Opinion
CASE NO.: CV 00-07428 ABC (RNBx)
May 31, 2001
ORDER GRANTING DEFENDANTS' MOTION TO SET ASIDE ENTRY OF DEFAULT; FED. R. CIV. PRO. 55(c)
Plaintiff's Complaint was filed on July 10, 2000. All of the named Defendants were promptly served, but failed to appear. Defaults were entered against Defendants Parks and Zavalla on August 11, 2000 and August 17, 2000, respectively. On May 2, 2001, Defendants Parks and Zavalla finally moved to have those defaults set aside. Plaintiff has timely opposed. After consideration of the papers, and the case file, the Court finds the Motion to Set Aside Default appropriate for submission without oral argument. See Fed.R.Civ.Pro. 78; Local Rule 7.11. Accordingly, the hearing set for June 4, 2001 is hereby VACATED. For the reasons indicated below, the Motion is GRANTED, but Defendants are ORDERED to pay $1,850.00 in reasonable attorneys' fees.
Default was entered on Defendant McLemore on December 15, 2000.
In addition, Defendants' counsel are ORDERED to personally hand deliver a copy of this Order to City Attorney James Hahn and Chief of Police Bernard Parks, for the purpose of giving notice to supervisors and Defendants of the errors made to date in litigation of this suit. Counsel are ORDERED to file a declaration, under penalty of perjury, to this Court within ten (10) days of the date of entry of this Order, verifying the required delivery of this Order to those individuals.
Future failures to comply with Federal Rules of Civil Procedure or the Central District Local Rules will be met with increased levels of sanctions, including but not limited to: payment of Plaintiff's reasonable attorneys' fees, monetary sanctions, and/or more drastic sanctions available under Federal Rule of Civil Procedure 37. The Court finds Defendants' counsel's motion to be among the weakest ever presented to this Court. Defendants are fortunate indeed that the standards for setting aside an entry of default are so lenient, and that this Court declines to hold Defendants responsible for the many errors and oversights of their counsel in the City Attorney's office.
I. BACKGROUND
Plaintiff's July 10, 2000 Complaint claims deprivation of his constitutional rights, and seeks remedies under 42 U.S.C. § 1983 et seq., based on an allegedly unlawful arrest. The Complaint charges that Plaintiff was arrested without probable cause, and seeks both damages and attorneys' fees based on this alleged deprivation.
The case was initially assigned to the Honorable Florence-Marie Cooper. On August 23, 2000 Judge Cooper recused herself, and the case was reassigned to the Honorable Nora M. Manella. On September 5, 2000 Judge Manella recused herself; the case was reassigned to this Court.
This Complaint is quite similar to a prior complaint filed by the same Plaintiff against two of the same named Defendants (Parks and Zavalla) on April 6, 2000, a case before the Honorable George H. King which is likewise premised on an unlawful arrest. Indeed, Plaintiff's current Complaint complains that the second allegedly unlawful arrest, upon which this case is based, was perpetrated in retaliation for the initial case filed by Plaintiff (Case No. CV 00-03675 GHK (RNBx)). In other words, the two actions are premised on two separate arrests.
Plaintiff filed no Notice of Related Case with this Court.
Defendants, and specifically the City Attorney's office, were (or are) clearly confused by the factual and temporal proximity of these two actions. Despite personal service on Defendant Parks on July 10, 2000, Defendant Zavalla on July 24, 2000, and Defendant McLemore on October 2, 2000, none of these Defendants made a timely appearance. See Proofs of Service filed July 12, 2000, August 17, 2000, October 17, 2000. Defaults were then entered against all three Defendants.
The City Attorney's ongoing "confusion" is demonstrated by the fact that the Motion to Set Aside, over eight months after this case was reassigned (twice), was noticed to be heard by Judge Cooper.
Waivers of service were also mailed to Defendants Zavalla and McLemore on July 10, 2000. See Proof of Service filed July 12, 2000.
