Retail Service Systems, Inc. v. Carolina Bedding Direct, LLC et al

Filing 102

ORDER adopting Report and Recommendations re 89 Report and Recommendations.. Signed by Judge George C Smith on 8/27/14. (lvw1)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF OHIO
EASTERN DIVISION
Retail Service Systems, Inc.,
Plaintiff,
Case No. 2:13-cv-994
JUDGE SMITH
Magistrate Judge Abel

v.
Carolina Bedding Direct, LLC, et al.,
Defendants.

OPINION AND ORDER
This matter is before the Court on Defendant’s, Mattress By Appointment, LLC’s,
objections (Doc. 95) to the portion of the Report and Recommendation issued by the Magistrate
Judge (Doc. 89), which recommends that the entry of default against Mattress By Appointment
remain standing. Plaintiff, Retail Service Systems, Inc. has filed a response (Doc. 99) urging that
the Magistrate Judge’s Report and Recommendation be affirmed. Because de novo review of the
matter confirms the Magistrate Judge’s conclusions, Mattress’s objections are OVERRULED
and the Magistrate Judge’s Report and Recommendation is AFFIRMED.
I.

BACKGROUND AND POSTURE

According to the allegations in this case, Power Marketing Direct, Inc., was the
predecessor in interest to the plaintiff, Retail Service Systems. (Doc. 1, Compl. at ¶¶ 2-3). The
CEO of all of the defendant companies, Darren Conrad, was, at one time, an officer with Power
Marketing. Id. at ¶¶ 1, 13. When he left Power Marketing in 2003, Conrad signed a 3-year noncompete agreement. Id. at ¶¶ 14-15. Notwithstanding this fact, soon after departing, he went into
business in competition with Power Marketing, using Power’s confidential materials. Id. at ¶¶

