendant

has

presented

a

meritorious defense. See, e.g., National Satellite Sports, Inc. v.
Carrabia, No. 4:01 CV 1474, 2003 WL 24843407, at *4 (N.D. Ohio Mar.
11, 2003) (unpublished) (denying summary judgment in favor of
plaintiff as to damages under the Cable Act where defendant’s
affidavit states he did not advertise, charge cover, or receive
financial benefit from unauthorized viewing of similar program).

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Accordingly, the first factor weighs in favor of setting aside the
Clerk’s entry of default.
2.

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 . . . .”

Moradi, 673 F.2d at 727.

Defendant filed

his instant Motion on April 26, 2012, almost four months after
service of the Complaint and 38 days after the Clerk entered a
default.

(See Docket Entries 5, 8, 11.)2

Other courts addressing

this issue have found similar or longer delays acceptable.

See,

e.g., Lolatchy, 816 F.2d at 952-54 (permitting case to proceed on
the merits although moving party delayed ten months after court
entered default before filing its motion to set aside default);
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); Wainwright’s Vacations, LLC v. Pan
Am.

Airways

Corp.,

130

F.

Supp.

2d

712,

718

(D.

Md.

2001)

(concluding moving party acted with reasonable promptness by moving
to vacate default slightly more than one month after entry of

2

Defendant further argues that he acted reasonably because
he “was not personally served with the summons in this matter” and
therefore did not learn “that this action had been commenced
[until] March 23, 2012, when [he] received the Entry of Default via
U.S. Mail.” (Docket Entry 12-1, ¶¶ 3-4.) In light of the Court’s
treatment of this factor, no need exists to consider Defendant’s
foregoing argument in this context.
-7-

default).

The second factor thus supports setting aside the entry

of default.
3.

Personal Responsibility

Defendant argues that he “has no responsibility for the
original default as he had no actual notice of the action until
after the Clerk had entered the default.”

(Docket Entry 12 at 4.)

He further contends, and supports by affidavit, that he “was not
properly served with process” (Docket Entry 12 at 3; see also
Docket Entry 12-1, ¶ 3) and that “Maria Ramirez, an employee of
[D]efendant, who personally interacted with the process server, did
not give the summons to [Defendant] or even tell him about it”
(Docket Entry 12 at 4; see also Docket Entry 12-1, ¶ 5).

Defendant

also offers an affidavit from Ms. Ramirez indicating she accepted
an envelope from a messenger on the evening the process server
claimed to have served Defendant and that “the gentleman who
delivered it did not indicate it was anything important” so she
“placed the envelope in a stack with other documents instead of
handing it to [Defendant].”

(Docket Entry 12-3, ¶¶ 3-7.)

The Proof of Service indicating the process server served the
Summons on Defendant (Docket Entry 5), in addition to the process
server’s affidavit averring the same (Docket Entry 13-1, ¶ 2; see
also Docket Entry 14, ¶¶ 2-7), establish a prima facie showing of
proper service under North Carolina law.

See Crabtree v. City of

Durham, 136 N.C. App. 816, 818, 526 S.E.2d 503, 505 (2000) (“When

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[a] return of service on its face shows legal service by an
authorized officer, that return is sufficient, at least prima
facie, to show service in fact.”).

“The prima facie evidence

established by a valid return of service may be rebutted only by
producing

affidavits

of

more

than

one

person

showing

unequivocally that proper service was not made upon the person
stated in the return of service.”

Id. (citing Grimsley v. Nelson,

342 N.C. 542, 545, 467 S.E.2d 92, 94 (1996)).
The affidavits of Defendant and Maria Ramirez provided by
Defendant rebut Plaintiff’s prima facie evidence of proper service.
(See Docket Entry 12-1, ¶¶ 3-5; Docket Entry 12-3, ¶¶ 3-7.)
Court

therefore

cannot

determine

whether

responsibility for the entry of default.

Defendant

The
bears

See, e.g., Turpin v.

Wellpoint Cos., Inc., Civil Action No. 3:10CV850-HEH, 2011 WL
1086482, at *2 (E.D. Va. Mar. 23, 2011) (unpublished) (recognizing
that “personal responsibility” factor can turn on whether proper
service occurred).

This factor thus does not weigh in favor of or

against setting aside the entry of default.
4.

Prejudice

In support of a showing of prejudice, Plaintiff asserts that
“Defendant’s actions, including his disregard for mail for over two
months, indicates that there will be increased difficulties in

-9-

discovery.”

(Docket Entry 13 at 8.)

The prejudice Plaintiff

asserts is purely speculative and unrelated to any delay by
Defendant in responding to the Complaint.
Circuit

has

found

prejudice

lacking

Moreover, the Fourth
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.
Lolatchy, 816 F.2d at 952-53.
this case.

These same circumstances exist in

Accordingly, this factor weighs in favor of setting

aside the entry of default.
5.

History of Dilatory Action

Separate from the delayed response to the Complaint, the
record does not reflect evidence of dilatory conduct by Defendant.
This factor therefore favors setting aside the entry of default.
6.

Less Drastic Sanctions

Defendant contends that “no sanctions are necessary in this
instance, and urges the Court to allow this case to proceed on the
merits.”

(Docket Entry 12 at 5.)

He concedes, however, that, if

the Court, “in its discretion, is inclined to explore alternative
sanctions, Plaintiff could presumably bring an appropriate motion
for costs associated with obtaining the entry of default.

This

factor, therefore, weighs in favor of setting aside the default.”
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(Id.)

Plaintiff, in turn, does request that, “to the extent the

Court is inclined to set aside the default, . . . it be permitted
to submit its costs and attorneys’ fees related to obtaining the
default and defending against Defendant’s Motion to Set Aside.”
(Docket Entry 13 at 10.)

The Parties therefore apparently agree

that sanctions less drastic than default exist and thus this factor
weighs in favor of setting aside default.3
CONCLUSION
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

weigh

in

favor

or

against

so

doing.

Furthermore, the Fourth Circuit has stated a strong preference that
“defaults be avoided and that claims and defenses be disposed of on
their merits.” Colleton Prep. Acad., 616 F.3d at 417. Under these
circumstances, good cause exists to set aside the entry of default
in the instant case.

3

Given the conflict in the evidence over service, the
Court declines to order any cost-shifting at this time.
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IT

IS

THEREFORE

ORDERED

that

Defendant

Jose

Francisco

Casillas’ Motion to Set Aside Entry of Default (Docket Entry 11) is
GRANTED.

Defendant shall answer or otherwise respond to the

Complaint by March 15, 2013.
/s/ L. Patrick Auld
L. Patrick Auld
United States Magistrate Judge
March 1, 2013

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