Plaintiff requested and received entry of defaults against Parks, Zavalla, and McLemore, on August 11, August 17, and December 15, 2000, respectively, in response to orders to show cause regarding lack of prosecution issued by Judge Cooper and then by this Court. Still, it was nearly nine months before Defendants Parks and Zavalla (or rather the City Attorney's office) filed the instant Motion to Set Aside.
In spite of the fact that it is now over five months since the default was entered against Defendant McLemore, the City Attorney has yet to move to set aside that entry of default. It is unclear why no request on Defendant McLemore's behalf was included in this Motion.
Defendants' counsel (the City Attorney's office) offers various explanations for this oversight which it claims are sufficient to meet a "good cause" standard to set aside the defaults. Arguing that the present case, and the previously-filed case before Judge King, involve "almost identical" complaints, counsel claims that when this second lawsuit was received "it was erroneously believed to be just another copy of the first lawsuit." Motion at 3. This is offered to explain the failure to answer immediately. At some point, counsel allegedly came to recognize the separability of the two complaints. Therefore, counsel contends that it attempted to file an Answer for Defendants Parks and Zavalla on October 11, 2000, but that it was rejected by the Clerk due to the defaults already entered against these Defendants.
Again, no explanation is offered as to Defendant McLemore.
Defendants' counsel claims this was its first notice that those defaults had been entered, and counsel says it wrote to Plaintiff's counsel on October 17, 2000 to see about removing the defaults (and to perform their Local Rule 7.4.1 obligations). Apparently, however, the need to set aside the defaults was forgotten by Defendants' counsel. This despite the fact that Plaintiff's counsel promptly responded to Defendants' counsel's letter, a response which Defendants' counsel failed to bring to the Court's attention. See Exh. 1 to Opposition. Defendants' counsel claims that "[i]t was believed that Parks and Zavalla were being defended against charges brought by Hart, which was true, except as it appears the defense was only in the first case." Motion at 3. Counsel offers only that "[t]he need to file a motion to set aside default was erroneously forgotten." Id. Counsel apparently claims excusable neglect as its sole explanation for the nearly seven months between the October 17, 2000 letter to Plaintiff's counsel and the May 2, 2001 filing of this Motion. Moreover, counsel seems to assert that consideration should be given to the fact that litigation of the "first case" (before Judge King) has proceeded apace. See id. at 5. Counsel claims there was no intent not to defend this suit, and that Plaintiff has not been at all prejudiced. See id.
The opposition filed by Plaintiff's counsel (Stephen Yagman) is typically scornful of these City Defendants' and Attorneys' claims of confusion between the two cases, and/or excusable neglect. He claims that Defendants' counsel have not shown adequate cause for the Court to set aside the defaults against Defendants Parks and Zavalla. See Opposition at 5-15. In the alternative, Plaintiff's counsel asks that any set-aside of these defaults be conditioned on payment of his fees and costs expended as a result. See Opposition at 16; See Nilson, Robbins, Dalgarn, Berliner, Carson Wurst v. Louisiana Hydrolec, 854 F.2d 1538, 1546-47 (9th Cir. 1988) (holding that a set-aside may be conditioned on payment of a sanction). Plaintiff's counsel also asks that the fees be charged to Defendants' counsel personally, to avoid having them be paid by "hapless Los Angeles taxpayers." Id.
Plaintiff's counsel claims to have expended $9,212.50 thus far, based on three hours billed for purposes of securing the defaults, and 13.75 hours billed for Opposing the instant Motion, all at his "usual and customary" hourly rate of $550.00/hour. See Yagman Decl. ¶ 3.
