Opinion ID: 3047727
Heading Depth: 2
Heading Rank: 3

Heading: Alternative Objections to Default

Text: Notwithstanding the propriety of the default judgment, appellants argue that the district court should have set it aside because (1) their errors in failing to obtain counsel and update their addresses amounted to excusable neglect, and (2) plaintiffs committed misconduct or misrepresented the record. We review for an abuse of discretion and affirm.
[8] When a default judgment is challenged on grounds of excusable neglect, three factors inform the district court’s exercise of discretion: (1) “whether the defendant’s culpable conduct led to the default”; (2) “whether the defendant has a meritorious defense”; and (3) “whether reopening the default judgment would prejudice the plaintiff.” TCI Group Life Ins. Plan, 244 F.3d at 696; see also Falk v. Allen, 739 F.2d 461, 463 (9th Cir. 1984) (per curiam). Because appellants were culpable with respect to the default and have no meritorious defense, the district court acted well within its discretion when it refused to set aside the judgment. [9] In this circuit, “a defendant’s conduct [is] culpable for purposes of the Falk factors where there is no explanation of the default inconsistent with a devious, deliberate, willful, or bad faith failure to respond.” TCI Group Life Ins. Plan, 244 F.3d at 698. Such a deliberate failure can be found where, as here, defendants provide the opposing party with an incorrect address, thereby precluding normal service of process. See id. at 698-99 (citing Pena v. Seguros La Comercial, S.A., 770 F.2d 811, 815 (9th Cir. 1985)). As in Pena, the defendants’ failure to update their address made it difficult for the oppos- EMPLOYEE PAINTERS’ TRUST v. ETHAN ENTERPRISES 3271 ing party to contact them. This error was hardly “excusable,” as defendants reasonably should have expected contact with the trusts in the course of ongoing litigation, particularly during the discovery period. Moreover, Ethan’s failure to secure replacement counsel, as required by the local rules, certainly cannot be described as “excusable neglect” given clear notice to Ethan of the need to obtain counsel and Ethan’s unexplained delay in doing so. See, e.g., Pioneer Inv. Servs. Co. v. Brunswick Assocs. Ltd. P’ship, 507 U.S. 380, 392 (1993) (“[M]istakes construing the rules do not usually constitute ‘excusable’ neglect.”); Pincay v. Andrews, 389 F.3d 853, 858 (9th Cir. 2004) (en banc) (describing a misreading of court rules as “egregious” but affirming the district court’s consideration of other factors). [10] Nor do appellants have a meritorious defense. See Haw. Carpenters’ Trust Funds, 794 F.2d at 513 (“[A]s a prerequisite to vacating an entry of default,” a party in default “is required to make some showing of a meritorious defense[.]”). Although Ethan, Johnson, and Tift argued in their briefs that they have not signed the CBA and would have a meritorious defense if the Ninth Circuit reversed the NLRB’s decision, appellants recently lost their NLRB appeal. See Ethan Enter., Inc., 154 Fed. Appx. at 23. As a result, Ethan must execute the CBA and satisfy its terms, including payment of contributions to the plaintiff trusts. Given the preclusive effect of this recent decision on the primary merits issue in the present case — whether Ethan is in fact bound by a collective bargaining agreement with the union requiring contributions to the trusts — “[t]o permit reopening of the case . . . would cause needless delay and expense to the parties and court system.” Haw. Carpenters’ Trust Funds, 794 F.2d at 513.
Appellants also argue that the default judgment should be set aside because of misconduct and misrepresentation by the trusts. Appellants, however, have provided no evidence of 3272 EMPLOYEE PAINTERS’ TRUST v. ETHAN ENTERPRISES misconduct by the trusts, let alone the “clear and convincing” evidence required to support such a charge. See De Saracho v. Custom Food Mach., Inc., 206 F.3d 874, 880 (9th Cir. 2000). [11] As described above, the trusts served notice of the default on the defendants in the same manner as they had served previous pleadings. Nothing in the record suggests that the trusts defrauded the court with respect to their claims. Similarly, no evidence suggests that the trusts misrepresented the contributions owed to them. Rather, it was appellants’ failure to participate in the litigation that forced the court to rely on indirect payroll information to calculate the amount of the judgment. Prior to the default, the district court entered an order to compel inspection of payroll records, but the copy of the order sent to defendants was returned to the court as undeliverable. So it was defendants who were responsible for the absence of direct data concerning the contributions due. [12] Given the lack of evidence of misconduct or misrepresentation, appellants fail to meet their burden under Rule 60(b)(3). AFFIRMED.