United States District Court, D. Arizona
ORDER AND OPINION
[Re: Motions at dockets 43 & 45]
JOHN W. SEDWICK, District Judge.
I. MOTIONS PRESENTED
At docket 43 defendants Tax Breaks, Inc. ("TBI") and Darius and Jane Doe Allen ("Allen") move to set aside the default judgment entered against them. The motion also seeks dismissal of plaintiffs' claims against them pursuant to Fed.R.Civ.P. 12(b)(5) for failure to properly serve them and asks that the dismissal be with prejudice pursuant to Fed.R.Civ.P. 41(b). Plaintiffs' response is at docket 44. The response also includes a request to again extend the time for service of process. TBI and Allen move to strike portions of the response at docket 45, where they also set out their reply in support of the motion at docket 43. Oral argument was not requested and would not aid the court.
Plaintiffs filed their complaint on June 10, 2013. It named numerous defendants among whom were TBI and Allen. The complaint was brought on behalf of a class of persons who were tax preparers for the defendants from January 2013, thru the date of the complaint.
The complaint sets out fourteen claims. Count One alleges that defendants violated the Racketeer Influenced and Corrupt Organizations Act. In Count Two plaintiffs allege that defendants violated the Fair Labor Standards Act by failing to pay the federal minimum wage. Count Three asserts that defendants violated the Fair Labor Standards Act by failing to pay overtime. Count Four sets out a breach-of-contract claim. Count Five purports to state a claim for fraud. Count Six asserts a breach of the implied contractual covenant to deal fairly and in good faith with the class members. Count Seven alleges that defendant failed to pay wages owed. Count Eight purports to state a claim for quantum meruit, while Count Nine advances a claim of unjust enrichment. Count Ten purports to state a claim for conversion. Count Eleven alleges that defendant failed to pay the employer's share of FICA taxes. Count Twelve alleges that defendant Tax Breaks LLC and TBI were the alter egos of Allen and defendant Kevin Murphy. Count Thirteen alleges that Tax Breaks LLC and defendant Family Dollar, Inc. are partners, so that Family Dollar, Inc. is liable for the acts of Tax Breaks LLC. Finally, Count Fourteen seeks a declaratory judgment. This "kitchen sink" pleading does not reflect careful legal analysis by plaintiffs' counsel.
The court denied plaintiffs' motion for class certification without prejudice to renewal after all defendants had been served. Thereafter, plaintiffs dismissed their claims against thirteen of the defendants without prejudice. Asked by the court to clarify against which defendants plaintiffs intended to pursue their claims, plaintiffs responded on September 9, 2013, that they were pursing claims against Kevin and Chelsea Murphy ("Murphy") upon whom process had been served. Plaintiffs further advised that they "will not be moving forward with claims against [TBI]. But Plaintiffs will be moving forward against Tax Breaks, LLC and Darius Allen" who had not yet been served. The court then issued an order indicating that because plaintiffs were not proceeding against TBI, plaintiffs should file a notice of dismissal of that defendant. The order further warned plaintiffs that they needed to perfect service on the unserved defendants within the 120-day time frame established by Fed.R.Civ.P. 4(m) or show good cause for an extension of time for service. On September 25, 2013, plaintiffs filed a notice of dismissal without prejudice of their claims against TBI. More than two months later, on December 5, 2013, plaintiffs moved to re-instate their claims against TBI saying they really meant to dismiss Tax Breaks LLC, not TBI. The motion was granted and TBI was reinstated.
Plaintiffs moved for the entry of default against Allen, TBI, and Murphy alleging that all had been properly served, but failed to appear and defend. Thereafter, the Clerk entered the requested default. The same day the default was entered, TBI and Allen appeared specially through counsel and moved to set aside the default as to TBI and Allen and to dismiss the claims against them with prejudice.
Plaintiffs do not oppose the request to vacate the entry of default as to defendants TBI and Allen. Accordingly, the defaults of TBI and Allen will be set aside.
B. Dismissal With Prejudice
TBI and Allen ask that the claims against them be dismissed with prejudice, an outcome which in proper circumstances is authorized by Fed.R.Civ.P. 41(b). When considering whether to dismiss claims with prejudice the court must consider a variety of factors: "(1) [T]he public's interest in expeditious resolution of litigation; (2) the court's need to manage its docket; (3) the risk of prejudice to the defendants; (4) the public ...