America Science Team Richmond, Inc. v. Chan

Filing 41

MEMORANDUM OPINION. Signed by District Judge John A. Gibney, Jr. on 3/12/2025. (jenjones, )

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF VIRGINIA
Richmond Division
AMERICA SCIENCE TEAM

RICHMOND, INC.,

Plaintiff,
Civil Action No. 3:22cv451

V.

ENOCH CHAN,
Defendant.
OPINION

This matter comes before the Court on motions filed by the defendant, Enoch Chan, to set

aside default judgment and for leave to supplement that filing. (ECF. Nos. 27, 31.) The plaintiff,
America Science Team Richmond, Inc. (“AmeriSci”), purportedly served Chan in this trade secrets
action in October 2022. Chan failed to timely answer, which ultimately led the Court to enter

default Judgment against him. Chan now moves to set aside the Court’s entry of default judgment,

claiming that he never received service of process and did not learn of AmeriSci’s action against

him until nearly a year after the Court entered default judgment. Because Chan has presented
sufficient evidence indicating that he did not receive personal service of the summons and

complaint in October 2022, the Court will grant Chan’s motions.
I. BACKGROUND

A. Facts as Alleged in the Complaint

Chan started working for an AmeriSci affiliate in 2016 and transferred to the company’s

laboratory in Richmond, Virginia, in September 2019.

On November 14, 2019, Chan took

advantage of a rare period in which he was unsupervised to install an unauthorized virtual private
network (“VPN”) on his work computer. He then used the VPN to copy and transfer AmeriSci’s

trade secrets off-site. Five days later, Chan went on family medical leave and never returned to

work. AmeriSci discovered Chan’s misappropriation in January 2020.
B. Procedural History
1. Precedins Action

On July 7, 2021, AmeriSci sued Chan for breach of contract; breach of fiduciary duty;
misappropriation of trade secrets; conversion; violation of the Virginia Computer Crimes Act, Va.
Code § 182.-152.1, el seq.; violation of the Computer Fraud and Abuse Act, 18 U.S.C. § 1030;
violation of the Defend Trade Secrets Act of 2016, 18 U.S.C. § 1836; unlawful access to stored

communications, 18 U.S.C. § 2701; and trespass to chattels. See Complaint, Am. Sci. Team
Richmond, Inc. v. Chan, No. 3:21-cv-00437-HEH (E.D. Va. July 7, 2021), ECF No. 1.
AmeriSci failed to effectuate service on Chan in the matter,'

After

the Honorable Henry E. Hudson

dismissed AmeriSci’s complaint without prejudice on February 14, 2022.
2.

Instant Action

a. Service of Process

On June 22, 2022. AmeriSci again sued Chan, bringing a complaint nearly identical to the
one it filed in the earlier action before Judge Hudson. After experiencing more difficulty locating

Chan, AmeriSci purportedly issued personal service on Chan at his parents’ home in Scarborough,
Canada on October 4, 2022. The process server attests that he went to Chan’s parents’ home on
that dale under the belief that Chan lived there. (ECF No. 29-1

4.) Upon arriving, the process

' The parties dispute why AmeriSci failed to effectuate service in the original action.
AmeriSci contends that Chan actively avoided service and refused to authorize his then-attorney
in a different matter, Stewart Andrew Sutton, to accept service.

{See ECF No. 29, at 4.) Chan

disputes that he actively avoided service, (ECF No. 30, at 3-4), and points to a letter from
December 1. 2021, in which Sutton informed AmeriSci’s counsel that he lacked “authority to
accept service on [Chan’s] behalf,” (ECF No. 29-3, at 3).
2

server noticed and look a picture of a white Kia belonging to Chan in the driveway. {Id. ^ 5; ECF
No. 29-2 T| 5.) He then knocked on the front door, and an older Asian man answered. (ECF No.

29-1 ^ 6.) The process server asked to speak with Chan. {Id. ^ 7.) The older man closed the door
and returned with a second Asian man who identified himself as Enoch Chan.

{Id. ^ 8.) The

process server left a copy of the summons and complaint with the individual who identified himseli
as Enoch Chan. {Id.

9.)

