United States District Court, N.D. California
ORDER DENYING MOTION TO SET ASIDE ENTRY OF DEFAULT
WILLIAM ALSUP, UNITED STATES DISTRICT JUDGE.
order holds that defendant Yosi., Inc. did not file its
motion to set aside final judgment within a reasonable time
under Rule 60(c) and failed to demonstrate excusable neglect
under Rule 60(b). Its motion to set aside default judgment is
Yosi, Inc. is a corporation that licenses a software
application to hospitals and medical-care facilities. Yosi
hired plaintiff David Zweig as its chief strategy officer in
September 2016. As part of Zweig's job, he marketed and
attempted to sell Yosi's software application licenses to
doctors in California (Prasad Aff. ¶¶ 1, 4; Zweig
Decl. ¶¶ 2, 6) (Dkt. Nos. 35-1; 41-2). Yosi and
Zweig executed an employment agreement. Per the agreement,
Zweig's primary business office and normal place of work
was in Piedmont, California, and his base salary was $140,
000 per year plus sales commissions and expenses (Dkt. No.
35-2 at 2-4). The agreement also stated that should Zweig
“terminate this [a]greement for [g]ood [r]eason . . .
[Yosi] shall pay [Zweig] a lump sum, cash severance payment
equal to two months of the base salary in effect at such
time”. Id. at 5. Zweig worked for Yosi for
approximately 13 months. In August 2017, Zweig resigned
because he had not been paid in nine months (Prasad Aff.
¶ 11; Zweig Decl. ¶ 7) (Dkt. Nos. 35-1; 41-2).
immediately thereafter, in September 2017, Zweig commenced
this civil action by filing a complaint against Yosi in the
Northern District of California (Dkt. No. 1). Four days
later, in October 2017, the clerk of court issued a summons
directed at Yosi at “205 E. 42nd Street, 14th Floor,
New York, New York, 10017” (Dkt. No. 5). Two days after
that, Yosi's CEO Hari Prasad acknowledged the lawsuit in
an email to Zweig's counsel. He wrote: “I am
disappointed you filed in federal court . . . .” (Dkt.
No. 41-1 at 10).
attempted to formally serve CEO Prasad three times, but CEO
Prasad wasn't there. Zweig even changed process servers.
This also failed. After months of effort, in December 2017,
Zweig finally managed to serve the summons and complaint -
not on CEO Prasad - but on one of Yosi's corporate
directors: Jonathan Feistmann (Zweig Decl. ¶¶ 9-10,
19) (Dkt. No. 41-2). Yosi then had 21 days to answer the
complaint or otherwise respond or be subject to judgment by
default (Dkt. No. 8).
moved for partial summary judgment. As a courtesy, Zweig
mailed the motion to Yosi (Dkt. No. 10). Still, because Yosi
had yet to appear, in January 2018, Magistrate Judge
Maria-Elena James denied the motion without prejudice (Dkt.
No. 11). Zweig also sought an entry for default (Dkt. No.
12). The clerk of court subsequently entered default against
Yosi (Dkt. 13).
February 2018, Zweig moved for default judgment (Dkt. No.
18). Judge James ordered Zweig to file a supplemental brief
explaining how Zweig calculated the requested damages. She
also ordered Zweig to serve her order for supplement briefing
on Yosi (Dkt. No. 19). Zweig filed the brief and mailed the
order to Yosi (Dkt. Nos. 20, 21).
March 2018, Zweig moved to amend his complaint (Dkt. No. 21).
Judge James granted Zweig leave to amend the complaint to add
a claim (Dkt. No. 22). In April 2018, the summons and amended
complaint was formally served on Director Feistmann (Dkt. No.
2018, Zweig sought entry of default on the amended complaint.
As a courtesy, Zweig mailed the request for default to Yosi
(Dkt. No. 26). The clerk entered default against Yosi two
days later (Dkt. No. 27). Five days after that, Zweig moved
for default judgment. Zweig mailed the motion to Yosi (Dkt.
2018, Judge James analyzed the case and wrote a fifteen-page
order. She recommended the district court grant Zweig's
motion for default judgment in part and enter default
judgment against Yosi. She recommended Zweig be awarded
unpaid wages, severance, liquidated damages, pre-judgment
interest and court costs but be denied for attorney's
fees and unreimbursed expenses. Judge James ordered Zweig to
serve a copy of her report on Yosi (Dkt. No. 29). Zweig
mailed her order to Yosi (Dkt. No. 32).
next day, due to the failure of defendant to appear and to
consent to a magistrate judge presiding over the case, this
civil action went back on our wheel and came randomly to the
undersigned judge (Dkt. No. 31). In July 2018, the
undersigned adopted the report and recommendation by Judge
James in full and subsequently entered the default judgment
against Yosi in the amount of $172, 977.36 (Dkt. No. 33 at
14). On July 5, 2018, judgment was entered in favor of Zweig.
The clerk closed the file (Dkt. No. 34). Yosi never appeared.
on July 31, 2018, Yosi's counsel emailed Zweig, quoted
now in full: “I am in process of begin [sic] retained
by Yosi to file an appeal in the above case. The deadline to
file the appeal is quickly approaching, and my client would
like to engage in settlement discussions before incurring the
costs of an appeal” (Dkt. No. 41-1 at 34). Despite this
email, Yosi never appeared nor appealed the default judgment.
hired New York counsel and began to take steps to enforce the
default judgment by filing an action in the Supreme Court of
the State of New York to domesticate the default judgment
(Zweig Decl. ¶¶ 24-25) (Dkt. No. 41-2). Yosi
appeared in the New York case and filed a cross-motion to
enforce an arbitration provision in Zweig's employment
agreement and dismiss the instant action.
363 days after the entry of default judgment, Yosi filed the
instant motion herein to set aside entry of default and
default judgment pursuant to Rules 55 and 60 (Dkt. No. 35).
Plaintiff opposed (Dkt. No. 41). While the instant motion
developed its briefing, the Supreme Court of the State of New
York denied Zweig's domestication of the default judgment
and granted Yosi's cross-motion to ...