The opinion of the court was delivered by: B. Lynn WINMILLChief U.S. District Court Judge
MEMORANDUM DECISION AND ORDER
Before the court is the Defendant's Motion to Set Aside Default and Reconsider Preliminary Injunction (Dkt. #2). The Court has determined that oral argument would not significantly assist in the decisional process, and will thus consider the motions without a hearing. Being familiar with the record and pleadings before it, the Court will set aside the default and vacate the order of preliminary injunction.
Plaintiff 1-800 Radiator Franchise, Inc. (RFI) brought the original action against Defendants Blincoe Diversified Alternatives, LLC (BDA), Damon Blincoe, and Kathi Blincoe, for trademark infringement and breach of contract. Plaintiff filed its Complaint (Dkt. 1), Amended Complaint (Dkt. 3), and Motion for Preliminary Injunction (Dkt. 2), to enjoin Defendants from trademark infringement and violation of its covenants not to compete. Damon and Kathi Blincoe filed an Answer (Dkt. 11) on behalf of themselves and BDA, whom they purported to represent pro se. Because of a lack of proper representation, Plaintiffs moved to strike Defendants' answer, with respect to BDA, and for entry of default as to BDA. The Court granted both motions and issued a preliminary injunction.
BDA has since acquired proper representation and filed a motion to set aside default and reconsider the grant of preliminary injunction. It is noted that the Plaintiff has failed to provide the Court with proof of service, regarding the motion for preliminary injunction.
There is little evidence that the Plaintiff in this case would be prejudiced by setting aside default judgment. The Court finds that this outweighs the other factors it must consider and will set aside its previous default of BDA.
When moving to set aside default, the moving party must demonstrate that "the interest in deciding the case on the merits should prevail over the very important interest in the finality of judgments." TCI Group Life Ins. Plan v. Knoebber, 244 F.3d 691, 696 (9th Cir. 2001). To do so, they must demonstrate good cause for lifting the default. Id. (citing Fed.R.Civ.P. 55(c)). When determining if good cause exists, courts are to look to three factors, 1) whether the Defendant's culpable conduct led to the default, 2) whether the defendant has a meritorious defense, and 3) whether reopening the default judgment would prejudice the plaintiff. Id.
Regarding the first factor, culpability may turn on the intentional nature of the conduct. See id. at 697. In the context of a motion to set aside default, conduct is not intentional when "the defendant offers a credible, good faith explanation negating any intention to take advantage of the opposing party, interfere with judicial decisionmaking, or otherwise manipulate the legal process." Id.
Damon and Kathi Blincoe knew they were unable to represent BDA, pro se, in their arbitration proceedings. They argue, however, that they were unaware the same was true for these federal proceedings. It is undisputed that the Blincoes intentionally declined to seek representation in these proceedings; but, the Court does not find that they did so to gain an advantage, interfere with judicial decisionmaking or otherwise manipulate these proceedings. Accordingly, their conduct is not necessarily culpable, even though intentional, and can be excused under a finding of good faith and minimal resultant delay in proceedings. See id. at 698. Under the facts presented, the Court concludes that the Blincoes' conduct is not culpable.
Turning to the second factor, the Court notes that reasonable people may disagree as to the meritorious nature of the defense offered by BDA. Given that uncertainty, the Court will err in favor of permitting BDA to present that defense.
Finally, with regard to the question of prejudice to the Court notes that the standard for determining prejudice to the plaintiff is "whether his ability to pursue his claim will be hindered." Falk v. Allen, 739 F.2d 461, 463 (9th Cir. 1984). Plaintiff has not persuaded the Court that its claim will be hindered by virtue of delays associated with ...