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Marilyn Dillard, et al v. Victoria M. Morton Enterprises

February 3, 2011

MARILYN DILLARD, ET AL., PLAINTIFFS,
v.
VICTORIA M. MORTON ENTERPRISES, INC., ET AL., DEFENDANTS. RUTH GALTIERI-CARLSON, ET AL., PLAINTIFFS,
v.
VICTORIA M. MORTON ENTERPRISES, INC., ET AL., DEFENDANTS.



The opinion of the court was delivered by: Kendall J. Newman United States Magistrate Judge

FINDINGS AND RECOMMENDATIONS

Presently before the court is a "Motion to Strike Defendants' Answer and Continued Application for Default Judgment," which was filed by plaintiffs in both above-captioned actions.*fn2 (Dillard, et al. v. Victoria M. Morton Enterprises, Inc., et al., No. 2:08-cv-1339 KJM KJN PS ("Dillard"), Dkt. No. 54; Galtieri-Carlson, et al. v. Victoria M. Morton Enterprises, Inc., et al., No. 2:08-cv-1777 KJM KJN PS ("Galtieri-Carlson"), Dkt. No. 40.) As discussed below, the undersigned previously denied applications for default judgment in both cases because of deficiencies largely related to the damages sought, but the denials were without prejudice. (Order, Apr. 23, 2010, Dillard, Dkt. No. 51; Order, Apr. 23, 2010, Galtieri-Carlson, Dkt. No. 36.) The plaintiffs' respective continued applications for default judgment remain before the court, and are the subject of these proposed findings and recommendations.*fn3 At this point in the proceedings, each set of plaintiffs seeks a default judgment against the same set of defendants-defendants Victoria M. Morton Enterprises, Inc., Suddenly Slender, and Suddenly Slender International-and seeks an award of $2 million dollars as to each named plaintiff in each action.*fn4

On September 29, 2010, the undersigned conducted a "prove-up" hearing in both cases regarding the plaintiffs' respective claims for damages. Attorneys R. Parker White, Jeffrey D. Fulton, and William L. Brelsford, Jr. appeared on behalf of all of the plaintiffs. None of the defendants or their representatives appeared at the prove-up hearing.

In regards to the Dillard matter, plaintiffs Marilyn Dillard and Stephen Dillard testified at the prove-up hearing, and Marilyn Dillard also testified on behalf of two minor plaintiffs, Ciera and Ariel Dillard, who are the children of Marilyn and Stephen Dillard.*fn5 As to the Galtieri-Carlson matter, plaintiffs Ruth Galtieri-Carlson and Deana Galtieri testified, and Deana Galtieri also testified on behalf of minor plaintiff Christian Galtieri-Brown, who is Deana Galtieri's son.*fn6 Although given repeated opportunities to submit documentary evidence in support of their claims for damages, none of the plaintiffs did so and, instead, plaintiffs in both actions seek only general damages in reliance on the testimony provided at the prove-up hearing and the previously filed declarations of the plaintiffs.

The undersigned has considered the briefs, oral arguments of counsel, testimony provided at the prove-up hearing, and the record in this case and, for the reasons stated below, recommends that plaintiffs' applications for default judgment in both the Dillard and Galtieri-Carlson matters be granted. The undersigned recommends an award of general damages to each plaintiff as discussed below.

I. BACKGROUND

Both of these products liability actions involve, as a general matter, personal injuries allegedly suffered by plaintiffs as a result of their exposure to the same "body wrap" products designed, manufactured, distributed, and/or licensed by defendants in each action. In a previously entered, 30-page order denying the initial application for default judgment filed by plaintiffs, the undersigned recounted in detail the allegations in the operative complaints in each action and the procedural histories of these cases. For the sake of brevity, that April 23, 2010 order is incorporated here by reference. (See Order, Apr. 23, 2010, Dillard, Dkt. No. 51; Order, Apr. 23, 2010, Galtieri-Carlson, Dkt. No. 36.)

Briefly stated, plaintiffs in the above-captioned actions, which are related but unconsolidated, jointly applied for entry of default judgment against various defendants who at one point in the litigation appeared but ceased defending themselves in the litigation. On April 23, 2010, the undersigned denied plaintiffs' joint application due to several deficiencies contained therein. (Order, Apr. 23, 2010, Dillard, Dkt. No. 51; Order, Apr. 23, 2010, Galtieri-Carlson, Dkt. No. 36.) Although the undersigned concluded that the entry of default judgments in both cases was likely warranted under the relevant legal standards, plaintiffs' imprecise and expedient application for default judgment was deficient in several respects, mostly related to the legal and factual basis for the damages award sought.*fn7 The undersigned denied plaintiffs' joint application for default judgment without prejudice and provided plaintiffs in both actions 60 days to, among other things, "file supplemental materials, including supplemental declarations and a memorandum of points and authorities, legally and factually substantiating a precise request for damages on behalf of each of the plaintiffs . . . and addressing the court's substantive concerns." (See Order, Apr. 23, 2010, at 29, Dillard, Dkt. No. 51; accord Order, Apr. 23, 2010, at 30, Galtieri-Carlson, Dkt. No. 36.)

