Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_05-cv-00518/USCOURTS-cand-3_05-cv-00518-3/pdf.json

Parties Involved:
Friendfinder, Inc.
Counter-defendant
Successfulmatch.com
Counter-claimant

Document Text:

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IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

FRIENDFINDER, INC.,

Plaintiff,

 v.

SUCCESSFULMATCH.COM,

Defendant.

 /

No. C 05-00518 JSW

ORDER GRANTING MOTION TO

SET ASIDE DEFAULT

This matter comes before the Court upon consideration of Defendant’s motion to set

aside default. Having considered the parties’ pleadings, relevant legal authority, the record in

this case, and good cause appearing, the Court GRANTS Defendant’s motion.

The Court finds this matter suitable for disposition without oral argument and hereby

VACATES the hearing date set for January 6, 2006 at 9:00 a.m. See N.D.Civ. L.R. 7-1(b). 

However, the Case Management Conference set for that date remains on calendar but shall be

moved to the Court’s regular case management calendar at 1:30 p.m.

FACTUAL AND PROCEDURAL HISTORY

On February 3, 2005, Plaintiff, Friendfinder.com, filed this action against Defendant

Successfulmatch.com, alleging claims for trademark infringement, violation of Section 43(a) of

the Lanham Act, trademark dilution, and cyberpiracy. 

On March 14, 2005, Plaintiff filed its proof of service demonstrating that Defendant was

purportedly served on March 7, 2005. Assuming service was proper, Defendant’s responsive

pleading would have been due on or about March 28, 2005. 

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On May 3, 2005, Defendant not having answered, Plaintiff filed a motion for entry of

default. Default was entered on May 9, 2005. 

On June 28, 2005, Plaintiff filed a request to continue the initial case management

conference indicating that Defendant had engaged counsel and that the parties were engaged in

settlement discussions. Plaintiff asked for a continuance to allow the parties time to reach a

settlement or give Plaintiff time to file a motion for default judgment. 

On July 6, 2005, the Court granted that request and continued the case management

conference until August 19, 2005. On August 17, 2005, Defendant filed the instant motion.

ANALYSIS

A. Legal Standard.

Pursuant to Federal Rule of Civil Procedure 55(c), “[f]or good cause shown the court

may set aside the entry of default.” The Court’s discretion in determining whether to set aside

the entry of default, as opposed to the entry of default judgment, is “especially broad.” Brady v.

United States, 211 F.3d 499, 504 (9th Cir. 2000). In general, there is a strong preference for

resolving cases on their merits. See, e.g., TCI Group Life Ins. Plan v. Knoebber (“TCI”), 244

F.3d 691, 696 (9th Cir. 2001) (citing Falk v. Allen, 739 F.2d 461, 463 (9th Cir. 1984)).

Factors that the Court may consider in determining whether a defendant has shown good

cause to set aside a default are: whether the defendant’s conduct was culpable; whether the

defendant has a meritorious defense; or whether the plaintiff would be prejudiced by vacating

the entry of default. See, e.g., TCI, 244 F.3d at 696 (considering vacating entry of default

pursuant to Federal Rule of Civil Procedure 60(b), but noting that factors re “good cause”

standard under Rule 55(c) are same). Defendant bears the burden of establishing that these

factors weigh in favor of vacating the default. Id.

B. Defendant Has Demonstrated Good Cause to Vacate the Entry of Default.

1. Defendant’s conduct was not culpable.

A party’s conduct can be considered culpable if he, or she, “has received actual or

constructive notice of the filing of the action and intentionally failed to answer.” TCI, 244 F.3d

at 697 (emphasis in original). In TCI, however, the Ninth Circuit has made clear that a lack of

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“culpable conduct” is essentially the equivalent of excusable neglect. Thus, if the defaulting

party comes forth with a “credible, good faith explanation negating any intention to take

advantage of the opposing party, interfere with judicial decision making, or otherwise

manipulate the legal process,” his or her conduct is excusable, not culpable. Id. at 697-98; see

also id. at 698 (“‘culpability’ involves ‘not simply nonappearance following receipt of notice of

the action, but rather conduct which hindered judicial proceedings’”) (quoting Gregorian v.

Izvestia, 871 F.2d 1515, 1525 (9th Cir. 1989).) 

Here, Defendant contends that service was improper. Defendant also contends that even

if service was proper, it did not receive a copy of the summons and complaint until after the

default had been entered. Specifically, Defendant contends that due to an apparent error, the

package containing the summons and complaint was not forwarded to Jason Du, Defendant’s

President, while he was traveling overseas. (See Declaration of Jason Du (“Du Decl.”), ¶¶ 9-

12.) Defendant contends Mr. Du received the summons and complaint on May 25, 2005. 

Thereafter, Defendant retained counsel, and it is undisputed that the parties started to engage in

settlement discussions. Indeed, Plaintiff requested a continuance of a case management

conference for the purpose of allowing those discussions to continue, while apparently reserving

the right to seek default judgment. (See Docket Nos. 11, 13.) Any delay between the time when

Defendant learned of the Complaint and the filing of the motion to set aside default, appears to

the Court to be due to the fact that the parties were engaged in settlement discussion. Without

expressing any opinion on the validity of service, the Court does not find any evidence in the

record that suggests Defendant intentionally failed to respond or otherwise intended to take

advantage of Plaintiff, interfere with judicial decisionmaking, or otherwise manipulate the legal

process. 

As such, the Court concludes that Defendant’s conduct in failing to timely respond to the

Complaint was not culpable.

2. Defendant has put forth sufficient evidence of a meritorious defense.

With respect to the question of a meritorious defense, “[t]he underlying concern is to

determine whether there is some possibility that the outcome of the suit after a full trial will be

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28 1 Plaintiff filed objections to Defendant’s evidence, but does not object to these

portions of paragraph 4.

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contrary to the result achieved by the default.” Hawaii Carpenters Trust Fund v. Stone, 794

F.2d 508, 513 (9th Cir. 1986) (affirming denial of motion to set aside entry of default where

there was no showing of meritorious defense). Defendant has submitted a proposed Answer and

Counterclaims with his motion to set aside default. Further, Defendant contends that Plaintiff

had knowledge of the allegedly infringing activities two years prior to filing this lawsuit. (Supp.

Du Decl., ¶ 4 at 2:14-27.)1 Thus, the Court cannot say that Defendant does not have a colorable

defense to Plaintiff’s claims of trademark infringement, unfair competition and cyberpiracy.

3. Plaintiff would not be prejudiced by vacating entry of default.

“To be prejudicial, the setting aside of a [default] must result in greater harm than simply

delaying resolution of the case. Rather ‘the standard is whether [plaintiff’s] ability to pursue his

claim will be hindered.’” TCI, 244 F.3d at 701 (quoting Falk, 739 F.2d at 463). For example, a

court could find prejudice if there was a loss of evidence or increased difficulties in obtaining

discovery. Id. Plaintiff contends that it will be more difficult to obtain discovery because

Defendant operates in China. Plaintiff does not suggest that discovery has been lost. Assuming

arguendo that Plaintiff would be required to obtain foreign discovery, Plaintiff would have

faced the same impediment if default had not been entered. Given the early stages of this

litigation and the strong preference for resolving cases on their merits, the Court finds that no

prejudice would result from vacating the entry of default.

Accordingly, the Court finds good cause to vacate the entry of default and GRANTS

Defendant’s motion. The Court encourages the parties to continue their efforts to resolve this

matter voluntarily.

IT IS SO ORDERED.

Dated: November 7, 2005 

JEFFREY S. WHITE

UNITED STATES DISTRICT JUDGE

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