-WGC Tahoe eCommerce, LLC v. Rana, No. 3:2011cv00725 - Document 18 (D. Nev. 2012)
Court Description: ORDER granting 15 Motion to Set Aside 14 Clerk's Entry of Default. Signed by Judge Edward C. Reed, Jr on 9/28/12. (Copies have been distributed pursuant to the NEF - JC)
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-WGC Tahoe eCommerce, LLC v. Rana Doc. 18 1 2 3 4 UNITED STATES DISTRICT COURT DISTRICT OF NEVADA 5 6 7 TAHOE ECOMMERCE, LLC, a Nevada limited liability company, 8 Plaintiff, 9 vs. 10 HUSSAIN RANA, an individual, dba 11 MEATPROCESSINGTOOLS.COM, 12 ) ) ) ) ) ) ) ) ) ) ) ) ) Defendants. 13 3:11-cv-00725-ECR-WGC Order 14 Now pending is a motion to set aside default (#15). 15 I. Background 16 On October 7, 2011, Plaintiff Tahoe eCommerce, LLC filed a 17 complaint (#1) alleging claims for (1) violation of the Lanham Act; 18 (2) unfair competition; (3) breach of contract; and (4) breach of 19 the implied covenant of good faith and fair dealing. The complaint 20 (#1) alleges that Plaintiff sells goods through a website located at 21 www.meatprocessingproducts.com. (Compl. ¶ 6 (#1).) In 2011, 22 Plaintiff purchased the business and all its tangible and intangible 23 property relating thereto from its predecessor Product Station, Inc. 24 through an online brokerage company named Business Brokers of 25 America, Inc. (“BBA”). (Id. ¶ 7.) Prior to Plaintiff purchasing 26 the business, and unbeknownst to Plaintiff, on or about March 25, 27 2010, Defendant executed a “Non Circumvent, Non-Disclosure 28 Dockets.Justia.com 1 Agreement” (“NDA”) with BBA. (Id.) Under the terms of the NDA, 2 Defendant was prohibited from using or divulging any information 3 regarding the business that was provided to him under the NDA. 4 (Id.) 5 Plaintiff alleges that it and its predecessor have continuously 6 used the mark “Meat Processing Products” and the website in 7 conjunction with the business, and that Plaintiff has applied for a 8 federal trademark registration for the meatprocessingproducts.com 9 mark. (Id. ¶ 8.) Plaintiff alleges that Defendant willfully and 10 maliciously commenced a business under the infringing names “Meat 11 Processing Tools” and “meatprocessingtools.com.” 12 On October 11, 2011, a summons (#3) was issued against 13 Defendant Rana at an address in Weatherford, Texas. On December 23, 14 2011, Plaintiff filed a Motion for Service by Publication (#5) which 15 we granted after an amended Motion (#7) was filed. We ordered that 16 service of process against defendant may be made by publication by 17 publishing such summons in the Reno Gazette Journal and The Dallas 18 News for a period of four weeks. Service by publication was allowed 19 because Plaintiff’s Motion (#7) stated that a process server 20 attempted service on Defendant six times between October and 21 November to no avail, and then again in December. The Clerk entered 22 default against Defendant on April 11, 2012. 23 On April 27, 2012, Defendant filed a Motion to Set Aside the 24 Default (#15). On May 10, 2012, Plaintiff opposed (#16). 25 22, 2012, Defendant replied (#17). 26 /// 27 /// 28 2 On May 1 2 II. Discussion Pursuant to Federal Rule of Civil Procedure 55(c), the court 3 may set aside an entry of default “for good cause.” In analyzing 4 good cause, the court considers: (1) whether the defaulting party 5 engaged in culpable conduct that led to the default; (2) whether the 6 defaulting party has a meritorious defense; or (3) whether vacating 7 the entry of default would prejudice the plaintiff. See Franchise 8 Holding II, LLC v. Huntington Restaurants Group, Inc., 375 F.3d 922, 9 925-26 (9th Cir. 2004). Default judgments are appropriate “only in 10 extreme circumstances; a case should, whenever possible, be decided 11 on the merits.” TCI Group Life Ins. Plan v. Knoebber, 244 F.3d 691, 12 696 (9th Cir. 2001). 13 A. Culpable Conduct 14 A defendant is culpable if he had “actual or constructive 15 notice of the filing of the action.” Direct Mail Specialists, Inc. 16 v. Eclat Computerized Techs. Inc., 840 F.2d 685, 690 (9th Cir. 17 1988). Furthermore, conduct is culpable “where there is no 18 explanation of the default inconsistent with a devious, deliberate, 19 willful, or bad faith failure to respond.” Employee Painters’ Trust 20 v. Ethan Enters., Inc., 480 F.3d 993, 1000 (9th Cir. 2007). 