Connolly v. Alderman et al

Filing 23

ENTRY ORDER Granting 9 Defendants' Motion to Set Aside Entry of Default and Denying as Moot 11 Plaintiff's Cross-Motion for Default Judgment. Signed by Chief Judge Christina Reiss on 12/1/2017. (pac)

UNITED STATES DISTRJCT COURTlltl DEC
. FOR THE
DISTRJCT OF VERMONT
DONALD CONNOLLY,
Plaintiff,
v.
PHILIP E. ALDERMAN, ALDERMAN
MOTOR CAR, LLC, and ALDERMAN'S
AUTOMOBILE CORPORATION,
Defendants.

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-I PH 3: 02

Case No.2: 17-cv-79

ENTRY ORDER
GRANTING DEFENDANTS' MOTION TO SET ASIDE ENTRY OF DEFAULT
AND DENYING AS MOOT PLAINTIFF'S CROSS-MOTION
FOR DEFAULT JUDGMENT
(Docs. 9 & 11)
Plaintiff Donald Connolly brings this action against Defendants Philip Alderman,
Alderman Motor Car, LLC, and Alderman's Automobile Corporation (collectively,
"Defendants"), alleging Defendants violated the Vermont Fair Employment Practices Act
("VFEPA") by allowing him to be subjected to sexual harassment (Count I); violated the
VFEPA by unlawfully retaliating against him (Count II); negligently supervised, trained,
and retained employees (Count III); and intentionally inflicted emotional distress on him
(Count IV). On July 11, 2017, Plaintiff filed for and obtained a Clerk's entry of default
as to all Defendants. Pending before the court are Defendants' motion to set aside the
entry of default (Doc. 9) and Plaintiffs cross-motion for a default judgment (Doc. 11 ).
On October 17, 20 17, after a hearing on the motions, the court took the matter under
advisement.
Plaintiff is represented by John D. Stasny, Esq. Defendants are represented by
F. David Harlow, Esq. and Elizabeth K. Rattigan, Esq.

I.

Factual Background and Procedural History.
Plaintiff asserts sexual harassment, unlawful retaliation, and hostile employment

environment claims arising out of his three-year employment at Defendants' automotive
dealerships in Vermont. Plaintiff contends that he was "subjected to regular, graphic
descriptions of [a co-worker's] sexual interests and preferred sexual acts; sexual
questions about [Plaintiff]; stories about other employees' sex acts; aggressive sexual
advances and demands; and other sexual harassment." (Doc. 1 at 1, ~ 1.)
Plaintiff filed a complaint with the Equal Employment Opportunity Commission
("EEOC") and in the proceedings before the EEOC, Defendants retained Littler
Mendelson P.C. to represent them. On May 4, 2017, Plaintiff filed the Complaint and his
counsel sent waivers of the service of summons to Defendants through Littler Mendelson
P.C., who forwarded the waivers to Defendants. On June 5, 2017, Defendant Alderman
signed a waiver of service on behalf of Defendant Alderman's Automobile Corporation
and returned it to Plaintiffs counsel. Two days later, Plaintiffs counsel mailed
Defendant Alderman a letter asking Defendant Alderman to forward the waivers to his
attorney if he was represented, and requesting that he sign and return waivers of service
for himself personally and on behalf of Defendant Alderman Motor Car, LLC by June 16,
2017.
Defendant Alderman called Plaintiffs attorney upon receipt of the letter in the
mistaken belief that Plaintiffs attorney was retained by Defendants' insurance company
to represent him. He communicated to Plaintiffs attorney his belief that the allegations
set forth in the Complaint were false. After discovering that he was speaking with
Plaintiffs attorney, Defendant Alderman credibly represents that he believed that his
only obligation was to sign and return the waivers of service.
Defendants' Answer was due on July 5, 2017, but they neither filed an Answer nor
requested an extension of time to do so. On July 11, 2017, Plaintiff sought and obtained
a clerk's entry of default as to all Defendants. Plaintiffs counsel sent Defendant
Alderman a copy of Plaintiffs motion for entry of default on July 11, 2017. On July 19,
2017, Defendants retained counsel who filed a notice ofappearance on Defendants'
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behalf and who attempted to obtain consent from Plaintiffs counsel to set aside the entry
of default and allow Defendants time to respond to the Complaint. Two days later, on
July 21, 2017, Defendants' counsel filed the motion to set aside the entry of default when
consent was not forthcoming. (Doc. 9.) On August 4, 2017, Plaintiff filed his crossmotion for a default judgment. (Doc. 11.) In his cross-motion, Plaintiff concedes that he
does not seek a sum certain.