Chan's father. David Chan, provides a different account of that day’s events. David agrees
that his son’s K.ia was in the driveway on October 4, 2022, but only because Chan ‘left it behind
in Canada when he moved to Hong Kong.” (ECF No. 30-1

8.) David further asserts that when

the process server came to his home, he answered the door and told him that Chan was not there.
{Id. ^5.) David then shut the door. {Id.) When David opened the door later, he "discovered that
some papers were left near the door." {Id.) David disputes that his son or any other Asian man
was in the home that day. {Id. ^13.)

b. Entry of Default and Default Judgntent

After Chan failed to respond to the complaint, AmeriSci moved for entry of default, which
the Clerk entered against Chan on November 22, 2022. Several months later, AmeriSci filed a

motion for default judgment with a Roseboro notice. Chan again did not respond, nor did he
appear for the hearing that the Court scheduled on AmeriSci’s motion on April 4,2023. The Court

accordingly granted AmeriSci’s motion and entered default judgment against Chan that same day.^

^ The Court ordered Chan to pay $255,500 in compensator)' damages and $50,000 in

punitive damages—plus post-judgment interest on both of those sums and $29,739.40 in
attorneys' fees and costs. (ECF No. 24, at 1.) The Court also permanently enjoined Chan from
further using AmcriSci’s trade secrets and confidential information and directed Chan to
immediately return all of AmeriSci’s confidential information in his possession. {Id. at 2.)

c. Motions and Supporting Documents
On February 15, 2024, Christopher Floge—Chan’s attorney in a separate matter—learned

of the default judgment entered against Chan in this action.^ (ECF No. 28-2 ^ 3.) Hoge alerted

Chan to his discovery five days later "by way of a phone call to his father, David Chan.” {Id. ^ 5.)
Chan then moved to set aside the Court’s entry of default judgment on March 11, 2024. In the
motion, Chan claims that he left the United States on March 4, 2022; temporarily lived with his

parents in Canada for about five months; and then moved to Hong Kong for medical school on

August 15, 2022. He maintains that AmeriSci never served him on October 4, 2022, and that he
lacked notice of this suit. In support, Chan includes (1) an affidavit stating that he first learned of
the default judgment against him through Hoge in February 2024 and (2) a receipt for a plane ticket
in his name from Toronto to Hong Kong on August 15, 2022. {See ECF No. 28-1.)
Thereafter, Chan submitted a motion for leave to supplement his prior filing with additional

documentary evidence as to his whereabouts on October 4, 2022. This included a travel history
report that he obtained from the Canada Border Services Agency (*‘CBSA”) showing that he left
Canada on August 15, 2022, and did not return to the country at any time through at least March
28, 2024. {See ECF No. 32-1, at 2.) Chan also submitted a ledger of transactions on his Octopus
Card, which '4s a rechargeable contactless card that can be used to pay both for transport in Hong

Kong

and

for many

shops and restaurants,” Octopus Card,

Civitatis Hong Kong,

^ Hoge replaced Sutton as Chan’s counsel in his dispute against his former immigration
attorney, Elaine Chang, in Maryland state court. {See ECF No. 28-2 % 2; ECF No. 29-3, at 4445.) Hoge also represents Chan’s parents in that same dispute. The Chans allege that Chang
worked for AmeriSci and extorted them out of $114,000 for legal immigration services.
AmeriSci’s counsel maintains that Chang did not work directly for AmeriSci, but did provide legal

immigration services for AmeriSci employees.
4

https://www.inlroducinghongkong.com/octopus-card (last visited Mar. 6, 2025).

The ledger

shows two transactions as having occurred on October 4, 2022. {See ECF 21-1, at 10.)

d. Motions Hearing
The Court conducted a hearing on Chan’s motions on December 12, 2024. Both Chan and
his Ihther testified. Chan maintained that he did not take any confidential information or install a

private VPN on any AmcriSci computer. Me also stated that he left Canada on August 15, 2022,
and has not returned since. To support his testimony, Chan introduced pictures that he took during

his travels to Hong Kong on August 15, 2022; the CBSA travel history report showing that he left
Canada on August 15, 2022, and did not return thereafter; and the Octopus Card ledger showing
his transactions in Hong Kong on October 4, 2022. The Court admitted these documents into
evidence over AmeriSci’s objection as to their authenticity.
On cross-examination, defense counsel questioned Chan about whether he continues to use

the email address ”enoch.chan(@hotmail.com,” the personal email address he used when he
worked at AmeriSci.

Chan insisted that he had not used the email address for years.

