J & J SPORTS PRODUCTIONS, INC. v. ARGUETA et al

Filing 19

MEMORANDUM OPINION AND ORDER signed by JUDGE THOMAS D. SCHROEDER on 11/6/2013, that Sanchez Argueta's motion to set aside the judgment (Doc. 15 ) is GRANTED and this court's July 31, 2013, default judgment against him is SET ASIDE. (Lloyd, Donna)

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

J & J
INC.,

SPORTS

PRODUCTIONS,

Plaintiff,
v.
MARCOS TULIO SANCHEZ ARGUETA
AND
JOSE
M.
SORTO,
INDIVIDUALLY
AND
D/B/A
EL
TAMARINDO RESTAURANT,
Defendants.

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)
)
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1:12cv1329

MEMORANDUM OPINION AND ORDER
THOMAS D. SCHROEDER, District Judge.
Before the court is a motion by the Defendant, Marcos Tulio
Sanchez

Argueta

judgment

(“Sanchez

entered

against

Argueta”)
him

to

pursuant

Federal Rules of Civil Procedure.

set
to

aside

Rule

(Doc. 15.)

a

60(b)

default
of

the

For the reasons

set forth in the opinion below, the court will grant the relief
Sanchez Argueta seeks and set aside the entry of the default
judgment.
I.

BACKGROUND
Plaintiff J & J Sports Productions, Inc. (J & J), filed its

complaint

against

(“Sorto”)

on

Sanchez

December

13,

Argueta
2012.

and

Jose

(Doc.

1.)

M.

Sorto
The

Rivera

complaint

alleged that Sanchez Argueta and Sorto, doing business as El
Tamarindo Restaurant (“the Restaurant”), located at 2609 High

Point Rd. in Greensboro, North Carolina (id. ¶¶ 6–7), willfully
intercepted, published, and exhibited “Tactical Warfare”: Manny
Pacquiao

v.

Championship

Antonio
Fight

Margarito,

Program

(“the

WBO

Light

Program”)

Middleweight

(id.

¶¶

9,

12).

J & J alleges that this conduct violated 47 U.S.C. §§ 530 & 605.
(Id. ¶¶ 14, 19.)
After Sanchez Argueta failed to respond to the complaint,
J & J moved for an entry of default against him pursuant to Rule
55(a), and the Clerk of Court in this district entered default
on March 11, 2013.

(Docs. 7, 8.)

On June 4, 2013, J & J moved

for entry of default judgment pursuant to Rule 55.
10.)

(Docs. 9,

This court granted J & J’s motion and entered default

judgment against Sanchez Argueta on July 31, 2013.

(Doc 13.)

On August 14, 2013, Sanchez Argueta moved to set aside the
default judgment pursuant to Rule 60(b).

(Docs. 15, 16.)

J & J

responded to the motion (Doc. 17), and Sanchez Argueta filed a
reply (Doc. 18).
II.

The motion is now ready for decision.

ANALYSIS
“[I]n order to obtain relief from a default judgment under

Rule 60(b), a moving party must show that his motion is timely,
that he has a meritorious defense to the action, and that the
opposing party would not be unfairly prejudiced by having the
judgment set aside.

If the moving party makes such a showing,

he must then satisfy one or more of the six grounds for relief
2

set forth in Rule 60(b) in order to obtain relief from the
judgment.”

Park Corp. v. Lexington Ins. Co., 812 F.2d 894, 896

(4th Cir. 1987).

This standard applies to Rule 60(b) motions

for relief from a default judgment.

See United States v. Assad,

179 F.R.D. 170, 172 (M.D.N.C. 1998).

The Fourth Circuit has

taken “an increasingly liberal view of Rule 60(b)” where default
judgments are at issue.
v.

Fodor

Contracting

See Augusta Fiberglass Coatings, Inc.

Corp.,

843

F.2d

808,

810–11

(4th

Cir.

