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Long v. McAfee

United States District Court, E.D. California

November 14, 2019

WAN TING LONG, et al., Plaintiffs,
v.
ERIC MCAFEE, et al., Defendants.

          ORDER DENYING PLAINTIFFS' MOTION FOR DEFAULT JUDGMENT AS PREMATURE (ECF NO. 14)

         On July 1, 2019, Wang Ting Long and Xuejun Makhsous (“Plaintiffs”) filed this action alleging violations of the Federal Securities Act and California law. (ECF No. 1.) Currently before the Court is Plaintiffs' motion for default judgment filed on November 12, 2019. (ECF No. 14.) Plaintiffs' motion shall be denied as premature as no defendant has had default entered against them, a necessary condition prior to the entering of default judgment. The Court also sets out the legal standards below to inform the pro se Plaintiffs of the factors the Court considers on a motion for default judgment so Plaintiffs are aware of the applicable legal standards if they choose to seek default judgment again after obtaining an entry of default.

         A. Legal Standard for Default Judgment

         “Our starting point is the general rule that default judgments are ordinarily disfavored, ” as “[c]ases should be decided upon their merits whenever reasonably possible.” NewGen, LLC v. Safe Cig, LLC, 840 F.3d 606, 616 (9th Cir. 2016) (quoting Eitel v. McCool, 782 F.2d 1470, 1472 (9th Cir. 1986)). Pursuant to Federal Rules of Civil Procedure 55, obtaining a default judgment is a two-step process. Entry of default must be obtained prior to entry of default judgment, and entry of default is appropriate as to any party against whom a judgment for affirmative relief is sought that has failed to plead or otherwise defend as provided by the Federal Rules of Civil Procedure and where that fact is made to appear by affidavit or otherwise. Fed.R.Civ.P. 55(a). After entry of default, a plaintiff can seek entry of default judgment. Fed.R.Civ.P. 55(b). Federal Rule of Civil Procedure 55(b)(2) provides the framework for the Court to enter a default judgment:

(b) Entering a Default Judgment.
(2) By the Court. In all other cases, the party must apply to the court for a default judgment. A default judgment may be entered against a minor or incompetent person only if represented by a general guardian, conservator, or other like fiduciary who has appeared. If the party against whom a default judgment is sought has appeared personally or by a representative, that party or its representative must be served with written notice of the application at least 7 days before the hearing. The court may conduct hearings or make referrals--preserving any federal statutory right to a jury trial--when, to enter or effectuate judgment, it needs to:
(A) conduct an accounting;
(B) determine the amount of damages;
(C) establish the truth of any allegation by evidence; or
(D) investigate any other matter.

Fed. R. Civ. P. 55.

         The decision to grant a motion for entry of default judgment is within the discretion of the court. PepsiCo, Inc. v. California Security Cans, 238 F.Supp. 1172, 1174 (C.D. Cal. 2002). The Ninth Circuit has set forth the following seven factors (the “Eitel factors”) that the Court may consider in exercising its discretion:

(1) the possibility of prejudice to the plaintiff, (2) the merits of plaintiff's substantive claim, (3) the sufficiency of the complaint, (4) the sum of money at stake in the action; (5) the possibility of a dispute concerning material facts; (6) whether the default was due to excusable neglect, and (7) the strong policy underlying the Federal Rules of Civil Procedure favoring decisions on the merits.

Eitel, 782 F.2d at 1471-72.

         B. Plaintiffs' Motion Shall ...


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