AmeriSci

then introduced a copy of an email with the email address ”[e-mail],” which the Court
admitted into evidence. Chan explained that he shares this new email address with his parents, but

that he rarely checks the account himself. AmeriSci next asked Chan whether he ever gave his
Octopus Card to someone else to use. which Chan denied,

finally. AmeriSci introduced the

complaint from Chan's Maryland case against Chang, 'fhc complaint lists 18 Farmington Crescent
in Ontario, Canada—the address of Chan’s parents’ home—as Chan’s address. When asked why

the Maiydand complaint lists his home address as in Canada rather than in Hong Kong, Chan stated
that he never told 1 logc to use that as his address. He then theorized that his father must have told

Hoge to use that address simply to ensure that all important documents in the case were sent there.

5

David took the stand next. Like Chan, David testified that Chan had not been in Canada

since August 15. 2022. When asked why the Maryland complaint lists 18 Larmington Crescent as
Chan’s address. David explained that Chan is merely a student in Hong Kong, so his permanent

legal address remains in Canada. Questioning then turned to what occurred on October 4, 2022.
David maintained that he told the process server that Chan was not home that day and that he found
the documents at his door the following day. David did not open the package, however, because
it was not addressed to him.

He also failed to tell Chan that he

had received the package until

learning of the default judgment against Chan in February 2024. When asked why he sat on this
information for around 16 months, David explained that he did not want to burden his son with yet
another legal matter and disrupt his studies.

At the end of the hearing, the Court withheld ruling on Chan’s motion to set aside default
judgment. The Court directed Chan to submit additional evidence regarding his whereabouts on
October 4, 2022, including documentation from his medical school detailing his dates of
enrollment and his academic schedule on the date in question. The Court also instructed Chan to

produce additional evidence showing that he has a meritorious defense, including an expert
affidavit explaining why Chan could not have committed the conduct alleged in the complaint.
e. Post-Hearing Submissions
As instructed, Chan submitted additional evidence to the Court on February 3, 2025. Chan
filed three documents to demonstrate that he was in Flong Kong on October 4, 2022.

First, he

submitted a certificate of enrollment from the University of Hong Kong showing that he was

admitted to medical school on September 1, 2022. {See ECF No. 38, at 22.) Second, he submitted

6

his class schedule for ihc week of October 3-7. 2022.’’ {See id at 23.) Third, Chan included a
copy of lexis between himself and his mother on October 4, 2022. (See id. at 24.) According to

Chan, these texts show that he went grocery shopping for her on that date, as corroborated by the
transactions contained in the previously submitted Octopus Card ledger.
Chan also submitted two pieces of evidence to demonstrate that he has a meritorious

defense. First, he shared a copy of what he attests was AmcriSci's work schedule on November
14, 2019. {See id. at 10.) The schedule shows that at least one other AmcriSci employee was

scheduled to work with him in the laboratory during all times of his shift that day. He. therefore.

disputes that AmeriSci left him unsupervised that day. Second. Chan provided an affidavit from
Patrick Fdlcr, a digital forensics expert. Eller stales that Chan would not have been able to install
a private VPN unless AmeriSci granted Chan network administrator access or Chan circumvented
the controls. {See id. at 14.) According to Eller, '“there is no indication that Mr. Chan possesses
the skill level required" to circumvent the controls. {Id.) Moreover, the alleged transfer would
have taken hours to accomplish given the size of the files. {See id.) Thus, assuming Chan was
supervised that day—as the schedule reflects—AmeriSci should have noticed any efforts by Chan

to misappropriate AmcriSci’s confidential information. {See id.)
II. DISCUSSION

Chan moves to set aside the Clerk's entry of default and the Court's final entry of default

judgment on the ground that he did not receive proper service in this case. He also moves to
supplement his motion with additional evidence of his whereabouts on October 4. 2022. The Court
will address the latter motion first, as resolution of Chan's motion to set aside default judgment

4

Chan created and maintained this schedule himself, as his medical school docs not keep

attendance records.