1988). 1
Sanchez Argueta argues that he satisfies the three initial
elements

required

by

Rule

60(b),

especially

that

he

has

a

meritorious defense to the action and that J & J will not be
prejudiced
satisfies

by
at

the
least

relief
one

of

granted. 2
Rule

relief from a final judgment.

He

60(b)’s

then

argues

conditions

that

to

he

obtain

These arguments will be addressed

in turn.

1

J & J cites Robinson v. Wix Filtration Corp., LLC, 599 F.3d 403, 412
n.12 (4th Cir. 2010), for the proposition that Sanchez Argueta must
also show “exceptional circumstances warranted relief from the
judgment.” That case involved a plaintiff’s attorney who neglected to
file a response to the opposing party’s motion for summary judgment.
The plaintiff subsequently sought relief from the district court’s
grant of summary judgment to the defendant.
Id. at 405–06.
It did
not involve Augusta’s more liberal construction of Rule 60(b) when
relief is sought from a default judgment.
The case cited by the
Robinson court similarly did not involve a default judgment.
See
Dowell v. State Farm Fire & Cas. Auto Ins. Co., 993 F.2d 46 (4th Cir.
1993).
2

J & J does not argue that Sanchez Argueta’s Rule 60(b) motion is
untimely, and the motion is in fact timely.

3

A.

Meritorious Defense

Sanchez Argueta’s proffered meritorious defense is that he
was not the owner of the Restaurant, never received compensation
from the Restaurant, and could not have authorized the Program’s
airing in the Restaurant.

Therefore, he argues that he cannot

be held liable under the applicable statutes.
defense

requires

a

finding

for

defaulting

the

proffer

valid counterclaim.”

of

evidence

party

or

which

which

“A meritorious
would

would

Augusta, 843 F.2d at 812.

permit

a

establish

a

“The underlying

concern is to determine whether there is some possibility that
the outcome of the suit after a full trial will be contrary to
the

result

achieved

by

the

default.”

10A

Wright,

et

al.,

Federal Practice & Procedure (3d ed.), § 2697; Augusta, 843 F.2d
at 812; Assad, 179 F.R.D. at 172.

A defendant need not prove

his meritorious defense by a preponderance of the evidence; he
need

only

“make

a

proffer

finding in [his] favor.”

of

evidence

which

would

Assad, 179 F.R.D. at 172.

permit

a

Any doubts

should be resolved in favor of the movant for relief.

Augusta,

843 F.2d at 812.
In this case, Sanchez Argueta has submitted an affidavit
laying out his defenses to J & J’s complaint.
13.)
control

(Doc. 16 at 11–

He claims that he cannot be liable because he had no
over

the

Restaurant,

was

never

an

employee

of

the

Restaurant, never received any compensation from the Restaurant,
4

and

is

connected

to

the

Restaurant

solely

by

obtained an ABC permit for it to assist Sorto.
¶¶ 5–9.)

the

fact

he

(Id. at 11–12

According to the affidavit, Sorto’s niece ordered that

the Program be shown on the Restaurant’s television and Sanchez
Argueta had no involvement with the decision.
If

the

testimony,
U.S.C.

§

trier

it

could

605

affirmative

of

or

find

credited

that

47

U.S.C.

by

acts

communications.

fact

the

he

(Id. ¶¶ 10–13.)

Sanchez

did

not

§ 553.

violate

Both

defendant

to

Argueta’s

either

statutes

intercept

sworn
47

require
licensed

See J & J Sports Productions, Inc. v. Lara

Sport House Corp., No. 1:10–cv–01369, 2011 WL 4345114, at *4–5
(E.D. Va. Aug. 26, 2011) (discussing the application of Sections
605 and 553 in a nearly identical case involving interception of
the cable signal for a sporting event).

If Sanchez Argueta’s

affidavit is true, he cannot be liable for any damages under
Sections

605

or

553

because

he

had

no

connection

with

the

Restaurant other than the ABC permit and occasional dishwashing
without compensation.
believed,
affirmative
statutes.

