Opinion ID: 2792928
Heading Depth: 2
Heading Rank: 1

Heading: “Extreme Circumstances”

Text: Before addressing the Falk factors, we must decide if our precedent requires a district court to state why a particular case presents “extreme circumstances” that would permit a default judgment to stand, even when it faithfully applies the Falk factors. Appellants rely heavily on language in Mesle to argue that the failure to do so mandates automatic reversal. To answer this question, we start with the origin of the phrase “extreme circumstances.” UNITED STATES V. AGUILAR 9 In Falk, we articulated “two policy concerns” that guide our review of Rule 60(b) motions in the default judgment context. The first was that Rule 60(b) is “remedial” and “must be liberally applied.” The second was that a default judgment “is a drastic step appropriate only in extreme circumstances; a case should, whenever possible, be decided on the merits.” Id. at 463. To ensure that we carried out these two policies, we adopted the now familiar three-factor test when “considering a motion to reopen a default judgment under Rule 60(b).” Id. (citing Gross v. Stereo Component Sys., 700 F.2d 120, 122 (3d Cir. 1983)). The “extreme circumstances” policy language was intended to remind courts that default judgments are the exception, not the norm, and should be viewed with great suspicion. When courts apply these factors, they must keep this policy concern in mind. However, nothing in Falk (or any other published decision) requires courts, in addition to applying these three factors, to articulate why a particular case presents “extreme circumstances.” Our court has applied the Falk factors many times to ensure that default judgments are entered only in extreme circumstances, but has never imposed the “magic words” requirement that Appellants seek.7 As we have explained: “The Falk factors 7 See, e.g., Brandt, 653 F.3d at 1111–12; Emp. Painters’ Trust v. Ethan Enters., Inc., 480 F.3d 993, 1000–01 (9th Cir. 2007); Franchise Holding II, LLC v. Huntington Rests. Grp., Inc., 375 F.3d 922, 925–27 (9th Cir. 2004); Laurino v. Syringa Gen. Hosp., 279 F.3d 750, 753–54 (9th Cir. 2002); Speiser, Krause & Madole P.C. v. Ortiz, 271 F.3d 884, 886–87 (9th Cir. 2001); TCI Grp. Life Ins. Plan v. Knoebber, 244 F.3d 691, 696–700 (9th Cir. 2001); Richmark Corp. v. Timber Falling Consultants, Inc., 937 F.2d 1444, 1448–49 (9th Cir. 1991); Alan Neuman Prods., Inc. v. Albright, 862 F.2d 1388, 1391–92 (9th Cir. 1988); Cassidy v. Tenorio, 856 F.2d 1412, 1415–17 (9th Cir. 1988); Direct Mail Specialists, Inc. v. 10 UNITED STATES V. AGUILAR quite effectively capture in the default judgment context the very equitable factors involved in the balance between the competing interests in assuring substantial justice and in protecting the finality of judgments that underlies Rule 60(b)(1).” TCI Grp., 244 F.3d at 696. In other words, faithful application of the Falk factors ensures that default judgments will stand only in extreme circumstances. There is no need to require district courts, in addition to applying these factors, to explain why a particular case is “extreme.” A rule to the contrary would make little sense. For example, if a claimant has no meritorious defense to a forfeiture complaint (as is the case here), then it is unclear what a further inquiry into “extreme circumstances” would accomplish: “If . . . the defendant presents no meritorious defense, then nothing but pointless delay can result from reopening the judgment.” Id. at 697; see also Haw. Carpenters’ Trust Funds v. Stone, 794 F.2d 508, 513 (9th Cir. 1986) (“To permit reopening of the case in the absence of some showing of a meritorious defense would cause needless delay and expense to the parties and court system.”). A complete lack of meritorious defenses itself constitutes an extreme circumstance. A straightforward reading of Mesle confirms this conclusion. In Mesle, we reversed a district court’s refusal to Eclat Computerized Techs., Inc., 840 F.2d 685, 690 (9th Cir. 1988); Meadows v. Dominican Republic, 817 F.2d 517, 521–22 (9th Cir. 1987); Benny v. Pipes, 799 F.2d 489, 494 (9th Cir. 1986); Pena v. Seguros La Comercial, S.A., 770 F.2d 811, 814–15 (9th Cir. 1985). UNITED STATES V. AGUILAR 11 set aside entry of default against the pro se claimant.8 We explained that the district court “ignored our oft stated commitment to deciding cases on the merits whenever possible, and held Mesle, a layman working without the aid of an attorney, to the same standards to which we hold sophisticated parties acting with the benefit of legal representation.” 615 F.3d at 1091. We faulted the district court for “turning the court’s attention to everyday oversights rather than to whether there were any extreme circumstances.” Id. We did not hold that the failure to recite the words “extreme circumstances” automatically qualifies as a reversible abuse of discretion. Rather, we simply held that, in applying the Falk factors, the district court “failed to apply this consideration when evaluating Mesle’s conduct.” Id. at 1093. As we put it another way in the conclusion, “[m]ore generally,” the district court “engaged in its analysis without demonstrating a proper awareness that ‘judgment by default is a drastic step appropriate only in extreme circumstances; a case should, whenever possible, be decided on the merits.’” Id. at 1095 (quoting Falk, 739 F.2d at 463). We confirm our three decades of precedent holding that courts reviewing a motion to set aside a default judgment must apply the Falk factors to ensure that the “extreme circumstances” policy is recognized. However, nothing in Rule 60(b) nor our precedent requires a district court to articulate on the record particular “extreme circumstances” before it denies a motion to set aside a default judgment. 8 The standard for determining whether to set aside entry of default for “good cause” under Rule 55(c) “is the same as is used to determine whether a default judgment should be set aside under Rule 60(b).” Mesle, 615 F.3d at 1091. This factual difference is thus immaterial to our analysis. 12 UNITED STATES V. AGUILAR