21 Plaintiff claims that Defendant had actual notice of the filing 22 of this action because Plaintiff’s principal Clayton Fisher had 23 multiple telephone conversations with Defendant’s father who stated 24 that he had told Defendant about the conversations. Defendant 25 disputes this allegation, claiming that Defendant’s father was 26 informed that a lawsuit had been filed but was not provided any 27 confirming information. 28 Defendant disputes that he had any actual 3 1 information or knowledge about the action, and states that once he 2 received the notice of default, he retained counsel and has taken 3 appropriate action to respond. The parties dispute which address 4 Defendant resided at while Plaintiff attempted to serve the summons 5 and complaint. 6 While the facts are hotly disputed, it is at least apparent 7 that Defendant may have been aware that there was a lawsuit filed 8 against him somewhere. Furthermore, notice of the summons was 9 published for a period of four weeks in The Dallas News. While the 10 Court cannot find, based on the allegations, whether Defendant 11 willfully, deliberately, or deviously avoided service of process, 12 this factor weighs in favor of denying the motion to set aside the 13 default. 14 B. Meritorious Defense 15 While a defendant seeking to set aside a default must present 16 specific facts that would constitute a defense, “the burden on a 17 party seeking to [set aside default] is not extraordinarily heavy.” 18 United States v. Signed Personal Check No. 730 of Yubran S. Mesle, 19 615 F.3d 1085, 1094 (9th Cir. 2010). All that is necessary to 20 satisfy this requirement is to “allege sufficient facts that, if 21 true, would constitute a defense.” Id. The question of whether 22 those allegations are true is not to be determined at this stage; 23 rather, it will be the subject of the later litigation. 24 Id. Defendant argues that Plaintiff’s claims against him fail 25 because the web addresses and trademarks are not substantially 26 similar to each other, Defendant is not trading off of Plaintiff’s 27 business reputation and is not engaged in a substantially similar 28 4 1 business, the alleged contract is vague and the vagueness must be 2 held against Plaintiff because Plaintiff authored the contract, and 3 finally, that there is no actual trademark that exists to be 4 infringed upon. While Defendant’s defenses are fairly conclusory, 5 the Ninth Circuit has indicated that a defendant’s burden at this 6 stage is “minimal.” Id. Because the complaint (#1) itself is 7 fairly conclusory and the merits of the case depend on delving into 8 deeper issues of whether the businesses here were similar, whether 9 Plaintiff is entitled to a trademark, and other such issues, we find 10 that this factor weighs in favor of Defendant, who has alleged 11 sufficient facts that, if true, would constitute a defense. 12 C. Prejudice 13 Plaintiff argues that it will be prejudiced if the default is 14 set aside, as Plaintiff has spent thousands of dollars trying to 15 serve Defendant, who allegedly evaded service for several months. 16 Plaintiff has also spent money in obtaining an order to serve by 17 publication. While Plaintiff has undoubtedly expended time, effort, 18 and money to litigate the action to this stage, we find that the 19 prejudice here is fairly minimal, as the action is at an early stage 20 and the motion to set aside the default was filed before default 21 judgment was requested. 22 There is some question as to the culpability of Defendant’s 23 conduct; however, the Court finds that setting aside the default in 24 this case would allow the most equitable resolution. Default 25 judgments are appropriate only in extreme circumstances and the law 26 favors a decision on the merits whenever possible. Knoebber, 244 27 F.3d at 696. For that reason, and because Defendant appeared by 28 5 1 attorney shortly after allegedly first receiving documents 2 concerning the case, the Court finds that the default shall be set 3 aside such that the case may be decided on its merits. 4 5 6 III. Conclusion IT IS, THEREFORE, HEREBY ORDERED that the Motion to Set Aside 7 the Default (#15) is GRANTED. 8 9 10 DATED: September 28, 2012. 11 ____________________________ UNITED STATES DISTRICT JUDGE 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 6
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