Sanchez
acts

(Doc. 16 at 12 ¶ 9.)

Argueta

required

could
to

be

not
liable

If the evidence is

have

committed

under

the

the

applicable

Therefore, Sanchez Argueta has met the standard for

showing a meritorious defense to the action.

5

B.

Prejudice

Sanchez Argueta also must show that J & J would not be
unfairly prejudiced by having the default judgment set aside.
He argues that no special circumstances exist in this case that
would prejudice J & J “beyond that suffered by any party which
loses a quick victory.”

(Id. at 6.)

J & J argues that this

conclusion is not enough to meet Sanchez Argueta’s burden to
show the lack of prejudice and points out that J & J could be
left without a remedy should the default judgment be set aside,
since

the

case

against

Sorto

has

been

dismissed.

However,

Sanchez Argueta’s seemingly conclusory statement illustrates the
difficulty plaintiffs have in demonstrating prejudice: there are
no circumstances in this case that would tend to show that J & J
would be prejudiced any more than would the normal losing party
on a Rule 60(b) motion.

See, e.g., Augusta, 843 F.2d at 812

(“As to prejudice, we perceive no disadvantage to Augusta beyond
that suffered by any party which loses a quick victory.”).
Plaintiff’s argument that it cannot obtain relief because
Sorto has been dismissed from the case is unavailing for two
reasons.
prejudice.
a

proper

First,

Sorto’s

dismissal

(Doc. 13 at 5.)
party

from

whom

from

the

case

is

without

Second, if Sanchez Argueta is not
to

obtain

recovery,

it

cannot

be

prejudice to J & J to prevent it from holding an innocent party
liable for the alleged statutory violations.
6

See Compton v.

Alton S.S. Co., 608 F.2d 96, 103 (4th Cir. 1979) (“Nor can the
plaintiff

be

said

to

be

prejudiced

by

the

vacation

of

his

judgment for statutory penalty wages, to which he is not legally
entitled.”).

Thus, Sanchez Argueta is correct that J & J would

suffer no prejudice beyond that of a typical plaintiff which
loses a default judgment.
C.

Rule 60(b) Conditions

Sanchez Argueta next must satisfy one of the six conditions
of Rule 60(b).

He argues that he is entitled to relief under

60(b)(1), (4), and (6).

Because excusable neglect exists under

Rule 60(b)(1), Sanchez Argueta’s other arguments need not be
addressed and the default judgment will be set aside.
In support of his contention that excusable neglect exists
in this case, Sanchez Argueta submits that, having received only
the equivalent of a second grade education (Doc. 16 at 11 ¶ 4),
he relied on his former attorney’s advice and did not respond to
the complaint because that attorney told him to do nothing and
let the court figure out that he was an improper defendant in
this case (id. at 12 ¶¶ 15, 17).
education
Argueta

and
did

prior
what

relationship

his

attorney

current default judgment.
attorney’s

error

led

to

On account of his lack of
with

the

recommended,

attorney,
leading

(Id. at 12 ¶¶ 19–20.)
his

default,

he

argues,

should be set aside based on excusable neglect.
7

Sanchez
to

the

Because his
the

default

J & J argues, citing Link v. Wabash Railroad Co., 370 U.S.
626,

634

(1962),

that

because

Sanchez

Argueta

chose

his

attorney, he cannot now avoid the consequences of his attorney’s
bad advice.

The Fourth Circuit, however, has not applied this

holding to Rule 60(b) motions, and the Supreme Court in Link
expressly declined to express a view on that question.
635–36.

