United States District Court, D. Arizona
Honorable G. Murray Snow United States District Judge
before the Court is Defendant Cavalry Staffing LLC’s
Motion to Set Aside Default Judgment pursuant to Federal Rule
of Civil Procedure 60(b). (Doc. 41.) The Court referred the
motion to United States Magistrate Judge Eileen
S. Willett for disposition. Judge Willett issued a Report and
Recommendation ("R & R") that the motion be granted
on December 3, 2015. (Doc. 50.) Plaintiff Charles Mays timely
filed objections to the R & R. (Doc. 51.) For the reasons set
forth below, the Court adopts the R & R in full.
party objects to the factual and procedural background as set
forth by the R & R. (Doc. 50.) The Court thus adopts it.
October 7, 2015, Defendant filed a Motion to Set Aside
Default Judgment pursuant to Rule 60(b)(1). (Doc. 41.)
Defendant contends that its failure to answer
Plaintiff’s complaint constitutes "excusable
neglect, " is exempted under the Rules, and thus the
Court’s entry of default judgment should be vacated.
The Magistrate Court agreed and recommended granting
Defendant’s motion. (Doc. 50.)
"district judge may refer dispositive pretrial motions .
. . to a magistrate, who shall conduct appropriate
proceedings and recommend dispositions." Thomas v.
Arn, 474 U.S. 140, 141 (1985); see also 28
U.S.C. § 636(b)(1)(B); Estate of Connors v.
O’Connor, 6 F.3d 656, 658 (9th Cir. 1993). Any
party "may serve and file written objections" to
the R & R. § 636(b)(1). "A judge of the court shall
make a de novo determination of those portions of
the report or specified findings or recommendations to which
objection is made." Id.; see also Fed.
R. Civ. P. 72(b). A district judge "may accept, reject,
or modify, in whole or in part, the findings or
recommendations made by the magistrate judge." §
636(b)(1); see also Fed. R. Civ. P. 72(b).
60(b) is "remedial in nature and therefore must be
liberally applied." Falk v. Allen, 739 F.2d
461, 463 (9th Cir. 1984) (per curiam). A "judgment by
default is a drastic step appropriate only in extreme
circumstances; [thus] a case should, whenever possible, be
decided on the merits." Id. The Court’s
analysis of a Rule 60(b) motion is guided by the
consideration of the following three-factors: (1) whether
culpable conduct of the Defendant led to the default, (2)
whether the Plaintiff will be prejudiced, and (3) whether the
Defendant has a meritorious defense. Id. After
applying that legal framework, the R & R recommended finding
in favor of Defendant on all three factors. Plaintiff raises
two objections to the R & R.
first objects to the sufficiency of an affidavit submitted by
the Defendant’s President David Stanley, which the
Magistrate Court relied upon when finding that
Defendant’s failure to answer constituted
"excusable neglect." Plaintiff argues that the
affidavit fails to address various specifics about the
Defendant’s receipt of service; for example, who
specifically is to receive documents from Defendant’s
designated service agent Business Filings. The Court finds
the affidavit satisfactory. Mr. Stanley, who, as
Defendant’s President, is an individual with the
authority to speak on behalf of the Defendant as a whole,
asserted as a sworn statement of fact: "To my knowledge
and belief, [Defendant] never received a copy of the
Complaint in the lawsuit at any time at our corporate offices
in Ohio. [Defendant] has no record of receiving any
communication from Business Filing Inc. regarding
[Plaintiff’s] lawsuit." (Doc. 42 at 2.) Mr.
Stanley further averred: "Any lawsuit filed against
[Defendant] should have been brought to my attention. I was
never made aware or told that [Plaintiff] filed suit against
[Defendant] by anyone in my employ or otherwise until I was
made aware of an attempt to collect on a judgment against
[Defendant] being made by [Plaintiff]." (Id.)
Plaintiff presents no counter evidence or legal argument
undermining the credibility or validity of Mr.
Stanley’s affidavit. Rather, Plaintiff seems to assert
that because he properly served Defendant’s agent,
Defendant must present more evidence than an affidavit from
its President to show "excusable neglect." However,
without any legal basis for his assertion, the Court finds
the affidavit sufficient. It is credible and relevant to
Defendant’s motion; moreover, it supports the finding
of "excusable neglect, " because it supports
finding that the Defendant did not engage in any
"willful, deliberate, or . . . bad faith" conduct
with the intent to take advantage of Plaintiff or to subvert
the legal process. See TGI Grp. Life Ins. Plan v.
Kroebber, 244 F.3d 691, 697-98 (9th Cir. 2001).
also contests the R & R’s "finding that Plaintiff
will not suffer prejudice due to the delay." (Doc. 51 at
2.) "To be prejudicial, the setting aside of a judgment
must result in greater harm than simply delaying resolution
of the case. Rather, the standard is whether
plaintiff’s ability to pursue his claim will be
hindered." TGI Grp. Life Ins. Plan, 244 F.3d at
701 (internal quotation marks, citations, and modifications
omitted). Truly prejudicial delay causes tangible harms like
the loss of evidence, discovery difficulties, or
"greater opportunit[ies] for fraud or collusion."
Id. (quoting Thompson v. Am. Home Assurance
Co., 95 F.3d 429, 433-34 (6th Cir. 1996)). Plaintiff
raises two insufficient objections; the first based on
speculation and the second based on inconvenience. Plaintiff
surmises that evidence may be lost when he asserts that
"Defendant did not articulate at all what evidence had
been preserved . . . ." (Doc. 51 at 2.) Without any
direct or circumstantial proof of spoliation of other loss of
evidence, the posture of this case is not different from when
Plaintiff filed his complaint. Discovery has not begun and
Plaintiff presents no reason beyond delay that this Court
should conclude that Plaintiff will suffer a tangible harm
like loss of evidence if this lawsuit is revived and decided
on its merits. Plaintiff’s second argument relies on
inconvenience; since the Court entered default judgment,
Plaintiff reasonably desires to hold on to the benefit of his
judgment, i.e., the over $80, 000 being held by the
Garnishee. However, "being forced to litigate on the
merits cannot be considered prejudicial for purposes of
lifting a default judgment. For had there been no default,
the plaintiff would of course have had to litigate the merits
of the case, incurring the costs of doing so." TCI
Grp. Life Ins. Plan, 244 F.3d at 701.
about Defendant’s conduct or the consequence of
vacating the Court’s default judgment rises to the
requisite "extreme circumstance" which ...