He nevertheless attests that it "is a true and accurate copy of |his] academic

calendar" for that week. (liCF No. 38, at 20.)
7

depends in part on whether the Court considers the evidence Chan submitted with his motion to
supplement the record.
A. Motion for Leave to Supplement
‘'On motion and reasonable notice, the court may, on just terms, permit a party to serve a

supplemental pleading setting out any transaction, occurrence, or event that happened after the
date of the pleading to be supplemented.” Fed. R. Civ. P. 15(d). Motions for leave to supplement
"should be freely granted, and should be denied only where ‘good reason exists .. ., such as
prejudice to the defendants.” Franks v. Ross, 313 F.3d 184, 198 n.l5 (4th Cir. 2002) (quoting
Walker v. United Parcel Serv., 240 F.3d 1268, 1278 (10th Cir. 2001)).
Chan seeks leave for the Court to consider two additional documents that evince his

whereabouts on October 4, 2022: (1) a travel history report from the CBSA detailing his travels in

and out of Canada from January 2022 through March 2024, and (2) a ledger of his Octopus Card

transactions in Hong ICong from April 2022 through April 2023. AmeriSci opposes the admission
of these documents on authenticity, hearsay, and relevance grounds.^

^ In opposing Chan's motion for leave to supplement, AmeriSci argues for the first time
that, even if its process server did not personally serve Chan, the company at least effectuated
proper alternative service because “the Summons and Complaint were served at Chan's residence
address in |Scarborough,] Canada and accepted by Chan's father.” (ECF No. 33, at 1.) A party
may serve another in a foreign country “by any agreed means of service that is reasonably
calculated to give notice, such as those authorized by the Hague Convention on the Service Abroad
of Judicial and Extrajudicial Documents.” Fed. R. Civ. P. 4(f)(1). ‘‘[I]f an international agreement
allows but does not specify other means,” a party may also serve another in accordance with the

foreign country's laws. Fed. R. Civ. P. 4(f)(2). Article 10 of the Hague Convention on the Service

Abroad of Judicial and Extrajudicial Documents allows for alternative service through the mail,
but not by leaving a copy of the summons and complaint at one’s home. And while the laws of

Scarborough, Canada permit alternative service by leaving the summons and complaint at one's

home with some other adult who lives there, .vee R.R.O. 1990, Reg. 194, r. 16.01(1), r. 16.03(5)(a),

the process server must also mail copies of these documents to the person at their residence the
same day or the following day, see id. see R.R.O. 1990, Reg. 194, r. 16.03(5)(b). AmeriSci has

not provided any evidence that its process server complied with this mailing requirement and, thus,
that it effectuated valid alternative service on Chan pursuant to Ontarian law. See id.
8

I. Authentication

AmeriSci first contends that Chan failed to properly authenticate the travel history report

and Octopus Card ledger. AmeriSci effectively contends that Chan must submit an affidavit from
the Canadian government official who produced the travel report history and from the Hong Kong
official who produced the Octopus Card ledger attesting to the authenticity of those documents.
This asks too much of Chan.

”To satisfy the requirement of authenticating or identifying an item of evidence, the
proponent must produce evidence sufficient to support a finding that the item is what the proponent
claims it is.” United States v, Walker, 32 F.4th 377, 393 (4th Cir. 2022) (quoting Fed. R. Evid.

901(a)). ‘*[T]he burden to authenticate under Rule 901 is not high,” United States v. Hossan, 742
F.3d 104, 133 (4th Cir. 2014) (quoting United States v. Vidacak, 553 F.3d 344, 349 (4th Cir.
2009)), and can be satisfied by offering testimony of a witness with knowledge of the evidence,

Fed. R. Evid. 901(b)(1); see Johnson v. Green, No. 1:23cvl85 (RDA/IDD), 2024 WL 3905718, at

*3 (E.D. Va. Aug. 22, 2024) (“Documents can be authenticated by an affidavit of an individual
with personal knowledge able to provide evidence sufficient to support a finding that the matter in
question is what its proponent claims.” (internal citations and quotation marks omitted)).
In United States v. Rumley, 952 F.3d 538 (4th Cir. 2020), a probation officer requested
records of the defendant's prior convictions from a state court. See id. at 547. The government
then introduced these records at sentencing through the probation officer's testimony to prove that

the defendant had a prior conviction for unlawful wounding. See id. The defendant argued that
the government failed to sufficiently authenticate the court records, as it had relied on the probation
officer's testimony

-not that of the state court official who shared the documents—to authenticate

the records. See id. The Fourth Circuit rejected this argument and concluded that the probation

9

officer’s testimony was “sufficient to justify the district court’s factual finding that the documents
were the official records of the circuit court.” Id. at 547-48.

