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Zweig v. Yosi, Inc.

United States District Court, N.D. California

September 13, 2019

DAVID ZWEIG, an individual Plaintiff,
v.
YOSI, INC., a New York corporation, Defendant.

          ORDER DENYING MOTION TO SET ASIDE ENTRY OF DEFAULT JUDGMENT

          WILLIAM ALSUP, UNITED STATES DISTRICT JUDGE.

         This 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 Denied.

         Defendant 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).

         Almost 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).

         Zweig 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).

         Zweig 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).

         In 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).

         In 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. 25).

         In May 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. No. 28).

         In June 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).

         The 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.

         Nevertheless, 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.

         Zweig 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.

         Then, 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 ...


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