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United States District Court, Eastern District of New York

March 3, 2003


The opinion of the court was delivered by: I. Leo Glasser, United States District Judge



Defendant Lushena Books ("Lushena") moves pursuant to Federal Rule of Civil Procedure 60 for an order vacating a default judgment entered against it on or about July 28, 2002. No such judgment is noted on the docket, but a default under Rule 55 was entered on July 28, 1999, and it is this entry to which Lushena refers. Plaintiff Gumbs & Thomas Publishers, Inc. ("Gumbs & Thomas") opposes the motion on the grounds that Lushena willfully ignored service of the complaint and entry of default for more than three years, that Lushena presents no meritorious defense, and that plaintiff will suffer substantial hardship caused by the likelihood of inadvertent or intentional destruction of evidence in the intervening years since the Complaint was filed.

Lushena's motion is denied for the reasons stated below.


Gumbs & Thomas is the publisher of the book Kwanzaa: Everything You Always Wanted to Know But Didn't Know Where to Ask ("Kwanzaa"). After sending cease and desist letters, Gumbs & Thomas filed the complaint in this action on June 24, 1999, claiming that Lushena and others had violated the copyright of Kwanzaa by reproducing and selling infringing copies. According to the sworn affidavit of the process server, service of summons and complaint was effected on July 16, 1999, by personal service upon Luther Warner, the manager for Lushena. at its offices in Chicago, Illinois. (See Gorrin Aff., Ex. A.)

Warner states that he called counsel for plaintiff and asked for proof of the allegations in the complaint. (Warner Aff., ¶ 8.) Warner did not hear back from plaintiff's counsel subsequent to that phone call. (Id.) Warner only later learned that Gumbs & Thomas entered a default and "filed the second action." (Id., ¶ 9.) According to counsel at oral argument. Gumbs & Thomas filed a separate infringement action in 2002 related to two other works.

On or around July 16, 1999, Jeffery Gorrin, Esq., the attorney for Gumbs & Thomas. spoke with Warner. (Gorrin Aff., ¶ 7.) According to Gorrin. Warner stated that the only copies of Kwanzaa were part of a print run shared by Gumbs & Thomas and Lushena. to which Gorrin replied that the infringing copies were from another print run and could be distinguished by certain physical characteristics, such as the cover's moray pattern and typeface. (Id.) Gorrin urged Warner to retain an attorney and to file an answer, and offered no assurances that Lushena need not take further action.*fn1 (Id.) Robert Gumbs. the President of Gumbs & Thomas, states that he spoke with Warner once regarding the case, but merely told Warner to speak with Gumbs & Thomas's attorney.

After the default was entered. Gorrin served a copy of the default entry on Lushena. (Id. ¶ 9.) On November 28, 2000, Warner again called him, and Gorrin explained that a default had been entered and that if the default persisted. a judgment would eventually be entered against Lushena. (Id., ¶ 10.) Gorrin states that Warner expressed disdain for the legal process and challenged Gorrin to collect on any judgment. (Id.)


I. Standard for Vacating Defaults

Rule 55(c) permits a court to set aside an entry of default "for good cause shown." Fed. R. Civ. P. 55(c). Three criteria are analyzed to determine whether to set aside an entry of default: whether the default was willful. whether the moving party has presented a meritorious defense. and whether setting aside the default would prejudice the party who secured the entry of default. Marziliano v. Heckler, 728 F.2d 151, 156 (2d Cir. 1984). The district court must consider and balance all three factors. Commercial Bank of Kuwait v. Rafidain Bank, 15 F.3d 238, 243 (2d Cir. 1994).

By comparison, if a judgment is entered after default. then it may be set aside "in accordance with Rule 60(b)." Fed.R.Civ.P. 55(c). Rule 60(b) provides numerous circumstances in which a court may relieve a party from judgment. including mistake, inadvertence, surprise, or excusable neglect (Rule 60(b)(1)); fraud, misrepresentation, or other misconduct of an adverse party (Rule 60(b)(3)); or any other reason justifying relief from the judgment (Rule 60(b)(6). Relief from a default judgment is entrusted to the sound discretion of the Court. and depends upon the circumstances of the case and the credibility and good faith of the parties. See Enron Oil Corp. v. Diakuhara, 10 F.3d 90, 95 (2d Cir. 1993). The Second Circuit has repeatedly indicated that "the preference is for the District Court to reach judgments on the merits and not by way of default judgments." Shah v. N.Y. State Dep't of Civil Serv., 168 F.3d 610, 615 (2d Cir. 1999) (citations omitted); accord Cody v. Mello, 59 F.3d 13, 15 (2d Cir. 1995). Accordingly, the courts resolve doubts in the movant's favor so that the case may be resolved, if possible, on the merits. Enron Oil, 10 F.3d at 95-96. Equitable factors that may tip the balance in favor of vacating a default judgment include whether the defaulting party was pro se and if substantial sums of money or significant rights are at stake. Id. at 97.

