United States District Court, S.D. California
ORDER GRANTING DEFENDANT'S MOTION TO SET ASIDE
DEFAULT, (DOC. NO. 9); DENYING PLAINTIFF'S MOTION FOR
DEFAULT, (DOC. NO. 7); AND SETTING ASIDE ENTRY OF DEFAULT,
(DOC. NO. 6)
Anthony J. Battaglia, United States District Judge
the Court is Plaintiff's motion for default, (Doc. No.
7), and Defendant's motion to set aside the default,
(Doc. No. 9). Because it appears to the Court that both
parties engaged in tactics leading to Defendant's
default, the Court GRANTS Defendant's
motion to set aside the default and allow the parties the
opportunity to litigate Plaintiff's claims on the merits.
Accordingly, the Court SETS ASIDE the
Clerk's entry of default, (Doc. No. 6), and
DENIES Plaintiff's motion for default,
(Doc. No. 7).
filed the complaint alleging service mark infringement,
service mark and trade name infringement, unfair competition,
false designation of origin, cybersquatting, business
practices violations, and service mark infringement under
California law. (Doc. No. 1.) Plaintiff-a company that
provides environmental consulting services- alleges it
registered its marks in 1991 and its domain name in 1999.
(Id. ¶¶ 7-9.) Plaintiff claims Defendants
began using a very similar name in its advertising and
services in 2016 doing substantially similar consulting
services. (Id. ¶¶ 23-27.) Plaintiff argues
the use of “Helix Environmental” interferes with
their intellectual property rights. (Id. ¶ 31.)
Rule of Civil Procedure 55(c) provides that a court may set
aside a default for “good cause shown.” The
“good cause” standard that governs vacating an
entry of default under Rule 55(c) is the same standard that
governs vacating a default judgment under Rule 60(b). See
TCI Group Life Ins. Plan v. Knoebber, 244 F.3d 691, 696
(9th Cir.2001). The good cause analysis considers three
(1) whether [defendant] engaged in culpable conduct that led
to the default;
(2) whether [defendant] had a meritorious defense; or (3)
whether reopening the default judgment would prejudice
[plaintiff]. See Id. As these factors are
disjunctive, the district court was free to deny the motion
“if any of the three factors was true.”
American Ass'n of Naturopathic Physicians v.
Hayhurst, 227 F.3d 1104, 1108 (9th Cir. 2000).
bears the burden of showing any of the factors favor setting
aside the default. TCI Group, 244 F.3d at 697.
Defendant's motion, Defendant explains the circumstances
leading to the default. (Doc. No. 9-1 at 2.) After filing the
complaint, Plaintiff contacted Defendant's counsel to
discuss the case. (Id.) Soon thereafter, the parties
discussed settlement. A month later, in mid-October 2018,
Plaintiff gave Defendant a settlement proposal and requested
a waiver of service. Plaintiff represented that if Defendant
accepted the waiver, the complaint would be held in abeyance
to allow 60 days to discuss settlement. This put the deadline
to respond at December 24, 2018. (Id. at 3.)
then states that the parties continued to discuss settlement
past this date. While waiting for a settlement counter-offer,
Defendant requested another extension, but opposing counsel
never responded. A few weeks later, Plaintiff finally
responded but demanded “immediate capitulation by
Defendant on all issues.” (Id.) Defense
counsel attempted to reach out to opposing counsel but claims
he was ignored. Plaintiff then filed the request for default,
which was entered, and filed the currently-pending motion for
default judgment. Defendant requests the Court set aside the
entry of default.
course, Plaintiff paints a different picture. Plaintiff
complains that for two years it requested Defendant quit
using its mark, and that for two years Defendant refused.
Plaintiff argues that Defendant did not participate in
litigation until the motion for default judgement was filed.
Plaintiff accuses Defendant's tactics as bad faith
efforts to stall the case and to continue to infringe on
Plaintiff's mark while avoiding the lawsuit. (Doc. No. 14
at 5.) However, Plaintiff's arguments assume that
Defendant is willfully infringing on Plaintiff's mark.
Plaintiff relies on this assumption to show why Defendant
allegedly stalled during negotiations and to argue that they
would be prejudiced should the Court set aside default.
However, Plaintiff does not have a verdict in hand and cannot
use that conclusory argument as evidence.
the good cause analysis, it appears that both parties engaged
in conduct leading to the default. Looking at the whole
picture, the Court finds both sides have a hand in creating
the circumstances before the Court. Both parties have also
placed blame with the other while taking no responsibility
for its own contributions. However, the Court declines to
place the lionshare of blame on Defendant and find that its
own sole conduct contributed to its default. Second,
Defendant states it has meritorious defenses, which the Court
confirms are stated in its proposed answer. ...