Id. at

On the contrary, the Fourth Circuit has indicated that

when the fault for a default judgment lies with an attorney,
Rule 60(b) relief is more likely to be granted.
In

Augusta,

the

court

discussed

the

seemingly

disparate

holdings in Park and United States v. Moradi, 843 F.2d 808 (4th
Cir. 1982), and determined that “the results of these two cases
are

entirely

consistent

when

one

considers

that

in

Park

the

party alone was responsible for its default, whereas in Moradi
the attorney alone was responsible for the default.”
843

F.2d

at

811

(in

Park,

the

insurance

company

Augusta,
defendant

received process in its mailroom and simply lost the papers,
whereas in Moradi the defendant’s answer was rejected by the
court

for

failure

to

comply

with

the

local

rules

and

his

attorney failed to file another answer or appear at a pre-trial
conference).

See also Point PCS, LLC v. Sea Haven Realty &

Constr., 95 F. App’x 24, 27 (4th Cir. 2004). 3

3

The Augusta court

Unpublished decisions of the Fourth Circuit have no precedential
value but are valuable for their persuasive reasoning. See Collins v.

8

found that “[the defendant] is largely blameless for the default
below, which was due primarily to its attorney's carelessness in
his handling of the amended complaint.”

Augusta, 843 F.2d at

812.
In this case, Sanchez Argueta’s limited education and his
previous relationship with his former attorney led him to rely
on poor advice not to respond to J & J’s lawsuit.

While Sanchez

Argueta may not be entirely blameless for the default judgment
and considering all of the circumstances, it was reasonable for
him to believe his attorney and follow the recommendation not to
answer

the

complaint.

Moreover,

the

Fourth

Circuit

has

expressed a strong policy in favor of deciding cases on the
merits.

See, e.g., United States v. Shaffer Equip. Co., 11 F.3d

450, 462–63 (4th Cir. 1993) (in the context of dismissal for
breach of duty of candor to the court by an attorney); Panhandle
Cleaning & Restoration, Inc. v. Vannest, No. 5:11CV178, 2012 WL
1354572, *2 (N.D. W. Va. Apr. 18, 2012) (“[T]his Court agrees
that

‘strong

merits

and

public

not

by

policy
default

favors

resolving

judgment.’”

disputes

(quoting

on

Pecarsky

Galaxiworld.com Ltd., 249 F.3d 167, 172 (2d Cir. 2001))). 4

the
v.

Other

Pond Creek Mining Co., 468 F.3d 213, 219 (4th Cir. 2006) (recognizing
that “we ordinarily do not accord precedential value to our
unpublished decisions” and that such decisions “are entitled only to
the weight they generate by the persuasiveness of their reasoning”
(citation omitted)).
4
In Shaffer, the court listed six factors to be considered before the
court exercises its inherent power to dismiss a case without deciding

9

courts have observed that “[t]he presumption against default is
particularly strong where . . . substantial sums of money are
demanded.”

State

Street

Bank

&

Trust

Co.

v.

Inversiones

Errazuriz, Limitada, 230 F. Supp. 2d 313, 316 (S.D.N.Y. 2002).
In this case, the default judgment against Sanchez Argueta
was for $12,000, exclusive of attorney fees.
This

is

a

significant

sum

to

him.

For

all

(Doc. 13 at 4.)
these

reasons,

therefore, the court will grant Sanchez Argueta’s motion and set
aside the default judgment.
III. CONCLUSION
IT IS THEREFORE ORDERED that Sanchez Argueta’s motion to
set aside the judgment (Doc. 15) is GRANTED and this court’s
July 31, 2013, default judgment against him is SET ASIDE.

/s/ Thomas D. Schroeder
United States District Judge
November 6, 2013

it on the merits.
Those factors are: “(1) the degree of the
wrongdoer's
culpability;
(2)
the
extent
of
the
client's
blameworthiness if the wrongful conduct is committed by its attorney,
recognizing that we seldom dismiss claims against blameless clients;
(3) the prejudice to the judicial process and the administration of
justice; (4) the prejudice to the victim; (5) the availability of
other sanctions to rectify the wrong by punishing culpable persons,
compensating harmed persons, and deterring similar conduct in the
future; and (6) the public interest.”
Shaffer, 11 F.3d at 462–63.
These factors weigh in favor of granting Sanchez Argueta relief from
the default judgment.

10