Chan followed the exact same process here.

Before the December 12 hearing, Chan

submitted an affidavit attesting that he requested both his travel records from the Canadian
government and a copy of the record of his Octopus Card charges. {See ECF No. 32-1 fl 3-4.)
Chan then testified to the same at the hearing. As the Court noted at the hearing, this testimony

alone sufficiently authenticates these documents. See Rumley, 952 F.3d at 47^8. The information
contained in the travel history report and Octopus Card ledger only bolsters that conclusion. The

travel history report includes the words “Canada Border Services Agency” and the agency's logo,
while the Octopus Card ledger similarly includes the word “Octopus” and the Octopus Card logo.
{See ECF No. 32-1, at 2-17.) These details, when coupled with Chan’s attestations, do more than
enough to validate the documents’ authenticity.
2.

Hearsay

AmeriSci next argues that the travel history report and Octopus Card ledger constitute
inadmissible hearsay. Although hearsay is generally inadmissible, see Fed. R. Evid. 802, courts
may admit such evidence if the current stage of the proceedings allow, see. e.g., United States v.
Sullivan, 238 F. App’x 955, 956 (4th Cir. 2007) (per curiam) (“The court did not err considering

hearsay testimony at sentencing.”).

Notably, courts routinely rely on hearsay evidence in

adjudicating motions to set aside default judgment. See May v. Gale Tschuor Co., No. 2:09-CV172, 2008 WL 5069132, at *6 (N.D. ind. Nov. 24, 2008) (When considering a motion to set aside

default judgment, “the court is not concerned with whether [the defendant’s] evidence would
ultimately be admissible at trial .... The issue at this point in the litigation is only whether the
defendant’s claimed evidence raises a triable fact issue.”); Ewing v. Isaac, No. 22-CV-1009 JLS

10

(MDD), 2022 WL 17254757, at *6 n.l (S.D. Cal. Nov. 28, 2022) (considering a defendant’s

affidavit that purportedly contained hearsay “to be sufficient evidence, at this early pre-answer

stage of the proceedings, to support the Motion to Set Aside”); see also Cart v. Inv. Retrievers,
lnc.,'^0. 1:14-CV-1270, 2015 U.S. Dist. LEXIS 103787, at *7 n.l (N.D. Ohio Apr. 17,2015) (“[I]t

is not clear that an affidavit in support of a motion to set aside an entry of default judgment must
satisfy the evidentiary standards of an affidavit submitted in support of a motion for summary
judgment.”). Thus, regardless of whether the travel history report and Octopus Card ledger qualify

as hearsay, the Court may consider those documents in deciding Chan’s motion to set aside default
judgment.
3. Relevance

AmeriSci lastly deems the travel history report and Octopus Card ledger irrelevant on the

ground that those documents do not prove that AmeriSci failed to properly serve Chan. “Evidence
is relevant only if it has the Tendency to make a fact more or less probable than it would be without
the evidence.’ and then only if that ‘fact is of consequence in determining the action.’” United
States V. Freitekh, 114 F.4th 292, 316 (4th Cir. 2024) (quoting Fed. R. Evid. 401). The travel

history report and Octopus Card ledger easily satisfy this standard. The travel history report covers
October 4, 2022—the precise date in question. It, therefore, tends to show that Chan was not in
Canada on that date, a fact unquestionably of consequence in determining whether he received

service of process. Similarly, while AmeriSci speculates that Chan may have shared the Octopus
Card with someone else, no evidence supports this theory. In fact, Chan attested to the opposite
both in an affidavit and at the hearing. {See ECF No. 32-1, at 1 ("[Tjhese charges were made by

me in Hong Kong.’').) Because the ledger shows two transactions as having occurred in Hong

11

Kong on October 4, 2022, it clearly has relevance in determining whether Chan received service
of process in Canada that day.