16-38. Following legal action by Power Marketing, an Ohio Court of Common Pleas issued
preliminary and then permanent injunctions – finding that Conrad and his entities had violated
the non-compete and Ohio’s Uniform Trade Secrets Act. (Doc. 1, Exs. A-B (decisions of the
Common Pleas Court)). During the course of that litigation and after, Conrad and his entities
apparently continued to violate the injunctions. In fact, in its last decision in 2009, the Common
Pleas Court awarded punitive damages because of “Defendant’s flagrant, on-going competition
with [Power Marketing], despite his License and Separation agreements and despite the
preliminary injunction order put in place by this Court, all of which prohibit such conduct . . . .”
(Doc. 1, Ex. B, Franklin County Com. Pl. Order at 18).
On October 4, 2013, following alleged further violations of Ohio’s Trade Secrets Act and
continued use of Power Marketing’s proprietary materials, Power Marketing’s successor, Retail
Service, sued a number of Conrad’s companies (of which Mattress By Appointment is one).
(Doc. 1 Compl. in passim). On October 7, 2013, the Clerk of this Court issued summons to
Mattress By Appointment via certified mail at the following address:
Mattress By Appointment, LLC
c/o Statutory Agent Darren B. Conrad
320 1st Street North, Apt. 904
Jacksonville Beach, FL 32250-6949
(Doc. 2, Summons Issued; Doc. 3, 1st Certificate of Mailing; Doc. 11, Green Card & Envelope).
No one claimed the certified mail package. (Doc. 89, Ex. 1, USPS Tracking Print-Out; Doc. 11,
Green Card & Envelope at 4 (clerk notes certified mail returned)). Presumably because the
envelope had Plaintiff’s counsel’s address on it, the United States Postal Service returned the
service materials to Plaintiff’s counsel rather than the Clerk of this Court. (Doc. 11, Green Card
& Envelope at 2, 4 (reflecting that the green card was executed by Douglas Cole, an attorney in
Plaintiff’s attorneys’ firm)). Plaintiff’s counsel then filed the envelope and green card with the
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Clerk of this Court whereupon, the Clerk attempted service by regular mail. Id.; (Doc. 12, 2d
Certificate of Mailing). Again, summons and a copy of the complaint were sent to:
Mattress By Appointment, LLC
c/o Statutory Agent Darren B. Conrad
320 1st Street North, Apt. 904
Jacksonville Beach, FL 32250-6949
(Doc. 12, 2d Certificate of Mailing). This time the service package was not returned to sender.
None of Conrad’s entities, including Mattress By Appointment, responded to the
summons or in any way answered the lawsuit. Thus, on January 24, 2014, Retail Service applied
for and, on January 27, obtained, an entry of default against Mattress by Appointment. (Doc. 15,
App’l for Default; Doc. 16 Ent. of Default). Immediately on the heels of the entry, Retail
Service moved for a default judgment. (Doc. 17, Mot. for Default Judgment).
Three days later, Mattress By Appointment finally entered the case and moved to set
aside the default. (Doc. 18, Mot. to Set Aside). In support of its motion, Mattress attached
affidavits of Darren Conrad and Reid Penuel (Florida counsel for Mattress). (Doc. 18, Exs. 2-3).
Conrad avers that he was never served with summons or a complaint. (Doc. 18, Ex. 2, Conrad
Aff. at ¶ 3). Penuel admits that he knew about the pendency of this case in early December,
shortly after service was attempted by regular mail, and well before the entry of default. (Doc.
18, Ex. 3, Penuel Aff. at ¶ 3). Yet, he claims that the failure to respond by his clients was the
result of local Ohio counsel (an unidentified predecessor counsel to Vorys, Sater, Seymour and
Pease, LLP) failing to timely file a motion to dismiss on his client’s behalf. Id. at ¶¶ 5-6.
Whether the entry of default against Mattress By Appointment should be set aside, or
whether it should mature into a default judgment, thereafter became the subject of numerous
filings. (Docs. 17, 18, 30, 31, 32, 38 (motions, responses, and replies regarding whether to set
aside default or render judgment)). In addition to those filings, between the filing of the motion
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for default and the Report and Recommendation, the Magistrate Judge conducted no fewer than
five conferences with counsel for the parties. (Docket reflects minute entries on February 7, 13,
and 19 as well as March 18, and April 28, 2014). On July 25, 2014, the Magistrate Judge issued
a Report and Recommendation recommending that this Court deny Mattress By Appointment’s
motion to set aside the entry of default. (Doc. 89, Rpt. & Rec. at 7-9). Mattress has filed various
objections to that recommendation. (Doc. 95, Obj. to Rpt. & Rec.).

Retail Service has

responded. (Doc. 99, Re. in Opp. to Obj.).
II.

STANDARD OF REVIEW

The duty of a district judge, when reviewing the report and recommendation of a
magistrate judge upon a dispositive motion, is clear; “[t]he district judge must determine de novo
any part of the magistrate judge’s disposition that has been properly objected to. The district
judge may accept, reject, or modify the recommended disposition; receive further evidence; or
return the matter to the magistrate judge with instructions.” Fed. R. Civ. P. 72(b)(3); 28 U.S.C. §
636(b)(1)(C) (2012). General objections, however, are insufficient to preserve issues for review;
“[a] general objection to the entirety of the magistrate’s report has the same effects as would a
failure to object.” Howard v. Sec’y of Health & Human Servs., 932 F.2d 505, 509 (6th Cir.
1991).
III.

DISCUSSION

Mattress tenders four objections to the Magistrate Judge’s recommendation. Mattress
objects to:
1. The Report’s denial of Defendant’s Motion to Set Aside, which was effectively
unopposed because Plaintiff never filed an opposition or contradicted the legal
or factual basis of the Motion;
2. The Report’s conclusion that Mattress by Appointment was properly served
pursuant to Ohio law, when the undisputed evidence shows a lack of actual
notice and, therefore, failure of service;
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3. The Report’s conclusion that Mattress by Appointment demonstrated an intent
to thwart judicial proceedings, when the undisputed evidence shows that
Defendant lacked actual notice of service but, upon later learning of the
lawsuit, that Defendant promptly and clearly intended and attempted to defend;
and,
4. The Report’s conclusion that the default should not be set aside, when the
Report otherwise correctly concludes that Mattress by Appointment has a
meritorious defense and that the delay due to any default has not prejudiced
Plaintiff.
(Doc. 95, Obj. to Rpt. & Rec. at 1-2) (footnote omitted). Each shall be addressed in turn.
A.