In response to the court's April 23, 2010 order, plaintiffs in both actions filed the identical pending "Continued Application for Default Judgment" and a related declaration of R. Parker White in support ("White Declaration"). Rather than address the court's detailed concerns regarding, among others, the legal and factual basis for plaintiffs' respective requests for damages in each case, the White Declaration simply states, in relevant part:

2. In response to the Court's order dated April 23, 2010, Plaintiffs request a default judgment in the amount of $2,000,000.00 each, based on the papers already submitted before the Court. Additionally, Plaintiffs request a prove-up hearing and will submit to examination before the Court and will submit medical records already obtained on behalf of Plaintiffs. At this stage of the litigation, because Defendants have failed to participate in discovery, Plaintiffs cannot justify the expense of submitting experts before the Court in support of Plaintiffs request for default judgments against Defendants. (White Decl. ¶ 2, Dillard, Dkt. No. 54, Doc. No. 54-2, and Galtieri-Carlson, Dkt. No. 40, Doc. No. 40-2) (emphasis added.)*fn8

The undersigned granted plaintiffs' request for a "prove-up hearing" in each case, and subsequently conducted that hearing on September 29, 2010. In granting the prove-up hearing, the undersigned stated:

The undersigned will grant plaintiffs' request for a "prove-up hearing" in each case, and will specially set that hearing. However, the undersigned notes that plaintiffs' counsel's generalized one-paragraph response to the court's 30-page order, which highlighted serious and specific concerns about the viability of plaintiffs' entitlement to damages in each case, is troubling. It illustrates plaintiffs' counsel's unwillingness to invest the time and effort required to legally and factually substantiate plaintiffs' collective claim for . . . damages. For example, a prove-up hearing, as opposed to an organized and detailed memorandum of points and authorities supported by declarations and documentary evidence, will not provide the court with plaintiffs' precise request for damages and the legal basis for the award of specific categories or types of damages. It appears plaintiffs' counsel would prefer to simply submit testimony and evidence to the court and leave it to the court to determine the legal basis for the damages sought and the amount of damages. Plaintiffs are entitled to take their chances with this less-than-ideal approach, which is the same approach that led to the court's initial denial of plaintiffs' deficient application for default judgment. Nevertheless, although the court will grant plaintiffs in both cases their requested prove-up hearing, it will permit plaintiffs in each case to submit memoranda points and authorities and supporting declarations, as discussed in the court's April 23, 2010 orders, prior to the prove-up hearing.

(Order, July 27, 2010, at 3-4 (footnote omitted), Dillard, Dkt. No. 57; Order, July 21, 2010, at 3-4 (footnote omitted), Galtieri-Carlson, Dkt. No. 43.) Although the court provided plaintiffs with repeated opportunities to file memoranda of points and authorities in support of their damages requests and to submit medical records in advance of the prove-up hearing, none of the plaintiffs submitted memoranda or documentary evidence substantiating the damages sought, except for redundant declarations of plaintiffs that the undersigned already found to be of only limited assistance as to damages.

At the prove-up hearing, the undersigned raised an additional concern regarding whether plaintiffs had adequately established through their pleadings that plaintiffs' exposure to the body wrap products caused the injuries allegedly suffered by plaintiffs. The undersigned provided plaintiffs with an opportunity to submit supplemental briefs as to this issue, and plaintiffs in both cases did so. (Suppl. Br. In Supp. of Pls.' Application for Default J. By Court, Dillard, Dkt. No. 62; Suppl. Br. In Supp. of Pls.' Application for Default J. By Court, Galtieri-Carlson, Dkt. No. 48.) Plaintiffs' counsel made clear at the prove-up hearing and in the most-recent supplemental briefing that "[e]ach plaintiff's individual request for judgment in the amount of $2,000,000 is based on general damages as a result of the physical and emotional harms each Plaintiff has suffered due to exposure to [defendants'] products." (Id.)

II. LEGAL STANDARDS

Pursuant to Federal Rule of Civil Procedure 55, default may be entered against a party against whom a judgment for affirmative relief is sought who fails to plead or otherwise defend against the action. See Fed. R. Civ. P. 55(a). However, "[a] defendant's default does not automatically entitle the plaintiff to a court-ordered judgment." PepsiCo, Inc. v. Cal. Sec. Cans, 238 F. Supp. 2d 1172, 1174 (C.D. Cal. 2002) (citing Draper v. Coombs, 792 F.2d 915, 924-25 (9th Cir. 1986)). Instead, the decision to grant or deny an application for default judgment lies within the district court's sound discretion. Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980). In making this determination, the court considers the following factors:

(1) the possibility of prejudice to the plaintiff, (2) the merits of plaintiff's substantive claim, (3) the sufficiency of the complaint, (4) the sum of money at stake in the action; (5) the possibility of a dispute concerning material facts; (6) whether the default was due to excusable neglect, and (7) the strong policy underlying the Federal Rules of Civil Procedure favoring decisions on the merits.

Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986). Default judgments are ordinarily disfavored. Id. at 1472.

As a general rule, once default is entered, well-pleaded factual allegations in the operative complaint are taken as true, except for those allegations relating to damages. TeleVideo Sys., Inc. v. Heidenthal, 826 F.2d 915, 917-18 (9th Cir. 1987) (per curiam) (citing Geddes v. United Fin. Group, 559 F.2d 557, 560 (9th Cir. 1977) (per curiam)); accord Fair Housing of Marin v. Combs, 285 F.3d 899, 906 (9th Cir. 2002). In addition, although well-pleaded allegations in the complaint are admitted by a defendant's failure to respond, "necessary facts not contained in the pleadings, and claims which are legally insufficient, are notestablished by default." Cripps v. Life Ins. Co. of N. Am., 980 F.2d 1261, 1267 (9th Cir. 1992) (citing Danning v. Lavine, 572 F.2d 1386, 1388 (9th Cir. 1978)); accord DIRECTV, Inc. v. Hoa Huynh, 503 F.3d 847, 854 (9th Cir. 2007) (stating that a defendant does not admit facts that are not well-pled or conclusions of law); Abney v. Alameida, 334 F. Supp. 2d 1221, 1235 (S.D. Cal. 2004) ("[A] default judgment may not be entered on a legally insufficient claim."). A party's default conclusively establishes that party's liability, although it does not establish the amount of damages. Geddes, 559 F.2d at 560 (stating that although a ...


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