The opinion of the court was delivered by: Honorable Janis L. Sammartino United States District Judge
ORDER (1) GRANTING PNS STORES, INC.'S MOTION TO SET ASIDE ENTRY OF DEFAULT, (2) GRANTING PNS STORES, INC.'S MOTION TO DISMISS COMPLAINT, (3) GRANTING SEDONA STAFFING'S MOTION TO SET ASIDE ENTRY OF DEFAULT, (4) GRANTING SEDONA STAFFING'S MOTION TO DISMISS COMPLAINT, and (5) "MAIN OFFICE BIG LOTS", and DENYING AS MOOT PLAINTIFF'S MOTION FOR JUDGMENT ON THE MERITS (Doc. Nos. 12, 13, 20, 22, 23)
Michelle Yvette Williams ("plaintiff") pleads a single cause of action for violation of the Freedom of Information Act because defendants PNS Stores, Inc., erroneously sued as "Main Office Big Lots," and Sedona Staffing are alleged to have unlawfully withheld documents relating to the termination of plaintiff's employment. (Doc. No. 1.) Plaintiff has obtained entry of default against both defendants. (Doc. No. 9.) Each defendant has filed a motion to set aside the entry of default against it (Doc. Nos. 12 (PNS Stores) & 22 (Sedona Staffing)) and to dismiss plaintiff's complaint (Doc. Nos. 13 (PNS Stores) & 23 (Sedona Staffing)). Plaintiff has moved for "judgment on the merits". (Doc. No. 20.) Assuming the parties' familiarity with the underlying facts, the Court addresses these motions as follows:
The Court will grant each defendant's motion to set aside entry of default. The Court's reasoning is equally applicable to both defendants' motions. "The court may set aside an entry of default for good cause[.]" Fed. R. Civ. P. 55(c). Factors relevant to the "good cause" inquiry include "(1) whether [defendant] engaged in culpable conduct that led to the default; (2) whether [defendant] had a meritorious defense; or (3) whether reopening the [action] would prejudice [plaintiff]." Franchise Holding II, LLC v. Huntington Rests. Group, Inc., 375 F.3d 922, 926 (9th Cir. 2004). The Court enjoys "especially broad" discretion to find good cause when setting aside an entry of default, rather than a default judgment. Mendoza v. Wight Vineyard Mgmt., 783 F.2d 941, 945 (9th Cir. 1986); McManus v. Am. States Ins. Co., 201 F.R.D. 493, 500 (C.D. Cal. 2000).
All three factors favor setting aside the entry of default. Defendant did not engage in culpable conduct because service of the summons and complaint was improper. See Fed. R. Civ. P. 4(h)(1) (explaining that domestic corporations may be served by delivering a copy of the summons and complaint to the authorized agent for service of process or by following the law of the state where the district court is located); Cal. Civ. Proc. Code § 416.10 (explaining permissible ways to serve a corporation, including service on designated agent for service of process or delivering copy to any one of listed executives); Randell v. Cal. State Comp. Ins. Fund, 2008 WL 2946557, at *2-*3 (E.D. Cal. July 29, 2008) (finding good cause to set aside entry of default where service was inadequate). The proof of service for Sedona Staffing was signed by Delia Puentes, an operations administrator who was not authorized to receive service of process. The proof of service for PNS Stores, Inc. lacks any signature. In short, plaintiff failed to serve the summons and complaint properly on either corporate defendant.
For the reasons stated post in the Court's analysis of the motion to dismiss, each defendant has a meritorious defense to plaintiff's complaint.
Finally, the Court finds that setting aside the entry of default and litigating the case on the merits will not prejudice plaintiff. To establish prejudice, there must be "greater harm than simply delaying resolution of the case. Rather, 'the standard is whether [plaintiff's] ability to pursue [her] claim will be hindered.'" TCI Group Life Ins. Plan v. Knoebber, 244 F.3d 691, 701 (9th Cir. 2001) (quoting Falk v. Allen, 739 F.2d 461, 463 (9th Cir. 1984)). The Court finds that delay is the only harm that will result from setting aside the entry of default.
Having set aside the entry of default, the Court will grant each defendant's motion to dismiss. The Court's reasoning is equally applicable to both defendants' motions. The Freedom of Information Act ("FOIA"), 5 U.S.C. § 552(a), imposes duties on "each agency [to] make available to the public information[.]" The statute defines "agency" as "any executive department, military department, Government corporation, Government controlled corporation, or other establishment in the executive branch of the Government (including the Executive Office of the President), or any independent regulatory agency[.]" Id. § 552(f)(1). The FOIA does not apply to private corporations, which defendants claim to be. Unt v. Aerospace Corp., 765 F.2d 1440, 1447 (9th Cir. 1985); Furlong v. Cochran, 2006 WL 3254505, at *1 (W.D. Wash. Nov. 9, 2006); The complaint does not allege that PNS Stores, Inc. and Sedona Staffing, both purporting to be private corporations, fall within the FOIA's definition of "agency."
Having granted the motion to dismiss, the Court will deny as moot plaintiff's motion for judgment on the merits. Also, having dismissed the complaint, the Court must determine whether to grant leave to amend. When dismissing a complaint, the Court may deny leave to amend only if it appears with certainty that the plaintiff cannot state a claim and any amendment would be futile. See Fed. R. Civ. P. 15(a) (stating leave to amend "shall be freely given when justice so requires"); DeSoto v. Yellow Freight Sys., Inc., 957 F.2d 655, 658 (9th Cir. 1992); Schreiber Distrib. Co. v. Serv-Well Furniture Co., 806 F.2d 1393, 1401 (9th Cir. 1986). Here, the Court grants leave to amend to allow plaintiff to plead that defendants are "agencies" within the meaning of the FOIA. Also, plaintiff's request for judgment on the merits "alleges that such wrongfully [sic] termination was due to Racial [sic] and other discrimination." (Doc. No. 20-1, at 3.) Therefore, leave to amend is also appropriate so that plaintiff may allege any additional causes of action, other than an FOIA claim.
In summary, the Court GRANTS each defendant's motion to set aside entry of default and DIRECTS the Clerk to set aside the entry of default as to both defendants. The Court GRANTS each defendant's motion to dismiss the complaint WITHOUT PREJUDICE. If plaintiff wishes to file an amended complaint, plaintiff SHALL FILE the amended complaint on or before October 3, 2008. Plaintiff MUST COMPLY with Federal Rule of Civil Procedure 4(h)(1) when serving the summons and complaint. The Court DENIES AS MOOT plaintiff's motion for judgment on the merits.
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