The opinion of the court was delivered by: Sheila K. Oberto United States Magistrate Judge
FINDINGS AND RECOMMENDATIONS THAT DEFENDANTS' MOTION TO SET ASIDE ENTRIES OF DEFAULT BE GRANTED (Docket No. 17) OBJECTIONS DUE: 15 DAYS
On August 19, 2010, Plaintiff Jesus Sosa ("Plaintiff") filed a complaint against Defendants Sunny I. Nishimoto and Dorothy Nishimoto, dba Fastway Market, and Nishimoto Company, Inc. (collectively "Defendants") alleging violations of the Americans with Disabilities Act of 1990 ("ADA"), the California Disabled Persons Act, the Unruh Civil Rights Act, and the California Health and Safety Code. (Doc. 2.) The gravamen of the complaint is that the building and facilities in which Fastway Market operates do not adequately accommodate persons with disabilities.
An executed summons was filed on September 23, 2010, indicating that Dorothy Nishimoto and Sunny I Nishimoto, dba Fastway Market, were served on September 14, 2010, through substitute service. (Doc. 6.) Their response to the complaint was due on or before October 5, 2010, but they failed to respond. On November 16, 2010, Plaintiff requested an entry of default with regard to Dorothy and Sunny I. Nishimoto (Doc. 7), which the Clerk entered November 17, 2010 (Docs. 8, 9.). An executed summons was filed on November 17, 2010, indicating that Nishimoto Company, Inc. was served by substitute service on September 14, 2010. (Doc. 10.) A response to the complaint was due on or before October 5, 2010. Following Nishimoto Company, Inc.'s failure to respond to the complaint, Plaintiff requested an entry of default on November 22, 2010. (Doc. 11.) The Clerk of the Court entered Nishimoto Company, Inc.'s default on November 22, 2010. (Doc.12.) On January 31, 2011, Defendants filed a motion to set aside the entries of default.
As a procedural matter, the Court notes that Plaintiff filed four similar complaints against various defendants, who are all represented by Steven A. Geringer. These four actions include: (1) 1:10-cv-01577-OWW-SKO, (2) 1:10-cv-01494-OWW-SKO, (3) 1:10-cv-01446-LJO-GSA,*fn1 and (4) 1:10-cv-01454-OWW-MJS. Defaults were entered against all the defendants in these actions, and Mr. Geringer has filed motions to set aside the defaults in each action.
"The court may set aside an entry of default for good cause . . . ." Fed. R. Civ. P. 55(c). To determine whether good cause exists, the court must consider the following three factors: (1) whether the party seeking default engaged in culpable conduct that led to the default; (2) whether the party seeking default has no meritorious defense; or (3) whether reopening the default would prejudice the other party. United States v. Signed Pers. Check No. 730 of Yubran S. Mesle ("Mesle"), 615 F.3d 1085, 1091 (9th Cir. 2010) (citing Franchise Holding II, LLC v. Huntington Rests. Group, Inc., 375 F.3d 922, 925-26 (9th Cir. 2004)). This is the same standard used for determining whether a default judgment should be set aside under Rule 60(b). Id. The good cause test is disjunctive, "such that a finding that any one of these factors is true is sufficient reason for the district court to refuse to set aside the default." Id. In considering these good cause factors, the Ninth Circuit instructs that the court is to be guided by the underlying policy objective that "'judgment by default is a drastic step appropriate only in extreme circumstances; a case should, whenever possible, be decided on the merits.'"Id. (quoting Falk v. Allen, 739 F.2d 461, 463 (9th Cir.1984)).
"[A] defendant's conduct is culpable if he has received actual or constructive notice of the filing of the action and intentionally failed to answer." TCI Group Life Ins. Plan v. Knoebber ("TCI Group"), 244 F.3d 691, 697 (9th Cir. 2001) (emphasis in original). A neglectful failure to answer where the defendant offers a credible, good faith explanation "negating any intention to take advantage of the opposing party, interfere with judicial decision making, or otherwise manipulate the legal process is not 'intentional' under [the Ninth Circuit's] default cases . . . . " Id; Mesle, 615 F.3d at 1092 ("movant cannot be treated as culpable simply for having made a conscious choice not to answer").
Defendants assert that their counsel had conversations with Plaintiff's counsel prior to the time they were to file an answer to the complaint. Defendants' counsel informed Plaintiff's counsel that Sunny I. Nishimoto is deceased, and neither Sunny I. Nishimoto nor Dorothy Nishimoto operates Fastway Market. (Doc. 17-1, 1:5-10.) Defendants' counsel also informed Plaintiff's counsel that he was representing defendants in three related, but separate actions, that Plaintiff had filed. (Doc. 17-1, 2:11-22.) Defendants' counsel identified various service of process errors in each case. (Id.) At the close of the conversation, Defendants' counsel asserts that it was his understanding that all four complaints would be amended and reserved given the various problems he had identified, and he represented to Plaintiff's counsel that he was authorized to accept service on behalf of all the defendants he represented in each of the four actions. (Id.) Instead of filing and serving an amended complaint, however, as Defendants' counsel anticipated, Plaintiff filed a request for entry of default.
Plaintiff's counsel disputes that there was an understanding that Plaintiff was going to amend the complaints in any of the four actions. Plaintiff presents, among other documents, a November 3, 2010, correspondence to Defendants' counsel wherein Plaintiff's counsel informed Defendants' counsel that entries of default would be requested if no responsive pleading was filed or a settlement was not reached before November 15, 2010. (See Doc. 21-3.) Plaintiff counsel asserts that, given this correspondence, any misunderstanding was clarified, and yet Defendants still failed to file any responsive pleading. Plaintiff asserts that "Defendants willfully chose not to file a responsive pleading." (Doc. 17, 3:26-27.)
Even after the default was entered, Defendants' counsel waited over two months to file a motion to set aside. However, despite Defendants' counsel's apparent slow reaction to what he characterizes as a misunderstanding regarding amendment and reservice of the complaint, there are no other facts that persuade the Court that his delay was specifically calculated to take advantage of the opposing party, interfere with judicial decision making, or otherwise manipulate the legal process. TCI Group, 244 F. 3d at 697. "[S]imple carelessness is not sufficient to treat a negligent failure to reply as inexcusable, at least without demonstration that other ...