Although the standards for Rule 55(c) and 60(b) motions are comparable, a "motion to vacate a default is subject to a less rigorous standard than applies to a Rule 60(b) motion to vacate a default judgment." American Airlines Ins. Co., Ltd v. Eagle Ins. Co., 92 F.3d 57, 59 (2d Cir. 1996); accord Shepard Claims Service, Inc. v. William Darrah & Assocs., 796 F.2d 190, 193 (6th Cir. 1986) ("In practice a somewhat more lenient standard is applied to Rule 55(c) motions where there has only been an entry of default than to Rule 60(b) motions where judgment has been entered."); Chrysler Credit Corp. v. Macino, 710 F.2d 363, 368 (7th Cir. 1983). Since only an entry of default has been entered in this present case, this motion will be analyzed under the less rigorous standard of Rule 55(c).

A. Willfulness of the Default

"Courts have held a default to be willful when a defendant knew about the complaint and failed to respond. . . . where the defendant fails to comply with the court's orders. . . . [or] when a lawyer neglects a case for an extended period of time." Saifullah v. U.S. Parole Com'n, 1991 WL 58280. at *1 (E.D.N.Y. Apr. 5, 1991) (Glasser, J.). On the other hand, "[n]egligence or carelessness does not amount to willfulness." Argus Research Group, Inc. v. Argus Securities, Inc., 204 F. Supp.2d 529, 531 (E.D.N.Y. 2002) (Spatt, J.).

In this case it is abundantly clear that Lushena had timely notice of the summons and complaint by service of process but failed to respond. Warner admits as much, and admits that he called Gumbs' attorney seeking proof of the claims contained in the complaint. Moreover. Lushena had notice of the entry of default, and still took no action.

Although Warner notes that he has no legal experience, that lack of legal knowledge cannot serve to insulate Lushena. As a corporation. Lushena could not appear in this action pro se. nor could Warner represent it. See Jones v. Niagara Frontier Transp. Auth., 722 F.2d 20, 22 (2d Cir. 1983); Pecarsky v. Ltd., 249 F.3d 167, 172 (2d Cir. 2001). Lushena should have consulted with its attorneys, and Warner's lack of experience with legal proceedings cannot absolve Lushena from its responsibilities to follow the Federal Rules of Civil Procedure and timely respond to a summons and complaint.

No evidence contradicts Gorrin's statements that Warner told him to try to pursue collection of any judgment that might be entered. No outside impediment prevented Lushena from filing an answer or other responsive paper, or nor did Warner have any reasonable cause to be mistaken about Lushena's obligations to respond to the summons and complaint or to the entry of default. Accordingly, Lushena's failure to respond was willful.

B. Presenting a Meritorious Defense

"To satisfy the criterion of a meritorious defense, the defense need not be ultimately persuasive at this stage. A defense is meritorious if it is good at law so as to give the factfinder some determination to make." American Airlines, 92 F.3d at 61. Lushena argues it has a meritorious defense that it bought copies in good faith and in due course of Kwanzaa that do not infringe on Gumbs & Thomas's copyright. (Lushena Mem. at 6-7.) Additionally, Warner states that there are significant issues regarding the existence of damages since Kwanzaa has been replaced in the market by a similar work with a lower cover price. (Warner Aff. ¶ 7.) In essence. Lushena offers a general denial. Given that there are few facts that support its defense, this defense is hardly persuasive; therefore, what merit the defense possesses will be given limited weight.

C. Prejudice to Plaintiff

"Delay alone does not establish prejudice." Enron Oil, 10 F.3d at 98. Rather, the plaintiff must show "that delay will `result in the loss of evidence, create increased difficulties of discovery, or provide greater opportunity for fraud and collusion.'" Davis v. Musler, 713 F.2d 907, 916 (2d Cir. 1983) (quoting Wright, Miller & Kane, Federal Practice & Procedure § 2699).

Lushena argues that Gumbs & Thomas will suffer no prejudice and still be able to pursue judgments against the other co-defendants (A&B Distributors, Inc. and D&J Book Distributors) even if the default is vacated. Gumbs & Thomas in response notes that the delay caused by Lushena's willful default will likely have resulted in the negligent or intentional destruction of evidence. (Gumbs' Mem. at 5.) Gumbs & Thomas also argues that Lushena's appearance shortly before the "imminent assignment of a pretrial conference date may very well preclude or seriously limit plaintiff's ability to follow up with discovery from Lushena's customers." (Id.)

Plaintiff is correct that it will be prejudiced by the potential loss of evidence and scheduling difficulties caused by additional third-party discovery. Although the degree of prejudice is difficult to measure, clearly the delay will cause substantial difficulties in concluding the case and potentially has resulted in the loss of evidence. Gumbs & Thomas would therefore be prejudiced by vacating the entry of default.

D. Other Factors

It does not appear that any other equitable factors are raised here (since the defendant cannot appear pro se in the first instance), although since no judgment has been entered it would be impossible to determine whether a substantial sum of money is at stake. Nor does either party address whether substantive rights are at stake. other than the threat of a judgment hanging over Lushena.

E. Weighing the Factors

Lushena's default was willful. Lushena's defense to plaintiff's claims can only be accorded some weight. Finally, there is clearly prejudice to plaintiff from the delay caused by the extraordinarily long time that elapsed before Lushena sought to vacate the entry of default. Accordingly, this Court finds that the balance of factors weighs strongly against vacating the entry of default.


For the foregoing reasons, Lushena's motion to vacate the entry of default is denied.


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