II. DISCUSSION
Rule 55(c) provides the standards for determining whether relief from a default entry should be granted. A court may set aside the entry of default "for good cause shown." Fed.R.Civ.Pro. 55(c). In general, a more lenient standard is applied to setting aside entry of default than is applied to vacating a default judgment. See, e.g., Hawaii Carpenters' Trust Funds v. Stone, 794 F.2d 508, 513 (9th Cir. 1986); Johnson v. Dayton Elec. Mfg. Co., 140 F.3d 781, 783 (8th Cir. 1998) (noting that vacating a default judgment "requires a stronger showing of excuse than relief from a mere default order. ") . Given a preference for adjudicating cases on their merits, it is within the discretion of the trial court whether a default should be set aside. See, e.g., Eitel v. McCool, 782 F.2d 1470, 1472 (9th Cir. 1986) ("Cases should be decided upon their merits whenever reasonably possible.") The discretion of the court is especially broad where, as here, a party seeks to set aside the entry of an order of default before the entry of a default judgment. See Mendoza v. Wight Vineyard Mgmt., 783 F.2d 941, 945 (9th Cir. 1986) . When exercising its discretion under Rule 55, the court's "underlying concern . . . is to determine whether there is some possibility that the outcome of the suit after a full trial will be contrary to the result achieved by the default." Hawaii Carpenters' Trust Funds, 794 F.2d at 513. In other words, would an adjudication on the merits present "some possibility" that a defendant would prevail on at least some of the claims or damages asserted.
Plaintiff's counsel, at the same time that he acknowledges the greater liberality of standards under Rule 55(c), seems to be arguing for an application of the more stringent standards under Rule 60(b). Most of the cases cited by Plaintiff's counsel deal with setting aside a default judgment, rather than just a clerk's default.
As a practical matter, when considering a motion to set aside a default entry, the parallels that exist between granting relief from a default entry and a judgment on default encourage a court to weigh the factors used to set aside a default judgment. See id. These factors include (1) whether there was some "culpable conduct" by a defendant which led to the default; (2) whether a plaintiff would be unduly prejudiced by a set-aside; and (3) whether a defendant can present a meritorious defense to a claim. See, e.g., Alan Neuman Prods., Inc. v. Albright, 862 F.2d 1388, 1392 (9th Cir. 1988) . However, it is also clear that these standards are interpreted liberally when deciding a motion to set aside entry of default. See Hawaii Carpenters' Trust Funds, 794 F.2d at 513 ("We recognize that the standards for setting aside entry of default under Rule 55(c) are less rigorous . . .")
Some courts also consider additional factors, such as: (1) the merits of plaintiff's substantive claim (really the converse of the "meritorious defense"); (2) the sufficiency of the complaint; (3) the sum of money at stake in the action; (4) the possibility of a dispute concerning material facts; and (5) the strong policy underlying the Federal Rules of Civil Procedure favoring decisions on the merits. See, e.g., Allen v. Calvo, 1992 WL 391302, *1 (D. Or. 1992)
Accordingly, Plaintiff's counsel's interchangeable use of the "good cause" standard for Rule 55(c), and the "excusable neglect" that is required by Rule 60(b), is incorrect. The former is clearly more lenient than the latter, and requires less of a defensible "excuse."
Consideration of the above-listed factors favors setting aside the entry of defaults in this case. As is detailed below, because the Court does not find any "culpable conduct" by Defendants leading to the entry of default, and because Plaintiff has not demonstrated any undue prejudice that would result from setting aside the default, it is preferable to have this case decided on its merits. Therefore, the Court hereby GRANTS Defendants' Motion to Set Aside Default.
A. Defendants Have Not Exhibited "Culpable Conduct"
"Culpable conduct" generally means "inexcusable." Most courts, in deciding a Motion to Set Aside Default under Rule 55(c), focus on the defaulting party's willfulness and consider whether that party intended to violate court procedures. See, e.g., Information Systems Networks Corp. v. United States, 994 F.2d 792, 796 (Fed. Cir. 1993) Therefore, although notice of the complaint and failure to respond clan constitute "culpable conduct" for the purposes of Rule 60(b), a more liberal standard under Rule 55(c) focuses on defendant willfulness.