II.

Conclusions of Law and Analysis.
Defendants seek to vacate the entry of default pursuant to Federal Rule of Civil

Procedure 55( c). Although Plaintiff concedes that he has not suffered significant
prejudice, he contends Defendants' default was willful and they lack meritorious defenses
to his VFEP A claims. Defendants counter that their failure to answer in a timely manner
was inadvertent, de minimis, and that they have meritorious defenses to Plaintiffs
claims.
A "court may set aside an entry of default for good cause[.]" Fed. R. Civ. P.
55(c). In determining whether good cause exists, the Second Circuit has directed courts
to examine three factors: "(1) whether the default was willful; (2) whether setting aside
the default would prejudice the adversary; and (3) whether a meritorious defense is
presented." Enron Oil Corp. v. Diakuhara, 10 F.3d 90, 96 (2d Cir. 1993). Because there
is a "strong preference for resolving disputes on the merits[,]" New York v. Green, 420
F.3d 99, 104 (2d Cir. 2005) (internal quotation marks omitted), the Rule 55(c) standard is
"lenient[.]" Meehan v. Snow, 652 F.2d 274, 277 (2d Cir. 1981). Accordingly, "when
doubt exists as to whether a default should be granted or vacated, the doubt should be
resolved in favor of the defaulting party." Enron Oil Corp., 10 F.3d at 96.
To establish a claim under VFEP A for sexual harassment and a hostile
employment environment, a plaintiff must first "prove that the harassment was
sufficiently severe or pervasive to alter the conditions of the victim's employment and
create an abusive working environment." Perry v. Ethan Allen, Inc., 115 F.3d 143, 149
(2d Cir. 1997) (internal quotation marks omitted). "Second, the plaintiff must show that
a specific basis exists for imputing the conduct that created the hostile environment to the
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employer." Id. "[A]n employer will be liable if the plaintiff demonstrates that the
employer either provided no reasonable avenue for complaint or knew of the harassment
but did nothing about it." Id. (internal quotation marks omitted).
To establish a prima facie case of retaliatory discrimination under VFEPA, a
plaintiff must show that "(1) she engaged in a protected activity; (2) her employer was
aware of that activity; (3) she suffered adverse employment decisions; and (4) there was a
causal connection between the protected activity and the adverse employment action."
Robertson v. Mylan Labs., Inc., 2004 VT 15, ~ 42, 176 Vt. 356, 376, 848 A.2d 310, 327-

28. Once a plaintiff establishes a prime facie case of retaliation, an employer must
"articulate some legitimate, nondiscriminatory reason" for the adverse employment
action. Hodgdon v. Mt. Mansfield Co., 624 A.2d 1122, 1127 (Vt. 1992) (quoting
McDonnell Douglas Corp. v. Green, 411 U.S. 792, 802 (1973)).