Opposition to the Motion to Set Aside
It is true, as Mattress points out, that “[f]ailure to file a memorandum in opposition may

result in the granting of any motion that would not result directly in entry of final judgment or an
award of attorneys’ fees.” S.D. Ohio Civ. R. 7.2(a)(2) (2014). It is also true, that Retail Service’s
formal “opposition” to Mattress’ motion to set aside consisted mainly of argument that, due to
ongoing discovery disputes, the matter was not ripe for decision. (Doc. 31, Memo. in Opp. to
Mot. to Set Aside at 6; see also Doc. 32, Reply in Supp. of Mot. Default Judgment). However,
local rule 7.2 says that “[f]ailure to file a memorandum in opposition may [not must] result in the
granting of [a] motion . . . .” S.D. Ohio Civ. R. 7.2(a)(2) (emphasis added). Moreover, Retail
Service had (and has) moved for the entry of a default judgment. (Doc. 17, Mot. for Default
Judgment). Setting aside the entry of default and granting a default judgment are opposing (if
not mutually exclusive) concepts. Under the circumstances, the Court will not pretend that
Retail Service’s failure to file a renewed formal opposition following discovery amounts to
withdrawal of its opposition to Mattress’ motion to set aside the entry of default. Furthermore,
the burden to show “good cause” for the set-aside is Mattress’. Fed. R. Civ. P. 55(c). Even had
Retail Service filed nothing in response to the motion to set aside, if Mattress failed to show

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“good cause” for the relief requested, it should have been denied.

This objection is

OVERRULED.
B.

Propriety of Service in Light of Conrad’s Affidavit
Mattress was correctly served under the rules. Federal Rule of Civil Procedure 4(e)(1)

allows service according to the rules for service followed by courts of general jurisdiction in
either the state in which the district court is located or the state where service is made. This
Court sits in Ohio. Mattress is located in Florida.
The Ohio rules permit the clerk of a court to make service by United States certified or
express mail. Ohio Civ. R. 4.1(A)(1)(a); see also, e.g., Fla. R. Civ. P. 1.070(i). Moreover, the
Ohio rules provide for a scenario where, as here, the certified mail goes unclaimed:
(D) United States certified or express mail service unclaimed. If a United
States certified or express mail envelope . . . was unclaimed, the clerk shall
forthwith . . . enter the fact and method of notification on the appearance docket.
If the attorney, or serving party, after notification by the clerk, files with the clerk
a written request for ordinary mail service, the clerk shall send by United States
ordinary mail a copy of the summons and complaint or other document to be
served to the defendant at the address set forth in the caption, or at the address set
forth in written instructions furnished to the clerk. . . . . Answer day shall be
twenty-eight days after the date of mailing as evidenced by the certificate of
mailing. . . . . Service shall be deemed complete when the fact of mailing is
entered of record, provided that the ordinary mail envelope is not returned by the
postal authorities with an endorsement showing failure of delivery. If the
ordinary mail envelope is returned undelivered, the clerk shall forthwith notify the
attorney, or serving party.
Ohio Civ. R. 4.6(D).
In this case, the Clerk of this Court issued summons to Mattress By Appointment via
certified mail at the following address:
Mattress By Appointment, LLC
c/o Statutory Agent Darren B. Conrad
320 1st Street North, Apt. 904
Jacksonville Beach, FL 32250-6949