See Direct Mail Specialists v. Eclat Computerized Technologies 840 F.2d 685, 690 (9th Cir. 1988) (denying a Rule 60(b) motion)
Accordingly, cases applying the Rule 60(b) "excusable neglect" standard, heavily relied upon by Plaintiff's counsel, are inapposite. See Opposition at 6-15 (citing, inter alia, Pioneer Investment Svcs. Co. v. Brunswick Associates Limited Partnership, 507 U.S. 380, 393-99 (1993), TCI Group Life Insurance Plan v. Knoebber, --- F.3d ---- (9th Cir. 2001), 2001 WL 487557, United States ex rel. Familian Northwest, Inc. v. R G B Contractors, Inc., 21 F.3d 952, 956 (9th Cir. 1994), Alan Neuman Prods., 862 F.2d at 1392 Falk v. Allen, 739 F.2d 461, 463 (9th Cir. 1984)) . All of these cases, along with the others cited in Plaintiff's counsel's brief, deal with vacating a default judgement.
In this case, although Defendants' attempt to file an Answer was rejected by the clerk's office, and Defendants' counsel never followed up on its subsequent letter to Plaintiff's counsel in the intervening span of nearly seven months, there is no indication that Defendants ever lacked the intent to defend this suit. Defendants apparently have been contesting the "first suit" before Judge King without an equivalent delay. Finally, by virtue of the present Motion Defendants clearly now intend to contest this case on its merits. Therefore, the Court finds that while Defendants' counsel was sloppy in the extreme, and nearly incompetent, its acts do not rise to "willful" misconduct.
B. Plaintiff Has Not Demonstrated Any Prejudice
Similarly, Plaintiff has failed to demonstrate any prejudice that would result from setting aside the entry of default. Plaintiff may not claim "prejudice" merely from having to now prosecute the case on its merits. Default is an inappropriate method of adjudication when it appears that a defendant intends to contest. Any prejudice which Plaintiff may have suffered is only in the form of additional fees and expenses incurred. These are addressed below. See infra Part II.D. The Court also observes that this circumstance is at least in small part a result of Plaintiff's counsel's apparent tendency to file more than one complaint on behalf of a single litigant, even when the facts alleged in separate cases might easily be joined in a single (amended) complaint. The failure to file a Notice of Related Case as required by Local Rule 4.3 has also only further complicated the matter.
C. Defendants Have Shown "Some Possibility" of a Meritorious Defense
Finally, though Defendants make no specific showing on viability of a "defense" to the present action, given the inherently factual nature of a Section 1983 false arrest claim, and the possibility of qualified immunity, the Court finds that Defendants have met their burden of providing "some possibility" that the outcome of this case would be different if it were adjudicated on its merits. Defendants have included with the Motion to Set Aside a copy of the Answer that they attempted to file on October 11, 2000. Given the disfavor for having cases decided on default, Defendants have done enough. D. The Default Will Be Set Aside, Conditioned on Payment of Fees
This does not, however, excuse Defendants' counsel's failure to address, let alone support, any purported defense to these claims.
For the foregoing reasons, the Court GRANTS Defendants' Motion to Set Aside Default, and VACATES the defaults against Parks and Zavalla. These Defendants are hereby granted leave to file an Answer to the Complaint. Defendants Parks and Zavalla are hereby ORDERED to file their Answer within ten (10) days of the date of entry of this Order. However, given that Plaintiff was required by this Court (by virtue of the various orders to show cause) to show some proof of prosecution of the case, which therefore required entry of defaults against the three named Defendants, it seems inequitable for Plaintiff to bear the full cost of Defendants' inattention. Accordingly, some shift of costs is approcriate in this case. See Nilson, 854 F.2d at l546-47.
