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Universal Instruments Corporation v. Micro System Engineering, Inc.

United States District Court, N.D. New York

July 14, 2014

UNIVERSAL INSTRUMENTS CORPORATION, Plaintiff,
v.
MICRO SYSTEM ENGINEERING, INC. et al., Defendants.

Schmeiser, Olsen Law Firm, Jonathan M. Madsen, Esq., Latham, NY, for the Plaintiff.

Kolisch, Hartwell Law Firm, DAVID P. COOPER, ESQ., DESMOND J. KIDNEY, ESQ., OWEN W. DUKELOW, ESQ., Portland, OR, for the defendants, Micro System Engineering, Inc.

Young, Sommer Law Firm, JEFFREY S. BAKER, ESQ., JOSEPH F. CASTIGLIONE, ESQ., Executive Woods, Albany, NY. Missouri Tooling & Automation

MEMORANDUM-DECISION AND ORDER

GARY L. SHARPE, Chief Judge.

I. Introduction

Plaintiff Universal Instruments Corporation commenced this diversity action alleging breach of contract and promissory estoppel against defendant Micro System Engineering, Inc. (MSEI), and claims of misappropriation of trade secrets, unfair competition, and unjust enrichment against MSEI and defendant Missouri Tooling & Automation (MTA), seeking damages and permanent injunctive relief. (Compl. ¶¶ 123-267, Dkt. No. 1.) Pending is defendants' motion to set aside default, (Dkt. No. 16), and Universal's motion for default judgment, (Dkt. No. 13). For the reasons that follow, defendants' motion is granted and Universal's motion is denied as moot.

II. Background[1]

Universal, a Delaware corporation with its principal place of business in New York, "designs and manufactures advanced automation and assembly equipment solutions for the electronic manufacturing industry." (Compl. ¶¶ 2-3.) In furtherance of its business, Universal owns certain intellectual property. ( See, e.g., id. ¶ 5.) MSEI, an Oregon corporation, which is in a contractual relationship with Universal, "designs, manufactures, and tests pacemaker boards and defibrillator boards, " and MTA, a Missouri corporation, "provides machine automation and replication, special machine design and manufacturing, concept and development, system upgrades and retrofits, motion controls and robotics, custom tooling and fixturing, and system integration." ( Id. ¶¶ 6, 9, 11, 12, 22.) Generically speaking, Universal claims that MSEI violated the contract by disclosing to MTA certain source codes "for the purpose of [MTA] competing against [Universal]." ( Id. ¶ 80.) This conduct, and more, forms the basis of Universal's complaint.

Universal filed its complaint on July 15, 2013. ( See generally Compl.) Although defendants contend that proper service was not made on them thereafter, (Dkt. No. 16, Attach. 6 at 5-6), it is undisputed that an employee of each defendant came into possession of the complaint one way or another. MSEI's employee, Tuan Nguyen, was presented with a package containing the complaint on July 18, 2013, although he "did not understand what was in the package when" it was given to him. (Dkt. No. 16, Attach. 1 ¶¶ 1-2, 4.) Nguyen left the package with MSEI corporate counsel James Maldonado the same day. ( Id. ¶ 3.) Maldonado did not review the contents of the package until July 31, at which time he discovered that it contained a complaint and set out to retain outside counsel to handle the litigation. (Dkt. No. 16, Attach. 2 ¶ 3.) The very next day, Maldonado attempted to contact Universal's counsel, Jonathan Madsen, to advise him that he had received the complaint, and ask for the date on which the complaint was served. ( Id. ¶ 4.) Madsen did not respond. ( Id. ) On the following day, Maldonado placed a telephone call to Madsen, who failed to return the call. ( Id. ¶ 5.) Maldonado attempted to contact Madsen again on August 6; Madsen "did not... respon[d] for several days." ( Id. ¶ 6.) On August 7, Maldonado engaged attorney David Cooper to represent MSEI and thereafter a meeting was held, on August 12, "to discuss his preliminary recommendations about the case." ( Id. ¶¶ 7-8.)

MTA employee Regina Stephens received a copy of the complaint on July 19. (Dkt. No. 16, Attach. 4 ¶¶ 1-2.) MTA also retained Cooper, who, on behalf of both MSEI and MTA, contacted Madsen on August 13 or 14, at which time Madsen did not indicate that he was seeking entry of default or default judgment. (Dkt. No. 16, Attach. 5 ¶¶ 1-3.)

Universal sought entry of default pursuant to Local Rule 55.1 on August 9, 2013 and August 12, 2013 against MSEI and MTA, respectively. (Dkt. Nos. 9, 11.) Soon thereafter, the Clerk entered each defendant's default. (Dkt. Nos. 10, 12.) The pending motions were filed afterward. (Dkt. Nos. 13, 16.)

III. Standard of Review

"The court may set aside an entry of default for good cause, " Fed.R.Civ.P. 55(c), which requires the court's consideration of three factors: "(1) whether the default was willful; (2) whether setting aside the default would prejudice the party for whom default was awarded; and (3) whether the moving party has presented a meritorious defense." Peterson v. Syracuse Police Dep't, 467 F.Appx. 31, 33 (2d Cir. 2012). "This test should be applied in the context of the general preference that litigation disputes be resolved on the merits, not on default.'" Citadel Mgmt., Inc. v. Telesis Trust, Inc., 123 F.Supp.2d 133, 142 (S.D.N.Y. 2000) (quoting Cody ...


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