United States District Court, D. South Dakota, Western Division
JEFFREY L. VIKEN, Chief District Judge.
On October 15, 2013, defendants filed a motion (Docket 28) asking the court to set aside the order for default judgment as to liability. (Docket 27). The same day, defendants filed a motion for leave to file out of time an answer to plaintiffs' complaint. (Docket 30). Plaintiffs opposed defendants' motions. (Dockets 31 & 32). On October 28, 2013, defendants filed a motion (Docket 35) to alter or amend the court's order of September 30, 2013, denying defendants' motion to set aside the clerk's second entry of default. (Docket 26). On November 1, 2013, defendants filed reply briefs in support of the motion for leave to file an out-of-time answer and the motion to set aside default judgment. (Dockets 37 & 38). On November 12, 2013, plaintiffs filed their brief in opposition to defendants' motion to alter or amend the court's September 30, 2013, order. (Docket 39). On November 26, 2013, defendants filed their reply brief in support of the motion to alter or amend the order and judgment. (Docket 40). For the reasons stated below, defendants' motion to set aside the order of default as to liability (Docket 28) is denied, defendants' motion for leave to file an out-of-time answer (Docket 30) is denied and defendants' motion to alter or amend the order and judgment (Docket 35) is denied.
On October 3, 2012, plaintiffs Joel and Marlene Marvin filed their complaint against the defendants alleging violations of the Fair Labor Standards Act, 29 U.S.C. §§ 206-216, with pendant state law claims, and a claim under the False Claims Act, 31 U.S.C. § 3730. (Docket 1). Defendants were served with the summons and complaint on October 9, 2012. (Dockets 5 & 6). No answer or other responsive pleading was filed by the defendants. On November 19, 2012, plaintiffs filed a motion for entry of default with a supporting affidavit. (Dockets 7 & 8). On November 28, 2012, the Clerk of Court filed an entry of default pursuant to Fed.R.Civ.P. 55(a). (Docket 9). On December 4, 2012, Attorney Donald Knudsen filed a notice of appearance on behalf of the defendants. (Docket 11). On January 8, 2013, defendants filed an unopposed motion to set aside the entry of default. (Docket 12). On January 14, 2013, the court granted defendants' motion, vacated the clerk's entry of default and permitted defendants to file their answer. (Docket 13).
On February 12, 2013, plaintiffs filed a second application for entry of default and a supporting affidavit. (Dockets 14 & 15). On February 13, 2013, Attorney Knudsen filed an affidavit in opposition to plaintiffs' request for entry of default and a draft copy of an answer. (Dockets 16 & 16-1). On February 14, 2013, the Clerk of Court filed the second entry of default pursuant to Rule 55(a). (Docket 17). On February 14, 2013, defendants filed an answer. (Docket 18). Defendants filed an amended answer on February 15, 2013. (Docket 19). The same day, defendants filed a motion to set aside the second entry of default, together with an affidavit of Attorney Knudsen. (Dockets 20 & 20-1).
On February 21, 2013, plaintiffs filed their opposition to defendants' motion to set aside the second entry of default and moved for default judgment pursuant to Rule 55(b). (Docket 21). On March 7, 2013, defendants filed their reply in support of the motion to set aside the second entry of default, together with an affidavit of Attorney Knudsen and other supporting documentation. (Dockets 22, 22-1, 22-2 & 22-3). On March 21, 2013, defendants filed their brief in opposition to plaintiffs' motion for default judgment. (Docket 24). The same day plaintiffs filed their reply brief in support of their motion for default judgment. (Docket 25).
On September 30, 2013, the court filed an order denying defendants' motion to set aside the second entry of default. (Docket 26). The court further ordered "that pursuant to Rule 55(b)(2) plaintiffs are entitled to a partial default judgment on the issue of defendants' liability and trial shall be limited to the issue of plaintiffs' damages pursuant to Rule 55(b)(2)(B)." Id. at p. 10. On October 10, 2013, a default judgment was entered in favor of the plaintiffs and against the defendants. (Docket 27).
On October 15, 2013, defendants' motion to set aside the default judgment claimed relief "under Fed. R. Civil P. § 60(b)(1) due to the fact that the failure to answer the complaint was inadvertent and excusable. The inadvertent failure to answer constituted a marginal' error which should be excused so that the case can be heard on its merits." (Docket 28 at p. 1). Defendants' brief also moved "the Court to reconsider its order denying the motion to set aside the clerk's second entry of default because the Court applied a standard for good cause which is too stringent at this stage of the proceedings." (Docket 29 at p. 1). Defendants assert "[t]here is a distinction in the law between a clerk's entry of default and a default judgment...." Id . "[R]elief from a default judgment requires a stronger showing of excuse than relief from a mere default order." Id . (citing Johnson v. Dayton Electric Manufacturing Co. , 140 F.3d 781, 783 (8th Cir. 1998) (internal citation and quotation marks omitted). Defendants argue the court must complete the analysis of factors set forth in Stephenson v. El-Batrawi , 524 F.3d 907, 912 (8th Cir. 2008). (Docket 29 at p. 2).
RULE 55(c) ANALYSIS
Rule 55 provides "[t]he court may set aside an entry of default for good cause, and it may set aside a default judgment under Rule 60(b)." Fed.R.Civ.P. 55(c). When the court conducted its analysis of whether to set aside the second entry of default, it used the "good cause" standard dictated by Stephenson. "When examining whether good cause exists, the district court should weigh whether the conduct of the defaulting party was blameworthy or culpable, whether the defaulting party has a meritorious defense, and whether the other party would be prejudiced if the default were excused.'" (Docket 26 at p. 4) (citing Stephenson , 524 F.3d at 912) (citing Johnson , 140 F.3d at 784). The court considered those three factors separately. Id. at pp. 4-9.
Defendants argue the court erred in analyzing each of the three factors. (Docket 29 at pp. 2-5). Separately considering defendants' arguments, without repeating the court's original analysis in detail, results in the following comparison.
1. Conduct of C-VISN and Women of War
The court made the following findings:
Defense counsel's explanation for failing to timely file an answer is disingenuous or weak, at best....
Defense counsel was aware of the January 14, 2013, order [Docket 13] and yet ignored his obligation to timely respond under Rule 12.... For some reason not disclosed to the court, defense counsel chose not to comply with either of the options available to him under Rule 6. Rather than admit to or claim a negligent oversight for failing to comply with the January 14, 2013, order and Rule 12, counsel attempted to shift the blame on to the court and plaintiffs' counsel.
The court finds defense counsel's decision-making process to be "intentional delay [and] disregard for ...