Here, all three factors support setting aside the clerk's entry of default.
Willfulness may be found where there is "evidence of bad faith," or the default arose
"from egregious or deliberate conduct." Am. All. Ins. Co. v. Eagle Ins. Co., 92 F.3d 60,
61 (2d Cir. 1996). Defendants' conduct in this case was not willful because willfulness
"requires 'something more than mere negligence,' such as 'egregious or deliberate
conduct,' although 'the degree of negligence in precipitating a default is a relevant factor
to be considered."' Green, 420 F.3d at 108. "Under the lenient standard of Rule 55( c),
the [c]ourt must resolve any doubt about defendants' willfulness in favor of the
defendants." Flanagan v. Modern Concrete Corp., 2008 WL 2559377, at *3 (E.D.N.Y.
June 23, 2008). In this case, although there was negligence, there is no evidence of bad
faith and Plaintiff makes no claim to the contrary. See Am. All. Ins. Co., 92 F.3d at 61
(concluding defendant's failure to answer due to a filing mistake by a clerk, "though
grossly negligent, ... was not willful, deliberate, or evidence of bad faith"); see also
Aetna Life Ins. Co. v. Licht, 2004 WL 2009410, at *3 (S.D.N.Y. Sept. 7, 2004)

(concluding that "the conduct of [defendant] and his attorney was ... careless, but it was
not so egregious as to warrant a finding of willfulness").

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Second, Defendants have demonstrated that they may present a meritorious
defense to Plaintiff's VFEP A claims because they contend it is undisputed that Plaintiff
was terminated for poor performance. If they can establish Plaintiff's poor performance,
they may be able to establish a legitimate business purpose for any adverse employment
action. In addition, Defendants assert that they can establish that they had a written
sexual harassment policy which Plaintiff failed to follow and that they were unaware of
the alleged harassment. See Hiramoto v. Goddard Call. Corp., 184 F. Supp. 3d 84, 99100 (D. Vt. Apr. 22, 2016) (granting defendant's motion for summary judgment on
plaintiff's retaliation claim where plaintiff set forth "no evidence that ... Defendant was
aware of that activity"). "In order to make a sufficient showing of a meritorious defense
in connection with a motion to vacate a default judgment, the defendant need not
establish his defense conclusively, but he must present evidence of facts that, if proven at
trial, would constitute a complete defense." S.E.C. v. McNulty, 137 F.3d 732, 740 (2d
Cir. 1998) (citation and internal quotations omitted); Vedder Price P. C. v. US Capital
Partners, LLC, 2017 WL 4180021, at *4 (S.D.N.Y. Sept. 20, 2017) ("The [c]ourt need
not draw any definitive conclusions about the persuasiveness of this putative defensethat Defendants have 'present[ ed] some evidence' supporting a meritorious defense is
sufficient to justify vacatur.") (alteration in original). Here, Defendants have satisfied the
requirement of proffering some evidence that they may be able to establish a complete
defense.
Third and most importantly, Plaintiff will not suffer undue prejudice if the court
allows this case to proceed. "Some delay is inevitable when a motion to vacate a
default ... is granted; thus, 'delay alone is not a sufficient basis for establishing
prejudice[,]"' and "[s]omething more is needed." Green, 420 F.3d at 110 (quoting Davis
v. Muster, 713 F.2d 907, 916 (2d Cir. 1983)). "[I]t 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."' Davis, 713 F.2d at 916. At oral argument,
Plaintiff conceded that he had not and will not suffer undue prejudice because of a
relatively short delay in Defendants' filing of an Answer.
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"Prior to the issuance of a default judgment under Rule 55(b), there must be an
entry of default pursuant to Rule 55(a)." Tarbell v. Jacobs, 856 F. Supp. 101, 104
(N.D.N.Y. 1994) (citing 10 Charles A. Wright & Arthur R. Miller, Fed. Practice and
Procedure § 2682 (1983)). "[B]ecause an entry of default is a necessary prerequisite" to
issuance of a default judgment, Plaintiffs cross-motion for default judgment is DENIED
ASMOOT. ld.
CONCLUSION
For the foregoing reasons, the court GRANTS Defendants' motion to set aside the
entry of default (Doc. 9) and DENIES Plaintiffs cross-motion for default judgment AS
MOOT (Doc. 11 ).
SO ORDERED.

, l-

S''

_J_ day of December, 2017 .
.::d~

Dated at Burlington, in the District of Vermont, this

c'i~~Ldg;-

United States District Court

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