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(Doc. 2, Summons Issued; Doc. 3, 1st Certificate of Mailing; Doc. 11, Green Card & Envelope).
No one claimed the certified mail package. (Doc. 89, Ex. 1, USPS Tracking Print-Out; Doc. 11,
Green Card & Envelope at 4 (clerk notes certified mail returned)). Presumably because the
envelope had Plaintiff’s counsel’s address on it, the United States Postal Service returned the
service materials to Plaintiff’s counsel rather than the Clerk of this Court. (Doc. 11, Green Card
& Envelope at 2, 4 (reflecting that the green card was executed by Douglas Cole, an attorney in
Plaintiff’s attorneys’ firm)). Mattress attempts to attack the validity of this service attempt –
suggesting that the USPS should have made more delivery attempts, that it is suspicious that the
green card was signed by Plaintiff’s counsel rather than the Clerk of this Court, and that the
receipt number in the USPS tracking print-out cited by the Magistrate judge varies by one digit
from the tracking number in the Clerk’s Certificate of Mailing. (Doc. 95, Obj. to Rpt. & Rec. at
7-8).
First, the responsibility of the Clerk under Ohio Rule of Civil Procedure 4.1(A)(1)(a) is to
send the mailing by certified mail. Regardless of the diligence of mailmen in Jacksonville, that
was done in this case. (Doc. 3, 1st Certificate of Mailing). The principle of parsimony (or
Occam’s Razor) dispenses with Mattress’ remaining two arguments. The green card (a computer
generated document) displays a tracking number matching the USPS print-out (another computer
generated document) and both show an address in Jacksonville Beach, Florida 32250. (Compare
Doc. 11, Green Card & Envelope at 1-2 with Doc. 89, Ex. 1, USPS Tracking Print-Out). The
Clerk’s office certification (a document typed by a human being with fingers) shows an identical
address but the 20-digit tracking number is off by a single digit. (Compare Doc. 3, 1st Certificate
of Mailing (tracking number 70121640000107725433) with Doc. 11, Green Card & Envelope at
2 (tracking number 70121640000207725433)). Is it more probable that someone in the Clerk’s

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office mistyped one number? Or is it more probable that some sort of convoluted plot or series
of coincidences transpired to create a false tracking record and therefore the incorrect impression
that the service package arrived in Jacksonville, that notice was given, and yet that the package
went unclaimed? Occam’s Razor.
Realizing that Mattress failed to claim the certified mail, Plaintiff’s counsel filed the
envelope and green card with the Clerk of this Court whereupon, in accordance with Ohio Rule
of Civil Procedure 4.6(D), the Clerk attempted service by regular mail. (Doc. 12, 2d Certificate
of Mailing). Again, summons and a copy of the complaint were sent to:
Mattress By Appointment, LLC
c/o Statutory Agent Darren B. Conrad
320 1st Street North, Apt. 904
Jacksonville Beach, FL 32250-6949
Id. This time the service package was not returned to sender.
Mattress objects that this was not effective service because service attempted in this
manner merely raises a presumption of effective service which is rebuttable by sufficient
evidence. (Doc. 95, Obj. to Rpt. & Rec. at 6 (quoting Schroeder v. Gold, No. 10052, 1987 Ohio
App. LEXIS 5641, at *8 (Ct. App. Jan 22, 1987)). Schroeder, Mattress notes, went on to say that
“Courts have found ‘sufficient evidence’ to rebut the presumption where uncontradicted sworn
statements were introduced which stated the party never received service of the complaint, even
where her opponent complied with Civ. R. 4.6 and had service made at an address where it could
reasonably be anticipated that the defendant would receive it.” 1987 Ohio App. LEXIS 5641, at
*8 (citing Rafalski v. Oates, 477 N.E.2d 1212, 1215 (Ohio Ct. App. 1984)). Because Conrad has
averred that he was never served, argues Mattress, the presumption is rebutted and there never
was service. (Doc. 95, Obj. to Rpt. & Rec. at 6-7; see also Doc. 18, Ex. 2, Conrad Aff. at ¶ 3).

