The opinion of the court was delivered by: Jeffrey L. VIKEN United States District Judge
Plaintiff's complaint was filed on July 1, 2011. (Docket 1). On July 12, 2011, the summons and complaint were served on Dempster Christenson, registered agent for defendant Chris Cam Corporation ("Chris Cam"). (Docket 6-1). On August 25, 2011, plaintiff filed a motion for default judgment pursuant to Fed. R. Civ. P. 55(b)(2). (Docket 7). Because Rule 55(a) was the proper citation for entry of a default judgment against a party who has failed to plead or defend, the Clerk of Court entered a default judgment on August 29, 2011. (Docket 11). On September 2, 2011, Chris Cam filed motions to set aside the entry of default, to deny plaintiff's motion for default judgment, and for leave to file an answer out of time. (Dockets 12 & 15). Defendant's motions are based on excusable neglect, the existence of meritorious defenses, and the lack of substantial prejudice to plaintiff if the default is excused. (Dockets 12 & 15). After briefing, the issue is ripe for resolution.
Defendant acknowledges its registered agent and CEO, Dempster Christenson, was served with the summons and complaint on July 12, 2011. (Docket 14, p. 1). Pursuant to Fed. R. Civ. P. 12 (a)(1)(A)(i), "[a] defendant must serve an answer . . . within 21 days after being served with the summons and complaint . . . ." Twenty-one days after July 12, 2011, excluding the date of service pursuant to Rule 6(a)(1)(A), is August 2, 2011.*fn1
Defendant acknowledges its answer was required to be served on or before August 2, 2011. (Docket 14, p. 1).
After receiving the summons and complaint, Sandra Christenson, President of Chris Cam, reviewed the allegations of the complaint.*fn2 (Docket 13, ¶ 5). Because Chris Cam filed a pro se response to plaintiff's administrative charge before the South Dakota Division of Human Rights, Ms. Christenson concluded she could likewise file a pro se response to plaintiff's complaint. Id. at ¶ 7. Prior to responding to plaintiff's complaint, Ms. Christenson "contacted the South Dakota Department of Labor to verify that she was properly calculating the 20-day response date for filing her Answer to the Complaint." Id. at ¶ 8. Upon the apparent recommendation of the Department of Labor, Ms. Christenson attempted to contact plaintiff's attorney, Shiloh MacNally, by telephone. Id. at ¶ 10. Ms. Christenson did not talk with Attorney MacNally, but rather spoke with Becky Purington, a paralegal in the Gunderson, Palmer, Nelson & Ashmore, LLP, law firm. (Docket 21-1, ¶¶ 1 & 2). Ms. Christenson suggested to Ms. Purington that Attorney MacNally was "helping her with" the plaintiff's file. Id. at ¶ 3. After concluding Ms. Christenson was calling on behalf of Chris Cam, Ms. Purington informed Ms. Christenson that she "should read and follow the directions on the Summons." Id. at ¶ 10. Ms. Purington reminded Ms. Christenson that no legal advice was being given, but that Ms. Purington would leave a message for Attorney MacNally. Id.
By letter dated August 2, 2011, Ms. Christenson faxed Attorney MacNally Chris Cam's "Responses to Allegations." (Docket 7-2). This response made specific reference to particular paragraphs of the complaint (Docket 1) and included detailed denials of the complaint's allegations of disability and discriminatory employment practices. Id. That same day, Attorney MacNally sent a return letter to Ms. Christenson via e-mail. (Docket 7-3). In her letter, Attorney MacNally stated "I received your letter today by email. I cannot render legal advice to you. You need to seek legal counsel on this matter." Id. Despite Attorney MacNally's clear declarations, Ms. Christensen did not seek the advice of an attorney. (Docket 14, p. 2).
On August 25, 2011, Attorney MacNally filed plaintiff's motion for default judgment and request for hearing.*fn3 (Docket 7). Attached to the motion were Ms. Christenson's response and Attorney MacNally's letter, both dated August 2, 2011. (Dockets 7-2 and 7-3). As part of the filing, Attorney MacNally properly included a certificate of service indicating copies of plaintiff's filings were mailed to Mr. Christenson. (Docket 10). Mr. Christenson is the registered agent and CEO of Chris Cam. (Docket 14, p. 1).
After reviewing the documents of record, including Ms. Christenson's response and Attorney MacNally's letter (Dockets 7-2 & 7-3), the Clerk of Court concluded the "[d]efendant failed to answer or otherwise defend and that the plaintiff is entitled to entry of default." (Docket 11). Pursuant to the authority of Rule 55(a), the Clerk filed an entry of default in favor of plaintiff and against Chris Cam on August 29, 2011. Id. That same day, the Clerk mailed a copy of the entry of default to Ms. Christenson on behalf of the defendant.
Upon receipt of plaintiff's motion for default on September 1, 2011, Ms. Christenson contacted Attorney A. Stevenson Bogue. (Docket 13, ¶ 4). That same day, Attorney Bogue called Attorney MacNally. Id. at ¶ 17. Because Attorney MacNally was unavailable, he left a voice mail. Id. In his voice mail, Attorney Bogue advised he is an attorney, would be representing Chris Cam, and asked Attorney MacNally to call him back to discuss plaintiff's motion. Id. Before Attorney MacNally could return the call, Attorney Bogue filed defendant's motions. (Docket 21, ¶ 11).
In resistance to defendant's motions, plaintiff submitted evidence of Chris Cam's litigation history in the District of South Dakota . (Docket 21-3). See Baltzer v. Chris Cam Corp., d/b/a Heartland Paper Company, CIV. 07-4194 (D.S.D. 2007). Balzer involved race discrimination and retaliation claims. (CIV. 07-4194; Docket 10). Chris Cam was represented by Attorney Bogue. (CIV. 07-4194; Docket 6). Ms. Christenson was a witness on behalf of the defendant. (CIV. 07-4194; Docket 29).
Chris Cam was also a defendant in an age discrimination case filed in the Southern Division of the District of South Dakota. See Kuzma v. Chris Cam Corporation, d/b/a Triangle School Supplies, CIV. 85-4156 (D.S.D. 1985). Attorney Bogue represented Chris Cam in that action. (CIV. 85-4195; Docket 1).
Plaintiff presented a summary of Chris Cam's participation in state court proceedings in South Dakota. (Docket 21-4). Chris Cam was involved in approximately twenty-seven civil cases in the state system and participated in about eleven default judgment proceedings. (Dockets 21, ¶ 14 & 21-4). Chris ...