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Joe Hand Promotions, Inc v. Olen L. Campbell

July 1, 2011

JOE HAND PROMOTIONS, INC.,
PLAINTIFF,
v.
OLEN L. CAMPBELL, ET AL.,
DEFENDANTS.
OLEN L. CAMPBELL, ET AL., THIRD PARTY PLAINTIFFS,
v.
DISH NETWORK, L.L.C.,
THIRD PARTY DEFENDANT.



The opinion of the court was delivered by: Sandra M. Snyder United States Magistrate Judge

ORDER GRANTING MOTION OF THIRD PARTY DEFENDANT DISH NETWORK TO SET ASIDE DEFAULT (Doc. 16)

Pursuant to F.R.Civ.P. 55(c), Third Party Defendant Dish Network, L.L.C., moves to set aside the Entry of Default against it. This Court has reviewed the papers and has determined that this matter is suitable for decision without oral argument pursuant to Local Rule 78-230(h). Having considered applicable law and all written materials submitted, the Court orders that Dish Network's motion be granted.

I. Procedural Background

On December 9, 2010, Plaintiff Joe Hand Promotions, Inc., filed its complaint against Defendants Olen L. Campbell, and Camco Investments, Inc., both doing business as Sports Club.

Plaintiff, which held exclusive nationwide commercial distribution rights to Ultimate Fighting Championship 107: BJ Penn v. Diego Sanchez ( the program), sued Defendants under multiple federal statutes for unlawfully intercepting and displaying the program in their commercial establishment, "Sports Club," in Selma, California. On March 18, 2011, Defendants/Third Party Plaintiffs (Defendants) answered and filed a third party complaint against Dish Network, alleging that Dish Network sold them the commercial satellite television subscription through which an employee ordered the program on the night it was telecast.

Although Dish Network was served on March 24, 2011, it failed to file a timely answer. On April 15, 2011, Defendants/Third Party Plaintiffs requested entry of default against Dish Network, which the Clerk of Court entered the same day. On April 20, 2011, Dish Network lodged its proposed motion to dismiss the third party complaint and moved to set aside the default.

II. Factual Background

Dish Network was served on March 24, 2011. Its answer was due April 14, 2011. Dish Network assigned the case to its paralegal, Amy Conley, whose office is in Colorado. Shortly thereafter, Conley took an emergency leave of absence from her job to assist her mother, who was having emergency surgery in Georgia. On April 11, 1011, Conley forwarded the third-party complaint via e-mail to Dish Network's outside attorney, Jennifer Friend, to prepare and file the answer. Stating that Conley would contact Friend "next week" to discuss the response, Conley's hurried e-mail did not advise Friend that the answer was due April 14, 2011. Friend, who was out of her office conducting depositions on April 11, 2011, relied on Conley's representation in the e-mail that they would speak the following week and did not open and review the attached third party complaint.

On Sunday, April 17, 2011, Friend received the notice of entry of default. Friend immediately telephoned Matthew Pare, attorney for the Defendants/Third Party Plaintiffs, leaving a message explaining her mistake and requesting that Defendants/Third Party Plaintiffs stipulate to set aside the default. Defendants/Third Party Plaintiffs refused to so stipulate, requiring Dish Network to move to set aside the default.

III. Discussion

"When a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend, and that failure is shown by affidavit or otherwise, the clerk must enter the party's default." F.R.Civ.P. 55(a). The court may set aside the entry of default for good cause, and the entry of a default judgment pursuant to F.R.Civ.P. 60(b). F.R.Civ.P. 55(c).

"Judgment by default is a drastic step appropriate only in extreme circumstances; a case should, whenever possible, be decided on the merits." Falk v. Allen, 739 F.2d 461, 463 (9th Cir. 1984). Motions to set aside default judgments seek to balance the "overriding judicial goal of deciding cases correctly, on their legal and factual merits, with the interest of both litigants and the courts in the finality of judgments." TCI Group Life Ins. Plan v. Knoebber, 244 F.3d 691, 695 (9th Cir. 2001). The rules accomplish this by limiting the bases by which parties may seek relief while granting Courts the discretion to reverse the finality of judgments to reach the merits of cases that were never decided on the merits. Id. Logically, policy considerations that apply to default judgments also apply to defaults, since these are an initial step toward the entry of a default judgment. In the Rule 55(c) context, however, the policy must be more liberally applied since the Court need not contend with the judicial interest in the finality of judgment. United States v. Signed Personal Check No. 730 of Yubran S. Mesle, 615 F.3d 1085, 1091 n. 1 (9th Cir. 2010).

In the Ninth Circuit, the "good cause" standard for setting aside a default is the same standard applied to set aside a default judgment under F.R.Civ.P. 60(b)(1). Signed Personal Check, 615 F.3d at 1091; TCI Group, 244 F.3d at 696. Under the good cause standard, the Court must evaluate (1) "whether the defendant's culpable conduct led to the default;" (2) "whether the defendant has a meritorious defense;" and (3) "whether reopening the default judgment would prejudice the plaintiff." Signed Personal Check, 615 F.3d at 1091; TCI Group, 244 F.3d at 696. The "good cause" standard is consistent with the "excusable neglect" standard articulated by the Supreme Court in Pioneer Inv. Services Co. v. Brunswick Assoc. Ltd. Partnership, 507 U.S. 380, 395 (1993), which takes into account "prejudice, the length of delay and impact on judicial proceedings, the reason for the delay, including whether it was within ...


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