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However, the rule of Rafalski, restated in Schroeder, is not as black and white as Mattress
would have it. As one Ohio Court explained:
In Rafalski v. Oates, 477 N.E.2d 1212, 1215 (Ohio Ct. App. 1984), the court held:
“Where a party seeking a motion to vacate makes an
uncontradicted sworn statement that she never received service of
a complaint, she is entitled to have the judgment against her
vacated even if her opponent complied with Ohio Civ. R. 4.6 and
had service made at an address where it could reasonably be
anticipated that the defendant would receive it. Cox v. Franklin,
Cuyahoga App. No. 32982, (Ohio Ct. App. (Jan. 10, 1974).
Appellant has presented no evidence to show that appellee actually
received service. It is reversible error for a trial court to disregard
unchallenged testimony that a person did not receive service.”
The Rafalski case was interpreted and applied in a series of cases from the Sixth
District Court of Appeals. In the first such case, the court stated:
“We conclude that if a defendant has only his self-serving
testimony that he did not receive service of process, even though
service of process was mailed, by ordinary mail, to him at his
correct address, and was not returned, *** a trial court might find,
in such a case, that it simply did not believe the testimony of the
defendant that he did not receive service of process.” Security
Nat’l Bank & Trust Co. v. Murphy, Clark App. No 2552, 1989
Ohio App. LEXIS 2868, at *4 (Ct. App. July 20, 1989).
In a subsequent case, the Sixth District expanded upon their previous holding,
stating, with regard to Rafalski:
“While some cases hold that an uncontroverted affidavit is
sufficient to require the default judgment to be found void ab
initio, these holdings do not prohibit the trial court from assessing
competency and credibility. Therefore, we find that the trial court
must determine whether sufficient evidence of nonservice was
presented to find the default judgment void ab initio.” United
Home Fed. v. Rhonehouse, 601 N.E.2d 138, 144 (Ohio Ct. Ap.
1991).
We find this interpretation of Rafalski persuasive.
In the instant case, appellant testified that he never received service of the
complaint. However, appellant does not contend that service was sent to an
incorrect address. Further, when the certified mail envelope was returned marked
“unclaimed” ordinary mail service was made to the correct address, and was not
returned. Also, testimony was received that notice of the default judgment was
sent by ordinary mail to the same address and was not returned.

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As a result, we cannot hold that the trial court erred in finding that appellant’s
testimony was not credible. Nor can we hold that the trial court erred in denying
appellant’s motion for relief from judgment.
Redfoot v. Mikouis, Accel. Case No. 96-T-5398, 1996 Ohio App. LEXIS 5415, at *5-8 (Ct. App.
Nov. 29, 1996) (citations edited for uniformity); see also Infinity Broad. v. Brewer, 2003-Ohio1022, at ¶ 8 (Ct. App.) (“we have rejected Rafalski”); Old Meadow Farm Co. v. Petrowski,
Accel. Case No. 2000-G-2265, 2001 Ohio App. LEXIS 782, at *8-10 (Ct. App. March 2, 2001)
(distinguishing Rafalski).
Mattress’ Florida attorney admits that he knew about the pendency of this case in early
December, shortly after service was attempted by regular mail, and well before the entry of
default. (Doc. 18, Ex. 3, Penuel Aff. at ¶ 3). Given that circumstance, Conrad’s affidavit is more
persuasive in what it fails to say than what it says. As in Redfoot, Conrad “does not contend that
service was sent to an incorrect address.” 1996 Ohio App. LEXIS 5415, at *7. Like the appellant
in Redfoot, all Conrad swears is, “I have not been served with a summons or complaint . . . .”
(Doc. 18, Ex. 2, Conrad Aff. at ¶ 3). That is a statement which, even if literally true, is perfectly
consistent with receiving a notice that certified mail is waiting to be collected at the post office
but never getting it – or with having someone else go through your regular mail and throw out
everything that looks like a lawsuit before you take delivery of anything.

