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Hartley v. Longshot Enterprises, Inc.

United States District Court, D. Idaho

October 1, 2018

DARLENE HARTLEY, Plaintiff,
v.
LONGSHOT ENTERPRISES, INC. d/b/a HOME HELPERS HOME HEALTH, a corporation, Defendant.

          MEMORANDUM DECISION & ORDER

          B. Lynn Winmill Chief Judge

         INTRODUCTION

         Federal Rule of Civil Procedure 1 requires parties and their counsel “to secure the just, speedy, and inexpensive determination of every action and proceeding.” This case is off to an inauspicious start. Before the Court is Defendant Longshot Enterprise, Inc.'s (“Longshot”) Motion to Set Aside Clerk's Entry of Default. Dkt. 11. Plaintiff Darlene Hartley (“Hartley”) opposes Longshot's motion. Dkt. 13. For the reasons set forth below, Longshot's motion is GRANTED. Furthermore, counsel for both parties are to meet and confer regarding the fees and expenses incurred by Hartley. Longshot and its counsel, Lane Erickson (“Erickson”), are hereby ORDERED to pay those fees and expenses as they are apportioned below.

         BACKGROUND

         Hartley filed a Charge of Discrimination with the Idaho Human Rights Commission and the United States Equal Opportunity Commission (“EEOC”) alleging, as she does in this suit, that Longshot created a hostile work environment and breached a duty of care owed to her. Complaint ¶ 27, Dkt. 1. Longshot retained Erickson to represent it before both agencies. Pl.'s Ex. A, Dkt. 13-2. On January 12, 2018, Hartley received her Notice of Right to Sue from the Idaho Human Right Commission. Def.'s Br. at 2-3, Dkt. 12-1. Hartley received an additional Notice from the EEOC on February 8, 2018. Id. This action was filed less than two months later. Compl., Dkt. 1.

         Service was accomplished on June 27, 2018. Dkt. 5. Teresa Nelson, Longshot's Chief Executive Officer, (“Nelson”) forwarded the Complaint to Longshot's insurance company on June 28, 2018. Nelson Aff. ¶ 5, Dkt. 12-2. From June 28, 2018 through July 25, 2018, Ms. Nelson continued to communicate with Longshot's insurance company and assumed, erroneously, that the insurance company was carefully responding on Longshot's behalf in this action. Id. ¶¶ 6-7. During this period, Longshot's July 18, 2018 deadline to file an answer passed, and Hartley filed a motion for entry of default on July 23, 2018. Dkt. 6. On July 25, 2018, Nelson was informed that the insurance company was denying Longshot's claim and was instructed to secure independent counsel for Longshot. Pl.'s Ex. E, Dkt. 13-6. That same day, Nelson contacted Erickson (Def.'s Br. ¶ 8, Dkt. 12-2), and Erickson entered a Notice of Appearance in this case (Notice of Appearance, Dkt. 7).

         Erickson, however, did not request leave of the Court to file an answer. And, he failed to communicate with Hartley's counsel after telling the Court's Clerk that he would. Pl.'s Ex. C, Dkt. 13-4. As a result, on August 6, 2018, the Clerk of the Court entered default. Clerk's Entry of Default, Dkt. 10. Nine days later, on August 15, 2018, (which was 21 days after he first appeared) Erickson filed the Motion to Set Aside Clerk's Entry of Default. Dkt. 11.

         Hartley opposes Longshot's motion and argues that Longshot is a legally sophisticated actor who intentionally decided not to answer the Complaint in a timely manner. Pl.'s Resp. at 6-7, Dkt. 13. In particular, Hartley credibly argues that Longshot's claim of work-product privilege over Nelson's communications with Longshot's insurance company from July 2, 2018 through July 19, 2018 indicates that a lawyer was working on Longshot's behalf, thereby making Longshot a legally sophisticated party. Id. Additionally, Hartley argues that vacating the entry of default is unwarranted here because Longshot has failed to put forth sufficient facts to indicate that it can defend on the merits. Id. at 8. Hartley appropriately concedes that she will not suffer prejudice greater than having to try the case on the merits if the order of default is vacated. Id. at 8-9.

         After Hartley filed her opposition to Longshot's motion, Longshot filed an Answer to the Complaint on September 19, 2018. Dkt. 14. That same day, Longshot filed its Reply to Hartley's opposition. Dkt. 15. In its Reply, Longshot makes three arguments: (1) Hartley misrepresented the legal standard for vacating a default motion under Federal Rule of Civil Procedure 55(c), (2) Longshot “previously provided the Court with facts evidencing it has meritorious defenses to plead in this case, ” and (3) Longshot's Answer contains sufficient facts and affirmative defenses to indicate that a meritorious defense exists. See generally Dkt. 15.

         LEGAL STANDARD

         “The court may set aside an entry of default for good cause....” Fed.R.Civ.P. 55(c). The “good cause” standard that governs vacating an entry of default under Rule 55(c) is the same standard that governs vacating a default judgment under Rule 60(b). See TCI Group Life Ins. Plan v. Knoebber, 244 F.3d 691, 696 (9th Cir. 2001). To determine whether good cause exists, the Court must analyze three factors:

(1) whether Longshot engaged in culpable conduct that led to the default;
(2) whether Longshot has a meritorious defense; and
(3) whether Hartley would be prejudiced if default is set ...

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