In sum, Chan properly authenticated the travel history report and Octopus Card ledger; the
Court may consider this evidence at the current stage of the proceedings; and this evidence has

relevance in evaluating whether Chan received service of process. Accordingly, the Court will
grant Chan’s motion for leave to supplement the record.
B. Motion to Set Aside Entry of Default and Default Judgment
I. Entry of Default Judgment

Courts "may set aside a final default judgment under [Federal] Rule [of Civil Procedure]
60(b).” Fed. R. Civ. P. 55(c). Under Rule 60(b), a court may relieve a party from its final judgment

in instances of mistake, inadvertence, surprise, or excusable neglect, see Fed. R. Civ. P. 60(b)(1);

where the opposing party has engaged in fraud, misrepresentation , or misconduct, see Fed. R. Civ.
P. 60(b)(3); where the judgment is void, see Fed. R. Civ. P. 60(b)(4); and where any other reason

justifies relief, see Fed. R. Civ. P. 60(b)(6). ''[I]n order to obtain relief from a judgment under
Rule 60(b), a moving party must show [1] that his motion is timely, [2] that he has a meritorious
defense to the action, and [3] that the opposing party would not be unfairly prejudiced by having

the judgment set aside.” Park Carp. v. Lexington Ins. Co., 812 F.2d 894, 896 (4th Cir. 1987).^ '"If

the moving party makes such a showing, he must then satisfy one or more of the six grounds for

^ Courts sometimes—but not always—impose an additional showing of “exceptional
circumstances.” Compare Werner v. Carho, 731 F.2d 204, 206—07 (4th Cir. 1984) (imposing

“exceptional circumstances” requirement), with Park Corp., 812 F.2d at 896 (imposing no such
requirement). Of note here, courts have held that one’s failure to receive personal service of a
summons and complaint qualifies as an exceptional circumstance warranting setting aside entry of
default judgment. See, e.g., Hudson v. Scarborough, No. 4:21-cv-03703-JD, 2023 WL 4034452,
at*3(D.S.C. Junel5,2023).
12

relief set forth in Rule 60(b) in order to obtain relief from the judgment.’' Id. Because Chan has

satisfied each of these requirements, the Court will set aside its entry of default judgment.
a.

Timeliness

'‘All motions under Rule 60(b) must be made within a reasonable time.

Id.

The Fourth

Circuit has found the timeliness requirement satisfied where a party filed its motion to set aside
default judgment filteen days after learning of the judgment. See id. A nearly identical timeline
exists here, as Chan filed his motion to set aside default judgment twenty days after learning of the

Court’s entry of default judgment. Thus, Chan timely filed his motion.
h. Meritorious Defense

To prevail on a motion to set aside default judgment, “a party is not required to establish a
meritorious defense by a preponderance of the evidence.

Cent. Op. Co. v. Util. Workers of Am.

AFL-CIO, 491 l'.2d 245, 252 n.8 (4th Cir. 1974). Instead, the party must merely make “a proffer

of evidence which would permit a finding for the defaulting party.” August Fiberglass Coatings.
Inc. V. Fodor Contracting Corp., 843 F.2d 808, 812 (4th Cir. 1988). If just “some possibility
[exists] that the outcome . . . after a full trial will be contrary to the result achieved by the default,”
the Court should find that the defaulting party raised a meritorious defense. Id. (citation omitted).

Chan denies having the ability to commit the alleged misappropriation of trade secrets. In

support, Chan shares a copy of AmeriSci’s work schedule for November 2019, which shows that
at least one other person worked with him in the laboratory at all times during his shift on
November 14, 2019. Additionally, Eller states that Chan could not have downloaded a private

VPN unless AmeriSci granted him the necessary privileges or he circumvented the controls,

neither of which appears to have occurred here. These facts, if accepted, would enable a factfinder
to rule for Chan. Thus, Chan elears the low bar for demonstrating that he has a meritorious defense.

13

c. Unfair Prejudice

In considering whether a parly will suffer prejudice from setting aside a default judgment,
courts may evaluate ‘'whether the delay impaired the nonmovant’s ability to present some of its
evidence, proceed to trial, or complete discovery.” Wang v. Doe, No. l:22-cv-651 CMII/IDD,
2024 WL 3100312, at *2 (E.D. Va. May 30, 2024); see Colleton Prep. Acad. Inc. v. Hoover
Universal, Inc., 616 F.3d 413, 418-19 (4lh Cir. 2010). “The mere existence of delay, additional

legal costs, and requiring the nonmovant to prove his case on the merits are insufficient, alone, to
create unfair prejudice.” Wang, 2024 WL 3100312, at *2; see Colleton, 616 F.3d at 418-19.
AmcriSci claims prejudice on the ground that Chan possibly destroyed evidence of his

misappropriation at some point over the past three years.