Under the

circumstances, since the Ohio rules delineating how service is to be made were followed, and as
(given Penuel’s admission) someone with Mattress clearly knew this case was ongoing shortly
after service was attempted, the Court finds Retail Service sufficiently served Mattress. (See
Doc. 18, Ex. 3, Penuel Aff. at ¶ 3). Mattress’ objection is OVERRULED.
C.

Intention to Thwart Judicial Proceedings
The orders of the state courts are quite sufficient to show that, in the past, Conrad and his

entities have displayed little respect for legal strictures imposed either by contract or by orders of
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courts. (See, e.g. Doc. 1, Ex. B, Franklin County Com. Pl. Order at 18 (chastising Conrad for his
“flagrant [and] on-going” violations of the court’s order)). Penuel’s affidavit makes it crystal
clear that Mattress was aware, shortly after service was attempted by regular mail, of the
pendency of this lawsuit. (Doc. 18, Ex. 3, Penuel Aff. at ¶ 3). Yet, only days after default
entered at the end of January did Mattress finally have an attorney enter an appearance on its
behalf in this Court and then, only for the purpose of seeking to have default set aside and the
case dismissed on a number of somewhat dubious grounds. (Doc. 18, Ex. 1, Proposed Mot. to
Dismiss at 2-6 (arguing insufficient service despite the facts discussed above and arguing
inappropriate venue despite previous court decisions explaining that Conrad, the CEO of
Mattress, stole trade secrets bearing on the same business in which Mattress is apparently
engaged, from a company in Ohio)).1 Even assuming, contrary to the facts in the record, that
Mattress actually had a bona fide belief that service had not successfully been accomplished
upon them, their proper remedy was to seek dismissal under Federal Rule of Civil Procedure
12(b)(5) – not sit on their hands until after default entered. Under the circumstances, and in light
of the history of this case, it is reasonable to conclude, as the Magistrate Judge did, that
Mattress’s failure to participate was born of an intention to thwart judicial proceedings. See S.
Elec. Health Fund v. Bedrock Servs., 146 F. App’x 772, 777 (6th Cir. 2005). The objection is
OVERRULED.
D.

Effect of Defenses and Lack of Prejudice
In determining whether an entry of default should be set aside, a three factor test is used:
(1)

Whether the default was willful;

(2)

Whether a set-aside would prejudice plaintiff; and

1

The proposed motion also argues that the claims for civil conspiracy and violations of Ohio Uniform Trade Secrets
Act are redundant and insufficiently pled. (Doc. 18, Ex. 1, Proposed Mot. to Dismiss at 6-11). The motion to
dismiss was not ultimately filed and these issues have not been fully briefed. Thus, the Court reserves judgment on
the merits of these criticisms.

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(3)

Whether the alleged defense was meritorious.

United Coin Meter Co. v. Seaboard Coastline R.R., 705 F.2d 839, 844 (6th Cir. 1983) (quoting
Keegel v. Key West & Caribbean Trading Co., Inc., 627 F.2d 372, 373 (D.C. Cir. 1980)). It is
true, as Mattress points out, that:
It has been found that a district court abuses its discretion in denying a motion to
set aside an entry of default when two of the three factors have been demonstrated
by the defendant: the defendant had a meritorious defense and no prejudice would
result to the plaintiff if the matter were to go forward.
O.J. Distrib., Inc. v. Hornell Brewing Co., 340 F.3d 345, 353 (6th Cir. 2003) (citing Shepard
Claims Serv., Inc. v. William Darrah & Assocs., 796 F.2d 190, 193-94 (6th Cir. 1986)); (see also
Doc. 95, Obj. to Rpt. & Rec. at 8 (mistakenly purporting to quote Dassault Systemes, SA v.
Childress, 663 F.3d 832, 838-39 (6th Cir. 2011) for the above proposition)). However, the Sixth
Circuit has also recognized that in some cases “particularly culpable conduct by the defendants
[can] outweigh [] two factors and tip the balance toward denial of relief.” Dassault Systemes, SA,
663 F.3d at 844 (quoting Waifersong, Ltd. v. Classic Music Vending, 976 F.2d 290, 293 (6th Cir.
1992)).
Here, though the Magistrate Judge found that “plaintiff has not shown that it suffered
prejudice from the delay and it appears that MBA has a meritorious defense,”2 he also found
particularly culpable conduct by Mattress in that it had shown “an intent to thwart judicial
proceedings or a reckless disregard for the effect of its conduct on those proceedings.” (Doc. 89,
Rpt. & Rec. at 8-9 (quoting Shepard Claims Serv., 796 F.2d at 194)). Having already concluded,
upon de novo review, that this finding was correct, this Court also shall conclude that Mattress’
attempts to thwart these proceedings outweigh the other two factors.
2