Though Nilsson is not explicit, it appears that the authority for conditioning a set-aside of default on payment of attorneys' fees is based on the sanction power of Federal Rule of Civil Procedure 37. Alternatively, it might be authorized for unnecessary multiplication of proceedings, sanctionable per 28 U.S.C. § 1927. The Court presumes that normal considerations governing what is a "reasonable" award of fees also apply to this award (e.g., the Court has an independent duty to determine the appropriate "lodestar" amount based on a reasonable hourly rate and reasonable number of hours) . See, e.g., Van Gerwen v. Guarantee Mutual Life Co., 214 F.3d 1041, 1045 (9th Cir. 2000).
It seems reasonable to award Plaintiff those costs incurred in seeking the entry of default by the Clerk. Plaintiff's counsel claims this took three hours of his billable time, at $550.00/hour. However, the combination of this hourly rate and this number of hours expended for the simple task of seeking default is unreasonable. The number of hours should have been pared down for billing purposes and/or, more appropriately, this essentially clerical task should not have been billed at Plaintiff's counsel's top billing rate. Accordingly, for this task the Court awards two hours at $250.00/hour, or $500.00.
As for Plaintiff's counsel's Opposition to the instant Motion, it might be hoped that Plaintiff's counsel would stipulate to any such request to set aside entry of default where it is clear that there is intent to contest the case on its merits (as evidenced, if not by this case, at least by the parallel case before Judge King) . However, the Court is not prepared to limit Plaintiff's counsel's zealous efforts to represent his client. Thus, some fees are also appropriate here, though the amount sought by Plaintiff's counsel again must be reduced.
First of all, preparation of the instant Opposition should not have taken the nearly fourteen hours that Plaintiff's counsel claims, for the relatively simple question of setting aside default. This is a fairly standard procedural issue, on which Plaintiff's counsel must have submitted numerous similar briefs in the past. In addition, most of the authority upon which counsel relied was inapplicable (in other words, counsel's efforts were largely unhelpful to the Court)
Similarly, such a simple matter also does not justify a billing rate of $550.00 per hour, for that number of hours. Therefore, the Court also reduces this request substantially, to an award of three hours at $450.00/hour, the last rate awarded by this Court, totaling $1,350.00. In sum, the Court thus ORDERS Defendants to pay a total of $1,850.00 to Plaintiff within thirty (30) days of this Order.
The Court declines to make Defendants' counsel pay personally.
The Court also ORDERS the parties to meet and confer within ten (10) days, and they are encouraged to submit a stipulation regarding the set-aside of default as to remaining Defendant McLemore. Should no stipulation be forthcoming, Defendants are also ORDERED to submit a motion to set aside default within twenty (20) days of this Order.
Assuming that it is filed within the requisite period of twenty days from the date of entry of this Order, the parties are informed the Court intends to grant any such forthcoming motion to set aside the entry of default against Defendant McLemore. Plaintiff's counsel is also informed there will be no further award of attorneys' fees based on any opposition to such timely motion. Finally, Plaintiff's counsel is ORDERED to file a Notice of Related Case in this case, and in Case No. CV 00-03675, within ten (10) days of entry of this Order.
III. CONCLUSION
For the foregoing reasons, the Court GRANTS Defendants' Motion to Set Aside the Default. The Clerk of the Court is instructed to set aside the Defaults entered as to Defendants Parks and Zavalla. These Defendants are ORDERED to file their Answer within ten days of this Order. The Court also ORDERS Defendants to pay Plaintiff's attorneys' fees and costs totalling $1,850.00, within thirty days of this Order.
Defendants' counsel are ORDERED to hand-deliver this Order to City Attorney James Hahn and Chief of Police Bernard Parks, and to file a notice of compliance within ten days of this Order. Counsel for both parties are ORDERED to meet and confer within ten days, and if no stipulation is forthcoming Defendants' counsel are ORDERED to file a motion to set aside default as to Defendant McLemore within twenty days. Plaintiff's counsel is also ORDERED to file a Notice of Related Case in this case and in Case No. CV 00-03675 within ten days.