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Velasco v. MIS Amigos Meat Market

March 16, 2009

MIGUEL VELASCO, ELIESER SERRANO, NICOLAS VELASCO, INDIVIDUALLY AND ACTING IN THE INTEREST OF OTHER CURRENT AND FORMER EMPLOYEES, PLAINTIFFS,
v.
MIS AMIGOS MEAT MARKET, INC, AND URIEL GONZALEZ, DEFENDANTS.



FINDINGS AND RECOMMENDATIONS

On December 3, 2008, this court heard defendants' motion, filed October 29, 2008, to set aside the default entered against them by the Clerk of Court on April 24, 2008.*fn1 Joan E. Presky appeared on behalf of defendants. Plaintiffs were represented by Stanley S. Mallison. Upon review of the motion and supporting documents, consideration of the parties' oral arguments, and good cause appearing, the court now issues the following findings and recommendations.

BACKGROUND

Plaintiffs filed their complaint on March 6, 2008, as "a wage and hour action to vindicate the rights afforded employees by the Fair Labor Standards Act, 29 U.S.C. §§201 et seq. ('FLSA'), the California Labor Code, California Business and Professions Code, and California contract and common law." Compl., at ¶ 1. Defendant Mis Amigos Meat Market, Inc. ("Mis Amigos"), is a California corporation with its principal place of business in Bay Point, California, and operates a retail grocery business in Woodland, California. Defendant Uriel Gonzalez ("Gonzalez"), is the owner and agent for service of process for Mis Amigos. Id. at ¶¶ 17-18.

Plaintiffs were employed by defendants as non-exempt employees to perform various tasks including, but not limited to, preparing and stocking produce and meats. Id. at ¶ 3. Plaintiffs claim, inter alia, that defendants denied them minimum wages with rest and meal periods or compensation thereof, overtime wages, and accrued vacation pay. Gonzalez is sued pursuant to the California's Private Attorney General Act ("PAGA"), Cal. Labor Code §§ 2698 et seq., which empowers aggrieved employees to recover penalties resulting from wage and hour violations on behalf of himself, the State of California and all current and former employees of a defendant. Id. at ¶ 2.

On April 16, 2008, plaintiffs filed returns demonstrating service of process upon Gonzalez and Mis Amigos on March 24, 2008. See Docket Nos. 6, 7. On April 21, 2008, plaintiffs filed amended returns setting forth the time of the alleged service of process, and clarified that defendant Gonzalez was served both individually and on behalf of defendant Mis Amigos. See Docket Nos. 8, 9. Pursuant to plaintiffs' request filed April 21, 2008, the Clerk entered default against defendants on April 24, 2008. Dckt. No. 12.

On October 29, 2008, defendants filed the instant motion pursuant to Fed. R. Civ. P. 55(c), asserting, inter alia, that good cause exists for setting aside the Clerk's entry of default.*fn2

LEGAL STANDARDS

Rule 55(c), Federal Rules of Civil Procedure, provides that "[t]he court may set aside an entry of default for good cause." "Good cause" is assessed by the court's consideration of the following factors: whether default is attributable to culpable conduct by defendant; whether defendant has a meritorious defense; and whether setting aside default will unfairly prejudice plaintiff. See TCI Group Life Ins. Plan v. Knoebber, 244 F.3d 691, 696 (9th Cir. 2001). These factors are disjunctive, and the court may vacate entry of default if any of the three factors is true. Franchise Holding II, LLC. v. Huntington Restaurants Group, Inc., 375 F.3d 922, 926 (9th Cir. 2004) (citation omitted). It is within the court's reasonable discretion to determine whether good cause has been shown. See Madsen v. Bumb, 419 F.2d 4, 6 (9th Cir. 1969); Curry v. Jensen, 523 F.2d 387, 388 (9th Cir. 1975). The court's discretion is particularly generous where the motion seeks to set aside entry of default, rather than default judgment. Mendoza v. Wight Vineyard Management, 783 F.2d 941, 945 (9th Cir. 1986). Any doubt should be resolved in favor of setting aside a default, in order to decide cases on their merits. Schwab v. Bullock's, Inc., 508 F.2d 353, 355 (9th Cir. 1974).

DISCUSSION

The hearing on defendants' motion focused on two matters: (1) defendant Gonzalez' averment that, while he received a copy of the complaint in the mail, service of process was never made upon him;*fn3 and (2) the parties' extended communications prior to the filing of plaintiffs' motion for default judgment.

Notwithstanding the presumption created by the affidavits of the process server that service of process upon defendants was proper, see, e.g., In FROF, Inc. v. Harris, 695 F. Supp. 827, 829 (E.D. Pa. 1988), and that defendants were also informed of this case by service of plaintiffs' request for entry of default on April 21, 2008, see Mallison Decl. at ¶ 13, and Dckt. Nos. 10 and 11, and pursuant to plaintiffs' letter dated May 29, 2008, id. at ¶ 22, and Exh. D, the court is persuaded that defendants have demonstrated good cause to set aside the default. Plaintiffs' efforts to obtain substantial documentation from defendants prior to moving for default judgment, and defendants' cooperation thereto, support defendant Gonzalez' representation that he reasonably believed, at least until October 2008, that such cooperation was serving to satisfy his obligations in this action. Moreover, it is now clear that defendants intend to proceed in the defense of this action, thus promoting the overriding public policy that cases be decided on their merits.

The chronology of this action is instructive. Following the Clerk's April 24, 2008 entry of default, the court, sua sponte, continued the initial scheduling conference from May 5, 2008 to July 14, 2008, "pending plaintiffs' filing of a motion for default judgment." Minute Order, filed April 28, 2008.

On June 24, 2008, plaintiffs "personally served" on defendant Mis Amigos a subpoena duces tecum in an effort "to obtain the documents necessary to perfect the judgment," Mallison Decl. at ¶ 25, although, as discussed infra, defendant Gonzalez states that he did not receive the subpoena until October. ¶ 3. I did receive the Complaint, by mail. I do not remember receiving the summons, and I did not know that I was supposed to respond or do anything with the court. Even if I did receive the summons, which I do not remember receiving, I did not understand that I had to file ...


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