This is not to suggest that Mattress would, absent default, be likely to win at trial. The test of a “meritorious
defense,” for purposes of determining whether to set aside a default, “is not whether a defense is likely to succeed on
the merits; rather, the criterion is merely 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.’” Dassault Systemes, SA, 663 F.3d at 843 (quoting United
States v. $ 22,050.00, 595 F.3d 318, 326 (6th Cir. 2010)).

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That is, it appears that Retail Service failed to meet the rather demanding test of prejudice
that the Sixth Circuit has used in such cases:
[D]elay alone is not a sufficient basis for establishing prejudice.” INVST Fin.
Group [v. Chem-Nuclear Sys.], 815 F.2d [391,] 398 [(6th Cir. 1987)] (internal
quotation marks omitted). Nor does increased litigation cost generally support
entry of default. $22,050, 595 F.3d at 325. Instead, “it must be shown that delay
will result in the loss of evidence, create increased difficulties of discovery, or
provide greater opportunity for fraud and collusion.” INVST Fin. Group, 815 F.2d
at 398 (internal quotation marks omitted).
Dassault Systemes, SA, 663 F.3d at 842. It also appears that Mattress has, by way of a proposed
motion to dismiss attached as an exhibit to its motion to set aside, asserted defenses which meet
the very low bar for determining merit in these circumstances. $ 22,050.00, 595 F.3d at 326
(quoting INVST Fin. Group, 815 F.2d at 399; Keegel, 627 F.2d at 374)) (noting that “cases
discussing meritorious defenses in the context of setting aside default do not require that a
defense be supported by detailed factual allegations to be deemed meritorious. Instead, all that is
needed is ‘“a hint of a suggestion” which, proven at trial, would constitute a complete
defense.’”). However, the larger circumstances must also be taken into account. This case has
essentially been litigated twice before in Ohio state court by predecessors of the current parties
with the result that, both times, Conrad and his entities lost. (Doc. 1, Exs. A-B (decisions of the
Franklin County Common Pleas Court)).

Under the circumstances, Mattress’ assertion of

“defenses” only meets the “meritorious” standard because the language in $ 22,050.00 is so
broad that it is somewhat difficult to conceive what, short of complete silence, would fail to
count as an assertion of a meritorious defense. Under the circumstances, the lack of prejudice
and the defenses alleged by Mattress, when balanced against Mattress’ willful failure to
participate in this litigation (even after Mattress was served and knew about the pending case)
shows that the entry of default was just when entered and ought to remain. The objection is
OVERRULED.
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IV.

CONCLUSION

The Court OVERRULES all of Mattress By Appointment’s objections. Accordingly,
the Magistrate Judge’s Report and Recommendation is ADOPTED AND AFFIRMED.
Mattress’ motion to set aside was not unopposed. As a matter of procedure, even if it had been
unopposed, it would not necessarily have been granted and, in any case, Mattress did not show
good cause for setting aside the entry of default. Mattress was properly served and actually
aware of the lawsuit shortly after being served. Mattress did demonstrate an intent to thwart
judicial proceedings under the circumstances and this outweighed both the fact that no prejudice
to Plaintiffs was discernible and Mattress’ alleged “defenses.”
IT IS SO ORDERED.
/s/ George C. Smith
GEORGE C. SMITH, JUDGE
UNITED STATES DISTRICT COURT

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