While Chan certainly could have

destroyed evidence, AmeriSci merely speculates to this point and fails to identify what evidence
Chan even has in his possession. Moreover, AmcriSci likely retains control over most, if not all,
of the evidence it needs to prove its claims given that it retains possession of the computer that

Chan allegedly used to misappropriate the company’s trade secrets. AmeriSci, therefore, will not
face unfair prejudice from having to litigate its case on the merits.
d. Rule 60(b) Grounds for Relief

Chan asserts various grounds for relief under Rule 60(b), including that the judgment is

void for want of personal jurisdiction under Rule 60(b)(4). To prevail on this ground, Chan must
demonstrate that AmeriSci did not, in fact, serve him in this case. See Koehler v. Dodwell, 152

F.3d 304, 306-07 (4th Cir. 1998) ("[A] failure to obtain proper service on the defendant deprives

the court of personal jurisdiction over the defendant,” and “any judgment entered against a
defendant over whom the court does not have personal jurisdiction is void.”).

I'o be sure,

AmeriSci’s process server filed an affidavit indicating that he personally served Chan on October

14

4, 2022. and a 2024 Maryland slate court filing lists Chan's home address as in Canada. Chan has
nevertheless presented an array of evidence showing that he was not in Canada on October 4,2022.
This includes a receipt for a plane ticket from Toronto to Hong Kong in Chan’s name on August
15, 2022; a travel history report from the CBSA showing that he did not enter Canada between
August 15, 2022, and March 28, 2024; the Octopus Card ledger with transactions occurring in

Hong Kong on October 4, 2022; texts between Chan and his mother corroborating that he went
grocery shopping for her that day; a certificate of enrollment at the University of Hong Kong
showing that Chan was admitted to medical school on September 1, 2022; a copy of Chan’s class
schedule for the week of October 3-7, 2022; and live testimony from both Chan and his father

stating that he was not in Canada on October 4, 2022. The totality of the evidence tends to show
that Chan was not in Canada on October 4, 2022, and, therefore, was not properly served in this
case.

Accordingly, the Court’s entry of default judgment is void.
2. Entry of Default

Courts “may set aside an entry of default for good cause.

Fed. R. Civ. P. 55(c).

In

evaluating whether good cause exists, “a district court should consider whether the moving party
has a meritorious defense, whether it acts with reasonable promptness, the personal responsibility
of the defaulting party, the prejudice to the party, whether there is a history of dilatory action, and

the availability of sanctions less drastic.” Colleton, 616 F.3d at 417 (quoting Payne ex rel. Est. oj
Calzada v. Brake, 439 F.3d 198, 204-05 (4th Cir. 2006)). The Fourth Circuit has expressed a

“strong preference” against entries of default and for district courts to dispose of claims on their
merits. Id. Thus, “Rule 55(c) motions must be 'liberally construed in order to provide relief from

the onerous consequences of defaults and default judgments.’
Arthur Murray, Inc., 816 F.2d 951, 954 (4th Cir. 1987)).

15

Id. at 421 (quoting Lolatchy v.

Nearly all the factors enumerated above weigh in Chan’s favor. As noted, Chan acted with

reasonable promptness; he has sufficiently raised a meritorious defense; and AmeriSci will suffer
no unfair prejudice from having to litigate its case on the merits. See supra Sections II.B.l.a.-c.

The totality of the evidence also leans towards a finding that he was not in Canada on October 4,
2022, thus mitigating his personal responsibility for default. See supra Section II.B.l.d. And
while AmeriSci claims that Chan has actively avoided process for years, the evidence presented

falls short of establishing that he has “a history of dilatory action.

Colleton, 616 ¥.3d at 417.

Finally, requiring Chan to defend this case on the merits unquestionably constitutes a sanction less

drastic than imposing hundreds of thousands of dollars of damages on him without giving him the
opportunity to defend himself The Court, therefore, will set aside the Clerk’s entry of default.
III. CONCLUSION

For the foregoing reasons, the Court grants Chan’s motions to set aside default judgment

and for leave to supplement that filing. (ECF Nos. 27, 31.)
The Court will issue an appropriate Order.

Let the Clerk send a copy of this Opinion to all counsel of record.

Isl

Date: I h March 2025

John A. Gibney, Jr. /

/ .

Senior United States/bisjficl/Judge

Richmond, VA

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