United States District Court, S.D. New York
JANOU PAKTER, JANOU LLC, and JP SEARCH, INC., formerly known as JANOU PAKTER, Plaintiffs,
JANOU PAKTER, LLC, Defendant,
OPINION & ORDER
A. Engelmayer United States District Judge
decision resolves the motion of defendant Janou Pakter LLC
("defendant") asking the Court to reconsider its
decision denying defendant's motion to vacate the default
judgment this Court had entered against it in this trademark
infringement action. That decision, issued on December 5,
2017 (the "December 5 Order"), reasoned that
defendant had failed to take the steps the Court had directed
be taken to justify vacating the default. In particular,
defendant had not reimbursed plaintiffs for the fees and
costs plaintiffs had incurred in connection with a
post-default inquest into damages. Defendant, having now paid
those fees and costs and having explained that
defendant's failure to heed that order derived from
defense counsel's having failed to correct the email
address that had been given to the Court, now moves for
reconsideration of that decision.
reasons that follow, the Court finds that defendant has now
adequately cured the prejudice to plaintiffs occasioned by
its defaults and has otherwise met the requirements, under
Federal Rule of Civil Procedure 55(c), to set aside a
default. Accordingly, the Court vacates its prior decision
denying vacatur of the default judgment and now vacates the
default judgment. This case will now move-expeditiously-to
litigation on the merits.
Court's December 5 Order, which the Court incorporates by
reference, recounted the halting trajectory of this action.
As relevant here, on March 29, 2017, the Court entered
default judgment against defendant and referred the case to
Magistrate Judge Gorenstein for an inquest into damages.
15, 2017, for the first time, counsel for defendant appeared
in this action, seeking an extension of time to respond to
plaintiffs' proposed findings of fact and conclusions of
law with respect to damages, and advising Judge Gorenstein
that defendant intended to file a motion in this Court to
vacate the default judgment. Dkts. 34-35. On June 16, 2017,
defendant so moved, see Dkts. 37-40, and on June 30,
2017, plaintiffs filed a brief in opposition, Dkt. 43.
November 20, 2017, this Court entered an order stating that
it would "condition any vacatur of the default judgment
on defendant's payment of the fees and costs plaintiffs
reasonably incurred in the preparation of plaintiffs'
proposed findings of fact and conclusions of law." Dkt.
45. The Court directed plaintiffs' counsel to submit by
November 28, 2017, in a sworn declaration, an accounting of
the fees and costs reasonably incurred in preparation of
those filings. Id. The Court further ordered that,
if defendant continued to seek vacatur of the default
judgment, defense counsel was required to submit a response
by Friday, December 1, 2017, "attesting to
defendant's willingness to promptly upon vacatur of the
default judgment reimburse plaintiff for all of those
reasonably incurred fees and costs." Id. The
Court advised that, if the defendant were unwilling to bear
those costs, the Court would "deny its motion to vacate
the default judgment." Id.
November 28, 2017, plaintiffs submitted the declaration of
their counsel William B. Kerr, attesting to the fees and
costs plaintiffs reasonably incurred in preparing their
proposed findings of fact and conclusions of law. Dkt. 46.
That declaration was supported by billing records which it
attached. Id. The fees and costs totaled $20,
607.59. Id. Defendant, however, did not pay these
fees and costs (or respond to or otherwise acknowledge
December 5 Order, the Court, noting defendant's failure
to commit to so reimburse plaintiff, held that defendant had
failed to cure the prejudice to plaintiffs that vacating the
default would cause. Accordingly, the Court denied the motion
February 26, 2018, nearly three months later, defendant
resurfaced. Its counsel, J. Gregory Lahr, submitted a letter
explaining that he had just learned of the December 5 Order
after the chambers of the Magistrate Judge newly assigned to
the case, the Hon. Stewart Aaron, had inquired whether
defendant intended to make a submission in connection with
the inquest. Lahr sought leave, on defendant's behalf, to
move for reconsideration of the December 5 Order. Dkt. 50. On
February 27, 2018, the Court authorized Lahr to file such a
motion, again conditioned on defendant's paying
plaintiffs' attorneys' fees and costs. Dkt. 51.
March 5, 2018, defendant submitted its motion for
reconsideration, accompanied by a memorandum of law in
support, Dkt. 54, and a declaration from Lahr, Dkt. 53
("Lahr Decl."). In that declaration, Lahr attested
that, on March 2, 2018, defendant had paid plaintiffs $20,
607.59, the full sum that plaintiffs sought. Lahr Decl. at
¶ 10. On March 16, 2018, plaintiffs submitted their
opposition in the form of a declaration of William B. Kerr.
Dkt. 57 ("Kerr Deck").
Second Circuit has "advised district courts to consider
three criteria in deciding a Rule 55(c) motion: (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, A6l Fed.Appx. 31, 33 (2d Cir.
2012). Prejudice to the non-defaulting party is
"the single most persuasive reason for denying a Rule
55(c) motion" Murray Eng'g, P.C. v. Windermere
Properties LLC, No. 12 CIV. 0052 JPO, 2013 WL 1809637,
at *5 (S.D.N.Y. Apr. 30, 2013) (quoting 10A Charles Allen
Wright, Arthur R. Miller & Mary Kay Kane, Federal
Practice and Procedure § 2699 (3d ed. 2010)). "In
cases where substantial rights are implicated or when
substantial sums of money are demanded, default judgments are
particularly disfavored by the law." Id. at *3
(internal quotations omitted), III. Analysis
the question presented by defendant's motion for vacatur
is a close one given the defense's lax approach to this
lawsuit, the Court finds-given defendant's recompense of
plaintiffs' attorneys' fees and costs as directed and
given defense counsel's proffer of a colorable
explanation for its failure to respond to the ...